UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 8-K

                             CURRENT REPORT PURSUANT
                          TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


Date of report (Date of earliest event reported):  June 8, 2006
                                                   -----------------------------


                          Pre-Paid Legal Services, Inc.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


                                    Oklahoma
--------------------------------------------------------------------------------
                 (State or Other Jurisdiction of Incorporation)


         001-09293                                     73-1016728
--------------------------------------------------------------------------------
  (Commission File Number)                   (IRS Employer Identification No.)


            One Pre-Paid Way
                Ada, OK                                 74820
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)             (Zip Code)


                                 (580) 436-1234
--------------------------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)



--------------------------------------------------------------------------------
          (Former Name or Former Address, if Changed Since Last Report)


     Check the  appropriate  box below if the Form 8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

     |_| Written  communications  pursuant to Rule 425 under the  Securities Act
(17 CFR 230.425)

     |_| Soliciting  material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)

     |_|  Pre-commencement  communications  pursuant to Rule 14d-2(b)  under the
Exchange Act (17 CFR 240.14d-2(b))

     |_|  Pre-commencement  communications  pursuant to Rule 13e-4(c)  under the
Exchange Act (17 CFR 240.13e-4(c))






                                TABLE OF CONTENTS


Item 1.01 Entry into a Material Definitive Agreement.

     On June 8, 2006,  Pre-Paid Legal  Services,  Inc. ("we" or "us") closed the
previously announced loan agreement with Bank of Oklahoma,  N.A. for $10 million
to finance stock  repurchases with a single  principal  payment maturity date of
December  1, 2006 and  interest  payable  monthly  at the 30 day LIBOR Rate plus
three percent,  adjusted monthly. The agreement contains financial and reporting
covenants and events of default  substantially the same as those in our existing
line  of  credit.  The  loan is  primarily  secured  by our  rights  to  receive
membership fees on a portion of our memberships, subordinate to the lien granted
to our existing  lenders.  The lenders under our existing  credit  agreement all
consented to this additional borrowing.

Item 2.03 Creation of a Direct  Financial  Obligation or an Obligation  under an
Off-Balance Sheet Arrangement of the Registrant.

     See Item 1.01 above.

Item 9.01 Financial Statements and Exhibits.

     See Exhibit Index attached.

                                   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.

                                   Pre-Paid Legal Services, Inc.


                                   By:      /s/ Randy Harp
                                            ------------------------------------
                                            Randy Harp, Chief Operating Officer

Date:  June 8, 2006





Exhibit Index

--------- ----------------------------------------------------------------------
|No.     |  Description                                                        |
|        |                                                                     |
--------- ----------------------------------------------------------------------
|10.1    | Loan Agreement dated June 6, 2006 between Pre-Paid legal Services,  |
|        | Inc and Bank of Oklahoma, N.A.                                      |
--------- ----------------------------------------------------------------------
|10.2    | Security Agreement dated June 6, 2006 between Pre-Paid legal        |
|        | Services, Inc and Bank of Oklahoma, N.A.                            |
--------- ----------------------------------------------------------------------







                                 LOAN AGREEMENT

                                     Between


                          PRE-PAID LEGAL SERVICES, INC.

                                       And


                             BANK OF OKLAHOMA, N.A.



                                  June 6, 2006






                               TABLE OF CONTENTS
                                  (continued)



1.       CERTAIN DEFINITIONS
         1.1      Advance
         1.2      Affiliate
         1.3      Agreement
         1.4      Business Day
         1.5      Collateral
         1.6      Code
         1.7      Commitment
         1.8      Compliance Certificate
         1.9      Debt Coverage Ratio
         1.10     ERISA
         1.11     Events of Default
         1.12     Funded Debt
         1.13     GAAP
         1.14     Governmental Authority
         1.15     Guarantor
         1.16     Guaranty Agreement
         1.17     Indebtedness
         1.18     Law or Laws
         1.19     Legal Contracts
         1.20     LIBOR Rate
         1.21     Lien
         1.22     Loan
         1.23     Loan Documents
         1.24     Material Adverse Effect
         1.25     Maturity Date
         1.26     Note
         1.27     PBGC
         1.28     Person
         1.29     Permitted Liens
         1.30     Plan.
         1.31     Potential Default
         1.32     Prime Rate
         1.33     Reportable Event
         1.34     Required Payment
         1.35     Responsible Officer
         1.36     Security Agreement
         1.37     Subsidiary


2.       LENDING AGREEMENT
         2.1      Loan
         2.2      Making of Payments
         2.3      Prepayment and Prepayment Penalty
         2.4      Application of Payments
         2.5      Default Interest
         2.6      Commitment Fee
         2.7      Further Assurance


3.       COLLATERAL
         3.1      Security Interest
         3.2      Guaranty Agreement


4.       CONDITIONS OF LENDING
         4.1      Conditions Precedent to Closing and Advances Pursuant to Loan


5.       REPRESENTATIONS AND WARRANTIES
         5.1      Organization and Good Standing
         5.2      Authorization and Power
         5.3      Governmental Authorization
         5.4      Binding Effect
         5.5      Financial Statements
         5.6      Labor Disputes and Acts of God
         5.7      Other Agreement
         5.8      Title to Property
         5.9      Litigation
         5.10     No Defaults on Outstanding Judgments or Orders
         5.11     Debt
         5.12     Conflicting Documents or Agreements
         5.13     Full Disclosure
         5.14     No Default
         5.15     Material Agreements
         5.16     Principal Office
         5.17     ERISA
         5.18     Payment of Taxes
         5.19     Survival Representations and Warranties


6.       AFFIRMATIVE COVENANTS
         6.1      Applicable Laws
         6.2      Annual Financial Statements
         6.3      Quarterly Financial Statements
         6.4      Notice of Litigation
         6.5      Maintenance of Existence
         6.6      Books and Records; Inspections
         6.7      Taxes
         6.8      Title to Assets and Maintenance
         6.9      Additional Assurances
         6.10     Performance of Obligations
         6.11     Expenses
         6.12     Payment of Liabilities
         6.13     Right to Conduct Business
         6.14     Other Information
         6.15     Regulation U Compliance


7.       NEGATIVE COVENANTS
         7.1      Negative Pledge
         7.2      Sale of Assets
         7.3      Additional Indebtedness
         7.4      Name, Fiscal Year and Accounting Method
         7.5      Dividends and Distributions
         7.6      Loans or Advances
         7.7      Discontinuance of Business Lines
         7.8      Mergers and Acquisitions
         7.9      Transactions With Affiliates


8.       FINANCIAL COVENANTS
         8.1      Debt Coverage Ratio
         8.2      Retention Rate
         8.3      Cancellation Rate
         8.4      Tangible Net Worth


9.       EVENTS OF DEFAULT
         9.1      Nonpayment of Note
         9.2      Nonpayment of Interest
         9.3      Other Nonpayment
         9.4      Breach of Covenants
         9.5      Representations and Warranties
         9.6      Insolvency
         9.7      Voluntary Bankruptcy
         9.8      Involuntary Bankruptcy
         9.9      Creditor's Proceedings
         9.10     Monetary Judgments
         9.11     Borrower Dissolution
         9.12     Harland Stonecipher
         9.13     Financial Covenants
         9.14     Other Defaults


10.      REMEDIES
         10.1     Immediate Acceleration
         10.2     No Cure or Notice
         10.3     Five Day Notice and Demand
         10.4     Thirty Day Notice and Demand
         10.5     Other Rights
         10.6     Cumulative Remedies


11.      GENERAL CONDITIONS
         11.1     Notices
         11.2     Amendment; Waiver
         11.3     Governing Law
         11.4     Prohibition Against Assignment
         11.5     Indemnification
         11.6     Entire Agreement
         11.7     Severability
         11.8     Captions
         11.9     Binding Effect
         11.10    Contrary Provisions
         11.11    Counterpart
         11.12    Waiver of Jury Trial









                                 LOAN AGREEMENT


THIS LOAN AGREEMENT is made and entered into this 6th day of June,  2006, by and
between PRE-PAID LEGAL SERVICES,  INC., an Oklahoma corporation (the "Borrower")
and BANK OF OKLAHOMA, N.A., a national banking association (hereinafter referred
to as "Bank").


                              W I T N E S S E T H:
                               -------------------

WHEREAS,  Borrower  and Bank  have  agreed  to an  extension  of  credit  in the
principal  amount of Ten Million and No/100  Dollars  ($10,000,000.00)  from the
Bank to the  Borrower  consisting  of a term loan for the purpose of  purchasing
Borrower's shares of stock in the open market; and


WHEREAS,  the Borrower desires to secure its obligation under this Agreement and
the promissory note described herein with a security interest in legal contracts
issued in states where such contracts are not viewed as insurance products.


NOW,  THEREFORE,  in consideration of the mutual covenants and agreements herein
contained,  and for other  good and  valuable  consideration,  the  receipt  and
adequacy of which are hereby acknowledged,  Bank and Borrower hereby consent and
agree as follows:


1. CERTAIN DEFINITIONS.
   --------------------

As used in this  Agreement,  "Borrower"  and "Bank"  shall have the meanings set
forth above and the following terms with their initial letters capitalized shall
have the following meanings except where the context otherwise requires:


     1.1 Advance.  The term "Advance"  shall mean the  disbursement by Bank of a
sum or sums loaned to Borrower pursuant to this Agreement.

     1.2 Affiliate.  The term "Affiliate" shall mean any Person which,  directly
or  indirectly,  controls,  is controlled by or is under common control with the
relevant Person. For the purposes of this definition, "control" (including, with
correlative  meanings,  the terms  "controlled  by" and  "under  common  control
with"), as used with respect to any Person,  shall mean a member of the board of
directors,  a general  partner or an executive  officer of such  Person,  or any
other Person with possession,  directly or indirectly, of the power to direct or
cause the direction of the management  and policies of such Person,  through the
ownership (of record,  as trustee,  or by proxy) of voting  shares,  partnership
interests or voting  rights,  through a management  contract or  otherwise.  Any
Person owning or  controlling  directly or indirectly ten percent or more of the
voting shares,  partnership interests or voting rights, or other equity interest
of another Person shall be deemed to be an Affiliate of such Person.

     1.3 Agreement.  The term "Agreement" shall mean this Loan Agreement, as the
same may from time to time be amended, supplemented or modified.

     1.4 Business Day. The term  "Business  Day" shall mean any day other than a
Saturday,  Sunday or other day on which commercial banks are authorized to close
under the Laws of, or are in fact closed in, the State of Oklahoma.

     1.5 Collateral.  The term "Collateral"  shall have that meaning ascribed to
such term as is provided in Section 3 hereof.

     1.6 Code.  The term "Code" shall mean the Internal  Revenue Code of 1986 as
amended from time to time.

     1.7 Commitment. The term "Commitment" shall mean $10,000,000.00.

     1.8 Compliance  Certificate.  The term "Compliance  Certificate" shall mean
each  certificate,  substantially  in the form of  Exhibit  B  attached  hereto,
executed by the  Responsible  Officer on behalf of Borrower and  furnished  from
time to time in accordance with this Agreement.

     1.9 Debt Coverage Ratio.  The term "Debt Coverage Ratio" shall mean (A) for
the  previous  three-months   annualized,   Net  Income  plus  depreciation  and
amortization,  plus interest expense minus  $1,000,000  (representing a mutually
agreed level of anticipated annual maintenance capital expenditures) minus stock
purchases for the previous  three months  annualized  and not paid for from loan
proceeds but excluding stock purchases from  unrestricted  cash reserves DIVIDED
BY (B) for the next ensuing twelve-months,  current maturities of long-term debt
plus interest  expense for the previous  three-months  annualized plus dividends
declared for the previous twelve (12) months.

     1.10 ERISA.  The term  "ERISA"  shall mean the Employee  Retirement  Income
Security Act of 1974, as amended,  together with all regulations issued pursuant
thereto.

     1.11  Events of  Default.  The term  "Events  of  Default"  shall have that
meaning ascribed to such term as is provided in Section 9 hereof.

     1.12 Funded Debt. The term "Funded Debt" shall mean debt for borrowed money
and all other  debt that is  evidenced  by bonds,  debentures,  notes,  or other
similar instruments.

     1.13  GAAP.  The term  "GAAP"  shall  mean  generally  accepted  accounting
principles  set  forth in the  opinions  and  pronouncements  of the  Accounting
Principles Board and the American  Institute of Certified Public Accountants and
statements and pronouncements of the Financial  Accounting Standards Board or in
such other  statements  by such other entity as may be approved by a significant
segment of the accounting profession,  which are applicable to the circumstances
as of the date of determination.

     1.14  Governmental  Authority.  The term  "Government  Authority" means any
nation or government,  any state or other  political  subdivision  thereof,  any
agency,  authority,  instrumentality,  regulatory  body,  court,  administrative
tribunal,  central  bank or  other  entity  exercising  executive,  legislative,
judicial,  taxing,  regulatory  or  administrative  powers  or  functions  of or
pertaining  to  government,  and  any  corporation  or  other  entity  owned  or
controlled,  through  stock or capital  ownership  or  otherwise,  by any of the
foregoing.

     1.15  Guarantor.  The term  Guarantor  shall  refer  to each of  Borrower's
non-insurance Subsidiaries,  whether one or more. Such Guarantors shall include:
American Legal  Services,  Inc., Ada Travel  Service,  Inc.,  Pre-Paid  Canadian
Holdings, L.L.C., and PPL Legal Care of Canada Corporation.

     1.16  Guaranty  Agreement.  The  term  "Guaranty  Agreement"  shall  mean a
continuing  guaranty of payment and  collection,  in  substantially  the form of
Exhibit  "D"  attached  hereto,  absolutely,   unconditionally  guarantying  the
obligations evidenced by the Loan.

     1.17 Indebtedness.  The term "Indebtedness" shall mean: (i) all obligations
of Borrower as evidenced by the Note; (ii) all obligations of Borrower evidenced
by this Agreement; (iii) all obligations of the Borrower arising from any of the
Loan Documents or other  agreements  covering  property secured by a Lien on any
asset of Borrower  now or  hereafter  contemplated  by this  Agreement,  whether
direct or indirect, absolute or contingent.

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

     1.19  Legal  Contracts.  The term  "Legal  Contracts"  means  those  legal,
insurance-type  contracts  with  members  which are issued in states  where such
contracts are not viewed or determined to be insurance products.

     1.20 LIBOR Rate. The term "LIBOR Rate" shall mean the arithmetic average of
the rate at which  Dollar  deposits  in  immediately  available  funds and for a
maturity  equal to  one-month  (30 days) are offered or  available in the London
Interbank  Market for Eurodollars as of 11:00 a.m.  (London time) on the date of
determination,  as  reported  in the "Money  Rates"  section of The Wall  Street
Journal or a substitute source  reasonably  determined by Bank in the event such
source is no longer  available.  If more than one month (30 days)  LIBOR Rate is
published  in The Wall Street  Journal for any  particular  time period then the
LIBOR Rate shall be the highest of such published  rates.  Beginning  October 1,
2003,  such rate shall be adjusted as of the first day of each month  during the
term hereof.

     1.21 Lien.  The term "Lien"  shall mean,  with  respect to any asset of the
Borrower, any mortgage,  lien, pledge, charge,  security interest or encumbrance
of any kind in respect of such asset.

     1.22 Loan.  The term "Loan"  shall mean that loan  described at Section 2.1
below and which is evidenced by the Note and secured by the Loan Documents.

     1.23 Loan Documents. The term "Loan Documents" shall collectively mean this
Agreement,  the Note,  the  Guaranty  Agreements,  the Security  Agreement,  all
financing statements,  and all other security documents and instruments executed
and  delivered in  connection  with the Loan  described  herein which secure the
obligations  of  the  Borrower  to  the  Bank  and  any  renewals,   amendments,
supplements or modifications thereof or thereto.

     1.24 Material Adverse Effect. The term "Material Adverse Effect" shall mean
any  circumstance or event which could have a material adverse effect on (i) the
Borrower's assets or properties,  liabilities,  financial  condition,  business,
operations,  affairs or circumstances,  or (ii) the ability of Borrower to repay
its debt from ongoing cash flow from  operations or cash reserves;  or (iii) the
ability of Borrower to carry out its  business as of the date of this  Agreement
or as  proposed at the date of this  Agreement  to be  conducted  or to meet its
obligations  under the Notes,  this  Agreement or the other Loan  Documents on a
timely basis.

     1.25 Maturity Date. The term "Maturity  Date" shall mean the earlier of (i)
December 6, 2006, or (ii) upon Borrower's closing of any new credit facility.

     1.26 Note. The term "Note" shall mean the promissory note, substantially in
the form of Exhibit "A" hereto  issued or to be issued  hereunder to the Bank to
evidence the  Indebtedness to Bank arising by reason of the Loan,  together with
all modifications, renewals and extensions thereof or any part thereof.

     1.27  PBGC.  The term  "PBGC"  shall  mean  the  Pension  Benefit  Guaranty
Corporation,  and any successor to all or any of this entity's  functions  under
ERISA.

     1.28 Person. The term "Person" shall include an individual,  a corporation,
a joint venture, a general or limited partnership,  a limited liability company,
a trust,  an  unincorporated  organization  or a  government  or any  agency  or
political subdivision thereof.

     1.29 Permitted Liens. The term "Permitted Liens" shall refer to those Liens
described in items (a) through (f) in Section 7.1 herein.

     1.30 Plan.  The term "Plan"  shall mean an employee  benefit  plan or other
plan  maintained by either Borrower for employees of either Borrower and covered
by Title IV of ERISA, or subject to the minimum finding  standards under Section
412 of the Internal Revenue Code of 1954, as amended.

     1.31 Potential Default.  The term "Potential  Default" shall mean any event
which with the giving of notice or lapse of time, or both, would become an Event
of Default.

     1.32 Prime Rate.  The term "Prime Rate" shall mean the BOKF National  Prime
Rate, described as the rate of interest set by BOK Financial Corporation, in its
sole  discretion,  on a daily basis as  published by BOK  Financial  Corporation
("BOKF")  from  time to time (the  "Index").  The  interest  rate on the Note is
subject to change from time to time based on changes in the Index.  The Index is
not  necessarily the lowest rate charged by Bank on its loans and is set by Bank
in its sole discretion. If the Index becomes unavailable during the term of this
Loan, Bank may designate a substitute index after notifying Borrower.  Bank will
tell Borrower the current index rate upon Borrower's request.  The interest rate
change will not occur more often than each day.  Borrower  understands that Bank
may make loans based on other  rates as well.  Under no  circumstances  will the
interest  rate on the Note be more than the maximum rate  allowed by  applicable
Law.

     1.33 Reportable Event. The term "Reportable  Event" shall have that meaning
assigned to such term in Title IV of ERISA.


     1.34  Required  Payment.  The term  "Required  Payment"  is used  herein as
defined in Section 2.4 hereof.


     1.35 Responsible  Officer.  The term  "Responsible  Officer" shall refer to
Steve  Williamson,  Borrower's  Chief  Financial  Officer or Randy  Harp,  Chief
Operating Officer.

     1.36 Security  Agreement.  The term  "Security  Agreement"  shall mean that
certain  Security  Agreement in  substantially  the form of Exhibit "C" attached
hereto executed by Borrower covering the Borrower's Legal Contracts.

     1.37  Subsidiary.  The term  "Subsidiary"  shall mean, as to any Person,  a
corporation,  limited partnership,  or limited liability company of which shares
of stock or other  ownership  interest  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,  the  general  partner  or other
managers of such corporation,  limited partnership, or limited liability company
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.

2. LENDING AGREEMENT.
   ------------------

Subject to the terms and conditions  hereof, and the terms and conditions of the
Loan  Documents,  and  in  reliance  upon  the  Borrower's  representations  and
warranties  contained herein,  the Bank agrees to extend credit to the Borrower,
and the  Borrower  agrees  to such  extensions  of  credit  from the Bank on the
following terms and conditions:

     2.1 Loan.  The Bank agrees to extend credit to the Borrower as evidenced by
the Note. This Loan is secured by the Collateral.


          2.1.1  Principal.  The  principal  amount of the Loan shall not exceed
     $10,000,000.00.


          2.1.2 Note Interest  Rate.  Beginning on the date of the first Advance
     hereunder,  and continuing throughout the life of the Loan, the outstanding
     principal  amount of the Note  shall bear  interest  per annum at the LIBOR
     Rate plus three percent (3%).  Interest shall be calculated on the basis of
     a year of 360 days for the actual  number of days  elapsed.  The LIBOR Rate
     shall be adjusted on the first day of each month  commencing  July 1, 2006.
     From the date hereof until July 1, 2006 the interest rate shall be 8.14%.

          2.1.3 Advances and Purpose.  Advances not to exceed  $10,000,000.00 in
     the aggregate will be available  primarily to fund Borrower's  acquisitions
     of its stock on the open market or otherwise  (such as private  purchases).
     This Loan is expressly not a revolving credit.  Once sums are advanced they
     cannot be paid back and re-advanced.

          2.1.4  Advance  Procedure.  The  amount  of the  Note  shall  be fully
     advanced  within  five  (5)  business  days  following  the  date  of  this
     Agreement.  Upon  such  Advance  hereunder,  Borrower  shall be  deemed  to
     represent and warrant that no Event of Default  currently exists or will be
     incurred as a result of the Advance.

          2.1.5  Repayment.  Beginning  June 31, 2006 and continuing on the last
     day of each month thereafter through November 30, 2006, Borrower shall make
     an interest  payment of all accrued  but unpaid  interest on the Note.  All
     outstanding  principal  plus all  accrued  but unpaid  interest  is due and
     payable on the Maturity Date.

     2.2 Making of Payments.  The principal of and interest on the Note shall be
payable  in  lawful  money of the  United  States  of  America,  in  immediately
available funds, at the principal office of the Bank in Oklahoma City, Oklahoma.
All such payments shall be made not later than 2:00 p.m., Oklahoma City time, on
the date due, and funds  received for principal  payments on the Note after such
hour on any day shall be treated for all  purposes of this  Agreement  as having
been  received on the next  succeeding  business  day in Oklahoma  City.  If any
payment made by the Borrower  under this  Agreement is to be made on a Saturday,
Sunday or legal holiday in Oklahoma City,  Oklahoma,  such payment shall be made
on the next succeeding business day.

     2.3  Prepayment  and Prepayment  Penalty.  Except as set forth herein,  the
Borrower  may prepay  any or all of the Loan,  either in whole or in part at any
time and from time to time, on any date without premium or penalty.

     2.4 Application of Payments.  Borrower hereby agrees that all Note payments
paid to Bank shall be applied:  (1) to any costs which the Borrower is obligated
to pay,  (2) to any  accrued  but  unpaid  interest,  and  (3) to the  principal
Indebtedness of the Note.

     2.5 Default Interest.  While any Event of Default exists hereunder or under
the Note or any of the Loan Documents,  in lieu of the interest rate provided in
the Note,  all sums owing by Borrower to Bank in connection  with the Loan shall
bear interest at the rate equal to three percent (3%) per annum in excess of the
Prime  Rate,  accrued  from the date of such  Event of  Default,  but  after any
applicable grace period to cure certain Events of Default as provided herein, to
the date on which such default is cured to the  reasonable  satisfaction  of the
Bank.

     2.6  Commitment  Fee.  On the date hereof  Borrower  shall have paid Bank a
commitment  fee equal to the amount of  $50,000.00.  If the Loan is fully repaid
after  four  months  from the date  hereof,  the  Borrower  shall be  reimbursed
$12,500.00 of this fee.

     2.7 Further  Assurance.  The Borrower shall, from time to time, execute and
deliver,  or cause to be executed and delivered,  to the Bank such  instruments,
agreements, assignments, financing statements, continuation statements and other
documents,  and take or cause to be taken such  actions  as Bank may  reasonably
require,  to provide  Bank with and to perfect the security  interests  required
hereunder and to establish and maintain the priority of such security  interests
and liens.

3.  COLLATERAL.
---------------

The Loan shall be secured by the following Collateral:

     3.1 Security Interest. The Bank shall have a valid and enforceable security
interest  evidenced  by a security  agreement  and a UCC-1  financing  statement
covering and encumbering Borrower's Legal Contracts.

     3.2 Guaranty Agreement.  In addition to the other collateral  referenced in
this  Section  3, each  Guarantor  shall  unconditionally  guarantee  the prompt
payment and collection of the Indebtedness evidenced by the Notes.

4. CONDITIONS OF LENDING.
-------------------------

     4.1  Conditions  Precedent  to Closing and Advances  Pursuant to Loan.  The
obligation  of the Bank to  perform  this  Agreement  and to extend  the Loan as
described  herein is  subject to the  performance  of the  following  conditions
precedent in form satisfactory to the Bank:

          4.1.1  Loan  Documents.   This  Agreement,   the  Note,  the  Security
     Agreement, the Guaranty Agreements, financing statements and all other Loan
     Documents not  specifically  mentioned but heretofore  required by the Bank
     shall  have  been  duly  executed,  acknowledged  (where  appropriate)  and
     delivered to the Bank, all in form and substance  satisfactory to the Bank,
     and all such applicable  documents shall have been properly recorded in all
     appropriate recording offices.

          4.1.2  Resolutions of Borrower and Guarantor.  Resolutions of Borrower
     or  Guarantor,  as  applicable,   approving  the  execution,  delivery  and
     performance of this Agreement,  the Notes, the Security Agreement,  and all
     other  Loan  Documents  to  which  each  are a party  and the  transactions
     contemplated  herein  and  therein,  duly  adopted by  Borrower's  board of
     directors or managers, as the case may be, and accompanied by a certificate
     of Borrower's  secretary or assistant secretary or manager, as the case may
     be,  stating  that such  Resolutions  are true and  correct,  have not been
     altered  or  repealed  and are in full  force and  effect  shall  have been
     delivered to the Bank.

          4.1.3 Incumbency  Certificate of Borrower and Each Guarantor. A signed
     certificate  of  Borrower's  and each  Guarantor's  secretary  or assistant
     secretary or manager,  as the case may be, which shall  certify the name of
     the officers of Borrower or Guarantors,  as the case may be,  authorized to
     sign the Loan Document on behalf of Borrower or Guarantor to be executed by
     such Person and the other documents or certificates to be delivered by such
     Person pursuant to the Loan Documents, together with the true signatures of
     each of such Persons shall have been delivered to the Bank.

          4.1.4 Borrower and Guarantor  Organizational  Documents. A copy of the
     Certificate  of  Incorporation  and  current  bylaws  of  Borrower  and the
     Certificate of Incorporation and current bylaws or Articles of Organization
     and  operating  agreement  of each  Guarantor,  as the case may be, and all
     amendments  thereto,  certified  by a  Responsible  Officer as being  true,
     correct  and  complete  as of  the  date  of  such  certification  and  the
     Certificate of Good Standing for Borrower and each Guarantor  issued by the
     Secretary of State of the State of Oklahoma  shall have also been delivered
     to the Bank.

          4.1.5 Financial  Statements and other Information.  The Borrower shall
     have furnished to the Bank such financial  statements and other information
     and/or documents as the Bank shall have requested.

          4.1.6 No  Default.  No Events of Default  shall have  occurred  and be
     continuing   under  this   Agreement   or  the  Loan   Documents   and  the
     representation  and  warranties  set forth  herein  and in all  other  Loan
     Documents shall be true and correct in all material respects.

          4.1.7 Compliance.  Borrower shall comply with and shall continue to be
     in  compliance  with  all  material  terms,  covenants,   warranties,   and
     conditions  of this  Agreement  and any other loan  documents  contemplated
     herein.

          4.1.8 No Adverse  Effect.  As of the date of making such  Advance,  no
     Material  Adverse  Effect has  occurred  since the date of the most  recent
     financial statement submitted to Bank.

          4.1.9 Commitment Fee. Bank shall have received the Commitment Fee.

5. REPRESENTATIONS AND WARRANTIES.
   -------------------------------

To induce the Bank to extend the Loan and enter  into this  Agreement,  Borrower
represents  and  warrants  to the Bank as of the date  hereof and on any and all
renewals and extensions thereof, as follows:


     5.1  Organization  and  Good  Standing.  Borrower  is  a  corporation  duly
organized and existing in good standing  under the laws of the State of Oklahoma
and has the requisite  power and authority to own its  properties and assets and
to transact the business in which it is engaged.

     5.2 Authorization and Power. Borrower has the requisite power and authority
to  execute,  deliver and perform  the Loan  Documents.  Borrower  has taken all
necessary corporate action to authorize such execution, delivery and performance
of the Loan  Documents.  Borrower is and will continue to be duly  authorized to
perform the Loan Documents.

     5.3 Governmental Authorization. The execution, delivery, and performance by
Borrower  of  this  Agreement  requires  no  approval  of  or  filing  with  any
Governmental Authorities.

     5.4 Binding Effect. This Agreement and the other Loan Documents,  when duly
executed and delivered, will constitute legal, valid, and binding obligations of
Borrower,  fully  enforceable in accordance with their respective terms (subject
to limitations  on  enforceability  resulting from  bankruptcy and other similar
laws relating to creditor's rights and principles of equity) and will secure the
payment and performance of the Loan as described herein.

     5.5 Financial  Statements.  The consolidated  balance sheet of the Borrower
and  its  Subsidiaries  as of  March  31,  2006  and  the  related  consolidated
statements of income and cash flows of the Borrower and its Subsidiaries for the
three  months then ended,  and the  accompanying  footnotes,  as included in the
Borrower's  Quarterly  report  on Form  10-Q as filed  with the  Securities  and
Exchange  Commission,  copies of which  have  been  furnished  to the Bank,  are
complete and correct and fairly present the consolidated  financial condition of
the Borrower and its Subsidiaries at such date and the  consolidated  results of
the  operations of the Borrower and it  Subsidiaries  for the period  covered by
such statements,  all in accordance with GAAP  consistently  applied (subject to
year-end adjustments in the case of the interim financial statements), and since
March 31, 2006 there has been no  material  adverse  change in the  consolidated
condition (financial or otherwise),  business, or operations of the Borrower and
its  Subsidiaries.  There are no liabilities of the Borrower or any  Subsidiary,
fixed or  contingent,  which are material but are not reflected in the financial
statements  or in the notes  thereto,  other  than  liabilities  arising  in the
ordinary course of business since March 31, 2006.

     5.6 Labor Disputes and Acts of God. Neither the business nor the properties
of the Borrower or any Subsidiary are affected by any fire, explosion, accident,
strike,  lockout,  or other labor dispute,  drought,  storm,  hail,  earthquake,
embargo,  act of God or of the public enemy,  or other casualty  (whether or not
covered by  insurance),  which  materially  and adversely  affects the business,
properties,  or the operations of the Borrower and its Subsidiaries,  taken as a
whole.

     5.7 Other  Agreements.  Neither the Borrower nor any Subsidiary of Borrower
is a party to any indenture, loan, or credit agreement, or to any lease or other
agreement or instrument or subject to any charter or corporate restriction which
could have a Material Adverse Effect. Neither the Borrower nor any Subsidiary is
in default in any respect in the performance,  observance, or fulfillment of any
of the  obligations,  covenants,  or  conditions  contained in any  agreement or
instrument material to the Borrower's consolidated business.

     5.8 Title to Property. Borrower has good and marketable title to all of the
Collateral  referenced in Section 3 above, free and clear of all liens, pledges,
restrictions, and encumbrances except for Permitted Liens.

     5.9 Litigation.  Excluding the lawsuits and other proceedings  disclosed by
Borrower in the SEC reports, there are no pending legal or governmental actions,
proceedings,  or  investigations  to which  Borrower  is a party or to which any
property of Borrower is subject which Borrower  reasonably expects would result,
in a Material  Adverse Effect and to the best of Borrower's  knowledge,  no such
actions  or  proceedings  are  threatened,   in  writing,   or  contemplated  by
governmental authorities or any other persons.

     5.10 No Defaults on Outstanding  Judgments or Orders.  The Borrower and its
Subsidiaries  have  satisfied  all  judgments,  and neither the Borrower nor any
Subsidiary  is in default with respect to any  judgment,  writ,  injunction,  or
decree  of any  court,  arbitrator,  or  federal,  state,  municipal,  or  other
governmental  authority,  commission,  board, bureau, agency, or instrumentally,
domestic or foreign.

     5.11 Debt.  The financial  statements  described in Section 4.1.5 contain a
complete  and  correct  list  of all  credit  agreements,  indentures,  purchase
agreements,  guaranties, capital leases, and other investments,  agreements, and
arrangements  presently in effect  providing  for or relating to  extensions  of
credit  (including  agreements and  arrangements  for the issuance of letters of
credit or for  acceptance  financing)  in respect of which the  Borrower  or any
Subsidiary is in any manner directly or contingently obligated;  and the maximum
principal  or face  amounts  of the  credit in  question,  outstanding  or to be
outstanding,  are correctly stated,  and all Liens of any nature given or agreed
to be given as security  therefore are correctly  described or indicated in such
financial statements.

     5.12 Conflicting Documents or Agreements. There are no provisions that have
not been  satisfied  pursuant to existing  real  estate  mortgages,  indentures,
leases,  security  agreements,  contracts,  notes,  instruments,  or  any  other
agreements or documents  binding on Borrower or affecting its properties,  which
would conflict with or in any way prevent the execution, delivery or performance
of the Loan Documents by Borrower.

     5.13 Full  Disclosure.  There is no  material  fact that  Borrower  has not
disclosed  to Bank which  could  have a Material  Adverse  Effect.  Neither  the
financial  statements  relied upon by the Bank, nor any certificate or statement
delivered  herewith or  heretofore  by Borrower to Bank in  connection  with the
negotiations of this Agreement,  contain any untrue statement of a material fact
or omits to state any material fact necessary to keep the  statements  herein or
therein from being misleading.

     5.14 No Default.  No event has occurred and is continuing which constitutes
an Event of Default or a Potential Default.


     5.15  Material  Agreements.  Borrower  is not in  default  in any  material
respect under any contract, lease, loan agreement, indenture, mortgage, security
agreement or other material agreement or obligation to which it is a party or by
which any of its properties is bound.

     5.16  Principal  Office.  The  principal  place of  business of Borrower in
Oklahoma is at One Pre-Paid Way, Ada, Oklahoma 74820.


     5.17 ERISA.

          (a) No Reportable Event has occurred and is continuing with respect to
     any Plan;

          (b) PBGC has not instituted proceedings to terminate any Plan;

          (c) Neither  Borrower nor any duly appointed  administrator  of a Plan
     (i) has incurred any  liability to PBGC with respect to any Plan other than
     for premiums not yet due or payable,  or (ii) has  instituted or intends to
     institute proceedings to terminate any Plan under Sections 4041 or 4041A of
     ERISA or withdraw  from any  Multi-Employer  Pension  Plan (as that term is
     defined in Section 3(37) of ERISA);

          (d) Each  Plan of  Borrower  has been  maintained  and  funded  in all
     material  respects in accordance  with its terms and with all provisions of
     ERISA and the Code applicable thereto;

          (e)  Borrower  has  complied  with  all  applicable   minimum  funding
     requirements of ERISA and the Code with respect to each Plan;

          (f) There are no unfunded  benefit  liabilities (as defined in Section
     4001(a)(18)  of ERISA) with respect to any Plan of such Borrower which pose
     a risk of causing a Lien to be created in the assets of Borrower; and

          (g) No  material  prohibited  transaction  under the Code or ERISA has
     occurred with respect to any Plan of Borrower.

     5.18 Payment of Taxes.  Borrower has filed all required federal,  state and
local  tax  returns  and have paid all  taxes as shown on such  returns  as they
become  due  except  those  being  contested  in good  faith and which  have not
resulted in any Liens.

     5.19 Survival  Representations  and  Warranties.  All  representations  and
warranties  by  Borrower  herein  shall  survive  delivery  of the  Note and any
investigation at any time made by or on behalf of Bank shall not diminish Bank's
right to rely thereon.

6. AFFIRMATIVE COVENANTS.
   ----------------------

Until  payment in full of the Note,  and any  renewals and  extensions  thereof,
Borrower agrees,  unless the Bank shall otherwise consent in writing, to perform
or cause to be performed the following agreements:

     6.1 Applicable  Laws.  Borrower shall comply in all material  respects with
the  requirements  of all Laws  applicable to it or to its business or property,
except in such instances in which (i) such requirement of Law is being contested
in good faith or a bona fide dispute  exists with respect  thereto;  or (ii) the
failure to comply  therewith could not reasonably be expected to have a Material
Adverse Effect.

     6.2 Annual Financial Statements. Borrower shall deliver to the Bank annual,
audited  financial  statements  within 90 days of its year-end,  current  within
twelve months, all prepared in accordance with GAAP, consistently maintained and
applied,  and  concurrent  with  the  submission  of the  financial  statements,
Borrower  shall  deliver a  Compliance  Certificate  executed  by a  Responsible
Officer  stating  that such person,  after due  inquiry,  has no knowledge of an
Event of Default and containing a computation of, and  demonstrating  compliance
with,  the  financial  covenants  described  in Section 8 below.  The  financial
statements  shall  consist  of,  at  least,   consolidated  balance  sheets  and
consolidated statements of income and cash flows.

     6.3  Quarterly  Financial  Statements.  Borrower  shall deliver to the Bank
quarterly,  unaudited financial  statements within 45 days after the end of each
of Borrower's  fiscal quarters  (excluding the last fiscal quarter of Borrower's
fiscal year),  prepared in accordance  with GAAP,  consistently  maintained  and
applied,  and  concurrent  with  the  submission  of the  financial  statements,
Borrower  shall  deliver a  Compliance  Certificate  executed  by a  Responsible
Officer  stating  that such person,  after due  inquiry,  has no knowledge of an
Event of Default and containing a computation of, and  demonstrating  compliance
with,  the  financial  covenants  described  in Section 8 below.  The  financial
statements  shall  consist  of,  at  least,   consolidated  balance  sheets  and
consolidated statements of income and cash flows.

     6.4 Notice of  Litigation.  Borrower  shall deliver to the Bank within five
(5) days after the  occurrence  thereof (a) notice of any material  developments
associated with any and all actions,  suits, and proceedings before any court or
governmental department,  commission,  board, bureau, agency or instrumentality,
domestic  or  foreign,  affecting  Borrower  or any  Subsidiary  of  Borrower in
existence  on the date  hereof  which  could  reasonably  be  expected to have a
Material  Adverse Effect and (b) notice of any additional  actions,  suits,  and
proceedings  involving  Borrower or any Subsidiary of Borrower which arise after
the date  hereof  and which  could  reasonably  be  expected  to have a Material
Adverse Effect.

     6.5  Maintenance  of Existence.  Borrower  shall  preserve and maintain its
corporate  existence and all of each of its rights,  privileges  and  franchises
necessary or desirable in the normal  conduct of its  business,  and conduct its
business  in an orderly  and  efficient  manner  consistent  with good  business
practices.

     6.6 Books and Records;  Inspections.  Accurate  books and records  shall be
kept by the  Borrower,  and the Bank  will  have  the  right  to  inspect,  upon
reasonable advance notice,  any assets of the Borrower,  and to examine and copy
such books and  records,  to discuss the  affairs,  finances and accounts of the
Borrower,  and to be informed as to the same at such times and  intervals as the
Bank might reasonably request under its normal course of business.

     6.7 Taxes. All taxes, assessments,  governmental charges and levies imposed
on the  Borrower  and its assets,  income and profits  will be paid prior to the
date on which penalties attach thereto.

     6.8 Title to Assets and  Maintenance.  Borrower  shall  defend and maintain
title to all its material properties and assets. Borrower shall keep its assets,
both real and  personal,  in good order and condition  consistent  with industry
practice and shall make all necessary  repairs,  replacements  and  improvements
required by the Leases.

     6.9 Additional Assurances. The Borrower agrees to execute,  acknowledge and
deliver to the Bank such instruments,  documents,  and any other items in a form
acceptable to the Bank may  reasonably  require in order to more fully carry out
the transactions contemplated herein.

     6.10 Performance of Obligations.  The Borrower shall pay the Note according
to the reading, tenor and effect thereof, and Borrower will do and perform every
act and discharge all obligations provided herein to be performed and discharged
or as contemplated hereby, at the time or times and in the manner specified.

     6.11  Expenses.  The  Borrower  covenants  and  agrees to pay all costs and
expenses  required to satisfy the  conditions of this  Agreement.  Further,  the
Borrower  covenants  and agrees to pay all costs and  expenses  incurred  in (i)
preparation for the closing hereof and for any subsequent  waivers or amendments
and (ii) in  connection  with the  exercise of rights and remedies of Bank under
the Loan  Documents,  including  but not limited to Bank's fees of attorneys for
Bank, to the extent permitted by Law.

     6.12 Payment of Liabilities. The Borrower shall pay all liabilities as they
become due unless they are  contested  in good faith by  appropriate  actions or
legal  proceedings and the Borrower  establishes  adequate  reserves therefor in
accordance with recognized accounting principles consistently applied.

     6.13 Right to  Conduct  Business.  The  Borrower  shall take all  necessary
actions  to  preserve   its  right  to  conduct   business  in  any   applicable
jurisdictions  and  before  all  regulatory  bodies;  to obtain  and  retain all
necessary Governmental Authorities approvals,  consents,  permits,  licenses and
certificates;  to comply in all material  respects with all valid and applicable
statutes,  rules and  regulations;  and to continue to conduct its businesses in
substantially the same manner as such businesses is now conducted.

     6.14 Other  Information.  The Borrower  will furnish to the Bank such other
information  concerning  the  financial  status of the  Borrower as the Bank may
reasonably request.

     6.15  Regulation U Compliance.  By action of its Board of Directors  either
before or as soon as practicable  after any purchases,  cause any and all shares
of  Borrower's  common  stock  purchased  with  the  proceeds  of the Loan to be
cancelled and retired to the status of authorized but unissued common stock.

7. NEGATIVE COVENANTS.
   -------------------

Prior  to the  payment  in full of the  Note  and any  renewals  and  extensions
thereof,  the Borrower  agrees that,  unless the Bank otherwise  gives its prior
consent in writing,  the Borrower will not perform or permit to be performed any
of the following acts:


     7.1 Negative Pledge. Except as provided herein,  Borrower shall not create,
incur,  assume, or permit to exist Lien, or other  encumbrances of any kind upon
in, on, or to any of its assets  except  (a) liens for taxes or  assessments  or
other  governmental  charges  being  contested in good faith and by  appropriate
proceedings,  (b) liens in connection  with workers  compensation,  unemployment
insurance,  or other social security  obligations,  (c)  mechanic's,  workmen's,
materialmen's,  landlord's,  carrier's,  or  other  like  liens  arising  in the
ordinary  course of business  with respect to  obligations  which are not due or
which are being  contested in good faith,  (d) judgment and other  similar liens
arising in connection  with court  proceedings,  provided the execution or other
enforcement of such liens is effectively  stayed and the claims secured  thereby
are being actively contested in good faith and by appropriate  proceedings,  and
(e) purchase money security interests in office furnishings and office equipment
acquired  in the  ordinary  course of  business,  provided  that  such  security
interest shall attach only to the  furnishings  and equipment so purchased,  and
(f) Liens securing  Indebtedness of the Borrower disclosed to Bank in Borrower's
financial statements described in Section 5.5.

     7.2 Sale of Assets.  Borrower  will not sell,  enter into  sale-lease  back
agreements,  exchange or transfer  title to any or all of its assets,  except in
the ordinary or normal course of business operations.

     7.3  Additional  Indebtedness.  Borrower  will not incur,  create,  assume,
suffer  to  exist  or in any  manner  become  or be  liable  in  respect  of any
Indebtedness,  nor will Borrower  guarantee or otherwise in any manner become or
be liable in respect of any  Indebtedness,  liabilities or other  obligations of
any other person or entity, whether by agreement to purchase the Indebtedness of
any other person or entity or agreement for the furnishing of funds to any other
person or entity  through the  purchase or lease of goods,  supplies or services
(or by way of stock  purchase,  capital  contribution,  advance or loan) for the
purpose of paying or discharging the Indebtedness of any other Person or entity,
or otherwise, except that the foregoing restrictions shall not apply to: (i) the
Note and any renewal or increase thereof,  or other Indebtedness of the Borrower
heretofore disclosed to Bank in the Borrower's financial statements described in
Section 5.5; or (ii) taxes,  assessments or other  government  charges which are
not yet due or are being contested in good faith by appropriate  action promptly
initiated and diligently conducted, if such reserve as shall be required by GAAP
shall have been made  therefor and levy and  execution  thereon have been stayed
and continue to be stayed; or (iii) Indebtedness  (other than in connection with
a loan or lending transaction)  incurred in the ordinary course of business;  or
(iv) any renewals or extensions (but not increases in) of any of the foregoing.

     7.4 Name, Fiscal Year and Accounting Method.  Borrower shall not change its
name or its method of accounting  without  providing Bank with three (3) month's
prior written notice.  Further, in regard to a name change,  Borrower shall have
taken such action as the Bank deems  necessary to continue the perfection of any
Liens securing payment of the Indebtedness.

     7.5 Dividends and Distributions.  Borrower shall not declare,  pay or make,
whether in cash or property, or set aside or apply any money or assets to pay or
make any dividend or other  distribution  with  respect to its capital  stock or
purchase  shares of its capital  stock,  which during any fiscal  quarter,  on a
combined  basis,  would exceed fifty percent (50%) of the Borrower's  cumulative
net income for all  previous  fiscal  quarters  beginning  July 1, 2004 less any
dividends or  distributions or stock purchases in such previous fiscal quarters.
To the extent,  Borrower does not utilize its availability to make a dividend or
purchase capital stock in any given quarter such amount not so utilized shall be
available in subsequent quarterly periods.  Provided further, Borrower shall not
be  permitted  to make any  dividend or  purchase  any shares  (including  those
permitted  by the next  proviso) if the  payment of the  dividend or purchase of
stock  shall  create  an Event of  Default.  Provided,  further  that any  stock
purchases funded by the Loan shall not be subject to such limitation.

     7.6  Loans or  Advances.  Borrower  shall  not  make or  permit  to  remain
outstanding  any loans or  advances  made by it to or in any  person or  entity,
except that the foregoing  restriction shall not apply to: (i) loans or advances
the material details of which have been set forth in the financial statements of
the Borrower heretofore furnished to Bank; or (ii) advances made in the ordinary
course of Borrower's  business to any Subsidiary or sales associate or employees
for  travel  or  similar  expenses;  or (iii)  loans  to  employees  for  option
exercises;  provided, however, such loans for option exercises shall not involve
an actual  advance  of cash to any such  employee;  or (iv)  loans or advance to
Subsidiaries to satisfy regulatory requirements of Governmental Authorities.

     7.7  Discontinuance  of Business Lines.  Borrower shall not discontinue any
line of business which would have a Material Adverse Effect.

     7.8 Mergers and  Acquisitions.  Borrower will not: (i) consolidate or merge
with or into any other  Person,  except  that  Borrower  may merge with  another
Person if such  Borrower is the  surviving  entity in such merger and if,  after
giving effect thereto, no default or Event of Default shall have occurred and be
continuing or (ii) acquire or create any additional subsidiaries.

     7.9  Transactions  With  Affiliates.  Borrower  shall  not  enter  into any
transaction,  including,  without limitation, the purchase, sale, or exchange of
property or the  rendering of any  service,  with any  Affiliate,  or permit any
Subsidiary to enter into any transaction,  including,  without  limitation,  the
purchase,  sale, or exchange of property or the  rendering of any service,  with
any Affiliate,  except in the ordinary  course of and pursuant to the reasonable
requirements of the Borrower's or such  Subsidiary's  business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than would
be  obtained  in a  comparable  arm's-length  transaction  with a Person  not an
Affiliate.

8. FINANCIAL COVENANTS.
   --------------------

Prior  to the  payment  in full of the  Note  and any  renewals  and  extensions
thereof,  the Borrower  agrees that,  unless the Bank otherwise  gives its prior
consent in writing,  the Borrower will perform or permit to be performed (or not
perform or not permit to be performed,  as the case may be) any of the following
acts:


     8.1 Debt Coverage Ratio.  Borrower's  Debt Coverage Ratio,  calculated on a
consolidated  basis and in  accordance  with GAAP,  shall not be less than 110%,
calculated on a quarterly basis.

     8.2 Retention  Rate.  Borrower shall maintain,  on a consolidated  basis, a
rolling  twelve (12) month average  retention  rate of  membership  contracts in
place for greater than  eighteen  (18) months of not less than  seventy  percent
(70%), calculated on a quarterly basis.

     8.3 Cancellation Rate. Borrower's  cancellation rate on contracts less than
or equal to twelve (12) months old, on a  consolidated  basis,  shall not exceed
45% on a trailing twelve (12) month basis, measured on a quarterly basis.

     8.4  Tangible  Net  Worth.  Borrower's  Tangible  Net Worth  (as  hereafter
defined),  determined on a consolidated basis and in accordance with GAAP, shall
not fall below  $25,000,000.  For purposes  hereof,  the term Tangible Net Worth
shall be defined in accordance  with GAAP;  provided,  however,  such definition
shall  exclude  the amount of  adjustments  to net worth,  as  required by GAAP,
relating to changes in Borrower's securities portfolio.

9. EVENTS OF DEFAULT.
   ------------------

The following shall constitute Events of Default hereunder and under each of the
Loan Documents:


     9.1  Nonpayment  of  Note.  Failure  to make  any  payment  when due of any
principal due and owing on the Note.

     9.2  Nonpayment  of  Interest.  Failure to make any payment when due of any
interest on the Note.

     9.3 Other  Nonpayment.  Borrower or any Guarantor fails to make any payment
when due,  other than as set forth in Sections 9.1 and 9.2 above,  of any amount
payable  to the Bank  under the  terms of this  Agreement,  the  Note,  the Loan
Documents  or any other  obligation  or  agreement  between the Borrower and any
financial institution.

     9.4  Breach of  Covenants.  Default by  Borrower  or any  Guarantor  in the
performance  or  observance  of any  covenant  or  agreement  contained  in this
Agreement,  the Note, the Security Agreement, or any of the other Loan Documents
not  specifically set forth in this paragraph other than as set forth in Section
9.13, or any agreement in connection therewith,  or under the terms of any other
instrument delivered to the Bank in connection with this Agreement.

     9.5 Representations and Warranties.  Any representation or warranty herein,
or any  representation,  statement,  certificate,  schedule  or  report  made or
furnished to the Bank on behalf of Borrower or any Guarantor, proves to be false
or erroneous in any material respect at the time of making thereof.

     9.6 Insolvency.  Borrower or any Guarantor:  (i) applies for or consents to
the  appointment  of a receiver,  trustee or  liquidator  of the  properties  of
Borrower;  (ii) admits in writing  the  inability  to pay debts as they  mature;
(iii) makes a general  assignment for the benefit of creditors;  or (iv) has any
significant portion of its assets or property placed in the hands of a receiver,
trustee or other officers or representatives of a court or of creditors.

     9.7  Voluntary  Bankruptcy.  Borrower  or any  Guarantor  shall be adjudged
bankrupt,  or any  voluntary  proceeding  shall be  instituted  by  Borrower  in
insolvency or bankruptcy, or for readjustment, extension or composition of debts
or for any other relief of debtors.

     9.8 Involuntary Bankruptcy.  Any involuntary proceeding shall be instituted
against Borrower or any Guarantor in insolvency or for readjustment,  extension,
or composition of debts,  which  proceeding is not dismissed  within ninety (90)
days from the filing of the commencement of the same.

     9.9  Creditor's  Proceedings.  The  institution  of any levy or  attachment
against  the assets of  Borrower or any  Guarantor  and such levy or  attachment
shall  continue  in place and in  effect  for a period  of 60  consecutive  days
without being vacated, discharged, satisfied, stayed, or removed.

     9.10  Monetary  Judgments.  One or  more  final  or  appealable  judgments,
decrees,  or orders  for the  payment of money in excess of  $500,000.00  in the
aggregate  shall  be  rendered  against  Borrower  or  any  Guarantor  and  such
judgments,  decrees,  or orders shall continue  unsatisfied  and in effect for a
period of 30 consecutive days without being vacated,  discharged,  satisfied, or
stayed or bonded pending  appeal,  except  judgments  described in the financial
statements referred to in Section 5.5 hereof.

     9.11 Borrower Dissolution.  The occurrence of any act causing a dissolution
or loss of legal existence of Borrower.

     9.12 Harland Stonecipher.  Harland Stonecipher shall ever cease to hold the
title of Chairman and Chief Executive  Officer or comparable  title and position
with Borrower for a period of 90 consecutive days.

     9.13  Financial  Covenants.  Default  shall  be made in  respect  of  those
covenants set forth in Section 8 of the Agreement, FINANCIAL COVENANTS.

     9.14 Other Defaults. Default shall be made in respect of any obligation for
borrowed  money in  excess  of  $100,000.00,  entered  into by  Borrower  or any
Guarantor and any other financial  institution or lender,  for which Borrower is
liable (directly, by assumption,  as guarantor or otherwise), or any obligations
secured by any mortgage,  pledge or other  security  interest,  lien,  charge or
encumbrance  with  respect  thereto,  on any asset or  property  of  Borrower in
respect of any agreement relating to any such obligations unless Borrower is not
liable for same  (i.e.,  unless  remedies  or  recourse  for failure to pay such
obligations is limited to foreclosure of the collateral security therefor),  and
if such default  shall  continue for more than thirty (30) days from the date of
default.

10.  REMEDIES.
     ---------

     10.1  Immediate  Acceleration.  Upon the  occurrence of an Event of Default
specified  in Sections  9.6,  9.7,  9.8,  9.9 and 9.10  immediately  and without
notice,  (i) all obligations  hereunder and under the Notes shall  automatically
become immediately due and payable, without presentment, demand, protest, notice
of protest, default or dishonor, notice of intent to accelerate maturity, notice
of  acceleration  of  maturity  or other  notice of any  kind,  except as may be
provided to the contrary  elsewhere herein, all of which are expressly waived by
the Borrower,  and (ii) the Bank is hereby  authorized at any time and from time
to time,  without  notice to the Borrower  (and any such notice being  expressly
waived by the  Borrower),  to  set-off  and apply  any and all  deposits  of the
Borrower (general or special,  time or demand,  provision or final) held by Bank
owing by Bank to or for the credit or account of the  Borrower  against  any and
all of the debt evidenced by the Note or other obligations set forth in any Loan
Document.

     10.2 No Cure  or  Notice.  Upon  the  occurrence  of an  Event  of  Default
specified in Sections 9.11 and 9.13,  the Bank may declare all debt evidenced by
any  and  all  Loan  Documents  to  be  immediately   due  and  payable  without
presentment,  demand, protest, notice of protest, default or dishonor, notice of
intent to  accelerate  maturity,  notice of  acceleration  of  maturity or other
notice of any kind, except as may be provided to the contrary  elsewhere herein,
all of which are hereby expressly waived by the Borrower, and in such event, the
Bank is hereby  authorized at any time and from time to time,  without notice to
the  Borrower  (any such notice  being  expressly  waived by the  Borrower),  to
set-off and apply any and all deposits containing funds of the Borrower (general
or special,  time or demand,  provision or final) held by Bank,  and any and all
other  indebtedness  at any time owing by Bank or to or for credit or account of
the Borrower against any and all of the debt evidenced by any Loan Document.  In
the event  Borrower  is  diligently  pursuing a cure to any Event of Default but
such cure cannot be accomplished  within the time periods set forth herein,  the
Bank may, in its sole discretion, extend any such cure period.

     10.3 Five Day Notice and Demand. Upon the occurrence of an Event of Default
specified  in Sections  9.1,  9.2,  9.3,  and 9.5  Borrower  shall have five (5)
business days to cure such failure to make payment without notice.  In the event
Borrower  shall fail to  effectuate  such a cure,  the Bank may declare all debt
evidenced  by any and all  Loan  Documents  to be  immediately  due and  payable
without presentment,  demand, protest,  notice of protest,  default or dishonor,
notice of intent to accelerate  maturity,  notice of acceleration of maturity or
other notice of any kind,  except as may be provided to the  contrary  elsewhere
herein,  all of which are hereby expressly  waived by the Borrower,  and in such
event, the Bank is hereby authorized at any time and from time to time,  without
notice to the Borrower (any such notice being expressly waived by the Borrower),
to  set-off  and apply any and all  deposits  containing  funds of the  Borrower
(general or special,  time or demand,  provision or final) held by Bank, and any
and all  other  indebtedness  at any time  owing by Bank or to or for  credit or
account of the  Borrower  against any and all of the debt  evidenced by any Loan
Document.  In the event  Borrower is diligently  pursuing a cure to any Event of
Default but such cure cannot be  accomplished  within the time periods set forth
herein, the Bank may, in its sole discretion, extend any such cure period.

     10.4  Thirty Day  Notice and  Demand.  Upon the  occurrence  of an Event of
Default other than those  specified in the sections  referenced in Section 10.1,
10.2 and 10.3  above,  Borrower  shall have  thirty  (30) days  after  receiving
written notification from the Bank of the Event of Default to cure such default.
In the event Borrower shall fail to effectuate such a cure, the Bank may declare
all debt  evidenced  by any and all Loan  Documents  to be  immediately  due and
payable without  presentment,  demand,  protest,  notice of protest,  default or
dishonor,  notice of intent to accelerate  maturity,  notice of  acceleration of
maturity or other notice of any kind,  except as may be provided to the contrary
elsewhere herein, all of which are hereby expressly waived by the Borrower,  and
in such event, the Bank is hereby  authorized at any time and from time to time,
without  notice to the Borrower (any such notice being  expressly  waived by the
Borrower),  to set-off and apply any and all  deposits  containing  funds of the
Borrower (general or special, time or demand,  provision or final) held by Bank,
and any and all other indebtedness at any time owing by Bank or to or for credit
or account of the Borrower against any and all of the debt evidenced by any Loan
Document.  In the event  Borrower is diligently  pursuing a cure to any Event of
Default but such cure cannot be  accomplished  within the time periods set forth
herein, Bank may, in its sole discretion, extend any such cure period.

     10.5 Other Rights.  Subject to the  provisions of this  Agreement and after
the giving of any required  notice and the  expiration  of any  applicable  cure
period, upon the occurrence of any Event of Default the Bank may, in addition to
the foregoing, exercise any or all of its rights and remedies provided by law or
pursuant to any other Loan Document.

     10.6  Cumulative  Remedies.  No failure on the part of the Bank to exercise
and no delay in exercising any right hereunder shall operate as a waiver hereof,
nor shall any single or partial exercise by Bank of any right hereunder preclude
any other or further  right of  exercise  thereof or the  exercise  of any other
right. The remedies herein provided are cumulative and not alternative.

11. GENERAL CONDITIONS.
    -------------------

The  following  conditions  shall  be  applicable  throughout  the  term of this
Agreement:


     11.1 Notices. All notices hereunder shall be in writing and shall be deemed
to have been sufficiently given or served for all purposes when presented as set
forth below to any party hereto at the following address:

                  To Borrower:              Pre-Paid Legal Services, Inc..
                                            One Pre-Paid Way
                                            Ada, Oklahoma  74820
                                            Telecopier number: 580/436-7410
                 Attn: Steve Williamson, Chief Financial Officer

                  To Bank:          BANK OF OKLAHOMA, N.A.
                                            201 Robert S. Kerr
                                            P.O. Box 24128
                                            Oklahoma City, Oklahoma 73124
                                            Telecopier number: 405/272-2588
                Attn: Laura Christofferson, Senior Vice President

or at such other  address of which it shall have  notified the party giving such
notice in writing.  Any notice,  demand or communication  under or in connection
with this Loan Agreement shall be deemed effective when received by the party to
whom addressed in the case of personal delivery,  telefax,  or by telex wire, or
if sent by mail shall be deemed effective three business days after deposited in
any post  office of the United  States  Post Office  Department,  registered  or
certified mail, postage fully prepaid, return receipt requested.

     11.2  Amendment;  Waiver.  This  Agreement  may not be  amended,  modified,
waived,  discharged or terminated in any way, except by an instrument in writing
executed by all parties hereto.

     11.3  Governing Law. This  Agreement,  the Note, the Loan Documents and all
other documents  issued and executed  hereunder shall be deemed to be a contract
made  under the laws of the State of  Oklahoma  and  shall be  construed  by and
governed in accordance with the laws of the State of Oklahoma.

     11.4 Prohibition Against Assignment. Borrower shall not assign nor transfer
voluntarily  or by operation of law, or otherwise  dispose of this  Agreement or
any rights hereunder, however the Bank shall have full right and power to assign
this  Agreement.  An assignment or transfer in violation of this provision shall
be invalid, and an assignment or transfer by operation of law shall be deemed to
be an invalid transfer.

     11.5  Indemnification.  The Borrower  agrees to indemnify and hold harmless
the Bank (or any  participant  in the Loan) and each of its  affiliates  and its
respective officers, directors, trustees, employees, agents, and advisors (each,
an "Indemnified  Party") from and against any and all claims,  damages,  losses,
liabilities,   costs,  and  expenses  (including   reasonable  attorneys'  fees,
disbursements  and other charges) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with
or by reason of (including in connection with any investigation,  litigation, or
proceeding and regardless of whether such  Indemnified  Party is a party thereto
or preparation of defense in connection  therewith) the Loan Documents or any of
the  transactions  contemplated  herein  or the  actual or  proposed  use of the
proceeds of the Loan, except to the extent such claim, damage, loss,  liability,
cost,  or expense  is found in a final,  non-appealable  judgment  by a court of
competent jurisdiction to have resulted solely from such Indemnified Party's bad
faith,  negligence or willful  misconduct,  or failure to comply with any of its
obligations  under  the  Loan  Documents.  In  the  case  of  an  investigation,
litigation  or other  proceeding  to which the  indemnity  in this  Section 11.5
applies,  such indemnity shall be effective  whether or not such  investigation,
litigation or proceeding  is brought by any Person.  The Borrower  agrees not to
assert any claim against any Indemnified  Party on any theory of liability,  for
special,  indirect,  consequential,  or  punitive  damages  arising  out  of  or
otherwise relating to the Loan Documents,  any of the transactions  contemplated
herein or the actual or proposed use of the proceeds of the Loan.

     11.6 Entire Agreement. This Agreement, the Note, the Loan Documents and the
other  instruments,  statements or documents  described  herein  constitute  the
entire  agreement  between  Borrower and Bank, with any and all prior agreements
and understandings being canceled and merged herein.

     11.7 Severability.  In case any one or more of the provisions  contained in
this Agreement,  the Note or any other Loan Documents  should be deemed invalid,
illegal or  unenforceable  in any  respect in any  jurisdiction,  the  validity,
legality and  enforceability of such provision or provisions will not in any way
be affected  or impaired  thereby in any other  jurisdiction  and the  validity,
legality and  enforceability  of the remaining  provisions  contained herein and
therein will not in any way be affected or impaired thereby.

     11.8  Captions.  The captions and headings of this loan  agreement  are for
convenience only and in no way define,  limit or describe the scope or intent of
any provision of this Agreement.

     11.9 Binding  Effect.  This Agreement shall be binding upon and shall inure
to the  benefit  of  the  parties  hereto  and  their  respective  heirs,  legal
representatives, successors and assigns.

     11.10 Contrary Provisions. The terms and conditions of this Agreement shall
govern and control any and all contrary provisions of the Loan Documents.

     11.11  Counterpart.   This  Agreement  may  be  executed  in  one  or  more
counterpart  and all  such  counterparts  shall  be  construed  together  as the
Agreement.

     11.12 Waiver of Jury Trial.  Borrower waives trial by jury in any action or
proceeding  to which  Borrower  and  Bank may be  parties,  arising  out of,  in
connection with or in any way pertaining to, this Agreement, the mortgage or any
of the other  Loan  Documents.  It is agreed  and  understood  that this  waiver
constitutes a waiver of trial by jury of all claims  against all parties to such
action or proceedings,  including  claims against parties who are not parties to
this note. This waiver is knowingly, willingly and voluntarily made by Borrower,
and Borrower hereby represents that no  representations  of fact or opinion have
been made by any  individual to induce this waiver of trial by jury or to in any
way modify or nullify its effect.  Borrower further represents and warrants that
it has been  represented  in the signing of this  Agreement and in the making of
this waiver by  independent  legal  counsel,  or has had the  opportunity  to be
represented by independent legal counsel selected of its own free will, and that
it has had the opportunity to discuss this waiver with counsel.



         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.

                                   PRE-PAID LEGAL SERVICES, INC.
                                   an Oklahoma corporation


                                   /s/ Randy Harp
                                   ---------------------------------------------
                                       By:  Randy Harp
                                       Title:  COO




<

                                   BANK OF OKLAHOMA, N.A.


                                   /s/ Laura Christofferson
                                   ---------------------------------------------
                                   By: Laura Christofferson
                                   Title: Senior Vice President














                                    EXHIBIT A


                                 PROMISSORY NOTE


$10,000,000.00  Oklahoma City, Oklahoma

     FOR VALUE RECEIVED,  PRE-PAID LEGAL SERVICES, INC., an Oklahoma corporation
(the "Maker") promises to pay to the order of BANK OF OKLAHOMA, N.A., a national
banking  association  ("Bank")  at the  office of Bank of  Oklahoma,  N.A.  (the
"Bank") in Oklahoma City, Oklahoma, which is located at 201 Robert S. Kerr Ave.,
or such other place as may be designated  in writing by the Bank,  the principal
sum of Ten Million and No/100  Dollars  ($10,000,000.00),  or so much thereof as
shall be  disbursed,  together  with  interest at the rate stated herein on such
outstanding principal amount, and on any past due interest payments,  payable as
follows:

          This Note is subject to the terms and  conditions of that certain Loan
     Agreement  of even  date  herewith,  between  the  undersigned  and Bank of
     Oklahoma,  N.A.  (as  amended,  the  "Loan  Agreement"),  which  terms  and
     conditions  are  hereby  incorporated  by  reference  herein  and  shall be
     controlling  over any provision of this Note to the contrary.  Reference is
     hereby made to the Loan  Agreement for a statement of the  calculation  and
     computation of the rate of interest  charged on amounts  outstanding  under
     this  Note,  for  a  statement  of  repayment  and  prepayment  rights  and
     obligations  of Maker,  for a statement of the terms and  conditions  under
     which  the due date of this  Note  may be  accelerated  and for  statements
     regarding other matters affecting this Note (including  without  limitation
     the obligations of the holder hereof to advance funds  hereunder,  exercise
     of rights and remedies,  payment of attorneys'  fees, court costs and other
     costs of  collection  and  certain  waivers  by  Maker  and  others  now or
     hereafter  obligated  for  payment  of any  sums due  hereunder).  Upon the
     occurrence  of an Event of  Default,  as that term is  defined  in the Loan
     Agreement,  and after  the  expiration  of any grace or cure  period as set
     forth in the Loan Agreement, the holder hereof (i) may declare forthwith to
     be entirely and  immediately  due and payable the principal  balance hereof
     and the  interest  accrued  hereon,  and (ii)  shall  have all  rights  and
     remedies of the Bank under the Loan Agreement and Loan Documents. This Note
     may be  prepaid in  accordance  with the terms and  provisions  of the Loan
     Agreement.  Capitalized terms not otherwise defined herein shall be defined
     as set forth in the Loan Agreement.

     This Note is the Note, as such term is defined in the Loan Agreement.

     This  Note  is to be  construed  according  to the  laws  of the  State  of
Oklahoma.

     The undersigned agrees that if, and as often as, this Note is placed in the
hands of an attorney for  collection or to defend or enforce any of the holder's
rights  hereunder,  the undersigned will pay to the holder hereof its reasonable
attorney's  fees,  together with all court costs and other expenses paid by such
holder.

     All  payments  on this Note  shall be made in legal  tender  of the  United
States of America or other  immediately  available  funds at the Bank's or other
holder's  address as shown  herein or otherwise  indicated  and any such payment
will not be deemed to have been made until it is  received by the holder of this
Note in collected funds.

     All agreements between the undersigned and the holder are expressly limited
so that in no  event  whatsoever,  whether  by  reason  of  disbursement  of the
proceeds  hereof or otherwise shall the amount of interest or finance charge (as
defined by the laws of the State of  Oklahoma)  paid or agreed to be paid by the
undersigned to the holder hereof exceed the highest lawful  contractual  rate of
interest or the maximum finance charge  permissible  under the law which a court
of competent  jurisdiction,  by final  non-appealable  order,  determines  to be
applicable  hereto.  If fulfillment of any agreement between the undersigned and
the holder hereof,  at the time the  performance of such agreement  becomes due,
involves  exceeding  such  highest  lawful  contractual  rate  or  such  maximum
permissible  finance  charge,  then the  obligation to fulfill the same shall be
reduced so such obligation does not exceed such highest lawful  contractual rate
or maximum  permissible  finance charge. If by any circumstance the holder shall
ever  receive as interest  or finance  charge an amount  which would  exceed the
amount allowed by applicable law, the amount which may be deemed excessive shall
be deemed applied to the principal of the indebtedness  evidenced hereby and not
to interest.  All interest and finance  charges paid or agreed to be paid to the
holder hereof shall be prorated, allocated and spread throughout the full period
of this Note. The terms and provisions of this paragraph shall control all other
terms and provisions  contained  herein and in any other  documents  executed in
connection  herewith.  If any provision of this Note, or the application thereof
to any party or circumstance is held invalid or unenforceable,  the remainder of
this  Note  and  the   application   of  such  provision  to  other  parties  or
circumstances  shall not be  affected  thereby,  provisions  of this Note  being
severable in any such instance.

     The makers, endorsers,  sureties,  guarantors and all other persons who may
become liable for all or any part of this obligation severally waive presentment
for  payment,  protest and notice of  nonpayment.  Said  parties  consent to any
extension of time (whether one or more) of payment hereof,  any renewal (whether
one or more)  hereof,  and any  release of any such party  liable for payment of
this note  without  notice to any such party and  without  discharging  the said
party's liability hereunder.

     The failure of the holder hereof to exercise any of the remedies or options
set forth in this Note or in any instrument  securing  payment hereof,  upon the
occurrence of one or more of the Events of Default shall not constitute a waiver
of the right to exercise the same or any other remedy at any subsequent  time in
respect  to the same or any other  Event of  Default.  Acceptance  by the holder
hereof  of any  payment  which is less  than the  total of all  amounts  due and
payable at the time of such payment  shall not  constitute a waiver of the right
to  exercise  any of the  foregoing  remedies  or options at that time or at any
subsequent  time,  or nullify  any prior  exercise of any such remedy or option,
without the express  consent of the holder  hereof,  except as and to the extent
otherwise provided by law.






     IN WITNESS WHEREOF, the undersigned has executed this instrument effective
as of June 6, 2006.


                                   PRE-PAID LEGAL SERVICES, INC.,
                                   an Oklahoma Corporation:


                                   By:
                                      ------------------------------------------
                                      Name: Randy Harp
                                      Title: COO









                                    EXHIBIT B


                         FORM OF COMPLIANCE CERTIFICATE


                               _________ __, 2006


BANK OF OKLAHOMA, N.A.
201 Robert S. Kerr Ave.
P.O. Box 24128 Oklahoma City, Oklahoma 73124
Attn:  Laura Christofferson, Senior Vice President


     Re:  Loan Agreement dated as of June 6, 2006, by and between Pre-Paid Legal
          Services, Inc. and Bank of Oklahoma, N.A (the "Loan Agreement")


Ladies and Gentlemen:


Pursuant to the applicable requirements of the Loan Agreement,  the undersigned,
as a  Responsible  Officer of Borrower,  hereby  certifies to you the  following
information  as true  and  correct  as of the  date  hereof  or for  the  period
indicated, as the case may be.


1.No  Potential  Default or Event of Default exists as of the date hereof or has
occurred since the date of our previous certification to you, if any.


2.The  following  Potential  Defaults or Events of Default  exist as of the date
hereof or have occurred since the date of our previous  certification to you, if
any,   and  the  actions  set  forth  below  are  being  taken  to  remedy  such
circumstances:


3.The  compliance of the Borrowers with the Debt Coverage Ratio, as of the close
of  business  on  ____________________________________,   is  evidenced  by  the
following:


Section 8.1: Debt Coverage Ratio
             -------------------


Required                                                          Actual
--------                                                          ------

1.10:1.00                                                      1.____:1.____


Section  8.2:Retention  Rate (12  month  average  in place for  greater  than 18
             -------------------------------------------------------------------
months)
-------


Required                                                          Actual
--------                                                          ------

70%                                                                 ___%







Section 8.3:Cancellation Rate (on contracts less than or equal to 12 months)
            ----------------------------------------------------------------


Required                                                          Actual
--------                                                          ------

45%                                                                __%


Section 8.4: Tangible Net Worth
             ------------------


Required                                                          Actual
--------                                                          ------

At least $25,000,000

4.No  material  adverse  change  in  Borrower's  ability  to repay  the Loan has
occurred since the date of the Financial Statements dated as of ---------------.



     Each  capitalized  term used but not defined  herein shall have the meaning
assigned to such term in the Loan Agreement.

                                   PRE-PAID LEGAL SERVICES, INC.
                                   an Oklahoma corporation


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














                                    EXHIBIT C


                               SECURITY AGREEMENT


THIS  SECURITY  AGREEMENT,  dated as of June 6,  2006,  made by  PRE-PAID  LEGAL
SERVICES,  INC.,  an  Oklahoma  corporation,   (the  "Pledgor"  and,  sometimes,
"Company"),  in favor of BANK OF OKLAHOMA,  N.A., a national banking association
(hereinafter referred to as "Bank".


BACKGROUND:  The Company and the Bank have entered into a Loan Agreement of even
date  herewith  (said  Agreement,  as it may  hereafter  be amended or otherwise
modified  from  time to time,  being  the "Loan  Agreement").  It is a  material
condition  precedent  to the  making  of  advances  by the Bank  under  the Loan
Agreement that the Company make the pledge and grant the assignment and security
interest contemplated by this Agreement. In the ordinary course of its business,
the Borrower  enters into legal service  contracts  with  customers  whereby the
customer  pays  periodic  membership  fees  and the  Borrower  provides  certain
specified  legal services if and to the extent the customer needs such services.
In approximately  sixteen (16) states, the Borrower's contracts are regulated as
insurance  instruments and/or pursuant to special statutory  provisions relating
to  legal  services  programs.   In  other  jurisdictions,   there  is  no  such
governmental regulation of the contracts. All of the Borrower's contracts, which
are not regulated, are referred to herein as the "Contracts".


THEREFORE,  in  order  to  induce  the  Bank to make  advances  under  the  Loan
Agreement, the Company agrees with the Bank as follows:


Section 1. Definitions.  All capitalized  terms used herein without  definitions
shall have the respective meanings provided therefor in the Loan Agreement.  The
term "State," as used herein, means the State of Oklahoma.  All terms defined in
Article 9 of the Uniform Commercial Code of the State and used herein shall have
the same definitions  herein as specified  therein.  The term  "Obligations," as
used herein, means all of the indebtedness,  obligations, and liabilities of the
Company to the Bank,  individually or collectively,  whether direct or indirect,
joint or several, absolute or contingent,  due or to become due, now existing or
hereafter arising under or in respect of the Loan Agreement,  and any promissory
notes or other instruments or agreements executed and delivered pursuant thereto
or in connection  therewith or this Agreement,  and the term "Event of Default,"
as used  herein,  means the  failure of the Company to pay or perform any of the
Obligations as and when due to be paid or performed  under the terms of the Loan
Agreement,  or the occurrence of any Default or Event of Default, as those terms
are defined in the Loan Agreement.


Section 2. Grant of Security Interest. The Company hereby grants to the Bank, to
secure the payment and performance in full of all of the Obligations, a security
interest in and so pledges and assigns to the Bank all right, title and interest
of Borrower in and to the Contracts,  whether now owned or hereafter acquired or
arising,  and all  proceeds  and  products  thereof  and all  rights to  receive
payments  from members  and/or to receive any other  payments or revenues of any
nature whatsoever pursuant to the terms of the Contracts or otherwise associated
with  the  Contracts  (all  of  the  foregoing  being  hereinafter   called  the
"Collateral") and proceeds of the Collateral.


Section 3.  Authorization  to File  Financing  Statements.  The  Company  hereby
irrevocably authorizes the Bank at any time and from time to time to file in any
Uniform  Commercial  Code  jurisdiction  any initial  financing  statements  and
amendments   thereto  that  describe  the   Collateral  and  contain  any  other
information  required by Article 9 of the Uniform  Commercial  Code of the State
for the  sufficiency or filing office  acceptance of any financing  statement or
amendment,  including  whether  the  Company  is an  organization,  the  type of
organization and any organization  identification  number issued to the Company.
The Company  agrees to furnish any such  information  to the Bank  promptly upon
request.  The Company also ratifies its authorization for the Bank to have filed
in  any  Uniform   Commercial  Code  jurisdiction  any  like  initial  financing
statements or amendments thereto if filed prior to the date hereof.


Section 4. Representations and Warranties Concerning Company's Legal Status. The
Company has previously delivered to the Bank a certificate signed by the Company
and  entitled  "Perfection  Certificate"  (the  "Perfection  Certificate").  The
Company represents and warrants to the Bank as follows:  (a) the Company's exact
legal name is that indicated on the Perfection  Certificate and on the signature
page hereof, (b) the Company is an organization of the type and organized in the
jurisdiction  set  forth  in the  Perfection  Certificate,  (C)  the  Perfection
Certificate  accurately sets forth the Company's  organizational  identification
number or  accurately  states  that the  Company  has none,  (d) the  Perfection
Certificate  accurately  sets forth the Company's  place of business or, if more
than one, its chief executive office as well as the Company's mailing address if
different, and (e) all other information set forth on the Perfection Certificate
pertaining to the Company is accurate and complete.


Section 5. Covenants  Concerning  Company's Legal Status.  The Company covenants
with the Bank as follows:  (a) without  providing at least 30 days prior written
notice to the Bank,  the Company will not change its name, its place of business
or, if more  than  one,  chief  executive  office,  or its  mailing  address  or
organizational  identification number if it has one, (b) if the Company does not
have an organizational  identification number and later obtains one, the Company
shall forthwith notify the Bank of such  organizational  identification  number,
and (c) the Company will not change its type of  organization,  jurisdiction  of
organization, or other legal structure.


Section 6.  Representations  and  Warranties  Concerning  Collateral,  Etc.  The
Company further represents and warrants to the Bank as follows:  (a) the Company
is the owner of the Collateral,  free from any adverse lien,  security interest,
or other encumbrance, except for the security interest created by this Agreement
and the  security  interest  in favor of the  Bank as  Agent in  regard  to that
certain  $31,500,000  loan to the  Borrower  from  various  lenders  dated as of
September 19, 2003,, (b) all lists and other supporting  documentation furnished
to the Bank with  respect to the  Contracts  is true and correct in all material
respects;  and (c) all other information set forth on the Perfection Certificate
pertaining to the Collateral is accurate and complete.


Section 7. Covenants Concerning  Collateral,  Etc. The Company further covenants
with the Bank as follows:  (a) except for the security  interest  herein granted
and the  security  interest  in favor of the  Bank as  Agent in  regard  to that
certain  $31,500,000  loan to the  Borrower  from  various  lenders  dated as of
September 19, 2003, the Company shall be the owner of the  Collateral  free from
any lien, security interest, or other encumbrance,  and the Company shall defend
the same against all claims and demands of all persons at any time  claiming the
same or any  interests  therein  adverse to the Bank,  (b) the Company shall not
pledge,  mortgage,  or  create,  or suffer to exist a security  interest  in the
Collateral in favor of any person other than the Bank and the security  interest
in favor of the Bank as Agent in regard to that certain  $31,500,000 loan to the
Borrower from various  lenders  dated as of September 19, 2003,  (c) the Company
will fully perform all of its obligations  under the Contracts,  (d) as provided
in the Loan Agreement, the Company will permit the Bank to inspect the books and
records associated with the Collateral at any reasonable time, wherever located,
(e) the Company will pay promptly when due all taxes, assessments,  governmental
charges,  and levies upon the  Collateral  or incurred  in  connection  with the
Contracts or incurred in connection  with this  Agreement,  (f) the Company will
continue to operate its business in compliance with all applicable provisions of
the  federal  Fair Labor  Standards  Act, as  amended,  and with all  applicable
provisions of federal,  state,  and local statutes and  ordinances,  and (g) the
Company  will  not sell or  otherwise  dispose,  or  offer to sell or  otherwise
dispose, of the Collateral or any interest therein.


     7.1Expenses  Incurred by Bank.  In its  discretion,  the Bank may discharge
taxes  and  other  encumbrances  at any  time  levied  or  placed  on any of the
Collateral,  and pay any  necessary  filing fees or other  amounts  necessary to
preserve  the  value  associated  with the  Contracts.  The  Company  agrees  to
reimburse  the Bank on demand  for any and all  expenditures  so made.  The Bank
shall have no obligation to the Company to make any such expenditures, nor shall
the making thereof relieve the Company of any default.


     7.2Bank's   Obligations  and  Duties.   Anything  herein  to  the  contrary
notwithstanding,  the Company  shall remain liable under all Contracts and shall
perform all  obligations to be observed or performed by the Company  thereunder.
The Bank shall not have any  obligation or liability  under any such contract or
agreement  by reason of or arising out of this  Agreement  or the receipt by the
Bank of any  payment  relating to any of the  Collateral,  nor shall the Bank be
obligated in any manner to perform any of the  obligations  of the Company under
or pursuant to any such contract or agreement,  to make inquiry as to the nature
or sufficiency of any payment  received by the Bank in respect of the Collateral
or as to the sufficiency of any performance by any party under any such contract
or  agreement,  to present or file any claim,  to take any action to enforce any
performance,  or to  collect  the  payment  of any  amounts  which may have been
assigned  to the Bank or to which the Bank may be entitled at any time or times.
The Bank's sole duty with respect to the  custody,  safe  keeping,  and physical
preservation  of the  Collateral in its  possession,  shall be to deal with such
Collateral  in the same manner as the Bank deals with  similar  property for its
own account.


Section 8. Contracts and Deposits. The Bank may at any time following and during
the  continuance  of an Event of Default,  at the option of the Bank transfer to
the Bank the  Collateral,  receive any income  thereon,  and hold such income as
additional  Collateral  or  apply  it to the  Obligations.  Whether  or not  any
Obligations  are due, the Bank may  following and during the  continuance  of an
Event of Default demand, sue for, collect,  or make any settlement or compromise
which it deems  desirable  with  respect to the  Collateral.  Regardless  of the
adequacy of Collateral or any other security for the  Obligations,  any deposits
or other sums at any time credited by or due from the Bank to the Company may at
any time be applied to or set off against any of the Obligations.


Section 9. Control of  Collateral  Proceeds.  If an Event of Default  shall have
occurred and be continuing,  the Company shall, at the request of the Bank, take
any action  requested by the Bank  required by the  Agreement to ensure that the
Bank obtains the full and immediate control of the Collateral.  After the making
of such a request or the giving of any such notification, the Company shall hold
any  proceeds  associated  with the  Contracts  as trustee for the Bank  without
commingling  the same with other  funds of the  Company  and shall turn the same
over to the Bank, in the identical  form  received,  together with any necessary
endorsements or assignments.  The Bank shall apply the proceeds  associated with
the Contracts to the Obligations,  such proceeds to be immediately entered after
final payment in cash or other  immediately  available funds of the items giving
rise to them.


Section 10. Power of Attorney.


     10.1  Appointment  and  Powers  of Bank.  The  Company  hereby  irrevocably
constitutes  and appoints the Bank and any officer or agent  thereof,  with full
power of  substitution  as its  true  and  lawful  attorneys-in-fact  with  full
irrevocable  power and authority in the place and stead of the Company or in the
Bank's own name for the purpose of carrying out the terms of this Agreement,  to
take any and all  appropriate  action and to execute any and all  documents  and
instruments  that may be necessary or  desirable to  accomplish  the purposes of
this Agreement  and,  without  limiting the generality of the foregoing,  hereby
gives said  attorneys  the power and right,  on behalf of the  Company,  without
notice to or assent by the Company, to do the following:


          (a)upon  the  occurrence  and  during the  continuance  of an Event of
     Default,  to sell,  transfer,  pledge,  make any agreement with respect to,
     orotherwise deal with any of the Collateral in such manner as is consistent
     with the Uniform  Commercial Code of the State of Oklahoma and as fully and
     completely  as though  the Bank were the  absolute  owner  thereof  for all
     purposes,  and to do at the Company's expense, at any time, or from time to
     time,  all acts and  things  which the Bank  deems  necessary  to  protect,
     preserve,  or realize upon the Collateral and the Bank's security  interest
     therein, in order to effect the intent of this Agreement,  all as fully and
     effectively as the Company might do; and


          (b)to the extent that the Company's  authorization  given in Section 3
     is  not  sufficient,   to  file  such  financing  statements  with  respect
     hereto,with  or without the  Company's  signature,  or a photocopy  of this
     Agreement in substitution for a financing  statement,  as the Bank may deem
     appropriate and to execute in the Company's name such financing  statements
     and amendments  thereto and  continuation  statements which may require the
     Company's signature.


     10.2  Ratification by Company.  To the extent permitted by law, the Company
hereby ratifies all that said attorneys shall lawfully do or cause to be done by
virtue  hereof.  This power of attorney is a power  coupled with an interest and
shall be irrevocable.


     10.3 No Duty on Bank. The powers conferred on the Bank hereunder are solely
to protect the interests of the Bank in the  Collateral and shall not impose any
duty upon it to exercise any such powers. The Bank shall be accountable only for
the  amounts  that it  actually  receives  as a result of the  exercise  of such
powers, and neither it nor any of its officers,  directors,  employees or agents
shall be  responsible  to the Company for any act or failure to act,  except for
Bank's own gross negligence or willful misconduct.


Section  11.  Remedies.  If an Event  of  Default  shall  have  occurred  and be
continuing,  the Bank may, without notice to or demand upon the Company, declare
this  Agreement  to be in  default,  and the Bank shall  thereafter  have in any
jurisdiction  in which  enforcement  hereof is sought,  in addition to all other
rights and  remedies,  the  rights and  remedies  of a secured  party  under the
Uniform Commercial Code of the State of Oklahoma. The Bank may in its discretion
require  the  Company  to  assemble  all or any part of the  Collateral  at such
location or locations  within the  jurisdiction(s)  of the  Company's  principal
office(s)  or at such  other  locations  as the Bank may  reasonably  designate.
Unless the Collateral is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market, the Bank shall give to the
Company at least five business  days prior written  notice of the time and place
of any public sale of  Collateral or of the time after which any private sale or
any other intended  disposition  is to be made. The Company hereby  acknowledges
that five  business  days prior  written  notice of such sale or sales  shall be
reasonable  notice.  In addition,  the Company waives any and all rights that it
may have to a  judicial  hearing in  advance  of the  enforcement  of any of the
Bank's rights hereunder, including, without limitation, their right following an
Event of Default to take immediate  possession of the Collateral and to exercise
its rights with respect thereto.


Section 12. Standards for Exercising Remedies. To the extent that applicable law
imposes  duties on the Bank to exercise  remedies in a  commercially  reasonable
manner,  the  Company  acknowledges  and  agrees  that  it is  not  commercially
unreasonable  for the  Bank  (a) to fail to  incur  expenses  reasonably  deemed
significant by the Bank to prepare  Collateral  for  disposition or otherwise to
complete raw material or work in process into finished  goods or other  finished
products for disposition,  (b) to fail to obtain third-party consents for access
to  Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain  governmental  or  third-party  consents for the collection or
disposition  of  Collateral  to be  collected  or  disposed  of,  (c) to fail to
exercise  collection remedies against account debtors or other persons obligated
on  Collateral  or to remove  liens or  encumbrances  on or any  adverse  claims
against Collateral,  (d) to exercise collection remedies against account debtors
and other  persons  obligated  on  Collateral  directly  or  through  the use of
collection  agencies  and  other  collection   specialists,   (e)  to  advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized  nature,  (f) to contact other
persons,  whether or not in the same business as the Company, for expressions of
interest in acquiring all or any portion of the  Collateral,  (9) to hire one or
more  professional  auctioneers  to assist  in the  disposition  of  Collateral,
whether or not the  collateral  is of a  specialized  nature,  (h) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the  Collateral or that have the reasonable  capability of
doing so, or that match  buyers and sellers of assets,  (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
(k) to purchase  insurance  or credit  enhancements  to insure the Bank  against
risks of loss,  collection,  or  disposition  of Collateral or to provide to the
Bank a guaranteed  return from the collection or  disposition of Collateral,  or
(I) to the extent  deemed  appropriate  by the Bank,  to obtain the  services of
other brokers,  investment  bankers,  consultants,  and other  professionals  to
assist the Bank in the collection or disposition of any of the  Collateral.  The
Company  acknowledges  that  the  purpose  of  this  Section  12 is  to  provide
nonexhaustive  indications of what actions or omissions by the Bank would not be
commercially  unreasonable  in the  Bank's  exercise  of  remedies  against  the
Collateral  and that other  actions or omissions by the Bank shall not be deemed
commercially  unreasonable  solely on  account  of not being  indicated  in this
Section 12. Without  limitation  upon the foregoing,  nothing  contained in this
Section 12 shall be  construed  to grant any rights to the  Company or to impose
any  duties on the Bank that  would not have been  granted  or  imposed  by this
Agreement or by applicable law in the absence of this Section 12.


Section 13. No Waiver by Bank,  Etc. The Bank shall not be deemed to have waived
any of its rights upon or under the  Obligations or the  Collateral  unless such
waiver  shall be in writing and signed by the Bank.  No delay or omission on the
part of the Bank in exercising any right shall operate as a waiver of such right
or any other right. A waiver on any one occasion shall not be construed as a bar
to or waiver of any right on any future occasion. All rights and remedies of the
Bank with respect to the Obligations or the Collateral, whether evidenced hereby
or by any other  instrument or papers,  shall be cumulative and may be exercised
singularly, alternatively, successively, or concurrently at such time or at such
times as the Bank deems expedient.


Section 14.  Marshalling.  The Bank shall not be required to marshal any present
or future collateral  security  (including but not limited to this Agreement and
the Collateral)  for, or other  assurances of payment of, the Obligations or any
of them or to resort to such collateral  security or other assurances of payment
in any particular  order, and all of its rights hereunder and in respect of such
collateral  security and other  assurances of payment shall be cumulative and in
addition to all other rights, however existing or arising. To the extent that it
lawfully may, the Company hereby agrees that it will not invoke any law relating
to the  marshalling  of  collateral  which  might  cause  delay in or impede the
enforcement  of the  Bank's  rights  under  this  Agreement  or under  any other
instrument  creating or evidencing any of the  Obligations or under which any of
the  Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise  assured,  and, to the extent that it lawfully may,
the Company hereby irrevocably waives the benefits of all such laws.


Section 15.  Proceeds of  Dispositions;  Expenses.  The Company shall pay to the
Bank on demand any and all expenses,  including  reasonable  attorneys' fees and
disbursements,  incurred  or paid  by the  Bank in  protecting,  preserving,  or
enforcing the Bank's rights under or in respect of any of the Obligations or any
of the  Collateral.  After  deducting all of said  expenses,  the residue of any
proceeds of collection or sale of the  Obligations or Collateral  shall,  to the
extent  actually  received in cash, be applied to the payment of the Obligations
in such  order  or  preference  as the Bank may  determine  or in such  order or
preference as is provided in the Loan Agreement,  proper allowance and provision
being  made  for any  Obligations  not then  due.  Upon the  final  payment  and
satisfaction  in full of all of the  Obligations  and after  making any payments
required  by the  Uniform  Commercial  Code of the State,  any  excess  shall be
returned to the Company,  and the Company shall remain liable for any deficiency
in the payment of the Obligations.


Section 16.  Overdue  Amounts.  Until  paid,  all amounts due and payable by the
Company  hereunder  shall be a debt  secured by the  Collateral  and shall bear,
whether before or after  judgment,  interest at the rate of interest for overdue
principal set forth in the Loan Agreement.


Section 17.  Governing  Law;  Consent to  Jurisdiction.  This  Agreement will be
construed  in  accordance  with the laws of the State of  Oklahoma.  The Company
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the  State of  Oklahoma  or any  federal  court  sitting  therein  and
consents  to the  nonexclusive  jurisdiction  of such  court and to  service  of
process  in any such suit being  made upon the  Company  by mail at the  address
specified in the Loan Agreement. The Company hereby waives any objection that it
may now or  hereafter  have to the venue of any such  suit or any such  court or
that such suit is brought in an inconvenient court.


Section 18. Waiver of Jury Trial.  THE COMPANY  WAIVES ITS RIGHT TO A JURY TRIAL
WITH  RESPECT TO ANY ACTION OR CLAIM  ARISING OUT OF ANY  DISPUTE IN  CONNECTION
WITH THIS AGREEMENT,  ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS.  Except as prohibited by law, the Company waives
any right which it may have to claim or recover in any litigation referred to in
the  preceding  sentence  any special,  exemplary,  punitive,  or  consequential
damages or any damages other than, or in addition to, actual damages.


Section 19.  Miscellaneous.  The headings of each section of this  Agreement are
for convenience only and shall not define or limit the provisions thereof.  This
Agreement  and all rights and  obligations  hereunder  shall be binding upon the
Company  and its  respective  successors  and  assigns,  and shall  inure to the
benefit  of the  Bank  and  its  successors  and  assigns.  If any  term of this
Agreement shall be held to be invalid,  illegal, or unenforceable,  the validity
of all  other  terms  hereof  shall  in no way be  affected  thereby,  and  this
Agreement shall be construed and be enforceable as if such invalid,  illegal, or
unenforceable term had not been included herein.







DATED as of the date shown above.


         DEBTOR:                   PRE-PAID LEGAL SERVICES, INC.,
                                   an Oklahoma corporation


                                   ---------------------------------------------
                                   By:  Randy Harp
                                   Title:  Chief Operating Officer


         BANK:                     BANK OF OKLAHOMA, N.A.,
                                   a national banking association


                                   ---------------------------------------------
                                   By:  Laura Christofferson
                                   Title: Senior Vice President










<



                                    EXHIBIT D


                               GUARANTY AGREEMENT


     FOR VALUE  RECEIVED,  and in  consideration  of BANK OF  OKLAHOMA,  N.A., a
national  banking  association  (hereinafter  referred to as "Bank")  advance of
funds to PRE-PAID  LEGAL  SERVICES,  INC., an Oklahoma  corporation  ("Debtor"),
which  owns  100%  of  the  stock  of   ________________________,   an  Oklahoma
corporation (referred to herein as "Guarantor") hereby guarantees absolutely and
unconditionally  the full and prompt payment when due,  whether at maturity,  by
acceleration  or otherwise,  and at any and all times  thereafter,  of: (i) that
certain Note executed by Debtor in favor of the Bank in the aggregate  principal
amount of  $10,000,000  dated June 6,  2006,  plus (ii) all  accrued  and unpaid
interest  thereon  and all costs and  expenses,  including,  but not  limited to
attorneys' fees, court costs and other legal expenses,  paid or incurred by Bank
in collecting or endeavoring to collect such  indebtedness  or any party thereof
and in enforcing this guaranty; plus (iii) all other obligations set forth in or
described in that certain Loan  Agreement of even date herewith  between  Debtor
and Bank (all such indebtedness,  liabilities and obligations including the debt
evidenced  by any  promissory  note,  together  with all  extensions,  renewals,
replacements,  rearrangements,  changes in form and modifications thereof, being
hereinafter  collectively  called  the  "Indebtedness").  Without  limiting  the
generality of the foregoing, Guarantor's liability hereunder shall extend to and
include all post-petition  interest,  expenses, and other duties and liabilities
of Debtor  described  above  which would be owed by Debtor but for the fact that
they are  unenforceable  or not  allowable due to the existence of a bankruptcy,
reorganization, or similar proceeding involving Debtor.

1. Amount.  Notwithstanding any provision herein to the contrary,  the liability
of the Guarantor hereunder shall be unlimited.


2. Statement of Consideration.  Guarantor stipulates that Guarantor will receive
substantial and valuable consideration and benefits from the extension of credit
by the Bank to Debtor and that it is in the  Guarantor's  best interest to enter
into this guaranty.


3.  Bank's  Remedies.  In the event of (i) an Event of  Default  as that term is
defined in that certain Loan  Agreement  between Debtor and Bank dated as of the
date hereof (the "Loan Agreement"),  or (ii) a breach of any of the covenants or
agreements  of Guarantor  contained  herein,  all  Indebtedness  shall,  for the
purposes of this Guaranty Agreement,  be deemed, at the election of the Bank (as
such term is defined in the Agreement), to be immediately due and payable.


4. Continuing  Nature of Guaranty.  Guarantor  further agrees that this guaranty
shall continue to be effective or be  reinstated,  as the case may be, if at any
time payment,  or any part thereof,  of the Indebtedness to Bank is rescinded or
must  otherwise  be  returned  by  Bank  upon  the  insolvency,  bankruptcy  and
reorganization  of the Debtor or  otherwise,  all as though such payment to Bank
had not been made.


5. Guarantor's  Authorization to Bank. The Bank may at any time and from time to
time  without  notice to  Guarantor,  take any or all of the  following  actions
without affecting or impairing the liability of Guarantor on this guaranty:  (i)
renew,  extend,  restructure,  modify,  rearrange  or  change  the  form  of the
Indebtedness (including,  but not limited to, a decrease in the rate of interest
due on the  Indebtedness)  or the time of payment  of all or any  portion of the
Indebtedness,  (ii) sell,  exchange,  accept,  substitute,  or realize  upon any
security or collateral for the  Indebtedness,  (iii) accept other  guarantors or
endorsers,  and (iv) release,  compromise or settle with any person primarily or
secondarily  liable on the  Indebtedness,  following a reasonable  determination
that such  person is  unable  to  satisfy  his,  her,  or its  liability  on the
Indebtedness (including any maker, co-maker, endorser or guarantor). There shall
be no  obligation  on the part of the  Bank,  at any  time,  to seek or obtain a
deficiency  judgment against Debtor.  Guarantor expressly and voluntarily waives
and relinquishes all set offs, rights and remedies accorded by applicable law to
guarantors,  including without  limitation,  any and all suretyship defenses and
offsets,  set offs, remedies or defenses accorded guarantors by law. Nothing set
forth in this  Guaranty  Agreement  shall be  construed  to prevent or  diminish
Guarantor's  right or  ability  to  purchase  the Note,  which  option is hereby
granted to Guarantor,  at a price equal to all principal,  interest and fees due
and owing  pursuant to the Note (as such term is defined in the Loan  Agreement)
upon Debtor's  default and failure to cure, if any ability to cure is available,
and  Bank's  exercise  of its rights  against  Guarantor  pursuant  to the terms
hereof.


6.  Relinquishment  of Right of Offset. If the Bank elects to foreclose any lien
in its favor,  (i) the Bank is  authorized  to  purchase  all or any  portion of
collateral  covered  by such  lien,  and (ii) the  amount  of the sale  proceeds
received by the Bank, to be applied against the Indebtedness shall be the actual
net  proceeds  received  from  a  commercially   reasonable  sale  of  any  such
collateral.  For  good  and  valuable  consideration,  Guarantor  hereby  fully,
voluntarily and expressly waives and relinquishes any statutory,  contractual or
other  right to set off or offset the fair  market  value of any  collateral  or
security for the Indebtedness against Guarantor's  liability hereunder,  so long
as any disposition thereof is accomplished in a commercially reasonable manner.


7.  Application  of  Payments of  Indebtedness.  Any and all  payments  upon the
Indebtedness  made by the Debtor, or by Guarantor,  or by any other person,  and
the proceeds of any and all security for any of the  Indebtedness may be applied
by the Bank upon such of the items of the  Indebtedness,  and in such order,  as
Bank may determine.


8. Notice.  It is also  understood and  reiterated  that the Bank has no duty to
collect from any other guarantor or to proceed  against the collateral  securing
the  Indebtedness  prior to making  demand  upon  Guarantor  for  payment of the
Indebtedness up to the amount set forth in paragraph 1 above.


9. Guarantor Waivers.


     (a) Guarantor waives notice of acceptance hereof by the Bank.


     (b) Any payment or payments  made by Guarantor  hereunder  notwithstanding,
the  Guarantor  will not  assert  or  exercise  any right of the Bank or of such
Guarantor  against  Debtor to  recover  the amount of any  payment  made by such
Guarantor  to  the  Bank  by way of  subrogation,  reimbursement,  contribution,
indemnity  or otherwise  arising by contract or operation of law, and  Guarantor
shall not have any right of recourse to or any claim against  assets or property
of Debtor, whether or not the obligations of Debtor have been satisfied,  all of
such rights being herein expressly  waived by Guarantor.  The provisions of this
paragraph shall survive the termination of this Guaranty,  and any  satisfaction
and discharge of Debtor by virtue of any payment, court order or applicable law.


     (c) The provisions of Section 9(b)  notwithstanding,  Guarantor  shall have
and be entitled to all rights of  subrogation  otherwise  provided by applicable
law in respect of any payment  Guarantor  may make or be obligated to make under
this  Guaranty,  and to assert and enforce the same,  in each case on and after,
but at no time prior to, the date (the  "Subrogation  Trigger Date") which is 91
days after the date on which all  obligations  under the underlying  instruments
shall  have been paid or  performed  in full,  if and only if the  existence  of
Guarantor's  rights under this Section 9(c) would not make  Guarantor a creditor
(as defined in the Bankruptcy Reform Act of 1978, as amended, 11 U.S.C.  Section
101 et seq., and the regulations  adopted and promulgated  pursuant  thereto) of
Debtor  in any  insolvency  bankruptcy,  reorganization  or  similar  proceeding
commenced on or prior to the Subrogation Trigger Date.


10.  Guarantor's  Representation  and  Warranties.  This guaranty shall bind the
heirs, successors and assigns of Guarantor and inure the benefit of Bank and its
successors  and assigns.  This guaranty is deemed  executed and delivered in the
City of  Oklahoma  City,  State of  Oklahoma  and shall be  governed  by and was
contracted  for in the city set forth above,  and this guaranty is hereby deemed
to have  been  given  when  received  and  accepted  by the  Bank in such  city.
Guarantor  hereby waives all objections to venue and consents and submits to the
jurisdiction of any state or federal court sitting in such city or the county in
which such city is  located,  or in any state or county in which  real  property
security any  promissory  note executed by Debtor is located in connection  with
any action  instituted by the Bank by reason of or arising out of the execution,
delivery  or  performance  of any  promissory  note  executed  by  Debtor or the
collection of any of the Indebtedness or this guaranty.  Wherever  possible each
provision  of this  guaranty  shall be  interpreted  in such a  manner  as to be
effective and valid under  applicable law, but if any provision of this guaranty
shall be  prohibited  by or invalid  under  such law,  such  provision  shall be
ineffective  to  the  extent  of  such   prohibition   or  invalidity,   without
invalidating the remainder of such provision or the remaining provisions of this
guaranty. If Guarantor is a corporation,  this guaranty has been duly authorized
to be executed,  delivered and performed by the undersigned  corporate  officers
pursuant to all  necessary  corporate  action of the board of  directors  of the
Guarantor.


11.  Waivers  and  Settlements.  All rights of the Bank are  cumulative  and not
alternative to other rights and may be selectively and successively  enforced by
the Bank as it may elect or  determine  in the sole  discretion  of the Bank and
such action(s) shall not be deemed a waiver or relinquishment of any other right
or remedy  held by the Bank.  Subject to the  requirements  of Section 5 of this
guaranty,  the Bank may settle with any one or more parties for such sum or sums
as it may  see fit and  release  any of such  other  parties  from  all  further
liability to the Bank for such  Indebtedness  without impairing the right of the
Bank to demand and collect the balance of such  Indebtedness  from others not so
expressly released.


12. Further Representations.  Guarantor expressly represents and warrants to the
Bank that at the time of the execution  and delivery  hereof to the Bank nothing
exists to impair  the  effectiveness  and the  immediate  taking  effect of this
guaranty  as the sole and only  agreement  between  Guarantor  and the Bank with
respect to guaranteeing payment of the Indebtedness.


13. Entire  Agreement.  THE WHOLE OF THIS GUARANTY IS FULLY SET FORTH HEREIN AND
CONSTITUTES THE ENTIRE AGREEMENT OF THIS GUARANTOR AND BANK WITH RESPECT TO THIS
GUARANTY, ALL DISCUSSIONS AND NEGOTIATIONS ARE MERGED INTO THIS AGREEMENT.  BANK
HAS MADE NO ORAL  AGREEMENTS,  PROMISES,  OR "SIDE DEALS" WITH  GUARANTOR.  This
guaranty may only be modified by a written  agreement by Bank and Guarantor.  No
officer,  agent or employee of Bank has authority to modify this guaranty orally
or to waive the provisions of this paragraph.


14.  Successors  and Assigns.  This  guaranty  shall inure to the benefit of the
Bank's successors and assigns and shall be binding upon the respective  personal
representatives,  heirs,  successors and assigns of Guarantor and the Bank. This
guaranty is effective  immediately  upon execution.  Guarantor hereby waives and
irrevocably  releases  any claim  that the  delivery  or  effectiveness  of this
guaranty is conditional in any manner whatsoever.


15.  Headings.  The  headings of the  sections of this  Guaranty  Agreement  are
inserted  for  convenience  only and shall not be  deemed to  constitute  a part
hereof.


16. Limitation On Obligations.


     (a) The  provisions  of this Guaranty are  severable,  and in any action or
proceeding  involving any state corporate law, or any state,  federal or foreign
bankruptcy,  insolvency,  reorganization  or other law  affecting  the rights of
creditors  generally,  if the  obligations of any Guarantor  under this guaranty
would otherwise be held or determined to be avoidable,  invalid or unenforceable
on account  of the amount of such  Guarantor's  liability  under this  guaranty,
then,  notwithstanding any other provision of this guaranty to the contrary, the
amount of such liability shall,  without any further action by such Guarantor or
the Bank,  be  automatically  limited and reduced to the highest  amount that is
valid and  enforceable as determined in such action or proceeding  (such highest
amount determined hereunder being the relevant Guarantor's "Maximum Liability").
This  Section  16(a) with respect to the Maximum  Liability of any  Guarantor is
intended  solely to preserve  the rights of the Bank to the  maximum  extent not
subject to avoidance  under  applicable  law, and neither any  Guarantor nor any
other person or entity  shall have any right or claim under this  Section  16(a)
with respect to the Maximum  Liability,  except to the extent  necessary so that
the obligations of any Guarantor  hereunder shall not be rendered voidable under
applicable law.


     (b)The Guarantor agrees that the Indebtedness may at any time and from time
to time exceed the Maximum Liability of Guarantor,  and may exceed the aggregate
Maximum  Liability of any other  guarantors,  without impairing this guaranty or
affecting  the rights and remedies of the Bank.  Nothing in this  Section  16(b)
shall be construed to increase any Guarantor's  obligations hereunder beyond its
Maximum Liability.


17. Date. This guaranty is made and entered into effective as of June 6, 2006.





GUARANTOR SIGNATURE:


----------------------------------,
an Oklahoma corporation


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











                               SECURITY AGREEMENT


THIS  SECURITY  AGREEMENT,  dated as of June 6,  2006,  made by  PRE-PAID  LEGAL
SERVICES,  INC.,  an  Oklahoma  corporation,   (the  "Pledgor"  and,  sometimes,
"Company"),  in favor of BANK OF OKLAHOMA,  N.A., a national banking association
(hereinafter referred to as "Bank".


BACKGROUND:  The Company and the Bank have entered into a Loan Agreement of even
date  herewith  (said  Agreement,  as it may  hereafter  be amended or otherwise
modified  from  time to time,  being  the "Loan  Agreement").  It is a  material
condition  precedent  to the  making  of  advances  by the Bank  under  the Loan
Agreement that the Company make the pledge and grant the assignment and security
interest contemplated by this Agreement. In the ordinary course of its business,
the Borrower  enters into legal service  contracts  with  customers  whereby the
customer  pays  periodic  membership  fees  and the  Borrower  provides  certain
specified  legal services if and to the extent the customer needs such services.
In approximately  sixteen (16) states, the Borrower's contracts are regulated as
insurance  instruments and/or pursuant to special statutory  provisions relating
to  legal  services  programs.   In  other  jurisdictions,   there  is  no  such
governmental regulation of the contracts. All of the Borrower's contracts, which
are not regulated, are referred to herein as the "Contracts".


THEREFORE,  in  order  to  induce  the  Bank to make  advances  under  the  Loan
Agreement, the Company agrees with the Bank as follows:


Section 1. Definitions.  All capitalized  terms used herein without  definitions
shall have the respective meanings provided therefor in the Loan Agreement.  The
term "State," as used herein, means the State of Oklahoma.  All terms defined in
Article 9 of the Uniform Commercial Code of the State and used herein shall have
the same definitions  herein as specified  therein.  The term  "Obligations," as
used herein, means all of the indebtedness,  obligations, and liabilities of the
Company to the Bank,  individually or collectively,  whether direct or indirect,
joint or several, absolute or contingent,  due or to become due, now existing or
hereafter arising under or in respect of the Loan Agreement,  and any promissory
notes or other instruments or agreements executed and delivered pursuant thereto
or in connection  therewith or this Agreement,  and the term "Event of Default,"
as used  herein,  means the  failure of the Company to pay or perform any of the
Obligations as and when due to be paid or performed  under the terms of the Loan
Agreement,  or the occurrence of any Default or Event of Default, as those terms
are defined in the Loan Agreement.


Section 2. Grant of Security Interest. The Company hereby grants to the Bank, to
secure the payment and performance in full of all of the Obligations, a security
interest in and so pledges and assigns to the Bank all right, title and interest
of Borrower in and to the Contracts,  whether now owned or hereafter acquired or
arising,  and all  proceeds  and  products  thereof  and all  rights to  receive
payments  from members  and/or to receive any other  payments or revenues of any
nature whatsoever pursuant to the terms of the Contracts or otherwise associated
with  the  Contracts  (all  of  the  foregoing  being  hereinafter   called  the
"Collateral") and proceeds of the Collateral.


Section 3.  Authorization  to File  Financing  Statements.  The  Company  hereby
irrevocably authorizes the Bank at any time and from time to time to file in any
Uniform  Commercial  Code  jurisdiction  any initial  financing  statements  and
amendments   thereto  that  describe  the   Collateral  and  contain  any  other
information  required by Article 9 of the Uniform  Commercial  Code of the State
for the  sufficiency or filing office  acceptance of any financing  statement or
amendment,  including  whether  the  Company  is an  organization,  the  type of
organization and any organization  identification  number issued to the Company.
The Company  agrees to furnish any such  information  to the Bank  promptly upon
request.  The Company also ratifies its authorization for the Bank to have filed
in  any  Uniform   Commercial  Code  jurisdiction  any  like  initial  financing
statements or amendments thereto if filed prior to the date hereof.


Section 4. Representations and Warranties Concerning Company's Legal Status. The
Company has previously delivered to the Bank a certificate signed by the Company
and  entitled  "Perfection  Certificate"  (the  "Perfection  Certificate").  The
Company represents and warrants to the Bank as follows:  (a) the Company's exact
legal name is that indicated on the Perfection  Certificate and on the signature
page hereof, (b) the Company is an organization of the type and organized in the
jurisdiction  set  forth  in the  Perfection  Certificate,  (C)  the  Perfection
Certificate  accurately sets forth the Company's  organizational  identification
number or  accurately  states  that the  Company  has none,  (d) the  Perfection
Certificate  accurately  sets forth the Company's  place of business or, if more
than one, its chief executive office as well as the Company's mailing address if
different, and (e) all other information set forth on the Perfection Certificate
pertaining to the Company is accurate and complete.


Section 5. Covenants  Concerning  Company's Legal Status.  The Company covenants
with the Bank as follows:  (a) without  providing at least 30 days prior written
notice to the Bank,  the Company will not change its name, its place of business
or, if more  than  one,  chief  executive  office,  or its  mailing  address  or
organizational  identification number if it has one, (b) if the Company does not
have an organizational  identification number and later obtains one, the Company
shall forthwith notify the Bank of such  organizational  identification  number,
and (c) the Company will not change its type of  organization,  jurisdiction  of
organization, or other legal structure.


Section 6.  Representations  and  Warranties  Concerning  Collateral,  Etc.  The
Company further represents and warrants to the Bank as follows:  (a) the Company
is the owner of the Collateral,  free from any adverse lien,  security interest,
or other encumbrance, except for the security interest created by this Agreement
and the  security  interest  in favor of the  Bank as  Agent in  regard  to that
certain  $31,500,000  loan to the  Borrower  from  various  lenders  dated as of
September 19, 2003,, (b) all lists and other supporting  documentation furnished
to the Bank with  respect to the  Contracts  is true and correct in all material
respects;  and (c) all other information set forth on the Perfection Certificate
pertaining to the Collateral is accurate and complete.


Section 7. Covenants Concerning  Collateral,  Etc. The Company further covenants
with the Bank as follows:  (a) except for the security  interest  herein granted
and the  security  interest  in favor of the  Bank as  Agent in  regard  to that
certain  $31,500,000  loan to the  Borrower  from  various  lenders  dated as of
September 19, 2003, the Company shall be the owner of the  Collateral  free from
any lien, security interest, or other encumbrance,  and the Company shall defend
the same against all claims and demands of all persons at any time  claiming the
same or any  interests  therein  adverse to the Bank,  (b) the Company shall not
pledge,  mortgage,  or  create,  or suffer to exist a security  interest  in the
Collateral in favor of any person other than the Bank and the security  interest
in favor of the Bank as Agent in regard to that certain  $31,500,000 loan to the
Borrower from various  lenders  dated as of September 19, 2003,  (c) the Company
will fully perform all of its obligations  under the Contracts,  (d) as provided
in the Loan Agreement, the Company will permit the Bank to inspect the books and
records associated with the Collateral at any reasonable time, wherever located,
(e) the Company will pay promptly when due all taxes, assessments,  governmental
charges,  and levies upon the  Collateral  or incurred  in  connection  with the
Contracts or incurred in connection  with this  Agreement,  (f) the Company will
continue to operate its business in compliance with all applicable provisions of
the  federal  Fair Labor  Standards  Act, as  amended,  and with all  applicable
provisions of federal,  state,  and local statutes and  ordinances,  and (g) the
Company  will  not sell or  otherwise  dispose,  or  offer to sell or  otherwise
dispose, of the Collateral or any interest therein.


     7.1 Expenses  Incurred by Bank. In its  discretion,  the Bank may discharge
taxes  and  other  encumbrances  at any  time  levied  or  placed  on any of the
Collateral,  and pay any  necessary  filing fees or other  amounts  necessary to
preserve  the  value  associated  with the  Contracts.  The  Company  agrees  to
reimburse  the Bank on demand  for any and all  expenditures  so made.  The Bank
shall have no obligation to the Company to make any such expenditures, nor shall
the making thereof relieve the Company of any default.


     7.2  Bank's  Obligations  and  Duties.  Anything  herein  to  the  contrary
notwithstanding,  the Company  shall remain liable under all Contracts and shall
perform all  obligations to be observed or performed by the Company  thereunder.
The Bank shall not have any  obligation or liability  under any such contract or
agreement  by reason of or arising out of this  Agreement  or the receipt by the
Bank of any  payment  relating to any of the  Collateral,  nor shall the Bank be
obligated in any manner to perform any of the  obligations  of the Company under
or pursuant to any such contract or agreement,  to make inquiry as to the nature
or sufficiency of any payment  received by the Bank in respect of the Collateral
or as to the sufficiency of any performance by any party under any such contract
or  agreement,  to present or file any claim,  to take any action to enforce any
performance,  or to  collect  the  payment  of any  amounts  which may have been
assigned  to the Bank or to which the Bank may be entitled at any time or times.
The Bank's sole duty with respect to the  custody,  safe  keeping,  and physical
preservation  of the  Collateral in its  possession,  shall be to deal with such
Collateral  in the same manner as the Bank deals with  similar  property for its
own account.


Section 8. Contracts and Deposits. The Bank may at any time following and during
the  continuance  of an Event of Default,  at the option of the Bank transfer to
the Bank the  Collateral,  receive any income  thereon,  and hold such income as
additional  Collateral  or  apply  it to the  Obligations.  Whether  or not  any
Obligations  are due, the Bank may  following and during the  continuance  of an
Event of Default demand, sue for, collect,  or make any settlement or compromise
which it deems  desirable  with  respect to the  Collateral.  Regardless  of the
adequacy of Collateral or any other security for the  Obligations,  any deposits
or other sums at any time credited by or due from the Bank to the Company may at
any time be applied to or set off against any of the Obligations.


Section 9. Control of  Collateral  Proceeds.  If an Event of Default  shall have
occurred and be continuing,  the Company shall, at the request of the Bank, take
any action  requested by the Bank  required by the  Agreement to ensure that the
Bank obtains the full and immediate control of the Collateral.  After the making
of such a request or the giving of any such notification, the Company shall hold
any  proceeds  associated  with the  Contracts  as trustee for the Bank  without
commingling  the same with other  funds of the  Company  and shall turn the same
over to the Bank, in the identical  form  received,  together with any necessary
endorsements or assignments.  The Bank shall apply the proceeds  associated with
the Contracts to the Obligations,  such proceeds to be immediately entered after
final payment in cash or other  immediately  available funds of the items giving
rise to them.


Section 10. Power of Attorney.


     10.1  Appointment  and  Powers  of Bank.  The  Company  hereby  irrevocably
constitutes  and appoints the Bank and any officer or agent  thereof,  with full
power of  substitution  as its  true  and  lawful  attorneys-in-fact  with  full
irrevocable  power and authority in the place and stead of the Company or in the
Bank's own name for the purpose of carrying out the terms of this Agreement,  to
take any and all  appropriate  action and to execute any and all  documents  and
instruments  that may be necessary or  desirable to  accomplish  the purposes of
this Agreement  and,  without  limiting the generality of the foregoing,  hereby
gives said  attorneys  the power and right,  on behalf of the  Company,  without
notice to or assent by the Company, to do the following:


     (a)upon the occurrence  and during the  continuance of an Event of Default,
to sell, transfer,  pledge, make any agreement with respect to, orotherwise deal
with any of the  Collateral  in such  manner as is  consistent  with the Uniform
Commercial  Code of the State of Oklahoma and as fully and  completely as though
the Bank were the  absolute  owner  thereof for all  purposes,  and to do at the
Company's expense,  at any time, or from time to time, all acts and things which
the Bank deems  necessary to protect,  preserve,  or realize upon the Collateral
and the Bank's security interest therein,  in order to effect the intent of this
Agreement, all as fully and effectively as the Company might do; and


     (b)to the extent that the Company's authorization given in Section 3 is not
sufficient,  to file such  financing  statements  with  respect  hereto,with  or
without  the  Company's   signature,   or  a  photocopy  of  this  Agreement  in
substitution for a financing statement,  as the Bank may deem appropriate and to
execute in the Company's name such financing  statements and amendments  thereto
and continuation statements which may require the Company's signature.


     10.2  Ratification by Company.  To the extent permitted by law, the Company
hereby ratifies all that said attorneys shall lawfully do or cause to be done by
virtue  hereof.  This power of attorney is a power  coupled with an interest and
shall be irrevocable.


     10.3 No Duty on Bank. The powers conferred on the Bank hereunder are solely
to protect the interests of the Bank in the  Collateral and shall not impose any
duty upon it to exercise any such powers. The Bank shall be accountable only for
the  amounts  that it  actually  receives  as a result of the  exercise  of such
powers, and neither it nor any of its officers,  directors,  employees or agents
shall be  responsible  to the Company for any act or failure to act,  except for
Bank's own gross negligence or willful misconduct.


Section  11.  Remedies.  If an Event  of  Default  shall  have  occurred  and be
continuing,  the Bank may, without notice to or demand upon the Company, declare
this  Agreement  to be in  default,  and the Bank shall  thereafter  have in any
jurisdiction  in which  enforcement  hereof is sought,  in addition to all other
rights and  remedies,  the  rights and  remedies  of a secured  party  under the
Uniform Commercial Code of the State of Oklahoma. The Bank may in its discretion
require  the  Company  to  assemble  all or any part of the  Collateral  at such
location or locations  within the  jurisdiction(s)  of the  Company's  principal
office(s)  or at such  other  locations  as the Bank may  reasonably  designate.
Unless the Collateral is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market, the Bank shall give to the
Company at least five business  days prior written  notice of the time and place
of any public sale of  Collateral or of the time after which any private sale or
any other intended  disposition  is to be made. The Company hereby  acknowledges
that five  business  days prior  written  notice of such sale or sales  shall be
reasonable  notice.  In addition,  the Company waives any and all rights that it
may have to a  judicial  hearing in  advance  of the  enforcement  of any of the
Bank's rights hereunder, including, without limitation, their right following an
Event of Default to take immediate  possession of the Collateral and to exercise
its rights with respect thereto.


Section 12. Standards for Exercising Remedies. To the extent that applicable law
imposes  duties on the Bank to exercise  remedies in a  commercially  reasonable
manner,  the  Company  acknowledges  and  agrees  that  it is  not  commercially
unreasonable  for the  Bank  (a) to fail to  incur  expenses  reasonably  deemed
significant by the Bank to prepare  Collateral  for  disposition or otherwise to
complete raw material or work in process into finished  goods or other  finished
products for disposition,  (b) to fail to obtain third-party consents for access
to  Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain  governmental  or  third-party  consents for the collection or
disposition  of  Collateral  to be  collected  or  disposed  of,  (c) to fail to
exercise  collection remedies against account debtors or other persons obligated
on  Collateral  or to remove  liens or  encumbrances  on or any  adverse  claims
against Collateral,  (d) to exercise collection remedies against account debtors
and other  persons  obligated  on  Collateral  directly  or  through  the use of
collection  agencies  and  other  collection   specialists,   (e)  to  advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized  nature,  (f) to contact other
persons,  whether or not in the same business as the Company, for expressions of
interest in acquiring all or any portion of the  Collateral,  (9) to hire one or
more  professional  auctioneers  to assist  in the  disposition  of  Collateral,
whether or not the  collateral  is of a  specialized  nature,  (h) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the  Collateral or that have the reasonable  capability of
doing so, or that match  buyers and sellers of assets,  (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
(k) to purchase  insurance  or credit  enhancements  to insure the Bank  against
risks of loss,  collection,  or  disposition  of Collateral or to provide to the
Bank a guaranteed  return from the collection or  disposition of Collateral,  or
(I) to the extent  deemed  appropriate  by the Bank,  to obtain the  services of
other brokers,  investment  bankers,  consultants,  and other  professionals  to
assist the Bank in the collection or disposition of any of the  Collateral.  The
Company  acknowledges  that  the  purpose  of  this  Section  12 is  to  provide
nonexhaustive  indications of what actions or omissions by the Bank would not be
commercially  unreasonable  in the  Bank's  exercise  of  remedies  against  the
Collateral  and that other  actions or omissions by the Bank shall not be deemed
commercially  unreasonable  solely on  account  of not being  indicated  in this
Section 12. Without  limitation  upon the foregoing,  nothing  contained in this
Section 12 shall be  construed  to grant any rights to the  Company or to impose
any  duties on the Bank that  would not have been  granted  or  imposed  by this
Agreement or by applicable law in the absence of this Section 12.


Section 13. No Waiver by Bank,  Etc. The Bank shall not be deemed to have waived
any of its rights upon or under the  Obligations or the  Collateral  unless such
waiver  shall be in writing and signed by the Bank.  No delay or omission on the
part of the Bank in exercising any right shall operate as a waiver of such right
or any other right. A waiver on any one occasion shall not be construed as a bar
to or waiver of any right on any future occasion. All rights and remedies of the
Bank with respect to the Obligations or the Collateral, whether evidenced hereby
or by any other  instrument or papers,  shall be cumulative and may be exercised
singularly, alternatively, successively, or concurrently at such time or at such
times as the Bank deems expedient.


Section 14.  Marshalling.  The Bank shall not be required to marshal any present
or future collateral  security  (including but not limited to this Agreement and
the Collateral)  for, or other  assurances of payment of, the Obligations or any
of them or to resort to such collateral  security or other assurances of payment
in any particular  order, and all of its rights hereunder and in respect of such
collateral  security and other  assurances of payment shall be cumulative and in
addition to all other rights, however existing or arising. To the extent that it
lawfully may, the Company hereby agrees that it will not invoke any law relating
to the  marshalling  of  collateral  which  might  cause  delay in or impede the
enforcement  of the  Bank's  rights  under  this  Agreement  or under  any other
instrument  creating or evidencing any of the  Obligations or under which any of
the  Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise  assured,  and, to the extent that it lawfully may,
the Company hereby irrevocably waives the benefits of all such laws.


Section 15.  Proceeds of  Dispositions;  Expenses.  The Company shall pay to the
Bank on demand any and all expenses,  including  reasonable  attorneys' fees and
disbursements,  incurred  or paid  by the  Bank in  protecting,  preserving,  or
enforcing the Bank's rights under or in respect of any of the Obligations or any
of the  Collateral.  After  deducting all of said  expenses,  the residue of any
proceeds of collection or sale of the  Obligations or Collateral  shall,  to the
extent  actually  received in cash, be applied to the payment of the Obligations
in such  order  or  preference  as the Bank may  determine  or in such  order or
preference as is provided in the Loan Agreement,  proper allowance and provision
being  made  for any  Obligations  not then  due.  Upon the  final  payment  and
satisfaction  in full of all of the  Obligations  and after  making any payments
required  by the  Uniform  Commercial  Code of the State,  any  excess  shall be
returned to the Company,  and the Company shall remain liable for any deficiency
in the payment of the Obligations.


Section 16.  Overdue  Amounts.  Until  paid,  all amounts due and payable by the
Company  hereunder  shall be a debt  secured by the  Collateral  and shall bear,
whether before or after  judgment,  interest at the rate of interest for overdue
principal set forth in the Loan Agreement.


Section 17.  Governing  Law;  Consent to  Jurisdiction.  This  Agreement will be
construed  in  accordance  with the laws of the State of  Oklahoma.  The Company
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the  State of  Oklahoma  or any  federal  court  sitting  therein  and
consents  to the  nonexclusive  jurisdiction  of such  court and to  service  of
process  in any such suit being  made upon the  Company  by mail at the  address
specified in the Loan Agreement. The Company hereby waives any objection that it
may now or  hereafter  have to the venue of any such  suit or any such  court or
that such suit is brought in an inconvenient court.


Section 18. Waiver of Jury Trial.  THE COMPANY  WAIVES ITS RIGHT TO A JURY TRIAL
WITH  RESPECT TO ANY ACTION OR CLAIM  ARISING OUT OF ANY  DISPUTE IN  CONNECTION
WITH THIS AGREEMENT,  ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS.  Except as prohibited by law, the Company waives
any right which it may have to claim or recover in any litigation referred to in
the  preceding  sentence  any special,  exemplary,  punitive,  or  consequential
damages or any damages other than, or in addition to, actual damages.


Section 19.  Miscellaneous.  The headings of each section of this  Agreement are
for convenience only and shall not define or limit the provisions thereof.  This
Agreement  and all rights and  obligations  hereunder  shall be binding upon the
Company  and its  respective  successors  and  assigns,  and shall  inure to the
benefit  of the  Bank  and  its  successors  and  assigns.  If any  term of this
Agreement shall be held to be invalid,  illegal, or unenforceable,  the validity
of all  other  terms  hereof  shall  in no way be  affected  thereby,  and  this
Agreement shall be construed and be enforceable as if such invalid,  illegal, or
unenforceable term had not been included herein.


DATED as of the date shown above.


         DEBTOR:                   PRE-PAID LEGAL SERVICES, INC.,
                                   an Oklahoma corporation


                                   /s/ Randy Harp
                                   ---------------------------------------------
                                   By: Randy Harp
                                   Title: Chief Operating Officer


         BANK:                     BANK OF OKLAHOMA, N.A.,
                                   a national banking association


                                   /s/ Laura Christofferson
                                   ---------------------------------------------
                                   By: Laura Christofferson
                                   Title: Senior Vice President