<PAGE>




                                EQUITY INCENTIVE PLAN

                           UNITED WISCONSIN SERVICES, INC.

                                  SEPTEMBER 11, 1998




                           THIS DOCUMENT CONSTITUTES PART 
                         OF A PROSPECTUS COVERING SECURITIES
                              THAT HAVE BEEN REGISTERED 
                    UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

<PAGE>
                           UNITED WISCONSIN SERVICES, INC.
                                EQUITY INCENTIVE PLAN

                                  TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>      <C>                                                                    <C>
Article   Section                                                                Page
-------   -------                                                                ----

      1   ESTABLISHMENT, PURPOSE, AND DURATION

               1.1  Establishment of the Plan                                       1
               1.2  Purpose of the Plan                                             1
               1.3  Duration of the Plan                                            2

     2         DEFINITIONS                                                          2

     3         ADMINISTRATION

               3.1  The Committee                                                   9
               3.2  Authority of the Committee                                      9
               3.3  Decisions Binding                                               9

     4         SHARES SUBJECT TO THE PLAN

               4.1  Number of Shares                                               10
               4.2  Lapsed Awards                                                  12
               4.3  Adjustments in Authorized Shares                               12

     5         ELIGIBILITY AND PARTICIPATION

               5.1  Eligibility                                                    12
               5.2  Actual Participation                                           12

     6         STOCK OPTIONS

               6.1  Grant of Options                                               13
               6.2  Option Award Agreement                                         15
               6.3  Option Price                                                   16
               6.4  Duration of Options                                            16
               6.5  Exercise of Options                                            16
               6.6  Payment                                                        16
               6.7  Restrictions on Share Transferability                          17
               6.8  Termination of Employment Due to Death, Disability or
                    Retirement                                                     17
               6.9  Termination of Employment for

</TABLE>
                                       i

<PAGE>

<TABLE>
<CAPTION>
<S>      <C>                                                                    <C>
                    Other Reasons                                                  19
               6.10 Transferability of Options                                     19

     7         STOCK APPRECIATION RIGHTS

               7.1  Grant of SARs                                                  20
               7.2  Exercise of Tandem SARs                                        21
               7.3  Exercise of Affiliated SARs                                    21
               7.4  Exercise of Freestanding SARs                                  21
               7.5  SAR Agreement                                                  22
               7.6  Term of SARs                                                   22
               7.7  Payment of SAR Amount                                          22
               7.8  Rule 16b-3 Requirements                                        22
               7.9  Termination of Employment Due to Death Disability, or
                    Retirement                                                     23
               7.10 Termination of Employment for Other Reasons                    24
               7.11 Nontransferability of SARs                                     24

     8         RESTRICTED STOCK

               8.1  Grant of Restricted Stock                                      25
               8.2  Restricted Stock Agreement                                     25
               8.3  Transferability                                                25
               8.4  Other Restrictions                                             25
               8.5  Certificate Legend                                             26
               8.6  Removal of Restrictions                                        26
               8.7  Voting Rights                                                  26
               8.8  Dividends and Other Distributions                              26
               8.9  Termination of Employment Due to Death, Disability, or
                    Retirement                                                     27
               8.10 Termination of Employment for Other Reasons                    27

     9         PERFORMANCE UNITS AND PERFORMANCE SHARES

               9.1  Grant of Performance Units/Shares                              28
               9.2  Value of Performance Units/Shares                              28
               9.3  Earning of Performance Units/Shares                            28
               9.4  Form and Timing of Payment of Performance Units/Shares         28
               9.5  Termination of Employment Due to Death,
                    Disability, Retirement, or Involuntary Termination
                    (without Cause)                                                29
</TABLE>

                                       ii
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<TABLE>
<CAPTION>
<S>      <C>                                                                    <C>
               9.6  Termination of Employment for Other Reasons                    29
               9.7  Nontransferability                                             29

     10        BENEFICIARY DESIGNATION                                             30

     11        DEFERRALS                                                           30

     12        RIGHTS OF EMPLOYEES

               12.1 Employment                                                     30
               12.2 Participation                                                  31

     13        CHANGE IN CONTROL                                                   31

     14        AMENDMENT, MODIFICATION, AND TERMINATION

               14.1 Amendment, Modification, and Termination                       32
               14.2 Awards Previously Granted                                      32

     15        WITHHOLDING

               15.1 Tax Withholding                                                32
               15.2 Share Withholding                                              32

     16        INDEMNIFICATION                                                     34

     17        SUCCESSORS                                                          34

     18        LEGAL CONSTRUCTION

               18.1 Gender and Number                                              35
               18.2 Severability                                                   35
               18.3 Requirements of Law                                            35
               18.4 Securities Law Compliance                                      35
               18.5 Governing Law                                                  36
</TABLE>
                                       iii
<PAGE>

                           UNITED WISCONSIN SERVICES, INC.
                                EQUITY INCENTIVE PLAN

                 ARTICLE 1.  ESTABLISHMENT, PURPOSE, AND DURATION

     1.1  ESTABLISHMENT OF THE PLAN.  United Wisconsin Services, Inc. (until 
the Effective Date known as Newco/UWS, Inc.), a Wisconsin corporation 
(hereinafter referred to as the "Company"), hereby establishes an incentive 
compensation plan to be known as the "United Wisconsin Services, Inc. Equity 
Incentive Plan" (hereinafter referred to as the "Plan"), as set forth in this 
document.  The Plan permits the grant of Nonqualified Stock Options, 
Incentive Stock Options, SARs, Restricted Stock, Performance Units, and 
Performance Shares.

     This Plan is being created in connection with the distribution (the 
"Distribution"), by the corporation formerly known as United Wisconsin 
Services, Inc. of all of the shares in the Company in connection with the 
spin-off of the managed care and specialty products business to the Company 
and the assumption by the Company of the United Wisconsin Services, Inc. 
name.   In connection with the Distribution, options ("Substituted Options") 
will be issued under this Plan in substitution for options issued under the 
equity incentive plan of the corporation formerly known as United Wisconsin 
Services, Inc. (the "Prior Plan").

     Upon approval by the Board of Directors of the Company, subject to 
ratification by an affirmative vote of a majority of Shares of the Company, 
the Plan shall become effective as of the Distribution Date (the "Effective 
Date"), and shall remain in effect as provided in Section 1.3 herein.

     1.2  PURPOSE OF THE PLAN.  The purpose of the Plan is to promote the 
success, and enhance the value, of the Company by linking the personal 
interests of Participants to those of Company shareholders, and by providing 
Participants with an incentive for outstanding performance.

<PAGE>

     The Plan is further intended to provide flexibility to the Company in 
its ability to motivate, attract, and retain the services of Participants 
upon whose judgment, interest, and special effort the successful conduct of 
its operation is dependent.

     1.3  DURATION OF THE PLAN.  Subject to approval by the Board of 
Directors of the Company and ratification by the shareholders of the Company, 
the Plan shall commence on the Effective Date, as described in Section 1.1 
herein, and shall remain in effect, subject to the right of the Board of 
Directors to terminate the Plan at any time pursuant to Article 14 herein, 
until all Shares subject to it shall have been purchased or acquired 
according to the Plan's provisions.  However, in no event may an Award be 
granted under the Plan more than ten years after the Effective Date.

                               ARTICLE 2.  DEFINITIONS

     Whenever used in the Plan, the following terms shall have the meanings 
set forth below and, when the meaning is intended, the initial letter of the 
word is capitalized:

          (a)  "Affiliate" - A company closely related to UWSI such as Blue
               Cross & Blue Shield United of Wisconsin, or such other company as
               the Board may designate.  For purposes of options received in
               connection with the Distribution, American Medical Security
               Group, Inc. (and its subsidiaries) will be considered Affiliates.


          (b)  "Affiliated SAR" means a SAR that is granted in connection with a
               related Option, and which will be deemed to automatically be
               exercised simultaneous with the exercise of the related Option.


          (c)  "Award" means, individually or collectively, a grant under this
               Plan of Nonqualified Stock Options, Incentive Stock Options,
               SARs, 

                                       -2-
<PAGE>

               Restricted Stock, Performance Units, or Performance Shares.

          (d)  "Award Agreement" means an agreement entered into by each
               Participant and the Company, setting forth the terms and
               provisions applicable to Awards granted to Participants under
               this Plan.


          (e)  "Beneficial Owner" shall have the meaning ascribed to such term
               in Rule 13d-3 of the General Rules and Regulations under the
               Exchange Act.


          (f)  "Board" or "Board of Directors" means the Board of Directors of
               the Company.


          (g)  "Cause" means: (I) willful and gross misconduct on the part of a
               Participant that is materially and demonstrably detrimental to
               the Company; or (ii) the commission by a Participant of one or
               more acts which constitute an indictable crime under United
               States Federal, state, or local law.  "Cause" under either (I) or
               (ii) shall be determined in good faith by the Committee.


          (h)  "Change in Control" of the Company shall be deemed to have
               occurred as of the first day that any one or more of the
               following conditions shall have been satisfied:


               (i)   Any Person (other than those Persons in control of the
                     Company as of the Effective Date, or other than a trustee
                     or other fiduciary holding securities under an employee
                     benefit plan of the Company, or a corporation owned
                     directly or indirectly by the stockholders of the Company
                     in 

                                       -3-
<PAGE>

                     substantially the same proportions as their ownership
                     of stock of the Company), becomes the Beneficial Owner,
                     directly or indirectly, of securities of the Company
                     representing twenty-five percent (25%) or more of the
                     combined voting power of the Company's then outstanding
                     securities; or


               (ii)  During any period of two (2) consecutive years (not
                     including any period prior to the Effective Date),
                     individuals who at the beginning of such period constitute
                     the Board (and any new Director, whose election by the
                     Company's stockholders was approved by a vote of at least
                     two-thirds (2/3) of the Directors then still in office who
                     either were Directors at the beginning of the period or
                     whose election or nomination for election was so
                     approved), cease for any reason to constitute a majority
                     thereof; or


               (iii) The stockholders of the Company approve: (A) a plan of
                     complete liquidation of the Company; or (B) an agreement
                     for the sale or disposition of all or substantially all
                     the Company's assets; or -C- a merger, consolidation, or
                     reorganization of the Company with or involving any other
                     corporation, other than a merger, consolidation, or
                     reorganization that would result in the voting securities
                     of the Company outstanding immediately prior thereto
                     continuing to represent (either by remaining outstanding
                     or by being converted into voting securities of the
                     surviving entity), at least fifty percent (50%) of the
                     combined voting power of the voting securities of the
                     Company (or such 

                                       -4-
<PAGE>

                     surviving entity) outstanding immediately after such 
                     merger, consolidation, or reorganization.


                     However, in no event shall a "Change in Control" be deemed
                     to have occurred, with respect to a Participant, if the
                     Participant is part of a purchasing group which
                     consummates the Change-in-Control transaction.  A
                     Participant shall be deemed "part of a purchasing group"
                     for purposes of the preceding sentence if the Participant
                     is an equity participant in the purchasing company or
                     group (except for: (I) passive ownership of less than
                     three percent (3%) of the stock of the purchasing company;
                     or (ii) ownership of equity participation in the
                     purchasing company or group which is otherwise not
                     significant, as determined prior to the Change in Control
                     by a majority of the nonemployee continuing Directors).


          (i)  "Code" means the Internal Revenue Code of 1986, as amended from
               time to time.


          (j)  "Committee" means the Management Review Committee, as specified
               in Article 3, appointed by the Board to administer the Plan with
               respect to grants of Awards.


          (k)  "Company" means United Wisconsin Services, Inc., a Wisconsin
               corporation, (until the Effective Date known as Newco/UWS, Inc.)
               or any successor thereto as provided in Article 17 herein.


          (l)  "Director" means any individual who is a Non-Employee member of

                                       -5-
<PAGE>

               the Board of Directors of the Company.


          (m)  "Directors Plan" means the 1995 Directors Stock Option Plan of
               United Wisconsin Services, Inc.


          (n)  "Disability" means a permanent and total disability, within the
               meaning of Code Section 22(e)(3), as determined by the Committee
               in good faith, upon receipt of sufficient competent medical
               advice from one or more individuals, selected by the Committee,
               who are qualified to give professional medical advice.


          (o)  "Distribution Date" means the date the stock of the Company is
               distributed by the corporation formerly known as United Wisconsin
               Services, Inc.


          (p)  "Employee" means any full-time employee of the Company or of the
               Company's Subsidiaries or Affiliates.  Directors who are not
               otherwise employed by the Company shall not be considered
               Employees under this Plan.


          (q)  "Exchange Act" means the Securities Exchange Act of 1934, as
               amended from time to time, or any successor Act thereto.


          (r)  "Fair Market Value" means the closing price for Shares on the
               relevant date, or (if there were no sales on such date) the
               average of closing prices on the nearest day before and the
               nearest day after the relevant date, on a stock exchange or over
               the counter, as determined by the Committee.

                                       -6-
<PAGE>

          (s)  "Freestanding SAR" means a SAR that is granted independently of
               any Options.


          (t)  "Incentive Stock Option" or "ISO" means an option to purchase
               Shares, granted under Article 6 herein, which is designated as an
               Incentive Stock Option and is intended to meet the requirements
               of Section 422 of the Code.


          (u)  "Insider" shall mean a Participant who is, on the relevant date,
               an officer, Director or 10% shareholder of the Company, subject
               to Section 16 of the Exchange Act.


          (v)  "Nonqualified Stock Option" or "NQSO" means an option to purchase
               Shares, granted under Article 6 herein, which is not intended to
               be an Incentive Stock Option.


          (w)  "Option" means an Incentive Stock Option or a Nonqualified Stock
               Option.


          (x)  "Option Price" means the price at which a Share may be purchased
               by a Participant pursuant to an Option, as determined by the
               Committee.


          (y)  "Participant" means an Employee or a Director who has outstanding
               an Award granted under the Plan.


          (z)  "Performance Unit" means an Award granted to an Employee, as
               described in Article 9 herein.

                                       -7-
<PAGE>

          (aa) "Performance Share" means an Award granted to an Employee,
               as described in Article 9 herein.


          (bb) "Period of Restriction" means the period during which the
               transfer of Shares of Restricted Stock is limited in some way
               (based on the passage of time, the achievement of performance
               goals, or upon the occurrence of other events as determined by
               the Committee, at its discretion), and the Shares are subject to
               a substantial risk of forfeiture, as provided in Article 8
               herein.


          (cc) "Person" shall have the meaning ascribed to such term in Section
               3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
               thereof, including a "group" as defined in Section 13(d).


          (dd) "Restricted Stock" means an Award granted to a Participant
               pursuant to Article 8 herein.


          (ee) "Retirement" shall have the meaning ascribed to it in the
               tax-qualified defined benefit retirement plan of the Company.


          (ff) "Shares" means the shares of common stock of the Company.


          (gg) "Subsidiary" means any corporation in which the Company owns
               directly, or indirectly through subsidiaries, at least fifty
               percent (50%) of the total combined voting power of all classes
               of stock, or any other entity (including, but not limited to,
               partnerships and joint ventures) in which the Company owns at
               least fifty percent (50%) of the combined equity thereof.

                                       -8-
<PAGE>

          (hh) "Substituted Option" means an option issued under this Plan in
               substitution for options issued under another stock option plan,
               including but not limited to options issued pursuant to the Prior
               Plan and the Directors Plan.


          (ii) "Stock Appreciation Right" or "SAR" means an Award, granted alone
               or in connection with a related Option, designated as a SAR,
               pursuant to the terms of Article 7 herein.


          (jj) "Tandem SAR" means a SAR that is granted in connection with a
               related Option, the exercise of which shall require forfeiture of
               the right to purchase a Share under the related Option (and when
               a Share is purchased under the Option, a SAR shall similarly be
               canceled).


          (kk) "Window Period" means the period beginning on the third business
               day following the date of public release of the Company's
               quarterly sales and earnings information, and ending on the
               thirtieth day following such date.

                              ARTICLE 3.  ADMINISTRATION

     3.1  THE COMMITTEE.  The Plan shall be administered by the Management 
Review Committee of the Board, or by any other Committee appointed by the 
Board consisting of not less than two (2) Directors who are not Employees.  
The members of the Committee shall be appointed from time to time by, and 
shall serve at the discretion of, the Board of Directors. 

     All members of the Committee shall be Non-Employee Directors.  
"Non-

                                       -9-
<PAGE>

Employee Directors," as defined in rule 16b-3 promulgated by the Securities 
and Exchange Commission ("SEC") under the Exchange Act, means a director who 
(I) is not currently an officer or otherwise employed by the Company or any 
affiliate (ii) does not receive compensation for consulting service or in any 
other capacity from the Company in excess of $60,000 in any one year, (iii) 
does not possess an interest in and is not engaged in business relationships 
required to be reported under Items 404(a) or 404(b) of Regulation S-K 
promulgated under the Exchange Act and (iv) is an Outside Director as defined 
in Treas. Reg. 1.162-27.

     3.2  AUTHORITY OF THE COMMITTEE.  The Committee shall have full power 
except as limited by law or by the Articles of Incorporation or Bylaws of the 
Company, and subject to the provisions herein, to determine the size and 
types of Awards with respect to Employees; to determine the terms and 
conditions of such Employee Awards in a manner consistent with the Plan; to 
construe and interpret the Plan and any agreement or instrument entered into 
under the Plan; to establish, amend, or waive rules and regulations for the 
Plan's administration; and (subject to the provisions of Article 14 herein) 
to amend the terms and conditions of any outstanding Award to the extent such 
terms and conditions are within the discretion of the Committee as provided 
in the Plan. Further, the Committee shall make all other determinations which 
may be necessary or advisable for the administration of the Plan.  As 
permitted by law, the Committee may delegate its authority as identified 
hereunder.

     3.3  DECISIONS BINDING.  All determinations and decisions made by the 
Committee pursuant to the provisions of the Plan and all related orders or 
resolutions of the Board of Directors shall be final, conclusive, and binding 
on all persons, including the Company, its stockholders, Employees, 
Directors, Participants, and their estates and beneficiaries.

                        ARTICLE 4.  SHARES SUBJECT TO THE PLAN

                                       -10-
<PAGE>

     4.1  NUMBER OF SHARES.  Subject to adjustment as provided in Section 4.3 
herein, the total number of Shares available for grant under the Plan may not 
exceed 4,500,000.  These 4,500,000 Shares may be either authorized but 
unissued or reacquired Shares.

     The following rules will apply for purposes of the determination of the 
number of Shares available for grant under the Plan:

          (a)  While an Award is outstanding, it shall be counted against the
               authorized pool of Shares, regardless of its vested status.


          (b)  The grant of an Option or Restricted Stock shall reduce the
               Shares available for grant under the Plan by the number of Shares
               subject to such Award.


          (c)  The grant of a Tandem SAR shall reduce the number of Shares
               available for grant by the number of Shares subject to the
               related Option (i.e., there is no double counting of Options and
               their related Tandem SARs).


          (d)  The grant of an Affiliated SAR shall reduce the number of Shares
               available for grant by the number of Shares subject to the SAR,
               in addition to the number of Shares subject to the related
               Option.


          (e)  The grant of a Freestanding SAR shall reduce the number of Shares
               available for grant by the number of Freestanding SARs granted.

                                       -11-
<PAGE>

          (f)  The Committee shall in each case determine the appropriate number
               of Shares to deduct from the authorized pool in connection with
               the grant of Performance Units and/or Performance Shares.


          (g)  To the extent that an Award is settled in cash rather than in
               Shares, the authorized Share pool shall be credited with the
               appropriate number of Shares represented by the cash settlement
               of the Award, as determined at the sole discretion of the
               Committee (subject to the limitation set forth in Section 4.2
               herein).


     4.2  LAPSED AWARDS.  If any Award granted under this Plan is canceled, 
terminates, expires, or lapses for any reason (with the exception of the 
termination of a Tandem SAR upon exercise of the related option, or the 
termination of a related Option upon exercise of the corresponding Tandem 
SAR), any Shares subject to such Award again shall be available for the grant 
of an Award under the Plan.

     4.3  ADJUSTMENTS IN AUTHORIZED SHARES.  In the event of any merger, 
reorganization, consolidation, recapitalization, separation, liquidation, 
stock dividend, split-up, Share combination, or other change in the corporate 
structure of the Company affecting the Shares, such adjustment shall be made 
in the number and class of Shares which may be delivered under the Plan, and 
in the number and class of and/or price of Shares subject to outstanding 
Options, SARs, and Restricted Stock granted under the Plan, as may be 
determined to be appropriate and equitable by the Committee, in its sole 
discretion, to prevent dilution or enlargement of rights; and provided that 
the number of Shares subject to any Award shall always be a whole number.

                      ARTICLE 5.  ELIGIBILITY AND PARTICIPATION

     5.1  ELIGIBILITY.  Persons eligible to participate in this Plan include all

                                       -12-
<PAGE>

Employees and Directors.

     5.2  ACTUAL PARTICIPATION.  Subject to the provisions of the Plan, the 
Committee may, from time to time, select from all eligible Employees, those 
to whom Awards shall be granted and shall determine the nature and amount of 
each Award.  Directors shall receive Options as provided in Section 6.1.

                              ARTICLE 6.  STOCK OPTIONS

     6.1  GRANT OF OPTIONS.  Subject to the terms and provisions of the Plan, 
options may be granted to Employees at any time and from time to time as 
shall be determined by the Committee.  The Committee shall have discretion in 
determining the number of Shares subject to Options granted to each Employee 
except that no Employee may receive options (other than Substituted Options) 
with respect to more than 250,000 Shares in any year.  The Committee may 
grant ISOs, NQSOs, or a combination thereof to Employees. Directors may 
receive only NQSOs.  Substituted Options may be issued under the Plan.  The 
number of Substituted Options shall be the number of options immediately 
before the substitution, adjusted to prevent dilution or enlargement of the 
Participant's rights.  The grant date of such substituted options shall be 
the grant date under the plan through which the options were originally 
granted.  Substituted Options shall be issued to Directors and Employees who 
participated in the Prior Plan and in the Directors Plan in accordance with 
the terms of the Employee Benefits Agreement executed in connection with the 
Distribution, and such substituted Options shall be subject to the same grant 
date, exercise price (as adjusted pursuant to Section 6.3), vesting and 
exercise period such Options were subject to under the Prior Plan and the 
Directors Plan.

          To the extent Shares are available for grant under the Plan, each
Director who is first elected as a Director subsequent to the Effective Date (a
"Subsequent 

                                       -13-
<PAGE>

Director") shall be granted, as of the date on which such Subsequent Director 
is qualified and first begins to serve as a Director, an Option to purchase 
6,000 shares, subject to adjustment pursuant to Section 4.3 or to purchase 
such lesser number of Shares as remain available for grant under the Plan.  
In the event that the number of Shares available for grant under the Plan is 
insufficient to make all grants hereby specified on the relevant date, then 
all Directors who are entitled to a grant on such date shall share ratably in 
the number of Shares then available for grant under the Plan.  The Option 
Price of such Option shall equal the Fair Market Value of a Share on the date 
the grant of this Option is effective.

          If sufficient Shares are not available under the Plan to fulfill 
the grant of Options to any Subsequent Director first elected after the 
Effective Date, and thereafter additional Shares become available, such 
Subsequent Director receiving an Option for fewer than 6,000 Shares shall 
then receive an Option to purchase an amount of Shares, determined by 
dividing the number of Shares available pro-rata among each Subsequent 
Director receiving an Option for fewer than 6,000 Shares, then available 
under the Plan, not to exceed 6,000 Shares, subject to adjustment as to any 
one Subsequent Director.  The date of grant shall be the date such additional 
Shares become available.  The Option Price of an Option shall equal the Fair 
Market Value of a Share on the date the Option is granted.

          If a Subsequent Director receives an Option to purchase fewer than 
6,000 Shares, subject to adjustment pursuant to Section 4.3 hereof, and 
additional Shares subsequently become available under the Plan, an Option to 
purchase such Shares shall first be allocated as of the date of availability 
to any Subsequent Director who has not previously been granted an Option.  
Such Options shall be granted to purchase a number of Shares no greater than 
the number of Shares covered by Options granted to other Subsequent Directors 
first elected subsequent to the Effective Date, but who have received Options 
to purchase fewer than 6,000 Shares (subject to adjustment pursuant 

                                       -14-
<PAGE>

to Section 4.3).  Thereafter, Options for any remaining Shares shall be 
granted pro-rata among all Subsequent Directors granted Options to purchase 
fewer than 6,000 Shares.  No Director first elected after the Effective Date 
shall receive an Option to purchase more than 6,000 Shares (subject to 
adjustment under Section 4.3).

     The Option Price of the Shares purchasable under each Option granted to 
a Director shall be equal to one hundred percent (100%) of the Fair Market 
Value per Share on the date of grant of such Option.

     Subject to acceleration as provided below, Options granted to Directors 
shall vest annually at the rate of thirty-three and one third percent 
(33-1/3%) of the aggregate number of Shares granted annually beginning on the 
first anniversary of the date of grant and on each subsequent anniversary of 
the date of grant thereafter.  If a Director's tenure ends during the 
applicable three-year period due to Death, Disability or Retirement or 
following a Change in Control, however, such Director's Options shall become 
immediately exercisable as to one hundred percent (100%) of the Shares 
covered thereby as of the Director's last day of service as a Director with 
the Company to the extent such Option may be exercised pursuant to Section 
6.5 of this Plan.  Retirement with respect to a Director shall mean the date 
of the Company's annual shareholders' meeting at which he or she would 
otherwise, but for said retirement, be a nominee for election to the Board, 
or the date on which the Director attains seventy (70) years of age.

     Once any portion of an Option issued to a Director becomes exercisable, 
it shall remain exercisable for the shortest period of (1) twelve years from 
the date of grant; or (2) two (2) years following the date on which the 
Director ceases to serve in such capacity for any reason other than removal 
for Cause. If a Director is removed for Cause, all outstanding Options held 
by the Director shall immediately be forfeited to the Company and no 
additional exercise period shall be allowed, regardless of the vested

                                       -15-
<PAGE>

status of the Options.

     6.2  OPTION AWARD AGREEMENT.  Each Option grant shall be evidenced by an 
Option Award Agreement that shall specify the Option Price, the duration of 
the Option, the number of Shares to which the Option pertains, and such other 
provisions as the Committee shall determine.  The Option Award Agreement also 
shall specify whether the Option is intended to be an ISO within the meaning 
of Section 422 of the Code, or a NQSO whose grant is intended not to fall 
under the Code provisions of Section 422.

     6.3  OPTION PRICE.  The Option Price for each grant of an option to an 
Employee shall be determined by the Committee; provided that the Option Price 
shall not be less than one hundred percent (100%) of the Fair Market Value of 
a Share on the date the Option is granted.  The Option Price for a 
Substituted Option shall be the Option Price immediately before the 
substitution, adjusted to prevent dilution or enlargement of the 
Participant's rights.

     6.4  DURATION OF OPTIONS.  Each Option granted shall expire at such time 
as the Committee shall determine at the time of grant; provided, however, 
that no ISO shall be exercisable later than the tenth (10th) anniversary date 
of its grant, and no NQSO shall be exercisable later than the twelfth (12th) 
anniversary date of its grant.  Substituted Options shall expire on the 
earlier of the date provided in this Section 6.4 or the date such options 
would have expired under the plan and agreement pursuant to which they were 
originally granted.

     6.5  EXERCISE OF OPTIONS.  Options granted to Employees under the Plan 
shall be exercisable at such times and be subject to such restrictions and 
conditions as the Committee shall in each instance approve, which need not be 
the same for each grant or for each Employee.  However, in no event may any 
Option granted under this Plan to an Employee or Director become exercisable 
prior to six (6) months following the date 

                                       -16-
<PAGE>

of its grant.

     6.6  PAYMENT.  Options shall be exercised by the delivery of a written 
notice of exercise to the Secretary of the Company, setting forth the number 
of Shares with respect to which the Option is to be exercised, accompanied by 
full payment for the Shares.

     The Option Price upon exercise of any Option shall be payable to the 
Company in full either: (a) in cash or its equivalent, or (b) by tendering 
previously acquired Shares having an aggregate Fair Market Value at the time 
of exercise equal to the total Option Price (provided that the Shares which 
are tendered must have been held by the Participant for at least six (6) 
months prior to their tender to satisfy the Option Price), or (c) by a 
combination of (a) and (b).

     The Committee also may allow cashless exercise as permitted under 
Federal Reserve Board's Regulation T, subject to applicable securities law 
restrictions, or by any other means which the Committee determines to be 
consistent with the Plan's purpose and applicable law.

     As soon as practicable after receipt of a written notification of 
exercise and full payment, the Company shall deliver to the Participant, in 
the Participant's name, Share certificates in an appropriate amount based 
upon the number of Shares purchased under the Option(s).

     6.7  RESTRICTIONS ON SHARE TRANSFERABILITY.  The Committee may impose 
such restrictions on any Shares acquired pursuant to the exercise of an 
Option under the Plan, as it may deem advisable, including, without 
limitation, restrictions under applicable Federal securities laws, under the 
requirements of any Stock exchange or market upon which such Shares are then 
listed and/or traded, and under any Blue Sky 

                                       -17-
<PAGE>

or state securities laws applicable to such Shares.

     6.8  TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY OR RETIREMENT.

          (a)  TERMINATION BY DEATH.  In the event the employment of an Employee
               is terminated by reason of death, all outstanding Options granted
               to that Employee shall immediately vest one hundred percent
               (100%), and shall remain exercisable at any time prior to their
               expiration date, or for one (1) year after the date of death,
               whichever period is shorter, by such person or persons as shall
               have been named as the Employee's beneficiary, or by such persons
               that have acquired the Employee's rights under the Option by will
               or by the laws of descent and distribution.

          (b)  TERMINATION BY DISABILITY.  In the event the employment of an
               Employee is terminated by reason of Disability, all outstanding
               Options granted to that Employee shall immediately vest one
               hundred percent (100%) as of the date the Committee determines
               the definition of Disability to have been satisfied, and shall
               remain exercisable at any time prior to their expiration date, or
               for one (1) year after the date that the Committee determines the
               definition of Disability to have been satisfied, whichever period
               is shorter.

          (c)  TERMINATION BY RETIREMENT.  In the event the employment of an
               Employee is terminated by reason of Retirement, the Committee
               shall retain discretion over the treatment of Options.

          (d)  EMPLOYMENT TERMINATION FOLLOWED BY DEATH.  In the event that an
               Employee's employment terminates by reason of Disability or

                                       -18-
<PAGE>

               Retirement, and within the exercise period allowed by the
               Committee following such termination the Employee dies, then the
               remaining exercise period under outstanding Options shall equal
               the longer of: (I) one (1) year following death; or (ii) the
               remaining portion of the exercise period which was triggered by
               the employment termination.  Such Options shall be exercisable by
               such person or persons who shall have been named as the
               Employee's beneficiary, or by such persons who have acquired the
               Employee's rights under the Option by will or by the laws of
               descent and distribution.

          (e)  EXERCISE LIMITATIONS ON ISOS.  In the case of ISOs, the tax
               treatment prescribed under Section 422 of the Internal Revenue
               Code of 1986, as amended, may not be available if the Options are
               not exercised within the Section 422 prescribed time periods
               after each of the various types of employment termination.

     6.9  TERMINATION OF EMPLOYMENT FOR OTHER REASONS.  If the employment of an
Employee shall terminate for any reason other than the reasons set forth in
Section 6.8 (and other than for Cause), all Options held by the Employee which
are not vested as of the effective date of employment termination immediately
shall be forfeited to the Company (and shall once again become available for
grant under the Plan).  However, the Committee, in its sole discretion, shall
have the right to immediately vest all or any portion of such Options, subject
to such terms as the Committee, in its sole discretion, deems appropriate.

     Options which are vested as of the effective date of employment 
termination may be exercised by the Employee within the period beginning on 
the effective date of employment termination, and ending six (6) months after 
such date or on such later 

                                       -19-
<PAGE>

date as is approved by the Committee.

     If the employment of an Employee shall be terminated by the Company for 
Cause, all outstanding Options held by the Participant immediately shall be 
forfeited to the Company and no additional exercise period shall be allowed, 
regardless of the vested status of the Options.

     For Employees employed by Affiliates, termination shall mean termination 
of such Employee's employment with the Affiliate.

     6.10 TRANSFERABILITY OF OPTIONS.  No ISO granted under the Plan may be 
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, 
other than by will or by the laws of descent and distribution.  Further, all 
ISOs granted to a Participant under the Plan shall be exercisable during his 
or her lifetime only by such Participant.

     NQSOs granted hereunder may be exercised only during a Participant's 
lifetime by the Participant, the Participant's guardian or legal 
representative or by a permissible transferee.  NQSOs shall be transferable 
by Participants pursuant to the laws of descent and distribution upon a 
Participant's death, and during a Participant's lifetime, NQSOs shall be 
transferable by Participants to members of their immediate family, trusts for 
the benefit of members of their immediate family, and charitable institutions 
("permissible transferees") to the extent permitted under Section 16 of the 
Exchange Act and subject to federal and state securities laws.  The term 
"immediate family" shall mean any child, stepchild, grandchild, parent, 
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, 
son-in-law, daughter-in-law, sister-in-law, or brother-in-law and shall 
include adoptive relationships.

     NQSOs also shall be transferable by Participants other than to permissible
transferees with the prior approval of the Committee which shall have the
authority to 

                                       -20-
<PAGE>

approve such transfers of NQSOs on a case-by-case basis in its sole 
discretion.

     The Committee shall have the authority to establish rules and 
regulations specifically governing the transfer of NQSOs granted under this 
Plan as it deems necessary and advisable.

                        ARTICLE 7.  STOCK APPRECIATION RIGHTS

     7.1  GRANT OF SARS.  Subject to the terms and conditions of the Plan, an 
SAR may be granted to an Employee at any time and from time to time as shall 
be determined by the Committee.  The Committee may grant Affiliated SARs, 
Freestanding SARs, Tandem SARs, or any combination of these forms of SAR.

     The Committee shall have complete discretion in determining the number 
of SARs granted to each Employee (subject to Article 4 herein) and, 
consistent with the provisions of the Plan, in determining the terms and 
conditions pertaining to such SARs.  However, the grant price of a 
Freestanding SAR shall be at least equal to one hundred percent (100%) of the 
Fair Market Value of a Share on the date of grant of the SAR.  The grant 
price of Tandem or Affiliated SARs shall equal the Option Price of the 
related Option.  In no event shall any SAR granted hereunder become 
exercisable within the first six (6) months of its grant.

     7.2  EXERCISE OF TANDEM SARS.  Tandem SARs may be exercised for all or 
part of the Shares subject to the related Option upon the surrender of the 
right to exercise the equivalent portion of the related Option.  A Tandem SAR 
may be exercised only with respect to the Shares for which its related Option 
is then exercisable.

     Notwithstanding any other provision of this Plan to the contrary, with 
respect to a Tandem SAR granted in connection with an ISO: (I) the Tandem SAR 
will expire no 

                                       -21-
<PAGE>

later than the expiration of the underlying ISO; (ii) the value of the payout 
with respect to the Tandem SAR may be for no more than one hundred percent 
(100%) of the difference between the Option Price of the underlying ISO and 
the Fair Market Value of the Shares subject to the underlying ISO at the time 
the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only 
when the Fair Market Value of the Shares subject to the ISO exceeds the 
Option Price of the ISO.

     7.3  EXERCISE OF AFFILIATED SARS.  Affiliated SARs shall be deemed to be 
exercised upon the exercise of the related Options.  The deemed exercise of 
Affiliated SARs shall not necessitate a reduction in the number of related 
Options.

     7.4  EXERCISE OF FREESTANDING SARS.  Freestanding SARs may be exercised 
upon whatever terms and conditions the Committee, in its sole discretion, 
imposes upon them.

     7.5  SAR AGREEMENT.  Each SAR grant shall be evidenced by an Award 
Agreement that shall specify the grant price, the term of the SAR, and such 
other provisions as the Committee shall determine.

     7.6  TERM OF SARS.  The term of a SAR granted under the Plan shall be 
determined by the Committee, in its sole discretion; provided, however, that 
such term shall not exceed twelve (12) years.

     7.7  PAYMENT OF SAR AMOUNT.  Upon exercise of a SAR, an Employee shall 
be entitled to receive payment from the Company in an amount determined by 
multiplying:

          (a)  The difference between the Fair Market Value of a Share on the
               date of exercise over the grant price; by

                                       -22-
<PAGE>

          (b)  The number of Shares with respect to which the SAR is exercised.


     At the discretion of the Committee, the payment upon SAR exercise may be 
in cash, in Shares of equivalent value, or in some combination thereof.

     7.8  RULE 16B-3 REQUIREMENTS.  Notwithstanding any other provision of 
the Plan, the Committee may impose such conditions on exercise of a SAR 
(including, without limitation, the right of the Committee to limit the time 
of exercise to specified periods) as may be required to satisfy the 
requirements of Section 16 (or any successor rule) of the Exchange Act.

     For example, if the Participant is an Insider, the ability of the 
Participant to exercise SARs for cash will be limited to Window Periods. 
However, if the Committee determines that the Participant is not an Insider, 
or if the securities laws change to permit greater freedom of exercise of 
SARs, then the Committee may permit exercise at any point in time, to the 
extent the SARs are otherwise exercisable under the Plan.

     7.9  TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT.


          (a)  TERMINATION BY DEATH.  In the event the employment of an Employee
               is terminated by reason of death, all outstanding SARs granted to
               that Employee shall immediately vest one hundred percent (100%),
               and shall remain exercisable at any time prior to their
               expiration date, or for one (1) year after the date of death,
               whichever period is shorter, by such person or persons as shall
               have been named as the Employee's beneficiary, or by such persons
               that have acquired the Employee's rights under the SAR by will or
               by the laws of descent and distribution.

                                       -23-
<PAGE>

          (b)  TERMINATION BY DISABILITY.  In the event the employment of a
               Participant is terminated by reason of Disability, all
               outstanding SARs granted to that Employee shall immediately vest
               one hundred percent (100%) as of the date the Committee
               determines the definition of Disability to have been satisfied,
               and shall remain exercisable at any time prior to their
               expiration date, or for one (1) year after the date that the
               Committee determines the definition of Disability to have been
               satisfied, whichever period is shorter.


          (c)  TERMINATION BY RETIREMENT.  In the event the employment of an
               Employee is terminated by reason of Retirement, the Committee
               shall retain discretion over the treatment of SARs.


          (d)  EMPLOYMENT TERMINATION FOLLOWED BY DEATH.  In the event that an
               Employee's employment terminates by reason of Disability or
               Retirement, and within the exercise period allowed by the
               Committee following such termination the Employee dies, then the
               remaining exercise period under outstanding SARs shall equal the
               longer of: (I) one (1) year following death; or (ii) the
               remaining portion of the exercise period which was triggered by
               the employment termination.  Such SARs shall be exercisable by
               such person or persons who shall have been named as the
               Employee's beneficiary, or by such persons who have acquired the
               Employee's rights under the SAR by will or by the laws of descent
               and distribution.


     7.10 TERMINATION OF EMPLOYMENT FOR OTHER REASONS.  If the employment of 
an Employee shall terminate for any reason other than the reasons set forth 
in Section 7.9 (and other than for Cause), all SARs held by the Employee 
which are not vested as of 

                                       -24-
<PAGE>

the effective date of employment termination immediately shall be forfeited 
to the Company (and shall once again become available for grant under the 
Plan).  However, the Committee, in its sole discretion, shall have the right 
to immediately vest all or any portion of such SARs, subject to such terms as 
the Committee, in its sole discretion, deems appropriate.

     SARs which are vested as of the effective date of employment termination 
may be exercised by the Employee within the period beginning on the effective 
date of employment termination, and ending six (6) months after such date or 
on such later date as is approved by the Committee.

     If the employment of an Employee shall be terminated by the Company for 
Cause, all outstanding SARs held by the Employee immediately shall be 
forfeited to the Company and no additional exercise period shall be allowed, 
regardless of the vested status of the SARs.

     7.11 NONTRANSFERABILITY OF SARS.  No SAR granted under the Plan may be 
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, 
other than by will or by the laws of descent and distribution.  Further, all 
SARs granted to an Employee under the Plan shall be exercisable during his or 
her lifetime only by such Employee.

                             ARTICLE 8.  RESTRICTED STOCK

     8.1  GRANT OF RESTRICTED STOCK.  Subject to the terms and provisions of 
the Plan, the Committee, at any time and from time to time, may grant Shares 
of Restricted Stock to eligible Employees in such amounts as the Committee 
shall determine.

     8.2  RESTRICTED STOCK AGREEMENT.  Each Restricted Stock grant shall be 

                                       -25-
<PAGE>

evidenced by a Restricted Stock Agreement that shall specify the Period of 
Restriction, or Periods, the number of Restricted Stock Shares granted, and 
such other provisions as the Committee shall determine.

     8.3  TRANSFERABILITY.  Except as provided in this Article 8, the Shares 
of Restricted Stock granted herein may not be sold, transferred, pledged, 
assigned, or otherwise alienated or hypothecated until the end of the 
applicable Period of Restriction established by the Committee and specified 
in the Restricted Stock Agreement, or upon earlier satisfaction of any other 
conditions, as specified by the Committee in its sole discretion and set 
forth in the Restricted Stock Agreement.  However, in no event may any 
Restricted Stock granted under the Plan become vested in an Employee prior to 
six (6) months following the date of its grant.  All rights with respect to 
the Restricted Stock granted to an Employee under the Plan shall be available 
during his or her lifetime only to such Participant.

     8.4  OTHER RESTRICTIONS.  The Committee shall impose such other 
restrictions on any Shares of Restricted Stock granted pursuant to the Plan 
as it may deem advisable including, without limitation, restrictions based 
upon the achievement of specific performance goals (Company-wide, divisional, 
and/or individual), and/or restrictions under applicable Federal or state 
securities laws; and may legend the certificates representing Restricted 
Stock to give appropriate notice of such restrictions.

     8.5  CERTIFICATE LEGEND.  In addition to any legends placed on 
certificates pursuant to Section 8.4 herein, each certificate representing 
Shares of Restricted Stock granted pursuant to the Plan shall bear the 
following legend:

          "The sale or other transfer of the Shares of stock
          represented by this certificate, whether voluntary,
          involuntary, or by operation of law, is subject to certain

                                       -26-
<PAGE>

          restrictions on transfer as set forth in the United
          Wisconsin Services, Inc. Equity Incentive Plan, and in a
          Restricted Stock Agreement.  A copy of the Plan and such
          Restricted Stock Agreement may be obtained from the
          Secretary of United Wisconsin Services, Inc."


     8.6  REMOVAL OF RESTRICTIONS.  Except as otherwise provided in this 
Article 8, Shares of Restricted Stock covered by each Restricted Stock grant 
made under the Plan shall become freely transferable by the Employee after 
the last day of the Period of Restriction.  Once the Shares are released from 
the restrictions, the Employee shall be entitled to have the legend required 
by Section 8.5 removed from his or her Share certificate.

     8.7  VOTING RIGHTS.  During the Period of Restriction, Employees holding 
Shares of Restricted Stock granted hereunder may exercise full voting rights 
with respect to those Shares.

     8.8  DIVIDENDS AND OTHER DISTRIBUTIONS.  During the Period of 
Restriction, Employees holding Shares of Restricted Stock granted hereunder 
shall be entitled to receive all dividends and other distributions paid with 
respect to those Shares while they are so held.  If any such dividends or 
distributions are paid in Shares, the Shares shall be subject to the same 
restrictions on transferability and forfeitability as the Shares of 
Restricted Stock with respect to which they were paid.

     In the event that any dividend constitutes a "derivative security" or an 
"equity security" pursuant to Rule 16(a) under the Exchange Act, such 
dividend shall be subject to a vesting period equal to the longer of: (I) the 
remaining vesting period of the Shares of Restricted Stock with respect to 
which the dividend is paid; or (ii) six months.  The Committee shall 
establish procedures for the application of this provision.

                                       -27-
<PAGE>

     8.9  TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT.  
In the event the employment of an Employee is terminated by reason of death 
or Disability, all outstanding Shares of Restricted Stock shall immediately 
vest one hundred percent (100%) as of the date of employment termination (in 
the case of Disability, the date employment terminates shall be deemed to be 
the date that the Committee determines the definition of Disability to have 
been satisfied).  The Committee retains discretion over the treatment of 
Restricted Stock upon Retirement.  In the event of full vesting, the holder 
of the certificates of Restricted Stock shall be entitled to have any 
nontransferability legends required under Sections 8.4 and 8.5 of this Plan 
removed from the Share certificates.

     8.10 TERMINATION OF EMPLOYMENT FOR OTHER REASONS.  If the employment of 
an Employee shall terminate for any reason other than those specifically set 
forth in Section 8.9 herein, all Shares of Restricted Stock held by the 
Employee which are not vested as of the effective date of employment 
termination immediately shall be forfeited and returned to the Company (and, 
subject to Section 4.2 herein, shall once again become available for grant 
under the Plan).

     With the exception of a termination of employment for Cause, the 
Committee, in its sole discretion, shall have the right to provide for 
lapsing of the restrictions on Restricted Stock following employment 
termination, upon such terms and provisions as it deems proper.

                 ARTICLE 9.  PERFORMANCE UNITS AND PERFORMANCE SHARES

     9.1  GRANT OF PERFORMANCE UNITS/SHARES.  Subject to the terms of the 
Plan, Performance Units and Performance Shares may be granted to eligible 
Employees at any time and from time to time, as shall be determined by the 
Committee.  The 

                                       -28-
<PAGE>

Committee shall have complete discretion in determining the number of 
Performance Units and Performance Shares granted to each Employee.

     9.2  VALUE OF PERFORMANCE UNITS/SHARES.  Each Performance Unit shall 
have an initial value that is established by the Committee at the time of 
grant. Each Performance Share shall have an initial value equal to the Fair 
Market Value of a Share on the date of grant.  The Committee shall set 
performance goals in its discretion which, depending on the extent to which 
they are met, will determine the number and/or value of Performance 
Units/Shares that will be paid out to the Employee.  The time period during 
which the performance goals must be met shall be called a "Performance 
Period."  Performance Periods shall, in all cases, exceed six (6) months in 
length.

     9.3  EARNING OF PERFORMANCE UNITS/SHARES.  After the applicable 
Performance Period has ended, the holder of Performance Units/Shares shall be 
entitled to receive payout on the number of Performance Units/Shares earned 
by the Employee over the Performance Period, to be determined as a function 
of the extent to which the corresponding performance goals have been achieved.

     9.4  FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/ SHARES.  Payment 
of earned Performance Units/Shares shall be made in a single lump sum, within 
forty-five (45) calendar days following the close of the applicable 
Performance Period.  The Committee, in its sole discretion, may pay earned 
Performance Units/Shares in the form of cash or in Shares (or in a 
combination thereof), which have an aggregate Fair Market Value equal to the 
value of the earned Performance Units/Shares at the close of the applicable 
Performance Period.

     Prior to the beginning of each Performance Period, Participants may 
elect to defer the receipt of Performance Unit/Share payout upon such terms 
as the Committee deems appropriate.

                                       -29-
<PAGE>

     9.5  TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, RETIREMENT, OR 
INVOLUNTARY TERMINATION (WITHOUT CAUSE).  In the event the employment of an 
Employee is terminated by reason of death or Disability or involuntary 
termination without Cause during a Performance Period, the Employee shall 
receive a prorated payout of the Performance Units/Shares.  The Committee 
retains discretion over the treatment of Performance Units/Shares upon 
Retirement.  Any prorated payout shall be determined by the Committee, in its 
sole discretion, and shall be based upon the length of time that the Employee 
held the Performance Units/Shares during the Performance Period, and shall 
further be adjusted based on the achievement of the preestablished 
performance goals.

     Timing of payment of earned Performance Units/Shares shall be determined 
by the Committee at its sole discretion.

     9.6  TERMINATION OF EMPLOYMENT FOR OTHER REASONS.  In the event that an 
Employee's employment terminates for any reason other than those reasons set 
forth in Section 9.5 herein, all Performance Units/Shares shall be forfeited 
by the Employee to the Company, and shall once again be available for grant 
under the Plan.

     9.7  NONTRANSFERABILITY.  Performance Units/Shares may not be sold, 
transferred, pledged, assigned, or otherwise alienated or hypothecated, other 
than by will or by the laws of descent and distribution.  Further, an 
Employee's rights under the Plan shall be exercisable during the Employee's 
lifetime only by the Employee or the Employee's legal representative.

                         ARTICLE 10.  BENEFICIARY DESIGNATION

     Each Participant under the Plan may, from time to time, name any 
beneficiary or 

                                       -30-
<PAGE>

beneficiaries (who may be named contingently or successively) to whom any 
benefit under the Plan is to be paid in case of his or her death before he or 
she receives any or all of such benefit.  Each such designation shall revoke 
all prior designations by the same Participant, shall be in a form prescribed 
by the Company, and will be effective only when any necessary spousal consent 
is obtained and filed by the Participant in writing with the Secretary of the 
Company during the Participant's lifetime.  In the absence of any such 
designation, benefits remaining unpaid at the Participant's death shall be 
paid to the Participant's estate.

                                ARTICLE 11.  DEFERRALS

     The Committee may permit a Participant to defer such Participant's 
receipt of the payment of cash or the delivery of Shares that would otherwise 
be due to such Participant by virtue of the exercise of an Option or SAR, the 
lapse or waiver of restrictions with respect to Restricted Stock, or the 
satisfaction of any requirements or goals with respect to Performance 
Units/Shares.  If any such deferral election is required or permitted, the 
Committee shall, in its sole discretion, establish rules and procedures for 
such payment deferrals.

                           ARTICLE 12.  RIGHTS OF EMPLOYEES

     12.1 EMPLOYMENT.  Nothing in the Plan shall interfere with or limit in 
any way the right of the Company to terminate any Employee's employment at 
any time, nor confer upon any Employee any right to continue in the employ of 
the Company.

     For purposes of the Plan, transfer of employment of a Participant 
between the Company and any one of its Subsidiaries (or between Subsidiaries) 
or Blue Cross & Blue Shield United of Wisconsin shall not be deemed a 
termination of employment.

                                       -31-
<PAGE>

     12.2 PARTICIPATION.  No Employee shall have the right to be selected to 
receive an Award under this Plan, or, having been so selected, to be selected 
to receive a future Award.

                            ARTICLE 13.  CHANGE IN CONTROL

     Upon the occurrence of a Change in Control, unless otherwise 
specifically prohibited by the terms of Section 18 herein:

          (a)  Any and all Options and SARs granted hereunder shall become
               immediately exercisable;


          (b)  Any restriction periods and restrictions imposed on Restricted
               Shares shall lapse, and within ten (10) business days after the
               occurrence of a Change in Control, the stock certificates
               representing Shares of Restricted Stock, without any restrictions
               or legend thereon, shall be delivered to the applicable
               Participants;


          (c)  The target value attainable under all Performance Units and
               Performance Shares shall be deemed to have been fully earned for
               the entire Performance Period as of the effective date of the
               Change in Control, and shall be paid out in cash to Participants
               within thirty (30) days following the effective date of the
               Change in Control; provided, however, that there shall not be an
               accelerated payout with respect to Performance Units or
               Performance Shares which were granted less than six (6) months
               prior to the effective date of the Change in Control;


          (d)  Subject to Article 14 herein, the Committee shall have the
               authority 

                                       -32-
<PAGE>

               to make any modifications to the Awards as determined by the
               Committee to be appropriate before the effective date of the
               Change in Control.

                ARTICLE 14.  AMENDMENT, MODIFICATION, AND TERMINATION

     14.1 AMENDMENT, MODIFICATION, AND TERMINATION.  With the approval of the 
Board, at any time and from time to time, the Committee may terminate, amend, 
or modify the Plan.

     14.2 AWARDS PREVIOUSLY GRANTED.  No termination, amendment, or 
modification of the Plan shall adversely affect in any material way any Award 
previously granted under the Plan, without the written consent of the 
Participant holding such Award.

                               ARTICLE 15.  WITHHOLDING

     15.1 TAX WITHHOLDING.  The Company shall have the power and the right to 
deduct or withhold, or require a Participant to remit to the Company, an 
amount sufficient to satisfy Federal, state, and local taxes (including the 
Participant's FICA obligation) required by law to be withheld with respect to 
any taxable event arising or as a result of this Plan.

     15.2 SHARE WITHHOLDING.  With respect to withholding required upon the 
exercise of Options or SARs, upon the lapse of restrictions on Restricted 
Stock, or upon any other taxable event hereunder, Participants may elect, 
subject to the approval of the Committee, to satisfy the withholding 
requirement, in whole or in part, by having the Company withhold Shares 
having a Fair Market Value on the date the tax is to be determined equal to 
the minimum statutory total tax which could be imposed on the transaction.  
All elections shall be irrevocable, made in writing, signed by the 

                                       -33-
<PAGE>

Participant, and elections by Insiders shall additionally comply with the 
applicable requirement set forth in (a) or (b) of this Section 15.2.

          (a)  AWARDS HAVING EXERCISE TIMING WITHIN INSIDERS' DISCRETION.  The
               Insider must either:


               (i)   Deliver written notice of the stock withholding election
                     to the Committee at least six (6) months prior to the date
                     specified by the Insider on which the exercise of the
                     Award is to occur; or


               (ii)  Make the stock withholding election in connection with an
                     exercise of an Award which occurs during a Window Period.


          (b)  AWARDS HAVING A FIXED EXERCISE/PAYOUT SCHEDULE WHICH IS OUTSIDE
               INSIDERS' CONTROL.  The Insider must either:


               (i)   Deliver written notice of the stock withholding election
                     to the Committee at least six (6) months prior to the date
                     on which the taxable event (e.g., exercise or payout)
                     relating to the Award is scheduled to occur; or


               (ii)  Make the stock withholding election during a Window Period
                     which occurs prior to the scheduled taxable event relating
                     to the Award (for this purpose, an election may be made
                     prior to such a Window Period, provided that it becomes
                     effective during a Window Period occurring prior to the
                     applicable taxable event).

                                       -34-
<PAGE>

                             ARTICLE 16.  INDEMNIFICATION

     Each person who is or shall have been a member of the Committee, or of 
the Board, shall be indemnified and held harmless by the Company against and 
from any loss, cost, liability, or expense that may be imposed upon or 
reasonably incurred by him or her in connection with or resulting from any 
claim, action, suit, or proceeding to which he or she may be a party or in 
which he or she may be involved by reason of any action taken or failure to 
act under the Plan and against and from any and all amounts paid by him or 
her in settlement thereof, with the Company's approval, or paid by him or her 
in satisfaction of any judgment in any such action, suit, or proceeding 
against him or her, provided he or she shall give the Company an opportunity, 
at its own expense, to handle and defend the same before he or she undertakes 
to handle and defend it on his or her own behalf.  The foregoing right of 
indemnification shall not be exclusive of any other rights of indemnification 
to which such persons may be entitled under the Company's Certificate of 
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that 
the Company may have to indemnify them or hold them harmless.

                               ARTICLE 17.  SUCCESSORS

     All obligations, of the Company under the Plan, with respect to Awards 
granted hereunder, shall be binding on any successor to the Company, whether 
the existence of such successor is the result of a direct or indirect 
purchase, merger, consolidation, or otherwise, of all or substantially all of 
the business and/or assets of the Company.

                                       -35-
<PAGE>

                           ARTICLE 18.  LEGAL CONSTRUCTION

     18.1 GENDER AND NUMBER.  Except where otherwise indicated by the 
context, any masculine term used herein also shall include the feminine; the 
plural shall include the singular and the singular shall include the plural.

     18.2 SEVERABILITY.  In the event any provision of the Plan shall be held 
illegal or invalid for any reason, the illegality or invalidity shall not 
affect the remaining parts of the Plan, and the Plan shall be construed and 
enforced as if the illegal or invalid provision had not been included.

     18.3 REQUIREMENTS OF LAW.  The granting of Awards and the issuance of 
Shares under the Plan shall be subject to all applicable laws, rules, and 
regulations, and to such approvals by any governmental agencies or national 
securities exchanges as may be required.

     Notwithstanding any other provision set forth in the Plan, if required 
by the then-current Section 16 of the Exchange Act, any "derivative security" 
or "equity security" offered pursuant to the Plan to any Insider may not be 
sold or transferred for at least six (6) months after the date of grant of 
such Award. The terms "equity security" and "derivative security" shall have 
the meanings ascribed to them in the then-current Rule 16(a) under the 
Exchange Act.

     18.4 SECURITIES LAW COMPLIANCE.  With respect to Insiders, transactions 
under this Plan are intended to comply with all applicable conditions or Rule 
16b-3 or its successors under the 1934 Act.  To the extent any provision of 
the plan or action by the Committee fails to so comply, it shall be deemed 
null and void, to the extent permitted by law and deemed advisable by the 
Committee.

                                       -36-
<PAGE>

     18.5 GOVERNING LAW.  To the extent not preempted by Federal law, the 
Plan, and all agreements hereunder, shall be construed in accordance with and 
governed by the laws of the State of Wisconsin.

                                       -37-