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                                                                   Exhibit 2.1
   




                             AGREEMENT AND PLAN OF MERGER
                                           
                                        AMONG
                                           
                             SIERRA HEALTH SERVICES, INC.
                                           
                               SIERRA ACQUISITION CORP.
                                           
                                         AND
                                           
                           PHYSICIAN CORPORATION OF AMERICA
                                           
                                           
                                           
                                           




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     AGREEMENT AND PLAN OF MERGER dated as of November 2, 1996, among Sierra
Health Services, Inc., a Nevada corporation ("Sierra"), Sierra Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of Sierra ("Sierra
Sub"), and Physician Corporation of America, a Delaware corporation ("PCA").

     WHEREAS, the respective Boards of Directors of Sierra, Sierra Sub and PCA
have determined that it is in the best interests of their respective
stockholders to enter into a business combination involving the merger of PCA
and Sierra Sub, pursuant to the terms and conditions of this Agreement;

     WHEREAS, to effect such transaction, the respective Boards of Directors of
Sierra, Sierra Sub and PCA, and Sierra acting as the sole shareholder of Sierra
Sub, have approved the merger of PCA and Sierra Sub (the "Merger"), pursuant to
the terms and conditions of this Agreement, whereby each issued and outstanding
share of Common Stock, par value $.01 per share, of PCA ("PCA Common Stock") not
owned directly or through a wholly-owned Subsidiary by Sierra or directly by PCA
will be converted into the right to receive Common Stock, par value $.005 per
share, of Sierra ("Sierra Common Stock"), all as provided herein;

     WHEREAS, Sierra, Sierra Sub and PCA desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;

     WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and for accounting
purposes, it is intended that the Merger shall be accounted for as a "pooling of
interests";

     NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties agree as follows:

                                ARTICLE I.  THE MERGER

     1.1. EFFECTIVE TIME OF THE MERGER.  Subject to the provisions of this
Agreement, the officers' certificate of PCA required by Section 251 of the
Delaware General Corporation Law (the "DGCL") shall be duly prepared, executed
and acknowledged by PCA (such document and any other documents necessary to
effect the Merger in accordance with the DGCL shall be referred to as the
"Merger Filings") and shall be delivered by the Surviving Corporation (as
defined in Section 1.3) to the Secretary of State of the State of Delaware for
filing.  The Merger shall become effective upon the filing of the Merger Filings
with the Secretary of State of the State of Delaware (the "Effective Time").

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     1.2. CLOSING.  The closing of the Merger (the "Closing") will begin at
10:00 a.m. local time on a date to be specified by the parties, which shall be
no later than the fifth business day after satisfaction of the latest to occur
of the conditions set forth in Sections 6.1, 6.2(b) (other than the delivery of
the officers' certificates referred to therein), 6.2(e), 6.3(b) (other than the
delivery of the officers' certificates referred to therein) and 6.3(d) (provided
that the other closing conditions set forth in Article VI have been met or
waived as provided in Article VI at or prior to the Closing) (the "Closing
Date"), at the offices of Morgan, Lewis & Bockius LLP, 5300 First Union
Financial Center, 200 South Biscayne Boulevard, Miami, Florida 33131-2339,
unless another date or place is agreed to in writing by the parties hereto.

     1.3. EFFECTS OF THE MERGER.

          (a)  At the Effective Time, (i) the separate existence of Sierra Sub
     shall cease and Sierra Sub shall be merged with and into PCA (Sierra Sub
     and PCA are sometimes referred to herein as the "Constituent Corporations"
     and PCA is sometimes referred to herein as the "Surviving Corporation"),
     (ii) the Certificate of Incorporation of PCA shall be amended by filing a
     Certificate of Merger pursuant to Section 251 of the DGCL, substantially in
     the form attached as Exhibit 1.3(a)(ii), so that (A) Article Fourth of such
     Certificate of Incorporation shall read in its entirety as follows: "The
     corporation is authorized to issue only one class of shares of stock which
     shall be designated as "Common Stock;" and the total number of shares which
     this Corporation is authorized to issue is one thousand (1,000)" and (B)
     Article Eleventh of such Certificate of Incorporation shall be deleted in
     its entirety, and, as so amended, the Certificate of Incorporation shall be
     the Certificate of Incorporation of the Surviving Corporation (until
     further amended) and (iii) the Bylaws of PCA as in effect immediately prior
     to the Effective Time shall be the Bylaws of the Surviving Corporation
     (until further amended).

          (b)  At and after the Effective Time, in accordance with Section 259
     of the DGCL, the Surviving Corporation shall possess all the rights and
     property of the Constituent Corporations and be subject to all the debts
     and liabilities of the Constituent Corporations as if the Surviving
     Corporation had itself incurred them; all rights of creditors and all liens
     upon any property of either of the Constituent Corporations shall be
     preserved unimpaired, provided that such liens upon property of a
     disappearing corporation shall be limited to the property affected thereby
     immediately prior to the Effective Time; and any action or proceeding
     pending by or against any disappearing corporation may be prosecuted to
     judgment, which shall bind the Surviving Corporation, or the Surviving
     Corporation may be proceeded against or substituted in its place.


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                         ARTICLE II.  EFFECT OF THE MERGER ON
                         THE CAPITAL STOCK OF THE CONSTITUENT
                        CORPORATIONS; EXCHANGE OF CERTIFICATES

     2.1. EFFECT ON CAPITAL STOCK.  As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of PCA
Common Stock or capital stock of Sierra Sub:

          (a)  CAPITAL STOCK OF SIERRA SUB.  Each issued and outstanding share
     of the capital stock of Sierra Sub shall be converted into and become one
     fully paid and nonassessable share of common stock, par value $.01 per
     share, of the Surviving Corporation.

          (b)  CANCELLATION OF SIERRA-OWNED STOCK.  All shares of PCA Common
     Stock that are owned by Sierra, Sierra Sub or any other wholly-owned
     Subsidiary of Sierra shall be canceled and retired and shall cease to exist
     and no stock of Sierra or other consideration shall be delivered in
     exchange therefor.  As used in this Agreement, the word "Subsidiary" means
     any corporation or other organization, whether incorporated or
     unincorporated, of which a party to this Agreement or any other Subsidiary
     of such a party (i) is a general partner (in the case of a partnership), or
     (ii) holds directly or indirectly at least a majority of the securities or
     other interests having by their terms ordinary voting power to elect a
     majority of the Board of Directors or others performing similar functions
     with respect to such corporation or other organization.

          (c)  EXCHANGE RATIO FOR PCA COMMON STOCK.  Subject to Section 2.2(f),
     each issued and outstanding share of PCA Common Stock together with the
     rights (the "PCA Rights") granted under the Rights Agreement, dated
     January 13, 1995 (the "PCA Rights Agreement"), between PCA and the Rights
     Agent (as defined therein), (other than shares to be canceled in accordance
     with Section 2.1(b)) shall be converted into the right to receive .45 (the
     "Conversion Number") of a fully paid and nonassessable share of Sierra
     Common Stock, including the corresponding percentage of a right (the
     "Right") to purchase shares of Series A Junior Participating Preferred
     Stock of Sierra (the "Sierra Series A Preferred") pursuant to the Rights
     Agreement dated as of June 14, 1994, between Sierra and Continental Stock
     Transfer & Trust Company, as Rights Agent (the "Rights Agreement").  All
     references in this Agreement to the PCA Common Stock to be received
     pursuant to the Merger shall be deemed to include the PCA Rights.  Prior to
     the Distribution Date (as defined in the Rights Agreement) all references
     in this Agreement to the Sierra Common Stock to be received pursuant to the
     Merger shall be deemed to include the Rights.  All such shares of PCA
     Common Stock shall no longer be outstanding and shall automatically be
     canceled and retired and shall cease to exist, and each holder of a
     certificate representing any such shares shall cease to have any rights
     with respect thereto, except the right to receive the shares of Sierra
     Common Stock 

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     to be issued in consideration therefor upon the surrender of such 
     certificate in accordance with Section 2.2, without interest.

          (d)  SHARES OF DISSENTING HOLDERS.

               (i)  Notwithstanding anything to the contrary contained in this
          Agreement, any holder of PCA Common Stock with respect to which
          dissenters' rights, if any, are granted by reason of the Merger under
          the DGCL and who does not vote in favor of the Merger and who
          otherwise complies with Subchapter IX of the DGCL ("PCA Dissenting
          Shares"), shall not be entitled to receive shares of Sierra Common
          Stock pursuant to Section 2.1(c) hereof, unless such holder fails to
          perfect, effectively withdraws or loses his right to dissent from the
          Merger under the DGCL.  Such holder shall be entitled to receive only
          the payment provided for by Subchapter IX of the DGCL.  If any such
          holder so fails to perfect, effectively withdraws or loses his
          dissenters' rights under the DGCL, his PCA Dissenting Shares shall
          thereupon be deemed to have been converted, as of the Effective Time,
          into the right to receive shares of Sierra Common Stock pursuant to
          Section 2.1(c).

               (ii) Any payments relating to PCA Dissenting Shares shall be made
          solely by the Surviving Corporation and no funds or other property
          have been or will be provided by Sierra Sub or any of its other direct
          or indirect Subsidiaries for such payment.

     2.2. EXCHANGE OF CERTIFICATES.

          (a)  EXCHANGE AGENT.  As of the Effective Time, Sierra shall deposit
     with Continental Stock Transfer & Trust Company, or another bank or trust
     company designated by Sierra and reasonably acceptable to PCA (the
     "Exchange Agent"), for the benefit of the holders of shares of PCA Common
     Stock, for exchange in accordance with this Article II, through the
     Exchange Agent: (i) certificates representing the appropriate number of
     shares of Sierra Common Stock and (ii) cash to be paid in lieu of
     fractional shares of Sierra Common Stock (such shares of Sierra Common
     Stock and such cash are hereinafter referred to as the "Exchange Fund")
     issuable pursuant to Section 2.1 in exchange for outstanding shares of PCA
     Common Stock.

          (b)  EXCHANGE PROCEDURES.  As soon as reasonably practicable after the
     Effective Time, the Exchange Agent shall mail to each holder of record of a
     certificate or certificates which immediately prior to the Effective Time
     represented outstanding shares of PCA Common Stock (the "Certificates")
     whose shares were converted into the right to receive shares of Sierra
     Common Stock pursuant to Section 2.1 and whose shares are not PCA
     Dissenting Shares: (i) a letter of transmittal (which shall specify that

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     delivery shall be effected, and risk of loss and title to the Certificates
     shall pass, only upon delivery of the Certificates to the Exchange Agent
     and shall be in such form and have such other provisions as Sierra and PCA
     may reasonably specify) and (ii) instructions for use in effecting the
     surrender of the Certificates in exchange for certificates representing
     shares of Sierra Common Stock. Upon surrender of a Certificate for
     cancellation to the Exchange Agent or to such other agent or agents as may
     be appointed by Sierra and Sierra Sub, together with such letter of
     transmittal, duly executed, the holder of such Certificate shall be
     entitled to receive in exchange therefor a certificate representing that
     number of whole shares of Sierra Common Stock and, if applicable, a check
     representing the cash consideration to which such holder may be entitled on
     account of a fractional share of Sierra Common Stock, which such holder has
     the right to receive pursuant to the provisions of this Article II, and the
     Certificate so surrendered shall forthwith be canceled.  In the event of a
     transfer of ownership of PCA Common Stock which is not registered in the
     transfer records of PCA, a certificate representing the proper number of
     shares of Sierra Common Stock may be issued to a transferee if the
     Certificate representing such PCA Common Stock is presented to the Exchange
     Agent, accompanied by all documents required to evidence and effect such
     transfer and by evidence that any applicable stock transfer taxes have been
     paid.  Until surrendered as contemplated by this Section 2.2, each
     Certificate shall be deemed at any time after the Effective Time to
     represent only the right to receive upon such surrender the certificate
     representing shares of Sierra Common Stock and cash in lieu of any
     fractional shares of Sierra Common Stock as contemplated by this Section
     2.2.

          (c)  DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.  No dividends
     or other distributions declared or made after the Effective Time with
     respect to Sierra Common Stock with a record date after the Effective Time
     shall be paid to the holder of any unsurrendered Certificate with respect
     to the shares of Sierra Common Stock represented thereby and no cash
     payment in lieu of fractional shares shall be paid to any such holder
     pursuant to Section 2.2(f) until the holder of record of such Certificate
     shall surrender such Certificate.  Subject to the effect of applicable
     laws, following surrender of any such Certificate, there shall be paid to
     the holder of the certificates representing whole shares of Sierra Common
     Stock issued in exchange therefor, without interest, (i) at the time of
     such surrender, the amount of any cash payable in lieu of a fractional
     share of Sierra Common Stock to which such holder is entitled pursuant to
     Section 2.2(f) and the amount of dividends or other distributions with a
     record date after the Effective Time theretofore paid with respect to such
     whole shares of Sierra Common Stock, and (ii) at the appropriate payment
     date, the amount of dividends or other distributions with a record date
     after the Effective Time but prior to surrender and a payment date
     subsequent to surrender payable with respect to such whole shares of Sierra
     Common Stock.

          (d)  LOST, STOLEN OR DESTROYED CERTIFICATES.  In the event that any
     certificate for PCA Common Stock shall have been lost, stolen or destroyed,
     the Exchange Agent 

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     shall issue in exchange therefor, upon the making of an affidavit of that
     fact by the holder thereof such shares of Sierra Common Stock and cash in
     lieu of fractional shares, if any, as may be required pursuant to this 
     Agreement provided, however, that Sierra may, in its discretion, require
     the delivery of a suitable bond or indemnity.

          (e)  NO FURTHER OWNERSHIP RIGHTS IN PCA COMMON STOCK.  All shares of
     Sierra Common Stock issued upon the surrender for exchange of shares of PCA
     Common Stock in accordance with the terms hereof (including any cash paid
     pursuant to Section 2.2(c) or 2.2(f)) shall be deemed to have been issued
     in full satisfaction of all rights pertaining to such shares of PCA Common
     Stock, subject, however, to the Surviving Corporation's obligation to pay
     any dividends or make any other distributions with a record date prior to
     the Effective Time which may have been declared or made by PCA on such
     shares of PCA Common Stock in accordance with the terms of this Agreement
     or prior to the date hereof and which remain unpaid at the Effective Time,
     and there shall be no further registration of transfers on the stock
     transfer books of the Surviving Corporation of the shares of PCA Common
     Stock which were outstanding immediately prior to the Effective Time.  If,
     after the Effective Time, Certificates are presented to the Surviving
     Corporation for any reason, they shall be canceled and exchanged as
     provided in this Article II.

          (f)  NO FRACTIONAL SHARES.  No fractions of a share of Sierra Common
     Stock shall be issued in the Merger, but in lieu thereof each holder of
     shares of PCA Common Stock otherwise entitled to a fraction of a share of
     Sierra Common Stock shall, upon surrender of his certificate or
     certificates, be entitled to receive an amount of cash (without interest)
     determined by multiplying the closing price for Sierra Common Stock as
     reported on the New York Stock Exchange ("NYSE") Composite Transactions on
     the business day two days prior to the Effective Date by the fractional
     share interest to which such holder would otherwise be entitled.  The
     parties acknowledge that payment of the cash consideration in lieu of
     issuing fractional shares was not separately bargained for consideration
     but merely represents a mechanical rounding off for purposes of simplifying
     the corporate and accounting problems which would otherwise be caused by
     the issuance of fractional shares.

          (g)  TERMINATION OF EXCHANGE FUND.  Any portion of the Exchange Fund
     which remains undistributed to the stockholders of PCA for six months after
     the Effective Time shall be delivered to Sierra, upon demand, and any
     stockholders of PCA who have not theretofore complied with this Article II
     shall thereafter look only to Sierra for payment of their claim for Sierra
     Common Stock, as the case may be, any cash in lieu of fractional shares of
     Sierra Common Stock and any dividends or distributions with respect to
     Sierra Common Stock.

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          (h)  NO LIABILITY.  Neither Sierra nor PCA shall be liable to any
     holder of shares of PCA Common Stock, or Sierra Common Stock, as the case
     may be, for such shares (or dividends or distributions with respect
     thereto) or cash from the Exchange Fund delivered to a public official
     pursuant to any applicable abandoned property, escheat or similar law.

                     ARTICLE III.  REPRESENTATIONS AND WARRANTIES

     3.1. REPRESENTATIONS AND WARRANTIES OF PCA.  PCA represents and warrants to
Sierra and Sierra Sub as follows:

          (a)  ORGANIZATION, STANDING AND POWER.  Each of PCA and its
     Subsidiaries is a corporation, duly organized, validly existing and in good
     standing under the laws of its jurisdiction of organization, has all
     requisite corporate power and authority to own, lease and operate its
     properties and to carry on its business, including those Subsidiaries
     engaged in the insurance business (the "Insurance Subsidiaries"), as now
     being conducted, and is duly qualified and in good standing to do business
     in each jurisdiction in which the nature of its business or the ownership
     or leasing of its properties makes such qualification necessary except when
     the failure to be so qualified would not have a Material Adverse Effect (as
     defined below) on PCA.  As used in this Agreement, "Material Adverse
     Effect" means any change in or effect on the referenced entity that is or
     will be materially adverse to the financial condition, businesses, assets
     or liabilities of such entity and its Subsidiaries taken as a whole, but
     shall not include (i) the effects of changes that are generally applicable
     in (A) the health care industry, (B) the United States economy, or (C) the
     United States securities markets or (ii) with respect to PCA, any default
     in or the acceleration of the maturity or due date of any indebtedness of
     PCA.

          (b)  CAPITAL STRUCTURE.  As of the date hereof, the authorized capital
     stock of PCA consists of 200,000,000 shares of PCA Common Stock and
     10,000,000 shares of preferred stock, $1.00 par value ("PCA Preferred
     Stock").  At the close of business on October 31, 1996:  (i) 38,828,456
     shares of PCA Common Stock were outstanding, 3,784,860 shares of PCA Common
     Stock were reserved for issuance upon the exercise of outstanding stock
     options (3,449,047 shares of which are subject to outstanding stock
     options) or pursuant to PCA's other benefit plans (such stock options and
     such benefit plans, collectively, the "PCA Stock Plans"), (ii) no shares of
     PCA Common Stock were reserved for issuance upon exercise of the PCA
     Rights, (iii) no shares of PCA Common Stock were held by its wholly-owned
     Subsidiaries, (iv) no shares of PCA Preferred Stock were outstanding and
     (v) except as set forth on Schedule 3.1(b), no warrants, bonds, debentures,
     notes or other indebtedness or other security having the right to vote (or
     convertible into or exercisable for securities having the right to vote) on
     any matters on which stockholders may vote ("Voting Debt"), were issued or
     outstanding; since September 30, 1996 there has been no material change in
     such share information.  All 

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     outstanding shares of PCA capital stock are validly issued, fully paid 
     and nonassessable and not subject to preemptive rights.  As of the date 
     of this Agreement, except for this Agreement, the PCA Stock Options (as 
     defined in Section 5.7) and the PCA Rights, there are no options, 
     warrants, calls, rights, or agreements to which PCA or any Subsidiary of 
     CA is a party or by which it or any such Subsidiary is bound obligating 
     PCA or any Subsidiary of PCA to issue, deliver or sell, or cause to be 
     issued, delivered or sold, any shares of capital stock or any Voting Debt 
     of PCA or of any Subsidiary of PCA or obligating PCA or any Subsidiary of 
     PCA to grant, extend or enter into any such option, warrant, call, right
     or agreement.  Assuming compliance by Sierra with Section 5.7 after the
     Effective Time, there will be no option, warrant, call, right or agreement
     obligating PCA or any Subsidiary of PCA to issue, deliver or sell, or cause
     to be issued, delivered or sold, any shares of capital stock or any Voting
     Debt of PCA or any Significant Subsidiary of PCA, or obligating PCA or any
     Subsidiary of PCA to grant, extend or enter into any such option, warrant,
     call, right or agreement.

          (c)  AUTHORITY.  PCA has all requisite corporate power and authority
     to enter into this Agreement and subject to approval of this Agreement and
     the Merger by the stockholders of PCA, to consummate the transactions
     contemplated hereby.  The execution and delivery of this Agreement and the
     consummation of the transactions contemplated hereby have been duly
     authorized by all necessary corporate action on the part of PCA, subject to
     such approval of this Agreement by the stockholders of PCA.  This Agreement
     has been duly executed and delivered by PCA and, subject to such approval
     of this Agreement by the stockholders of PCA, constitutes a valid and
     binding obligation of PCA enforceable against it in accordance with its
     terms.  The execution and delivery of this Agreement does not, and the
     consummation of the transactions contemplated hereby will not, conflict
     with, or result in any violation of, or default (with or without notice or
     lapse of time, or both) under, or give rise to a right of termination,
     cancellation or acceleration of any obligation or the loss of a material
     benefit under, or the creation of a lien, pledge, security interest or
     other encumbrance on assets (any such conflict, violation, default, right
     of termination, cancellation or acceleration, loss or creation, a
     "Violation"), pursuant to any provision of the Certificate of Incorporation
     or Bylaws of PCA or any Subsidiary of PCA or, except (i) as set forth on
     SCHEDULE 3.1(C) hereto or (ii) as contemplated by the next sentence hereof,
     result in any Violation of any loan or credit agreement, note, mortgage,
     indenture, lease, Designated Plan (as defined in Section 3.1(o)) or other
     agreement, obligation, instrument, permit, concession, franchise, license,
     judgment, order, decree, statute, law, ordinance, rule or regulation
     applicable to PCA or any Subsidiary of PCA or their respective properties
     or assets which Violation would have a Material Adverse Effect on PCA.  No
     consent, approval, order or authorization of, or registration, declaration
     or filing with, any court, administrative agency or commission or other
     governmental authority or instrumentality, domestic or foreign (a
     "Governmental Entity"), is required by or with respect to PCA or any of its
     Subsidiaries in connection with the execution and delivery of this
     Agreement 

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     by PCA, or the consummation by PCA of the transactions contemplated 
     hereby, the failure to obtain which would have a Material Adverse Effect 
     on PCA, except for (i) the filing of a premerger notification report by 
     PCA under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as 
     amended (the "HSR Act"), (ii) the filing with the Securities and Exchange
     Commission (the "SEC") of (A) a proxy statement in definitive form 
     relating to the meeting of PCA's stockholders, and a meeting of Sierra's 
     shareholders, to be held in connection with the Merger (the "Proxy 
     Statement") and (B) such reports under Sections 13(a), 13(d) and 16(a) 
     of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), 
     as may be required in connection with this Agreement and the transactions 
     contemplated hereby, (iii) the filing of the Merger Filings and 
     appropriate documents with the relevant authorities of other states in 
     which PCA is qualified to do business, (iv) such filings, authorizations,
     orders and approvals (the "State Approvals") as may be required by foreign,
     state or local governmental authorities including those in connection with
     PCA's insurance business and those required by the federal Health
     Maintenance Organization Act of 1973 and the rules and regulations
     thereunder (the "Federal HMO Act"), the applicable provisions of the
     Florida, Texas and Puerto Rico laws regulating health maintenance
     organizations and prepaid health clinics, and the rules and regulations
     thereunder (the "HMO Act"), the applicable provisions of the Florida, Texas
     and Puerto Rico Insurance Code and the rules and regulations thereunder
     relating to the regulation of domestic insurers, third-party benefits
     administrators and to Insurance Holding Company Systems in the State of
     Florida (collectively the "Insurance Laws"), the applicable provisions of
     Title XVIII of the Social Security Act and the regulations promulgated
     thereunder (the "Medicare Laws"), the applicable provisions of Title XIX of
     the Social Security Act and the regulations promulgated thereunder and the
     Florida and Texas laws and regulations implementing the Medicaid Program
     (the "Medicaid Laws"), the Puerto Rico Healthcare Reform Act and the
     regulations promulgated thereunder, the applicable provisions of Florida,
     Texas and Puerto Rico laws regulating home health agencies and pharmacies
     and the regulations promulgated thereunder and the applicable provisions of
     the Drug Enforcement Administration laws and regulations regulating
     controlled substances (the "Facility Licensing Laws"), and the applicable
     provisions of Florida, Texas and Puerto Rico laws respecting certificates
     of need and the regulations promulgated thereunder (the "CON Laws") and
     (v) such filings, authorizations, orders and approvals (the "State Takeover
     Approvals") as may be required by state takeover laws.

          (d)  SEC DOCUMENTS.  PCA has delivered or made available to Sierra a
     true and complete copy of each material report, schedule, registration
     statement and definitive proxy statement filed by PCA with the SEC since
     January 1, 1992 (as such documents have since the time of their filing been
     amended, the "PCA SEC Documents") which are all the documents (other than
     preliminary material) that PCA has been required to file with the SEC since
     such date.  As of their respective dates, the PCA SEC Documents complied in
     all material respects with the requirements of the Securities Act of 1933,
     as 

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<PAGE>

     amended (the "Securities Act"), or the Exchange Act, as the case may be,
     and the rules and regulations of the SEC thereunder applicable to such PCA
     SEC Documents and at the time of its filing none of the PCA SEC Documents
     contained any untrue statement of a material fact or omitted to state a
     material fact required to be stated therein or necessary to make the
     statements therein, in light of the circumstances under which they were
     made, not misleading.  The consolidated financial statements of PCA
     included in the PCA SEC Documents comply as to form in all material
     respects with applicable accounting requirements and with the published
     rules and regulations of the SEC with respect thereto, have been prepared
     in accordance with generally accepted accounting principles applied on a
     consistent basis during the periods involved (except as may be indicated in
     the notes thereto or, in the case of the unaudited statements, as permitted
     by Form 10-Q of the SEC) and fairly present in all material respects
     (subject, in the case of the unaudited statements, to normal, recurring
     audit adjustments) the consolidated financial position of PCA and its
     consolidated Subsidiaries as at the dates thereof and the consolidated
     results of their operations and cash flows for the periods then ended.

          (e)  INFORMATION SUPPLIED.  None of the information supplied or to be
     supplied by PCA for inclusion or incorporation by reference in (i) the
     registration statement on Form S-4 to be filed with the SEC by Sierra in
     connection with the issuance of shares of Sierra Common Stock in the Merger
     (the "S-4") will, at the time the S-4 is filed with the SEC and at the time
     it becomes effective under the Securities Act, contain any untrue statement
     of a material fact or omit to state any material fact required to be stated
     therein or necessary to make the statements therein not misleading, and
     (ii) the Proxy Statement will, at the date mailed to stockholders of PCA
     and shareholders of Sierra and at the times of the meetings of stockholders
     of PCA and shareholders of Sierra to be held in connection with the Merger,
     contain any untrue statement of a material fact or omit to state any
     material fact required to be stated therein or necessary in order to make
     the statements therein, in light of the circumstances under which they are
     made, not misleading. The Proxy Statement will comply as to form in all
     material respects with the provisions of the Exchange Act and the rules and
     regulations thereunder.

          (f)  COMPLIANCE WITH APPLICABLE LAWS.  Except as set forth on
     SCHEDULE 3.1(f), the businesses of PCA and each of its Subsidiaries have
     been and are being conducted in compliance in all material respects with
     all applicable laws, rules, ordinances, regulations, licenses, judgments,
     orders or decrees of federal, state, local and foreign governmental
     authorities, except for possible violations which individually or in the
     aggregate do not, and, insofar as reasonably can be foreseen, in the future
     will not, have a material adverse effect on PCA and its Subsidiaries taken
     as a whole.  PCA and each of its Subsidiaries hold all certificates of
     authority, franchises, grants, permits, licenses, easements, consents,
     certificates, variances, exemptions, orders and approvals from all
     Governmental Entities (collectively, "PCA Permits") which are necessary to
     own, lease and operate the assets and properties they currently own, lease
     and operate 

                                    -10-
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     and to conduct their respective businesses and operations in the manner 
     heretofore conducted and as proposed to be conducted, except for those 
     PCA Permits, the absence of which would not have a Material Adverse Effect
     on PCA.  SCHEDULE 3.1(f) contains a list of all PCA Permits the violation 
     of which would have a Material Adverse Effect on PCA, including the 
     jurisdictions in which PCA or one or more of its Subsidiaries holds a 
     license or are otherwise authorized to conduct insurance business and the
     types or lines of insurance which PCA or one or more of its Subsidiaries is
     permitted to write in such jurisdictions.  Except as set forth on SCHEDULE
     3.1(F), no notice has been received and, after due inquiry of management,
     no investigation or review is pending or, to PCA's knowledge, threatened by
     any Governmental Entity with regard to (i) any alleged violation by PCA or
     any of its Subsidiaries of any law, rule, regulation, ordinance, PCA
     Permit, judgment, order or decree or (ii) any alleged failure to have or
     any violation of any PCA Permit, which violation or failure would have a
     Material Adverse Effect on PCA.  Neither PCA nor any of its Subsidiaries
     nor to PCA's knowledge any of its or their respective executive officers,
     directors or employees (in their capacities as such) has engaged in any
     activity constituting fraud or abuse under the laws relating to health
     care, insurance or the regulation of professional corporations.

     (g)  FINANCIAL STATEMENTS.

          (i)  PCA has delivered, or (if not yet available) will promptly
     deliver when available (and in any event prior to the Effective Time), to
     Sierra complete and correct copies of (i) the consolidated balance sheets
     of PCA and each of its then-existing Subsidiaries as at December 31, 1995,
     1994, 1993, 1992, 1991, and the related audited statements of income and
     stockholders' equity and cash flows, for the fiscal years ended on those
     dates, together with all footnotes and (ii) the unaudited consolidated
     interim financial statements for PCA and each of its Subsidiaries as at,
     and for the fiscal periods ended on September 30, 1996 and 1995 and each
     subsequent quarterly reporting date.  All of such financial statements
     fairly present or when delivered will fairly present, as the case may be
     (subject, in the case of unaudited interim financial statements, to normal,
     recurring adjustments which are not expected to be, individually or in the
     aggregate, materially adverse to PCA and its Subsidiaries taken as a
     whole), in all material respects, the financial position, results of
     operations and cash flows of PCA and each of its Subsidiaries as at the
     respective dates of such balance sheets and for each of the respective
     periods then ended, in conformity with (A) generally accepted accounting
     principles prevailing in the United States ("U.S. GAAP") and (B) in the
     case of each of the Insurance Subsidiaries, statutory or other accounting
     practices prescribed or permitted by the insurance regulatory authorities
     in the States of Florida and Texas or in Puerto Rico, as appropriate, in
     each case applied on a basis consistent throughout the reported periods.

                                    -11-

<PAGE>

          (ii) Except as set forth on SCHEDULE 3.1(g), neither such financial
     statements nor the financial statements of PCA included in the PCA SEC
     Documents (i) contain or when delivered will contain, as the case may be,
     any item of extraordinary or non-recurring income or expense (except as
     specified therein); (ii) reflect or when delivered will reflect, as the
     case may be, uncollectible accounts receivable without a reserve fairly
     stated for uncollectible amounts; and (iii) reflect or when delivered will
     reflect, as the case may be, any write-off or revaluation of assets (except
     as specified therein).  As at the respective dates of the balance sheets
     included in all such financial statements, there was no liability,
     indebtedness or obligation of any nature or in any amount that should
     properly be reflected or provided for in financial statements prepared in
     conformity with U.S.  GAAP or statutory accounting practices prescribed or
     permitted by the applicable insurance regulatory authorities, whichever is
     appropriate, applied on a basis consistent with that for prior periods,
     which was not fully reflected in such financial statements.

          (iii)  Except as set forth on SCHEDULE 3.1(g), the reserves
     recorded in the accounting records of each of the Insurance Subsidiaries
     for insurance policy benefits, losses, claims and expenses and any other
     reserves are reasonable and adequate and were prepared in accordance with
     the statutory or other accounting practices prescribed or permitted by the
     applicable insurance regulatory authorities and of all the jurisdictions in
     which the Insurance Subsidiaries are licensed to transact an insurance
     business and make good and sufficient provisions for all insurance
     obligations of PCA and its Subsidiaries.  Such reserves have been opined
     upon as reasonable and adequate as of December 31, 1995, by Towers Perrin
     Integrated Health Systems Consulting and Insurance Industry Consultants,
     Inc., each a duly qualified actuarial firm that, as of the date of its
     report, was a member in good standing in the American Academy of Actuaries.
     William M. Mercer, Incorporated ("Mercer"), a duly qualified actuarial firm
     that is a member in good standing in the American Academy of Actuaries, has
     evaluated the unpaid loss and loss adjustment expense liabilities of PCA's
     property and casualty Subsidiary, PCA Property & Casualty Insurance Company
     ("PCA P&C"), as of September 30, 1996, with respect to certain "blocks" of
     business (the "Workers' Compensation Business"), a draft report with
     respect to which has been provided to Sierra.  

          (h)  LITIGATION.  Except (i) as set forth on SCHEDULE 3.1(h), (ii) as
     disclosed in the SEC Documents and (iii) for actions and suits arising in
     the ordinary course of the insurance business, none of which is reasonably
     expected to have a Material Adverse Effect on PCA, there is no action,
     suit, proceeding or investigation, either at law or in equity, at or before
     any commission or other administrative authority in any domestic or foreign
     jurisdiction, of any kind now pending or, to PCA's knowledge, threatened,
     involving PCA, any of its Subsidiaries or any of the respective properties
     or assets of PCA or any Subsidiary of PCA that (i) if asserted is
     reasonably expected to have a 

                                   -12-
<PAGE>

     Material Adverse Effect on PCA, (ii) questions the validity of this 
     Agreement or (iii) seeks to delay, prohibit or restrict in any manner the
     Merger or any action taken or to be taken by PCA or any of its Subsidiaries
     under this Agreement.  Except as set forth on SCHEDULE 3.1(h), none of PCA 
     nor any of its Subsidiaries, nor any of their respective properties or 
     assets, is subject to any continuing order of, consent decree, settlement 
     agreement or other similar written agreement (other than agreements related
     to the settlement of insurance claims in the ordinary course of business),
     continuing investigation (other than regularly scheduled audits) by any 
     court, Governmental Entity, or any judicial, administrative or arbitral 
     judgment, order, writ, decree, injunction, restraint, or award of any 
     court, Governmental Entity or arbitrator, including without limitation 
     cease-and-desist or other orders. Neither PCA nor any of its Subsidiaries 
     has agreed to, or is bound by, any extension or waiver of the statute of 
     limitations relating to any pending or potential action, suit, claim, 
     proceeding or investigation involving PCA or any of its Subsidiaries 
     (other than extensions or waivers in connection with the settlement of 
     insurance claims in the ordinary course of business).

          (i)  LABOR AND EMPLOYMENT MATTERS.  Neither PCA nor any of its
     Subsidiaries has employees who are represented by a labor union or
     organization, no labor union or organization has been certified or
     recognized as a representative of any such employees, and neither PCA nor
     any of its Subsidiaries is a party to or has any obligation under any
     collective bargaining agreement or other contract or agreement with any
     labor union or organization.  There are no pending or, to PCA's knowledge,
     threatened, representation campaigns, elections or proceedings or questions
     concerning union representation involving any employees of either PCA or
     any of its Subsidiaries.  Neither PCA nor any of its Subsidiaries has any
     knowledge of any activities or efforts of any labor union or organization
     (or representatives thereof) to organize any of its employees, any demands
     for recognition or collective bargaining, any strikes, slowdowns, work
     stoppages or lock-outs of any kind, or threats thereof, by or with respect
     to any employees of PCA or any of its Subsidiaries, and no such activities,
     efforts, demands, strikes, slowdowns, work stoppages or lock-outs occurred
     during a three-year period preceding the date hereof.  Neither PCA nor any
     of its Subsidiaries has engaged in, admitted committing, or been held in
     any administrative or judicial proceeding to have committed any unfair
     labor practice under the National Labor Relations Act, as amended.  Except
     as set forth on SCHEDULE 3.1(i), neither PCA nor any of its Subsidiaries is
     involved in any industrial or trade dispute or any dispute or negotiation
     regarding a claim of material importance with any labor union or
     organization concerning its employees, and there are no controversies,
     claims, demands or grievances of material importance pending or, so far as
     PCA is aware, threatened, between PCA or any of its Subsidiaries and any of
     their respective employees.

          (j)  ABSENCE OF CERTAIN CHANGES.  Since December 31, 1995 and except
     (i) as set forth in SCHEDULE 3.1(j), (ii) for the execution and delivery of
     this Agreement and 

                                   -13-
<PAGE>

     changes in its properties or business attributable to the transactions 
     contemplated by this Agreement, (iii) as disclosed in PCA's financial 
     statements or in the PCA SEC Reports previously delivered or made available
     to Sierra and Sierra Sub and (iv) sales and purchases of investment 
     securities in the ordinary course, neither PCA nor any of its Subsidiaries:

            (i)  had any change in its financial condition or businesses,
          assets or liabilities, other than changes which have not had,
          individually or in the aggregate, a Material Adverse Effect on PCA;

            (ii) suffered any damage, destruction or loss of physical property
          (not adequately covered by insurance) that, individually or in the 
          aggregate, has had a Material Adverse Effect on PCA;

            (iii)   issued, sold or otherwise disposed of, or, since October 31,
          1996, redeemed, purchased or otherwise acquired, or agreed to issue,
          sell or otherwise dispose of, redeem, purchase or otherwise acquire,
          any capital stock or any other security of PCA or any of its 
          Subsidiaries or granted or agreed to grant any option warrant or other
          right to subscribe for or to purchase any capital stock or any other
          security of PCA or any of its Subsidiaries;

            (iv) incurred or agreed to incur any material indebtedness for
          borrowed money;

            (v)  paid or obligated itself to pay in excess of $500,000 in the
          aggregate for any fixed assets;

            (vi) [intentionally omitted];

            (vii)   sold, transferred, leased or otherwise disposed of, or
          agreed to sell, transfer, lease or otherwise dispose of, (A) any
          properties or assets to any director or officer of PCA or of any
          Subsidiary of PCA or any member of the family or any other affiliate
          of any of the foregoing or (B) any properties or assets having a fair
          market value of $250,000 or agreed to sell, transfer, lease or
          otherwise dispose of, any assets (other than securities) having a fair
          market value at the time of sale, transfer or disposition of $250,000;

            (viii)  mortgaged, pledged or subjected to any material charge,
          lien, claim or encumbrance, or agreed to mortgage, pledge or subject
          to any material charge, lien, claim or encumbrance any of its material
          properties or assets;

                                   -14-
<PAGE>

            (ix) declared, set aside or paid any dividend or made any 
          distribution (whether in cash, property or stock) with respect to any
          of its capital stock;

            (x)  (A) increased, or agreed to increase, the compensation or
          bonuses or special compensation of any kind of any of its directors,
          officers or employees (other than insurance agents or independent
          contractors) over the rate being paid to them on December 31, 1995, as
          set forth in PCA's Proxy Statement for the 1996 Annual Meeting of
          Stockholders ("PCA's 1996 Proxy Statement"), other than normal merit
          and cost-of-living increases pursuant to customary arrangements
          consistently followed, or (B) since July 1, 1996, paid any bonus or
          similar compensation to any director, officer or employee of PCA or
          any Subsidiary of PCA in excess of $100,000, or (C) entered into any
          employment, consulting or severance agreement or arrangement with any
          director, officer or employee (other than any agent or independent
          contractor) or adopted or increased any benefit under any insurance,
          pension or other employee benefit plan, payment or arrangement made
          to, for or with any director, officer or employee (other than any
          agent or independent contractor);

            (xi) has terminated, or been notified in writing of the likely
          termination of, a material contract with a hospital or other provider,
          a self-insured employer, a union or other association, a government
          agency or a national insurance carrier or any other material contract
          regarding managed care services or insurance services;

            (xii)   neither PCA nor any of its Subsidiaries has entered into a 
          contract or arrangement with an individual or entity (including a 
          network of health care providers) providing for the rendering of
          professional health care services by such person as an employee of or
          contractor to PCA (other than a provider of in-patient care) under
          which, during the last 12 months, PCA was obligated or became
          committed to pay in excess of $500,000 or under which, during the next
          12 months, PCA is reasonably expected to pay or to become obligated to
          pay in excess of $500,000, except for such contracts that are
          terminable by PCA upon 90 days advance notice without penalty;

            (xiii)  except as otherwise required or provided for in this
          Agreement and except in the ordinary course of business, made or
          permitted any material amendment or termination of any material
          contract, lease, concession, franchise, license, indenture,
          instrument, mortgage, note, loan or credit agreement or other
          obligation to which it is a party;

            (xiv)   had any resignation or termination of employment of any
          of its key officers or employees, or become aware of any impending or
          threatened 

                                   -15-
<PAGE>

          termination of employment, that would, individually or in the 
          aggregate, have a Material Adverse Effect on PCA;

            (xv) had any labor trouble or concerted work stoppage or knows of
          any impending or threatened labor trouble or concerted work stoppage;

            (xvi)   canceled, or agreed to cancel, any debts or claims over
          $500,000 in the aggregate or $250,000 individually other than in the
          ordinary course of business;

            (xvii)  made any material change in its accounting methods or
          practices with respect to its condition, operations, business,
          properties, assets or liabilities;

            (xviii) entered into any material transaction not in the ordinary
          course of its business;

            (xix)   made any charitable or political contribution or pledge in 
          excess of $100,000 in the aggregate;

            (xx) agreed or committed to do, or authorized or approved any
          action looking to, any of the foregoing;

            (xxi)   paid aggregate commissions to insurance agents and
          independent contractors for policies issued in 1995 and with normal
          anniversary dates of January 1, 1995 or subsequent thereto in excess
          of 15% of direct premiums written or; 

            (xxii)  made any material cash payments to insurance agents,
          independent contractors or brokers other than pursuant to a Producer
          Profit Share Agreement. 

          (k)  MATERIAL CONTRACTS.  Except as set forth in SCHEDULE 3.1(k),
     neither PCA nor any of its Subsidiaries is a party to any written or oral:

               (i)  employment or consulting contract or other contract for
          services involving a payment of more than $250,000 annually and that
          is not terminable without cost upon thirty (30) days' prior written
          notice;

               (ii) material lease, franchise or concession providing for a
          payment by any person of more than $500,000 annually;

                                   -16-

<PAGE>

          (iii)  loan agreement, mortgage, indenture, promissory note, financing
     lease or other instrument relating to any debt (in excess of $250,000 and 
     which, in the aggregate, do not amount to more than $1,000,000);

          (iv)  contract of purchase or sale involving more than $500,000 and 
     that is not in the ordinary course of business;

          (v)  partnership, joint venture, material license or similar 
     agreement;

          (vi)  stand-by letter of credit, guarantee  or performance bond;

          (vii)  contract restricting the ability of any person from freely 
     engaging in any business or competing anywhere in the world;

          (viii)  material contract with a hospital or other provider, a
     self-insured employer, a union or other association, a governmental
     agency or a national insurance carrier or any other material contract
     regarding managed care services or insurance services;

          (ix)  contract or arrangement with an individual or entity (including 
     a network of health care providers) providing for the rendering of 
     professional health care services by such person as an employee of or 
     contractor to PCA (other than a provider of in-patient care) under which, 
     during the last 12 months, PCA was obligated or became committed to pay in 
     excess of $1,000,000 except for such contracts that are terminable by PCA 
     upon 90 days advance notice without penalty; or

          (x)  other material contract or commitment not made in the ordinary 
     course of business.

Each contract or other agreement listed in SCHEDULE 3.1(k) is in full force and 
effect and is valid and enforceable by PCA or a Subsidiary of PCA, as the case 
may be, in accordance with its terms.  Except as set forth on SCHEDULE 3.1(k), 
neither PCA nor any of its Subsidiaries is in default in the observance or the 
performance of any term or obligation to be performed by it under any contract 
listed in SCHEDULE 3.1(k) except for such defaults the effect of which singly 
or in the aggregate would not have a Material Adverse Effect on PCA. To the 
knowledge of PCA without investigation, no other person is in default in the 
observance or the performance of any term or obligation to be performed by it 
under any material contract listed in SCHEDULE 3.1(k).  There is currently no 
outstanding bid or contract proposal by PCA or any of its Subsidiaries which, 
if accepted or entered into, might reasonably be expected to result in a 
material loss to either PCA or any of its Subsidiaries, except with respect to 
losses occurring in the 


                                     -17-
<PAGE>

ordinary course of business.  PCA has delivered or made available to Sierra 
and Sierra Sub copies of all contracts listed in the schedules hereto.

     (l)  OFFICERS AND DIRECTORS AND EMPLOYEES.  PCA's 1996 Proxy Statement, as 
modified by SCHEDULE 3.1(l), sets forth a list of:

          (i)  The names of all directors and officers of PCA and each of its 
     Subsidiaries;

          (ii)  The name and current annual rate of compensation (including
     bonuses and other forms of compensation) paid by PCA and its Subsidiaries 
     to each of its respective officers, directors and employees whose annual 
     rate of base compensation exceeded $100,000 for the year ended 
     December 31, 1995; and

          (iii)  The names of all persons who have written employment,
     consulting or severance agreements or arrangements with PCA or any of
     its Subsidiaries if such agreement or arrangement provides for payment
     to such persons resulting from such person's resignation, from a
     change-in-control of PCA or any of its Subsidiaries or from a change
     in such person's responsibilities following a change-in-control,
     complete and correct copies of such agreements have been completed to
     Sierra.

     (m)  TITLE TO AND CONDITION OF PROPERTIES AND ASSETS.  

          (i)  PCA and its Subsidiaries have good and defensible title to,
     or valid leasehold interests in, their respective material properties
     and assets, whether owned or leased, including, without limitation,
     (i) those used in their respective businesses, and (ii) those
     reflected in the consolidated balance sheet of PCA as of September 30,
     1996 most recently delivered to Sierra (except as since sold or
     otherwise disposed of in the ordinary course of business and except
     for minor defects in title, easements, restrictive covenants and
     similar encumbrances or impediments that, individually or in the
     aggregate, do not and will not materially interfere with the ability
     of PCA and its Subsidiaries to use their properties or to conduct
     their businesses as currently conducted), in each case subject to no
     mortgage, pledge, conditional sales contract, lien, security interest,
     right of possession in favor of any third party, claim or other
     encumbrance (collectively "Liens"), except for (w) the lien of current
     Taxes (as hereinafter defined) not yet due and payable, (x) with
     respect to leased property, the provisions of such leases, (y) Liens
     granted to PCA's lenders under that certain Revolving Credit Agreement
     (the "PCA Credit Facility") between PCA and Citibank, N.A. dated
     October 27, 1994, as amended on September 22, 1995 and March 29, 1996
     and (z) liens, that, individually or in the aggregate, do not and will
     not materially 


                                     -18-
<PAGE>

     interfere with the ability of PCA or any of its Subsidiaries to conduct 
     business as currently conducted.  Except as described on SCHEDULE 3.1(m), 
     subsequent to December 31, 1995, neither PCA nor any of its Subsidiaries 
     has sold or disposed of any of their respective properties or assets or 
     obligated themselves to do so except in the ordinary course of business.  
     The facilities, machinery, furniture, office and other equipment of PCA 
     and each of its Subsidiaries that are used in their respective businesses 
     are in good operating condition and repair, subject to the ordinary wear 
     and tear of those businesses.

          (ii)  All of the real property owned or leased by PCA or any of
     its Subsidiaries has been maintained by PCA in compliance with all
     federal, state and local environmental protection, occupational,
     health and safety or similar laws, ordinances, restrictions, licenses
     and regulations, except where the failure to so maintain the property
     would not have a Material Adverse Effect on PCA. 

     (n)  PATENTS, COPYRIGHTS, SERVICE MARKS AND TRADEMARKS.  Neither PCA
nor any of its Subsidiaries own or licenses any patent, copyright, service
mark, trademark or other intellectual property right, other than such
patents, copyrights, service marks, trademarks and other intellectual
property rights as are described in SCHEDULE 3.1(n), except for such
intellectual property rights the loss of which singly or in the aggregate
would not have a Material Adverse Effect on PCA.  Except as set forth on
SCHEDULE 3.1(n) and other than such as would have a Material Adverse Effect
on PCA: (i) PCA and its Subsidiaries own or license all patents,
copyrights, service marks, trademarks and other intellectual property
rights that are necessary to the conduct of their respective businesses,
(ii) all names under which PCA or any of its Subsidiaries currently
conducts business are set forth in SCHEDULE 3.1(n), (iii) no claim has been
made, and to PCA's knowledge no basis for any such claim exists, that PCA
or any of its Subsidiaries has infringed any patent, copyright, service
mark, trademark or other intellectual property right of any other person
and (iv) no claim has been made, and to PCA's knowledge no basis for any
such claim exists, that any person has infringed on any patent, copyright,
service mark, trademark or other intellectual property right of PCA or any
of its Subsidiaries.

     (o)  EMPLOYEE BENEFIT PLANS.

          (i)  LIST OF PLANS.  SCHEDULE 3.1(o) includes a complete and
     accurate list of all employee benefit plans ("Plans"), as defined in
     Section 3(3) of the Employee Retirement Income Security Act of 1974,
     as amended ("ERISA"), and material benefit arrangements that are not
     Plans ("Benefit Arrangements"), including, but not limited to any (A)
     employment or consulting agreements, (B) incentive bonus or deferred
     bonus arrangements, (C) arrangements providing termination allowance,
     severance or similar benefits, (D) equity compensation 


                                     -19-
<PAGE>

     plan, and (E) deferred compensation plans, (F) cafeteria plans, (G) 
     employee assistance programs, (H) bonus programs, (I) scholarship programs,
     (J) vacation policies, and (K) stock option plans that are currently
     in effect or were maintained within three years of the Effective Time,
     or have been approved before the Effective Time but are not yet
     effective, for the benefit of directors, officers, employers or former
     employees (or their beneficiaries) of PCA or a Controlled Company
     ("Designated Plans").  For purposes of this Section 3.1(o), "Controlled 
     Company" shall mean any entity that, together with PCA as of the relevant 
     determination date under ERISA, is or was required to be treated as a 
     single employer under Section 414 of the Code and any reference to PCA in 
     this Section 3.1(o) shall also include a reference to a Controlled Company.

          (ii)  NO TITLE IV PLANS OR VEBAS.  Neither PCA nor any entity
     (whether or not incorporated) that was at any time during the six
     years before the Effective Time treated as a single employer together
     with PCA under Section 414 of the Code has ever maintained, had any
     obligation to contribute to or incurred any liability with respect to
     a pension plan that is or was subject to the provisions of Title IV of
     ERISA or Section 412 of the Code.  Neither PCA nor any entity (whether
     or not incorporated) that was at any time during the six years before
     the Effective Time treated as a single employer together with PCA
     under Section 414 of the Code has ever maintained, had an obligation
     to contribute to, or incurred any liability with respect to a
     multiemployer pension plan as defined in Section 3(37) of ERISA. 
     During six years before the Effective Time, PCA has not maintained,
     had an obligation to contribute to or incurred any liability with
     respect to a voluntary employees beneficiary association that is or
     was intended to satisfy the requirements of Section 501(c)(9) of the
     Code.

          (iii)   DISCLOSED PLANS.  With respect to each Designated Plan,
     PCA has delivered to Sierra, as applicable, true and complete copies
     of (A) all written documents comprising such Plan or each Benefit
     Arrangement (including amendments and individual agreements relating
     thereto); (B) the trust, group annuity contract or other document that
     provides for the funding of the Designated Plan or the payment of
     Designated Plan benefits, (C) the three most recent annual Form 5500,
     990 and 1041 reports (including all schedules thereto) filed with
     respect to the Designated Plan; (D) the most recent actuarial report,
     valuation statement or other financial statement; (E) the most recent
     Internal Revenue Service determination letter ("IRS") and all rulings
     or determinations requested from the IRS after the date of that
     determination letter; (F) the summary plan description currently in
     effect and all material modifications thereto; and (G) all other
     correspondence from the IRS or Department of Labor received that
     relate to one or more of the Designated Plans with respect to any
     matter, audit or inquiry that is still pending.  All information
     provided by PCA and its


                                     -20-

<PAGE>

      Subsidiaries to the individuals who prepared any such financial 
      statements was true, correct and complete in all material respects.
      Each financial or other report delivered to Sierra pursuant hereto is
      accurate in all material respects, and there has been no material 
      adverse change in the financial status of any Designated Plan since 
      the date of the most recent report provided with respect thereto.

        (iv) COMPLIANCE WITH LAW.  Except as set forth in SCHEDULE 3.1(o),
      PCA has operated, and has caused its appointees and nominees to 
      operate, each Designated Plan in a manner which is in material 
      compliance with the terms thereof and with all applicable law, 
      regulations and administrative agency rulings and requirements 
      applicable thereto, the violation of which would not have a material
      adverse effect on PCA and its Subsidiaries taken as a whole.  Except
      as otherwise disclosed in SCHEDULE 3.1(o), with respect to each
      Designated Plan that is a Plan (A) the Plan is in compliance with
      ERISA in all material respects, including but not limited to all
      reporting and disclosure requirements of Part 1 of Subtitle B of
      Title I of ERISA; (B) the appropriate Form 5500 has been timely filed,
      for each year of its existence; (C) there has been no transaction
      described in sections 406 or 407 of ERISA or section 4975 of the Code
      relating to the Plan unless exempt under section 408 of ERISA or
      section 4975 of the Code, as applicable; and (D) the bonding
      requirements of section 412 of ERISA have been satisfied.

        (v)  CONTRIBUTIONS.  Full payment has been made of all amounts
      which PCA or a Controlled Company is required, under applicable law or
      under any Designated Plan or any agreement related to any Designated
      Plan to which PCA or a Controlled Company is a party, to have paid as
      contributions thereto as of the last day of the most recent fiscal
      year of each Designated Plan ended prior to the date hereof.  Benefits
      under all Designated Plans are as represented in the governing
      instruments provided pursuant to (i) above, and have not been
      increased subsequent to the date as of which documents have been
      provided.

        (vi) TAX QUALIFICATION.  Each Designated Plan, as amended to date, 
      that is intended to be qualified under Section 401(a) and 501(a) of 
      the Code has been determined to be so qualified by the IRS, has been 
      submitted to the IRS for a determination with respect to such 
      qualified status or the remedial amendment period established under
      Section 402(b) of the Code with respect to the Designated Plan will
      not have expired prior to the Effective Time.  Except as disclosed on
      SCHEDULE 3.1(o), no facts have occurred which if known by the IRS
      could cause disqualification of any such Plan.

        (vii)   TAX OR CIVIL LIABILITY.  Neither PCA nor a Controlled
      Company has participated in, or is aware of, any conduct that could
      result in the imposition 

                                -21-
<PAGE>

      upon PCA of any excise tax under Sections 4971 through 4980B of the 
      Code or civil liability under Section 502(i) of ERISA with respect to
      any Designated Plan.

        (viii)  CLAIMS LIABILITY.  There is no action, claim or demand of 
      any kind (other than routine claims for benefits) that has been
      brought or, to PCA's knowledge, threatened against, or relating to,
      any Designated Plan, and PCA has no knowledge of any pending
      investigation or administrative review by any Governmental Entity
      relating to any Designated Plan.

        (ix) RETIREE WELFARE COVERAGE.  Except as set forth in 
      SCHEDULE 3.1(o), no Designated Plan provides any health, life or other
      welfare coverage to employees of PCA or a Controlled Company beyond
      termination of their employment with PCA or a Controlled Company by
      reason of retirement or otherwise, other than coverage as may be
      required under Section 4980B of the Code or Part 6 of ERISA, or under
      the continuation of coverage provisions of the laws of any state or
      locality.

        (x)  NO EXCESS PARACHUTE PAYMENTS.  No amount that could be
      received (whether in cash or property or the vesting of property) as a
      result of any of transactions contemplated by this Agreement by any
      employee, officer or director of PCA or a Controlled Company who is a
      "disqualified individual" (as such term is defined in proposed
      Treasury Regulation Section 1.280G-1) under any employment, severance
      or termination agreement, other compensation arrangement or Designated
      Plan currently in effect would be characterized as an "excess
      parachute payment" (as such term is defined in Section 280G(b)(1) of
      the Code). 

      (p)  TRANSACTIONS WITH OFFICERS, DIRECTORS AND OTHERS.  Except as set
 forth on SCHEDULE 3.1(p), no director, officer or affiliate of PCA, or any
 member of the immediate family or any other affiliate of any of the
 foregoing, is a party to business arrangements or relationships of any kind
 with PCA or its Subsidiaries in which the amount involved exceeds $60,000,
 or, to the knowledge of PCA, owns or has an ownership interest in any
 corporation (in excess of 5% of any publicly traded corporation) or other
 entity that is a party to, or in any property which is the subject of any
 such business arrangements.

      (q)  INSURANCE MATTERS--REINSURANCE AND COINSURANCE.  SCHEDULE 3.1(q)
 contains a list of all reinsurance or coinsurance treaties or agreements to
 which PCA or any of its Subsidiaries is a party.  All such treaties or
 agreements as set forth in such Schedule are valid, binding and in full
 force and effect in accordance with their terms (except as the
 enforceability thereof may be limited by applicable bankruptcy, insolvency,
 reorganization, moratorium or other similar laws affecting creditors'
 rights generally or 

                                -22-
<PAGE>

 by the principles governing the availability of equitable remedies); and 
 neither PCA nor its Insurance Subsidiaries nor, to PCA's knowledge, any 
 other party thereto is in default as to any provision thereof, except for 
 such defaults the effect of which singly or in the aggregate would not have
 a Material Adverse Effect on PCA, and none of such agreements contains any 
 provision (A) providing that any other party thereto may terminate such 
 agreement or declare a default or seek damages thereunder by reason of the 
 transactions contemplated by this Agreement or (B) which would be altered 
 or otherwise become applicable by reason of such transactions.  PCA does 
 not know of any facts or events that could cause the financial condition of
 any party to any such agreement to be impaired to such an extent that a 
 default thereunder may be reasonably anticipated.

      (r)  TAXES.

           (i)  DEFINITIONS.  For purposes of this Agreement:

                (A)  "Code" means the Internal Revenue Code of 1986, as
           amended.

                (B)  "Returns" means any returns, reports or statements
           (including any information returns) required to be filed for
           purposes of a particular Tax.

                (C)  "Tax" or "Taxes" means all federal, state, local or
           foreign net or gross income, gross receipts, net proceeds,
           premium, capital, sales, use, ad valorem, value added, franchise,
           withholding, payroll, employment, disability, workers' 
           compensation, excise, property, alternative or add-on minimum, 
           environmental or other taxes, assessments, duties, fees, 
           levies or other governmental charges of any nature whatever, 
           whether disputed or not, together with any interest, 
           penalties, additions to tax or additional amounts with respect 
           thereto.

                (D)  "Taxing Authority" means any governmental agency,
           board, bureau, body, department or authority of any United 
           States federal, state or local jurisdiction, or any foreign 
           jurisdiction, having or purported to exercise jurisdiction with 
           respect to any Tax.

           (ii)    TAX REPRESENTATIONS. Except as set forth in SCHEDULE 3.1(r):

                   (A)  All Returns required to have been filed on or before
           the date hereof by or with respect to PCA or any of its Subsidiaries
           or any affiliated, combined, consolidated, unitary or similar group 
           of which PCA 

                                -23-
<PAGE>

           or its Subsidiaries is or was a member (a "Relevant Group") with any
           Taxing Authority have been duly and timely filed, and each such 
           Return correctly and completely reports all material information 
           required to be reported thereon.  All Taxes of PCA or its 
           Subsidiaries or any member of a Relevant Group (whether or not shown
           on any Return) with respect to any period ending on or before the 
           date hereof have been paid or are duly reserved for in the financial
           statements of PCA and its Subsidiaries for such period.

                    (B)  Neither PCA nor any of its Subsidiaries has waived any
           statute of limitations in respect of Taxes or agreed to any
           extension of time with respect to any Tax assessment or deficiency.

                    (C)  PCA is not currently under audit by any Taxing
           Authority with respect to any material Return.  PCA's consolidated 
           federal income tax returns have been audited through 
           December 31, 1992.  No claim is pending by any Taxing Authority in 
           a jurisdiction in which PCA or any of its Subsidiaries does not file
           Returns, that it is subject to Taxation in that jurisdiction.
   
                    (D)  Other than agreements among PCA and its Subsidiaries, 
           neither PCA nor any of its Subsidiaries is a party to any tax 
           allocation or tax sharing agreement.

                    (E)  Neither PCA nor any of its Subsidiaries is a 
           "consenting corporation" within the meaning of Section 341(f)(1) of
           the Code or comparable provisions of any state statute, and none of
           the assets of PCA or its Subsidiaries is subject to any election 
           under Section 341(f) of the Code or comparable provisions of any 
           state statutes.

                    (F)  Neither PCA nor any of its Subsidiaries has received
           or requested any ruling of a Taxing Authority relating to Taxes or
           entered into any material written or legally binding agreement 
           with a Taxing Authority relating to Taxes.

                    (G)  Neither PCA nor any of its Subsidiaries (1) has or is
           projected to have a material amount includible in its income for the
           current taxable year under Section 951 of the Code, (2) has been a
           passive foreign investment company within the meaning of Section 1296
           of the Code, and neither PCA nor any of its Subsidiaries is a
           shareholder, directly or indirectly in any passive foreign investment
           company, or (3) has a material unrecaptured overall foreign loss
           within the meaning of Section 940(f) of the Code.

                                   -24-
<PAGE>

                    (H)  Neither PCA nor any of its Subsidiaries is, or at any 
           time has been, subject to (1) the dual consolidated loss provisions 
           of Section 1503(d) of the Code, (2) the overall foreign loss 
           provisions of Section 904(f) of the Code, or (3) the 
           recharacterization provisions of Section 952(c)(2) of the Code.

                    (I)  None of the assets of PCA or any of its Subsidiaries
          constitutes tax-exempt bond financed property or tax-exempt use
          property, within the meaning of Section 168 of the Code. 
          Neither PCA nor any of its Subsidiaries is a party to any "safe
          harbor lease" that is subject to the provisions of Section 168(f)(3)
          of the Internal Revenue Code as in effect prior to the Tax Reform Act
          of 1986, or to any "long-term contract" within the meaning of
          Section 460 of the Code.

                     (J)  Neither PCA nor any of its Subsidiaries has any 
          material (1) deferred gain or loss arising out of any deferred 
          intercompany transaction or (2) income which will be reportable in a
          period ending after the Closing Date which is attributable to a 
          transaction occurring in, or a change in accounting method made for,
          a period ending on or prior to the Closing Date.

                     (K)  Neither PCA nor any of its Subsidiaries is a party 
          to any written, oral or implied agreement or obligation to provide any
          "covered employee," as defined in Section 162(m)(3) of the Code, with
          remuneration in excess of $1 million, that would be disallowed as a
          deduction for Federal income tax purposes pursuant to Section 162(m)
          of the Code.
     
          (iii)  REPRESENTATIONS RELATING TO TAX-FREE REORGANIZATION.

                 (A)  In the Merger, shares of PCA Common Stock representing
          control of PCA, as defined in Section 369(c) of the Code, will be
          exchanged solely for voting stock of Sierra.

                 (B)  PCA is not an investment company within the meaning of
          Section 368(a)(2)(F)(iii) of the Code.

                 (C)  Neither PCA nor any of its Subsidiaries is under the
          jurisdiction of a court in a Title 11 or similar case within the
          meaning of Section 368(a)(3)(A) of the Code.

                 (D)  To the knowledge of PCA there is no plan or intention on
          the part of PCA stockholders to sell, exchange or otherwise dispose 
          of a number of shares of Sierra Common Stock received by them for 
          shares of PCA Common Stock pursuant to the Merger, nor to enter 
          into any puts, calls, straddles, spreads or

                                     -25-

<PAGE>

          similar transactions, that would reduce PCA stockholders' ownership
          for U.S. federal income tax purposes of Sierra's Common Stock to a 
          number of shares having a value, as of the Effective Time, of less 
          than 50 percent of the value of all of the formerly outstanding stock
          of PCA as of the same date.  For purposes of this representation, 
          shares of PCA Common Stock surrendered by dissenters or exchanged for
          cash in lieu of fractional shares of Sierra Common Stock are treated 
          as outstanding shares of PCA Common Stock at the Effective Time.  
          Moreover, shares of PCA Common Stock and shares of Sierra Common Stock
          held by PCA stockholders and otherwise sold, redeemed or disposed of 
          prior to or subsequent to the Merger will be considered in making 
          this representation.

                (E)  At the Effective Time, the fair market value of the assets
          of PCA will exceed the sum of its liabilities, plus the amount of
          liabilities, if any, to which such assets are subject.

                (F)  At the Effective Time, PCA will not have outstanding any
          warrants, options, convertible securities, or any other type of right
          pursuant to which any person could acquire stock in PCA that, if
          exercised or converted, would affect Sierra's acquisition or retention
          of control of PCA as defined in Section 368(c)(1) of the Code.

                (G)  At the Effective Time there will not be any intercorporate
          indebtedness existing between Sierra and PCA or between Sierra Sub and
          PCA.

                (H)  PCA, PCA stockholders and Subsidiaries will pay their own
          respective expenses, if any, incurred in connection with the Merger.

                (I)  As of the Effective Time, PCA will hold at least 90% of the
          fair market value of its net assets and at least 70% of the fair
          market value of its gross assets held immediately before the
          commencement of the negotiations of the transaction as contemplated
          herein or hereby.  For purposes of this representation, amounts paid
          by PCA to dissenters, amounts paid by PCA to stockholders who receive
          cash and other property, amounts used by PCA to pay reorganization
          expenses and all redemptions and distributions (except for regular,
          normal dividends) made by PCA will be included as assets of PCA
          immediately prior to the transaction.

                (J)  PCA will not make any extraordinary dividend payments to
          its stockholders prior to the Effective Time, or in contemplation 
          of the Merger.

          (s)  OPINION OF FINANCIAL ADVISOR.  PCA has received the opinion of
     Bear, Stearns & Co. dated the date hereof, to the effect that the Merger is
     fair, from a financial 

                                     -26-

<PAGE>

     point of view, to the stockholders of PCA.   PCA has delivered a true and
     complete copy of this opinion to Sierra.

          (t)  VOTE REQUIRED.  The affirmative vote of a majority of the votes
     that holders of the outstanding shares of PCA Common Stock are entitled to
     cast is the only vote of the holders of any class or series of PCA capital
     stock or Voting Debt necessary to approve this Agreement and the
     transactions contemplated hereby (assuming the accuracy of the
     representations contained in Sections 3.2(b) and 3.2(u), without giving
     effect to the knowledge qualification thereof).

          (u)  ACCOUNTING MATTERS.  Neither PCA nor to the best of its
     knowledge, any of its affiliates, has through the date of this Agreement,
     taken or agreed to take any action that would prevent Sierra from
     accounting for the business combination to be effected by the Merger as a
     pooling of interests.

          (v)  INVESTMENT COMPANY ACT.  Neither PCA nor any of its Subsidiaries
     is an "investment company", or a company "controlled" by an "investment
     company", within the meaning of the Investment Company Act of 1940, as
     amended.

          (w)  APPLICABILITY OF DGCL 203.  The provisions of Section 203 of the
     DGCL will not, assuming the accuracy of the representations contained in
     Section 3.2(u) (without giving effect to the knowledge qualification
     thereof), apply to this Agreement or any of the transactions contemplated
     hereby.

          (x)  OWNERSHIP OF SIERRA COMMON STOCK.  As of the date hereof, neither
     PCA nor, to the best of its knowledge, any of its affiliates or associates
     is an "interested stockholder" of Sierra within the meaning of Section 203
     of the DGCL.

     3.2. REPRESENTATIONS AND WARRANTIES OF SIERRA AND SIERRA SUB.  Sierra and
Sierra Sub represent and warrant to PCA as follows:

          (a)  ORGANIZATION; STANDING AND POWER.  Each of Sierra and Sierra Sub
     and any other Subsidiary of Sierra is a corporation duly organized, validly
     existing and in good standing under the laws of its state of incorporation
     or organization and has all requisite corporate power and authority to own,
     lease and operate its properties and to carry on its business as now being
     conducted, and is duly qualified and in good standing to do business in
     each jurisdiction in which the nature of its business or the ownership of
     leasing of its properties makes such qualification necessary, except where
     the failure to be so qualified would not have a Material Adverse Effect on
     Sierra.

          (b)  CAPITAL STRUCTURE.  As of the date hereof, the authorized capital
     stock of Sierra consists of 40,000,000 shares of Sierra Common Stock and
     1,000,000 shares of 

                                     -27-
<PAGE>

     Sierra Series A Preferred Stock.  As of the close of business on 
     October 31, 1996: (i) 17,874,403 shares of Sierra Common Stock were 
     outstanding, (ii) 3,086,153 shares of Sierra Common Stock were reserved
     for issuance pursuant to the Sierra stock option plans and Sierra 
     restricted stock plans (collectively, "Sierra Stock Plans"), (iii) 100,200
     shares of Sierra Common Stock were held by Sierra in its treasury, (iv)
     209,606 shares of Sierra Series A Preferred were reserved for issuance upon
     exercise of the Rights and (v) no Voting Debt of Sierra or any of its
     Subsidiaries was issued or outstanding; since September 30, 1996 there has
     been no material change in such share information.  Between September 30,
     1996 and the date of this Agreement Sierra has granted stock options
     pursuant to the Sierra Stock Plans as set forth on SCHEDULE 3.2(b).  All
     outstanding shares of Sierra capital stock are, and the shares of Sierra
     Common Stock (x) to be issued pursuant to or as specifically contemplated
     by this Agreement, and (y) when issued in accordance with this Agreement,
     upon exercise of PCA Stock Options, in accordance with actions permitted by
     Section 4.1(c), will be, validly issued, fully paid and nonassessable and
     not subject to preemptive rights.  As of the date of this Agreement, except
     for this Agreement, the Sierra Stock Plans, and the Rights Agreement, there
     are no options, warrants, calls, rights or agreements to which Sierra or
     any Subsidiary of Sierra is a party or by which it or any such Subsidiary
     is bound obligating Sierra or any Subsidiary of Sierra to issue, deliver or
     sell, or cause to be issued, delivered or sold, additional shares of
     capital stock or any Voting Debt of Sierra or of any Subsidiary of Sierra
     or obligating Sierra or any Subsidiary of Sierra to issue, deliver or sell,
     or cause to be issued, delivered or sold, additional shares of capital
     stock of Sierra or of any Subsidiary of Sierra to grant, extend or enter
     into any such option, warrant, call, right or agreement.  As of the date
     hereof, the authorized capital stock of Sierra Sub consists of 1,000 shares
     of Common Stock, par value $.01 per share, of which 100 shares are issued
     and outstanding.

          (c)  AUTHORITY.  Sierra and Sierra Sub have all requisite corporate
     power and authority to enter into this Agreement and to consummate the
     transactions contemplated hereby.  The execution and delivery of this
     Agreement and the consummation of the transactions contemplated hereby have
     been duly authorized by all necessary corporate action on the part of
     Sierra and Sierra Sub, except that the approval of Sierra's shareholders of
     this Agreement and the Merger and the transactions contemplated hereby may
     be required.  This Agreement has been duly executed and delivered by Sierra
     and Sierra Sub and constitutes a valid and binding obligation of Sierra and
     Sierra Sub enforceable against each in accordance with its terms.  The
     execution and delivery of this Agreement does not, and the consummation of
     the transactions contemplated hereby will not, conflict with, or result in
     any Violation pursuant to any provision of the Articles of Incorporation or
     Bylaws of Sierra, except (i) as set forth on SCHEDULE 3.2(c) hereto or
     (ii) as contemplated by the next sentence hereof, result in any Violation
     of any loan or credit agreement, note, mortgage, indenture, lease,
     Designated Plan or other agreement, obligation, instrument, permit,
     concession, franchise, license, judgment, order, decree,

                                     -28-
<PAGE>

     statute, law, ordinance, rule or regulation applicable to Sierra or any 
     Subsidiary of Sierra or their respective properties or assets, which 
     Violation would have a Material Adverse Effect on Sierra.  No consent, 
     approval, order or authorization of, or registration, declaration or 
     filing with, any Governmental Entity is required by or with respect to 
     Sierra or any of its Subsidiaries in connection with the execution and 
     delivery of this Agreement by Sierra and Sierra Sub or the consummation 
     by Sierra and Sierra Sub of the transactions contemplated hereby, the 
     failure to obtain which would have a Material Adverse Effect on Sierra, 
     except for (i) the filing of a premerger notification report by Sierra 
     under the HSR Act, (ii) the filing with the SEC of the S-4, the Proxy 
     Statement (if the approval of Sierra's shareholders is required) and such
     reports under Sections 13(a), 13(d) and 16(a) of the Exchange Act, as may 
     be required in connection with this Agreement, and the transactions 
     contemplated hereby and the obtaining from the SEC of such orders as may 
     be so required, (iii) the filing of such documents with, and the obtaining
     of such orders from, the various state authorities, including state 
     securities authorities, that are required in connection with the 
     transactions contemplated by this Agreement, (iv) the filing of the Merger
     Filings with the Secretary of State of the State of Delaware and 
     appropriate documents with the relevant authorities of other states in 
     which Sierra is qualified to do business and (v) the State Approvals and 
     State Takeover Approvals.

          (d)  SEC DOCUMENTS.  Sierra has delivered or made available to PCA a
     true and complete copy of each material report, schedule, registration
     statement and definitive proxy statement filed by Sierra with the SEC since
     January 1, 1992 (as such documents have since the time of their filing been
     amended, the "Sierra SEC Documents") which are all the documents (other
     than preliminary material) that Sierra was required to file with the SEC
     since such date.  As of their respective dates, the Sierra SEC Documents
     complied in all material respects with the requirements of the Securities
     Act or the Exchange Act, as the case may be, and the rules and regulations
     of the SEC thereunder applicable to such Sierra SEC Documents, and at the
     time of its filing none of the Sierra SEC Documents contained any untrue
     statement of a material fact or omitted to state a material fact required
     to be stated therein or necessary to make the statements therein, in light
     of the circumstances under which they were made, not misleading.  The
     consolidated financial statements of Sierra and its consolidated
     Subsidiaries included in the Sierra SEC Documents comply as to form in all
     material respects with applicable accounting requirements and with the
     published rules and regulations of the SEC with respect thereto, have been
     prepared in accordance with generally accepted accounting principles
     applied on a consistent basis during the periods involved (except as may be
     indicated in the notes thereto or, in the case of the unaudited statements,
     as permitted by Form 10-Q of the SEC) and fairly present in all material
     respects (subject, in the case of the unaudited statements, to normal,
     recurring audit adjustments) the consolidated financial position of Sierra
     and its consolidated Subsidiaries as at the dates thereof and the
     consolidated results of their operations and cash flows for the periods
     then ended.

                                     -29-

<PAGE>

          (e)  INFORMATION SUPPLIED.  None of the information supplied or to be
     supplied by Sierra or Sierra Sub for inclusion or incorporation by
     reference in (i) the S-4 will, at the time the S-4 is filed with the SEC
     and at the time it becomes effective under the Securities Act, contain any
     untrue statement of a material fact or omit to state any material fact
     required to be stated therein or necessary to make the statements therein
     not misleading and (ii) the Proxy Statement will, at the date mailed to
     shareholders and at the times of the meeting or meetings of shareholders to
     be held in connection with the Merger, contain any untrue statement of a
     material fact or omit to state any material fact required to be stated
     therein or necessary in order to make the statements therein, in light of
     the circumstances under which they are made, not misleading.  The Proxy
     Statement will comply as to form in all material respects with the
     provisions of the Exchange Act and the rules and regulations thereunder,
     and the S-4 will comply as to form in all material respects with the
     provisions of the Securities Act and the rules and regulations thereunder.

          (f)  COMPLIANCE WITH APPLICABLE LAWS.  Except as set forth on
     SCHEDULE 3.2(f), the businesses of Sierra and each of its Subsidiaries have
     been and are being conducted in compliance with all applicable laws, rules,
     ordinances, regulations, licenses, judgments, orders or decrees of federal,
     state, local and foreign governmental authorities, except for possible
     violations which individually or in the aggregate do not, and, insofar as
     reasonably can be foreseen, in the future will not, have a material adverse
     effect on Sierra and its Subsidiaries taken as a whole.  Sierra and each
     Subsidiary of Sierra hold all certificates of authority, franchises,
     grants, permits, licenses, easements, consents, certificates, variances,
     exemptions, orders and approvals from all Governmental Entities
     (collectively, "Sierra Permits") which are necessary to own, lease and
     operate the assets and properties they currently own, lease and operate and
     to conduct their respective businesses and operations in the manner
     heretofore conducted and as proposed to be conducted, except for those
     Sierra Permits, the absence of which would not have a Material Adverse
     Effect on Sierra.  SCHEDULE 3.2(f) contains a list of all Sierra Permits
     the violation of which would have a Material Adverse Effect on Sierra,
     including the jurisdictions in which Sierra or one or more of its
     Subsidiaries holds a license or are otherwise authorized to conduct
     insurance business and the types or lines of insurance which Sierra or one
     or more of its Subsidiaries is permitted to write in such jurisdictions. 
     No notice has been received and, after due inquiry of management, no
     investigation or review is pending or, to Sierra's knowledge, threatened by
     any Governmental Entity with regard to (i) any alleged violation by Sierra
     or any of its Subsidiaries of any law, rule, regulation, ordinance, Sierra
     Permit, judgment, order or decree or (ii) any alleged failure to have or
     any violation of any Sierra Permit which violation or failure would have a
     Material Adverse Effect on Sierra.  Neither Sierra nor any of its
     Subsidiaries nor to Sierra's knowledge any of its or their respective
     executive officers, directors or employees (in their capacities as such)
     has engaged in any activity constituting fraud or 

                                     -30-
<PAGE>

     abuse under the laws relating to health care, insurance or the regulation
     of professional corporations.

          (g)  FINANCIAL STATEMENTS.

            (i)  Sierra has delivered, or (if not yet available) will
          promptly deliver when available (and in any event prior to the
          Effective Time), to PCA complete and correct copies of (i) the balance
          sheets of Sierra and each of its then-existing Subsidiaries as at
          December 31, 1995, 1994, 1993, 1992, 1991, and the related audited
          statements of income and shareholders' equity and cash flows, for the
          fiscal years ended on those dates, together with all footnotes and
          (ii) the unaudited interim financial statements for Sierra and each of
          its Subsidiaries as at, and for the fiscal periods ended on
          September 30, 1996 and 1995 and each subsequent quarterly reporting
          date.  All of such financial statements fairly present or when
          delivered will fairly present, as the case may be (subject, in the
          case of unaudited interim financial statements, to normal, recurring
          adjustments which are not expected to be, individually or in the
          aggregate, materially adverse to Sierra and its Subsidiaries taken as
          a whole), in all material respects, the financial position, results of
          operations and cash flows of Sierra and each of its Subsidiaries as at
          the respective dates of such balance sheets and for each of the
          respective periods then ended, in conformity with (A) U.S. GAAP and
          (B) in the case of each of the Insurance Subsidiaries, statutory or
          other accounting practices prescribed or permitted by the applicable
          insurance regulatory authorities in each case applied on a basis
          consistent throughout the reported periods.

            (ii) Except as set forth on SCHEDULE 3.2(g), neither such
          financial statements nor the financial statements of Sierra included
          in the Sierra SEC Documents (i) contain or when delivered will
          contain, as the case may be, any item of extraordinary or
          non-recurring income or expense (except as specified therein);
          (ii) reflect or when delivered will reflect, as the case may be,
          uncollectible accounts receivable without a reserve fairly stated for
          uncollectible amounts; and (iii) reflect or when delivered will
          reflect, as the case may be, any write-off or revaluation of assets
          (except as specified therein).  As at the respective dates of the
          balance sheets included in all such financial statements, there was no
          liability, indebtedness or obligation of any nature or in any amount
          that should properly be reflected or provided for in financial
          statements prepared in conformity with U.S. GAAP or statutory
          accounting practices prescribed or permitted by the applicable
          insurance regulatory authorities, whichever is appropriate, applied on
          a basis consistent with that for prior periods, which was not fully
          reflected in such financial statements.

                                     -31-
<PAGE>


            (iii)   The reserves recorded in the accounting records of each
          of the Insurance Subsidiaries for insurance policy benefits, losses,
          claims and expenses and any other reserves are reasonable and adequate
          and were prepared in accordance with the statutory or other accounting
          practices prescribed or permitted by the applicable insurance
          regulatory authorities and of all the jurisdictions in which the
          Insurance Subsidiaries are licensed to transact an insurance business
          and make good and sufficient provisions for all insurance obligations
          of Sierra and its Subsidiaries.  Such reserves have been opined upon
          as reasonable and adequate as of December 31, 1995, for Sierra Health
          & Life Insurance Company, Inc. by Towers Perrin Integrated Health
          Systems Consulting, a duly qualified actuarial firm that is a member
          in good standing in the American Academy of Actuaries.  For Health
          Plan of Nevada, Inc. and HMO Texas, L.C. such reserves have been
          opined upon as reasonable and adequate as of December 31, 1995 by
          Marlin Mueller, a duly qualified actuary who is a member in the
          American Academy of Actuaries.  For California Indemnity Insurance
          Company and Commercial Casualty Insurance Company such reserves have
          been opined upon as resonable and adequate as of December 31, 1995 by
          Timothy B. Perr, a duly qualified actuary who is a member in good
          standing in the American Academy of Actuaries.

          (h)  LITIGATION.  Except (i) as set forth on SCHEDULE 3.2(h), (ii) as
     disclosed in the Sierra SEC Documents and (iii) for actions and suits
     arising in the ordinary course of business, none of which is reasonably
     expected to have a Material Adverse Effect on Sierra, there is no action,
     suit, proceeding or investigation, either at law or in equity, at or before
     any commission or other administrative authority in any domestic or foreign
     jurisdiction, of any kind now pending or, to the best of Sierra's or Sierra
     Sub's knowledge, threatened, involving Sierra, Sierra Sub or any other
     Subsidiary of Sierra, or any of the respective properties or assets of
     Sierra or Sierra Sub that (i) if asserted is reasonably expected to have a
     Material Adverse Effect on Sierra, (ii) questions the validity of this
     Agreement, or (iii) seeks to delay, prohibit or restrict in any manner any
     action taken or to be taken by Sierra or Sierra Sub under this Agreement. 
     None of Sierra nor any Subsidiary of Sierra, nor any of their respective
     properties or assets is subject to any continuing order of, consent decree,
     settlement agreement or other similar written agreement (other than
     agreements related to the settlement of insurance claims in the ordinary
     course of business), continuing investigation (other than regularly
     scheduled audits) by any court, Governmental Entity, or any judicial
     administrative or arbitral judgment, order, writ, decree, injunction,
     restraint, or award of any court, Governmental Entity or arbitrator,
     including without limitation cease-and-desist or other orders.  Neither
     Sierra nor any of its Subsidiaries has agreed to, or is bound by, any
     extension or waiver of the statute of limitations relating to any pending
     or potential action, suit, claim, proceeding or investigation involving
     Sierra or any of its Subsidiaries (other than 

                                     -32-
<PAGE>

     extensions or waivers in connection with the settlement of insurance 
     claims in the ordinary course of business).

          (i)  LABOR AND EMPLOYMENT MATTERS.  Neither Sierra nor any of its
     Subsidiaries has employees who are represented by a labor union or
     organization, no labor union or organization has been certified or
     recognized as a representative of any such employees, and neither Sierra
     nor any of its Subsidiaries is a party to or has any obligation under any
     collective bargaining agreement or other contract or agreement with any
     labor union or organization.  There are no pending or, to Sierra's
     knowledge, threatened, representation campaigns, elections or proceedings
     or questions concerning union representation involving any employees of
     either Sierra or any of its Subsidiaries.  Neither Sierra nor any of its
     Subsidiaries has any knowledge of any activities or efforts of any labor
     union or organization (or representatives thereof) to organize any of its
     employees, any demands for recognition or collective bargaining, any
     strikes, slowdowns, work stoppages or lock-outs of any kind, or threats
     thereof, by or with respect to any employees of Sierra or any of its
     Subsidiaries, and no such activities, efforts, demands, strikes, slowdowns,
     work stoppages or lock-outs occurred during a three-year period preceding
     the date hereof.  Neither Sierra nor any of its Subsidiaries has engaged
     in, admitted committing, or been held in any administrative or judicial
     proceeding to have committed any unfair labor practice under the National
     Labor Relations Act, as amended.  Except as set forth on SCHEDULE 3.2(i),
     neither Sierra nor any of its Subsidiaries is involved in any industrial or
     trade dispute or any dispute or negotiation regarding a claim of material
     importance with any labor union or organization concerning its employees,
     and there are no controversies, claims, demands or grievances of material
     importance pending or, so far as Sierra is aware, threatened, between
     Sierra or any of its Subsidiaries and any of their respective employees.

          (j)  ABSENCE OF CERTAIN CHANGES OR EVENTS.  Since December 31, 1995
     and except (i) as set forth in SCHEDULE 3.2(j), (ii) for the execution and
     delivery of this Agreement and changes in its properties or business
     attributable to the transactions contemplated by this Agreement, (iii) as
     disclosed in the Sierra SEC Documents filed prior to the date of this
     Agreement or in the audited consolidated balance sheets of Sierra and its
     Subsidiaries and the related consolidated statements of income,
     shareholders' equity and cash flows as of and for the period ended
     December 31, 1995 (the "Sierra 1995 Financials"), true and correct copies
     of which have been delivered to PCA, and (iv) sales and purchases of
     investment securities in the ordinary course, neither Sierra nor any of its
     Subsidiaries:

            (i)  had any change in its financial condition businesses, assets
          or liabilities, other than changes which have not had, individually or
          in the aggregate, a Material Adverse Effect on Sierra;

                                     -33-

<PAGE>

             (ii)   suffered any damage, destruction or loss of physical
        property (not adequately covered by insurance) that, individually or
        in the aggregate, has had a Material Adverse Effect on Sierra;

             (iii)  issued, sold or otherwise disposed of, or, since
        October 31, 1996, redeemed, purchased or otherwise acquired, or agreed
        to issue, sell or otherwise dispose of, redeem, purchase or otherwise
        acquire, any capital stock or any other security of Sierra or any of
        its Subsidiaries or granted or agreed to grant any option warrant or
        other right to subscribe for or to purchase any capital stock or any
        other security of Sierra or any of its Subsidiaries;

             (iv)   incurred or agreed to incur any material indebtedness for
        borrowed money;

             (v)    paid or obligated itself to pay in excess of $500,000 in
        the aggregate for any fixed assets;

             (vi)   sold, transferred, leased or otherwise disposed of, or
        agreed to sell, transfer, lease or otherwise dispose of, (A) any
        properties or assets to any director or officer of Sierra or of any
        Subsidiary of Sierra or any member of the family or any other
        affiliate of any of the foregoing or (B) any properties or assets
        having a fair market value of $250,000 or agreed to sell, transfer,
        lease or otherwise dispose of, any assets (other than securities)
        having a fair market value at the time of sale, transfer or
        disposition of $250,000;

             (vii)  mortgaged, pledged or subjected to any material charge,
        lien, claim or encumbrance, or agreed to mortgage, pledge or subject
        to any material charge, lien, claim or encumbrance any of its material
        properties or assets;

             (viii) declared, set aside or paid any dividend or made any
        distribution (whether in cash, property or stock) with respect to any
        of its capital stock;

             (ix)   (A) increased, or agreed to increase, the compensation or
        bonuses or special compensation of any kind of any of its directors,
        officers or employees (other than insurance agents or independent
        contractors) over the rate being paid to them on December 31, 1995, as
        set forth in Sierra's Proxy Statement for the 1996 Annual Meeting of
        Shareholders ("Sierra's 1996 Proxy Statement"), other than normal
        merit and cost-of-living increases pursuant to customary arrangements
        consistently followed, or (B) since July 1, 1996, paid any bonus or
        similar compensation to any director, officer or employee of Sierra or
        any Subsidiary of Sierra in excess of $100,000, or (C) entered into
        any employment, consulting or severance agreement or arrangement with
        any director, officer or employee (other 

                                   -34-
<PAGE>
       than any agent or independent contractor) or adopted or increased any 
       benefit under any insurance, pension or other employee benefit plan, 
       payment or arrangement made to, for or with any director, officer or 
       employee (other than any agent or independent contractor);

             (x)     has terminated, or been notified in writing of the likely
        termination of, a material contract with a hospital or other provider,
        a self-insured employer, a union or other association, a government
        agency or a national insurance carrier or any other material contract
        regarding managed care services or insurance services;

             (xi)    neither Sierra nor any of its Subsidiaries has entered
        into a contract or arrangement with an individual or entity (including
        a network of health care providers) providing for the rendering of
        professional health care services by such person as an employee of or
        contractor to Sierra (other than a provider of in-patient care) under
        which, during the last 12 months, Sierra was obligated or became
        committed to pay in excess of $500,000 or under which, during the next
        12 months, Sierra is reasonably expected to pay or to become obligated
        to pay in excess of $500,000, except for such contracts that are
        terminable by Sierra upon 90 days advance notice without penalty;

             (xii)   except as otherwise required or provided for in this
        Agreement and except in the ordinary course of business, made or
        permitted any material amendment or termination of any material
        contract, lease, concession, franchise, license, indenture,
        instrument, mortgage, note, loan or credit agreement or other
        obligation to which it is a party;

             (xiii)  had any resignation or termination of employment of any
        of its key officers or employees, or become aware of any impending or
        threatened termination of employment, that would, individually or in
        the aggregate, have a Material Adverse Effect on Sierra;

             (xiv)   had any labor trouble or concerted work stoppage or
        knows of any impending or threatened labor trouble or concerted work
        stoppage;

             (xv)    canceled, or agreed to cancel, any debts or claims over
        $500,000 in the aggregate or $250,000 individually other than in the
        ordinary course of business;

             (xvi)   made any material change in its accounting methods or
        practices with respect to its condition, operations, business,
        properties, assets or liabilities;

                                   -35-

<PAGE>

             (xvii)  made any charitable or political contribution or pledge
        in excess of $100,000 in the aggregate;

             (xviii) agreed or committed to do, or authorized or approved
        any action looking to, any of the foregoing;

             (xix)   paid aggregate commissions to insurance agents and
        independent contractors for policies issued in 1995 and with normal
        anniversary dates of January 1, 1995 or subsequent thereto in excess
        of 15% of direct premiums written; 

             (xx)    made any material cash payments to insurance agents,
        independent contractors or brokers other than pursuant to a Producer
        Profit Share Agreement;  or

             (xxi)   entered into any material transaction not in the
        ordinary course of its business.

        (k)  MATERIAL CONTRACTS.  Except as set forth in SCHEDULE 3.2(k),
   neither Sierra nor any of its Subsidiaries is a party to any written or
   oral:

             (i)     employment or consulting contract or other contract for
        services involving a payment of more than $250,000 annually and that
        is not terminable without cost upon thirty (30) days' prior written
        notice;

             (ii)    material lease, franchise or concession providing for a
        payment by any person of more than $500,000 annually;

             (iii)   loan agreement, mortgage, indenture, promissory note,
        financing lease or other instrument relating to any debt (in excess of
        $250,000 and which, in the aggregate, do not amount to more than
        $1,000,000);

             (iv)    contract of purchase or sale involving more than $500,000
        and that is not in the ordinary course of business;

             (v)     partnership, joint venture, material license or similar
        agreement;

             (vi)    stand-by letter of credit, guarantee or performance bond;

             (vii)   material contract with a hospital or other provider, a
        self-insured employer, a union or other association, a governmental
        agency or a national 
 
                                   -36-

<PAGE>

        insurance carrier or any other material contract
        regarding managed care services or insurance services;

             (viii)  contract restricting the ability of any person from
        freely engaging in any business or competing anywhere in the world;

             (ix)    contract or arrangement with an individual or entity
        (including a network of health care providers) providing for the
        rendering of professional health care services by such person as an
        employee of or contractor to Sierra (other than a provider of
        in-patient care) under which, during the last 12 months, Sierra was
        obligated or became committed to pay in excess of $1,000,000 except
        for such contracts that are terminable by Sierra upon 90 days advance
        notice without penalty; or

             (x)     other material contract or commitment not made in the
        ordinary course of business.

   Each contract or other agreement listed in SCHEDULE 3.2(k) is in full force
   and effect and is valid and enforceable by Sierra or a Subsidiary of
   Sierra, as the case may be, in accordance with its terms.  Neither Sierra
   nor any of its Subsidiaries is in default in the observance or the
   performance of any term or obligation to be performed by it under any
   material contract listed in SCHEDULE 3.2(k).  To the knowledge of Sierra
   without investigation, no other person is in default in the observance or
   the performance of any term or obligation to be performed by it under any
   material contract listed in SCHEDULE 3.2(k).  There is currently no
   outstanding bid or contract proposal by Sierra or any of its Subsidiaries
   which, if accepted or entered into, might reasonably be expected to result
   in a material loss to either Sierra or any of its Subsidiaries, except with
   respect to losses occurring in the ordinary course of business.  Sierra has
   delivered or made available to PCA copies of all contracts listed in the
   schedules hereto.

        (l)  OFFICERS AND DIRECTORS AND EMPLOYEES.  Sierra's 1996 Proxy
   Statement, as modified by SCHEDULE 3.2(l), sets forth a list of:

             (i)     The names of all directors and officers of Sierra and
        each of its material Subsidiaries;

             (ii)    The name and current annual rate of compensation
        (including bonuses and other forms of compensation) paid by Sierra and
        its Subsidiaries to each of its respective officers, directors and
        employees whose annual rate of base compensation exceeded $100,000 for
        the year ended December 31, 1995; and

                                   -37-
<PAGE>
            (iii)   The names of all persons who have written employment,
        consulting or severance agreements or arrangements with Sierra or 
        any of its Subsidiaries if such agreement or arrangement provides 
        for payment to such persons resulting from such person's 
        resignation, from a change-in-control of Sierra or any of its 
        Subsidiaries or from a change in such person's responsibilities 
        following a change-in-control; and Sierra has provided complete and 
        correct copies of such agreements to PCA.

        (m)  TITLE TO AND CONDITION OF PROPERTIES AND ASSETS.  

            (i) Sierra and its Subsidiaries have good and defensible title
        to, or valid leasehold interests in, their respective material 
        properties and assets, whether owned or leased, including, 
        without limitation, (A) those used in their respective 
        businesses, and (B) those reflected in the consolidated balance 
        sheet of Sierra as of September 30, 1996 most recently delivered 
        to PCA (except as since sold or otherwise disposed of in the 
        ordinary course of business and except for minor defects in 
        title, easements, restrictive covenants and similar encumbrances 
        or impediments that, individually or in the aggregate, do not 
        and will not materially interfere with the ability of Sierra and 
        its Subsidiaries to use their properties or to conduct their 
        businesses as currently conducted), in each case subject to no 
        Liens, except for (x) the lien of current Taxes (as hereinafter 
        defined) not yet due and payable, (y) with respect to leased 
        property, the provisions of such leases and (z) liens, that, 
        individually or in the aggregate, do not and will not materially 
        interfere with the ability of Sierra or any of its Subsidiaries 
        to conduct business as currently conducted.  Except as described 
        on SCHEDULE 3.2(m), subsequent to December 31, 1995, neither 
        Sierra nor any of its Subsidiaries has sold or disposed of any 
        of their respective properties or assets or obligated themselves 
        to do so except in the ordinary course of business.  The 
        facilities, machinery, furniture, office and other equipment of 
        Sierra and each of its Subsidiaries that are used in their 
        respective businesses are in good operating condition and 
        repair, subject to the ordinary wear and tear of those 
        businesses.

            (ii) All of the real property owned or leased by Sierra or any of 
        its Subsidiaries has been maintained by Sierra in compliance with all 
        federal, state and local environmental protection, occupational, 
        health and safety or similar laws, ordinances, restrictions, 
        licenses and regulations, except where the failure to so 
        maintain the property would not have a Material Adverse Effect 
        on Sierra. 

     (n)  PATENTS, COPYRIGHTS, SERVICE MARKS AND TRADEMARKS.  Neither Sierra 
nor any of its Subsidiaries own or licenses any patent, copyright, service 
mark, trademark or other intellectual property right, other than such patents, 
copyrights, service marks, trademarks and other intellectual property rights as 
are described in SCHEDULE 3.2(n), 

                                     -38-
<PAGE>

except for such intellectual property rights the loss of which singly or in 
the aggregate would not have a Material Adverse Effect on Sierra.  Except as 
set forth on SCHEDULE 3.2(n) and other than such as would have a Material 
Adverse Effect on Sierra: (i) Sierra and its Subsidiaries own or license 
all patents, copyrights, service marks, trademarks and other intellectual 
property rights that are necessary to the conduct of their respective 
businesses, (ii) all names under which Sierra or any of its Subsidiaries 
currently conducts business are set forth in SCHEDULE 3.2(n), (iii) no 
claim has been made, and to Sierra's knowledge no basis for any such 
claim exists, that Sierra or any of its Subsidiaries has infringed any patent, 
copyright, service mark, trademark or other intellectual property right of any 
other person and (iv) no claim has been made, and to Sierra's knowledge no basis
for any such claim exists, that any person has infringed on any patent, 
copyright, service mark, trademark or other intellectual property right of 
Sierra or any of its Subsidiaries.

     (o)  EMPLOYEE BENEFIT PLANS.

            (i)  LIST OF PLANS.  SCHEDULE 3.2(o) includes a complete and 
        accurate list of all employee benefit plans ("Plans"), as 
        defined in Section 3(3) of ERISA and material benefit 
        arrangements that are not Plans ("Benefit Arrangements"), 
        including, but not limited to any (A) employment or consulting 
        agreements, (B) incentive bonus or deferred bonus arrangements, 
        (C) arrangements providing termination allowance, severance or 
        similar benefits, (D) equity compensation plan, and (E) deferred 
        compensation plans, (F) cafeteria plans, (G) employee assistance 
        programs, (H) bonus programs, (I) scholarship programs, (J) 
        vacation policies, and (K) stock option plans that are currently 
        in effect or were maintained within three years of the Effective 
        Time, or have been approved before the Effective Time but are 
        not yet effective, for the benefit of directors, officers, 
        employers or former employees (or their beneficiaries) of Sierra 
        or a Controlled Company ("Designated Plans").  For purposes of 
        this Section 3.2(o), "Controlled Company" shall mean any entity 
        that, together with Sierra as of the relevant determination date 
        under ERISA, is or was required to be treated as a single 
        employer under Section 414 of the Code and any reference to 
        Sierra in this Section 3.2(o) shall also include a reference to 
        a Controlled Company.

            (ii) NO TITLE IV PLANS OR VEBAS.  Neither Sierra nor any 
        entity (whether or not incorporated) that was at any time during 
        the six years before the Effective Time treated as a single 
        employer together with Sierra under Section 414 of the Code has 
        ever maintained, had any obligation to contribute to or incurred 
        any liability with respect to a pension plan that is or was 
        subject to the provisions of Title IV of ERISA or Section 412 of 
        the Code.  Neither Sierra nor any entity (whether or not 
        incorporated) that was at any time during the six years before 
        the Effective Time treated as a single employer together with 
        Sierra

                                     -39-
<PAGE>

        under Section 414 of the Code has ever maintained, had an 
        obligation to contribute to, or incurred any liability with 
        respect to a multiemployer pension plan as defined in Section 
        3(37) of ERISA. During six years before the Effective Time, 
        Sierra has not maintained, had an obligation to contribute 
        to or incurred any liability with respect to a voluntary 
        employees beneficiary association that is or was intended 
        to satisfy the requirements of Section 501(c)(9) of the 
        Code.

            (iii)   DISCLOSED PLANS.  With respect to each Designated 
        Plan, Sierra has delivered to Sierra, as applicable, true and 
        complete copies of (A) all written documents comprising such 
        Plan or each Benefit Arrangement (including amendments and 
        individual agreements relating thereto); (B) the trust, group 
        annuity contract or other document that provides for the funding 
        of the Designated Plan or the payment of Designated Plan 
        benefits, (C) the three most recent annual Form 5500, 990 and 
        1041 reports (including all schedules thereto) filed with 
        respect to the Designated Plan; (D) the most recent actuarial 
        report, valuation statement or other financial statement; (E) 
        the most recent Internal Revenue Service determination letter 
        ("IRS") and all rulings or determinations requested from the IRS 
        after the date of that determination letter; (F) the summary 
        plan description currently in effect and all material 
        modifications thereto; and (G) all other correspondence from the 
        IRS or Department of Labor received that relate to one or more 
        of the Designated Plans with respect to any matter, audit or 
        inquiry that is still pending. All information provided by 
        Sierra and its Subsidiaries to the individuals who prepared any 
        such financial statements was true, correct and complete in all 
        material respects.  Each financial or other report delivered to 
        Sierra pursuant hereto is accurate in all material respects, and 
        there has been no material adverse change in the financial 
        status of any Designated Plan since the date of the most recent 
        report provided with respect thereto.

            (iv) COMPLIANCE WITH LAW.  Except as set forth in SCHEDULE 
        3.2(O), Sierra has operated, and has caused its appointees and 
        nominees to operate, each Designated Plan in a manner which is 
        in material compliance with the terms thereof and with all 
        applicable law, regulations and administrative agency rulings 
        and requirements applicable thereto, the violation of which 
        would not have a material adverse effect on Sierra and its 
        Subsidiaries taken as a whole. Except as otherwise disclosed in 
        SCHEDULE 3.2(o), with respect to each Designated Plan that is a 
        Plan (A) the Plan is in compliance with ERISA in all material 
        respects, including but not limited to all reporting and 
        disclosure requirements of Part 1 of Subtitle B of Title I of 
        ERISA; (B) the appropriate Form 5500 has been timely filed, for 
        each year of its existence; (C) there has been no transaction 
        described in sections 406 or 407 of ERISA or section 4975 of the 
        Code relating to the Plan unless exempt under section 408 of 
        ERISA or section 4975 of the Code, as 

                                     -40-
<PAGE>

        applicable; and (D) the bonding requirements of section 412 of 
        ERISA have been satisfied.

            (v)  CONTRIBUTIONS.  Full payment has been made of all 
        amounts which Sierra or a Controlled Company is required, under 
        applicable law or under any Designated Plan or any agreement 
        related to any Designated Plan to which Sierra or a Controlled 
        Company is a party, to have paid as contributions thereto as of 
        the last day of the most recent fiscal year of each Designated 
        Plan ended prior to the date hereof.  Benefits under all 
        Designated Plans are as represented in the governing instruments 
        provided pursuant to (i) above, and have not been increased 
        subsequent to the date as of which documents have been provided.

            (vi) TAX QUALIFICATION.  Each Designated Plan, as amended to 
        date, that is intended to be qualified under Section 401(a) and 
        501(a) of the Code has been determined to be so qualified by the 
        IRS, has been submitted to the IRS for a determination with 
        respect to such qualified status or the remedial amendment 
        period established under Section 402(b) of the Code with respect 
        to the Designated Plan will not have expired prior to the 
        Effective Time.  Except as disclosed on SCHEDULE 3.2(o), no 
        facts have occurred which if known by the IRS could cause 
        disqualification of any such Plan.

            (vii)   TAX OR CIVIL LIABILITY.  Neither Sierra nor a 
        Controlled Company has participated in, or is aware of, any 
        conduct that could result in the imposition upon Sierra of any 
        excise tax under Sections 4971 through 4980B of the Code or 
        civil liability under Section 502(i) of ERISA with respect to 
        any Designated Plan.

            (viii)  CLAIMS LIABILITY.  There is no action, claim or 
        demand of any kind (other than routine claims for benefits) that 
        has been brought or, to Sierra's knowledge, threatened against, 
        or relating to, any Designated Plan, and Sierra has no knowledge 
        of any pending investigation or administrative review by any 
        Governmental Entity relating to any Designated Plan.

            (ix) RETIREE WELFARE COVERAGE.  Except as set forth in 
        SCHEDULE 3.2(o), no Designated Plan provides any health, life or 
        other welfare coverage to employees of Sierra or a Controlled 
        Company beyond termination of their employment with Sierra or a 
        Controlled Company by reason of retirement or otherwise, other 
        than coverage as may be required under Section 4980B of the Code 
        or Part 6 of ERISA, or under the continuation of coverage 
        provisions of the laws of any state or locality.

            (x)  NO EXCESS PARACHUTE PAYMENTS.  No amount that could be 
        received (whether in cash or property or the vesting of 
        property) as a result of any

                                     -41-
<PAGE>

        of transactions contemplated by this Agreement by any employee, 
        officer or director of Sierra or a Controlled Company who is a 
        "disqualified individual" (as such term is defined in proposed 
        Treasury Regulation Section 1.280G-1) under any employment, 
        severance or termination agreement, other compensation 
        arrangement or Designated Plan currently in effect would be 
        characterized as an "excess parachute payment" (as such term is 
        defined in Section 280G(b)(1) of the Code).

     (p)  TRANSACTIONS WITH OFFICERS, DIRECTORS AND OTHERS.  Except as set
forth on SCHEDULE 3.2(p), no director, officer or affiliate of Sierra, or
any member of the immediate family or any other affiliate of any of the
foregoing, is a party to business arrangements or relationships of any kind
with Sierra or its Subsidiaries in which the amount involved exceeds
$60,000, or, to the knowledge of Sierra, owns or has an ownership interest
in any corporation (in excess of 5% of any publicly traded corporation) or
other entity that is a party to, or in any property which is the subject of
any such business arrangements.

     (q)  INSURANCE MATTERS--REINSURANCE AND COINSURANCE.  SCHEDULE 3.2(q)
contains a list of all reinsurance or coinsurance treaties or agreements to
which Sierra or any of its Subsidiaries is a party.  All such treaties or
agreements as set forth in such Schedule are valid, binding and in full
force and effect in accordance with their terms (except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally or by the principles governing the availability of
equitable remedies); and neither Sierra nor its Insurance Subsidiaries nor,
to Sierra's knowledge, any other party thereto is in default as to any
provision thereof, except for such defaults the effect of which singly or
in the aggregate would not have a Material Adverse Effect on Sierra, and
none of such agreements contains any provision (A) providing that any other
party thereto may terminate such agreement or declare a default or seek
damages thereunder by reason of the transactions contemplated by this
Agreement or (B) which would be altered or otherwise become applicable by
reason of such transactions.  Sierra does not know of any facts or events
that could cause the financial condition of any party to any such agreement
to be impaired to such an extent that a default thereunder may be
reasonably anticipated.

     (r)  TAXES.

          (i)  TAX REPRESENTATIONS.  Except as set forth in SCHEDULE 3.2(r):

               (A)  All Returns required to have been filed on or before the 
          date hereof by or with respect to Sierra or any of its Subsidiaries 
          or any affiliated, combined, consolidated, unitary or similar group 
          of which Sierra 


                                     -42-
<PAGE>

          or its Subsidiaries is or was a member (a "Relevant Group") with any 
          Taxing Authority have been duly and timely filed, and each such 
          Return correctly and completely reports all material information 
          required to be reported thereon.  All Taxes of Sierra or its 
          Subsidiaries or any member of a Relevant Group (whether or not shown 
          on any Return) with respect to any period ending on or before the date
          hereof have been paid or are duly reserved for in the financial
          statements of Sierra and its Subsidiaries for such period.

               (B)  Neither Sierra nor any of its Subsidiaries has waived any 
          statute of limitations in respect of Taxes or agreed to any extension 
          of time with respect to any Tax assessment or deficiency.


               (C)  PCA is not currently under audit by any Taxing Authority 
          with respect to any material Return.  PCA's consolidated federal 
          income tax returns have been audited through December 31, 1992.  No 
          claim is pending by any Taxing Authority in a jurisdiction in which 
          PCA or any of its Subsidiaries does not file Returns, that it is 
          subject to Taxation in that jurisdiction.

               (D)  Other than agreements among Sierra and its Subsidiaries,
          neither Sierra nor any of its Subsidiaries is a party to any tax 
          allocation or tax sharing agreement.

               (E)  Neither Sierra nor any of its Subsidiaries is a
          "consenting corporation" within the meaning of Section 341(f)(1)
          of the Code or comparable provisions of any state statute, and
          none of the assets of Sierra or its Subsidiaries is subject to
          any election under Section 341(f) of the Code or comparable
          provisions of any state statutes.

               (F)  Neither Sierra nor any of its Subsidiaries has received
          or requested any ruling of a Taxing Authority relating to Taxes
          or entered into any material written or legally binding agreement
          with a Taxing Authority relating to Taxes.

               (G)  Neither Sierra nor any of its Subsidiaries (1) has or
          is projected to have a material amount includible in its income
          for the current taxable year under Section 951 of the Code, (2)
          has been a passive foreign investment company within the meaning
          of Section 1296 of the Code, and neither Sierra nor any of its
          Subsidiaries is a shareholder, directly or indirectly in any
          passive foreign investment company, or (3) has a material


                                     -43-
<PAGE>

          unrecaptured overall foreign loss within the meaning of Section
          940(f) of the Code.

               (H)  Neither Sierra nor any of its Subsidiaries is, or at
          any time has been, subject to (1) the dual consolidated loss
          provisions of Section 1503(d) of the Code, (2) the overall
          foreign loss provisions of Section 904(f) of the Code, or (3) the
          recharacterization provisions of Section 952(c)(2) of the Code.

               (I)  None of the assets of Sierra or any of its Subsidiaries
          constitutes tax-exempt bond financed property or tax-exempt use
          property, within the meaning of Section 168 of the Code.  Neither
          Sierra nor any of its Subsidiaries is a party to any "safe harbor
          lease" that is subject to the provisions of Section 168(f)(3) of
          the Internal Revenue Code as in effect prior to the Tax Reform
          Act of 1986, or to any "long-term contract" within the meaning of
          Section 460 of the Code.

               (J)  Neither Sierra nor any of its Subsidiaries has any
          material (1) deferred gain or loss arising out of any deferred
          intercompany transaction or (2) income which will be reportable
          in a period ending after the Closing Date which is attributable
          to a transaction occurring in, or a change in accounting method
          made for, a period ending on or prior to the Closing Date.

               (K)  Neither Sierra nor any of its Subsidiaries is a party
          to any written, oral or implied agreement or obligation to
          provide any "covered employee," as defined in Section 162(m)(3)
          of the Code, with remuneration in excess of $1 million, that
          would be disallowed as a deduction for Federal income tax
          purposes pursuant to Section 162(m) of the Code.
       
          (ii)  REPRESENTATIONS RELATING TO TAX-FREE REORGANIZATION.  Prior
     to and at the Effective Time, Sierra will be in "control" of Sierra
     Sub within the meaning of Section 368(C) of the Code and Sierra has no
     plan or intention to cause PCA to issue additional shares of capital
     stock following the Effective Time that would result in Sierra losing
     "control" (as so defined) of PCA; Sierra has no plan or intention to
     reacquire any of its stock issued pursuant to the Merger; Sierra has
     no plan or intention to liquidate PCA, to merge PCA with or into
     another corporation including Sierra or its affiliates, to sell,
     distribute or otherwise dispose of any of the capital stock of PCA or
     to cause PCA to sell or otherwise dispose of any of its assets, except
     for dispositions made in the ordinary course of business; neither
     Sierra nor Sierra Sub is an "investment company" 


                                     -44-
<PAGE>

     within the meaning of Section 368(a)(2)(F)(iii) of the Code; neither 
     Sierra nor Sierra Sub is under the jurisdiction of a court in a Title 11 
     or similar case within the meaning of Section 368(a)(3)(A) of the Code; 
     the liabilities of Sierra Sub assumed by PCA and the liabilities to which
     the transferred assets of Sierra Sub are subject were incurred by Sierra 
     Sub in the ordinary course of its business; following the Effective Time, 
     Sierra shall cause PCA to either continue the historic business of PCA or 
     use a significant portion of PCA's historic business assets in a business; 
     any amounts paid with respect to PCA Dissenting Shares will be paid by PCA 
     solely from PCA's pre-merger assets and without reimbursement therefor by 
     Sierra or Sierra Sub; neither Sierra nor any affiliate of Sierra owns, or 
     has owned during the past five (5) years, directly or indirectly, any 
     shares of PCA's capital stock or the right to acquire or vote any such 
     shares; no shareholder is acting as agent for Sierra in connection with the
     Merger or the approval thereof; and assuming the accuracy of PCA's
     representation contained in Section 3.1(r)(iii)(I), following the Merger 
     PCA will hold at least 90% of the fair market value of its net assets and 
     at least 70% of the fair market value of its gross assets and at least 90% 
     of the fair market value of Sierra Sub's net assets and at least 70% of the
     fair market value of Sierra Sub's gross assets, held immediately before the
     Merger, taking into account any merger expenses and any distributions other
     than regular dividends.

     (s)  OPINION OF FINANCIAL ADVISOR.  Sierra has received the opinion of 
Salomon Brothers Inc, dated the date hereof, to the effect that the 
consideration to be received in the Merger by Sierra's shareholders is fair 
to Sierra and its shareholders from a financial point of view.  Sierra has 
delivered a true and complete copy of this opinion to PCA.

     (t)  ACCOUNTING MATTERS.  Neither Sierra nor, to the best of its 
knowledge, any of its affiliates, has through the date of this Agreement 
taken or agreed to take any action that would prevent Sierra from accounting 
for the business combination to be effected by the Merger as a pooling of 
interests.

     (u)  OWNERSHIP OF PCA COMMON STOCK.  As of the date hereof, neither 
Sierra nor, to the best of its knowledge, any of its affiliates or 
associates, (i) (A) beneficially owns, directly or indirectly, or (B) are 
parties to any agreement, arrangement or understanding for the purpose of 
acquiring, holding, voting or disposing of, in each case, shares of capital 
stock of PCA, which in the aggregate, represent 10% or more of the 
outstanding shares of capital stock of PCA entitled to vote generally in the 
election of directors, nor (ii) is an "interested stockholder" of PCA within 
the meaning of Section 203 of the DGCL.


                                     -45-

<PAGE>

          (v)  INTERIM OPERATIONS OF SIERRA SUB.  Sierra Sub was formed solely
     for the purpose of engaging in the transactions contemplated hereby, has
     engaged in no other business activities and has conducted its operations
     only as contemplated hereby.

          (w)  INVESTMENT COMPANY ACT.  Neither Sierra nor Sierra Sub is an
     "investment company", or a company "controlled" by an "investment company",
     within the meaning of the Investment Company Act of 1940, as amended.

          (x)  VOTE REQUIRED.  The affirmative vote of a majority of the votes
     that holders of the outstanding shares of Sierra Common Stock are entitled
     to cast is the only vote of the holders of any class or series of Sierra
     capital stock or Voting Debt necessary to approve this Agreement and the
     transactions contemplated hereby.

          (y)  APPLICABILITY OF DGCL 203.  The provisions of Section 203 of the
     DGCL will not, assuming the accuracy of the representations contained in
     Section 3.1 (x) (without giving effect to the knowledge qualification
     thereof), apply to this Agreement or any of the transactions contemplated
     hereby.

                ARTICLE IV.  COVENANTS RELATING TO CONDUCT OF BUSINESS

     4.1. COVENANTS OF PCA.  During the period from the date of this Agreement
and continuing until the Effective Time, PCA agrees as to itself and its
Subsidiaries that (except as expressly contemplated or permitted by this
Agreement, or to the extent that the other party shall otherwise consent in
writing and except with respect to employment and compensation arrangements
entered into by PCA):

          (a)  ORDINARY COURSE.  PCA and its Subsidiaries shall carry on their
     respective businesses in the usual, regular and ordinary course in
     substantially the same manner as heretofore conducted and use all
     reasonable efforts to preserve intact their present business organizations,
     keep available the services of their present officers and employees and
     preserve their relationships with customers, suppliers and others having
     business dealings with them to the end that their goodwill and ongoing
     businesses shall not be impaired in any material respect at the Effective
     Time.

          (b)  DIVIDENDS; CHANGES IN STOCK.  PCA shall not, nor shall it permit
     any of its Subsidiaries to, nor shall PCA propose to, (i) declare or pay
     any dividends on or make other distributions in respect of any of its
     capital stock, except for dividends by a wholly-owned Subsidiary of PCA or
     such Subsidiary, (ii) split, combine or reclassify any of its capital stock
     or issue or authorize or propose the issuance of any other securities in
     respect of, in lieu of or in substitution for shares of its capital stock
     or (iii) repurchase or otherwise acquire, or permit any Subsidiary to
     purchase or otherwise acquire, any shares of its capital stock.

                                     -46-

<PAGE>

          (c)  ISSUANCE OF SECURITIES.  PCA shall not, nor shall PCA permit any
     of its Subsidiaries to, issue, deliver or sell, or authorize or propose the
     issuance, delivery or sale of, any shares of its capital stock or any
     securities convertible into, or any rights, warrants or options to acquire,
     any such shares, or convertible securities, other than the issuance of PCA
     Common Stock upon the exercise of outstanding stock options or stock grants
     under PCA Stock Plans in each case in accordance with their present terms.

          (d)  GOVERNING DOCUMENTS.  PCA shall not amend nor shall it permit its
     Subsidiaries (except, with the consent of Sierra, to the extent required by
     relevant authorities to become admitted to engage in the insurance business
     in the jurisdictions in which PCA and its Subsidiaries are currently
     admitted) to amend or propose to amend its Certificate of Incorporation or
     Bylaws.

          (e)  NO ACQUISITIONS.  PCA shall not, nor shall PCA permit any of its
     Subsidiaries to, acquire or agree to acquire by merging or consolidating
     with, or by purchasing a substantial equity interest in or a substantial
     portion of the Assets of, or by any other manner, any business or any
     corporation, partnership, association or other business organization or
     division thereof or otherwise acquire or agree to acquire any assets in
     each case which are material, individually or in the aggregate, to PCA and
     its Subsidiaries taken as a whole.

          (f)  NO DISPOSITIONS.  Other than (i) as may be required by law to
     consummate the transactions contemplated hereby or (ii) in the ordinary
     course of business consistent with prior practice, PCA shall not, nor shall
     PCA permit any of its Subsidiaries to, without the prior consent of Sierra,
     sell, lease, encumber or otherwise dispose of, or agree to sell, lease,
     encumber or otherwise dispose of, any of its assets, which are material,
     individually or in the aggregate, to PCA and its Subsidiaries taken as a
     whole.  The transaction described in clause (i) above is not in
     contemplation of the Merger and the Merger is not dependent upon the
     consummation of such transaction.

          (g)  INDEBTEDNESS.  PCA shall not, nor shall PCA permit any of its
     Subsidiaries to, incur (which shall not be deemed to include entering into
     credit agreements, lines of credit or similar arrangements until borrowings
     are made under such arrangements) any indebtedness for borrowed money or
     guarantee any such indebtedness or issue or sell any debt securities or
     warrants or rights to acquire any debt securities of such party or any of
     its Subsidiaries or guarantee any debt securities of others other than (i)
     in each case in the ordinary course of business consistent with prior
     practice and (ii) refinancing, amendments to or modifications of existing
     credit lines and borrowings thereunder.

          (h)  OTHER ACTIONS.  PCA shall not, nor shall PCA permit any of its
     Subsidiaries to, take any action that would or is reasonably likely to
     result in any of its representations and warranties set forth in this
     Agreement being untrue as of the date 

                                     -47-

<PAGE>

     made (to the extent so limited), or in any of the conditions to the Merger 
     set forth in Article VI not being satisfied.

          (i)  ADVICE OF CHANGES; SEC FILINGS.  PCA shall confer with Sierra on
     a regular and frequent basis and report on operational matters and promptly
     advise Sierra of any change or event having a Material Adverse Effect on
     PCA.  PCA shall promptly provide Sierra (or its counsel) copies of all
     filings made by such party with any state or federal Governmental Entity in
     connection with this Agreement and the transactions contemplated hereby.

          (j)  ACCESS TO INFORMATION.  Upon reasonable notice, PCA shall (and
     shall cause its Subsidiaries to) afford to the officers, employees,
     accountants, counsel and other representatives of Sierra, access, during
     normal business hours during the period prior to the Effective Time, to all
     its properties, books, contracts, commitments and records and, during such
     period, PCA shall (and shall cause its Subsidiaries to) furnish promptly to
     Sierra (a) a copy of each report, schedule, registration statement and
     other document filed or received by it during such period pursuant to the
     requirements of Federal securities laws and (b) all other information
     concerning its business, properties and personnel as such other party may
     reasonably request.  Unless otherwise required by law, Sierra will hold any
     such information which is nonpublic in confidence until such time as such
     information otherwise becomes publicly available through no wrongful act of
     either party, and in the event of termination of this Agreement for any
     reason Sierra shall promptly return all nonpublic documents obtained from
     PCA or its Subsidiaries, and any copies made of such documents, to PCA.

          (k)  AFFILIATES.  Prior to the Closing Date, PCA shall deliver to
     Sierra a letter identifying all persons who are, at the time this Agreement
     is submitted for approval to the stockholders of PCA, "affiliates" of PCA
     for purposes of Rule 145 under the Securities Act.  PCA shall use its best
     efforts to cause each such person to deliver to Sierra on or prior to the
     Closing Date a written agreement, substantially in the form attached as
     EXHIBIT 4.1(k) hereto.

     4.2. COVENANTS OF SIERRA AND SIERRA SUB.  During the period from the date
of this Agreement and continuing until the Effective Time, Sierra Sub agrees and
Sierra agrees as to itself and its Subsidiaries that (except (i) as described on
EXHIBIT 4.2, (ii) as expressly contemplated or permitted by this Agreement,
(iii) to the extent that the other party shall otherwise consent in writing and
(iv) with respect to employment and compensation arrangements entered into by
Sierra):

          (a)  ORDINARY COURSE.  Sierra and its Subsidiaries shall carry on
     their respective businesses in the usual, regular and ordinary course in
     substantially the same manner as heretofore conducted and use all
     reasonable efforts to preserve intact their 

                                     -48-

<PAGE>

     present business organizations, keep available the services of their 
     present officers and employees and preserve their relationships with 
     customers, suppliers and others having business dealings with them to 
     the end that their goodwill and ongoing businesses shall not be impaired 
     in any material respect at the Effective Time.
     
          (b)  DIVIDENDS; CHANGES IN STOCK.  Sierra shall not, nor shall it
     permit any of its Subsidiaries to, nor shall Sierra propose to, (i) declare
     or pay any dividends on or make other distributions in respect of any of
     its capital stock, except for dividends by a wholly-owned Subsidiary of
     Sierra or such Subsidiary, (ii) split, combine or reclassify any of its
     capital stock or issue or authorize or propose the issuance of any other
     securities in respect of, in lieu of or in substitution for shares of its
     capital stock or (iii) repurchase or otherwise acquire, or permit any
     Subsidiary to purchase or otherwise acquire, any shares of its capital
     stock.

          (c)  ISSUANCE OF SECURITIES.  Sierra shall not, nor shall Sierra
     permit any of its Subsidiaries to, issue, deliver or sell, or authorize or
     propose the issuance, delivery or sale of, any shares of its capital stock
     or any securities convertible into, or any rights, warrants or options to
     acquire, any such shares, or convertible securities, other than the
     issuance of Sierra Common Stock upon the exercise of outstanding stock
     options or stock grants under Sierra Stock Plans in each case in accordance
     with their present terms.

          (d)  GOVERNING DOCUMENTS.  Except as contemplated by this Agreement,
     Sierra shall not amend nor shall it permit its Subsidiaries (except, with
     the consent of PCA, to the extent required by relevant authorities to
     become admitted to engage in the insurance business in the jurisdictions in
     which Sierra and its Subsidiaries are currently admitted) to amend or
     propose to amend its Articles of Incorporation or Bylaws.

          (e)  NO ACQUISITIONS.  Sierra shall not, nor shall Sierra permit any
     of its Subsidiaries to, acquire or agree to acquire by merging or
     consolidating with, or by purchasing a substantial equity interest in or a
     substantial portion of the Assets of, or by any other manner, any business
     or any corporation, partnership, association or other business organization
     or division thereof or otherwise acquire or agree to acquire any assets in
     each case which are material, individually or in the aggregate, to Sierra
     and its Subsidiaries taken as a whole.

          (f)  NO DISPOSITIONS.  Other than (i) as may be required by law to
     consummate the transactions contemplated hereby or (ii) in the ordinary
     course of business consistent with prior practice, Sierra shall not, nor
     shall Sierra permit any of its Subsidiaries to, without the prior consent
     of PCA, sell, lease, encumber or otherwise dispose of, or agree to sell,
     lease, encumber or otherwise dispose of, any of its assets, which are
     material, individually or in the aggregate, to Sierra and its Subsidiaries
     taken as a whole.  The 

                                     -49-

<PAGE>


     transaction described in clause (i) above is not in contemplation of the
     Merger and the Merger is not dependent upon the consummation of such
     transaction.

          (g)  INDEBTEDNESS.  Sierra shall not, nor shall Sierra permit any of
     its Subsidiaries to, incur (which shall not be deemed to include entering
     into credit agreements, lines of credit or similar arrangements until
     borrowings are made under such arrangements) any indebtedness for borrowed
     money or guarantee any such indebtedness or issue or sell any debt
     securities or warrants or rights to acquire any debt securities of such
     party or any of its Subsidiaries or guarantee any debt securities of others
     other than (i) in each case in the ordinary course of business consistent
     with prior practice, (ii) refinancing of existing credit lines and
     borrowings thereunder and (iii) to enable Sierra to pay when due all
     indebtedness for borrowed money of PCA.

          (h)  OTHER ACTIONS.  Sierra shall not, nor shall Sierra permit any of
     its Subsidiaries to, take any action that would or is reasonably likely to
     result in any of its representations and warranties set forth in this
     Agreement being untrue as of the date made (to the extent so limited), or
     in any of the conditions to the Merger set forth in Article VI not being
     satisfied.

          (i)  ADVICE OF CHANGES; SEC FILINGS.  Sierra shall confer with PCA on
     a regular and frequent basis and report on operational matters and promptly
     advise PCA of any change or event having a Material Adverse Change.  Sierra
     shall promptly provide PCA (or its counsel) copies of all filings made by
     such party with any state or federal Governmental Entity in connection with
     this Agreement and the transactions contemplated hereby.

          (j)  ACCESS TO INFORMATION.  Upon reasonable notice, Sierra shall (and
     shall cause its Subsidiaries to) afford to the officers, employees,
     accountants, counsel and other representatives of PCA, access, during
     normal business hours during the period prior to the Effective Time, to all
     its properties, books, contracts, commitments and records and, during such
     period, Sierra shall (and shall cause its Subsidiaries to) furnish promptly
     to PCA (a) a copy of each report, schedule, registration statement and
     other document filed or received by it during such period pursuant to the
     requirements of Federal securities laws and (b) all other information
     concerning its business, properties and personnel as such other party may
     reasonably request.  Unless otherwise required by law, PCA will hold any
     such information which is nonpublic in confidence until such time as such
     information otherwise becomes publicly available through no wrongful act of
     either party, and in the event of termination of this Agreement for any
     reason PCA shall promptly return all nonpublic documents obtained from
     Sierra or its Subsidiaries, and any copies made of such documents, to
     Sierra.

                                     -50-
<PAGE>


                          ARTICLE V.  ADDITIONAL AGREEMENTS

     5.1. PREPARATION OF S-4 AND THE PROXY STATEMENT.  Sierra and PCA shall
promptly prepare and file with the SEC the Proxy Statement and Sierra shall
prepare and file with the SEC the S-4, in which the Proxy Statement will be
included as a prospectus.  Each of Sierra and PCA shall use its best efforts to
have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing.  Sierra shall also take any action (other than
qualifying to do business in any jurisdiction in which it is now not so
qualified) required to be taken under any applicable state securities laws in
connection with the issuance of Sierra Common Stock in the Merger and upon the
exercise of PCA Stock Options (as defined in Section 5.7), and PCA shall furnish
all information concerning PCA and the holders of PCA Common Stock as may be
reasonably requested in connection with any such action.

     5.2. LETTER OF PCA'S ACCOUNTANTS.  PCA shall use its best efforts to cause
to be delivered to Sierra a letter of KPMG Peat Marwick LLP, PCA's independent
auditors, dated a date within two business days before the date on which the S-4
shall become effective and addressed to Sierra, in form and substance reasonably
satisfactory to Sierra and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the S-4.

     5.3. MEETINGS.  Each of PCA and Sierra shall call a meeting of its
respective stockholders and shareholders to be held as promptly as practicable
for the purpose of voting upon this Agreement and related matters (including,
with respect to Sierra, the approval of an amendment to the Articles of
Incorporation of Sierra to increase its authorized capital stock from 40,000,000
shares of Sierra Common Stock to 100,000,000 shares).  PCA, Sierra Sub and
Sierra will, through their respective Boards of Directors, subject to their
fiduciary duties to their shareholders under applicable law, recommend to their
respective stockholders and shareholders approval of such matters.  PCA and
Sierra shall coordinate and cooperate with respect to the timing of such
meetings and shall use their best efforts to hold such meetings on the same day
and as soon as practicable after the date hereof.

     5.4. LEGAL CONDITIONS TO MERGER.  Each of PCA, Sierra and Sierra Sub will
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on itself with respect to the Merger
(including furnishing all information required under the HSR Act, in connection
with the Approvals and in connection with approvals of or filings with any other
Governmental Entity) and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon any of them or
any of their Subsidiaries in connection with the Merger.  Each of PCA, Sierra
and Sierra Sub will, and will cause its Subsidiaries to, take all reasonable
actions necessary to obtain (and will cooperate with each other in obtaining)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party, required to be
obtained or

                                 -51-


<PAGE>

made by Sierra, PCA or any of their Subsidiaries in connection with the 
Merger or the taking of any action contemplated thereby or by this Agreement.

     5.5. STOCK EXCHANGE LISTING.  Sierra shall use all reasonable efforts to
cause the shares of Sierra Common Stock to be issued in the Merger and the
shares of Sierra Common Stock to be reserved for issuance upon exercise of PCA
Stock Options to be approved for listing on the NYSE, subject to official notice
of issuance, prior to the Closing Date.

     5.6. EMPLOYEE BENEFIT PLANS.  PCA agrees to take all necessary steps at or
prior to the Closing to terminate effective as of the Closing, the following
Designated Plans (as disclosed on SCHEDULE 3.1(o)): (i) the 1986 Incentive Stock
Option Plan, (ii) the 1986 Non-Qualified Stock Option Plan and (iii) the 1993
Stock Option Plan.  PCA also agrees that, on or after the date of this
Agreement, it will not issue any stock option or any other award pursuant to the
1993 Stock Option Plan, the 1986 Incentive Stock Option Plan and the 1986
Non-Qualified Stock Option Plan (collectively, the "PCA Plans") and PCA agrees
that the remaining Designated Plans, if any, will continue subsequent to the
Closing, but may be terminated at any time thereafter provided that at such time
the employees of the Surviving Corporation or its Subsidiaries are either
covered under a Plan, if any, providing benefits of the same nature that is
maintained by either Sierra or a Subsidiary for its employees or by a Plan
comparable to any such Plan.

     5.7. STOCK OPTIONS.

          (a)  At the Effective Time, each outstanding option to purchase shares
     of PCA Common Stock (a "PCA Stock Option" or collectively, "PCA Stock
     Options") issued pursuant to PCA Plans, issued to Jackson Memorial
     Foundation and to The University of Miami, and issued to employees of PCA
     not pursuant to the PCA Plans or any other stock option plan, whether
     vested or unvested, shall be assumed by Sierra.  Each PCA Stock Option
     shall be deemed to constitute an option to acquire, on the same terms and
     conditions as were applicable under such PCA Stock Option, the same number
     of shares of Sierra Common Stock as the holder of such PCA Stock Option
     would have been entitled to receive pursuant to the Merger had such holder
     exercised such option in full immediately prior to the Effective Time, at a
     price per share equal to (y) the aggregate exercise price for the shares of
     PCA Common Stock otherwise purchasable pursuant to such PCA Stock Option
     divided by (z) the number of full shares of Sierra Common Stock deemed
     purchasable pursuant to such PCA Stock Option; provided, however, that in
     the case of any option to which section 421 of the Code applies by reason
     of its qualification under section 422 of the Code ("incentive stock
     options"), the option price, the number of shares purchasable pursuant to
     such option and the terms and conditions of exercise of such option shall
     be determined in order to comply with section 424(a) of the Code.

          (b)  As soon as practicable after the Effective Time, Sierra shall
     deliver to the holders of PCA Stock Options appropriate notices setting
     forth such holders' rights


                                           -52-

<PAGE>

     pursuant to the respective PCA Plans and the agreements evidencing the
     grants of such Options shall continue in effect on the same terms and
     conditions (subject to the adjustments required by this Section 5.7 after
     giving effect to the Merger). Sierra shall comply with the terms of the
     PCA Plans and ensure, to the extent required by, and subject to the
     provisions of, such Plans, that PCA Stock Options which qualified as
     incentive stock options prior to the Effective Time continue to qualify
     as qualified stock options after the Effective Time.

          (c)  Sierra shall take all corporate action necessary to reserve for
     issuance a sufficient number of shares of Sierra Common Stock for delivery
     upon exercise of PCA Stock Options assumed in accordance with this Section
     5.7.  As soon as practicable after the Effective Time, Sierra shall file a
     registration statement on Form S-3 or Form S-8, as the case may be (or any
     successor or other appropriate forms), or another appropriate form with
     respect to the shares of Sierra Common Stock subject to such options and
     shall use its best efforts to maintain the effectiveness of such
     registration statement or registration statements (and maintain the current
     status of the prospectus or prospectuses contained therein) for so long as
     such options remain outstanding.  With respect to those individuals who
     subsequent to the Merger will be subject to the reporting requirements
     under Section 16(a) of the Exchange Act, where applicable, Sierra shall
     administer PCA Plans assumed pursuant to this Section 5.7 in a manner that
     complies with Rule 16b-3 promulgated under the Exchange Act to the extent
     the applicable PCA Plan complied with such rule prior to the Merger.

     5.8. BROKERS OR FINDERS.  Each of Sierra and PCA represents, as to itself,
its Subsidiaries and its affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any broker's
or finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, except Bear, Stearns & Co.,
whose fees and expenses will be paid by PCA in accordance with PCA's agreement
with such firm (copies of which have been delivered by PCA to Sierra prior to
the date of this Agreement), and Salomon Brothers Inc, whose fees and expenses
will be paid by Sierra in accordance with Sierra's agreement with such firm
(copies of which have been delivered by Sierra to PCA prior to the date of this
Agreement), and each of Sierra and PCA respectively agree to indemnify and hold
the other harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have been made by
such party or its affiliate.

     5.9. ACCESS TO SIERRA RECORDS.  Upon reasonable notice, Sierra shall (and
shall cause its Subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of PCA, access, during normal business hours
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, Sierra shall (and
shall cause its Subsidiaries to) furnish promptly to PCA (a) a copy


                                -53-


<PAGE>

of each report, schedule, registration statement and other document filed or 
received by it during such period pursuant to the requirements of Federal 
securities laws and (b) all other information concerning its business, 
properties and personnel as such other party may reasonably request. Unless 
otherwise required by law, PCA will hold any such information which is 
nonpublic in confidence until such time as such information otherwise becomes 
publicly available through no wrongful act of either party, and in the event 
of termination of this Agreement for any reason PCA shall promptly return all 
nonpublic documents obtained from Sierra or its Subsidiaries, and any copies 
made of such documents, to Sierra.

     5.10.  EMPLOYMENT AGREEMENTS.  Sierra shall, as of or prior to the
Effective Time, have offered to, which offer has not been revoked or rescinded,
to enter into employment contracts with the persons set forth on EXHIBIT 5.10 on
the terms set forth in the forms of Employment Agreements attached hereto as
EXHIBIT 5.10. 

     5.11.  INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.

          (a)  From and after the Effective Time, Sierra and the Surviving
     Corporation shall, jointly and severally indemnify, defend and hold
     harmless each person who is now, or has been at any time prior to the date
     hereof or who becomes prior to the Effective Time, an officer, director or
     employee of PCA or any of its Subsidiaries (the "Indemnified Parties")
     against (i) all losses, claims, damages, costs, expenses (including
     attorney's fees), liabilities or judgments or amounts that are paid in
     settlement (which settlement shall require the prior written consent of
     Sierra, which consent shall not be unreasonably withheld) of or in
     connection with any claim, action, suit, proceeding or investigation (a
     "Claim") in which an Indemnified Party is, or is threatened to be made, a
     party or a witness based in whole or in part on or arising in whole or in
     part out of the fact that such person is or was an officer, director or
     employee of PCA or any of its Subsidiaries, whether such Claim pertains to
     any matter or fact arising, existing or occurring at or prior to the
     Effective Time (including, without limitation, the Merger and other
     transactions contemplated by this Agreement), regardless of whether such
     Claim is asserted or claimed prior to, at or after the Effective Time (the
     "Indemnified Liabilities"), and (ii) all Indemnified Liabilities based in
     whole or in part on, or arising in whole or in part out of, or pertaining
     to this Agreement or the transactions contemplated hereby, in each case to
     the full extent PCA would have been permitted under Delaware law and its
     Certificate of Incorporation and Bylaws to indemnify such person (and
     Sierra shall pay expenses in advance of the final disposition of any such
     action or proceeding to each Indemnified Party to the full extent permitted
     by law and under such Certificate of Incorporation or Bylaws, upon receipt
     of any undertaking required by such Certificate of Incorporation, Bylaws or
     applicable law).  Any Indemnified Party wishing to claim indemnification
     under this Section 5.11(a), upon learning of any Claim, shall notify Sierra
     (but the failure so to notify Sierra shall not relieve it from any
     liability which Sierra may have under this Section 5.11(a) except to


                                 -54-

<PAGE>

     the extent such failure prejudices Sierra) and shall deliver to Sierra any
     undertaking required by such Certificate of Incorporation, Bylaws or
     applicable law. Each of Sierra and Surviving Corporation shall, jointly and
     severally use its best efforts to assure, to the extent permitted under
     applicable law, that all limitations of liability existing in favor of the
     Indemnified Parties as provided in PCA's Certificate of Incorporation and
     Bylaws, as in effect as of the date hereof, with respect to claims or
     liabilities arising from facts or events existing or occurring prior to the
     Effective Time (including, without limitation, the transactions
     contemplated by this Agreement), shall survive the Merger.  The obligations
     of Sierra and Surviving Corporation described in this Section 5.11(a) shall
     continue in full force and effect, without any amendment thereto, for a
     period of not less than six years from the Effective Time; provided,
     however, that all rights to indemnification in respect of any Claim
     asserted or made within such period shall continue until the final
     disposition of such Claim; and provided further that nothing in this
     Section 5.11(a) shall be deemed to modify applicable Delaware
     Indemnification of former officers and directors.  The Indemnified Parties
     as a group may retain only one law firm at the expense of Sierra to
     represent them with respect to each such matter unless there is, under
     applicable standards of professional conduct, a conflict on any significant
     issue between the positions of any two or more Indemnified Parties.

          (b)  Sierra and the Surviving Corporation shall cause to be maintained
     in effect for not less than six years from the Effective Time the current
     policies of directors' and officers' liability insurance maintained by PCA
     and its Subsidiaries (provided that Sierra and the Surviving Corporation
     may substitute therefor policies of at least the same coverage containing
     terms and conditions which are no less advantageous to the Indemnified
     Parties in all material respects so long as no lapse in coverage occurs as
     a result of such substitution) with respect to all matters, including the
     transactions contemplated hereby, occurring prior to, and including, the
     Effective Time, provided that, in the event that any Claim is asserted or
     made within such six-year period, such insurance shall be continued in
     respect of any such Claim until final disposition of any and all such
     Claims.  Notwithstanding anything to the contrary contained elsewhere
     herein, Sierra's and Surviving Corporation's agreement set forth above
     shall be limited to cover claims only to the extent that those claims are
     not covered under PCA's directors' and officers' insurance policies (or any
     substitute policies permitted by this Section 5.11(b)).

          (c)  The obligations of Sierra and the Surviving Corporation under
     this Section 5.11 are intended to benefit, and be enforceable against
     Sierra and the Surviving Corporation directly by, the Indemnified Parties,
     and shall be binding on all respective successors of Sierra and the
     Surviving Corporation.

     5.12.  ADDITIONAL AGREEMENTS; REASONABLE EFFORTS.  Subject to the terms
and conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause


                                       -55-

<PAGE>


to be taken, all action and to do, or cause to be done, all things necessary, 
proper or advisable under applicable laws and regulations to consummate and 
make effective the transactions contemplated by this Agreement, subject to 
the appropriate vote of shareholders of Sierra and of stockholders of PCA 
described in Section 6.1(a), including cooperating fully with the other 
party, including by provision of information and making of all necessary 
filings in connection with, among other things the HSR Act.  In case at any 
time after the Effective Time any further action is necessary or desirable to 
carry out the purposes of this Agreement or to vest the Surviving Corporation 
with full title to all properties, assets, rights, approvals, immunities and 
franchises of either of the Constituent Corporations, the proper officers and 
directors of each party to this Agreement shall take all such necessary 
action.

     5.13.  POOLING.  Sierra and PCA each agrees that it will not knowingly
take any action which would have the effect of jeopardizing the treatment of the
Merger as a "pooling-of-interests" for accounting purposes.

     5.14.  NO ACTIONS INCONSISTENT WITH TAX-FREE REORGANIZATION.  PCA and
each of its Subsidiaries, Sierra and Sierra Sub shall (and, following the
Effective Time, Sierra shall cause the Surviving Corporation to) take no action
with respect to the capital stock, assets or liabilities of the Surviving
Corporation that would cause the Merger not to qualify as a "reorganization"
within the meaning of Sections 368(a)(1)(A) and (a)(2)(E) of the Code.

     5.15.  SIERRA'S BOARD OF DIRECTORS.

          (a)  The Board of Directors of Sierra will take action prior to the
     Effective Time to cause the number of directors comprising the full Board
     of Directors of Sierra at the Effective Time to be increased to nine
     persons, and the three persons listed on EXHIBIT 5.15 as the PCA designees
     to the Board of Directors of Sierra shall be elected to the Board of
     Directors of Sierra by the Sierra Board of Directors effective at the
     Effective Time, such increase in number and such election to be subject to
     the Closing.  The Sierra Board of Directors will also take action prior to
     the Effective Time to cause the committees of the Board of Directors of
     Sierra at the Effective Time to be the committees listed on EXHIBIT 5.15,
     having the membership noted on such Exhibit, such action to be subject to
     the Closing.  Following the Effective Time, the Board of Directors of
     Sierra will take action to cause one person to be designated by mutual
     agreement of the PCA designees and the Sierra designees to be elected to
     the Board of Directors of Sierra.  If prior to the Effective Time, any PCA
     designee for director set forth on EXHIBIT 5.15, or if during the two years
     after the Effective Time, any PCA designated director shall decline or be
     unable to serve as a director of Sierra, the other PCA designees or the
     remaining PCA designated directors, as the case may be, shall designate
     another person to serve in such person's stead, subject to the approval of
     a majority of the Sierra designated directors at that time, which approval
     shall not be unreasonably withheld.  If during the two years after the
     Effective Time, any Sierra designated director


                                   -56-


<PAGE>

     shall decline or be unable to serve as a director of Sierra, the remaining
     Sierra designated directors shall designate another person to serve in such
     person's stead.  Sierra agrees that, during the two year period after the
     Effective Time, it shall cause at least one PCA designee listed on
     EXHIBIT 5.16 (or his successor chosen pursuant to this Section 5.15(a)) to
     be a member of each of the Committees set forth on EXHIBIT 5.16 of the
     Board of Directors of Sierra. Sierra shall take all appropriate action for
     two years after the Effective Time to assist in the nomination for election
     as directors of the PCA designees listed on EXHIBIT 5.15 (or any successor
     chosen pursuant to this Section 5.15(a)).

          (b)  Each person designated by PCA to serve on the Board of Directors
     of Sierra, and any person subsequently appointed to the Board of Directors
     of Sierra by such designees pursuant to Section 5.15(a), shall be covered
     by the 1995 Employee Directors Stock Plan and the prior service of any such
     person on the PCA Board of Directors shall count as service on the Board of
     Directors of Sierra for all purposes under such plan. 

     5.16.  APPOINTMENT OF DIRECTORS TO COMMITTEES.  Sierra's Board of
Directors shall take the requisite action to appoint at the Effective Time those
individuals set forth on EXHIBIT 5.16 as members of the executive and operating
committees of the Board of Directors of Sierra as set forth on such EXHIBIT
5.16.

     5.17.  ELECTION OF OFFICERS OF SIERRA.  Sierra's Board of Directors
shall take the requisite action to elect at the Effective Time those individuals
set forth on EXHIBIT 5.10 to the offices set forth in their respective
Employment Agreement, understanding that such individuals will be entitled to
all rights under their existing employment contracts with PCA.

     5.18.  HEADQUARTERS.  PCA and Sierra agree that commencing at the
Effective Time the headquarters of the Surviving Corporation shall be located in
Las Vegas, Nevada.



                          ARTICLE VI.  CONDITIONS PRECEDENT

     6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.  The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:

          (a)  APPROVAL.  This Agreement and the Merger shall have been approved
     and adopted by the affirmative vote of a majority of the votes that the
     holders of the outstanding shares of PCA Common Stock are entitled to cast
     and shall have been approved by the affirmative vote of [a majority of the
     votes that the holders of the outstanding shares of Sierra Common Stock are
     entitled to cast].  Not more than ten percent (10%) of the holders of the
     outstanding shares of PCA Common Stock shall have


                                -57-

<PAGE>

     delivered to PCA written demands for appraisal of such shares prior to the
     taking of the vote by the stockholders of PCA on the Merger.

          (b)  NYSE LISTING.  The shares of Sierra Common Stock issuable to PCA
     stockholders pursuant to this Agreement and such other shares required to
     be reserved for issuance in connection with the Merger shall have been
     authorized for listing on the NYSE upon official notice of issuance.

          (c)  OTHER APPROVALS.  The filings provided for by Section 1.1 and the
     State Takeover Approvals and all authorizations, consents, orders or
     approvals (including State Approvals) of, or declarations or filings with,
     or expirations of waiting periods imposed by, any Governmental Entity the
     absence of which would have a Material Adverse Effect on Sierra or the
     Surviving Corporation shall have been filed, have occurred or been
     obtained.

          (d)  S-4.  The S-4 shall have become effective under the Securities
     Act and shall not be the subject of any stop order or proceedings seeking a
     stop order.

          (e)  NO INJUNCTIONS OR RESTRAINTS.  No temporary restraining order,
     preliminary or permanent injunction or other order issued by any court of
     competent jurisdiction or other legal restraint or prohibition (an
     "Injunction") preventing the consummation of the Merger shall be in effect.

          (f)  POOLING.  The independent public accountants of each of PCA and
     Sierra shall have issued an opinion, addressed to them that the Merger will
     qualify for "pooling of interests" accounting treatment under applicable
     accounting rules, including, without limitation, applicable SEC accounting
     standards.

     6.2. CONDITIONS TO OBLIGATIONS OF SIERRA AND SIERRA SUB.  The obligations
of Sierra and Sierra Sub to effect the Merger are subject to the satisfaction of
the following conditions unless waived by Sierra and Sierra Sub:

          (a)  REPRESENTATIONS AND WARRANTIES.  The representations and
     warranties of PCA set forth in this Agreement shall be true and correct in
     all material respects as of the date of this Agreement and (except to the
     extent such representations and warranties speak as of an earlier date) as
     of the Closing Date as though made on and as of the Closing Date, except
     (i) as otherwise contemplated by this Agreement or (ii) to the extent that
     any omission or misrepresentation would not have a Material Adverse Effect
     on PCA.  Sierra shall have received a certificate signed on behalf of PCA
     by the chief executive officer and by the chief financial officer of PCA to
     such effect.


                                   -58-

<PAGE>


          (b)  PERFORMANCE OF OBLIGATIONS OF PCA.  PCA shall have performed in
     all material respects all obligations required to be performed by it under
     this Agreement at or prior to the Closing Date where the failure to do so
     would have a Material Adverse Effect on PCA, and Sierra shall have received
     a certificate signed on behalf of PCA by the Chief Executive Officer and by
     the Chief Financial Officer of PCA to such effect.

          (c)  LETTER FROM PCA AFFILIATES.  Sierra shall have received from each
     person named in the letter referred to in Section 4.1(k) an executed copy
     of an agreement substantially in the form of EXHIBIT 4.1(K).

          (d)  TAX OPINION.  The opinion of Morgan, Lewis & Bockius LLP, counsel
     to Sierra, to the effect that the Merger will be treated for Federal income
     tax purposes as a reorganization within the meaning of Section 368(a) of
     the Code, and that Sierra, Sierra Sub and PCA will each be a party to that
     reorganization within the meaning of Section 368(b) of the Code, dated on
     or about the date that is two business days prior to the date the Proxy
     Statement is first mailed to stockholders of PCA and to the shareholders of
     Sierra, shall not have been withdrawn or modified in any material respect.

          (e)  CONSENTS UNDER AGREEMENTS.  PCA shall have obtained the consent
     or approval of each person (other than Sierra and its Subsidiaries and
     affiliates) whose consent or approval shall be required in order to permit
     the succession by the Surviving Corporation pursuant to the Merger to any
     obligation, right or interest of PCA or any Subsidiary of PCA under any
     loan or credit agreement, note, mortgage, indenture, lease or other
     agreement or instrument, except those for which failure to obtain such
     consents and approvals would not have a Material Adverse Effect on Sierra
     following the Merger, including the Surviving Corporation and its
     Subsidiaries.

          (f)  NO REPEAL OF RESOLUTIONS.  Except as permitted by the terms of
     this Agreement, neither the Board of Directors of PCA nor any committee
     thereof shall have rescinded or repealed, or amended to change the terms of
     this Agreement, the resolutions adopted by the Board of Directors on
     November 2, 1996 (accurate and complete copies of which will be provided to
     Sierra).

     6.3. CONDITIONS OF OBLIGATIONS OF PCA.  The obligation of PCA to effect the
Merger is subject to the satisfaction of the following conditions unless waived
by PCA:

          (a)  REPRESENTATIONS AND WARRANTIES.  The representations and
     warranties of Sierra and Sierra Sub set forth in this Agreement shall be
     true and correct in all material respects as of the date of this Agreement
     and (except to the extent such representations speak as of an earlier date)
     as of the Closing Date as though made on and as of the Closing Date, except
     (i) as otherwise contemplated by this Agreement or (ii) to the extent


                                    -59-


<PAGE>


     that any omission or misrepresentation would not have a Material Adverse
     Effect on Sierra.  PCA shall have received a certificate signed on behalf
     of Sierra by the Chief Executive Officer or the President or the Vice
     Chairman or and by the chief financial officer of Sierra to such effect.

          (b)  PERFORMANCE OF OBLIGATIONS OF SIERRA AND SIERRA SUB.  Sierra and
     Sierra Sub shall have performed in all material respects all obligations
     required to be performed by them under this Agreement at or prior to the
     Closing Date where the failure to do so would have a Material Adverse
     Effect on Sierra, and PCA shall have received a certificate signed on
     behalf of Sierra by the Chief Executive Officer or the President or the
     Vice Chairman and by the chief financial officer of Sierra to such effect.

          (c)  TAX OPINION.  The opinion of Fulbright & Jaworski L.L.P., counsel
     to PCA, to the effect that the Merger will be treated for Federal income
     tax purposes as a reorganization within the meaning of Section 368(a) of
     the Code, and that Sierra, Sierra Sub and PCA will each be a party to that
     reorganization within the meaning of Section 368(b) of the Code, dated on
     or about the date that is two business days prior to the date the Proxy
     Statement is first mailed to stockholders of PCA and of Sierra, shall not
     have been withdrawn or modified in any material respect.

          (d)  CONSENTS UNDER AGREEMENTS.  Sierra shall have obtained the
     consent or approval of each person (other than PCA and its Subsidiaries and
     affiliates) whose consent or approval shall be required in connection with
     the transactions contemplated hereby under any loan or credit agreement,
     note, mortgage, indenture, lease or other agreement or instrument, except
     those for which failure to obtain such consents and approvals would not
     have a Material Adverse Effect on Sierra following the Merger, including
     the Surviving Corporation and its Subsidiaries.

          (e)  NO REPEAL OF RESOLUTIONS.  Except as permitted by the terms of
     this Agreement, neither the Board of Directors of Sierra nor any committee
     thereof shall have rescinded or repealed, or amended to change the terms of
     this Agreement, the resolutions adopted by the Board of Directors at a
     meeting duly called and held on November 1, 1996 (accurate and complete
     copies of which will be provided to PCA).

                       ARTICLE VII.  TERMINATION AND AMENDMENT

     7.1. TERMINATION.  This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of PCA or by the shareholders of
Sierra:

          (a)  by mutual consent of Sierra and PCA;


                                     -60-


<PAGE>


          (b)  by 

            (i)  Sierra if there has been a breach of any representation,
          warranty, covenant or agreement on the part of PCA set forth in this
          Agreement that would have a Material Adverse Effect on PCA so that the
          conditions set forth in Section 6.2(a) or (b) would be incapable of
          being satisfied within forty-five (45) days of notice of such breach;
          provided that in any case, a wilful breach shall be deemed to cause
          such conditions to be incapable of being satisfied for purposes of
          this Section 7.1(b),

            (ii) PCA if there has been a breach of any representation,
          warranty, covenant or agreement on the part of Sierra or Sierra Sub
          set forth in this Agreement that would have a Material Adverse Effect
          on Sierra so that the conditions set forth in Section 6.3(a) or (b)
          would be incapable of being satisfied within sixty (60) days of notice
          of such breach provided that in any case, a wilful breach shall be
          deemed to cause such conditions to be incapable of being satisfied for
          purposes of this Section 7.1(b), or 

            (iii)   either Sierra or PCA if any permanent injunction or
          other order of a court or other competent authority preventing the
          consummation of the Merger shall have become final and non-appealable;

          (c)  by either Sierra or PCA if the Merger shall not have been
     consummated on or before March 31, 1997, unless the failure to consummate
     the Merger is the result of a material breach of this Agreement by the
     party seeking to terminate this Agreement;

          (d)  by either Sierra or PCA if any required approval of the
     stockholders of PCA or shareholders of Sierra shall not have been obtained
     by reason of the failure to obtain the required affirmative vote at a duly
     held meeting of shareholders of Sierra or stockholders of PCA or at any
     adjournment thereof; 

          (e)  by either Sierra or PCA to the extent permitted under Section 8.2
     or 8.3.; or

          (f)  by Sierra (i) within three business days of the receipt by Sierra
     of a final report by Mercer with respect to the Workers' Compensation
     Business which concludes that the reasonable and adequate reserves for the
     Workers' Compensation Business with respect to those certain "blocks" has
     increased from the Mercer draft report referred to in Section 3.1(g)(iii)
     of $317.3 million and exceeds the $362.6 million reserve accrued on the
     financial books and records of PCA, or (ii) on or before 5:00 p.m. Miami
     time on November 18, 1996, in the event that the Florida Department of
     Insurance shall not


                                  -61-


<PAGE>

     have approved on or before November 15, 1996, the transfer to ZC Insurance
     Company of Florida Workers' Compensation policies currently being written
     by PCA P&C.

     7.2. EFFECT OF TERMINATION.  In the event of termination of this Agreement
by either PCA or Sierra as provided in Section 7.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of Sierra, Sierra Sub or PCA or their respective officers or directors except
(y) with respect to the last sentence of Sections 4.1(j) and 5.9, and Sections
5.8, 7.5, 8.2, 8.3 and 8.4 and (z) to the extent that such termination results
from the willful breach by a party hereto of any of its representations,
warranties, covenants or agreements set forth in this Agreement except as
provided in Section 9.7.

     7.3. AMENDMENT.  This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the stockholders of PCA or, the shareholders of Sierra, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders or shareholders without such further approval.  This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.

     7.4. EXTENSION; WAIVER.  At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein.  Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.

     7.5. FEES AND EXPENSES.

          (a)  All costs and expenses incurred in connection with this Agreement
     and the transactions contemplated hereby shall be paid by the party
     incurring such expense, and, in connection therewith, each of Sierra and
     PCA shall pay, with its own funds and not with funds provided by the other
     party, any and all property or transfer taxes imposed on such party or any
     real property tax imposed on any holder of shares in such party resulting
     from the Merger, except that expenses incurred in connection with printing
     and mailing the Proxy Statement and the S-4 shall be shared equally by
     Sierra and PCA.

          (b)  PCA agrees that if Sierra terminates this Agreement pursuant to
     Section 7.1(b), then on the Payment Date (as defined below), PCA shall pay
     to Sierra an amount equal to $3,000,000 plus all of Sierra's Expenses,
     including Sierra's share of the Expenses described in Section 7.5(a), which
     sum PCA and Sierra agree is reasonable


                                    -62-


<PAGE>

     under the circumstances since it would be impracticable and extremely
     difficult to fix the actual damage to Sierra in the case of such a
     termination.  For purposes of this Section 7.5(b), the "Payment Date" is
     the date not less than 10 days following the termination of this Agreement
     by Sierra giving rise to payment under this Section 7.5(b), and not later
     than two business days after the date of delivery of a notice of demand
     pursuant to Section 7.5(e).  PCA shall not be obligated to pay the amounts
     set forth in the first sentence of this Section 7.5(b) if PCA terminates
     this Agreement pursuant to Section 7.1(b) or 7.1(c) or as a result of the
     failure of the conditions set forth in Section 6.1 or Section 6.3 to be
     satisfied.

          (c)  Sierra agrees that if PCA terminates this Agreement pursuant to
     Section 7.1(b), then on the Payment Date (as defined below), Sierra shall
     pay to PCA an amount equal to $3,000,000 plus all of PCA's Expenses,
     including PCA's share of the Expenses described in Section 7.5(a), which
     sum Sierra and PCA agree is reasonable under the circumstances since it
     would be impracticable and extremely difficult to fix the actual damage to
     PCA in the case of such a termination.  For purposes of this
     Section 7.5(c), the "Payment Date" is the date not less than 10 days
     following the termination of this Agreement by PCA giving rise to payment
     under this Section 7.5(c), and not later than two business days after the
     date of delivery of a notice of demand pursuant to Section 7.5(e).  Sierra
     shall not be obligated to pay the amounts set forth in the first sentence
     of this Section 7.5(c) if Sierra terminates this Agreement pursuant to
     Section 7.1(b) or 7.1(c) or as a result of the failure of the conditions
     set forth in Section 6.1 or Section 6.2 to be satisfied.

          (d)  PCA and Sierra each agree that (i) except as set forth in clause
     (ii) below, the payment provided for in Sections 7.5(b), 7.5(c), 8.2, 8.3
     and 8.4 shall be the sole and exclusive remedy of Sierra and PCA upon any
     termination of this Agreement as described in such sections and such
     remedies shall be limited to the sum stipulated in such sections regardless
     of the circumstances (including willful or deliberate conduct) giving rise
     to such termination, and (ii) with respect to any termination of this
     Agreement pursuant to Section 7.1(b), all remedies available to the other
     party either in law or equity shall be preserved and survive the
     termination of this Agreement.

          (e)  Any payment required to be made pursuant to Section 7.5(b) or
     7.5(c) shall be made to the party entitled to such payment not later than
     two business days after delivery to the party obligated to make such
     payment of notice of demand for payment and an itemization setting forth in
     reasonable detail all Expenses of such entitled party (which itemization
     may be supplemented and updated from time to time by such entitled party
     until the 60th day after such entitled party delivers such notice of demand
     for payment), and shall be made by wire transfer of immediately available
     funds to an account designated by such entitled party in the notice of
     demand for payment delivered pursuant to this Section 7.5(e).


                                -63-
<PAGE>


               ARTICLE VIII.  SPECIAL PROVISIONS AS TO CERTAIN MATTERS

     8.1. TAKEOVER DEFENSES OF PCA AND SIERRA.

          (a)  No later than the fifth business day after the date of the
     announcement of the execution of this Agreement, each of PCA and Sierra
     will amend their respective Rights Agreements, as necessary, (i) to prevent
     this Agreement or the consummation of the transactions contemplated hereby
     from resulting in the distribution of separate rights certificates or the
     occurrence of a Distribution Date (as defined therein) or being deemed a
     Triggering Event (as defined therein) and (ii) to provide that neither
     Sierra, Sierra Sub nor PCA shall be deemed to be an Acquiring Person (as
     defined therein) by reason of the transactions contemplated by this
     Agreement.

          (b)  Pursuant to Section 8.1(a), the Board of PCA shall take all
     necessary action to amend the PCA Rights Agreement so that (i) none of the
     execution or delivery of this Agreement or the exchange of the shares of
     PCA Common Stock for the shares of Sierra Common Stock in accordance with
     Article II will cause (A) the PCA Rights distributed pursuant to the PCA
     Rights Agreement to become exercisable under the PCA Rights Agreement, (B)
     Sierra or any of the Sierra Subsidiaries to be deemed an "Acquiring Person"
     (as defined in the PCA Rights Agreement), or (C) the "Shares Acquisition
     Date" (as defined in the PCA Rights Agreement) to occur upon any such event
     and (ii) the "Final Expiration Date" (as defined in the PCA Rights
     Agreement) of the PCA Rights shall occur immediately prior to the Effective
     Time.  PCA agrees to take all necessary action to amend the PCA Rights
     Agreement so that the consummation of the Merger, on the terms permitted
     hereunder, will not cause any of the effects referred to in Section 3 or 13
     of the PCA Rights Agreement to occur; provided, however, that PCA shall not
     be required to make such amendments to the PCA Rights Agreement if (i)
     Sierra has not performed or complied in all material respects with all
     agreements and covenants required by this Agreement to be performed or
     complied with by it on or prior to the consummation of the Merger or (ii)
     PCA obtains and there is in force from the Delaware Court of Chancery an
     order permanently, preliminarily or temporarily declaring that the making
     of such amendments to the PCA Rights Agreement would be contrary to the
     fiduciary duties of the Board of Directors of PCA.

          (c)  PCA and Sierra shall each take such action with respect to any
     other anti-takeover provisions in their respective charters or afforded
     either of them by statute to the extent necessary to consummate the Merger
     on the terms set forth in this Agreement.

     8.2. NO SOLICITATION.

          (a)  PCA shall not, nor shall it permit any of its Subsidiaries to,
     nor shall it authorize or permit any officer, director or employee of or
     any investment banker,


                                     -64-


<PAGE>

     attorney or other advisor, agent or representative of PCA or any of its
     subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage
     the submission of any takeover proposal, (ii) enter into any agreement
     (other than confidentiality and standstill agreements in accordance with
     the immediately following proviso) with respect to any takeover proposal,
     or (iii) participate in any discussions or negotiations regarding, or
     furnish to any person any information with respect to, or take any other
     action to facilitate any inquiries or the making of any proposal that
     constitutes, or may reasonably be expected to lead to, any takeover
     proposal; provided, however, in the case of this clause (iii), that prior
     to the vote of stockholders of PCA for approval of the Merger (and not
     thereafter if the Merger is approved thereby) to the extent required by the
     fiduciary obligations of the Board of Directors of PCA, determined in good
     faith by a majority of the disinterested members thereof based on the
     advice of outside counsel, PCA may, in response to an unsolicited request
     therefor, furnish information to any person or "group" (within the meaning
     of Section 13(d)(3) of the Exchange Act) pursuant to a confidentiality
     agreement on substantially the same terms as provided in Confidentiality
     Agreement between PCA and Sierra (the "Confidentiality Agreement"). Without
     limiting the foregoing, it is understood that any violation of the
     restrictions set forth in the preceding sentence by any officer, director
     or employee of PCA or any of its Subsidiaries or any investment banker,
     attorney or other advisor, agent or representative of PCA, whether or not
     such person is purporting to act on behalf of PCA or otherwise, shall be
     deemed to be a material breach of this Agreement by PCA. For purposes of
     this Section 8.2, "takeover proposal" means (i) any proposal, other than a
     proposal by Sierra or any of its affiliates, for a merger or other business
     combination involving PCA, (ii) any proposal or offer, other than a
     proposal or offer by Sierra or any of its affiliates, to acquire from PCA
     or any of its affiliates in any manner, directly or indirectly, an equity
     interest in PCA or any Subsidiary, any voting securities of PCA or any
     Subsidiary or a material amount of the assets of PCA and its Subsidiaries,
     taken as a whole, or (iii) any proposal or offer, other than a proposal or
     offer by Sierra or any of its affiliates, to acquire from the stockholders
     of PCA by tender offer, exchange offer or otherwise more than 20% of the
     outstanding shares of PCA Common Stock.

          (b)  Neither the Board of Directors of PCA nor any committee thereof
     shall, except in connection with the termination of this Agreement pursuant
     to Section 7.1(a), (b), or (f), (i) withdraw or modify, or propose to
     withdraw or modify, in a manner adverse to Sierra or Sierra Sub the
     approval or recommendation by the Board of Directors of PCA or any such
     committee of this Agreement or the Merger or take any action having such
     effect, provided, that a statement by the Board of Directors of PCA to its
     stockholders as contemplated by Rule 14e-2(a) following Sierra's receipt of
     a Notice of Superior Proposal (as defined below) shall not be deemed to
     constitute a withdrawal or modification of its recommendation of this
     Agreement or the Merger, or (ii) approve or recommend, or propose to
     approve or recommend, any takeover proposal.  Notwithstanding the
     foregoing, in the event the Board of Directors of PCA receives a


                                  -65-


<PAGE>

     takeover proposal that, in the exercise of its fiduciary obligations (as
     determined in good faith by a majority of the disinterested members thereof
     based on the advice of outside counsel), it determines to be a superior
     proposal, the Board of Directors may withdraw or modify its approval or
     recommendation of this Agreement or the Merger and may (subject to the
     following sentence) terminate this Agreement, in each case at any time
     after midnight on the next business day following Sierra's receipt of
     written notice (a "Notice of Superior Proposal") advising Sierra that the
     Board of Directors has received a takeover proposal which it has determined
     to be a superior proposal, specifying the material terms and conditions of
     such superior proposal (including the proposed financing for such proposal
     and a copy of any documents conveying such proposal) and identifying the
     person making such superior proposal.  PCA may terminate this Agreement
     pursuant to the preceding sentence only if the stockholders of PCA shall
     not yet have voted upon the Merger and PCA shall have paid to Sierra the
     PCA Termination Fee (as defined in Section 8.4(a)).  Any of the foregoing
     to the contrary notwithstanding, PCA may engage in discussions with any
     person or group that has made an unsolicited takeover proposal for the
     limited purpose of determining whether such proposal is a superior
     proposal.  Nothing contained herein shall prohibit PCA from taking and
     disclosing to its stockholders a position contemplated by Rule 14e-2(a)
     following Sierra's receipt of a Notice of Superior Proposal.

          (c)  In the event that the Board of Directors of PCA or any committee
     thereof shall (i) withdraw or modify, or propose to withdraw or modify, in
     a manner adverse to Sierra or Sierra Sub the approval or recommendation by
     the Board of Directors of PCA or any such committee of this Agreement or
     the Merger or take any action having such effect or (ii) approve or
     recommend, or propose to approve or recommend, any takeover proposal,
     Sierra may terminate this Agreement.

          (d)  For purposes of this Section 8.2, a "superior proposal" means any
     bona fide takeover proposal to acquire, directly or indirectly, for
     consideration consisting of cash, securities or a combination thereof, all
     of the shares of PCA Common Stock then outstanding or all or substantially
     all the assets of PCA, and otherwise on terms that a majority of the
     disinterested members of the Board of Directors of PCA determines in its
     good faith reasonable judgment (based on the written advice of a financial
     advisor of nationally recognized reputation, a copy of which shall be
     provided to Sierra) to be more favorable to PCA's stockholders than the
     Merger.

          (e)  In addition to the obligations of PCA set forth in paragraph (b),
     PCA shall promptly advise Sierra orally and in writing of any takeover
     proposal or any inquiry with respect to or which could lead to any takeover
     proposal, the material terms and conditions of such inquiry or takeover
     proposal (including the financing for such proposal and a copy of such
     documents conveying such proposal), and the identity of the person


                                       -66-


<PAGE>

     making any such takeover proposal or inquiry. PCA will keep Sierra fully
     informed of the status and details of any such takeover proposal or
     inquiry.

     8.3. NO SOLICITATION.

          (a)  Sierra shall not, nor shall it permit any of its Subsidiaries to,
     nor shall it authorize or permit any officer, director or employee of or
     any investment banker, attorney or other advisor, agent or representative
     of Sierra or any of its subsidiaries to, directly or indirectly,
     (i) solicit, initiate or encourage the submission of any takeover proposal,
     (ii) enter into any agreement (other than confidentiality and standstill
     agreements in accordance with the immediately following proviso) with
     respect to any takeover proposal, or (iii) participate in any discussions
     or negotiations regarding, or furnish to any person any information with
     respect to, or take any other action to facilitate any inquiries or the
     making of any proposal that constitutes, or may reasonably be expected to
     lead to, any takeover proposal; provided, however, in the case of this
     clause (iii), that prior to the vote of shareholders of Sierra for approval
     of the Merger (and not thereafter if the Merger is approved thereby) to the
     extent required by the fiduciary obligations of the Board of Directors of
     Sierra, determined in good faith by a majority of the disinterested members
     thereof based on the advice of outside counsel, Sierra may, in response to
     an unsolicited request therefor, furnish information to any person or
     "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
     pursuant to a confidentiality agreement on substantially the same terms as
     provided in Confidentiality Agreement.  Without limiting the foregoing, it
     is understood that any violation of the restrictions set forth in the
     preceding sentence by any officer, director or employee of Sierra or any of
     its Subsidiaries or any investment banker, attorney or other advisor, agent
     or representative of Sierra, whether or not such person is purporting to
     act on behalf of Sierra or otherwise, shall be deemed to be a material
     breach of this Agreement by Sierra.  For purposes of this Section 8.3,
     "takeover proposal" means (i) any proposal, other than a proposal by PCA or
     any of its affiliates, for a merger or other business combination involving
     Sierra, (ii) any proposal or offer, other than a proposal or offer by PCA
     or any of its affiliates, to acquire from Sierra or any of its affiliates
     in any manner, directly or indirectly, an equity interest in Sierra or any
     Subsidiary, any voting securities of Sierra or any Subsidiary or a material
     amount of the assets of Sierra and its Subsidiaries, taken as a whole, or
     (iii) any proposal or offer, other than a proposal or offer by PCA or any
     of its affiliates, to acquire from the shareholders of Sierra by tender
     offer, exchange offer or otherwise more than 20% of the outstanding shares
     of Sierra Common Stock.

          (b)  Neither the Board of Directors of Sierra nor any committee
     thereof shall, except in connection with the termination of this Agreement
     pursuant to Section 7.1(a), (b), or (f), (i) withdraw or modify, or propose
     to withdraw or modify, in a manner adverse to PCA the approval or
     recommendation by the Board of Directors of Sierra or


                                   -67-


<PAGE>

     any such committee of this Agreement or the Merger or take any action
     having such effect, provided, that a statement by the Board of Directors of
     Sierra to its stockholders as contemplated by Rule 14e-2(a) following PCA's
     receipt of a Notice of Superior Proposal (as defined below) shall not be
     deemed to constitute a withdrawal or modification of its recommendation of
     this Agreement or the Merger, or (ii) approve or recommend, or propose to
     approve or recommend, any takeover proposal.  Notwithstanding the
     foregoing, in the event the Board of Directors of Sierra receives a
     takeover proposal that, in the exercise of its fiduciary obligations (as
     determined in good faith by a majority of the disinterested members thereof
     based on the advice of outside counsel), it determines to be a superior
     proposal, the Board of Directors may withdraw or modify its approval or
     recommendation of this Agreement or the Merger and may (subject to the
     following sentence) terminate this Agreement, in each case at any time
     after midnight on the next business day following PCA's receipt of written
     notice (a "Notice of Superior Proposal") advising PCA that the Board of
     Directors has received a takeover proposal which it has determined to be a
     superior proposal, specifying the material terms and conditions of such
     superior proposal (including the proposed financing for such proposal and a
     copy of any documents conveying such proposal) and identifying the person
     making such superior proposal.  Sierra may terminate this Agreement
     pursuant to the preceding sentence only if the shareholders of Sierra shall
     not yet have voted upon the Merger and Sierra shall have paid to PCA the
     Sierra Termination Fee (as defined in Section 8.4(b)).  Any of the
     foregoing to the contrary notwithstanding, Sierra may engage in discussions
     with any person or group that has made an unsolicited takeover proposal for
     the limited purpose of determining whether such proposal is a superior
     proposal.  Nothing contained herein shall prohibit Sierra from taking and
     disclosing to its stockholders a position contemplated by Rule 14e-2(a)
     following PCA's receipt of a Notice of Superior Proposal.

          (c)  In the event that the Board of Directors of Sierra or any
     committee thereof shall (i) withdraw or modify, or propose to withdraw or
     modify, in a manner adverse to PCA the approval or recommendation by the
     Board of Directors of Sierra or any such committee of this Agreement or the
     Merger or take any action having such effect or (ii) approve or recommend,
     or propose to approve or recommend, any takeover proposal, PCA may
     terminate this Agreement.

          (d)  For purposes of this Section 8.3, a "superior proposal" means any
     bona fide takeover proposal to acquire, directly or indirectly, for
     consideration consisting of cash, securities or a combination thereof, all
     of the shares of Sierra Common Stock then outstanding or all or
     substantially all the assets of Sierra, and otherwise on terms that a
     majority of the disinterested members of the Board of Directors of Sierra
     determines in its good faith reasonable judgment (based on the written
     advice of a financial advisor of nationally recognized reputation, a copy
     of which shall be provided to PCA) to be more favorable to Sierra's
     shareholders than the Merger. 


                                      -68-

<PAGE>


          (e)  In addition to the obligations of Sierra set forth in
     paragraph (b), Sierra shall promptly advise PCA orally and in writing of
     any takeover proposal or any inquiry with respect to or which could lead to
     any takeover proposal, the material terms and conditions of such inquiry or
     takeover proposal (including the financing for such proposal and a copy of
     such documents conveying such proposal), and the identity of the person
     making any such takeover proposal or inquiry.  Sierra will keep PCA fully
     informed of the status and details of any such takeover proposal or
     inquiry.

     8.4. PROVISION FOR ADDITIONAL FEE AND EXPENSE REIMBURSEMENTS.

          (a)  PCA agrees to pay Sierra a fee in immediately available funds of
     $17,000,000 (the "PCA Termination Fee") promptly upon the termination of
     this Agreement in the event this Agreement is terminated by (i) Sierra as
     permitted by Section 8.2 or (ii) PCA other than as permitted by this
     Agreement.  In addition to the PCA Termination Fee payable pursuant to
     clause (ii) of the immediately preceding sentence, Sierra shall be entitled
     to the fees and expenses provided in Section 7.5(b) and any other remedies
     including actual damages and specific performance, as permitted by law or
     equity.  Further, in the event the stockholders of PCA vote upon the Merger
     and do not approve the Merger and this Agreement is terminated pursuant to
     Section 7.1(d), PCA agrees to pay to Sierra the PCA Termination Fee if
     after the date hereof and before such termination of this Agreement or
     within six months following the date of such termination of this Agreement
     a takeover proposal shall have been made, such payment to be made upon the
     consummation of such takeover.  In all other instances covered by the
     foregoing provisions of this Section 8.4(a), the PCA Termination Fee shall
     be payable promptly upon termination of this Agreement.

          (b)  Sierra agrees to pay PCA a fee in immediately available funds of
     $17,000,000 (the "Sierra Termination Fee") promptly upon the termination of
     this Agreement in the event this Agreement is terminated by (i) PCA as
     permitted by Section 8.3 or (ii) Sierra other than as permitted by this
     Agreement.  In addition to the Sierra Termination Fee payable pursuant to
     clause (ii) of the immediately preceding sentence, PCA shall be entitled to
     the fees and expenses provided in Section 7.5(c) and any other remedies,
     including actual damages and specific performance, as permitted by law or
     equity.  Further, in the event the shareholders of Sierra vote upon the
     Merger and do not approve the Merger and this Agreement is terminated
     pursuant to Section 7.1(d), Sierra agrees to pay to PCA the Sierra
     Termination Fee if after the date hereof and before such termination of
     this Agreement or within six months following the date of such termination
     of this Agreement a takeover proposal shall have been made, such payment to
     be made upon the consummation of such takeover.  In all other instances
     covered by the foregoing provisions of this Section 8.4(b), the Sierra
     Termination Fee shall be payable promptly upon termination of this
     Agreement.


                                     -69-


<PAGE>


                           ARTICLE IX.  GENERAL PROVISIONS

     9.1. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.  None of
the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 2.1, 2.2, 5.6 through
5.17, Section 7.5 and Article IX and the agreements of the "affiliates" of PCA
delivered pursuant to Section 4.1(l).

     9.2. NOTICES.  All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):

     (a)  if to Sierra or Sierra Sub, to

          Sierra

          or

          Sierra Acquisition Corp.

          2724 North Tenaya Way
          Las Vegas, NV 89128
          (702) 242-7180
          Telecopy No. (702) 242-7915
          Attention:  Chief Executive Officer

     with a copy to

          2724 North Tenaya Way
          Las Vegas, NV 89128
          (702) 242-7189
          Telecopy No. (702) 242-1532
          Attention:  General Counsel


                                  -70-


<PAGE>

     and to

          Morgan, Lewis & Bockius LLP
          5300 First Union Financial Center
          200 South Biscayne Boulevard
          Miami, Florida 33131-2339
          (305) 579-0300
          Telecopy No. (305) 579-0321
          Attention: John S. Fletcher

     and

     (b)  if to PCA, to


          5835 Blue Lagoon Drive
          Miami, FL 33126
          (305) 265-2840
          Telecopy No. (305) 264-2771
          Attention: Chief Financial Officer

     with a copy to


          5835 Blue Lagoon Drive
          Miami, FL 33126
          (305) 265-2920
          Telecopy No. (305) 267-4811
          Attention: General Counsel

     and a copy to

          Fulbright & Jaworski L.L.P.
          1301 McKinney, Suite 5100
          Houston, Texas 77010-3095
          (713) 651-5151
          Telecopy No. (713) 651-5246
          Attention: Robert F. Gray, Jr.

     9.3. INTERPRETATION.  When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated.  The table of contents and headings contained in this
Agreement are for reference purposes only and shall not


                                     -71-


<PAGE>

affect in any way the meaning or interpretation of this Agreement.  Whenever 
the words "include", "includes" or "including" are used in this Agreement, 
they shall be deemed to be followed by the words "without limitation". The 
phrase "made available" in this Agreement shall mean that the information 
referred to has been made available if requested by the party to whom such 
information is to be made available.  The phrases "the date of this 
Agreement", "the date hereof", and terms of similar import, unless the 
context otherwise requires, shall be deemed to refer to the date set forth on 
the last page of this Agreement.

     9.4. SCHEDULES.  Any information set forth in any Schedule to this
Agreement shall be responsive to any disclosure required to be provided pursuant
to the terms of any of the Sections of this Agreement and not only the Section
of this Agreement to which such Schedule relates.  Any information set forth in
a Schedule that is not required to be provided pursuant to the terms of the
Section of this Agreement to which such Schedule relates is provided for
informational purposes only and shall not be construed as expanding or modifying
the representation, warranty or benchmark contained in such section.  The
listing of or reference in a Schedule to any notice, claim, demand, inquiry or
threat shall not be construed as an admission of the truth or accuracy thereof
or an admission of responsibility or liability.  The inclusion of a particular
item or matter on a Schedule shall not be construed as an admission by party
delivering such Schedule that such item or matter falls within the scope of any
materiality or other qualifications or limitations to the representation,
warranty, benchmark or matter to which such Schedule relates.

     9.5. COUNTERPARTS.  This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

     9.6. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF OWNERSHIP. 
This Agreement (including the documents and the instruments referred to herein)
(a) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, (b) except as provided in Sections 5.6, 5.7, 5.10, 5.11,
5.15, 5.16, 5.17 and 5.19 is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.  The parties hereby
acknowledge that, except as hereinafter agreed to in writing, no party shall
have the right to acquire or shall be deemed to have acquired shares of common
stock of the other party pursuant to the Merger until consummation thereof.

     9.7. GOVERNING LAW.  This Agreement, the transactions contemplated hereby
and the rights of the parties hereunder and under statutory and common law with
respect to the transactions contemplated hereby shall be governed and construed
in accordance with the laws of the State of Delaware.


                                   -72-

<PAGE>


     9.8. NO REMEDY IN CERTAIN CIRCUMSTANCES.  Each party agrees that, should
any court or other competent authority hold any provision of this Agreement or
part hereof or thereof to be null, void or unenforceable, or order any party to
take any action inconsistent herewith or not to take any action required herein,
the other party shall not be entitled to specific performance of such provision
or part hereof or thereof or to any other remedy, including but not limited to
money damages, for breach hereof or thereof or of any other provision of this
Agreement or part hereof or thereof as a result of such holding or order.

     9.9. PUBLICITY.  Except as otherwise required by law or the rules of the
NYSE and the Nasdaq National Market, so long as this Agreement is in effect,
neither PCA nor Sierra shall, or shall permit any of their respective
Subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to the transactions contemplated by this
Agreement without reviewing the same with the other party.

     9.10.  ASSIGNMENT.  Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sierra Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Sierra or to any direct or indirect wholly owned Subsidiary of Sierra.  Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.


                               [signature page follows]



                                        -73-


<PAGE>

     IN WITNESS WHEREOF, Sierra, Sierra Sub and PCA have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first set forth above.

                                       SIERRA HEALTH SERVICES, INC.



                                       By: [Signature Illegible]
                                           -----------------------------

Attest:


/s/ Frank E. Collins
-------------------------------
SECRETARY

                                       SIERRA ACQUISITION CORP.



                                       By: [Signature Illegible]
                                           -----------------------------

Attest:


/s/ Frank E. Collins
-------------------------------
SECRETARY

                                       PHYSICIAN CORPORATION OF AMERICA



                                       By: [Signature Illegible]
                                           -----------------------------


Attest:


/s/ John Hageman
-------------------------------
SECRETARY


                                         -74-