PLAN AND AGREEMENT OF MERGER


                                      AMONG

                           GRIFFIN ACQUISITION CORP.,

                               WILLIAM D. GRIFFIN,

                                       AND

                                  RISCORP, INC.







                           --------------------------



                                November 3, 1999


                           --------------------------



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<TABLE>
<CAPTION>



                                Table of Contents
<S>                                                                                                             <C>

1.       MERGER   2
         1.1.     The Merger......................................................................................2
         1.2.     Conversion of Shares............................................................................2
         1.3.     Dissenting Shares...............................................................................4
         1.4.     Payment of Cash for Class A Common Stock........................................................5
         1.5.     Stock Transfers.................................................................................7
2.       CLOSING  7
3.       REPRESENTATIONS AND WARRANTIES OF RISCORP................................................................7
         3.1.     Organization, Good Standing and Power...........................................................7
         3.2.     Capitalization..................................................................................7
         3.3.     RISCORP Subsidiaries............................................................................8
         3.4.     Authority; Enforceability.......................................................................8
         3.5.     No Violation; Consents..........................................................................8
         3.6.     RISCORP Financial Statement; SEC Reports........................................................9
         3.7.     Absence of Certain Changes or Events...........................................................10
         3.8.     Taxes and Tax Returns..........................................................................11
         3.9.     Litigation.....................................................................................13
         3.10.    Contracts and Commitments......................................................................13
         3.11.    Proxy Statement, Etc...........................................................................13
         3.12.    Employee Benefit Plans.........................................................................14
         3.13.    Collective Bargaining; Labor Disputes; Compliance..............................................15
         3.14.    Brokers and Finders............................................................................15
         3.15.    No Violation of Law............................................................................16
         3.16.    Voting Requirements............................................................................16
         3.17.    Properties.....................................................................................16
         3.18.    Amendment to Rights Agreement..................................................................17
         3.19.    Disclosure.....................................................................................17
4.       REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND GUARANTOR................................................17
         4.1.     Organization, Good Standing and Power..........................................................18
         4.2.     Authority; Enforceability......................................................................18
         4.3.     No Violation; Consents.........................................................................18
         4.4.     Proxy..........................................................................................19
         4.5.     Brokers and Finders............................................................................19
         4.6.     Capitalization.................................................................................19
         4.7.     Disclosure.....................................................................................19
         4.8.     Investigation by Acquiror and Guarantor........................................................19
5.       CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME; CERTAIN COVENANTS.....................................20
         5.1.     Access and Information.........................................................................20
         5.2.     Conduct of Business Pending Merger.............................................................20
         5.3.     Stockholders' Approval.........................................................................24
         5.4.     Takeover Statutes..............................................................................25
         5.5.     Consents.......................................................................................25
         5.6.     Further Assurances.............................................................................25
         5.7.     Notice; Efforts to Remedy......................................................................26
         5.8.     Proxy Materials and Schedule 13E-3.............................................................26
         5.9.     Press Releases; Filings........................................................................26
         5.10.    Indemnification of Officers and Directors......................................................27
         5.11.    Surrender/Sale of Insurance Licenses...........................................................28
         5.12.    Management of Contingent Claim.................................................................28
6.       CONDITIONS PRECEDENT TO MERGER..........................................................................28
         6.1.     Conditions to Each Party's Obligations.........................................................28
         6.2.     Conditions to Obligations of RISCORP...........................................................29
         6.3.     Conditions to Obligations of Acquiror..........................................................29
7.       TERMINATION OF THE MERGER...............................................................................30
         7.1.     Termination....................................................................................30
         7.2.     Effect of Termination..........................................................................31
8.       MISCELLANEOUS...........................................................................................32
         8.1.     Waiver and Amendment...........................................................................32
         8.2.     Non-Survival of Representations and Warranties.................................................32
         8.3.     Notices........................................................................................32
         8.4.     Descriptive Headings; Interpretation...........................................................34
         8.5.     Counterparts...................................................................................34
         8.6.     Entire Agreement...............................................................................34
         8.7.     Governing Law..................................................................................34
         8.8.     Severability...................................................................................34
         8.9.     Enforcement of Agreement.......................................................................34
         8.10.    Assignment.....................................................................................35
         8.11.    Limited Liability..............................................................................35
         8.12.    Definition of Knowledge........................................................................35
         8.13.    Guarantor......................................................................................35

</TABLE>

List of Exhibits

Exhibit A.........Voting Agreement
Exhibit B.........General Release
Exhibit C.........Fee Advancement Agreement
Exhibit D.........Escrow Agreement
Exhibit E.........Form of Section 5.10(d) Compliance Certificate
Exhibit F.........Contact Information for Compliance with Section 5.11(d)
Exhibit G.........RISCORP's Knowledge



<PAGE>


                          PLAN AND AGREEMENT OF MERGER

         PLAN AND AGREEMENT OF MERGER (this  "Agreement"),  dated as of November
3,  1999,  by and  among,  GRIFFIN  ACQUISITION  CORP.,  a  Florida  corporation
("Acquiror"),  WILLIAM D. GRIFFIN,  an  individual  and resident of the state of
Florida ("Guarantor") and RISCORP, INC., a Florida corporation ("RISCORP").

         WHEREAS, Guarantor has incorporated Acquiror under the Florida Business
Corporation  Act (the "FBCA") for the purpose of Acquiror  merging with and into
RISCORP pursuant to the applicable provisions of the FBCA (the "Merger") so that
RISCORP will continue as the surviving corporation of the Merger;

         WHEREAS, Guarantor is the sole stockholder of Acquiror and is executing
this Agreement to guarantee the performance of Acquiror's  obligations hereunder
through the Effective Time (as hereinafter defined);

         WHEREAS,  the  respective  Boards of  Directors of RISCORP and Acquiror
have  approved and declared  advisable the Merger,  the terms and  provisions of
this Agreement and the transactions contemplated hereby;

         WHEREAS,  the  respective  Boards of  Directors of RISCORP and Acquiror
have  determined  that the Merger is in furtherance of and consistent with their
respective  long-term  business  strategies  and is  fair  to  and  in the  best
interests of their respective stockholders;

         WHEREAS,  the Merger described herein is subject to the approval of the
stockholders  of  RISCORP  and the  satisfaction  of  certain  other  conditions
described in this Agreement;

         WHEREAS,  in order to induce the  parties to enter into this  Agreement
and to perform their obligations  hereunder Guarantor and each holder of Class B
Common Stock (as  hereinafter  defined)  have  executed  and  delivered a voting
agreement in the form of Exhibit A attached hereto;

         WHEREAS,  in order to induce the  parties to enter into this  Agreement
and to perform  their  obligations  hereunder,  each of the holders of shares of
Class B Common  Stock,  the officers and  directors of RISCORP,  Guarantor,  and
certain other parties have executed and delivered a release substantially in the
form of Exhibit B attached  hereto to be effective as of the Effective  Time (as
hereinafter defined) (the "Release"); and

         WHEREAS,  in  connection  with  the  execution  and  delivery  of  this
Agreement,  Acquiror has executed and delivered a fee  advancement  agreement in
substantially  the form of Exhibit C attached  hereto to be  effective as of the
Effective Time (the "Fee Advancement Agreement").

         NOW,  THEREFORE,  in  consideration  of the  premises and of the mutual
representations,  warranties,  covenants and agreements  herein  contained,  the
parties agree as follows:


<PAGE>
1.   MERGER


     1.1. The Merger

          (a) Upon the terms and subject to the conditions of this Agreement, at
     the Effective Time and in accordance  with the provisions of this Agreement
     and the FBCA,  Acquiror shall be merged with and into RISCORP,  which shall
     be the surviving  corporation  (sometimes  referred to  hereinafter  as the
     "Surviving   Corporation")  in  the  Merger,  and  the  separate  corporate
     existence  of  Acquiror  shall  cease.  Subject to the  provisions  of this
     Agreement,  articles of merger  (the  "Articles  of Merger")  shall be duly
     prepared,  executed and acknowledged by RISCORP, on behalf of the Surviving
     Corporation,  and  thereafter  delivered  to the  Secretary of State of the
     State of Florida  for filing on the  Closing  Date,  as required by Section
     607.1105 of the FBCA. The Merger shall become  effective upon the filing of
     the Articles of Merger with the  Secretary of State of the State of Florida
     or at such time  thereafter  as is provided in the  Articles of Merger (the
     "Effective Time").

          (b) From and after the Effective  Time,  the Merger shall have all the
     effects as  provided  in the  applicable  provisions  of the FBCA.  Without
     limiting the generality of the foregoing, and subject thereto, by virtue of
     the Merger and in accordance with the FBCA, all of the properties,  rights,
     privileges, powers and franchises of RISCORP and Acquiror shall vest in the
     Surviving  Corporation  and all of the  debts,  liabilities  and  duties of
     RISCORP and Acquiror shall become the debts,  liabilities and duties of the
     Surviving Corporation.

          (c) The  Articles of  Incorporation  of RISCORP in effect  immediately
     prior to the Effective Time shall be the Articles of  Incorporation  of the
     Surviving  Corporation  until  thereafter  amended in  accordance  with the
     provisions thereof and the FBCA.

          (d) The Bylaws of RISCORP in effect immediately prior to the Effective
     Time  shall be the  Bylaws  of the  Surviving  Corporation  until  altered,
     amended  or  repealed  as  provided  in such  Bylaws,  in the  Articles  of
     Incorporation of the Surviving Corporation and in the FBCA.

          (e) The officers and  directors of Acquiror  immediately  prior to the
     Effective Time shall be the initial officers and directors of the Surviving
     Corporation,  in each  case  until  their  respective  successors  are duly
     elected and qualified.

     1.2.  Conversion  of Shares.  As of the  Effective  Time,  by virtue of the
Merger and without any action on the part of Acquiror,  RISCORP or any holder of
the following securities:

          (a) Each share of common stock, par value $.01 of Acquiror  ("Acquiror
     Common  Stock")  that is issued and  outstanding  immediately  prior to the
     Effective  Time  shall be  converted  into and  become  one fully  paid and
     nonassessable share of Class B Common Stock (as hereinafter defined).



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<PAGE>

          (b) Subject to Section 1.3,  each share of Class A Common  Stock,  par
     value $.01 per share of RISCORP (the "Class A Common Stock") that is issued
     and outstanding  immediately  prior to the Effective Time shall be canceled
     and  extinguished  and  shall be  converted  automatically  into a right to
     receive an amount in cash equal to the Merger Consideration (as hereinafter
     defined), without interest, less any required withholding taxes, payable to
     the holder  thereof,  as provided in Section  1.4,  upon  surrender  of the
     certificate formerly representing the Class A Common Stock.

               (i) As used herein:

                    (1) the term "Merger Consideration" shall equal (A)(I) $2.85
          less (II) the excess of the  Transactional  Expenses  over  $1,500,000
          divided by the Outstanding Class A Shares (as defined in Section 3.2),
          plus (B) the  Contingent  Claim Amount divided by the aggregate of the
          Outstanding  Class A Shares  and the  Outstanding  Class B Shares  (as
          defined in Section 3.2); and

                    (2) the term "Contingent Claim Amount" shall equal the value
          of any  recovery  obtained by RISCORP from Zenith  Insurance  Company,
          Arthur  Andersen LLP or their  respective  insurers in settlement  and
          final discharge of all alleged errors made in the determination of the
          Final  Business  Balance  Sheet  (as  defined  in that  certain  Asset
          Purchase  Agreement by and among RISCORP,  its subsidiaries and Zenith
          Insurance  Company  dated  June 17,  1997) (the  "Contingent  Claim");
          provided that (A) the value of any recovery (to the extent not paid in
          cash  or cash  equivalents)  shall  be  determined  as of the  date of
          settlement  of such  Contingent  Claim by an  independent  expert well
          recognized for having the knowledge and experience  necessary to value
          such consideration (the "Independent Expert") who shall be selected by
          RISCORP  within  its  reasonable  discretion  and who  shall  use such
          valuation   methodologies  as  are  reasonably   customary  under  the
          circumstances  and deemed relevant by the  Independent  Expert (B) the
          determination  of such  Independent  Expert shall be final,  valid and
          binding on all parties in interest;  (C) to the extent that all or any
          portion of the recovery received in respect of the Contingent Claim is
          not reasonably  subject to valuation (as determined by the Independent
          Expert) then all or such portion (as the case may be) of such recovery
          shall be deemed to equal zero;  and (D) the  Contingent  Claim  Amount
          shall be  reduced by the  aggregate  of all fees,  costs and  expenses
          incurred  by,  paid  by,  or  charged  to  RISCORP  in  (I)  pursuing,
          prosecuting,  settling, and obtaining recovery for any such Contingent
          Claim, (II) hiring and engaging the Independent Expert and valuing any
          recovery  of  the  Contingent   Claim;  and  (III)   distributing  any
          Contingent Claim Amount to stockholders of RISCORP.

               (ii) On the Closing  Date,  RISCORP  shall  deliver to Acquiror a
     listing of each holder of Class A Common  Stock  indicating  such  holder's
     name  and  address  (the  "Class  A  Stockholder  List").  Not  later  than
     forty-five (45) days following the final settlement of the Contingent

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     Claim, RISCORP shall distribute to each holder of Class A Common Stock such
     holder's  pro rata  portion of the  Contingent  Claim Amount to the address
     shown on the Class A  Stockholder  List or such  other  address as any such
     stockholder  may from time to time provide in writing to RISCORP;  provided
     that to the extent that any recovery  obtained by RISCORP on any Contingent
     Claim is other than cash or a cash equivalent, RISCORP, within the exercise
     of  its  reasonable  discretion,  may  pay  the  pro  rata  portion  of the
     Contingent  Claim  Amount to the holders of Class A Common Stock in cash or
     by distribution of any securities or other instruments  received by RISCORP
     in settlement of such Contingent Claim.

               (iii) Not less  than  two (2)  days  prior  to the  Stockholders'
     Meeting  (as  hereinafter  defined),  RISCORP  shall  cause  the  Officer's
     Certificate  (as  hereinafter  defined ) to be delivered  to Acquiror.  For
     purposes of this Agreement:

                    (1)  "Transactional  Expenses"  shall  mean  the  amount  of
          Estimated Transactional Expenses (as hereinafter defined) as set forth
          on the Officer's Certificate;

                    (2) "Estimated Transactional Expenses" shall mean the sum of
          the (A) estimated costs, expenses and fees for legal services rendered
          to RISCORP after the date hereof in connection  with the  consummation
          of the  transactions  contemplated  hereby and (B) the estimated fees,
          costs,  and expenses of RISCORP  with respect to services  provided to
          RISCORP by KPMG, LLP (or any successor  thereto) after the date hereof
          in connection with the consummation of the  transactions  contemplated
          hereby,  (excluding any fees,  costs and expenses related to the audit
          of  RISCORP's  financial  statements  for  the  calendar  year  ending
          December 31, 1999); and

                    (3)  "Officer's   Certificate"   shall  mean  a  certificate
          executed by a duly authorized  officer of RISCORP which sets forth the
          Estimated  Transactional  Expenses and which shall include  reasonable
          and appropriate supporting invoices and/or other documentation.

          (c) Each  share of Class B Common  Stock,  par value $.01 per share of
     RISCORP ("Class B Common Stock") that is issued and outstanding immediately
     prior to the Effective Time shall remain outstanding.

     1.3. Dissenting Shares.  Notwithstanding  anything in this Agreement to the
contrary,  shares of Class A Common  Stock  issued and  outstanding  immediately
prior to the  Effective  Time held by a holder who shall have not voted in favor
of the Merger or  consented  thereto in writing  and who shall have  demanded in
writing  appraisal for such shares in accordance with Sections  607.1301 et seq.
of the  FBCA  shall  not be  converted  into  a  right  to  receive  the  Merger
Consideration  but shall have the rights set forth in Sections  607.1301 et seq.
of the FBCA (or any  successor  provisions),  if  applicable  unless such holder
fails to  perfect or  otherwise  loses such  holder's  right to such  payment or
appraisal, if any, pursuant to Sections 607.1301 et seq. of the FBCA. If, after


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<PAGE>

the Effective Time, any holder of Class A Common Stock fails to perfect or loses
any such right to appraisal,  each such share of such holder shall be treated as
a share  that had been  converted  as of the  Effective  Time  into the right to
receive the Merger  Consideration  in accordance with Section 1.2. RISCORP shall
give prompt notice to Acquiror of any notices of dissent, demands for payment of
fair value or other  communications  or actions received by RISCORP with respect
to  shares  of  Class A Common  Stock,  and  Acquiror  shall  have the  right to
participate  in and  approve  all  negotiations  and  proceedings  with  respect
thereto.  RISCORP shall not,  except with the prior written consent of Acquiror,
make any  payment  with  respect  to,  or settle  or offer to  settle,  any such
demands.

     1.4. Payment of Cash for Class A Common Stock.

          (a) At the Effective Time, RISCORP shall irrevocably  deposit or cause
     to be deposited  with a bank or trust  company to be  designated by RISCORP
     and  reasonably  satisfactory  to  Acquiror  which is  organized  and doing
     business under the laws of the Untied States or any state thereof and has a
     combined  capital and  surplus of at least  $100,000,000  (the  "Disbursing
     Agent"),  as agent  for the  holders  of the  shares  of the Class A Common
     Stock, cash in the estimated aggregate amount required to effect conversion
     of shares of Class A Common  Stock  into the  Merger  Consideration  at the
     Effective Time pursuant to Section 1.2 hereof.  Pending distribution hereof
     pursuant to Section 1.4(b) hereof of the cash deposited with the Disbursing
     Agent,  such cash shall be held in trust for the  benefit of the holders of
     the  Class A Common  Stock  and the fund  shall  not be used for any  other
     purpose and Acquiror and Surviving  Corporation  may direct the  Disbursing
     Agent to invest such cash, provided that such investments:

               (i) shall be obligations of or guaranteed by the United States of
          America,  commercial  paper  obligations  receiving the highest rating
          from  either  Moody's  Investors  Services,  Inc.  or Standard & Poors
          Corporation, or certificates of deposit, bank repurchase agreements or
          bankers   acceptance,   of  domestic  commercial  banks  with  capital
          exceeding  $250,000,000  (collectively,  "Permitted  Investments")  or
          money market funds which are invested solely in Permitted Investments;
          and

               (ii)  shall  have  maturities  that  will  not  prevent  or delay
          payments to be made pursuant to Section 1.4(b) hereof.

          Each holder of a certificate or  certificates  representing  shares of
          Class A Common  Stock  canceled  on the  Effective  Time  pursuant  to
          Section 1.2 hereof may thereafter  surrender  such  certificate to the
          Disbursing Agent, as agent for such holder of shares of Class A Common
          Stock,  which  shall  effect  the  exchange  of  such  certificate  or
          certificates  on such  holder's  behalf for a period ending six months
          after the Effective Time. Any interest and other income resulting from
          such investments shall be paid to the Surviving Corporation.

          (b) After surrender to the Disbursing  Agent of any certificate  which
     prior to the Effective  Time shall have  represented  any shares of Class A
     Common Stock (such shares being the "Surrendered  Shares"),  the Disbursing
     Agent  shall  promptly   distribute  to  the  person  in  whose  name  such
     certificate  shall have been  registered  a check in an amount equal to the
     Merger Consideration multiplied by the number of Surrendered Shares. Until


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<PAGE>

     so  surrendered  and  exchanged,  each such  certificate  shall,  after the
     Effective Time, be deemed to represent only the right to receive such cash,
     and until such surrender and exchange,  no cash shall be paid to the holder
     of  such  outstanding  certificate  in  respect  thereof.  No  interest  or
     dividends  shall be paid or accrued on the Merger  Consideration.  Not less
     than ten (10)  business  days prior to the  Closing  Date,  Acquiror  shall
     submit to RISCORP, letters of transmittal and other documents and materials
     to be mailed  to the  holders  of Class A Common  Stock to  facilitate  the
     surrender of such Class A Common  Stock.  The Surviving  Corporation  shall
     immediately  following the Effective  Time cause to be  distributed to such
     holders such  letters of  transmittal  and other  documents  and  materials
     approved by RISCORP to facilitate such surrender.

          (c) If any cash deposited  with the  Disbursing  Agent for purposes of
     payment in exchange  for shares of Class A Common Stock  remains  unclaimed
     following the expiration of six (6) months after the Effective  Time,  such
     cash shall be  delivered to the  Surviving  Corporation  by the  Disbursing
     Agent,  and  thereafter  the  Disbursing  Agent  shall not be liable to any
     persons  claiming any amount of such cash,  and the  surrender and exchange
     shall be  effected  directly  with the  Surviving  Corporation  (subject to
     applicable abandoned property, escheat and similar laws). No interest shall
     accrue or be payable  with  respect to any  amounts  which any such  holder
     shall  be  so  entitled  to  receive.  The  Surviving  Corporation  or  the
     Disbursing  Agent shall be authorized to pay the cash  attributable  to any
     certificate  theretofore  issued  which  has been lost or  destroyed,  upon
     receipt of evidence reasonably satisfactory to the Surviving Corporation of
     ownership of the shares of Class A Common Stock represented  thereby and of
     appropriate indemnification.

          (d) None of Acquiror,  the  Surviving  Corporation  or the  Disbursing
     Agent  shall be liable to any person in  respect of any shares of  retained
     Class A Common Stock (or dividends or  distributions  with respect thereto)
     or cash delivered to a public official pursuant to any applicable abandoned
     property,  escheat or similar law. If any certificates  representing shares
     of Class A Common  Stock  shall  not have been  surrendered  prior to three
     years after the Effective Time, any such cash,  dividends or  distributions
     in respect of such certificate shall, to the extent permitted by applicable
     law,  become the property of the Surviving  Corporation,  free and clear of
     all claims or interest of any person previously entitled thereto.

          (e) If  payment  is to be made to a person  other  than the  person in
     whose name a surrendered  certificate,  which prior to the  Effective  Time
     shall have  represented  any shares of Class A Common Stock, is registered,
     it shall be a condition to such payment that the certificate so surrendered
     shall be endorsed or shall  otherwise be in proper form for  transfer,  and
     that the person  requesting  such payment  shall have paid any transfer and
     other taxes required by reason of such payment in a name other than that of
     the  registered  holder  of  the  certificate  surrendered  or  shall  have
     established  to  the  satisfaction  of  the  Surviving  Corporation  or the
     Disbursing Agent that such tax either has been paid or is not payable.

          (f) From and after the Effective  Time, the holders of shares of Class
     A Common Stock  outstanding  immediately  prior to the Effective Time shall
     cease to have any  rights  with  respect  to such  shares of Class A Common
     Stock except as otherwise provided herein or by law.


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<PAGE>

     1.5. Stock Transfers. After the Effective Time, there shall be no transfers
on the stock transfer books of the Surviving  Corporation of any shares of Class
A Common Stock which were outstanding immediately prior to the Effective Time.

    2.CLOSING.  Unless otherwise mutually agreed upon in writing by Acquiror and
RISCORP,  the closing of the Merger (the  "Closing") will be held at 10:00 a.m.,
local  time,  on the  second  business  day  following  the date that all of the
conditions  precedent  specified in this  Agreement  have been (or can be at the
Closing)  satisfied  or waived by the party or parties  permitted to do so (such
date being referred to hereinafter as the "Closing Date").  The place of Closing
shall be at the offices of King & Spalding, 191 Peachtree Street, N.E., Atlanta,
Georgia  30303,  or at such other place as may be agreed  between  Acquiror  and
RISCORP.

     3.  REPRESENTATIONS AND WARRANTIES OF RISCORP.  With such exceptions as are
set forth in the  appropriate  sections  of a letter  (the  "RISCORP  Disclosure
Letter")  delivered  by  RISCORP  to  Acquiror  on or  prior to the date of this
Agreement,  RISCORP  hereby  represents and warrants to Acquiror as set forth in
this Section 3.

          3.1.  Organization,  Good Standing and Power. RISCORP is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State of Florida 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.  RISCORP is duly  qualified or licensed to do business and is in good
standing  in each  jurisdiction  in which  the  nature  of its  business  or the
ownership  or leasing of its  properties  make such  qualification  or licensing
necessary,  except  where the failure to be so qualified or licensed or to be in
good  standing  would not,  individually  or in the  aggregate,  have a material
adverse  effect (net of any insurance  proceeds  recovered) on (a) the financial
condition  or net worth of RISCORP  and  RISCORP  Subsidiaries  (as  hereinafter
defined) on a consolidated basis or (b) the ability of RISCORP to consummate the
transactions  contemplated by this Agreement (collectively,  a "Material Adverse
Effect on RISCORP"). RISCORP has made available to Acquiror complete and correct
copies of its  Articles  of  Incorporation  and all  amendments  thereto and its
Bylaws as amended  and all  similar  organizational  documents  for all  RISCORP
Subsidiaries.

          3.2. Capitalization. The authorized capital stock of RISCORP as of the
date hereof consists of (a) 100,000,000  shares of Class A Common Stock of which
14,258,671 shares are issued and outstanding (such shares being the "Outstanding
Class A  Shares"),  (b)  100,000,000  shares  of Class B  Common  Stock of which
24,334,443 shares are issued and outstanding (such shares being the "Outstanding
Class B Shares"),  and (c) 10,000,000  shares of Preferred Stock, par value $.01
per share of  RISCORP  ("Preferred  Stock"),  of which no shares  are issued and
outstanding.  All outstanding  shares of capital stock of RISCORP have been duly
authorized  and  validly  issued  and are fully paid and  nonassessable  and not
subject to any preemptive  rights.  Except as set forth in this Section 3.2, (a)
there are no shares of  capital  stock or other  equity  securities  of  RISCORP
outstanding,  (b) there are no option plans,  outstanding  options,  warrants or
rights to purchase or acquire  from  RISCORP any capital  stock of RISCORP,  (c)
there are no  existing  registration  covenants  with  RISCORP  with  respect to
outstanding shares of any of the capital stock of RISCORP, and (d) there are no


                                       7
<PAGE>

convertible   securities   or   other   contracts,   commitments,    agreements,
understandings,  arrangements or restrictions by which RISCORP is bound to issue
any additional  shares of its capital stock or other  securities.  Other than as
contemplated  in  this  Agreement  and  in  the  First  Amendment  to  Directors
Agreement, there are no voting trusts or other agreements or understandings with
respect to the voting of capital  stock of RISCORP or any RISCORP  Subsidiary to
which RISCORP or any RISCORP Subsidiary is a party.

          3.3. RISCORP  Subsidiaries.  Section 3.3 of RISCORP  Disclosure Letter
sets forth a correct and complete  list of each  corporation  owned  directly or
indirectly by RISCORP (each a "RISCORP Subsidiary" and collectively the "RISCORP
Subsidiaries").  Section  3.3 of the  Disclosure  Letter also  identifies  those
RISCORP  subsidiaries  holding  insurance  licenses  or owning any  assets  (the
"Insurance  Subsidiaries").  RISCORP owns or controls,  directly or  indirectly,
100% of the outstanding  equity  securities of each RISCORP  Subsidiary free and
clear of all liens, charges,  pledges, security interests or other encumbrances.
Other than the RISCORP Subsidiaries,  RISCORP does not own or control any equity
interest in any corporation, partnership, limited liability company, association
or other entity. All of the capital stock of each Insurance  Subsidiary has been
duly  authorized and validly issued and is fully paid and  nonassessable.  There
are no  outstanding  options  or rights to  subscribe  to, or any  contracts  or
commitments to issue or sell, any shares of the common stock,  equity  interests
or  other   securities   (collectively   the  "Capital  Stock")  or  obligations
convertible into or exchangeable for, or giving any person any right to acquire,
any shares of the Capital Stock of any Insurance  Subsidiary to which RISCORP or
any Insurance  Subsidiary is a party. Each Insurance Subsidiary is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of its
jurisdiction  of  incorporation  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.

          3.4.  Authority;  Enforceability.  RISCORP has the corporate power and
authority  to enter  into this  Agreement  and to  consummate  the  transactions
contemplated hereby, subject to the approval of this Agreement and the Merger by
the  stockholders  of  RISCORP  in  accordance  with the FBCA and the Bylaws and
Articles of Incorporation  of RISCORP.  Subject to such approval and compliance,
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  RISCORP,  and this  Agreement  has been  duly
executed  and  delivered  by  RISCORP  and  constitutes  the valid  and  binding
obligation of RISCORP,  enforceable against it in accordance with its terms, (i)
except as may be limited by bankruptcy,  insolvency, moratorium or other similar
laws  affecting or relating to enforcement  of creditors'  rights  generally and
(ii) subject to general principles of equity.

          3.5. No Violation; Consents.

               (a) Except for  compliance  with the  Securities  Exchange Act of
     1934 (the "Exchange Act"), neither the execution,  delivery and performance
     by RISCORP of this Agreement, the filing of the Articles of Merger with the
     Secretary of State for the State of Florida, the consummation by RISCORP of
     the transactions contemplated hereby, nor compliance by RISCORP with any of
     the provisions hereof, will:

                    (i)  violate,  conflict  with,  result  in a  breach  of any
          provision of,  constitute a default (or an event that,  with notice or
          lapse of time or both,  would  constitute a default) under,  result in
          the termination of, accelerate the performance  required by, or result
          in a right of  termination  or  acceleration,  or the  creation of any
          lien, security interest, charge or encumbrance upon any of the


                                       8
<PAGE>

          properties or assets of RISCORP, under any of the terms, conditions or
          provisions of, (x) RISCORP's  Articles of Incorporation or Bylaws, (y)
          the articles of incorporation, certificate of incorporation, bylaws or
          any similar  organizational  document of any Insurance Subsidiary,  or
          (z) any note,  bond,  mortgage,  indenture  or Material  Contract  (as
          hereinafter  defined) to which RISCORP or any RISCORP  Subsidiary is a
          party, or by which RISCORP or any RISCORP  Subsidiary may be bound, or
          to which RISCORP or any RISCORP Subsidiary or the properties or assets
          of any of them may be subject; or

                    (ii) subject to compliance with the statutes and regulations
          referred  to in  Section  3.4(b),  violate  any valid and  enforceable
          judgment,  ruling,  order,  award,  writ,  injunction,  decree, or any
          statute,  rule or  regulation  applicable  to RISCORP  or any  RISCORP
          Subsidiary or any of their respective properties or assets.

               (b)  Except  for (i)  compliance  with  the  Exchange  Act,  (ii)
     notices, filings,  authorizations,  exemptions,  consents or approvals, the
     failure  of which  to give or  obtain  would  not,  individually  or in the
     aggregate,  have a Material Adverse Effect on RISCORP,  (iii) the filing of
     the Articles of Merger with the Secretary of State of Florida, and (iv) the
     filing  of the  notices  with  or the  consents  obtained  from  the  state
     insurance  commissioners  of  Florida  and  Missouri  or  other  regulatory
     authorities set forth in the RISCORP Disclosure Letter and the surrender of
     certificates  of authority  or insurance  licenses in those states in which
     such surrender has not been accomplished prior to or at Closing,  no notice
     to, filing with, authorization of, exemption by, or consent or approval of,
     any  governmental  authority or other  regulatory body is necessary for the
     consummation by RISCORP of the transactions contemplated by this Agreement.


     3.6.RISCORP Financial Statements; SEC Reports.

               (a) Since  February  27,  1998 (such date being the date  RISCORP
     filed the amended Annual Report on Form 10-K/A for the calendar year ending
     December  31, 1996) (the  "Filing  Date")  RISCORP has filed all reports or
     amended reports (the "RISCORP Reports") required to be filed by it with the
     Securities  and  Exchange  Commission  (the "SEC") and all RISCORP  Reports
     complied  as  to  form  in  all  material   respects  with  the  applicable
     requirements  of law. Each report  required to be filed by RISCORP with the
     SEC since  the  Filing  Date did not on the date of filing of such  reports
     and, except to the extent revised or superseded by a subsequent filing with
     the SEC prior to the date hereof does not, contain an untrue statement of a
     material  fact or omit 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.  RISCORP  has
     heretofore  made  available  to  Acquiror  true and  correct  copies of all
     RISCORP Reports,  together with all exhibits thereto. RISCORP also has made
     available to Acquiror true and correct copies of the unaudited consolidated
     balance sheets of RISCORP and the RISCORP  Subsidiaries  at August 31, 1999
     and the related unaudited consolidated statements of income,  stockholders'
     equity and cash flows for the period then ended. The audited consolidated


                                       9
<PAGE>

     balance  sheet of RISCORP and the RISCORP  Subsidiaries  as of December 31,
     1998 as set forth in  RISCORP's  Annual  Report on Form 10-K for the period
     then ended (the "Form 10-K") is  sometimes  referred to herein as the "1998
     Balance Sheet."

               (b)  All of the  financial  statements  included  in the  RISCORP
     Reports  (which  are  collectively  referred  to  herein  as  the  "RISCORP
     Consolidated  Financial  Statements")  fairly  presented  in  all  material
     respects  the  consolidated  financial  position of RISCORP and the RISCORP
     Subsidiaries  as at the dates  mentioned  and the  consolidated  results of
     operations,  changes in stockholders' equity and cash flows for the periods
     then ended in conformity  with  generally  accepted  accounting  principles
     ("GAAP") (subject to any exceptions as to consistency  specified therein or
     as may be  indicated in the notes  thereto or in the case of the  unaudited
     statements, as may be permitted by Form 10-Q of the SEC and subject, in the
     case  of  unaudited  statements,   to  normal,  recurring  year  end  audit
     adjustments).


          3.7.Absence of Certain Changes or Events. Since December 31, 1998:

               (a) there has not been any condition,  event or occurrence which,
     individually or in the aggregate,  has had or could  reasonably be expected
     to have a  Material  Adverse  Effect on  RISCORP or give rise to a Material
     Adverse Effect on RISCORP;

               (b) RISCORP has not changed its accounting  principles or methods
     in any material  respect  except  insofar as may be required by a change in
     GAAP;

               (c) there has been no condition,  event or occurrence which could
     reasonably be expected to prevent,  materially  hinder or materially  delay
     the  ability  of  RISCORP  to  consummate  the  Merger or the  transactions
     contemplated by this Agreement;

               (d) there has not been any declaration,  setting aside or payment
     of any dividend or other distribution  (whether in cash, stock or property)
     with  respect to the  capital  stock of RISCORP or any  RISCORP  Subsidiary
     other than dividends paid to RISCORP or a member of the consolidated  group
     of RISCORP;

               (e) RISCORP has not terminated or  accelerated  the provisions of
     any contract or agreement for the provision of professional services; and

               (f) RISCORP and RISCORP Subsidiaries have not:

                    (i) increased  the  compensation  or fringe  benefits of any
          present  or former  director,  officer or  employee  of RISCORP or any
          RISCORP  Subsidiary  (except  for  increases  in  salary  or  wages of
          employees  in the  ordinary  course of business  consistent  with past
          practice);

                    (ii) granted any severance or termination pay to any present
          or former  director,  officer or  employee  of RISCORP or any  RISCORP
          Subsidiary;



                                       10
<PAGE>

                    (iii) loaned or advanced  money or other property by RISCORP
          or any RISCORP Subsidiary to any of their present or former directors,
          officers or employees; or

                    (iv)  except  as   contemplated   in  Section   5.2(c)(xiv),
          established,  adopted, entered into, amended or terminated any RISCORP
          Employee Plan (as hereinafter defined); or

               (g) except as  contemplated in Section  5.2(c)(xiv),  RISCORP has
     not amended,  terminated,  modified or  accelerated  any contract  with The
     Phoenix Management Company, Ltd.

     3.8.Taxes and Tax Returns

               (a) Since September 17, 1997 and, prior to September 17, 1997, to
     the actual  knowledge  of RISCORP,  without  independent  investigation  or
     inquiry,  RISCORP  and the  RISCORP  Subsidiaries  have (i) duly and timely
     filed  (or  there  has  been  filed  on  their  behalf)  with   appropriate
     governmental  authorities all tax returns  required to be filed by them, on
     or prior to the date  hereof,  except to the  extent  that any  failure  to
     timely file would not,  individually  or in the aggregate,  have a Material
     Adverse Effect on RISCORP, and (ii) duly paid in full or made provisions in
     RISCORP Consolidated Financial Statements in accordance with GAAP (or there
     has been paid or provision  has been made on their  behalf) for the payment
     of all Taxes (as hereinafter defined) for all periods ending on or prior to
     the date hereof.

               (b) All such  returns are correct  and  complete in all  material
     respects and there are no deficiencies  for Taxes (as hereinafter  defined)
     that have been proposed,  asserted or assessed  against  RISCORP or its Tax
     Affiliates that remain unpaid.

               (c)  No  federal,   state,  local  or  foreign  audits  or  other
     administrative  proceedings or court proceedings are presently pending with
     regard to any Taxes or tax returns of RISCORP or the  RISCORP  Subsidiaries
     wherein an adverse determination or ruling in any one such proceeding or in
     all such  proceedings in the aggregate would have a Material Adverse Effect
     on RISCORP.

               (d) The RISCORP Disclosure Letter lists all tax returns that have
     been audited and  indicates  all tax returns that are currently the subject
     of audit. Since September 17, 1997 and, prior to September 17, 1997, to the
     actual knowledge of RISCORP, without independent  investigation or inquiry,
     neither  RISCORP nor any Tax  Affiliate has granted any extension or waiver
     of the statute of  limitations  period on the  assessment  of any  material
     Taxes which period (after  giving  effect to such  extension or waiver) has
     not expired.  Since September 17, 1997 and, prior to September 17, 1997, to
     the Knowledge of RISCORP, neither RISCORP nor any Tax Affiliate has granted
     power of attorney with respect to any matter  relating to any material Tax.
     Since  September  17, 1997 and,  prior to September 17, 1997, to the actual
     knowledge of RISCORP, without independent investigation or inquiry, no


                                       11
<PAGE>

     claim has been made by an authority in a jurisdiction  where RISCORP or any
     Tax Affiliate does not file tax returns that it is or may be subject to Tax
     in that jurisdiction.

               (e) Since September 17, 1997 and, prior to September 17, 1997, to
     the actual  knowledge  of RISCORP,  without  independent  investigation  or
     inquiry,  RISCORP and each Tax  Affiliate  has  withheld and paid all Taxes
     required to have been paid in connection  with amounts paid or owing to any
     employee, independent contractor, stockholder, partner or third party.

               (f) Since September 17, 1997 and, prior to September 17, 1997, to
     the actual  knowledge  of RISCORP,  without  independent  investigation  or
     inquiry,  neither  RISCORP  nor any  Tax  Affiliate  is a party  to any Tax
     allocation, sharing or similar agreement.

               (g) Since September 17, 1997 and, prior to September 17, 1997, to
     the actual  knowledge  of RISCORP,  without  independent  investigation  or
     inquiry,  neither  RISCORP  nor any Tax  Affiliate  has been a member of an
     affiliated  group filing or  consolidated  federal income tax return (other
     than a group the common parent of which was RISCORP).

               (h) Since September 17, 1997 and, prior to September 17, 1997, to
     the actual  knowledge  of RISCORP,  without  independent  investigation  or
     inquiry,  neither  RISCORP nor any Tax Affiliate has made any payments,  is
     obligated to make any payments,  or is a party to any agreement  that under
     certain  circumstances could obligate it to make any payments that will not
     be deductible  under Section 280G of the Internal  Revenue Code of 1986, as
     amended  (the  "Code") or would  constitute  compensation  in excess of the
     limitation set forth in Section 162(m) of the Code.

               (i) Since September 17, 1997 and, prior to September 17, 1997, to
     the actual  knowledge  of RISCORP,  without  independent  investigation  or
     inquiry,  no consent under  Section  341(f) of the Code has been filed with
     respect to RISCORP or any Tax Affiliate.

               (j)  Neither  RISCORP  nor any Tax  Affiliate  has  been a United
     States  real  property  holding  corporation  within the meaning of Section
     897(c)(2)  of the Code during the  applicable  period  specified in Section
     897(c)(1)(A)(ii) of the Code.

               (k) Since September 17, 1997 and, prior to September 17, 1997, to
     the actual  knowledge  of RISCORP,  without  independent  investigation  or
     inquiry,  no claim for unpaid Taxes has become a lien or encumbrance of any
     kind against the property of RISCORP or any Tax Affiliate.

As used herein (i) the term "Taxes" shall include all Federal,  state, local and
foreign  income,  property,   premium,  sales,  excise,   employment,   payroll,
withholding  and other  taxes and (ii) the term "Tax  Affiliate"  shall mean any
RISCORP  Subsidiary  and any individual or entity for whose Taxes RISCORP or any
RISCORP  Subsidiary  is or could be held  liable  whether  by  reason of being a
member of an affiliated,  consolidated, combined, unitary or other similar group
for tax purposes, by reason of being a successor,  member or general partner, by
agreement, or otherwise.


                                       12
<PAGE>

3.9.Litigation. Except as disclosed in the RISCORP Reports:

               (a) neither RISCORP nor any RISCORP  Subsidiary is a party to any
     pending  or,  to  the  Knowledge  of  RISCORP  (as  hereinafter   defined),
     threatened  claim,  action,  suit,  investigation  or proceeding  which, if
     finally  determined  adversely,  would have, either  individually or in the
     aggregate, a Material Adverse Effect on RISCORP;


               (b) there is no outstanding order, writ,  judgment,  stipulation,
     injunction, decree, determination,  award or other decision against RISCORP
     or any RISCORP Subsidiary which,  either  individually or in the aggregate,
     has had or would have a Material Adverse Effect on RISCORP;

               (c) no officer or  director  of RISCORP is a party to any pending
     or, to the knowledge of such officer of director, threatened claim, action,
     suit,  investigation or proceeding or subject to outstanding  order,  writ,
     judgment,  stipulation,  injunction, decree, determination,  award or other
     decision arising out of or related to such officer's or director's actions,
     inactions, duties, or status as an officer or director of RISCORP.

          3.10.  Contract and  Commitments.  Each  contract,  agreement or other
document or  instrument  ("Material  Contract")  to which  RISCORP or any of its
Subsidiaries is a party that was required to be filed as an exhibit to RISCORP's
annual report on Form 10-K or 10-K/A for the year ended December 31, 1998 or any
quarterly report on form 10-Q filed since December 31, 1998 was so filed. Except
for the  Shareholder  Protection  Rights  Agreement  dated  May 13,  1999 by and
between RISCORP and First Union National Bank (the "Rights Agreement"),  RISCORP
is not a party to or subject to any "poison  pill",  shareholders  rights  plan,
rights agreement or similar agreement, instrument or plan.

          3.11.   Proxy   Statement,   etc.  The  proxy  statement  (the  "Proxy
Statement")  to be mailed  to  RISCORP's  stockholders  in  connection  with the
meeting  (the  "Stockholders'  Meeting") to be called to consider the Merger and
any other document filed with the SEC in connection with the Merger, at the date
such document is first  published,  sent or delivered to RISCORP's  stockholders
and at the  Stockholders'  Meeting  will not 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 were  made not  misleading,  provided  that no
representation  is made by RISCORP with respect to statements made in such Proxy
Statement or other  document  filed with the SEC in  connection  with the Merger
based on written information supplied by Acquiror or Guarantor  specifically for
inclusion or  incorporation  by  reference in the Proxy  Statement or such other
document.  All documents that RISCORP is responsible for filing with the SEC and
any other regulatory agency in connection with the Merger will comply as to form
in all  material  respects  with  the  provisions  of  applicable  law  and  any
applicable rules or regulations thereunder.

          3.12.   Employee   Benefit   Plans.   Notwithstanding   the  following
representations   regarding   employee  benefit  plans,   with  respect  to  any
representations  or warranties  concerning any matter relating to or arising out
of any transactions  occurring  before September 17, 1997,  between any party in
interest (as defined in Section 3(14) of the Employee Retirement Income Security


                                       13
<PAGE>

Act of 1974, as amended ("ERISA")),  and the RISCORP Management  Services,  Inc.
Employee  Stock  Ownership  Plan (as amended and restated as part of the RISCORP
Management Services,  Inc. Retirement Plan) in this Section 3.12 or elsewhere in
this  Agreement,  such  representation  or warranty  shall be based on RISCORP's
actual knowledge without independent investigation or inquiry.

               (a)  The  RISCORP  Disclosure  Letter  contains  a list  of  each
     employee  benefit  plan (as  defined  in  Section  3(3) of ERISA)  which is
     maintained by or contributed to by RISCORP or any RISCORP Subsidiary,  each
     stock  option,  stock  purchase  or other  equity-based  compensation  plan
     maintained by or contributed to by RISCORP or any RISCORP Subsidiary,  each
     other plan,  program or other  arrangement  which provides  compensation or
     taxable  benefits to officers  of RISCORP or any RISCORP  Subsidiary,  each
     employment  agreement  in effect with any officer or employee of RISCORP or
     any RISCORP  Subsidiary and each agreement which provides any benefits upon
     a change in control of RISCORP or any RISCORP  Subsidiary  (individually  a
     "RISCORP  Employee Plan" and  collectively the "RISCORP  Employee  Plans").
     RISCORP has made  available to Acquiror the plan documents or other writing
     constituting  each RISCORP  Employee  Plan and, if  applicable,  the trust,
     insurance  contract or other arrangement which holds, or which constitutes,
     an asset of such plan, the ERISA summary plan description for such plan and
     the most  recent  Form 5500 for such plan.  RISCORP  has  identified  those
     RISCORP Employee Plans which RISCORP intends to satisfy the requirements of
     Section 401 of the Code and has made available to Acquiror  accurate copies
     of the most recent favorable determination letters for such plans.

               (b) No  RISCORP  Employee  Plan is subject to Title IV or Section
     302 of  ERISA or  Section  412 or 4971 of the  Code.  To the  Knowledge  of
     RISCORP,  there  does not now  exist,  nor do any  circumstances  currently
     exist,  that could result in any liability under the continuation  coverage
     requirements  of Section 601 et seq. of ERISA and Section 4980B of the Code
     other than liabilities  under such laws that arise solely out of, or relate
     solely  to,  the  RISCORP  Employee  Plans  ("RISCORP  Controlled  Acquiror
     Liability") that would be a liability of RISCORP or any RISCORP  Subsidiary
     following the Effective Time.

               (c) Neither RISCORP nor any RISCORP Subsidiary is, or has been, a
     participant  in a multi  employer plan (within the meaning of ERISA Section
     3(37)).  Neither RISCORP nor any RISCORP Subsidiary maintains or has at any
     time  maintained  a RISCORP  Employee  Plan which is subject to Title IV of
     ERISA.  Neither RISCORP nor any RISCORP  Subsidiary is obligated to provide
     medical  benefits or any other welfare  benefits under any RISCORP Employee
     Plan which is a welfare  plan as defined in Section  3(1) of ERISA to or on
     behalf of any person who is no longer an employee of RISCORP or any RISCORP
     Subsidiary,  except for health continuation coverage as required by Section
     4980B of the Code or Part 6 of Title I of ERISA.

               (d)  Each  RISCORP  Employee  Plan  (i)  has  at all  times  been
     maintained,  by  its  terms  and  in  operation,  in  accordance  with  all
     applicable  laws, and (ii) which is intended to be qualified  under Section
     401 of the Code has at all  times  been  maintained,  by its  terms  and in
     operation, in accordance with Section 401 of the Code, in each case except


                                       14
<PAGE>

     where a  failure  to be so  maintained  would not have a  Material  Adverse
     Effect on RISCORP.  As of December  31,  1998,  neither  RISCORP nor any of
     RISCORP Subsidiaries had any liability under any RISCORP Employee Plan that
     was not reflected in 1998 Balance Sheet or disclosed in the notes  thereto,
     other than  liabilities  which  individually  or in the aggregate would not
     have a Material Adverse Effect on RISCORP.

               (e) To the  actual  knowledge  of  RISCORP,  without  independent
     investigation  or inquiry,  no  prohibited  transaction  has occurred  with
     respect to any RISCORP  Employee  Plan  maintained by RISCORP or any of the
     RISCORP  Subsidiaries  that would result in the imposition of an excise tax
     or other  liability  under  the Code or ERISA  on  RISCORP  or any  RISCORP
     Subsidiary or in any obligation to reimburse any person for any such tax or
     other liability.

               (f) All  contributions  or premium  payments  with respect to the
     RISCORP Employee Plans due for any period ending on or before the Effective
     Time have been or will be  timely  paid by  RISCORP.  The  execution  of or
     performance  of the  transactions  contemplated  by this Agreement will not
     create,  accelerate or increase any obligations  under the RISCORP Employee
     Plans.

          3.13.  Collective  Bargaining;  Labor  Disputes;  Compliance.  Neither
RISCORP nor any RISCORP  Subsidiary (a) is a party to any collective  bargaining
agreement or (b) has any employees. To the knowledge of RISCORP, since September
17,  1997,  RISCORP and each  RISCORP  Subsidiary  have  complied  with all laws
relating to the employment and safety of labor, including provisions relating to
wages, hours,  benefits,  collective bargaining and all applicable  occupational
safety and health acts, laws and  regulations  except,  in each case,  where the
failure to be in compliance would not, individually or in the aggregate,  have a
Material Adverse Effect on RISCORP.

          3.14. Brokers and Finders. Neither RISCORP nor any RISCORP Subsidiary,
nor any of their respective  officers,  directors or employees,  has employed or
will employ any broker or finder or incurred or will incur any liability for any
financial advisory fees, brokerage fees,  commissions,  or finder's fees, and no
broker or finder has acted or will act directly or indirectly for RISCORP or any
RISCORP Subsidiary, in connection with this Agreement or any of the transactions
contemplated hereby.

          3.15.  No  Violation  of  Law.  To the  Knowledge  of  RISCORP,  since
September  17,  1997,  the business  and  operations  of RISCORP and the RISCORP
Subsidiaries  have  been  conducted  in  compliance  with all  applicable  laws,
ordinances,  regulations  and  orders  of all  governmental  entities  and other
regulatory bodies (including, without limitation, laws, ordinances,  regulations
and orders relating to zoning,  environmental  matters and the safety and health
of employees and to applicable  state and federal  insurance  laws) except where
such noncompliance,  individually or in the aggregate, would not have a Material
Adverse Effect on RISCORP.  Since September 17, 1997, except as disclosed in the
RISCORP Reports or the RISCORP Disclosure Letter:

                                       15
<PAGE>

               (a) neither RISCORP,  any RISCORP Subsidiary,  nor any officer or
     director of RISCORP has been charged with or, to the  Knowledge of RISCORP,
     is now under  investigation with respect to, a violation of any regulation,
     ordinance,  order or other  requirement of a  governmental  entity or other
     regulatory body;

               (b) neither  RISCORP,  any RISCORP  Subsidiary nor any officer or
     director of RISCORP is a party to or bound by any order,  judgment,  decree
     or award of a  governmental  entity or other  regulatory  body which has or
     will have,  individually or in the aggregate,  a Material Adverse Effect on
     RISCORP; and

               (c) RISCORP and the RISCORP  Subsidiaries  have timely  filed all
     reports  required  to be  filed  with  any  governmental  entity  or  other
     regulatory  body on or before  the date  hereof as to which the  failure to
     timely file such reports would result, individually or in the aggregate, in
     a Material Adverse Effect on RISCORP.

RISCORP and the RISCORP Subsidiaries have all permits,  certificates,  licenses,
approvals and other authorizations  required in connection with the operation of
the  business  of RISCORP  and the  RISCORP  Subsidiaries,  except for  permits,
certificates,  licenses, approvals and other authorizations the failure of which
to have would not,  individually  or in the aggregate,  have a Material  Adverse
Effect on  RISCORP.  The  RISCORP  Disclosure  Letter  sets  forth a list of all
permits, certificates,  licenses, approvals and other authorizations required to
be obtained in connection with the consummation of the transactions contemplated
hereby the failure of which to obtain would have a Material  Adverse  Effects on
RISCORP.


          3.16. Voting Requirements.  The affirmative vote of (i) the holders of
80% of the issued and outstanding Voting Stock (as defined in RISCORP's Articles
of  Organization)  and (ii) the holders of  two-thirds  of the shares of Class A
Common Stock with respect to this  Agreement  and the Merger is the only vote of
the  holders of any class or series of  RISCORP's  capital  stock  necessary  to
approve this Agreement and the transactions contemplated by this Agreement.

          3.17. Properties.

               (a)  RISCORP  does not own any real  property  and  there  are no
     outstanding contracts for the purchase of any real property.

               (b)  RISCORP  and  RISCORP   Subsidiaries  hold  good  and  valid
     leasehold  title to leased real  property  they  occupy,  free of all liens
     except for liens that,  individually or in the aggregate,  would not have a
     Material Adverse Effect on RISCORP or liens securing indebtedness evidenced
     by agreements  listed on the RISCORP  Disclosure Letter or reflected on the
     RISCORP Consolidated  Financial Statement.  All Real Property leases are in
     full force and effect and grant in all  respects the  leasehold  estates or
     rights of  occupancy  or use they  purpose to grant.  There are no existing
     defaults (either on the part of RISCORP or any RISCORP  Subsidiary,  or, to
     the Knowledge of RISCORP,  any other party thereto) under any real property
     lease and no event has occurred which, with notice or the lapse of time, or
     both,  would  constitute  a default  (either  on the part of RISCORP or any
     RISCORP  Subsidiary  or, to the  Knowledge  of  RISCORP,  any  other  party
     thereto) under any of the real property leases. The consummation of the


                                       16
<PAGE>

     merger will not result in the occurrence of a default under any of the real
     property leases (whether pursuant to a "change of control" provision in the
     real property lease or otherwise).

          3.18.  Amendment to Rights Agreement.  On or prior to the date hereof,
the Board of Directors of RISCORP has taken all necessary action with respect to
the Rights  Agreement so that (i) neither  Acquiror nor Guarantor will become an
"Acquiring  Person"  as  a  result  of  the  consummation  of  the  transactions
contemplated  by this  Agreement,  (ii) no  "Separation  Time"  (as such term is
defined in the Rights  Agreement) will occur as a result of the  consummation of
the  transactions  contemplated by this Agreement,  and (iii) all Class A Rights
and Class B Rights (as such terms are  defined in Rights  Agreement)  issued and
outstanding  under the Rights  Agreement or any other similar  rights or options
issued pursuant to any contract or agreement will not be exercisable as a result
of the  execution  and  delivery of this  Agreement or the  consummation  of the
transactions contemplated herein.

          3.19.  Disclosure.  No  representation,  warranty or covenant  made by
RISCORP in this Agreement or the RISCORP  Disclosure  Letter  contains an untrue
statement of a material  fact or omits to state a material  fact  required to be
stated herein or therein or necessary to make the statements contained herein or
therein not  misleading.  The  disclosure of any item in the RISCORP  Disclosure
Letter or in any  attachment  thereto is  disclosure  for all purposes for which
disclosure is required under this Agreement, to the extent that such information
is reasonably  apparent on its face as being  applicable  for all such purposes.
The  inclusion  of any  item in the  RISCORP  Disclosure  Letter  (i)  does  not
represent a determination  by RISCORP that such item is "material" or could have
a Material Adverse Effect on RISCORP; (ii) does not represent a determination by
RISCORP  that such item did not arise in the ordinary  course of  business;  and
(iii) shall not  constitute  an  admission by RISCORP  that such  disclosure  is
required  to be  made  pursuant  to any of the  representations  and  warranties
contained herein.

     4.  REPRESENTATIONS  AND  WARRANTIES OF ACQUIROR AND  GUARANTOR.  With such
exceptions  as are set  forth in a letter  (the  "Acquiror  Disclosure  Letter")
delivered by Acquiror to RISCORP  prior to the date of this  Agreement,  each of
Acquiror and Guarantor hereby represents and warrants to RISCORP as follows:

          4.1.Organization.  Acquiror is a corporation,  duly organized, validly
existing and in good standing under the laws of the State of Florida 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.

          4.2. Authority; Enforceability. Each of Acquiror and Guarantor has the
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 each of Acquiror,
and this  Agreement  has been  duly  executed  and  delivered  by  Acquiror  and
Guarantor and constitutes the valid and binding obligation of each such party,


                                       17
<PAGE>

enforceable  against  it in  accordance  with its  terms,  (i)  except as may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to  enforcement  of  creditors  rights  generally  and (ii)  subject to
general principles of equity.

          4.3. No Violation; Consents

               (a) Except for  compliance  with the  Exchange  Act,  neither the
     execution,  delivery  and  performance  by  Acquiror or  Guarantor  of this
     Agreement, the filing of the Articles of Merger with the Secretary of State
     for the State of Florida,  the consummation by Acquiror or Guarantor of the
     transactions  contemplated  hereby, nor compliance by Acquiror or Guarantor
     with any of the provisions hereof, will:

                    (i)  violate,  conflict  with,  result  in a  breach  of any
          provision of,  constitute a default (or an event that,  with notice or
          lapse of time or both,  would  constitute a default) under,  result in
          the termination of, accelerate the performance  required by, or result
          in a right of  termination  or  acceleration,  or the  creation of any
          lien,  security  interest,  charge  or  encumbrance  upon  any  of the
          properties or assets of Acquiror or Guarantor, under any of the terms,
          conditions or provisions of, (x) Acquiror's  Articles of Incorporation
          or Bylaws,  or (y) any note,  bond,  mortgage,  indenture  or material
          contract  to which  Acquiror  or  Guarantor  is a  party,  or by which
          Acquiror or Guarantor may be bound,  or to which Acquiror or Guarantor
          or the properties or assets of any of them may be subject,  other than
          as would, with respect to clause (y) not have,  individually or in the
          aggregate,  a material  adverse effect (net of any insurance  proceeds
          recovered) on (1) the financial  condition or net worth of Acquiror or
          Guarantor or (2) the ability of Acquiror or  Guarantor  to  consummate
          the transactions  contemplated by this Agreement (a "Material  Adverse
          Effect on Acquiror/Guarantor"); or

                    (ii) subject to compliance with the statutes and regulations
          referred  to in  Section  4.3(b),  violate  any valid and  enforceable
          judgment,  ruling,  order, writ,  injunction,  decree, or any statute,
          rule or regulation applicable to Acquiror or Guarantor or any of their
          respective   properties   or  assets  where  such   violation   would,
          individually  or in the aggregate,  have a Material  Adverse Effect on
          Acquiror/Guarantor.

               (b)  Except  for (i)  compliance  with  the  Exchange  Act,  (ii)
     notices, filings,  authorizations,  exemptions,  consents or approvals, the
     failure  of which  to give or  obtain  would  not,  individually  or in the
     aggregate, have a Material Adverse Effect on Acquiror/Guarantor,  and (iii)
     the  filing  of the  Articles  of  Merger  with the  Secretary  of State of
     Florida,  no notice to,  filing with,  authorization  of,  exemption by, or
     consent or approval of, any governmental authority or other regulatory body
     is  necessary  for  the  consummation  by  Acquiror  or  Guarantor  of  the
     transactions contemplated by this Agreement.


          4.4.Proxy.  The written  information  furnished to RISCORP by Acquiror
and  Guarantor  specifically  for  inclusion  in  the  Proxy  Statement,  or any
amendment or  supplement  thereto,  or  specifically  for inclusion in any other
documents  filed with the SEC by RISCORP in connection  with the Merger,  shall,
(i) with respect to the Proxy Statement at the time the Proxy Statement is


                                       18
<PAGE>

mailed and at the time of the Stockholders'  Meeting,  and, (ii) with respect to
the Schedule 13E-3 and such other documents,  at the time of filing with the SEC
and at the time of such Stockholders'  Meeting, not contain any untrue statement
of a  material  fact or omit to state a  material  fact  required  to be  stated
therein  or  necessary  to  make  the  statements   therein,  in  light  of  the
circumstance under which they were made, not misleading.

          4.5.  Brokers and Finders.  Neither  Acquiror nor Guarantor nor any of
their respective  officers,  directors or employees,  has employed any broker or
finder or incurred any  liability  for any financial  advisory  fees,  brokerage
fees, commissions,  or finder's fees, and no broker or finder has acted directly
or indirectly  for Acquiror or Guarantor,  in connection  with this Agreement or
any of the transactions contemplated hereby.

          4.6. Capitalization. The authorized capital stock of Acquiror consists
of  10,000  shares of common  stock,  par value  $.10 per share of which one (1)
share is issued and  outstanding  on the date  hereof and is owned of record and
beneficially  by  Guarantor.  Such  issued and  outstanding  stock has been duly
authorized and validly issued and is fully paid and  non-assessable  and free of
pre-emptive rights.

          4.7.  Disclosure.  No  representation,  warranty or  covenant  made by
Acquiror in this Agreement or the Acquiror  Disclosure Letter contains an untrue
statement of a material  fact or omits to state a material  fact  required to be
stated herein or therein or necessary to make the statements contained herein or
therein not  misleading.  The disclosure of any item in the Acquiror  Disclosure
Letter or in any  attachment  thereto is  disclosure  for all purposes for which
disclosure is required under this Agreement, to the extent that such information
is reasonably  apparent on its face as being  applicable  for all such purposes.
The  inclusion  of any  item in the  Acquiror  Disclosure  Letter  (i)  does not
represent a determination by Acquiror that such item is "material" or could have
a Material  Adverse  Effect on  Acquiror/Guarantor;  (ii) does not  represent  a
determination by Acquiror that such item did not arise in the ordinary course of
business;  and (iii) shall not  constitute an admission by Acquiror or Guarantor
that  such   disclosure   is  required  to  be  made  pursuant  to  any  of  the
representations and warranties contained herein.

          4.8.  Investigation by Acquiror and Guarantor.  Acquiror and Guarantor
have  conducted  their own  independent  review and analysis of the  businesses,
assets,  condition,   operations  and  prospects  of  RISCORP  and  the  RISCORP
Subsidiaries  and  acknowledge  that Acquiror and  Guarantor  have been provided
access to the  properties,  premises  and  records  of RISCORP  and the  RISCORP
subsidiaries  for this purpose.  In entering into this  Agreement,  Acquiror and
Guarantor  have  relied or will rely  solely  upon their own  investigation  and
analysis and the representations  and warranties  contained herein, and Acquiror
and Guarantor:

               (a) acknowledge that, except with respect to the RISCORP Reports,
     none of  RISCORP,  the  RISCORP  Subsidiaries  or any of  their  respective
     directors, officers, employees, affiliates, agents or representatives makes
     any  representation  or  warranty,  either  express or  implied,  as to the
     accuracy  or  completeness  of any  of the  information  provided  or  made
     available  to Acquiror and  Guarantor  or their  agents or  representatives
     prior to the execution of this Agreement; and

                                       19
<PAGE>

               (b) agree,  to the fullest extent  permitted by law, that none of
     RISCORP,  the RISCORP  Subsidiaries or any of their  respective  directors,
     officers,  employees,  affiliates, agents or representatives shall have any
     liability  or  responsibility  whatsoever  to Acquiror or  Guarantor on any
     basis  (including,  without  limitation,  in contract or tort or otherwise)
     based upon any information provided or made available,  or statements made,
     to Acquiror or Guarantor prior to the execution of this Agreement,

except that the  foregoing  shall not apply to the extent  RISCORP,  the RISCORP
Subsidiaries  or  any  of  their  respective  directors,   officers,  employees,
affiliates,  agents or  representatives  commits fraud or engages in intentional
deception with respect to the information that it provides or makes available to
RISCORP.


     5. CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME; CERTAIN COVENANTS


          5.1. Access and  Information.  Upon reasonable  notice,  RISCORP shall
afford Acquiror and Guarantor and their  respective  representatives  reasonable
access  during  normal  business  hours to the  properties,  books,  records and
personnel of RISCORP and RISCORP  Subsidiaries  and such additional  information
concerning  the business and properties of RISCORP and RISCORP  Subsidiaries  as
Acquiror and its representatives may reasonably request.

          5.2. Conduct of Business Pending Merger.

               (a) RISCORP  agrees  that from the date  hereof to the  Effective
     Time,  except as  contemplated  by this  Agreement  or to the  extent  that
     Acquiror  shall  otherwise  consent in  writing,  RISCORP  and the  RISCORP
     Subsidiaries  will operate their  businesses  only in the ordinary  course,
     and, consistent with its business practices since April 1, 1998.

               (b) RISCORP  agrees  that from the date  hereof to the  Effective
     Time,  except as  otherwise  consented  to by  Acquiror  in  writing  or as
     permitted,  required or contemplated by this Agreement,  (i) neither it nor
     any RISCORP  Subsidiary  will change any  provision of its  Certificate  of
     Incorporation  or  Bylaws  or  similar  governing   documents  (subject  to
     compliance  with Section 5.11 hereto,  except such changes as are necessary
     to  effectuate   the   surrender   and/or  sale  of  RISCORP's  or  RISCORP
     Subsidiaries' certificate of authority or licenses to transact the business
     of insurance in the state where such  certificates of authority or licenses
     are currently  held);  (ii) neither it nor any RISCORP  Subsidiary will not
     make,  declare or pay any dividend except for any dividend declared or paid
     by any RISCORP Subsidiary to RISCORP or any RISCORP  Subsidiary;  and (iii)
     neither  it nor any  RISCORP  Subsidiary  will  make  any  distribution  or
     directly or indirectly sell, issue, redeem,  purchase or otherwise acquire,
     any shares of its outstanding capital stock, change the number of shares of
     its  authorized  or  issued  capital  stock or issue or grant  any  option,
     warrant, call, commitment,  subscription, right to purchase or agreement of
     any character  relating to its  authorized  or issued  capital stock or any
     securities convertible into shares of such stock.

                                       20
<PAGE>

               (c) RISCORP agrees that, except to the extent (i) consented to by
     Acquiror in writing or (ii)  permitted,  required or  contemplated  by this
     Agreement, from the date hereof it will not, nor will it permit any RISCORP
     Subsidiary to:

                    (i) enter into any agreement  representing an obligation for
          indebtedness  for borrowed  money or increase the principal  amount of
          indebtedness  under  any  existing  agreement  or  assume,  guarantee,
          endorse or otherwise  become  responsible  for the  obligations of any
          other individual, firm or corporation;

                    (ii)  sell,   mortgage,   encumber  or  pledge  any  of  its
          properties or assets;

                    (iii) take any action to (A) amend or terminate  any RISCORP
          Employee Plan, (B) increase the  compensation of any of its directors,
          executive  officers or employees,  (C) adopt any other plan,  program,
          arrangement  or  practice  providing  new  or  increased  benefits  or
          compensation to its employees, or (D) modify,  accelerate the benefits
          under,  amend or terminate any agreement with any of RISCORP's agents,
          employees,  officers  or  directors,  except as set  forth in  Section
          5.2(c)(xiv);

                    (iv) enter into any negotiation with respect to or adopt any
          collective bargaining agreement;

                    (v) make any significant change in any accounting methods or
          systems of internal accounting controls,  except as may be appropriate
          to conform to changes in statutory accounting rules or GAAP;

                    (vi) pay,  loan or advance any amount to, or sell,  transfer
          or lease any properties or assets (real,  personal or mixed,  tangible
          or intangible) to, or enter into any material agreement or arrangement
          with,  any  (A) of its  officers  or  directors,  (B)  "affiliate"  or
          "associate"  of any of its  officers or  directors  (as such terms are
          defined in Rule 405 promulgated under the Securities Act) or (C) third
          party;

                    (vii)  make any tax  election  or settle or  compromise  tax
          liability that would reasonably be expected to have a Material Adverse
          Effect on RISCORP;

                    (viii) split,  combine,  or reclassify  any capital stock of
          RISCORP or any RISCORP Subsidiary;

                    (ix) acquire or agree to acquire by merging or consolidating
          with or by purchasing a substantial portion of the stock or assets of,
          or by any other manner, any business or any corporation,  partnership,
          joint venture,  association or other business organization or division
          thereof;

                                       21
<PAGE>

                    (x)  adopt a plan of  complete  or  partial  liquidation  or
          resolutions  providing  for or  authorizing  such a  liquidation  or a
          dissolution, merger, consolidation, restructuring, recapitalization or
          reorganization;

                    (xi) invest  assets of RISCORP or any RISCORP  Subsidiary in
          any  security,  instrument,  or  other  investment  other  than in the
          ordinary course of business at then prevailing market rates consistent
          with RISCORP's written investment policy;

                    (xii) amend,  terminate,  modify, or accelerate any material
          contract or agreement to which RISCORP is a party;


                    (xiii)  modify,   amend  or  terminate   RISCORP's   written
          investment policy;

                    (xiv) modify or accelerate the provisions of or terminate or
          amend any  contract  with The  Phoenix  Management  Company,  Ltd.  or
          Buttner  Hammock and Company,  P.A.,  provided  that RISCORP  shall be
          authorized  to  take  any  action  necessary  to  (A)(1)   accelerate,
          effective as of the  Closing,  the vesting of the Class A Common Stock
          issued  to The  Phoenix  Management  Company,  Ltd.  pursuant  to that
          certain  Restricted  Stock Award  Agreement by and between The Phoenix
          Management  Company,  Ltd. and RISCORP and (2) amend the provisions of
          the Management Agreement of RISCORP, Inc. dated February 18, 1998 (the
          "Management  Agreement")  to  reduce  the  fees  paid  to The  Phoenix
          Management  Company,  Ltd. to such amount  RISCORP  deems  appropriate
          after notice to Acquiror or (B) terminate the Management Agreement.

                    (xv) enter  into any  agreement  to take any of the  actions
          described in Section 5.2(b) or elsewhere in this Section 5.2(c).

               (d) RISCORP  shall keep  Acquiror  and  Guarantor  informed  with
     respect to the  status of any  litigation  to which  RISCORP,  any  RISCORP
     Subsidiary,  or any officer, director or employee of RISCORP or any RISCORP
     Subsidiary is a party  (whether or not commenced  prior to the date of this
     Agreement) and shall not settle or compromise any such  litigation in which
     RISCORP or any RISCORP  Subsidiary  is a  defendant  without the consent of
     Acquiror; provided that RISCORP may enter into any settlement agreement for
     any  litigation  to which any RISCORP  Subsidiary is a defendant in which a
     determination  has been made by RISCORP  that neither it nor or any RISCORP
     Subsidiary has any reasonable basis to assert claims for, cross claims for,
     or similar  rights to recovery if the amount  paid for such  settlement  by
     RISCORP and the RISCORP  Subsidiaries does not exceed $100,000 for any such
     individual  litigation  claim and does not exceed $250,000 in the aggregate
     for all such litigation claims. Further,  RISCORP covenants and agrees that
     it will consult with  representatives of Acquiror on an on-going basis with
     respect to the direction and material  decisions  affecting the disposition
     of all  litigation in which  RISCORP or any RISCORP  Subsidiary is either a
     plaintiff or asserting a cross or other similar form of claim and shall not
     take any action to settle or compromise and/or resolve any such claim


                                       22
<PAGE>

     without first giving  Acquiror's  representatives  adequate  opportunity to
     consider the merits of any such settlement, compromise or resolution and an
     opportunity  to advise  RISCORP of  Acquiror's  views  with  respect to the
     merits of any such proposed settlement, compromise and/or resolution.

               (e) Except as provided by this Section  5.2(e) RISCORP shall not,
     nor shall it permit any RISCORP  Subsidiary  to, nor shall it  authorize or
     permit any  officer,  director or employee  of, or any  investment  banker,
     attorney or other  advisor or  representative  or agent of,  RISCORP or any
     RISCORP  Subsidiary to,  directly or indirectly,  (i) solicit,  initiate or
     encourage  the  submission  of any bona fide  proposal  with  respect  to a
     merger,  consolidation,  share  exchange or similar  transaction  involving
     RISCORP or any RISCORP Subsidiary,  or any purchase of all or substantially
     all of the  assets of  RISCORP  other  than the  transactions  contemplated
     hereby  (an  "Acquisition  Proposal");  (ii)  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 Acquisition Proposal;  (iii) withdraw,  qualify
     or modify, or propose publicly to withdraw,  qualify or modify, in a manner
     adverse to Acquiror,  the approval or  recommendation of RISCORP's Board of
     Directors or any committee  thereof of the Merger or this  Agreement;  (iv)
     approve or  recommend,  or propose  publicly to approve or  recommend,  any
     transaction  involving  an  Acquisition  Proposal  from a third  party  (an
     "Alternative  Transaction");  or (v) cause RISCORP to enter into any letter
     of intent,  agreement in principle,  acquisition agreement or other similar
     agreement  related to any  Alternative  Transaction  (each an  "Acquisition
     Agreement").  Notwithstanding  the foregoing,  nothing herein shall prevent
     RISCORP's Board of Directors from furnishing  non-public  information to or
     entering  into  discussions  or  negotiations  with any person or entity in
     connection  with  an  unsolicited  bona  fide  Alternative  Transaction  or
     recommending  such an unsolicited bona fide Alternative  Transaction to the
     stockholders of RISCORP, if and only to the extent that, RISCORP's Board of
     Directors  determines  in good faith (after  receiving  advice from outside
     counsel  as  to  its  fiduciary  duties  to  RISCORP's  stockholders  under
     applicable  law) that it has received a Superior  Proposal (as  hereinafter
     defined).  If,  in  accordance  with the  immediately  preceding  sentence,
     RISCORP's Board of Directors  believes it has received a Superior Proposal,
     it may inform  RISCORP's  stockholders  that it no longer believes that the
     Merger is  advisable  and no longer  recommends  approval  of the Merger (a
     "Subsequent  Determination")  and may enter into an  Acquisition  Agreement
     with respect to a Superior  Proposal,  but only at a time that is after the
     third business day following  Acquiror's receipt of written notice advising
     Acquiror  that  RISCORP's  Board  of  Directors  has  received  a  Superior
     Proposal.  Such  written  notice  shall  specify  the  material  terms  and
     conditions  of such  Superior  Proposal,  identify  the person  making such
     Superior  Proposal and state that RISCORP's  Board of Directors  intends to
     make a  Subsequent  Determination.  During such three  business day period,
     RISCORP  shall  provide  an  opportunity   for  Acquiror  to  propose  such
     adjustments  to the terms and  conditions of this Agreement as would enable
     RISCORP to proceed with its  recommendation  to its stockholders  without a
     Subsequent  Determination;  provided,  however,  that the acceptance of any
     such proposed adjustment shall be at the sole discretion of RISCORP's Board
     of Directors,  exercised in good faith, and this Agreement shall be amended
     to reflect any such accepted adjustments;  provided, further, however, that
     any such proposed adjustment, the sole effect of which is to (i) increase


                                       23
<PAGE>

     the amount of the Merger  Consideration,  (ii) waive one or more conditions
     to the  obligations  of Acquiror  to effect the Merger or (iii)  modify the
     terms and  conditions  of this  Agreement  to reflect  identical  terms and
     conditions  contained in such  Superior  Proposal,  shall be  automatically
     accepted by  RISCORP,  and this  Agreement  shall be amended to reflect any
     such automatically accepted adjustments.  For purposes of this Agreement, a
     "Superior  Proposal"  means any proposal (on its most  recently  amended or
     modified terms, if amended or modified) made by a third party to enter into
     an Alternative Transaction which RISCORP's Board of Directors determines in
     its good faith judgment to be more favorable to RISCORP's stockholders than
     the Merger, taking into account all relevant factors (including whether, in
     the good faith judgment of RISCORP's Board of Directors, the third party is
     reasonably  able to finance the  transaction,  and any proposed  changes to
     this  Agreement  that may be  proposed  by  Acquiror  in  response  to such
     Alternative  Transaction).  Nothing contained in this Section 5.2(e) or any
     other provision hereof shall prohibit RISCORP or RISCORP Board of Directors
     from making such disclosure to RISCORP's stockholders as, in the good faith
     judgment  of  RISCORP's  Board of  Directors  after  receiving  advice from
     outside  counsel,  is  consistent  with its  obligations  hereunder  and is
     required by  applicable  law;  provided,  that  RISCORP may not,  except as
     expressly provided by this Section 5.2(e), withdraw,  qualify or modify, in
     a manner adverse to Acquiror,  the approval or  recommendation of RISCORP's
     Board of Directors of the Merger or this Agreement.


5.3. Stockholders' Approval.

               (a)  RISCORP  shall  take all  actions  reasonably  necessary  in
     accordance with applicable law and its articles of incorporation and bylaws
     to convene the  Stockholders'  Meeting as soon as  reasonably  practicable.
     Except as set forth in Section 5.2(e) in connection with the  Stockholders'
     Meeting,  the  Board of  Directors  of  RISCORP  shall  recommend  that the
     stockholders of RISCORP vote to approve this Agreement.

               (b)  RISCORP  shall use all  commercially  reasonable  efforts to
     solicit from holders of shares of Class A Common Stock, proxies in favor of
     the Merger and shall take all other action  necessary or, in the reasonable
     opinion of the Board of Directors of RISCORP,  advisable to secure any vote
     or consent of the holders of Class A Common Stock  required by the FBCA and
     this Agreement.

          5.4. Takeover Statutes.  If any "fair price,"  "moratorium,"  "control
share acquisition," "business combination,"  "stockholder protection" or similar
antitakeover  statute or  regulation  enacted  under  state or Federal law shall
become  applicable to the Merger or any of the other  transactions  contemplated
hereby,  each of RISCORP and  Acquiror and the Board of Directors of RISCORP and
partners  of  Acquiror  shall grant such  approvals  and take such  commercially
reasonable actions as are within its authority and consistent with its fiduciary
obligations  to its  stockholders  as  determined in good faith by such Board so
that  the  Merger  and  the  other  transactions   contemplated  hereby  may  be
consummated  as promptly as  practicable  on the terms  contemplated  hereby and
otherwise use commercially reasonable efforts, subject to such fiduciary duties,
to eliminate or minimize the effects of such statute or regulation on the Merger
and the other transactions contemplated hereby.



                                       24
<PAGE>

          5.5. Consents.

               (a) RISCORP and Acquiror,  individually or collectively, will use
     commercially  reasonable  efforts to take,  or cause to be taken all action
     and to do, or cause to be done all things  necessary,  proper, or advisable
     to obtain the written consent or approval of the governmental  authorities,
     regulatory bodies, and other persons or entities identified on Schedule 5.6
     in connection  with the  consummation of the  transactions  contemplated by
     this  Agreement,  except where the failure to obtain any  required  written
     consent or approval  thereunder  would not individually or in the aggregate
     result in a Material  Adverse  Effect on RISCORP;  provided,  however,  the
     costs,  expenses and fees incurred by RISCORP in connection  with obtaining
     any consents or approvals from any state  department of insurance shall not
     be included in the Estimated Transactional Expenses.

               (b) Subject to the terms and conditions herein provided,  each of
     the  parties  hereto  will  promptly  file  and  prosecute  diligently  the
     applications and related documents  required to be filed by such party with
     the applicable  regulatory  authorities in order to effect the transactions
     contemplated  hereby.  Each  party  hereto  agrees to use all  commercially
     reasonable  efforts to take, or cause 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.


          5.6. Further Assurances.  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 obtain the  written  consent or  approval  of the  governmental
authorities,  regulatory  bodies and other  persons or  entities  identified  on
Schedule 5.6, the proper officers and directors of each  corporation  which is a
party  to this  Agreement  shall  take all such  necessary  action.  Each of the
parties  hereto  agrees to  defend  vigorously  against  any  actions,  suits or
proceedings  in which such party is named as  defendant  which  seeks to enjoin,
restrain or prohibit the transactions  contemplated hereby or seeks damages with
respect to such transactions.

          5.7. Notice; Efforts to Remedy.

               (a) Each party hereto shall  promptly give written  notice to the
     other parties hereto upon becoming aware of the impending occurrence of any
     event   which  would   cause  or   constitute   a  breach  of  any  of  the
     representations,  warranties  or covenants of such party  contained in this
     Agreement and shall use all commercially  reasonable  efforts to prevent or
     promptly remedy the same. During the period from the date of this Agreement
     to the Effective Time, RISCORP and Acquiror each shall cause one or more of
     its  representatives  to  confer  on a  regular  and  frequent  basis  with
     representatives  of the other and to  report on the  general  status of its
     ongoing operations.  RISCORP shall promptly notify Acquiror of any material
     change  in each  case on a  consolidated  basis  in the  normal  course  of
     RISCORP's or the RISCORP  Subsidiaries'  businesses  or in the operation of
     its or their  properties  and of the  receipt  by  RISCORP  or the  RISCORP
     Subsidiaries of notice of any governmental  complaints,  investigations  or
     hearings (or  communications  indicating that the same may be contemplated)
     or the  receipt by RISCORP or the RISCORP  Subsidiaries  of a notice of the
     institution or the threat of litigation involving RISCORP or any of the


                                       25
<PAGE>

     RISCORP Subsidiaries, and will keep Acquiror fully informed with respect to
     such events.

          5.8. Proxy Materials and Schedule 13E-3.

               (a) In connection with the Stockholders'  Meeting,  RISCORP shall
     prepare  and file  the  Proxy  Statement  with  the SEC and  shall  use its
     commercially  reasonable  efforts to respond to the comments of the SEC and
     to cause a Proxy  Statement to be mailed to RISCORP's  shareholders  all as
     soon as reasonably  practicable;  provided,  that prior to filing the Proxy
     Statement, RISCORP shall consult with Acquiror with respect to such filings
     and shall  afford  Acquiror  reasonable  opportunity  to  comment  thereon.
     Acquiror shall provide  RISCORP with any  information  for inclusion in the
     Proxy  Statement  which may be required  under  applicable law and which is
     reasonably requested by RISCORP.

               (b) RISCORP and any person that may be deemed to be an  affiliate
     of RISCORP shall prepare and file concurrently with the filing of the Proxy
     Statement a statement on Schedule  13E-3 with the SEC. If at any time prior
     to the  Stockholders'  Meeting any event  should occur which is required by
     applicable  law to be set forth in an amendment of, or  supplement  to, the
     Schedule  13E-3,  RISCORP and such  person  shall file such  amendments  or
     supplements.


          5.9.  Press  Releases;  Filings.  Without  the  consent  of the  other
parties,  none of the parties  shall issue any press  release or make any public
announcement  with  regard  to  this  Agreement  or  the  Merger  or  any of the
transactions contemplated hereby or thereby; provided,  however, that nothing in
this  Section 5.9 shall be deemed to prohibit  any party  hereto from making any
disclosure  which its counsel  deems  necessary or advisable in order to fulfill
such party's disclosure  obligations imposed by law or the rules of any national
securities  exchange or automated quotation system. Each of RISCORP and Acquiror
shall  promptly  notify the other of each report,  schedule  and other  document
filed by it or any of its respective  Subsidiaries with the SEC and of any other
document pertaining to the transactions contemplated hereby filed with any other
governmental authorities.

          5.10. Indemnification of Officers and Directors.

               (a)  Immediately  following the Effective  Time,  Acquiror  shall
     cause to be in effect the current  policies  of  directors'  and  officers'
     liability  insurance  maintained by RISCORP or any RISCORP  Subsidiary (the
     "D&O  Policies")  with respect to claims arising from facts or events which
     occurred at or before the Effective  Time, and Acquiror shall maintain such
     coverage until such policies  expire by their own terms or are cancelled by
     the insurer.  On the Closing Date,  RISCORP  shall  transfer to First Union
     National Bank ("Escrow  Agent") an amount equal to $2,500,000 to be held by
     Escrow  Agent  for a period  not to exceed  four and one half  years and in
     accordance  with the  Escrow  Agreement  attached  hereto as Exhibit D (the
     "Escrow Agreement").

               (b) Until  expiration of the  applicable  statute of  limitations
     period, the Surviving Corporation shall provide with respect to each


                                       26
<PAGE>

     present or former director or officer of RISCORP and its subsidiaries (both
     present and past) (the "Indemnified  Parties"),  the indemnification rights
     (including any rights to advancement  of expenses)  which such  Indemnified
     Parties had, whether from RISCORP or such subsidiary,  immediately prior to
     the Merger,  whether under the FBCA, the Indemnity Agreements to which each
     present RISCORP director is a party or the articles of incorporation or the
     bylaws of RISCORP or such subsidiary or otherwise.

               (c) This Section  5.10 shall  survive the Closing and is intended
     to benefit RISCORP,  the Surviving  Corporation and each of the Indemnified
     Parties  and his or her heirs and  representatives  (each of whom  shall be
     entitled to enforce this Section  5.10  against  Acquiror or the  Surviving
     Corporation, as the case may be) and shall be binding on all successors and
     assigns of Acquiror and the Surviving Corporation.

               (d) For a  period  of four  and one  half  years  (the  "Covenant
     Period")  following the Closing  Date,  RISCORP  shall,  as of the end each
     fiscal  quarter during the Covenant  Period,  maintain a Net Book Value (as
     hereinafter  defined) of not less than the amount set forth in the Acquiror
     Disclosure Letter, of which an amount set forth in the Acquiror  Disclosure
     Letter shall be comprised of cash and cash  equivalents (as determined on a
     consolidated  basis and in accordance  with GAAP).  As used herein the term
     "Net Book Value" shall equal (A) the sum of all of  RISCORP's  assets as of
     the end of any such fiscal quarter  determined on a consolidated  basis and
     in accordance with GAAP less (B) the sum of all of RISCORP's liabilities as
     of the end of any such fiscal quarter  determined on a  consolidated  basis
     and in accordance  with GAAP.  Not more than thirty (30) days following the
     end of each fiscal quarter during the Covenant  Period,  a duly  authorized
     officer of RISCORP shall deliver a certificate in the form attached  hereto
     as  Exhibit  E to each of the  persons  set forth on  Exhibit F  certifying
     RISCORP's compliance with the covenants set forth in this Section 5.10(d).

          5.11.  Surrender/Sale  of Insurance  Licenses.  RISCORP and  Acquiror,
individually or collectively  shall use commercially  reasonable  efforts to (i)
surrender or cause to be  surrendered or sell or cause to be sold at or prior to
Closing all  certificates of authority or insurance  licenses held by RISCORP or
by any  RISCORP  Subsidiary,  and (ii)  receive  or have  released  by any state
insurance  commissioner  or any other  appropriate  state  authority any and all
restricted  funds,  minimum capital  requirements or deposits or any other funds
shown as "Cash  and Cash  Equivalents  Restricted"  on the 1998  Balance  Sheet;
provided,  however,  the  costs,  expenses  and  fees  incurred  by  RISCORP  in
connection with the performance of its obligations under this Section 5.11 shall
not  be  included  in  the  Estimated  Transactional  Expenses.  Notwithstanding
RISCORP's  efforts  to  date  to  surrender  or  cause  to  be  surrendered  all
certificates  of  authority  or  insurance  licenses  held by  RISCORP or by any
RISCORP Subsidiary,  RISCORP agrees that it shall cooperate with Acquiror in its
efforts to  determine  whether  such  certificates  of  authority  or  insurance
licenses could be sold to a third party immediately prior to the consummation of
the Merger without delaying the  consummation of the  transactions  contemplated
herein. The parties agree that any such sale of the certificates of authority or
insurance licenses would be on terms mutually acceptable to RISCORP and Acquiror
and would be subject to, among other things,  RISCORP's  ability to withdraw its
pending  requests  for  the  surrender  of such  certificates  of  authority  or
insurance licenses.

                                       27
<PAGE>

          5.12.  Management of Contingent Claim.  Notwithstanding any provisions
in this  Agreement to the contrary,  the parties  hereto  acknowledge  and agree
that,  following Closing,  RISCORP shall have all right and authority to manage,
pursue and  prosecute  the  Contingent  Claim in such  manner as  RISCORP  deems
necessary or  appropriate  within the exercise of RISCORP's  sole,  absolute and
unfettered discretion, including, without limitation, the right (i) to elect not
to pursue such  Contingent  Claim;  (ii) to settle,  compromise  or dismiss such
Contingent Claim for such amount and/or for such  consideration as RISCORP shall
determine in its sole, absolute and unfettered  discretion;  and (iii) to select
and appoint  counsel and to  determine  the means used to prosecute or pursue or
settle, resolve or dismiss such Contingent Claim.

6.       CONDITIONS PRECEDENT TO MERGER

          6.1.   Conditions  to  Each  Party's   Obligations.   The   respective
obligations  of each  party  to  effect  the  Merger  shall  be  subject  to the
satisfaction  on or  prior  to  the  Closing  Date  of  each  of  the  following
conditions:

               (a) This  Agreement  and the Merger shall have been  approved and
     adopted by the  affirmative  vote or consent of the holders of at least (i)
     80% of the Voting Stock (as defined in RISCORP's Articles of Incorporation)
     and (ii) two-thirds of the outstanding shares of Class A Common Stock.

               (b) All consents, authorizations, orders and approvals identified
     on Schedule 5.6 required in  connection  with the  execution,  delivery and
     performance  of this  Agreement,  the failure to obtain which would prevent
     the consummation of the Merger or have a Material Adverse Effect on RISCORP
     or a  Material  Adverse  Effect  on  Acquiror/Guarantor,  shall  have  been
     obtained  without the imposition of any condition having a Material Adverse
     Effect on RISCORP or a Material Adverse Effect on Acquiror/Guarantor.

               (c) No governmental authority or other regulatory body (including
     any  court  of  competent   jurisdiction)   shall  have  enacted,   issued,
     promulgated,  enforced  or entered  any law,  rule,  regulation,  executive
     order, decree, injunction or other order (whether temporary, preliminary or
     permanent)  which is then in effect and has the effect of making illegal or
     in any  way  preventing  or  prohibiting  the  Merger  or the  transactions
     contemplated by this Agreement.

               (d) At the mailing  date of the Proxy  Statement  and the date of
     the Stockholders' Meeting, the Proxy Statement shall not contain any untrue
     statement of a material  fact, or omit to state any material fact necessary
     in order to make the statements therein not misleading.

          6.2. Conditions to Obligations of RISCORP.  The obligations of RISCORP
to effect the Merger  shall be  subject to the  satisfaction  on or prior to the
Closing Date (except as set forth  herein) of each of the  following  conditions
unless waived by RISCORP:

               (a) The  representations and warranties of Acquiror and Guarantor
     set forth in Sections 4.1, 4.2, and 4.3 of this Agreement that are


                                       28
<PAGE>

     qualified  as to  materiality  shall be true and correct in all respects at
     and as of the  date of this  Agreement  and at and as of the  Closing  Date
     (except to the extent such  representations and warranties expressly relate
     to an  earlier  date) as though  made at and as of the  Closing  Date.  The
     representations  and  warranties  of Acquiror  and  Guarantor  set forth in
     Sections 4.1, 4.2, and 4.3 of this  Agreement  that are not qualified as to
     materiality shall be true and correct in all material respects at and as of
     the date of this Agreement and at and as of the Closing Date (except to the
     extent such  representations and warranties  expressly relate to an earlier
     date) as though made at and as of the Closing Date.

               (b)  Acquiror  and  Guarantor  each shall have  performed  in all
     material respects all covenants and agreements  required to be performed by
     them under this Agreement at or prior to the Closing Date.

               (c) Acquiror  shall  furnish  RISCORP with a  certificate  of its
     appropriate  officers as to  compliance  with the  conditions  set forth in
     Sections 6.2(a) and 6.2(b).

               (d) RISCORP shall have paid to Escrow Agent the Escrow Amount and
     the Escrow Agent and RISCORP  shall have  executed and delivered the Escrow
     Agreement.


          6.3.  Conditions  to  Obligations  of  Acquiror.  The  obligations  of
Acquiror and Guarantor to effect the Merger shall be subject to the satisfaction
on or prior  to the  Closing  Date of each of the  following  conditions  unless
waived by Acquiror and Guarantor:

               (a) The  representations  and  warranties of RISCORP set forth in
     Sections 3.1, 3.2, 3.4 and 3.5 of this  Agreement  that are qualified as to
     materiality shall be true and correct in all respects at and as of the date
     of this  Agreement  and at and as of the Closing Date (except to the extent
     such representations and warranties expressly relate to an earlier date) as
     though  made  at  and as of  the  Closing  Date.  The  representations  and
     warranties  of RISCORP set forth in Sections  3.1, 3.2, 3.4 and 3.5 of this
     Agreement  that  are not  qualified  as to  materiality  shall  be true and
     correct in all  material  respects at and as of the date of this  Agreement
     and  at  and  as  of  the   Closing   Date   (except  to  the  extent  such
     representations  and  warranties  expressly  relate to an earlier  date) as
     though made at and as of the Closing Date.

               (b) RISCORP  shall have  performed in all  material  respects all
     covenants  and  agreements  required  to  be  performed  by it  under  this
     Agreement at or prior to the Closing Date.

               (c) RISCORP  shall furnish  Acquiror  with a  certificate  of its
     appropriate  officers as to  compliance  with the  conditions  set forth in
     Sections 6.3(a) and 6.3(b).

               (d) RISCORP shall have paid to Escrow Agent the Escrow Amount and
     the Escrow Agent and RISCORP  shall have  executed and delivered the Escrow
     Agreement.

               (e) Acquiror shall have received letters of resignation effective
     as of the  Effective  Time  from  each of the  officers  and  directors  of
     RISCORP.

                                       29
<PAGE>
7.       TERMINATION OF THE MERGER

          7.1.Termination. This Agreement may be terminated at any time prior to
the Effective Time,  whether before or after the approval by the stockholders of
RISCORP:

               (a) by the mutual written consent of Acquiror and RISCORP;

               (b) by RISCORP :

                    (i) if the Merger is not  consummated on or before April 30,
          2000 (or such later date as shall have been  approved by Acquiror  and
          RISCORP),  unless the failure of such  occurrence  shall be due to the
          failure of RISCORP to perform or observe the covenants, agreements and
          conditions  hereof to be  performed or observed by it at or before the
          Effective Time;

                    (ii)  if  events   occur   which   render   impossible   the
          satisfaction  of one or more of the  conditions  set forth in Sections
          6.1 and 6.2 and such conditions are not waived by RISCORP,  unless the
          failure of such  occurrence  shall be due to the failure of RISCORP to
          perform or observe the covenants,  agreements and conditions hereof to
          be performed or observed by it at or before the Effective Time;

                    (iii)  if  RISCORP  is   enjoined  or   restrained   by  any
          governmental authority or other regulatory body (including any court),
          such  injunction or  restraining  order  prevents the  performance  by
          RISCORP of its  obligations  hereunder and such  injunction  shall not
          have  been  withdrawn  within  60 days  after  the date on which  such
          injunction was first issued;

                    (iv) the  stockholders  of RISCORP  shall have voted on this
          Agreement and the Merger and the votes shall not have been  sufficient
          to satisfy the condition set forth in Section 6.1(a); or

                    (v) in connection with entering into a definitive  agreement
          as  permitted  by  Section  5.2(e)  related  to a  Superior  Proposal,
          provided  that Company has  complied  with all  provisions  of Section
          5.2(e) including, without limitation, the notice provisions thereof.

               (c) by Acquiror if:

                    (i) the  Merger is not  consummated  on or before  April 30,
          2000 (or such later date as shall have been  approved  by RISCORP  and
          Acquiror),  unless the failure of such occurrence  shall be due to the
          failure of Acquiror or Guarantor to perform or observe the  covenants,
          agreements and  conditions  hereof to be performed or observed by them
          at or before the Effective Time;

                    (ii) events occur which render  impossible the  satisfaction
          of one or more of the conditions set forth in Sections 6.1 and 6.3 and


                                       30
<PAGE>

          such conditions are not waived by Acquiror, unless the failure of such
          occurrence  shall be due to the failure of Acquiror  or  Guarantor  to
          perform or observe the covenants,  agreements and conditions hereof to
          be performed or observed by them at or before the Effective Time;

                    (iii) Acquiror is enjoined or restrained by any governmental
          authority  or  other  regulatory  body  (including  any  court),  such
          injunction or restraining  order prevents the  performance by Acquiror
          of its obligations  hereunder and such injunction  shall not have been
          withdrawn  within 60 days after the date on which such  injunction was
          first issued;

                    (iv) the  stockholders  of RISCORP  shall have voted on this
          Agreement and the Merger and the votes shall not have been  sufficient
          to satisfy the condition set forth in Section 6.1(a); or

                    (v) Acquiror  receives a written notice from RISCORP's Board
          of Directors in accordance with Section 5.2(e) that RISCORP's Board of
          Directors  has  received  a  Superior  Proposal  or  intends to make a
          Subsequent Determination.

          7.2.Effect  of  Termination.  In  the  event  of the  termination  and
abandonment  of this Agreement  under Section 7.1, this  Agreement  shall become
void and have no effect,  without any  liability on the part of any party or its
directors,  officers or  stockholders  except (i) as provided in Section 5.9 and
(ii) to the extent that such termination  results from the willful breach by any
party hereto of any material  representation,  warranty,  covenant, or agreement
hereunder.

8.       MISCELLANEOUS

          8.1. Waiver and Amendment. Any term or provision of this Agreement may
be waived in  writing at any time by the party  which is, or whose  stockholders
are,  entitled  to the  benefits  thereof,  and any  term or  provision  of this
Agreement may be amended or supplemented at any time by action of the respective
Boards of Directors (or its  authorized  representative)  of Acquiror or RISCORP
without action of the  stockholders,  whether before or after the  Stockholders'
Meeting;  provided,  however, that after approval of the stockholders of RISCORP
no such  amendment  shall  (i)  reduce  the  amount  or  change  the form of the
consideration to be delivered to RISCORP's  stockholders as contemplated by this
Agreement;  (ii)  otherwise  materially  adversely  affect the interests of such
stockholders  unless such  amendment is approved by RISCORP's  stockholders;  or
(ii) except as allowed by Section  607.1002 of the FBCA,  amend the  articles of
incorporation  of either  RISCORP or Acquiror.  No  amendment to this  Agreement
shall be  effective  unless  it has  been  executed  by  RISCORP,  Acquiror  and
Guarantor.

          8.2.  Non-Survival  of  Representations  and  Warranties.  None of the
representations  and  warranties  of  RISCORP  set  forth in  Section  3 to this
Agreement or of Acquiror or Guarantor set forth in Section 4 to this  Agreement,
or in any instrument or certificate delivered pursuant to this Agreement,  shall
survive  the  Merger  nor shall  their  respective  stockholders,  directors  or
officers have any liability to the other after the Effective  Time on account of
any  breach  of  warranty  or  failure  or  the  incorrectness  of  any  of  the
representations  or warranties  contained  herein or in any certificate or other
instrument  delivered  pursuant to this Agreement.  All covenants and agreements
set forth in this  Agreement  shall  survive  until  satisfied  or waived by the
appropriate party. Except as set forth in the immediately preceding sentence,


                                       31
<PAGE>

the sole right and remedy arising from a breach of a representation or warranty,
from the failure of any of the  conditions  of the Merger to be met, or from the
failure to perform  (other  than a willful  failure to  perform)  any promise or
discharge  any  obligation  in  this  Agreement  shall  be  termination  of this
Agreement by the  aggrieved  party and the  remedies  provided in Section 7.2 or
Section 8.9 hereof.

          8.3. Notices . All notices or other  communications which are required
or  permitted  hereunder  shall  be  in  writing  and  sufficient  if  delivered
personally,  telecopied (if confirmed) or sent by registered or certified  mail,
postage prepaid, return receipt requested, addressed as follows:

                                    If to RISCORP:

                                       One Sarasota Tower, Suite 608
                                       Two North Tamiami Trail
                                       Sarasota, Florida  34236
                                       Attention:  Walter E. Riehemann
                                       Telecopy No.:  941-366-0993

                                    With a copy to:

                                       Alston & Bird LLP
                                       One Atlantic Center
                                       1201 West Peachtree Street
                                       Atlanta, Georgia  30309-3424
                                       Attention:  J. Vaughan Curtis
                                       Telecopy No.:  404-881-4777

                                    If to Acquiror or Guarantor:

                                       1830 S. Osprey Avenue
                                       Suite 100-A
                                       Sarasota, Florida 34239
                                       Attention:  William D. Griffin
                                       Telecopy No.:  941-316-6813

                                    With a copy to:

                                       King & Spalding
                                       191 Peachtree Street, N.E.
                                       Atlanta, Georgia 30303
                                       Attention:  Mr. Edward J. Hawie, Esq.
                                       Telecopy No.:  (404) 572-5100


                                       32
<PAGE>

          8.4. Descriptive  Headings;  Interpretation.  The descriptive headings
are for  convenience  of  reference  only and shall not  control  or affect  the
meaning or construction of any provision of this Agreement.  When a reference is
made in this Agreement to Sections, such reference shall be to a Section of this
Agreement  unless  otherwise  indicated.  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.

          8.5.  Counterparts.  This  Agreement  may be executed in any number of
counterparts,  and each  such  counterpart  shall be  deemed  to be an  original
instrument,  but  all  such  counterparts  together  shall  constitute  but  one
agreement.  This Agreement shall become effective when one or more  counterparts
have been signed by each of the parties and delivered to the other  parties,  it
being understood that the parties need not sign the same counterpart.

          8.6. Entire  Agreement.  This Agreement  contains the entire agreement
between Acquiror and RISCORP with respect to the Merger, and supersede all prior
arrangements or understandings with respect to the subject matter hereof. Except
as  otherwise  contemplated  in the  covenants  listed  in  Section  7.2  (which
covenants  shall be  enforceable  by the  person  or  persons  affected  thereby
following the Effective Time), this Agreement is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder;  provided
that each current  director and officer of RISCORP shall be deemed a third party
beneficiary  of this Agreement and shall be entitled to enforce the covenants of
Acquiror contained in Section 5.10 hereof as if they were a party hereto.

          8.7.  Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN  ACCORDANCE  WITH THE LAWS OF THE  STATE OF  FLORIDA  (WITHOUT  REGARD TO ANY
APPLICABLE CONFLICTS OF LAW PROVISIONS THEREOF).

         8.8. Severability.  If any term or other provision of this Agreement is
invalid,  illegal or  incapable  of being  enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the  economic or legal  substance  of
the transactions  contemplated  hereby are not affected in any manner materially
adverse to any party. Upon such  determination  that any term or other provision
is invalid,  illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this  Agreement so as to effect the  original  intent of
the parties as closely as possible in a mutually acceptable manner in order that
the transactions be consummated as originally contemplated to the fullest extent
possible.

          8.9.  Enforcement  of Agreement.  The parties  agree that  irreparable
damage  would occur in the event that any of the  provisions  of this  Agreement
were not performed in accordance  with their  specific  terms or were  otherwise
breached.  It is  accordingly  agreed that the  parties  shall be entitled to an
injunction or injunctions  to prevent  breaches of this Agreement and to enforce
specifically  the terms and provisions  hereof in any court of the United States
or any state having jurisdiction,  this being in addition to any other remedy to
which they are entitled at law or in equity.

                                       33
<PAGE>

          8.10.  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,  and any  attempt  to make any such  assignment
without such consent shall be null and void. Subject to the preceding  sentence,
this Agreement will be binding upon,  inure to the benefit of and be enforceable
by the parties hereto and their respective successors and assigns.

          8.11. Limited Liability.  Notwithstanding  any other provision of this
Agreement,  no stockholder,  director,  officer,  affiliate or representative of
RISCORP or Acquiror shall have any personal  liability in respect of or relating
a  breach  of the  representations  or  warranties  of  such  party  under  this
Agreement,  except to the extent that such person or entity has engaged in fraud
with  respect to such  matters  or has  engaged in  intentional  deception  with
respect to such matters.  Except as set forth in the preceding sentence,  to the
fullest extent legally permissible, each of RISCORP and Acquiror, for itself and
its stockholders,  directors,  officers and affiliates, waives and agrees not to
seek to assert or enforce any such liability for a breach of representations and
warranties  contained  herein that any such person otherwise might have pursuant
to applicable law.

          8.12. Definition of Knowledge. The words "to the Knowledge of RISCORP"
or "to RISCORP's knowledge" and words of similar import shall mean the knowledge
of any one of the persons  listed on Exhibit G.  Knowledge  shall include actual
knowledge  as well as the  knowledge a  reasonable  business  person  would have
obtained  after  making  reasonable  inquiry  and  after  exercising  reasonable
diligence with respect thereto.

          8.13. Guarantor.

               (a) Guarantor hereby unconditionally and irrevocably  guarantees,
     to RISCORP the due and punctual  performance of each of the obligations and
     the  undertakings  of Acquiror  under this Agreement when and to the extent
     the same are required to be  performed  and subject to all of the terms and
     conditions  hereof.  If Acquiror shall fail to perform fully and punctually
     any  obligation or undertaking of Acquiror under this Agreement when and to
     the  extent  the same is  required  to be  performed,  Guarantor  will upon
     written demand from RISCORP forthwith perform or cause to be performed such
     obligation or undertaking, as the case may be. The obligations of Guarantor
     under this guaranty shall constitute an absolute and unconditional  present
     and continuing  guarantee of performance to the extent provided herein, and
     shall not be contingent upon any attempt by RISCORP to enforce  performance
     by Acquiror.

               (b) Subject to 8.13(a),  the  obligations of Guarantor under this
     guaranty  are  absolute   and   unconditional,   are  not  subject  to  any
     counterclaim, set off, deduction, abatement or defense based upon any claim
     Guarantor  may have against  RISCORP  (except for any defense  Acquiror may
     have against RISCORP under the terms of this  Agreement),  and shall remain
     in  full  force  and  effect   without  regard  to  (i)  any  agreement  or
     modification  to any of the terms of this Agreement or any other  agreement
     which  may  hereafter  be  made  relating   thereto;   (ii)  any  exercise,
     nonexercise,  or waiver by RISCORP of any right, power, privilege or remedy
     under or in respect of this Agreement;  (iii) any  insolvency,  bankruptcy,
     dissolution,  liquidation,  reorganization  or the like of  Acquiror  at or
     prior to the Closing; (iv) absence of any notice to, or knowledge by,


                                       34
<PAGE>

     Guarantor of the  existence or  occurrence  of any of the matters or events
     set  forth in the  forgoing  causes  (i)  through  (iii);  or (v) any other
     circumstance, whether similar or dissimilar to the foregoing.

               (c)  Guarantor  unconditionally  waives (i) any and all notice of
     default,  non-performance  or non-payment by Acquiror under this Agreement,
     (ii) all notices which may be required by statute, rule of law or otherwise
     to  preserve  intact any rights of RISCORP  against  Guarantor,  including,
     without limitation,  any demand, presentment or protest, or proof of notice
     of  non-payment   under  this  Agreement,   and  (iii)  any  right  to  the
     enforcement,  assertion  or  exercise  by  RISCORP  of  any  right,  power,
     privilege or remedy conferred in this Agreement or otherwise.

               (d)  Notwithstanding   anything  in  this  Section  8.13  to  the
     contrary,  the guaranty set forth in this Section 8.13 shall  terminate and
     shall be of no further force or effect upon the Closing.


                                       35
<PAGE>

         IN  WITNESS  WHEREOF,  each  of the  parties  hereto  has  caused  this
Agreement  to be  executed  and  delivered  by its  respective  duly  authorized
officers, all as of the date first above written.


                                                     GRIFFIN ACQUISITION CORP.



                                                 By:      /s/ William D. Griffin
                                                 Name:  William D. Griffin
                                                 Title:    President




                                                       /s/ William D. Griffin
                                                     William D. Griffin




                                  RISCORP, INC.



                                                By:      /s/ Walter E. Riehemann
                                                Name:  Walter E. Riehemann
                                                Title:    President





                                       36
<PAGE>


                                    Exhibit E


                 Form of Section 5.10(d) Compliance Certificate


                                     [Date]


To the  persons set forth in Exhibit F of that  certain  Plan and  Agreement  of
Merger dated November 3, 1999.


                  Re:      Compliance Certificate in accordance with
                  Section 5.10(d) of that certain Plan and Agreement of
                  Merger dated November 3, 1999 (the "Merger Agreement").


         This certificate is being delivered to you pursuant to the requirements
of  Section  5.11  of the  Merger  Agreement.  Capitalized  terms  used  in this
certificate but not otherwise  defined shall have the meanings  assigned to them
in the Merger Agreement.

         The undersigned, being a duly appointed officer of RISCORP, does hereby
certify and  confirm,  in his capacity as such  officer,  that at the end of the
fiscal quarter ending  _________,  RISCORP  satisfied the covenants set forth in
Section 5.10(d) of the Merger Agreement.





                                                              RISCORP, INC.













<PAGE>


                                    Exhibit F
               Contact Persons for Compliance with Section 5.10(d)

         The estate of Frederick M. Dawson          Walter L. Revell
         12900 Lakeview Point Court                 H.J. Ross Associates, inc.
         Windermere, Florida                        3770 SW 8th Street
         Telecopy No:  407-876-0374                 Coral Gables, Florida  33134
                                                    Telecopy No.:  305-567-1771

         Seddon Goode, Jr.                          Walter E. Riehemann
         University Research Park, Inc.             6321 Manatee Avenue West
         301 South Tyron Street                     Bradenton, Florida  34209
         Two First Union Center                     Telecopy No.: 941-761-9186
         Suite 1980
         Charlotte, North Carolina  28202-1910
         Telecopy No.:  704-338-9539


         George E. Greene, III                  Edward W. Buttner, IV
         1222 Brightwaters Boulevard, NE        Buttner, Hammock & Company, P.A.
         St. Petersburg, Florida  33704         7800 Belfort Parkway
         Telecopy No.:  727-898-7202            Jacksonville, Florida  32256
                                                Telecopy No.:  904-281-0518

         With a copy to:

         Alston & Bird LLP
         One Atlantic Center
         1201 West Peachtree Street
         Atlanta, Georgia  30309
         Attention:  J. Vaughan Curtis, Esq.
         Telecopy No.:  (404) 881-4777






<PAGE>


                                                Exhibit G
                                           RISCORP's Knowledge



1.   Walter E. Riehemann

2.   Edward W. Buttner, IV