Document:

<PAGE>
                                                                   EXHIBIT 10.22

                          WAIVER AND CONSENT AGREEMENT

        WAIVER AND CONSENT AGREEMENT, dated as of July 2, 2001, among Mercury
Air Group, Inc., a New York corporation (the "Company"), J. H. Whitney Mezzanine
Fund, L.P., a Delaware limited partnership ("WMF"), and each of the corporations
which are signatories hereto listed as Guarantors (each a "Guarantor"). All
capitalized terms used herein and not otherwise defined herein shall have the
respective meanings provided such terms in the Purchase Agreement referred to
below.

                              W I T N E S S E T H :

        WHEREAS, the Company and WMF are parties to a Securities Purchase
Agreement, dated as of September 10, 1999 (as amended, modified or supplemented
through the date hereof, the "Purchase Agreement"); and

        WHEREAS, the Company has requested that WMF provide the waiver provided
for herein, and WMF has agreed to provide such waiver on the terms and
conditions set forth herein;

        WHEREAS, the Guarantors are parties to the Guaranty.

        NOW, THEREFORE, it is agreed:

        1. Section 9.6 of the Purchase Agreement limits the Company's right with
respect to Asset Dispositions (as defined in the Purchase Agreement). The
Company has advised WMF that its subsidiary, RPA Airline Automotion Services,
Inc. ("RPA") and RPA's affiliate RPA; Division El Salvador, S.A. de C.V. ("RPA,
S.A., and together with RPA, the "Target Companies"), have agreed to sell all of
the assets of the Target Companies pursuant to that certain Asset Purchase
Agreement (the "Asset Purchase Agreement"), dated the date hereof, by and among
RPA, SITA Information Networking Computing USA Inc., the Company and RPA, S.A.
(the "Disposition"), a copy of which has been provided to WMF. WMF hereby
consents to the Disposition, subject to the satisfaction of each of the
conditions set forth below:

            (a) the Disposition is consummated in accordance with the Asset
Purchase Agreement in the form delivered to WMF, without amendment, modification
or waiver of any provision without the prior consent of WMF; and

            (b) the net proceeds received from the Disposition (i.e., the
Purchase Price less related expenses) are paid to reduce the amount outstanding
under the Term Loan made pursuant to Senior Credit Agreement (as defined in the
Purchase Agreement).

        2. For purposes of the Guaranty, by their respective signatures below,
each Guarantor hereby consents and agrees to the entering into of this Waiver
and Consent Agreement and acknowledges and affirms that the Guaranty (as
amended,

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modified or supplemented prior to the date hereof) remains in full force and
effect in accordance with its terms on the date hereof and after giving effect
to this Waiver and Consent Agreement. The Company and each of the Guarantors
hereby acknowledges and affirms that the Guaranty (as amended, modified or
supplemented prior to the date hereof) remains in full force and effect in
accordance with its terms on the date hereof and after giving effect to this
Waiver and Consent Agreement.

        3. This Waiver and Consent Agreement is limited as specified and shall
not constitute a modification, acceptance or waiver of any other provision of
the Purchase Agreement or any of the other Transaction Documents.

        4. In order to induce WMF to enter into this Waiver and Consent
Agreement, the Company hereby represents and warrants that no default under any
of the Transaction Documents or Event of Default exists as of the date hereof.

        5. This Waiver and Consent Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be delivered to WMF.

        6. THIS WAIVER AND CONSENT AGREEMENT AND THE RIGHTS AND OBLIGATIONS
HEREUNDER SHALL BE GOVERNED BY, CONSTRUED IN ACCORDANCE WITH, AND ENFORCED
UNDER, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS OR INSTRUMENTS
ENTERED INTO AND PERFORMED ENTIRELY WITHIN SUCH STATE.

        7. This Waiver and Consent Agreement shall become effective when each of
the Company, the Guarantors and WMF shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have delivered (including
by way of telecopier) the same to WMF at its address listed in the Purchase
Agreement.

        8. The Company will pay all expenses of WMF (including fees, charges and
disbursements of counsel) in connection with this Waiver and Consent Agreement.

        9. From and after the effective date of this Waiver and Consent
Agreement, all references in the Purchase Agreement and each of the other
Transaction Documents to the Purchase Agreement shall be deemed to be references
to the Purchase Agreement after giving effect to this Waiver and Consent
Agreement.

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        IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Waiver and Consent Agreement to be duly executed and delivered as of the
date first above written.

                                        MERCURY AIR GROUP, INC.
                                        (A NEW YORK CORPORATION)

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

                                        J. H. WHITNEY MEZZANINE FUND, L.P.

                                        By:    Whitney GP, L.L.C.
                                               Its General Partner

                                        By:
                                               ---------------------------------
                                               Name:
                                               A Managing Director

GUARANTORS:

MERCFUEL, INC.

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

MAYTAG AIRCRAFT CORPORATION

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

MERCURY AIR CARGO, INC.

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

AEG FINANCE CORPORATION

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

                [SIGNATURE PAGE TO WAIVER AND CONSENT AGREEMENT]

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MERCURY AIR CENTERS, INC.
(f/k/a WOFFORD FLYING SERVICES, INC.)

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

HERMES AVIATION, INC.

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

VULCAN AVIATION, INC.

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

RPA AIRLINE AUTOMATION SERVICES, INC.
(f/k/a RENE PEREZ AND ASSOCIATES, INC.)

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

MERCURY ACCEPTANCE CORPORATION

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

EXCEL CARGO, INC.

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

MERCFUEL, INC.

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

                [SIGNATURE PAGE TO WAIVER AND CONSENT AGREEMENT]

                                       4<PAGE>
                                                                   EXHIBIT 10.29

                              EMPLOYMENT AGREEMENT
                              --------------------

     THIS AGREEMENT is entered into as of the 10th day of April, 2001, by and
between Peter W. Nauert ("Nauert") and Ceres Group, Inc. a Delaware corporation
(the "Company").

     WHEREAS, Nauert possesses valuable skills, expertise and abilities in the
life, accident and health insurance business; and

     WHEREAS, the Company wishes to continue the services of Nauert as the Chief
Executive Officer of the Company, and Nauert is willing to serve in such
capacity, all upon the terms and conditions hereinafter set forth.

     NOW THEREFORE, in consideration of the covenants set forth herein, the
parties hereto agree as follows:

     1. EMPLOYMENT. The Company hereby agrees to employ Nauert as its Chief
Executive Officer commencing on July 1, 2001 (the "Commencement Date") and,
unless sooner terminated as hereinafter provided, ending on the second
anniversary of the Commencement Date (the "Term"). Thereafter, the Term shall be
automatically renewed for additional, subsequent and consecutive one (1) year
periods, unless either the Company or Nauert gives written notice to the other
of the intent to terminate this Agreement for good reason or no reason at all.
Written notice must be given by either party at least ninety (90) days prior to
the end of the then current period, in which event the Term shall end at the end
of the then current period. Nauert hereby agrees to render such services to the
Company upon the terms and conditions set forth in this Agreement. Nauert shall
devote such business time to the business and affairs of the Company as is
reasonably necessary to the discharge of his duties as Chief Executive Officer.
Nauert will otherwise be free to pursue active management of his personal
investment portfolio. In the event there shall become available to Nauert during
the Term, directly or indirectly, through an affiliate or otherwise, any
business opportunity (whether in the form of a transaction or otherwise)
reasonably related to the business of the Company or any of its subsidiaries,
Nauert shalt cause such opportunity to be presented to the Company for its
consideration and pursuit; PROVIDED, that Nauert shall be free to pursue such
opportunity, directly or indirectly, through an affiliate or otherwise, if the
Company declines to pursue such opportunity and Nauert obtains the prior written
consent of the Company, as authorized by its board of directors (provided such
consent is not unreasonably withheld or delayed).

     2. COMPENSATION. During the Term, Nauert shall receive as compensation:

        (a) A base salary not less than Seven Hundred Fifty Thousand Dollars
($750,000.00) per year ("Base Salary"); provided that if Nauert is granted a
merit increase in Base Salary, his Base Salary will not thereafter be reduced
below that increased level during the Term;

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        (b) A stock award (the "Stock Award") payable in shares of common stock
of the Company (the "Common Stock") together with a cash payment equal to the
federal, state and local taxes (the "Tax Payment") payable by Nauert with
respect to the Stock Award; PROVIDED, HOWEVER, in no event shall a Tax Payment
with respect to the taxes for any year exceed 50% of the "Fair Market Value" of
the Stock Award received by Nauert in such year as determined under Section 2(i)
of this Agreement. The amount and payment of the Stock Award shall be as
follows: commencing on October 1, 2001, and on the 1st day after the close of
each three-month period thereafter (that is, the first day of January, April,
July and October), Nauert shall receive a number of shares of Common Stock equal
to $125,000 divided by the average closing price of the Common Stock for the
most recently completed three-month period. For example, the October 1, 2001
Stock Award payment shall be based on the average closing price during the
three-month period ending on September 30, 2001, and each Stock Award payment
thereafter shall be based on the three-month period ending the day before the
date of such payment. The number of shares of Common Stock granted pursuant to
the Stock Award shall be adjusted to account for stock splits, stock dividends
or other reclassifications of the Common Stock following the Commencement Date.
Nauert shall receive the Tax Payment prior to April 15 of the year following the
year of payment of the Stock Award to which such Tax Payment relates. All Common
Stock paid to Nauert pursuant to this Paragraph 2(b) shall be fully vested
immediately upon issuance; PROVIDED, HOWEVER, that Nauert shall forfeit all
rights to any unpaid Stock Award and the Tax Payment related thereto if his
employment with the Company is terminated prior to July 1, 2003, for any reason
other than a Severenceable Event (as hereinafter defined). A "Severenceable
Event" shall mean any of the following: (i) termination by the Company for any
reason other than for Cause, (ii) Qualifying Termination following a Change of
Control, (iii) termination by Nauert for Good Reason, or (iv) termination due to
the death or total or partial disability of Nauert. All stock certificates
issued to Nauert pursuant to this Section 2(b), shall, if deemed necessary by
the Company, contain the following legends and any others deemed reasonably
necessary by the Company:

                                     NOTICE

        THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE SUBJECT TO
        TRANSFER RESTRICTIONS, VOTING LIMITATIONS, AND OTHER TERMS AND
        CONDITIONS CONTAINED IN AN AMENDED AND RESTATED VOTING AGREEMENT DATED
        JULY 25, 2000 BY AND AMONG THE COMPANY AND CERTAIN OF ITS
        STOCKHOLDERS, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
        COMPANY.

        THIS SECURITY IS SUBJECT TO CERTAIN RIGHTS AND RESTRICTIONS SET FORTH
        IN THE STOCKHOLDERS AGREEMENT DATED AS OF JULY 1, 1998, A COPY OF
        WHICH MAY OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE
        OFFICES.

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<PAGE>

        THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
        UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT", OR
        UNDER THE SECURITIES LAWS OF ANY STATE. THE SHARES EVIDENCED BY THIS
        CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
        AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
        SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
        REGISTRATION OR EXEMPTION THEREFROM. THE COMPANY MAY REQUIRE AN
        OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY
        TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
        WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

        (c) STOCK OPTIONS.

            (i) The Company will grant to Nauert on the date of this Agreement
options to purchase 250,000 shares of Common Stock of the Company (the
"Options"), subject to the terms of the Company's standard Option Agreement. The
exercise price of the Options shall be the price of the Company's stock at the
close of the market on the date immediately preceding the date of this
Agreement.

            (ii) One hundred percent (100%) of the Options will vest two (2)
years after the date of this Agreement, if Nauert is still employed by the
Company. All unvested Options shall vest immediately upon the occurrence of a
Severenceable Event. Nauert shall forfeit all unvested Options if his employment
with the Company is terminated for Cause.

            (iii) The Company will consider making, but is not obligated to
make, an additional grant of options to Nauert one year after the date of this
Agreement, up to a maximum of 250,000 options. The Company will exercise
reasonable discretion in determining whether to make any such additional grant
to Nauert.

            (iv) This Section 2(c) of the Agreement constitutes a plan (the
"Plan") under which the Options are granted for purposes of Section 162(m) of
the Internal Revenue Code. At the close of the market on the date immediately
preceding the date of this Agreement, the fair market value of one (1) share of
Common Stock was equal to $5.12. The maximum number of shares of Common Stock
subject to this Plan on which options to purchase may be granted is 500,000, all
of which are granted (or may be granted) to Nauert in this Section 2(c).

        (d) INCENTIVE PAY. Nauert shall participate in the Company Bonus Plan
for executives or such other incentive compensation or plans as may be
established by the Board of Directors of the Company (the "Company Bonus Plan"),
provided that, for purposes of determining Nauert's bonus under the Company
Bonus Plan, only Nauert's Base Salary shall be

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<PAGE>

used, provided further, that Nauert's bonus under the Company Bonus Plan will be
determined as set forth in a schedule which shall be maintained in the minutes
of the Compensation Committee and deemed to be a part of this Agreement as if
it was attached hereto.

        (e) OTHER COMPENSATION. Nauert may also receive such cash bonuses or
such other incentive compensation as the Board of Directors of the Company may
approve from time to time in its sole discretion.

        (f) ASSIGNMENT BY NAUERT. Notwithstanding anything herein to the
contrary, Nauert may assign up to 25% of his right to receive payments pursuant
to this Paragraph 2 to a third party and Nauert may assign up to 100% of his
right to receive payments pursuant to this Paragraph 2 to Geneva Capital,
provided that Nauert or his immediate family owns a controlling interest in
Geneva Capital at the time of such assignment; PROVIDED, HOWEVER, that such
assignment does not violate any restrictions on transferability and
assignability of Common Stock awarded under Section 2(b) of this Agreement.

        (g) PERFORMANCE GOAL. Nauert's right to and receipt of any Tax Payment
as provided under Section 2(b) of this Agreement is subject to the satisfaction
of the Performance Goal as set forth in a schedule which shall be maintained in
the minutes of the Compensation Committee and deemed to be a part of this
Agreement as if it was attached hereto.

        (h) CERTIFICATION OF PERFORMANCE. Prior to Nauert's receipt of any Tax
Payment or incentive pay under Section 2(d) of this Agreement, the Board of
Directors of the Company or the Compensation Committee thereof shall certify
whether or not the Performance Goal was satisfied.

        (i) FAIR MARKET VALUE OF STOCK AWARD. For purposes of Sections 83 and
162 of the Internal Revenue Code, the "Fair Market Value" of a Stock Award shall
be equal to the product of (i) the number of shares of Common Stock, including
fractional shares, paid to Nauert multiplied by (ii) the closing price of one
(1) share of Common Stock on the date of payment.

     3. BENEFITS. The Company agrees to provide Nauert with staff appropriate
for the position of Chief Executive Officer. Nauert shall be entitled to
participate in any employee benefit plans and insurance programs currently
offered by the Company, or which it may adopt from time to time, for its
executive management or supervisory personnel generally, in accordance with the
eligibility requirements for participation therein.

     4. EXPENSES. The Company will pay or reimburse Nauert for all reasonable
business expenses incurred by Nauert in the performance of his duties, including
all costs relating to travel between Nauert's principal residence and the
Company's offices in Cleveland, Ohio.

     5. DEATH. Nauert's employment by the Company will terminate immediately
upon his death; PROVIDED that in the event of Nauert's death during the Term,
Nauert's estate shall be entitled, to receive the payments described in clauses
(i), (ii) and (iv) of the last sentence of paragraph 7(b). Nauert's estate also
shall be entitled to receive the Base Salary and Stock Awards that would have
been payable to Nauert pursuant to Paragraphs 2(a) and (b) had Nauert remained
employed by the Company throughout the Term, paid out during normal payroll
periods for the remainder of the Term.

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<PAGE>

     6. DISABILITY. If Nauert becomes totally or partially disabled during the
Term, the Company shall continue to pay to Nauert, as long as such disability
continues during the Term, the Base Salary payable to Nauert at the date his
disability is determined, reduced dollar-for-dollar to the extent of any
disability insurance payments paid to Nauert through insurance programs, the
premiums for which were paid by the Company or its subsidiaries. For purposes of
this Agreement the term "total disability" shall mean Nauert's inability due to
illness, accident or other physical or mental incapacity to engage in the full
time performance of his duties under this Agreement as reasonably determined by
the Board of Directors of the Company based on such evidence as such Board shall
deem appropriate. For purposes of this Agreement, "partial disability" shall
mean Nauert's disability due to illness, accident or other physical or mental
incapacity to engage in only the partial performance of his duties under this
Agreement, as reasonably determined by the Board of Directors of the Company
based on such evidence as such Board shall deem appropriate.

     7. TERMINATION.

        (a) FOR CAUSE. The Company shall have the right to terminate Nauert's
employment hereunder at any time during the Term for Cause. For purposes of this
Agreement, "Cause" shall be limited to (i) Nauert's conviction of a crime
constituting a felony or of a misdemeanor involving fraud, dishonesty or moral
turpitude; (ii) fraud, misappropriation of funds, or embezzlement committed by
Nauert against the Company; (iii) Nauert's willful or intentional material
breach of this Agreement that results in financial detriment that is material to
the Company; or (iv) Nauert's commission of an act or omission that is
materially contrary to the Company's best interests. Notwithstanding anything
herein to the contrary, Nauert's inability to perform the duties of his position
due to his death or his total or partial disability shall not be deemed to
constitute Cause.

        If, in the opinion of the Board of Directors of the Company, Nauert's
employment shall become subject to termination for Cause, the Board of Directors
shall give Nauert written notice to that effect which notice shall describe the
matter or matters constituting such Cause. If, within thirty (30) days of
receipt of such notice, Nauert has not substantially eliminated or cured each
such matter or matters, then the Company shall have the right to give Nauert
notice of the termination of his employment. Nauert's employment hereunder shall
be considered terminated for Cause as of the date specified in such notice of
termination unless and until there is a final determination by a court of
competent jurisdiction that the cause of termination of Nauert's employment did
not exist at the time of giving said notice of termination. Upon termination of
Nauert's employment for Cause, this Agreement shall terminate without further
obligations to Nauert other than the Company's obligation (i) to pay to Nauert
within thirty (30) days after the date of termination that portion of Nauert's
aggregate compensation that is accrued through the date of termination to the
extent not theretofore paid and (ii) to pay or provide to pay, to Nauert on a
timely basis any other amounts or benefits required to be paid or provided or
which Nauert is eligible to receive under any plan, program, policy, practice,
contract or agreement of the Company to the extent not theretofore paid or
provided.

        (b) WITHOUT CAUSE. The Company shall have the right to terminate
Nauert's employment hereunder without Cause at any time during the Term. If the
Board of Directors

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determines to terminate Nauert's employment without Cause, the Company shall
give notice of such termination to Nauert and Nauert's employment hereunder
shall be considered terminated without Cause as of the date specified in such
notice of termination. Upon termination of Nauert's employment without Cause,
Nauert shall receive the following: (i) that portion of Nauert's aggregate
compensation that is accrued through the date of termination to the extent not
theretofore paid, (ii) any amounts or benefits required to be paid or provided
to which Nauert is eligible to receive under any plan, program, policy,
practice, contract or agreement of the Company to the extent not theretofore
paid or provided, (iii) Base Salary and Stock Awards, including the Tax
Payments, paid out in normal payroll periods for a period of two (2) years, and
(iv) any incentive pay that would have been payable to Nauert pursuant to
Paragraph 2(d) for a period of two (2) years, assuming target level performance,
payable at the normal periods for payment under the Company Bonus Plan;
provided, however, that if Nauert is terminated without cause following July 1,
2003, then he shall receive incentive pay for the year in which his employment
is terminated, assuming target level performance, payable at the normal periods
for payment under the Company Bonus Plan.

        (c) BY NAUERT. Nauert may terminate his employment hereunder at any
time by retirement or resignation, upon notice to the Company. Upon such
termination by Nauert, no compensation for any period after the date of such
termination shall be payable to Nauert, other than that portion of his aggregate
compensation that is accrued through the date of termination to the extent not
theretofore paid; PROVIDED, that if such termination by Nauert is for Good
Reason (as hereafter defined) then Nauert shall be entitled to the payments
described in clauses (i), (ii), and (iii) of the last sentence of Paragraph
7(b). "Good Reason" shall mean any of the following:

            (i) a change in Nauert's status as Chief Executive Officer of the
Company, the assignment to Nauert of any duties or responsibilities which are
inconsistent with Nauert's status as Chief Executive Officer of the Company, or
a reduction in the duties and responsibilities to be exercised by Nauert as
Chief Executive Officer of the Company; or

            (ii) a failure by the Company to continue in effect, without
material change, any benefit or incentive plan or arrangement in which Nauert
and all other executive officers of the Company participate, or the taking of
any action by the Company that would materially and adversely affect Nauert's
participation in, or materially reduce Nauert's benefits under, any such plan or
arrangement; provided that failure by the Company to grant the additional
options referenced in Paragraph 2(c)(iii) shall not by itself be sufficient
grounds to constitute "Good Reason."

        (d) CHANGE IN CONTROL. Upon the occurrence of a Qualifying Termination
following a Change in Control (as those terms are defined herein), Nauert shall
be entitled to an amount equal to two (2) years Base Salary, and two (2) years
Stock Awards, including the Tax Payments, and an Incentive Payment. The amount
of the Stock Award shall be determined as follows: Nauert shall receive a number
of shares of Common Stock equal to $1.0 million divided by the average closing
price of the Common Stock for the most recently completed quarter prior to the
occurrence of the Qualifying Termination following a Change in Control (periods
ending March 31, June 30, September 30 or December 31). The Incentive Payment
shall be a lump sum payment equal to any incentive pay that would have been
payable to Nauert pursuant to paragraph 2(d) for a

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<PAGE>

period of two (2) years, assuming target level performance. "Change in Control"
shall mean the occurrence of any of the following events:

            (i) a tender offer shall be made and consummated for the ownership
of 50.1% or more of the outstanding voting securities of the Company;

            (ii) the Company shall be merged or consolidated with another
corporation and, as a result of such merger or consolidation, less than 50.1% of
the outstanding voting securities of the surviving or resulting corporation
shall be owned in the aggregate by the former shareholders of the Company as the
same shall have existed immediately prior to such merger or consolidation;

            (iii) the Company shall sell substantially all of its operating
assets to another corporation which is not a wholly owned subsidiary; or

            (iv) a person, within the meaning of Section 3(a)(9) or of Section
13(d)(3) (as in effect on the date hereof) of the Exchange Act shall acquire,
other than by reason of inheritance, (50.1%) or more of the outstanding voting
securities of the Company (whether directly, indirectly, beneficially or of
record). In determining whether a Change in Control has occurred, gratuitous
transfers made by a person to an affiliate of such person (as determined by the
Board of Directors of the Company), whether by gift, devise or otherwise, shall
not be taken into account. For purposes of this Agreement, ownership of voting
securities shall take into account and shall include ownership as determined by
applying the provisions of Rule l3d-3(d)(l)(i) as in effect on the date hereof
pursuant to the Exchange Act.

        A "Qualifying Termination" shall occur only if:

        (a) a Change in Control occurs; and

        (b) (i) within 12 months after the Change in Control, the Company
terminates Nauert's employment other than for Cause; or

            (ii) within 12 months after the Change in Control, Nauert terminates
his employment hereunder for Good Reason.

     8. MINIMUM INVESTMENT. Throughout the Term, Nauert shall retain, directly
or indirectly, ownership of not less than 900,000 shares of Common Stock unless,
and except to the extent, released from this obligation in writing by the
Company. For purposes of this Agreement, "retain indirectly" shall mean and
refer to any shares of Common Stock that would be considered to be owned by
Nauert under Section 267(c) of the Internal Revenue Code of 1986, as amended
(the "Code", or the income of which would be taxable to Nauert, his spouse or
his children, or to any trust of which Nauert would be deemed the owner under
any of Sections 67 1 through 677, inclusive, of the Code.

     9. COVENANTS.

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<PAGE>

        (a) CONFIDENTIAL INFORMATION AND TRADE SECRETS. During Nauert's
employment by the Company, Nauert will enjoy access to the Company's
"confidential information" and "trade secrets." For purposes of this Agreement,
"confidential information" shall mean information which is not publicly
available including without limitation, information concerning customers,
material sources, suppliers, financial projections, marketing plans and
operation methods, Nauert's access to which derives solely from Nauert's
employment with the Company. For purposes of this Agreement, "trade secrets"
shall mean the Company's processes, methodologies and techniques known only to
those employees of the Company who need to know such secrets in order to perform
their duties an behalf of the Company. The Company takes numerous steps,
including these provisions, to protect the confidentiality of its confidential
information and trade secrets, which it considers unique, valuable and special
assets.

        (b) RESTRICTED USE AND NON-DISCLOSURE. Nauert, recognizing the Company's
significant investment of time, efforts and money in developing and preserving
its confidential information, shall not, during his employment hereunder and for
a two (2) year period after the end of Nauert's employment hereunder, use for
his direct or indirect personal benefit any of the Company's confidential
information or trade secrets. For a two (2) year period after the end of
Nauert's employment hereunder, Nauert shall not disclose to any person any of
the Company's confidential information or trade secrets.

        (c) RETURN OF THE COMPANY'S PROPERTY. Upon termination of Nauert's
employment with the Company, for whatever reason and in whatever manner, Nauert
shall return to the Company all copies of all writings and records relating to
the Company's business, confidential information or trade secrets that are in
Nauert's possession of such time.

        (d) NON-COMPETITION. During Nauert's employment hereunder, and in the
event of (i) a termination of Nauert's employment by Nauert for Good Reason, or
(ii) a termination of Nauert's employment by the Company without Cause, then for
a period equal to the lesser of 12 months or the remainder of original term of
the Agreement, Nauert shall not engage, directly or indirectly, whether as an
owner, partner, employee, officer, director, agent, consultant or otherwise, in
any location where the Company or any of its subsidiaries is engaged in business
after the date hereof and prior to the termination of Nauert's employment, in a
business the same or similar to, any business now, or at any time after the date
hereof and prior to Nauert's termination, conducted by the Company or any of its
subsidiaries; PROVIDED HOWEVER, that the mere ownership of 5% or less of the
stock of a company whose shares are traded on a national securities exchange or
are quoted on the National Association of Securities Dealers Automated Quotation
System, shall not be deemed ownership which is prohibited hereunder; PROVIDED,
FURTHER, that upon the occurrence of a Change of Control, the provisions of this
Paragraph 9(d) shall no longer be of any force or effect.

        (e) NON-SOLICITATION. In the event of (i) a termination of Nauert's
employment by Nauert with Good Reason or (ii) a termination of Nauert's
employment by the Company without Cause, then during the period equal to the
lesser of twelve (12) months or the remainder of the original term of the
Agreement, Nauert shall not, directly or indirectly, induce employees of the
Company or any of its subsidiaries to leave such employment with the result that
such employees would engage in business activities which are substantially
similar or are closely related to the

                                       8
<PAGE>

business activities such employee performed on behalf of the Company and which
compete against the Company; PROVIDED, that upon the occurrence of a Change of
Control, the provisions of this Paragraph 9(e) shall no longer be of any force
or effect.

        (f) ENFORCEABILITY. The necessity of protection against the competition
of Nauert and the nature and scope of such protection has been carefully
considered by the parties hereto. The parties hereto agree and acknowledge that
the duration, scope and geographic areas applicable to the non-competition
covenant in this Section 9 are fair, reasonable and necessary, that adequate
compensation has been received by Nauert for such obligations, and that these
obligations do not prevent Nauert from earning a livelihood. If, however for any
reason any court determines that the restrictions in this Agreement arc not
reasonable, that consideration is inadequate or that Nauert has been prevented
from earning a livelihood, such restrictions shall be interpreted, modified or
rewritten to include as much of the duration, scope and geographic area
identified in this Section 9 as well render such restrictions valid and
enforceable.

        (g) EQUITABLE REMEDIES. Notwithstanding the provisions of Paragraph 10
hereof, in the event of a breach or threatened breach by Nauert of any of the
covenants set forth in this Paragraph, the Company or any of its affiliates
shall be entitled to seek in any court of proper jurisdiction all appropriate
remedies, including without limitation injunctive relief and monetary damages.

        (h) SURVIVAL. The covenants set forth in this Paragraph shall survive
termination of this Agreement.

     10. ARBITRATION OF DISPUTES. Any controversy or claim, arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in the City of Cleveland, Ohio, in accordance with the laws of the State of Ohio
by three arbitrators, one of whom shall be appointed by the Company, one by
Nauert and the third by the first two arbitrators. If the first two arbitrators,
cannot agree on the appointment of a third arbitrator, then the third arbitrator
shall be appointed by the Chief Judge of the United States District Court for
the Northern District of Ohio, Eastern Division. The arbitration shall be
conducted in accordance with the rules of the American Arbitration Association,
except with respect to the selection of arbitrators which shall be as provided
in this paragraph. Judgement upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The Company shall pay the fees
and expenses of such arbitrator and the other costs of arbitration. In addition,
the Company shall pay (or Nauert shall be entitled to recover from the Company,
as the case may be) his reasonable attorneys' fees and costs and expenses in
connection with the successful enforcement of any of his rights hereunder.

     11. LIMITATION ON PAYMENTS. Notwithstanding any other term of this
Agreement, the aggregated payments by the Company to Nauert under this Agreement
or otherwise that are determined to be "parachute payments" for purposes of
Section 280G of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder ("Section 280G"), shall not exceed 299% of
Nauert's "base amount" as determined for purposes of Section 280G. All
determinations and computations for this purpose, including the interpretation
of Section 280G and its application to the matters set forth herein, will be
made by the Compensation Committee

                                       9
<PAGE>

in its sole discretion and its determinations hereunder will be binding on
Nauert and the Company. To the extent that this provision requires a reduction
in the amount of payment(s) that would otherwise be due and owing by the Company
to Nauert under this Agreement or otherwise, the Compensation Committee shall
have sole discretion to determine the method of reducing any such payment(s) in
order to meet the limitations imposed by this provision.

     12. NOTICES. Any notice required or permitted pursuant to this Agreement
shall be deemed to have been properly given if in writing and when delivered
personally or by a national overnight courier service or five business days
after being sent by United States mail, certified or registered, postage
prepaid, addressed as follows:

                  If to the Company:

                           Ceres Group, Inc.
                           17900 Royalton Road
                           Strongsville, Ohio 44136
                           Attention: General Counsel

                  With a copy to:

                           Marc C. Krantz, Esq.
                           Kohrman Jackson & Krantz
                           One Cleveland Center
                           1375 East Ninth Street, 20th Floor
                           Cleveland, Ohio  44114

                  If to Nauert:

                           Peter W.  Nauert
                           1750 East Golf Road
                           Suite 210
                           Schaumburg, Illinois 60173

or to such other place as either party may designate to the other by written
notice in accordance with this Paragraph.

     13. NO WAIVER. No waiver of any breach of any of the terms or provisions of
this Agreement shall be construed or held to be a waiver of any other breach, or
waiver of, acquiescence in or consent to any further or succeeding breach
thereof

     14. ASSIGNMENT. This Agreement shall not be assignable by either party
without the written consent of the other party. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns.

                                       10
<PAGE>

     15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without regard to its principles
of conflicts of law.

     16. SEVERABILITY. If any provision of this Agreement is held for any reason
to be invalid, it will not invalidate any other provisions of this Agreement
which are in themselves valid, nor will it invalidate the provisions of any
other agreement between the parties hereto. Rather, such invalid provision shall
be construed so as to give it the maximum effect allowed by applicable law. Any
other written agreement between the parties hereto shall be conclusively deemed
to be an agreement independent of this Agreement.

     17. HEADINGS. Paragraph headings hereunder are for convenience only and
shall not affect the meaning or interpretation of the provisions of this
Agreement.

     18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original without production of
the others.

     19. ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
agreement and understanding among the parties hereto relating to the subject
matter hereof, and supersedes all previous written or oral negotiations,
commitments and writings with respect to the subject matter hereof. This
Agreement may be amended only by a written instrument signed by each party
hereto.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                                       CERES GROUP, INC.

                                       By: /s/ Anthony J. Pino
                                          -------------------------------------
                                       Its: Executive Vice President
                                            -----------------------------------

                                       /s/ Peter W. Nauert
                                       ----------------------------------------
                                           Peter W. Nauert

                                       11

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