Document:

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                                                                   Exhibit 10(a)

                  This STOCK PURCHASE AGREEMENT is made and effective as of
December 30, 1999, by and among HUMANA INC., a Delaware corporation ("HUMANA"),
PHYSICIAN CORPORATION OF AMERICA, a Delaware corporation and a wholly owned
subsidiary of Humana ("SELLER"), and FOLKSAMERICA HOLDING COMPANY, INC., a New
York corporation ("PURCHASER").

                              W I T N E S S E T H:

                  WHEREAS, Seller owns all of the issued and outstanding shares
of common stock, par value $1.00 per share (the "SHARES"), of PCA Property and
Casualty Insurance Company, an insurance company organized under the laws of the
State of Florida (the "COMPANY");

                  WHEREAS, Seller wishes to sell the Shares to Purchaser, and
Purchaser wishes to purchase the Shares from Seller, on the terms and subject to
the conditions set forth herein; and

                  WHEREAS, Humana has joined in this Agreement solely for the
purpose of guaranteeing the obligations of Seller under this Agreement and
making certain representations, warranties and covenants for the benefit of
Purchaser.

                  NOW, THEREFORE, in consideration of the premises and of the
mutual agreements and covenants hereinafter set forth, the parties hereby agree
as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01. CERTAIN DEFINED TERMS. As used in this
Agreement, the following terms shall have the following meanings:

                  "ACQUISITION PROPOSAL" has the meaning specified in Section
6.06.

                  "ADJUSTED PURCHASE PRICE" has the meaning specified in Section
2.02(a).

                  "ADJUSTMENT" has the meaning specified in Section 8.05.

                  "AFFILIATE" with respect to any Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For purposes of this definition, "control" (or
"controlled," as the context may require)

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shall have the meaning specified in Section 4-143.045 of the Florida
Administrative Code Annotated, as in effect on the date hereof.

                  "AFFILIATE AGREEMENTS" has the meaning specified in Section
4.19.

                  "AMENDED AND RESTATED MANAGEMENT CONTRACT" has the meaning
specified in Section 4.28.

                  "ANNUAL STATUTORY STATEMENTS" means the Annual Statement of
the Company, as filed with the Florida Insurance Department, for the years ended
December 31, 1998, 1997 and 1996, in each case including all exhibits,
interrogatories, notes and schedules thereto and any auditor's report, actuarial
opinion, affirmation or certification filed in connection therewith.

                  "ASSUMED PORTFOLIO TRANSACTION" has the meaning specified in
Section 4.20(a).

                  "BUSINESS" means the business of the Company as it is
currently conducted by the Company as of the date hereof and, when applicable,
as of the Closing Date.

                  "BUSINESS DAY" means a day of the year on which banks are not
required or authorized to be closed in the City of New York.

                  "CLOSING" has the meaning specified in Section 2.04(a).

                  "CLOSING DATE" has the meaning specified in Section 2.04(a).

                  "COMPANY" means PCA Property and Casualty Insurance Company,
an insurance company organized under the laws of the State of Florida.

                  "CONTEST" has the meaning specified in Section 8.04(b).

                  "CONTRACT" means all written mortgages, indentures,
debentures, notes, loans, bonds, agreements, contracts, leases, subleases,
licenses (excluding governmental licenses, permits and authorizations),
franchises, obligations, instruments or other legally binding commitments,
arrangements or undertakings of any kind (including without limitation all
leases and other agreements referred to in Section 4.17 of the Disclosure
Schedule but excluding Reinsurance Agreements and Insurance Policies written by
the Company) to which the Company is a party or by which the Company or any of
its Properties may be bound or affected.

                  "DAMAGES" means any and all debts, obligations, losses,
claims, demands, assessments, orders, judgments, writs, decrees, liabilities
costs, damages and other expenses (including any reasonable costs of
investigation, reasonable attorneys' fees and expenses and other costs of
defense) of any kind and of any nature whatsoever.

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                  "DESIGNATED SECURITIES" has the meaning specified in Section
2.03(c)(i).

                  "DISCLOSURE SCHEDULE" means the Disclosure Schedule, dated as
of the date hereof, delivered to Purchaser by Seller.

                  "DOLES APPLICATIONS" has the meaning specified in Section
10.04(c).

                  "ENCUMBRANCES" means any lien, pledge, mortgage, security
interest, assessment, claim, lease, charge, option, right of first refusal,
imperfection of title, easement, transfer restriction under any shareholder or
similar agreement, encumbrance or any other restriction or limitation of any
kind whatsoever.

                  "ENVIRONMENTAL LAWS" means any and all federal, state, local,
provincial and foreign, civil and criminal laws, statutes, regulations, orders,
and other provisions having the force or effect of law, all judicial and
administrative orders and determinations to which the Company or Seller or any
Affiliate of Seller is subject, and all common law, in each case concerning
public health and safety, worker health and safety and pollution or protection
of the environment.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations and interpretations thereunder.

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the regulations and rules promulgated thereunder.

                  "FLORIDA INSURANCE CODE" means the Florida Insurance Code,
Chapters 624 to 632 and Part I of Chapter 641 of the Florida Statutes, and the
regulations and rules promulgated thereunder.

                  "FLORIDA INSURANCE DEPARTMENT" means the State of Florida,
Department of Insurance.

                  "FINAL NET GAIN OR LOSS" has the meaning specified in Section
2.02(b)(i).

                  "FORM A FILING" has the meaning specified in Section 6.04(a).

                  "GAAP" means United States generally accepted accounting
principles and practices as in effect from time to time consistently applied.

                  "GOVERNMENTAL AUTHORITY" means any federal, state, local or
foreign government, political subdivision, legislature, court, agency,
department, bureau, commission or other governmental or regulatory authority,
body or instrumentality, including any insurance or

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securities regulatory authority.

                  "HAZARDOUS SUBSTANCES" means petroleum, petroleum hydrocarbons
or petroleum products, petroleum by-products, radioactive materials, underground
storage tanks, asbestos or asbestos-containing materials, gasoline, diesel fuel,
pesticides, radon, urea formaldehyde, lead or lead-containing materials,
polychlorinated biphenyls, ionizing and non-ionizing radiation including radon
and electromagnetic frequency radiation; and any other chemicals, materials,
substances or wastes in any amount or concentration which are now or hereafter
become defined as or included in the definition of "HAZARDOUS SUBSTANCES,"
"HAZARDOUS MATERIALS," "HAZARDOUS WASTES," "EXTREMELY HAZARDOUS WASTES,"
"RESTRICTED HAZARDOUS WASTES," "TOXIC SUBSTANCES," "TOXIC POLLUTANTS,"
"POLLUTANTS," "REGULATED SUBSTANCES," "SOLID WASTES," or "CONTAMINANTS" or words
of similar import, under any Environmental Laws.

                  "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.

                  "HUMANA" has the meaning specified in the Preamble.

                  "HWCS" has the meaning specified in Section 4.16.

                  "HWCS DIVESTITURE" has the meaning specified in Section 4.28.

                  "INDEMNIFIED PARTY" has the meanings specified in Sections
10.02(a) and 10.03(a), as applicable.

                  "INITIAL NET LOSS" has the meaning specified in Section
2.02(b)(i).

                  "INSURANCE POLICY(IES)" means all binders, policies,
contracts, certificates and other obligations, whether oral or written, of
insurance.

                  "INTELLECTUAL PROPERTY RIGHTS" has the meaning specified in
Section 4.16.

                  "INTERIM VALUATION REPORT" has the meaning specified in
Section 2.03(b).

                  "INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended.

                  "INVESTMENT PORTFOLIO" means a list provided by Seller to
Purchaser setting forth all investments, including, without limitation, stocks,
bonds and limited partnership interests, owned by the Company as of the
Reference Date, the issuer of the investments, the amount owned and the Fair
Market Value of the investments as of such date.

                  "IRS" has the meaning specified in Section 4.24(d).

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                  "KNOWLEDGE OF SELLER,"or similar words, means the knowledge of
Humana, Seller or the Company.

                  "MALPRACTICE ACTION" has the meaning specified in Section
10.04(b).

                  "MANAGEMENT CONTRACT" has the meaning specified in Section
4.28.

                  "MATERIAL ADVERSE EFFECT" means:

                  (a) With respect to Seller or the Company, any change in, or
         effect on, the Company or the Business which is, or which is reasonably
         likely to be, materially adverse to the Business, operations, assets,
         liabilities, results of operations, or condition (financial or
         otherwise) of the Company, taken as a whole or, as applicable to
         Seller, taken as a whole on a consolidated basis with its Affiliates,
         or insurance licenses or other material Permits of the Company, or
         which will, or is reasonably likely to, prevent the transactions
         contemplated by this Agreement; and

                  (b) With respect to Purchaser, any change in, or effect on,
         Purchaser which is reasonably likely to be materially adverse to
         Purchaser's operations, assets, liabilities, results of operations, or
         condition (financial or otherwise), taken as a whole on a consolidated
         basis, or which will, or is reasonably likely to, prevent the
         transactions contemplated by this Agreement.

Notwithstanding the foregoing, there shall be no "Material Adverse Effect" if
the change in, or effect on, the Business, operations, assets, liabilities,
results of operations, or condition of a party hereto results from general
economic conditions or general insurance industry conditions in the United
States or in any other jurisdiction where such party's operations or assets are
located, or results from the identity of, or circumstances unique to, the other
party to this Agreement.

                  "NY FILING" has the meaning specified in Section 6.04.

                  "PERMITS" has the meaning specified in Section 4.15.

                  "PERMITTED ENCUMBRANCE" has the meaning specified in Section
4.17(b).

                  "PERSON" means any individual, corporation, partnership,
limited liability company, firm, joint venture, association, joint stock
company, trust, unincorporated organization, governmental or regulatory
authority or other entity.

                  "POST-CLOSING PERIODS" means any taxable period thereof
beginning after the Closing Date. If a taxable period begins before the Closing
Date and ends after the Closing Date, then the portion of the taxable period
that begins on the day following the Closing Date shall

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constitute a Post-Closing Period.

                  "PRE-CLOSING PERIOD" means any taxable period or portion
thereof that is not a Post-Closing Period.

                  "PROPERTY" means real, personal or mixed property, tangible or
intangible, including without limitation any leased real property.

                  "PROVISIONAL PURCHASE PRICE" has the meaning specified in
Section 2.02(a).

                  "PURCHASER" has the meaning specified in the Preamble.

                  "PURCHASER'S DESIGNATED SECURITIES" has the meaning specified
in Section 2.03(b).

                  "QUARTERLY STATUTORY STATEMENTS" means the Quarterly
Supplemental Reports of the Company as filed with the Florida Insurance
Department for the quarterly periods ended March 31, June 30 and September 30,
1999.

                  "REFERENCE DATE" means June 30, 1999.

                  "REFERENCE SCHEDULE D" has the meaning specified in Section
2.03(a).

                  "REINSURANCE AGREEMENTS" has the meaning specified in Section
4.20(a).

                  "RELEVANT GROUP" has the meaning specified in Section 4.24(a).

                  "RESERVES" means all unearned premium reserves and all
reserves for incurred losses including, without limitation, case reserves,
reserves for incurred but not reported losses and reserves for loss adjustment
expenses, both allocated and unallocated, and also any adjustments to such items
on account of reinsurance receivables, salvage and subrogation, reinsurance
retrospective premiums and reinsurance profit commissions.

                  "RETROCESSION ARRANGEMENT" has the meaning specified in
Section 4.20(c).

                  "SAP" means, with respect to a reinsurance or insurance
company, the statutory accounting procedures and practices prescribed or
permitted from time to time by the National Association of Insurance
Commissioners and the Florida Insurance Department and applied in a consistent
manner throughout the periods involved.

                  "SELLER" has the meaning specified in the Preamble.

                  "SHARES" has the meaning specified in the Recitals.

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                  "STRADDLE PERIOD" has the meaning specified in Section
8.01(b).

                  "SUBJECT SCHEDULE D" has the meaning specified in Section
2.03(a).

                  "SUBSIDIARY" means any and all other corporations, limited
liability companies, partnerships, joint ventures, associations and other
entities of which the Company, directly or indirectly (through one or more
Subsidiaries or otherwise), owns or controls more than 10% of the voting
securities or other voting interests.

                  "TAX" or "TAXES" means (i) all taxes, fees, duties and other
assessments imposed by the United States or any state, local or foreign
government or political subdivision or taxing authority thereof or therein,
including, without limitation, any income, estimated, premium, profits, windfall
profits, environmental, alternative, minimum, license, import, transfer,
registration, stamp, franchise, sales, use, value added, gross receipts, excise,
utility, property (real or personal), severance, ad valorem, net proceeds, deed,
lease, service, capital, customs, occupation, payroll, wage, workman's
compensation, employment, withholding and social security taxes, including all
interest, penalties and additions to taxes imposed by any taxing authority with
respect thereto, whether disputed or not and (ii) any liability of the Company
for amounts described in (i) as a result of being a member of any affiliated,
consolidated, combined or unitary group on or prior to the Closing Date.

                  "TAX RETURN" means any return, report or statement (including
any information returns) required to be filed for purposes of a particular Tax.

                  "TAX SHARING AGREEMENT" means that certain Tax Payment
Allocation Agreement relating to the payment of Taxes relating to any
affiliated, consolidated, combined or unitary group to which the Company and
Seller are parties and dated as of December 31, 1997.

                  "THIRD PARTY ACCOUNTANT" has the meaning specified in Section
2.02(b)(ii).

                  "VALUATION REPORT" has the meaning specified in Section
2.02(b)(ii).

                                   ARTICLE II

                           PURCHASE AND SALE OF SHARES

                  SECTION 2.01. PURCHASE OF SHARES. Subject to the terms and
conditions contained in this Agreement, at the Closing, Seller shall sell the
Shares to Purchaser, and Purchaser shall purchase the Shares from Seller.

                  SECTION 2.02.  PURCHASE PRICE.

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                  (a) The purchase price for the Shares shall be equal to
$125,000,000 (the "PROVISIONAL PURCHASE PRICE"), which shall be adjusted
pursuant to the terms of Section 2.02(b) to reflect the difference, if any,
between the Initial Net Loss and the Final Net Gain or Loss (the Provisional
Purchase Price as adjusted pursuant to the terms of Section 2.02(b) below, is
referred to herein as the "ADJUSTED PURCHASE PRICE").

                  (b) The Provisional Purchase Price shall be subject to
adjustment at and following the Closing as herein provided.

                  (i) The parties hereby agree that the net unrealized loss on
         the Investment Portfolio as of the Reference Date is $4,349,053 (the
         "INITIAL NET LOSS"). The "FINAL NET GAIN OR LOSS" shall be (x) the net
         unrealized gain or loss on the Investment Portfolio, determined in
         accordance with SAP, as of the Closing Date (provided that the market
         values used in determining such unrealized gain or loss shall be the
         published market value, rather than the NAIC market value), plus or
         minus (y) the gains or losses realized by the Company on the Investment
         Portfolio, determined in accordance with SAP, during the period
         commencing on the first day following the Reference Date and ending on
         the Closing Date.

                  (ii) Within ten (10) days following the Closing, the Purchaser
         shall cause the Company to prepare, and deliver to Seller, a report
         (the "VALUATION REPORT") setting forth the Final Net Gain or Loss,
         which report shall have been prepared using the same valuation sources
         used by Purchaser in the preparation of the Interim Valuation Report
         or, if any such source is unavailable, a comparable valuation source.
         Seller shall review the Valuation Report delivered to it and comment
         thereon within ten (10) days after receipt thereof. Purchaser shall
         instruct the Company to provide Seller such information regarding the
         Investment Portfolio as may be reasonably requested by Seller in its
         review, and Purchaser agrees that Seller may have access to the
         accounting records of the Company, during normal business hours, for
         the purpose of reviewing such Valuation Report. Any changes in the
         Valuation Report that are agreed to by Purchaser and Seller within ten
         (10) Business Days of the aforementioned delivery of the Valuation
         Report shall be incorporated into a final Valuation Report. In the
         event that Purchaser and Seller are unable to agree on the calculation
         of the unrealized gain/loss with respect to any item or items within
         ten (10) Business Days of the aforementioned delivery of the Valuation
         Report, such item or items shall be referred to a nationally recognized
         independent accounting firm (the "THIRD PARTY ACCOUNTANT") selected by
         mutual agreement of Seller and Purchaser within five (5) days
         thereafter for resolution within two (2) weeks and the calculation of
         any item of realized or unrealized gain/loss which such Third Party
         Accountant shall determine in writing shall be binding and conclusive
         on the parties and shall be so reflected in a final Valuation Report.
         Seller and Purchaser shall share equally the costs of retaining any
         accountants involved in this valuation process.

                  (iii) If the Final Net Gain or Loss as determined in Section
         2.02(b)(ii) is a loss

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         and such loss is less than the Initial Net Loss, or if it is a gain,
         Seller shall be entitled to, and Purchaser shall pay promptly, and in
         any event within ten (10) Business Days following issuance of a final
         Valuation Report, to Seller, an amount equal to the difference between
         the Final Net Gain or Loss and the Initial Net Loss. If the Final Net
         Gain or Loss as determined in Section 2.02(b)(ii) is a loss and such
         loss is greater than the Initial Net Loss, Purchaser shall be entitled
         to, and Seller shall pay promptly, and in any event within ten (10)
         Business Days following issuance of a final Valuation Report, to
         Purchaser, an amount equal to the difference between the Final Net Gain
         or Loss and the Initial Net Loss. In either case, such payment will be
         made together with interest on the amount of such difference for the
         period from the Closing Date until the date of payment at an effective
         annual rate equal to the annual interest rate for 90-day United States
         Treasury Bills prevailing on the Closing Date plus 50 basis points. The
         payment made pursuant hereto shall be made by bank wire transfer of
         immediately available funds to an account designated by the recipient
         of the funds.

                  SECTION 2.03. PRE-CLOSING ADJUSTMENTS TO THE INVESTMENT
PORTFOLIO.

                  (a) As soon as it becomes available, Seller shall deliver to
Purchaser a true and complete copy of Schedule D to the Annual Statutory
Statement of the Company for the year ending December 31, 1999 (the "SUBJECT
SCHEDULE D"). The Subject Schedule D shall be prepared in a manner consistent
with Schedule D to the Quarterly Statutory Statement of the Company for the
period ended on the Reference Date (the "REFERENCE SCHEDULE D").

                  (b) Within twenty (20) days following receipt of the Subject
Schedule D, Purchaser shall deliver to Seller a valuation report (the "INTERIM
VALUATION REPORT"). The Interim Valuation Report shall contain (i) Purchaser's
valuation, as of December 31, 1999, of each security listed on the Subject
Schedule D, (ii) the identity of the source used by Purchaser to determine such
valuations and (iii) a list of the securities contained in the Investment
Portfolio which Purchaser is designating for replacement by Seller ("PURCHASER'S
DESIGNATED SECURITIES"), PROVIDED, HOWEVER, that the aggregate value of
Purchaser's Designated Securities (as set forth in the Reference Schedule D)
shall not exceed $40,000,000.

                  (c) Within ten (10) days of receipt of the Interim Valuation
Report, Seller shall:

                  (i) deliver to Purchaser a list of the securities contained in
         the Investment Portfolio which the Seller is designating for
         replacement (such securities designated by Seller together with the
         Purchaser's Designated Securities, the "DESIGNATED SECURITIES"); and

                  (ii) replace all of the Designated Securities with money
         market instruments or U.S. Treasury securities (as Purchaser may elect)
         having an aggregate fair market value (as of the date of replacement)
         equal to the sum of (x) the aggregate value of the

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         Designated Securities as set forth in the Reference Schedule D and (y)
         the aggregate interest accrued and unpaid on the Designated Securities
         between the Reference Date and the date of such replacement.

                  SECTION 2.04.  CLOSING.

                  Subject to the terms and conditions of this Agreement, the
sale and purchase of the Shares contemplated hereby shall take place at a
closing (the "CLOSING") at 10:00 a.m., local time, on the fifth Business Day
after the satisfaction of the conditions to closing set forth in Article IX, at
the offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York
10178, or at such other time or on such other date or at such other place as
Seller and Purchaser may mutually agree upon in writing (the date on which the
Closing takes place being the "CLOSING DATE").

                  SECTION 2.05.  DELIVERIES AND ACTIONS TO BE TAKEN AT CLOSING.

                  (a) At the Closing, Seller shall deliver or cause to be
delivered to Purchaser (duly executed where appropriate):

                  (i) stock certificates evidencing the Shares duly endorsed in
         blank or accompanied by stock powers duly executed in blank, in proper
         form for transfer, with all required stock transfer tax stamps affixed
         or provided for;

                  (ii) a certificate from a duly authorized officer of Seller,
         certifying as to the fulfillment of the conditions specified in Section
         9.02(a);

                  (iii) the articles of incorporation of the Company, certified
         by the Secretary of State or other appropriate official of the State of
         Florida, as of a date not earlier than ten (10) Business Days prior to
         the Closing Date and accompanied by a certificate of the Secretary or
         Assistant Secretary of the Company, dated as of the Closing Date,
         stating that no amendments have been made to such articles since such
         date, and the By-laws of the Company, certified by the Secretary or
         Assistant Secretary of the Company;

                  (iv) a certificate of the Secretary or an Assistant Secretary
         of Seller certifying (x) the names and signatures of the officers of
         Seller authorized to sign this Agreement and any other document
         required to be delivered by Seller hereunder, and (y) as to the
         resolutions of the Board of Directors of Seller approving the execution
         and delivery of this Agreement and the performance of the transactions
         and obligations of Seller contemplated by this Agreement

                  (v) a certificate of the Secretary or Assistant Secretary of
         Humana certifying (x) the names and signatures of the officers of
         Humana authorized to sign this Agreement and any other document
         required to be delivered by Humana hereunder, and (y) as to the

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         resolutions of the Board of Directors of Humana approving the execution
         and delivery of this Agreement and the performance of the transactions
         and obligations of Humana contemplated by this Agreement;

                  (vi) a good standing certificate for the Company from the
         Secretary of State or other appropriate official of the State of
         Florida, dated as of a date not earlier than fifteen Business Days
         prior to the Closing Date;

                  (vii) legal opinions from Greenebaum Doll & McDonald PLLC,
         counsel to the Seller, and Katz, Kutter, Haigler, Alderman, Bryant &
         Yon, regulatory counsel to Seller addressed to Purchaser and dated the
         Closing Date, reasonably satisfactory to Purchaser; and

                  (viii) such other certificates and documents described in
         Section 9.02 of this Agreement.

                  (b) At the Closing, Purchaser shall deliver or cause to be
delivered to Seller (duly executed where appropriate):

                  (i) the Provisional Purchase Price, by bank wire transfer to
         an account designated by Seller in writing at least three (3) Business
         Days prior to Closing in immediately available funds;

                  (ii) a certificate from a duly authorized officer of
         Purchaser, certifying as to the fulfillment of the conditions specified
         in Section 9.01(a);

                  (iii) a certificate of the Secretary or an Assistant Secretary
         of Purchaser certifying (x) the names and signatures of the officers of
         Purchaser authorized to sign this Agreement and any other document
         required to be delivered by Purchaser hereunder, and (y) as to the
         resolutions of the Board of Directors of Purchaser approving the
         execution and delivery of this Agreement and the performance of the
         transactions and obligations of Purchaser contemplated by this
         Agreement;

                  (iv) a legal opinion from Morgan, Lewis & Bockius LLP, counsel
         to Purchaser, addressed to Seller and dated as of the Closing Date,
         reasonably satisfactory to Purchaser; and

                  (v) such other certificates and documents described in Section
         9.01 of this Agreement.

                                   ARTICLE III

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               REPRESENTATIONS AND WARRANTIES OF SELLER AND HUMANA

         Seller and Humana hereby jointly and severally represent and warrant to
Purchaser as follows:

                  SECTION 3.01. INCORPORATION AND AUTHORITY OF SELLER AND
HUMANA.

                  (a) Each of Humana and Seller is a company duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has all necessary corporate power and authority to own, lease and operate
its Properties (including, in the case of Seller, to own the Shares), to conduct
its business as now being conducted, to enter into this Agreement and each other
agreement and instrument required to be executed and delivered by it pursuant
hereto, to carry out its respective obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by each of Seller and Humana of this Agreement and each
other agreement and instrument required to be executed and delivered by Seller
or Humana pursuant hereto, and the consummation by each of Seller and Humana of
the transactions contemplated hereby and thereby, have been duly and validly
authorized by all requisite corporate action and no other corporate proceedings
on the part of either Humana or Seller is necessary to authorize the foregoing.
This Agreement has been, and at the Closing the other agreements and instruments
required pursuant hereto and to which Seller or Humana is a party will have
been, duly and validly executed and delivered by Seller and Humana, as the case
may be, and assuming due authorization, execution and delivery by Purchaser of
this Agreement and such other documents, this Agreement and such other documents
will constitute the legal, valid and binding obligations of Seller and Humana,
enforceable against Seller and Humana, respectively, in accordance with their
terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to the effect of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

                  (b) As of the date hereof, Humana owns, and as of the Closing
Date, Humana will own, all of the issued and outstanding capital stock of Seller
free and clear of all Encumbrances.

                  SECTION 3.02. NO CONFLICT. Assuming all consents, approvals,
authorizations, orders and other actions described in Section 4.05 have been
obtained and/or taken, and all filings and notifications described in Section
4.05 have been made, except as may result from any facts or circumstances
relating solely to Purchaser or its Affiliates, and except for enforcement or
other action of a Governmental Authority resulting therefrom which may delay or
prevent consummation of the transactions provided for herein, the execution and
delivery of this Agreement by Humana and its performance of the guarantee
provided for herein, do not and will not (a) violate or conflict with the
certificate of incorporation or bylaws of Humana, (b) conflict with or violate
any material law, rule, regulation, order, writ, judgment, injunction, decree,

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determination or award applicable to Humana, (c) result in any material breach
of, or constitute a material default (or event which with the giving of notice
or lapse of time, or both, would constitute a material default) under, or give
to others any rights of termination, amendment, acceleration or cancellation of
any material Contract, Permit or other instrument to which Humana is a party or
by which any of its Properties are bound or affected, or (d) require Humana to
obtain any consent, approval, authorization, order or other action by any
Governmental Authority.

                  SECTION 3.03. DISCLOSURE. No representation or warranty or
other statement made by Seller or Humana in this Article III or in Article III
of the Disclosure Schedule contains any untrue statement of a material fact, or
omits to state a material fact necessary to make the statements contained herein
or therein, in light of the circumstances under which they were made, not
misleading.

                                   ARTICLE IV

                    REPRESENTATIONS AND WARRANTIES OF SELLER

         Seller hereby represents and warrants to Purchaser as follows:

                  SECTION 4.01. INCORPORATION AND QUALIFICATION OF THE COMPANY.
The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Florida and has the necessary corporate
power and authority to own, operate or lease the properties and assets now
owned, operated or leased by the Company and to carry on the Business now being
conducted by the Company. Seller has delivered to Purchaser true and complete
copies of the articles of incorporation and by-laws of the Company as in effect
on the date hereof. The Company is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, operated or leased or the nature of its activities makes
such qualification necessary, except for such failures which, individually or in
the aggregate, would not have a Material Adverse Effect. Except as disclosed in
Section 4.01 of the Disclosure Schedule, the Company is licensed or authorized
to write insurance or reinsurance in each of the jurisdictions listed in Section
4.01 of the Disclosure Schedule. True and correct copies of the insurance
licenses issued by each such jurisdiction are included in Section 4.01 of the
Disclosure Schedule.

                  SECTION 4.02. CAPITAL STOCK OF THE COMPANY. The Shares
constitute all the issued and outstanding shares of capital stock of the
Company. Except for 1,800,000 shares of common stock which are authorized but
not outstanding and the Shares, no other class of capital stock, equity
security, preferred stock, bonds, debentures, notes, debt instruments, evidence
of indebtedness or other securities of any kind in the Company are authorized or
outstanding. The Shares have been duly authorized and validly issued and are
fully paid and non-assessable and were not issued in violation of any preemptive
rights. As of the date hereof there is no, and as of

                                       13

<PAGE>

the Closing Date there will be no, security, option, warrant, right, call,
subscription, agreement, commitment or understanding of any nature whatsoever,
fixed or contingent, that directly or indirectly, (i) except as contemplated by
this Agreement, calls for the issuance, sale, pledge or other disposition of any
shares of capital stock of the Company or any securities convertible into, or
other rights to acquire, any shares of capital stock of the Company, (ii)
relates to the voting or control of such capital stock, securities or rights, or
(iii) obligates Seller or the Company to grant, offer or enter into any of the
foregoing. As of the date hereof Seller owns, and as of the Closing Date Seller
will own, the Shares, free and clear of all Encumbrances, other than the
obligation hereunder to sell the Shares to Purchaser and except for restrictions
on transfer or resale imposed under applicable federal securities laws. Upon the
conveyance and transfer of the Shares to Purchaser as contemplated hereby,
Purchaser shall acquire good and valid title to the Shares, free and clear of
all Encumbrances (except as may result from any facts or circumstances relating
solely to Purchaser or its Affiliates, and except for restrictions on transfer
or resale imposed under applicable federal securities laws) and Purchaser will
be entitled to all rights of a holder of the Shares.

                  SECTION 4.03.  SUBSIDIARIES.

                  (a) As of the date hereof, the Company has, and as of the
Closing Date the Company will have, no Subsidiaries.

                  (b) Except as set forth in Section 4.03(b) of the Disclosure
Schedule (and, with respect to clause (i), except as set forth in the Investment
Portfolio), there are no corporations, partnerships, limited liability
companies, joint ventures, associations or other entities (i) in which the
Company owns, of record or beneficially, any direct or indirect capital stock,
membership or other equity interest or any right (contingent or otherwise) to
acquire the same, or (ii) which the Company controls, directly or indirectly, by
contract or proxy or otherwise, alone or in combination with any other Person.

                  (c) Except as set forth in Section 4.03(c) of the Disclosure
Schedule, there are no assets or Properties owned by, or in the possession of,
Seller (or any Affiliate of Seller or of the Company) which are used, or
necessary, in connection with the Business (including, without limitation, the
settlement and adjustment of outstanding claims under Insurance Policies and
Reinsurance Agreements) of the Company. Except as set forth in Section 4.03(c)
of the Disclosure Schedule, neither Seller nor any Affiliate of Seller or the
Company has any debts, liabilities, obligations or other commitments (i) which
are guaranteed or secured by the Company or (ii) for which the Company may be
liable.

                  SECTION 4.04.  NO CONFLICT.

                  (a) Except as set forth in Section 4.04(a) of the Disclosure
Schedule, neither the Seller nor the Company is in violation or default in any
material respect (and is not in default in any respect regarding any
indebtedness, loan or credit agreement) under any indenture,

                                      14

<PAGE>

agreement or instrument to which it is a party or by which it or any of its
assets or properties may be bound. The Seller and the Company are in compliance
in all material respects with all orders, writs, injunctions, judgments or
decrees of any Governmental Authority or arbitrator(s).

                  (b) Assuming all consents, approvals, authorizations, orders
and other actions described in Section 4.05 have been obtained and/or taken, and
all filings and notifications described in Section 4.05 have been made, except
as may result from any facts or circumstances relating solely to Purchaser or
its Affiliates, the execution, delivery and performance of this Agreement by
Seller, the sale of the Shares by Seller pursuant to this Agreement and the
consummation by Seller of the transactions contemplated hereby do not and will
not (a) violate or conflict with the respective charter documents of Seller or
the Company, (b) conflict with or violate any material law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award applicable to
Seller or the Company or the Business, or (c) result in any material breach of,
or constitute a material default (or event which with the giving of notice or
lapse of time, or both, would become a material default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of any material Encumbrance on any of the material assets
or properties of the Company pursuant to any Contract, Permit or other
instrument relating to such assets or properties to which Seller or the Company
is a party or by which any of such assets or properties is bound or affected.

                  SECTION 4.05. CONSENTS AND APPROVALS. The (i) execution and
delivery by Seller of this Agreement and each other agreement and instrument
required to be executed and delivered by Seller in connection herewith, (ii)
sale of the Shares pursuant to this Agreement and (iii) consummation of the
transactions contemplated hereby do not, and Seller's performance of this
Agreement and each other agreement and instrument required to be executed and
delivered by Seller in connection herewith will not, require Seller or the
Company to obtain any consent, approval, authorization, order or other action
by, or require Seller or the Company to file with or notify any Governmental
Authority, except pursuant to (a) the notification requirements of the HSR Act,
(b) the approval of the Florida Insurance Department, (c) information filing
requirements in any other state where the Company is licensed to do business and
(d) the notification requirements described in Section 4.05 of the Disclosure
Schedule.

                  SECTION 4.06. FINANCIAL INFORMATION. The Company has
heretofore delivered to Purchaser true and complete copies of the Annual
Statutory Statements and the Quarterly Statutory Statements of the Company
prepared and filed with the Florida Insurance Department after September, 1997.
Except as set forth in Section 4.06 of the Disclosure Schedule, the Annual
Statutory Statement of the Company for the period ended December 31, 1998, and
the Quarterly Statutory Statements of the Company for each quarter ended
thereafter were prepared in accordance with SAP, prepared in accordance with the
books and records of the Company, audited by PricewaterhouseCoopers LLP (the
"Company's Auditors"), presents fairly in all material respects the statutory
financial position of the Company at the respective date thereof and the
statutory results of operations and cash flows of the Company for the respective
periods then ended, except that the Quarterly Statutory Statements have not been
audited and are subject

                                      15

<PAGE>

to normal recurring year-end audit adjustments and omit footnotes and other
presentation items. Each of the Annual Statutory Statements and Quarterly
Statutory Statements (i) complies in all material respects with the Florida
Insurance Code, (ii) was complete and correct in all material respects when
filed, (iii) was filed with or submitted to the Florida Insurance Department in
a timely manner on forms prescribed or permitted by the Florida Insurance
Department, and (iv) was not prepared utilizing any material accounting
practices that are permitted rather than prescribed by the Florida Insurance
Code. Except as set forth in Section 4.06 of the Disclosure Schedule, no
material deficiency has been asserted with respect to any of the Annual
Statutory Statements or Quarterly Statutory Statements by the Florida Insurance
Department or any other Governmental Authority.

                  SECTION 4.07. ABSENCE OF UNDISCLOSED LIABILITIES. Except as
disclosed in Section 4.07 of the Disclosure Schedule, to the Knowledge of Seller
there are no debts, liabilities, obligations or commitments of the Company of
any kind whatsoever, whether accrued, fixed or unfixed, choate or inchoate,
liquidated or unliquidated, secured or unsecured, contingent, absolute, known or
unknown, determined, determinable or otherwise, other than:

                  (a) as, and to the extent, specifically disclosed in any of
the subsections of this Article IV or the Disclosure Schedule;

                  (b) with respect to the tax matters addressed in Section 4.24
and Article VIII (which shall be governed solely by the terms of such Section
4.24 and Articles VIII);

                  (c) liabilities arising under any Reinsurance Agreements or
any Insurance Policies written by the Company;

                  (d) liabilities or obligations reflected or reserved against
on the balance sheet included in the Quarterly Statutory Statement dated as of
September 30, 1999; or

                  (e) liabilities incurred since the date of the most recent
Annual Statutory Statement in the ordinary course of business and consistent
with past practice, which, individually and in the aggregate, would not have a
Material Adverse Effect.

                  SECTION 4.08. INVESTMENTS. Except as set forth in Section 4.08
of the Disclosure Schedule, the Company has good and marketable title to all of
the investments listed in the most recent Investment Portfolio provided to
Purchaser, free and clear of all Encumbrances except for restrictions imposed
under the Florida Insurance Code. Section 4.08 of the Disclosure Schedule sets
forth the Investment Portfolio as of the Reference Date. Except as set forth in
Section 4.08 of the Disclosure Schedule, none of the investments listed in the
Investment Portfolio is in default in the payment of principal or interest or
dividends. All such investments comply in all material respects with the
investment guidelines adopted by the Investment Committee of the Company's Board
of Directors and comply in all material respects with any and all investment
restrictions under, and qualify as "admitted assets" under, the Florida

                                       16

<PAGE>

Insurance Code.

                  SECTION 4.09. CERTAIN EVENTS.

                  (a) The Company ceased all underwriting activity as of
November 15, 1996, and since such date the Company has not issued, renewed or
extended (excluding Center Re commutations) any Insurance Policy or Reinsurance
Agreement. Except as set forth in Section 4.09 of the Disclosure Schedule, since
November 15, 1996, the Business of the Company has consisted solely of the
settlement and adjustment of claims arising under Insurance Policies and
Reinsurance Agreements issued, entered into or assumed by the Company prior to
November 15, 1996, and activities directly related thereto.

                  (b) Except as set forth in Section 4.09 of the Disclosure
Schedule, since the Reference Date there has been no change in the Business,
operations, assets, Properties, condition (financial or otherwise), results of
operations, insurance licenses or Permits of the Company which, individually or
in the aggregate, has had or is reasonably likely to have a Material Adverse
Effect.

                  (c) Except as set forth in Section 4.09 of the Disclosure
Schedule or as specifically disclosed in the Company's 1998 Annual Statutory
Statement or its interim Quarterly Statutory Statements for 1999, since the
Reference Date the Business of the Company has been conducted only in the
ordinary course of business consistent with past practice and there has not
been:

                  (i) any material change in the underwriting, reinsurance,
         marketing, accounting, establishment of reserves, investment or claims
         adjustment policies and practices of the Company, including, without
         limitation, any change which has had the effect of accelerating the
         recording and billing of premiums or accounts receivable or retarding
         the payment of expenses, or changes in the method of establishing
         Reserves in connection with any accounts or Business of the Company, or
         any change that has had the effect of materially altering, modifying or
         changing the historic operating, financial or accounting practices or
         policies of the Company, including accruals of and reserves for Tax
         liabilities;

                  (ii) any damage, destruction or casualty loss with respect to
         the Property of the Company (whether or not covered by insurance) which
         has had or is reasonably likely to have a Material Adverse Effect;

                  (iii) any direct or indirect repurchase, redemption or other
         acquisition by the Company of any shares of capital stock or other
         securities of the Company, or any declaration, setting aside or payment
         of any dividend or other distribution in respect of shares of capital
         stock of the Company;

                                       17

<PAGE>

                  (iv) any employment, bonus, incentive or deferred
         compensation, severance or termination agreement or arrangement entered
         into between the Company and a director or officer or consultant of the
         Company (other than any agreements or arrangements between such persons
         and an Affiliate of the Company for which the Company has no
         liability);

                  (v) any indebtedness incurred by the Company for borrowed
         money, including, without limitation, obligations in respect of
         capitalized leases, or any guarantee by the Company of indebtedness for
         borrowed money or any other obligation of any other Person;

                  (vi) any sale, lease, abandonment or other disposition by the
         Company of any interest in Property, other than in the ordinary course
         of business and consistent with past practice, in an aggregate amount
         of more than $15,000;

                  (vii) the creation of any Encumbrance on all or any portion of
         any material assets, Properties or rights of the Company, except
         Permitted Encumbrances;

                  (viii) any capital expenditure made by the Company, except
         capital expenditures not exceeding an aggregate of $50,000;

                  (ix) any amendment, modification, alteration, failure to renew
         or termination of any Contract, Insurance Policy or Reinsurance
         Agreement which, individually or in the aggregate with such other
         amendments, modifications, alterations, failure to renew or
         terminations, has had or could reasonably be expected to have a
         Material Adverse Effect;

                  (x) any waiver of any rights of material value or any
         cancellation or forgiveness of any claims, debts or accounts receivable
         owing to the Company other than in the ordinary course of business and
         consistent with past practice;

                  (xi) any making of any loan, advance or capital contribution
         to or investment by the Company in any Person, except for purchases of
         investments for its investment portfolio consistent in all material
         respects with its investment guidelines and past practices and except
         for other transactions in the ordinary course of business and
         consistent with past practice;

                  (xii) any transaction or commitment made, or any contract or
         agreement entered into, between the Company, on the one hand, and
         Seller or its Affiliates, on the other hand, except those which are to
         be satisfied prior to the Closing pursuant to Section 6.11 hereof;

                  (xiii) any adoption of a plan of complete or partial
         liquidation, dissolution, rehabilitation, restructuring,
         recapitalization, re-domestication or other reorganization

                                       18

<PAGE>

         with respect to the Company;

                  (xiv) any entry into any joint venture, partnership, managing
         general agency or similar arrangement with any Person;

                  (xv) any incurrence by the Company of any material liability
         for rate roll-backs or premium refunds, or failure by the Company to
         pay in full all guaranty fund assessments of which written notice has
         been received from any Governmental Authority; or

                  (xvi) any authorization, approval, agreement or commitment to
         do any of the foregoing.

                  SECTION 4.10. INSURANCE RESERVES. The Reserves as of the
Reference Date and any subsequent date on which such Reserves may have been
redetermined (i) were determined in accordance with SAP; (ii) were computed in
accordance with generally accepted loss reserving standards and principles;
(iii) met the requirements of the Florida Insurance Department; and (iv) made
reasonable provision, in the aggregate, for all unpaid loss and loss expense
obligations, including obligations for incurred but not reported loss and loss
adjustment expenses, and unearned premiums as of the Reference Date. Except as
set forth in Section 4.10 of the Disclosure Schedule, none of the Reserves
reflected on the Quarterly Statutory Statement dated as of the Reference Date
have been discounted in any manner. The Company owns assets that qualify as
"admitted assets" under the Florida Insurance Code in an amount at least equal
to the Reserves plus its minimum statutory capital and surplus as required under
the Florida Insurance Code. Seller has delivered or made available to Purchaser
true and complete copies of all actuarial reports, actuarial certificates and
loss and loss adjustment expense reserve reports prepared internally or by any
third party actuarial consultant on behalf of or made available to Seller or any
of its Affiliates, including the Company, in each case relating to the adequacy
of the Reserves for any period ended on or after December 31, 1996. The
foregoing notwithstanding, Seller makes no representation and gives no warranty
with respect to the adequacy of the Reserves to cover the actual amount of
losses and loss adjustment expenses paid after the date hereof.

                  SECTION 4.11. JUDGMENTS, DECREES AND ORDERS. Except as set
forth in Section 4.11 of the Disclosure Schedule, neither the Company nor any of
its directors, officers or employees (in their capacity as such) is a party to
or subject to any judgment, decree, order, writ, award, or injunction of any
Governmental Authority or arbitrator. The Company is in compliance in all
material respects with respect to all judgments, orders, writs, arbitration
awards, injunctions, decrees or awards of any Governmental Authority or
arbitrator to which it is subject.

                  SECTION 4.12. LITIGATION. Except as set forth in Section 4.12
of the Disclosure Schedule, there are no claims, actions, suits, investigations,
arbitrations or legal, administrative

                                      19

<PAGE>

or other proceedings pending and, to the Knowledge of Seller, none are
threatened, against or affecting the Company or any of its Properties, at law or
in equity, or before or by any Governmental Authority or arbitrator. Except as
set forth in Section 4.12 of the Disclosure Schedule, since September 8, 1997,
except with respect to payments made in the ordinary course in connection with
Reinsurance Agreements or Insurance Policies written by the Company, there have
been no payments made by or on behalf of the Company (other than pursuant to an
Insurance Policy or Reinsurance Agreements) with respect to any threatened or
previously outstanding litigation.

                  SECTION 4.13. COMPLIANCE WITH LAWS. The Company is in
compliance with (a) the terms of its certificate or articles of incorporation,
its by-laws and any other charter or organization documents, (b) all laws,
statutes, ordinances, rules, regulations or other legal requirements, whether
federal, state, local or foreign, applicable to the Company or by which any of
its Properties may be bound, (c) except as set forth in Section 4.13 of the
Disclosure Schedule, all applicable licenses, authorizations, orders, writs,
judgments, injunctions, awards, and decrees of any court, the Florida Insurance
Department or any other Governmental Authority, or any arbitrators, and (d) its
Permits, except, in the case of clauses (b), (c) and (d), where the failure to
comply would not, individually or in the aggregate, have a Material Adverse
Effect.

                  SECTION 4.14. ENVIRONMENTAL, HEALTH AND SAFETY COMPLIANCE.
Except as set forth in Section 4.14 of the Disclosure Schedule, the Company is
not engaged in, and has not been engaged in, the creation, generation or
disposal, on- or off-site, of Hazardous Substances.

                  SECTION 4.15. LICENSES AND PERMITS. Except as set forth in
Section 4.15 of the Disclosure Schedule, the Company has all governmental
licenses, permits and authorizations (other than those relating to the writing
of insurance which are covered by the next sentence) necessary to carry on the
Business now being conducted by the Company (collectively, the "PERMITS"), all
of which are valid and in full force and effect, except for such Permits the
absence of which, individually or in the aggregate, would not have a Material
Adverse Effect. Section 4.01 of the Disclosure Schedule lists all jurisdictions
in which the Company is licensed, authorized or permitted to write insurance or
reinsurance. Except as set forth in Section 4.15 of the Disclosure Schedule,
since September 8, 1997, and, prior to such date to the Knowledge of Seller, the
Company has been duly authorized by the relevant state, foreign and other
insurance regulatory authorities to write the lines of insurance or reinsurance
that it has written in the respective jurisdictions in which it has done
business. No insurance regulator in any state has notified the Company, orally
or in writing, that the Company is commercially domiciled in any jurisdiction,
and neither Seller nor the Company is aware of any facts that would result in
the Company being commercially domiciled in any state. The insurance licenses
attached to Section 4.01 of the Disclosure Schedule are the licenses necessary
for the Company to conduct the Business in the manner and in the areas in which
such Business is currently being conducted except where the failure to be so
licensed would not, individually or in the aggregate, have a Material Adverse
Effect, and all of the insurance licenses are valid and in full force and
effect. The Company has not received any notice, oral or written, that it has,
and it has not, engaged in

                                       20

<PAGE>

any activity which would cause modification, limitation, non-renewal, revocation
or suspension of any insurance license or Permit, and no action, inquiry,
investigation or proceeding looking to or contemplating the revocation,
modification, limitation, non-renewal or suspension of any thereof is pending or
threatened. Except as set forth in Section 4.15 of the Disclosure Schedule, (i)
all reports, statements, documents, registrations, filings and submissions to
state insurance regulatory authorities complied in all material respects with
applicable law in effect when filed and (ii) no deficiencies have been asserted
by any such regulatory authority with respect to such reports, statements,
documents, registrations, filings or submissions that have not been satisfied in
all material respects.

                  SECTION 4.16. INTELLECTUAL PROPERTY RIGHTS. Section 4.16 of
the Disclosure Schedule sets forth a list of each trade name, service mark,
trademark, logo, copyright, patent and other intangible property used by the
Company or in the Business which is material to the conduct of the Business,
other than computer software which will be provided by Humana Workers
Compensation Services, Inc., a Florida corporation ("HWCS"), as further provided
in Section 4.28 of this Agreement (collectively, "INTELLECTUAL PROPERTY
RIGHTS"), which are all the material Intellectual Property Rights that are
required to conduct the Business. Except as set forth in Section 4.16 of the
Disclosure Schedule, the Company owns and has good title or has valid and
enforceable licenses relating to all of the Intellectual Property Rights, and
has the right to use the Intellectual Property Rights, free and clear of any
royalty or other payment obligation (except as provided in any license) or, to
the Knowledge of Seller, claims of infringement or other Encumbrance. Neither
Seller nor the Company has received any notice, in writing, of any conflict with
or violation or infringement of, any rights of any other Person with respect to
any Intellectual Property Right. The Intellectual Property Rights have been
registered to the extent required with the appropriate Governmental Authority
and such registrations have been continuously maintained and are in full force
and effect, except where the failure to register or to maintain any such
registration would not, individually or in the aggregate, have a Material
Adverse Effect. To the Knowledge of Seller, the rights of the Company to the
Intellectual Property Rights are not being infringed by others. No licenses have
been granted by the Company, and, to the Knowledge of Seller, there is no
obligation requiring the Company to grant any license, with respect to any of
the Intellectual Property Rights.

                  SECTION 4.17.  PROPERTY.

                  (a) The Company neither owns nor leases any real or tangible
personal property.

                  (b) Except as set forth in Section 4.17(b) of the Disclosure
Schedule, the Company has good title to, or a valid license in, all its
intangible personal Property free and clear of all Encumbrances, except (i)
liens for Taxes and assessments not yet payable; (ii) liens, imperfections of
title and easements which do not, either individually or in the aggregate,
materially detract from the value of, or interfere with the present use of, the
Properties subject thereto or affected thereby (the exceptions in clauses (i)
and (ii) being herein called "PERMITTED

                                       21

<PAGE>

ENCUMBRANCES").

                  (c) All equipment, fixtures and other Properties used in the
Business (all of which are listed in Section 4.17(c) of the Disclosure Schedule)
are, or will be at Closing, owned or leased by HWCS and are (i) in good
operating condition and repair, reasonable wear and tear excepted, and (ii)
adequate for the Business currently conducted by the Company and suitable in all
respects for the purposes for which they are now being used, except for such
failures to be in such good operating condition or adequacy or suitability
which, individually and in the aggregate, do not have a Material Adverse Effect.

                  SECTION 4.18. COMPANY'S PROPERTY & CASUALTY INSURANCE
COVERAGE.

                  (a) Section 4.18 of the Disclosure Schedule contains a true
and correct list of all property and casualty, liability, workers compensation,
directors and officers liability, surety bonds, key-man and life insurance and
other similar Insurance Policies (including the expiration dates thereof, the
limits of liability, deductible amounts, and the annual premiums thereof) that
insure the business, operations or affairs of the Company that (i) have been
issued to the Company or (ii) are held by Seller or by any Affiliate of Seller
for the benefit of the Company and that will not continue to be applicable to
the Company following the Closing. All such insurance is in full force and
effect and, to the Knowledge of Seller and the Company, is with financially
sound and reputable insurers in accordance with normal industry practice.

                  (b) Since January 1, 1998, the Company has not failed to give
any material notice or to present any material claim under any Insurance Policy
or surety bond in due and timely fashion. Seller has given Purchaser the most
recently available reports for the Company on: (i) accidents, casualties or
damages occurring on or to the Properties or assets of the Company; and (ii)
claims by the Company for damages, reimbursement of losses, contribution or
indemnification under any Insurance Policy and settlements or negotiations of
settlements relating thereto.

                  SECTION 4.19. RELATIONSHIPS WITH AFFILIATES, OFFICERS,
DIRECTORS AND INTERESTED PARTIES. Section 4.19 of the Disclosure Schedule sets
forth all agreements between the Company and Seller or any of its Affiliates,
including, without limitation, any Insurance Policies and Reinsurance Agreements
issued by, or on behalf of, the Company for the benefit of Seller or any of its
Affiliates ("AFFILIATE AGREEMENTS"). Except for the Affiliate Agreements, the
Management Contract, or as set forth in Section 4.19 of the Disclosure Schedule
and other than intercompany payables and receivables arising from the payment of
expenses or provision of services by the Company on behalf of Seller, or by
Seller on behalf of the Company, as the case may be (which shall be settled in
full as provided in Section 6.11), the Company is not a party to any contract,
agreement or arrangement with Seller or any of its Affiliates, or any officer,
director or employee of such Persons.

                  SECTION 4.20. ASSUMED AND CEDED REINSURANCE AGREEMENTS.

                                       22

<PAGE>

                  (a) As used in this Agreement, the term "REINSURANCE
AGREEMENTS" shall mean all assumed and ceded reinsurance and retrocession
agreements, contracts, treaties, obligations, instruments or other reinsurance
or retrocession commitments, arrangements or undertakings of any kind to which
the Company is a party or by which the Company or any of its respective
Properties may be bound or affected and shall further include, without
limitation, any portfolio reinsurance or other assumption transaction where the
Company assumed workers' compensation insurance or other liabilities from any
assessable mutual, pool, company, association or fund (such assumption, an
"ASSUMED PORTFOLIO TRANSACTION").

                  (b) Set forth in Section 4.20(b) of the Disclosure Schedule is
a complete and accurate list of each Reinsurance Agreement pursuant to which the
Company has assumed business (along with a description of certain of the terms
thereof, including the name of the ceding company, type of contract, inception
date, estimated premium and limit) and under which the Company remains subject
to liability. Seller will deliver to Purchaser at the Closing a complete and
accurate list of each assumed Reinsurance Agreement in force five Business Days
prior to the Closing Date, including information similar to Section 4.20(b) of
the Disclosure Schedule.

                  (c) Set forth in Section 4.20(c) of the Disclosure Schedule is
a complete and accurate list of each Reinsurance Agreement pursuant to which the
Company has ceded or transferred any portion of its obligations or liabilities
under any reinsurance or insurance agreement (a "RETROCESSION ARRANGEMENT"),
including a description of certain of the terms thereof (including the name of
the retrocessionaire, type of contract, inception date, estimated premium and
limit). Except as set forth in Section 4.20(c) of the Disclosure Schedule, (i)
to the Knowledge of Seller, none of such retrocessionaires is insolvent or the
subject of a rehabilitation, liquidation, conservatorship, receivership,
bankruptcy or similar proceeding; (ii) to the Knowledge of Seller, the financial
condition of any such retrocessionaire is not impaired to the extent that a
default thereunder is reasonably anticipated, (iii) no notice of intended
cancellation has been received by the Company from any of such
retrocessionaires; and (iv) the Company is entitled under the Florida Insurance
Code to take full credit in its Annual Statutory Statements for all amounts
recoverable by it pursuant to any Retrocession Arrangement, and all such amounts
recoverable have been properly recorded in the books and records of account of
the Company and are properly reflected in the Annual Statutory Statements.
Seller will deliver to Purchaser at the Closing a complete and accurate list of
each Retrocession Arrangement in force five Business Days prior to the Closing
Date including information similar to Section 4.20(c) of the Disclosure
Schedule. Except as set forth in Section 4.20(c) of the Disclosure Schedules, no
such Retrocession Arrangement contains any provision providing that any such
party thereto may terminate, cancel, or commute the same by reason of the
transactions contemplated by this Agreement.

                  (d) All of the Reinsurance Agreements are valid, binding and
enforceable against the Company and, to the knowledge of Seller, against the
other parties thereto in

                                       23

<PAGE>

accordance with their terms and are in full force and effect. Except as set
forth in Section 4.20(d) of the Disclosure Schedules, the Company is not, and to
the Knowledge of Seller, no other party thereto is, in or claimed to be in
material breach or material default under any Reinsurance Agreement, and no
event has occurred which (after notice or lapse of time or both) would become a
material breach or material default under, or would permit modification,
cancellation, acceleration or termination of, any Reinsurance Agreement or
result in the creation of any material Encumbrance upon, or result in any Person
obtaining any right to acquire, any Properties or rights of the Company. There
are no unresolved disputes under any Reinsurance Agreement.

                  (e) The accounts receivable of the Company reflected on the
Quarterly Statutory Statement dated as of the Reference Date are, and as of the
Closing Date will be, (i) legal, valid and binding obligations of the respective
debtors enforceable in accordance with their respective terms, (ii) not subject
to any valid set-off or counterclaim, (iii) collectible in the ordinary course
of business consistent with past practice in the aggregate recorded amounts
thereof, net of any applicable reserve reflected in the Quarterly Statutory
Statement dated as of the Reference Date, (iv) not the subject of any claims,
actions, suits, arbitrations or other proceedings brought by or on behalf of the
Company or by the account debtor, (v) not subject to any pledge as collateral by
the Company, (vi), with respect to receivables from the Florida Special
Disability Trust Fund, any claims thereunder have been timely filed, and (vii)
the Quarterly Statutory Statement dated as of the Reference Date does not, and
will not, reflect any account receivable for potential refunds of assessments
previously paid by the Company to the Florida Special Disability Trust Fund.
Subject to Section 10.04(c), any future refunds for assessments previously paid
by the Company to the Florida Special Disability Trust Fund shall be the sole
property of the Company.

                  SECTION 4.21. OTHER CONTRACTS.

                  (a) Set forth on Section 4.21 of the Disclosure Schedule is a
complete and accurate list of (x) each Contract which is material to the
Business, Properties, operations, assets, liabilities or financial condition of
the Company and (y) without regard to materiality, each of the following
Contracts relating to the Company (access to correct and complete copies or, if
none exist, written descriptions, of all Contracts called for by clauses (x) and
(y) having been provided to Purchaser):

                  (i) All Contracts out of the ordinary course of business
         representing, individually or in the aggregate, non-terminable future
         liabilities in excess of $100,000;

                  (ii) Each employment, severance, termination, agency,
         brokerage, consultation or representation Contract or similarly binding
         arrangement of any type (including, without limitation, loans or
         advances) with any current or former executive, employee, consultant,
         representative, officer or director of the Company, or any managing
         general agent, agent, reinsurance intermediary, claims adjuster,
         manager or administrator or

                                       24

<PAGE>

         broker of the Company or to whom any underwriting or claims settlement
         authority is delegated, and the name, position and rate of compensation
         of each such Person and the expiration date of each such Contract;

                  (iii) All Contracts or similarly binding arrangements with any
         Person containing any provision or covenant limiting the ability of the
         Company to engage in any line of business in any geographical area or
         compete with any Person;

                  (iv) All partnership, joint venture or profit-sharing
         Contracts with any Person;

                  (v) All Contracts relating to the borrowing of money or the
         deferred purchase price of Property (other than repurchase agreements
         and reverse repurchase agreements entered into in the ordinary course
         of managing the Company's investments and consistent with past
         practice), or the direct or indirect guarantee of any obligation for,
         or Contracts to service the repayment of, borrowed money or any other
         liability in respect of indebtedness for borrowed money of any other
         Person;

                  (vi) Each lease, sublease, license (excluding computer
         software) or rental or use Contract to which the Company is a party
         with respect to personal Property used by the Company in the conduct of
         its Business, operations or affairs and providing for annual rental
         payments to be paid by or on behalf of the Company in excess of
         $50,000;

                  (vii) All Contracts relating to the future disposition or
         acquisition of any investment in any Person or of any interest in any
         business enterprise (other than the disposition or acquisition of
         investments in the ordinary course of business consistent with past
         practice), and all Contracts requiring the Company to purchase any
         security (other than such purchases in the ordinary course of business
         consistent with past practice);

                  (viii) All reinsurance pools pursuant to which the Company has
         assumed reinsurance risks currently in force and all assigned pools in
         which the Company is participating, other than state FAIR plans,
         assigned risk plans, joint underwriting associations and similar
         associations arising from the requirements of state insurance rules and
         regulations;

                  (ix) Each Contract relating to computer software licensing or
         data processing services representing non-terminable future liabilities
         in excess of $50,000;

                  (x) Each Contract (other than Contracts cancelable at will or
         with 30 days' notice, in each case without penalty) involving payments
         of more than $50,000 during its term for the purchase of materials,
         supplies or services;

                  (xi) Each Contract (other than Contracts cancelable at will or
         with 30 days'

                                       25

<PAGE>

         notice, in each case without penalty) which obligates the Company to
         provide services to a third party over a period of more than six months
         or involving an amount or value in excess of $50,000; and

                  (xii) Any power of attorney which is currently effective and
         outstanding, other than powers of attorney which are required by law or
         which have been granted pursuant to requirements of applicable state
         insurance or securities rules and regulations.

                  (b) All of the material Contracts are valid, binding and
enforceable against the parties thereto in accordance with their terms and are
in full force and effect, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). The Company is not, and to the Knowledge of
Seller, no other party thereto is, in or claimed to be in material breach or
material default under any material Contract, and no event (other than the
execution of this Agreement) has occurred which (after notice or lapse of time
or both) would become a material breach or material default under or would
permit modification, cancellation, acceleration or termination of, any material
Contract or result in the creation of any material Encumbrance (other than
Permitted Encumbrances) upon, or any Person obtaining any right to acquire, any
Properties or rights of the Company. There are no unresolved disputes under any
material Contract. Except as set forth in Section 4.21(b) of the Disclosure
Schedule, no material Contract contains any provision providing that any other
party thereto may terminate or cancel the same by reason of the transactions
contemplated by this Agreement.

                  SECTION 4.22. EMPLOYEE BENEFIT MATTERS. The Company has no
employees and has never maintained, contributed to or sponsored any employee
benefit plan, program or arrangement, including, without limitation, any
"employee benefit plan" within the meaning of Section 3(3) of ERISA.

                  SECTION 4.23.  LABOR MATTERS.

                  (a) The Company has never been a party to any collective
bargaining agreement or other labor union contract applicable to persons
formerly employed by the Company. There are no grievances currently outstanding
against the Company with respect to any former employee of the Company, and
there are no unfair labor practice complaints pending against the Company before
the National Labor Relations Board.

                  (b) The Company is not liable for any arrears in withholding
or any Taxes or penalties for any failure to comply with any wage or withholding
laws or regulations relating to any individual.

                  SECTION 4.24. TAXES. Except as set forth in Section 4.24 of
the Disclosure Schedule:

                                       26
<PAGE>

                  (a) All Tax Returns required to be filed after November 1,
1997 in respect of the Company or any affiliated, combined, consolidated,
unitary or similar group of which the Company was or is a member ("RELEVANT
GROUP") that are due, taking into account timely extensions of the filing
period, on or prior to the date hereof have been duly and timely filed in
accordance with all applicable laws and each such Tax Return is correct,
accurate and complete in all material respects. To the Knowledge of Seller, all
Tax Returns required to be filed before November 2, 1997 in respect of Company
or any affiliated, combined, consolidated, unitary or similar group of which the
Company was or is a member that were due, taking into account timely extensions
of the filing period, on or prior to November 1, 1997 have been duly and timely
filed in accordance with all applicable laws and such Tax Returns are correct,
accurate and complete in all material respects. For Taxes due after September 8,
1997 and, to the Knowledge of the Seller, for Taxes due before September 9,
1997, the Company or the member of the Relevant Group has paid, or has made
provision for Taxes (as opposed to any reserve for deferred Taxes to reflect
timing differences between book and Tax income) on its books in accordance with
GAAP for the payment of all Taxes, whether or not yet due and payable and
whether or not disputed, in respect of the periods covered by those Tax Returns
which are due on or before the date hereof.

                  (b) After September 8, 1997 the Company has made, and to the
Knowledge of Seller, prior to September 9, 1997 the Company made, all
withholdings of Taxes required to be made under all applicable federal, state,
local and foreign Tax laws and regulations on or before the date hereof in
connection with payments made to any employee, former employee, creditor,
shareholder, affiliate, customer or supplier, and to the extent required to be
paid, such withholdings have been paid to the respective governmental agencies.

                  (c) There have been made available to Purchaser true and
complete copies of the portions of the Tax Returns, relevant to the Company,
since September 8, 1997, which returns are set forth on Section 4.24 of the
Disclosure Schedule.

                  (d) Except as set forth in Section 4.24 of the Disclosure
Schedule, no deficiencies, adjustments, or changes in assessments for any Taxes
have been proposed, asserted or assessed against the Company. All liabilities in
respect of federal income Taxes of the Company have been finally determined for
all taxable years ended prior to the date hereof, except as set forth in Section
4.24 of the Disclosure Schedule. Except as set forth in Section 4.24 of the
Disclosure Schedule, there is no action, suit, proceeding, audit, investigation
or claim pending or, to the Knowledge of Seller, threatened, in respect of any
Taxes for which the Company may become liable, including as a transferee of the
assets of, or successor to, any entity. All deficiencies proposed as a result of
any audits have been paid or finally settled except as set forth in Section 4.24
of the Disclosure Schedule, and no deficiencies have been proposed in the course
of any pending audit. Except as set forth in Section 4.24 of the Disclosure
Schedule, as to Company's tax years beginning on or after January 1, 1997 and
ending on or before the date hereof, and to Knowledge of Seller as to Company's
tax years beginning before

                                       27

<PAGE>

January 1, 1997, no issue has been raised during the past five years by the
Internal Revenue Service ("IRS") in any audit of the Company or its predecessor
which, by application of similar principles, could be expected to result in a
material proposed deficiency for any period not yet audited or for periods under
audit assuming the Company's future Tax Returns are prepared in a manner
consistent with past practice employed by the Company.

                   (e) Except as set forth in Section 4.24 of the Disclosure
Schedule, since September 8, 1997 the Company has not, and to Knowledge of
Seller prior to September 9, 1997, the Company has not, executed or filed with
the IRS or any other taxing authority any agreement or other document extending,
or having the effect of extending, the period of assessment or collection of any
Taxes for which the Company may be liable.

                   (f) The Company qualifies as an insurance company under the
Internal Revenue Code and neither Seller nor the Company has received any notice
or other communication relating to or affecting such qualification of the
Company as an insurance company under the Internal Revenue Code.

                   (g) Except as set forth in Section 4.24 of the Disclosure
Schedule, from and after September 8, 1997, Company has joined in filing a
consolidated, combined, affiliated, unitary or similar return with Humana and
its affiliates and the Company has not filed or consented to the filing of any
foreign, federal or state consolidated, combined, affiliated, unitary or similar
return with any entity other than Humana and its affiliates.

                   (h) The Company is not a partner in any partnership, joint
venture or other arrangement that is treated as a partnership for Tax purposes
other than certain mandatory state insurance associations and mandatory state
reinsurance pools.

                   (i) Except as set forth in Section 4.24 of the Disclosure
Schedule, there are no material Encumbrances for Taxes upon the assets of the
Company except Encumbrances for Taxes not yet due and payable.

                   (j) Since September 8, 1997, and to the Knowledge of Seller
prior to September 9, 1997, neither Seller nor the Company has filed a consent
pursuant to Section 341(f) of the Internal Revenue Code, or agreed to have
Section 341(f)(2) of the Internal Revenue Code apply to any disposition of a
subsection (f) asset (as defined in Section 341(f)(4) of the Internal Revenue
Code) owned by Seller or the Company.

                   (k) Since September 8, 1997 and to the Knowledge of Seller,
prior to September 9, 1997, the Company has made all payments of estimated Taxes
that are required to be made prior to the date hereof.

                   (l) The Company has not made any payments, nor is it
obligated to make any payments, nor is it a party to any agreement that under
certain circumstances could require it to

                                       28

<PAGE>

make any payments, that are not deductible under Section 280G of the Internal
Revenue Code.

                   (m) None of the Properties of the Company constitutes
tax-exempt bond financed property or tax-exempt use property, within the meaning
of Section 168 of the Internal Revenue Code. The Company is not a party to any
"safe harbor lease" that is subject to the provisions of Section 168(f)(8) of
the Internal Revenue Code as in effect prior to the Tax Reform Act of 1986, or
to any "long-term contract" within the meaning of Section 460 of the Internal
Revenue Code.

                   (n) The Company has not made any accounting method changes,
and, to the Knowledge of Seller, there are no proposed or threatened accounting
method changes of the Company that could reasonably be expected to give rise to
an adjustment under Section 481 of the Internal Revenue Code for periods after
the Closing Date.

                   (o) Except as set forth in Section 4.24 of the Disclosure
Schedule, the Company has not received any written ruling of a taxing authority
related to Taxes or, since its formation, entered into any material written and
legally binding agreement with a taxing authority relating to Taxes except as
regards the extension of any statute of limitations.

                   (p) Except as set forth is Section 4.24 of the Disclosure
Schedule, the Company has no liability for Taxes of any Person other than the
Company (i) under Section 1.1502-6 of the Treasury Regulations (or any similar
provision of state, local or foreign Law), (ii) as a transferee or successor by
operation of law, or (iii) by contract (other than the Tax Sharing Agreement).
Except as set forth is Section 4.24 of the Disclosure Schedule, the Company is
not a party to any Tax allocation or sharing agreement, other than the Tax
Sharing Agreement.

                   (q) Since September 8, 1997 and to the Knowledge of Seller,
prior to September 9, 1997, the Company has not participated in or cooperated
with an international boycott within the meaning of Section 999 of the Internal
Revenue Code.

                   (r) Section 4.24 of the Disclosure Schedule contains a list
of all states, territories and jurisdictions (foreign or domestic) to which any
Tax is properly payable by the Company. There presently exists no unresolved
claim by any taxing authority in a jurisdiction in which the Company does not
file tax returns that it is or may be subject to Tax in that jurisdiction.

                   (s) The annual limitation applicable to such net operating
loss carryforwards under Section 382 of the Internal Revenue Code with respect
to the Section 382 Subgroup which includes the Company, is at least $10 million.

                   (t) The Company has not made any payments under the Tax
Sharing Agreement with respect to the 1999 or 2000 taxable year prior to the
date hereof.

                                       29

<PAGE>

                  SECTION 4.25. AGENTS. To the Knowledge of Seller, all Persons
through whom the Company has placed or sold reinsurance and insurance are duly
licensed (to the extent such licensing is required) to sell or place reinsurance
and insurance in the jurisdictions where they do so on behalf of the Company. No
single agent, broker, intermediary or producer has any underwriting or binding
authority on behalf of the Company, the Company is not a party to any managing
general agency contracts or other similar arrangements (except for the
Management Contract) and the Company is not a party to any fronting or similar
agreement to place or sell reinsurance or insurance for any other Person.

                  SECTION 4.26. ACCOUNTS WITH FINANCIAL INSTITUTIONS. Section
4.26 of the Disclosure Schedule sets forth a list of all safe deposit boxes,
active bank accounts and other time or demand deposits of the Company, together
with the names and addresses of the applicable financial institution or other
depository, the account number and the names of all persons authorized to draw
thereon or who have access thereto.

                  SECTION 4.27. MINUTE BOOKS; STOCK RECORDS; OFFICERS AND
DIRECTORS. The minute books of the Company which have been made available to
Purchaser for its inspection are complete and correct and have been maintained
in accordance with sound business practices. The minute books of the Company
contain accurate and complete records of all meetings held of, and corporate
action taken by (whether by a meeting or by consent actions in lieu of
meetings), the Board of Directors (and any committee thereof) of the Company and
its shareholders since incorporation. The stock records of the Company, which
have been made available to Purchaser for its inspection, are true and complete
in all material respects. Section 4.27 of the Disclosure Schedule sets forth a
true and correct list of the officers and directors of the Company as of the
date of this Agreement.

                  SECTION 4.28. HWCS MANAGEMENT CONTRACT.

                  (a) As of the date hereof, HWCS, is a wholly owned subsidiary
of Seller. Attached hereto as EXHIBIT A is a true and complete copy of the
Management Contract, dated as of January 1, 1996, between the Company and HWCS
(the "MANAGEMENT CONTRACT"). Attached hereto as EXHIBIT B-1 is substantially the
form of Amended and Restated Management Contract to be entered into between the
Company and HWCS on the Closing Date, if HWCS remains an Affiliate of Seller on
the Closing Date, and attached hereto as EXHIBIT B-2 is substantially the form
of Amended and Restated Management Contract to be entered into between the
Company and HWCS upon consummation (if ever) of the sale of capital stock of
HWCS to D. Gene Roberts (as contemplated below) (the form of such contract,
whether Exhibit B-1 or Exhibit B-2 is ultimately executed, is hereinafter
referred to as the "AMENDED AND RESTATED MANAGEMENT CONTRACT"). As of the date
hereof, HWCS or an Affiliate of HWCS, and as of the Closing of the sale of
capital stock of HWCS to D. Gene Roberts, HWCS (i) owns or has, or will own or
have valid and enforceable leases or licenses relating to all of the assets and
Property necessary for it to perform the services required of it under the
Amended and Restated Management Contract,

                                       30

<PAGE>

including, without limitation, any and all computer software or hardware
necessary to render such services (a description of such computer software and
hardware is set forth on Section 4.28(a) of the Disclosure Schedule), (ii) has
or will have employees with the expertise and experience necessary to perform
the services required under the Amended and Restated Management Contract, and
(iii) possesses or will possess all Permits necessary to perform the services
required of it under the Amended and Restated Management Contract. The Company
is not, and to the Knowledge of Seller, HWCS is not, in or claimed to be in
material breach or default under the Management Contract and there are no
unresolved disputes under the Management Contract. On or after the Closing Date,
all of the capital stock of HWCS may be sold to D. Gene Roberts, the current
Executive Director of HWCS, or to another Person reasonably acceptable to the
Purchaser (the "HWCS DIVESTITURE"), provided, that in such HWCS Divestiture,
HWCS shall immediately thereafter: (i) own or have valid and enforceable leases
or licenses relating to all of the assets and Property necessary for it to
perform the services required of it under the Amended and Restated Management
Contract, including, without limitation, any and all computer software or
hardware set forth on Section 4.28(a) of the Disclosure Schedule, (ii) have a
net worth of not less than $5,000,000, (iii) have employees of HWCS with the
expertise and experience necessary to perform the services required of HWCS
under the Amended and Restated Management Contract, and (iv) possess all Permits
necessary to perform the services required of it under the Amended and Restated
Management Contract. Seller will not transfer the capital stock of HWCS until
all of the conditions set forth above are fulfilled in all material respects.

                   (b) HWCS is in compliance in all material respects with (a)
the terms of its certificate or articles of incorporation, its by-laws and any
other charter or organization documents, (b) all laws, statutes, ordinances,
rules, regulations or other legal requirements, whether federal, state, local or
foreign, applicable to HWCS or by which any of its Properties may be bound, (c)
except as set forth in Section 4.28(b) of the Disclosure Schedule, all
applicable licenses, authorizations, orders, writs, judgments, injunctions,
awards, and decrees of any court, the Florida Insurance Department or any other
Governmental Authority, or any arbitrators, and (d) its Permits, except, in the
case of clauses (b) and (d), where the failure to comply would not, individually
or in the aggregate, have a Material Adverse Effect.

                  SECTION 4.29. YEAR 2000.

                  (a) The description of Year 2000 issues contained in Humana's
most recent Form 10-Q, as filed with the Securities and Exchange Commission,
does 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 the light of the circumstances under which they were made, not
misleading as and to the extent relating to the Company, HWCS and their
respective information technology assets.

                  (b) Based on its review and study of Year 2000 issues as
reflected in Humana's Form 10-Q referred to in clause (a) above, Seller
reasonably believes that neither Year

                                       31

<PAGE>

2000 problems nor commercially reasonable and foreseeable remediation costs have
had, or will have, a Material Adverse Effect with respect to the Company.

                  SECTION 4.30. BROKERS. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Seller or the Company.

                  SECTION 4.31. DISCLOSURE. No representation or warranty or
other statement made by Seller in this Article IV or otherwise in this Agreement
or in the Disclosure Schedule contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.

                                    ARTICLE V

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

                  Purchaser hereby represents and warrants to Seller as follows:

                  SECTION 5.01. INCORPORATION AND AUTHORITY. Purchaser is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of New York and has all necessary corporate power and
authority to own, lease and operate its Properties, to conduct its business as
now being conducted, to enter into this Agreement and each other agreement and
instrument required to be executed and delivered by it pursuant hereto, to carry
out its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Purchaser of this Agreement and each other agreement and instrument required to
be executed and delivered by Purchaser pursuant hereto, and the consummation by
Purchaser of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all requisite corporate action, and no other corporate
proceedings on the part of Purchaser are necessary to authorize the foregoing.
This Agreement has been, and at the Closing the other agreements and instruments
required pursuant hereto and to which Purchaser is a party will have been, duly
and validly executed and delivered by Purchaser, and assuming due authorization,
execution and delivery by Seller and Humana of this Agreement and such other
documents, this Agreement and such other documents at the Closing will
constitute the legal, valid and binding obligations of Purchaser enforceable
against Purchaser in accordance with their terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

                  SECTION 5.02. NO CONFLICT. Assuming all consents, approvals,
authorizations,

                                       32

<PAGE>

orders and other actions described in Section 5.03 have been obtained and/or
taken, all filings and other notifications described in Section 5.03 have been
made, and except as may result from any facts or circumstances relating solely
to Seller or Humana, the execution, delivery and performance of this Agreement
by Purchaser, the purchase of the Shares by Purchaser pursuant to this
Agreement, and the consummation by Purchaser of the transactions contemplated
hereby do not and will not (a) violate or conflict with the certificate of
incorporation or by-laws (or other similar applicable documents) of Purchaser,
(b) conflict with or violate any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to Purchaser, or (c)
result in any breach of, or constitute a default (or event which with the giving
of notice or lapse of time, or both, would constitute a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of any Encumbrance on any of the Properties of
Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument relating to such assets or
properties to which Purchaser is a party or by which any of such Properties is
bound or affected, which conflict, violation, breach or default in the case of
clauses (a), (b) and (c) would have, or is reasonably likely to have, a Material
Adverse Effect on the ability of Purchaser to fulfill its obligations to Seller
pursuant to this Agreement, including consummation of the transactions
contemplated by this Agreement.

                  SECTION 5.03. CONSENTS AND APPROVALS. The execution, delivery
and performance of this Agreement and each other agreement and instrument
required to be executed by Purchaser, the purchase of the Shares by Purchaser
pursuant to this Agreement, and the consummation by Purchaser of the
transactions contemplated hereby, do not, and will not, require any consent,
approval, authorization, order or other action by, or filing with or
notification to, any Governmental Authority, except (a) the notification
requirements of the HSR Act and (b) the approval of the Florida Insurance
Department and the New York Insurance Department.

                  SECTION 5.04. ABSENCE OF LITIGATION. No claim, action,
proceeding or investigation is pending against Purchaser or any of its
Affiliates which seeks to materially delay or prevent the consummation of the
transactions contemplated hereby or which would be reasonably likely to
adversely affect or restrict Purchaser's ability to consummate the transactions
contemplated hereby.

                  SECTION 5.05. INVESTMENT PURPOSE. Purchaser is acquiring the
Shares solely for its own account and not with a view to, or for offer or sale
in connection with, any distribution thereof in any transaction which would be
in violation of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

                  SECTION 5.06. BROKERS. Except for John P. Woods, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Purchaser. Purchaser is solely
responsible for the fees and expenses of John P. Woods.

                                       33

<PAGE>

                  SECTION 5.07. DISCLOSURE. No representation or warranty or
other statement made by Purchaser in this Article V or otherwise in this
Agreement or in the Disclosure Schedule contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.

                                   ARTICLE VI

                              ADDITIONAL AGREEMENTS

                  SECTION 6.01. CONDUCT OF BUSINESS PRIOR TO THE CLOSING.

                  (a) Seller covenants and agrees that, between the date hereof
and the Closing Date, it shall cause the Company to (a) conduct its Business in
the ordinary course and consistent with its prior practice, except as described
in Section 6.01(a) of the Disclosure Schedule or except as otherwise
specifically provided in this Agreement, and (b) comply with any and all orders
set forth in Section 4.11 of the Disclosure Schedule.

                   (b) Except as otherwise specifically provided in this
Agreement, Seller covenants and agrees that, prior to the Closing and without
making any commitment on Purchaser's behalf, it will cause the Company (i) to
use all commercially reasonable efforts to preserve substantially intact its
business organization, goodwill, Permits and insurance licenses, (ii) to comply
in all material respects with all laws, statutes, ordinances, rules and
regulations applicable to the Company, (iii) to take all commercially reasonable
steps to preserve the current relationships of the Company with its reinsurance
intermediaries, ceding companies, reinsurers, agents, suppliers, service
providers and other persons with which the Company has significant business
relationships, and (iv) to perform in all material respects its obligations
under all Insurance Policies, Reinsurance Agreements, Contracts and commitments
to which it is a party or by or to which it is bound or subject.

                  (c) Seller covenants and agrees that prior to the Closing
Date, it will cause the Company to maintain its books and records in the usual,
regular and ordinary manner consistent with past practices; to use commercially
reasonable efforts to continue in full force and effect the Insurance Policies
listed in Section 4.18 of the Disclosure Schedule or comparable substitute
policies and will promptly notify Purchaser of any cancellation or non-renewal
of such insurance; and to use commercially reasonable efforts to maintain all of
its Properties in good repair, working order and operating condition (subject
only to ordinary wear and tear).

                  (d) Seller covenants and agrees that it will not allow the
Company to amend, commute, terminate or waive any of its rights under any
Insurance Policies or Reinsurance Agreement pursuant to which the Company has
ceded or transferred any portion of its

                                       34

<PAGE>

obligations or liabilities.

                  (e) Seller covenants and agrees to cause the Company to
commence preparation of and, consistent with past practice and on a timely
basis, if required prior to the Closing Date, file with or submit to the Florida
Insurance Department and any other insurance department or other Governmental
Authority with which the Company is required to make such filings or
submissions, and, if filed prior to the Closing Date, deliver to Purchaser true
and complete copies of, an Annual Statutory Statement for the year ending
December 31, 1999, together with all related notes, exhibits and schedules
thereto and a Quarterly Statutory Statement for each quarter of 2000 ending
prior to the Closing Date, together with all related notes, exhibits and
schedules thereto. All such Annual Statutory Statements and Quarterly Statutory
Statements filed with or submitted to the Florida Insurance Department and any
other insurance department, or regulatory authority (i) shall be prepared from
the books of account and other financial records of the Company, (ii) shall be
filed with or submitted to the Florida Insurance Department, and such other
insurance departments and regulatory authorities, on forms prescribed or
permitted thereby, (iii) shall be prepared in accordance with SAP applied on a
basis consistent with the past practices of the Company, and shall comply on
their respective dates of filing or submission with the Florida Insurance Code
and the laws of such other jurisdictions, (iv) shall present fairly in all
material respects the statutory assets, liabilities, capital and surplus,
results of operations and cash flows of the Company as of the dates thereof or
for the periods covered thereby (subject, in the case of quarterly statements,
to normal estimation of accruals and reserves and normal year-end audit
adjustments and to exclusion of footnotes and other presentation items used in
the preparation of the Annual Statement), and (v) shall not use any accounting
practices that are permitted rather than prescribed by the Florida Insurance
Department.

                  (f) Seller covenants and agrees that, prior to the Closing, it
will not permit the Company to amend its articles of incorporation or by-laws or
to merge or consolidate or sell all or substantially all of its assets (other
than in the ordinary course of trading its investment portfolio consistent with
its investment guidelines and past practice), or obligate itself to do so, with
or into or to any other entity, without the prior written consent of Purchaser.

                  (g) Seller and Buyer agree that, prior to the Closing, the
Company may consummate the transfers of the assets and liabilities of Hallmark
Re Ltd. pursuant to the terms set forth in that certain Assignment and Novation
Agreement entered into as of June 30, 1999, a copy of which has been previously
provided to the Purchaser, and as approved by the Florida Department of
Insurance pursuant to the Consent Order dated December 23, 1999.

                  (h) Except as otherwise specifically permitted by this
Agreement, Seller covenants and agrees that, without the prior written consent
of Purchaser, which shall not be unreasonably withheld or delayed, it will not
permit the Company, prior to the Closing, to:

                  (i) change in any material respect its accounting methods,
         principles or practices, or change in any material respect its
         reinsurance, establishment of reserves,

                                       35

<PAGE>

         investment or claims adjustment policies or practices, except as
         required by SAP as applied by the Florida Insurance Department;

                  (ii) declare, set aside or pay any dividend or other
         distribution (whether in cash, stock, property or any combination
         thereof) in respect of the Shares or any other securities or redeem,
         repurchase or otherwise acquire any equity securities;

                  (iii) revalue any of its Properties, including, without
         limitation, writing off notes or accounts receivable, other than in the
         ordinary course of business consistent with past practice;

                  (iv) establish any bonus, insurance, severance, termination,
         deferred compensation, pension, retirement, profit sharing, stock
         option (including, without limitation, the granting of stock options,
         stock appreciation rights, performance awards, or restricted stock
         awards), stock purchase or other employee benefit plans, or otherwise
         increase the compensation payable or to become payable to any
         directors, officers or employees of the Company (other than plans
         established by, or compensation increases payable by, an Affiliate of
         the Company for which the Company has no liability);

                  (v) adopt or enter into any collective bargaining agreement or
         adopt any "employee benefit plan" within the meaning of Section 3(3) of
         ERISA;

                  (vi) create, incur, assume, maintain or permit to exist any
         Encumbrances on any Property of the Company other than Permitted
         Encumbrances;

                  (vii) create, incur or assume any indebtedness for borrowed
         money, including obligations in respect of capital leases, or guarantee
         any indebtedness for borrowed money or any other obligation of any
         other Person;

                  (viii) pay or discharge any material claim, liability or
         Encumbrance (whether absolute, accrued, contingent or otherwise), or
         waive any right, other than in the ordinary course of business
         consistent with past practice or pursuant to binding contractual
         obligations of the Company in existence on the date hereof;

                  (ix) hire any employees, or engage any agents or consultants,
         except where the engaging of such agents or consultants is required to
         continue operations of the Company in the ordinary course consistent
         with past practices;

                  (x) authorize or make any capital expenditure in excess of an
         aggregate of $50,000;

                  (xi) issue or agree to issue any shares of its capital stock
         or securities exchangeable for or convertible into such capital stock;

                                       36

<PAGE>

                  (xii) become a party to any agreement which, if it existed on
         the date hereof, would be required to be listed in the Disclosure
         Schedule, or, other than in the ordinary course of business and
         consistent with past practice, amend or terminate any existing
         Reinsurance Agreement or Insurance Policy or, other than in the
         ordinary course of business and consistent with past practice, amend or
         terminate any other Contract;

                  (xiii) dispose of or acquire any assets other than in the
         ordinary course of business and consistent with past practice in excess
         of $100,000;

                  (xiv) make any investments in non-investment grade securities;

                  (xv) abandon, modify, waive, terminate or otherwise change any
         of the insurance licenses described in Section 4.01 of the Disclosure
         Schedule or Permits of the Company, except as may be required by law or
         by any applicable insurance or other regulatory authority;

                  (xvi) enter into any commutation of any Insurance Policy and
         Reinsurance Agreement, except for commutation of the Citrus Insurance
         Fund in an amount not to exceed $6,800,000;

                  (xvii) make any loan, advance or capital contribution to or
         investment by the Company in any Person, except in the ordinary course
         of business and consistent with past practice;

                  (xviii) enter into any transaction or commitment or any
         Contract between the Company on the one hand, and Seller or any of its
         Affiliates on the other hand, except for the Amended and Restated
         Management Contract and for those Contacts required for operation of
         the Company in the ordinary course which will be settled in full prior
         to Closing in the manner set forth in Section 6.11 of this Agreement;

                  (xix) consider or adopt a plan of complete or partial
         liquidation, dissolution, rehabilitation, restructuring,
         recapitalization, re-domestication or other reorganization;

                   (xx) enter into any joint venture, partnership, managing
         general agency or similar arrangement with any Person, other than the
         Amended and Restated Management Contract;

                  (xxi) settle or compromise any claims against the Company
         (other than the payment of claims on Insurance Policies or under
         Reinsurance Agreements, in each case in the ordinary course of business
         consistent with past practice) involving payments by the Company or
         having a value, in the aggregate, of $100,000;

                                       37

<PAGE>

                  (xxii) take any action or course of action inconsistent with
         its compliance with the covenants and agreements contained in this
         Agreement;

                  (xxiii) take or agree to commit to take any action that would
         make any representation or warranty of Seller contained herein
         inaccurate in any material respect at the Closing or omit to take any
         action necessary to prevent any such representation or warranty from
         being inaccurate in any material respect at such time; or

                  (xxiv) transfer to or from Seller or its Affiliates any
         Property relating to the Business except as specifically authorized by
         this Agreement.

                  SECTION 6.02. ACCESS TO INFORMATION. From the date hereof
until the Closing, upon reasonable notice, Seller shall and shall cause its and
the Company's officers, directors, employees, auditors and agents to, (i) afford
the officers, employees and authorized agents and representatives of Purchaser
reasonable access, during normal business hours and upon reasonable advance
notice, to the offices, properties, books and records of the Company and to
Seller's, its Affiliates and the Company's respective officers, employees,
agents, accountants and actuaries in order to make such investigation of the
Company and its Business, Properties and operations as it deems necessary, and
(ii) furnish to the officers, employees and authorized agents and
representatives of Purchaser such additional financial and operating data and
other information regarding the assets, Properties, goodwill and Business of the
Company as are available to Seller, its Affiliates or the Company, or as may be
prepared or compiled by Seller, its Affiliates or the Company without undue
burden or expense as Purchaser may from time to time reasonably request.
Purchaser agrees that said investigation shall be conducted in such a manner as
not to interfere unreasonably with the operation of the Company, Seller or its
Affiliates. No investigation or access to information pursuant to this Section
6.02 shall affect any representation or warranty made by Seller to Purchaser
hereunder or otherwise affect the rights and remedies available to Purchaser
hereunder.

                  SECTION 6.03. BOOKS AND RECORDS.

                  (a) Purchaser agrees that it shall preserve and keep all
material books and records of the Company for the period up to and including the
Closing Date in the possession of Purchaser or the Company for a period of at
least seven years following the Closing Date. After such seven-year period,
before Purchaser or the Company shall dispose of any of such books and records,
at least 90 calendar days' prior written notice to such effect shall be given by
Purchaser to Seller, and Seller shall be given an opportunity, at its cost and
expense, to remove and retain all or any part of such books and records as
Seller may select. During such seven-year period, duly authorized
representatives of Seller shall, upon reasonable notice, have access thereto
during normal business hours to examine, inspect and copy such books and
records, with any out-of-pocket costs being borne by Seller, upon providing to
Purchaser in reasonable detail the basis upon which such requested books and
records are relevant to the inquiry, and such access shall be limited to such
relevant books and records.

                                       38

<PAGE>

                  (b) If, in order properly to prepare documents required to be
filed with Governmental Authorities or their financial statements, it is
necessary that any party hereto or any successors be furnished with additional
information relating to the Company or the Business, and such information is in
the possession of the other party hereto, such party agrees to use all
reasonable efforts to furnish such information to such other party, at the cost
and expense of the party being furnished such information upon the furnishing by
the requesting party the reason such information is necessary, and excluding
from Purchaser's and from Seller's obligations any information which is subject
to a confidentiality agreement with any third Person and which cannot be given
after reasonable efforts (including the giving of such commitments as to
confidentiality the requesting party may need to give) have been used by the
party which is subject to the confidentiality agreement to secure the consent of
such third Person to the use or disclosure of such information.

                  SECTION 6.04. REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS.

                  (a) Each party hereto will use all reasonable efforts to
obtain all authorizations, consents, orders and approvals of all Governmental
Authorities that may be or become necessary for its execution and delivery of,
and the performance of its obligations pursuant to, this Agreement and, as to
Purchaser, it shall use its reasonable best efforts to obtain such consents and
approvals from the Florida Insurance Department and the New York Insurance
Department as may be necessary for it to reinsure all or a portion of the
Company's Business with one or more Affiliates of Purchaser (including, without
limitation, any required approvals of the Florida Insurance Department and New
York Insurance Department), and will cooperate fully with the other parties in
promptly seeking to obtain all such authorizations, consents, orders and
approvals. Each party hereto agrees to make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby as soon as reasonably practicable after the
date hereof and to supply promptly any additional information and documentary
material that may be requested pursuant to the HSR Act. Purchaser agrees to make
its initial filing pursuant to Florida Insurance Code Section 628.461 (the "FORM
A FILING") and pursuant to New York Insurance Law Section 1603 (the "NY FILING")
within fifteen (15) Business Days of the date hereof, and to promptly commence
all necessary actions to obtain an order from the Florida Insurance Department
(y) approving the Amended and Restated Management Agreement and (z) discharging
or modifying the Consent Orders of the Florida Insurance Department dated
September 8, 1997 and December 23, 1999 (collectively, the "CONSENT ORDERS") to
permit the transactions contemplated herein, to fully and unconditionally
release and discharge the Company, Seller, Humana and any of their Affiliates
from all obligations and liabilities under such Consent Order and any other
orders in respect of the Company. Purchaser further agrees to supply promptly
any additional information and documentary material that may be requested by the
Florida or New York Insurance Departments in connection with such filing and
proceedings. Purchaser agrees to provide draft of the Form A Filing and NY
Filings to Seller for its review and to consult with Seller relating to any
issues arising as a result of Seller's review, prior to the submission by
Purchaser of the Form A Filing

                                       39

<PAGE>

to the Florida Insurance Department and the NY Filing to the New York Insurance
Department; provided that such consultation does not delay the timely filing of
either the Form A Filing, the NY Filing or any amendments or supplements thereto
and it being agreed that the final determination as to the content of such
filings or any amendments or supplements thereto shall remain with Purchaser.
Purchaser agrees to provide Seller with copies of the Form A Filing and the NY
Filing and each amendment or supplement thereto in final form upon the
submission thereof to the Florida Insurance Department and New York Insurance
Department, respectively. Seller and Purchaser each agree to promptly make all
other appropriate filings with the Florida Insurance Department or the New York
Insurance Department and such other filings as may be required under the
insurance laws of any other state or jurisdiction in which the Company does
business. The parties hereto will not knowingly take any action that will have
the effect of materially delaying, impairing or impeding the receipt of any
required approvals.

                  (b) Purchaser and Seller will use all their respective
reasonable efforts to assist one another in obtaining any consents referred to
in Sections 9.01(d) and 9.02(d) and any consents referred to in Sections 9.01(e)
and 9.02(e), including, without limitation, providing to such parties such
financial statements and other financial information with respect to Purchaser
as such parties may reasonably request, if and to the extent such information
may reasonably be required; PROVIDED, HOWEVER, that neither Purchaser nor Seller
shall be obligated with respect to such assistance (i) to expend any funds
except the payment of the fees and expenses of any applicable attorneys,
consultants or other advisors retained by it and applicable filing fees and
other costs required by Governmental Authorities, or (ii) to take any actions
with respect to their respective businesses or the Business of the Company
which, in its reasonable judgement, is materially adverse.

                  SECTION 6.05. NO SOLICITATION OF EMPLOYEES. For a period of
18 months following the Closing and other than through ordinary help-wanted
advertising, (a) Seller and its Affiliates shall not, directly or indirectly,
actively solicit or induce any employee of HWCS to leave such employment and
become an employee of Seller or its Affiliates and (b) Purchaser and the Company
shall not, directly or indirectly, actively solicit or induce any employee of
Seller or any Affiliate of Seller (other than HWCS) to leave such employment and
become an employee of the Purchaser or any of its Affiliates; PROVIDED, HOWEVER,
that nothing in this Section 6.05 shall prohibit Seller or any of its Affiliates
or the Purchaser or any of its Affiliates from employing any person who contacts
them on his or her own initiative and without any direct or indirect
solicitation by Seller or any of its Affiliates or Purchaser or any of its
Affiliates, as the case may be.

                  SECTION 6.06. NO SOLICITATION OF OFFERS, ETC. Neither of
Seller nor Humana shall, nor shall it permit any of their respective
subsidiaries to, nor shall they authorize or permit any of their respective
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by them or any of their
subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action designed
to facilitate, any inquiries or the making of any

                                       40

<PAGE>

proposal which constitutes or is likely to lead to any Acquisition Proposal (as
defined below) or (ii) participate in any discussions or negotiations regarding
any Acquisition Proposal. Without limiting the foregoing it is understood that
any violation of the restrictions set forth in the preceding sentence by any
director or officer of any of Humana, Seller, the Company or any of their
respective Affiliates, or any investment banker, financial advisor, attorney,
accountant or other representative of Humana, Seller, the Company or any of
their respective Affiliates, whether or not acting on behalf of Humana, Seller,
the Company or any of their respective Affiliates, shall be deemed a breach of
this Section 6.06 by Seller. For purposes of this Agreement, "ACQUISITION
PROPOSAL" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of a business that constitutes 15% or
more of the net revenues, net income or assets of the Company, or 15% or more of
any class of equity securities of the Company, or any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company, other than the transactions contemplated by
this Agreement.

                  SECTION 6.07. FEES AND EXPENSES. Except as otherwise provided
in this Agreement, all costs and expenses, including, without limitation, fees
and disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred. All expenses incurred by the Company in connection with
this Agreement for services rendered or costs incurred prior to the Closing,
including, without limitation, expenses and fees of counsel, investment bankers
and other advisors engaged by Company, Humana or Seller prior to the Closing,
shall be borne solely by Seller.

                  SECTION 6.08. INVESTMENT PORTFOLIO. Prior to the Closing Date,
Seller shall update the Investment Portfolio as of the end of each month and
shall deliver the updated Investment Portfolio to Purchaser within ten (10)
Business Days of the end of such month.

                  SECTION 6.09. NOTICE OF CERTAIN MATTERS.

                  (a) Seller covenants and agrees to give prompt notice in
writing to Purchaser of: (i) any information that indicates that any
representation or warranty of Seller contained herein was not true and correct
as of the date hereof or will not be true and correct in any material respect as
of the Closing Date, (ii) the occurrence of any event which will result, or has
a reasonable prospect of resulting, in the failure to satisfy a condition
specified in Article IX hereof, (iii) any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement, (iv) any
change in the officers or directors of the Company, (v) any notices or
communication received from the Florida Insurance Department or the New York
Insurance Department, and (vi) any fact, condition or change that, individually
or in the aggregate, has resulted or is reasonably likely to result in a
Material Adverse Effect, with respect to Seller or the Company.

                                       41

<PAGE>

                  (b) Seller covenants and agrees to (i) promptly advise
Purchaser of any fact, condition or change that, individually or in the
aggregate, has resulted or is reasonably likely to result in a Material Adverse
Effect on the Company and (ii) notify Purchaser of any emergency or any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated) or adjudicatory proceedings
involving any Property of the Company, and will keep Purchaser fully informed of
such events and permit Purchaser's representatives reasonable access to all
materials prepared in connection therewith in accordance with the terms set
forth in Section 6.02.

                  (c) Purchaser covenants and agrees to give prompt notice in
writing to Seller of: (i) any information that indicates that any representation
or warranty of Purchaser contained herein was not true and correct in any
material respect as of the date hereof or will not be true and correct in any
material respect as of the Closing Date, (ii) the occurrence of any event which
may make the satisfaction of the conditions in Section 9.01 impossible or
unlikely; (iii) any notice or other written communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement; (iv) any
notices or communications received from the Florida Insurance Department or the
New York Insurance Department; and (iv) any fact, condition or change that,
individually or in the aggregate, has resulted or is reasonably likely to result
in a Material Adverse Effect with respect to Purchaser.

                  (d) The giving of any such notice under this Section 6.09 or
the providing of the financial statements contemplated by Section 6.10 shall in
no way change or modify Seller's or Purchaser's representations and warranties
or the conditions to any party's obligations contained herein or otherwise
affect the remedies available to Purchaser or Seller hereunder.

                  SECTION 6.10. INTERIM FINANCIAL STATEMENTS. Seller shall, as
soon as available, but no later than forty-five (45) days after the end of the
relevant month or quarter, as the case may be, deliver promptly to Purchaser any
and all final quarterly financial statements for the Company, audited or
unaudited, prepared for the management of the Company after the date of this
Agreement and prior to the Closing Date. In addition, Sellers will deliver to
Purchaser copies of the audited 1999 Annual Statutory Statement as soon as they
have been delivered by the Company's Auditors.

                  SECTION 6.11. AFFILIATE AGREEMENTS; INTERCOMPANY ACCOUNTS.

                  (a) Except as set forth in Schedule 6.11(a) hereto, Seller
shall cause all intercompany accounts receivable or payable (whether or not
currently due or payable) between (a) the Company, on the one hand, and (b)
Seller or any of its Affiliates (other than the Company), or any of the officers
or directors of Seller and any of its Affiliates, on the other hand, to be
settled in full (without any premium or penalty) at or prior to the Closing.
Within fifteen (15) Business Days prior to the Closing, Seller shall prepare and
deliver to Purchaser a

                                       42

<PAGE>

preliminary statement setting out in reasonable detail the calculation of all
such intercompany account balances as of the Closing based upon the latest
available financial information as of such date. Seller shall provide Purchaser
with supporting documentation verifying the underlying intercompany charges and
transactions. If Purchaser disagrees with the calculation of such intercompany
balances, Purchaser may, within ten (10) Business Days prior to the Closing
Date, deliver a notice to Seller disagreeing with such calculation and setting
forth Purchaser's calculation of such amount. If Purchaser and Seller are unable
to resolve such disagreement within five (5) Business Days thereafter, such
disagreement shall be resolved by independent accountants of nationally
recognized standing reasonably satisfactory to Purchaser and Seller, whose
determination shall be final and conclusive; provided that such dispute shall
not delay the Closing unless the amount in controversy would have a Material
Adverse Effect on the Company or Seller if not resolved on or before the Closing
Date (which when determining whether the matter will have a Material Adverse
Effect, there shall be taken into consideration the fact that such dispute will
be of temporary duration until finally resolved by the selected accounting
firm).

                  (b) All Affiliate Agreements shall be terminated and
discharged without any further liability or obligation thereunder effective at
the Closing, upon terms and pursuant to instruments reasonably satisfactory to
Purchaser and Seller, unless otherwise noted on Section 6.11(b) of the
Disclosure Schedule.

                  SECTION 6.12. COMPANY OBLIGATIONS. Seller agrees that in each
instance in this Agreement where the Company is obligated to act or refrain from
acting under this Agreement during the period prior to the Closing, Seller shall
cause the Company to fulfill such obligations.

                  SECTION 6.13. FURTHER ACTION. Each of the parties hereto shall
execute and deliver such documents and other papers and take such further
actions as may be reasonably required to carry out the provisions hereof and
give effect to the transactions contemplated hereby.

                  SECTION 6.14. COMPLIANCE WITH CONDITIONS. Each party hereto
agrees to cooperate fully with each other party, and shall use its reasonable
best efforts to cause the conditions precedent for which such party is
responsible to be fulfilled. Each party further agrees to use its reasonable
best efforts, and act in good faith, to consummate this Agreement and the
transactions contemplated hereby as promptly as possible.

                                   ARTICLE VII

                                EMPLOYEE MATTERS

                  SECTION 7.01. PURCHASER. Either as a result of the
transactions contemplated herein or otherwise, Purchaser shall neither adopt,
become a sponsoring employer of, and Purchaser shall have no obligations,
responsibility or liabilities under, any employee benefit

                                       43

<PAGE>

plans, programs, arrangements, maintained, sponsored or contributed to (whether
currently or in the past) by the Company, Seller or Humana. Either as a result
of the transactions contemplated herein or otherwise, Purchaser shall not employ
or engage in any manner, and Purchaser shall have no obligations, responsibility
or liabilities to or with respect to, any individual who is or was an employee
or service provider of or to the Company, Seller or Humana (including but not
limited to any individual who currently provides or previously provided services
to the Company pursuant to an arrangement with any management company or similar
entity).

                                  ARTICLE VIII

                                   TAX MATTERS

                  SECTION 8.01. INDEMNITY.

                  (a) Seller agrees to indemnify and hold harmless the Purchaser
and the Company against (i) all Taxes of the Company with respect to any period
or portion thereof that ends on or before the Closing Date, (ii) all Taxes with
respect to any period or portion thereof that begins on or before the Closing
Date which relate to a Tax Return which is filed on a combined, consolidated,
unitary or similar group basis where the Company is or was a member, (iii) all
Taxes imposed on the Seller or any subsidiary or Affiliate of the Seller (other
than the Company), (iv) amounts in respect of Taxes for Pre-Closing Periods for
which the Company may be liable for the Taxes of a Person other than the Company
under Section 1.1502-6 of the Treasury Regulations or any comparable provision
of State, local or foreign law; or as a transferee or successor, by operation of
law or by contract, pursuant to Section 381 of the Internal Revenue Code; or
pursuant to a Tax allocation or sharing agreement, (v) all Taxes imposed as a
result of the Company or any Subsidiary ceasing to be a member of a combined,
consolidated, unitary or similar group and all Taxes imposed as a result of any
transfer of any Subsidiary on or before the Closing Date, (vi) any Tax arising
directly or indirectly from any breach of any representation or warranty of
Seller or Humana contained in Section 4.24 of this Agreement as if such
representation or warranty were made on and as of the Closing Date (other than
any representation or warranty which is not stated to be "as of the date hereof"
and which is specific as to the date when made), without giving effect to any
supplement to the Disclosure Schedule or from any breach of a representation or
a covenant set out in this Article VIII of this Agreement, (vii) all Taxes
(including interest and penalties) imposed on the Company relating to its
acquisition of assets from the Florida Agri-Business and Industries Self
Insurers Fund ("FA&I"), the Florida Business Mutual Insurance Company ("FBM"),
the Florida Builders & Employers Mutual Insurance Company ("FB&E") and Florida
Automobile Dealers Self Insurers Fund ("FADF") and any similar entity to which
the Company is the successor of such entity's liabilities and assets, and (viii)
reasonable liabilities or costs (including legal expenses) resulting from the
foregoing (except as otherwise provided in Section 8.04(b)). Purchaser shall be
responsible for, and hereby agrees to indemnify and hold harmless Seller and its
Affiliates against, Taxes in respect of the Company for which the Purchaser is
not eligible for

                                       44

<PAGE>

indemnification pursuant to the first sentence hereof. Nothing in this Section
8.01 shall be interpreted as requiring the Purchaser to make payments of any
Taxes to any taxing authority before the Closing Date.

                  (b) In the case of Taxes that are payable with respect to a
taxable period (a "Straddle Period") that begins before the Closing Date and
ends after the Closing Date (excluding any such Taxes that are taken into
account in allocating liabilities under Section 8.07), the portion of any such
Tax that is allocable to the relevant portion of the period shall be: (i) in the
case of Taxes that are either (x) based upon or related to income or receipts or
(y) imposed in connection with any sale or other transfer or assignment of
property (real or personal, tangible or intangible) (other than conveyances
pursuant to this Agreement, as provided under Section 8.07), deemed equal to the
amount which would be payable if the taxable period began or ended on the
Closing Date, and (ii) in the case of Taxes imposed on a periodic basis with
respect to the assets of the Company or otherwise measured by the level of any
item, deemed to be the amount of such Taxes for the entire period (or, in the
case of such Taxes determined on an arrears basis, the amount of such Taxes for
the immediately preceding period) multiplied by a fraction the numerator of
which is the number of calendar days in the portion of such period ending on the
Closing Date and the denominator of which is the number of calendar days in the
entire period.

                  SECTION 8.02. RETURNS AND PAYMENTS.

                  (a) Seller shall cause the Company to prepare and timely file
or otherwise furnish to the appropriate party (or cause to be prepared and filed
or so furnished) in a timely manner all Tax Returns with respect to the Company
that are due (taking into account all available extensions) on or before the
Closing Date and all Tax Returns with respect to the Company which are required
to be filed on a combined, consolidated, unitary or similar group basis for any
tax period of the Company that ends on or before the Closing Date, which returns
shall be prepared in a manner consistent with past practice employed by the
Company. Purchaser shall prepare and timely file (or cause the Company to
prepare and timely file) all Tax Returns in respect of the Company that are not
required to be, or caused to be, prepared and filed by Seller hereunder. Tax
Returns prepared by Purchaser for any Straddle Period or for any taxable period
that ends on or prior to the Closing Date shall be prepared in a manner
consistent with past practices employed by Seller (except to the extent counsel
for Purchaser determines there is no reasonable basis in law therefor). With
respect to any Tax Return required to be prepared by Purchaser hereunder and as
to which an amount of Tax is allocable to Seller under Section 8.01(b),
Purchaser shall provide Seller and its authorized representatives with a copy of
such completed Tax Return (with which Purchaser will make available supporting
schedules and information), and a statement and supporting schedules certifying
the amount of Tax shown on such Tax Return that is allocable to Seller pursuant
to Section 8.01(b), at least 20 days prior to the due date (including any
extension thereof) for the filing of such Tax Return, and Seller and its
authorized representatives shall have the right to review such Tax Return and
statement prior to the filing of such Tax Return. Seller and Purchaser agree to
consult and to attempt in good faith to resolve any issues arising as a result
of the review of such Tax Return and statement by Seller

                                       45

<PAGE>

or its authorized representatives; provided that such consultation does not
delay the timely filing of the Tax Return. In the event of a dispute, the party
that is responsible hereunder for the greater amount of Taxes, taking into
account on a net present value basis all open taxable periods affected by the
issue (including future periods in the case of recurring issues), shall have the
right to make the final determination as to any such disputed issue.

                  (b) Seller shall pay or cause to be paid to the appropriate
Tax authority when due and payable all Taxes that are required to be reported on
Tax Returns which are required to be filed by Seller pursuant to subsection (a)
but subject to the right of Seller to be paid amounts in respect of Taxes and to
be indemnified by the Purchaser pursuant to Section 8.01(a). From and after the
Closing Date, the Purchaser shall pay or cause to be paid to the appropriate tax
authority when due and payable all Taxes which accrue with respect to the
Company for any other taxable period (subject to its right of indemnification
from Seller for the Pre-Closing Date portion of any Tax period that includes the
Closing Date pursuant to Sections 8.01(a) and (b)).

                  SECTION 8.03. REFUNDS.

                  Any refunds received by Purchaser or the Company (or any
successor to any of the foregoing) with respect to Taxes of the type for which
Seller is responsible under this Agreement or otherwise (specifically including,
without limiting the kind or scope, refunds, if any, from the current audits of
FA&I, the Company and Humana) shall be for the account of Seller, and Purchaser
shall pay over or cause to be paid over to Seller any such refund or the amount
of any such benefit within ten (10) Business Days of the receipt thereof (in the
case of such a refund) or entitlement thereto (in the case of such an
entitlement). Purchaser shall, if Seller reasonably so requests, cause the
relevant entity to file (including filing in Company, White Mountains, FA&I,
FBM, FB&E & FADF or Purchaser or their affiliate's names, as appropriate) for
any refunds, or equivalent amounts to which Seller is entitled under this
Section 8.03. Purchaser shall permit Seller to control the prosecution of any
such refund claim, and shall cause the relevant entity to authorize by
appropriate power of attorney such persons as Seller shall designate to
represent such entity with respect to such refund claim and Seller shall
reimburse Purchaser for all its reasonable out-of-pocket expenses in connection
therewith, provided that after good faith efforts to resolve any disputes, to
the extent there is any disputed issue with respect to the prosecution of any
such refund claim, control of that issue shall be determined as if the refund
claim were a Tax Return for the purposes of the last sentence of Section
8.02(a). Seller shall pay over to Purchaser any refunds of Taxes for which
Purchaser is responsible under Section 8.02(a) that may be received by Seller or
any of its Affiliates (other than the Company). Notwithstanding anything herein
to the contrary, to the extent any refund is attributable to the carryback of
losses or credits arising in a taxable period beginning after the Closing Date
(the claim for which refund shall be prepared and pursued at Purchaser's
expense), such refund shall be for the account of and belong to Purchaser.

                  SECTION 8.04. TAX CONTESTS.

                                       46

<PAGE>

                  (a) After the Closing, Purchaser shall reasonably promptly
after becoming aware notify Seller in writing of the commencement of any Tax
audit or administrative or judicial proceeding and shall also separately notify
Seller in writing of any demand or claim on Purchaser or the Company which, if
determined adversely to the taxpayer or after the lapse of time would be grounds
for indemnification by Seller under this Article VIII. Such notice shall contain
factual information (to the extent known to Purchaser or the Company) describing
the asserted Tax liability in reasonable detail and shall include copies of any
notice or other document received from any taxing authority in respect of any
such asserted Tax liability. If Purchaser fails to give Seller reasonably prompt
notice of an asserted Tax liability as required by this Section 8.04, then (i)
if Seller is precluded by the failure to give reasonably prompt notice from
contesting the asserted Tax liability in both the administrative and judicial
forums, then Seller shall not have any obligation to indemnify for any loss or
damage arising out of such asserted Tax liability, and (ii) if Seller is not so
precluded from contesting but such failure to give reasonably prompt notice
results in an actual detriment to Seller, then any amount which Seller is
otherwise required to pay Purchaser pursuant to this Article VIII with respect
to such liability shall be reduced by the amount of such detriment.

                  (b) Seller, promptly after receiving notice, may elect to
direct, through counsel of its own choosing and at its own expense, any audit,
claim for refund and administrative or judicial proceeding involving any
asserted liability with respect to which indemnity may be sought against Seller
under this Article VIII (any such audit, claim for refund or proceeding relating
to an asserted Tax liability are referred to herein collectively as a
"CONTEST"). If Seller elects to direct the Contest of an asserted Tax liability,
Purchaser shall cooperate in all reasonable respects and shall cause the Company
or its successor to cooperate in all reasonable respects, at Seller's expense,
in each phase of such Contest. If Seller does not either reasonably promptly
give notice to direct the Contest or commence the direction of the Contest or if
it contests its obligation to indemnify under Section 8.01, Purchaser or the
Company may pay, compromise or contest, at its own expense, such asserted
liability without waiving any of its rights to indemnification hereunder.
However, in such case, neither Purchaser nor the Company may settle or
compromise any asserted liability over the objection of Seller; provided,
however, that Seller's consent to settlement or compromise shall not be
unreasonably withheld or delayed. In any event, each of the Purchaser (or the
Company) and Seller may participate, at its own expense, in the Contest. If
Seller chooses to direct the Contest, Purchaser shall promptly empower and shall
cause the Company or its successor promptly to empower (by power of attorney and
such other documentation as may be appropriate) such representatives of Seller
as Seller may designate to represent Purchaser or the Company or its successor
in the Contest insofar as the Contest involves an asserted Tax liability for
which Seller would be liable under this Article VIII, provided that Seller shall
not, without Purchaser's consent, which shall not be unreasonably withheld or
delayed, (x) agree to any settlement with respect to any Tax if such settlement
would likely materially adversely affect the future Tax liability of Purchaser
or the Company for any periods ending after the Closing Date other than through
the use of losses or credits arising in periods or portions thereof ending on or
prior to the Closing Date or (y) agree to any settlement of such claim or cease
to defend against such claim if, pursuant to or as a result

                                       47

<PAGE>

of such settlement or cessation, injunctive or other equitable relief would be
imposed against Purchaser or the Company. If, with respect to any proposed
settlement referred to in clause (x) of the previous sentence, Seller proposes
in good faith to settle a claim, suit, action or proceeding with respect to any
Tax, which settlement offer is accepted by the relevant taxing authority,
Purchaser may elect to continue to contest such claim, suit, action or
proceeding; provided that notwithstanding how such matter is ultimately settled
or decided, the liability of Seller (including tax, penalty, interest and legal
fees and other expenses) with respect to such claim, suit, action or proceeding
shall be no greater than the amount which would have been payable if Purchaser
had consented to the settlement proposed by Seller.

                  (c) Purchaser shall have the sole obligation and right to
direct, at its own expense, a Contest regarding any Tax Return relating to the
Company for any taxable period commencing after the Closing Date; provided,
however, that Purchaser shall advise and consult with Seller regarding the
status of any such Contest that involves the Company and provided further that,
without the prior written consent of Seller (which shall not be unreasonably
withheld or delayed), and except as provided in Section 8.04(b), Purchaser shall
not (i) make any election, change any annual accounting period or adopt or
change any accounting method if any such election, adoption or change would have
the effect of increasing the tax liability of Seller in any tax period or
portion thereof ending on or before the Closing Date, or (ii) file any amended
return, enter into any closing agreement, settle any tax claim or assessment
relating to the Company, surrender any right to claim a refund of Taxes, consent
to any extension or waiver of the limitation period applicable to any tax claim
or assessment relating to the Company or take any action, if any such amendment,
agreement, settlement, surrender, consent or other action would have the effect
of increasing the tax liability of Seller in any tax period or portion thereof
ending on or before the Closing Date, except to the extent Seller is to be fully
paid or reimbursed for, or indemnified by Purchaser against, any such increase
under Sections 8.05 or 11.02 of this Agreement, or otherwise.

                  (d) Regardless of whether a Contest is commenced, if Seller
becomes aware of the commencement of any Tax audit or administrative or judicial
proceeding which could result in any liability for which Seller has agreed to
indemnify Purchaser or the Company pursuant to the provisions of Section
8.01(a), Seller shall reasonably promptly so inform Purchaser in writing (if it
has not previously done so).

                  SECTION 8.05. CERTAIN AUDIT ADJUSTMENTS.

                  (a) If an audit adjustment, claim for refund or amended return
("Adjustment"), after the date hereof shall both increase a Tax liability which
is allocated to Seller under Section 8.01 or otherwise the responsibility of
Seller (or reduce losses or credits otherwise available to Seller) for a period
or portion thereof ending on or before the Closing Date and decrease a Tax
liability which is allocable to Purchaser for a period or portion thereof ending
after the Closing Date, then, when and to the extent that Purchaser (or the
Company) derives a benefit from such decrease (through a reduction of Taxes,
refund of Taxes paid or credit against

                                       48

<PAGE>

Taxes due), Purchaser shall promptly pay to Seller an amount equal to the amount
of such refund, reduction or credit (unless Seller has previously been
compensated for such benefit under this Article VIII). Similarly, if an
Adjustment shall both decrease a Tax liability which is allocated to Seller
under this Section 8.05 or otherwise is the responsibility of Seller for a
period or portion thereof ending on or before the Closing Date and increase the
Tax liability which is allocable to Purchaser (or reduce losses or credits
otherwise available to Purchaser) for a period or portion thereof ending after
the Closing Date, then, when and to the extent that Seller or its Affiliate
derives a benefit from such decrease (through a refund or reduction of Taxes
paid or credit against Taxes due), Seller shall promptly pay to Purchaser an
amount equal to the amount of such refund, reduction or credit. In the event
that a benefit derived from an increase in a Tax liability allocable to either
Purchaser or Seller pursuant to an Adjustment is negated due to a subsequent
Adjustment or net operating loss carryback after either Purchaser or Seller has
paid such benefit to the other party, as the case may be, such benefit shall be
repaid to the original payor, subject to return to such other party if and when
the benefit again becomes available.

                  SECTION 8.06. COOPERATION AND EXCHANGE OF INFORMATION.

                  Seller and Purchaser will provide each other with such
cooperation and information as either of them reasonably may request of the
other in filing any Tax Return, amended return or claim for refund, determining
a liability for Taxes or a right to a refund of Taxes or participating in or
conducting any audit or other proceeding in respect of Taxes. Such cooperation
and information shall include providing copies of relevant Tax Returns or
portions thereof, together with accompanying schedules and related work papers
and documents relating to rulings or other determinations by taxing authorities,
but in no event shall either party be required to disclose to the other party
any information relating to its operations other than the Company. Seller and
Purchaser shall make their employees available on a mutually convenient basis to
provide explanations of any documents or information provided hereunder. Seller
and Purchaser will retain all Tax Returns, schedules and work papers and all
material records or other documents relating to Tax matters of the Company for
its taxable period first ending after the Closing Date and for all prior taxable
periods and future federal income tax returns to the extent relevant to Sections
8.10(d) and 8.10(e) until the later of: (i) the expiration of the statute of
limitations of the taxable periods to which such returns and other documents
relate, without regard to extensions except to the extent notified by the other
party in writing of such extensions for the respective Tax periods; or (ii) six
years (or such longer period as needed for purposes of Section 8.10(d) or
8.10(e)) following the due date (without extension) for such returns. After such
time, before either Seller or Purchaser shall dispose of any of such books and
records, at least ninety calendar days prior written notice to such effect shall
be given to the other party, and such other party shall be given an opportunity,
at its cost and expense, to remove and retain all or any part of such books and
records as such party may select; provided, however, that in no event shall
either party be required to disclose to the other party any information relating
to its operations other than the Company. Any information obtained under this
Section 8.06 shall be kept confidential, except as may be otherwise necessary in
connection with the filing of returns or claims for refund or in conducting an
audit or other proceeding.

                                       49
<PAGE>

                  SECTION 8.07. CONVEYANCE TAXES.

                  Seller agree to assume liability for and to hold Purchaser
harmless against any sales, use, transfer, stamp, stock transfer, real property
transfer or gains, and value added taxes, any transfer, registration, recording
or other fees in the nature of Taxes incurred as a result of the transactions
contemplated hereby, and shall file such applications and documents as shall
permit any such Tax to be assessed and paid on or prior to the Closing Date in
accordance with any available pre-sale filing procedure.

                  SECTION 8.08. FIRPTA CERTIFICATE.

                  Sellers shall deliver or cause to be delivered to Purchaser on
the Closing Date a FIRPTA Certificate duly executed by the Company and in form
and substance reasonably satisfactory to Purchaser.

                  SECTION 8.09. TAX SHARING AGREEMENT.

                  Any Tax Sharing Agreement shall terminate with respect to the
Company on the Closing Date, with the Company having no further payment
obligation or rights under such agreement on or after the Closing Date. No
payments shall be made by the Company, Seller, Humana or their affiliates under
the Tax Sharing Agreement for year 1999 and year 2000.

                  SECTION 8.10. NET OPERATING LOSS.

                  (a) Humana, Seller, Purchaser and the Company will file a
timely election to have Seller and Humana retain net operating loss carryovers
or capital loss carryovers of the Company under the Internal Revenue Code and
Treas. Reg. Section 1. 1502-20(g) (and any corresponding provision of State or
local tax law) in an amount equal to the excess, if any, of (i) Aggregate
Company Taxable Income over (ii) Seller Utilized Losses. If as a result of an
audit or otherwise, it is subsequently determined that the amount of the excess
of Aggregate Company Taxable Income over Seller Utilized Losses has increased
from the amount retained by Seller and Humana pursuant to the preceeding
sentence, Purchaser shall pay to Seller any tax benefit from such excess losses
each time that Purchaser, the Company or their affiliates utilize such excess
losses. The parties may, but are not required to, agree to have Humana and
Seller retain a greater amount of net operating losses, and for an appropriate
payment to be made therefor.

                  (b) Humana and Seller will file a timely election under
Internal Revenue Code Treas. Reg. Sections 1.1502-95(b)(2), Reg.1.1502-95(c) and
1.1502-95 (e) (and any corresponding provision of State or local tax law) to
apportion an amount of Humana's and Seller's Section 382 limitation from the
September 8, 1997 acquisition of Seller's predecessor by means of a merger of
such predecessor into Seller, a newly-formed subsidiary of Humana, to the
Company equal to the limitation to which the Company or Purchaser is subject
under Section

                                       50

<PAGE>

382(c) of the Code as a result of the acquisition of the Company by Purchaser.
At Purchaser's request, Seller will join Purchaser in making any election
required under Treas. Reg. Sections 1.1502-95(b)(2), 1.1502-95(c) or
1.1502-95(e) (and any corresponding provision of State or local tax law).

                  (c) On or before November 1, 2000, Humana and the Seller shall
promptly make a payment to Purchaser equal to an estimate made by Seller in good
faith of the Tax Payment. On or before October 1, 2001 the Tax Payment shall be
recalculated based upon the information contained in the tax returns of the
Company. If the Tax Payment as recalculated has increased from the amount used
to make the estimated Tax Payment, Humana and the Seller shall promptly make a
payment to the Purchaser of such excess, with interest from November 1, 2000. If
the Tax Payment as recalculated has decreased from the amount used to make the
estimated Tax Payment, the Purchaser shall promptly make a payment to the Seller
of such decrease, with interest from November 1, 2000. If, as a result of an
audit or otherwise, it is subsequently determined that the amount of the excess
of the Seller Utilized Losses over Aggregate Taxable Income has increased from
the amount used to make the recalculated Tax Payment under either of the
preceding two sentences, Humana and the Seller shall promptly make a payment to
Purchaser equal to the increase in the Tax Payment as further recalculated with
interest from November 1, 2000. If as a result of an audit or otherwise, it is
subsequently determined that the amount of the excess of Seller Utilized Losses
over Aggregate Company Taxable Income has decreased from the amount used to make
the recalculated Tax Payment under the second or third preceeding sentence, the
Purchaser shall promptly make a payment to Seller equal to any decrease in the
Tax Payment as further recalculated with interest from November 1, 2000,
provided that (i) the aggregate amounts of any payment by Purchaser to Seller
under this sentence (determined without regard to interest) shall not exceed the
the aggregate Tax Payments received by Purchaser (determined without regard to
interest) and (ii) Purchaser shall not be required to make a payment to the
extent that it is unable to utilize the associated net operating loss or capital
loss carryovers as a result of the expiration of applicable statute of
limitiations. In the event that an election is not required to be made under
Section 8.10(a) and either (A) Purchaser is not required to make a payment to
Seller under this paragraph as a result of clause (i) in the proviso in the
preceeding sentence or (B) as a result of an audit or otherwise, it is
subsequently determined that Aggregate Company Taxable Income exceeds Seller
Utilized Losses, Purchaser shall pay to Seller any tax benefit from such excess
losses each time that Purchaser, the Company or their affiliates utilize such
excess losses. For the purpose of this paragraph, interest shall be calculated
using an interest rate equal to the interest rate on one year United States
Treasury Bills as of November 1, 2000 plus 50 basis points, compounded annually.

                  (d) Purchaser shall pay an amount equal to the federal income
tax benefit obtained by Purchaser, the Company and their affiliates from the use
of the Company's net operating loss carryover which existed at December 31,
1998, to the extent that the aggregate federal income tax benefit from the
Company's net operating loss carryover exceeds the sum of (i) $2,000,000 PLUS
(ii) the federal income tax benefits which would have been obtained by

                                       51

<PAGE>

Purchaser, the Company and their affiliates if the Company's net operating loss
carryover had been $67,000,000 at December 31, 1998. Such payment shall be
promptly made to Humana each time after Purchaser, the Company or their
affiliates utilize such excess federal income tax benefits less any prior
payments made to Humana under this Section 8.10(d). If and only if the net
operating loss carryover utilized by the Purchaser, the Company or their
affiliates shall exceed $70,000,000 at December 31, 1998, then, within a
reasonable time after the Company's, the Purchaser's or any of their affiliate's
filing of federal income tax returns which utilize any such loss, then the
Purchaser (or other appropriate entity) shall furnish Humana a schedule setting
forth the annual uses of such loss and the loss remaining to be used.

                  (e) Seller shall pay an amount equal to the federal income tax
benefit not obtained by Purchaser, the Company and their affiliates from the use
of the Company's net operating loss carryover which existed at December 31,
1998, to the extent that the aggregate federal income tax benefit from the
Company's net operating loss carryover is less than the difference between (i)
the federal income tax benefits which would have been obtained by Purchaser, the
Company and their affiliates if the Company's net operating loss carryover had
been $66,000,000 at December 31, 1998, and (ii) $2,000,000. Such payment shall
be promptly made to the Company each time after Purchaser, the Company or their
affiliates file a return which would have utilized a federal income tax benefit
had the Company's net operating loss at December 31, 1998 been $66,000,000, to
the extent the aggregate lost benefits exceed $2,000,000 plus any prior payments
made to Company under this Section 8.10(e). Prior to claiming a payment under
this paragraph, the Purchaser (or other appropriate entity) shall furnish Humana
a schedule setting forth the annual uses of such loss and the loss remaining to
be used.

                  (f) Definitions. For purposes of this Section 8.10, the
following terms shall have the following definitions:

                      (1) "Company 1999 Taxable Income" shall mean the lesser of
(i) the actual separate company U.S. Federal taxable income of the Company for
1999 (determined without regard to any net operating or capital loss carryback
of the Company for any taxable period beginning after the Closing Date) and (ii)
$21 million.

                      (2) "Company 2000 Taxable Income" shall mean the lesser of
(i) the actual separate company U.S. Federal taxable income of the Company for
2000 for the Pre-Closing Period, determined by excluding any net capital gains
resulting from dispostions not directed by the Purchaser and its Affiliates, the
excess, if any, of net capital losses over net capital gains resulting from
dispositions directed by the Purchaser or its Affiliates prior to the Closing,
any extraordinary reserve releases or adjustments and any net operating or
capital loss carryback of the Company for any taxable period beginning after the
Closing Date and (ii) $20 million multiplied by a fraction, the numerator of
which is the number of calendar days in 2000 preceding the Closing Date and the
denominator is 366.

                                       52

<PAGE>

                      (3) "Aggregate Company Taxable Income" shall equal the sum
of Company 1999 Taxable Income and Company 2000 Taxable Income.

                      (4) "Seller Utilized Losses" shall mean an amount equal to
the portion of the net operating loss carryovers and capital loss carryovers of
the Company that have been utilized by the Humana U.S. federal consolidated
return group during 1999 and 2000.

                      (5) "Tax Payment" shall mean a dollar amount equal to
38.575% multiplied by 85% multiplied by the excess of (i) Seller Utilized Losses
over (ii) Aggregate Company Taxable Income.

                  SECTION 8.11. MISCELLANEOUS.

                  Seller and Purchaser agree to treat all payments made by
either to or for the benefit of the other (including any payments to the
Company) under this Article VIII and under other indemnity provisions of this
Agreement, as adjustments to the purchase price or as capital contributions for
Tax purposes and that such agreed treatment shall govern for Tax purposes
hereof.

                                   ARTICLE IX

                              CONDITIONS TO CLOSING

                  SECTION 9.01. CONDITIONS TO OBLIGATIONS OF SELLER. The
obligation of the Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or prior written waiver, at or
prior to the Closing, of each of the following conditions:

                  (a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all respects as of the Closing Date with the same force and
effect as if made as of the Closing Date, other than such representations and
warranties as are made as of another date, which shall be true and correct in
all respects as of such date, except where the failure of any representation or
warranty to be true or correct would not have the effect of making the
transactions contemplated by this Agreement illegal and would not have, either
individually or in the aggregate, a Material Adverse Effect on the Seller. All
covenants contained in this Agreement to be complied with by Purchaser on or
before the Closing shall have been complied with in all material respects.
Nothing set forth herein or in the certificate to be delivered by Seller at
Closing pursuant to Section 2.05(a)(ii) shall limit the right of Seller to be
indemnified by Purchaser under Sections 10.02 (a)(ii) or 10.02(a)(iii) of this
Agreement

                  (b) HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the purchase of the Shares contemplated hereby
shall have expired or shall have

                                       53

<PAGE>

been terminated without action by the Federal Trade Commission or Department
of Justice which would cause a Material Adverse Effect on Seller or of any of
its Affiliates;

                  (c) NO ORDER. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other order (whether temporary, preliminary or permanent) which is
in effect and has the effect of making the transactions contemplated by this
Agreement illegal or otherwise restraining or prohibiting consummation of such
transactions or which would have a Material Adverse Effect on Seller or any of
its Affiliates; PROVIDED, HOWEVER, that the parties hereto shall use their
reasonable best efforts to have any such order or injunction vacated;

                  (d) GOVERNMENTAL FILINGS AND CONSENTS. All governmental
orders, approvals and consents to the transactions contemplated by this
Agreement shall have been obtained and be in effect on the Closing Date
(including, but not limited to, the approval of the Florida Insurance Department
and any approvals which may be required under the insurance laws of any
jurisdiction in which the Company does business), except to the extent that the
failure to obtain any such consent would not have the effect of making the
transactions contemplated by this Agreement illegal or otherwise restrain or
prohibit consummation of such transactions or result in a material liability to
Seller, the Consent Orders shall have been modified to permit the transactions
contemplated herein and Seller, Humana and any of their Affiliates (other than
the Company) shall have fully and unconditionally released and discharged from
all obligations and liabilities under such Consent Order and any other orders in
respect of the Company, and the Amended and Restated Management Contract shall
have been approved by the Florida Insurance Department, if required, upon
substantially the same terms as the Amended and Restated Contract attached
hereto;

                  (e) THIRD PARTY CONSENTS. Seller shall have received the third
party consents, approvals, authorizations or actions to the transactions
contemplated by this Agreement, if any, in form and substance reasonably
satisfactory to Seller from the parties listed in Section 9.01(e) of the
Disclosure Schedule, except to the extent that failure to obtain any such
consents would not have the effect of making the transactions contemplated by
this Agreement illegal, would not otherwise restrain or prohibit consummation of
such transactions, and would not result in a material liability to Seller; and

                  (f) PROCEEDING. All proceedings, corporate or otherwise, taken
by Purchaser in connection with the transactions contemplated hereby and all
instruments and documents incident thereto shall be reasonably satisfactory in
form and substance to Seller and its counsel.

                  SECTION 9.02. CONDITIONS TO OBLIGATIONS OF PURCHASER. The
obligations of Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:

                  (a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and

                                       54

<PAGE>

warranties of Seller and Humana contained in this Agreement shall be true and
correct in all respects as of the Closing Date with the same force and effect as
if made as of the Closing Date, other than such representations and warranties
as are made as of another date, which shall be true and correct in all respects
as of such date, except where the failure of any representation or warranty to
be true or correct would not have the effect of making the transactions
contemplated by this Agreement illegal and would not have, either individually
or in the aggregate, a Material Adverse Effect on the Company. With respect to
the representations set forth in Section 4.24 of this Agreement stated as to be
made of the date hereof, such representation shall be deemed to be made as of
the Closing Date. All covenants contained in this Agreement to be complied with
by Seller and Humana on or before the Closing shall have been complied with in
all material respects. Nothing set forth in this Section 9.02(a) or in the
certificate of Purchaser to be delivered at Closing pursuant to Section
2.05(b)(ii) shall limit the right of Purchaser to be indemnified by Seller
pursuant to Sections 10.03(a)(ii) or 10.03(a)(iii) of this Agreement.

                  (b) HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the purchase of the Shares contemplated hereby
shall have expired or shall have been terminated without any action by the
Federal Trade Commission or the Department of Justice which would have a
Material Adverse Effect on the Company, Purchaser or any Affiliate of Purchaser;

                  (c) NO ORDER OR SUIT. No Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other order (whether temporary, preliminary or permanent) which is
in effect and has the effect of making the transactions contemplated by this
Agreement illegal or otherwise restraining or prohibiting consummation of such
transactions or which would have a Material Adverse Effect on the Company,
Purchaser or any of its Affiliates; provided, that the parties hereto shall use
their reasonable best efforts to have any such order or injunction vacated;

                  (d) GOVERNMENTAL FILINGS AND CONSENTS. All governmental
orders, approvals and consents to the transactions contemplated by this
Agreement shall have been obtained and be in effect on the Closing Date
(including, but not limited to, the approval of the Florida Insurance Department
and the New York Insurance Department and any approvals which may be required
under the insurance laws of any jurisdiction in which the Company does
business), except to the extent that the failure to obtain any such consent,
individually and in the aggregate, would not have a Material Adverse Effect.
Such approvals as shall have been obtained shall not impose upon Purchaser, the
Company or any of the Purchaser's Affiliates any conditions or other
requirements which would cause any material additional costs or materially
interfere with the continued operations of the business of the Purchaser, its
Affiliates or the Company as currently conducted. As of the date hereof, the
Company is subject to the Consent Orders of the Florida Insurance Department. To
the extent the Company seeks modification of either of the Consent Orders or any
order relative to the transactions described in this Agreement, such modified
Consent Orders or other orders shall be in all respects reasonably satisfactory
to Purchaser. In addition, the Amended and Restated Management Contract shall
have been approved by the

                                       55

<PAGE>

Florida Insurance Department if required upon substantially the same terms as
the Amended and Restated Management Contract attached hereto;

                  (e) THIRD PARTY CONSENT. Purchaser shall have received the
third party consents, approvals, authorizations or actions to the transactions
contemplated by this Agreement, if any, in form and substance reasonably
satisfactory to Purchaser from the parties listed in Section 9.02(e) of the
Disclosure Schedule, except to the extent that the failure, individually and in
the aggregate, to obtain any such consents would not have a Material Adverse
Effect;

                  (f) RESIGNATION OF DIRECTORS AND CERTAIN OFFICERS OF THE
COMPANY. Purchaser shall have received the resignations, effective as of the
Closing, of all the directors and officers of the Company;

                  (g) NO MATERIAL ADVERSE EFFECT. Since the date of this
Agreement, no event or events shall have occurred which, individually or in the
aggregate, have, or are reasonably likely to have, had a Material Adverse Effect
with respect to the Company;

                  (h) MINUTE AND STOCK RECORDS. The Purchaser shall have
received evidence reasonably satisfactory to it that the complete and correct
minute books and stock certificate and record books (with all canceled and
unused stock certificates attached) and the corporate seals of the Company are
in the possession of the Person designated at least two (2) Business Days prior
to the Closing by the Purchaser to Seller in writing;

                  (i) AMENDED AND RESTATED MANAGEMENT CONTRACT. HWCS shall have
entered into the Amended and Restated Management Contract; and

                  (j) PROCEEDINGS. All proceedings, corporate or otherwise,
taken by Seller or Humana in connection with the transactions contemplated
hereby and all instruments and documents incident thereto shall be reasonably
satisfactory in form and substance to Purchaser and its counsel.

                                    ARTICLE X

                      INDEMNIFICATION & CERTAIN LITIGATION

                  SECTION 10.01. SURVIVAL. All agreements made by the parties in
this Agreement and the right to recover for breach of the representations,
warranties and covenants and agreements of the parties hereto contained herein
shall survive the Closing, regardless of any investigation made by or on behalf
of Seller or Purchaser, for the periods set forth in this Article X.
Notwithstanding anything in Article VIII or in any other provision of this
Agreement to the contrary, the representations and warranties in Section 4.24
respecting the liability of the

                                       56

<PAGE>

Company for Taxes shall continue to survive until all taxable periods of the
Company to and including the Closing Date shall be closed to any further
assessment of Taxes and to any assessment of any penalties or interest charges
in respect of any such Taxes, by receipt of a final assessment, in form and
substance reasonably satisfactory to Purchaser, from the appropriate tax
authorities, or by the expiration of the applicable statute of limitations or
any extension thereof by waiver or otherwise. After the Closing, all claims,
whether in Contract, tort or otherwise, relating to or resulting from a breach
of any representation, warranty, covenant or agreement contained in this
Agreement (except for claims relating to or resulting from the guarantee of
Humana as set forth in Article XII, and except for claims for injunctive or
other equitable relief for which monetary damages covered by an indemnity set
forth herein are not available) shall be made exclusively under, and subject to
the limitations set forth in this Article X. Notwithstanding anything in Article
X or any other term or provision of this Agreement to the contrary, after the
Closing, all claims, whether in Contract, tort or otherwise, relating to or
resulting from a breach of any representation, warranty or covenant relating to
Taxes contained in this Agreement (except for claims relating to or resulting
from the guarantee of Humana as set forth in Article XII, and except for claims
for injunctive or other equitable relief for which monetary damages covered by
an indemnity set forth in Article VIII of this Agreement are not available)
shall be made exclusively under, and subject to the limitations set forth in,
Article VIII and, as to limitations on the timing of such claims, this Section
10.01, Section 10.02(b)(iii) or Section 10.03(b)(iii) of this Agreement, as
applicable.

                  SECTION 10.02. INDEMNIFICATION BY PURCHASER

                  (a) Purchaser agrees, subject to the limitations, conditions
and other terms and conditions of this Article X, to indemnify Seller and its
Affiliates, and the respective officers, directors, employees, agents, heirs,
successors and assigns of Seller and its Affiliates (as used in this Section
10.02, each an "INDEMNIFIED PARTY") against and to defend and hold them harmless
from, and shall pay to such Indemnified Parties the amount of all Damages
arising directly or indirectly, from or in connection with: (i) any breach of
any representation or warranty of Purchaser set forth in this Agreement; (ii)
any breach of any representation or warranty of Purchaser in this Agreement as
if such representation or warranty were made on and as of the Closing Date
(other than any representation or warranty which is specific as to the date when
made), without giving effect to any supplement to the Disclosure Schedule; (iii)
a breach by Purchaser of any covenant, agreement or obligation set forth in this
Agreement (excluding, however, from this Section 10.02, a breach of a covenants
set forth in Article VIII); and (iv) the conduct of the Business by Purchaser
following the Closing. No claim may be asserted nor may any action be commenced
against Purchaser under this Section 10.02 for breach of any representation,
warranty, covenant or agreement contained herein, unless written notice of such
claim or action is received by Purchaser describing in reasonable detail the
facts and circumstances known to Seller or any other Indemnified Party with
respect to the subject matter of such claim or action on or prior to the date on
which the representation, warranty, covenant or agreement on which such claim or
action is based ceases to survive as set forth in

                                       57

<PAGE>

Section 10.02(b)(iii), irrespective of whether the subject matter of such claim
or action shall have occurred before or after such date and any claim made by
Seller or any other Indemnified Party under this Section 10.02 within the
aforesaid time periods shall be considered timely made even if such claim is not
resolved until after the expiration of the aforesaid periods.

                  (b) The obligations of Purchaser set forth in Section 10.02(a)
shall be subject to the following limitations and restrictions:

                  (i) Purchaser shall not be obligated to indemnify the
         Indemnified Parties until such time as the total sum of the Damages
         shall exceed $2,500,000, at which time Purchaser shall indemnify the
         Indemnified Parties for only the amount of the Damages in excess of
         $2,500,000, PROVIDED, HOWEVER, that this limitation shall not apply
         with respect to any Damages arising from or in connection with breach
         of any representation or warranty contained in Section 5.01 or a breach
         of the covenants set forth in Article VIII, and shall not apply to a
         breach or failure of performance of any of the payment obligations set
         forth in Section 2 of this Agreement, all of which shall be indemnified
         on a dollar-for-dollar basis.

                  (ii) The aggregate amount of Purchaser's liability under
         Section 10.02 with respect to all claims for indemnification or other
         relief thereunder, shall not exceed an amount equal to fifty percent
         (50%) of the Adjusted Purchase Price, PROVIDED, HOWEVER, that this
         limitation shall not apply with respect to any Damages arising from or
         in connection with breach of any representation or warranty contained
         in Section 5.01 or a breach of the covenants set forth in Article VIII,
         and shall not apply to a breach or failure of performance of any of the
         payment obligations set forth in Section 2 of this Agreement.

                  (iii) Purchaser shall have no liability with respect to any
         claim or other assertion of a right to recover Damages for any breach
         of the representations, warranties and covenants of Purchaser contained
         in this Agreement, unless such Indemnified Parties deliver to Purchaser
         notice of such matter within two (2) years after the Closing Date,
         except for (x) any breach of an agreement or covenant which, by its
         terms, is to be performed after the Closing Date, for which
         indemnification shall be required if such Indemnified Parties deliver
         notice at any time prior to expiration of the applicable period under
         the statute of limitations therefor, and (y) any breach of a
         representation and warranty contained in Section 5.01, for which there
         shall be no time limitations in which such Indemnified Parties must
         deliver notice to Purchaser to be entitled to indemnification from
         Purchaser under Section 10.02(a).

                  (iv) Payments by Purchaser pursuant to Section 10.02(a) shall
         be limited to the amount of any Damages that remains after deducting
         therefrom any insurance proceeds and any indemnity, contribution or
         other similar payment recoverable by the Indemnified Party from any
         third party with respect thereto; PROVIDED, HOWEVER, that the

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<PAGE>

         reduction for insurance proceeds shall itself be reduced by the present
         value of Seller's reasonably estimated increase in insurance costs
         directly attributable to the claim in respect of which such insurance
         proceeds shall have been received for the five years following the
         receipt of such proceeds using a discount rate of six percent.

                  (c) An Indemnified Party shall give Purchaser prompt written
notice of any claim, assertion, event or proceeding by or in respect of a third
party of which an Indemnified Party has knowledge concerning any liability or
damage as to which an Indemnified Party may request indemnification hereunder.
Failure to give such notice shall not waive any right to indemnification on the
part of the Indemnified Party or Parties who fail to give such notice, except
only to the extent of any Damages actually suffered by Purchaser or any of its
Affiliates by reason of the delay in receiving such notice. Purchaser shall have
the right to direct, through counsel of its own choosing, provided such counsel
is reasonably satisfactory to the Indemnified Party, the defense or settlement
of any such claim or proceeding at its own expense, provided that Purchaser
vigorously and diligently pursues such defense in good faith and keeps the
Indemnified Party and its attorneys reasonably informed as to the progress of
the defense and any proposed settlement. If Purchaser elects to assume the
defense of any such claim or proceeding, the Indemnified Party may participate
in such defense, but in such case the expenses of the Indemnified Party shall be
paid by the Indemnified Party. Notwithstanding the foregoing, if an Indemnified
Party determines in good faith that there is a reasonable probability that any
such claim or proceeding may adversely affect it or its Affiliates other than as
a result of monetary damages for which it or its Affiliates would be entitled to
indemnification under this Agreement, such Indemnified Party may, by notice to
Purchaser, assume the exclusive right to defend, compromise, or settle such
claim or proceeding, but Purchaser will not be bound by any determination of
such claim or proceeding so defended or any compromise or settlement effected
without its consent (which may not be unreasonably withheld or delayed). The
Indemnified Party shall provide Purchaser with access to such Indemnified
Party's records and personnel relating to any such claim, assertion, event or
proceeding during normal business hours and shall otherwise cooperate with
Purchaser in the defense or settlement thereof, and Purchaser shall reimburse
the Indemnified Party for all the reasonable out-of-pocket expenses of such
Indemnified Party in connection therewith. If Purchaser elects to direct the
defense of any such claim or proceeding, the Indemnified Party shall not pay, or
permit to be paid, any part of any claim or demand arising from such asserted
liability, (i) unless Purchaser consents in writing to such payment which
consent shall not be unreasonably withheld, or (ii) unless Purchaser, subject to
the last sentence of this Section 10.02(c), withdraws from the defense of such
asserted liability, or (iii) unless a final judgment from which no appeal may be
taken by or on behalf of Purchaser is entered against the Indemnified Party for
such liability, or (iv) unless there is a material risk if such asserted
liability is not paid then that an injunction or other equitable relief will be
granted which will have a Material Adverse Effect on Seller or any of its
Affiliates. Without the prior written consent of the Indemnified Parties (such
consent not to be unreasonably withheld), Purchaser shall not enter into any
settlement of any claim or proceeding; PROVIDED HOWEVER, that , if pursuant to
or as a result of such settlement (x) injunctive or other equitable relief would
be imposed against the Indemnified Parties, or any of them, or (y) such
settlement,

                                       59

<PAGE>

in the reasonable judgment of the Indemnified Parties, would have a Material
Adverse Effect on such Indemnified Parties or any Affiliate of such Indemnified
Parties for which it is not entitled to indemnification hereunder, or (z) such
settlement does not include a general release to all Indemnified Parties, then
such settlement shall require the prior written consent of the Indemnified
Parties. If Purchaser shall fail to defend any claim or proceeding that it has a
duty to defend hereunder, or if, after commencing or undertaking any such
defense, Purchaser fails to diligently prosecute and defend or withdraws from
such defense, or if Purchaser cannot reasonably defend the Indemnified Party due
to conflicts of interest or conflicts between the defense that it must assert on
behalf of the Indemnified Parties and the defense it must assert to protect its
interests in such claim or proceeding, the Indemnified Party shall have the
right to undertake the defense or settlement thereof, at Purchaser's expense. If
the Indemnified Party assumes the defense of any such claim or proceeding
pursuant to this Section 10.02(c) and proposes to settle such claim or
proceeding prior to a final judgment thereon or to forego appeal with respect
thereto, then the Indemnified Party shall give Purchaser prompt written notice
thereof and Purchaser shall have the right to participate in the settlement or
assume or reassume the defense of such claim or proceeding subject to the
conditions set forth above; provided that if Purchaser does not assume or
reassume the defense within ten (10) Business Days or any earlier time that such
offer to settle expires then the Indemnified Party can settle such claim in good
faith without the consent of Purchaser.

                  (d) Except as embodied and set forth in this Agreement, the
Disclosure Schedule, the certificates delivered pursuant to Article IX or any
agreement executed and delivered pursuant to the provisions hereof, Purchaser is
not making any representation, warranty, covenant, promise or agreement with
respect to the matters contained herein or therein. Anything herein to the
contrary notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein or therein shall give rise to any right on the part
of the Indemnified Party, after the consummation of the purchase and sale of the
Shares contemplated by this Agreement, to rescind this Agreement or any of the
transactions contemplated hereby.

                  SECTION 10.03. INDEMNIFICATION BY SELLER.

                  (a) Seller agrees, subject to the limitations, conditions and
other terms and conditions of this Article X, to indemnify Purchaser and its
Affiliates and their respective officers, directors, employees, agents, heirs,
successors and assigns (as used in this Section 10.03, each an "INDEMNIFIED
PARTY") against and hold them harmless from, and shall pay, all Damages arising
directly or indirectly, from or in connection with:(i) any breach of any
representation or warranty of Seller or Humana set forth in this Agreement
(excluding, however, from this Section 10.03, a breach of a representation or
warranty set forth in Section 4.24); (ii) any breach of any representation or
warranty of Seller or Humana in this Agreement as if such representation or
warranty were made on and as of the Closing Date (other than any representation
or warranty which is specific as to the date when made), without giving effect
to any supplement to the Disclosure Schedule (excluding, however, from this
Section 10.03, a breach of a representation or warranty set forth in Section
4.24); (iii) a breach by Seller of any

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<PAGE>

covenant, agreement or obligation set forth in this Agreement (excluding,
however, from this Section 10.03, a breach of a covenants set forth in Article
VIII); and (iv) any and all liabilities (including, without limitation, any
liability for premium payments or premium refunds, but excluding any taxes
covered by Article VIII) arising, directly or indirectly, from or in connection
with any Assumed Portfolio Transactions (including, without limitation, claims
arising under, or related to, the underlying Insurance Policies and Contracts
relating to such Assumed Portfolio Transactions), other than (A) liabilities for
workers' compensation insurance claims and related expenses arising from such
Assumed Portfolio Transactions and (B) liabilities arising with respect to such
Assumed Portfolio Transactions as a result of the actions of Purchaser or the
Company following the Closing, and (v) any and all liabilities for any fines or
penalties imposed by the Florida Insurance Department for any violation of any
order applicable to the Company, which violation occurred prior to the Closing.
No claim may be asserted nor any action commenced against Seller under this
Section 10.03 for breach of any representation, warranty, covenant or agreement
contained herein, unless written notice of such claim or action is received by
Seller describing in reasonable detail the facts and circumstances known to
Purchaser or any other Indemnified Party with respect to the subject matter of
such claim or action on or prior to the date specified in this Section
10.03(b)(iii), irrespective of whether the subject matter of such claim or
action shall have occurred before or after such date; and any claim made by
Purchaser or any other Indemnified Party under the provisions of this Section
10.03 within the aforesaid time periods shall be considered timely made even if
such claim is not resolved until after the expiration of the aforesaid periods.

                  (b) The obligations of Seller set forth in Section 10.03(a)
shall be subject to the following limitations and restrictions:

                  (i) Seller shall not be obligated to indemnify the Indemnified
         Parties until such time as the total sum of the Damages shall exceed
         $2,000,000, at which time Seller shall indemnify the Indemnified
         Parties for only the amount of the Damages in excess of $2,000,000;
         PROVIDED, HOWEVER, that this limitation shall not apply with respect to
         any Damages arising from or in connection with a breach of any
         representation or warranty contained in Section 4.01, Section 4.02,
         Section 4.12, Section 4.22, Section 4.23 and Section 4.24, a breach of
         the covenants set forth in Article VII or Article VIII, and shall not
         apply to breach or failure of performance of any of the payment
         obligations set forth in Section 2 of this Agreement, all of which
         shall be indemnified on a dollar-for-dollar basis; PROVIDED, FURTHER,
         that Seller shall not be obligated to indemnify the Indemnified Parties
         with respect to matters relating to Section 10.03(b)(iv) until such
         time as the total sum of the Damages shall exceed $500,000, at which
         time Seller shall indemnify the Indemnified Parties for only the amount
         of the Damages in excess of $500,000.

                  (ii) The aggregate amount of Seller's liability under Section
         10.03 with respect to all claims for indemnification or other relief
         thereunder, shall not exceed an amount equal to fifty percent (50%) of
         the Adjusted Purchase Price, PROVIDED, HOWEVER, that this limitation
         shall not apply with respect to any Damages arising from or in

                                       61

<PAGE>

         connection with breach of any representation or warranty contained in
         Section 4.01, Section 4.02, Section 4.12, Section 4.22, Section 4.23
         and Section 4.24, a breach of the covenants set forth in Article VII
         and Article VIII, and shall not apply to breach or failure of
         performance of any of the payment obligations set forth in Section 2 of
         this Agreement.

                  (iii) Seller shall have no liability with respect to any claim
         or other assertion of a right to recover Damages for any breach of the
         representations, warranties and covenants of Seller or Humana contained
         in this Agreement, unless such Indemnified Parties deliver to Seller
         notice of such matter within two (2) years after the Closing Date,
         except for (x) any breach of an agreement or covenant which, by its
         terms, is to be performed after the Closing Date, for which
         indemnification shall be required if the Indemnified Parties deliver
         notice at any time prior to expiration of the applicable period under
         the statute of limitations therefor, (y) any breach of a representation
         and warranty contained in the first sentence of Section 4.01, Section
         4.02 and Section 4.03, for which there shall be no time limitations in
         which the Indemnified Parties must deliver notice to Seller to be
         entitled to indemnification from Seller under Section 10.03(a), and (z)
         any breach of a representation and warranty of Seller set forth in
         Section 4.24, for which indemnification shall be required if the
         Indemnified Parties deliver notice of such matter prior to the
         expiration of the time period prescribed in Section 10.01.

                  (iv) Payments by Seller pursuant to Section 10.03(a) shall be
         limited to the amount of any Damage that remains after deducting
         therefrom any insurance proceeds and any indemnity, contribution or
         other similar payment recoverable by the Indemnified Parties from any
         third party with respect thereto; PROVIDED, HOWEVER, that the reduction
         for insurance proceeds shall itself be reduced by the present value of
         Purchaser's reasonably estimated increase in insurance costs directly
         attributable to the claim in respect of which such insurance proceeds
         shall have been received for the five years following the receipt of
         such proceeds using a discount rate of six percent.

                  (c) An Indemnified Party shall give Seller reasonably prompt
written notice of any claim, assertion, event or proceeding by or in respect of
a third party of which such Indemnified Party has knowledge concerning any
liability or damage as to which such Indemnified Party may request
indemnification hereunder. Failure to give such notice shall not waive any right
to indemnification on the part of the Indemnified Party or Parties who fail to
give such notice, except only to the extent of any damage or loss actually
suffered by Seller or any of its Affiliates by reason of the delay in receiving
such notice. Seller shall have the right to direct, through counsel of its own
choosing, provided such counsel is reasonably satisfactory to the Indemnified
Party, the defense or settlement of any such claim or proceeding at its own
expense, provided that Seller vigorously and diligently pursues such defense in
good faith and keeps the Indemnified Party and its attorneys reasonably informed
as to the progress of the defense and any proposed settlement. If Seller elects
to assume the defense of any such claim or proceeding, the Indemnified Party may
participate in such defense, but in such case the expenses of the

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<PAGE>

Indemnified Party shall be paid by the Indemnified Party. Notwithstanding the
foregoing, if an Indemnified Party determines in good faith that there is a
reasonable probability that any such claim or proceeding may adversely affect it
or its Affiliates other than as a result of monetary damages for which it or its
Affiliates would be entitled to indemnification under this Agreement, such
Indemnified Party may, by notice to Seller, assume the exclusive right to
defend, compromise, or settle such claim or proceeding, but Seller will not be
bound by any determination of such claim or proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld or delayed). The Indemnified Party shall provide Seller
with access to such Indemnified Party's records and personnel relating to any
such claim, assertion, event or proceeding during normal business hours and
shall otherwise cooperate with Seller in the defense or settlement thereof, and
Seller shall reimburse the Indemnified Party for all the reasonable
out-of-pocket expenses of such Indemnified Party in connection therewith. If
Seller elects to direct the defense of any such claim or proceeding, the
Indemnified Party shall not pay, or permit to be paid, any part of any claim or
demand arising from such asserted liability (i) unless Seller consents in
writing to such payment, which consent will not be unreasonably withheld, or
(ii) unless Seller, subject to the last sentence of this Section 10.03(c),
withdraws from the defense of such asserted liability, or (iii) unless a final
judgment from which no appeal may be taken by or on behalf of Seller is entered
against the Indemnified Party for such liability or (iv) unless there is a
material risk if such asserted liability is not paid that an injunction or other
equitable relief will be granted which will have a Material Adverse Effect on
Purchaser or the Company or any of their Affiliates. Without the prior written
consent of the Indemnified Parties (such consent not to be unreasonably
withheld), Seller shall not enter into any settlement of any claim or
proceeding; PROVIDED HOWEVER, that , if pursuant to or as a result of such
settlement (x) injunctive or other equitable relief would be imposed against the
Indemnified Parties, or any of them, or (y) such settlement, in the reasonable
judgment of the Indemnified Parties, would have a Material Adverse Effect on
such Indemnified Parties or any Affiliate of such Indemnified Parties for which
it is not entitled to indemnification hereunder, or (z) such settlement does not
include a general release to all Indemnified Parties, then such settlement shall
require the prior written consent of the Indemnified Parties. If Seller shall
fail to defend any claim or proceeding that it has a duty to defend hereunder,
or if after commencing or undertaking any such defense, shall fail to diligently
prosecute and defend or withdraws from such defense, or if Seller cannot
reasonably defend the Indemnified Party due to conflicts of interest or
conflicts between the defense that it must assert on behalf of the Indemnified
Parties and the defense it must assert to protect its interests in such claim or
proceeding, the Indemnified Party shall have the right to undertake the defense
or settlement thereof, at Seller's expense. If the Indemnified Party assumes the
defense of any such claim or proceeding pursuant to this Section 10.03(c) which
Seller had the duty to defend hereunder, and proposes to settle such claim or
proceeding prior to a final judgment thereon or to forego any appeal with
respect thereto, then the Indemnified Party shall give Seller prompt written
notice thereof and Seller shall have the right to participate in the settlement
or assume or reassume the defense of such claim or proceeding subject to the
conditions set forth above; provided that if Seller does not assume or reassume
the defense within ten (10) Business Days or any earlier time that such offer to
settle expires, then the Indemnified Party can settle such claim in good faith
without the consent of

                                       63

<PAGE>

Seller.

                  (d) Except as embodied and set forth in this Agreement, the
Disclosure Schedule, the certificates delivered pursuant to Article VIII or any
agreement executed and delivered pursuant to the provisions hereof, Seller has
not made, and is not making, any representation, warranty, covenant, promise or
agreement with respect to any matters contained herein or therein. Anything
herein to the contrary notwithstanding, no breach of any representation,
warranty, covenant or agreement contained herein or therein shall give rise to
any right on the part of the Indemnified Party, after the consummation of the
purchase and sale of the Shares contemplated by this Agreement, to rescind this
Agreement or any of the transactions contemplated hereby.

                  SECTION 10.04. CERTAIN LITIGATION.

                  (a) Notwithstanding anything in this Agreement to the
contrary, Seller shall assume the defense of, and all costs and expenses
associated with, including without limitation, the amount of any judgments or
settlements thereof, the matters set forth on Section 4.12 of the Disclosure
Schedule or any matters disclosed pursuant to Section 4.12, both before and
after the Closing Date. The Purchaser shall cause the Company to render such
assistance, information, documents and access to personnel and records as may be
reasonably requested by Seller in order to assist in such defense. Seller may
settle any such matters as they deem appropriate without Purchaser's consent as
long as (i) there is no finding or admission of any violation any applicable law
or regulation, or any violation of the rights of Purchaser and no effect on any
other claims that may be made against Purchaser or its Affiliates, (ii) the sole
relief provided under the settlement in monetary damages that are paid in full
by Seller and (iii) Purchaser will have no liability with respect to any
compromise or settlement of such claims effected without its consent. To the
extent that the Purchaser or the Company receives any insurance proceeds from
any insurance policy covering the Company which was in force prior to the
Closing with respect to any matters set forth on Section 4.12 of the Disclosure
Schedule, they shall as soon as reasonably practicable pay such insurance
proceeds to Seller. Further, Purchaser hereby assigns to Seller any rights with
respect to such insurance proceeds and/or any claims against insurance companies
with respect to matters set forth on Section 4.12 of the Disclosure Schedule.
Seller shall promptly reimburse Purchaser and/or the Company, as applicable, for
all out-of-pocket costs relating to assistance provided pursuant to this Section
10.04. The parties hereby agree that the limitations set forth in Section
10.03(b)(i) and (ii) shall not apply with respect to this Section 10.04(a).

                  (b) The parties hereby agree that, following the Closing,
Seller shall retain the right to continue and control prosecution, at Seller's
sole expense, of the lawsuit entitled PHYSICIAN CORPORATION OF AMERICA AND PCA
PROPERTY AND CASUALTY INSURANCE COMPANY V. INSURANCE INDUSTRY CONSULTANTS, INC.
WYNN, DEXTER & SAMPEY, P.A., WILLARD W. PEACOCK, GARY P. HOBART AND GARY R.
RESETAR, Case No. CI 97-4606, pending before the Circuit Court in and for Orange
County, Florida (the "MALPRACTICE ACTION") and to receive the proceeds of any

                                       64

<PAGE>

settlement or judgment arising from the Malpractice Action; PROVIDED, HOWEVER,
that Seller shall indemnify the Company and Purchaser against and hold them
harmless from, and shall pay all Damages arising directly or indirectly from or
in connection with, any claim asserted against the Company and/or Purchaser
related to the Malpractice Action on a dollar-for-dollar basis without regard to
any of the limitations set forth in Section 10.03(b)(i) and (ii).

                  (c) Seller and Purchaser hereby agree that, following the
Closing Date, they shall use their best efforts to cooperate and jointly control
the prosecution of the various applications presently pending before the Florida
Department of Labor and Employment Security ("DOLES") that seek refunds of
assessments paid by the Company and its various predecessors in interest from
and after 1996 to DOLES (The "DOLES APPLICATIONS"). Seller and Purchaser shall
share equally in the expense of prosecuting the DOLES Applications and in the
proceeds from refunds or settlements ultimately received thereon.

                                   ARTICLE XI

                        TERMINATION, AMENDMENT AND WAIVER

                  SECTION 11.01. TERMINATION. This Agreement may be terminated
at any time prior to the Closing:

                  (a) by the mutual written consent of Seller and Purchaser;

                  (b) by written notice by either Seller or Purchaser if the
Closing shall not have occurred prior to July 31, 2000; PROVIDED, HOWEVER, that
the right to terminate this Agreement under this Section 11.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the failure
of the Closing to occur prior to such date;

                  (c) by Purchaser, if Seller shall have breached or failed in
any material respect to perform or comply with any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform or comply (A) would give rise to the failure of a
condition set forth in Section 9.02, and (B) is incapable of being cured by
Seller; or

                  (d) by Seller, if Purchaser shall have breached or failed in
any material respect to perform or comply with any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform or comply (A) would give rise to the failure of a
condition set forth in Section 9.01, and (B) is incapable of being cured by
Purchaser.

                                       65

<PAGE>

                  SECTION 11.02. EFFECT OF TERMINATION. In the event of
termination of this Agreement as provided in Section 11.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto, except that (a) the obligations under Section 12.01 and the obligations
of the parties under the Confidentiality Agreement between Humana and Purchaser
dated November 4, 1999 (the "Confidentiality Agreement") will survive and (b)
nothing herein shall relieve either party from liability for any breach hereof.

                  SECTION 11.03. WAIVER. At any time prior to the Closing,
either party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party to be bound thereby.

                                   ARTICLE XII

                               GUARANTY OF HUMANA

                  Humana hereby unconditionally and irrevocably guarantees the
performance of Seller's obligations, responsibilities, duties and liabilities
under this Agreement. If Seller fails for any reason to satisfy said
obligations, responsibilities, duties or liabilities, Humana shall satisfy all
said obligations, responsibilities, duties and liabilities. This Guaranty
constitutes a guaranty of performance and payment when due and not of collection
and is not conditional or contingent upon any attempt to obtain performance by
or to collect from, or pursue or exhaust any rights or remedies against, Seller.

                                  ARTICLE XIII

                               GENERAL PROVISIONS

                  SECTION 13.01. NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made as of (i) the date delivered if delivered personally
against written receipt or (ii) five days after mailing if mailed by registered
or certified mail (postage prepaid, return receipt requested) or (iii) the date
telecopied to the parties (if the appropriate answerback or telephonic
confirmation) shall have been received, or (iv) the date of delivery by a
nationally recognized overnight courier service; PROVIDED THAT notices after the
giving of which there is a designated period within which to perform an act and
notices of changes of address shall be effective only upon receipt. All such
notices and communications shall be delivered to the following addresses or
numbers (or at such other address or number for a party as shall be specified by
like notice):

                                       66

<PAGE>

                  (a) if to Seller or Humana:

                      Physicians Corporation of America
                      500 West Main Street
                      Louisville, Kentucky 40202
                      Attention: L. Bryan Shaul, Vice President - Mergers and
                      Acquisitions
                      Telecopier: (502) 580-1690

                      with a copies under separate cover to:

                      Humana Inc.
                      500 West Main Street
                      Louisville, Kentucky 40202
                      Attention: Ralph M. Wilson, Senior Legal Counsel
                      Telecopier: (502) 580-2799

                      Greenebaum Doll & McDonald PLLC
                      3300 National City Tower
                      101 South Fifth Street
                      Louisville, Kentucky 40202
                      Attention: Daniel E. Fisher, Esq.
                      Telecopier: (502) 587-3699

                                       67

<PAGE>

                  (b) if to Purchaser:

                      Folksamerica Group
                      One Liberty Plaza
                      Nineteenth Floor
                      New York, N.Y. 10006
                      Attention:  Donald A. Emeigh, Jr., Esq., Senior Vice
                      President,

                      General Counsel and Secretary
                      Telecopier: (212) 385-3678

                      with a copy under separate cover to:

                      Morgan, Lewis & Bockius LLP
                      101 Park Avenue
                      New York, N.Y. 10178-0060
                      Attention:  F. Sedgwick Browne, Esq.
                      Telecopier:  (212) 309-6273

                  SECTION 13.02. PUBLIC ANNOUNCEMENT. No party to this Agreement
shall make any public announcements in respect of this Agreement or the
transactions contemplated herein or otherwise communicate with any news media
without prior notification to the other party, and the parties, subject to the
requirements of applicable law, shall cooperate as to the timing and content of
any such announcement. The parties agree that, except as required by applicable
law, in the event this Agreement is terminated in accordance with Article XII
hereof, each party will keep confidential the reasons for such termination and
any public announcement issued by either party following any such termination
shall be limited to a statement that the parties were unable to agree on the
principal terms of the transaction.

                  SECTION 13.03. HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

                  SECTION 13.04. 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 is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
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 contemplated hereby be consummated as
originally contemplated to the greatest extent possible.

                  SECTION 13.05. ENTIRE AGREEMENT. As used herein, the term
"Agreement"

                                       68

<PAGE>

shall mean this Stock Purchase Agreement, the Exhibits hereto, including those
which will be executed and delivered by one or more of the parties hereto at or
prior to the Closing Date pursuant hereto, and the Disclosure Schedule delivered
in connection herewith, and all certificates, documents and instruments which
are identified herein as having been or to be furnished to a party pursuant
hereto. This Agreement and the Confidentiality Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior agreements, correspondence, arrangements
and understandings, both written and oral relating to the subject matter hereof.

                  SECTION 13.06. ASSIGNMENT. This Agreement shall be binding on,
and inure to the benefit of, the parties hereto and their respective successors
and assigns. This Agreement shall not be assigned by operation of law or
otherwise; PROVIDED, HOWEVER, that this Agreement may be assigned, in whole or
in part, by Purchaser to any Affiliate of Purchaser, without releasing Purchaser
from any of its obligations or liabilities hereunder.

                  SECTION 13.07. NO THIRD-PARTY BENEFICIARIES. Except for the
provisions of this Agreement relating to Indemnified Parties, this Agreement is
for the sole benefit of and is binding upon the parties hereto and their
permitted successors and assigns and nothing herein, express or implied, is
intended to or shall confer upon any other person or entity any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.

                  SECTION 13.08. AMENDMENT; WAIVER. This Agreement may not be
amended or modified except by an instrument in writing signed by Seller, Humana
and Purchaser. Waiver of any term or condition of this Agreement shall only be
effective if in writing and shall not be construed as a waiver of any subsequent
breach or waiver of the same term or condition, or a waiver of any other term or
condition of this Agreement. Any failure or delay on the part of any party in
exercising any power or right hereunder shall not operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power preclude any
other or further exercise thereof or the exercise of any other right or power
hereunder.

                  SECTION 13.09. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Florida, without
giving effect to any conflict of law rules which might result in the application
of the laws of any other jurisdiction.

                  SECTION 13.10. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.

                            [Signature Page Follows]

                                       69

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.

                                  HUMANA INC.

                                  By

                                    L. Bryan Shaul,
                                    Vice President-Mergers and Acquisitions

                                  PHYSICIAN CORPORATION OF AMERICA

                                  By

                                    L. Bryan Shaul,
                                    Vice President-Mergers and Acquisitions

                                  FOLKSAMERICA HOLDING COMPANY, INC.

                                  By

                                  Name:  Steven E. Fass
                                  Title: President & Chief Executive Officer

                                       70

<PAGE>

                                                                  EXECUTION COPY

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

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

                            STOCK PURCHASE AGREEMENT

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

                          DATED AS OF DECEMBER 30, 1999

                                      AMONG

                                   HUMANA INC.

                        PHYSICIAN CORPORATION OF AMERICA

                                       AND

                       FOLKSAMERICA HOLDING COMPANY, INC.

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

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                   PAGE
                                                                                   ----
<S>                                                                                <C>
ARTICLE I    DEFINITIONS.............................................................1
             SECTION 1.01.  Certain Defined Terms....................................1

ARTICLE II   PURCHASE AND SALE OF SHARES.............................................7
             SECTION 2.01.  Purchase of Shares.......................................7
             SECTION 2.02.  Purchase Price...........................................7
             SECTION 2.03.  Pre-Closing Adjustments to the Investment Portfolio......9
             SECTION 2.04.  Closing.................................................10
             SECTION 2.05.  Deliveries and Actions to be Taken at Closing...........10

ARTICLE III  REPRESENTATIONS AND WARRANTIES OF SELLER AND HUMANA....................12
             SECTION 3.01.  Incorporation and Authority of Seller and Humana........12
             SECTION 3.02.  No Conflict.............................................12
             SECTION 3.03.  Disclosure..............................................13

ARTICLE IV   REPRESENTATIONS AND WARRANTIES OF SELLER...............................13
             SECTION 4.01.  Incorporation and Qualification of the Company..........13
             SECTION 4.02.  Capital Stock of the Company............................13
             SECTION 4.03.  Subsidiaries............................................14
             SECTION 4.04.  No Conflict.............................................15
             SECTION 4.05.  Consents and Approvals..................................15
             SECTION 4.06.  Financial Information...................................15
             SECTION 4.07.  Absence of Undisclosed Liabilities......................16
             SECTION 4.08.  Investments.............................................16
             SECTION 4.09.  Certain Events..........................................17
             SECTION 4.10.  Insurance Reserves......................................19
             SECTION 4.11.  Judgments, Decrees and Orders...........................19
             SECTION 4.12.  Litigation..............................................20
             SECTION 4.13.  Compliance with Laws....................................20
             SECTION 4.14.  Environmental, Health and Safety Compliance.............20
             SECTION 4.15.  Licenses and Permits....................................20
             SECTION 4.16.  Intellectual Property Rights............................21
             SECTION 4.17.  Property................................................21
             SECTION 4.18.  Company's Property & Casualty Insurance Coverage........22
             SECTION 4.19.  Relationships with Affiliates, Officers,
                                            Directors and Interested Parties........22
             SECTION 4.20.  Assumed and Ceded Reinsurance Agreements................23
             SECTION 4.21.  Other Contracts.........................................24
             SECTION 4.22.  Employee Benefit Matters................................26
             SECTION 4.23.  Labor Matters...........................................26

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                                                   PAGE
                                                                                   ----
<S>                                                                                <C>

             SECTION 4.24.  Taxes...................................................27
             SECTION 4.25.  Agents..................................................30
             SECTION 4.26.  Accounts with Financial Institutions....................30
             SECTION 4.27.  Minute Books; Stock Records; Officers and Directors.....30
             SECTION 4.28.  HWCS Management Contract................................30
             SECTION 4.29.  Year 2000...............................................31
             SECTION 4.30.  Brokers.................................................32
             SECTION 4.31.  Disclosure..............................................32

ARTICLE V    REPRESENTATIONS AND WARRANTIES OF PURCHASER............................32
             SECTION 5.01.  Incorporation and Authority.............................32
             SECTION 5.02.  No Conflict.............................................33
             SECTION 5.03.  Consents and Approvals..................................33
             SECTION 5.04.  Absence of Litigation...................................33
             SECTION 5.05.  Investment Purpose......................................34
             SECTION 5.06.  Brokers.................................................34
             SECTION 5.07.  Disclosure..............................................34

ARTICLE VI   ADDITIONAL AGREEMENTS..................................................34
             SECTION 6.01.  Conduct of Business Prior to the Closing................34
             SECTION 6.02.  Access to Information...................................38
             SECTION 6.03.  Books and Records.......................................38
             SECTION 6.04.  Regulatory and Other Authorizations; Consents...........39
             SECTION 6.05.  No Solicitation of Employees............................40
             SECTION 6.06.  No Solicitation of Offers, Etc..........................41
             SECTION 6.07.  Fees and Expenses.......................................41
             SECTION 6.08.  Investment Portfolio....................................41
             SECTION 6.09.  Notice of Certain Matters...............................41
             SECTION 6.10.  Interim Financial Statements............................42
             SECTION 6.11.  Affiliate Agreements; Intercompany Accounts.............43
             SECTION 6.12.  Company Obligations.....................................43
             SECTION 6.13.  Further Action..........................................43
             SECTION 6.14.  Compliance With Conditions..............................43

ARTICLE VII  EMPLOYEE MATTERS.......................................................44
             SECTION 7.01.  Purchaser...............................................44

ARTICLE VIII TAX MATTERS............................................................44
             SECTION 8.01.  Indemnity...............................................44
             SECTION 8.02.  Returns and Payments....................................45
             SECTION 8.03.  Refunds.................................................46

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                                                   PAGE
                                                                                   ----
<S>                                                                                <C>

             SECTION 8.04.  Tax Contests............................................47
             SECTION 8.05.  Certain Audit Adjustments...............................49
             SECTION 8.06.  Cooperation and Exchange of Information.................49
             SECTION 8.07.  Conveyance Taxes........................................50
             SECTION 8.08.  FIRPTA Certificate......................................50
             SECTION 8.09.  Tax Sharing Agreement...................................50
             SECTION 8.10.  Net Operating Loss......................................50
             SECTION 8.11.  Miscellaneous...........................................53

ARTICLE IX   CONDITIONS TO CLOSING..................................................53
             SECTION 9.01.  Conditions to Obligations of Seller.....................53
             SECTION 9.02.  Conditions to Obligations of Purchaser..................55

ARTICLE X    INDEMNIFICATION & CERTAIN LITIGATION...................................57
             SECTION 10.01.  Survival...............................................57
             SECTION 10.03.  Indemnification by Seller..............................60

ARTICLE XI   TERMINATION, AMENDMENT AND WAIVER......................................65
             SECTION 11.01.  Termination............................................65
             SECTION 11.02.  Effect of Termination..................................66
             SECTION 11.03.  Waiver.................................................66

ARTICLE XII  GUARANTY OF HUMANA.....................................................66

ARTICLE XIII GENERAL PROVISIONS.....................................................67
             SECTION 13.01.  Notices................................................67
             SECTION 13.02.  Public Announcement....................................68
             SECTION 13.03.  Headings...............................................68
             SECTION 13.04.  Severability...........................................68
             SECTION 13.05.  Entire Agreement.......................................69
             SECTION 13.06.  Assignment.............................................69
             SECTION 13.07.  No Third-Party Beneficiaries...........................69
             SECTION 13.08.  Amendment; Waiver......................................69
             SECTION 13.09.  Governing Law..........................................69
             SECTION 13.10.  Counterparts...........................................69

</TABLE>

EXHIBIT

A    Management Contract
B-1  Form of Amended and Restated Management Contract
B-2  Form of Amended and Restated Management Contract<PAGE>

                                   EXHIBIT B-1

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

                       AMENDED AND RESTATED

                               MANAGEMENT CONTRACT

                                 BY AND BETWEEN

                    PCA PROPERTY & CASUALTY INSURANCE COMPANY

                                       AND

                   HUMANA WORKERS COMPENSATION SERVICES, INC.

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

                               [________] 1, 2000

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

SECTION                                                                                                        PAGE

<S>                                                                                                              <C>
1.  Duties of the Manager.........................................................................................1
         1.1  Claims Processing...................................................................................2
         1.2  Loss Statistical Analysis...........................................................................3
         1.3  Premium or Monies Collection........................................................................3
         1.4  Regulatory Liaison..................................................................................4
         1.5  Accounting to the Company...........................................................................4
         1.6  Preparation of Financial Statements; Books and Records..............................................4
         1.7  Retention of Accountants and Actuaries..............................................................5
         1.8  Case Management.....................................................................................5
         1.9  Ministerial Functions ..............................................................................5
         1.10  Information Systems  ..............................................................................5

2.  Limitation of Authority.......................................................................................5

3.  Relationship of the Parties...................................................................................6

4.  Claims Account................................................................................................7

5.  Expenses of the Manager.......................................................................................7

6.  Expenses of the Company.......................................................................................7

7.  Compensation of the Manager...................................................................................8

8.  Term..........................................................................................................8

9.  Budgets and Controls   .......................................................................................9

10.  Covenants ...................................................................................................9
         10.1  Use of Service Fees  ..............................................................................9
         10.2  Notice of Default    ..............................................................................9
         10.3  Conduct of Business  ..............................................................................9
         10.4  Taxes                ..............................................................................9
         10.5  Provision of Medical Care and Service Contracts....................................................9

11.  Licensing and Countersignature Requirements.................................................................10

12.  Amendment & Waivers   ......................................................................................10

13.  Assignment .................................................................................................10
</TABLE>

                                       -i-

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

SECTION                                                                                                        PAGE

<S>                                                                                                             <C>
14.  Inspections ................................................................................................10

15.  Termination ................................................................................................10
         15.1  Due Cause Defined    .............................................................................10
         15.2  Termination for Breach; Cure Rights...............................................................11
         15.3  Termination With Notice...........................................................................11
         15.4  Remedies Upon Early Termination...................................................................12
         15.5  Additional Agreements Upon Termination............................................................13

16.  Limitation of Liability of the Company and its Agents.......................................................13

17.  Limitation of Liability of the Manager......................................................................13

18.  Special Administrator Provisions............................................................................13

19.  Errors and Omissions Insurance..............................................................................14

20.  Notices ....................................................................................................14

21.  Arbitration ................................................................................................14
         21.1  Resolution of Disputes............................................................................14
         21.2  Composition of Panel .............................................................................15
         21.3  Appointment of Arbitrators........................................................................15
         21.4  Failure of Party to Appoint Arbitrator............................................................15
         21.5  Choice of Forum      .............................................................................15
         21.6  Submission of Dispute to Panel....................................................................15
         21.7  Procedure Governing Arbitration...................................................................15
         21.8  Arbitration Award    .............................................................................15
         21.9  Cost of Arbitration  .............................................................................16
         21.10  Tolling of Statutes of Limitation................................................................16

22.  Service of Process    ......................................................................................16

23.  Regulatory Notices    ......................................................................................16

24.  Divisibility          ......................................................................................16

25.  Headings              ......................................................................................16

26.  Governing Law         ......................................................................................16

27.  Entire Agreement      ......................................................................................16
</TABLE>

                                      -ii-

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

SECTION                                                                                                        PAGE

<S>                                                                                                            <C>
28.  Counterparts   ............................................................................................16

MANAGEMENT CONTRACT        ......................................................................................1
         Calendar Year   ........................................................................................2
</TABLE>

                                      -iii-

<PAGE>

                    AMENDED AND RESTATED MANAGEMENT CONTRACT

         THIS AMENDED AND RESTATED MANAGEMENT CONTRACT ("Agreement"), effective
as of the 1st day of [_______], 2000 (the "Effective Date"), by and between PCA
PROPERTY & CASUALTY INSURANCE COMPANY, a Florida corporation (the "Company"),
and HUMANA WORKERS COMPENSATION SERVICES, INC., a Florida corporation (the
"Manager").

         RECITALS:

         A. The Company is a Florida-domiciled property and casualty stock
insurer.

         B. The Manager is a licensed insurance administrator and agent and has
expertise, systems, and personnel to provide comprehensive management for the
Company's insurance business.

         C. The Company and the Manager are parties to a Management Contract
dated as of January 1, 1996, pursuant to which the Manager was retained to
manage the Company's insurance operations, subject to the supervision of the
Company (the "Original Agreement").

         D. Pursuant to a Stock Purchase Agreement, dated as of December __,
1999 ("Stock Purchase Agreement") among Physicians Corporation of America, a
wholly-owned subsidiary of Humana Inc. ("Humana") and the sole shareholder of
the Company ("PCA"), Humana and Folksamerica Holding Company, Inc.
("Folksamerica"). PCA sold to Folksamerica on the date hereof all of the issued
and outstanding capital stock of the Company (the "Acquisition").

         E. The parties hereto now desire to amend, restate and replace the
Original Agreement in its entirety in conjunction with the Acquisition, upon and
subject to the terms and conditions set forth in this Agreement.

         AGREEMENT:

         NOW, THEREFORE, in consideration of the mutual promises of the parties
hereto, and other good and valuable consideration, the receipt and sufficiency
of which each party hereby acknowledges, the parties hereby agree as follows:

         1. DUTIES OF THE MANAGER. The Manager undertakes, by itself and through
its subcontractors, to provide to the Company comprehensive management and
administration of the Company's insurance business, subject to the terms and
conditions stated herein and the corporate policies promulgated from
time-to-time by the Company. Company shall have the right to approve the
appointment of all subcontractors who provide material services for Manager
under this Agreement. Without limiting the generality of the foregoing, the
Manager shall perform the following services, except as the Company may from
time to time otherwise expressly direct.

<PAGE>

                  1.1 CLAIMS PROCESSING. The Manager shall provide comprehensive
claim processing, administration, adjusting, and settlement services for the
Company, subject to the limitations contained in this Agreement and as stated
(and communicated in writing to the Manager) in the policies and procedures
(consistent with the terms and conditions contained in this Agreement) developed
and promulgated from time to time by the Company. Without the prior approval of
the Company, the Manager has no authority to pay or commit the Company to pay a
claim over a specified amount other than as set forth in Exhibit B. Without
limiting the generality of the foregoing, the Manager shall:

                  (a) give the Company prompt written notice after the Manager
has actual notice of any demand, action, suit, or proceeding raised, brought,
overtly threatened, made, or commenced against the Company that relates to any
matter to which the provisions of this Agreement apply;

                  (b) fully investigate and adjust all claims against the
Company for coverage or benefits under its policies;

                  (c) report to the Company in a timely manner as set forth in
Exhibit B;

                  (d) use only properly licensed adjusters to adjust claims;

                  (e) notify the Company as soon as it becomes known to the
Manager that a claim:

                           (1)  exceeds the limits set by the company in
Exhibit B;

                           (2) could potentially involve a coverage dispute;

                           (3) exceeds the Manager's claims settlement
authority; or

                           (4) is closed by payment of an amount awarded by
         final judgment of a tribunal of competent jurisdiction (and not
         appealed or subject to appeal) or an amount set or agreed to by the
         Company;

                  (f) pursue all salvage and subrogation rights of the Company,
and forward the proceeds from all such recoveries to the Company, or deposit
them to its fiduciary account if the check is made payable to Manager and
immediately forward such proceeds to the Company, upon receipt;

                  (g) submit and prosecute to completion claims for
reimbursement or recovery from the Florida Special Disability Trust Fund, and
forward all proceeds thereof to the Company, or deposit them to its fiduciary
account if the check is made payable to the Manager and immediately forward such
proceeds to the Company, upon receipt and immediately forward to the Company;

                  (h) pay claims and allocated loss adjustment expenses only on
drafts of and as authorized by the Company (the Company shall maintain a funded
claims account for this purpose);

                                       -2-

<PAGE>

                  (i) ensure that any draft prepared by the Manager, its agents,
or its employees is signed and issued in accordance with the procedures and
limitations set forth in Exhibit B to this Agreement and incorporated herein;

                  (j) adjust all claims according to applicable state law, the
terms and conditions of the Company's policies of insurance, and any written
standards provided by the Company;

                  (k) provide the Company, no later than the 10th business day
of each month, with management information reports for the preceding month which
include a loss run, a check register, a reserve transaction journal, and such
other information as the Company may reasonably request; and

                  (l) the Manager shall not have authority, nor shall any person
appointed by the Manager have authority, to amend the Company's policies of
insurance, or contracts of assumed or ceded reinsurance or waive any such
insurance policy or contract provision or condition without the Company's
express written consent.

                  1.2  LOSS STATISTICAL ANALYSIS.

                  (a) The Manager shall provide professional staff for claims
management coordination under a risk management program, including, but not
limited to, for loss statistical analysis and, in an advisory capacity to
management of the Company, propose the establishment of policies relating
thereto.

                  (b) The Manager agrees to compile and furnish, and where
appropriate file, all pertinent statistical information as from time-to-time
requested by the Company in the form reasonably required by the Company,
including specifically, but without limitation, data required for submission to
or use by the National Council on Compensation Insurance, any other rating
bureau or service used by the Company, and the National Association of Insurance
Commissioners and its operating divisions or instrumentalities such as the
Securities Valuation Office.

                  (c) The Manager shall be responsible for conducting quality
assurance programs for all premium, accounting, and statistical reports and all
policy transactions to assure compliance with all terms of this Agreement and
reconciliation procedures.

                  1.3  PREMIUM OR MONIES COLLECTION.

                  (a) The Manager shall remit to the Company all premiums or
other monies received or collected on business subject to this Agreement by the
Manager or by agents contracted by the Manager on behalf of the Company, whether
or not collected directly by the Manager or by agents from insureds. All such
premiums or other monies received by the Manager pursuant to this Agreement
shall be held by the Manager as bailee thereof in a fiduciary capacity for the
Company.

                  (b) All monies received on behalf of the Company shall be
promptly deposited in the Company's bank account or in a fiduciary account for
immediate transfer to the Company account if the check is made payable to the
Manager. The Manager shall not commingle any premium monies

                                       -3-

<PAGE>

collected pursuant to this Agreement with operating funds or funds held by the
Manager in any other capacity. The Manager shall procure and maintain a
fiduciary account dedicated to monies collected on behalf of the Company for
deposit in the Company account in the event monies belonging to the Company are
made payable to the Manager.

                  (c) The Manager shall conduct premium audits and adjustments
on the Company's behalf, whether called for by the policy terms or at the
initiative of the Manager or the Company, and report to the Company the results
thereof.

                  (d) The Company and Manager may, by written notice to the
other, offset any balance or balances due from the Manager or from the Company
under this Agreement with any balance the Company or Manager holds and that is
then due and payable to the Manager or the Company, as the case may be.

                  1.4 REGULATORY LIAISON. As and when requested by the Company,
the Manager shall act as a liaison between the Company and the Florida
Department of Insurance (the "Department") and any other regulatory or
governmental body or authority to facilitate compliance by the Company with
applicable provisions of law and to submit information, reports, and filings
required or requested by any such body or authority.

                  1.5 ACCOUNTING TO THE COMPANY. The Manager shall provide, no
later than the 10th business day of each month, a detailed accounting to the
Company of all monies, funds, securities, and similar instruments handled in the
Company's name or on its behalf for or during the prior month.

                  1.6  PREPARATION OF FINANCIAL STATEMENTS; BOOKS AND RECORDS.

                  (a) The Manager shall keep complete and accurate records of
the Company's business subject to this Agreement, including but not limited to
all policy claims and financial records. The policy and premium records so
retained by the Manager on behalf of the Company shall be in hard copy form,
microfilm, electronic format, or other generally accepted information storage
medium, as well as in any reasonable back-up form requested by the Company.

                  (b) The Manager also shall prepare and maintain the books and
records of the Company on behalf of the Company, including without limitation
all accounting records and reports, general and other ledgers, financial
statements, and statutory financial reports and filings. The Company and its
designated consultants and advisors shall have the right to examine such books,
files, and records at any time and to make copies of such records as it may deem
necessary, at its cost and expense. All books, accounts, or other documents
relating to the business of the Company, except computer software systems and
the books and records of Manager, are the property of the Company whether paid
for by it or not. The Department shall be permitted reasonable access upon
proper request to books, bank accounts, and records of the Manager to which it
is entitled under applicable law. The records shall be retained in accordance
with the Florida Insurance Code and the Internal Revenue Code in accordance with
procedures established from time to time. No provision of this Agreement shall
be construed or operate to waive or relinquish any legal privilege, proprietary
right, or business confidence of the Company.

                                       -4-

<PAGE>

                  1.7 RETENTION OF ACCOUNTANTS AND ACTUARIES. The retention of
any accountants and actuaries shall be made by the Company at its expense. The
Manager shall keep financial records of the Company open for examination by the
Company and its accountants, auditors and actuaries to examine the financial
condition and results of operation of the Company in accordance with statutory
accounting principles.

                  1.8 CASE MANAGEMENT. The Manager shall perform the specific
services relating to on-site case management, and network access for fees
outlined in Exhibit A attached hereto, and these fees will be assigned to
Allocated Loss Adjustment expenses. All managed care services will be provided
in accordance with AHCA provisions, inclusive of maintaining AHCA approvals.

                  1.9 MINISTERIAL FUNCTIONS. The Manager shall obtain or furnish
and supervise the performance of such ministerial and incidental functions in
connection with the administration of the Company as may be agreed upon by the
Manager and the Company.

                  1.10 INFORMATION SYSTEMS. Manager shall maintain the computer
hardware and the software licenses described on Schedule 1.10 hereto, and upon
termination of this Agreement, Manager shall use its reasonable best efforts to
provide to the Company access to the systems and the data contained therein.
[Schedule 1.10 is to be provided for review of the Company prior to the Closing
Date of the Stock Purchase Agreement.]

         2. LIMITATION OF AUTHORITY. In addition to any other limitations
expressly contained in this Agreement, any Exhibit hereto, bulletin, or
instruction which may be issued from time to time by the Company to the Manager
consistent with this Agreement, and except as otherwise permitted by this
Agreement, the Manager has no authority to and shall not:

                  (a) Make, accept or endorse notes or otherwise incur any
liability which is not incurred in the ordinary course of business of the
Manager on behalf of the Company in accordance with this Agreement.

                  (b) Waive a forfeiture or issue a guaranty for or on behalf of
the Company, other than as permitted expressly in writing by the Company.

                  (c) Extend the time for the payment of premiums or other
monies due the Company.

                  (d) Institute, prosecute, defend, or maintain any legal
proceedings in connection with any matter on behalf of the Company; provided,
that at the Company's request (which may be a continuing or standing request)
the Manager shall conduct such proceedings, at the Company's expense and subject
to its direction, respecting collection of premiums, defense of claims under the
Company's business, and other matters deemed routine or otherwise designated by
the Company for this purpose.

                  (e) Directly or indirectly solicit, sell, offer, bind, issue
or deliver any insurance or reinsurance or buy retrocessional coverage for the
Company without the approval of the Company.

                                       -5-

<PAGE>

                  (f) Transact business, or cause the Company to transact
business, in contravention of applicable laws, rules, lawful orders, or
regulations or in contravention of written instructions issued by the Company to
Manager consistent with this Agreement and as agreed from time to time.

                  (g) Hold itself out as an agent of the Company in any other
manner, or for any other purpose, other than as specifically authorized or
permitted by or in accordance with this Agreement or as otherwise expressly
authorized by the Company from time to time.

                  (h) Waive or forgive premium payment.

                  (i) Withhold or use of its own purposes (except as authorized
in this Agreement) any monies or property of the Company.

                  (j) Offer or pay any rebate or return of premium other than as
prescribed by the Company's policies of insurance.

                  (k) Bind (or commit to bind) coverage subsequent to its
effective date without express approval of the Company.

                  (l) Appoint any agent or producer.

                  (m) Permit agents or sub-agents of the Company to serve on the
Manager's Board of Directors.

                  (n) Endorse checks that are payable to the Company or its
order, except that the Manager may endorse such checks for deposit into a
fiduciary bank account where such checks are received on behalf of the Company
but made payable to the Manager. The Manager shall endorse and deposit in the
account on behalf of the Company all premium checks or other monies received on
behalf of the Company that are made payable to the Manager or its order.

                  (o) Commit the Company to any claims compromise or settlement
from a reinsurer without express approval of the Company.

         3. RELATIONSHIP OF THE PARTIES. The Company and the Manager are not
partners or joint venturers with each other, and nothing herein shall be
construed so as to make them partners or joint venturers or to impose any
liability of such on either of them. The Manager shall perform its duties
hereunder as an independent contractor and, except as herein expressed or as
hereafter expressly authorized by the Company, not as an agent of the Company,
but the Manager may act and hold itself out as the Company's agent to the extent
and for the purposes so authorized. The Manager shall be free to exercise
independent judgment as to the time, place, and manner of servicing
policyholders, administering, adjusting, and settling claims, and otherwise
performing its duties under this Agreement. However, the Manager shall perform
its duties at all times in accordance with this Agreement.

         4. CLAIMS ACCOUNT. The Company shall maintain a funded or zero-balance
fiduciary claims account upon which the Manager shall draw drafts as described
in Section 1 of this

                                       -6-

<PAGE>

Agreement. The Company shall, if necessary, deposit additional funds into the
claims account on a daily or weekly basis to maintain it at a level sufficient
to allow the Manager to pay claims under Section 1.1(g) and to carry out its
obligations under this Agreement. The Manager shall regularly provide
information and estimates to the Company to enable the Company to maintain the
claims account at an appropriate level. The Company shall provide to the Manager
such information as is necessary for the Manager to draw drafts on the Account
and shall from time to time designate to the Manager blocks of draft numbers for
the Manager to use in discharging its obligations under this Agreement.

         5. EXPENSES OF THE MANAGER. Without regard to the amount of
compensation earned or received hereunder by the Manager, the Manager shall bear
the following expenses, provided that the Manager may receive reimbursement for
all or an allocated portion of such expenses as is expressly provided elsewhere
in this Agreement.

                  (a) Employment expenses of personnel or subcontractors
employed by the Manager to render services required to be rendered or furnished
to the Company hereunder, including, but not limited to, salaries, wages,
payroll taxes, mandatory insurances, and costs of employee benefit plans and
temporary help expenses.

                  (b) Rent, telephone, utilities, office furniture, equipment,
machinery (including computer hardware and software to the extent utilized), and
other office expenses of the Manager.

                  (c) Miscellaneous administrative and overhead expenses
relating to performance by the Manager of its functions hereunder.

                  (d) Expenses of professional advisors and consultants engaged
or retained by the Manager for its purposes and not on behalf of the Company.

                  (e) Taxes payable in respect of the income, operations, and
properties of the Manager, and any costs, fines, or penalties imposed on or paid
by Manager because of its actual or alleged conduct or operations.

         6. EXPENSES OF THE COMPANY. Except as expressly otherwise provided in
this Agreement, the Company shall pay all of its expenses not assumed by the
Manager. Without limiting the generality of the foregoing, it is specifically
agreed that the following expenses relating to the business and operations of
the Company shall be paid or reimbursed by the Company and shall not be borne by
the Manager.

                  (a) All filing fees, taxes, assessments, and impositions
applicable to the Company or its business, including specifically, but without
limitation, premium taxes, intangible taxes, and guaranty fund, assigned risk
plan, and Special Disability Trust Fund assessments.

                  (b) All premiums and consideration for reinsurance.

                  (c) All expenses of organizing, financing, converting,
reorganizing, liquidating, or terminating the Company.

                                       -7-

<PAGE>

                  (d) All expenses in the payment and settlement of claims,
together with expenses properly classified or accounted for as allocated loss
adjustment expenses (as further described in Sections (3)(a) and (3)(b) of
Exhibit A attached hereto), but not including expenses properly classified as or
accounted for as unallocated loss adjustment expenses.

                  (e) All expenses for Company membership requested by the
Company in any board, bureaus, associations, or joint underwriting or assigned
risk plan, including the National Council on Compensation Insurance, Inc.,
Insurance Services Office, Inc., and any other such organizations to which the
Company subscribes or approves its subscription but not including memberships
necessary for the Manager to fulfill its obligations under this Agreement.

                  (f) All costs and expenses including professional fees for
legal, accounting, and actuarial services rendered from time to time for the
Company by any legal, accounting, or actuarial firm engaged and approved in
writing by the Company.

                  (g) Audits and examination fees of the Company by the
Department or any other regulatory or governmental entity respecting the
Company.

                  (h) All assessments, charges, or impositions by or for
guaranty associations, residual market mechanisms, the Florida Hurricane
Catastrophe Fund, and all other similar entities.

                  (i) All expenses, fees, or assessments charged by A.M. Best or
any similar rating agency in connection with securing listings and ratings for
the Company.

                  (j) All promotional and advertising expenses initiated by the
Company.

         7. COMPENSATION OF THE MANAGER. The Company shall pay to the Manager as
compensation for services rendered to the Company under the terms of this
Agreement, the amounts listed on Exhibit A. All fees shall be payable monthly
unless the Manager otherwise expressly agrees.

         8. TERM. This Agreement shall commence as of the Effective Date and
continue in force and effect for 15 years, unless the insurance reserves of the
Company are equal or greater than $10,000,000, in which case, this Agreement
shall continue to be in force and all of its terms and provisions shall remain
enforceable until such time as such reserves are less than $10,000,000, or
unless sooner terminated (a) by written agreement of the parties or (b) pursuant
to Section 15 or any other provision of this Agreement expressly providing for
termination. Provided, however, in the event of the termination of this
Agreement, the Manager shall continue to administer and provide the services
agreed pursuant to the terms hereof for a reasonable period of time, not to
exceed 30 days, to enable the Company to find a suitable replacement to perform
such services.

         9. BUDGETS AND CONTROLS. For so long as this Agreement is in effect,
the Manager shall submit to the Company (a) not less than 30 days prior to
December 31 of a year, a detailed operating budget for the Manager's current and
next succeeding fiscal year, showing without limitation the Manager's plans and
ability to fulfill its obligations under this Agreement as they come due, and
thereafter (b) quarterly and annual audited financial statements prepared in
accordance with generally

                                       -8-

<PAGE>

accepted accounting principles showing the Manager's financial condition,
results of operation, and cash flow for the quarter or year last ended, as
applicable. Annual financial statements shall be audited; quarterly statements
need not be audited. The Company shall be entitled to review and audit, through
its employees and agents (including independent accountants and auditors) the
books, records, and financial statements of the Manager, and the Manager shall
cooperate fully therein.

         10.  COVENANTS.

                  10.1 USE OF SERVICE FEES. Except as otherwise permitted
herein, the Manager will use the Service Fees provided on Exhibit A to meet the
working capital and general corporate needs of the Manager.

                  10.2 NOTICE OF DEFAULT. The Manager will give prompt notice in
writing to the Company of (a) the occurrence or any default or (b) the
occurrence of any other development, financial or otherwise which could
reasonably be expected to result in a default or affect the ability of the
Manager to provide the services to Company contemplated herein.

                  10.3 CONDUCT OF BUSINESS. The Manager will (a) carry on and
conduct its business in substantially the same manner and in substantially the
same fields of business as it is presently conducted and shall not establish any
subsidiary or make any material investment in any other company without prior
consent of the Company, which consent will not be unreasonably withheld, (b) not
conduct any significant business except for insurance or insurance related
services, (c) do all things necessary to remain duly incorporated, validly
existing and in good standing as a domestic corporation in its jurisdiction in
which its business is conducted and (d) do all things necessary to renew, extend
and continue in effect all licenses which may at any time and from time to time
be necessary to conduct business in compliance with this Agreement and all
applicable laws and regulations.

                  10.4 TAXES. The Manager will timely file complete and correct
United States federal and applicable foreign, state and local tax returns
required by applicable law and pay when due all taxes, assessments and
governmental charges and levies upon it or its income, profits or property.

                  10.5 PROVISION OF MEDICAL CARE AND SERVICE CONTRACTS. The
Manager will furnish to the Company, upon request therefor, copies of each
contract to which the Manager is a party relating to the provision of medical
care and related procedures, which the Manager utilizes in connection with its
settlement and evaluation of claims on behalf of the Company or to which
Claimants are referred by the Manager.

         11.  LICENSING AND COUNTERSIGNATURE REQUIREMENTS.

                  (a) The Manager represents and warrants that it now has, and
it agrees to maintain during the term of this Agreement, the license or licenses
necessary to perform its obligations under this Agreement. If the Manager
complies with licensing laws by using the license of a principal, director,
officer, or employee, then the Manager warrants and guarantees that the licenses
will comply with all requirements of this Agreement and specifically with this
paragraph, and the Manager will be responsible to the Company to the same extent
as if the applicable license were held

                                       -9-

<PAGE>

directly by the Manager. In the event that any license the Manager uses and
requires to fulfill the requirements of the Agreement expires, terminates, or is
suspended for any reason, and the Manager does not use another of its licenses
or the license of a principal, director, officer, or employee, then the Company
may terminate this Agreement and avail itself of any rights provided under
section 15 hereof.

         12. AMENDMENT & WAIVERS. This Agreement may not be amended, modified,
terminated, or discharged in whole or in part, except by an instrument in
writing signed by both parties hereto or their respective successors or assigns.
No waiver of any right, remedy, or benefit provided or accruing to either party
under this Agreement shall be effective unless in writing and executed by the
party against which it operates.

         13.  ASSIGNMENT.

Neither party may assign this Agreement in whole or in part without the prior
written consent of the other, which shall not be unreasonably withheld. Company
may assign its rights under this Agreement to Folksamerica or any affiliate
within Folksamerica , without the consent of Manager, provided that the assets
of the Company are also transferred to Folksamerica or such affiliate and
Folksamerica or such affiliate, as the case may be, remains financially viable.
Further, Manager may assign its rights under this Agreement to Humana or any
affiliate of Humana, without the consent of the Company, provided that Humana,
or such affiliate of Humana, as the case may be, remains financially viable.

         14. INSPECTIONS. The Company may conduct on-site reviews of the
operations of the Manager. The Company shall provide the Manager with a copy of
the reviews as soon as they are completed.

         15.  TERMINATION.

                  15.1  DUE CAUSE DEFINED.  Either party may terminate this
Agreement at any time for Due Cause committed by the other party. "Due Cause"
shall mean:

                  (a) Willful misconduct by the other with respect to a matter
that is a subject of this Agreement;

                  (b) Negligence or recklessness in the performance of the
other's material duties under this Agreement;

                  (c) Any act, error, or omission, whether intentional or
unintentional, by the other, its officers, directors, employees, or sub-agents,
that places the Company or the Manager, as the case may be, in violation (not
promptly cured) of any applicable law, rule, regulation, or lawful and binding
order of the Department, other regulatory agency or authority, or court of
competent jurisdiction in any material respect.;

                  (d) Any breach, non-performance, or violation by the other, or
its officers, directors, employees, or its sub-agents, of any material
provision, term or condition hereof;

                                      -10-

<PAGE>

                  (e) The Manager's persistent failure to follow in a material
respect a lawful directive of the Company that is called for by or not
inconsistent with this Agreement; or

                  (f) (i) the sale, merger, consolidation, share exchange or
other transaction where, immediately following such transaction, there is a
change of ownership or control of more than 50% of the voting securities of the
Manager or the Company, as the case may be, or (ii) there is a sale of all or
substantially all of the assets of the Manager or the Company, as the case may
be, without making provision for the assumption by the acquiror of all
liabilities and obligations of the Manager or the Company, as the case may be,
under this Agreement; provided, the Manager shall have no reason to withhold its
consent to any of the foregoing transactions if the proposed transaction does
not, or is not reasonably likely to, adversely affect the Manager's rights to
receive the compensation, bonuses and other benefits provided for in this
Agreement; provided, further, the Company shall have no reason to withhold its
consent to any of the foregoing transactions if the proposed transaction does
not, or is not reasonably likely to, adversely affect the Company's rights
provided for in this Agreement. The parties hereby agree that Due Cause shall
not exist for termination of this Agreement for any change of control in Humana
or Folksamerica.

                  15.2 TERMINATION FOR BREACH; CURE RIGHTS. Before a party may
terminate this Agreement, the party must permit the other to rectify such
breach, non-performance, or violation within a reasonable period, not to exceed
30 days unless extended by agreement of the parties. If the party fails to cure
such breach within such period, this Agreement shall terminate on the effective
date of the termination as provided in the termination notice.

                  15.3 TERMINATION WITH NOTICE. Notwithstanding the foregoing,
either party may terminate this Agreement immediately by giving written notice
of termination to the other party at its address if the other should:

                  (a) Be adjudged bankrupt or not cause to be dismissed a
bankruptcy petition within 60 days after it is filed;

                  (b) Have a receiver of its business, assets or property
appointed for purposes of liquidation because of insolvency or other grounds
permitted by law;

                  (c)  Make a general assignment for the benefit of creditors;

                  (d) Suffer any judgment in an amount in excess of $250,000.00
against it which remains unsatisfied, unbonded, or not stayed pending appeal for
30 days or longer; or

                  (e) Institute or suffer to be instituted and not dismissed
within 60 days any proceedings for the reorganization or arrangement of its
affairs.

                  (f) Failure of Manager to carry errors and omissions insurance
as set forth in Section 19, below, and to maintain a fidelity bond providing for
coverage of at least $5,000,000.

                                      -11-

<PAGE>

                  15.4  REMEDIES UPON EARLY TERMINATION.

                  (a) Upon termination of this Agreement, unless otherwise
stipulated in writing by the Company, the Manager shall account to the Company
for all monies or other transactions unaccounted for at the time of termination
or arising thereafter with respect to the Company's business. Except as provided
in Section 15.4(b), the Manager shall be entitled to its agreed compensation and
any reimbursable costs expended by Manager in accordance with the terms of this
Agreement up to and including the date of termination.

                  (b)  Upon termination of this Agreement by the Company for Due
Cause, the Manager shall:

                           (1) be entitled to any reimbursable costs expended by
         Manager in accordance with the terms of this Agreement up to and
         including the date of termination;

                           (2) forfeit any and all rights to any bonus
         compensation pursuant to Section 2 of Exhibit A of this Agreement,
         except bonus compensation earned up to the date of termination as
         established pursuant to an actuarial report prepared as of the
         termination date;

                           (3) forfeit any and all rights to receive future fees
         payable pursuant to Section 3 of Exhibit A to this Agreement;

                           (4) forfeit any and all rights to receive future fees
         payable pursuant to Section 1 of Exhibit A to this Agreement; and

                           (5) reimburse the Company fees paid pursuant to
         Section 1 of Exhibit A of this Agreement based upon the schedule:

<TABLE>
<CAPTION>

                                                  Total Due
<S>                                            <C>
If terminated year 1.........................  $      750,000
If terminated year 2.........................  $      650,000
If terminated year 3.........................  $      750,000
If terminated year 4.........................  $      850,000
If terminated year 5.........................  $      950,000
If terminated after 5 years..................  $            0
</TABLE>

                  (c) The parties hereby acknowledge and agree that the damages
for lost opportunity to earn bonus payments which Manager would suffer or incur
upon the termination of this Agreement within the first two years of the term of
this Agreement by the Company without Due Cause or by the Manager for Due Cause
would be substantial but difficult or impossible to ascertain or determine. The
parties stipulate that in any such event, the Company shall pay to the Manager
$5,000,000 as damages for its lost opportunity to earn the bonus payments
provided for in this Agreement. The parties further acknowledge and agree that
such payment by the Company constitutes liquidated damages for the lost
opportunity to earn bonus payments and not a penalty for any such breach by the
Company and the resulting termination of this Agreement.

                                      -12-

<PAGE>

                  15.5  ADDITIONAL AGREEMENTS UPON TERMINATION.

                  (a) If such action is reasonably necessary to protect the
business of the Company or the value of the Subject Business, the Company may
suspend claims settlement authority of the Manager during the pendency of any
bona fide dispute over the cause for or propriety of termination.

                  (b) Any termination shall not affect the rights and
obligations of the parties as to transactions or acts by either party prior to
the effective date of termination or relieve either party's obligation on
policies during the pendency of any dispute over the cause of termination,
unless otherwise agreed to by the parties.

                  (c) Any right of termination or cancellation belonging to any
party may be exercised without prejudice to any other right or remedy to which
the terminating or canceling party may be entitled at law or under this
Agreement.

         16. LIMITATION OF LIABILITY OF THE COMPANY AND ITS AGENTS. No personal
liability shall accrue to the Company's directors, officers, or employees,
arising out of the performance of their responsibilities under this Agreement.

         17. LIMITATION OF LIABILITY OF THE MANAGER. The Manager assumes no
responsibility, and shall not be responsible for any decision or election of the
Company (whether by act or omission) to follow or decline to follow any advice
or recommendation of the Company.

         18. SPECIAL ADMINISTRATOR PROVISIONS. The Manager is deemed to be an
administrator, as defined by SS 626.88, Florida Statutes, for purposes or by
virtue of entering into and performing this Agreement, but only to the extent
that such provisions apply to the functions performed by Manager under this
Agreement within the meaning of SS 626.882(2)(a), F.S.

                  (a) All monies received by the Manager on behalf of or for the
Company, and any return premiums received from or on behalf of the Company shall
be held in a fiduciary capacity. Any such funds shall be immediately remitted to
the person or persons entitled to them or deposited promptly in a fiduciary
account maintained by Manager in a financial institution. If charges or premiums
deposited in such an account are collected on behalf of more than one insurer,
the Manager shall keep records clearly recording the deposits and withdrawals on
behalf of each insurer and shall, upon request, furnish any such insurer with
copies of records pertaining to its deposits and withdrawals. Manager may not
pay claims from any such fiduciary account. Withdrawals from any such account
shall be made in accordance with this Agreement. Any claims paid by Manager from
funds collected on behalf of the Company shall be paid on drafts of, and as
authorized by the Company.

                  (b) Until six years or such longer period as required by law
after the termination or expiration of this Agreement, Manager shall maintain in
its principal office, and in accordance with prudent standards of insurance
record keeping, this Agreement and adequate books and records of all
transactions with the Company and its policyholders. The Department shall have
access to such books and records for purposes of examination, audit, and
inspection, to the extent and under the conditions provided in the Florida
Insurance Code.

                                      -13-

<PAGE>

                  (C) Any policies, certificates, booklets, termination notices,
or other written communications delivered by the Company to Manager for delivery
to Company policyholders shall be so delivered promptly after Manager's receipt
of delivery instructions.

         19. ERRORS AND OMISSIONS INSURANCE. Commencing on the Effective Date
and continuing during the term of this Agreement and for a period of three (3)
years subsequent to the date of termination of this Agreement for any reason,
the Manager shall maintain errors and omissions insurance (with the Manager and
the Company as named insureds) with a policy limit of $15,000,000, with a
deductible no greater than $25,000 per claim, with a $100,000 annual AGGREGATE
deductible, under a current policy issued by an insurer reasonably acceptable to
the Company. Said policy shall provide coverage for errors and omissions for all
claims adjusting and administrative services performed by the Manager under this
Agreement. Deductibles, if paid in the future, shall be paid by the Manager. A
copy of the policy shall be furnished to the Company. In the event such policy
is canceled or non-renewed during the Term of this Agreement, the Manager will
provide notice to the Company, which notice shall be received at least 30 days
prior to such termination of non-renewal.

         20. NOTICES. Any notices, reports, or other communication required to
be given hereunder shall be in writing unless some other method of giving such
notice, report, or other communication is accepted by the party to which it is
given and shall be given by being delivered at its principal business address or
another address requested by the recipient.

         21.  ARBITRATION.

                  21.1 RESOLUTION OF DISPUTES. Any dispute between the Company
and the Manager arising out of the provisions of this Agreement, or concerning
its interpretation or validity, whether arising before or after termination of
this Agreement, shall be submitted to arbitration in the manner set forth in
this Section. Either party may initiate arbitration of any dispute arising out
of the provisions of this Agreement by giving written notice to the other party,
by registered mail, return receipt requested, of its intention to arbitrate and
of its appointment of an arbitrator in accordance with Section 21.3.

                  21.2 COMPOSITION OF PANEL. Unless the parties agree upon a
single arbitrator within fifteen (15) days after the receipt of notice of
intention to arbitrate, all disputes shall be submitted to an arbitration panel
composed of two arbitrators and an umpire, chosen in accordance with Sections
21.3 and 21.4

                  21.3 APPOINTMENT OF ARBITRATORS. The members of the
arbitration panel shall be chosen from persons knowledgeable in the insurance
and reinsurance business. The party requesting arbitration (hereinafter referred
to as the "claimant") shall appoint an arbitrator and give written notice
thereof, by registered mail, return receipt requested, to the other party
(hereinafter referred to as the "respondent") together with its notice of
intention to arbitrate. Unless a single arbitrator is agreed upon within fifteen
(15) days after the receipt of the notice of intention to arbitrate, the
respondent shall, within thirty (30) days after receiving such notice, also
appoint an arbitrator and notify the claimant thereof in a like manner. Before
instituting a hearing, the two arbitrators so

                                      -14-

<PAGE>

appointed shall choose an umpire. If, within twenty (20) days after they are
both appointed, the arbitrators fail to agree upon the appointment of an umpire,
the umpire shall be appointed by the President of the American Arbitration
Association. The umpire shall participate in all proceedings and have the same
power and authority as the other arbitrators selected by the claimant and
respondent.

                  21.4 FAILURE OF PARTY TO APPOINT ARBITRATOR. If the respondent
fails to appoint an arbitrator within thirty (30) days after receiving a notice
of intention to arbitrate, such arbitrator shall be appointed by the President
of the American Arbitration Association, and shall then, together with the
arbitrator appointed by the claimant, choose an umpire as provided in Section
21.3.

                  21.5 CHOICE OF FORUM. Any arbitration instituted pursuant to
this Article shall be held in New York, New York .

                  21.6 SUBMISSION OF DISPUTE TO PANEL. Unless otherwise extended
by the arbitration panel, or agreed to by the parties, each party shall submit
its case to the panel within thirty (30) days after the selection of an umpire.

                  21.7 PROCEDURE GOVERNING ARBITRATION. All proceedings before
the panel shall be informal and the panel shall not be bound by the formal rules
of evidence. The panel shall have the power to fix all procedural rules relating
to the arbitration proceeding. In reaching any decision, the panel shall give
due consideration to the customs and usage of the insurance and reinsurance
business.

                  21.8 ARBITRATION AWARD. The arbitration panel shall render its
decision within sixty (60) days after termination of the proceeding, which
decision shall be in writing, stating the reasons therefor. The decision of the
majority of the panel shall be final and binding on the parties to the
proceeding. Judgement on the award rendered may be entered in any court having
jurisdiction, or application may be made to such court for a judicial acceptance
of such award or any order of enforcement, as the case may be.

                  21.9 COST OF ARBITRATION. Unless otherwise allocated by the
panel, each party shall bear the expense of its own arbitrator and shall jointly
and equally bear with the other parties the expense of the umpire and the
arbitration.

                  21.10 TOLLING OF STATUTES OF LIMITATION. All applicable
statutes of limitation shall be tolled while the procedures specified in this
Section 21 are pending. The parties shall take such action, if any, required to
effectuate such tolling.

         22. SERVICE OF PROCESS. In the event any legal process or notice is
served on the Manager in a suit or proceeding against the Company, the Manager
shall forthwith forward such process or notice, in a timely fashion and by
registered or certified mail, to the Company's office as hereinabove specified,
or to such other address as the Company may have previously specified to the
Manager in writing by notice in accordance with this Agreement.

                                      -15-

<PAGE>

         23. REGULATORY NOTICES. The Manager shall forward promptly to the
Company all correspondence pertaining to this Agreement, the Company or the
Company's business received from any government authority or regulatory agency.

         24. DIVISIBILITY. If any provision hereof shall be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions hereof.

         25. HEADINGS. Paragraph headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning
of this Agreement.

         26. GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Florida as at the time in effect.

         27. ENTIRE AGREEMENT. This Agreement and the attached Schedules and
Exhibits set forth the entire understanding of the parties hereto with respect
to the subject matter hereof and supersedes all prior and contemporaneous
agreements or understandings, written or oral, respecting such subject matter.

         28. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute a single instrument.

         IN WITNESS WHEREOF, the parties have hereunder set their hands and
seals, each through a duly authorized representative.

                                          PCA PROPERTY & CASUALTY INSURANCE
                                          COMPANY

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

                                          HUMANA WORKERS COMPENSATION
                                          SERVICES, INC.

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

                                      -16-

<PAGE>

                                    EXHIBIT A
                                       TO
                               MANAGEMENT CONTRACT

HWCS  SERVICE FEE PROVISIONS:

In return for the above services provided by Manager pursuant to this Agreement,
the Company will provide to Manager the following service fees:

(1)  The recorded ULAE amount on Company balance sheet at the date of close of
     the Company and the PCA Stock Purchase Agreement, plus an additional
     $3,000,000 in service fees payable to Manager. The recorded ULAE as of
     October 31, 1999 was $9,374,000 which will be reduced prior to the date of
     close by periodic adjustments to reflect reimbursements to the Manager for
     direct ULAE costs. Such reimbursements are estimated to be $350,000 to
     $450,000 per month.

     The payment of those fees shall be in six month intervals as follows:

<TABLE>
<CAPTION>

                        DATE                                           PAYMENT
<S>                                                    <C>
Close................................................                               $3,000,000

6 months after close.................................                               $3,000,000

12 months after close................................                               $1,000,000

18 months after close................................                               $1,000,000

24 months after close ...............................                                 $500,000

30 months after close................................                                 $500,000

36 months after close ...............................                                 $500,000

42 months after close ...............................                                 $500,000

48 months after close ...............................  One-half of Balance of ULAE
                                                       Account

54 months after close ...............................  Balance of ULAE Account
</TABLE>

(2)  The Company and Manager will enter into a bonus arrangement which allows
     for both parties to share in the incremental savings produced by the
     efforts of Manager.

The intent of the periodic bonus calculation will be to determine and share the
cumulative net increase in statutory book value attributable to the value added
service efforts of the Manager. To this end the following formula will serve as
a base for this calculation which will be made cumulatively from the date of
close using page 4 of the Annual Statement - audited:

                                       -1-

<PAGE>

<TABLE>
<CAPTION>

<S>                                                                                           <C>
Net income before income taxes (line 14)                                                                    $XXXXXX

Less, net investment gain or loss (line 9A)                                                                     XXX

Plus, $5,000,000 to reflect purchase price concession (this adjustment to be
         made in the bonus calculations for the first three years
          for a maximum adjustment of $15,000,000)*                                                       5,000,000

Plus or minus the difference in Losses incurred (line 2 and line 12 as it
     relates to loss portfolio transfers) resulting from replacing the
     amount included for ending reserves with that amount representing the
     independent actuaries' recommended reserve level
     (i.e., "best estimate") ..                                                                            XXX
                                                                                                         XXXXXX
                                                                                                          @ 25%
                                                                                                         XXXXXX

Less, amount paid as medical access fees (item 3(A) below)                                                      XXX

Total Amount Payable to Manager                                                                             $XXXXXX
</TABLE>

*    Assumes that no prior reserve reductions are restored before the date of
     close.

The bonus calculation will be performed annually by March 15th of each year and
payable on April 1st of each year based on the following table.

<TABLE>
<CAPTION>

                                                        CALENDAR YEAR
                          2000         2001           2002          2003           2004          2005         2006
--------------------  ------------ -------------  ------------- -------------  ------------- ------------ ------------
Payment date            April 1,     April 1,       April 1,      April 1,       April 1,      April 1,     April 1,
                          2001         2002           2003          2004           2005          2006         2007
--------------------  ------------ -------------  ------------- -------------  ------------- ------------ ------------
<S>                       <C>           <C>            <C>           <C>            <C>          <C>          <C>
% of Cumulative           50%           65%            80%           90%            95%          100%         100%
bonus payable
--------------------  ------------ -------------  ------------- -------------  ------------- ------------ ------------
% held in interest        50%           35%            20%           10%            5%            0%           0%
bearing account
--------------------  ------------ -------------  ------------- -------------  ------------- ------------ ------------
</TABLE>

The bonus calculation will be an inception to date calculation done each year
and fully paid out under the above percentages. A full and final settlement will
be mutually agreed to by both parties in year seven (2006).

The interest bearing account will be a bank account in the name of Folksamerica
and Humana Workers' Compensation Services, Inc. and all interest will accrue to
Humana Workers' Compensation Services, Inc. to the extent that the related bonus
principal is paid.

(3)  The following fees are payable to HWCS monthly and are related solely to
     Allocated Loss Adjustment Expenses (ALAE);

                                       -2-

<PAGE>

A)   Medical network access fees of 30% of savings below prevailing Florida fee
     schedule.
B)   On-site medical case management fees as detailed on Attachment A hereto.

                                       -3-

<PAGE>

                                  ATTACHMENT A

         The following flat rates for on-site medical case management services
include one (1) hour travel time and fifty (50) miles travel distance for "in
person" services. Miles traveled beyond fifty (50) shall be reimbursed at $0.32
per mile.

<TABLE>
<CAPTION>
SERVICE                                                                RATE
<S>                                                                    <C>
3-Point Medical Assessment in Person                                   $465
(Claimant, Physician, Employer)
</TABLE>

          Description: Review referral information, schedule appointments and
          meet with the claimant physician and employer. Submit report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
3-Point Contact in Person                                              $585
with Attendant Care Assessment
</TABLE>
         Description: Review referral information, schedule appointments, meet
         with claimant, physician and employer. Meet with claimant to review
         home environment, family support system, activities of daily living,
         functional abilities, limitations, and recommendations. Meet with
         physician to review attendant care assessment, sign assessment, submit
         report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
Claimant Visit in Person                                               $245
</TABLE>
          Description: Review referral information, schedule appointment, and
          meet with claimant. Submit report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
Physician Visit In Person                                              $245
</TABLE>
          Description: Review referral information, schedule appointment, and
          consult with physician. Submit report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
Employer Visit                                                         $245
</TABLE>
          Description: Review referral information, schedule appointment, and
          meet employer. Submit report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
2-Point Contact In Person                                              $365
(Claimant, Physician)
with Attendant Care Assessment                                         $485
</TABLE>
          Description: Review referral information, schedule appointments, meet
          with claimant, physician. Submit report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
2-Point Contact in Person                                              $365
(Claimant, Employer) No Job Analysis
</TABLE>
          Description: Review referral information, schedule appointments, meet
          with claimant and employer, interview supervisor.

                                       -4-

<PAGE>

                              ATTACHMENT A, (CONT.)

<TABLE>
<CAPTION>
SERVICE                                                                RATE
<S>                                                                    <C>
2-Point Contact in Person                                              $465
(Claimant, Employer) with Job Analysis
</TABLE>
          Description: Review referral information, schedule appointments, meet
          with claimant and employer, interview supervisor, and observe job
          being performed. Submit job analysis report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
Claimant Contact in Person                                             $355
with Attendant Care Assessment
(Initial Assessment)
</TABLE>
          Description: Review referral information, schedule appointment, meet
          with claimant. Refer to Attendant Care Assessment Description. Submit
          report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
Attendant Care Assessment in Person                                    $295
(Utilizing Revised AHCA Form)
</TABLE>
          Description: Review referral information, schedule appointment, and
          meet with claimant to review home environment, family support system,
          activities of daily living, functional abilities and limitations, and
          recommendation. Submit report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
Re-Employment Assessment-Telephonic                                    $135
(Per New Rehab Rules 38.F)
</TABLE>
          Description: Review referral information, and consult with claimant,
          physician and employer by telephone. Submit report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
Re-Employment Assessment in Person                                     $465
(Per New Rehab Rules 38.F)
</TABLE>
          Description: Review referral information, schedule appointment, meet
          with claimant, physician and employer. Submit report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
Re-Employment Assessment with Job Analysis                             $565
</TABLE>
          Description: Review referral information, schedule appointment, meet
          with claimant, physician, and employer. Refer to Job Analysis
          description. Submit report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
Vocational Assessment with Transferable                                $625
Skills Analysis (includes computerized analysis)
</TABLE>
          Description: Review referral information, schedule appointment, and
          meet with claimant for comprehensive vocational interview. Develop
          vocational profile from work history, adjust to reflect functional
          limitations, and perform transferable skills analysis. Submit report.

                                       -5-

<PAGE>

                               ATTACHMENT A, CONT.

<TABLE>
<CAPTION>
SERVICE                                                                RATE
<S>                                                                    <C>
Vocational Assessment/Job Analysis/                                    $725
Labor Market Survey
</TABLE>
          Description: Review referral information, schedule appointment, meet
          with claimant for comprehensive vocation interview. Develop vocational
          profile from work history, adjusted to reflect functional limitations.
          Refer to Job Analysis description. Refer to Labor Market Survey
          description. Submit report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
Job Analysis in Person                                                 $260
</TABLE>
          Description: Review referral information, schedule appointment to meet
          with employer, interview supervisor, and observe job being performed.
          Submit job analysis report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
Labor Market Survey with Transferable                                  $455
Skills Analysis (includes computerized analysis)
</TABLE>
          Description: Review referral information, develop vocational profile
          from work history, adjust to reflect functional limitations and
          perform computerized transferable skills analysis to identify
          potential vocational goals. Review labor market resources, and conduct
          telephone survey of employers within given geographical area to
          document availability of jobs for vocational goal or goals identified.
          Survey will include a minimum of five (5) positive responses to
          support vocational goal or will include at least twelve (12) negative
          responses, to document goal is invalid. Submit report outlining
          results of TSA and labor market survey. LMS report will include
          employer name, phone number, contact person, hiring requirements,
          physical requirements of job and information regarding wages and job
          openings.

<TABLE>
<CAPTION>
<S>                                                                    <C>
Labor Market Survey without Transferable                               $355
Skills Analysis (includes computerized analysis)
</TABLE>

         Description: Review referral information and labor market resources,
         and conduct availability of jobs for given occupational goal and goals.
         Survey will include a minimum of five (5) positive responses (per
         Division guidelines) to support vocational goal or will include at
         least twelve (12) negative responses, to document goal is invalid.
         Report will include employer name, phone number, contact person, hiring
         requirements, physical requirements of job, and information regarding
         wages and job openings. Submit report.

<TABLE>
<CAPTION>
<S>                                                                    <C>
Transferable Skills Analysis                                           $175
</TABLE>
          Description: Review referral information TSA
          (computerized/non-computerized analysis) to identify potential
          vocational goals. Submit report.

                                       -6-

<PAGE>

                                    EXHIBIT B
                                       TO
                              MANAGEMENT AGREEMENT

         CLAIMS HANDLING PROCEDURES:

         The Manager, on behalf of the Company, will be responsible for
         handling, processing, adjustment and settlement of any and all claims,
         including all ceded and third party recoveries associated therewith,
         and other claims related activities associated with the PCA P&C
         business. This includes, but is not limited to, all claims associated
         with the loss portfolio transfers entered into by the Company prior to
         the closing date of the Folksamerica purchase of the Company from
         Humana. For sake of order in the administration under this Management
         Agreement, the different types of business are specifically classified
         as (1) Primary Workers Compensation, (2) Excess Workers Compensation,
         and (3) Other Liability (i.e. - the General Liability book assumed from
         FHB and later written directly by PCA P&C). This Exhibit will outline
         the various duties required on a general, which applies to all three
         business categories, as well as to each specific area.

                  GENERAL DUTIES

                  1. The Manager will handle, process, adjust and settle all
         losses in accordance with the appropriate state statutes and generally
         accepted "best claim handling practices/standards." The Manager will
         ensure that only covered losses are accepted and that all potential
         third party recoveries including, but not limited to, SDTF recoveries,
         reinsurance recoveries, subrogation recoveries and salvage, where
         appropriate, are timely filed and pursued. The Manager will act in good
         faith when handling these matters on behalf of the Company.

                  2. The Manager will maintain all claim records for the
         Company, including the "paper" claim file (which will include the
         original investigative information, medical and wage information,
         doctors reports, legal notices, etc.) and the electronic claim file.
         The Manager will be responsible for maintaining these records and will
         serve as the Company's custodian of records. The Manager will be
         responsible for the maintenance of records for files and items that are
         sent to off site storage. The Manager will track all losses that have
         been settled via an annuity or structure basis and will retain records
         related to these types of settlements.

                  3. The Manager, in consultation with the Company, will
         maintain competent and adequate staff to manage the run off of the
         portfolio of the Company's losses. The Manager will initially set, and
         periodically update, internal procedures, providing them to the Company
         for approval, which will outline the Manager's "best claim handling
         practices/standards" requirements. Those procedures should include
         requirements relating to the following areas:

                                      -7-

<PAGE>

                            -      File creation, closing, and reopening,
                                   including computer system input and paper
                                   file maintenance.
                            -      Diary maintenance, size and frequency.
                            -      Investigation requirements and file
                                   documentation.
                            -      Mail processing standards.
                            -      Coverage confirmation, coverage issue
                                   recognition, ROR issuance, declination
                                   issuance, etc.
                            -      Reserve calculations, timing, authorities,
                                   etc.
                            -      Payment approval (double signature required
                                   over $1,000), timing, authority, etc.
                            -      Vendor assignment guidelines, criteria and
                                   auditing.
                            -      Subrogation/Salvage/3rd party recovery
                                   analysis, tracking, follow up and collection.
                            -      SDTF recovery analysis, tracking, follow up
                                   and collection.
                            -      Reinsurance administration including, but not
                                   limited to premium calculation, audits, loss
                                   reporting, updating, billing and collection.

                  If additional areas develop that need to be addressed, the
         Manager will set a new and appropriate procedure to be implemented,
         which will submitted to the Company for approval.

                  4. The Manager will follow the authority guidelines for
         reserve and payment as outlined in the following business specific
         sections. The Manager shall provide appropriate notice and information
         to the Company when seeking authority as spelled out in these sections.
         The Manager will submit a written request for the authority to the
         Company. The format of the authority request and the type of
         information required, whether in the submission or as an attachment,
         will be addressed on a case by case basis. The Company will return a
         signed copy of this authorization request, either confirming or
         adjusting the item(s) requested, prior to the Manager actually
         performing the requested authority (i.e.-booking reserves or making an
         offer of settlement above the stated authority level). At no time will
         the Manager have the requested authority unless they have a signed
         acknowledgment from the Company.

                  5. The Manager will use only vendors that have been approved
         by the Company. A list of the approved vendors may be periodically
         updated by written request of the Manager.

                  6. The Manager will provide prompt notice to the Company of
         all situations where it becomes known to the Manager that:

                            -      a claim, demand, action, suit or proceeding
                                   has been brought, threatened, commenced or
                                   made against the Company on matters that the
                                   Manager is handling on behalf of the Company.
                            -      a claim's potential exceeds the authority
                                   limits for reserve changes and payments as
                                   set forth in the business specific sections
                                   of this Exhibit.

                                       -8-

<PAGE>

                            -      a potential coverage dispute may arise that
                                   would warrant the seeking of a coverage
                                   opinion from counsel, the issuance of a
                                   Reservation of Rights letter or the
                                   declination of coverage. The Company will be
                                   informed prior to the Manager's final
                                   communication to the insured.
                            -      a claim will be adjudicated by arbitration,
                                   mediation, or court/tribunal of jurisdiction.
                                   The Manager will give at least one (1) month
                                   notice prior to the scheduled proceedings
                                   date to the Company, such notice to include
                                   an appropriate action plan for the Company's
                                   consideration.
                            -      a claim is being disputed or has gone
                                   uncollected from a reinsurer for longer than
                                   180 days from the date of initial billing.
                            -      a SDTF "approved" recovery has not been
                                   collected within three (3) years from its
                                   initial submission.
                            -      a claim has been closed by payment of an
                                   amount awarded by final judgment by a
                                   tribunal of competent jurisdiction.

                  7. The Manager has no authority to subcontract any
         "traditional" claim activities to a non-party to this agreement without
         the express written consent of the Company.

                  PRIMARY WORKERS COMPENSATION

                  1. The Manager's reserve and payment authority on a per file
         basis limits the ability of the Manager to adjust the individual case
         incurred development with out the express consent of the Company. When
         suggesting changes above the Manager's stated authority, the Manager
         needs to provide to the Company the complete payment and reserve
         history for consideration. In addition thereto, the Manager should
         provide a report that includes the insured's information, claimant's
         information, description of accident, date of loss, date of report to
         Manager or Manager's predecessor, relevant coverage information, nature
         of injury, prognosis, current medical developments, current work
         status, litigation status, current reserve and paid information,
         recommended change, current reinsurance status, SDTF information, and
         the Manager's action plan.

                  2. The Manager will review all open losses on a regular diary.
         Every open file will be assigned to and reviewed by a handler of
         competent knowledge and skill for the loss involved. In addition to the
         assigned handler, a "claim supervisor" will oversee the handler's
         activities and will be required to review every open file at least
         twice during an annual period. The claim supervisor will be responsible
         for ensuring that "best claim practices" are being followed and that
         outstanding reserves are adequate.

                  3. The Manager will maintain a booklet/binder, which will be
         periodically (at a minimum annually) updated, of all open losses with
         incurred amounts greater than $250,000 for the Company's benefit and
         use. The Company will receive the periodic updates on the open losses.
         If a claim that meets criteria to be included in this booklet and
         subsequently closes, the Manager will provide a closing update to the
         Company.

                                       -9-

<PAGE>

                  4. The Manager will have authority to pay medical providers,
         approved vendors, claimant's periodic indemnity payments, etc.
         associated with the day to day administration of business. That said,
         if the amount involved exceeds the stated authority level, the Manager
         is required to obtain the Company's written authority prior to settling
         the related matter.

                  5. The Manager has authority to pay up to $50,000 for
         indemnity and $100,000 for medical on a per transaction basis. That
         said, if the payments result in a change to incurred of $50,000, the
         Manager needs to obtain authority from the Company. Any amount in
         excess of these amounts requires the Company's prior written approval.

                  6. The Manager has authority to change reserves, either
         increase or decrease, by $50,000 on a per file basis. If payments and
         reserve adjustments over the twelve (12) prior months has resulted in
         the decrease of $50,000 to the reserves, the Manager is required to
         reevaluate the reserve adequacy of the file and report to the Company
         accordingly.

                  7. The Manager will not commute future liabilities by
         accelerating payments without the express written consent of the
         Company.

                  EXCESS WORKERS COMPENSATION

                  1. The Manager will have on staff a person(s) of appropriate
         background and knowledge to address this diverse and complex book of
         business.

                  2. The Manager will secure the necessary information to
         evaluate the Company's exposure under these policies. If that
         information is not available via reports from the various insureds, the
         Manager will advise the Company that an audit is required. The Manager
         will give the Company the option to participate in the audit. That
         said, the Manager will be responsible to complete the audit and provide
         an detailed report of findings to the Company.

                  3. The Manager will have authority to the insured various
         items due that are within the Manager's authority level and associated
         with the day to day administration of business. That said, if the
         amount involved exceeds the stated authority level, the Manager is
         required to obtain the Company's written authority prior to settling
         the related matter.

                  4. The Manager has authority to pay up to $50,000 on a per
         transaction basis. That said, if the payments result in a change to
         incurred of $50,000, the Manager needs to obtain authority from the
         Company. Any amount in excess of these amounts requires the Company's
         prior written approval.

                  5. The Manager has authority to change reserves, either
         increase or decrease, by $50,000 on a per file basis. If payments and
         reserve adjustments over the twelve (12) prior months has resulted in
         the decrease of $50,000 to the reserves, the Manager is required to
         reevaluate the reserve adequacy of the file and report to the Company
         accordingly.

                                      -10-

<PAGE>

                  6. The Manager will not commute future liabilities by
         accelerating payments without the express written consent of the
         Company.

                  OTHER LIABILITY

                  1. The Manager will have on staff a person(s) of appropriate
         background and knowledge to address this diverse and complex book of
         business.

                  2. Every newly reported loss will be evaluated upon receipt
         and determined if there are any coverage issues. The Manager will put
         in place appropriate procedures to ensure that coverage in fact exists
         and that the loss being reported is a covered item.

                  3. The Manager will maintain the computer system that was in
         use when the coverage was bound and/or provide for the conversion and
         preservation of theses records. In this regard, the Manager will ensure
         that all loss activity that was booked to this system is maintained and
         referred to during the adjustment of the currently open or newly
         reported losses.

                  4. The Manager will maintain a booklet/binder, which will be
         periodically (at a minimum annually) updated, of all open losses
         regardless of the reserve amount for the Company's benefit and use. The
         Company will receive the periodic updates on the open losses. If a
         claim that meets criteria to be included in this booklet and
         subsequently closes, the Manager will provide a closing update to the
         Company. The content of these individual reports will include insured
         information, claimant(s) information, description of accident, date of
         loss, date of report to Manager or Manager's predecessor, all coverage
         information, litigation information, reserve and payment information,
         current status and action plan.

                  5. The Manager has authority to settle losses up to $50,000
         that have been properly investigated and evaluated for adjudication.
         That said, if the settlement will result in the total paid amount in
         excess of $50,000, the Manager must request authority from the Company
         prior to entering into negotiations.

                  6. The Manager has authority to reserve individual losses up
         to $100,000 on a per policy basis. If the Manager believes that the
         reserve should be greater than $100,000, they should request authority
         from the Company prior to posting the reserve.

                                      -11-

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