Document:

<PAGE>   1

                                                                   EXHIBIT 10.1

                           THIRD AMENDMENT AGREEMENT

         This Third Amendment Agreement, dated as of May 30, 2000 (this
"Agreement"), is among WESTPOINT STEVENS INC., a Delaware corporation (the
"Borrower"), WESTPOINT STEVENS (UK) LIMITED, WESTPOINT STEVENS (EUROPE)
LIMITED, each of the Banks signatories hereto, and BANK OF AMERICA, N.A., as
Administrative Agent (the "Agent").

                                   RECITALS:

         A.       Pursuant to that certain Second Amended and Restated Credit
Agreement, dated as of June 9, 1998 among the Borrower, WestPoint Stevens (UK)
Limited and WestPoint Stevens (Europe) Limited (collectively, the "Foreign
Borrowers"), the lending and financial institutions party thereto (the
"Original Banks"), and the Agent, as amended by that certain letter agreement
dated as of June 10, 1998 among the Borrower, the Foreign Borrowers, the
Existing Banks, and the Agent (as amended, the "Original Credit Agreement"),
the Original Banks agreed to make revolving loan and letter of credit
facilities available to the Borrower and the Foreign Borrowers.

         B.       Pursuant to that certain Amendment Agreement (the "First
Amendment"), dated as of July 31, 1998, by and among the Borrower, the Foreign
Borrowers, the Original Banks parties thereto, the Agent, and National
Westminster Bank PLC ("Natwest"), the Original Credit Agreement was amended to
increase the aggregate Revolving Committed Amount from $550,000,000 to
$575,000,000, and to add Natwest as a Bank under the Original Credit Agreement
(as amended by the First Amendment, the "First Amended Credit Agreement").

         C.       Pursuant to that certain Second Amendment Agreement (the
"Second Amendment"), dated as of May 20, 1999, by and among the Borrower, the
Foreign Borrowers, the Banks parties thereto, and the Agent, the First Amended
Credit Agreement was amended to increase the aggregate Revolving Committed
Amount to $800,000,000 by increasing the Revolving Commitment of certain
consenting Banks (as amended by the Second Amendment, the "Second Amended
Credit Agreement").

         D.       By separate letter agreements dated June, 30, 1998, October
7, 1998, March 16, 1999, August 31, 1999, and November 15, 1999, the Borrower,
the Foreign Borrowers, the Required Banks, and the Agent have amended the
definitions of the terms "Maximum Restricted Payment Amount" and "Minimum
Consolidated Net Worth" on four occasions (the "Letter Amendments"). The
Original Credit Agreement, as amended by the First Amendment, the Second
Amendment, and the Letter Amendments shall be referred to as the "Existing
Credit Agreement".

         E.       The Borrower and the Foreign Borrowers have requested that
the Required Banks agree to make certain additional amendments to the Existing
Credit Agreement.

                                       1
<PAGE>   2

         NOW, THEREFORE, based upon the foregoing, and for good and valuable
consideration, the sufficiency and receipt of which is hereby acknowledged, the
parties hereby agree as follows:

                                     PART I
                                  DEFINITIONS

         SUBPART 1.1. Certain Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Agreement, including its
preamble and recitals, have the following meanings:

         "Amended Credit Agreement" means the Existing Credit Agreement as
amended hereby.

                  "Effective Date" shall have the meaning ascribed to such term
in Subpart 3.1.

         SUBPART 1.2. Other Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Agreement, including its
preamble and recitals, have the meanings provided in the Amended Credit
Agreement.

                                    PART II
                    AMENDMENTS TO EXISTING CREDIT AGREEMENT

         Effective on (and subject to the occurrence of) the Effective Date,
the Existing Credit Agreement is hereby amended in accordance with this Part
II. Except as so amended, the Existing Credit Agreement shall continue in full
force and effect.

         SUBPART 2.1       Amendments to Existing Definitions in Section 1.1.
Section 1.1 of the Existing Credit Agreement is amended by revising each of the
following definitions in the manner described below:

         (a)      Applicable Percentage. The definition of the term "Applicable
Percentage" is amended by substituting the following matrix for the one
previously set forth in the definition of "Applicable Percentage" in the
Existing Credit Agreement:

<TABLE>
<CAPTION>
PRICING LEVEL     Rate Adjustment Ratio                   Applicable Percentage For
                                                          Eurocurrency Loans, Standby
                                                          Letter of Credit Fee and Trade
                                                          Letter of Credit Fee

<S>               <C>                                     <C>
I                 LESS THAN OR EQUAL TO                    1.0%
                  2.75

II                LESS THAN OR EQUAL TO 3.25 BUT          0.75%
                  GREATER THAN 2.75

III               GREATER THAN 3.25                       0.50%
</TABLE>

                                       2
<PAGE>   3

         (b)      The definition of the terms "Consolidated Net Income" and
"Consolidated Net Loss" are amended to read in their entirety as follows:

                  "Consolidated Net Income" and "Consolidated Net Loss" mean,
         respectively, for any period, the aggregate net income (or net loss)
         of the Consolidated Parties on a consolidated basis, as determined in
         accordance with GAAP. There shall be excluded in computing
         Consolidated Net Income and Consolidated Net Loss, to the extent
         otherwise included therein, (i) any gain or loss which is treated as
         an extraordinary item under GAAP and any gain or loss from the sale of
         any asset other than a sale in the ordinary course of business, (ii)
         the income or loss of any Person (other than a Consolidated Subsidiary
         of the Borrower) in which any other Person (other than the Borrower or
         any of its Consolidated Subsidiaries) has a joint interest, except to
         the extent of the amount of dividends or other distributions actually
         paid to the Borrower or any of its Consolidated Subsidiaries by such
         Person during such period, (iii) the income or loss of any Person
         accrued prior to the date it becomes a Consolidated Subsidiary of the
         Borrower or is merged into or consolidated with the Borrower or any of
         its Consolidated Subsidiaries or that Person's assets are acquired by
         the Borrower or any of its Consolidated Subsidiaries, (iv) the income
         of any Consolidated Subsidiary of the Borrower to the extent that the
         declaration or payment of dividends or similar distributions by that
         Consolidated Subsidiary of that income is not at the time permitted by
         operation of the terms of its charter or any agreement, instrument,
         judgment, decree, order, statute, rule or governmental regulation
         applicable to that Consolidated Subsidiary (the only such restrictions
         as of the date hereof being those imposed by the corporate law of any
         such Subsidiary's state of incorporation), (v) the amortization of
         Excess Reorganization Value during such period as determined in
         accordance with GAAP, and (vi) the 2000 Restructuring Charges.

         (c)      The definition of the term "Consolidated Net Worth" is
amended to read in its entirety as follows:

                  "Consolidated Net Worth" means, as of any date, all amounts
         which would be included under stockholders' equity on a balance sheet
         of the Borrower and its Consolidated Subsidiaries determined as at
         such date on a consolidated basis in accordance with GAAP. There shall
         be excluded in computing Consolidated Net Worth (a) the amortization
         of Excess Reorganization Value since January 1, 1993 as determined in
         accordance with GAAP, (b) the effect of the Restructuring Charge,
         adjusted to reflect the tax effect of such charge, (c) any non-cash
         minimum pension liability adjustment determined in accordance with
         GAAP, without giving effect to any adjustment for minority interest in
         the cases of clauses (a) and (b) above, (d) the effect of the
         after-tax write-off of deferred financing fees and expenses related to
         the Original Credit Agreement (and each amendment or restatement
         thereof, including the 1994 Credit Agreement and this Credit
         Agreement, as amended), (e) the after-tax extraordinary expenses in
         1998 and 1999 associated with the refinancing of the Borrower's 8-3/4%
         senior notes, its 9-3/8% senior subordinated debentures, its 9%
         sinking fund debentures and the Permitted Receivables Financing, and
         (f) the effect of the 2000 Restructuring Charge.

                                       3

<PAGE>   4

         (d)      The definition of the term Maximum Restricted Payment Amount
is amended to read in its entirety as follows:

                  "Maximum Restricted Payment Amount" means the sum of (i)
         $358,874,000, plus (ii) 50% of the Consolidated Net Income from and
         after September 30, 1999 until any relevant measurement date, plus
         (iii) the Net Cash Proceeds received by the Borrower from the exercise
         of stock warrants or options by current or former employees or
         directors of the Borrower in respect of Capital Stock of the Borrower
         from and after June 30, 1999.

         SUBPART 2.2       Addition of New Definitions in Section 1.1. Section
1.1 of the Existing Credit Agreement is further amended by adding each of the
following new definitions in their appropriate alphabetical order:

                  (a)      "2000 Restructuring Charge" means the following
         non-recurring charges, in the aggregate amount not in excess of
         $125,000,000, incurred, accrued or reserved by the Borrower or its
         Consolidated Subsidiaries during fiscal year 2000: (i) write-off of
         goodwill and other intangibles related to impaired assets; (ii) direct
         inventory write-offs and/or related increases in inventory reserves;
         (iii) write-offs of fixed assets and non- capitalized relocation
         charges; and (iv) without duplication, relocation, severance,
         unabsorbed overhead, and other costs related to the Borrower's
         restructuring, impairment charges and recapitalization plan as
         disclosed to the Agent and the Banks.

                  (b)      "Balance Sheet Debt" means all Funded Indebtedness
         of the Borrower and the Consolidated Subsidiaries less any amount of
         any Indebtedness incurred and outstanding in relation to the Permitted
         Receivables Financing, any Guaranty Obligations, and any Letters of
         Credit (to the extent any such Indebtedness would otherwise constitute
         Funded Indebtedness).

         SUBPART 2.3       Amendment to Section 2.1(a). Section 2.1(a) of the
Existing Credit Agreement is amended to read in its entirety as follows:

         2.1      REVOLVING LOANS.

                  (a)      Revolving Commitment. Subject to the terms and
         conditions hereof and in reliance upon the representations and
         warranties set forth herein, each Bank severally agrees to make
         available to the Borrower such Bank's Revolving Commitment Percentage
         (as set forth on Schedule 2.1(a)) of revolving credit loans requested
         by the Borrower in Dollars ("Revolving Loans") from time to time from
         the Closing Date until the Maturity Date, or such earlier date as the
         Revolving Commitments shall have been terminated as provided herein;
         provided, however, that the sum of the aggregate principal amount of
         outstanding Revolving Loans shall not exceed (i) at any time prior to
         July 1, 2001, EIGHT HUNDRED MILLION DOLLARS ($800,000,000), (ii) from
         and after July 1, 2001, SEVEN HUNDRED TWENTY-FIVE MILLION DOLLARS
         ($725,000,000), and (iii) from and after July 1, 2002, SIX HUNDRED
         FIFTY MILLION DOLLARS ($650,000,000) (as such aggregate maximum
         amounts may be reduced from time to time as provided in Section 3.4,
         the "Revolving Committed

                                       4
<PAGE>   5

         Amount"); provided, further, (i) with regard to each Bank
         individually, such Bank's outstanding Revolving Loans shall not exceed
         such Bank's Revolving Commitment, (ii) with regard to the Banks
         collectively, the aggregate principal amount of outstanding Revolving
         Loans plus the aggregate principal amount of Competitive Loans plus
         the Dollar Amount of the aggregate outstanding principal amount of
         Foreign Currency Loans, plus the aggregate principal amount of
         outstanding Swingline Loans plus the Dollar Amount of LOC Obligations
         outstanding shall not exceed the Revolving Committed Amount. Revolving
         Loans may consist of Base Rate Loans or Eurocurrency Loans, or a
         combination thereof, as the Borrower may request; provided, however,
         that no more than eight (8) Eurocurrency Loans shall be outstanding
         under this Section 2.1 at any time (it being understood that, for
         purposes hereof, Eurocurrency Loans with different Interest Periods
         shall be considered as separate Eurocurrency Loans, even if they begin
         on the same date, although borrowings, extensions and conversions may,
         in accordance with the provisions hereof, be combined at the end of
         existing Interest Periods to constitute a new Eurocurrency Loan with a
         single Interest Period). Revolving Loans may be repaid and reborrowed
         in accordance with the provisions hereof.

         SUBPART 2.4       Amendment of Section 7.11(a). Section 7.11(a) of the
Existing Credit Agreement is amended in its entirety to read as follows:

                  (a)      Minimum Consolidated Net Worth. Have a Consolidated
         Net Worth as of the last day of each fiscal quarter of not less than
         (i) $20,000,000, (ii) increased on a cumulative basis as of the end of
         each fiscal quarter of the Consolidated Parties, commencing with the
         fiscal quarter ending June 30, 1998, by an amount equal to forty
         percent (40%) of Consolidated Net Income (to the extent positive) for
         the fiscal quarter then ended, and (iii) further increased on a
         cumulative basis by fifty percent (50%) of Consolidated Net Income (to
         the extent positive) for the period October 1, 1998 through September
         30, 1999.

         SUBPART 2.5       Amendment of Section 7.11(c). Section 7.11(c) of the
Existing Credit Agreement is amended in its entirety to read as follows:

                  (c)      Interest Coverage Ratio. Have at the end of each
         fiscal quarter an Interest Coverage Ratio which is not less than 2.00
         to 1.00.

         SUBPART 2.6       Addition of New Section 7.11(d). Section 7.11 of the
Existing Credit Agreement is further amended by adding a new subsection (d)
which reads in its entirety as follows:

                  (d)      Balance Sheet Debt to Consolidated EBITDA Ratio.
         Have at the end of each fiscal quarter a ratio of Balance Sheet Debt
         on such date to Consolidated EBITDA for the four (4) fiscal quarters
         ending on such date of (i) not more than 4.85 to 1.0 from and after
         December 31, 2000, and (ii) not more than 4.50 to 1.0 from and after
         December 31, 2001.

                                       5
<PAGE>   6
                                    PART III
                          CONDITIONS TO EFFECTIVENESS

         SUBPART 3.1       Effective Date. The amendments effected by this
Agreement shall be and become effective as of the date hereof when (i) all of
the conditions set forth in this Subpart 3.1 shall have been satisfied, and
(ii) the Required Banks, the Borrower, and the Foreign Borrowers shall have
duly executed counterparts of this Agreement and provided original copies
thereof to the Agent.

                  SUBPART 3.1.1.    Closing Certificate. The Agent shall have
received a certificate from the Borrower and the Foreign Borrowers certifying
that (i) no Default or Event of Default exists as of the Effective Date, and
(ii) the representations and warranties of the Borrower and the Foreign
Borrowers made in or pursuant to the Credit Documents are true in all material
respects on and as of the Effective Date.

                  SUBPART 3.1.2.    Guarantors Consent.  Each of the Guarantors
shall have executed the Consent included in the signature pages of this
Agreement, and the Agent shall have received such Consent executed by each
Guarantor.

                  SUBPART 3.1.3.    Corporate Action. The Borrower shall deliver
to the Agent certified copies of all corporate action taken by each Credit
Party approving this Agreement and each of the documents executed and delivered
in connection herewith (including, without limitation, a certificate setting
forth the resolutions of the Board of Directors of each Credit Party adopted in
respect of the transactions contemplated by this Agreement.)

                  SUBPART 3.1.4.    Documentation. The Existing Banks and the
Agent shall have received all information, and such counterpart originals or
such certified or other copies of such originals, as they may reasonably
request, together with the legal opinion of counsel to the Borrower in form and
content reasonably satisfactory to the Agent and its counsel. All legal matters
incident to the transactions contemplated by this Agreement shall be
satisfactory to the counsel for the Agent.

                  SUBPART 3.1.5.    Amendment Fee. An amendment fee of 25 basis
points ($2,000,000) of the Revolving Committed Amount shall be paid pro rata to
those Banks executing and delivering this Agreement to the Agent prior to the
deadline established by the Agent for the receipt thereof.

                                    PART IV
                                 MISCELLANEOUS

         SUBPART 4.1       Cross-References. References in this Agreement to any
Part or Subpart are, unless otherwise specified, to such Part or Subpart of
this Agreement.

         SUBPART 4.2       Instrument Pursuant to Existing Credit Agreement.
This Agreement is a document executed pursuant to the Existing Credit Agreement
and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Existing Credit Agreement.

         SUBPART 4.3       Credit Documents. Each of the Borrower and the
Foreign Borrowers hereby confirms and agrees that the Credit Documents are, and
shall continue to be, in full force and effect, except as amended hereby,
except that, on and after the Effective Date, references in each Credit
Document to the "Credit Agreement", "thereunder", "thereof" or words

                                       6
<PAGE>   7

of like import referring to the Existing Credit Agreement shall mean the
Amended Credit Agreement.

         SUBPART 4.4       Representations and Warranties. Each of the Borrower
and the Foreign Borrowers hereby represents and warrants that (i) it has the
requisite corporate power and authority to execute, deliver and perform this
Agreement, (ii) it is duly authorized to, and has been authorized by all
necessary corporate action, to execute, deliver and perform this Agreement,
(iii) it has no claims, counterclaims, offsets, or defenses to the Credit
Documents and the performance of its obligations thereunder, (iv) the
representations and warranties contained in Section 6 of the Existing Credit
Agreement are, subject to the limitations set forth therein, true and correct
in all material respects on and as of the date hereof as though made on and as
of such date (except for those which expressly relate to an earlier date or
those which relate to specific schedules, the changes to which do not represent
a Material Adverse Effect), (v) no event of default under any other agreement,
document or instrument to which it is a party will occur as a result of the
transactions contemplated hereby, and (vi) as of the date of this Agreement, no
Event of Default or Defaults exists.

         SUBPART 4.5       Costs and Expenses. The Borrower hereby agrees to pay
on demand all costs and expenses (including without limitation the reasonable
fees and expenses of counsel to the Agent) incurred by the Agent in connection
with the negotiation, preparation, execution, and delivery of this Agreement
and the enforcement or preservation of any rights and remedies of the Banks and
the Agent hereunder.

         SUBPART 4.6       Counterparts, Effectiveness, Etc. This Agreement may
be executed by the parties hereto in several counterparts, each of which shall
be deemed to be an original and all of which shall constitute together but one
and the same agreement.

         SUBPART 4.7       Captions. The captions in this Agreement are inserted
only as a matter of convenience and for reference and in no way define, limit
or describe the scope of this Agreement or any provision hereof.

         SUBPART 4.8       Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

         SUBPART 4.9       Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.

               [Remainder of this page intentionally left blank.]

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<PAGE>   8

                      [THIS PAGE INTENTIONALLY LEFT BLANK]

                                       8
<PAGE>   9

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective duly authorized officers as of the day and year
first above written.

THE BORROWER:                            WESTPOINT STEVENS INC.,
                                         a Delaware corporation

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

THE FOREIGN BORROWERS:                   WESTPOINT STEVENS (UK) LIMITED

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

                                         WESTPOINT STEVENS (EUROPE)
                                         LIMITED

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

THE BANKS:                                        BANK OF AMERICA, N.A.,
                                         individually in its capacity as a
                                         Bank and in its capacity as
                                         Agent

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

                             [Signatures Continued]

                                       9
<PAGE>   10

                                         BANK ONE, N.A.

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

                                         THE BANK OF NEW YORK

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

                                         SCOTIABANC INC.

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

                                         WACHOVIA BANK, N.A.

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

                             [Signatures Continued]

                                      10
<PAGE>   11

                                         SOCIETE GENERALE

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

                                         ABN AMRO BANK, N.V.

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

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

                                         SUNTRUST BANK, ATLANTA

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

                                         FIRST UNION NATIONAL BANK

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

                                         FLEET BANK, N.A.

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

                             [Signatures Continued]

                                      11
<PAGE>   12

                                         AMSOUTH BANK

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

                                         COOPERATIEVE CENTRALE
                                         RAIFFEISEN-BOERENLEENBANK B.A.,

                                         "Rabobank Nederland", New York Branch

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

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

                                         NATIONAL WESTMINSTER BANK PLC

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

                             [Signatures Continued]

                                      12
<PAGE>   13

                              CONSENT TO AGREEMENT

         Each of the undersigned Subsidiary Guarantors, as a party to one or
more of the Credit Documents, hereby acknowledges the execution and delivery of
the Second Amendment Agreement dated as of May __, 2000, hereby confirms and
agrees that each Credit Document to which it is a party is, and shall continue
to be, in full force and effect, and hereby ratifies and confirms in all
respects its obligations thereunder. This Consent may be executed by the
parties hereto in counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same instrument.

                                    WEST POINT-PEPPERELL ENTERPRISES, INC.

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

                                    J. P. STEVENS & CO., INC.

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

                                    J. P. STEVENS ENTERPRISES, INC.

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

                                    WESTPOINT STEVENS STORES, INC.

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

                                    LIEBHARDT, INC.

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

                                      13<PAGE>   1
                                                                    Exhibit 10.1

                   INSURANCE ADMINISTRATION SERVICES AGREEMENT

         THIS INSURANCE ADMINISTRATION SERVICES AGREEMENT ("Agreement") is
effective as of the 3rd day of May, 2000 ("Effective Date"), by and between
INSURANCE MANAGEMENT SOLUTIONS, INC. ("IMS"), a corporation organized and
existing under the laws of the State of Florida with its principal place of
business located at 360 Central Avenue, St. Petersburg, Florida 33701, and
RELIANCE INSURANCE COMPANY ("Customer") having its principal place of business
at 77 Water Street, New York, New York 10005.

         WHEREAS, Cybercomp is a division of Customer;

         WHEREAS, Customer is desirous of IMS providing insurance administration
services to its customers, as set forth in this Agreement;

         WHEREAS, Customer wishes to engage the services of IMS to administer
certain of the Customer's obligations for the lines of business ("Authorized
Lines of Business") in the state(s) ("Authorized States") set forth in SCHEDULE
A;

         WHEREAS, IMS wishes to provide such insurance administration services
as set forth herein.

         NOW THEREFORE, IN CONSIDERATION OF the mutual covenants and agreements
hereinafter set forth, the parties hereto do covenant and agree as follows:

ARTICLE I.        DEFINITIONS

Unless the context clearly requires otherwise, the following terms when used in
this Agreement shall have the meanings set forth below:

A.       "Affiliate" is any company which controls, is controlled by, or under
         common control with, a party, and "control" is defined as owning 50% or
         more of such entity.

B.       "Authorized Lines of Business" means the lines of business expressly
         set forth in SCHEDULE A of this Agreement.

C.       "Authorized States" means the states expressly set forth in SCHEDULE A
         of this Agreement.

D.       "Business Day" means any day other than a Saturday, Sunday or other day
         which is an IMS holiday (New Years Day, Memorial Day, Independence Day,
         Thanksgiving Day, day after Thanksgiving Day, Christmas Eve (after 12
         PM Eastern Standard Time), Christmas Day).

E.       "Change of Control" means (a) A sale, transfer or pledge, or the
         issuance to a new shareholder, of fifty (50%) percent or more of the
         voting stock of a party; or (b) A sale, transfer or pledge of a
         substantial portion of the material assets of a party, or any merger or
         consolidation of a party with another entity or entities.

F.       "Insurance Administration Services" means the services set forth in
         this Agreement and EXHIBITS I, II AND III hereto in the Authorized
         States in accordance with the Specifications, the other terms of the
         Agreement, the applicable laws, and regulations.

G.       "Insurance Program" means the Customer's insurance products within the
         Authorized Lines of Business to be offered within the Authorized
         States.

                                       1
<PAGE>   2

H.       "Specifications" means the business requirements, functions, and
         technical specifications the Insurance Administration Services are
         obligated to materially comply with, as set forth in Exhibits I, II,
         and III hereto and in Appendix D.

I.       "Systems Development Life Cycle" means the process of defining,
         documenting, and sign-off prior to deployment of all of the business,
         functional, and technical specifications related to the Insurance
         Administration Services to be performed under this Agreement, and the
         development and quality assurance of those business, functional and
         technical specifications after deployment as set forth in APPENDIX H.
         APPENDIX H may be modified or revised upon the mutual written agreement
         of IMS and Customer.

J.       "Technical Information" means and shall include (without limitation)
         computer programs, databases, designs, algorithms, processes,
         structures, data formats, business methods, know how, and research and
         development information.

ARTICLE II.       TERM

A.       The implementation period ("Implementation Period") shall begin on the
         Effective Date of this Agreement and shall end upon the date
         ("Completion Date") on which all tasks delineated in the rollout plans
         ("Rollout Plans") contained within APPENDICES A, B, AND C are completed
         by IMS and accepted by Customer in accordance with the Specifications
         and the procedures specified within the System Development Life Cycle.
         Customer shall provide to IMS during such Implementation Period the
         data, information, background, and other facts needed for IMS to
         complete the Rollout Plans, as delineated within APPENDICES A, B AND C
         and in accordance with the Specifications.

B.       The term of the Agreement shall commence on the Effective Date and
         shall have a minimum operating term ("Minimum Operating Term") of
         ninety-six (96) full calendar months following the Completion Date.
         However, the term of this Agreement shall automatically extend for an
         additional operating term ("Extended Operating Term") of twelve (12)
         calendar months (at the rates in SCHEDULE B then in effect for the
         first Extended Operating Term) at the end of the Minimum Operating
         Term, or at the end of any Extended Operating Term, unless terminated
         earlier pursuant to the termination provisions within Article VIII.

ARTICLE III.      RESPONSIBILITIES OF IMS

A.       During the Implementation Period, IMS shall design, construct, acquire
         and/or implement the software systems that will enable IMS to provide
         the Insurance Administration Services. In addition, the Implementation
         Period will be used to assemble and train the IMS staff, arrange for
         furniture and fixtures, and essentially complete all of the necessary
         procedures required to provide to Customer the Insurance Administration
         Services.

B.       IMS will utilize the System Development Life Cycle and the appropriate
         phase specific processes (as further described in APPENDIX H) to
         complete the Rollout Plans and to accomplish any other project (related
         to the Insurance Administration Services) to be performed on behalf of
         Customer under this Agreement. IMS and Customer will cooperate to
         jointly develop the test plans and business test cases to be used
         during the System Development Life Cycle. IMS will provide Customer
         with the test results and shall await the Customer's Acceptance (as
         further detailed within the System Development Life Cycle in accordance
         with the Specifications) prior to deployment into live production.

                                       2
<PAGE>   3

C.       IMS shall complete the Rollout Plans in accordance with the procedures
         specified within the System Development Life Cycle and the
         Specifications. Upon completion of each task delineated within the
         Rollout Plan, IMS shall conduct such testing as it deems necessary or
         appropriate in accordance with the System Development Life Cycle and
         the Specifications and shall allow Customer an opportunity to conduct
         its own testing regarding the task recently deemed completed by IMS.
         IMS shall permit Customer to participate in such IMS testing if it so
         chooses, and shall provide Customer any and all relevant test results.
         IMS shall also co-operate with Customer's testing on its reasonable
         request.

D.       IMS shall dedicate the appropriate human, equipment and computer
         resources to provide Customer with the Insurance Administration
         Services, during any term of this Agreement, for the Insurance Program
         in the Authorized States specified in SCHEDULE A. If Customer is
         reasonably dissatisfied with a "Key IMS Staff Member" assigned by IMS
         to provide Insurance Administration Services under this Agreement, then
         upon Customer's written notice thereof, IMS shall exercise commercially
         reasonable efforts to replace the Key IMS Staff Member within a
         reasonable time from IMS' receipt of notice, but in no event later than
         three (3) months from IMS' receipt of notice. Further, if a Key IMS
         Staff Member resigns or is terminated by IMS, IMS shall provide
         Customer fourteen (14) calendar days prior notice of the proposed
         change in a Key IMS Staff Member (or, to the extent that a Key IMS
         Staff Member resigns and fails to provide IMS fourteen (14) calendar
         days notice, prompt notice upon receiving the resignation notice from
         the Key IMS Staff Member). Notwithstanding the foregoing, if a Key IMS
         Staff Member requests and is granted an intra-company job transfer or
         if IMS transfers a Key IMS Staff Member to another job within IMS, IMS
         shall provide Customer thirty (30) days notice prior to the effective
         date of the proposed job transfer. For the purposes of this Section,
         the following IMS staff members shall be considered "Key IMS Staff
         Members": Commercial Business Unit Manager, Account Manager, IS Project
         Manager, Accounting Manager and the Customer Service Manager.

E.       IMS shall designate an employee ("Account Manager") of sufficient
         status and authority to act as liaison with Customer to facilitate IMS'
         performance of the Insurance Administration Services under this
         Agreement. The Account Manager will have substantial property and
         casualty insurance operational and underwriting experience and shall
         provide Customer with a written monthly report designed by Customer, as
         may be mutually agreed upon by Customer and IMS, for documenting the
         status of the Insurance Administration Services.

F.       IMS shall, based on accepted industry standards and in accordance with
         generally accepted insurance and accounting practices as designated by
         the appropriate state regulatory bodies, maintain complete and orderly
         records and policy and/or claims files as may be required as a result
         of IMS performing the Insurance Administration Services on behalf of
         Customer. These files shall be retained by IMS, in a format or media
         defined by IMS which shall be in compliance with applicable laws and
         regulations, for a minimum of five (5) years or the period specified by
         the applicable state and/or federal statutes regulating the
         preservation of records, whichever is longer, unless the Customer
         requests that its records be returned to it at their expense at the
         expiration of the minimum five (5) year period.

G.       At IMS' expense, IMS shall provide Customer adequate office space at
         its principal servicing office for two designated employees of
         Customer. Further, at Customer's sole option and expense (at the then
         commercially reasonable leasing rates), IMS will provide additional
         adequate office space at its principal servicing office for one or more
         additional designated employees of Customer, but no more than five (5)
         additional employees of Customer at any one time. With regards to any
         office space provided by IMS to Customer, whether the office space is
         provided at IMS expense or at Customer's

                                       3
<PAGE>   4

         expense, Customer shall remain responsible for all related office
         expenses, including, but not limited to, any expense for: office
         equipment, office furniture, telephones, telephone service, computers
         and printers.

H.       During any term of this Agreement, IMS shall reimburse Customer for the
         expense of conducting an annual regulatory/compliance audit of the
         Insurance Administration Services. Notwithstanding the foregoing, the
         reimbursement by IMS to Customer shall not exceed ___*___ per calendar
         year.

ARTICLE IV.       RESPONSIBILITIES OF CUSTOMER

A.       During the Implementation Period and during any term of this Agreement,
         Customer shall provide to IMS, in a timely manner, any and all data,
         information and other items within its reasonable control and necessary
         to enable IMS to perform the Insurance Administration Services (and
         shall use its best efforts to obtain any and all data, information and
         other items not within Customer's reasonable control but nonetheless
         necessary to enable IMS to perform the insurance administration
         services). APPENDIX E sets forth the kinds of documentation, data and
         information that will be required by IMS to support delivery of the
         Insurance Administration Services. Customer shall also provide IMS with
         Customer's banking institution account information, corporate and
         subsidiary logos (if applicable), style and specifications of printed
         documents (such as insurance policies), and policy jackets. Customer
         hereby grants IMS a limited, non-transferable, non-assignable, license
         to use Customer's corporate and subsidiary logos (and any other
         copyrighted or trademarked property of Customer that may be provided to
         IMS under this Agreement) while performing the Insurance Administration
         Services. Customer acknowledges and agrees that delays in delivery of
         required documentation, data and/or information by Customer will result
         in a similar delay in fulfilling Insurance Administration Services or
         completing the overall goals and objectives identified in APPENDIX D
         and that such a delay in performing the Insurance Administration
         Services shall not be deemed the "substantial fault" of IMS. If
         Customer's failure to provide IMS the required documentation, data or
         information will result in a delay in the performance of the Insurance
         Administration Services provided by IMS of greater than two (2)
         Business Days, then IMS will notify Customer. Customer shall comply
         with, and shall perform the duties specified in, EXHIBIT I, II, AND III
         as they relate specifically to Customer.

B.       Customer shall work and cooperate with IMS in utilizing the System
         Development Life Cycle (as specified in APPENDIX H) as reasonably
         necessary to complete the Rollout Plans and to accomplish any other
         project (related to the Insurance Administration Services) to be
         performed under this Agreement, provided that such tasks remain the
         ultimate responsibility of IMS hereunder. Customer participation in the
         System Development Life Cycle shall include, but shall not be limited
         to, reviewing and signing-off on all definitions and documentation
         prior to the commencement of each phase within the System Development
         Life Cycle. Customer shall perform functional and business case testing
         within the IMS Model Office environment to ensure the product changes
         meet the agreed upon specifications. Customer will work and cooperate
         with IMS to jointly develop the test plans and business test cases to
         be used during the System Development Life Cycle, provided however that
         nothing herein limits Customer's right to conduct its own testing in
         accordance with the provisions provided in Section III.C. Customer
         shall exercise good faith in promptly testing and accepting IMS'
         completion of each task within the Rollout Plan, in accordance with the
         System Development Life Cycle and the Specifications, prior to live
         production. Customer and IMS agree that time is of the essence during
         the Implementation Period. Customer shall provide IMS with written
         approval of its acceptance of each task within the Rollout Plan if such
         task is in substantial compliance with all material requirements in
         accordance with the System Development Life Cycle and the
         Specifications. If the parties are unable to reach an agreement as to
         whether a task has been completed by IMS in substantial compliance

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                       4
<PAGE>   5

         with all material requirements with the System Development Life Cycle
         and the Specifications, either party may resolve that dispute in
         accordance with the dispute resolution procedures contained within
         Article XII of this Agreement. By definition, the completion and
         acceptance of each task delineated within the Rollout Plan also
         includes the completion and acceptance of the integration of each new
         task with previously completed, accepted and deployed Rollout Plan
         tasks.

C.       CUSTOMER ACKNOWLEDGES AND AGREES THAT IMS ASSUMES NO INSURANCE RISK FOR
         THE BUSINESS PROCESSED UNDER THIS AGREEMENT.

D.       From time to time, on terms reasonably acceptable to Customer and
         within Customer's discretion, Customer agrees to act as a Beta Test
         Site for purpose of testing the new technologies and/or system
         modifications ("New Proprietary System") that IMS may develop (other
         than a System Enhancement Project, as defined in Article XIII). In
         consideration of Customer performing this function, IMS will grant
         (prior its general release) a personal, non-transferable,
         non-assignable, non-exclusive license to Customer (with the right to
         sub-license the New Proprietary System to its appointed insurance sales
         agents in accordance with the limitations set forth in this Agreement)
         to use the New Proprietary System solely in connection with the
         Insurance Administration Services to be performed by IMS under this
         Agreement and subject to the same limitations and conditions imposed
         upon the Proprietary System (as defined herein).

E.       Customer shall designate a manager level employee ("Customer Liaison")
         of sufficient status and binding decision making authority to act as
         liaison with IMS and to facilitate Customer's role as IMS performs the
         Insurance Administration Services enumerated in EXHIBITS I, II AND III
         of this Agreement. The Customer Liaison will meet at least once each
         calendar quarter, or as may otherwise be necessary, with the Account
         Manager.

F.       IMS' rights hereunder are not exclusive. Specifically, nothing herein
         shall limit Customer's right to provide for itself, or to procure from
         others, services comparable to the Insurance Administration Services,
         on a whole or partial basis.

ARTICLE V.        CUSTOMER ACCESS TO RECORDS / CONFIDENTIAL INFORMATION

A.       At Customer's expense, Customer and Customer's reinsurers will be
         permitted reasonable access to all IMS records, information, personnel
         and facilities (excluding, specifically, proprietary Technical
         Information) reasonably necessary to: (i) audit the completeness and
         accuracy of the Insurance Administration Services provided under this
         Agreement and reports produced for Customer pursuant to this Agreement;
         (ii) verify the accuracy and validity of all billings and charges to
         Customer under this Agreement, including any travel and living
         expenses; and (iii) verify IMS' overall compliance with the terms of
         this Agreement and applicable laws and regulations, and the guidelines
         as provided by Customer.

         Access to IMS' records, personnel and facilities will be provided
         during normal business hours upon ten (10) Business Days prior written
         notice to IMS by Customer for so long as IMS is required to maintain
         such records under this Agreement; except in case of allegations of
         fraud or in connection with regulatory inquiry, in which case access
         will be granted within twenty four (24) hours of written notice to IMS.
         Notwithstanding the foregoing, Customer may perform, at Customer's
         expense, up to two surprise audits (per calendar year), with
         twenty-four (24) hours written notice to IMS, specifically of the
         records maintained by IMS that relate to Customer's custodial bank
         accounts.

         At Customer's expense (except in the case of state regulatory audits),
         Customer will be permitted to copy those IMS records subject to audit.
         Upon reasonable request by Customer, and at Customer's expense, IMS
         will promptly mail or fax to Customer

                                       5
<PAGE>   6

         supporting documentation concerning any specific Customer policyholder
         billing, payment or other transaction processed by IMS under the terms
         of this Agreement.

         IMS will provide adequate workspace for Customer to conduct audits in
         accordance with this Article. Further, Customer or its representatives
         shall take reasonable precautions, when conducting audits under this
         Article, not to materially disrupt IMS' ongoing business activities.

B.       The recipient ("Recipient") of confidential data and/or information
         shall maintain the confidentiality of all data and/or information which
         is the property of the other party ("Disclosing Party"), whether
         originally supplied by the Disclosing Party, or whether generated by
         the Disclosing Party in the course of performing or facilitating the
         Insurance Administration Services under this Agreement and which is
         directly accessible to the Recipient or is in the possession of
         Recipient in the implementation, facilitation and/or performance of the
         Insurance Administration Services. During any term of this Agreement,
         Recipient may acquire, know, or have within its possession, information
         (including, but not limited to, Technical Information) and/or data of
         the Disclosing Party concerning commercial and trade affairs, rating
         and underwriting rules and guidelines, the identity of clients, the
         identity of insureds and beneficiaries, claims, benefits, rates and
         agents, financial information, Proprietary System (as defined herein),
         Third Party Proprietary System (as defined herein) and business
         practices of the Disclosing Party ("Confidential Information").
         Confidential Information which is provided in tangible form must be
         clearly marked "Confidential", "Proprietary" or the substantial
         equivalent thereof, or if orally disclosed must be clearly identified
         as "Confidential" or "Proprietary" at the time of the disclosure
         (except for IMS' Technical Information; Customer's Technical
         Information as may be provided by Customer to IMS; Customer's
         underwriting rules and guidelines; the identity of Customer's clients;
         the identity of insureds and beneficiaries; and all data created or
         generated in the course of the Insurance Administration Services and
         specifically relating to Customer and/or its insurance sales agents,
         insurance sales brokers, insurance sales representatives and clients;
         which will be deemed "Confidential Information" under this Agreement).
         Except as required by law, Recipient shall keep Disclosing Party's
         Confidential Information confidential and shall only use the
         Confidential Information in performing or facilitating the Insurance
         Administration Services under this Agreement. Recipient shall not
         disclose the Confidential Information without Disclosing Party's prior
         written permission except to Recipient's employees, representatives,
         consultants and agents who require the information to perform or
         facilitate the Insurance Administration Services under this Agreement.
         Customer and IMS each warrant to the other that all appropriate
         measures shall be taken by such Recipient to safeguard the
         confidentiality of the Confidential Information of the other, with a
         level of care at least equal to the level of care with which Recipient
         safeguards its own confidential or proprietary information. All
         employees of Recipient and any third parties who are given access to
         the Confidential Information shall be under written obligation to
         Recipient to maintain such information in confidence.

         IMS and Customer agree that any Recipient shall have no obligation with
         respect to any information or data which:

                  (a)      is already rightfully known to Recipient through
                           means other than Disclosing Party; or

                  (b)      is or becomes publicly known through no wrongful act
                           of Recipient; or

                  (c)      is rightfully obtained by Recipient from a
                           third-party without similar restriction and without
                           breach of this Agreement; or

                  (d)      is independently developed by Recipient without
                           breach of this Agreement.

                                       6
<PAGE>   7
         Disclosing Party shall retain title to all Confidential Information
         (whether tangible or intangible) delivered pursuant to this Agreement.
         Recipient shall not copy, reproduce or use any Confidential Information
         without written authorization of Disclosing Party, except as may be
         reasonably required to accomplish the Insurance Administration Services
         under this Agreement. Recipient shall promptly return or destroy, on
         written request of Disclosing Party, all tangible copies containing
         Confidential Information. The obligations under this Paragraph shall
         survive the termination of this Agreement. Notwithstanding the
         foregoing, this Article shall not prevent the disclosure of
         Confidential Information to the extent legally required by any court or
         regulatory entity having jurisdiction over the parties.

ARTICLE VI.       EXPENSES AND FEES

A.       In consideration of IMS providing Insurance Administration Services
         described herein, and subject to IMS material compliance with the
         material terms of this Agreement, Customer shall pay IMS an
         implementation charge ("Implementation Charge"), miscellaneous fees
         ("Miscellaneous Fees") and servicing fee ("Service Fee") for each
         Authorized Line of Business, as specified in SCHEDULE B. Except for the
         Service Fee, which is based upon a percentage of the adjusted net
         direct written premium, the Miscellaneous Fees specified in Section V
         of SCHEDULE B hereto may be raised effective as of each anniversary of
         the Effective Date by the percentage increase in the Geographical City
         Consumer Price Index as reported by the United States Bureau of Labor
         Statistics for the most recently completed calendar year that IMS is
         performing services on behalf of the Customer. Further, in the event
         that a vendor supplying a service or product to IMS (including but not
         limited to postage and paper), which service or product is required by
         IMS to provide the Insurance Administration Services to Customer,
         increases or decreases its rates charged to IMS, IMS may increase, and
         shall decrease, the contracted rates set forth herein to incorporate
         such increased or decreased costs, as applicable.

B.       On the second anniversary of the Completion Date, and subject
         to IMS' material compliance with the material terms of this Agreement
         hereunder, Customer shall immediately pay IMS a minimum fee ("Initial
         Minimum Fee") that shall equal the difference between ($___*___) and
         the aggregate amount of: (i) Service Fees paid to IMS during the
         ___*___ period immediately prior to the ___*___ anniversary of the
         Completion Date, and (ii) miscellaneous fees for "time & material" work
         (performed on behalf of Customer, outside of the scope of this
         Agreement and related to the Insurance Administration Services to be
         performed under Exhibit I, II, and III) paid to IMS during the ___*___
         period immediately prior to the ___*___ anniversary of the Completion
         Date. In addition to the foregoing, on the ___*___ anniversary of the
         Completion Date, and subject to IMS' material compliance with the
         material terms of this Agreement hereunder, Customer shall immediately
         pay IMS a minimum fee ("Contract Term Minimum Fee") that equals the
         difference between ___*___ and the aggregate amount of: (i) Service
         Fees and Initial Minimum Fee paid to IMS during the ___*___ ___*___
         period prior to the ___*___ anniversary of the Completion Date, and
         (ii) miscellaneous fees for "time & material" work (performed on behalf
         of Customer, outside of the scope of this Agreement and related to the
         Insurance Administration Services to be performed under Exhibit I, II,
         and III) paid to IMS during the ___*___immediately prior to the ___*___
         anniversary of the Completion Date.

C.       Customer shall not be required to reimburse IMS for travel, living and
         out-of-pocket expenses incurred by IMS personnel unless such expenses
         are approved in writing by Customer prior to travel.

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                       7
<PAGE>   8

D.       Customer agrees to pay all tariffs and taxes that are now or may become
         applicable to the Insurance Administration Services rendered hereunder.
         This provision includes but is not limited to sales, use, and personal
         property taxes, or any other form of tax based on Insurance
         Administration Services performed, equipment used by IMS solely for
         Customer, and the communicating of storage of data used by IMS solely
         for Customer, but does not include taxes based upon the net income of
         IMS. If any governmental body imposes on IMS a tax ("Impact Tax") that
         is applicable to the Insurance Administration Services performed by IMS
         under this Agreement and that Impact Tax significantly impacts the
         future profitability of Customer's Authorized Lines of Business, then
         IMS shall make a good faith effort to reduce the impact of the Impact
         Tax by exploring and pursuing commercially reasonable options to reduce
         the impact of the Impact Tax.

E.       IMS shall establish a custodial bank account on Customer's behalf to be
         used by IMS in performing the premium billing and collection payment
         obligations delineated in EXHIBITS I, II, AND III of this Agreement.
         Invoices prepared will be in Customer's name or as directed by Customer
         and will require all premiums to be sent to a post office box in
         Customer's name, or at Customer's option and expense, have all premiums
         deposited in a lock box by tape feed at Customer's expense. Customer
         hereby authorizes IMS, subject to Customer's prior written approval, to
         form such custodial bank account ("Custodial Account") on Customer's
         behalf. IMS will prepare bills for premiums due and transmit them in
         accordance with Customer's provided billing plan and guidelines in
         Customer's name and receive the premiums so billed on behalf of
         Customer (including installments, reminders, cancellations and pending
         notices). Postage charges and supplies are included in the fees
         delineated in SCHEDULE B of this Agreement. Account reconciliation and
         cash receipt, payment posting, deposit posting, overpay and underpay
         processing, and NSF processing will be handled by IMS.

         Cancellation notices will be sent for non-payment in accordance with
         Customer's provided guidelines and applicable laws and regulations. IMS
         will disburse funds from the premiums received on behalf of Customer
         for commission payments, return of premium, overpayments and policy
         cancellation or changes resulting in a return of premium. IMS will
         receive the monies due in trust under the Insurance Administration
         Services enumerated in EXHIBITS I, II, AND III of this Agreement and
         will remit to Customer on a daily basis the premiums received by IMS,
         less the disbursements made on behalf of Customer, and an amount
         necessary for IMS to perform the Insurance Administration Services on a
         day-to-day basis. IMS shall provide to Customer a monthly statement
         detailing any disbursements of funds under this Section.

F.       IMS will provide Customer with a statement ("Monthly Statement") each
         month detailing IMS' Service Fees and Miscellaneous Fees. Customer will
         provide IMS with written notice within three (3) Business Days of
         receipt of a Monthly Statement of any disputed amounts in such Monthly
         Statement. IMS will withdraw from the Custodial Account all undisputed
         Service Fees and Miscellaneous Fees. If IMS has not received written
         notice of any disputed amount from Customer within three (3) Business
         Days of Customer's receipt of a Monthly Statement, then IMS will
         withdraw the entire amount delineated on the Monthly Statement. If
         Customer disputes any amount listed on a Monthly Statement, then the
         parties will exercise best efforts to resolve the dispute within five
         (5) Business Days from the date Customer receives the Monthly
         Statement. Customer will not be required to maintain a balance greater
         than what is necessary for IMS to perform the Insurance Administration
         Services on a day-to-day basis and for IMS to pay fees and other
         charges to be paid IMS under the Agreement. IMS and Customer will
         mutually agree upon a formula for calculating the required balances.
         Customer agrees to promptly change the formula if a negative balance
         occurs, and Customer further agrees that Customer will be responsible
         for paying any charges, interest or penalties resulting from Customer's
         failure to maintain a positive balance.

                                       8
<PAGE>   9

         All billing and installment fees and interest accrued on monies
         deposited in the Custodial Account will be the sole and exclusive
         property of Customer. Additionally, all Custodial Account service fees,
         including, but not limited to account maintenance, return item charges,
         ACH services, account reconciliation process ("ARP"), account repo
         investment, account research, etc., charged by the underlying financial
         institution in connection with the administration of said Custodial
         Account shall be the sole responsibility of the Customer and shall be
         deducted directly from the Custodial Account. IMS will submit
         statements to the Customer on a regular monthly basis for all charges
         incurred hereunder for the preceding month. Failure by Customer to pay
         all undisputed fees and expenses when due shall be considered a
         material breach of this Agreement.

G.       With the exception of the Minimum Operating Term and the first Extended
         Operating Term, prior to renewal of this Agreement for any Extended
         Operating Term, IMS may modify SCHEDULE B in its discretion to reflect
         any increase in the cost of providing the Insurance Administration
         Services (including, but not limited to statutory, regulatory, or
         judicial changes that require IMS to incur additional cost or expenses
         in performing the Insurance Administration Services) or to remain
         competitive with the rates currently being charged within the industry
         for like services. Any modification of SCHEDULE B shall be proposed to
         Customer at least six (6) months prior to the expiration of any
         Extended Operating Term. IMS shall modify Schedule B to reflect any
         increase or decrease in such costs.

H.       If costs arise during any term of this Agreement that were not
         anticipated by the parties at the time this Agreement was executed,
         then payment of such costs will be resolved as follows: (a) if the work
         or reason giving rise to the unanticipated cost is only for Customer's
         benefit, was requested or approved by Customer, then Customer will pay
         such costs and IMS shall not use such work product for other IMS
         customers; or; (b) IMS will pay such costs.

I.       Within sixty (60) calendar days after IMS provides internet access
         (which shall include deployment of the internet access into live
         production) to Customer's insurance sales agents for a particular
         Authorized Line of Business within an Authorized State in compliance
         with the Specifications ("60 Day Internet Access Milestone"), Customer
         shall ensure that within any monthly billing period a minimum of sixty
         percent (60%) of all new business that is processed by IMS for that
         Authorized Line of Business within the Authorized State is processed
         using the internet access and without the manual intervention of IMS,
         provided IMS is in material compliance with the material terms of this
         Agreement hereunder. If in any given monthly billing period, after the
         60 Day Internet Access Milestone, more than forty percent (40%) of such
         new business for a particular Authorized Line of Business within an
         Authorized State is not processed by IMS via the internet access and
         with the manual intervention of IMS, then Customer shall retroactively
         pay IMS on a time and material basis (as specified in SCHEDULE B,
         Section V of this Agreement) for the manual processing of any new
         business that is in excess of the forty percent (40%) level.

J.       Within one hundred and twenty (120) days after IMS provides internet
         access (which shall include deployment of the internet access into live
         production) to Customer's insurance sales agents for a particular
         Authorized Line of Business within an Authorized State in material
         compliance with the Specifications ("120 Day Internet Access
         Milestone"), Customer shall ensure that within any monthly billing
         period a minimum of eighty percent (80%) of all new business that is
         processed by IMS for that Authorized Line of Business within the
         Authorized State is processed using the internet access and without the
         manual intervention of IMS, provided IMS is in material compliance with
         the material terms of this Agreement hereunder. If in any given monthly
         billing period, after the 120 Day Internet Access Milestone, more than
         twenty percent (20%) of such new business for a particular Authorized
         Line of Business within an Authorized State is not

                                       9
<PAGE>   10

         processed by IMS via the internet access and with the manual
         intervention of IMS, then Customer shall retroactively pay IMS on a
         time and material basis (as specified in SCHEDULE B, Section V of this
         Agreement) for the manual processing of any new business that is in
         excess of the twenty percent (20%) level.

K.       Immediately upon deploying internet access into live production
         ("Internet Access") for a particular Authorized Line of Business within
         an Authorized State, IMS shall measure the average "down time" (between
         the hours of 9 AM to 9 PM EST) per Business Day of the Internet Access
         ("Average Daily Down Time") for that particular Authorized Line of
         Business within that Authorized State. The term "down time" shall be
         defined as any amount of time that Internet Access is not accessible in
         accordance with the Specifications to Customer or its insurance sales
         agents, except to the extent due to network failures outside of IMS'
         reasonable control. Then, on the four (4) week anniversary of the date
         that IMS provides Internet Access to Customer for an Authorized Line of
         Business within an Authorized State and on the last day of every
         subsequent four (4) week period ("Four Week Measuring Period") until
         the 120 Day Internet Access Milestone is reached, IMS shall compute a
         four (4) week rolling average of Average Daily Down Time ("Four Week
         Average Down Time"). If the Four Week Average Down Time is greater than
         ten percent (10%) of the total amount of time that the Internet Access
         is available to Customer and its insurance sales agents (between the
         hours of 9 AM to 9 PM every Business Day during any Four Week Measuring
         Period), then Customer shall be granted an additional amount of time
         ("Additional Compliance Days") to comply with the provisions of Section
         (H) and (I) of this Article as provided below:

<TABLE>
<CAPTION>

         --------------------------------------------- ----------------------------------------------
                 FOUR WEEK AVERAGE DOWN TIME                    ADDITIONAL COMPLIANCE DAYS
         --------------------------------------------- ----------------------------------------------
         <S>                                           <C>
         Less than 10%                                 No Additional Compliance Days
         --------------------------------------------- ----------------------------------------------
         Between 11% and 15%                           Five Additional Compliance Days
         --------------------------------------------- ----------------------------------------------
         Additional increments of 5%                   Five Additional Compliance Days
                                                       (i.e., between 16% and 20% shall entitle
                                                       Customer to five Additional Compliance Days
                                                       for a total of ten Additional Compliance Days)
         --------------------------------------------- ----------------------------------------------

         Nothing in this Section K limits Customer's other remedies for IMS'
         breaches relating to down time.
</TABLE>

ARTICLE VII.      LICENSE, TRADE SECRET AND PROPRIETARY RIGHTS

A.       IMS, from time to time, may use its own proprietary computer software
         products and account servicing methods and procedures ("Proprietary
         System") which are identified, described or referenced in EXHIBIT I, II
         AND III hereto, in the performance of the Insurance Administration
         Services. During any term of this Agreement, IMS grants a personal,
         non-transferable, non-assignable, non-exclusive license to Customer
         (with the right to sub-license the Proprietary System to its appointed
         insurance sales agents in accordance with the limitations set forth in
         this Agreement) to use the Proprietary System solely in connection with
         the Insurance Administration Services to be performed by IMS under this
         Agreement. Provided that Customer is in material compliance with the
         material terms of this Agreement, IMS further grants Customer an
         option, exercisable by written notice to IMS, to license the
         Proprietary System on or before the end of the term of this Agreement
         pursuant to terms, conditions and license charges that are mutually
         agreeable to IMS and Customer. The parties hereby agree to make a good
         faith effort to complete a licensing agreement containing mutually
         agreeable and commercially reasonable terms, conditions and license
         charges, within twelve (12) months from the Effective Date of this
         Agreement; provided, however, that if the parties are unable to reach
         an agreement within twelve (12) months on a mutually acceptable
         licensing agreement, the Customer's option to license

                                       10
<PAGE>   11

         the Proprietary System shall not expire (so long as Customer is in
         material compliance with the material terms of this Agreement) and the
         parties shall continue to make a good faith effort to complete a
         licensing agreement containing mutually agreeable and commercially
         reasonable terms, conditions, and license charges. For the purposes of
         this Article, the term "commercially reasonable terms, conditions, and
         license charges" shall mean terms, conditions and license charges that
         are substantially similar to terms, conditions and license charges that
         are being offered to any IMS client (if any) or within the insurance
         computer software licensing industry for substantially similar
         proprietary computer software products and account servicing methods.
         IMS agrees that it will not, during or after the term hereof, sell,
         license, sublicense, or otherwise make available any modification or
         enhancement to the Proprietary System that IMS specifically designs and
         develops for Customer pursuant to this Agreement and/or EXHIBIT I, II,
         AND III of this Agreement and during the any term of the Agreement
         ("IMS/Customer Exclusive Modification") to any other customer of IMS
         without Customer's prior written consent. Notwithstanding the
         foregoing, only those modifications and enhancements to the Proprietary
         System or part thereof (including, but not limited to, modifications
         and enhancements made during the Implementation Period) that are
         specifically marked with the legend "IMS/Customer Exclusive
         Modification" (as, upon mutual agreement of IMS and Customer, will be
         documented by IMS within the System Development Life Cycle) will be
         considered an IMS/Customer Exclusive Modification. IMS and Customer
         agree that the parties shall act in a commercially reasonable manner in
         determining whether any modification or enhancement to the Proprietary
         System is "proprietary" or "exclusive" to Customer and thus shall be
         marked as a "IMS/Customer Exclusive Modification". If the parties are
         unable to reach an agreement as to whether a modification or
         enhancement to the Proprietary System is "proprietary" or "exclusive"
         and thus should be deemed an IMS/Customer Exclusive Modification,
         either party may resolve that dispute in accordance with the dispute
         resolution procedures contained within Article XII of this Agreement.
         Further, no provision within this Agreement shall be interpreted as
         prohibiting IMS from selling or licensing its Proprietary System, or
         modifications and enhancements to the Proprietary System (not
         specifically designed or developed for Customer pursuant to the terms
         of this Agreement and not specifically marked "IMS/Customer Exclusive
         Modification"), to any other customer or prospective customer of IMS,
         so long as Customer's Confidential Information is not disclosed.

B.       IMS, from time to time, may also use proprietary third party computer
         software products and third party account servicing methods and
         procedures ("Third Party Proprietary System"), which are identified,
         described or referenced in EXHIBIT I, II AND III hereto (including the
         principal Commercial Lines Workers Compensation and other processing
         software) in the performance of the Insurance Administration Services.
         During the term of this Agreement, IMS will utilize a Third Party
         Proprietary System ("WC Software") to perform the principal processing
         functions in connection with the Commercial Lines Workers Compensation
         Insurance Administration Services set forth in EXHIBIT III hereto, and
         (provided that Customer is in material compliance with the material
         terms of this Agreement) Customer shall be granted an option to license
         such WC Software, on or before the termination of this Agreement,
         pursuant to the third-party vendor's then current terms, conditions and
         license charges therefor. IMS agrees that it will not, during or after
         the term hereof, sell, license, sublicense, or otherwise make available
         any modification or enhancement to the Third Party Proprietary System
         that IMS specifically designs and develops for Customer pursuant to
         this Agreement and/or EXHIBIT I, II, AND III of this Agreement and
         during the any term of the Agreement ("Third Party Exclusive
         Modification") to any other customer of IMS without Customer's prior
         written consent. Notwithstanding the foregoing, only those
         modifications and enhancements to the Third Party Proprietary System or
         part thereof (including, but not limited to, modifications and
         enhancements made during the Implementation Period) that are
         specifically marked with the legend "Third Party Exclusive
         Modification" (as, upon mutual agreement of IMS and Customer, will be
         documented by IMS within the System Development Life Cycle) will be

                                       11
<PAGE>   12

         considered a Third Party Exclusive Modification. IMS and Customer agree
         that the parties shall act in a reasonable manner in determining
         whether any modification or enhancement to the Third Party Proprietary
         System is "proprietary" or exclusive" to Customer and thus shall be
         marked as a "Third Party Exclusive Modification". If the parties are
         unable to reach an agreement as to whether a modification or
         enhancement to the Third Party Proprietary System is "proprietary" or
         "exclusive" and thus should be deemed an Third Party Exclusive
         Modification, either party may resolve that dispute in accordance with
         the dispute resolution procedures contained within Article XII of this
         Agreement. Further, no provision within this Agreement shall be
         interpreted as prohibiting IMS or the Third Party Proprietary System
         vendor from selling or licensing the Third Party Proprietary System, or
         modifications and enhancements to the Third Party Proprietary System
         (not specifically designed or developed for Customer pursuant to the
         terms of this Agreement and not specifically marked "Third Party
         Exclusive Modification"), to any other customer or prospective customer
         of IMS, so long as Customer's Confidential Information is not
         disclosed.

C.       Other than the limited rights to use the Proprietary System and Third
         Party Proprietary System, this Agreement grants to Customer no right to
         possess or reproduce, down load, reverse engineer, or obtain any other
         interest in, the Proprietary System and the Third Party Proprietary
         System or their specifications in any tangible or intangible medium.
         Customer may not mortgage, hypothecate, sell, assign, pledge, lease,
         transfer, license, or sublicense the Proprietary System or any Third
         Party Proprietary System, nor allow any person, firm, or corporation to
         transmit, copy, reproduce, download, reverse engineer, or obtain any
         other interest in the Proprietary System or any Third Party Proprietary
         System or their specifications in whole or in part. In the event
         Customer shall come into possession of the source or object code
         associated with Proprietary System or any Third Party Proprietary
         System, Customer shall immediately notify IMS and return the source or
         object code associated with Proprietary System or a Third Party
         Proprietary System in its possession and all copies of any kind thereof
         to IMS upon IMS' request.

D.       Customer covenants and agrees not to disclose or otherwise make the
         Proprietary System or any Third Party Proprietary System available to
         any person other than employees, insurance sales agents or
         representatives of the Customer required to have access or use of the
         Proprietary System or Third Party Proprietary System to facilitate IMS'
         or Customer's performance under this Agreement. Customer agrees to
         obligate each such employee, appointed insurance sales agent or
         representative to a level of care sufficient to protect the Proprietary
         System or a applicable Third Party Proprietary System from unauthorized
         disclosure.

E.       IMS warrants and represents that it owns, or is licensed with respect
         to, all Proprietary Systems and Third Party Proprietary Systems that it
         will employ in the performance of this Agreement and that it has the
         right to grant the rights herein provided.

F.       With regard to any IMS proprietary computer software products
         ("Software Products"), which make up part of the Proprietary System and
         are licensed to Customer under this Article, IMS agrees that it will
         deposit the source code, including all program notes and annotations
         (if any) and required development and maintenance tools ("Source Code")
         for the Software Products (and any updates, modifications or
         enhancements) with an escrow agent ("Escrow Agent") acceptable to
         Customer and IMS. If this Agreement is terminated pursuant to Article
         VIII (B) (a), Customer shall have the right to obtain a single copy of
         the then current version of the Source Code from the Escrow Agent. The
         Source Code obtained by Customer pursuant to this Article shall be
         subject to the same restrictions and limitations imposed upon Customer
         regarding its use of the Proprietary System, which restrictions and
         limitations shall survive the termination of this Agreement. Further,
         with regards to WC Software, IMS agrees that it will require its WC
         Software third party vendor ("WC Vendor") to deposit the WC Software
         source code ("WC Source

                                       12
<PAGE>   13

         Code") for the WC Software (and any updates, modifications or
         enhancements) with an escrow agent ("WC Escrow Agent") acceptable to
         IMS and the WC Vendor. If the WC Vendor is declared insolvent or
         bankrupt, commences or has commenced against it a proceeding in
         bankruptcy not dismissed within sixty (60) days of commencement, IMS
         shall have the right to obtain a single copy of the then current
         version of the WC Source Code from the WC Escrow Agent.

G.       The obligations of Customer and IMS under this Article shall continue
         after this Agreement is terminated.

ARTICLE VIII.     TERMINATION

A.       Either party may terminate this Agreement at the end of the Minimum
         Operating Term or at the end of any Extended Operating Term, provided
         the terminating party gives the other party at least six (6) months
         prior written notice of such termination.

B.       This Agreement shall also terminate:

         (a)      at the election of the Customer, upon notice to IMS, if IMS
                  becomes insolvent, if it makes an assignment for the benefit
                  of its creditors, if a petition for relief under the
                  Bankruptcy Code is filed by or against it and it is not
                  dismissed within thirty (30) days of being filed, or if a
                  trustee, receiver or other custodian of its assets is
                  appointed;

         (b)      at the election of IMS, upon notice to Customer, if Customer
                  becomes insolvent, if it makes an assignment for the benefit
                  of its creditors, if a petition for relief under the
                  Bankruptcy Code is filed by or against it and it is not
                  dismissed within thirty (30) days of being filed, or if a
                  trustee, receiver or other custodian of its assets is
                  appointed;

         (c)      at the election of the Customer, upon notice to IMS, if IMS
                  commits any of the following acts or omissions in the
                  performance of any material term of this Agreement: actual
                  fraud, or willful misconduct (which includes, but is not
                  limited to, willful violation of any material covenant of this
                  Agreement, or willful violation of any material State
                  Insurance Department regulation or statutory provision
                  applicable to IMS);

         (d)      at the election of the Customer, if IMS materially breaches
                  any provision of this Agreement and fails to cure such breach
                  within sixty (60) days after notice thereof is given to IMS by
                  the Customer;

         (e)      at the election of IMS, if Customer materially breaches any
                  provision of this Agreement and fails to cure such breach
                  within sixty (60) days after notice thereof is given to
                  Customer by IMS (except for Customer's failure to pay any and
                  all fees and expenses due under Article VI of this Agreement,
                  in which case Customer must cure such breach within thirty
                  (30) days after notice thereof is given to Customer by IMS);
                  or

         (f)      at the election of the Customer, upon notice to IMS, in the
                  event of a "Change of Control" of IMS, unless (i) IMS has
                  provided Customer sixty (60) days advance notice of the
                  proposed Change of Control and (ii) Customer has agreed in
                  writing to such Change of Control.

C.       Except for termination of this Agreement under Article VIII.A. (a), (b)
         and (f), either party may contest a ground for termination asserted
         against it by initiating a dispute resolution procedure under Article
         XII within 30 days after receiving a notice of termination. In such
         case this Agreement will not terminate, and the parties will continue
         performing, unless

                                       13
<PAGE>   14

         and until the allegedly defaulting party fails to comply with a final
         award against it under such dispute resolution procedure within 15 days
         after it is rendered.

D.       On expiration or termination of this Agreement, IMS shall return to
         Customer all of Customers Confidential Information, either in
         electronic or hard copy form, in IMS' possession and delete any
         electronic copies thereof related to the Insurance Administration
         Services provided by IMS during any term of this Agreement; Customer
         shall do the same and cause Customer's agents, representatives,
         consultants and employees to do the same relative to IMS' Confidential
         Information. Customer shall pay IMS (in accordance with SCHEDULE B then
         in effect) any and all Service Fees, miscellaneous fees and third party
         fees due IMS for Insurance Administration Services performed prior to
         the termination date this Agreement. IMS and Customer shall cooperate
         in any transition period during the wind-up of Insurance Administration
         Services provided Customer under this Agreement. If Customer requires
         assistance in converting Customer's data to a new format, or requires
         assistance from IMS relative to Customer's transition to an alternative
         processing arrangement, then IMS shall provide such services at the
         then current rates in Section V of SCHEDULE B. (except in the case
         where IMS is finally adjudicated by a court or Arbitration Board as
         being in material breach of this Agreement in accordance with Article
         VIII.B.(d) and Customer terminates this Agreement for such material
         breach in accordance with Article VIII.B.(d), then IMS will provide
         such data conversion services at IMS' sole expense).

ARTICLE IX.       WARRANTIES AND COVENANTS

IMS covenants that: (a) all Insurance Administration Services shall materially
conform to the descriptions set forth in EXHIBITS I, II AND III of this
Agreement; (b) all Insurance Administration Services shall be performed in a
good and workmanlike manner; (c) all Insurance Administration Services shall be
performed by persons who are adequately trained and skilled in the property and
casualty insurance and computer industries to provide the same in accordance
with the requirements of this Agreement and such persons shall be equipped with
the tools, software and other equipment necessary to perform the Insurance
Administration Services; and (d) IMS will comply with the law of the state or
states covered by this Agreement and with the rules and regulations of all
regulatory authorities having jurisdiction over IMS' activities, and shall,
whenever necessary, maintain at its own expense all required licenses to
transact business in such states. IMS warrants to Customer that (a) IMS has the
right to grant the license to the Proprietary System used to perform the
Insurance Administration Services and, that the rights to such Proprietary
System granted hereunder will not infringe upon or misappropriate a third
party's copyright, patent, or trade secret rights; (b) IMS is duly authorized
and incorporated to transact the business of servicing insurance companies; and
(c) the express warranties provided here and elsewhere in this Agreement are
IMS' only warranties and no other warranty, express or implied, including any
warranty of merchantability, fitness or fitness for a particular purpose, will
apply to the provision of Insurance Administration Services under this
Agreement.

ARTICLE X         LIABILITY, LIMIT OF LIABILITY, INDEMNITIES AND REMEDIES

A.       The parties shall assume the following obligations and liabilities as
         specified below and subject to the limitations on liability set forth
         in Paragraph B below:

         (a)      If, due to IMS' substantial fault, Customer is required to pay
                  a penalty, settlement or fine resulting from an insurance
                  regulatory inquiry of the Insurance Administration Services,
                  then IMS will reimburse Customer for such fine, settlement,
                  and/or penalty;

         (b)      IMS shall indemnify, defend and hold harmless Customer, its
                  officers, and directors from any liability, cost, loss, fine,
                  penalty, claim, demand, damage or expense, including
                  reasonable attorney fees, incurred as a result of any material
                  breach of IMS'

                                       14
<PAGE>   15

                  obligations under this Agreement or the material breach of any
                  representation or warranty made pursuant hereto;

         (c)      Customer shall indemnify, defend and hold harmless IMS, its
                  officers, and directors from any liability, cost, loss, fine,
                  penalty, claim, demand, damage or expense, including
                  reasonable attorney fees, incurred as a result of any material
                  breach of Customer's obligations under this Agreement or the
                  material breach of any representation or warranty made
                  pursuant hereto;

         (d)      If: (i) in any given four (4) week rolling period ("Initial
                  Deficient Service Period"), due to IMS' substantial fault,
                  performance of the Insurance Administration Services within an
                  Authorized Line of Business falls outside of one or more of
                  the "Service Standard Levels" for that Authorized Line of
                  Business (as set forth in EXHIBIT I, II, OR III); and (ii) due
                  to IMS substantial fault IMS does not re-establish performance
                  within the next immediately four (4) week rolling period
                  ("Subsequent Service Period") for that Authorized Line of
                  Business; then, thereafter, for so long as the Insurance
                  Administration Services for that Authorized Line of Business
                  fail to comply with any material part of the Service Standards
                  Levels for that Authorized Line of Business, due to IMS
                  substantial fault, Customer may withhold ___*___ of the
                  Service Fees due under SCHEDULE B for that particular
                  Authorized Line of Business ("ServiceHoldback") for all
                  subsequent four (4) week rolling periods ("Deficient Service
                  Period"), until IMS re-establishes the Insurance
                  Administration Services, for that Authorized Line of Business,
                  within the related Service Standard Levels, for that
                  particular Authorized Line of Business, for a complete four
                  (4) week rolling period.

                  After any Deficient Service Period, if the Insurance
                  Administration Services for an Authorized Line of Business
                  comply with the Service Standard Levels for that Authorized
                  Line of Business for a complete four (4) week rolling period,
                  then Customer shall immediately remit all amounts previously
                  withheld as a Service Holdback for that Authorized Line of
                  Business, subject to any allowance for "Liquidated Damages" as
                  specified below. If IMS fails to bring the Insurance
                  Administration Services for an Authorized Line of Business
                  within the Service Standard Levels for that Authorized Line of
                  Business during the four (4) week rolling period immediately
                  following any Deficient Service Period (not including the
                  Initial Deficient Period and the Subsequent Service Period),
                  Customer will be entitled to retain as "Liquidated Damages",
                  ___*___ of all amounts withheld as a Service Holdback for that
                  Authorized Line of Business during that Deficient Service
                  Period. Notwithstanding the foregoing, if the parties
                  anticipate IMS will be out of compliance with the Service
                  Standard Levels for a particular Authorized Line of Business
                  due to a material increase in IMS work load in any given four
                  (4) week rolling period for that Authorized Line of Business,
                  then IMS may request and Customer shall send, subject to
                  availability, the necessary Customer personnel ("Overload
                  Personnel") to IMS' service center to cooperate with and
                  assist IMS in re-establishing or maintaining Service Standard
                  Levels for that Authorized Line of Business. IMS will
                  reimburse Customer for Customer's direct costs (including
                  related salaries and travel expenses of the Overload Personnel
                  during their period of service to IMS) incurred in providing
                  such assistance, but only to the extent actually used by IMS.
                  In addition to the reimbursement of salary and travel expenses
                  of the Overload Personnel, IMS shall pay Customer a ___*___
                  override on any salary reimbursements that it may pay Customer
                  for Overload Personnel utilized by IMS pursuant to this
                  Section. IMS acknowledges: (a) that the Service Standards
                  Levels set forth in EXHIBIT I, II, AND III are only intended
                  to gauge the service levels and do not relieve IMS of its
                  obligation to perform the Insurance Administration Services in
                  accordance with this Agreement and applicable laws and
                  regulations, and (b) that the liquidated damages herein do not
                  limit Customer's right to terminate this Agreement as herein
                  provided.

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                       15
<PAGE>   16

B.       Except for: (i) Service Fees and other amounts owed to IMS by Customer
         in consideration of IMS providing the Insurance Administration
         Services, miscellaneous services or third party services; (ii) acts of
         fraud, or willful misconduct; (iii) IMS' obligations to indemnify
         Customer pursuant to Paragraph C and D below; (iv) amounts payable by
         IMS under Article XIII of this Agreement; and (v) violations of Article
         VII of this Agreement; each party's maximum liability ("Maximum
         Liability") to the other party for any cause whatsoever, during any one
         calendar year (including, but not limited to, amounts payable to
         Customer by IMS for regulatory fines, settlements and penalties) shall
         be limited to direct damages incurred by that party and shall be
         limited to the greater of: (a) ___*___ of the Service Fees actually
         paid to IMS under SCHEDULE B during the calendar year in which the
         direct damages were suffered by a party; or (b) ___*___ each such
         calendar year. To the extent that a penalty, settlement or fine (for
         which IMS is required to assume liability under this Article) relates
         back to a certain policy, the penalty, assessment or fine shall have
         been deemed to be paid on the effective date that the policy was issued
         by IMS under this Agreement and the damage shall be deemed to be
         suffered during that same calendar year. This Article shall survive any
         termination of this Agreement.

C.       IMS shall indemnify and defend Customer, and its officers, directors,
         employees, agents, and Affiliates, at IMS' sole cost (including
         reasonable attorney's fees), for any final (non-appealable) judgment
         recovered against Customer finding that the right granted by IMS to
         Customer to use the Proprietary System in connection with this
         Agreement infringed upon or misappropriated a third party's copyright,
         patent, or trade secret rights; provided, however, that Customer gives
         IMS prompt written notice from Customer's receipt of such claim.

D.       IMS shall indemnify and defend Customer, and its officers, directors,
         employees, agents, and Affiliates, at IMS' sole cost (including
         reasonable attorney's fees), for any settlement recovered against
         Customer finding that the right granted by IMS to Customer to use the
         Proprietary System in connection with this Agreement infringed upon or
         misappropriated a third party's copyright, patent, or trade secret
         rights; provided, however, that Customer gives IMS prompt written
         notice from Customer's receipt of such claim. Customer may participate
         in the negotiation of any proposed settlement, however, Customer shall
         not make, agree to or execute any settlement (for which Customer is
         indemnified by IMS hereunder) without IMS prior written approval.

E.       If data is processed in error due to an error or defect in the
         Insurance Administration Services provided by IMS, then upon IMS
         receiving notice of such error or defect, IMS shall reprocess such data
         without charge to Customer.

F.       All parties agree to promptly give the other notice upon being notified
         or becoming aware of any and all allegations or claims, which could
         give rise to a claim under this Article.

ARTICLE XI.       GENERAL AGREEMENTS

A.       This Agreement in all matters arising thereunder shall be governed by
         and determined in accordance with the laws of the State of New York.

B.       The parties shall not liable or deemed to be in default or "substantial
         fault" for any delay or failure in performance under this Agreement or
         interruption of the Insurance Administration Services resulting,
         directly or indirectly, from an external act outside of the control of
         IMS, including, but not limited to: acts of God, civil or military
         authority, labor disputes, shortages of suitable parts, materials,
         labor or transportation or any similar cause beyond the reasonable
         control of the parties. Notwithstanding the foregoing, IMS shall make a
         good faith effort to explore and pursue commercially reasonable
         alternatives that may be available to eliminate the delay, failure or
         interruption caused by the external

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                       16
<PAGE>   17
         act. IMS acknowledges that it has a detailed emergency recovery plan
         for interruption of the Insurance Administration Services and has
         contracted with an emergency "Hot Site". IMS shall follow its recovery
         plan, which provides recovery priority to "Production Customers" and is
         designed to re-establish the Insurance Administration Services
         following a disaster causing an interruption thereof. IMS acknowledges
         that Customer is a Production Customer. Customer acknowledges that the
         Hot Site is only a temporary bridge and that there may be a diminution
         in the performance levels of the Insurance Administration Services (but
         IMS will make a good faith effort, under the circumstances, to meet
         IMS' goal of re-establishing, at a minimum, quoting, rating and policy
         issuance services for Production Customers within 72 hours of a
         disaster) until the main data center capabilities are re-established.
         Once Service Fees paid by Customer to IMS under this Agreement, during
         one (1) calendar year, exceed ___*___, Customer and IMS shall mutually
         agree on a disaster recovery plan that shall be exclusive to Customer.

C.       Customer and IMS agree that, during any term of this Agreement and for
         a period of six (6) months following the termination of this Agreement,
         neither party will directly or indirectly induce any employee of the
         other to terminate his or her employment with the other party; nor will
         either, without prior written consent of the other, offer employment to
         any employee of the other party or to former employees of the other
         party during the six (6) month period immediately following such
         employee's termination. This Paragraph shall survive termination of
         this Agreement.

D.       Any and all notices, designations, consents, offers, acceptances, or
         any other communication provided for herein may not be delivered via
         the e-mail but shall be given in writing by hand delivery, by overnight
         carrier, by registered or certified mail or by facsimile transmission
         and shall be addressed as follows:

                  As to Customer:     Cybercomp by Reliance National
                                      A Reliance National Group Holdings Company
                                      Crossroads Corporate Center
                                      3150 Brunswick Pike, Suite 130
                                      Lawrenceville, NJ 08648,
                  Fax Number:         (609) 434-5902
                  Attention:          Executive Vice President

                  As to IMS:          Insurance Management Solutions, Inc.
                                      360 Central Avenue, 16th Floor
                                      St. Petersburg, FL 33701
                  Fax Number:         (727) 823-6518
                  Attention:          President

         Notices sent by hand delivery should be deemed effective on the date of
         that hand delivery. Notices sent by overnight carrier should be deemed
         effective on the next Business Day after being placed into the hands of
         the overnight carrier. Notices sent by registered or certified mail
         shall be deemed effective on the fifth Business Day after being
         deposited into the post office. Notices sent by facsimile transmission
         shall be deemed to be effective on day when sent if sent prior to 4:30
         p.m. (the time being determined by the time zone of the recipient),
         otherwise they shall be deemed effective on the next Business Day.

E.       This Agreement, and any exhibits, schedules or addenda attached hereto,
         contains all of the prior oral and/or previously written agreements,
         representations, and arrangements between the parties hereto. There are
         no representations or warranties other than those set forth herein. No
         change or modification of this Agreement shall be valid unless the same
         shall be in writing and signed by all of the parties hereto. All
         schedules, addendum

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                       17
<PAGE>   18

         of any kind, or attachments to this Agreement shall be made a part of
         this Agreement and shall be subject to all terms and conditions of this
         Agreement. Article V (B), VII, X, XI (C) shall survive any termination
         of this Agreement.

F.       Words of a gender used in this Agreement shall be held to include any
         other gender, the words in a singular number held to include the
         plural, when the sentence so requires. Article headings are intended
         for purposes of description only and shall not be used for purposes of
         interpretation of this Agreement.

G.       Should any part of this Agreement for any reason be declared invalid,
         such decision shall not effect the validity of any remaining portion,
         which remaining portion shall remain in full force and effect as if the
         Agreement had been executed with the invalid portion thereof
         eliminated. It is, therefore, declared the intention of the parties
         hereto that each of them will have executed the remaining portion of
         this Agreement without including therein any such part, parts or
         portion which may, for any reason, be hereafter declared void.

H.       If either party should bring a Court action alleging breach of this
         Agreement or seeking to enforce, rescind, renounce, declare, void or
         terminate this Agreement or any provisions thereof, the prevailing
         party shall be entitled to recover all of its legal expenses, including
         reasonable attorney's fees and costs (including legal expenses for any
         appeals taken), and to have the same awarded as part of the judgement
         in the proceeding in which such legal expenses and attorney's fees were
         incurred.

I.       Neither IMS nor Customer shall assign this Agreement or any of its
         rights hereunder without the prior written consent of the non-assigning
         party, except that Customer may assign this Agreement to a purchaser of
         all or substantially all of its assets or equity. A Change of Control
         of either party shall constitute an assignment. Upon written approval
         by IMS, which written approval shall not unreasonably be withheld,
         Customer and its assigns may assign this Agreement to any Affiliate of
         Customer, whether by direct assignment, Change of Control, or any other
         manner.

J.       The parties agree not to disclose the terms and conditions of this
         Agreement to any third party, except (i) as required in the normal
         conduct of Customer's business, or (ii) as required by law or
         regulation including without limitation, any Federal securities law, or
         regulation.

ARTICLE XII.      DISPUTE RESOLUTION PROCEDURES

A.       Prior to initiation of arbitration, the parties will attempt in good
         faith to promptly resolve any material dispute regarding this Agreement
         by negotiations between senior management ("Senior Management") of the
         parties. Senior Management of each party will meet within ten (10)
         calendar days of notice ("Notice of Dispute") by a party of the
         existence of a material dispute, at a mutually agreed time and place,
         to resolve the material dispute. Senior Management, who shall have the
         authority to settle the dispute, shall prepare and exchange memoranda
         stating the issues in the material dispute and their positions. If the
         material dispute is not resolved to the mutual satisfaction of the
         parties within seven (7) calendar days of the meeting of Senior
         Management, then the parties may attempt to resolve the controversy
         using mediation.

B.       If the matter has not been resolved pursuant to the aforesaid mediation
         procedure within thirty (30) calendar days of the issuance of a party
         of a Notice of Dispute, or if either party will not participate in
         mediation, then either party may initiate arbitration upon fifteen (15)
         calendar days written notice to the other party. Notwithstanding the
         foregoing, all deadlines specified above may be extended upon mutual
         agreement of the parties.

                                       18
<PAGE>   19

C.       Except for the right of either party to apply to a court of competent
         jurisdiction for review of the award of arbitration, for a temporary
         restraining order, preliminary injunction or other equitable relief to
         preserve the status quo, or disputes relating to breach of the
         confidentiality, non-disclosure or trade secret provisions of this
         Agreement, all claims, disputes, controversies and other matters
         relating to breach of this Agreement, and which cannot be resolved by
         the parties shall be settled by arbitration in accordance with this
         Agreement.

D.       Notice requesting arbitration ("Arbitration Notice"), or any other
         notice made in connection therewith, shall be made in writing by one
         party and sent by certified mail, return receipt requested, to the
         other party. The Arbitration Notice shall state in particular all
         issues to be resolved in the view of the complaining party, shall
         appoint the arbitrator selected by the complaining party and shall set
         a tentative date for the hearing, which date shall be no sooner than
         forty-five (45) calendar days and no later than ninety (90) calendar
         days from the date that the Arbitration Notice is mailed. Within twenty
         (20) calendar days of receipt of the complaining party's Arbitration
         Notice, the respondent shall notify the complaining party of the
         location for conducting arbitration and the name of its appointed
         arbitrator. When the two arbitrators have been appointed, they shall
         agree on a third independent arbitrator and shall appoint such person
         by written notice to the parties signed by both arbitrators within
         thirty (30) calendar days from the date of the appointment of the
         second arbitrator. If the two arbitrators fail to agree upon the
         appointment of an independent arbitrator at the end of thirty (30)
         calendar days following the appointment of the second arbitrator, then
         the independent arbitrator shall be appointed by the American
         Arbitration Association ("AAA"), or its successor, in accordance with
         its then prevailing commercial arbitration rules then in effect. The
         three (3) arbitrators shall constitute the Arbitration Board ("Board").

E.       The members of the Board shall be active or retired (i) lawyers or
         professionals familiar with insurance and/or (ii) active or former
         officers or management employees of insurance and/or data processing
         firms and/or software development companies. The person selected by the
         two respective arbitrators appointed by the parties shall be the umpire
         or chief arbitrator and must be a lawyer.

F.       Arbitration shall be conducted in accordance with the Commercial Rules
         of the American Arbitration Association ("AAA") then in effect except
         as modified herein.

G.       The parties agree that all then current employees of each with material
         relevant information will be voluntarily produced, at the employer's
         expense, for all proper discovery and arbitration hearings.

H.       The cost of the arbitration relative to the arbitrators and the AAA
         ("Costs") shall be borne equally pending the arbitrators' award. Each
         party shall bear its own expenses for attorneys' fees. The prevailing
         party in any arbitration proceeding hereunder shall be entitled, in
         addition to such other relief as may be granted, to recover the portion
         of the Costs incurred by that party in connection with arbitration
         under the Agreement prior to the award.

I.       The parties agree that the arbitrators shall be required to render
         their decision in writing within thirty (30) calendar days of the
         conclusion of the arbitration proceedings, unless such time shall be
         extended by mutual agreement of the parties.

J.       With respect to any matter brought before the Board, the Board shall
         make a decision having regard to the intentions of the parties, the
         terms of this Agreement, and custom and usage of the insurance and data
         processing industry. Such decisions shall be in writing and shall state
         the findings of fact and conclusions of law upon which the decision is
         based, provided that such decision may not (i) award consequential,
         punitive, special,

                                       19
<PAGE>   20

         incidental or exemplary damages, or (ii) include a suspension of this
         Agreement or any provisions hereof. The decision shall be based
         exclusively upon the evidence presented by the parties at a hearing in
         which evidence shall be allowed. Said decisions may be reviewable and
         vacated, modified or corrected, in whole or in part, by appropriate
         courts of competent jurisdiction for clear abuses of discretion or
         errors at law by the Board. If the decision is not vacated, modified,
         or corrected in whole or in part upon an appeal, such decision shall be
         final and binding upon all parties to the proceeding and may be entered
         by either party in any court having competent jurisdiction.

ARTICLE XIII.     ADDITIONAL AUTHORIZED STATES AND AUTHORIZED LINES OF
BUSINESS - SYSTEM ENHANCEMENT PROJECTS

A.       If Customer requests that IMS initiate a project (related to the
         Insurance Administration Services) that will require IMS to materially
         deviate its systems from the system functionality currently in use by
         IMS ("System Enhancement Project"), IMS will provide Customer, on a
         timely basis, with an estimate of the time and costs required to
         complete such System Enhancement Project along with a detailed
         description and project plan of the change(s) requested. The detailed
         description of the project, the project plan and the estimated
         completion date ("Project Completion Date") of the System Enhancement
         Project will be subject to Customer's approval in writing in its
         discretion, prior to any work being performed by IMS.

B.       If a System Enhancement Project is authorized by Customer and IMS fails
         to complete a System Enhancement by the designated Project Completion
         Date, IMS will be subject to liquidated damages as specified in "the
         "Matrix" contained in APPENDIX F. Notwithstanding the foregoing, the
         above Matrix shall only apply to System Enhancement Projects that
         require more than one hundred (100) man-hours of time to complete.
         Further, the Customer acknowledges and agrees that delays in delivery
         of required documentation, data and/or information by Customer may
         result in a similar delay in completing a System Enhancement Project
         within the designated Project Completion Date. Accordingly, if
         Customer's fails to provide to IMS the required documentation, data or
         information within the date that was mutually agreed to prior to the
         initiating of the System Enhancement Project, then the designated
         Project Completion Date of the System Enhancement Project shall be
         extended in accordance with APPENDIX "G". The parties acknowledge that
         Customer's projected damages from delay are difficult to ascertain and
         that the amounts in the Matrix are reasonable approximations of such
         damages.

                                       20
<PAGE>   21

         IN WITNESS WHEREOF, the parties hereto by their respective duly
authorized representatives have executed this Agreement to be effective as of
the 3rd day of May, 2000.

"IMS":                                     "Customer":

INSURANCE MANAGEMENT SOLUTIONS, INC.       RELIANCE INSURANCE COMPANY

By: /s/ D. M. HOWARD                       By /s/ MARK BENSON
------------------------------------       -------------------------------------
D. M. HOWARD                                      MARK BENSON

As its: PRES/CEO                           As its: EVP
------------------------------------       -------------------------------------

Date: 5/3/2000                             Date: 5/2/2000
------------------------------------       -------------------------------------

WITNESS:                                   WITNESS:

/s/ Wendy G. Jordan 5/3/2000               /s/ George Kowalsky 5/2/2000
------------------------------------       -------------------------------------

                                       21
<PAGE>   22

SCHEDULE "A" -    AUTHORIZED STATES AND INSURANCE PROGRAM

SCHEDULE "B" -    FEE SCHEDULE

EXHIBIT 1 -       COMMERCIAL LINES BUSINESS OWNER PROGRAM

EXHIBIT 2 -       COMMERCIAL LINES UMBRELLA PROGRAM

EXHIBIT 3 -       COMMERCIAL LINES WORKERS COMPENSATION PROGRAM

APPENDIX "A" -    BUSINESS OWNER STATE ROLLOUT PLAN

APPENDIX "B" -    UMBRELLA STATE ROLLOUT PLAN

APPENDIX "C" -    WORKERS COMPENSATION ROLLOUT PLAN

APPENDIX "D" -    OVERALL GOALS AND OBJECTIVES OF CYBERCHOICE (BOP) PROGRAM

APPENDIX "E" -    CUSTOMER REQUIREMENTS FOR DOCUMENTATION

APPENDIX "F" -    IMS SYSTEM ENHANCEMENT LIQUIDATED DAMAGES SCHEDULE

APPENDIX "G" -    SYSTEM ENHANCEMENT EXTENSION SCHEDULE

APPENDIX "H" -    SYSTEM DEVELOPMENT LIFE CYCLE

                                       22
<PAGE>   23

                                   SCHEDULE A

                     AUTHORIZED STATES AND INSURANCE PROGRAM

IMS shall provide Insurance Administration Services as described in EXHIBITS I,
II AND III for the following authorized line(s) of business ("Authorized Line of
Business") in the following authorized state(s) ("Authorized States"):

1.       AUTHORIZED LINE OF BUSINESS:

         Commercial Lines: Business Owners Policy (BOP) including Building,
         Personal Property, and General Liability.

         AUTHORIZED STATES:

         The initial authorized state to be implemented will be ___*___. The
         next ___*___ states will be: ___*___. The next ___*___ states will be:
         ___*___, followed by ___*___.

2.       AUTHORIZED LINE OF BUSINESS:

         Commercial Umbrella

         AUTHORIZED STATES:

         All ___*___, the ___*___ and ___*___.

3.       AUTHORIZED LINE OF BUSINESS:

         Workers' Compensation/Employers' Liability

         AUTHORIZED STATES:

         All ___*___, ___*___ and ___*___.

4.       IMS SERVICES CENTERS:

         IMS shall provide the Insurance Administration Services defined above
         primarily at IMS' St. Petersburg/Tampa, Florida Service Center
         location; or for data processing services only, at IMS' Bozeman,
         Montana Service Center, or with Customers' prior written approval, at
         another comparable IMS Service Center.

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                       23
<PAGE>   24

                                   SCHEDULE B
                    BUSINESS OWNERS, COMMERCIAL UMBRELLA AND
             WORKERS COMPENSATION/EMPLOYERS' LIABILITY SERVICE FEES

SECTION  I        IMPLEMENTATION SERVICE CHARGES

Customer shall pay IMS an "Implementation Charge" equal to $___*___ in
consideration of IMS implementing the Insurance Administration Services to be
performed under this Agreement. All data center charges associated with
implementing the base system are included in the Implementation Charge.

Customer will pay IMS $___*___ of the Implementation Charge upon execution of
the Agreement and the remaining balance of the Implementation Charges as
follows:

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------
The Customer shall pay IMS the following portion of the Implementation Charge,
totaling ___*___, upon the completion and Acceptance of each defined "mid point"
delineated in the Rollout Plans (APPENDIX A, B, AND C) for each Authorized Line
of Business:

Authorized Line of Business             Portion of Implementation Charge                Amount
---------------------------------------------------------------------------------------------------
<S>                                     <C>                                             <C>
Business Owners (Appendix A)                           *                                   *
Commercial Umbrella (Appendix B)                       *                                   *
Workers' Compensation (Appendix C)                     *                                   *
---------------------------------------------------------------------------------------------------
TOTAL                                                  *                                   *
---------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------
The Customer shall pay IMS the remaining portion of the Implementation Charge,
totaling ___*___, upon the completion and Acceptance of each Rollout Plan
(APPENDIX A, B, AND C) for each Authorized Line of Business:

Authorized Line of Business             Portion of Implementation Charge                Amount
---------------------------------------------------------------------------------------------------
<S>                                     <C>                                             <C>
Business Owners (Appendix A)                           *                                   *
Commercial Umbrella (Appendix B)                       *                                   *
Workers' Compensation (Appendix C)                     *                                   *
---------------------------------------------------------------------------------------------------
TOTAL                                                  *                                   *
---------------------------------------------------------------------------------------------------
</TABLE>

SECTION II        DEFINITIONS

The following words will have the following meanings:

1.       "Adjusted Net Direct Written Premium" ("NDWP") shall equal the gross
         amount of direct written premium (including increases thereto resulting
         from endorsements and premium audits) processed by IMS for a particular
         Authorized Line of Business, in a month, less the amount of reductions
         due to cancellations, endorsements and premium audits in such month for
         such Authorized Line of Business.

2.       "Total Inception to Date NDWP" will mean the current sum total of
         Customer's monthly NDWP for a particular Authorized Line of Business,
         as measured Inception to Date (from the Effective Date of this
         Agreement).

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                       24
<PAGE>   25

3.       "Charge Size" will mean the appropriate vertical column in the Charge
         Factor Table below, for each Authorized Line of Business, to be
         determined by the Customer's Total Inception to Date NDWP for that
         particular Authorized Line of Business.

4.       "Charge Factor" will mean the appropriate percentage of premium to be
         paid IMS, for Insurance Administration Services rendered for a
         particular Authorized Line of Business, based upon the Charge Size and
         the Monthly Average Policy Premium for that particular Authorized Line
         of Business.

5.       "Monthly Average Policy Premium" will mean the appropriate horizontal
         row in the Charge Factor Table below, for each Authorized Line of
         Business, to be determined by dividing the sum of the NDWP processed by
         IMS in a given month for that particular Authorized Line of Business by
         the number of new and renewal policies processed in such month for that
         particular Authorized Line of Business.

SECTION III       INSURANCE ADMINISTRATIVE SERVICES - SERVICE FEE SCHEDULE

Customer shall pay IMS a monthly servicing fee ("Service Fee"), for all
Insurance Administration Services rendered by IMS pursuant to this Agreement.
The Service Fees will be calculated as follows:

1.       The appropriate Charge Size for that particular Authorized Line of
         Business, for each month will be identified.

2.       The Monthly Average Policy Premium will be calculated and the
         corresponding Charge Factor in the Charge Size Column, for that
         particular Authorized Line of Business, will be identified.

3.       Each Service Fee, for a particular Authorized Line of Business, will
         equal the product resulting from multiplying the Charge Factor in the
         Charge Factor Table (at the intersection of the Average Monthly Policy
         Premium row and the Charge Size column) times the NDWP processed by IMS
         for the month for that particular Authorized Line of Business.

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------
                                                 BUSINESS OWNERS
                                               CHARGE FACTOR TABLE
                               CHARGE SIZE (BASED ON TOTAL INCEPTION TO DATE NDWP)
-------------------------------------------------------------------------------------------------------------
Monthly
Average                   *                 *                 *                 *                 *
Policy
Premium
-------------------------------------------------------------------------------------------------------------
<S>                 <C>               <C>               <C>               <C>               <C>
___*___                   *                 *                 *                 *                 *

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

___*___                   *                 *                 *                 *                 *

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

___*___                   *                 *                 *                 *                 *

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

</TABLE>

Any reduction in the applicable Charge Factor, resulting from the attainment of
a certain level of Total Inception to Date NDWP production level as specified
above, shall only be applicable to

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                       25
<PAGE>   26

business processed by IMS after Customers' Total Inception to Date NDWP
production reaches that certain specified level.

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------
                                               COMMERCIAL UMBRELLA
                                               CHARGE FACTOR TABLE
                                CHARGE SIZE BASED ON TOTAL INCEPTION TO DATE NDWP
-------------------------------------------------------------------------------------------------------------
Monthly                    *                                   *                                   *
Average
Policy
Premium
-------------------------------------------------------------------------------------------------------------
<S>                 <C>                                 <C>                                 <C>
___*___                    *                                   *                                   *

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

___*___                    *                                   *                                   *

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

___*___                    *                                   *                                   *

-------------------------------------------------------------------------------------------------------------
</TABLE>

Any reduction in the applicable Charge Factor, resulting from the attainment of
a certain level of Total Inception to Date NDWP production level as specified
above, shall only be applicable to business processed by IMS after Total
Inception to Date NDWP production reaches that certain specified level.

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------
                                   WORKERS' COMPENSATION
                                    CHARGE FACTOR TABLE
-----------------------------------------------------------------------------------------------
Monthly                *              *            *            *             *       *
Average Policy                                                                        *
Premium                                                                               *
                                                                                      *
-----------------------------------------------------------------------------------------------
<S>                  <C>            <C>          <C>         <C>          <C>       <C>
___*___                *              *            *           *            *         *
___*___
-----------------------------------------------------------------------------------------------
___*___                *              *            *           *            *         *
___*___

-----------------------------------------------------------------------------------------------
___*___                *              *            *           *            *         *
___*___

-----------------------------------------------------------------------------------------------
___*___                *              *            *           *            *         *
___*___
-----------------------------------------------------------------------------------------------
</TABLE>

SECTION IV        HYPOTHETICAL MONTHLY SERVICE FEE

For illustrative purposes only, a hypothetical monthly Service Fee for the
Business Owners Authorized Line of Business is set forth below:

Customers' Total Inception to Date NDWP at the end of the example month was
$___*___. The Charge Size column is therefore $___*___ to $___*___. In this
month IMS processed 2000 policies with a NDWP of $___*___. The Monthly Average
Policy Premium row is $___*___. The hypothetical monthly Service Fee will be
equal to ___*___.

The above example is representative for the Authorized Lines of Business of
Business Owners and Commercial Umbrella only.

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                       26
<PAGE>   27

SECTION V         MISCELLANEOUS FEES

1.       System modifications, enhancements, interfaces to Customer or other
         third-parties systems will be performed on a time and materials basis @
         $___*___ per person, per hour, subject to an annual adjustment based on
         IMS' then current standard fees.

2.       Data Conversion from existing Customer system to IMS system will be
         performed on a time and materials basis at the rate of $___*___ per
         person, per hour.

3.       Third-party information services used to provide the Insurance
         Administration Services will be a pass-through expense to Customer.

4.       Data communication line charges (used by IMS solely for Customer) will
         be a pass through expense to Customer.

5.       IMS will provide data entry services at IMS' servicing office at the
         time and materials rate of $___*___ per person, per hour.

6.       Brio(R) (a third party reporting tool) is approximately $___*___ per
         full service seat license or $___*___ for a limited seat license.
         Customer shall maintain responsibility for purchasing the appropriate
         number of licenses for their use.

SECTION VI        WORKERS COMPENSATION PARTNERSHIP INCENTIVE

1.       IMS shall pay Customer, provided that Customer is in material
         compliance with the material terms of the Agreement, the following
         advance payments, which will represent Customer's incentive fee for the
         first ___*___ of Net Direct Written Premium ("Client WC NDWP") for
         Workers Compensation Business processed by IMS, using the WC Software
         (as defined in the Agreement) or any alteration, modification or
         enhancements of the WC Software (collectively, "Client WC Software"),
         for Clients other than Customer.
                ___*___                ___*___
                ___*___                ___*___
                ___*___                ___*___
                ___*___                ___*___

         At Customer's expense, Customer will be permitted reasonable access to
         IMS' records, information, personnel and facilities (excluding,
         specifically, proprietary Technical Information of IMS and the Clients
         and proprietary confidential information of the Clients) reasonably
         necessary to verify IMS' compliance with the terms of this Section VI.
         Access to IMS' records, personnel and facilities will be provided
         during normal business hours upon ten (10) Business Days prior written
         notice to IMS by Customer.

2.       After the threshold of ___*___ Client WC NDWP is met ("Threshold
         Date"), IMS shall pay Customer __*__ of Client WC NDWP for Workers
         Compensation business processed by IMS, using the Client WC Software,
         for Clients other than Customer. Beginning on the month after the
         Threshold Date, IMS shall deliver quarterly reports to Customer on the
         amount of Client WC NDWP administered, using the Client WC Software, on
         behalf of Clients hereunder. After the Threshold Date, IMS shall make
         such payments with respect to Client WC NDWP accrued during any term of
         this Agreement. IMS shall make such payments quarterly and shall
         accompany each payment with a statement showing Client WC NDWP during
         the applicable quarter and the calculation of such fee.

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                       27
<PAGE>   28

3.       The payment fees to the Customer described in this Section VI are
         dependent on the execution of the Agreement not later than April 14,
         2000. For any delay in the execution of the Agreement beyond April 14,
         2000, each corresponding payment to the Customer will be delayed
         proportionately to the same Business Day of the following month as
         defined in this Section VI.

                                       28
<PAGE>   29

                                   EXHIBIT I

                    COMMERCIAL LINES BUSINESS OWNERS PROGRAM

DEFINITIONS

Capitalized terms, not otherwise defined in the Agreement or in this Exhibit,
shall be construed as otherwise generally understood in the insurance and data
processing industry.

PLAN OF OPERATION

PROJECT ASSUMPTIONS

With the expansion of Customer's business plan to incorporate its new Business
Owner's Policy ("BOP") insurance product it intends, over the short-term, to
use its current Customer insurance sales agent network. Ultimately, by
expanding its product offerings Customer will increase its distribution channel
and create the opportunity for significant premium growth.

In order to ensure that Customer is positioned to achieve its stated goals and
that it will be able to provide its insurance sales agents ("Agents") with an
Internet solution that is compatible with their current system capabilities,
IMS has developed the following system requirements for the BOP insurance
product. These requirements are based upon numerous discussions that have taken
place with Customer's key management team over recent months.

1.       To meet Customer's business objectives IMS will implement a system
         with the following system functionality:

         o   Quick quote function

         o   User controlled editing to establish distinct underwriting rules

         o   Use of  Customer company specific policy forms

         o   Customized output with Customer specific logo on forms

         o   Loading of rate files

         o   Use of  Customer rates/loss cost multipliers for BOP

         o   Receivables processing

         o   Automated renewal/endorsement process

         o   Cancellation processing

         o   Reinsurance processing

         o   Claims data management

         o   Agency management reporting

         o   Premium and commissions accounting

         o   Generation of commission statements and checks

         o   Compliance of statutory reporting

         o   Testing of all functions with Customer's data

         o   Controlled environment with Customer approval and sign-off of test
             results

         o   Document packaging

         o   Cash processing

         o   Audit/inspection processing/vendor management

         o   Interfaces for Customer's clearance system, FARE, ISO GUS and D&B,
             and Claim TPA

2.       Customer will not use ISO policy forms. There are 5 company specific
         general forms, 12 property forms, and 21 liability forms. Of these, 5
         will be dynamic declarations displaying all limits for included and
         optional coverages in the Insurance Program. The remaining forms will
         be static. In addition, there will be one (1) to three (3) forms per
         state that are state specific and may contain minimal dynamic data. It
         is assumed these additional forms will only vary slightly when
         implemented requiring minor maintenance support and that certain
         additional forms may be required to be added to BOP from time to time.
         However,

                                       1
<PAGE>   30

         with regards to any additional forms that may be added from time to
         time, Customer shall be billed for the System Enhancement at the time
         and materials rate unless: (a) the System Enhancement will take less
         than forty (40) hours to complete; and/or (b) the form to be
         implemented is state mandated form.

3.       Customer will promptly provide IMS with all data required on the
         declaration pages. IMS will create the sample declaration for
         Customer's approval based on the data provided. All coverage limits
         will be displayed on the property or liability declarations. In
         addition to these declaration pages, Customer also requires a schedule
         of forms and endorsements applicable to the program, common policy
         declarations, and a schedule of locations. All forms contain dynamic
         data.

4.       In order to utilize document packaging, OCR lines must be printed on
         all forms.

5.       Customer will inform IMS of any changes to forms and any new versions
         and their attachment rules as they are developed.

6.       In order to utilize other third party databases (GUS, Dun &
         Bradstreet) and build the necessary interfaces with these third party
         databases, Customer will negotiate with the various information
         service providers so that it will in turn allow IMS electronic access
         to their databases for use in processing Customer's business.

7.       IMS will, at least initially, have to rely on Customer to provide IMS
         with regulatory and ISO requirements and inform IMS of the necessary
         changes in all Authorized States. Once IMS receives these notices IMS
         will apply the changes and ensure compliance.

8.       Customer will promptly provide the necessary resources to handle the
         reporting required for state-specific calls based on the data provided
         by IMS through FARE (a Customer proprietary system).

9.       IMS will assist the Customer corporate bureau reporting team by
         providing the appropriate premium and loss information for the annual
         verification submission to ISO.

10.      Customer will promptly provide IMS with an electronic copy of the
         specific Cybercomp class codes that will apply to the eBOP program.

11.      In order to develop the final system specifications and to complete
         the business requirements document, IMS will require the following
         additional information:

STATE SPECIFIC INFORMATION:

         o   State filings as completed

         o   Underwriting manuals by state as completed

         o   Cause of loss codes by coverage and state (if state differences
             apply)

         o   Add state-specific forms and distribution

GENERIC INFORMATION:

         o   Annual statement line of business by coverage

         o   Binding requirements and workflow

         o   Standard anti-fraud wording

         o   Endorsement business rules and workflow

         o   Cancellation business rules and workflow

         o   Reinstatement business rules and workflow

         o   Audit business rules and workflow

         o   Generic forms and distribution

         o   Inspection business rules and workflow

                                       2
<PAGE>   31

         o   New business rules and workflow

         o   Renewal business rules and workflow

12.      Customer's underwriting group will provide IMS with the necessary
         changes to the prototype screens. IMS will apply these changes to the
         screens once they have been received from Customer. Screens to be
         developed based on product rules and guidelines to be provided. IMS
         will identify functional changes outside the scope of the original
         Agreement and assess impact to cost and time schedule as necessary.

13.      A list of the standard reports available from IMS has been provided to
         Customer for its review. Customer can choose the reports that it would
         like to receive on a regular basis from this list.

14.      IMS will create a policy transaction file to be provided on-line to
         Customer's claim third party administrator ("Claim TPA") for coverage
         verification. It is IMS' intent to provide the coverage verification
         data file to the Claim TPA's and Cybercomp on a daily basis by posting
         the data file to the web-enabled front-end for the Claim TPA's to
         access only their data. It will be the responsibility of the Claim TPA
         to download the data on a daily or interim basis. IMS will hold the
         daily files for a period to be reasonably agreed upon by Cybercomp and
         IMS. As a transitional phase for the Claim TPA's retrieving the claims
         data from the Internet, IMS will provide the data files to the Claim
         TPA's via e-mail.

15.      Customer will not be issuing short-term policies. Agents will have to
         issue full term policies and cancel if necessary. Customer will
         promptly provide IMS the rules to follow for canceling the policy on a
         pro-rata basis.

16.      Customer will offer a multi-year term policy if Customer and IMS
         mutually agree such an offering can be supported in the existing IMS
         system infrastructure with little to no change and without impact to
         the implementation schedule or cost.

17.      IMS can support the use of a building code effectiveness grading
         system in the rating algorithm if necessary. Customer will promptly
         provide IMS the criteria to be used in the rating.

18.      IMS can support a minimum retained premium, which is referred to as a
         "flat minimum". Customer will promptly provide IMS with the minimum to
         be used for the Customer's BOP policies.

19.      Customer will promptly provide IMS the zip codes to territory mapping
         for use in rating and statistical reporting.

20.      IMS can support a 6-digit classification code ("6-Digit Code"). The
         6-Digit Code will be comprised of the 4 position SIC code and a 2
         position code identifying the type of business. Management reporting
         will be done based on the 6-Digit Code and will not require reporting
         based a breakdown of the class code.

21.      IMS will follow the exception processing guidelines established by
         Customer for processing submissions that fall outside the Customer's
         BOP underwriting guidelines.

22.      IMS will provide the Claim TPA's access to the policy forms to make
         decisions on coverage. The process to be used for providing access
         will be agreed upon by Customer and IMS and will not impact the
         implementation schedule or cost.

23.      IMS' system performs field value and relational editing as the user
         inputs data. Customer will promptly provide IMS the edits to be used
         for the Customer's BOP program.

                                       3
<PAGE>   32

24.      IMS' system will retain submission data input by Agent as soon as the
         reservation is cleared and the quote process is allowed to continue.
         This data will be available for management reporting as per Customer's
         request. IMS will evaluate each request and provide an estimate to
         implement based on the agreed upon process for enhancement requests.

25.      Customer Claim TPA's are responsible for submitting accurate data in
         the correct position, size, type and format and with the correct
         values as assigned by ISO or IMS. All data formats should be edited
         prior to submission to IMS.

26.      Customer Claim TPA's will submit one (1) file monthly to IMS by tape
         cartridge or as ASCII files attached to e-mail by a predefined
         timeframe to be determined after the completion of the detail business
         requirements.

27.      IMS will provide an error report of claims rejected by the interface
         due to incorrect data being submitted. The report will be provided on
         a monthly basis after processing the current month claims file from
         the Claim TPA. Claims that do not pass all edits will be rejected in
         their entirety. Rejected claims will be corrected and resubmitted with
         all data previously rejected, including all financial transactions.
         All resubmitted transactions should be included with the next Claim
         TPA file transmission. All claims passing edits will be processed to
         IMS' system.

28.      IMS will provide Customer with the required policy/claims data for
         calculating the Claim TPA's processing fees.

29.      Customer will pay all Claim TPA fees as per contract between Customer
         and the Claim TPA. Any services offered by IMS for Claim TPA data
         processing beyond the contracted services will be charged to Customer
         per the Agreement based upon prior approval from Customer.

30.      Customer is looking to acquire the services of a single toll free
         vendor ("Toll Free Vendor") for claims reporting. This Toll Free
         Vendor will also need a copy of the policyholder coverage information
         to confirm coverage, locations and forms and provide the necessary
         data to the Claim TPA for administering the claims. It is IMS' intent
         to provide the Toll Free Vendor access to the coverage verification
         data needed through IMS' web-enabled front-end. The Toll Free Vendor
         will need access to more policy data than the Claim TPA. The IMS
         security levels will define which data is to be accessed by the Toll
         Free Vendor or the Claim TPA and allow the Toll Free Vendor access to
         all policy data irrespective of the Claim TPA assigned.

31.      IMS will provide insured welcome letters ("Welcome Letter") to be
         generated and mailed out of the IMS system. The Welcome Letter
         consists of a one (1) page document that is mailed to the Insured. The
         Welcome Letter will be mailed with the policy if the policy is mailed
         within seven (7) Business Days of binding. If policy is not prepared
         for mailing within seven (7) Business Days, the Welcome Letter will be
         mailed separately.

32.      IMS will provide time and material estimates to implement the various
         components required for interfacing the Kokopelli designed web-site to
         the IMS system as the detail specifications are provided by Customer.
         DELIVERY OF SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE AGREEMENT. These
         components are as follows:

         o   RFP - IMS will be given an opportunity to respond to the RFP for
             hosting the web system.

         o   Agency profile and set up will be done on Kokopelli front-end.
             Customer will require that the Agent have a logon for Kokopelli
             and a separate logon to the IMS application as an additional
             security layer. Agent will be required to input his or her
             password to access quote and support application. IMS will develop
             the interface/integration between the IMS security system and
             Kokopelli.

         o   IMS will develop a https protocol between Kokopelli and the IMS'
             producer system and the PDS agent master when agency appointment
             is approved, updated, cancelled.

                                       4
<PAGE>   33

             Customer will need to establish the procedures for handling
             sub-agents via the Kokopelli system or other defined process.

         o   IMS will provide a daily file containing policy status information
             to the Kokopelli system. The insureds access is limited based on
             whether an in-force policy exists for the insured.

         o   IMS will provide insured access to the loss run reports provided
             to the Agents via the support site. The navigation should be
             streamlined to eliminate the selection choices and display only
             the loss run report for the insured's policy.

         o   Customer will promptly provide IMS screen prints of the Kokopelli
             web-site in order to develop a similar look and feel for the
             product sites being developed. The color scheme and background
             layout of the Kokopelli site should be similar in the product
             sites. All other functions will be specific to the product
             application or follow the current Workers Compensation Internet
             application.

         o   IMS will provide separate time and material estimates for
             components listed above based on whether IMS is the web hosting
             vendor or not.

         o   In the event the Kokopelli solution for the Agent appointment is
             not in production prior to the implementation of the first state
             rollout on the IMS system, an alternate solution for establishing
             the Agent data in the IMS system will be developed.

33.      IMS will provide Customer a time and materials estimate to implement
         an interface to a premium finance company for retrieving a finance
         quote and establishing financing at binding. DELIVERY OF SUCH FUNCTION
         IS OUTSIDE THE SCOPE OF THE AGREEMENT.

34.      IMS will offer Customer the capability of tracking the Claim TPA
         take-over process in the claims data interface. The additional
         processes for providing data extracts and reports for the current and
         new Claim TPA, will be estimated by IMS on a time and material basis.
         DELIVERY OF THESE ADDITIONAL PROCESSES IS OUTSIDE THE SCOPE OF THE
         AGREEMENT.

35.      IMS will provide the ability for Agents to process premium and
         non-premium endorsements to in-force policies via the Internet
         application.

36.      IMS will provide the management of the inspection and audit vendors
         selected by Customer for responding to service requests. The
         management of these vendors will be based on the defined rules and
         guidelines established by Customer. IMS and Customer will jointly
         share in the efforts to develop an automated solution for the vendor
         management process in the IMS system.

37.      The IMS system will handle capturing multiple aggregates at the
         coverage level. IMS will provide a report to Customer identifying
         policies where a percentage of the policy aggregate has been met.

38.      IMS will offer Customer an interface to an appropriate vendor to be
         selected by Customer, or to integrate the vendor's database and
         calculation algorithm, to perform an insurance-to-value calculation.
         IMS will provide a time and materials estimate upon receipt of the
         file specifications and business requirements to implement this
         function. DELIVERY OF SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE
         AGREEMENT.

39.      IMS will offer Customer an interface to the Hartford Steam Boiler
         Inspection and Insurance Company for the purpose of submitting premium
         bordereaux and the corresponding premium payments on a monthly basis
         within the days specified in the treaty. IMS will provide a time and
         materials estimate to implement this function. DELIVERY OF SUCH
         FUNCTION IS OUTSIDE THE SCOPE OF THE AGREEMENT.

40.      IMS will offer Customer a data feed to Customer's catastrophe modeling
         system. IMS will provide a time and materials estimate to implement
         this function. DELIVERY OF SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE
         AGREEMENT.

                                       5
<PAGE>   34

41.      IMS will provide cover pages in color (blue or black ink) with the
         graphics based on line of business.

42.      IMS will provide Customer the capability to offer its Agents
         installment agency billing for Agents' Business Owners' Policies. With
         the cooperation of Customer, this function will be made available to
         Customer no later than twelve (12) months from Customer's request to
         implement this function.

                                       6
<PAGE>   35

                            REQUIREMENTS DEFINITION

                             BUSINESS REQUIREMENTS

THIS SECTION DETAILS THE APPLICABLE STIPULATIONS OF THE INSURANCE
ADMINISTRATION SERVICES TO BE PROVIDED UNDER THE AGREEMENT BASED ON THE
CATEGORIES LISTED BELOW.

1.       DOCUMENT PACKAGING REQUIREMENTS

IMS uses automated, system-generated forms, from policy declaration pages to
Agent statements, and maintains the necessary form information: form names,
recipients, and printer instructions, including variable information such as
company name and address. The IMS system not only catalogs all current forms in
use, but also stores previous versions of forms should IMS need to retrieve
them for Customer's legal or auditing purposes.

Standard Forms and Distribution:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                         DOCUMENT
                                                       FORM              PACKAGING
FORM DESCRIPTION                                       RECIPIENT         RECIPIENT          DISTRIBUTION
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>               <C>                <C>
Declarations                                           I,A,L,X           I,A,L,X            Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Installment Due Notice                                 I,L,X             I, L, X            Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Schedule of Payments                                   A only            A only             Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Short Down Payment Notice                              I,A,L,X           I,A,L,X            Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Adjusted Premium Notice                                I,A,L,X           I,A,L,X            Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Cancel Underwriting (reason codes on back)             I,A,L,X           A,L,X              Insured's copy goes proof of mail to
                                                                                            insured
----------------------------------------------------------------------------------------------------------------------------------
Notice of Cancellation (reason codes on back)          I,A,L,X           A,L,X              Insured's copy goes proof of mail to
                                                                                            insured
----------------------------------------------------------------------------------------------------------------------------------
Notice of Nonrenewal (reason codes on back)            I,A,L,X           A,L,X              Insured's copy goes proof of mail to
                                                                                            insured
----------------------------------------------------------------------------------------------------------------------------------
Confirmation of Cancellation                           I,A,L,X           A,L,X              Insured's copy goes proof of mail to
                                                                                            insured
----------------------------------------------------------------------------------------------------------------------------------
Cancellation Nonpay (has coupon on back)               I,A,L,X           A,L,X              Insured's copy goes proof of mail to
                                                                                            insured
----------------------------------------------------------------------------------------------------------------------------------
Cancel Policy Financial Status                         A only            A only             Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Notice of Reinstatement                                I,A,L,X           I,A,L,X            Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Notice of No Coverage                                  I,A,L,X           A,L,X              Insured's goes proof of mail to insure
----------------------------------------------------------------------------------------------------------------------------------
Additional Premium Due                                 I,A,L,X           I,A,L,X            Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Premium Due Notice                                     I,A,L,X           I,A,L,X            Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Past Due Premium Notice                                I,A,L,X           I,A,L,X            Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Balance Due Notice                                     I,A,L,X           I,A,L,X            Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       7
<PAGE>   36

<TABLE>
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>               <C>                <C>
Balance Due Final Notice                               I,A,L,X           I,A,L,X            Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Renewal Notice/Payment Schedule                        I,A,L,X           I,A,L,X            Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
Final Renewal Notice                                   I,A,L,X           I,A,L,X            Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
BAS/Corr Letterhead                                    I,A,L,X           I,A,L,X            Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------
All coverage forms                                     I only            I only             Recipient's copy directly to recipient
----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

Legend:  I = Insured, A = Agent, L = Lender, X = Additional Interest/Imaging
         Requirements

2.       IMAGING REQUIREMENTS

The IMS underwriting department has access to all documents that are sent to
IMS and all document packaging output documents related to a policy through an
electronic form archive. As a standard procedure all system-generated documents
are transmitted to the IMS imaging system via Computer Output to Laser Disc
("COLD"). These stored images are duplicates of the original documents sent to
the policyholders, Agents and other respective parties and can be reproduced
for Customer, its auditors, reinsurers, and its Agents upon request. IMS does
not retain hard copy documents once the IMS records management department scans
the images into the system.

3.       INPUT REQUIREMENTS

The information required for quoting and binding a policy shall be input into
the IMS system by Customer's Agents using the Internet. IMS' underwriting
department will be prepared to handle exception processing that may occur based
on procedures defined by Customer. As defined in Customer's underwriting
guidelines, the largest building content value will be marked as a key
location. The first location address will then automatically pre-fill the
mailing address. Modifications to quotes will not be indicated on the
production report. Customer will promptly provide IMS with three sets of
questions designed to classify different types of commercial property risks
such as restaurants and contractors.

An individual Agent will be able to enter the same quote within a predefined
number of attempts. If this number is exceeded that Agent will not be allowed
to continue the process and will automatically be referred to IMS' customer
service department for assistance. The production quote count will not be
affected by an unsuccessful quote attempt.

The input requirements are based solely on the information provided by Customer
to IMS. During the implementation of the Rollout Plan, as the detailed
underwriting information for each state is determined, additional requirements
will be incorporated into the project scope.

4.       MANAGEMENT REPORTING REQUIREMENTS

The reports that Customer provided to IMS have been analyzed and compared to
the IMS standard reports to ensure that the information Customer requires is
available. This analysis and a list of IMS' standard reports have been provided
by IMS to Customer and Customer acknowledges receipt thereof. IMS will send a
weekly e-mail with the Weekly Data File Report that represents the Agent's BOP
books of business to each Marketing/Field Representative. IMS will also send
this information to Customer's Accounting Group via e-mail. In addition, IMS
will provide an accounting group report that contains all BOP books of business
sorted by Customer's Marketing/Field Representative.

                                       8
<PAGE>   37

5.       AD HOC REPORTING REQUIREMENTS.

IMS utilizes a third party ad hoc reporting tool called Brio(R).

Brio(R) Report provides the enterprise reporting tools and technology that
Customer will need to develop and process a complete range of reports, from
small reports to mission-critical operational reports that access large volumes
of data in production databases, legacy applications, and data warehouses.
Output from Brio(R) Report can range from high-volume printed reports to highly
interactive reports delivered via the Web.

BRIO(R) CAPABILITIES

The following is a list of Brio(R) capabilities that Customer may choose to
utilize. The use of these features is determined at the end user level.

         o   Merge premium data with loss data

         o   Read only so that the data can be changed

         o   Drill down into the data

         o   Intelligent method for subtotaling and totaling

         o   Can filter the data by year to date, week to date, etc.

         o   Time Service Report -- e-mailed or static on the Customer web site

         o   Running the month end process on
             a weekly basis

         o   Fifteen (15) file layouts for reporting against Month End (samples
             were previously provided to Customer

         o   Three to five (3-5) additional file layouts based on specific data
             reporting requirements to be provided by Customer which will not
             require the capture of additional data within the base system
             database.

NOTE: In order for Customer to realize the full benefits of the Brio(R)
reporting tool, it would be necessary for Customer to establish a dedicated
line into the IMS system. This would allow Customer to access Brio(R) and
Customer-specific data.

6.       FORMS

Customer will not use ISO policy forms. There are 5 company specific general
forms, 12 property forms, and 21 liability forms. Of these, 5 will be dynamic
declarations displaying all limits for included and optional coverages in the
program. The remaining forms will be static. In addition, there will be one (1)
to three (3) forms per state that are state specific. Certain additional forms
may be required to be added to BOP from time to time. However, with regards to
any additional forms that may be added from time to time, Customer shall be
billed for the System Enhancement at the time and materials rate unless: (a)
the System Enhancement will take less than forty (40) hours to complete; and/or
(b) the form to be implemented is state mandated form.

7.       OUTPUT AT AGENT'S OFFICE

In response to Customer's request that specific forms be available to print in
the Agent's office IMS agrees to provide the following:

         o   Quote

         o   Memorandum of coverage

         o   Application

         o   Binder

         o   Billing status information

                                       9
<PAGE>   38

         o   Policy status information

         o   Employer limits information

         o   Policy loss run report

         o   State specific program underwriting forms

         o   Premium finance agreement (creation of the finance agreement
             requires an interface with a premium finance company. THIS
             INTERFACE IS OUTSIDE THE SCOPE OF THIS AGREEMENT.

8.       STATISTICAL, FEDERAL AND STATE REPORTING REQUIREMENTS

IMS will support regulatory reporting for the eBOP program. IMS will ensure
that all of the required fields necessary to produce the required information
are defined in the system. IMS will also utilize the ISO edit package for
validation of data prior to reporting.

IN ADDITION TO MEETING THE FEDERAL AND STATE REPORTING REQUIREMENTS, IMS WILL
PROVIDE THE FOLLOWING ISO REPORTING SUPPORT SERVICES:

         o   Quarterly or as dictated by each state's reporting requirements
             statistical reporting to ISO under the Businessowners module of
             the commercial stat plan

         o   statistical agent liaison

         o   IMS will assist the Customer corporate bureau reporting team with
             the annual verification by providing the necessary reconciliation
             of statistical or financial variances using the required ISO
             definition codes

         o   IMS will offer Customer selected data for a Customer data feed to
             its catastrophe modeling system. (THIS INTERFACE IS OUTSIDE THE
             SCOPE OF THIS AGREEMENT.)

9.       STATUTORY REQUIREMENTS

IMS recognizes that statutory requirements will vary from state to state. IMS
agrees to analyze and document these requirements based on the information
provided by Customer as each new Authorized State is phased in.

10.      UNDERWRITING REQUIREMENTS

The underwriting decisions for the Businessowners insurance product will be
completed utilizing an underwriting template provided by Customer. The
underwriting will take place on-line via specially designed screens and will
provide automatic rejection of applications that do not meet the defined
underwriting guidelines. When a fax or mail-in submission is received, the IMS
commercial underwriting department will use the Internet screens and the
predefined Customer rates, rules and guidelines in the IMS system to issue or
reject the policy.

AUDITS

IMS will provide audit letters for the Customer new business and renewal
policies, upon receipt of an application for a BOP risk that requires IMS to
send an audit letter requesting underwriting information, such as prior loss
history, payroll and gross receipts. IMS will follow audit guidelines that will
be provided to IMS by Customer. IMS will take "necessary steps" if no response
is received from the insured, which necessary steps may include issuance of a
second audit letter and/or issuance of an underwriting cancellation notice.
When an audit response is returned to IMS, IMS will process the appropriate
credit or debit to the policy, and send follow-up correspondence with an
explanation of the reason(s) for the change in policy premium.

In addition to the Audit letters, IMS will also send notification to the Audit
TPA of Customer's choice that will inform the Audit TPA that a particular risk
requires an on-site audit. Upon receipt

                                      10
<PAGE>   39

of a complete audit finding, IMS will then process any necessary changes to the
policy, as outlined by Customer.

INSPECTIONS

IMS' commercial underwriting department will order, on behalf of Customer,
underwriting inspections from Customer's inspection administrator as required
by state mandates or Customer's underwriting rules and guidelines. IMS will
process the resulting policy updates, as outlined in Customer's underwriting
manual, such as cancellations or documentation on the policy.

REINSTATEMENT WITH A LAPSE IN COVERAGE

IMS will process reinstatements subject to the guidelines set by Customer.

EXCEPTION PROCESSING

Submissions that fall outside of Customer's Business Owner's Program
underwriting guidelines and that result in a disputed rejection, will be
handled according to an "Exception Processing" document that will be created
and approved by Customer with consultation and input from IMS.

10.1     ACCEPTABLE CLASSIFICATION

Customer will promptly provide IMS the Customer classes eligible for the eBOP
Program. Customer will then provide a matrix to IMS for use during policy
processing in determining eligible classes, cross-editing of classes and
generation of class specific forms.

10.2     POLICY LEVEL GUIDELINES

Customer's specific underwriting rules will be displayed on a customized data
entry screen. The system will be designed to ensure that the Customer specific
criteria are met before the risk is accepted. The underwriting rules will vary
by state.

Additional state specific underwriting guidelines will be utilized for the eBOP
program. IMS will provide these guidelines in the form of underwriting
questions, as shown in the eBOP Prototype. The resulting response from the
Agent will determine the acceptability of the risk. IMS will use the two sets
of questions that will be required for restaurants and contractors.

10.3     RISK SCORING

IMS will use the criteria defined by Customer to score the risk and determine
the appropriate product tier. Based on Customer's requirements, IMS will
establish a default in the system so that if a score is generated that is
outside the tier range (example provided is +100 to -100), an error message
will be generated in the system. The user will be informed Customer is
declining to quote the business and the reason why.

The risk scoring function in the system will allow for different criteria range
thresholds and automatically make point assignments by state. Additionally, an
effective and expiration date will be used in the AS/400 system tables to allow
changes within the state set up.

Policies insuring multiple locations will generate a risk score for each
location with a weighted average of the risk scores for all locations.

In states allowing filing of multiple tiers within a single company, the tier
rate will be applied using discounts and/or surcharges. In states requiring
separate companies per tier, the rates will be calculated by applying a rate
factor after the completion of premium development for the risk.

Based on the weighted average risk score generated during the rating process,
the risk will be placed in the appropriate product tier.

                                      11
<PAGE>   40

An example of a possible multiple company rating tier is provided below (as
provided by Customer):

<TABLE>
<CAPTION>

------------------------------------------------------------ ------------------ -------------
                                                              RISK SCORE POINT   TIER RATING
        INSURANCE COMPANY                                          RANGE            FACTOR
------------------------------------------------------------ ------------------ -------------
    <S>                                                       <C>                <C>
    Reliance National Insurance                                    ___*___         ___*___
------------------------------------------------------------ ------------------ -------------
    United Pacific                                                 ___*___         ___*___
------------------------------------------------------------ ------------------ -------------
    Reliance Insurance                                             ___*___         ___*___
------------------------------------------------------------ ------------------ -------------
    Reliance National Indemnity                                    ___*___         ___*___
------------------------------------------------------------ ------------------ -------------
    Reliance Universal Insurance                                   ___*___         ___*___
------------------------------------------------------------ ------------------ -------------
</TABLE>

An example of the risk criteria that IMS will use for the development of the
risk scoring mechanism is shown below (as provided by Customer):

<TABLE>
<CAPTION>

------------------------------------------------------------- --------------------------------------- ---------------------
                        CRITERIA                                                RANGE                         POINTS
------------------------------------------------------------- --------------------------------------- ---------------------
<S>                                                           <C>                                      <C>
Years In Business At Location                                                     *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
History Verification From D&B                                                     *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
Credit Scoring                                                                    *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
Building Age                                                                      *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
Classification                                                                    *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
Standard Industrial Classification (SIC) Verification                             *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
Crime Scoring                                                                     *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
Distance From Water                                                               *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
</TABLE>

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                      12
<PAGE>   41

<TABLE>
------------------------------------------------------------- --------------------------------------- ---------------------
<S>                                                           <C>                                      <C>

Central Station Burglar & File Alarm                                              *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
Length of Time Without Reported Claims                                            *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *

------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *

------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *

------------------------------------------------------------- --------------------------------------- ---------------------
                                                                                  *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
Large Building Credit                                                             *                             *
------------------------------------------------------------- --------------------------------------- ---------------------
</TABLE>

10.4     COVERAGES

Customer's Businessowners policy will provide basic coverage with the option to
select a package endorsement for predefined increased limits. The product will
also offer the ability to choose additional increased coverage/limits for
selected coverages within the product. At a minimum, the Customer BOP product
will offer basic coverage limits for Building or Business Personal Property and
Business Liability.

11.      RATING REQUIREMENTS

Customer will promptly provide IMS with rating development guidelines that will
be incorporated into the rating algorithms. Customer established these
guidelines from the ISO Commercial Lines Manual. Specific rules and paragraphs
from the ISO Commercial Lines Manual are referenced within the explanation of
the general rating rules below:

11.1     GENERAL RATING RULES

         o   Factors or multipliers are to be applied consecutively and not
             added together unless otherwise specified.

         o   Round rates, factors and multipliers after the final calculation
             to three decimal places. Five-tenths or more of a mill shall be
             considered one mill, for example, .1245 = .125.

         o   Round the premium for each coverage for which a separate premium
             is calculated to the nearest whole dollar. Round a premium
             involving $.50 or over to the next higher whole dollar.

         o   Compute premium for mandatory coverages by using the limit of
             insurance and, once computed, apply the premium separately to
             building and business personal property. The limit of insurance
             must be the replacement cost value (Rating Basis Code 2) of the
             property to be insured. This does not apply to fast food
             restaurants.

         o   Applicable to eligible fast food restaurants:

             a.   Compute premium separately for mandatory property and
                  liability coverages.

             b.   For mandatory liability coverage, the rates apply per $1,000
                  of gross sales.

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                      13
<PAGE>   42

11.2     PREMIUM DEVELOPMENT

Businessowners policies are class rated. The building and personal property
rates are stored and accessed in system tables based on territory, building
construction, public fire protection, building occupancy, and whether or not
the building has a sprinkler system. Optional coverages result in the addition
of a flat premium or can be increased by applying a rate to the insured values,
depending on the coverage.

12.      PROPOSED DETAILED INTERNET WORK FLOW

The following proposed detailed workflow provides an outline of the tasks that
shall be completed by an Agent in order to enter a new Businessowner policy.
The workflow for interfacing with third-party vendors such as GUS and Dunn &
Bradstreet may change based on availability and cost to Customer of data from
the third-party sources. As long as the number of interfaces and the data
required for validation does not increase from what was previously defined the
workflow may require only slight modification. As part of the eBOP project IMS
will develop the screens and processes to support these functions.

IMS encourages the processing of cash through Electronic Funds Transfer (EFT),
which is IMS' preferred method for processing cash quickly and efficiently. At
least initially, Customer would like to have the ability to process checks and
credit card payments in addition to EFT. To support this request IMS will make
all three of these methods available.

(Work flow diagrams for renewals, endorsements, cancellations, and
reinstatements will require further review and discussion with Customer before
being finalized. However, similar or like work flow processes are anticipated
for these transactions.)

                                      14
<PAGE>   43
12.1     eBOP Proposed Internet New Business Process Diagram

<TABLE>
<S>     <C>                <C>                   <C>                                   <C>                <C>              <C>

                                                          Entrance Screen

                                                              Quote of
                                                              Support      Support      Support Flow

                                                               Quote

                                                 State Selection / Effective date

                                                           Eligiblility                                           No

                                                             Eligible

                                                                Yes

        Retrieve D&B and
         Clearance Info                             Dun and Bradstreet Lookup

                                                    Years in Business / Losses

                                                       Policy Level Coverage

                                                        Location / Coverage
Mostly

                                                             Additional
                                                             Locations                      Yes

                                                                No

                                                             Coverage
                               Building                       Option                      Contents

                                                       Building and Contents

                           Building Coverage      1st     ---    O    ---     2nd      Contents Coverage
         Loop                                                                                                  Loop
       repeated                                                                                              repeated
       for each    Yes                                                                                       for each
       Location               Additional                                                                     Building
                              Buildings                                                Contents Options

                                  No

                                                           Loop
                                                         Repeated                                                           Return
                           Buildings Options             for each                                                          entrance
                                                         Building                                                           screen

                                                                                           Proposal

                                                Retrieve GUS Info for all Locations

           Continue
           Working                                      Quote/Premium                      Print

                                                                                                             Quote

             Bind

           Binding                                 Binding            System Marks                        Agent Faxes
         Information         Anti-Fraud         Instructions         Policy Pending        Application    EFT to IMS
                                                                          Cash

                                                   Binder

</TABLE>

                                      15
<PAGE>   44

12.2     Customer Proposed Cash Process Diagram

<TABLE>
 <S>                   <C>                    <C>         <C>                            <C>                       <C>

                                              IMS Entering Cash
                                                Initiates Cash
                                                    Process

                                     Check     Retrieve Funds                     ACH                               Sweep Account

                             Check Received                                                 Bounced ACH                  Funds
                                                 Credit Card                             Charged to Agent/   No       Transferred
                                                                                              Insured

    IMS Continues
 collection efforts    No    Check clears                                                  Sweep Account
                                                   Credit
                                                  Processed                                                              Yes
                                  Yes

 Notify Reliance Via                                               Bounced ACH
       Email                                                    charged to Agent/    No        Funds               Automatic Policy
                                                                     Insured                Transferred                Issuance
                           IMS Issues Policy
                                              Yes
                                                     No
  IMS Cancel Policy                                                  Submit
                                                                  Credit Card #      No    Cancel Policy
                                                                   w/in 24 hrs.

                                                                       Yes

                                                             System generates Output                   Dec

                                                          Premium deposited in Reliance
                                                                     Account                      Policy Issuance
                                                                                                  Notice to Agent
                                                    Reliance funds transferred to Reliance
                                                               operating account

                                                         IMS will draw fee from Reliance
                                                                operating account

</TABLE>

                                      16
<PAGE>   45

13.      CUSTOMER SERVICE

Although IMS realizes that most of the transactions that IMS will be processing
for Customer will be received through the Internet, the need for customer
service, once a policy has been issued, still exists. IMS' commercial lines
staff will quote submissions and bind coverage if an Agent accepts, based on
verification of the program guidelines, required underlying limits of insurance
and any applicable exclusion(s).

The IMS commercial lines customer service department associates will undergo
comprehensive product training that will include Customer's eBOP policy
guidelines.

13.1     POLICY PROCESSING

In conjunction with the Internet capabilities, the IMS customer service unit
will utilize IMS' "Policy Processing System" to provide full processing for all
BOP policy requirements (as specified in this Exhibit), while managing the
entire policy process (new business, quoting, renewals, change endorsements,
cancellations, and reinstatements). When an audit response is returned to IMS,
IMS will process the appropriate credit or debit to the policy, and send
follow-up correspondence with an explanation of the reason(s) for the change in
policy premium.

To assist in this process the Policy Processing System utilizes the Group 1,
Code 1 software. This product not only recognizes and corrects incorrect
addresses, but also draws in the city and state information thereby expediting
the data entry process whether through the Internet or the exception processing
procedures.

Access to the Policy Processing System is based on user authority, with
security at both the menu option and function levels. These authority levels
govern access by IMS' internal resources as well as the designated external
users.

System edits are built based on the Customer eBOP Program underwriting and
rating guidelines. IMS will automatically determine risk acceptability based on
these edits.

13.2     CUSTOMER SERVICE NEW BUSINESS PROCESS

The diagram that follows provides a high level overview of IMS' workflow, as
established for processing Customer's mailed-in or faxed new business
applications. This basic workflow will also apply to renewal, endorsement and
cancellation processing for the eBOP program.

13.3     QUALITY CONTROL SELF AUDIT

Customer will perform initial quality control functions during the first six
(6) months of live production processing. During this time, Customer will
develop a self audit process to be implemented by IMS, the terms of which will
be mutually agreeable to IMS and Customer and are to be negotiated separately
from this Agreement.

                                      17
<PAGE>   46

                        IMS CUSTOMER SERVICE DEPARTMENT
                          NEW BUSINESS PROCESS DIAGRAM

                    IMS Mailroom
                 Receives Umbrella
                     Submission

                      Route to
                     Commercial
                     Department

                     Underwriter
                      Companies
                      Automated
                        Quote

                    Acceptability              No            Decline
                         Met?

                         Yes

                  Quote Emailed or
                   Faxed to Agent

                         Agent                 No            Archive
                        Accepts                               Quote
                        Quote?

                         Yes

                         Bind
                       Coverage
                     upon Receipt
                       of Funds

                         Funds                 No            Process
                       Received?                           Cancellation

                          Yes

                       Customer
                       Service
                    Issues Policy
                        through
                         AS/400

                                      18
<PAGE>   47

13.4.    SURVEY AND UNDERWRITING REPORTS

IMS will provide third party reports such as CLUE reports on an as needed basis
for new business or renewal processing. The type and frequency of the reports
shall be designated by Customer and shall be handled as a pass through expense
to Customer for billing purposes. IMS shall utilize authorized vendors for
obtaining the required records.

13.5.    CORRESPONDENCE

When dealing with Agents, insureds, claimants, and lenders, IMS' customer
service representatives utilize IMS' "Correspondence System". IMS will send
custom form letters, track outgoing correspondence, and log incoming
correspondence. IMS will create the form letter templates, which will then
reside in the IMS system for repeated use, based on the guidelines provided by
Customer.

IMS will save a copy of the letter online and create a history record showing
that a letter was sent. IMS will produce user activity reports from the
Correspondence System that assist in tracking outgoing correspondence created
by an individual user or group of users on any date. These reports will be
provided to Customer upon reasonable request.

13.6.    CLIENT INFORMATION

Customer search option allows IMS to view all the policies belonging to a
specific policyholder. The Customer update option allows IMS to change general
insured information (e.g., addresses, telephone numbers, etc.). Entering this
insured information one time applies the information to all products under that
insured.

13.7.    POLICY HISTORY AND NOTES

IMS will respond to requests that involve historical data through the history
option found within the IMS system. This option allows IMS to view policy
transactions and forms in detail. Selecting the history option reveals the
policy activity screen, which displays the entire history of the current
policy. This function provides IMS with the ability to respond more effectively
to Customer's Agents and policyholders.

Additionally, when policy processing deviates from the norm, documenting these
differences for future reference through the Comments Processor is standard
procedure. This function provides an internal notebook, attached to a policy,
that alerts the user to important information.

13.8.    APPLICATION SUPPORT TABLES

Over six hundred (600) files contained in the "Application Support Tables"
allow IMS to customize "Insurance Tools" to fit Customer's profile. IMS can
revise maintenance files within the different components of the system. For
example, if there are changes to rates or products, IMS can easily make those
changes by simply copying, saving, and updating the existing values.

14.      ACCOUNTING

IMS will provide full accounting services (as specified in this Exhibit) for
Customer including day-to-day posting, balancing and control of premium
receivables, bank reconciliation and annual statement support.

14.1     PAYMENT PROCESSING

IMS will follow all binding guidelines established by Customer in order to
expedite the issuance of policies. While IMS prefers that Customer utilize
Electronic Funds Transfer ("EFT") as much as possible, IMS acknowledges that it
will be required to handle a range of payment processing, including:

         o    Checks

                                      19
<PAGE>   48

         o    Credit card payments

         o    Reconciliation

Premium processing for payments related to installments, renewals, audit bills
and endorsements will be processed through multiple lock boxes via an
authorized Bank with a designated Customer Post Office Box. The lockbox to be
used on the remittance will be determined based on the insured's billing state.
(EFT and credit card payments will also be offered.) These payments will be
picked up early each morning and deposited the same day. Payments received with
a remittance coupon will be processed using optical OCR equipment that reads
the policy number electronically. Once lockbox data is transmitted and loaded,
the system will automatically process cash by applying payments and updating
policies.

Any payments collected via credit card will incur a processing fee. These fees
will be included with the policy premium where state guidelines allow a charge
to be passed back to the insured. Customer will promptly provide IMS with any
state-specific requirements for credit card processing.

Reinstatement and collection procedures will be established according to
Customer's guidelines. IMS will request these payments be sent directly to IMS'
office, EFT or through credit card payment.

IMS will actively support Customer's efforts to promote the utilization of EFT
with its Agents if Customer chooses this option. IMS will review the
requirements and attempt to address any legitimate concerns that the Agents may
present.

IMS will be responsible for the processing of all policy premiums direct
deposits. To facilitate this process the following controls are in place:

         o    Use of preprinted policy numbers on all documentation

         o    Daily review and comparison of system totals compared to total
              cash transmitted and/or entered and any credit card receipts
              transmitted

         o    Daily preparation and reviews of deposit slips and journal entry
              forms

         o    Transactions not received through EFT will be deposited within 24
              hours of receipt

Cash processing includes the application of payments to current policies as
well as the application of new business. Because the volume of payments can be
extensive, cash processing is completed in batches. Once a batch of payments is
entered either automatically or manually, the system assigns a control and
batch number. These identifiers are used to track data throughout the system.

The system supports full and partial cash entries. Full entries process a
variety of cash payments within a single batch. The full entry is also used to
process new business transactions. Through cash component processing, the new
policy number is automatically registered.

There is also a cash correction option that allows for cash revisions as well
as previous payment adjustments. Once retrieved, the cash correction option
provides a number of selections for making revisions. These include changes to
Agent, product, payor, and net amount information.

Cash processing activities such as non-sufficient funds processing, stop
payments and deposit corrections will be handled according to IMS' established
procedures unless Customer provides acceptable written specifications.

                                      20
<PAGE>   49

14.2     COMMISSION PROCESSING

IMS will provide the ability to offer varying commission rates to Agents for
incentives such as utilizing the Internet to submit business versus faxing or
mailing a new business or renewal application. IMS will disburse commission
payments by the fifteenth (15th) calendar day of the following month. Payments
will be derived according to the commission structures instituted for eBOP and
for premiums collected through the previous month-end.

14.3     REINSURANCE PROCESSING

IMS will process all of Customer's reinsurance transactions. In order to
accomplish this task, data from Customer's claim and premium files will be
converted to the appropriate formats and using the predefined criteria provided
by Customer, IMS will calculate the concessions and match the transactions with
the reinsureds. Once this process is completed, IMS will store the results in a
database to use for generating disbursements and for billing invoices. In
addition, this database will also be used as necessary to apply cash to
recoverable balances. If a reinsurance contract requires loss notices, IMS will
produce those notices and mail those notices to the reinsurer.

14.4     BILLING PROCESSING

Customer will offer direct installment billing. IMS will handle this function
using IMS' AS/400 system that interacts with premium, cash, and return premium
processing and takes into account all requirements for agency accounting. IMS
can manage installment payments as well as additional premium processing. The
IMS "Direct Bill System" allows billing based on verification of appropriate
minimum deposit, an outlined installment schedule, total premium amount, policy
term, or any combination of these features that may be requested in writing in
advance by Customer. Also, because the Direct Bill System is fully integrated
with automatic forms IMS will be able to generate the appropriate printed
billing notices, such as direct bill installments, renewal notices and
additional premium notices.

IMS will utilize the Direct Bill System to create a history record of every
transaction (installment notices sent and amounts paid) and send that record to
the activity screen of the applicable policy.

The Direct Bill System allows IMS to design a number of different payment plans
based on Customer's required criteria for different companies, products and
states. Further, the Direct Bill System will allow IMS to tailor settings to
meet Customer's specific needs:

         o    "COPYIMS" can create different billing cycles for various payment
              plans.

         o    IMS can set minimum values for premium to qualify for specific
              payment plans.

         o    Customer will define different new business and renewal down
              payment percentages.

         o    Customer will have the ability to establish waive amounts that
              prevent the system from billing beneath a certain threshold. Then
              if an endorsement occurs, the system will add the previously
              unpaid waive amount to the billing for the endorsement premium.

Billing for new business, renewals, change endorsements and installments will
be established upon receipt of Customer's payment plan schedule.

Audit Processing that results in an additional premium will be billed as such.
The additional monies will not be spread in remaining installments. An
Additional premium notice will be sent to the insured and Agent. IMS will
follow Customer's reasonably established collection guidelines if the
additional premium is not received in the given number of days.

                                      21
<PAGE>   50

14.5     DISBURSEMENTS

All disbursement batches shall be reviewed and approved before they are
forwarded to IMS for check printing. IMS will verify that the requestor has the
authority documented on the invoice and that the check is issued to the correct
recipient.

To issue the disbursement IMS will utilize the I.T.'s disbursement system,
"CheckWriter". Checkwriter is designed to update, delete, approve, and track
handwritten or computer-generated return premium checks.

Although there are a number of different reasons that IMS may have to issue a
return premium check, the process is always the same. First, IMS indicates the
product and policy and then supplies payment information. CheckWriter tracks
Agent and payment information and maintains the insured's and/or payee's name
and address to ensure proper return premium check processing.

In addition to processing and printing, IMS uses CheckWriter to record manually
generated check information. This data is integrated directly into policy and
bank reconciliation records in the system. This feature helps maintain accurate
records for all check processing in a central location.

Again, using CheckWriter IMS processes both account information that is
transmitted directly from the bank, and manually keyed data to provide Customer
automatic check reconciliation. Check printing data is processed by the AS/400
and downloaded to a personal computer for printing on a MICR printer. This
method allows important banking information to be coded directly onto the
check, increasing accuracy in check clearance by the bank. Reports generated by
CheckWriter provide check number information, outstanding amounts, and policy
activity.

In addition to these more traditional functions, IMS will generate and transmit
daily "positive pay" files to IMS' banking partners on IMS' disbursement bank
accounts.

14.6     1099 REPORTING

IMS' "Producer System" will comply with all 1099 reporting requirements. Using
the Agent file component of the Producer System all information relative to an
Agent will be captured including the tax identification number and the social
security number. This component will act as a control file and provide the
necessary data to generate both the Agent statements as well as the 1099
reports.

14.7     PRODUCER

"I.T.'s Producer System" will manage detailed information for all Agents,
providing access to data ranging from the general--name, address, and Agent
number, to the specific--commission rates, products sold, and license
appointments. All vital Agent premium data needed to create month-end premium
production reports, Agent checks, and Agent statements in both detail and
summary will be integrated within the month-end IT's Producer System.

IMS will track all contracts by Agent and product, providing Customer with both
effective and expiration dates of those contracts. The IT's Producer System
will provide IMS with the capability to set up and maintain override
commissions for any Agent desiring that arrangement. In addition, an Agent
relationship file will allow Customer to request IMS assign Agents to a general
or reporting Agent. The IMS system also contains all the tables that run the
IT's Producer System so IMS can add new sales representatives, enter commission
rates, or add a new Agent type at the request of Customer.

15.      USER DOCUMENTATION

To meet Customer's requirements for clear concise user documentation to support
its Agents, IMS will provide a reference guide, which will be available through
e-mail, and additional online reference information.

                                      22
<PAGE>   51

The BOP Reference Guide will include the following:

         o    Introduction

         o    System overview

         o    Getting started

The additional information that will be available online will include:

         o    Underwriting responsibilities of the Agent

         o    New quote

         o    Unbound quotes

         o    Problem reporting

         o    Support site

         o    Questions and answers

In addition to the reference materials defined above, IMS will provide access
to Customer's eBOP Underwriting/ Agent manual online. To ensure that the
information remains current in these eBOP Underwriting/Agent online manuals,
Customer will promptly provide revised versions of the eBOP Underwriting/Agent
manual to IMS. Once this information is received by IMS, a service request will
be generated to archive the old version and provide the Agents with access to a
new online version as well as prior versions.

16.      IT ENVIRONMENT

IMS will initially facilitate the Insurance Administration Services on an IBM
AS/400 model 9406-650 having 4GB of main storage and over 373GB of on-line
storage. Additional peripherals will initially include on 3995 model C42
Optical Tower, one IBM 3590 tape drive, one IBM 9348 1/2 inch reel tape drive,
and one IBM 6141 ASCII Workstation Controller which houses eight ports
dedicated for dial up access. Additionally, a second AS/400 will initially be
used for programming and testing of enhancements. The AS/400's currently run
IBM OS/400 Version 4, Release 2 as the operating system. The IMS system has
averaged over 99% availability for two consecutive years. Furthermore, greater
than 98% of transactions are completing in less than two seconds.

IMS has Local Area Network ("LAN") equipment consisting of more than fifty
Microsoft NT v4.0 servers running on rack mounted Compaq Proliant server class
computers and one RS6000. These servers are connected to the network backbone,
and eventually to the user workstations, via a combination of Token Ring and
100BaseT. The LAN infrastructure utilizes 3Com's LanPlex Switch as the
collapsed backbone, with Superstack II hubs used for workstation access.
Workstations are Compaq Pentium based computers running Microsoft Windows 95,
98, or NT as its operating system. The typical user workstation is installed
with Microsoft Office 97, Microsoft Outlook, and IBM Client Access 5250
emulation connecting to IMS' AS/400 via TCP/IP.

The servers on the IMS LAN run the full Microsoft Backoffice suite, including
Exchange that is used as the messaging server, and also as the repository for
E-Mail and calendars. Other servers run NT/SQL, SMS, SNA, Internet Information
Server, ViewStar Imaging, and TASC COLD.

The PBX used by IMS is the Northern Telecom option 81c, which includes features
such as Meridian Mail, Customer Controlled Routing, and Meridian Link. There
are over 1150 extensions in use currently.

IMS data center ("Data Center") is protected by a 65KVA Toshiba UPS that
provides additional processing time of one half hour under full load in the
event of a commercial power failure at the main processing site. The UPS
running at 50% load has a battery life of over one-hour. IMS will be running
the UPS at approximately 40% capacity, thereby increasing the battery life to
well over one hour in the event of a power failure. All equipment in the Data
Center, including AS/400, LAN, and phone equipment, will be protected by this
UPS. Additionally, during non-prime time, there is

                                      23
<PAGE>   52

a backup of the entire system performed. The data tapes associated with both
the LAN and AS/400 are stored with an off-site data security vendor. IMS data
processing sites currently have disaster recovery plans, which are tested
either annually or bi-annually. When IMS executed its last mock disaster in
January 1999, IMS was able to restore all applications and data files and
establish remote connectivity within 16 hours at the IBM Business Recovery
Systems hot site in New York.

Policy, correspondence, and report printing functions are performed on four
Xerox 4890 Color Laser printers, each rated at 92 pages per minute. These
printers provide spot color capability for professional appearance of printed
output. The Xerox printers are connected to a Barr system via bus and tag
cables, and in turn, the Barr system is connected to the AS/400 via twinax
cable.

17.      SECURITY REQUIREMENTS

IMS' "Point of Sale Internet Solution" has a "Security Model" that includes
authentication, access control, privacy, and data integrity for the web sites
and applications. The Security Model use digital certificates, encryption, user
ids and passwords to prevent unauthorized individuals from accessing the IMS'
systems.

Using Secure Socket Layer ("SSL") technology, IMS will provide encryption and
decryption of both request and response data being passed across network
connections, such as Agent information, policy data and credit card
information.

IMS is certified with the IBM e-business "Mark" Program. The "Mark" tells
Customer's customers and business partners that Customer is using IBM products
and services as part of Customer's e-business solution. It further communicates
those IBM products and services can help make a site more scalable, reliable
and secure.

17.1     APPLICATION SECURITY

The security component allows access levels to be set for each user of
Insurance Tools. When a user signs on, the system uses behind-the-scenes
processing to determine proper access levels. Depending on the security level,
a user can only access certain systems within Insurance Tools.

Insurance Tools requires a valid user ID and password before access is granted
to the system. This access is granted in varying degrees--for example, Customer
may give only a supervisor the security level to delete certain data.

The security component not only allows control over which systems an associate
can access, but it also defines access levels within each system. In some
instances, the user may view but not make any changes to certain options or
systems while, in others, the user cannot view certain options or systems at
all.

The security administrator can change access levels as needed. Adding new users
is relatively easy: simply select and copy a similar profile from another
employee. The ability to add, change, and delete security accesses is available
at any time.

18.      SYSTEMS INTERFACES

CLEARANCE SYSTEM INTERFACE

This interface will be designed to ensure that no two Customer Agents are
competing for the same prospect. For new business submissions via the eBOP
system, a call will be made to the Customer host to determine if the account
already exists under the same product offering. The results of the search will
be returned to the eBOP system to allow the Agent to continue the submissions
or notify the Agent that the account is being serviced by another appointed
agency that is associated with Customer.

                                      24
<PAGE>   53

An update to the record in Customer's system will be made at defined points
within the submission cycle and at policy renewal.

FARE SYSTEM INTERFACE

Businessowners building and contents premium file and claims file will be sent
monthly to Customer. This file layout has been provided to IMS for its review
and analysis. IMS will provide this capability.

CLAIM TPA INTERFACE

This interface will allow Claim TPA's selected by Customer to submit monthly
data files to IMS for processing into the IMS businessowners system. The claims
data fed to the IMS system will be used to provide the required information to
Customer in the monthly FARE, creation of policy loss run reports and for any
required statutory reporting requirements.

IMS will provide an interface to retrieve the following information from the a
third party vendor system:

         o    Public protection class

         o    Wind

         o    Crime grading

IMS will provide an interface to retrieve the following information from a
third party vendor system:

         o    Business established date

         o    Credit scoring

         o    SIC code verification

         o    Bankruptcy proceedings

         o    Duns number identification

IMS will offer Customer an interface to a third party vendor to be determined
by Customer, or integrate the third party vendor's database and calculation
algorithm, to perform an insurance-to-value calculation. IMS will provide a
time and material estimate upon receipt of the file specifications and business
requirements. DELIVERY OF THESE ADDITIONAL PROCESSES IS OUTSIDE THE SCOPE OF
THE AGREEMENT.

IMS will offer Customer an interface to the Hartford Steam Boiler Inspection
and Insurance Company for the purpose of submitting premium bordereaux and the
corresponding premium payments on a monthly basis within the days specified in
the treaty. IMS will provide a time and materials estimate to implement this
function. DELIVERY OF THESE ADDITIONAL PROCESSES IS OUTSIDE THE SCOPE OF THE
AGREEMENT.

IMS will offer Customer a data feed to Customer's catastrophe modeling system.
IMS will provide a time and materials estimate to implement this function.
DELIVERY OF THESE ADDITIONAL PROCESSES IS OUTSIDE THE SCOPE OF THE AGREEMENT.

18.1     ADDITIONAL SUPPORT FUNCTIONS

In addition to Internet access, a Customer-specific toll-free number,
Interactive Voice Response ("IVR") and voice mail will be used to service
Customer`s Agents and insureds. The IVR provides support for quick inquiries
with responses available for frequently asked questions, voicemail, access to
the IMS customer service and underwriting department, and the IMS IS support
center.

Information available through IVR includes:

         o    Last payment received

         o    Outstanding balance on account

                                      25
<PAGE>   54

         o    Next payment due

         o    Renewal payment due

         o    Cancellation reason code

         o    Cancellation date

         o    Non-renewal reason code

SCREEN SPECIFICATIONS

PROTOTYPE

The Prototype screens provide a visual representation of the specific input
screens that will be developed by IMS to support the BOP business for Customer.
This approach does not allow for functional changes to the screens. Customer
will provide IMS with reasonable input regarding the "look and feel" of the
screens being developed. This input may include items such as the addition of
"drop down" boxes or cosmetic enhancements to the color scheme.

RESOURCES

IMS will provide the following resources necessary to perform the Insurance
Administration Services to be provided under the Agreement. IMS will identify
the "key" employees prior to the commencement of applicable Rollout Plan. If
additional resources are necessary, IMS will provide those resources as the
Insurance Administration Services to be provided under the Agreement reasonably
dictate.

TYPES OF RESOURCES

INFORMATION SERVICES

Account Manager

The Account Manager will provide overall technical management and have
accountability for all technical responsibilities associated with the
Customer's account. The Account Manager will determine project prioritization
within and across product lines and set project direction from analysis through
implementation. In addition, the Account Manager will provide assistance and
direction in utilizing the established system development methodology for
systems analysis and conceptual design. This individual will also assume
management responsibility for resource allocation, provide front-line
leadership to associates, assist in career development planning and conduct
performance reviews.

Business Systems Analyst

The Business Systems Analyst will be responsible for establishing and
maintaining relationships at the product level. The Business System Analyst
often has expertise in more than one product line and uses that knowledge to
participate in project prioritization within their specialized product lines.
The Business Systems Analyst will utilize the established system development
methodology during systems analysis and conceptual design to prepare and
present project deliverables. He or she will be expected to establish and
maintain effective communications, frequently acting as a liaison with both
business analysts representing the Customer and systems analysts representing
IMS during the project life cycle.

Systems Analyst AS400 / RPG

The System Analyst will be responsible for the analysis, design, construction,
testing and implementation of computer based programs/systems. He or she will
be expected to meet business/project objectives and conform to technical
standards and conventions. The System Analyst will provide programming support
to both end users and IS associates. He or she will also be responsible for
researching and correcting program and system failures.

                                      26
<PAGE>   55

Forms Specialist

The Forms Specialist will be responsible for developing and administering
product support in the form of user and system documentation for all software
applications. This responsibility will include creating user guides, on-line
assistance, and other documentation whenever necessary. In addition, the Forms
Specialist will perform the tasks associated with the electronic design, setup,
and support of all insurance-related forms.

End User Support

End User Support will provide varying levels of end user support (for hardware,
software, telephony, and other computer related equipment as reasonably
required. He or she will be expected to have the ability to determine the
complexity of a problem and either take corrective action or ensure that any
additional resources necessary to correct the problem are notified.

Network Telecommunication Engineer

The Network Telecom Engineer will be responsible for investigating any issues
associated with the design, testing, integration and implementation of
computer, LAN/WAN, telephony equipment and all associated computer operating
systems. In further support of the corporate hardware and software
configuration, he or she will also be capable of performing the job functions
related to capacity planning, performance tuning, and systems production
support.

AS/400 Operations

The AS/400 Operator will be responsible for the processes required to run
production jobs (daily, weekly, and monthly), print various reports, process
data transmissions, and run systems back-ups. He or she also will process
special requests such as data restores, vary devices on/off, and emergency
print jobs.

CUSTOMER SERVICE

Commercial Lines Manager

The Commercial Lines Manager will be required to provide leadership for the
policy and call center administration unit and has primary accountability for
daily operations. The Commercial Lines Manager will make recommendations
relative to business plan strategies but will be primarily focused on the
execution of the plan as approved by senior management of IMS. Additionally,
the Commercial Lines Manager will have direct responsibility for IMS
supervisors and subordinate associates and will have shared responsibility for
the profit and loss experience of the department. The Commercial Lines Manager
will also assists in establishing and monitoring the performance objectives
that support the goals of IMS and Customer.

Customer Service Supervisor

The Customer Service Supervisor will provide front-line leadership to IMS
commercial line associates on a daily basis by providing assistance and
direction in career development. Although this individual has input regarding
budget planning, his or hers primary role will be to carryout business plan
objectives, manage the allocation of resources and respond to and implement the
directives from IMS management.

Product Coordinator

The Product Coordinator will be responsible for working closely with the
customer service representatives and IMS management to provide the technical
training required to support Customer's underwriting guidelines and rules. The
Product Coordinator will ensure that everyone associated with the eBOP program
is aware of system changes or enhancements. Other job responsibilities
associated with the Product Coordinator include: maintaining thorough product
knowledge and being able to relate that knowledge to the processing functions;
expertise in training department personnel; and monitoring the quality of
service that is provided to Customer.

Underwriter

The Underwriter will have experience and be capable of selecting and
identifying new and renewal at-risk business. The Underwriter will be required
to apply Customer's underwriting

                                      27
<PAGE>   56

philosophy and standards when making decisions regarding acceptability of a
risk. The Underwriter will also be required to develop and maintain a
productive working relationship with Customer's Agents and underwriting
management staff. In addition, ensuring acceptable time service standards are
met relative to processing Customer's new business, renewals, audits, change
endorsements and cancellations will be part of the Underwriters' overall
responsibilities.

Test Analyst

The Test Analyst will provide technical support for major system test projects,
enhancements and corrections. The Test Analyst will have a level of technical
competence that will allow them to understand new requirements and develop
specific test plans that will support the proposed changes. The Test Analyst
will be required to execute a test plan and compare the results with the
requirements to determine if application is functioning as intended. The Test
Analyst will be responsible for notifying IMS' IS department of any
discrepancies discovered during the testing phase and will track the progress
of a project and provide management with regular status reports.

Quality Control Representative

The Quality Control Representative will be responsible for correcting policies
that are listed on the daily error report. The Quality Control Representative
will keep detailed record of error trends, and recommend and coordinate
appropriate action with the Product Coordinator and IMS management.
Additionally, the Quality Control Representative will perform quality reviews
on all functions in the IMS customer service department and will analyze and
process internal measurement reports on a daily, weekly and monthly basis.

Customer Service Representative

IMS will provide Customer with Customer Service Representatives ("CSR") that
will handle the Agent inquiries regarding Customer policies, or the occasional
policyholder, in a courteous, positive and professional manner. Each CSR
position is monitored to ensure time service, quality, productivity, telephone
availability and call time standards are being met. The CSR will also be
responsible for maintaining an in-depth knowledge of the rules and procedures
for processing all commercial line functions.

Accounting

IMS will provide an Accounting Manager for Customer who is responsible for
sign-off of all accounting reconciliation weekly and monthly financial reports.

Regulatory/Compliance Analyst.

IMS will provide a Regulatory/Compliance Analyst for Customer within six (6)
months from the effective date of the Agreement. He or she will be expected to
establish and maintain effective communication, acting as a liaison with both
Customer's Compliance Manager and IMS Operations and Development Teams to
ensure implementation of regulatory requirements as provided by Customer.

IMS Internal Audit Executive

IMS will, from time to time, involve its internal Audit Executive to review
IMS' compliance of Customer's pre-defined policies and procedures.

Premium Audit Analyst

The premium Audit Analyst will oversee the premium audit workflow to ensure
audits are ordered on a timely basis, audit response is received from audit
vendor within established timeframe, and instruct action on policy based on
agreed upon guidelines established between IMS and Customer. He or she will
communicate directly with audit vendor, Customer's audit manager, agents and
insureds where necessary.

                                      28
<PAGE>   57

                          ORGANIZATIONAL APPROACH FOR
                      DEVELOPMENT & IMPLEMENTATION OF THE
                                  FIRST STATE

The following chart depicts the types of resources required for developing the
BOP application, developing the interfaces and implementation of both.

<TABLE>
<CAPTION>

                                              ACCOUNT MANAGER

------------------    ------------------    -------------------    -------------   -----------------
                                                                       Forms           Statutory
     ___*___             Interfaces              Reporting          Development        Reporting
------------------    ------------------    -------------------    -------------   -----------------
<S>                   <C>                   <C>                    <C>             <C>

 Business Systems      Business Systems       Business Systems        Systems       Business Systems
    Analyst(s)            Analyst(s)             Analyst(s)          Analyst(s)         Analyst
------------------    ------------------    -------------------    -------------   -----------------

     Systems                Systems               Systems                               Systems
    Analyst(s)            Analyst(s)             Analyst(s)                           Analyst(s)
------------------    ------------------    -------------------                    -----------------
</TABLE>

                            IMS INFORMATION SERVICES
                                   RESOURCES

The following chart depicts the types of resources required for developing the
state specific changes for the next ___*___ states. This will include
implementation of the BOP product in ___*___. Other states may take the place of
these states provided implementation is not more difficult and has not began for
the state being replaced.

<TABLE>
<CAPTION>
                                   ACCOUNT MANAGER
------------------     ------------------    -------------------     ------------------
     ___*___                 ___*___               ___*___                 ___*___
------------------     ------------------    -------------------     ------------------
<S>                    <C>                   <C>                     <C>
 Business Systems       Business Systems       Business Systems       Business Systems
     Analyst                Analyst                Analyst                Analyst
------------------     ------------------    -------------------      -----------------

      Systems               Systems               Systems                 Systems
    Analyst(s)             Analyst(s)            Analyst(s)              Analyst(s)
------------------     ------------------    -------------------     ------------------
</TABLE>

                            IMS INFORMATION SERVICES
                                   RESOURCES

The following chart depicts the types of resources required for developing the
state specific changes for the next ___*___ states. This will include
implementation of the BOP product in ___*___, and ___*___. Other states may take
the place of these

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                      29
<PAGE>   58

states provided implementation is not more difficult and has not began for the
state being replaced.

<TABLE>
<CAPTION>

                                              ACCOUNT MANAGER

------------------    ------------------    -------------------    -------------        -----------------
     ___*___                ___*___               ___*___             ___*___                 ___*___
------------------    ------------------    -------------------    -------------        -----------------
<S>                   <C>                   <C>                    <C>                  <C>

 Business Systems      Business Systems       Business Systems      Business Systems     Business Systems
     Analyst               Analyst                Analyst               Analyst              Analyst
------------------    ------------------    -------------------    -----------------    -----------------

     Systems                Systems               Systems               Systems              Systems
     Analyst                Analyst               Analyst               Analyst              Analyst
------------------    ------------------    -------------------    -----------------    -----------------
</TABLE>

                               SUPPORT RESOURCES

The following types of resources will be assigned as states are deployed. The
quantity of resources depends on the number of states that have been
implemented. As new states are moved into production and support needs
increase, additional resources will be utilized.

         o    Help desk

         o    Statutory reporting

         o    Engineering for infrastructure

         o    Forms specialist

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                      30
<PAGE>   59

                         IMS CUSTOMER SERVICE RESOURCES

The following chart depicts the resources required for servicing eBOP. As new
states are deployed and servicing needs increase, additional resources will be
utilized.

                                  IMS Senior
                                  Management

                                Commercial Lines
                                  Management

                     Admin
                   Assistant

              Customer Service           Product
                 Supervisor            Coordinator

              Customer Service         Underwriters
              Representatives

                  Clerical       Test            Quality
                  Support      Analysis          Control
                                             Representatives

IMPLEMENTATION APPROACH

NEW IMPLEMENTATION

The implementation of the applicable Roll Out Plan will begin once Customer has
received filing approval for eBOP product in the states that require insurance
department authorization for rates and forms. IMS will be in production with
the base system, interfaces, reporting, forms and statistical reporting for an
individual state in one hundred and fifty (150) calendar days after Customer's
signoff on the Detailed Business Requirements Document. After the one hundred
and fifty (150) calendar days and the completion of the implementation for the
first state, IMS can be in production with the base system for the next ___*___
states in sixty (60) calendar days, and a subsequent group of ___*___
states within sixty (60) calendar days. After the initial ___*___ states are
implemented, the states will be implemented in groups of ___*___ until
completion of all Authorized States. Customer will ensure the filings for each
state is completed prior to the start of the state applicable Rollout. (The
Rollout Plan is in APPENDIX A.)

The initial state to be implemented will be ___*___, unless any unforeseen
issues arise with the ___*___ State department of insurance approval process. If
any unforeseen issues arise, Customer will advise IMS of the alternate first
state, which will be no more complex to implement than ___*___. The first
___*___ states are intended to be a subset of the following and will be chosen
based on ease of implementation: ___*___. Other states may take the place of
these states provided implementation is not more difficult and has not began for
any state(s) being replaced.

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                      31
<PAGE>   60

IMPLEMENTATION SERVICES

The IMS Implementation Team will provide product support and strategic
implementation services. The Implementation Team will provide the following
services:

         o    Project management services

PROJECT PLANNING

1.       Definition of work requirements

2.       Definition of quantity and quality of work

3.       Definition of resources needed

PROJECT MONITORING

1.       Tracking progress

2.       Comparing actual outcome to estimated outcome

3.       Analyzing impact

4.       Making adjustments

         o   Implementation approach

         o   Electronic commerce strategies for property and casualty insurance
             companies

         o   Electronic commerce application and system architecture development

         o   Data Center services

         o   Technical support services

ENHANCEMENTS/CHANGE CONTROL

Requests for changes and technical assistance will be handled through the IMS'
"Systems Development Life Cycle", as referenced in the Agreement. Customer will
submit a change request form to the IMS' Account Manager identifying the change
or technical assistance required. The IMS Account Manager will develop a "Quote
Sheet". The Quote Sheet will include initial time, cost estimates and initial
Project Plan. Once approval is received from Customer on the Quote Sheet, the
IMS Systems Analyst will perform design, development, and testing.

TRAINING

To assist in educating the Agents on the use of the Internet interface and the
IMS base system, IMS will provide two seminars in the first year of operation,
each at a single site. After the first year of the Agreement, a single seminar
will be provided at the request of Customer. IMS' preferred approach to
training is to "train the trainer." IMS anticipates that the Customer's field
Vice Presidents would most likely be the individuals with whom IMS would train
in the above referenced seminars.

In addition to the above referenced training, if Customer chooses to license
the Brio(R) reporting tool, IMS will provide additional training services for
this product on a time and material basis.

TECHNICAL SUPPORT

CUSTOMER SERVICE HOURS OF OPERATION

Monday through Friday, 8:00 a.m. to 8:00 p.m., Eastern Standard Daylight Time.
Arrangements can be made to accommodate extended hours of operation. Exclusions
from this time are IMS' corporate holidays. These holidays are:

         New Year's Day
         Memorial Day
         Independence Day

                                      32
<PAGE>   61

         Labor Day
         Thanksgiving Day
         Day after Thanksgiving
         Christmas Eve
         Christmas Day

In the event the holiday falls on a weekend IMS will transfer the holiday to a
working day prior to or after the holiday.

                                      33
<PAGE>   62

                        IMS BPO SERVICE STANDARDS LEVELS

In accordance with ARTICLE X (A) (d) of the Agreement, the following are the
"Service Standard Levels" that are applicable to the Commercial Lines Business
Owners (BOP) program (Authorized Line of Business):

HOURS OF OPERATION

The IMS commercial lines customer service department will provide service for
Customer, its Agents and insureds Monday through Friday 8:00 AM to 8:00 PM,
EST.

TELEPHONE SERVICE

IMS will respond to telephone inquiries from Customer's Agents and insureds at
a service level of eighty-five percent (85%) of all calls answered within
twenty-five (25) seconds or less.

A Meridian Total Service Factor ("TSF") report will be provided to Customer
every Monday (unless that Monday is a IMS corporate holiday, in which case the
TSF report will be provided the next Business Day) for the previous week's call
activity.

TSF is calculated by (calls answered + calls abandoned + direct calls In) - (#
Answered after threshold * # Abandoned after threshold) x 100 = divide answer
by total of first set of ( ).

PROCESSING

For policies handled through exception processing procedures:

            Cash receipts              one (1) Business Day
            New business               fourteen (14) Business Days
            Renewals                   ten (10) Business Days or within
                                       established state regulatory guidelines,
                                       whichever is less.
            Endorsements               ten (10) Business Days
            Cancellations              two (2) Business Days or within
                                       established state regulatory guidelines,
                                       whichever is less
            Correspondence             five (5) Business Days
            Exception quote            one (1) Business Day from receipt
            Premium audit billing      ten (10) Business Days

For policy transactions submitted through the Internet:

            Cash processing
            (EFT, ACH, Credit Card)    twenty-four (24) hours
            New business               twenty-four (24) hours
            Endorsements               twenty-four (24) hours
            Cancellations              twenty-four (24) hours
            Renewals                   twenty-four (24) hours
            Correspondence             five (5) Business Days
            Cash receipts              one (1) Business Day

Commission checks will be issued by the fifteenth (15th)) calendar day of each
month for commission due on policies from the prior month.

ISO error corrections will be completed within the mandated timeframes for each
state.

                                      34
<PAGE>   63

REGULATORY CHANGES

Fees to complete regulatory changes are included in the Insurance
Administration Services pricing. IMS will complete all regulatory changes
within the compliance date assuming IMS receives a minimum thirty (30) calendar
day prior written notification from Customer. In the event that IMS receives
less than thirty (30) calendar days written notification and/or the effort is
extraordinary, IMS will make every reasonable effort to complete the changes
within the compliance date.

SYSTEM ENHANCEMENTS LESS THAN 40 HOURS

Fees to complete minor enhancements are included within the Insurance
Administration Services Pricing. An initial scope assessment, with an
approximate estimate of hours, will be provided to Customer within ten (10)
Business Days from the date IMS receives notification of an enhancement
request. Based on signed approval of Detailed Business Requirements, IMS will
proceed with completion of the enhancement.

SYSTEM ENHANCEMENTS GREATER THAN 40 HOURS

Fees to complete sizable enhancements are at time and materials rate. An
initial scope assessment, with an approximate estimate of hours, will be
provided to Customer within ten (10) Business Days from the date IMS receives
notification of an enhancement request. For projects greater than two hundred
(200) hours, IMS will provide an estimate at the completion of Detailed
Business Requirements and give Customer the option of a "fixed" price project.
In either case, IMS will proceed based on signed approval of the "Detailed
Business Requirements".

DATA CENTER

IMS' Data Center goal for "up time" is 99%. It is IMS goal to provide this
standard to Customer.

The system availability is from 4:00 AM - 2:00 AM EST (22 hours).

NOTE: ALL SERVICE STANDARD LEVELS ARE MEASURED IN BUSINESS DAYS (UNLESS
OTHERWISE NOTED IN THE EXHIBIT) FROM THE DATE AN ERROR-FREE INTERNET
TRANSACTION, OR MAILED-IN OR FAXED DOCUMENT IS RECEIVED.

                                      35
<PAGE>   64

                                   EXHIBIT II

                    COMMERCIAL LINES UMBRELLA ONLINE PROGRAM

DEFINITIONS

Capitalized terms, not otherwise defined in the Agreement or in this Exhibit,
shall be construed as otherwise generally understood in the insurance and data
processing industry.

PLAN OF OPERATION

PROJECT ASSUMPTIONS

With the expansion of Customer's business plan incorporating its new Internet
Commercial Lines Umbrella Online program, Customer intends, over the short-term,
to use its current insurance sales Agent network. Ultimately, by expanding its
product offerings Customer represents that it will increase its distribution
channel and create the opportunity for significant premium growth.

In order to ensure that Customer is positioned to achieve its stated goals and
that it will be able to provide its insurance sales agents ("Agents") with an
Internet solution that is compatible with its current system capabilities, IMS
has developed the following system requirements. These requirements are based
upon information provided by Customer.

1.       Customer's Commercial Lines Umbrella Online product will have a similar
         "look and feel" to eBOP and move Cybercomp toward a seamlessly
         integrated system.

2.       Through this new program, Customer will make Umbrella coverage
         available for underlying policies written in the eBOP program, or
         written through other insurance companies. Acceptability for risks
         placed with other companies will be based on that insurers' AM Best
         Rating, business classifications, and application of underwriting
         template.

3.       IMS will implement, at a minimum, a system based on Customer's existing
         Commercial Lines Umbrella Online product definition with the following
         functionality for eBOP:

         o   Quick quote function

         o   User controlled editing to establish distinct underwriting
             rules

         o   Use of customer filed forms

         o   Customized output with customer specific logo on forms

         o   Loading of rate files

         o   Receivables processing

         o   Automated renewal/endorsement process

         o   Cancellation processing

         o   Agency management reporting

         o   Premium and commissions accounting

         o   Generation of commission statements and checks

         o   Testing of all functions with Customer's data

         o   Controlled environment with Customer approval and sign-off of
             test results

         o   Document packaging

         o   Cash processing

         o   Reinsurance processing

         o   Claims management reporting

         o   Interfaces for Customer's Clearance system and FARE

4.       Customer will utilize IMS' document packaging for policy and billing
         form distribution. To facilitate this packaging process, OCR lines must
         be printed on all forms. Customer will identify those states in which
         it will be required to re-file any policy forms.

                                       1
<PAGE>   65

5.       In order to develop the final system specifications and to complete the
         business requirements document, IMS will require and Customer agrees to
         promptly provide the following additional information:

         STATE SPECIFIC INFORMATION:

         o   Cause of loss codes by coverage and state (if state
             differences apply)

         o   State specific filed forms

         GENERIC INFORMATION:

         o   Underwriting manuals

         o   Filed forms

         o   Cybercomp classification eligibility matrix

         o   Annual statement line of business by coverage

         o   Binding requirements and workflow

         o   Standard anti-fraud wording

         o   Endorsement business rules and workflow

         o   Cancellation business rules and workflow

         o   Reinstatement business rules and workflow

         o   Renewal business rules and workflow

6.       The Customer underwriting group will provide IMS with the necessary
         changes to the prototype screens in states where applicable. IMS will
         apply these changes to the screens once they have been received from
         Customer.

7.       Customer has provided IMS with a sample Commercial Lines Umbrella
         Online declaration page and schedule of underlying insurance. These
         documents will be reviewed and modified as dictated by the Commercial
         Lines Umbrella Online program requirements. Customer will promptly
         provide copies of all general and state specific forms to IMS.

8.       A list of the standard reports available from IMS has been provided to
         Customer. Customer can choose the reports that it would like to receive
         on a regular basis from this list.

9.       Customer Agents will be required to input the liability limits of the
         underlying policy, if the underlying policy is written through an
         insurer other than Customer's eBOP program. Customer represents and
         warrants to IMS that the underlying coverages do not need to be
         reported to ISO if the underlying policy is an ISO BOP policy.

10.      Customer will promptly provide IMS with a matrix of states where there
         is a Ten Thousand Dollars ($10,000) retained limit and where no
         retained limit applies.

11.      Reinsurance will be applied in accordance with Customer's reinsurance
         treaty agreements.

12.      IMS assumes that the required underlying limits for the Customer
         Commercial Lines Umbrella Online policy will be based on the basic
         industry limits:

         o   $1,000,000 per occurrence

         o   $1,000,000 general aggregate

         o   $1,000,000 product/completed operations aggregate

         Business Auto Liability

         o   $1,000,000 combined single limit

         Employers Liability

         o   $100,000 bodily injury per accident

         o   $100,000 bodily injury by disease per employee

         o   $500,000 disease aggregate

13.      Customer Umbrella Online policies are non-auditable, therefore IMS
         processing services will not be required to support this function.

                                       2
<PAGE>   66

14.      Inspections are not required on the Umbrella Online policies, therefore
         IMS processing services will not be required to support this function.

15.      State calls are not required for Commercial Lines Umbrella Online.
         However, IMS will assist Customer by providing Umbrella Online specific
         data required for any special state calls as requested by Customer.

16.      Customer Umbrella Online policies will be written on an occurrence
         basis.

17.      Rating algorithms do not vary by state for the Umbrella Online program.

18.      IMS will correct the "Umbrella Online" online screens to ensure these
         rating screens will have correct input capability for the Agents in
         order to system generate the declaration pages and other required forms
         for each issued policy.

19.      Customer's Umbrella Online policies will be no less than monthly term
         policies. The Umbrella Online program requires the GL underlying to be
         concurrent with the Umbrella Online policy term. If the underlying GL
         policy expires in less than (1) one year, the Umbrella Online policy
         will be written as an annual term and cancelled upon request at the
         expiration of the underlying GL policy.

20.      The prototype screens developed are representative of the approach IMS
         used for other products in the Cyber products family and will be
         modified to represent the Customer Commercial Lines Umbrella Online
         product requirements. IMS will re-scope these requirements before
         finalizing the Detail Business Requirements.

21.      Claims processing will be handled by Customer and will not require IMS
         to develop an interface to the IMS system.

22.      Customer will promptly provide to IMS on a timely basis, any special
         data capture requirements for processing professional incidental
         coverages.

23.      Customer will promptly provide on a timely basis the data requirements
         for any data not contained within the fifteen (15) file layouts
         currently used by the Brio(R) reporting tool. IMS requires the data for
         creating claims and additional accounting reports.

24.      IMS will complete any "A" Rate filings where needed based on the
         required data.

25.      IMS will provide insured welcome letters ("Welcome Letter") to be
         generated and mailed out of the IMS system. The Welcome Letter consists
         of a one (1) page document that is mailed to the Insured. The Welcome
         Letter will be mailed with the policy if the policy is mailed within
         seven (7) Business Days of binding. If policy is not prepared for
         mailing within seven (7) Business Days, the Welcome Letter will be
         mailed separately.

26.      IMS will provide time and material estimates to implement the various
         components required for interfacing the Kokopelli designed web-site to
         the IMS system as the detail specifications are provided by Customer.
         DELIVERY OF SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE AGREEMENT. These
         components are as follows:

         o   RFP - IMS will be given an opportunity to respond to the RFP
             for hosting the web system.

         o   Agency profile and set up will be done on Kokopelli front-end.
             Customer will require that the Agent have a logon for
             Kokopelli and a separate logon to the IMS application as an
             additional security layer. Agent will be required to input
             password to access quote and support application. IMS will
             develop the interface/integration between the IMS security
             system and Kokopelli.

         o   IMS will develop a https protocol between Kokopelli and the
             IMS producer system and the PDS' Agent master when agency
             appointment is approved, updated, cancelled. Customer will
             need to

                                       3
<PAGE>   67

             establish the procedures for handling sub-producers via the
             Kokopelli system or other defined process.

         o   IMS will provide a daily file containing policy status
             information to the Kokopelli system. The insureds access is
             limited based on whether an in-force policy exists for them.

         o   IMS will provide insured access to the loss run reports
             provided to the Agents via the support site. The navigation
             should be streamlined to eliminate the selection choices and
             display only the loss run report for the insured's policy.

         o   Customer will promptly provide IMS screen prints of the
             Kokopelli web-site in order to develop a similar look and feel
             for the product sites being developed. The color scheme and
             background layout of the Kokopelli site should be similar in
             the product sites. All other functions will be specific to the
             product application or follow the current Workers Comp
             Internet application.

         o   IMS will provide separate time and material estimates for
             components listed above based on whether IMS is the web
             hosting vendor or not.

         o   In the event the Kokopelli solution for Agent appointment is
             not in production prior to the implementation of the first
             state rollout on the IMS system, an alternate solution for
             establishing the Agent data in the IMS system will be
             developed.

27.      IMS will provide Customer a time and materials estimate to implement an
         interface to a premium finance company for retrieving a finance quote
         and establishing financing at binding. DELIVERY OF SUCH FUNCTION IS
         OUTSIDE THE SCOPE OF THE AGREEMENT.

28.      IMS will provide the ability for the Agents to process premium and
         non-premium endorsements to in-force policies via the Internet
         application.

29.      The IMS system will provide the ability to process Umbrella Online
         policies with up to three (3) underlying policies per coverage.

30.      In order to accommodate for policies issued on the "Umbrella Online"
         application prior to the implementation of the IMS system, IMS will
         provide data entry services to input all upcoming renewals in order for
         the Agent to renew the business via the Internet application. This
         service will be provided at the contracted data entry rate specified in
         Schedule B. IMS will support any merging of data prior to the renewal
         at the time and materials rate. DELIVERY OF SUCH FUNCTION IS OUTSIDE
         THE SCOPE OF THE AGREEMENT.

31.      IMS will provide Customer the capability to offer its Agents
         installment agency billing for Agents' Umbrella Online Policies. With
         the cooperation of Customer, this function will be made available to
         Customer no later than twelve (12) months from Customer's request to
         implement this function.

                                       4
<PAGE>   68

                             REQUIREMENTS DEFINITION

                              BUSINESS REQUIREMENTS

THIS SECTION DETAILS THE APPLICABLE STIPULATIONS OF THE INSURANCE ADMINISTRATION
SERVICES TO BE PROVIDED UNDER THE AGREEMENT BASED ON THE CATEGORIES LISTED
BELOW.

1. DOCUMENT PACKAGING REQUIREMENTS              NO CHANGE TO THE UMBRELLA ONLINE
   PROGRAM.

IMS uses automated, system-generated forms, from policy declaration pages to
Agent statements, and maintains the necessary form information: form names,
recipients, and printer instructions, including variable information such as
company name and address. The IMS system not only catalogs all current forms in
use, but also stores previous versions of forms should IMS need to retrieve them
for Customer's legal or auditing purposes.

STANDARD FORMS AND DISTRIBUTION:

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------
                                                            DOCUMENT
                                              FORM          PACKAGING
FORM DESCRIPTION                           RECIPIENT        RECIPIENT                   DISTRIBUTION
-----------------------------------------------------------------------------------------------------------------
<S>                                        <C>              <C>           <C>
Declarations                                I,A,L,X          I,A,L,X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Optional Endorsements                       I,A,L,X          I,A,L,X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Installment Due Notice                       I,L,X           I, L, X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Schedule of Payments                         A only          A only       Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Short Down Payment Notice                   I,A,L,X          I,A,L,X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Adjusted Premium Notice                     I,A,L,X          I,A,L,X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Cancel Underwriting (reason codes on        I,A,L,X           A,L,X       Insured's copy goes proof of mail to
back)                                                                     insured
-----------------------------------------------------------------------------------------------------------------
Notice of Cancellation (reason codes on     I,A,L,X           A,L,X       Insured's copy goes proof of mail to
back)                                                                     insured
-----------------------------------------------------------------------------------------------------------------
Notice of Nonrenewal (reason codes on       I,A,L,X           A,L,X       Insured's copy goes proof of mail to
back)                                                                     insured
-----------------------------------------------------------------------------------------------------------------
Confirmation of Cancellation                I,A,L,X           A,L,X       Insured's copy goes proof of mail to
                                                                          insured
-----------------------------------------------------------------------------------------------------------------
Cancellation Nonpay (has coupon on back)    I,A,L,X           A,L,X       Insured's copy goes proof of mail to
                                                                          insured
-----------------------------------------------------------------------------------------------------------------
Cancel Policy Financial Status               A only          A only       Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Notice of Reinstatement                     I,A,L,X          I,A,L,X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Notice of No Coverage                       I,A,L,X           A,L,X       Insured's goes proof of mail to insured
-----------------------------------------------------------------------------------------------------------------
Additional Premium Due                      I,A,L,X          I,A,L,X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Premium Due Notice                          I,A,L,X          I,A,L,X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Past Due Premium Notice                     I,A,L,X          I,A,L,X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Balance Due Notice                          I,A,L,X          I,A,L,X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Balance Due Final Notice                    I,A,L,X          I,A,L,X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Renewal Notice/Payment Schedule             I,A,L,X          I,A,L,X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
Final Renewal Notice                        I,A,L,X          I,A,L,X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
BAS/Corr Letterhead                         I,A,L,X          I,A,L,X      Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
All coverage forms                           I only          I only       Recipient's copy directly to recipient
-----------------------------------------------------------------------------------------------------------------
</TABLE>
Legend: I = Insured, A = Agent, L = Lender, X = Additional Interest

                                       5
<PAGE>   69

2. IMAGING REQUIREMENTS                        NO CHANGE TO THE UMBRELLA ONLINE
   PROGRAM.

The IMS underwriting department has access to all documents that are sent to IMS
and all document packaging output documents related to a policy through an
electronic form archive. As a standard procedure all system-generated documents
are transmitted to the imaging system via Computer Output to Laser Disc
("COLD"). These stored images are duplicates of the original documents sent to
the policyholders, Agents and other respective parties and can be reproduced for
Customer, its auditors and reinsurers, and its Agents upon request. IMS does not
retain hard copy documents once the IMS records management department scans the
images into the system.

3. INPUT REQUIREMENTS

The information required for quoting and binding a policy will be input into the
Internet system by Customer's Agents. IMS' underwriting department will handle
exception processing that may occur based on procedures as defined by Customer.
An individual Agent will be able to enter the same quote within a predefined
number of attempts. If this number is exceeded, that Agent will not be allowed
to continue the process and will automatically be referred to IMS' customer
service department for assistance. The production quote count would not be
affected by an unsuccessful quote attempt.

The input requirements, as defined in the Agreement, are based solely on the
information provided by Customer. During the implementation of the Rollout Plan,
as the detailed underwriting information for each state is determined,
additional requirements will be incorporated into the project scope. IMS will
complete the detail analysis to determine all required fields for quoting and
binding based on the forms and distribution documents, the bureau reporting
requirements and any Customer Commercial Lines Umbrella Online specific
underwriting rules. The completion of this analysis is dependent upon receipt of
all completed Commercial Lines Umbrella Online underwriting rules and guidelines
from Customer.

4. MANAGEMENT REPORTING REQUIREMENTS            NO CHANGE TO THE UMBRELLA ONLINE
   PROGRAM.

The reports that Customer has provided to IMS have been analyzed and compared to
the  IMS standard reports to ensure that the information Customer requires is
available. This analysis and a list of IMS' standard reports have been provided
eBOP to Customer and Customer acknowledges receipt thereof.

IMS will send a weekly e-mail with the Weekly Data File Report that represents
an Agent's Umbrella Online book of business to each Marketing/Field
Representative. IMS will also send this information to Customer's Accounting
Group via e-mail. In addition, IMS will provide Customer with an accounting
group report that contains all Umbrella Online books of business sorted by
Customer's Marketing/Field Representative.

5. AD HOC REPORTING REQUIREMENTS                NO CHANGE TO THE UMBRELLA ONLINE
   PROGRAM.

IMS utilizes a third party ad hoc reporting tool called Brio(R).

Brio(R) report provides the enterprise reporting tools and technology that
Customer will need to develop and process a complete range of reports, from
small reports to mission-critical operational reports that access large volumes
of data in production databases, legacy applications, and data warehouses.
Output from Brio(R) report can range from high-volume printed reports to highly
interactive reports delivered via the Web.

BRIO(R) CAPABILITIES

The following is a list of Brio(R) capabilities that Customer may choose to
utilize. The use of these features is determined at the end user level.

         o  Merge premium data with loss data

                                       6
<PAGE>   70

         o   Read only so that the data can be changed

         o   Drill down into the data 0 Intelligent method for subtotaling and
             totaling

         o   Can filter the data by year to date, week to date, etc.

         o   Time Service Report--e-mailed or static on the Customer's web site

         o   Running the month end process on a weekly basis

         o   Fifteen (15) file layouts for reporting against month end

         o   Three to five (3- 5) additional file layouts based on specific data
             reporting requirements to be provided by Customer

NOTE: In order for Customer to realize the full benefits of the Brio(R)
reporting tool, it would be necessary for Customer to establish a dedicated line
into the IMS system. This would allow Customer to access Brio(R) and
Customer-specific data.

6. FORMS

Customer has provided IMS with its Commercial Lines Umbrella Online declaration
page and schedule of underlying insurance. IMS will provide the capability to
generate these documents as required with all pertinent information from IMS'
Umbrella Online system. As previously stated, upon receipt of the coverage form
from Customer, IMS will complete the detail analysis to confirm all information
required on the form is being captured via the system.

7. OUTPUT AT AGENT'S OFFICE                     NO CHANGE TO THE UMBRELLA ONLINE
   PROGRAM.

In response to Customer's request that specific forms be available to print in
the Agent's office IMS agrees to provide the following:

         o   Quote

         o   Memorandum of coverage

         o   Application

         o   Binder

         o   Billing status information

         o   Policy status information

         o   Employer limits information

         o   State specific program underwriting forms

         o   Policy loss run report

         o   Premium finance agreement (creation of the finance agreement
             requires an interface with a premium finance company. THIS
             INTERFACE IS OUTSIDE THE SCOPE OF THE AGREEMENT.)

Upon receipt of these documents from Customer, IMS and Customer will cooperate
to co-develop the output so that forms will meet the Umbrella Online program
requirements. Customer will provide IMS with sample layouts for each document.
All data necessary to automatically generate the document(s) will be input by
the Agent or retrieved through another agreed upon means.

IMS EVENTUALLY EXPECTS TO PROVIDE A COMBINED QUOTE AND APPLICATION TO THE AGENT
WHEN PROCESSING MULTI-LINE SUBMISSIONS VIA THE IMS SYSTEM. INITIALLY, HOWEVER,
THE OUTPUT WILL REMAIN PRODUCT SPECIFIC UNTIL SUCH TIME AS THE COMBINED OUTPUT
CAN BE SCOPED AND AN IMPLEMENTATION PLAN IS PRESENTED TO CUSTOMER. IMS WILL
PROVIDE CUSTOMER AN IMPLEMENTATION PLAN FOR COMBINING THE BOP AND UMBRELLA
ONLINE PRODUCTS WITHIN SIX (6) MONTHS OF THE COMPLETION THE LAST STATE ROLLOUT
UNDER THE BOP ROLLOUT PLAN.

8. STATISTICAL, FEDERAL, AND STATE REPORTING REQUIREMENTS

IMS understands that Customer is not required to file its Umbrella Online rates;
however, for each policy issued there is a rate form that must be completed and
reported by state. IMS will provide "A" rate form(s)

                                       7
<PAGE>   71

for the Umbrella Online program on a quarterly basis or as dictated by the state
reporting requirements. Customer will provide IMS with the data fields that need
to be captured on the "A" Rate form(s) such as policy number, effective and
expiration dates, and description of coverage.

9. STATUTORY REQUIREMENTS

IMS recognizes that statutory requirements will vary by state. IMS will analyze
and document any necessary requirements based upon receipt of Customer's "Stat
Plan". IMS will then identify whether or not changes are needed for the
Commercial Lines Umbrella Online program.

10. UNDERWRITING REQUIREMENTS

The underwriting decisions for the Commercial Lines Umbrella Online program will
be completed utilizing an underwriting template provided by Customer. IMS'
system will allow Customer's Agents to select the Commercial Lines Umbrella
Online Liability Policy for quoting and submission online, upon completion of
the BOP quote or as a stand-alone quote. The online system will also allow for
automatic rejection of applications that do not meet the defined underwriting
guidelines.

When a fax or mail-in submission is received, the IMS commercial underwriting
department will use the Internet screens and the predefined Customer rates,
rules and guidelines in the system to issue or reject the policy.

IMS' system will accommodate rating Umbrella Online policies for Customer's
defined types of underlying coverage(s). These were defined as:

         o   Employers liability

         o   Automobile liability

         o   Commercial general liability

The IMS system will provide the ability to process Umbrella Online policies with
up to three (3) underlying policies per coverage.

IMS will also provide Customer's Agents with the ability to accept Umbrella
Online policies on risks whose primary coverage is written through another
insurer. If a submission for Umbrella Online is not in conjunction with a
related Customer BOP or Workers Compensation quote, IMS' system will prompt for
entry of the required schedule of underlying limits of insurance. The prompt may
also include, but is not limited to, the following information:

         o   Insurance carrier

         o   Policy number

         o   Policy effective/expiration date

         o   Type of coverage

         o   Limits of insurance

         o   Bodily Injury

         o   Physical Damage

         o   CSL

Customer may require a third or fourth carrier to be captured if incidental
professional coverages are underlying. Customer will promptly provide IMS with
the requirements for determining when the additional carrier information is
required.

                                       8
<PAGE>   72

AUDITS

Customer's Commercial Lines Umbrella Online policies are non-auditable and do
not require IMS processing services to support this function.

INSPECTIONS

Customer has notified IMS that inspections are not required on the Umbrella
Online policies. Therefore, IMS processing services are not required to support
this function.

REINSTATEMENT WITH A LAPSE IN COVERAGE          NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.

The IMS system will allow the user to reinstate an Umbrella Online policy with
or without a lapse in coverage. Approval of any reinstatements will be subject
to the guidelines set by Customer and mutually agreed upon by IMS.

EXCEPTION PROCESSING                            NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.

Submissions that fall outside of the Customer Umbrella Online underwriting
guidelines that result in a disputed rejection, will be handled according to an
"Exception Processing" document that will be created and mutually approved by
Customer and IMS.

10.1 ACCEPTABLE CLASSIFICATION         NO CHANGE TO THE UMBRELLA ONLINE PROGRAM.

Customer will promptly provide IMS the Customer classes eligible for the
Umbrella Online program. Customer will then provide a matrix to IMS for use
during policy processing in determining eligible classes, cross-editing of
classes and generation of class specific forms.

10.2 POLICY LEVEL GUIDELINES

Customer's specific underwriting rules will be displayed on a customized data
entry screen. The system will be designed to ensure that the Customer specific
criteria are met before the risk is accepted. The eligibility guidelines will
not vary by state but will be specific to the Type of business selected by the
Agent. IMS will provide these guidelines in the form of underwriting questions,
as shown in the Commercial Lines Umbrella Online prototype. The resulting
response from the Agent will determine the acceptability of the risk

10.3  RISK SCORING

Risk scoring does not apply to the Customer's Commercial Lines Umbrella Online
program. Customer has indicated all Umbrella Online policies will be issued
under Reliance National Indemnity, as determined in the underwriting rules and
guidelines for the Umbrella Online program.

10.4  COVERAGES

Customer will promptly provide the following limits of liability under the
Commercial Lines Umbrella Online program. A quote will be offered for each
layer, with the Agent selecting the specific layer for binding. Customer will
promptly provide IMS with a matrix of states where a Ten Thousand Dollars
($10,000) self-insured retention applies and where no retained limit applies.

         o   $1,000,000
         o   $2,000,000
         o   $3,000,000
         o   $4,000,000
         o   $5,000,000
         o   $6,000,000
         o   $7,000,000
         o   $8,000,000
         o   $9,000,000
         o   $10,000,000

                                       9
<PAGE>   73

MANDATORY COVERAGES

The Commercial Lines Umbrella Online Policy will, at a minimum, include the
following underlying coverages:

         o   $1,000,000   per occurrence

         o   $1,000,000   general aggregate

         o   $1,000,000   product/completed operations aggregate

Business Auto Liability

         o   $1,000,000    combined single limit

Employers Liability

         o   $100,000      bodily injury per accident

         o   $100,000      bodily injury by disease per employee

         o   $500,000      disease aggregate

11. RATING REQUIREMENTS

CUSTOMER HAS PROVIDED IMS WITH RATING DEVELOPMENT GUIDELINES THAT WILL BE
INCORPORATED INTO THE RATING ALGORITHMS.

11.1 GENERAL RATING RULES

         o   Factors or multipliers are to be applied consecutively and not
             added together unless otherwise specified.

         o   Round rates, factors and multipliers after the final calculation to
             three decimal places. Five-tenths or more of a mill shall be
             considered one mill, for example, .1245 = .125.

11.2 PREMIUM DEVELOPMENT

         o   Customer has provided the following rating schematic for
             determining premium for policies submitted under the Customer
             Commercial Lines Umbrella Online program.

         o   For the first million requested the following rating algorithm is
             used.

         o   Add ___*___ of the (general liability premium + the greater of
             [___*___ of auto liability premium OR calculated unit rate])

         o   For contractors classes substitute ___*___ for ___*___

         o   The result must be no less than $___*___.

For each additional million requested, the following rating algorithm is used.

         o   Use the Increased "Limit Factor" factoring table for each million
             requested.

                  Increased Limits Factor Factoring Table

                           Layer            % For Layer
                           -----            -----------
                           1M

                           2M               ___*___

                           3M               ___*___

                           4M               ___*___

                           5M               ___*___

                           6M               ___*___

                           7M               ___*___

                           8M               ___*___

                           9M               ___*___

                           10M              ___*___

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                       10
<PAGE>   74

         o   The result (for each million) must be no less than $___*___.

         o   To Calculate the Unit Rate the following is used.

         For each type of motor vehicle, sum the dollar value of all vehicles.

                  Type                               Multiplication Factor
                  ----                               ---------------------

                  Private cars                       $___*___ per unit

                  Light Trucks                       $___*___ per unit

                  Medium Trucks                      $___*___ per unit

                  Heavy Trucks                       $___*___ per unit

         o   If the underlying policy is BOP, the Agent must enter the BOP
             premium. The IMS system will calculate the GL premium based on
             ___*___ of the BOP premium entered.

12. PROPOSED DETAILED INTERNET WORK FLOW

The following proposed detailed workflow provides an outline of the tasks that
would need to be completed by an Agent in order to enter a new Umbrella Online
policy. As part of the Commercial Lines Umbrella Online project it will be
necessary for IMS to develop the screens and processes to support these
functions.

IMS encourages the processing of cash through Electronic Funds Transfer (EFT),
which is IMS' preferred method for processing cash quickly and efficiently. At
least initially, Customer would like to have the ability to process checks and
credit card payments in addition to EFT. To support this request, IMS will
initially make all three of these methods available.

(Work flow diagrams for renewals, endorsements, cancellations, and
reinstatements will require further review and discussion with Customer before
being finalized. However, similar or like work flow processes are anticipated
for these transactions.)

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                       11
<PAGE>   75

  12.1 CUSTOMER COMMERCIAL LINES UMBRELLA ONLINE PROPOSED INTERNET NEW BUSINESS
                                 PROCESS DIAGRAM

                                   Entrance Screen

New Quote

         Support Flow  Support      Quote of
                                     Support

                                     Quote                 No           Continue
                                                                         Working
                        State Selection / Effective date

         Modify

                                    Eligibility

                                      Eligible                     Proposal

                                        Yes

         Continue                Quote / Premium        Print
         Working

          Bind                                                     Quote

         Binding    Anti-Fraud     Binding     System    Application    Agent
       Information              Instructions    Marks                   faxes
                                               Policy                    EFT
                                              Pending                     to
                                                Cash                     IMS

                                   Binder

                                       12
<PAGE>   76

12.2     CUSTOMER PROPOSED CASH PROCESS DIAGRAM     NO CHANGE TO THE UMBRELLA
         ONLINE PROGRAM.

<TABLE>
 <S>                   <C>                    <C>         <C>                            <C>                       <C>

                                              IMS Entering Cash
                                                Initiates Cash
                                                    Process

                                     Check     Retrieve Funds                     ACH                               Sweep Account

                             Check Received                                                 Bounced ACH                  Funds
                                                 Credit Card                             Charged to Agent/   No       Transferred
                                                                                              Insured

    IMS Continues
 collection efforts    No    Check clears                                                  Sweep Account
                                                   Credit
                                                  Processed                                                              Yes
                                  Yes

 Notify Reliance Via                                               Bounced ACH
       Email                                                    charged to Agent/    No        Funds               Automatic Policy
                                                                     Insured                Transferred                Issuance
                           IMS Issues Policy
                                              Yes
                                                     No
  IMS Cancel Policy                                                  Submit
                                                                  Credit Card #      No    Cancel Policy
                                                                   w/in 24 hrs.

                                                                       Yes

                                                             System generages Output                   Dec

                                                          Premium deposited in Reliance
                                                                     Account                      Policy Issuance
                                                                                                  Notice to Agent
                                                    Reliance funds transferred to Reliance
                                                               operating account

                                                         IMS will draw fee from Reliance
                                                                operating account

</TABLE>

                                       13
<PAGE>   77

13. CUSTOMER SERVICE

IMS understands that the Customer Agents will be encouraged to utilize the
Internet for submitting an Umbrella Online Policy. However, IMS is prepared to
quote these policies if a submission is faxed or mailed into IMS' offices.

IMS' Commercial Lines staff will quote submissions and bind coverage if an Agent
accepts, based on verification of the program guidelines, required underlying
limits of insurance and any applicable exclusion(s).

The IMS commercial lines customer service department associates will undergo
comprehensive product training that will include Customer's Umbrella Online
policy guidelines.

13.1 POLICY PROCESSING

IMS' customer service department will utilize IMS' "Policy Processing System"
for Umbrella Online policy quoting, which will be integrated with the Customer's
BOP policy information. The Policy Processing System will also allow the
Customer's underwriters to quote an Umbrella Online policy based on a
stand-alone request. As set forth in Exhibit I, eBOP system edits are built
based on the Customer Commercial Lines Umbrella Online program underwriting and
rating guidelines. IMS will automatically determine risk acceptability based on
these edits.

13.2 CUSTOMER SERVICE NEW BUSINESS PROCESS      NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.

The diagram on the next page provides a high level overview of IMS' workflow, as
established for processing Customer's mailed-in or faxed new business
applications. This basic workflow will also apply to renewal, endorsement and
cancellation processing for the Customer Commercial Lines Umbrella Online
program.

13.3 QUALITY CONTROL SELF AUDIT

Customer will perform initial quality control functions during the first six (6)
months of live production processing. During this time, Customer will develop a
self audit process to be implemented by IMS, the terms of which will be mutually
agreeable to IMS and Customer and are to be negotiated separately from this
Agreement.

                                       14
<PAGE>   78

                         IMS CUSTOMER SERVICE DEPARTMENT
                          NEW BUSINESS PROCESS DIAGRAM

                    IMS Mailroom
                 Receives Umbrella
                     Submission

                      Route to
                     Commercial
                     Department

                     Underwriter
                      Companies
                      Automated
                        Quote

                    Acceptability              No            Decline
                         Met?

                         Yes

                  Quote Emailed or
                   Faxed to Agent

                         Agent                 No            Archive
                        Accepts                               Quote
                        Quote?

                         Yes

                         Bind
                       Coverage
                     upon Receipt
                       of Funds

                         Funds                 No            Process
                       Received?                           Cancellation

                          Yes

                       Customer
                       Service
                    Issues Policy
                        through
                         AS/400

                                       15
<PAGE>   79

13.4 CORRESPONDENCE                             NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.

When dealing with Agents, insureds, claimants, and lenders IMS' customer service
representatives utilize IMS' "Correspondence System". IMS will create and send
custom form letters, track outgoing correspondence, and log incoming
correspondence. IMS create the form letter templates, which then reside in the
Correspondence System for repeated use based on the guidelines provided by
Customer.

IMS will save a copy of the letter online and create a history record showing
that a letter was sent.

IMS will produce user activity reports from the Correspondence System that
assist in tracking outgoing correspondence created by an individual user or
group of users on any date. These reports provide IMS with another opportunity
to review correspondence transactions for clarity and consistency and will be
shared with Customer upon request.

13.5  CUSTOMER INFORMATION                      NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.

The Customer search option allows IMS to view all the policies belonging to a
specific policyholder.

The Customer update option allows IMS to change general insured information
(e.g., addresses, telephone numbers, etc.). Entering this insured information
one time applies the information to all products under that insured.

13.6 POLICY HISTORY AND NOTES                   NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.

IMS will be able to respond to requests that involve historical data through the
history option found within the IMS system. This option allows IMS to view
policy transactions and forms in detail. Selecting the history option reveals
the policy activity screen, which displays the entire history of the current
policy. This function provides IMS with the ability to respond more effectively
to Agents and policyholders.

Additionally, when policy processing deviates from the norm, documenting these
differences for future reference through the "Comments Processor" is standard
procedure. This function provides an internal notebook, attached to a policy
that alerts the user to important information.

13.7 APPLICATION SUPPORT TABLES                 NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.

Over six hundred (600) files contained in the "Application Support Tables" that
allow IMS to customize Insurance Tools to fit Customer's profile.

IMS can revise maintenance files within the different components of the system.
For example, if there are changes to rates or products, IMS can make those
changes by simply copying, saving, and updating the existing values.

14. ACCOUNTING                                  NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.

Accounting services for the Customer's Commercial Lines Umbrella Online program
will include:

         o   Payment processing

         o   Commission processing

         o   Billing processing

         o   Premium and claims reinsurance processing and reporting

         o   Disbursements

         o   1099 reporting

                                       16
<PAGE>   80

IMS will support payment processing on the above listed functions as established
for the eBOP program. This includes EFT, credit card and lockbox payment
processing. (See eBOP Exhibit I for complete details.)

PRODUCER

The "I.T.'s Producer System" will manage detailed information for Customer's
Agents, providing access to data ranging from the general--name, address, and
Agent number, to the specific--commission rates, products sold, anD license
appointments. All vital Agent premium data needed to create month-end premium
production reports, Agent checks, and Agent statements in both detail and
summary is integrated with the month-end system.

IMS will track all contracts by Agent and product, providing Customer with both
effective and expiration dates of those contracts.

The I.T.'s Producer System provides IMS with the capability to set up and
maintain override commissions for any Agent desiring that arrangement. In
addition, an Agent relationship file will allow Customer to request IMS assign
Agents to a general or reporting Agent. The I.T.'s Producer System also contains
all the tables that run the Producer System so IMS can add new sales
representatives, enter commission rates, or add a new Agent type at the request
of Customer.

15. USER DOCUMENTATION                          NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.

To meet Customer's requirements for clear concise user documentation to support
its Agents, IMS will provide a reference guide, which will be available through
e-mail, and additional online reference information.

The "Umbrella Online reference guide" will include the following:

         o   Introduction

         o   System overview

         o   Getting started

The additional information that will be available online will include:

         o   Underwriting responsibilities of the Agent

         o   New quote

         o   Unbound quotes

         o   Problem reporting

         o   Support site

         o   Questions and answers

In addition to the reference materials defined above, IMS will provide access to
Customer's Umbrella Online Underwriting / Agent manual online. The online
Umbrella Online Manual will contain a product description, claims procedures,
and contacts list. To ensure that the information remains current in the online
Umbrella Online Manual, Customer will promptly provide revised versions of
Customer's Umbrella Online Underwriting/Agent manual to IMS. Once this
information is received by IMS, a service request will be generated to archive
the old version and provide the Agents with access to a new online Umbrella
Online Manual as well as prior versions.

                                       17
<PAGE>   81

16. IT ENVIRONMENT                              NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.

IMS will initially facilitate the Insurance Administration Services on an IBM
AS/400 model 9406-650 having 4GB of main storage and over 373GB of on-line
storage. Additional peripherals include on 3995 model C42 Optical Tower, one IBM
3590 tape drive, one IBM 9348 1/2 inch reel tape drive, and one IBM 6141 ASCII
Workstation Controller which houses eight ports dedicated for dial up access.
Additionally, initially a second AS/400 is used for programming and testing of
enhancements. The AS/400's currently run IBM OS/400 Version 4, Release 2 as the
operating system. The system has averaged over 99% availability for two
consecutive years. Furthermore, greater than 98% of transactions are completing
in less than two seconds.

IMS has Local Area Network ("LAN") equipment consisting of more than fifty
Microsoft NT v4.0 servers running on rack mounted Compaq Proliant server class
computers and one RS6000. These servers are connected to the network backbone,
and eventually to the user workstations, via a combination of Token Ring and
100BaseT. The LAN infrastructure utilizes 3Com's LanPlex Switch as the collapsed
backbone, with Superstack II hubs used for workstation access. Workstations are
Compaq Pentium based computers running Microsoft Windows 95, 98, or NT as their
operating system. The typical user workstation is installed with Microsoft
Office 97, Microsoft Outlook, and IBM Client Access 5250 emulation connecting to
IMS' AS/400 via TCP/IP.

The servers on the IMS LAN run the full Microsoft Backoffice suite, including
Exchange that is used as the messaging server, and also as the repository for
E-Mail and calendars. Other servers run NT/SQL, SMS, SNA, Internet Information
Server, ViewStar Imaging, and TASC COLD.

The PBX used by IMS is a Northern Telecom option 81c, which includes features
such as meridian mail, customer controlled routing, and meridian link. There are
over 1150 extensions in use currently.

The IMS Data Center ("Data Center") is protected by a 65KVA Toshiba UPS that
provides additional processing time of one half hour under full load in the
event of a commercial power failure at the main processing site. The UPS running
at 50% load has a battery life of over one-hour. IMS will be running the UPS at
approximately 40% capacity, thereby increasing the battery life to well over one
hour in the event of a power failure. All equipment in the Data Center,
including AS/400, LAN, and phone equipment, will be protected by this UPS.
Additionally, during non-prime time, there is a backup of the entire system
performed. The data tapes associated with both the LAN and AS/400 are stored
with an off-site data security vendor. IMS data processing sites currently have
disaster recovery plans, which are tested either annually or bi-annually. When
IMS executed its last mock disaster in January 1999, IMS was able to restore all
applications and data files and establish remote connectivity within 16 hours at
the IBM Business Recovery Systems hot site in New York.

Policy, correspondence, and report printing functions are performed on four
Xerox 4890 Color Laser printers, each rated at 92 pages per minute. These
printers provide spot color capability for professional appearance of printed
output. The Xerox printers are connected to a Barr system via bus and tag
cables, and in turn, the Barr system is connected to the AS/400 via twinax
cable.

17. SECURITY REQUIREMENTS                       NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.

IMS' "Point of Sale Internet Solution" has a "Security Model" that includes
authentication, access control, privacy, and data integrity for the web sites
and applications. The Security Model use digital certificates, encryption, user
ids and passwords to prevent unauthorized individuals from accessing IMS'
systems.

Using Secure Socket Layer ("SSL") technology, IMS will provide encryption and
decryption of both request and response data being passed across network
connections, such as Agent information, policy data and credit card information.

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<PAGE>   82

IMS is certified with the IBM e-business "Mark" program. The "Mark" tells
Customer's customers and business partners that Customer is using IBM products
and services as part of Customer's e-business solution. It further communicates
those IBM products and services can help make a site more scalable, reliable and
secure.

APPLICATION SECURITY

The security component allows access levels to be set for each user of Insurance
Tools. When a user signs on, the system uses behind-the-scenes processing to
determine proper access levels. Depending on the security level, a user can only
access certain systems within Insurance Tools.

Insurance Tools requires a valid user ID and password before access is granted
to the system. This access is granted in varying degrees--for example, Customer
may give only a supervisor the security level to delete certain data.

The security component not only allows control over which systems an associate
can access, but it also defines access levels within each system. In some
instances, the user may view but not make any changes to certain options or
systems while, in others, the user cannot view certain options or systems at
all.

The security administrator can change access levels as needed. Adding new users
is relatively easy: simply select and copy a similar profile from another
employee. The ability to add, change, and delete security accesses is available
at any time.

18. SYSTEMS INTERFACES

CLEARANCE SYSTEM INTERFACE - This interface will be designed to ensure that no
two Customer Agents are competing for the same prospect. For new business
submissions via the Customer Commercial Lines Umbrella Online system, a call
will be made to the Customer host to determine if the account already exists
under the same product offering. The results of the search will be returned to
the Customer Commercial Lines Umbrella Online system to allow the Agent to
continue the submissions or notify the Agent the account is being serviced by
another appointed agency that is associated with Customer.

An update to the record in the Customer system will be made at defined points
within the submission cycle and at policy renewal.

FARE SYSTEM INTERFACE - Premium file and claims file sent monthly to Customer.
This file layout has been provided to IMS for our review and analysis. IMS will
provide this capability.

19. ADDITIONAL SUPPORT FUNCTIONS                NO CHANGE TO THE UMBRELLA ONLINE
    PROGRAM.

In addition to Internet access, a Customer-specific toll-free number,
interactive voice response ("IVR") and voice mail will be used to service
Customer's Agents and insureds. The IVR provides support for quick inquiries
with responses available for frequently asked questions, voicemail, access to
IMS' customer service and underwriting department, and the IS support center.

Information available through IVR includes:

         o   Last payment received

         o   Outstanding balance on account

         o   Next payment due

         o   Renewal payment due

         o   Cancellation reason code

         o   Cancellation date

         o   Non-renewal reason code

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<PAGE>   83

SCREEN SPECIFICATIONS

PROTOTYPE

The prototype screens provide a visual representation of the specific input
screens that will be developed by IMS to support the Umbrella Online business
for Customer. This approach does not allow for functional changes to the
screens. Customer will provide IMS with reasonable input regarding the "look and
feel" of the screens being developed. This input may include items such as the
addition of "drop down" boxes or cosmetic enhancements to the color scheme.

RESOURCES

IMS will not require additional executive level management for the Customer's
Commercial Lines Umbrella Online program. Every attempt will be made to leverage
the resources assigned to the eBOP program for the Customer Commercial Lines
Umbrella Online program. In IMS' best effort to maximize returns, it is our
expectation that this will be a singular commercial lines business unit.

IMPLEMENTATION APPROACH

NEW IMPLEMENTATION

IMS can be in production with Customer's Commercial Lines Umbrella Online
System, interfaces, reporting, forms and statistical reporting for all filed
states at the commencement of this agreement within one hundred twenty (120)
calendar days after Customer's sign-off on the Detailed Business Requirements
document. After the one hundred and twenty (120) calendar days and the
completion of the implementation for the first state, IMS can be in production
with Customer's Umbrella Online system for and each subsequent filed state
within thirty (30) days until completion of all states. (The Rollout Plan is in
Appendix B.)

IMPLEMENTATION SERVICES

The IMS Implementation Team will provide product support and strategic
implementation services for Customer. This Implementation Team will provide the
following services:

         o   Project management services

             Project planning

             1.       Definition of work requirements
             2.       Definition of quantity and quality of work
             3.       Definition of resources needed

             Project monitoring

             1.       Tracking progress
             2.       Comparing actual outcome to estimated outcome
             3.       Analyzing impact
             4.       Making adjustments

         o   Implementation approach

         o   Electronic commerce strategies for property and casualty
             insurance companies

         o   Electronic commerce application and system architecture
             development

         o   Data Center services

         o   Technical support services

ENHANCEMENTS/CHANGE CONTROL

Requests for changes and technical assistance will be handled through the IMS
Systems Development Life Cycle, as referenced in the Agreement. Customer will
submit a change request form to the IMS

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<PAGE>   84

Account Manager identifying the change or technical assistance required. The IMS
Account Manager will develop a "Quote Sheet". The Quote Sheet will include
initial time, cost estimates and initial Project Plan.

Once approval is received from Customer on the Quote Sheet, the IMS Systems
Analyst will perform design, development, and testing.

TRAINING                               NO CHANGE TO THE UMBRELLA ONLINE PROGRAM.

To assist in educating the Agents on the use of the Internet interface and the
IMS base system IMS will provide two seminars in the first year of operation
each at a single site. After the first year of the agreement a single seminar
will be provided at the request of Customer. IMS' preferred approach to training
is to "train the trainer." IMS anticipates that the Customer's field Vice
Presidents would most likely be the individuals with whom IMS train in the above
referenced seminars.

In addition to the above referenced seminars, if Customer chooses to license the
Brio(R) reporting tool, IMS will provide additional training services for this
product on a Time and Material basis.

TECHNICAL SUPPORT                               NO CHANGE TO THE UMBRELLA ONLINE
PROGRAM.

CUSTOMER SERVICE HOURS OF OPERATION:

Monday through Friday, 8:00 a.m. to 8:00 p.m., Eastern Standard Daylight Time.
Arrangements can be made to accommodate extended hours of operation. Exclusions
from this time are IMS' Corporate Holidays. These holidays are:

         o   New Year's Day

         o   Memorial Day

         o   Independence Day

         o   Labor Day

         o   Thanksgiving Day

         o   Day after Thanksgiving

         o   Christmas Eve

         o   Christmas Day

In the event the holiday falls on a weekend IMS will transfer the holiday to a
working day prior to or after the holiday.

                         IMS BPO SERVICE STANDARD LEVELS

In accordance with ARTICLE X (A) (d) of the Agreement, the following are the
"Service Standard Levels" that are applicable to the Commercial Lines Umbrella
Online program (Authorized Line of Business):

HOURS OF OPERATION

The IMS commercial lines customer service department will provide service for
Customer, its Agents and insureds Monday through Friday 8:00 AM to 8:00 PM, EST.

TELEPHONE SERVICE

IMS will respond to telephone inquiries from Customer's Agents and insureds at a
service level of eighty-five percent (85%) of all calls answered within
twenty-five (25) seconds or less.

A Meridian Total Service Factor ("TSF") report will be provided to Customer
every Monday (unless that Monday is a IMS corporate holiday, in which case the
TSF report will be provided the next Business Day) for the previous week's call
activity. The calculation for this report is based on the following.

TSF is calculated by (calls Answered + calls abandoned + direct calls In) - (#
answered after threshold * # abandoned after threshold) x 100 = divide answer by
total of first set of ( ).

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<PAGE>   85

PROCESSING

For policies handled through exception processing procedures:

         Cash receipts              one (1) Business Day
         New business               four (4) Business Days from
                                    receipt of complete, accurate and
                                    valid Underlying Policy information
                                    from the Customer Agent.
         Renewals                   ten (10) Business Days or within
                                    established state regulatory
                                    guidelines, whichever is less.
         Endorsements               ten (10) Business Days
         Cancellations              two (2) Business Days or within established
                                    state regulatory guidelines, whichever is
                                    less.
         Correspondence             five (5) Business Days
         Exception quote            one (1) Business Day from receipt of
                                    complete, accurate and valid Commercial
                                    Lines Umbrella Online submission for rate
                                    information.

For policy transactions submitted through the Internet:

         Cash processing
         (EFT, ACH, credit card)     twenty-four (24) hours
         New business                twenty-four (24) hours
         Endorsements                twenty-four (24) hours
         Cancellations               twenty-four (24) hours
         Renewals                    twenty-four (24) hours
         Correspondence              five (5) Business Days
         Cash receipts               one (1) Business Day

Commission checks will be issued by the fifteenth (15th) calendar day of each
month for commission due on Umbrella Online policies from the prior month.

Bureau error corrections for "A" Rate form filing will be completed within the
state mandated timeframes.

REGULATORY CHANGES

Fees to complete regulatory changes are included in the Insurance Administration
Services pricing. IMS will complete all regulatory changes within the compliance
date assuming IMS receives a minimum thirty (30) calendar days prior written
notification from Customer. In the event that IMS receives less than thirty (30)
calendar days written notification and/or the effort is extraordinary, IMS will
make every reasonable effort to complete the changes within the compliance date.

SYSTEM ENHANCEMENTS LESS THAN 40 HOURS

Fees to complete minor enhancements are included within the Insurance
Administration Services pricing. An initial scope assessment, with an
approximate estimate of hours, will be provided to Customer within ten (10)
Business Days from the date IMS receives notification of an enhancement request.
Based on signed approval of Detailed Business Requirements, IMS will proceed
with completion of the enhancement.

SYSTEM ENHANCEMENTS GREATER THAN 40 HOURS

Fees to complete sizable enhancements are at time and materials rate. An initial
scope assessment, with an approximate estimate of hours, will be provided to
Customer within ten (10) Business Days from the date IMS receives notification
of an enhancement request. For projects greater than 200 hours, IMS will provide
an estimate at the completion of Detailed Business Requirements and give
Customer the option of a "fixed" price project. In either case, IMS will proceed
based on signed approval of detailed business requirements.

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<PAGE>   86

DATA CENTER

IMS' Data Center goal for "up time" is 99%. It is IMS' goal to provide this
standard to Customer.

The system availability is from 4:00 AM - 2:00 AM EST (22 hours).

NOTE: ALL SERVICE STANDARD LEVELS ARE MEASURED IN BUSINESS DAYS (UNLESS
OTHERWISE NOTED IN THE EXHIBIT) FROM THE DATE AN ERROR FREE INTERNET TRANSACTION
OR MAILED-IN OR FAXED DOCUMENT IS RECEIVED.

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<PAGE>   87

                                  EXHIBIT III

                 COMMERCIAL LINES WORKERS COMPENSATION PROGRAM

DEFINITIONS

Capitalized terms, not otherwise defined in the Agreement or in this Exhibit,
shall be construed as otherwise generally understood in the insurance and data
processing industry.

PLAN OF OPERATION

PROJECT ASSUMPTIONS

1.       To meet Customer's existing business objectives IMS will implement a
         Workers Compensation system, based on Customer's existing Workers
         Compensation product definitions, with the following functionality:

         o    Quick quote function

         o    User controlled editing to establish distinct underwriting rules

         o    Use of Customer filed policy forms

         o    Customized output with customer specific logo on forms

         o    Loading of rate files

         o    Use of bureau published rates/approved loss cost multipliers

         o    Use of state mandated legal wording on policy
              forms/correspondence

         o    Receivables processing

         o    Automated renewal processing

         o    Endorsement processing

         o    Cancellation/reinstatement processing

         o    Audit processing

         o    Premium and commissions accounting

         o    Generation of commission statements and checks

         o    Reinsurance processing

         o    Agency management reporting

         o    Claims data management

         o    Coverage verification for Customer's claims third party
              administrators ("Claim TPA")

         o    Compliance of statutory reporting

         o    Loss control survey request ordering

         o    Inspection ordering

         o    Testing of all functions with Customer's data

         o    Controlled environment with Customer's approval and sign-off of
              test results

         o    Document packaging

         o    Cash processing

         o    Interfaces for Claims TPA's, Customer's clearance system and FARE

2.       Applications may be submitted by appointed Customer agents ("Agents")
         via the Internet for real-time quoting and binding.

3.       The Internet screens will be designed as a mirror image of the current
         Cybercomp Workers Compensation Internet Solution. Upon completion of
         the Detail Business Requirements document IMS will provide, for
         Customer's reasonable approval, revised screens that incorporate any
         process/workflow improvements to streamline the data entry process by
         the Agent.

4.       IMS will provide an interface to the Customer's "Clearance System" for
         Internet and faxed quote submissions and renewal business.

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<PAGE>   88

5.       Customer is currently affiliated with NCCI and the Independent Bureaus
         and will provide IMS with the necessary authority to obtain the
         required policy processing data and underwriting rules on Customer's
         behalf. Where available, information will be provided to IMS
         electronically.

6.       IMS will at least initially have to rely on Customer to provide IMS
         with regulatory requirements as dictated by NCCI or Independent
         Bureau(s). IMS will assess and apply the change to ensure compliance
         of the change(s) upon receipt of the information from Customer.

7.       In order to utilize document packaging, OCR lines must be printed on
         all forms. Some states may require that Customer re-file its forms for
         approval before adding the OCR line. Customer will identify those
         states in which it will be required to re-file any policy forms.

8.       Customer will promptly provide all underwriting rules and guidelines
         based on the program plan in each state. Any deviation from these
         rules and guidelines will be considered for exception processing
         following the mutually agreed upon exception processing policies and
         procedures defined by Customer. Customer and IMS will cooperate to
         automate any manual processing where possible.

9.       Customer Workers Compensation policies will be no less than monthly
         term policies.

10.      Customer will promptly provide IMS with all information pertinent for
         establishing new Agents in the IMS Workers Compensation system for
         policy processing.

11.      Customer will combine its existing Small Business Employers Plan" and
         the "Business Solution Plans" into a single plan by introducing class
         minimum premium for each state plan.

12.      Customer will provide a minimum of 10 business days advance notice to
         IMS prior to the effective date of changes to its underwriting program
         and policies and procedures.

13.      IMS will follow the accounting processing (receivables and audit)
         rules and guidelines as defined by Customer and mutually agreed upon
         by IMS for audit, billing and collections, cancellation and
         reinstatement processing. Customer and IMS will cooperate to automate
         any manual processing where reasonably possible; provided, however, if
         automation is not reasonably possible IMS shall manually perform any
         accounting processing that is not automated in accordance with the
         Agreement and this Exhibit.

14.      Audits will be ordered on an interim and annual basis on behalf of
         Customer for cancelled or expired policies as per Customer's
         guidelines.

15.      Premium and claims reinsurance will be applied in accordance with
         Customer's reinsurance treaty agreements. Customer will promptly
         provide new definitions at the close of each calendar year in order
         for IMS to apply changes prior to the first month-end cycle of each
         calendar year.

16.      Commissions are paid once a month, at mid-month. The commission check
         is based on the premium collected in the previous month multiplied by
         the commission rate. A commission statement will be provided to every
         Agent that details the transaction by policy.

17.      Customer will promptly provide IMS the commission rates for new Agents
         or changes to existing Agents along with the effective date of the
         change.

18.      Customer will promptly provide the necessary resources to handle the
         reporting required for state-specific calls based on the data provided
         by IMS through FARE.

19.      IMS will order loss control surveys for all issued policies as per
         Customer's guidelines. It will be necessary for Customer to provide
         IMS access to the Customer's EMS database in LotusNotes. (It is the
         intent of IMS to automate the input of the data into the Customer EMS
         system. THE EFFORT ASSOCIATED WITH THIS DATA FEED IS OUTSIDE THE SCOPE
         OF THE AGREEMENT.)

20.      Customer Claims TPA's are responsible for submitting accurate data in
         the correct position, size, type and format and with the correct
         values as assigned by NCCI, Independent Bureaus or IMS. All data
         formats will be edited prior to submission to IMS.

21.      Customer Claims TPA's will submit one (1) file monthly to IMS by tape
         cartridge or as ASCII files attached to e-mail by a predefined
         timeframe to be mutually determined after the completion of the Detail
         Business Requirements.

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<PAGE>   89

22.      IMS will provide an error report of claims rejected by the interface
         due to incorrect data being submitted. The report will be provided on
         a monthly basis after processing the current month claims file from
         the Claims TPA. Claims that do not pass all edits will be rejected in
         their entirety. Rejected claims will be corrected and resubmitted with
         all data previously rejected, including all financial transactions.
         All resubmitted transactions should be included with the next Claims
         TPA file transmission. All claims passing edits will be processed to
         IMS' system.

23.      IMS will provide Customer with the required policy/claims data for
         calculating Claims TPA's processing fees.

24.      Customer will pay all Claims TPA fees as per contract between Customer
         and the Claims TPA. Any services offered by IMS for third party
         administration" data processing beyond the contracted services will be
         charged to Customer per Servicing contract based upon prior approval
         from Customer.

25.      IMS will create a policy transaction file to be provided on-line to
         the Claims TPA's for coverage verification. It is IMS' intent to
         provide the coverage verification data file to the Claims TPA's and
         Cybercomp on a daily basis by posting the data file to the web-enabled
         front-end for the Claims TPA's to access only Customer's data. It will
         be the responsibility of the Claims TPA to download the data on a
         daily or interim basis. IMS will hold the daily files for a period to
         be agreed upon by Cybercomp and IMS. As a transitional phase for the
         Claims TPA's retrieving the claims data from the Internet, IMS will
         provide the data files to the Claims TPA's via e-mail.

26.      Customer is looking to acquire the services of a single toll free
         vendor ("Toll Free Vendor") for claims reporting. The Toll Free Vendor
         will also need a copy of the policyholder coverage information to
         confirm coverage, locations and forms and provide the necessary data
         to the Claims TPA for administering the claims. It is IMS' intent to
         provide the Toll Free Vendor access to the coverage verification data
         needed through the web-enabled front-end. The Toll Free Vendor will
         need access to more policy data than the Claims TPA. The IMS security
         levels will define the data to be accessed by the Toll Free Vendor or
         the Claims TPA and allow the Toll Free Vendor access to all policy
         data irrespective of the Claims TPA assigned.

27.      IMS will order state inspections on behalf of Customer as per the
         state requirements. Currently Arizona and South Dakota require
         inspections.

28.      Customer will promptly provide the data requirements for any data not
         contained within the fifteen (15) file layouts currently used by the
         (third party) Brio(R) ad hoc reporting tool. IMS will create up to
         five (5) additional files within the scope of this Exhibit. The data
         requested is needed for creating ad hoc underwriting analysis, claims
         and additional accounting reports.

29.      IMS shall, where cost effective to IMS and after consultation with
         Customer, automate all data interfaces between IMS and any third party
         administrator utilized by Customer for processing and handling of the
         Workers Compensation policies being serviced by IMS. Customer will
         promptly provide IMS the necessary support to work with the Claims
         TPA's in defining and implementing such automation of data transfers
         into or out of the IMS Workers Compensation system.

30.      In order to develop the final system specifications and to complete
         the Detail Business Requirements Document, Customer will provide IMS
         in a timely manner the following additional information:

STATE SPECIFIC INFORMATION:

         o Underwriting rules and guidelines

         o State specific filed forms

         o Binding requirements and workflow

GENERIC INFORMATION:

         o Customer specific filed forms

         o Annual statement line of business by coverage

         o New business rules and workflow

         o Endorsement business rules and workflow

         o Cancellation business rules and workflow

         o Reinstatement business rules and workflow

         o Renewal business rules and workflow

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<PAGE>   90

         o Audit business rules and workflow

         o Billing/collection business rules and workflow

31.      IMS will provide Insured "Welcome Letters" to be generated and mailed
         out of the IMS system. The Welcome Letters consists of a one (1) page
         document that is mailed to the Insured. The Welcome Letter will be
         mailed with the policy if the policy is mailed within seven (7)
         Business Days of binding. If policy is not prepared for mailing within
         seven (7) Business Days, the Welcome Letter will be mailed separately.

32.      IMS will provide time and material estimates to implement the various
         components required for interfacing the Kokopelli designed web-site to
         the IMS system as the detail specifications are provided by Customer.
         DELIVERY OF SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE AGREEMENT. These
         components are as follows:

         o    RFP - IMS will be given an opportunity to respond to the RFP for
              hosting the web system.

         o    Agency profile and set up will be done on Kokopelli front-end.
              Customer will require that the Agent have a logon for Kokopelli
              and a separate logon to the IMS application as an additional
              security layer. Agent will be required to input his or her
              password to access quote and support application. IMS will
              develop the interface/integration between the IMS' security
              system and Kokopelli.

         o    IMS will develop a https protocol between Kokopelli and the IMS
              producer system and the PDS' agent master when agency appointment
              is approved, updated, or cancelled. Customer will need to
              establish the procedures for handling sub-producers via the
              Kokopelli system or other defined process.

         o    IMS will provide a daily file containing policy status
              information to the Kokopelli system. The insureds access will be
              limited based on whether an in-force policy exists for the
              insured.

         o    IMS will provide insured access to the loss run reports provided
              to the Agents via the support site. The navigation should be
              streamlined to eliminate the selection choices and display only
              the loss run report for the insured's policy.

         o    Customer will promptly provide IMS screen prints of the Kokopelli
              web-site in order to develop a similar look and feel for the
              product sites being developed. The color scheme and background
              layout of the Kokopelli site should be similar in the product
              sites. All other functions will be specific to the product
              application or follow the current Workers Compensation Internet
              application.

         o    IMS will provide separate time and material estimates for
              components listed above based on whether IMS is the web hosting
              vendor or not.

         o    In the event the Kokopelli solution for Agent appointment is not
              in production prior to the implementation of the first state
              rollout on the IMS system, an alternate solution for establishing
              the Agent data in the IMS system will be developed.

33.      IMS will provide Customer a time and materials estimate to implement
         an interface to a premium finance company for retrieving a finance
         quote and establishing financing at binding. DELIVERY OF SUCH FUNCTION
         IS OUTSIDE THE SCOPE OF THE AGREEMENT.

34.      IMS will offer Customer the capability of tracking the Claims TPA
         take-over process in the claims data interface. The additional
         processes for providing data extracts and reports for the current and
         new Claims TPA, will be estimated by IMS on a time and material basis.
         DELIVERY OF THESE ADDITIONAL PROCESSES IS OUTSIDE THE SCOPE OF THE
         AGREEMENT.

35.      IMS will provide the ability for Agents to process premium and
         non-premium endorsements to in-force policies via the Internet
         application.

36.      IMS will provide the management of the inspection and audit vendors
         selected by Customer for responding to service requests. The
         management of these vendors will be based on the defined rules and
         guidelines established by Customer. IMS and Customer will jointly
         share in the efforts to develop an automated solution for the vendor
         management process in the IMS system.

37.      In addition to the other functionalities defined within this Exhibit
         and the Agreement, IMS will provide Customer with the ability to
         support the following functions within the IMS Workers Compensation

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<PAGE>   91

         system. Customer will promptly provide IMS detail specifications and
         business requirements to implement these functions within the
         implementation time schedule.

         o    Nevada transitional rating for new business and converted
              in-force business

         o    Agency better business commission option

         o    By state by class minimum premiums

         o    Employers liability stop gap coverage for monopolistic states

         o    Anniversary date edits

         o    Edit quote effective date edits

         o    Multi-company rating capability

         o    Application of multiple plans per state, county or zip code

         o    Scoring system for general information questions

         o    Revised quote layout

         o    Experience mod history scoring

         o    Multiple plan effective dates

         o    Access to special rating guidelines associated with eligibility
              questions

         o    Data capture capability for requesting take out credits

         o    Produce posting notices as per state requirements

         o    Merit rating

38.      IMS will offer Customer the ability to support dividend processing for
         the following functions:

         o    PAR dividend plans

         o    Deferral dividend plans

         o    Dividend disclosure statements

         o    Minimum dividend plans

         IMS will provide a time and materials estimate upon receipt of the
         detail business requirements. DELIVERY OF SUCH FUNCTION IS OUTSIDE THE
         SCOPE OF THE AGREEMENT.

39.      IMS will offer Customer the ability to support an interface to a
         payroll distribution company. IMS will provide a time and materials
         estimate upon receipt of the detail specifications and business
         requirements. DELIVERY OF SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE
         AGREEMENT.

40.      Customer's policy data will be converted from Customer's existing
         (immediately prior to the execution of the Agreement) Workers
         Compensation policy system to the IMS' system for policy handling. IMS
         will analyze the effort associated with the conversion of the data and
         provide Customer a time and materials estimate. Customer will promptly
         provide IMS the necessary data file layouts to develop the estimate
         and the conversion logic. ALL EFFORTS ASSOCIATED WITH THE ANALYSIS,
         CONVERSION LOGIC DEVELOPMENT, RECONCILIATION AND DATA CLEAN-UP (AND
         DELIVERY OF THE RESULTING DATA CONVERSION) IS OUTSIDE THE SCOPE OF THE
         AGREEMENT.

41.      IMS will provide a time and material estimate to implement an
         automated solution for Deductible Billing. DELIVERY OF SUCH FUNCTION
         IS OUTSIDE THE SCOPE OF THE AGREEMENT.

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<PAGE>   92

                            REQUIREMENTS DEFINITION

                             BUSINESS REQUIREMENTS

THIS SECTION DETAILS THE APPLICABLE STIPULATIONS OF THE INSURANCE
ADMINISTRATION SERVICES TO BE PROVIDED UNDER THIS AGREEMENT BASED ON THE
CATEGORIES LISTED BELOW.

1.       DOCUMENT PACKAGING REQUIREMENTS    NO CHANGE FOR THE CYBERCOMP PROGRAM

IMS uses automated, system-generated forms, from policy declaration pages to
Agent statements, and maintains all the necessary form information: form names,
recipients, and printer instructions, including variable information such as
company name and address. The IMS system not only catalogs all current forms in
use, but also stores previous versions of forms should IMS need to retrieve
them for Customer's legal or auditing purposes.

Customer will promptly provide IMS the distribution requirements for all
correspondence to complete the Detail Business Requirements Document.

2.       IMAGING REQUIREMENTS               NO CHANGE FOR THE CYBERCOMP PROGRAM

The IMS Underwriting department will be provided access to all documents that
are sent to IMS, and all document packaging output documents related to a
policy, through an electronic form archive. As a standard procedure, all
system-generated documents are transmitted to the imaging system via Computer
Output to Laser Disc ("COLD"). These stored images are duplicates of the
original documents sent to the policyholders, Agents and other respective
parties and can be reproduced for Customer, its auditors, reinsurers, and its
Agents upon request. IMS does not retain hard copy documents once the IMS
records management department scans the images into the IMS system.

3.       INPUT REQUIREMENTS

The information required for quoting and binding a policy will be input into
the system by Customer's Agents using the Internet. IMS' underwriting
department will be prepared to handle exception processing that may occur based
on procedures as defined by Customer and mutually agreed upon by IMS.

An individual Agent will be able to enter the same quote within a predefined
number of attempts. If this number is exceeded, that Agent will not be allowed
to continue the process and will automatically be referred to IMS' customer
service department for assistance. The production quote count would not be
affected by an unsuccessful quote attempt.

The input requirements, as defined in this Exhibit, are based solely on the
information provided by Customer to IMS. During the implementation of the
Rollout Plan, as the detailed underwriting information for each state is
determined, additional requirements will be incorporated into the project
scope. IMS will complete the detail analysis to determine all required fields
for quoting and binding based on the forms and distribution documents, the
bureau reporting requirements and any Customer Workers Compensation
underwriting rules as currently defined in Customer's existing Cybercomp
system. The completion of this analysis is dependent upon receipt of all
completed Workers Compensation underwriting rules and guidelines from Customer.

4.       MANAGEMENT REPORTING REQUIREMENTS

Customer has provided IMS with a sample of reports that it had received from
its existing (immediately prior to the execution of this Agreement) Workers
Compensation system. The reports received from Customer are not inclusive of
all Customers' reporting requirements. Customer will promptly provide IMS with
sample copies of all required reports received/generated from the existing
Workers Compensation system. Upon receipt of these reports, IMS will review
each report to determine if the report or a similar report is currently being
generated through the IMS system. IMS will provide up to 15 additional reports

                                       6
<PAGE>   93

that are not currently provided in IMS' base system, to satisfy the current
Customer's reporting requirements.

IMS will send a weekly e-mail with the "Weekly Data File Report" that
represents an Agent's Workers Compensation book of business to each
Marketing/Field Representative. IMS will also send this information to
Customer's accounting group via e-mail. In addition, IMS will provide an
"Accounting Group Report" that contains all Workers Compensation books of
business sorted by Marketing/Field Representative.

5.       AD HOC REPORTING REQUIREMENTS      NO CHANGE FOR THE CYBERCOMP PROGRAM

IMS utilizes a third party ad hoc reporting tool called Brio(R). Brio(R) report
provides the enterprise reporting tools and technology that Customer will nEed
to develop and process a complete range of reports, from small reports to
mission-critical operational reports that access large volumes of data in
production databases, legacy applications, and data warehouses. Output from
Brio(R) report can range from high-volume printed reports to highly interactivE
reports delivered via the Web.

BRIO(R) CAPABILITIES

The following is a list of Brio(R) capabilities that Customer may choose to
utilize. The use of these features is determined at the end user level.

         o    Merge premium data with loss data

         o    Read only so that the data can be changed

         o    Drill down into the data

         o    Intelligent method for subtotaling and totaling

         o    Can filter the data by year to date, week to date, etc.

         o    Time Service Report--e-mailed or static on the Customer web site

         o    Running the month end process on a weekly basis

         o    Fifteen (15) file layouts for reporting against Month End

         o    Up to five (5) additional file layouts based on specific data
              reporting requirements to be provided by Customer

NOTE: In order for Customer to realize the full benefits of the Brio(R)
reporting tool, it would be necessary for Customer to establish a dedicated
line into the IMS system. This would allow Customer to access Brio(R) and
Customer-specific data.

6.       FORMS

IMS will support the creation of all policy form/documents as required by state
bureau requirements and any Customer specific forms.

7.       OUTPUT AT AGENT'S OFFICE

In response to Customer's request that specific forms and certain Internet data
information be available to print in the Agent's office, IMS agrees to provide
the following:

         o    Quote

         o    Confirmation letter

         o    Preliminary installment schedule

         o    Declination letter

         o    Billing status information

         o    Policy status information

         o    Employer limits information

         o    Policy loss run report

         o    State specific program underwriting forms

                                       7
<PAGE>   94

         o    Premium finance agreement (creation of the finance agreement
              requires an interface with a premium finance company. DELIVERY OF
              SUCH FUNCTION IS OUTSIDE THE SCOPE OF THE AGREEMENT.)

8.       COMPLIANCE/BUREAU REPORTING

IMS will ensure compliance with all State and Bureau entity mandated
requirements for unit statistical reporting, State mandates, NCCI PIC/POCS,
DCI, ICR, and Bureau Criticism responses.

Data calls from regulatory entity shall not be completed by IMS. Customer will
respond based on data interfaced from the IMS' system to FARE.

9.       UNDERWRITING

The underwriting decisions for the Workers Compensation insurance product will
be completed utilizing an underwriting template provided by Customer. The
underwriting will take place online via specially designed screens and will
provide automatic rejection of applications that do not meet the defined
underwriting guidelines.

When a fax or mail-in submission is received, the IMS commercial underwriting
department will use the Internet screens and the predefined Customer rates,
rules and guidelines in the IMS system to issue or reject the policy.

PREMIUM AUDIT

Customer uses a third-party audit vendor for performing physical premium
audits. IMS will order on behalf of Customer, physical premium audits, process
the results of the premium audits and associated billing based on the
procedures defined by Customer and mutually agreed upon by IMS.

INSPECTIONS

IMS' Commercial underwriting department will order, on behalf of Customer,
underwriting inspections from Customer's inspection administrator as required
by state mandates or Customer's underwriting rules and guidelines. IMS will
process the resulting policy updates, as outlined in Customer's underwriting
manual, such as cancellations or documentation on the policy.

REINSTATEMENT WITH A LAPSE IN COVERAGE     NO CHANGE FOR THE CYBERCOMP PROGRAM.

IMS will process reinstatements subject to the guidelines set by Customer.

EXCEPTION PROCESSING                       NO CHANGE FOR THE CYBERCOMP PROGRAM.

Submissions that fall outside of Customer's Workers Compensation underwriting
guidelines and that result in a disputed rejection, will be handled according
to an "Exception Processing" document that will be created and approved by
Customer with consultation and input from IMS.

10.      POLICY LEVEL GUIDELINES

Customer's specific underwriting eligibility rules will be displayed on a
customized data entry screen. The system will be designed to ensure that the
Customer specific criteria will be met before the risk is accepted. The
underwriting eligibility rules will vary by state and may be modified by
Customer on an interim basis for competitive pricing reasons. The following is
an example of Customer's minimum guidelines:

         o    Is 75% of the payroll assignable to employees domiciled in the
              primary state?

         o    Is the applicable or most recent experience modification less
              than or equal to "maximum limit for state?"

                                       8
<PAGE>   95

         o    Is the payroll assignable to less than 5 states?

         o    Is the manual, unmodified premium greater than "minimum limit for
              state or governing class template minimum if available"?

         o    Are all of the classes "eligible classifications"? (a class is
              determined to be "eligible" if not listed under the ineligible
              class list.)

         o    Is your current coverage with a company not affiliated with a
              Customer's Group Holding Company?

         o    Has there been a cancellation/lapse in coverage due to
              non-payment of premium in the past 18 months?

         o    Is the employer currently uninsured for workers compensation?

         o    Are the insured's operations "restricted" as defined in the
              governing classification template?

         o    If "restricted" operations apply, does the employer pay less than
              an average of $6 per hour to employees in the governing class?

         o    Additional state specific underwriting eligibility questions may
              be applied based on Customer's underwriting guidelines for the
              primary state.

10.1     RISK SCORING

IMS will use criteria defined by Customer to score the risk and determine the
appropriate Issuing Company. Based on Customer's requirements, IMS will decline
the risk for being outside the underwriting eligibility guidelines if a score
is generated that is outside the risk score range (example provided is <0).

The risk scoring function in the system will allow for different criteria range
thresholds for each Authorized State and automatically make premium adjustment
assignments by state based on responses to the criteria questions.
Additionally, an effective and expiration date will be used in the AS/400
system tables to allow changes within the state set up.

Customer has two (2) types of underwriting plans. These include:

         o    A "Percentage Plan" where the application criteria response is a
              percentage amount that is totaled and compared to the Risk
              State's mandated schedule modification minimum and maximum
              limits. If the total risk score exceeds the minimum or maximum
              state schedule modification limit, the minimum or maximum is
              used. The calculated score is applied to the premium as the
              schedule modification credit or debit. Only one Issuing Company
              will be available for the Percentage Plans.

         o    A "Point Plan" where the application criteria response is a point
              score that is totaled and compared to a score range to determine
              the Issuing Company.

         An example of the Point Plan risk criteria that IMS will use for the
         development of the risk scoring mechanism is shown below (as provided
         by Customer):

                                       9
<PAGE>   96

<TABLE>
<CAPTION>

------------------------------------------   ---------------------------------------------   --------------------
CRITERIA                                     RANGE                                           POINTS
------------------------------------------   ---------------------------------------------   --------------------
<S>                                          <C>                                             <C>

Average weekly wage rating (A, B, C, D)                           *                                  *
for employees in governing classification
------------------------------------------   ---------------------------------------------   --------------------
                                                                  *                                  *
------------------------------------------   ---------------------------------------------   --------------------
                                                                  *                                  *
------------------------------------------   ---------------------------------------------   --------------------
                                                                  *                                  *
------------------------------------------   ---------------------------------------------   --------------------
Experience modification history                                   *                                  *
------------------------------------------   ---------------------------------------------   --------------------
                                                                  *                                  *
------------------------------------------   ---------------------------------------------   --------------------
                                                                  *                                  *
------------------------------------------   ---------------------------------------------   --------------------
</TABLE>

<TABLE>
<CAPTION>

------------------------------------------   ---------------------------------------------   --------------------
CRITERIA                                     RANGE                                           POINTS
------------------------------------------   ---------------------------------------------   --------------------
<S>                                          <C>                                             <C>

Does the employer financially                                     *                                  *
contribute to an employee medical
benefit plan?
------------------------------------------   ---------------------------------------------   --------------------
                                                                  *                                  *
------------------------------------------   ---------------------------------------------   --------------------
Does the insured qualify for a class                              *                                  *
specific preferred operation adjustment?

------------------------------------------   ---------------------------------------------   --------------------
                                                                  *                                  *
------------------------------------------   ---------------------------------------------   --------------------
</TABLE>

An example of the Issuing Company criteria for the above Point Plan criteria is
provided below (as provided by Customer):

<TABLE>
<CAPTION>

----------------------   ------------------------------------   ------------   ------------------------
SCORES                   ISSUING COMPANY                         DEVIATION      PREMIUM DISCOUNT TABLE
----------------------   ------------------------------------   ------------   ------------------------
<S>                      <C>                                    <C>            <C>

       0 - 9             Reliance Insurance Company                   *                    *
----------------------   ------------------------------------   ------------   ------------------------
       10 - 14           United Pacific Insurance Company             *                    *
----------------------   ------------------------------------   ------------   ------------------------
       >/= 15            Reliance National Insurance Company          *                    *
----------------------   ------------------------------------   ------------   ------------------------
</TABLE>

An example of the Percentage Plan risk criteria that IMS will use for the
development of the risk scoring mechanism is shown below (as provided by
Customer):

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                      10
<PAGE>   97

<TABLE>
<CAPTION>

------------------------------------------   ---------------------------------------------   --------------------
CRITERIA                                     RANGE                                           POINTS
------------------------------------------   ---------------------------------------------   --------------------
<S>                                          <C>                                             <C>

Average weekly wage rating (A, B, C, D)                            *                                  *
for employees in governing
classification
------------------------------------------   ---------------------------------------------   --------------------
                                                                   *                                  *
------------------------------------------   ---------------------------------------------   --------------------
                                                                   *                                  *
------------------------------------------   ---------------------------------------------   --------------------
                                                                   *                                  *
------------------------------------------   ---------------------------------------------   --------------------
Experience modification history                                    *                                  *
------------------------------------------   ---------------------------------------------   --------------------
                                                                   *                                  *
------------------------------------------   ---------------------------------------------   --------------------
                                                                   *                                  *
------------------------------------------   ---------------------------------------------   --------------------
Does the employer financially
contribute to an employee medical                                  *                                  *
benefit plan?
------------------------------------------   ---------------------------------------------   --------------------
                                                                   *                                  *
------------------------------------------   ---------------------------------------------   --------------------
Does the insured qualify for a class                               *                                  *
specific preferred operation adjustment?

------------------------------------------   ---------------------------------------------   --------------------
                                                                   *                                  *
------------------------------------------   ---------------------------------------------   --------------------
</TABLE>

The Issuing Company for the above example would be Reliance Insurance Company
with applicable premium discount from "Table 9".

10.2     RATING REQUIREMENTS

IMS will follow all state mandated rating algorithms as published by NCCI or
the Independent State bureau as it relates to Customer's specific underwriting
rules and guidelines.

11.      PROPOSED DETAILED INTERNET WORK FLOW

The following proposed detailed workflow provides an outline of the tasks that
would need to be completed by an Agent in order to enter a new Workers
Compensation policy. As part of the Cybercomp project it will be necessary for
IMS to develop the screens and processes to support these functions with a
similar " look and feel" to the current Cybercomp Workers Compensation Internet
solution.

(Workflow diagrams for renewals, endorsements, cancellations, reinstatements
and audits will require further review and discussion with Customer before
being finalized. However, similar or like workflow processes are anticipated
for these transactions.)

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

                                      11
<PAGE>   98

11.1.    CYBERCOMP PROPOSED INTERNET NEW BUSINESS PROCESS DIAGRAM:

                                   Entrance Screen

New Quote

         Support Flow  Support      Quote of
                                     Support

                                     Quote                 No           Continue
                                                                         Working
                        State Selection / Effective date

         Modify

                                    Eligibility

                                      Eligible

                                        Yes

         Continue                Quote / Premium        Print      Quote
         Working

          Bind

         Binding       Binding      Verification      System      Agent
       Information   Instructions  Process/Quality     Marks      faxes
                                      Control         Policy       EFT
                                                     Pending        to
                                                       Cash        IMS

                     Confirmation/
                      Installment
                       Schedule

                                      12
<PAGE>   99

11.2.    CUSTOMER PROPOSED CASH PROCESS DIAGRAM:

<TABLE>
 <S>                   <C>                    <C>         <C>                            <C>                       <C>

                                              IMS Entering Cash
                                                Initiates Cash
                                                    Process

                                     Check     Retrieve Funds                     ACH                               Sweep Account

                             Check Received                                                 Bounced ACH                  Funds
                                                 Credit Card                             Charged to Agent/   No       Transferred
                                                                                              Insured

    IMS Continues
 collection efforts    No    Check clears                                                  Sweep Account
                                                   Credit
                                                  Processed                                                              Yes
                                  Yes

 Notify Reliance Via                                               Bounced ACH
       Email                                                    charged to Agent/    No        Funds               Automatic Policy
                                                                     Insured                Transferred                Issuance
                           IMS Issues Policy
                                              Yes
                                                     No
  IMS Cancel Policy                                                  Submit
                                                                  Credit Card #      No    Cancel Policy
                                                                   w/in 24 hrs.

                                                                       Yes

                                                             System generates Output                   Dec

                                                          Premium deposited in Reliance
                                                                     Account                      Policy Issuance
                                                                                                  Notice to Agent
                                                    Reliance funds transferred to Reliance
                                                               operating account

                                                         IMS will draw fee from Reliance
                                                                operating account

</TABLE>

                                      13
<PAGE>   100

13.      CUSTOMER SERVICE                  NO CHANGE FOR THE CYBERCOMP PROGRAM.

IMS understands that the Customer's Agents will be encouraged to utilize the
Internet for submitting a Workers Compensation Insurance policy. However, IMS
is prepared to quote these policies if a submission is faxed or mailed into
IMS' offices.

IMS' commercial lines staff will quote submissions and bind coverage if an
Agent accepts, based on verification of the program guidelines, required
underlying limits of insurance and any applicable exclusion(s).

The IMS commercial lines customer service department associates will undergo
comprehensive product training that will include a review of Customer's Workers
Compensation policy guidelines.

13.1.    UNDERWRITING SERVICE

The underwriting decisions for the Workers Compensation insurance product will
be completed utilizing an underwriting template provided by Customer. The
underwriting will take place online via specially designed screens and will
provide automatic rejection of applications that do not meet the defined
underwriting guidelines.

When a fax or mail-in submission is received, the IMS commercial underwriting
department will use the Internet screens and the predefined Customer rates,
rules and guidelines in the system to issue or reject the policy.

IMS will provide policy underwriting for non-internet submissions, rating and
policy issuance as defined in Customer's underwriting, rating and policy
processing procedures and guidelines. IMS will follow NCCI's or other bureau
reporting entity's rating rules and guidelines.

13.2.    POLICY PROCESSING

IMS will provide the following policy processing services for Customer's
Workers Compensation business submitted via the Cybercomp program. Customer and
IMS will reasonably and mutually define the policies and procedures to be
followed by the IMS service staff to meet Customer's Workers Compensation
program requirements.

         o    Review of bound submitted information for completeness and
              accuracy. This includes validation of experience modification,
              class code, payroll, Federal Employment Identification Number
              (FEIN), and risk address. (It is IMS' intention to automate this
              function for NCCI states by utilizing the electronic mod
              distribution solution currently being offered by NCCI. Customer
              will promptly provide the necessary resources and authority to
              complete this process as quickly as possible.)

         o    Issuing and distributing policies

         o    Issuing and distributing billing invoices

         o    Processing agent/Customer/insured requested endorsements

         o    Issuing and distributing cancellation notices

         o    Distributing required state and Customer specific policy forms

         o    Distributing State and Customer required correspondence

         o    Process required state filings and reporting

         o    Issue required state certificate of insurance

         o    Respond to policy inquiries from insureds, Customer's appointed
              Agents and Customer's staff

                                      14
<PAGE>   101

14.      CUSTOMER SERVICE NEW BUSINESS PROCESS

The diagram that follows provides a high level overview of IMS's workflow, as
established for processing Customer's mailed-in or faxed new business
applications. This basic workflow will also apply to renewal, endorsement and
cancellation processing for the Cybercomp program.

                         IMS CUSTOMER SERVICE DEPARTMENT
                          NEW BUSINESS PROCESS DIAGRAM

                    IMS Mailroom
                 Receives Umbrella
                     Submission

                      Route to
                     Commercial
                     Department

                     Underwriter
                      Companies
                      Automated
                        Quote

                    Acceptability              No            Decline
                         Met?

                         Yes

                  Quote Emailed or
                   Faxed to Agent

                         Agent                 No            Archive
                        Accepts                               Quote
                        Quote?

                         Yes

                         Bind
                       Coverage
                     upon Receipt
                       of Funds

                         Funds                 No            Process
                       Received?                           Cancellation

                          Yes

                       Customer
                       Service
                    Issues Policy
                        through
                         AS/400

                                      15
<PAGE>   102

15.      ACCOUNTING

Accounting services for the Customer Cybercomp Workers Compensation Program
will include:

         o    Payment processing

         o    Commission processing

         o    Billing processing

         o    Disbursements

         o    1099 reporting

         o    Premium and claims reinsurance processing and reporting

         o    IMS will support payment processing on the above listed functions
              as established for the eBOP and Commercial Lines Umbrella Online
              program. This includes EFT, credit card and lockbox payment
              processing.

PAYMENT PROCESSING

IMS will follow all binding guidelines established by Customer in order to
expedite the issuance of policies. While IMS prefers that Customer utilize
Electronic Funds Transfer (EFT) as much as possible, IMS acknowledges that it
will be required to handle a full range of payment processing, including:

         o    Checks

         o    Credit card payments

         o    Reconciliation

Premium processing for payments related to installments, renewals, audit bills
and endorsements will be processed through multiple lockboxes via an authorized
bank with a designated Customer Post Office Box. The lockbox to be used on the
remittance will be determined based on the insured's billing state. (EFT and
credit card payments will also be offered.) These payments will be picked up
early each morning and deposited the same day. Payments received with a
remittance coupon will be processed using optical OCR equipment that reads the
policy number electronically. Once lockbox data is transmitted and loaded, the
system will automatically process cash by applying payments and updating
policies.

Any payments collected via Credit Card will incur a processing fee. These fees
will be included with the policy premium where state guidelines allow a charge
to be passed back to the insured. Customer will promptly provide IMS with any
state specific requirements for credit card processing.

Reinstatement and collection procedures will be established according to
Customer's guidelines. IMS will request these payments be sent directly to our
office, EFT or through credit card payment.

IMS will support Customer's efforts to promote the utilization of EFT with its
Agents and insureds if it chooses this option. IMS will review the requirements
and address any concerns that the Agents may present.

The IMS accounting department will process all policy premium direct deposits.
To facilitate this process the following controls will be in place:

         o    Use of preprinted policy numbers on all documentation

         o    Daily review and comparison of system totals compared to total
              cash transmitted and/or entered and any credit card receipts
              transmitted

         o    Daily preparation and reviews of deposit slips and journal entry
              forms

         o    Transactions not received through EFT will be deposited within
              twenty four (24) hours of receipt

Cash processing includes the application of payments to current policies as
well as the application of new business. Because the volume of payments can be
extensive, cash processing will be completed in

                                      16
<PAGE>   103

batches. Once a batch of payments is entered either automatically or manually,
the system assigns a control and batch number. These identifiers are used to
track data throughout the IMS system.

Cash processing activities such as non-sufficient funds processing, stop
payments and deposit corrections will be handled according to IMS' established
procedures or Customer's specifications.

COMMISSION PROCESSING

IMS will provide the ability to offer varying commission rates for incentives
such as utilizing the Internet to submit business versus faxing or mailing a
new business or renewal application. IMS will disburse commission payments by
the fifteenth (15th) calendar day of the following month. Payments will be
derived according to the commission structures instituted for Cybercomp and for
premiums collected through the previous month-end.

BILLING PROCESSING

Customer has requested the ability to offer direct installment billing with
some agency billing for specific agencies. IMS will process installment
payments as well as additional premium processing for new business, renewals
and change endorsements.

Billing will be established upon receipt of Customer's payment plan schedule as
per Customer's procedures and guidelines.

Audit processing that results in an additional premium will be billed as per
Customer's procedures and guidelines.

DISBURSEMENTS

IMS will provide return premium processing as per Customer's established
guidelines and procedures. Disbursement processing will include the processing
and issuance of the return premium and the bank reconciliation. IMS will also
generate and transmit daily "positive pay" files to IMS' banking partners on
IMS' disbursement bank accounts.

1099 REPORTING

IMS' "Producer System" complies with all 1099 reporting requirements. Using the
Agent file component of the Producer System, all information relative to an
Agent is captured including tax identification number and social security
number. This component will act as a control file and provides the necessary
data to generate both the Agent statements as well as the 1099 reports.

PRODUCER

"I.T.'s Producer System" will manage detailed information for all Agents,
providing access to data ranging from the general--name, address, and Agent
number, to the specific--commission rates, products sold, and license
appointments. All vital Agent premium data needed to create month-end premium
production reports, Agent checks, and Agent statements in both detail and
summary is integrated with the month-end system.

IMS will tracks all contracts by Agents and product, providing Customer with
both effective and expiration dates of those contracts

The I.T.'s Producer System provides IMS with the capability to set up and
maintain override commissions for any Agent desiring that arrangement. In
addition, an Agent's relationship file will allow Customer to request IMS
assign Agents to a general or reporting Agent. The I.T.'s System also contains
all the tables that run the Producer System so IMS can add new sales
representatives, enter commission rates, or add a new Agent type at the request
of Customer.

                                      17
<PAGE>   104

16.      USER DOCUMENTATION                NO CHANGE FOR THE CYBERCOMP PROGRAM.

To meet Customer's requirements for clear concise user documentation to support
its Agents, IMS will provide a reference guide, which will be available through
email, and additional online reference information.

The "Cybercomp Workers Compensation Reference Guide" will include the
following:

         o    Introduction

         o    System overview

         o    Getting started

The additional information that will be available online will include:

         o    Underwriting responsibilities of the Agent

         o    New quote

         o    Unbound quotes

         o    Problem reporting

         o    Support site

         o    Questions and answers

In addition to the reference materials defined above, IMS will provide access
to Customer's Cybercomp Underwriting/ Agent Manual online. To ensure that the
information remains current in these online Cybercomp manuals, Customer will
promptly provide revised versions of the Cybercomp Underwriting/Agents manual
to IMS. Once this information is received by IMS, a service request will be
generated to archive the old version and provide the Agents with access to a
new online version as well as prior versions.

17.      IT ENVIRONMENT                    NO CHANGE FOR THE CYBERCOMP PROGRAM.

IMS will initially facilitate the Insurance Administration Services on an IBM
AS/400 model 9406-650 having 4GB of main storage and over 373GB of on-line
storage. Additional peripherals will initially include a 3995 model C42 Optical
Tower, one IBM 3590 tape drive, one IBM 9348 1/2 inch reel tape drive, and one
IBM 6141 ASCII Workstation Controller which houses eight ports dedicated for
dial up access. Additionally, a second AS/400 is used for programming and
testing of enhancements. The AS/400's currently run IBM OS/400 Version 4,
Release 2 as the operating system. The system has averaged over 99%
availability for two consecutive years. Furthermore, greater than 98% of
transactions are completing in less than two seconds.

IMS has Local Area Network equipment consisting of more than sixty Microsoft NT
v4.0 servers running on rack mounted Compaq Proliant server class computers and
one RS6000. These servers are connected to the network backbone, and eventually
to the user workstations, via a combination of Token Ring and 100BaseT. The
network infrastructure utilizes 3Com's LanPlex Switch as the collapsed
backbone, with Superstack II hubs used for workstation access. Workstations are
Compaq Pentium based computers running Microsoft Windows 95, 98, or NT as its
operating system. The typical user workstation is installed with Microsoft
Office 97, Microsoft Outlook, and IBM Client Access 5250 emulation connecting
to IMS' AS/400 via TCP/IP.

The servers on the IMS LAN run the full Microsoft BackOffice suite, including
Exchange that is used as the messaging server, and also as the repository for
e-mail and calendars. Other servers run NT/SQL, SMS, SNA, Internet Information
Server, ViewStar Imaging, and TASC COLD.

The PBX used by IMS is a state of the art Northern Telecom option 81c, which
includes advanced features such as Meridian Mail, Customer Controlled Routing,
and Meridian Link. There are over 1150 extensions in use currently.

                                      18
<PAGE>   105

The IMS data center ("Data Center") is protected by a 65KVA Toshiba UPS that
provides additional processing time of one half hour under full load in the
event of a commercial power failure at the main processing site. The UPS
running at 50% load has a battery life of over one-hour. IMS will be running
the UPS at approximately 40% capacity, thereby increasing the battery life to
well over one hour in the event of a power failure. All equipment in the Data
Center, including AS/400, LAN, and phone equipment, will be protected by this
UPS. Additionally, during non-prime time, there is a backup of the entire
system performed. The data tapes associated with both the LAN and AS/400 are
stored with an off-site data security vendor. IMS data processing sites
currently have disaster recovery plans, which are tested either annually or
BI-annually. When IMS executed its last mock disaster in January 1999, IMS was
able to restore all applications and data files and establish remote
connectivity within 16 hours at the IBM Business Recovery Systems hot site in
New York.

Policy, correspondence, and report printing functions are performed on four
Xerox 4890 Color Laser printers, each rated at 92 pages per minute. These
printers provide spot color capability for professional appearance of printed
output. The Xerox printers are connected to a Barr system via bus and tag
cables, and in turn, the Barr system is connected to the AS/400 via twinax
cable.

18.      SECURITY REQUIREMENTS             NO CHANGE FOR THE CYBERCOMP PROGRAM.

IMS' current "Point of Sale Internet Solution" has a "Security Model" that
includes authentication, access control, privacy, and data integrity for the
web sites and applications. The Security Model use digital certificates,
encryption, user ids and passwords to prevent unauthorized individuals from
accessing the IMS' systems.

Using Secure Socket Layer ("SSL") technology, IMS will provide encryption and
decryption of both request and response data being passed across network
connections, such as Agent information, policy data and credit card
information.

IMS is certified with the IBM e-business "Mark" Program. The "Mark" tells your
customers and business partners that Customer is using IBM products and
services as part of your e-business solution. It further communicates that IBM
products and services can help make a site more scalable, reliable and secure.

APPLICATION SECURITY

The security component allows access levels to be set for each user of IMS'
Workers Compensation system. When a user signs on, the system uses
behind-the-scenes processing to determine proper access levels. Depending on
the security level, a user can only access certain menu options and functions.

IMS' Workers Compensation system requires a valid user ID and password before
access is granted to the system. This access is granted in varying degrees.

The security component not only allows control over which functions an
associate can access, but it also defines access levels within each functional
component. In some instances, the user may view but not make any changes to
certain options or functions while, in others, the user cannot view certain
options or functions at all.

The security administrator can change access levels as needed. The ability to
add, change, and delete security accesses is available at any time.

19.      SYSTEMS INTERFACES

CLEARANCE SYSTEM INTERFACE -- This interface will be designed to ensure that no
two Customer Agents are competing for the same prospect. For new business
submissions via the Cybercomp system, a call will be made to the Customer host
to determine if the account already exists under the same product offering. The
results of the search will be returned to the Cybercomp system to allow the
Agent to continue the submissions or notify the Agent that the account is being
serviced by another appointed agency associated with Customer.

                                      19
<PAGE>   106

An update to the record in the Customer's system will be made at defined points
within the submission cycle and at policy renewal.

FARE SYSTEM INTERFACE -- Premium file and Claims file sent monthly to Customer.
This file layout has been provided to IMS for our review and analysis. IMS will
provide this capability.

CLAIMS TPA INTERFACE -- This interface will allow Claims TPA's selected by
Customer to submit monthly data files to IMS for processing into the IMS
Workers Compensation system. The claims data fed to the IMS system will be used
to provide the required information to Customer in the monthly FARE, creation
of policy loss run reports and for any required statutory reporting
requirements.

20.      ADDITIONAL SUPPORT FUNCTIONS      NO CHANGE FOR THE CYBERCOMP PROGRAM.

In addition to Internet access, a Customer-specific toll-free number,
interactive voice response ("IVR") and voice mail will be used to service
Customer Agents and insureds. The IVR provides support for quick inquiries with
responses available for frequently asked questions, voicemail, access to the
IMS' customer service and underwriting department, and the IMS' IS support
center.

Information available through IVR includes:

         o    Last payment received

         o    Outstanding balance on account

         o    Next payment due

         o    Renewal payment due

         o    Cancellation reason code

         o    Cancellation date

         o    Non-renewal reason code

         o    Screen specifications

PROTOTYPE

The Internet screens will be designed as a mirror image of the Customer's
existing (immediately prior to the execution of the Agreement) Cybercomp
Workers Compensation Internet solution. Upon completion of the Detail Business
Requirements document IMS will provide for Customer's approval, revised screens
that incorporate any process/workflow improvements to streamline the data entry
process by the Agent.

RESOURCES                                  NO CHANGE FOR THE CYBERCOMP PROGRAM.

IMS will provide the internal qualified resources required for the overall
management of the Insurance Administration Services to be provided to Customer
under this Agreement. IMS will identify the key employees prior to
implementation of the applicable Rollout Plan. If additional resources are
necessary, IMS will provide those resources as the Insurance Administration
Services to be provided Customer under this Agreement reasonably dictate.

TYPES OF RESOURCES

INFORMATION SERVICES

Account Manager

The Account Manager assigned to this position will provide overall technical
management and have accountability for all technical responsibilities
associated with the Customer account. The Account Manager will determine
project prioritization within and across product lines and set project
direction from analysis through implementation. In addition, the account
manager will provide assistance and direction in utilizing the established
system development methodology for systems analysis and conceptual design. This
individual will also assume management responsibility for resource allocation,
provide front-line leadership to associates, assist in career development
planning and conduct performance reviews.

Business Systems Analyst

The Business Systems Analyst will be responsible for establishing and
maintaining relationships at the product level. The Account Manager often has
expertise in more than one product line and uses that

                                      20
<PAGE>   107

knowledge to participate in project prioritization within Customer's
specialized product lines. A Business Systems Analyst will utilize the
established system development methodology during systems analysis and
conceptual design to prepare and present project deliverables. He or she will
be expected to establish and maintain effective communications, frequently
acting as a liaison with both business analysts representing the Customer and
systems analysts representing the IMS development center, during the project
life cycle.

Systems Analyst AS400 / RPG

A System Analyst will be responsible for the analysis, design, construction,
testing and implementation of computer based programs/systems. He or she will
be expected to meet business/project objectives and conform to technical
standards and conventions. The System Analyst will provide programming support
to both end users and IS associates. He or she will also be responsible for
researching and correcting program and system failures.

Forms Specialist

The Forms Specialist will be responsible for developing and administering
product support in the form of user and system documentation for all software
applications. This responsibility will include creating user guides, on-line
assistance, and other documentation whenever necessary. In addition, the Forms
Specialist will perform the tasks associated with the electronic design, setup,
and support of all insurance-related forms.

End User Support

The End User Support will provide varying levels of end user support for
hardware, software, telephony, and other computer related equipment as
required. He or she will be expected to have the ability to determine the
complexity of a problem and either take corrective action or ensure that any
additional resources necessary to correct the problem are notified.

Network Telecommunication Engineer

The Network Telecom Engineer will be responsible for investigating any issues
associated with the design, testing, integration and implementation of
computer, LAN/WAN, telephony equipment and all associated computer operating
systems. In further support of the corporate hardware and software
configuration, he or she will be capable of performing the job functions
related to capacity planning, performance tuning, and systems production
support.

AS/400 Operations

The AS/400 Operator will be responsible for the processes required to run
production jobs (daily, weekly, and monthly), print various reports, process
data transmissions, and run systems back-ups. He or she also will process
special requests such as data restores, vary devices on/off, and emergency
print jobs.

CUSTOMER SERVICE

Commercial Lines Manager

The Commercial Lines Manager will be required to provide leadership for the
policy and call center administration unit and has primary accountability for
daily operations. The Commercial Lines Manager will make recommendations
relative to business plan strategies but will be primarily focused on the
execution of the plan as approved by senior management of IMS. Additionally,
the Commercial Lines Manager will have direct responsibility for IMS
supervisors and subordinate associates and will have shared responsibility for
the profit and loss experience of the department. The Commercial Lines Manager
will also assist in establishing and monitoring the performance objectives that
support the goals of IMS and Customer.

Customer Service Supervisor

The Customer Service Supervisor will provide front-line leadership to IMS
commercial line associates on a daily basis by providing assistance and
direction in career development. Although the Customer Service Supervisor has
input regarding budget planning, his or her primary role will be to carryout
business plan objectives, manage the allocation of resources and respond to and
implement the directives from IMS management.

                                      21
<PAGE>   108

Product Coordinator

The Product Coordinator will be responsible for working closely with the
customer service representatives and IMS management, to provide the technical
training required to support Customer's underwriting guidelines and rules. The
Product Coordinator will ensure that everyone associated with the Cybercomp
program is aware of system changes or enhancements. Other job responsibilities
associated with the Product Coordinator position include: maintaining thorough
product knowledge and being able to relate that knowledge to the processing
functions; expertise in training department personnel; and monitoring the
quality of service that will be provided to Customer.

Underwriter

An Underwriter will have experience and be capable of selecting and identifying
new and renewal at-risk business. The Underwriter will be able to apply
Customer's underwriting philosophy and standards when making decisions
regarding acceptability of a risk. The Underwriter will also be required to
develop and maintain a productive working relationship with Customer's Agents
and IMS' underwriting management staff. Ensuring acceptable time service
standards are met relative to processing new business, renewals, audits, change
endorsements and cancellations will be part of the Underwriters' overall
responsibilities.

Test Analyst

The Test Analyst will provide technical support for major system test projects,
enhancements and corrections. The Test Analyst will have a level of technical
competence that will allow him or her to understand new requirements and
develop specific test plans that will support the proposed changes. In
addition, the Test Analyst will be required to execute a test plan and compare
the results with the requirements to determine if application is functioning as
intended. The Test Analyst will be responsible for notifying IMS' IS department
of any discrepancies discovered during the testing phase and will track the
progress of a project and provide IMS management with regular status reports.

Quality Control Representative

The Quality Control Representative will be responsible for correcting policies
that are listed on the Daily Error Report. The Quality Control Representative
will keep detailed record of error trends, and recommend and coordinate
appropriate action with the Product Coordinator and IMS management.
Additionally, the Quality Control Representative will perform quality reviews
on all functions in the IMS customer service department and will analyze and
process internal measurement reports on a daily, weekly and monthly basis.

Customer Service Representative

IMS will provide Customer with Customer Service Representatives ("CSR") that
will of handle the Agents inquiries regarding Customer's policies, or the
occasional policyholder, in a courteous, positive and professional manner. Each
CSR position is monitored to ensure time service standards, quality,
productivity, telephone availability and call time service standards are being
met. The CSR will also be responsible for maintaining an in-depth knowledge of
the rules and procedures for processing all commercial line functions.

Accounting

IMS will provide an Accounting Manager for Customer who is responsible for
sign-off of all accounting reconciliation weekly and monthly financial reports.
IMS will consult with Customer on the qualifications and experience
requirements of the IMS Accounting Manager Candidate.

Regulatory/Compliance Analyst

IMS will provide a Regulatory/Compliance Analyst for Customer within six (6)
months from the effective date of the Agreement. He or she will be expected to
establish and maintain effective communication, acting as a liaison with both
Customer's Compliance Manager and IMS Operations and Development Teams to
ensure implementation of regulatory requirements as provided by Customer.

IMS Internal Audit Executive

IMS will, from time to time, involve its internal Audit Executive to review
IMS' compliance of Customer's pre-defined policies and procedures.

Premium Audit Analyst

The premium Audit Analyst will oversee the premium audit workflow to ensure
audits are ordered on a timely basis, audit response is received from audit
vendor within established timeframe, and instruct

                                      22
<PAGE>   109

action on policy based on agreed upon guidelines established between IMS and
Customer. He or she will communicate directly with audit vendor, Customer's
audit manager, agents and insureds where necessary.

IMPLEMENTATION APPROACH

NEW IMPLEMENTATION

The implementation of the applicable Rollout Plan will begin once Customer has
agreed to the terms of the Workers Compensation proposal. IMS will implement
new business processing for Customer's Cybercomp program for all NCCI states
and the Independent Bureau states simultaneously. The above includes the
required interfaces, reporting, forms and statistical reporting.

IMPLEMENTATION SERVICES                    NO CHANGE FOR THE CYBERCOMP PROGRAM.

The IMS Implementation Team will provide product support and strategic
implementation services to Customer. The Implementation Team will provide the
following:

         o   Project management services

             Project Planning

             1.   Definition of work requirements

             2.   Definition of quantity and quality of work

             3.   Definition of resources needed

             Project Monitoring

             1.   Tracking progress

             2.   Comparing actual outcome to estimated outcome

             3.   Analyzing impact

             4.   Making adjustments

         o   Implementation approach

         o   Electronic commerce strategies for property and casualty
             insurance companies

         o   Electronic commerce application and system architecture
             development

         o   Data Center services

         o   Technical support services

ENHANCEMENTS/CHANGE CONTROL

Requests for changes and technical assistance will be handled through the IMS'
"Systems Development Life Cycle", as referenced in the Agreement. Customer will
submit a change request form to the IMS' Account Manager identifying the change
or technical assistance required. The IMS Account Manager will develop a Quote
Sheet. The Quote Sheet will include initial time, cost estimates and initial
yProject Plan. Once approval is received from Customer on the Quote Sheet, the
IMS' Systems Analyst will perform design, development, and testing.

TRAINING                                   NO CHANGE FOR THE CYBERCOMP PROGRAM.

To assist in educating the Agents on the use of the Internet interface and the
IMS base system, IMS will provide two seminars in the first year of operation
each at a single site. After the first year of the Agreement, a single seminar
will be provided at the request of Customer. IMS' preferred approach to

                                      23
<PAGE>   110

training is to "train the trainer." IMS anticipates that the Customer field
Vice Presidents would most likely be the individuals with whom IMS would train
in the above referenced seminars.

In addition to the above referenced training, if Customer chooses to license
the Brio(R) reporting tool, IMS will provide additional training services for
this product on a time and materials basis.

TECHNICAL SUPPORT                          NO CHANGE FOR THE CYBERCOMP PROGRAM.

CUSTOMER SERVICE HOURS OF OPERATION:

Monday through Friday, 8:00 a.m. to 8:00 p.m., Eastern Standard Daylight Time.
Arrangements can be made to accommodate extended hours of operation. Exclusions
from this time are IMS' Corporate Holidays. These holidays are:

         o    New Year's Day

         o    Independence Day

         o    Labor Day

         o    Thanksgiving Day

         o    Day after Thanksgiving

         o    Christmas Eve

         o    Christmas Day

In the event the holiday falls on a weekend IMS will transfer the holiday to a
working day prior to or after the holiday.

                                      24
<PAGE>   111

                        IMS BPO SERVICE STANDARD LEVELS

In accordance with ARTICLE X (A) (D) of the Agreement, the following are the
"Service Standard Levels" that are applicable to the Workers Compensation
program (Authorized Line of Business):

HOURS OF OPERATION

The commercial lines customer service department will provide service for
Customer, its Agents and insureds Monday through Friday 8:00 AM to 8:00 PM,
EST.

TELEPHONE SERVICE

IMS will respond to telephone inquiries from Customer Agents and insureds at a
Service Level of eighty-five (85%) of all calls answered within twenty-five
(25) seconds or less.

A Meridian Total Service Factor ("TSF") Report will be provided to Customer
every Monday (unless that Monday is a IMS corporate holiday, in which case the
TSF report will be provided the next Business Day) for the previous weeks call
activity.

TSF is calculated by (Calls Answered + Calls Abandoned + Direct Calls In) - (#
Answered after threshold * # Abandoned after threshold) x 100 = divide answer
by total of first set of ( ).

PROCESSING

The following standards apply to policy processing functions performed by the
IMS Operations Center:

         o    Non-electronic Quotes    one (1) Business Days

         o    Cash Receipts            one (1) Business Days

         o    New Business             fourteen (14) Business Days

         o    Renewals                 ten (10) Business Days or within
                                       established state regulatory guidelines,
                                       whichever is less

         o    Non-renewals             ten (10) Business Days or within
                                       established state regulatory guidelines,
                                       whichever is less

         o    Endorsements             twenty (20) Business Days

         o    Cancellations            ten (10) Business Days

         o    Reinstatements           five (5) Business Days

         o    Audit Billing            twenty (20) Business Days

         o    Correspondence           five (5) Business Days

         o    Bureau Criticisms        fifteen (15) Business Days from IMS'
                                       receipt of the criticism, or as required
                                       by the regulatory entity, a response
                                       will be provided to regulatory entity

Commission checks will be issued by the fifteenth (15th) calendar day of each
month for commission due on policies from the prior month.

REGULATORY CHANGES: Fees to complete Regulatory Changes are included in the
Insurance Administration Services pricing. IMS will complete all regulatory
changes within the compliance date assuming IMS receives a minimum thirty (30)
calendar day prior written notification from Customer. In the event that IMS
receives less than thirty (30) calendar days written notification and/or the
effort is extraordinary, IMS will make every reasonable effort to complete the
changes within the compliance date. Within six (6) months from the effective
date of the Agreement, IMS will consult with Customer to identify regulatory
changes that affect Customer's business and agree on the process required to
comply with the affected changes.

SYSTEM ENHANCEMENTS LESS THAN 40 HOURS: Fees to complete minor enhancements are
included within the Insurance Administrative Services pricing. An initial scope
assessment, with an approximate estimate of hours, will be provided to Customer
within ten (10) Business Days from the date IMS receives

                                      25
<PAGE>   112

notification of an enhancement request. Based on signed approval of Detailed
Business Requirements, IMS will proceed with completion of the enhancement.

SYSTEM ENHANCEMENTS GREATER THAN 40 HOURS: Fees to complete sizable
enhancements are at time and materials rate. An initial scope assessment, with
an approximate estimate of hours, will be provided to Customer within ten (10)
Business Days from the date IMS receives notification of an enhancement
request. For projects greater than two hundred (200) hours, IMS will provide an
estimate at the completion of Detailed Business Requirements and give Customer
the option of a "fixed" price project. In either case, IMS will proceed based
on signed approval of Detailed Business Requirements.

DATA CENTER

IMS' Data Center goal for "up time" is 99%. It is IMS' goal to provide this
standard for Customer.

The system availability is from 4:00 AM - 2:00 AM EST (22 hours).

NOTE: ALL SERVICE STANDARD LEVELS ARE MEASURED IN BUSINESS DAYS (UNLESS
OTHERWISE NOTED IN THE EXHIBIT) FROM THE DATE AN ERROR FREE INTERNET
TRANSACTION OR MAILED-IN OR FAXED DOCUMENT IS RECEIVED.

                                      26

<PAGE>   113

                                   APPENDIX A

                       BUSINESS OWNERS STATE ROLL-OUT PLAN

              NOTE: Dates will be adjusted based on the start time*

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.
<PAGE>   114

                                   APPENDIX B

                          UMBRELLA STATE ROLL-OUT PLAN

             NOTE: Dates will be adjusted based on the start time*

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

<PAGE>   115
                                   APPENDIX C

                      WORKERS' COMPENSATION ROLL-OUT PLAN

             NOTE: Dates will be adjusted based on the start time*

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.

<PAGE>   116

                                   APPENDIX D

                            CYBERCHOICE (BOP) PROGRAM

1.       INTERNET FEATURE REQUIREMENTS:

         o   Access and Data Security

         o   Quote Process

         o   User Controlled Editing to Establish Distinct Underwriting
             Rules

         o   Internet Renewal

         o   Internet Endorsement Process

         o   On Line Clearing and Reserving of new accounts through the
             Customer's Clearance System

         o   Loss Runs

         o   Installment Invoice

         o   Underwriting Data Validation Interfaces (ISO, Marshall Swift,
             Hartford Steam)

2.       ACTUARIAL & COMPLIANCE REQUIREMENTS:

         o   Loading of Rate Files

         o   Use of  Customer Rates/Loss Cost Multipliers

         o   Compliance of Statutory Reporting

         o   Support state-specific calls based on the data provided
             through FARE.

         o   Quarterly Catastrophe Modeling Interface

3.       FINANCIAL & ACCOUNTING REQUIREMENTS:

         o   Cash Processing (EFT, Credit Card, ACH Debit)

         o   Receivables Processing

         o   Premium and Commissions Accounting

         o   Generation of Commission Statements and Checks

         o   Internet Premium Finance Quoting interface

         o   Monthly transmission of Premiums, Claims and Reinsurance
             activity to FARE

         o   Weekly Production Reporting System

4.       UNDERWRITING REQUIREMENTS:

         o   Cancellation Processing

         o   Reinsurance Processing

         o   Exception Processing guidelines for submissions that fall
             outside the underwriting guidelines

5.       CLAIMS REQUIREMENTS:

         o   Claims Data Management

         o   Aggregate Claims Tracking

         o   On Line access to policy coverage information to the claims
             TPA's

         o   Data for calculating claims TPA's processing fees

6.       AGENCY/AUDIT/LOSS CONTROL REQUIREMENTS:

         o   Agency Management Reporting

         o   Audit/Inspection Processing/Vendor Management

         o   Standard Reports currently available from IMS

7.       INFRASTRUCTURE REQUIREMENTS:

         o   Data Communications Line connecting Customer to IMS' network

         o   Ad Hoc Reporting Tool and Data Warehouse

         o   Agency and Insured data interfaces to the Point Click and Bind
             portal system

         o   Testing of All Functions with Customer's Data

         o   Controlled Environment with Customer Approval and Sign-Off of
             Test Results

<PAGE>   117

         o   Document Packaging

         o   Use of Customer's Company Specific Policy Forms

         o   Customized Output with Customer Specific Logo on Forms

                           COMMERCIAL UMBRELLA PROGRAM

1.       INTERNET FEATURE REQUIREMENTS:

         o   Access and Data Security

         o   Quote Process

         o   User Controlled Editing to Establish Distinct Underwriting
             Rules

         o   Internet Renewal

         o   Internet Endorsement Process

         o   On Line Clearing and Reserving of new accounts through the
             Customer's Clearance System

         o   Loss Runs

         o   Installment Invoice

2.       ACTUARIAL & COMPLIANCE REQUIREMENTS:

         o   Loading of Rate Files

         o   Use of Customer's Rates/Loss Cost Multipliers

3.       FINANCIAL & ACCOUNTING REQUIREMENTS:

         o   Cash Processing (EFT, Credit Card, ACH Debit)

         o   Receivables Processing

         o   Premium and Commissions Accounting

         o   Generation of Commission Statements and Checks

         o   Internet Premium Finance Quoting interface

         o   Monthly Premium Interface to Wins, for satisfying FARE
             requirements

         o   Weekly Production Reporting System

4.       UNDERWRITING REQUIREMENTS:

         o   Cancellation Processing

         o   Reinsurance Processing

         o   Exception Processing guidelines for submissions that fall
             outside the underwriting guidelines

5.       CLAIMS REQUIREMENTS:

         o   Monthly Interface to Wins, for satisfying policy coverage
             information to claims TPAS

6.       AGENCY/AUDIT/LOSS CONTROL REQUIREMENTS:

         o   Agency Management Reporting

         o   Standard Reports currently available from IMS

7.       INFRASTRUCTURE REQUIREMENTS:

         o   Ad Hoc Reporting Tool and Data Warehouse

         o   Agency and Insured data interfaces to the Point Click and Bind
             portal system 0

         o   Testing of All Functions with Customer's Data

         o   Controlled Environment with Customer's Approval and Sign-Off
             of Test Results

         o   Document Packaging

         o   Use of Customer's Company Specific Policy Forms

         o   Customized Output with Customer Specific Logo on Forms

<PAGE>   118

                          WORKERS COMPENSATION PROGRAM

1.       INTERNET FEATURE REQUIREMENTS:

         o   Access and Data Security

         o   Quote Process

         o   User Controlled Editing to Establish Distinct Underwriting
             Rules

         o   Internet Renewal

         o   Internet Endorsement Process

         o   On Line Clearing and Reserving of new accounts through the
             Customer's Clearance System

         o   Loss Runs

         o   Installment Invoice

         o   Dividend Plan  Rules

2.       ACTUARIAL & COMPLIANCE REQUIREMENTS:

         o   Loading of Rate Files

         o   Use of  Customer's Rates/Loss Cost Multipliers

         o   Compliance of Statutory Reporting

         o   Support state-specific calls based on the data provided through
             FARE.

3.       FINANCIAL & ACCOUNTING REQUIREMENTS:

         o   Cash Processing (EFT, Credit Card, ACH Debit)

         o   Receivables Processing

         o   Premium and Commissions Accounting

         o   Generation of Commission Statements and Checks

         o   Internet Premium Finance Quoting interface

         o   Automated Payroll Payment interface

         o   Monthly transmission of Premiums, Claims and Reinsurance
             activity to FARE

         o   Weekly Production Reporting System

         o   Dividend Deferral Process

4.       UNDERWRITING REQUIREMENTS:

         o   Cancellation Processing

         o   Reinsurance Processing

         o   Exception Processing guidelines for submissions that fall
             outside the underwriting guidelines

         o   Underwriting Account Data Validation Interfaces (NCCI, ETC.)

5.       CLAIMS REQUIREMENTS:

         o   Claims Data Management

         o   On Line access to policy coverage information to the claims
             TPA's

         o   Data for calculating claims TPA's processing fees

6.       AGENCY/AUDIT/LOSS CONTROL REQUIREMENTS:

         o   Agency Management Reporting

         o   Audit/Inspection Processing/Vendor Management

         o   Standard Reports currently available from IMS

7.       INFRASTRUCTURE REQUIREMENTS:

         o   Ad Hoc Reporting Tool and Data Warehouse

         o   Agency and Insured data interfaces to the Point Click and Bind
             portal system

         o   Testing of All Functions with Customer's Data

         o   Controlled Environment with Customer's Approval and Sign-Off of
             Test Results

         o   Document Packaging

         o   Use of Customer's Company Specific Policy Forms

         o   Customized Output with Customer Specific Logo on Forms

<PAGE>   119

                                   APPENDIX E

                      CUSTOMER'S REQUIREMENTS DOCUMENTATION

CUSTOMER'S CYBERCOMP (WC) REQUIREMENTS DOCUMENTATION

--------------------------------------------------------------------------------
ITEM #   ITEM DESCRIPTION
--------------------------------------------------------------------------------
1        Provide access to Reliance National's Partner Connections website
--------------------------------------------------------------------------------
2        Provide current WC underwriting procedures and workflows (new business,
         renewals, endorsements, quoting)
--------------------------------------------------------------------------------
3        Provide current WC accounting procedures and workflows (Audit
         processing, Billing/collections, commission processing, reinsurance)
--------------------------------------------------------------------------------
4        Provide proposed Claims TPA interface file layout
--------------------------------------------------------------------------------
5        Provide coverage verification data requirements
--------------------------------------------------------------------------------
6        Provide TPA fee calculation data requirements
--------------------------------------------------------------------------------
7        Provide Clearance file layout requirements
--------------------------------------------------------------------------------
8        Provide FARE file layout requirements
--------------------------------------------------------------------------------
9        Provide Underwriting rules and guidelines by state
--------------------------------------------------------------------------------
10       Provide CyberComp specific forms
--------------------------------------------------------------------------------
11       Provide data dump from existing WC system
--------------------------------------------------------------------------------
12       Provide WC Claims TPA data management procedures and workflow
--------------------------------------------------------------------------------
13       Provide management reporting requirements w/data definitions for
         required data
--------------------------------------------------------------------------------
14       Provide current Audit processing workflows and procedures
--------------------------------------------------------------------------------
15       Provide Underwriting workflow and procedures
--------------------------------------------------------------------------------
16       Provide TPA selection criteria and data requirements for TPA monthly
         report
--------------------------------------------------------------------------------
17       Provide Dividend processing report formats
--------------------------------------------------------------------------------
18       Provide Endorsement pages for Dividend plans
--------------------------------------------------------------------------------
19       Provide copies of the dividend disclosure statements for all 10
         dividend states
--------------------------------------------------------------------------------
20       Provide multi-state processing requirements for dividend processing
--------------------------------------------------------------------------------
21       Provide mailing of receipients copies specifications
--------------------------------------------------------------------------------
22       Decide if the 1st of each month is acceptable for installment due dates
--------------------------------------------------------------------------------
23       Provide requirements for self reporting/CRI interface
--------------------------------------------------------------------------------
24       Provide requirements for dividend referrals
--------------------------------------------------------------------------------
25       Provide requirements for setting up sub-producers via Kokopelli or
         manual
--------------------------------------------------------------------------------
26       Provide requirements for premium finance interface
--------------------------------------------------------------------------------
27       Provide requirements on need to differentiate primary and secondary
         state licenses.
--------------------------------------------------------------------------------
28       Provide Reinsurance Treaty Rules
--------------------------------------------------------------------------------

<PAGE>   120

CUSTOMER CYBERCHOICE (BOP) REQUIREMENTS DOCUMENTATION

--------------------------------------------------------------------------------
ITEM #   ITEM DESCRIPTION
--------------------------------------------------------------------------------
1        Provide underwriting manuals and guidelines
--------------------------------------------------------------------------------
2        Identify state forms refiling requirements for OCR lines being added
--------------------------------------------------------------------------------
3        Provide state specific and generic filed forms
--------------------------------------------------------------------------------
4        Provide copy of Reliance Stat Plan
--------------------------------------------------------------------------------
5        Annual statement line by coverage
--------------------------------------------------------------------------------
6        Binding requirements
--------------------------------------------------------------------------------
7        Standard Anti-Fraud wording
--------------------------------------------------------------------------------
8        Endorsement business rules and processing
--------------------------------------------------------------------------------
9        Cancellation business rules and processing - Same as Workers Comp
--------------------------------------------------------------------------------
10       Reinstatement business rules and processing - Same as Workers Comp
--------------------------------------------------------------------------------
11       Audit business rules and processing - Same as Workers Comp
--------------------------------------------------------------------------------
12       Inspection business rules and processing
--------------------------------------------------------------------------------
13       Provide Cyberbop specific requirements for standard forms and
         distribution
--------------------------------------------------------------------------------
14       Determine legality issues surrounding imaging of documents and
         destroying original
--------------------------------------------------------------------------------
15       Provide data requirements for any data not captured in the 15 file
         layouts used by Brio
--------------------------------------------------------------------------------
16       Provide Loss runs data requirements
--------------------------------------------------------------------------------
17       Provide RMS CAT model file layout
--------------------------------------------------------------------------------
18       Provide TSF calculation for phone service standards monitoring
--------------------------------------------------------------------------------
19       Provide service standards for system changes
--------------------------------------------------------------------------------
20       Provide state specific requirements for credit card processing
--------------------------------------------------------------------------------
21       Provide commission processing requirements
--------------------------------------------------------------------------------
22       Provide FARE interface file layout
--------------------------------------------------------------------------------
23       Provide Claims interface file layout
--------------------------------------------------------------------------------
24       Provide Claims coverage verification requirements
--------------------------------------------------------------------------------
25       Provide Clearance file layout requirements
--------------------------------------------------------------------------------
26       Provide TPA selection criteria and data requirements for TPA monthly
         report
--------------------------------------------------------------------------------
27       Research development of combined billing for BOP and Umbrella
--------------------------------------------------------------------------------
28       Provide documentation for schedule rating guidelines required by state
--------------------------------------------------------------------------------
29       Determine capability of printing policy in agents office and/or email
         to agent
--------------------------------------------------------------------------------
30       Provide mapping for zip code, region, territory for inflation guard
--------------------------------------------------------------------------------
31       Provide list of states that IMS has experienced difficulties with
         filing forms
--------------------------------------------------------------------------------
32       Provide rating algorithm and worksheets
--------------------------------------------------------------------------------
33       Research possibility of combining all products through document
         packaging
--------------------------------------------------------------------------------
34       Provide screen mock ups with field mapping along with underwriting
         edits
--------------------------------------------------------------------------------
35       Research feasibility of prohibiting binding of risks in areas under a
         moritirum
--------------------------------------------------------------------------------
36       Research commission level down to a class code level
--------------------------------------------------------------------------------
37       Provide IMS implementation timeframe for field specific on-line
         documentation
--------------------------------------------------------------------------------
38       Provide Renewal business rules and processing include mini and 3 yr
         template rules
--------------------------------------------------------------------------------
39       Provide class code mapping from Reliance codes to ISO to statistical
--------------------------------------------------------------------------------
40       Provide zip code to Reliance territory to ISO territory.
--------------------------------------------------------------------------------
41       Provide mapping information for Hartford Steam Boiler
--------------------------------------------------------------------------------
42       Provide business rules and processing for 3 year policies
--------------------------------------------------------------------------------
43       Provide BOP logo to be used on correspondence and screens
--------------------------------------------------------------------------------

<PAGE>   121

44       Provide cover letters for policy mailing and matrix for determining
         which letter to send
--------------------------------------------------------------------------------
45       Determine workflow for providing access to coverage form content for
         the Claims TPA's
--------------------------------------------------------------------------------
46       Provide file layouts and requirements for Marshall Swift interface
--------------------------------------------------------------------------------
47       Provide quote business rules and processing
--------------------------------------------------------------------------------
48       Research capability of credit card processing via Kokopelli front end
--------------------------------------------------------------------------------
49       Provide copies of cancellation and collection letter forms
--------------------------------------------------------------------------------
50       Provide Reinsurance Treaty Rules
--------------------------------------------------------------------------------

<PAGE>   122

CUSTOMER UMBRELLA REQUIREMENTS DOCUMENTATION

--------------------------------------------------------------------------------
ITEM #   ITEM DESCRIPTION
--------------------------------------------------------------------------------
1        Provide state rollout grouping
--------------------------------------------------------------------------------
2        Identify state forms refiling requirements for OCR lines being added
--------------------------------------------------------------------------------
3        Provide underwriting rules and guidelines
--------------------------------------------------------------------------------
4        Provide state specific and generic filed forms
--------------------------------------------------------------------------------
5        Provide Reliance class code listing
--------------------------------------------------------------------------------
6        Annual statement line of business by coverage
--------------------------------------------------------------------------------
7        Binding requirements and workflow
--------------------------------------------------------------------------------
8        Standard Anti-Fraud wording
--------------------------------------------------------------------------------
9        Endorsement business rules and workflow
--------------------------------------------------------------------------------
10       Cancellation business rules and workflow
--------------------------------------------------------------------------------
11       Reinstatement business rules and workflow
--------------------------------------------------------------------------------
12       Renewal business rules and workflow
--------------------------------------------------------------------------------
13       Validate bureau reporting requirements for ISO BOP underlying coverages
--------------------------------------------------------------------------------
14       Confirm required underlying limits for Auto liability - CSL
--------------------------------------------------------------------------------
15       Provide example of A Rate form
--------------------------------------------------------------------------------
16       Provide special data capture requirements for Incidential Professional
         Coverages
--------------------------------------------------------------------------------
17       Provide requirements for TBD policy dates on underlying policy
         information
--------------------------------------------------------------------------------
18       Determine legality issues surrounding imaging of documents and
         destroying original
--------------------------------------------------------------------------------
19       Provide TSF calculation for phone service standards monitoring
--------------------------------------------------------------------------------
20       Provide service standards for system changes
--------------------------------------------------------------------------------
21       Provide data requirements for any data not captured in the 15 file
         layouts used by Brio
--------------------------------------------------------------------------------
22       Provide state specific requirements for credit card processing
--------------------------------------------------------------------------------
23       Provide FARE interface requirements
--------------------------------------------------------------------------------
24       Provide Clearance file layout requirements
--------------------------------------------------------------------------------
25       Provide commission processing requirements
--------------------------------------------------------------------------------
26       Determine capability of printing policy in agents office and/or email
         to agent
--------------------------------------------------------------------------------
27       Provide list of states that IMS has experienced difficulties with
         filing forms
--------------------------------------------------------------------------------
28       Research possibility of combining all products through document
         packaging
--------------------------------------------------------------------------------
29       Research feasibility of prohibiting binding of risks in areas under a
         moritirum
--------------------------------------------------------------------------------
30       Research commission level down to a class code level
--------------------------------------------------------------------------------
31       Provide IMS implementation timeframe for field specific on-line
         documentation
--------------------------------------------------------------------------------
32       Provide copies of cancellation and cancellation letter forms
--------------------------------------------------------------------------------
33       Provide quote business rules and processing
--------------------------------------------------------------------------------
34       Provide Logos for correspondence and screens
--------------------------------------------------------------------------------
35       Provide rules for handling inforce business once IMS product live
--------------------------------------------------------------------------------
36       Provide decision on whether WINS or FARE interface will be used
--------------------------------------------------------------------------------
37       Provide Reinsurance Treaty Rules
--------------------------------------------------------------------------------

<PAGE>   123

                                   APPENDIX E

                      CUSTOMER'S REQUIREMENTS DOCUMENTATION

CUSTOMER'S CYBERCOMP (WC) REQUIREMENTS DOCUMENTATION

--------------------------------------------------------------------------------
ITEM #   ITEM DESCRIPTION
--------------------------------------------------------------------------------
1        Provide access to Reliance National's Partner Connections website
--------------------------------------------------------------------------------
2        Provide current WC underwriting procedures and workflows (new business,
         renewals, endorsements, quoting)
--------------------------------------------------------------------------------
3        Provide current WC accounting procedures and workflows (Audit
         processing, Billing/collections, commission processing, reinsurance)
--------------------------------------------------------------------------------
4        Provide proposed Claims TPA interface file layout
--------------------------------------------------------------------------------
5        Provide coverage verification data requirements
--------------------------------------------------------------------------------
6        Provide TPA fee calculation data requirements
--------------------------------------------------------------------------------
7        Provide Clearance file layout requirements
--------------------------------------------------------------------------------
8        Provide FARE file layout requirements
--------------------------------------------------------------------------------
9        Provide Underwriting rules and guidelines by state
--------------------------------------------------------------------------------
10       Provide CyberComp specific forms
--------------------------------------------------------------------------------
11       Provide data dump from existing WC system
--------------------------------------------------------------------------------
12       Provide WC Claims TPA data management procedures and workflow
--------------------------------------------------------------------------------
13       Provide management reporting requirements w/data definitions for
         required data
--------------------------------------------------------------------------------
14       Provide current Audit processing workflows and procedures
--------------------------------------------------------------------------------
15       Provide Underwriting workflow and procedures
--------------------------------------------------------------------------------
16       Provide TPA selection criteria and data requirements for TPA monthly
         report
--------------------------------------------------------------------------------
17       Provide Dividend processing report formats
--------------------------------------------------------------------------------
18       Provide Endorsement pages for Dividend plans
--------------------------------------------------------------------------------
19       Provide copies of the dividend disclosure statements for all 10
         dividend states
--------------------------------------------------------------------------------
20       Provide multi-state processing requirements for dividend processing
--------------------------------------------------------------------------------
21       Provide mailing of receipients copies specifications
--------------------------------------------------------------------------------
22       Decide if the 1st of each month is acceptable for installment due dates
--------------------------------------------------------------------------------
23       Provide requirements for self reporting/CRI interface
--------------------------------------------------------------------------------
24       Provide requirements for dividend referrals
--------------------------------------------------------------------------------
25       Provide requirements for setting up sub-producers via Kokopelli or
         manual
--------------------------------------------------------------------------------
26       Provide requirements for premium finance interface
--------------------------------------------------------------------------------
27       Provide requirements on need to differentiate primary and secondary
         state licenses.
--------------------------------------------------------------------------------
28       Provide Reinsurance Treaty Rules
--------------------------------------------------------------------------------

<PAGE>   124

CUSTOMER CYBERCHOICE (BOP) REQUIREMENTS DOCUMENTATION

--------------------------------------------------------------------------------
ITEM #   ITEM DESCRIPTION
--------------------------------------------------------------------------------
1        Provide underwriting manuals and guidelines
--------------------------------------------------------------------------------
2        Identify state forms refiling requirements for OCR lines being added
--------------------------------------------------------------------------------
3        Provide state specific and generic filed forms
--------------------------------------------------------------------------------
4        Provide copy of Reliance Stat Plan
--------------------------------------------------------------------------------
5        Annual statement line by coverage
--------------------------------------------------------------------------------
6        Binding requirements
--------------------------------------------------------------------------------
7        Standard Anti-Fraud wording
--------------------------------------------------------------------------------
8        Endorsement business rules and processing
--------------------------------------------------------------------------------
9        Cancellation business rules and processing - Same as Workers Comp
--------------------------------------------------------------------------------
10       Reinstatement business rules and processing - Same as Workers Comp
--------------------------------------------------------------------------------
11       Audit business rules and processing - Same as Workers Comp
--------------------------------------------------------------------------------
12       Inspection business rules and processing
--------------------------------------------------------------------------------
13       Provide Cyberbop specific requirements for standard forms and
         distribution
--------------------------------------------------------------------------------
14       Determine legality issues surrounding imaging of documents and
         destroying original
--------------------------------------------------------------------------------
15       Provide data requirements for any data not captured in the 15 file
         layouts used by Brio
--------------------------------------------------------------------------------
16       Provide Loss runs data requirements
--------------------------------------------------------------------------------
17       Provide RMS CAT model file layout
--------------------------------------------------------------------------------
18       Provide TSF calculation for phone service standards monitoring
--------------------------------------------------------------------------------
19       Provide service standards for system changes
--------------------------------------------------------------------------------
20       Provide state specific requirements for credit card processing
--------------------------------------------------------------------------------
21       Provide commission processing requirements
--------------------------------------------------------------------------------
22       Provide FARE interface file layout
--------------------------------------------------------------------------------
23       Provide Claims interface file layout
--------------------------------------------------------------------------------
24       Provide Claims coverage verification requirements
--------------------------------------------------------------------------------
25       Provide Clearance file layout requirements
--------------------------------------------------------------------------------
26       Provide TPA selection criteria and data requirements for TPA monthly
         report
--------------------------------------------------------------------------------
27       Research development of combined billing for BOP and Umbrella
--------------------------------------------------------------------------------
28       Provide documentation for schedule rating guidelines required by state
--------------------------------------------------------------------------------
29       Determine capability of printing policy in agents office and/or email
         to agent
--------------------------------------------------------------------------------
30       Provide mapping for zip code, region, territory for inflation guard
--------------------------------------------------------------------------------
31       Provide list of states that IMS has experienced difficulties with
         filingmforms
--------------------------------------------------------------------------------
32       Provide rating algorithm and worksheets
--------------------------------------------------------------------------------
33       Research possibility of combining all products through document
         packaging
--------------------------------------------------------------------------------
34       Provide screen mock ups with field mapping along with underwriting
         edits
--------------------------------------------------------------------------------
35       Research feasibility of prohibiting binding of risks in areas under a
         moritirum
--------------------------------------------------------------------------------
36       Research commission level down to a class code level
--------------------------------------------------------------------------------
37       Provide IMS implementation timeframe for field specific on-line
         documentation
--------------------------------------------------------------------------------
38       Provide Renewal business rules and processing include mini and 3 yr
         template rules
--------------------------------------------------------------------------------
39       Provide class code mapping from Reliance codes to ISO to statistical
--------------------------------------------------------------------------------
40       Provide zip code to Reliance territory to ISO territory.
--------------------------------------------------------------------------------
41       Provide mapping information for Hartford Steam Boiler
--------------------------------------------------------------------------------
42       Provide business rules and processing for 3 year policies
--------------------------------------------------------------------------------
43       Provide BOP logo to be used on correspondence and screens
--------------------------------------------------------------------------------

<PAGE>   125

44       Provide cover letters for policy mailing and matrix for determining
         which letter to send
--------------------------------------------------------------------------------
45       Determine workflow for providing access to coverage form content for
         the Claims TPA's
--------------------------------------------------------------------------------
46       Provide file layouts and requirements for Marshall Swift interface
--------------------------------------------------------------------------------
47       Provide quote business rules and processing
--------------------------------------------------------------------------------
48       Research capability of credit card processing via Kokopelli front end
--------------------------------------------------------------------------------
49       Provide copies of cancellation and collection letter forms
--------------------------------------------------------------------------------
50       Provide Reinsurance Treaty Rules
--------------------------------------------------------------------------------

<PAGE>   126

CUSTOMER UMBRELLA REQUIREMENTS DOCUMENTATION

--------------------------------------------------------------------------------
ITEM #   ITEM DESCRIPTION
--------------------------------------------------------------------------------
1        Provide state rollout grouping
--------------------------------------------------------------------------------
2        Identify state forms refiling requirements for OCR lines being added
--------------------------------------------------------------------------------
3        Provide underwriting rules and guidelines
--------------------------------------------------------------------------------
4        Provide state specific and generic filed forms
--------------------------------------------------------------------------------
5        Provide Reliance class code listing
--------------------------------------------------------------------------------
6        Annual statement line of business by coverage
--------------------------------------------------------------------------------
7        Binding requirements and workflow
--------------------------------------------------------------------------------
8        Standard Anti-Fraud wording
--------------------------------------------------------------------------------
9        Endorsement business rules and workflow
--------------------------------------------------------------------------------
10       Cancellation business rules and workflow
--------------------------------------------------------------------------------
11       Reinstatement business rules and workflow
--------------------------------------------------------------------------------
12       Renewal business rules and workflow
--------------------------------------------------------------------------------
13       Validate bureau reporting requirements for ISO BOP underlying coverages
--------------------------------------------------------------------------------
14       Confirm required underlying limits for Auto liability - CSL
--------------------------------------------------------------------------------
15       Provide example of A Rate form
--------------------------------------------------------------------------------
16       Provide special data capture requirements for Incidential Professional
         Coverages
--------------------------------------------------------------------------------
17       Provide requirements for TBD policy dates on underlying policy
         information
--------------------------------------------------------------------------------
18       Determine legality issues surrounding imaging of documents and
         destroying original
--------------------------------------------------------------------------------
19       Provide TSF calculation for phone service standards monitoring
--------------------------------------------------------------------------------
20       Provide service standards for system changes
--------------------------------------------------------------------------------
21       Provide data requirements for any data not captured in the 15 file
         layouts used by Brio
--------------------------------------------------------------------------------
22       Provide state specific requirements for credit card processing
--------------------------------------------------------------------------------
23       Provide FARE interface requirements
--------------------------------------------------------------------------------
24       Provide Clearance file layout requirements
--------------------------------------------------------------------------------
25       Provide commission processing requirements
--------------------------------------------------------------------------------
26       Determine capability of printing policy in agents office and/or email
         to agent
--------------------------------------------------------------------------------
27       Provide list of states that IMS has experienced difficulties with
         filing forms
--------------------------------------------------------------------------------
28       Research possibility of combining all products through document
         packaging
--------------------------------------------------------------------------------
29       Research feasibility of prohibiting binding of risks in areas under a
         moritirum
--------------------------------------------------------------------------------
30       Research commission level down to a class code level
--------------------------------------------------------------------------------
31       Provide IMS implementation timeframe for field specific on-line
         documentation
--------------------------------------------------------------------------------
32       Provide copies of cancellation and cancellation letter forms
--------------------------------------------------------------------------------
33       Provide quote business rules and processing
--------------------------------------------------------------------------------
34       Provide Logos for correspondence and screens
--------------------------------------------------------------------------------
35       Provide rules for handling inforce business once IMS product live
--------------------------------------------------------------------------------
36       Provide decision on whether WINS or FARE interface will be used
--------------------------------------------------------------------------------
37       Provide Reinsurance Treaty Rules
--------------------------------------------------------------------------------

<PAGE>   127

                                   APPENDIX F

               IMS SYSTEMS ENHANCEMENT LIQUIDATED DAMAGES SCHEDULE

<TABLE>
<CAPTION>

                                    Liquidated   Liquidated      Liquidated     Liquidated    Liquidated      Liquidated
    Project Size         Grace       Damages       Damages         Damages        Damages       Damages        Damages
   (Time & Cost)        Period       per day       per day         per day        per day       per day        per day
                        (weeks)     1 wk late    2 wks late      3 wks late     4 wks late    5 wks late     >5 wks late

------------------------------------------------------------------------------------------------------------------------
<S>                    <C>         <C>          <C>             <C>            <C>           <C>            <C>
 < 4 wks, > $___*___      ONE          ___*___      ___*___          ___*___
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------
 4-8 wks, > $___*___      ONE          ___*___      ___*___          ___*___        ___*___
 4-8 wks, > $___*___      TWO          n/a          ___*___          ___*___        ___*___       ___*___       ___*___
 4-8 wks, > $___*___     THREE         n/a           n/a             ___*___        ___*___       ___*___       ___*___
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------
8-16 wks, > $___*___      TWO          n/a          ___*___          ___*___        ___*___       ___*___       ___*___
8-16 wks, > $___*___     THREE         n/a           n/a             ___*___        ___*___       ___*___       ___*___
8-16 wks, > $___*___      FOUR         n/a           n/a             n/a            ___*___       ___*___       ___*___
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------
> 16 wks, > $___*___      TWO          n/a          ___*___          ___*___        ___*___       ___*___       ___*___
> 16 wks, > $___*___     THREE         n/a           n/a             ___*___        ___*___       ___*___       ___*___
> 16 wks, > $___*___      FOUR         n/a           n/a             n/a            ___*___       ___*___       ___*___
> 16 wks, > $___*___      FIVE         n/a           n/a             n/a            n/a           ___*___       ___*___
------------------------------------------------------------------------------------------------------------------------
</TABLE>

                     A week is defined as five Business Days
       Maximum Liquidated Damages amount is ___*___ of Total Project Cost
                Maximum One Week liquidated damages is $___*___

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.
<PAGE>   128

                                   APPENDIX G

                   IMS SYSTEMS ENHANCEMENT EXTENSION SCHEDULE

<TABLE>
<CAPTION>

                            DELAY IN THE DELIVERY OF DOCUMENTATION, DATA AND/OR INFORMATION:
    Project Size            Received      Received      Received       Received      Received
    (Time & Cost)            within        within        within         within     greater than

                             1 week       2 weeks       3 weeks      4 weeks         5 weeks
                           after due     after due     after due     after due      after due
                              date          date          date       date              date

------------------------------------------------------------------------------------------------
 <S>                       <C>           <C>           <C>           <C>            <C>
 < 4 wks, > $___*___          ___*___       ___*___       ___*___        ___*___
------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------
 4-8 wks, > $___*___          ___*___       ___*___       ___*___        ___*___       ___*___
 4-8 wks, > $___*___          ___*___       ___*___       ___*___        ___*___       ___*___
 4-8 wks, > $___*___          ___*___       ___*___       ___*___        ___*___       ___*___
------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------
 8-16 wks, > $___*___          ___*___       ___*___       ___*___        ___*___       ___*___
 8-16 wks, > $___*___          ___*___       ___*___       ___*___        ___*___       ___*___
 8-16 wks, > $___*___          ___*___       ___*___       ___*___        ___*___       ___*___
------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------
 > 16 wks, > $___*___      No impact     No impact         ___*___        ___*___       ___*___
 > 16 wks, > $___*___      No impact         ___*___       ___*___        ___*___       ___*___
 > 16 wks, > $___*___      No impact         ___*___       ___*___        ___*___       ___*___
 > 16 wks, > $___*___      No impact         ___*___       ___*___        ___*___       ___*___
------------------------------------------------------------------------------------------------
</TABLE>

A week is defined as five Business Days

The specified % shall be multiplied times the number of Business Days that the
documentation, data and/or information was delivered late and the total shall
equal the number of Business Days that the due date for the System Enhancement
Project is extended.

EXAMPLE: Necessary data or Information is received from CyberComp ___*___
Business Days late on a (> ___*___ week project that is >$___*___) System
Enhancement Project. Therefore, IMS shall be given an ___*___ additional
Business Days (___*___ Business Days = ___*___ Business Days) in which to
complete the System Enhancement Project.

*  Indicates that material has been omitted and confidential treatment has been
   requested therefor. All such omitted material has been filed separately with
   the SEC pursuant to Rule 24b-2.
<PAGE>   129

                                   APPENDIX H

                         SYSTEMS DEVELOPMENT LIFE CYCLE

IMS will utilize the Systems Development Life Cycle ("SDLC") and the appropriate
phase specific processes as defined herein to accomplish and complete all of the
tasks ("Task") delineated within the Rollout Plans (contained within Appendices
A, B and C), in accordance with the Specifications, and to complete any System
Enhancement Project authorized pursuant to Article XIII of the Agreement. The
SDLC will identify the appropriate phase level activities and deliverables that
would be recommended prior to completing a Task delineated within a Rollout
Plan.

Phase reviews will be conducted at major project milestones or checkpoints
defined by the Customer and IMS. At that time, both Customer and IMS will have
the opportunity to review the status of the project, consider alternative
opportunities, resolve outstanding issues, and verify the accuracy of the
existing estimates.

Customer accepts responsibility for signing off at the completion of a Task
delineated within a Rollout Plan before proceeding to next specified Task
delineated within that Rollout Plan, and IMS and Customer shall assure that
resources required for the next phase are committed and available.

Specifically, if IMS deems that a Rollout Plan Task has been properly completed
by IMS, in accordance with the Specifications and the SDLC, and is ready for
live production, IMS shall provide the Customer Liaison a written notice
("Completion Notice") that it has completed the specified Task and IMS shall
provide Customer with all relevant test results. Customer will then have a
reasonable amount of time following the date of the Completion Notice within
which to test the Task for acceptance purposes.

Customer shall exercise good faith in promptly testing and accepting IMS'
completion of each Task within the Rollout Plan prior to moving that completed
Task to live production. IMS shall cooperate with Customer, upon request, in its
testing of any completed Task. If Customer determined that a completed Task
contains defects ("Defects"), IMS shall make a good faith effort to correct any
Defects within a reasonable amount of time of being notified by Customer.

Customer shall provide IMS with written approval ("Acceptance Notice") of its
acceptance of each Task within the Rollout Plan if such task is in substantial
compliance with all material requirements in accordance with the System
Development Life Cycle and the Specifications. Acceptance of the Task by
Customer shall not be deemed to waive any of IMS' warranties or Customer and
IMS' other remedies as may be provided in the Agreement. Further, by definition,
the completion and acceptance of each task delineated within the Rollout Plan
also includes the completion and acceptance of the integration of each new task
with previously completed, accepted and deployed rollout Plan task.

For the purpose of accurate auditing, Customer agrees that all communication for
requesting specification changes within the Task delineated within the Rollout
Plan will be made to the Account Manager in writing and will not be directed to
any other member of the IMS project team.

The Account Manager will evaluate requested changes to specifications and
discuss the impact of the changes with the Customer Liaison. The Account Manager
will define, in writing, any estimates which will result in a cost overrun, a
delay to a Rollout Plan milestone or an adjustment to resource assignments. The
written adjustments will be presented to Customer for acceptance and approval by
Customer.

<PAGE>   130

DELIVERABLES

Phase I - Analysis

Phase I SDLC is the analysis phase and is the most crucial part of the systems
development methodology. The focus of this phase is on defining business events
and the overall business processes that drive those events.

To collect this information, IMS project team members will chair
information-gathering meetings, with the appropriate Customer counterparts, to
gather relevant business requirements. The deliverable, called the Detailed
Business Requirements ("DBR") document shall contain all collected information
required to complete a Task delineated within a Rollout Plan and shall be
written without any technical assumptions.

Phase II - Design

Phase II of the SDLC is the design phase. The DBR produced in Phase I will
functionally describe the system to be designed and will be used as a basis to
compile a technical design. In this task, a set of guidelines shall be developed
to ensure the application interaction procedures are consistently designed, are
as re-usable as possible and are tailored to the technology environments within
which they are to be implemented. The deliverable from this phase, called the
Technical Design Specifications ("TDR"), shall be used to perform all
development/enhancement tasks required to meet the DBR.

Phase III - Development and Unit / Integration Testing

Phase III of the SDLC is the development and unit / integration testing phase of
all executables of the application-databases, screens, programs, control
libraries, transaction definitions and to generate the physical design and
implementation of the database.

All components and aspects of the application will be tested to ensure all DBR
have been met. At this stage, smaller components will be tested to ensure they
are free from defects prior to integration with larger modules of the
development package and prior to quality assurance testing procedures in the
next phase. The main deliverables from this phase are the tested program modules
that will be required for systems and quality assurance testing for the next
phase.

Phase IV - Integration Testing, Quality Assurance (QA) Review and System Testing

In this phase, system integrity and functional testing of the application shall
be conducted by the IMS (Quality Assurance team) prior to moving the system into
the IMS Model Office. This process will continue through elimination of all
defects by testing application integrity and validating all functions by quality
assurance prior to releasing to IMS Model Office.

Phase V - Model Office Testing

The purpose of this phase is to test and verify all objectives defined in the
DBR. Test plans shall be developed to test various possible scenarios and to
test the application utilizing the IMS Model Office environment and resources.
These testing components are comprised of the following:

         o   Security testing will verify all security requirements and
             issues are resolved.

         o   Compatibility and conversion testing will verify the system is
             compatible with other systems' architecture and any conversion
             process from other systems' architecture works properly.

         o   Performance testing will be performed to verify that customer
             specific and all modules meet all performance standards.

         o   Recovery testing will also be performed to verify that the
             system meets any program-defined error recovery standards.

         o   Procedural testing encompasses any human procedure for which
             this automation is a part of, and will be tested so that the
             whole of the procedure remains intact.

         o   Installability testing will verify that the system can be
             installed across the range of platforms for which it is
             intended, most specifically, the internet components.

<PAGE>   131

         o   Volume testing and stress testing will be performed to verify
             that the system can handle the anticipated workload and that
             the system performs within standards under peak loads.

Phase VI - Deployment

Phase VI of the SDLC is deployment of the application following the successful
completion of IMS Model Office testing. At this stage, any data conversion
required will be implemented as well as the installation of hardware/software
systems required to meet the project objectives. The implementation can take the
form of a phased rollout based on customer and product requirements and as a
result, the deployment phase may be performed more than once. The main
deliverable for this phase is the Deployed System.

Upon completion of Phase VI, for each particular Task within the Rollout Plan,
IMS shall deliver to the Customer Liaison a Completion Notice as specified
above.

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