Sample Business Contracts


Services Agreement - Provident Indemnity Life Insurance Co., Provident American Life and Health Insurance Co., HealthPlan Services Corp. and HealthPlan Services Inc.


                               SERVICES AGREEMENT




        This Services Agreement (the "Agreement") is entered into by and among
PROVIDENT INDEMNITY LIFE INSURANCE COMPANY, a Pennsylvania corporation, and
PROVIDENT AMERICAN LIFE AND HEALTH INSURANCE COMPANY, a Pennsylvania corporation
(collectively, "Provident"), HEALTHPLAN SERVICES CORPORATION, a Delaware
corporation ("HPC") and HEALTHPLAN SERVICES, INC., a Florida corporation
("HPS"), effective as of February 1, 1998 (the "Effective Date").

        WHEREAS, Provident and HPS previously entered into a Services Agreement
effective as of July 19, 1996, which has governed the parties' relationship to
date and relates to certain business sold through HPS' distribution network (the
"First Agreement"); and

        WHEREAS, Provident has developed another block of individual and
individually underwritten group association health insurance business, excluding
the True Small Group insurance business as hereinafter defined (the "Program")
(through its own distribution system of agents, subagents, and managing general
agents("MGAs")) which was not previously administered by HPS, and such block
includes the same or similar types of health insurance coverage to individuals
and group associations as is currently being administered by HPS pursuant to the
First Agreement; and

        WHEREAS, Provident desires that HPS assist and otherwise provide
administrative and other services to Provident with respect to such block of
business and assist Provident in entering the small group market; and

        WHEREAS, HPS desires to perform such services in accordance with the
terms of this Agreement, and to assist Provident in entering the small group
market by developing small group product and pricing.

        NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Provident and HPS hereby agree as follows:


                                     PART 1


                                   DEFINITIONS


        Capitalized terms used in this Agreement shall have the meanings
ascribed to them in Exhibit A, which is attached hereto and incorporated herein
by reference.



<PAGE>

                                     PART 2


                             ADMINISTRATIVE SERVICES


        2.1 Processing Applications. HPS shall process applications for coverage
under the Policy pursuant to the written guidelines that Provident provides to
HPS in accordance with this Agreement.

        2.2 Participation Documents. HPS shall distribute Participation
Documents to Enrollees in accordance with the procedures set forth in Part 4
hereof.

        2.3 Intentionally deleted.

        2.4 Customer Service. HPS shall maintain a full-time WATTS line on each
Business Day (from 8:00 A.M. to 8:00 P.M., Eastern Standard Time, Monday through
Thursday, and 8:00 A.M. to 7:00, P.M., Eastern Standard Time, on Fridays), to
respond to Provident (including agent access unit), agent and Enrollee requests
for information or assistance regarding Premium payments, administration,
claims, commissions, and other aspects of the Program, in accordance with
procedures reasonably required by Provident.

        2.5 Claims Processing. HPS shall perform the claims services set forth
below on behalf of Provident in compliance with the Program and with Provident's
claim policy and procedures, as set forth in Appendix 2.10(B) to be mutually
agreed upon by the parties, using Provident approved forms:

                      (a) HPS shall receive and correlate all information
        necessary to confirm eligibility for benefits and determine Program
        benefits due to Enrollees, and transmit such information to Provident;

                      (b) HPS shall calculate Program benefits and pay Enrollee
        claims by drafts drawn on a Provident bank account established for that
        purpose, in accordance with written procedures and controls established
        by Provident and submitted to HPS;

                      (c) HPS shall maintain claim records necessary for the
        processing of claims in a manner reasonably satisfactory to Provident
        and, at a minimum, compliant with regulatory market conduct standards;

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                      (d) HPS shall refer to the group claim department at
        Provident's home office in Norristown, Pennsylvania, or such other
        location designated by Provident, any issue relating to claim handling
        when HPS determines Provident's written claims payment guidelines are
        not reasonably clear;

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<PAGE>


                      (e) In the event any single claim transaction would result
        in a benefit draft or drafts exceeding $20,000, HPS shall refer the
        claim(s) to the claim department of Provident for prior approval; and

                      (f) Provident will make the final determination as to the
        payment of any claim that is denied in whole or in part by HPS and with
        respect to which a request for claim review has been made.

        2.6 Special Claims Services. HPS shall provide the following services
(the "Special Claims Services") on behalf of Provident with respect to claims
submitted for health care services provided to any Enrollee, to the extent
reasonably required by Provident, and in accordance with the policies and
procedures reasonably required by Provident and provided to HPS, as set forth in
Appendices "A" and "B" and as mutually agreed upon by the parties:

                      (a) identifying certain claims that may be incorrectly
        billed, using criteria developed by one or more recognized experts in
        the health care field;

                      (b) investigating, within agreed upon parameters, certain
        of such potentially incorrect claims and adjusting such claims if
        appropriate;

                      (c) identifying potentially fraudulent practices and
        referring such practices to Provident and other parties designated by
        Provident; and

                      (d) identifying providers that may have improperly billed
        for services, or participated in overutilization of services, and
        implementing procedures to monitor such providers' future billing and
        utilization practices.

                      (e) providing persons to testify as witnesses in
litigation involving the Program, at Provident's cost and expense.

        2.7 Generally Accepted Clinical Standards. To the extent reasonably
required by Provident, HPS shall utilize Generally Accepted Clinical Standards
in performing services pursuant to this Part 2. For purposes of this Agreement,
"Generally Accepted Clinical Standards" shall mean standards of clinical
practice regarding inpatient and outpatient utilization of health care services,
as assessed by one or more recognized experts in the health care field.

        2.8 No Incentive Payment. HPS agrees that it shall not enter into any
incentive payment agreement with a provider of health services that is based on
reduction of services or the charges thereof, reduction of length of stay, or
utilization of alternative treatment settings to reduce the amount of necessary
or appropriate medical care.


                                      -4-
<PAGE>


        2.9 Loss Ratio Management Advisory Services. Provident agrees that HPS
shall participate in its loss ratio management analysis during the first sixty
(60) months of the term of the Agreement, including but not limited to those
decisions relating to new business, in force rate adjustments, and plan
modifications. In that regard, Provident shall inform HPS of all decisions to be
made within 10 days prior to the proposed decision date, give HPS reasonable
access to relevant information connected with such decision, and give HPS a
reasonable opportunity to provide input.

        2.10 Performance Standards. HPS shall perform its services hereunder
pursuant to the performance standards (the "Performance Standards") set forth in
Appendices 2.10(A), (B) and (C) attached hereto and incorporated herein by
reference. The performance standards fall into three categories:

                        (i) Those where Provident suffers indirectly when HPS
        does not meet the Performance Standards set forth in Appendix 2.10(A)
        hereto ("Quality of Service Standards");

                       (ii) Those where Provident suffers directly as a result
        of HPS not implementing/executing the Performance Standards set forth in
        Appendix 2.10(B) hereto ("Policy/Procedure Standards"); and

                      (iii) Those where Provident suffers indirectly when HPS
        does not meet Performance Standards set forth in Appendix 2.10(C) hereto
        ("Data Warehouse Standards").

        The following penalties shall apply for non-compliance with the above
Performance Standards:

                      (a) $10,000 per infraction, to a maximum of $85,000 per
        month (on a prorata basis depending upon when in the month following the
        60-day cure period that such infraction is cured) and $360,000 per year
        for any "Quality of Service Standard" or any Data Warehouse Standard"
        violations unremedied for more than 60 days after the date Provident
        notifies HPS of such violation in writing.

                      (b) Any and all losses, damagesand costs in excess of
        $20,000 per claim, for any "Policy/Procedure Standard" violation; and

                      (c) Provident may terminate this Agreement and receive
        liquidated damages equal to 200% of the "direct costs" referred to in
        Section 17.8 hereof, for any "Quality of Service Standards" or any "Data
        Warehouse Standard" violation which is unremedied for more than 120 days
        after the date Provident notifies HPS of the violation in writing.

                                      -5-

<PAGE>
        All penalties assessed herein shall be paid to Provident on the 15th day
of the month following the later of receipt of notice of violation or the end of
the applicable cure period, and the amount shall be calculated back to the end
of the applicable cure period.

        The parties hereto agree that drafts of Appendices 2.10(A), (B) and (C)
as of the date of this Agreement shall be finalized within four (4) weeks of the
date of this Agreement. Such finalized Appendices shall be mutually agreed upon
and shall include, at a minimum, information on the drafts as of the date of
this Agreement. In the event that the parties cannot agree within four (4) weeks
of the date of this Agreement as to the form of Appendices 2.10 (A), (B), and
(C), the draft forms attached hereto shall be applicable until agreement is
reached.

        2.11 Data Warehouse Requirements. HPS agrees to comply with the data
warehouse requirements set forth in Appendix "2.10(C)" hereto.
                                                                               


                                     PART 3

                          MARKETING ASSISTANCE SERVICES

        3.1 Marketing. Provident shall be responsible for all marketing services
and materials provided hereunder.
                                                                               

                                     PART 4

                             PARTICIPATION DOCUMENTS

        4.1 Preparation and Distribution of Participation Documents. Provident
shall prepare, at its own cost, the layout, design, and copy of all
Certificates, booklets, identification cards, and other written documents
relating to participation in the Program to be delivered to any Agent and/or
Enrollee (each a "Participation Document"). HPS shall distribute and pay the
cost of the distribution of the Participation Documents to Agents and/or
Enrollees as reasonably required by Provident, in accordance with a schedule to
be mutually agreed upon by the Parties.

                                      -6-


<PAGE>

        4.2 Printing/Delivery. To the extent reasonably required by Provident,
HPS shall arrange for the printing of all or part of the Participation
Documents. In the event that Provident requires such printing service, then
Provident shall deliver to HPS a camera-ready copy of the prototype of such
Participation Documents, and a copy stored on a 3 1/2" standard computer
diskette in an American standard code for information interchange, at least
twenty-five (25) Business Days before the first date on which HPS is required to
distribute such Participation Documents pursuant to Section 4.1 above. HPS shall
arrange for the printing of such Participation Documents, and HPS shall be
responsible for the cost of such printing. In the event that Provident does not
require HPS to arrange for printing any Participation Documents, then Provident
shall make deliveries to HPS, on a schedule to be mutually agreed upon by the
Parties, of sufficient Participation Documents to allow HPS to maintain a
three-month supply of such Documents.

                                      -7-



<PAGE>


        4.3 Distribution. HPS shall promptly distribute the Participation
Documents in accordance with this Part 4 at no cost to Provident.
Notwithstanding the foregoing, if a change in any Participation Documents
results in a redistribution of such Participation Documents, then Provident
shall reimburse HPS for the total postage and other direct costs associated with
such redistribution, except to the extent that the change is required as a
result of an error that is solely the responsibility of HPS.

        4.4 Vendor Materials. Notwithstanding anything contained in this Part 4
to the contrary, Provident shall be responsible for procuring all vendor
materials, including but not limited to PPO directories, managed care cards
(other than policy issue I.D. cards which are the responsibility of HPS and
shall be at HPS's cost), pharmaceutical cards, and other vendor cards and
materials. HPS shall be responsible for mailing all vendor materials and the
mailing cost.


                                     PART 5

                   PREMIUM COLLECTION AND COMMISSION PAYMENTS


        5.1 Billing and Commission Payments. On behalf of Provident, HPS, at its
cost, shall bill each Enrollee for Premium amounts and other amounts owed by
such Enrollee to Provident, calculate commissions to agents, prepare and
distribute commission statements, and distribute commissions to agents (funded
by Provident), in accordance with Provident's policy and procedure, subject to
mutual agreement (as previously referred to).

        5.2 Receipt of Premium Payments. On behalf of Provident, HPS shall
receive and credit all Premium payments and other payments made by Enrollees,
and shall make all cash adjustments for Premium refunds and other required cash
transfers with respect to such payments, in accordance with Provident's policy
and procedure. Any Premium payments that are received by HPS shall be deemed to
have been received by Provident, but the payment of return Premium amounts by
Provident to HPS shall not be deemed payment to an insured or claimant until
such payment is received by such insured or claimant. Nothing in this Section
5.2 shall limit any right of Provident against HPS resulting from HPS' failure
to make payments to Provident or to any insured claimant.

        5.3 Remittance. HPS shall immediately deposit each Premium payment or
other payment it receives from an Enrollee into a separate custodian account in
trust for Provident (the "Custodial Account") at First Union National Bank, or
at such other financial institution as the parties may agree. The parties agree
that funds flowing in and out of the Custodial Account shall be limited as
follows:

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<PAGE>


                      (a) On or before the seventh (7th) calendar day of each
month (or if the seventh (7th) falls on a day other than a Business Day, then on
the first Business Day thereafter), HPS shall initiate, with Provident's joint
signature, the transfer by Automated Clearing House Transfer ("ACH") to an
account designated by HPS an amount equal to the Remittance Due. The term
"Remittance Due" shall be an amount equal to the HPS compensation for the prior
month, commissions paid during the prior month, all investment earnings
generated by the Custodial Account and other reimbursable items that may
include, but not be limited to, premium refunds, attending physician statements,
PPO Directories, and third party vendor payments, all such amounts may be
estimated as necessary with an adjustment in the following month for any over
payment or under payment.

                      (b) On or before the fifteenth (15th) calendar day of each
month (or if the fifteenth (15th) falls on a day other than a Business Day, then
on the first Business Day thereafter), HPS shall initiate, with Provident's
joint signature, the transfer by ACH to an account designated by Provident an
amount equal to all premiums deposited in the Custodial Account during the prior
month, minus the Remittance Due (as described in Section 5.3(a) above).

                      (c) The Parties agree that the foregoing procedures must
be reflected in an appropriate agreement with First Union National Bank or
such other financial institution as the Parties may agree, the Parties will use
their best efforts to promptly complete such agreement, it being understood that
the account shall require an authorized signature from both HPS and Provident,
with such signatures to not be unreasonably withheld, in order to make any
withdrawals from the account. In the event that on or after the fifteenth, HPS
refuses to authorize the withdrawal within forty-eight (48) hours after written
notice thereof by Provident, Provident may independently initiate withdrawals
from the Custodial Account provided that such withdrawals do not reduce the
balance of the Custodial Account below $12,000,000, it being understood that the
distribution of funds in excess of $12,000,000 of Collected Funds in any one
month shall be subject to the sole signatory of Provident.

        5.4 Reconciliation. On or before the seventh calendar day of each month
(or, if the seventh falls on a day other than a Business Day, then on the first
Business Day thereafter), HPS shall deliver to Provident a reconciliation report
of the Custodial Account for the previous month (the "Reconciliation Report"),
which Reconciliation Report shall set forth (i) the total amount of Premium and
other payments deposited into the Custodial Account during such month, as
adjusted for Premium refunds and other required cash transfers with respect to
such Premium payments (the "Collected Funds"), and (ii) the Remittance Due.


                                      -9-

<PAGE>

        5.5 Reports. Subject to the terms of Section 3.4 above, HPS shall
provide Provident with such reports regarding Premium billing and remittance as
are reasonably required by Provident, in a format and on a timetable to be
mutually agreed upon by the Parties. HPS shall maintain records of cash receipts
and disbursements relating to HPS' performance of services under the Program, as
required by laws and regulations applicable to third party administrators.

                                      -10-




<PAGE>


        5.6 Deposits. Any Premium payment received from an individual prior to
the final coverage determination with respect to such individual (any "Deposit")
shall not at that time be deemed to be a "Premium" for purposes of this Section
5 or any other provision of this Agreement. As reasonably required by Provident,
HPS shall place each individual's Deposit in the Custodial Account until such
individual is accepted for coverage under the Policy in accordance with the
terms of this Agreement, at which time the Deposit will be deemed to be a
"Premium" for purposes of this Agreement. In the event that such individual is
not accepted for coverage under the Policy, then HPS shall return the Deposit to
such individual in accordance with procedures reasonably required by Provident.


                                     PART 6

                                     RECORDS

        6.1 Record Retention; Data. During the term of this Agreement and for a
period of seven (7) years after termination hereof, HPS shall maintain at its
principal administrative office, in original form or on electronic media,
adequate books and records of all transactions between HPS, Provident, and
Enrollees (the "Records"), in accordance with all rules and regulations of
regulatory authorities applicable to third party administrators (including but
not limited to state laws requiring that HPS provide state officials with access
to such books and records). HPS and Provident may use the data recorded on such
Records for any purpose, subject to the provisions of this Agreement and
Applicable Law (including laws protecting confidential Enrollee information).
HPS shall retain full ownership rights over all compilations, analyses, and
reports generated by HPS, as well as all proprietary technology, software, and
other data utilized by HPS in the performance of its obligations under this
Agreement. Such ownership rights shall include, but are not limited to, all
rights associated with publication, trade secrets, copyrights, trademarks, and
patents.

        6.2 Provident Access. Provident is the legal owner of the Records and
retains the right to continuing access to the Records needed by Provident to
fulfill all its obligations to Enrollees, subject to the terms of this
Agreement, Applicable Law, and laws, rules, and regulations applicable to third
party administrators. All Records maintained by HPS hereunder shall be used by
HPS solely for the day-to-day operational purposes contemplated by this
Agreement and shall be made available to Provident during normal business hours
of any Business Day for review, inspection, examination, and, reproduction,
provided that Provident provides HPS with reasonable notice of its intention to
inspect the Records, and provided that Provident reimburses HPS for HPS'
reasonable cost of reproduction. If HPS is required to disclose any of such
Records to any third party pursuant to Applicable Law or any law, rule or
regulation applicable to third party administrators, such disclosure shall be at
the expense of Provident. Upon termination of this Agreement, as reasonably
required by Provident and at Provident's expense, HPS shall transfer the Records
within a reasonable time after termination. HPS may retain at its discretion
copies of all or a portion of the Records, subject to the terms of this
Agreement. Upon the reasonable request of Provident, and at Provident's expense,
HPS shall destroy all or part of the records, except to the extent prohibited by
applicable law.

                                      -11-

<PAGE>
                                     PART 7

                        OTHER PROVIDENT RESPONSIBILITIES

        7.1 Notice of Changes. Provident shall notify HPS of any change in
benefits, rates, forms, commission schedules, or other aspects of the Program:
(i) at least ninety (90) calendar days (or up to 12 months in the event
Provident's proposed changes fundamentally alter the Program) before the date on
which Provident requires HPS to include such change in renewals or proposals
issued in accordance with Section 3.1 above; and (ii) at least thirty (30)
Business Days before Provident requires that HPS notify Enrollees of such change
(whether or not such notice is required by Applicable Law). In the event that
Provident does not provide HPS with notice as required in the previous sentence
with respect to any rate change, then the rates that were applicable before such
change shall apply. The provisions of this Section 7.1 shall not limit any other
remedies that may be available to HPS in the event that Provident fails to
comply with the terms hereof.

        7.2 Intentionally deleted.

        7.3 Provident Agents. Notwithstanding anything contained herein to the
contrary, Provident shall be responsible for all interface and relationship
management for both sales and service with respect to the agents, subagents, and
MGAs identified by Provident in its list of Agents and subagents. Provident
shall also be financially responsible for paying all Agents' commissions payable
in connection herewith and which are distributed by HPS.

        7.4 Attending Physician Fees. Provident shall be responsible for and pay
all attending physician fees incurred in connection with the underwriting
process.

        7.5 Miscellaneous. Provident shall be responsible for all PPO network
contracting, managed care contracting, vendor fees, agent appointment fees, and
all other fees except for third party administrator licensing fees.


                                      -12-


<PAGE>

        7.6 Provident Entering Small Group Business. During 1998, provided HPS
provides assistance in developing the True Small Group market, Provident shall,
with the assistance of HPS, use its best efforts to enter the True Small Group
market, and HPS shall serve as the exclusive administrator of such business on
such terms as the Parties hereto may mutually agree. The exclusivity herein
provided shall become non-exclusive if after ninety (90) days' written notice by
Provident, HPS shall not agree to provide the service, product design and
distribution of products in the True Small Group market.

                                      -13-



<PAGE>


        7.7 Quarterly Meetings. At HPS's request, the Chairman and CEO of
Provident agree to be available to meet quarterly with HPS to discuss the
business being transacted pursuant to this Agreement, future direction, and
profitability.


                                     PART 8

                                      AUDIT

        Provident shall have the right to audit the books and accounts of HPS
relating to all transactions subject to this Agreement, in accordance with
Applicable Law and subject to the terms of this Agreement. Such audits shall be
conducted in a reasonable manner.


                                     PART 9

                                  UNDERWRITING

        HPS shall perform underwriting services as requested by Provident.
Provident expressly retains sole authority to establish underwriting rules for
approval of applicants for coverage under the Program. The establishment of such
rules shall be solely within the discretion of Provident and will be contained
in written underwriting rules provided to HPS. HPS shall have authority to
implement and apply Provident's underwriting guidelines but may not modify any
term or condition of any Certificate or waive any provision thereof except to
the extent required by Provident. HPS shall refer any questions regarding
implementation of Provident's underwriting guidelines to Provident. Provident
shall provide designated HPS employees with sufficient training with respect to
the Provident underwriting guidelines. Such training shall include but not be
limited to (i) at least five (5) Business Days of training at HPS offices by a
senior Provident underwriter prior to the date on which HPS begins underwriting
the Program, (ii) during the first six (6) months after HPS begins underwriting
under the Program, monthly training sessions at HPS offices by senior Provident
underwriters, and (iii) annual training sessions at HPS offices by senior
Provident underwriters. On sixty (60) days advance written notice to HPS,
Provident may assume responsibility for underwriting (with a corresponding
reduction in the Additional Service Fees).


                                     PART 10

                                   ADVERTISING

        10.1 Advertising Materials. HPS shall not use any written or oral
advertisement that bears Provident's name unless HPS has obtained Provident's
prior written approval of such advertisement. To the extent required by
Applicable Law, HPS shall keep a file of all advertisements used by HPS in the
performance of its obligations hereunder.


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<PAGE>

                                     PART 11

                                  COMPENSATION

        11.1 Service Fee. As compensation to HPS for the services that HPS
provides hereunder, and in addition to the other amounts to be paid by Provident
to HPS hereunder, HPS shall retain as a service fee (the "Service Fee,"
specifically defined to include both a Base Service Fee and an Additional
Service Fee) a portion of each Premium payment it receives pursuant to Section 5
hereof. The Service Fee shall be calculated in accordance with the terms of
Exhibit B attached hereto. Notwithstanding anything contained herein to the
contrary, HPS agrees that it shall not price its services for Provident at a
rate any greater than fees charged by HPS to any other carrier for similar
services, regardless of scale.

        11.2 HPS Administration Fees. To the extent permitted by Applicable Law,
and approved by Provident, HPS may charge each Enrollee late fees, insufficient
funds fees, and other penalty charges associated with the Premium amounts to be
received by HPS in accordance with this Agreement and Applicable Law. Fees
collected by HPS pursuant to this Section 11.2 will be deposited in the
Custodial Account.


                                     PART 12

                             RELATIONSHIP OF PARTIES

        12.1 Contractual Relationship. The only relationships between HPS and
Provident are the contractual relationships referred to in this Agreement.
Nothing contained in this Agreement shall be construed to create the
relationship of employer and employee or principal and agent, or to create a
partnership or joint venture relationship, between Provident and HPS. Each
Party's authority shall be limited to that which is expressly stated in this
Agreement. Except as specifically provided elsewhere in this Agreement, neither
Party shall exercise any control over the hours, office location, rentals, or
employees of the other.

        12.2 Subcontracts. HPS may subcontract for the performance of services
which HPS is to provide hereunder; provided, however, that HPS will not, without
Provident's prior written consent, subcontract, except to a Corporate Affiliate
of HPS, for the performance of any services hereunder requiring direct contact
with Enrollees.

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<PAGE>
        12.3 Changes in Obligations. In the event that any mandate of a
regulatory body having jurisdiction over the Parties hereto, any Applicable Law
(as defined in Exhibit A hereto), any law or regulation applicable to the
parties hereto or the transactions herein contemplated, or any change in the
Program results in a material change in the nature or financial impact of either
Party's obligations or compensation hereunder ("Material Change"), then such
Party may provide the other Party with notice of such Material Change, and the
Parties shall negotiate in good faith an amendment to this Agreement that shall
set forth the terms under which the Parties shall perform such new obligations.
In the event that the Parties cannot reach agreement on an amendment to this
Agreement within thirty (30) calendar days after the delivery of a Material
Change notice pursuant to this Section 12.3, then either Party may terminate
this Agreement in accordance with Section 17.4 below.

        12.4 Amendment of Agreement. In the event that any mandate of a
regulatory body having jurisdiction over the Parties hereto, any Applicable Law,
or any law or regulation applicable to the parties hereto or the transactions
herein contemplated, requires the Parties to amend this Agreement, then the
Parties shall negotiate in good faith to amend this Agreement in order to comply
with such law or regulation. In the event that the Parties cannot reach
agreement with respect to an amendment of this Agreement pursuant to this
Section 12.4, then either Party may terminate this Agreement pursuant to Section
17.5 below.

        12.5 HPS Sales of Individual Group Association Products. For a period of
one (1) year from the Effective Date of the Agreement (and during the remaining
term of this Agreement, provided the annualized premium administered by HPS for
Provident exceeds $65,000,000 and does not fall below such amount for two
consecutive quarters), HPS agrees not to sell any individual or group
association health insurance products on behalf of payors other than Provident
if such products directly compete with the individual products sold by Provident
in connection herewith. Individual or group association products do not include
True Small Group which, by definition, may include individuals. Notwithstanding
anything contained herein to the contrary, this Section 12.5 shall not apply
with respect to any HMO health care product HPS currently sells, markets, or
distributes, or wishes to sell, market, or distribute in the future, or to the
extent that:

               (a) HPS desires to sell, market, or distribute an individual or
        group association health insurance product in a state in which Provident
        is either not licensed to conduct business or is not willing to conduct
        business;

               (b) Provident (or another fronting carrier acceptable to HPS, in
        its sole and absolute discretion) does not meet specifications for a
        particular health insurance product offering designed by a non-carrier
        which HPS desires to sell, market, or distribute directly to the
        consumer, without the involvement of independent agents and/or brokers
        (because, for example, of Provident's A.M. Best rating);

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<PAGE>

               (c) HPS desires to sell, market, or distribute an individual or
        group association health insurance product for or on behalf of any of
        its current customers, for which HPS currently sells individual or group
        association health insurance products; or

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<PAGE>


               (d) HPS has asked Provident to supply an individual or group
        association health insurance product in connection with a marketing
        opportunity which will not involve any independent MGAs, and Provident
        either declines or fails to make the product available within a
        reasonable time frame.

Further, HPS may perform any and all administration, risk management, and other
back office services for any and all carriers, whether or not such carriers
currently have a business relationship with HPS.

        12.6 Other Vendors. Provident shall not engage a third party
administrator other than HPS for the services and Program which are the subject
of this Agreement for the term of this Agreement.

        12.7 First Agreement Amendments. The parties hereto agree to negotiate,
in good faith, an amendment to the First Agreement, only with regard to Part 5,
Premium Collection and Commission Reports, and adjustments that may be necessary
to compensate HPS in connection therewith.


                                     PART 13

                            COMPLAINTS AND LITIGATION

        13.1 Notice of Regulatory Action. Each Party shall promptly notify the
other Party of any complaint to or from any federal or state regulatory agency
of which such Party becomes aware in connection with any transaction covered by
this Agreement. In the event that HPS receives a complaint letter from any state
insurance department, then HPS shall forward such complaint letter, together
with its file and a detailed report on the matter, to Provident promptly by
express delivery.

        13.2 Notice of Litigation. Each Party shall promptly notify the other
Party of any litigation or attorney's letter threatening litigation of which
such Party becomes aware in connection with any transaction covered by this
Agreement. Each Party shall forward to the other Party promptly by express mail
any summons or complaint received by such Party in connection with any matter
covered by this Agreement.

        13.3 Defense Costs. Except as provided in Part 14 below, each Party
hereto shall be responsible at its own expense for defending itself in any
litigation brought against it, whether or not the other Party hereto is also a
defendant, arising out of any aspect of activities engaged in connection with
this Agreement.

                                      -18-


<PAGE>


                                     PART 14

                          INDEMNIFICATION AND INSURANCE

        14.1 HPS Indemnification of Provident. Except as set forth in Section
14.2 below, and as provided in Section 2.10, HPS agrees to indemnify and hold
harmless Provident, and its parents, subsidiaries, affiliates, officers, agents,
and employees, from and against any and all losses, costs, claims, demands, and
damages, including but not limited to attorneys' fees, arising out of or caused
by any act or omission which is an intentional breach of this Agreement, or
proven gross negligence, proven fraudulent conduct, or embezzlement of HPS, its
officers, agents, or employees.

        14.2 Provident Indemnification of HPS. Except as set forth in Section
14.1 above, Provident agrees to indemnify and hold harmless HPS, and its
parents, subsidiaries, affiliates, officers, agents, and employees, from and
against any and all losses, costs, claims, demands, and damages, including but
not limited to attorneys' fees, arising out of or caused by:

                      (a) any act done by Provident, or any omission by
        Provident, in connection with the carrying out or performance of its
        obligations in connection with the Program or this Agreement, or any
        action or inaction by HPS that was taken or not taken at the direction
        or request of Provident (or in accordance with Provident's underwriting,
        administration, and claims guidelines, rules, policies, or procedures as
        set forth herein); and

                      (b) intentional breach of this Agreement, proven gross
        negligence, proven fraudulent conduct or embezzlement attributable to
        Provident, its officers, agents, or employees.

        14.3 Insurance. During the term of this Agreement HPS shall maintain, at
HPS expense, insurance in effect that covers loss by reason of acts of fraud or
dishonesty, fidelity and errors and omissions. Such insurance shall be in an
amount of no less than $2,000,000 and shall list Provident as a named insured to
the extent of its interest therein. HPS shall cause the issuer of each insurance
policy to deliver to Provident evidence of the existence of such policy and
shall require the insurer to give Provident thirty (30) calendar days written
notice prior to cancellation of, or any material change in, the policy. HPS
shall provide Provident with prompt notice of any such change. The Parties
hereto acknowledge that pursuant to that certain HPC Executive Protection Policy
(#8142-20-00), specifically Section 12 thereof, HPC, as the first named insured
therein has various rights and is subject to certain restrictions contained
therein. Any losses or other payments received by HPC thereunder, to the extent
of Provident's interest therein, shall be forwarded to Provident by HPC within
five (5) days of receipt by HPC.

                                      -19-

<PAGE>



                                     PART 15

                         REGULATORY AND OTHER LIABILITY

        15.1 HPS Warranties, Representations, and Compliance. In the conduct of
its business and the performance of its obligations under this Agreement, HPS
(a) warrants and represents to Provident that it is in compliance with, and
shall continue to comply with, all Applicable Law, all applicable statutes,
ordinances, rules, and regulations of any and all federal, state, and municipal
regulatory authorities specifically applicable to third party administrators
(including but not limited to applicable bond requirements). Except as otherwise
specifically provided in this Agreement, HPS shall be solely responsible for,
and, shall comply with all Applicable Law with respect to the services it is
performing hereunder. Where required by state law or regulation, HPS shall hold
a certificate of registration as a third party administrator issued by the
Department of Insurance or other regulatory body. To the extent required by (and
in accordance with the requirements of) laws applicable to third party
administrators, HPS shall provide written notice to Enrollees of the terms of
this Agreement. At Provident's reasonable request, HPS shall provide Provident
with any HPS records evidencing compliance with third party administrator
regulations; and (b) warrants to Provident that (i) HPS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and (ii) this Agreement constitutes a valid and binding obligation of
HPC and HPS enforceable against HPC and HPS in accordance with its terms. The
undersigned officers have the full power and authority to execute and deliver
this Agreement and perform the obligations of HPS hereunder, and no further
action or authorization is necessary on the part of HPS or the undersigned
officers in order to consummate the transaction herein contemplated.

        15.2 Provident Warranties, Representations, and Compliance. In the
conduct of its business and the performance of its obligations under this
Agreement, Provident (a) warrants and represents to HPS that it is in compliance
with, and shall continue to comply with, all Applicable Law, all statutes,
ordinances, rules and regulations of any and all federal, state, and municipal
regulatory authorities. Except as otherwise specifically provided in this
Agreement, Provident shall be solely responsible for, and shall comply with all
Applicable Law with respect to, all aspects of the design and implementation of
the Program, including but not limited to (i) Agent appointment and licensure
(including all fees associated therewith), (ii) underwriting criteria and
coverage determinations, (iii) the disposition of Premium amounts prior to final
coverage determinations, (iv) the rights or obligations to Enrollees, (v) the
scope of benefits under the Certificates, (vi) Premium rates, and (vii) the
content of the Policy, the Materials, Participation Documents, group contracts,
and Certificates. At HPS' reasonable request Provident shall provide HPS with
written guidelines setting forth procedures applicable to these matters.
Provident shall notify HPS of any Provident obligation under Applicable Law that
HPS is required to perform on behalf of Provident in accordance with this
Agreement; and (b) warrants to HPS that (i) each of Provident American
Corporation and Provident American Life and Health Insurance Company are
corporations duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania, (ii) this Agreement constitutes a
valid and binding obligation against each of them enforceable against each of
them in accordance with its terms. The undersigned officers have the full power
and authority to execute and deliver this Agreement and perform the obligations
of hereunder, and no further action or authorization is necessary on the part of
either of them or the undersigned officers in order to consummate the
transaction herein contemplated, and (iii) PILIC is the owner of 100% of the
issued and outstanding shares of the capital stock of PALHIC.

                                      -20-

<PAGE>

                                     PART 16

                    CONFIDENTIAL AND PROPRIETARY INFORMATION

        16.1 Confidential Information. For purposes of this Agreement,
"Confidential Information" of a Party shall mean any confidential and/or
proprietary information belonging to such Party, including but not limited to
information concerning (i) the terms of this Agreement and discussions of the
matters described herein, and (ii) the business and operations of such Party,
such as all information regarding Participating Agents, the costs to each Party
of performing its obligations under this Agreement, insureds, Agents,
policyholders, products, Agent lists, distribution strategies, loss ratio
information, and marketing programs, and information regarding Provident
insureds, including Enrollees. Notwithstanding the foregoing, "Confidential
Information" shall not include:

                      (a) information that, at the time of disclosure to the
        Party receiving the information (the "Receiving Party"), is in the
        public domain;

                      (b) information that, after disclosure, is published or
        otherwise becomes part of the public domain through no fault of the
        Receiving Party;

                      (c) information that was in the Receiving Party's
        possession or the possession of an affiliate of the Receiving Party at
        the time of disclosure to the Receiving Party;

                      (d) information that is received by the Receiving Party in
        good faith from an independent source that has no duty of nondisclosure
        with respect to the information (or, if such source does have a duty of
        nondisclosure, the Receiving Party was unaware of or had no reasonable
        basis for knowing of such duty); or

                      (e) information that a Party is required by Applicable Law
        to disclose to a third party, to the extent of such disclosure.


                                      -21-

<PAGE>

        16.2 Protection of Confidential Information. Except as otherwise
specifically provided in this Agreement or as otherwise required by Applicable
Law, each Party (a) shall hold in confidence any and all Confidential
Information which belongs to the other Party and shall take such precautions
with respect to such Confidential Information as it normally takes with its own
confidential and/or proprietary information, and (b) shall not use the
Confidential Information of the other Party (including any information relating
to Agents or Enrollees) for any purpose other than the performance of its
obligations under this Agreement. In particular, HPS agrees that it shall not
disseminate or utilize Provident's database of MGAs, Agents or subagents
(although Provident expressly acknowledges that HPS may currently use the
services of certain individuals contained on such databases, and nothing herein
shall prohibit HPS from continuing to use such individuals, it being the
objective of this provision to prevent HPS' dissemination or use of "the
database," (particularly in a manner which competes with Provident's
distribution) not HPS' use of specific individuals named therein).

        16.3 Judicial Proceedings. Each Party shall endeavor to keep and assist
the other Party's keeping the Confidential Information confidential in judicial
or administrative hearings or proceedings, and shall provide assistance in
obtaining confidential treatment under applicable laws, statutes, or
regulations. If a Party finds it necessary to disclose any Confidential
Information in any such judicial or administrative hearing or proceeding, the
Party shall immediately notify the other Party and shall attempt to disclose
such Confidential Information "in camera" or subject to "protective order" or on
some other non-public basis.

        16.4 Enrollee Information. HPS shall not supply information regarding
any Enrollee to any Party that is not affiliated with HPS or Provident, except
as may be required by this Agreement or Applicable Law, or as permitted in
writing by such Enrollee.


                                     PART 17

                              TERM AND TERMINATION

        17.1 Term. The term of this Agreement shall commence on the Effective
Date and shall continue in effect until December 31, 2002 unless terminated in
accordance with the provisions of this Part 17. The term shall automatically
renew for successive one (1) year terms unless either Party provides the other
with 180 days advance written notice of its intent not to renew.

                                      -22-
<PAGE>

        17.2 Intentionally deleted.

        17.3 Termination for Cause. In the event that a Termination Event has
occurred with respect to a Party (the "Defaulting Party"), then the other Party
may terminate this Agreement upon thirty (30) calendar days written notice to
the Defaulting Party. Such notice shall be given within a reasonable time after
the occurrence of the Termination Event, and shall describe such Termination
Event in reasonable detail. For purposes of this Agreement, the occurrence of
any of the events specified below in this Section 17.3 shall constitute a
"Termination Event" with respect to a Party.

                      (a) Breach of Agreement. A Termination Event shall be
        deemed to occur with respect to a Party if such Party breaches this
        Agreement, and the Breach continues for a period of sixty (60) calendar
        days after such Party receives written notice of the Breach from the
        other Party. Notwithstanding the foregoing, if such Breach is not
        reasonably susceptible to correction within such sixty-day period, then
        a Termination Event shall not be deemed to have occurred if the Party in
        Breach commences and diligently pursues corrective action within such
        sixty-day period, and the Breach is cured within a reasonable time
        thereafter.

                      (b) Dissolution; Insolvency. A Termination Event shall be
        deemed to occur with respect to a Party upon the occurrence of any of
        the following:

                               (i) the entry of a decree or order for relief of
               such Party by a court of competent jurisdiction in any
               involuntary case involving such Party under any bankruptcy,
               insolvency, or other similar law now or hereafter in effect, or
               the filing with respect to such Party of a petition in any such
               involuntary bankruptcy or similar case, which petition remains
               undismissed for a period of ninety (90) calendar days;

                              (ii) the appointment of a receiver for such Party
               or substantially all the assets of such Party; or

                              (iii) the commencement by such Party of a
               voluntary case under any bankruptcy or insolvency law (or other
               similar law now or hereafter in effect), or the dissolution of
               the business and operations of such Party necessary for such
               Party to perform its obligations hereunder.

        17.4 Termination Upon Material Change. In the event that a Material
Change Termination Event has occurred, then either Party may terminate this
Agreement upon thirty (30) calendar days written notice to the other Party. For
purposes of this Agreement, a "Material Change Termination Event" shall be
deemed to have occurred if the Parties have been unable to negotiate an
amendment to this Agreement within thirty (30) calendar days after delivery of a
Material Change notice pursuant to Section 12.3 above.


                                      -23-

<PAGE>

        17.5 Termination Upon Failure to Agree. In the event that the Parties
are unable to reach agreement with respect to an amendment of this Agreement in
accordance with Section 12.4 above, then either Party may terminate this
Agreement upon thirty (30) calendar days notice to the other Party, unless the
Parties reach agreement with respect to such amendment within the thirty-day
notice period.

        17.6 Suspension of Underwriting Authority. To the extent required by
law, Provident shall have the right to suspend the underwriting authority of HPS
during the pendency of any dispute between the Parties regarding the cause for
termination of this Agreement. Provident shall fulfill all of Provident's lawful
obligations with respect to the Enrollees, regardless of any dispute between
Provident and HPS, and HPS shall cooperate with Provident in this regard.

        17.7 Notice to State Regulators. Provident shall provide the Director of
Insurance of the State of Arizona with fifteen (15) calendar days prior written
notice of termination or cancellation or any other change in this Agreement.

        17.8 Remedies of Provident. Except as set forth in Section 2.10 and
Section 14.1 hereof, Provident shall not, and hereby waives any right to, pursue
any right or remedy at law or equity to recover any losses, costs, claims,
demands, damages, or attorneys' fees arising out of or caused by (i) any Breach
(other than an intentional Breach or as a result of gross negligence or fraud)
of this Agreement or any other Termination Event relating to HPS' performance of
services pursuant to this Agreement, (ii) any Material Change, or (iii) any
other occurrence relating to HPS' performance of services pursuant to this
Agreement. The rights and remedies available to Provident pursuant to Part 14
and Section 2.10 of this Agreement shall be the sole rights and remedies
available to Provident with respect to any losses, costs, claims, damages, or
attorneys fees arising out of this Agreement. Notwithstanding the foregoing,
Provident does not waive its rights to pursue the remedies available to it in
law or equity for an intentional Breach of this Agreement by HPS, gross
negligence, or proven fraud, or as a named insured under the insurance policy or
policies required to be provided pursuant to Section 14.3 hereof.

        17.9 Remedies of HPS. Except with regard to remedies available under
Section 11.1 and as set forth in Section 14.2 hereof, HPS shall not, and hereby
waives any right to, pursue any right or remedy at law or equity to recover any
losses, costs, claims, demands, damages, or attorneys' fees arising out of or
caused by (i) any Breach (other than an intentional Breach or as a result of
gross negligence or fraud) of this Agreement or any other Termination Event
relating to Provident's performance under this Agreement, (ii) any Material
Change, or (iii) any other occurrence relating to Provident's performance of
services under this Agreement. The rights and remedies available to HPS pursuant
to Part 14 of this Agreement shall be the sole rights and remedies available to
HPS with respect to any losses, costs, claims, damages, or attorneys' fees
arising out of this Agreement. Notwithstanding the foregoing, HPS does not waive
its rights to pursue the remedies available to it in law or equity for an
intentional Breach of this Agreement by Provident, gross negligence, or proven
fraud. Notwithstanding the foregoing, in the event the Agreement is terminated
for any reason other than as provided in Section 17.12 hereof during the first
forty-eight (48) months of the term hereof, Provident agrees to pay HPS the sum
of all remaining Base Service Fee payments (identified in Exhibit B) through the
end of the sixty month term hereof and shall reimburse HPS for all direct costs
incurred by HPS in connection with its effort to undertake the business
contemplated hereby on a pro rated basis. HPS shall have the right to receive
such payments in all events and shall be able to pursue any and all remedies
available with respect thereto. Direct costs shall be formally communicated by
HPS in writing within six (6) months of the Effective Date, for purposes of
calculating pro-rata costs over the sixty (60) month term of this Agreement.


                                      -24-
<PAGE>


        17.10 Transition. Notwithstanding the inherent implied duty of good
faith of the Parties with respect to this Agreement, HPS and Provident agree
that they will cooperate and assist each other upon termination of this
Agreement for any reason to the degree possible consistent with the intent of
this Agreement.

        17.11 Post Termination. In the event Provident requires HPS' continued
service for a period of six (6) months after the effective date of termination
of this Agreement for any reason other than a termination by Provident pursuant
to Section 17.3 hereof, Provident shall pay HPS no greater than $6 per claim
incurred before but administered by HPS after such termination date, to the
extent requested by Provident.

        17.12 Recapture; Return. Notwithstanding any provision to the contrary
in this Agreement:

                      (a) Provident shall have the right to recapture from HPS
the administrative services of the Program to be performed by HPS hereunder,
and upon the completion thereof to terminate this Agreement. In the event that
Provident desires to exercise the rights granted hereunder, it shall give six
(6) months' written notice thereof to HPS. Upon the termination of this
Agreement as herein provided, Provident shall pay to HPS an amount equal to (i)
Base Service Fee payments for the remainder of the initial term of the Agreement
as set forth in Exhibit "B", in a lump sum, and (ii) a Recapture/Return Fee.

                      (b) HPS shall have the right to cease providing the
administrative services of the Program and return the administrative services of
the Program to Provident, and upon the transition thereof, to terminate this
Agreement. In the event that HPS desires to exercise the rights granted
hereunder, it shall give six (6) months' written notice to Provident. Upon the
termination of this Agreement as herein provided, HPS shall pay to Provident a
Recapture/Return Fee. In which event, Provident shall pay the Base Service Fee
payments for the remainder of the initial term of the Agreement as set forth in
Exhibit "B".


                                      -25-
   

<PAGE>

                                     PART 18

                            MISCELLANEOUS PROVISIONS

        18.1 Identification of Services. HPS shall use its best efforts to
perform, whenever possible, the administrative services hereunder on behalf of
Provident under the name of Provident such that Provident's Agents,
policyholders, insureds, Enrollees, and providers shall maintain identification
with Provident and shall not be provided with any identification to HPS or any
of its subcontractors.

                                      -26-



<PAGE>


        18.2 Guarantee by HPC. As an inducement to Provident to enter into this
Agreement, HPC guarantees the prompt and timely performance by HPS of the
obligations of HPS as set forth in this Agreement.


        18.3 Modification; Waivers. No modification, amendment or waiver of this
Agreement, or any part of it, shall be valid unless in writing, signed by the
Party sought to be charged therewith. No waiver of any Breach or condition of
this Agreement shall be deemed to be a waiver of any subsequent Breach or
condition, whether of like or different nature.

        18.4 Governing Law. This Agreement shall be subject to and construed
under the laws of the Commonwealth of Pennsylvania (but not including the choice
of law rules thereof). The parties hereto agree to consent to the jurisdiction
and venue of the courts of the Commonwealth of Pennsylvania located in
Montgomery County, Pennsylvania, and of the United States District Court for the
Eastern District of Pennsylvania, and agree that all disputes between the
parties shall be litigated only therein.

        18.5 References and Section Headings. Any reference to the singular
shall include reference to the plural, and vice versa. Part and section headings
are intended for the purpose of description only and shall not be used for
purposes of interpretation of this Agreement.

        18.6 Severability. In the event any court of competent jurisdiction
holds that a particular provision or requirement of this Agreement is in
violation of any Applicable Law, such provision or requirement shall be enforced
only to the extent it is not in violation of such Applicable Law or is not
otherwise unenforceable, and all other provisions and requirements of this
Agreement shall remain in full force and effect.

                                      -27-


<PAGE>

        18.7 Notices. Any notice, demand or other document required or permitted
to be delivered hereunder shall be in writing and shall be (i) mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, (ii) delivered in person, by reputable delivery service, (iii) sent by
telegram, or (iii) transmitted by facsimile, and shall be addressed to the
recipient Party at the address indicated below, or at such other address as such
party shall indicate in a notice to the other Party sent in accordance with this
Section 18.7:

                      (a)     If to HPS:

                                           HealthPlan Services, Inc.
                                           Attention: Phillip S. Dingle
                                           Senior Vice President & Chief Counsel

                                      -28-





<PAGE>



                              If Delivered By Hand:

                                            3501 Frontage Road
                                            Tampa, FL 33607

                              If Delivered By U.S. Mail:

                                            P.O. Box 30098
                                            Tampa, FL 33630-3098


                              If Delivered By Fax:

                                            813/287-6629

                      (b)     If to Provident:

                              If Delivered By Hand or By U.S. Mail:

                                     James O. Bowles, President and Chief
                                     Operating Officer
                                     Provident Indemnity Life Insurance Company
                                     2500 DeKalb Pike
                                     Norristown, PA 19404-0511

                              If Delivered By Fax:

                                     610/279-1486

                      (c)      With a copy to:

                                     M.F. Beausang, Jr., Esq.
                                     Butera, Beausang, Cohen & Brennan
                                     630 Freedom Business Center
                                     Suite 212
                                     King of Prussia, PA 19406-1331

Each notice, demand or other document that is delivered in the manner described
above shall be deemed to be sufficiently delivered, given, served, sent,
provided, and received for all purposes at such time as it is delivered to the
addressee (with the return receipt, delivery receipt, affidavit of messenger or,
with respect to a facsimile transmission, the answerback being conclusive, but
not exclusive, evidence of such delivery), or at such time as delivery is
refused upon presentation.

                                      -29-
<PAGE>



        18.8 Entire Agreement. This Agreement and the attached Exhibits and
Appendices hereto contains the whole of the understanding between the Parties
hereto relating in any manner of its subject matter, and any representation,
warranty, covenant, understanding or agreement not contained or incorporated in
it by reference shall be of no force or effect. As of the Effective Date, this
Agreement supersedes all prior proposals, discussions, writings, and agreements
between any of the parties to this Agreement relating the subject matter hereof.

        18.9 Binding Agreement: Assignment. This Agreement and all the
provisions hereof will be binding upon and inure to the benefit of the parties
hereto and their permitted assigns. Neither this Agreement nor any other rights,
interests, or obligations hereunder my be assigned by either Party without the
prior written consent of the other Party hereto, which consent will not be
unreasonably withheld. Any assignment in violation of this Agreement shall be
void and to no effect. Notwithstanding the foregoing, upon sixty (60) days'
prior written notice to such effect, HPS may assign its rights and obligations
hereunder to a Corporate Affiliate.

        18.10 Third Party Beneficiaries. This Agreement shall not, and is not
intended to, confer upon any party, other than the Parties hereto and their
successors and permitted assigns, any rights, remedies, obligations or
liabilities, except as expressly provided herein.

        18.11 Force Majeure. Neither Party shall be liable for any delay or
failure to perform its obligations under this Agreement arising out of a cause
beyond its control or without its fault or negligence. Such causes may include,
but are not limited to, fires, floods, and natural disasters.

        18.12 Survival. Each applicable provision of Section 2.10, Part 5 (for
payments owed to Provident hereunder) Part 6, Part 8, Parts 14 through 16, and
Sections 17.8, 17.9, 17.10 and 17.12 of this Agreement, as well as any other
provision applicable to the implementation of such provisions, shall survive
termination of this Agreement for any reason, and for a period of one (1) year
thereafter, unless by its terms it is no longer applicable.

                                      -30-

<PAGE>

        IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed on its behalf as of the date set forth hereunder.

                                            HEALTHPLAN SERVICES, INC.



Dated:                                      By:
      ---------------------------              -----------------------------
                                                    Timothy T. Clifford
                                                    Chief Operating Officer,
                                                    Small Group Business


                                            HEALTHPLAN SERVICES CORPORATION



Dated:                                      By:
      ----------------------------             ------------------------------
                                                     Timothy T. Clifford
                                                     Chief Operating Officer,
                                                     Small Group Business



                                            PROVIDENT INDEMNITY LIFE
                                            INSURANCE COMPANY



Dated:                                      By:
      -----------------------------            -------------------------------
                                                     James O. Bowles, President
                                                     and Chief Operating Officer


                                            PROVIDENT AMERICAN LIFE AND
                                            HEALTH INSURANCE COMPANY




Dated:                                      By:
      ------------------------------           -------------------------------
                                                    James O. Bowles, President
                                                    and Chief Operating Officer

                                      -31-
<PAGE>


                                    EXHIBIT A

                                   DEFINITIONS


        "Administration Fee" shall have the meaning set forth in Section 11.2 of
this Agreement.

        "Agent" shall mean any licensed insurance agent or broker.

        "Applicable Law" shall mean any statute, ordinance, rule, or regulation
of any federal, state, municipal, or other governmental authority applicable to
(i) the Policy or the Certificates, (ii) Agent appointment or licensure, (iii)
underwriting criteria or coverage determinations, (iv) the disposition of
Premium amounts prior to final coverage determinations, (v) the rights or
obligations of Enrollees, (vi) the scope of benefits under the Policy, (vii)
Premium rates, or (viii) any other aspect of the Program (except any law that
specifically regulates solely third party administrators and that is not
otherwise applicable to the Program).

        "Appointment Form" shall mean any appointment or licensure material
provided by Provident to HPS for distribution to Agents.

        "Association" shall mean the association or associations designated and
accessed by Provident, the members of which are covered under the terms of a
Policy issued by Provident.

        "Breach" shall mean a Party's failure, or the act of a Party's failing,
to perform, observe, or satisfy any applicable obligation under this Agreement,
which failure or failing (i) constitutes a pattern of nonperformance, (ii) a
violation of Section 2.10(c), and (iii) has a material adverse effect on the
efficiency of the Program or the profits that the other Party hereto realizes
from the Program.

        "Business Day" shall mean any day other than a Saturday, Sunday, HPS
holiday or holiday at a financial institution at which the Premium Account (or
the account designated by Provident pursuant to Section 5.4 hereof) is located.

        "Certificate" shall mean a certificate issued by Provident to an
Enrollee evidencing such Enrollee's enrollment in the Association and coverage
under the Policy, which certificate (i) is delivered by HPS to an Enrollee
pursuant to this Agreement, or (ii) is issued upon receipt of an application for
enrollment processed by HPS.

        "Collected Funds" shall have the meaning set forth in Section 5.4 of
this Agreement.

                                      -32-

<PAGE>
        "Confidential Information" shall have the meaning set forth in Section
16.1 hereof.

        "Corporate Affiliate" shall mean a corporation, more than 50% of the
capital stock of which is owned by a Party.

        "Defaulting Party" shall have the meaning set forth in Section 17.3 of
this Agreement.

        "Deposit" shall have the meaning set forth in Section 5.6 of this
Agreement.

        "Effective Date" shall have the meaning set forth in the Recitals of
this Agreement.

        "Enrollee" shall mean any individual covered under a Certificate.

        "Generally Accepted Clinical Standards" shall have the meaning set forth
in Section 2.7 of this Agreement.

        "Material Change" shall have the meaning set forth in Section 12.3 of
this Agreement.

        "Material Change Termination Event" shall have the meaning set forth in
Section 17.4 of this Agreement.

        "Participation Document" shall have the meaning set forth in Section 4.1
of this Agreement.

        "Party" shall mean either HPS or Provident.

        "Policy" shall mean the health insurance policy issued by Provident that
covers all Enrollees in the Association.

        "Premium" shall mean any amount that Provident charges any Enrollee for
coverage under the Policy, excluding association dues, enrollment,
administration and billing fees.

        "Premium Account" shall have the meaning set forth in Section 5.3 of
this Agreement.

        "Recapture/Return Fee" shall mean a payment as liquidated damages of
$2,000,000; no Recapture Fee shall be payable upon termination after the fourth
year.

        "Reconciliation Report" shall have the meaning set forth in Section 5.4
of this Agreement.



                                      -33-

<PAGE>

        "Receiving Party" shall have the meaning set forth in Section 16.1(a) of
this Agreement.

        "Records" shall have the meaning set forth in Section 6.1 of this
Agreement.

        "Remittance Due" shall have the meaning set forth in Section 5.4 of this
Agreement.

        "Service Fee" shall have the meaning set forth in Section 11.1 of this
Agreement.

        "Special Claims Services" shall have the meaning set forth in Section
2.6 of this Agreement.

        "Termination Event" shall have the meaning set forth in Section 17.3 of
this Agreement.


        "True Small Group" shall mean a plan of, or contributed by, an employer,
including a self-employed person, or employee organization to provide health
care to the employees, former employees, the employer, others associated with or
formerly associated with the employer in a business relationship, or their
families. True Small Group shall also include bona fide associations as defined
by Health Insurance Portability and Accessability Act of 1996.

                                      -34-
<PAGE>



                                    EXHIBIT B

                                  COMPENSATION

        For purposes of this Agreement, the "Service Fee" to be retained by HPS
with respect to each Certificate shall be as follows:

               (i) A Base Service Fee of $85,000 per month during the first
        sixty (60) months of the term of the Agreement;

               (ii) $10,000 per month during the first sixty (60) months of the
        term of the Agreement in exchange for loss ratio management advisory
        services to be provided by HPS;

               (iii) Additional Service Fees as a percent of premium with
respect to the policies administered by HPS, as follows:

 Annualized Earned Premium
 (paid monthly, but determined
 on a quarterly basis)
                                                              HPS Service Fee
         (000,000)
                       $                                                       %
         Less than 110                                          8.00

 At least 110 but less than 120                          7.75
                "      120            "      130                       7.50
                "      130            "      140                       7.25
                "      140            "      150                       7.00
                "      150            "      175                       6.75 
 "        175   "      200                     6.50
                "      200            "      250                       6.25
                    [250 or more]                        6.00

Additional Service Fees shall be paid on a monthly basis, upon the preceding
calendar quarter's Annualized Earned Premium.

               (iv) Additional Service Fees with respect to underwriting shall
        be: $25 per submitted application, if less than 15,000 applications per
        quarter, plus $20 per application submitted in excess of 14,999
        applications per quarter; (for 1998, the total payable shall not be less
        than $225,000 per quarter; for 1999 and thereafter, the amount payable
        shall be $30 per submitted application if less than 10,000 applications
        are submitted per quarter; if more than 10,000 applications are
        submitted per quarter, the above scale applies).

                                      -35-

<PAGE>

                (v) Additional Service Fees for premium from (I) those policies
        assumed after the date hereof through Provident's acquisition of other
        companies or of blocks of business and (II) those policies or plans
        issued by Provident which are not customary in the industry or which
        require significant programming changes by HPS shall be adjusted
        accordingly, and the pricing will be mutually agreed upon by both
        parties; and

               (vi) Six Dollars ($6) for each claim that HPS administers which
        is incurred before the Effective Date but received after such date, in
        addition to those claims reported and outstanding as of any transition
        dates as mutually agreed upon by the parties, on all administered
        business that is the subject of this Agreement; and

               (vii) The cost of claim payment for claims incurred during the
        Agreement period and submitted following the termination date, or, if
        later, a mutually agreed upon transition date, shall be borne by HPS, at
        a mutually agreeable rate, not to exceed Six Dollars ($6) per claim.

                                      -36-





<PAGE>




                         AMENDMENT TO SERVICES AGREEMENT




        THIS AMENDMENT TO SERVICES AGREEMENT is made and entered into this _____
day of February, 1998, by and among PROVIDENT INDEMNITY LIFE INSURANCE COMPANY,
a Pennsylvania corporation, and PROVIDENT AMERICAN LIFE AND HEALTH INSURANCE
COMPANY, a Pennsylvania corporation (collectively, "Provident"), HEALTHPLAN
SERVICES CORPORATION, a Delaware corporation ("HPC") and HEALTHPLAN SERVICES,
INC., a Florida corporation ("HPS").

                                   BACKGROUND

        A. The parties entered into an agreement entitled Services Agreement
dated October 16, 1997 and effective as of February 1, 1998 (the "Services
Agreement").

        B. The parties are desirous of amending the Services Agreement as
hereinafter set forth.

        NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereby agree as follows:

               1. Amendment to Exhibit "B". Exhibit "B" to the Services
Agreement is hereby amended in its entirety as set forth in the form of the
Amended Exhibit "B" attached hereto as Exhibit "A".

               2. Effective Date. The effective date for Amended Exhibit "B"
shall be February 1, 1998.

               3. Ratification. As herein amended, the Services Agreement is
ratified, approved, and affirmed, and remains in full force and effect.

                                      -1-

<PAGE>

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Services Agreement as of the day and year first above written.


                                           HEALTHPLAN SERVICES, INC.



Dated:                                      By:
      ---------------------------              --------------------------------
                                               Phillip S. Dingle
                                               Chief Legal Officer




                                           HEALTHPLAN SERVICES CORPORATION



Dated:                                      By:
      ----------------------------             --------------------------------
                                                Phillip S. Dingle
                                                Chief Legal Officer



                                            PROVIDENT INDEMNITY LIFE INSURANCE
                                                         COMPANY



Dated:                                      By:
      ------------------------------           --------------------------------
                                               James O. Bowles, President



                                            PROVIDENT AMERICAN LIFE AND HEALTH
                                                    INSURANCE COMPANY



Dated:                                      By:    
      --------------------------------         --------------------------------
                                               James O. Bowles, President


                                      -2-


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