ASSET PURCHASE AGREEMENT

 

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                           ASSET PURCHASE AGREEMENT
                                    
                                   Between
                                    
                   CENTRAL MASSACHUSETTS HEALTH CARE, INC.
                                    
                                     and
                                    
                       HEALTHSOURCE MASSACHUSETTS, INC.
                                    
                                    
                                April 10, 1995
                                    
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                           ASSET PURCHASE AGREEMENT

        ASSET PURCHASE AGREEMENT dated as of the 10th day of April, 1995, by
and between CENTRAL MASSACHUSETTS HEALTH CARE, INC., a not-for-profit
corporation organized under the laws of the Commonwealth of Massachusetts with
a principal address at 100 Front Street, Suite 300, Worcester, Massachusetts
01608 (the "Seller") and HEALTHSOURCE MASSACHUSETTS, INC., a corporation
organized under the laws of the Commonwealth of Massachusetts with a principal
office at c/o Healthsource, Inc., Two College Park Drive, Hooksett, New
Hampshire 03106 (the "Buyer").

        WHEREAS, Buyer is a wholly-owned subsidiary of Healthsource, Inc.
("Healthsource") and will seek to become licensed as an HMO in Massachusetts;

        WHEREAS, Healthsource desires to continue its HMO business in
Massachusetts and believes that Seller is well established in central
Massachusetts and capable of further market development and expansion in
central and eastern Massachusetts;

        WHEREAS, Buyer  recognizes that Seller has a similarly oriented HMO
business that relies in significant part on close relationships with the
physician community;

        WHEREAS, Buyer recognizes that Seller has significant management
personnel and Board of Director leadership and Buyer currently intends to
utilize such personnel and leadership in Buyer's envisioned expansion in
central and eastern Massachusetts;

        WHEREAS, Seller desires to sell and Buyer desires to purchase from
Seller the health maintenance organization business of Seller (including all of
the assets of Seller related thereto) which Buyer currently intends to operate
locally through Seller's offices and through Seller's employees and managers in
Worcester under the name "Central Massachusetts Health Care";

        WHEREAS, Buyer currently intends that Buyer after Closing shall be the
exclusive vehicle used by Healthsource to operate and expand its HMO business
within central and eastern Massachusetts; and,

        WHEREAS, Seller and Buyer desire to enter the transactions contemplated
in this Agreement.

        NOW, THEREFORE, in consideration of the mutual promises herein set
forth, and subject to the terms and conditions hereof, the parties agree as
follows:

1.   DEFINITIONS.

        As used in this Agreement, terms defined in the preamble and recitals
of this Agreement shall have the meanings set forth herein and the following
terms shall have the meanings set forth below:

        (a)  "AGREEMENT" shall mean this Asset Purchase Agreement and all
        Schedules and Exhibits hereto, as the same may from time to time be 
        amended as permitted by this Agreement.

        (b)  "CLOSING" shall mean the simultaneous closing of the purchase of
        the assets of Seller specified herein together with all other deliveries
        contemplated by this Agreement; such Closing to be at the offices of
        Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. on a date and at a
        time to be established by mutual agreement of the parties, but in no
        event later than the first business day of the month following the month
        in which there is satisfaction or waiver of the conditions to
        Closing as provided in SECTIONS 9 AND 10.

        (c)   "CODE" shall mean the Internal Revenue Code of 1986 and all
        regulations promulgated thereunder, including any amendments or any     
        substitute or successor provisions thereto.

        (d)  "ERISA" shall mean the Employee Retirement Income Security      
        Act of 1974 (and any sections of the Code amended by it) and all
        regulations promulgated thereunder, as the same have from time to
        time been amended.

        (e)  "ESTIMATED BALANCE SHEET" shall mean the estimated balance sheet as
        herein determined.  Seller shall, thirty (30) days prior to the Closing
        Date, deliver to Buyer a proposed estimated balance sheet of Seller as
        of such date ("Proposed Estimated Balance Sheet") which presents fairly
        the financial condition of Seller as of such date in accordance with
        generally accepted accounting principles and actuarial reserving
        practices consistently applied with those used in the preparation of the
        1994 Balance Sheet and applying the Special Accounting Principles
        described in SECTION 1(i).  Deloitte & Touche, LLP shall be given a
        reasonable opportunity to review the Proposed Estimated  Balance Sheet
        in draft form before it is finalized (including all work papers of KPMG
        Peat Marwick, LLP, actuarial assumptions and calculations).  In the
        event Buyer and Buyer's independent accountants, Deloitte & Touche, LLP
        dispute the Proposed Estimated Balance Sheet, they shall notify Seller
        and KPMG Peat Marwick, LLP within two weeks of the receipt of all such
        papers and shall attempt to resolve such dispute.  If the parties are
        unable to resolve the dispute within ten (10) days after Buyer's receipt
        of all papers from KPMG Peat Marwick, LLP, KPMG Peat Marwick, LLP and
        Deloitte & Touche, LLP shall select a third nationally recognized
        accounting firm to act as arbitrator of the dispute and such firm shall
        resolve the 

        dispute within ten (10) days after such dispute is referred to such
        arbitrator.  The decision of the arbitrator shall be final and binding
        on Seller and Buyer.  Seller and Buyer shall share equally the fees and
        expenses of the arbitrator.  The resulting balance sheet shall be
        binding on both parties and shall form the basis for preparation and
        delivery by Seller at Closing of the Estimated Balance Sheet, which
        shall be prepared in a manner consistent with the Proposed Estimated
        Balance Sheet (as modified by agreement of Seller and Buyer and by
        arbitration, if necessary, as described herein).

        (f)  "HISTORICAL FINANCIALS" shall mean the balance sheet as of December
        31, 1993 and 1994 for Seller and the statements of revenues and
        expenses, changes in fund balances and cash flows of the HMO Business
        for the years ended December 31, 1992, 1993 and 1994 for the HMO
        Business prepared by Seller so as to fairly present the operations and
        financial condition of the HMO Business in accordance with generally
        accepted accounting principles, consistently applied, together with the
        unqualified opinion and report (with standard footnotes) of KPMG Peat
        Marwick, LLP upon such statements prepared in accordance with
        generally accepted auditing standards.  Such Historical Financials shall
        be prepared in compliance with SEC Rule S-X in form for filing with the
        SEC and coupled with the consent of KPMG Peat Marwick, LLP to being
        named as experts and to the use of their reports in such filing.  All
        costs of preparing the Historical Financials shall be borne by Seller.

        (g)  "MATERIAL ADVERSE EFFECT" for purposes of SECTION 10.15 hereof
        shall mean any event, occurrence or matter having a material adverse
        effect on the business, operations, property, results of operations,
        financial condition or prospects of Seller or the HMO Business,
        including but not limited to failure to negotiate and enter into the
        hospital services agreement with the Medical Center of Central
        Massachusetts ("MCCM") referred to in SECTION 18 on the terms and       
        conditions specified in EXHIBIT J for all members of Seller and its
        present or future affiliates, including without limitation, Buyer and
        its affiliates.

        (h)  "1994 BALANCE SHEET" shall mean the balance sheet of Seller as of
        December 31, 1994 prepared by Seller so as to fairly present the
        financial condition of Seller in accordance with generally accepted
        accounting principles and actuarial reserving practices, consistently
        applied, together with the unqualified opinion and report (with standard
        footnotes) of KPMG Peat Marwick, LLP upon such statements prepared in
        accordance with generally accepted auditing standards as modified by the
        Special Accounting Principles.  Buyer's independent accountants,
        Deloitte & Touche, LLP shall be given a reasonable opportunity to review
        the 1994 Balance Sheet in draft form before it  is finalized (including
        all work papers of KPMG Peat Marwick, LLP actuarial assumptions and 

        calculations).  In the event Buyer and Buyer's independent accountants,
        Deloitte & Touche, LLP dispute the 1994 Balance Sheet, they shall notify
        Seller and KPMG Peat Marwick, LLP within one week of the receipt of all
        such papers and shall attempt to resolve such dispute.  If the parties
        are unable to resolve the dispute within fifteen (15) business days
        after Buyer's receipt of all papers from KPMG Peat Marwick, LLP,
        Deloitte & Touche, LLP and KPMG Peat Marwick, LLP shall select a third
        nationally recognized accounting firm to act as arbitrator of the
        dispute and such firm shall resolve the dispute within fifteen (15)
        business days after such dispute is referred to such arbitrator.  The
        decision of the arbitrator shall be final and binding on Seller and
        Buyer.  Seller and Buyer shall share equally the fees and expenses of
        the arbitrator.  The resulting balance sheet shall be binding on both
        parties and shall be the "1994 Balance Sheet."

        (i)  "SPECIAL ACCOUNTING PRINCIPLES" shall mean the following Special
        Accounting Principles which shall apply to the specific financial
        statements required by this Agreement, where these Special Accounting
        Principles are specifically referenced:  (i) there shall be included not
        only incurred but unbilled services but also a full accrual for
        completion of hospitalization existing on the end of the accounting
        period (hereafter the "Full Accrual Principle"); and (ii) for purposes
        of preparation of any balance sheet and any income statement, activities
        outside of the ordinary business and investment activities of any kind
        shall be eliminated to remove any effect that would increase the income
        or net worth in said calculations, for example and without limitation,
        any net gain (after deducting any losses from the sale of appreciated
        securities or other capital assets) shall be excluded from the
        calculations, as well as the income tax related to such net gain, but
        this shall not have any impact on interest or dividend income as
        normally accounted for by Seller's accounting policies.

        (j)  "TAXES" shall mean all federal, state, local, foreign, and other
        net income, gross income, gross receipts, sales, use, ad valorem,
        transfer, franchise, profits, license, lease, service, service use,
        withholding, payroll, employment, excise, severance, stamp,
        occupation, premium, property, windfall profits, customs, duties or
        other taxes, fees, assessments, or charges of any kind whatever,
        together with any interest and any penalties, additions to tax, or
        additional amounts with respect thereto. 

2.   PURCHASE OF HMO BUSINESS; RELATED MATTERS.

           2.01 PURCHASE OF THE HMO BUSINESS.  Seller shall assign and Buyer
shall assume the business of Seller's HMO Business as of Closing consisting
of all HMO products of Seller which remain in force as of Closing, together
with all operating assets of Seller used in the operation of Seller's HMO
Business subject to the terms and conditions 

of this Agreement, including but not limited to:  (a) all accounts receivable of
Seller existing as of Closing, including without limitation all uncollected
servicing fees, premiums, and any and all other amounts and accounts receivable
due to Seller; (b) subject to SECTION 2.04, assignments of all written
contracts, agreements, leases (including without limitation, leases of real,
personal, or tangible property), licenses, permits, rights, obligations or other
commitments of Seller; (c) all subscriber and employer agreements, including all
reinsurance or stop-loss policies which Buyer shall continue in force absent
Seller's agreement that they shall lapse, all policy-related files,
policy-related data, inventory of current forms, business and personnel records,
files and plans, separate telephone numbers, product and brand names, and all
transferable contractual rights of Seller; (d) all intangible assets of Seller
including but not limited to marks, names, trademarks, service marks, patents,
patent rights, assumed names, logos, trade secrets, proprietary rights, all
computer software (whether owned or licensed with Seller taking all actions
necessary to properly transfer all of Seller's software to Buyer including
without limitation paying any additional necessary license fees to software
vendors), subrogation rights (including without limitation, assets realized as a
result thereof), confidential or proprietary information, prepayments, deferred
charges, refunds, credits, claims, benefits and other rights and interest of
Seller including without limitation the name Central Massachusetts Health Care,
Inc.; and (e) all tangible assets of Seller used in the operation of Seller's
HMO Business including, but not limited to, furniture, fixtures, equipment,
supplies, computer hardware, and all other tangible assets and personal property
of Seller, but not including the capital stock of 300 Grove Street Realty Corp.
(or any assets thereof) or any notes receivable or other obligations of
Worcester Surgical Center, Inc. to Seller or other assets of Seller relating to
the Worcester Surgical Center.  The business being transferred is referred to
herein as the "HMO Business" and the assets being transferred are referred to
herein as the "Assets".  Buyer shall assume the HMO Business pursuant to an
Assumption Reinsurance Agreement approved by the Massachusetts Division of
Insurance, in the form attached hereto as EXHIBIT A.  A computer generated
schedule of all such existing assets having an individual book value of more
than $1,000 is attached as SCHEDULE 6.08.

        2.02 EMPLOYMENT MATTERS.  In connection with the acquisition of the HMO
Business, Buyer, at Closing, shall hire Seller's current employees engaged in
the conduct of  Seller's business (hereinafter the "Transferred Employees") at
salaries comparable to those disclosed under SECTION 6.14.  It is the current
intention of Buyer to retain Seller's workforce after Closing at salaries and
with benefits substantially similar to those provided by Seller to such
employees on the Closing Date; it being understood and agreed that this
representation does not confer any rights of continued employment upon any such
Transferred Employee other than that of an employee-at-will.  After Closing,
employees of Seller who accept employment with Buyer shall be eligible to
receive those salary and other benefits as shall be applicable from 

time to time to other employees of Buyer holding comparable positions.  At
Closing Buyer shall also assume all obligations of Seller under the     
agreements with certain key employees as disclosed in SCHEDULE 2.02.

        2.03 EMPLOYEE BENEFITS.  Seller's current employees are presently
participating in the benefit plans listed in SCHEDULE 6.24 (collectively the
"Employee Benefit Plans").  As of the day prior to Closing,  Seller shall
terminate the participation of Seller's employees in the Employee Benefit Plans
and Seller shall be entirely responsible for administering and reporting each
such termination as well as providing such notices of vested rights or payments,
if any, to each such participant as are required by law and shall hold Buyer
harmless from any liability occasioned by such termination or arising from such
employees prior participation in the Employee Benefit Plans.  After Closing
Seller's employees shall participate in the benefit plans of Buyer.

        2.04 PHYSICAL FACILITIES/OFFICE FURNITURE AND EQUIPMENT.  Seller
currently leases office space in Worcester, Massachusetts from Worcester Center
Realty Trust under a lease expiring October 31, 1999.  Seller shall cause an
assignment of said lease to Buyer at Closing and shall deliver to Buyer an
estoppel certificate from the lessor of such property.
   
        2.05 ASSIGNMENT OF CONTRACTS.  At Closing Seller shall assign to Buyer
all contracts listed on SCHEDULE 2.05A and all other contracts used in Seller's
business which Buyer elects to assume at Closing and shall secure all necessary
consents to the assignment of such assigned and assumed contracts; including
without limitation the consents of employers and groups referred to in SECTION
10.16 and the consents of hospitals referred to in SECTION 10.17.  At Buyer's
option after further review, Seller shall assign the contract listed on SCHEDULE
2.05B to Buyer; in the event Buyer elects not to require Seller to assign such
contract to Buyer, Seller shall retain and Buyer shall not assume any liability,
expense or claim whatsoever in any way relating to such contract or relating to
any other parties to such contract.

        2.06 PURCHASE OF HMO BUSINESS - GENERAL.  Buyer shall purchase the
assets and specified liabilities of the HMO Business as further described in
this Agreement.  The investment assets transferred to Buyer by Seller shall
include only: (i) direct obligations of the U.S. Government or its agencies
maturing in 90 days or less from the date of issuance; (ii) certificates of
deposit maturing not more than 90 days from the date of issuance issued by a
bank whose long term debt is rated AA by Moody's Investors Services, Inc. and AA
or better by Standard and Poor's Corporation; (iii) publicly traded investment
grade "NAIC 1" money market and fixed income securities; and (iv) cash
(hereinafter referred to collectively as "Acceptable Financial Assets").

        2.07 DELIVERY OF 1994 BALANCE SHEET, ESTIMATED BALANCE SHEET AND
HISTORICAL FINANCIALS.  As soon practicable after execution of this Agreement
Seller shall deliver to Buyer the 1994 Balance Sheet.  At

Closing, Seller shall at its sole expense deliver the Estimated Balance
Sheet and the Historical Financials for the HMO Business.

        2.08 THIRD PARTIES GENERALLY.  Seller shall obtain from third parties
all necessary consents in a form reasonably acceptable to Buyer so that each
third party relationship with the HMO Business shall remain in effect on the
same terms and conditions after Closing.

        2.09 PHYSICIAN WITHHOLDS.  At or prior to Closing, Seller shall pay to
its participating physicians up to one hundred percent (100%) of the fees
withheld from participating physicians for the calendar year 1994, currently
estimated at $5,825,000, or such lesser amount as shall be approved by the
Commonwealth of Massachusetts Attorney General and Massachusetts Division of
Insurance ("Physician Withholds") and shall provide Buyer with proof of payment
of the Physician Withholds.  Buyer shall assume no liability whatsoever for the
payment of the Physician Withholds.

3.      PURCHASE PRICES; METHOD OF PAYMENT; ALLOCATION.

        3.01  PURCHASE PRICE.  In consideration of the transfer of the Assets
and Seller's Non-Competition Covenant referred to in SECTION 11, Buyer shall pay
to Seller at Closing an amount (the "Adjusted Purchase Price") equal to the base
purchase price of Sixty Two Million Five Hundred Thousand Dollars ($62,500,000)
(the "Base Purchase Price) as adjusted in accordance with the provisions of
SECTION 4, calculated as reflected on SCHEDULE 4.01.

        3.02 METHOD OF PAYMENT.  Buyer shall make payment at Closing of the net
amount due Seller after any adjustments, credits and pro-rations by wire
transfer to Seller's bank.  Notwithstanding the above, Buyer may elect to retain
a portion of the Adjusted Purchase Price to offset Seller's obligation to
deliver the Acceptable Financial Assets at book value and such cash retained by
Buyer shall be deemed to be part of the Acceptable Financial Assets delivered by
Seller to Buyer.  Seller may elect to retain certain Acceptable Financial Assets
at book value and Buyer may retain a portion of the Purchase Price to offset
Seller's obligation to deliver such Acceptable Financial Assets; such cash
retained by Buyer shall be deemed to be part of the Acceptable Financial Assets
delivered by Seller to Buyer.

        3.03 ALLOCATION OF PURCHASE PRICE.  The purchase price for the Assets
shall be allocated by Buyer; Seller shall cooperate with Buyer in the filing of
all forms and reports necessary to effect such allocation.

        3.04 SELLER'S LIABILITIES.  Seller shall assume, bear and seasonably
satisfy all of its expenses, debts and liabilities including without limitation,
contractual claims, claims of employees, claims against any affiliate, director,
officer, employee or agent, employee benefit plan claims, litigation liability,
tort liability, workmen's compensation claims, accounts payable, tax liability
of any kind, health 

care expenses, and commissions on a fully accrued basis arising from the conduct
of the HMO Business through Closing and any and all activities performed (or not
performed) prior to Closing (including without limitation any liability relating
to or arising from the matters listed on SCHEDULE 3.04 attached hereto), it is
agreed that Buyer assumes none of such liabilities, whether known or unknown,
nor however arising, except for any such liabilities which are specifically
reflected in the Estimated Balance Sheet or the Final Balance Sheet and only to
the extent Buyer received effective credits for same in calculating the tangible
minimum net worth referred to under SECTION 4.01(a) and 4.02.  Moreover, Buyer
shall not assume any liabilities whatsoever in any way relating to (i) 300 Grove
Street Realty Corp., Worcester Surgical Center, Inc. or the Somerset/Worcester
MRI Limited Partnership; or (ii) the Physician Withholds defined in SECTION 2.09
which Seller shall pay to its participating physicians at or prior to
Closing to the extent permitted in SECTION 2.09.

4.   PURCHASE PRICE CREDIT AND POST-CLOSING ADJUSTMENT;
     PRO-RATIONS.

     4.01 PURCHASE PRICE CREDITS.
          -----------------------

          (a)  CHANGES IN TANGIBLE NET WORTH.  If the tangible net worth
          (Fund balances) of Seller as reflected on the Estimated Balance
          Sheet at Closing is less than $18,200,000, Buyer shall receive a
          purchase price credit equal to the difference between such
          tangible net worth as reflected on the Estimated Balance Sheet
          and $18,200,000, subject to offset by the "1995 Losses Offset" as
          defined in SECTION 4.01(b).  If the tangible net worth of Seller
          as reflected on the Estimated Balance Sheet at Closing is greater
          than $18,200,000, Buyer will pay such excess to Seller at
          Closing.  Seller and Buyer acknowledge and agree that all
          amounts, if any, paid or to be paid by Seller to physicians prior
          to or at Closing for return of Physician Withholds as permitted
          by SECTION 2.09 shall be deducted from the "Risk fund" line item
          of the Estimated Balance Sheet and Final Balance Sheet (which
          will have the effect of reducing the Seller's total "Fund
          balances" shown in such Estimated Balance Sheet and Final Balance
          Sheet).

          (b)  1995 LOSSES OFFSET.  For purposes of determining any
          purchase price credit or adjustment, if any, under SECTIONS
          4.01(a) and 4.02(a), in the event that Seller's tangible net
          worth as of the Closing Date is less than $18,200,000 (for
          reasons other than as a result of the payment of the Physician
          Withholds), Seller shall be entitled to offset amounts otherwise
          due to Buyer as a result of any such shortfall from $18,200,000
          incurred in the period from January 1, 1995 through the date of
          Closing by up to $1.5 

          million in operating losses incurred by Seller during such period 
          (January 1, 1995 through the date of Closing).

     (c)  EXCLUSION OF NON-HMO BUSINESS ASSETS.  As provided in SECTIONS
          2.01 and 3.04, Seller and Buyer agree that all assets and
          liabilities and any operational responsibilities relating to 300
          Grove Street Realty Corp., Worcester Surgical Center, Inc. and
          the Somerset/Worcester MRI Limited Partnership (hereinafter the
          "Non-HMO Business Assets) will be retained by Seller.  The
          Adjusted Purchase Price shall in all cases be determined by
          excluding therefrom the value of the Non-HMO Business Assets of
          Seller as reflected on the Estimated Balance Sheet and the Final
          Balance Sheet.

     4.02 POST-CLOSING ADJUSTMENTS.
          -------------------------

          (a)  FINAL BALANCE SHEET ADJUSTMENT.  Seller will, within 45 days
          after the Closing Date, deliver to Buyer a proposed final balance
          sheet of Seller as of the Closing Date ("Proposed Final Balance
          Sheet") which presents fairly the financial condition of Seller
          as of the Closing Date in accordance with generally accepted
          accounting principles and actuarial reserving practices
          consistently applied with those used in the preparation of the
          Estimated Balance Sheet and the 1994 Balance Sheet (and applying
          the Special Accounting Principles), together with the unqualified
          opinion of KPMG Peat Marwick, LLP prepared in accordance with
          generally accepted auditing standards as modified by the Special
          Accounting Principles.  Buyer's independent accountants, Deloitte
          & Touche, LLP shall be given a reasonable opportunity to review
          the Proposed Final Balance Sheet in draft form before it is
          finalized (including all work papers of KPMG Peat Marwick, LLP
          actuarial assumptions and calculations).  In the event Buyer and
          Buyer's independent accountants, Deloitte & Touche, LLP dispute
          the Proposed Final Balance Sheet, they shall notify Seller and
          KPMG Peat Marwick, LLP within two weeks of the receipt of all
          such papers and shall attempt to resolve such dispute.  If the
          parties are unable to resolve the dispute within fifteen (15)
          business days after Buyer's receipt of all papers from KPMG Peat
          Marwick, LLP Deloitte & Touche, LLP and KPMG Peat Marwick, LLP
          shall select a third nationally recognized accounting firm to act
          as arbitrator of the dispute and such firm shall resolve the
          dispute within fifteen (15) business days after such dispute is
          referred to such arbitrator.  The decision of the arbitrator
          shall be final and binding on Seller and Buyer.  Seller and Buyer
          shall share equally the fees and expenses of the arbitrator.  The
          resulting balance sheet shall be binding on both parties and
          shall be the "Final Balance Sheet."  To the extent that the Final
          Balance Sheet reflects tangible net worth of 

          Seller as of the Closing Date of less than $18,200,000, Seller shall
          pay the difference (adjusted for any prior adjustment to the purchase
          price received by Buyer or Seller pursuant to SECTIONS 4.01(a) and
          4.01(c) above and the 1995 Losses Offset of SECTION 4.01(b) above). 
          If the tangible net worth of Seller as of the Closing Date as
          reflected on the Final Balance Sheet is greater than $18,200,000
          (including without limitation by reason of there being IBNR
          reserves in excess of that which would be required in accordance with
          generally accepted accounting and actuarial reserving practices
          consistent with past practices of Seller) such difference will be paid
          by Buyer to Seller (adjusted for any prior adjustment to the purchase
          price received by Buyer or Seller pursuant to SECTION 4.01(a) above).

          (b)  UPDATED FINAL BALANCE SHEET IBNR ADJUSTMENT.  Within 45 days
          after June 30, 1996, Buyer shall deliver to Seller an audited
          updated Final Balance Sheet of  Seller's HMO Business as of the
          Closing Date prepared in accordance with generally accepted
          accounting principles and actuarial reserving practices
          consistently applied with those used in the preparation of the
          Final Balance Sheet (including the Special Accounting
          Principles), reviewed by Buyer's auditors ("Updated Final Balance
          Sheet"), which takes into account actual payments after Closing
          for claims for health care incurred but not reported ("IBNR")
          through the date of Closing along with an appropriate accrual for
          any remaining IBNR ("Actual IBNR").  If Actual IBNR as reflected
          in the Updated Final Balance Sheet is different from IBNR
          reported in the Final Balance Sheet, Seller will pay the
          difference to Buyer if such Actual IBNR is greater than the Final
          Balance Sheet IBNR and Buyer will pay the difference to Seller if
          such Actual IBNR is less than the Final Balance Sheet IBNR.

          (c)  PAYMENTS; INTEREST.  Any post-closing payments pursuant to
          this Section 4.02 shall be paid within five (5) days of
          determination as provided in Sections 4.02(a) or (b), along with
          interest thereon from the Closing Date at the Prime Rate as
          defined in Section 13.  

     4.03 CLOSING PRO-RATIONS.  The following items shall be adjusted at
Closing:

          (a)  To the extent that such amounts have not been reflected as
          liabilities on the books of Seller, Seller shall pay to Buyer at
          Closing those amounts representing unearned prepaid premiums on
          all health care benefits provided by Seller.

          (b)  Final payroll for all Transferred Employees shall be
          pro-rated between Seller and Buyer based upon the working days
          attributable to each to Closing.  Based upon Seller's vacation,
          sick leave and personal day policy now in effect, an appropriate
          accrual shall be made for all vacation leave, sick leave and
          personal days earned through Closing and Seller shall pay such
          amount to Buyer at Closing and Buyer shall assume Seller's
          obligations for such vacation, sick leave and personal days.

5.   SELLER'S OR BUYER'S DELIVERIES; FURTHER ASSURANCES.

     5.01 SELLER'S DELIVERIES.  At Closing Seller shall deliver to Buyer:
          -------------------

          (a)  a bill of sale in the form of Exhibit B attached hereto;

          (b)  copies of all minute books of Seller;

          (c)  copies of the Articles of Organization, and any amendments
          thereto, of Seller certified by the Secretary of State of the
          Commonwealth of Massachusetts, and the By-Laws (with any
          amendments thereto) of Seller, certified by the Secretary of
          Seller;

          (d)  a certificate dated as of Closing and executed on behalf of
          Seller by a duly authorized officer of each stating that:  (i)
          all of the representations and warranties made by them in this
          Agreement and in any Schedule hereto (as the same have been
          amended) are true and correct on and as of Closing with the same
          effect as though such representations and warranties had been
          made as of such Closing, except with respect to the transactions
          and matters required or contemplated by this Agreement; and, (ii)
          Seller has performed and complied with all of its obligations
          under this Agreement which are to be performed or complied with
          prior to or on Closing; 

          (e)  such other instrument or instruments of transfer, in such
          form as shall be necessary or appropriate to vest in Buyer
          marketable title to the assets conveyed hereunder;

          (f)  certificates issued by appropriate governmental authorities
          evidencing:  (i) the corporate existence and good standing of
          Seller as a corporation in the Commonwealth of Massachusetts; and
          (ii) the appropriate licensure and good standing of Seller with
          the Commonwealth of Massachusetts Division of Insurance as of a
          date not more than ten (10) days prior to Closing;

          (g)  the Assumption Reinsurance Agreement between Seller and
          Buyer in the form of EXHIBIT A;

          (h)  an opinion from Messrs. Choate, Hall & Stewart, counsel to
          Seller, in the form of EXHIBIT C-1;

          (i)   evidence of all of Seller's approvals referred to in
          SCHEDULE 6.17 and SECTION 6.18;

          (j)  the Non-Competition Agreement referred to in and required by
          SECTION 11, in the form of EXHIBIT D;

          (k)  assignments of all contracts referred to in SCHEDULE 2.05
          and SECTION 2.05;

          (l)  transfers and assignments of all of Seller's owned and
          leased computer software including, without limitation, the
          software listed on SCHEDULE 6.10;

          (m)  the Comfort Letter referred to in Section 10.10 in the form
          of EXHIBIT F;

          (n) the 1994 Balance Sheet, the Estimated Balance Sheet and
          Historical Financials as required by SECTION 2.07;

          (o) assignments of the lease to Seller's office with appropriate
          estoppel certificates of the lessor of such property; and

          (p)  the Releases referred to in SECTION 10.18.

     5.02 BUYER'S DELIVERIES.  At Closing, Buyer shall deliver:

          (a)  cashier's check or evidence of wire transfer in the amount
          of the Adjusted Purchase Price due in accordance with SECTIONS 3
          and 4 hereof; 

          (b)  a certificate dated as of Closing and executed on behalf of
          Buyer by a duly authorized officer, stating that:  (i) all of the
          representations and warranties made by Buyer in this Agreement
          are true and correct on and as of Closing with the same effect as
          though such representations and warranties had been made and
          given on Closing; and, (ii) Buyer has performed and complied with
          all of its obligations under this Agreement which are to be
          performed or complied with prior to or on Closing;

          (c)  the Assumption and Reinsurance Agreement in the form of
          EXHIBIT A;

          (d)  an opinion from Sheehan Phinney Bass + Green, Professional
          Association in the form of EXHIBIT C-2;

          (e)  certificates issued by appropriate government authorities
          evidencing: (i) the corporate existence and good standing of
          Buyer as a corporation in the Commonwealth of Massachusetts as of
          a date not more than ten (10) days prior to Closing and (ii) the
          appropriate licensure as an HMO and good standing of Buyer with
          the Commonwealth of Massachusetts Division of Insurance; and

          (f)  evidence of all of Buyer's approvals referred to in SECTION
          7.03 and SCHEDULE 7.03.

     5.03 FURTHER ASSURANCES.  Following Closing, at the request of Buyer,
Seller shall deliver to Buyer such further documents executed by Seller and
take such reasonable action as may be necessary or appropriate:  (i) to
confirm the sale, transfer, assignment, conveyance, and delivery of the HMO
Business and Assets purchased by Buyer pursuant to this Agreement; (ii) to
vest in Buyer marketable right, title, and interest in and to the HMO
Business and the Assets; and (iii) to fully and completely consummate the
transactions herein contemplated.

6.   REPRESENTATIONS AND WARRANTIES OF SELLER.

     Seller represents and warrants to Buyer as follows:

     6.01 CORPORATE ORGANIZATION; ETC..  Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has all requisite corporate power and
authority to carry on its business as it is now being conducted and to own,
operate and lease its properties.

     6.02 CAPITALIZATION.  Seller is a non-stock, not-for-profit
corporation.  There are no shares of capital stock of Seller outstanding
and there are no outstanding options, warrants or other rights to purchase
or acquire any capital stock.

     6.03 SUBSIDIARIES.  SCHEDULE 6.03 sets forth the name, jurisdiction of
incorporation, capitalization and number of shares of outstanding capital
stock of each class owned, directly or indirectly, by Seller with respect
to each corporation or other entity of which Seller owns, directly or
indirectly, securities (or equivalent interests) having ordinary voting
power to elect a majority of the directors (or persons performing
equivalent functions) (individually, a "Subsidiary", and collectively, the
"Subsidiaries").  All of the issued and outstanding shares of capital stock
of each Subsidiary are validly issued, fully paid and nonassessable and all
such shares shown in SCHEDULE 6.03 as being owned, directly or indirectly,
by Seller are owned free and clear of any liens, encumbrances, pledges,
security interests, or claims of any kind.  No Subsidiary has outstanding
any 

securities convertible into or exchangeable or exercisable for any shares
of subsidiary capital stock, there are no outstanding options, warrants or
other rights to purchase or acquire any capital stock of any Subsidiary,
and there are no contracts, commitments, understandings, arrangements or
restrictions by which any Subsidiary is bound to issue additional shares of
its capital stock.  Except for the Subsidiaries and as otherwise disclosed
in SCHEDULE 6.03, Seller does not own, directly or indirectly, any capital
stock or other equity securities of any corporation or other entity or have
any direct or indirect equity interest in any business.  Each Subsidiary
(a) is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and (b) has all
requisite corporate power and authority to carry on its business as it is
now being conducted and to own, operate and lease its properties.

     6.04 FINANCIAL STATEMENTS.  The audited consolidated balance sheets of
Seller as of December 31, 1991, 1992 and 1993, the draft audited balance
sheet of Seller as of December 31, 1994, the audited consolidated
statements of revenues and expenses, changes in fund balances and cash
flows of Seller for the periods ended December 31, 1991, 1992 and 1993 and
the draft audited consolidated statements of revenues and expenses, changes
in fund balances and cash flows of Seller for the period ended December 31,
1994 have each been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and fairly present the
financial position of Seller as of said dates and the results of its
operations and cash flows for the periods then ended.  The Historical
Financials for Seller for the years ended December 31, 1994, 1993 and 1992,
the 1994 Balance Sheet, the Estimated Balance Sheet and the Final Balance
Sheet, when delivered, will have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis and will
fairly present the financial position of Seller as of the dates reflected
thereon and the results of its operations and cash flows for the period
then ended.  (The financial statements for the years ended December 31,
1991, 1992 and 1993 and the draft audited financial statements for the year
ended December 31, 1994 shall be referred to herein collectively as the
"Financial Statements").  Except as shown on SCHEDULE 6.04, there are no
pre-paid expense items or other assets of any character carried on the
books of Seller as of December 31, 1994 which will have to be written off,
so far as Seller can now reasonably foresee (in whole or in part), within
the four (4) year period following Closing.

     6.05 ABSENCE OF UNDISCLOSED LIABILITIES.  Except to the extent
specifically reflected, reserved against or disclosed in the Financial
Statements or shown on a Schedule hereto, except for claims fully and
adequately covered by insurance, Seller does not, as of the date of such
statements (and will not as of Closing) have any indebtedness, liabilities,
or obligations of any nature, whether accrued, absolute, or contingent, and
whether due or to become due, including, but not limited to, unearned
premiums, prepaid commissions, disputed or contingent liabilities, taxes or
anticipated or unrealized losses ("Liabilities").  

Except as set forth in SCHEDULE 6.05 hereto, there are no Liabilities of
any nature in any amount not fully reflected or reserved against in the
Financial Statements.  Except as set forth in SCHEDULE 6.05 hereto, Seller
has not guaranteed or assumed any debt or obligation of any person,
partnership, corporation, or other entity. 

     6.06 ABSENCE OF CERTAIN CHANGES.  Except as set forth in SCHEDULE 6.06
hereto, since December 31, 1994, there has not been (i) any change in the
condition, financial or otherwise, or in the operations, business,
properties, assets or prospects of Seller, or (ii) any damage, destruction,
or loss to any of the properties or assets of Seller, whether or not
covered by insurance, resulting in a loss of $5,000 or more, or (iii) any
labor trouble (including, without intending any limitation, any
negotiation, or request for negotiation, for any representation or any
labor contract) affecting Seller, or (iv) any published Massachusetts
regulation which has or may adversely affect or impair the business,
properties, assets, operations, or prospects of Seller.

     6.07 CORPORATE RECORD BOOKS, ETC.  Seller's minute books, all of which
have been furnished to Buyer, are in good order and with all necessary
signatures, set forth all meetings and actions taken by the respective
shareholders and directors of Seller and properly record all corporate
action which should be reflected therein.  Complete and correct copies of
the Articles of Organization of Seller and the By-Laws of Seller, as
amended to the date hereof (certified by its Secretary), have been
delivered to Buyer by Seller.

     6.08 TITLE TO ASSETS; LIENS.  A true, correct and complete list and
description of all machinery, equipment, vehicles and personal property
owned by Seller are set forth in SCHEDULE 6.08.  Seller owns no real
property.  Except as set forth in SCHEDULE 6.08, Seller has good and
marketable title to all its owned or leased properties and assets,
tangible, and intangible, including all assets reflected in the December
31, 1994 Financial Statements, except as disposed of after December 31,
1994, in the ordinary course of business, subject to no mortgage, pledge,
lien, security interest, lease, charge, easement, encumbrance, conditional
sale, or other title retention agreement.  Except as set forth and
identified in SCHEDULE 6.08, all of the assets, tangible and intangible,
necessary for the conduct of the business or operations of Seller as now
conducted are owned or leased by Seller, and except as set forth in
SCHEDULE 6.0 8, Seller's right, title and interest to all property or
assets owned or leased by it will in no way be affected by this Agreement
or the transactions contemplated herein.  Except as set forth in SCHEDULE
6.08, there are no outstanding commitments of Seller relative to the
purchase, sale, mortgage, or lease of any real property.
 
     6.09 LEASES OF REAL AND PERSONAL PROPERTY.  A true, correct, and
complete list and brief description of all leases of real property, and
leases of any personal property, to which Seller is a party, either as
lessor or lessee, are set forth in SCHEDULE 6.09 hereto.  All such 

leases are valid and effective in accordance with their respective terms. 
Except as set forth in SCHEDULE 6.09, the continuation, validity, and
effectiveness of each such lease will in no way be affected by this
Agreement or the transactions contemplated herein.  Seller has furnished to
Buyer complete and correct copies of each such lease to which Seller is a
party.  Except as set forth in SCHEDULE 6.09, Seller's interest in such
leases as either lessor or lessee is subject to no mortgage, pledge, lien,
security interest, lease, charge, easement, encumbrance, conditional sale,
or other agreement. Except as set forth in SCHEDULE 6.09, to Seller's
knowledge there are no existing, claimed, purported, or alleged defaults or
events of default or state of facts which with notice or lapse of time, or
both, would constitute defaults thereunder.  Except as set forth in
SCHEDULE 6.09, Seller has not received notice and it is not otherwise aware
of any claimed or purported or alleged default or state of facts which with
notice or lapse of time, or both, would constitute a default on the part of
any party in the performance of any obligation to be performed or paid by
any party with respect to any such lease.  Except as set forth in SCHEDULE
6.09, upon and after Closing, Seller shall have the legal right (without
further consent or other approval of any other party) to possess and
quietly enjoy such premises and properties under such leases.

     6.10 COMPUTER SYSTEMS.  Seller's computer system is presently serving
it adequately with no unusual equipment failure or lack of response time,
except as set forth in SCHEDULE 6.10; no equipment or programming upgrades
are required to efficiently operate such system through 1996.  SCHEDULE
6.10 hereto sets forth a true and complete listing of all computer hardware
and computer software programs used in the conduct of the HMO Business
which were licensed primarily for such use and which will be transferred to
Buyer hereunder, except for commercially available programs that may be
licensed for a fee of less than $1,000.  SCHEDULE 6.10 hereto sets forth
whether each such computer software program is (i) licensed by Seller from
a third party or (ii) licensed by a third party and assigned by such third
party to Seller in accordance with the terms of such licenses (collectively
referred to herein as the "Licensed Software").  With respect to Licensed
Software (i) there are no infringement suits, actions or proceedings
pending or, to the knowledge of Seller, threatened against Seller, with
respect to the software and (ii) Seller has the full right, power and
authority to assign the Licensed Software to Buyer as contemplated in this
Agreement, subject to the prohibitions against assignment set forth in the
agreements evidencing the license and sublicense of the Licensed Software
to Seller.  SCHEDULE 6.10 also includes all of the computer software
programs owned by Seller that are used to support the HMO Business (the
"Owned Software").  The computer hardware and computer software described
on SCHEDULE 6.10 (together with those commercially available items that
would have been required to have been described on such schedule but for
the established materiality threshold), include all of the computer
hardware and computer software used by Seller to conduct the HMO Business
in the manner it is presently conducted.

     6.11 INSURANCE.  A true, correct and complete list and brief
description (including annual premiums, insurer, agent, coverage,
expiration date) of Seller's insurance policies in effect during the period
subsequent to December 31, 1993 are set forth in SCHEDULE 6.11 hereto. 
Except as set forth in SCHEDULE 6.11, there is no default or claimed, 
purported or, to Seller's knowledge, alleged default or state of facts
which with notice or lapse of time, or both, would constitute a default on
the part of any party in the performance of any obligation to be performed
or paid by any party under any policy referred to in or submitted as a part
of SCHEDULE 6.11 and Seller has not received or given notice of any default
or claimed, purported or alleged default or state of facts which with
notice or lapse of time, or both, would constitute a default on the part of
any party in the performance or payment of any obligation to be performed
or paid by any party under any policy referred to in or submitted as a part
of SCHEDULE 6.11.  All insurance coverage provided to Seller is and has
been on an arms-length basis at rates no less than those generally charged
to similar clients.

     6.12 TRADEMARKS, COPYRIGHTS, ETC.  Except as shown on SCHEDULE 6.12,
Seller does not own or employ in its business any trademarks, copyrights or
similar rights. 

     6.13 LICENSES, FRANCHISES AND PERMITS.  A true, correct and complete
list and brief description of the licenses, and other regulatory
authorizations necessary for the conduct of Seller's business as presently
being conducted and necessary for the conduct of the duties of its
employees on behalf of Seller (including without limitation, agent's and
broker's licenses of its sales agents and employees) are set forth in
SCHEDULE 6.13 hereto.  Except as set forth in SCHEDULE 6.13, Seller has all
licenses, and other regulatory authorizations necessary for the conduct of
its business as now conducted.  All such licenses, and regulatory
authorizations are valid and in full force and effect.  Except as set forth
in SCHEDULE 6.13, there are no agreements with or orders by any regulatory
authorities prohibiting or restricting the conduct of the Seller's HMO
Business.  Seller and its employees have not breached any provision of, and
are not in default under the terms of, and have not engaged in any activity
which would cause revocation or suspension of, any such licenses, or
regulatory authorizations and no action or proceeding looking to or
contemplating the revocation or suspension of any thereof is pending or, to
the best of Seller's knowledge, threatened.  No such license or permit
issued by any governmental authority to Seller or to any of its present
employees who presently holds such a license and uses it in Seller's
business has ever been revoked, suspended or rescinded.

     6.14 EMPLOYEE RELATIONS.  Set forth in SCHEDULE 6.14 is a true,
correct and complete payroll roster of all employees of Seller for the
calendar year 1994, showing the rate of pay for each such person entitled
to receive compensation from Seller, and the gross payments made to each
such person for the periods set forth above.  No increases, other than in
the ordinary course of business consistent with past 

practice, in such salaries have been given since January 1, 1994.  Seller
is not a party to any contract with any of its employees, agents,
consultants, officers, salesmen, sales representatives, distributors, or
dealers that is not cancelable by Seller without penalty or premium on not
more than thirty (30) days notice, except as set forth in SCHEDULE 6.14 or
attached thereto.  Except as set forth in SCHEDULE 6.14, Seller has not
promulgated any policy or entered into any agreements relating to the
payment of severance pay to employees whose employment is terminated or
suspended, voluntarily or otherwise, and Seller has not promulgated any
profit sharing, retirement, workers' compensation, disability, stock
purchase, bonus, deferred compensation, health care or other similar plan
providing benefits for its employees.  Seller is not a party to any
collective bargaining agreement covering or relating to any of its
employees and has not recognized, has not been required to recognize, and
has not received a demand for recognition by any collective bargaining
representative, except as set forth on SCHEDULE 6.14.  Except as set forth
on SCHEDULE 6.14, Seller has accrued (in accordance with generally accepted
accounting principles, consistently applied) in its Financial Statements
all liability for all employee bonus, vacations, sick time, compensatory
time, deferred compensation, disability, health care, profit sharing,
retirement, or any other similar benefit for its employees which would be
payable to such employees upon their termination from employment.  Seller
has complied with all applicable domestic laws, rules, or regulations
relating to employment, including those relating to wages, hours,
collective bargaining and the withholding and payment of taxes and
contributions.  Seller has withheld all amounts required by law or
agreement to be withheld from the wages or salaries of its employees and
there are no arrearages of wages or any tax or penalty for failure to
comply with the foregoing owed by it with respect to employees.  Except as
set forth on SCHEDULE 6.14, there are no controversies pending or
threatened between Seller and any of its employees, any labor unions or
other collective bargaining agents representing or purporting to represent
its employees.  Except as set forth on SCHEDULE 6.15, none of the
management of Seller has resigned or threatened to resign since January 1,
1995.

     6.15 LITIGATION, COMPLIANCE WITH LAWS.  Except to the extent set forth
in SCHEDULE 6.15 hereto (which SCHEDULE contains a true, correct and
complete list and description), there is no suit, action, litigation,
administrative action, arbitration, or other proceeding pending or to
Seller's knowledge threatened involving Seller (either individually or as a
member of a group) involving more than $10,000 individually or $250,000 in
the aggregate.  Seller has complied with and is not in material default
under any federal, state or local laws, regulations, ordinances,
requirements, or orders applicable to its business, operations, or
properties.   Seller has not received notice and it has no knowledge of any
claimed violation or default with respect to any of the foregoing.  Except
as set forth on SCHEDULE 6.15, there is no material investigation or review
pending or to Seller's knowledge threatened by any governmental entity with
respect to Seller relating to the HMO Business, nor has any governmental
entity indicated to Seller an 

intention to conduct the same.  Except as set forth on SCHEDULE 6.15,
there are no grievances, disputes, or litigation pending (or to the
knowledge of Seller threatened) against Seller involving claims from
accounts, clients, covered persons, or members of Seller relating to
coverage of health claims or any claim for punitive, exemplary or other
extra-contractual damages which could result in any liability in excess of
$10,000.

     6.16 CAPACITY; AUTHORIZATION AND EFFECT.  Seller has all requisite
corporate power and authority to enter into this Agreement and the
agreements referred to herein (hereinafter collectively the "Agreements"),
and to perform all of its obligations hereunder.  The Board of Directors of
Seller has duly authorized the execution and delivery of the Agreements and
the consummation and performance by Seller of its obligations thereunder
and, no other corporate proceedings on the part of Seller are necessary to
authorize the Agreements and the performance by Seller of its obligations
thereunder.  Subject to obtaining the necessary approval of the
Incorporators of Seller, the Agreements, when executed and delivered by
Seller and approved by the Incorporators of Seller will be, legal, valid
and binding agreements of Seller, enforceable against Seller in accordance
with their terms, except that:  (i) the enforceability thereof may be
subject to bankruptcy, insolvency, fraudulent conveyance, equity of
redemption, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally; and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceedings therefor may be brought.

          6.17 COMPLIANCE WITH OTHER INSTRUMENTS, ETC.  Subject to obtaining the
consents listed in SCHEDULE 6.17 hereto, neither the execution nor the
delivery of this Agreement nor the consummation of the transactions
contemplated hereby, will:  (i) conflict with or result in any violation of
or constitute a default under any term of the Articles of Organization or
By-Laws of Seller (each as amended), or any agreement, loan or credit
agreement, mortgage, indenture, franchise, license, permit, authorization,
lease, or other instrument, writ, injunction, determination, award,
judgment, decree, order, law, rule, or regulation by which Seller is bound;
(ii) result in the creation or imposition of any lien, security interest,
charge, encumbrance, restriction, or claim of any nature upon, or give to
others any material interest or rights, including rights of termination or
cancellation in or with respect to, any of the properties, assets, 
businesses, or prospects of Seller sold herein or (iii) violate or conflict
with any other restriction of any kind or character to which Seller is
subject.

          6.18 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES.  Except for: 
(i) the filing of appropriate documents to effect the transactions
contemplated herein as required by the law of the Commonwealth of
Massachusetts, (ii) the approval of the Commonwealth of Massachusetts
Division of Insurance, (iii) the approval of the Attorney General of the

Commonwealth of Massachusetts, and (iv) the filing of a Pre-Merger
Notification pursuant to the Hart-Scott-Rodino Anti-Trust Improvements Act
of 1976 ("Hart-Scott"), and the consents and approvals listed in SCHEDULE
6.17, no consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority is required to
be obtained or made by Seller in connection with the execution, delivery
and performance of this Agreement and the transactions contemplated herein
by Seller.

          6.19 ADVERSE RESTRICTIONS, ETC.  Except as set forth in SCHEDULE 6.19
and except for restrictions in its Articles of Organization, as amended,
Seller is not subject to any charter or other corporate agreement or any
foreign or domestic judgment, order, writ, injunction, or decree which
adversely affects or, may in the future adversely affect the business or
operations, properties, assets, prospects or condition, financial or
otherwise, of Seller.

          6.20 AGREEMENTS, ETC.  Except for agreements cancelable on not more
than 30 days' notice without penalty or involving total payments of less
than $10,000, set forth in SCHEDULE 6.20 is a true, correct and complete
list and brief description as to the following:  (i) all bonus, incentive
compensation, profit-sharing, retirement, pension, group insurance, death
benefit, or other fringe benefit plans, deferred compensation and
post-termination obligations and trust agreements relating to Seller, in
effect or under which any amounts remain unpaid on the date hereof or are
to become effective after the date hereof; (ii) all collective bargaining
agreements of Seller with any labor union or other representative of
employees, including local agreements, amendments, supplements, letters,
and memoranda of understanding of all kinds and all employment and
consulting contracts; (iii) any agreements, contracts, arrangements,
commitments, understandings, or obligations, oral or written, limiting
Seller's freedom to compete in any line of business or with any person, or
in any way providing for a joint venture, partnership or other joint
enterprise; (iv) all contracts with participating employers which have
employees covered by Seller; (v) all agreements, contracts, arrangements,
commitments, understandings, or obligations, oral or written with all
physicians, hospitals and other health care providers rendering services to
Seller; (vi) all other agreements, contracts, arrangements, commitments,
understandings, or obligations, oral or written, relating to Seller, its
business, operations, prospects, properties, assets, or condition
(financial or otherwise) in which Seller or any officer or director of
Seller, has any interest, direct or indirect, including a description of
any transactions between Seller and any entities in which such officers or
directors have any interest; and (vii) all agreements, contracts,
arrangements, commitments, understandings, or obligations, oral or written,
of Seller (not otherwise required to be listed hereunder) which could
materially affect Seller, or its business, operations, prospects, or
financial condition.  Except as set forth in SCHEDULE 6.20, the
continuation, validity and effectiveness of the contracts, plans, or other
instruments set forth in SCHEDULE 6.20 will in no way be affected 

by this Agreement or by the transactions contemplated herein.  Except as
set forth in SCHEDULE 6.20, for any payment defaults by insured subscribers
or employers, and for other payment defaults not exceeding $10,000 in the
aggregate:  (i) there is no default or state of facts which with notice or
lapse of time, or both, would constitute a default on the part of Seller
(or to Seller's knowledge on the part of any party other than Seller) in
the performance of any obligation to be performed or paid by any party
under any contracts, plans, or other instruments or arrangements referred
to in or submitted as a part of SCHEDULE 6.20; (ii) Seller has not received
or given notice of any default or claimed or purported or alleged default
or state of facts which with notice or lapse of time, or both, would
constitute a default on the part of any party in the performance or payment
of any obligation to be performed or paid by any party under any contracts,
plans, or other instruments or arrangements referred to in or submitted as
a part of SCHEDULE 6.20; (iii) no contracts, agreements, arrangements,
understandings or obligations required to be disclosed as part of SCHEDULE
6.20 between Seller and any affiliate of Seller are on terms other than at
arms-length and at usual and customary rates.

          6.21 POWERS OF ATTORNEY.  Except as set forth on SCHEDULE 6.21, Seller
does not have any power of attorney (whether general or special)
outstanding with respect to any matter. 

          6.22 PREPAID COMMISSIONS.  Except as set forth on SCHEDULE 6.22, there
are no liabilities for prepaid commissions due sales agents or brokers in
connection with any products written by Seller.

          6.23 BANK, MONEY MARKET AND BROKERAGE ACCOUNTS.  Set forth in SCHEDULE
6.23 hereto is a true, correct and complete list showing the name and
address of each banking institution, mutual fund or stock brokerage firm in
which Seller has accounts or safe deposit boxes, the account numbers or box
numbers relating thereto, and the name of each person authorized to draw
thereon or to have access thereto.  There are no credit cards issued to
Seller, any employees, officers or agents of Seller, any employee of Seller
or any other person or entity under which Seller has any current or
potential future liability except as listed on SCHEDULE 6.23.

          6.24 ERISA/BENEFITS.  SCHEDULE 6.24 contains a true, correct and
complete list and brief description of "employee pension benefit plans" (as
defined in "ERISA"), "employee welfare benefit plans" (as defined in
Section 3(1) of ERISA) and all other employee benefit plans maintained by
Seller (all the foregoing being herein called "Employee Benefit Plans")
maintained or contributed to by Seller.  Each Employee Benefit Plan has
been administered in all respects in accordance with its terms and is in
compliance in all respects with the currently applicable provisions of
ERISA and the Internal Revenue Code of 1986, as amended (the "Code").  All
reports, returns and similar documents with respect to the Employee Benefit
Plans required to be filed with any government agency or distributed to any
Employee Benefit Plan participant have been 

duly and timely filed or distributed.  To the knowledge of Seller, there
are no investigations by any government agency, and no termination
proceedings or other claims, suits or proceedings against or involving any
Employee Benefit Plan or asserting any rights or claims to benefits under
any Employee Benefit Plan that could give rise to any liability to Seller
or such Plan.  All the Employee Benefit Plans that are intended to be
qualified under Section 401(a) of the Code have received determination
letters from the Internal Revenue Service to the effect that such Employee
Benefit Plans are qualified and the Plans and the trusts related thereto
are exempt from Federal income taxes, no such determination letter has been
revoked and revocation has not been threatened, and no such Employee
Benefit Plan has been amended since the date of its most recent
determination letter or application therefor in any respect that would
adversely affect its qualification or increase its cost.  No Employee
Benefit Plans have been terminated and there have not been any "reportable
events" (as defined in Section 4043 of ERISA and the regulations
thereunder) with respect thereto and no Employee Benefit Plan has an
"accumulated funding deficiency" within the meaning of Section 412(a) of
the Code or any unfunded liability of any kind.

          6.25 ACCOUNTS RECEIVABLE.  All of the net accounts receivable on the
books of Seller are valid and collectible using commercially reasonable
collection practices; all such accounts arose in the ordinary course of
business and none is subject to any defense, counterclaim or off-set of any
kind.  Other than accounts receivable from the Worcester Surgical Center
and the Worcester/Somerset Limited Partnership which shall not be
transferred to Buyer pursuant to this Agreement, Seller has no other
accounts receivable from any affiliate of Seller.

          6.26 MISSTATEMENTS.  Neither this Agreement, nor any other agreement
or certificate delivered to Buyer at Closing contains (or shall contain)
any untrue statement of a material fact or omits (or shall omit) to state a
material fact necessary to make the statement contained therein not
misleading.

          6.27 DEBT OBLIGATIONS.  Set forth on SCHEDULE 6.27 is a true, complete
and accurate list setting forth each instrument defining the terms on which
debts for borrowed funds (not including trade debt) of, or guarantees of
the debts of third parties by, Seller have been issued, and the name of the
lender and the current amount outstanding on all such obligations,
including, without limitation, term loans, revolving credit agreements,
notes, or other financing vehicles, but excepting contracts with providers
and insurance policies.

          6.28 ENVIRONMENTAL MATTERS.  Seller has stored, handled and disposed
of all hazardous waste in full conformity with all applicable federal,
state and local laws, regulations and ordinances.  Seller's leased real
property or any portion thereof, is not in violation of any law regarding
environmental matters, and no event has occurred or is occurring which
could give rise to any such action, order, proceeding, violation or
investigations.  Seller has obtained all required permits, 

licenses and other authorizations which are required under federal, state
and local laws relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, or hazardous or toxic materials or
wastes into ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants or
hazardous or toxic materials or wastes.  Seller is in compliance with all
terms and conditions of the required permits,  licenses and authorizations, 
and is also in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules
and timetables contained in those laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued,
entered, promulgated or approved thereunder.  There are no past, present
or, so far as Seller can reasonably foresee, future events,  conditions,
circumstances, activities, practices, incidents, actions or plans which may
interfere with or prevent continued compliance, or which may give rise to
any common law or legal liability, or otherwise form the basis of any
claim, action, suit, proceeding, hearing or investigations against Seller
based on or related to the manufacture, processing, distributions, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any
pollutant, contaminant, or hazardous or toxic material or waste.

          6.29 TAXES.  Seller is a not-for-profit, tax-exempt organization as
defined under Section 501(c)(4) of the Code.  Seller is in full compliance
with all applicable federal and state laws, regulations, rulings and orders
pertaining to the operation of a tax-exempt entity, such as Seller,
including without limitation, requirements as to private benefit,
inurement, self-dealing, conflicts of interest and other applicable
requirements.  Except as noted in SCHEDULE 6.29 there have been properly
completed and filed on a timely basis and in correct form all tax returns,
information returns or other required information or filings required to be
filed by Seller on or prior to the date hereof (the "Returns").  As of the
time of filing, the foregoing Returns correctly reflected all information
regarding the income, business, assets, operations, activities or status of
Seller or any other information required to be shown thereon.  With respect
to all amounts in respect of taxes imposed on  or for which Seller is or
could be liable, whether to taxing authorities (as, for example, under law)
or to other persons or entities (as, for example, under tax allocation
agreements), with respect to all taxable periods or portions of periods
ending on or before Closing, all applicable tax laws and agreements have
been fully complied with, and all such amounts required to be paid by
Seller to taxing authorities or others on or before the date hereof have
been paid.  No notices of deficiency have been issued by (or are currently
pending before), and no proceedings are currently pending before, any
taxing authority in connection with any of the Returns relating to Seller. 
No waivers of statutes of limitation with respect 

to the Returns have been given by or requested from Seller.  Consummation
of the transactions pursuant to this Agreement will in no way affect any
such prior tax return filings or result in any past or future tax
consequences for Seller which may have any affect on the Assets or the
Buyer after Closing.

          6.30 BOOKS AND RECORDS.  All of the corporate, financial and business
records of Seller are located at its principal office at 100 Front Street,
Suite 300, Worcester, Massachusetts.

          6.31 PENDING PROPOSALS.  Seller has made available to Buyer for
inspection a complete list and brief description of all pending proposals
for new business or renewals of existing accounts of Seller.

          6.32 CERTAIN FEES AND EXPENSES.  Neither Seller nor any of its
respective officers, directors or employees has incurred any claims for any
brokerage fees, commissions or finders' fees in connection with the
transactions contemplated hereby nor any other obligations for professional
services of any kind except to KPMG Peat Marwick, Wheat, First Securities,
Inc., and Seller's legal counsel, Choate, Hall & Stewart.

          6.33 MANAGEMENT LETTER(S).  Except as set forth on SCHEDULE 6.33,
Seller has received no management letters from KPMG Peat Marwick in
relation to its financial statements.  All of the matters noted in any such
management letters have been complied with or totally resolved.

          6.34 ARRANGEMENTS FOR STOP-LOSS INSURANCE.  Shown on SCHEDULE 6.34 is
a true, correct and complete list and brief description of all contracts,
agreements or undertakings, oral or in writing, in any way related to the
provision of so-called stop-loss health insurance or re-insurance
maintained by Seller for itself or for the benefit of any self-funded
employer accounts for which it administers claims.  Seller has no liability
under any such stop-loss or re-insurance arrangements.

          6.35 EMPLOYER AND GROUP CONTRACTS.  Seller has provided to Buyer
copies of its standard employer and other group agreements.  Except as
shown on SCHEDULE 6.35 (which SCHEDULE contains a true, correct and
complete list and brief description), there are no agreements with
employers or other groups on terms other than as provided in such standard
employer agreements.  Except as shown on SCHEDULE 6.35, Seller has no
reason to believe that employers and other groups will not participate with
Buyer.

          6.36 MEMBERS/SUBSCRIBERS.  As of March 1, 1995, Seller had 84,103 HMO
members.

          6.37 PHYSICIAN AGREEMENTS AND RELATIONSHIPS.  Seller has in effect
standard physician agreements in the forms provided by Seller to Buyer with
at least 1,600 physicians; all such physicians have entered into the
agreements in the form provided and no physician has any 

different arrangement with Seller.  All returns of physician withholds
have been duly approved by the Division of Insurance of the Commonwealth of
Massachusetts and all withhold returns have been made in accordance with
the conditions of such approvals.  Seller believes that its physician
relationships are favorable and Seller has no reason to believe that
physician relationships will worsen or that physicians who currently
participate with Seller will withdraw and not participate with Buyer.

          6.38 BROKERS AND AGENTS.  SCHEDULE 6.38 lists all persons through
which Seller places or sells products with premium volume in excess of
$10,000 per year.  Seller has no financial obligations to any person with
respect to existing or future HMO Business, except as recorded as a
liability on the Financial Statements or as described in SCHEDULE 6.38. 
Except as indicated in SCHEDULE 6.38, Seller is not a party to any fronting
or similar agreement to place or sell insurance for any other insurance
company.

          6.39 AUTHORITY.  The delivery to Buyer of the Agreements and the
documents referred to therein including, without limitation, the Assumption
Reinsurance Agreement, will transfer valid title to the HMO contracts
comprising the HMO Business, and all of the assets of Seller's HMO Business
as defined in SECTION 2.01, free and clear of any options, liens, trusts,
encumbrances, security interests, charges and claims of any kind other than
the rights of policyholders.

          6.40 REINSURANCE.  Attached as SCHEDULE 6.40 is a list of every policy
of reinsurance or other agreement allocating insurance risk which relates
to existing or future (or prior policies written since July 1, 1993)
policies written as part of (or related to) the HMO Business.

          6.41 INVESTMENT ASSETS.  Except as set forth in SCHEDULE 6.41 hereto
and except with respect to any investment assets to be transferred as part
of the HMO Business that are publicly traded securities, Seller has
received written representations from each issuer of such investment assets
that the investment assets issued by such issuer were duly authorized and
issued by such issuer.  Except as set forth in SCHEDULE 6.41 hereto, each
of such investment assets is negotiable and no consent or other approval is
required to be obtained to permit Seller to convey, transfer and sell the
investment assets to Buyer free and clear of all claims, liens and
encumbrances of any kind.

          6.42 MATERIAL ADVERSE  CHANGES OR EFFECT.  Seller has no knowledge of
any matter which may result in a material adverse change or effect on the
financial condition or prospects of Seller or the HMO Business.

          6.43 OPERATION OF HMO BUSINESS.  All of the activities and operations
and all of the assets related to the HMO Business have been at all times
and now are owned or conducted only by Seller and by no other legal entity
in whole or in part.  All HMO contracts included in 

the HMO Business as now in force are in all material respects, to the
extent required under applicable law, on forms approved by applicable
insurance regulatory authorities or which have been filed and not objected
to by such authorities within the period provided for objection, and such
forms comply in all material respects with the insurance statutes,
regulations and rules applicable thereto.  True, complete and correct
copies of such forms have been furnished or made available to Buyer, the
reference numbers of such forms are listed on SCHEDULE 6.43 hereto and
there are no other forms of insurance contracts used in connection with the
HMO Business.  Premium rates established in connection with the HMO
Business which are required to be filed with or approved by insurance
regulatory authorities have been so filed or approved, the premiums charged
conform thereto in all material respects, and such premiums comply in all
material respects with the insurance statutes, regulations and rules
applicable thereto.  Seller is in full compliance with all contractual,
statutory, regulatory and other requirements applicable to Seller as a
provider of HMO coverage to employees of the federal, state and local
governments and subdivisions and is subject to no claim for a penalty,
fine, return of premium, or other charge or liability in respect thereof.

          6.44 MEDICARE SECONDARY PAYOR.  Without in any way limiting the
generality of other representations and warranties made herein by Seller,
all actions taken or failed to have been taken by Seller or its affiliates
or agents in connection with the insuring or administration of healthcare
plans maintained for Seller's employer clients or other clients have been
taken or omitted in complete compliance with the so-called "Medicare
Secondary Payor Rules" under all applicable federal laws, as supplemented
by the regulations of the Department of Health and Human Services
("Secondary Payor Rules"); no healthcare plan administered or insured by
Seller has any liability of any nature (including but not limited to, any
liability under the Internal Revenue Code, ERISA, the Social Security Act
and Age Discrimination in Employment Act) to the United States of America
or to any other person or entity with respect to the Secondary Payor Rules,
nor will any such liability arise after Closing if Buyer continues to
follow the administrative and computer procedures established by Seller
prior to Closing in conducting the HMO Business.  Neither Seller nor its
affiliates or agents have incurred any liability with respect to acts taken
or omitted prior to Closing under existing or prior contracts with their
employer clients or other clients for any excise tax liability under
Section 5000 of the Internal Revenue Code.

7.        REPRESENTATIONS AND WARRANTIES OF BUYER.

          Buyer represents and warrants to Seller as follows:

          7.01 ORGANIZATION; GOOD STANDING.  Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
Commonwealth of Massachusetts.

          7.02 AUTHORITY.  Buyer has full corporate authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby.  This Agreement has been duly executed and delivered by Buyer and
constitutes the legal, valid, and binding obligation of Buyer, enforceable
against Buyer in accordance with their terms, except that (i) the
enforceability thereof may be subject to bankruptcy, insolvency, fraudulent
conveyance, equity of redemption, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally; and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceedings therefor may be
brought.

          7.03 GOVERNMENTAL AND OTHER CONSENTS, ETC.  Except for the approvals
referred to in SECTION 6.18 and the approvals referred to on SCHEDULE 7.03,
no consent, approval, or authorization of, or designation, declaration, or
filing with, any governmental authority or other persons or entities on the
part of Buyer is required in connection with the execution or delivery of
this Agreement or the consummation of the transactions contemplated hereby.

          7.04 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the execution nor
the delivery of this Agreement nor the consummation of the transactions
contemplated hereby, will (i) conflict with or result in any violation of
or constitute a default under any term of the Articles of Incorporation or
By-Laws of Buyer (each as amended) or any agreement, loan or credit
agreement, mortgage, indenture, franchise, license, permit, authorization,
lease, or other instrument, writ, injunction, determination, award,
judgment, decree, order, law, rule or regulation to which Buyer is bound;
(ii) result in the creation or imposition of any lien, security interest,
charge, encumbrance, restriction, or claim of any nature upon, or give to
others any interest or rights, including rights of termination or
cancellation in or with respect to, or otherwise adversely affect, any of
the properties, assets, businesses, or prospects of Buyer, or (iii) violate
or conflict with any other restriction of any kind or character to which
Buyer is subject.

          7.05 CONDUCT OF BUSINESS.  Buyer and its various subsidiaries and
affiliates have complied in all material respects with all laws to which
they are subject and there is no litigation pending or, to Buyer's
knowledge, threatened which, if resolved unsatisfactorily to Buyer or any
of such subsidiaries and affiliates, could prohibit the transactions
contemplated by this Agreement.

8.        COVENANTS OF SELLER AND BUYER PENDING CLOSING.

          8.01 COVENANTS OF SELLER.  Seller agrees that from the date of this
Agreement to Closing:

               (a)  COOPERATION.  Seller shall use its best efforts to cause the
               sale contemplated by this Agreement to 

               be consummated, and  without limiting the generality of the
               foregoing, to obtain all consents, approvals and authorizations
               of third parties, to make all filings with and give all notices
               to third parties and to take all actions which may be necessary
               or reasonably required in order to effect the
               transactions contemplated hereby and to otherwise satisfy all of
               the conditions set forth in this Agreement.  Without limiting
               the generality of the foregoing, promptly following the
               execution and delivery of this Agreement, Seller shall (together
               with Buyer) present the transactions contemplated by this
               Agreement to the Massachusetts Division of Insurance and the
               Attorney General of the Commonwealth of Massachusetts and shall
               use its best efforts to resolve any objections of such
               regulatory authority thereto to  the satisfaction of such
               regulatory authority.  All data and information concerning the
               business of Seller shall be made available to Buyer on
               reasonable terms subject to the maintenance of confidentiality
               by Buyer.

               (b)  MAINTENANCE OF PROPERTIES, ETC.  Seller shall maintain all
               of its properties in customary repair, order, and condition,
               reasonable wear excepted, and shall maintain insurance upon all
               of its properties in such amounts and of such kinds and against
               such risks usually maintained and insured against by Seller.

               (c)  MAINTENANCE OF BOOKS.  Seller shall maintain its books,
               accounts and records in the usual manner on a basis consistent
               with prior years.

               (d)  ACCESS TO PROPERTIES, ETC.  Subject to the assurance
               regarding confidentiality and to reasonable procedures to avoid
               undue disturbance of Seller's operations, Seller shall give or
               cause to be given to Buyer and to Buyer's counsel, accountants,
               investment advisors and other representatives full access during
               normal business hours to all of the properties, books, tax
               returns, contracts, commitments and records of Seller, or copies
               of the same, which are material to the transactions contemplated
               by this Agreement, and shall furnish to Buyer copies of all such
               documents, certified if requested, and all such information as
               Buyer may from time to time reasonably request with respect to
               the affairs of Seller.

               (e)  CERTAIN PROHIBITED TRANSACTIONS.  Seller, without the prior
               written consent of Buyer, shall not:  (i) discuss, solicit,
               encourage, or respond to any proposal for the acquisition, merger
               or consolidation of all or any significant part of Seller's
               assets or business; (ii) provide any information to any party in
               connection with any 

               such proposal; (iii) negotiate with respect to, or enter into,
               any contract to merge or consolidate with any other corporation
               or entity; (iv) negotiate with respect to, or change, the
               character of their businesses, or sell, transfer, or otherwise
               dispose of or encumber all or any substantial part of Seller's
               assets; (v) negotiate with respect to, or issue or contract to
               issue, any debt or guarantees of debt (other than trade debt
               incurred in the ordinary course of business) which exceed in the
               aggregate Ten Thousand Dollars ($10,000) at any one time
               outstanding; (vi) negotiate with respect to, or enter into, any
               joint venture or partnership, for the conduct of Seller's
               business; (vii) pay any distribution of Seller's assets or
               earnings (viii) sell, assign, or transfer any patents,
               trademarks, trade names, copyrights, or other intangible assets
               of Seller; (ix) adopt any plan of liquidation; (x) directly or
               indirectly dispose of or encumber any of Seller's assets except
               in the ordinary course of business; (xi) waive any right of
               significant value; (xii) change in any manner the method or      
               timing on the payment of the liabilities of Seller; (xiii) file
               any new license applications (except for an application to HCFA
               for participation in the Medicare Risk Program); (xiv) expand
               any existing service area; (xv) enter into any new reinsurance
               and stop-loss insurance agreement; (xvi) enter into any new
               contracts or agreements with health care providers (except for
               standard agreements with participating physicians); (xvii) enter
               into any joint venture, partnership or other joint enterprise
               involving any part of the HMO Business; (xviii) enter into any
               non-competition or other agreement which may restrict in any way
               the conduct of the HMO Business; or (xix) generally engage in
               any business practice or take any action which is not in the
               ordinary course of business of Seller.  If any acquisition,
               merger or consolidation proposal is received by Seller, Seller
               shall promptly notify Buyer of such fact and shall provide Buyer
               copies of any such offers or proposals.

               (f)  COMPLIANCE WITH LAWS.  Seller shall duly comply in all
               respects with all laws, regulations, and decrees applicable to it
               and to the conduct of its businesses.

               (g)  INCONSISTENT ACTS.  From the date of this Agreement to
               Closing, except as otherwise permitted by this Agreement, Seller
               will not engage in any activity or enter into any transaction
               which would be inconsistent in any respect with any
               representation, warranty or covenant set forth in this Agreement
               if such representations and warranties were made at a time
               subsequent to such activity or transaction and all references to
               the date of this Agreement were deemed to be such later date. 
               Seller will promptly notify Buyer if at 

               any time after the date of this Agreement Seller believes or has
               reason to believe that the condition specified in this paragraph
               may not be satisfied, except for causes beyond Seller's
               control.

               (h)  EMPLOYEE COMPENSATION.  Seller will pay or accrue prior to
               Closing, all wages, salaries, bonuses and all other compensation
               due employees for services rendered prior to Closing.

               (i)  UNDERWRITING NEW BUSINESS.  Prior to Closing Seller shall
               not make any proposal or commitment for HMO coverage affecting
               more than 500 lives or members with an average group premium
               below $125 per member per month without first consulting with
               Buyer.

               (j)  CLOSING CORRECTIONS.  Seller shall update its various
               disclosure schedules to reflect transactions occurring after the
               date of this Agreement and pursuant to and in conformity with
               this SECTION 8.01.  To facilitate closing, Seller will provide
               Buyer with drafts of any changes and copies of any documents
               referred to therein at least two business days prior to closing
               in order that Buyer may confirm the fact that such changes did in
               fact occur in conformity with this SECTION 8.01.  No such
               disclosure shall have any effect for the purpose of determining
               the satisfaction of the conditions set forth in SECTION 10
               hereof.

               (k)  REQUIRED CORPORATE APPROVALS.  The Company shall cause a
               Special Meeting of its Incorporators to be duly called and held
               as soon as reasonably practicable for the purpose of approving
               the sale of the HMO Business and Assets and to take all other
               actions contemplated by this Agreement which require approval of
               the Incorporators.  The Company shall use its best efforts to
               cause each of its Incorporators to vote in favor of same at such
               Special Meeting and the Company's directors shall in all
               circumstances, whether formal or informal, endorse and recommend
               approval of the actions contemplated by this Agreement.

               (l)  NO NEW CONTRACTS.  Seller shall not enter into, renew,
               modify, terminate or assume any contract, lease, license or
               commitment which by its terms requires performance subsequent to
               the Closing Date except for such matters which are within the
               normal and ordinary course of business or which involve an annual
               monetary commitment or exposure of not more than $10,000 each or
               $100,000 in the aggregate, provided, however, that Seller will
               use its best efforts to immediately inform Buyer of any proposed
               contracts that it believes will be in Buyer's best interest.

               (m)  HMO UNDERWRITING.  Seller shall not enter into, renew,
               modify, terminate or assume any HMO contract, unless such HMO
               contract complies with underwriting standards ordinarily and
               customarily employed by Seller in the past in writing new
               business and unless any such HMO contract is reasonably expected
               to generate revenues sufficient to meet anticipated obligations
               and a margin for profit consistent with Seller's average margin
               on such products, in the case of new business, and consistent
               with the margin on the specific account in the prior year, if
               renewal business; provided, further, that if Seller believes that
               any proposed non-complying contract would be advisable in order
               to maintain or enhance the HMO Business, it shall so notify
               Buyer.

               (n)  PHYSICIAN CONTRACTS.  Seller shall use its best efforts to
               cause its primary care and specialist physicians to enter into
               participating physician services agreements in the form of
               EXHIBIT E attached hereto.

               (o)  SELLER'S AGENTS.  Buyer may contact insurance agents or
               brokers selling HMO contracts or other products issued by Seller
               for the purpose of engaging such agents or brokers to act on
               behalf of Buyer and its affiliates to sell contracts and products
               in the same lines as such HMO contracts after the Closing Date. 
               Seller shall (i) encourage each of the agents and brokers listed
               on SCHEDULE 6.38 hereto, on or prior to the Closing Date, to
               execute and deliver to Buyer an agency agreement in form
               acceptable to Buyer, and (ii) issue to each such agent or broker
               a waiver in form acceptable to Buyer providing for the waiver by
               Seller of any rights arising pursuant to existing Seller agency
               agreements prohibiting any such agents or brokers from selling
               contracts and products in the same lines as such HMO contracts on
               behalf of Buyer and its affiliates.

          8.02 COVENANTS OF BUYER.  Buyer agrees that from the date of this
Agreement to Closing:

               (a)  COOPERATION.  Buyer shall use its best efforts to cause the
               sale contemplated by this Agreement to be consummated, and
               without limiting the generality of the foregoing, to obtain all
               consents and authorizations of third parties, including
               regulatory approvals, and to make all filings with and give all
               notices to third parties which may be necessary or reasonably
               required in order to effect the transactions contemplated hereby.
               
9.        CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER.

          All obligations of Seller under this Agreement are subject to the
fulfillment, at or prior to Closing, of each of the following conditions:

          9.01 BUYER'S REPRESENTATIONS AND WARRANTIES.  There shall be no breach
of the representations and warranties of Buyer herein for which purpose the
same shall be deemed applicable as of the Closing Date with the same force
and effect as though made on and as of said date except as affected by
transactions contemplated hereby.

          9.02 BUYER'S COVENANTS.  Buyer shall have performed all of its
obligations and agreements and complied with all its covenants contained in
this Agreement to be performed and complied with by it prior to Closing.

          9.03 BUYER'S COUNSEL'S OPINION.  Sheehan Phinney Bass + Green,
Professional Association, counsel to Buyer, shall have delivered to Seller
an opinion, dated as of Closing, in the form of EXHIBIT C-2.  In giving
such opinion such counsel may rely, as to matters of fact, upon
certificates of officers of Buyer, and as to matters governed by the laws
of Massachusetts, such counsel may rely upon the opinions of local counsel.

          9.04 BUYER'S CLOSING CERTIFICATE.  Seller shall have received a
certificate of Buyer dated as of Closing, in form and substance reasonably
satisfactory to counsel to Seller certifying as to the fulfillment of the
matters mentioned in SECTIONS 9.01 and 9.02.

          9.05 SUBSIDIARY AGREEMENTS.  Buyer shall have executed the various
agreements required to be executed pursuant to this Agreement including,
without limitation, the Assumption Reinsurance Agreement in the form of
EXHIBIT A.

          9.06 CONSENTS AND REGULATORY APPROVALS.  Seller shall have received
evidence, reasonably satisfactory to Seller and counsel for Seller, that
all of the approvals and consents disclosed in SCHEDULE 6.17 and SECTIONS
6.18 and 7.03 have been duly obtained.  Without in any way limiting the
generality of the foregoing, Seller shall have received (i) approval for
Seller to sell the HMO Business to Buyer, approval of the Assumption
Reinsurance Agreement and other necessary approvals from the Commonwealth
of Massachusetts Division of Insurance; (ii) all required approvals from
the Attorney General of the Commonwealth of Massachusetts and (iii)
evidence from Buyer that Buyer has received the approvals of the
Commonwealth of Massachusetts Division of Insurance of the transactions
contemplated herein.

          9.07 NO LITIGATION.  No action, suit, or proceeding before any court
or any governmental or regulatory authority shall have been commenced, no
investigation by any governmental or regulatory authority shall have been 
commenced, and no action, suit, or proceeding by any governmental or
regulatory authority shall have been threatened against 

Seller or Buyer:  (i) seeking to challenge the transactions contemplated
hereby or questioning the validity or legality of any such transactions
which would, if resolved adversely, severally or in the aggregate,
adversely affect the financial condition, business, property, assets or
prospects of  Seller's business; (ii) which might restrict or affect the
right of Buyer to acquire the assets and business of Seller or to exercise
any rights in respect thereto or under this Agreement or any agreement
referred to herein subsequent to Closing; or, (iii) which seeks to subject
Seller or any of its affiliates to any liability, fine, forfeiture, or
penalty by reason of the transactions contemplated by this Agreement. 
There shall not have been issued any injunction or order restraining or
otherwise preventing the transactions contemplated by this Agreement.

          9.08 PHYSICIAN WITHHOLDS.  Notwithstanding any other provision of this
Agreement, regulatory approval for return of the Physician Withholds
referred to in SECTION 2.09 shall not be a condition to Seller's
obligations hereunder including, without limitation, the obligation to
close and complete the sale of the HMO Business to Buyer; it being intended
that the transactions contemplated herein shall take place regardless of
whether the Physician Withholds can be or are paid as contemplated in
SECTION 2.09.

10.       CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.

          All obligations of Buyer under this Agreement are subject to the
fulfillment, at or prior to Closing, of each of the following conditions:

          10.01     SELLER'S REPRESENTATIONS AND WARRANTIES.  There shall be no
breach of the representations and warranties of Seller herein contained for
which purpose the same shall be deemed applicable as of Closing with the
same force and effect as though made on and as of said date, except as
affected by the transactions contemplated hereby.

          10.02     SELLER'S COVENANTS.  Seller shall have performed all of its
obligations and agreements and complied with all of its covenants in this
Agreement to be performed and complied with by it prior to Closing.

          10.03     CLOSING CERTIFICATE.  Buyer shall have received a
certificate of Seller executed on behalf of Seller by its appropriate
officers dated as of Closing, in form reasonably satisfactory to counsel to
Buyer, certifying as to the fulfillment of the matters mentioned in
SECTIONS 10.01 and 10.02.

          10.04     CONSENTS AND REGULATORY APPROVALS.  Buyer shall have
received evidence, reasonably satisfactory to Buyer and counsel for Buyer,
that all of the consents disclosed in SCHEDULES 6.17 and 7.03, and SECTION
6.18 and 7.03 have been duly obtained, and that all necessary foreign and
domestic permits, licenses, franchises, governmental approvals, and other
regulatory authorizations necessary to 

the operations of the business of Seller from and after Closing have been
issued with no conditions or with conditions affecting Buyer or the HMO
Business after Closing that are satisfactory to Buyer in its sole
discretion.  Without in any way limiting the generality of the foregoing,
Buyer shall have received (i) approval to acquire the HMO Business of
Seller, approval of the Assumption Reinsurance Agreement, licensure of
Buyer as an HMO in Massachusetts, approval of other contractual
arrangements and transactions contemplated herein (including without
limitation approval of the hospital provider agreement with MCCM, if
required) and all other approvals necessary to enable Buyer to conduct the
HMO Business of Seller as presently conducted, from the Commonwealth of
Massachusetts Division of Insurance, and (ii) all required approvals from
the Attorney General of the Commonwealth of Massachusetts.

          10.05     SELLER'S OPINION OF COUNSEL.  Choate, Hall & Stewart,
counsel to Seller, shall have delivered to Buyer an opinion, dated as of
Closing, in the form of EXHIBIT C-1.  In giving such opinion such counsel
may rely, as to matters of fact, upon certificates of officers of Seller.

          10.06     NO LITIGATION.  No action, suit, or proceeding before any
court or any governmental or regulatory authority shall have been
commenced, no investigation by any governmental or regulatory authority
shall have been commenced, and no action, suit, or proceeding by any
governmental or regulatory authority shall have been threatened against
Seller or Buyer:  (i) seeking to challenge the transactions contemplated
hereby or questioning the validity or legality of any such transactions
which would, if resolved adversely, severally or in the aggregate,
adversely affect the financial condition, business, property, assets or
prospects of the HMO Business; (ii) which might restrict or affect the
right of Buyer to acquire the HMO Business or to exercise any rights in
respect thereto or under this Agreement or any agreement referred to herein 
subsequent to Closing; or, (iii) which seeks to subject Buyer or any of its
affiliates to any liability, fine, forfeiture, or penalty by reason of the
transactions contemplated by this Agreement.  There shall not have been
issued any injunction or order restraining or otherwise preventing the
transactions contemplated by this Agreement.

          10.07     LOSS OF MEMBERS AND PRINCIPAL EMPLOYER ACCOUNTS.  Since
January 1, 1995, the net enrollment of members of Seller shall not have
decreased by more than 5% percent.  Except as disclosed in SCHEDULE 6.35,
no employer account or participating group having more than 4,000 members
with Seller shall have notified Seller nor given Seller reason to believe
said Employer will withdraw or not renew.

          10.08     PHYSICIAN AGREEMENTS, MAINTENANCE OF PRIMARY CARE AND
SPECIALTY PHYSICIANS.  Seller shall have entered into participating
physician services agreements with at least 90% of its primary care
physicians and 90% of its specialist physicians in the form of EXHIBIT E
hereto.  Since January 1, 1995 there shall have occurred no withdrawal 

(or notice of intent to so withdraw) by more than: (i) ten percent (10%)
of Seller's participating primary care physicians and (ii) twenty percent
(20%) of Seller's participating specialty care physicians.  Seller shall
have assigned to Buyer all of Seller's physician contracts (with all
necessary consents or novations).

          10.09     FINANCIAL STATEMENTS. Seller shall have delivered to Buyer: 
(i) all interim unaudited financial statements of Seller from the date of
this Agreement through any month ending at least thirty (30) days prior to
Closing; and (ii) the Estimated Balance Sheet and Historical Financials as
required in SECTION 2.07.

          10.10     COMFORT LETTER.  Buyer shall have received at Closing a
Comfort Letter covering the matters specified in EXHIBIT F dated as of
Closing from KPMG Peat Marwick, Seller's independent auditors, in form and
substance reasonably acceptable to Buyer verifying that as of a date no
more than 5 days prior to Closing there has been no material change in the
financial condition of Seller from that reflected in the Financial
Statements.

          10.11     APPROVALS AND CONSENTS.  Seller shall have taken all actions
and received all approvals required to consummate fully the transactions
herein, including without limitation the actions and approvals required in
SECTION 6.17, SCHEDULE 6.17 and otherwise under this Agreement.

          10.12     EMPLOYMENT AGREEMENT.  Seller shall have entered into an
Employment Agreement with the individual(s) listed in SCHEDULE 10.12 in the
form of EXHIBIT G.

          10.13     NON-COMPETITION AGREEMENT.  Seller (any foundation into
which Seller is converted) and any of their affiliates shall have entered
into the Non-Competition Agreement with Buyer, in the form of EXHIBIT D.

          10.14     ASSUMPTION REINSURANCE AGREEMENT.  Seller shall have entered
into the Assumption Reinsurance Agreement in the form of EXHIBIT A.

          10.15     NO MATERIAL ADVERSE CHANGE.  There shall have occurred no
event or events having a Material Adverse Effect on Seller or the HMO
Business.

          10.16     EMPLOYER AND GROUP CONSENTS.  All employers or other groups
having at least 250 members shall have consented to the assignment of such
employer's or group's contract with Seller to Buyer pursuant to the terms
of the Assumption Reinsurance Agreement.

          10.17     HOSPITAL CONTRACTS.  Seller shall have received the consent
to the assignment to Buyer of the hospital provider agreements from the
hospitals listed on SCHEDULE 10.17 hereto.

          10.18     RELEASES.   300 Grove Street Realty Corp. shall have
executed the release of Seller, its directors, officers, agents, employees,
other representatives, and assigns in the form of EXHIBIT H attached
hereto.  Worcester Surgical Center, Inc. shall have executed the release of
Seller, its directors, officers, agents, employees and assigns in the form
of EXHIBIT H hereto.  Seller shall have executed the release of Seller's
employees in the form of EXHIBIT I hereto.

          10.19     U-MASS MEDICAL CENTER AGREEMENT.  The University of
Massachusetts Medical Center ("UMMC") shall have confirmed to Healthsource
in writing that health care services rendered to members of Seller (who
become members of Buyer) after Closing shall be governed by the terms of
the existing provider agreement between UMMC and Healthsource, including
without limitation the provisions relating to fees for such services.

          10.20     PHYSICIAN WITHHOLDS.  Seller shall have delivered to Buyer
at Closing proof of payment of Physician Withholds as required in SECTION 2.09.

11.       SELLER'S NON-COMPETITION COVENANT.

          Seller for itself (for any foundation into which Seller is converted)
and any of its affiliates shall enter into the Non-Competition Agreement in
the form of EXHIBIT D.

12.       TRADEMARKS, ETC.

           Seller agrees for itself and any of its present or future affiliates
not to use any name, trade name, trademark, brand name, or service mark
similar thereto listed in SCHEDULE 12 and transferred to Buyer.

13.       INDEMNITIES.

          13.01     INDEMNIFICATION BY SELLER.  Seller shall indemnify, defend
and hold harmless Buyer and its respective shareholders, officers,
directors, employees, subsidiaries, agents, successors, and affiliates
(hereinafter the "Buyer Indemnified Parties") from, against, and with
respect to, any and all loss, damage, claim, action, suit, proceeding
(civil or criminal), deficiency or expense arising or resulting from, or
attributable to, any of the following:

               (a)  any loss, damage, claim, action, suit, proceeding,
               litigation, judgment, decision, decree, injunction, or ruling
               affecting Seller or the HMO Business which results from acts or
               omissions prior to the Closing Date other than those arising on
               account of liabilities of Seller specifically assumed by Buyer
               pursuant to SECTION 3.04.

               (b)  any misrepresentation or breach of any representation or
               warranty of Seller contained herein or in any report, schedule,
               agreement, or document attached hereto or referenced herein, or
               any closing document delivered in connection with the
               transactions contemplated by such documents;

               (c)  any breach or default by Seller of any covenant, obligation
               or undertaking on their part contained herein or in any report,
               schedule, agreement, or document attached hereto or referenced
               herein, or any closing document delivered in connection with the
               transactions contemplated by such documents;

               (d)  all undisclosed or underdisclosed liabilities, debts,
               obligations and commitments of Seller, fixed or contingent, known
               or unknown, incurred in respect of any statement of fact,
               occurrence or circumstance existing prior to or at the Closing
               Date;

               (e)  any cost, expense or liability incurred by Buyer Indemnified
               Parties as a result of a claim for investment banker's fees,
               brokerage, transactional or similar fees by any person asserting
               it was engaged by Seller or any of its affiliates;

               (f)  any out-of-pocket costs of any nature including without
               limitation, legal, accounting, fines, penalties, compliance
               costs, financial assurance requirements, capital equipment and
               maintenance costs, investigation and remediation costs,
               engineering, contractor, consultants, expert and other
               professional fees, resulting from or attributable to any matter
               or thing mentioned or described in clauses (a) through (e) above,
               and all such expenses incurred by Buyer Indemnified Parties in
               seeking enforcement against Seller with respect to any matter or
               thing mentioned or described in clauses (a) through (e) above (if
               it is ultimately determined that any of Buyer Indemnified Parties
               is entitled to indemnification).

          Notwithstanding the foregoing, the right of Buyer to indemnification
under this SECTION 13.01 shall be subject to the following limitations:

                     (i) no indemnification shall be payable pursuant to this
                    SECTION 13.01 unless the total of all claims for
                    indemnification pursuant to this SECTION 13.01 shall exceed
                    Two Hundred Fifty Thousand Dollars ($250,000) in the
                    aggregate and then only to the extent the aggregate
                    indemnification expenses exceed such amount.

          13.02     INDEMNIFICATION BY BUYER.  Buyer shall indemnify, defend and
hold harmless Seller and each of its shareholders, officers, directors,
employees, subsidiaries, agents, successors, and affiliates (the "Seller
Indemnified Parties") from, against and with respect to any and all loss,
damage, claim, action, suit, proceeding (civil or criminal), deficiency or
expense arising or resulting from, or attributable to, any of the
following:

               (a)  any misrepresentation or breach of any representation or
               warranty of Buyer contained herein or in any report, agreement,
               schedule or document attached hereto or referenced herein, or any
               closing document delivered in connection with the transactions
               contemplated by such documents;

               (b) any breach or default by Buyer of any covenant, obligation or
               undertaking on its part contained herein or in any report,
               schedule, agreement or document attached hereto or referenced
               herein or any Closing document delivered in connection with the
               transactions contemplated by such documents;

               (c)  any cost, expense or liability incurred by Seller
               Indemnified Parties as a result of a claim for investment
               banker's fees, brokerage, transactional or similar fees by any
               person asserting it was engaged by Buyer or any of its
               affiliates; and

               (d)  any out-of-pocket costs, including without limitation,
               legal, accounting, engineering and other professional fees,
               resulting from or attributable to any matter or thing mentioned
               or described in clauses (a) through (c) above, and all such
               expenses incurred by Seller Indemnified Parties in seeking
               enforcement against Buyer with respect to any matter or thing
               mentioned or described in clauses (a) through (c) above (if it is
               ultimately determined that Seller Indemnified Parties are
               entitled to indemnification).

          13.03     NOTICE AND MANAGEMENT OF CLAIMS.  If any action, suit, or
proceeding shall be commenced against, or any claim or demand be asserted
against, a party in respect of which such party proposes to demand
indemnification hereunder, such party seeking indemnification (the
"Indemnified Party") shall notify the party from whom the Indemnified Party
seeks indemnification (the "Indemnifying Party") and shall consult with the
Indemnifying Party with respect thereto, provided however, that failure to
give such notice shall not constitute a waiver of the Indemnified Party's
right to indemnification or a defense to any claim by the Indemnified Party
hereunder.  The Indemnified Party may, at its option, participate with the
Indemnifying Party, at its own expense, in the defense of any such action,
suit, or proceeding, but such defense, and any settlement of any such
action, suit or proceeding, 

shall generally be under the reasonable control of the Indemnifying Party
unless such claim involves claims which could interfere with the business,
operations or prospects of Buyer, in which event Buyer shall control such
defense or settlement.  The parties each agree to render to each other such
assistance, information, documents and access to personnel and records as
may be reasonably be requested in order to insure the proper and adequate
defense of any Third-Party Claim.

          13.04     RESOLUTION OF RESPONSIBILITY FOR CLAIMS.  In the event that
any dispute arises as to either party's responsibility with respect to a
claim for indemnification, the parties hereto agree to resolve such
differences by following the dispute resolution procedure set forth in
SECTION 15 hereof all of the terms and conditions of which are incorporated
herein by reference.

          13.05     INTEREST.  In the case of any payments made or costs or
damages incurred and paid by a party, interest on the amount thereof shall
accrue beginning thirty (30) days after written notice of the claim is
given, PROVIDED, THAT such notice is accompanied by documentation
describing the basis of such claim in reasonable detail for evaluation;
PROVIDED FURTHER, HOWEVER, that the claiming party shall only be entitled
to receive such interest to the extent that it is determined that such
party is entitled to indemnification hereunder.  Interest shall accrue
until the claim is paid in full at a variable rate equal to the prime
interest rate (as published in the Money Rates column of the Wall Street
Journal) plus two percent (2%) compounded monthly.

14.       NATURE AND SURVIVAL OF REPRESENTATIONS AND
          WARRANTIES.

          All statements contained in any certificate, Exhibit, SCHEDULE, or
other instrument delivered by or on behalf of Seller pursuant to this
Agreement, or in connection with the transactions contemplated hereby,
shall be true and correct as of both the date hereof and Closing.  All
representations, warranties and covenants made by Seller and Buyer shall
survive Closing hereunder for a period of one (1) year from Closing, and
the consummation of the transactions contemplated hereby and all such
representations, warranties or covenants shall be fully applicable and
effective whether or not any of the parties relies in fact thereon or has
knowledge (acquired either before or after the date hereof, and whether
from the other parties hereto or from its own investigation) of any fact at
variance with, or of any breach of, any such representation, warranty, or
covenant.

15.       DISPUTE RESOLUTION.

          All controversies or claims arising out of or relating to this
Agreement or any agreement referred to or contemplated herein shall be
settled in the first instance by non-binding mediation between the parties
using mutually agreeable professional mediation services and, failing a
resolution through mediation within thirty (30) days of demand 

for same, thereafter by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association in Boston,
Massachusetts.  All such arbitration shall take place in Boston,
Massachusetts.  Judgment upon the award rendered by the arbitrator(s) may
be entered in any court having jurisdiction thereof.  The results of
arbitration shall be binding upon both parties.  The prevailing party in
such arbitration proceeding shall be entitled to recover its reasonable
attorneys' fees and costs.  Until such arbitration is finally concluded,
the provisions of this Agreement shall remain in full force and effect.

16.       BROKERAGE.

          Seller agrees to indemnify Buyer and to hold it harmless from and
against any and all claims for any broker's or finder's fee or commission
arising out of or based on any act or omission of Seller.  Buyer agrees to
indemnify Seller and to hold it harmless from and against any and all
claims for any broker's or finder's fee or commission arising out of or
based on any act or omission of Buyer or its affiliates.

17.       PAYMENT OF EXPENSES.

          Buyer and Seller shall each pay all of their own expenses in
connection with this Agreement and the transactions and deliveries
contemplated hereby, including without limitation any expenses incurred in
connection with any claims made by any third party calling into question
the transactions contemplated hereby.

18.       TERMINATION.

          This Agreement may be terminated at any time prior to Closing by
mutual written consent of Buyer and Seller.  This Agreement also may be
terminated by Buyer or Seller, without liability on the part of the
terminating party to the other party, if:  (i) the proposed contract with
MCCM, as required by the condition of SECTIONS 10.15 and 1(g), on the terms
and conditions specified in EXHIBIT J, has not been negotiated and entered
into within sixty (60) days from the date of this Agreement and Buyer has
not waived such condition, (ii) the transactions contemplated by this
Agreement have not been consummated on or prior to September 30, 1995 or
such later date as may be agreed upon in writing by the parties, if the
failure to consummate said purchase and sale by said date is not due to the
refusal or failure of the terminating party to perform any act required to
be performed under this Agreement or to satisfy a condition to closing
under this Agreement; (iii) the parties fail to obtain necessary regulatory
approvals from the Massachusetts Department of Insurance and the
Massachusetts Attorney General (or other appropriate Massachusetts
regulatory body), on or prior to September 30, 1995; or (iv) Seller is
required to seek additional bidders for its assets at the request of the
Massachusetts Attorney General and Buyer is unwilling to consent to Seller
seeking such additional bidders.

19.       BOARD OF DIRECTORS OF BUYER/PHYSICIAN ADVISORY COUNCIL/PROVIDER
          CONTRACTS
                                     
          19.01     BOARD OF DIRECTORS OF BUYER.  Buyer currently intends that
the Board of Directors of Buyer after Closing shall consist of 14 members
and Buyer currently intends to appoint 12 members of Seller's Board of
Directors to Buyer's Board of Directors at Closing with the remaining two
(2) directors to be representatives of Healthsource.  Buyer also currently
intends that two-thirds of Buyer's Board of Directors shall be physicians
who are then duly licensed physician providers of healthcare or ancillary
services to Buyer.  The Board of Directors of Buyer shall be permitted to
suggest nominations for election of directors to the Board of Directors of
Healthsource and Healthsource shall seriously consider any such
nominations.

          19.02     PHYSICIAN ADVISORY COUNCIL.  Buyer currently intends to
establish a physician advisory council to Buyer's Board of Directors
("Council") comprised of physicians who are participating physicians (M.D.
or D.O.) with Buyer that shall include among its members all of those
individuals who previously served as Incorporators of Seller on the Closing
Date and shall thereafter be comprised of physician providers elected
annually by the vote of all of the physician providers pursuant to
procedures to be specified in the By-Laws of Buyer.  The purpose of the
Council will be to meet with the Board of Directors of Buyer (or a duly
appointed committee of the Board) on a quarterly basis to facilitate
communication between the Board of Directors of Buyer and the physician
providers regarding matters involving relations between Buyer and the
physician providers.

          19.03     PROVIDER CONTRACTS.  Buyer currently intends to continue the
business and provider contractual relationships with various healthcare
providers and other independent contractors with which Seller had
relationships on the Closing Date, except to the extent that Buyer shall
have determined at any time that any such relationship is not in the best
interests of Buyer.

          19.04     CONTROL OF BUYER.  The statements contained in SECTIONS
19.01, 19.02 and 19.03 above are statements of the current intention of
Healthsource and Buyer.  The parties hereto acknowledge and agree that
Healthsource shall have the ultimate right to control the business and
operations of Buyer after Closing including without limitation the right to
change the matters referred to above in SECTIONS 19.01, 19.02 and 19.03 at
any time.

20.       MISCELLANEOUS.

          20.01     WAIVERS.  No action taken pursuant to this Agreement,
including, without limitation, proceeding with Closing, shall be deemed to
constitute a waiver by any party taking such action or compliance with any
representations, warranties, covenants, or agreements contained in this
Agreement.  The waiver by any of the parties of a breach of any 

provision of this Agreement shall not operate or be construed as a waiver
of a breach of any other provision of this Agreement.

          20.02     SELLER'S FAILURE TO CLOSE.  In the event of any refusal on
the part of Seller to close the transactions contemplated in this
Agreement, other than default by Buyer, Seller shall be liable hereunder to
Buyer, and Buyer shall be entitled to seek all damages provided by law in a
dispute resolution proceeding under SECTION 15.

          20.03     BUYER'S FAILURE TO CLOSE.  In the event of any refusal on
the part of Buyer to close the transactions contemplated by this Agreement,
other than default by Seller, Buyer shall be liable hereunder to Seller and
Seller shall be entitled to seek all damages provided by law in an dispute
resolution proceeding under SECTION 15.

          20.04     AMENDMENTS, SUPPLEMENTS, TERMINATION, ETC.  Subject to
applicable law, this Agreement may be amended, modified and supplemented
only by written agreement of Buyer and Seller at any time prior to Closing
with respect to any of the terms contained herein.

          20.05     NOTICES.  All notices, consents, demands, requests,
approvals and other communications, which are required or may be given
hereunder shall be in writing and shall be deemed to have been duly given
if hand-delivered or mailed certified first class mail, postage prepaid. 
Notice shall be deemed effective on the date of such hand delivery or three
(3) days after (not including Sundays and federal holidays) the date of
mailing of such certified mail:

               (i)    If to Seller:

                    Central Massachusetts Health Care
                     100 Front Street, Suite 300
                     Worcester, Massachusetts 01608

                       with a copy to:

                    Choate, Hall & Stewart
                    Exchange Place
                    53 State Street
                    Boston, Massachusetts 02109
                    Attn:  Christopher M. Jedrey, Esq.

               (ii)   If to Buyer:

                    Healthsource Massachusetts, Inc.
                    c/o Healthsource, Inc.
                    Two College Park Drive
                    Hooksett, New Hampshire  03106
                    Attn:  Norman C. Payson, M.D., President

                       with a copy to:

                    Sheehan, Phinney, Bass + Green, Professional Association
                    1000 Elm Street
                    P.O. Box 3701
                    Manchester, New Hampshire  03105-3701
                    Attn:  Daniel N. Gregoire, Esq.

or to such other person or persons at such address or addresses as may be
designated by written notice to the other parties hereunder.

          20.06     ENTIRE AGREEMENT.  This Agreement, together with the other
writings delivered in connection herewith, embodies the entire agreement
and understandings of the parties hereto with respect to the subject
matters hereof and thereof and supersedes any prior agreement and
understanding between the parties.

          20.07     PRONOUNS.  All pronouns and any variations thereof shall be
deemed to refer to masculine, feminine, neuter, singular, or plural as the
identity of the person or persons may require.

          20.08     GOVERNING LAW AND BINDING EFFECT.  This Agreement shall be
governed by the laws of the Commonwealth of Massachusetts without regard to
principles of conflicts of law and shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
assigns.  Any action initiated by any party hereto shall be brought in
Federal District Court in Boston, Massachusetts.

          20.09     SEVERABILITY.   Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such  prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction, provided such prohibited or unenforceable provision does not
affect the essence of this Agreement.

          20.10     COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.

          20.11     CAPTIONS.  The captions and headings throughout this
Agreement are for convenience and reference only, and shall in no way be
deemed to define, modify, or add to the construction of any provision of,
or to the scope or intent of, this Agreement.

          20.12     NO THIRD-PARTY BENEFICIARIES.  Except for the rights of
policyholders pursuant to the Assumption Reinsurance Agreement, each party
hereto intends that this Agreement shall not benefit or create any right or
cause of action in or on behalf of any person other than the parties
hereto; nor shall any statement herein be deemed an admission against
interest by any party in proceedings with any third person.

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

WITNESS:                 CENTRAL MASSACHUSETTS HEALTH CARE,
                         INC.  ("SELLER")

                         By: /s/   
- ---------------------        ----------------------------------
                                Duly Authorized

                         HEALTHSOURCE MASSACHUSETTS, INC.
                         ("BUYER")

                         By: /s/   
- ---------------------        ----------------------------------
                               Norman C. Payson, M.D.

 

Basic Info X:

Name: ASSET PURCHASE AGREEMENT
Type: Asset Purchase Agreement
Date: May 10, 1995
Company: HEALTHSOURCE INC
State: New Hampshire

Other info:

Date:

  • April 10 , 1995
  • 10th day of April , 1995
  • ten 10
  • December 31 , 1992
  • October 31 , 1999
  • fifteen 15
  • June 30 , 1996
  • December 31 , 1991
  • December 31 , 1994
  • December 31 , 1993
  • January 1 , 1994
  • March 1 , 1995
  • July 1 , 1993
  • January 1 , 1995
  • September 30 , 1995
  • Sundays

Organization:

  • Proposed Estimated Balance Sheet
  • KPMG Peat Marwick , LLP
  • Central Massachusetts Health Care , Inc.
  • Worcester Center Realty Trust
  • Moody 's Investors Services , Inc.
  • Commonwealth of Massachusetts Attorney General
  • Sixty Two Million Five Hundred Thousand Dollars
  • Acceptable Financial Assets
  • Estimated Balance Sheet and Final Balance Sheet
  • Non-HMO Business Assets of Seller
  • Special Accounting Principles
  • Proposed Final Balance Sheet
  • LLP Deloitte & Touche
  • Final Balance Sheet of Seller
  • Updated Final Balance Sheet
  • Final Balance Sheet IBNR
  • Assumption Reinsurance Agreement between Seller and Buyer
  • Articles of Organization of Seller
  • Board of Directors of Seller
  • Internal Revenue Service
  • First Securities , Inc.
  • the Division of Insurance
  • Department of Health and Human Services
  • Sheehan Phinney Bass + Green
  • HMO Business of Seller
  • Commonwealth of Massachusetts Division of Insurance
  • Grove Street Realty Corp.
  • Worcester Surgical Center , Inc.
  • University of Massachusetts Medical Center
  • Commercial Arbitration Rules of the American Arbitration Association
  • Massachusetts Department of Insurance
  • Seller 's Board of Directors to Buyer 's Board of Directors
  • Board of Directors of Healthsource
  • Incorporators of Seller
  • Board of Directors of Buyer
  • Hall & Stewart Exchange Place 53 State Street Boston
  • Healthsource Massachusetts , Inc.
  • Healthsource , Inc.
  • College Park Drive Hooksett
  • Federal District Court

Location:

  • Hooksett
  • Mintz
  • Ferris
  • Central Massachusetts
  • Commonwealth of Massachusetts
  • Choate
  • United States of America
  • Worcester
  • M.D.
  • Phinney
  • New Hampshire
  • Esq
  • Boston

Money:

  • $ 5,825,000
  • $ 62,500,000
  • $ 1.5 9
  • $ 18,200,000
  • $ 5,000
  • $ 1,000
  • $ 125
  • $ 10,000
  • $ 100,000
  • $ 250,000

Person:

  • Levin
  • Cohn
  • Glovsky
  • Popeo
  • Hall & Stewart
  • Choate
  • Christopher M. Jedrey
  • Sheehan
  • Daniel N. Gregoire
  • Norman C. Payson

Percent:

  • one hundred percent 100 %
  • 5 % percent
  • 90 %
  • ten percent
  • 10 %
  • twenty percent
  • 20 %
  • 2 %