INSPIRE INSURANCE SOLUTIONS INC
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>9
<FILENAME>ex10-6.txt
<TEXT>
                                                                    Exhibit 10.6


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                         CLAIMS ADMINISTRATION AGREEMENT

                                  by and among

        INSPIRE CLAIMS MANAGEMENT, INC., debtor and debtor-in-possession,

       INSPIRE INSURANCE SOLUTIONS, INC., debtor and debtor-in-possession,

                                       And

                        ARROWHEAD CLAIMS MANAGEMENT, INC.

                            Dated as of May 14, 2002

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<PAGE>


                         CLAIMS ADMINISTRATION AGREEMENT

         THIS  CLAIMS  ADMINISTRATION  AGREEMENT,  dated as of May 14, 2002 (the
"Signing  Date"),  is by and among INSpire Claims  Management,  Inc., a Delaware
corporation  and debtor and  debtor-in-possession  ("INSpire  Claims"),  INSpire
Insurance    Solutions,    Inc.,   a   Texas    corporation   and   debtor   and
debtor-in-possession  ("INSpire  Insurance"),  and Arrowhead Claims  Management,
Inc. a California  corporation  ("Customer").  INSpire Claims, INSpire Insurance
and  Customer  are  sometimes  collectively  referred to as the  "Parties,"  and
individually  referred to as a "Party."  This Claims  Administration  Agreement,
together  with  the  Schedules   referenced  herein  and  attached  hereto,  are
collectively referred to as this "Agreement."

                                    RECITALS

         A. INSpire Claims provides  certain claims  administration  services to
Customer pursuant to a Claims  Administration  Services  Agreement,  dated as of
December 1, 1998, by and between INSpire Claims and Arrowhead  General Insurance
Agency, Inc., a Minnesota corporation ("AGIA"),  which was subsequently assigned
to Customer (the "Claims Administration Agreement").

         B. INSpire Claims,  INSpire Insurance and Customer subsequently entered
into a Claims  Management  System  and  Support  Services  Agreement  and  First
Amendment to Claims Administration Agreement,  dated as of January 11, 2002 (the
"Claims  Management  Agreement"),  by which,  among other  things,  the personal
automobile  claims servicing  business was removed from the terms and conditions
of the Claims  Administration  Agreement and INSpire Insurance agreed to provide
certain services to Customer.

         C.  INSpire  Insurance,  INSpire  Claims  and  Customer  now  desire to
terminate  the  Claims  Administration   Agreement  and  the  Claims  Management
Agreement and to concurrently enter into various new agreements,  including this
Agreement, which will collectively establish a new business relationship between
the Parties.

         D.  On  February  15,  2002,   INSpire  Claims  and  INSpire  Insurance
voluntarily  filed  petitions  for relief under  Chapter 11 of the United States
Bankruptcy Code (the "Bankruptcy  Code") with the United States Bankruptcy Court
for the  Northern  District  of Texas,  Fort  Worth  Division  (the  "Bankruptcy
Court"),  which are jointly being administered under Case No.  02-41228-DML (the
"Bankruptcy Case").

         E. INSpire  Insurance,  INSpire Claims and Customer further desire that
this Agreement,  as well as the other agreements referenced in it, shall only be
effective  and binding on them if (1) all of such  agreements  are approved by a
final  order  of the  Bankruptcy  Court  acceptable  in form  and  substance  to
Customer, and (2) INSpire's rejection of the Claims Administration Agreement and
the Claims  Management  Agreement is approved by a final order of the Bankruptcy
Court acceptable in form and substance to Customer.

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                             STATEMENT OF AGREEMENT

NOW,  THEREFORE,  in  consideration  of the promises and the mutual  agreements,
covenants,  representations  and  warranties set forth in this Agreement and for
other good,  valid and binding  consideration,  the receipt and  sufficiency  of
which are hereby  acknowledged,  the  Parties,  intending  to be legally  bound,
hereby agree as follows:

                                    ARTICLE I
                               SERVICES;TERM; FEES

         Section 1.1 Services. Effective on the later of the Signing Date or the
date when this Agreement is approved by final order of the  Bankruptcy  Court as
provided  for herein  (the  "Effective  Date")  and during the Term (as  defined
below),  INSpire Claims will provide the services set forth on Schedule 1.1 (the
"Services"),  to  Customer  upon the  terms  and  conditions  set  forth in this
Agreement. In addition to the Services,  INSpire Claims will provide to Customer
such other claims administration  services as Customer may reasonably request in
writing  from time to time during the Term and with respect to which the Parties
will have agreed  regarding  the scope,  nature and pricing of such services and
the time period during which such  services  will be provided  (the  "Additional
Services").  During the Term of this  Agreement,  Customer may assume certain of
the  Services  from  INSpire  Claims  upon  terms  and   conditions   which  are
mutually-agreeable  to  the  Parties  and,  with  respect  to  such  transferred
services,  the Parties have agreed that INSpire  Claims' costs  associated  with
such services (the  "Transferred  Services") shall be borne by Customer and then
offset  against the Services Fee as set forth in Section  1.3(a).  Such transfer
shall be executed only through a signed addendum to this Agreement.

         Section 1.2 Term. The term during which INSpire Claims will provide the
Services to Customer  will  commence  on the  Effective  Date and will expire on
December 31, 2008 (the "Expiration Date") unless extended or terminated pursuant
to the  terms of this  Agreement  (the  "Term").  The  Expiration  Date  will be
extended  automatically  for a period  of one year  unless  either  Party  gives
written notice of  non-extension to the other Party at least six months prior to
the then current Expiration Date.

         Section 1.3   Services Fee, Quarterly Minimums and Related Expenses.

                  (a)  Services  Fee.  During  the  Term,  Customer  will pay to
INSpire  Claims for the  performance of the Services a fee which will be payable
monthly  and  calculated  by  multiplying  (i)  the  amount  of  Earned  Premium
recognized  by  Customer  that is subject  to the  Services  in the  immediately
preceding  month, by (ii) 7.15% (the "Services  Fee").  For the purposes of this
Agreement,  "Earned Premium" will mean the aggregate amount of personal property
premiums,  for the products and carriers in the  authorized  states  included in
Schedule 1.1,  recognized as earned by Customer during a particular time period.
The Services Fee will be due and payable in arrears on the last day of the month
following the close of the calendar month in which the Services were performed.

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                  (b) Quarterly  Minimums.  During each calendar  quarter of the
Term,  the Services Fee payable each month will not be less than an amount equal
to  Eighty  Percent  (80%)  of the  average  monthly  Services  Fee  paid in the
immediately prior calendar quarter (the "Quarterly Minimum").

                  (c) Unanticipated  and Increased  Service Level Changes.  Each
Party agrees to negotiate in good faith for an adjustment to the Services Fee in
the  event  of any  statutory,  regulatory  or  judicial  changes  that  require
additional activities not then provided for pursuant to this Agreement.

                  (d) Taxes.  Customer  will pay all tariffs and taxes,  however
designated or levied,  now existing or imposed in the future that are applicable
to the Services or the Services  Fee.  Such tariffs and taxes  include state and
local privilege and excise taxes, sales, use and personal property taxes and any
other  tariff  or tax  based on  Services  performed,  equipment  used,  and the
communication or storage of data.  Notwithstanding the foregoing,  Customer will
not be  responsible  for, and INSpire will pay (i) any franchise or income taxes
based upon the income of INSpire Claims,  (ii) any personal  property or similar
taxes based upon the personal or real property owned or leased by INSpire Claims
and used in the  performance of the Services,  and (iii) Texas state sales taxes
payable  as a result  of the  Services  Fee due to  INSpire  Claims  under  this
Agreement;  provided, however, that (1) the maximum annual Texas state sales tax
base (the amount on which Texas  state  sales taxes are  calculated)  payable by
INSpire on the Services Fee will not exceed the product of  $5,000,000 of Earned
Income multiplied by the then effective  Services Fee, and (2) Customer will pay
the excess of such maximum amount.

                  (e) Loss Adjustment Expenses. Unless expressly provided for in
this  Agreement,  INSpire Claims will be entitled to no other  compensation.  To
this end,  INSpire Claims will pay with its own funds, and not with the funds of
Customer or insurers or reinsurers  represented  by Customer,  all allocated and
unallocated loss adjustment  expenses  necessary to perform Services,  including
its  overhead,  personnel  and  administrative  expenses,  the costs of  records
retrieval,  medical reviews,  investigators,  appraisers,  experts and all other
vendors and  subcontractors.  Unless  expressly  provided for in this Agreement,
Customer and the insurers and  reinsurers  represented  by Customer will have no
obligation to reimburse  INSpire Claims for any internal or external expenses or
loss  adjustment  expenses  incurred  by INSpire  Claims in the  performance  of
Services, except in the event of extraordinary loss adjustment expenses incurred
as the direct result of a catastrophic  event, in which instance INSpire will be
entitled to be reimbursed for those  extraordinary  loss adjustment  expenses on
the condition  that the expenses are deemed  reasonable  and  appropriate by the
insurer and are  reimbursable to INSpire by the insurer.  Under no circumstances
will  Customer  have any  obligation to pay any amount to INSpire in addition to
the Services Fee set forth in Section 1.3(a).

                  (f) Service Level Penalty  Payment.  During the Term,  INSpire
Claims will pay to Customer the penalty  payments  set forth in Schedule  1.3(f)
attached  to this  Agreement  for the  failure of INSpire  Claims to achieve the
Service Levels (as defined below) during the specified time period (the "Service
Level Penalties"). Service Level Penalties shall not in the aggregate exceed 15%

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of the  Services  Fee  payable  in any  month.  Payment  of such  Service  Level
Penalties shall not in any way limit, restrict or relieve any Party of liability
for any breach of this  Agreement.  INSpire  Claims will pay the  Service  Level
Penalties to Customer  within thirty days of the close of the time period during
which the penalty payments were calculated or, alternatively, Customer may, upon
thirty (30) days notice to INSpire  Claims,  offset the Service Level  Penalties
owed by INSpire  Claims  against the Services Fee payable by Customer to INSpire
Claims.  In the event that INSpire Claims  believes that Service Level Penalties
have been improperly offset by Customer, INSpire Claims shall have full recourse
to all remedies provided for in Article VII of this Agreement.

                  (g) Penalty  Identification.  Penalties will be identified via
system  reports,  where  available,  or via audit by  Customer.  Audits shall be
conducted quarterly or monthly, at Customer's option, upon ten (10) days written
notice to  INSpire  Claims  and will  consist  of a review  of a sample  size of
transactions   constituting   at  least  10%  of  the  universe  of   applicable
transactions for the specified audit period. Audit results will be considered by
Customer  and  INSpire  Claims  to be  applicable  to  100% of the  universe  of
applicable  transactions  for that  specified  audit  period for the purposes of
calculating Penalties only if Service Levels are not met in more than 95% of the
files audited.

                  (h) Acts Beyond Control. If an event described in Section 8.14
of this Agreement [Force Majeure clause] impacts INSpire Claims' ability to meet
a Service  Level,  then INSpire Claims will not be penalized for failing to meet
that Service  Level to the extent that such event has affected  INSpire  Claims'
ability to meet its obligations.

                  (i) Interest on Past Due Payments.  Any sum due INSpire Claims
pursuant to this  Agreement that is not paid on the date on which payment is due
shall bear interest from that date until the date such sum is paid at the lesser
of 1.5 percent per month or the maximum rate of interest  allowed by  applicable
law.  Customer  will  also  pay  INSpire  Claims  for any  reasonable  expenses,
including  attorney's fees,  incurred by INSpire Claims in the collection of any
amounts due and payable under this Agreement.

                  (j) Electronic Funds  Transfer.  INSpire Claims  will  provide
Customer bank routing  information.  All payments are to be via Electronic Funds
Transfer (EFT),  unless  otherwise  agreed to in writing by the parties,  to the
account specified in writing by INSpire Claims.

                  (k) Payment  of  Undisputed  Amounts.  In the event that there
is an amount in  dispute,  Customer  is still  obligated  to pay all  undisputed
amounts on all invoices.

         Section 1.4 Policy Processing and Administration Agreement; Sublease of
Premises;  Software License Agreement;  Professional  Services Agreement;  Asset
Purchase  Agreement;   Comprehensive  Preferred  Escrow  Agreement;  and  Policy
Processing and Administration Agreement.

                  (a) Sublease of  Premises.  Concurrent  with the  execution of
this Agreement,  and as a condition to it, AGIA and INSpire Insurance will enter
into a separate  Sublease  by which  INSpire  Insurance  shall  sublease  office
premises located at 6055 Lusk Boulevard, San Diego, California, to AGIA.

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                  (b) Software License Agreement.  Concurrent with the execution
of this  Agreement,  and as a condition to it, AGIA and INSpire  Insurance  will
enter into separate  Software License  Agreement by which INSpire Insurance will
license certain software systems to AGIA.

                   (c)  Professional  Services  Agreement.  Concurrent  with the
execution  of this  Agreement,  and as a condition to it,  AGIA,  Customer,  and
INSpire Insurance will enter into separate  Professional  Services  Agreement by
which INSpire Insurance will provide certain professional services to AGIA.

                  (d) Asset Purchase Agreement. Concurrent with the execution of
this Agreement,  and as a condition to it, AGIA and INSpire Insurance will enter
into a separate  Asset Purchase  Agreement by which INSpire  Insurance will sell
certain  assets  to AGIA  and  AGIA  will  purchase  such  assets  from  INSpire
Insurance.

                  (e) Comprehensive Preferred Escrow Agreement.  Concurrent with
the execution of this  Agreement,  and as a condition to it, AGIA,  Customer and
INSpire  Insurance  will  enter into  separate  Comprehensive  Preferred  Escrow
Agreement  by which  INSpire  Insurance  will  maintain  in escrow a copy of the
object  code and  source  code for the latest  version  of  INSpire  Insurance's
software incorporated in the System in use by Customer.

                  (f) Policy Processing and Administration Agreement. Concurrent
with the execution of this Agreement, and as a condition to it, AGIA and INSpire
Insurance  will enter  into a  separate  Policy  Processing  and  Administration
Agreement by which INSpire  Insurance will provide certain policy processing and
administration services to AGIA.

                                   ARTICLE II
                             PERFORMANCE OF SERVICES

         Section 2.1 Service Levels. Each Party agrees to the service levels set
forth on Schedule  2.1,  which  service  levels will be  reviewed  annually  and
revised as mutually agreed upon by the Parties (the "Service  Levels").  INSpire
Claims will provide Services under this Agreement in accordance with the Service
Levels.

         Section 2.2 Evaluation and Review Process. Within 30 days after the end
of each calendar  month during the Term,  INSpire  Claims will provide  Customer
with a monthly  service  report that shows the  performance of INSpire Claims as
measured against the Service Levels.

         Section 2.3       Audit: Access to Records, Systems and Facilities.

                 (a) Annual Audit.  Within 90 days after the  completion of each
calendar year during the Term, INSpire Claims and Customer will cause a mutually

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agreed-upon,  nationally-recognized accounting firm or other professional entity
(i)  to  test  the  procedures  and  controls  used  by  INSpire  Claims  in the
performance of the Services, and (ii) to opine as to whether such procedures and
controls are sufficient to meet the Service Levels.  INSpire Claims and Customer
agree to split the costs and expenses of the third party auditor equally between
the Parties.

                  (b) Access to Records  and  Facilities.  INSpire  Claims  will
provide  Customer and its  reinsurers,  carriers,  prospective  carriers and the
entity  performing the annual audit  described  above  reasonable  access to its
facilities and all books,  records and accounts  necessary to verify  compliance
with this  Agreement.  Such access  will be made  available  upon prior  written
notice during normal  business  hours for the Term of this  Agreement and during
the  periods in which  INSpire  Claims is required  to  maintain  such  records.
INSpire  Claims  will  provide  the  appropriate   state  insurance   department
reasonable  access  to its  facilities  and all  necessary  books,  records  and
accounts in a form usable by such department.  Customer remains  responsible for
ensuring  that  all  persons  given  access  comply  with  the   confidentiality
provisions of Article III.

                  (c) Access to Systems.  INSpire  Claims will provide  Customer
reasonable  access to the computer systems used by INSpire Claims to perform the
Services.  Such access will be made  available  upon prior written notice during
normal  business  hours during the Term.  Customer will be  responsible  for the
payment or reimbursement  of any fees or expenses  associated with compliance by
INSpire Claims with this subsection.

         Section 2.4       Ownership of Property

                  (a) Customer's  Property.  Customer will own all right,  title
and interest in and to the content of the policy,  claim,  accounting  and agent
files and computer  images and storage  discs created or developed in connection
with or as a result of the performance of the Services.

                  (b)  INSpire  Claims'  Property.  Subject  to  the  foregoing,
INSpire  Claims  will own all right,  title and  interest  in and to any and all
tools, techniques,  processes,  procedures,  inventions, software, patents, know
how,  trade secrets and other  copyrights  that it already has or that are first
discovered,  created or developed by INSpire  Claims in  connection  with,  as a
result of or incident to the performance of the Services.

         Section 2.5  Customer's Performance  Obligations and  Acknowledgements.
The  performance  of the  Services by INSpire  Claims  requires  the support and
cooperation of Customer. As such, Customer agrees and acknowledges as follows:

                  (a) Provide  Information and Material.  Customer will provide,
in a timely manner and in a format reasonably  acceptable to INSpire Claims, the
data and  materials  necessary  for  INSpire  Claims to  perform  the  Services,
including policy jackets,  Customer's banking institution  account  information,
corporate and subsidiary  logos (if  applicable),  style and  specifications  of
printed documents such as insurance policies.

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                  (b)  Acknowledgment of Responsibility.  Customer  acknowledges
that INSpire Claims  assumes no risk or  responsibility  for  Customer's  policy
processing and administration functions under this Agreement.

                  (c)  Access to  Third Party  Software.  Customer  will provide
INSpire  Claims access to all software  necessary for INSpire  Claims to perform
the Services.

         Section  2.6  Maintenance  of  Documents  and  Files.  During the Term,
INSpire  Claims will maintain (a) records of amounts billed and payments made on
behalf of Customer, and (b) copies of all claims, policies,  notifications, loss
reports,  inspections,   independent  adjuster  reviews,  claims  documentation,
records  and  correspondence  relating  to all  Customers  claims and  policies.
INSpire Claims will not destroy these records and documents  without the written
permission  of Customer for a period of five years from the loss or  termination
date of the applicable  policy,  or the period specified by the applicable state
or federal  statute  regulating  preservation  of records,  whichever is longer.
INSpire Claims may, at its discretion, use magnetic, optical, and other types of
technology  to store such data.  INSpire  Claims  agrees to provide to  Customer
reasonable  supporting  documentation  regarding  any disputed  invoice or claim
amount  within 15 days  after  Customer  provides  written  notification  of the
dispute to INSpire Claims.

         Section 2.7 Ultimate Discretion. INSpire Claims acknowledges and agrees
that Customer,  being at risk and having ultimate  responsibility for the claims
to be administered by INSpire Claims, will at all times have ultimate discretion
with respect to all matters pertaining to claims arising under its policies.

         Section 2.8 Mail  Received.  On and after the Effective  Date,  INSpire
Claims may receive  and open all mail  addressed  to Customer  and deal with the
contents thereof in its discretion to the extent that such mail and the contents
thereof relate to the Services.  INSpire Claims agrees to deliver or to cause to
be delivered to Customer all mail received by INSpire  Claims which is addressed
to Customer and does not relate to the Services.

         Section 2.9  Insurance.  During the Term,  INSpire Claims will maintain
errors and omissions insurance under a current and paid up policy,  effective as
of the Effective Date, issued by an insurer  reasonably  acceptable to Customer,
which  insurance  will  have a policy  limit of no less  than  $5,000,000  and a
deductible  no greater  than  $250,000.  If  INSpire  Claims  fails to  maintain
coverage or incurs a lapse in coverage,  Customer may purchase tail coverage (at
INSpire  Claims'  expense) in the amount set forth herein.  INSpire  Claims will
provide a copy of said  insurance  policy to Customer  and  annually  provide to
Customer a certificate of insurance issued by INSpire Claims' insurer.  Customer
will be  named  as an  additional  insured  under  INSpire  Claims'  errors  and
omissions insurance policy.


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                                   ARTICLE III
                                 CONFIDENTIALITY

         Section 3.1  Definitions.  For purposes of this  Article  the following
definitions will apply:

                  (a)  "Arrowhead  Group" means  Arrowhead  Management  Company,
AGIA,  and  Customer  and  their   respective   affiliates,   parent   entities,
subsidiaries, agents, directors, officers, employees, accountants, attorneys and
advisors.

                  (b) "INSpire Group" means INSpire Claims and INSpire Insurance
and  their  respective  affiliates,  parent  entities,   subsidiaries,   agents,
directors, officers, employees, accountants, attorneys and advisors.

                  (c) "Confidential Information" means any information,  oral or
written,  whether  prepared by the  Disclosing  Party,  its  Representatives  or
otherwise,  which  is  furnished  to the  Receiving  Party or on  behalf  of the
Disclosing Party after the date of this Agreement relating to the Services. Such
information  includes,  but is not  limited  to,  financial  information,  trade
secrets,  processes,  inventory,  formulas,  prices,  markets,  employee  lists,
salaries,  reports,  computer  files,  maps,  drawings,  specifications,   title
reports,  customer  information  and  lists,  vendor  sources,  development  and
marketing,  plans, statistical data, forecasts,  marketing strategies,  or other
commercial,  technical,  strategic  or  human  resources  information.  The term
"Confidential Information" does not include: (i) information which is or becomes
generally  available  to the public  other than as a result of any  unauthorized
disclosure or any wrongful acts of the Receiving Party;  (ii) information  which
is   independently   developed  by  the  Receiving  Party  without  the  use  of
Confidential  Information from the Disclosing Party;  (iii) information which is
rightfully  received from a third party whose  disclosure  would not violate any
confidentiality obligation or breach of any agreement; or (iv) information which
is  approved  for  release  by the  Disclosing  Party in  writing  signed by the
Disclosing Party specifying the information to be released.

                  (d) "Disclosing Party" means Arrowhead Group or INSpire Group,
as the case may be, with  respect to any  Confidential  Information  provided by
such party to the other party.

                  (e) "Receiving  Party" means Arrowhead Group or INSpire Group,
as the case may be, with  respect to any  Confidential  Information  received by
such party from the other party.

                  (f)  "Representative"  means any  employee,  agent,  attorney,
accountant,  financial  advisor or other  person  acting on behalf of a party in
connection with this Agreement.

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         Section 3.2  Nondisclosure.  The Parties hereby agree as follows:

                  (a) Use of Information.  All Confidential  Information will be
used  solely  for the  purpose  of  performing  the  Services.  In no event will
Confidential  Information be used by any party or person receiving  Confidential
Information for business or competitive purposes.

                  (b) Confidentiality. All Confidential Information will be kept
strictly  confidential  by the  Receiving  Party and the  Receiving  Party  will
restrict disclosure of Confidential Information to only those employees,  agents
and advisors of the Receiving Party who have a need to know such information for
the purpose of performing the Services.

                  (c)  Disclosure  to  Representatives.  Representatives  of the
Receiving  Party shall be informed by the  Receiving  Party of the  confidential
nature of such information and the covenant of  confidentiality by the Receiving
Party hereunder, and they shall be directed by the Receiving Party to treat such
information  confidentially.  Before  any  disclosure  o  dissemination  of  any
Confidential  Information subject to this Agreement is made to any person, other
than an officer or director of the Receiving Party or its counsel or independent
accountant, the Receiving Party shall provide the person to whom such disclosure
is made with a copy of this Agreement.

         Section 3.3 No  Solicitation.  Each Party agrees that without the other
Party's prior written consent, neither such Party nor any of its affiliates will
solicit for employment, employ or otherwise contract for or solicit the services
of any person who is now employed by the other  Party,  for a period of one year
from the Effective Date, provided that this paragraph shall not apply to general
commercially  published  solicitations  for  employment  by a Party or responses
thereto  by  employees  of the  other  Party or to the  hiring of  employees  as
contemplated by the definitive  agreements  pursuant to which this Agreement was
executed.

          Section 3.4 Required  Disclosure.  In the event the Receiving Party or
its Representatives  are requested or required in a judicial,  administrative or
governmental proceeding to disclose any Confidential Information,  the Receiving
Party  shall  cooperate  with the  Disclosing  Party and  provide it with prompt
notice of any such request so that the Disclosing  Party may seek an appropriate
protective  order  and/or  waive  the  Receiving  Party's  compliance  with  the
provisions of this  Agreement.  If, in the absence of a protective  order or the
receipt of a waiver hereunder,  the Receiving Party or its  Representatives  are
nonetheless, in the opinion of the Receiving Party's attorneys, legally required
to disclose  Confidential  Information  to any tribunal or else stand liable for
contempt  or  suffer  other  penalty,  the  Receiving  Party may  disclose  such
information  to such tribunal  without  liability  hereunder,  provided that the
Receiving Party complies with the notice provisions of this paragraph.

          Section 3.5 Return of Confidential Information. Upon the expiration or
termination of this Agreement,  the Receiving  Party shall promptly,  and in any
event upon request by the Disclosing Party,  deliver to the Disclosing Party all
Confidential  Information,  including  all  written  and  electronically  stored
copies.  Neither the Disclosing  Party nor its  Representatives  will retain any
copies,  extracts  or  other  reproductions,  in  whole  or  in  part,  of  such
Confidential  Information.  At the Disclosing  Party's  request,  all documents,

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memoranda,  notes and other such writings prepared by the Receiving Party or its
Representatives  based on the information in the  Confidential  Information,  or
which quote from or summarize any Confidential Information, will be destroyed as
soon as  reasonably  practicable,  and such  destruction  shall be  certified in
writing to the Disclosing Party by an authorized  officer of the Receiving Party
supervising the destruction.

          Section 3.6 Remedies for Breach. The Parties acknowledge that a breach
of the covenant of  confidentiality  contained in this  Agreement  may result in
irreparable and continuing  damage to the Disclosing  Party for which there will
be no adequate remedy at law. In the event of any breach of this Agreement,  the
Receiving  Party agrees that the Disclosing  Party shall be entitled to seek and
obtain specific performance of this Agreement by the Receiving Party, including,
upon  making the  requisite  showing  that it is entitled  thereto,  provisional
injunctive  relief  restraining the Receiving Party from committing such breach,
in addition to such other and further relief,  including  monetary  damages,  as
provided by law.

                                   ARTICLE IV
                       TRADE SECRET AND PROPRIETARY RIGHTS

         Section 4.1 No Rights to Software.  Notwithstanding  any use by INSpire
Claims of any proprietary  computer  software programs in the performance of the
Services,  neither this Agreement nor the performance of any Services  hereunder
will be construed as a grant of a license or any other interest in or to INSpire
Claims' computer software programs.  Further,  this Agreement grants to Customer
no right to possess or reproduce,  or any other interest in, any of the computer
software  programs used in the performance of all or any part of the Services or
their  specifications  in any tangible or  intangible  medium.  Customer may not
mortgage,  hypothecate,  sell,  assign,  pledge,  lease,  transfer,  license  or
sublicense any computer  software programs used in the performance of all or any
part of the  Services,  nor allow any  person  or  entity to  transmit,  copy or
reproduce any such computer software programs.  In the event Customer comes into
possession of the computer  software  programs used in the performance of all or
any part of the Services,  Customer will  immediately  notify INSpire Claims and
return such  computer  software  programs  and all copies of any kind thereof to
INSpire Claims.

         Section 4.2  Nondisclosure.  Other than  Customer's  employees who need
access to  computer  software  programs  for the  performance  of their  duties,
Customer covenants and agrees not to disclose or otherwise make available to any
person any computer software programs used in the performance of all or any part
of the  Services.  Customer  agrees to take all  reasonable  steps  necessary to
obligate each of its  employees  who is given access to such  computer  software
programs to a level of care sufficient to protect the computer software programs
from unauthorized disclosure.

         Section 4.3 Survival.  THE OBLIGATION OF THE PARTIES UNDER THIS ARTICLE
AND  ARTICLE  III WILL  CONTINUE  AFTER THIS AGREEMENT EXPIRES OR IS TERMINATED.



                                       11
<PAGE>


                                    ARTICLE V
                                   TERMINATION

         Section 5.1  Termination of Agreement. This Agreement may be terminated
prior to the Expiration Date only as follows:

                  (a) by the  non-breaching  Party  upon a breach  by the  other
Party of its duties or obligations under this Agreement; provided, however, that
(i) such  breach  remains  substantially  uncured  within 30 days after  written
notice  specifying such breach is received by the breaching  Party, or (ii) with
respect to a breach  that cannot be  reasonably  cured  within a 30-day  period,
should the defaulting  party fail to proceed within 30 days after written notice
specifying  the breach to commence  curing the default  and  thereafter  fail to
proceed with all reasonable diligence to cure substantially the default;

                  (b) by a Party  in the  event  (i)  the  other  Party  makes a
general  assignment  for the benefit of creditors,  (ii) the other Party files a
voluntary  petition in  bankruptcy or petitions  for  reorganization  or similar
arrangement  under the bankruptcy  laws,  excepting the Bankruptcy Case, (iii) a
petition  in  bankruptcy  is filed  against the other Party by a third party and
such  petition is not dismissed  within  ninety days of its filing date,  (iv) a
receiver or trustee is appointed  for all or any part of the property and assets
of the other  Party,  or (v) the  Bankruptcy  Case is  converted to a case under
Chapter 7 of the Bankruptcy Code;

                  (c) by Customer,  upon  commission by INSpire Claims of fraud,
criminal conduct or willful violation of an insurance statute or regulation,  if
said  conduct by INSpire  Claims has a  material  adverse  effect on  Customer's
ability  to engage in  business.  This  paragraph  does not apply to  conduct by
INSpire Claims' employees who are not acting at the direction of INSpire Claims;
or

                  (d) by  INSpire Claims  if  Customer's  Written  Premium falls
below $20,000,000 on an annual basis.

         Section 5.2  Procedure Upon Expiration or Termination.  Upon expiration
or termination of this Agreement:

                  (a) Customer  may (i) assume  control of such open claim files
as Customer  may elect,  in which case INSpire  Claims will take all  reasonable
steps  necessary  to effect the orderly  transfer  of such claims  files so that
Customer's  liability for claims or allocated  loss  adjustment  expenses is not
incurred,  or (ii)  require  INSpire  Claims  to  continue  to  administer  to a
conclusion  such open claim files as Customer may elect,  in which case Customer
will  pay  INSpire  Claims  a  reasonable  fee on a  time  and  materials  basis
reasonably established by INSpire Claims;

                  (b)  INSpire  Claims  will  promptly  return to  Customer  any
policies,  forms or other supplies imprinted with Customer's name, regardless of
who  incurred  the cost for same as well as all  files and  documents  regarding
Customer's policies and claims;

                                       12
<PAGE>

                  (c) INSpire Claims will provide promptly to Customer,  without
charge, a tape backup of all data files. Further, for a reasonable fee on a time
and  materials  basis,  INSpire  Claims will provide to Customer  the  personnel
necessary  to assist with the  records  layout and file  structures  of the data
files such that these  records and data files can be  transferred  to a new data
base designated by Customer.  In the event that  termination is as a result of a
breach by INSpire Claims,  Customer shall have the right to maintain and process
claims arising on its policies on INSpire Claims' then current  software systems
for a period of six months so that  Customer  can effect an orderly  transfer of
its business to a new  processing  system;  provided that Customer shall pay all
third party maintenance, license and other fees in order to do so;

                  (d) Such expiration or termination will not in any  way limit,
restrict or relieve any Party of liability for any breach of this Agreement; and

                  (e)  The automatic stay under the Bankruptcy  Code will not in
any way limit or restrict  Customer from  exercising its rights or remedies upon
expiration or termination of this Agreement.

                                   ARTICLE VI
                      REMEDIES AND LIMITATION OF LIABILITY

         Section 6.1       Indemnification of the Parties.

                  (a) Each Party (the "Indemnitor") will indemnify,  defend, and
hold  harmless  the  other  Party  (the   "Indemnitee")  from  and  against  any
arbitration award,  claim,  cost,  damage,  demand,  expense,  fine,  liability,
lawsuit,  obligation,  payment  or  penalty  of any kind or  nature  whatsoever,
including any reasonable  attorneys'  fees and expenses (a "Claim")  incurred by
the  Indemnitee  that  arises out of or  directly  relates  to the  Indemnitor's
performance  or breach of this  Agreement.  Upon an  Indemnitee's  request,  the
Indemnitor  will  indemnify the  Indemnitee's  directors,  employees,  officers,
agents,  attorneys,  representatives and shareholders to the same extent as such
Indemnitee.  No such person,  however,  will be a third party beneficiary of the
indemnification  provision  set forth in this  Agreement.  To the extent  that a
Indemnitee  requests the Indemnitor to indemnify  such party's  representatives,
the Indemnitee will cause its representatives to comply with the indemnification
provisions  and  abide  by the  indemnification  limitations  set  forth in this
Agreement.

                  (b) Customer hereby fully and irrevocably waives, releases and
discharges all existing and potential claims, awards, costs, demands,  expenses,
liabilities,  fines,  balances,  payments,  demands  for  payment or rights that
Customer may have against INSpire Claims and INSpire Insurance, which in any way
relate to or arise from the  services  rendered  by INSpire  Claims and  INSpire
Insurance under the Claims  Administration  Agreement and the Claims  Management
Agreement,  except for claims for  indemnification  arising from INSpire Claims'
negligent  handling of claims under  Customer's  policies prior to the Effective
Date of this Agreement.  INSpire Claims and INSpire  Insurance  hereby fully and
irrevocably  waive,  release and discharge  all existing and  potential  claims,
awards,  costs,  demands,  expenses,  liabilities,  fines,  balances,  payments,
demands for payment or rights  INSpire  Claims and  INSpire  Insurance  may have

                                       13
<PAGE>

against Customer, which in any way relate to or arise from the services rendered
by  INSpire  Claims  and  INSpire  Insurance  under  the  Claims  Administration
Agreement  and the  Claims  Management  Agreement,  except  for (i)  claims  for
indemnification  arising from Customer's  negligent handling of claims under its
own  policies on or after the  Effective  Date of this  Agreement,  and (ii) any
amounts owed to INSpire pursuant to the Claims Administration  Agreement and the
Claims Management  Agreement for services rendered by INSpire from April 1, 2002
until the  Effective  Date.  INSpire  Claims  will  indemnify,  defend  and hold
Customer  harmless from  liability for negligent  claims  handling  prior to the
Effective Date,  unless the claims were handled in compliance with the direction
of Customer or the insurer.  Customer  will  indemnify,  defend and hold INSpire
Claims harmless for Customer's negligent claims handling, unless the claims were
handled in compliance with the direction of the insurer.

         Section  6.2  Limitations  of  Liability.  INSpire  Claims and  INSpire
Insurance  will not be liable  for any  damages  or  indemnification  under this
Agreement  arising out of any handling of any claims under  Customer's  policies
where bad faith is  alleged  (the "Bad Faith  Claims")  (a) except to the extent
such Bad Faith Claim arises out of or is directly related to INSpire Claims' and
INSpire  Insurance  negligence,  gross  negligence or willful  misconduct in the
performance of the Services;  provided, however, that INSpire Claims and INSpire
Insurance will have no liability hereunder in connection with any action, or any
failure to take an action,  taken at the  direction of  Customer,  (b) until the
amount of the aggregate of all Bad Faith Claims for damages and  indemnification
for which INSpire Claims and INSpire  Insurance  would  otherwise be responsible
exceeds  $50,000 in any  particular  calendar year (the  "Deductible")  and then
INSpire Claims and INSpire  Insurance will only be responsible for the amount in
excess of the  Deductible,  and (c) to the extent that the  aggregate  amount of
such Bad Faith Claims exceed $5,000,000 in the aggregate.

         Section   6.3   Limitation   Acknowledgement.   Each  Party   expressly
acknowledges  that the  limitations  set forth in this Article VI represent  the
express agreement of the Parties with respect to the allocation of risks between
the Parties,  including the level of risk to be associated  with the performance
of the  Services as related to the amount of the  payments to be made to INSpire
Claims for such  Services,  and each party  fully  understands  and  irrevocably
accepts such limitations.

         Section  6.4 Notice of Claim.  Any award of damages or  indemnification
pursuant to this Agreement is conditioned  upon the Indemnitor  having  received
full and prompt notice in writing of the Claim and the  Indemnitee  allowing the
Indemnitor to fully direct the defense or  settlement  of such Claim;  provided,
however,  that the failure to receive  prompt notice  relieves the Indemnitor of
its  obligations  under  this  Article  only  if the  Indemnitor  is  materially
prejudiced  by the failure to receive such notice.  The  Indemnitor  will not be
responsible for any settlement or compromise made without its consent.


                                       14
<PAGE>


                                   ARTICLE VII
                       ARBITRATION AND EQUITABLE REMEDIES

         Section 7.1 Settlement Meeting.  The Parties will attempt in good faith
to resolve  promptly through  negotiations any dispute under this Agreement.  If
any such dispute should arise,  the Parties,  will meet at least once to attempt
to resolve  the matter  (the  "Settlement  Meeting").  Any Party may request the
other Parties to attend a Settlement Meeting at a mutually agreed time and place
within ten days after  delivery of a notice of a dispute.  The  occurrence  of a
Settlement  Meeting with  respect to a dispute will be a condition  precedent to
seeking any arbitration or judicial remedy,  provided that if a Party refuses to
attend a Settlement Meeting the other Parties may proceed to seek such remedy.

         Section 7.2 Arbitration Proceedings. If the Parties have not resolved a
monetary  dispute at the  Settlement  Meeting any Party may submit the matter to
arbitration.   A  panel  of  three  arbitrators  will  conduct  the  arbitration
proceedings in accordance with the provisions of the Federal Arbitration Act (99
U.S.C.  Section 1 et seq.) and the Commercial  Arbitration Rules of the American
Arbitration Association (the "Arbitration Rules"). The decision of a majority of
the panel will be the decision of the arbitrators.

                  (a)  Arbitration  Notice.  To  submit a  monetary  dispute  to
arbitration, a Party will furnish the other Parties and the American Arbitration
Association with a notice (the "Arbitration Notice") containing (i) the name and
address of such Party,  (ii) the nature of the  monetary  dispute in  reasonable
detail, (iii) the Party's intent to commence arbitration  proceedings under this
Agreement, and (iv) the other information required under the Federal Arbitration
Act and the Arbitration Rules.

                  (b) Selection of  Arbitrators.  Within ten days after delivery
of the Arbitration  Notice,  each Party will select one arbitrator from the list
of  the  American  Arbitration   Association's   National  Panel  of  Commercial
Arbitrators.  Within  ten days  after  the  selection  of the last of those  two
arbitrators,  those two arbitrators  will select the third  arbitrator from such
list. If the first two arbitrators  cannot select a third arbitrator within such
ten-day  period,  the American  Arbitration  Association  will select such third
arbitrator  from the list.  Each arbitrator will be an individual not subject to
disqualification  under Rule No. 19 of the Arbitration  Rules with experience in
settling complex litigation involving the insurance industry.

                  (c)  Arbitration  Final.  The  arbitration  of the  matters in
controversy and the  determination  of any amount of damages or  indemnification
will be final and binding  upon the Parties to the maximum  extent  permitted by
law,  provided that any Party may seek any equitable  remedy available under Law
as provided in this Agreement. This agreement to arbitrate is irrevocable.

         Section 7.3 Place of Arbitration.  Any arbitration  proceedings will be
conducted at such neutral location outside of the States of California and Texas
as the  Parties  may  agree.  If a neutral  location  cannot be agreed to by the
parties,  then the  arbitration  proceedings  will be held in  Albuquerque,  New



                                       15
<PAGE>

Mexico.  The arbitrators  will hold the arbitration  proceedings  within 60 days
after the selection of the third arbitrator.

         Section 7.4 Discovery.  During the period  beginning with the selection
of the third  arbitrator  and  ending  upon the  conclusion  of the  arbitration
proceedings,  the  arbitrators  will have the authority to permit the Parties to
conduct such discovery as the arbitrators consider appropriate.

         Section 7.5 Equitable Remedies.  Notwithstanding  anything else in this
Agreement to the contrary, after the Settlement Meeting a Party will be entitled
to seek any equitable  remedies available under law. Any such equitable remedies
will be in addition to any damages or indemnification rights that such Party may
assert in an arbitration proceeding.

         Section 7.6 Judgments.  Any arbitration award under this Agreement will
be final and binding.  Any court having  jurisdiction may enter judgment on such
arbitration award upon application of a Party.

         Section 7.7 Expenses. If any Party commences arbitration proceedings or
court proceedings  seeking equitable relief with respect to this Agreement,  the
prevailing Party in such arbitration  proceedings or case may receive as part of
any award or judgment  reimbursement of such Party's reasonable  attorneys' fees
and expenses to the extent that the arbitrators or court considers appropriate.

         Section 7.8 Cost of the  Arbitration.  The arbitrators  will assess the
costs of the  arbitration  proceedings,  including their fees, to the Parties in
such proportions as the arbitrators consider reasonable under the circumstances.

         Section 7.9  Exclusivity of Remedies.  To the extent  permitted by law,
the  arbitration  and  judicial  remedies  set forth in this Article will be the
exclusive  remedies  available to the Parties with respect to any dispute  under
this Agreement or claim for damages or indemnification under this Agreement.

                                  ARTICLE VIII
                                  MISCELLANEOUS

         Section 8.1 Amendment. No amendment of this Agreement will be effective
unless in writing signed by the Parties.

         Section 8.2 Counterparts.  This Agreement may be executed in any number
of counterparts,  each of which will be deemed to be an original agreement,  but
all of which will constitute one and the same agreement.

         Section 8.3 Entire  Agreement.  This Agreement  constitutes  the entire
agreement  and  understanding  between  the  Parties  and  supersedes  all prior
agreements  and  understandings,  both  written  and oral,  with  respect to the
subject matter of this Agreement.

                                       16
<PAGE>

         Section 8.4  Expenses.  Each Party will bear  its  own  expenses  with
respect to the  negotiation  and  preparation  of this Agreement.

         Section 8.5 No Assignment. No Party may assign its benefits or delegate
its duties under this  Agreement  without the prior  consent of the other Party.
Any attempted  assignment or delegation without such prior consent will be void.
Notwithstanding  the  foregoing,  each Party may  assign  its rights  under this
Agreement to a purchaser  of all the assets or equity of such Party  without the
other Party's consent,  and any such purchaser and any subsequent  purchasers of
all of the assets or equity of such Party may similarly assign such rights.

         Section 8.6 No Third Party Beneficiaries.  This Agreement is solely for
the benefit of the Parties and no other Person will have any right, interest, or
claim under this Agreement.

         Section 8.7  Notices.  All  claims,  consents,  designations,  notices,
waivers,  and other  communications in connection with this Agreement will be in
writing.  Such  claims,  consents,  designations,  notices,  waivers,  and other
communications  will be considered received (a) on the day of actual transmittal
when transmitted by facsimile with written confirmation of such transmittal, (b)
on the next business day following  actual  transmittal  when  transmitted  by a
nationally  recognized  overnight  courier,  or (c) on the  third  business  day
following  actual  transmittal  when  transmitted  by  certified  mail,  postage
prepaid,  return receipt requested;  in each case when transmitted to a Party at
its address  set forth  below (or to such other  address to which such Party has
notified the other, Parties in accordance with this Section to send such claims,
consents, designations, notices, waivers, and other communications):

INSpire Claims and INSpire:                   Attn: Chief Executive Officer
                                              INSpire Claims Management, Inc./
                                              INSpire Insurance Solutions, Inc.
                                              300 Burnett Street
                                              Fort Worth, Texas 76012
                                              Phone: 817-348-3999
                                              Fax: 817-348-3787

         with a copy to:                      Mr. Steve Leshin
                                              Jenkens & Gilchrist, P.C.
                                              1445 Ross Avenue, Suite 3200
                                              Dallas, Texas 75202
                                              Phone:  214-855-4500
                                              Fax:  214-855-4300


                                       17
<PAGE>

Customer:                                      Attn: Chief Executive Officer
                                               Arrowhead Claims Management, Inc.
                                               501 West Broadway, Suite 790
                                               San Diego, California 92101
                                               Phone: 619-744-5007
                                               Fax: 619-744-8764

         Section 8.8 Public  Announcements.  The Parties will agree on the terms
of any press releases or other public  announcements  related to this Agreement,
and will  consult  with each other  before  issuing any press  releases or other
public  announcements  related to this Agreement;  provided,  however,  that any
Party may make a public  disclosure if in the opinion of such Party's counsel it
is  required  by law or the rules of any  applicable  stock  exchange  or dealer
quotation  system to make such  disclosure.  The  Parties  agree,  to the extent
practicable,  to consult with each other regarding any such public  announcement
in advance  thereof.  The Parties may,  however,  include the other Party on any
general  customer  lists or in  presentations  that  include  a list of  current
customers.

         Section  8.9   Representation  by  Legal  Counsel.   Each  Party  is  a
sophisticated  entity that was advised by  experienced  legal  counsel and other
advisors in the negotiation and preparation of this Agreement.

         Section 8.10  Severability.  Any  provision of this  Agreement  that is
prohibited  or  unenforceable  in  any  jurisdiction  will  not  invalidate  the
remaining  provisions of this Agreement or affect the validity or enforceability
of such provision in any other jurisdiction. In addition, any such prohibited or
unenforceable  provision  will be given  effect to the  extent  possible  in the
jurisdiction where such provision is prohibited or unenforceable.

         Section 8.11  Successors.  This Agreement will be binding upon and will
inure  to the  benefit  of each  Party  and its  heirs,  legal  representatives,
permitted  assigns,  and successors,  provided that this Section will not permit
the assignment or other transfer of this Agreement,  whether by operation of law
or otherwise,  if such  assignment of other transfer is not otherwise  permitted
under this Agreement.

         Section  8.12  Time  of the  Essence.  Time  is of the  essence  in the
performance  of this  Agreement  and all dates  and  periods  specified  in this
Agreement.

         Section 8.13 Waiver.  No provision of this Agreement will be considered
waived  unless such  waiver is in writing and signed by the Party that  benefits
from the  enforcement  of such  provision.  No waiver of any  provision  in this
Agreement,  however,  will be  deemed a waiver  of a  subsequent  breach of such
provision  or a waiver  of a similar  provision.  In  addition,  a waiver of any
breach or a failure to enforce any term or condition of this  Agreement will not
in any way affect,  limit, or waive a Party's rights under this Agreement at any
time to enforce strict  compliance  thereafter  with every term and condition of
this Agreement.

                                       18
<PAGE>

         Section 8.14 Force Majeure. The Parties will not be liable or deemed to
be in default for any delay or failure in  performance  under this  Agreement or
interruption of Services  resulting,  directly or indirectly,  from acts of God,
civil or military  authority,  labor disputes,  shortages of suitable materials,
labor or  transportation  or any similar cause beyond the reasonable  control of
the Parties.

         Section 8.15 Attorneys' Fees. In the event of any action,  arbitration,
claim,   proceeding  or  suit  between   Customer  and  INSpire  Claims  seeking
enforcement of any of the terms and conditions of this Agreement, the prevailing
party in such action, arbitration, claim, proceeding or suit will be awarded its
reasonable  costs  and  expenses,  including  its  court  costs  and  reasonable
attorneys' fees.

         Section 8.16  Relationship of the Parties.  The Parties are independent
contractors of one another, and there should be no instance in which they should
be construed as partners or joint venturers.

         Section  8.17  Drafting.  Neither  this  Agreement  nor  any  provision
contained in this  Agreement  will be  interpreted in favor of or against either
Party  because such Party or its legal  counsel  drafted this  Agreement or such
provision.  No prior draft of this Agreement or any provision  contained in this
Agreement will be used when interpreting this Agreement or its provisions.

         Section 8.18  Headings.  Article and section  headings are used in this
Agreement only as a matter of convenience  and will not have any effect upon the
construction or interpretation of this Agreement.

         Section 8.19 Condition of Bankruptcy Court Approval.  This Agreement is
expressly  conditioned  upon INSpire  Claims and INSpire  Insurance  obtaining a
final order from the Bankruptcy  Court in the Bankruptcy Case approving (i) this
Agreement,  as well as the Policy Processing and Administration  Agreement,  the
Sublease,  the Asset Purchase  Agreement,  the Software License  Agreement,  the
Professional Services Agreement and the Comprehensive Preferred Escrow Agreement
concurrently entered into between members of the INSpire Group and the Arrowhead
Group,  all  without  amendment  or  modification,   unless  such  amendment  or
modification  is approved in writing by all of the  Parties,  within  forty-five
(45)  days  after  the  date  this  Agreement  is  entered  into;  and  (ii) the
termination  of the Claims  Administration  Agreement and the Claims  Management
Agreement.  The  final  order  of the  Bankruptcy  Court  shall be in a form and
substance  acceptable to Customer.  This  Agreement  shall be implemented by the
Parties on a date mutually agreed to by the Parties, but no later than five days
after the Effective  Date. If the final order from the  Bankruptcy  Court is not
obtained  within the time  specified,  this  Agreement  and all of its terms and
provisions are and shall be null and void and of no force or effect whatsoever.

         Section 8.20  Termination  of Claims  Administration  Agreement and the
Claims Management Agreement.  INSpire Insurance,  INSpire Claims and Customer do
hereby agree to terminate, and do terminate, the Claims Administration Agreement
and the Claims Management Agreement as of the Effective Date.



                           [SIGNATURE PAGE TO FOLLOW]


                                       19
<PAGE>



         IN WITNESS  WHEREOF,  the  Parties  have caused  this  Agreement  to be
executed and delivered by a duly authorized officer as of the Signing Date.

INSPIRE INSURANCE SOLUTIONS, INC.,
a Texas corporation, debtor and debtor-in-possession


By:
   ---------------------------------------------------
         Richard Marxen, President & CEO


INSPIRE CLAIMS MANAGEMENT, INC.,
a Delaware corporation, debtor and debtor-in-possession


By:
   ----------------------------------------------------
         Richard Marxen, President & CEO


ARROWHEAD CLAIMS MANAGEMENT, INC.,
a California corporation


By:
   ----------------------------------------------------
         Kevin McDonald, President & CEO




                                       20
<PAGE>




Schedule 1.1 - Services

         During the Term,  and in  accordance  with the guidance  and  direction
provided by Customer,  INSpire Claims will provide all the Claims Administration
Services  and  general  management  services  specified  in  paragraph 1 of this
Schedule for the  policies  written by or through  Customer  for the  authorized
Personal  Property  products,  carriers and states  identified in paragraph 2 of
this Schedule 1.1.

1.       Services--Claims Administration

         (a) INSpire  Claims agrees to  investigate,  evaluate,  and handle each
claim  reported  according to applicable  state law, the terms and conditions of
the policy and any written standards  provided by Customer.  INSpire Claims will
not have any  authority  to alter or  discharge  any  policy or waive any policy
provision or condition.  INSpire Claims' services will include,  generally,  the
prompt  and  diligent  management,  processing,  investigating,  adjusting,  and
reasonable  settlement  of claims,  the  extension  or denial of  coverage,  the
assessment and appraisal of personal injuries and physical damage,  retention of
experts  when  necessary,  and the pursuit and  collection  of  subrogation  and
salvage  recoveries.  Such services may also include like services identified by
Customer (and accepted by INSpire) as services  provided by Customer to carriers
as of the Signing Date.

         (b) Loss reporting will be by toll free access provided to insureds and
agents.

         (c) Coverage will be verified on all cases.

         (d) INSpire Claims will administer the appraisal/assessment process and
will use in this  endeavor a  combination  of staff and vendor,  adjusters,  and
appraisers.

         (e)  INSpire   Claims  will  perform  all   reasonable   and  necessary
administrative and clerical work in connection with claim or loss reports.

         (f) INSpire  Claims will  establish and maintain a claim filed for each
reported  claim or loss with a copy of the policy for each reported  claim.  The
claim file will have a daily activity log that will be reviewable at any and all
reasonable times by Customer subject to the provisions of the Agreement.

         (g) Upon receipt by INSpire  Claims of a demand for  arbitration  of an
uninsured  motorist  claim  which  cannot be resolved  by  negotiation,  or upon
receipt by INSpire Claims of notice that litigation has been filed  concerning a
claim, INSpire Claims will promptly deliver to Customer the original claim file,
notes and photographs,  which material will be returned to INSpire Claims at the
conclusion  of the  arbitration  or  litigation.  All  expenses  incurred  after
referral, including attorneys' fees, will be the responsibility of Customer.

                                       21
<PAGE>

         (h)  INSpire  Claims  will  record and report  each claim  promptly  to
Customer  with a  recommended  reserve.  INSpire  Claims  will,  within  two (2)
business days after the  occurrence of the event when said two (2) business days
is reasonable,  report to and consult with Customer's designated  representative
with respect to any of the following:

                  (i)  Any  loss  or  claim  resulting  in  legal  action  being
         instituted against INSpire Claims or Customer;

                  (ii) Any loss or claim  causing a  complaint  to be filed with
         any regulatory authority;

                  (iii) Any inquiry from any regulatory authority, including but
         not limited to any insurance  department,  with respect to any claim or
         claims, even if no complaint causes such inquiry;

                  (iv) Any claim INSpire Claims deems appropriate to deny policy
         coverage or involves a Coverage  dispute unless  otherwise  directed by
         Customer;

                  (v) Any claim  which is likely  to  result  in  payment(s)  in
         excess of the lesser of (A) fifty thousand  dollars  ($50,000),  (B) an
         amount  established  by the  appropriate  Department of Insurance,  (C)
         above the policy limits,  or (D) an amount that Customer is required to
         report to one of its carriers.  Customer is  responsible  for informing
         INSpire Claims in writing as to the carriers and amounts required to be
         reported.  In the event of such claim,  INSpire  Claims will  forward a
         copy of the claim filed to Customer at its request;

                  (vi) Any claim open for more than six  months,  or involves an
         allegation of extra contractual obligations;

                  (vii) Any claim involving a fatality,  amputation, spinal cord
         or brain damage, loss eyesight, extensive burns, poisoning, or multiple
         fractures; or

                  (viii) Any claim involving a minor.

         (i) Within five  business  days after the end of each  calendar  month,
INSpire Claims will provide monthly,  year-to-date and inception-to-date reports
on all claims activity, including new claims, claims closed without payment, and
changes  to  outstanding  reserves  as of the date  reported,  all  reported  by
accident year, calendar year and policy year. The claim reports will include:

                  (i) Information and statistical data (A) required by Insurance
         Services Office ("ISO"),  and (B) necessary for Customer to prepare any
         reports   required   by   the   National   Association   of   Insurance
         Commissioners,  or (C) other reports reasonably  requested by Customer.
         When  appropriate,  filings  will  be  made  directly  with  the  above
         entities;

                                       22
<PAGE>

                  (ii)  Loss  runs with paid  claims  and  outstanding  reserves
         remaining  at the end of each monthly  report  period,  categorized  as
         indemnity,  medical payment, or loss adjustment expense, plus any other
         information  required  by the annual  statement  instructions  or state
         regulatory agencies;

                  (iii) Check Registers;

                  (iv) Large loss  listing  for claims  exceeding  amounts to be
         mutually  agreed  upon  by  Parties,   including  cumulative  paid  and
         outstanding reserves as of month end; and

                  (v)  Aggregate  loss  runs (on a paid and  incurred  basis) by
         policy.

         (j)  INSpire  Claims will  prepare  checks and  vouchers,  compromises,
releases,  agreements and any other documents  reasonably  necessary to finalize
and close  claims on forms  approved  by  Customer.  INSpire  Claims  will issue
payments of claims and allocate loss adjustment  expenses only on checks of, and
as authorized by, Customer.

                  (i) For purposes of settling  claims and paying claim  related
         expenses,  Customer  has  agreed  to  establish,  maintain  and  fund a
         separate  bank  account from which  INSpire  Claims may draw against as
         hereinafter set forth (the "Claim Account").

                  (ii)  Customer  agrees to  deposit  additional  funds into the
         Claim  Account on a weekly basis if necessary to maintain it at a level
         sufficient to allow INSpire Claims to carry out its  obligations  under
         this Agreement.  INSpire Claims will regularly provide  information and
         estimates to Customer to enable  Customer to maintain the Claim Account
         at an appropriate  level.  Customer will provide to INSpire Claims such
         information  as is necessary  for INSpire  Claims to draw checks on the
         Claim Account.

                  (iii)  INSpire  Claims  hereby  covenants  that  any  check it
         prepares  will be  signed  and  issued  only  in  accordance  with  the
         procedures adopted by Customer. Any check prepared by INSpire and drawn
         on the Claim Account will be signed by two authorized individuals.

                  (iv) INSpire  Claims will maintain a daily  register of checks
         drawn  on  the  Claim   Account  for  each  loss  payment  (the  "Claim
         Register").  INSpire  Claims  will  provide  Customer  access  to  this
         information.  The Claim  Register will  include,  for each claim and/or
         claimant,  the claim number,  policy number, loss date, the name of the
         payee,  the date and check number of the  disbursement,  and the amount
         and type or purpose of the payment  (i.e.  indemnity,  loss  adjustment
         expense,  etc.).  INSpire  Claims  will  forward  a copy  of the  Claim
         Register to Customer on a monthly basis.

                  (v) INSpire Claims will promptly  deposit any monies collected
         through  salvage and  subrogation to the Claim Account,  and maintain a
         register  of all  such  collections  and  deposits  (the  "Salvage  and
         Subrogation  Register").  The Salvage  and  Subrogation  Register  will

                                       23
<PAGE>

         include, but will not be limited to, the following information: date of
         deposit, date of receipt of funds, the claim number, the payer, and the
         amount and purpose of such payment.

                  (vi)  INSpire  Claims will provide  access to the  information
         necessary for Customer to reconcile the Claim  Register and the Salvage
         and Subrogation Register to the Claim Account on a monthly basis.

         (k) Service Standards and claims documentation will be to standards set
by Customer and agreed to by INSpire Claims.  At a minimum,  INSpire Claims will
be in  compliance  with all state  regulations  dealing with the  adjusting  and
handling of claims.  INSpire  Claims' own procedures  and Customer's  reasonable
written  directives.  INSpire Claims will periodically review the development of
the claims handling  procedures with Customer to identify problems and recommend
corrective action.

         (l) INSpire  Claims will  diligently  pursue and  prosecute  Customer's
salvage and subrogation  rights relating to any losses.  INSpire Claims will use
reasonable  efforts to collect and deposit funds arising from the enforcement of
such  rights into the Claim  Account.  INSpire  Claims  will  report  monthly on
salvage/subrogation receipts.

         (m) INSpire Claims will (i) investigate suspected fraud as appropriate,
(ii) provide monthly reports of the  effectiveness of its anti-fraud  program to
Customer,  and  (iii)  prepare  the  reports  required  by any  state  insurance
commission.



                                       24
<PAGE>


2.  The Personal Property Products, Carriers and States Authorized for Services

State            Plan #          Product          Carrier
-------------------------------------------------------------------------
AL                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
AZ                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
CA                 14            Motorcycle       Clarendon National
-------------------------------------------------------------------------
CA               15-16           DIC              Clarendon National
-------------------------------------------------------------------------
CA             17-20, 22         HO3              Clarendon National
-------------------------------------------------------------------------
CA                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
CA            27-29, 35,36       DP3              Clarendon National
-------------------------------------------------------------------------
CA                 31            HO4              Clarendon National
-------------------------------------------------------------------------
CA                 32            HO6              Clarendon National
-------------------------------------------------------------------------
CA             17-20, 22         HO3              Clarendon National
-------------------------------------------------------------------------
CT               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
CT                 31            HO4              Clarendon National
-------------------------------------------------------------------------
CT                 32            HO6              Clarendon National
-------------------------------------------------------------------------
CT               33, 34          Pref HO4/6       Clarendon National
-------------------------------------------------------------------------
DE               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
DE                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
FL                 21            Mobile Home      LION
-------------------------------------------------------------------------
GA               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
LA               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
LA                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
LA                 24            DP1              Clarendon National
-------------------------------------------------------------------------
MD               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
MD                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
ME               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
MS               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
MS                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
NH               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
NJ               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
NM                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
NY             18-20, 22         HO3              Clarendon National
-------------------------------------------------------------------------
NY               31,33           HO4              Clarendon National
-------------------------------------------------------------------------
NY               32,34           HO6              Clarendon National
-------------------------------------------------------------------------
OR                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
PA                 14            Motorcycle       Clarendon National
-------------------------------------------------------------------------
PA                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
RI               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
SC               18-20           HO3              Clarendon National
-------------------------------------------------------------------------
SC                 21            Mobile Home      Clarendon National
-------------------------------------------------------------------------
VA             18-20, 22         HO3              Clarendon National
-------------------------------------------------------------------------
VA               31,33           HO4              Clarendon National
-------------------------------------------------------------------------
VA               32,34           HO6              Clarendon National
-------------------------------------------------------------------------
CA               18-20           HO3              Srius America
-------------------------------------------------------------------------
CA                 50            BOP              HUDSON
-------------------------------------------------------------------------
CA                 55            Umbrella         RLI
-------------------------------------------------------------------------


                                       25
<PAGE>


Schedule 1.3(f) - Penalty Provisions and Payments for INSpire Claim's failure to
meet Service Levels

The  following  penalties  will apply  should  INSpire  Claims  fail to meet the
individual Service Levels set forth in Schedule 2.1 to the Claims Administration
Agreement.  Each Penalty  numbered below will  constitute the penalty to INSpire
for failing to meet the same numbered Service Level on Schedule 2.1:

1.       $5 per occurrence.

2.       $5 per occurrence.

3.       $10 for each incomplete Suspense item beyond 10 calendar days.

4.       $500 per day.

5.       $500 per day.

6.       $1,000 per week.

7.       $10 per occurrence.

8.       $5 per occurrence.

9.       $20 per occurrence.

10.      $5 per occurrence.

11.      $20 per occurrence.

12.      $5 per occurrence.

13.      5% reduction of the Claims Administration Fee for the following month.

14.      $10 per occurrence.

15.      $5 per occurrence.

16.      $5 per occurrence.

17.      5% reduction of the Claims Administration Fee for the following month.

18.      $5 per occurrence.

19.      $5 per occurrence.


                                       26
<PAGE>

20.      $5 per day of late delivery.

21.      $5 per occurrence.

22.      $1 per day of late delivery.

23.      $5 per day of late delivery.

24.      No Penalty.  This is a good faith commitment.

25.      $1 per day of late delivery.

26.      $200 per day.




                                       27
<PAGE>


Schedule 2.1 - Service Levels for the Claims Administration of Personal Property
Policies

      1. All claims reported will be assigned to an adjuster within one business
day of receipt of first notice of loss by INSpire.

      2. Adjusters will contact,  or document an attempt to contact the claimant
and insured in the claim file within one business day after  assignment.  In the
event a contact is not made within one business  day, a further  attempt will be
made by the adjuster to contact the claimant  and insured  every day  thereafter
until  contact is made and such attempt will be documented in the claim file. In
addition,  a letter will be sent to the claimant after three business days if no
contact is made.

      3. All  suspense/diary  lists will remain  current,  meaning  suspensed or
diaried items will be worked on the suspense or diary date.

      4. The First  Notice of Loss Unit will  answer 85% of the calls  within 60
seconds or less.

      5. The First  Notice of Loss Unit will  answer 95% of the calls within 120
seconds.

      6. The  First  Notice  of Loss  Unit  will  have an  average  weekly  call
abandonment rate of less than 5%.

      7.  Ten-day  (calendar  days)  initial  supervisory  file  reviews will be
completed and documented in every claims file.

      8.  Thirty-day (calendar days) case reviews will be completed and
documented in every claims file.

     9. Initial reserves,  as agreed upon between INSpire and customer,  will be
set up on all new claims  reported  within two business  days of First Notice of
Loss.

     10. All reserves will  subsequently  be adjusted within three business days
of the adjuster gaining  information  that supports a reserve change.  This will
include all claims where a reserve is no longer warranted.

     11. Local or  Independent  Field  Adjusters  will be assigned  within three
business  days of First  Notice of Loss on all claims  where the damage has been
assessed to be $3,000 or greater.  Independent Adjusters will be retained on all
such  claims over $3,000  when a local  adjuster  is unable to  investigate  the
claim. INSpire will follow-up with all Independent Adjusters within two business
days following their appointment and again within six business days if no status
report is received  by that time.  All  contacts  with Field  Adjusters  will be
documented in the claim file.

     12.  Subrogation  will be  properly  addressed  on all  claims  and will be
evident by documentation  contained in the claims file within five business days
of assignment to an adjuster.  Subrogation referral sheets are required to be in
all claims files if subrogation  potential is found.  All subrogation  referrals

                                       28
<PAGE>

will be sent to a subrogation specialist within two business days of subrogation
potential being identified.

     13.  Ten  assignments  to  independent  contractors,  adjusters  and  staff
adjusters will be reinspected each month. The results of all reinspections  will
be reported to customer within thirty (30) days after the close of each calendar
month.

     14.  Reservation of Rights letters will be completed and sent, one copy via
certified  mail and  another  copy via regular  mail,  with a copy placed in the
claim file, on the following types of claims 100% of the time:

         a. All claims where the initial notice of loss reflects that the policy
may not have been in force at the time of loss;
         b. All claims  where the loss may be excluded due to the conduct of the
Insured (intentional act, unlawful act, etc.);
         c. All claims where coverage is in question;
         d. Delayed  reporting of the loss by the Insured  after the Insured has
become aware of the loss resulting in the expansion of the scope of the loss;
         e.  Non-co-operation  of the Insured that  jeopardizes  the  settlement
investigation; and
         f. Failure to comply with policy conditions.

     15. All non-weather related losses within the first thirty (30) days of the
policy period,  all fire losses,  all theft losses,  all multiple claims will be
sent to the special  investigations  unit (SIU)  within three  business  days of
First Notice of Loss 100% of the time.

     16. All large  losses  that  exceed  $25,000 are to be provided to Customer
within two business days after establishment of the reserve 100% of the time.

     17.  During the last week of each  calendar  month,  INSpire will perform a
Dangling  Reserve Study, the scope of which will be mutually agreed upon between
the  Parties,  and the results of which will be provided to Customer  within ten
(10) days after the end of each calendar month.

     18.  Police  reports and  affidavits of theft are required on 100% of theft
claims and are to be present in the claims file, unless a supervisor  authorizes
payment, in which case documentation for the exception must be present in file.

     19. All claims  checks will be issued and mailed to the  appropriate  party
within two business days of a payment being determined.

     20. INSpire will provide high level, non-binding cost and time estimates of
system  modifications  within ten (10) working days of an inquiry by Customer in
order for Customer to determine the cost/benefit and feasibility of changes.

                                       29
<PAGE>

     21.  Risk  Reports,  the scope of which will be  mutually  agreed to by the
Parties, will be completed, placed in the claims file and forwarded to INSpire's
Policy  Processing  and  Administration  department  on the  following  types of
losses:

         a.       Theft losses (two or more or questionable within three years);
         b.       Fire losses ($5,000 or more damage);
         c.       Dog bite losses;
         d.       Habitual claims (more than two claims in last three years);
         e.       Poor risk conditions (both dwelling and premises); and
         f.       Red Flag claims (those that are highly suspicious,  deliberate
actions, failure to cooperate by insured, etc.)

     22. All inquiries from  regulatory  bodies will be answered  within the
time set by the regulatory body.

     23. All Coverage  questions will be resolved (i.e. a  determination  will
be made) within fifteen (15) business days of the report of loss.

     24. All telephone calls requiring a call back will be returned within one
business day.

     25.  All  written  correspondence  requiring  a response  will be  answered
promptly and no later than fifteen (15) calendar days of receipt.

     26.  Claims  Call  Center  Services - These  services  will be  provided by
INSpire  from 8:00 a.m. to 5:30 p.m.,  Monday  through  Friday,  for  California
personal property insureds and claimants and from 6:00 a.m. to 5:30 p.m., Monday
through  Friday,  for  insureds and  claimants  located  outside of  California,
utilizing  toll-free 1-800 inbound telephone  service.  Times stated are Pacific
Standard Times. An after-hour  answering service will be provided for after-hour
calls Monday through Friday, Saturdays, Sundays and Holidays.





                                       30

</TEXT>
</DOCUMENT>
