TREMONT ADVISERS INC, 10-K, 1998-03-19

TREMONT ADVISERS INC
10-K, 1998-03-19
MANAGEMENT CONSULTING SERVICES

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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 10-KSB

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: Commission file number: 33-89966
December 31, 1997

TREMONT ADVISERS, INC.
(Name of small business issuer in its charter)

Delaware 06-1210532
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

555 Theodore Fremd Avenue, Rye, New York 10580
(Address of Principal Executive Offices) (Zip Code)

Issuer's telephone number, including area code: (914) 925-1140

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

None

Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes x No .

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of Issuer's knowledge, in the definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. x

State issuer's revenues for its most recent fiscal year = $7,026,641.00.

The aggregate market value of the Class A Common Stock held by nonaffiliates of
the Issuer was approximately $2,346,847, based upon the average bid and ask
prices of such stock on March 6, 1998, quoted by the National Quotation Bureau,
LLC in the over-the counter market. The aggregate market value of the Class B
Common Stock held by nonaffiliates of the Issuer was approximately $8,379,621,
based upon the average bid and ask prices of such stock on March 6, 1998, quoted
by the National Quotation Bureau, LLC in the over-the-counter market.

The number of outstanding shares of the Issuer's Class A Common Stock, $.01 par
value was 1,284,718 as of March 6, 1998 and the number of outstanding shares of
the Issuer's Class B Common Stock, $.01 par value was 2,802,104 as of March 6,
1998.

DOCUMENTS INCORPORATED BY REFERENCE
None

<PAGE>

Table of Contents

PART I .................................................................... 1

Item 1. Description of Business................................ 1
Item 2. Description of Properties.............................. 9
Item 3. Legal Proceedings...................................... 9
Item 4. Submission of Matters to a Vote of Security Holders.... 9

PART II ................................................................... 10

Item 5. Market For the Registrant's Common Equity and Related
Stockholder Matters................................... 10
Item 6. Management's Discussion and Analysis.................. 12
Item 7. Financial Statements.................................. 21
Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure................... 40

PART III ................................................................... 41

Item 9. Directors and Executive Officers of the Registrant.....41
Item 10. Executive Compensation................................ 43
Item 11. Security Ownership of Certain Beneficial Owners and
Management............................................ 47
Item 12. Certain Relationships and Related Transactions........ 50
Item 13. Exhibits, List and Reports on Form 8-K................ 52

EXHIBIT INDEX............................................................... 57

<PAGE>

PART I
Item 1. Description of Business

General

Tremont Advisers, Inc. (the "Company"), which was incorporated in the
State of Delaware on June 18, 1987, is a holding company which, through its
wholly-owned subsidiaries, is primarily engaged in rendering consulting and
specialized investment services to investment funds, investment managers,
institutional investors and high net worth individuals with respect to the
organization and management of their investment portfolio or programs, as well
as managing and sponsoring its own single-manager and multi-manager investment
funds. Further, the Company, through its subsidiaries, offers marketing and
business development consulting services to investment management firms and to
individual investment advisers. The Company derives a significant portion of its
revenues from consulting services agreements with single-manager and
multi-manager investment funds or their sponsors and advisers. The Company's
principal domestic subsidiary, Tremont Partners, Inc. ("TPI"), is a registered
investment adviser under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and currently serves either as a co-general partner
or general partner, of five investment limited partnerships. TPI
provides investment advisory services for the funds for which it serves as
general partner. Tremont (Bermuda) Limited ("TBL"), the Company's principal
foreign subsidiary, provides investment advisory services to several
multi-manager offshore funds and acts as the fund sponsor, primary placement
agent and, in some cases, administrator, for a select group of offshore funds
managed by U.S.-based money managers. The Company's third subsidiary, Tremont
Securities, Inc. ("TSI"), is a registered broker/dealer and was formed to assist
in the purchase and sale of investment funds and other entities, and to
facilitate soft-dollar arrangements. The Company's primary objectives are to
maintain and expand its services for single-manager and multi-manager investment
programs or funds, and to develop or sponsor its own single-manager and
multi-manager investment funds.

Services and Method of Operation

The Company conducts its business through the activities and operations
of the three subsidiaries mentioned above. Although each subsidiary markets its
services to a distinct and separate group of clients, certain of the Company's
clients may utilize the services of more than one of such subsidiaries. The
Company has derived its principal revenues from TPI and TBL, and continues to do
so.

1. TPI:

TPI was formed in 1984 as a consulting firm assisting pension and
profit sharing plans and other financial entities in the design and structure of
specialized investment programs. TPI now specializes in non-traditional
approaches to investment management and has expanded its client base to include
financial intermediaries, individuals and pension, retirement, and profit
sharing plans. TPI also provides consulting services to several multi-manager
investment funds, as well as to institutional and high net worth investors. Its
primary consulting services have been and continue to be rendered to plan
sponsors or managers of single-manager and multi-manager investment funds.
During the years ended December 31, 1997 and 1996, approximately 53% and 53%,
respectively, of the Company's consolidated revenues have been derived from the
operations of TPI. The principal services offered and rendered to clients by TPI
include the following:

<PAGE>

A. Investment Funds. TPI's consulting services to these funds
or their sponsors have accounted for approximately 39% and 38% of the Company's
consolidated revenues for each of the years ended December 31, 1997 and 1996,
respectively. TPI has been instrumental in the organization and structure of its
current major single-manager or multi-manager investment fund clients. In the
organization of such funds, TPI assists the sponsor in: (i) establishing
investment objectives and guidelines consistent with the client's purposes and
market; (ii) defining suitable asset classes for investment; (iii) negotiating
fees and other arrangements with investment advisers and other professionals
rendering services to the funds; and (iv) providing consultation regarding fund
structure and administration. Upon organization of such funds, TPI renders,
among other things, services for (i) the monitoring of investment performance of
such funds, including the performance of individual investment advisers; (ii)
the recommendation of the retention or replacement of such investment advisers;
(iii) the furnishing of specialized reports responsive to the requests of the
sponsors or managers of such funds; and (iv) other administrative services as
required from time to time. In several instances, TPI is the investment adviser
to such funds with respect to the investment of their portfolio assets. TPI
currently serves as either a co-general partner or general partner of five
investment limited partnerships. TPI also renders advisory services to
investment partnerships, bank trust funds, and insurance companies in the
selection of their investments in other investment partnerships, funds, and/or
separate accounts. In addition to receiving management fees, TPI may receive
consulting fees based on the value of assets of funds under management for which
it provides its consulting or advisory services to its investment fund clients.
In several funds, TPI may receive a performance fee at the end of a fund's first
fiscal year and yearly thereafter in addition to the fees received based on
assets under management.

B. Institutional and High Net Worth Investors. TPI also offers
and renders consulting services to corporate pension and profit-sharing or
similar plans, state and local retirement systems, and high net worth
individuals with respect to the investment and management of their investment
portfolios or programs. Such services may include: (i) designing and
implementing, including objectives and guidelines, their investment programs;
(ii) identifying and selecting appropriate investment advisers for such
programs; (iii) monitoring the performance of such investment programs; and (iv)
administering, and reporting in respect of, such programs. TPI generally
receives annual retainer fees or asset-based fees for its consulting services to
these institutional and individual investors.

C. Investment Adviser Research Program. As part of its
consulting business, TPI maintains a continuing research program with respect to
the evaluation and review of both domestic and foreign investment advisers and
advisory firms. TPI's employees meet with and interview over 250 advisory
individuals or firms each year. Interviews are conducted with each adviser or
the senior investment personnel of an advisory firm in order to evaluate such
factors as investment approach, style, personnel turnover, delegation of
investment decision-making responsibilities and number and type of accounts
under management. As a result of TPI's investment adviser research, it has
developed a proprietary computerized database of more than 2,000 investment
advisers and investment advisory firms, including domestic and international
equity and fixed income advisers, mutual funds, private limited partnerships,
and offshore funds. This database allows TPI to monitor and evaluate investment
management performance and to simulate the match of a fund's objectives with the
investment characteristics of different or combined investment advisers. In
addition, TPI utilizes its database to assist in advising investor clients in
the selection of appropriate investment advisers or investment programs.

<PAGE>

D. Special Projects. TPI has offered, and continues to offer,
its investment advisory or investor clients specialized consulting services for
projects under consideration by such clients. Such projects may include research
or reports on particular aspects of the investment management business, such as
studies of risk arbitrage opportunities, research for investing in distressed
securities, recommendations for investment products utilizing insurance
programs, and market neutral investing. Such projects have not, overall,
produced significant revenues to TPI. TPI generally receives a single project
fee for its consulting services for these types of projects.

2. TBL:

TBL was formed in November 1988 as an exempted company under the laws
of Bermuda to provide investment management services to offshore investors. TBL
currently provides investment advisory services to several multi-manager
offshore funds and acts as the fund sponsor, primary placement agent, and in
some cases administrator, for a select group of offshore funds managed by
U.S.-based money managers. For the years ended December 31, 1997 and 1996, TBL
accounted for approximately 40% and 43%, respectively, of the Company's
consolidated revenues. The Company expects that TBL will continue to render
consulting or investment advisory services to its clients, as well as to several
new offshore funds to be organized by other sponsors.

TBL offers placement agent services to a select group of offshore
mutual funds. This activity was a logical extension of the consulting services
it offers to financial intermediaries and investment managers through TPI. TBL
currently provides placement agent services to approximately twenty offshore
funds located in offshore jurisdictions worldwide. Services offered to these
funds include:

A. Fund Development and Structuring. TBL coordinates all
aspects of offshore fund development, including reviewing offering materials,
creating marketing programs and sales literature, identifying service providers
for the funds, and negotiating fees as directed by the fund manager.

B. Placement Agent Services. Upon formation of an offshore
fund, TBL assists the fund manager in raising capital for investment in these
funds from investors located outside the United States. Placement agent services
are conducted by TBL's office in Hamilton, Bermuda and by TBL's staff traveling
abroad. During 1997, substantial resources were devoted to developing
relationships with prospective investors located in Europe.

Given the growth during recent years in the amount of money invested in
offshore funds, management believes that TBL will continue to be a significant
contributor to the Company's revenues in the future.

The Company's business continues to focus on the development and
management of singlemanager and multi-manager fund products and clients. TPI and
TBL have been actively engaged in seeking new single-manager and multi-manager
investment fund clients. Additionally, the growth of the offshore fund market
and placement agent business has diversified the Company's business interests.
The Company expects to concentrate on rendering consulting services to
single-manager or multi-manager investment fund clients, to continue to develop
its own proprietary investment funds, and to develop its own distribution for
select institutional and individual markets worldwide. In 1994, TBL acquired an
interest in a joint venture which has developed a full "turn-key" asset
allocation program that is offered on a private label basis to select financial
institutions and offshore clients

<PAGE>

around the world. In 1996, TBL acquired an interest in Tremont International
Insurance Ltd. ("TIIL"). TIIL is a Cayman Island insurance company offering a
variety of insurance products to customers who are not residents of the Cayman
Islands.

In July 1997, Mutual Risk Management, Ltd. ("MRM"), an international
risk management company, invested $5 million in TIIL. Simultaneously, TBL, MRM
and The Anglo Dutch Insurance Company Limited, a Cayman Island life insurance
company ("Anglo-Dutch"), formed Tremont MRM Services Limited ("TMRM") under
Bermuda law. TMRM provides product development, marketing and administrative
services to TIIL pursuant to an agreement between the parties. MRM has invested
$1 million in TMRM and received a 20% interest therein. TBL owns 24.5% of TIIL
and 40% of TMRM. As a result of certain transactions described below in Item 6
under the heading "Management's Discussion and Analysis - Liquidity and Capital
Resources," MRM indirectly owns Class B Common Stock equal to 20% of the
aggregate of the Company's outstanding Class A Common Stock and Class B Common
Stock.

3. TSI:

TSI, a wholly-owned subsidiary of the Company, is a broker-dealer
registered under the Securities Exchange Act of 1934, as amended. TSI was
established to act as an introducing broker for security transactions initiated
by nonaffiliated companies, and to facilitate soft-dollar arrangements. TSI
accounted for approximately 7% and 4%, respectively, of consolidated revenues
for the years ended December 31, 1997 and December 31, 1996.

Clients

The Company's principal clients have been and continue to be investment
funds formed by or with the assistance of TPI or TBL, or the sponsors and
managers of such investment funds. The types of investment funds include mutual
funds registered as investment companies under the Investment Company Act of
1940, as amended (the "Investment Company Act"), limited partnerships, bank
trust funds and offshore mutual funds. TPI and TBL consulting agreements with
investment fund clients accounted for approximately 58% and 64%, respectively,
of the Company's consolidated revenues for the years ended December 31, 1997 and
1996. Accordingly, the loss of a significant portion of these clients could have
a material adverse effect on the Company.

The significant client relationships of the Company, by subsidiary, are
as follows:

1. TPI:

The Domestic Emerging Markets - Minority Equity Trust is a
multi-manager commingled equity fund utilizing investment management firms which
are owned and operated by minorities or women whose assets were transferred to
it from The Minority Equity Trust on or about December 1, 1996. TPI advises the
sponsor of this trust on a wide range of investment services, including minority
investment manager selection and monitoring and supervision of its investment
program. Compensation to TPI is through an annual retainer; however, in October
1996, TPI received a one-time payment of $320,000 in October 1996 from the
sponsor of the Domestic Emerging Markets Minority Equity Trust in consideration
for terminating TPI's contract with The Minority Equity Trust. As of January 1,
1998, the program had a net asset value of approximately $203 million.

<PAGE>

The Chrysler Minority Equity Trust is a multi-manager program which
uses minority owned and operated investment management firms. TPI advises it on
the selection and monitoring of the managers, as well as on the allocation of
funds among them. TPI's compensation is based upon a percentage of the net asset
value at the end of each month. As of January 1, 1998, the program had a net
asset value of approximately $346 million.

Preferred Investors, L.P. is a multi-manager Delaware limited
partnership, designed for high net worth individuals who can accept a high
degree of risk in their investment, focuses on investment strategies that tend
to counterbalance one another during periods of both market strength and
weakness. TPI serves as consultant to the general partner of the partnership and
assists in the monitoring and selection of investment partnerships considered
for investment. TPI receives on-going compensation from the general partner
based on a percentage of assets in the partnership at the end of each month. As
of January 1, 1997, the approximate net asset value of the partnership was $181
million.

Sage Capital, L.P. is a multi-manager Delaware limited partnership
composed of a diverse selection of highly skilled investment managers whose risk
profile and levels of expertise meet the standards of the general partners. TPI
serves as consultant to the general partners of the partnership and assists in
the monitoring and selection of investment partnerships considered for
investment. TPI receives on-going compensation from the general partners based
on a percentage of the assets in the partnership at the end of each month. As of
January 1, 1998, the fund had a net asset value of approximately $57.7 million.

Meridian Horizon Fund, L.P., formerly The Ultima Fund, L.P., is a
multi-manager Delaware limited partnership (the "Meridian Fund") organized in
1991 by Zeron Capital Management, Inc. ("Zeron") to engage principally in
diversified investment strategies utilizing a multi-manager approach. In
September 1994, TPI became a co-general partner. Effective January 1, 1997,
Meridian Capital Partners, Inc. replaced Zeron as co-general partner. The
general partners receive an administrative fee and a quarterly management fee
based upon the net asset value of the partnership as of the end of each quarter.
At January 1, 1998, the approximate net asset value of the Meridian Fund was
$160 million. At December 31, 1997, TPI's investment in the Meridian Fund was
$299,483.

GamTree, L.P. is a multi-manager Delaware limited partnership
("GamTree") formed for the purpose of achieving long-term capital growth through
diversified asset management. TPI and an affiliate of a principal shareholder,
GAMCO Investors, Inc., are its co-general partners. The general partners receive
a quarterly management fee based upon the net asset value of the partnership as
of the end of each quarter. In addition, the general partners may receive an
incentive allocation based upon the net asset value of the capital accounts of
the limited partners at the end of each year if there is a gross profit, after
obtaining certain pre-established benchmarks, from investment activities of the
partnership for the relevant fiscal year. At January 1, 1998, the approximate
net asset value of the partnership was $1.8 million. At December 31, 1997, TPI's
investment in GamTree was $186,717.

The Broad Market Fund, L.P. is a multi-manager Delaware limited
partnership formed for the purpose of achieving long term capital growth through
hedged investments arranged by one or more money managers and/or investment
funds. TPI is the general partner and receives a monthly management fee based
upon the net asset value of the partnership as of the end of each month. At
January 1, 1998, the approximate net asset value of the partnership was $149
million after including

<PAGE>

$14.8 million of January 1, 1998 contributions. At December 31, 1997, TPI's
investment in the fund was $688,592.

The Broad Market Prime Fund, L.P. is a Delaware multi-manager limited
partnership ("BMPF") created in July, 1997 for the purpose of achieving
long-term capital growth through a leveraged investment strategy. TPI is the
general partner and receives a monthly management fee based upon the net asset
value of the partnership as of the end of each month. As of January 1, 1998, the
approximate net asset value of the partnership was $68 million. In addition, the
general partner will be reimbursed for certain allocable expenses. At December
31, 1997, TPI did not have an investment in BMPF.

The F.W. Thompson Fund, L.P. is a Delaware limited partnership
organized for the purpose of achieving long-term capital growth while preserving
capital. TPI is the general partner and receives a monthly management fee based
upon the net asset value of the partnership as of the end of each month. The
general partner also receives a performance fee from the partnership's net
profit after all other fees, including the management fee, are deducted. The
performance fee is payable on a cumulative basis. The performance fee will not
be payable with regard to any period during which the partnership incurs a net
loss and only becomes payable after such net loss is recouped and net gains are
achieved, net of performance fees previously paid. The performance fees earned
by the general partner at December 31, 1997 and 1996 for the years then ended
were $246,494 and $195,830, respectively. At January 1, 1998, the approximate
net asset value of the partnership was $5.7 million. At December 31, 1997, TPI's
investment in the fund was $46,695.

Security Equity Life Insurance Company is a New York company offering a
Group Flexible Premium Variable Life Insurance contract with separate accounts
for different investments. TPI acts as the investment manager of one of these
separate accounts using a multi-manager approach. The primary investment
objective of this account is to achieve above-average, long-term capital growth.
At January 1, 1998, the account had an approximate net asset value of $52
million. TPI receives compensation from the account based upon a percentage of
net assets in the account.

2. TBL:

Ultima Investments Limited is a Cayman Islands fund organized to
provide non-American investors access to a fund managed by a select group of
investment managers not usually available to the public. Currently, the fund is
being marketed in Japan and Europe. Investments may include open-ended mutual
funds, non-U.S. based investment partnerships, managed funds, securities held in
segregated accounts and other investment vehicles that invest or trade in a wide
range of primarily U.S. equity securities, as well as stocks, bonds, options,
currencies, futures, money market instruments and precious metals. TBL
evaluates, selects and monitors the fund's investment managers and arranges for
all the administrative services required for the operation of the fund.
Compensation to TBL is based upon a percentage of the net asset value at the end
of each month. At January 1, 1998, the approximate net asset value of the fund
was $15 million.

Kingate Global Fund, Ltd. is a British Virgin Islands hedge fund,
marketed to high net worth individuals who can accept a high degree of risk in
their investment. TBL receives compensation from the fund based on a percentage
of the net asset value of the fund at the end of each month. As of January 1,
1998, the approximate net asset value of the fund was $290 million.

<PAGE>

Starvest Fund, Ltd. is a Bermuda hedge fund that is marketed to high
net worth individuals who can accept a high degree of risk in their investment.
TBL serves as its investment advisor and receives on-going compensation based on
a percentage of the average net assets in the fund at the end of each month. In
addition, TBL is entitled to a performance fee when and if the fund's sponsor
receives a performance fee. During the years ended December 31, 1997 and 1996,
performance fees of $191,802 and $128,000 respectively, were accrued by TBL. The
performance fee for the year ended December 31, 1997 is subject to adjustment
pending completion of final audit of the fund. As of January 1, 1998, the
approximate net asset value of the fund was $116 million.

Tremont International Insurance, Ltd. ("TIIL") is a Cayman Island
corporation offering certain deferred variable annuities, variable life
insurance and other insurance contracts to customers who are not resident in the
Cayman Islands. TIIL was originally a joint venture between TBL and Anglo-Dutch.
Effective July 1, 1997, Mutual Risk Management ("MRM"), an international risk
management company, purchased 51% of TIIL's issued share capital.
Simultaneously, TBL sold 0.4% of TIIL's issued share capital to Anglo-Dutch. As
a result of these transactions, TBL's interest has been reduced to 24.5% of
TIIL's issued share capital. TBL, MRM and Anglo-Dutch formed Tremont MRM
Services Limited ("TMRM"), a Bermuda company, to provide product development,
marketing and administrative services to TIIL. TBL owns a 40% interest in TMRM.

The percentage of revenues that any client, including the clients
described above, contributes to the Company can fluctuate substantially over
time due to the nature of the capital markets or the nature of the fee
arrangements with the client. As the Company continues to grow, it is expected
that total revenue will be less dependent on any one client.

The Company, through its subsidiaries, enters into written agreements
with its clients. Under these agreements, TPI's and TBL's fees are typically
based on a percentage of assets under management or a percentage based on
performance of the fund, payable periodically, usually monthly or quarterly,
during the term of the agreement. In certain instances, TPI and TBL receive an
initial fixed fee from multi-manager investment fund clients for their services
in organizing the multimanager investment funds. Other arrangements are based on
annual retainer fees, payable periodically during the term of the consulting
agreement or as a single fee for individual consulting projects. Fees for
offshore placement agent services are based on assets placed in the offshore
funds by TBL. TBL may receive from these clients a one-time fixed fee for
services rendered in organizing the offshore fund. Several contracts entered
into by TBL require the payment of asset-based fees to TBL well beyond the
termination of a particular contract, so long as those investors placed by TBL
remain investors in those funds.

The Company's ability to generate and sustain revenues from its
multi-manager investment fund clients is primarily dependent on the size of the
assets under management in each fund and on the continuation of its agreements
with the funds. Each of these agreements generally is terminable upon 30 to 60
days' written notice or on the expiration of a stated term of up to two years,
subject to earlier termination in certain circumstances. Other annual retainer
or ongoing agreements are also generally terminable on short-term notice from
clients.

Although the Company expects that its arrangement with its clients with
respect to the multimanager investment funds will continue for the duration of
such funds, there can be no assurance that such arrangements will not be earlier
terminated by the clients. During 1997, TPI and TBL agreed to terminate their
consulting relationships with three clients due to what management believes are
the

<PAGE>

clients' internal business reasons. During 1996, TBL agreed to terminate its
relationship with two clients due to what management believes are internal
business reasons of their sponsor. In addition, two multi-manager investment
funds changed the method of payment to TPI from a fee based upon a percentage of
assets under management to an annual retainer. Neither the 1996 nor the 1997
consulting agreement terminations, nor the changes in the methods of calculating
fees payable to TPI, have resulted in a significant loss of revenues. However,
the Company will continue to endeavor to expand its client base and further
diversify its consulting business in an effort to reduce the adverse impact of
termination in respect to any one or more of its clients.

The following table sets forth the number of clients, by type of fee
arrangement, and the percentage of the Company's consolidated revenues
(exclusive of commissions earned by TSI) generated by such clients for each of
the two years ended December 31, 1997 and 1996:

Number of Clients % of Revenue
--------------------- --------------------
1997 1996 1997 1996
---- ---- ---- ----

Percentage Fee 29 28 77% 79%
Placement Agent Fee 17 22 10 12
Annual Retainer Fee 26 17 10 8
Single Project Fee 1 4 3 1
-- -- -- --
Total 73 71 100% 100%
====== ==== ===== ====

Competition

The Company encounters intense competition in all aspects of the
securities business and competes directly with other securities firms, a
significant number of which have substantially greater capital and other
resources and many of which offer a wider range of financial services than the
Company. In addition to competition for investment consulting clients from firms
currently in the securities business, there has recently been increasing
competition from other sources, such as commercial banks and insurance companies
offering financial services, and from other investment alternatives. The Company
believes that the principal competitive factors in the securities industry are
the quality and ability of professional personnel and relative prices of
services and products offered. The Company believes that the most important
factors affecting competition among investment consulting firms are the
abilities and reputations of their consulting and professional personnel, their
ability to develop new investment management products and technologies for
clients and the personal marketing of their services, rather than differences in
their consulting fees. The principal factor in maintaining a firm's competitive
position is the continued involvement of its professional management.

Regulation

The Company may be subject to or restricted by federal or state
governmental laws or regulations relating to the investment consulting services
rendered to its clients. The Company's principal domestic subsidiary is
registered as an investment adviser under the Advisers Act. Although TPI is so
registered, such registration does not imply in any manner that TPI has been
approved by the Commission or any state or foreign regulatory authority or that
the qualifications of TPI have been passed upon by the Commission or any state
regulatory authority. To the extent that the

<PAGE>

Company renders such services, it is subject to compliance with the Advisers Act
and state law, including limitations on the amount of fees charged by it and the
transactions effected by it. Even though management of the Company believes the
Company is in compliance with applicable regulations, changes in such
regulations may affect the expense of operation and require costly adjustments
in the Company's business procedures to ensure compliance.

The Company may, in certain instances, be deemed to be a "fiduciary"
for its clients and their funds under ERISA and U.S. Department of Labor
regulations promulgated thereunder. In such event, the Company could be subject
to certain sanctions and fines for its noncompliance with such law and
regulations.

The Company obtains a significant amount of its revenues from sponsors
or managers of single-manager and multi-manager investment funds. These sponsors
and managers are generally subject to regulation under the Investment Company
Act and the Investment Advisers Act with respect to the amount of the fees that
they may charge to their funds. Since the Company is generally paid out of the
fees received by such sponsors or managers, any regulatory limits on such fees
directly impact the fees to be received by the Company. In addition, the
aforementioned acts require that the agreements of such sponsors or managers
with their funds be generally terminable by the funds on 30 to 60 days' notice.
Accordingly, the Company's agreements with such sponsors or managers are
generally subject to such termination provisions.

Employees

At December 31, 1997, the Company had 27 full-time employees and no
part-time employees.

Item 2. Description of Properties

The Company owns no real property. Effective September 1997, the
Company moved to a larger facility for its executive offices. The lease for this
8,222 square foot office expires August 2002 and requires monthly payments of
approximately $17,100. The Company was completely released from its obligations
under its former lease which required monthly payments of approximately $8,450.

TBL's lease for corporate offices expired in February 1997, and was
renewed through February 2000. The lease for this 3,250 square foot office
requires monthly payments of approximately $5,500.

Item 3. Legal Proceedings.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

No matter was submitted to a vote of the holders of either the Class A
Common Stock or Class B Common Stock in the fourth quarter of 1997.

<PAGE>

PART II

Item 5. Market For the Registrant's Common Equity and Related Stockholder
Matters

The Company's Class A Common Stock has been quoted on the OTC Bulletin
Board under the symbol TMAV since March, 1992, when the Company completed its
initial public offering of Class A Common Stock. Prior to the initial private
offering of shares of Class B Common Stock, which closed on January 14, 1994,
and subsequent effective registrations of such shares in July 1994 and May 1995,
respectively, there had been no public trading market for the Company's Class B
Common Stock. The Class A Common Stock and Class B Common Stock are closely held
and thinly traded. The Class A Common Stock and Class B Common Stock are quoted
on the OTC Bulletin Board.

The quotations are dealer prices without retail mark-ups, mark-downs or
commissions and may not represent actual transactions. The following table sets
forth the range of high and low bid prices of the Class A Common Stock and Class
B Common Stock, respectively, from January 1, 1996 through March 6, 1998.

<PAGE>

<TABLE>
Price Range of Class A Common Stock

<S> <C> <C>
Bid Prices
High Low

1996

January 1, 1996 - March 31, 1996 $2.00 $1.00
April 1, 1996 - June 30, 1996 3.00 1.00
July 1, 1996 - September 30, 1996 3.00 2.50
October 1, 1996 - December 31, 1996 4.50 3.00

1997

January 1, 1997 - March 31, 1997 $3.75 $3.75
April 1, 1997 - June 30, 1997 4.25 3.75
July 1, 1997 - September 30, 1997 4.25 3.25
October 1, 1997 - December 31, 1997 6.25 3.25

1998

January 1, 1998 - March 6, 1998 $6.25 $5.00

Price Range of Class B Common Stock

Bid Prices
High Low

1996

January 1, 1996 - March 31, 1996 $ .50 $ .50
April 1, 1996 - June 30, 1996 .75 .50
July 1, 1996 - September 30, 1996 1.00 .75
October 1, 1996 - December 31, 1996 2.50 1.00

1997

January 1, 1997 - March 31, 1997 $2.50 $2.50
April 1, 1997 - June 30, 1997 3.50 1.88
July 1, 1997 - September 30, 1997 3.50 3.50
October 1, 1997 - December 31, 1997 4.75 3.50

1998

January 1, 1998 - March 6, 1998 $4.75 $4.75

</TABLE>

<PAGE>

Holders

As of March 6, 1998 there were approximately 68 holders of record of
the Company's Class A Common Stock and approximately 112 holders of record of
the Company's Class B Common Stock.

Dividends

Since its organization, the Company has not paid any dividends on its
Common Stock nor does it plan to do so in the foreseeable future.

Item 6. Management's Discussion and Analysis

Financial Condition

The Company believes its relationships with its present clients are
stable. The agreements with the Company's single-manager and multi-manager
investment funds generally are terminable upon 30 to 60 days' notice or on the
expiration of a stated term of up to two years, subject to earlier termination
in certain circumstances. At December 31, 1997, the Company expects that its
arrangements with its principal single-manager and multi-manager investment fund
clients will continue for the duration of such funds and the Company has not
received any notice that any of such clients intends to terminate its
arrangement after December 31, 1997. There can be no assurance that any such
arrangement will not be earlier terminated by the client. The Company is not
currently aware of any event or events which would cause its clients to
terminate their arrangements with the Company. Several contracts entered into by
TBL require the payment of asset-based fees to TBL well beyond the termination
of a particular contract, so long as the investors placed by TBL remain
investors in those funds.

The Company believes that its product development efforts of 1997, as
well as the relationships formed abroad, have placed the Company in a good
position for 1998 and thereafter. Management expects to concentrate on
successfully developing new products and taking full advantage of its growing
relationships world-wide to improve its revenues and to develop independent
product distribution channels. Profitability is dependent on the ability of the
Company to maintain existing client relationships, several of which account for
a significant portion of the Company's revenues, to increase assets under
management for its client funds, and to market its services to new accounts.

Results of Operations

The Company's revenues are derived from consulting and specialized
investment services provided to institutional and other clients, as well as
management fees from certain funds under management. Consulting fees are
generally a function of the amount of assets under management and the percentage
fees charged to clients. Management fees are based on a percentage of the assets
of the managed fund and are usually paid on a monthly or quarterly basis. The
Company also receives asset-based fees for investments placed by TBL in certain
offshore mutual funds. The Company provides other consulting services generally
on a fixed fee basis, whether as annual retainer fees or

<PAGE>

single project fees. The Company's principal operating expenses consist of its
costs of personnel and independent consultants.

Fiscal year ended December 31, 1997 compared to Fiscal year ended December 31,
1996.

Consulting fees earned by the Company for the year ended December 31,
1997 increased by $1,557,174, or approximately 36.4%, as compared to the year
ended December 31, 1996. At the principal domestic subsidiary, TPI, consulting
fees increased from $2,599,672 for the year ended December 31, 1996 to
$3,437,455 for the year ended December 31, 1997, primarily due to increases in
revenues from The Broad Market Fund, L.P. ($619,138), The Broad Market Prime
Fund, L.P. ($210,498) and The Security Equity Life program ($187,806). These and
other increases were partially offset by declines in revenues, including a
decline in revenues from Pine Street Associates, L.P. ($100,000) and from
Minority Equity Trust ($320,000 resulting from a 1996 one-time termination fee),
among others. Consulting fees also increased domestically in 1997 as a result of
a 1996 amendment of TSI's restriction agreement with the NASD so that TSI may
sell limited partnership interests. For the year ended December 31, 1997,
consulting fees from this activity equalled $173,055. During the years ended
December 31, 1997 and 1996 certain clients accounted for a significant
percentage of the Company's consolidated revenues: The Broad Market Fund, L.P.
accounted for approximately 17% and 10%, respectively, of consolidated revenues
and revenues from related entities accounted for approximately 28% and 20%,
respectively, of consolidated revenues.

At the foreign subsidiary, TBL, consulting fees increased from
$1,683,424 for the year ended December 31, 1996 to $2,229,760 for the year ended
December 31, 1997. This increase is primarily due to increases in revenues from
the Class B Shares of the Kingate Global Fund, Ltd. ($322,149) and Winston
Partners II Offshore Ltd. ($91,074), as well as the commencement of revenues
from Tremont MRM Services, Ltd. ($154,800). These and other increases in TBL's
revenues, were partially offset by declines in revenues from Global Advisors
Portfolio, N.V. ($230,013), among others. The increase or decrease in revenues
was primarily as a result of increases or decreases in the value of the assets
within the respective investment vehicles.

Performance fees for the year ended December 31, 1997 were $884,284
compared to $780,678 for the year ended December 31, 1996. This $103,606
increase is primarily due to the underlying investment vehicles outperforming
pre-established benchmarks. The significant performance fees earned by TBL in
1997 were from Starvest Fund Ltd. ($191,802), B.P. Overseas Partners, Ltd.
($102,281) and Cambridge Energy Fund International Ltd. ($131,258). The sole
significant performance fee earned by TPI in 1997 was $246,494 from The F.W.
Thompson Fund, L.P. The performance fees earned for the year ended December
31, 1997 are subject to adjustment pending completion of final audit of the
respective funds.

Each of Global Advisors Portfolio, N.V. and Global Advisors Portfolio
II, N.V. terminated TBL as their advisor effective as of the close of business
on November 15, 1996 and, as a result, no further fees were, nor will be,
generated from them after that date. Management believes these terminations will
not have a material future impact on the Company.

Management expects performance fee revenue to increase during periods
of positive market conditions, but management cannot predict with any accuracy
whether such income from performance fees will continue in the future due to
changing market conditions and other outside factors.

<PAGE>

Commissions increased $72,012 for the year ended December 31, 1997, or
approximately 31%, as compared to the year ended December 31, 1996, as a result
of TSI having additional clients and more trading activity in 1997.

Operating profits at TBL were $490,203 and $625,762 for the years ended
December 31, 1997 and 1996, respectively. The decrease in operating profit from
1996 to 1997 ($135,559) was primarily due to an investment gain of $130,874 in
1996 which did not recur in 1997. Identifiable assets of TBL were $1,531,727 and
$1,563,788 at December 31, 1997 and 1996, respectively.

Compensation expense increased for the year ended December 31, 1997 by
$624,163, or approximately 23%, over the similar period in 1996, as a result of
the Company's continued efforts to attract and retain qualified employees.
Compensation expense primarily increased due to salary increases for certain
employees that became effective January 1, 1997 and increased health care costs
due to the increase in the number of employees during the year. As part of
compensation expense, $701,000 and $780,750 for the years ended December 31,
1997 and 1996, respectively, were attributable to bonuses granted by the Company
to its employees.

General and administrative expenses consist primarily of rent,
telecommunications, travel and entertainment, outside professional fees and
other related expenses. General and administrative expenses were $1,506,834 and
$1,306,040 for the years ended December 31, 1997 and 1996, respectively,
representing 21.4% and 24.7% of revenues, respectively. The increases in general
and administrative expenses were primarily due to costs related to the Company's
continued expansion to service its business growth. The decrease, however, in
general and administrative expense as a percentage of revenues was attributable
to the increase in revenues from the Company's proprietary products, expansion
of its client base, and the positive results from cost containment measures.

Consulting expenses increased by $476,420 during the year 1997, as
compared to the similar period of 1996, primarily as a result of the increase in
revenues from the clients that participate in revenue sharing arrangements. For
example, TSI has an arrangement for securities clearance services with a
clearing broker dealer whereby a certain percentage of the commissions earned is
shared; this agreement became effective in June 1995 when TSI became a
registered broker dealer. Also, TPI and TBL have revenue sharing arrangements
with respect to certain clients whose products were launched during 1997.

The increase in depreciation and amortization is a result of fixed
asset purchases during the year ended December 31, 1997. These purchases
totalled $299,692 and consisted of computer equipment for the new employees
hired during the year, software purchases, as well as a computer system network
for TBL. At December 31, 1997, the Company has no significant commitments for
additional capital expenditures.

Other income decreased for the year ended December 31, 1997 by $131,120
over 1996. Other income in 1996 includes an investment gain of $130,874
resulting from the exercise of warrants to purchase 57,639 shares of common
stock of an unaffiliated public corporation and the subsequent sale of such
shares. At December 31, 1997, TBL owned warrants to purchase common stock of the
same unaffiliated public corporation at $3.78 per share until October 19, 1998
(87,500 shares), and 18,750 shares at $3.63 per share until October 30, 1998,
respectively. Such warrants have been valued at zero on December 31, 1997.

<PAGE>

Profitability is dependent on the ability of the Company to maintain
existing client relationships, several of which currently account for a
significant portion of the Company's revenues, to increase assets under
management for its clients, and to market its services to new accounts.

Foreign currency fluctuation may also have an impact on the Company's
profitability over time as a result of the Company's participation in foreign
securities markets. Currently, all of the Company's transactions are conducted
in U.S. dollars, so the Company does not have, at this time, any significant
foreign currency risk.

Fiscal year ended December 31, 1996 compared to Fiscal year ended December 31,
1995.

Consulting fees earned by the Company for the year ended December 31,
1996 increased by $1,211,007, or approximately 39.4%, as compared to the year
ended December 31, 1995. At the domestic subsidiary, TPI, consulting fees
increased from $1,735,699 for the year ended December 31, 1995 to $2,599,672 for
the year ended December 31, 1996. The increase at this subsidiary is primarily
due to increases in revenues from The Broad Market Fund, L.P. ($320,283), The
Ultima Fund, L.P. ($119,376), The F.W. Thompson Fund, L.P. ($94,467) and the
Chrysler Minority Equity Trust ($87,141). These increases, as well as a one-time
payment of $320,000 as a result of a termination agreement with the sponsor of
the Minority Equity Trust, were partially offset by declines in revenues from
Pine Street Associates, L.P. ($100,000), among others. At the foreign
subsidiary, TBL, consulting fees increased from $1,336,390 for the year ended
December 31, 1995 to $1,683,424 for the year ended December 31, 1996. The
increase at this subsidiary is primarily due to increases in revenues from the
Class B Shares of the Kingate Global Fund, Ltd. ($283,442), Winston Partners II
Offshore Ltd. ($117,206) and Ultima Investments Limited ($62,480). These
increases in revenues, as well as other increases in revenues at TBL, were
partially offset by declines in revenues from Global Advisors Portfolio, N.V.
($222,820), among others. The increase or decrease in revenues was primarily as
a result of increases or decreases in the value of the assets within the
respective investment vehicles.

Performance fees for the year ended December 31, 1996 were $780,678
compared to $209,196 for the year ended December 31, 1995. This $571,482
increase is primarily due to the underlying investment vehicles outperforming
pre-established benchmarks. The significant performance fees earned by TBL in
1996 were from Starvest Fund Ltd. ($128,000), B.P. Overseas Partners, Ltd.
($125,000) and Needham Emerging Growth International Fund, Ltd ($119,899). The
performance fee earned by TPI in 1996 was $195,830 for The F.W. Thompson Fund,
L.P.

Each of Global Advisors Portfolio, N.V. and Global Advisors Portfolio
II, N.V. terminated their relations with TBL effective as of the close of
business on November 15, 1996, and as a result, no further fees have been or
will be generated after that date. Management believes these terminations will
not have a material future impact on the Company.

Commissions increased $96,124 for the year ended December 31, 1996, or
approximately 72%, as compared to the year ended December 31, 1995 as a result
of TSI having a full year of operation in 1996.

Management believes that the Company will become less dependent on a
small number of large clients, as the Company is developing relationships with a
variety of additional entities. The Company is also utilizing these
relationships to create diversified ways to package and distribute

<PAGE>

Tremont proprietary products. In addition, management expects performance fee
revenue to increase during periods of positive market conditions, but management
cannot predict with any accuracy whether such income from performance fees will
continue in the future due to changing market conditions and other outside
factors.

Operating profits at TBL were $625,762 and $41,999 for the years ended
December 31, 1996 and 1995, respectively. The increase in operating profit from
1995 to 1996 ($583,763) was due to increases in revenues of $742,432 and an
investment gain of $130,874 partially offset by an increase in expenses of
$270,361. Identifiable assets of TBL were $1,563,788 and $731,997 at December
31, 1996 and 1995, respectively. Identifiable assets at December 31, 1996
increased from December 31, 1995 primarily as a result of TBL's net income and
increased accounts receivable as a result of higher performance fees accrued at
December 31, 1996.

Compensation expense increased for the year ended December 31, 1996 by
$572,550, or approximately 27%, over the similar period in 1995, partially as a
result of the Company's continued efforts to attract and retain qualified
employees. Such efforts resulted in an increase in the number of employees to 26
at December 31, 1996 from 23 at December 31, 1995. In addition to the increase
in the number of employees, compensation expense also increased due to salary
increases for certain employees that became effective January 1, 1996 and
increased health care costs due to the increase in the number of employees. As
part of compensation expense, $780,750 and $420,000 for the years ended December
31, 1996 and 1995, respectively, were attributable to bonuses granted by the
Company to its employees.

General and administrative expenses consist primarily of rent,
telecommunications, travel and entertainment, outside professional fees and
other related expenses. General and administrative expenses were $1,306,040 and
$997,231 for the year ended December 31, 1996 and 1995, respectively,
representing 24.7% and 29.2% of revenues, respectively. The increases in general
and administrative expenses were primarily due to costs related to the Company's
continued expansion to service its business growth. The decrease, however, in
general and administrative expense as a percentage of revenues was attributable
to the increase in revenues from the Company's proprietary products, expansion
of its client base, and the positive results from cost containment measures.

Consulting expenses increased during the year 1996, as compared to the
similar period of 1995, primarily as a result of the increase in revenues from
the clients that participate in revenue sharing arrangements. For example, TSI
has an arrangement for securities clearance services with a clearing broker
dealer whereby a certain percentage of the commissions earned is shared; this
agreement became effective in June 1995 when TSI became a registered broker
dealer. Also, TPI has revenue sharing arrangements with respect to certain
clients whose products were launched during 1996.

The increase in depreciation and amortization is a result of fixed
asset purchases during the year ended December 31, 1996. These purchases
totalled $99,013 and consisted of computer equipment for the new employees hired
during the year, software purchases, as well as a computer system network for
TBL. At December 31, 1996, the Company has made commitments for additional
capital expenditures totaling approximately $27,000.

Other income increased for the year ended December 31, 1996 by $126,129
over 1995. Other income in 1996 includes an investment gain of $130,874 from the
exercise of warrants to

<PAGE>

purchase 57,639 shares of common stock of an unaffiliated public corporation and
the subsequent sale of such shares. At December 31, 1996, TBL owns warrants to
purchase common stock of the same unaffiliated public corporation at $3.78 per
share until October 19, 1998 (87,500 shares), and 18,750 shares at $3.63 per
share until October 30, 1998, respectively. Such warrants have been valued at
zero on December 31, 1996.

Liquidity and Capital Resources

At December 31, 1997, the Company had $820,801 in cash and cash
equivalents and working capital of $1,819,482, as compared to cash and cash
equivalents of $551,710 and working capital of $605,828 at December 31, 1996. A
portion of this increase was due to the series of equity transactions with
Mutual Risk Management which are described below.

Cash flows used by operating activities was $56,267 in 1997, compared
to cash flows provided by operating activities of $443,025 in 1996. The primary
operating use of the 1997 cash flows was to decrease accounts payable and
accrued expenses and also reflects an increase in accounts receivables. These
uses were partially offset by cash generated from profitable operations. Cash
flows used in investing activities were $397,896 and $426,464 in 1997 and 1996,
respectively. The principal use of the 1997 and 1996 cash flows in investing
activities were investments in limited partnerships and joint ventures, as well
as the purchase of fixed assets offset partially by the sale of limited
partnership interests.

Cash flows provided by financing activities of $723,254 in 1997
resulted from the issuance of 202,365 shares of the Company's Class B Common
Stock. In July 1997, Mutual Risk Management ("MRM"), an international risk
management company, indirectly acquired an equity interest in the Company. In
July 1997, MGL Investments Ltd. ("MGL"), a wholly-owned subsidiary of MRM,
purchased 615,000 shares of outstanding Class B Common Stock at a price of $3.75
per share pursuant to a tender offer. In addition, the Company simultaneously
sold MGL 202,365 shares of Class B Common Stock at a price of $3.75 per share.
As a result of these transactions, the Company received net proceeds of $723,254
and MRM indirectly acquired, through MGL, Class B Common Stock equal to 20% of
the aggregate of the Company's outstanding Class A Common Stock and Class B
Common Stock.

At December 31, 1997, the Company owned options to purchase 8,000
shares of a nonpublic registered investment adviser specializing in 401(k)
investment allocation advice over the Internet. The options were granted at $10
per share and have vested or will vest 25% on January 1, 1996; 25% in equal
installments at the end of each month between January 1, 1996 and December 31,
1997; and 50% in equal installments at the end of each month between January 1,
1998 and December 31, 1998. The options have a five year term and have been
valued at zero by the Company at December 31, 1997.

At December 31, 1997, the Company owned 30,000 shares of a nonpublic
financial services company as a result of an employee's participation as a board
member of such company. As a result of consulting services performed for this
entity, TPI received $56,152 and $42,235, respectively for the years ended
December 31, 1997 and 1996. At December 31, 1997, the Company valued these
shares of common stock at zero.

<PAGE>

The Company believes that it has adequate capital resources and working
capital to bring to market the products it developed in late 1997 and those it
expects to develop in early 1998, and that the revenue stream from these
products, as well as from existing products, will be sufficient to support
future growth. The Company has no material short or long term debt obligations.

In August 1993, a law suit was initiated against the Company, TPI, TBL
and Ms. Manzke, the Chairman of the Board, in the Supreme Court of the State of
New York, County of New York, by Mr. Sass Khazzam, Capulet Management Inc. and
Kazco Mgt., Inc. alleging that there was an agreement pursuant to which the
plaintiffs would receive 20% of the fees paid by Global Advisors Portfolio, N.V.
The Court ordered the dismissal of the complaint against the Company and TPI. In
February 1997, a jury returned a verdict against TBL in favor of Kazco Mgt.,
Inc. After entry of the verdict, the Company was informed that the plaintiff
would not appeal the verdict and that no judgment would be entered against TBL,
provided that the amount awarded by the jury was paid. On March 31, 1997, TBL
paid KazCo Mgt., Inc. the sum of $151,689, the full amount awarded by the jury
including interest and court costs. General releases were exchanged and the
action was discontinued with prejudice.

The Company and Sandra L. Manzke, the Company's Chairman of the Board
and Chief Executive Officer, are parties to an employment agreement dated as of
September 25, 1995. The agreement was amended on December 10, 1997 and will
expire on December 31, 1998, unless terminated at an earlier date pursuant to
the terms and conditions of such agreement. While employed, Ms. Manzke is
entitled to a minimum base salary of $373,000 per annum. She is also entitled to
a bonus as determined by the Board of Directors. Ms. Manzke's employment may be
terminated due to illness, disability or other incapacity to the extent that she
is unable to perform her duties for a period of ninety (90) consecutive days. If
her employment is so terminated, she will be entitled to receive her base salary
and accrued bonus until December 31, 1998. In the event of her death, her right
to compensation will cease.

In the event of the termination of Ms. Manzke's employment for any
reason, including death, the Company will have the option, provided it is
exercised within ninety (90) days, to reacquire all of Ms. Manzke's shares of
capital stock of the Company for a price per share equal to its market value on
the date of such termination. Ms. Manzke agreed that she will not sell or
dispose of her stock in the Company without first offering to sell it to the
Company at a price per share equal to the then market value.

On December 10, 1997, the Company amended its employment agreement,
dated April 22, 1994, with Robert I. Schulman, the Company's President and Chief
Operating Officer. Under the amended agreement, which expires on December 31,
1998, Mr. Schulman is entitled to receive a minimum annual base salary of
$335,700. In addition, he is entitled to receive incentive compensation equal to
90% of the incentive compensation payable to Ms. Manzke in the applicable year.

Upon Mr. Schulman's execution of his employment agreement in 1994, the
Board of Directors granted him an option to purchase 275,000 shares of Class B
Common Stock at $1.75 per share, the then current fair value of the stock as
determined by the Board of Directors. The options are fully vested and will
expire on the anniversary of the grant date in 2001. In the event Mr. Schulman's
employment is terminated, TPI, a subsidiary of the Company, will have the
option, exercisable no later than seven days after the date of termination, to
purchase all of Mr. Schulman's

<PAGE>

stock and vested options. The purchase price for each share of Common Stock
shall be equal to the best bid price on the date of such termination, and the
purchase price for each option shall be the greater of (i) $1.75 or (ii) the
amount of the best bid price for a share of Common Stock on the date of such
termination less $1.75.

On May 15, 1997 and June 12, 1997, options to purchase 20,000 shares
and 125,000 shares, respectively, of Class B Common Stock were granted to the
directors and certain employees of the Company at a price of $3.75 per share.
The options vest 25% on the grant date, 25% on the first anniversary of the
grant date, and 50% on the second anniversary of the grant date. They expire on
the fifth anniversary of the grant date.

Effective September 1997, the Company moved to a larger facility and
entered into a lease agreement for new executive offices. The Company was
completely released from its obligation under the old lease. The lease for the
new facility expires August 31, 2002 and requires monthly payments of
approximately $17,100.

TBL's lease for corporate offices expired in February 1997 and was
renewed through February 2000. The lease requires monthly lease payments of
approximately $5,500.

Meridian Horizon Fund, L.P., formerly The Ultima Fund, L.P., is a
multi-manager Delaware limited partnership (the "Meridian Fund") organized in
1991 by Zeron Capital Management, Inc. ("Zeron") to engage principally in
diversified investment strategies utilizing a multi-manager approach. In 1994,
TPI became a co-general partner. Effective January 1, 1997, Meridian Capital
Partners, Inc. replaced Zeron as co-general partner. The general partners
receive an administrative fee and a quarterly management fee based upon the net
asset value of the partnership as of the end of each quarter. At January 1,
1998, the approximate net asset value of the Meridian Fund was $160 million. At
December 31, 1997, TPI's investment in the Meridian Fund was $299,483.

The Broad Market Prime Fund, L.P., is a Delaware multi-manager limited
partnership which had an approximate net asset value of $68 million as of
January 1, 1998. It was created in July, 1997

<PAGE>

for the purpose of achieving long-term capital growth through a leveraged
investment strategy. TPI is the general partner and receives a monthly
management fee based upon the net asset value of the partnership as of the end
of each month. In addition, the general partner will be reimbursed for certain
allocable expenses. At December 31, 1997, TPI did not have an investment in
BMPF.

Tremont International Insurance, Ltd. ("TIIL"), is a Cayman Island
corporation that offers certain deferred variable annuities, variable life
insurance and other insurance contracts to customers who are not resident in the
Cayman Islands. TIIL is a joint venture between TBL and The Anglo Dutch
Insurance Company Limited, a Cayman Island life insurance company
("Anglo-Dutch"). Effective July 1, 1997, Mutual Risk Management ("MRM"), an
international risk management company, purchased 51% of TIIL's issued share
capital. Simultaneously, 0.4% of TIIL's issued share capital to Anglo-Dutch. As
a result of these transactions, TBL's interest has been reduced to 24.5% of
TIIL's issued share capital. TBL, MRM and Anglo-Dutch formed Tremont MRM
Services Limited ("TMRM"), a Bermuda company to provide product development,
marketing and administrative services to TIIL. TBL owns a 40% interest in TMRM.

Inflation

The impact of inflation on the Company's revenues and results of
operations has not been significant.

Impact of Year 2000

The Year 2000 issue is the result of computer programs being written
using two digits rather than four to determine the applicable year. Any computer
programs that have time sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculation causing significant disruptions of operations, including,
among other things, a temporary inability to process transactions or engage in
similar normal business activities. Based on a recent assessment, the Company
determined its computer systems are currently enabled for year 2000 entries. The
cost of such assessment was immaterial to the Company. However, the Company
could be adversely affected if the Computer systems used by the Company's
service providers do not properly process and calculate date-related information
and data from and after January 1, 2000. The Company is currently in
communication with these other companies to determine if there is reasonable
cause for concern.

<PAGE>

Item 7. Financial Statements.

Year Ended December 31, 1997

Page

Reports of Independent Auditors..............................................22
Consolidated Balance Sheets as of December 31, 1997 and 1996 ................24
Consolidated Statements of Income for the years ended
December 31, 1997 and 1996 ................................................25
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1997 and 1996 ................................................26
Consolidated Statements of Cash Flows for the years ended
December 31, 1997 and 1996 ................................................27
Notes to Consolidated Financial Statements...................................28

21
<PAGE>

Report of Independent Auditors

Shareholders and Board of Directors
Tremont Advisers, Inc.

We have audited the accompanying consolidated balance sheets of Tremont
Advisers, Inc. as of December 31, 1997 and 1996, and the related consolidated
statements of income, shareholders' equity, and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The financial statements of The Broad Market
Fund, L.P. (a limited partnership in which the Company had a .51% and .80%
interest at December 31, 1997 and 1996, respectively) have been audited by other
auditors whose reports have been furnished to us; insofar as our opinion on the
consolidated financial statements relates to data included for The Broad Market
Fund, L.P., it is based solely on their reports. In the consolidated financial
statements, the Company's investment in The Broad Market Fund, L.P. is stated at
$688,592 and $559,847 at December 31, 1997 and 1996, respectively, and the
Company's equity in the net income of The Broad Market Fund, L.P. is stated at
$128,745 and $79,784, for the years ended December 31, 1997 and 1996,
respectively.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits, and the reports of other auditors, provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Tremont Advisers, Inc.
at December 31, 1997 and 1996, and the consolidated results of their operations
and their cash flows for the years then ended, in conformity with generally
accepted accounting principles.

Ernst & Young, LLP

Stamford, Connecticut
February 13, 1998

22
<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Partners of
The Broad Market Fund, L.P.

We have audited the statement of financial condition of The Broad Market Fund,
L.P. (a limited partnership) as of December 31, 1997, and the related statements
of income, changes in Partners' capital, and cash flows for each of the two
years in the period then ended (not presented herein). These financial
statements are the responsibility of the General Partner. Our responsibility is
to express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Broad Market Fund, L.P. as
of December 31, 1997, the results of its operations and its cash flows for each
of the two years in the period then ended in conformity with generally accepted
accounting principles.

GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
New York, New York

February 2, 1998
23

<PAGE>
Tremont Advisers, Inc.

Consolidated Balance Sheets
<TABLE>
<S> <C> <C>

December 31
1997 1996
Assets
Current assets:
Cash and cash equivalents $ 820,801 $ 551,710
Accounts receivable, less allowance for bad debts of $25,000 2,011,445 1,419,578
Receivable from officer 200,000 -
Prepaid expenses and other 123,103 31,616
Total current assets 3,155,349 2,002,904

Investments in limited partnerships (cost -- $803,467 and $668,467) 1,221,487 871,378
Investments in joint ventures (cost -- $371,667 and $317,400) 99,345 169,250
Other investments (cost -- $86,000 and $170,000) 75,420 170,000

Fixed assets:
Furniture and equipment 706,640 449,704
Leasehold improvements 53,662 10,906
Less accumulated depreciation (359,149) (226,894)
Fixed assets, net 401,153 233,716

Other assets 28,958 34,495
Total assets $ 4,981,712 $ 3,481,743

Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 50,490 $ 90,606
Accrued expenses 1,112,734 1,131,970
Income taxes payable 1,143 3,000
Deferred income taxes payable 171,500 171,500
Total current liabilities 1,335,867 1,397,076

Deferred income taxes payable 160,600 22,600
Redeemable preferred stock:
Series A Preferred Stock, $1 par value, 650,000 shares
authorized, none issued and outstanding - -

Shareholders' equity:
Preferred Stock, $1 par value, 350,000 shares authorized,
issued and outstanding - none - -
Class A Common Stock, $0.01 par value, 5,000,000
shares authorized, 1,284,718 shares issued and outstanding 12,847 12,847
Class B Common Stock, $0.01 par value, 5,000,000 shares
authorized, 2,802,104 and 2,599,739 shares issued and outstanding 28,021 25,997
Additional paid in capital 4,725,293 4,004,063
Accumulated deficit (1,280,916) (1,980,840)
Total shareholders' equity 3,485,245 2,062,067
Total liabilities and shareholders' equity $ 4,981,712 $ 3,481,743

</TABLE>
See accompanying notes.

<PAGE>
Tremont Advisers, Inc.

Consolidated Statements of Income

<TABLE>
Year ended December 31
<S> <C> <C>
1997 1996
Revenues:
Consulting fees $5,840,270 $4,283,096
Performance fees 884,284 780,678
Commissions 302,087 230,075
Total revenues 7,026,641 5,293,849

Expenses:
Compensation 3,325,025 2,700,862
General and administrative 1,506,834 1,306,040
Consulting 1,119,030 642,610
Depreciation and amortization 137,792 100,628
Total expenses 6,088,681 4,750,140

Equity in earnings of limited partnerships 215,109 106,574
Loss from operations of joint ventures, net (117,109) (73,150)
Other income, net 13,834 144,954

Income before income taxes 1,049,794 722,087
Provision for income taxes 349,870 196,542
Net income $ 699,924 $ 525,545

Net income per common share $ 0.18 $ 0.14

Net income per common share - assuming dilution $ 0.17 $ 0.13
</TABLE>
See accompanying notes
25
<PAGE>

Tremont Advisers, Inc.

Consolidated Statements of Shareholders' Equity

Common Stock Additional Total
Shares Outstanding Par Value Paid in Accumulated Shareholders'
Class A Class B Class A Class B Capital Deficit Equity

Balance at December 31, 1995 1,284,718 2,559,739 $12,847 $25,597 $3,924,463 $(2,506,385) $1,456,522

Issuance of Class Common Stock -
Director Option - 40,000 - 400 79,600 - 80,000

Net Income - - - - - 525,545 525,545

Balance at December 31, 1996 1,284,718 2,599,739 12,847 25,997 4,004,063 (1,980,840) 2,062,067

Issuance of Class B Common Stock - 202,365 - 2,024 721,230 - 723,254

Net income - - - - - 699,924 699,924

Balance at December 31, 1997 1,284,718 2,802,104 $12,847 $28,021 $4,725,293 $(1,280,916) $3,485,245

</TABLE>
See accompanying notes.

<PAGE>
Tremont Advisers, Inc.

Consolidated Statements of Cash Flows

<TABLE>
<S> <C> <C>
Year ended December 31
1997 1996
Operating activities
Net income $ 699,924 $ 525,545
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 137,792 100,628
Equity in earnings of limited partnerships (215,109) (106,574)
Loss from operations of joint ventures, net 117,109 73,150
Loss/(gain) from other investments 10,580 (130,874)
Deferred income taxes 138,000 194,100
Changes in operating assets and liabilities:
Accounts receivable (591,867) (701,338)
Receivable from officer (200,000) -
Income taxes, net (1,857) 700
Prepaid expenses and other (91,487) 3,044
Accounts payable (40,116) 17,788
Accrued expenses (19,236) 461,468
Other - 5,388
Net cash provided (used) by operating activiti (56,267) 443,025

Investing activities
Purchase of fixed assets (299,692) (99,013)
Investments in limited partnerships (685,000) (200,925)
Withdrawals from limited partnerships 550,000 -
Investments in joint ventures (56,842) (207,400)
Sale of joint venture 9,638 -
Sale of other investment 84,000 -
Investment in mutual fund - (50,000)
Purchase of marketable securities - (128,516)
Sale of marketable securities - 259,390
Net cash used by investing activities 397,896 426,464

Financing activities
Net proceeds from offering - Class B Common Stock 723,254 -
Exercise of Class B Common Stock Option - 80,000
Net cash provided by financing activities 723,254 80,000

Net increase in cash and cash equivalents 269,091 96,561
Cash and cash equivalents at beginning of year 551,710 455,149
Cash and cash equivalents at end of year $ 820,801 $ 551,710

</TABLE>
See accompanying notes.

27
<PAGE>

Tremont Advisers, Inc.

Notes to Consolidated Financial Statements

December 31, 1997

1. Basis of Presentation

The consolidated financial statements include the accounts of Tremont Advisers,
Inc. ("the Company") and its wholly-owned subsidiaries, Tremont Partners, Inc.,
("TPI"), Tremont (Bermuda) Limited ("TBL") and Tremont Securities, Inc. ("TSI").
TPI is an investment advisor registered under the Investment Advisers Act of
1940, as amended. TBL is incorporated under Bermuda law and provides advisory
services to clients located offshore. TSI, a registered broker-dealer, assists
customers in the purchase and sale of investments in other entities. All
significant intercompany transactions have been eliminated in consolidation.

The Company is a holding company which, through its subsidiaries, is engaged in
one business segment. The Company is primarily engaged in rendering consulting
and specialized investment services to investment funds, investment managers,
institutional investors, and high net worth individuals with respect to the
organization and management of their investment portfolio or programs, as well
as managing and sponsoring its own multi-manager funds. In addition, the Company
offers marketing and business development consulting services to investment
management firms and to individual investment advisers.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from such estimates.

The consolidated statements of income include revenues from a foreign subsidiary
located in Bermuda, of $2,801,875 and $2,284,686 for the years ended December
31, 1997 and 1996, respectively. Net income included in the statements of income
from this foreign subsidiary, are $490,203 and $625,762 for the years ended
December 31, 1997 and 1996, respectively. Identifiable assets of the foreign
subsidiary were $1,531,727 and $1,563,788 at December 31, 1997 and 1996,
respectively.

2. Summary of Significant Accounting Policies

Fair Value of Financial Instruments

The estimated fair value of amounts reported in the consolidated financial
statements have been determined by using available market information and
appropriate valuation methodologies. The carrying value for all current assets
and current liabilities approximates fair value because of their short-term
nature. The fair value of long-term investments also approximate their carrying
value.
28

<PAGE>

Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Revenue Recognition

Consulting fees are recorded as earned and are derived from consulting and
specialized investment services provided to institutional and other clients, as
well as fees earned from certain funds under management. These fees are
generally a percentage of the amount of assets under management as well as fees
for investments placed by TBL in certain offshore mutual funds. The Company
provides other consulting services generally on a fixed fee basis, either as
annual retainer fees or single project fees. Performance fees are recorded based
on the achievement of investment performance in excess of established benchmarks
and are recognized only when they are no longer subject to market conditions.
Commissions earned by TSI are recorded on a trade date basis.

During the periods presented in the consolidated statements of income, certain
clients accounted for a significant percentage of the Company's consolidated
revenues. For the years ended December 31, 1997, and December 31, 1996, the
Broad Market Fund, L.P. accounted for approximately 17% and 10 %, respectively
of consolidated revenues. For the years ended December 31, 1997 and 1996,
revenues from related entities (see Note 3) accounted for approximately 28% and
20% of consolidated revenues, respectively.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three
months or less at the time of purchase to be cash equivalents. At December 31,
1997 cash and cash equivalents includes a U.S Treasury Bill of $250,000 which
matured January 8, 1998.

Investments

The equity method of accounting is used for investments in limited partnerships
and investments in joint ventures. Other investments are recorded at cost.

Marketable Securities

Management determines whether marketable securities are to be classified as
trading or available-for-sale at the time of purchase and re-evaluates such
designation as of each balance sheet date. Securities classified as trading are
securities acquired (and generally held for short periods) to make a profit from
short-term movements in market price. These securities are carried at fair
value, with unrealized holding gains and losses included in earnings.
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses, net of tax, reported as a separate component of shareholders'
equity. Realized gains and losses and declines in value judged to be other than
temporary on available-for-sale securities are included in other income, net.
The cost of securities is based on the specific identification method.

Fixed Assets

Fixed assets are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the related assets (3-5
years).
29

<PAGE>

Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Income Taxes

The provision for income taxes includes federal and state taxes currently
payable and those deferred because of temporary differences between the
financial statement and tax basis of assets and liabilities. A valuation
allowance is recorded based on available evidence when it is more likely than
not that some portion or all of the deferred tax assets will not be realized.

Stock Compensation

The Company accounts for its stock compensation under the provisions of APB 25,
"Accounting for Stock Issued to Employees".

Net Income Per Share

In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings Per Share." Statement 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. All earnings per share amounts for all periods have been
presented, and where appropriate, restated to conform to the Statement 128
requirements.

Concentrations of Credit Risk

The Company's accounts receivable are not concentrated in any specific
geographic region, but are concentrated in the investment industry. At December
31, 1997, the Company had accounts receivable of $283,917 and $247,070 from
Starvest Funds Ltd. and The F.W. Thompson Fund. L.P., respectively. At December
31, 1996, the Company had accounts receivable of $228,230, $166,128 and $153,702
from Ultima Investments Limited, Starvest Funds Ltd. and The F.W. Thompson Fund,
L.P., respectively. Although the Company's exposure to credit risk associated
with nonpayment by customers is affected by conditions within the investment
industry, no other customer exceeded 10% of the Company's receivables at
December 31, 1997 and 1996, respectively.

3. Investments in Limited Partnerships

The Broad Market Fund, L.P.--The Broad Market Fund L.P. is a Delaware limited
partnership ("Broad Market Fund") that was organized for the purpose of
achieving long-term capital growth through hedged investments arranged by one or
more money managers and/or investment funds. At December 31, 1997 and 1996, TPI,
the General Partner, had an investment of $688,592 (cost - $423,620) and
$559,847 (cost - $423,620), respectively, in the Broad Market Fund. For the
years ended December 31, 1997 and 1996, TPI's proportionate share of the Broad
Market Fund's income ($128,745 and $79,784, respectively) is reflected in equity
in earnings of limited partnerships in the consolidated statements of income. At
December 31, 1997 and 1996, TPI's investment in the Broad Market Fund
represented .51% and .80%, respectively, of the Broad Market Fund's net assets.
The summarized audited financial information of the Broad Market Fund, based
solely on the report of other auditors, is as follows:

30
<PAGE>
Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

3. Investments in Partnerships (continued)

December 31
1997 1996

Total assets $162,511,390 $75,908,923
Total liabilities 28,567,596 6,264,461

Year ended December 31,
1997 1996

Net investment income $ 2,658,019 $ 878,640
Net realized gain on investments 15,764,772 7,485,139
Net income $18,422,791 $ 8,363,779

GamTree, L.P.--GamTree, L.P., a Delaware limited partnership ("GamTree") was
organized for the purpose of achieving long-term capital growth through
diversified asset management. At December 31, 1997 and 1996, TPI, a Co-General
Partner with GAMCO Investors, Inc., an affiliate of a shareholder, had an
investment of $186,717 (cost - $100,000) and $158,429 (cost - $100,000),
respectively, in GamTree. For the years ended December 31, 1997 and 1996, TPI's
proportionate share of GamTree's income ($28,288 and $21,079, respectively) is
reflected in equity in earnings of limited partnerships in the consolidated
statements of income. At December 31, 1997, TPI's investment in GamTree
represented 10.2% of GamTree's net assets.

Meridian Horizon Fund, L.P.--Meridian Horizon Fund, L.P. is a Delaware limited
partnership ("Meridian"), formerly known as The Ultima Fund, L.P., that was
organized for the purpose of achieving a high total return and preservation of
capital utilizing a multi-manager approach to investing. At December 31, 1997
and 1996, the Company had an investment of $299,483 (cost $250,000) and $116,549
(cost $115,000), respectively, in Meridian, which represents .23% and .20%,
respectively, of Meridian's net assets. For the years ended December 31, 1997
and 1996, the Company's proportionate share of Meridian's income ($47,934 and
$1,549, respectively), is reflected in equity in earnings of limited
partnerships in the consolidated statements of income. Effective January 1,
1997, Meridian's Limited Partnership Agreement was amended and restated whereby
Meridian Capital Partners, Inc. replaced Zeron Capital Management, Inc. as a
Co-General Partner with the Company.

The F.W. Thompson Fund, L.P.--In October 1995, The F.W. Thompson Fund, L.P. a
Delaware limited partnership (the "Thompson Fund"), was organized for the
purpose of achieving long-term capital growth while preserving capital. At
December 31, 1997 and 1996, TPI, the General Partner, had an investment of
$46,695 (cost - $29,847) and $36,553 (cost - $29,847), respectively, in the
Thompson Fund, which represents .82% and .60%, respectively, of the fund's
equity. In addition, TPI has a commitment to fund up to 1% of the limited
partnership losses if and when such losses occur. For the years ended December
31, 1997 and 1996, TPI's proportionate share of the limited partnership's income
($10,142 and $4,162, respectively) is reflected in equity in earnings of limited
partnerships in the consolidated statements of income.

31
<PAGE>

Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

3. Investments in Partnerships (continued)

The Broad Market Prime Fund, L.P.--The Broad Market Prime Fund, L.P., a Delaware
limited partnership ("BMPF"), was formed on July 1, 1997 for the purpose of
achieving long-term capital growth through a leveraged investment strategy. At
December 31, 1997, the Company, as General Partner, did not have an investment
in this fund, however the Company has a commitment to fund up to 1% of the
limited partnership losses if and when such losses occur. For the year ended
December 31, 1997, the Company did not have any equity in earnings of limited
partnerships for this limited partnership.

The aggregated summarized unaudited financial information of GamTree, Meridian,
the Thompson Fund and BMPF is as follows:

December 31
1997 1996

Total assets $249,504,158 $70,688,495
Total liabilities 60,805,159 7,342,820

Year Ended December 31
1997 1996

Net investment loss $(2,509,355) $(1,077,612)
Net realized and unrealized
gain on investments 16,488,421 9,765,451
Net income $13,979,066 $ 8,687,839

4. Investments in Joint Ventures

In October 1994, TBL entered into an agreement to form N-Compass Financial
Services Limited, a joint venture, to provide investment advisory services to
offshore clients. For the years ended December 31, 1997 and 1996, TBL's
proportionate share (40%) of operating losses of the joint venture were $83,508
and $95,350, respectively. The investment in this joint venture at December 31,
1997 and 1996 was $10,400 (cost - $264,258) and $79,650 (cost - $250,000),
respectively.

At December 31, 1997 and 1996, TBL's investment representing 24.5% and 24.9% of
Tremont International Insurance Ltd. ("TIIL"), a Cayman Islands corporation,
formed in July 1996, was $61,238 (cost - $62,250) and $60,532 (cost - $62,250),
respectively. TIIL offers certain deferred variable annuities, variable life
insurance and other insurance contracts to customers not resident in the Cayman
Islands. For the periods ended December 31, 1997 and 1996, TBL's proportionate
share of operating income (losses) were $706 and $(1,718), respectively.

In July 1997, TBL formed with Mutual Risk Management, an international risk
management company ("MRM") and another party, and acquired a 40% interest in
Tremont MRM Services Limited ("TMRM"), a company incorporated under the laws of
Bermuda. TMRM provides product development, marketing and administrative
services to TIIL. At December 31, 1997, TBL's investment was $3,663 (cost
$4,800) and for the period ended December 31, 1997 its proportionate share of
operating losses was $1,137.

32
<PAGE>

Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

4. Investments in Joint Ventures (continued)

At December 31, 1997 and 1996, the Company has other joint venture interests
aggregating $24,044 (cost - $40,359) and $29,068 (cost - $5,150).

5. Other Investments

At December 31, 1997, the Company has options to purchase 8,000 shares of a
nonpublic company. This registered investment adviser specializes in 401(k)
investment allocation advise over the Internet. The options were granted at $10
per share and 50% have vested as of December 31, 1997. The remaining 50% vest in
equal installments at the end of each month between January 1, 1998 and December
31, 1998. The options have a five year term and have been valued at zero at
December 31, 1997.

At December 31, 1997, the Company owns a beneficial interest in 30,000 shares of
a nonpublic financial services company formed in 1996. Such shares were received
by the Company as a result of an employees participation as a board member of
such company. As a result of consulting services performed for this nonpublic
entity, TPI has received $56,152 and $42,235, respectively for the years ended
December 31, 1997 and 1996. At December 31, 1997, the shares of common stock
have been valued at zero.

At December 31, 1997, TBL owns warrants to purchase 87,500 shares of common
stock of an unaffiliated public corporation at $3.78 per share which expire
October 19, 1998, and 18,750 shares of common stock of the same unaffiliated
public corporation at $3.63 per share which expire October 30, 1998. Such
warrants have been valued at zero at December 31, 1997.

At December 31, 1997 and 1996, TBL's investment in American Master Fund Limited,
a Cayman Islands exempt Company, which was incorporated in July 1991, was
$51,420 (cost - $50,000) and $50,000 (cost - $50,000), respectively. The
principal activity of this Company is to operate as an investment fund to invest
primarily in offshore investment vehicles. The Fund's investment objective is to
achieve a high total rate of return by utilizing the expertise of a number of
investment managers, while preserving capital for its investors.

At December 31, 1997 and 1996, the Company had other nonpublic investments
aggregating $24,000 (cost - $36,000) and $120,000 (cost - $120,000),
respectively.
33

<PAGE>

Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

6. Accrued Expenses

Accrued expenses consist of the following:

December 31
1997 1996

Professional and consulting fees $ 741,105 $ 930,454
Compensation 200,000 150,000
Note payable 87,840 -
Employee benefit plan 46,566 -
Other 37,223 51,516
$1,112,734 $1,131,970

7. Shareholders' Equity

The Company's Class A Common Stock and Class B Common Stock are entitled to
equal rights and privileges, except that:

a. with respect to voting rights, each Class A Common Stock shareholder is
entitled to four votes for each share held of record, while the Class B
Common Stock shareholders are entitled to one vote for each share held of
record; and,

b. upon liquidation, dissolution or winding up of the Company, before any
distribution in respect of the Class B Common Stock, the shareholders of
the Class A Common Stock are entitled to receive an amount equal to the
aggregate liquidation preference of $0.40 per share. The shareholders of
the Class B Common Stock are then entitled to $0.40 per share, and the
remaining assets of the Company are then distributed in equal amounts per
share.

The Company also has authorized 350,000 shares of $1 par value voting Preferred
Stock; no shares of such Preferred Stock have been issued. In addition, the
Company has authorized 650,000 shares of Series A Preferred Stock (Redeemable
Preferred Stock) $1 par value. The Redeemable Preferred has no voting rights,
except to elect one member of the Company's Board of Directors and to vote, as a
separate class, on any merger, consolidation, or sale of the Company's assets.
At December 31, 1997, there is no Redeemable Preferred Stock issued and
outstanding.

No dividends may be declared or paid on either class of Common Stock as long as
there are accumulated and unpaid dividends on Series A Preferred Stock. The
Company has not declared or paid dividends on either Class of Common Stock
during the two year period ended December 31, 1997.

In July 1997, the Company entered into a series of transactions whereby MRM
indirectly acquired an equity interest in the Company. In June 1997, MGL
Investment Ltd. ("MGL"), a wholly-owned subsidiary of MRM, began a tender offer
to purchase 615,000 shares of outstanding Class B Common Stock, par value $0.01
at a price of $3.75 per share. This transaction was completed on July 7, 1997
for the entire 615,000 shares. In addition, pursuant to a certain stock purchase
agreement, the Company sold to MGL 202,365 shares of its Class B Common Stock,
par value $0.01 at a price of $3.75 per share. The transaction was completed for
net proceeds of $723,254, which is net of $35,615 of costs incurred. As a result
of these transactions, MRM indirectly owns, through MGL, Class B Common Stock
equal to 20% of the aggregate of the Company's outstanding Class A Common Stock
and Class B Common Stock.

<PAGE>
Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

8. Stock Options

During December 1994, an option to purchase 40,000 shares of Class B Common
Stock at $2.00 per share was granted to a director and an option to purchase
10,000 shares of Class B Common Stock at $2.00 per share was granted to an
employee. The director exercised his option and purchased 40,000 shares of Class
B Common Stock in December 1996. The employee's options, which are now fully
vested, will expire on the anniversary of the grant date in 1999. In the event
of the termination of the employee's employment, the Company will have the
option, exercisable no later than seven days after the date of termination, to
purchase all of the employee's stock and vested options. The purchase price for
each share of stock shall be equal to the best bid price on the date of such
termination, and the purchase price for each option shall be the greater of (i)
$2.00 or (ii) the amount of the best bid price for a share of stock on the date
of such termination less $2.00.

In April 1994, the Board of Directors granted to the president and chief
operating officer an option to purchase 275,000 shares of Class B Common Stock
at $1.75 per share, the then current fair market value of the stock. The options
are fully vested and will expire on the anniversary of the grant date in 2001.
In the event of the termination of the executive's employment, TPI will have the
option, exercisable no later than seven days after the date of termination, to
purchase all of the executive's stock and vested options. The purchase price of
each share of stock shall be equal to the best bid price on the date of such
termination, and the purchase price for each option shall be the greater of (i)
$1.75 or (ii) the amount of the best bid price for a share of stock on the date
of such termination less $1.75.

The Company has elected to follow Accounting principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related Interpretations
in accounting for its employee stock options because, as discussed below, the
alternative fair value accounting provided for under FASB Statement No. 123,
"Accounting for Stock-Based Compensation," requires use of option valuation
models that were not developed for use in valuing employee stock options. Under
APB 25, because the exercise price of the Company's employee stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized.

During May and June 1997, options to purchase 145,000 shares of Class B Common
Stock were granted to the directors and certain executive employees at $3.75 per
share. The options will vest and become exercisable on the following schedule:
25 percent on the date of the agreement, 25 percent on the first anniversary of
the execution of the agreement and 50 percent on the second anniversary of the
agreement. In the event of the termination of the directors or employees, the
Company will have the option, exercisable no later than seven days after the
date of termination, to purchase all of the directors or employees shares and
vested options. The purchase price for each share of stock shall be equal to the
best bid price on the date of such termination, and the purchase price for each
option shall be the greater of (i) $3.75, or (ii) the amount of the best bid
price for a share of stock on the date of such termination less $3.75. During
1997, 13,334 of such options lapsed due to the termination of an employee. No
options were granted during 1996.

Pro forma information regarding net income and earnings per share is required by
Statement 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions for 1997;
risk-free interest rate of 6.62%; dividend yield of 0%; volatility factor of the
expected market price of the Company's common stock of .574, and a
weighted-average expected life of the options of 5 years.

35
<PAGE>

Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

8. Stock Options (continued)

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information for 1997 follows:

Pro forma net income $640,848

Pro forma earnings per share
Basic $ 0.16
Diluted $ 0.16

A summary of the Company's stock option activity and related information for the
years ended December 31 follows:
<TABLE>
<S> <C> <C>
1997 1996
Weighted-Average Weighted-Average
Options Exercise Price Options Exercise Price

Outstanding - beginning of year 285,000 $1.76 325,000 $1.79
Granted 145,000 3.75 -
Exercised - (40,000 2.00
Lapsed (13,334) 3.75 -

Outstanding - end of year 416,666 $2.39 285,000 $1.76

Exercisable at end of year 322,916 $1.99 235,000 $1.76

Weighted-average fair value of
options granted during the year $1.71 -
</TABLE>
Exercise prices for options outstanding as of December 31, 1997 ranged from
$1.75 to $3.75. The weighted-average remaining contractual life of those options
is 3.6 years.

9. Other Income, Net
1997 1996

Interest income $ 24,414 $ 14,080
Realized gain/(loss) from other investments (10,580) 130,874
$ 13,834 $144,954

<PAGE>

Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

10. Income Taxes

The provision for income taxes is summarized as follows:

1997 1996
Current:
Federal $157,975 $ -
State 53,895 2,442
211,870 2,442
Deferred:
Federal 128,702 194,100
State 9,298 -
Total tax expense $349,870 $196,542

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and deferred tax assets as of December
31, 1997 and 1996 are as follows:

1997 1996
Deferred tax liabilities:
Tax over book depreciation $ 23,500 $ 19,200
Unrealized appreciation in limited
partnerships 9,600 8,500
Undistributed earnings of foreign
subsidiary 306,700 208,000
Total deferred tax liabilities 339,800 235,700

Deferred tax assets:
Bad debt reserves 4,000 4,000
Organization costs 3,700 5,100
Net operating loss carryforward - 32,500
Total deferred tax assets 7,700 41,600
Net deferred tax liability $332,100 $194,100

The income tax provision gives effect to permanent differences between financial
and taxable income, resulting in a lower effective tax rate than the statutory
income tax rate. The reconciliation of income tax attributable to income before
income taxes computed at the U.S. federal statutory tax rates to income tax
expense is:

1997 1996
Amount Percent Amount Percent

Statutory federal income tax rate $356,930 34.0 $245,510 34.0
State taxes, net of federal benefit 41,707 4.0 1,612 .2
Travel and entertainment - nondeductible 9,556 0.9 7,435 1.0
Permanently reinvested foreign income (68,000) (6.6) - -
Change in valuation allowance - - (62,100) (8.6)
Other 9,677 1.0 4,085 .6
$349,870 33.3 $196,542 27.2

<PAGE>
Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

10. Income Taxes (continued)

In 1997, the Company made estimated federal income tax payments of $160,000. In
1997 and 1996 the Company paid $53,727 and $1,742, respectively, in state
income, minimum and capital taxes.

Deferred income taxes were not provided on certain undistributed foreign
earnings ($200,000 at December 31, 1997) of TBL because such undistributed
earnings are expected to be reinvested indefinitely overseas. If these amounts
were not considered permanently reinvested, additional deferred taxes of
approximately $68,000 would have been provided.

The valuation allowance was reduced to zero at December 31, 1996 from $62,100 at
December 31, 1995 primarily as a result of the utilization of net operating loss
carryforwards in 1996. At December 31, 1997, the Company had no net operating
loss carryforwards and at December 31, 1996 had a net operating loss
carryforward of approximately $60,000.

11. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per
share:

1997 1996

Numerator:
Net income - numerator for basic and
dilutive earnings per share (income
available to common stockholders) $ 699,924 $ 525,545

Denominator:
Denominator for basic earnings per
share - weighted average shares 3,985,640 3,847,575

Effect of dilutive securities:
Employee stock options 136,928 116,534

Denominator for diluted earnings
per share - adjusted weighted
average shares and assumed conversions 4,122,568 3,964,109

Basic earnings per share $ 0.18 $ 0.14

Diluted earnings per share $ 0.17 $ 0.13

12. Commitments

On December 10, 1997, the Company entered into a amendment to the employment
contract with the Chairman of the Board of Directors that expires on December
31, 1998. Under the terms of this agreement, the Chairman is entitled to receive
a minimum annual base salary of $373,000. In addition, the Chairman could
receive incentive compensation, to be determined by the Board of Directors, at
the end of each fiscal year.
38
<PAGE>
Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

12. Commitments (continued)

On December 10, 1997, the Company entered into an amendment to the employment
contract with the President and Chief Operating Officer of the Company that
expires on December 31, 1998. Under the terms of such amended agreement, the
executive is entitled to receive a minimum annual bases salary of $335,700. In
addition, the executive will receive incentive compensation equal to an amount
pursuant to a predetermined percentage of the incentive compensation paid to the
Company's Chairman of the Board of Directors.

Effective September 1997, the Company moved to a larger facility and entered
into a lease agreement for new executive offices. The Company was completely
released from its obligation under the old lease (which required monthly
payments of approximately $8,450). The lease for the new facility expires August
31, 2002 and requires monthly payments of approximately $17,100.

TBL's lease for corporate offices expired in February 1997, and was renewed
through February 2000. Such lease requires monthly payments of approximately
$5,500.

Rent expense for the years ended December 31, 1997 and 1996 was $218,096 and
$173,457, respectively. Future minimum obligations under noncancelable operating
leases at December 31, 1997 were as follows: 1998-$319,730, 1999-$298,940,
2000-$234,325 and 2001-$222,293.

13. Employee Benefit Plan

The Company has a defined contribution plan, the Tremont Advisers 401(k) Savings
Plan (the "Plan"), which has been designed to provide retirement benefits for
the Company's employees. All employees who have attained the age of eighteen and
who have completed one month of service with the Company are eligible to
participate in the Plan. An employee may elect to defer up to 15% of his or her
compensation per year to contribute to the Plan and may allocate such
contributions among eight investment mutual funds and the Class A or Class B
Common Stock of the Company. There is no provision for employer matching
contributions.

The Company may contribute a sum to be determined each plan year by employer
resolution. The amount allocated to each participant is generally governed by
each employee's compensation. For the years ended December 31, 1997 and December
31, 1996, the Company contributed $46,566 and $31,728, respectively, to the
Plan.

14. Impact of Year 2000 (Unaudited)

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to determine the applicable year. Any computer programs
that have time sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculation causing significant disruptions of operations, including, among
other things, a temporary inability to process transactions or engage in similar
normal business activities. Based on a recent assessment, the Company determined
its internal computer systems are currently enabled for year 2000 entries. The
cost of such assessment was immaterial to the Company. However, the Company
could be adversely affected if the computer systems used by the Company's
service providers do not properly process and calculate date-related information
and data from and after January 1, 2000. The Company is currently in
communications with these service providers to determine if there is significant
cause for concern.

39
<PAGE>
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.

Not Applicable

<PAGE>

PART III

Item 9. Directors and Executive Officers of the Registrant.

The present Directors and Executive Officers of the Company are set forth below:

Name Age Position

Sandra L. Manzke 49 Chairman of the Board of Directors
and Chief Executive Officer
Robert I. Schulman 52 Director, President and Chief Operating Officer
John L. Keeley, Jr. 57 Director
Jimmy L. Thomas 56 Director
Alan A. Rhein 55 Director
Suzanne S. Hammond 51 Secretary and Treasurer
Stephen T. Clayton 37 Chief Financial Officer
Bruce D. Ruehl 37 Senior Vice President-Director of Manager
Research

All directors of the Company hold office until the next annual meeting
of stockholders of the Company and until their successors are duly elected and
qualified, or until their earlier death, resignation or removal. Executive
officers are elected by the Board of Directors on an annual basis and serve at
the discretion of the Board of Directors. Sandra L. Manzke and Robert I.
Schulman are the only officers subject to the terms of an employment agreement.
There are no family relationships among any of the directors or executive
officers of the Company.

Sandra L. Manzke is the Company's Chairman of the Board and Chief
Executive Officer. Prior to May 31, 1994, she had been President and a director
of the Company since September 1987 when the Company acquired TPI. Ms. Manzke
was one of the principal founders of TPI in 1984 and has been its Chairman and
President since its inception. Ms. Manzke also serves as a director of TBL.
Ms. Manzke has and continues to be principally responsible for the operation
and client relationships of the Company.

Robert I. Schulman became the Company's President and Chief Operating
Officer as of May 31, 1994. He has been a Director of the Company since October
1993. Mr. Schulman also became President, Chief Executive Officer and a
Director of Tremont Securities, Inc. as of June 1994. Prior to May 31, 1994, he
was Executive Vice President, Director of Products & Services at Smith Barney
Shearson. He began his career in 1969 as an Account Executive trainee with E.F
Hutton & Co., Inc. He then became assistant branch manager of the Columbus
Circle branch of E.F. Hutton & Co., Inc. in New York City. Subsequently, Mr.
Schulman served as Vice President and Regional Options and Futures Director of
the Atlantic Region, Senior Vice President and National Director of Leveraged
Products, and as Executive Vice President of all product sales at E.F. Hutton &
Co., Inc. He has served on the NYSE Derivative Product Committee, CBOE Retail
Advisory Council, NASD Options and Derivative Product Committee, Board of the
New York Futures Exchange, and the NYSE Option Specialist Allocation Committee.
Mr. Schulman is a member of the Company's Audit Committee. He also serves on
the boards of directors of two non-public companies which are parties to
agreements with the Company, the Lockwood Financial Group, Ltd., and 401(K)
Forum, Inc.

<PAGE>

John L. Keeley, Jr. became a Director of the Company in January 1994.
Mr. Keeley is President, Treasurer and a Director of Keeley Investment
Corporation, a registered broker-dealer. He has held these positions since
1977. He is also President, Treasurer and a Director of Keeley Asset Management
Corporation, a registered investment advisor, Keeley Small Cap Value Fund, Inc.,
an open-end mutual fund, various investment partnerships and the John L. Keeley,
Jr. Foundation. Mr. Keeley also became a Director of the Marquette National
Corporation in 1994. Mr. Keeley is a member of the Company's Audit Committee.

Alan A. Rhein, became a Director of the Company in June 1997. Mr.
Rhein is a founding principal of Lockwood Financial Group Ltd., an investment
management consulting firm, and is President and Chief Executive Officer of
Lockwood Financial Services, the broker-dealer division of Lockwood Financial
Group Ltd. He started his financial services career as an account executive in
1965 with E.F. Hutton & Co. He spent the next 23 years with that firm in a
variety of positions from Account Executive, Branch Manager to Executive Vice
President in charge of the Atlantic Region. In 1986, Mr. Rhein was elected to
the Board of Directors of E.F. Hutton & Co. After the Shearson Lehman takeover
of E.F. Hutton, Mr. Rhein was promoted to Group President. In 1993, Mr. Rhein
was recruited by Prudential Securities to serve as Executive Vice President in
charge of their entire Retail Branch system. Mr. Rhein is a member of the
Company's Audit Committee.

Jimmy L. Thomas became a Director of the Company in November 1994. Mr.
Thomas has been Senior Vice President - Financial Services and Treasurer of
Gannett Co., Inc. since December 1991. Prior to 1991, Mr. Thomas was Vice
President - Financial Services and Treasurer of Gannett Co., Inc. He is also a
Director of Broadway/Brown Development Co. Mr. Thomas serves on the Investment
Advisory Board of the Newspaper Association of America and the Regional Advisory
Boards of Marine Midland Bank and Arkwright Boston Manufacturers Mutual
Insurance Company. Mr. Thomas is a member of the Company's Audit Committee.

Suzanne S. Hammond has been the Secretary and Treasurer of the Company
since August 1991. Ms. Hammond became a consultant to TPI in April 1989, and
prior to that time, she served for six years as a Senior Analyst with Rogers,
Casey & Associates, Inc., a firm engaged in the business of pension consulting,
where she was responsible for monitoring the New York City Teachers' Retirement
System Variable Annuity Fund A and the related South Africa divestiture
proceedings. Ms. Hammond also currently serves as a Vice President, Treasurer
and Secretary of TPI, and as a director of TBL.

Stephen T. Clayton joined the Company on January 10, 1994 and was
appointed Chief Financial Officer on January 19, 1994. Mr. Clayton also became
the Financial and Operations Principal and a Director of TSI in June 1994. Mr.
Clayton was a Senior Manager with Ernst & Young LLP, an independent public
accounting firm, from October 1989 until he joined the Company. Prior to
becoming a Senior Manager, he worked for six years at Ernst & Young LLP.

Bruce D. Ruehl joined the Company in August 1993 and was appointed
Senior Vice President-Director of Manager Research of TPI in 1994. Prior to
joining TPI, Mr. Ruehl was a Vice President and Principal at Reliance
Properties, Inc. where he advised private real estate partnerships investing in
bank and RTC-owned properties. From 1985 to 1989, Mr. Ruehl was at Brown
Brothers Harriman & Co. in the institutional management area. From 1989 to 1990,
he was with Shearson Lehman's Consulting Services Department as Vice President
and National Product Manager overseeing proprietary manager investment
activities and new products.

<PAGE>

Item 10. Executive Compensation.

The following table sets forth the annual and long-term compensation
for the Company's Chief Executive Officer and other executive officers whose
total cash compensation exceeded $100,000 for services rendered to the Company
and its subsidiaries for the fiscal year ended December 31, 1997 (the "Named
Officers").

<PAGE>

<TABLE>

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Summary Compensation Table
Annual Compensation
- ---------------------------------------------------------------------------------------------------------------------
Long Term Compensation

Annual Compensation
------------------------------------------------
Awards Payouts
- ---------------------------------------------------------------------------------------------------------------------
Restricted Securities LTIP All other
Name and Principal Other Stock Underlying Payout Compen-
Position Salary Bonus Annual Award(s) Options/ ($) sation ($)
Year ($)(a) ($)(b) Compen- ($) SARs (#)
sation
($)
- ---------------------------------------------------------------------------------------------------------------------
Sandra L. Manzke, 1997 362,000 135,000 - - 35,000 - -
Chief Executive Officer
--------------------------------------------------------------------------------------------
1996 262,500 325,000 - - - - -
--------------------------------------------------------------------------------------------
1995 250,000 196,500 - - - - -
- ---------------------------------------------------------------------------------------------------------------------
Robert I. Schulman, 1997 326,250 121,500 - - 25,000 - -
Chief Operating
Officer
--------------------------------------------------------------------------------------------
1996 236,250 292,500 - - - - -
--------------------------------------------------------------------------------------------
1995 225,000 147,375 - - - - -
- ---------------------------------------------------------------------------------------------------------------------
Bruce D. Ruehl, Senior 1997 140,000 100,000 - - 10,000 - -
Vice President and
Director of Manager
Research for TPI
--------------------------------------------------------------------------------------------
1996 85,000 55,000 - - - - -
--------------------------------------------------------------------------------------------
1995 75,538 10,000 - - - - -
- ---------------------------------------------------------------------------------------------------------------------
Stephen T. Clayton 1997 120,000 50,000 - - 10,000 - -
Chief Financial Officer
--------------------------------------------------------------------------------------------
1996 110,000 32,500 - - - - -
--------------------------------------------------------------------------------------------
1995 105,000 13,850 - - - - -
- ---------------------------------------------------------------------------------------------------------------------
Suzanne S. Hammond, 1997 100,417 14,000 - - - - -
Secretary and
Treasurer
--------------------------------------------------------------------------------------------
1996 85,000 7,000 - - - - -
--------------------------------------------------------------------------------------------
1995 82,500 5,000 - - - - -
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) On December 10, 1997, the Company entered into an amendment to Ms. Manzke's
employment agreement dated September 15, 1995. Under the terms of the amended
agreement which expires on December 31, 1998, Ms. Manzke is entitled to receive
a minimum annual base salary of $373,000. In addition, Ms. Manzke may receive
incentive compensation to be determined by the Board of Directors. On December
10, 1997, the Company entered into an amendment to Mr. Schulman's employment
agreement dated April 22, 1994. Under the terms of this amended agreement which
expires on December 31, 1998, Mr. Schulman is entitled to receive minimum annual
base compensation of $335,700. In addition, Mr. Schulman must receive incentive
compensation equal 90% of the incentive compensation paid to Ms. Manzke in any
year.

(b) A portion of the bonuses for Ms. Manzke and Mr. Schulman which accrued in
1996 were actually paid in 1997. These amounts were $75,000 and $67,500,
respectively.

<PAGE>

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

Presented below is information with respect to unexercised stock options to
purchase the Company's Class B Common Stock held by each Named Officer as of
December 31, 1997.
<TABLE>
<S> <C> <C> <C> <C>
(Number of
Securities Value of
Underlying Unexercised In-
Unexercised the-Money Options
Options at at December 31,
December 31, 1997($)
1997 (#)

Shares Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized Unexercisable Unexercisable
- ------------------------------------------------------------------------------------------------
Sandra L. Manzke - - 8,750/26,250 $8,750/$26,250

Robert I. Schulman - - 281,250/18,750 $831,250/$18,750

Bruce D. Ruehl - - 2,500/7,500 $2,500/$7,500

Stephen T. Clayton - - 12,500/7,500 $30,000/$7,500

Suzanne S. Hammond - - - -

</TABLE>

Directors' Compensation

Directors of the Company who are salaried employees of the Company do
not receive any additional compensation for serving as a director. Non-employee
directors of the Company receive $2,500 for each Board of Directors meeting
attended and $1,250 for each telephonic Board Meeting attended.

Employment Contracts, Termination of Employment and Change in Control
Arrangements.

The Company and Sandra L. Manzke, the Company's Chairman of the Board
and Chief Executive Officer, entered into an amended employment agreement
pursuant to which Ms. Manzke is entitled to a minimum base salary of $373,000
per annum. She is also entitled to a bonus as determined by the Board of
Directors. Ms. Manzke's employment may be terminated due to illness, disability
or other incapacity such that she is unable to perform her duties for a period
of ninety (90) consecutive days. If her employment is so terminated, she will be
entitled to receive her base salary and accrued bonus until December 31, 1998.
In the event of her death, her right to compensation will cease.

In the event of the termination of Ms. Manzke's employment for any
reason, including death, the Company shall have the option, provided it is
exercised within ninety (90) days, to reacquire all of Ms. Manzke's shares of
capital stock in the Company for a price per share equal to the market value on
the date of such termination. Ms. Manzke has agreed that she will not sell or
dispose of her stock in the Company without first offering to sell the stock to
the Company at a price per share equal to its then market value.

Robert I. Schulman, the President and Chief Operating Officer of the
Company, entered into an amendment, as of December 10, 1997, to his employment
agreement. The amended agreement

<PAGE>

expires on December 31, 1998 and will be automatically renewed from year to year
unless either party terminates it in a timely manner. Mr. Schulman is entitled
to a minimum base salary of $335,700 plus a bonus as the Board of Directors may
determine; provided, however, that in no event will Mr. Schulman's base salary
in any year be less than 90% of the base salary payable to Ms. Manzke for such
year and in no event will Mr. Schulman's bonus be less than 90% of the incentive
compensation payable to Ms. Manzke in such year. If Mr. Schulman is disabled or
his employment is terminated by the Company without cause or by him with cause,
then he will be entitled to receive his base salary and accrued bonus until
December 31, 1998. In the event his employment is terminated by the Company with
cause or by him without cause, or in the event of his death, his right to
compensation will cease upon the date of termination or death.

Upon executing his employment agreement in 1994, Mr. Schulman was
granted options to purchase 275,000 shares of the Company's Class B Common Stock
at an exercise price of $1.75 per share, the then current fair market value of
the Class B Common Stock. The options are fully vested and will expire on the
anniversary of the grant date in 2001. In the event Mr. Schulman's employment is
terminated for any reason, including the expiration of the employment agreement,
any unvested options will lapse; vested but unexercised options will remain
outstanding and exercisable under the original terms and conditions, subject to
an option in favor of TPI to purchase all of Mr. Schulman's stock no later than
seven days after the date of termination for a per share price equal to the best
bid price on the date of termination and the purchase price for each option
shall be the greater of (i) $1.75 or (ii) the amount of the best bid price for a
share of Common Stock on the date of termination less $1.75. Mr. Schulman has
agreed that he will not dispose of the Class B Common Stock he acquires pursuant
to the options or the unexercised options without first offering them to TPI for
the per share price applicable in the case of the termination of his employment.

Class B Options

During May and June 1997, options to purchase 20,000 shares and 125,000
shares, respectively, were granted to the directors and certain executive
employees at $3.75 per share. At September 30, 1997, 13,334 options lapsed due
to an employee's termination of employment. The remaining options have vested or
will vest and become exercisable on the following schedule: 25 percent on the
date of the grant, 25 percent on the first anniversary of the grant and 50
percent on the second anniversary of the grant. In the event a director or
employee ceases to serve as such, the Company will have the option, exercisable
no later than seven days after the date of termination of the relationship, to
purchase all of the director's or employee's vested options. The purchase price
for each share of Class B Common Stock shall be equal to the best bid price on
the date of such termination, and the purchase price for each option shall be
the greater of (i) $3.75, or (ii) the amount of the best bid price for a share
of Class B Common Stock on the date of such termination less $3.75.

In December 1994, options to purchase 10,000 shares of Class B Common
Stock were granted to an officer. These options are fully vested and will expire
on December 15, 1999, the fifth anniversary of the date of grant. In the event
the officer's employment is terminated, the Company will have the option,
exercisable no later than seven days after the date of termination, to purchase
all of the officer's stock and vested options. The purchase price for each share
of Class B Common Stock shall be equal to the best bid price on the date of such
termination, and the purchase price for each option shall be the greater of (i)
$2.00 or (ii) the amount of the best bid price for a share of Class B Common
Stock on the date of such termination less $2.00.

<PAGE>

As of December 31, 1997, options to purchase 275,000 shares, 10,000
shares and 37,916 shares of Class B Common Stock for $1.75, $2.00 and $3.75,
respectively, were exercisable by the Company's directors and executives.

Indemnification for Certain Liabilities

The By-Laws of the Company provide that the Company may indemnify its
directors and officers to the fullest extent permitted by the laws of the
Delaware General Corporation Law against all expenses, liability and loss
(including attorneys' fees, judgment, fines and amounts paid in settlement)
incurred by them in any action, suit or proceeding arising out of certain of
their actions or omissions in their capacities as directors or officers. Article
Seven of the Company's Restated Certificate of Incorporation provides that, with
certain exceptions, no director of the Company may be liable to the Company for
monetary damages as a result of a breach of his fiduciary duties as a director.
The Company has acquired directors' and officers' liability insurance for its
directors and officers.

The Delaware Supreme Court has held the directors' duty of care to a
corporation and its shareholders requires the exercise of an informed business
judgment. Having become informed of all material information reasonably
available to them, directors must act with requisite care in the discharge of
their duties. The Delaware General Corporation Law permits a corporation through
its certificate of incorporation to exonerate its directors from personal
liability to the corporation or its shareholders for monetary damages for a
breach of their fiduciary duty of care as a director, with certain exceptions.
The exceptions include a breach of the director's duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, improper declaration of dividends and transactions from which
the director derived an improper personal benefit. As noted above, the Company's
Restated Certificate of Incorporation exonerates its directors, acting in such
capacity, from monetary liability to the extent permitted by this statutory
provision. This limitation of liability provision does not eliminate a
shareholder's right to seek non-monetary, equitable remedies such as an
injunction or rescission in order to redress an action taken by directors.
However, as a practical matter, equitable remedies may not be available in all
situations, and there may be instances in which no effective remedy is
available.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

The following table contains information relating to the beneficial
ownership of Common Stock by members of the Board of Directors, and by such
members and by the Company's officers as a group, as well as certain other
beneficial owners as of March 6, 1998. Information as to the number of shares of
Common Stock owned and the nature of ownership has been provided by these
individuals and is not within the direct knowledge of the Company. Unless
otherwise indicated, the named individuals possess sole voting and investment
power with respect to the shares listed. The following information has been
furnished to the Company or is based on Schedules 13D, or any amendments
thereto, received by the Company as filed with the Commission.

Name and Address of Number of
Beneficial Owner Shares Owned % of
Class A Class B Class A Class B

Sandra L. Manzke (1) 199,762 392,826 16% 14%
555 Theodore Fremd Avenue
Rye, New York

Robert I. Schulman(2) 1,964 353,501 * 11
555 Theodore Fremd Avenue
Rye, New York

John L. Keeley, Jr. (3) 81,590 331,546 6 12
401 South LaSalle Street
Chicago, Illinois

Alan Rhein (4) - 6,250 - *
405 Park Avenue
New York, New York

Jimmy L. Thomas (5) - 42,500 - 2
1100 Wilson Boulevard
Arlington, VA 22234

Suzanne S. Hammond (6) - 23,832 - *
555 Theodore Fremd Avenue
Rye, New York

Stephen T. Clayton (7) 759 28,667 * 1
555 Theodore Fremd Avenue
Rye, New York

Bruce D. Ruehl (8) 201 98,870 * 4
555 Theodore Fremd Avenue
Rye, New York

Mario J. Gabelli (9) 569,039 196,695 44 7
Gabelli Funds, Inc.
555 Theodore Fremd Avenue
Rye, New York

Lynch Corporation (10) - 116,189 - 4
8 Sound Shore Drive
Greenwich, CT

MGL Investments Ltd. (11) - 817,365 - 29
One Logan Square
Suite 1400
Philadelphia, PA

Directors and Officers
as a group: 284,276 1,277,992 22 44

</TABLE>
* Less than one percent.

(1) Includes 10,000 shares of Class A Common Stock held by the Tremont Advisers,
Inc., 401(k) Savings Plan for the benefit of Ms. Manzke and 16,162 shares of
Class A Common Stock which are registered in the names of Ms. Manzke's children,
over which she possesses sole voting power and investment power with respect to
such shares. The 392,826 shares of Class B Common Stock include 43,425 shares
held by the Tremont Advisers, Inc. 401(k) Savings Plan for the benefit of
Ms. Manzke and 8,750 shares represent certain stock options granted to Ms.
Manzke by the Company that have vested.

<PAGE>
(2) The shares of Class A Common Stock are held by the Tremont Advisers, Inc.
401(k) Savings Plan for the benefit of Mr. Schulman. Of the 353,501 shares of
Class B Common Stock, 281,250 shares represent certain stock options granted to
Mr. Schulman by the Company that have vested and 8,454 shares are held by the
Tremont Advisers, inc. 401(k) Savings Plan for the benefit of Mr. Schulman.

(3) The 81,590 shares of Class A Common Stock are beneficially owned by Mr.
Keeley. Of the 331,546 shares of Class B Common Stock reported, 262,500 shares
reported are beneficially owned by Mr. Keeley and include 20,000 shares held in
the name of his wife, 35,000 shares held by the KIC Profit Sharing Plan & Trust
for the benefit of Mr. Keeley for which Mr. Keeley is Trustee, and 35,000 shares
held by the KIC Pension Plan & Trust for the benefit of Ms. Keeley and for which
Mr. Keeley is Trustee and 2,500 shares represent certain stock options granted
to Mr. Keeley by the Company that have vested. Of the remaining 69,046 shares of
Class B Common Stock, 65,712 shares are owned by Kamco Limited Partnership No. 1
("KLP") and 3,334 shares held by JGJ Partnership of which Mr. Keeley is a
partner. Mr. Keeley is the sole general partner of KLP, an investment
partnership organized under the laws of Illinois. Mr. Keeley is deemed to have a
beneficial ownership of securities owned beneficially by each of the foregoing
entities.

(4) The 6,250 shares of Class B Common Stock represent certain stock options
granted to Mr. Rhein by the Company that have vested.

(5) Of the 42,500 shares of Class B Common Stock beneficially owned by Mr.
Thomas, 2,500 shares represent certain stock options granted to Mr. Thomas by
the Company that have vested.

(6) Of the 23,832 shares of Class B Common Stock beneficially owned by Ms.
Hammond, 1,500 shares are held by the Tremont Advisers, Inc. 401(k) Savings Plan
for the benefit of Ms. Hammond.

(7) The 759 shares of Class A Common Stock are held by the Tremont Advisers,
Inc. 401(k) Savings Plan for the benefit of Mr. Clayton. Of the 28,667 shares of
Class B Common Stock, 12,500 shares represent certain stock options granted to
Mr. Clayton by the Company that have vested, 3,666 shares are held by the
Tremont Advisers, Inc. 401(k) Savings Plan for the benefit of Mr. Clayton and
3,500 shares are held in the name of his wife, for which Mr. Clayton
specifically disclaims beneficial ownership.

(8) The 201 shares of Class A Common Stock are held by the Tremont Advisers,
Inc. 401(k) Savings Plan for the benefit of Mr. Ruehl. Of the 98,870 shares of
Class B Common Stock, 1,370 shares are held by the Tremont Advisers, Inc. 401(k)
Savings Plan for the benefit of Mr. Ruehl and 2,500 shares represent certain
stock options granted to Mr. Ruehl by the Company that have vested.

(9) Includes 325,385 shares of Class A Common Stock and 2,267 shares of Class B
Common Stock owned by family trusts or partnerships over which Mr. Gabelli has
sole voting power and investment power. Does not include shares listed elsewhere
in this table which are held by Lynch Corporation ("Lynch"), of which Mr.
Gabelli specifically disclaims beneficial ownership. Mr. Gabelli is the
principal shareholder, as well as the Chairman of the Board and Chief Executive
Officer, of Gabelli Funds, Inc. ("GFI"), a registered investment adviser under
the Investment Advisers Act of 1940, as amended and the ultimate parent company
for a variety of operating companies engaged in various aspects of the
securities business, including GAMCO Investors, Inc. ("GAMCO"), a wholly-owned
subsidiary of GFI and a registered investment adviser; Gabelli Securities, Inc.
("GSI"), a majority-owned subsidiary of GFI; and Gabelli & Company, Inc.
("Gabelli & Company"), a wholly-owned subsidiary of GSI and a registered
broker-dealer. Mr. Gabelli is also Chairman of the Board and Chief Executive
Officer of GAMCO and a registered representative of Gabelli & Company. GFI,
GAMCO, GSI and Gabelli & Company are herein referred to as "affiliates" of Mr.
Gabelli. Acting in these capacities, Mr. Gabelli has the authority for making
voting and investment decisions on behalf of the affiliates and, therefore, may
be deemed to be the beneficial owner of shares of the Company owned by or held
in accounts of such affiliates. Of the remaining 243,654 shares of Class A
Common Stock owned by Mr. Gabelli and affiliates of Gabelli, 42,000 shares are
held by Gabelli Securities, Inc. and 105,500 shares are held by GFI, each of
which has the sole voting power and sole investment power for their clients with
respect to these securities.

(10) Mr. Gabelli is Chairman of the Board and Chief Executive Officer of Lynch,
and he and his affiliates and their clients are principal shareholders of Lynch.
Mr. Gabelli may be deemed to be a beneficial owner of the shares of the Company
owned by Lynch by virtue of his and certain affiliated parties' beneficial
ownership of 336,250 shares, or 24.4%, of the common stock of Lynch. Mr.
Gabelli, however, specifically disclaims beneficial ownership of all of the
shares of the Company's Common Stock held by Lynch.

(11) In July 1997, Mutual Risk Management ("MRM"), an international risk
management company, indirectly acquired an equity interest in the Company. In
July 1997, MGL Investments Ltd. ("MGL"), a wholly-owned subsidiary of MRM,
purchased 615,000 shares of outstanding Class B Common Stock at a price of $3.75
per share pursuant to a tender offer. In addition, the Company simultaneously
sold MGL 202,365 shares of Class B Common Stock at a price of $3.75 per share.
As a result of these transactions, MRM indirectly owns, through MGL, Class B
Common Stock equal to 20% of the aggregate of the Company's outstanding Class A
Common Stock and Class B Common Stock.

<PAGE>

Item 12. Certain Relationships and Related Transactions.

Class B Common Stock Sale

In July 1997, MRM indirectly acquired an equity interest in the
Company. In June 1997, MGL Investment Ltd. ("MGL"), a wholly-owned subsidiary of
MRM, began a tender offer to purchase 615,000 shares of outstanding Class B
Common Stock, par value $0.01 at a price of $3.75 per share. This transaction
was completed on July 7, 1997 for the entire 615,000 shares. In addition, the
Company sold to MGL 202,365 shares of Class B Common Stock at a price of $3.75
per share. As a result of these transactions, MRM indirectly owns, through MGL,
Class B Common Stock equal to 20% of the aggregate of the Company's outstanding
Class A Common Stock and Class B Common Stock.

Class B Options

During May and June 1997, options to purchase 20,000 shares and 145,000
shares, respectively, of Class B Common Stock were granted to the directors and
certain executive employees at $3.75 per share. At September 30, 1997, 13,334
options lapsed due to an employee's termination of employment. The remaining
options have vested or will vest and become exercisable on the following
schedule: 25 percent on the date of the grant, 25 percent on the first
anniversary of the grant and 50 percent on the second anniversary of the grant.
In the event a director or employee ceases to serve as such, the Company will
have the option, exercisable no later than seven days after the date of
termination of the relationship, to purchase all of the director's or employee's
vested options. The purchase price for each share of Class B Common Stock shall
be equal to the best bid price on the date of such termination, and the purchase
price for each option shall be the greater of (i) $3.75, or (ii) the amount of
the best bid price for a share of Class B Common Stock on the date of such
termination less $3.75.

In December 1994, an option to purchase 40,000 shares of Class B Common
Stock was granted to Jimmy L. Thomas, a director of the Company. In December
1996, Mr. Thomas exercised the option and purchased 40,000 shares of the
Company's Class B Common Stock at $2.00 per share, the then fair market value.

Joint Venture Investments

Tremont International Insurance, Ltd. ("TIIL"), is a Cayman Island
corporation that offers certain deferred variable annuities, variable life
insurance and other insurance contracts to customers who are not resident in the
Cayman Islands. TIIL had been a joint venture between TBL and AngloDutch.
Effective July 1, 1997, Mutual Risk Management ("MRM"), an international risk
management company, purchased 51% of TIIL's issued share capital.
Simultaneously, TBL sold 0.4% of TIIL's issued share capital to Anglo-Dutch. As
a result of these transactions, TBL's interest has been reduced to 24.5% of
TIIL's issued share capital. TBL, MRM and Anglo-Dutch formed Tremont MRM
Services Limited ("TMRM"), a Bermuda company to provide product development,
marketing and administrative services to TIIL. TBL owns a 40% interest in TMRM.

<PAGE>

Partnership Contributions

TPI, in its capacity as a co-general partner of the Meridian Horizon
Fund, L.P., made an additional contribution of $135,000 to the partnership's
capital, effective January 1, 1997.

TPI is a limited, as well as general, partner of The Broad Market Fund,
L.P. Upon becoming a limited partner, TPI made a contribution of $550,000 to the
partnership's capital effective August 1, 1997. On November 30, 1997, TPI, as a
limited partner, received a distribution of $550,000 from the partnership.

Selection of Investment Advisers

As part of its services rendered, and in its capacity as investment
consultant to various clients, the Company monitors and evaluates the
performance of investment managers for clients based on a criteria of matching
the objectives of the clients with the investment characteristics of an
investment manager. Based on such monitoring and evaluation, the Company will
either recommend the selection, continuation or termination of an investment
manager to the Company's clients. The final decision is made by the client. In
certain instances, clients have requested that affiliates of the Company act as
investment manager. GAMCO, an affiliate of Mario J. Gabelli, was selected to be
one of the investment managers, along with others, to one of the Company's
consulting clients upon the recommendation of TPI or TBL. Such recommendation
was made based on an evaluation of all relevant factors by TPI or TBL. In
addition, TBL was retained as the investment advisor of the Global Advisors
Portfolio, N.V. and an investment by this fund has been made in Gabelli
International II, a fund operated by an affiliate of the Company. In accordance
with the terms of this fund, no affiliate of TPI or TBL can manage more than 15%
of the assets of this fund. In accordance with the investment management
agreement dated February 22, 1993 by and between the Global Advisors Portfolio
N.V. and TBL, TBL was terminated as of the close of business on November 15,
1996. TBL does not anticipate receiving further fees from this fund.

In the future, the Company may enter into transactions with its
directors, officers, stockholders of 5% of its Common Stock or affiliates of
Lynch or Mr. Gabelli, but will do so only if the terms of such transactions are
no less favorable to the Company than could be obtained by the Company from
unaffiliated third parties.

Payment from Officer

Ms. Manzke will pay $200,000 to the Company. Ms. Manzke has advised the
Company that she had provided consulting services for a fee to a principal of an
investment fund for which a subsidiary of the Company currently performs
services. Ms. Manzke believes that her services were not within the scope either
of her employment or the Company's business activities, but has advised the
Company that she will no longer render individual or independent services to
such principal.

<PAGE>

Item 13. Exhibits, List and Reports on Form 8-K.

(a) Documents filed as part of this report:

1. The following consolidated financial statements of the Company are
included in Item 7:

Year Ended December 31, 1997

Report of Independent Auditors
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Income for the years ended
December 31, 1997 and 1996
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1997 and 1996
Consolidated Statements of Cash Flows for the years ended
December 31, 1997 and 1996
Notes to Consolidated Financial Statements

Exhibit No.

3.1 Restated Certificate of Incorporation of the Company
(incorporated herein by reference to the Company's Form S-1
filed with the Commission on December 16, 1991).

3.2 By-Laws of the Company (incorporated herein by reference to
the Company's Form S-1 filed with the Commission on December
16, 1991).

3.3 Amendment to the Certificate of Incorporation of the Company,
dated December 23, 1993 (incorporated herein by reference to
the Company's Form 10-K filed with the Commission on March 29,
1994).

4.1 Specimen representing the Rights Certificate of the Company
(incorporated herein by reference to the Company's Form S-1
filed with the Commission on December 16, 1991).

4.2 Specimen representing the Class A Common Stock, $0.01 par
value, of the Company (incorporated herein by reference to the
Company's Form S-1 filed with the Commission on December 16,
1991).

10.5 Investment Management Agreement dated September 20, 1990,
between American Masters Fund (Cayman) Limited (referenced in
the Prospectus as "The Ultima Funds Limited") and Tremont
(Bermuda) Limited (incorporated herein by reference to the
Company's Form S-1 filed with the Commission on December 16,
1991).

<PAGE>

10.9 Consulting Services Agreement dated as of May 1, 1991, between
Harold Cohen and Tremont Partners, Inc. (incorporated herein
by reference to the Company's Form S-1 filed with the
Commission on December 16, 1991).

10.17 Consulting Agreements between Leon Meyers and each of Tremont
Partners, Inc. and Tremont (Bermuda) Limited (incorporated
herein by reference to the Company's Form 8-K filed with the
Commission on January 12, 1993).

10.22 Letter Agreement dated October 25, 1993, between the Company
and Sandra L. Manzke (incorporated herein by reference to the
Company's Form 10-K filed with the Commission on March 29,
1994).

10.27 Lease between First Properties of Bermuda Ltd and Tremont
(Bermuda) Limited, dated February 23, 1994 (incorporated
herein by reference to the Company's Form 10-K filed with the
Commission on March 29, 1994).

10.29 Consulting Services Agreement between Omega Overseas Partners,
Ltd. and Tremont (Bermuda) Limited dated April 1, 1994
(incorporated herein by reference to the Company's Form 10-K
filed with the Commission on March 29, 1994).

10.30 Employment Agreement dated April 22, 1994 between the Company
and Robert I. Schulman (incorporated herein by reference to
the Company's Form 10-Q filed with the Commission on May 12,
1994).

10.31 Stock Option Agreement dated April 22, 1994 between the
Company and Robert I. Schulman (incorporated herein by
reference to the Company's Form 10-Q filed with the Commission
on May 12, 1994).

10.33 Stock Option Agreement dated December 15, 1994 between the
Company and Stephen T. Clayton (incorporated herein by
reference to the Company's Registration Statement No. 33-89966
on Form S-1 and Post-Effective Amendment No. 1 to Registration
Statement No. 33-81438 on Form S-1 filed with the Commission
on March 3, 1995).

10.34 Employment Agreement dated September 25, 1995 between the
Company and Sandra L. Manzke (incorporated herein by reference
to the Company's Form 10-Q filed with the Commission on
November 13, 1995).

10.35 Amended Employment Agreement dated as of December 15, 1995,
between the Company and Robert I. Schulman (incorporated
herein by reference to the Company's Form 10-KSB filed with
the Commission on March 12, 1997).

10.36 Amended Employment Agreement dated as of December 13, 1996,
between the Company and Sandra L. Manzke (incorporated herein
by reference to the Company's Form 10-KSB filed with the
Commission on March 12, 1997).

10.37 Amended Employment Agreement dated as of December 13, 1996,
between the Company and Robert I. Schulman (incorporated
herein by reference to the Company's Form 10-KSB filed with
the Commission on March 12, 1997).

<PAGE>

10.38 Amendment, dated December 13, 1996, to Lease between First
Properties of Bermuda Ltd. and Tremont ("Bermuda") Limited
dated February 23, 1994.

10.39 Lease between Gateside - Rye Company and the Company dated
April 18, 1997.

10.40 Stock Option Agreement dated May 15, 1997 between the Company
and Stephen T. Clayton.

10.41 Stock Option Agreement dated May 15, 1997 between the Company
and Bruce D. Ruehl.

10.42 Master Agreement dated as of June 5, 1997 among the Company,
Tremont Bermuda Limited, Tremont International Insurance Ltd.,
Mutual Risk Management (Holdings) Ltd., MGL Investments Ltd.,
Hemisphere Management Limited and The Anglo-Dutch Insurance
Company Limited.

10.43 Stock Purchase Agreement dated as of June 5, 1997 between the
Company and MGL Investments Ltd.

10.44 Stock Option Agreement dated June 12, 1997 between the Company
and Sandra L. Manzke.

10.45 Stock Option Agreement dated June 12, 1997 between the Company
and Robert I.Schulman.

10.46 Stock Option Agreement dated June 12, 1997 between the Company
and John L.Keeley, Jr.

10.47 Stock Option Agreement dated June 12, 1997 between the Company
and Alan A. Rhein.

10.48 Stock Option Agreement dated June 12, 1997 between the Company
and Jimmy L. Thomas.

10.49 Stock Purchase Agreement dated as of July 1, 1997 between
Tremont MRM Services Limited and Mutual Risk Management
(Holdings) Ltd.

10.50 Shareholders' Agreement dated as of July 1, 1997 among Tremont
MRM Services Limited, Tremont (Bermuda) Limited, The
Anglo-Dutch Insurance Company Limited and Mutual Risk
Management (Holdings) Ltd.

10.51 Amendment to Employment Agreement dated as of December 10,
1997, between the Company and Sandra L. Manzke.

10.52 Amendment to Employment Agreement dated as of December 10,
1997, between the Company and Robert I. Schulman.

<PAGE>

21.1 Subsidiaries of the Company (incorporated herein by reference
to the Company's Form 10-K filed with the Commission on March
28, 1996).

23.1 Consent of Ernst & Young LLP, independent auditors.

23.2 Consent of Goldstein Golub Kessler & Company,P.C., independent
auditors.

99.1 Press Release dated January 5, 1993 (incorporated herein by
reference to the Company's Form 8-K filed with the Commission
on January 12, 1993).

99.3 Press Release dated January 18, 1994 (incorporated herein by
reference to the Company's Form 8-K filed with the Commission
on January 18, 1994).

99.4 Press Release dated June 5, 1997.

99.5 Press Release dated August 11, 1997.

(b) Reports on Form 8-K.

None.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

TREMONT ADVISERS, INC.
(Registrant)
By /s/ Stephen T. Clayton
Stephen T. Clayton
Chief Financial Officer

Dated: March 18, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

Signature Title Date

/s/ Sandra L. Manzke Chairman of the Board and March 18, 1998
- --------------------
Sandra L. Manzke Chief Executive Officer

/s/ Robert I. Schulman President; Chief Operating March 18, 1998
- ----------------------
Robert I. Schulman Officer and Director

/s/ John L. Keeley, Jr. Director March 18, 1998
- -----------------------
John L. Keeley, Jr.

/s/ Alan A. Rhein Director March 18, 1998
- -----------------
Alan A. Rhein

/s/ Jimmy L. Thomas Director March 18, 1998
- -------------------
Jimmy L. Thomas

/s/ Suzanne S. Hammond Secretary & Treasurer March 18, 1998
- ----------------------
Suzanne S. Hammond

/s/ Stephen T. Clayton Chief Financial Officer March 18, 1998
- ----------------------
Stephen T. Clayton

</TABLE>

<PAGE>

EXHIBIT INDEX
=========================================================================================================
Page No.
- ---------------------------------------------------------------------------------------------------------
3.1 Restated Certificate of Incorporation of the Company (incorporated ___
herein by reference to the Company's Form S-1 filed with the
Commission on December 16, 1991).
- ---------------------------------------------------------------------------------------------------------
3.2 By-Laws of the Company (incorporated herein by reference to the ___
Company's Form S-1 filed with the Commission on December 16, 1991).
- ---------------------------------------------------------------------------------------------------------
3.3 Amendment to the Certificate of Incorporation of the Company, dated ___
December 23, 1993 (incorporated herein by reference to the Company's
Form 10-K filed with the Commission on March 29, 1994).
- ---------------------------------------------------------------------------------------------------------
4.1 Specimen representing the Rights Certificate of the Company ___
(incorporated herein by reference to the Company's Form S-1 filed with
the Commission on December 16, 1991).
- ---------------------------------------------------------------------------------------------------------
4.2 Specimen representing the Class A Common Stock, $0.01 par value, of ___
the Company (incorporated herein by reference to the Company's Form
S-1 filed with the Commission on December 16, 1991).
- ---------------------------------------------------------------------------------------------------------
10.5 Investment Management Agreement dated September 20, 1990, between ___
American Masters Fund (Cayman) Limited (referenced in the Prospectus
as "The Ultima Funds Limited") and Tremont
(Bermuda) Limited (incorporated herein by reference to
the Company's Form S-1 filed with the Commission on December 16, 1991).
- ---------------------------------------------------------------------------------------------------------
10.9 Consulting Services Agreement dated as of May 1, 1991, between ___
Harold Cohen and Tremont Partners, Inc. (incorporated herein by
reference to the Company's Form S-1 filed with Commission on December 16, 1991).
- ---------------------------------------------------------------------------------------------------------
10.17 Consulting Agreements between Leon Meyers and each of Tremont ___
Partners, Inc. and Tremont (Bermuda) Limited (incorporated herein by the
Company's Form 8-K filed with the Commission on January 12, 1993).
- ---------------------------------------------------------------------------------------------------------
10.22 Letter Agreement dated October 25, 1993, between the Company and ___
Sandra L. Manzke (incorporated herein by reference to the Company's
Form 10-K filed with the Commission on March 29, 1994).
- ---------------------------------------------------------------------------------------------------------
10.27 Lease between First Properties of Bermuda Ltd and Tremont (Bermuda) ___
Limited, dated February 23, 1994 (incorporated herein by reference to
the Company's Form 10-K filed with the Commission on March 29, 1994).

<PAGE>

- ---------------------------------------------------------------------------------------------------------
10.29 Consulting Services Agreement between Omega Overseas Partners, Ltd. ___
and Tremont (Bermuda) Limited dated April 1, 1994 (incorporated
herein by reference to the Company's Form 10-K filed with the
Commission on March 29, 1994).
- ---------------------------------------------------------------------------------------------------------
10.30 Employment Agreement dated April 22, 1994 between the Company and ___
Robert I. Schulman (incorporated herein by reference to the Company's
Form 10-Q filed with the Commission on May 12, 1994).
- ---------------------------------------------------------------------------------------------------------
10.31 Stock Option Agreement dated April 22, 1994 between the Company and ___
Robert I. Schulman (incorporated herein by reference to the Company's
Form 10-Q filed with the Commission on May 12, 1994).
- ---------------------------------------------------------------------------------------------------------
10.33 Stock Option Agreement dated December 15, 1994 between the ___
Company and Stephen T. Clayton (incorporated herein by reference to
the Company's Registration Statement No. 33-89966 on Form S-1 and
Post-Effective Amendment No. 1 to Registration Statement No. 33-
81438 on Form S-1 filed with the Commission on March 3, 1995).
- ---------------------------------------------------------------------------------------------------------
10.34 Employment Agreement dated September 25, 1995 between the ___
Company and Sandra L. Manzke (incorporated herein by reference to the
Company's Form 10-Q filed with the Commission on November 13, 1995).

- ---------------------------------------------------------------------------------------------------------
10.35 Amended Employment Agreement dated as of December 15, 1995, ___
between the Company and Robert I. Schulman (incorporated herein by
reference to the Company's Form 10-KSB filed with the Commission on March 12,1997).
- ---------------------------------------------------------------------------------------------------------
10.36 Amended Employment Agreement dated as of December 13, 1996, ___
between the Company and Sandra L. Manzke (incorporated herein by
reference to the Company's Form 10-KSB filed with the Commission on March 12, 1997).
- ---------------------------------------------------------------------------------------------------------
10.37 Amended Employment Agreement dated as of December 13, 1996, ___
between the Company and Robert I. Schulman (incorporated herein by
reference to the Company's Form 10-KSB filed with the Commission on March 12, 1997).
- ---------------------------------------------------------------------------------------------------------
10.38 Amendment, dated December 13, 1996, to Lease between First 61
Properties of Bermuda Ltd. and Tremont (Bermuda) Limited dated
February 23, 1994.
- ---------------------------------------------------------------------------------------------------------
10.39 Lease between Gateside-Rye Company and the Company dated April 1, 62
1997.
- ---------------------------------------------------------------------------------------------------------
10.40 Stock Option Agreement dated May 15, 1997 between the Company and 63
Stephen T. Clayton.

<PAGE>

- ---------------------------------------------------------------------------------------------------------
10.41 Stock Option Agreement dated May 15, 1997 between the Company and 66
Bruce D. Ruehl.
- ---------------------------------------------------------------------------------------------------------
10.42 Master Agreement dated as of June 5, 1997 among the Company, 69
Tremont Bermuda Limited, Tremont International Insurance Ltd.,
Mutual Risk Management (Holdings) Ltd., MGL Investments Ltd.,
Hemisphere Management Limited and The Anglo-Dutch Insurance
Company Limited.
- ---------------------------------------------------------------------------------------------------------
10.43 Stock Purchase Agreement dated as of June 5, 1997 between the 70
Company and MGL Investments Ltd.
- ---------------------------------------------------------------------------------------------------------
10.44 Stock Option Agreement dated June 12, 1997 between the Company and 105
Sandra L. Manzke.
- ---------------------------------------------------------------------------------------------------------
10.45 Stock Option Agreement dated June 12, 1997 between the Company and 108
Robert I. Schulman.
- ---------------------------------------------------------------------------------------------------------
10.46 Stock Option Agreement dated June 12, 1997 between the Company and 111
John L. Keeley, Jr.
- ---------------------------------------------------------------------------------------------------------
10.47 Stock Option Agreement dated June 12, 1997 between the Company and 114
Alan A. Rhein.
- ---------------------------------------------------------------------------------------------------------
10.48 Stock Option Agreement dated June 12, 1997 between the Company and 117
Jimmy L. Thomas.
- ---------------------------------------------------------------------------------------------------------
10.49 Stock Purchase Agreement dated as of July 1, 1997 between Tremont 120
MRM Services Limited and Mutual Risk Management (Holdings) Ltd.
- ---------------------------------------------------------------------------------------------------------
10.50 Shareholders' Agreement dated as of July 1, 1997 among Tremont MRM 144
Services Limited, Tremont (Bermuda) Limited, The Anglo-Dutch
Insurance Company Limited and Mutual Risk Management (Holdings)
Ltd.
- ---------------------------------------------------------------------------------------------------------
10.51 Amendment to Employment Agreement dated as of December 10, 1997, 167
between the Company and Sandra L. Manzke.
- ---------------------------------------------------------------------------------------------------------
10.52 Amendment to Employment Agreement dated as of December 10, 1997, 168
between the Company and Robert I. Schulman.
- ---------------------------------------------------------------------------------------------------------
21.1 Subsidiaries of the Company (incorporated herein by reference to the ___
Company's Form 10-K filed with the Commission on March 28, 1996).
- ---------------------------------------------------------------------------------------------------------
23.1 Consent of Ernst & Young LLP, independent auditors. 169
- ---------------------------------------------------------------------------------------------------------
23.2 Consent of Goldstein Golub Kessler & Company, P.C., independent 170
auditors.

<PAGE>

- ---------------------------------------------------------------------------------------------------------
99.1 Press Release dated January 5, 1993 (incorporated herein by reference to ___
the Company's Form 8-K filed with the Commission on January 12,
1993).
- ---------------------------------------------------------------------------------------------------------
99.3 Press Release dated January 18, 1994 (incorporated herein by reference ___
to the Company's Form 8-K filed with the Commission on January 18,
1994).
- ---------------------------------------------------------------------------------------------------------
99.4 Press Release dated June 5, 1997. 171
- ---------------------------------------------------------------------------------------------------------
99.5 Press Release dated August 11, 1997. 172
=========================================================================================================

</TABLE>
60

<PAGE>
Exhibit 10.38
13th December, 1996

Mr. Yohann Wong, President
Tremont (Bermuda) Limited
Tremont House, 4 Park Road
Hamilton 11

Dear Johann,

Lease of Tremont House

Thank you for you letter of 26th November, 1996. As per the original
lease effective 1st March, 1994 under Article 11. of same we are prepared to
renew the lease for a further three years effective 1st March, 1997, at an
annual rent of $66,000. We will consider further renewal 90 days before expiry,
which will depend on BELCO needs and the market value. Other terms and
conditions will remain the same with the exception that effective 1st March,
1997 Castle Realty Ltd. (formerly First Properties of Bermuda) will no longer
be the agent and you will be dealing directly with ourselves.

Please sign the attached letter signifying your agreement to these terms
and conditions.

With kind regards,

/s/ Keith B. Spurling
K.B. Spurling
Sr. Manger, Finance & Administration
KBS:mjaf
encl.

Agreed /s/ Johann Wong
Johann Wong, President
TREMONT (BERMUDA) LTD.

1
<PAGE>
Exhibit 10.39

Lease, dated as of April 1, 1997, between Gateside-Rye Company, as
landlord, and Tremont Advisers, Inc., as tenant, is for office space of 8,222
square feet located on the second floor of 555 Theodore Fremd Road, Rye, New
York, in the building known as Building "C", a part of the International
Corporate Center, as more particularly described on Exhibit A to the Lease. The
Lease has a term of five years commencing on September 1, 1997 and ending on
August 31, 2002, unless sooner terminated in accordance with the provisions
of the Lease, and provides for monthly fixed rental payments of $17,129.17.
<PAGE>
Exhibit 10.40

STOCK OPTION AGREEMENT

STOCK OPTION AGREEMENT (the "Agreement") dated as of the 15th day of May, 1997,
by and between STEPHEN T. CLAYTON, an individual residing at 65 Raemont Road,
Granite Springs, New York 10527 ( the "Executive"); and TREMONT ADVISERS, INC.
("Tremont"), a Delaware Corporation having its principal executive offices at
Corporate Center at Rye, 555 Theodore Fremd Avenue, Rye, New York.

WITNESSETH:

WHEREAS, the Executive is an officer of Tremont; and

WHEREAS, Tremont has decided to grant the Executive options to purchase up to
10,000 shares of Tremont Class B common stock ("Class B Common Stock"), par
value $0.01 at an exercise price of $3.75 per share.

NOW, THEREFORE, in consideration of the premises and the covenants, terms and
conditions hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are specifically acknowledged, the parties
hereto hereby agree as follows:

1. OPTION GRANT. Tremont hereby grants to Executive an option ("the
Option") to acquire up to 10,000 shares of Class B Common Stock (Collectively,
the "Option Shares") at an exercise price of $3.75 per share ("Exercise Price").

2. EXERCISE PERIOD. The Options will expire on the fifth (5th)
anniversary of the grant date (being May 15, 2002). The Options shall vest and
become exercisable on the following schedule: 2,500 shares as of the date of
this agreement, 2,500 shares on the 1st anniversary of the execution of this
agreement being May 15, 1998 and 5,000 on the 2nd anniversary of this agreement.
(collectively, the "Exercise Period").

In the event of the termination of the Executive, for any reason, whether by the
Company or by the Executive, or upon the expiration of this Agreement, any
options that have not vested will lapse.

In the event that at any time the Executive shall desire to sell, assign or
transfer all or any part of his vested Options or shares of Stock, he shall
first offer such Options or shares of Stock (the "Offered Options" and the
"Offered Stock," respectively) to Tremont by written notice, specifying the
number of Offered Options and/or the number of shares of Offered Stock. The
purchase price for each share of Offered Stock Shall be equal to the best bid
price thereof on the date of the Executive's offer notice to Tremont. The
purchase price for an Offered Option shall be an amount equal to the greater of
(x) $3.75, or (y) the amount of the best bid price for a share of Stock on the
date of the Executive's offer notice to Tremont less $3.75. Tremont shall have
the option, exercisable no later than 7 days after receipt of such notice to
purchase the Offered Options and/or the Offered Stock, as the case may be.

3. METHOD OF EXERCISE. The Options, after vesting, may be exercised
during the Exercise Period in whole or in part by giving written notice to
Tremont specifying the number of Option Shares to be purchased. The notice must
be directed to Tremont at Tremont's Corporate address, which currently is the
address set forth in Section 8 below. The date of exercise is the date on which
such notice is received by Tremont. Such notice must be accompanied by payment
to Tremont in full for the Option Shares to be purchased upon such exercise.
Payment may be made in cash, certified check or bank guaranteed check.
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<PAGE>
4. DELIVERY OF SHARES. Promptly after payment for the Option Shares
referred to in Section 3, Tremont shall deliver to Executive a certificate
representing the Option Shares so purchased. In the event that any exercise of
the Options shall be for less than the total amount of the then vested Options,
the remaining vested Options, shall remain exercisable during the term hereof.

5. TRANSFERABILITY. The Executive shall at no time sell, assign, or
transfer all or any part of the Options granted to him pursuant to this
Agreement except in accordance with giving notice to the Company and in
accordance with federal and state securities laws.

6. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION OF THE COMPANY. In the
event of any change in the outstanding shares of the Class B Common Stock of
Tremont by reason of reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation, or any
change in the corporate structure of Tremont or in the shares of the Class B
Common Stock, the number of shares covered by the Options and the Exercise Price
shall be appropriately adjusted.

7. FURTHER ASSURANCES. Each of the parties hereto agrees from and after
the date hereof that each of them shall from time to time, at the request of the
other party and without further consideration, do, execute and deliver, or cause
to be done, executed and delivered, all such further acts, things and
instruments as may be reasonably required to more effectively evidence and give
effect to the provisions and the intent and purposes of this Agreement.

8. NOTICES. Any notices or other communications given hereunder shall
be in writing, and shall be delivered to the parties at the addresses set forth
below (or to such other party or entity or address as either party may specify
by due notice to the other party). Notices or other communications given by
certified mail, return receipt requested, postage prepaid, shall be deemed given
three days after the date of mailing. Notice or other communications sent in any
other manner shall be deemed given only when actually received:

(a) If to Executive:

Stephen T. Clayton
65 Raemont Road
Granite Springs, New York 10527

(b) If to Tremont:

Tremont Advisers, Inc.
Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, New York 10580-1430
Attention: President

9. SOLE AGREEMENT OF PARTIES. This Agreement sets forth all the
covenants, promises, agreements, conditions and understandings among the parties
hereto, and there are no other covenants, promises, agreements, conditions or
understandings, whether oral or written, among the parties hereto in connection
with the transaction contemplated by this Agreement. This Agreement may only be
amended by a written instrument executed by the parties hereto.
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<PAGE>
10. PARTIES IN INTEREST, ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon Executive and Tremont and their respective
successors and assigns; and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies under or by
reason of this Agreement.

11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.

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

13. PUBLIC DISCLOSURE. The parties agreed that no publicity release,
public announcement or governmental filings of this Agreement or the transaction
contemplated hereby shall be made by any of the parties without the consent of
the others, except as may be required by law, regulation or order to which any
such party may be subject.

14. REPRESENTATION. Each party hereby represents and warrants to the
other that each has read the above provisions and that each has had a sufficient
opportunity to discuss the term and conditions of this Agreement thoroughly with
each party's respective advisors prior to signing below. Further, in signing
this Agreement, each party has not relied on or been induced to execute this
Agreement by any statements, representations, agreements, or promises, oral or
written, other than expressly written above in this Agreement.

in witness whereof, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.

By: /s/ Stephen T. Clayton
Stephen T. Clayton

TREMONT ADVISERS, INC.

By: /s/ Robert Schulman
Robert Schulman
President
3
<PAGE>

Exhibit 10.41

STOCK OPTION AGREEMENT

STOCK OPTION AGREEMENT (the "Agreement") dated as of the 15th day of May, 1997,
by and between BRUCE D. RUEHL, an individual residing at 2 Silver Birch Lane,
Ridgefield, Connecticut 06877 ( the "Executive"); and TREMONT ADVISERS, INC.
("Tremont"), a Delaware Corporation having its principal executive offices at
Corporate Center at Rye, 555 Theodore Fremd Avenue, Rye, New York.

WITNESSETH:

WHEREAS, the Executive is an officer of Tremont; and

In the event of the termination of the Executive, for any reason, whether by the
Company or by the Executive, or upon the expiration of this Agreement, any
options that have not vested will lapse.

(a) If to Executive:

Bruce D. Ruehl
2 Silver Birch Lane
Ridgefield, Connecticut 06877

(b) If to Tremont:

Tremont Advisers, Inc.
Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, New York 10580-1430
Attention: President

11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.

in witness whereof, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.

By: /s/ Bruce D. Ruehl
Bruce D. Ruehl

TREMONT ADVISERS, INC.

By: /s/ Robert Schulman
Robert Schulman
President
3
<PAGE>

Exhibit 10.42

MASTER AGREEMENT made this 5th day of June, 1997 among Tremont
Advisers, Inc., a Delaware corporation, with offices at 555 Theodore Fremd
Avenue, Rye, NY 10580 ("Tremont"), Tremont (Bermuda) Limited, an exempted
Bermuda company ("TBL"), Tremont International Insurance Ltd., a Cayman Islands
exempted limited company, with offices at Genesis Building, 2nd Floor,
Georgetown, Grand Cayman, Cayman Islands, B.W.I. ("TIL"), Mutual Risk Management
(Holdings) Ltd., a Bermuda corporation, with offices at 44 Church Street,
Hamilton, HM HX Bermuda ("MRM"), MGL Investments Ltd., a Delaware corporation
with offices at One Logan Square, Suite 1400, Philadelphia, Pennsylvania 19103
("MGL"), Hemisphere Management Limited, a Bermuda company, with offices at
Hemisphere House, 40 Church Street, Hamilton, Bermuda ("Hemisphere") and The
Anglo-Dutch Insurance Company Limited, a Cayman Islands corporation, with
offices at Genesis Building, 2nd Floor, Georgetown, Grand Cayman, Cayman
Islands, B.W.I. ("AngloDutch").

WITNESSETH:

WHEREAS, the parties to this Agreement are entering into a series of
transactions represented by a series of agreements, documents and instruments,
and MGL intends to make a tender offer for certain shares of the common stock of
Tremont;

WHEREAS, it is intended that, except as otherwise provided, the various
transactions are mutually contingent such that one shall not become effective
unless all shall become effective;

WHEREAS, MGL intends to commence the tender offer prior to
the effectiveness of the various transactions;

WHEREAS, Tremont and TBL are engaged in the business of providing
consulting and specialized investment services to investment funds, investment
managers and investors as well as the management and sponsoring of investment
funds, both offshore (in the case of TBL) and onshore (in the case of Tremont);

WHEREAS, TIL issues and sells certain insurance and annuity products
utilizing offshore investment vehicles;

WHEREAS, Anglo-Dutch designs and markets insurance and
annuity products utilizing offshore investment vehicles;

WHEREAS, MRM is engaged in the business of providing risk management
services in the alternative insurance market as well as other insurance product
and management services and MGL is an affiliate of MRM doing business in the
United States;

WHEREAS, Hemisphere is engaged in the business of providing
management and administration services for offshore investment
funds;
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<PAGE>
NOW, THEREFORE, it is agreed as follows:

1. The Transactions.

The various transactions (the "Transactions") and the
principal agreements, documents and instruments (the "Agreements") entered into
and to be entered into among the parties are as follows:

(a) The Tender Offer

MGL intends to immediately make a tender offer for
shares of the Class B Common Stock of Tremont (the "Tender Offer"). MGL intends
to acquire that number of shares which shall equal up to 15% of the total issued
and outstanding shares of the Class A Common Stock and the Class B Common Stock,
taken together, of Tremont. MGL has prepared, for dissemination to the Class B
shareholders of Tremont, the following documents:

(x) Letter of Transmittal; and

(y) Offer Letter.

The principal terms of the Tender Offer are as
follows:

(i) The price per share tendered is $3.75 U.S;

(ii) The aggregate number of shares to be purchased
is not less than 505,000 and not more than 615,000;

(iii) The time period for the Tender Offer shall be
from June 6, 1997 through July 7, 1997; and

(iv) The Tender Offer shall be made pro-rata to all
holders of the Class B Shares; if more than 615,000
shares shall be tendered, then MGL shall purchase
100% of the shares tendered by holders of 1,000
shares or less and a proportionate amount, on a
pro-rata basis, of shares tendered by holders of more
than 1,000 shares.

(b) Acquisition of Tremont Shares

If the Tender Offer is successful, MGL intends to
purchase from Tremont, and Tremont intends to issue and sell to MGL, up to
340,000 shares of Tremont's Class B Common Stock (the "Tremont Share Purchase").
2
<PAGE>
The principal Agreements to be entered into with respect to the Tremont Share
Purchase shall include the following:

(i) Stock Purchase Agreement between Tremont and MGL.

Anglo-Dutch intends to sell to MRM, and MRM intends to
purchase from Anglo-Dutch, ordinary shares of TIL representing 51% of the issued
and outstanding shares of TIL, for a purchase price equal to the book value of
such shares (the "TIL Share Purchase"). In addition, MRM intends to purchase
from TIL, and TIL intends to issue and sell to MRM 1,000 shares of TIL's
newly-created preferred shares for U.S. $5,000,000 (the "TIL Preferred
Purchase"). Simultaneously, MRM shall agree to perform certain administrative
services for TIL at cost plus 15%. The principal Agreements to be entered into
with respect to the TIL Share Purchase and the TIL Preferred Purchase shall
include the following:

(i) Stock Purchase Agreement among TIL,
Anglo-Dutch and MRM;

(ii) Amendment to TIL Memorandum of
Association and Amendment to TIL Articles of
Association;

(iii) Shareholders Agreement among TIL, AngloDutch,
MRM and TBL; and

(iv) Services Agreement between TIL and MRM.

(d) Formation and Subscription for Shares of Tremont
MRM Services Limited

Anglo-Dutch, TBL and MRM intend to form and own Tremont MRM
Services Limited ("TMSL"), a Bermuda exempt company, which will perform certain
services for TIL (the "TMSL Services Arrangement"). MRM will purchase, and TMSL
will issue and sell to MRM, twenty percent (20%) of TMSL's ordinary shares (the
"TMSL Share Purchase"). The principal Agreements to be entered into with respect
to the TMSL Services Arrangement and the TMSL Share Purchase shall include the
following:

3
<PAGE>

(ii) Shareholders Agreement among TMSL AngloDutch,
MRM and TBL; and

(iii) Services Agreement between TMSL and TIL.

(e) Software License

In order to assist MRM in its account management activities,
TBL, TIL and Anglo-Dutch will license certain computer systems to MRM, including
the account management and reporting system, the insurance proposal system and
word processing files for the production of contracts and private placement
memoranda.

(i) Software License Agreement between
Anglo-Dutch and MRM (the "License Agreement");

(f) Mutual Cooperation and Non-competition

The parties have entered into the various provisions of this
Agreement relating to cooperation and non-competition.

2. Effectiveness of Transactions

Each of the parties shall proceed expeditiously and in good
faith to complete all of the Agreements in order to effectuate the Transactions.
The Agreements may be executed at different times. Notwithstanding the prior
execution of any of the Agreements, and notwithstanding the provisions of any of
the Agreements, the effectiveness of the Transactions and the Agreements with
respect to each of the Transactions shall be governed by the following
provisions:

(a) The Tender Offer shall become effective in accordance with
its terms and the Tremont Share Purchase shall only be effected upon the
termination of the Tender Offer.

(b) The following Transactions:

(i) the TIL Share Purchase;

(ii) the TIL Preferred Purchase;

(iii) the TMSL Services Arrangement;

(iv) the TMSL Share Purchase;

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<PAGE>
(v) the Software License Agreement; and

(vi) Cooperation and Non-Competition.

and each and all of the Agreements relating to each of the Transactions shall
become effective simultaneously and none shall be effective unless all shall be
effective. The effectiveness of each shall be a condition to the effectiveness
of each other. In the event that any portion of any of the Transactions shall be
required to be undertaken prior to such effectiveness, the parties shall take
such steps as shall be necessary to revise or undo any such portion in the event
that the effectiveness of all of them shall not occur on or before July 31, 1997
(the "Outside Date"). The parties may extend the Outside Date if all of the
parties shall agree to such extension. If all of the Transactions shall not have
become effective on or before the Outside Date, as it may be so extended, none
of the Transactions shall be consummated.

3. Joint Marketing Agreement.

(a) Each of Tremont, TBL, MRM and Hemisphere, and their
respective affiliates (for this purpose, an "Introducing Party") has access to
various clients ("Proprietary Clients") who may be suitable for the proprietary
investment funds or services which are sponsored by one of the other parties.
For purposes of this Agreement, affiliates of any of the parties shall be
included within the definition of such party within the meaning set forth in
this Agreement. For purposes of this Agreement, "Investment Fund" shall mean an
investment fund sponsored by any of the parties, whether publicly or privately
offered, and whether offered in the United States or offshore.

(b) During the Term (as hereinafter defined), each Introducing
Party shall use reasonable business efforts to market to its Proprietary Clients
the Investment Funds and services sponsored by each of the other parties (for
this purpose, a "Sponsor"), it being understood that no Introducing Party shall
have any obligation to market an Investment Fund of a Sponsor which, in the
opinion of the Introducing Party, is directly competitive with an Investment
Fund sponsored by the Introducing Party.

(c) The specific procedures applicable to the overall
agreements in this Section 3 are set forth in Sections 4 and 5 below.

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<PAGE>
4. Marketing Procedures.

The following procedures shall apply to the marketing
arrangements referred to in Section 3 above.

(a) The Introducing Party will introduce the Sponsor to its
Proprietary Clients (who shall then become "Prospective Clients" for the
purposes of this Agreement).

(b) At the Sponsor's request, the Introducing Party, solely as
an independent contractor and without any ability to bind the Sponsor, will
assist the Sponsor in presentations to Prospective Clients, including attendance
at meetings with clients, preparation of materials for presentation to
Prospective Clients and follow-up to assist in the conclusion of arrangements
with Prospective Clients.

5. Standards of Conduct. In performing the services under this
Agreement, the Introducing Party shall fully comply with each of the following
requirements:

(a) The Introducing Party shall at all times comply fully with
all of the provisions of any statute, rule, regulation or order pertaining to
the activities of the Introducing Party.

(b) The Sponsor shall have the right, for any reason, to
determine that the Introducing Party shall not pursue arrangements with any
Prospective Client and, if the Sponsor shall make such determination, the
Sponsor shall give notice to the Introducing Party of such determination. In
such event, the Introducing Party shall undertake no further services with
respect to such Prospective Client on the Sponsor's behalf. Notwithstanding
anything to the contrary in this Section 6(b), if the reason for the Sponsor
determining not to pursue arrangements with any Prospective Client is that the
Sponsor presently has or has had a prior relationship with such Proposed Client,
the Sponsor's notice shall so state and, in such event, the Introducing Party
shall not receive any compensation with respect to such Prospective Client,
whether or not the Sponsor shall receive any compensation with respect to such
Prospective Client.

(c) The Introducing Party shall not, without the Sponsor's
prior direction or approval, make any representation with respect to the
Sponsor, oral or written, to any Prospective Client.

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<PAGE>
6. Exclusive Fund Administration.

(a) TBL presently administers certain Investment Funds for its
own account and for others. With the exception of the Investment Funds presently
administered by TBL, during the Term, Hemisphere will be the exclusive
administrator for all Investment Funds "controlled" by TBL or MRM. For purposes
of this Section, "control" shall mean the absolute power and right to designate
service providers, such as administrators, and the power and right to enter into
an agreement with such providers on behalf of the Investment Fund.

(b) During the Term, each of TBL and MRM will use its
reasonable business efforts to have Hemisphere appointed as administrator on
each Investment Fund with respect to which each of them has a marketing
agreement or other business arrangement. Notwithstanding the foregoing, all
parties understand that TBL does not "control" such Investment Funds and,
therefore, TBL shall not be in breach of this agreement if any such Investment
Fund does not so engage Hemisphere for any reason.

(c) No Investment Fund shall be required to enter into any
arrangements with Hemisphere unless (i) the Administration Agreement proposed by
Hemisphere shall be upon terms and conditions customary in the industry, (ii)
the fees and other charges imposed by Hemisphere shall be competitive and equal
to the lowest fees and charges charged by Hemisphere to similarly situated
investment funds and (iii) Hemisphere shall be ready, willing and able to
provide commercially competitive service in accordance with the highest industry
standards.

(d) Neither TBL nor MRM will engage in the administration of
any Investment Fund during the Term (except as provided in the first sentence of
subparagraph (a)) unless Hemisphere shall fail to comply with the standards set
forth in subparagraph (c) with respect to any Investment Fund.

(e) Where appropriate, TBL and Hemisphere will arrange for
compensation to be payable to TBL for its directing of Investment Funds to
Hemisphere under this Section 6.

7. Life and Annuity Products.

(a) MRM shall not solicit any hedge fund manager with respect
to the marketing of an offshore insurance product similar to the insurance
products being marketed by TIL and TMSL except through TMSL.

7
<PAGE>
(b) In the event that a manager of a hedge fund shall contact
MRM concerning the use of MRM Life or another subsidiary of MRM as the issuer of
an offshore insurance product to be primarily marketed in conjunction with such
hedge fund, MRM shall use its reasonable best efforts to direct that hedge fund
manager to TMSL. In connection with such efforts, MRM shall direct such manager
to representatives of TBL and/or Anglo-Dutch and shall assist the latter
companies in soliciting such manager on behalf of TIL and TMSL. If,
notwithstanding such efforts by MRM, the hedge fund manager chooses not to
utilize the services of TIL and TMSL, then MRM may, thereafter, offer the
services of MRM Life to such manager. The products and services offered by MRM
Life shall be offered at prices which shall not be lower than the lower of (i)
.75% for variable annuity products and 1% annually of the cash value of the
policy of the initial premium for variable life insurance products; or (ii) the
prices at which comparable services are then being offered by TIL and TMSL, net
of sales allowances and/or commissions, if any.

(c) Clients seeking offshore hedge fund type insurance
products may be introduced from time to time to MRM by independent financial
planners and similar organizations. MRM shall refer such clients to TMSL and
TIL. If, notwithstanding such referral, any such client shall choose not to
utilize the services of TMSL and TIL, then MRM Life may offer to such client a
similar product. The services offered by MRM Life shall be offered at prices
which are not significantly different than the prices at which such services (or
reasonably similar services) are then being offered by MRM and its Affiliates to
TIL and TMSL.

(d) If any client seeking an offshore hedge fund type
insurance product from MRM shall have previously been a client or business
relationship of any affiliate of TBL or TMSL, then the provisions of Section (c)
above shall apply except that the prices to be offered by MRM shall be governed
by the last sentence of Section (b) in lieu of the last sentence of Section (c).

(e) For purposes of this Section 7, a "Significant Financial
Institution" shall mean a financial institution offering a wide range of
financial products and services (i.e., not an institution whose principal
business is the management of hedge funds) and (i) having a net worth of not
less than U.S.$100,000,000, (ii) gross annual revenues of not less than
U.S.$250,000,000, or (iii) assets under management greater than
U.S.$2,000,000,000. If a Significant Financial Institution shall contact MRM or
any of its Affiliates with respect to the use of an offshore insurance product
in connection with a hedge fund, MRM shall have no duty to refer such

8
<PAGE>
institution to TIL or TMSL, even if the principal investment strategy involved
the use of offshore hedge fund managers.

8. Development by MRM of Certain Products.

During the Term, TMSL and TIL will supply copies of all their
accounting systems and software utilized to underwrite, administer and reinsure
the life insurance products presently offered by TIL. TBL, TIL and TMSL will
make available to MRM copies of all legal opinions, reinsurance contracts and
other contracts used in their respective life insurance business. In addition
TBL, TMSL and TIL will make appropriate personnel available to MRM at cost, plus
15%, to assist MRM in developing a similar business in a Bermuda life insurance
company, MRM Life.

9. Finder's Fees. Each Sponsor shall pay to each Introducing Party the
following compensation:

(a) For each Client introduced to a Sponsor by an Introducing
Party (including those Clients introduced pursuant to Section 3 and those
clients introduced by MRM pursuant to Section 7(c)), the Sponsor shall pay to
the Introducing Party an amount equal to twenty percent (20%) of all
compensation and fees earned by the Sponsor with respect to such Client (the
"Finder's Fee"). The Sponsor shall pay such compensation within thirty
(30) days after the end of the calendar month in which the compensation and
fees to which such Finder's Fee shall relate shall have been paid. The
provisions of this paragraph a shall survive the termination of this Agreement.

(b) Inasmuch as the Sponsor shall have the absolute discretion
not to enter into an arrangement with any Proposed Client or Prospective Client,
no Finder's Fee shall be payable to the Introducing Party unless and until the
Sponsor shall actually enter into such arrangement and the Sponsor shall not
have any obligation to the Introducing Party for failing or refusing to enter
into any such arrangement.

10. Indemnification.

(a) Each Party shall indemnify and hold harmless the other,
its partners, employees and agents, from and against any loss, damage, costs and
expenses, including reasonable attorneys' fees, to the extent caused by any
breach by such party of any of its agreements or representations contained in
this Agreement.

(b) Each Party shall indemnify and hold harmless the other
from and against any loss, damage, costs and expenses, including reasonable

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<PAGE>
attorneys' fees, arising out of or relating to any violation by such party of
any securities laws.

11. Term.

The term of this Agreement shall be co-extensive with the term
of Services Agreement referred to in Section 1(d)(iii).

12. Miscellaneous Provisions.

(a) This agreement may not be amended or modified except by an
instrument in writing signed by the party to be charged.

(b) This agreement shall be governed by the laws of Bermuda.

(c) No party shall have the right to assign or delegate any of
its obligations under this agreement to any party and any such attempted
assignment or delegation shall be void. This agreement shall otherwise be
binding upon and inure to the benefit of the parties and their respective
successors and assigns.

(d) Any notices which may be given under this agreement shall
be in writing, shall be sent by recognized overnight courier to any party at its
address set forth above, and shall be deemed given one day after being sent.

(e) This agreement may be executed in counterparts.

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<PAGE>
IN WITNESS WHEREOF, the parties have executed this agreement as of the
date and year first above written.

TREMONT ADVISERS, INC.

By: /s/ Robert I. Schulman
Name: Robert I.Schulman
Its: President

MUTUAL RISK MANAGEMENT
(HOLDINGS) LTD.

By: /s/ David J.Doyle
Name: David J. Doyle
Its: Director

MGL INVESTMENTS LTD.

By: /s/ Frederick W. London
Name: Frederick W. London
Its: _____________________

TREMONT (BERMUDA) LIMITED

By: /s/ Johann Wong
Name: Johann Wong
Its: Director

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<PAGE>
TREMONT INTERNATIONAL
INSURANCE LIMITED

By: /s/ Johann Wong
Name: Johann Wong
Its: Director

HEMISPHERE MANAGEMENT
LIMITED

By: /s/ Christopher Wetherhill
Name: Christopher Wetherhill
Its: President

THE ANGLO-DUTCH INSURANCE
COMPANY LIMITED

By: /s/ Peter Mackay
Name: Peter Mackay
Its: Director

<PAGE>

Exhibit 10.43

STOCK PURCHASE AGREEMENT

by and between

TREMONT ADVISERS, INC.

and

MGL INVESTMENTS LTD.

Dated as of June 5, 1997

<PAGE>

TABLE OF CONTENTS

Page

Section 1. Definitions and Principles of Construction.................1
1.01 Defined Terms............................................. 1
1.02 Principles of Construction................................ 5

Section 2. Sale and Purchase of Stock............................... 6
2.01 Sale and Purchase of Stock............................... 6
2.02 Purchase Price........................................... 6
2.03 Closing.................................................. 6

Section 3. Representations and Warranties of the Company............ 7
3.01 Organization and Good Standing........................... 7
3.02 Authorization............................................ 7
3.03 Enforceability........................................... 8
3.04 Approvals................................................ 8
3.05 Capitalization........................................... 9
3.06 Form 10-KSB; Form 10-QSB; Form 10........................ 10
3.07 Material Adverse Change.................................. 10
3.08 Litigation............................................... 11
3.09 Defaults................................................. 11
3.10 Certificate of Incorporation and By-laws; Minute Books... 12
3.11 Taxes.................................................... 12
3.12 Transactions with Affiliates............................. 13
3.13 Disclosure............................................... 14
3.14 Governmental Regulations................................. 15
3.15 Brokers.................................................. 15

Section 4. Representations, Warranties and Covenants of the
Purchaser.............................................. 15
4.01 Investment Intent........................................ 15
4.02 No Registration of Securities............................ 16
4.03 Investor Status.......................................... 16
4.04 Organization and Good Standing........................... 16
4.05 Authorization............................................ 17
4.06 Enforceability........................................... 17
4.07 Approvals................................................ 18
4.08 Brokers.................................................. 18

<PAGE>

Page

Section 5. Further Agreements of the Parties........................ 18
5.01 Protection Against Dilution.............................. 18
5.02 Right to Elect Director.................................. 19
5.03 Registration Rights...................................... 20
5.04 Regulatory Information................................... 23

Section 6. Covenant with Respect to Conduct of Business............. 24

Section 7. Conditions to Closing.................................... 24
(a) Conditions to Purchase................................... 24
(b) Conditions to Sale....................................... 27

Section 8. Indemnification.......................................... 29

Section 9. Notices.................................................. 30

Section 10. Survival of Representations and Warranties............... 31

Section 11. Amendment or Waiver...................................... 31

Section 12. Waiver of Jury Trial..................................... 31

Section 13. Assignment............................................... 31

Section 14. Miscellaneous............................................ 32

Exhibit A - Form of Tender Offer Documents

Schedule 3.05(b) - Options

3
<PAGE>

This STOCK PURCHASE AGREEMENT, dated as of June 5, 1997, by
and between Tremont Advisers, Inc. a Delaware corporation (the "Company"), and
MGL Investments Ltd., a Delaware corporation (the "Purchaser").

In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:

Section 1. Definitions and Principles of Construction.

1.01 Defined Terms. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:

"Affiliate" shall mean, with respect to a Person, a Person that directly,
or indirectly through one or more intermediaries, controls, or is controlled by
or is under common control with, such Person. For the purposes of this
definition, the terms "control," "controlled by" and "under common control with"
shall have such meanings as are used in the Exchange Act.

"Aggregate Outstanding Common" shall have the meaning set forth in
Section 5.02 hereof.

<PAGE>

"Agreement" shall mean this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof.

"Class A Common" shall mean the Class A Common Stock of the
Company, $0.01 par value per share.

"Class B Common" shall mean the Class B Common Stock of the
Company, $0.01 par value per share.

"Closing" shall have the meaning given to such term in Section 2.03
hereof.

"Closing Date" shall have the meaning given to such term in Section
2.03 hereof.

"Code" shall mean the Internal Revenue Code of 1986, as amended.

"Common Stock" shall mean the common stock of the Company.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

<PAGE>

"Licenses" shall have the meaning given to such term in Section 3.09
hereof.

"Lien" shall mean any lien, pledge, hypothecation, mortgage, security
interest, claim, lease, charge, option, right of first refusal, easement
encroachment, transfer restriction, or other encumbrance of any kind.

"Material Adverse Effect" shall mean a material adverse effect upon
the business, assets, condition (financial or otherwise), operations or
prospects of the Company and its Subsidiaries, taken as a whole.

"Persons" shall mean an individual, partnership, corporation,
association, trust, joint venture, unincorporated organization, and any
government, governmental department or agency or political subdivision thereof.

"Purchase Price" shall have the meaning given to such term in Section
2.02 hereof.

"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

<PAGE>

"Shares" shall have the meaning given to such term in Section 2.01
hereof.

"Subsidiary" shall mean any corporation or other entity in which the
Company directly or indirectly owns or has the power to vote shares of any
capital stock or other ownership interests having ordinary voting power to elect
a majority of the directors of such corporation, or other persons performing
similar functions for such entity, as the case may be, and each partnership and
limited liability company in which such corporation or entity is a general
partner or manager or member, as the case may be.

"Tax Return" means a report, return or other information required to
be supplied to a governmental entity with respect to Taxes including, where
permitted or required, combined or consolidated returns for any group of
entities that include the Company or any Subsidiary.

"Taxes" means any federal, state, county, local or foreign taxes,
charges, fees, levies, or other assessments, including all net income, gross
income, sales and use, ad valorem, transfer, gains, profits, excise, franchise,
real and personal property, gross receipt, capital stock, production, business
and occupation, disability, employment, payroll, license, estimated, stamp,
custom duties, severance or withholding taxes or charges imposed by any
governmental entity, including any interest and penalties (civil or criminal) on
or

<PAGE>

additions to any such taxes and any expenses incurred in connection with the
determination, settlement or litigation of any Tax liability.

"Tender Offer" shall mean the tender offer to be made by the
Purchaser to the holders of the Class B Common resulting in the purchase of not
less than 505,000 shares of the Class B Common up to a maximum of 615,000 shares
of the Class B Common, pursuant to that certain Offer to Purchase, the
accompanying Letter of Transmittal to Tender Shares of Class B Common Stock, and
related documentation, in substantially the form annexed hereto as Exhibit A.

1.02 Principles of Construction. (a) All references to
sections, schedules and exhibits are to sections, schedules and exhibits in or
to this Agreement unless otherwise specified. The words "hereof," "herein," and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provisions of this
Agreement.

(b) All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in the
United States.

<PAGE>

Section 2. Sale and Purchase of Stock.

2.01 Sale and Purchase of Stock. At the Closing, the Company
agrees to issue and sell to the Purchaser, and, subject to the terms and
conditions hereof and in reliance on the representations, warranties and
covenants set forth or referred to herein, the Purchaser agrees to purchase from
the Company, such number of shares of the Class B Common representing that
number of shares of Class B Common which, when issued, and taken together with
the Class B Common to be acquired by the Purchaser in the Tender Offer, would
cause the Purchaser to own as of the Closing Date, and after giving effect to
the number of shares of Class B Common acquired by the Purchaser in the Tender
Offer, that number of shares which shall equal in number an aggregate amount of
twenty percent (20%) of the issued and outstanding shares of Class A Common and
Class B Common (the aggregate number of shares of Class B Common being purchased
by the Purchaser pursuant to this Agreement at the Closing is hereinafter
referred to as the "Shares"). Notwithstanding the foregoing, the Company shall
not be required to sell to the Purchaser more than 340,000 Shares.

2.02 Purchase Price. The purchase price for the Shares shall
be Three Dollars and 75/100 ($3.75) per Share (the "Purchase Price").

2.03 Closing. The closing of the purchase and sale of the
Shares (the "Closing") will take place at the offices of Newman Tannenbaum
Helpern Syracuse &

<PAGE>

Hirschtritt LLP, 900 Third Avenue, New York, New York, at 10:00 a.m. New York
time, on the date which is five (5) business days following the closing of the
sale and purchase of the shares acquired by the Purchaser pursuant to the Tender
Offer, or at such other time, date and place as the parties hereto may agree
upon (the "Closing Date"). At the Closing, the Company will deliver to the
Purchaser against payment of the Purchase Price, in immediately available funds,
certificates representing the number of Shares.

ection 3. Representations and Warranties of the Company. The Company
represents and warrants to, and for the benefit of, the Purchaser as follows:

3.01 Organization and Good Standing. Each of the Company and
each Subsidiary (a) is duly organized and existing in good standing in its
jurisdiction of formation, (b) is duly qualified and authorized to do business
in all other jurisdictions in which the nature of its business or property makes
such qualification necessary, except where such failure to qualify would not
have a Material Adverse Effect, and (c) has the power to own its properties and
to carry on its business as now conducted and as proposed to be conducted.

3.02 Authorization. The execution, delivery and performance by
the Company of this Agreement and the issuance and sale by the Company of the
Shares (a) are within the Company's corporate power and authority, (b) have been
duly authorized by all necessary corporate proceedings, (c) do not conflict with
or result in any breach or violation of any provision of the Certificate of
Incorporation or Bylaws (or similar governing

<PAGE>

documents) of the Company or any Subsidiary, (d) do not conflict with or result
in any breach or violation of any provision of any law, regulation, or judgment,
writ, injunction, license or permit, applicable to the Company or any
Subsidiary, and (e) do not conflict with or result in any breach or violation of
any of the terms or conditions of, or constitute (or with notice or lapse of
time or both constitute) a default under, or give rise to the creation of any
lien upon any of the property or assets of the Company or any Subsidiary, under
any contract, agreement, lease or other instrument to which the Company or any
Subsidiary is a party or by which any of their respective assets or properties
are bound, the consequences of which, with respect to this clause (e), could
reasonably be expected to result in a Material Adverse Effect.

3.03 Enforceability. This Agreement has been duly executed and
delivered by the Company and constitutes, the valid and legally binding
obligation of the Company enforceable against it in accordance with its terms,
except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally and by principles of equity regarding the
availability of remedies.

3.04 Approvals. The execution, delivery and performance by the
Company of this Agreement, and the purchase and sale of the Shares, do not
require the approval or consent of, or any filing with, any governmental
authority or agency or any other Person.

<PAGE>

3.05 Capitalization. (a) The authorized capital stock of the
Company consists solely of: (i) 5,000,000 shares of Class A common stock, $0.01
par value per share; (ii) 5,000,000 shares of Class B common stock, $0.01 par
value per share; (iii) 350,000 shares of preferred stock, $1.00 par value per
share; and (iv) 650,000 shares of Series A (redeemable) preferred stock, $1.00
par value per share. As of the date hereof, (x) 1,284,718 of the shares of Class
A common stock were issued and outstanding; (y) 2,599,739 shares of the Class B
common stock were issued and outstanding; and (z) none of the shares of
preferred stock or Series A (redeemable) preferred stock was issued or
outstanding. All of the outstanding shares of capital stock of the Company are,
and upon the delivery to the Purchaser at the Closing of certificates
representing the Shares in the manner set forth in Section 2.03 hereof, the
Shares, will be, duly authorized, validly issued, fully paid and nonassessable
and free and clear of all Liens.

(b) Except as otherwise set forth on Schedule 3.05(b), neither the
Company nor any Subsidiary has outstanding any rights (either pre-emptive or
other) or options to subscribe for or purchase from the Company or such
Subsidiary or any warrants or other agreements providing for or requiring the
issuance or purchase or other acquisition by or on behalf of the Company or such
Subsidiary of, any capital stock or other equity interests or any securities
convertible into or exchangeable for the Company's or such Subsidiary's capital
stock or other equity interests. There are no voting trusts or other agreements
or understandings with respect to the voting of the capital stock or other
equity interests of the Company or such Subsidiary nor any restrictions on the
transferability or sale

<PAGE>

of such shares or other equity interest except under the Securities Act and
state "blue sky" or securities laws. Neither the Company nor any Subsidiary is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire, redeem or retire any shares of capital stock or other equity interests
of the Company or such Subsidiary or any securities convertible into or
exchangeable for any such capital stock or other equity interests.

3.06 Form 10-KSB; Form 10-QSB; Form 10. The Company's annual
report on Form 10-KSB for the year ended December 31, 1996 and its quarterly
report for the quarter ended March 31, 1997, as filed with the United States
Securities and Exchange Commission, fairly and in all material respects presents
the financial condition of the Company and a description of its business. The
Company is not required to have any class of its securities registered pursuant
to Section 12 of the Exchange Act and does not have any class so registered.

3.07 Material Adverse Change. Since December 31, 1996, (i)
there has been no material adverse change in the business, properties or
financial condition of the Company or its Subsidiaries, taken as a whole, and
the Company does not now know of any such change that is threatened, (ii) the
Company and the Subsidiaries have conducted their business only in the ordinary
course consistent with past practice, (iii) the Company has not declared or paid
any dividends or other distributions in respect of its capital stock, and (iv)
the Company and the Subsidiaries have not made any change in their accounting
practices.

<PAGE>

3.08 Litigation. There is no litigation, at law or in equity
or any proceeding before any court, board or other governmental or
administrative agency or any arbitrator pending or, to the knowledge of the
Company, threatened against the Company or any of the Subsidiaries. No judgment,
decree or order of any court, board or other governmental or administrative
agency or arbitrator has been issued against or binds the Company or any
Subsidiary.

3.09 Defaults. Neither the Company nor any Subsidiary is, nor
upon and immediately after consummation of the transactions contemplated hereby,
will be, in default in any material respect under any provisions of its
respective Certificate of Incorporation or By-laws (or similar governing
documents) or under any provisions of any franchise, contract, agreement, lease
or other instrument to which either the Company or any Subsidiary is a party or
by which either the Company or any Subsidiary or its respective properties or
assets is bound nor is either the Company or any Subsidiary in violation of any
law, judgment, decree or governmental order, rule or regulation which default or
violation has or would have a Material Adverse Effect. Each of the Company and
each Subsidiary owns or validly holds all licenses, permits, orders or approvals
of any federal, state, local or foreign governmental or regulatory bodies
(including investment advisor and broker-dealer licenses) that are necessary for
the conduct of the business of the Company or such Subsidiary, as the case may
be, except for those which the failure to obtain would not have a Material
Adverse Effect (collectively, "Licenses"). All Licenses are in full force and

14
<PAGE>
effect, and no proceeding is pending or, to the knowledge of either the Company
or any Subsidiary, threatened to revoke or limit any License.

3.10 Certificate of Incorporation and By-laws; Minute Books.
The copies of the Certificate of Incorporation and By-laws of the Company and
all amendments to each, which have heretofore been delivered to the Purchaser,
are true, correct and complete. The minute books of the Company contain true and
complete records of all meetings and consents in lieu of meetings of their
respective Board of Directors (and any committees thereof), or similar governing
bodies, since the time of their respective organizations. The stock books of the
Company are true, correct and complete.

3.11 Taxes. Each of the Company and each Subsidiary has filed
all Tax Returns required to be filed, except to the extent that the failure to
file would not have a Material Adverse Effect. All such Tax Returns were in all
respects true, complete and correct and have been filed on a timely basis. Each
of the Company and each Subsidiary have paid, in the time and manner prescribed
by law, all Taxes that are due and payable, except to the extent that the
failure to pay would not have a Material Adverse Effect. There are no Tax liens
on any property of the Company or any Subsidiary. Each of the Company and each
Subsidiary has established on their books and records reserves adequate to pay
all Taxes not yet due and payable. There are no agreements, waivers or other
arrangements providing for an extension of time with respect to the filing of
any returns or the assessment of any Tax or deficiency against the Company or
any of the Subsidiaries nor are there any

<PAGE>

known actions, suits, proceedings, investigations or claims pending against the
Company or any of the Subsidiaries in respect of any Tax, assessment or
governmental charge, or any other matters under discussion between the Company
or any of the Subsidiaries and any federal, state or local authority relating to
any Tax assessments, or governmental charges or any known claims against the
Company or any of the Subsidiaries for additional Taxes, assessments, or any
governmental charges asserted by any such authority.

3.12 Transactions with Affiliates. (a) Neither the Company nor
any Subsidiary has any indebtedness to, nor is there any indebtedness owing to
the Company or any Subsidiary from, (i) its officers, directors or any of their
respective spouses or relatives or Affiliates, and (ii), to its knowledge, its
stockholders or any of their respective spouses or relatives or Affiliates.

(b) None of the officers or directors of the Company or any
Subsidiary or their respective spouses or relatives or Affiliates or, to the
knowledge of the Company or any Subsidiary, any of the stockholders of the
Company or any Subsidiary or their respective spouses or relatives or
Affiliates, has any contractual or other claim against, any interest in any
property or assets used by, or otherwise engaged in any transaction with either
the Company or any Subsidiary.

(c) None of the officers or directors of the Company or any
Subsidiary or their respective spouses or relatives or Affiliates, or, to the
knowledge of the

<PAGE>

Company or any Subsidiary, the stockholders or significant employees or
consultants of the Company or any Subsidiary or their respective spouses or
relatives or Affiliates, owns, directly or indirectly, individually or
collectively, a material interest in any entity which is a competitor with, or
client of, (or has any existing contractual relationship) the Company or any
Subsidiary.

3.13 Disclosure. (a) All written information with respect to
the Company, any Subsidiary, and, to the best of the Company's knowledge after
due inquiry, the business and the assets of the Company and each Subsidiary
(other than the forecasted balance sheets and other forecasted financial
statements) furnished to the Purchaser by the Company, any Subsidiary, or on
behalf of the Company or any Subsidiary, were, at the time the same were so
furnished, complete and correct in all material respects, or have been
subsequently supplemented by other written information to the extent necessary
to give the Purchaser a true and accurate knowledge of the subject matter of
such written information in all material respects. There is no fact known to the
Company or any Subsidiary, which has a Material Adverse Effect, or so far as the
Company or any Subsidiary can reasonably foresee, is reasonably likely to have a
Material Adverse Effect, which has not been set forth in such written
information disclosed to the Purchaser prior to the Closing Date.

(b) No representation, warranty or statement made by the Company
or any Subsidiary in this Agreement, or in any agreement, certificate, statement
or document required to be delivered pursuant hereto, contains any untrue
statement of a material fact or

<PAGE>

omits to state a material fact necessary in order to make the statements
contained in this Agreement or in such other agreement, certificate, statement
or document not misleading in light of the circumstances in which they were
made.

3.14 Governmental Regulations. Assuming that the
representations and warranties of the Purchaser set forth in Section 4.03 are
true and correct, the offer, issuance and delivery to the Purchaser of the
Shares hereunder are exempt from registration under the Securities Act.

3.15 Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by the Company
directly with the Purchaser without the intervention of any Person on behalf of
the Company in such manner as to give rise to any valid claim by any Person
against the Purchaser for a finder's fee, brokerage commission or similar
payment.

Section 4. Representations, Warranties and Covenants of the Purchaser.
The Purchaser represents and warrants to, and covenants with, the Company that:

4.01 Investment Intent. The Purchaser is acquiring the Shares
for investment, and not with a view to selling or otherwise distributing the
Shares.

<PAGE>

4.02 No Registration of Securities. The Purchaser is aware
that the Shares have not been registered under the Securities Act or under state
securities or blue sky laws in reliance upon certain exemptions from such
registration, and may not be transferred except pursuant to an effective
registration under the Securities Act and under state securities or blue sky
laws or in a transaction exempt from such registration.

4.03 Investor Status. (a) The Purchaser is able to bear the
economic risk of the investment of the Purchaser in the Shares and has such
knowledge and experience in financial and business matters, so as to be capable
of evaluating the merits and risks of the prospective investment in the Shares.

(b) The Purchaser is aware that no Federal or state agency has (i)
made any finding or determination as to the fairness of any aspect of the
investment in the Shares or (ii) passed on or endorsed the merits of the
offering of the Shares.

(c) The Purchaser is an "accredited investor," as that term is
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

4.04 Organization and Good Standing. The Purchaser has been
duly organized and is validly existing and in good standing under the laws of
the State of Delaware, and it has the legal right and all necessary corporate
power and authority to execute, deliver and perform all of its obligations under
this Agreement. Prior to the

<PAGE>

Closing Date the Purchaser shall deliver to the Company copies of its
Certificate of Incorporation and By-laws, together with all amendments thereto,
in each case certified as to the truth, accuracy and completeness thereof by the
Purchaser's secretary.

4.05 Authorization. The execution, delivery and performance by
the Purchaser of this Agreement, and the purchase by the Purchaser of the Shares
(a) are within the Purchaser's corporate power and authority, (b) have been duly
authorized by all necessary corporate proceedings of the Purchaser, (c) do not
conflict with or result in any breach or violation of any provision of the
Certificate of Incorporation or Bylaws of the Purchaser, (d) do not conflict
with or result in any breach or violation of any provision of any law,
regulation, order, judgment, writ, injunction, license or permit, applicable to
the Purchaser, or (e) conflict with or result in any breach or violation of any
of the terms or conditions of, or constitute (or with notice or lapse of time or
both constitute) a default under, or give rise to the creation of any lien upon
any of the property or assets of the Purchaser, under any contract, agreement,
lease or other instrument to which the Purchaser is a party or by which any of
its respective assets or properties is bound, the consequences of which, with
respect to this clause (e), could reasonably be expected to have a material
adverse effect on the validity or enforceability of this Agreement or on the
ability of the Purchaser to perform its obligations hereunder.

4.06 Enforceability. This Agreement has been duly executed and delivered
and is the valid and legally binding obligation of the Purchaser enforceable in
accordance

<PAGE>

with its terms, except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally and by principles of equity regarding
the availability of remedies.

4.07 Approvals. The execution, delivery and performance by the
Purchaser of this Agreement, and the purchase and sale of the Shares, do not
require the approval or consent of, or any filing with, any governmental
authority or agency or any other Person.

4.08 Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by the Purchaser
directly with the Company without the intervention of any Person on behalf of
the Purchaser in such manner as to give rise to any valid claim by any Person
against the Company or any Subsidiary for a finder's fee, brokerage commission
or similar payment.

Section 5. Further Agreements of the Parties.

5.01 Protection Against Dilution. The Purchaser is hereby
accorded protection against dilution with respect to the transactions
contemplated hereunder. In the event of the proposed issuance by the Company of
any shares of its common stock (other than pursuant to the exercise of options
to purchase common stock issued to employees, directors and officers of the
Company) (a "Subsequent Stock Issuance"), the Purchaser shall have the right to
acquire Class B Common Shares in such issuance (the "Additional Class B

21
<PAGE>

Shares") in an amount (by number) equal to up to twenty-five percent (25%) of
such proposed issuance at the purchase price and terms offered to other
prospective purchasers in the issuance. In the event the Company proposes to
issue any such additional of shares of its capital stock, then the Company shall
give notice thereof in writing to the Purchaser (the "Option Notice") in the
manner provided herein not less than thirty (30) days prior to the date of the
proposed issuance, setting forth appropriate details with respect to such
proposed issuance. The Purchaser may exercise such right by giving, within
fifteen (15) days after delivery to the Purchaser of the Option Notice, a notice
setting forth its election to acquire Additional Class B Shares. In the event
the Purchaser elects to acquire Additional Class B Shares, the closing of the
purchase and sale of such Additional Class B Shares will take place at the
offices of the Company on a date not later than five (5) days following the
closing of the sale and purchase of the shares in such issuance to the other
prospective purchasers. At the closing of the purchase and sale of the
Additional Class B Shares, the Company will deliver to the Purchaser against
payment of the purchase price for the Additional Class B Shares, in immediately
available funds, or on such other terms as may be afforded other purchasers in
the Subsequent Stock Issuance, certificates representing the number of
Additional Class B Shares.

5.02 Right to Elect Director. For so long as the Purchaser, or
its Affiliates(s), owns not less than fifteen percent (15%) of the aggregate
outstanding amount of the Class A Common and Class B Common (the "Aggregate
Outstanding Common"), or such lesser amount as may be agreed to between the
Company and the Purchaser, commencing

<PAGE>

with the first annual meeting of the shareholders of the Company following the
Closing Date and at each meeting of such shareholders thereafter for the
purposes of electing directors, the Purchaser shall have the right to nominate
one director for election to the Company's board of directors; provided,
however, that until such first annual meeting following the Closing Date, the
Purchaser may require that the board increase its number by one (1) director and
fill such vacancy with an appointee selected by the Purchaser for a term to last
until such first annual meeting. In the event the Purchaser shall elect to not
so nominate or appoint such director, its shall nevertheless be permitted to
have an appointee attend every regular and special meeting of the Company's
board of directors.

5.03 Registration Rights. The Company covenants and agrees as follows:

(a) Piggy-Back Registration. For so long as the Purchaser, or its
Affiliates(s), owns not less than fifteen percent (15%) of the Aggregate
Outstanding Common, or such lesser amount as may be agreed to between the
Company and the Purchaser, if, at any time following the date of this Agreement,
the Company shall file a registration statement (other than any registration
statement on Form S-4, Form S-8, or any successor form) with the Securities and
Exchange Commission (the "Commission") while the Shares are owned by the
Purchaser, the Company shall give the Purchaser at least 45 days' prior written
notice of the filing of such registration statement. If requested by the
Purchaser in writing within 30 days after receipt of any such notice, the
Company shall, at the Company's sole expense (other than the fees and
disbursements of counsel for the Purchaser
23

<PAGE>

and the underwriting discounts, if any, payable in respect of the Shares sold by
the Purchaser), register or qualify all or, at the Purchaser's option, any
portion of the Shares concurrently with the registration of such other
securities, all to the extent requisite to permit the public offering and sale
of the Shares through the facilities of all securities exchanges and the
over-the-counter markets on which the Company's securities are traded.
Notwithstanding the foregoing, if the managing underwriter of any such offering
shall advise the Company in writing that, in its opinion, the distribution of
all or a portion of the Shares requested to be included in the registration
concurrently with the securities being registered by the Company would
materially adversely affect the distribution of such securities by the Company
for its own account, then the Purchaser if it has requested registration of the
Shares shall not be entitled to have the Shares (or the portions thereof so
designated by the managing underwriter) included in such registration statement,
provided that no such exclusion or reduction shall be made as to any of the
Shares if any securities of the Company are included in such registration
statement for the account of any Person other than the Company and the Purchaser
unless the securities included in such registration statement for such other
Person shall have been reduced pro rata to the reduction of the Shares which
were requested to be included in such registration.

(b) Demand Registration. For so long as the Purchaser, or its
Affiliates(s), owns not less than fifteen percent (15%) of the Aggregate
Outstanding Common, or such lesser amount as may be agreed to between the
Company and the Purchaser, if, at any one time after 12 months following the
date of this Agreement, the

<PAGE>

Company shall receive a written request from the Purchaser to register the sale
of the Shares which the Purchaser then owns, provided the Company at the time of
such request is required to file periodic reports under Section 13 or 15 of the
Exchange Act, the Company shall, as promptly as practicable, at the Company's
sole expense (other than the fees and disbursements of counsel for the Purchaser
and the underwriting discounts, if any, payable in respect of the Shares sold by
the Purchaser) prepare and file with the Commission a registration statement
sufficient to permit the public offering and sale of the Shares through the
facilities of all securities exchanges and the over-the-counter markets on which
the Company's securities are traded, and will use its best efforts to cause such
registration statement to become effective as promptly as practicable; provided,
however, that the Company may delay the effectiveness of such request until up
to 120 days after the board of directors of the Company has determined that such
a registration would not be in the best interests of the Company at such time.
The Company shall not be obligated to effect any registration of its securities
pursuant to this Section 5.03(b) within six months after the effective date of a
previous registration statement prepared and filed in accordance with Section
5.03(a) (in which such Shares could have been included).

(c) Company's Obligations. (i) In the event of a registration
pursuant to the provisions of this Section 5.03, the Company shall use its best
efforts to cause the Shares so registered to be registered or qualified for sale
under the securities or blue sky laws of such jurisdictions as the Purchaser may
reasonably request; provided, however, that the Company shall not by reason of
this Section 5.03(c) be required to qualify

<PAGE>

to do business in any state in which it is not otherwise required to qualify to
do business or to file a general consent to service of process; and

(ii) In the event of a registration pursuant to the provisions
of this Section 5.03, the Company shall furnish to the Purchaser such reasonable
number of copies of the registration statement and of each amendment and
supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement and
each supplement or amendment thereto (including each preliminary prospectus),
all of which shall conform to the requirements of the Securities Act and the
rules and regulations thereunder, and such other documents, as the Purchaser may
reasonably request to facilitate the disposition of the Shares included in such
registration.

(d) Other Conditions. In the event of a registration pursuant to the
provision of this Section 5.03, the Company and the Purchaser shall enter into a
cross-indemnity agreement and a contribution agreement, each in customary form,
with each underwriter, if any, and, if requested, enter into an underwriting
agreement containing conventional representations, warranties, allocation of
expenses, and customary closing conditions, including, without limitation,
opinions of counsel and accountants' cold comfort letters, with any underwriter
who acquires any of the Shares.

5.04 Regulatory Information. The Purchaser shall furnish the Company with
such information regarding itself and its Affiliates as may be reasonably
requested by the

<PAGE>

Company to the extent the Company shall be required to amend any License of the
Company or any Subsidiary in connection with the transactions contemplated or
referred to under this Agreement.

Section 6. Covenant with Respect to Conduct of Business. From
the date hereof until the Closing the Company shall conduct its business only in
the ordinary course and in substantially the same manner as heretofore.

Section 7. Conditions to Closing.

(a) Conditions to Purchase. The Purchaser's obligation to
purchase the Shares at the Closing, pursuant to this Agreement, is subject to
compliance by the Company with its agreements herein contained, and to the
satisfaction, on or prior to the Closing Date with respect to the Purchaser's
obligation to consummate the Closing, of the following conditions (compliance
with which or the occurrence of which may be waived in whole or in part in
writing by the Purchaser):

(i) Tender Offer. The Purchaser shall have acquired the minimum
number of shares of Class B Common pursuant to the Tender Offer as set forth in
Section 1.01 hereof.

<PAGE>

(ii) Charter Documents; Good Standing Certificate. The Purchaser
shall have received from the Company (1) a certificate from a duly authorized
officer thereof dated as of the Closing Date certifying as to (A) the absence of
any amendment to the Certificate of Incorporation not otherwise furnished to the
Purchaser pursuant to the terms hereof, and (B) the completeness and accuracy of
the By-laws of the Company as in effect on the Closing Date, and (2) a
certificate, dated not more than twenty days prior to the Closing Date, of the
Secretary of State of Delaware certifying that the Company is duly incorporated
and in good standing under the laws of the State of Delaware.

(iii) Proof of Corporate Action. The Purchaser shall have received
from the Company copies, certified by a duly authorized officer thereof to be
true and complete as of the Closing Date, of the records of all corporate action
taken to authorize the execution, delivery and performance of this Agreement.

(iv) Incumbency Certificate. The Purchaser shall have received
from the Company an incumbency certificate, dated the Closing Date, signed by a
duly authorized officer thereof, and giving the name and bearing a specimen
signature of each individual who shall be authorized to sign, in the name and on
behalf of the Company, this Agreement and to give notices and to take other
action on behalf of the Company under this Agreement.

<PAGE>

(v) Legal Opinion. The Purchaser shall have received from
Newman Tannenbaum Helpern Syracuse & Hirschtritt LLP, counsel to the Company, at
the Closing their favorable opinion, dated the Closing Date, and covering such
matters with respect to the transactions contemplated by this Agreement as the
Purchaser may reasonably request.

(vi) Representations and Warranties; Officers' Certificates. The
representations and warranties of the Company contained or incorporated by
reference herein shall be true and correct in all material respects on and as of
the Closing Date; and the Company shall have performed and complied with all
conditions, covenants and agreements required to be performed or complied with
by it prior to the Closing Date; and the Purchaser shall have received on the
Closing Date a certificate to these effects signed by an authorized officer of
the Company.

(vii) Legality; Authorization. The purchase of the Shares shall not
be prohibited by any law or governmental order or regulation, and shall not
subject the Purchaser to any penalty, special tax or other onerous condition.
All necessary consents, approvals, licenses, permits, orders and authorization
of, or registrations, declarations and filings with, any governmental or
administrative agency or with any other Person, with respect to any of the
transactions contemplated by this Agreement shall have been fully obtained or
made and shall be in full force and effect.

<PAGE>

(viii) Litigation, Etc. No suit, action, investigation, inquiry or other
proceeding (including, without limitation, the enactment or promulgation of a
statute or rule) by or before any arbitrator or any governmental injunction or
order by a state or federal court shall have been entered (1) as of the Closing
Date in connection with the Agreement or any of the transactions contemplated
hereby or (2) at the Closing Date, which would have a Material Adverse Effect or
a material adverse effect on the transactions contemplated by this Agreement,
including, without limitation, the acquisition of the Shares contemplated
hereby.

(ix) General. All instruments and legal, governmental,
administrative and corporate proceedings in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to the Purchaser, and the Purchaser shall have received copies of all
documents, including, without limitation, records of corporate or other
proceedings, opinions of counsel, consents, licenses, approvals, permits and
orders which the Purchaser may have reasonably requested in connection
therewith.

<PAGE>

(i) Charter Documents; Good Standing Certificate. The Company
shall have received from the Purchaser (1) a certificate from a duly authorized
officer thereof dated as of the Closing Date certifying as to (A) the absence of
any amendment to its Certificate of Incorporation not otherwise furnished to the
Company pursuant to the terms hereof, and (B) the completeness and accuracy of
the By-laws of the Purchaser as in effect on the Closing Date, and (2) a
certificate, dated not more than twenty days prior to the Closing Date, of an
appropriate government official certifying that the Purchaser is duly organized
and in good standing under the laws of Delaware.

(ii) Proof of Corporate Action. The Company shall have received
from the Purchaser copies, certified by a duly authorized officer thereof to be
true and complete as of the Closing Date, of the records of all corporate action
taken to authorize the execution, delivery and performance of this Agreement.

(iii) Incumbency Certificate. The Company shall have received from
the Purchaser an incumbency certificate, dated the Closing Date, signed by a
duly authorized officer thereof, and giving the name and bearing a specimen
signature of each individual who shall be authorized to sign, in the name and on
behalf of the Purchaser, this Agreement and to give notices and to take other
action on behalf of the Purchaser under this Agreement.

(iv) Representations and Warranties; Officers' Certificates. The
representations and warranties of the Purchaser contained or incorporated by
reference herein

<PAGE>

shall be true and correct in all material respects on and as of the Closing
Date; and the Purchaser shall have performed and complied with all conditions,
covenants and agreements required to be performed or complied with by it prior
to the Closing Date; and the Company shall have received on the Closing Date a
certificate to these effects signed by an authorized officer of the Purchaser.

(v) Legality; Authorization. The purchase of the Shares shall not
be prohibited by any law or governmental order or regulation, and shall not
subject the Company to any penalty, special tax or other onerous condition. All
necessary consents, approvals, licenses, permits, orders and authorization of,
or registrations, declarations and filings with, any governmental or
administrative agency or with any other Person, with respect to any of the
transactions contemplated by this Agreement shall have been fully obtained or
made and shall be in full force and effect.

Section 8. Indemnification. (a) The Company and the Purchaser
each agree to indemnify and hold the other harmless against any and all claims,
liabilities, costs, damages or expenses (including reasonable counsel fees and
disbursements) which at any time may be incurred by the other as a result of any
misrepresentation, breach of warranty or non-fulfillment of any covenant on the
part of the indemnifying party contained herein.

(b) Subject to Section 10, the obligations of the Company and the
Purchaser under this Section 8 shall survive payment or transfer of the Shares.

<PAGE>

Section 9. Notices. Any notice or other communication in
connection with this Agreement shall be deemed to be delivered if in writing (or
in the form of a telecopy) addressed as provided below and if either (a)
actually delivered or telecopied to said address or (b) in the case of a letter,
on the next business day after the same shall have been deposited with a
recognized international overnight courier:

If to the Company:

Tremont Advisers, Inc.
555 Theodore Fremd Avenue
Rye, New York 10580
Attention: Robert Schulman
Facsimile No.: 914-921-3499

With a copy to:

Newman Tannenbaum Helpern
Syracuse & Hirschtritt LLP
900 Third Avenue
New York, New York 10022
Attention: Michael G. Tannenbaum, Esq.
Facsimile No.: 212-371-1084

If to the Purchaser:

MGL Investments Ltd.
One Logan Square
Suite 1400
Philadelphia, Pennsylvania 19103
Attention: Andrew Walsh
Facsimile No.: 215-963-1210

With a copy to:

Gould & Wilkie
One Chase Manhattan Plaza
New York, New York 10005
Attention: Frederick W. London, Esq.
Facsimile No.: 212-809-6890

<PAGE>

Section 10. Survival of Representations and Warranties. All
agreements, representations and warranties made herein or in any certificate or
other document referred to herein or delivered pursuant hereto shall survive (i)
with respect to representations and warranties contained herein, until eighteen
(18) months after the Closing, (ii) until eighteen (18) months after the Closing
with respect to each covenant and agreement contained herein which is to be
performed on or before the Closing, and (iii) with respect to each other
covenant and agreement contained herein until the last date on which such
covenant or agreement specifies it is to be performed, or, if no such date is
specified, indefinitely.

Section 11. Amendment or Waiver. Neither this Agreement nor
any terms hereof may be changed, waived, discharged or terminated unless such
change, waiver, discharge or termination is in writing signed by the Company and
the Purchaser.

Section 12. Waiver of Jury Trial. Each of the Company and the
Purchaser hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to the actions of the Company and the Purchaser
pursuant to this Agreement in the negotiation, administration, performance or
enforcement thereof.

Section 13. Assignment. This Agreement is not assignable except by
operation of law or as each of the parties hereto may agree in writing and any
attempted assignment in violation of this provision shall be null and void.

<PAGE>

Section 14. Miscellaneous. This Agreement (including the
Exhibits and Schedules) sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby and supersede any
prior written or oral understandings with respect thereto. The invalidity or
unenforceability of any terms or provisions hereof shall not affect the validity
or enforceability of any other term or provision hereof. The headings in this
Agreement are for convenience of reference only and shall not alter or otherwise
affect the meaning hereof. This Agreement may be executed in any number of
counterparts which together shall constitute one instrument and shall be
governed by and construed in accordance with laws of the State of New York
without giving regard to the principles of conflicts of law, and shall bind and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.

TREMONT ADVISERS, INC.

ATTEST: By: /s/ Robert I. Schulman
Name: Robert I. Schulman
/s/ Stephen Clayton Title: President
Name: Stephen Clayton
Title: Chief Financial Officer
MGL INVESTMENTS LTD.

ATTEST: By:/s/ Richard E. O'Brien
Name: Richard E. O'Brien
/s/ Frederick W. London Title: Vice President,
Name: Frederick W. London Secretary and
Title: Assistant Secretary Treasury

<PAGE>

EXHIBIT A

Form of Purchaser's Tender Offer Documents:

1. Offer to Purchase
2. Letter of Transmittal
3. Notice of Guaranteed Delivery
4. Letter to Brokers, et al.
5. Letter from Brokers, et al. to Clients
6. Guidelines for Certification of Taxpayer Identification Number
on Substitute IRS Form W-9

<PAGE>

SCHEDULE 3.05(b)

TREMONT ADVISERS, INC.
SUMMARY OF STOCK OPTIONS

The Following Class B Stock Options Were Outstanding As of May 30, 1997:

Robert Schulman 275,000
Stephen Clayton 20,000
Bruce Ruehl 10,000 305,000
------------

The Following Class B Stock Options Are Proposed As of May 30, 1997:

Directors:

Sandra Manzke 35,000
Robert Schulman 25,000
Alan Rhein 25,000
John Keeley 10,000
Jimmy Thomas 10,000 105,000
-----------

Employees:

Bill Vasu 20,000 20,000
----------- ----------

Total Class B Stock Options Outstanding: 430,000

Terms of the proposed Class B Stock Options are as follows:

Price $3.75

Exercise Period Options will expire on fifth
anniversary Options will vest
one-fourth on grant Options will vest
one-fourth on first anniversary
Options will vest one-half on second
anniversary

In the event of termination, for any
reason, any options that have not
vested will lapse.

Tremont will have the first right to
buy any vested options or shares if
the director or employee shall desire
to sell, assign or transfer such
shares.

<PAGE>

Exhibit 10.44
STOCK OPTION AGREEMENT

STOCK OPTION AGREEMENT (the "Agreement") dated as of June 12, 1997, by and
between SANDRA L. MANZKE, an individual residing at 12 Bishop Park Drive, Pound
Ridge, New York 10576 (the "Executive"); and TREMONT ADVISERS, INC. ("Tremont"),
a Delaware Corporation having its principal Executive offices at Corporate
Center at Rye, 555 Theodore Fremd Avenue, Rye, New York.

WITNESSETH:

WHEREAS, Ms. Manzke is an Executive of Tremont; and

WHEREAS, Tremont has decided to grant the Executive options to purchase up to
35,000 shares of Tremont Class B common stock ("Class B Common Stock"), par
value $0.01 at an exercise price of $3.75 per share.

1. OPTION GRANT. Tremont hereby grants to Executive an option ("the
Option") to acquire up to 35,000 shares of Class B Common Stock (Collectively,
the "Option Shares") at an exercise price of $3.75 per share ("Exercise Price").

2. EXERCISE PERIOD. The Options will expire on the fifth (5th)
anniversary of the grant date (being June 12, 2002). The Options shall vest and
become exercisable on the following schedule: 8,750 shares as of the date of
this agreement, 8,750 shares on the 1st anniversary of the execution of this
agreement being June 12, 1998 and 17,500 on the 2nd anniversary of this
agreement.
(collectively, the "Exercise Period").

In the event of the termination of the Executive, for any reason, whether by the
Company or by the Executive, or upon the expiration of this Agreement, any
options that have not vested will lapse.

1
<PAGE>
4. DELIVERY OF SHARES. Promptly after payment for the Option Shares
referred to in Section 3, Tremont shall deliver to Executive a certificate
representing the Option Shares so purchased. In the event that any exercise of
the Options shall be for less than the total amount of the then vested Options,
the remaining vested Options, shall remain exercisable during the term hereof.

(a) If to Executive:

Sandra L. Manzke
12 Bishop Park Drive
Pound Ridge, NY 10576

(b) If to Tremont:

Tremont Advisers, Inc.
Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, New York 10580-1430
Attention: President

11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.

in witness whereof, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.

By: /s/ Sandra L. Manzke
Sandra L. Manzke

TREMONT ADVISERS, INC.

By: /s/ Robert Schulman
Robert Schulman
President
3
<PAGE>
Exhibit 10.45

STOCK OPTION AGREEMENT

STOCK OPTION AGREEMENT (the "Agreement") dated as of the June 12, 1997, by and
between ROBERT I. SCHULMAN, an individual residing at 18 Green Valley Road,
Armonk, New York 10504 (the "Executive"); and TREMONT ADVISERS, INC.
("Tremont"), a Delaware Corporation having its principal Executive offices at
Corporate Center at Rye, 555 Theodore Fremd Avenue, Rye, New York.

WITNESSETH:

WHEREAS, Mr. Schulman is an Executive of Tremont; and

WHEREAS, Tremont has decided to grant the Executive options to purchase up to
25,000 shares of Tremont Class B common stock ("Class B Common Stock"), par
value $0.01 at an exercise price of $3.75 per share.

1. OPTION GRANT. Tremont hereby grants to Executive an option ("the
Option") to acquire up to 25,000 shares of Class B Common Stock (Collectively,
the "Option Shares") at an exercise price of $3.75 per share ("Exercise Price").

2. EXERCISE PERIOD. The Options will expire on the fifth (5th)
anniversary of the grant date (being June 12, 2002). The Options shall vest and
become exercisable on the following schedule: 6,250 shares as of the date of
this agreement, 6,250 shares on the 1st anniversary of the execution of this
agreement being June 12, 1998 and 12,500 on the 2nd anniversary of this
agreement.
(collectively, the "Exercise Period").

In the event of the termination of the Executive, for any reason, whether by the
Company or by the Executive, or upon the expiration of this Agreement, any
options that have not vested will lapse.

(a) If to Executive:

Robert I. Schulman
18 Green Valley Road
Armonk, New York 10504

(b) If to Tremont:

Tremont Advisers, Inc.
Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, New York 10580-1430
Attention: Chief Financial Officer

11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.

in witness whereof, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.

By: /s/ Robert I. Schulman
Robert I. Schulman

TREMONT ADVISERS, INC.

By: /s/ Stephen Clayton
Stephen Clayton
Chief Financial Officer

<PAGE>
Exhibit 10.46
STOCK OPTION AGREEMENT

STOCK OPTION AGREEMENT (the "Agreement") dated as of the June 12, 1997, by and
between JOHN L. KEELEY, JR., an individual residing at 4138 Central Avenue,
Western Springs, Illinois 60558 (the "Director"); and TREMONT ADVISERS, INC.
("Tremont"), a Delaware Corporation having its principal Director offices at
Corporate Center at Rye, 555 Theodore Fremd Avenue, Rye, New York.

WITNESSETH:

WHEREAS, Mr. Keeley is a Director of Tremont; and

WHEREAS, Tremont has decided to grant the Director options to purchase up to
10,000 shares of Tremont Class B common stock ("Class B Common Stock"), par
value $0.01 at an exercise price of $3.75 per share.

1. OPTION GRANT. Tremont hereby grants to Director an option ("the
Option") to acquire up to 10,000 shares of Class B Common Stock (Collectively,
the "Option Shares") at an exercise price of $3.75 per share ("Exercise Price").

2. EXERCISE PERIOD. The Options will expire on the fifth (5th)
anniversary of the grant date (being June 12, 2002). The Options shall vest and
become exercisable on the following schedule: 2,500 shares as of the date of
this agreement, 2,500 shares on the 1st anniversary of the execution of this
agreement being June 12, 1998 and 5,000 on the 2nd anniversary of this
agreement.
(collectively, the "Exercise Period").

In the event of the termination of the Director, for any reason, whether by the
Company or by the Director, or upon the expiration of this Agreement, any
options that have not vested will lapse.

In the event that at any time the Director shall desire to sell, assign or
transfer all or any part of his vested Options or shares of Stock, he shall
first offer such Options or shares of Stock (the "Offered Options" and the
"Offered Stock," respectively) to Tremont by written notice, specifying the
number of Offered Options and/or the number of shares of Offered Stock. The
purchase price for each share of Offered Stock Shall be equal to the best bid
price thereof on the date of the Director's offer notice to Tremont. The
purchase price for an Offered Option shall be an amount equal to the greater of
(x) $3.75, or (y) the amount of the best bid price for a share of Stock on the
date of the Director's offer notice to Tremont less $3.75. Tremont shall have
the option, exercisable no later than 7 days after receipt of such notice to
purchase the Offered Options and/or the Offered Stock, as the case may be.

1
<PAGE>
4. DELIVERY OF SHARES. Promptly after payment for the Option Shares
referred to in Section 3, Tremont shall deliver to Director a certificate
representing the Option Shares so purchased. In the event that any exercise of
the Options shall be for less than the total amount of the then vested Options,
the remaining vested Options, shall remain exercisable during the term hereof.

5. TRANSFERABILITY. The Director shall at no time sell, assign, or
transfer all or any part of the Options granted to him pursuant to this
Agreement except in accordance with giving notice to the Company and in
accordance with federal and state securities laws.

(a) If to Director:

John L. Keeley, Jr.
4138 Central Avenue
Western Springs, Illinois 60558

(b) If to Tremont:

Tremont Advisers, Inc.
Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, New York 10580-1430
Attention: President

9. SOLE AGREEMENT OF PARTIES. This Agreement sets forth all the
covenants, promises, agreements, conditions and understandings among the parties
hereto, and there are no other covenants, promises, agreements, conditions or
understandings, whether oral or written, among the parties hereto in connection
with the transaction contemplated by this Agreement. This Agreement may only be
amended by a written instrument executed by the parties hereto.
2
<PAGE>
10. PARTIES IN INTEREST, ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon Director and Tremont and their respective
successors and assigns; and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies under or by
reason of this Agreement.

11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.

in witness whereof, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.

By: /s/ John L. Keeley, Jr.
John L. Keeley, Jr.

TREMONT ADVISERS, INC.

By: /s/ Robert Schulman
Robert Schulman
President

<PAGE>
Exhibit 10.47

STOCK OPTION AGREEMENT

STOCK OPTION AGREEMENT (the "Agreement") dated as of June 12 , 1997, by and
between ALAN A. RHEIN, an individual residing at 16 Belmont Drive South, Roslyn
Heights, New York 11577 (the "Director"); and TREMONT ADVISERS, INC.
("Tremont"), a Delaware Corporation having its principal Director offices at
Corporate Center at Rye, 555 Theodore Fremd Avenue, Rye, New York.

WITNESSETH:

WHEREAS, Mr. Rhein is a Director of Tremont; and

WHEREAS, Tremont has decided to grant the Director options to purchase up to
25,000 shares of Tremont Class B common stock ("Class B Common Stock"), par
value $0.01 at an exercise price of $3.75 per share.

1. OPTION GRANT. Tremont hereby grants to Director an option ("the
Option") to acquire up to 25,000 shares of Class B Common Stock (Collectively,
the "Option Shares") at an exercise price of $3.75 per share ("Exercise Price").

2. EXERCISE PERIOD. The Options will expire on the fifth (5th)
anniversary of the grant date (being June 12, 2002). The Options shall vest and
become exercisable on the following schedule: 6,250 shares as of the date of
this agreement, 6,250 shares on the 1st anniversary of the execution of this
agreement being June 12, 1998 and 12,500 on the 2nd anniversary of this
agreement.
(collectively, the "Exercise Period").

In the event of the termination of the Director, for any reason, whether by the
Company or by the Director, or upon the expiration of this Agreement, any
options that have not vested will lapse.

(a) If to Director:

Alan A. Rhein
16 Belmont Drive South
Roslyn Heights, New York 11577

(b) If to Tremont:

Tremont Advisers, Inc.
Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, New York 10580-1430
Attention: President

2
<PAGE>
10. PARTIES IN INTEREST, ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon Director and Tremont and their respective
successors and assigns; and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies under or by
reason of this Agreement.

11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.

in witness whereof, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.

By: /s/ Alan A. Rhein
Alan A. Rhein

TREMONT ADVISERS, INC.

By: /s/ Robert Schulman
Robert Schulman
President
3

<PAGE>
Exhibit 10.48
STOCK OPTION AGREEMENT

STOCK OPTION AGREEMENT (the "Agreement") dated as of June 12, 1997, by and
between JIMMY L. THOMAS, an individual residing at 100 Gibbon Street,
Alexandria, Virginia 22314 ( the "Director"); and TREMONT ADVISERS, INC.
("Tremont"), a Delaware Corporation having its principal Director offices at
Corporate Center at Rye, 555 Theodore Fremd Avenue, Rye, New York.

WITNESSETH:

WHEREAS, Mr. Thomas is a Director of Tremont; and

2. EXERCISE PERIOD. The Options will expire on the fifth (5th)
anniversary of the grant date (being June 12, 2002). The Options shall vest and
become exercisable on the following schedule: 2,500 shares as of the date of
this agreement, 2,500 shares on the 1st anniversary of the execution of this
agreement being June 12, 1998 and 5,000 on the 2nd anniversary of this
agreement.
(collectively, the "Exercise Period").

In the event of the termination of the Director, for any reason, whether by the
Company or by the Director, or upon the expiration of this Agreement, any
options that have not vested will lapse.

(a) If to Director:

Jimmy L. Thomas
100 Gibbon Street
Alexandria, Virginia 22314

(b) If to Tremont:

Tremont Advisers, Inc.
Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, New York 10580-1430
Attention: President

11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.

in witness whereof, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.

By: /s/ Jimmy L. Thomas
Jimmy L. Thomas

TREMONT ADVISERS, INC.

By: /s/ Robert Schulman
Robert Schulman
President
3
<PAGE>
Exhibit 10.49

EXECUTION COPY

STOCK PURCHASE AGREEMENT

by and among

TREMONT MRM SERVICES LIMITED

and

MUTUAL RISK MANAGEMENT (HOLDINGS) LTD.

Dated as of July 1, 1997

<PAGE>

TABLE OF CONTENTS

Page

Section 1. Definitions and Principles of
Construction................................................... 1

1.01 Defined Terms.................................................. 1
1.02 Principles of Construction..................................... 2

Section 2. Sale and Purchase of Shares.................................... 3
2.01 Sale and Purchase of Common Shares............................. 3
2.02 Purchase Price................................................. 3
2.03 Closing........................................................ 3

Section 3. Representations and Warranties of the Company.................. 4
3.01 Organization and Good Standing................................. 4
3.02 Authorization.................................................. 4
3.03 Enforceability................................................. 5
3.04 Approvals...................................................... 5
3.05 Capitalization................................................. 6
3.06 Litigation..................................................... 7
3.07 Defaults....................................................... 7
3.08 Memorandum of Association and Bye-laws......................... 7
3.09 Disclosure..................................................... 7
3.10 Brokers........................................................ 8

Section 4. Representations and Warranties of the Purchaser................ 9
4.01 Investment Intent.............................................. 9
4.02 No Registration of Securities.................................. 9
4.03 Investor Status................................................ 9
4.04 Organization and Good Standing................................. 9
4.05 Authorization.................................................. 10
4.06 Enforceability.................................................. 10
4.07 Approvals....................................................... 11
4.08 Brokers......................................................... 11

Section 5. Conditions to Closing........................................... 11
(a) Purchase................................................... 11
(b) Conditions to Sale......................................... 14

Section 6. Indemnification................................................. 16
2
<PAGE>
Section 7. Notices......................................................... 16

Section 8. Survival of Representations
and Warranties................................................. 17
Section 9. Amendment or Waiver............................................ 18

Section 10. Waiver of Jury Trial........................................... 18

Section 11. Assignment..................................................... 18

Section 12. Miscellaneous.................................................. 18

Schedule 3.04 - Approvals
Schedule 3.05(a) - Shareholders

<PAGE>

This STOCK PURCHASE AGREEMENT, dated as of July 1, 1997, by
and among Tremont MRM Services Limited, an exempted Bermuda company (the
"Company"), and Mutual Risk Management (Holdings) Ltd., a Bermuda company (the
"Purchaser").

In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:

Section 1. Definitions and Principles of
Construction.

1.01 Defined Terms. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:

"Agreement" shall mean this Agreement, as the same
may be amended, supplemented or modified in accordance with the
terms hereof.

"Closing" shall have the meaning given to such
term in Section 2.03 hereof.

"Closing Date" shall have the meaning given to
such term in Section 2.03 hereof.

<PAGE>

"Lien" shall mean any lien, pledge, hypothecation,
mortgage, security interest, claim, lease, charge, option, right of first
refusal, easement encroachment, transfer restriction, or other encumbrance of
any kind.

"Material Adverse Effect" shall mean a material
adverse effect upon the business, assets, condition (financial or otherwise),
operations or prospects of the Company, taken as a whole.

"Persons" shall mean an individual, partnership,
corporation, association, trust, joint venture, unincorporated organization, and
any government, governmental department or agency or political subdivision
thereof.

"Purchase Price" shall have the meaning given to
such term in Section 2.02 hereof.

"Shares" shall have the meaning given to such term
in Section 2.01 hereof.

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<PAGE>
refer to this Agreement as a whole and not to any particular provisions of this
Agreement.

(b) All accounting terms not specifically defined
herein shall be construed in accordance with United States generally accepted
accounting principles.

Section 2. Sale and Purchase of Shares.

2.01 Sale and Purchase of Common Shares. At the Closing, the
Company agrees to issue and sell to the Purchaser, and, subject to the terms and
conditions hereof and in reliance on the representations, warranties and
covenants set forth or referred to herein, the Purchaser agrees to purchase from
the Company, 2,400 of the Company's common shares (the number of common shares
of the Company being purchased by the Purchaser at the Closing is hereinafter
referred to as the "Shares").

2.02 Purchase Price. The purchase price for the Shares
shall be Two Thousand Four Hundred U.S. Dollars (U.S.$2,400) (the
"Purchase Price").

2.03 Closing. The closing of the purchase and sale of the
Shares (the "Closing") will take place at the offices of Conyers Dill & Pearman,
Clarendon House, Church Street, Hamilton HM LX, Bermuda, at 11:00 a.m. local
Bermuda time on July 1, 1997, or at such other time, date and place as the
parties hereto may agree upon (the "Closing Date"). At the Closing, the

6
<PAGE>
Company will deliver to the Purchaser against payment of the Purchase
Price, in immediately available funds, certificates representing the
Shares. At the Closing, the Purchaser will also make an additional capital
contribution to the Company with respect to the Shares in the amount of Nine
Hundred Ninety-Seven Thousand Six Hundred U.S. Dollars (U.S. $997,600).

Section 3. Representations and Warranties of the
Company. The Company represents and warrants to, and for the
benefit of, the Purchaser as follows:

3.01 Organization and Good Standing. The Company (a) is duly
organized and existing in good standing in its jurisdiction of formation, (b) is
duly qualified and authorized to do business in all other jurisdictions in which
the nature of its business or property makes such qualification necessary,
except where such failure to qualify would not have a Material Adverse Effect,
and (c) has the power to own its properties and to carry on its business as now
conducted and as proposed to be conducted.

3.02 Authorization. The execution, delivery and
performance by the Company of this Agreement and the issuance and
sale by the Company of the Shares (a) are within the Company's corporate
power and authority, (b) have been duly authorized by all necessary
corporate proceedings, (c) do not conflict with or result in any breach or
violation of any provision of the Memorandum of Association or Bye-Laws of the
Company (or similar governing documents), (d) do not conflict with or result in

7
<PAGE>
any breach or violation of any provision of any law, regulation, or judgment,
writ, injunction, license or permit, applicable to the Company, and (e) do not
conflict with or result in any breach or violation of any of the terms or
conditions of, or constitute (or with notice or lapse of time or both
constitute) a default under, or give rise to the creation of any Lien upon any
of the property or assets of the Company, under any contract, agreement, lease
or other instrument to which the Company is a party or by which any of its
assets or properties are bound, the consequences of which, with respect to this
clause (e), could reasonably be expected to result in a Material Adverse Effect.

3.04 Approvals. Except as set forth on Schedule 3.04, the
execution, delivery and performance by the Company of this Agreement, and the
purchase and sale of the Shares, do not require the approval or consent of, or
any filing with, any governmental authority or agency or any other Person.

3.05 Capitalization. (a) The authorized share capital of the
Company consists solely of 12,000 shares, U.S.$1.00 par value per share. Up

8
<PAGE>
to the Closing, all of the issued and outstanding share capital of the Company
is owned, directly or indirectly, beneficially and of record by the Persons
respectively set forth on Schedule 3.05(a). All of the outstanding share capital
of the Company is, and upon the delivery to the Purchaser at the Closing of
certificates representing the Shares, in the manner set forth in Section 2.03
hereof, the Shares, will be, duly authorized, validly issued, registered in the
name of the Purchaser, fully paid and nonassessable. The Shares are free and
clear of all Liens.

(b) The Company does not have outstanding any
rights (either pre-emptive or other) or options to subscribe for or purchase
from the Company or any warrants or other agreements providing for or requiring
the issuance or purchase or other acquisition by or on behalf of the Company of,
any share capital or other equity interests or any securities convertible into
or exchangeable for the Company's share capital or other equity interests.
To the best of the Company's knowledge, there are no voting trusts or
other agreements or understandings with respect to the voting of the share
capital or other equity interests of the Company nor any restrictions on the
transferability or sale of such shares or other equity interest except as may
exist under relevant securities laws. The Company is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire, redeem
or retire any shares or other equity interests of the Company or any securities
convertible into or exchangeable for any such share capital or other equity
interests.

3.06 Litigation. There is no litigation, at law or in equity
or any proceeding before any court, board or other governmental or

9
<PAGE>
administrative agency or any arbitrator pending or, to the knowledge of the
Company, threatened against the Company. No judgment, decree or order of any
court, board or other governmental or administrative agency or arbitrator has
been issued against or binds the Company.

3.07 Defaults. The Company is not, nor upon and immediately
after consummation of the transactions contemplated hereby, will be, in default
in any material respect under any provisions of its Memorandum of Association or
Bye-laws (or similar governing documents) or under any provisions of any
franchise, contract, agreement, lease or other instrument to which the Company
is a party or by which the Company or its properties or assets is bound nor
is the Company in violation of any law, judgment, decree or governmental
order, rule or regulation which default or violation has or would have a
Material Adverse Effect.

3.08 Memorandum of Association and Bye-Laws. The copies of the
Memorandum of Association and Bye-Laws (or similar governing documents) of the
Company, and all amendments to each, which shall have been delivered by the
Company to the Purchaser on or prior to the Closing Date, are true, correct and
complete.

3.09 Disclosure. (a) All written information with respect to
the Company, and, to the best of the Company's knowledge after due inquiry, the
business and the assets of the Company furnished to the Purchaser by the
Company, or on behalf of the Company, were, at the time the same were so
furnished, complete and correct in all material respects, or have been

10
<PAGE>
subsequently supplemented by other written information to the extent necessary
to give the Purchaser a true and accurate knowledge of the subject matter of
such written information in all material respects. There is no fact known to the
Company, which has a Material Adverse Effect, or so far as the Company can
reasonably foresee, is reasonably likely to have a Material Adverse Effect,
which has not been set forth in such written information disclosed to the
Purchaser prior to the Closing Date.

(b) No representation, warranty or statement made
by the Company in this Agreement, or in any agreement, certificate, statement or
document required to be delivered pursuant hereto, contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained in this Agreement or in such other agreement,
certificate, statement or document not misleading in light of the circumstances
in which they were made.

3.10 Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by the Company
directly with the Purchaser without the intervention of any Person on behalf of
the Company in such manner as to give rise to any valid claim by any Person
against the Purchaser for a finder's fee, brokerage commission or similar
payment.

Section 4. Representations and Warranties of the
Purchaser. The Purchaser represents and warrants to the Company
that:

11
<PAGE>
4.01 Investment Intent. The Purchaser is acquiring the
Shares for investment, and not with a view to selling or
otherwise distributing the Shares.

4.02 No Registration of Securities. The Purchaser is aware
that the Shares have not been registered under any relevant securities laws, and
may therefore be subject to restrictions on transfer under such laws.

(b) The Purchaser is aware that no governmental
agency has (i) made any finding or determination as to the fairness of any
aspect of the investment in the Shares or (ii) passed on or endorsed the merits
of the purchase of the Shares.

4.04 Organization and Good Standing. The Purchaser has been
duly organized and is validly existing and in good standing under the laws of
Bermuda, and it has the legal right and all necessary corporate power and
authority to execute, deliver and perform all of its obligations under this
Agreement. Prior to the Closing Date, the Purchaser shall have delivered to the
Company copies of the Purchaser's Memorandum of Association and Bye-Laws (or
similar governing documents), together with all amendments thereto.

12
<PAGE>

4.05 Authorization. The execution, delivery and performance by
the Purchaser of this Agreement, and the purchase by the Purchaser of the Shares
(a) are within the Purchaser's corporate power and authority, (b) have been duly
authorized by all necessary corporate proceedings of the Purchaser, (c) do not
conflict with or result in any breach or violation of any provision of the
Memorandum of Association or Bye-Laws (or similar governing documents) of the
Purchaser, (d) do not conflict with or result in any breach or violation of any
provision of any law, regulation, order, judgment, writ, injunction, license or
permit, applicable to the Purchaser, or (e) conflict with or result in any
breach or violation of any of the terms or conditions of, or constitute (or with
notice or lapse of time or both constitute) a default under, or give rise to the
creation of any lien upon any of the property or assets of the Purchaser, under
any contract, agreement, lease or other instrument to which the Purchaser is a
party or by which any of its respective assets or properties is bound, the
consequences of which, with respect to this clause (e), could reasonably be
expected to have a material adverse effect on the validity or enforceability of
this Agreement or on the ability of the Purchaser to perform its obligations
hereunder.

4.06 Enforceability. This Agreement has been duly executed and
delivered and is the valid and binding obligation of the Purchaser enforceable
in accordance with its terms, except to the extent that its enforceability
may be limited by applicable bankruptcy, insolvency, reorganization or other
laws affecting the enforcement of creditors' rights generally and by
principles of equity regarding the availability of remedies.

13
<PAGE>
4.07 Approvals. The execution, delivery and performance by the
Purchaser of this Agreement, and the purchase and sale of the Shares, do not
require the approval or consent of, or any filing with, any governmental
authority or agency or other Person.

4.08 Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by the Purchaser
directly with the Company, without the intervention of any Person on behalf of
the Purchaser in such manner as to give rise to any valid claim by any Person
against the Company or any Subsidiary for a finder's fee, brokerage commission
or similar payment.

Section 5. Conditions to Closing.

(i) Charter Documents; Good Standing Certificate.
The Purchaser shall have received from the Company copies of the Memorandum of

14
<PAGE>
Association and Bye-Laws of the Company as in effect on the Closing Date,
certified as to their completeness and accuracy by a duly authorized officer of
the Company.

(ii) Proof of Corporate Action. The Purchaser
shall have received from the Company copies, certified by a duly authorized
officer thereof to be true and complete as of the Closing Date, of the records
of all corporate action taken to authorize the execution, delivery and
performance of this Agreement.

(iii) Incumbency Certificate. The Purchaser
shall have received from the Company an incumbency certificate, dated the
Closing Date, signed by a duly authorized officer thereof, and giving the name
and bearing a specimen signature of each individual who shall be authorized to
sign, in the name and on behalf of the Company, this Agreement and to give
notices and to take other action on behalf of the Company under this Agreement.

(iv) Representations and Warranties; Officers'
Certificates. The representations and warranties of the Company contained or
incorporated by reference herein shall be true and correct in all material
respects on and as of the Closing Date; and the Company shall have performed and
complied with all conditions, covenants and agreements required to be performed
or complied with by it prior to the Closing Date; and the Purchaser shall have
received on the Closing Date a certificate to these effects signed by an
authorized officer of the Company.

15
<PAGE>
(v) Legality; Authorization. The purchase of the
Shares shall not be prohibited by any law or governmental order or regulation,
and shall not subject the Purchaser to any penalty, special tax or other onerous
condition. All necessary consents, approvals, licenses, permits, orders and
authorization of, or registrations, declarations and filings with, any
governmental or administrative agency or with any other Person, with respect to
any of the transactions contemplated by this Agreement shall have been fully
obtained or made and shall be in full force and effect.

(vi) Litigation, Etc. No suit, action,
investigation, inquiry or other proceeding (including, without limitation, the
enactment or promulgation of a statute or rule) by or before any arbitrator or
any governmental injunction or order by any court having jurisdiction shall have
been entered (1) as of the Closing Date in connection with the Agreement
or any of the transactions contemplated hereby or (2) at the Closing Date,
which would have a Material Adverse Effect or a material adverse effect
on the transactions contemplated by this Agreement, including, without
limitation, the acquisition of the Shares contemplated hereby.

(vii) General. All instruments and legal,
governmental, administrative and corporate proceedings in connection with the
transactions contemplated by this Agreement shall be reasonably satisfactory in
form and substance to the Purchaser, and the Purchaser shall have received
copies of all documents, including, without limitation, records of corporate or

16
<PAGE>
other proceedings, opinions of counsel, consents, licenses, approvals, permits
and orders which the Purchaser may have reasonably requested in connection
therewith.

(b) Conditions to Sale. The Company's obligation to issue and
sell the Shares at the Closing, pursuant to this Agreement, is subject to
compliance by the Purchaser with its agreements herein contained, and to the
satisfaction, on or prior to the Closing Date with respect to the Company's
obligation to consummate the Closing, of the following conditions (compliance
with which or the occurrence of which may be waived in whole or in part in
writing by the Company):
(i) Charter Documents; Compliance Certificate.
The Company shall have received from the Purchaser (A) copies of the Memorandum
of Association and Bye-Laws of the Company as in effect on the Closing Date,
certified as to their completeness and accuracy by a duly authorized officer of
the Purchaser, and (B) a compliance certificate, dated not more than twenty days
prior to the Closing Date, of an appropriate government official certifying that
the Purchaser is in compliance under the laws of Bermuda as contemplated by such
certificate.

(ii) Proof of Corporate Action. The Company shall
have received from the Purchaser copies, certified by a duly authorized officer
thereof to be true and complete as of the Closing Date, of the records of all
corporate action taken to authorize the execution, delivery and performance of
this Agreement.

17
<PAGE>

(iii) Incumbency Certificate. The Company
shall have received from the Purchaser an incumbency certificate, dated the
Closing Date, signed by a duly authorized officer thereof, and giving the name
and bearing a specimen signature of each individual who shall be authorized to
sign, in the name and on behalf of the Purchaser, this Agreement and to give
notices and to take other action on behalf of the Purchaser under this
Agreement.

(iv) Representations and Warranties; Officers'
Certificates. The representations and warranties of the Purchaser contained or
incorporated by reference herein shall be true and correct in all material
respects on and as of the Closing Date; and the Purchaser shall have performed
and complied with all conditions, covenants and agreements required to be
performed or complied with by it prior to the Closing Date; and the Company
shall have received on the Closing Date a certificate to these effects signed by
an authorized officer of the Purchaser.

(v) Legality; Authorization. The purchase of the
Shares shall not be prohibited by any law or governmental order or regulation,
and shall not subject the Company to any penalty, special tax or other onerous
condition. All necessary consents, approvals, licenses, permits, orders and
authorization of, or registrations, declarations and filings with, any
governmental or administrative agency or with any other Person, with respect to
any of the transactions contemplated by this Agreement shall have been fully
obtained or made and shall be in full force and effect.

18
<PAGE>
Section 6. Indemnification. (a) The Company and
the Purchaser each agree to indemnify and hold the other harmless
against any and all claims, liabilities, costs, damages or
expenses (including reasonable counsel fees and disbursements)
which at any time may be incurred by the other as a result of any
misrepresentation, breach of warranty or non-fulfillment of any covenant on the
part of the indemnifying party contained herein.

(b) Subject to Section 8, the obligations of the
Company and the Purchaser under this Section 8 shall survive payment or transfer
of the Shares.

Section 7. Notices. Any notice or other communication in
connection with this Agreement shall be deemed to be delivered if in writing (or
in the form of a telecopy) addressed as provided below and if either (a)
actually delivered or telecopied to said address or (b) in the case of a letter,
the business day after the same shall have been deposited with a recognized
international overnight courier:

If to the Company:

Tremont MRM Services Limited
Tremont House, 4 Park Road
Hamilton HM11, Bermuda
Attention: Secretary
Facsimile No.: 441-296-0667

With a copy to:

Newman Tannenbaum Helpern
Syracuse & Hirschtritt LLP
900 Third Avenue
New York, New York 10022
Attention: Michael G. Tannenbaum, Esq.
Facsimile No.: 212-371-1084

19
<PAGE>
If to the Purchaser:

Mutual Risk Management (Holdings) Ltd.
44 Church Street
P.O. Box HM 2064
Hamilton HM HX, Bermuda
Attention: Secretary
Facsimile No.: 441-292-1867

With a copy to:

Gould & Wilkie
One Chase Manhattan Plaza
New York, New York 10005
Attention: Frederick W. London, Esq.
Facsimile No.: 212-809-6890

Section 8. Survival of Representations and Warranties. All
agreements, representations and warranties made herein or in any certificate or
other document referred to herein or delivered pursuant hereto shall survive (i)
with respect to representations and warranties contained herein, until eighteen
(18) months after the Closing, (ii) until eighteen (18) months after the Closing
with respect to each covenant and agreement contained herein which is to be
performed on or before the Closing, and (iii) with respect to each other
covenant and agreement contained herein until the last date on which such
covenant or agreement specifies it is to be performed, or, if no such date is
specified, indefinitely.

20
<PAGE>
Section 9. Amendment or Waiver. Neither this
Agreement nor any terms hereof may be changed, waived, discharged
or terminated unless such change, waiver, discharge or termination is in writing
signed by the Company and the Purchaser.

Section 10. Waiver of Jury Trial. Each of the Company and the
Purchaser hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to the actions of the Company and the Purchaser
pursuant to this Agreement in the negotiation, administration, performance or
enforcement thereof.

Section 11. Assignment. This Agreement is not
assignable except by operation of law or as each of the parties
hereto may agree in writing and any attempted assignment in
violation of this provision shall be null and void.

Section 12. Miscellaneous. This Agreement (including the
Exhibits and Schedules) sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby and supersede any
prior written or oral understandings with respect thereto. The invalidity or
unenforceability of any terms or provisions hereof shall not affect the validity
or enforceability of any other term or provision hereof. The headings in this
Agreement are for convenience of reference only and shall not alter or otherwise
affect the meaning hereof. This Agreement may be executed in any number of
counterparts which together shall constitute one instrument and shall be

21
<PAGE>
governed by and construed in accordance with laws of Bermuda without giving
regard to the principles of conflicts of law, and shall bind and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.

IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.

TREMONT MRM SERVICES LIMITED

ATTEST: By:/s/ Spottswood P. Dudley
Name: Spottswood P. Dudley
/s/ David J. Doyle Title: President
Name: David J. Doyle
Title:

MUTUAL RISK MANAGEMENT
(HOLDINGS) LTD.

ATTEST: By: /s/ David J. Doyle
Name: David J. Doyle
_____________________ Title:
Name:
Title:

<PAGE>

SCHEDULE 3.04

Approvals

None.

<PAGE>

SCHEDULE 3.05(A)

Shareholders

The existing shareholders of Tremont MRM Services Limited are:

NAME NUMBER OF SHARES OWNED

Tremont (Bermuda) Limited 4,800
The Anglo-Dutch Insurance Company Limited 4,800

<PAGE>

Exhibit 10.50

SHAREHOLDERS' AGREEMENT

SHAREHOLDERS' AGREEMENT made as of the 1st day of July, 1997 by and
among TREMONT MRM SERVICES LIMITED, an exempted Bermuda company, having a place
of business at Tremont House, 4 Park Road, Hamilton, HM11, Bermuda (the
"Company") Tremont (Bermuda) Limited, an exempted Bermuda company, having a
place of business at Tremont House, 4 Park Road, Hamilton HM 11, Bermuda
("TBL"), The Anglo-Dutch Insurance Company Limited, a Cayman Islands
corporation, having a place of business at Genesis Building, 2nd Floor,
Georgetown, Grand Cayman, Cayman Islands, B.W.I. ("Anglo-Dutch") and Mutual Risk
Management (Holdings) Ltd., a Bermuda corporation, having a place of business at
44 Church Street, Hamilton HM HX, Bermuda ("MRM"). Each of TBL, AngloDutch and
MRM are referred to as a "Shareholder" and, collectively, as the "Shareholders."

W I T N E S S E T H :

WHEREAS, TBL and Anglo-Dutch have heretofore operated as an informal
joint venture to render services to Tremont International Insurance Ltd., a
Cayman Islands exempted limited company ("TIL");

WHEREAS, the parties hereto wish to form an exempted Bermuda company,
admit MRM to the Company as a shareholder and desire to set forth their rights
and obligations vis-a-vis the Company;

WHEREAS, the Company shall enter into a certain Services Agreement with
TIL for the development, administration, marketing and sale of certain insurance
products and the performance of certain other services as set forth in the
Services Agreement;

WHEREAS, the Memorandum of Association and Bye-Laws of the Company
provide that the Company is authorized to issue 12,000 shares of capital stock
$1.00 par value per share (the "Shares"); and

WHEREAS, the Shareholders desire to set forth certain
restrictions and obligations on themselves, the Company and the
shares of the Company; and

WHEREAS, the directors of the Company have considered it in the
interests of the Company to enter into this Agreement.

NOW, THEREFORE, it is agreed as follows:

1. Purpose and Mandatory Activities

(a) Purpose. The purpose of the Company (the "Purpose") is to
enter into the Services Agreement, to develop, administer, market and sell the

1
<PAGE>
Products, to perform other services for TIL pursuant to the Services Agreement,
and to engage in such other activities as may be in furtherance of said Purpose.
Other than unsecured trade payables incurred in the ordinary course of the
Company's business, the Company shall incur no indebtedness except with the
prior consent of two of the three Shareholders. The Company shall not engage in
any other business without the prior consent of all of the Shareholders.

In amplification of the foregoing and as set forth elsewhere
in this Agreement, the Shareholders hereby confirm that the Company is a special
purpose entity which: (i) shall not own any asset other than such personalty,
equipment and/or fixtures as may be reasonably related thereto the Purpose; (ii)
shall not engage in any business operations other than those necessary for the
Purpose and any business transactions which are entered into between the Company
and any Shareholder or Affiliate of any Shareholder shall be entered into upon
terms and conditions that are intrinsically fair and substantially similar to
those that would be available on an arm's-length basis with third parties (the
Shareholders agree that the Services Agreement satisfies such condition); (iii)
shall be solvent and pay its debts from its assets as the same become due; (iv)
shall maintain books and records and bank accounts separate from those of its
Affiliates, including its Shareholders; (v) shall be, and at all times shall
hold itself out to the public as, a legal entity separate and distinct from any
other entity (including any Affiliate and any Shareholder); (vi) shall file its
own tax returns; (vii) shall maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its respective size and
character and in light of its respective contemplated business operations; and
(viii) shall not commingle its funds or assets with any other person or entity.

(b) Mandatory Activities. Notwithstanding anything to
the contrary set forth in this Agreement, the Company, at all
times, shall:

(i) hold its assets in its own name;

(ii) conduct its own business in its own name;

(iii) comply in all respects at all times with
the provisions of the Services Agreement;

(iv) maintain its books, records, resolutions and
agreements as official records;

2
<PAGE>
(v) pay its own liabilities out of its own funds;

(vi) observe all corporate formalities, particularly
as required under Bermuda law;

(vii) maintain an arm's-length relationship
with its Affiliates;

(viii) pay the salaries of its own employees and
maintain a sufficient number of employees in light of
its contemplated business operations;

(ix) not guarantee or become obligated for the debts
of any other entity or hold out its credit as being
available to satisfy the obligations of others;

(x) not acquire obligations of Affiliates;

(xi) not make loans to any other person or entity;

(xii) allocate fairly and reasonably any
overhead for shared office space;

(xiii) use separate stationery, invoices, and
checks;

(xiv) not pledge its assets for the benefit of
any other entity;

(xv) hold itself out as a separate entity, and not
fail to correct any known misunderstanding regarding
its separate identity;

(xvi) not identify itself or any of its
Affiliates as a division or part of the other; and

(xvii) not engage in business in the United States.

The Board of Directors of the Company shall be responsible for
ensuring that the requirements of Section 1(a) and this Section 1(b) shall be
complied with by the Company.

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<PAGE>
(c) Meetings, Etc. All meetings of the Board of
Directors or Shareholders of the Company shall be held in either
Bermuda or the Cayman Islands.

2. Management and Control

(a) The Memorandum of Association and Bye-Laws of the
Company, as heretofore adopted by the Company and as amended to date, are, by
its execution of this Agreement, approved by each of the Shareholders.

(b) The Board of Directors of the Company (the "Board" or
"Board of Directors"), consists of Robert I. Schulman and Sandra L. Manzke
(appointed by TBL); Spottswood Dudley and James Salvaggi (appointed by
Anglo-Dutch); and Richard E. O'Brien (appointed by MRM). Each Shareholder, by
its execution of this Agreement, ratifies and confirms the appointment of the
foregoing individuals as Directors of the Company. The Board of Directors shall
consist of at least two individuals, one appointed by TBL and one appointed by
Anglo-Dutch. TBL and Anglo-Dutch may increase the number of individuals to be
appointed by each to any equal number. MRM shall have the right to appoint to
the Board of Directors one or more individuals, not to exceed one-third of the
total number of individuals on the Board of Directors.

(c) The current officers of the Company, as heretofore elected
by the Board, are as follows: Sandra L. Manzke, Managing Director; Spottswood
Dudley, President; Robert I. Schulman, Executive Vice President; James Salvaggi,
Vice PresidentSecretary/Treasurer. Each Shareholder, by its execution of this
Agreement, ratifies and confirms the election of such persons as officers of the
Company and agrees that each such officer shall serve in such capacity until
removed by a majority of the Board of Directors.

(d) The fiscal year of the Company shall be as determined by
the Board.

(e) The bank accounts of the Company shall be maintained at
such banks as shall be decided by the Board and require such signatures as the
Board shall determine.

(f) The Board shall be responsible for the management of the
Company's business, subject to the provisions of the other Sections of this
Agreement which shall limit and restrict the authority of the Board to the
fullest extent permitted by law without derogating from the fiduciary duties of
the Board (and each of its members) to the Company.

4
<PAGE>
(g) Notwithstanding anything to the contrary contained in this
Agreement or applicable law, the Board of Directors shall not have the power or
authority, without the consent of all of the Shareholders (a) to cause the
Company to take any Bankruptcy Action or (b) to cause the Company to commence
winding up, dissolve, liquidate, consolidate, merge or sell all or substantially
all of its assets.

(h) No Director or Shareholder shall be required to devote its
full working time to the Company but shall devote reasonable efforts of the type
a prudent businessman would devote in similar circumstances which may be
necessary in order properly to supervise the affairs and business of the
Company.

(i) Unless there shall be prior approval by MRM, Anglo-Dutch
will not originate any new insurance applications for business to be written
after the date of this Agreement during the Term.

(j) In connection with the Company's services under the
Services Agreement:

(i) Anglo-Dutch shall supervise the Company's
services as they relate to insurance services;

(ii) MRM shall supervise the Company's services as
they relate to the actual issuance of policies; and

(iii) TBL shall supervise all pricing issues and
investment management.

(k) Each Director and Shareholder shall devote so much of its
time to the business of the Company as in its judgment the conduct of the
Company's business shall require, and, except as otherwise provided in this
Agreement or in any other agreement among the parties, each Director and
Shareholder may engage in business ventures of any nature and description
independently or with others and neither the Company nor any of the Directors
and Shareholders shall have any rights in and to such independent venturers or
the income or profits derived therefrom.

(l) Each Shareholder, by its execution of this Agreement,
ratifies and confirms that the Board shall act by majority vote, except as
otherwise provided in Section 3 hereof.

(m) In the event that TBL shall cause any of its employees
and/or affiliates to render certain financial and administration services to the

5
<PAGE>
Company, such services shall be provided at such rates as the Company and TBL
shall agree.

(n) Attached hereto is a schedule showing the anticipated
expenses of the Company, aggregating $1,000,000 for the period June 30, 1997
through June 30, 1998. These projections will be updated by the Board at least
annually. It is anticipated that the $1,000,000 capital contribution by MRM
will be utilized for the 1997-1998 expenses.

(o) Each Director and Shareholder will have access, at all
reasonable times at the Company's office, to the books and records of the
Company.

3. Actions Requiring Unanimous Consent

Each Shareholder, by its execution of this Agreement, ratifies
and confirms that the unanimous decision of the Board shall be required with
respect to any of the following matters:

(i) Issuance by the Company of any Shares or
other securities to any person;

(ii) Recapitalization of the Company's Shares;

(iii) Liquidation or dissolution of the
Company or other cessation of the Company's
business;

(iv) Voluntary winding up of the Company or other
action by the Company for relief under any laws
relating to bankruptcy or insolvency;

(v) Reorganization of the Company, including, without
limitation, sale of substantially all of the assets
of the Company, merger or consolidation of the
Company with any other entity or spin-off or split up
of the Company;

(vi) Recommendation of the amount of any dividend;

(vii) Approval of any transaction with any Affiliate
of any of the Shareholders, or of any transaction
with a partner, shareholder, officer or director of
any Affiliate of any of the Shareholders; or

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<PAGE>
(viii) Approval of the Corporation's purchase of
Shares pursuant to Sections 7 or 9 (except that the
vote of any Director appointed by the Selling
Shareholder shall not be required).

4. Share Ownership

As of the date of this Agreement, an aggregate of 12,000
Shares are issued and outstanding. The number of Shares owned by each of the
Shareholders, and the percentage of the total number of Shares issued and
outstanding owned by each Shareholder, is set forth below opposite the
respective Shareholder's name.

<TABLE>
<S> <C> <C> <C>
=============================================================================================================================
Initial Number Percentage
Capital of of
Name Contribution Shares Ownership
- -----------------------------------------------------------------------------------------------------------------------------
TBL $4,800 4800 40%

- -----------------------------------------------------------------------------------------------------------------------------
Anglo-Dutch $4,800 4800 40%
- -----------------------------------------------------------------------------------------------------------------------------
MRM $2,400 2400 20%
=============================================================================================================================

</TABLE>
In addition, MRM is making, as of the date of this Agreement,
an additional capital contribution of $997,600 and no additional Shares shall be
issued to MRM as a consequence of that contribution.

5. Restrictions on Transfer of Shares

(a) Except as otherwise provided in this Agreement, no
Shareholder shall at any time during the term of this Agreement, sell, assign,
encumber, transfer, pledge or hypothecate or otherwise dispose of all or any
part of the Shares now owned or hereafter acquired by him or any interest
therein except by a transfer of the entire legal and beneficial interest therein
and in the manner hereinafter provided. Any such purported encumbrance, transfer
or disposition in violation of this Agreement shall be invalid and of no force
and effect in relation to any other Shareholder and so far as permitted by law
shall not be recorded on the books of the Company. Any proposed transfer must be
in compliance with all requirements of the law of Bermuda including the securing
of any required approvals.

(b) Any additional or substituted person or entity who becomes
a Shareholder in the Company shall be required, as a condition precedent to the
issuance or transfer of Shares to it, to agree in writing to be bound by the
terms of this Agreement.

(c) Notwithstanding the foregoing, any of the Shareholders may
transfer to any employee of the Company Shares in the Company (up to an

7
<PAGE>
aggregate of 5% of the Company's Shares for all such transfers) free, except as
provided in this subsection (c), of the restrictions imposed by this Agreement.
Any such employee transferee shall agree that he shall not sell, assign,
encumber, transfer, pledge, hypothecate or otherwise dispose of all or any part
of his or her Shares and, further, that upon termination of his employment, he
shall sell his Shares back to the transferring Shareholder for such price as the
transferring Shareholder may designate at the time of transfer. Any Shares so
repurchased may be transferred to other employees upon the same terms.

6. Endorsement of Share Certificates

All Share certificates now or hereafter issued by the Company
shall be subject to this Agreement and shall bear the following legend:

"The Shares evidenced by this certificate or any certificate
issued in exchange or transfer therefor are and will be
subject to, and may be transferred only in accordance with the
agreement dated as of the 1st day of July 1997 by and among
the Company and its shareholders and any amendments thereto,
which agreement provides for restrictions on the transfer,
encumbrance and disposition of the Shares of the Company and
which is on file at the registered office of the Company."

7. Voluntary Sale of Shares--Bona Fide Offer

(a) In the event that any Shareholder shall have received, and
wishes to accept, a bona fide offer from one or more third parties to purchase
all but not less than all of its Shares (the "Offered Shares") the Shareholder
(the "Selling Shareholder") shall offer the Offered Shares to the Company and
the remaining Shareholders pursuant to the procedures set forth in this Section
7.

(b) In the event that a Selling Shareholder shall be required
to offer the Offered Shares to the Company and/or the remaining Shareholders
pursuant to Section 7(a), the Selling Shareholder shall offer such Shares to the

8
<PAGE>
Company and the remaining Shareholders by written notice (the "Offer Notice"),
which Offer Notice shall be given simultaneously to the Company and to the
remaining Shareholders, advising them of its intention to make such disposition.
The Offer Notice shall (i) set forth the name(s) and address(es) of the
party(ies) having made such offer (the "Offerors") and (ii) specify the number
of Shares subject to the offer, the intended purchase price thereof and the
method of payment therefor and any other material terms of such offer. Such
options available to the Company and/or the remaining Shareholders shall be
exercisable in accordance with the provisions of Section 7(c) and Section 7(e)
hereof.

(c) The Company shall have the option, exercisable no later
than forty-five (45) days after receipt of the Offer Notice and subject to all
applicable laws and regulations (the "Company Exercise Period"), to agree to
purchase, at the price determined and upon the terms provided in Section 8
hereof, all or part of the Offered Shares as indicated in this Section 7(c);
provided, however, that this Section 7(c) shall not apply to any offer made by
an Offeror which the Company has reasonable cause to believe may not be a bona
fide purchase offer; and provided, further, that the Company shall have the
option to purchase less than all of the Offered Shares only in the event the
balance of the Offered Shares are purchased by the remaining Shareholders as
provided in this Section 7.

(d) If the Company shall elect to exercise this option, it
shall give a written notice of exercise to the Selling Shareholder, no later
than five (5) business days prior to the expiration of the aforesaid Company
Exercise Period, which notice (hereinafter the "Company Exercise Notice") shall
specify the number of shares being purchased by the Company. In the event the
Company and/or any remaining Shareholder(s) elect to purchase the Offered Shares
pursuant to this Section 7 (each such purchaser shall sometimes hereinafter be
referred to as a "Purchaser"), then the closing shall take place at the
registered office of the Company or such other place as the Company may
reasonably designate (i) in the event the Company shall elect to purchase all of
the Offered Shares, within sixty (60) days after the giving of such Company
Exercise Notice, or (ii) in the event the Company shall elect to purchase less
than all of the Offered Shares, within sixty (60) days after the giving of all
"Shareholder Exercise Notices" (as such term is defined in Section 7(e) hereof).
At the closing, the purchase price shall be paid and the Shares shall be
transferred, as set forth in Section 8 hereof.

(e) If the Company shall fail to elect to exercise, in part or
in whole, its option to purchase the Offered Shares, then each remaining

9
<PAGE>
Shareholder shall have the option to purchase its proportionate share of the
Offered Shares, other than those Shares purchased by the Company pursuant to
Section 7(c) hereof, such proportionate share to be based upon the ratio of the
number of Shares held by each such accepting Shareholder to the total number of
issued and outstanding shares of Shares held by all accepting Shareholders. This
option to the remaining Shareholders shall be exercisable, if at all, within the
thirty (30) day period following the expiration of the Company Exercise Period
as above provided in Section 7(d) (the "Shareholder Exercise Period"). If any
Shareholder shall elect to exercise its option, such Shareholder shall give a
written notice of exercise to the Company and the Selling Shareholder prior to
the expiration of the aforesaid Shareholder Exercise Period (the "Shareholder
Exercise Notice").

(f) In the event that the option is exercised by the Company
and the Company does not have a surplus sufficient to enable the Company
lawfully to make such purchase, then the Company and the Shareholders will
promptly take all action which may be necessary and permitted by law (including
reducing the capital of the Company) in order to make funds available in an
amount sufficient to pay such sums that may be required on account of the
purchase price. Each Shareholder, by its execution of this Agreement, agrees to
vote its Shares in such manner as to accomplish the availability of such funds,
and the Selling Shareholder shall be deemed to have given the President of the
Company its proxy for such purpose or, if the President of the Company is the
Selling Shareholder or there shall be no person occupying the office of
President, such proxy shall be deemed given to the Secretary of the Company.
In addition, the Company shall be able to exercise the option only if it has
sufficient capital under Bermuda law.

(g) In the event that the options granted to the Company and
the remaining Shareholders pursuant to this Section 7 are not exercised as
herein provided, the Selling Shareholder shall have the right to dispose of all
of the shares owned by the Selling Shareholder at the price and on the terms
specified in the Offer Notice and subject to the terms of this Agreement;
provided, however, that the offer and sale of the shares shall, in all respects
comply with the registration provisions of (or be exempt from the registration
provisions of) any applicable securities law and the conclusive written opinion
of the Offeror's counsel that the offer and sale comply with said registration
provisions or are exempt therefrom shall be received by the Company. Copies of
all documents relating to such sale shall be forwarded to the Secretary of the
Company no later than five (5) days after the date of the sale. If such sale is

10
<PAGE>
not consummated within sixty (60) days after the expiration of the option
period, the Selling Shareholder's Shares shall again be subject to all of the
terms and provisions of this Agreement.

8. Purchase Price for Sale under Section 7

(a) In the event that one or more Purchasers (as defined in
Section 7(d)) elect to purchase Shares from the Selling Shareholder as provided
in Section 7 above, the purchase price for the Offered Shares shall be at the
price and payable on the terms which are designated in the Offer Notice provided
for in Section 7(b) above.

(b) In order to provide security for the payment of the
deferred portion of the purchase price, if any, the Selling Shareholder shall
deliver at closing the certificates evidencing the number of Shares being
purchased by the Purchaser, together with duly executed instruments of transfer
of such shares, to such person as shall be acceptable to both parties as escrow
agent (the "Escrow Agent"). Upon receipt of payment in full of each installment
of principal and interest on such deferred portion, the Escrow Agent shall
release to the maker of the related note or other evidence of indebtedness note
a duly endorsed share transfer certificate with any required transfer tax stamps
affixed thereto, representing that fraction of the Shares which such Purchaser
has purchased which corresponds to a fraction the numerator of which shall equal
the principal payment made and the denominator of which shall equal the original
principal amount of the Purchaser's note or other evidence of indebtedness.

(c) In the event of any default in the payment of the deferred
portion of the purchase price, if any, the Selling Shareholder shall give notice
thereof to the Escrow Agent, and the Escrow Agent shall thereupon hold the
certificates and share transfer instruments in respect of such Shares until
there shall be delivered to the Escrow Agent a copy of a final judgment
directing disposition of the Shares or a letter of instructions signed by the
Selling Shareholder and the Purchaser directing disposition of the Shares. So
long as a Purchaser's purchased Shares shall be held by the Escrow Agent, he she
or it shall receive any distributions thereon to hold the same upon trust. Until
notice of default, the Escrow Agent shall deliver such distributions to the
Purchaser; after notice of default, the Escrow Agent shall hold such
distributions pending instructions as set forth above. Voting rights with
respect to such Shares shall be exercisable by the Purchaser so long as the
shares are held by the Escrow Agent, and the Selling Shareholder shall at

11
<PAGE>
closing deliver such instruments of proxy as may be necessary or appropriate to
give effect to the terms of this Section 8.

9. Additional Options to Purchase Shares

(a) In the event that any Shareholder shall desire to sell all
or a portion of its shares of Stock when it has not received a bona fide offer
as described in Section 7(a), the Shareholder (the "Selling Shareholder") shall
offer such shares (the "Offered Shares") to the Company and the remaining
Shareholders pursuant to the procedures set forth in Section 7; provided,
however, that the notice hereunder shall specify only the number of Offered
Shares. The options available to the Company and the remaining Shareholders to
purchase all of the Offered Shares shall be exercisable in writing by notice to
the Selling Shareholder as specified in Section 7(d) or Section 7(e), as the
case may be, at the price determined and on the terms set forth in Section 10
hereof, and the closing of the transaction shall take place no later than sixty
(60) days after the exercise of the option.

(b) In the event a Bankruptcy Action shall occur with respect
to any Shareholder (the "Selling Shareholder"), the Selling Shareholder shall be
deemed, without further action, to have offered all of the Shares then owned by
such Shareholder (the "Offered Shares") to the Company and the remaining
Shareholders pursuant to the procedures set forth in Section 7 hereof. The
options available to the Company and the remaining Shareholders shall be
exercisable in writing to the Selling Shareholder no later than thirty (30) days
after the date of occurrence of the Bankruptcy Action (or, if such Bankruptcy
Action was not then notified or known (or reasonably apparent) to the Company
and the remaining Shareholders, after the date of such notification or knowledge
(or becoming reasonably apparent) at the price determined and on the terms set
forth in Section 10 hereof, and the closing of the transaction shall take place
no later than sixty (60) days after the date on which such options are
exercised.

(c) In the event all or any of a Shareholder's Shares becomes
subject to a proposed or actual encumbrance, such Shareholder (the "Selling
Shareholder") shall be deemed, without further action, to have offered all of
the Shares then owned by such Shareholder (the "Offered Shares") to the Company
and the remaining Shareholders in accordance with the provisions of Section 9(b)
above. If the aforesaid offer is accepted by the Company and/or the remaining
Shareholders, the closing for such purchase shall be held no later than sixty
(60) days after the date of the exercise of the option.

12
<PAGE>
(d) In the event that the Company, having exercised its option
to purchase the Shares offered or deemed offered pursuant to this Section 9,
does not have funds available sufficient to enable the Company lawfully to make
such purchase, then the Company and the Shareholders will promptly take all
action which may be necessary and permitted by law (including without limitation
reducing the capital of the Company) to make funds available in an amount
sufficient to pay such sums that may be required on account of the purchase
price. Each Shareholder, by its execution of this Agreement, agrees to vote its
Shares in such a manner as to accomplish the availability of such funds and the
Selling Shareholder shall be deemed to have given the President of the Company
his proxy for such purpose or, if the President of the Company is the Selling
Shareholder or there shall be no person occupying the office of President , such
proxy shall be deemed given to the Secretary of the Company.

(e) In the event that TIL shall elect to cause the termination
of the Services Agreement pursuant to the provisions of Section 15 thereof, such
election shall be deemed to be an offer to sell MRM's Shares for the purpose of
Section 9(a) of this Agreement and the Company and the remaining Shareholders
shall have the rights therein specified.

10. Method of Valuation for Purposes of Section 9

(a) In the event the Company and/or any remaining
Shareholder(s) exercise its or their option to purchase the shares offered
pursuant to Section 9, the purchase price of the sale of Shares under Section 9
shall be an amount equal to the Selling Shareholder's pro rata share of the
value of the Company, determined by an appraiser appointed in accordance with
the provisions of Section 10(c) hereof. The appraiser shall act as an expert,
not an arbitrator and the appraiser's determination of such value shall be
final, conclusive, and binding on all parties. The Selling Shareholder's pro
rata share of the Company's value shall be a fraction thereof, the numerator of
which is the number of Shares owned by the Selling Shareholder and the
denominator of which is the total number of Shares issued and outstanding on the
date of the applicable event triggering the purchase of the Shareholder's
Shares.

(b) Payment of the purchase price for the Shares shall be made
in cash unless the Selling Shareholder and the Purchaser agree to an alternative
method, in which event delivery of the share certificates representing the
Shares and other documents evidencing or connected with the sale of such Shares
shall be made in the same manner as is provided for in Section 8(b).

13
<PAGE>
(c) An appraiser shall be selected by the Selling Shareholder
(or its legal representative) and the Purchasers. If agreement on an appraiser
cannot be reached within five days after any election to purchase under Section
9, the Selling Shareholder (or his legal representative) and the Purchaser(s)
shall each promptly select an appraiser, which appraisers shall then promptly
select a third, who shall be deemed the appraiser for the purposes hereof. The
determination of the appraiser as to the price of the Stock and the terms and
conditions of the sale shall be binding upon the parties and shall be made as
soon as practicable.

11. Come - Along

In the event any Shareholder (the "Selling Shareholder") shall
have given an Offer Notice to the remaining Shareholders under Section 7 and
neither the Company nor the remaining Shareholders shall have exercised their
rights under Section 7, each remaining Shareholder may join in such sale and
sell its Shares on substantially the same basis as set forth in the Offer
Notice, pro rata (based upon the respective Shares held by the Shareholders) and
at the same time as the Selling Shareholder. A remaining Shareholder shall give
notice of its intention to so "come-along" by giving notice to the Selling
Shareholder within twenty (20) days after the Offer Notice. Such sale shall
proceed free of any restrictions pursuant to this Agreement.

12. Sale of TIL

In the event that there shall have been an Offer Notice given
by any Shareholder and, thereupon, the remaining Shareholders shall have
exercised their Come-along rights pursuant to Section 11 and thus all of the
Shares of the Company shall be sold to an unaffiliated third party, then the
ordinary shares and preferred shares of TIL shall be sold to such third party in
the same transaction. Unless otherwise agreed to by the third party purchaser
and the owners of TIL, the purchase price for the ordinary shares of TIL shall
be their book value as at the end of the month preceding the date of sale and
the purchase price for the preferred shares of TIL shall be the sum of U.S.
$5,000,000 plus accrued and unpaid dividends, together with any interest due
and owing thereon. Notwithstanding the foregoing, if the third party purchaser
shall not be willing to purchase all of the preferred shares simultaneously
with the closing of the sale of the Shares, then MRM, or the Company, as the
case may be, shall agree to a pro-rata redemption of the preferred shares
over a period not to exceed eighteen (18) months, with each installment of
the redemption price matched against a retirement of a pro-rata portion of the

14
<PAGE>
preferred shares. Dividends shall continue to accrue and be payable so long
as any preferred shares shall remain outstanding and at each redemption an
dividends owing upon the redeemed shares shall be payable in full.

13. Closing

Any closing pursuant to Section 7 and Section 9 shall be held
at the registered office of the Company or such other place as it may reasonably
specify. At such closing the Selling Shareholder shall assign and deliver to the
Purchaser(s) any certificate or certificates representing the Shares sold by it
hereunder together with share transfer form(s) duly executed in blank free from
any encumbrances and with any required transfer tax stamps affixed or paid for.
Payment shall be made for such Shares at the closing at the price determined and
on the terms set forth in Section 10, unless otherwise provided herein.

14. Termination and Liquidation

(a) The Term of this Agreement shall commence on the date
hereof and shall terminate upon the occurrence of any of the following events:

(i) The written agreement of the parties hereto;

(ii) The termination of the Services Agreement;

(iii) The dissolution of the Company; and

(iv) The merger or consolidation of the Company in a
transaction in which the Company is not the surviving
entity.

(b) In the event of a winding-up or liquidation of the Company
during the term of this Agreement, the assets of the Company shall, subject to
any applicable law, be disposed of in the following priority:

(i) To the payment in full of all obligations and
liabilities of the Company to persons other than
the Shareholders;

(ii) To the payment in full of all obligations and
liabilities of the Company to its Shareholders (save
in their capacity as Shareholders); and

15
<PAGE>
(iii) The balance to the Shareholders, pro rata in
accordance with the number of Shares held, as a
liquidating dividend.

15. Specific Performance

The parties recognize that the Shares of the Company are
unique to the Company and not readily purchasable or saleable and that
irreparable damage will or may be suffered by the parties if the terms and
undertakings herein contained are not specifically enforced. Therefore, it is
agreed that this Agreement may be enforced by proceedings for equitable remedies
such as injunction or specific performance; such right shall be in addition and
not in lieu of any other rights or remedies any party may have hereunder, all
such rights and remedies being cumulative and subject to all applicable law.

16. Indemnification. The Company shall indemnify, defend and save each
of the Shareholders and each of the members of the Board of Directors harmless
from all loss, cost, damage and expense (including, without limitation,
reasonable counsel fees) and against all claims, actions or proceedings brought,
made or asserted against it, arising out of or resulting from the performance of
its duties in good faith under this Agreement, absent misconduct or negligence
with respect to the operations of the Company.

17. Notices

(a) All notices provided for herein shall be in writing and
they, as well as any other papers which it is provided herein shall be sent to
any Shareholder or the Company, shall be either (i) delivered in person, or (ii)
sent via certified mail, return receipt requested, or (iii) sent by nationally
recognized overnight courier system, or (iv) sent by facsimile, telex or
telegram addressed to a Shareholder at the address designated by such
Shareholder and/or addressed to the Company at the address of its registered
office. The notice shall be deemed to be given in cases (i), (ii) and (iii) on
the date of its actual receipt by the party entitled thereto, and, in case (iv),
on the date of transmission. Any notice by telex or telegram shall be followed
within five (5) days by written notice sent via certified mail, return receipt
requested.

(b) The parties may designate by notice to each other any new
address for the purpose of this Agreement as provided in this Section 17.

<PAGE>

18. Miscellaneous

(a) Upon the request of the parties hereto, the other parties
shall make, execute and deliver any and all instruments or papers as may be
reasonably required for the purpose of giving full effect to this Agreement and
to the terms, provisions and options herein contained.

(b) This Agreement shall inure to the benefit of and be
binding upon the Company and each of the Shareholders, its heirs, distributees,
legatees, executors, administrators, legal representatives and assigns,
including any receiver or trustee in bankruptcy or other insolvency proceeding.

(c) This Agreement is a contract made and to be performed in
Bermuda and shall in all respects be governed by and construed under the laws of
Bermuda.

(d) Should any provision, or portion of any provision, of this
Agreement be invalid or unenforceable for any reason, the validity or
enforceability of the remaining provisions, or of the other portions of the
provision in question shall not be affected thereby; provided, that such
severance shall have no material adverse effect on the terms of this Agreement
and this Agreement shall be carried out as if any such invalid or unenforceable
provision or portion of any provision were not contained herein.

(e) This Agreement merges and supersedes all prior
negotiations, agreements and understandings among the Shareholders relating to
the subject matter hereof and constitutes the entire agreement between the
Shareholders. No modification or amendment of any provision of this Agreement
shall be valid unless in writing signed by all the signatories of this Agreement
who are at the time of such modification or amendment, Shareholders of the
Company and by the Company.

(f) Whenever required by the context hereof, the singular
shall include the plural, and vice versa, and the neuter shall include the
masculine and feminine genders.

(g) No waiver or any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed the
waiver of any subsequent breach or default of the same or similar nature.

(h) The captions and headings contained in this Agreement are
for convenience only and shall not be construed as part of this Agreement.

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<PAGE>
(i) In the event of any conflict between the terms of this
Agreement and the Memorandum of Association and Bye-Laws of the Company then as
between the parties, the provisions of this Agreement shall prevail and in such
a case the parties hereto agree to use all their respective powers to remove
such conflict.

(j) This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all such
counterparts shall together constitute one instrument.

(k) The Company's execution, delivery and performance of this
Agreement have been duly authorized.

19. Definitions

As used herein, the following terms shall have the following
meanings:

(a) "Additional Contribution" shall have the meaning set forth
in Section 4(b) hereof.

(b) "Affiliates" shall mean (i) any person directly or
indirectly controlling, controlled by or under common control with another
person; (ii) any person owning or controlling ten percent (10%) or more of the
outstanding voting activities of another person; (iii) any officer, director or
partner of such person; and (iv) any company for whom any person is an officer,
director or partner. An "Affiliated" entity is an entity which is an Affiliate
of another person.

(c) "Agreement" shall mean this Shareholders' Agreement, as it
may be amended, modified, supplemented or restated from time to time.

(d) "Bankruptcy Action" shall be deemed to occur with respect
to the specified person or entity when such person or entity is voluntarily
adjudicated a bankrupt or insolvent, or seeks, consents to or does not contest
the winding-up or the appointment of a receiver or trustee for itself or for all
or any part of its property, or files or consents to the filing of a petition
seeking relief under the bankruptcy, arrangement, reorganization or other debtor
relief laws of any competent jurisdiction, or makes a general assignment for the
benefit of creditors, or admits in writing an inability to pay its debts as they
may mature, or a petition is filed against such person or entity seeking relief
under the bankruptcy, arrangement, reorganization or other debtor relief laws of
any competent jurisdiction, or a court of competent jurisdiction enters an
order, judgment or decree appointing, without the consent of such person

18
<PAGE>
or entity, a receiver or trustee for it, or for all or any part of his or its
property, and such petition, order, judgment or decree shall not be and remain
discharged or stayed within a period of sixty (60) days after its entry.

(e) "Company" shall have the meaning set forth in the recital
of the parties hereof.

(f) "Company Exercise Notice" shall have the meaning set forth
in Section 7(d) hereof.

(g) "Company Exercise Period" shall have the meaning set forth
in Section 7(c) hereof.

(h) "Escrow Agent" shall have the meaning set forth in Section
8(b) hereof.

(i) "Offer Notice" shall have the meaning set forth in Section
7(b) hereof.

(j) "Offered Shares" shall have the meaning set forth in
Section 7(a), Section 9(a), Section 9(b), or Section 9(c) hereof, as the case
may be.

(k) "Offerors" shall have the meaning set forth in Section
7(b) hereof.

(l) "Products" shall mean certain deferred variable annuity,
variable life insurance and other insurance products from time to time
developed, marketed and sold by the Company for TIL pursuant to the Services
Agreement.

(m) "Purchaser" shall have the meaning set forth in Section
7(d) hereof.

(n) "Selling Shareholders" shall have the meaning set forth in
Section 7(a), Section 9(a) or Section 9(b) hereof, as the case may be.

(o) "Shareholder" shall have the meaning set forth in the
Preamble hereof.

(p) "Shareholder Exercise Notice" shall have the meaning set
forth in Section 7(e) hereof.

(q) "Shareholder Exercise Period" shall have the meaning set
forth in Section 7(e) hereof.

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<PAGE>
(r) "Shares" shall have the meaning set forth in the Preamble
hereof.

(s) "Services Agreement" shall mean that certain Services
Agreement dated July 1, 1997 entered into between the Company and TIL.

(t) "TIL" shall mean Tremont International Insurance, Ltd.

(u) "Term" shall have the meaning set forth in Section 22
hereof.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.

TREMONT MRM SERVICES LIMITED

/s/ Spottswood P. Dudley
By: Spottswood P. Dudley
President

TREMONT (BERMUDA) LIMITED

/s/ Johann Wong
By: Johann Wong
Director

THE ANGLO-DUTCH INSURANCE
COMPANY LIMITED

/s/ Peter Mackay
By: Peter Mackay
Director

MUTUAL RISK MANAGEMENT (HOLDINGS) LTD.

/s/ David J. Doyle
By: David J. Doyle
Director

<PAGE>
TREMONT MRM SERVICES LIMITED

Schedule of Budgeted Operating Expenses

Average Estimated
Monthly 18 Month
Expense Type Expenses Totals

Rent $ 2,500 $ 45,000
Senior Employee Salary and Benefits 10,000 180,000
Assistant Employee Salary and Benefits 2,917 52,500
Travel and Entertainment 200 3,900
Printing, Supplies and Mailings 1,500 27,000
Telephone 1,250 22,500
Miscellaneous 417 7,500
Work Permits 2,000 36,000
Depreciation - Fixed Assets 500 9,000
Actuarial & Professional 4,167 75,000
T&E 6,389 115,000
Senior Employee Salary and Benefits 13,333 240,000
Second Employee Salary and Benefits 6,667 120,000
Assistant Salary and Benefits 1,667 30,000
Travel and Entertainment 3,333 60,000
Rent 2,500 45,000
Miscellanelous 500 9,000

TOTAL EXPENSES $ 59,860 $ 1,077,400

<PAGE>
Exhibit 10.51
AMENDMENT
TO
EMPLOYMENT AGREEMENT

AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") dated this 10th of
December, 1997, by and between TREMONT ADVISERS, INC., a Delaware corporation
having its principal executive offices at Corporate Center at Rye, 555 Theodore
Fremd Avenue, Rye, New York ("Tremont"); and SANDRA L. MANZKE, an individual
residing in Pound Ridge, New York ("Executive").
WITNESSETH:

WHEREAS, Executive is employed by Tremont pursuant to and in accordance
with the terms and conditions contained in an employment agreement dated
September 25, 1995 (the "Employment Agreement"), by and between Tremont and
Executive; and

WHEREAS, Executive and Tremont are each desirous of amending the
Employment Agreement in accordance with this Amendment, effective January 1,
1998.

NOW, THEREFORE, in consideration of the promises and mutual covenants,
terms and conditions hereinafter set forth and in the Employment Agreement, the
parties hereto hereby agree as follows:

1. Section 3(a)(i) of the Employment Agreement is hereby amended by deleting the
following phrase: "three hundred sixty-two thousand dollars ($362,000)" and
inserting in its place "three hundred seventy-three thousand dollars
($373,000)."

2. Section 5 shall be amended by deleting all references therein to "December
31, 1997" and inserting in its place "December 31, 1998."

3. Except to the extent amended by this Amendment, the terms and conditions of
the Employment Agreement shall remain in full force and effect. In the event of
any conflict between the terms of the Employment Agreement and the Amendment,
the Amendment shall control.

4. Each party hereby represents and warrants to the other that each has read the
foregoing provisions and that each has had a sufficient opportunity to discuss
this Amendment with anyone each party might desire prior to signing below.
Further, in signing this Amendment, each party has not relied on or been induced
to execute this Amendment by any statements, representations, agreements or
promises, oral or written, made by the other except for those expressly
contained in this Amendment.

IN WITNESS WHEREOF, this Amendment has been executed and delivered by
the parties hereto as of the date first above written.

WITNESS

/s/ Suzanne S. Hammond By: /s/ Sandra L. Manzke
Suzanne S. Hammond Sandra L. Manzke
Secretary and Treasurer

ATTEST TREMONT ADVISERS, INC.

/s/ Stephen T. Clayton /s/ Robert I. Schulman
Stephen T. Clayton Robert I. Schulman
Chief Financial Officer Chief Operating Officer

<PAGE>

Exhibit 10.52
AMENDMENT
TO
EMPLOYMENT AGREEMENT

AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") dated this 10th of
December, 1997, by and between TREMONT ADVISERS, INC., a Delaware corporation
having its principal executive offices at Corporate Center at Rye, 555 Theodore
Fremd Avenue, Rye, New York ("Tremont"); and ROBERT I.SCHULMAN, an individual
residing at 18 Green Valley Road, Armonk, New York ("Executive").

WITNESSETH:

WHEREAS, Executive is employed by Tremont pursuant to and in accordance
with the terms and conditions contained in an employment agreement dated
April 22, 1994 (the "Employment Agreement"), by and between Tremont and
Executive; and

WHEREAS, Executive and Tremont are each desirous of amending the
Employment Agreement in accordance with this Amendment, effective January 1,
1998.

NOW, THEREFORE, in consideration of the promises and mutual covenants,
terms and conditions hereinafter set forth and in the Employment Agreement, the
parties hereto hereby agree as follows:

1. Section 3(a)(i) of the Employment Agreement is hereby amended by deleting the
following phrase: "three hundred twenty-six thousand dollars ($26,000)" and
inserting in its place "three hundred thirty-five thousand seven
hundred dollars ($335,700)."

2. Section 5 shall be amended by deleting all references therein to "December
31, 1997" and inserting in its place "December 31, 1998."

IN WITNESS WHEREOF, this Amendment has been executed and delivered by
the parties hereto as of the date first above written.

WITNESS

/s/ Suzanne S. Hammond By: /s/ Robert I. Schulman
Suzanne S. Hammond Robert I. Schulman
Secretary and Treasurer

ATTEST TREMONT ADVISERS, INC.

/s/ Stephen T. Clayton /s/ Sandra L. Manzke
Stephen T. Clayton Sandra L.Manzke
Chief Financial Officer Chief Executive Officer

<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-78346) pertaining to the Tremont Advisers, Inc. 401(k) Savings Plan
of our report dated February 13, 1998, with respect to the consolidated
financial statements of Tremont Advisers, Inc. included in the Annual Report
(Form 10-KSB) for the year ended December 31, 1997.

Ernst & Young, LLP
Stamford, Connecticut
March 18, 1998

<PAGE>

Exhibit 23.2

INDEPENDENT AUDITOR'S CONSENT

To the Board of Directors of
Tremont Advisers, Inc.

We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-78346) pertaining to the Tremont Advisers, Inc.
401(k) Savings Plan of our report dated February 2, 1998 on the financial
statements of The Broad Market Fund, L.P. as of December 31, 1997 and for each
of the two years in the period then ended which report is included in the Annual
Report on Form 10-KSB of Tremont Advisers, Inc. for the year ended December 31,
1997.

GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
New York, New York

March 18, 1998

<PAGE> Press Release 97-2
Exhibit 99.4 For Immediate Release
Contact: Robert I. Schulman

Tremont Advisers, Inc. Announces
Joint Venture

Rye, New York, June 5, 1997 - Tremont Advisers, Inc. ("Tremont")
and Mutual Risk Management Ltd. ("MRM") today announced a series
of transactions pursuant to which MRM will acquire an equity
interest in Tremont and will invest in Tremont's developing
offshore life insurance businesses.

A wholly-owned Delaware subsidiary of MRM will offer to acquire 20% of Tremont.
A portion of this equity position will be obtained through a tender offer to the
existing shareholders of the Company's Class B Common Shares for up to 615,000
shares at $3.75 per share. Upon termination of the tender offer, MRM will
purchase directly from Tremont between 205,000 and 340,000 Class B Common Shares
depending upon the results of the tender offer. At the completion of these
transactions, MRM will own approximately 20% of the outstanding Common Shares of
Tremont. This offer is expected to commence on or about June 6, 1997.

In a series of related transactions, MRM will also acquire, from an unrelated
party, 51% of Tremont International Insurance LTD., a Cayman Island insurance
company recently established to write offshore life insurance products such as
variable annuities and variable life policies. Tremont (Bermuda) Limited, a
wholly-owned subsidiary of Tremont Advisers, Inc., will retain its 24.5%
interest in Tremont International Insurance LTD. MRM will invest $5 million in
Tremont International Insurance LTD., to provide capital and support this new
and exciting business.

In addition, Tremont (Bermuda) Limited and The Anglo-Dutch Insurance Company, a
Cayman Islands insurance company, will be joined by MRM in a joint venture that
is designed to develop offshore annuity products utilizing offshore alternative
managers and the facilities of Tremont International Insurance LTD. MRM will
invest $1 million in this venture as initial capital to aggressively develop
this business.

**********************

Tremont Advisers, Inc. is a diversified financial service company
that provides consulting and specialty product advice to a wide
range of financial intermediaries.

<PAGE>

Exhibit 99.5
Press Release 97-4
For Immediate Release
Contact: Robert I. Schulman

Tremont Advisers, Inc. Announces Second
Quarter and Six Month Operating Results

Rye, New York, August 11, 1997 - Tremont Advisers, Inc. ("Tremont") reported net
income of $292,600, or $.07 per share, for the six months ended June 30, 1997 as
compared to $113,100, or $.03 per share, for the same period in 1996. Tremont
also reported net income of $186,800, or $.05 per share, for the three months
ended June 30, 1997 as compared to $86,800, or $.02 per share, for the same
period in 1996. Tremont's total revenues for the six months ended June 30, 1997
were $2,616,500 as compared to $1,971,900 for the same period in 1996. Total
revenues were $1,367,800 for the three months ended June 30, 1997 as compared to
$1,009,100 for the same period in 1996. Tremont's operating results increased
primarily due to growth in its proprietary products, an increase in funds under
management, as well as an expanded client base. The management team at Tremont
is pleased with its recent growth in all of its primary product lines and is
optimistic that such growth will continue.

In July, Tremont entered into a series of transactions whereby Mutual Risk
Management, an international risk management company ("MRM"), acquired an equity
interest in Tremont. In June 1997, MGL Investment Ltd. ("MGL"), a wholly-owned
subsidiary of MRM, began a tender offer to purchase 615,000 shares of previously
outstanding Class B Common Stock par value $0.01 at a price of $3.75 per share.
This transaction was completed on July 7, 1997 for the entire 615,000 shares. In
addition, pursuant to a certain stock purchase agreement, Tremont sold to MGL
202,365 shares of its Class B Common Stock, par value $0.01 at a price of $3.75
per share. As a result of these transactions, MRM indirectly owns, through MGL,
20% of Tremont's outstanding common stock which includes Class A Common Stock
and Class B Common Stock.

In addition, MRM invested $5 million in Tremont International Insurance Ltd., a
Cayman Island insurance company ("TIIL") recently established for the purpose of
providing offshore life insurance products such as variable annuities and
variable life policies. Tremont (Bermuda) Limited ("TBL"), a wholly-owned
subsidiary of Tremont, owns a 24.5% interest in TIIL. In July 1997, TBL formed,
with MRM and another party, and acquired a 40% interest in Tremont MRM Services
Limited ("TMRM"), a company incorporated under the laws of Bermuda. TMRM will
provide product development, marketing and administrative services to TIIL, as
more fully set forth in an agreement between the

1
<PAGE>

parties. MRM has invested $1 million in this venture to
initially capitalize and develop this business.

The Broad Market Prime Fund, L.P., is the newest addition to Tremont's time of
proprietary products. This domestic multi-manager limited partnership was
launched on July 1, 1997 by means of a private offering and has received
subscriptions for $14.5 million. It was created for the purpose of achieving
long term capital growth through a leveraged investment strategy. This press
release shall not constitute an offer to sell or the solicitation of an offer to
buy the securities offered by The Broad Market Prime Fund, L.P., which can only
be made by its Private Placement Memorandum.

*******************************

Tremont Advisers, Inc. is a diversified financial services
company that provides consulting and specialty product advice to
a wide range of financial intermediaries.