<PAGE>

                                                                   Exhibit 10.35

                           MEMORANDUM OF UNDERSTANDING

      This Memorandum of Understanding ("MOU") is entered into this 21st day of
March 2003, by and among the State of Texas ("Texas"), the Office of the
Attorney General ("OAG"), the Texas Department of Insurance ("TDI"), including
the Texas Commissioner of Insurance ("Commissioner") (hereafter sometimes
referred to collectively as the "State"), and PacifiCare of Texas, Inc.
("PacifiCare").

      The State and PacifiCare (hereafter collectively the "Parties") are
entering into this MOU to set forth the principal terms and conditions upon
which the Parties have agreed to resolve outstanding disputes, including
disputes arising out of Cause No. GN 103906 (the "Lawsuit"). Within thirty (30)
days following the execution of this MOU, the Parties have agreed to enter into
a definitive settlement agreement (the "Settlement") to implement the following
terms and conditions:

      1. Stay of Lawsuit. Following execution of the MOU, the Parties shall
immediately file a joint motion requesting a stay of the Lawsuit until twelve
months following execution of the Settlement or for such additional period as
the Parties may mutually agree (the "Stay"); provided, however, that if after
eight months following execution of the Settlement the requirements set forth in
Paragraphs 2 and 3, below, have not been satisfied by PacifiCare, the Parties
shall meet in good faith to determine whether the Stay should continue for the
remaining four month period. In the event there is a disagreement between the
Parties as to continuing the Stay for the remaining four month period, then
PacifiCare shall have the right to request permission from the Travis County
District Court to extend the Stay to allow PacifiCare to continue with the
bankruptcy processes up to a maximum period of four months. The order staying
the Lawsuit shall provide that the trial date in the Lawsuit and any other
deadlines in the Lawsuit that have not passed as of the date of execution of
this MOU shall be extended for a period of time equal to the period that the
Stay is in effect. Following execution of this MOU and throughout the Stay, no
orders will be sought, signed or entered in the Lawsuit that affect the
substantive rights of the Parties, and if during this period, any order is
signed or entered, nothing in this MOU or the Settlement shall prevent either of
the Parties from pursuing an appeal. The purpose of the Stay is to allow the
Parties and others to proceed with due diligence and in good faith with the
activities required to settle the Medical Select Management ("MSM") Bankruptcy
and Heritage Southwest Medical Group, PA ("HSW") Bankruptcy and engage in a good
faith review of outstanding valid provider claims of Heritage Physicians Network
("HPN"), without the necessity of the Parties simultaneously prosecuting the
Lawsuit.

      2. MSM Bankruptcy. During the Stay, PacifiCare will enter into an
agreement with the MSM bankruptcy trustee or other creditor representative that
provides that funds will be paid to provider creditors of MSM under an approved
plan of reorganization or settlement agreement and that provides releases
satisfactory to PacifiCare.

            a. PacifiCare will use its best reasonable efforts to meet the
      following milestones in connection with the MSM bankruptcy:


                                  Page 1 of 11
                                 March 21, 2003
<PAGE>
            1.    Execute a term sheet in the MSM bankruptcy within 30 days of
                  execution of the Settlement;

            2.    File disclosure statement with the bankruptcy court within 30
                  days of execution of the term sheet;

            3.    Complete solicitation of providers to opt in to plan of
                  reorganization within 90 days following the court's approval
                  of the disclosure statement.

            4.    Plan confirmation within 8 months of execution of the
                  Settlement.

            b. In the event that the total provider creditor claims allowed by
      the MSM Trustee ("Total Allowed Provider Claims") exceed the provider
      claims sampling estimate as determined by Med Pathways (the "Claims
      Estimate"), PacifiCare agrees to increase its agreed upon contribution
      (the "PacifiCare Base Contribution") to fund payment of provider creditor
      claims as follows: PacifiCare shall contribute an additional amount equal
      to the difference between the Total Allowed Provider Claims and the Claims
      Estimate multiplied by the fraction, the numerator of which shall be the
      PacifiCare Base Contribution and the denominator of which shall be the
      Claims Estimate; provided, however, PacifiCare's additional contribution
      will be capped at 20% of the PacifiCare Base Contribution or $500,000,
      whichever is greater. For example, assuming the PacifiCare Base
      Contribution is $1.5 million, the Claims Estimate is $12 million and the
      Total Allowed Provider Claims is $15 million, PacifiCare's additional
      contribution would be $500,000, because $500,000 is greater than $375,000
      ($1.5 million divided by $12 million times $3 million = $375,000).

            c. PacifiCare will not receive any distribution from the MSM
      bankruptcy estate until all allowed general unsecured creditor claims are
      paid, but this provision shall not affect PacifiCare's rights and
      priorities relative to other licensed payors, insiders or affiliates.

            d. Regardless of the thresholds that PacifiCare may require in the
      MSM bankruptcy, for purposes of this MOU only, the Parties shall use best
      reasonable efforts toward achieving an opt-in level of approximately 90%
      of the providers who vote. Providers paid by PacifiCare outside the
      bankruptcy will be counted as "opt-in" providers for purposes of this
      calculation. In the event the opt-in level is not achieved, the Parties
      shall meet in good faith to review the propriety of the acceptances and
      discuss possible modifications of the opt-in level, and if the Parties
      cannot agree, the OAG may terminate this MOU.

            e. The Parties shall meet periodically as mutually determined to
      review the status of the MSM bankruptcy proceedings.

      3. HSW Bankruptcy. During the Stay, PacifiCare will enter into an
agreement with the HSW bankruptcy trustee or other creditor representative that
provides that funds will be paid to provider creditors of HSW under an approved
plan of reorganization or settlement agreement and that provides releases
satisfactory to PacifiCare.


                                  Page 2 of 11
                                 March 21, 2003
<PAGE>
            a PacifiCare will use best reasonable efforts to (i) reach a
      settlement that will result in a motion being filed under Bankruptcy Rule
      9019 in the HSW bankruptcy within 120 days of execution of the Settlement,
      and (ii) if such motion is filed and approved by the court, complete
      solicitation of providers to accept the settlement within 90 days
      following the order approving the settlement becoming final. Payment will
      be made within 30 days after the solicitation is complete at a threshold
      level acceptable to PacifiCare.

            b. The Parties will use best reasonable efforts to have the HSW
      Trustee dismiss with prejudice any and all actions filed pursuant to 11
      USC 542-553, inclusive, but only to the extent those actions seek to
      recover payments for services rendered to PacifiCare members.

            c. In the event a Rule 9019 process is not agreed upon by all
      applicable parties, and a plan of reorganization under Chapter 11 is
      utilized, PacifiCare will use its best reasonable efforts to meet the
      following milestones in connection with the HSW bankruptcy:

            1.    Execute a term sheet in the HSW bankruptcy within 120 days of
                  execution of the Settlement;

            2.    File disclosure statement with the bankruptcy court within 30
                  days of execution of the term sheet;

            3.    Complete solicitation of providers to opt-in to plan of
                  reorganization within 90 days following the court's approval
                  of the disclosure statement.

            4.    Plan confirmation within 8 months of execution of the
                  Settlement.

            d. In the event that the total provider creditor claims allowed by
      the HSW Trustee ("Total Allowed Provider Claims") exceed the provider
      creditor claims sampling estimate as determined by Med Pathways, who has
      been jointly engaged by the HSW Trustee and PacifiCare (the "Claims
      Estimate"), PacifiCare agrees to increase what its agreed upon
      contribution may be (the "PacifiCare Base Contribution") to fund payment
      of provider creditor claims as follows: PacifiCare shall contribute an
      additional amount equal to the difference between the Total Allowed
      Provider Claims and the Claims Estimate multiplied by the fraction, the
      numerator of which shall be the PacifiCare Base Contribution and the
      denominator of which shall be the Claims Estimate; provided, however,
      PacifiCare's additional contribution will be capped at 20% of the
      PacifiCare Base Contribution or $500,000, whichever is greater.

            e. PacifiCare will not receive any distribution from the HSW
      bankruptcy estate until all allowed general unsecured creditor claims are
      paid, but this provision shall not affect PacifiCare's rights and
      priorities relative to other licensed payors, insiders or affiliates.

            f. Regardless of the thresholds that PacifiCare may require in the
      HSW bankruptcy, for purposes of this MOU only, the Parties shall use best
      reasonable efforts


                                  Page 3 of 11
                                 March 21, 2003
<PAGE>
      toward achieving an opt-in level of 90% of the providers who vote.
      Providers paid by PacifiCare outside the bankruptcy will be counted as
      "opt-in" providers for purposes of this calculation. In the event the
      opt-in level is not achieved, the Parties shall meet in good faith to
      review the propriety of the acceptances and discuss possible modifications
      of the opt-in level, and if the Parties cannot agree, the OAG may
      terminate this MOU.

            g. All Parties shall meet periodically as mutually determined to
      review the status of the HSW bankruptcy proceedings.

      4. HPN. During the Stay, PacifiCare agrees to engage in a process with HPN
and the affected HPN providers to validate amounts for outstanding claims of
such HPN providers for services provided to PacifiCare members. In exchange for
releases of PacifiCare relating to such claims, PacifiCare shall pay valid
claims at whatever amount that may be agreed upon. Such process will take into
account the claims review from HPN and any additional claims information
furnished by such HPN providers. PacifiCare will use best reasonable efforts to
reach agreement on payment of valid claims and to complete this process within
120 days of execution of the Settlement.

      5. Withdrawal or Stay of CIDs, Visitation Letters, and Other Litigation
and Pending Investigations. The Parties agree as follows:

            a. The following Civil Investigative Demands and Visitation Letters
      have been or will be withdrawn upon execution of this MOU:

            (i)   Civil Investigative Demand, First Request, dated September 24,
                  2001 directed to PacifiCare of Texas, Inc. and purportedly
                  covering alleged improprieties in delegation practices by
                  PacifiCare of Texas, Inc. (This Civil Investigative Demand is
                  the subject of Cause No. GN 103374, PacifiCare Of Texas, Inc.
                  vs. The State Of Texas And John Cornyn, Attorney General,
                  Individually And In His Official Capacity; in the district
                  court Of Travis County, Texas, 200th Judicial District.)

            (ii)  Civil Investigative Demand, Second Request, dated September
                  24, 2001 directed to PacifiCare of Texas, Inc. and purportedly
                  covering alleged improprieties in delegation practices by
                  PacifiCare of Texas, Inc. (This Civil Investigative Demand is
                  the subject of Cause No. GN 103374, PacifiCare Of Texas, Inc.
                  vs. The State Of Texas And John Cornyn, Attorney General,
                  Individually And In His Official Capacity; in the district
                  court Of Travis County, Texas, 200th Judicial District.)


            (iii) Civil Investigative Demand dated September 21, 2001 directed
                  to PacifiCare of Texas, Inc. and purportedly covering
                  allegations of unfair insurance practices and DTPA violations
                  regarding managed care contracting, delegation and payment
                  practices related to payment


                                  Page 4 of 11
                                 March 21, 2003
<PAGE>
                  to health care providers for services rendered to managed care
                  patients in Texas. (This Civil Investigative Demand is the
                  subject of Cause No. GN 103351, PacifiCare Of Texas, Inc. vs.
                  The State Of Texas And John Cornyn, Attorney General,
                  Individually And In His Official Capacity; in the district
                  court Of Travis County, Texas, 200th Judicial District.) (iv)
                  Visitation Letter dated December 10, 2001 directed to
                  PacifiCare of Texas, Inc. and purportedly covering alleged
                  violations of the DTPA, article 21.21 of the Texas Insurance
                  Code and article 20A.18C of the Texas Health Maintenance Act.

            (v)   Visitation Letter dated March 28, 2002 directed to PacifiCare
                  of Texas, Inc. and purportedly covering Preferred Provider
                  Organization Documents and alleged violations of the DTPA and
                  article 21.21 of the Texas Insurance Code.

      b. Except for TDI's investigation regarding case #44891, all pending civil
      investigations that have been referred to the Legal Division of TDI as of
      the execution of this MOU, all currently pending investigations by the OAG
      related to PacifiCare as of the execution of this MOU, and the following
      Visitation Letters shall be stayed during the Stay:

            (i)   Visitation Letter dated March 28, 2002 directed to PacifiCare
                  of Texas, Inc. and purportedly covering Health Maintenance
                  Organization Documents and alleged violations of the DTPA and
                  article 21.21 of the Texas Insurance Code.

            (ii)  Visitation Letter dated May 22, 2002 directed to PacifiCare
                  Life Assurance Company and purportedly covering Preferred
                  Provider Organization Documents and alleged violations of the
                  DTPA and article 21.21 of the Texas Insurance Code.

      During the Stay, PacifiCare and the OAG will work in good faith to resolve
      issues relating to the above two Visitation Letters. If PacifiCare and the
      OAG do not reach an agreed resolution of these issues during the Stay,
      following the Stay, the OAG may formally proceed with these two Visitation
      letters, and any actions or claims related to these two Visitation Letters
      shall be exempted from the requirements of any dismissals or final
      judgments required by this MOU.

      c. The following actions shall also be stayed in accordance with the Stay
      provisions set forth in Paragraph 1, above, and following execution of
      this MOU, the Parties shall immediately file joint motions, as necessary,
      to effectuate such stays: Cause No. GN103374; 98-1397; GN 103351;and
      GN203219.


                                  Page 5 of 11
                                 March 21, 2003
<PAGE>
            d. Any statute of limitations applicable to any administrative or
            court action against PacifiCare by the TDI or Commissioner to impose
            a sanction, penalty, fine or other relief for any statutory or
            regulatory violations alleged in the Lawsuit will be tolled for the
            period the Stay is in effect. Any matter stayed pursuant to this MOU
            will be tolled for the period the Stay is in effect. The TDI and
            PacifiCare agree to enter into any further agreements as may be
            appropriate to provide and assure the tolling of those actions
            during that period. During the period of the Stay, the TDI and
            Commissioner agree not to file any administrative or other
            proceeding seeking a sanction, penalty, fine or other relief for any
            statutory or regulatory violations alleged in the Lawsuit.

      6. Attorneys Fees. PacifiCare shall pay $1.25 million in attorneys fees to
the Office of Attorney General as follows: (i) $750,000 upon execution of the
Settlement to be held in trust in an interest bearing account at a mutually
agreed upon financial institution until the effectiveness of the Settlement, as
described below; and (ii) $500,000 upon the effectiveness of the Settlement, as
described below. In the event the Settlement does not become effective as
described below, the $750,000, together with accrued interest, shall be
immediately returned to PacifiCare. Interest accrues to whomever the funds are
eventually payable.

      7. Additional Payments. PacifiCare shall pay $1.5 million in
administrative services reimbursement and $1.5 million in administrative
penalties as follows:

            a. (i) $850,000 in administrative services reimbursement upon
      execution of the Settlement to be held in trust in an interest bearing
      account at a mutually agreed upon financial institution until the
      effectiveness of the Settlement, as described below; and (ii) $650,000 in
      administrative services reimbursement upon the effectiveness of the
      Settlement, as described below. In the event the Settlement does not
      become effective, the $850,000, together with accrued interest, shall be
      immediately returned to PacifiCare. Interest accrues to whomever the funds
      are eventually payable.

            b. (i) $850,000 in administrative penalties upon execution of the
      Settlement to be held in trust in an interest bearing account at a
      mutually agreed upon financial institution until the effectiveness of the
      Settlement, as described below; and (ii) $650,000 in administrative
      penalties upon the effectiveness of the Settlement, as described below. In
      the event the Settlement does not become effective, the $850,000, together
      with accrued interest, shall be immediately returned to PacifiCare.
      Interest accrues to whomever the funds are eventually payable.

      8. Good Faith Efforts. All Parties shall use good faith efforts to
facilitate the satisfaction of the above requirements. Without limiting the
foregoing, the State agrees to support PacifiCare's efforts in meeting the
requirements relating to the above two bankruptcies and the HPN providers,
consistent with the terms and conditions of this MOU. In the event the OAG
reasonably determines that good faith efforts are not being used by PacifiCare
as required by this MOU, the OAG shall provide written notice to PacifiCare
specifying any alleged deficiencies and afford PacifiCare fifteen (15) days from
the receipt of such notice to address such alleged deficiencies. In the event
the OAG and PacifiCare do not agree that the alleged


                                  Page 6 of 11
                                 March 21, 2003
<PAGE>
deficiencies have been addressed, the OAG may move the Travis County District
Court to lift the Stay, provided that the OAG first provides an additional
subsequent reasonable notice to PacifiCare before making such motion.

      9. Effectiveness of Settlement. Upon the satisfaction by PacifiCare or
waiver by the State of the requirements of Paragraphs 2, 3, 4, 6, and 7 above
and Paragraph 11 below, the Settlement shall become effective. Upon the
effectiveness of the Settlement, the following actions shall be taken:

            a.    The Parties, including any Intervernors in the Lawsuit who
                  execute the Settlement, if any, agree to enter an "Agreed
                  Final Judgment and Permanent Injunction" in the Lawsuit which
                  shall be limited to a term of one year and shall require
                  PacifiCare to comply with the provisions of Article 20A.18B of
                  the Texas Insurance Code and Section 21.2801 through 21.2820
                  of the Texas Administrative Code, but only with respect to
                  members enrolled in PacifiCare's commercial HMO plans. Any
                  such injunction shall provide reasonable notice to PacifiCare
                  of an alleged violation(s) and an opportunity for PacifiCare
                  to cure such alleged violation(s) prior to the initiation of
                  any legal proceedings.

            b.    All other pending litigation between the Parties shall be
                  disposed of through dismissals with prejudice or agreed final
                  judgments, as appropriate, including the following actions:
                  No. GN103374; GN 103351; 98-13971; and GN203219.

            c.    The Parties and Intervenors in the Lawsuit who execute the
                  Settlement, if any, and each of them hereby RELEASE, ACQUIT,
                  and FOREVER DISCHARGE the Released Parties from all Released
                  Claims. For purposes of this provision, the following terms
                  are defined as set forth below:

                  "Released Claims" means and includes any and all civil,
                  administrative and equitable claims, demands and causes of
                  action of any nature whatsoever against the Released Parties,
                  whether pending or threatened, suspected or unsuspected,
                  contingent or non-contingent, known or unknown, for any and
                  all damages, fines, penalties, assessments and other remedies
                  or relief that in any way arise out of or in any way relate to
                  (i) the acts, events, occurrences and/or omissions alleged, or
                  that could have been alleged, in the Lawsuit or any other
                  litigation between the Parties brought prior to execution of
                  this MOU, (ii) the CIDs or Visitation Letters issued to
                  PacifiCare that were issued prior to execution of this MOU; or
                  (iii) pending investigations by TDI or OAG.

                  "Released Parties" means and includes (i) with respect to
                  releases by the State and Intervenors in the Lawsuit who
                  execute the Settlement, if any, and each of them: PacifiCare
                  of Texas, Inc., as well as its past and present


                                  Page 7 of 11
                                 March 21, 2003
<PAGE>
                  parent companies, subsidiaries and affiliates, and each of
                  their past and present officers, employees, agents, directors,
                  representatives, attorneys, predecessors, successors and
                  assigns; and (ii) with respect to releases by PacifiCare:
                  Intervenors in the Lawsuit who execute the Settlement, if any,
                  and each of their past and present officers, employees,
                  agents, directors, representatives, attorneys, predecessors,
                  successors and assigns, the State of Texas, the OAG, the
                  Attorney General of the State of Texas in his official and
                  individual capacity, the TDI, the Commissioner in his official
                  and individual capacity, and their respective employees,
                  agents, representatives and attorneys.

                  Notwithstanding any language in this paragraph to the
                  contrary, the following is not released: Any and all claims,
                  demands or causes of action of any nature whatsoever, whether
                  pending or threatened, suspected or unsuspected, contingent or
                  non-contingent, known or unknown, for any and all damages,
                  fines, penalties, assessments or other remedies or relief that
                  in any way arise out of or in any way relate to TDI Case
                  #44891 or either of the two Visitation Letters referenced in
                  paragraph 5(b)(i) and (ii) herein to the extent such
                  Visitation Letters address claims, acts, events, occurrences
                  and/or omissions not alleged in the Lawsuit or in any other
                  litigation between the Parties brought prior to the execution
                  of this MOU.

      10. Intervenors. This MOU contemplates that some or all Intervenors in the
Lawsuit will agree to and participate in the Settlement. Each Intervenor who
desires to so participate shall execute the Settlement. In the event any one or
more of the Intervenors in the Lawsuit does not execute the Settlement, then the
State and PacifiCare agree to seek a severance of those non-settling Intervenors
from the Lawsuit.

      11. Payment of Non-Delegated and Delegated Claims. PacifiCare agrees to
the following :

            a. For all contracted non-delegated valid commercial clean claims,
if any, with dates of service from August 1, 2000 through December 31, 2002,
which have not otherwise been paid or settled by PacifiCare, PacifiCare shall,
within 90 days following execution of the Settlement, pay the provider the
lesser of billed charges as defined in 28 Texas Administrative Code Section
28.2802(2) (i.e., usual and customary charges), the applicable contracted
penalty rate, or the amount the provider agrees to accept as payment for the
claim.

            b. For all contracted non-delegated valid commercial claims (which
are not clean), if any, with dates of service from August 1, 2000 through
December 31, 2002, which have not otherwise been paid or settled by PacifiCare,
PacifiCare shall, within 90 days following execution of the Settlement, pay the
lesser of the contracted rate or the amount the provider agrees to accept as
payment for the claim.

            c. For all non-delegated valid commercial claims, if any, from
non-contracted providers with dates of service from August 1, 2000 through
December 31, 2002,


                                  Page 8 of 11
                                 March 21, 2003
<PAGE>
which have not otherwise been paid or settled by PacifiCare, PacifiCare shall,
within 90 days following execution of the Settlement, pay the lesser of usual
and customary amount or the amount the provider agrees to accept as payment for
the claim.

            d. For all delegated valid commercial claims, if any, with dates of
service from August 1, 2000 through December 31, 2002 which have not otherwise
been paid or settled by PacifiCare or any delegate of PacifiCare and which are
the subject of a written provider complaint made to either TDI or PacifiCare
prior to the execution of this MOU, PacifiCare shall, within 120 days following
execution of the Settlement, pay such claims, if any, at the applicable contract
rate. This provision shall not apply to delegated provider claims related to the
following delegates: MSM, HSW, HPN and Quantum Southwest Medical Associates,
Inc.

            e. For purposes of this Paragraph 11, clean claim shall have the
meaning set forth in Article 20A.18B and 28 Texas Administrative Code Section
28.2801 et. seq. and shall have been clean at the time of its submission prior
to the execution of this MOU.

            f. PacifiCare shall within 150 days following execution of the
Settlement, provide a report to TDI which lists the total number of providers,
if any, who were paid and the total amount paid under the above, and the total
number of physicians, if any, who were paid and the total amount paid under the
above.

            g. After PacifiCare provides the report to TDI, TDI and PacifiCare
will meet and confer in good faith regarding compliance and use best reasonable
efforts to resolve any disagreements before the State may take any position that
PacifiCare has failed to satisfy the requirements of this Paragraph 11.

      12. Bargained For Consideration. The Parties recognize that certain
damages cannot be determined with any precise degree of accuracy. The Parties
also recognize that some damages or elements of damages may not have manifested
themselves as of the date of this MOU, and hence may be unknown to the parties
at this time. Recognizing that, the Parties hereby bargain to include all such
known and unknown damages and elements of damages within the terms of this
release.

      13. No Admission of Liability. The agreements and the transfer of
consideration contained in this document are to compromise and settle disputed
claims, avoid the expense, uncertainties and hazards of litigation, and to buy
peace. It is further expressly understood and agreed that no payments made or
releases or other consideration given shall be construed as an admission of
liability, because all liability has been expressly denied.

      14. Miscellaneous. The parties agree to cooperate fully and to execute any
and all supplementary documents, including without limitation execution of a
definitive settlement agreement consistent with the terms and conditions of this
MOU, and to take all additional actions which may be necessary or appropriate to
give full force and effect to the terms, conditions and intent of this MOU. The
State further agrees that neither the State nor its agents shall take any
actions to interfere with PacifiCare's efforts to reach compromises with the MSM
Bankruptcy trustee and the HSW Bankruptcy trustee and the HPN providers, nor
shall the State


                                  Page 9 of 11
                                 March 21, 2003
<PAGE>
nor its agents solicit or encourage creditors or any other interested parties to
object to or impede such compromises.

            Further, it is expressly understood and agreed that the terms of
this document are contractual and not merely recitals. This MOU contains the
entire understanding of the Parties and is a fully integrated agreement with
respect to the subject matter herein. This MOU shall neither create any rights
in any third parties who have not entered into this MOU, nor shall this MOU
entitle any such third party to enforce any rights or obligations that may be
possessed by such third party. The Parties intend that this written document
will be binding upon each of them. This MOU will be construed and enforced under
the laws of the State of Texas. Each party to this MOU has reviewed and revised,
or had the opportunity to review and revise, this MOU. Accordingly, the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
MOU.

            In entering into this MOU, the Parties represent that they have
relied upon the legal advice of their attorneys. The Parties further represent
that the terms of this MOU have been completely read and explained to them by
their attorneys, and that those terms are fully understood and voluntarily
accepted by such party.

            This MOU may be executed in multiple originals.

             [The remainder of this page left intentionally blank.]


                                  Page 10 of 11
                                 March 21, 2003
<PAGE>
                                                                   Exhibit 10.35

      EXECUTED in multiple originals on the date first written above.

                                  GEORGE BECKER
                                  President, PacifiCare of Texas, Inc.

                                  /s/ George Becker
                                  ----------------------------------------------

                                  JOSE MONTEMAYOR
                                  Commissioner, Department of Insurance

                                  /s/ Jose Montemayor
                                  ----------------------------------------------

                                  JEFFREY S. BOYD
                                  Deputy Attorney General for Litigation

                                   /s/ Jeffrey S. Boyd
                                  ----------------------------------------------