<PAGE>

                                                                  Exhibit 10 (n)

                              AMENDED AND RESTATED

                        MARKETING AND SERVICES AGREEMENT

                                  By and Among

                        PHYSICIANS HEALTH SERVICES, INC.

                               and its affiliate,

                  PHYSICIANS HEALTH SERVICES OF NEW YORK, INC.

                                       and

                 THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
<PAGE>

     AMENDED AND RESTATED MARKETING AND SERVICES AGREEMENT

     Reference is hereby made to the Marketing and Services Agreement (the
"Marketing and Services Agreement") made and entered into as of April 27, 1995
(the "Inception Date") by and among PHYSICIANS HEALTH SERVICES, INC., a
corporation organized under the laws of the State of Delaware, and its
affiliate, PHYSICIANS HEALTH SERVICES OF NEW YORK, INC., a corporation organized
under the laws of the State of New York as a health maintenance organization
(collectively, "PHS," unless the context indicates reference to Physicians
Health Services, Inc. or Physicians Health Services of New York, Inc. as
separate corporate entities), and THE GUARDIAN LIFE INSURANCE COMPANY OF
AMERICA, a mutual life insurance company organized under the laws of the State
of New York ("Guardian"). This Amended and Restated Marketing and Services
Agreement is dated as of October 1, 1996, and when executed by the parties
hereto, shall supersede and replace the Marketing and Services Agreement and
shall constitute a binding and enforceable amendment to the Marketing and
Services Agreement in its entirety.

     THE MARKETING AND SERVICES AGREEMENT IS AMENDED AND RESTATED IT ITS
ENTIRETY AS FOLLOWS:

     This Amended and Restated Marketing and Services Agreement (this
"Agreement") is made and entered into as of this 1st day of October, 1996 by and
among PHYSICIANS HEALTH SERVICES, INC., PHYSICIANS HEALTH SERVICES OF NEW YORK,
INC. and GUARDIAN.
<PAGE>

                                    RECITALS

     WHEREAS, PHS, which is licensed to operate a health maintenance in the
State of New York, maintains a network of health care providers in the State of
New York and is authorized to offer for sale plans providing managed care health
care benefits in such State;

     WHEREAS, Guardian desires to make different types of managed care health
coverage plans available for sale by the Guardian Marketing Force (as defined
herein) in the State of New York;

     WHEREAS, PHS is willing to make its managed care health coverage plans
available for sale by the Guardian Marketing Force;

     WHEREAS, Guardian is authorized to offer for sale preferred provider
organization plans and indemnity insurance contracts ("collectively, Health
Insurance Contracts," as defined herein) to individuals and groups in the State
of New York and to offer certain other insurance plans in such State, including
group life. disability and dental insurance plans ("Ancillary Products," as
defined herein);


                                       2
<PAGE>

     WHEREAS, PHS desires to make Health Insurance Contracts and Ancillary
Products available for sale by PHS in the State of New York;

     WHEREAS, PHS and Guardian each desire to market "multi-choice" plans, which
give employees the option of choosing benefits under pre-selected combinations
of health coverage plans; and

     WHEREAS, PHS and Guardian desire to enter into certain reinsurance
transactions, pursuant to which Guardian will reinsure PHS with respect to risks
under HMO Plans (as defined herein) and an affiliate of PHS, Physicians Health
Services (Bermuda) Ltd., will reinsure Guardian with respect to risks under
Out-of-Network Contracts (as defined herein).

     NOW THEREFORE, in consideration of the mutual agreements contained herein,
the sufficiency of which is hereby acknowledged, and in consideration of the
performance by the parties of their obligations under this Agreement, the
parties agree as follows:


                                       3
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

     As used in this Agreement, the following terms shall have the following
meanings (definitions are applicable to both the singular and the plural form of
each term defined herein):

     "Ancillary Products" means the life insurance, short- and long-term
disability insurance, accidental death and dismemberment insurance, and dental
insurance products offered by Guardian as designated by the parties from time to
time.

     "Business Day" means any day except Saturday or Sunday or any legal Federal
or New York State holiday.

     "Change of Control" means the acquisition, in a single transaction or in a
series of related transactions, by a person, an entity, or a group of persons or
entities acting in concert of: (i) twenty-five percent (25%) or more (a) of the
voting common stock of Physicians Health Services, Inc. or Physicians Health
Services of New York, Inc. (excluding any acquisition of stock by a party
currently owning twenty-five percent (25%) or more of such common stock), or (b)
fifty-one percent (51 %) or more of the aggregate value of the assets of
Physicians Health Services, Inc. or Physicians Health Services of New York,
Inc.; or (ii) twenty-five percent (25%) or more of any ownership interest in
Guardian.


                                       4
<PAGE>

     "Continuation Plan" has the meaning given such term in Section 8.6 of the
HMO and Indemnity Reinsurance Agreements.

     "Contractholder" means an employer in the Service Area who or which
executes an enrollment agreement with respect to any Managed Care Contract
subject to this Agreement.

     "Contract Termination Date" means the effective date upon which this
Agreement terminates pursuant to the applicable section in Article X below.

     "Eligible Employee" means an employee who is eligible to enroll in the
Contractholder's Plan.

     "Effective Date" shall have the meaning set forth in Section 10.1.

     "Guardian Marketing Force" means employees of Guardian. and any agents
under contract with Guardian who or which are licensed in the State of New York
to sell individual and/or group health insurance contracts and who or which are
acting on behalf of Guardian, but not including employees or agents of PHS, or
independent brokers.

     "Health Insurance Contracts" means contracts for health insurance offered
on a fee for service or indemnity basis by Guardian in the Service Area when
such contracts are marketed and sold under the tradename "The Guardian & PHS
Healthcare Solutions," or such other tradename as the parties may mutually agree
to from time to time. Health Insurance Contracts


                                       5
<PAGE>

include preferred provider plans using the PHS Network or PHCS' network of
providers and Out-of-Network Contracts offered by Guardian in the Service Area.

     "HMO Plans" means commercial contracts for health care services provided by
PHS to Contractholders in the Service Area utilizing the PHS Network to provide
health care services when such contracts are marketed and sold under the
tradename "The Guardian & PHS Healthcare Solutions," or such other tradename as
the parties may mutually agree to from time to time. HMO Plans include HMO Plans
with a "point-of-service" feature sold together with an Out-of-Network Contract.

     "HMO Reinsurance Agreement" means the form of Reinsurance Agreement
described in Section 9.1 and attached hereto as Exhibit A-1.

     "Indemnity Reinsurance Agreement" means the form of Reinsurance Agreement
described in Section 9.2 and attached hereto as Exhibit A-2.

     "Managed Care Contracts" means any HMO Plan or Health Insurance Contract
purchased by a Contractholder pursuant to Article II below.

     "Marketing Materials" shall have the meaning set forth in Section 2.6.


                                       6
<PAGE>

     "Material Change" shall have the meaning set forth in Section 6.3.

     "Out-of-Network Contract" means a Health Insurance Contract underwritten by
Guardian which is marketed and sold as the "out-of-network" component of a HMO
Plan with a "point-of-service" feature.

     "PHCS" means Private Healthcare Systems, Incorporated, a Delaware
corporation with its headquarters in Waltham, Massachusetts, that organizes
managed care networks.

     "PHS Network" means the network of health care providers in the Service
Area, including physicians and other individual practitioners and health care
facilities or individual practice associations, who or which are under direct or
indirect contract with PHS to provide services to Subscribers under a HMO Plan.

     "Plans" means the HMO Plans, Health Insurance Contracts and Ancillary
Products sold pursuant to this Agreement.

     "Quarter" means each of the four consecutive three-month periods in a
calendar year.

     "Quarterly Accounting Report" shall have the meaning set forth in Section
8.1.


                                       7
<PAGE>

     "Service Area" means the Counties of Bronx, Dutchess, Kings, Nassau, New
York, Queens, Richmond, Rockland, Suffolk, Orange, Putnam and Westchester in the
State of New York.

     "Subscriber" means the persons, including, but not limited to, Eligible
Employees, who have enrolled in a Managed Care Contract and who meet the
Contractholder's and the Managed Care Contract's eligibility requirements.


                                   ARTICLE II

                              MARKETING AND SALES

     2.1 Marketing and Sale of the HMO Plans by Guardian. (a) During the term of
this Agreement, Guardian shall have the right to market HMO Plans to its
existing and prospective customers through the Guardian Marketing Force,
pursuant to the terms of Section 2.3 below.

     (b) Except as permitted by 2.1(c) below, Guardian shall not enter into any
marketing agreements or similar agreements with any managed care organization
other than PHS for purpose of offering managed care products for sale in the
Service Area.

     (c) Nothing contained in this Agreement shall limit Guardian's right to
contract with PHCS for the purpose of developing managed care networks in the
Service Area or elsewhere;


                                       8
<PAGE>

provided, however, that during the term of this Agreement, Guardian shall not,
without consulting with PHS, replace a HMO Plan with a similar type of plan
utilizing a PHCS network.

     (d) Nothing contained in this Agreement shall limit Guardian's right to
market Health Insurance Contracts and Ancillary Products not subject to this
Agreement directly to employers with whom Guardian contracts.

     2.2 Marketing and Sale of Health Insurance Contracts by PHS: Ancillary
Products.

     (a) During the term of this Agreement, PHS shall have the right to market
Health Insurance Contracts and Ancillary Products to its existing and
prospective customers in the Service Area, pursuant to the terms of Section 2.3
below.

     (b) Except with Guardian's prior written consent and except as permitted by
Section 2.2(c) below, PHS shall not enter into marketing or similar agreements
with any entity other than Guardian with respect to marketing in the Service
Area of HMO Plans, Health Insurance Contracts or Ancillary Products or insurance
products substantially similar to the Health Insurance Contracts or Ancillary
Products

     (c) PHS expressly acknowledges and agrees that notwithstanding anything to
the contrary stated in this Section 2.2(c), that it has not, and that it will
not, enter into any marketing or similar agreement with any entity other than
Guardian with respect to marketing in the Service Area of any commercial, fully
insured HMO Plan, Health Insurance Contract or Ancillary Product. Guardian
acknowledges and agrees that PHS may enter into arrangements


                                       9
<PAGE>

in the Service Area with respect to marketing Ancillary Products in connection
with PHS' Medicare and Medicaid health maintenance organization plans
("Government Plans"). Guardian also acknowledges and agrees that prior to the
Effective Date that PHS entered into an arrangement with Dental Benefit
Providers to market dental products (the "DBP Plans") in the Service Area. PHS
agrees that from and after December 31, 1997 that it will not market the DBP
Plans other than in connection with the marketing of the Government Plans.
Guardian further acknowledges and agrees that prior to the Effective Date that
PHS entered into arrangements with All America Financial Services, Inc.
("AAFS"), International Netherlands Group and its subsidiaries (collectively,
"ING") and Lincoln National Life Insurance Company of America ("LNLICA") to
market specific and aggregate stop-loss premium health maintenance organization
plans ("Stop-Loss Plans") and that PHS marketed the life insurance products of
AAFS, ING and LNLICA in connection with such arrangements. PHS agrees that from
and after the Effective Date that it will not market Stop-Loss Plans or life
insurance products in connection with such Stop-Loss Plans unless it gives
Guardian the opportunity to provide such stop-loss coverage to PHS. If Guardian
is able to provide such stop-loss coverage at a rate which does not exceed by
more than five percent (5 %) the average of the rates provided by AAFS, ING and
LNLICA, then PHS will utilize Guardian to provide such stop-loss coverage. In
the event there is a Change of Control and PHS is acquired by, or PHS is merged
with, any entity, the limitations set forth in Section 2.2(b) of this Agreement
shall apply to the surviving entity.

     (d) Nothing contained in this Agreement shall limit PHS's right to market
HMO plans not subject to this Agreement directly to employers with whom PHS
contracts.


                                       10
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                     [THIS PAGE MISSING FROM ORIGINAL COPY]





                                       11
<PAGE>

engaged in negotiating or renegotiating a contract for such services) without
the prior consent of such other party.

     2.5 Identification of Managed Care Contracts. The Managed Care Contracts
shall be marketed under the collective designation '`The Guardian & PHS
Healthcare Solutions." Each Managed Care Contract shall be assigned a specific
trade name, to be agreed to by the parties.

     2.6 Marketing Materials. PHS and Guardian shall jointly develop handbooks,
enrollment forms, identification cards and all other marketing materials
relating to the Managed Care Contracts (collectively, "Marketing Materials").
The parties agree that the cost of the initial development and production of
such Marketing Materials shall be shared equally by the parties pursuant to
Section 7.4 below. Thereafter, the party responsible for reproducing such
Marketing Materials shall include the cost of such reproduction in Schedule B as
a reimbursable expense. To the extent consistent with administrative
requirements, and to the extent permitted by New York law or regulations, all
Marketing Materials will consist of each party's existing Marketing Materials,
modified to reflect the terms of this Agreement. Neither party will use
Marketing Materials reflecting this Agreement or using the name of the other
party, without the other party's prior approval.

     2.7 Training. PHS and Guardian shall jointly develop training programs
regarding marketing and administering the Managed Care Contracts for all members
of the Guardian


                                       12
<PAGE>

Marketing Force and for Guardian and PHS personnel engaging in marketing or
administrative functions.


                                   ARTICLE III

                     UNDERWRITING. RATES AND ADMINISTRATION

     3.1 Underwriting and Administration of HMO Plans. (a) PHS shall be
responsible for developing and filing with the appropriate regulatory
authorities the rates for the HMO Plans. Guardian shall utilize such filed rates
and shall be responsible for calculating premiums according to established
underwriting guidelines for the HMO Plans subject to the requirements of
applicable law; provided, however, that, the parties agree that they will
mutually develop the premiums for any HMO Plan marketed to a group of more than
five hundred (500) employees. PHS shall provide Guardian with all information
reasonably relating to rating methodology, including, without limitation, cost
assumptions, anticipated loss ratios and other actuarial assumptions, and
provider and facility agreements. Underwriting guidelines for HMO Plans that are
to be marketed pursuant to this Agreement will be mutually developed by the
parties, subject to the requirements of New York law, including Section 4317 of
the Insurance Law.


                                       13
<PAGE>

     (b) Guardian shall develop premiums for HMO Plans subject to this Agreement
by using PHS' filed and approved adjusted community rating methodology, subject
to applicable law

     (c) Except as otherwise expressly provided for herein, PHS shall be solely
responsible for administration of the HMO Plans, including the payment of
claims, withholds, taxes and all other amounts (other than commissions) payable
to any person with respect to HMO Plans.

     3.2 Underwriting and Administration of Health Insurance Contracts and
Ancillary Products. (a) Guardian shall be responsible for underwriting of the
Health Insurance Contracts (including the Out-of-Network Contracts) and
Ancillary Products. Underwriting guidelines for the Out-of-Network Contracts
that are to be marketed pursuant to this Agreement will be developed in
consultation with PHS subject to the requirements of New York law, including
Section 3731 of the New York State Insurance Law.

     (b) Guardian shall have sole responsibility for rating of Health Insurance
Contracts (including the Out-of-Network Contracts) and Ancillary Products. With
respect to the Out-of-Network Contracts, Guardian shall provide PHS with all
information reasonably relating to rating methodology, including, without
limitation, cost assumptions, anticipated loss ratios and other actuarial
assumptions.


                                       14
<PAGE>

     (c) Guardian shall be solely responsible for administration of Health
Insurance Contracts (including the Out-of-Network Contracts) and Ancillary
Products, including the payment of claims, taxes and all other amounts payable
with respect to such contracts; provided, however, that, PHS shall act as the
agent of Guardian and shall pay claims and provide certain other administrative
services under the Out-of-Network Contracts, subject to mutually agreed upon
claims standards.

     3.3 "Point-of-Service" HMO Plans. The out-of-network component of any
point-of-service HMO Plan shall be made available as a Guardian Health Insurance
Contract.

     3.4 Discounts. Any discount of manual rates for any HMO Plan or
Out-of-Network Contract which exceeds a mutually agreed upon amount (as set
forth in the underwriting guidelines mutually agreed upon by the parties), must
be jointly authorized by the underwriting departments of each of the parties,
subject to the laws and regulations of the State of New York applicable to such
Plans.


                                       15
<PAGE>

                                   ARTICLE IV

           BILLING AND COLLECTION OF PREMIUMS: PAYMENT OF COMMISSIONS

     4.1 Billing and Collection of Premiums. (a) Guardian shall be responsible
for billing and collection of premiums for all Plans, regardless of how such
Plans are marketed.

     (b) Premiums received by Guardian from Contractholders with respect to HMO
Plans will be held for the benefit of PHS during the Quarter in which such
premiums are received. Interest shall be credited on cash balances held by
Guardian, as set forth in Article VII of the HMO Reinsurance Agreement.

     (c) The amount of net premiums held by Guardian at the end of each Quarter
with respect to HMO Plans i.e., premiums received plus interest credited in
accordance with Section 4. l(b) above, less commissions paid to agents or
brokers pursuant to Section 4.2 below), reduced by any claims reimbursed to PHS
(including withholds) and other amounts as agreed to by the parties shall be
paid to PHS in accordance with Section 7.3 of the HMO Reinsurance Agreement.

     4.2 Commissions. (a) Commissions with respect to Plans sold pursuant to
this Agreement shall be paid according to the schedule of commissions set forth
in Schedule B. Subject to the provisions of New York laws and regulations, the
commission rates to be paid with respect to Plans may be changed from time to
time, as agreed to jointly by PHS and Guardian, provided that the party not
proposing the change shall not unreasonably withhold its


                                       16
<PAGE>

consent to a change by the proposing party. All Managed Care Contracts shall be
priced to include expense factors for appropriate commission payments

     (b) Guardian shall make payment of all commissions to members of the
Guardian Marketing Force, to independent brokers and to Physicians Health
Insurance Services, Inc., an insurance agency ("PHIS"), to the extent that such
commissions become due as a result of the sale of Plans subject to this
Agreement. Guardian shall act as PHS's agent in the payment of commissions for
HMO Plans. PHS shall have responsibility for any other compensation with respect
to Plans sold by PHIS.

     (c) Each party shall be responsible for ensuring that its employees or
agents are appropriately licensed and appointed, as necessary, to sell Plans and
to receive commissions. All payments of commissions to agents, brokers or
employees shall comply with applicable laws, rules, ordinances and regulations.

     (d) Limitations on Commission and Marketing Fees. Notwithstanding any other
provision of this contract, the total of commissions and marketing fees payable
by Guardian under this Agreement shall not exceed any limitations set forth in
Section 4228 of the New York State Insurance Law.


                                       17
<PAGE>

                                    ARTICLE V

                        ENROLLMENT: MEMBERSHIP SERVICES

     5.1 Enrollment. (a) Guardian and PHS shall jointly enroll new
Contractholders and Subscribers purchasing Managed Care Contracts.

     (b) Each party shall be responsible for obtaining enrollment information
from Contractholders and Subscribers with respect to those Managed Care
Contracts sold by such party's Marketing Force and shall transmit such
information to the other party on a timely basis in a format that is acceptable
to the other party.

     5.2 Meetings with Contractholders and Subscribers. Guardian and PHS shall
cooperate in conducting employee on-site enrollment meetings.

     5.3 Enrollment Materials. All enrollment agreements, forms and other
materials, including Subscriber handbooks and identification cards, used for
Contractholders and Subscribers shall be either PHS's or Guardian's existing
approved forms, modified as necessary to reflect the terms of this Agreement,
and the administrative requirements of PHS and Guardian, respectively. All such
materials shall specify that PHS is the underwriter of HMO Plans, and that
Guardian is the underwriter of Health Insurance Contracts (including the
Out-of-Network Contracts) and Ancillary Products. Neither party will use
enrollment


                                       18
<PAGE>

materials reflecting this Agreement, or using the name of the other party,
without the other party's approval.

     5.4 Enrollment Reports. (a) PHS and Guardian shall prepare periodic and
timely reports as set forth in Schedule C showing all Managed Care Contracts
sold, renewed or terminated, and other enrollment information required by either
party in order to perform its duties with respect to such Contracts. Such
reports shall be made by each party on a periodic and timely basis on the
Business Day following the date of transactions or other matters reported, and
shall be transmitted by electronic transmission in a form reasonably acceptable
to the receiving party.

     (b) PHS and Guardian shall prepare periodic reconciliations of the
enrollment information in the possession of each party.

     5.5 Membership Services. All membership services with respect to
Subscribers under HMO Plans shall be provided by PHS.


                                       19
<PAGE>

                                   ARTICLE VI

                             PHS NETWORK MANAGEMENT

     6.1 PHS Network Management. (a) PHS shall be solely responsible for
development and maintenance (including, without limitation, quality assurance,
utilization management and credentialing protocols) of the PHS Network. PHS
shall provide Guardian with an accurate listing of the composition of the PHS
Network at the Effective Date, and thereafter shall update the listing
periodically, showing additions and deletions to the composition of the PHS
Network.

     (b) PHS shall be solely responsible for any loss or liability arising from
any inaccuracy in such listings.

     (c) Guardian may recommend additions to, or deletions from, the PHS
Network, and PHS shall endeavor to be responsive to accommodate Guardian's
recommendation. PHS shall have the sole authority to enter into contracts with
providers.

     6.2 Medical Management. PHS shall be solely responsible for all claims
processing and auditing, health services (including hospital pre-certification,
outpatient pre-certification, large claim case management and utilization
review) and all risk accounting for the provider bonus arrangements under the
HMO Plans.


                                       20
<PAGE>

     6.3 Material Change in PHS Network.

     PHS acknowledges that maintenance of an adequate network of health care
providers is of primary concern to Guardian, and agrees to notify Guardian if
the PHS Network fails to meet the criteria set forth below. PHS further
acknowledges and agrees that any failure to meet the following criteria
constitutes material change in PHS Network.

     (i) The PHS Network will contain that number of physicians as determined by
the parties, from time to time, equaling 80% or more of the number of physicians
(practicing as individuals or in practice groups or clinics) determined by
averaging the number of such physicians under contract with the three largest
health maintenance organizations operating in the Service Area (measured by the
number of persons eligible to receive benefits under such plans, but not
including any plans offered by Blue Cross/Blue Shield of New York).

     (ii) The PHS network will contain a number of acute care institutions
equaling 80% or more of the number of such institutions determined as in (i)
above.

     (iii) The PHS Network will further contain a number of tertiary care
institutions (as defined by the New York Hospital Association) equaling 80% or
more of all such institutions determined as in (i) above.

     6.4 Professional Liability Insurance. (a) PHS shall require each physician
member of the PHS Network to maintain professional liability insurance, with
limits of at least $1,000,000 per occurrence, and $3,000,000 in the aggregate
for individual practitioners and practice groups, and $1,000,000 per occurrence
and $3,000,000 aggregate for hospitals,


                                       21
<PAGE>

clinics and other institutional providers. Guardian accepts that hospitals and
other institutional providers may self-insure or self-retain with respect to
such liability limits, as permitted by applicable New York law and regulations.
Guardian also recognizes that liability limits for the following individual
non-physician members of the PHS Network may be $1,000,000 per occurrence and
$1,000,000 in the aggregate: chiropractors, social workers, audiologists. speech
pathologists, optometrists, physical therapists and occupational therapists.


                                   ARTICLE VII

             MARKETING AND ADMINISTRATIVE SERVICES FEE AND EXPENSES

     7.1 Guardian's Marketing and Administrative Services Fee. PHS shall pay
Guardian a Marketing and Administrative Services Fee for the duties assigned to
Guardian under this Marketing and Services Agreement equal to the amount shown
on Schedule B. as it may be amended from time to time, for each Quarter, or
portion thereof, during which this Agreement is in effect.

     7.2 PHS's Administrative Services Fee. PHS shall be entitled to an
Administrative Services Fee for the administrative duties assigned to PHS under
this Marketing and Services Agreement equal to the amount shown on Schedule B.
as it may be amended from time to time, for each Quarter, or portion thereof,
during which this Agreement is in effect.

     7.3 Adjustments of Fee. The Fees set forth in Schedule B shall remain in
effect for four Quarters, or portion thereof, beginning with the Quarter that
includes the Effective Date.


                                       22
<PAGE>

Each party shall have the right to adjust the Fees payable hereunder for any
subsequent period of four Quarters by providing notice to the other party of an
amendment of Schedule B no less than forty-five (45) calendar days prior to the
beginning of the next such period. Such adjustment will be limited to an amount
necessary to cover changes in that party's costs of providing services
hereunder, without provision of profit.

     7.4 Expenses. Each party shall be responsible for its expenses incurred in
connection with this Agreement; provided, however, that expenses attributable to
the development and initial production of Marketing Materials shall be shared
equally. Each party shall calculate such expenses (including, without
limitation, a reasonable allocation of internal expenses, production and
printing expenses and legal expenses incurred in connection with obtaining
regulatory approval of any forms) on a Quarterly basis, and shall provide the
other party with a schedule of such expenses in connection with each Quarterly
Accounting Report. A party whose expenses under this Section 7.4 exceed one-half
of the aggregate of the expenses incurred by both parties for the Quarter shall
be entitled to reimbursement for such excess within forty-five (45) calendar
days from the end of such Quarter.

     7.5 Reinsurance Agreement. At the option of the parties, the fees and
expenses hereunder may be incorporated in any Reinsurance Agreement entered into
between the parties (or affiliates of the parties) to the extent that such fees
relate to reinsured HMO Plans or Out-of-Network Contracts.


                                       23
<PAGE>

                                  ARTICLE VIII

                            ACCOUNTING AND REPORTING

     8.1 Quarterly Accounting Reports. Within forty-five (45) calendar days of
the end of each Quarter, each party shall supply the other with a Quarterly
Accounting Report as defined in Section 7.3 of the Reinsurance Agreement.
Quarterly Accounting Reports shall be made for the Quarter that includes the
Effective Date, and shall be made for each Quarter following the effective date
of termination of this Agreement if any amount is due any party under this
Agreement.

     8.2 Settlements. Settlement of all amounts due pursuant to this Agreement
shall be made on a net basis in connection with the Quarterly Accounting Report.
If one party owes a net amount to the other, such amount shall be paid in
accordance with Section 7.3 of the HMO Reinsurance Agreement (with respect to
amounts relating to the HMO Plans) and Section 7.3 of the Indemnity Reinsurance
Agreement (with respect to amounts relating to the Health Insurance Contracts).

     8.3 Reconciliation. Each party shall have the right to review all
individual components of transactions entered into each Quarterly Accounting
Report. The parties shall have twenty (20) Business Days from the day the
Quarterly Accounting Report is submitted to report any deficiency in such report
and to request an adjustment of any payment made to or received by either party.
Any amount due either party in connection with such reconciliation


                                       24
<PAGE>

shall be paid within twenty (20) calendar days of the receipt of notice that
additional amounts are due.

     8.4 Best Efforts to Supply Actual Data. In preparing all reports required
in this Agreement, Guardian or PHS, as the case may be, shall make its best
efforts to supply the actual data. If the actual data cannot be supplied with
the appropriate report, Guardian or PHS, as the case may be, shall produce best
estimates, and shall provide amended reports based on actual data no more than
thirty (30) calendar days after such report was originally due.

     8.5 Statement of Actuarial Opinion. (a) Within forty-five (45) calendar
days after the end of the calendar year, each party shall provide the other with
a Statement of Actuarial Opinion certifying the adequacy of the reserve for
products covered under this Agreement. The Actuarial Opinion must state whether
or not the reserve for products covered under this Agreement meet the minimum
standards of all states where each party is licensed, and if not, the Actuarial
Opinion must state the difference between reserves and state minimums

     (b) The Actuarial Opinion shall meet the requirements set forth in the
NAIC's Actuarial Opinion and Memorandum Regulation and shall be signed by each
party's "Appointed Actuary." The Appointed Actuary may or may not be an employee
of such party.


                                       25
<PAGE>

                                   ARTICLE IX

                             REINSURANCE AGREEMENTS

     9.1 HMO Reinsurance Agreement. The parties each hereby acknowledge that,
simultaneously with the execution of this Agreement, they intend to enter into a
reinsurance agreement in the form attached hereto as Exhibit A-1 (the "HMO
Reinsurance Agreement"). The parties intend, under the terms of the HMO
Reinsurance Agreement, that PHS will cede to Guardian certain specified
percentages of the risks under the HMO Plans, including those HMO Plans with a
point of service feature, as more fully described in the HMO Reinsurance
Agreement. In return. Guardian shall be allocated specified percentages of
premiums received by PHS with respect to the HMO Plans, all as more fully
described in the HMO Reinsurance Agreement.

     9.2 Indemnity Reinsurance Agreement. The parties each hereby acknowledge
that, simultaneously with the execution of this Agreement, they intend to enter
into a reinsurance agreement in the form attached hereto as Exhibit A-2 (the
"Indemnity Reinsurance Agreement"). The parties intend, under the terms of the
Indemnity Reinsurance Agreement, that Guardian will cede to Physicians Health
Services (Bermuda) Ltd. ("PHS (Bermuda)"), an affiliate of PHS, certain
specified percentages of the risks under the Out-of-Network Contracts, as more
fully described in the Indemnity Reinsurance Agreement. In return, PHS (Bermuda)
shall be allocated specified percentages of premiums received by Guardian with


                                       26
<PAGE>

respect to the Out-of-Network Contracts. all as more fully described hi the
indemnity Reinsurance Agreement.


                                    ARTICLE X

                              TERM AND TERMINATION

     10.1 Effective Date. This Agreement shall become effective on October 1,
1996 (the "Effective Date"), and shall continue in effect unless terminated
pursuant to the terms of this Article X. Notwithstanding anything to the
contrary stated in this Article X. this Agreement shall continue in effect.
solely with respect to the provision of administrative services, for any Managed
Care Contract in effect on the Contract Termination Date until 180 days
subsequent to the next succeeding renewal date of any Managed Care Contract
following such Contract Termination Date; and provided, further however, that in
the event of a termination pursuant to Section 8.6 of the HMO and Indemnity
Reinsurance Agreements, this Agreement shall remain in effect solely with
respect to the provision of administrative services with respect to any
Continuation Plan for the period stated in Section 8.6 of the HMO and Indemnity
Reinsurance Agreements.

     10.2 Termination Due to Change of Control. In the event of a Change of
Control in one party, the other party shall have the right to terminate this
Agreement as set forth in Section 8.6 in the HMO and Indemnity Reinsurance
Agreements. The Contract Termination Date under this Section 10.2 shall be the
effective date of the Change of Control.


                                       27
<PAGE>

     10.3 Termination Without Cause. (a) Either party shall have the right to
terminate this Agreement without cause upon 180 days prior written notice to the
other party. The Contract Termination Date under this Section 10.3 shall be the
180th day following the giving of notice required by this Section 10.3.

     (b) If PHS terminates this Agreement pursuant to Section 10.3(a), it agrees
to pay Guardian an amount equal to one half the fair market value of all HMO
Plans in force on the effective date of termination, other than HMO Plans that
(i) resulted from the conversion of pre-existing PHS contracts to Managed Care
Contracts, or (ii) are not continued as PHS plans on or before the first renewal
date for such contracts following the effective date of termination. In the
event that Guardian terminates this Agreement pursuant to Section 10.3(a),
Guardian agrees to pay PHS an amount equal to one half the fair market value of
all Out-of-Network Contracts in force on the effective date of termination,
other than Out-of-Network Contracts that (i) resulted from the conversion of
pre-existing Guardian contracts to Managed Care Contracts, or (ii) are not
continued as Guardian health insurance contracts on or before the first renewal
date for such contracts following the effective date of termination.

     (c) The parties will agree to a method of valuation of the HMO Plans and
Out-of-Network Contracts (using methods of valuation customarily used in valuing
HMO Plans or health insurance business). If the parties are unable to agree on
valuation, the matter


                                       28
<PAGE>

will be referred to arbitration. Payments required under this Section 10.3 shall
be made in connection with the final Annual Accounting Report.

     10.4 Termination For Cause. (a) In the event that either party shall
default in the performance of the duties and obligations imposed on it pursuant
to the terms of this Agreement or the Reinsurance Agreement(s), or breach any of
the provisions contained herein or therein, including the failure to pay any
amount when due, or the failure of either party to maintain a level of services
under this Agreement that is reasonably satisfactory to the other party, the
defaulting party shall be allowed thirty (30) calendar days from written notice
of such default or breach to present to the non-defaulting party a plan to cure
such default or breach that is reasonably satisfactory to the non-defaulting
party. If a reasonably satisfactory plan to cure the default or breach is not
submitted within that time, or if the plan is not carried out according to its
terms, the non-defaulting party shall have the right to terminate this
Agreement, and the Reinsurance Agreement(s), upon delivery of written notice of
such termination to the defaulting party, which shall be effective upon receipt,
without prejudice to any other rights or remedies available to the non
defaulting party by reason of such default or breach.

     (b) In the event that either party shall engage in fraudulent, illegal or
grossly negligent conduct with respect to its duties and obligations under this
Agreement or the Reinsurance Agreement(s), the other party shall have the right
to terminate this Agreement,


                                       29
<PAGE>

and the Reinsurance Agreement(s), upon delivery of written notice of such
termination to the defaulting party, which shall be effective upon receipt,
without prejudice to any other rights or remedies available to the non
defaulting party by reason of the defaulting party's conduct.

     (c) In the event that this Agreement is terminated pursuant to this Section
10.4, the provisions of Section 10.3(b) shall apply as if the defaulting party
elected to terminate this Agreement.

     (d) The Contract Termination Date under this Section 10.4 shall be the date
of receipt of notification of termination.

     10.5 Termination Due to Financial Impairment or Loss of Authority. In the
event that either party shall become unable to perform its obligations under the
Managed Care Contracts because of financial impairment or loss of authority to
act under law, or by action of any regulatory authority, the other party shall
have the right, subject to the requirements of relevant law and receipt of
necessary approvals, to terminate this Agreement and have the Managed Care
Contracts assigned to, and all obligations assumed by, an appropriately licensed
organization that provides substantially similar healthcare services as
described in this Agreement. The Contract Termination Date under this Section
10.5 shall be the date set forth in Section 8.8 of the HMO and Indemnity
Reinsurance Agreements.

     10.6 Termination for Material Change in PHS Network. In the event that the
PHS Network undergoes a material change within the meaning of Section 6.3 of
this Agreement,


                                       30
<PAGE>

PHS shall be allowed thirty (30) days to present to Guardian a plan to cure such
Material Change that is reasonably satisfactory to Guardian. If a reasonably
satisfactory plan to cure the Material Change is not submitted within that time,
or if the plan is not carried out according to its terms, Guardian shall have
the right to terminate this Agreement, and the Reinsurance Agreement(s), upon
delivery of written notice of such termination to PHS, which shall be effective
upon receipt, without prejudice to any other rights or remedies available to
Guardian. The Contract Termination Date under this Section 10.6 shall be the
date of receipt of notification to terminate.

     10.7 Buy-Out Provisions. The parties acknowledge and agree that the
"buy-out" provisions set forth in Section 10.3(b) above apply only to
terminations under Sections 10.3(a) and 10.4 above. Such buy-out provisions do
not apply to terminations under any other section of this Agreement or to
terminations under the HMO Reinsurance Agreement or the Indemnity Reinsurance
Agreement.


                                   ARTICLE XI

                                INDEMNIFICATION

     11.1 PHS's Indemnification. PHS shall indemnify Guardian against all
liabilities, losses, suits, damages, costs, and expenses (including, without
limitation, damages resulting from breach of this Agreement and reasonable fees
of Guardian's attorneys and other expenses


                                       31
<PAGE>

of litigation), net of recoveries from third parties, arising out of or in
connection with PHS's obligations under this Agreement, including acts or
omissions to act, or negligent, willful, reckless or intentional wrongs, fraud,
oppression or bad faith.

     11.2 Guardian's Indemnification. Guardian shall indemnify PHS against all
liabilities, losses, suits, damages, costs and expenses (including, without
limitation, damages resulting from breach of this Agreement, reasonable fees of
PHS's attorneys and other expenses of litigation), net of recoveries from third
parties, arising out of or in connection with Guardian's obligations under this
Agreement, including acts or omissions to act, or negligent, willful, reckless
or intentional wrongs, fraud, oppression or bad faith.

     11.3 Liability under PHS's HMO Plans. Except as specifically set forth in
any Reinsurance Agreement(s) to be entered into between the parties, Guardian is
not a guarantor, insurer, or reinsurer of, or joint venturer with, PHS. Guardian
does not accept any risk of loss for, nor provide any indemnification to PHS,
any Contractholder or Subscriber, any provider or any other person with respect
to an HMO Plan. PHS shall indemnify Guardian for all liabilities, losses, suits,
damages, costs and expenses (including reasonable fees of Guardian's attorneys,
and other expenses of litigation), net of recoveries from third parties, arising
in connection with a HMO Plan or the PHS Network, including action or failure to
act by PHS, or its employees or agents (excluding health care providers who or
which are not employees of, or under an agency agreement with, PHS).


                                       32
<PAGE>

     11.4 Liability under Health Insurance Contracts and Ancillary Products.
Except as set forth in any Reinsurance Agreement(s) to be entered into between
the parties, PHS is not a guarantor, insurer, or reinsurer of, or joint venturer
with, Guardian. PHS does not accept any risk of loss, nor provide any
indemnification to Guardian, any Contractholder or Subscriber, any provider or
any other person with respect to a Health Insurance Contract or Ancillary
Product. Guardian shall indemnify PHS for all liabilities, losses, suits,
damages, costs and expenses (including reasonable fees of PHS's attorneys, and
other expenses of litigation), net of recoveries from third parties, arising in
connection with a Health Insurance Contract or Ancillary Product, including
action or failure to act by Guardian, or its employees or agents.

     11.5 Survival of Article. This Article XI shall survive the termination or
nonrenewal of this Agreement.


                                   ARTICLE XII

                                  ARBITRATION

     12.1 Appointment of Arbitrators. In the event of any disputes or
differences arising hereafter between the parties with reference to any
transaction under or relating in any way to this Agreement, as to which
agreement between the parties hereto cannot be reached, the dispute or
difference shall be resolved by arbitration. Three arbitrators shall decide any


                                       33
<PAGE>

dispute or difference. The arbitrators must be disinterested officers or retired
officers of life and health insurance or health maintenance organizations other
than the two parties to this Agreement or their affiliates. Each of the parties
agrees to appoint one of the arbitrators with the third, to be chosen by the two
appointed arbitrators. In the event that either party should fail to choose an
arbitrator within thirty (30) calendar days following a written request by the
other party to do so, the requesting party may choose a second arbitrator before
entering upon arbitration. In the event that the two arbitrators shall not be
able to agree on the choice of the third arbitrator within twenty (20) calendar
days following their appointment. each arbitrator shall nominate five (5)
candidates within ten (10) calendar days thereafter, four (4) of whom the other
party shall decline, and the third arbitrator shall be chosen by the President
of the American Arbitration Association or his designee. Should the chosen third
arbitrator so selected decline to serve, the candidate who was not chosen by the
President shall be appointed. This process shall continue until a candidate has
agreed to serve.

     12.2 Decision. The arbitrators shall consider customary and standard
practices in the health insurance and managed care business. They shall decide
by a majority vote of the arbitrators. There shall be no appeal from their
written decision. judgment may be entered on the decision of the arbitrators by
any court having jurisdiction. If, in the opinion of the arbitrators, a dispute
cannot be otherwise resolved. this Agreement shall be terminated in accordance
with Section 10.4 hereof.


                                       34
<PAGE>

     12.3 Expenses of Arbitration. Each party shall bear the expense of its own
arbitrator (whether selected by that party, or by the other party pursuant to
the procedures set out in Section 12.1) and related outside attorneys' fees, and
shall jointly and equally bear with the other party the expenses of the third
arbitrator.

     12.4 Applicable Law. Any arbitration instituted pursuant to this Article
shall be held in New York and the laws of the State of New York and, to the
extent applicable, the Federal Arbitration Act, shall govern the interpretation
and application of this Agreement.

     12.5 Survival of Article. This Article shall survive termination of this
Agreement.


                                  ARTICLE XIII

                                  MISCELLANEOUS

     13.1 Stop-Loss Coverage. Guardian shall have the right to provide
Contractholders with stop-loss insurance or reinsurance with respect to HMO
Plans that are Managed Care Contracts subject to this Agreement. Guardian shall
have the right to bid on stop-loss reinsurance protection for all other business
of PHS. Nothing herein shall require PHS to reinsure HMO Plans that are not
Managed Care Contracts with Guardian. In addition, Guardian acknowledges that
PHS has certain existing arrangements, and may enter into

                                       35
<PAGE>

additional arrangements in the future, for stop-loss reinsurance coverage for
HMO Plans that are not Managed Care Contracts which shall remain in effect
regardless of this Agreement.

     13.2 Misunderstandings and Oversights. If any delay, omission, error or
failure to perform any act required by this Agreement is unintentional and
caused by misunderstanding or oversight, PHS and Guardian will adjust the
situation to what it would have been had the misunderstanding or oversight not
occurred. The party that first discovers such oversight or incorrect act as a
result of the misunderstanding will notify the other party in writing promptly
upon discovery of the misunderstanding or oversight. The parties shall act to
correct the error, omission or oversight within thirty (30) days of notification
of the problem. This Section 13.2 shall not be construed as a waiver by either
party of its right to enforce strictly the terms of this Agreement.

     13.3 Non-Solicitation. (a) During the term of this Agreement, neither
Guardian nor any entity under Guardian's control shall contact, solicit or
contract for services with any PHS Network health care provider then under
contract with PHS. Nothing in this Agreement shall preclude PHCS from
contracting with any PHS Network health care provider.

     (b) During the term of this Agreement, neither party shall knowingly
solicit for employment an employee of the other party who has been engaged in
activities covered by this Agreement, without written consent of the other
party.

                                       36
<PAGE>

     13.4 Regulatory Approval. Performance of the obligations of either party
under this Agreement shall be subject to the receipt of necessary regulatory
approvals under the laws, regulations and practices of regulatory authorities in
New York. PHS and Guardian shall cooperate in attempting to obtain expeditiously
any necessary regulatory approvals from regulatory authorities. Each party will
bear its own expenses in obtaining such approvals.

     13.5 Audits. Each party shall have the right, upon reasonable notice to the
other party, and at the requesting party's expense, to audit the books and
records of the other party relating to receipts, enrollment, service standards
and other matters relating to this Agreement during regular business hours at
the premises of the audited party where such records are normally maintained.
The audited party shall reasonably cooperate in any such audit.

     13.6 Headings and Schedules. Headings used herein are not part of this
Agreement. Any Schedules or Exhibits attached hereto are part of this Agreement.

     13.7 Compliance with Applicable Laws and Regulations. It is the intention
of the parties that this Agreement comply with all existing applicable laws and
regulations, as from time to time are in effect, so that the Agreement remains
in full force. Each of the parties agrees to comply with all laws, ordinances,
rules, regulations and orders of regulatory bodies applicable to the
transactions contemplated by this Agreement, including those relating to

                                       37
<PAGE>

maintenance of appropriate licenses and the appointment of agents and payment of
commissions. Either party shall promptly notify the other party of any
complaint, inquiry or lawsuit by any regulatory authority relating to the
Managed Care Contracts or to this Agreement.

     13.8 Successors and Assigns: Binding Effect. Except as otherwise provided
herein and in the HMO and Indemnity Reinsurance Agreements this Agreement cannot
be assigned by PHS or Guardian without the prior written approval of the other
party. The provisions of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
permitted successors and assigns.

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

     13.10 Entire Agreement: Amendment. This Agreement and the Reinsurance
Agreements constitute the entire agreement between the parties with respect to
the Managed Care Contracts and Ancillary Products, and supersede any previous
written or oral agreements. This Agreement shall be amended only by written
agreement signed by a duly authorized officer of each of PHS and Guardian, and
any change to this Agreement shall be null and void unless made by such written
agreement; provided, however, that where, under insurance,

                                       38
<PAGE>

health or other applicable laws or regulations, the approval of any such
amendment to this Agreement by one or more federal, state or local governmental
or regulatory authorities is required, the amendment shall not take effect
unless and until all such necessary approvals have been obtained and received by
both PHS and Guardian. In the event that any such approval is required, PHS and
Guardian shall each take all necessary actions in order to obtain such approval.

     13.11 Waivers. The waiver by either of the parties of the other party's
prompt and complete performance, or breach or violation, of any provisions of
this Agreement and related documents shall not operate or be construed as a
waiver of any subsequent breach or violation, and the waiver by any of the
parties to exercise any right or remedy which it may possess hereunder shall not
operate or be construed as a bar to the exercise of such right or remedy by such
party upon the occurrence of any subsequent breach or violation.

     13.12 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of laws thereof.

     13.13 Severability. In the event any section or provision of this
Agreement or related documents is found to be void and unenforceable by a court
of competent jurisdiction, the remaining sections and provisions of this
Agreement or related documents shall nevertheless be

                                       39
<PAGE>

binding upon the parties with the same force and effect as though the void or
unenforceable part had not been severed or deleted.

     13.14 Notices. Any notice to be given pursuant to the terms of this
Agreement shall be given in writing either by personal delivery or by mail,
registered or certified, return receipt requested and postage prepaid. Mail
notices shall be sent to the parties at their respective addresses as shown:

          If to Guardian:

          The Guardian Life Insurance Company of America
          201 Park Avenue South
          New York, New York 10003
          Attention: Edward K. Kane, Esq.
          Senior Vice President and General Counsel

          If to Physicians Health Services, Inc.:

          Physicians Health Services, Inc.
          120 Hawley Lane
          Trumbull, Connecticut O6611
          Attention: Regina M. Campbell
          Senior Vice President & Chief Administrative Officer

          If to Physicians Health Services of New York, Inc.:

          Physicians Health Services of New York, Inc.
          399 Knollwood Road, Suite 212
          White Plains, New York 10603
          Attention: Executive Director

                                       40
<PAGE>

     13.15 Confidentiality. (a) Neither Guardian nor PHS shall disclose any
proprietary or confidential information of the other party to a third party
without the express written consent of the other party to this Agreement. For
purposes of this Agreement, "proprietary and confidential" information will
include, without limitation, all internal business practices and business
records, information concerning products and pricing, contracts, computer
hardware and software or business methods in any form whatsoever, peer review,
quality assurance and grievance procedures, any aspect of the utilization review
program, provider fee schedules, reimbursement schedules, or discounts, and
advertising or marketing information, but not including information otherwise
available to the public. Neither party shall use any proprietary and
confidential information of the other party for its own benefit. Upon
termination of this Agreement, each party will immediately return to the other
party any confidential information, claims files necessary for the continued
administration of any Plan, and other property of the other party.

     (b) Guardian and PHS agree to maintain the confidentiality of any health
care information pertaining to Subscribers including, without limitation, files,
records, reports, and other information prepared and maintained in connection
with this Agreement, in accordance with all applicable laws and regulations.

     (c) Each Party shall obtain any necessary consent from Subscribers with
respect to the release to the other party of any confidential information
relating to such

                                       41
<PAGE>

Subscribers, by means of general or specific releases, as appropriate. Each
party shall notify the other if it becomes aware that proper releases have not
been obtained.

     (d) Guardian shall not make any list of PHS providers available to any
person other than appropriate regulatory authorities, Guardian employees who are
engaged in operations relating to this Agreement, and independent brokers and
other persons engaged in marketing of Managed Care Contracts.

     13.16 Press Releases. No public statement or press release regarding the
existence of this Agreement shall be made by either party without obtaining the
prior written consent of the other party, except as required by applicable laws
or regulations.

     13.17 Relationship of Parties. The parties to this Agreement are and shall
remain independent contractors. Neither party is the employee or agent of the
other party, except as set forth herein, and neither party has an express or
implied right to bind the other party. The parties do not intend to form a joint
venture, partnership, or to be governed by laws relating to any relationship
other than that of independent contractors. Neither party is authorized to
modify, alter or waive the terms of any product issued by the other party.

                                       42
<PAGE>

     13.18 Offset. In the event that either party to this Agreement shall fail
to make payment of any amount that is due and owing to the other party under
this Agreement, all mutual debts shall be offset, and only the balance of such
debts shall be paid.

     13.19 Financial Statements. Each party shall furnish financial statements
as filed with the appropriate regulatory authority to the other party upon
request.

     13.20 Regulatory Review. The parties acknowledge and agree that this
Agreement is subject to the review and approval of the New York State Department
of Insurance. The parties expressly agree that any revisions to this Agreement
required by the New York State Department of Insurance will be addressed in an
amendment to, or restatement of, the Agreement.

                                       43
<PAGE>

                                    EXECUTION

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.

                              PHYSICIANS HEALTH SERVICES, INC.

                              By /s/ REGINA M. CAMPBELL
                                 --------------------------
                                 Name Regina M. Campbell
                                 Title Senior Vice President

                              PHYSICIANS HEALTH SERVICES
                                 OF NEW YORK

                              By /s/ REGINA M. CAMPBELL
                                 --------------------------
                                 Name Regina M. Campbell
                                 Title Senior Vice President

                              THE GUARDIAN LIFE INSURANCE
                                 COMPANY OF AMERICA

                              By /s/ JOSEPH D. SARGENT
                                 --------------------------
                                 Name Joseph D. Sargent
                                 Title President and CEO

                                       44
<PAGE>

                                   SCHEDULE A

                     DESCRIPTION OF MANAGED CARE CONTRACTS


[DESCRIBE NY PLANS]

                                      A-1
<PAGE>

NEW YORK PASSPORT HMO - HEALTHCARE SOLUTIONS
<TABLE>
===============================================================================================================
<S>                       <C>                                                 <C>
N36000 (5-lONYP)          PHS 5 (Customized)                                  Healthcare Solutions, eff. 7/1/95
---------------------------------------------------------------------------------------------------------------
N37000 (15-20, 25 and     PHS 15 (Customized)                                 Healthcare Solutions, eff. 7/1/95
26NYP
---------------------------------------------------------------------------------------------------------------
N38000 (11-14NYP)         PHS 5/250 (Customized)                              Healthcare Solutions, eff. 7/1/95
---------------------------------------------------------------------------------------------------------------
N39000 (21-24NYP)         PHS 15/500 (Customized)                             Healthcare Solutions, eff. 7/1/95
---------------------------------------------------------------------------------------------------------------
</TABLE>

12/18/96                                                                       6
<PAGE>

NEW YORK CHARTER POS - HEALTHCARE SOLUTIONS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------

Copay      In         Individual      Family          Coinsurance     Individual    Family Out      Annual       COMMENTS
Schedule   Network    Deductible      Deductible      (pd by PHS)     Out of        of Pocket       Benefit
           Plans                                                      Pocket Max.   Max.            Limit
------------------------------------------------------------------------------------------------------------------------------------

<S>        <C>        <C>             <C>             <C>             <C>           <C>             <C>          <C>
N3627G     PHS 5      $200            $5OO            70% of the      $1,700        $4,250          NA           Available for sale
5NYC                                                  next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3637G     PHS 5      $300            $750            70% of the      $1,800        $4,500          NA           Available for sale
6NYC                                                  next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3657G     PHS 5      $500            $l,250          70% of the      $2,000        $5,000          NA           Available for sale
7NYC                                                  next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3628G     PHS 5      $200            $500            80% of the      $1,200        $3,000          NA           Available for sale
8NYC                                                  next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3638G     PHS 5      $300            $750            80% of the      $1,300        $3,250          NA           Available for sale
9NYC                                                  next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3658G     PHS 5      $500            $1,250          80% of the      $1,500        $3,750          NA           Available for sale
1ONYC                                                 next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3837G     PHS 5/250  $300            $750            70% of the      $1,800        $4,500          NA           Available for sale
11NYC                                                 next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3857G     PHS 5/250  $500            $1,250          70% of the      $2,000        $5,000          NA           Available for sale
12NYC                                                 next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3838G     PHS 5/25O  $300            $750            80% of the      $1,300        $3,250          NA           Available for sale
13NYC                                                 next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3858G     PHS 5/250  $500            $1,250          80% of the      $l,500        $3,750          NA           Available for sale
14NYC                                                 next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3727G     PHS 15     $200            $500            70% of the      $1,700        $4,250          NA           Available for sale
15NYC                                                 next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3737G     PHS 15     $300            $750            70% of the      $l,800        $4,500          NA           Available for sale
16NYC                                                 next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3757G     PHS 15     $500            $l,250          70% of the      $2,000        $5,000          NA           Available for sale
17NYC                                                 next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3728G     PHS 15     $200            $500            80% of the      $1,200        $3,000         NA            Available for sale
18NYC                                                 next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

                                                                               7
12/18/96
<PAGE>

NEW YORK CHARTER POS - HEALTHCARE SOLUTIONS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------

Copay      In         Individual      Family          Coinsurance     Individual    Family Out      Annual       COMMENTS
Schedule   Network    Deductible      Deductible      (pd by PHS)     Out of        of Pocket       Benefit
           Plans                                                      Pocket Max.   Max.            Limit
------------------------------------------------------------------------------------------------------------------------------------

<S>        <C>        <C>             <C>             <C>             <C>           <C>             <C>          <C>
N3738G     PHS 15     $300            $75O            80% of the      $1,300        $3,250          NA           Available for sale
19NYC                                                 next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3758G     PHS 15     $500            $l,250          80% of the      $1,500        $3,750          NA           Available for sale
20NYC                                                 next $5,OOO                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3957G     PHS        $500            $l,2SO          70% of the      $2,000        $5,000          NA           Available for sale
21NYC      15/500                                     next $5,000                                                eff. 7/1/95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3958G     PHS        $5OO            $l,250          80% ofthe       $l,500        $3,750          NA           Available for sale
22NYC      15/500                                     next $5,000                                                eff. 7/1 /95 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3917G     PHS        $l,OOO          $2,500          70% of the      $3,700        $9,250          NA           Available for sale
23NYC      15/500                                     next $10,000                                               eff. 1-1-97 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3918G     PHS        $1,000          $2,500          80% of the      $2,800        $7,000          NA           Available for sale
24NYC      15/500                                     next $10,000                                               eff. 1-1-97 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3717G     PHS 15     $l,OOO          $2,500          70% of the      $3,700        $9,250          NA           Available for sale
25NYC                                                 next $10,000                                               eff. 1-1-97 (1)
------------------------------------------------------------------------------------------------------------------------------------

N3718G     PHS 15     $1,000          $2,500          80% of the      $2,800        $7,000          NA           Available for sale
26NYC                                                 next $10,000                                               eff. 1-1-97 (1)
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

12/18/96                                                                       8
<PAGE>

NEW YORK PASSPORT POS - HEALTHCARE SOLUTIONS
<TABLE>
<CAPTION>
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Copay      In         Individual      Family          Coinsurance     Individual    Family Out      Annual       COMMENTS
Schedule   Network    Deductible      Deductible      (pd by PHS)     Out of        of Pocket       Benefit
           Plans                                                      Pocket Max.   Max.            Limit
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<S>        <C>        <C>             <C>             <C>             <C>           <C>             <C>          <C>
N3627G     PHS 5      $200            $500            70% of the      $l,700        $4,2SO          NA           Available for sale
5NYP                                                  next $5,000                                                eff. 7/1/95 (1)
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N3637G     PHS 5      $300            $750            70% of the      $l,800        $4,500          NA           Available for safe
6NYP                                                  next $5,000                                                eff. 7/1/95 (1)
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N3657G     PHS 5      $500            $1,250          70% of the      $2,000        $5,000          NA           Available for sale
7NYP                                                  next $5,000                                                eff. 7/1/95 (1)
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N3628G     PHS 5      $200            $500            80% of the      $l,200        $3,000          NA           Available for sale
8NYP                                                  next $5,000                                                eff. 7/1/95 (1)
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N3638G     PHS 5      $300            $750            80% of the      $1,300        $3,250          NA           Available for sale
9NYP                                                  next $5,000                                                eff. 7/1/95 (1)
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N3658G     PHS 5      $500            $1,250          80% of the      $1,500        $3,750          NA           Available for sale
lONYP                                                 next $5,000                                                eff. 7/1/95 (1)
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N3837G     PHS 5/250  $300            $750            70% Of the      $l,800        $4,500          NA           Available forsale
11NYP                                                 next $5,000                                                eff. 7/1/95 (1)
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N3857G     PHS 5/250  $500            $l,250          70% of the      $2,000        $5,000          NA           Available for sale
12NYP                                                 next $5,000                                                eff. 7/1/95 (1)
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N3838G     PHS 5/250  $300            $750            80% of lhe      $l,300        $3,250          NA           Available for sale
13NYP                                                 next $5,000                                                eff. 7/1/95 (1)
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N3858G     PHS 5/250  $500            $l,250          80% of the      $l,500        $3,750          NA           Available for sale
14NYP                                                 next $5,000                                                eff. 7/1/95 (1)
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</TABLE>

12/18/96                                                                       9
<PAGE>

NEW YORK PASSPORT POS - HEALTHCARE SOLUTIONS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------

Copay      In         Individual      Family          Coinsurance     Individual    Family Out      Annual       COMMENTS
Schedule   Network    Deductible      Deductible      (pd by PHS)     Out of        of Pocket       Benefit
           Plans                                                      Pocket Max.   Max.            Limit
------------------------------------------------------------------------------------------------------------------------------------

<S>        <C>        <C>             <C>             <C>             <C>           <C>             <C>          <C>
N3727G     PHS 15     $200            $500            70% of tbe      $l,700        $4,250          NA           Available for sale
15NYP                                                 next $5,000                                                eff. 7/1/95 (1)
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N3737G     PHS 15     $300            $750            70% of the      $1,800        $4,500          NA           Available for sale
16NYP                                                 next $5,000                                                eff. 7/1/95 (1)
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N3757G     PHS i5     $500            $l,250          70% of the      $2,000        $5,000          NA           Available forsale
17NYP                                                 next $5,OOO                                                eff. 7/1/95(1)
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N3728G     PHS 15     $200            $500            80%of the       $1,200        $3,000          NA           Available forsale
18NYP                                                 next $5,000                                                eff. 7/l/95 (1)
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N3738G     PHS 15     $300            $750            80% of the      $1,300        $3,250          NA           Available for sale
19NYP                                                 next $5,000                                                eff. 7/1/95 (1)
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N3758C     PHS 15     $500            $1,250          80% of the      $1,500        $3,750          NA           Available for sale
20NYP                                                 next $5,000                                                eff. 7/1/95 (1)
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N3957G     PHS        $500            $1,250          70% of the      $2,000        $5,000          NA           Availabic for sale
21NYP      15/500                                     next $5,000                                                eff. 7/1/95 (1)
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N3958G     PHS        $500            $1,250          80% of the      $l,500        $3,750          NA           Available for sale
22NYP      15/500                                     next $5,000                                                eff. 7/1/95 (1)
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N3917G     PHS        $1,000          $2,500          70% of the      $3,700        $9,250          NA           Available for sale
23NYP      15/500                                     next $10,000                                               eff. 1-1-97 (1)
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N3918G     PHS        $1,000          $2,500          80% of the      $2,800        $7,000          NA           Available for sale
24NYP      15/500                                     next $10,000                                               eff. 1-1-97 (1)
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N3717G     PHS 15     $l,OOO          $2,500          70% of the      $3,700        $9,250          NA           Available for sale
25NYP                                                 next $10,000                                               eff. 1-1-97 (1)
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N3718G     PHS 15     $1,OO0          $2,500          80% of the      $2,800        $7,000          NA           Availabic for sale
26NYP                                                 next $10,000                                               eff. 1-1-97 (1)
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</TABLE>

12/18/96                                                                     10
<PAGE>

                                    NY (IN)

                                   Schedule B

                 Contract Allowances Administrative Service Fee

I. Guardian's Administrative Services Fee (as a percentage of premium)

                                              HMO           POS(In)
                                              ---           -------
Marketing                                    0.63%           0.63%
Sales                                        1.38%           1.38%
Administration                               1.30%           1.30%
Billing/Collections                          1.69%           1.69%
Advertising                                  0.15%           0.15%
Total                                        5.15%           5.15%

II. PHS' Administrative Services Fee (as a percentage of premium)

                                               HMO           POS(In)
                                              ---           -------
Health Services, UR                          1.67%            1.67%
Net Mgt, MDD, QA                             2.43%            2.43%
Operations                                   3.58%            3.58%
Acct Svc., Cust Srv.                         1.44%            1.44%
Marketing                                    0.63%            0.63%
Sales                                        0.15%            0.15%
Administration                               1.30%            1.30%
Advertising                                  0.15%            0.15%
Total                                       11.35%           11.35%
<PAGE>

                                   NY (OUT)

                                   Schedule B

                Contract Allowances, Administrative Service Fee

I. Guardian's Administrative Services Fee (as a percentage of premium)
                                                                     POS (Out)
                                                                     ---------
Marketing                                                              0.63%
Sales                                                                  1.38%
Administration                                                         1.30%
Claims                                                                 N/A
Billing/Collections                                                    1.69%
Advertising                                                            0.15%
Total                                                                  5.15%

II. PHS' Administrative Services Fee (as a percentage of premium)

                                                                     POS (Out)
                                                                     ---------
Health Services, UR                                                     1.67%
Net Mgt, MDD, QA                                                        2.43%
Operations                                                              3.58%
Acct Svc., Cust Srv.                                                    1.44%
Marketing                                                               0.63%
Sales                                                                   0.15%
Administration                                                          1.30%
Advertising                                                             0.15%
Total                                                                  11.35%
<PAGE>

                                   EXHIBIT A-1

                            HMO REINSURANCE AGREEMENT












                                      EX-1
<PAGE>

                                   EXHIBIT A-l
                         INDEMNITY REINSURANCE AGREEMENT










                                      EX-2