Exhibit 10.1


                            HEALTH SERVICES AGREEMENT

                                 BY AND BETWEEN

                              RIO GRANDE HMO, INC.

                                       AND

                             LIFEMARK OF TEXAS, INC,


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This HEALTH SERVICES AGREEMENT  ("Agreement") is entered into by and between Rio
Grande HMO,  Inc.  d/b/a HMO  Blue(R),  Southeast  Texas,  a health  maintenance
organization  certified  under Article 20A of the Insurance Code of the State of
Texas  (hereinafter  referred  to as  "HMO"),  and  Lifemark  of Texas,  Inc.  a
nonprofit  health  corporation  certified  under  Section  5.01(a)  of the Texas
Medical Practice Act (hereinafter referred to as "Lifemark Texas").

1     PREAMBLE

      HMO is engaged in the  development,  management  and operation of a health
      maintenance  organization,  one of whose purposes is to provide or arrange
      for comprehensive  health care on a prepaid basis for Medicaid recipients.
      HMO  desires to engage the  services  of  Lifemark  Texas in the  Medicaid
      program. Lifemark Texas desires to participate in the HMO's health service
      delivery  system and directly  provide or arrange  health care services to
      Medicaid  recipients  who have  selected the HMO,  and to provide  certain
      administrative services to HMO.

      Now, therefore,  in consideration of the mutual promises herein stated, it
      is agreed by and between the parties hereto as follows:

2     DEFINITIONS

      The following terms will have the meanings for purposes of this Agreement,
      as set forth below:

2.1   "AGREEMENT" means this contract, including all attachments appended hereto
      and any written amendments subsequently executed by the parties.

2.2   "CLEAN  CLAIM"  means a TDHS  approved  or  identified  claim  format that
      contains all data fields  required by HMO and TDHS for final  adjudication
      of the claim.  The required  data fields must be complete and accurate and
      include HMO-published requirements for adjudication.

2.3   "CONTRACT YEAR" means September 1 of the current year through August 31 of
      the  following  year or as otherwise  defined by the Texas  Department  of
      Human Services for a particular service area or service area expansion.

2.4   "COVERED SERVICES" means those health care services or products, including
      medical,  dental,  vision,  behavioral,  approved home and community based
      care,  and other  services to which Members are entitled under the Program
      as  described in the RFA, the TDHS  Contract and  value-added  services as
      described in the HMO's response to the RFA dated April 7, 1997.

2.5   "DESIGNATED  MEMBERS"  means  those  Members  who have  selected,  or been
      assigned to,  participating  Providers to be those  Members'  Primary Care
      Physicians.

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2.6   "EMERGENCY MEDICAL CONDITION" means a medical condition manifesting itself
      by acute symptoms of sufficient  severity  (including  severe pain),  such
      that a prudent  layperson who possesses an average knowledge of health and
      medicine  could  reasonably  expect the absence of immediate  medical care
      could result in:

      (a)  placing  the  patient's  health  in  serious  jeopardy;
      (b)  serious impairment  to bodily  functions;
      (c)  serious  dysfunction  of any bodily organ or part;
      (d)  serious disfigurement; or
      (e)  in  the  case  of a pregnant woman, serious jeopardy to the health of
           the fetus.

2.7   "EMERGENCY  SERVICES"  means  Covered  Services  that are  furnished  by a
      Provider that is qualified to furnish such services  under this  Agreement
      and are needed to evaluate or  stabilize an  Emergency  Medical  Condition
      and/or emergency behavioral health condition.

2.8   "EPSDT" means the Early and Periodic Screening,  Diagnosis,  and Treatment
      program  contained at 42 United  States Code  1396d(r).  The name has been
      changed to "Texas Health Steps" in the State of Texas.

2.9   "EPSDT-CCP"  means  the  Early  and  Periodic  Screening,  Diagnosis,  and
      Treatment  --   Comprehensive   Care   Program,   under  which  TDH  added
      comprehensive  care  benefits to the federal  EPSDT (Texas  Health  Steps)
      program requirements.

2.10  "HCFA" means the Health Care Financing Administration.

2.11  "HEALTH  CARE  PROFESSIONAL"  means  any  physician,  nurse,  audiologist,
      physician  assistant,   clinical  psychologist,   occupational  therapist,
      physical   therapist,   speech  and   language   pathologist,   and  other
      professional  engaged in the delivery of health  services who is licensed,
      practices under an institutional  license,  certified,  or practices under
      authority of a physician or legally constituted  professional  association
      or other authority consistent with State law to render services to Members
      pursuant to an agreement with HMO or Lifemark Texas.

2.12  "INSTITUTIONAL  SERVICES" means those  non-professional  Covered  Services
      provided  by or through a State  licensed or  Medicare/Medicaid  certified
      facility.  Such  services  include,  but are not limited to:  inpatient or
      outpatient  hospital  services,  skilled nursing  facility  services,  and
      emergency room services.

2.13  "MEDICAL DIRECTOR" means a physician  designated by HMO who is responsible
      for monitoring the provision of Covered Services to Members.

2.14  "MEDICALLY  NECESSARY"  means those services or supplies  specified in the
      TDHS Contract which are:

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      (a) reasonable and necessary to prevent  illnesses or medical  conditions,
      or  provide  early  screening,   interventions,   and/or   treatments  for
      conditions  that cause  suffering  or pain,  cause  physical  deformity or
      limitations  in  function,  threaten to cause or worsen a handicap,  cause
      illness or infirmity of a Member, or endanger life;

      (b) provided at appropriate  facilities and at the  appropriate  levels of
      care for treatment of a Member's medical conditions;

      (c) consistent with health care practice guidelines and standards that are
      issued  by  professionally   recognized   health  care   organizations  or
      governmental agencies;

      (d)  consistent with the diagnoses of the conditions; and

      (e) no more  intrusive or  restrictive  than necessary to provide a proper
      balance of safety, effectiveness, and efficiency.

2.15  MEDICALLY  NECESSARY  BEHAVIORAL  HEALTH  SERVICES" means those behavioral
      health services which:

      (a) are  reasonable  and  necessary  for the  diagnosis  or treatment of a
      mental health or chemical dependency disorder or to improve or to maintain
      or to prevent deterioration of functioning resulting from such a disorder;

      (b) are in accordance with professionally accepted clinical guidelines and
      standards of practice in behavioral health care;

      (c) are furnished in the most appropriate and least restrictive setting in
      which services can be safely provided;

      (d) are the most  appropriate  level of supply or service which can safely
      be provided; and

      (e) could not be omitted without  adversely  affecting the Member's mental
      and/or physician health or the quality of care rendered.

2.16  "MEMBER" means any person residing in the service enrollment area who is:

      (1)   entitled to benefits under Title XIX of the Social  Security Act and
            the Texas Medical Assistance Program (Medicaid);

      (2)   in a Medicaid eligibility category included in the Program;

      (3)   enrolled in the Program; and

      (4)   enrolled with HMO.


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2.17  "PARTICIPATING  PROVIDER"  means any health  care  facility or Health Care
      Professional  that  renders  Covered  Services  to Members  pursuant to an
      agreement with HMO or Lifemark Texas.

2.18  "PRIMARY CARE PHYSICIAN OR PROVIDER"  means a  Participating  Provider who
      has further  agreed to provide to Designated  Members a medical home,  and
      who is  responsible  for  providing  initial and primary care to patients,
      maintaining  the continuity of patient care,  and initiating  referral for
      care.

2.19  "PROVIDER"   means  an   individual   or  entity  and  its  employees  and
      subcontractors that directly provide health care services to HMO's Members
      under a TDHS Medicaid managed care program.

2.20  "PROGRAM" means the State of Texas STAR+PLUS  Program for the provision of
      medical,  dental, vision,  behavioral,  approved home and community based,
      and other  health  services  to  Medicaid  recipients  in a  managed  care
      delivery setting as described in the STAR+PLUS  portion of the Request For
      Application by the Texas Department of Health,  dated January 7, 1997, and
      the TDHS Contract.

2.21  "REQUEST FOR  APPLICATION"  or "RFA" shall mean the  TDH/TDHS  Request for
      Application  for the  Program  dated  January  7, 1997 and any  amendments
      thereto.

2.22  "REVENUE"  means  the  monthly  payments  and  all  subsequent  adjustment
      payments made to HMO under the TDHS Contract.

2.23  "SPECIALIST  PHYSICIAN" means a physician who is a Participating  Provider
      and who agrees to directly provide Covered Services to Designated  Members
      upon the referral by any Primary Care Physician.

2.24  "STATE" means the State of Texas.

2.25  "TDH" means the Texas Department of Health.

2.26  "TDHS" shall mean the Texas Department of Human Services.

2.27  "TDHS  CONTRACT"  means the agreement  between HMO and TDHS specifying the
      terms and  conditions  under which Covered  Services are to be provided to
      Members  pursuant  to the  Program,  and  any of its  written  amendments,
      corrections or modifications.

2.28  "TDI" means the Texas Department of Insurance.

2.29  "TDMHMR"   means  the  Texas   Department  of  Mental  Health  and  Mental
      Retardation.

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2.30  "THHSC" means the Texas Department of Health and Human Services.

2.31  "THIRD  PARTY  LIABILITY"  means  benefits  paid or  payable  by all other
      federal or State medical care programs that are primary to Medicaid, group
      or individual  insurance  (including  the  insurance of absent  spouses or
      parents who may have  insurance  to pay medical  care for spouses or minor
      Members, and auto or casualty insurance collections, subject to limitation
      pursuant to State law).

3     OBLIGATIONS OF HMO

3.1   GENERAL. HMO shall maintain the organizational and administrative capacity
      and capabilities to carry out duties and  responsibilities  under the TDHS
      Contract.

3.2   FISCAL SOLVENCY. HMO is and shall remain in full compliance with all State
      and federal solvency  requirements for HMOs, including but not limited to,
      all reserve  requirements,  net worth standards,  debt to equity ratios or
      other debt limitations.

3.3   INSURANCE.  HMO has obtained and shall maintain the insurance coverages as
      required by the TDHS Contract.

3.4   COMPLIANCE.  HMO  shall  comply  with  all  State  and  federal  laws  and
      regulations  relating to the Texas  Medicaid  Program  which have not been
      waived by HCFA.  HMO shall comply with all rules  relating to the Medicaid
      Managed Care Program adopted by TDHS,  TDI, TDH,  THHSC,  TDMHMR any other
      state  agency  delegated  authority to operate or  administer  Medicaid or
      Medicaid Managed Care Programs.

4     ACCOUNTABILITY, DELEGATION AND OVERSIGHT.

4.1   ACCOUNTABILITY.  HMO is and shall remain  responsible  for  performing all
      duties,  responsibilities  and services under the TDHS Contract regardless
      of  whether  the duty,  responsibility  or  service  is  subcontracted  or
      delegated to Lifemark Texas under this Agreement.

4.2   SUBCONTRACT/DELEGATION. HMO has subcontracted and/or delegated to Lifemark
      Texas,  and Lifemark Texas shall perform,  those duties,  responsibilities
      and  services  (collectively,  "Activities")  which are  specified in this
      Agreement.  Lifemark  Texas shall not further  subcontract or delegate the
      performance of these  Activities to any organization or entity without the
      prior written consent of HMO. Any such subcontract or delegation agreement
      shall be approved by HMO, and TDHS if deemed necessary under regulatory or
      TDHS Contract requirements, and attached as an addendum to this Agreement.

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4.3   OVERSIGHT.   Lifemark  Texas  shall  comply  with  all  HMO  standards and
      requirements applicable to the Activities, and Lifemark  Texas's  policies
      and  procedures  for  performing  the  Activities shall be consistent with
      HMO's policies and procedures. If Lifemark Texas's policies and procedures
      are  inconsistent  with the HMO's, the HMO's policies and procedures shall
      apply.

4.4   MAINTENANCE OF INFORMATION AND RECORDS.  Lifemark Texas shall maintain all
      records  reviewed or created in connection  with performing the Activities
      in a form acceptable to HMO,  provide HMO with access to such  information
      and  records,  and  permit  HMO to review  and copy such  information  and
      records,  in accordance  with the  requirements  of State and federal law.
      Lifemark Texas shall create,  keep and maintain records in accordance with
      TDHS Contract  Section 3.5 and other  requirements as specified by federal
      or State laws or regulations.

4.5   REPORTING  OBLIGATIONS.  Lifemark  Texas shall  provide HMO with  periodic
      written reports  regarding all Activities in the formats  specified by HMO
      for each of the  Activities.  Lifemark  Texas  shall  disclose,  and shall
      require  network  Providers to  disclose,  to HMO all pending or potential
      arbitration,  litigation or administrative  actions against Lifemark Texas
      or the network  Provider  prior to the  execution of this  Agreement,  and
      within seven (7) days of receiving service or becoming aware of threatened
      litigation during the term of the Agreement.

4.6   MONITORING/AUDITS.  HMO shall oversee Lifemark Texas's  performance of the
      Activities through review of periodic written reports provided by Lifemark
      Texas  as  described  above,  meetings  with  appropriate  Lifemark  Texas
      representatives,  and onsite  audits and  assessments  of Lifemark  Texas.
      Lifemark Texas shall  cooperate,  participate  and comply with HMO in such
      monitoring and audits.  Such audits and assessments  shall be performed in
      accordance with  requirements of State and federal law.  Without  limiting
      the foregoing,  Lifemark  Texas agrees that  contracts with  Participating
      Providers shall permit Lifemark Texas to disclose to HMO its Participating
      Providers  credentialing  files.  Lifemark  Texas agrees that TDHS, TDI or
      their  designee  have the right from time to time to examine and audit the
      books of Lifemark Texas and its subcontractors relating to: 1) capacity to
      bear the risk of  potential  financial  losses;  2) services  performed or
      determination of amounts payable under the TDHS Contract;  3) detection of
      fraud and abuse; and 4) other purposes TDHS deems necessary to perform its
      regulatory  function and/or to enforce the provisions of the TDHS Contract
      or  other   requirements   as  specified  by  federal  or  State  laws  or
      regulations.

4.7   LIFEMARK TEXAS COVENANTS - NONPROVIDER SERVICES.  Lifemark Texas agrees to
      the  following  covenants,  and agrees to include  such  covenants  in any
      subcontract for nonProvider services:

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      4.7.1 Lifemark  Texas   understands  that  services  provided  under  this
            contract  are  funded by State  and  federal  funds  under the Texas
            Medical Assistance Program (Medicaid).  Lifemark Texas is subject to
            all State and  federal  laws,  rules and  regulations  that apply to
            persons or  entities  receiving  State and federal  funds.  Lifemark
            Texas understands that any violation by Lifemark Texas of a State or
            federal  law  relating  to  the  delivery  of  services  under  this
            Agreement,  or any  violation of the TDHS  Contract  could result in
            liability  for  contract  money   damages,   and/or  civil  criminal
            penalties and sanctions under State and federal law.

      4.7.2 Lifemark  Texas  understands  and  agrees  that the HMO has the sole
            responsibility  for  payment of services  rendered  by the  Lifemark
            Texas  under  this  Agreement.  In the  event of HMO  insolvency  or
            cessation of operations,  Lifemark  Texas's sole recourse is against
            the HMO through the bankruptcy or receivership estate of the HMO.

      4.7.3 Lifemark  Texas  understands  and agrees  that TDHS is not liable or
            responsible  for  payment  for  any  services  provided  under  this
            Agreement.

      4.7.4 Lifemark Texas agrees that any modification,  addition,  or deletion
            of the provisions of this Agreement will become effective no earlier
            than 30 days after the HMO notifies TDHS of the change. If TDHS does
            not  provide  written  approval  within  30  days  from  receipt  of
            notification  from the HMO, changes may be considered  provisionally
            approved.

4.8   This  Agreement is subject to State and federal fraud and abuse  statutes.
      Lifemark  Texas is subject to State and federal fraud and abuse  statutes.
      Lifemark  Texas will be required to  cooperate  in the  investigation  and
      prosecution of any suspected fraud or abuse,  and must provide any and all
      requested originals and copies of records and information,  free of charge
      on request,  to any State or federal  agency with authority to investigate
      fraud and abuse in the Medicaid program.

      The Texas Medicaid  Fraud Control Unit must be allowed to conduct  private
      interviews  of  Lifemark  Texas   personnel,   subcontractors   and  their
      personnel,  witnesses,  and patients.  Requests for  information are to be
      complied with, in the form and the language requested. Lifemark Texas, its
      employees and  subcontractors  and their  employees and  contractors  must
      cooperate fully in making  themselves  available in person for interviews,
      consultation, grand jury proceedings, pretrial conference, hearings, trial
      and in any other process,  including investigations.  Compliance with this
      covenant shall be a shared expense of HMO and Lifemark Texas and shall not
      be charged to the Program.

4.9   LIFEMARK TEXAS COVENANTS - PROVIDER SERVICES. Lifemark Texas agrees to the
      following covenants,  and agrees to include such covenants in any contract
      for Provider services:

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      4.9.1 Lifemark Texas is being  contracted to deliver Medicaid managed care
            under the TDHS  STAR+PLUS  program.  HMO must provide  copies of the
            TDHS  Contract to the Lifemark  Texas upon request.  Lifemark  Texas
            understands that services provided under this contract are funded by
            State and federal funds under the Medicaid  program.  Lifemark Texas
            is subject to all state and federal laws,  rules,  regulations  that
            apply to all persons or entities  receiving state and federal funds.
            Lifemark Texas understands that any violation by a Provider of State
            or federal law  relating to the delivery of services by the Provider
            under this  Agreement,  or any violation of the TDHS Contract  could
            result  in  liability  for  money  damages,  and/or  civil  criminal
            penalties and sanctions under state and/or federal law.

      4.9.2 Lifemark  Texas  understands  and  agrees  that  HMO  has  the  sole
            responsibility  for  payment of  covered  services  rendered  by the
            Provider  under this  Agreement.  In the event of HMO  insolvency or
            cessation of operations,  Lifemark  Texas's sole recourse is against
            HMO through the bankruptcy,  conservatorship, or receivership estate
            of HMO.

      4.9.3 Lifemark  Texas  understands  and  agrees  TDHS  is  not  liable  or
            responsible for payment for any Medicaid covered  services  provided
            to  mandatory  Member under this  Agreement.  Federal and State laws
            provide  severe  penalties  for any Provider who attempts to collect
            any payment from or bill a Medicaid recipient for a Covered Service.

      4.9.4 Lifemark Texas agrees that any modification,  addition,  or deletion
            of the provisions of this Agreement will become effective no earlier
            than 30 days after HMO  notifies  TDHS of the change in writing.  If
            TDHS does not provide  written  approval within 30 days from receipt
            of notification  from HMO,  changes can be considered  provisionally
            approved,  and will become  effective.  Modifications,  additions or
            deletions  which  are  required  by TDHS or by  changes  in State or
            federal law are effective immediately.

      4.9.5 This  contract  is  subject  to  all  State  and  federal  laws  and
            regulations  relating  to fraud  and  abuse in  health  care and the
            Medicaid program.  Lifemark Texas must cooperate and assist TDHS and
            any  State  or  federal  agency  that is  charged  with  the duty of
            identifying,  investigating,  sanctioning or  prosecuting  suspected
            fraud and abuse. Lifemark Texas must provide originals and/or copies
            of any and all  information,  allow  access to premises  and provide
            records to TDHS or its authorized  agent(s),  THHSC,  HCFA, the U.S.
            Department  of Health and Human  Services,  FBI,  TDI, and the Texas
            Attorney  General's  Medicaid Fraud Control Unit, upon request,  and
            free-of-charge.  Lifemark  Texas must report any suspected  fraud or
            abuse  including any suspected fraud and abuse committed by HMO or a
            Medicaid recipient to TDHS for referral to THHSC.

      4.9.6 Lifemark Texas is required to submit proxy claims or encounter forms
            to HMO for  services  provided  to all  STAR+PLUS  Members  that are
            capitated by HMO in accordance  with the encounter data  submissions
            requirements established by HMO and TDHS.

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      4.9.7 HMO is  prohibited  from  imposing  restrictions  upon the  Lifemark
            Texas' free  communication  with  Members  about a Member's  medical
            conditions, treatment options,  HMO referral policies,  and other
            HMO policies, including financial incentives or arrangements and all
            STAR+PLUS managed care plans with whom Lifemark Texas contracts.

      4.9.8 The Texas  Medicaid  Fraud  Control  Unit must be allowed to conduct
            private  interviews  of  Lifemark  Texas  and the  Lifemark  Texas's
            employees,  contractors, and patients. Requests for information must
            be complied with, in the form and language requested. Lifemark Texas
            and their employees and  contractors  must cooperate fully in making
            themselves available in person for interviews,  consultation,  grand
            jury proceedings,  pre-trial conference,  hearings, trial and in any
            other  process,  including  investigations.   Compliance  with  this
            covenant is at Lifemark Texas's own expense.

4.10  COMPLIANCE.  Lifemark  Texas must  comply,  and shall  require its network
      Providers and  subcontractors  to comply,  with all State and federal laws
      and regulations relating to the Texas Medicaid program, all rules relating
      to the Medicaid  Managed Care program  adopted by TDHS,  TDI, TDH,  THHSC,
      TDMHMR and any other State agency delegated  authority to operate Medicaid
      or Medicaid Managed Care programs, and the TDHS Contract.  Lifemark Texas,
      its network Providers and subcontractors  shall comply with the provisions
      of the Clean Air Act and the  Federal  Water  Pollution  Control  Act,  as
      amended.  To the extent  required by Federal or State law,  Lifemark Texas
      shall prepare and implement an affirmative action program.  Lifemark Texas
      agrees to buy Texas  products  and services  when they are  available at a
      comparable  price and a comparable  period of time, as required by Section
      48 of Article IX of the General Appropriations Act of 1995. Lifemark Texas
      shall comply with Section 5.9 of the TDHS Contract, if applicable.

4.11  PROGRAM  INTEGRITY.  Lifemark  Texas has not been excluded,  debarred,  or
      suspended from  participation in any program under Title XVII or Title XIX
      under  any of the  provisions  of  section  1128(a)  or (b) of the  Social
      Security Act (42 USC Section 1320 a-7), or Executive Order 12549. Lifemark
      Texas must  notify HMO within 3 days of the time it  receives  notice that
      any action being taken against  Lifemark Texas or any person defined under
      the provision of section 1128 (a) or (b) or any subcontractor, which could
      result in  exclusion,  debarment  or  suspension  of  Lifemark  Texas or a
      subcontractor  from  the  Medicaid  program,  or  any  program  listed  in
      Executive Order 12549.

4.12  FRAUD  CONTROL.  Lifemark  Texas must submit to HMO within sixty (60) days
      after the effective date of this Agreement a copy of the Lifemark  Texas's
      fraud control program. Lifemark Texas's fraud control program must contain
      the  same  standards  and  requirements  as  the  HMO's  fraud  and  abuse
      compliance  plan as  required  by the  TDHS  Contract,  Section  5.3.  HMO
      acknowledges  that  Lifemark  Texas has  submitted a fraud control plan to
      HMO.

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4.13  SAFEGUARDING INFORMATION.

      4.13.1All Member  information,  records and data  collected or provided to
            Lifemark  Texas by HMO,  TDHS or another  State  agency is protected
            from disclosure by State and federal law and  regulations.  Lifemark
            Texas may only  receive and disclose  information  which is directly
            related  to  establishing   eligibility,   providing   services  and
            conducting  or assisting in the  investigation  and  prosecution  of
            civil and criminal proceedings under State or federal law.

      4.13.2Lifemark  Texas  shall be  responsible  for  informing  Members  and
            providers  regarding  the  provisions  of 42  CFR  431,  Subpart  F,
            relating to  Safeguarding  Information on Applicants and Recipients,
            and  Lifemark  Texas must ensure that  confidential  information  is
            protected from disclosure except for authorized purposes.

      4.13.3Lifemark  Texas must assist  network in policies for  protecting the
            confidentiality of AIDS and HIV-related  medical  information and an
            anti-discrimination   policy  for   employees   and   Members   with
            communicable  diseases in  compliance  with Health and Safety  Code,
            Chapter 85,  Subchapter E. relating to the Duties of State  Agencies
            and State Contractors.

      4.13.4Lifemark  Texas  must  require  that  Participating  Physicians  and
            Participating  Providers have mechanisms in place to ensure Member's
            (including minor's) confidentiality for family planning services.

4.14  NON-DISCRIMINATION.

      Lifemark Texas agrees to comply with, and to include in all subcontracts a
      provision that the  subcontractor  will comply with, each of the following
      requirements:

      4.14.1Title  VI of the  Civil  Rights  Act  of  1964,  Section  504 of the
            Rehabilitation  Act of 1973, the Americans with  Disabilities Act of
            1990, and all requirements  imposed by the regulations  implementing
            these  acts and all  amendments  to the laws  and  regulations.  The
            regulations  provide  in part that no person  in the  United  States
            shall, on the grounds of race,  color,  national  origin,  sex, age,
            disability,   political  beliefs  or  religion,   be  excluded  from
            participation  in,  or  denied,  any  aid,  care,  service  or other
            benefits, or be subjected to any discrimination under any program or
            activity receiving federal funds.

      4.14.2Texas Health and Safety Code Section  85.113  (relating to workplace
            and confidentiality guidelines regarding AIDS and HIV).

      4.14.3The  provisions  of  Executive  Order  11246,  as  amended by 11375,
            relating to Equal Employment Opportunity.

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4.15  HISTORICALLY UNDERUTILIZED BUSINESSES (HUBS).

      4.15.1TDHS  is  committed  to  providing   procurement   and   contracting
            opportunities to historically underutilized businesses (HUBs), under
            the  provisions  of Texas  Government  Code,  Title 10,  Subtitle D,
            Chapter 2161 and 1 TAC Section 111.11(b) and 111.13(c)(7).  Lifemark
            Texas is  required  to make a good  faith  effort to assist  HUBs in
            receiving a portion of the total contract value of this Agreement.

4.16  REQUEST FOR PUBLIC INFORMATION.

      4.16.1This Agreement and all network Provider and subcontractor  contracts
            are subject to public  disclosure  under the Public  Information Act
            (Texas  Government  Code,  Chapter  552).  TDHS may  receive  Public
            Information  requests  related  to the  TDHS  Contract,  information
            submitted  as part of the  compliance  of the TDHS  Contract and the
            HMO's application upon which the TDHS Contract was awarded.

      4.16.2TDHS  may,  in its sole  discretion,  request  a  decision  from the
            Office of the Attorney  General (AG opinion)  regarding  whether the
            information  requested is excepted from required public  disclosure.
            TDHS may rely on the HMO's written  representations in preparing any
            AG opinion request, in accordance with Texas Government Code Section
            552.305.  TDHS is not liable for failing to request an AG opinion or
            for releasing  information which is not deemed  confidential by law,
            if the HMO fails to  provide  TDHS  with  specific  reasons  why the
            requested information is exempt from the required public disclosure.
            TDHS  or  the  Office  of  the  Attorney  General  will  notify  all
            interested parties if an AG opinion is requested.

      4.16.3If Lifemark Texas believes that the requested  information qualifies
            as a  trade  secret  or  as  commercial  or  financial  information,
            Lifemark  Texas  must  notify HMO  within  two (2)  working  days of
            Lifemark  Texas's  receipt of the request of the specific  text,  or
            portion  of text,  which  Lifemark  Texas  claims is  excepted  from
            required  public  disclosure.  The  Lifemark  Texas is  required  to
            identify the specific provisions of the Public Information Act which
            the  Lifemark  Texas  believes  are  applicable,  and is required to
            include a detailed  written  explanation of how the exceptions apply
            to the specific  information  identified  by the  Lifemark  Texas as
            confidential and excepted from required public disclosure.

4.17  NOTICE AND APPEAL.

      4.17.1For acute care services,  Lifemark Texas must comply with the notice
            requirements  contained in 25 TAC Section 36.21, and the maintaining
            benefits and services  contained in 25 TAC Section  36.22,  whenever
            the HMO or Lifemark  Texas  intends to take an action  affecting the
            Member  benefits and services under the TDHS Contract and the Member
            appeal requirements contained in Article 8.7 of the TDHS Contract.

                                             12
<PAGE>

      4.17.2For Long Term Care  services,  Lifemark  Texas must  comply with the
            notice  requirements  contained in 40 TAC, Section 79.1204,  and the
            appeal requirements of 40 TAC ch.79,  whenever HMO or Lifemark Texas
            intends to take an adverse  action  affecting  Member  benefits  and
            services  under  this  Contract.  Lifemark  Texas  agrees to provide
            information regarding fair hearings to TDHS within fifteen (15) days
            of the date of appeal and agrees to provide a Lifemark  Texas  staff
            member to represent HMO and Lifemark Texas at the hearing.  Lifemark
            Texas shall comply with the Member appeal requirements containing in
            paragraph 8.7 of the TDHS Contract.

4.18  ACCREDITATION.   Lifemark   Texas  shall  comply  with  the  standards  of
      accreditation  organizations  in its  performance of this Agreement if HMO
      pursues accreditation, or is accredited, by an accreditation organization.

5     OBLIGATIONS OF LIFEMARK TEXAS

5.1   SCOPE OF HEALTH CARE SERVICES.

      Lifemark  Texas,  through the  Participating  Providers,  shall provide or
      arrange  the  Covered  Services  to  Members in  accordance  with the TDHS
      Contract,  Article VI, Scope of Services. All Covered Services provided or
      arranged by Lifemark Texas shall be provided or arranged by duly licensed,
      certified or otherwise  authorized  Participating  Providers in accordance
      with  (i) the  generally  accepted  medical  and  surgical  practices  and
      standards prevailing in the applicable  professional community at the time
      of treatment,  (ii) the provisions of the Utilization  Management  Program
      and the Quality Improvement  Program,  and (iii) the requirements of State
      and federal law.

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<PAGE>

5.2   PROVIDER NETWORK REQUIREMENTS.

      5.2.1 Lifemark Texas shall establish,  provide,  and administer a Provider
            network comprising a sufficient number of Participating Providers to
            provide  or  arrange  Covered  Services  and meet  the  needs of the
            Members in accordance with the TDHS Contract  Article VII,  Provider
            Network Requirements.  Lifemark Texas' Participating Providers shall
            provide or arrange Covered Services,  including  Emergency Services,
            to Members  twenty-four  (24) hours a day, three hundred  sixty-five
            (365) days per year. Participating Providers must meet credentialing
            standards and have entered into a Provider contract before providing
            or  arranging  Covered  Services  to Members.  Lifemark  Texas shall
            establish,   provide  and  administer  a  credentialing  program  in
            accordance  with the TDHS  Contract,  Section 7.8, and the Delegated
            Credentialing  Program,  attached  hereto as Addendum 1. In order to
            assist Lifemark Texas with the  establishment of a Provider network,
            HMO  hereby  grants  Lifemark  Texas full use of and access to HMO's
            Provider network  established for the Program.  Lifemark Texas shall
            pay  HMO  [x]*  each   Contract   Year  for  such  use  and  access.
            Notwithstanding  this grant of full use and access to HMO's Provider
            network,  HMO retains its rights to  restrict,  suspend or terminate
            Participating  Providers.  Notwithstanding  the grant of full use of
            and access to HMO's Provider  network to Lifemark  Texas,  HMO shall
            maintain its Provider  network and Provider  contracts in compliance
            with the TDHS Contract.

      5.2.2 All  Participating  Providers must have a written contract with HMO,
            to  participate  in the Program.  All  standard  formats of Provider
            contracts  shall be  attached as  addendum  to this  Agreement.  Any
            modifications to the standard formats of Provider  contracts must be
            approved by HMO and TDHS.  The standard  Provider  contracts are the
            following:

            _Participating   Primary  Care  Physician  Agreement  -  Addendum  2
            _Participating   Specialist   Physician   Agreement   -  Addendum  3
            _Participating  Medical Group Agreement - Addendum 4  _Participating
            Ancillary  Healthcare  Provider  Agreement Addendum 5 _Participating
            Hospital   Agreement  -  Addendum  6  _Participating   Nursing  Home
            Agreement - Addendum 7

5.3   MEMBER SERVICES REQUIREMENTS.

      5.3.1 Lifemark  Texas shall  establish,  provide and  administer  a Member
            Services  program,  including member  education,  in accordance with
            Section 3.4,  Sections  6.5 - 6.14,  Article VIII and Article XIV of
            the TDHS Contract.

5.4   MARKETING AND PROHIBITED PRACTICES.

      Lifemark  Texas shall comply with  Article IX of the TDHS  Contract in the
      production and distribution of marketing materials and marketing practices

5.5   MIS REQUIREMENTS.

      Lifemark  Texas shall  establish,  provide  and  administer  a  management
      information  system  ("MIS")  in  accordance  with  Article  X of the TDHS
      Contract.

5.6   QUALITY ASSURANCE AND QUALITY IMPROVEMENT PROGRAM.

      Lifemark Texas shall establish, provide and administer a Quality
      Assurance and Quality Improvement Program ("QIP.") in accordance with
      Article XI of the TDHS Contract and the QIP. Delegation Requirements
      attached hereto as Addendum 8.

                                        14

<PAGE>

5.7   UTILIZATION MANAGEMENT PROGRAM.

      Lifemark  Texas shall  establish,  provide and  administer  a  Utilization
      Management   Program  in  accordance   with  the  TDHS  Contract  and  the
      Utilization Management Delegation Requirements attached hereto as
      Addendum 9.

5.8   REPORTING  REQUIREMENTS.  Lifemark  Texas  shall  establish,  provide  and
      administer  a reporting  system  which  produces  the reports  required in
      Article XII of the TDHS  Contract  in the format and with the  information
      required by TDHS. All reports shall be simultaneously submitted to HMO and
      TDHS.  HMO  reserves  the right to require that any report be submitted to
      HMO for  approval  prior  to  submission  to TDHS,  and the  right to file
      corrected reports.

5.9   MEDICAL DIRECTOR.

      Lifemark  Texas shall  provide the  equivalent  of one  full-time  Medical
      Director  licensed  as a  physician  by the Texas  State  Board of Medical
      Examiners  for the STAR  and  STAR+PLUS  programs.  Lifemark  Texas  shall
      prepare  a written  job  description  describing  the  Medical  Director's
      authority,  duties and responsibilities as described in Section 3.3 of the
      TDHS  Contract.  Lifemark  Texas  agrees  that the Medical  Director  must
      exercise  independent medical judgment in all medical necessity decisions.
      Lifemark  Texas must  assure  that  medical  necessity  decisions  are not
      adversely influenced by fiscal management decisions.  Lifemark Texas shall
      permit the State to conduct reviews of medical necessity  decisions by the
      Medical  Director  at any time.  If the medical  director's  time spent on
      duties exceeds a standard full-time equivalent employee,  then such excess
      time shall be charged to the STAR program.

5.10  CLAIMS PROCESSING REQUIREMENTS.

      5.10.1Lifemark Texas and/or its claims  processing  subcontractor(s)  must
            comply with the Texas  Managed Care Claims Manual  (Claims  Manual),
            which contains claims processing requirements. Lifemark Texas and/or
            its claims processing  subcontractor(s) must comply with any changes
            to Claims Manual with appropriate notice of changes from the State.

      5.10.2Lifemark  Texas  must  not pay or  authorize  HMO to pay  any  claim
            submitted by a Provider who has been excluded or suspended  from the
            Medicare or Medicaid  programs for fraud and abuse when the Lifemark
            Texas has knowledge of the exclusion or suspension.

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<PAGE>

      5.10.3All Provider Clean Claims must be adjudicated  (finalized as paid or
            denied  adjudicated)  within  [x]*  days  from the date the claim is
            received by Lifemark Texas.  Claims ordered to be paid by TDHS shall
            be paid immediately. Lifemark Texas must pay Providers interest on a
            Clean Claim which is not adjudicated  within [x]* days from the date
            the claim is received by the  Lifemark  Texas or becomes  clean at a
            rate of [x]* for each month the Clean Claim  remains  unadjudicated.
            Lifemark Texas will be held to a minimum  performance  level of [x]*
            of all Clean  Claims paid or denied  within [x]* days of receipt and
            [x]* of all Clean Claims paid or denied within [x]* days of receipt.
            Failure to meet  these  performance  levels is a default  under this
            Agreement.  Lifemark  Texas  shall  pay  all  damages  or  penalties
            assessed  by  TDHS  if  TDHS   determines   Lifemark  Texas  or  its
            subcontractor is responsible for failure to meet performance levels.
            The performance  levels are subject to changes if required to comply
            with federal and State laws or regulations. Lifemark Texas shall not
            have to spend its own funds to pay claims.

      5.10.4All  claims and  appeals  submitted  to  Lifemark  Texas  and/or its
            claims processing  subcontractors  must be  paid-adjudicated  (Clean
            Claims), denied-adjudicated (Clean Claims), or denied for additional
            information  (unclean claims) to Providers within [x]* days from the
            date the claim is received by Lifemark Texas. Providers must be sent
            a  written  notice  for each  claim  that is denied  for  additional
            information (unclean claims) identifying the claim, all reasons whey
            the  claim is being  denied,  the date the  claim  was  received  by
            Lifemark Texas, all information  required from the Provider in order
            for the  Lifemark  Texas to  adjudicate  the claim,  and the date by
            which the requested  information must be received from the Provider.
            Lifemark Texas shall comply with the Member notice,  appeal and fair
            hearing  requirements  as described in the TDHS  Contract,  Sections
            5.11 and 8.7.

      5.10.5Claims that are suspended  (pended  internally) must be subsequently
            paid-adjudicated,   denied-adjudicated,  or  denied  for  additional
            information  (pended  externally)  within  [x]*  days  from  date of
            receipt.  No claim can be suspended for a period exceeding [x]* days
            from date of receipt of the claim.

      5.10.6Lifemark  Texas  must  identify  each data  field of each claim form
            that  is  required  from  the  Provider  in  order  for  the  HMO to
            adjudicate  the  claim.  Lifemark  Texas  must  inform  all  network
            Providers  about the required  fields no later than 30 days prior to
            the effective  date of this  Agreement or as a provision  within the
            Provider contract.  Out of network Providers must be informed of all
            required  fields if the claim is denied for additional  information.
            The required fields must include those required by the HMO and TDHS.

      5.10.7Lifemark  Texas is subject to the Remedies and Sanctions  Article of
            the TDHS  Contract  for claims  that are not  processed  on a timely
            basis  as  required  by  this   Agreement  and  the  Claims  Manual.
            Notwithstanding  the  provisions  of Sections  5.10.3,  5.10.4,  and
            5.10.5, sanctions will be applied if at least [x]* of all claims are
            not  adjudicated  (paid,  denied,  or external  pended) [x]* days of
            receipt  and [x]*  within  [x]* days of receipt of for the  Contract
            Year to date. HMO shall not apply sanctions  against  Lifemark Texas
            unless sanctions are imposed by TDHS against HMO.

                                        16
<PAGE>

      5.10.8Lifemark  Texas  agrees that when it receives  written  notification
            from  TDHS  or HMO  that a  Provider's  funds  be held  because  the
            Provider has changed  ownership,  has an unpaid judgment,  sanction,
            monetary penalty or audit exception or has failed to meet some other
            legal requirement, Lifemark Texas will place the Provider's funds on
            hold unit it receives  further  notification  from TDHS or HMO. Upon
            notification to Lifemark  Texas,  Lifemark Texas must either pay the
            claim or remit the held funds to TDHS.

      5.10.9Lifemark  Texas must comply with the  standards  adopted by the U.S.
            Department of Health and Human Services  under the Health  Insurance
            Portability and  Accountability Act of 1996 submitting and receiving
            claims  information  through  electronic data interchange (EDI) that
            allows for automated  processing and  adjudication  of claims within
            two  or  three  years,  as  applicable,  from  the  date  the  rules
            promulgated under HIPAA are adopted.

5.11  THIRD  PARTY  RECOVERY.  Lifemark  Texas  shall  assist HMO in Third Party
      Liability  recovery  efforts and pursue  recovery for expenses  related to
      acute care services and long-term care services.  Lifemark Texas shall not
      exceed  the  limited  authority  granted  to HMO by TDHS for  Third  Party
      Liability  recovery,  and Lifemark Texas shall comply with Section 1.5 and
      4.9 of the TDHS Contract in such efforts.  If a  subcontractor  is engaged
      for Third Party Liability recovery efforts,  such  subcontractor  shall be
      paid from Revenue deposited for the payment of claims.

6     INSURANCE

6.1   Lifemark Texas must maintain or cause to be maintained  general  liability
      insurance  in the  amounts  of at  least  $1,000,000  per  occurrence  and
      $5,000,000 in the aggregate.

6.2   Lifemark Texas must maintain or require  professional  liability insurance
      on each of the  Providers  in the  network in the amount of  $100,000  per
      occurrence  and $300,000 in the aggregate,  or the limits  required by the
      hospital at which the network Provider has admitting privileges.

6.3   Lifemark Texas must maintain an umbrella professional  liability insurance
      policy for the  greater of  $3,000,000  or an amount  (rounded to the next
      $100,000) which represents the number of STAR+PLUS Members enrolled in HMO
      in the first month of the Contract Year  multiplied by $150, not to exceed
      $10,000,000.

6.4   If the  professional  liability  policy (or  policies)  is canceled or not
      renewed and coverage is provided on a claims-made  basis,  Lifemark  Texas
      agrees to exercise  any option  contained  in the policy (or  policies) to
      extend the  reporting  period to the maximum  period  permitted  under the
      policy (or policies);  provided, however, Lifemark Texas need not exercise
      such option if the superseding insurer will accept all prior claims.

                                        17

<PAGE>


6.5   All insurance  required under this Agreement  shall be provided by insurer
      who meet HMO and TDHS standards.  A copy of certificate of insurance shall
      be issued to HMO prior to the  effective  date of this  Agreement and upon
      the renewal of the  insurance  coverage  specified  in this Article 6. The
      certificate  shall provide that HMO shall  receive  thirty (30) days prior
      written notice of cancellation or material reduction in coverage.  Failure
      to provide the  certificate  of insurance  shall be grounds for  immediate
      termination of this Agreement.

7     INDEMNIFICATION.

      Lifemark Texas shall indemnify,  defend and hold harmless, and shall cause
      each  of  the  Participating  Providers  to  indemnify,  defend  and  hold
      harmless,  HMO and its  directors,  officers,  employees,  affiliates  and
      agents against any claim,  loss,  damage,  cost expense,  money damages or
      civil  monetary  penalties  imposed  by TDHS or other  government  agency,
      forfeiture of HMO's performance bond, or liability,  including  reasonable
      attorneys'  fees and  expenses  (except for jointly  shared legal fees and
      expenses for  investigations  under  Section 4.8 below)  arising out of or
      related  to  the   performance  or   nonperformance   by  Lifemark  Texas,
      Participating Providers, their employees and agents, of any services to be
      performed or arranged under this  Agreement,  or arising out of or related
      to the grant of full use of and access to Lifemark Texas of HMO's Provider
      network.

8     GOVERNING LAW AND REGULATORY REQUIREMENTS.

8.1   GOVERNING  LAW.  This  Agreement  and the  rights and  obligations  of the
      parties  hereunder  shall  be  construed,  interpreted,  and  enforced  in
      accordance  with,  and governed by, the laws of the State of Texas and the
      United States of America,  including,  without limitation, the Texas Human
      Resources Code, Chapter 32 and the Texas Health  Maintenance  Organization
      Act, as  amended,  and the  regulations  adopted  thereunder  by the Texas
      Department of Insurance (the "Texas HMO Act"). Any provisions  required to
      be in this  Agreement  by the Texas HMO Act or any other State and federal
      law or by the Texas  Department  of  Insurance  ("TDI") or any other State
      agencies  shall  bind HMO and  Lifemark  Texas  whether  or not  expressly
      provided in this Agreement.

8.2   NON-BILLING OF MEMBER (MEMBER HOLD HARMLESS PROVISION - HMO INSOLVENCY AND
      HMO  NON-PAYMENT).  With the  exception  of  copayments  and  charges  for
      non-Covered  Services  delivered  on a  fee-for-service  basis to Members,
      Lifemark  Texas  and  its  Participating  Providers  shall  in  no  event,
      including,  without  limitation,  non-payment by HMO, insolvency of HMO or
      Lifemark  Texas,  or breach of this  Agreement,  bill,  charge,  collect a
      deposit from, or attempt to bill,  charge,  collect or receive any form of
      payment, compensation or reimbursement from, or have any recourse against,
      any Member or any person  (other  than HMO) acting on behalf of any Member
      for Covered Services provided pursuant to this Agreement.

                                        18

<PAGE>


      Lifemark  Texas shall not maintain  any action at law or equity  against a
      Member to collect sums owed by HMO to Lifemark  Texas.  Upon notice of any
      such action,  HMO may terminate  this Agreement as provided above and take
      all other  appropriate  action consistent with the terms of this Agreement
      to eliminate such charges.

      Lifemark  Texas's   obligations  under  this  Section  shall  survive  the
      termination of this Agreement  with respect to Covered  Services  provided
      during or after the term of this Agreement, regardless of the cause giving
      rise to such  termination  and shall be construed to be for the benefit of
      the Member. This Section supersedes any oral or written contrary agreement
      now existing or hereafter  entered into between  Lifemark  Texas or any of
      its  Participating  Providers  or Members or  persons  acting on  Member's
      behalf.  All Provider  contracts shall contain a provision similar to this
      Section in which the  Provider  shall hold  harmless the Member for HMO or
      Lifemark Texas's insolvency or nonpayment.

      Any  modification,  addition or deletion to the provisions of this Section
      shall become  effective on a date earlier than fifteen (15) days after the
      Commissioner  of the Texas  Department of Insurance  has received  written
      notice of such proposed changes.

8.3   PROVISIONS  REQUIRED BY "PATIENT  PROTECTION  RULES".  The  provisions set
      forth below are required to be included in this Agreement  pursuant to the
      "Patient  Protection  Rules" adopted by the Texas Department of Insurance,
      as set forth in Chapter 11 of Title 28 of the Texas  Administrative  Code.
      Lifemark  Texas shall include the  provisions set forth in this Section in
      all  subcontracts  with its  Participating  Physicians  and  Participating
      Providers.

      8.3.1 PRE-TERMINATION  NOTICE. Before terminating Lifemark Texas or any of
            the Participating Providers, HMO shall provide a written explanation
            to Lifemark Texas or the Participating Provider of the reason(s) for
            termination.  Before terminating any of its Participating Providers,
            Lifemark   Texas  shall  provide  a  written   explanation   to  the
            Participating Provider of the reason(s) for termination.

                                        19

<PAGE>


      8.3.2 PRE-TERMINATION  REVIEW  FOR  PHYSICIAN.  Within  sixty (60) days of
            receipt of written notice of termination from HMO or Lifemark Texas,
            any of  Participating  Providers  may submit a request in writing to
            HMO or Lifemark Texas for a review of the proposed termination.  Any
            review  requested  hereunder  will be conducted by an advisory panel
            consisting of Providers including at least one representative in the
            Provider's  same or similar  specialty,  if available,  appointed to
            serve on the standing quality  improvement  committee or utilization
            management  committee.  The  recommendation  of the advisory  review
            panel shall be considered by HMO or Lifemark  Texas but shall not be
            binding on HMO or Lifemark  Texas. A copy of the  recommendation  of
            the   advisory   review   panel  and  HMO's  or   Lifemark   Texas's
            determination  following  review  shall be provided to the  affected
            Provider upon request.  Not withstanding  the foregoing,  a Provider
            shall  not be  entitled  to a review  in any case in which  there is
            imminent harm to patient health or an action by a State medical,  or
            other physician  licensing board or other  governmental  agency that
            effectively  impairs the Provider's  ability to practice medicine or
            another profession or in cases of fraud or malfeasance.

      8.3.3 NOTICES TO MEMBERS OF TERMINATION OF AGREEMENT. HMO shall provide at
            least  thirty  (30) days  prior  written  notice to  Members  of the
            impending termination of this Agreement or the impending termination
            of any of Participating Providers who is providing ongoing treatment
            to such Members on the effective date of  termination,  so that such
            Members  may  select  another  Participating   Provider  or  request
            continued   ongoing   treatment   through   Lifemark  Texas  or  the
            Participating  Provider following termination as provided in Section
            8.3.5 below.

      8.3.4 PROHIBITION   AGAINST   RETALIATION.    Lifemark   Texas   and   its
            Participating  Providers  shall not be terminated or  non-renewed by
            HMO in  retaliation  against  Lifemark  Texas  or any  Participating
            Provider for reasonably  filing a complaint against HMO or appealing
            a decision of HMO on behalf of a Member.

      8.3.5 CONTINUING CARE FOR MEMBERS OF SPECIAL  CIRCUMSTANCE.  Following the
            termination of this Agreement or of any of  Participating  Providers
            for  any  reason  other  than  medical  competence  or  professional
            behavior,  Lifemark  Texas  or  such  Participating  Provider  shall
            continue to provide treatment to any Member of special circumstance,
            such  as  a  Member   who  has  a   disability,   acute   condition,
            life-threatening  illness or is past the twenty-four  (24th) week of
            pregnancy,  who is receiving  ongoing Covered Services from Lifemark
            Texas  or its  Participating  Provider  on  the  effective  date  of
            termination,   and  HMO  shall  reimburse   Lifemark  Texas  or  its
            Participating Provider for the Member's continuing ongoing treatment
            at the rates set forth in this  Agreement,  in  accordance  with the
            dictates  of  medical prudence and  the  provisions of this Section.

            For purposes of this Section,  "special  circumstance"  shall mean a
            condition  such that Lifemark  Texas or its  Participating  Provider
            reasonably  believes  that  discontinuing  care by  Lifemark  Texas'
            Participating  Provider  could  cause harm to the  Member.  Lifemark
            Texas or its  Participating  Provider  shall  identify  a Member  of
            special  circumstance  to  HMO  and  request  that  such  Member  be
            permitted  to  continue   treatment  under  Lifemark  Texas  or  its
            Participating   Provider's   care,   and   Lifemark   Texas  or  its
            Participating  Provider  shall not seek  payment from such Member of
            any  amounts  for which  the  Member  is not  responsible  under the
            Program.  The  obligations of Lifemark  Texas and its  Participating
            Providers  and HMO under  this  Section  shall  extend  for at least
            ninety  (90) days from the  effective  date of  termination  of this
            Agreement  or beyond  nine months in the case of a Member who at the
            time of termination has been diagnosed with a terminal illness.  Any
            dispute  arising  between  HMO  and  Lifemark  Texas  or  any of its
            Participating   Providers  regarding  the  necessity  for  continued
            treatment by Lifemark Texas Participating Provider shall be resolved
            pursuant to the dispute resolution procedure as provided herein.

                                        20
<PAGE>

      8.3.6 NO  INDEMNIFICATION.  This  Agreement  may not contain any provision
            purporting  to indemnify  the HMO for any tort  liability  resulting
            from acts or omissions of the HMO.

      8.3.7 EXPEDITED  REVIEW.  A physician  or provider  who is  terminated  or
            deselected  shall be entitled to an expedited  review process by HMO
            or Lifemark  Texas on request by the  physician or provider.  If the
            physician or provider is  deselected  for reasons  other than at the
            physician's  or provider's  request,  HMO or Lifemark  Texas may not
            notify patients of the physician's or provider's  deselection  until
            the  effective  date of the  termination  or the time a review panel
            makes  a  formal  recommendation.  If a  physician  or  provider  is
            deselected  for reasons  related to imminent  harm,  HMO or Lifemark
            Texas may notify patients immediately.

      8.3.8 POSTED NOTICE OF COMPLAINT  PROCESS.  HMO,  Lifemark  Texas and each
            Participating  Provider  shall post in its facility of  facilities a
            notice to Members of the process for resolving  complaints  with the
            HMO. The notice must include TDI's  toll-free  telephone  number for
            filing complaints.

8.4   REQUIREMENTS  FOR CONTRACT  BETWEEN  PRIMARY HMO AND LIFEMARK  TEXAS.  The
      provisions set forth below are required to be included in this  Agreement,
      as an agreement between the parties,  pursuant to Section 11.1604 of Title
      28 of the Texas Administrative Code ("Section  11.1604").  For purposes of
      this Agreement, "Primary HMO" is HMO, as defined in Section 11.2(b)(20) of
      Title 28 of the Texas Administrative Code. For purposes of this Agreement,
      Lifemark  Texas is acting as an "Approved Non Profit  Health  Corporation"
      providing "health care services" within the meaning of Section 11.1604 for
      purposes of determining Primary HMO regulatory contractual requirements.

      8.4.1 LIFEMARK  TEXAS'S  ACKNOWLEDGMENTS  AND  AGREEMENTS.  Lifemark Texas
            acknowledges and agrees that:

            (i)   HMO, acting in the role of the Primary HMO under this
                  Agreement, is required under the Texas HMO Act and
                  regulations of the Texas Department of Insurance ("TDI")
                  and the Texas Department of Health ("TDH") to establish,
                  operate and maintain a health care delivery system, quality
                  assurance system, provider credentialing system and other
                  systems and programs meeting TDI and Texas Health Care
                  Council standards and is directly accountable for
                  compliance with such standards.

                                        21

<PAGE>


            (ii)  The role of Lifemark Texas,  acting as an "Approved Non Profit
                  Health  Corporation" within the meaning of Section 11.1604, is
                  limited to implementing certain systems of utilizing standards
                  approved by HMO and subject to HMO's  oversight and monitoring
                  of Lifemark Texas's performance.

            (iii) HMO may take  whatever  action  deemed  necessary  by HMO,  to
                  assure  that all HMO system and  program  functions  which are
                  delegated or assigned to Lifemark  Texas under this  Agreement
                  are  performed  in  full   compliance   with  all   applicable
                  regulatory requirements of TDI.

8.5   HMO'S  RESPONSIBILITY  AS PRIMARY HMO. Nothing contained in this Agreement
      shall be construed to in any way limit HMO's authority and  responsibility
      for compliance with the provisions of the Texas HMO Act and all regulatory
      requirements  of TDI. HMO shall  submit a  monitoring  plan to TDI setting
      out:

      a) how HMO will  ensure  Lifemark  Texas has an  effective  administrative
      system for providing  timely and accurate  reimbursement to all physicians
      and providers under contract with Lifemark Texas or HMO; and

      b) how HMO will  ensure  that all HMO  functions  which are  delegated  or
      assigned  under  contract with  Lifemark  Texas are  consistent  with full
      compliance by HMO with all regulatory requirements of TDI.

8.6   PROVIDER  CONTRACTS.  Lifemark  Texas  shall  make  available  to HMO  all
      contracts with Participating Providers so as to ensure compliance with the
      following:

      (a) a Provider  contract  cannot be terminated  by Lifemark  Texas without
      ninety (90) days written notice;

      (b) a hold harmless  provision is included  providing  that Lifemark Texas
      and its contracted physicians and Providers are prohibited from billing or
      attempting to collect from HMO Members (except for authorized  co-payments
      and deductibles) for Covered  Services under any  circumstance,  including
      the insolvency of HMO or the Lifemark Texas; and

      c) the  Provider  contract  contains  a  provision  that  nothing  in this
      Agreement  shall be construed  in any way to limit the HMO's  authority or
      responsibility to comply with all TDI regulatory requirements.

8.7   FINANCIAL  SOLVENCY.  Lifemark  Texas shall  provide HMO with  evidence of
      Lifemark Texas's financial solvency and financial ability to perform, such
      as a  certified  financial  audit of the  Lifemark  Texas  by  independent
      certified public accountants,  utilizing generally accepted accounting and
      auditing principles.

                                        22
<PAGE>

8.8   PROVISION  OF DATA.  Lifemark  Texas  shall  provide  to HMO on at least a
      monthly  basis,  in a usable form necessary for audit  purposes,  the data
      necessary  for HMO to comply with the TDI and Texas  Health  Care  Council
      reporting  requirements  with  respect to any  Covered  Services  provided
      pursuant to this Agreement,  including,  without limitation, the following
      data:

      (i)   number of Members  served or assigned to Lifemark  Texas  (including
            number added and terminated since the last reporting period);

      (ii)  form of  contracts  with  the  Participating  Providers  who will be
            providing  Covered  Services to the Members and any material changes
            to such contracts;

      (iii) Copayments received by Lifemark Texas;

      (iv)  summary  of  amounts  paid  by  Lifemark  Texas  to  physicians  and
            providers;

      (v)   description of Lifemark  Texas's payment  methods for  Participating
            Providers (i.e., capitation, fee-for-service or other risk sharing);

      (vi)  utilization data;

      (vii) summary of the  amounts  paid by Lifemark  Texas for  administrative
            services relating to HMO;

      (viii)time  period  that  claims and debts  related to claims  owed by the
            Lifemark Texas have been pending;

      (ix)  information  required by HMO to file its own claims for reinsurance,
            coordination of benefits and subrogation;

      (x)   Member satisfaction data;

      (xi)  Member complaint data;

      (xii) documentation   of  any  regulatory   inquiries  or   investigations
            regarding Lifemark Texas or any Participating Provider; and

      (xiii)any other data necessary to assure proper  monitoring and control of
            delivery network, by HMO.

8.9   ON-SITE  AUDIT.  HMO shall conduct an on-site  audit of Lifemark  Texas no
      less  frequently  than annually or more  frequently upon indication of any
      material  non-compliance,   to  obtain  information  necessary  to  verify
      Lifemark Texas's  compliance with all regulatory  requirements of TDI. HMO
      shall make written  documentation of such audits available to the TDI upon
      request.

                                        23

<PAGE>


8.10  CORRECTIVE  ACTION. HMO shall take prompt action to correct any failure by
      Lifemark Texas to comply with regulatory  requirements of the TDI relating
      to any systems or functions  delegated by HMO to Lifemark Texas under this
      Agreement  and  necessary  to  ensure  HMO's  full   compliance  with  all
      applicable regulatory requirements.

9     REVENUE, ACCOUNTS, ADMINISTRATIVE FEES AND RISK SHARING.

9.1   OPERATIONAL  PHASE.  Lifemark Texas shall be paid an Administrative Fee as
      set forth in Exhibit A of this Agreement.

      Lifemark  Texas will estimate and be paid the monthly  Administrative  Fee
      before the fifteenth day of the month. Any adjustments based on the actual
      membership figures will be made to the subsequent months payment. Lifemark
      Texas will produce a monthly  Administrative  Services Fee  Reconciliation
      Report setting forth  estimated  payment of that month and  reconciliation
      for prior periods. In no event shall the total  Administrative Fee paid to
      Lifemark  Texas in any Contract [x]* of that Contract  Year's  Revenue (as
      defined below).

      In return for receiving the  Administrative  Fee,  Lifemark Texas shall be
      responsible  for all  costs  associated  with  the  administration  of the
      Program,   except  for  the  following   expenses,   which  shall  be  the
      responsibility of the HMO:

            9.1.1 claims costs for Covered Services;

            9.1.2 legal services of the HMO;

            9.1.3 actuarial services of the HMO;

            9.1.4 all insurance premiums for the HMO;

            9.1.5 directors' fees and expenses related to HMO Board of
                  Director meetings;

            9.1.6 expenses relating to the corporate existence of the HMO;

            9.1.7 audit and tax services of the HMO;

            9.1.8 advertising and marketing expenses of the HMO;

            9.1.9 any  income,  property,  premium or other taxes of the HMO and
                  any assessments or license fees;

            9.1.10other expenses clearly related to the business of the
                  HMO as an independent corporate entity;

                                        24

<PAGE>

            9.1.11costs associated,  including preparation of proposals, for the
                  expansion of the HMO into additional service areas.

9.2   REVENUE AND ACCOUNTS.

      9.2.1 PROGRAM  CONTRACT YEAR 2000. For the partial  Program  Contract Year
            beginning  December 1, 1999 and ending  August 31,  2000,  HMO shall
            deposit [x]* of Revenue into the HMO's Contract  Depository  Account
            ("CDA") and the remaining [x]* of Revenue into an account designated
            by HMO to pay for  HMO's  oversight,  reinsurance  and  recovery  of
            initial Program start-up costs. "Revenue" means the monthly payments
            and all subsequent  adjustment  payments,  made to the HMO under the
            TDHS Contract.

      9.2.2 PROGRAM  CONTRACT YEAR 2001. For the Program Contract Year beginning
            September 1, 2000 and ending August 31, 2001, HMO shall deposit [x]*
            of Revenue into the CDA, and the  remaining  [x]* of Revenue into an
            account  designated by HMO to pay for HMO's  oversight,  reinsurance
            and recovery of initial Program start-up costs.

      9.2.3 PROGRAM  CONTRACT  YEAR 2002.  If this  Agreement  is  extended  for
            Program Contract Year beginning  September 1, 2001 and ending August
            31,  2002,  HMO shall  deposit  [x]* of Revenue into the CDA and the
            remaining  [x]* of Revenue into an account  designated by HMO to pay
            for HMO's oversight, reinsurance and recovery of
            initial Program start-up costs.

      9.2.4 PROGRAM  CONTRACT YEAR 2003.  If this  Agreement is extended for the
            Program Contract Year beginning  September 1, 2002 and ending August
            31, 2003,  the parties  shall agree as part of such  extension as to
            the division of the Revenue.

9.3   RISK SHARING.

      9.3.1 SHARING OF NET INCOME BEFORE TAXES. Commencing on the effective date
            of this Agreement,  and for each Contract Year  thereafter,  HMO and
            Lifemark  Texas shall share equally in the "HMO Share" of the excess
            of allowable  HMO STAR+PLUS  revenues  over  allowable HMO STAR+PLUS
            expenses as measured by any  positive  amount for Net Income  Before
            Taxes  of  the  final  Managed  Care  Financial  Statistical  Report
            ("Report").  The amount for Net  Income  Before  Taxes of the Report
            shall  include,   or  be  combined  with,  any  interest  earned  or
            investment  income on Revenue.  No amount  shall be paid to Lifemark
            Texas until TDHS has been paid its experience  rebate, if any, under
            the TDHS Contract. Lifemark Texas's participation in the "HMO Share"
            is contingent upon Lifemark  Corporation's  repayment in full of any
            outstanding notes or loans from HMO. If Net Income  Before  Taxes of
            the Report for any  Contract  Year is a  negative  number,  HMO  and
            Lifemark  Texas shall each  contribute an equal amount to HMO's  CDA
            sufficient to eliminate the deficit within fifteen  (15) days of the
            filing of the Report  with TDHS.  Lifemark  Texas  and  HMO shall be
            paid within fifteen (15) days after filing of the Report their equal
            shares,  if any, of a positive  "HMO Share".  Claims incurred during
            a  Contract  Year  but  paid after  the determination of "HMO Share"
            shall be considered in the risk sharing settlement for the following
            Contract Year.

                                        25
<PAGE>

      9.3.2 ADJUSTMENT.  HMO and Lifemark Texas  acknowledge  that TDHS may make
            adjustments  to Net Income Before Taxes after payment of the amounts
            in Section 9.3.1.  HMO and Lifemark Texas shall repay amounts to the
            CDA which may be due to such adjustment  within fifteen (15) days of
            the determination of the adjustment.


      9.3.3 SECURITY FOR DEFICITS.  As security for Lifemark  Texas's payment of
            any  deficits is described in Section  9.3.1 above,  Lifemark  Texas
            shall purchase a Certificate of Deposit instrument ("Collateral") in
            an amount determined annually by the parties.  Such Collateral shall
            be assigned  to HMO and  pledged in writing  for the HMO's  benefit.
            Such pledge shall be in the form of the agreement attached hereto as
            Addendum  10. The  Collateral  amount  shall be agreed  upon by both
            parties  annually  within ninety (90) days after  commencement  of a
            Contract  Year.  If the parties  cannot agree,  then an  independent
            actuarial  firm shall be selected by mutual  agreement  to determine
            the Collateral  amount.  The parties shall share equally the cost of
            the actuarial  firm.  The actuarial  firm's  recommendation  for the
            Collateral amount shall be binding upon the parties.  The Collateral
            amount for Contract year 2000 is [x]*. The  Collateral  amount shall
            not be changed  until any deficits for the  previous  Contract  Year
            have  been  paid  by  Lifemark  Texas.   The  Collateral   shall  be
            established  within  thirty  (30)  days  of the  execution  of  this
            Agreement.  If the  Collateral  is not  established  by  such  date,
            Lifemark  Texas shall  forfeit  the  Additional  Administrative  Fee
            provided  in EXHIBIT A until the  Collateral  is  established.  This
            provision shall survive the termination of this Agreement.

      9.3.4 SECURITY  EXCEPTION.  If  Lifemark  Texas  obtains  a  Texas  health
            maintenance  organization license, or if Lifemark Corporation or one
            of its affiliates  obtains a Texas health  maintenance  organization
            license and this  Agreement is assigned to such entity,  the parties
            shall determine,  in consultation with TDI, if the Collateral may be
            used to jointly satisfy the  requirements of Section 9.3.3 and TDI's
            minimum net worth requirements for health maintenance organizations.
            If TDI  rejects  such  proposal,  such  entity  shall  maintain  the
            Collateral solely for the purposes of this Agreement. If TDI accepts
            such  proposal,  TDI must agree that HMO will have a first  priority
            lien on the Collateral.

                                        26
<PAGE>

10    TERM AND TERMINATION.

      10.1  TERM. This Agreement shall be effective on December 1, 1999, (though
            it may be finally  executed and  delivered on a subsequent  date) or
            the first day of the month following TDHS approval of this Agreement
            if TDHS must approve the effective  date,  through  August 31, 2001.
            The parties may extend the Agreement by mutual written agreement for
            additional one (1) year periods,  not to exceed two (2)  extensions.
            Each  such  extension  shall be  effective  on  September  1, or the
            effective  date of the Contract  Year between TDHS and the HMO. If a
            party  does not  desire to extend  this  Agreement,  such party must
            provide  the other  party at least one  hundred  twenty  (120)  days
            written  notice prior to the  expiration of the current  term.  Such
            extensions of this Agreement shall be of no force and effect if TDHS
            and HMO do not agree to a Program contract for the extension periods
            of this Agreement.

      10.2 TERMINATION. This Agreement may be terminated upon the following:

            10.2.1 at any time upon the written mutual consent of both parties.

            10.2.2either  party may  terminate  this  Agreement  for a  material
                  breach  or upon the  failure  of either  party to  obtain  and
                  maintain any license,  registration or approval required under
                  State or federal law that is material to the  operation of the
                  Plan Program which has not been cured within 30 days after the
                  "Cure  Period".  The Cure Period is defined as sixty (60) days
                  from the date on which one party receives notice of a material
                  breach from the other party. Provided however, if the material
                  breach involves failure to pay  Administration  Fees when due,
                  the Cure  Period  shall be (10)  days.  If this  Agreement  is
                  assigned to Lifemark Corporation or an affiliate during a Cure
                  Period,  such  assignee  shall be subject to the breach notice
                  and the remaining portion of the Cure Period.

            10.2.3In  the  event  the  contract  between  TDHS  and  the  HMO is
                  terminated  for any reason or the HMO's  participation  in the
                  Program is  otherwise  terminated,  in which case  termination
                  shall be  effective  as of the  termination  date of the HMO's
                  participation in the Program.

            10.2.4Immediately upon the filing of a bankruptcy petition by either
                  party.

                                        27

<PAGE>

10.3  OBLIGATIONS IN EVENT OF TERMINATION.

      10.3.1Upon  termination  of this  Agreement  for reasons  other than those
            described in Section  10.2.2 of this  Agreement,  HMO shall purchase
            those fixed assets and leasehold  improvements  acquired and used by
            Lifemark  Texas  (or  its  subcontractor  Lifemark  Corporation)  to
            administer the HMO at a price equal to the book value of such assets
            as  determined  by  Lifemark  Texas (or its  subcontractor  Lifemark
            Corporation)  at  the  termination  date.  Lifemark  Texas  (or  its
            subcontractor  Lifemark  Corporation)  shall use Generally  Accepted
            Accounting  Principles  (GAAP) for  depreciation of fixed assets and
            leasehold  improvements.  HMO shall also  agree to assume  and/or be
            fully  financially  responsible  for any  lease of  office  space or
            equipment  being  utilized  for  HMO  operations  and  to  indemnify
            Lifemark Texas (or its subcontractor  Lifemark  Corporation) against
            any  liability  therefor.  The purpose of this  reimbursement  is to
            allow the recovery of those costs normally  covered over the life of
            a contract.

      10.3.2In the  event  of  termination  of this  Agreement  for any  reason,
            Lifemark Texas and its subcontractors shall fully cooperate with the
            person or entity  selected  by HMO to assume  administration  of the
            Program.

      10.3.3In the event of termination of this Agreement,  Lifemark Texas shall
            provide  HMO with all copies of records in  Lifemark  Texas's or its
            subcontractor's  Program and which are  necessary  for the continued
            operation  of the  Program,  or  shall  forward  such  records  to a
            successor administrator as directed by HMO.

      10.3.4Upon  termination of this Agreement for any reason,  Lifemark Texas,
            at HMO's option,  shall continue to adjudicate  all incurred  claims
            that had not been  paid as of the  termination  date.  HMO shall pay
            Lifemark Texas a fee of [x]* of the paid claim amount for each claim
            adjudicated.  Lifemark  Texas shall have no obligation to expend its
            own funds to adjudicate  such claims,  but shall deliver such claims
            to the HMO pursuant to the HMO's instructions.  Lifemark Texas shall
            have  no  obligation  to  adjudicate   claims   incurred  after  the
            termination date of this Agreement.

      10.3.5NOTICE OF  WITHDRAWAL.  If HMO determines to withdraw from or limits
            involvement  in the Program,  HMO shall give  Lifemark  Texas ninety
            (90) days prior written notice.  To "withdraw"  shall mean an action
            by HMO to terminate the TDHS Contract,  or HMO's failure or decision
            not to  extend or renew the TDHS  Contract.  To "limit  involvement"
            shall  mean an action by HMO not to expand its  service  area in the
            Program if the HMO is presented such an opportunity. HMO agrees that
            if HMO withdraws or limits its involvement in the Program,  Lifemark
            Texas may pursue such opportunity independently of HMO.

11 MISCELLANEOUS.

11.1  CONFIDENTIALITY. Lifemark Texas agrees to safeguard the confidentiality of
      all data  pertaining to this  Agreement and Covered  Services  rendered to
      Members in accordance with TDHS requirements.

                                        28

<PAGE>

11.2  RELATIONSHIP OF THE PARTIES.  In the  performance of the work,  duties and
      obligations of the parties pursuant to this Agreement,  the parties shall,
      at all times,  be acting and  performing as  independent  contractors.  No
      relationship  of employer  and  employee,  or partners or joint  venturers
      created by this Agreement, and neither party may therefore, make any claim
      against  the  other   party  for  social   security   benefits,   workers'
      compensation benefits, unemployment insurance benefits, vacation pay, sick
      leave or any other  employee  benefit of any kind.  In  addition,  neither
      party shall have any power or  authority to act for or on behalf of, or to
      bind the other except as herein expressly granted, and no other or greater
      power or  authority  shall be  implied  by the grant or denial of power of
      authority specifically mentioned herein.

11.3  ASSIGNMENT/SUBCONTRACTING.  Neither  party shall have the right to assign,
      delegate or subcontract any of its rights or obligations hereunder without
      the prior written consent of the other party.  The parties agree that this
      Agreement  shall  be  assigned  by HMO to  Lifemark  Corporation  or to an
      affiliate of Lifemark Corporation if Lifemark Corporation or the affiliate
      obtains  a Texas  health  maintenance  organization  license.  HMO  hereby
      consents to the  assignment  of the Amended  and  Restated  Administrative
      Services  Agreement  attached  hereto  as  Addendum  11  whereby  Lifemark
      Corporation  shall  perform  certain  administrative  services  for and on
      behalf of Lifemark Texas.

11.4  NOTICES.  Except as set forth herein,  all notices require or permitted to
      be given hereunder, shall be in writing and shall be sent by United States
      mail, certified or registered,  return receipt requested, postage prepaid,
      to the  parties  hereto  at their  respective  addresses  set forth on the
      signature page hereto, or such other address as may be fixed in accordance
      with the  provisions  hereof.  Except  as set forth  herein,  if mailed in
      accordance  with the  provisions of this  paragraph,  such notice shall be
      deemed to be received three (3) business days after mailing.

11.5  HEADINGS.  The  headings of the various  sections  of this  Agreement  are
      inserted  merely for the purpose of convenience and do not expressly or by
      implication  limit,  define or extend the specific terms of the section so
      designated.

11.6  WAIVER OF BREACH.  The waiver by either  party of a breach or violation of
      any provision of this Agreement  shall not operate as, nor be construed to
      be, a waiver of any subsequent breach thereof.

11.7  APPLICABLE LAW.  This Agreement shall be governed in all respects by
      the laws of the State of Texas.

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<PAGE>


11.8  INVALID PROVISIONS. If, for any reason, any provision of this Agreement is
      or shall be hereafter determined by law, act, decision, or regulation of a
      duly  constituted body or authority,  to be in any respect  invalid,  such
      determination  shall not nullify any of the other terms and  provisions of
      this Agreement and, unless  otherwise agreed to in writing by the parties,
      then, in order to prevent the  invalidity of such  provision or provisions
      of this  Agreement,  the said  provision  or  provisions  shall be  deemed
      automatically  amended in such respect as may be necessary to conform this
      entire  Agreement  with  such  applicable  law,  act,  decision,  rule  or
      regulation.

11.9  NO THIRD-PARTY BENEFICIARY.  This Agreement is entered into by and between
      HMO and Lifemark Texas and for their benefit. There is no intent by either
      party to create or establish  third-party  beneficiary status or rights or
      their equivalent in any Member,  subcontractor,  or other third party, and
      no such third party shall have any right to enforce any right or enjoy any
      benefit created or established under this Agreement.

11.10 COMPLAINT AND APPEAL  PROCESS.  In the event that any dispute  relating to
      this  Agreement  arises  between  Lifemark Texas and HMO, the parties will
      make a good faith effort to resolve the dispute informally. If the dispute
      cannot  be  resolved  informally,  Lifemark  Texas  must  submit a written
      complaint  to  which  clearly  states  the  basis of the  complaint  and a
      proposed  resolution.  HMO shall  respond  to a written  complaint  to HMO
      within  thirty  (30) days of  receipt,  either  accepting,  rejecting,  or
      modifying Lifemark Texas's proposed  resolution.  This will be HMO's final
      determination.  If the parties  are unable to resolve the dispute  through
      the  complaint   process,   the  dispute  shall  be  resolved  by  binding
      arbitration in accordance with the Rules of Commercial  Arbitration of the
      American  Arbitration  Association.  In no event  may the  arbitration  be
      initiated  more than one year after the date one party first gave  written
      notice of the dispute to the other party. The arbitration shall be held in
      Dallas,  Texas or in such other location as the parties may mutually agree
      upon.  The  arbitrator  shall have no power to award punitive or exemplary
      damages  or vary  the  terms  of this  Agreement  and  shall  be  bound by
      controlling law.

11.11 REVIEW AND AUDIT.  Upon reasonable  notice, or such notice as is permitted
      by federal  or State  authorities,  Lifemark  Texas will at all times make
      available  for  review  and audit by either  the HMO or its  designee  its
      files,  books,  procedures and records (including computer terminal access
      to same)  pertaining  to the Program or the services  provided by Lifemark
      Texas or Lifemark Corporation under this Agreement. In addition,  Lifemark
      Texas  shall  make  available  for  interview  with  HMO's  auditor  those
      personnel with material  involvement or responsibility with respect to the
      services  provided by Lifemark  Texas or Lifemark  Corporation  under this
      Agreement.

11.12 ENTIRE AGREEMENT: AMENDMENT. This Agreement and all exhibits and addendums
      hereto  shall  constitute  the entire  agreement  relating  to the subject
      matter  hereof  between  the  parties  hereto,  and  supersedes  all other
      agreements,  written or oral,  relating to the subject matter hereof. This
      Agreement may be amended by mutual agreement of the parties, provided that
      such amendment is reduced to writing and signed by both parties.

11.13 EXHIBITS.  Any exhibits or  addendums  attached to this  Agreement  are an
      integral part of this Agreement and are incorporated herein by reference.

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<PAGE>


11.14 STATE GOVERNMENT  APPROVALS.  The parties  acknowledge and agree that this
      Agreement is subject to review and approval by TDI and TDHS.

12    RIGHT OF FIRST  REFUSAL.  HMO  hereby  grants a right of first  refusal to
      Lifemark Texas, Lifemark Corporation,  or a Lifemark Corporation affiliate
      to be the administrative  services manager and health services Provider if
      HMO expands its service area in the Program.  Further, HMO hereby grants a
      right of first  refusal to  Lifemark  Texas,  Lifemark  Corporation,  or a
      Lifemark  Corporation  affiliate,  to enter into an  arrangement  of equal
      sharing of medical risk in the Program,  or any other form of relationship
      in which such risk is shared equally by the parties.  The parties agree to
      negotiate  with each other in good faith as to the  allocation of start-up
      expenses and administrative services fees related to the expansion. If HMO
      declines to pursue the expansion, Lifemark Texas, Lifemark Corporation, or
      a Lifemark Corporation affiliate may pursue the opportunity  independently
      of HMO.

13    NON-COMPETE.  During the term of this Agreement,  Lifemark Texas, Lifemark
      Corporation,  or a Lifemark Corporation affiliate may not compete with HMO
      in the Program, or enter into a contract with an entity that competes with
      HMO  in  the  Program  without  obtaining  HMO's  prior  written  consent;
      provided,  however,  this  restrictive  covenant does not apply to service
      area  expansion in the Program which HMO has declined or failed to pursue.
      Except as set forth above, HMO and Lifemark Texas,  Lifemark  Corporation,
      or a Lifemark Corporation affiliate may pursue independently of each other
      business opportunities which are unrelated to the Program.

      IN WITNESS  WHEREOF,  the  parties  have  executed  this  Agreement  to be
effective as of the day and year first set forth above.

RIO GRANDE HMO, INC.

By:   /S/DAVID G. BICK              Its    VICE PRESIDENT
      ---------------------                --------------
Date: JANUARY 19, 2000

ADDRESS FOR NOTICES:
901 S. Central Expressway
Richardson, Texas 75080

LIFEMARK OF TEXAS, INC.

By:   /S/MICHAEL J. KENNEDY         Its    VICE PRESIDENT
      ---------------------                --------------
Date: JANUARY 19, 2000

ADDRESS FOR NOTICES:

7600 North 16th Street, Suite 150
Phoenix, Arizona 85020

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<PAGE>



                                    EXHIBIT A

                           ADMINISTRATIVE FEE SCHEDULE
                      RIO GRANDE HMO - HARRIS COUNTY, TEXAS
                           EFFECTIVE DECEMBER 1, 1999

ABD / SSI  MANAGEMENT  FEE  SCHEDULE  FOR MEMBERS  DETERMINED  BY TDHS AS "OTHER
COMMUNITY CLIENTS (DUAL ELIGIBLE AND MEDICAID ONLY, COMBINED)"

Tier     Membership                                     Fees
                                                   The Greater of:

I.       First [x]*                         [x]* PMPM     or         [x]*

II.      Next [x]*                          [x]* PMPM     or         [x]*
                                            [x]*
III.     Members in Excess of [x]*               PMPM     or         [x]*

If  membership  for ABD lives  falls  below [x]*  members,  Plan will  reimburse
Lifemark  Texas at its actual costs (as  determined by a  Plan-approved  budget)
plus [x]* per month.  This maximum  reimbursement  amount applies to ABC/SSI and
LTC, combined,  if both groups are under the minimum  memberships for the month.
Costs will be  determined  by allocating  total costs based on  membership.  For
allocation purposes, [x]* member will equal [x]* members.

LTC MANAGEMENT FEE SCHEDULE FOR ALL OTHER MEMBER RISK GROUPS COMBINED


Tier     Membership                                     Fees
                                                   The Greater of:

I.       First [x]*                           [x]* PMPM     or          [x]*

II.      Next [x]*                            [x]* PMPM     or          [x]*

III.     Members in Excess of [x]*            [x]* PMPM     or          [x]*

If membership  for LTC lives falls [x]* members,  Plan will  reimburse  Lifemark
Texas at its actual costs (as determined by a  Plan-approved  budget) plus [x]*.
This maximum  reimbursement amount applies to ABC/SSI and LTC, combined, if both
groups are under the minimum memberships for the month. Costs will be determined
by allocating  total costs based on membership.  For allocation  purposes,  [x]*
member will equal [x]* members.

Lifemark Texas shall be paid the following Administrative Fees in addition to
the Base Fees above:
CONTRACT YEAR                             ADDITIONAL ADMINISTRATIVE FEE
                                          (% of Revenue)
12/01/99 - 08/31/00                             [x]*
09/01/00 - 08/31/01                             [x]*
09/01/01 - 08/31/02 (if extended)               [x]*
09/01/02 - 08/31/03 (if extended)               (Subject to negotiation)

* CONFIDENTIAL TREATMENT REQUESTED


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