Exhibit 10.2

                                AMENDED AND RESTATED
                        ADMINISTRATIVE SERVICES AGREEMENT

         This  Amended and  Restated  Administrative  Services  Agreement  (this
"Agreement")  is made and entered  into by and between Rio Grande HMO,  Inc.,  a
Texas  corporation  (the  "Plan"),   and,  Lifemark   Corporation,   a  Delaware
corporation ("Lifemark").

                                   WITNESSETH:

         WHEREAS,  the Plan is a  qualified  health  plan  under a managed  care
program  administered by the Texas Department of Human Services  ("TDHS") of the
State of Texas.

         WHEREAS,  Lifemark  is  the  successor  organization  to  Managed  Care
Solutions,  Inc., a Delaware corporation("MCS");

         WHEREAS, the Plan engaged MCS to provide  administrative and management
services in connection  with the operation of the Plan Program  (defined  below)
pursuant to an Administrative  Services Agreement (the "Original Agreement") and
an Amendment to Administrative Services Agreement (the "First Amendment"),  both
effective on March 31, 1997;

         WHEREAS,  The Plan and  Lifemark  desire to enter into the  Amended and
Restated   Administrative  Services  Agreement  which  accurately  restates  and
integrates the Original  Agreement and First Amendment and as further amended by
this Agreement as hereinafter set forth.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:

1.       DEFINITIONS.
         -----------

         1.1      THE  PLAN  PROGRAM.   "The  Plan   Program"   shall  mean  all
                  administrative  and  medical  care  delivery   components  and
                  systems  available  through the Plan as necessary for the Plan
                  to provide or arrange for the provision of Covered Services to
                  those Program  eligible  Members who receive  coverage through
                  the Plan.

         1.2      THE  PROGRAM.  "The  Program"  shall  mean 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.

         1.3      COVERED  SERVICES.  "Covered  Services" shall mean health care
                  services  or  products,  including  medical,  dental,  vision,
                  behavioral,  approved home and community based care, and other
                  health  services  to which  Members  are  entitled  under  the
                  Program as described in the TDH Request for Application  dated
                  January 7, 1997.  "Covered  Services"  shall also  include all
                  value-added  services as described in the Plan response  dated
                  April 7, 1997 to the Texas  Department  of Health  Request for
                  Application.

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         1.4      IMPLEMENTATION  DATE.  "Implementation  Date"  shall  mean the
                  later of (1) October 1, 1997 or (2) the date the Plan  Program
                  becomes  operational and the Plan is obligated to commence the
                  provision of Covered Services to Members.

         1.5      PARTICIPATING PROVIDER.  "Participating Provider" shall mean a
                  duly licensed (if subject to licensure)  physician,  hospital,
                  health professional,  facility, and other health care provider
                  that  have  entered  into a  contract  with  the  Plan for the
                  provision of Covered Services to Members.

         1.6      PRE-OPERATIONAL PHASE.  "Pre-Operational Phase" shall mean the
                  period beginning May 7, 1997 and ending on the  Implementation
                  Date.

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

         1.8      RECIPIENTS OR MEMBERS.  "Recipients"  or "Members"  shall mean
                  those  individuals  who are eligible  for  coverage  under the
                  Program and who have enrolled in the Plan.

         1.9      TDH.  "TDH"  shall mean the Texas  Department  of  Health,  an
                  agency, division or department of State government responsible
                  for  administration  of its State Medicaid Program pursuant to
                  Title XIX of the Social Security Act and applicable State law.

         1.10     TDHS.   "TDHS"  shall  mean  the  Texas  Department  of  Human
                  Services,   an  agency,   division  or   department  of  State
                  government   responsible  for   administration  of  its  State
                  Medicaid  Program pursuant to Title XIX of the Social Security
                  Act and applicable state law.

         1.11     TDI.  "TDI" shall mean the Texas Department of Insurance.

         1.12     MEDICAL  EXPENDITURES.  "Medical  Expenditures" shall mean all
                  expenses for Covered Services  incurred in a specific contract
                  year and paid during the specific  contract year and up to 120
                  days after the end of the contract year.

         1.13     MEDICAL  BUDGET.  "Medical  Budget"  shall mean an  accounting
                  process  whereby a gross  amount of funds is set aside by Plan
                  to cover costs  associated  with medically  necessary  covered
                  services for Members of the Plan.

         1.14     STATE.  "State" shall mean the State of Texas.

2.       LIFEMARK RESPONSIBILITIES: INSURANCE REQUIREMENTS

         -------------------------------------------------

         2.1      PRE-OPERATIONAL PHASE.

                  2.1.1    GENERALLY.  On behalf of, and after  consulting  with
                           the Plan,  Lifemark  shall respond in a timely manner
                           to  TDHS  requests  for  additional   information  or
                           clarification  of the  terms  of the  RFA  and  shall
                           provide  assistance  and  support  to the Plan in its
                           negotiations with TDHS concerning the Program.

                                             2

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                  2.1.2    SPECIFIC   PRE-OPERATIONAL  DUTIES.   Pre-operational
                           duties are those  activities  that are  performed  by
                           Lifemark   on   behalf   of  the  Plan   during   the
                           Pre-Operational  Phase  of this  Agreement.  Services
                           performed  during the  Pre-Operational  Phase in many
                           instances will extend beyond the Implementation  Date
                           as necessary to conduct day to day  operations of the
                           Plan. In  consideration  of the  reimbursement of all
                           pre-operational  costs in accordance with Section 3.1
                           of this Agreement,  during the Pre-Operational Phase,
                           Lifemark shall assist the Plan with the establishment
                           of the following services.

                           2.1.2.1  Location of an office site and  in selection
                                    of office equipment;

                           2.1.2.2  Installation of computer  hardware, software
                                    and related equipment;

                           2.1.2.3  Staff selection and training;

                           2.1.2.4  Development   of   marketing   programs   if
                                    directed by the Plan;

                           2.1.2.5  Development of  Plan  policy and procedures;

                           2.1.2.6  Provider   network   development,  including
                                    negotiating, credentialing, and contracting;

                           2.1.2.7  Education  of  participating  providers  and
                                    their   staff   regarding   Plan   programs;

                           2.1.2.8  Establishment  of  utilization  and  quality
                                    assurance programs;

                           2.1.2.9  In  coordination  with  the  Plan,  act as a
                                    liaison   with   TDHS  and   assist  in  the
                                    negotiation of contracts;

                           2.1.2.10 Preparation of member handbooks;

                           2.1.2.11 Preparation of provider handbooks; and

                           2.1.2.12 Obtain  necessary State of Texas Third Party
                                    Administrator   (TPA)   and/or   Utilization
                                    Review Agent (UR) licenses.

         2.2      OPERATIONAL  PHASE  ADMINISTRATIVE  SERVICES.  Lifemark  shall
                  provide the following  administrative  and management services

                  necessary to the Plan:

                  2.2.1    GENERAL   MANAGEMENT   DUTIES.   Lifemark   shall  be
                           responsible for the day-to-day operational management
                           of the Plan as it relates to the  Program  consistent
                           with and in  compliance  with the  provisions of this
                           Agreement, the RFA, and any contract between TDHS and
                           the Plan. All amendments to the contract  between the
                           Plan  and  TDHS  that  relate  to  the  provision  of
                           administrative  services,  including requirements for
                           information services, shall be incorporated into this
                           agreement   and   Lifemark   shall   carry  out  such
                           requirements following reasonable written notice from
                           Plan.

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                  2.2.2    CONTRACTING WITH PROVIDERS. Lifemark shall assist the
                           Plan in recruiting,  negotiating,  and contracting on
                           behalf of the Plan with providers of medical, dental,
                           vision,  behavioral  and  other  health  services  to
                           provide  Covered  Services  to Members as required by
                           the  contract  between  TDHS and the  Plan.  Provider
                           contracts   shall  be   between   the  Plan  and  the
                           Participating Providers.

                           All contracts with  Participating  Providers shall be
                           in  a  form  and  contain  such   provisions  as  are
                           acceptable  to the Plan,  set forth  the  method  and
                           amount of reimbursement  to Participating  Providers,
                           and specify that the Participating Providers shall be
                           subject to all requirements contained in the RFA, any
                           contract   between   TDHS  and  the  Plan,   and  all
                           applicable provisions of this Agreement.

                  2.2.3    CLAIMS  PROCESSING  AND PAYMENT.  Lifemark  shall pay
                           claims  to  Participating  Providers for all approved
                           Covered  Services  rendered to Members in  accordance
                           with the contracts entered into between Participating
                           Providers and the Plan, the RFA, any contract between
                           TDHS and the Plan, and this Agreement. Lifemark shall
                           have the  authority  and  discretion to interpret the
                           requirements of  the  RFA, the  contract between TDHS
                           and the Plan, and  the  contracts  between  the  Plan
                           and  providers  with  respect  to payment  of  claims
                           to Participating  Providers.  Claims  payments  shall
                           be made by checks or drafts signed by Lifemark as the
                           Plan's   dispersing   agent   out   of   the  account
                           established in accordance with Section  2.2.4 hereof,
                           and  Lifemark  shall  provide the Plan with a copy of
                           all  check  registers  for  claims   payment  checks.
                           Lifemark  shall  notify  the  Plan  by  facsimile  or
                           electronic   transmission   within   the  greater  of
                           forty-eight (48)  hours  or  two  (2)  business  days
                           prior  to  releasing  a check from such account in an
                           amount  equal  to  or  greater  than [x]*.   The Plan
                           shall  not  unreasonably  withhold  its  approval  of
                           such  expenditure,  and, the  Plan  shall  provide  a
                           written  explanation to  Lifemark  of any disapproval
                           of   such  an  expenditure.  The  Plan's  failure  to
                           disapprove  the  issuance  of  such  check within the
                           notice  period  shall be deemed to be approval of the
                           issuance.

                  2.2.4    BANK  ACCOUNT;  ACCOUNTING  AND FINANCE  DUTIES.  Two
                           separate  bank  accounts  shall  be  established  and
                           controlled by the Plan.  The first shall be a control
                           depository  account  ("CDA")for premium deposits from
                           TDHS.  The  second  account  will  be  a Zero Balance
                           Account   ("ZBA")  used   solely   for  disbursements
                           initiated by Lifemark for payment of Covered Services
                           and Lifemark administrative services fees.   Lifemark
                           shall  be  responsible for performing  all day to day
                           financial  and  accounting  functions  of  the  Plan,
                           including   preparation  of   financial   statements,
                           accounts   payable/receivable   administration,   and
                           banking arrangements.   Lifemark  shall  provide  the
                           Plan  with  monthly financial statements and support.
                           It is understood that during  the  first  six  months
                           of operations  certain  data may not  be available to
                           conduct   comprehensive  financial  and   operational
                           analyses.   Lifemark   shall  prepare for  the Plan's
                           review,  signature  and submission, any financial and
                           regulatory  reports  required  by  TDHS  or  TDH   in
                           connection  with  the  Program   and/or   the   Texas
                           Department of Insurance.  The Plan agrees to transfer
                           and  maintain sufficient funds in the ZBA to meet all
                           Plan obligations as presented. Under no circumstances
                           is Lifemark  required to expend  Lifemark's own funds
                           to pay claims.

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                  2.2.5    PLAN BENEFITS LITIGATION.  If a demand is asserted or
                           a  litigation/arbitration   proceeding  is  commenced
                           ("Plan  Benefits  Litigation")  by a Member or health
                           care provider to recover benefits  against  Lifemark,
                           the Plan or both parties, the following shall apply:

                           2.2.5.1  If either Lifemark or the Plan becomes aware
                                    of the asserted Plan Benefits Litigation, it
                                    shall promptly  notify the other party.  The
                                    Plan  shall,   with  Lifemark's  advice  and
                                    input, determine whether to pay the disputed
                                    claims  or   proceed   with  Plan   Benefits
                                    Litigation.

                           2.2.5.2  In   the   event  the  Plan   determines  to
                                    proceed  with  Plan Benefits Litigation, the
                                    Plan  shall  retain  counsel and  direct the
                                    response to the  Plan  Benefits  Litigation.
                                    The Plan  shall  be responsible for assuming
                                    the  cost  attributable  to  Plan   Benefits
                                    Litigation. Lifemark shall  fully  cooperate
                                    with such Plan Benefits Litigation.

                  2.2.6    COORDINATION  OF BENEFITS;  THIRD PARTY  LIABILITIES;
                           REINSURANCE.  Lifemark shall be  responsible  for the
                           following  activities in connection with coordination
                           of benefits and  third-party  recoveries  as required
                           under  the  provisions  of  the  RFA  and  under  any
                           contract between TDHS and the Plan:

                           2.2.6.1  Recovering or coordinating  medical expenses
                                    incurred  by  Members  from all  third-party
                                    liability  resources  on  behalf of the Plan
                                    and depositing any amounts  recovered in the
                                    Plan's designated bank account;

                           2.2.6.2  Establishing   and   maintaining   files  of
                                    Members' third-party  liability information;

                           2.2.6.3  Receiving  third-party liability information
                                    from TDHS and updating the Members' files on
                                    a timely basis;

                           2.2.6.4  Informing  TDHS and the Plan of  third-party
                                    liability information  discovered during the
                                    course of business operations;

                           2.2.6.5  Providing  TDHS and the Plan  with  required
                                    reports  relating to amounts  recovered from
                                    third-parties;

                           2.2.6.6  Recovering  reinsurance  revenues payable to
                                    the Plan from TDHS and/or other reinsurers.

                                             5

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                  2.2.7    CASE  MANAGEMENT.  Lifemark  shall be responsible for
                           performing  case  management  services in  accordance
                           with  the  RFA and in  accordance  with the  contract
                           between  TDHS and  the  Plan.  Lifemark  shall ensure
                           that  each   Member  has  chosen  or  is  assigned  a
                           primary  care  provider who shall assess the Member's
                           health  care  needs and  shall  provide  services  to
                           meet  those   needs   either   directly  or   through
                           referrals to other Participating Providers.  Lifemark
                           shall   implement   a   system   for  the  directing,
                           coordinating, monitoring and tracking of  the Covered
                           Services rendered to each Member.

                  2.2.8    FACILITATION OF SERVICES.  Lifemark shall provide the
                           Plan  and   Participating   Providers   with   Member
                           enrollment  and  eligibility  information  letter and
                           maintain  telephone lines as required by the contract
                           with TDHS for the purpose of  determining  enrollment
                           and  eligibility  information  upon  admission  to an
                           emergency facility or hospital emergency room.

                  2.2.9    PROGRAM COVERAGE INFORMATION.  Lifemark shall prepare
                           and forward to all Participating  Providers a summary
                           of Covered  Services  including  schedules of Covered
                           Service  and  applicable  exclusions  or  limitations
                           thereto, and applicable co-payments, co-insurance and
                           deductibles.

                  2.2.10   QUALITY ASSURANCE.  Lifemark shall be responsible for
                           developing  and   maintaining  a  Quality   Assurance
                           Program in compliance  with the  requirements  of the
                           RFA, and with any contract between TDHS and the Plan.

                  2.2.11   UTILIZATION MANAGEMENT. Lifemark shall be responsible
                           for  developing   and   maintaining   a   Utilization
                           Management   Program   in    compliance   with    the
                           requirements  of  the  RFA,  and  with  any  contract
                           between   TDHS  and   the   Plan.   The   Utilization
                           Management   Program   shall  determine  whether  the
                           level,  type,  and  cost  of  benefits  provided  are
                           appropriate  to  the  health care needs of Members on
                           an ongoing basis.

                  2.2.12   CREDENTIALING.  Lifemark shall be responsible for the
                           process of  credentialing  and  recredentialing  each
                           Participating  Provider in accordance with applicable
                           Plan policies and procedures.

                  2.2.13   INFORMATION SYSTEMS.

                           2.2.13.1 Lifemark  shall  develop and  maintain as of
                                    the   Implementation   Date   an   automated
                                    management information system as required by
                                    the contract with TDHS, any contract between
                                    TDHS and the Plan, and this Agreement.

                                             6

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                           2.2.13.2 The parties  acknowledge  that Lifemark will
                                    use  its   proprietary   software   program,
                                    Managed   Care  One,   which   includes  all
                                    documentation  thereof  and  amendments  and
                                    revisions thereto, as the information system
                                    implemented pursuant to this Agreement.  The
                                    program,   source  and   object   codes  and
                                    databases,   the   trade   secrets   related
                                    thereto, the copy right of Managed Care One,
                                    the trademark of the name, all  intellectual
                                    property rights associated with the program,
                                    the technical information,  design concepts,
                                    processes,  formulae and  algorithms and all
                                    other rights and aspects  pertaining thereto
                                    are highly  confidential  and the  exclusive
                                    property  of   Lifemark.   Nothing  in  this
                                    Agreement   shall  be  construed  to  be  an
                                    assignment,  transfer,  purchase,  lease  or
                                    license of such  rights.  Lifemark  is using
                                    Managed   Care  One  strictly  for  its  own
                                    purposes in fulfilling its duties under this
                                    Agreement  and may  elect at any time in its
                                    sole   discretion   to   use   a   different
                                    information system; provided however that no
                                    disruption  of Plan Program  functions  will
                                    result   from   such   decision.   The  Plan
                                    acknowledges   that   certain   features  of
                                    Managed Care One are highly confidential and
                                    proprietary  and  agrees,   even  after  the
                                    termination of this  Agreement,  to maintain
                                    the    strict    confidentiality    of   all
                                    information  obtained about all of the above
                                    described  aspects  and all  features of the
                                    program,  regardless of how such information
                                    was obtained, until such information becomes
                                    public  information.  The  Plan  waives  all
                                    claim,  right  or  interest   whatsoever  in
                                    Managed  Care  One,  or  any  of  the  above
                                    described aspects and features thereof,  and
                                    all amendments or revisions thereto.

                           2.2.13.3 All data entered into Managed Care One after
                                    the   Implementation   Date  and  until  the
                                    termination  of this  Agreement that pertain
                                    to the  Plan  Program,  is owned by the Plan
                                    and Lifemark  shall provide such data to the
                                    Plan upon request of the Plan.  In the event
                                    the contract  between  Lifemark and the Plan
                                    is terminated, within five (5) working days
                                    thereafter, such data will be transferred to
                                    the Plan by Lifemark using industry standard
                                    electronic media. The Plan shall be entitled
                                    to no other information from Managed Care
                                    One.

                  2.2.14   REPORTS  TO  AND LIAISON WITH TDHS AND TDI.  Lifemark
                           shall  be responsible for making reports to  TDHS and
                           TDI  and the Plan which are required by contract with
                           TDHS and  to act as a liaison to TDHS for the general
                           purpose of regulatory compliance.  Reports  shall  be
                           made  at such times  as  are required by TDHS and TDI
                           and such report shall be in format acceptable to TDHS
                           and  TDI.  Lifemark  shall  furnish  copies  of  such
                           reports to the Plan contemporaneously with submission
                           to TDHS and TDI.

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                  2.2.15   REPORTS  TO  THE PLAN.  Lifemark  shall report to the
                           designated  Plan  executive on a regular basis and at
                           such  times  as  are reasonably  requested.  Lifemark
                           shall report to the designated Plan executive  on any
                           and all matters relating to the administration of the
                           Plan  Program.   Lifemark  shall  provide  reasonable
                           advance notice to the Plan  of any meeting with TDHS,
                           TDI or  other  State  regulatory  personnel  so as to
                           allow a Plan  representative to attend the meeting in
                           person or  by teleconference.   If  either  party  is
                           unable to attend the  meeting, the other party agrees
                           to fully  inform the other of the information  gained
                           or decisions made.

                  2.2.16   MEMBER  SERVICES.  Lifemark shall be responsible  for
                           providing  all Member  services and  functions as are
                           required by the RFA,  any and all  contracts  between
                           TDHS and the Plan,  and this  Agreement,  including a
                           Member call center for STAR and STAR+PLUS if required
                           by the contract between TDHS/TDH and the Plan.

                  2.2.17   COMPLAINT   RESOLUTION   PROCEDURE.   Lifemark  shall
                           maintain a complaint  resolution procedure to process
                           Member and provider complaints.

                  2.2.18   PROVIDER  AND  MEMBER  SATISFACTION.  Lifemark  shall
                           administer periodically, but not less frequently than
                           annually,    Participating    Provider   and   Member
                           satisfaction surveys as required by TDHS.

                  2.2.19   INSURANCE REQUIREMENTS.

                           2.2.19.1 PROFESSIONAL LIABILITY INSURANCE. During the
                                    term  of  this  Agreement,  the  Plan  shall
                                    maintain,  at its sole expense,  a policy of
                                    HMO-type  professional  liability  insurance
                                    acceptable to Lifemark with coverage  limits
                                    in the  minimum  amount  of  $1,000,000  per
                                    incident  and   $3,000,000   in  the  annual
                                    aggregate.   In  addition,  the  Plan  shall
                                    purchase  a  "tail  policy"  with  the  same
                                    policy limits  following the effective  date
                                    of  termination  of the foregoing  policy in
                                    the  event the  policy  is a  "claims  made"
                                    policy.  Lifemark at its own  expense  shall
                                    obtain a  professional  liability  insurance
                                    policy  acceptable to the Plan with coverage
                                    limits in the minimum  amount of  $1,000,000
                                    per  incident and  $3,000,000  in the annual
                                    aggregate  for Lifemark  employees  for such
                                    items as  credentialing,  care  coordination
                                    and utilization review related activities.

                           2.2.19.2 COMPREHENSIVE LIABILITY INSURANCE.  Lifemark
                                    and the Plan  each  shall  maintain,  at the
                                    sole expense of each, throughout the term of
                                    this   Agreement,   a  policy   of   general
                                    liability   insurance,    with   terms   and
                                    conditions  acceptable to the other party in
                                    the  minimum   amount  of   $1,000,000   per
                                    occurrence  and  $3,000,000  in  the  annual
                                    aggregate.

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                           2.2.19.3 PROOF OF INSURANCE. Each party shall furnish
                                    the other with  evidence of such  insurance,
                                    including   certificates  of  insurance  and
                                    complete copies of insurance policies,  upon
                                    the  other's   request.   Each  party  shall
                                    provide  the other with a minimum of 30 days
                                    prior written notice in the event any of the
                                    insurance    policies   required   by   this
                                    Agreement are canceled,  materially  changed
                                    or restricted in any way.

                  2.2.20   MEDICAL  DIRECTOR.   Lifemark   shall   provide   the
                           equivalent of a full-time  medical director  licensed
                           by the Texas State Board of Medical Examiners for the
                           STAR  and  STAR+PLUS programs.  Lifemark  must have a
                           written job description for the medical  director who
                           shall perform  such  duties as  are  required by TDHS
                           in  its  contract  with  the  Plan.  If  the  medical
                           director's  time  spent  on   these  duties   exceeds
                           a  standard full-time  equivalent  Lifemark employee,
                           then such excess time shall be  charged to  the  STAR
                           program.   The   medical   director   must   exercise
                           independent medical judgment in all medical necessity
                           decisions.  Lifemark   must   ensure   that   medical
                           necessity  decisions  are not adversely influenced by
                           fiscal management  decisions.  Lifemark  acknowledges
                           that the Plan and agencies of the State of  Texas may
                           conduct  reviews  of  medical necessity decisions  by
                           the medical director at any time.

3.       REVENUE, ACCOUNTS AND ADMINISTRATIVE FEES
         -----------------------------------------

         3.1      PRE-OPERATIONAL  PHASE ADVANCE. The Plan shall pay Lifemark an
                  amount equal [x]* as an advance for  services  provided to the
                  Plan related to  pre-operational  activities.  Payment will be
                  made in three equal installments with the first payment due to
                  Lifemark no later than May 15, 1997.  Subsequent payments will
                  be due no  later  than  June  15,  1997 and  August  15,  1997
                  respectively.

         3.2      REIMBURSEMENT  FOR  PRE-OPERATIONAL  PHASE.  The Plan will pay
                  Lifemark   an   amount   equal   [x]*   in   connection   with
                  pre-operational   activities   during   each   month   of  the
                  Pre-Operational  Phase.  After the advance funds  described in
                  Section 3.1 have been applied,  any remaining amount due shall
                  be  PAID  TO  LIFEMARK  NO  LATER  THAN  THE  15TH  day of the
                  following  month.  Lifemark  will provide Plan with a detailed
                  listing of actual expenses incurred.

         3.3      OPERATIONAL  PHASE.  Lifemark shall be paid an  Administrative
                  Fee following the Implementation  Date as set forth in Exhibit
                  A of this Agreement.

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                  Lifemark 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  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 in any  contract  year [x]* of that  contract
                  year's Revenue (as defined below).

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

                  3.3.1    Claims costs for Covered Services;

                  3.3.2    Legal services of the Plan;

                  3.3.3    Actuarial services of the Plan;

                  3.3.4    All insurance premiums for the Plan;

                  3.3.5    Board fees and expenses related to Board meetings;

                  3.3.6    Expenses relating to the corporate existence of the
                           Plan;

                  3.3.7    Audit and tax services of the Plan;

                  3.3.8    Advertising and marketing expenses of the Plan;

                  3.3.9    Any income,  property,  premium or other taxes of the
                           Plan and any assessments or license fees;

                  3.3.10   Other expenses clearly related to the business of the
                           Plan as an independent corporate entity;

                  3.3.11   Costs associated, including preparation of proposals,
                           for the expansion of the Plan into additional service
                           areas.

         3.4      PERFORMANCE  FEE/PERFORMANCE  PENALTY. At least annually, Plan
                  and Lifemark shall  determine a set of  performance  goals and
                  objectives  for  Lifemark  and the  performance  of its duties
                  under this  agreement.  Such goals and objectives may include,
                  among other things,  the reduction of HMO  administrative  and
                  similar  expenditures from budgeted targets or the achievement
                  of  other  Plan  Program  operating  efficiencies.   Based  on
                  Lifemark'  achievement  of  specified  goals  and  objectives,
                  Lifemark  shall be paid a  performance  fee (the  "Performance
                  Fee"). The Performance Fee shall be paid as set out in Exhibit
                  B of this Agreement.  Under certain  instances as described in
                  Exhibit  B,   Lifemark  may  be  subject  to  a  Penalty  (the
                  "Performance  Penalty").  Any  Performance  Penalty  shall  be
                  offset against Lifemark' base  Administrative Fee paid by Plan
                  as provided  under Section 3.3 and Exhibit A of this Agreement
                  and  under  the  terms  as  set  forth  in   EXHIBIT   B.  THE
                  MINIMUM/MAXIMUM   amount  of  any   Performance  Fee  and  the
                  Performance  Penalty  shall in no instance  exceed [x]* by the
                  Plan in a given contract year commencing on the Implementation
                  Date.  This  Section  3.4  shall be null and  void  upon  Plan
                  entering  into a risk  sharing  arrangement  with  Lifemark of
                  Texas,  Inc. and the  assignment of this Agreement to Lifemark
                  of Texas, Inc.

                                             10

<PAGE>

         3.5      REVENUE AND ACCOUNTS.

                  3.5.1    PROGRAM  CONTRACT YEAR 2000. For the Partial  Program
                           contract year  beginning  December 1, 1999 and ending
                           August  31,  2000,  the Plan  shall  deposit  [x]* of
                           Revenue  into  the  CDA,  and the  remaining  [x]* of
                           Revenue into an account designated by Plan to pay for
                           Plan's oversight, reinsurance and recovery of initial
                           Plan  Program  start-up  costs.  "Revenue"  means the
                           monthly   payments  and  all  subsequent   adjustment
                           payments,  made to the Plan by TDHS under the Program
                           contract.

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

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

                  3.5.4    PROGRAM 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.

4.       TERM AND TERMINATION
         --------------------

         4.1      TERM.  This Agreement  shall be effective on December 1, 1999,
                  or the first day of the month  following TDHS approval of this
                  Agreement if TDHS must approve the effective  date,  though it
                  may  be  finally  executed and delivered on a subsequent date.
                  The Agreement shall be effective during the  period  necessary
                  to  complete  the  Plan's  preoperational activities and shall
                  then  be  in full force and effect  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 Plan.  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
                  Plan  do  not  agree  to  a Program contract for the extension
                  periods of this Agreement.

                                        11

<PAGE>

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

                  4.2.1    At any time upon the written mutual consent of both
                           parties.
                  4.2.2    Either  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  Administrative  Fees when due,  the Cure  Period
                           shall be (10) days.

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

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

         4.3      OBLIGATIONS IN EVENT OF TERMINATION.

                  4.3.1    Upon termination of this Agreement for reasons  other
                           than  those  described  in  Section  4.2.2   of  this
                           Agreement,  the  Plan   shall  purchase  those  fixed
                           assets and leasehold improvements acquired  and  used
                           by Lifemark to administer the Plan at  a  price equal
                           to the book value of  such  assets as  determined  by
                           Lifemark at the termination date.  Lifemark shall use
                           Generally  Accepted Accounting Principles  (GAAP) for
                           depreciation   of    fixed   assets   and   leasehold
                           improvements.  The Plan  shall  also  agree to assume
                           and/or  be  fully  financially  responsible  for  any
                           lease of office space  or  equipment  being  utilized
                           for  Plan  operations  and  to   indemnify   Lifemark
                           against any liability therefor.  The  purpose of this
                           reimbursemen  is to allow the recovery of those costs
                           normally covered over the life of a contract.

                  4.3.2    In the event of termination of this Agreement for any
                           reason,  Lifemark  shall  fully  cooperate  with  the
                           person  or  entity  selected  by the  Plan to  assume
                           administration of the Plan.

                  4.3.3    In  the  event  of  termination  of  this  Agreement,
                           Lifemark  shall  provide  the Plan with all copies of
                           records  in   Lifemark'   possession   directly   and
                           specifically  relating to the Plan  Program and which
                           are necessary for the continued operation of the Plan
                           Program, or shall forward such records to a successor
                           administrator as directed by the Plan.

                                             12

<PAGE>

                  4.3.4    If this  Agreement  is  terminated  by the  Plan  for
                           reasons  other  than those  stated in  Section  4.2.2
                           within one year of the Implementation  Date, the Plan
                           will  reimburse  Lifemark  for  [x]*  of all  Program
                           related expenses incurred by Lifemark.

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

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

5.       MISCELLANEOUS

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

         5.2      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 or authority specifically mentioned herein.

                                             13

<PAGE>

         5.3      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  may be
                  assigned at any time by Plan to Lifemark of Texas, Inc.

         5.4      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.

         5.5      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.

         5.6      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.

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

         5.8      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.

         5.9      NO THIRD-PARTY BENEFICIARY.  This Agreement is entered into by
                  and between the Plan and Lifemark and for their benefit. There
                  is  not  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.

                                             14

<PAGE>

         5.10     COMPLAINT  AND APPEAL  PROCESS.  In the event that any dispute
                  relating to this Agreement  arises between  Lifemark and Plan,
                  the  parties  will make a good  faith  effort to  resolve  the
                  dispute   informally.   If  the  dispute  cannot  be  resolved
                  informally,  Lifemark must submit a written  complaint to Plan
                  which clearly states the basis of the complaint and a proposed
                  resolution.  Plan shall respond to a written  complaint within
                  thirty (30) days of receipt,  either accepting,  rejecting, or
                  modifying Lifemark's proposed resolution.  This will be Plan'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.

         5.11     REVIEW AND AUDIT.  Lifemark  will at all times make  available
                  for review and audit by either  the Plan or its  designee  its
                  files,  books,  procedures  and  records  (including  computer
                  terminal access to same) pertaining to the Plan Program or the
                  services  provided  by  Lifemark  under  this  Agreement.   In
                  addition, Lifemark shall make available for interview with the
                  auditor  those   personnel   with  material   involvement   or
                  responsibility  with  respect  to  the  services  provided  by
                  Lifemark under this Agreement.

         5.12     ENTIRE AGREEMENT:  AMENDMENT.  This Agreement and all exhibits
                  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.

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

         5.14     TEXAS  DEPARTMENT OF INSURANCE.  The parties  acknowledge  and
                  agree that this Agreement is subject to review and approval by
                  TDI and TDHS.

         5.15     PLAN INSOLVENCY. Lifemark understands and agrees that Plan has
                  the sole  responsibility  for payment of services  rendered by
                  Lifemark under this Agreement. In the event of Plan insolvency
                  or cessation of  operations,  Lifemark' sole recourse shall be
                  against Plan through the bankruptcy or receivership  estate of
                  Plan.  Lifemark  understands and agrees that neither the State
                  of Texas nor the Plan  Member is  liable  or  responsible  for
                  payment for any services provided under this Agreement.

         5.16     MODIFICATION   TO   AGREEMENT.   Lifemark   agrees   that  any
                  modification,  addition, or deletion of the provisions to this
                  Agreement  will become  effective  no earlier than thirty (30)
                  days after Plan notifies the TDHS of the change.  If TDHS does
                  not  provide  written  approval  within  thirty (30) days from
                  receipt  of  notification  from the Plan such  changes  may be
                  considered provisionally approved.

                                        15

<PAGE>

         5.17     FRAUD AND ABUSE.  This  Agreement  and Lifemark are subject to
                  state and federal fraud and abuse  statutes.  Lifemark 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.

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

6.       RIGHT  OF  FIRST  REFUSAL.  The  Plan  hereby  grants a right  of first
         refusal  to  Lifemark to be the administrative services manager if Plan
         expands its service area in  the  Program.  Further,  the  Plan  hereby
         grants  a  right  of  first  refusal  to  Lifemark  or its  affiliates,
         including but not limited to, Lifemark of Texas, Inc., 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  the Plan declines to pursue the
         expansion,  Lifemark  may  pursue  the opportunity independently of the
         Plan.

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

                                        16

<PAGE>

8.       SETTLEMENT OF  PERFORMANCE  FEE. Plan agrees to pay Lifemark the sum of
         $600,000.00  ("Settlement  Amount") in full and final settlement of the
         Performance  Fee from the  Implementation  Date  through and  including
         November  30, 1999.  Lifemark  accepts the  Settlement  Amount and does
         completely and generally  release,  remise,  and forever discharge Plan
         from any and all claims for Performance Fee for such time period.  This
         release  shall become  effective  and binding upon: a) the execution of
         this Agreement,  and b) the receipt of the Performance Fee by Lifemark.
         Plan  shall pay the  Performance  Fee  within  thirty  (30) days of the
         assignment of this Agreement to Lifemark of Texas, Inc.

9.       PARTIAL  PAYMENT OF PERFORMANCE  FEE. Within 30 days from the execution
         hereof Plan  agrees to pay the sum of  $600,000  as an initial  payment
         against  the amount  finally  determined  to be owed to  Lifemark  as a
         Performance Fee for the period from the Implementation Date through and
         including November 30, 1999. The parties anticipate the final amount of
         the Performance Fee to be settled as Managed Care Financial Statistical
         Reports are filed with TDHS for the relevant time periods.


         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
         --------------------------------
         David G. Bick

DATE:    JANUARY 19, 2000

ADDRESS FOR NOTICES:

901 S. Central Expressway
Richardson, Texas 75080

LIFEMARK CORPORATION

BY:      /S/ MICHAEL KENNEDY                         ITS      VICE PRESIDENT
         --------------------------------
DATE:    JANUARY 19, 2000

ADDRESS FOR NOTICES:

7600 NORTH 16TH Street, Suite 150
Phoenix, Arizona 85020

                                        17

<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]*

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


If  membership  for ABD lives  falls  below [x]*  members,  Plan will  reimburse
Lifemark Texas at its [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 [x]* lives falls  below [x]*  members,  Plan will  reimburse
Lifemark Texas at its [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.

                                        18

<PAGE>

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)



                                        19

<PAGE>

                                    EXHIBIT B

                        PERFORMANCE GOALS AND OBJECTIVES

I.       After  120  days  but  before  180  days  after  the end of each of the
         periods,  the   first   of  which  beginning  January  1, 1998  through
         December  31,  1998,  and the next  period  beginning  January  1, 1999
         through  November  30,  1999  ("Performance  Goal Periods"),  Plan will
         calculate the Performance  Fee/Penalty.  Plan will set a gross  medical
         budget which is defined as the sum  of the products  of  the per member
         per month (pmpm) medical  cost target  times the actual  member  months
         for each category.  The pmpm medical cost targets for FY 1998 are shown
         in Exhibit C and will be updated annually.  In  the event that  Medical
         Expenditures fall below [x]* of the gross medical budget, Plan will pay
         Lifemark a Performance Fee in the amount equal to [x]* by Plan  for the
         next  contract  month,  then Lifemark  may elect to pay the Performance
         Penalty to up to twelve (12) equal monthly installments.

II.      In the event that Plan incurs financial  penalties imposed by TDH, TDHS
         or the Texas  Department of Insurance  with respect to the operation of
         the Plan  Program and is a direct  result of the failure of Lifemark to
         fulfill its duties under this  Agreement,  Plan will pay such penalties
         from its own funds,  but may deduct the amount of such  penalties  from
         Lifemark'  Administrative  Fee;  provided  however,  the  amount of the
         deduction shall not exceed [x]*.

III.     This  Exhibit B shall be null and void if Lifemark of Texas,  Inc.  and
         Plan have entered into a risk sharing  arrangement  and this  Agreement
         has been assigned to Lifemark of Texas, Inc.

                                             20

<PAGE>

                                    EXHIBIT C

              PER MEMBER PER MONTH MEDICAL COST BUDGET TARGETS FOR

               FY 1998 - OCTOBER 1, 1997 THROUGH AUGUST 31, 1998.



           CBA Waiver - Dual Eligible                                       [x]*

           CBA Waiver - Medicaid Only                                       [x]*

           Other Community Clients- Dual Eligible                           [x]*

           Other Community Clients - Medicaid Only                          [x]*

           New Nursing Facility Clients (MAO) - Dual Eligible               [x]*

           New Nursing Facility Clients (MAO) - Medicaid Only               [x]*

           Voluntary Nursing Facility Clients - Dual Eligible               [x]*

           Voluntary Nursing Facility Clients - Medicaid Only               [x]*

In the event that Plan capitation rates from TDHS are supplemented,  modified or
changed,  Plan and Lifemark agree to review medical cost targets as described in
this Exhibit.

* CONFIDENTIAL TREATMENT REQUESTED

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