FIRST AMENDMENT AND RESTATEMENT
                              OF SERVICES AGREEMENT

     FIRST AMENDMENT AND RESTATEMENT OF SERVICES AGREEMENT, dated as of June 13,
1997 (this "Agreement"),  by and among CONTEMPORARY HEALTHCARE MANAGEMENT, INC.,
a New Jersey  corporation  ("CHCM"),  BLUE CROSS AND BLUE  SHIELD OF NEW JERSEY,
INC., a New Jersey health service corporation  ("BCBSNJ"),  CAREADVANTAGE HEALTH
SYSTEMS,  INC., a Delaware  corporation  ("CAHS"),  and  CAREADVANTAGE,  INC., a
Delaware corporation ("CAI").

                              W I T N E S S E T H :

     WHEREAS,  CHCM  provides  certain  managed  care  services to managed  care
organizations and others,  including,  without  limitation,  utilization  review
services,  utilization management services and certain technical,  communication
and  administrative  support services in connection with the foregoing  services
and the provision of health care services; and

     WHEREAS,   BCBSNJ   provides   indemnity   health   benefits   and  certain
administrative services to the Serviced Population (as hereinafter defined); and

     WHEREAS,  as of  February  22,  1996 (the  "Effective  Date"),  the parties
entered into an agreement (the "Original  Agreement")  wherein CHCM was retained
by BCBSNJ  as  BCBSNJ's  exclusive  provider  of the  Services  (as  hereinafter
defined) with respect to the Serviced Population; and

     WHEREAS,  the parties  desire to amend and restate the Original  Agreement,
effective as of the date first set forth above (the "Restatement Date");

     NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants  and  undertakings  of the  parties  hereto,  and for  other  good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties hereto, intending to be legally bound, do hereby agree
as follows:

<PAGE>

1. Definitions.

     As used in this  Agreement,  the  following  terms shall have the following
meanings:

     1.1. "Acceptable Policies" is defined in Section 14.3 hereof.

     1.2. "Actual Current Year's Days" shall mean, for each Fully-Insured Market
Segment in any  BCBSNJ  Fiscal  Year,  the actual  number of days  incurred  per
thousand members of the Serviced Population in such Fully-Insured Market Segment
during such BCBSNJ Fiscal Year.

     1.3.  "Actual  Prior  Year's  Days"  shall mean (i) for each  Fully-Insured
Market Segment in any BCBSNJ Fiscal Year other than the 2000 BCBSNJ Fiscal Year,
the  actual  number  of days  incurred  per  thousand  members  of the  Serviced
Population in such Fully-Insured Market Segment during the immediately preceding
BCBSNJ Fiscal Year and (ii) for each  Fully-Insured  Market  Segment in the 2000
BCBSNJ Fiscal Year,  the actual number of days incurred per thousand  members of
the Serviced  Population in such  Fully-Insured  Market Segment during the first
six (6) months of the 1999 BCBSNJ Fiscal Year.

     1.4. "Actuarial Cost Per Day" shall mean Nine Hundred  Eighty-Seven Dollars
($987), unless otherwise agreed by the parties.

     1.5.  "Affiliate" shall mean, with respect to any party hereto,  any Person
that, directly or indirectly,  through one or more intermediaries,  controls, or
is  controlled  by or is under common  control with such party.  As used in this
Section 1.5, "control" shall mean the possession, directly or indirectly, of the
power to direct or cause the  direction of the  management  and policies of such
Person,  whether  through the  ownership  of voting  securities,  by contract or
otherwise.

     1.6. "Agreement" is defined in the introductory paragraph hereof.

     1.7. "Annualized Bonus Amount" shall mean, for any BCBSNJ Fiscal Year as of
any date of calculation,  twenty-five  percent (25%) of the sum of the following
products,  calculated  separately for each  Fully-Insured  Market Segment in the
applicable BCBSNJ Fiscal Year:

          (a) the  difference,  whether  positive  or  negative,  calculated  by
     subtracting,  for such  Fully-Insured  Market  Segment,  the Actual Current
     Year's Days from the Target Days; multiplied by

          (b) the Actuarial Cost Per Day; multiplied by


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<PAGE>

          (c) the average  number of members of the Serviced  Population in such
     Fully-Insured Market  Segment  for such BCBSNJ  Fiscal Year  divided by One
     Thousand (1,000).

     1.8. "BCBSNJ" is defined in the introductory paragraph hereof.

     1.9. "BCBSNJ Fiscal Quarter" shall mean each full or partial fiscal quarter
of BCBSNJ occurring during or after the Term.

     1.10.  "BCBSNJ  Fiscal Year" shall mean each full or partial fiscal year of
BCBSNJ occurring during the Term.

     1.11. "BCBSNJ Policies" is defined in Section 5.1(a)(i) hereof.

     1.12. "Brennan" is defined in Section 10.2(a)(vii) hereof.

     1.13. "CAHS" is defined in the introductory paragraph hereof.

     1.14. "CAI" is defined in the introductory paragraph hereof.

     1.15. "CHCM" is defined in the introductory paragraph hereof.

     1.16.  "CHCM's Costs" shall mean, with respect to any item, the direct cost
of such item to CHCM (or CAI or CAHS,  as the case may be),  net of any  related
savings  (the  "Net  Costs")  plus ten  percent  (10%)  of such Net  Costs as an
allowance for general and  administrative  costs, plus ten percent (10%) of such
Net Costs as an allowance for profit.

     1.17. "Confidential Information" shall mean:

          (a) the UR/UM Materials;

          (b) any forms, policies, procedures, manuals and materials of any kind
     created,  owned or provided by a party hereto in  connection  with, or with
     respect to, the Services;

          (c) any information or data relating to the Services or this Agreement
     that is made available by a party hereto to another party hereto and (i) is
     marked  confidential,  or at the  time  of its  being  made  available,  is
     otherwise  indicated to be  confidential,  or (ii) within  thirty (30) days
     after such  information  or data is first made  available,  is indicated in
     writing to be confidential;


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<PAGE>

          (d) any derivative  works based on the materials,  information or data
     described in subclauses (b) and (c) above; and

          (e) with respect to the confidentiality obligations hereunder of CHCM,
     CAHS and CAI only, (i) Patient Information, (ii) any and all information or
     data (whether patient  specific,  account specific,  aggregates  thereof or
     otherwise)  relating to the cost or  utilization  of health  care  services
     provided  to,  or  received  by,  the  Serviced  Population  or  any  other
     individual  covered by any BCBSNJ health care benefit  plan,  (iii) any and
     all  information or data relating to the health of the Serviced  Population
     or any other  individual  covered by any BCBSNJ  health care  benefit  plan
     (including,  without  limitation,  an  individual's  health  care  history,
     diagnosis,  condition, treatment or evaluation), (iv) any and all lists (or
     any  portions  thereof) of  individuals  covered by any BCBSNJ  health care
     benefit plan and the groups to which such individuals  belong,  (v) any and
     all  software  data  that  is the  property  of  BCBSNJ,  (vi)  any and all
     information  or data obtained or accessed by CHCM,  CAI or CAHS as a result
     of, or by means of, the on-line access to the information systems of BCBSNJ
     provided  pursuant to Section 6.2 hereof,  (vii) any and all information or
     data  created or  generated in  connection  with the  provision of Services
     hereunder  and  (viii)  any   derivative   works  based  on  the  foregoing
     information,  data or materials  described in subclauses  (i) through (vii)
     above;

provided,  however, that Confidential  Information shall not mean information or
data  that:  (w) was  previously  known  to the  receiving  party at the time of
disclosure and is not subject to an existing agreement of confidence between the
applicable  parties,  (x) is  subject to an  existing  agreement  of  confidence
between the applicable parties, (y) is publicly known through no act or omission
by the receiving party or (z) otherwise is disclosed to the receiving party by a
third party having the legal right to make such disclosure.

     1.18.  "Contract"  shall mean any contract,  agreement,  lease,  license or
other legally binding  commitment,  obligation or  arrangement,  whether oral or
written, express or implied.

     1.19.  "Customer  Dissatisfaction"  shall  mean  (a) a  materially  adverse
aggregate  response  regarding  the  quality of  Services  performed  by, or the
personnel  or  staff  of,  CHCM,  CAI  and/or  CAHS,  as  measured  by  customer
satisfaction surveys ("Customer Surveys"),  the form and substance of which have
been  approved  by CHCM,  which  approval  shall not be  unreasonably  withheld,
conducted  (i)  in  accordance  with  all  applicable   BCBSNJ  Policies  and/or
Performance  Standards and (ii) by an  independent  Person  specializing  in the
conduct of surveys,  reasonably  acceptable to and mutually agreed by BCBSNJ and
CHCM (a "Survey  Person"),  or (b) a materially  adverse  series of responses or
complaints received by BCBSNJ with respect to the Serviced Population  regarding
the quality of Services  performed by, or the  personnel or staff of, CHCM,  CAI
and/or CAHS.


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<PAGE>

     1.20. "Customer Surveys" is defined in Section 1.19 hereof.

     1.21. "Damages" is defined in Section 14.1(a) hereof.

     1.22. "Designated Employees" is defined in Section 5.5 hereof.

     1.23.  "Equity  Securities" shall have the meaning ascribed to such term in
Section 3 of the Exchange Act.

     1.24.  "Exchange  Act" shall mean the  Securities  Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
thereunder, all as the same shall be in effect from time to time.

     1.25.  "Exposed  Lives" shall mean,  as to any Market  Segment,  the agreed
number  of  Persons   included  within  such  Market  Segment  for  purposes  of
calculating  payments required to be made pursuant to Section 4.1(b)(ii) hereof,
based on BCBSNJ's  conversion factors for calculating Exposed Lives from Exposed
Subscribers.  The aggregate number of Exposed Lives in all Market Segments shall
be deemed to be Seven  Hundred  Eighty  Thousand  (780,000)  for the  nine-month
period  commencing  January 1,  1997,  distributed  as follows  among the Market
Segments, based on the following number of Exposed Subscribers:

     Market Segment                   Exposed Lives        Exposed Subscribers
     --------------                   -------------        -------------------

Individual Under 65 CMM                  64,762                   38,784

Individual Under 65 non-CMM              13,493                    9,107

Small Employer                           72,964                   35,391

Corporate 50-99                          23,139                   10,095

Corporate 100+                          282,495                  110,413

National Accounts                        46,683                   19,681

State Account                           216,135                   91,426

Other Government Accounts                60,329                   23,013
                                        -------                  -------

         Total                          780,000                  337,910


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<PAGE>

The number of Exposed  Lives in each Market  Segment shall be updated by BCBSNJ,
and BCBSNJ  shall  provide  written  notice of such update to CHCM,  (i) on each
September 1 and March 1 during the Term,  beginning on  September  1, 1997,  and
(ii) on the first day of such  other  months as may be  appropriate  if,  due to
changes in the size of the  Serviced  Population  or  otherwise,  the  aggregate
number of Exposed  Lives is  proposed to change by more than five  percent  (5%)
from its then current level. Any such update shall be effective beginning in the
first Service Month  following the month in which BCBSNJ  provides notice of the
update to CHCM;  provided,  however,  that in any case where BCBSNJ gives notice
later than the first day of the required  month,  such update shall be effective
in the second Service Month  following the month in which BCBSNJ provides notice
of the update to CHCM.

     1.26.  "Exposed  Subscribers"  shall mean the Exposed Lives excluding those
covered individuals that are dependents of enrollees as determined by BCBSNJ.

     1.27.  "For Cause  Event of  Termination"  is  defined  in Section  10.2(a)
hereof.

     1.28.  "Fully-Insured  Market  Segment"  shall  mean the  following  Market
Segments and each other  fully-insured  Market  Segment as to which BCBSNJ gives
notice to CHCM from time to time  during the Term in  accordance  with the terms
hereof in its sole and absolute discretion:

          (a) Individual Under 65 CMM;

          (b) Individual Under 65 non-CMM;

          (c) Small Employer; and

          (d) Corporate 50-99.

     1.29. "GAAP" shall mean generally accepted  accounting  principles (as such
principles  may change from time to time) applied on a consistent  basis,  which
shall include,  but not be limited to, the official  interpretations  thereof by
the Financial Accounting Standards Board, its predecessors or successors.

     1.30.  "Governmental  Authorities"  shall  mean  any and all  governmental,
legislative,   administrative,   judicial  (including,  without  limitation,  as
pertaining to  arbitration  tribunals or other  bodies) or regulatory  agencies,
commissions,  boards, bureaus, departments,  bodies,  instrumentalities or other
authorities having jurisdiction over any or all of the parties hereto and/or the
transactions contemplated by this Agreement.

     1.31. "Guaranteed Obligations" is defined in Section 9.1 hereof.


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<PAGE>

     1.32. "Indemnified Party" is defined in Section 14.2 hereof.

     1.33. "Indemnifying Party" is defined in Section 14.2 hereof.

     1.34.  "Interim  Payment" shall mean Eight Hundred  Thirty-Three  Thousand,
Three Hundred Thirty-Three Dollars ($833,333).

     1.35.   "Interim  Services  Agreement"  shall  mean  the  Interim  Services
Agreement, dated as of April 1, 1995 by and among CHCM, BCBSNJ, CAHS and CAI, as
in effect on the date hereof.

     1.36. "Law" shall mean any law (including,  without limitation,  common law
and  Federal,  state  and  local  law),  constitution,  statute,  treaty,  rule,
regulation,  code, ordinance,  order,  injunction,  writ, decree or award of any
Governmental Authority.

     1.37.  "License"  shall  mean  any  certificate,  license,  permit,  right,
application,  filing, registration,  franchise,  approval or other authorization
necessary for the provision of Services hereunder.

     1.38. "Local 54 Contract" shall mean the  Administrative  Services Contract
commencing October 1, 1996 between BCBSNJ and the Union.

     1.39.  "Local 54 Process" shall mean the provision by CHCM of such services
as are contemplated by the Local 54 Contract.

     1.40.  "Market  Segment"  shall mean each market segment listed on Schedule
1.40 attached  hereto and each other market segment to be included  hereunder of
which  BCBSNJ  gives  notice  to  CHCM  from  time to time  during  the  Term in
accordance with the terms hereof in its sole and absolute discretion.

     1.41. "Marks" shall mean any trademark,  trade name, servicemark or service
name owned and/or utilized by any or all of BCBSNJ and its Affiliates.

     1.42. "MEDecision License" is defined in Section 11.4 hereof.

     1.43. "Modified Day" shall mean a day of inpatient  hospitalization claimed
with respect to an Exposed Life following inpatient  admission,  but for which a
determination is made by CHCM that such day of inpatient  hospitalization is not
medically appropriate,  provided that such determination is maintained through a
completed  appeals  process.   Any   determination   overturned  on  appeal  for
administrative reasons,  rather than for medical appropriateness  reasons, shall
be deemed to have been maintained through a completed


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<PAGE>

appeals process unless the basis for such  determination  having been overturned
is a failure by CHCM to satisfy its obligations under this Agreement.

     1.44.  "Moral  Turpitude" shall mean any act or omission that constitutes a
felony under any applicable Law or civil fraud or deceit.

     1.45. "Original Agreement" is defined in the recitals hereto.

     1.46.  "Patient  Information"  shall mean any and all  information  or data
relating  to the health of any  member of the  Serviced  Population  (including,
without limitation, an individual's health care history,  diagnosis,  condition,
treatment  or  evaluation)  and any  derivative  works  based  on the  foregoing
information or data.

     1.47. "Performance Standards" shall mean:

          (a) all performance  standards and measures required by any applicable
     Law (including, for this purpose only, at the discretion of the Senior Vice
     President Health Industry Services of BCBSNJ,  any Law applicable to health
     maintenance organizations in the State of New Jersey);

          (b) all performance  standards and measures customary for statewide or
     regional industry practice;

          (c) all performance standards and measures agreed to by BCBSNJ and any
     of its  customers  from time to time during the Term of which  BCBSNJ gives
     notice to CAI, CHCM and CAHS in accordance with the terms hereof; and

          (d) all performance  standards and measures set forth on Schedule 1.47
     attached hereto;

provided,  however,  that BCBSNJ agrees to pay to CHCM CHCM's Costs attributable
to any changes subsequent to the Effective Date in the performance standards and
measures identified in clause (c) of this Section 1.47 (other than those changes
made at the request or  recommendation of either CAI, CAHS or CHCM which are not
likely, in BCBSNJ's reasonable  judgment,  to enhance the benefits to BCBSNJ and
its customers expected to be generated by operation of this Agreement).

     1.48. "Person" shall mean any individual,  partnership,  firm,  enterprise,
corporation or other entity.

     1.49. "Post-Termination License Agreement" is defined in Section 10.3(a)(i)
hereof.


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<PAGE>

     1.50. "Restatement Date" is defined in the recitals hereto.

     1.51. "Restrictive Covenants" is defined in Section 13.1 hereof.

     1.52. "Serviced Population" shall mean:

          (a)  any  and all  individuals  covered  by  BCBSNJ  indemnity  health
     benefits plans;

          (b) where specified by any applicable BCBSNJ customer,  all applicable
     individuals  covered by an  administrative  services  contract between such
     customer and BCBSNJ;

          (c) where  specified by any applicable  BCBSNJ  customer,  any and all
     individuals covered by "Administrative Services Only" arrangements; and

          (d)  all  applicable  covered  individuals  with  respect  to any  new
     categories of BCBSNJ customers requiring  utilization review or utilization
     management services;

in each case, if and to the extent BCBSNJ gives notice to CHCM from time to time
during the Term in its sole and absolute discretion.

     1.53. "Service Month" shall mean each calendar month during the Term.

     1.54.  "Services"  shall mean, in  connection  with the provision of health
care:

          (a) development of review protocols,  guidelines and standards,  which
     must be approved by BCBSNJ in advance of their application and which BCBSNJ
     may, from time to time, in its sole and absolute discretion, modify;

          (b)  pre-certification   services,   including,   without  limitation,
     pre-admission  review,  pre-certification  of selected  surgical/diagnostic
     procedures, pre-certification of selected outpatient/ambulatory procedures,
     assignment of initial length of hospital stay;

          (c)  concurrent  review  services,   including,   without  limitation,
     appropriate  concurrent  inpatient service review,  regular reassessment of
     length  of stay  assignment,  discharge  planning  support  and  outpatient
     service coordination;

          (d)  procedure   certification/mandatory   second   surgical   opinion
     services,   including,   without   limitation,   provision  for  telephonic
     interviewing of patients and


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<PAGE>

     their  attending   physicians  for  evaluation  of  proposed  surgical  and
     diagnostic procedures with respect to appropriateness of care;

          (e) large  medical case  management  (including,  without  limitation,
     management of medical cases involving  long-term or catastrophic  illnesses
     to  ensure  cost-effective  utilization  of  benefits),  as such  cases are
     identified using BCBSNJ-approved criteria attached hereto as Schedule 1.54,
     which  criteria  may be amended from time to time by BCBSNJ in its sole and
     absolute discretion;

          (f) focused and random retrospective review services for medical cases
     that were or should have been subject to  pre-certification  or  concurrent
     services  adequate to maintain  optimal function of the other Services with
     respect  to such  cases,  and  such  retrospective  review  services  shall
     include, without limitation,  retrospective medical record review, analysis
     and evaluation of medical appropriateness, hospital admission and length of
     stay  trends,  level  and  quality  of care and  changes  in  medical  care
     patterns;

          (g) account  education and relations  services relating to utilization
     review and utilization management, including, without limitation, provision
     of  communications  materials to support the BCBSNJ marketing  divisions in
     their dealings with BCBSNJ customers and the Serviced Population,  the cost
     of such  materials to be reasonably  agreed upon by the parties (other than
     utilization   reporting  materials  prepared  in  the  ordinary  course  of
     business, which shall be provided without charge by CHCM);

          (h)   fulfillment  of   communication   and  reporting   requirements,
     including,  without  limitation,  communication  to BCBSNJ of all decisions
     regarding medical appropriateness of pre-certification,  concurrent review,
     pre-procedure review and large medical case management;

          (i) fulfillment of customer service  requirements  and  responsibility
     for direct  communications with all BCBSNJ customers,  Serviced Population,
     patients and their  families and with all  physicians,  hospitals and other
     providers, in each case relating to Services;

          (j) establishment  and maintenance of required  mechanisms for appeals
     by members of the  Serviced  Population  and  provision  of  technical  and
     administrative support for BCBSNJ's appeals mechanisms;

          (k) assisting BCBSNJ in the development of the utilization  review and
     utilization  management  components of future BCBSNJ  products and lines of
     business; and


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<PAGE>

          (l) any other  services  similar or ancillary to any of the  foregoing
     Services mutually agreed upon by BCBSNJ and CHCM;

as all of the  foregoing  is more fully  described  on Schedule  1.54A  attached
hereto. To the extent of any  inconsistency  between the terms of Schedule 1.54A
hereto relating to the Services or the provision  thereof and the terms of other
provisions of this  Agreement,  such terms of Schedule 1.54A hereto shall govern
and apply.

     1.55.  "Specialty  Advisory  Process"  shall  mean  formation  of  regional
specialty advisory committees  ("Committees") for, on average,  two (2) clusters
of approximately five (5) network hospitals per cluster per six (6) month period
during the term of the Specialty Advisory Process involving medical  specialists
from those hospitals in selected,  high prevalence  clinical  specialties in the
development and implementation of length-of-stay parameters. Committees for each
cluster  will be formed in three (3) or more  specialties.  Two (2)  meetings of
each Committee in each hospital  cluster will be held.  After three (3) clusters
of hospitals have been involved,  in each  specialty,  guidelines of the several
Committees will be melded.  The Specialty Advisory Process will also include the
performance of matched  specialty  concurrent  reviews  focused on each hospital
cluster for which Committee  meetings are held during any BCBSNJ Fiscal Quarter.
A twenty  percent (20%) sample of  concurrent  reviews,  approximately,  will be
forwarded  to  consultants  on  retainer to CAI for review and  discussion  with
attending physicians.

     1.56. "Survey Person" is defined in Section 1.19 hereof.

     1.57. "Target Days" shall mean

          (a) with  respect  to the 1997  BCBSNJ  Fiscal  Year,  the  difference
     calculated  by  subtracting  thirty-five  (35) from the Actual Prior Year's
     Days;

          (b) with  respect  to the 1998  BCBSNJ  Fiscal  Year,  the  difference
     calculated  by  subtracting  twenty-five  (25) from the Actual Prior Year's
     Days;

          (c) with  respect  to the 1999  BCBSNJ  Fiscal  Year,  the  difference
     calculated by  subtracting  fifteen (15) from the Actual Prior Year's Days;
     and

          (d) with  respect  to the 2000  BCBSNJ  Fiscal  Year,  the  difference
     calculated by subtracting fifteen (15) from the Actual Prior Year's Days.

     1.58. "Term" is defined in Section 3 hereof.

     1.59. "Termination Payment" is defined in Section 10.1(b)(i) hereof.


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<PAGE>

     1.60.  "Union"  shall mean the Hotel  Employees  and  Restaurant  Employees
International Union Welfare Fund.

     1.61. "URAC" shall mean the Utilization Review Accreditation  Commission or
its successors.

     1.62.  "UR/UM  Materials"  shall mean any and all (a)  methods,  processes,
manuals,  trade  secrets  and  other  proprietary  information  used  by CHCM in
rendering  utilization review and utilization  management services (or any other
Services or any other  services  similar or  ancillary  to any of the  Services)
regardless  of  where  provided,  (b)  software  owned  or used by CHCM  and (c)
improvements, enhancements,  modifications, updates and corrections with respect
to any of the foregoing, as and when same are released.

     1.63.  "Without  Cause  Termination  Date" is defined  in  Section  10.1(a)
hereof.

2. Appointment of Exclusive Services Provider.

     As of the Effective  Date,  BCBSNJ hereby  appoints  CHCM,  and CHCM hereby
accepts  appointment as, the exclusive  provider of Services with respect to the
Serviced  Population  upon the terms and conditions set forth herein;  provided,
however, it is hereby acknowledged that, subject to Section 15.4 hereof, CAHS or
CAI or a subcontractor may from time to time render Services hereunder.

3. Term.

     The term of this  Agreement  (the "Term")  shall  commence on the Effective
Date and  continue  in effect  until June 30,  2000,  unless this  Agreement  is
earlier terminated  pursuant to Section 10 hereof. The parties agree to commence
good faith discussions to extend this Agreement not later than June 30, 1999. In
the event that the parties do not agree to extend this Agreement by December 31,
1999,  then CAI,  CAHS and CHCM shall take such actions  prior to the end of the
Term as may reasonably be requested by BCBSNJ to wind-up the relationship  among
the  parties as of the end of the Term.  Notwithstanding  any term or  condition
contained in this Agreement to the contrary,  none of the parties shall have any
obligations  under  this  Agreement,   including,   without  limitation,   those
obligations arising under Section 4 hereof, prior to the Effective Date.

4. Compensation.

     4.1. Compensation.  In consideration for the Services rendered hereunder to
BCBSNJ and the  performance  of the other  obligations  under  Section 5 hereof,
BCBSNJ shall compensate CHCM as follows:


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<PAGE>

          (a) Closing Payment.  On the Effective Date,  BCBSNJ shall pay to CHCM
     an amount equal to the difference of:

               (i) the product of (A) the Interim Payment  multiplied by (B) the
          number of full months between  January 1, 1996 and the Effective Date;
          minus

               (ii) the net amount  previously  paid by BCBSNJ to CAHS under the
          Interim Services Agreement with respect to any period commencing on or
          after January 1, 1996.

          (b) Monthly Service Fee.

               (i) For each Service  Month  during the 1996 BCBSNJ  Fiscal Year,
          including the Service  Month during which the  Effective  Date occurs,
          BCBSNJ shall pay to CHCM,  not later than fifteen (15) days  following
          the end of such Service Month, the Interim Payment.

               (ii) For each Service  Month  commencing  on or after  January 1,
          1997,  BCBSNJ  shall pay to CHCM,  not later  than  fifteen  (15) days
          following the end of each Service  Month,  with respect to each Market
          Segment  identified on Schedule 1.40  attached  hereto,  the price set
          forth thereon with respect to such Market  Segment for the  applicable
          BCBSNJ Fiscal Year,  multiplied by the corresponding number of Exposed
          Subscribers  in such  Market  Segment  during the  applicable  Service
          Month.

          (c) Other Monthly  Payments.  In addition to amounts otherwise payable
     to CHCM pursuant to this Section 4.1,  BCBSNJ shall pay to CHCM,  not later
     than fifteen (15) days following the end of each Service Month:

               (i) for each Service Month beginning on or after January 1, 1997,
          but only during the  pendency of the Local 54 Process as  described in
          Section 5.1(b) hereof, Five Thousand, Four Hundred Fifty-Eight Dollars
          ($5,458) per Service Month;  provided,  however,  that amounts payable
          pursuant to this  clause (i) shall be reduced to the  extent,  if any,
          that BCBSNJ is required to make any payments to the Union  pursuant to
          paragraph 2 of Section C of Schedule B to the Local 54 Contract; and

               (ii) for each  Service  Month  beginning on or after May 1, 1997,
          but only during the  pendency  of the  Specialty  Advisory  Process as
          described  in Section  5.1(c)  hereof,  Thirty-Three  Thousand,  Three
          Hundred Thirty-Three Dollars ($33,333) per Service Month.


                                       13
<PAGE>

          (d) Quarterly Bonus Payment. For each BCBSNJ Fiscal Quarter during the
     Term  beginning on or after January 1, 1997,  BCBSNJ shall pay to CHCM, not
     later than  seventy-five  (75) days following the end of such BCBSNJ Fiscal
     Quarter,  an amount equal to sixty percent (60%) of one-fourth (1/4) of the
     Annualized Bonus Amount for the corresponding BCBSNJ Fiscal Year, projected
     as of the end of such BCBSNJ Fiscal Quarter,  plus the amount  (positive or
     negative) calculated by subtracting (i) aggregate payments pursuant to this
     clause (d) with respect to prior BCBSNJ Fiscal  Quarters during such BCBSNJ
     Fiscal Year from (ii) the amount  calculated by  multiplying  sixty percent
     (60%) of one-fourth  (1/4) of the  Annualized  Bonus Amount for such BCBSNJ
     Fiscal Year,  projected as of the end of such BCBSNJ Fiscal Quarter, by the
     number of prior BCBSNJ  Fiscal  Quarters  during such BCBSNJ Fiscal Year. A
     sample quarterly payment calculation is attached for illustrative  purposes
     only as Exhibit 4.1(d) hereto.

          (e) Annual Bonus Adjustment.

               (i) For each BCBSNJ Fiscal Year during the Term,  beginning  with
          the 1997 BCBSNJ Fiscal Year,  BCBSNJ shall pay to CHCM, not later than
          (x)  November  15 of the  calendar  year next  succeeding  such BCBSNJ
          Fiscal  Year,  in the case of the 1997,  1998 and 1999  BCBSNJ  Fiscal
          Years,  or (y) May 15,  2001,  in the case of the 2000  BCBSNJ  Fiscal
          Year, an amount equal to the positive  difference,  if any, calculated
          by subtracting:

                    (A) the aggregate  amount  previously paid by BCBSNJ to CHCM
               with respect to such BCBSNJ Fiscal Year pursuant to clause (d) of
               this Section 4.1; from

                    (B) the Annualized Bonus Amount for such BCBSNJ Fiscal Year,
               calculated  as of the  end of the  third  BCBSNJ  Fiscal  Quarter
               immediately following the end of such BCBSNJ Fiscal Year.

               (ii) In the event  that the  difference  calculated  pursuant  to
          clause (i),  above,  is negative,  then CHCM shall pay to BCBSNJ,  not
          later than the  applicable  date  specified  in clause  (i), an amount
          equal to the additive inverse of such difference.

               (iii) In addition  to any amount  otherwise  payable  pursuant to
          this clause (e) with respect to the 1997 BCBSNJ  Fiscal  Year,  BCBSNJ
          shall pay to CHCM,  on or prior to November 15, 1998,  the amount,  if
          any, that would have been payable as a "Bonus  Payment" (as defined in
          the Original Agreement) with respect to the 1996 BCBSNJ Fiscal Year if
          each month in


                                       14
<PAGE>

          1996  had  been a  Service  Month  and  such  Bonus  Payment  had been
          calculated  in  accordance   with  Section   4.1(c)  of  the  Original
          Agreement.

     4.2.  Shortfall  Adjustment.  In the  event  that the  aggregate  number of
Modified Days during the 1997 BCBSNJ Fiscal Year is not equal to or greater than
Twenty Thousand (20,000),  then CHCM will pay to BCBSNJ, not later than February
15, 1998, the sum of Five Hundred Thousand Dollars ($500,000).

     4.3. Special Compensation Provisions Applicable to 1996. CAI, CAHS and CHCM
acknowledge   that   BCBSNJ  has  paid  CAHS  and  CHCM  Ten   Million   Dollars
($10,000,000),  in the aggregate,  under the Interim Services  Agreement and the
Original  Agreement with respect to the 1996 BCBSNJ Fiscal Year.  Simultaneously
with the  execution  and  delivery  of this  Agreement,  CHCM is  executing  and
delivering to BCBSNJ a promissory note,  guaranteed by CAI and CAHS,  secured to
the extent provided in, and otherwise in the form of, Exhibit 4.3 hereto, in the
principal amount of One Million, Eight Hundred Sixty-Two Thousand, Eight Hundred
Twenty-Three  Dollars  ($1,862,823),  such amount  representing  the  difference
calculated by subtracting from Ten Million Dollars ($10,000,000) the sum of:

          (a) with  respect  to the first  nine (9)  months  of the 1996  BCBSNJ
     Fiscal Year, Five Million, Six Hundred Eighty-Nine Thousand, Ninety Dollars
     ($5,689,090), such amount representing the aggregate amount that would have
     been  payable  as  "Monthly  Service  Fees"  (as  defined  in the  Original
     Agreement)  with  respect to the first  nine (9) months of the 1996  BCBSNJ
     Fiscal Year,  if each such month had been a Service  Month and such Monthly
     Service Fees had been  calculated in accordance  with Section  4.1(b)(y) of
     the Original Agreement; plus

          (b) with  respect  to the last  three (3)  months  of the 1996  BCBSNJ
     Fiscal Year, Two Million,  Fifteen  Thousand  Dollars  ($2,015,000)  in the
     aggregate; plus

          (c) with  respect  to the  November  1996 and  December  1996  Service
     Months,  Four  Hundred  Sixteen  Thousand,  Seven  Hundred  Twelve  Dollars
     ($416,712)  in the  aggregate  (the  "Assumed  1996  Bonus"),  such  amount
     representing the sum of:

               (i) One Hundred  Fifty-Four  Dollars ($154) for each Modified Day
          in excess of Five Hundred  Eighty-Three (583) Modified Days, up to One
          Thousand,  Eighty-Four  (1,084) excess Modified Days, during each such
          Service Month; plus

               (ii) One Hundred  Nine  Dollars  ($109) for each  Modified Day in
          excess of One Thousand,  Six Hundred Sixty-Seven (1,667) Modified Days
          during each such Service Month;


                                       15
<PAGE>

          assuming  Two  Thousand,  Seventy-Four  (2,074)  Modified  Days in the
          November 1996 Service Month and Two Thousand,  Twenty (2,020) Modified
          Days in the December 1996 Service Month;  provided,  however, that the
          actual  number of Modified Days in the November 1996 and December 1996
          Service  Months will be  determined as of the date that is thirty (30)
          days after the  Restatement  Date (the  "Adjustment  Date"),  based on
          information  then available  (such actual number of Modified Days, the
          "Adjusted Days"), and (x) if the difference  calculated by subtracting
          the  Assumed  1996  Bonus  from the amount  computed  pursuant  to the
          foregoing  formula using the Adjusted Days is greater than zero,  then
          BCBSNJ will immediately pay to CHCM the amount of such difference, and
          (y) if such difference is less than zero,  then CHCM will  immediately
          pay to  BCBSNJ  an  amount  equal  to the  additive  inverse  of  such
          difference; plus

          (d) with  respect to the Local 54  Process,  Sixteen  Thousand,  Three
     Hundred Seventy-Five Dollars ($16,375) in the aggregate.

     4.4. Compensation Dependent Upon Execution.  Notwithstanding the provisions
of Section 4.1  providing  for the payment by BCBSNJ of fees and bonuses in 1997
and  subsequent  years,  and  notwithstanding  the  provisions  of  Section  4.3
providing for the repayment of certain amounts by CHCM, the parties  acknowledge
that the  amounts due under such  sections  would not have been due had they not
executed this First Amendment and Restatement of the Services Agreement.

     4.5.  Revision of Compensation  Arrangements.  Anything herein contained to
the  contrary  notwithstanding,   the  parties  agree  to  commence  good  faith
discussions and use their  respective  best efforts,  as promptly as practicable
following  the  Restatement  Date and, in any event,  within one hundred  twenty
(120) days of the Restatement Date, to revise the compensation  arrangements set
forth in this Section 4 so that, as revised,  such arrangements fully compensate
CHCM for the cost of providing  the  Services  hereunder  (including  reasonable
overhead and profit) while creating  financial  incentives to reduce the overall
costs of healthcare  services (whether  facility-based or otherwise) provided to
the  Serviced  Population,  on a "per  member  per  month"  basis,  in a  manner
consistent with the parties' strategic and other business objectives.

     4.6. Manner of Payment.  All payments  hereunder between any of the parties
hereto shall be payable  when due  hereunder at the  receiving  party's  offices
identified  in Section 15.3 hereof,  as such offices may be changed from time to
time.

     4.7.  Survival.  The terms and conditions of this Section 4 shall expressly
survive any  termination  of this Agreement and shall continue in full force and
effect thereafter.


                                       16
<PAGE>

5. Service Responsibilities of CHCM.

     As of the Effective Date, CHCM hereby  covenants and agrees for the benefit
of BCBSNJ as follows:

     5.1. Performance of Services.

          (a) Compliance with Standards and Policies.  During the Term, CHCM, in
     accordance with its acceptance of its appointment as the exclusive provider
     of Services with respect to the Serviced Population under Section 2 hereof,
     shall:

               (i) perform the  Services  and its other  respective  obligations
          hereunder  in  accordance  with,  and  subject  to,  the terms  hereof
          (including,  without  limitation,  in accordance with, and subject to,
          the  Performance   Standards)  and  all  applicable  BCBSNJ  policies,
          protocols,  guidelines and  procedures  (as such policies,  protocols,
          guidelines  and procedures may be changed by BCBSNJ from time to time,
          in its sole and absolute  discretion,  the "BCBSNJ Policies"),  and in
          all respects to the reasonable satisfaction of BCBSNJ; and

               (ii) without  limiting the generality of the foregoing,  promptly
          make any and all reasonable changes in its performance of the Services
          and its other obligations  hereunder as may be reasonably requested by
          BCBSNJ from time to time.

          (b) Change of BCBSNJ Policies -- General. BCBSNJ agrees to pay to CHCM
     CHCM's Costs attributable to any changes in the BCBSNJ Policies (other than
     those changes made at the request or  recommendation of either CAI, CAHS or
     CHCM which are not likely, in BCBSNJ's reasonable judgment,  to enhance the
     benefits to BCBSNJ and its customers  expected to be generated by operation
     of this  Agreement)  made  subsequent to the Effective Date and established
     pursuant to this  Section  5.1,  including,  without  limitation,  any such
     changes made pursuant to clause (c) of this Section 5.1.

          (c)  Formalization  and Change of BCBSNJ Policies --  Post-Restatement
     Date.  Each of the parties  acknowledges  that some BCBSNJ Policies will be
     formalized   and  other  BCBSNJ   Policies   will  be  changed,   effective
     approximately  one hundred twenty (120) days after the Restatement Date, to
     include  appropriate  procedural  guidelines with respect to the timely and
     accurate  collection,  processing and dissemination of relevant information
     between and among CHCM, BCBSNJ,  Persons providing  healthcare  services to
     the Serviced Population and others in connection with CHCM's performance of
     the Services hereunder, and:


                                       17
<PAGE>

               (i) to establish appropriate,  related reporting requirements and
          audit rights; and

               (ii)  to  provide  for  the  development  and  implementation  of
          corrective action plans following demonstrated non-compliance with any
          such guidelines and to establish reasonable financial disincentives to
          any  violation by CHCM of any such  guidelines,  in each case,  to the
          extent  that   compliance   with  such  guidelines  is  within  CHCM's
          reasonable control;

     provided,  however, that any such guidelines shall be subject to reasonable
     agreement  between the Senior Vice President - Health Industry  Services of
     BCBSNJ,  on  behalf  of  BCBSNJ,  and  CHCM  regarding  the  timeframe  for
     implementation  thereof and the  magnitude  of, and criteria for  invoking,
     related financial disincentives to any violation thereof.

          (d) Local 54 Process. Beginning on October 1, 1996, and throughout the
     Term or until such time as BCBSNJ  advises  CHCM,  on not less than  thirty
     (30) days' prior written notice, that such services are no longer required,
     CHCM shall  provide the  services  incident  to the Local 54 Process.  Upon
     termination of such services,  no additional amounts will become payable to
     CHCM under Section 4.1(c)(i) hereof.

          (e)  Specialty  Advisory  Process.  Beginning  on November 1, 1996 and
     throughout  the Term,  CHCM shall  provide  the  services  incident  to the
     Specialty  Advisory  Process,  including,  without  limitation,   providing
     reasonably detailed quarterly reports to BCBSNJ regarding expenses incurred
     and  expenditures  made by CHCM in  connection  with the  provision of such
     services;  provided,  however, that CHCM shall discontinue its provision of
     such  services (i) in the event that BCBSNJ  advises CHCM, on not less than
     six (6) months'  prior  written  notice or about April 30, 1998,  that such
     services  are no longer  required and (ii) in any event,  unless  otherwise
     agreed by BCBSNJ and CHCM,  on April 30,  1999.  Upon  termination  of such
     services,  no additional  amounts will become payable to CHCM under Section
     4.1(c)(ii) hereof.

     5.2. Management/Operational  Responsibilities.  During the Term, CHCM shall
provide the management oversight and supervision of its own operations necessary
to ensure the  performance of the Services in accordance  with the terms hereof.
Without limiting the generality of the foregoing, CHCM shall:

          (a)  during  the Term,  select and  appoint  and  employ and  maintain
     (including the  Designated  Employees  pursuant to Section 5.5 hereof),  in
     accordance with the


                                       18
<PAGE>

     terms of  Schedule  1.47  hereto  and all  applicable  BCBSNJ  Policies,  a
     sufficient number of:

               (i) professional review and case management personnel (including,
          without limitation,  physician  advisors,  registered nurses and other
          appropriate  medical  professions)  who shall  review and manage large
          medical   cases   and   provide    appropriate    authorizations   and
          certifications  in accordance  with, and subject to, the terms hereof,
          all applicable Law and BCBSNJ Policies; and

               (ii) other  review and support  staff  involved in, and as may be
          required for, the provision of Services  hereunder in accordance  with
          the terms hereof,  which staff shall  include,  but not be limited to,
          (A) legal support, (B) quality assurance personnel and (C) information
          systems, communications, and systems and procedures professionals.

     All such  personnel and staff  described in this Section 5.2 shall have the
     appropriate  qualifications  and meet the applicable  criteria set forth in
     Schedule 5.2(a) attached hereto (including, without limitation, appropriate
     credentialing  criteria)  or  such  other  criteria  as may  be  reasonably
     established by BCBSNJ from time to time;

          (b) during the Term,  ensure that the personnel and staff described in
     Section 5.2(a) hereof shall receive  adequate  initial and ongoing training
     and education in accordance with all applicable  BCBSNJ Policies (i) in the
     systems,  procedures and protocols required in connection with the delivery
     of Services,  (ii) in the subject areas  underlying  the Services and (iii)
     all other matters required for their performance of the Services  hereunder
     in accordance with the terms hereof;

          (c) obtain  within  twelve (12) months from the  Effective  Date,  and
     maintain during the Term, full accreditation and certification by URAC;

          (d)  during the Term,  obtain and  maintain  any  regulatory  or other
     Licenses  that may be  required to conduct the  business of  providing  the
     Services; and

          (e) during the Term,  operate and maintain adequate primary and backup
     computer and  telecommunications  systems and  facilities  as determined by
     BCBSNJ.

     5.3. Performance Standards and Quality Assurance.

          (a) Performance Standards.  During the Term, CHCM shall adhere to, and
     shall provide the Services hereunder in accordance with and subject to, the
     Performance Standards.


                                       19
<PAGE>

          (b) Quality Assurance.

               (i)  CHCM  shall  be  responsible  for  the  application  of  all
          Performance  Standards  during the Term and shall ensure that all such
          Performance Standards are followed during the course of the day-to-day
          performance of the Services hereunder.

               (ii) During the Term,  CHCM shall,  at the  direction  of BCBSNJ,
          conduct or assist  BCBSNJ in the conduct of, on a quarterly  basis,  a
          number of quality assurance  programs with respect to the provision of
          Services  hereunder,   including,   without  limitation,   reviews  of
          employees (including, without limitation, physicians and other medical
          professionals)  and the  measurement  of whether  CHCM is meeting  the
          Performance  Standards.  In the event such  programs are  conducted by
          CHCM, it shall promptly  report the results of such programs to BCBSNJ
          in writing in a form  reasonably  satisfactory  to BCBSNJ.  BCBSNJ may
          audit the report presented by CHCM (and the books, records and data on
          the basis of which the report is prepared,  as applicable) through the
          use of an independent  third-party  reasonably acceptable and mutually
          agreed by BCBSNJ and CHCM.  The  results of such audit  shall be final
          and conclusive.  The cost of any such audit shall be shared jointly by
          the parties.

               (iii) In the event, as a result of an employee  review  described
          in  Section  5.3(b)(ii)  hereof,  BCBSNJ,  in its  sole  and  absolute
          discretion,  informs CHCM that such employee should be reassigned from
          the  rendering of any Services to be performed  under this  Agreement,
          CHCM hereby  agrees that such employee  shall be  reassigned  from the
          rendering of such Services.

               (iv) CHCM hereby  acknowledges  that  certain of the  Performance
          Standards shall be measured by means of Customer Surveys.

               (v) CHCM shall be responsible for all costs and expenses incurred
          in  connection  with  the  conduct  of any  and all  Customer  Surveys
          (including, without limitation, the fees of all Survey Persons).

     5.4.  Confidentiality of Patient Information.  During the Term, subject to,
and in accordance with, all applicable BCBSNJ Policies, CHCM shall:

          (a) adopt and implement security and  confidentiality  procedures that
     comply with all applicable Law and BCBSNJ  Policies  regarding  (including,
     without limitation, procedures with respect to access to and possession of)
     any and all Patient Information; and


                                       20
<PAGE>

          (b) subject to subclause (a) above,  preserve the  confidentiality  of
     Patient  Information and use such Patient  Information only for the limited
     purpose  necessary  to perform the  Services in  accordance  with the terms
     hereof.

     5.5.  Designated  Employees.  CHCM hereby  acknowledges  that,  in order to
ensure the quality of the Services to be provided  hereunder,  those persons set
forth on Schedule 5.5 attached hereto are full-time  employees of CHCM (all such
persons referred to as "Designated Employees").  CHCM hereby agrees that, during
the Term,  if any of the  Designated  Employees is  terminated,  with or without
cause, or otherwise leaves the employment of CHCM,  BCBSNJ (through a designated
representative) shall have the right to review and approve or disapprove, in its
reasonable discretion,  any and all candidates proposed by CHCM to be successors
(immediate  and  otherwise)  to such  Designated  Employees in  accordance  with
Section 6.1(a) hereof.

     5.6. Information Systems. CHCM shall establish, provide and maintain during
the  Term,  in  a  manner  satisfactory  to  BCBSNJ  in  all  material  respects
(including, without limitation, with respect to security matters), all necessary
secured telecommunication and MIS interfaces between its information systems and
the  information  systems of BCBSNJ  required  for the  provision by CHCM of the
Services  hereunder  in  accordance  with the terms hereof  (including,  without
limitation, the utilization review and care management systems). CHCM shall bear
the cost of all such connectivity and interface between its information  systems
and the  information  systems  of BCBSNJ  (including,  without  limitation,  the
establishment of common linkage records).  Notwithstanding any provision of this
Section to the  contrary,  BCBSNJ shall pay to CHCM's Costs for any such changes
BCBSNJ may require.

     5.7. Reports; Retention of Records. CHCM shall create, maintain and retain,
using  reporting  systems and procedures  that are in accordance with the BCBSNJ
Policies or otherwise acceptable to BCBSNJ, records of the activities of CHCM in
connection  with the performance of Services  hereunder;  and CAI and CAHS shall
assume and be solely  responsible  for all costs incurred in connection with the
creation,   installation  and  implementation  of  such  reporting  systems  and
procedures.  In connection with the creation,  maintenance and retention of such
records,  CHCM shall provide to BCBSNJ each of the reports described on Schedule
5.7 attached hereto at the applicable interval set forth thereon.

6. Responsibilities of BCBSNJ.

     As of the  Effective  Date,  BCBSNJ  hereby  covenants  and  agrees for the
benefit of CAI, CHCM and CAHS as follows:


                                       21
<PAGE>

     6.1. General Responsibilities. During the Term, BCBSNJ shall:

          (a)  through  a  designated  representative,  review  and  approve  or
     disapprove,  in its reasonable discretion,  any and all candidates proposed
     by CHCM in accordance with Section 5.5 hereof, to be successors  (immediate
     or otherwise) to the Designated Employees; and

          (b) from time to time upon the reasonable  request of CHCM,  cause its
     employees or agents to cooperate with CHCM in connection with the provision
     of Services hereunder;  provided,  however, in no event shall BCBSNJ or any
     of its employees or agents assume or satisfy any of the obligations of CHCM
     hereunder or otherwise.

     6.2. Access to Information.  Subject to the satisfaction of the obligations
of CHCM  under  Section  5.6  hereof to  establish,  provide  and  maintain  all
necessary  telecommunication and MIS interfaces,  BCBSNJ shall provide CHCM with
direct, on-line access to the information systems of BCBSNJ (including,  without
limitation,  the utilization review and care management systems) as such systems
relate to the Serviced  Population  and are  required  for the  provision of the
Services hereunder in accordance with the terms hereof.

     6.3.  Provider  Agreement.  In the event that BCBSNJ  proposes to amend any
provision in its provider contracts with inpatient hospitals in a manner that is
reasonably likely to have a material adverse affect on CHCM's ability to provide
Services  hereunder or on the  financial  benefits  otherwise  available to CHCM
hereunder (including,  but not limited to, the amendment of provisions requiring
that providers  notify CHCM on behalf of BCBSNJ of an admission,  or prohibiting
providers  from balance  billing  patients for days not certified  after medical
appropriateness  review and appeal), then (i) BCBSNJ shall provide prior written
notice  of such  proposed  amendment  to CHCM and (ii) this  Agreement  shall be
revised  as  reasonably  necessary,  prior  to the  effective  date of any  such
amendment, to eliminate or fully mitigate such material adverse affect.

     6.4 Computations and  Determinations.  Computations and determinations made
by BCBSNJ pursuant to this Agreement (including,  but not limited to allocations
and  reserve  factors)  will be arrived at by a method that is  consistent  with
generally  accepted  actuarial  principles  and/or  GAAP,  and the methods  used
generally by BCBSNJ in making such  determinations  and  computations  for other
BCBSNJ business.

     6.5 Inspection of Books and Records. CHCM shall have the right, through its
authorized agents, at any reasonable time and at its own expense, to inspect the
books,  records  and  Contracts  of  BCBSNJ  to the  extent  that  they  contain
information bearing on CHCM's compensation under this Agreement, and to make and
retain copies thereof and extracts therefrom, subject to the other provisions of
this Agreement.


                                       22
<PAGE>

7. Representations and Warranties of CAHS and CAI.

     Each of CAHS and CAI, jointly and severally, hereby represents and warrants
to BCBSNJ, as of the Effective Date, as follows:

     7.1. Organization.

          (a) CAHS (i) is a corporation duly organized,  validly existing and in
     good  standing  under  the  Laws of the  State  of  Delaware  and  (ii) has
     delivered  to  BCBSNJ  true  and  complete  copies  of its  certificate  of
     incorporation, as amended, certified by the Secretary of State of Delaware,
     and its by-laws, as amended, certified by its secretary.

          (b) CAI (i) is a corporation  duly organized,  validly existing and in
     good  standing  under  the  Laws of the  State  of  Delaware  and  (ii) has
     delivered  to  BCBSNJ  true  and  complete  copies  of its  certificate  of
     incorporation, as amended, certified by the Secretary of State of Delaware,
     and its by-laws, as amended, certified by its secretary.

     7.2. Power and Authority.

          (a) It has full  power  (corporate  or  otherwise)  and  authority  to
     execute,  deliver and perform this  Agreement in accordance  with its terms
     and to carry on its business as it is now being conducted.

          (b) All action  (corporate or otherwise) on its part necessary for the
     authorization,  execution,  delivery and  performance of this Agreement and
     the consummation of the transactions contemplated hereby has been taken and
     no further action or authorization  (corporate or otherwise) on its part is
     required to consummate  the  transactions  provided for in this  Agreement.
     This  Agreement  constitutes  its  valid  and  legally  binding  obligation
     enforceable  in  accordance  with its  terms,  except as may be  limited by
     bankruptcy, moratorium,  reorganization,  insolvency and other similar Laws
     of general  application  relating to or affecting  the rights of creditors,
     and by general principles of equity. The execution, delivery or performance
     of this Agreement by it shall not: (i) violate, conflict with, or result in
     a breach of, any provisions of its  organizational or governing  documents,
     (ii) conflict with,  constitute a default or result in a breach of, or give
     rise to a right  of or  result  in a  termination  of,  or  accelerate  the
     performance  required by the terms of, any mortgage,  deed of trust,  lien,
     lease,  restriction  or other Contract to which it or any of its assets are
     bound or by which it or any of its assets are  affected,  (iii)  violate or
     conflict  with the terms of any  order,  judgment,  writ,  or decree of any
     Governmental Authority or (iv) result


                                       23
<PAGE>

     in the creation or imposition of a lien or give any other Person any right,
     title or interest in its assets or business.

          (c) The execution and delivery of this Agreement and the  consummation
     of the  transactions  contemplated  by this Agreement shall not require the
     consent,  approval or authorization  of any  Governmental  Authority or any
     other Person under any License, agreement, indenture or other instrument or
     Contract to which it is a party or to which any of its property is subject,
     and no declaration,  filing or registration with any Governmental Authority
     is required by it in connection with such transactions.

     7.3. Power and Authority of CHCM.

          (a) All action  (corporate or otherwise) on the part of CHCM necessary
     for  the  authorization,   execution,  delivery  and  performance  of  this
     Agreement and the consummation of the transactions  contemplated hereby has
     been taken and no further action or authorization  (corporate or otherwise)
     on the part of CHCM is required to consummate the transactions provided for
     in this  Agreement.  This  Agreement  constitutes  CHCM's valid and legally
     binding obligation  enforceable  against CHCM in accordance with its terms,
     except  as  may  be  limited  by  bankruptcy,  moratorium,  reorganization,
     insolvency  and other  similar Laws of general  application  relating to or
     affecting the rights of creditors, and by general principles of equity.

          (b) The  execution  and  delivery  of this  Agreement  by CHCM and the
     consummation of the  transactions  contemplated by this Agreement shall not
     require  the  consent,   approval  or  authorization  of  any  Governmental
     Authority or any other Person to which any of its property is subject,  and
     no declaration,  filing or registration with any Governmental  Authority is
     required by it in connection with such transactions.

     7.4.  Litigation.  Except as set forth on Schedule  7.4,  there is no suit,
action, claim,  proceeding,  governmental  investigation or governmental inquiry
pending  or  threatened  against,  or  affecting,  it  or,  to the  best  of its
knowledge, any of its directors, partners or officers, or relating to its assets
or business that, if adversely determined,  could have a material adverse effect
upon any or all of CAHS or CAI, their respective  assets,  this Agreement or the
transactions  contemplated  hereby,  and  there is no legal,  administrative  or
arbitration proceeding pending, threatened against, or relating to it or, to the
best of its knowledge,  any of its directors,  partners or officers, or to which
it or any of its  directors,  partners or officers,  might become party that, if
adversely  determined,  could have a material  adverse effect upon any or all of
CAHS or  CAI,  their  respective  assets,  this  Agreement  or the  transactions
contemplated hereby; and there is no judgment, order or decree affecting it, or,
to the best of its knowledge, any of its directors, partners or officers, or its
assets that


                                       24
<PAGE>

remains  unsatisfied or that continues in effect beyond the date hereof.  Except
as set forth on Schedule  7.4, it has no  knowledge of any facts that might form
the basis for any such suit, action, claim, proceeding, investigation or inquiry
in which the  opposing  party  could be  expected  to  prevail,  and there is no
outstanding  order,  writ,  injunction or decree of any  Governmental  Authority
against or affecting it or, to the best of its knowledge,  any of its directors,
partners  or  officers,  its  business,   this  Agreement  or  the  transactions
contemplated hereby.

     7.5. Licenses. It owns, holds or otherwise possesses, or lawfully uses, all
Licenses that are in any manner  necessary for it to consummate the transactions
contemplated hereby and to perform its obligations as well as the obligations of
CHCM hereunder,  including,  without limitation,  the provision of Services upon
the terms and  conditions  set forth in this  Agreement.  Schedule  7.5 attached
hereto  contains a true and complete  list of such  Licenses.  No  proceeding is
pending or, to its knowledge, threatened or seeking the revocation or limitation
of any  License and it has no  knowledge  of any facts that might form the basis
for such a proceeding  in which the opposing  party could be expected to prevail
or any reason why any License may  terminate  because of, or may not be included
as part of, the  transactions  contemplated  hereby or why they may not be valid
indefinitely or renewable in accordance with applicable Law.

     7.6.  Compliance  with Laws,  etc. Its business  and  operations  have been
conducted,  and are in compliance in all material  respects with all  applicable
Law, including,  without limitation,  those pertaining to antitrust, pricing and
trade  practices,  equal  opportunity,  employment,  discrimination,  securities
issuance  and  regulation,  and  occupational  health and  safety;  and,  to its
knowledge, there are no pending notices, allegations or threatened claims of its
violation of any such Laws.

     7.7. Disclosure.

          (a) The information  furnished by it or on its behalf to BCBSNJ or its
     representatives  in connection  with this  Agreement  and the  transactions
     contemplated  hereby  does not  contain  and shall not  contain  any untrue
     statement  of  material  fact and does not omit and shall not omit to state
     any material  fact  required to be stated  therein or necessary to make the
     statements made, in light of the circumstances  under which they were made,
     not misleading.

          (b)  None  of its  representations  or  warranties  contained  in this
     Agreement,  in  any  schedule  or  exhibit  hereto  or  in  any  agreement,
     instrument or certificate  furnished to BCBSNJ  pursuant to this Agreement,
     contains or shall contain any untrue  statement of a material fact or omits
     or shall omit to state any material fact  required to be stated  therein or
     necessary  to make  the  statements  herein  or  therein,  in  light of the
     circumstances under which they were made, not misleading.


                                       25
<PAGE>

     7.8. UR/UM Materials. CHCM is, and shall remain for the Term, a licensee or
sublicensee,  as  applicable,  of the UR/UM  Materials;  and CHCM has, and shall
obtain  and  maintain  for  the  Term,  title  to or the  right  to  license  or
sublicense, as applicable, the UR/UM Materials.

     7.9.  Survival of  Representations  and  Warranties.  The  representations,
warranties  and  covenants  of each of CAHS and CAI  contained in this Section 7
shall expressly survive the date hereof.

8. Representations and Warranties of BCBSNJ.

     BCBSNJ  hereby  represents  and warrants to each of CAHS and CAI, as of the
Effective Date, as follows:

     8.1.  Organization.  BCBSNJ  (i)  is  a  health  service  corporation  duly
organized,  validly existing and in good standing under the Laws of the State of
New Jersey and (ii) has  delivered to CAI and CAHS true and  complete  copies of
its  certificate  of  incorporation,  as amended,  certified by the Secretary of
State of New Jersey, and its by-laws, as amended, certified by its secretary.

     8.2. Power and Authority of BCBSNJ.

          (a) BCBSNJ has full power  (corporate or  otherwise)  and authority to
     execute,  deliver and perform this  Agreement in accordance  with its terms
     and to carry on its business as it is now being conducted.

          (b)  All  action  (corporate  or  otherwise)  on the  part  of  BCBSNJ
     necessary for the  authorization,  execution,  delivery and  performance of
     this Agreement and the consummation of the transactions contemplated hereby
     has been  taken  and no  further  action  or  authorization  (corporate  or
     otherwise) on its part is required to consummate the transactions  provided
     for in this  Agreement.  This Agreement  constitutes  its valid and legally
     binding obligation  enforceable in accordance with its terms, except as may
     be limited by bankruptcy, moratorium, reorganization,  insolvency and other
     similar Laws of general application  relating to or affecting the rights of
     creditors, and by general principles of equity. The execution,  delivery or
     performance  of this  Agreement by BCBSNJ shall not: (i) violate,  conflict
     with,  or result in a breach of, any  provisions of its  organizational  or
     governing documents,  (ii) conflict with, constitute a default or result in
     a breach of, or give rise to a right of or result in a  termination  of, or
     accelerate the performance required by the terms of, any mortgage,  deed of
     trust, lien, lease, restriction or other Contract to which it or any of its
     assets are bound or by which it or any of its assets  are  affected,  (iii)
     violate or conflict with the terms of any order, judgment,  writ, or decree
     of any Governmental Authority or


                                       26
<PAGE>

     (iv)  result  in the  creation  or  imposition  of a lien or give any other
     Person any right, title or interest in its assets or business.

          (c) The execution and delivery of this Agreement and the  consummation
     of the  transactions  contemplated  by this Agreement shall not require the
     consent,  approval or authorization  of any  Governmental  Authority or any
     other Person under any License, agreement, indenture or other instrument or
     Contract  to which  BCBSNJ  is a party or to which any of its  property  is
     subject,  and no declaration,  filing or registration with any Governmental
     Authority is required by it in connection with such transactions.

     8.3. Disclosure.

          (a) The information furnished by it or on its behalf to CAHS or CAI or
     their respective  representatives in connection with this Agreement and the
     transactions contemplated hereby does not contain and shall not contain any
     untrue  statement of material  fact and does not omit and shall not omit to
     state any material fact required to be stated  therein or necessary to make
     the statements  made, in light of the  circumstances  under which they were
     made, not misleading.

          (b)  None  of its  representations  or  warranties  contained  in this
     Agreement,  in  any  schedule  or  exhibit  hereto  or  in  any  agreement,
     instrument  or  certificate  furnished  to  CAHS  or CAI  pursuant  to this
     Agreement,  contains or shall  contain any untrue  statement  of a material
     fact or omits or shall  omit to state  any  material  fact  required  to be
     stated  therein or necessary to make the statements  herein or therein,  in
     light of the circumstances under which they were made, not misleading.

     8.4. Survival of Representations  and Warranties.  The  representations and
warranties  of BCBSNJ  contained in this Section 8 shall  expressly  survive the
date hereof.

9. Guaranty.

     9.1. Enforcement of Guaranteed  Obligations.  Each of CAHS and CAI, jointly
and severally,  hereby (a) irrevocably and unconditionally  guarantees to BCBSNJ
the timely and  satisfactory  performance  of the  obligations of CHCM hereunder
(including,  without  limitation,  the  indemnity  obligations  under Section 14
hereof,  the "Guaranteed  Obligations") and (b) acknowledges and agrees that (i)
such guaranty of performance  is the primary  obligation of each of CAHS and CAI
and (ii) BCBSNJ may  enforce  such  guaranty  against any or all of CAHS and CAI
without any prior attempted  enforcement of the Guaranteed  Obligations  against
CHCM.


                                       27
<PAGE>

     9.2. No Impairment or Discharge.  Each of CAHS and CAI hereby  acknowledges
and  agrees  that its  liability  to BCBSNJ  under  this  Section 9 shall not be
impaired or discharged by reason of (a) any time or other indulgence  granted by
BCBSNJ to CHCM or any guarantor  thereof,  (b) any arrangement,  reorganization,
insolvency  or  bankruptcy  Law modifying the rights and remedies of BCBSNJ with
regard to the Guaranteed Obligations,  this Agreement or any of the transactions
contemplated  hereby, (c) enforcement or failure of enforcement by BCBSNJ of its
rights hereunder with respect to the Guaranteed Obligations or (d) any change in
the terms of this Agreement (by formal  amendment of this Agreement  pursuant to
Section 15.6 hereof or otherwise).  Neither  partial  enforcement  against,  nor
partial satisfaction by, CHCM of the Guaranteed Obligations shall waive or limit
in any manner  whatsoever  the  guaranty  obligations  of CAHS or CAI under this
Section 9.  Enforcement  of the guaranty under this Section 9 is in addition to,
and not in lieu of, any other rights and remedies available to BCBSNJ under this
Agreement or at law or in equity (or otherwise).

     9.3. Waiver.  Each of CAHS and CAI hereby waives all defenses or conditions
precedent to enforcement of its guaranty under this Section 9.

     9.4.  Survival.  The terms and conditions of this Section 9 shall expressly
survive any  termination  of this Agreement and shall continue in full force and
effect thereafter.

10. Termination of Agreement.

     10.1.  Termination  without Cause. BCBSNJ shall have the right, in its sole
and absolute discretion, to terminate this Agreement without cause at any time:

          (a) upon ninety (90) days' prior written notice to CHCM,  CAHS and CAI
     (such date ninety  (90) days from  delivery of such  notice,  the  "Without
     Cause Termination Date"); and

          (b) in the event that the Without Cause  Termination Date occurs prior
     to June 30, 2000, BCBSNJ shall pay to CHCM liquidated damages promptly upon
     the  calculation  of such in  accordance  with this Section 10.1 (but in no
     event  prior to the  Without  Cause  Termination  Date) in an  amount  (the
     "Termination Payment") equal to the sum of:

               (i) that amount equal to forty  percent  (40%) of the fair market
          value of CAI as of the Without Cause  Termination  Date,  after giving
          effect to the  termination  of this  Agreement  and any payments to be
          made pursuant to this Section 10.1(b)(i); plus


                                       28
<PAGE>

               (ii) the present value as of the Without Cause  Termination  Date
          of the future  valuation of this  Agreement  over the remainder of the
          Term of this  Agreement  from (and not  including)  the Without  Cause
          Termination Date; plus

               (iii) the present value as of the Without Cause  Termination Date
          of the  future  valuation  of any  third-party  contract  that CAI can
          establish,  as fully and finally  determined  by a court of  competent
          jurisdiction (and following the expiration of any appeals  therefrom),
          was lost  solely as a direct  result of BCBSNJ's  termination  of this
          Agreement under this Section 10.1.

          (c) Each of BCBSNJ and CAI hereby agrees that the fair market value of
     CAI after giving effect to the termination of this  Agreement,  the present
     value of this Agreement and the present value of any third-party contracts,
     each with respect to calculating the Termination Payment in accordance with
     subclause  (b)(i) above shall be  determined  by an  independent  valuation
     expert  mutually  acceptable  to  BCBSNJ  and  CAI and  using  a  valuation
     methodology  acceptable  to BCBSNJ and CAI,  which  determination  shall be
     final and  binding  upon the  parties  hereto and the cost of which  expert
     shall be borne equally by BCBSNJ and CAI. In the event that sixty (60) days
     prior to the Without Cause  Termination Date BCBSNJ and CAI cannot mutually
     agree upon a valuation  expert,  each such party shall promptly  select and
     retain at their own expense a  valuation  expert and notify the other party
     of the identity of the expert so selected and the two (2) selected  experts
     shall  appoint  a  third,  the cost of which  third  expert  shall be borne
     equally by BCBSNJ and CAI.  The mean of the  valuation of each of the three
     (3) experts for each of the fair market value of CAI after giving effect to
     the termination of this Agreement,  the present value of this Agreement and
     the present value of the  third-party  contracts shall be final and binding
     upon the parties  hereto and shall be the  valuation  used for  purposes of
     calculating the Termination Payment in accordance with clause (b) above.

     10.2. Termination for Cause.

          (a) BCBSNJ.  BCBSNJ may, at any time,  in its  reasonable  discretion,
     terminate  this  Agreement  upon  the  expiration  of any  applicable  cure
     periods,  effective by delivering written notice to CHCM, CAHS and CAI upon
     the  occurrence or existence of any one or more of the following  events or
     conditions  (each  and any such  event or  condition  that  precipitates  a
     termination of this Agreement in accordance  with the terms of this Section
     10.2(a), a "For Cause Event of Termination"):

               (i)  Representations   and  Warranties.   Any  representation  or
          warranty made by CAHS or CAI hereunder  shall prove to have been false
          or


                                       29
<PAGE>

          misleading in any material  respect as of the time made  (including by
          omission of material information necessary to make such representation
          or warranty not misleading).

               (ii) Covenant Performance.  CHCM shall commit any breach, failure
          or violation of any material covenant, agreement,  undertaking or duty
          hereunder,  where such  breach,  failure or  violation  continues  for
          thirty (30) days after  receipt by CHCM of written  notice  specifying
          such  breach,  failure  or  violation  in  reasonable  detail,  or,  a
          repetition of such breach,  failure or violation (or the occurrence of
          a  substantially  similar  breach,  failure  or  violation)  that  had
          previously  been  cured.   Without  limiting  the  generality  of  the
          foregoing,  the parties hereto hereby  acknowledge  and agree that for
          purposes of this Section  10.2(a)(ii) either of the following shall be
          deemed a breach of a  material  covenant  of this  Agreement:  (A) any
          failure to provide  and/or  perform the  Services in  accordance  with
          and/or  subject to the  Performance  Standards  or any other  material
          deviation  from  the  Performance  Standards  in  connection  with the
          performance of the Services hereunder or (B) Customer Dissatisfaction.

               (iii) Bankruptcy.  CAI shall dissolve or be liquidated,  or CAHS,
          CAI,  or  CHCM  shall  (A)  make an  assignment  for  the  benefit  of
          creditors,  (B)  petition or apply to any  tribunal  for, or otherwise
          seek,  consent to, or acquiesce  in, the  appointment  of a custodian,
          receiver or trustee for it or a  substantial  part of its assets,  (C)
          commence,  consent  to, or  acquiesce  in,  any  proceeding  under any
          bankruptcy,  reorganization,  arrangement,  dissolution or liquidation
          Law of any  jurisdiction,  whether now or hereafter in effect,  or (D)
          have  had  any  such  petition  or  application  filed,  or  any  such
          proceeding  shall  have  been  commenced,  against  it,  in  which  an
          adjudication or appointment is made or order for relief is entered and
          which remains undismissed or unstayed for a period of thirty (30) days
          or  more.  Moreover,  (i) any of CAHS,  CAI and  CHCM  (x) has  become
          insolvent,  or (y) is generally not paying,  or is unable to, or shall
          admit in writing its  inability to, pay its debts as such debts become
          due, (ii) such party has received a written demand from BCBSNJ seeking
          further  assurance  that  such  party  will  be able  to  perform  its
          obligations  under this Agreement without  impairment,  and (iii) such
          party has not  responded to BCBSNJ within five (5) days of such demand
          with adequate evidence,  as determined in BCBSNJ's sole and reasonable
          discretion, of such further assurance.

               (iv)  Moral  Turpitude.  CHCM,  CAI or  CAHS,  or  any  of  their
          respective  officers,  directors  or  partners,  or any holder of five
          percent (5%) or more of any class of Equity Securities of either CHCM,
          CAHS or CAI,


                                       30
<PAGE>

          shall  commit  an act of Moral  Turpitude  that  materially  adversely
          affects, or that could reasonably be expected to materially  adversely
          affect, BCBSNJ, its business or reputation.

               (v) Transactional  Documents.  CHCM, CAHS or CAI shall commit any
          material  breach,  failure or  violation,  subject to the lapse of any
          applicable  cure  period  without  cure  thereof,  of  any  condition,
          undertaking, representation, warranty or covenant made for the benefit
          of BCBSNJ  and/or  Enterprise  Holding  Company,  Inc. in (A) the note
          referred to in Section 4.3 of this  Agreement,  following  thirty (30)
          days' prior  written  notice from BCBSNJ,  provided  that such breach,
          failure or  violation  has not been cured prior to the  expiration  of
          such 30-day notice period, or (B) any of the  Transactional  Documents
          (as such term is defined in the Acquisition Agreement).

               (vi) Brennan  Acquisition.  Any of Robert E. Brennan  ("Brennan")
          and/or any nominee of Brennan and/or any Person  controlled by Brennan
          acquires,  holds,  controls  or is  issued,  directly  or  indirectly,
          separately  or  jointly,  five  percent  (5%) or more of any  class of
          Equity Securities of either CHCM, CAHS or CAI.

          (b) CHCM.  CHCM may, at any time, in its  discretion,  terminate  this
     Agreement effective immediately by delivering written notice to BCBSNJ upon
     the  occurrence or existence of any one or more of the following  events or
     conditions  (whatever  the  reason for such  event and  whether  voluntary,
     involuntary, or effected by operation of law):

               (i)  Representations   and  Warranties.   Any  representation  or
          warranty  made by BCBSNJ  hereunder  shall prove to have been false or
          misleading in any material  respect as of the time made  (including by
          omission of material information necessary to make such representation
          or warranty not misleading).

               (ii)  Payment  of  Compensation.  BCBSNJ  shall  fail to make any
          payment of any amount when due as  compensation  to CHCM hereunder and
          such failure  continues  for five (5) business  days after  receipt by
          BCBSNJ  from  CHCM  of  written  notice  specifying  such  failure  in
          reasonable detail.

               (iii)  Covenant  Performance.  BCBSNJ  shall  commit any  breach,
          failure or violation of any material covenant, agreement,  undertaking
          or  duty of  BCBSNJ  hereunder  (except  for any  breach,  failure  or
          violation  pertaining  to any of its payment  obligations  hereunder),
          where such breach, failure or


                                       31
<PAGE>

          violation  continues for thirty (30) days after receipt by BCBSNJ from
          CHCM of written notice specifying such breach, failure or violation in
          reasonable detail.

               (iv) Bankruptcy.  BCBSNJ shall (A) become insolvent, (B) dissolve
          or be liquidated (except in connection with a liquidation  required by
          applicable Law resulting from a voluntary  corporate  reorganization),
          (C)  generally  not,  or be unable to, or shall  admit in writing  its
          inability  to, pay its debts as such  debts  become  due,  (D) make an
          assignment for the benefit of creditors,  (E) petition or apply to any
          tribunal  for, or otherwise  seek,  consent to, or  acquiesce  in, the
          appointment  of  a  custodian,   receiver  or  trustee  for  it  or  a
          substantial part of its assets, (F) commence, consent to, or acquiesce
          in, any proceeding under any bankruptcy, reorganization,  arrangement,
          dissolution or  liquidation  Law of any  jurisdiction,  whether now or
          hereafter in effect (except in connection with a liquidation  required
          by   applicable   Law   resulting    from   a   voluntary    corporate
          reorganization),  or (G)  have had any such  petition  or  application
          filed, or any such proceeding  shall have been commenced,  against it,
          in which an adjudication or appointment is made or order for relief is
          entered and which  remains  undismissed  or  unstayed  for a period of
          thirty (30) days or more.

     10.3. Effect of Termination.

          (a)  Post-Termination  Activities.  Upon termination of this Agreement
     pursuant to Section  10.2(a)  hereof,  each of CAI,  CAHS and CHCM  agrees,
     jointly and severally, as follows:

               (i) For a period of ten (10) years  from the date of  termination
          of this  Agreement,  each of CAI,  CAHS and CHCM agrees to license and
          assign to BCBSNJ for use in its business  (x) any methods,  processes,
          manuals,  trade secrets or other proprietary  information used by CAI,
          CAHS or CHCM in rendering the Services hereunder,  and (y) any and all
          improvements,  enhancements,  modifications,  updates and  corrections
          with respect  thereto,  all pursuant to the terms and  conditions of a
          license  agreement (the "Post  Termination  License  Agreement"),  the
          final form of which is  attached  hereto as Exhibit  10.3(a).  Each of
          CAI, CAHS and CHCM agrees to execute and deliver the  Post-Termination
          License  Agreement upon  termination of this  Agreement.  Each of CAI,
          CAHS  and  CHCM  hereby   authorizes  BCBSNJ  and  does  hereby  make,
          constitute  and  appoint  BCBSNJ,  and any officer or agent of BCBSNJ,
          with full  power of  substitution,  as such  party's  true and  lawful
          attorney-in-fact,  with power,  in its own name or in the name of CAI,
          CAHS and CHCM, respectively, to execute the Post-Termination License


                                       32
<PAGE>

          Agreement  and any other  documents  necessary  to effect the terms of
          this Section 10.3(a).  Pursuant to this Section 10.3(a), BCBSNJ hereby
          covenants and agrees that, in connection  with its use of the Power of
          Attorney  granted to it by each of CAI,  CAHS and CHCM  hereunder,  it
          will not interfere  with the conduct of either CAI's,  CAHS' or CHCM's
          business as it is then  conducted  except to the extent  necessary  to
          give effect to the Post-Termination License Agreement.

               (ii) Each of CAI,  CAHS and CHCM agrees to sublease to BCBSNJ (x)
          for a period of one (1) year  subsequent  from the date of termination
          of this  Agreement,  a  sufficient  amount  of  leased  space at CAI's
          offices  located at 485-C Route 1 South,  Iselin,  New Jersey,  or any
          subsequent  offices  which CAI may occupy  from time to time,  and (y)
          subleases  for  such  office  equipment  and  furnishings,  including,
          without  limitation,  the Term Master Lease  Agreement  dated April 6,
          1995  between CAI and IBM Credit  Corporation,  as may be necessary to
          enable BCBSNJ independently to render the Services.  Each of CAI, CAHS
          and  CHCM  agrees  that  any  lease  of  office  space,  equipment  or
          furnishings made to BCBSNJ pursuant to this Section  10.3(a)(ii) shall
          be  based  upon  the  cost  of such  leases  to  CAI,  CAHS  or  CHCM,
          respectively. Any rent due hereunder shall constitute CHCM's Costs.

               (iii)  Each of CAI,  CAHS and CHCM  agrees to  cooperate  and not
          interfere  with  BCBSNJ  in  having  those  personnel  then  currently
          employed by CAI, CAHS and CHCM,  including,  without  limitation,  the
          Designated  Employees  (other  than  Dean  Kallin  or any  person  who
          succeeds to his position and the CAI Director-MIS), hired and employed
          by  BCBSNJ,  as  BCBSNJ  may  designate  in its  sole  and  reasonable
          discretion,  in order to enable  BCBSNJ  independently  to render  the
          Services. In the event that any of such personnel designated by BCBSNJ
          do not accept  employment by BCBSNJ and remain in the employ of either
          CAI,  CAHS and  CHCM,  each of CAI,  CAHS and CHCM  agrees to make the
          services  of such  personnel  as well as Dean Kallin or any person who
          succeeds to his position and the CAI Director-MIS  available to BCBSNJ
          for a period  of one (1) year  from  the date of  termination  of this
          Agreement  in order to  enable  BCBSNJ  independently  to  render  the
          Services.   The  costs  of  making  such  personnel   available  shall
          constitute CHCM's Costs.

               (iv) Each of CAI, CAHS and CHCM agrees to use its best efforts to
          enable BCBSNJ to enter into agreements with those vendors of CAI, CAHS
          and CHCM whom BCBSNJ desires to contract with, to the extent that said
          employees  or  vendors  have  participated  in  the  provision  of the
          Services to BCBSNJ.


                                       33
<PAGE>

               (v) Each of CAI, CAHS and CHCM agrees to license or sublicense to
          BCBSNJ,  on a cost basis,  or use its best  efforts to arrange for the
          license to BCBSNJ, at a cost no greater than that paid by CAI, CAHS or
          CHCM in its provision of the Services,  all software not owned by CAI,
          CAHS or CHCM and used by such parties with respect to their  provision
          of utilization review and utilization  management services (including,
          without limitation, the Services).

               (vi) Each of CAI,  CAHS and CHCM agree to take any other  actions
          required  hereby or  otherwise  reasonably  necessary  to wind-up  the
          relationship among the parties.

          (b) Survival of Rights.  Notwithstanding  the foregoing  provisions of
     this Section 10,  including,  without  limitation  Section  10.3(a) hereof,
     expiration or earlier  termination of this  Agreement  shall not (i) act to
     diminish,  waive or  terminate  any rights or  remedies  of a party  hereto
     arising  out of or relating to any  breach,  failure or  violation  of this
     Agreement  (including,  without  limitation,  the  rights  relating  to any
     breach, failure or violation of the obligations described in Sections 10.5,
     11.1, 11.2, 11.3 and 12 hereof or giving rise to such termination) and such
     rights shall expressly  survive such termination and (ii) relieve,  release
     or discharge a party hereto from any obligation, debt or liability that may
     previously have accrued and remains to be performed upon the effective date
     of termination (including, without limitation, the guarantee obligations of
     CAHS and CAI under Section 9 hereof). Except for (A) the obligations, debts
     and liabilities  contemplated by the immediately prior sentence and (B) any
     obligations,  debts or liabilities  that by their terms  expressly  survive
     (including, without limitation,  obligations, debts and liabilities arising
     under Sections 9 and 14 hereof),  upon expiration or earlier termination of
     this Agreement,  no party hereto shall have or owe any further  obligation,
     debt or liability to the other.

          (c)  Confidential  Information.  In the  event  of the  expiration  or
     earlier termination of this Agreement,  each of the parties hereto shall as
     promptly as practicable,  deliver to the appropriate party, but in no event
     later than ten (10) days  following  such  expiration or  termination,  and
     without  retaining  copies thereof,  all  Confidential  Information and all
     documents,  work papers and other materials  obtained from such other party
     relating to such party and/or the transactions contemplated hereby, whether
     so obtained before or after the execution hereof. The parties hereto hereby
     acknowledge  and  agree  that the  Patient  Information,  the  Confidential
     Information  of  BCBSNJ  and any and all  information  or data  created  or
     generated in  connection  with the  provision of Services  hereunder is the
     exclusive property of BCBSNJ.


                                       34
<PAGE>

     10.4.  Equitable Remedies.  The parties hereto hereby acknowledge and agree
that the  occurrence or existence of an event or condition  under Sections 10.2,
10.3 and 10.5 hereof that  permits the  non-breaching  party to  terminate  this
Agreement  thereunder may cause such  non-breaching  party  irreparable harm and
injury and,  accordingly,  in  anticipation  of, or following the  commission or
discovery  of  any  such  event,  the  non-breaching   party,  in  addition  to,
independent  of, and severally  enforceable  from,  any and all other rights and
remedies available to the non-breaching party pursuant to this Agreement, at law
or in equity (or otherwise),  shall, notwithstanding any other provision hereof,
be entitled, in its sole and absolute discretion,  to seek and obtain, equitable
relief,   including,   without   limitation,   injunctive  relief  and  specific
performance, in any court of competent jurisdiction.

     10.5.  Non-Solicitation.  During the Term and for a period of two (2) years
thereafter,  other than those  individuals  solicited in accordance with Section
10.3(a)(iii)  hereof, none of the parties hereto shall,  directly or indirectly,
without the prior written  consent of the  applicable  party,  hire,  solicit or
entice  away,  or attempt to hire,  solicit or entice away from such party,  any
director, partner, officer, employee, consultant,  independent contractor (other
than  Persons  rendering  legal,  accounting  or  financial  services)  or agent
thereof.

11. Restrictive and Other Covenants.

     11.1.  Provision  of Services of CHCM,  CAHS and CAI. For good and valuable
consideration,  the receipt and sufficiency of which are hereby  acknowledged by
the parties hereto,  during the Term, none of CAI, CAHS and CHCM, nor, on behalf
of CAI, CAHS and CHCM, any of their respective Affiliates,  directors, officers,
employees or agents of either CHCM, CAHS or CAI, shall,  directly or indirectly,
whether personally or as owner, director, control person, shareholder,  partner,
member, manager, operator, joint venturer, agent, consultant or otherwise, enter
into or engage in any discussion,  agreement or other binding  obligations  with
any third party relating to the provision of services  substantially  similar to
the Services  within the State of New Jersey,  without the prior written consent
of BCBSNJ, which consent shall not be unreasonably withheld.

     11.2.  BCBSNJ's  Contracts  with  Third  Parties.  For  good  and  valuable
consideration,  the receipt and sufficiency of which are hereby  acknowledged by
the parties hereto,  during the Term, none of BCBSNJ,  nor, on behalf of BCBSNJ,
any of  its  Affiliates,  directors,  officers,  employees,  or  agents,  shall,
directly  or  indirectly,  whether  personally  or as owner,  director,  control
person, shareholder,  partner, member, manager, operator, joint venturer, agent,
consultant or otherwise,  enter into or engage in any  discussion,  agreement or
other  binding  obligations  with any third party  relating to the  provision of
services to BCBSNJ substantially similar to the Services.

     11.3 Noncompetition.  For good and valuable consideration,  the receipt and
sufficiency of which are hereby  acknowledged by the parties hereto,  during the
Term, none


                                       35
<PAGE>

of  CAHS,  CAI or CHCM  nor,  on  behalf  of CAI,  CAHS and  CHCM,  any of their
respective Affiliates,  directors,  officers,  partners,  employees or agents of
either CHCM, CAHS or CAI, shall,  directly or indirectly,  whether personally or
as owner,  director,  control person,  shareholder,  partner,  member,  manager,
operator,  joint  venturer,  agent,  consultant  or  otherwise,  engage  in  any
business,  venture  or  enterprise  in  competition  with  any of the  principal
businesses carried on by BCBSNJ or any of its Affiliates.

     11.4. New Market Segments,  Performance Standards and Services. The parties
hereto hereby  acknowledge and agree that BCBSNJ,  during the Term, from time to
time during the Term in its sole and absolute  discretion,  shall give notice to
CHCM and CAHS that (a) Services are to be provided hereunder to a market segment
(fully-insured  or otherwise) that does not appear on Schedule 1.40 hereto or to
a new category of BCBSNJ customers  requiring  utilization review or utilization
management  services that does not itself constitute a market segment hereunder,
and thereafter  Services shall be provided  thereto in accordance with the terms
hereof, (b) additional or revised  performance  standards and measures have been
agreed to by BCBSNJ and one or more of its customers,  and from the date of such
notice all  references  to  "Performance  Standards"  herein with respect to the
provision of Services  hereunder to such customer(s)  shall be deemed to include
such additional or revised standards and measures,  provided,  however, that the
cost of any changes due to such additional or revised performance  standards and
measures  (other than those  changes  made at the request or  recommendation  of
either CAI, CAHS or CHCM which are not likely, in BCBSNJ's reasonable  judgment,
to enhance the benefits to BCBSNJ and its customers  expected to be generated by
operation of this Agreement) shall be borne solely by BCBSNJ,  (c) additional or
revised  performance  standards  and  measures  not  unreasonable  in  light  of
statewide or regional  industry  practice have been adopted by BCBSNJ,  and from
the date of such notice all references to "Performance  Standards"  herein shall
be deemed to include such additional or revised standards and measures,  and (d)
BCBSNJ  requests  that  services  similar or  ancillary  to any of the  Services
specified  by BCBSNJ in such notice be provided  as  Services  hereunder,  which
described  services  shall be included  hereunder as mutual agreed by BCBSNJ and
CHCM.

     11.5. MEDecision License. For good and valuable consideration,  the receipt
and sufficiency of which are hereby  acknowledged by the parties hereto,  during
the Term,  each of CAI,  CAHS and CHCM  agrees  that,  with  respect  to the one
hundred  (100)  user  license  (the  "MEDecision  License")  granted  to CAHS by
MEDecision,  Inc.  under an Agreement for Products & Services  dated November 7,
1994,  as amended to date,  each of such  parties  shall not permit any users to
utilize the  MEDecision  License,  other than users  engaged in the provision of
Services to BCBSNJ,  unless in BCBSNJ's sole and absolute judgment,  there are a
sufficient number of users designated by BCBSNJ to permit the adequate provision
of the Services to BCBSNJ.


                                       36
<PAGE>

     11.6.  Further  Assurances.  Each party hereto hereby agrees to perform any
further  acts and  execute  and deliver  any  documents  that may be  reasonably
necessary to carry out the provisions and purposes of this Agreement.

12. Confidentiality; Marks.

     12.1.  Confidentiality.  Each party hereto hereby  agrees that,  during the
Term and after the termination of this Agreement,  it shall (a) not, directly or
indirectly,  use (other than for the  purposes  contemplated  hereby  during the
Term), (b) keep secret and retain in strictest confidence,  and (c) not disclose
to any third party, Confidential  Information.  Notwithstanding the foregoing, a
party may  disclose  Confidential  Information:  (i) when  compelled to do so by
applicable Law, a court of competent  jurisdiction  or a Governmental  Authority
and (ii) to those of such party's officers,  directors,  partners, employees and
agents who have a "need to know".

     12.2.  Marks.  During the Term and after the termination of this Agreement,
each of CHCM, CAI and CAHS shall use its best efforts to protect the Marks. Each
of CHCM, CAI and CAHS hereby  acknowledges  and agrees that it does not now own,
nor, by virtue of the Services rendered  hereunder shall it acquire,  any right,
title or interest with respect to the Marks, and that all such right,  title and
interest is owned by BCBSNJ and its  Affiliates.  Each of CHCM,  CAI and/or CAHS
shall promptly notify BCBSNJ in writing of any unauthorized uses,  infringements
or violations of the Marks of which it becomes aware. Each of CHCM, CAI and CAHS
further  acknowledges and agrees that BCBSNJ and its Affiliates have substantial
goodwill in and with  respect to the Marks,  that  nothing in this  Agreement or
with respect to the transactions  contemplated hereby is intended to diminish or
otherwise  adversely  affect such  goodwill  and that none of CHCM,  CAI or CAHS
shall acquire any right,  title and interest in or to such goodwill by virtue of
this Agreement or the  transactions  contemplated  hereby.  None of CHCM, CAI or
CAHS shall use the Marks, including,  without limitation, with respect to any of
its  advertising  or public  disclosures,  without the prior written  consent of
BCBSNJ and its Affiliates,  which consent BCBSNJ and its Affiliates may grant or
deny in their sole and absolute  discretion,  provided,  however,  that,  in the
event  that  BCBSNJ  shall not have  given a  response  or reply to any  written
requests for approval specifically  referencing this Section 12.2 for the use of
its Marks by either CHCM,  CAI or CAHS within ten (10) days of BCBSNJ's  receipt
of such request for approval,  such approval  shall be deemed to have been given
by BCBSNJ to either CHCM, CAI or CAHS, as applicable, for the use of such Marks,
provided, further, however, that nothing in this Section 12.2 shall prohibit any
use of the  Marks in  connection  with any  public  disclosure  required  by law
provided that CAI, CAHS and CHCM, as the case may be, furnishes  advance written
notice of such use to BCBSNJ to the greatest extent practicable.


                                       37
<PAGE>

13. Equitable Remedies.

     13.1.  Rights and Remedies.  If any party breaches or threatens to commit a
breach of any of the provisions of Section 10.5,  11.1,  11.2, 11.3 or 12 hereof
(the "Restrictive  Covenants"),  the affected non-breaching party shall have the
following  rights  and  remedies,  each of which  rights and  remedies  shall be
independent  of the others and  severally  enforceable,  and each of which is in
addition to, and not in lieu of, any other rights and remedies  available to the
affected non-breaching at law or in equity (or otherwise):

          (a) the right and remedy to have the breaching party enjoined (whether
     by  temporary   restraining  order,   temporary   injunction  or  permanent
     injunction)  by any  court of  competent  jurisdiction  from  breaching  or
     continuing to breach any of the Restrictive Covenants, it being agreed that
     any breach or threatened  breach of the  Restrictive  Covenants would cause
     irreparable  injury to the  affected  non-breaching  party  and that  money
     damages would not provide an adequate remedy to the affected  non-breaching
     party;

          (b)  the  right  and   remedy  to  have  the   Restrictive   Covenants
     specifically  enforced  by any court of  competent  jurisdiction,  it being
     agreed that any breach or threatened  breach of the  Restrictive  Covenants
     would cause irreparable injury to the affected non-breaching party and that
     money  damages  would  not  provide  an  adequate  remedy  to the  affected
     non-breaching party; and

          (c) the right and remedy to require the breaching party to account for
     and pay over to the affected non-breaching party all compensation, profits,
     monies,  accruals,  increments or other benefits derived or received by the
     breaching party as the result of any transactions  constituting a breach of
     the Restrictive Covenants.

     13.2. Geographical and Temporal Scope;  Enforceability.  The parties hereto
hereby  acknowledge and agree that the Restrictive  Covenants are reasonable and
valid in geographical and temporal scope and in all other respects. If any court
determines  that  any of the  Restrictive  Covenants,  or any part  thereof,  is
unenforceable  because of the geographic or durational scope of such provisions,
such  court  shall  have  the  power to  reduce  the  duration  or scope of such
provision,  as the case may be, and in its reduced form,  such  provision  shall
then  be  enforceable.  If any  court  determines  that  any of the  Restrictive
Covenants,  or any part thereof,  is invalid or unenforceable,  the remainder of
the  Restrictive  Covenants  shall be given full effect,  without  regard to the
invalid portions.

     13.3.  Jurisdiction;  Severability.  Notwithstanding  any  other  provision
hereof,  the parties  hereto each intend to and hereby  confer  jurisdiction  to
enforce the Restrictive Covenants upon the courts of any jurisdiction within the
geographical  scope of such Restrictive  Covenants.  If the courts of any one or
more of such jurisdictions hold the


                                       38
<PAGE>

Restrictive  Covenants  unenforceable  by reason of the breadth of such scope or
otherwise, it is the intention of the parties that such determination not bar or
in any way  affect  the  affected  non-breaching  party's  right  to the  relief
provided in this Section 13 in the courts of any other  jurisdiction  within the
geographical  scope  of  such  Restrictive  Covenants,  as to  breaches  of such
Restrictive Covenants in such other respective  jurisdictions,  such Restrictive
Covenants as they relate to each jurisdiction being, for this purpose, severable
into diverse and independent covenants.

     13.4. Tolling.  During any period of a breach by a party of the Restrictive
Covenants,  the relevant restricted periods shall be tolled until such breach is
cured or otherwise  terminated,  and the period of such breach shall be added to
each restricted period.

14. Indemnity; Insurance.

     14.1. Indemnity.

          (a) CAI, CAHS and CHCM.  Each of CAI,  CAHS and CHCM shall  indemnify,
     defend  and  hold  harmless  BCBSNJ,  its  Affiliates  and  the  respective
     directors,  partners,  officers,  employees  and  agents of BCBSNJ  and its
     Affiliates,  from and against any and all claims,  actions, losses (whether
     joint or several),  liabilities,  damages,  costs and expenses  (including,
     without limitation,  attorneys' fees and expenses) (collectively "Damages")
     arising out of or relating  to: (a) any breach,  failure or violation by it
     of  any  of  its  respective  representations,  warranties,  covenants  and
     undertakings  set  forth  in this  Agreement,  and  (b) any of its  acts or
     omissions,  or an act or omission  of its  respective  partners,  officers,
     employees, agents or subcontractors, outside of the scope of its respective
     obligations hereunder.

          (b) BCBSNJ. BCBSNJ shall indemnify, defend and hold harmless CAI, CAHS
     and  CHCM,  their  respective  Affiliates  and  the  respective  directors,
     partners,  officers,  employees  and agents of CAI, CAHS and CHCM and their
     respective Affiliates,  from and against any and all Damages arising out of
     or relating  to: (a) any breach,  failure or  violation by it of any of its
     respective  representations,  warranties,  covenants and  undertakings  set
     forth in this Agreement, and (b) any of its acts or omissions, or an act or
     omission  of  its  respective  partners,  officers,  employees,  agents  or
     subcontractors,   outside  of  the  scope  of  its  respective  obligations
     hereunder.

     14.2. Notice;  Defense. Each party hereto entitled to indemnification under
this  Section  14  (each,  an  "Indemnified  Party")  hereby  agrees to give the
applicable  party or parties  obligated  to  indemnify  it under this Section 14
(each,  an  "Indemnifying  Party")  written  notice of any event or assertion of
which the Indemnified  Party obtains  knowledge  concerning any Damage and as to
which  the  Indemnified  Party  may  request  indemnification   hereunder.   The
Indemnified Party shall cooperate with the Indemnifying Party in


                                       39
<PAGE>

determining the validity of any claim or assertion requiring indemnity hereunder
and in defending  against third parties with respect to the same. The defense of
such litigation  shall be within the control of the  Indemnifying  Party, or, as
the  case  may  be,  any  Persons  providing   indemnity  and  defense  to  such
Indemnifying Party;  provided,  however,  that an Indemnifying Party's choice of
counsel  shall  be  reasonably   satisfactory  to  the  Indemnified  Party.  The
Indemnified  Party may  participate  in the  defense  of any claim or  assertion
requiring  indemnity  hereunder,  and in such event,  shall  cooperate  fully in
connection therewith.  If an Indemnifying Party fails to perform its obligations
under this Section  14.2,  then the  Indemnified  Party may directly  assume the
defense of the claim or assertion at issue,  and such  Indemnifying  Party shall
promptly reimburse the Indemnified Party for all costs and expenses  (including,
without  limitation,  attorneys'  fees and  expenses),  incurred  in  connection
therewith.  The Indemnified  Party's failure to give timely notice or to provide
copies of  documents or to furnish  relevant  data in  connection  with any such
third-party  claim shall not  constitute  a defense (in part or in whole) to any
claim for  indemnification  by it.  Each of CAI,  CAHS,  CHCM and BCBSNJ  hereby
agrees  not to  settle  or  compromise  any  such  third-party  suit,  claim  or
proceeding  without prior written consent of the applicable  Indemnified  Party,
which  consent  shall  not be  unreasonably  withheld  as to suits,  claims  and
proceedings at law.

     14.3. Insurance.  In order to secure their respective indemnity obligations
arising under this Section 14, (a) CHCM shall  maintain in full force and effect
during the Term an occurrence  basis (or if  unavailable,  a claims-made  basis,
with   appropriate   "tail"   coverage)   policy  or  policies  of  professional
responsibility/errors   and   omissions/utilization   review   and   utilization
management  insurance in per occurrence  and aggregate  face amounts  reasonably
acceptable to BCBSNJ, with insurance carriers  reasonable  acceptable to BCBSNJ,
naming  BCBSNJ as an  additional  insured,  such  policy or  policies  not to be
cancelable  upon less than thirty (30) days' prior notice,  and  providing  that
BCBSNJ shall receive copies of all notices  thereunder  ("Acceptable  Policies")
and (b) CAHS and CAI shall maintain Acceptable Policies in full force and effect
during the Term.

     14.4. Survival. The terms and conditions of this Section 14 shall expressly
survive any  termination  of this Agreement and shall continue in full force and
effect thereafter.

15. General.

     15.1. No Employment Relationship. Except as otherwise set forth herein, the
directors,  partners,  shareholders,  trustees,  officers,  employees, agents or
representatives  of any of the  parties  hereto  shall not be deemed  directors,
partners, shareholders, trustees, officers, employees, agents or representatives
of another party hereto,  and such individuals shall not be entitled or eligible
to  participate  in or receive  benefits or  privileges  provided or extended by
another  party  hereto  to  such  party's  directors,  partners,   shareholders,
trustees, officers, employees, agents or representatives.


                                       40
<PAGE>

     15.2.  Survival.  Except as may otherwise be specifically  provided in this
Agreement,   the   representations,   warranties,   covenants,   agreements  and
undertakings  contained  in  this  Agreement  and  in  any  schedule,  document,
agreement,  certificate or other instrument  executed and/or delivered  pursuant
hereto  shall  survive the  execution  and  delivery of this  Agreement  and the
consummation  of the  transactions  called for  hereby and shall  remain in full
force and effect,  regardless of any  investigation  made by or on behalf of any
party hereto.

     15.3.  Notice. All notices and other  communications  hereunder shall be in
writing  and  shall be  deemed to have been  given  upon  receipt,  and shall be
addressed as follows:

If to CHCM:                Contemporary HealthCare Management, Inc.
                           Metropolitan Corporate Center 485-C
                           Route 1 South
                           Iselin, New Jersey  08830
                           Attn:  Richard Freeman, M.D., Vice President

If to BCBSNJ:              Blue Cross and Blue Shield of New Jersey, Inc.
                           Three Penn Plaza East
                           Newark, New Jersey  07105-2200
                           Attn:  Mr. Robert J. Pures
                                  Senior Vice President - Administration, Chief
                                  Financial Officer and Treasurer

with a copy to:            Blue Cross and Blue Shield of New Jersey, Inc.
                           Three Penn Plaza East
                           Newark, New Jersey  07105-2200
                           Attn:  Susan Scholle Connor, Esq.
                                  General Counsel

If to CAHS:                CareAdvantage Health Systems, Inc.
                           Metropolitan Corporate Center 485-C
                           Route 1 South
                           Iselin, New Jersey  08830
                           Attn:  Mr. Thomas Riley

If to CAI:                 CareAdvantage, Inc.
                           Metropolitan Corporate Center 485-C
                           Route 1 South
                           Iselin, New Jersey  08830
                           Attn:  Mr. Thomas Riley


                                       41
<PAGE>

or to such other address as any party hereto shall have  designated to the other
parties in accordance with the provisions of this Agreement.

     15.4.  Binding  Agreement;  Assignability.  This Agreement shall be binding
upon and shall inure to the benefit of the parties  hereto and their  respective
successors and permitted assigns and subcontractors. No party hereto shall sell,
assign,  transfer,  convey,  subcontract  or otherwise  dispose of its rights or
obligations  under,  title to, or interest  in, this  Agreement,  in whole or in
part, to any third party, except that:

          (a)  BCBSNJ  may  sell,  assign,  transfer,   convey,  subcontract  or
     otherwise dispose of its rights or obligations under, title to, or interest
     in, this Agreement, to a successor-in-interest  of all or substantially all
     of its indemnity  insurance  business (i) in connection with (A) a transfer
     to an Affiliate,  (B) a  reorganization  or (C) a merger,  consolidation or
     other business combination, or (ii) in the event of a sale of substantially
     all of its assets (whether through asset or stock sale or otherwise); and

          (b)  CHCM may (i)  sell,  assign,  transfer,  convey,  subcontract  or
     otherwise dispose of its rights or obligations under, title to, or interest
     in, this Agreement to any Affiliate, provided that such Affiliate agrees in
     writing  to be bound by all of the  provisions  hereof  and,  prior to such
     Person  ceasing to be an  Affiliate,  all such rights and  obligations  are
     transferred back to CHCM or (ii) delegate or subcontract the performance of
     any of its  obligations  under this  Agreement,  in each  instance with the
     prior written consent of BCBSNJ,  to CAHS or any third-party  subcontractor
     that agrees to be bound by the confidentiality provisions hereof.

In connection with any delegation or subcontracting  of obligations  pursuant to
subclause (b) above,  (I) CHCM shall  supervise such  performance to ensure that
such  obligations  are  completed  in  accordance  with the terms  hereof in all
respects and (II) such  performance  shall not result in the payment of, or give
rise to a right  of CHCM,  CAHS or such  subcontractor,  as the case may be,  to
receive, or an obligation on the part of BCBSNJ to make, any payment in addition
to the  compensation  as calculated  pursuant to the terms of this Agreement for
any provision of Services rendered in connection with this Section 15.4. Nothing
expressed or implied in this Agreement is intended to, or shall confer upon, any
Person other than the parties hereto and their respective permitted assignees or
subcontractors   (which  the  parties  acknowledge  and  agree  are  third-party
beneficiaries hereof), any rights, remedies, obligations or liabilities under or
by reason of this Agreement.

     15.5.  Headings.  The subject  headings of the Sections and  subsections of
this  Agreement  are  included for  purposes of  convenience  only and shall not
affect the construction or interpretation of any of its provisions.


                                       42
<PAGE>

     15.6.  Entire  Agreement;  Amendment.  This Agreement and all schedules and
exhibits  attached hereto and thereto,  which by this reference are incorporated
herein and made a part hereof,  embody the entire  agreement  and  understanding
among the parties hereto with respect to the subject matter hereof.  The parties
hereto hereby  acknowledge and agree that in the event of a conflict between the
terms and  conditions  of this  Agreement  and the terms and  conditions  of any
certificate  or other  instrument  executed  and/or  delivered  pursuant to this
Agreement,  the terms and  conditions  of this  Agreement  shall  control.  This
Agreement may not be amended except by a writing executed by each of the parties
hereto.

     15.7.  Waiver.  Waiver by the parties of a breach,  failure or violation of
any  provision  of this  Agreement  may be made only in writing  executed by the
parties  hereto and such waiver shall not  constitute a waiver of any subsequent
breach, failure or violation of the same or other provisions hereof.

     15.8.  Governing Law;  Jurisdiction.  This Agreement  shall be construed in
accordance  with and  governed by the  internal  Laws of the State of New Jersey
applicable to contracts  made and to be performed  therein.  Except as otherwise
set forth herein,  the courts of the State of New Jersey in Essex County and the
United  States  District  Court  for  the  District  of New  Jersey  shall  have
jurisdiction  over the parties with respect to any dispute or controversy  among
them arising under or in connection  with this  Agreement  and, by execution and
delivery of this Agreement, each of the parties to this Agreement submits to the
jurisdiction of those courts.

     15.9.  Severability.  If any term of this Agreement or application  thereof
shall be invalid or unenforceable,  the remainder of this Agreement shall remain
in full force and effect.

     15.10.   Counterparts.   This   Agreement   may  be   executed  in  several
counterparts, each of which is an original but all of which shall constitute one
and the same instrument.

     15.11. Costs and Expenses.  Except with respect to those costs and expenses
that the parties  agree shall be divided  equally or otherwise  allocated,  each
party  shall  bear  such  party's  own costs and  expenses  (including,  without
limitation,   expenses  of  counsel,   outside   auditors  and  consultants)  in
negotiating  this  Agreement and otherwise in connection  with the  transactions
contemplated hereby.

     15.12.  Interim Services Agreement.  From and after the Effective Date, the
obligation  of CAHS to provide  utilization  review  services  to BCBSNJ and the
obligation of BCBSNJ to pay CAHS for such services, in each case pursuant to the
Interim Services Agreement, shall be terminated.


                                       43
<PAGE>

     IN WITNESS WHEREOF,  the parties hereto have duly executed and acknowledged
this Agreement as of the date first above written.

                                       CONTEMPORARY HEALTHCARE
                                        MANAGEMENT, INC.

                                       By: /s/ Richard W. Freeman
                                           ------------------------------------
                                       Title:  Richard W. Freeman, M.D.
                                               President

                                       BLUE CROSS AND BLUE SHIELD
                                        OF NEW JERSEY, INC.

                                       By: /s/ Robert J. Pures
                                           ------------------------------------
                                       Title:  Robert J. Pures
                                               SVP- Administration, Chief
                                               Financial Officer $ Treasurer

                                       CAREADVANTAGE HEALTH
                                         SYSTEMS, INC.

                                       By: /s/ Richard W. Freeman
                                           ------------------------------------
                                       Title:  Richard W. Freeman, M.D.
                                               President

                                       CAREADVANTAGE, INC.

                                       By: /s/ Richard W. Freeman
                                           ------------------------------------
                                       Title:  Richard W. Freeman, M.D.
                                               President


                                       44
<PAGE>

                                 Schedule 1.40

                     Prices for Services in Market Segments
               (Prices per Exposed Subscriber per Service Month)

                                           1997     1998      1999        2000
         Market Segment                    Price    Price     Price      Price
         --------------                    -----    -----     -----      -----
                                           
Individual Under 65 CMM                    $4.96    $4.61     $4.26      $4.26
                                           
Individual Under 65 non-CMM                 4.96     4.61      4.26       4.26
                                           
Small Employer                              5.19     4.82      4.45       4.45
                                           
Corporate 50-99                             4.64     4.31      3.98       3.98
                                           
Corporate 100+                              2.06     2.06      2.06       2.06
                                           
National Accounts                           2.06     2.06      2.06       2.06
                                           
State Account                               1.70     1.70      1.70       1.70
                                           
Other Government Accounts                   1.08     1.08      1.08       1.08


<PAGE>

                                 Schedule 1.47

                             Performance Standards

CHCM shall  comply with all  customer  service  requirements  as  specified  for
accreditation with URAC.

Unless more  stringently  specified by URAC standards,  customer  service levels
shall be maintained at least at the following levels:

     Telephone calls shall be answered on average within 20 seconds.

     Lost call ratios shall be maintained at under 5 percent.

     Line busy rates shall be maintained at under 5 percent.

     98% of prospective, urgent review appeals shall be decided and communicated
     within one (1) business day of receipt.

98% of second level review appeals shall be decided and communicated  within ten
(10) business  days of receipt.  98% of third level appeals shall be decided and
communicated  within  twenty  (20)  business  days of  receipt  of all  relevant
information, including the clinical record.

CHCM   shall    develop,    maintain   and    implement   a   written    quality
management/improvement  plan that is consistent  with the BCBSNJ Service Quality
Plan and practices. The plan shall provide for the following elements:

     Satisfactions surveys
     Process  tracking,   stabilization  and  improvement  
     Employee education  and   involvement
     RN  peer  review  system  
     Silent telephone  performance  monitoring  system  
     Staff  audits  and evaluation


<PAGE>

                                 Schedule 1.54

               Criteria for Identification of Large Medical Cases

                                                      Description               
                                                      -----------               
                                                      
Neonatal                                              Spina Bifida
                                                      Premature Delivery
                                                      Bronchopulmonary Dysplasia
                                                      Cystic Fibrosis
                                                      Hydrocephalus, newborn
                                                      Congenital Anomaly
                                                      
Stroke/Cerebrovascular Accident                       Hemiplegia
                                                      Intracranial Hemorrhage
                                                      
Respiratory Failure with Ventilator Dependence        
                                                      
Terminal Cancer                                       
                                                      
Muscular/Neurological Disorders                       Muscular Dystrophy
                                                      Multiple Sclerosis
                                                      Amyotrophic Lateral
                                                      Solerosis
                                                      Paralysis
                                                      Polio
                                                      Cerebral Palsy
                                                      
AIDS, HIV+ and complications                          Kaposi Sarcoma
                                                      PCP-Pneumocystis Carinii
                                                      Pneumonia
                                                      Cryptosporidiosis
                                                      Lymphoma
                                                      
Major Head Trauma/Traumatic Brain Injury              Head Injury
                                                      Skull Fracture
                                                      Coma
                                                      
Spinal Cord Injury                                    Diseases of Spinal Cord
                                                      Fracture of Neck & Trunk

<PAGE>

Limb Amputation with Complications

Third Degree Burns

Other
-----

1.   Prolonged and complicated hospital stays.
2.   Acute care stay which do not meet criteria but require skilled care.
3.   All rehabilitation admissions.

<PAGE>

                                 Schedule 1.54A

                                    Services

For all services  specified below,  BCBSNJ will define the medical procedures to
which these services shall apply. The review protocols, guidelines and standards
used in the provision of the services specified below must be approved by BCBSNJ
in advance of their  application  and BCBSNJ may, from time to time, in its sole
and absolute discretion,  modify such protocols,  guidelines and standards.  The
application of such  protocols,  guidelines and standards by CHCM, all physician
advisors and all other individuals  providing services shall result in a uniform
and  consistent  application  of a  single  set  of  protocols,  guidelines  and
standards for the provision of care.

It is understood  that BCBSNJ shall maintain  control of its preferred  provider
networks in all respects (including,  without limitation,  the rates set for and
paid  thereto),  in addition to the selection of, and the rates set for and paid
to, all other  providers of health care and all vendors  utilized in  connection
therewith as may arise in connection with the provision of Services.

Pre-certification  Review Services --  Pre-certification  Review is performed to
determine the  appropriateness  of proposed  services,  medical necessity of the
care  setting,  safe and  effective  alternatives  to the planned  services  and
feasibility of any identified alternative setting.  Precertification review also
serves as a  case-identification  device for  initiation  of  concurrent  review
services and large medical case management.

     Pre-certification Review Services include the following:

          Pre-admission  Review  --  Pre-admission  review  occurs  prior  to  a
          patient's  non-emergency  or  scheduled  inpatient  admission  to help
          determine   the  medical   necessity   of  the   patient's   inpatient
          hospitalization  and to establish an initial length of stay (LOS).  If
          the criteria for inpatient necessity is met, the case is certified and
          an estimated  number of days of inpatient  stay is assigned based upon
          pre-admission  information.  If the case  cannot be  certified  by the
          initial  reviewer,  the  case is  referred  to a  qualified  physician
          advisor for  investigation,  leading to the  approval or denial of the
          requested service and/or LOS.

          Pre-certification of BCBSNJ-Selected  Outpatient/Ambulatory Procedures
          --Prospective  review  of  BCBSNJ-selected  surgical,   diagnostic  or
          therapeutic  outpatient  procedure  recommended for the patient occurs
          prior to the  rendering  of the  procedure  to  determine  the medical
          necessity  of  the  procedure.  If  criteria  are  met,  the  case  is
          certified.  If the case cannot be certified  by the initial  reviewer,
          the case is referred

<PAGE>

          to  a  qualified  physician  advisor  for  investigation,  leading  to
          approval or denial of the requested service.

          Physician  advisors  must  review at least eight  percent  (8%) of all
          pre-admission  Review cases. As a result,  physician advisors actively
          participate  in the  development  of  treatment  plans  and  discharge
          planning  activities (which activities are described in greater detail
          below).

          Only physician  advisors may decline to approve benefits for requested
          services.

Concurrent  Review  Services  --  Concurrent  review  determines  if care  being
rendered is medically  necessary and  effective,  and if it is being rendered at
the appropriate level of care for the patient's condition.

Concurrent  review  services  are  applicable  to acute  and  non-acute  medical
services.   Approval  for  extensions  of  LOS  or  services   beyond   original
authorizations  must be  certified  by a licensed  registered  nurse ("RN") or a
qualified physician advisor using  BCBSNJ-approved  clinical  guidelines,  which
guidelines  may be modified by BCBSNJ from time to time in its sole and absolute
discretion.  Non-physician  case  managers  must  refer  questionable  cases  to
physician  advisors for review.  Only physician  advisors may decline to approve
benefits for requested services.

          Physician  advisors  must  review  at least ten  percent  (10%) of all
          concurrent review cases.

          CHCM may conduct  concurrent  review by on-site nurse case managers or
          physician advisors whenever financially feasible and agreeable for the
          BCBSNJ client.

          In addition to the foregoing,  concurrent  review services include the
          following:

               Daily or  intermittent  concurrent  inpatient care management and
               case review.

               Regular reassessment of LOS assignment.

               Discharge  planning and support  services for any continuation of
               care  management  needed by the patient upon discharge  including
               home  health  care,   specialty   referral  and  coordination  of
               post-delivery services.

               Outpatient  case  coordination  -- Outpatient  case  coordination
               includes working with hospital staff and community resources when
               referrals  are made  for home  health  care  services,  specialty
               services,   durable  medical  equipment  or  other  post-delivery
               services that are requested and medically appropriate.

<PAGE>

Referrals shall be to providers in preferred  provider  networks  established by
BCBSNJ at preferred  rates,  provided,  however,  other providers may be used if
cost effectiveness can be demonstrated.

Large Medical Case Management Services -- Large medical case management involves
the  coordination of care for selected  catastrophic or potentially  high dollar
cases. Licensed RNs assist the patient and the patient's family and primary care
physician  in reviewing  treatment  plans and special  services  needed for care
management.  Physician  Advisors  shall be  consulted  during  the review of any
questionable case or plan of treatment. BCBSNJ will determine the guidelines for
case selection and case management services to be provided and may, from time to
time, in its sole and absolute discretion, redefine the guidelines.

     Large medical case management services include the following:

          Identification   and  management  of  cases  involving   long-term  or
          catastrophic illness or injury to ensure cost-effective utilization of
          benefits.

          Investigation of referrals from BCBSNJ, the pre-admission  review, the
          providers and the individual  BCBSNJ  subscribers to determine medical
          appropriateness of large medical case management services.

          Identification,  investigation and use of  cost-effective  alternative
          settings.

          Case  acceptance  and receipt of a signed  agreement  from  patient or
          patient's  guardian  for services to be  provided;  establishment  and
          maintenance of appropriate  contact with BCBSNJ  marketing  divisions,
          patients and patients' family and providers.

          Provision of discharge  planning  support to assist  social  services,
          hospital  utilization  review and staff and nursing  services to place
          the  patient  in  sub-acute  facilities  or in the home for  continued
          therapy when medically appropriate.

          Use, whenever possible,  of preferred provider networks established by
          BCBSNJ for the provision of appropriate  services at preferred  rates;
          however,  other  providers  may be used if  cost-effectiveness  can be
          demonstrated  and  prior  approval  is  received  from  BCBSNJ in each
          instance.

Procedure  Certification/Mandatory  Second Surgical  Opinion Services (MSSOP) --
These services are provided for all subscriber  contracts requiring MSSOP. These
services  shall be  incorporated  into  the  pre-certification  review  services
described above.

     MSSOP services include the following:

<PAGE>

          Utilization  of  a  second  opinion  panel  of  qualified  specialists
          developed and maintained by BCBSNJ.

          Provision for telephonic  interviewing of patients and their attending
          physician/surgeons   for  the  evaluation  of  proposed  surgical  and
          diagnostic procedures for appropriateness of care.

          Arrangement,  if requested by the patient or patient's representative,
          for a third opinion in the event of a non-confirming second opinion.

Retrospective  Review Services -- The retrospective  review process is conducted
when  precertification  has not been obtained or when a BCBSNJ  client  receives
services that were not authorized. The medical record is reviewed by a physician
advisor to  ascertain  if the  admission or days of care in question met medical
necessity criteria.  Information  obtained from retrospective chart review shall
be used to  evaluate  quality of care and  appropriateness  of  services  and to
monitor trends in the delivery of health care services.

CHCM shall perform  retrospective  review of cases that were or should have been
subject  to  precertification  review  or  concurrent  review by CHCM and when a
BCBSNJ client receives  services that were not  authorized.  The results of such
review shall be reported  promptly to BCBSNJ for its claim action.  BCBSNJ shall
also  perform  retrospective  review  necessary  to support  its basic  business
functions.  CHCM and BCBSNJ  retrospective review functions shall be coordinated
in such a fashion as to  minimize  duplication  and  unnecessary  administrative
burden either upon themselves or upon providers.

BCBSNJ shall provide to CHCM paid claims data necessary to conduct retrospective
analysis at regular  intervals to be mutually  agreed to by the parties,  but in
any event, no less than semi-annually.

     Retrospective review services include the following:

          Performance  of  retrospective  medical  record  review to analyze and
          evaluate  medical  appropriateness,  admissions,  LOS  and  level  and
          quality of care.

          Conduct of focused  and random  retrospective  reviews to ensure  Plan
          payment is made for medically appropriate admissions. For the purposes
          of this review,  two percent (2%) of all cases  subject to CHCM review
          shall be reviewed annually.

          Quarterly analysis and evaluation of medical appropriateness, hospital
          admission  and LOS  trends,  level and  quality of care and changes in
          medical  care  patterns  shall be  conducted  quarterly  and  shall be
          promptly reported to BCBSNJ.

<PAGE>

Communication  and  Reporting  Requirements  --  Communication  mechanisms  will
include, as appropriate,  CHCM provided  publications and circulars,  telephone,
facsimile,  meeting and seminars,  written  correspondence,  and electronic data
transmissions and techniques.

     Communication services will include, but not be limited to, the following:

          Communication   to  BCBSNJ   of  all   decisions   regarding   medical
          appropriateness  of  pre-certification   review,   concurrent  review,
          pre-procedure  review and large medical case  management to facilitate
          claims   adjudication   and  assist   with  client   relations.   Such
          communications  will  include  automated  linkages  to  BCBSNJ  claims
          systems and  individual  discussions  where  required  by BCBSNJ.  The
          current  recording of  pre-certification  review,  concurrent  review,
          pre-procedure  review and large medical case management review on CARS
          screens shall be maintained until a mutually agreeable alternative has
          been developed.

          Communication  of utilization  management  decisions  shall be made to
          subscribers,  their  physicians  and hospitals by  telephone,  written
          correspondence and systems updates.  Communication timeliness shall be
          as specified by URAC and shall utilize forms approved by BCBSNJ.

          Communication  to  network  hospitals  shall be made to assure  proper
          understanding and use of utilization management  procedures,  policies
          and  practices.  Communication  with  physicians  and  other  provider
          communities  shall be made to explain and justify review and treatment
          protocols, cost containment measures and case management findings.

Appeals  -- In order to  provide  mechanisms  that will  assure,  and be seen to
assure,  fairness  in  Utilization  Management  processes  with  respect  to the
provision  of  services  to health care  recipients,  a three (3) level  appeals
process shall be established and maintained.  With the prior approval of BCBSNJ,
CHCM shall  establish  and  maintain the  required  mechanisms  for such appeals
process and provide technical and administrative support therefor. Except as set
forth above with respect to such  mechanisms  and support,  the appeals  process
shall be conducted and controlled in all material respects by BCBSNJ.

     The three levels of medical appeal shall include:

          Review by the  physician  advisor  rendering  an initial  denial where
          additional  clinical  information  is presented,  which may be used to
          modify the original decision.

          Review  by a  physician  advisor,  other  than the  physician  advisor
          rendering the original  decision,  who is a licensed,  board certified
          physician or other medical

<PAGE>

          specialist in the same or similar  specialty as typically  manages the
          medical   condition,   procedure  or  treatment  as  mutually   deemed
          appropriate.

          Review by a panel of reviewers that shall include a representative  of
          each of the  following  organizational  units:  CHCM,  BCBSNJ  medical
          staff,  BCBSNJ  legal  staff  and  the  appropriate  BCBSNJ  Marketing
          Divisions.

     When ASO cases are  appealed,  a fourth level of appeal  shall  include the
     BCBSNJ clientpurchaser of the benefit plan.

     All appeals will be reviewed  promptly and resolved  within the time frames
     specified  by URAC.  Decisions  shall be  communicated  in writing to those
     affected  (patient,  physician,  and hospital).  Data regarding appeals and
     their  results  shall be used by CHCM in  reviewing  and  educating  review
     personnel.

     Appeals   unrelated  to  clinical   decisions  on  medical   necessity  and
     appropriateness,  which may include  scope of benefits  and  administrative
     matters, shall be reviewed and decided by BCBSNJ.

Customer Service -- CHCM shall comply with all customer service  requirements as
specified for accreditation with URAC.

Unless more  stringently  specified by URAC standards,  customer  service levels
shall be maintained at least at the following levels:

     Telephone calls shall be answered on average within 20 seconds.

     Lost call ratio shall be maintained at under five percent (5%).

     Line busy rates shall be maintained at under five percent (5%).

     98% of prospective, urgent review appeals shall be decided and communicated
     within one (1) business day of receipt.

     98% of second level review appeals shall be decided and communicated within
     ten (10)  business  days of receipt.  98% of third level  appeals  shall be
     decided and communicated within twenty (20) business days of receipt of all
     relevant information, including the clinical record.

Account  Education  and Relations -- CHCM shall  provide  account  education and
relations  services relating to utilization  review and utilization  management,
including, without limitation,  provision of communications materials to support
the BCBSNJ marketing divisions in their dealings with

<PAGE>

BCBSNJ customers and the Serviced  Population,  the cost of such materials to be
agreed upon by the parties (other than utilization  reporting materials prepared
in the ordinary  course of business,  which shall be provided  without charge by
CHCM);

CHCM shall be involved in the planning and conduct of new account education.

CHCM's sales staff shall be available and participate, if requested, with BCBSNJ
in the sale of CHCM's services to new accounts and prospects.

Product  Development  -- CHCM  shall  reasonably  cooperate  with  BCBSNJ in the
development of the Utilization Review and Utilization  Management  components of
future products and lines of business.

Group Claims and Utilization Reporting

     BCBSNJ shall retain  responsibility for group claims, basic utilization and
     reporting  of  actuarial  data to BCBSNJ  customers.  CHCM and BCBSNJ shall
     develop  specifications  for a  mutually  acceptable  level of  detail  and
     frequency of reporting necessary to meet requirements to be set by BCBSNJ.

<PAGE>

                                Schedule 5.2(a)

                        Qualifications and Criteria for
               Professional Review and Case Management Personnel
                      and Certain Review and Support Staff

Appropriately  qualified  professional  review  personnel shall review cases and
provide indicated authorizations and certifications according to BCBSNJ-approved
review protocols and procedures.  Qualifications are described below and must be
met unless a higher  standard is required  for URAC  certification,  which shall
supersede the requirements described below.

     Appropriately  trained  non-clinician  staff (subject to BCBSNJ  approval),
     licensed registered nurses or Physician Advisors may pre-certify  requested
     services.

     New  Jersey  licensed   registered  nurses  (RNs),  using  BCBSNJ  approved
     criteria,  or Physician Advisors may provide approval for extension of stay
     or services beyond initial authorizations.

     Under  no  circumstances  shall a  reviewer,  other  than an  appropriately
     qualified Physician Advisor, render a non-certification decision. Physician
     Advisors  shall  review  all  admissions  and  continued  stays that do not
     satisfy  guidelines  for inpatient  care,  and all  determinations  require
     interaction with the patient's attending physician.

     CHCM shall  maintain  a team of expert  Physician  Advisors,  appropriately
     qualified, to provide all necessary services to BCBSNJ.

     All review and support staff shall receive  initial and regular  continuous
     training in medical terminology,  utilization management practices,  review
     protocols, telephone techniques, computer and systems techniques, insurance
     plan programs, hospital guidelines, URAC policies and procedures, and other
     topics  to  ensure   first   quality   service  and  to  comply  with  URAC
     accreditation requirements.

<PAGE>

                                  Schedule 5.5

                              Designated Employees

Individual                         Title
----------                         -----

Richard Freeman                    Senior Vice President            
Ellen Friedman                     Vice President of Care Management

<PAGE>

                                  Schedule 5.7

                    Required Reports and Reporting Intervals

CHCM shall provide the following quarterly reports to BCBSNJ:

          Activity Reports showing,  at a minimum,  1) Total
          Reviews, Days Requested,  Days Approved,  and Days
          Denied for all  inpatient  cases  (specifying,  as
          appropriate,     subacute     inpatient     cases,
          rehabilitative  facility cases and skilled nursing
          facility cases) initiated  during the quarter,  2)
          Outpatient  Services Reviewed,  Services Approved,
          and Services Denied,  3) the number and percentage
          of i) inpatient and ii) outpatient  cases referred
          to  Physician  Advisors  during the quarter and 4)
          results   of  all  case   management   activities,
          including case volumes and estimated savings.

          Efficiency Reports showing, at a minimum, Staffing
          and activity  including phone calls,  Faxes, Total
          Inpatient Review, Total Outpatient Review,  Number
          of  Retrospective  Reviews,  and  Number  of Large
          Medical  Case  Management  cases  opened,   number
          closed, and number open at the end of the Quarter.

          HEDIS-compatible  reports  identifying  savings in
          medicine and surgery resulting from review, impact
          on length  of stay,  appropriateness  of  setting,
          necessity  of  procedures   and  case   management
          aversion.

          Customer  Service  Reports  showing,  on a  weekly
          basis:  1) the percentage of calls answered within
          20 seconds;  2) lost call ratios; and 3) line-busy
          ratios.

Results of Retrospective Reviews will be reported as reviewed, which shall be no
less frequently than semi-annually.

Customer  Service Reports will be sent to BCBSNJ  promptly  following the end of
the month. All other reports will be sent to BCBSNJ within 45 days following the
end of the quarter.

Report  formats and content  will be  suggested  by CHCM and shall be subject to
approval by BCBSNJ.

<PAGE>

                                  Schedule 7.4

                                   Litigation

CAI has been served with a demand for Arbitration by Mr. John Lincoln,  a former
employee as claimant (the  "Claimant"),  dated November 13, 1995 pursuant to the
American Arbitration  Association  Commercial  Arbitration Rules. The Demand for
Arbitration   alleges  that  CAI  breached  the  Claimant's  written  employment
agreement by failing to pay salary to the Claimant and by its subsequent failure
to pay liquidated  damages. By letter dated October 31, 1995, CAI terminated the
employment  agreement with the Claimant for "cause" as defined in the employment
agreement.  The  Demand  for  Arbitration  specifies  a claim for  relief by the
Claimant of approximately $625,000 in salary plus other unspecified compensatory
and  punitive  damages.  CAI  has  recorded  separation  costs  of  $640,000  in
connection therewith as of October 31, 1995.

CAI and the  Claimant  have been  engaged in  settlement  discussions  since the
filing of the Demand for  Arbitration  and Management  believes that the parties
have reached an  agreement  in  principle  on the  material  terms of a proposed
settlement,  subject to the preparation  and execution of definitive  settlement
agreements.  No assurances  can be given,  however,  that the settlement of this
proceeding will be effectuated.

On January 30, 1995, CAI entered into a three (3) year Consulting Agreement with
a consultant,  Robert T. Caruso (the "Consultant"),  who was an executive of the
former  parent  company,  for  strategic  planning  services and  assistance  in
securing  financial  arrangements.  This Consulting  Agreement was terminated on
April 24, 1995 in connection  with the closing of the Separation  Agreement with
Primedex  Health  Systems,  Inc. On May 1, 1995,  CAI agreed to enter into a new
consulting   agreement  with  an  entity  (the  "Entity")  affiliated  with  the
Consultant (the "New Consulting  Agreement") providing for payments for services
at the monthly rate of $38,500 to commence on October 1, 1996 (one day after the
expiration  of  the  Consultant's  consulting  agreement  with  Primedex  Health
Systems,  Inc.) and to  terminate  on  December  31,  1998.  Pursuant to the New
Consulting  Agreement,  the  Entity  will  provide  advice  and  counsel  to CAI
regarding  business  strategies  and  implications,  oversight and assistance in
financing arrangements. On August 22, 1995, pursuant to a resolution approved by
its Board of Directors on August 17, 1995, CAI  terminated the New  Consultation
Agreement with the Consultant or any entity  affiliated  with the Consultant for
cause.  Management  believes  that  any  potential  claim  against  CAI  by  the
Consultant is without merit.

<PAGE>

                                  Schedule 7.5

                    Licenses Required to Perform Obligations

The following  licenses are to be maintained  until BCBSNJ approved  replacement
systems/licenses are in place:

   Medical Approval Protocol System (MAPS)

   PAS length of stay tables

   Access to BCBSNJ's National Second Opinion Panel for a Second Opinion Network

   MEDecision site licenses

<PAGE>

                                                                  Exhibit 4.1(d)

                Illustrative Quarterly Bonus Payment Calculation
                            as of Third-Quarter 1997

Assumptions:  Entries in columns (1), (2), (3)
              First-Quarter Payment (FQP) = $0, Second-Quarter 
              Payment (SQP) = $10,000

                                   (1)    (2)    (3)    (4)     (5)

Individual Under 65 CMM            15     550    500    515    $222,075

Individual Under 65 non-CMM        65     365    325    330     320,775

Small Employer                     75     285    250    250           0

Corporate 50-99                    25     310    280    275    (123,375)
                                                               --------
                                                                   S

                                                                     Section
                                                                     Reference
                                                                     ---------

(1)  =   Average number over first nine months of 1997 of 
         members of the Serviced Population for the 
         Current Year/1,000                                             N/A

(2)  =   Days/1,000 Prior Year                                          1.3

(3)  =   Days/1,000 Current Year                                        1.2

(4)  =   Target = (2) - 35                                              1.57

(5)  =   Calculation = [(4) - (3)] x $987 x (1)                         1.7

S    =   Sum of entries in column 5 = $419,475                          1.7

Annualized Bonus Payment (ABA) = .25 x S (if S >= 0) = $104,869         1.7

Third-Quarter 
  Bonus Payment = .60 (ABA/4) + [[(.60 ABA/4) x 2] - (FQP + SQP)]       4.1(d)

                = $15,730 + [($31,461 - ($0 + $10,000)]

                = $37,191

<PAGE>

                                Exhibit 10.3(a)

                   Form of Post-Termination License Agreement

                    [Not attached; on file with the Company]