<PAGE>

                                                                   EXHIBIT 10.36

                                    AGREEMENT

         This settlement agreement is dated and entered into this twenty-third
day of July, 2003, by and among the State of Texas ("Texas"), the Office of the
Attorney General ("OAG"), the Texas Department of Insurance ("TDI"), including
the Texas Commissioner of Insurance ("Commissioner") (collectively the "State"),
and PacifiCare of Texas, Inc. ("PacifiCare"). The State and PacifiCare
(collectively the "Parties") agree as follows:

                                 I. DEFINITIONS

         For purposes of this Agreement, the following terms have the meanings
specified below:

         "Agreement" means this settlement agreement.

         "Court" means the District Court of Travis County, Texas, 250th
Judicial District.

         "HPN" means Heritage Physicians Network.

         "HSW" means Heritage Southwest Medical Group, P.A.

         "Intervenors" shall have the meaning given it in Section II, below.

         "Lawsuit" shall have the meaning given it in Section II, below.

         "MOU" means the Memorandum of Understanding, dated March 21, 2003,
entered into by the Parties.

         "MSM" means Medical Select Management.

         "Other Investigations" means all currently pending investigations by
the OAG related to PacifiCare as of the date of the MOU, including the Civil
Investigative Demands and Visitation Letters listed in Section V, below, but
excluding the two Visitation Letters listed in Section V, Item 2, below, to the
extent either of these two Visitation Letters address claims, acts, events,
occurrences or omissions that are not Released Claims, as defined below; and
with the exception of Case #44891, all pending civil investigations relating to
PacifiCare that have been referred to the Legal Division of TDI as of the date
of the MOU, including the payment of delegated and non-delegated claims as
described in Section IV, Item 4, below.

         "Other Lawsuits" means the following actions:

         1.       No. GN 103374, PacifiCare of Texas, Inc. vs. The State of
                  Texas And John Cornyn, Attorney General, Individually, and In
                  His Official Capacity; in the district court of Travis County
                  Texas, 200th Judicial District;

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                                                                    PAGE 1 OF 20

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         2.       No. GN 103351, PacifiCare of Texas, Inc. vs. The State of
                  Texas And John Cornyn, Attorney General, Individually And In
                  His Official Capacity; in the district court of Travis County,
                  Texas, 200th Judicial District; and

         3.       No. 98-13971, The State of Texas vs. PacifiCare of Texas, Inc.
                  in the district court of Travis County, Texas, 201st Judicial
                  District.

         "Provider Bankruptcies" means the MSM and HSW bankruptcies, as
described in Section IV, Items 1 and 2, below.

         "Released Claims" means and includes any and all civil, administrative,
equitable and other claims, demands and causes of action of any nature
whatsoever against the Released Parties, whether pending or threatened,
suspected or unsuspected, contingent or non-contingent, known or unknown, for
any and all damages, fines, penalties, assessments and other remedies or relief
that in any way arise out of or in any way relate to acts, events, occurrences
and/or omissions occurring before March 31, 2003 (i) that were alleged, or that
could have been alleged, in the Lawsuit or Other Lawsuits, or (ii) that relate
to the Other Investigations. Notwithstanding the foregoing, Released Claims does
not mean and does not include any and all claims, demands or causes of action of
any nature whatsoever, whether pending or threatened, suspected or unsuspected,
contingent or non-contingent, known or unknown, for any and all damages, fines,
penalties, assessments or other remedies or relief that in any way arise out of
or in any way relate to (i) TDI Case #44891, or (ii) any and all matters under
review at TDI relating to PacifiCare that have not been referred to the Legal
Division of TDI as of the date of the MOU. In addition, with respect to the
Visitation Letter dated May 22, 2002 directed to PacifiCare Life Assurance
Company and the Visitation Letter dated March 28, 2002 directed to PacifiCare of
Texas, Inc., Released Claims does not mean and does not include actions for
injunctive relief directly related to PacifiCare's documentation and methodology
of claims adjustments and documentation of claim payments and denials with
respect to commercial claims for health care services not subject to capitation
and rendered by direct contracted providers. As to such Visitation Letters,
however, Released Claims means and includes any claim or action seeking to
compel the payment of any kind for any reason.

         "Released Parties" means and includes (i) with respect to releases
given by the State: PacifiCare of Texas, Inc., as well as its past and present
parent companies, subsidiaries and affiliates, and each of their past and
present officers, employees, agents, directors, representatives, attorneys,
predecessors, successors and assigns; and (ii) with respect to releases given by
PacifiCare: the State of Texas, the OAG, the Attorney General of the State of
Texas in his official and individual capacity, the TDI, the Commissioner in his
official and individual capacity, and their respective officers, employees,
agents, representatives and attorneys, predecessors and successors.

         "Stay" shall mean the agreed-to stay of the Lawsuit, as described in
Section III, below.

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                                  II. RECITALS

         WHEREAS, on or about November 27, 2001, PacifiCare filed suit against
TDI and the State of Texas in Cause No. GN 103906, PacifiCare of Texas, Inc. vs.
The Texas Department of Insurance and the State of Texas, in the district court
of Travis County, Texas, 53rd Judicial District;

         WHEREAS, on or about February 11, 2002, the State of Texas and the
Commissioner filed suit against PacifiCare in Cause No. GV 200718, State of
Texas and Jose Montemayor, Commissioner of Insurance of the State of Texas vs.
PacifiCare of Texas, Inc., in the district court of Travis County, Texas, 250th
Judicial District;

         WHEREAS, by agreed order dated September 18, 2002, Cause No. GV 200718
was consolidated into Cause No. GN 103906, and styled PacifiCare of Texas, Inc.
vs. The Texas Department of Insurance and the State of Texas, in the district
court of Travis County, Texas, 53rd Judicial District (the "Lawsuit"), and
pursuant to the Travis County Local Rules of Procedure and Decorum, the Lawsuit
was assigned to the Honorable Judge John K. Dietz, presiding judge of the 250th
Judicial District Court;

         WHEREAS, the Texas Medical Association, Robert Newhouse, Trustee of the
Heritage Southwest Bankruptcy Estate and in his capacity as representative of
certain medical providers (which representative capacity PacifiCare reserves the
right to contest), Memorial Hermann Hospital System, and other medical providers
have intervened or may intervene in the Lawsuit (the "Intervenors");

         WHEREAS, the undersigned recognize that bona fide disputes and
controversies continue to exist between the Parties in the Lawsuit, both as to
fact and extent of liability, if any;

         WHEREAS, by reason of such disputes and controversies, the undersigned
entered into the MOU on March 21, 2003 and agreed to enter into a definitive
settlement agreement, within thirty (30) days following such date, which date
has been extended by mutual agreement of the Parties;

         WHEREAS, the Parties desire to implement a system to provide for the
resolution of claims of providers in the Provider Bankruptcies and HPN and for
the payment of outstanding delegated and non delegated claims, if any;

         WHEREAS, PacifiCare denies each of the claims alleged by the State and
the Intervenors, and further denies wrongdoing of any kind whatsoever, and does
not admit liability; and

         WHEREAS, after considering the benefits to be gained under this
Agreement, the risks associated with continuing this complex and lengthy
litigation, the likelihood of success on the

AGREEMENT

                                                                    PAGE 3 OF 20

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merits of the litigation, the public interest, the welfare of Texas' consumers,
and to avoid further expense and diversion of time and resources, the State and
PacifiCare believe this Agreement is fair, adequate, and reasonable.

         NOW THEREFORE IT IS AGREED by the Parties as follows:

                              III. STAY OF LAWSUIT

         Following execution of the MOU, the Parties filed a joint motion and
agreed order, in the form attached hereto as Exhibit "A," requesting a stay of
the Lawsuit until twelve (12) months following the date of this Agreement or for
such additional period as the Parties may mutually agree (the "Stay"). The
Parties agree, however, that if after eight months following execution of this
Agreement, the requirements set forth in Section IV., Items 1 and 2, below,
relating to the Provider Bankruptcies, have not been satisfied by PacifiCare,
the Parties shall meet in good faith to determine whether the Stay should
continue for the remaining four month period. In the event there is a
disagreement between the Parties as to continuing the Stay for the remaining
four-month period, then PacifiCare shall have the right to request permission
from the Court to extend the Stay up to a maximum period of four months to allow
PacifiCare to continue its efforts with respect to the Provider Bankruptcies.
The order staying the Lawsuit shall provide that the trial date in the Lawsuit
and any other deadlines in the Lawsuit that have not passed as of the date of
the MOU shall be extended for a period of time equal to the period from the date
the MOU was executed to the end of the Stay.

         Promptly upon the execution of this Agreement, the Parties shall file
agreed motions and orders in the forms attached hereto as Exhibits "B," "C,"
"D," respectively, to stay the following lawsuits for the duration of the Stay:

                  (i)      No. GN 103374, PacifiCare of Texas, Inc. vs. The
                           State of Texas And John Cornyn, Attorney General,
                           Individually And In His Official Capacity; in the
                           district court of Travis County, Texas, 200th
                           Judicial District

                  (ii)     No. GN 103351, PacifiCare of Texas, Inc. vs. The
                           State of Texas And John Cornyn, Attorney General,
                           Individually And In His Official Capacity; in the
                           district court of Travis County, Texas, 200th
                           Judicial District

                  (iii)    No. 98-13971, The State of Texas vs. PacifiCare of
                           Texas, Inc., in the district court of Travis County,
                           Texas, 201st Judicial District.

         Following execution of the MOU and throughout the Stay, no orders will
be sought, signed or entered in the Lawsuit that affect the substantive rights
of the Parties, and if during this period, any order is signed or entered,
nothing in this Agreement shall prevent any of the Parties from pursuing an
appeal. Any documents and information provided by PacifiCare to

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                                                                    PAGE 4 OF 20

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the State or by the State to PacifiCare pursuant to this Agreement during the
Stay will be subject to the Protective Order in the Lawsuit.

         The purpose of the Stay is to allow the Parties and others to proceed
with due diligence and in good faith with the activities required to settle the
Provider Bankruptcies, as described in Section IV, Items 1 and 2 below, and
engage in a good faith review of outstanding valid provider claims related to
HPN, as described in Section IV, Item 3, below, and pay outstanding delegated
and non-delegated claims, if any, as described in Section IV, Item 4, below,
without the necessity of the Parties simultaneously prosecuting the Lawsuit.

                     IV. ACTIONS TO BE TAKEN DURING THE STAY

         1.       MSM Bankruptcy. This concerns the case styled: In re Medical
Select Management, Debtor; Case No. 01-45298-BJH-11 (N. D. Tex. Bankr. - Fort
Worth). During the Stay, PacifiCare will enter into an agreement or agreements
with the MSM bankruptcy trustee or other creditor representatives that provide
that funds will be paid to provider creditors of MSM under a confirmed plan or
settlement agreement approved by the bankruptcy court and that provide releases
satisfactory to PacifiCare.

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

                           1.       Execute a term sheet with the MSM bankruptcy
                                    trustee or other creditor representative(s)
                                    in the MSM bankruptcy within 30 days of the
                                    date of this Agreement;

                           2.       The filing by the MSM bankruptcy trustee or
                                    other party (including the Parties to this
                                    Agreement) of a disclosure statement and
                                    plan in accordance with the term sheet with
                                    the bankruptcy court within 30 days of
                                    execution of the term sheet;

                           3.       Completion by the MSM bankruptcy trustee
                                    and/or other party (including the Parties to
                                    this Agreement) of solicitation of providers
                                    to vote on the plan within 90 days following
                                    the bankruptcy court's approval of the
                                    disclosure statement;

                           4.       Obtain confirmation of the plan by the
                                    bankruptcy court within 8 months of the date
                                    of this Agreement.

                  b.       In the event that the total provider creditor claims
         allowed by the bankruptcy court ("Total Allowed Provider Claims")
         exceed the provider creditor claims sampling estimate, as determined by
         Medical Pathways Management Corporation (the "Claims Estimate"),
         PacifiCare agrees to increase its agreed upon contribution (the
         "PacifiCare Base Contribution") to fund payment of provider creditor
         claims as follows: PacifiCare shall contribute an additional amount
         equal to the difference between the Claims Estimate and the Total
         Allowed Provider Claims multiplied by the fraction, the numerator of
         which shall be the PacifiCare Base

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                                                                    PAGE 5 OF 20

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         Contribution and the denominator of which shall be the Claims Estimate;
         provided, however, PacifiCare's additional contribution will be capped
         at the greater of (i) 20% of the PacifiCare Base Contribution, or (ii)
         $500,000. For example, assuming the Claims Estimate is $12 million, the
         Total Allowed Provider Claims is $15 million, and the PacifiCare Base
         Contribution is $1,500,000, PacifiCare's additional contribution would
         be $375.000. This is determined as follows: Step 1: $15 million (Total
         Allowed Provider Claims) minus $12 million (Claims Estimate) equal $3
         million; Step 2: $3 million is multiplied by .125 (.125 being the
         fraction resulting from $1.5 million (PacifiCare Base Contribution)
         being divided by $12 million(Claims Estimate)) = $375,000. Step 3: The
         cap on PacifiCare's additional contribution is the greater of (i) 20%
         of the PacifiCare Base Contribution--in this example, $300,000
         ($1,500,000 multiplied by 20% = $300,000); or (ii) $500,000. Because,
         in this example, the $375,000 does not exceed the greater of the two
         caps, PacifiCare's additional contribution remains at $375,000. The
         Parties shall not use or interpret this example as any type of
         approval, endorsement or prediction by the State of the Claims
         Estimate, PacifiCare Base Contribution, or Total Allowed Provider
         Claims in the MSM Bankruptcy. The reference to Medical Pathways
         Management Corporation herein is solely for the purpose of determining
         the addition to the PacifiCare Base Contribution, if any, contemplated
         by this paragraph. Nothing herein shall constitute an endorsement or
         approval of Medical Pathways Management Corporation or the scope of the
         services it has rendered.

                  c.       PacifiCare asserts a claim in the MSM bankruptcy in
         excess of $11 million as a result of alleged damages suffered from the
         breach of an agreement between PacifiCare and MSM (the "PacifiCare MSM
         Damage Claim"). PacifiCare also asserts an administrative claim in the
         MSM bankruptcy (the "PacifiCare MSM Administrative Claim"). PacifiCare
         will not receive any distribution from the MSM bankruptcy estate for
         the PacifiCare MSM Damage Claim or the PacifiCare MSM Administrative
         Claim until all allowed general unsecured creditor claims are paid, but
         this provision shall not affect PacifiCare's rights and priorities
         relative to other licensed payors, insiders or affiliates. Nothing
         herein shall in any way constitute an endorsement or approval by the
         State of the amount or viability of the PacifiCare MSM Damage Claim or
         the PacifiCare MSM Administrative Claim. In addition, to the extent
         that PacifiCare purchases or obtains any claims in the MSM Bankruptcy,
         PacifiCare agrees to forgo or give back any distribution on such
         claim(s) to the extent the distribution is greater than the dollar
         amount paid to the transferor for the claim(s).

                  d.       Regardless of the thresholds that PacifiCare may
         require in the MSM bankruptcy, for purposes of this Agreement only, the
         Parties shall use best reasonable efforts toward achieving an opt-in
         level of 90% of the providers who vote on the plan. Providers paid or
         caused to be paid outside the bankruptcy will be counted as "opt- in"
         providers for purposes of this calculation, as will providers, if any,
         who are unimpaired and thus are deemed to vote on the plan pursuant to
         11 USC Section 1126(f) or 11 USC Section 105. For so long as this
         agreement is in effect, PacifiCare shall not use 11

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                                                                    PAGE 6 OF 20

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         USC Section 105 to obtain a determination that a provider is not
         impaired in any manner inconsistent with 11 USC Section 1124 except
         with respect to providers who elect to participate in a convenience
         class. For purposes of this Agreement, any holder of a provider claim
         who elects to participate in a convenience class shall be deemed
         unimpaired. PacifiCare will provide the results of the vote to the
         State within two business days of the votes being filed with the
         bankruptcy court. Notwithstanding anything herein to the contrary, if
         PacifiCare reaches an agreement with a provider for the transfer or
         compromise of its claim against PacifiCare, such provider's vote on a
         plan (to the extent the provider continues to have a lawful right to
         vote on the plan) shall not count for purposes of the threshold set
         forth above, but the resolution or transfer of the claim will be
         counted as an affirmative acceptance for purposes of the threshold set
         forth above. In the event the opt-in level is not achieved, the Parties
         shall meet in good faith to discuss possible modifications of the
         opt-in level or other alternatives, and if the Parties cannot agree,
         the OAG may terminate this Agreement. As used herein the phrase
         "Providers paid or caused to be paid outside the bankruptcy" shall mean
         those providers whose claims were paid or caused to be paid by
         PacifiCare and shall include: (i) providers whose claims were acquired
         or caused to be acquired by PacifiCare; and (ii) providers who agreed
         with PacifiCare to transfer or compromise their claims, provided that
         the claim(s) of any such providers are for services rendered to health
         plan members assigned to MSM, which services were rendered prior to the
         filing of the bankruptcy petition and which were not paid for at the
         time the bankruptcy petition was filed.

                  e.       For so long as this Agreement is in effect: (i)
         PacifiCare shall not propose, support, or fund, any plan, nor support
         or propose any Bankruptcy Court order (including any order confirming a
         plan), which specifically addresses whether any claims of the State,
         the TDI or the OAG against PacifiCare are modified, impaired, or
         discharged; and (ii) except with respect to providers who are
         unimpaired or elect to participate in a convenience class, PacifiCare
         shall not propose, support or fund any plan which provides that with
         respect to providers (a) holding allowed claims at the conclusion of
         the time for voting on the plan in the MSM bankruptcy and (b)who did
         not affirmatively opt-in to a settlement with PacifiCare, that such
         providers' rights against PacifiCare are discharged solely by reason of
         confirmation of the plan.

                  f.       Nothing in this Agreement shall prevent PacifiCare
         from making a payment pursuant to a plan or settlement even if the
         providers have not opted in to the plan or settlement at the level
         satisfying the requirements of this Agreement. Notwithstanding the
         foregoing, the act of payment by itself shall not satisfy the opt-in
         levels required hereunder.

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

AGREEMENT

                                                                    PAGE 7 OF 20

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         2.       HSW Bankruptcy. This concerns the case styled: In re Heritage
Southwest Medical Group, P.A., Alleged Debtor(s); Case No. 01-30212-HCA-7 (N.D.
Tex. Bankr. - Dallas). During the Stay, PacifiCare will enter into an agreement
or agreements with the HSW bankruptcy trustee or other creditor
representative(s) that provide that funds will be paid to provider creditors of
HSW under a court approved plan or settlement agreement(s) and that provide
releases satisfactory to PacifiCare.

                  a.       PacifiCare will use best reasonable efforts to (i)
         reach a settlement that will result in a motion being filed under
         Bankruptcy Rule 9019 in the HSW bankruptcy within 120 days of the
         execution of this Agreement, and, (ii) if such motion is filed and
         approved by the court, complete solicitation of providers to accept the
         settlement within 90 days following the order approving the settlement
         becoming final. Payment will be made within 30 days after the
         solicitation is complete at a threshold level acceptable to PacifiCare;
         provided, however, that in the event the State files an objection to
         the settlement prosecuted in accordance with Bankruptcy Rule 9019,
         PacifiCare reserves the right not to make the payments pursuant to the
         settlement or to delay the payments until the State's objection is
         resolved by final order.

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

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

                           1.       Execute a term sheet with the HSW bankruptcy
                                    trustee, other creditor representative(s),
                                    or the debtor in the HSW bankruptcy within
                                    120 days of the date of this Agreement;

                           2.       The filing by the HSW bankruptcy trustee or
                                    other party (including the Parties to this
                                    Agreement) of a disclosure statement and
                                    plan in accordance with the term sheet with
                                    the bankruptcy court within 30 days of
                                    execution of the term sheet;

                           3.       Completion by the HSW trustee and/or other
                                    party (including the Parties to this
                                    Agreement) of solicitation of providers to
                                    vote in favor of the plan within 90 days
                                    following the court's approval of the
                                    disclosure statement;

                           4.       Plan confirmation by the bankruptcy court
                                    within eight months of the date of this
                                    Agreement.

                  d.       In the event that the total provider creditor claims
         allowed by the bankruptcy court ("Total Allowed Provider Claims")
         exceed the provider creditor claims sampling estimate as determined by
         Medical Pathways Management

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         Corporation, who has been jointly engaged by the HSW Trustee and
         PacifiCare (the "Claims Estimate"), PacifiCare agrees to increase what
         its agreed upon contribution may be (the "PacifiCare Base
         Contribution") to fund payment of provider creditor claims as follows:
         PacifiCare shall contribute an additional amount equal to the
         difference between the Total Allowed Provider Claims and the Claims
         Estimate multiplied by the fraction, the numerator of which shall be
         the PacifiCare Base Contribution and the denominator of which shall be
         the Claims Estimate; provided, however, PacifiCare's additional
         contribution will be capped at 20% of the PacifiCare Base Contribution
         or $500,000, whichever is greater. The reference to Medical Pathways
         Management Corporation herein is solely for the purpose of determining
         the addition to the PacifiCare Base Contribution, if any, contemplated
         by this paragraph. Nothing herein shall constitute an endorsement or
         approval of Medical Pathways Management Corporation or the scope of the
         services it has rendered.

                  e.       PacifiCare asserts a claim in the HSW bankruptcy in
         excess of $18 million as a result of alleged damages suffered from the
         breach of an agreement between PacifiCare and Heritage Southwest
         Medical Group, Inc., which agreement was guaranteed by HSW (the
         "PacifiCare HSW Damage Claim"). PacifiCare also asserts an
         administrative claim in the HSW bankruptcy (the "PacifiCare HSW
         Administrative Claim"). PacifiCare will not receive any distribution
         from the HSW bankruptcy estate for the PacifiCare HSW Damage Claim or
         PacifiCare HSW Administrative Claim until all allowed general unsecured
         creditor claims are paid, but this provision shall not affect
         PacifiCare's rights and priorities relative to other licensed payors,
         insiders or affiliates. Nothing herein shall in any way constitute an
         endorsement or approval by the State of the amount or viability of the
         PacifiCare HSW Damage Claim or the PacifiCare HSW Administrative Claim.
         To the extent that PacifiCare purchases or obtains any claims in the
         Heritage Bankruptcy, PacifiCare agrees to forgo or give back any
         distribution on such claim(s) to the extent the distribution is greater
         than the dollar amount paid to the transferor for the claim(s).

                  f.       Regardless of the thresholds that PacifiCare may
         require in the HSW bankruptcy, for purposes of this Agreement only, the
         Parties shall use best reasonable efforts toward achieving an opt-in
         level of 90% of the providers who vote on the plan or affirmatively
         accept or reject the settlement under Bankruptcy Rule 9019 after
         solicitation of acceptances or rejections, as applicable. In the event
         a settlement under Bankruptcy Rule 9019 is utilized, PacifiCare agrees
         that all providers will be given the opportunity to accept or reject
         the settlement except (i) providers whose claims are not allowed at the
         time for acceptance or rejection, as applicable, or (ii) providers who
         have reached a compromise with PacifiCare or have transferred their
         claims. "Providers paid or caused to be paid outside the bankruptcy
         will be counted as "opt- in" providers for purposes of this
         calculation, as will providers, if any, who are unimpaired and thus are
         deemed to vote on the plan or settlement pursuant to 11 USC Section
         1126(f) or 11 USC Section 105. Notwithstanding anything to the contrary
         herein, for so long as this Agreement is in effect, PacifiCare shall
         not use 11 USC

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                                                                    PAGE 9 OF 20

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         Section 105 to obtain a determination that a provider is unimpaired in
         any manner inconsistent with 11 USC 1124 except with respect to
         providers who elect to participate in a convenience class. For purposes
         of this Agreement, any holder of a provider claim who elects to
         participate in a convenience class shall be deemed unimpaired.
         PacifiCare will provide the results of the vote to the State within two
         business days of the votes being filed with the bankruptcy court.
         Notwithstanding anything herein to the contrary, if PacifiCare reaches
         an agreement with a provider for the transfer or compromise of its
         claim against PacifiCare, such provider's vote on a plan or settlement
         (to the extent the provider continues to have a lawful right to vote on
         the plan or settlement) shall not count for purposes of the threshold
         set forth above, but the resolution or transfer of the claim will be
         counted as an affirmative acceptance for purposes of the threshold set
         forth above. In the event the opt-in level is not achieved, the Parties
         shall meet in good faith to discuss possible modifications of the
         opt-in level or other alternatives, and if the Parties cannot agree,
         the OAG may terminate this Agreement. As used herein, the phrase
         "Providers paid or caused to be paid outside the bankruptcy" shall mean
         those providers whose claims were paid or caused to be paid by
         PacifiCare and shall include: (i) providers whose claims were acquired
         or caused to be acquired by PacifiCare; and (ii) providers who agreed
         with PacifiCare to transfer or compromise their claims, provided that
         the claim(s) of any such providers are for services rendered to health
         plan members assigned to Heritage Southwest Medical Group, Inc., which
         services were rendered prior to the entry of the order for relief in
         the HSW bankruptcy case and paid for after the filing of the
         involuntary bankruptcy petition in the HSW bankruptcy case.

                  g.       For so long as this Agreement is in effect: (i)
         PacifiCare shall not propose, support or fund any plan or settlement,
         nor support or propose any Bankruptcy Court order (including any order
         confirming a plan or any settlement), which specifically addresses
         whether any claims of the State, the TDI or the OAG against PacifiCare
         are modified, impaired or discharged; and (ii) PacifiCare shall not
         propose, support or fund any Bankruptcy Rule 9019 Settlement or plan
         which provides that with respect to providers (a) holding allowed
         claims at the conclusion of time for voting on the plan or the
         conclusion of the solicitation process under a Bankruptcy Rule 9019
         Settlement and (b) who did not affirmatively opt-in to the plan or
         accept the settlement with PacifiCare, that such providers' claims
         against PacifiCare shall be discharged solely by reason of confirmation
         of the plan or approval of the settlement. Notwithstanding the
         foregoing, subsection (ii) shall not apply to providers who are
         unimpaired or elect to participate in a convenience class under a plan
         or a Bankruptcy Rule 9019 Settlement.

                  h.       Nothing in this Agreement shall prevent PacifiCare
         from making a payment pursuant to a court approved plan or settlement
         even if the providers have not opted in to the plan or settlement at
         the level satisfying the requirements of this Agreement.
         Notwithstanding the foregoing, the act of payment by itself shall not
         satisfy the opt-in levels required hereunder.

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                                                                   PAGE 10 OF 20

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

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

         4.       Payment of Delegated and Non-Delegated Claims. During the
Stay, PacifiCare agrees to the following with respect to payment of delegated
and non-delegated claims:

                  a.       For all contracted non-delegated valid commercial
         clean claims, if any, with dates of service from August 1, 2000 through
         March 31, 2003 which were not paid in accordance with the contract
         within 45 days of receipt of the claim and for which amounts are owing
         as provided in this paragraph, PacifiCare shall, within 90 days
         following the date of this Agreement, pay the provider the lesser of
         billed charges (as defined in 28 Texas Administrative Code Section
         21.2802(2)) the amount payable under the applicable contract plus the
         applicable contracted penalty rate, or the amount the provider agreed
         or agrees to accept as payment for the claim.

                  b.       For all contracted non-delegated valid commercial
         claims (which are not clean), if any, with dates of service from August
         1, 2000 through March 31, 2003 for which amounts are owing as provided
         in this paragraph, PacifiCare shall, within 90 days following the date
         of this Agreement, pay the lesser of the contracted rate or the amount
         the provider agrees to accept as payment for the claim.

                  c.       For all non-delegated valid commercial claims, if
         any, from non-contracted providers with dates of service from August 1,
         2000 through March 31, 2003, for which amounts are owing as provided in
         this paragraph, PacifiCare shall, within 90 days following execution of
         this Agreement, pay the lesser of the usual and customary amount or the
         amount the provider agrees to accept as payment for the claim.

                  d.       For all delegated valid commercial claims, if any,
         with dates of service from August 1, 2000 through March 31, 2003 for
         which amounts are owing as provided in this paragraph and which are the
         subject of a written provider complaint made to either TDI or
         PacifiCare, PacifiCare shall, within 120 days following the date of
         this Agreement, pay such claims, if any, at the applicable contract
         rate. This

AGREEMENT

                                                                   PAGE 11 OF 20

<PAGE>

         provision shall not apply to delegated provider claims related to the
         following delegates: MSM, HSW (including Heritage Southwest Medical
         Group, Inc.), HPN and Quantum Southwest Medical Associates, Inc. For
         purposes of this paragraph, for claims with dates of service on or
         before December 31, 2002, the written provider complaint must have been
         made prior to the execution of the MOU on March 21, 2003.

                  e.       For purposes of this Section IV, Item 4, clean claim
         shall have the meaning set forth in Texas Insurance Code Article
         20A.18B and 28 Texas Administrative Code Section 21.2801 et. seq. and
         for all claims with dates of service on or before December 31, 2002 and
         submitted prior to the execution of the MOU on March 21, 2003 shall
         have been clean on March 21, 2003.

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

                  g.       Within 90 days after PacifiCare provides the report
         to TDI, TDI shall identify any concerns regarding PacifiCare's
         compliance with the requirements of this Section IV, Item 4 and meet
         and confer in good faith with PacifiCare regarding such concerns and
         use best reasonable efforts to resolve any disagreements before the
         State may take any position that PacifiCare has failed to satisfy the
         requirements of this Section IV, Item 4. Nothing in this Agreement
         shall be construed to require PacifiCare to conduct an audit of any
         type with respect to claims with dates of service from August 1, 2000
         through March 31, 2003, as described in paragraphs (a) through (d),
         above, in order to satisfy the requirements of this Section IV, Item 4.
         Except as provided in Section VII, Section VIII, and Section IX, below,
         nothing in this Agreement limits the authority of TDI to require
         information pursuant to Texas Insurance Code Section 38.001 or to
         conduct examinations pursuant to Texas Insurance Code Articles 1.15 or
         20A.17 or to conduct any other investigation authorized by the
         Insurance Code to determine whether PacifiCare is in compliance with
         the requirements of this Section IV, Item 4. In addition, nothing in
         this Agreement limits the authority and ability of TDI to otherwise
         regulate PacifiCare regarding any matter that is not a Released Claim.

                     V. DISPOSITION OF OTHER INVESTIGATIONS

         1.       Representation of Prior Withdrawal of Civil Investigative
Demands and Certain Visitation Letters. The OAG represents and warrants that
prior to the date of the MOU the following Civil Investigative Demands and
Visitation Letters were withdrawn by the OAG and will not be re-served during
the Stay and that the withdrawals were not part of the bargained for
consideration of the MOU or this Agreement:

AGREEMENT

                                                                   PAGE 12 OF 20

<PAGE>

                  (i)      Civil Investigative Demand, First Request, dated
                           September 24, 2001 directed to PacifiCare of Texas,
                           Inc. and purportedly covering alleged improprieties
                           in delegation practices by PacifiCare of Texas, Inc.

                  (ii)     Civil Investigative Demand, Second Request, dated
                           September 24, 2001 directed to PacifiCare of Texas,
                           Inc. and purportedly covering alleged improprieties
                           in delegation practices by PacifiCare of Texas, Inc.

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

                  (iv)     Visitation Letter dated December 10, 2001 directed to
                           PacifiCare of Texas, Inc. and purportedly covering
                           alleged violations of the DTPA, article 21.21 of the
                           Texas Insurance Code and article 20A.18C of the Texas
                           Health Maintenance Organization Act.

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

         2.       Stay of Other Matters; Resolution of Certain Visitation
Letters. Except for TDI's investigation regarding case #44891, all pending civil
investigations that have been referred to the Legal Division of TDI as of the
execution of the MOU, including the payment of delegated and non-delegated
claims as described in Section IV, Item 4, above, all currently pending
investigations by the OAG related to PacifiCare as of the execution of the MOU,
and the following Visitation Letters shall be stayed during the Stay:

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

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

During the Stay, PacifiCare and the OAG will work in good faith to resolve
issues relating to the above two Visitation Letters. If PacifiCare and the OAG
do not reach an agreed resolution of these issues during the Stay, following the
Stay, the OAG may formally proceed with any

AGREEMENT

                                                                   PAGE 13 OF 20

<PAGE>

actions or claims related to these two Visitation Letters that are not Released
Claims. Any actions or claims related to these two Visitation Letters shall be
exempted from the requirements of any dismissals or final judgments as required
by this Agreement.

         3.       Tolling of Statute of Limitations. Any statute of limitations
applicable to any administrative or court action against PacifiCare by the TDI
or Commissioner to impose a sanction, penalty, fine or other relief for any
statutory or regulatory violations alleged in the Lawsuit will be tolled from
the date the MOU was executed and while the Stay is in effect. Any other matter
stayed pursuant to this Agreement will be tolled for the period the Stay is in
effect. The TDI and PacifiCare agree to enter into any further agreements as may
be appropriate to provide and assure the tolling of those actions during those
periods. During the period of the Stay, the TDI and Commissioner agree not to
file any administrative or other proceeding seeking a sanction, penalty, fine or
other relief for any statutory or regulatory violations alleged in the Lawsuit,
Other Lawsuits or Other Investigations. However, nothing in this Agreement
limits the authority and ability of the TDI to initiate an administrative
hearing regarding any matter that is not a Released Claim.

                       VI. GOOD FAITH EFFORTS DURING STAY

         All Parties shall use good faith efforts to facilitate the satisfaction
of the above requirements. Without limiting the foregoing, the State agrees to
support PacifiCare's efforts in meeting the requirements relating to the
Provider Bankruptcies and the HPN providers, consistent with the terms and
conditions of this Agreement. In the event the OAG reasonably determines that
good faith efforts are not being used by PacifiCare as required by this
Agreement, the OAG shall provide written notice to PacifiCare specifying any
alleged deficiencies and afford PacifiCare fifteen (15) days from the receipt of
such notice to address such alleged deficiencies. In the event the OAG and
PacifiCare do not agree that the alleged deficiencies have been addressed
satisfactorily, the OAG may move the Court to lift the Stay, provided that the
OAG first provides an additional subsequent reasonable notice to PacifiCare
before making such motion.

                        VII. EFFECTIVENESS OF SETTLEMENT

         Upon the satisfaction by PacifiCare or waiver by the State of the
requirements of Section IV, Items 1 through 4, above, the State shall promptly
provide PacifiCare with written notice of such satisfaction or waiver. Upon
receipt of such notice, PacifiCare shall cause to be completed all of the
requirements described in Sections X and XI below relating to payment to the
State of the attorneys fees and other additional payments. Once all the
requirements of Section IV, Items 1 through 4, above, have been satisfied by
PacifiCare or waived by the State, and all of the payments to the State have
been made pursuant to Sections X and XI, below, the settlement shall become
effective and the releases provided for in Section VIII, below, shall be deemed
given and effective with no further action required by any of the Parties.

AGREEMENT

                                                                   PAGE 14 OF 20

<PAGE>

         If the Stay of the Lawsuit ends or is lifted and the settlement has not
become effective or if this Agreement is terminated, then the parties shall
promptly submit an order agreed to as to form, if possible, as directed by the
Court on March 4, 2003 on the motions for summary judgment heard in the Lawsuit
on that day (together with a motion to have the Stay lifted if the Stay has not
already been lifted) and the Parties shall be free to resume the Lawsuit
proceedings, as well as any proceedings relating to the Other Lawsuits, Other
Investigations, or the Visitation Letters listed in Section V, Item2, and the
rights and obligations set forth in this Agreement shall have no force or effect
except as provided in: (i) Section III, above, regarding the extension of the
trial date and any other deadlines in the Lawsuit for a period of time equal to
the period from the date the MOU was executed to the end of the Stay; (ii)
Section V, Item 3, above, regarding the tolling of statutes of limitation during
the period the Stay is in effect; (iii) Sections X and XI, below, regarding the
return to PacifiCare of payments made pursuant to those Sections; and (iv)
Section XV, below.

                              VIII. MUTUAL RELEASES

         Upon the effectiveness of the settlement, as described in Section VII,
above, the Parties RELEASE, ACQUIT, and FOREVER DISCHARGE the Released Parties
from all Released Claims.

                   IX. AGREED JUDGMENTS AND AGREED DISMISSALS

         Upon the effectiveness of the settlement, the Parties shall take all
steps necessary to ensure that the following events occur:

         1.       Entry of Agreed Judgment in the Lawsuit. If upon the
effectiveness of the settlement, the State and PacifiCare are the only parties
in the Lawsuit, then they will submit an "Agreed Final Judgment and Permanent
Injunction" in the Lawsuit in the form attached hereto as Exhibit "E." If at
that time, the State and PacifiCare are not the only parties in the Lawsuit then
PacifiCare and State will submit a joint motion and agreed order severing the
other parties and submit an "Agreed Final Judgment and Permanent Injunction" in
the form attached hereto as Exhibit "E."

         2.       Entry of Agreed Dismissal in Other Lawsuits. The parties will
enter an "Agreed Dismissal" in each of the following lawsuits in the form
attached hereto as Exhibits "F," "G," and "H," respectively:

                  (i)      No. GN 103374, PacifiCare of Texas, Inc. vs. The
                           State of Texas And John Cornyn, Attorney General,
                           Individually And In His Official Capacity; in the
                           district court of Travis County, Texas, 200th
                           Judicial District;

                  (ii)     No. GN 103351, PacifiCare of Texas, Inc. vs. The
                           State of Texas And John Cornyn, Attorney General,
                           Individually And In His Official

AGREEMENT

                                                                   PAGE 15 OF 20

<PAGE>

                           Capacity; in the district court of Travis County,
                           Texas, 200th Judicial District; and

                  (iii)    No. 98-13971, The State of Texas vs. PacifiCare of
                           Texas, Inc., in the district court of Travis County,
                           Texas, 201st Judicial District.

                               X. ATTORNEY'S FEES

         PacifiCare shall pay $1.25 million in attorneys fees to the OAG as
follows: First, PacifiCare shall pay $750,000 (the "Escrowed Attorney's Fees")
upon execution of this Agreement to be held in trust in an interest bearing
account (the "Trust Account") at Wells Fargo Bank Texas, N.A. ("Wells Fargo")
subject to the Escrow Agreement, attached hereto as Exhibit "I" (the "Escrow
Agreement"). If the requirements set forth in the Escrow Agreement for release
of the Escrowed Attorney's Fees to the State are satisfied, the Escrowed
Attorney's Fees, together with any remaining interest thereon after payment of
escrow fees, shall be released by Wells Fargo to the State. Second, PacifiCare
shall, within 3 business days following the release of the Escrowed Attorney's
Fees by Wells Fargo to the State as described above, pay $500,000 to the State
by wire transfer in accordance with the wiring instructions to be provided by
OAG. If the Stay of the Lawsuit ends or is lifted and the settlement has not
become effective or if this Agreement is terminated, then the Escrowed
Attorney's Fees, together with any remaining interest thereon after payment of
escrow fees, shall be promptly returned to PacifiCare.

                XI. ADDITIONAL PAYMENTS TO BE MADE BY PACIFICARE

         PacifiCare shall pay $1.5 million in administrative services
reimbursement and $1.5 million in administrative penalties to TDI as follows.
First, PacifiCare shall pay $1.7 million (the "Escrowed Administrative
Payments") upon execution of this Agreement to be held in the Trust Account at
Wells Fargo and subject to the Escrow Agreement. If the requirements set forth
in the Escrow Agreement for the release of the Escrowed Administrative Payments
to the State are satisfied, the Escrowed Administrative Payments, together with
any remaining interest thereon after payment of escrow fees, shall be released
by Wells Fargo to the State. Second, PacifiCare shall, within 3 business days
following the release of the Escrowed Administrative Payments by Wells Fargo to
the State as described above, pay $1.3 million to the State by wire transfer in
accordance with the wiring instructions to be provided by OAG. If the Stay of
the Lawsuit ends or is lifted and the settlement has not become effective or if
this Agreement is terminated, then the Escrowed Administrative Payments,
together with any remaining interest thereon after payment of escrow fees, shall
be promptly returned to PacifiCare.

                          XII. SEVERANCE OF INTERVENORS

         This Agreement contemplates the possibility that some or all
Intervenors in the Lawsuit will agree to and participate in this Agreement. Each
Intervenor who desires to participate in

AGREEMENT

                                                                   PAGE 16 OF 20

<PAGE>

this Agreement shall execute the Agreement to Stay of the Lawsuit in the form
attached hereto as Exhibit "J".

         In the event any one or more of the Intervenors in the Lawsuit does not
execute Exhibit "J" by August 15, 2003, then the State and PacifiCare agree to
seek a severance of those non-settling Intervenors from the Lawsuit. This Motion
for Severance shall be in the form attached hereto as Exhibit "K".

                        XIII. BARGAINED FOR CONSIDERATION

         The Parties recognize that certain damages cannot be determined with
any precise degree of accuracy. The Parties also recognize that some damages or
elements of damages may not have manifested themselves as of the date of this
Agreement, and hence may be unknown to the Parties at this time. Recognizing
that, the Parties hereby bargain to include all such known and unknown damages
and elements of damages within the mutual releases provided for in Section VIII,
above.

                  XIV. CLOSING; SIGNING AND FILING OF DOCUMENTS

         If necessary, the Parties agree to conduct a "closing" as soon as
reasonably possible following the execution of this Agreement and another
"closing" as soon as reasonably possible following the effectiveness of the
settlement. The purpose of the closings shall be to sign the various exhibits to
this Agreement so they may be filed with the appropriate courts and delivered to
the applicable parties. The closings shall occur at a time and place mutually
agreed upon by the parties to this Agreement.

                          XV. NO ADMISSION OF LIABILITY

         The Parties acknowledge and agree that the agreements and transfer of
consideration contained in this Agreement are to compromise and settle disputed
claims, avoid the expense, uncertainties and hazards of litigation, and to buy
peace. It is further expressly understood and agreed that no payments made or
releases or other consideration given shall be construed as an admission of
liability or wrongdoing of any nature whatsoever, because all alleged liability
and wrongdoing has been expressly denied. The Parties further acknowledge that
Rule 408 of the Texas Rules of Evidence applies to this Agreement.

                                XVI MISCELLANEOUS

         The Parties agree to cooperate fully and to execute any and all
supplementary documents consistent with the terms and conditions of this
Agreement, and to take all additional actions which may be necessary or
appropriate to give full force and effect to the terms, conditions and intent of
this Agreement. The State further agrees that neither the State nor its agents
shall take any actions to interfere with PacifiCare's efforts to reach
compromises with the MSM Bankruptcy trustee and the HSW Bankruptcy trustee and
the HPN

AGREEMENT

                                                                   PAGE 17 OF 20

<PAGE>

providers, nor shall the State nor its agents solicit or encourage creditors or
any other interested parties to object to or impede such compromises. Nothing
herein shall preclude agreements to settle or acquire the beneficial interests
and rights in claims of providers of services to health plan members assigned to
HSW, MSM, or HPN.

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

         This Agreement may be amended or modified, and any of the terms,
covenants, or conditions hereof may be waived, only by a written instrument
executed by the Parties hereto, or in the case of a waiver, by the Party waiving
compliance. Any waiver by any Party of any condition, or of the breach of any
provision, term or covenant contained in this Agreement, in any one or more
instances, shall not be deemed to be nor construed as a waiver of any other
provision, term or covenant of this Agreement.

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

         This Agreement may be executed in multiple originals.

                     [Remainder of Page Intentionally Blank]

AGREEMENT

                                                                   PAGE 18 OF 20

<PAGE>

         EXECUTED in multiple originals on the date first written above.

                                  /s/ George Becker
                                  ----------------------------------------------
                                  GEORGE BECKER
                                  President, PacifiCare of Texas, Inc.

                                  /s/ Jose Montemayor
                                  ----------------------------------------------
                                  JOSE MONTEMAYOR
                                  Commissioner, Department of Insurance

                                  /s/ Barry R. McBee
                                  ----------------------------------------------
                                  BARRY R. McBEE
                                  First Assistant Attorney General

                                  /s/ Paul D. Carmona
                                  ----------------------------------------------
                                  PAUL D. CARMONA
                                  Acting Deputy Attorney General for Litigation

AGREEMENT

                                                                   PAGE 19 OF 20

<PAGE>

                                    EXHIBITS

A.       Joint Motion and Agreed Order to Stay in Consolidated Lawsuit.

B.       Agreed Motion and Order to Stay - Cause No. GN -103374, PacifiCare of
         Texas, Inc. v. The State of Texas and John Cornyn, Attorney General,
         Individually and In His Official Capacity.

C.       Agreed Motion and Order to Stay - Cause No. GN-103351, PacifiCare of
         Texas, Inc. v. The State of Texas and John Cornyn, Attorney General,
         Individually and In His Official Capacity.

D.       Agreed Motion and Order to Stay - Cause No. 98-13971; The State of
         Texas v. PacifiCare of Texas, Inc.

E.       Agreed Final Judgment and Permanent Injunction in Consolidated Lawsuit.

F.       Agreed Motion and Order of Dismissal of Cause No. GN-103374, PacifiCare
         of Texas, Inc. v. The State of Texas and John Cornyn, Attorney General,
         Individually and In His Official Capacity.

G.       Agreed Motion and Order of Dismissal of Cause No. GN-103351, PacifiCare
         of Texas, Inc. v. The State of Texas and John Cornyn, Attorney General,
         Individually and In His Official Capacity.

H.       Agreed Motion and Order of Dismissal of Case No. 98-13971; The State of
         Texas v. PacifiCare of Texas, Inc.

I.       Escrow Agreement and Notice of Satisfaction of Waiver of Conditions to
         Settlement.

J.       Intervenors' Agreement to Stay - Consolidated Lawsuit.

K.       Motion for Severance - Consolidated Lawsuit.

AGREEMENT

                                                                   PAGE 20 OF 20