Document:

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                                                                   EXHIBIT 10.1

                        The Puerto Rico Health Insurance

                                    CONTRACT

                                  Metro-North

                         October 1, 2001-June 30, 2002

        [ASES LOGO]                                      [TRIPLE-S LOGO]

ADMINISTRACION DE SEGUROS DE SALUD
          DE PUERTO RICO

       ASEGURANDO TU SALUD
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                                TABLE OF CONTENTS

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TERMS AND CONDITIONS                                                    PAGE
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<S>         <C>                                                         <C>
I           Definitions                                                   2

II          Eligibility and Enrollment                                    8

III         Right to Choose                                              14

IV          Secondary Payor                                              16

V           Emergencies                                                  17

VI          Access to Benefits                                           19

VII         Contracts with HCO's and All Participating Providers         23

VIII        Subscription Process and Identification Cards                28

IX          Summary Plan Description Booklet                             29

X           Grievance Procedure                                          32

XI          Health Care Organizations                                    34

XII         Guarantee of Payment                                         37

XIII        Utilization Review and Quality Assurance                     40

XIV         Compliance and Agreement for Inspection of Records           44

XV          Information, Systems and Reporting Requirements              46

XVI         Financial Requirements                                       54

XVII        Plan Compliance Evaluation Program                           55

XVIII       Payment of Premiums                                          63

XIX         Actuarial Requirements                                       67

XX          Preventive Medicine Program                                  67

XXI         Mental Health Program                                        70

XXII        Benefits                                                     70

XXIII       Conversion Clause                                            71

XXIV        Transactions with the Insurer                                73

XXV         Non-Cancellation Clause                                      73

XXVI        Applicable Law                                               73

XXVII       Effective Date and Term                                      74
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TERMS AND CONDITIONS                                                    PAGE
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<S>         <C>                                                         <C>
XXVIII      Conflict of Interest                                         74

XXIX        Income Taxes                                                 74

XXX         Advance Directives                                           74

XXXI        Ownership and Third Party Transactions                       75

XXXII       Modification of the Contract                                 75

XXXIII      Termination of Agreement                                     75

XXXIV       Phase-Out Clause                                             76

XXXV        Third Party Disclaimer                                       77

XXXVI       Penalties Sanctions Clauses                                  77

XXXVII      Hold Harmless Clause                                         80

XXXVIII     Center of Medicare and Medicaid Services Contract
            Requirements                                                 80

XXXIX       Force Majeure                                                81

XL          Year 2000 Clause                                             81

XXLI        Federal Government Approval                                  81

XLII        Acknowledgement as to Insurer                                81

XLIII       Entire Agreement                                             82
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<TABLE>
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ADDENDA:
--------
<S>                        <C>
Addendum I                 Benefits Coverage-Formulary
Addendum II                PRHIA Instructions to Insurers for
                           Orientation and Subscription Process-
                           Beneficiaries Manual
Addendum III               Insurer Grievance Procedure
Addendum IV                Proposed Information Requirements
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                                    CONTRACT

         This Agreement entered into this 14TH DAY OF SEPTEMBER, 2001, at San
Juan, Puerto Rico, by and between PUERTO RICO HEALTH INSURANCE ADMINISTRATION, a
public instrumentality of the Commonwealth of Puerto Rico, organized under Law
72 approved on September 7, 1993, hereinafter referred to as the
"ADMINISTRATION", represented by its Executive Director, ANGEL BLANCO BOTTEY,
and TRIPLE-S, INC., a domestic corporation duly organized and doing business
under the laws of the Commonwealth of Puerto Rico, with employer social security
number 66-0229064, hereinafter referred to as the "INSURER", represented by its
Chief Executive Officer, MIGUEL VAZQUEZ DEYNES.

                                   WITNESSETH

         In consideration of the mutual covenants and agreements hereinafter set
forth, the parties, their personal representatives and successors, agree as
follows:

         FIRST:  The ADMINISTRATION has the responsibility to seek, negotiate,
and contract with public and private insurers, health care insurance programs
that eventually will be capable of providing all citizens that reside in the
island of Puerto Rico access to quality health care services, regardless of
their economic condition and capacity to pay.

         SECOND:  Law 72 of September 7, 1993 dictates the express policy that
empowers the ADMINISTRATION to seek, negotiate and contract health insurance
programs that will allow its beneficiaries access to quality health services, in
particular the medically indigent and the public employees of the Central
Government and Pensioners.

         THIRD:  The ADMINISTRATION published a Request For Proposals for the
North, Metro-North, East, Southeast, West, Southwest, San Juan, Northwest,
Northeast and Central Health Area/Region, seeking to provide health insurance
coverage to all eligible beneficiaries in said health Area/Region, by
contracting with private insurers.

         FOURTH:  Pursuant to the terms of the aforementioned Request For
Proposals, published on June 3-4, 2001, four different private health insurers
submitted to the ADMINISTRATION proposals to underwrite the health insurance for
the Health Area/Region.

         FIFTH:  The proposals submitted by the proposing insurers were
thoroughly evaluated by a Evaluation Committee, as well as an Administrative
Evaluation Committee within the ADMINISTRATION, as a result of which, a
recommendation was presented to the Board of Directors of the ADMINISTRATION.

         SIXTH:  The Board of Directors of the ADMINISTRATION, after a careful
and complete analysis of all technical and administrative elements of the
proposals, decided

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to award the INSURER the contract to underwrite and administer the health
insurance for the METRO NORTH Health Area/Region, composed of the municipalities
of BAYAMON, CATANO, DORADO, GUAYNABO, TOA BAJA, VEGA ALTA.

         SEVENTH:  The benefits to be provided under the plan offered by the
INSURER are divided in three types of coverage: 1) the Basic Coverage that
includes preventive, medical, hospital, surgical, diagnostic tests, clinical
laboratory tests, x-rays, emergency room, ambulance, maternity and prescription
drug services; 2) Dental Coverage based on the free choice of participating
dentists from INSURER's network, and 3) the Special Coverage that includes
benefits for catastrophic conditions, expensive procedures and specialized
diagnostic tests. Benefits shall be provided by the INSURER in strict compliance
with Law Number 72 of September 7, 1993, as amended, which is made part of this
contract, the terms and conditions contained in Addenda I, II, III, and IV of
this contract, and subject to the following:

                              TERMS AND CONDITIONS
                                    ARTICLE I
                                  DEFINITIONS

ACCESS:  Adequate availability of all necessary health care services included in
the plan being contracted to fulfill the needs of the beneficiaries of the
program.

ADMINISTRATION:  Puerto Rico Health Insurance Administration.

ADVANCE DIRECTIVES:  A written instruction such as a living will or durable
power of attorney for health care, recognized under the laws of the Commonwealth
of Puerto Rico (whether statutory or as recognized by the courts of the
Commonwealth, relating to the provision of health care when the individual is
incapacitated.

ANCILLARY SERVICES (Ancillary Charges):  Supplemental services, including
laboratory, radiology, physical therapy, and inhalation therapy, which are
provided in conjunction with medical or hospitals care.

ASSMCA - Mental Health and Substance Abuse Administration:  Spanish acronym for
the Puerto Rico Mental Health and Substance Abuse Administration, the state
agency that has been delegated the responsibility for the planning,
establishment of mental and substance abuse policies and procedures, the
coordination, development and monitoring of all mental health and substance
abuse services rendered to beneficiaries under the Puerto Rico Health Insurance
Program.

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BENEFICIARY:  Any person that under Law 72 of September 7, 1993 is determined
eligible to receive services, is reported as such to the INSURER by the
ADMINISTRATION, and is enrolled in the plan.

CAPITATION:  That portion of the premium paid to the INSURER which is disbursed
to the HCO in payment for all the benefits provided under the Basic Coverage to
the beneficiaries who have selected said HCO, as hereinafter defined.

CO-INSURANCE:  Percentage based participation of the beneficiary on each loss or
portion of the cost of receiving a service.

CONTRACT: The present contractual relationship between the ADMINISTRATION and
the INSURER, and to which, 1) Law 72 of September 7, 1993, 2) the Request For
Proposal, 3) the INSURER's Proposal documents, 4) the representations and
assurances provided at the clarification meeting held on June 11, 2001 contained
in the transcript of the meeting, and 5) all other certifications issued by the
INSURER following said clarification meeting, are herein incorporated by
reference. All of the five (5) preceding set of documents are integral parts of
this contract.

CONTRACT TERM:  Period of nine (9) consecutive months beginning on the date the
contract is effective. The coverage shall end at the conclusion of the contract
term, unless extended pursuant to Article XXVII.

CMS:  Acronym for the Center of Medicare and Medicaid Services.

DEDUCTIBLE:  A fixed amount that the beneficiary has to pay to the provider as
part of the cost of receiving a health care service, as provided in ADDENDUM I
of this contract.

ELECTIVE SURGERY:  A surgical procedure that, even though medically necessary
and prescribed by a physician, does not need to be performed immediately because
no imminent risk to life, permanent damage of a vital organ or permanent
impairment is present, and which therefore can be scheduled.

EMERGENCY MEDICAL CONDITION:  (Prudent Layperson Standard) a medical condition
presenting symptoms of sufficient severity that a person with average knowledge
of health and medicine would reasonably expect the absence of immediate medical
attention to result in (i) placing their health or the health of an unborn child
in immediate jeopardy, (ii) serious impairment of bodily functions, or (iii)
serious dysfunction of any bodily organ or part.

ENCOUNTER:  A contact between a patient and health professional during which a
service is provided. An encounter form records selected identifying, diagnostic
and related information describing an encounter.

FAMILY CONTRACT:  The benefits provided to the following eligible beneficiaries;
1) principal subscriber; and 2) his or her spouse (legally married or
common law); and 3)

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his or her children (legally, adopted, foster or step children) under 21 years
old that depend on the principal subscriber for subsistence; and 4) individuals
under 21 years of age who have no children and live in common law with one of
the eligible children in the same household; and 5) his or her dependents, of
any age, who are blind or permanently disabled and live in the same household.
Female beneficiaries (except spouse) covered under family contract who become
pregnant shall constitute a separate subscriber under an individual contract as
of the first day of the month the pregnancy is diagnosed and reported to the
INSURER.

HEALTH CARE ORGANIZATION/HCO:  A health care entity supported by a network of
providers and which is based on a managed care system and accessed through a
primary care physician (gatekeeper). Said entity has contracted with the insurer
to provide, in adequate facilities, the benefits provided for within the Basic
Coverage or the Basic and Special Coverage of the health insurance contract. For
the purpose of this contract the HCO will be identified by its descriptive name
such as Primary Care Center, Physician Hospital Organization (PHO), Independent
Practice Association (IPA), Primary Provider Group (PPG), or any other model.
The INSURER is responsible for the availability of all necessary providers to
cover both the basic and the special coverage.

HEALTH AREA/REGION:  The METRO NORTH Health Area/Region as defined by the
ADMINISTRATION, composed of the municipalities of BAYAMON, CATANO, DORADO,
GUAYNABO, TOA BAJA, AND VEGA ALTA.

HIPAA:  The Health Insurance Portability and Accountability Act is federal
legislation (Public law 104-191) approved by Congress in August 21, 1996
regulating the continuity and portability of health plans, mandating the
adoption and implementation of administrative simplification standards to
prevent, fraud, abuse, improve health plan overall operations and guarantee the
privacy and confidentiality of individually identifiable health information.

INDIVIDUAL CONTRACT:  The benefits provided to eligible subscribers that are:
1) unmarried single adults without minor dependents; or 2) married adults whose
spouse and/or dependents are not eligible for coverage under this program; or
3) Female beneficiaries (except spouse) covered under family contract who
become pregnant as of the first day of the month the pregnancy is diagnosed
and reported to the INSURER.

INDIVIDUAL PRACTICE ASSOCIATION (IPA):  A managed care delivery model in which
the INSURER contracts with a physician organization which, in turn, contracts
with individual physicians. The IPA physicians practice in their own offices and
continue to see their fee-for-service patients. This type of system combines
prepayment with the traditional means of delivering health care, a physician
office/private practice. For the purpose of this contract, an IPA will be
considered a Health Care Organization (HCO).

INSURER:  TRIPLE-S, INC., is a private entity which meets the definition of a
managed care organization (MCO), previously known as a state defined HMO, has a

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comprehensive risk contract primarily for the purpose of providing health care
services, making the services it provides accessible (in terms of timeliness,
amount, duration and scope) as those services are to other Medicaid recipients
within the Area/Region served by the entity and meets the solvency standards
under the law as a state licensed risk-bearing entity.

MANAGED BEHAVIORAL HEALTH ORGANIZATION (MBHO):  An entity constituted by Mental
Health Participating Providers and organized with the purpose of negotiating
contracts to provide mental health and substance abuse services.

MEDICARE:  Federal health insurance program for people 65 or older, people of
any age with permanent kidney failure, and certain disabled people according to
Title XVIII of the Social Security Act. Medicare has two parts: Part A and Part
B. Part A is the hospital insurance that includes inpatient hospital care and
certain follow up care. Part B is medical insurance that includes doctor
services and many other medical services and items. A Medicare recipient is a
person who has either Part A or Part A and B insurance.

MEDICARE BENEFICIARY:  Any person who is a Medicare recipient of Part A or Part
A and B and complies with the definition of beneficiary established in this
article.

MEDICALLY NECESSARY SERVICES:  shall mean services or supplies provided by an
institution, physician, or other providers that are required to identify or
treat a beneficiary's illness, disease, or injury and which are:
         a.       Consistent with the symptoms or diagnosis and treatment of the
                  enrollee's illness, disease, or injury; and
         b.       Appropriate with regard to standards of good medical practice;
                  and
         c.       Not solely for the convenience of an enrollee, physician,
                  institution or other provider; and
         d.       The most appropriate supply or level of services which can
                  safely be provided to the enrollee. When applied to the care
                  of an inpatient, it further means that services for the
                  enrollee's medical symptoms or condition require that the
                  services cannot be safely provided to the enrollee as an
                  outpatient; and
         e.       When applied to enrollees under 21 years of age, services
                  shall be provided in accordance with EPSDT requirements
                  including federal regulations as described in 42 CFR Part 441,
                  Subpart B, and the Omnibus Budget Reconciliation Act of 1989.

MENTAL HEALTH FACILITIES:  Any premises (a) owned, leased, used or operated
directly or indirectly by or for the Managed Behavioral Health Organization
(MBHO) or its affiliates for purposes related to this Agreement; or (b)
maintained by a subcontractor or provider to provide mental health services on
behalf of the Managed Behavioral Health Organization.

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MENTAL HEALTH CARVE-OUT:  Specified psychiatric, behavioral, and substance abuse
services covered under the Puerto Rico Health Insurance Plan provided through a
contract with a separate entity.

NON-PARTICIPATING PROVIDER:  All health care services providers that do not have
a contract in effect with the INSURER. Said provider is barred from providing
services under this contract.

PARTICIPATING PHYSICIAN:  A doctor of medicine that is legally authorized to
practice medicine and surgery within the Commonwealth of Puerto Rico and has a
contract in effect with the INSURER.

PARTICIPATING PROVIDER:  All health care services providers that have a contract
in effect with the INSURER.

PERSON WITH AN OWNERSHIP OR CONTROL INTEREST:  A person or corporation that:
owns, directly or indirectly five percent (5%) or more of the insurer's capital
or stock or receives five percent (5%) or more of its profits; has an interest
in any mortgage, deed of trust, note, or other obligations secured in whole or
in part by the insurer or by its property or assets, and that interest is equal
to or exceeds five percent (5%) of the total property and assets of the insurer;
or is an officer or director of the INSURER.

PHYSICIAN INCENTIVE PLAN:  Any compensation arrangements between INSURER and
physician or physician groups that may directly or indirectly have the effect
of reducing or limiting services furnished to Medicaid recipients enrolled with
the insurer.

PRE-AUTHORIZATION:  A written or electronic approval by the INSURER to the
beneficiary granting authorization for a benefit to be provided under the
Special Coverage of the program. The beneficiary is responsible for obtaining
the pre-authorization for coverage in order to receive covered benefits that
require it. Failure to obtain pre-authorization precludes coverage.
Notwithstanding the aforementioned, the INSURER has the option of not requiring
pre-authorization for all services received within a particular HCO.

PREMIUM:  The monthly amount that the ADMINISTRATION agrees to pay to the
INSURER as a result of having assumed the financial risk for providing the
benefits to the beneficiaries covered. Method of payment is referred to
hereunder as per member per month (PMPM).

PRIMARY CARE PHYSICIAN (GATEKEEPER):  A doctor of medicine legally authorized to
practice medicine and surgery within the Commonwealth of Puerto Rico, who
initially evaluates and provides treatment to beneficiaries. He/she is
responsible for determining the services required by the beneficiaries, provides
continuity of care, and refers the beneficiaries to specialized services if
deemed medically necessary. Primary physicians will be considered those
professionals accepted as such in the local

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and federal jurisdictions. The following are considered primary care physicians:
Pediatricians, Obstetrician/Gynecologist, Family Physicians, Internists and
General Practitioners. Each female beneficiary with a pregnancy factor has to
select an obstetrician-gynecologist as her primary care physician. Once the
pregnant woman completes her maternity care period, she will be allowed to
continue with her primary care physician.

PROVIDER:  An individual or entity that is authorized under the laws of the
Commonwealth of Puerto Rico to provide health care services.

PRICO:  Acronym for the Puerto Rico Insurance Commissioner's Office, the state
agency responsible for regulating, fiscalizing, and licensing insurance business
in Puerto Rico.

SECOND MEDICAL OPINION:  A consultation with a peer requested by the
beneficiary, the HCO, a Participating Physician or the INSURER to assess the
appropriateness of a previous recommendation for surgery or medical treatment.

SECONDARY or SPECIALTY PHYSICIAN:  A physician such as a dermatologist,
urologist or cardiologist, who provides professional services on a referral from
a Primary Care Provider.

SUBSCRIBER:  The beneficiary covered under the individual coverage of the plan
or the principal beneficiary who grants eligibility to all those beneficiaries
included under the family coverage.

SUPPORT PARTICIPATING PROVIDERS:  Health care service providers who are needed
to complement and provide support services to the Primary Care Physicians and
who have a contract with the INSURER to provide said services. A referral from
the Gatekeeper is necessary. The following will be considered support
participating providers, among others: Pharmacies, Hospitals, Health Related
Professionals, Clinical Laboratories, Radiological Facilities, Podiatrists,
Optometrists, and all those participating providers that may be needed to
provide services under the basic and special coverage considering the specific
health problems of the Area/Region.

SUPPORT PARTICIPATING PHYSICIANS:  Doctors of Medicine legally authorized to
practice medicine and surgery within Puerto Rico who are needed to complement
and provide support services to the Primary Care Physicians and who have a
contract with the INSURER to provide said services. A referral from the
Gatekeeper is necessary.

QUALITY IMPROVEMENT (QI):  The ongoing process of responding to data gathered
through quality monitoring efforts, in such a way as to improve the quality of
health care delivered to individuals. This process necessarily involves
follow-up studies of the measures taken to effect change in order to demonstrate
that the desired change has occurred.

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UTILIZATION MANAGEMENT (UM):  The process of evaluating necessity
appropriateness and efficiency of healthcare services through the revision of
information about hospital, service or procedure from patients and/or providers
to determine whether it meets established guidelines and criteria approved by
the MCO.

                         ORGANIZATION AND ADMINISTRATION

         INSURER must maintain the organizational and administrative capacity
and capabilities to carry out all duties and responsibilities under this
contract.

         INSURER must maintain assigned staff with the capacity and capability
to provide all services to all Beneficiaries under this contract.

         INSURER must maintain an administrative office in the service area
(local office). The local office must comply with the American with Disabilities
Act (ADA) requirements for public buildings.

         INSURER must provide training and development programs to all assigned
staff to ensure they know and understand the service requirements under this
contract including the reporting requirements, the policies and procedures,
cultural and linguistic requirements and the scope of services to be provided.
The training and development plan must be submitted to THE ADMINISTRATION.

         INSURER must notify THE ADMINISTRATION immediately no later than 30
days after the effective date of this contract of any changes in its
organizational chart as previously submitted to THE ADMINISTRATION.

         INSURER must notify THE ADMINISTRATION immediately within fifteen (15)
working days of any change in regional or office managers. This information must
be updated whenever there is a significant change in organizational structure or
personnel.

                                   ARTICLE 11
                           ELIGIBILITY AND ENROLLMENT

1.       Eligibility shall be determined according to Article VI, Section 5 of
         Law 72 of September 7, 1993 and the federal laws and regulations
         governing eligibility requirements for the Medicaid Program.

2.       The INSURER shall provide coverage for all the eligible beneficiaries
         as provided in the prior section.

3.       The INSURER shall inform beneficiaries, who are also Medicare
         recipients with Part A or Part A and B, at the time of enrollment that
         if they choose to become beneficiaries under the contracted health
         insurance, the benefits provided under said contract will be accessed
         exclusively through the primary care physician. In this situation:

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         a)       bad debt reimbursement, as a result of non-payment of
                  deductibles and/or coinsurance, for covered Part A services
                  and Part B services provided in hospital setting, other than
                  physician services;
         b)       payment for covered Part A services;
         c)       payment for Part B outpatient services provided in a hospital
                  setting; and
         d)       all covered Part B services,

         will continue to be recognized as a covered reimbursable Medicare
         Program cost. Medicare beneficiaries with either Part A or Part A and
         B can choose to access their Part A or Part B services from the
         Medicare's providers list except that in this case the INSURER will not
         cover the payment of any benefits provided through this contract.

4.       The INSURER represents that neither the capitated amount paid to each
         HCO nor the fee for service amount paid to all providers includes
         payment for services covered under the Medicare Federal Program. The
         primary care physicians, the participating providers or any other
         physician contracted on a salary basis cannot receive duplicate
         payments for those beneficiaries that have Medicare Part A or Part B
         coverage. The INSURER further represents that it will audit and review
         its billing data to avoid duplicate payment with the Medicare Program.
         The INSURER shall report its findings to the ADMINISTRATION on a
         quarterly basis. The ADMINISTRATION will audit and review Medicare
         billing data for Part A or Part B payment for beneficiaries eligible to
         said Federal Program.

5.       Co-insurance and deductible for Part B services provided on an
         outpatient basis to hospital clinics, other than physician services,
         will be considered as a covered bad debt reimbursement item under the
         Medicare program cost. In this instance, the INSURER will pay for the
         co-insurance and deductibles related to the physician services provided
         as a Part B service through the amount paid to the HCO.

6.       The INSURER guarantees to maintain adequate services for the Health
         Area/Region for the prompt enrollment of all eligible beneficiaries on
         a daily basis and in the order of their application. The INSURER shall
         maintain sufficient facilities within the Area/Region as needed. The
         subscriber shall be responsible for visiting the designated facility in
         order to complete all requirements towards enrollment. The INSURER
         shall enroll the beneficiary(ies) and issue the official identification
         card(s) on the same day that the subscriber completes the enrollment
         requirements. Initial orientation and enrollment will be conducted
         pursuant to the Instructions to Insurers for Implementation of
         Orientation and Subscription Process contained in ADDENDUM II.

         The INSURER shall be responsible to provide the subscriber with
         specific information allowing for the prompt and reliable enrollment of
         all eligible individuals.

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7.       The ADMINISTRATION shall notify the INSURER on a daily basis of all
         beneficiaries who have become eligible, as well as those who have
         ceased to be eligible. The INSURER shall guarantee the maintenance,
         functionality, and reliability of all necessary systems to allow
         enrollment or disenrollment of subscribers.

8.       The beneficiary becomes eligible for enrollment as of the date
         specified in the ADMINISTRATION's notification to the INSURER.

9.       The beneficiary ceases to be eligible as of the disenrollment date
         specified in the ADMINISTRATION's notification to the INSURER. If the
         ADMINISTRATION notifies the INSURER that the beneficiary ceased to be
         eligible on or before the last working day of the month in which
         eligibility ceases, the disenrollment will be effective on the first
         day of the following month. Disenrollment will be effected exclusively
         by a notification issued by the ADMINISTRATION.

10.      If, following disenrollment, a beneficiary's contract is reinstated and
         the beneficiary is re-enrolled on the same month of disenrollment, the
         contract will be reinstated as of the date of re-enrollment and the
         ADMINISTRATION will pay premiums on a pro-rata basis for that month.

11.      The INSURER agrees to maintain active enrollment for those
         beneficiaries reported eligible by the ADMINISTRATION. Notification of
         eligible persons will be made through electronic transmissions or
         machine readable media. The ADMINISTRATION will forward this data to
         the INSURER in the format agreed by both parties in accordance with the
         Daily Update/Carrier Eligibility File Format as required in the RFP.

12.      Coverage under the plan shall begin the day that the enrollment process
         has been completed. The INSURER will guarantee that it will be ready to
         notify the ADMINISTRATION of all newly enrolled beneficiaries through
         electronic or magnetic media on a daily basis upon the Administration's
         request. This notification will include all new beneficiaries as of the
         day before the notification is issued and will be sent to the
         ADMINISTRATION no later than the following working day after the
         enrollment process has been completed. Premiums shall be paid on a
         pro-rata basis as of the date that the enrollment process was completed
         and the official identification card has been issued, to the end of the
         month, as specified in the INSURER's notification to the
         ADMINISTRATION. Premium payments, if applicable, for newborn of
         beneficiaries will accrue as of the date of birth of the child in the
         event that the enrollment process of said new beneficiary is completed.
         Premium payments shall be paid retroactively to the INSURER upon
         enrollment of the newborn. The insurer will pay the providers for the
         services rendered to that newborn. Nevertheless the newborn will be
         considered an insured beneficiary under his mother's coverage during
         the neo-natal period, thirty (30) days.

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13.      In case that an individual has been certified as eligible by the
         Department of Health but has not completed the enrollment process, and
         he/she or his/her dependents need emergency services, the
         ADMINISTRATION shall verify the eligibility status of the individual.
         If the individual is eligible as a beneficiary, emergency services will
         be provided as if the individual is a beneficiary and arrangements for
         the issuance of the identification card will be made immediately after
         the notification of eligibility is made by the ADMINISTRATION to the
         INSURER. The premium in this instance will be paid to the INSURER on a
         pro-rata basis from the moment the emergency services needed are
         provided or the identification card is issued, whichever is first. For
         the purpose of this situation, the enrollment process is the process
         that commences at the time that the ADMINISTRATION gives notice to the
         INSURER of the beneficiaries eligibility status, and results in a
         letter to said beneficiary establishing the date and location for the
         completion of the enrollment documents and selection of the HCO. Said
         process ends when the beneficiary has selected an HCO from those
         available in the Health Area/Region and has received an identification
         card.

         Nothing provided in this section is intended to affect a provider's
         obligation to screen and stabilize an individual arriving at its
         facilities for emergency treatment as defined by EMTALA and the
         applicable Commonwealth laws.

14.      Coverage shall end effective on the date of disenrollment. Premiums
         will be paid until the effective date of disenrollment. In the event
         of disenrollment while the beneficiary is an inpatient of a hospital on
         the last day of the month of coverage, and continues to be an inpatient
         of a hospital during the month following his disenrollment, the
         ADMINISTRATION will cover the payment of the premium for that following
         month. If the beneficiary remains hospitalized in subsequent months,
         the conversion clause will apply for the months after the one being
         paid by the ADMINISTRATION it being the INSURER's responsibility to
         assure that premiums are paid. Disenrollment will be effected
         exclusively by a notification issued by the ADMINISTRATION.

15.      The INSURER shall not in any way discriminate nor terminate coverage of
         any beneficiary(ies) for reasons due to adverse change in recipient's
         health, or based on expectations that an enrollee will require high
         cost care, or need of health services, or any reason whatsoever, except
         for non-payment of premiums or fraudulent use of benefits or
         participation of fraudulent acts, after prior notification and
         consultation with the ADMINISTRATION.

16.      The INSURER agrees to maintain an Enrollment Data Base which:

                  a)       includes each subscriber and all beneficiaries;
                  b)       contains for each subscriber and beneficiary the
                           information technically defined in the (Carrier
                           Response Billing File/Carrier Eligibility File)
                           formats required in RFP.

                                       11
<PAGE>

17.      The INSURER will secure on the date of enrollment a signed statement
         from the subscriber authorizing the Federal Government, the INSURER,
         the ADMINISTRATION and/or their designees to review the medical record
         of the subscriber and other beneficiaries, in order to determine
         quality, appropriateness, timeliness and cost of services performed
         under this contract. The terms, content and specifications of said
         authorization shall be consistent with the standards set forth in 45CFR
         164.508 et seq., part of the regulations of the Health Insurance
         Portability and Accountability Act.

18.      All individually identified information of services related to
         beneficiaries which is obtained by the INSURER shall be confidential
         and shall be used or disclosed by the INSURER, the HCO and/or its
         participating providers only for purposes directly connected with
         performance of all obligations contained in this contract. Medical
         records and management information data concerning any beneficiary
         enrolled pursuant to this contract shall be confidential and shall be
         disclosed within the INSURER's organization or to other persons, as
         authorized by the ADMINISTRATION, only as necessary to provide medical
         care and quality, peer or grievance review of such medical care under
         the terms of this contract and in coordination with the mental health
         carve-out contract subscribed by ASSMCA. The confidentiality provisions
         herein contained shall survive the termination of this contract and
         shall bind the INSURER, its HCOs and the INSURER's participating
         providers as long as they maintain any individually identifiable
         information relating to beneficiaries as provided in the implementation
         of the HIPAA regulation schedule to be set forth by the Federal
         Government, 45 CFR 164.102 et. seq. Any request for information which
         is made by third parties not related to this contract will be forwarded
         to the ADMINISTRATION for consideration, review and decision as to the
         pertinence of the request and the authorization for disclosure.

         Nothing in this section shall limit or affect the ADMINISTRATION's, the
         INSURER and/or providers obligations regarding protected individually
         identifiable health information as provided in 45 CFR 164.102 et seq.
         (HIPAA) regulations.

         Disclosure of individually identifiable health information to any
         business associate as defined in 45 CFR 164.504(e) of the HIPAA
         regulations by the INSURER shall entail the legal obligations set forth
         therein.

19.      The INSURER agrees to notify the ADMINISTRATION immediately of any
         change in the place of residence of the subscriber, insofar as the
         subscriber makes the change known to the INSURER. Address changes will
         be forwarded through electronic and/or machine-readable media as
         referred in paragraph sixteen.

                                       12
<PAGE>

20.      The INSURER agrees to implement a program whereby eligible
         beneficiaries are properly advised of the date of termination of their
         eligibility so as to assure that they complete the recertification
         process prior to said date. Said program should provide for an initial
         notice of the termination date at least ninety (90) days prior to the
         effective date of the eligibility termination.

21.      The INSURER hereby commits to comply with the electronic transactions,
         security and privacy requirements of the HIPAA regulations as provided
         in 45CFR 160 and 142 et seg. within the implementation dates set forth
         therein or by subsequent regulations schedule.

22.      DISENROLLMENT

         The INSURER has a limited right to request a beneficiary be disenrolled
         from INSURER without the beneficiary's consent. THE ADMINISTRATION must
         approve any INSURER request for disenrolling a beneficiary for cause.

         Disenrollment of a beneficiary may be permitted under the following
         circumstances:

         (a)      Beneficiary misuses or loans its membership card to another
                  person to obtain services.

         (b)      Beneficiary is disruptive, unruly, threatening or
                  uncooperative to the extent that beneficiary's membership
                  seriously impairs INSURER's or provider's ability to provide
                  services to beneficiaries or to obtain new beneficiaries, and
                  beneficiary's behavior is not caused by a physical or other
                  mental health condition.

The INSURER must take reasonable measures to improve a beneficiary's behavior
prior to requesting disenrollment and must notify beneficiary of its intent to
disenroll. Reasonable measure may include providing education and counseling
regarding the offensive acts or behavior.

INSURER must notify the beneficiary of the INSURER's decision to disenroll after
reasonable measures have failed to remedy the problem.

If the beneficiary disagrees with the decision to disenroll the beneficiary from
INSURER, INSURER MUST notify the beneficiary of the availability of the
complaint of Grievance Procedure and THE ADMINISTRATION's Fair Hearing process.

If the beneficiary disagrees with the decision to disenroll, INSURER must notify
the Beneficiary of the availability of the complaint procedure and compliance
with Fair Hearing Process, or as provided by Law 72 of September 7, 1993, as
amended.

                                       13
<PAGE>
                                   ARTICLE III
                                 RIGHT TO CHOOSE

1.       Each principal subscriber shall have the right to select an HCO from
         those available in the health Area/Region which at no time will be less
         than two (2) HCOs at each municipality, one of which has to be a
         privatized or non-privatized government or municipal facility if
         available, and subject to compliance with INSURER's requirements for
         HCO's. The selection of the HCO or primary care physician will be made
         by the beneficiaries at the insurance regional offices.

         The right of beneficiaries to transfer or change from an HCO shall be
         made at any time without cause during the first 90 days following the
         date of the beneficiary's initial enrollment or the date of enrollment
         notice is sent, whichever is later, and at most once every twelve (12)
         months thereafter, and for any of the causes of disenrollment set forth
         on 42 CFR 438.56 at any time.

2.       Each HCO will have available at least one of each specialist considered
         a primary care physician and shall meet the specification of the ratio
         specified in Article VI, and will have a sufficient number of primary
         care physicians to provide health care services to all beneficiaries
         according to the ratio specified in Article VI. Furthermore, the
         INSURER will provide to each HCO a network with a sufficient number of
         participating providers to render all services included under the
         basic, special and dental coverage to beneficiaries pursuant to the
         ratio specified in Article VI.

3.       The beneficiary shall have the right to choose his or her primary care
         physician from those available within the HCO selected by the principal
         subscriber. Said right also encompasses the change of the selected
         primary physician at any time by making the proper administrative
         arrangements within the HCO in conformity with the HCO's established
         policy. The selected primary care physician or the substitute on-duty
         primary care physician within the HCO must be available on a 24 hour
         basis for emergencies and/or telephone consultations. Each HCO must
         have available all of the primary care physicians (family physicians,
         internists, general practitioners, pediatricians and
         obstetrician-gynecologist) subject to waivers in case of unavailability
         of a specific provider.

4.       A primary care physician can only act as such in only one (1)
         municipality within the Health Area/Region subject of this contract and
         must be available to attend the health care needs of the beneficiary on
         a twenty four (24) hour basis, seven (7) days a week.

5.       A primary care physician can only act as such in only one (1) HCO
         within the Health Area/Region subject of this contract and must be
         available to attend the health care needs of the beneficiary on a
         twenty four (24) hour basis, seven (7) days a week.

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<PAGE>

6.       Each female beneficiary may select (i) primary care physician, or (ii)
         primary care physician and obstetrician-gynecologist as her primary
         care physician. If the female is pregnant, the
         obstetrician-gynecologist automatically will become the primary care
         physician; if one is not previously selected, she will then have to
         choose an obstetrician-gynecologist as her primary care physician. Once
         the pregnant woman completes her maternity care period, she will be
         allowed to continue with her original primary care physician.

7.       Any subscriber may change the selected HCO subject to the provisions of
         Section I, above. If the request for an HCO change is filed with the
         INSURER on or before the fifth day of each month the change of HCO will
         become effective on the first day of the next month. If the change is
         filed after the fifth day of the month, the change in HCO will be
         effective on the first day of the second succeeding month. Selection
         guidelines are contemplated in Article VI, paragraph 3 of this
         contract.

8.       The beneficiary shall have the right to choose the provider to be
         referred to from those participating providers within the HCO's network
         that are under contract with the INSURER's for benefits covered under
         the Basic and Special Coverage.

9.       Dental services will be provided through the INSURER's network of
         dentists for the health insurance services contracted. Each subscriber
         will have the right to select a dentist within the INSURER's network to
         receive dental services. The accepted dentist/beneficiary ratio is one
         (1) dentist for each one thousand three hundred fifty (1,350)
         beneficiaries.

10.      In the event that HCOs under 330 Projects of the Rural Health
         Initiative have contracts with specialists, support participating
         providers, or support participating physicians, either on a
         fee-for-service basis or on a salary basis, the INSURER will be
         responsible for gathering and reporting all required data including the
         payment of services described in Article VII, Section five (5), Article
         XV, sections four (4) and eight (8), and the Record of Service File
         Layout formats as required in the RFP.

11.      The INSURER will provide to each principal subscriber a complete list
         of all participating physicians and participating providers, with
         addresses and specialties or health related services offered, in order
         to allow the beneficiary to choose among them.

12.      The beneficiary shall also have the right to choose the pharmacy
         according to applicable PBM guidelines established by the
         ADMINISTRATION and any other participating providers among those
         contracted by the ADMINISTRATION for basic and/or special coverage
         services, said guidelines to become effective sixty (60) days after
         notice to INSURER. The ADMINISTRATION will determine the acceptable
         pharmacy/beneficiary ratio in order to assure access to the pharmacy
         benefits. The right to choose requires the availability of sufficient
         number of pharmacies in each municipality of residence of the
         beneficiaries.

                                       15

<PAGE>

13.      The INSURER will develop and effectively disseminate an education and
         orientation program in order to insure that all eligible beneficiaries
         are aware of their rights under this contract, including their right to
         choose physicians and providers. The ADMINISTRATION reserves the right
         to make changes, modifications and recommendations to said program in
         coordination and agreement with the INSURER. This program shall be
         subject to approval by the ADMINISTRATION prior to its implementation
         and in compliance with the marketing guidelines and prohibitions
         referred in Article IX.

14.      Notwithstanding the foregoing, the ADMINISTRATION shall preserve the
         right in coordination with INSURER, to expand, limit or otherwise amend
         the provision of services as provided for herein and/or to negotiate in
         coordination with the INSURER, cost saving and efficiency improvement
         measures. In those cases in which the ADMINISTRATION acts on its own,
         changes to the provision of services shall be notified to the INSURER
         no later than 30 days prior to implementation. Said modifications will
         take place after consultation and cost negotiation with the INSURER.

                                  ARTICLE IV
                                 SECONDARY PAYOR

1.       The INSURER shall be a secondary payor to any other party liable in any
         claim for services to a beneficiary, including but not limited to: the
         INSURER itself, Medicare, other insurers or health maintenance
         organizations, non-profit INSURER's operating under law 152 approved
         May 9, 1942 as amended, Association de Maestros de Puerto Rico, medical
         plans sponsored by employee organizations, labor unions, and any other
         entity that results liable for the benefits claimed against the INSURER
         for coverage to beneficiaries.

2.       It shall be the responsibility of the INSURER to ascertain that the
         aforementioned provisions of Law 72 of September 7, 1993 are enforced
         and that the INSURER acts as secondary payor to any other medical
         insurance.

3.       The ADMINISTRATION and the INSURER will cooperate in the exchange of
         third parties health insurance benefits information. To this effect the
         INSURER will comply fully with the Carta Normativa Numero N-E-5-95-98
         issued by the Office of the Insurance Commissioner of Puerto Rico and
         the HIPAA regulations provisions cited elsewhere in this contract.

4.       The INSURER will make diligent efforts to determine if beneficiaries
         have third party coverage and will attempt to utilize such coverage
         when applicable. The INSURER, will be permitted to retain 100% of the
         collections from subrogation. The plan's experience will be credited
         with the amount collected from said primary payor.

                                       16

<PAGE>

5.       The INSURER must report quarterly to the ADMINISTRATION the amounts
         collected from third parties for health services provided. Said
         reports must provide a detailed description of the beneficiary's
         name, contract number, third party payor name and address, date of
         service, diagnosis and provider's name and address and identification
         number.

6.       The INSURER must report quarterly to the ADMINISTRATION the amounts
         collected from third parties for health services provided according
         with standard format to be adopted by the ADMINISTRATION. Said reports
         must provide a detailed description of the beneficiary's name,
         contract number, third party payor name and address, date of service,
         diagnosis and provider's name and address and identification number.

7.       The INSURER shall develop specific procedures for the exchange of
         information, collections and reporting of other primary payor sources
         and is required to verify its own eligibility files for information on
         whether or not the beneficiary has private health insurance within the
         INSURER.

8.       The INSURER must implement and execute, an effective and diligent
         mechanism in order to assure the collection from primary payors of all
         benefits covered under this contract. Said program, mechanisms and
         method of implementation shall be reported to the ADMINISTRATION as of
         the first date of the effectiveness of this contract.

9.       Failure of the INSURER to comply with this Article may, at the
         discretion of the ADMINISTRATION, be cause for the application of the
         provisions under Article XXXIII.

                                    ARTICLE V
                                   EMERGENCIES

1.       In cases of emergency or immediate need of medical care within the
         Commonwealth of Puerto Rico, the INSURER will be responsible for the
         payment of emergency service provided to beneficiaries when the
         emergency or immediate need of medical care occurs within its network
         or outside of its network or the geographical Area/Region of the
         selected HCO's emergency care facility. Such services must be paid by
         the INSURER regardless of whether the entity that furnishes the service
         has contracted with the INSURER and no prior authorization shall be
         required by the INSURER for the provision of emergency services. The
         INSURER will assume the payment of the medical screening examinations
         or other medically necessary emergency services, whether or not the
         patients meets the prudent layperson standard, in the event that the
         beneficiary's PCP or any INSURER representative or provider instructs
         them to seek emergency care within or out of its network area/region.

                                       17

<PAGE>

         Such services shall consist of whatever is necessary to stabilize the
         patient's condition, unless the expected medical benefits of a transfer
         outweigh the risk of not undertaking the transfer, and the transfer
         conforms with all applicable requirements. The stabilization services
         includes all treatment that may be necessary to assure within
         reasonable medical probability, that no material deterioration of the
         patients condition is likely to result from or occur during discharge
         of the patient or transfer of patient to another facility.

         In the event of a disagreement with the provider concerning whether a
         patient is stable enough in order to be discharged or transferred or
         whether the medical benefits outweight the risk, the judgement of the
         attending physician caring for the enrollee will prevail and oblige the
         INSURER. Such services shall be provided in such a manner as to allow
         the subscriber to be stable for discharge or transfer as defined by
         EMTALA, in order to safely return the subscriber to the corresponding
         HCO, or to an appropriate participating provider for continuation of
         treatment.

2.       Since emergency care is of utmost concern to the ADMINISTRATION, the
         INSURER shall require that adequate ambulance transportation and
         emergency medical care are available. Each municipality shall have
         access to an emergency care system composed of ground, air and maritime
         ambulance transportation as necessary, and emergency medical care.

3.       Ambulance transportation and emergency care will be subject to periodic
         reviews by applicable governmental agencies to ensure the highest
         quality of services.

4.       All participating providers shall provide immediate emergency care
         services to beneficiaries when requested.

5.       Emergency care services as well as ambulance transportation services
         shall exist in each municipality comprising the health area/region,
         24 hours a day, and 365 days yearly, operated by an HCO, or by other
         participating providers.

6.       The INSURER and each HCO is required to provide access to emergency
         care and ambulance transportation services within their own facilities,
         through their contracted, participating providers or through contract
         with third parties that guarantee said emergency care and ambulance
         transportation twenty four (24) hours a day, seven (7) days a week.

7.       The INSURER will assure that each HCO makes the necessary arrangements
         to have readily available ambulance services in good mechanical
         condition and properly equipped, in order to assure a prompt and
         effective ambulance transportation service.

8.       The INSURER or the HCO will establish Urgent Care Centers within the
         Health Area/Region. These include physician offices and clinics with
         extended hours.

                                       18

<PAGE>

         These Urgent Care Centers may complement emergency care services but at
         no time will they substitute the requirement to have emergency care
         services and ambulance transportation available at each municipality 24
         hours a day, 7 days a week and 365 days yearly.

9.       The INSURER will provide beneficiaries access to a 24-hour-a-day
         toll-free hotline with licensed qualified professionals to help
         beneficiaries with questions about particular medical conditions and to
         guide them to appropriate facilities (emergency rooms, urgent care
         centers, among others). Notwithstanding, the aforementioned statement,
         the beneficiary will have the right to choose to attend an emergency
         room if he believes his condition is an emergency medical condition, as
         defined in this contract, without prior need of authorization or
         certification.

                                   ARTICLE VI
                               ACCESS TO BENEFITS

1.       The INSURER will contract all available private providers that meet its
         credentialing process and agree to its contractual terms, in order to
         assure sufficient participating providers, to satisfy the demand of
         covered services by the beneficiaries enrolled in the program. The
         physician/beneficiary ratio accepted is one (1) primary care physician
         for each eight hundred and fifty (850) beneficiaries; one (1)
         specialist (not primary care) for each one thousand one hundred (1,100)
         beneficiaries; and, one (1) physician (all) for each eight hundred
         (800) beneficiaries. These ratio does not take into account the
         expected mix between private patients and beneficiaries which could
         increase the physicians capacity to 1:1,700 for primary care
         physicians; 1:2,200 for specialists and 1:1,600 for all physicians. In
         the event that the HCOs provides services only to beneficiaries under
         this contract, the physician/beneficiary ratio will be the same to that
         applicable when there is a mix between private patients and
         beneficiaries. The INSURER will assure compliance with said
         physician/beneficiary ratio.

2.       The INSURER shall be responsible to contract all the necessary health
         care services and participating providers to insure that all the
         benefits covered under the Basic, Dental and Special Coverage of the
         plan are rendered, through the INSURER's participating providers with
         the timeliness, amount, duration and scope as those services are
         rendered to non-enrolled Medicaid recipients within the area/region
         served.

3.       Every subscriber shall be able to select from at least two (2) HCOs
         with sufficient enrollment capacity in his or her municipality, one of
         which will be a privatized government facility, if available and
         subject to compliance with INSURER's requirements for HCOs. Each
         subscriber shall also be able to choose a HCO outside his or her
         municipality of domicile as provided for in Article III, paragraph 1 of
         this contract.

                                       19

<PAGE>

4.       A primary care physician can only act as such in only one (1)
         municipality within the Health Area/Region subject of this contract and
         must be available to attend the health care needs of the beneficiary on
         a twenty four (24) hour basis, seven (7) days a week.

5.       Contracts between the INSURER and HCOs and between the INSURER and its
         participating providers shall be independent contracts specifically
         designed to cover all terms and conditions contained in this contract.
         Coverage afforded to beneficiaries under this contract constitutes a
         direct obligation on the part of the INSURER's participating providers
         to comply with all terms and conditions contained herein.

6.       HCO enrollment shall be conditioned on the availability of adequate
         health care services. It shall be the INSURER's responsibility to
         maintain a constant assessment of the enrollment capacity of each HCO.
         Adequate health care services will be those determined acceptable under
         the ADMINISTRATION's Compliance Evaluation Program as outlined in
         Article XVII of this contract.

7.       That INSURER shall be responsible for communicating to its
         participating providers the public policy that prohibits provider
         inquiries with the purpose of determining if the beneficiary is subject
         to the benefits provided under Law 72 of September 7, 1993.

8.       The INSURER is responsible for the development and maintenance of an
         adequate system for referrals of health services under this contract.
         It shall audit all systems and processes related to referrals of
         services that the HCO'S or participating providers implement. In no way
         the INSURER, HCO'S or any provider's Referral Committee may interfere,
         prohibit, or restrict any health care professional's advice within
         their scope of practice. The referral system must be approved by the
         Administration.

9.       All referral systems must comply with timeframes established in
         paragraph (23). If the system developed by the INSURER is by electronic
         means, it must be installed at all primary care offices. It is
         unacceptable to force the beneficiary to move to another facility to
         obtain referrals.

10.      The INSURER assures the ADMINISTRATION that no HGO'S or participating
         providers will impose limit quotas or restrain services to
         subcontracted providers for the services medically needed (e.g.
         laboratory, pharmacies, or other services).

11.      The INSURER shall expedite access to benefits of beneficiaries
         diagnosed with conditions under the Special Coverage. The
         identification of these beneficiaries will allow rapid access of the
         medical services covered under our Special Coverage.

                                      20

<PAGE>

12.      Any denial, unreasonable delay or rationing of services to the
         beneficiaries is expressly prohibited. The INSURER shall require strict
         compliance with this prohibition by its participating providers or any
         other entity related to the rendering of medical care services to the
         beneficiaries. Any action in violation of this prohibition shall be
         subject to the provisions of Article VI, Section 6 of Law 72 of
         September 7, 1993. Furthermore, the INSURER shall be responsible for
         posting information at every HCO, addressed to the beneficiaries,
         stating the policy that prohibits denying, unreasonably delaying or
         rationing services by participating providers or any other entity
         related to the rendering of medical care services to the beneficiaries,
         and providing information on procedures for filing a grievance on the
         subject. The INSURER shall notify the HCOs and participating providers
         that they must comply with the policy that prohibits the denial, the
         unreasonable delay or the rationing of services by participating
         providers or any other entity rendering medical services to
         beneficiaries, and further that they must provide information on
         procedures for filing a grievance. The INSURER shall comply with the
         performance measures established and scheduled by the ADMINISTRATION.

13.      The INSURER will ensure that HCOs and participating providers have a
         mix of patients distributed between private and eligible beneficiaries
         so as to avoid any possibility of discrimination by reason of medical
         indigence, whenever feasible.

14.      No participating provider, or its agents, may deny a beneficiary access
         to medically necessary health care services, except for the reasons
         specified in Article VI, section 6 of Law 72 of September 7, 1993.

15.      The INSURER is responsible for having an adequate number of
         participating physicians and providers to supply all the benefits
         offered in the Basic, Dental and the Special Coverage of the contracted
         health insurance. The benefits under the Basic, Special and Dental
         coverage will be provided to the beneficiaries at the location of the
         participating providers.

16.      The INSURER is responsible to have available all participating
         providers needed in order to render all the medically necessary
         services required to provide the beneficiaries with the benefits
         included in the Basic, Dental and Special Coverage of the contracted
         health insurance as specified in ADDENDUM I of this contract.

17.      The INSURER agrees to require compliance by all participating
         physicians and providers with all provisions contained in this
         contract.

18.      The INSURER has a continuous legal responsibility toward the
         ADMINISTRATION to assure that all activities under this contract are
         carried out. INSURER will use its best efforts to prevent unauthorized
         actions by HCOs or participating providers. INSURER will take
         appropriate measures to ensure that all activities under this Contract
         are carried out. Failure to properly discharge the

                                       21

<PAGE>

         obligation to assure, by all means necessary and appropriate, full
         compliance with said activities, shall result in the termination of
         this contract as provided in Article XXXIII hereof.

19.      Pursuant to the Health Reform Concept of 1993, the INSURER shall
         contract as participating providers those Commonwealth owned facilities
         that have been privatized in the Health Area/Region by virtue of Laws
         103 of July 12, 1985, and 190 of September 5, 1996, the 330 and 339
         Projects of the Rural Health Initiatives, those State owned facilities
         not privatized, as well as the privatized or non privatized municipally
         owned facilities in the different areas/regions and regions which will
         complement access to covered medical services, subject to its
         credentialing requirements and contractual terms.

20.      The INSURER assures the ADMINISTRATION that physician and providers of
         services under this contract will provide the full range medical
         counseling that is appropriate for beneficiaries condition. In no way
         the INSURER or any of its contractors may interfere, prohibit, or
         restrict any health care professional's advice within their scope of
         practice, regardless of whether a care or treatment is covered under
         the contract.

21.      The INSURER assures the ADMINISTRATION that its Physician Incentive
         Plan does not in any way compensate directly or indirectly physicians,
         individual physicians, group of physicians or subcontractors as an
         inducement to reduce or limit medically necessary services furnished to
         individual enrollee and that it meets the stop-loss protection and
         enrollee survey and disclosure requirements under the Social Security
         Act. The INSURER shall ensure that at the intermediate level all
         physician providers groups are afforded with adequate stop-loss
         protection within the required thresholds under the Medicaid Program
         regulations.

22.      If the Insurer's Physician Incentive Plan in any respect places
         physicians at substantial financial risk, INSURER assures that adequate
         stop-loss insurance will be maintained to protect physicians from loss
         beyond the risk thresholds established under sections 42CFR 422.208. In
         the event, INSURER places physicians at substantial risk it shall
         conduct enrollee/disenrollee surveys not later than one year after the
         effective date of the contract and at least annually thereafter.

23.      Timeframes for Access Requirements. INSURER must have sufficient
         network of providers and must establish procedures to ensure
         beneficiaries have access to routine, urgent, and emergency services;
         telephone appointments; advice and Beneficiaries service lines. These
         services must be accessible to beneficiaries within the following
         timeframes:

         -        Urgent Care within 24 hours of request;

                                       22

<PAGE>

         -        Routine care within 2 weeks of request;

         -        Physical/Wellness Exams for adults must be provided within 8
                  to 10 weeks of the request;

         -        Referrals: Appointments of referrals must be delivered and
                  notified to beneficiaries within five (5) days from the date
                  prescribed by the provider.

24.      INSURER must establish policies and procedures to ensure access to
         EPSDT Checkups be provided within ninety (90) days of new enrollment,
         except that newborn beneficiaries should be seen within two (2) weeks
         of enrollment, and that in all cases, and for all beneficiaries such
         policies and procedures be consistent with the American Academy of
         Pediatrics and EPSDT periodicity schedule which is based on the
         American Academy of Pediatrics schedule and the guidelines established
         by the ADMINISTRATION. The INSURER must advice the beneficiary of his
         right to have a checkup.

                                  ARTICLE VII
              CONTRACTS WITH HCOs AND ALL PARTICIPATING PROVIDERS

1.       All services necessary to provide beneficiaries the benefits of the
         Basic, Special and Dental Coverage shall be contracted in writing with
         all participating providers. The INSURER will ensure that all
         provisions and requirements contained in this contract are properly
         included in the contracts with the HCOs and with all participating
         providers and that they are carried out by said HCOs and participating
         providers. Such provisions and requirements made part of these
         contracts will be properly notified to the ADMINISTRATION. Coverage
         afforded to beneficiaries under this contract constitutes a direct
         obligation on the part of the INSURER's participating providers to
         comply with all terms and conditions contained herein.

2.       The INSURER may not discriminate with respect to participation,
         reimbursement or indemnification as to any provider who is acting
         within the scope of the provider's license or certification under
         applicable Commonwealth.

3.       The INSURER agrees to draft, execute and enforce a specific contract
         between the INSURER and the HCO and between the INSURER and its
         participating providers that will include all applicable provisions
         contained in this contract. The INSURER will insure that said
         applicable provisions are properly complied with by the HCOs and its
         network of participating providers.

         To this effect, the Insurer also agrees to certify or attest that none
         of his contractors, subcontractors or providers of services: (1)
         consults, employs or procures services from any individual that has
         been debarred or suspended from

                                       23
<PAGE>

         any federal agency; or (2) has a director, partner or employee with a
         beneficial ownership of more than a 5% on their organization's equity
         who has been debarred or suspended by any federal agency, or (3)
         procures self-referral of services to any provider in which it may have
         directly or indirectly any economic or proprietary interest.

         The INSURER will certify and attest that it has provided all HCOs,
         complete written instructions describing procedures to be used for the
         compliance with all duties and obligations arising under this contract.
         These instructions will include the following information: provider
         selection by beneficiaries, covered services, reporting requirements,
         record- keeping requirements, grievance procedures, deductibles and
         co-payment amounts, confidentiality, and prohibitions against denial or
         rationing of services. Copy of these instructions will be submitted to
         the ADMINISTRATION, who reserves the right to request modifications or
         amendments to said instructions following consultation with the
         INSURER.

4.       The INSURER agrees to incorporate in its contracts with HCOs and in
         those between the INSURER and its participating providers, the
         following provisions, among others, contained in this contract:

         a.       A payment time schedule to pay the HCOs for services rendered
                  and for payment for services rendered by the participating
                  providers to the HCOs, the schedules will not exceed the time
                  limitation standards required by the Administration under this
                  contract to assure prompt payments of sums due to providers.

         b.       A warranty by the HCO insuring that the method and system used
                  to pay for the services rendered by the HCO's network of
                  participating providers are reasonable and that the negotiated
                  terms do not jeopardize or infringe upon the quality of the
                  services provided.

         c.       A procedure that establishes how the HCO's network of
                  participating providers can recover from the INSURER monies
                  owed for services rendered and not paid by the HCO, after the
                  HCO's participating provider has demanded payment from the
                  HCO.

         d.       That payments received for services rendered under the health
                  insurance plan shall constitute full and complete payment
                  except for: (i) the deductibles contained in ADDENDUM I of
                  this contract, and (ii) that the benefits or services rendered
                  is not covered. The INSURER will insure compliance with
                  Article XVIII, paragraphs (6) and (7) of this contract.

         e.       A release clause authorizing access by the ADMINISTRATION to
                  the participating providers' Medicare billing data for
                  beneficiaries covered by this contract who are also Part A and
                  Part A and B Medicare beneficiaries, provided that such access
                  is authorized by CMS and other related statutory or regulatory
                  provisions thereof. Access by the ADMINISTRATION shall be at
                  all times subject to all HIPAA regulations requirements
                  mentioned elsewhere in this contract.

                                       24

<PAGE>

         f.       That INSURER will cover the payment of Medicare Part B
                  deductibles and co-insurance for services received by a
                  beneficiary under Medicare Part B, accessed through the HCO's
                  primary care provider, with primary care physician's
                  authorization their network of participating providers and the
                  participating providers of the INSURER for the basic and/or
                  special coverage.

         g.       Co-insurance and deductible for Part B services provided on an
                  outpatient basis to hospital clinics and other institutional
                  care providers, other than physician services, will be
                  considered as a covered bad debt reimbursement item under the
                  Medicare program cost. In this instance, the INSURER will pay
                  for the co-insurance and deductibles related to the physician
                  services provided as a Part B service.

         h.       That the only Part A deductible and co-insurance, and Part B
                  deductible and co-insurance for outpatient services provided
                  in a hospital clinic and other institutional care providers,
                  other that physician services, will be the one billed to
                  Medicare as bad debt. No other amount will be charged to these
                  beneficiaries. The INSURER will neither cover the payment of
                  Medicare Part A deductibles and co-insurance for services
                  received by a beneficiary under Medicare Part A nor the Part B
                  deductible and co-insurance for services provided in hospital
                  clinics, other than physician services. The INSURER will cover
                  the deductibles and co-insurances of all Part B services
                  including Part B deductibles and co-insurance for physician
                  services provided in an outpatient basis to hospital clinics.

         i.       That coverage afforded to beneficiaries under this contract
                  constitutes a direct obligation on the part of the INSURER's
                  participating providers to comply with all terms and
                  conditions contained herein.

         j.       The INSURER will establish directives for psychotropic
                  prescription dispatchment by providers in accordance with the
                  applicable agreement with the pharmacy benefit managers (PBM).
                  The ADMINISTRATION is evaluating an alternative arrangement
                  for pharmacy benefit management, (PBM), which if agreeable to
                  the parties will be implemented according to Article XXXII of
                  this Contract.

5.       The INSURER agrees to provide to the ADMINISTRATION a detailed
         description of the payment methodology used to pay for services
         rendered by the HCOs, HCO's network of providers (primary care
         physicians and other providers), and other participating providers.
         Said description of the payment methodology will also address the
         methodology used by the HCOs in the distribution within their own group
         of the capitation payments, fee for services or other basis for payment
         of services to providers servicing said HCOs. The INSURER will submit
         to the ADMINISTRATION a monthly report detailing all payments made to
         the HCO, HCO's network of participating providers and to the INSURER's
         participating providers classified by specialty.

6.       The INSURER represents that neither the premium or the capitated
         payments or capitated payments with a fee-for-service component for
         services, made to

                                       25
<PAGE>

         HCOs, to HCO's network of participating providers, as well as to the
         INSURER's participating providers, include payment of services covered
         under the Medicare Federal Program.

7.       As part of the terms and conditions contained in the contracts with
         participating providers, the INSURER will include in those with
         privatized government facilities (to include those under management
         contract, that have been sold or are under lease), a provision that
         will authorize the INSURER upon the written request of the Department
         of Health, to withhold a determined amount from the monthly payments to
         said participating providers for services rendered under this contract.
         Said amount will be determined by the Department of Health on the basis
         of the payments contractually agreed to between the Department of
         Health of the Commonwealth of Puerto Rico and said participating
         providers on account of the management fee, sale price or lease fee, as
         well as 50% of the employees' payroll which the participating providers
         are required to reimburse the Department of Health. The INSURER will
         remit said withheld amounts directly to the Department of Health.

8.       The INSURER shall provide all reasonable means necessary to ensure that
         the contracting practices between its participating HCO and providers
         are in compliance with federal anti-fraud provisions and particularly,
         in conformity with the limitations and prohibitions of the False Claims
         Act, the Anti-kickback statute and regulations and Stark II Law and
         regulations prohibiting self-referral to designated medical services by
         participating medical providers.

9.       To the extent feasible within INSURER'S existing claims processing
         systems, INSURER should have a single or central address to which
         providers must submit claims. If a central processing center is not
         possible within INSURER's existing claims processing system, INSURER
         must provide each network provider a complete list of all entities to
         whom the providers must submit claims for processing and/or
         adjudication. The list must include the name of the entity, the address
         to which claims must be sent, explanation for determination of the
         correct claims payer based on services rendered, and a phone number the
         provider may call to make claims inquiries. INSURER must notify
         providers in writing of any changes in the claims filing list at least
         30 days prior to effective date of change. If INSURER is unable to
         provide 30 days notice, providers must be given a 30-day extension on
         their claims filing deadline to ensure claims are routed to correct
         processing center.

10.      The Administration and the Department of Health Medicaid Fraud Control
         Unit must be allowed to conduct private interviews of providers and the
         providers' employees, contractors, and patients. Requests for
         information must be complied with, in the form and language requested.
         Providers and their employees and contractors must cooperate fully in
         making themselves available in person for interviews, consultation,
         grand jury proceedings, pre-trial conference, hearings, trial and in
         any other process, including investigations.

                                       26

<PAGE>
11.      PROVIDER MANUAL AND PROVIDER TRAINING

         INSURER must prepare and issue a Provider Manual(s), including any
         necessary specialty manuals to the providers in the INSURER network and
         to newly contracted providers in the INSURER network within five (5)
         working days from inclusion of the provider into the network. The
         Provider Manual must contain sections relating to special requirements.

         INSURER must provide training to all network providers and their staff
         regarding the requirements of THE ADMINISTRATION/INSURER contract and
         special needs of beneficiaries under this contract.

         INSURER training for all providers must be completed no later than 30
         days after placing a newly contracted provider on active status.
         INSURER must provide ongoing training to new and existing providers as
         required by INSURER or THE ADMINISTRATION to comply with this contract.

         INSURER must maintain and make available upon request enrollment or
         attendance rosters dated and signed by each attendee or other written
         evidence of training of each network provider and their staff.

12.      PROVIDER QUALIFICATIONS - GENERAL

         The providers in INSURER network must meet the following
         qualifications:

--------------------------------------------------------------------------------
FQHC         A Federally Qualified Health Center meets the standards established
             by federal rules and procedures. The FQHC must also be an eligible
             provider enrolled in the Medicaid program.
--------------------------------------------------------------------------------
Physician    An individual who is licensed to practice medicine as an M.D. or a
             D.O. in Puerto Rico either as a primary care provider or in the
             area of specialization under which they will provide medical
             services under contract with INSURER; who is a provider enrolled in
             the Medicaid program; and who has a valid Drug Enforcement Agency
             registration number and a Puerto Rico Controlled Substance
             Certificate, if either is required in their practice.
--------------------------------------------------------------------------------
Hospital     An institution licensed as a general or special hospital by the
             Puerto Rico Health Department under Chapter 241 of the Health and
             Safety Code and Private Psychiatric Hospitals under Chapter 577 of
             the Health and Safety Code (or is a provider which is a component
             part of a State or local government entity which does not require a
             license under the laws of the Commonwealth of Puerto Rico), which
             is enrolled as a provider in the Puerto Rico Medicaid Program.
--------------------------------------------------------------------------------

                                       27

<PAGE>

--------------------------------------------------------------------------------
Non-Physician  An individual holding a license issued by the applicable
Practitioner   licensing agency of the Commonwealth of Puerto Rico who is
Provider       enrolled in the Puerto Rico Medicaid Program or an individual
               properly trained to provide health support services who
               practices under the direct supervision of an appropriately
               licensed professional.
--------------------------------------------------------------------------------
Clinical       An entity having a current certificate issued under the Federal
Laboratory     Clinical Laboratory Improvement Act (CLIA), and enrolled in the
               Puerto Rico Medicaid Program.
--------------------------------------------------------------------------------
Rural Health   An institution which meets all of the criteria for designation
Clinic (RHC)   as a rural health clinic, and enrolled in the Puerto Rico
               Medicaid Program. (330, 329)
--------------------------------------------------------------------------------
Local Health   A local health department established pursuant to Health and
Department     Safety Code, Title 2, Local Public Health Reorganization Act
               ss.121.031 ff.
--------------------------------------------------------------------------------
Non-Hospital   A Provider of health care services which is licensed and
Facility       credentialed to provide services, and enrolled in our program.
Provider
--------------------------------------------------------------------------------
School Based   Clinics located at school campuses that provide on-site primary
Health Clinic  and preventive care to children and adolescents.
(SBHC)
--------------------------------------------------------------------------------

                                  ARTICLE VIII
                  SUBSCRIPTION PROCESS AND IDENTIFICATION CARDS

1.       The INSURER agrees to comply and implement in full all instructions and
         guidelines contained in the Administration's Instructions to Insurers
         for Implementation of Orientation and Subscription Process. (ADDENDUM
         II)

2.       The INSURER shall issue to each beneficiary a card of durable plastic
         material that provides proper identification to access the benefits
         covered under this contract.

3.       This card shall be similar to those the INSURER issues to the rest of
         their subscribers and shall not contain information that may identify
         the cardholder as medically indigent.

4.       The INSURER shall be responsible to assure delivery of the cards at a
         location accessible to the beneficiaries in each municipality.

                                       28

<PAGE>

5.       The INSURER shall deliver the card on the same day that the beneficiary
         completes the enrollment process.

6.       The identification cards shall contain the following information:

         a)       Name of Beneficiary

         b)       INSURER's Group Number

         c)       Subscriber's Social Security Number

         d)       Relationship of beneficiary with subscriber (if applicable)

         e)       HCO name and number

         f)       Issue Date

         g)       Type of Contract (individual or family)

         h)       Coverage effective date

         i)       Other Insurance code

         j)       Medicare Part A and/or Part A and B deductible code.

7.       The INSURER will replace lost, stolen, mutilated cards and will have
         the right to charge the beneficiaries one dollar ($1.00) for each card
         replaced.

8.       The INSURER will replace free of charge the identification card
         whenever a change of HCO is made.

9.       Identification cards are the property of the INSURER and they shall be
         returned by the beneficiary upon losing eligibility to the plan or when
         a change of HCO is made.

10.      The INSURER shall be responsible for notifying each beneficiary that
         the identification card is for the personal identification of the
         beneficiary to whom it has been issued, and that lending, transferring
         or in any other way consenting to the use of the card by any other
         person constitutes a fraudulent act.

11.      Identification Card contents and layout are subject to the prior
         approval of the ADMINISTRATION to be in accordance with Law 72 of
         September 7, 1993.

                                   ARTICLE IX
            SUMMARY PLAN DESCRIPTION BOOKLET AND ORIENTATION PROGRAMS
                              MARKETING PROVISIONS

1.       The INSURER shall be responsible for the preparation, printing and
         distribution, at its own cost, of booklets, in the Spanish language,
         that describe the plan and the benefits covered therein. The Insurer
         agrees to submit before the effective date of the contract a translated
         copy of the beneficiaries booklet in the English language by the proper
         revision of federal authorities. These booklets will be delivered to
         each subscriber upon enrollment, along with the required identification
         card(s).

                                       29

<PAGE>

2.

3.       The booklets shall serve as guarantee of the benefits to be provided
         and shall contain the following information:

         a)       Schedule of benefits covered, all services and items that are
                  available and that are covered either directly or through
                  methods of referral and/or prior authorization, a written
                  description of how and where the services that have been
                  available through the plan services may be obtained.

         b)       Benefit's exclusions and limitations. For benefits that
                  enrollees are entitled to but are not available through the
                  MCO, a written description on how and where to obtain
                  benefits; description of procedures for requesting
                  disenrollments/changes.

         c)       Beneficiary's rights and responsibilities, in accordance with
                  specific rights and requirements to be afforded in accordance
                  with Medical Program regulations 42 CFR 438.100 as amended,
                  Puerto Rico Patient Bill of Rights Law 194, Puerto Rico Mental
                  Health Code, August 25, 2000, as implemented by regulation,
                  and Law 11 which creates the Office of Patients Solicitor
                  General of April 11, 2001.

         d)       Instructions on how to access benefits, including a list of
                  (1) available HCO's and its participating providers, PCP or
                  Specialists (its locations and qualifications), (2) providers
                  from which to obtain benefits under the Special Coverage. Said
                  list can be provided in a separate booklet.

         e)       Official grievances and appeal filing procedures.

         f)       In the event a Physician Incentive Plan affects the use of
                  referral services and/or places physicians at substantial
                  risk, the INSURER shall provide the following information upon
                  beneficiaries requests: the type of incentive arrangements,
                  whether stop-loss insurance is provided and the survey results
                  of any enrollee/disenrollee surveys that will have to be
                  conducted by INSURER.

         g)       Unless otherwise specified, subscription materials must be
                  written at the 4th-6th grade reading comprehension level.

4.       The booklets shall be approved by the ADMINISTRATION prior to printing,
         distribution, and dissemination in compliance with provisions of
         Article IX.

5.       The INSURER shall also be responsible for the preparation, printing and
         distribution, at its own cost, of an Informative Bulletin, in the
         Spanish language, that describes the plan, services and benefits
         covered therein as well as the managed care concept. This Informative
         Bulletin will be distributed among the HCOs, HCO's network of
         participating providers and the INSURER's participating providers.

6.       The INSURER shall be responsible to conduct and assure the
         participation of all providers under this contract to diverse seminars
         to be held throughout the

                                       30

<PAGE>

         Health Area/Region in order to properly orient and familiarize said
         providers with all aspects and requirements related to the Preventive
         Medicine Program, Benefits and Coverage under this contract, and the
         Managed Care concept. Said seminars will be organized, scheduled,
         conducted and offered at the expense of the INSURER. The curriculum for
         said seminars will be coordinated with and approved by the
         ADMINISTRATION Healthcare Coordinators.

7.       All participating providers are mandatorily required to receive yearly
         during the contract term at least four (4) hours of orientation,
         education and familiarization with different aspects related to this
         contract on/or before the expiration of the first four and a half
         (4 1/2) months of the contract term. Failure to comply with this
         requirement will be sufficient grounds to exclude from the Health
         Insurance Program the participating provider. If, at the expiration of
         the first four and half (4 1/2) of the contract term, the participating
         provider has not fully complied with this requirement, it will be
         excluded as participating provider for subsequent periods of the
         contract or the contract term. At the discretion of the ADMINISTRATION,
         and for good cause the excluded provider may be authorized to be
         contracted as a participating provider if it subsequently complies with
         the requirement.

8.       The ADMINISTRATION will monitor and evaluate all marketing activities
         by the INSURER, its contractor, sub-contractors or any provider of
         services under this contract.

9.       Any marketing material addressed to enrollees can not contain false or
         misleading information. All oral, written or audiovisual information
         addressed to enrollees should be accurate and sufficient for
         beneficiaries to make an informed consent decision whether or not to
         enroll and will have to be pre-approved by the ADMINISTRATION.

10.      The INSURER, contractor or subcontractor or any providers of services
         must distribute the material to its entire service area/region. In the
         event the INSURER or any of its contractors develop new and revised
         materials they shall submit them to the ADMINISTRATION for prior
         approval.

11.      The ADMINISTRATION will appoint an Advisory Committee, with
         representation of at least: a board certified physician, a beneficiary
         of a consumer advocate organization that includes Medicaid recipients a
         health related professional related with the medical needs of
         low-income population and a Director of a Welfare Department that does
         not head a medicaid agency.

12.      The Advisory Committee will assist the ADMINISTRATION in the evaluation
         and the review of any marketing or informational material addressed to
         assist medicaid recipients in the provision of health services under
         this contract.

                                       31

<PAGE>

         All the marketing activities and the information which shall be allowed
         will be limited to the following:

                  a)       Clear description of health care benefits coverage
                           and exclusions to enrollees.
                  b)       Explain how, when, where benefits are available to
                           enrollees;
                  c)       Explain how to access emergency, family-planning
                           services, services that do or do not require
                           referrals and authorizations;
                  d)       Explain any benefits enrollees are entitled to, that
                           are not available through the MCO and how to obtain
                           them;
                  e)       Enrollees rights and responsibilities;
                  f)       Grievance and appeal procedures.

13.      The INSURER, its agents, any contractor or sub-contractor party under
         this contract shall not engage in cold call marketing that is,
         unsolicited personal contact with potential enrollees for the purpose
         of influencing them to enroll with any of its contractors. Also
         telephone, door-to-door or telemarketing for the same purposes is
         hereby prohibited.

14.      Neither the INSURER, its contractor, subcontractor or any provider may
         put into effect a plan under which compensation, reward, gift or
         opportunity are offered to enrollees as an inducement to enroll other
         than to offer health care benefits. The INSURER its contractor,
         subcontractor or provider is prohibited from influencing an individual
         enrollment with the sale of any other insurance.

15.      In the event of a final determination reached by the ADMINISTRATION
         that the INSURER, its agents, any of its contractor or subcontractors,
         has failed to comply with any of the provisions set forth on this
         article, the ADMINISTRATION in compliance with due process guarantees
         and remedies available under its regulations; Law 72 of September
         7, 1993; the Social Security and Balance Budget Act, will proceed to
         enforce the compliance of these provisions by pursuing within its
         empowered authority the sanctions established in Article XXXVI.

                                    ARTICLE X
                               GRIEVANCE PROCEDURE

1.       The INSURER represents that it has established an effective procedure
         that assures the filing, receipt, and prompt handling and resolution of
         all grievances and complaints made by the beneficiaries and the
         participating providers. The INSURER will prepare a grievance form that
         must be approved by the ADMINISTRATION. The approved grievance form
         shall be made available to all beneficiaries, HCOs, HCO's network of
         participating providers and the INSURER's participating providers. The
         parties will make whatever adjustments are necessary to reconcile their
         grievance procedure with provisions of Law 194 of August 25, 2000
         (known as "Patient Bill of Rights") or those contained in Law

                                       32

<PAGE>

         11 of April 11, 2001 (known as "Law Creating the Office of Patient's
         Solicitor General") as implemented by regulation.

2.       Any written or telephone communication from a beneficiary or
         participating provider, which expresses dissatisfaction with an action
         or decision arising under the health insurance contracted, shall be
         promptly and properly handled and resolved through a routine complaint
         procedure to be implemented by the INSURER, after prior approval from
         the ADMINISTRATION. The INSURER shall be responsible for documenting in
         writing all aspects and details of said complaints.

3.       The routine complaint procedure which must be implemented by the
         INSURER must provide for (i) the availability of complaint forms to
         document oral complaints; (ii) for the proper handling of the
         complaints; and (iii) for the disposition by notice to the complainant
         of the action taken. This notice shall advise the complainant of the
         INSURER's official Grievance Procedure. The INSURER will submit to the
         ADMINISTRATION, on a monthly basis a written report detailing all
         grievances and routine complaints received, solved and pending solution
         and/or copies of the complaint forms with the notation of the action
         taken. All grievance files and complaint forms must be made available
         to the ADMINISTRATION for auditing. All grievance documents and related
         information shall be considered as containing individually identifiable
         health information, and shall be treated in accordance with the HIPAA
         regulations cited elsewhere.

4.       The Grievance Procedure shall assure the participation of persons with
         authority to require corrective action.

5.       The INSURER's Grievance Procedure shall contain all the necessary
         provisions that assure the affected parties right to due process of
         law. In the event that changes are made to the existing Grievance
         Procedure, a copy of the proposed changes will be made available to the
         ADMINISTRATION for approval prior to its implementation. A copy of the
         INSURER's Grievance Procedure is attached hereto as ADDENDUM III and
         incorporated as part of this contract. The INSURER acknowledges that
         the arbitration process contemplated in the Grievance Procedure shall
         not be applicable to disputes between the ADMINISTRATION and the
         INSURER.

6.       Pursuant to Law 72 of September 7, 1993, any decision issued by the
         INSURER is subject to appeal before the ADMINISTRATION. Such appeal
         shall be regulated by the ADMINISTRATION's regulations and the Uniform
         Administrative Procedure Act, Law 170 of August 12, 1988, as amended
         and as applicable, provided however, that subscribers grievances shall
         be expeditiously solved and that INSURER shall therefore fully
         cooperate with the prompt solutions of any such grievance.

                                       33

<PAGE>

7.       The decision issued by the ADMINISTRATION is subject to review before
         the Circuit Court of Appeals of the San Juan Panel of the Commonwealth
         of Puerto Rico.

8.       INSURER must have written policies and procedures for receiving,
         tracking, reviewing, and reporting and resolving of Beneficiaries
         complaints. The procedures must be reviewed and approved in writing by
         THE ADMINISTRATION. Any changes or modifications to the procedures must
         be submitted to THE ADMINISTRATION for approval thirty (30) days prior
         to the effective date of the amendment.

9.       INSURER must designate an officer of INSURER who has primary
         responsibility for ensuring that complaints are resolved in compliance
         with written policy and within the time required. An "officer" of
         INSURER means a president, vice president, secretary, treasurer, or
         chairperson of the Board of Directors of a corporation, the sole
         proprietor, the managing general partner of a partnership, or a person
         having similar executive authority in the organization.

10.      INSURER must have a routine process to detect patterns of complaints
         and disenrollments and involve management and supervisory staff to
         develop policy and procedural improvements to address the complaints.
         INSURER must cooperate with THE ADMINISTRATION in beneficiaries'
         complaints relating to enrollment and disenrollment. INSURER's
         complaints procedures must be provided to beneficiaries in writing and
         in alternative communication formats. A written description of
         INSURER's complaints procedures must be in appropriate languages and
         easy for beneficiaries to understand. INSURER must include a written
         description in the beneficiaries Handbook. INSURER must maintain at
         least one local and one toll-free telephone number for making
         complaints.

11.      INSURER's process must require that every complaint received in person,
         by telephone or in writing, is recorded in a written record and is
         logged with the following details: date; identification of the
         individual filing the complaint; identification of the individual
         recording the complaint; nature of the complaint; disposition of the
         complaint; corrective action required; and date resolved.

12.      The INSURER Grievance Procedures must comply with the minimum standards
         for prompt resolution of grievances and time frames set forth in 45 CFR
         438.400-424.

                                   ARTICLE XI
                            HEALTH CARE ORGANIZATIONS

1.       All Health Care Organizations (HCOs) shall have a sufficient number of
         primary care physicians as specified in Article VI to attend to the
         medical needs of the beneficiaries. All specialties specified in this
         section have to be available at each HCO. The following are considered
         primary care physicians (gatekeepers):

                                       34

<PAGE>

         a)       General Practitioners

         b)       Internists

         c)       Family Physicians

         d)       Pediatricians

         e)       Obstetricians and Gynecologists

2.       The INSURER shall have available and under contract a sufficient number
         of the following types of support participating providers to render
         services to all beneficiaries:

         a)       Optometrists

         b)       Podiatrists

         c)       Clinical laboratories- (The INSURER shall insure that all
                  laboratory testing sites providing services under this
                  contract have either a clinical laboratory improvement
                  amendment (CLIA) certificate with the registration and (CLIA)
                  identification number or a waiver certification).

         d)       Radiological facilities

         e)       Health Related Professionals

         f)       Hospitals

         g)       Pharmacies

         h)       All those participating providers that may be needed to
                  provide services under the basic, special and dental coverage
                  considering the specific health problems of an area/region.

         The INSURER may not discriminate with respect to participation,
         reimbursement or indemnification as to any provider who is acting
         within the scope of the provider's license or certification under
         applicable state law.

3.       The INSURER shall enter into adequate arrangements to provide its
         beneficiaries with the services provided for under the dental and
         pharmacy coverage, as contractually agreed to between the dentists and
         pharmacies and the INSURER. These arrangements will provide for an
         adequate number of dentists and pharmacies that guarantee the right to
         choose of the beneficiaries.

4.       INSURER shall have available and under contract a sufficient number of
         the following types of support participating physicians to provide
         services to all beneficiaries:

         a)       Ophthalmologists

                                       35
<PAGE>

         b)       Radiologists

         c)       All those physicians that may be necessary and are available
                  considering the morbidity and mortality rates of the specific
                  health area/region, and those needed to provide all the
                  benefits contained in the Basic Coverage of the plan.

5.

6.       The physician/beneficiary ratio accepted is one (1) primary care
         physician for each eight hundred and fifty (850) beneficiaries; one (1)
         specialist (not primary care) for each one thousand one hundred (1,100)
         beneficiaries; and, one (1) physician (all) for each eight hundred
         (800) beneficiaries. These ratio does not take into account the
         expected mix between private patients and beneficiaries which could
         increase the physicians capacity to 1:1,700 for primary care
         physicians; 1:2,200 for specialists and 1:1,600 for all physicians. In
         the event that the HCOs provides services only to beneficiaries under
         this contract, the physician/beneficiary ratio will be the same to that
         applicable when there is a mix between private patients and
         beneficiaries.

7.       The INSURER shall not have, directly or indirectly, any conflict of
         interest through economic participation in any HCO, participating
         provider, its subsidiaries, or affiliates.

8.       The INSURER shall enforce upon each HCO strict quality assurance and
         utilization review programs as described in this contract, the Request
         for Proposals, the INSURER's proposal and its Operations Manual.

9.       The INSURER shall contract and have available all the participating
         providers required to provide to the beneficiaries, in a prompt and
         efficient manner, the benefits included in the Basic, Special and
         Dental Coverage as specified in ADDENDUM I of this contract.

10.      The INSURER agrees to enforce and assure compliance by the HCOs with
         all provisions contained in this contract.

11.      The INSURER will prepare, and provide to all HCOs, complete written
         instructions describing procedures to be used for the compliance with
         all duties and obligations arising under this contract. These
         instructions will cover at least the following topics: provider
         selection by beneficiaries, covered services, instructions and
         coordination of access to mental health services through the mental
         carve-out contractors, reporting requirements, record keeping
         requirements, grievance procedures, deductibles and co-payment amounts,
         confidentiality, and the prohibition against denial or rationing of
         services. A copy of these instructions will be submitted to the
         ADMINISTRATION, who reserves the right to request modifications or
         amendments to said instructions following consultation with the
         INSURER.

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                                   ARTICLE XII
                              GUARANTEE OF PAYMENT

1.       The INSURER expressly guarantees payment for all medically necessary
         services rendered to beneficiaries by any and all participating
         providers.

2.       The insolvency, liquidation, bankruptcy or breach of contract of an
         HCO, or of a contracted participating provider does not release the
         INSURER from its obligation and guarantee to pay for all services
         rendered as authorized under this health insurance contract.

         The nature of INSURER's obligations to guarantee payment to all HCOs,
         providers or subcontractors for services rendered under this health
         insurance contract is solidary, subject to complying with whatever
         established claim proceedings require. As such, the INSURER will
         respond directly to the ADMINISTRATION as principal obligor to comply
         in its entirety with all the contract terms.

3.       In accordance with the payments rights guaranteed under paragraph
         (4) and (5), the provider shall claim direct payments due by a
         HCO/Contractor, to the INSURER. The INSURER shall deduct any amount
         payable directly to a provider from the capitation payments owed to an
         HCO or other contractor.

4.       The INSURER agrees to pay all monies due to the HCOs and/or
         participating providers according to the agreed payment schedule in the
         contracts with said parties. The INSURER represents as of the date of
         this contract that payment to HCO's, HCO's network of participating
         providers and INSURER's participating providers will be made no later
         than forty-five (45) days or as provided by legislation from the date
         that a full, complete and ready to process claim is received at the
         INSURER, when received within sixty (60) days of date of service. The
         INSURER expressly commits to implement all internal systems necessary
         to promptly pay its HCO's and providers all full, complete and ready to
         process claims within the term provided in this section, and to avoid
         unjustifiable delay in payment by submitting said claims to audits and
         evaluation of contested claims; said practice is expressly prohibited,
         and may result in the remedies set forth at Article XXXVI or
         termination as provided in Article XXXIII. A complete and ready to
         process claim (clean claim) is a claim received by the INSURER for
         adjudication, and which requires no further information, adjustment, or
         alteration by the provider of the services in order to be processed and
         paid by the INSURER.

5.       In the event that, following the receipt of the claim, the same is
         totally or partially contested by the INSURER or HCO, the participating
         provider shall be notified in writing within thirty (30) days that the
         claim is contested with the contested portion identified and provided
         the reasons thereof. Upon receipt of a new or supplemented claim, the
         INSURER or the HCO, shall pay or deny the contested

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<PAGE>

         claim or portion of the contested claim within thirty (30) days. Upon
         expiration of any of the aforementioned periods of time, the overdue
         payments shall bear interest at the prevailing rate for personal loans
         as determined by the Financial Board of the Office of the Commissioner
         of Financial Institutions.

6.       Checks for capitated payments to HCO's, HCO's network of participating
         providers and INSURER's participating providers are to be regularly
         issued by the INSURER on the 15th day of each month. The INSURER
         further represents that it has contracted with the HCO the payment of
         the corresponding capitation no later than the last day of the month to
         which said capitation corresponds.

7.       The INSURER agrees and warrants that it will be the central payor for
         all valid claims that will be generated throughout their contracted
         participating provider network for the health insurance contract for
         the Health Region/Area.

8.       All payments distribution within the capitated services will be made by
         the INSURER. In the event that participating providers in their
         arrangements with the HCOs consent to the disbursement of the payment
         checks directly to the HCOs, the INSURER will assure and require the
         HCOs to provide on a monthly basis a schedule of the amount of the
         payments made to said participating providers. In any event, the
         INSURER will provide the ADMINISTRATION with a detailed monthly report
         listing by providers the monthly payment distribution. The claim for
         services rendered will be generated and forwarded by the participating
         providers directly to the INSURER. The claims submitted by the
         participating providers will comply with the requirements contained in
         Article XV, Sections four (4) and eight (8).

9.       The INSURER agrees and warrants that the method and system used to pay
         for the services rendered to and by the HCOs and all participating
         providers is reasonable and that the amount paid does not jeopardize or
         infringe upon the quality of the services provided.

10.      The guarantee of payment contained in this article will be reinforced
         through the establishment of different alternatives in order to insure
         that HCOs, HCO's participating providers and INSURER's participating
         providers are paid in full for contracted services in accordance with
         established budgets. Said alternatives will be submitted to the
         ADMINISTRATION for approval prior to its implementation.

11.      Inasmuch as the INSURER will be the central payor for all payments for
         valid claims for services rendered by the HCOs, HCO's network of
         participating providers and INSURER's participating providers the
         INSURER agrees to incorporate in the contracts with the HCOs, and to
         require the HCOs to incorporate in their arrangements with their
         participating providers a provision whereby the INSURER is authorized
         to adjudicate and determine the validity of any claim or dispute
         between the HCO and its participating providers regarding a
         controversy surrounding the validity of the claims of services
         submitted by said

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<PAGE>

         participating provider. Said provision will assure that the HCO's
         network of participating providers payment for a valid claim for
         services is not improperly withheld and that in no event payment in
         this situation is made more than sixty (60) days from the date that the
         claim or dispute is received by the INSURER. It will be the INSURER's
         responsibility to verify the terms of the arrangements between the HCO
         and its network of participating providers, the rendering of the
         services, the reasonableness of the claim and that payment has not been
         made.

12.      The guarantee of payment and the representations as to the payment
         schedule to HCO's and participating providers will be enforceable and
         not set aside or altered in the event that the INSURER is notified of
         the expiration of the term of this contract or of its termination.

13.      The INSURER agrees to provide the ADMINISTRATION, on a monthly basis,
         and through electronic or magnetic media format, a detailed report
         containing all payments made to HCOs, to HCO's network of participating
         providers, and to the INSURER's participating providers during the
         month immediately preceding the report. Said report will also include a
         list of all claims received on account of those payments during the
         preceding month by the INSURER from the HCOs, the HCO's network of
         participating providers as well as a detail as to all claims received
         but not paid by reason of accounting or administrative objections. The
         INSURER further agrees to make available to the ADMINISTRATION for
         auditing purposes any and all records or financial data related to
         claims submitted but not paid by reason of accounting or administrative
         objections. The intention of this clause is for the ADMINISTRATION to
         be able to determine on a monthly basis the amount of money paid to
         each participating provider, the amount billed by and not paid to each
         participating provider and the reasons for non-payment in order to keep
         track of the regularity of payments of the Insurer and the HCOs and
         their compliance with this contract.

14.      The INSURER also agrees to provide to HCO's, on a monthly basis, and
         through electronic or machine readable media format, a detailed report
         classified by beneficiaries, by providers, by diagnosis, by procedure,
         by date of service and by its real cost of all payments made by the
         INSURER which entails a deduction from the gross monthly payment to
         said HCO's. Copy of said report will be made available to the
         ADMINISTRATION each month.

15.      Each HCO must report each encounter to the INSURER on a monthly basis
         classified by each participating provider within the HCO, as well as
         the real cost of the services of each encounter of service. The INSURER
         must submit to the ADMINISTRATION the distribution of the capitation
         within each HCO as established on the Actuarial Reports formats
         required in the RFP.

16.      The INSURER will abide with the ADMINISTRATION efforts to implement
         cost reduction measures and the future implementation payments methods
         based on fee schedules or diagnosis related groups that may be
         established.

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                                  ARTICLE XIII
                    UTILIZATION REVIEW AND QUALITY ASSURANCE

1.       The INSURER will establish a Quality of Care Program with the following
         guidelines:

         a)       PHYSICIAN-CREDENTIALING: The INSURER shall follow strict
                  provider screening procedures before contracting. In order to
                  assure quality health services for the medically indigent, the
                  INSURER will follow stringent physician selection and
                  credentialing process for this plan as per the INSURER's
                  Proposal. The ADMINISTRATION may review participating
                  providers credentials at any time and submit its findings to
                  the INSURER for consideration by the INSURER if necessary. The
                  INSURER shall notify the ADMINISTRATION quarterly of all
                  accepted and non-accepted providers.

         b)       PROVIDER CONTRACTING: The INSURER will assure that all
                  hospitals facilities, doctors, dentists, and all health care
                  providers are appropriately licensed and in good standing with
                  all their governing bodies and accrediting agencies and meet
                  all practice requirements established by law, the Department
                  of Health, the ADMINISTRATION and other governing agencies, as
                  described in the INSURER's Proposal. The ADMINISTRATION may
                  review participating provider credentials at any time and
                  submit its findings to the INSURER for consideration by the
                  INSURER if necessary. The INSURER shall notify the
                  ADMINISTRATION quarterly of all accepted and non-accepted
                  providers.

         c)       INSPECTION OF ALL FACILITIES: The INSURER will insure that all
                  providers' physical facilities are safe, sanitary and follow
                  sound operating procedures, as described in the INSURER's
                  Proposal and that all laboratory testing site providing
                  services under this contract have their duly CLIA
                  certification along with their identification number or waiver
                  certificate. The ADMINISTRATION may review participating
                  provider facilities at any time and submit its findings to the
                  INSURER for consideration by the INSURER if necessary. The
                  INSURER shall notify the ADMINISTRATION quarterly of all
                  inspections done.

         d)       MEDICAL RECORD REVIEW: The INSURER will establish a program to
                  monitor the appropriateness of care being provided, the
                  adequacy and consistency of record keeping, and completeness
                  of records, as described in the INSURER's Proposal. The
                  INSURER shall notify the ADMINISTRATION on a quarterly basis
                  of all findings in the Medical Record Review Program. The
                  ADMINISTRATION may review and/or audit Program records and
                  reports at any time.

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<PAGE>

         e)       CLINICAL DATABASE SYSTEM: The HCOs will provide the INSURER
                  with statistical records of utilization of medical services by
                  beneficiaries, as described in the INSURER's Proposal. The
                  INSURER shall notify the ADMINISTRATION on a quarterly basis
                  of all findings in the Clinical Database System. The
                  ADMINISTRATION may review and/or audit the Clinical Database
                  System records and reports at any time.

         f)       RETROSPECTIVE REVIEW: The INSURER will establish a
                  Retrospective review Program that will address quality and
                  utilization problems that may arise, as described in the
                  INSURER's Proposal. The INSURER shall notify the
                  ADMINISTRATION on a quarterly basis of all findings in the
                  Retrospective Review Program. The ADMINISTRATION may review
                  and/or audit the program findings at any time.

         g)       OUTCOME REVIEW: The INSURER will establish an Outcome Review
                  Program to assess the quality of inpatient and ambulatory care
                  management provided by the primary health care providers, as
                  described in the INSURER's Proposal. The INSURER shall notify
                  the ADMINISTRATION on a quarterly basis of all findings in the
                  Outcome Review Program. The ADMINISTRATION may review and/or
                  audit the program findings at any time.

         h)       QUALITY OF CARE COMMITTEE: The INSURER will establish a
                  Quality of Care Committee to insure provider's compliance with
                  the INSURER'S quality of care program, as described in the
                  INSURER's Proposal. The INSURER shall submit a report to the
                  ADMINISTRATION on a quarterly basis of all findings in the
                  Quality of Care Committee. The ADMINISTRATION may review
                  and/or audit the program findings and reports at any time.

 2.      The INSURER will establish cost containment and utilization review
         programs as follows:

         a)       HOSPITAL ADMISSION AND STAY REVIEW: The INSURER will establish
                  programs to reduce unnecessary hospital use and to review
                  hospital admissions through the following programs, as
                  described in the INSURER's Proposal:

                  1)       CONCURRENT REVIEW: The INSURER will establish a
                           program to review hospital admissions to guarantee
                           adequacy and duration of stay.

                  2)       RETROSPECTIVE REVIEW: The INSURER will establish a
                           program to determine medical necessity and service
                           adequacy after the service has been rendered or paid
                           to providers or physicians.

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<PAGE>

         (3)      PROSPECTIVE REVIEW: The INSURER will establish a program to
                  determine appropriate lengths of stay at the hospital prior to
                  admission for elective or non-emergency hospitalizations.

b)       UTILIZATION REVIEW PROGRAM: The INSURER will establish a program to
         identify patterns of medical practice and their effect in the care
         being provided, as described in the INSURER's Proposal, and through the
         following:

         (1)      PRE-PAYMENT REVIEW: The INSURER will establish a program to
                  prevent inappropriate billing of services prior to claims
                  payment and to evaluate questionable practices, problematic
                  coding, inappropriate level of care, excessive tests and
                  services.

         (2)      POST PAYMENT REVIEW: The INSURER will establish a program to
                  review service claims for purposes of creating a provider
                  profiling system.

         The INSURER shall submit a report to the ADMINISTRATION on a quarterly
         basis of all findings under the Utilization Review Programs. The
         ADMINISTRATION may review and/or audit the programs' findings and
         reports at any time.

c)       SECOND SURGICAL OPINION: The INSURER will establish a program to allow
         beneficiaries to obtain a second surgical opinion for elective surgical
         procedures on a voluntary basis, as described in the INSURER's
         Proposal.

d)       INDIVIDUAL CASE MANAGEMENT PROGRAM: The INSURER will establish a
         program to identify and manage cases that involve high health care
         costs, as described in the INSURER's Proposal. The INSURER shall submit
         a report to the ADMINISTRATION on a quarterly basis of all findings in
         the Individual Case Management Program. The ADMINISTRATION may review
         and/or audit the program findings and reports at any time.

e)

f)       FRAUD AND ABUSE: The INSURER will establish a program to assure
         reasonable levels of utilization and quality of care, as described in
         the INSURER's Proposal. The INSURER shall submit a report to the
         ADMINISTRATION on a quarterly basis of all findings in the Fraud and
         Abuse Program. The Fraud and Abuse Reports must include:

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<PAGE>

                  (1) the number of complaints of fraud and abuse made to the
                  Commonwealth that warrant a preliminary investigation, and,

                  (2) for each case of suspected fraud and abuse warranting a
                  full investigation, the INSURER must report the following
                  information:

                           (i)      the provider's name and number;
                           (ii)     the source of the complaint;
                           (iii)    the type of provider;
                           (iv)     the nature of the complaint;
                           (v)      the approximate range of dollars involved,
                                    and,
                           (vi)     the legal and administrative disposition
                                    or status of the case.

         g)       COORDINATION OF BENEFITS PROGRAM: The INSURER will establish a
                  program to identify beneficiaries with other insurance in
                  order to coordinate health insurance benefits from other
                  carriers, as described in the INSURER's Proposal. The INSURER
                  shall submit a report to the ADMINISTRATION on a quarterly
                  basis of all findings in the Coordination of Benefits Program.
                  The ADMINISTRATION may review and/or audit the program
                  findings and reports at any time.

3.       DENTAL SERVICES UTILIZATION REVIEW PROGRAM: The INSURER agrees to
         maintain a program to determine that the services provided to
         beneficiaries are in accordance to established quality parameters by
         the dental community as provided for in the INSURER's Proposal. The
         INSURER shall notify the ADMINISTRATION quarterly of all findings of
         said review program. The ADMINISTRATION may review and/or audit the
         program findings at any time.

4.       EPSDT AND MIGRANT SERVICES PROGRAM: The INSURER will implement a
         program that addresses EPSDT screening and Migrant services indicators
         for preventive diagnostic tests according to age in all areas/regions
         and shall notify the ADMINISTRATION on a monthly basis all findings of
         said program. INSURER assures the compliance with Section 1905(r) of
         the Social Security Act and the applicable protocols adopted by the
         Department of Health for the implementation of these Programs.

5.       The INSURER shall continue to submit the ADMINISTRATION on a monthly
         basis a report that includes all services rendered by diagnosis and
         procedures identified by all specialties, by place of service including
         those under dental coverage, and procedures in laboratories and
         X-rays. It will be reported beginning with the most common diagnosis
         and procedures until reaching the least common. The INSURER shall be
         required to provide the ADMINISTRATION on a monthly basis data in and
         electronic form that includes all of the specified fields and elements
         described in ADDENDUM IV, whenever said reporting system can be
         implemented.

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6.       All services rendered shall be identified by Current Procedure
         Terminology, International Classification of Diseases, Clinical
         Modifications Diagnostic Statistic Manual and American Dental
         Association's Current Dental Terminology, as applicable.

7.       The ADMINISTRATION and the INSURER will agree on the required format in
         order to comply with the reporting requirements in this section and
         which will be accomplished through electronic or magnetic media.

8.       All the required programs, processes and reports heretofore referred
         to, will also be an obligation on the part of the INSURER's
         participating providers, HCOs and HCO's participating providers. The
         INSURER will assure compliance therewith on the part of said INSURER's
         participating providers, HCOs and HCO's participating providers.

9.       The ADMINISTRATION reserves the right to require the INSURER to
         implement additional specific cost and utilization controls, subject to
         prior consultation and cost negotiation with the INSURER if necessary.

                                   ARTICLE XIV
                            COMPLIANCE AND AGREEMENT
                            FOR INSPECTION OF RECORDS

1.       Since funds from the Commonwealth Plan under Title XIX of the Social
         Security Act Medical Assistance Program (Medicaid) as well as from
         Title V of the Social Security Act and Mental Health Block Grants are
         used to finance this project in part the INSURER shall agree to comply
         with the requirements and conditions of the Center of Medicare and
         Medicaid Services (CMS), the Comptroller General of the United States,
         the Comptroller of Puerto Rico and this ADMINISTRATION, as to the
         maintenance of records related to this contract and audit rights
         thereof, as well as all other legal obligations attendant thereto,
         including, but not limited to, non-discrimination, coverage benefit
         eligibility as provided by the Puerto Rico State Plan and Law 72 of
         1993, anti-fraud and anti-kickback laws, and those terms and provisions
         of the SSA as applicable. All disclosure obligations and access
         requirements set forth in this Article or any other Article shall be
         subject at all times and to the extent mandated by law and regulation,
         to the HIPAA regulations described elsewhere in this agreement.

2.       The INSURER shall require from the HCO's and all participating
         providers that they maintain an appropriate record system for
         services rendered to beneficiaries, including separate medical files
         and records for each beneficiary as is necessary to record all clinical
         information pertaining to said beneficiaries, including notations of
         personal contacts, primary care visits, diagnostic studies and all
         other services. The INSURER shall also maintain records to document
         fiscal activities and expenditures relating to compliance under this
         agreement.

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         The INSURER and all participating providers shall preserve, and retain
         in readily accessible form, the records mentioned herein during the
         term of this contract and for the period of six (6) years thereafter.

3.       At all times during the term of this contract and for a period of six
         (6) years thereafter, the INSURER and all participating providers will
         provide the ADMINISTRATION, CMS, the Comptroller of Puerto Rico, the
         Comptroller General of the United States of America and/or their
         authorized representatives, access to all records relating to the
         INSURER's compliance under this contract for the purpose of
         examination, audit or copying of such records. The audits of such
         records include examination and review of the sources and applications
         of funds under this contract. The INSURER shall also furnish access to
         and permit inspection and audit by the ADMINISTRATION, CMS, the
         Comptroller of Puerto Rico, the Comptroller General of the United
         States of America and/or their authorized representatives to any
         financial records relating to the capacity of the INSURER or its HCOs,
         if relevant, to bear the risk of potential financial losses.

4.       The INSURER shall ensure that the HCO's and all participating providers
         and their subcontractors furnish to the Peer Review Organization (PRO)
         or to the ADMINISTRATION on-site access to, or copies of patient care
         records as needed to evaluate quality of care.

5.       The ADMINISTRATION and CMS shall have the right to inspect, evaluate,
         copy and audit any pertinent books, documents, papers and records of
         the INSURER related to this contract and those of any HCO or
         participating provider in order to evaluate the services performed,
         determination of amounts payable, reconciliation of benefits,
         liabilities and compliance with this contract.

6.       The INSURER shall provide for the review of services (including both
         in-patient and out-patient services) covered by the plan for the
         purpose of determining whether such services meet professional
         recognized standards of health care, including whether appropriate
         services have not been provided or have been provided in inappropriate
         settings. It shall also provide for review, by random sampling, by the
         ADMINISTRATION, of written complaints, and the results thereof, filed
         by beneficiaries or their representatives as to the quality of services
         provided.

7.       The INSURER agrees that the ADMINISTRATION and CMS may conduct
         inspections and evaluations, at all reasonable times, through on-site
         audits, systems tests, assessments, performance review and regular
         reports to assure the quality, appropriateness, timeliness and cost of
         services furnished to the beneficiaries.

8.       The ADMINISTRATION and CMS shall have the right to inspect all of the
         INSURER's financial records related to this contract, that may be
         necessary to assure that the ADMINISTRATION pays no more than its fair
         share of general

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<PAGE>

         overhead costs as contracted. The ADMINISTRATION and CMS shall have the
         right to inspect all the HCOs' financial records related to this
         contract.

9.       The INSURER agrees that the ADMINISTRATION may evaluate, through
         inspection or other means, the facilities of the INSURER's
         participating providers, HCO's and its participating providers. All
         facilities shall comply with the applicable licensing and certification
         requirements as established by regulations of the Department of Health
         of Puerto Rico. It shall be the INSURER responsibility to take all
         necessary measures to ascertain that all facilities contracting with
         INSURER comply with the required licensing and certification
         regulations of the Puerto Rico Health Department, and to terminate the
         contract of any facility not in compliance with said provisions.

         Failure to adequately monitor the licensing and certification of the
         facilities may result in the termination of this contract as provided
         in Article XXXIII.

10.      The INSURER agrees and also will require all HCOs and participating
         providers to agree that the ADMINISTRATION's right to inspect,
         evaluate, copy and audit, will survive the termination of this contract
         for a period of six (6) years from said termination date unless:

         a)       The ADMINISTRATION determines there is a special need to
                  retain a particular record or group of records for a longer
                  period and notifies the INSURER at least thirty (30) days
                  before the normal disposition date;

         b)       There has been a termination, dispute, fraud, or similar fault
                  by the INSURER, in which case the retention may be extended to
                  three (3) years from the date of any resulting final
                  settlement; or

         c)       The ADMINISTRATION determines that there is a reasonable
                  possibility of fraud, in which case it may reopen a final
                  settlement at any time;

         d)       There has been an audit intervention by CMS, the office of the
                  Comptroller of Puerto Rico, the Comptroller General of the
                  United States or the ADMINISTRATION, in which case the
                  retention may be extended until the conclusion of the audit
                  and publication of the final report.

11.      The INSURER agrees to require all HCO's and participating providers to
         permit the ADMINISTRATION to review and audit all aspects related to
         quality, appropriateness, timeliness and cost of services rendered, and
         to demonstrate that the services for which payment was made were
         actually provided.

                                   ARTICLE XV
                             INFORMATION SYSTEMS AND
                             REPORTING REQUIREMENTS

1.       The INSURER agrees to comply with the reporting and information systems
         requirements as provided for in the Request for Proposals and the
         Proposal submitted by the INSURER. Accordingly the INSURER must submit
         to the

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         ADMINISTRATION a detailed Systems Requirements Inventory Report which
         details the following:

         a)       Plan's compliance with each information system requirement;
         b)       action plan of INSURER's response to the requirements;
         c)       actual date that each system requirement will be completely
                  operational, not to exceed the effective date of coverage
                  under this contract.

2.       The INSURER agrees to submit to the ADMINISTRATION the System Inventory
         Report for final approval not later than the date of the signing of
         this contract.

3.       All Management Information Systems Requirements included in the Request
         for Proposal and those included in the INSURER's Proposal must commence
         implementation as of the date of the signing of this contract and shall
         be fully operational as of the first day of coverage under this
         contract. Material non compliance with this requirement shall be enough
         reason to cancel the contract herein, with prior written notification
         by the ADMINISTRATION to the INSURER according to the time set in
         Article XXXIII.

4.       The INSURER shall be responsible for the data collection and other
         statistics of all services provided including, but not limited, to
         encounter and real cost of each one, claims services and any other
         pertinent data from all HCOs, participating providers or any other
         entity which provide services to beneficiaries under the program, said
         data to be classified by provider, by beneficiary, by diagnosis, by
         procedure and by the date the service is rendered. The data collected
         must then be forwarded to the ADMINISTRATION on a monthly basis in an
         electronic or on machine readable media format. The data fields and
         specific data elements required to be transmitted are contained in the
         RFP's Record of Service File Layout format. The ADMINISTRATION reserves
         the right to modify, expand or delete the requirements contained
         therein or issue new requirements, subject to consultation with the
         INSURER and cost negotiation, if necessary. Failure to comply with the
         requirements contained herein will be sufficient cause for the
         imposition against the INSURER of the penalty provided for in Article
         XXXVI of this contract.

5.       The INSURER agrees that all required data and information needs to be
         collected and reported through electronic or machine readable media
         commencing with the effective date of coverage of this contract.

6.       The information systems of all HCOs shall be compatible with the
         systems in use at all by INSURER.

7.       The INSURER shall supply to the HCOs and, upon request, to all
         participating providers with eligibility information on a daily basis.
         Said information shall be secured through on-line access with the
         INSURER.

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8.       The INSURER agrees to submit to the ADMINISTRATION within twenty-five
         (25) days of the closing of each month, in such form and detail as
         indicated in the Record of Service File Layout format and any other
         formats the ADMINISTRATION requires in the RFP, the following
         information:

         a)       Data pertaining to health insurance claims, and encounter for
                  all services provided to beneficiaries.

         b)       Statistical data on providers, medical services and any other
                  services;

         c)       Enrollment database;

         d)       Any and all data and information as required in the Request
                  for Proposals and in the Proposal submitted;

         e)       Any other reports or data that the ADMINISTRATION may require
                  after consultation with the INSURER and cost negotiation, if
                  necessary.

         Failure to comply with the requirements contained herein will be
         sufficient cause for the imposition against the INSURER of the penalty
         provided for in Article XXXVI of this contract.

9.       The INSURER agrees to provide to the ADMINISTRATION, on a regular basis
         as needed, any and all data, information, reports, and documentation
         that will permit Governmental Agencies, the compilation of statistical
         data to substantiate the need for, and the appropriate use of federal
         funds for federally financed health programs.

10.      The INSURER agrees to report to the ADMINISTRATION on a daily basis all
         information pertaining to enrollment, disenrollment, and other
         subscriber or beneficiary transactions as required by the
         ADMINISTRATION. All records shall be transmitted: 1) through approved
         ADMINISTRATION systems contractor; or 2) over data transmission lines
         directly to the ADMINISTRATION; or 3) on machine readable media. All
         machine readable media or electronic transmissions shall be consistent
         with the relevant ADMINISTRATION's record layouts and specifications.

11.      The INSURER will submit to the ADMINISTRATION on a monthly basis
         reports and data generated electronically that allows the
         ADMINISTRATION:

         a.       Evaluation of the effectiveness of the delivery of services by
                  providers and the adequacy of these services.
         b.       Monitoring and evaluation of the efficiency and propriety of
                  the services that are being received by the beneficiaries and
                  their dependents.
         c.       Comparison of experience with that of other providers.
         d.       Comparison of the utilization of health care and the cost
                  tendencies within the community and the group that renders
                  service.
         e.       Demonstration of how the quality of care is being improved for
                  the insured and their dependents.

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<PAGE>

         f.       Comparison of the administrative measures taken by the INSURER
                  with reference points to be able to evaluate the progress
                  towards constant improvement.

         g.       Compliance with the information requirements and reports of
                  the Federal Programs such as: Title II of the Health Insurance
                  Portability and Accountability Act; Title IV-B Part 1 and 2,
                  Title IV-E, Title V, Title XIX, Title and Title XXI of the
                  Social Security Act; the applicable state laws as (the Child
                  Abuse Act, "Ley de Maltrato de Menores" Public Law 75 of May
                  28, 1980; the Protection and Assistance to Victims and Witness
                  Act, "Ley de Proteccion y Asistencia a Victimas de Delitos y
                  Testigos", Public Law 77 of July 9,1986), and any other
                  information requirements which in the future are mandated by
                  federal and state programs.

         h.       Evaluation of each service provided with separate
                  identification by beneficiary, by provider, by diagnosis, by
                  diagnostic code, by procedure code and by date and place of
                  service. The provider must be identified by his/her provider's
                  identification number or his/her social security account
                  number.

         These reporting requirements will be discontinued when the new
         reporting system contained in ADDENDUM IV is implemented. Failure to
         comply with the requirements contained herein will be sufficient cause
         for the imposition against the INSURER of the penalty provided for in
         Article XXXVI of this contract.

12.      The INSURER will provide the ADMINISTRATION with a uniform system for
         data collection.

13.      The INSURER'S Information Systems must provide a continuous flow of
         information to measure the quality of services rendered to the
         beneficiaries and their dependents. The purpose of these systems must
         be to help the ADMINISTRATION and the INSURER in the process of
         achieving continuous improvement in the quality of services rendered to
         beneficiaries and their dependents within a cost effective system.

14.      The INSURER will prepare the necessary reports requested herein for the
         administration of the health insurance contract. Daily reports are due
         by the end of the following business day. Weekly reports are due on the
         first business day of the following week. Monthly reports are due
         twenty-five (25) days after the end of each month. Quarterly reports
         are due thirty (30) days after the end of each quarter.

15.      The INSURER must inform to the Administration on a monthly basis all
         cancellation and disenrollment of providers.

16.      The INSURER must provide the ADMINISTRATION on a monthly basis with the
         updated version of the Providers Directory.

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17.      The INSURER will coordinate the enrollment of beneficiaries.

18.      The INSURER will assure adequate and efficient functioning for the
         term of the contract that includes an insurance against economic loss
         due to system failure or data loss.

19.      As an additional measure to guarantee quality and adequacy of the
         medical health services, the INSURER will conduct periodical statistics
         analysis of the medical services rendered to the beneficiaries and will
         compare them with the primary physician practice profile of their
         regular health insurance plan. Quarterly reports as to the analysis and
         comparison statistics will be submitted to the ADMINISTRATION.

20.      In order to insure that all subscriber encounters are registered and
         recorded, the INSURER will conduct audits of statistical samples and
         unannounced personal audits of the HCOs and participating provider's
         facilities to assure that the medical records reconcile with the
         encounter reported, and corrective measures will be taken in case of
         any violation of the INSURER's regulations regarding the registration
         and reporting of encounters. The INSURER will provide quarterly reports
         to the ADMINISTRATION covering all the findings and corrective
         measures, if any, taken regarding any violation of said regulations.

21.      The INSURER, as a minimum must guarantee the following:

         a.       The security and integrity of the information and
                  communication systems through:
                  1.       Regular Backups on a daily basis
                  2.       Controlled Access to the physical plant
                  3.       Control logical access to information systems
                  4.       Verification of the accuracy of the data and
                           information

         b.       The continuity of services through:
                  1.       Regular maintenance of the systems, programs and
                           equipment
                  2.       A staff of duly trained personnel
                  3.       An established and proven system of Disaster Recovery
                  4.       Cost Effective systems.

         c.       Identification of the beneficiary via the use of plastic
                  cards.

         d.       Automated system of communication with statistics of the
                  management of calls (Occurrence of busy lines, etc.)

         f.       A comprehensive health insurance claim processing system to
                  handle receiving process and payment of claims and encounters.

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<PAGE>

 g.       Analysis/Control of utilization (The INSURER must provide said
          analysis to the ADMINISTRATION on a monthly basis in the format
          outlined by the ADMINISTRATION):

         1.       by patient/family
         2.       by region, area/region town, (zip code)
         3.       by provider (provider's identification number or social
                  security account numbers)
         4.       by diagnosis
         5.       by procedure or service
         6.       by date of service

Failure to comply with the requirements contained herein will be sufficient
cause for the imposition against the INSURER of the penalty provided for in
Article XXXVI of this contract.

j.       Financial and Actuarial reports
k.       System of Control and claims payment that includes payment history.
l.       Computerized pharmacy system that permits its integration to the
         payment procedures to the providers.
m.       Outcome Analysis
n.       Electronic creation of data files related to mortality, morbidity, and
         vital statistics.

o.       Integration to central systems
         1.       Procedures and communications Protocol Compatibility;
         2.       Ability to transmit reports, and or files via electronic
                  means.
p.       Electronic Handling of:

         1.       The process of Admission to hospitals and ambulatory services
         2.       Verification of eligibility and subscription to the plan.
         3.       Verification of benefits
         4.       Verification of Financial information (Deductibles,
                  Co-payments, etc.)
         5.       Verification of individual demographic data
         6.       Coordination of Benefits.

q.       Computerized applications for general accounting.
r.       As to HCOs and all Participating Providers the information system shall
         provide for:

         1.       On line access to service history for each beneficiary.
         2.       Register of diagnosis and procedures for each service
                  rendered.
         3.       Complete demography on line, including the aspect of coverage
                  and financial responsibility of the patient.
         4.       Individual and family transactions
         5.       Annotations on line (General notes such as allergies,
                  reminders or other clinical aspects (free form)

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         6.       Analysis of activity by:

                  a.       department
                  b.       provider
                  c.       diagnosis
                  d.       procedures
                  e.       age
                  f.       sex
                  g.       origin
                  h.       others, as mutually agreed upon.

         7.       Diagnosis history by patient with multiple codes per service.
         8.       AD Hoc Reports
         9.       Referrals Control
         10.      Electronic Billing
         11.      Pharmacy system
         12.      Dental system
         13.      Ability to handle requirements of the Medicare programs such
                  as RBRVS (Relative Base Relative Value System).
         14.      Ability to collect data as to the quarter in which the
                  pregnant female beneficiary commences her ob-gyn treatment.
                  The format for the collection of this data shall be approved
                  by the ADMINISTRATION prior to its implementation.

22.      The INSURER agrees to report all procedure and diagnostic information
         using the current versions of Current Procedural Terminology,
         International Classification of Diseases, Clinical Modification,
         Diagnostic Statistic Manual and American Dental Association's Current
         Dental Terminology, respectively. This does not prevent the adoption by
         INSURER of the ANSI X-12 electronic transactions for standards set
         forth in the HIPAA regulations; which shall be implemented on or before
         October 2002, unless modified by DHHS.

23.      Non compliance with any of the Information Systems and Reporting
         Requirements; with any requirements related to the electronic standards
         transactions to be implemented within the schedule set forth by the
         HIPAA regulations, or with other requirements contained herein, shall
         be subject to the provisions of Articles XXXIII and XXXVI of this
         contract, as well as to Article IV, Section 2(n) of Law 72 of September
         7, 1993, which provides the right of the ADMINISTRATION to enforce
         compliance through the Circuit Court of Appeal Puerto Rico, Part of San
         Juan.

24.      The INSURER shall provide the ADMINISTRATION with one or more telephone
         numbers of dial-in data lines, and a minimum of three user's ID's and
         passwords that will allow the ADMINISTRATION's authorized personnel
         access to the INSURER's on-line computer applications, Such access will
         allow the ADMINISTRATION use of the same systems and access to the same
         information

                                       52

<PAGE>

         as used by the INSURER and enable the inquiry on beneficiaries,
         providers, and statistics files related to this contract.

25.      As per the INSURER's proposal, INSURER shall provide to each HCOs,
         HCOs network of participating providers and INSURER'S participating
         providers in the Health Area/Region, as well as to those outside of the
         area/region who provide services to beneficiaries from within the
         area/region, the necessary hardware and software to maintain on-line
         communication with the INSURER's Information System to document all
         encounters and services rendered to beneficiaries. Said hardware and
         software will be provided at a reasonable cost for the implementation
         and servicing.

26.      The INSURER agrees to submit to the ADMINISTRATION reports as to the
         data and information gathered through the use of the Health Plan
         Employer Data and Information Set (HEDIS) and the work plan required in
         the RFP formats, as per Article XVII, Section VII.

27.      The INSURER must disclose to the ADMINISTRATION the following
         information on provider incentive plans in sufficient detail to
         determine whether their incentive plan complies with the regulatory
         requirements set forth on 42 CFR 434.70(a) and 422.10:

         a)       Whether services not furnished by the physician or physician
                  group are covered by the incentive plan. If only the services
                  furnished by the physician or physician group are covered by
                  the incentive plan, disclosure of other aspects of the plan
                  need not be made.
         b)       The type of incentive arrangement (i.e., withhold, bonus,
                  capitation).
         c)       A determination on the percent of payment under the contract
                  that is based on the use of referral services. If the
                  incentive plan involves a withholding or bonus, the percent of
                  the withholding of bonus. If the calculated amount is 25% or
                  less, disclosure of the remaining elements in this list is not
                  required and there is no substantial risk.
         d)       Proof that the physician or physician group has adequate
                  stop-loss protection, including the amount and type of
                  stop-loss protection.
         e)       The panel size and, if patients are pooled, the method used.
         f)       In the case of those prepaid plans that are required to
                  conduct beneficiary surveys, the survey's results.

         The information items (a) through (e) above, must be disclosed to the
         ADMINISTRATION: (1) prior to approval of its initial contracts or
         agreements, upon the contract or agreements anniversary or renewal
         effective date or upon request by the Administration or CMS. The
         disclosure item (f) is due 3 months after the end of the contract year
         or upon request by CMS.

         If the contract with the INSURER is an initial Medicaid contract, but
         the INSURER has operated previously in the commercial or Medicare
         markets,

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<PAGE>

         information on physician incentive plans for the year preceding the
         initial contract period must be disclosed. If the contract is an
         initial contract with INSURER, but the INSURER has not operated
         previously in the commercial or Medicare markets, the INSURER should
         provide assurance that the provider agreements that they sign will meet
         CMS and Commonwealth requirements (i.e. there is no Physician Incentive
         Plan (PIP); there is a PIP but no Substantial Financial Risk (SFR);
         there is a PIP and SFR so stop-loss and survey requirements will be
         met). For contracts being renewed or extended, the INSURER must provide
         PIP disclosure information for the prior contracting period's
         contracts.

         The INSURER must update PIP disclosures annually and must disclose to
         administration whether PIP arrangements have changed from the previous
         year. Where arrangements have not changed, a written assurance that
         there has not been a change is sufficient. This also applies when
         INSURER analyze the PIP arrangements in their direct and downstream
         contracts to determine which disclosure items are due from their
         contractors. INSURER is expected to maintain the current written
         assurances and the prior periods' documentation so that the materials
         are available during on-site reviews.

28.      INSURER TELEPHONE ACCESS REQUIREMENTS

         INSURER must have adequately-staffed telephone lines available.
         Telephone personnel must receive customer service telephone training.
         INSURER must ensure that telephone staffing is adequate to fulfill the
         standards of promptness and quality listed below:

         1.       80% of all telephone calls must be answered within an average
                  of 30 seconds;
         2.       The lost (abandonment) rate must not exceed 5%;
         3.       INSURER cannot impose maximum call duration limits but must
                  allow calls to be of sufficient length to ensure adequate
                  information is provided to the Beneficiaries or Provider.

29.      The INSURER shall abide with the present Information Systems and
         Reporting Requirements established and shall cooperate with the
         Administration's Proposed Plans to implement new and revised
         requirement as set forth in ADDENDUM IV.

                                   ARTICLE XVI
                             FINANCIAL REQUIREMENTS

1.       The INSURER shall notify the ADMINISTRATION of any loans and other
         special financial arrangements which are made between the INSURER and
         any HCO's or participating provider or related parties. Any such loans
         shall strictly conform with the legal requirements of the anti-fraud
         and anti-kickback laws and regulations.

                                       54

<PAGE>
2.       The INSURER shall provide to the ADMINISTRATION copies of audited
         financial statements following Generally Accepted Accounting
         Principles (GAAP) and of the report to the Insurance Commissioner in
         the format agreed to by the National ASSOCIATION of Insurance
         Commissioners (NAIC), for the year ending on December 31, 2000, and
         subsequently thereafter for the contract term not later than March 15
         of each subsequent year. Unaudited GAAP financial statements for each
         quarter during the contract term shall be presented to the
         ADMINISTRATION not later than forty five (45) days after the closing
         of each quarter.

3.       The INSURER will maintain adequate procedures and controls to insure
         that any payments pursuant to this contract are properly made. In
         establishing and maintaining such procedures the INSURER will provide
         for separation of the functions of certification and disbursement.

4.       The INSURER is required to establish a cash reserve, in accordance
         with the Insurance Code of Puerto Rico, to insure that outstanding
         claims can be satisfied in the event of insolvency.

5.       The INSURER agrees to provide to the ADMINISTRATION, upon the
         expiration of each period of twelve (12) consecutive months of the
         contract year, and not later than ninety (90) days thereafter, audited
         financial statements following Generally Accepted Accounting
         Principles (GAAP) which exclusively present the operational financial
         situation related to the execution of this contract. The
         ADMINISTRATION reserves the right to request interim audited financial
         statements not to exceed two (2) during the contract term.

6.       The INSURER agrees to provide and make available to the ADMINISTRATION
         or any accounting firm contracted by the ADMINISTRATION any and all
         working papers of its external auditors related to this contract.

                                  ARTICLE XVII
                       PLAN COMPLIANCE EVALUATION PROGRAM

1.       The ADMINISTRATION shall conduct periodical evaluations of the
         INSURER's compliance with all terms and conditions of this contract
         including, but not limited to, quality, appropriateness, timeliness
         and reasonableness of cost and administrative expenses, said
         evaluation to be defined as the Plan Compliance Evaluation Program.

2.       Said program will evaluate compliance of the following aspects in each
         areas/regions:

         a)       Eligibility and enrollment
         b)       Services to beneficiaries and participating providers

                                      55
<PAGE>

         c)       Coverage of benefits
         d)       Reporting
         e)       Financial requirements
         f)       Rules and Regulations
         g)       Plan initiatives
         h)       Quality, appropriateness, timeliness and cost of services
         i)       Utilization
         j)       Fraud and abuse
         k)       Accessibility
         l)       Grievances and Complaint handling
         m)       Information Systems
         n)       Electronic standards, security and privacy compliance as
                  provided by HIPAA to include review of timetables for
                  compliance and implementation plans
         o)       Such aspects which the ADMINISTRATION considers necessary in
                  order to evaluate full compliance with this contract.

3.       The evaluation process will be performed throughout the contract year
         using specific evaluating parameters. All parameters will be derived
         exclusively from the Request for Proposals, the INSURER's Proposal and
         this contract. Each area/region will contain several parameters with
         each parameter having a specific numeric value adding up a subtotal
         per area/region and a total for the aggregate of all area/regions of
         evaluation. Results will be presented in a Plan Compliance Evaluation
         Report. The evaluating parameters will be presented to the INSURER
         prior to commencement of the evaluation process.

4.       The INSURER shall comply with the penalties set for each parameter
         within the range of values predetermined by the ADMINISTRATION.

5.       Compliance with the Plan Compliance Evaluation Program is of essence
         to this contract and will be a determining factor in the renewal of
         this contract. Failure to comply with compliance requirements or
         parameters may also result in the termination of the contract as
         provided in Article XXXIII.

6.       The ADMINISTRATION agrees to furnish the INSURER with the required
         Plan Performance Evaluation Program prior to its implementation.

7.       The INSURER, as an additional tool to assure the evaluation of the
         insurance contract, agrees to abide, implement and develop the Health
         Plan-Employer Data and Information Set (Hedis), as revised and
         recommended by NCQA and in accordance with the time schedule, work
         plan and other requirements established in Addendum XI of the RFP
         referring to HEDIS DATA.

8.       DEFAULT AND REMEDIES under Plan Compliance Program.

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<PAGE>

         REMEDIES AVAILABLE TO THE ADMINISTRATION UNDER THE PLAN COMPLIANCE
         PROGRAM FOR INSURER'S DEFAULTS

         All of the listed remedies below may be exercised by the
         ADMINISTRATION and are in addition to all other remedies available to
         the ADMINISTRATION under this contract, by law or in equity, are joint
         and several, and may be exercised concurrently or consecutively.
         Exercise of any remedy in whole or in part does not limit the
         ADMINISTRATION in exercising all or part of any remaining remedies.

         Any particular default listed under subparagraph (a) to (j) below
         (which is not intended to be exhaustive) may be subject, when
         applicable, to any one or more of the following remedies:

         -        Terminate the contract if the applicable conditions set forth
                  in Section 10.1 are met;

         -        Suspend payment to INSURER;

         -        Recommend to CMS that sanctions be taken against INSURER as
                  set out in Section 10.7;

         -        Remove the EPSDT's component from the capitation paid to
                  INSURER if the benchmarks(s) missed is for EPSDT's;

         -        Assess civil monetary penalties as set out in section 10.8;
                  and/or

         -        Withhold premium payment.

         DEFAULTS BY INSURER

a.       FAILURE TO PERFORM AN ADMINISTRATIVE FUNCTION

         Failure of INSURER to perform an administrative function is a default
         under this contract. Administrative functions are any requirements
         under this contract that are not direct delivery of health care
         services. Administrative functions include claims payment; encounter
         data submission; filing any report when due; cooperating in good faith
         with THE ADMINISTRATION, an entity acting on behalf of THE
         ADMINISTRATION, or an agency authorized by statute or law to require
         the cooperation of INSURER in carrying out an administrative,
         investigative, or prosecutorial function of the program; providing or
         producing records upon request; or entering into contracts or
         implementing procedures necessary to carry out contract obligations.

b.       ADVERSE ACTION AGAINST INSURER BY PRICO

                  Termination or suspension of INSURER's PRICO Certificate of
                  Authority or any adverse action taken by PRICO that THE
                  ADMINISTRATION determines will affect the ability of INSURER
                  to provide health care services to beneficiaries is a default
                  under this contract.

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<PAGE>

c.       INSOLVENCY

                  Failure of INSURER to comply with Commonwealth solvency
                  standards or incapacity of INSURER to meet its financial
                  obligations as they come due is a default under this
                  contract.

d.       FAILURE TO COMPLY WITH FEDERAL LAWS AND REGULATIONS

                  Failure of INSURER to comply with the federal requirements
                  for Medicaid, including, but not limited to, federal law
                  regarding misrepresentation, fraud, or abuse; and, by
                  incorporation, Medicare standards, requirements, or
                  prohibitions, is a default under this contract.

                  The following events are defaults under this contract
                  pursuant to 42 U.S.C. 1396b(m)(5), 1396u-2(e)(1)(A):

                  INSURER's substantial failure to provide medically necessary
                  items and services that are required under this contract to
                  be provided to beneficiaries;

                  INSURER's imposition of premiums or charges on beneficiaries
                  in excess of the premiums or charge permitted by federal law;

                  INSURER's acting to discriminate among beneficiaries on the
                  basis of their health status or requirements for health care
                  services, including expulsion or refusal to enroll an
                  individual, except as permitted by federal law, or engaging
                  in any practice that would reasonably be expected to have the
                  effect of denying or discouraging enrollment with INSURER by
                  eligible individuals whose medical condition or history
                  indicates a need for substantial future medical services;

                  INSURER's misrepresentation or falsification of information
                  that is furnished to CMS, THE ADMINISTRATION, a beneficiary,
                  a potential beneficiary, or a health care provider;

                  INSURER's failure to comply with the physician incentive
                  requirements under 42 U.S.C. 1396b(m)(2)(A)(x); or

                  INSURER's distribution, either directly or through any agent
                  or independent contractor, of marketing materials that
                  contain , false or misleading information, excluding
                  materials previously approved by THE ADMINISTRATION.

e.       MISREPRESENTATION OR FRAUD

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<PAGE>

         INSURER's misrepresentation or fraud with respect of any provision of
         this contract is a default under this contract.

f.       EXCLUSION FROM PARTICIPATION IN MEDICARE OR MEDICAID

         Exclusion of INSURER or any of the managing employees or persons with
         an ownership interest whose disclosure is required by Section 1124(x)
         of the Social Security Act (the Act) from the Medicaid or Medicare
         program under the provisions of Section 1128(x) and/or (b) of the Act
         is a default under this contract.

         Exclusion of any provider or subcontractor or any of the managing
         employees or persons with an ownership interest of the provider or
         subcontractor whose disclosure is required by Section 1124(x) of the
         Social Security Act (the Act) from the Medicaid or Medicare program
         under the provisions of Section 1128(x) and/or (b) of the Act is a
         default under this contract if the exclusion will materially affect
         INSURER's performance under this contract.

g.       FAILURE TO MAKE PAYMENTS TO NETWORK PROVIDERS AND SUBCONTRACTORS

         INSURER's failure to make timely and appropriate payments to network
         providers and subcontractors is a default under this contract.

h.       FAILURE TO MONITOR AND/OR SUPERVISE ACTIVITIES OF CONTRACTORS OR
         NETWORK PROVIDERS

         Failure of INSURER to audit, monitor, supervise, or enforce functions
         delegated by contract to another entity that results in a default
         under this contract or constitutes a violation of state or federal
         laws, rules, or regulations is a default under this contract.

         Failure of INSURER to properly credential its providers, conduct
         reasonable utilization review, or conduct quality monitoring is a
         default under this contract.

         Failure of INSURER to require providers and contractors to provide
         timely and accurate encounter, financial, statistical and utilization
         data is default under this contract.

i.       PLACING THE HEALTH AND SAFETY OF BENEFICIARIES IN JEOPARDY

         INSURER's placing the health and safety of the beneficiaries in
         jeopardy is a default under this contract.

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<PAGE>

j.       FAILURE TO MEET ESTABLISHED BENCHMARK

         Failure of INSURER to repeatedly meet any benchmark established by THE
         ADMINISTRATION under this contract is a default under this contract.

9.       NOTICE OF DEFAULT AND CURE OF DEFAULT WHEN APPLICABLE

         THE ADMINISTRATION will provide INSURER with written notice of default
         (Notice of Default) under this contract. The Notice of Default may be
         given by any means that provides verification of receipt. The Notice
         of Default must contain the following information:

                  (i) A clear and concise statement of the circumstances or
                  conditions that constitute a default under this contract;

                  (ii) The contract provision(s) under which default is being
                  declared;

                  (iii) A clear and concise statement of how and/or whether the
                  default may be cured;

                  (iv) A clear and concise statement of the time period during
                  which INSURER, when applicable, may cure the default;

                  (v) The remedy or remedies THE ADMINISTRATION is electing to
                  pursue and when the remedy or remedies will take effect; -

                  (vi) If THE ADMINISTRATION is electing to impose civil
                  monetary penalties, the amount that THE ADMINISTRATION
                  intends to withhold or impose and the factual basis on which
                  THE ADMINISTRATION is imposing the chosen remedy or remedies;

                  (vii) Whether any part of a civil monetary penalty, if THE
                  ADMINISTRATION elects to pursue these remedy, may be passed
                  through to an individual or entity who is or may be
                  responsible for the act or omission for which default is
                  declared;

                  (viii) Whether failure to cure the default within the given
                  time period, if any, will result in THE ADMINISTRATION
                  pursuing an additional remedy or remedies, including, but not
                  limited to, additional sanctions,- referral for investigation
                  or action by another agency, and/or termination of the
                  contract.

10.      EXPLANATION OF REMEDIES

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10.1     TERMINATION

10.1.1   TERMINATION BY THE ADMINISTRATION

         THE ADMINISTRATION may terminate this contract if:

10.1.1.1 INSURER substantially fails or refuses to provide payment for or
         access to medically necessary services and items that are required
         under this contract to be provided to beneficiaries after notice and
         opportunity to cure;

10.1.1.2 INSURER substantially fails or refuses to perform administrative
         functions under this contract after notice and opportunity to cure;

10.1.1.3 INSURER materially defaults under any of the provisions of Article
         XVI;

10.1.1.4 Federal or Commonwealth funds for the Medicaid program are no longer
         available; or

10.1.1.5 THE ADMINISTRATION has a reasonable belief that INSURER has placed the
         health or welfare of beneficiaries in jeopardy.

10.1.2  THE ADMINISTRATION must give INSURER 30 days written
         notice of intent to terminate this contract if termination is the
         result of INSURER's substantial failure or refusal to perform
         administrative functions or a material default as established in
         Article XXXIII.

10.1.3   THE ADMINISTRATION may, when termination is due to INSURER's
         substantial failure or refusal to provide payment for or access to
         medically necessary services- and items, notify INSURER's
         beneficiaries of any hearing requested by INSURER. Additionally, if
         THE ADMINISTRATION terminates for this reason, THE ADMINISTRATION may
         enroll INSURER's beneficiaries with another INSURER or permit
         INSURER's beneficiaries to receive Medicaid-covered services other
         than from an INSURER.

10.1.4   INSURER must continue to perform services under the transition plan
         described in Section 10.2.1 if the termination is for any reason other
         than THE ADMINISTRATION'S reasonable belief that INSURER is placing
         the health and safety of the beneficiaries in jeopardy. If termination
         is due to this reason, THE ADMINISTRATION may prohibit INSURER's
         further performance of services under the contract.

10.1.5   If THE ADMINISTRATION terminates this contract, INSURER may appeal the
         termination under Article VI Section 12 Law 72 September 7, 1993, as
         amended.

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10.1.9   TERMINATION BY MUTUAL CONSENT

         This contract may be terminated at any time by mutual consent of both
         INSURER and THE ADMINISTRATION.

10.2     DUTIES OF CONTRACTING PARTIES UPON TERMINATION BY REASON OF DEFAULT

         When termination of the contract occurs by reason of default, THE
         ADMINISTRATION and INSURER must meet the following obligations:

10.2.1   THE ADMINISTRATION and INSURER must prepare a transition plan, which
         is acceptable to and approved by THE ADMINISTRATION, to ensure that
         beneficiaries are reassigned to other plans without interruption of
         services. That transition plan will be implemented during the 90-day
         period between receipt of notice and the termination date unless
         termination is the result of THE ADMINISTRATION's reasonable belief
         that INSURER is placing the health or welfare of beneficiaries in
         jeopardy.

10.2.2.2 INSURER is responsible for all expenses related to giving notice to
         beneficiaries; and

10.2.2.3 INSURER is responsible for all expenses incurred by THE ADMINISTRATION
         in implementing the transition plan.

10.2.2.4 If the contract is terminated by mutual consent:

10.2.3.1 THE INSURER is responsible for notifying all beneficiaries of the date
         of termination and how beneficiaries can continue to receive contract
         services and the provisions of Article XXXIV shall apply.

10.3-10.6

10.7     RECOMMENDATION TO CMS THAT SANCTIONS BE TAKEN AGAINST INSURER

10.7.1   If CMS determines that INSURER has violated federal law or regulations
         and that federal payments will be withheld, THE ADMINISTRATION will
         deny and withhold payments for new enrollees of INSURER.

10.7.2   INSURER must be given notice and opportunity to appeal a decision of
         THE ADMINISTRATION and CMS pursuant to 42 CFR `434.67.

10.8     CIVIL MONETARY PENALTIES

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10.8.1   The Administration may impose monetary penalties according to Article
         XXXVI, Section 4.

10.9

10.10    REVIEW OF REMEDY OR REMEDIES TO BE IMPOSED

10.10.1  INSURER may dispute the notice by the ADMINISTRATION that
         ADMINISTRATION intends to impose any sanction under this contract.
         INSURER may notify THE ADMINISTRATION of its objections by filing a
         written response to the Notice of Default, clearly stating the reason
         INSURER disputes the proposed sanction. With the written response,
         INSURER must submit to THE ADMINISTRATION any documentation that
         supports INSURER's position. INSURER must file the review within
         fifteen (15) days from INSURER's receipt of the Notice of Default as
         provided in Article XXXIII, subparagraph 2. Filing a dispute in a
         written response to the Notice of Default suspends imposition of the
         proposed sanction.

10.10.2  INSURER and THE ADMINISTRATION must attempt to informally resolve the
         dispute. If INSURER and THE ADMINISTRATION are unable to informally
         resolve the dispute THE ADMINISTRATION will make the remedy final.

                                 ARTICLE XVIII
                              PAYMENT OF PREMIUMS

1.       The payment for the first month of coverage under this contract will
         be made upon the certification by the INSURER that it has complied
         with all the terms and conditions contained in this contract to the
         satisfaction of the ADMINISTRATION.

2.       For subsequent months the ADMINISTRATION shall pay to the INSURER-the
         corresponding monthly premium within the first five (5) working days
         of the month of coverage, upon submission by the INSURER of an invoice
         containing the list of the beneficiaries enrolled for the month of the
         invoice.

         The monthly premium calculation for beneficiaries not enrolled for the
         full month shall be determined on a pro-rata basis by dividing the
         corresponding monthly premium amount by the number of days in the month
         and multiplying the result by the number of days the beneficiary was
         actually enrolled.

3.       The monthly premiums for the months comprised within the contract term
         and covered by this contract are as follows:

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         a)       For all beneficiaries including all those who are sixty-five
                  (65) years and older who are Medicare beneficiaries with Part
                  A or Parts A and B and those who are sixty-five years and
                  older who are not Medicare recipients:

                  1)       Per member per month rate (PMPM) (Beneficiary)
                           established at SIXTY EIGHT DOLLARS AND SEVENTY FIVE
                           CENTS ($68.75).

4.       The per member per month rate (PMPM) herein agreed provides for:

         a)       The billing by providers to Medicare for services rendered to
                  beneficiaries who are also Medicare recipients. The INSURER
                  will not cover deductibles or co-insurance of Part A, but
                  will cover deductibles and co insurance of Part B of
                  Medicare, except for deductibles and co-insurance for
                  outpatient services provided in hospital setting, other than
                  physician services.

         b)       The recognition as a covered reimbursable Medicare Program
                  cost as bad debts by reason of non-payment of Part A
                  deductibles and/or coinsurance, and for deductibles and
                  co-insurance for outpatient services provided in hospital
                  setting under Medicare Part B, other than physician services.

         c)       Pharmacy coverage for beneficiaries who are also Part A and
                  Part A and B Medicare recipients, as long as the benefits are
                  accessed through the PCP, HCOs, HCO's network of
                  participating providers or the INSURER's participating
                  providers and the prescription is issued by a participating
                  provider of the INSURER.

         d)       Dental coverage for beneficiaries who are also Part A and
                  Part A and B Medicare recipients, the INSURER's participating
                  providers.

         e)       All benefits included in ADDENDUM I that are not covered
                  under Medicare Part A or Part B.

5.       The INSURER shall not, at any time, increase the rate agreed in the
         contract nor reduce the benefits agreed to as defined in ADDENDUM I of
         this contract.

6.       The INSURER guarantees the ADMINISTRATION that the rate and any
         applicable deductibles or co-payments constitute full payment for the
         benefits contracted under the plan, and that participating providers
         cannot collect any . additional amount from the beneficiaries. Balance
         billing is expressly prohibited.

         Upon a determination made by the ADMINISTRATION that the INSURER or
         its agents that the INSURER has engaged in balance billing, the
         ADMINISTRATION will proceed to enforce provisions as established in
         Article XXXVI.

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7.       The INSURER understands that the payment of premium by the
         ADMINISTRATION and the INSURER's payments to its HCOs, HCO's network
         of participating providers and INSURER's participating providers,
         shall be considered as full and complete payment for all services
         rendered except for the deductibles established in ADDENDUM I of the
         contract herein.

8.       For those Medicare beneficiaries with Part A, any recovery by the
         provider for Part A deductibles and/or co-insurance will be made
         exclusively through the Medicare Part A Program as bad debts. In this
         instance, beneficiaries would neither pay any reimbursement for
         rendered services to a participating provider nor pay the deductibles
         included in ADDENDUM I of this contract.

9.       For those Medicare beneficiaries with Part B, any recovery by the
         participating provider for Part B deductibles and/or co-insurance,
         other than services provided on an outpatient basis to hospital
         clinics, will be made through the INSURER and/or the HCOs. In this
         instance, beneficiaries would neither pay any reimbursement for
         rendered services to a participating provider nor pay the deductibles
         included in ADDENDUM I OF THIS contract.

10.      Co-insurance and deductible for Part B services provided on an
         outpatient basis to hospital clinics, other than physician services,
         will be considered as a covered bad debt reimbursement item under the
         Medicare program cost. In this instance, the INSURER will pay for the
         co-insurance and deductibles related to the physician services
         provided as a Part B service, through the capitation paid to the HCO.
         .

11.      Newborns shall be immediately covered by the INSURER if born to an
         eligible individual and/or family unit as defined herein the Medicaid
         Commonwealth Plan, the law and its regulations.

12.      The INSURER understands that if the Federal Government submits an
         alternative to the agreement hereof that is more cost effective and
         for the benefit of the Government of Puerto Rico, the ADMINISTRATION
         along with the INSURER shall renegotiate the coverage for Medicare
         beneficiaries with Part A or Part A and B.

13.      The INSURER certifies that the monthly billing submitted to the
         ADMINISTRATION includes all beneficiaries, who have been issued an
         identification card and for which payment of premiums are due either
         on a monthly or pro-rated basis. The ADMINISTRATION will not accept
         any new billing once the monthly billing is submitted by the INSURER-
         to the ADMINISTRATION, unless there is a justifiable reason for the
         omission.

14.      If any differences arise in the ADMINISTRATION's payment of premiums
         to the INSURER, the latter will proceed to analyze the differences
         between the original billing submitted by the INSURER and the amount
         paid by the

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         ADMINISTRATION. The INSURER will proceed, after proper analysis, to
         submit to the ADMINISTRATION a diskette as well as all relevant
         documentation that supports and details the INSURER's claim not later
         than thirty (30) working days after payment is made to the INSURER by
         the ADMINISTRATION. Once this term has ended, the INSURER waives its
         right to claim any amounts from differences arising from the monthly
         payment made by the ADMINISTRATION and releases the ADMINISTRATION
         from any and all obligation to pay any additional premiums, including
         differences to billing by more than one insurer. During the following
         one hundred and twenty (120) days the ADMINISTRATION will confirm the
         validity of the claim and make payment thereof.

                                  ARTICLE XIX
                             ACTUARIAL REQUIREMENTS

1.       For the purpose of determining future premiums, the loss experience of
         this contract shall be based exclusively on the results of the cost of
         health care services provided to the beneficiaries covered under this
         contract. The INSURER shall maintain all the utilization and financial
         data related to this contract duly segregated from its regular
         accounting system including, but not limited to the General Ledger and
         the necessary Accounting Registers classified by the Area/Region
         subject to this contract.

2.       Administrative expenses to be included in determining the experience
         of the program are those directly related to this contract. Separate
         allocations of expenses from the INSURER's regular business, INSURER's
         related companies, INSURER's parent company or other entities will be
         reflected or made a part of the financial and accounting records
         described in the preceding section.

3.       Any pooling of operating expenses with other of the INSURER's groups,
         cost shifting, financial consolidation or the implementation of other
         combined financial measures is expressly forbidden.

4.       Amounts paid for claims or encounters resulting from services
         determined to be medically unnecessary by the INSURER will not be
         considered in the contract's experience.

5.       The INSURER shall provide the ADMINISTRATION every month with a
         Premium Disbursement Illustration. Said illustration shall present the
         distribution of the capitation, claim expenses by coverage, reserves,
         administrative expenses and premium distributions as referred and
         contained in the RFP's Actuarial Reports formats. Failure to comply
         with the requirements contained herein will be sufficient cause for
         the imposition against the INSURER of the penalty provided for in
         Article XXXVI of this contract.

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6.       The determination by the INSURER as to the payment of the capitation
         fee and as to any other payments by virtue of this contract will be
         computed on an actuarially sound basis.

7.       The INSURER will provide to the ADMINISTRATION, on a monthly basis,
         the actuarial data, premium distribution, and reports as contained in
         the RFP's Actuarial Report formats. Failure to comply with the
         requirements contained herein will be sufficient cause for the
         imposition against the INSURER of the penalty provided for in Article
         XXXVI of this contract.

                                   ARTICLE XX
                        PREVENTIVE MEDICINE PROGRAM The

1.       Department of Health will provide for and effectively implement a
         preventive medicine program with primary emphasis on public health
         education which will include, but will not be limited to, guidance on
         lifestyles, AIDS, drug abuse, cancer and mother and child care. This
         is typically referred to as Primary Prevention. The INSURER will
         collaborate with the Department of Health and provide for a preventive
         medicine program with primary emphasis on the provision of clinical
         services in support of the Preventive Medicine Program, including but
         not limited to, screening and education of individual patients, such
         as PAP Smears, colorectal screening mammograms and cholesterol
         screening as indicated by the best practices of medicine.

         In cooperation with the INSURER, the Department of Health will develop
         a surveillance methodology to identify compliance with this program.

2.       The INSURER, through its secondary and tertiary Preventive Program,
         will address, analyze and implement measures to provide effective
         clinical and educational activities seeking to combat the specific
         causes of morbidity and mortality in the Area/Region.

3.       The INSURER will develop and effectively implement a case management
         system in order to monitor high risk cases and attend to the covered
         health care needs of the beneficiaries and dependents within said
         category.

4.       The INSURER represents that under its Preventive Program it will
         contract, sufficient medical specialists and specialized teams in
         order to combine the resources of the HCOs and the professional staff
         of the HCOs, including but not limited to, health educators,
         nutritionists, dieticians, nurses, other trained personnel and
         physicians who will act as the team's educator, manager and
         coordinator.

5.       The INSURER will be responsible to direct to a network of other
         agencies and community resources serving each municipality within the
         Area/Region so as to guarantee that participating providers and
         beneficiaries are aware of and

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         understand the available services in their community and the process by
         which to access them.

6.       The INSURER will assure that discharge of the mother and her baby from
         the hospital is based upon sound clinical judgment determined by the
         clinician.

7.       The responsibilities of the INSURER in the Preventive Program will
         include the following

         a)       A disease management program developed by the INSURER in
                  collaboration with the Department of Health which shall
                  develop standardized processes to address mayor public health
                  programs such as Asthma, Diabetes, Hypertension and Congestive
                  Heart Failure, among others. This program shall include
                  identification treatment protocols/guidelines and
                  surveillance/monitoring. In cooperation with the Department of
                  Health and the Centers for Disease Control (CDC) annual
                  reports will be published detailing the results.

          b)      A case management program which initially will be under the
                  responsibility of a nurse. Case management will not be
                  limited to the physician's offices or a determined center.
                  Coordination of the services provided is required within the
                  community and at the home of the beneficiary, if necessary.

         c)       An outreach program shall be developed in collaboration with
                  the Department of Health to target specific clinical issues as
                  identified by the Department of Health, for those
                  beneficiaries who cannot access those services. The- clinical
                  standard shall conform to the published HEDIS measures. These
                  measures can be modified or supplemented by the Department of
                  Health. d) The

         d)       INSURER will assure that all pregnant women are screened for
                  alcohol use following the Department of Health Guidelines.

         e)       The INSURER will assure that all pregnant women will obtain
                  counseling for the HIV test. All pregnant women who accept the
                  the HIV test will be referred to the HIV Prevention and
                  Detection Program of the Department of Health. The participant
                  provider shall coordinate all referrals with the Department of
                  Health. Pre-natal care and HIV testing will continue to be
                  covered benefits under this contract.

         f)       The INSURER will assure that all pregnant women, following the
                  administration of the HIV test that reports a positive result,
                  are allowed to be treated under the guidelines for the
                  utilization of ZDV in pregnant women and neonatal infants to
                  reduce the risk of mother-infant HIV transmission, published
                  by the Department of Health.

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<PAGE>

         g)       The INSURER will assure that all pregnant women are properly
                  educated about the WIC Program. Those eligible individuals
                  will be referred to the WIC Program of .the Department of
                  Health. It will be 'the immediate responsibility of the
                  participating providers to comply with all requirements in
                  order to arrange the referral to the WIC Program without any
                  cost to the patient.

         h)       The INSURER will assure that all providers comply with the
                  EPSDT (Early Periodic Screening Diagnosis and Treatment)
                  Program and the Guidelines for Adolescent Preventive Services
                  (GAPS) from the American Medical Association. The itinerary of
                  services that have to be rendered by providers will comply
                  with the EPSDT Itinerary Services Formats.

         i)       The INSURER will be responsible to develop and demonstrate its
                  strategy to meet the appropriate prevention program guidelines
                  as required by the Department of Health.

         j)       The INSURER will provide the ADMINISTRATION monthly reports
                  detailing all services rendered to mother and child classified
                  by age groups and listing the numbers of pregnant women that
                  have: (i) received prenatal care on each month in the
                  reporting period; (ii) counseled as to HIV testing; (iii)
                  referred to the HIV Prevention and Detection Program of the
                  Department of Health; and (iv) referred to the WIC Program.

         k)       The INSURER agrees to comply and assure that all participating
                  providers will comply with the federal and local laws referred
                  in Article XV paragraph (11) (g) of this contract. The INSURER
                  will assure the submission by the participating provider of
                  all the protocols and formats requested by the Department of
                  Health, Department of the Family, Department of Education and
                  Department of Justice as contained in the RFP formats.

8.       The INSURER will develop and effectively implement incentive-based
         programs whereby the providers are motivated toward compliance with all
         requirements of their Preventive Medicine Program such as EPSDT,
         Immunizations, Prenatal care, reduction in cesarean sections, and other
         related services.

9.       The ADMINISTRATION shall evaluate these preventive programs through
         HEDIS and other applicable performance standards.

10.      The INSURER will provide the ADMINISTRATION quarterly reports- needed
         by the Department of Health detailing services rendered in the
         Preventive Program described below.

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11.      The ADMINISTRATION shall have the right to audit the compliance with
         these requirements as needed. Non-compliance shall be a determining
         factor in nonrenewal of this contract or breach thereof as defined in
         Article of XXXIII.

                                  ARTICLE XXI
                             MENTAL HEALTH PROGRAM

1.       The INSURER shall direct beneficiaries to access Mental Health and
         Substance Abuse benefits in coordination with the Mental Behavior
         Healthcare Organization in the health region contracted by the
         ADMINISTRATION and ASSMCA. The ASSMCA will monitor the Mental Health
         and Substance Abuse Program provided through the MBHO contracted in
         the Health Region/Area with sufficient specificity effectiveness in
         order to provide for all mental health and substance abuse needs for
         all eligible beneficiaries residing within the municipalities forming
         part of said area.

2.       The INSURER will abide with the ADMINISTRATION and ASSMCA's guidelines
         for expediting access of beneficiaries to the mental health and
         substance abuse benefits covered under the Health Insurance Program.

                                  ARTICLE XXII
                                    BENEFITS

1.       The INSURER agrees to provide to the enrolled beneficiaries the
         benefits included in ADDENDUM I of this contract. The benefits to be
         provided under the program are divided in three types of coverage: 1)
         the Basic Coverage that includes preventive, medical, hospital,
         surgical, diagnostic tests, clinical laboratory tests, x-rays,
         emergency room, ambulance, maternity and prescription drug services,
         2) Dental Coverage based on the right to choose one of the
         participating dentists from the INSURER's network and 3) the Special
         Coverage that includes benefits for catastrophic conditions, expensive
         procedures and specialized diagnostic tests.

2.       The INSURER may not modify, change, limit, reduce, or otherwise alter
         said benefits nor the agreed terms and conditions for their delivery
         without the express written consent of the ADMINISTRATION.

3.       The Coverage for Medicare beneficiaries is established as follows:

         (a)      Beneficiaries with Part A of Medicare The INSURER will pay
                  for all services not included in Part A of Medicare, and
                  included in the contract herein. The INSURER will not pay the
                  applicable Part A deductibles and coinsurance.

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         (b)      Beneficiaries with Part A and Part B of Medicare- The INSURER
                  will pay for prescription drugs prescribed by PCP and dental
                  coverage. The INSURER will not cover the payment of the
                  applicable Part A deductibles and coinsurance, but will cover
                  the payment of the applicable Part B deductible and
                  co-insurance.

         (c)      Access to services contemplated herein will be through a
                  selected HCO. Beneficiaries with Part A can select from the
                  Medicare's providers list, in which case the benefits under
                  this contract would not be covered.

4.       The Medicare beneficiary can select a Part A provider from the
         Medicare Part A providers list, but has to select a HCO for Part B
         services for beneficiaries with Part B services or Part B equivalent
         services for beneficiaries without Part B of Medicare.

                                 ARTICLE XXIII
                               CONVERSION CLAUSE

1.       If during the term of this contract, the insurance coverage for a
         beneficiary terminates because the beneficiary ceases to be eligible
         and is disenrolled, such person has the right to receive a direct
         payment policy from INSURER without submitting evidence of
         eligibility. The direct payment policy will be issued by the INSURER
         without taking into consideration pre-existing conditions or waiting
         periods. The written request for a direct payment policy must be made,
         and the first premium submitted to INSURER on or before thirty-one
         (31) days after the date of disenrollment, bearing in mind that:

         a)       The direct payment policy should be an option of such person,
                  through any of the means which at that date INSURER has
                  currently made available according to the age and benefits
                  requested. It will be subject to the terms and conditions of
                  the direct payment policy.

         b)       The premium for the direct payment policy will be in
                  accordance with the rate then in effect at INSURER,
                  applicable to the form and benefits of the direct payment
                  policy, in accordance with the risk category the person falls
                  in at the moment, and the age reached on the effective date
                  of the direct payment policy. The health condition at the
                  moment of conversion will have no bearing in the eligibility
                  nor will it be an acceptable base for the risk
                  classification.

         c)       The direct payment policy should also provide for coverage to
                  any other individual, if these were considered eligible
                  beneficiaries at the termination date of the health insurance
                  under this contract. Under option by

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                  INSURER, a separate direct payment policy may be issued to
                  cover the other individuals who formerly were eligible
                  beneficiaries.

         d)       The direct payment policy will be effective upon termination
                  of coverage under the health insurance contracted.

         e)       INSURER will not be obligated to issue a direct payment
                  policy covering a person who has the right to receive similar
                  services provided by any insurance coverage or under the
                  Medicare Program of the Federal Social Security legislation,
                  as subsequently amended, if such benefits, jointly provided
                  under the direct payment policy, result in an excess of
                  coverage (over insurance), according to the standards of the
                  INSURER.

2.       When coverage under this contract terminates due to the expiration of
         its term, all persons formerly considered eligible beneficiaries, who
         have been insured for a period of three (3) years prior to the
         termination date, will be eligible for a INSURER direct payment
         policy, subject to the conditions and limitations stipulated in clause
         1 of this section.

3.       Subject to the conditions and limitations stipulated in clause 1 of
         this section, the conversion privilege will be granted:

         a)       to all eligible beneficiaries whose coverage under the health
                  insurance contracted is terminated because they cease to be
                  eligible beneficiaries and are disenrolled.

         b)       to any eligible beneficiary whose coverage under the health
                  insurance contracted ceases because he no longer qualifies as
                  an eligible beneficiary, regardless of the fact that the
                  principal subscriber and/or any other eligible beneficiary
                  continues covered by said health insurance coverage under
                  this contract.

4.       In case an eligible beneficiary under this contract suffers a loss
         covered by the direct payment policy, described in clause 1 of this
         section, during the period he/she would have qualified for a direct
         payment policy and before the said direct payment policy is in effect,
         the benefits which he/she would have a right to collect under such
         direct payment policy will be paid as a claim under the direct payment
         policy, subject to having requested the direct payment policy and the
         payment of the first premium.

5.       If any eligible beneficiary under this contract subsequently
         acquires the right to obtain a direct payment policy, under the terms
         and conditions of the INSURER's policies without providing evidence of
         qualifications for such insurance, subject to the request and payment
         of the first premium during the period specified in the policy; and if
         this person is not notified of the existence of this right, at least
         fifteen (15) days prior to the expiration of such period, such person
         will be

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         granted an additional period during which time he/she can claim
         his/her right, none of the above implying the continuation of a policy
         for a period longer than stipulated in said policy. The additional
         period will expire fifteen (15) days after the person is notified, but
         in no case will it be extended beyond sixty (60) days after the
         expiration date of the policy. Written notification handed to the
         person or mailed to the last known address of the person, as
         acknowledged by the policy holder, will be considered as notification,
         for the purposes of this paragraph. If an additional period is granted
         for the right of conversion as hereby provided, and if the written
         application for direct payment, enclosed with the first premium
         payment, is made during the additional period, the effective date of
         the direct payment policy will be the termination of the health
         insurance coverage under this contract.

6.       Subject to the other conditions expressed before, the eligible
         beneficiaries will have the right to conversion, up to one of the
         following dates:

         a)       date of termination of his/her eligibility under this
                  contract; or

         b)       termination date of this contract; or

         c)       date of amendment of this contract, if said amendment in any
                  way eliminates the beneficiaries' eligibility.

                                 ARTICLE XXIV
                         TRANSACTIONS WITH THE INSURER

1.       All transactions between the ADMINISTRATION and the INSURER shall, be
         handled according to the terms and conditions set forth in this
         contract.

2.       The INSURER shall appoint a person that shall be responsible for all
         transactions with the ADMINISTRATION.

3.       All eligibility transactions shall be coordinated on a daily basis.

                                  ARTICLE XXV
                            NON-CANCELLATION CLAUSE

The INSURER may not cancel this contract, or make modifications to it for any
reason, or otherwise change, restrict or reduce the insurance or the benefits,
except for nonpayment of premiums.

                                  ARTICLE XXVI
                                 APPLICABLE LAW

The Request for Proposal that originated this contract, the Proposal submitted
by the INSURER, this contract and/or any other document or provision
incorporated to it by

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reference, shall be interpreted and construed according to the laws of the
Commonwealth of Puerto Rico. If any controversy may arise regarding the
interpretation or performance of this contract, the parties voluntary. submit
for its resolution to the jurisdiction of the Superior Court of the
Commonwealth of Puerto Rico, San Juan Part.

                                 ARTICLE XXVII
                            EFFECTIVE DATE AND TERM

1.       This contract shall be in effect for nine months, starting at 12:01
         AM, Puerto Rico time on October 1, 2001, the first day that coverage
         begins and payment of the premium is due.

2.       This contract may not be assigned, transferred or pledged by the
         INSURER without the express written consent of the ADMINISTRATION.

3.       This contract may be extended by the ADMINISTRATION, upon acceptance
         by the INSURER, for any subsequent period of time if deemed in the
         best interest of the beneficiaries, the ADMINISTRATION, and the
         Government of Puerto Rico.

                                 ARTICLE XXVIII
                              CONFLICT OF INTEREST

Any officer, director, employee or agent of the ADMINISTRATION, the Government
of the Commonwealth of Puerto Rico, its municipalities or corporations cannot
be part of this contract or derive any economic benefit that may arise from its
execution.

                                  ARTICLE XXIX
                                  INCOME TAXES

The INSURER certifies and guarantees that at the time of execution of this
contract, 1) it is a corporation duly authorized to conduct business in Puerto
Rico and that has filed income tax returns for the previous five (5) years; 2)
that it complied with and paid unemployment insurance tax, disability insurance
tax (Law 139), social security for drivers ("seguro social choferil"), if
applicable); 3) filed State Department reports, during the five (5) years
preceding this contract and 4) that it does not owe any kind of taxes to the
Commonwealth of Puerto Rico.

                                  ARTICLE XXX
                               ADVANCE DIRECTIVES

The INSURER agrees to enforce and require compliance by all applicable
participating providers with 42 CFR 434, Part 489, Subpart I relating to
maintaining written policies

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and procedures respecting advance directives. This requirement includes
provisions to inform and distribute written information to adult individuals
concerning policies on advance directives, including a description of
applicable Commonwealth law.

                                  ARTICLE XXXI
                     OWNERSHIP AND THIRD PARTY TRANSACTIONS

The INSURER shall report ownership, control interest, and related information
to the ADMINISTRATION, and upon request, to the Secretary of the Department of
Health and Human Services, the Inspector General of the Department of Health
and Human Services, and the Comptroller General of the United States, in
accordance with Sections 1124 and 1903 (m)(4) of the Federal Social Security
Act.

                                 ARTICLE XXXII
                            MODIFICATION OF CONTRACT

If the ADMINISTRATION finds that, because of amendments to Law 72 of September
7, 1993, or by reason of other subsequent Federal or local legislative changes
that affect this contract, or because of any reasons deemed by the
ADMINISTRATION to be in the best interest of the Government of Puerto Rico in
carrying out the provisions of Law 72 of September 7, 1993, or in order to
perform experiments and demonstration projects pursuant to legislative
enactment, modification of this contract is necessary, the ADMINISTRATION may
modify any of the requirements, terms and conditions, functions, part thereof
or any other services to be performed by the INSURER. Prior to any such
modification, the ADMINISTRATION shall afford the INSURER an opportunity to
consult and participate in planning for adjustments which might be necessary
and thereafter provide the INSURER written notice that the modification is to
be made within ninety (90) days after a date specified in the notice. Said
modifications will take place after consultation and cost negotiation with the
INSURER.

                                 ARTICLE XXXIII
                            TERMINATION OF AGREEMENT

1.       If the ADMINISTRATION finds, after reasonable notice and opportunity
         for a hearing to the INSURER the INSURER has failed substantially to
         carry out the material terms and conditions of this contract, the
         ADMINISTRATION may terminate this contract at any time, as provided in
         Section 10.1, above.

2.       In the event that there is non-compliance by the INSURER with any
         specific clause of this contract, the ADMINISTRATION will notify the
         INSURER in writing, indicating the area/region(s) of non-compliance.
         The INSURER will be granted the opportunity to present and discuss its
         position regarding the issue within fifteen (15) days from the date of
         the notification. After considering the

                                       75
<PAGE>

         allegations presented by the INSURER following adequate hearing and
         the opportunity to present all necessary evidence in support of its
         position, and the ADMINISTRATION formally determines that there is a
         non-compliance, at the discretion of the ADMINISTRATION, this contract
         may be cancelled by giving thirty (30) days prior written notice
         before the effective date of cancellation.

3.       In the event that the INSURER does not remedy, correct or cure the
         material deficiencies noted in the Plan Compliance Evaluation Report,
         as provided for in Article XVII of this contract, and following the
         opportunity of an adequate hearing and the presentation of evidence in
         support of its position, and the ADMINISTRATION confirms the
         deficiency, then at the discretion of the ADMINISTRATION this contract
         may be cancelled by giving thirty (30) days prior notice.

4.       If the INSURER were to be declared insolvent, files for bankruptcy or
         is placed under liquidation, the ADMINISTRATION shall have the option
         to cancel and immediately terminate this contract. In the event of
         this happening an enrollee will not be liable for payments under this
         contract.

5.       In the event that this contract is terminated, the INSURER shall
         promptly provide the ADMINISTRATION all necessary information for the
         reimbursement of any pending and outstanding Claims. The INSURER
         hereby recognizes that in the event of termination under this Article
         it shall be bound to provide reasonable cooperation to the
         ADMINISTRATION beyond the date of termination in order to properly
         effect the transition to the new INSURER taking over the region
         covered by this Contract. This obligation to reasonably cooperate
         shall survive the date of said effective termination provided, at the
         ADMINISTRATION's discretion.

6.       The INSURER agrees and recognizes that in the event there are no
         sufficient enough funds designated for the payment of premium, the
         ADMINISTRATION reserves the right to terminate this contract,
         effective ninety (90) days after prior written notification.

                                 ARTICLE XXXIV
                                PHASE-OUT CLAUSE

In the event that the contract is terminated, the INSURER will continue to
provide services for a reasonable term to guarantee the continuance of services
until the ADMINISTRATION has made adequate arrangements to continue the
rendering of health care benefits to beneficiaries. The duration of such term
will not exceed sixty (60) days and the PMPM shall be agreed upon by the
INSURER and the ADMINISTRATION.

Upon the expiration of the contract, the INSURER will provide the
ADMINISTRATION with the historical/utilization data of services rendered to
beneficiaries in the

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<PAGE>

area/region, in order to prevent fraud and double billing of services by the
incoming INSURER.

Any INSURER phasing out of a Health Region will guarantee payment for services
rendered to beneficiaries under the previous contract. Failure to do so, shall
entail in accordance with the fair hearing process established on Article
XXXIII, the retention of a determined amount of premium payment of INSURER's
Health Region Contract. The amount to be retained shall be sufficient to cover
the amount owed.

                                  ARTICLE XXXV
                             THIRD PARTY DISCLAIMER

None of the obligations, covenants, duties, and responsibilities incurred or
assumed under the present Contract, the Request For Proposal, Proposal, the
representations and assurances provided at the clarification meeting held on
June 11, 2001, by either: (I) the INSURER towards the ADMINISTRATION and any
governmental agencies, or (ii) the ADMINISTRATION towards the INSURER, shall be
deemed as the assumption by the INSURER or the ADMINISTRATION, as the case
might be, of any legal liability or responsibility towards a third party in the
event that a negligent or intentional injury, malpractice, damage or
wrongdoing, or any harm whatsoever is incurred by or caused by the HCOs, the
HCO's network of participating providers and/or the INSURER's participating
providers.

                                 ARTICLE XXXVI
                        PENALTIES AND SANCTIONS CLAUSES

1.       In the event that the INSURER does not furnish the ADMINISTRATION with
         any kind of monthly reports related to the gathering and reporting of
         encounter information, the ADMINISTRATION may retain one monthly
         premium for each month in default said retention to be effective for
         the subsequent month after the default. Once the INSURER complies with
         said requirement, the amount retained will be fully paid to the
         INSURER, within five days after receiving the required reports for the
         subsequent month.

2.       In the event that the INSURER does not comply with its obligation
         related to the monthly gathering and accurate reporting of encounter
         information, according to Article XV of this contract, the
         ADMINISTRATION may retain one monthly premium payable to the INSURER
         for each month in default, provided:

         a.       the ADMINISTRATION gives, within ten (10) working days after
                  receipt of the monthly report, written notification by
                  certified mail, or personally hand delivers said notification
                  to the INSURER of the non-compliance and the reasons thereof;
                  and

         b.       the ADMINISTRATION grants ten (10) working days for the
                  INSURER to cure the default; and

         c.       the INSURER fails to correct it within said term.

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<PAGE>

         Whenever as the above events take place, the ADMINISTRATION may retain
         one monthly premium payment for each month in default. Retention will
         be effective ten (10) working days after the notice of non-compliance.
         Once the INSURER corrects the problem, at the satisfaction of the
         ADMINISTRATION and according to Article XV of this contract, the
         amount retained will be fully paid to the INSURER, within five days
         after receiving full and complete reports for the subsequent month.

3.       For the purpose of subparagraphs 1 and 2, above, default is defined as
         the non-compliance by the INSURER of the reporting requirements
         established for the gathering and reporting of encounter information
         as established in Article XV of this contract, or when the INSURER
         does not submit the reports within the established term set in this
         contract.

4.       A.       Civil Monetary Penalties: In the event that there is a
                  non-compliance with Article VI, XII, XVI, XVII and/or with
                  any specific clause of this contract or the INSURER engages
                  in any of the following practices:

                           (a)      Fails to substantially provide medically
                                    necessary services to enrollees under this
                                    contract;

                           (b)      imposes on enrollees premiums and charges
                                    in excess of the ones permitted under this
                                    contract;

                           (c)      discriminates among enrollees on the basis
                                    of their health status or requirements for
                                    health care (such as terminating an
                                    enrollment or refusing to reenroll) except
                                    as permitted under the Program or engages
                                    in practices to discourage enrollment by
                                    recipients whose medical condition or
                                    history indicates need for substantial
                                    medical services;

                           (d)      misrepresents or falsifies information that
                                    is furnished to CMS, to the ADMINISTRATION,
                                    to an enrollee, potential enrollee or
                                    provider of services;

                           (e)      distributes, directly or indirectly through
                                    any agent, independent contractor,
                                    marketing material not approved by the
                                    ADMINISTRATION, or that contains false or
                                    misleading information;

                           (f)      Fails to comply with the requirements for
                                    physician incentive plans in section 1876
                                    (i) (8) of the Social Security Act, and at
                                    42 CFR 417.479, or fails to submit to the
                                    ADMINISTRATION its physician incentive
                                    plans as requested in 42 CFR 434.70

The ADMINISTRATION will notify the INSURER in writing, the findings of the
violation and the impending intention to impose intermediate sanctions for each
violation which could consist of: monetary penalties at the discretion of the
Administration may range from five hundred dollars $500 to twenty five thousand
dollars $25,000; or the resolution of the contract and temporary management;

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<PAGE>

         suspension, and/or with-holding of premium payments, which may range
         from a percent amount, or more than one monthly premium payments. The
         imposition of sanctions will depend on the extent and severity of the
         actions:

         At the sole discretion of the ADMINISTRATION and after affording the
         INSURER due process to submit a corrective action as established in
         paragraph (B), below, the ADMINISTRATION will deduct any amount it may
         deem adequate from the premium payments or any other administrative
         items of said payments.

         The Office of the Inspector General may impose civil money penalties
         of up to $25,000.00 in addition to, or in lieu of each determination
         by the ADMINISTRATION, or CMS, for non-compliance conduct as set forth
         on subparagraphs (a) through (f).

The Secretary of the Department of Health and Human Services may seek the
enforcement of felony charges, for violation regarding subparagraph (b), above.

         B.       The INSURER will have the right to present and discuss its
                  position regarding the ADMINISTRATION'S finding within
                  thirty(30) days from the receipt of the notification. After
                  such period expires the Administration will issue its
                  decision regarding the contemplated sanctions which could be
                  (i) let stand the initial determination, (ii) modify the
                  sanction or (iii) eliminate the sanction if the Insurer has
                  taken affirmative corrective actions. Upon notifying the
                  INSURER of the final decision, if in disagreement, the
                  INSURER will have (30) days to request a hearing before the
                  Administration. Upon the expiration of the thirty (30) days
                  without invoking a formal hearing, or after the celebration
                  of a hearing and after issuance of findings and
                  recommendations of the hearing examiner, the decision will
                  then become final, subject to the appeal process provided in
                  section 12, Art. VI of Law 72, September 7,1993, as amended.

         C.       The ADMINISTRATION, shall appoint temporary management only
                  if it finds that the INSURER has egregiously or repeatedly
                  engaged in any of the stated practices on paragraph (A) of
                  this article; or places a substantial risk on the health of
                  enrollees; or there is a need to assure the health of an
                  organization's enrollees during an orderly termination,
                  reorganization of the Insurer or while improvements are being
                  made to correct violations. The temporary management may not
                  be removed until the INSURER assures the ADMINISTRATION that
                  the violations will not recur.

5.       If a contractor is found to be in non-compliance with the provisions
         on ARTICLE VII concerning affiliation with debarred or suspended
         individuals, the ADMINISTRATION:

                  a)       Shall notify the Secretary of non-compliance;

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<PAGE>

                  b)       May continue the existing contract with the Insurer,
                           unless the Secretary (in consultation with the
                           Inspector General of the Department of Health
                           Services directs otherwise); and,

                  c)       May not review or otherwise extend the duration of an
                           existing contract with the INSURER unless the
                           Secretary (in consultation with the Inspector General
                           of the DHHS) provides to the ADMINISTRATION and to
                           Congress a written statement describing compelling
                           reasons that exist for renewing or extending the
                           contract.

6.       Notwithstanding the provisions set in this Article, the ADMINISTRATION
         reserves the right to terminate this contract, as established in
         Article XXXIII.

                                 ARTICLE XXXVII
                              HOLD HARMLESS CLAUSE

1.       The INSURER warrants and agrees to indemnify and save harmless the
         ADMINISTRATION from and against any loss or expense by reason of any
         liability imposed by law upon the ADMINISTRATION and from and against
         claims against the ADMINISTRATION for damages because of bodily
         injuries, including death, at any time resulting therefrom, accidents
         sustained by any person or persons on account of damage to property
         arising out of or in consequence of the performance of this contract,
         whether such injuries to persons or damage to property are due or
         claimed to be due to any negligence of the INSURER, the INSURER's
         participating providers, the HCOs, the HCO's network of participating
         providers, their agents, servants, or employees or of any other
         person.

3.       The INSURER warrants and agrees to purchase insurance coverage
         to include Contractual Liability Coverage incorporating the
         obligations herein assumed by the INSURER with limits of liability
         which shall not be less than one (1) million dollars with said
         insurance coverage providing for the INSURER's obligation and the
         insurance company of INSURER to defend and appear on behalf of the
         ADMINISTRATION in any and all claims or suits which may be brought
         against the ADMINISTRATION on account of the obligations herein
         assumed by the INSURER.

                                ARTICLE XXXVIII
               CENTER OF MEDICARE AND MEDICAID SERVICES CONTRACT
                                  REQUIREMENTS

The ADMINISTRATION and INSURER agree and recognize that guidance and directives
from the Center of Medicare and Medicaid Services (CMS) are incorporated in
contracts subject to its approval, such as the present one, and that they
constitute binding obligations on the part of the INSURER.

                                       80
<PAGE>

                                 ARTICLE XXXIX
                                 FORCE MAJEURE

Whenever a period of time is herein prescribed for action to be taken by the
INSURER, the INSURER shall not be liable or responsible for, and there shall be
excluded from the computation for any such period of time, any delays due to
strikes, acts of God, shortages of labor or materials, war, terrorism,
governmental laws, regulations or restrictions or any other causes of any kind
whatsoever which are beyond the control of the INSURER.

                                   ARTICLE XL
                                YEAR 2000 CLAUSE

The parties hereby assure that all hardware and software that it uses with
respect to this Agreement are Year 2000 Compliant in accordance to CMS's Year
Compliance definitions as stated in the RFP. The Parties acknowledge that this
provision is an essential condition to this Agreement.

                                  ARTICLE XXLI
                          FEDERAL GOVERNMENT APPROVAL

1.       Inasmuch as it is a requirement that the Center of Medicare and
         Medicaid Services (CMS) approves this contract in order to authorize
         the use of federal funds to finance the health insurance contracted,
         the same may be subject to modifications in order to incorporate or
         modify the terms and conditions of this contract.

2.       Any provision of this contract which is in conflict with any Federal
         Laws, Federal Medicaid Statutes, Health Insurance Portability and
         Accountability Act, Federal Regulations; or CMS policy guidance, as
         applicable, is hereby amended to conform to the provisions of those
         laws, regulations, and Federal policy. Such amendment of the contract
         will be effective on the effective date of the statutes or regulations
         necessitating it, and will be binding on the parties even though such
         amendment may not have been reduced to writing and formally agreed
         upon and executed by the parties.

                                  ARTICLE XLII
                          ACKNOWLEDGMENT AS TO INSURER

1.       All responsibilities, obligations, assurances and representations,
         made, taken, and assumed by the INSURER under this contract will be
         fully, solely, and entirely assumed by the INSURER. Notwithstanding,
         the ADMINISTRATION acknowledges that Triple-S will carry out the
         responsibilities as to the administration and operational management
         of the Health Insurance subject of

                                       81
<PAGE>

         this contract and that its officers are authorized to represent
         Triple-S, Inc. in matters related to be carried out.

2.       The ADMINISTRATION acknowledges that the INSURER is in a corporate
         reorganizational process. The INSURER will notify the ADMINISTRATION
         the date when the reorganizational process is completed. The INSURER
         represents that the reorganizational process shall not constituted an
         assignment of this Contract.

                                 ARTICLE XLIII
                                ENTIRE AGREEMENT

The parties agree that they accept, consent and promise to abide by each and
every one of the clauses contained in this contract and that the contract
contains the entire agreement between the parties and in order to acknowledge
so, they initial the margin of each of the pages and affix below their
respective signatures, in San Juan, Puerto Rico, this 14TH DAY OF SEPTEMBER,
2001.

PUERTO RICO HEALTH PLANS                     TRIPLE-S, INC.
INSURANCE ADMINISTRATION

By                                           By

/s/ Angel Blanc Bottey                       /s/ Miguel Vazquez Deynes
-----------------------------------          ----------------------------------
Angel Blanc Bottey                           Miguel Vazquez Deynes
Executive Director                           Chief Executive Officer

                                      82<PAGE>
                                                                    EXHIBIT 10.2

                        The Puerto Rico Health Insurance

                                    Contract

                                     North

===============================================================================

===============================================================================

                        October 1, 2001- June 30, 2002

         [ASES LOGO]                               [TRIPLE-S LOGO]

ASEGURANDO TU SALUD
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
TERMS AND CONDITIONS                                                   PAGE
--------------------                                                   ----

<S>                                                                    <C>
I      Definitions                                                       2
II     Eligibility and Enrollment                                        8
III    Right to Choose                                                  14
IV     Secondary Payor                                                  16
V      Emergencies                                                      17
VI     Access to Benefits                                               19
VII    Contracts with HCO's and All Participating Providers             23
VIII   Subscription Process and Identification Cards                    28
IX     Summary Plan Description Booklet                                 29
X      Grievance Procedure                                              32
XI     Health Care Organizations                                        35
XII    Guarantee of Payment                                             37
XIII   Utilization Review and Quality Assurance                         40
XIV    Compliance and Agreement for Inspection of Records               44
XV     Information Systems and Reporting Requirements                   47
XVI    Financial Requirements                                           55
XVII   Plan Compliance Evaluation Program                               56
XVIII  Payment of Premiums                                              63
XIX    Actuarial Requirements                                           66
XX     Preventive Medicine Program                                      67
XXI    Mental Health Program                                            70
XXII   Benefits                                                         70
XXIII  Conversion Clause                                                71
XXIV   Transactions with the Insurer                                    73
XXV    Non-Cancellation Clause                                          74
XXVI   Applicable Law                                                   74
XXVII  Effective Date and Term                                          74
</TABLE>

                                       i
<PAGE>

<TABLE>
<CAPTION>
TERMS AND CONDITIONS                                                   PAGE
--------------------                                                   ----

<S>                                                                    <C>
XXVIII    Conflict of Interest                                          74
XXIX      Income Taxes                                                  75
XXX       Advance Directives                                            75
XXXI      Ownership and Third Party Transactions                        75
XXXII     Modification of the Contract                                  75
XXXIII    Termination of Agreement                                      76
XXXIV     Phase-Out Clause                                              77
XXXV      Third Party Disclaimer                                        77
XXXVI     Penalties Sanctions Clauses                                   77
XXXVII    Hold Harmless Clause                                          80
XXXVIII   Center of Medicare and Medicaid Services
            Contract Requirements                                       81
XXXIX     Force Majeure                                                 81
XL        Year 2000 Clause                                              81
XXLI      Federal Government Approval                                   81
XLII      Acknowledgement as to Insurer                                 82
XLIII     Entire Agreement                                              82
</TABLE>

ADDENDA:
-------

Addendum I        Benefits Coverage-Formulary
Addendum II       PRHIA Instructions to Insurers for Orientation and
                  Subscription Process- Beneficiaries Manual
Addendum III      Insurer Grievance Procedure
Addendum IV       Proposed Information Requirements

                                      ii
<PAGE>

                                    CONTRACT

         This Agreement entered into this 14TH DAY OF SEPTEMBER, 2001, at San
Juan, Puerto Rico, by and between PUERTO RICO HEALTH INSURANCE ADMINISTRATION,
a public instrumentality of the Commonwealth of Puerto Rico, organized under
Law 72 approved on September 7, 1993, hereinafter referred to as the
"ADMINISTRATION", represented by its Executive Director, ANGEL BLANCO BOTTEY,
and TRIPLE-S, INC., a domestic corporation duly -organized and doing business
under the laws of the Commonwealth of Puerto Rico, with employer social
security number 66-0229064, hereinafter referred to as the "INSURER",
represented by its Chief Executive Officer, MIGUEL VAZQUEZ DEYNES.

                                   WITNESSETH

         In consideration of the mutual covenants and agreements hereinafter
set forth, the parties, their. personal representatives and successors, agree
as follows:

         FIRST: The ADMINISTRATION has the responsibility to seek, negotiate,
and contract with public and private insurers, health care insurance programs
that eventually will be capable of providing all citizens that reside in the
island of Puerto Rico access to quality health care services, regardless of
their economic condition and capacity to pay.

         SECOND: Law 72 of September 7,1993 dictates the express policy that
empowers the ADMINISTRATION to seek, negotiate and contract health insurance
programs that will allow its beneficiaries access to quality health services,
in particular the medically indigent and the public employees of the Central
Government and pensioners.

         THIRD: The ADMINISTRATION published a Request For Proposals for the
North, Metro-North, East, Southeast, West, Southwest, San Juan, Northwest,
Northeast and Central Health Area/Region, seeking to provide health insurance
coverage to all eligible beneficiaries in said health Area/Region, by
contracting with private insurers

         FOURTH: Pursuant to the terms of the aforementioned Request For
Proposals, published on June 3-4, 2001, four different private health insurers
submitted to the ADMINISTRATION proposals to underwrite the health insurance
for the Health Area/Region.

         FIFTH: The proposals submitted by the proposing insurers were
thoroughly evaluated by a Evaluation Committee, as well as an Administrative
Evaluation Committee within the ADMINISTRATION, as a result of which, a
recommendation was presented to the Board of Directors of the ADMINISTRATION.

         SIXTH: The Board of Directors of the ADMINISTRATION, after a careful
and complete analysis of all technical and administrative elements of the
proposals, decided

                                       1
<PAGE>

to award the INSURER the contract to underwrite and administer the health
insurance for the NORTH Health Area/Region, composed of the municipalities of
ARECIBO, BARCELONETA, CAMUY, CIALES, FLORIDA, HATILLO, LARES, MANATI, MOROVIS,
QUEBRADILLAS, UTUADO, AND VEGA BAJA.

         SEVENTH; The benefits to be provided under the plan offered by the
INSURER are divided in three types of coverage: 1) the Basic Coverage that
includes preventive, medical, hospital, surgical, diagnostic tests, clinical
laboratory tests, x-rays, emergency room, ambulance, maternity and prescription
drug services; 2) Dental Coverage based on the free choice of participating
dentists from INSURER's network, and 3) the Special Coverage that includes
benefits for catastrophic conditions, expensive procedures and specialized
diagnostic tests. Benefits shall be provided by the INSURER in strict
compliance with Law Number 72 of September 7, 1993, as amended, which is made
part of this contract, the terms and conditions contained in Addenda I, II,
III, and IV of this contract, and subject to the following:

                              TERMS AND CONDITIONS
                                   ARTICLE I
                                  DEFINITIONS

ACCESS: Adequate availability of all necessary health care services included in
the plan being contracted to fulfill the needs of the beneficiaries of the
program.

ADMINISTRATION: Puerto Rico Health Insurance Administration.

ADVANCE DIRECTIVES: A written instruction such as a living will or durable
power of attorney for health care, recognized under the laws, of the
Commonwealth of Puerto Rico (whether statutory or as recognized by the courts
of the Commonwealth, relating to the provision of health care when the
individual is incapacitated.

ANCILLARY SERVICES (Ancillary Charges): Supplemental services, including
laboratory, radiology, physical therapy, and inhalation therapy, which are
provided in conjunction with medical or hospitals care.

ASSMCA - Mental Health and Substance Abuse Administration: Spanish acronym for
the Puerto Rico Mental Health and Substance Abuse Administration, the state
agency that has been delegated the responsibility for the planning,
establishment of mental and substance abuse policies and procedures, the
coordination, development and monitoring of all mental health and substance
abuse services rendered to beneficiaries under the Puerto Rico Health Insurance
Program.

                                       2
<PAGE>

BENEFICIARY: Any person that under Law 72 of September 7, 1993 is determined
eligible to receive services, is reported as such to the INSURER by the
ADMINISTRATION, and is enrolled in the plan.

CAPITATION: That portion of the premium paid to the INSURER which is disbursed
to the HCO in payment for all the benefits provided under the Basic Coverage to
the beneficiaries who have selected said HCO, as hereinafter defined.

CO-INSURANCE: Percentage based participation of the beneficiary on each loss or
portion of the cost of receiving a service.

CONTRACT: The present contractual relationship between the ADMINISTRATION and
the INSURER, and to which, 1) Law 72 of September 7, 1993, 2) the Request For
Proposal, 3) the INSURER's Proposal documents, 4) the representations and
assurances provided at the clarification meeting held on June 11, 2001
contained in the transcript of the meeting, and 5) all other certifications
issued by the INSURER following said clarification meeting, are herein
incorporated by reference. All of the five (5) preceding set of documents are
integral parts of this contract.

CONTRACT TERM: Period of nine (9) consecutive months beginning on the date the
contract is effective. The coverage shall end at the conclusion of the contract
term, unless extended pursuant to Article XXVII.

CMS: Acronym for the Center of Medicare and Medicaid Services.

DEDUCTIBLE: A fixed amount that the beneficiary has to pay to the provider as
part of the cost of receiving a health care service, as provided in ADDENDUM I
of this contract.

ELECTIVE SURGERY: A surgical procedure that, even though medically necessary
and prescribed by a physician, does not need to be performed immediately
because no imminent risk to life, permanent damage of a vital organ or
permanent impairment is present, and which therefore can be scheduled.

EMERGENCY MEDICAL CONDITION: (Prudent Layperson Standard) a medical condition
presenting symptoms of sufficient severity that a person with average knowledge
of health and medicine would reasonably expect the absence of immediate medical
attention to result in (i) placing their health or the health of an unborn
child in immediate jeopardy, (ii) serious impairment of bodily functions, or
(iii) serious dysfunction of any bodily organ or part.

ENCOUNTER: A contact between a patient and health professional during which a
service is provided. An encounter form records selected identifying, diagnostic
and related information describing an encounter.

FAMILY CONTRACT: The benefits provided to the following eligible beneficiaries;
1) principal subscriber; and 2) his or her spouse (legally married or common
law); and 3)

                                       3
<PAGE>

his or her children (legally, adopted, foster or step children) under 21 years
old that depend on the principal subscriber for subsistence; and 4) individuals
under 21 years of age who have no children and live in common law with one of
the eligible children in the same household; and 5) his or her dependents, of
any age, who are blind or permanently disabled and live in the same household.
Female beneficiaries (except spouse.) covered under family contract who become
pregnant shall constitute a separate subscriber under an individual contract as
of the first day of the month the pregnancy is diagnosed and reported to the
INSURER.

HEALTH CARE ORGANIZATION / HCO: A health care entity supported by a network of
providers and which is based on a managed care system and accessed through a
primary care physician (gatekeeper). Said entity has contracted with the
insurer to provide, in adequate facilities, the benefits provided for within
the Basic Coverage or the Basic and Special Coverage of the health insurance
contract. For the purpose of this contract the HCO will be identified by its
descriptive name such as Primary Care Center, Physician Hospital Organization
(PHO), Independent Practice Association (IPA), Primary Provider Group (PPG), or
any other model. The INSURER is responsible for the availability of all
necessary providers to cover both the basic and the special coverage.

HEALTH AREA/REGION: The NORTH Health Area/Region as defined by the
ADMINISTRATION, composed of the municipalities of ARECIBO, BARCELONETA, CAMUY,
CIALES, FLORIDA, HATILLO, LARES, MANATI, MOROVIS, QUEBRADILLAS, UTUADO, AND
VEGA BAJA. HIPAA: The Health Insurance Portability and Accountability Act is
federal legislation (Public law 104-191) approved by Congress in August 21,1996
regulating the continuity and portability of health plans, mandating the
adoption and implementation of administrative simplification standards to
prevent, fraud, abuse, improve health plan overall operations and guarantee the
privacy and confidentiality of individually identifiable health information.

INDIVIDUAL CONTRACT: The benefits provided to eligible subscribers that are: 1)
unmarried single adults without minor dependents; or 2) married adults whose
spouse and/or dependents are not eligible for coverage under this program; or
3) Female beneficiaries (except spouse) covered under family contract who
become pregnant as of the first day of the month the pregnancy is diagnosed and
reported to the INSURER.

INDIVIDUAL PRACTICE ASSOCIATION (IPA): A managed care delivery model in which
the INSURER contracts with a physician organization which, in turn, contracts
with individual physicians. The IPA physicians practice in their own offices
and continue to see their fee-for-service patients. This type of system
combines prepayment with the traditional means of delivering health care, a
physician office/private practice. For the purpose of this contract, an IPA
will be considered a Health Care Organization (HCO).

                                       4
<PAGE>

INSURER: TRIPLE-S, INC., is a private entity which meets the definition of a
managed care organization (MCO), previously known as a state defined HMO, has a
comprehensive risk contract primarily for the purpose of providing health care
services, making the services it provides accessible (in terms of timeliness,
amount, duration and scope) as those services are to other Medicaid recipients
within the Area/Region served by the entity and meets the solvency standards
under the law as a state licensed risk-bearing entity.

MANAGED BEHAVIORAL HEALTH ORGANIZATION (MBHO): An entity constituted by Mental
Health Participating Providers and organized with the purpose of negotiating
contracts to provide mental health and substance abuse services..

MEDICARE: Federal health insurance program for people 65 or older, people of
any age with permanent kidney failure, and certain disabled people according to
Title XVIII of the Social Security Act. Medicare has two parts: Part A and Part
B. Part A is the hospital insurance that includes inpatient hospital care and
certain follow up care. Part B is medical insurance that includes doctor
services and many other medical services and items. A Medicare recipient is a
person who has either Part A or Part A and B insurance.

MEDICARE BENEFICIARY: Any person who is a Medicare recipient of Part A or Part
A and B and complies with the definition of beneficiary established in this
article.

MEDICALLY NECESSARY SERVICES: shall mean services or supplies provided by an
institution, physician, or other providers that are required to identify or
treat a beneficiary's illness, disease, or injury and which are:

         a.       Consistent with the symptoms or diagnosis and treatment of
                  the enrollee's illness, disease, or injury; and

         b.       Appropriate with regard to standards of good medical
                  practice; and

         c.       Not solely for the convenience of an enrollee, physician,
                  institution or other provider; and

         d.       The most appropriate supply or level of services which can
                  safely be provided to the enrollee. When applied to the care
                  of an inpatient, it further means that services for the
                  enrollee's medical symptoms or condition require that the
                  services cannot be safely provided to the enrollee as an
                  outpatient; and

         e.       When applied to enrollees under 21 years of age, services
                  shall be provided in accordance with EPSDT requirements
                  including federal regulations as described in 42 CFR Part
                  441, Subpart B, and the Omnibus Budget Reconciliation Act of
                  1989.

                                       5
<PAGE>

MENTAL HEALTH FACILITIES: Any premises (a) owned, leased, used or operated
directly or indirectly by or for the Managed Behavioral Health Organization
(MBHO) or its affiliates for purposes related to this Agreement; or (b)
maintained by a subcontractor or provider to provide mental health services on
behalf of the Managed Behavioral Health Organization.

MENTAL HEALTH CARVE-OUT: Specified psychiatric, behavioral, and substance abuse
services covered under the Puerto Rico Health Insurance Plan provided through a
contract with a separate entity. NON-PARTICIPATING PROVIDER: All health care
services providers that do not have a contract in effect with the INSURER. Said
provider is barred from providing services under this contract. PARTICIPATING
PHYSICIAN: A doctor of medicine that is legally authorized to practice medicine
and surgery within the Commonwealth of Puerto Rico and has a contract in effect
with the INSURER.

PARTICIPATING PROVIDER: All health care services providers that have a contract
in effect with the INSURER.

PERSON WITH AN OWNERSHIP OR CONTROL INTEREST: A person or corporation that:
owns, directly or indirectly five percent (5%) or more of the insurer's capital
or stock or receives five percent (5%) or more of its profits; has an interest
in any mortgage, deed of trust, note, or other obligations secured in whole or
in part by the insurer or by its property or assets, and that interest is equal
to or exceeds five percent (5%) of the total property and assets of the
insurer; or is an officer or director of the INSURER.

PHYSICIAN INCENTIVE PLAN: Any compensation arrangements between INSURER and
physician or. physician groups that may directly or indirectly have the effect
of reducing or limiting services furnished to Medicaid recipients enrolled with
the insurer.

PRE-AUTHORIZATION: A written or electronic approval by the INSURER to the
beneficiary granting authorization for a benefit to be provided under the
Special Coverage of the program. The beneficiary is responsible for obtaining
the preauthorization for coverage in order to receive covered benefits that
require it. Failure to obtain pre-authorization precludes coverage.
Notwithstanding the aforementioned, the INSURER has the option of not requiring
pre-authorization for all services received within a particular HCO.

PREMIUM: The monthly amount that the ADMINISTRATION agrees to pay to the
INSURER as a result of having assumed the financial risk for providing the
benefits to the beneficiaries covered. Method of payment is referred to
hereunder as per member per month (PMPM).

                                       6
<PAGE>

PRIMARY CARE PHYSICIAN (GATEKEEPER): A doctor of medicine legally authorized to
practice medicine and surgery within the Commonwealth of Puerto Rico, who
initially evaluates and provides treatment to beneficiaries. He/she is
responsible for determining the services required by the beneficiaries,
provides continuity of care, and refers the beneficiaries to specialized
services if deemed medically necessary. Primary physicians will be considered
those professionals accepted as such in the local and federal jurisdictions.
The following are considered primary care physicians: Pediatricians,
Obstetrician/Gynecologist, Family Physicians, Internists and General
Practitioners. Each female beneficiary with a pregnancy factor has to select an
obstetrician-gynecologist as her primary care physician. Once the pregnant
woman completes her maternity care period, she will be allowed to continue with
her primary care physician.

PROVIDER: An individual or entity that is authorized under the laws of the
Commonwealth of Puerto Rico to provide health care services.

PRICO: Acronym for the Puerto Rico Insurance Commissioner's Office, the state
agency responsible for regulating, fiscalizing, and licensing insurance
business in Puerto Rico.

SECOND MEDICAL OPINION: A consultation with a peer requested by the
beneficiary, the HCO, a Participating Physician or the INSURER to assess the
appropriateness of a previous recommendation for surgery or medical treatment.

SECONDARY or SPECIALTY PHYSICIAN: A physician such as a dermatologist,
urologist or cardiologist, who provides professional services on a referral
from a Primary Care Provider SUBSCRIBER: The beneficiary covered under the
individual coverage of the plan or the principal beneficiary who grants
eligibility to all those beneficiaries included under the family coverage.

SUPPORT PARTICIPATING PROVIDERS: Health care service providers who are needed
to complement and provide support services to the Primary Care Physicians and
who have a contract with the INSURER to provide said services. A referral from
the Gatekeeper is necessary. The following will be considered support
participating providers, among others: Pharmacies, Hospitals, Health Related
Professionals, Clinical Laboratories, Radiological Facilities, Podiatrists,
Optometrists, and all those participating providers that may be needed to
provide services under the basic and special coverage considering the specific
health problems of the Area/Region.

SUPPORT PARTICIPATING PHYSICIANS: Doctors of Medicine legally authorized to
practice medicine and surgery within Puerto Rico who are needed to complement
and provide support services to the Primary Care Physicians and who have a
contract with the INSURER to provide said services. A referral from the
Gatekeeper is necessary.

                                       7
<PAGE>

QUALITY IMPROVEMENT (QI): The ongoing process of responding to data gathered
through quality monitoring efforts, in such a way as to improve the quality of
health care delivered to individuals. This process necessarily involves
follow-up. studies of the measures taken to effect change in order to
demonstrate that the desired change has occurred.

UTILIZATION MANAGEMENT (UM): The process of evaluating necessity
appropriateness and efficiency of healthcare services through the revision of
information about hospital, service or procedure from patients and/or providers
to determine whether it meets established guidelines and criteria approved by
the MCO.

                        ORGANIZATION AND ADMINISTRATION

         INSURER must maintain the organizational and administrative capacity
and capabilities to carry out all duties and responsibilities under this
contract.

         INSURER must maintain assigned staff with the capacity and capability
to provide all services to all Beneficiaries under this contract.

         INSURER must maintain an administrative office in the service area
(local office). The local office must comply with the American with
Disabilities Act (ADA) requirements for public buildings..

         INSURER must provide training and development programs to all assigned
staff to ensure they know and understand the service requirements under this
contract including the reporting requirements, the policies and procedures,
cultural and linguistic requirements and the scope of services to be provided.
The training and development plan must be submitted to THE ADMINISTRATION.

         INSURER must notify THE ADMINISTRATION immediately no later than 30
days after the effective date of this contract of any changes in its
organizational chart as previously submitted to THE ADMINISTRATION.

         INSURER must notify THE ADMINISTRATION immediately within fifteen (15)
working days of any change in regional or office managers. This information
must be updated whenever there is a significant change in organizational
structure or personnel.

                                   ARTICLE II
                           ELIGIBILITY AND ENROLLMENT

1.       Eligibility shall be determined according to Article VI, Section 5 of
         Law 72. of September 7, 1993 and the federal laws and regulations
         governing eligibility requirements for the Medicaid Program.

2.       The INSURER shall provide coverage for all the eligible beneficiaries
         as provided in the prior section.

                                       8
<PAGE>

3.       The INSURER shall inform beneficiaries, who are also Medicare
         recipients with Part A or Part A and B, at the time of enrollment that
         if they choose to become beneficiaries under the contracted health
         insurance, the benefits provided under said contract will be accessed
         exclusively through the primary care physician. In this situation:

         a)       bad debt reimbursement, as a result of non-payment of
                  deductibles and/or coinsurance, for covered Part A services
                  and Part B services provided in hospital setting, other than
                  physician services;

         b)       payment for covered Part A services;

         c)       payment for Part B outpatient services provided in a hospital
                  setting; and

         d)       all covered Part B services,

         will continue to be recognized as a covered reimbursable Medicare
         Program cost. Medicare beneficiaries with either Part A or Part A and
         B can choose to access their Part A or Part B services from the
         Medicare's providers list except that in this case the INSURER will
         not cover the payment of any benefits provided through this contract.

4.       The INSURER represents that neither the capitated amount paid to each
         HCO nor the fee for service amount paid to all providers includes
         payment for services covered under the Medicare Federal Program, The
         primary care physicians, the participating providers or any other
         physician contracted on a salary basis cannot receive duplicate
         payments for those beneficiaries that have Medicare Part A or Part B
         coverage. The INSURER further represents that it will audit and review
         its billing data to avoid duplicate payment with the Medicare Program.
         The INSURER shall report its findings to the ADMINISTRATION on a
         quarterly basis. The ADMINISTRATION will audit and review Medicare
         billing data for Part A or Part B payment for beneficiaries eligible
         to said Federal Program.

5.       Co-insurance and deductible for Part B services provided on an
         outpatient basis to hospital clinics, other than physician services,
         will be considered as a covered bad debt reimbursement item under the
         Medicare program cost. In this instance, the INSURER will pay for the
         co-insurance and deductibles related to the physician services
         provided as a Part B service through the amount paid to the HCO.

6.       The INSURER guarantees to maintain adequate services for the Health
         Area/Region for the prompt enrollment of all eligible beneficiaries on
         a daily basis and in the order of their application. The INSURER shall
         maintain sufficient facilities within the Area/Region as needed. The
         subscriber shall be responsible for visiting the designated facility
         in order to complete all requirements towards enrollment. The INSURER
         shall enroll the beneficiary(ies) and issue the official
         identification cards) on the same day that the subscriber completes
         the enrollment requirements. Initial orientation and enrollment will
         be conducted

                                       9
<PAGE>

         pursuant to the Instructions to Insurers for Implementation of
         Orientation and Subscription Process contained in ADDENDUM II.

         The INSURER shall be responsible to provide the subscriber with
         specific information allowing for the prompt and reliable enrollment
         of all eligible individuals.

7.       The ADMINISTRATION shall notify the INSURER on a daily basis of all
         beneficiaries who have become eligible, as well as those who have
         ceased to be eligible. The INSURER shall guarantee the maintenance,
         functionality, and reliability of all necessary systems to allow
         enrollment or disenrollment of subscribers.

8.       The beneficiary becomes eligible for enrollment as of the date
         specified in the ADMINISTRATION's notification to the INSURER.

9.       The beneficiary ceases to be eligible as of the disenrollment date
         specified in the ADMINISTRATION's notification to the INSURER. If the
         ADMINISTRATION notifies the INSURER that the beneficiary ceased to be
         eligible on or before the last working day of the month in which
         eligibility ceases, the disenrollment will be effective on the first
         day of the following month. Disenrollment will be effected exclusively
         by a notification issued by the ADMINISTRATION.

10.      If, following disenrollment, a beneficiary's contract is reinstated
         and the beneficiary is re-enrolled on the same month of disenrollment,
         the contract will be reinstated as of the date of re-enrollment and
         the ADMINISTRATION will pay premiums on a pro-rata basis for that
         month.

11.      The INSURER agrees to maintain active enrollment for those
         beneficiaries reported eligible by the ADMINISTRATION. Notification of
         eligible persons will be made through electronic transmissions or
         machine readable media. The ADMINISTRATION will forward this data to
         the INSURER in the format agreed by both parties in accordance with
         the Daily Update/Carrier Eligibility File Format as required in the
         RFP.

12.      Coverage under the plan shall begin the day that the enrollment
         process has been completed. The INSURER will guarantee that it will be
         ready to notify the ADMINISTRATION of all newly enrolled beneficiaries
         through electronic or magnetic media on a daily basis upon the
         Administration's request. This notification will include all new
         beneficiaries as of the day before the notification is issued and will
         be sent to the ADMINISTRATION no later than the following working day
         after the enrollment process has been completed. Premiums shall be
         paid on a pro-rata basis as of the: date that the enrollment process
         was completed and the official identification card has been issued, to
         the end of the month, as specified in the INSURER's notification to
         the ADMINISTRATION. Premium payments, if applicable, for newborn of
         beneficiaries will accrue as of

                                       10
<PAGE>

         the date of birth of the child in the event that the enrollment
         process of said new beneficiary is completed. Premium payments shall
         be paid retroactively to the INSURER upon enrollment of the newborn.
         The insurer will pay the providers for the services rendered to that
         newborn. Nevertheless the newborn will be considered an insured
         beneficiary under his mother's coverage during the neonatal period,
         thirty (30) days.

13.      In case that an individual has been certified as eligible by the
         Department of Health but has not completed the enrollment process, and
         he/she or his/her dependents need emergency services, the
         ADMINISTRATION shall verify the eligibility status of the individual.
         If the individual is eligible as a beneficiary, emergency services
         will be provided as if the individual is a beneficiary and
         arrangements for the issuance of the identification card will be made
         immediately after the notification of eligibility is made by the
         ADMINISTRATION to the INSURER. The premium in this instance will be
         paid to the INSURER on a pro-rata basis from the moment the emergency
         services needed are provided or the identification card is issued,
         whichever is first. For the purpose of this situation, the enrollment
         process is the process that commences at the time that the
         ADMINISTRATION gives notice to the INSURER of the beneficiaries
         eligibility status, and results in a letter to said beneficiary
         establishing the date and location for the completion of the
         enrollment documents and selection of the HCO. Said process ends when
         the beneficiary has selected an HCO from those available in the Health
         Area/Region and has received an identification card.

         Nothing provided in this section is intended to affect a provider's
         obligation to screen and stabilize an individual arriving at its
         facilities for emergency treatment as defined by EMTALA and the
         applicable Commonwealth laws.

 14.     Coverage shall end effective on the date of disenrollment. Premiums
         will be paid until the effective date of disenrollment. In the event
         of disenrollment while the beneficiary is an inpatient of a hospital
         on the last day of the month of coverage, and continues to be an
         inpatient of a hospital during the month following his disenrollment,
         the ADMINISTRATION will cover the payment of the premium for that
         following month. If the beneficiary remains hospitalized in subsequent
         months, the conversion clause will apply for the months after the one
         being paid by the ADMINISTRATION it being the INSURER's responsibility
         to assure that premiums are paid. Disenrollment will be effected
         exclusively by a notification issued by the ADMINISTRATION.

 15.     The INSURER shall not in any way discriminate nor terminate coverage
         of any beneficiary(ies) for reasons due to adverse change in
         recipient's health, or based on expectations that an enrollee will
         require high cost care, or need of health services, or any reason
         whatsoever, except for non-payment of premiums or fraudulent use of
         benefits or participation of fraudulent acts, after prior notification
         and consultation with the ADMINISTRATION.

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<PAGE>

16.      The INSURER agrees to maintain an Enrollment Data Base which:

         a)       includes each subscriber and all beneficiaries;

         b)       contains for each subscriber and beneficiary the information
                  technically defined in the (Carrier Response Billing
                  File/Carrier Eligibility File) formats required in RFP.

17.      The INSURER will secure on the date of enrollment a signed statement
         from the subscriber authorizing the Federal Government, the INSURER,
         the ADMINISTRATION and/or their designees to review the medical record
         of the subscriber and other beneficiaries, in order to determine
         quality, appropriateness, timeliness and cost of services performed
         under this contract. The terms, content and specifications of said
         authorization shall be consistent with the standards set forth in
         45CFR 164.508 et seq., part of the regulations of the Health Insurance
         Portability and Accountability Act.

18.      All individually identified information of services related to
         beneficiaries which is obtained by the INSURER shall be confidential
         and shall be used or disclosed by the INSURER, the HCO and/or its
         participating providers only for purposes directly connected with
         performance of all obligations contained in this contract. Medical
         records and management information data concerning any beneficiary
         enrolled pursuant to this contract shall be confidential and shall be
         disclosed within the INSURER's organization or to other persons, as
         authorized by the ADMINISTRATION, only as necessary to provide medical
         care and quality, peer or grievance review of such medical care under
         the terms of this contract and in coordination with the mental health
         carve-out contract subscribed by AS SMCA. The confidentiality
         provisions herein contained shall survive the termination of this
         contract and shall bind the INSURER, its HCOs and the INSURER's
         participating providers as long as they maintain any individually
         identifiable information relating to beneficiaries as provided in the
         implementation of the HIPAA regulation schedule to be set forth by the
         Federal Government, 45 CFR 164.102 et. seq. Any request for
         information which is made by third parties not related to this
         contract will be forwarded to the ADMINISTRATION for consideration,
         review and decision as to the pertinence of the request and the
         authorization for disclosure.

         Nothing in this section shall limit or affect the ADMINISTRATION's,
         the INSURER and for providers obligations regarding protected
         individually identifiable health information as provided in 45 CFR
         164.102 et seq. (HIPAA) regulations.

         Disclosure of individually identifiable health information to any
         business associate as defined in 45 CFR 164.504(e) of the HIPAA
         regulations by the INSURER shall entail the legal obligations set
         forth therein.

                                      12
<PAGE>

19.      The INSURER agrees to notify the ADMINISTRATION immediately of any
         change in the place of residence of the subscriber, insofar as the
         subscriber makes the change known to the INSURER. Address changes will
         be forwarded through electronic and/or machine-readable media as
         referred in paragraph sixteen.

20.      The INSURER agrees to implement a program whereby eligible
         beneficiaries are properly advised of the date of termination of their
         eligibility so as to assure that they complete the recertification
         process prior to said date. Said program should provide for an initial
         notice of the termination date at least ninety (90) days prior to the
         effective date of the eligibility termination.

21.      The INSURER hereby commits to comply with the electronic transactions,
         security and privacy requirements of the HIPAA regulations as provided
         in 45CFR 160 and 142 et seq. within the implementation dates set forth
         therein or by subsequent regulations schedule.

22.      DISENROLLMENT

         The INSURER has a limited right to request a beneficiary be
         disenrolled from INSURER without the beneficiary's consent. THE
         ADMINISTRATION must approve any INSURER request for disenrolling a
         beneficiary for cause.

         Disenrollment of a beneficiary may be permitted under the following
         circumstances:

         (a)      Beneficiary misuses or loans its membership card to another
                  person to obtain services.

         (b)      Beneficiary is disruptive, unruly, threatening or
                  uncooperative to the extent that beneficiary's membership
                  seriously impairs INSURER's or provider's ability to provide
                  services to beneficiaries or to obtain new beneficiaries, and
                  beneficiary's behavior is not caused by a physical or other
                  mental health condition.

The INSURER must take reasonable measures to improve a beneficiary's behavior
prior to requesting disenrollment and must notify beneficiary of its intent to
disenroll. Reasonable measure may include providing education and counseling
regarding the offensive acts or behavior.

INSURER must notify the beneficiary of the INSURER's decision to disenroll
after reasonable measures have failed to remedy the problem.

If the beneficiary disagrees with the decision to disenroll the beneficiary
from INSURER, INSURER MUST notify the beneficiary of the availability of the
complaint of Grievance Procedure and THE ADMINISTRATION's Fair Hearing process.

                                      13
<PAGE>

If the beneficiary disagrees with the decision to disenroll, INSURER must
notify the Beneficiary of the availability of the complaint procedure and
compliance with Fair Hearing Process, or as provided by Law 72 of September 7,
1993, as amended.

                                  ARTICLE III
                                RIGHT TO CHOOSE

1.       Each principal subscriber shall have the right to select an HCO from
         those available in the health Area/Region which at no time will be
         less than two (2) HCOs at each municipality, one of which has to be a
         privatized or non-privatized government or municipal facility if
         available, and subject to compliance with INSURER's requirements for
         HCO's. The selection of the HCO or primary care physician will be made
         by the beneficiaries at the insurance regional offices.

         The right of beneficiaries to transfer or change from an HCO shall be
         made at any time without cause during the first 90 days following the
         date of the beneficiary's initial enrollment or the date of enrollment
         notice is sent, whichever is later, and at most once every twelve (12)
         months thereafter, and for any of the causes of disenrollment set
         forth on 42 CFR 438.56 at any time.

2.       Each HCO will have available at least one of each specialist
         considered a primary care physician and shall meet the specification
         of the ratio specified in Article VI, and will have a sufficient
         number of primary care physicians to provide health care services to
         all beneficiaries according to the ratio specified in Article VI.
         Furthermore, the INSURER will provide to each HCO a network with a
         sufficient number of participating providers to render all services
         included under the basic, special and dental coverage to beneficiaries
         pursuant to the ratio specified in Article VI.

3.       The beneficiary shall have the right to choose his or her primary care
         physician from those available within the HCO selected by the
         principal subscriber. Said right also encompasses the change of the
         selected primary physician at any time by making the proper
         administrative arrangements within the HCO in conformity with the
         HCO's established policy. The selected primary care physician or the
         substitute on-duty primary care physician within the HCO must be
         available on a 24 hour basis for emergencies and/or telephone
         consultations. Each HCO must have available all of the primary care
         physicians (family physicians, internists, general practitioners,
         pediatricians and obstetrician-gynecologist) subject to waivers in
         case of unavailability of a specific provider.

4.       A primary care physician can only act as such in only one (1)
         municipality within the Health Area/Region subject of this contract
         and must be available to attend the health care needs of the
         beneficiary on a twenty four (24) hour basis, seven (7) days a week.

                                      14
<PAGE>

5.       A primary care physician can only act as such in only one (1) HCO
         within the Health Area/Region subject of this contract and must be
         available to attend the health care needs of the beneficiary on a
         twenty four (24) hour basis, seven (7) days a week.

6.       Each female beneficiary may select (i) primary care physician, or (ii)
         primary care physician and obstetrician-gynecologist as her primary
         care physician. If the female is pregnant, the
         obstetrician-gynecologist automatically will become the primary care
         physician; if one is not previously selected, she will then have to
         choose an obstetrician-gynecologist as her primary care physician.
         Once the pregnant woman completes her maternity care period, she will
         be allowed to continue with her original primary care physician.

7.       Any subscriber may change the selected HCO subject to the provisions
         of Section 1, above. If the request for an HCO change is filed with
         the INSURER on or before the fifth day of each month the change of HCO
         will become effective on the first day of the next month. If the
         change is filed after the fifth day of the month, the change in HCO
         will be effective on the first day of the second succeeding month.
         Selection guidelines are contemplated in Article VI, paragraph 3 of
         this contract.

8.       The beneficiary shall have the right to choose the provider to be
         referred to from those participating providers within the HCO's
         network that are under contract with the INSURER's for benefits
         covered under the Basic and Special Coverage.

9.       Dental services will be provided through the INSURER's network of
         dentists for the health insurance services contracted. Each subscriber
         will have the right to select a dentist within the INSURER's network
         to receive dental services. The accepted dentist/beneficiary ratio is
         one (1) dentist for each one thousand three hundred fifty (1,350)
         beneficiaries.

10.      In the event that HCOs under 330 Projects of the Rural Health
         Initiative have contracts with specialists, support participating
         providers, or support participating physicians, either on a
         fee-for-service basis or on a salary basis, the INSURER will be
         responsible for gathering and reporting all required data including
         the payment of services described in Article VII, Section five (5),
         Article XV, sections four (4) and eight (8), and the Record of Service
         File Layout formats as required in the RFP.

11.      The INSURER will provide to each principal subscriber a complete list
         of all participating physicians and participating providers, with
         addresses and specialties or health related services offered, in order
         to allow the beneficiary to choose among them.

12.      The beneficiary shall also have the right to choose the pharmacy
         according to applicable PBM guidelines established by the
         ADMINISTRATION and any other participating providers among those
         contracted by the ADMINISTRATION for basic and/or special coverage
         services, said guidelines to become effective sixty (60) days after
         notice to INSURER. The ADMINISTRATION will determine the

                                      15
<PAGE>

         acceptable pharmacy/beneficiary ratio in order to assure access to the
         pharmacy benefits. The right to choose requires the availability of
         sufficient number of pharmacies in each municipality of residence of
         the beneficiaries. .

13.      The INSURER will develop and effectively disseminate an education and
         orientation program in order to insure that all eligible beneficiaries
         are aware of their rights under this contract, including their right
         to choose physicians and providers. The ADMINISTRATION reserves the
         right to make changes, modifications and recommendations to said
         program in coordination and agreement with the INSURER. This program
         shall be subject to approval by the ADMINISTRATION prior to its
         implementation and in compliance with the marketing guidelines and
         prohibitions referred in Article IX.

14.      Notwithstanding the foregoing, the ADMINISTRATION shall preserve the
         right in coordination with INSURER, to expand, limit or otherwise
         amend the provision of services as provided for herein and/or to
         negotiate in coordination with the INSURER, cost saving and efficiency
         improvement measures. In those cases in which the ADMINISTRATION acts
         on its own, changes to the provision of services shall be notified to
         the INSURER no later than 30 days prior to implementation. Said
         modifications will take place after consultation and cost negotiation
         with the INSURER.

                                   ARTICLE IV
                                SECONDARY PAYOR

1.       The INSURER shall be a secondary payor to any other party liable in
         any claim for services to a beneficiary, including but not limited to:
         the INSURER itself, Medicare, other insurers or health maintenance
         organizations, non-profit INSURER's operating under law 152 approved
         May 9, 1942 as amended, Asociacion de Maestros de Puerto Rico, medical
         plans sponsored by employee organizations, labor unions, and any other
         entity that results liable for the benefits claimed against the
         INSURER for coverage to beneficiaries.

2.       It shall be the responsibility of the INSURER to ascertain that the
         aforementioned provisions of Law 72 of September 7, 1993 are enforced
         and that the INSURER .acts as secondary payor to any other medical
         insurance.

3.       The ADMINISTRATION and the INSURER will cooperate in the exchange of
         third parties health insurance benefits information. To this effect
         the INSURER will comply fully with the Carta Normativa Numero
         N-E-5-95-98 issued by the Office of the Insurance Commissioner of
         Puerto Rico and the HIPAA regulations provisions cited elsewhere in
         this contract.

4.       The INSURER will make diligent efforts to determine if beneficiaries
         have third party coverage and will attempt to utilize such coverage
         when applicable. The INSURER, will be permitted to retain 100% of the
         collections from subrogation.

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<PAGE>

         The plan's experience will be credited with the amount collected from
         said primary payor.

5.       The INSURER must report quarterly to the ADMINISTRATION the amounts
         collected from third parties for health services provided. Said
         reports must provide a detailed description of the beneficiary's name,
         contract number, third party payor name and address, date of service,
         diagnosis and provider's name and address and identification number.

6.       The INSURER must report quarterly to the ADMINISTRATION the amounts
         collected from third parties for health services provided according
         with standard format to be adopted by the ADMINISTRATION. Said reports
         must provide a detailed description of the beneficiary's name,
         contract number, third party payor name and address, date of service,
         diagnosis and provider's name and address and identification number.

7.       The INSURER shall develop specific procedures for the exchange of
         information, collections and reporting of other primary payor sources
         and is required to verify its own eligibility files for information on
         whether or not the beneficiary has private health insurance within the
         INSURER.

8.       The INSURER must implement and execute, an effective and diligent
         mechanism in order to assure the collection from primary payors of all
         benefits covered under this contract. Said program, mechanisms and
         method of implementation shall be reported to the ADMINISTRATION as of
         the first date of the effectiveness of this contract.

9.       Failure of the INSURER to comply with this Article may, at the
         discretion of the ADMINISTRATION, because for the application of the
         provisions under Article XXXIII.

                                   ARTICLE V
                                  EMERGENCIES

1.       In cases of emergency or immediate need of medical care within the
         Commonwealth of Puerto Rico, the INSURER will be responsible for the
         payment of emergency service provided to beneficiaries when the
         emergency or immediate need of medical care occurs within its network
         or outside of its network or the geographical Area/Region of the
         selected HCO's emergency care facility. Such services must be paid by
         the INSURER regardless of whether the entity that furnishes the
         service has contracted with the INSURER and no prior authorization
         shall be required by the INSURER for the provision of emergency
         services. The INSURER will assume the payment of the medical
         screening examinations or other medically necessary emergency
         services, whether or not the patients meets the prudent layperson
         standard, in the event

                                      17
<PAGE>

         that the beneficiary's PCP or any INSURER representative or provider
         instructs them to seek emergency care within or out of its network
         area/region.

         Such services shall consist of whatever is necessary to stabilize the
         patient's condition, unless the expected medical benefits of a
         transfer outweigh the risk of not undertaking the transfer, and the
         transfer conforms with all applicable requirements. The stabilization
         services includes all treatment that may be necessary to assure within
         reasonable medical probability, that no material deterioration of the
         patients condition is likely to result from or occur during discharge
         of the patient or transfer of patient to another facility.

         In the event of a disagreement with the provider concerning whether a
         patient is stable enough in order to be discharged or transferred or
         whether the medical benefits outweight the risk, the judgement of the
         attending physician caring for the enrollee will prevail and oblige
         the INSURER. Such services shall be provided in such a manner as to
         allow the subscriber to be stable for discharge or transfer as defined
         by EMTALA, in order to safely return the subscriber to the
         corresponding HCO, or to an appropriate participating provider for
         continuation of treatment.

2.       Since emergency care is of utmost concern to the ADMINISTRATION, the
         INSURER shall require that adequate ambulance transportation and
         emergency medical care are available. Each municipality shall have
         access to an emergency care system composed of ground, air and
         maritime ambulance transportation as necessary, and emergency medical
         care.

3.       Ambulance transportation and emergency care will be subject to
         periodic reviews by applicable governmental agencies to ensure. the
         highest quality of services.

4.       All participating providers shall provide immediate emergency care
         services to beneficiaries when requested.

5.       Emergency care services as well as ambulance transportation services
         shall exist in each municipality comprising the health area/region,
         24 hours a day, and 365 days yearly, operated by an HCO, or by other
         participating providers.

6.       The INSURER and each HCO is required to provide access to emergency
         care and ambulance transportation services within their own
         facilities, through their contracted, participating providers or
         through contract with third parties that guarantee said emergency care
         and ambulance transportation twenty four (24) hours a day, seven (7)
         days a week.

7.       The INSURER will assure that each HCO makes the necessary arrangements
         to have readily available ambulance services in good mechanical
         condition and properly equipped, in order to assure a prompt and
         effective ambulance transportation service.

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<PAGE>

8.       The INSURER or the HCO will establish Urgent Care Centers within the
         Health Area/Region. These include physician offices and clinics with
         extended hours. These Urgent Care Centers may complement emergency
         care services but at no time will they substitute the requirement to
         have emergency care services and ambulance transportation available at
         each municipality 24 hours a day, 7 days a week and 365 days yearly.

9.       The INSURER will provide beneficiaries access to a 24-hour-a-day
         toll-free hotline with licensed qualified professionals to help
         beneficiaries with questions about particular medical conditions and
         to guide them to appropriate facilities (emergency rooms, urgent care
         centers, among others). Notwithstanding, the aforementioned statement,
         the beneficiary will have the right to choose to attend an emergency
         room if he believes his condition is an emergency medical condition,
         as defined in this contract, without prior need of authorization or
         certification.

                                  ARTICLE VI
                               ACCESS TO BENEFITS

1.       The INSURER will contract all available private providers that meet
         its credentialing process and agree to its contractual terms, in order
         to assure sufficient participating providers, to satisfy the demand of
         covered services by the beneficiaries enrolled in the program. The
         physician/beneficiary ratio accepted is one (1) primary care physician
         for each eight hundred and fifty (850) beneficiaries; one (1)
         specialist (not primary care) for each one thousand one hundred
         (1,100) beneficiaries; and, one (1) physician (all) for each eight
         hundred (800) beneficiaries. These ratio does not take into account
         the expected mix between private patients and beneficiaries which
         could increase the physicians capacity to 1:1,700 for primary care
         physicians; 1:2,200 for specialists and 1:1,600 for all physicians. In
         the event that the HCOs provides services only to beneficiaries under
         this contract, the physician/beneficiary ratio will be the same to
         that applicable when there is a mix between private patients and
         beneficiaries. The INSURER will assure compliance with said
         physician/beneficiary ratio.

2.       The INSURER shall be responsible to contract all the necessary health
         care services and participating providers to insure that all the
         benefits covered under the Basic, Dental and Special Coverage of the
         plan are rendered, through the INSURER's participating providers with
         the timeliness, amount, duration and scope as those services are
         rendered to non-enrolled Medicaid recipients within the area/region
         served.

3.       Every subscriber shall be able to select from at least two (2) HCOs
         with sufficient enrollment capacity in his or her municipality, one of
         which will be a privatized government facility, if available and
         subject to compliance with INSURER's requirements for HCOs. Each
         subscriber shall also be able to choose a HCO

                                      19
<PAGE>

         outside his or her municipality of domicile as provided for in Article
         III, paragraph 1 of this contract.

4.       A primary care physician can only act as such in only one (1)
         municipality within the Health Area/Region subject of this contract
         and must be available to attend the health care needs of the
         beneficiary on a twenty four (24) hour basis, seven (7) days a week.

5.       Contracts between the INSURER and HCOs and between the INSURER and its
         participating providers shall be independent contracts specifically
         designed to cover all terms and conditions contained in this contract.
         Coverage afforded to beneficiaries under this contract constitutes a
         direct obligation on the part of the INSURER's participating
         providers: to comply with all terms and conditions contained herein.

6.       HCO enrollment shall be conditioned on the availability of adequate
         health care services. It shall be the INSURER's responsibility to
         maintain a constant assessment of the enrollment capacity of each HCO.
         Adequate health care services will be those determined acceptable
         under the ADMINISTRATION's Compliance Evaluation Program as outlined
         in Article XVII of this contract.

7.       That INSURER shall be responsible for communicating to its
         participating providers the public policy that prohibits provider
         inquiries with the purpose of determining if the beneficiary is
         subject to the benefits provided under Law 72 of September 7, 1993.

8.       The INSURER is responsible for the development and maintenance of an
         adequate system for referrals of health services under this contract.
         It shall audit all systems and processes related to referrals of
         services that the HCO'S or participating providers implement. In no
         way the INSURER, HCO'S or any provider's Referral Committee may
         interfere, prohibit, or restrict any health care professional's advice
         within their scope of practice. The referral system must be approved
         by the Administration.

9.       All referral systems must comply with timeframes established in
         paragraph (23). If the system developed by the INSURER is by
         electronic means, it must be installed at all primary care offices. It
         is unacceptable to force the beneficiary to move to another facility
         to obtain referrals.

10.      The INSURER assures the ADMINISTRATION that no HCO'S or participating
         providers will impose limit quotas or restrain services to
         subcontracted providers for the services medically needed (e.g.
         laboratory, pharmacies, or other services).

11.      The INSURER shall expedite access to benefits of beneficiaries
         diagnosed with conditions under the Special Coverage. The
         identification of these beneficiaries

                                      20
<PAGE>

         will allow rapid access of the medical services covered under our
         Special Coverage.

12.      Any denial, unreasonable delay or rationing of services to the
         beneficiaries is expressly prohibited. The INSURER shall require
         strict compliance with this prohibition by its participating providers
         or any other entity related to the rendering of medical care services
         to the beneficiaries. Any action in violation of this prohibition
         shall be subject to the provisions of Article VI, Section 6 of Law 72
         of September 7, -1993. Furthermore, the INSURER shall be responsible
         for posting information at every HCO, addressed to the beneficiaries,
         stating the policy that prohibits denying, unreasonably delaying or
         rationing services by participating providers or any other entity
         related to the rendering of medical care services to the
         beneficiaries, and providing information on procedures for filing a
         grievance on the subject. The INSURER shall notify the HCOs and
         participating providers that they must comply with the policy that
         prohibits the denial, the unreasonable delay or the rationing of
         services by participating providers or any other entity rendering
         medical services to beneficiaries, and further that they must provide
         information on procedures for filing a grievance. The INSURER shall
         comply with the performance measures established and scheduled by the
         ADMINISTRATION.

13.      The INSURER will ensure that HCOs and participating providers have a
         mix of patients distributed between private and eligible beneficiaries
         so as to avoid any possibility of discrimination by reason of medical
         indigence, whenever feasible.

14.      No participating provider, or its agents, may deny a beneficiary
         access to medically necessary health care services, except for the
         reasons specified in Article VI, section 6 of Law 72 of September 7,
         1993.

15.      The INSURER is responsible for having an adequate number of
         participating physicians and providers to supply all the benefits
         offered in the Basic, Dental and the Special Coverage of the
         contracted health insurance. The benefits under the Basic, Special and
         Dental coverage will be provided to the beneficiaries at the location
         of the participating providers.

16.      The INSURER is responsible to have available all participating
         providers needed in order to render all the medically necessary
         services required to provide the beneficiaries with the benefits
         included in the Basic, Dental and Special Coverage of the contracted
         health insurance as specified in ADDENDUM I of this contract.

17       The INSURER agrees to require compliance by all participating
         physicians and providers with all provisions contained in this
         contract.

18.      The INSURER has a continuous legal responsibility toward the
         ADMINISTRATION to assure that all activities under this contract are
         carried out.

                                      21
<PAGE>

         INSURER will use its best efforts to prevent unauthorized actions by
         HCOs or participating providers. INSURER will take appropriate
         measures to ensure that all activities under this Contract are carried
         out. Failure to properly discharge the obligation to assure, by all
         means necessary and appropriate, full compliance with said activities,
         shall result in the termination of this contract as provided in
         Article XXXIII hereof.

19.      Pursuant to the Health Reform Concept of 1993, the INSURER shall
         contract as participating providers those Commonwealth owned
         facilities that have been privatized in the Health Area/Region by
         virtue of Laws 103 of July 12, 1985, and 190 of September 5, 1996, the
         330 and 339 Projects of the Rural Health Initiatives, those State
         owned facilities not privatized, as well as the privatized or non
         privatized municipally owned facilities in the different
         areas/regions and regions which will complement access to covered
         medical services, subject to its credentialing requirements and
         contractual terms.

20.      The INSURER assures the ADMINISTRATION that physician and providers of
         services under this contract will provide the full range medical
         counseling that is appropriate for beneficiaries condition. In no way
         the INSURER or any of its contractors may interfere, prohibit, or
         restrict any health care professional's advice within their scope of
         practice, regardless of whether a care or treatment is covered under
         the contract.

21.      The INSURER assures the ADMINISTRATION that its Physician Incentive
         Plan does not in any way compensate directly or indirectly physicians,
         individual physicians, group of physicians or subcontractors as an
         inducement to reduce or limit medically necessary services furnished
         to individual enrollee and that it meets the stop-loss protection and
         enrollee survey and disclosure requirements under the Social Security
         Act. The INSURER shall ensure that at the intermediate level all
         physician providers groups are afforded with adequate stoploss
         protection within the required thresholds under the Medicaid Program
         regulations.

22.      If the Insurer's Physician Incentive Plan in any respect places
         physicians at substantial financial risk, INSURER assures that
         adequate stop-loss insurance will be maintained to protect physicians
         from loss beyond the risk thresholds established under sections 42CFR
         422.208. In the event, INSURER places physicians at substantial risk
         it shall conduct enrollee/disenrollee surveys not later than one year
         after the effective date of the contract and at least annually
         thereafter.

23.      Timeframes for Access Requirements. INSURER must have sufficient
         network of providers and must establish procedures to ensure
         beneficiaries have access to routine, urgent, and emergency services;
         telephone appointments; advice and Beneficiaries service lines. These
         services must be accessible to beneficiaries within the following
         timeframes:

                                      22
<PAGE>

         -        Urgent Care within 24 hours of request;

         -        Routine care within 2 weeks of request;

         -        Physical/Wellness Exams for adults must be provided within 8
                  to 10 weeks of the request;

         -        Referrals: Appointments of referrals must be delivered and
                  notified to beneficiaries within five (5) days from the date
                  prescribed by the provider.

24.      INSURER must establish policies and procedures to ensure access to
         EPSDT Checkups be provided within ninety (90) days of new enrollment,
         except that newborn beneficiaries should be seen within two (2) weeks
         of enrollment, and that in all cases, and for all beneficiaries such
         policies and procedures be consistent with the American Academy of
         Pediatrics and EPSDT periodicity schedule which is based on the
         American Academy of Pediatrics schedule and the guidelines established
         by the ADMINISTRATION. The INSURER must advice the beneficiary of his
         right to have a checkup.

                                  ARTICLE VII
              CONTRACTS WITH HCOS AND ALL PARTICIPATING PROVIDERS

1.       All services necessary to provide beneficiaries the benefits of the
         Basic, Special and Dental Coverage shall be contracted in writing with
         all participating providers. The INSURER will ensure that all
         provisions and requirements contained in this contract are properly
         included in the contracts with the HCOs and with all participating
         providers and that they are carried out by said HCOs and participating
         providers. Such provisions and requirements made part of these
         contracts will be properly notified to the ADMINISTRATION. Coverage
         afforded to beneficiaries under this contract constitutes a direct
         obligation on the part of the INSURER's participating providers to
         comply with all terms and conditions contained herein.

2.       The INSURER may not discriminate with respect to participation,
         reimbursement or indemnification as to any provider who is acting
         within the scope of the provider's license or certification under
         applicable Commonwealth.

3.       The INSURER agrees to draft, execute and enforce a specific contract
         between the INSURER and the HCO and between the INSURER and its-
         participating providers that will include all applicable provisions
         contained in this contract. The INSURER will insure that said
         applicable provisions are properly complied with by the HCOs and its
         network of participating providers.

                                      23
<PAGE>
         To this effect, the Insurer also agrees to certify or attest that none
         of his contractors, subcontractors or providers of services: (1)
         consults, employs or procures services from any individual that has
         been debarred or suspended from any federal agency; or (2) has a
         director, partner or employee with a beneficial ownership of more than
         a 5% on their organization's equity who has been debarred or suspended
         by any federal agency, or (3) procures self-referral of services to
         any provider in which it may have directly or indirectly any economic
         or proprietary interest.

         The INSURER will certify and attest that it has provided all HCOs,
         complete written instructions describing procedures to be used for the
         compliance with all duties and obligations arising under this
         contract. These instructions will include the following information:
         provider selection by beneficiaries, covered services, reporting
         requirements, record- keeping requirements, grievance procedures,
         deductibles and co-payment amounts, confidentiality, and prohibitions
         against denial or rationing of services. Copy of these instructions
         will be submitted to the ADMINISTRATION, who reserves the right to
         request modifications or amendments to said instructions following
         consultation with the INSURER.

4.       The INSURER agrees to incorporate in its contracts with HCOs and in
         those between the INSURER and its participating providers, the
         following provisions, among others, contained in this contract:

         a.       A payment time schedule to pay the HCOs for services rendered
                  and for payment for services rendered by the participating
                  providers to the HCOs, the schedules will not exceed the time
                  limitation standards required by the Administration under
                  this contract to assure prompt payments of sums due to
                  providers.

         b.       A warranty by the HCO insuring that the method and system
                  used to pay for the services rendered by the HCO's network of
                  participating providers are reasonable and that the
                  negotiated terms do not jeopardize or infringe upon the
                  quality of the services provided.

         c.       A procedure that establishes how the HCO's network of
                  participating providers can recover from the INSURER monies
                  owed for services rendered and not paid by the HCO, after the
                  HCO's participating provider has demanded payment from the
                  HCO.

         d.       That payments received for services rendered under the health
                  insurance plan shall constitute full and complete payment
                  except for: (i) the deductibles contained in ADDENDUM I of
                  this contract, and (ii) that the benefits or services
                  rendered is not covered. The INSURER will insure compliance
                  with Article XVIII, paragraphs (6) and (7) of this contract.

         e.       a release clause authorizing access by the ADMINISTRATION to
                  the participating providers' Medicare billing data for
                  beneficiaries covered by this contract who are also Part A
                  and Part A and B Medicare beneficiaries, provided that such
                  access is authorized by CMS and other related statutory or
                  regulatory provisions thereof. Access by the

                                        24
<PAGE>

                  ADMINISTRATION shall be at all times subject to all HIPAA
                  regulations requirements mentioned elsewhere in this
                  contract.

         f.       That INSURER will cover the payment of Medicare Part B
                  deductibles and co-insurance for services received by a
                  beneficiary under Medicare Part B, accessed through the HCO's
                  primary care provider, with primary care physician's
                  authorization their network of participating providers and
                  the participating providers of the INSURER for the basic
                  and/or special coverage.

         g.       Co-insurance and deductible for Part B services provided on
                  an outpatient basis to hospital clinics and other
                  institutional care providers, other than physician services,
                  will be considered as a covered bad debt reimbursement item
                  under the Medicare program cost. In this instance, the
                  INSURER will pay for the co-insurance and deductibles related
                  to the physician services provided as a Part B service.

         h.       That the only Part A deductible and co-insurance, and Part B
                  deductible and co-insurance for outpatient services provided
                  in a hospital clinic and other institutional care providers,
                  other that physician services, will be the one billed to
                  Medicare as bad debt. No other amount will be charged to
                  these beneficiaries. The INSURER will neither cover the
                  payment of Medicare Part A deductibles and co-insurance for
                  services received by a beneficiary under Medicare Part A nor
                  the Part B deductible and co-insurance for services provided
                  in hospital clinics, other than physician services. The
                  INSURER will cover the deductibles and co-insurances of all
                  Part B services including Part B deductibles and co-insurance
                  for physician services provided in an outpatient basis to
                  hospital clinics.

         i.       That coverage afforded to beneficiaries under this contract
                  constitutes a direct obligation on the part of the INSURER's
                  participating providers to comply with all terms and
                  conditions contained herein.

         j.       The INSURER will establish directives for psychotropic
                  prescription dispatchment by providers in accordance with the
                  applicable agreement with the pharmacy benefit managers
                  (PBM). The ADMINISTRATION is evaluating an alternative
                  arrangement for pharmacy benefit management, (PBM), which if
                  agreeable to the parties will be implemented according to
                  Article XXXII of this Contract.

5.       The INSURER agrees to provide to the ADMINISTRATION a detailed
         description of the payment methodology used to pay for services
         rendered by the HC0s, HCO's network of providers (primary care
         physicians and other providers), and other participating providers.
         Said description of the payment methodology will also address the
         methodology used by the HCOs in the distribution within their own
         group of the capitation payments, fee for services or other basis for
         payment of services to provider HCOs. The INSURER will submit to the
         ADMINISTRATION a monthly report detailing all payments made to the
         HCO, HCO's network of participating providers and to the INSURER's
         participating providers classified by specialty.

                                      25
<PAGE>

6.       The INSURER represents that neither the premium or the capitated
         payments or capitated payments with a fee-for-service component for
         services, made to HCOs, to HCO's network of participating providers,
         as well as to the INSURER's participating providers, include payment
         of services covered under the Medicare Federal Program.

7.       As part of the terms and conditions contained in the contracts with
         participating providers, the INSURER will include in those with
         privatized government facilities (to include those under management
         contract, that have been sold or are under lease), a provision that
         will authorize the INSURER upon the written request of the Department
         of Health, to withhold a determined amount from the monthly payments
         to said participating providers for services rendered under this
         contract. Said amount will be determined by the Department of Health
         on the basis of the payments contractually agreed to between the
         Department of Health of the Commonwealth of Puerto Rico and said
         participating providers on account of the management fee, sale price
         or lease fee, as well as 50% of the employees' payroll which the
         participating providers are required to reimburse the Department of
         Health. The INSURER will remit said withheld amounts directly to the
         Department of Health.

8.       The INSURER shall provide all reasonable means necessary to ensure
         that the contracting practices between its participating HCO and
         providers are in compliance with federal anti-fraud provisions and
         particularly, in conformity with the limitations and prohibitions of
         the False Claims Act, the Anti-kickback statute and regulations and
         Stark II Law and regulations prohibiting self-referral to designated
         medical services by participating medical providers.

9.       To the extent feasible within INSURER'S existing claims processing
         systems, INSURER should have a single or central address to which
         providers must submit claims. If a central processing center is not
         possible within INSURER's existing claims processing system, INSURER
         must provide each network provider a complete list of all entities to
         whom the providers must submit claims for processing and/or
         adjudication. The list must include the name of the entity, the
         address to which claims must be sent, explanation for determination of
         the correct claims payer based on services rendered, and a phone
         number the provider may call to make claims inquiries. INSURER must
         notify providers in writing of any changes in the claims filing list
         at least 30 days prior to effective date of change. If INSURER is
         unable to provide 30 days notice, providers must be given a 30-day
         extension on their claims filing deadline to ensure claims are routed
         to correct processing center.

10.      The Administration and the Department of Health Medicaid Fraud Control
         Unit must be allowed to conduct private interviews of providers and
         the providers' employees, contractors, and patients. Requests for
         information must be complied with, in the form and language requested.
         Providers and their employees and contractors must cooperate fully in
         making themselves available

                                      26
<PAGE>

         in person for interviews, consultation, grand jury proceedings,
         pre-trial conference, hearings, trial and in any other process,
         including investigations.

11.      PROVIDER MANUAL AND PROVIDER TRAINING

         INSURER must prepare and issue a Provider Manual(s), including any
         necessary specialty manuals to the providers in the INSURER network
         and to newly contracted providers in the INSURER network within five
         (5) working days from inclusion of the provider into the network. The
         Provider Manual must contain sections relating to special
         requirements.

         INSURER must provide training to all network providers and their staff
         regarding the requirements of THE ADMINISTRATION/INSURER contract and
         special needs of beneficiaries under this contract.

         INSURER training for all providers must be completed no later than 30
         days after placing a newly contracted provider on active status.
         INSURER must provide ongoing training to new and existing providers as
         required by INSURER or THE ADMINISTRATION to comply with this
         contract.

         INSURER must maintain and make available upon request enrollment or
         attendance rosters dated and signed by each attendee or other written
         evidence of training of each network provider and their staff.

12.      PROVIDER QUALIFICATIONS - GENERAL

         The providers in INSURER network must meet the following
         qualifications:

FQHC              A Federally Qualified Health Center meets the standards
                  established by federal rules and procedures. The FQHC must
                  also be an eligible provider enrolled in the Medicaid
                  program.

Physician         An individual who is licensed to practice medicine as an M.D.
                  or a D.O. in Puerto Rico either as a primary care provider or
                  in the area of specialization under which they will provide
                  medical services under contract with INSURER; who is a
                  provider enrolled in the Medicaid program; and who has a
                  valid Drug Enforcement Agency registration number and a
                  Puerto Rico Controlled Substance Certificate, if either is
                  required in their practice.

Hospital          An institution licensed as a general or special hospital by
                  the Puerto Rico Health Department under Chapter 241 of the
                  Health and Safety Code and Private Psychiatric Hospitals
                  under Chapter 577 of the Health and Safety Code (or is a
                  provider which is a component part of a State or local
                  government entity which does not require a

                                       27
<PAGE>

                  license under the laws of the Commonwealth of Puerto Rico),
                  which is enrolled as a provider in the Puerto Rico Medicaid
                  Program.

Non-Physician     An individual holding a license issued by the applicable
Practitioner      licensing agency of the Commonwealth of Puerto Rico who is
Provider          enrolled in the Puerto Rico Medicaid Program or an
                  individual properly trained to provide health support
                  services who practices under the direct supervision of an
                  appropriately licensed professional.

Clinical          An entity having a current certificate issued under the
Laboratory        Federal Clinical Laboratory Improvement Act (CLIA), and
                  enrolled in the Puerto Rico Medicaid Program.

Rural Health      An institution which meets all of the criteria for
Clinic (RHC)      designation as a rural health clinic, and enrolled in the
                  Puerto Rico Medicaid Program. (330, 329)

Local Health      A local health department established pursuant to Health and
Department        Safety Code, Title 2, Local Public Health Reorganization Act
                  ss.121.031ff.

Non-Hospital      A provider of health care services which is licensed and
Facility          credentialed to provide services, and enrolled in our
Provider          program.

School Based      Clinics located at school campuses that provide on-site
Health Clinic     and primary preventive care to children and adolescents.
(SBHC)

                                  ARTICLE VIII
                 SUBSCRIPTION PROCESS AND IDENTIFICATION CARDS

1.       The INSURER agrees to comply and implement in full all instructions
         and guidelines contained in the Administration's Instructions to
         Insurers for Implementation of Orientation and Subscription Process.
         (Addendum II)

2.       The INSURER shall issue to each beneficiary a card of durable plastic
         material that provides proper identification to access the benefits
         covered under this contract.

3.       This card shall be similar to those the INSURER issues to the rest of
         their subscribers and shall not contain information that may identify
         the cardholder as medically indigent.

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<PAGE>

4.       The INSURER shall be responsible to assure delivery of the cards at a
         location accessible to the beneficiaries in each municipality.

5.       The INSURER shall deliver the card on the same day that the
         beneficiary completes, the enrollment process.

6.       The identification cards shall contain the following information:

         a)       Name of Beneficiary

         b)       INSURER's Group Number

         c)       Subscriber's Social Security Number

         d)       Relationship of beneficiary with subscriber (if applicable)

         e)       HCO name and number

         f)       Issue Date

         g)       Type of Contract (individual or family)

         h)       Coverage effective date

         i)       Other Insurance code

         j)       Medicare Part A and/or Part A and B deductible code.

7.       The INSURER will replace lost, stolen, mutilated cards and will have
         the right to charge the beneficiaries one dollar ($1.00) for each card
         replaced.

8.       The INSURER will replace free of charge the identification card
         whenever a change of HCO is made.

9.       Identification cards are the property of the INSURER and they shall be
         returned by the beneficiary upon losing eligibility to the plan or
         when a change of HCO is made.

10.      The INSURER shall be responsible for notifying each beneficiary that
         the identification card is for the personal identification of the
         beneficiary to whom it has been issued, and that lending, transferring
         or in any other way consenting to the use of the card by any other
         person constitutes a fraudulent act.

11.      Identification Card contents and layout are subject to the prior
         approval of the ADMINISTRATION to be in accordance with Law 72 of
         September 7, 1993.

                                   ARTICLE IX
           SUMMARY PLAN DESCRIPTION BOOKLET AND ORIENTATION PROGRAMS
                              MARKETING PROVISIONS

1.       The INSURER shall be responsible for the preparation, printing and
         distribution, at its own cost, of booklets, in the Spanish language,
         that describe the plan and the benefits covered therein. The Insurer
         agrees to submit before the effective date of the contract a
         translated copy of the beneficiaries booklet in the English

                                       29
<PAGE>

         language by the proper revision of federal authorities. These booklets
         will be delivered to each subscriber upon enrollment, along with the
         required identification card(s)

2.

3.       The booklets shall serve as guarantee of the benefits to be provided
         and shall contain the following information:

         a)       Schedule of benefits covered, all services and items that are
                  available and that are covered either directly or through
                  methods of referral and/or prior authorization, a written
                  description of how and where the services that have been
                  available through the plan services may be obtained.

         b)       Benefit's exclusions and limitations. For benefits that
                  enrollees are entitled to but are not available through the
                  MCO, a written description on how and where to obtain
                  benefits; description of procedures for requesting
                  disenrollments/changes.

         c)       Beneficiary's rights and responsibilities, in accordance with
                  specific rights and requirements to be afforded in accordance
                  with Medical Program regulations 42 CFR 438.100 as amended,
                  Puerto Rico Patient Bill of Rights Law 194, Puerto Rico
                  Mental Health Code, August 25, 2000, as implemented by
                  regulation, and Law 11 which creates the Office of Patients
                  Solicitor General of April 11, 2001.

         d)       Instructions on how to access benefits, including a list of
                  (1) available HCO's and its participating providers, PCP or
                  Specialists (its locations and qualifications), (2) providers
                  from which to obtain benefits under the Special Coverage.
                  Said list can be provided in a separate booklet.

         e)       Official grievances and appeal filing procedures.

         f)       In the event a Physician Incentive Plan affects the use of
                  referral services and/or places physicians at substantial
                  risk, the INSURER shall provide the following information
                  upon beneficiaries requests: the type of incentive
                  arrangements, whether stop-loss insurance is provided and the
                  survey results of any enrollee/disenrollee surveys that will
                  have to be conducted by INSURER.

         g)       Unless otherwise specified, subscription materials must be
                  written at the 4th-6th grade reading comprehension level.

4.       The booklets shall be approved by the ADMINISTRATION prior to
         printing, distribution, and dissemination in compliance with
         provisions of Article IX.

5.       The INSURER shall also be responsible for the preparation, printing
         and distribution, at its own cost, of an Informative Bulletin, in the
         Spanish language, that describes the plan, services and benefits
         covered therein as well as the managed care concept. This Informative
         Bulletin will be distributed among the HCOs, HCO's network of
         participating providers and the INSURER's participating providers.

                                       30
<PAGE>

6.       The INSURER shall be responsible to conduct and assure the
         participation of all providers under this contract to diverse seminars
         to be held throughout the Health Area/Region in order to properly
         orient and familiarize said providers with all aspects and
         requirements related to the Preventive Medicine Program, Benefits and
         Coverage under this contract, and the Managed Care concept. Said
         seminars will be organized, scheduled, conducted and offered at the
         expense of the INSURER. The curriculum for said seminars will be
         coordinated with and approved by the ADMINISTRATION Healthcare
         Coordinators.

7.       All participating providers are mandatorily required to receive yearly
         during the contract term at least four (4) hours of orientation,
         education and familiarization with different aspects related to this
         contract on/or before the expiration of the first four and a half
         (4 1/2) months of the contract term. Failure to comply with this
         requirement will be sufficient grounds to exclude from the Health
         Insurance Program the participating provider. If, at the expiration of
         the first four and half (4 1/2) of the contract term, the
         participating provider has not fully complied with this requirement,
         it will be excluded as participating provider for subsequent periods
         of the contract or the contract term. At the discretion of the
         ADMINISTRATION, and for good cause the excluded provider may be
         authorized to be contracted as a participating provider if it
         subsequently complies with the requirement.

8.       The ADMINISTRATION will monitor and evaluate all marketing activities
         by the INSURER, its contractor, sub-contractors or any provider of
         services under this contract.

9.       Any marketing material addressed to enrollees can not contain false or
         misleading information. All oral, written or audiovisual information
         addressed to enrollees should be accurate and sufficient for
         beneficiaries to make an informed consent decision whether or not to
         enroll and will have to be pre-approved by the ADMINISTRATION.

10.      The INSURER, contractor or subcontractor or any providers of services
         must distribute the material to its entire service area/region. In the
         event the INSURER or any of its contractors develop new and revised
         materials they shall submit them to the ADMINISTRATION for prior
         approval.

11.      The ADMINISTRATION will appoint an Advisory Committee, with
         representation of at least: a board certified physician, a beneficiary
         of a consumer advocate organization that includes Medicaid recipients
         a health related professional related with the medical needs of
         low-income population and a Director of a Welfare Department that does
         not head a medicaid agency.

                                      31
<PAGE>

12.      The Advisory Committee will assist the ADMINISTRATION in the
         evaluation and the review of any marketing or informational material
         addressed to assist medicaid recipients in the provision of health
         services under this contract.

         All the marketing activities and the information which shall be
         allowed will be limited to the following:

         a)       Clear description of health care benefits coverage and
                  exclusions to enrollees;

         b)       Explain how, when, where benefits are available to enrollees;

         c)       Explain how to access emergency, family-planning services,
                  services that do or do not require referrals and
                  authorizations;

         d)       Explain any benefits enrollees are entitled to, that are not
                  available through the MCO and how to obtain them;

         e)       Enrollees rights and responsibilities;

         f)       Grievance and appeal procedures.

13.      The INSURER, its agents, any contractor or sub-contractor party under
         this contract shall not engage in cold call marketing that is,
         unsolicited personal contact with potential enrollees for the purpose
         of influencing them to enroll with any of its contractors. Also
         telephone, door-to-door or telemarketing for the same purposes is
         hereby prohibited.

14.      Neither the INSURER, its contractor, subcontractor or any provider may
         put into effect a plan under which compensation, reward, gift or
         opportunity are offered to enrollees as an inducement to enroll other
         than to offer health care benefits. The INSURER its contractor,
         subcontractor or provider is prohibited from influencing an individual
         enrollment with the sale of any other insurance.

15.      In the event of a final determination reached by the ADMINISTRATION
         that the INSURER, its agents, any of its contractor or subcontractors,
         has failed to comply with any of the provisions set forth on this
         article, the ADMINISTRATION in compliance with due process guarantees
         and remedies available under its regulations; Law 72 of September
         7, 1993; the Social Security and Balance Budget Act, will proceed to
         enforce the compliance of these provisions by pursuing within its
         empowered authority the sanctions established in Article XXXV1.

                                   ARTICLE X
                              GRIEVANCE PROCEDURE

1.       The INSURER represents that it has established an effective procedure
         that assures the filing, receipt, and prompt handling and resolution
         of all grievances and complaints made by the beneficiaries and the
         participating providers. The INSURER will prepare a grievance form
         that must be approved by the ADMINISTRATION. The approved grievance
         form shall be made available to all

                                       32
<PAGE>

         beneficiaries, HCOs, HCO's network of participating providers and the
         INSURER's participating providers. The parties will make whatever
         adjustments are necessary to reconcile their grievance procedure with
         provisions of Law 194 of August 25, 2000 (known as "Patient Bill of
         Rights") or those contained in Law 11 of April 11, 2001 (known as "Law
         Creating the Office of Patient's Solicitor General") as implemented by
         regulation.

2.       Any written or telephone communication from a beneficiary or
         participating provider, which expresses dissatisfaction with an action
         or decision arising under the health insurance contracted, shall be
         promptly and properly handled and resolved through a routine complaint
         procedure to be implemented by the INSURER, after prior approval from
         the ADMINISTRATION. The INSURER shall be responsible for documenting
         in writing all aspects and details of said complaints.

3.       The routine complaint procedure which must be implemented by the
         INSURER must provide for (i) the availability of complaint forms to
         document oral complaints; (ii) for the proper handling of the
         complaints; and (iii) for the disposition by notice to the complainant
         of the action taken. This notice shall advise the complainant of the
         INSURER's official Grievance Procedure. The INSURER will submit to the
         ADMINISTRATION, on a monthly basis a written report detailing all
         grievances and routine complaints received, solved and pending
         solution and/or copies of the complaint forms with the notation of the
         action taken. All grievance files and complaint forms must be made
         available to the ADMINISTRATION for auditing. All grievance documents
         and related information shall be considered as containing individually
         identifiable health information, and shall be treated in accordance
         with the HIPAA regulations cited elsewhere.

4.       The Grievance Procedure shall assure the participation of persons with
         authority to require corrective action.

5.       The INSURER's Grievance Procedure shall contain all the necessary
         provisions that assure the affected parties right to due process of
         law. In the event that changes are made to the existing Grievance
         Procedure, a copy of the proposed changes will be made available to
         the ADMINISTRATION for approval prior to its implementation. A copy of
         the INSURER's Grievance Procedure is attached hereto as ADDENDUM III
         and incorporated as part of this contract. The INSURER acknowledges
         that the arbitration process contemplated in the Grievance Procedure
         shall not be applicable to disputes between the ADMINISTRATION and the
         INSURER.

6.       Pursuant to Law 72 of September 7, 1993, any decision issued by the
         INSURER is subject to appeal before the ADMINISTRATION. Such appeal
         shall be regulated by the ADMINISTRATION's regulations and the Uniform
         Administrative Procedure Act, Law 170 of August 12, 1988, as amended
         and as applicable,

                                      33
<PAGE>

         provided however, that subscribers grievances shall be expeditiously
         solved and that INSURER shall therefore fully cooperate with the
         prompt solutions of any such grievance.

7.       The decision issued by the ADMINISTRATION is subject to review before
         the Circuit Court of Appeals of the San Juan Panel of the Commonwealth
         of Puerto Rico.

8.       INSURER must have written policies and procedures for receiving,
         tracking, reviewing, and reporting and resolving of Beneficiaries
         complaints. The procedures, must be reviewed and approved in writing
         by THE ADMINISTRATION. Any changes or modifications to the procedures
         must be submitted to THE ADMINISTRATION for approval thirty (30) days
         prior to the effective date of the amendment.

9.       INSURER must designate an officer of INSURER who has primary
         responsibility for ensuring that complaints are resolved in compliance
         with written policy and within the time required. An "officer" of
         INSURER means a president, vice president, secretary, treasurer, or
         chairperson of the Board of Directors of a corporation, the sole
         proprietor, the managing general partner of a partnership, or a person
         having similar executive authority in the organization.

10.      INSURER must have a routine process to detect patterns of complaints
         and disenrollments and involve management and supervisory staff to
         develop policy and procedural improvements to address the complaints.
         INSURER must cooperate with THE ADMINISTRATION in beneficiaries'
         complaints relating to enrollment and disenrollment. INSURER's
         complaints procedures must be provided to beneficiaries in writing and
         in alternative communication formats. A written description of
         INSURER's complaints procedures must be in appropriate languages and
         easy for beneficiaries to understand. INSURER must include a written
         description in the beneficiaries Handbook. INSURER must maintain at
         least one local and one toll-free telephone number for making
         complaints.

11.      INSURER's process must require that every complaint received in
         person, by telephone or in writing, is recorded in a written record
         and is logged with the following details: date; identification of the
         individual filing the complaint; identification of the individual
         recording the complaint; nature of the complaint; disposition of the
         complaint; corrective action required; and date resolved.

12.      The INSURER Grievance Procedures must comply with the minimum
         standards for prompt resolution of grievances and time frames set
         forth in 45 CFR 438.400-424.

                                       34
<PAGE>

                                   ARTICLE XI
                           HEALTH CARE ORGANIZATIONS

1.       All Health Care Organizations (HCOs) shall have a sufficient number of
         primary care physicians as specified in Article VI to attend to the
         medical needs of the beneficiaries. All specialties specified in this
         section have to be available at each HCO. The following are considered
         primary care physicians (gatekeepers):

         a)       General Practitioners

         b)       Internists

         c)       Family Physicians

         d)       Pediatricians

         e)       Obstetricians and Gynecologists

2.       The INSURER shall have available and under contract a sufficient
         number of the following types of support participating providers to
         render services to all beneficiaries:

         a)       Optometrists

         b)       Podiatrists

         c)       Clinical laboratories- (The INSURER shall insure that all
                  laboratory testing sites providing services under this
                  contract have either a clinical laboratory improvement
                  amendment (CLIA) certificate with the registration and (CLIA)
                  identification number or a waiver certification).

         d)       Radiological facilities

         e)       Health Related Professionals

         f)       Hospitals

         g)       Pharmacies

         h)       All those participating providers that may be needed to
                  provide services under the basic, special and dental coverage
                  considering the specific health problems of an area/region.

         The INSURER may not discriminate with respect to participation,
         reimbursement or indemnification as to any provider who is acting
         within the scope of the provider's license or certification under
         applicable state law.

3.       The INSURER shall enter into adequate arrangements to provide its
         beneficiaries with the services provided for under the dental and
         pharmacy coverage, as contractually agreed to between the dentists and
         pharmacies and

                                       35
<PAGE>

         the INSURER. These arrangements will provide for an adequate number of
         dentists and pharmacies that guarantee the right to choose of the
         beneficiaries.

4.       The INSURER shall have available and under contract a sufficient
         number of the following types of support participating physicians to
         provide services to all beneficiaries:

         a)       Ophthalmologists

         b)       Radiologists

         c)       All those physicians that may be necessary and are available
                  considering the morbidity and mortality rates of the specific
                  health area/region, and those needed to provide all the
                  benefits contained in the Basic Coverage of the plan.

5.

6.       The physician/beneficiary ratio accepted is one (1) primary care
         physician for each eight hundred and fifty (850) beneficiaries; one
         (1) specialist (not primary care) for each one thousand one hundred
         (1,100) beneficiaries; and, one (1) physician (all) for each eight
         hundred (800) beneficiaries. These ratio does not take into account
         the expected mix between private patients and beneficiaries which
         could increase the physicians capacity to 1:1,700 for primary care
         physicians; 1:2,200 for specialists and 1:1,600 for all physicians. In
         the event that the HCOs provides services only to beneficiaries under
         this contract, the physician/beneficiary ratio will be the same to
         that applicable when there is a mix between private patients and
         beneficiaries.

7.       The INSURER shall not have, directly or indirectly, any conflict of
         interest through economic participation in any HCO, participating
         provider, its subsidiaries, or affiliates.

8.       The INSURER shall enforce upon each HCO strict quality assurance and
         utilization review programs as described in this contract, the
         Request for Proposals, the INSURER's proposal and its Operations
         Manual.

9.       The INSURER shall contract and have available all the participating
         providers required to provide to the beneficiaries, in a prompt and
         efficient manner, the benefits included in the Basic, Special and
         Dental Coverage as specified in ADDENDUM I of this contract.

10.      The INSURER agrees to enforce and assure compliance by the HCOs with
         all provisions contained in this contract.

11.      The INSURER will prepare, and provide to all HCOs, complete written
         instructions describing procedures to be used for the compliance with
         all duties and obligations arising under this contract. These
         instructions will cover at least

                                      36
<PAGE>

         the following topics: provider selection by beneficiaries, covered
         services, instructions and coordination of access to mental health
         services through the mental carve-out contractors, reporting
         requirements, record keeping requirements, grievance procedures,
         deductibles and co-payment amounts, confidentiality, and the
         prohibition against denial or rationing of services. A copy of these
         instructions will be submitted to the ADMINISTRATION, who reserves the
         right to request modifications or amendments to said instructions
         following consultation with the INSURER.

                                  ARTICLE XII
                              GUARANTEE OF PAYMENT

1.       The INSURER expressly guarantees payment for all medically necessary
         services rendered to beneficiaries by any and all participating
         providers.

2.       The insolvency, liquidation, bankruptcy or breach of contract of an
         HCO, or of a contracted participating provider does not release the
         INSURER from its obligation and guarantee to pay for all services
         rendered as authorized under this health insurance contract.

         The nature of INSURER's obligations to guarantee payment to all HCOs,
         providers or subcontractors for services rendered under this health
         insurance contract is solidary, subject to complying with whatever
         established claim proceedings require. As such, the INSURER will
         respond directly to the ADMINISTRATION as principal obligor to comply
         in its entirety with all the contract terms.

3.       In accordance with the payments rights guaranteed under paragraph (4)
         and (5), the provider shall claim direct payments due by a
         HCO/Contractor, to the INSURER. The INSURER shall deduct any amount
         payable directly to a provider from the capitation payments owed to an
         HCO or other contractor.

4.       The INSURER agrees to pay all monies due to the HCOs and/or
         participating providers according to the agreed payment schedule in
         the contracts with said parties. The INSURER represents as of the date
         of this contract that payment to HCO's, HCO's network of participating
         providers and INSURER's participating providers will be made no later
         than forty-five (45) days or as provided by legislation from the date
         that a full, complete and ready to process claim is received at the
         INSURER, when received within sixty (60) days of date of service. The
         INSURER expressly commits to implement all internal systems necessary
         to promptly pay its HCO's and providers all full, complete and ready
         to process claims within the term provided in this section, and to
         avoid unjustifiable delay in payment by submitting said claims to
         audits and evaluation of contested claims; said practice is expressly
         prohibited, and may result in the remedies set forth at Article XXXVI
         or termination as provided in Article XXXIII. A complete and

                                      37
<PAGE>

         ready to process claim (clean claim) is a claim received by the
         INSURER for adjudication, and which requires no further information,
         adjustment, or alteration by the provider of the services in order to
         be processed and paid by the INSURER.

5.       In the event that, following the receipt of the claim, the same is
         totally or partially contested by the INSURER or HCO, the
         participating provider shall be notified in writing within thirty (30)
         days that the claim is contested with the contested portion identified
         and provided the reasons thereof. Upon receipt of a new or
         supplemented claim, the INSURER or the HCO, shall pay or deny the
         contested claim or portion of the contested claim within thirty (30)
         days. Upon expiration of any of the aforementioned periods of time,
         the overdue payments shall bear interest at the prevailing rate for
         personal loans as determined by the Financial Board of the Office of
         the Commissioner of Financial Institutions.

6.       Checks for capitated payments to HCO's, HCO's network of participating
         providers and INSURER's participating providers are to be regularly
         issued by the INSURER on the 15th day of each month. The INSURER
         further represents that it has contracted with the HCO the payment of
         the corresponding capitation no later than the last day of the month
         to which said capitation corresponds.

7.       The INSURER agrees and warrants that it will be the central payor for
         all valid claims that will be generated throughout their contracted
         participating provider network for the health insurance contract for
         the Health Region/Area.

8.       All payments distribution within the capitated services will be made
         by INSURER. In the event that participating providers in their
         arrangements with the HCOs consent to the disbursement of the payment
         checks directly to the HCOs, the INSURER will assure and require the
         HCOs to provide on a monthly basis a schedule of the amount of the
         payments made to said participating providers. In any event, the
         INSURER will provide the ADMINISTRATION with a detailed monthly report
         listing by providers the monthly payment distribution. The claim for
         services rendered will be generated and forwarded by the participating
         providers directly to the INSURER. The claims submitted by the
         participating providers will comply with the requirements contained in
         Article XV, Sections four (4) and eight (8).

9.       The INSURER agrees and warrants that the method and system used to pay
         for the services rendered to and by the HCOs and all participating
         providers is reasonable and that the amount paid does not jeopardize
         or infringe upon the quality of the services provided.

10.      The guarantee of payment contained in this article will be reinforced
         through the establishment of different alternatives in order to insure
         that HCOs, HCO's participating providers and INSURER's participating
         providers are paid in full for

                                       38
<PAGE>

         contracted services in accordance with established budgets. Said
         alternatives will be submitted to the ADMINISTRATION for approval
         prior to its implementation.

11.      Inasmuch as the INSURER will be the central payor for all payments for
         valid claims for, services rendered by the HCOs, HCO's network of
         participating providers and INSURER's participating providers the
         INSURER agrees to incorporate in the contracts with the HCOs, and to
         require the HCOs to incorporate in their arrangements with their
         participating providers a provision whereby the INSURER is authorized
         to adjudicate and determine the validity of any claim or dispute
         between the HCO and its participating providers regarding a
         controversy surrounding the validity of the claims of services
         submitted by said participating provider. Said provision will assure
         that the HCO's network of participating providers payment for a valid
         claim for services is not improperly withheld and that in no event
         payment in this situation is made more than sixty (60) days from the
         date that the claim or dispute is received by the INSURER. It will be
         the INSURER's responsibility to verify the terms of the arrangements
         between the HCO and its network of participating providers, the
         rendering of the services, the reasonableness of the claim and that
         payment has not been made.

12.      The guarantee of payment and the representations as to the payment
         schedule to HCO's and participating providers will be enforceable and
         not set aside or altered in the event that the INSURER is notified of
         the expiration of the term of this contract or of its termination.

13.      The INSURER agrees to provide the ADMINISTRATION, on a monthly basis,
         and through electronic or magnetic media format, a detailed report
         containing all payments made to HCOs, to HCO's network of
         participating providers, and to the INSURER's participating providers
         during the month immediately preceding the report. Said report will
         also include a list of all claims received on account of those
         payments during the preceding month by the INSURER from the HCOs, the
         HCO's network of participating providers as well as a detail as to all
         claims received but not paid by reason of accounting or administrative
         objections. The INSURER further agrees to make available to the
         ADMINISTRATION for auditing purposes any and all records or financial
         data related to claims submitted but not paid by reason of accounting
         or administrative objections. The intention of this clause is for the
         ADMINISTRATION to be able to determine on a monthly basis the amount
         of money paid to each participating provider, the amount billed by and
         not paid to each participating provider and the reasons for
         non-payment in order to keep track of the regularity of payments of
         the Insurer and the HCOs and their compliance with this contract.

14.      The INSURER also agrees to provide to HCO's, on a monthly basis, and
         through electronic or machine readable media format, a detailed report
         classified by beneficiaries, by providers, by diagnosis, by procedure,
         by date of service and by its real cost of all payments made by the
         INSURER which entails a deduction

                                      39
<PAGE>

         from the gross monthly payment to said HCO's. Copy of said report will
         be made available to the ADMINISTRATION each month.

15.      Each HCO must report each encounter to the INSURER on a monthly basis
         classified by each participating provider within the HCO, as well as
         the real cost of the services of each encounter of service. The
         INSURER must submit to the ADMINISTRATION the distribution of the
         capitation within each HCO as established on the Actuarial Reports
         formats required in the RFP.

16.      The INSURER will abide with the ADMINISTRATION efforts to implement
         cost reduction measures and the future implementation payments methods
         based on fee schedules or diagnosis related groups that may be
         established.

                                  ARTICLE XIII
                    UTILIZATION REVIEW AND QUALITY ASSURANCE

1.       The INSURER will establish a Quality of Care Program with the
         following guidelines:

         a)       PHYSICIAN-CREDENTIALING: The INSURER shall follow strict
                  provider screening procedures before contracting. In order to
                  assure quality health services for the medically indigent,
                  the INSURER will follow stringent physician selection and
                  credentialing process for this plan as per the INSURER's
                  Proposal. The ADMINISTRATION may review participating
                  providers credentials at any time and submit its findings to
                  the INSURER for consideration by the INSURER if necessary.
                  The INSURER shall notify the ADMINISTRATION quarterly of all
                  accepted and non-accepted providers.

         b)       PROVIDER CONTRACTING: The INSURER will assure that all
                  hospitals facilities, doctors, dentists, and all health care
                  providers are appropriately licensed and in good standing
                  with all their governing bodies and accrediting agencies and
                  meet all practice requirements established by law, the
                  Department of Health, the ADMINISTRATION and other governing
                  agencies, as described in the INSURER's Proposal. The
                  ADMINISTRATION may review participating provider credentials
                  at any time and submit its findings to the INSURER for
                  consideration by the INSURER if necessary. The INSURER shall
                  notify the ADMINISTRATION quarterly of all accepted and
                  non-accepted providers.

         c)       INSPECTION OF ALL FACILITIES: The INSURER will insure that
                  all providers' physical facilities are safe, sanitary and
                  follow sound operating procedures, as described in the
                  INSURER's Proposal and that all laboratory testing site
                  providing services under this contract have their

                                       40
<PAGE>

                  duly CILIA certification along with their identification
                  number or waiver certificate. The ADMINISTRATION may review
                  participating provider facilities at any time and submit its
                  findings to the INSURER for consideration by the INSURER if
                  necessary. The INSURER shall notify the ADMINISTRATION
                  quarterly of all inspections done.

         d)       MEDICAL RECORD REVIEW: The INSURER will establish a program
                  to monitor the appropriateness of care being provided, the
                  adequacy and consistency of record keeping, and completeness
                  of records, as described in the INSURER's Proposal. The
                  INSURER shall notify the ADMINISTRATION on a quarterly basis
                  of all findings in the Medical Record Review Program. The
                  ADMINISTRATION may review and/or audit Program records and
                  reports at any time.

         e)       CLINICAL DATABASE SYSTEM: The HCOs will provide the INSURER
                  with statistical records of utilization of medical services
                  by beneficiaries, as described in the INSURER's Proposal. The
                  INSURER shall notify the ADMINISTRATION on a quarterly basis
                  of all findings in the Clinical Database System. The
                  ADMINISTRATION may review and/or audit the Clinical Database
                  System records and reports at any time.

         f)       RETROSPECTIVE REVIEW: The INSURER will establish a
                  Retrospective review Program that will address quality and
                  utilization problems that may arise, as described in the
                  INSURER's Proposal. The INSURER shall notify the
                  ADMINISTRATION on a quarterly basis of all findings in the
                  Retrospective Review Program. The ADMINISTRATION may review
                  and/or audit the program findings at any time.

         g)       OUTCOME REVIEW: The INSURER will establish an Outcome Review
                  Program to assess the quality of inpatient and ambulatory
                  care management provided by the primary health care
                  providers, as described in the INSURER's Proposal. The
                  INSURER shall notify the ADMINISTRATION on a quarterly basis
                  of all findings in the Outcome Review Program. The
                  ADMINISTRATION may review and/or audit the program findings
                  at any time.

         h)       QUALITY OF CARE COMMITTEE: The INSURER will establish a
                  Quality of Care Committee to insure provider's compliance
                  with the INSURER's quality of care program, as described in
                  the INSURER's Proposal. The INSURER shall submit a report to
                  the ADMINISTRATION on a quarterly basis of all findings in
                  the Quality of Care Committee. The ADMINISTRATION may review
                  and/or audit the program findings and reports at any time.

2.       The INSURER will establish cost containment and utilization review
         programs as follows:

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<PAGE>

         a)       HOSPITAL ADMISSION AND STAY REVIEW: The INSURER will
                  establish programs to reduce unnecessary hospital use and
                  to review hospital admissions through the following programs,
                  as described in the INSURER's Proposal:

                  (1)      CONCURRENT REVIEW: The INSURER will establish a
                           program to review hospital admissions to guarantee
                           adequacy and duration of stay.

                  (2)      RETROSPECTIVE REVIEW: The INSURER will establish a
                           program to determine medical necessity and service
                           adequacy after the service has been rendered or
                           paid to providers or physicians.

                  (3)      PROSPECTIVE REVIEW: The INSURER will establish a
                           program to determine appropriate lengths of stay at
                           the hospital prior to admission for elective or
                           non-emergency hospitalizations.

         b)       UTILIZATION REVIEW PROGRAM: The INSURER will establish a
                  program to identify patterns of medical practice and their
                  effect in the care being provided, as described in the
                  INSURER's Proposal, and through the following:

                  (1)      PRE-PAYMENT REVIEW: The INSURER will establish a
                           program to prevent inappropriate billing of services
                           prior to claims payment and to evaluate questionable
                           practices, problematic coding, inappropriate level
                           of care, excessive tests and services.

                  (2)      POST PAYMENT REVIEW: The INSURER will establish a
                           program to review service claims for purposes of
                           creating a provider profiling system.

                  The INSURER shall submit a report to the ADMINISTRATION on a
                  quarterly basis of all findings under the Utilization Review
                  Programs. The ADMINISTRATION may review and/or audit the
                  programs' findings and reports at any time.

         c)       SECOND SURGICAL OPINION: The INSURER will establish a program
                  to allow beneficiaries to obtain a second surgical opinion
                  for elective surgical procedures on a voluntary basis, as
                  described in the INSURER's Proposal.

         d)       INDIVIDUAL CASE MANAGEMENT PROGRAM: The INSURER will
                  establish a program to identify and manage cases that involve
                  high health care costs, as described in the INSURER's
                  Proposal. The INSURER shall

                                       42
<PAGE>

                  submit a report to the ADMINISTRATION on a quarterly basis of
                  all findings in the Individual Case Management Program. The
                  ADMINISTRATION may review and/or audit the program findings
                  and reports at any time.

         e)

         f)       FRAUD AND ABUSE: The INSURER will establish a program to
                  assure reasonable levels of utilization and quality of care,
                  as described in the INSURER's Proposal. The INSURER shall
                  submit a report to the ADMINISTRATION on a quarterly basis of
                  all findings in the Fraud and Abuse Program. The Fraud and
                  Abuse Reports must include:

                           (1)      the number of complaints of fraud and abuse
                           made to the Commonwealth that warrant a preliminary
                           investigation, and,

                           (2)      for each case of suspected fraud and abuse
                           warranting a full investigation, the INSURER must
                           report the following information:

                                    (i)      the provider's name and number;

                                    (ii)     the source of the complaint;

                                    (iii)    the type of provider;

                                    (iv)     the nature of the complaint;

                                    (v)      the approximate range of dollars
                                             involved, and,

                                    (vi)     the legal and administrative
                                             disposition or status of the case.

         g)       COORDINATION OF BENEFITS PROGRAM: The INSURER will establish
                  a program to identify beneficiaries with other insurance in
                  order to coordinate health insurance benefits from other
                  carriers, as described in the INSURER's Proposal. The INSURER
                  shall submit a report to the ADMINISTRATION on a quarterly
                  basis of all findings in the Coordination of Benefits
                  Program. The ADMINISTRATION may review and/or audit the
                  program findings and reports at any time.

3.       DENTAL SERVICES UTILIZATION REVIEW PROGRAM: The INSURER agrees to
         maintain a program to determine that the services provided to
         beneficiaries are in accordance to established quality parameters by
         the dental community as provided for in the INSURER's Proposal. The
         INSURER shall notify the ADMINISTRATION quarterly of all findings of
         said review program. The ADMINISTRATION may review and/or audit the
         program findings at any time.

4.       EPSDT AND MIGRANT SERVICES PROGRAM: The INSURER will implement a
         program that addresses EPSDT screening and Migrant services indicators
         for preventive diagnostic tests according to age in all areas/regions
         and shall notify the ADMINISTRATION on a monthly basis all findings of
         said program.

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         INSURER assures the compliance with Section 1905(r) of the Social
         Security Act and the applicable protocols adopted by the Department of
         Health for the implementation of these Programs.

5.       The INSURER shall continue to submit the ADMINISTRATION on a monthly
         basis a report that includes all services rendered by diagnosis and
         procedures identified by all specialties, by place of service
         including those under dental coverage, and procedures in laboratories
         and X-rays. It will be reported beginning with the most common
         diagnosis and procedures until reaching the least common. The INSURER
         shall be required to provide the ADMINISTRATION on a monthly basis
         data in and electronic form that includes all of the specified fields
         and elements described in ADDENDUM IV, whenever said reporting system
         can be implemented.

6.       All services rendered shall be identified by Current Procedure
         Terminology, International Classification of Diseases, Clinical
         Modifications Diagnostic Statistic Manual and American Dental
         Association's Current Dental Terminology, as applicable.

7.       The ADMINISTRATION and the INSURER will agree on the required format
         in order to comply with the reporting requirements in this section and
         which will be accomplished through electronic or magnetic media.

8.       All the required programs, processes and reports heretofore referred
         to, will also be an obligation on the part of the INSURER's
         participating providers, HCOs and HCO's participating providers. The
         INSURER will assure compliance therewith on the part of said INSURER's
         participating providers, HCOs and HCO's participating providers.

9.       The ADMINISTRATION reserves the right to require the INSURER to
         implement additional specific cost and utilization controls, subject
         to prior consultation and cost negotiation with the INSURER if
         necessary.

                                  ARTICLE XIV
                            COMPLIANCE AND AGREEMENT
                           FOR INSPECTION OF RECORDS

1.       Since funds from the Commonwealth Plan under Title XIX of the Social
         Security Act Medical Assistance Program (Medicaid) as well as from
         Title V of the Social Security Act and Mental Health Block Grants are
         used to finance this project in part the INSURER shall agree to comply
         with the requirements and conditions of the Center of Medicare and
         Medicaid Services (CMS), the Comptroller General of the United States,
         the Comptroller of Puerto Rico and this ADMINISTRATION, as to the
         maintenance of records related to this contract and audit rights
         thereof, as well as all other legal obligations attendant thereto,
         including, but not limited

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<PAGE>

         to, non-discrimination, coverage benefit eligibility as provided by
         the Puerto Rico State Plan and Law 72 of 1993, anti-fraud and
         anti-kickback laws, and those terms and provisions of the SSA as
         applicable. All disclosure obligations and access requirements set
         forth in this Article or any other Article shall be subject at all
         times and to the extent mandated by law and regulation, to the HIPAA
         regulations described elsewhere in this agreement.

2.       The INSURER shall require from the HCO's and all participating
         providers that they maintain an appropriate record system for services
         rendered to beneficiaries, including separate medical files and
         records for each beneficiary as is necessary to record all clinical
         information pertaining to said beneficiaries, including notations of
         personal contacts, primary care visits, diagnostic studies and all
         other services. The INSURER shall also maintain records to document
         fiscal activities and expenditures relating to compliance under this
         agreement. The INSURER and all participating providers shall preserve,
         and retain in readily accessible form, the records mentioned herein
         during the term of this contract and for the period of six (6) years
         thereafter.

3.       At all times during the term of this contract and for a period of six
         (6) years thereafter, the INSURER and all participating providers will
         provide the ADMINISTRATION, CMS, the Comptroller of Puerto Rico, the
         Comptroller General of the United States of America and/or their
         authorized representatives, access to all records relating to the
         INSURER's compliance under this contract for the purpose of
         examination, audit or copying of such records. The audits of such
         records include examination and review of the sources and applications
         of funds under this contract. The INSURER shall also furnish access to
         and permit inspection and audit by the ADMINISTRATION, CMS, the
         Comptroller of Puerto Rico, the Comptroller General of the United
         States of America and/or their authorized representatives to any
         financial records relating to the capacity of the INSURER or its HCOs,
         if relevant, to bear the risk of potential financial losses.

4.       The INSURER shall ensure that the HCO's. and all participating
         providers and their subcontractors furnish to the Peer Review
         Organization (PRO) or to the ADMINISTRATION on-site access to, or
         copies of patient care records as needed to evaluate quality of care.

5.       The ADMINISTRATION and CMS shall have the right to inspect, evaluate,
         copy and audit any pertinent books, documents, papers and records of
         the INSURER related to this contract and those of any HCO or
         participating provider in order to evaluate the services performed,
         determination of amounts payable, reconciliation of benefits,
         liabilities and compliance with this contract.

6.       The INSURER shall provide for the review of services (including both
         in-patient and out-patient services) covered by the plan for the
         purpose of determining whether such services meet professional
         recognized standards of health care, including whether appropriate
         services have not been provided or have been

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<PAGE>

                  provided in inappropriate settings. It shall also provide for
                  review, by random sampling, by the ADMINISTRATION, of written
                  complaints, and the results thereof, filed by beneficiaries
                  or their representatives as to the quality of services
                  provided.

7.       The INSURER agrees that the ADMINISTRATION and CMS may conduct
         inspections and evaluations, at all reasonable times, through on-site
         audits, systems tests, assessments, performance review and regular
         reports to assure the quality, appropriateness, timeliness and cost of
         services furnished to the beneficiaries.

8.       The ADMINISTRATION and CMS shall have the right to inspect all of the
         INSURER's financial records related to this contract, that may be
         necessary to assure that the ADMINISTRATION pays no more than its fair
         share of general overhead costs as contracted. The ADMINISTRATION and
         CMS shall have the right to inspect all the HCOs' financial records
         related to this contract.

9.       The INSURER agrees that the ADMINISTRATION may evaluate, through
         inspection or other means, the facilities of the INSURER's
         participating providers, HCO's and its participating providers. All
         facilities shall comply with the applicable licensing and
         certification requirements as established by regulations of the
         Department of Health of Puerto Rico. It shall be the INSURER
         responsibility to take all necessary measures to ascertain that all
         facilities contracting with INSURER comply with the required licensing
         and certification regulations of the Puerto Rico Health Department,
         and to terminate the contract of any facility not in compliance with
         said provisions.

         Failure to adequately monitor the licensing and certification of the
         facilities may result in the termination of this contract as provided
         in Article XXXIII.

10.      The INSURER agrees and also will require all HCOs and participating
         providers to agree that the ADMINISTRATION's right to inspect,
         evaluate, copy and audit, will survive the termination of this contract
         for a period of six (6) years from said termination date unless:

         a)       The ADMINISTRATION determines there is a special need to
                  retain a particular record or group of records for a longer
                  period and notifies the INSURER at least thirty (30) days
                  before the normal disposition date;

         b)       There has been a termination, dispute, fraud, or similar
                  fault by the INSURER, in which case the retention may be
                  extended to three (3) years from the date of any resulting
                  final settlement; or

         c)       The ADMINISTRATION determines that there is a reasonable
                  possibility of fraud, in which case it may reopen a final
                  settlement at any time;

         d)       There has been an audit intervention by CMS, the office of
                  the Comptroller of Puerto Rico, the Comptroller General of
                  the United States or the

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<PAGE>
                  ADMINISTRATION, in which case the retention may be extended
                  until the conclusion of the audit and publication of the final
                  report.

11.      The INSURER agrees to require all HCO's and participating providers to
         permit the ADMINISTRATION to review and audit all aspects related to
         quality, appropriateness, timeliness and cost of services rendered, and
         to demonstrate that the services for which payment was made were
         actually provided.

                                   ARTICLE XV
                             INFORMATION SYSTEMS AND
                             REPORTING REQUIREMENTS

1.       The INSURER agrees to comply with the reporting and information systems
         requirements as provided for in the Request for Proposals and the
         Proposal submitted by the INSURER. Accordingly the INSURER must submit
         to the ADMINISTRATION a detailed Systems Requirements Inventory Report
         which details the following:

         a)       Plan's compliance with each information system requirement:
         b)       action plan of INSURER's response to the requirements;
         c)       actual date that each system requirement will be completely
                  operational, not to exceed the effective date of coverage
                  under this contract.

2.       The INSURER agrees to submit to the ADMINISTRATION the System Inventory
         Report for final approval not later than the date of the signing of
         this contract.

3.       All Management Information Systems Requirements included in the Request
         for Proposal and those included in the INSURER's Proposal must commence
         implementation as of the date of the signing of this contract and shall
         be fully operational as of the first day of coverage under this
         contract. Material non compliance with this requirement shall be enough
         reason to cancel the contract herein, with prior written notification
         by the ADMINISTRATION to the INSURER according to the time set in
         Article XXXIII.

4.       The INSURER shall be responsible for the data collection and other
         statistics of all services provided including, but not limited, to
         encounter and real cost of each one, claims services and any other
         pertinent data from all HCOs, participating providers or any other
         entity which provide services to beneficiaries under the program, said
         data to be classified by provider, by beneficiary, by diagnosis, by
         procedure and by the date the service is rendered. The data collected
         must then be forwarded to the ADMINISTRATION on a monthly basis in an
         electronic or on machine readable media format. The data fields and
         specific data elements required to be transmitted are contained in the
         RFP's Record of Service File Layout format. The ADMINISTRATION reserves
         the right to modify, expand or delete the requirements contained
         therein or issue new requirements, subject to

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<PAGE>

         consultation with the INSURER and cost negotiation, if necessary.
         Failure to comply with the requirements contained herein will be
         sufficient cause for the imposition against the INSURER of the penalty
         provided for in Article XXXVI of this contract.

5.       The INSURER agrees that all required data and information needs to be
         collected and reported through electronic or machine readable media
         commencing with the effective date of coverage of this contract.

6.       The information systems of all HCOs shall be compatible with the
         systems in use at all by INSURER.

7.       The INSURER shall supply to the HCOs and, upon request, to all
         participating providers with eligibility information on a daily basis.
         Said information shall be secured through on-line access with the
         INSURER.

8.       The INSURER agrees to submit to the ADMINISTRATION within twenty-five
         (25) days of the closing of each month, in such form and detail as
         indicated in the Record of Service File Layout format and any other
         formats the ADMINISTRATION requires in the RFP, the following
         information:

         a)       Data pertaining to health insurance claims, and encounter for
                  all services provided to beneficiaries.
         b)       Statistical data on providers, medical services and any other
                  services;
         c)       Enrollment database;
         d)       Any and all data and information as required in the Request
                  for Proposals and in the Proposal submitted;

         e)       Any other reports or data that the ADMINISTRATION may require
                  after consultation with the INSURER and cost negotiation, if
                  necessary.

         Failure to comply with the requirements contained herein will be
         sufficient cause for the imposition against the INSURER of the penalty
         provided for in Article XXXVI of this contract.

9.       The INSURER agrees to provide to the ADMINISTRATION, on a regular
         basis-as needed, any and all data, information, reports, and
         documentation that will permit Governmental Agencies, the compilation
         of statistical data to substantiate the need for, and the appropriate
         use of federal funds for federally financed health programs.

10.      The INSURER agrees to report to the ADMINISTRATION on a daily basis all
         information pertaining to enrollment, disenrollment, and other
         subscriber or beneficiary transactions as required by the
         ADMINISTRATION. All records shall be transmitted: 1) through approved
         ADMINISTRATION systems contractor; or 2) over data transmission lines
         directly to the ADMINISTRATION; or 3) on machine readable media. All
         machine readable media or electronic

                                       48
<PAGE>

         transmissions shall be consistent with the relevant ADMINISTRATION's
         record layouts and specifications.

11.      The INSURER will submit to the ADMINISTRATION on a monthly basis
         reports and data generated electronically that allows the
         ADMINISTRATION:

         a.       Evaluation of the effectiveness of the delivery of services by
                  providers and the adequacy of these services.
         b.       Monitoring and evaluation of the efficiency and propriety of
                  the services that are being received by the beneficiaries and
                  their dependents.
         c.       Comparison of experience with that of other providers.
         d.       Comparison of the utilization of health care and the cost
                  tendencies within the community and the group that renders
                  service.
         e.       Demonstration of how the quality of care is being improved for
                  the insured and their dependents.
         f.       Comparison of the administrative measures taken by the INSURER
                  with reference points to be able to evaluate the progress
                  towards constant improvement.
         g.       Compliance with the information requirements and reports of
                  the Federal Programs such as: Title II of the Health Insurance
                  Portability and Accountability Act; Title IV-B Part 1 and 2,
                  Title IV-E, Title V, Title XIX, Title and Title XXI of the
                  Social Security Act; the applicable state laws as( the Child
                  Abuse Act, "Ley de Maltrato de Menores" Public Law 75 of May
                  28,1980; the Protection and Assistance to Victims and Witness
                  Act, "Ley de Proteccion y Asistencia a Victimas de Delitos y
                  Testigos", Public Law 77 of July 9,1986), and any other
                  information requirements which in the future are mandated by
                  federal and state programs.
         h.       Evaluation of each service provided with separate
                  identification by beneficiary, by provider, by diagnosis, by
                  diagnostic code, by procedure code and by date and place of
                  service. The provider must be identified by his/her provider's
                  identification number or his/her social security account
                  number.

         These reporting requirements will be discontinued when the new
         reporting system contained in ADDENDUM IV is implemented. Failure to
         comply with the requirements contained herein will be sufficient cause
         for the imposition against the INSURER of the penalty provided for in
         Article XXXVI of this contract.

12.      The INSURER will provide the ADMINISTRATION with a uniform system for
         data collection.

13.      The INSURER'S Information Systems must provide a continuous flow of
         information to measure the quality of services rendered to the
         beneficiaries and their dependents. The purpose of these systems must
         be to help the ADMINISTRATION and the INSURER in the process of
         achieving continuous

                                       49
<PAGE>

         improvement in the quality of services rendered to beneficiaries and
         their dependents within a cost effective system.

14.      The INSURER will prepare the necessary reports requested herein for the
         administration of the health insurance contract. Daily reports are due
         by the end of the following business day. Weekly reports are due on the
         first business day of the following week. Monthly reports are due
         twenty-five (25) days after the end of each month. Quarterly reports
         are due thirty (30) days after the end of each quarter.

15.      The INSURER must inform to the Administration on a monthly basis all
         cancellation and disenrollment of providers.

16.      The INSURER must provide the ADMINISTRATION on a monthly basis with the
         updated version of the Providers Directory.

17.      The INSURER will coordinate the enrollment of beneficiaries.

18.      The INSURER will assure adequate and efficient functioning for the term
         of the contract that includes an insurance against economic loss due to
         system failure or data loss.

19.      As an additional measure to guarantee quality and adequacy of the
         medical health services, the INSURER will conduct periodical statistics
         analysis of the medical services rendered to the beneficiaries and
         will compare them with the primary physician practice profile of their
         regular health insurance plan. Quarterly reports as to the analysis and
         comparison statistics will be submitted to the ADMINISTRATION.

20.      In order to insure that all subscriber encounters are registered and
         recorded, the INSURER will conduct audits of statistical samples and
         unannounced personal audits of the HCOs and participating provider's
         facilities to assure that the medical records reconcile with the
         encounter reported, and corrective measures will be taken in case of
         any violation of the INSURER's regulations regarding the registration
         and reporting of encounters. The INSURER will provide quarterly reports
         to the ADMINISTRATION covering all the findings and corrective
         measures, if any, taken regarding any violation of said regulations.

21.      The INSURER, as a minimum must guarantee the following:

         a.       The security and integrity of the information and
                  communication systems through:
                  1.       Regular Backups on a daily basis
                  2.       Controlled Access to the physical plant
                  3.       Control logical access to information systems.
                  4.       Verification of the accuracy of the data and
                           information

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<PAGE>

         b.       The continuity of services through:
                  1.       Regular maintenance of the systems, programs and
                           equipment
                  2.       A staff of duly trained personnel
                  3.       An established and proven system of Disaster Recovery
                  4.       Cost Effective systems.

         c.       Identification of the beneficiary via the use of plastic
                  cards.
         d.       Automated system of communication with statistics of the
                  management of calls (Occurrence of busy lines, etc.)

         f.       A comprehensive health insurance claim processing system to
                  handle receiving process and payment of claims and encounters.

         g.       Analysis/Control of utilization (The INSURER must provide said
                  analysis to the ADMINISTRATION on a monthly basis in the
                  format outlined by the ADMINISTRATION):
                  1.       by patient/family
                  2.       by region, area/region town, (zip code)
                  3.       by provider (provider's identification number or
                           social security account numbers)
                  4.       by diagnosis
                  5.       by procedure or service
                  6.       by date of service

         Failure to comply with the requirements contained herein will be
         sufficient cause for the imposition against the INSURER of the penalty
         provided for in Article XXXVI of this contract.

         j.       Financial and Actuarial reports
         k.       System of Control and claims payment that includes payment
                  history.
         l.       Computerized pharmacy system that permits its integration to
                  the payment procedures to the providers.
         m.       Outcome Analysis
         n.       Electronic creation of data files related to mortality,
                  morbidity, and vital statistics.
         o.       Integration to central systems
                           1.       Procedures and communications Protocol
                                    Compatibility;
                           2.       Ability to transmit reports, and or files
                                    via electronic means.
         p.       Electronic Handling of:

                  1.       The process of Admission to hospitals and ambulatory
                           services
                  2.       Verification of eligibility and subscription to the
                           plan.
                  3.       Verification of benefits
                  4.       Verification of Financial information (Deductibles,
                           Co-payments, etc.)

                                       51
<PAGE>

                  5.       Verification of individual demographic data
                  6.       Coordination of Benefits.

         q.       Computerized applications for general accounting.
         r.       As to HCOs and all Participating Providers the information
                  system shall provide for:

                  1.       On line access to service history for each
                           beneficiary.
                  2.       Register of diagnosis and procedures for each service
                           rendered.
                  3.       Complete demography on line, including the aspect of
                           coverage and financial responsibility of the patient.
                  4.       Individual and family transactions
                  5.       Annotations on line (General notes such as allergies,
                           reminders or other clinical aspects (free form)
                  6.       Analysis of activity by:

                           a.       department
                           b.       provider
                           c.       diagnosis
                           d.       procedures
                           e.       age
                           f.       sex
                           g.       origin
                           h.       others, as mutually agreed upon.

                  7.       Diagnosis history by patient with multiple codes per
                           service.
                  8.       AD Hoc Reports
                  9.       Referrals Control
                  10.      Electronic Billing
                  11.      Pharmacy system
                  12:      Dental system
                  13.      Ability to handle requirements of the Medicare
                           programs such as RBRVS (Relative Base Relative Value
                           System).
                  14.      Ability to collect data as to the quarter in which
                           the pregnant female beneficiary commences her ob-gyn
                           treatment. The format for. the collection of this
                           data shall be approved by the ADMINISTRATION prior to
                           its implementation.

22.      The INSURER agrees to report all procedure and diagnostic information
         using the current versions of Current Procedural Terminology,
         International Classification of Diseases, Clinical Modification,
         Diagnostic Statistic Manual and American Dental Association's Current
         Dental Terminology, respectively. This does not prevent the adoption by
         INSURER of the ANSI X-12 electronic transactions for standards set
         forth in the HIPAA regulations; which shall be implemented on or before
         October 2002, unless modified by DHHS.

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<PAGE>

23.      Non compliance with any of the Information Systems and Reporting
         Requirements; with any requirements related to the electronic standards
         transactions to be implemented within the schedule set forth by the
         HIPAA regulations, or with other requirements contained herein, shall
         be subject to the provisions of Articles XXXIII and XXXVI of this
         contract, as well as to Article IV, Section 2(n) of Law 72 of September
         7, 1993, which provides the right of the ADMINISTRATION to enforce
         compliance through the Circuit Court of Appeal Puerto Rico, Part of San
         Juan.

24.      The INSURER shall provide the ADMINISTRATION with one or more telephone
         numbers of dial-in data lines, and a minimum of three user's ID's and
         passwords that will allow the ADMINISTRATION's authorized personnel
         access to the INSURER's on-line computer applications, Such access will
         allow the ADMINISTRATION use of the same systems and access to the same
         information as used by the INSURER and enable the inquiry on
         beneficiaries, providers, and statistics files related to this
         contract.

25.      As per the INSURER's proposal, INSURER shall provide to each HCOs, HCO
         s network of participating providers and INSURER's participating
         providers in the Health Area/Region, as well as to those outside of the
         area/region who provide services to beneficiaries from within the
         area/region, the necessary hardware and software to maintain on-line
         communication with the INSURER's Information System to document all
         encounters and services rendered to beneficiaries. Said hardware and
         software will be provided at a reasonable cost for the implementation
         and servicing.

26.      The INSURER agrees to submit to the ADMINISTRATION reports as to the
         data and information gathered through the use of the Health Plan
         Employer Data and Information Set (HEDIS) and the work plan required in
         the RFP formats, as per Article XVII, Section VII.

27.      The INSURER must disclose to the ADMINISTRATION the following
         information on provider incentive plans in sufficient detail to
         determine whether their incentive plan complies with the regulatory
         requirements set forth on 42 CFR 434.70(a) and 422.10:

         a)       Whether services not furnished by the physician or physician
                  group are covered by the incentive plan. If only the services
                  furnished by the physician or physician group are covered by
                  the incentive plan, disclosure of other aspects of the plan
                  need not be made.
         b)       The type of incentive arrangement (i.e., withhold, bonus,
                  capitation).
         c)       A determination on the percent of payment under the contract
                  that is based on the use of referral services. If the
                  incentive plan involves a withholding or bonus, the percent of
                  the withholding of bonus. If the calculated amount is 25% or
                  less, disclosure of the remaining elements in this list is not
                  required and there is no substantial risk.

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         d)       Proof that the physician or physician group has adequate
                  stop-loss protection, including the amount and type of
                  stop-loss protection.
         e)       The panel size and; if patients are pooled, the method used.
         f)       In the case of those prepaid plans that are required to
                  conduct beneficiary surveys, the survey's results.

The information items (a) through (e) above, must be disclosed to the
ADMINISTRATION: (1) prior to approval of its initial contracts or agreements,
upon the contract or agreements anniversary or renewal effective date or upon
request by the Administration or CMS. The disclosure item (f) is due 3 months
after the end of the contract year or upon request by CMS.

If the contract with the INSURER is an initial Medicaid contract, but the
INSURER has operated previously in the commercial or Medicare markets,
information on physician incentive plans for the year preceding the initial
contract period must be disclosed. If the contract is an initial contract with
INSURER, but the INSURER has not operated previously in the commercial or
Medicare markets, the INSURER should provide assurance that the provider
agreements that they sign will meet CMS and Commonwealth requirements (i.e.
there is no Physician Incentive Plan (PIP); there is a PIP but no Substantial
Financial Risk (SFR); there is a PIP and SFR so stop-loss and survey
requirements will be met). For contracts being renewed or extended, the INSURER
must provide PIP disclosure information for the prior contracting period's
contracts.

The INSURER must update PIP disclosures annually and must disclose to
administration whether PIP arrangements have changed from the previous year.
Where arrangements have not changed, a written assurance that there has not been
a change is sufficient. This also applies when INSURER analyze the PIP
arrangements in their direct and downstream contracts to determine which
disclosure items are due from their contractors. INSURER is expected to maintain
the current written assurances and the prior periods' documentation so that the
materials are available during on-site reviews.

28.      INSURER TELEPHONE ACCESS REQUIREMENTS

         INSURER must have adequately-staffed telephone lines available.
         Telephone personnel must receive customer service telephone training.
         INSURER must ensure that telephone staffing is adequate to fulfill the
         standards of promptness and quality listed below:

         1.       80% of all telephone calls must be answered within an average
                  of 30 seconds;
         2.       The lost (abandonment) rate must not exceed 5%;
         3.       INSURER cannot impose maximum call duration limits but must
                  allow calls to be of sufficient length to ensure adequate
                  information is provided to the Beneficiaries or Provider.

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29.      The INSURER shall abide with the present Information Systems and
         Reporting Requirements established and shall cooperate with the
         Administration's Proposed Plans to implement new and revised
         requirement as set forth in ADDENDUM IV.

                                   ARTICLE XVI
                             FINANCIAL REQUIREMENTS

1.       The INSURER shall notify the ADMINISTRATION of any loans and other
         special financial arrangements which are made between the INSURER and
         any HCO's or participating provider or related parties. Any such loans
         shall strictly conform with the legal requirements of the anti-fraud
         and anti-kickback laws and regulations.

2.       The INSURER shall provide to the ADMINISTRATION copies of audited
         financial statements following Generally Accepted Accounting Principles
         (GAAP) and of the report to the Insurance Commissioner in the format
         agreed to by the National ASSOCIATION of Insurance Commissioners
         (NAIC), for the year ending on December 31, 2000, and subsequently
         thereafter for the contract term not later than March 15 of each
         subsequent year. Unaudited GAAP financial statements for each quarter
         during the contract term shall be presented to the ADMINISTRATION not
         later than forty five (45) days after the closing of each quarter.

3.       The INSURER will maintain adequate procedures and controls to insure
         that any payments pursuant to this contract are properly made. In
         establishing and maintaining such procedures the INSURER will provide
         for separation of the functions of certification and disbursement.

4.       The INSURER is required to establish a cash reserve, in accordance with
         the Insurance Code of Puerto Rico, to insure that outstanding claims
         can be satisfied in the event of insolvency.

5.       The INSURER agrees to provide to the ADMINISTRATION, upon the
         expiration of each period of twelve (12) consecutive months of the
         contract year, and not later than ninety (90) days thereafter, audited
         financial statements following Generally Accepted Accounting Principles
         (GAAP) which exclusively present the operational financial situation
         related to the execution of this contract. The ADMINISTRATION reserves
         the right to request interim audited financial statements not to exceed
         two (2) during the contract term.

6.       The INSURER agrees to provide and make available to the ADMINISTRATION
         or any accounting firm contracted by the ADMINISTRATION any and all
         working papers of its external auditors related to this contract.

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                                  ARTICLE XVII
                       PLAN COMPLIANCE EVALUATION PROGRAM

1.       The ADMINISTRATION shall conduct periodical evaluations of the
         INSURER's compliance with all terms and conditions of this contract
         including, but not limited to, quality, appropriateness, timeliness and
         reasonableness of cost and administrative expenses, said evaluation to
         be defined as the Plan Compliance Evaluation Program.

2.       Said program will evaluate compliance of the following aspects in each
         areas/regions:

         a)       Eligibility and enrollment
         b)       Services to beneficiaries and participating providers
         c)       Coverage of benefits
         d)       Reporting
         e)       Financial requirements
         f)       Rules and Regulations
         g)       Plan initiatives
         h)       Quality, appropriateness, timeliness and cost of services
         i)       Utilization
         j)       Fraud and abuse
         k)       Accessibility
         l)       Grievances and Complaint handling
         m)       Information Systems
         n)       Electronic standards, security and privacy compliance as
                  provided by HIPAA to include review of timetables for
                  compliance and implementation plans
         o)       Such aspects which the ADMINISTRATION considers necessary in
                  order to evaluate full compliance with this contract.

3.       The evaluation process will be performed throughout the contract year
         using specific evaluating parameters. All parameters will be derived
         exclusively from the Request for Proposals, the INSURER's Proposal and
         this contract. Each area/region will contain several parameters with
         each parameter having a specific numeric value adding up a subtotal per
         area/region and a total for the aggregate of all area/regions of
         evaluation. Results will be presented in a Plan Compliance Evaluation
         Report. The evaluating parameters will be presented to the INSURER
         prior to commencement of the evaluation process.

4.       The INSURER shall comply with the penalties set for each parameter
         within the range of values predetermined by the ADMINISTRATION.

5.       Compliance with the Plan Compliance Evaluation Program is of essence to
         this contract and will be a determining factor in the renewal of this
         contract. Failure to

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         comply with compliance requirements or parameters may also result in
         the termination of the contract as provided in Article XXXIII.

6.       The ADMINISTRATION agrees to furnish the INSURER with the required Plan
         Performance Evaluation Program prior to its implementation.

7.       The INSURER, as an additional tool to assure the evaluation of the
         insurance contract, agrees to abide, implement and develop the Health
         Plan-Employer Data and Information Set (Hedis), as revised and
         recommended by NCQA and in accordance with the time schedule, work plan
         and other requirements established in Addendum XI of the RFP referring
         to HEDIS DATA.

8.       DEFAULT AND REMEDIES under PIan Compliance Program.

         REMEDIES AVAILABLE TO THE ADMINISTRATION UNDER THE PLAN COMPLIANCE
         PROGRAM FOR INSURER'S DEFAULTS

         All of the listed remedies below may be exercised by the ADMINISTRATION
         and are in addition to all other remedies available to the
         ADMINISTRATION under this contract, by law or in equity, are joint and
         several, and may be exercised concurrently or consecutively. Exercise
         of any remedy in whole or in part does not limit the ADMINISTRATION in
         exercising all or part of any remaining remedies.

         Any particular default listed under subparagraph (a) to Q) below (which
         is not intended to be exhaustive) may be subject, when applicable, to
         any one or more of the following remedies:

         -        Terminate the contract if the applicable conditions set forth
                  in Section 10.1 are met;
         -        Suspend payment to INSURER;
         -        Recommend to CMS that sanctions be taken against INSURER as
                  set out in Section 10.7;
         -        Remove the EPSDT's component from the capitation paid to
                  INSURER if the benchmarks(s) missed is for EPSDT's;
         -        Assess civil monetary penalties as set out in section 10.8;
                  and/or
         -        Withhold premium payment.

         DEFAULTS BY INSURER

a.       FAILURE TO PERFORM AN ADMINISTRATIVE FUNCTION

         Failure of INSURER to perform an administrative function is a default
         under this contract. Administrative functions are any requirements
         under this contract that are not direct delivery of health care
         services. Administrative functions include

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         claims payment; encounter data submission; filing any report when due;
         cooperating in good faith with THE ADMINISTRATION, an entity acting on
         behalf of THE ADMINISTRATION, or an agency authorized by statute or
         law to require the cooperation of INSURER in carrying out an
         administrative, investigative, or prosecutorial function of the
         program; providing or producing records upon request; or entering into
         contracts or implementing procedures necessary to carry out contract
         obligations.

b.       ADVERSE ACTION AGAINST INSURER BY PRICO

         Termination or suspension of INSURER's PRICO Certificate of Authority
         or any adverse action taken by PRICO that THE ADMINISTRATION determines
         will affect the ability of INSURER to provide health care services to
         beneficiaries is a default under this contract.

c.       INSOLVENCY

         Failure of INSURER to comply with Commonwealth solvency standards or
         incapacity of INSURER to meet its financial obligations as they come
         due is a default under this contract.

d.       FAILURE TO COMPLY WITH FEDERAL LAWS AND REGULATIONS

         Failure of INSURER to comply with the federal requirements for
         Medicaid, including, but not limited to, federal law regarding
         misrepresentation, fraud, or abuse; and, by incorporation, Medicare
         standards, requirements, or prohibitions, is a default under this
         contract.

         The following events are defaults under this contract pursuant to 42
         U.S.C. 1396b(m)(5), 1396u-2(e)(1)(A):

         INSURER's substantial failure to provide medically necessary items and
         services that are required under this contract to be provided to
         beneficiaries;

         INSURER's imposition of premiums or charges on beneficiaries in excess
         of the premiums or charge permitted by federal law;

         INSURER's acting to discriminate among beneficiaries on the basis of
         their health status or requirements for health care services, including
         expulsion or refusal to enroll an individual, except as permitted by
         federal law, or engaging in any practice that would reasonably be
         expected to have the effect of denying or discouraging enrollment with
         INSURER by eligible individuals whose medical condition or history
         indicates a need for substantial future medical services;

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         INSURER's misrepresentation or falsification of information that is
         furnished to CMS, THE ADMINISTRATION, a beneficiary, a potential
         beneficiary, or a health care provider; .

         INSURER's failure to comply with the physician incentive requirements
         under 42 U.S.C. 1396b(m)(2)(A)(x); or

         INSURER's distribution, either directly or through any agent or
         independent contractor, of marketing materials that contain false or
         misleading information, excluding materials previously approved by THE
         ADMINISTRATION.

e.       MISREPRESENTATION OR FRAUD

         INSURER's misrepresentation or fraud with respect of any provision of
         this contract is a default under this contract.

f.       EXCLUSION FROM PARTICIPATION IN MEDICARE OR MEDICAID

         Exclusion of INSURER or any of the managing employees or persons with
         an ownership interest whose disclosure is required by Section 1124(x)
         of the Social Security Act (the Act) from the Medicaid or Medicare
         program under the provisions of Section 1128(x) and/or (b) of the Act
         is a default under this contract.

         Exclusion of any provider or subcontractor or any of the managing
         employees or persons with an ownership interest of the provider or
         subcontractor whose disclosure is required by Section 1124(x) of the
         Social Security Act (the Act) from the Medicaid or Medicare program
         under the provisions of Section 1128(x) and/or (b) of the Act is a
         default under this contract if the exclusion will materially affect
         INSURER's performance under this contract.

g.       FAILURE TO MAKE PAYMENTS TO NETWORK PROVIDERS AND SUBCONTRACTORS

         INSURER's failure to make timely and appropriate payments to network
         providers and subcontractors is a default under this contract.

h.       FAILURE TO MONITOR AND/OR SUPERVISE ACTIVITIES OF CONTRACTORS OR
         NETWORK PROVIDERS

         Failure of INSURER to audit, monitor, supervise, or enforce functions
         delegated by contract to another entity that results in a default under
         this contract or constitutes a violation of state or federal laws,
         rules, or regulations is a default under this contract.

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         Failure of INSURER to properly credential its providers, conduct
         reasonable utilization review, or conduct quality monitoring is a
         default under this contract.

         Failure of INSURER to require providers and contractors to provide
         timely and accurate encounter, financial, statistical and utilization
         data is default under this contract.

i.       PLACING THE HEALTH AND SAFETY OF BENEFICIARIES IN JEOPARDY

         INSURER's placing the health and safety of the beneficiaries in
         jeopardy is a default under this contract.

j.       FAILURE TO MEET ESTABLISHED BENCHMARK

         Failure of INSURER to repeatedly meet any benchmark established by THE
         ADMINISTRATION under this contract is a default under this contract.

9.       NOTICE OF DEFAULT AND CURE OF DEFAULT WHEN APPLICABLE

         THE ADMINISTRATION will provide INSURER with written notice of default
         (Notice of Default) under this contract. The Notice of Default may be
         given by any means that provides verification of receipt. The Notice of
         Default must contain the following information:

         (i)      A clear and concise statement of the circumstances or
                  conditions that constitute a default under this contract;

         (ii)     The contract provisions) under which default is being
                  declared;

         (iii)    A clear and concise statement of how and/or whether the
                  default may be cured;

         (iv)     A clear and concise statement of the time period during which
                  INSURER, when applicable, may cure the default;

         (v)      The remedy or remedies THE ADMINISTRATION is electing to
                  pursue and when the remedy or remedies will take effect;

         (vi)     If THE ADMINISTRATION is electing to impose civil monetary
                  penalties, the amount that THE ADMINISTRATION intends to
                  withhold or impose and the factual basis on which THE
                  ADMINISTRATION. is imposing the chosen remedy or remedies;

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             (vii) Whether any part of a civil monetary penalty, if THE
             ADMINISTRATION elects to pursue these remedy, may be passed through
             to an individual or entity who is or may be responsible for the act
             or omission for which default is declared;

             (viii) Whether failure to cure the default within the given time
             period, if any, will result in THE ADMINISTRATION pursuing an
             additional remedy or remedies, including, but not limited to,
             additional sanctions, referral for investigation or action by
             another agency, and/or termination of the contract.

10.          EXPLANATION OF REMEDIES

10.1         TERMINATION

10.1.1       TERMINATION BY THE ADMINISTRATION

             THE ADMINISTRATION may terminate this contract if:

10.1.1.1     INSURER substantially fails or refuses to provide payment for or
             access to medically necessary services and items that are required
             under this contract to be provided to beneficiaries after notice
             and opportunity to cure;

10.1.1.2     INSURER substantially fails or refuses to perform administrative
             functions under this contract after notice and opportunity to cure;

10.1.1.3     INSURER materially defaults under any of the provisions of Article
             XVI;

10.1.1.4     Federal or Commonwealth funds for the Medicaid program are no
             longer available; or

10.1.1.5     THE ADMINISTRATION has a reasonable belief that INSURER has placed
             the health or welfare of beneficiaries in jeopardy.

10.1.2       THE ADMINISTRATION must give INSURER 30 days written notice of
             intent to terminate this contract if termination is the result of
             INSURER's substantial failure or refusal to perform administrative
             functions or a material default as established in Article XXXIII.

10.1.3       THE ADMINISTRATION may, when termination is due to INSURER's
             substantial failure or refusal to provide payment for or access to
             medically necessary services and items, notify INSURER's
             beneficiaries of any hearing requested by INSURER. Additionally, if
             THE ADMINISTRATION terminates for this reason, THE ADMINISTRATION
             may enroll

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             INSURER's beneficiaries with another INSURER or permit INSURER's
             beneficiaries to receive Medicaid-covered services other than from
             an INSURER.

10.1.4       INSURER must continue to perform services under the transition plan
             described in Section 10.2.1 if the termination is for any reason
             other than THE ADMINISTRATION's reasonable belief that INSURER is
             placing the health and safety of the beneficiaries in jeopardy. If
             termination is due to this reason, THE ADMINISTRATION may prohibit
             INSURER's further performance of services under the contract.

10.1.5       If THE ADMINISTRATION terminates this contract, INSURER may appeal
             the termination under Article VI Section 12 Law 72 September 7,
             1993, as amended.

10.1.9       TERMINATION BY MUTUAL CONSENT

             This contract may be terminated at any time by mutual consent of
             both INSURER and THE ADMINISTRATION.

10.2         DUTIES OF CONTRACTING PARTIES UPON TERMINATION BY REASON OF DEFAULT

             When termination of the contract occurs by reason of default, THE
             ADMINISTRATION and INSURER must meet the following obligations:

10.2.1       THE ADMINISTRATION and INSURER must prepare a transition plan,
             which is acceptable to and approved by THE ADMINISTRATION, to
             ensure that beneficiaries are reassigned to other plans without
             interruption of services. That transition plan will be implemented
             during the 90-day period between receipt of notice and the
             termination date unless termination is the result of THE
             ADMINISTRATION's reasonable belief that INSURER is placing the
             health or welfare of beneficiaries in jeopardy.

10.2.2.2     INSURER is responsible for all expenses related to giving notice
             to beneficiaries; and

10.2.2.3     INSURER is responsible for all expenses incurred by THE
             ADMINISTRATION in implementing the transition plan.

10.2.2.4     If the contract is terminated by mutual consent:

10.2.3.1     THE INSURER is responsible for notifying all beneficiaries of the
             date of termination and how beneficiaries can continue to receive
             contract services and the provisions of Article XXXIV shall apply.

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10.3-10.6

10.7         RECOMMENDATION TO CMS THAT SANCTIONS BE TAKEN AGAINST INSURER

10.7.1       If CMS determines that INSURER has violated federal law or
             regulations and that federal payments will be withheld, THE
             ADMINISTRATION will deny and withhold payments for new enrollees of
             INSURER.

10.7.2       INSURER must be given notice and opportunity to appeal a decision
             of THE ADMINISTRATION and CMS pursuant to 42 CFR 434.67.

10.8         CIVIL MONETARY PENALTIES

10.8.1       The Administration may impose monetary penalties according to
             Article XXXVI, Section 4.

10.9

10.10        REVIEW OF REMEDY OR REMEDIES TO BE IMPOSED

10.10.1      INSURER may dispute the notice by the ADMINISTRATION that
             ADMINISTRATION intends to impose any sanction under this contract.
             INSURER may notify THE ADMINISTRATION of its objections by filing a
             written response to the Notice of Default, clearly stating the
             reason INSURER disputes the proposed sanction. With the written
             response, INSURER must submit to THE ADMINISTRATION any
             documentation that supports INSURER's position. INSURER must file
             the review within fifteen (15) days from INSURER's receipt of the
             Notice of Default as provided in Article XXXIII, subparagraph 2.
             Filing a dispute in a written response to the Notice of Default
             suspends imposition of the proposed sanction.

10.10.2      INSURER and THE ADMINISTRATION must attempt to informally resolve
             the dispute. If INSURER and THE ADMINISTRATION are unable to
             informally resolve the dispute THE ADMINISTRATION will make the
             remedy final.

                                  ARTICLE XVIII
                               PAYMENT OF PREMIUMS

1.       The payment for the first month of coverage under this contract will be
         made upon the certification by the INSURER that it has complied with
         all the terms and conditions contained in this contract to the
         satisfaction of the ADMINISTRATION.

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         For subsequent months the ADMINISTRATION shall pay to the INSURER the
         corresponding monthly premium within the first five (5) working days of
         the month of coverage, upon submission by the INSURER of an invoice
         containing the list of the beneficiaries enrolled for the month of the
         invoice.

2.       The monthly premium calculation for beneficiaries not enrolled for the
         full month shall be determined on a pro-rata basis by dividing the
         corresponding monthly premium amount by the number of days in the month
         and multiplying the result by the number of days the beneficiary was
         actually enrolled.

3.       The monthly premiums for the months comprised within the contract term
         and covered by this contract are as follows:

         a)       For all beneficiaries including all those who are sixty-five
                  (65) years and older who are Medicare beneficiaries with Part
                  A or Parts A and B and those who are sixty-five years and
                  older who are not Medicare recipients:

                  1)       Per member per month rate (PMPM) (Beneficiary)
                           established at FIFTY FIVE DOLLARS AND TWENTY FIVE
                           CENTS ($55.25).

4.       The per member per month rate (PMPM) herein agreed provides far:

         a)       The billing by providers to Medicare for services rendered to
                  beneficiaries who are also Medicare recipients. The INSURER
                  will not cover deductibles or co-insurance of Part A, but will
                  cover deductibles and co-insurance of Part B of Medicare,
                  except for deductibles and co-insurance for outpatient
                  services provided in hospital setting, other than physician
                  services.

         b)       The recognition as a covered reimbursable Medicare Program
                  cost as bad debts by reason of non-payment of Part A
                  deductibles and/or coinsurance, and for deductibles and
                  co-insurance for outpatient services provided in hospital
                  setting under Medicare Part B, other than physician services.

         c)       Pharmacy coverage for beneficiaries who are also Part A and
                  Part A and B Medicare recipients, as long as the benefits are
                  accessed through the PCP, HCOs, HCO's network of participating
                  providers or the INSURER's participating providers and the
                  prescription is issued by a participating provider of the
                  INSURER.

         d)       Dental coverage for beneficiaries who are also Part A and Part
                  A and B Medicare recipients, the INSURER's participating
                  providers.

         e)       All benefits included in ADDENDUM I that are not covered under
                  Medicare Part A or Part B.

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5.       The INSURER shall not, at any time, increase the rate agreed in the
         contract nor reduce the benefits agreed to as defined in ADDENDUM I of
         this contract.

6.       The INSURER guarantees the ADMINISTRATION that the rate and any
         applicable deductibles or co-payments constitute full payment for the
         benefits contracted under the plan, and that participating providers
         cannot collect any additional amount from the beneficiaries. Balance
         billing is expressly prohibited.

         Upon a determination made by the ADMINISTRATION that the INSURER or its
         agents that the INSURER has engaged in balance billing, the
         ADMINISTRATION will proceed to enforce provisions as established in
         Article XXXVI.

7.       The INSURER understands that the payment of premium by the
         ADMINISTRATION and the INSURER's payments to its HCOs, HCO's network of
         participating providers and INSURER's participating providers, shall be
         considered as full and complete payment for all services rendered
         except for the deductibles established in ADDENDUM I of the contract
         herein.

8.       For those Medicare beneficiaries with Part A, any recovery by the
         provider for Part A deductibles and/or co-insurance will be made
         exclusively through the Medicare Part A Program as bad debts. In this
         instance, beneficiaries would neither pay any reimbursement for
         rendered services to a participating provider nor pay the deductibles
         included IN ADDENDUM 1 of this contract.

9.       For those Medicare beneficiaries with Part B, any recovery by the
         participating provider for Part B deductibles and/or co-insurance,
         other than services provided on an outpatient basis to hospital
         clinics, will be made through the INSURER and/or the HCOs. In this
         instance, beneficiaries would neither pay any reimbursement for
         rendered services to a participating provider nor pay the deductibles
         included in ADDENDUM I of this contract.

10.      Co-insurance and deductible for Part B services provided on an
         outpatient basis to hospital clinics, other than physician services,
         will be considered as a covered bad debt reimbursement item under the
         Medicare program cost. In this instance, the INSURER will pay for the
         co-insurance and deductibles related to the physician services
         provided as a Part B service, through the capitation paid to the HCO.

11.      Newborns shall be immediately covered by the INSURER if born to an
         eligible individual and/or family unit as defined herein the Medicaid
         Commonwealth Plan, the law and its regulations.

12.      The INSURER understands that if the Federal Government submits an
         alternative to the agreement hereof that is more cost effective and for
         the benefit of the Government of Puerto Rico, the ADMINISTRATION along
         with the

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         INSURER shall renegotiate the coverage for Medicare beneficiaries with
         Part A or Part A and B.

13.      The INSURER certifies that the monthly billing submitted to the
         ADMINISTRATION includes all beneficiaries, who have been issued an
         identification card and for which payment of premiums are due either on
         a monthly or pro-rated basis. The ADMINISTRATION will not accept any
         new billing once the monthly billing is submitted by the INSURER to the
         ADMINISTRATION, unless there is a justifiable reason for the omission.

14.      If any differences arise in the ADMINISTRATION's payment of premiums to
         the INSURER, the latter will proceed to analyze the differences between
         the original billing submitted by the INSURER and the amount paid by
         the ADMINISTRATION. The INSURER will proceed, after proper analysis, to
         submit to the ADMINISTRATION a diskette as well as all relevant
         documentation that supports and details the INSURER's claim not later
         than thirty (30) working days after payment is made to the INSURER by
         the ADMINISTRATION. Once this term has ended, the INSURER waives its
         right to claim any amounts from differences arising from the monthly
         payment made by the ADMINISTRATION and releases the ADMINISTRATION from
         any and all obligation to pay any additional premiums, including
         differences to billing by more than one insurer. During the following
         one hundred and twenty (120) days the ADMINISTRATION will confirm the
         validity of the claim and make payment thereof.

                                   ARTICLE XIX
                             ACTUARIAL REQUIREMENTS

1.       For the purpose of determining future premiums, the loss experience of
         this contract shall be based exclusively on the results of the cost of
         health care services provided to the beneficiaries covered under this
         contract. The INSURER shall maintain all the utilization and financial
         data related to this contract duly segregated from its regular
         accounting system including, but not limited to the General Ledger and
         the necessary Accounting Registers classified by the Area/Region
         subject to this contract.

2.       Administrative expenses to be included in determining the experience of
         the program are those directly related to this contract. Separate
         allocations of expenses from the INSURER's regular business, INSURER's
         related companies, INSURER's parent company or other entities will be
         reflected or made a part of the financial and accounting records
         described in the preceding section.

3.       Any pooling of operating expenses with other of the INSURER's groups,
         cost shifting, financial consolidation or the implementation of other
         combined financial measures is expressly forbidden.

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4.       Amounts paid for claims or encounters resulting from services
         determined to be medically unnecessary by the INSURER will not be
         considered in the contract's experience.

5.       The INSURER shall provide the ADMINISTRATION every month with a Premium
         Disbursement Illustration. Said illustration shall present the
         distribution of the capitation, claim expenses by coverage, reserves,
         administrative expenses and premium distributions as referred and
         contained in the RFP's Actuarial Reports formats. Failure to comply
         with the requirements contained herein will be sufficient cause for the
         imposition against the INSURER of the penalty provided for in Article
         XXXVI of this contract.

6.       The determination by the INSURER as to the payment of the capitation
         fee and as to any other payments by virtue of this contract will be
         computed on an actuarially sound basis.

7.       The INSURER will provide to the ADMINISTRATION, on a monthly basis, the
         actuarial data, premium distribution, and reports as contained in the
         RFP's Actuarial Report formats. Failure to comply with the requirements
         contained herein will be sufficient cause for the imposition against
         the INSURER of the penalty provided for in Article XXXVI of this
         contract.

                                   ARTICLE XX
                           PREVENTIVE MEDICINE PROGRAM

1.       The Department of Health will provide for and effectively implement a
         preventive medicine program with primary emphasis on public health
         education which will include, but will not be limited to, guidance on
         lifestyles, AIDS, drug abuse, cancer and mother and child care. This is
         typically referred to as Primary Prevention. The INSURER will
         collaborate with the Department of Health and provide for a preventive
         medicine program with primary emphasis on the provision of clinical
         services in support of the Preventive Medicine Program, including but
         not limited to, screening and education of individual patients, such as
         PAP Smears, colorectal screening mammograms and cholesterol screening
         as indicated by the best practices of medicine.

         In cooperation with the INSURER, the Department of Health will develop
         a surveillance methodology to identify compliance with this program.

2.       The INSURER, through its secondary and tertiary Preventive Program,
         will address, analyze and implement measures to provide effective
         clinical and educational activities seeking to combat the specific
         causes of morbidity and mortality in the Area/Region.

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3.       The INSURER will develop and effectively implement a case management
         system in order to monitor high risk cases and attend to the covered
         health care needs of the beneficiaries, and dependents within said
         category.

4.       The INSURER represents that under its Preventive Program it will
         contract, sufficient medical specialists and specialized teams in order
         to combine the resources of the HCOs and the professional staff of the
         HCOs, including but not limited to, health educators, nutritionists,
         dieticians, nurses, other trained personnel and physicians who will act
         as the team's educator, manager and coordinator.

5.       The INSURER will be responsible to direct to a network of other
         agencies and community resources serving each municipality within the
         Area/Region so as to guarantee that participating providers and
         beneficiaries are aware of and understand the available services in
         their community and the process by which to access them.

6.       The INSURER will assure that discharge of the mother and her baby from
         the hospital is based upon sound clinical judgment determined by the
         clinician.

7.       The responsibilities of the INSURER in the Preventive Program will
         include the following

         a)       A disease management program developed by the INSURER in
                  collaboration with the Department of Health which shall
                  develop standardized processes to address major public health
                  programs such as Asthma, Diabetes, Hypertension and Congestive
                  Heart Failure, among others. This program shall include
                  identification treatment protocols/guidelines and
                  surveillance/monitoring. In cooperation with the Department of
                  Health and the Centers for Disease Control (CDC) annual
                  reports will be published detailing the results.

         b)       A case management program which initially will be under the
                  responsibility of a nurse. Case management will not be limited
                  to the physician's offices or a determined center.
                  Coordination of the services provided is required within the
                  community and at the home of the beneficiary, if necessary.

         c)       An outreach program shall be developed in collaboration with
                  the Department of Health to target specific clinical issues as
                  identified by the Department of Health, for those
                  beneficiaries who cannot access those services. The clinical
                  standard shall conform to the published HEDIS measures. These
                  measures can be modified or supplemented by the Department of
                  Health.

         d)       The INSURER will assure that all pregnant women are screened
                  for alcohol use following the Department of Health Guidelines.

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         e)       The INSURER will assure that all pregnant women will obtain
                  counseling for the HIV test. All pregnant women who accept the
                  HIV test will be referred to the HIV Prevention and Detection
                  Program of the Department of Health. The participant provider
                  shall coordinate all referrals with the Department of Health.
                  Pre-natal care and HIV testing will continue to be covered
                  benefits under this contract.

         f)       The INSURER will assure that all pregnant women, following
                  the administration of the HIV test that reports a positive
                  result, are allowed to be treated under the guidelines for the
                  utilization of ZDV in pregnant women and neonatal infants to
                  reduce the risk of mother-infant HIV transmission, published
                  by the Department of Health.

         g)       The INSURER will assure that all pregnant women are properly
                  educated about the WIC Program. Those eligible individuals
                  will be referred to the WIC Program of the Department of
                  Health. It will be the immediate responsibility of the
                  participating providers to comply with all requirements in
                  order to arrange the referral to the WIC Program without any
                  cost to the patient.

         h)       The INSURER will assure that all providers comply with the
                  EPSDT (Early Periodic Screening Diagnosis and Treatment)
                  Program and the Guidelines for Adolescent Preventive Services
                  (GAPS) from the American Medical Association. The itinerary of
                  services that have to be rendered by providers will comply
                  with the EPSDT Itinerary Services Formats.

         i)       The INSURER will be responsible to develop and demonstrate its
                  strategy to meet the appropriate prevention program guidelines
                  as required by the Department of Health.

         j)       The INSURER will provide the ADMINISTRATION monthly reports
                  detailing all services rendered to mother and child classified
                  by age groups and listing the numbers of pregnant women that
                  have: (i) received prenatal care on each month in the
                  reporting period; (ii) counseled as to HIV testing; (iii)
                  referred to the HIV Prevention and Detection Program of the
                  Department of Health; and (iv) referred to the WIC Program.

         k)       The INSURER agrees to comply and assure that all participating
                  providers will comply with the federal and local laws referred
                  in Article XV paragraph (11) (g) of this contract. The INSURER
                  will assure the submission by the participating provider of
                  all the protocols and formats requested by the Department of
                  Health, Department of the Family, Department of Education and
                  Department of Justice as contained in the RFP formats.

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8.       The INSURER will develop and effectively implement incentive-based
         programs whereby the providers are motivated toward compliance with all
         requirements of their Preventive Medicine Program such as EPSDT,
         Immunizations, Prenatal care, reduction in cesarean sections, and other
         related services.

9.       The ADMINISTRATION shall evaluate these preventive programs through
         HEDIS and other applicable performance standards.

10.      The INSURER will provide the ADMINISTRATION quarterly reports needed by
         the Department of Health detailing services rendered in the Preventive
         Program described below.

11.      The ADMINISTRATION shall have the right to audit the compliance with
         these requirements as needed. Non-compliance shall be a determining
         factor in non-renewal of this contract or breach thereof as defined in
         Article of XXXIII.

                                   ARTICLE XXI
                              MENTAL HEALTH PROGRAM

1.       The INSURER shall direct beneficiaries to access Mental Health and
         Substance Abuse benefits in coordination with the Mental Behavior
         Healthcare Organization in the health region contracted by the
         ADMINISTRATION and ASSMCA. The ASSMCA will monitor the Mental Health
         and Substance Abuse Program provided through the MBHO contracted in the
         Health Region/Area with sufficient specificity effectiveness in order
         to provide for all mental health and substance abuse needs for all
         eligible beneficiaries residing within the municipalities forming part
         of said area.

2.       The INSURER will abide with the ADMINISTRATION and ASSMCA's guidelines
         for expediting access of beneficiaries to the mental health and
         substance abuse benefits covered under the Health Insurance Program.

                                  ARTICLE XXII
                                    BENEFITS

1.       The INSURER agrees to provide to the enrolled beneficiaries the
         benefits included in ADDENDUM I of this contract. The benefits to be
         provided under the program are divided in three types of coverage: 1)
         the Basic Coverage that includes preventive, medical, hospital,
         surgical, diagnostic tests, clinical laboratory tests, x-rays,
         emergency room, ambulance, maternity and prescription drug services, 2)
         Dental Coverage based on the right to choose one of the participating
         dentists from the INSURER's network and 3) the Special Coverage that
         includes benefits for catastrophic conditions, expensive procedures and
         specialized diagnostic tests.

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2.       The INSURER may not modify, change, limit, reduce, or otherwise alter
         said benefits nor the agreed terms and conditions for their delivery
         without the express written consent of the ADMINISTRATION.

3.       The coverage for Medicare beneficiaries is established as follows:

                  (a)      Beneficiaries with Part A of Medicare- The INSURER
                           will pay for all services not included in Part A of
                           Medicare, and included in the contract herein. The
                           INSURER will not pay the applicable Part A
                           deductibles and coinsurance.

                  (b)      Beneficiaries with Part A and Part B of Medicare- The
                           INSURER will pay for prescription drugs prescribed by
                           PCP and dental coverage. The INSURER will not cover
                           the payment of the applicable Part A deductibles and
                           coinsurance, but will cover the payment of the
                           applicable Part B deductible and co-insurance.

                  (c)      Access to services contemplated herein will be
                           through a selected HCO. Beneficiaries with Part A can
                           select from the Medicare's providers list, in which
                           case the benefits under this contract would not be
                           covered.

4.       The Medicare beneficiary can select a Part A provider from the Medicare
         Part A providers list, but has to select a HCO for Part B services for
         beneficiaries with Part B services or Part B equivalent services for
         beneficiaries without Part B of Medicare.

                                  ARTICLE XXIII
                                CONVERSION CLAUSE

1.       If during the term of this contract, the insurance coverage for a
         beneficiary terminates because the beneficiary ceases to be eligible
         and is dis-enrolled, such person has the right to receive a direct
         payment policy from INSURER without submitting evidence of eligibility.
         The direct payment policy will be issued by the INSURER without taking
         into consideration pre-existing conditions or waiting periods. The
         written request for a direct payment policy must be made, and the first
         premium submitted to INSURER on or before thirty-one (31) days after
         the date of disenrollment, bearing in mind that:

         a)       The direct payment policy should be an option of such person,
                  through any of the means which at that date INSURER has
                  currently made available according to the age and benefits
                  requested. It will be subject to the terms and conditions of
                  the direct payment policy.

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         b)       The premium for the direct payment policy will be in
                  accordance with the rate then in effect at INSURER, applicable
                  to the form and benefits of the direct payment policy, in
                  accordance with the risk category the person falls in at the
                  moment, and the age reached on the effective date of the
                  direct payment policy. The health condition at the moment of
                  conversion will have no bearing in the eligibility nor will it
                  be an acceptable base for the risk classification.

         c)       The direct payment policy should also provide for coverage to
                  any other individual, if these were considered eligible
                  beneficiaries at the termination date of the health insurance
                  under this contract. Under option by INSURER, a separate
                  direct payment policy may be issued to cover the other
                  individuals who formerly were eligible beneficiaries.

         d)       The direct payment policy will be effective upon termination
                  of coverage under the health insurance contracted.

         e)       INSURER will not be obligated to issue a direct payment policy
                  covering a person who has the right to receive similar
                  services provided by any insurance coverage or under the
                  Medicare Program of the Federal Social Security legislation,
                  as subsequently amended, if such benefits, jointly provided
                  under the direct payment policy, result in an excess of
                  coverage (over insurance), according to the standards of the
                  INSURER.

2.       When coverage under this contract terminates due to the expiration of
         its term, all persons formerly considered eligible beneficiaries, who
         have been insured for a period of three (3) years prior to the
         termination date, will be eligible for a INSURER direct payment policy,
         subject to the conditions and limitations stipulated in clause 1 of
         this section.

3.       Subject to the conditions and limitations stipulated in clause 1 of
         this section, the conversion privilege will be granted:

         a)       to all eligible beneficiaries whose coverage under the health
                  insurance contracted is terminated because they cease to be
                  eligible beneficiaries and are disenrolled.

         b)       to any eligible beneficiary whose coverage under the health
                  insurance contracted ceases because he no longer qualifies as
                  an eligible beneficiary, regardless of the fact that the
                  principal subscriber and/or any other eligible beneficiary
                  continues covered by said health insurance coverage under this
                  contract.

4.       In case an eligible beneficiary under this contract suffers a loss
         covered by the direct payment policy, described in clause 1 of this
         section, during the period he/she would have qualified for a direct
         payment policy and before the said direct

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         payment policy is in effect, the benefits which he/she would have a
         right to collect under such direct payment policy will be paid as a
         claim under the direct payment policy, subject to having requested the
         direct payment policy and the payment of the first premium.

5.       If any eligible beneficiary under this contract subsequently acquires
         the right to obtain a direct payment policy, under the terms and
         conditions of the INSURER's policies without providing evidence of
         qualifications for such insurance, subject to the request and payment
         of the first premium during the period specified in the policy; and if
         this person is not notified of the existence of this right, at least
         fifteen (15) days prior to the expiration of such period, such person
         will be granted an additional period during which time he/she can claim
         his/her right, none of the above implying the continuation of a policy
         for a period longer than stipulated in said policy. The additional
         period will expire fifteen (15) days after the person is notified, but
         in no case will it be extended beyond sixty (60) days after the
         expiration date of the policy. Written notification handed to the
         person or mailed to the last known address of the person, as
         acknowledged by the policy holder, will be considered as notification,
         for the purposes of this paragraph. If an additional period is granted
         for the right of conversion as hereby provided, and if the written
         application for direct payment, enclosed with the first premium
         payment, is made during the additional period, the effective date of
         the direct payment policy will be the termination of the health
         insurance coverage under this contract.

6.       Subject to the other conditions expressed before, the eligible
         beneficiaries will have the right to conversion, up to one of the
         following dates:

         a)       date of termination of his/her eligibility under this
                  contract; or
         b)       termination date of this contract; or
         c)       date of amendment of this contract, if said amendment in any
                  way eliminates the beneficiaries' eligibility.

                                  ARTICLE XXIV
                          TRANSACTIONS WITH THE INSURER

1.       All transactions between the ADMINISTRATION and the INSURER shall be
         handled according to the terms and conditions set forth in this
         contract.

2.       The INSURER shall appoint a person that shall be responsible for all
         transactions with the ADMINISTRATION.

3.       All eligibility transactions shall be coordinated on a daily basis.

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                                   ARTICLE XXV
                             NON-CANCELLATION CLAUSE

The INSURER may not cancel this contract, or make modifications to it for any
reason, or otherwise change, restrict or reduce the insurance or the benefits,
except for nonpayment of premiums.

                                  ARTICLE XXVI
                                 APPLICABLE LAW

The Request for Proposal that originated this contract, the Proposal submitted
by the INSURER, this contract and/or any other document or provision
incorporated to it by reference, shall be interpreted and construed according to
the laws of the Commonwealth of Puerto Rico. If any controversy may arise
regarding the interpretation or performance of this contract, the parties
voluntary submit for its resolution to the jurisdiction of the Superior Court of
the Commonwealth of Puerto Rico, San Juan Part.

                                  ARTICLE XXVII
                             EFFECTIVE DATE AND TERM

1.       This contract shall be in effect for nine months, starting at 12:01 AM,
         Puerto Rico time on October 1, 2001, the first day that coverage begins
         and payment of the premium is due.

2.       This contract may not be assigned, transferred or pledged by the
         INSURER without the express written consent of the ADMINISTRATION.

3.       This contract may be extended by the ADMINISTRATION, upon acceptance by
         the INSURER, for any subsequent period of time if deemed in the best
         interest of the beneficiaries, the ADMINISTRATION, and the Government
         of Puerto Rico.

                                 ARTICLE XXVIII
                              CONFLICT OF INTEREST

Any officer, director, employee or agent of the ADMINISTRATION, the Government
of the Commonwealth of Puerto Rico, its municipalities or corporations cannot be
part of this contract or derive any economic benefit that may arise from its
execution.

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                                  ARTICLE XXIX
                                  INCOME TAXES

The INSURER certifies and guarantees that at the time of execution of this
contract, 1) it is a corporation duly authorized to conduct business in Puerto
Rico and that has filed income tax returns for the previous five (5) years; 2)
that it complied with and paid unemployment insurance tax, disability insurance
tax (Law 139), social security for drivers ("seguro social choferil"), if
applicable); 3) filed State Department reports, during the five (5) years
preceding this contract and 4) that it does not owe any kind of taxes to the
Commonwealth of Puerto Rico.

                                   ARTICLE XXX
                               ADVANCE DIRECTIVES

The INSURER agrees to enforce and require compliance by all applicable
participating providers with 42 CFR 434, Part 489, Subpart I relating to
maintaining written policies and procedures respecting advance directives. This
requirement includes provisions to inform and distribute written information to
adult individuals concerning policies on advance directives, including a
description of applicable Commonwealth law.

                                  ARTICLE XXXI
                     OWNERSHIP AND THIRD PARTY TRANSACTIONS

The INSURER shall report ownership, control interest, and related information to
the ADMINISTRATION, and upon request, to the Secretary of the Department of
Health and Human Services, the Inspector General of the Department of Health and
Human Services, and the Comptroller General of the United States, in accordance
with Sections 1124 and 1903 (m)(4) of the Federal Social Security Act.

                                  ARTICLE XXXII
                            MODIFICATION OF CONTRACT

If the ADMINISTRATION finds that, because of amendments to Law 72 of September
7, 1993, or by reason of other subsequent Federal or local legislative changes
that affect this contract, or because of any reasons deemed by the
ADMINISTRATION to be in the best interest of the Government of Puerto Rico in
carrying out the provisions of Law 72 of September 7, 1993, or in order to
perform experiments and demonstration projects pursuant to legislative
enactment, modification of this contract is necessary, the ADMINISTRATION may
modify any of the requirements, terms and conditions, functions, part thereof or
any other services to be performed by the INSURER. Prior to any such
modification, the ADMINISTRATION shall afford the INSURER an opportunity to
consult and participate in planning for adjustments which might be necessary and
thereafter provide the INSURER written notice that the modification is to be
made within

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ninety (90) days after a date specified in the notice. Said modifications will
take place after consultation and cost negotiation with the INSURER.

                                 ARTICLE XXXIII
                            TERMINATION OF AGREEMENT

1.       If the ADMINISTRATION finds, after reasonable notice and opportunity
         for a hearing to the INSURER the INSURER has failed substantially to
         carry out the material terms and conditions of this contract, the
         ADMINISTRATION may terminate this contract at any time, as provided in
         Section 10.1, above.

2.       In the event that there is non-compliance by the INSURER with any
         specific clause of this contract, the ADMINISTRATION will notify the
         INSURER in writing, indicating the area/region(s) of non-compliance.
         The INSURER will be granted the opportunity to present and discuss its
         position regarding the issue within fifteen (15) days from the date of
         the notification. After considering the allegations presented by the
         INSURER following adequate hearing and the opportunity to present all
         necessary evidence in support of its position, and the ADMINISTRATION
         formally determines that there is a non-compliance, at the discretion
         of the ADMINISTRATION, this contract may be cancelled by giving thirty
         (30) days prior written notice before the effective date of
         cancellation.

3.       In the event that the INSURER does not remedy, correct or cure the
         material deficiencies noted in the Plan Compliance Evaluation Report,
         as provided for in Article XVII of this contract, and following the
         opportunity of an adequate hearing and the presentation of evidence in
         support of its position, and the ADMINISTRATION confirms the
         deficiency, then at the discretion of the ADMINISTRATION this contract
         may be cancelled by giving thirty (30) days prior notice.

4.       If the INSURER were to be declared insolvent, files for bankruptcy or
         is placed under liquidation, the ADMINISTRATION shall have the option
         to cancel and immediately terminate this contract. In the event of this
         happening an enrollee will not be liable for payments under this
         contract.

5.       In the event that this contract is terminated, the INSURER shall
         promptly provide the ADMINISTRATION all necessary information for the
         reimbursement of any pending and outstanding Claims. The INSURER hereby
         recognizes that in the event of termination under this Article it shall
         be bound to provide reasonable cooperation to the ADMINISTRATION beyond
         the date of termination in order to properly effect the transition to
         the new INSURER taking over the region covered by this Contract. This
         obligation to reasonably cooperate shall survive the date of said
         effective termination provided, at the ADMINISTRATION' discretion.

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6.       The INSURER agrees and recognizes that in the event there are no
         sufficient enough funds designated for the payment of premium, the
         ADMINISTRATION reserves the right to terminate this contract, effective
         ninety (90) days after prior written notification.

                                  ARTICLE XXXIV
                                PHASE-OUT CLAUSE

In the event that the contract is terminated, the INSURER will continue to
provide services for a reasonable term to guarantee the continuance of services
until the ADMINISTRATION has made adequate arrangements to continue the
rendering of health care benefits to beneficiaries. The duration of such term
will not exceed sixty (60) days and the PMPM shall be agreed upon by the INSURER
and the ADMINISTRATION.

Upon the expiration of the contract, the INSURER will provide the ADMINISTRATION
with the historical/utilization data of services rendered to beneficiaries in
the area/region, in order to prevent fraud and double billing of services by the
incoming INSURER.

Any INSURER phasing out of a Health Region will guarantee payment for services
rendered to beneficiaries under the previous contract. Failure to do so, shall
entail in accordance with the fair hearing process established on Article
XXXIII, the retention of a determined amount of premium payment of INSURER's
Health Region Contract. The amount to be retained shall be sufficient to cover
the amount owed.

                                  ARTICLE XXXV
                             THIRD PARTY DISCLAIMER

None of the obligations, covenants, duties, and responsibilities incurred or
assumed under the present Contract, the Request For Proposal, Proposal, the
representations and assurances provided at the clarification meeting held on
June 11, 2001, by either: (I) the INSURER towards the ADMINISTRATION and any
governmental agencies, or (ii) the ADMINISTRATION towards the INSURER, shall be
deemed as the assumption by the INSURER or the ADMINISTRATION, as the case might
be, of any legal liability or responsibility towards a third party in the event
that a negligent or intentional injury, malpractice, damage or wrongdoing, or
any harm whatsoever is incurred by or caused by the HCOs, the HCO's network of
participating providers and/or the INSURER's participating providers.

                                  ARTICLE XXXVI
                         PENALTIES AND SANCTIONS CLAUSES

1.       In the event that the INSURER does not furnish the ADMINISTRATION with
         any kind of monthly reports related to the gathering and reporting of
         encounter information, the ADMINISTRATION may retain one monthly
         premium for each

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         month in default said retention to be effective for the subsequent
         month after the default. Once the INSURER complies with said
         requirement, the amount retained will be fully paid to the INSURER,
         within five days after receiving the required reports for the
         subsequent month.

2.       In the event that the INSURER does not comply with its obligation
         related to the monthly gathering and accurate reporting of encounter
         information, according to Article XV of this contract, the
         ADMINISTRATION may retain one monthly premium payable to the INSURER
         for each month in default, provided:

         a.       the ADMINISTRATION gives, within ten (10) working days after
                  receipt of the monthly report, written notification by
                  certified mail, or personally hand delivers said notification
                  to the INSURER of the non-compliance and the reasons thereof;
                  and
         b.       the ADMINISTRATION grants ten (10) working days for the
                  INSURER to cure the default; and
         c.       the INSURER fails to correct it within said term.

         Whenever as the above events take place, the ADMINISTRATION may retain
         one monthly premium payment for each month in default. Retention will
         be effective ten (10) working days after the notice of non-compliance.
         Once the INSURER corrects the problem, at the satisfaction of the
         ADMINISTRATION and according to Article XV of this contract, the amount
         retained will be fully paid to the INSURER, within five days after
         receiving full and complete reports for the subsequent month.

3.       For the purpose of subparagraphs 1 and 2, above, default is defined as
         the non-compliance by the INSURER of the reporting requirements
         established for the gathering and reporting of encounter information as
         established in Article XV of this contract, or when the INSURER does
         not submit the reports within the established term set in this
         contract.

4.       A. Civil Monetary Penalties: In the event that there is a
         non-compliance with Article VI, XII, XVI, XVII and/or with any specific
         clause of this contract or the INSURER engages in any of the following
         practices:

                  (a)      Fails to substantially provide medically necessary
                           services to enrollees under this contract;
                  (b)      imposes on enrollees premiums and charges in excess
                           of the ones permitted under this contract;
                  (c)      discriminates, among enrollees on the basis of their
                           health status or requirements for health care (such
                           as terminating an enrollment or refusing to reenroll)
                           except as permitted under the Program or engages in
                           practices to discourage enrollment by recipients
                           whose medical condition or history indicates need for
                           substantial medical services;

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                  (d)      misrepresents or falsifies information that is
                           furnished to CMS, to the ADMINISTRATION, to an
                           enrollee, potential enrollee or provider of services;
                  (e)      distributes, directly or indirectly through any
                           agent, independent contractor, marketing material not
                           approved by the ADMINISTRATION, or that contains
                           false or misleading information;
                  (f)      Fails to comply with the requirements for physician
                           incentive plans in section 1876 (i) (8) of the Social
                           Security Act, and at 42 CFR 417.479, or fails to
                           submit to the ADMINISTRATION its physician incentive
                           plans as requested in 42 CFR 434.70

         The ADMINISTRATION will notify the INSURER in writing, the findings of
         the violation and the impending intention to impose intermediate
         sanctions for each violation which could consist of: monetary penalties
         at the discretion of the Administration may range from five hundred
         dollars $500 to twenty five thousand dollars $25,000; or the resolution
         of the contract and temporary management; suspension, and/or
         with-holding of premium payments, which may range from a percent
         amount, or more than one monthly premium payments. The imposition of
         sanctions will depend on the extent and severity of the actions.

         At the sole discretion of the ADMINISTRATION and after affording the
         INSURER due process to submit a corrective action as established in
         paragraph (B), below, the ADMINISTRATION will deduct any amount it may
         deem adequate from the premium payments or any other administrative
         items of said payments.

         The Office of the Inspector General may impose civil money penalties of
         up to $25,000.00 in addition to, or in lieu of each determination by
         the ADMINISTRATION, or CMS, for non-compliance conduct as set forth on
         subparagraphs(a) through (f).

The Secretary of the Department of Health and Human Services may seek the
enforcement of felony charges, for violation regarding subparagraph (b), above.

         B.       The INSURER will have the right to present and discuss its
                  position regarding the ADMINISTRATION'S finding within
                  thirty(30) days from the receipt of the notification. After
                  such period expires the Administration will issue its decision
                  regarding the contemplated sanctions which could be (i) let
                  stand the initial determination, (ii) modify the sanction or
                  (iii) eliminate the sanction if the Insurer has taken
                  affirmative corrective actions. Upon notifying the INSURER of
                  the final decision, if in disagreement, the INSURER will have
                  (30) days to request a hearing- before the Administration.
                  Upon the expiration of the thirty (30) days without invoking a
                  formal hearing, or after the celebration of a hearing and
                  after issuance of findings and recommendations of the hearing
                  examiner, the decision

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                  will then become final, subject to the appeal process provided
                  in section 12, Art. VI of Law 72, September 7,1993, as
                  amended.

         C.       The ADMINISTRATION, shall appoint temporary management only if
                  it finds that the INSURER has egregiously or repeatedly
                  engaged in any of the stated practices on paragraph (A) of
                  this article; or places a substantial risk on the health of
                  enrollees; or there is a need to assure the health of an
                  organization's enrollees during an orderly termination,
                  reorganization of the Insurer or while improvements are being
                  made to correct violations. The temporary management may not
                  be removed until the INSURER assures the ADMINISTRATION that
                  the violations will not recur.

5.       If a contractor is found to be in non-compliance with the provisions
         on ARTICLE VII concerning affiliation with debarred or suspended
         individuals, the ADMINISTRATION:

         a)       Shall notify the Secretary of non-compliance;
         b)       May continue the existing contract with the Insurer, unless
                  the Secretary (in consultation with the Inspector General of
                  the Department of Health Services directs otherwise); and,
         c)       May not review or otherwise extend the duration of an existing
                  contract with the INSURER unless the Secretary (in
                  consultation with the Inspector General of the DHHS) provides
                  to the ADMINISTRATION and to Congress a written statement
                  describing compelling reasons that exist for renewing or
                  extending the contract.

6.       Notwithstanding the provisions set in this Article, the
         ADMINISTRATION reserves the right to terminate this contract, as
         established in Article XXXIII.

                                 ARTICLE XXXVII
                              HOLD HARMLESS CLAUSE

1.       The INSURER warrants and agrees to indemnify and save harmless the
         ADMINISTRATION from and against any loss or expense by reason of any
         liability imposed by law upon the ADMINISTRATION and from and against
         claims against the ADMINISTRATION for damages because of bodily
         injuries, including death, at any time resulting therefrom, accidents
         sustained by any person or persons on account of damage to property
         arising out of or in consequence of the performance of this contract,
         whether such injuries to persons or damage to property are due or
         claimed to be due to any negligence of the INSURER, the INSURER's
         participating providers, the HCOs, the HCO's network of participating
         providers, their agents, servants, or employees or of any other person.

3.       The INSURER warrants and agrees to purchase insurance coverage to
         include Contractual Liability Coverage incorporating the obligations
         herein assumed by

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         the INSURER with limits of liability which shall not be less than one
         (1) million dollars with said insurance coverage providing for the
         INSURER's obligation and the insurance company of INSURER to defend
         and appear on behalf of the ADMINISTRATION in any and all claims or
         suits which may be brought against the ADMINISTRATION on account of the
         obligations herein assumed by the INSURER.

                                 ARTICLE XXXVIII
                CENTER OF MEDICARE AND MEDICAID SERVICES CONTRACT
                                  REQUIREMENTS

The ADMINISTRATION and INSURER agree and recognize that guidance and directives
from the Center of Medicare and Medicaid Services (CMS) are incorporated in
contracts subject to its approval, such as the present one, and that they
constitute binding obligations on the part of the INSURER.

                                  ARTICLE XXXIX
                                  FORCE MAJEURE

Whenever a period of time is herein prescribed for action to be taken by the
INSURER, the INSURER shall not be liable or responsible for, and there shall be
excluded from the computation for any such period of time, any delays due to
strikes, acts of God, shortages of labor or materials, war, terrorism,
governmental laws, regulations or restrictions or any other causes of any kind
whatsoever which are beyond the control of the INSURER.

                                   ARTICLE XL
                                YEAR 2000 CLAUSE

The parties hereby assure that all hardware and software that it uses with
respect to this Agreement are Year 2000 Compliant in accordance to CMS's Year
Compliance definitions as stated in the RFP. The Parties acknowledge that this
provision is an essential condition to this Agreement.

                                  ARTICLE XXLI
                           FEDERAL GOVERNMENT APPROVAL

Inasmuch as it is a requirement that the Center of Medicare and Medicaid
Services (CMS) approves this contract in order to authorize the use of federal
funds to finance the health insurance contracted, the same may be subject to
modifications in order to incorporate or modify the terms and conditions of this
contract.

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2.       Any provision of this contract which is in conflict with any Federal
         Laws, Federal Medicaid Statutes, Health Insurance Portability and
         Accountability Act, Federal Regulations, or CMS policy guidance, as
         applicable, is hereby amended to conform to the provisions of those
         laws, regulations, and Federal policy. Such amendment of the contract
         will be effective on the effective date of the statutes or regulations
         necessitating it, and will be binding on the parties even though such
         amendment may not have been reduced to writing and formally agreed upon
         and executed by the parties.

                                  ARTICLE XLII
                          ACKNOWLEDGMENT AS TO INSURER

1.       All responsibilities, obligations, assurances and representations,
         made, taken, and assumed by the INSURER under this contract will be
         fully, solely, and entirely assumed by the INSURER. Notwithstanding,
         the ADMINISTRATION acknowledges that Triple-C will carry out the
         responsibilities as to the administration and operational management of
         the Health Insurance subject of this contract and that its officers are
         authorized to represent Triple-S, Inc. in matters related to be carried
         out.

2.       The ADMINISTRATION acknowledges that the INSURER is in a corporate
         reorganizational process. The INSURER will notify the ADMINISTRATION
         the date when the reorganizational process is completed. The INSURER
         represents that the reorganizational process shall not constituted an
         assignment of this Contract.

                                  ARTICLE XLIII
                                ENTIRE AGREEMENT

The parties agree that they accept, consent and promise to abide by each and
every one of the clauses contained in this contract and that the contract
contains the entire agreement between the parties and in order to acknowledge
so, they initial the margin of each of the pages and affix below their
respective signatures, in San Juan, Puerto Rico, this 14TH DAY OF SEPTEMBER,
2001.

PUERTO RICO HEALTH PLANS                TRIPLE-S, INC
INSURANCE ADMINISTRATION

By /s/ ANGEL BLANCO BOTTEY              By /s/ MIGUEL VAZQUEZ DEYNES
------------------------------          ------------------------------
ANGEL BLANCO BOTTEY                     MIGUEL VAZQUEZ DEYNES
EXECUTIVE DIRECTOR                      CHIEF EXECUTIVE OFFICER

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