Document:

<PAGE>

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

                                                                    Exhibit 10.2

                           RECEIVABLES SALE AGREEMENT

                           Dated as of April 30, 2002

                                      among

        OWENS & MINOR, INC., OWENS & MINOR DISTRIBUTION, INC. and OWENS &
                              MINOR MEDICAL, INC.,
                                 as Originators

                                       and

                               O&M FUNDING CORP.,
                                    as Buyer

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

<PAGE>

                               TABLE OF CONTENTS

                                                                           Page
                                                                           ----

ARTICLE I. AMOUNTS AND TERMS..................................................2

   Section 1.1       Purchase of Receivables..................................2

   Section 1.2       Payment for the Purchase.................................3

   Section 1.3       Purchase Price Credit Adjustments........................4

   Section 1.4       Payments and Computations, Etc...........................5

   Section 1.5       Transfer of Records; License of Software.................5

   Section 1.6       Characterization.........................................5

   Section 1.7       Addition of Originators..................................6

   Section 1.8       Termination of Status as an Originator...................6

   Section 1.9       Facility Fee.............................................7

   Section 1.10      Limited Role of the Parent...............................9

ARTICLE II. REPRESENTATIONS AND WARRANTIES....................................9

   Section 2.1       Representations and Warranties of Originators............9

ARTICLE III. CONDITIONS OF PURCHASE..........................................13

   Section 3.1       Conditions Precedent to Purchase........................13

   Section 3.2       Conditions Precedent to Subsequent Payments.............13

ARTICLE IV. COVENANTS........................................................14

   Section 4.1       Affirmative Covenants of Originators....................14

   Section 4.2       Negative Covenants of Originators.......................18

ARTICLE V. TERMINATION EVENTS................................................19

   Section 5.1       Termination Events......................................19

   Section 5.2       Remedies................................................22

ARTICLE VI. INDEMNIFICATION..................................................22

   Section 6.1       Indemnities by Originators..............................22

   Section 6.2       Other Costs and Expenses................................28

ARTICLE VII. MISCELLANEOUS...................................................28

   Section 7.1       Waivers and Amendments..................................28

   Section 7.2       Notices.................................................28

   Section 7.3       Protection of Ownership Interests of Buyer..............28

                                       i

<PAGE>

                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----

   Section 7.4       Confidentiality.........................................29

   Section 7.5       Limitation of Liability.................................30

   Section 7.6       No Recourse.............................................30

   Section 7.7       Bankruptcy Petition.....................................30

   Section 7.8       CHOICE OF LAW...........................................30

   Section 7.9       CONSENT TO JURISDICTION.................................30

   Section 7.10      WAIVER OF JURY TRIAL....................................31

   Section 7.11      Integration; Binding Effect; Survival of Terms..........31

   Section 7.12      Counterparts; Severability; Section References..........32

                                       ii

<PAGE>

                             EXHIBITS AND SCHEDULES

EXHIBIT I     --   Definitions
EXHIBIT II    --   Principal Place of Business; Location(s) of Records; Federal
                   Employer Identification Number; Other Names
EXHIBIT III   --   Lock-Boxes; Collection Accounts; Collection Banks
EXHIBIT IV    --   Form of Compliance Certificate
EXHIBIT V     --   Credit and Collection Policy
EXHIBIT VI    --   Form of Subordinated Note
SCHEDULE A    --   List of Documents to Be Delivered to Buyer Prior to the
                   Purchase

                                      iii

<PAGE>

                           RECEIVABLES SALE AGREEMENT
                           --------------------------

          THIS RECEIVABLES SALE AGREEMENT, dated as of April 30, 2002, is by and
among OWENS & MINOR, INC., a Virginia corporation ("Parent"), OWENS & MINOR
DISTRIBUTION, INC., a Virginia corporation ("O&M Distribution"), OWENS & MINOR
MEDICAL, INC. (formerly known as OMI Specialty, Inc.), a Virginia corporation
("O&M Medical") (each of the foregoing including Parent, an "Originator" and
collectively, the "Originators"), and O&M FUNDING CORP., a Virginia corporation
("Buyer"). Unless defined elsewhere herein, capitalized terms used in this
Agreement shall have the meanings assigned to such terms in Exhibit I hereto
                                                            ---------
(or, if not defined in Exhibit I hereto, the meaning assigned to such term in
                       ---------
Exhibit I to the Purchase Agreement).
---------

                             PRELIMINARY STATEMENTS

          Pursuant to that certain Receivables Sale Agreement, dated as of July
14, 2000 (the "Amended Receivables Sale Agreement") among Koley's Medical
Supply, Inc. ("Koley's"), Owens & Minor Medical, Inc., the Parent, Owens & Minor
West, Inc.("O&M West") and Stuart Medical, Inc. ("Stuart") as originators and
O&M Funding Corp., as Buyer, as amended by Amendment No. 1 to the Receivables
Sale Agreement, dated as of December 31, 2001, among O&M Distribution (successor
in interest to each of Koley's, Owens & Minor Medical, Inc., O&M West and
Stuart), the Parent, and O&M Funding Corp., each of O&M Distribution, O&M
Medical and the Parent has sold, transferred and assigned to Buyer, all of their
respective right, title and interest in and to the Receivables presently owned
by Buyer disregarding any purchases contemplated by this Receivables Sale
Agreement (the "Purchased Receivables"), together with the Related Security and
Collections with respect thereto.

          Each of O&M Distribution, Owens & Minor Medical, Inc., and the Parent
intends to terminate the Amended Receivables Sale Agreement as of the date
hereof.

          Each of the Originators desire to sell and assign to Buyer, and Buyer
desires to purchase from the Originators, all of the Originators' right, title
and interest in and to future Receivables originated by the Originators on or
prior to the Termination Date in accordance with the terms hereunder.

          The Originators and Buyer intend the transactions contemplated hereby
to be true sales of the Receivables from the Originators to Buyer, providing
Buyer with the full benefits of ownership of the Receivables, and the
Originators and Buyer do not intend these transactions to be, or for any purpose
to be characterized as, loans from Buyer to the Originators.

          Following the acquisition of Receivables from the Originators, Buyer
will sell undivided interests therein and in the associated Related Security and
Collections pursuant to that certain Receivables Purchase Agreement dated as of
April 30, 2002 (as the same may from time to time hereafter be amended,
supplemented, restated or otherwise modified, the "Purchase Agreement") among
Buyer, Parent, O&M Medical, as the Servicer, Blue Ridge Asset Funding
Corporation ("Blue Ridge"), Wachovia Bank, National Association ("Wachovia"),
individually as a liquidity provider to Blue Ridge and as agent for Blue Ridge
and its liquidity providers (in

<PAGE>

such latter capacity, a "Co-Agent"), Blue Keel Funding, L.L.C. ("Blue Keel" and,
together with Blue Ridge, the "Conduits"), and Fleet National Bank, individually
as a liquidity provider to Blue Keel and as agent for Blue Keel and its
liquidity providers (in such latter capacity, a "Co-Agent"), and Wachovia Bank,
National Association, as administrative agent for the Conduits and the Co-Agents
(in such capacity the "Collateral Agent" and, together with the Co-Agents, the
"Agents").

                                   ARTICLE I.
                                AMOUNTS AND TERMS

Section 1.1 Purchase of Receivables.
            -----------------------

     (a) Effective on the date hereof, in consideration for the Purchase Price
and upon the terms and subject to the conditions set forth herein, each
Originator does hereby sell, assign, transfer, set-over and otherwise convey to
Buyer, without recourse (except to the extent expressly provided herein), and
Buyer does hereby purchase from each Originator, all of such Originator's right,
title and interest in and to all Receivables existing as of the close of
business on the Business Day immediately prior to the date hereof and all
Receivables thereafter arising through and including the Termination Date,
together, in each case, with all Related Security, Lock-Boxes and Collection
Accounts relating thereto and all Collections thereof. In accordance with the
preceding sentence, on the date hereof Buyer shall acquire all of each such
Originator's right, title and interest in and to all Receivables existing as of
the close of business on the Business Day immediately prior to the date hereof
and thereafter arising through and including the Termination Date, together with
all Related Security relating thereto and all Collections thereof; provided that
Buyer shall be obligated to pay the Purchase Price therefor in accordance with
Section 1.2. In connection with the payment of the Purchase Price for any
------------
Receivables purchased hereunder, Buyer may request that each Originator deliver,
and each Originator shall deliver, such approvals, opinions, information,
reports or documents as Buyer may reasonably request.

     (b) It is the intention of the parties hereto that the Purchase of
Receivables by an Originator hereunder shall constitute an absolute sale or
other outright conveyance, which sale is absolute and irrevocable and provides
Buyer with the full benefits of ownership of the Receivables. Except for the
Purchase Price Credits owed pursuant to Section 1.3, the sale of Receivables
                                        -----------
hereunder is made without recourse to the Originators; provided, however, that
(i) each Originator shall be liable to Buyer for all representations,
warranties, covenants, and indemnities made by such Originator pursuant to the
terms of the Transaction Documents to which such Originator is a party, and (ii)
such sale does not constitute and is not intended to result in an assumption by
Buyer or any assignee thereof of any obligation of any Originator or any other
Person arising in connection with the Receivables, the related Contracts and/or
other Related Security or any other obligations of any Originator. In view of
the intention of the parties hereto that the Purchase of Receivables made
hereunder shall constitute a sale of such Receivables rather than loans secured
thereby, each Originator agrees that it will, on or prior to the date hereof and
in accordance with Section 4.1(e)(ii), mark its master data processing records
                   ------------------
relating to the Receivables with a legend acceptable to Buyer (and the
Collateral Agent and each Co-Agent, as Buyer's assignees), evidencing that Buyer
has purchased such Receivables as provided in this Agreement and to note in its
financial statements that its Receivables have been

                                       2

<PAGE>

sold to Buyer. Upon the request of Buyer (or the Collateral Agent or any
Co-Agent, as Buyer's assignee), each Originator will, at such Originator's
expense, execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate to perfect and maintain the
perfection of Buyer's ownership interest in the Receivables and the Related
Security and Collections with respect thereto, or as Buyer (or the Collateral
Agent, as Buyer's assignee) may reasonably request.

Section 1.2 Payment for the Purchase.
            ------------------------

     (a) The Purchase Price for each Receivable coming into existence after the
Closing Date shall be due and owing in full by Buyer to each Originator or its
designee on the date each such Receivable came into existence (except that Buyer
may, with respect to any such Purchase Price, offset against such Purchase Price
any amounts owed by such Originator to Buyer hereunder and which have become due
but remain unpaid) and shall be paid to each Originator in the manner provided
in the following paragraphs (b), (c) and (d).
                 --------------  ---     ---

     (b) With respect to any Receivables coming into existence after the date
hereof, on each Settlement Date, Buyer shall pay the Purchase Price therefor in
accordance with Section 1.2(d) and in the following manner:
                --------------

          first, by delivery of immediately available funds, to the extent of
          -----
          funds available to Buyer from its subsequent sale of an interest in
          the Receivables to each Co-Agent for the benefit of the Purchasers
          under the Purchase Agreement or other cash on hand, such funds to be
          allocated among the Originators as determined by Buyer in its sole
          discretion; and

          second, to the extent any portion of the Purchase Price remains
          ------
          unpaid, by delivery of the proceeds of a subordinated revolving loan
          from such Originator to Buyer (a "Subordinated Loan") in an amount not
          to exceed the least of (i) the remaining unpaid portion of such
          Purchase Price, (ii) the maximum Subordinated Loan that could be
          borrowed without rendering Buyer's Tangible Net Worth less than
          $10,000,000 and (iii) the maximum Subordinated Loan that could be
          borrowed without rendering the Net Value less than the aggregate
          outstanding principal balance of the Subordinated Loans (including the
          Subordinated Loan proposed to be made on such date). Each Originator
          is hereby authorized by Buyer to endorse on the schedule attached to
          its Subordinated Note an appropriate notation evidencing the date and
          amount of each advance thereunder, as well as the date of each payment
          with respect thereto, provided that if the failure to make such
          notation shall not affect any obligation of Buyer thereunder.

Subject to the limitations set forth above, each Originator irrevocably agrees
to advance each Subordinated Loan requested by Buyer on or prior to the
Termination Date. The Subordinated Loans shall be evidenced by, and shall be
payable in accordance with the terms and provisions of the Subordinated Notes
and shall be payable solely from funds which Buyer is not required under the
Purchase Agreement to set aside for the benefit of, or otherwise pay over to,
the

                                       3

<PAGE>

Purchasers, the Collateral Agent, the Co-Agents or any other Person then
entitled to any amounts as specified in the Purchase Agreement.

     (c) From and after the Termination Date, no Originator shall be obligated
to (but may, at its option) sell Receivables to Buyer unless such Originator
reasonably determines that the Purchase Price therefor will be satisfied with
funds available to Buyer from sales of interests in the Receivables pursuant to
the Purchase Agreement, Collections, proceeds of Subordinated Loans or
otherwise.

     (d) Although the Purchase Price for each Receivable coming into existence
after the date hereof shall be due and payable in full by Buyer to each
Originator on the date such Receivable comes into existence, settlement of the
Purchase Price between Buyer and each Originator shall be effected on a monthly
basis on Settlement Dates with respect to all Receivables coming into existence
during the same Accrual Period and based on the information contained in the
Settlement Report delivered by the Servicer pursuant to Article VIII of the
                                                        ------------
Purchase Agreement for the Accrual Period then most recently ended. Although
settlement shall be effected on Settlement Dates, increases or decreases in the
amount owing under the Subordinated Notes made pursuant to Section 1.2(b) shall
                                                           --------------
be deemed to have occurred and shall be effective as of the last Business Day of
the Accrual Period to which such settlement relates.

Section 1.3 Purchase Price Credit Adjustments. If on any day:
            ---------------------------------

     (a) the Outstanding Balance of a Receivable acquired from any Originator
is:

          (i)  reduced as a result of any defective, rejected or non-conforming
               goods or services, any discount or any adjustment or otherwise by
               an Originator (other than cash Collections on account of the
               Receivables),

          (ii) reduced or canceled as a result of a setoff in respect of any
               claim by any Person (whether such claim arises out of the same or
               a related transaction or an unrelated transaction), or

     (b) any of the representations and warranties set forth in Article II are
                                                                ----------
no longer true with respect to any Receivable,

then, in such event, Buyer shall be entitled to a credit (each, a "Purchase
Price Credit") against the Purchase Price otherwise payable hereunder equal to
the Purchase Price of such Receivable plus any interest which accrued during the
related Accrual Period. If such Purchase Price Credit exceeds the Original
Balance of the Receivables coming into existence on any day, then the applicable
Originator shall pay the remaining amount of such Purchase Price Credit either
(i) in cash within five (5) Business Days thereafter, or (ii) by deducting the
remaining amount of such Purchase Price Credit from any indebtedness owed to
such Originator under its Subordinated Note; provided, however, that so long as
a Termination Event or a Potential Termination Event has occurred and is
continuing, such Purchase Price Credit shall be paid by such Originator, to
Buyer, in cash, by deposit of immediately available funds to the relevant
Collection Account for application by the Servicer to the same extent as if
Collections on the applicable Receivable in such amount had been received on
such date. In the event that an Originator has paid in full the Purchase Price
Credit of any Receivable pursuant to this Section 1.3, Buyer shall reconvey such
                                          -----------

                                       4

<PAGE>

Receivable to such Originator, without representation or warranty, but free and
clear of all liens created by Buyer.

Section 1.4 Payments and Computations, Etc. All amounts to be paid or deposited
            ------------------------------
by Buyer hereunder shall be paid or deposited in accordance with the terms
hereof on the day when due in immediately available funds to the account of the
applicable Originator designated from time to time by such Originator or as
otherwise directed by such Originator. In the event that any payment owed by any
Person hereunder becomes due on a day that is not a Business Day, then such
payment shall be made on the next succeeding Business Day. If any Originator
fails to pay any amount hereunder when due, such Originator agrees to pay, on
demand, the Default Fee in respect thereof until paid in full; provided,
however, that such Default Fee shall not at any time exceed the maximum rate
permitted by applicable law. All computations of interest payable hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed.

Section 1.5 Transfer of Records; License of Software.
            ----------------------------------------

     (a) In connection with the Purchase of Receivables hereunder, each
Originator hereby sells, transfers, assigns and otherwise conveys to Buyer all
of such Originator's right and title to and interest in the Records relating to
all Receivables sold hereunder, without the need for any further documentation
in connection with the Purchase. In connection with such transfer, each
Originator hereby grants to each of Buyer, the Collateral Agent and the Servicer
an irrevocable, non-exclusive license to use, without royalty or payment of any
kind, all software used by such Originator to account for the Receivables, to
the extent necessary to administer the Receivables, whether such software is
owned by such Originator or is owned by others and used by such Originator under
license agreements with respect thereto, provided that should the consent of any
                                         --------
licensor of such Originator to such grant of the license described herein be
required, such Originator hereby agrees that upon the request of Buyer (or the
Collateral Agent or any Co-Agent, as Buyer's assignees), such Originator will
use its reasonable efforts to obtain the consent of such third-party licensor.
The license granted hereby shall be irrevocable, and shall terminate on the date
this Agreement terminates in accordance with its terms and all amounts payable
hereunder in respect of any Receivables or otherwise have been paid in full.

     (b) Each Originator (i) shall take such action requested by Buyer (or the
Collateral Agent or any Co-Agent, as Buyer's assignee), from time to time
hereafter, that may be necessary or appropriate to ensure that Buyer and its
assigns under the Purchase Agreement have an enforceable ownership interest in
the Records relating to the Receivables purchased from such Originator
hereunder, and (ii) shall use its reasonable efforts to ensure that Buyer, the
Collateral Agent and the Servicer each has an enforceable right (whether by
license or sublicense or otherwise) to use all of the computer software used to
account for the Receivables and/or to recreate such Records.

Section 1.6 Characterization. If, notwithstanding the intention of the parties
            ----------------
expressed in Section 1.1(b), any sale or contribution by any Originator to Buyer
             --------------
of Receivables hereunder shall be characterized as a secured loan and not a sale
or such sale shall for any reason be ineffective or unenforceable, then this
Agreement shall be deemed to constitute a security agreement under the UCC and
other applicable law. For this purpose and without being in

                                       5

<PAGE>

derogation of the parties' intention that the sale of Receivables hereunder
shall constitute a true sale thereof, each Originator hereby grants to Buyer a
duly perfected security interest in all of such Originator's right, title and
interest in, to and under all Receivables now existing and hereafter arising,
all Collections, Related Security and Records with respect thereto, each
Lock-Box and Collection Account and all proceeds of the foregoing, which
security interest shall be prior to all other Adverse Claims thereto. After the
occurrence of a Termination Event, Buyer (and the Collateral Agent and each
Co-Agent, as Buyer's assignees) shall have, in addition to the rights and
remedies which they may have under this Agreement, all other rights and remedies
provided to a secured creditor after default under the UCC and other applicable
law, which rights and remedies shall be cumulative.

Section 1.7 Addition of Originators. Any Subsidiary of the Parent may become an
            -----------------------
Originator hereunder with the prior written consent of Buyer (and the Collateral
Agent and each Co-Agent, as Buyer's assignees). Each Subsidiary of the Parent
that is proposed to be added as an Originator shall give to Buyer (and the
Collateral Agent and each Co-Agent, as Buyer's assignees) prior written notice
of its desire to be added as an Originator. Once the notice has been given, any
addition of a Subsidiary of the Parent as an Originator pursuant to this section
shall become effective on the first Business Day following the date on which (i)
such Subsidiary and the parties hereto shall have executed and delivered the
agreements, instruments and other documents (including, without limitation,
opinions of counsel, financing statements and collection account agreements) and
the amendments or other modifications to the Transaction Documents, in form and
substance satisfactory to Buyer (and to the Collateral Agent and each Co-Agent,
as Buyer's assignees), that Buyer (or the Collateral Agent or any Co-Agent, as
Buyer's assignee) determines are necessary or appropriate to effect the
addition, (ii) the Parent confirms in writing that the guaranty under Article
XIV of the Purchase Agreement covers the obligations of such new Originator as
an Originator and (iii) Buyer (and the Collateral Agent and each Co-Agent, as
Buyer's assignees) shall have consented, in writing, to the addition of such new
Originator. Upon such effectiveness, any reference to "Originator" in this
Agreement shall refer to each existing Originator and each Subsidiary of the
Parent added as an Originator pursuant to this Section.

Section 1.8 Termination of Status as an Originator. At any time when more than
            --------------------------------------
one Person is an Originator, an Originator may terminate its obligations as an
Originator hereunder if:

     (a) the Originator (a "Terminating Originator") shall have given Buyer (and
the Collateral Agent and each Co-Agent, as Buyer's assignees) not less than
ninety (90) days' prior written notice of its intention to terminate; provided,
however, that the Originator shall not be required to give more than thirty (30)
days' notice in the case of a termination resulting from a merger permitted by
Section 4.2(g),
-------------

     (b) an Authorized Officer of the Parent shall have certified that the
termination by the Terminating Originator of its status as an Originator will
not have a Material Adverse Effect on the business, financial condition or
assets of Buyer,

     (c) both immediately before and after giving effect to the termination by
the Terminating Originator, no Termination Event or Potential Termination Event
shall have

                                       6

<PAGE>

occurred and be continuing or shall reasonably be expected to occur as a result
of such termination,

     (d) both immediately before and after giving effect to the termination by
the Terminating Originator, the Aggregate Invested Amount shall not exceed the
Purchase Limit, and

     (e) the Collateral Agent and each Co-Agent, as Buyer's assignees) shall
have consented (which such consent shall not be unreasonably withheld), in
writing, to the termination of the obligations of such Terminating Originator.

          Any termination by an Originator shall become effective on the first
Business Day that follows the day on which the requirements of clauses (a)
                                                               -----------
through (e) shall have been satisfied (or such later date specified in the
        ---
notice or certificate referred to in the clauses). Any termination by an
Originator shall terminate its rights and obligations hereunder; provided,
however, that the termination shall not relieve the Terminating Originator of
obligations which relate to transferred Receivables owned by or obligations of
the Terminating Originator arising prior to the effective date of the
termination.

Section 1.9 Facility Fee.
            ------------

     (a) In consideration for the agreement by Buyer to provide the receivables
purchase facility hereunder and to purchase Receivables from the Originators
pursuant to this Agreement, each Originator agrees to pay Buyer a facility fee
(the "Facility Fee") as set forth in this Section 1.9. The Facility Fee shall
                                          ------------
accrue from the date of the initial purchase from such Originator hereunder, in
each case to the Termination Date, and shall be payable in arrears by such
Originator on each Settlement Date and the Termination Date.

     (b) The Facility Fee payable by each Originator on any Settlement Date and
on the Termination Date shall be calculated in accordance with the following
formula:

         FF    =    FFOB x FFP

         where:

         FF    =    the Facility Fee payable by such Originator on such date.

         FFOB  =    the aggregate Outstanding Balance of the Receivables that
                    were purchased from such Originator during the Accrual
                    Period immediately preceding such Settlement Date. (For
                    purposes of this calculation, the Outstanding Balance of a
                    Receivable shall be measured only at the time of such
                    Receivable's creation and sale to Buyer.)

         FFP   =    the Facility Fee Percentage as measured on such Settlement
                    Date as determined pursuant to paragraph (c) below.

                                       7

<PAGE>

     (c) "Facility Fee Percentage" as measured on any Settlement Date (or the
Termination Date) means for each Originator a percentage determined in
accordance with the following formula:

         FFP   =    (OTD/360) x FR

         where:

         FFP   =    the Facility Fee Percentage as measured on such Settlement
                    Date (or the Termination Date);

         OTD   =    the "Originator Turnover Days" for such Originator, which
                    shall be equal to the product of (x) the quotient of (i) the
                    aggregate Outstanding Balance of Receivables originated by
                    such Originator during the Accrual Period which occurs two
                    months prior to the month in which such Settlement Date (or
                    the Termination Date) occurs, divided by (ii) the aggregate
                    amount of the Collections received during the Accrual Period
                    immediately preceding such Settlement Date (or the
                    Termination Date) on Receivables originated by such
                    Originator, multiplied by (y) the number of days in the
                    calendar month coinciding with such Accrual Period; and

         FR    =    the Funding Rate as measured on such Settlement Date (or the
                    Termination Date), as determined pursuant to paragraph (d)
                    below.

     (d) "Funding Rate" as measured on any Settlement Date (or the Termination
Date) means a per annum percentage rate determined in accordance with the
following formula:

         FR    =    0.02% + DRP + SFP + EXP

         where:

         FR    =    the Funding Rate as measured on such Settlement Date
                    (or the Termination Date);

         DRP   =    the "Discount Rate Percentage", which shall be equal to a
                    fraction (expressed as a percentage) (x) the numerator of
                    which is the sum of the products obtained by multiplying (A)
                    each CP Rate, Base Rate or LIBO Rate applicable to Capital
                    outstanding as of the first day of the Accrual Period ending
                    immediately prior to such Settlement Date (or the
                    Termination Date), times (B) the amount of Capital to which
                    such CP Rate, Base Rate or LIBO Rate applied on such first
                    day, and (y) the denominator of which is the aggregate
                    outstanding amount of Capital on such first day;

                                       8

<PAGE>

         SFP   =    the "Servicer's Fee Percentage", which shall be equal to the
                    per annum percentage rate set forth in Section 8.6 of the
                    Purchase Agreement; and

         EXP   =    the amount, which shall be equal to a fraction (expressed as
                    a percentage), (x) the numerator of which is the sum of any
                    fees, costs and expenses incurred by Buyer during the
                    Accrual Period preceding such Settlement Date or Termination
                    Date (and not accounted for in the Adjustment Factor),
                    including, without limitation, reserve costs, tax payments
                    and indemnity obligations of Buyer for which Buyer is not
                    indemnified pursuant to this Agreement and (y) the
                    denominator of which is the aggregate Outstanding Balance of
                    the Receivables that were purchased from such Originator
                    during the Accrual Period immediately preceding such
                    Settlement Date or Termination Date; provided, however,
                    that, for purposes of minimizing fluctuations in the rate
                    calculated as the Funding Rate, the Servicer may allocate
                    and spread any unscheduled or unaccruable costs and expenses
                    of Buyer over several Settlement Dates and the Termination
                    Date at the Servicer's reasonable discretion, subject to the
                    requirement that such allocation be reasonably calculated to
                    allow Buyer to recover such costs and expenses over a
                    reasonable period of time.

Section 1.10 Limited Role of the Parent. Although certain of the Originators may
             --------------------------
do business under the name "Owens & Minor", legal and beneficial ownership of
the Receivables (without giving effect to the transactions contemplated
hereunder) remains in the name of the Originator that generated such
Receivables. The Parent is an Originator for the sole purpose of transferring
any right, title or interest, if any, it may have in the Receivables.

                                  ARTICLE II.
                         REPRESENTATIONS AND WARRANTIES

Section 2.1 Representations and Warranties of Originators. Each Originator
            ---------------------------------------------
hereby represents and warrants to Buyer and each Purchaser, as assignee of
Buyer, that:

     (a) Corporate Existence and Power. Such Originator is a corporation duly
         -----------------------------
organized, validly existing and in good standing under the laws of its state of
incorporation, and is duly qualified to do business and is in good standing as a
foreign corporation, and has and holds all corporate power and all governmental
licenses, authorizations, consents and approvals required to carry on its
business in each jurisdiction in which failure to qualify would have a Material
Adverse Effect on such Originator or the Receivables originated by it.

     (b) Power and Authority; Due Authorization Execution and Delivery. The
         -------------------------------------------------------------
execution and delivery by such Originator of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder and, such Originator's use of the proceeds
of the Purchase made hereunder, are within its corporate powers and authority
and have been duly authorized by all necessary corporate action on its part.
This

                                        9

<PAGE>

Agreement and each other Transaction Document to which such Originator is a
party has been duly executed and delivered by such Originator.

     (c) No Conflict. The execution and delivery by such Originator of this
         -----------
Agreement and each other Transaction Document to which it is a party, and the
performance of its obligations hereunder and thereunder do not contravene or
violate (i) its certificate or articles of incorporation or by-laws, (ii) any
law, rule or regulation (including without limitation Regulation U or Regulation
X) applicable to it, (iii) any restrictions under any agreement, contract or
instrument to which it is a party or by which it or any of its property is
bound, or (iv) any order, writ, judgment, award, injunction or decree binding on
or affecting it or its property, and do not result in the creation or imposition
of any Adverse Claim on assets of such Originator or its Subsidiaries (except as
created hereunder and except, in any case described in the foregoing clauses
(ii), (iii) and (iv), where such contravention or violation would not have a
Material Adverse Affect); and no transaction contemplated hereby requires
compliance with any bulk sales act or similar law.

     (d) Governmental Authorization. Other than the filing of the financing
         --------------------------
statements required hereunder, no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution and delivery by such Originator of this
Agreement and each other Transaction Document to which it is a party and the
performance of its obligations hereunder and thereunder.

     (e) Actions, Suits. There are no actions, suits or proceedings pending, or
         --------------
to the best of such Originator's knowledge, threatened, against or affecting
such Originator, or any of its properties, in or before any court, arbitrator or
other body, that, if adversely determined, would have a Material Adverse Effect
on such Originator or the Receivables originated by it. Such Originator is not
in default with respect to any order of any court, arbitrator or governmental
body.

     (f) Binding Effect. This Agreement and each other Transaction Document to
         --------------
which such Originator is a party constitute the legal, valid and binding
obligations of such Originator enforceable against such Originator in accordance
with their respective terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law). Each sale made by such Originator pursuant to this Agreement shall
constitute a valid sale, transfer and assignment of Receivables to Buyer,
enforceable against creditors of, and purchasers from, such Originator.

     (g) Accuracy of Information. All information heretofore furnished by such
         -----------------------
Originator or any of its Affiliates to Buyer (or to the Collateral Agent or any
Co-Agent, as Buyer's assignees) for purposes of or in connection with this
Agreement, any of the other Transaction Documents or any transaction
contemplated hereby or thereby is, and all such information hereafter furnished
by such Originator or any of its Affiliates to Buyer (or to the Collateral Agent
or any Co-Agent, as Buyer's assignees) will be, true and accurate in every
material respect on the date such information is stated or certified (or, if
such information specifies another date, such other date) and does not and will
not contain any material

                                       10

<PAGE>

misstatement of fact or omit to state a material fact or any fact necessary to
make the statements contained therein not materially misleading.

     (h) Use of Proceeds. No use of the proceeds of the Purchases hereunder will
         ---------------
violate or result in a violation of the Securities Act of 1933, as amended, or
the regulations issued pursuant thereto, or the Securities Exchange Act of 1934,
as amended, or the regulations issued pursuant thereto, or Regulation T, U or X
promulgated by the Board of Governors of the Federal Reserve System. "Margin
Stock" with the meaning of Regulation U promulgated by the Board of Governors of
the Federal Reserve System does not constitute more than 25% of the value of the
consolidated assets of the Performance Guarantor and its Subsidiaries.

     (i) Good Title. Immediately prior to the time each Receivable is
         ----------
transferred to Buyer hereunder, such Originator shall be the legal and
beneficial owner of each such Receivable and Related Security with respect
thereto, free and clear of any Adverse Claim, except as created by the
Transaction Documents. There have been duly filed all financing statements or
other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect such Originator's
ownership interest in each Receivable, its Collections and the Related Security.

     (j) Perfection. This Agreement, together with the filing of the financing
         -----------
statements contemplated hereby, is effective to transfer to Buyer (and Buyer
shall acquire from such Originator) legal and equitable title to, with the right
to sell and encumber each Receivable existing and hereafter arising, together
with the Related Security and Collections with respect thereto, free and clear
of any Adverse Claim, except as created by the Transactions Documents. There
have been duly filed all financing statements or other similar instruments or
documents necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect Buyer's ownership or security interest in the
Receivables, the Related Security and the Collections.

     (k) Places of Business. The principal places of business and chief
         ------------------
executive office of such Originator and the offices where it keeps all of its
Records are located at the address(es) listed on Exhibit II or such other
locations of which Buyer has been notified in accordance with Section 4.2(a) in
                                                              --------------
jurisdictions where all action required by Section 4.2(a) has been taken and
                                           --------------
completed. Such Originator's Federal Employer Identification Number and
Organizational Identification Number are correctly set forth on Exhibit II.

     (l) Collections. The conditions and requirements set forth in Section
         -----------                                               -------
4.1(i) have at all times been satisfied and duly performed. The names and
------
addresses of all Collection Banks, together with the account numbers of the
Collection Accounts of such Originator at each Collection Bank and the post
office box number of each Lock-Box, are listed on Exhibit III. Such Originator
has not granted any Person, other than Buyer (and its assigns) dominion and
control of any Lock-Box or Collection Account, or the right to take dominion and
control of any such Lock-Box or Collection Account at a future time or upon the
occurrence of a future event.

     (m) Material Adverse Effect. Since December 31, 2001, no event has occurred
         -----------------------
that would have a Material Adverse Effect.

                                       11

<PAGE>

     (n) Names. The name in which such Originator has executed this Agreement is
         -----
identical to the name of such Originator as indicated on the public record of
its state of organization which shows such Originator to have been organized. In
the past five (5) years, such Originator has not used any corporate names, trade
names or assumed names other than the name in which it has executed this
Agreement and as listed on Exhibit II.

     (o) Ownership of Buyer. Parent and O&M Distribution, collectively, own,
         ------------------
directly or indirectly, 100% of the issued and outstanding equity interests of
Buyer. Such equity interests are validly issued, fully paid and nonassessable,
and there are no options, warrants or other rights to acquire securities of
Buyer.

     (p) Not a Holding Company or an Investment Company. Such Originator is not
         ----------------------------------------------
a "holding company" or a "subsidiary holding company" of a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended, or any successor statute. Such Originator is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or any successor statute.

     (q) Compliance with Law. Such Originator has complied in all respects with
         -------------------
all applicable laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject which if violated would have a
Material Adverse Effect on such Originator or the Receivables originated by it.
Each Receivable, together with the Contract related thereto, does not contravene
any laws, rules or regulations applicable thereto (including, without
limitation, laws, rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy), and no part of such Contract is in violation
of any such law, rule or regulation.

     (r) Compliance with Credit and Collection Policy. Such Originator has
         --------------------------------------------
complied in all material respects with its Credit and Collection Policy with
regard to each Receivable and the related Contract, and has not made any
material change to such Credit and Collection Policy, except such material
change as to which the Agents have been notified in accordance with Section
                                                                    -------
4.1(a)(iii).
-----------

     (s) Payments to Originator. With respect to each Receivable transferred to
         ----------------------
Buyer hereunder, the Purchase Price received by such Originator constitutes
reasonably equivalent value in consideration therefor and such transfer was not
made for or on account of an antecedent debt. No transfer by such Originator of
any Receivable hereunder is or may be voidable under any section of the Federal
Bankruptcy Code.

     (t) Enforceability of Contracts. Each Contract with respect to each
         ---------------------------
Receivable is effective to create, and has created, a legal, valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any accrued interest thereon, enforceable
against the Obligor in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).

                                       12

<PAGE>

     (u) Eligible Receivables. Each Receivable purchased by Buyer from such
         --------------------
Originator hereunder and included in the Net Pool Balance was an Eligible
Receivable on the date of such Purchase.

     (v) [Reserved].

     (w) Accounting. Such Originator accounts for the transactions contemplated
         ----------
by this Agreement on its books and records and, for purposes of generally
accepted accounting principles, as sales in accordance with SFAS 140.

     (x) Compliance with Representations. On and as of the date of the Purchase
         -------------------------------
and on and as of each subsequent date each Receivable came into existence, each
Originator hereby represents and warrants that all of the other representations
and warranties set forth in this Article II are true and correct on and as of
each such date (and after giving effect to all Receivables in existence on each
such date) as though made on and as of each such date (except where such
representation or warranty relates to an earlier date, in which case as of such
earlier date).

     (y) Nature of Receivables. Each Receivable originated by such Originator is
         ---------------------
an "account," a "payment intangible" or "chattel paper" under and as defined in
the UCC of all applicable jurisdictions.

                                  ARTICLE III.
                             CONDITIONS OF PURCHASE

Section 3.1 Conditions Precedent to Purchase. Any Purchase under this Agreement
            --------------------------------
is subject to the conditions precedent that (a) Buyer shall have received on or
before the date of such purchase those documents listed on Schedule A and (b)
                                                           ----------
all of the conditions precedent to the initial purchase under the Purchase
Agreement shall have been satisfied or waived in accordance with the terms
thereof.

Section 3.2 Conditions Precedent to Subsequent Payments. Buyer's obligation to
            -------------------------------------------
pay for Receivables coming into existence after the date hereof shall be subject
to the further conditions precedent that (a) the Facility Termination Date shall
not have occurred under the Purchase Agreement; (b) Buyer (and the Collateral
Agent and each Co-Agent, as Buyer's assignees) shall have received such other
approvals, opinions or documents as it may reasonably request; and (c) on the
date such Receivable came into existence, the following statements shall be true
(and the acceptance of the proceeds of any payment for such Receivable shall be
deemed a representation and warranty by such Originator that such statements are
then true):

     (a) the representations and warranties set forth in Article II are true and
                                                         ----------
correct on and as of the date such Receivable came into existence as though made
on and as of such date; and

     (b) no event has occurred and is continuing that will constitute a
Termination Event or a Potential Termination Event.

                                       13

<PAGE>

Notwithstanding the foregoing conditions precedent, upon payment of the Purchase
Price for any Receivable (whether by payment of cash, through an increase in the
amounts outstanding under the Subordinated Note, by offset of amounts owed to
Buyer and/or by offset of capital contributions), title to such Receivable and
the Related Security and Collections with respect thereto shall vest in Buyer,
whether or not the conditions precedent to Buyer's obligation to pay for such
Receivable were in fact satisfied. The failure of such Originator to satisfy any
of the foregoing conditions precedent, however, shall give rise to a right of
Buyer to rescind the related purchase and direct such Originator to pay to Buyer
an amount equal to the Purchase Price payment that shall have been made with
respect to any Receivables related thereto.

                                   ARTICLE IV.
                                    COVENANTS

Section 4.1 Affirmative Covenants of Originators. Until the date on which this
            ------------------------------------
Agreement terminates in accordance with its terms and all obligations of such
Originator have been paid in full, each Originator hereby covenants to Buyer
(and the Agents and Purchasers), as to itself, as set forth below:

     (a) Reporting. Each Originator will maintain, for itself and each of its
         ---------
Subsidiaries, a system of accounting established and administered in accordance
with GAAP, and furnish to each of the Agents:

          (i)  Copies of Notices. Promptly upon its receipt of any notice,
               -----------------
               request for consent, financial statements, certification, report
               or other communication under or in connection with any
               Transaction Document from any Person other than Buyer or any of
               the Agents or Purchasers, copies of the same.

          (ii) Change in Credit and Collection Policy. Prior to the
               --------------------------------------
               effectiveness of any material change in or amendment to the
               Credit and Collection Policy, a copy of the Credit and Collection
               Policy then in effect and a notice indicating such proposed
               change or amendment.

          (iii) Other Information. Promptly, from time to time, such other
                -----------------
               information, documents, records or reports relating to the
               Receivables or the condition or operations, financial or
               otherwise, of such Originator as Buyer or any Agent may from time
               to time reasonably request in order to protect the interests of
               Buyer (and the Collateral Agent, as Buyer's assignees) under or
               as contemplated by this Agreement.

     (b) Notices. Each Originator will notify each of the Agents in writing of
         -------
any of the following promptly upon learning of the occurrence thereof,
describing the same and, if applicable, the steps being taken with respect
thereto:

          (i)  Termination Events or Potential Termination Events. The
               --------------------------------------------------
               occurrence of each Termination Event and each Potential
               Termination Event, by a statement of an Authorized Officer of
               such Originator.

                                       14

<PAGE>

          (ii) Judgment and Proceedings. The institution of any litigation,
               ------------------------
               arbitration proceeding or governmental proceeding against any
               such Originator or its Subsidiaries, which, if adversely
               determined, would have a Material Adverse Effect on such
               Originator or the Receivables originated by it, or which seeks to
               enjoin performance of or otherwise relates to the Transaction
               Documents.

          (iii) Material Adverse Effect. The occurrence of any event or
                -----------------------
               condition that has, or could reasonably be expected to have, a
               Material Adverse Effect.

          (iv) ERISA Events. The occurrence of any ERISA Event.
               ------------

          (v)  Downgrade of Parent. Any downgrade in the rating of any
               -------------------
               Indebtedness of Parent by S&P or by Moody's, setting forth the
               Indebtedness affected and the nature of such change.

     (c) Compliance with Laws and Preservation of Corporate Existence. Each
         ------------------------------------------------------------
Originator will comply in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject which, if violated, would have a Material Adverse Effect. Each
Originator will preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified in good standing as a foreign corporation in each
jurisdiction where failure to do so would have a Material Adverse Effect;
provided, however, that the merger of any Originator as permitted by Section
                                                                     -------
4.2(g) shall not be prohibited by the second sentence of this Section 4.1(c).
------                                                        --------------

     (d) Audits. Each Originator will furnish to the Agents from time to time
         ------
such information with respect to it and the Receivables as any of the Agents may
reasonably request. Each Originator will, from time to time during regular
business hours as requested by any of the Agents, upon reasonable notice, permit
each of the Agents or their respective agents or representatives: (i) to examine
and make copies of and abstracts from all Records in the possession or under the
control of such Originator relating to the Receivables and the Related Security,
including, without limitation, the related Contracts; provided, however, that
the Agents may not make and retain copies of any Contract, and (ii) to visit the
offices and properties of such Originator for the purpose of examining such
materials described in clause (i) above, and to discuss matters relating to such
                       ----------
Originator's financial condition or the Receivables and the Related Security or
such Originator's performance under any of the Transaction Documents or such
Originator's performance under the Contracts (subject to confidentiality
restrictions in the relevant Contracts) and, in each case, with any of the
officers or employees of such Originator having knowledge of such matters. The
Originators shall be solely responsible for the reasonable costs of each such
examination; provided that so long as: (A) no Termination Event under the
             --------
Purchase Agreement is outstanding, such Originator shall not be liable for the
cost of more than one (1) such examination during any calendar year, and (B) the
Agents will not request more than four (4) examinations in any one calendar
year.

                                       15

<PAGE>

     (e) Keeping and Marking of Records and Books.
         ----------------------------------------

          (i)  Each Originator will maintain and implement administrative and
               operating procedures (including, without limitation, an ability
               to recreate records evidencing Receivables in the event of the
               destruction of the originals thereof), and keep and maintain all
               documents, books, records and other information reasonably
               necessary or advisable for the collection of all Receivables
               (including, without limitation, records adequate to permit the
               immediate identification of each new Receivable and all
               Collections of and adjustments to each existing Receivable);
               provided, however, that nothing in this sentence shall require
               any Originator to retain records for a period longer than seven
               (7) years after creation. Each Originator will give the Agents
               notice of any material change in the administrative and operating
               procedures referred to in the previous sentence.

          (ii) Each Originator will (A) on or prior to the date hereof, mark its
               master data processing records and other books and records
               relating to the Receivables with a legend, acceptable to the
               Agents, describing Buyer's ownership interests in the Receivables
               and further describing the Receivable Interests under the
               Purchase Agreement and (B) upon the request of any of the Agents,
               (x) mark each Contract constituting an instrument, promissory
               note, chattel paper, document or certificated security (each as
               defined in the UCC) with a legend describing Buyer's ownership
               interests in the Receivables and further describing the
               Receivable Interests of the Collateral Agent (on behalf of the
               Purchasers) and (y) deliver to the Collateral Agent (as Buyer's
               assignee) all Contracts (including, without limitation, all
               multiple originals of any such Contract) relating to the
               Receivables.

     (f) Compliance with Contracts and Credit and Collection Policy. Each
         ----------------------------------------------------------
Originator will timely and fully (i) perform and comply with all provisions,
covenants and other promises required to be observed by it under the Contracts
related to the Receivables, and (ii) comply in all material respects with its
Credit and Collection Policy in regard to each Receivable and the related
Contract.

     (g) [Reserved].

     (h) Ownership. Each Originator will, at its expense, take all necessary
         ---------
action to establish and maintain, irrevocably in Buyer, legal and equitable
title to the Receivables, the Related Security and the Collections, free and
clear of any Adverse Claims other than Adverse Claims in favor of Buyer (and the
Collateral Agent, as Buyer's assignee) (including, without limitation, the
                                        ---------  ------- ----------
filing of all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect Buyer's interest in such Receivables, Related Security and
Collections and such other action to perfect, protect or more fully evidence the
interest of Buyer (and the Collateral Agent, as Buyer's assignee) as Buyer (or
the Collateral Agent, as Buyer's assignee) may reasonably request).

                                       16

<PAGE>

     (i) Purchasers' Reliance. Each Originator acknowledges that the Purchasers
         --------------------
are entering into the transactions contemplated by the Purchase Agreement in
reliance upon Buyer's identity as a legal entity that is separate from each
Originator and any Affiliates thereof. Therefore, from and after the date of
execution and delivery of this Agreement, each Originator will take all
reasonable steps including, without limitation, all steps that any of the Agents
may from time to time reasonably request, to maintain Buyer's identity as a
separate legal entity and to make it manifest to third parties that Buyer is an
entity with assets and liabilities distinct from those of any Originator and any
Affiliates thereof and not just a division of any Originator. Without limiting
the generality of the foregoing and in addition to the other covenants set forth
herein, each Originator (i) will not hold itself out to third parties as liable
for the debts of Buyer nor purport to own the Receivables and other assets
acquired by Buyer, (ii) will take all other actions necessary on its part to
ensure that Buyer is at all times in compliance with the covenants set forth in
Section 7.1(i) of the Purchase Agreement and (iii) will cause all tax
--------------
liabilities arising in connection with the transactions contemplated herein or
otherwise to be allocated between such Originator and Buyer on an arm's-length
basis and in a manner consistent with the procedures set forth in U.S. Treasury
Regulations (S)(S) 1.1502-33(d) and 1.1552-1.

     (j) Collections. Each Originator will cause (1) all proceeds from all
         -----------
Lock-Boxes to be directly deposited by a Collection Bank into a Collection
Account and (2) each Lock-Box and Collection Account to be subject at all times
to a Collection Account Agreement that is in full force and effect; provided
                                                                    --------
however, that with respect to each Existing Collection Account Agreement, such
-------
agreement shall have been assigned to the Collateral Agent on or prior to the
date hereof (in the case of each Existing Collection Account Agreement with
Wachovia Bank, National Association and Fleet National Bank), or shall be
replaced by a new Collection Account Agreement on or prior to the date thirty
(30) days after the date of this Agreement, and in the case of each Collection
Account Agreement assigned to the Collateral Agent on or before the date of this
Agreement, shall be replaced by a new Collection Account Agreement on or prior
to the date 90 days after the date of this Agreement. In the event any payments
relating to Receivables are remitted directly to an Originator or any Affiliate
of an Originator, such Originator will remit (or will cause all such payments to
be remitted by any such Affiliate) directly to a Collection Bank for deposit
into a Collection Account within two (2) Business Days following receipt thereof
and, at all times prior to such remittance, such Originator will itself hold or,
if applicable, will cause such payments to be held by any such Affiliate, in
trust for the exclusive benefit of Buyer (and the Collateral Agent, as Buyer's
assignee, for the benefit of the Purchasers). Each Originator will transfer
exclusive ownership, dominion and control of its respective Lock-Box and
Collection Account to Buyer and, will not grant the right to take dominion and
control of any Lock-Box or Collection Account at a future time or upon the
occurrence of a future event to any Person, except to Buyer (or the Collateral
Agent, as Buyer's assignee) as contemplated by this Agreement and the Purchase
Agreement. Only Collections of Receivables shall be deposited into the
Collection Accounts.

     (k) Taxes. Each Originator will file all tax returns and reports required
         -----
by law to be filed by it and promptly pay all material taxes and governmental
charges (including any governmental charges the nonpayment of which could result
in a Lien on the Receivables or the Related Security) at any time owing;
provided, however, that no Originator shall be required to pay any such taxes or
governmental charges which are not yet delinquent or are being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves in

                                       17

<PAGE>

accordance with GAAP shall have been set aside on its books unless the failure
to make any such payment (1) shall give rise to an immediate right to foreclose
on an Adverse Claim securing such amounts, (2) shall result in the attachment of
an Adverse Claim securing such amounts in excess of $1,000,000 in the aggregate,
or (3) would have a Material Adverse Effect.

Section 4.2 Negative Covenants of Originators. Until the date on which this
            ---------------------------------
Agreement terminates in accordance with its terms and all obligations or such
Originator hereunder have been paid in full, each Originator hereby covenants to
Buyer and the Agents and the Purchasers, as assignees of Buyer, as to itself,
that:

     (a) Name Change, Offices and Records. Such Originator will not change its
         --------------------------------
name, identity or corporate structure (within the meaning of Article 9 of any
                                                             ---------
applicable enactment of the UCC), change its jurisdiction of organization or
organize in an additional jurisdiction or relocate its chief executive office or
any office where corporate credit management is administered unless it shall
have: (i) given Buyer (and the Collateral Agent, as Buyer's assignee) at least
forty-five (45) days' prior written notice thereof and (ii) delivered to Buyer
(and to the Collateral Agent, as Buyer's assignee) all financing statements,
instruments and other documents requested by any of the Agents in connection
with such change or relocation.

     (b) Change in Payment Instructions to Obligors. Such Originator will not
         ------------------------------------------
add or terminate any bank as a Collection Bank, or make any change in the
instructions to Obligors regarding payments to be made to any Lock-Box or
Collection Account, unless the Collateral Agent, as Buyer's assignee) shall have
received, at least ten (10) days before the proposed effective date therefor,
(i) written notice of such addition, termination or change and (ii) with respect
to the addition of a Collection Bank or a Collection Account or Lock-Box, an
executed Collection Account Agreement with respect to the new Collection Account
or Lock-Box; provided, however, that an Originator may make changes in
instructions to Obligors regarding payments if such new instructions require
such Obligor to make payments to another existing Collection Account.

     (c) Modifications to Contracts and Credit and Collection Policy. Such
         -----------------------------------------------------------
Originator will not make any change to its Credit and Collection Policy that
could materially and adversely affect the collectibility of the Receivables or
decrease the credit quality of any newly created Receivables, without the prior
written consent of the Agents. Except as otherwise permitted in its capacity as
Servicer pursuant to Article VIII of the Purchase Agreement, O&M Medical will
                     ------------
not extend, amend or otherwise modify the terms of any Receivable or any
Contract related thereto other than in accordance with the related Originator's
Credit and Collection Policy.

     (d) Sales, Liens. Such Originator will not sell, assign (by operation of
         ------------
law or otherwise) or otherwise dispose of, or grant any option with respect to,
or create or suffer to exist any Adverse Claim upon (including, without
limitation, the filing of any financing statement) or with respect to, any
Receivable, Related Security or Collections, or upon or with respect to any
Contract under which any Receivable arises, or any Lock-Box or Collection
Account, or assign any right to receive income with respect thereto (other than,
in each case, (1) the creation of the interests therein in favor of Buyer
provided for herein or (2) an Adverse Claim resulting from the nonpayment of
taxes which is permitted to exist under Section 4.1(k)), and such Originator
                                        --------------
shall defend the right, title and interest of the Collateral Agent, as Buyer's
assignee) in, to and under

                                       18

<PAGE>

any of the foregoing property, against all claims of third parties claiming
through or under such Originator. Such Originator shall not create or suffer to
exist any mortgage, pledge, security interest, encumbrance, lien, charge or
other similar arrangement on any inventory the sale or lease of which would give
rise to a Receivable.

     (e) [Reserved].

     (f) Accounting for Purchase. Such Originator will not, and will not permit
         -----------------------
any Affiliate to, account for or treat (whether in financial statements or
otherwise) the transactions contemplated hereby in any manner other than the
sale of the Receivables and the Related Security by such Originator to Buyer or
in any other respect account for or treat the transactions contemplated hereby
in any manner other than as a sale of the Receivables and the Related Security
by such Originator to Buyer except to the extent that such transactions are not
recognized on account of consolidated financial reporting in accordance with
generally accepted accounting principles.

     (g) Merger. No Originator shall merge or consolidate with or into, or
         ------
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions, and except as otherwise contemplated herein) all or
any material part of its assets (whether now owned or hereafter acquired) to, or
acquire all or any material part of the assets of, any Person; provided,
however, that any Originator may merge with or into (i) any other Originator or
(ii) any direct or indirect wholly-owned subsidiary of the Parent (other than
Buyer), so long as the surviving entity of such merger expressly assumes the
obligations of such Originator hereunder and the Parent confirms that the
guaranty under the Performance Undertaking covers the obligations of such
surviving entity as Originator.

                                   ARTICLE V.
                               TERMINATION EVENTS

Section 5.1 Termination Events. The occurrence of any one or more of the
            ------------------
following events shall constitute a Termination Event:

     (a) Such Originator shall fail to make any payment or deposit required
hereunder when due and such failure continues for two (2) Business Days.

     (b) Such Originator shall fail to perform or observe any term, covenant or
agreement hereunder (other than as referred to in paragraph (a)) or any other
Transaction Document to which it is a party and such failure shall continue for
five (5) consecutive Business Days.

     (c) Any representation, warranty, certification or statement made by such
Originator in this Agreement, any other Transaction Document or in any other
document delivered pursuant hereto or thereto shall prove to have been incorrect
in any material respect when made or deemed made; provided that the materiality
threshold in the preceding clause shall not be applicable with respect to any
representation or warranty which itself contains a materiality threshold and
provided further, that any misrepresentation or certification for which Buyer
has actually received a Purchase Price Credit shall not constitute a Termination
Event hereunder.

                                       19

<PAGE>

     (d) Failure of the Performance Guarantor or any Originator to pay any
Indebtedness when due in excess of $10,000,000 after taking into account any
applicable period of grace; or the default by the Performance Guarantor or any
Originator in the performance of any term, provision or condition contained in
any agreement under which any such Indebtedness was created or is governed, the
effect of which is to cause, or to permit the holder or holders of such
Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any such Indebtedness of the Performance Guarantor or any
Originator shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the date of maturity
thereof.

     (e) (i)The Performance Guarantor or any Originator or any of their
respective Subsidiaries shall generally not pay its debts as such debts become
due or shall admit in writing its inability to pay its debts generally or shall
make a general assignment for the benefit of creditors; or (ii) any proceeding
shall be instituted by or against the Performance Guarantor or such Originator
or any of their respective Subsidiaries seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or any substantial part of its property
which proceeding, if not instituted by such Originator, shall remain undismissed
or unstayed for a period of sixty (60) days; or (iii) the Performance Guarantor
or any Originator or any of their respective Subsidiaries shall take any
corporate action to authorize any of the actions set forth in the foregoing
clauses (i) or (ii) of this subsection (e).

     (f) A Change of Control shall occur.

     (g) One or more final judgments for the payment of money in an amount in
excess of $10,000,000 in the aggregate, shall be entered against the Performance
Guarantor or any Originator on claims not covered by insurance or as to which
the insurance carrier has denied its responsibility, and such judgment shall
continue unsatisfied and in effect for thirty (30) consecutive days without a
stay of execution.

     (h) Any Pension Plan of Parent or any of its ERISA Affiliates:

          (i)  shall fail to be funded in accordance with the minimum funding
               standard required by applicable law, the terms of such Pension
               Plan, Section 412 of the Tax Code or Section 302 of ERISA for any
               plan year or a waiver of such standard is sought or granted with
               respect to such Pension Plan under applicable law, the terms of
               such Pension Plan or Section 412 of the Tax Code or Section 303
               of ERISA, in either such case in an amount in excess of
               $5,000,000; or

          (ii) shall require Parent or any of its ERISA Affiliates to provide
               security under applicable law, the terms of such Pension Plan,
               Section 401 or 412 of the Tax Code or Section 306 or 307 of ERISA
               in an amount in excess of $5,000,000; or

                                       20

<PAGE>

          (iii) An ERISA Event shall occur (other than the termination of the
               frozen Pension Plan maintained by Parent as of the date hereof,
               but only to the extent that Parent terminates such Pension Plan
               in a standard termination under Section 4041 of ERISA) and the
               ERISA Event is reasonably likely to result in the imposition of
               any liability on an Originator in an amount in excess of
               $5,000,000.

     (i) The Internal Revenue Service shall file notice of a lien pursuant to
Section 6323 of the Tax Code with regard to any of the Receivables, Collections
or Related Security and such lien shall not have been released within fifteen
(15) days of the related Originator's receipt of the notice of the filing of
such lien, or the PBGC shall, or shall indicate its intention to, file notice of
a lien pursuant to Section 4068 of ERISA with regard to any of the Receivables,
Collections or Related Security.

     (j) Any event shall occur which (i) materially and adversely impairs the
ability of the Originators to originate Receivables of a credit quality that is
at least equal to the credit quality of the Receivables sold or contributed to
Buyer on the date of this Agreement and (ii) has, or could be reasonably
expected to have, a Material Adverse Effect.

     (k) As of the end of the fiscal quarter of the Parent, the Consolidated
Current Ratio (as defined in the Parent Credit Agreement as of the date hereof)
shall not be less than 1.40 to 1.0.

     (l) Consolidated Net Worth (as defined in the Parent Credit Agreement as of
the date hereof) shall not be less than the sum of (A) $290,000,000 plus (B) as
of the end of each fiscal quarter beginning with the fiscal quarter ended March
31, 2002, an amount equal to fifty percent (50%) of Consolidated Net Income (as
defined in the Parent Credit Agreement as of the date hereof and to the extent
positive) for such fiscal quarter, such increases to be cumulative, plus (C) an
amount equal to one hundred percent (100%) of the net proceeds from Equity
Transactions (as defined in the Parent Credit Agreement as of the date hereof)
occurring after April 30, 2002 minus any payments made by the Parent to
repurchase Junior Subordinated Debentures (as defined in the Parent Credit
Agreement as of the date hereof) to the extent such repurchase is permitted
under Section 8.7(b)(iv) of the Parent Credit Agreement.

     (m) As of the end of any fiscal quarter of the Parent set forth below, the
Consolidated Total Leverage Ratio (as defined in the Parent Credit Agreement as
of the date hereof) shall not be greater than 3.25:1.0.

     (n) As of the end of any fiscal quarter of the Parent set forth below, the
Consolidated Fixed Charge Coverage Ratio (as defined in the Parent Credit
Agreement as of the date hereof) shall not be less than 1.5:1.0.

     (o) Performance Guarantor shall fail to perform or observe any term,
covenant or agreement required to be performed by it under the Performance
Undertaking (after the expiration of any applicable grace period), or the
Performance Undertaking shall cease to be effective or to be the legally valid,
binding and enforceable obligation of Performance Guarantor,

                                       21

<PAGE>

or Performance Guarantor shall directly or indirectly contest in any manner such
effectiveness, validity, binding nature or enforceability.

Section 5.2 Remedies. Upon the occurrence and during the continuation of an
            --------
Termination Event, Buyer may take any of the following actions: (i) declare the
Termination Date to have occurred, whereupon the Termination Date shall
forthwith occur, without demand, protest or further notice of any kind, all of
which are hereby expressly waived by each Originator; provided, however, that
upon the occurrence of Termination Event described in Section 5.1(d), or of an
                                                      --------------
actual or deemed entry of an order for relief with respect to an Originator
under the Federal Bankruptcy Code, the Termination Date shall automatically
occur, without demand, protest or any notice of any kind, all of which are
hereby expressly waived by each Originator and (ii) to the fullest extent
permitted by applicable law, declare that the Default Fee shall accrue with
respect to any amounts then due and owing by Buyer to such Originator. The
aforementioned rights and remedies shall be in addition to all other rights and
remedies of Buyer and its assigns available under this Agreement, by operation
of law, at equity or otherwise, all of which are hereby expressly preserved,
including, without limitation, all rights and remedies provided under the UCC,
all of which rights shall be cumulative.

                                   ARTICLE VI.
                                 INDEMNIFICATION

Section 6.1 Indemnities by Originators. (a) Without limiting any other rights
            --------------------------
that Buyer may have hereunder or under applicable law, each Originator, jointly
and severally, hereby agrees to indemnify Buyer, each Agent and each Purchaser,
and their respective assigns, officers, directors, agents, employees, members
and direct or indirect owners (each an "Indemnified Party") from and against any
and all damages, losses, claims, taxes, liabilities, costs, expenses and for all
other amounts payable, including reasonable attorneys' fees and disbursements
(all of the foregoing being collectively referred to as "Indemnified Amounts")
awarded against or incurred by any of them arising out of or as a result of this
Agreement or the acquisition, either directly or indirectly, by Buyer of an
interest in the Receivables, excluding, however:

     (1) Indemnified Amounts to the extent a final judgment of a court of
     competent jurisdiction holds that such Indemnified Amounts resulted from
     gross negligence or willful misconduct on the part of the Indemnified Party
     seeking indemnification;

     (2) Indemnified Amounts to the extent the same includes losses in respect
     of Receivables that are uncollectible on account of the insolvency,
     bankruptcy or lack of creditworthiness of the related Obligor; or

     (3) any Excluded Taxes except to the extent the Indemnified Party is
     entitled to receive an amount equal to the sum it would have received had
     no deductions for Taxes and Other Taxes been made as set forth in Section
     6.1(c)(i);

provided, however, that nothing contained in this sentence shall limit the
liability of any Originator or limit the recourse of Buyer to any Originator for
amounts otherwise specifically provided to be paid by such Originator under the
terms of this Agreement.

                                       22

<PAGE>

          Without limiting the generality of the foregoing indemnification, each
Originator shall, jointly and severally, indemnify Buyer for Indemnified Amounts
(including, without limitation, losses in respect of uncollectible receivables,
regardless of whether reimbursement therefor would constitute recourse to such
Originator) relating to or resulting from:

          (i)  any representation or warranty made by such Originator (or any
               officers of such Originator) under or in connection with this
               Agreement, any other Transaction Document or any other
               information or report delivered by such Originator pursuant
               hereto or thereto, which shall have been false or incorrect when
               made or deemed made;

          (ii) the failure by such Originator, to comply with any applicable
               law, rule or regulation with respect to any Receivable or
               Contract related thereto, or the nonconformity of any Receivable
               or Contract included therein with any such applicable law, rule
               or regulation or any failure of such Originator to keep or
               perform any of its obligations, express or implied, with respect
               to any Contract;

          (iii) any failure of such Originator to perform its duties, covenants
               or other obligations in accordance with the provisions of this
               Agreement or any other Transaction Document;

          (iv) any products liability or similar claim arising out of or in
               connection with merchandise, insurance or services that are the
               subject of any Contract;

          (v)  any dispute, claim, offset or defense (other than discharge in
               bankruptcy of the Obligor) of the Obligor to the payment of any
               Receivable (including, without limitation, a defense based on
               such Receivable or the related Contract not being a legal, valid
               and binding obligation of such Obligor enforceable against it in
               accordance with its terms), or any other claim resulting from the
               sale of the merchandise or service related to such Receivable or
               the furnishing or failure to furnish such merchandise or
               services;

          (vi) the commingling of Collections of Receivables at any time with
               other funds other than Collections in respect of sales taxes;

          (vii) any investigation, litigation or proceeding related to or
               arising from this Agreement or any other Transaction Document,
               the transactions contemplated hereby, such Originator's use of
               the proceeds of the Purchase from it hereunder, the ownership of
               the Receivables originated by such Originator or any other
               investigation, litigation or proceeding relating to such
               Originator in which any Indemnified Party becomes involved as a
               result of any of the transactions contemplated hereby;

          (viii) any inability to litigate any claim against any Obligor in
               respect of any Receivable as a result of such Obligor being
               immune from civil and commercial law or suit on the grounds of
               sovereign immunity, failure to

                                       23

<PAGE>

               comply with applicable state or federal assignment of claims acts
               (or analogous laws) and the regulations promulgated thereunder,
               or otherwise from any legal action, suit or proceeding;

          (ix) any Termination Event described in Section 5.1(d);
                                                  --------------

          (x)  any failure to vest and maintain vested in Buyer, or to transfer
               to Buyer, legal and equitable title to, and ownership of, the
               Receivables originated by such Originator and the related
               Collections, and all of such Originator's right, title and
               interest in, the Related Security and the Collections, in each
               case, free and clear of any Adverse Claim;

          (xi) the failure to have filed, or any delay in filing, financing
               statements or other similar instruments or documents under the
               UCC of any applicable jurisdiction or other applicable laws with
               respect to any Receivable originated by such Originator, the
               Related Security and Collections with respect thereto, and the
               proceeds of any thereof, whether at the time of the Purchase from
               such Originator hereunder or at any subsequent time;

          (xii) any action or omission by such Originator which reduces or
               impairs the rights of Buyer with respect to any Receivable or the
               value of any such Receivable;

          (xiii) any attempt by any Person (other than a Purchaser) to void the
               Purchase from such Originator hereunder under statutory
               provisions or common law or equitable action; and

          (xiv) any offset or recoupment against the Outstanding Balance of any
               Receivable by any Governmental Authority of taxes due and owing
               to it by any Originator or any of its Affiliates;

     (b) Notwithstanding anything to the contrary in this Agreement, solely for
the purposes of determining Indemnified Amounts owing under this Section 6.1,
                                                                 -----------
any representation, warranty or covenant qualified by materiality or the
occurrence of a Material Adverse Effect shall not be so qualified.

     (c) Taxes.
         -----

          (i)  Any and all payments made hereunder to an Indemnified Party shall
               be made free and clear of and without deduction for any and all
               current or future taxes, levies, imposts, deductions, charges or
               withholdings, and all liabilities with respect thereto excluding:
                                                                      ---------
               (A) franchise taxes, excise taxes and taxes imposed on or
               measured by all or part of the gross or net income (but not
               including any such tax in the nature of a withholding tax) of
               such Indemnified Party, in each case, by the jurisdiction under
               the laws of which such Indemnified Party is organized or has its
               applicable lending or administrative office or any political
               subdivision of any thereof, to the extent that the imposition of
               such taxes is consistent with the Intended

                                       24

<PAGE>

               Characterization of the Receivable Interests for income tax
               purposes, and (B) taxes that would not have been imposed if the
               only connection between such Indemnified Party and the
               jurisdiction imposing such taxes was the activities of such
               Indemnified Party pursuant to or in respect of this Agreement
               (including entering into, lending money or extending credit
               pursuant to, receiving payments under, or enforcing this
               Agreement) (all such excluded taxes, levies, imposts, deductions,
               charges, withholding and liabilities collectively or individually
               referred to herein as "Excluded Taxes" and all such nonexcluded
               taxes, levies, imposts, deductions, charges, withholdings, and
               liabilities collectively or individually referred to herein as
               "Taxes"). If any Originator shall be required to deduct any Taxes
               or Other Taxes from or in respect of any sum payable hereunder to
               any Indemnified Party: (A) the sum payable shall be increased by
               the amount (an "additional amount") necessary so that after
               making all required deductions (including deductions applicable
               to additional sums payable under this Section 6.1(c)) such
                                                     --------------
               Indemnified Party shall receive an amount equal to the sum it
               would have received had no such deductions been made, (B) such
               Originator shall make such deductions and (C) such Originator
               shall pay the full amount deducted to the relevant Governmental
               Authority in accordance with applicable law.

          (ii) In addition, each Originator agrees to pay to the relevant
               Governmental Authority in accordance with applicable law all
               taxes, levies, imposts, deductions, charges, assessments or fees
               of any kind (including but not limited to any current or future
               stamp or documentary taxes or any other excise or property taxes,
               charges, or similar levies, but excluding any Excluded Taxes)
               imposed upon any Indemnified Party as a result of the
               transactions contemplated by this Agreement or that arise from
               any payment made hereunder or from the execution, delivery, or
               registration of or otherwise similarly with respect to, this
               Agreement ("Other Taxes").

          (iii) Each Originator agrees to indemnify each Indemnified Party from
               and against the full amount of Taxes and Other Taxes arising out
               of this Agreement (whether directly or indirectly) imposed upon
               or paid by such Person and any liability (including penalties,
               interest, and expenses (including reasonable attorneys' fees and
               expenses)) arising with respect thereto, whether or not such
               Taxes or Other Taxes were correctly or legally asserted by the
               relevant Governmental Authority (including any Taxes or Other
               Taxes imposed upon such Person on account of the Intended
               Characterization not being respected by a relevant Government
               Authority). A certificate as to the amounts prepared by an
               Indemnified Party, absent manifest error, shall be final,
               conclusive, and binding for all purposes. Such indemnification
               shall be made within 30 days after the date the Indemnified Party
               makes a timely written demand therefor or the time at which such
               amount is payable after a timely written demand therefor has been
               made, whichever is earlier. A written demand will be considered
               "timely" for purposes of the preceding sentence only if it is

                                       25

<PAGE>

               received by such Originator no later than 180 days after the
               earlier of (A) the date on which such Indemnified Party makes
               such payment of Taxes or Other Taxes or liability arising
               therefrom or with respect thereto and (B) the date on which the
               relevant Governmental Authority or other party makes written
               demand upon such Indemnified Party for payment of such Taxes or
               Other Taxes or liability arising therefrom or with respect
               thereto (after all appeals have been fully pursued) to the extent
               the Indemnified Party elects to pursue such appeals. Each
               Indemnified Party agrees to provide the related Originator with
               written notice of any official demand for payment after the
               appeals process with such Governmental Authority has been
               completed by a Governmental Authority or other party pursuant to
               clause (B) above promptly upon such Indemnified Party's receipt
               of such official demand.

          (iv) As soon as practicable after the date of any payment of Taxes or
               Other Taxes by an Originator to a Governmental Authority
               hereunder, such Originator will deliver to the relevant
               Indemnified Party the original or a certified copy of a receipt
               issued by such Governmental Authority evidencing payment thereof.

          (v)  Without prejudice to the survival of any other agreement
               contained herein, the agreements and obligations contained in
               this Section 6.1(c) shall survive the termination of this
                    --------------
               Agreement.

          (vi) Notwithstanding any other provision of this Section 6.1(c), no
               Originator shall be required to indemnify or pay any additional
               amounts to any Non-U.S. Purchaser or Agent pursuant to Sections
               6.1(c)(i), (ii), or (iii) with respect to Taxes or Other Taxes
               imposed by the United States if the obligation to withhold with
               respect to such Taxes or Other Taxes results from, or would not
               have occurred but for, the failure of any Non-U.S. Purchaser or
               Agent to deliver the forms described in this paragraph (vi) (it
               being understood that the Non-U.S. Purchaser or Agent shall not
               have failed to comply with the provisions of paragraph (vi) if it
               is legally unable to deliver the forms described therein) for any
               period with respect to which the Non-U.S. Purchaser or Agent have
               failed to provide the Originators with (A) a complete and
               properly executed Internal Revenue Service Form W-8BEN or W-8ECI,
               as appropriate, or any successor form prescribed by the Internal
               Revenue Service, certifying that such Indemnified Party is
               entitled to benefits under an income tax treaty to which the
               United States is a party which reduces to zero the rate of
               withholding tax on payments due under this Agreement or
               certifying that the income receivable pursuant to this Agreement
               or any of the other Transaction Documents is effectively
               connected with the conduct of a trade or business in the United
               States, (B) a complete and properly executed Internal Revenue
               Service Form W-9, or any successor form prescribed by the
               Internal Revenue Service, (C) any other complete and properly
               executed form or certificate required by any taxing authority

                                       26

<PAGE>

               (including any certificate required by Sections 871(h) and 881(c)
               of the Tax Code), certifying that such Indemnified Party is
               entitled to a complete exemption from tax on payments pursuant to
               this Agreement or any of the other Transaction Documents, (D) a
               complete and properly executed Internal Revenue Service Form
               W-8IMY and any related documents required in conjunction with
               such W-8IMY, (unless such failure is due to a change in treaty,
               law, or regulation occurring subsequent to the date on which a
               form originally was required to be provided); provided, however,
                                                             --------  -------
               that should an Indemnified Party, which is otherwise exempt from
               or subject to a reduced rate of withholding tax, become subject
               to Taxes because of its failure to deliver a form required
               hereunder, the Originators shall take such steps as the
               Indemnified Party shall reasonably request to assist such
               Indemnified Party in recovering such Taxes. The Originator shall
               be required to pay any Taxes or Other Taxes resulting from a
               change in law (or interpretation thereof) that becomes effective
               after the date hereof. Upon becoming aware of a change in law (or
               interpretation) each Party hereto will use its best efforts to
               provide the other party with notice of such change.

          (vii) Any Indemnified Party claiming any indemnity payment or
               additional amounts payable pursuant to this Section 6.1(c) shall
                                                           --------------
               use reasonable efforts (consistent with legal and regulatory
               restrictions) to file any certificate or document reasonably
               requested in writing by an Originator or to change the
               jurisdiction of its applicable lending office or administrative
               office if the making of such a filing or change would avoid the
               need for or reduce the amount of any such indemnity payment or
               additional amounts that may thereafter accrue and would not, in
               the good faith determination of such Indemnified Party, be
               otherwise disadvantageous to such Indemnified Party.

          (viii) Nothing contained in this Section 6.1(c) shall require an
                                           --------------
               Indemnified Party to make available any of its tax returns (or
               any other information that it deems to be confidential or
               proprietary).

          (ix) If any Indemnified Party receiving an indemnification payment
               hereunder with respect to Taxes or Other Taxes or liabilities
               arising therefrom shall subsequently receive a refund from any
               taxing authority which is specifically attributable to such
               indemnification payment, such Person shall promptly pay such
               refund to the applicable Originator.

Section 6.2 Other Costs and Expenses. The Originators shall pay to Buyer on
            ------------------------
demand all costs and out-of-pocket expenses in connection with the preparation,
execution, delivery and administration of this Agreement, the transactions
contemplated hereby and the other documents to be delivered hereunder. The
Originators shall pay to Buyer on demand any and all costs and expenses of
Buyer, if any, including reasonable counsel fees and expenses in connection with
the enforcement of this Agreement and the other documents delivered hereunder
and in connection

                                       27

<PAGE>

with any amendment, restructuring or workout of this Agreement or such
documents, or the administration of this Agreement following an Termination
Event.

                                  ARTICLE VII.
                                  MISCELLANEOUS

Section 7.1 Waivers and Amendments. (a) No failure or delay on the part of Buyer
            ----------------------
(or the Collateral Agent, on behalf of the Co-Agents and Purchasers, as Buyer's
assignee) in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other further exercise thereof or the
exercise of any other power, right or remedy. The rights and remedies herein
provided shall be cumulative and nonexclusive of any rights or remedies provided
by law. Any waiver of this Agreement shall be effective only in the specific
instance and for the specific purpose for which given.

     (b) No provision of this Agreement may be amended, supplemented, modified
or waived except in writing signed by each Originator and Buyer and, to the
extent required under the Purchase Agreement, the Co-Agents, the Collateral
Agent and the Financial Institutions or the Required Financial Institutions.

Section 7.2 Notices. Except as provided below, all communications and notices
            -------
provided for hereunder shall be in writing (including bank wire, telecopy or
electronic facsimile transmission or similar writing) and shall be given to the
other parties hereto at their respective addresses or telecopy numbers set forth
on the signature pages hereof or at such other address or telecopy number as
such Person may hereafter specify for the purpose of notice to each of the other
parties hereto. Each such notice or other communication shall be effective (i)
if given by telecopy, upon the receipt thereof, (ii) if given by mail, three (3)
Business Days after the time such communication is deposited in the mail with
first class postage prepaid or (iii) if given by any other means, when received
at the address specified in this Section 7.2.
                                 -----------

Section 7.3 Protection of Ownership Interests of Buyer. (a) Each Originator
            ------------------------------------------
agrees that from time to time, at its expense, it will promptly execute and
deliver all instruments and documents, and take all actions, that may be
necessary or desirable, or that the Collateral Agent may request, to perfect,
protect or more fully evidence the Receivable Interests, or to enable Buyer (or
the Collateral Agent, as Buyer's assignee) to exercise and enforce their rights
and remedies hereunder. At any time, Buyer (or the Collateral Agent, as Buyer's
assignee) may, at each Originator's sole cost and expense, direct such
Originator to notify the Obligors of Receivables of the ownership interests of
Buyer and its assigns under this Agreement and the other Transaction Documents
and may also direct that payments of all amounts due or that become due under
any or all Receivables be made directly to Buyer or its designee (or the
Collateral Agent, as Buyer's assignee, for the benefit of the Purchasers).

         (b) If any Originator fails to perform any of its obligations
hereunder, Buyer (or the Collateral Agent, as Buyer's assignee) may (but shall
not be required to) perform, or cause performance of, such obligation, and the
costs and expenses incurred by Buyer (or the Collateral Agent, as Buyer's
assignee) in connection therewith shall be payable by such Originator as
provided in Section 6.2. Each Originator irrevocably authorizes Buyer (or the
            -----------
Collateral Agent,

                                       28

<PAGE>

as Buyer's assignee) at any time and from time to time in the sole discretion of
Buyer (or the Collateral Agent, as Buyer's assignee), and appoints Buyer (and
the Collateral Agent, as Buyer's assignee) as its attorney(s)-in-fact, to act on
behalf of such Originator (i) to execute on behalf of such Originator as debtor
and to file financing statements necessary or desirable in the sole discretion
of Buyer (or the Collateral Agent, as Buyer's assignee) to perfect and to
maintain the perfection and priority of the interest of Buyer in the Receivables
and (ii) to file a carbon, photographic or other reproduction of this Agreement
or any financing statement with respect to the Receivables as a financing
statement in such offices as Buyer (or the Collateral Agent, as Buyer's
assignee) in its sole discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of Buyer's interests in the Receivables.
This appointment is coupled with an interest and is irrevocable. If any
Originator fails to perform any of its obligations hereunder: (A) such
Originator hereby authorizes Buyer (or its assigns) to file financing statements
and other filing or recording documents with respect to the Receivables and
Related Security (including any amendments thereto, or continuation or
termination statements thereof), without the signature or other authorization of
such Originator, in such form and in such offices as Buyer (or any of its
assigns) reasonably determines appropriate to perfect or maintain the perfection
of the ownership or security interests of Buyer (or its assigns) hereunder, (B)
such Originator acknowledges and agrees that it is not authorized to, and will
not, file financing statements or other filing or recording documents with
respect to the Receivables or Related Security (including any amendments
thereto, or continuation or termination statements thereof), without the express
prior written approval by the Collateral Agent (as Buyer's assignee), consenting
to the form and substance of such filing or recording document, and (C) such
Originator approves, authorizes and ratifies any filings or recordings made by
or on behalf of the Collateral Agent (as Buyer's assignee) in connection with
the perfection of the ownership or security interests in favor of Buyer or the
Collateral Agent (as Buyer's assignee).

Section 7.4 Confidentiality. (a) Each Originator shall maintain and shall cause
            ---------------
each of its employees and officers to maintain the confidentiality of this
Agreement, the other Transaction Documents and the other confidential
proprietary information with respect to the Co-Agents, the Collateral Agent and
the Conduits and their respective businesses obtained by it or them in
connection with the structuring, negotiating and execution of the transactions
contemplated herein, except that such Originator and its officers and employees
may disclose such information to such Originator's external accountants,
attorneys and any rating agency, and as required by any applicable law or order
of any judicial or administrative proceeding, and to the Parent Credit Agreement
Banks.

     (b) Anything herein to the contrary notwithstanding, each Originator hereby
consents to the disclosure of any nonpublic information with respect to it (i)
to Buyer, the Agents and the Purchasers by each other, (ii) by Buyer, the Agents
or the Purchasers to any prospective or actual assignee or participant of any of
them or (iii) by any of the Agents to any rating agency, Commercial Paper dealer
or provider of a surety, guaranty or credit or liquidity enhancement to the
Conduits or any entity organized for the purpose of purchasing, or making loans
secured by, financial assets for which any of the Agents acts as the
administrative agent or collateral agent and to any officers, directors,
employees, outside accountants and attorneys of any of the foregoing, provided
                                                                      --------
each such Person is informed of the confidential nature of such information. In
addition, the Purchasers and the Agents may disclose any such nonpublic
information

                                       29

<PAGE>

pursuant to any law, rule, regulation, direction, request or order of any
judicial, administrative or regulatory authority or proceedings (whether or not
having the force or effect of law).

Section 7.5 Limitation of Liability. No claim may be made by any Originator,
            -----------------------
Buyer or any other Person against any Agent, any Purchaser or their respective
Affiliates, directors, officers, employees, attorneys or agents for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and each Originator and Buyer hereby waives,
releases, and agrees not to sue upon any claim for any such damages, whether or
not accrued and whether or not known or suspected to exist in its favor;
provided, however, that this Section shall not bar Buyer from making a claim
against a Conduit, Co-Agent or Financial Institution with respect to liability
arising out of such party's gross negligence or willful misconduct.

Section 7.6 No Recourse. Notwithstanding anything in this Agreement or any other
            -----------
Transaction Document to the contrary, the obligations of each Conduit under the
Transaction Documents are solely the corporate obligations of such Conduit. No
recourse shall be had for any obligation or claim arising out of or based upon
any Transaction Document against any stockholder, employee, officer, director or
incorporator of such Conduit. The agreements in this section shall survive the
termination of this Agreement and the other Transaction Documents.

Section 7.7 Bankruptcy Petition. (a) Each Originator and Buyer hereby covenants
            -------------------
and agrees that, prior to the date that is one year and one day after the
payment in full of all outstanding senior Indebtedness of a Conduit, it will not
institute against, or join any other Person in instituting against such Conduit
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.

     (b) Each Originator hereby covenants and agrees that, prior to the date
that is one year and one day after the payment in full of all outstanding
obligations of Buyer under the Purchase Agreement, it will not institute
against, or join any other Person in instituting against Buyer any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.

Section 7.8 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
            -------------
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING, BUT NOT
LIMITED TO, NY GENERAL OBLIGATION LAWS (S) 5-1401 ET SEQ., BUT OTHERWISE WITHOUT
                                                  -- ---
REGARD TO CONFLICT OF LAW PROVISIONS) EXCEPT TO THE EXTENT THAT THE PERFECTION
OF BUYER'S SECURITY INTEREST IN THE RECEIVABLES IS GOVERNED BY THE LAW OF
ANOTHER STATE, AS REQUIRED BY THE LAWS OF THE STATE OF NEW YORK.

Section 7.9 CONSENT TO JURISDICTION. EACH ORIGINATOR HEREBY IRREVOCABLY SUBMITS
            -----------------------
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY STATE COURT SITTING IN NEW YORK,
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY

                                       30

<PAGE>

DOCUMENT EXECUTED BY SUCH ORIGINATOR PURSUANT TO THIS AGREEMENT AND EACH
ORIGINATOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION
OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY
WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF BUYER (OR THE
COLLATERAL AGENT, AS BUYER'S ASSIGNEE) TO BRING PROCEEDINGS AGAINST ANY
ORIGINATOR IN THE COURTS OF ANY OTHER JURISDICTION TO THE EXTENT NECESSARY TO
REALIZE ON THE INTERESTS OF BUYER (OR THE COLLATERAL AGENT, AS BUYER'S ASSIGNEE)
IN ANY RECEIVABLES, RELATED SECURITY OR PROCEEDS THEREOF. ANY JUDICIAL
PROCEEDING BY ANY ORIGINATOR AGAINST BUYER (OR ANY AGENT) OR ANY AFFILIATE
THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH
ORIGINATOR PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN THE FEDERAL
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY STATE COURT SITTING
IN NEW YORK, NEW YORK.

Section 7.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY
             --------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY
ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER
OR THEREUNDER.

Section 7.11 Integration; Binding Effect; Survival of Terms.
             ----------------------------------------------

     (a) This Agreement hereby supersedes in its entirety the Amended
Receivables Sale Agreement as of the date hereof. From and after the
effectiveness of this Agreement, all representations, warranties and indemnities
shall be applicable to the Purchased Receivables with the same force and effect
as the Receivables arising on or after the date of this Agreement.

     (b) This Agreement, the Purchase Agreement and each other document or
instrument executed or delivered in connection therewith and each Collection
Account Agreement contain the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
the subject matter hereof superseding all prior oral or written understandings.

     (c) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns (including
any trustee in bankruptcy). No Originator may assign any of its rights and
obligations hereunder or any interest herein without the prior written consent
of Buyer and each of the Agents. Buyer may assign at any time its rights and
obligations hereunder and interests herein to any other Person without the
consent of any Originator. Without limiting the foregoing, each Originator

                                       31

<PAGE>

acknowledges that Buyer, pursuant to the Purchase Agreement, may assign to the
Collateral Agent, for the benefit of the Purchasers, its rights, remedies,
powers and privileges hereunder and that the Collateral Agent may further assign
such rights, remedies, powers and privileges to the extent permitted in the
Purchase Agreement. Each Originator agrees that the Collateral Agent, as the
assignee of Buyer, shall, subject to the terms of the Purchase Agreement, have
the right to enforce this Agreement and to exercise directly all of Buyer's
rights and remedies under this Agreement (including, without limitation, the
right to give or withhold any consents or approvals of Buyer to be given or
withheld hereunder) and each Originator agrees to cooperate fully with the
Collateral Agent in the exercise of such rights and remedies. This Agreement
shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms and shall remain in full force and effect until
terminated in accordance with its terms; provided, however, that the rights and
remedies with respect to (i) any breach of any representation and warranty made
by any Originator pursuant to Article II; (ii) the indemnification and payment
                              ----------
provisions of Article VI; and (iii) Section 7.6 shall be continuing and shall
              ----------            -----------
survive any termination of this Agreement. This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms and shall remain in full force and effect until terminated in
accordance with its terms; provided, however, that the rights and remedies with
respect to (i) any breach of any representation and warranty made by any
Originator pursuant to Article II, (ii) the indemnification and payment
                       ----------
provisions of Article VI, and Section 7.6 shall be continuing and shall survive
              ----------      -----------
any termination of this Agreement.

Section 7.12 Counterparts; Severability; Section References. This Agreement may
             ----------------------------------------------
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise expressly indicated, all references herein
to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and
sections of, and schedules and exhibits to, this Agreement.

                            [Signature Pages Follow]

                                       32

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date
hereof.

                                             OWENS & MINOR, INC.

                                             By:
                                                 -------------------------------
                                             Name:
                                                   -----------------------------
                                             Title:
                                                    ----------------------------

                                             Address: 4800 Cox Road
                                                      Glen Allen, Virginia 23060
                                                      Attention:
                                                                 ---------------
                                                      Phone:
                                                             -------------------
                                                      Fax:
                                                           ---------------------

                                             OWENS & MINOR DISTRIBUTION, INC.

                                             By:
                                                 -------------------------------
                                             Name:
                                                   -----------------------------
                                             Title:
                                                    ----------------------------

                                             Address: 4800 Cox Road
                                                      Glen Allen, Virginia 23060
                                                      Attention:
                                                                 ---------------
                                                      Phone:
                                                             -------------------
                                                      Fax:
                                                           ---------------------

                                       S-1

<PAGE>

                                             OWENS & MINOR MEDICAL, INC.

                                             By:
                                                 -------------------------------
                                             Name:
                                                   -----------------------------
                                             Title:
                                                    ----------------------------

                                             Address: 4800 Cox Road
                                                      Glen Allen, Virginia 23060
                                                      Attention:
                                                                 ---------------
                                                      Phone:
                                                             -------------------
                                                      Fax:
                                                           ---------------------

                                             O&M FUNDING CORP.

                                             By:
                                                 -------------------------------
                                             Name:
                                                   -----------------------------
                                             Title:
                                                    ----------------------------

                                             Address: 4800 Cox Road
                                                      Glen Allen, Virginia 23060
                                                      Attention:
                                                                 ---------------
                                                      Phone:
                                                             -------------------
                                                      Fax:
                                                           ---------------------

                                       S-2

<PAGE>

                                    Exhibit I

                                   Definitions
                                   -----------

          This is Exhibit I to the Agreement (as hereinafter defined). As used
in the Agreement and the Exhibits, Schedules and Annexes thereto, capitalized
terms have the meanings set forth in this Exhibit I (such meanings to be equally
applicable to the singular and plural forms thereof). If a capitalized term is
used in the Agreement, or any Exhibit, Schedule or Annex thereto, and not
otherwise defined therein or in this Exhibit I, such term shall have the meaning
assigned thereto in Exhibit I to the Purchase Agreement.

          "Accrual Period" means each calendar month or portion thereof which
elapses during the term of the Agreement. The first Accrual Period shall
commence on the date of the Purchase of Receivables hereunder and the final
Accrual Period shall terminate on the Termination Date.

          "Adjustment Factor" means a percentage calculated to take account the
risk of nonpayment by the Obligors. Each Originator and Buyer may agree from
time to time to change the Adjustment Factor based on changes in one or more of
the items affecting the calculation thereof, provided that any change to the
                                             --------
Adjustment Factor shall take effect as of the commencement of an Accrual Period,
shall apply only prospectively and shall not affect the Purchase Price payment
in respect of Purchase which occurred during any Accrual Period ending prior to
the Accrual Period during which such Originator and Buyer agree to make such
change.

          "Agents" has the meaning set forth in the Preliminary Statements to
the Agreement.

          "Agreement" means the Receivables Sale Agreement, dated as of April
30, 2002, among Originators and Buyer, as the same may be amended, restated or
otherwise modified.

          "Authorized Officer" means, with respect to an Originator, its
respective corporate controller, treasurer, assistant treasurer, vice
president-finance or chief financial officer.

          "Base Rate" means a rate per annum equal to the corporate base rate,
prime rate or base rate of interest, as applicable, announced by the Reference
Bank from time to time, changing when and as such rate changes.

          "Blue Ridge" has the meaning set forth in the Preliminary Statements
to the Agreement.

          "Blue Keel" has the meaning set forth in the Preliminary Statements to
the Agreement.

          "Business Day" means any day on which banks are not authorized or
required to close in New York, New York, Richmond, Virginia, Charlotte, North
Carolina or Boston, Massachusetts and The Depository Trust Company of New York
is open for business.

                                       I-1

<PAGE>

          "Buyer" has the meaning set forth in the preamble to the Agreement.

          "Change of Control" means with respect to any Originator or Buyer, the
Parent's failure to own, directly or indirectly, 100% of the issued and
outstanding capital stock of such Person.

          "Co-Agents" has the meaning set forth in the Preliminary Statements to
the Agreement.

          "Collateral Agent" has the meaning set forth in the Preliminary
Statements to the Agreement.

          "Conduit" has the meaning set forth in the Preliminary Statements to
the Agreement.

          "Credit and Collection Policy" means, with respect to each Originator,
such Originator's credit and collection policies and practices relating to
Contracts and Receivables existing on the date hereof and summarized in Exhibit
                                                                        -------
V, as modified from time to time in accordance with the Agreement.
-

          "Default Fee" means with respect to any amount due and payable by any
party hereunder, an amount equal to interest on any such unpaid amount at a rate
per annum equal to 2% above the Base Rate.

          "Dilutions" means, at any time, the aggregate amount of reductions or
cancellations described in Section 1.3(a) of the Agreement.
                           --------------

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations issued thereunder.

          "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with any Originator within the meaning of
Section 414(b) or (c) of the Tax Code (and Sections 414(m) and (o) of the Tax
Code for purposes of provisions relating to Section 412 of the Tax Code).

          "ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by any Originator or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001 (a) (2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by any Originator or any
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to terminate,
the treatment of an amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or; (e) an event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan.

                                       I-2

<PAGE>

          "Excluded Receivables" means (a) any indebtedness or obligations owed
to any Originator that was originated pursuant to a revolving charge agreement,
and (b) any amount owing to an Originator representing sales tax payable to any
state or political subdivision in connection with any transaction giving rise to
any Receivables.

          "Excluded Taxes" has the meaning set forth in Section 6.1.
                                                        -----------

          "Facility Fee" has the meaning set forth in Section 1.9.
                                                      -----------

          "Federal Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy", as amended and any successor statute thereto.

          "Intended Characterization" means, for income tax purposes, the
characterization of the acquisition by the Purchasers of Receivable Interests
under the Purchase Agreement as a loan or loans by the Purchasers to Buyer
secured by the Receivables, the Related Security and the Collections.

          "Material Adverse Effect" means a material adverse effect on (i) the
financial condition or operations of the Originators and their Subsidiaries,
taken as a whole, or Buyer, as applicable (except as otherwise disclosed to or
discussed with Buyer (and the Agents) prior to the date hereof), (ii) the
ability of any Originator, or Buyer, as applicable, to perform its obligations
under the Agreement or any other Transaction Document, (iii) the legality,
validity or enforceability of the Agreement or any other Transaction Document,
(iv) any Originator's, Buyer's, the Co-Agents', the Collateral Agent's or any
Purchaser's interest in the Receivables generally or in any significant portion
of the Receivables, the Related Security or Collections with respect thereto, or
(v) the collectibility of the Receivables generally or of any material portion
of the Receivables.

          "Moody's" means Moody's Investors Service, Inc.

          "Multiemployer Plan" means a "multiemployer plan", within the meaning
of Section 4001 (a) (3) of ERISA, to which any Originator or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the preceding
six calendar years, has made, or been obligated to make, contributions.

          "Net Value" means, as of any date of determination, an amount equal to
the sum of (i) the aggregate Outstanding Balance of the Receivables at such
time, minus (ii) the sum of (A) the aggregate Invested Amount outstanding at
      -----
such time, plus (B) the Required Reserve.
           ----

          "New Lending Office" means, with respect to any Non-U.S. Purchaser,
any administrative office or lending office designated by such Non-U.S.
Purchaser after the date on which it first became a Non-U.S. Purchaser for
purposes of booking its interest or participation in the Receivable Interests.

          "Non-U.S. Purchaser" means each Purchaser and each Participant that is
granted a participating interest in any Receivable Interest and that is not an
United States Person within the meaning of Section 7701(a)(30) of the Tax Code.

                                       I-3

<PAGE>

          "Original Balance" means, with respect to any Receivable, the
Outstanding Balance of such Receivable on the date it was purchased by Buyer.

          "Originators" has the meaning set forth in the preamble to the
Agreement.

          "Parent" has the meaning set forth in the preamble to the Agreement.

          "Parent Credit Agreement" means that certain Credit Agreement dated as
of April 30, 2002, by and among the Parent, as borrower, various of its
Subsidiaries, as guarantors, the banks, syndication agents and co-agents from
time to time party thereto, and Bank of America, N.A., as administrative agent,
as in effect on the date hereof.

          "Parent Credit Agreement Banks" means the financial institutions party
to the Parent Credit Agreement.

          "PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.

          "Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA other than a Multiemployer Plan which any
Originator or ERISA Affiliate sponsors or maintains, or to which it makes, is
making, or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding five plan years.

          "Performance Guarantor" means Parent in its capacity as guarantor of
the Originators' and Servicer's performance under the Performance Undertaking.

          "Performance Undertaking" means that certain Performance Undertaking,
dated as of April 30, 2002, by the Performance Guarantor in favor of Buyer and
its assigns, substantially in the form of Exhibit XI to the Purchase Agreement,
as the same may be amended, restated or otherwise modified from time to time.

          "Potential Termination Event" means an event which, with the passage
of time or the giving of notice, or both, would constitute an Termination Event.

          "Purchase" means the purchase under the Agreement by Buyer from an
Originator of the Receivables, the Related Security and the Collections related
thereto, together with all related rights in connection therewith.

          "Purchase Agreement" has the meaning set forth in the Preliminary
Statements to the Agreement.

          "Purchase Price" means, with respect to any Purchase on any date, the
aggregate price to be paid by Buyer to an Originator for such Purchase in
accordance with Section 1.2 of the Agreement for the Receivables, Collections
                -----------
and Related Security being sold to Buyer on such date, which price shall equal
(i) the product of (x) the Original Balance of such Receivables, multiplied by
                                                                 ---------- --
(y) one minus the Adjustment Factor then in effect, minus (ii) any Purchase
Price

                                       I-4

<PAGE>

Credits to be credited against the Purchase Price otherwise payable in
accordance with Section 1.3 of the Agreement.
                -----------

          "Purchase Price Credit" has the meaning set forth in Section 1.3 of
                                                               -----------
the Agreement.

          "Purchasers" has the meaning set forth in the Preliminary Statements
to the Agreement.

          "Receivable" means the indebtedness and other obligations, other than
the indebtedness and other obligations constituting Excluded Receivables but
including the Purchased Receivables, owed to an Originator (without giving
effect to any transfer or conveyance under the Amended Receivables Sale
Agreement or this Agreement) or Buyer (after giving effect to the transfers
under the Amended Receivables Sale Agreement and this Agreement) whether
constituting an account, chattel paper, instrument or general intangible,
arising in connection with the sale of products and related services by such
Originator and includes, without limitation, the obligation to pay any Finance
Charges with respect thereto. Indebtedness and other rights and obligations
arising from any one transaction, including, without limitation, indebtedness
and other rights and obligations represented by an individual invoice, shall
constitute a Receivable separate from a Receivable consisting of the
indebtedness and other rights and obligations arising from any other
transaction; provided that any indebtedness, rights or obligations referred to
             --------
in the immediately preceding sentence shall be a Receivable regardless of
whether the account debtor or applicable Originator treats such indebtedness,
rights or obligations as a separate payment obligation.

          "Related Security" means, with respect to any Receivable:

               (i)  all of the applicable Originator's interest in the inventory
                    and goods (including returned or repossessed inventory or
                    goods), if any, the sale of which by such Originator gave
                    rise to such Receivable, and all insurance contracts with
                    respect thereto,

               (ii) all other security interests or liens and property subject
                    thereto from time to time, if any, purporting to secure
                    payment of such Receivable, whether pursuant to the Contract
                    related to such Receivable or otherwise, together with all
                    financing statements and security agreements describing any
                    collateral securing such Receivable,

               (iii) all guaranties, insurance and other agreements or
                    arrangements of whatever character from time to time
                    supporting or securing payment of such Receivable whether
                    pursuant to the Contract related to such Receivable or
                    otherwise,

               (iv) all service contracts and other contracts and agreements
                    associated with such Receivable,

               (v)  all Records related to such Receivable, and

                                       I-5

<PAGE>

               (vi) all proceeds of any of the foregoing.

          "Reportable Event" means any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.

          "S&P" means Standard and Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.

          "Settlement Date" means the twentieth (20th) day of each calendar
month.

          "Subordinated Loan" has the meaning set forth in Section 1.2(b) of the
                                                           --------------
Agreement.

          "Subordinated Notes" means the promissory notes in substantially the
form of Exhibit VI hereto as more fully described in Section 1.2 of the
        ----------                                   -----------
Agreement, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

          "Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, association, limited liability company, joint venture
or similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.

          "Tangible Net Worth" means total stockholders' equity minus goodwill,
patents, trade names, trade marks, copyrights, franchises, organizational
expense, deferred assets other than prepaid insurance and prepaid taxes and such
other assets as are properly classified as "intangible assets", for any
corporation as determined in accordance with generally accepted accounting
principles.

          "Tax Code" means the Internal Revenue Code of 1986, as the same may be
amended from time to time.

          "Termination Date" means the earliest to occur of (i) the Facility
Termination Date (as defined in the Purchase Agreement), (ii) the Business Day
immediately prior to the occurrence of a Termination Event set forth in Section
                                                                        -------
5.1(e), (iii) the Business Day specified in a written notice from Buyer to the
------
Originators following the occurrence of any other Termination Event, and (iv)
the date which is 10 Business Days after Buyer's receipt of written notice from
any Originator that it wishes to terminate the facility with respect to such
Originator evidenced by this Agreement.

          "Termination Event" has the meaning set forth in Section 5.1 of the
                                                           -----------
Agreement.

          "Transaction Documents" means, collectively, this Agreement, each
Collection Account Agreement, the Subordinated Notes and all other instruments,
documents and agreements executed and delivered in connection herewith.

                                       I-6

<PAGE>

          All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All terms
used in Article 9 of the UCC in the State of New York, and not specifically
defined herein, are used herein as defined in such Article 9.

                                       I-7<PAGE>

                         AMERIGROUP District of Columbia

                          CONTRACT No: POHC-2002-D-0003

                                  CORE CONTRACT

<PAGE>

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

                                   SECTION AA

A.l  SOLICITATION OFFER AND AWARD

     A.1.1 With regard to this contract:

     (a)  References to the Child and Adolescent Supplemental Security Income
          Plan (CASSIP) and Supplemental Security Income-Related Plan are not
          applicable to this contract.

     (b)  The Health Care Financing Administration (HCFA) has changed its name
          to the Centers for Medicare and Medicaid Services (CMS). Any
          requirement related to HCFA is still in effect and is now a
          requirement to CMS.

A.2  DOCUMENTS ATTACHED AND INCORPORATED BY REFERENCE

     A.2.1 The following documents are attached to and incorporated by reference
           into this contract:

          Attachment 1 - U.S. Wage Determination Number: 1994-2103,
                         Revision Number: 24 - dated May 31, 2001.

          Attachment 2 - Request For Proposal Number POHC-2001-R-2002

          Attachment 3 - Amendments Number 0015 to 0001 (highest to lowest)

          Attachment 4 - Proposal dated December 27,2000 (Technical only)

          Attachment 5 - First Best And Final Offer dated May 21, 2001(Technical
                         only)

          Attachment 6 - Second Best And Final Offer dated July 2,2001
                         (Technical only)

          Attachment 7 - Minimum Covered Services for Minimum Covered Services
                         for Medicaid Managed Care Program (MMCP)

          Attachment 8 - Managed Care Disclosure compliance Package under
                         Physician Incentive Regulation, Physician Incentive
                         Disclosure Form, HCFA Physician Incentive Plan
                         Worksheet, Stop-Loss Information (These documents may
                         be obtained by opening the website located at
                         hht://www.hcfa.gov/medicare/physincp/disclose.htm)

          Attachment 9 - Newborn Notification Report

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003          1
--------------------------------------------------------------------------------

<PAGE>

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

A.3  ORDER OF PRIORITY

          A conflict in language shall be resolved by giving precedence to the
          document in the highest order of priority that contains language
          addressing the issue in question, as follows:

          Sections A through I of this contract

          U.S. Wage Determination Number: 1994-2103, Revision Number: 24, dated
          May 31, 2001.

     (c)  Minimum Covered Services for Minimum Covered Services for Medicaid
          Managed Care Program (MMCP)

          Managed Care Disclosure compliance Package under Physician Incentive
          Regulation, Physician Incentive Disclosure Form, HCFA Physician
          Incentive Plan Worksheet, Stop-Loss Information
          (These documents may be obtained by opening the website located at
          hht://www.hcfa.gov/medicare/physincp/disclose.htm)

     (e)  Amendments Number 0015 (highest priority) through 0001 (lowest
          Priority)

     (f)  Request For Proposal Number POHC-2001-R-2002

     (g)  Second Technical Best And Final Offer dated July 2, 2001

     (h)  First Technical Best And Final Offer dated May 21, 2001

     (i)  Technical Proposal dated December 27, 2000

     (j)  Newborn Notification Report

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003          2
--------------------------------------------------------------------------------

<PAGE>

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

                 SECTION B - SUPPLIES OR SERVICES AND PRICE/COST

B.   Supplies or Services and Price/Cost.......................................4

     The Contractor shall provide all resources (except as may be expressly
     stated in the contract as furnished by the District of Columbia Government)
     necessary to furnish the items below in accordance with the
     Description/Specification/Work Statement set forth in Section C...........4

B.2  The Government of the District of Columbia ("District") Department of
     Health (DOH) Medical Assistance Administration (MAA) has a requirement to
     contract for health care programs:........................................4

     Indefinite Delivery Indefinite Quantity (IDIQ) Contract (DCHFP)...........4

     RESERVED..................................................................4

     Rate Adjustment...........................................................4

     Rate Categories...........................................................5

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003          3
--------------------------------------------------------------------------------

<PAGE>

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

                                    SECTION B

B.   SUPPLIES OR SERVICES AND PRICE

B.1  The Contractor Shall Provide All Resources (Except as May be Expressly
     Stated In The Contract As Furnished By The District Of Columbia Government)
     Necessary To Furnish The Items Below In Accordance With The
     Description/specification/work Statement Set Forth in Section C.

B.2  The Government of the District of Columbia ("District") Department of
     Health (DOH) Medical Assistance Administration (MAA) Has a Requirement to
     Contract for Health Care Programs:

     a)   District of Columbia Healthy Families Plans (DCHFP). DCHFPs will serve
          individuals in Temporary Assistance to Needy Families (TANF) or
          TANF-related Medicaid eligibility categories, and the

     b)   RESERVED.

B.3  Indefinite Delivery Indefinite Quantity (IDIQ) Contract (DCHFP)

     B.3.1 DCHFP contractors will be paid the negotiated monthly capitation rate
     for each eligible member enrolled in their health plan.

     B.3.2 The guaranteed minimum for each DCHFP contract is $150,000 per year.

     B.3.3 The maximum for each DCHFP contract is 75,000 enrollees per year.

     RESERVED

     Rate Adjustment

     B.5.1 For DCHFP, Offerors shall propose a capitation rate to be effective
     for the base period of the contract. For the option periods of the
     contract, the capitation rate in effect will be the capitation rate for the
     base period, as adjusted in accordance with this Section B.5.1.

     No later than twelve (12) months after the date of contract award and
     annually thereafter, the District will conduct an actuarial review of the
     capitation rates in effect to determine the actuarial soundness of the
     rates paid to the Contractors. The actuarial review will take into account
     factors such as inflation, significant changes in the demographic
     characteristics of the member population, or the disproportionate
     enrollment selection of Contractor by members in certain rate cohorts.

     This actuarial review of the capitation rates may result in an annual
     adjustment, either increase or decrease, to the capitation rates. The
     District and Contractor shall negotiate the actual amount of the
     adjustment; however, the negotiated

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003          4
--------------------------------------------------------------------------------

<PAGE>

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

     adjustment shall not exceed the upper payment limits as defined in 42 CFR
     447.361.

          The annual adjustment shall be effective as of the first day of the
          option period to which the adjusted capitation rate applies. If the
          District and Contractor have not completed negotiations for the
          adjusted capitation rate by the first day of the affected option
          period, the Contractor shall continue to perform under the contract at
          the rates in effect for the preceding contract period. All
          negotiations shall be concluded by the end of the third month of the
          option period.

     B.5.2 RESERVED.

B.6  Rate Categories

     B.6.1 For DCHFP, capitation payments will be calculated based upon the
     monthly enrollment in each of the following enrollment categories and the
     capitation rate for that category:

               B.6.1.1 Infants Under 1 year of age

                    .    Delivery month
                    .    Birth month

               B.6.1.2 Children of 1 year through 12 years of age

               B.6.1.4 Females and ages 13 through 18 years of age

               B.6.1.4 Males ages 13 through 18 years of age

               B.6.1.5 Females ages 19 through 36 years of age

               B.6.1.6 Males ages 19 through 36 years of age

               B.6.1.7 Males and 37 years of age and older

               B.6.1.8 Females 37 years of age and older

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003          5
--------------------------------------------------------------------------------

<PAGE>

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

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: POHC-2002-D-OOO3          6
--------------------------------------------------------------------------------

<PAGE>

     B.6.2 Supplies/Services

AMERICAID Community Care

------------------------------------------------------------------------------
CONTRACT NO.:    POHC-2002-D-0003                                  Page 7
------------------------------------------------------------------------------
 LINE
 ITEM
NUMBER                 SUPPLIES/SERVICES                           TOTAL PMPM*
------------------------------------------------------------------------------
 0001    DC HEALTHY FAMILIES PROGRAM (DCHFP)
                                                PAGE

0001AA   Infants Under 1 year of age
            Delivery month (projected delivery)
            Birth month (actual month of birth)

0001AB   Children of 1 year of age through 12 years of age

0001AC   Females ages 13 through 18 years of age

0001AD   Males ages 13 through 18 years of age

0001AE   Females age 19 through 36 years of age

0001AF   Males ages 19 through 36 years of age

0001AG   Females 37 years of age and older

0001AH   Males 37 years of age and older

            *PMPM = per member per month
            The associated price is retrieved from
            Attachment J.1.

                        FOR DISTRICT USE ONLY
------------------------------------------------------------------------------
Line  AGY  YR  Index  PCA  OBJ  AOBJ  Grant  Proj  AG1  AG2  AG3    Percent
                                       PH     PH
------------------------------------------------------------------------------

<PAGE>

Revenue Category:  Infants Under 1 year of age

Section B - Supplies/Services

     RATE CALCULATION

Contractor:        Americaid Community Care

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
CONTRACT NO.:  POHC-2002-D-2003                                                                             PAGE 8
------------------------------------------------------------------------------------------------------------------
 ITEM                                                         UNIT OF        UTILIZATION
NUMBER         SUPPLIES/SERVICES                              SERVICE          PER 1000      UNIT PRICE     PMPM
------------------------------------------------------------------------------------------------------------------
<S>      <C>                                               <C>               <C>            <C>            <C>
 0001    The Contractor shall provide covered services
         for Category of Aid" DCHFP Less Than 1 year
         Old Males and Females
0001AA   Hospital Inpatient                                     Days
0001AB   Skilled Nursing Facility                               Days
0001AC   Hospital Outpatient                                   Visits
0001AD   Physician                                             Visits
0001AE   Pharmacy                                           Prescriptions
0001AF   Transportation                                         Trips
0001AG   Durable Medical Equipment                              Units
0001AH   Home Health                                           Visits
0001AI   EPSDT                                                Services
0001AJ   Dental                                               Services       N/A
0001AK   Vision                                            Visits/Services   N/A
0001AL   Mental Health Services                            Visits/Services   N/A
0001AM   Other Services                                        Claims
         TOTAL CAPITATION
         ADMINISTRATIVE COST
         TOTAL PMPM
         AVERAGE HOSPITAL LENGTH OF STAY

         NOTE: (1) Utilization per 1.000 - Calculated by
              taking the total utilization multiplied by
              12,000 divided by the annualized member
              months

              (2) Unit Cost - Calculated by taking the
              total dollars divided by the total
              utilization

              (3) PMPM - Calculated by taking the total
              dollars divided by the annualized member
              months.

------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Revenue Category:  Delivery Month(projected delivery)

Section B - Supplies/Services

     RATE CALCULATION

Contractor:        Americaid Community Care

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Contract NO.:  POHC-2002-D-2003                                                                           PAGE 9
------------------------------------------------------------------------------------------------------------------
 ITEM                                                       UNIT OF        UTILIZATION
NUMBER         SUPPLIES/SERVICES                            SERVICE          PER 1000      UNIT PRICE      PMPM
------------------------------------------------------------------------------------------------------------------
<S>      <C>                                             <C>               <C>            <C>            <C>
 0001    The Contractor shall provide covered services
         for Category of Aid" DCHFP Less Than 1 year
         Old Males and Females
0001AA   Hospital Inpatient                                   Days
0001AB   Skilled Nursing Facility                             Days
0001AC   Hospital Outpatient                                 Visits
0001AD   Physician                                           Visits
0001AE   Pharmacy                                         Prescriptions
0001AF   Transportation                                       Trips
0001AG   Durable Medical Equipment                            Units
0001AH   Home Health                                         Visits
0001AI   EPSDT                                              Services
0001AJ   Dental                                             Services       N/A
0001AK   Vision                                          Vlsits/Services   N/A
0001AL   Mental Health Services                          Visits/Services   N/A
0001AM   Other Services                                      Claims
         TOTAL CAPITATION
         ADMINISTRATIVE COST
         TOTAL PMPM
         AVERAGE HOSPITAL LENGTH OF STAY

         NOTE: (1) Utilization per 1.000 - Calculated
              by taking the total utilization
              multiplied by 12,000 divided by the
              annualized member months

              (2) Unit Cost - Calculated by taking the
              total dollars divided by the total
              utilization

              (3) PMPM - Calculated by taking the total
              dollars divided by the annualized member
              months.

------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Revenue Category: Birth month (actual month of birth)

Section B - Supplies/Services

     RATE CALCULATION

Contractor:       Americaid Community Care

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
CONTRACT NO.: POHC-2002-D-0003                                                                           PAGE 10
------------------------------------------------------------------------------------------------------------------
 ITEM                                                       UNIT OF        UTILIZATION
NUMBER                   SUPPLIES/SERVICES                  SERVICE          PER 1000      UNIT PRICE      PMPM
------------------------------------------------------------------------------------------------------------------
<S>      <C>                                             <C>               <C>            <C>            <C>
 0001    The Contractor shall provide covered services
         for Category of Aid" DCHFP Less Than 1 year
         Old Males and Females
0001AA   Hospital Inpatient                                   Days
0001AB   Skilled Nursing Facility                             Days
0001AC   Hospital Outpatient                                 Visits
0001AD   Physician                                           Visits
0001AE   Pharmacy                                         Prescriptions
0001AF   Transportation                                       Trips
0001AG   Durable Medical Equipment                            Units
0001AH   Home Health                                         Visits
0001AI   EPSDT                                              Services
0001AJ   Dental                                             Services       N/A
0001AK   Vision                                          Visits/Services   N/A
0001AL   Mental Health Services                          Visits/Services   N/A
0001AM   Other Services                                      Claims
         TOTAL CAPITATION
         ADMINISTRATIVE COST
         TOTAL PMPM
         AVERAGE HOSPITAL LENGTH OF STAY

         NOTE: (1) Utilization per 1,000-Calculated
               by taking the total utilization
               multiplied by 12,000 divided by the
               annualized member months

               (2) Unit Cost - Calculated by taking
               the total dollars divided by the total
               utilization

               (3) PMPM - Calculated try taking the
               total dollars divided by the annualized
               member months.

------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Revenue Category: Children of 1 year of age through 12 years of age

Section B - Supplies/Services

     RATE CALCULATION

Contractor:       Americaid Community Care

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003                                                                            PAGE 11
-----------------------------------------------------------------------------------------------------------------
 ITEM                                                        UNIT OF        UTILIZATION
NUMBER                   SUPPLIES/SERVICES                   SERVICE         PER 1000       UNIT PRICE     PMPM
-----------------------------------------------------------------------------------------------------------------
<S>      <C>                                             <C>                <C>            <C>            <C>
 0001    The Contractor shall provide covered services
         for Category of Aid" DCHFP Less Than 1 year
         Old Males and Females
0001AA   Hospital Inpatient                                   Days
0001AB   Skilled Nursing Facility                             Days
0001AC   Hospital Outpatient                                 Visits
0001AD   Physician                                           Visits
0001AE   Pharmacy                                         Prescriptions
0001AF   Transportation                                       Trips
0001AG   Durable Medical Equipment                            Units
0001AH   Home Health                                         Visits
0001AI   EPSDT                                              Services
0001AJ   Dental                                             Services        N/A
0001AK   Vision                                          Visits/Services    N/A
0001AL   Mental Health Services                          Visits/Services    N/A
0001AM   Other Services                                      Claims
         TOTAL CAPITATION
         ADMINISTRATIVE COST
         TOTAL PMPM
         AVERAGE HOSPITAL LENGTH OF STAY

         NOTE: (1) Utilization per 1,000 - Calculated
               by taking the total utilization
               multiplied by 12,000 divided by the
               annualized member months

               (2) Unit Cost - Calculated by taking
               the total dollars divided by the total
               utilization

               (3) PMPM - Calculated by taking the
               total dollars divided by the annualized
               member months.

-----------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Revenue Category: Females ages 13 through 18 years of age

Section B - Supplies/Services

     RATE CALCULATION

Contractor:       Americaid Community Care

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
CONTRACT NO.: POHC-2002-D-0003                                                                           PAGE 12
----------------------------------------------------------------------------------------------------------------
 ITEM                                                        UNIT OF       UTILIZATION
NUMBER                 SUPPLIES/SERVICES                     SERVICE         PER 1000      UNIT PRICE     PMPM
----------------------------------------------------------------------------------------------------------------
<S>      <C>                                             <C>               <C>            <C>            <C>
 0001    The Contractor shall provide covered services
         for Category of Aid" DCHFP Less Than 1 year
         Old Males and Females
0001AA   Hospital Inpatient                                   Days
0001AB   Skilled Nursing Facility                             Days
0001AC   Hospital Outpatient                                 Visits
0001AD   Physician                                           Visits
0001AE   Pharmacy                                         Prescriptions
0001AF   Transportation                                       Trips
0001AG   Durable Medical Equipment                            Units
0001AH   Home Health                                         Visits
0001AI   EPSDT                                              Services
0001AJ   Dental                                             Services       N/A
0001AK   Vision                                          Visits/Services   N/A
0001AL   Mental Health Services                          Visits/Services   N/A
0001AM   Other Services                                      Claims
         TOTAL CAPITATION
         ADMINISTRATIVE COST
         TOTAL PMPM
         AVERAGE HOSPITAL LENGTH OF STAY

         NOTE: (1) Utilization per 1,000 - Calculated
               by taking the total utilization
               multiplied by 12,000 divided by the
               annualized member months

               (2) Unit Cost - Calculated by taking
               the total dollars divided by the total
               utilization

               (3) PMPM - Calculated by taking the
               total dollars divided by the annualized
               member months.

----------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Revenue Category: Males ages 13 through 18 years of age

Section B - Supplies/Services

     RATE CALCULATION

Contractor:       Americaid Community Care

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
CONTRACT NO.: POHC-2002-D-0003                                                                           PAGE 13
----------------------------------------------------------------------------------------------------------------
 ITEM                                                        UNIT OF       UTILIZATION
NUMBER                 SUPPLIES/SERVICES                     SERVICE         PER 1000      UNIT PRICE      PMPM
----------------------------------------------------------------------------------------------------------------
<S>      <C>                                             <C>               <C>            <C>            <C>
 0001    The Contractor shall provide covered services
         for Category of Aid" DCHFP Less Than 1 year
         Old Males and Females
0001AA   Hospital Inpatient                                   Days
0001AB   Skilled Nursing Facility                             Days
0001AC   Hospital Outpatient                                 Visits
0001AD   Physician                                           Visits
0001AE   Pharmacy                                         Prescriptions
0001AF   Transportation                                       Trips
0001AG   Durable Medical Equipment                            Units
0001AH   Home Health                                         Visits
0001AI   EPSDT                                              Services
0001AJ   Dental                                             Services       N/A
0001AK   Vision                                          Visits/Services   N/A
O001AL   Mental Health Services                          Visits/Services   N/A
0001AM   Other Services                                      Claims
         TOTAL CAPITATION
         ADMINISTRATIVE COST
         TOTAL PMPM
         AVERAGE HOSPITAL LENGTH OF STAY

         NOTE: (1) Utilization per 1,000 - Calculated
               by taking the total utilization
               multiplied by 12,000 divided by the
               annualized member months

               (2) Unit Cost - Calculated by taking
               the total dollars divided by the total
               utilization

               (3) PMPM - Calculated by taking the
               total dollars divided by the annualized
               member months.

----------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Revenue Category: Females age 19 through 36 years of age

Section B - Supplies/Services

     RATE CALCULATION

Contractor:       Americaid Community Care

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
CONTRACT NO.: POHC-2002-D-0003                                                                           PAGE 14
----------------------------------------------------------------------------------------------------------------
 ITEM                                                        UNIT OF       UTILIZATION
NUMBER                 SUPPLIES/SERVICES                     SERVICE         PER 1000      UNIT PRICE     PMPM
----------------------------------------------------------------------------------------------------------------
<S>      <C>                                             <C>               <C>            <C>            <C>
 0001    The Contractor shall provide covered services
         for Category of Aid" DCHFP Less Than 1 year
         Old Males and Females
0001AA   Hospital Inpatient                                    Days
0001AB   Skilled Nursing Facility                              Days
0001AC   Hospital Outpatient                                  Visits
0001AD   Physician                                            Visits
0001AE   Pharmacy                                         Prescriptions
0001AF   Transportation                                       Trips
0001AG   Durable Medical Equipment                            Units
0001AH   Home Health                                          Visits
0001AI   EPSDT                                               Services
0001AJ   Dental                                              Services      N/A
0001AK   Vision                                          Visits/Services   N/A
0001AL   Mental Health Services                          Visits/Services   N/A
0001AM   Other Services                                       Claims
         TOTAL CAPITATION
         ADMINISTRATIVE COST
         TOTAL PMPM
         AVERAGE HOSPITAL LENGTH OF STAY

         NOTE: (1) Utilization per 1,000 - Calculated
              by taking the total utilization
              multiplied by 12,000 divided by the
              annualized member months

              (2) Unit Cost - Calculated by taking the
              total dollars divided by the total
              utilization

              (3) PMPM - Calculated by taking the
              total dollars divided by the annualized
              member months.

----------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Revenue Category: Males ages 19 through 36 years of age

Section B - Supplies/Services

     RATE CALCULATION

Contractor:       Americaid Community Care

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
CONTRACT NO.: POHC-2002-D-0003                                                                           PAGE 15
----------------------------------------------------------------------------------------------------------------
 ITEM                                                       UNIT OF        UTILIZATION
NUMBER                 SUPPLIES/SERVICES                    SERVICE          PER 1000      UNIT PRICE     PMPM
----------------------------------------------------------------------------------------------------------------
<S>      <C>                                             <C>               <C>            <C>            <C>
 0001    The Contractor shall provide covered services
         for Category of Aid" DCHFP Less Than 1 year
         Old Males and Females
0001AA   Hospital Inpatient                                    Days
0001AB   Skilled Nursing Facility                              Days
0001AC   Hospital Outpatient                                  Visits
0001AD   Physician                                            Visits
0001AE   Pharmacy                                         Prescriptions
0001AF   Transportation                                       Trips
0001AG   Durable Medical Equipment                            Units
0001AH   Home Health                                          Visits
0001AI   EPSDT                                               Services
0001AJ   Dental                                              Services      N/A
0001AK   Vision                                          Visits/Services   N/A
0001AL   Mental Health Services                          Visits/Services   N/A
0001AM   Other Services                                       Claims
         TOTAL CAPITATION
         ADMINISTRATIVE COST
         TOTAL PMPM
         AVERAGE HOSPITAL LENGTH OF STAY

         NOTE: (1) Utilization per 1,000-
              Calculated by taking the total
              utilization multiplied by 12,000
              divided by the annualized member months

              (2) Unit Cost - Calculated by taking the
              total dollars divided by the total
              utilization

              (3) PMPM - Calculated by taking the
              total dollars divided by the
              annualized member months.

----------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Revenue Category: Females 37 years of age and older

Section B - Supplies/Services

     RATE CALCULATION

Contractor:       Americaid Community Care

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
CONTRACT NO.: POHC-2002-D-0003                                                                           PAGE 16
----------------------------------------------------------------------------------------------------------------
 ITEM                                                        UNIT OF       UTILIZATION
NUMBER                  SUPPLIES/SERVICES                    SERVICE         PER 1000      UNIT PRICE     PMPM
----------------------------------------------------------------------------------------------------------------
<S>      <C>                                             <C>               <C>            <C>            <C>
 0001    The Contractor shall provide covered services
         for Category of Aid" DCHFP Less Than 1 year
         Old Males and Females
0001AA   Hospital Inpatient                                    Days
0001AB   Skilled Nursing Facility                              Days
0001AC   Hospital Outpatient                                  Visits
0001AD   Physician                                            Visits
0001AE   Pharmacy                                         Prescriptions
0001AF   Transportation                                       Trips
0001AG   Durable Medical Equipment                            Units
0001AH   Home Health                                          Visits
0001AI   EPSDT                                               Services
0001AJ   Dental                                              Services      N/A
0001AK   Vision                                          Visits/Services   N/A
0001AL   Mental Health Services                          Visits/Services   N/A
0001AM   Other Services                                       Claims
         TOTAL CAPITATION
         ADMINISTRATIVE COST
         TOTAL PMPM
         AVERAGE HOSPITAL LENGTH OF STAY

         NOTE: (1) Utilization per 1,000 - Calculated
              by taking the total utilization
              multiplied by 12,000 divided by the
              annualized member months

              (2) Unit Cost - Calculated by taking the
              total dollars divided by the total
              utilization

              (3) PMPM - Calculated by taking the
              total dollars divided by the annualized
              member months.

----------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Revenue Category: Males 37 years of age and older

Section B - Supplies/Services

     RATE CALCULATION

Contractor:       Americaid Community Care

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
CONTRACT NO.: POHC-2002-D-0003                                                                           PAGE 17
----------------------------------------------------------------------------------------------------------------
 ITEM                                                        UNIT OF       UTILIZATION
NUMBER                   SUPPLIES/SERVICES                   SERVICE         PER 1000      UNIT PRICE     PMPM
----------------------------------------------------------------------------------------------------------------
<S>      <C>                                             <C>               <C>            <C>            <C>
 0001    The Contractor shall provide covered services
         for Category of Aid" DCHFP Less Than 1 year
         Old Males and Females
0001AA   Hospital Inpatient                                    Days
0001AB   Skilled Nursing Facility                              Days
0001AC   Hospital Outpatient                                  Visits
0001AD   Physician                                            Visits
0001AE   Pharmacy                                         Prescriptions
0001AF   Transportation                                       Trips
0001AG   Durable Medical Equipment                            Units
0001AH   Home Health                                          Visits
0001AI   EPSDT                                               Services
0001AJ   Dental                                              Services      N/A
0001AK   Vision                                          Visits/Services   N/A
0001AL   Mental Health Services                          Visits/Services   N/A
0001AM   Other Services                                       Claims
         TOTAL CAPITATION
         ADMINISTRATIVE COST
         TOTAL PMPM
         AVERAGE HOSPITAL LENGTH OF STAY

         NOTE: (1) Utilization per 1,000 - Calculated
              by taking the total utilization
              multiplied by 12,000 divided by the
              annualized member months

              (2) Unit Cost - Calculated by taking the
              total dollars divided by the total
              utilization

              (3) PMPM - Calculated by taking the
              total dollars divided by the annualized
              member months.

----------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

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

                                   SECTION C

<TABLE>
<S>                                                                            <C>
C.     Description/Specifications/Work Statement..............................  19

C.1    Scope..................................................................  19
C.2    Background.............................................................  36
C.3    Requirements...........................................................  38
C.4    Place of Business and Hours of Operation...............................  42
C.5    Marketing..............................................................  42
C.6    Enrollment, Education and Outreach.....................................  46
C.7    Member Services........................................................  52
C.8    Coverage of Services and Benefits......................................  55
C.9    Network................................................................  69
C.10   Utilization Management and Care Coordination Capabilities..............  84
C.11   Financial Functions.................................................... 104
C.12   Management Information System.......................................... 106
C.13   Quality Improvement.................................................... 109
C.14   Complaints, Grievances and Fair Hearings............................... 113
C.15   Implementation Plan.................................................... 120
C.16   Performance and Outcome Measures....................................... 121
C.17   Specific Requirements and Responsibilities for DCHFP Contractors Only.. 121
C.18   RESERVED............................................................... 133
</TABLE>

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         18
--------------------------------------------------------------------------------

<PAGE>

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

                                    Section C

C.   DESCRIPTION/SPECIFICATIONS/WORK STATEMENT

C.1  Scope

     C.1.1 The District of Columbia, Department of Health, Medical Assistance
          Program is seeking Contractors to provide healthcare services to its
          Medicaid eligible population enrolled in the District of Columbia
          Healthy Families Program (DCHFP).

               C.1.1.1   DCHFP: The DCHFP program is a capitated program that
                         consists of an array of comprehensive healthcare and
                         mental health services. Services will be provided to
                         approximately 75,000 primarily low-income pregnant
                         women, children and adults who are enrolled in the
                         DCHFP managed care program on a mandatory basis.
                         Effective April 1,2001 it is anticipated that
                         approximately 11,000 additional eligible Medicaid
                         recipients will be enrolled in the DCHFP program as a
                         result of expanded coverage.

               C.1.1.2   RESERVED.

     C.1.2 Applicable Documents

          The Contractors shall comply with the most recent versions and future
          revisions to all federal and District of Columbia laws, Court Orders
          including Salazar v. The District of Columbia et al., regulations,
          policies, and subsequent amendments in the operation of its program,
          including, but not limited to, those barring discrimination in
          enrollment, access to health services, provision of health care and
          coverage. The following documents are applicable.

               Court Orders pertaining to Salazar v. The District of Columbia et
               al.
               DC Civil Action No. 93-452 (GK)(Salazar Court Order);
               Medicaid Managed Care Amendment Act 1992, DC Law 9-247,DC Code,
               sec 1-359./(d);
               Mayor's Order No. 93-219;
          .    42 CFR Part 434 subpart C, E, and F;
          .    Conditions of participation applicable to providers of services
               described in Section 1903(m) and 1932 of the Social Security Act,
               42 U.S.C. Section 1396b(m);
               Implementing federal regulations including 42 CFR 434 et seq.;

--------------------------------------------------------------------------------
CONTRACT NO.:  P0HC-2002-D-0003        19
--------------------------------------------------------------------------------

<PAGE>

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

               Terms and provisions of the waiver of federal law granted to the
               District by the Secretary of Health and Human Services under
               Section 1915(b) of the Social Security Act (42 U.S.C. Section
               1396n(b));
          .    Title XIX, the Medicaid Act;
          .    Conditions of participation applicable to providers of managed
               care services under the-District Code Section 1-359, and District
               of Columbia Municipal Regulation, Title 29, Chapters 53, 54, and
               55; and
          .    Memorandum of Agreement (MOA) Between MAA, and the Office of the
               Dixon Transitional Receiver, DC Commission on Mental Health.
          .    The Balanced Budget Act of 1997 .

     C.1.3 Definitions

     ACEDS:Automated Client Eligibility Determination System. The information
               system maintained by the District to document Medicaid claims
               payment and service provisions.

     Actuarially equivalent: Costs the same

     Addictions, Prevention, Recovery Administration (APRA): The District of
               Columbia's agency, responsible for alcohol and drug abuse
               treatment and prevention services, under the auspices of the
               Department of Health.

     Administrative Cost: All operating costs of the Contractor, including care
               coordination, but excluding medical costs.

     Adjudicated Claim: A claim that has been processed to payment or denial.

     Affiliate: Any individual, corporation, partnership, joint venture, trust,
               unincorporated organization or association, or other similar
               organization (hereinafter "Person"), controlling, controlled by
               or under common control with Contractor or its parent(s), whether
               such common control be direct or indirect. Without limitation,
               all officers, or persons, holding five percent (5%) or more of
               the outstanding ownership interests of Contractor or its
               parent(s), directors or subsidiaries of Contractor or parent(s)
               shall be presumed to be affiliates for purposes of the RFP and
               Agreement. For purposes of this definition, "control" means the
               possession, directly or indirectly, of the power (whether or not
               exercised) to direct or cause the direction of the management or
               policies of a Person, whether through the ownership of voting
               securities, other ownership interests, or by contract or
               otherwise including but not limited to the power to elect a
               majority of the directors of a corporation or trustees of a
               trust, as the case may be.

     Alcohol and Drug Abuse Treatment Services: Care and services which are
               covered under the District of Columbia Medicaid plan or that are
               otherwise furnished to District residents pursuant to any other
               funded

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         20
--------------------------------------------------------------------------------

<PAGE>

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

               program and which are required for the diagnosis and treatment of
               an illness or condition which is classified as an
               addiction-related disorder under the ICD-9 or DSM-IV.

     Alternate Payment Name: The person to whom benefits are issued on behalf of
               a consumer.

     American  Accreditation HealthCare Commission/URAC: Commission that
               establishes accreditation standards for managed care
               organizations.

     Appeals:  A request from an Enrollee for a reversal of a denial by the
               managed care organization of authorization to provide a service
               prescribed by an in-plan, appropriately qualified practitioner
               (see also "Grievances").

     Authorization: see Prior Authorization, Service Authorization

     Automatic Enrollment: The process for assigning Enrollees to a health plan
               if they have not exercised their right to choose for themselves
               within the allowed timeframe.

     Business Days: A business day includes Monday through Friday except for
               those days recognized as federal holidays and/or District
               holidays.

     Cancellation/termination: Discontinuation of the contract for any reason
               prior to the expiration date.

     Capitation Rate: The monthly rate per Enrollee, fixed annually in advance,
               paid by the MAA to a contracted managed care plan for managing
               the services described in the contracted Evidence of Coverage,
               whether or not the Enrollee receives services during the period
               covered by the rate.

     Care Coordination: Refers to the activities of assisting Enrollees and
               service providers to coordinate care for Enrollees with multiple,
               complex, and/or intensive treatment needs, including
               participating in assessments, treatment planning, making
               referrals, providing health education, facilitating exchange of
               information, monitoring implementation of treatment plans,
               discharge planning and coordination. It also includes cooperating
               with other District agencies or entities serving Enrollees, such
               as, but not limited to, the Commission on Mental Health Services,
               Public Schools, and the District's Children and Family Services.

     Care Management System: In this document, refers to an organized system for
               managing the medical and/or mental health and alcohol and drug
               abuse care of Enrollees with complex care needs, including
               Primary Care Physicians' responsibility for providing and
               managing primary care, an EPSDT tracking system, a utilization
               management system with special procedures for high cost/high-risk
               cases, and care coordination.

     Case Management Services: Services which will assist individuals in
               gaining access to necessary medical, social, educational and
               other services.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         21
--------------------------------------------------------------------------------

<PAGE>

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

     Case Payment Name: The person in whose name benefits are issued.

     CASSIP: Reserved.

     Certified Nurse Midwife: An individual licensed under the laws within the
               scope of the Act of April 04, 1929 [P.L. 160, NO.155].

     Certified Registered Nurse Practitioner (CRNP): A registered nurse licensed
               in the District of Columbia who is certified by the Boards in a
               particular clinical specialty area and who, while functioning in
               the expanded role as a professional nurse, performs acts of
               medical diagnosis or prescription of medical therapeutic or
               corrective measures in collaboration with and under the direction
               of a physician licensed to practice medicine in the District of
               Columbia.

     Child: In this document, refers to children and adolescents ages 0
               through 21 eligible for Medicaid and/or enrolled in a Medicaid
               Managed Care Program.

     Children's Health Insurance Program (SCHIP): Passed as part of the Balanced
               Budget Act of 1997, the Children's Health Insurance Program
               provides health insurance for children who come from working
               families with incomes too high to qualify for Medicaid, but too
               low to afford private health insurance.

     Children with Special Health Care Needs: Those children who have, or are at
               increased risk for, chronic physical, developmental, behavioral,
               or emotional conditions and who also require health and related
               services of a type or amount beyond those required by children
               generally. This definition includes children on SSI or who are
               SSI-related eligibles.

     Claim: A bill from a provider of a medical service or product that is
               assigned a unique identifier (i.e. claim reference number). A
               claim does not include an encounter form for which no payment is
               made or only a nominal payment is made.

     Clean claim: Claim submitted on an approved claim form, and containing
               complete and accurate information for all data fields required by
               the Contractor and MAA for final adjudication of the claim. If
               information that is not included on the claim form is necessary
               for adjudication of a claim, then such additional information
               shall be submitted as required in order for the claim to be
               considered "clean".

     Commission Accreditation Rehabilitation Facilities (CARF): An accreditation
               organization that develops and maintains practical and relevant
               standards of quality for programs and services.

     Complaint: An issue an Enrollee or provider presents to the managed care
               organization, either in written or oral form, which is subject to
               resolution by the Contractor, their designee and/or MAA.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         22
--------------------------------------------------------------------------------

<PAGE>

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

     Concurrent Review: A review conducted by the Contractor or MAA during a
               course of treatment to determine whether or not services should
               continue as prescribed or should be terminated, changed, or
               altered.

     Consumer Satisfaction Surveys: Valid and reliable surveys to measure
               Enrollees' overall satisfaction with Medicaid services and with
               specific aspects of those services, in order to identify problems
               and opportunities for improvement.

     Continuity of Care: Care provided to an Enrollee that is coordinated by a
               designated primary care provider or specialty provider to the
               greatest degree possible, so that the delivery of care to the
               Enrollee remains stable, services are consistent and
               unduplicated, and persons involved in the care and treatment of
               the Enrollee understand and support the plan of care.

     Contractor: A managed care organization participating in the District's
               Medicaid Managed Care Program authorized under DC Code sec.
               1-359(d).

     Covered Services: Health care services that the Contractor shall provide
               to Enrollees, including all services required by this contract
               and state and federal law, and all additional services described
               by the Contractor in its response to the RFP for this contract.

     Credentialing: A review process to approve a provider or professional who
               applies to provide care in a hospital, clinic, medical group or
               in a health plan, based upon specific criteria, standards and
               prerequisites, including federal health care program requirements
               (see also "Primary Source Verification").

     Crisis Plan: A plan developed by the Enrollee, the Enrollee's family (when
               relevant) and the Enrollee's medical or mental health and alcohol
               or drug abuse providers to guide the management of medical or
               mental health/alcohol and drug abuse crises for which the
               Enrollee is at risk. In addition conditions which meet the
               definition of emergency, mental health conditions which severely
               compromise an individual's ability to maintain his or her
               customary level of functioning, or which put him or her at risk
               for harming self or others are also considered to be crisis
               situations.

     Cultural Competence: A set of skills that allow service providers and
               medical organizations to respond sensitively and respectfully to
               people of various cultures, races, ethnic backgrounds and
               religions, and sexual preferences and to communicate with them
               accurately and effectively to identify and diagnose
               health-related problems and to jointly develop culturally
               appropriate plans for treatment and self-care.

     Day: calendar day unless otherwise specified.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         23
--------------------------------------------------------------------------------

<PAGE>

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

     Deliverables: Those documents, records and reports required to be furnished
               to the MAA for review and/or approval pursuant to the terms of
               the RFP and Agreement.

     Denial of Services: Any determination made by the Contractor in response to
               a provider's request for approval to provide MAA-covered services
               of a specific duration and scope which: disapproves the request
               completely; approves provision of the requested service(s), but
               for a lesser scope or duration than requested by the provider; or
               disapproves provision of the requested service(s), but approves
               provision of an alternative service(s). An approval of a
               requested service which includes a requirement for a concurrent
               review by the Contractor during the authorized period does not
               constitute a denial.

     Denied Claim: An adjudicated claim that does not result in a payment
               obligation to a provider.

     Disease Management: An integrated treatment approach that includes the
               collaboration and coordination of patient care delivery systems
               and that focuses on measurably improving clinical outcomes for a
               particular medical condition through the use of appropriate
               clinical resources such as preventive care, treatment guidelines,
               patient counseling, education and outpatient care; and that
               includes evaluation of the appropriateness of the scope, setting
               and level of care in relation to clinical outcomes and cost of a
               particular condition.

     Disenrollment: Action taken by the MAA to remove a member's name from the
               monthly Enrollment Report following the MAA's receipt of a
               determination that the member is no longer eligible for
               enrollment.

     District of Columbia Healthy Families Program (DCHFP): District of
               Columbia Healthy Families Program is the District's combination
               of the Medicaid program and the State Children's Health Insurance
               Program (SCHIP).

     Developmental Disability: A severe, chronic disability that is (or is
               suspected of being):
               a)   Attributable to a mental or physical impairment or
                    combination of mental and physical impairments;
               b)   Manifested before the individual attains age 22;
               c)   Likely to continue indefinitely; and that
               d)   Results in functional limitations or impairment of normal
                    growth and development (if not treated); and
               e)   When applied to infants and young children with substantial
                    developmental delay or specific congenital or acquired
                    conditions, either results, or, if not treated, could result
                    in developmental disabilities.

     District: Refers to the Government of the District of Columbia.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         24
--------------------------------------------------------------------------------

<PAGE>

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

     Dixon Transitional Receiver: The court designated administrator and its
               successors of the DC Commission on Mental Health Services (CMHS),
               responsible for assuring that individuals with mental health
               needs receive care through an integrated, community-based system
               of care, responsible for administering the mental health services
               provided directly by the CMHS and through its contractors, and
               responsible for monitoring the provision of all mental health
               care under the Medicaid Managed Care Program.

     DSM-IV: the Diagnostic and Statistical Manual of Mental Disorders, Fourth
               Edition, which is the American Psychiatric Association's official
               classification of mental health and alcohol and drug abuse
               disorders.

     Dual Eligibles: An individual who is eligible to receive services through
               both Medicare and Medicaid.

     Early and Periodic Screening, Diagnosis, and Treatment (EPSDT): The
               pediatric component of the Medicaid program created and
               implemented by federal statute and regulations. This program
               establishes standards of care for children and adolescents under
               age 21, calling for regular screening and for the services needed
               to prevent, diagnose, correct or ameliorate a physical or mental
               illness, including alcohol and drug abuse, or condition
               identified through screening. Medicaid services for children are
               required as a matter of law to meet these standards, which may
               require that services outside traditional Medicaid benefits be
               provided when needed to treat such conditions.

     Eligibility Period: A period of time during which a consumer is eligible to
               receive MAA benefits. An eligibility period is indicated by the
               eligibility start and end date.

     Eligibility Verification System (EVS): The information system maintained by
               the District of Columbia Income Maintenance Administration that
               allows providers to verify eligibility status of Medicaid
               recipients.

     Emergency Medical Condition: A medical condition manifesting itself by
               acute symptoms of sufficient severity (including severe pain)
               such that a prudent layperson, who possesses an average knowledge
               of health and medicine, could reasonably expect the absence of
               immediate medical attention to result in:
               a)   Placing the health of the individual (or, with respect to a
                    pregnant woman, the health of the woman or her unborn child)
                    in serious jeopardy;
               b)   Serious impairment to bodily functions; and/or
               c)   Serious dysfunction of any body organ or part.

     Emergency Member Issue: A problem of a member (including problems related
               to whether an individual is a member), the resolution of which
               should occur immediately or before the beginning of the next
               business day in order to prevent a denial or medically
               significant delay in care to the

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         25
--------------------------------------------------------------------------------

<PAGE>

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

               member that could precipitate a medical emergency condition or
               need for urgent care.

     Emergency Services: Covered inpatient or outpatient services that
               a)   Are furnished by an appropriate source;
               b)   Are needed immediately because of an injury or sudden
                    illness; and
               c)   Cannot be delayed for the time required to reach the
                    Contractor without risk of permanent damage to the
                    Enrollee's health.

     Encounter Data: An encounter is defined as any health care service provided
               to a member. Encounters whether reimbursed through capitation,
               fee-for-service, or another method of compensation shall result
               in the creation and submission of an encounter record to the MAA.
               The information provided on these records represents the
               encounter data provided by the Contractor.

     Enrollee: A person eligible for the District's Medicaid program who is
               enrolled in a Medicaid Managed Care Program contracted health
               plan.

     Enrollment: The process by which a member's entitlement to receive services
               from a Contractor are initiated.

     Enrollment Broker: The Contractor that provides assistance to Medicaid
               eligibles in the selection of a health plan. The same Contractor
               will offer a 24-hour Helpline to answer Medicaid recipients'
               questions about participating in their health plans.

     Evidence of Coverage: Any certificate, agreement, contract or notification
               issued to an Enrollee that sets forth the responsibilities of the
               Enrollee and services available to the Enrollee.

     Experimental Treatment: A course of treatment, procedure, device or other
               medical intervention that is not yet recognized by the
               professional medical community as an effective, safe and proven
               treatment for the condition for which it is being used.

     External Quality Review (EQR): A requirement under Title XIX of the Social
               Security Act, Section 1902(a), (30), (c) for states to obtain an
               independent, external review body to perform an annual review of
               the quality of services furnished under state contracts with
               managed care organizations, including the evaluation of quality
               outcomes, timeliness and access to services.

     Fair Hearing: The process adopted and implemented by the District
               Department of Health in compliance with federal regulations and
               state rules relating to Medicaid Fair Hearings found at 42 CFR
               Part 431, Subpart E.

     Family: In this document, parents, foster parents, legal guardians or
               relatives who serve as a child's primary caregiver.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         26
--------------------------------------------------------------------------------

<PAGE>

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

     Family-Centered Care: Best practice principles for provision of medical,
               therapeutic and mental health care for children with special
               health care or developmental needs. Family-centered care
               establishes parents as the central members of a team of
               professionals that plan and implement services needed to address
               a child's needs; builds upon the strengths of the family;
               recognizes and addresses the impact of a child with special
               health care needs on caregivers, siblings and other family
               members; and arranges for services to be provided in the home or
               other natural settings whenever possible.

     Family Planning Services: Any medically approved diagnostic procedure,
               treatment, counseling, drug, supply, or device which is
               prescribed or furnished by a provider to individuals of
               childbearing age for the purpose of enabling such individuals to
               freely determine the number and spacing of their children.

     Federally Qualified Health Center (FQHC): A health center as defined in 42
               C.F.R. 405.2430 - 2470.

     Federally Recognized Services: Services refers to medically necessary
               services that must be made available to children and adolescents
               under the EPSDT program including the services listed in
               Attachment J.8.

     Fee-for-Service (FFS): Payment to providers on a per-service basis for
               health care services.

     Formulary: An exclusive list of drug products for which the Contractor will
               provide coverage to its members, as approved by the Medicaid
               Program.

     Fraud: An intentional deception or misrepresentation or concealment of
               the facts made by a person with the knowledge that the deception
               could result in some unauthorized benefit to himself/herself or
               another person. It includes any act that constitutes fraud
               under applicable federal or state law.

     General Accepted Accounting Principles (GAAP): A technical term in
               financial accounting. It encompasses the conventions, rules, and
               procedures necessary to define accepted accounting practice at a
               particular time. This includes not only broad guidelines of
               general application, but also detailed practices and procedures.

     Grievances: A complaint which cannot be resolved to the Enrollee's
               satisfaction or an issue presented by the Enrollee to the
               Contractor or MAA in writing for formal consideration.

     Health Care Financing Administration (HCFA): The federal agency within
               the Department of Health and Human Services responsible for
               oversight of Medicaid programs.

     Health Care Professional: Physician or other health care
               provider/practitioner if coverage for the professional's
               services, provided for under the

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         27
--------------------------------------------------------------------------------

<PAGE>

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

               professional scope of practice, and included under the contract
               for the services of the professional. This term includes, but is
               not limited to: podiatrist, optometrist, chiropractor,
               psychologist, dentist, physician assistant, physical or
               occupational therapist and therapy assistant, speech-language
               pathologist, audiologist, registered or licensed practical nurse
               (including nurse practitioner, clinical nurse specialist,
               certified registered nurse anesthetist and certified
               nurse-midwife), licensed certified social worker, registered
               respiratory therapist and certified respiratory therapy
               technician.

     Health Maintenance Organization (HMO): A District of Columbia licensed
               risk-bearing entity which combines delivery and financing of
               health care and which provides basic health services to enrolled
               members for a fixed, prepaid fee.

     High Cost/High-Risk Case Management: Policies and procedures for
               effectively managing the authorization of treatment services for
               Enrollees with high cost and/or high-risk conditions to ensure
               efficient use of resources and high quality health outcomes.

     Immediate Need: A situation in which, in the professional judgment of the
               dispensing registered pharmacist, the dispensing of the drug at
               the time when the prescription is presented is necessary to
               reduce or prevent the occurrence or persistence of a serious
               adverse health condition.

     In-Plan Services: Services which are the payment responsibility of the
               Contractor.

     Income Maintenance Administration (IMA): District agency responsible for
               determining eligibility for Medicaid through TANF and
               TANF-related categories, and for administering determinations for
               SSI eligibility made by the Social Security Administration.

     Individuals with Disabilities Education Act (IDEA): Federal law governing
               the rights of infants and toddlers to receive early intervention
               and children with disabilities to receive educational services.

     Inquiry: Any member's request for administrative service, information or
               to express an opinion. Whenever specific corrective action is
               requested by the member, or determined to be necessary by the
               Contractor, it should be classified as a complaint.

     Involuntary Disenrollment: The termination of membership of an Enrollee
               under conditions permitted in this agreement.

     Joint Commission on Accreditation of Healthcare Organizations (JCAHO):
               National organization that sets standards for hospitals and other
               health care organizations and conducts reviews to determine
               whether they meet those standards in order to accredit them.

     LaShawn Receiver: Court designated administrator of the District Child
               and Family Services Agency responsible for investigating
               children's

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         28
--------------------------------------------------------------------------------

<PAGE>

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

               protective issues, exercising custodial responsibility for
               children who are removed from the custody of their families, and
               administering foster care and other services needed to care for
               children while they are in the custody of the District.

     Managed Care Eligibles: District of Columbia residents who have been
               determined eligible for Medicaid in an eligibility category that
               requires them to participate in Medicaid Managed Care Program by
               enrolling in a health plan.

     Managed Care Organization (MCO): An entity which manages the purchase and
               provision of physical or behavioral health services.

     Management Information System (MIS): Computerized or other system for
               collection, analysis and reporting of information needed to
               support management activities.

     Medicaid: A program established by Title XIX of the Social Security Act
               which provides payment of medical expenses for eligible persons
               who meet income and/or other criteria.

     Medicaid Managed Care Program (MMCP): A program for the provision and
               management of specified Medicaid services through contracted
               Health Maintenance Organizations. MMCP was established pursuant
               to the Medicaid Managed Care Amendment Act of 1992, effective
               March 17, 1992 (DC Law 9-247, DC Code Section 1-359) as amended.

     Medical Assistance Administration (MAA): The Administration within the
               District of Columbia Department of Health responsible for
               administering all Medicaid services under Title XIX (Medicaid)
               for eligible recipients, including the Medicaid Managed Care
               Program and oversight of its managed care contractors.

     Medical Cost: All Third Party claims paid for medical services covered
               under Medicaid, excluding those services not covered under the
               contract as identified in Section C.8.

     Medical Necessity Criteria: Clinical determinations to establish a
               service or benefit that will, or is reasonably expected to:
               .    Prevent the onset of an illness, condition or disability;
               .    Reduce or ameliorate the physical, mental behavioral, or
                    developmental effects of an illness, condition, injury or
                    disability;
               .    Assist the individual to achieve or maintain maximum
                    functional capacity in performing daily activities, taking
                    into account both the functional capacity of the individual
                    and those functional capacities appropriate for individuals
                    of the same age.

     Medically Appropriate Transfer: A transfer from a hospital, which complies
               with the requirement of 42 U.S.C. Section 1395dd(c).

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         29
--------------------------------------------------------------------------------

<PAGE>

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

     Medically Necessary Services: Services that are included in the District's
               Medicaid programs and meet medical necessity criteria established
               in this Request for Proposals.

     Member Month: One Enrollee who is enrolled in the MMCP for one month.

     Member Record: A record contained on the Daily Membership File or the
               Monthly Membership File that contains information on
               eligibility, managed care coverage, and the category of
               assistance, which help establish the covered services for which a
               consumer is eligible.

     Mental Health and Alcohol and Drug Abuse Services: Medicaid services for
               the treatment of mental or emotional disorders and treatment of
               chemical dependency disorders.

     National Committee on Quality Assurance (NCQA): An organization that sets
               standards, evaluates and accredits health plans and other managed
               health care organizations.

     Net Worth (Equity): The residual interest in the assets of an entity
               that remains after deducting its liabilities.

     Network: Means all contracted or employed providers in the health plan who
               are providing covered services to members.

     Network Provider: Health and mental health services provider who is an
               individual or organization selected and under contract with a
               specific contractor.

     Notice of Action: Written notice of a decision by a contractor to
               authorize, deny, terminate, suspend, or delay requested services
               for a specific Enrollee; approve or deny a grievance; approve or
               deny an appeal; or report on actions taken to resolve a
               complaint.

     Ombudsman: Entity that engages in impartial and independent investigation
               of individual complaints, advocates on behalf of consumers and
               issues recommendations. This function may be operated by an
               organization independent of the Contractor, or by a designated
               and appropriately delineated and empowered unit in a government
               agency.

     Out-of-Network Provider: A health or mental health and alcohol and drug
               abuse individual or organization who does not have a written
               provider agreement with a Contractor and therefore not included
               or identified as being the Contractor's network.

     Out of Plan Services: Services that are not included as covered
               services.

     Outreach: Activities performed by the Contractor or its designee to
               contact its Enrollees and their families, and to communicate
               information, monitor the effectiveness of care, encourage use of
               Medicaid resources and treatment compliance, and provide
               education.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         30
--------------------------------------------------------------------------------

<PAGE>

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

     Primary Care Provider (PCP): A board-certified or board-eligible provider
               who has a contract with a managed care plan to provide necessary
               well care, diagnostic, and primary care services, and to manage
               covered benefits for Enrollees in his or her caseload. A
               physician with a specialty of pediatrics, obstetrics/gynecology,
               internal medicine, family medicine or any other specialty the
               Contractor designates from time to time may serve as a PCP.

     Primary Source Verification: Credentialing procedures for the review and
               verification of original documents submitted for credentialing,
               including confirmation of references, appointments, and licensure
               from licensing authorities. (See also "Credentialing")

     Prior Authorization: A determination made by a Contractor to approve or
               deny a provider's or Enrollee's request to provide a service or
               course of treatment of a specific duration and scope to an
               Enrollee prior to the provision of the service. (See also
               "Service Authorization")

     Provider: An individual or organization that delivers medical, dental,
               rehabilitation, or mental health services.

     Provider Agreement: Any MAA-approved written agreement between the
               Contractor and a provider to provide medical or professional
               services to MAA consumers to fulfill the requirements of the
               contract.

     Qualified Family Planning Provider (QFPP): Any public or not-for-profit
               health care provider that complies with Title X
               guidelines/standards and receives Title X funding.

     Quality Improvement: Methods to identify opportunities for improving
               organizational performance, identify causes of poor performance,
               design and test interventions, and implement demonstrably
               successful interventions system-wide.

     Quality Management: An ongoing, objective and systematic process of
               monitoring, evaluating and improving the quality, appropriateness
               and effectiveness of care.

     Recipient: A person eligible to receive medical and/or behavioral health
               services.

     Recipient Month: One MA consumer covered for one (1) month.

     Rejected Claim: A claim that has erroneously been assigned a unique
               identifier and is removed from the claims processing system prior
               to adjudication.

     Remittance Advice: A written explanation accompanying payment to a provider
               indicating how the payment is to be applied.

     Residential Treatment Facility: 24-hour treatment facility primarily for
               children with significant behavioral problems who need long-term
               treatment.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         31
--------------------------------------------------------------------------------

<PAGE>

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

     Respite: A Service provided in order to offer a period of relief for a
               family member or other non-paid caregiver of a person who has
               needs requiring constant monitoring, assistance with activities
               of daily living, and/or treatment. Respite may be provided in the
               home setting by alternative caretakers, or out of home in a
               non-acute residential, nursing or hospital setting.

     Retrospective Review: Determination of the appropriateness or necessity of
               services after they have been delivered, generally through the
               review of the medical or treatment record.

     Risk Assessment: Assessment process based on medical records, phone
               contact, and when needed, an office visit or outreach to the
               home, to determine which Enrollees are most in need of medical
               and related services to improve their condition.

     Risk Pool: Deleted.

     Routine: Describes a level of health needs which is neither urgent nor
               emergent, but for which medical services can improve functioning
               and/or reduce symptoms.

     Salazar Monitor: Court monitor appointed to report, record, evaluate,
               observe, and provider recommendations to the United States
               District Court on the District's Medicaid program including
               processing of Medicaid applications and re-certification,
               eligibility verification, and arranging for, providing, and
               reporting on EPSDT services.

     School-Based Health Center: A health care site located on school building
               premises which provides, at a minimum, on-site, age-appropriate
               primary and preventive health services with parental consent, to
               children in need of primary health care.

     Section 1915(b) Waiver: A statutory provision of Medicaid that allows a
               state to partially limit the freedom of choice by consumers of
               Medicaid eligible services or that waives the requirements under
               Title XIX, the Medicaid Act, for statewideness of a plan or
               comparability of benefits.

     Senior Manager: A Contractor's staff member who has decision-making
               authority, and is accountable, for the performance of a major
               function and/or department.

     Service Authorization: A determination made by a Contractor to approve or
               deny a provider's or Enrollees' request to provide a service or
               course of treatment of a specific duration and scope to an
               Enrollee. (See also "Prior Authorization")

     SOBRA: Sixth Omnibus Budget Reconciliation Act, it allows states to expand
             coverage to pregnant women and children.

     Special Health Care Needs: See Children with Special Health Care Needs.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         32
--------------------------------------------------------------------------------

<PAGE>

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

     Spend-down: A process of establishing eligibility by allowing consumers to
               spend their excess net income on certain incurred or paid medical
               expenses. Eligibility may need to be redetermined monthly.

     Stabilize: The provision of treatment necessary to assure, within
               reasonable medical probability, that no material deterioration of
               an Enrollee's medical condition is likely to result.

     Start Date: The first date which consumers are eligible for medical
               services under the operational contract, and on which the
               Contractors are operationally responsible and financially liable
               for providing medically necessary services to consumers.

     Subcapitation: A provider in the Contractor's network paid on a per
               member/per month basis to cover some or all of its services. This
               method passes on a portion of risk to providers.

     Subcontract: Any written agreement between the Contractor and another party
               that requires the other party to provide services or benefits
               that the Contractor shall make available.

     Supplemental Security Income (SSI): A Medicaid category of assistance for
               blind or disabled individuals who are eligible for federal
               Supplemental Security Income benefits and Medicaid.

     SSI-Related: A Medicaid category, which includes, but is not limited to the
               same requirements as the corresponding category of SSI. Persons
               who receive Medicaid in SSI-Related categories may include, but
               are not limited to aged, blind or disabled and people determined
               to be Medically Needy.

     Sui Juris: Having full legal rights or capacity as in the case of
               emancipated minors.

     Temporary Assistance for Needy Families (TANF): Federally funded program
               that provides assistance to single-parent families with children
               who meet the categorical requirements for aid. TANF eligibles
               also qualify for Medicaid coverage.

     TANF-related Individuals: Persons who qualify for Medicaid and whose family
               incomes do not exceed 200% of FPL. TANF-related eligibility is
               determined by the District's State Medicaid Plan or federal law
               (including medically needy and transitional Medicaid).

     Third Party Liability: Insurance policy or other form of coverage with
               responsibility to pay for certain health services for a Medicaid
               eligible in addition to Medicaid. Includes commercial health
               insurance, worker's compensation, casualty, torts, and estates.
               These sources shall be used to offset the costs of Medicaid
               services.

     Third Party Resource (TPR):A third party resource is any individual, entity
               or program that is liable to pay all or part of the medical cost
               of injury,

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         33
--------------------------------------------------------------------------------

<PAGE>

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

               disease or disability of a consumer. Examples of third party
               resources would include government insurance programs such as
               Medicare or CHAMPUS (Civilian Health and Medical Program of the
               Uniformed Services); private health insurance companies, or
               carriers; liability or casualty insurance; and court-ordered
               medical support. Such resources, or insurance, shall be billed
               prior to billing the MA Program, but a TPR should never interfere
               with an MA consumer's receipt of service.

     Title XVIII (Medicare): A federally-financed health insurance program
               administered by the Health Care Financing Administration (HCFA),
               covering almost all Americans sixty-five (65) years old and older
               and certain individuals under sixty-five (65) who are disabled or
               have chronic kidney disease. The program provides protection with
               an acute care focus under two parts: (1) Part A covers inpatient
               hospital services, post-hospital care in skilled nursing
               facilities and care in patients' homes; and (2) Part B covers
               primarily physician and other outpatient services.

     Transportation Services: Mode of transportation that can suitably meet
               Enrollee's medical needs. Acceptable forms of providing
               transportation include, but are not limited to, provision of bus,
               subway, or taxi vouchers; wheel chair vans; and ambulances.

     Triage: The process of determining the degree of urgency of the needs of an
               individual Enrollee, and then referring and/or further arranging
               for that Enrollee to receive the appropriate level of care.

     TTD/TTY: A telecommunications instrument enabling those with communication
               disorders to communicate over the telephone by using a keyboard.
               Also known as Teletype (TTY) or TTD.

     Urban: Consists of territory, persons and housing units in places, which
               are designated as 2,501 persons or more. These places shall be in
               close proximity to one another.

     Urgent Medical Condition: A condition, including a mental health and/or
               alcohol and drug abuse condition, less serious than an emergency
               medical condition, which is severe and/or painful enough to cause
               a prudent layperson, possessing an average knowledge of medicine,
               to believe that his or her condition requires medical evaluation
               or treatment within 24 hours in order to prevent serious
               deterioration of the individual's condition or health.

     Utilization Management: An objective and systematic process for planning,
               organizing, directing and coordinating health care resources to
               provide medically necessary, timely and quality health care
               services in the most cost-effective manner.

     Utilization Review Criteria: Detailed standards, guidelines, decision
               algorithms, models, or informational tools that describe the
               clinical factors to be considered relevant to making
               determinations of medical necessity

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         34
--------------------------------------------------------------------------------

<PAGE>

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

               including, but not limited to, level of care, place of service,
               scope of service, and duration of service.

     Waiver: A process by which a state may obtain an approval from HCFA for an
               exception to a federal Medicaid requirement(s).

     Youth Services Administration (YSA): District agency responsible for
               administering services for youth who are in the custody of the
               District as a result of criminal activities.

     Acronyms

     ADA       Americans with Disabilities Act
     AMBHA     American Managed Behavioral Healthcare Association
     APRA      Addictions, Prevention, Recovery Administration
     CAHPS     Consumer Assessment of Health Plans Studies
     CARF      Commission on Accreditation of Rehabilitation Facilities
     CASSIP    Child and Adolescent SSI or SSI-Related Plans
     CLIA      Clinical Laboratory Improvement Amendment
     CMHS      Commission on Mental Health Services
     CO        Contracting Officer
     COTR      Contracting Officer Technical Representative
     DBE       Disadvantaged Business Enterprise
     DCHFP     District of Columbia Healthy Families Program
     DCPS      D.C. Public Schools
     DME       Durable Medical Equipment
     DOES      District of Columbia Department of Employment Services
     DOH       Department of Health
     D-U-N-S   Data-Universal-Numbering-System
     DUR       Drug Utilization Review
     EOB       Explanation of Benefits
     EPSDT     Early and Periodic Screening, Diagnosis, and Treatment
     ESA       Employment Standards Administration
     EVS       Eligibility Verification System
     FFS       Fee-For-Service
     FPL       Federal Poverty Level
     FQHC      Federally Qualified Health Center
     FTE       Full Time Equivalent Employees
     HCFA      Health Care Finance Administration
     HIPAA     Health Insurance Portability and Accountability Act
     HMO       Health Maintenance Organization
     ICF/MR    Intermediate Care Facilities for Mental Retardation
     IDEA      Individuals with Disabilities Education Act
     IDIQ      Indefinite Delivery Indefinite Quantity
     IEP       Individualized Education Plan
     IFB       Invitation for Offers
     IFSP      Individualized Family Services Plan
     IMA       Income Maintenance Administration

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         35
--------------------------------------------------------------------------------

<PAGE>

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

     JCAHO     Joint Commission on Accreditation of Healthcare Organizations
     LBE       Local Business Enterprise
     LBOC      Local Business Opportunity Commission
     MAA       Medical Assistance Administration
     MH        Mental Health
     MIS       Management Information System
     MMCP      Medicaid Managed Care Program
     MOU       Memorandum of Understanding
     NAIC      National Association of Insurance Commissioners
     NCQA      National Committee on Quality Assurance
     OHRLBD    Office of Human Rights and Local Business Development
     OIG       Office of Inspector General, U.S. Department of Health and Human
               Services
     OMC       Office of Managed Care
     OTMP      Outreach and Transition Monitoring Plan
     PBC       Public Benefits Corporation
     PBM       Pharmacy Benefits Manager
     PCP       Primary Care Physician
     PMPM      Per Member Per Month
     QFPP      Qualified Family Planning Provider
     QI        Quality Improvement
     QISMC     Quality Improvement System for Managed Care
     RFP       Request for Proposal
     SA        Substance Abuse
     SCHIP     State Children's Health Insurance Program
     SOBRA     Sixth Omnibus Budget Reconciliation Act
     SSI       Supplemental Security Income
     TANF      Temporary Assistance to Needy Families
     TDL       Technical Direction Letter
     TPL       Third Party Liability
     TTY       Teletype
     UPL       Upper Payment Limit
     URAC      Utilization Review Accreditation Commission
     VFC       Vaccines for Children
     WIC       Special Supplemental Food Program for Women, Infants and Children
     YSA       Youth Services Administration

C.2  Background

     The Government of the District of Columbia, Department of Health Medical
     Assistance Administration is the single state agency with the
     responsibility for implementation and administration of the District of
     Columbia's Medicaid (i.e., Title XIX) and Children's Health Insurance
     (i.e., Title XXI - SCHIP) programs. Through these programs, approximately
     125,000 eligible low-income family members and disabled and elderly
     individuals receive health insurance coverage. Of the 125,000 eligibles,
     approximately 50,000 are enrolled in the Fee for Service

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         36
--------------------------------------------------------------------------------

<PAGE>

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

     program and are not the responsibility of the Contractor. The two
     components of the Medicaid system that are subject to this contract are as
     follows:

          DCHFP operates as a capitated waiver program under Section 1915(b) of
          the Social Security Act. The DCHFP serves approximately 75,000
          primarily low-income pregnant women, children and adults (e.g., TANF,
          SOBRA and SCHIP eligibles) who are enrolled on a mandatory basis in
          health maintenance organizations (HMOs). The HMOs are required to
          provide a comprehensive array of medically necessary health care and
          mental health services to DCHFP enrollees. Beginning April 1, 2001,
          MAA anticipates expanding DCHFP coverage to include individuals up to
          200% of the Federal Poverty Level (FPL). The expanded coverage to 200%
          FPL is anticipated to include 11,000 new Enrollees.

               C.2.1.1   In addition, MAA is submitting an amendment to the
                         District's Medicaid State Plan to the Health Care
                         Finance Agency (HCFA) requesting to provide outpatient
                         drug and alcohol rehabilitation services. Contingent
                         upon HCFA approval, these services will be available
                         to DCHFP Enrollees on a FFS reimbursement basis through
                         a specialized provider network. DCHFP contractors are
                         not financially responsible for the delivery of
                         outpatient and rehabilitation services.

          RESERVED.

     C.2.3 DCHFP responsibility for Proposed Alcohol and Drug Abuse Services
          Contingent upon HCFA approval of the District's waiver request, the
          District MAA will select a network(s) of alcohol and drug abuse
          treatment providers to provide outpatient, day treatment, methadone,
          residential and detoxification services to DCHFP Enrollees. The
          contracted alcohol and drug abuse treatment provider network will be
          paid by MAA on a for fee-for-service (FFS) basis for Enrollees of the
          DCHFPs. Although the DCHFPs will not be responsible for paying
          providers for these services, the DCHFP Contractors shall have a role
          with regard to alcohol and drug abuse treatment, including: (1)
          assisting MAA in the selection of the alcohol and drug abuse treatment
          provider network(s); (2) assisting MAA in the development of
          protocols, policies and procedures that govern referral and
          coordination of care; (3) establishing protocols, policies and
          procedures that govern the delivery of dual diagnosis services (mental
          health and alcohol and drug abuse); (4) referring Enrollees suspected
          of needing alcohol and drug abuse treatment; and(5) participating in
          multidisciplinary staffing to ensure coordination of alcohol and drug
          abuse treatment and mental health and/or physical health care needs.
          DCHFP Contractors' capitation will include costs associated with the

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         37
--------------------------------------------------------------------------------

<PAGE>

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

          administrative functions of referral and care coordination for
          Enrollees needing alcohol and drug abuse treatment.

     C.2.4 The MAA's principal objective in the development of this solicitation
          is to ensure the selection of Contractors who can provide high quality
          health care services and supports to all enrollees. The MAA has also
          identified the following desired outcomes and guiding principles for
          each specific program.

               C.2.4.1   For DCHFP:

                         .    Improve access to and coordination of Individuals
                              with Disabilities Education Act (IDEA) health
                              related services for IDEA eligible children;
                         .    Improve health outcomes for children through
                              increased compliance with Early and Periodic
                              Screening, Diagnosis, and Treatment (EPSDT);
                         .    Improve birth outcomes through earlier and
                              increased participation in prenatal care;
                         .    Improve coordination of care for individuals with
                              serious and complex conditions including children
                              with special health care needs;
                         .    Improve access to mental health and alcohol and
                              drug abuse treatment, and improve coordination
                              between primary care and mental health/alcohol and
                              drug abuse treatment;
                         .    Improve access for individuals to appropriate
                              services and supports; and
                         .    Utilize public resources in the most efficient
                              manner possible.

               C.2.4.2   RESERVED.

C.3  Requirements

     The requirements in this section pertain to DCHFP program the contractor(s)
     shall:

     C.3.1 Network

               C.3.1.1.  Maintain an adequate network of health service
                         providers and agencies that is of sufficient size and
                         scope to meet the health and mental health care needs
                         of Medicaid Enrollees and the specifications of this
                         contract;

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         38
--------------------------------------------------------------------------------

<PAGE>

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

               C.3.1.2   Maintain accurate and current information regarding the
                         membership of its provider network and the capacity of
                         each primary care provider within the network to accept
                         new patients;

               C.3.l.3   Provide complete, accurate and current written
                         information about its network, services, and procedures
                         to any prospective or current Enrollee, the
                         representatives of such Enrollees and organizations
                         that counsel Medicaid-eligible persons regarding their
                         choice of plans.

     C.3.2 Organizational Requirements

               C.3.2.1   Organizational Structure

                         The Contractors shall have a well-defined
                         organizational structure with clearly assigned
                         responsibility and accountability for major managed
                         care functions. The Contractor may combine functions or
                         assign responsibility for a function across multiple
                         departments, as long as the staffing, duties and
                         functions are carried out as required in the following
                         subsections.

               C.3.2.2   The Contractors shall identify key personnel for
                         functions specified in Sections C.3.2.3 through
                         C.3.2.12 below that are considered to be essential to
                         the work being performed.

               C.3.2.3   The Contractors shall have a Chief Executive Officer
                         with clear authority over the entire operation and
                         designate a Senior Manager with overall responsibility
                         for fulfilling the terms for each of its Medicaid
                         Managed Care Program contracted plan(s).

               C.3.2.4   The Contractors shall have a Chief Financial Officer to
                         oversee the budget and accounting system.

               C.3.2.5   The Contractors shall designate a board-certified
                         physician licensed in the District with at least five
                         years experience to serve as Medical Director for its
                         Medicaid Managed Care Program contracted plan(s). The
                         responsibilities of the Medical Director pertain to
                         physical health care and include the following
                         functions:

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         39
--------------------------------------------------------------------------------

<PAGE>

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

                         C.3.2.5.1 Development of clinical practice standards,
                                   policies, procedures, and performance
                                   standards;

                         C.3.2.5.2 Review and resolution of quality of care
                                   problems;

                         C.3.2.5.3 Participation in grievance and appeal
                                   processes related to service denials and
                                   clinical practice;

                         C.3.2.5.4 Development, implementation, and review of
                                   the internal quality assurance and
                                   utilization management programs;

                         C.3.2.5.5 Oversight of the referral process for
                                   specialty and out-of-plan services;

                         C.3.2.5.6 Leadership and direction for the Contractor's
                                   clinical staff recruitment, credentialing and
                                   privileging activities;

                         C.3.2.5.7 Leadership and direction for the Contractor's
                                   prior authorization and utilization review
                                   process;

                         C.3.2.5.8 Leadership and direction of policies and
                                   procedures relating to confidentiality of
                                   clinical records; and

                         C.3.2.5.9 Participation in meetings called by MAA

               C.3.2.6   The Contractors shall designate a single Senior
                         Manager, which mayor may not be the contracted
                         Psychiatric Medical Director, with overall
                         responsibility for performance of the Contractor's
                         obligations to provide mental health services and to
                         coordinate with the Commission on Mental Health
                         Services and the Dixon Transitional Receiver.

               C.3.2.7   The Contractors shall designate a Senior Manager with
                         overall responsibility for a Quality Improvement
                         Program

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         40
--------------------------------------------------------------------------------

<PAGE>

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

                         to assess ongoing quality and to develop and implement
                         the Contractor's Quality Improvement Plan.

               C.3.2.8   The Contractors shall designate a Senior Manager with
                         overall responsibility for a Care Coordination Program
                         to coordinate care for Enrollees with multiple,
                         complex, and/or intensive treatment needs including
                         individuals in need of alcohol and drug abuse
                         treatment.

               C.3.2.9   The Contractors shall designate a Senior Manager with
                         overall responsibility for a Member Services Program to
                         communicate with Enrollees on a twenty-four (24) hours
                         per day, seven (7) days per week basis, act as member
                         advocates, and coordinate members' use of the
                         complaint, grievance, and appeals process.

               C.3.2.10  The Contractors shall designate a Senior Manager with
                         overall responsibility for a Provider Services Program
                         to coordinate communications between the MCO and its
                         providers and oversee provider network management.

               C.3.2.11  The Contractors shall designate a Senior Manager with
                         overall responsibility for Management Information
                         Services to support the operations of computerized
                         system for collection, analysis and reporting of
                         information.

               C.3.2.12  Medicaid Advisory Committee

                         C.3.2.12.1 The Contractors shall establish an Advisory
                                   Committee within sixty (60) days of contract
                                   award. The Contractor shall ensure that this
                                   committee meets at least quarterly to advise
                                   the Contractors on matters relating to
                                   services to enrollees.

                         C.3.2.12.2 The Advisory Committee shall also include
                                   network providers, Enrollees, and sufficient
                                   other stakeholders, representative of
                                   relevant advocacy groups, trade associations,
                                   and the District agencies that serve Medicaid
                                   managed care Enrollees to provide
                                   comprehensive feedback on the Contractor's
                                   operations and planned changes. At a minimum,
                                   the Advisory Committee shall include a
                                   representative of the Commission

--------------------------------------------------------------------------------
CONTRACT N).: POHC-2002-D-OOO3         41
--------------------------------------------------------------------------------

<PAGE>

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

                                   on Mental Health Services/Dixon Transitional
                                   Receiver, the DC Public Schools, the
                                   District's Court System, Child and Family
                                   Services Agency/LaShawn Receiver, the Use
                                   Your Power Parent Advisory Council, the
                                   Department of Human Services Youth Services
                                   Administration, the Chief Executive Officer
                                   of his/her designee of the MAA contracted
                                   alcohol and drug abuse provider network(s),
                                   and the Department of Human Services Early
                                   Intervention Program.

                         C.3.2.12.3 MAA will approve the overall representation
                                   on this Committee and the scope of its
                                   jurisdiction.

                         C.3.2.12.4 The Contractors shall generate and maintain
                                   minutes and records of the agendas of the
                                   meetings, issues raised and any
                                   recommendations made to resolve identified
                                   issues or to improve the Contractor's
                                   operations. These records shall be available
                                   within three (3) working days of each
                                   meeting, and may be reviewed by MAA or its
                                   representative, upon request.

     Place of Business and Hours of Operation

     The Contractor shall maintain a business office in the District which shall
     operate Monday through Friday between 8:00 a.m. and 5:00 p.m. and which
     shall be adequately staffed to ensure prompt and accurate responses to
     inquiries from current or prospective Enrollees, providers of the
     Contractor's network and officials of the District or federal governments.
     The Contractor shall provide live access twenty-four (24) hours per day,
     seven (7) days per week to its Member Services program and other key
     functions that support care coordination and utilization.

     Marketing

     The Contractor shall comply with the Balanced Budget Act of 1997.

     C.5.1 Permissible Marketing Activities

          In addition to the requirements of the Balanced Budget Act of 1997,
          the Contractor shall be responsible for distributing all permissible
          marketing materials throughout the District of Columbia. The
          Contractor shall be permitted to perform the following marketing
          activities under this contract:

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         42
--------------------------------------------------------------------------------

<PAGE>

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

               C.5.1.1   General information distributed through mass media
                         (i.e., newspapers, magazines and other periodicals,
                         radio, television the Internet, and other media
                         outlets);

               C.5.l.2   Telephone calls, mailings and home visits are
                         permissible only to individuals who are current
                         Enrollees of the Contractor for the sole purpose of
                         educating current Enrollees about services offered by
                         or available through the Contractor;

               C.5.1.3   General activities which benefit the entire community
                         such as health fairs, school contributions or activity
                         sponsorships, and health education and promotion
                         programs; and

               C.5.l.4   Materials as requested and/or required by the District
                         to be distributed by its enrollment agent.

     Prior Approval of all Marketing Activities and Materials

               C.5.2.1   The Contractor shall submit a detailed description of
                         its marketing plan and all materials that it intends to
                         use to MAA sixty (60) days prior to implementation of
                         the marketing plan.

     Content of Marketing Materials and Information

               C.5.3.1   Written brochures and materials which are intended to
                         encourage eligibles to select the Contractor and are
                         distributed through the permissible marketing
                         activities described Section 0 shall be written at the
                                              ---------
                         fifth (5th) grade reading level and shall at a minimum
                         contain the following information:

                         C.5.3.1.1 A statement that Medicaid beneficiaries can
                                   choose to enroll in any plan that is offered;

                         C.5.3.1.2 A listing of covered services and cost
                                   sharing requirements if applicable;

                         C.5.3.1.3 An explanation of beneficiaries' rights to
                                   select a primary care provider and to obtain
                                   family planning services from any qualified
                                   family planning provider, including the
                                   qualified family planning agencies that may

--------------------------------------------------------------------------------
CONTRACT NO.: POHC-2002-D-OOO3         43
--------------------------------------------------------------------------------

<PAGE>

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

                                   not be providers of the Contractor's network;

                         C.5.3.1.4 An explanation of the importance of selecting
                                   a primary care provider from whom or through
                                   whom all care will be obtained;

                         C.5.3.1.5 An explanation of the right of an Enrollee
                                   needing mental health or alcohol and drug
                                   abuse services to receive such care and have
                                   a choice of network providers.

                         C.5.3.1.6 An explanation of the availability of
                                   assistance from the District or its agent in
                                   selecting a health plan; and

                         C.5.3.1.7 Where and how to obtain easy, userfriendly,
                                   yet detailed and specific information on
                                   available providers in the Contractor's
                                   network prior to making a final plan
                                   selection.

               C.5.3.2   The Contractor shall furnish the following information
                         through the permissible marketing activities described
                         in Section C.5.1:

                         C.5.3.2.1 An explanation of services available through
                                   the Contractor;

                         C.5.3.2.2 A description of the service network offered
                                   by the Contractor (including types of
                                   providers, locations of providers, and
                                   hours);

                         C.5.3.2.3 The availability of services for persons
                                   whose primary language is not English or who
                                   have a disability; and

                         C.5.3.2.4 The availability of transportation services.

     C.5.4 Permissible Marketing Activities of Network Providers

               C.5.4.1   The Contractor shall ensure that its network providers
                         comply with Sections C.5 in performing any marketing
                         activities on the Contractor's behalf.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         44
--------------------------------------------------------------------------------

<PAGE>

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

               C.5.4.2   Marketing information distributed by a provider in the
                         Contractor's network that is directed to the provider's
                         current patients shall be limited to general
                         information about their health plan and notification of
                         the provider's inclusion in the Contractor's network.

               C.5.4.3   The Contractors shall provide the District's Enrollment
                         Broker with listing of its network providers. When a
                         listed provider serves other health plans as well, the
                         names of those health plans shall be disclosed.

               C.5.4.4   All such information shall include a statement that
                         Medicaid beneficiaries can choose to enroll in any MMCP
                         plan that is offered for their eligibility group.

     C.5.5 Prohibited Information and Activities

               The Contractor and their Subcontractors are prohibited from
               distributing the following information or conducting the
               following activities:

               C.5.5.1   Materials which mislead or falsely describe covered or
                         available services;

               C.5.5.2   Materials which mislead or falsely describe the
                         Contractor's provider participation network, the
                         participation or availability of network providers, the
                         qualifications and skills of network providers
                         (including their bilingual skills), or the hours and
                         locations of network services;

               C.5.5.3   Offering gifts of more than the minimums value cash
                         promotions, and/or other insurance products which are
                         designed to induce enrollment by individual
                         beneficiaries;

               C.5.5.4   Compensation arrangements with marketing personnel that
                         utilize any type of payment structure in which
                         compensation is tied to the number (or classes) of
                         persons who enroll;

               C.5.5.5   Direct soliciting of members, either by mail,
                         door-to-door or telephonic, of prospective Enrollees;
                         and

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         45
--------------------------------------------------------------------------------

<PAGE>

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

               C.5.5.6   Engaging in any marketing activity or using any
                         marketing material not approved in advance by the
                         District.

C.6  Enrollment, Education and Outreach

     The Contractor shall develop procedures and materials to assist new
     Enrollees in selecting a PCP; inform them of covered services, benefits and
     procedures; and inform them of their rights as Plan Enrollees and Medicaid
     recipients and how to exercise their rights. All such material shall be
     submitted to MAA for approval prior to distribution.

     C.6.1 Coordination with the District's Agent/Enrollment Broker

               The Contractor shall coordinate enrollment, education, and
               outreach activities with the District, or its Agent/Enrollment
               Broker.

     C.6.2 Acceptance of all Enrollees

               The Contractor shall accept each individual who is enrolled in or
               assigned to the Contractor by the District or its agent.

     C.6.3 Evidence of Coverage

               Within ten (10) business days of the date on which the District
               or its agent notifies the Contractor that an individual has been
               enrolled with the Contractor, the Contractor shall provide each
               Enrollee with written evidence of coverage and a Member Handbook
               written equivalent to a fifth grade reading level that shall
               include the following orientation and education materials:

               C.6.3.1   A plan membership card which contains the effective
                         date of enrollment, the individual's Enrollee
                         identification number (including the DC Medicaid ID
                         number), the Contractor's general information and
                         emergency telephone numbers, and other general
                         information;

               C.6.3.2   Conditions of enrollment, the scope, content, duration
                         and limitation of coverage in the plan;

               C.6.3.3   Explanation of the procedure for obtaining benefits,
                         including the address and telephone number of the
                         Contractor's office or facility and the days that the
                         office or facility is open and services are available;

               C.6.3.4   Explanation of how and where to access emergency
                         medical care availability to Enrollees twenty-four (24)

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         46
--------------------------------------------------------------------------------

<PAGE>

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

                         hours a day, seven (7) day a week; a description of the
                         process for using either in network or out-of-network
                         providers for emergency services; and an explanation of
                         out-of-plan coverage;

               C.6.3.5   A confirmation of the Enrollee's selection of a primary
                         care provider if a PCP was designated at the time of
                         enrollment;

               C.6.3.6   For Enrollees who have not selected a PCP, an
                         explanation of the auto-assignment process; the
                         Enrollee's right to select and change their PCP; and
                         instructions on how to select a PCP. The instructions
                         shall include a process for selection by telephone and
                         an explanation that an Enrollee may remain with his or
                         her current PCP if the PCP is a member of the
                         Contractor's network;

               C.6.3.7   Information on prescription coverage and co-pay
                         schedules as applicable;

               C.6.3.8   A list of all current network primary care providers
                         with open practices, with their board certification
                         status, addresses, telephone numbers, availability of
                         evening or weekend hours, and all languages spoken;

               C.6.3.9   An explanation of how the Enrollee may obtain an
                         initial assessment with a network outpatient mental
                         health or contracted alcohol and drug abuse network
                         provider, and how to obtain assistance in locating a
                         provider;

               C.6.3.10  An explanation of how the Enrollee may obtain specialty
                         care and the costs, if any, associated with specialty
                         care;

               C.6.3.11  An explanation of the Enrollee's opportunity to obtain
                         family planning services covered under this contract
                         from a qualified family planning provider of their
                         choice regardless of the family planning provider's
                         membership in the Contractor's network;

               C.6.3.12  A separate brochure explaining the EPSDT program which
                         includes a list of all of the services available to
                         children, a statement that services are free, and a
                         telephone number which Enrollees can call to receive
                         assistance in scheduling an appointment and obtaining
                         transportation;

--------------------------------------------------------------------------------
CONTRACT NO.: POHC-2002-D-0003         47
--------------------------------------------------------------------------------

<PAGE>

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

               C.6.3.13  Information on how to request IDEA evaluation for an
                         enrolled child through the Contractor's network;

               C.6.3.14  Notification of the Enrollee's responsibility to report
                         any ongoing care corresponding to a plan of care at the
                         time of enrollment and their rights to continue that
                         treatment under the Contractor on a transitional basis
                         as described in Section C.8.4;

               C.6.3.15  Notification of the Enrollee's responsibility to report
                         any third party payment source to the Contractor and
                         the importance of doing so;

               C.6.3.16  A description of the Enrollee's rights under the plans
                         including:

                         C.6.3.16.1 The right to obtain information listed in
                                   Section C.7.4.3, upon request;

                         C.6.3.16.2 Notification of how to submit a grievance or
                                   complaint and information about how to
                                   contact the Ombudsmen for assistance in doing
                                   so;

                         C.6.3.16.3 The right of an Enrollee to receive
                                   assistance from a personal representative of
                                   the Enrollee's choice during grievance or
                                   complaint procedures; and

                         C.6.3.16.4 The Enrollee's right to request a hearing
                                   with the Office of Fair Hearings;

               C.6.3.17  Identification of the services that are covered under
                         the District's Medicaid plan but that are not part of
                         Contractor's service benefit package and that therefore
                         may be obtained from any participating Medicaid
                         provider without adhering to Contractor's procedures.
                         Information regarding allowable reasons and procedures
                         for disenrolling from the Contractor's plan;

               C.6.3.18  Information on the availability of transportation and
                         interpretation services as required in Section C and
                         Attachment A.2.1(g) under this contract and the
                         procedures for requesting such assistance;

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         48
--------------------------------------------------------------------------------

<PAGE>

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

               C.6.3.19  As needed, the Contractor shall make the above listed
                         materials available to Enrollees in English, Spanish,
                         Vietnamese, Chinese, Braille, or audio format; and

               C.6.3.20  The Contractor shall issue updates to the Member
                         Handbook when there are material changes that will
                         affect access to services and information about the
                         Medicaid Managed Care Program and shall provide at
                         least an annual mailing of the complete updated Member
                         Handbook.

     C.6.4 Selection of Primary Care Provider

               C.6.4.1   The Contractor shall allow each Enrollee the freedom to
                         choose from among its participating PCPs, and change
                         PCPs as requested. The Contractor shall notify
                         Enrollees of procedures for changing PCPs. The
                         materials used to notify Enrollees shall be approved by
                         MAA.

               C.6.4.2   If the Enrollee desires, the Contractor shall allow him
                         or her to remain with his or her existing PCP if the
                         PCP is a member of Contractor's primary care network.

               C.6.4.3   If an Enrollee does not choose a PCP, the Contractor
                         shall match Enrollees with PCPs by:

                         C.6.4.3.1 Assigning Enrollees to a provider from whom
                                   they have previously received services, if
                                   the information is available;

                         C.6.4.3.2 Designating a PCP who is geographically
                                   accessible to the Enrollee;

                         C.6.4.3.3 Assigning all children within a single family
                                   to the same PCP; and

                         C.6.4.3.4 Asigning a child with a significant medical
                                   condition to a practitioner experienced in
                                   treating that condition, if the Contractor
                                   knows of the condition.

               C.6.4.4   The Contractor shall ensure that all new Enrollees
                         select or are assigned to a PCP within sixty (60) days
                         of enrollment. The Contractor shall ensure that
                         Enrollees receive information about where they can
                         receive care during the time period between enrollment
                         and PCP selection/assignment. The Contractor shall
                         notify the

--------------------------------------------------------------------------------
CONTRACT NO.: POHC-2002-D-0003         49
--------------------------------------------------------------------------------

<PAGE>

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

                         Enrollee of his or her assigned PCP within five (5)
                         days of assignment.

               C.6.4.5   The Contractor shall document the number of requests to
                         change PCPs and the reasons for such requests, and
                         report them to the District on a quarterly basis in
                         accordance with Section F.5.

     C.6.5 Responsibility for Newborns

               C.6.5.1   The Contractor(s) shall submit the newborn's name and
                         date of birth to the Enrollment Broker and MAA when
                         requesting enrollment of the newborn to the mother's
                         health plan ten (10) days after the birth of the child.
                         A newborn shall be enrolled from its birth month
                         through its eligibility end date except as provided in
                         Section H.1.1.2. A newborn shall remain enrolled in the
                         health plan of birth until a Medicaid number is
                         assigned to the newborn. A mother can not disenroll the
                         newborn from the health plan of birth until a Medicaid
                         number has been assigned to the newborn.

               C.6.5.2   As noted in Section C.6.5.1, a newborn will be enrolled
                         from its birth month through eligibility end date
                         unless specified in this section:

                         C.6.5.2.1 If the newborn is abandoned the newborn shall
                                   remain in the mother's health plan until
                                   alternative medical care is determined. The
                                   contractor shall ensure that the newborn has
                                   a Medicaid number before the transfer of the
                                   newborn for alternative medical care.

                         C.6.5.2.2 If the newborn is placed for adoption the
                                   newborn shall remain in the birth mother's
                                   health plan until alternative medical care is
                                   determined. The contractor shall ensure the
                                   newborn has a Medicaid number before the
                                   transfer of the newborn for alternative
                                   medical care.

                         C.6.5.2.3 The contractors shall submit the Newborn
                                   Notification Report to MAA by the tenth
                                   (10th) day of each month in accordance with
                                   Section F.5. The Newborn Notification Report
                                   shall include all newborns identified

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         50
--------------------------------------------------------------------------------

<PAGE>

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

                                   since the submission of the last report. See
                                   Attachment J.4 for a sample copy of the
                                   report.

               C.6.5.3   The Contractor shall assure that each high-risk newborn
                         receives a home visit conducted by a registered nurse
                         within forty-eight (48) hours of discharge from the
                         birthing hospital or birthing center. The visit shall
                         be in compliance with established home visit protocol.
                         During the home visit the nurse will conduct an
                         assessment of the home environment; parent-child
                         attachment; family resources, supports, and linkages;
                         as well as family and parent risk factors. The nurse
                         will also review with the parent(s) and/or guardian(s)
                         the infant health care information materials provided
                         by the hospital and/or birthing center to assure that
                         parent(s) and/or guardian(s) understand the infant's
                         health and wellness needs. The nurse will provide
                         referrals for any needed services to link the family to
                         the most convenient and appropriate sources of on-going
                         support. The nurse will provide post-visit follow-up
                         either in person or by telephone to assure that the
                         family is linked to referral sources. The contractor's
                         response to this solicitation shall include proposed
                         newborn home visiting protocol. The contractors shall
                         comply with any relevant data reporting requirements.

     C.6.6 Disenrollment of Enrollees

               C.6.6.1   The Contractor shall not disenroll any Enrollee.

               C.6.6.2   The Contractor may request that MAA disenroll an
                         Enrollee who demonstrates a pattern of disruptive or
                         abusive behavior or obtaining services in a fraudulent
                         or deceptive manner.

                         C.6.6.2.1 In addressing the pattern and in requesting
                                   disenrollment, neither the Contractor nor the
                                   network providers may in any way discriminate
                                   against the Enrollee.

                         C.6.6.2.2 The Contractor shall make the request in
                                   writing in accordance with the process set
                                   forth in Section H.1.1.3. The Contractor
                                   shall include supporting documentation of the
                                   documentation of the conduct of the enrollee
                                   who

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         51
--------------------------------------------------------------------------------

<PAGE>

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

                                   demonstrates a pattern of disruptive, abusive
                                   behavior, obtaining services in a fraudulent
                                   or deceptive manner.

                         C.6.6.2.3 The Contractor shall not request a
                                   disenrollment of an enrollee solely because
                                   of an adverse change in mental health status.

C.7  Member Services

     The Contractor shall maintain a Member Services Department that is
     adequately staffed with qualified individuals who shall assist Enrollees,
     Enrollees' family members, or other interested parties (consistent with
     laws on confidentiality and privacy) in obtaining information and services
     under this plan.

     C.7.1 New Enrollee Orientation

               The Contractor shall offer culturally appropriate orientation
               sessions for new Enrollees conducted in, at a minimum, Spanish,
               English, Vietnamese, Chinese and American Sign Language as
               appropriate to the audience. Orientation sessions can be either
               in a group setting or in individual meetings and shall, at a
               minimum, cover the following topics:

               C.7.1.1   Explanation of EPSDT services;

               C.7.1.2   The availability and scheduling of transportation
                         services;

               C.7.1.3   Promotion of family-centered care and family
                         involvement in care and treatment planning;

               C.7.1.4   Procedures for accessing care including mental health
                         and alcohol and drug abuse services and services
                         received outside the Contractor's network;

               C.7.1.5   The types of assistance that can be provided by the
                         Ombudsman and how to contact the Ombudsman;

               C.7.1.6   Enrollee rights in Medicaid Managed Care Program
                         contracted plans and with the Office of Fair Hearings;
                         and

               C.7.l.7   Enrollee's responsibility for reporting any third party
                         payment source to the Contractor.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         52
--------------------------------------------------------------------------------

<PAGE>

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

     C.7.2 Member Services Telephone Line

               The Contractor shall operate a live access toll-free Member
               Services telephone line twenty-four (24) hours per day, seven (7)
               days per week. The Member Services telephone line shall:

               C.7.2.1   Have procedures effective in promptly identifying
                         special language needs and routing them to staff and/or
                         services capable of meeting those needs;

               C.7.2.2   Maintain TTY or comparable services for people who are
                         hearing impaired;

               C.7.2.3   Provide a system that allows non-English speaking
                         callers to talk to a bilingual staff person or an
                         interpreter accessed through the AT&T language line or
                         an equivalent service, who can translate to an English
                         speaking staff person; and

               C.7.2.4   Be monitored to measure performance such as, but not
                         limited to, abandonment rate and average response time
                         to live interaction.

     C.7.3 Member Assistance

               C.7.3.1   The Contractor shall ensure that Member Services staff
                         is also available to assist Enrollees in person when
                         needed during regular business hours.

               C.7.3.2   Member Services staff shall:

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         53
--------------------------------------------------------------------------------

<PAGE>

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

                         C.7.3.2.1 Provide information related to covered
                                   services, accessing care, and enrollment
                                   status;

                         C.7.3.2.2 Provide information on how to assist
                                   Enrollees with accessing mental health and
                                   alcohol and drug abuse care;

                         C.7.3.2.3 Assist any Enrollee to file a complaint or
                                   grievance if the member services staff cannot
                                   resolve the issue;

                         C.7.3.2.4 Provide information on contacting the
                                   Ombudsman for assistance with filing a
                                   complaint or grievance;

                         C.7.3.2.5 Assist Enrollees in selecting a PCP, or
                                   locating another network provider; and

                         C.7.3.2.6 Schedule appointments and arrange
                                   transportation for services if requested and
                                   necessary. The Contractor shall not establish
                                   a requirement that such requests be made more
                                   than five (5) calendar days in advance.

               C.7.3.3   The Contractor shall ensure that Member Services
                         Department staff has access to current information
                         about all providers in the network, including mental
                         health providers, and all providers in the MAA
                         contracted alcohol and drug abuse network (and also
                         including, but not limited to: specialty; board
                         certification status; geographic location, including
                         address and telephone number; office hours; open or
                         closed panels; handicap accessibility; and cultural and
                         linguistic abilities.

     C.7.4 Member Information

               C.7.4.1   All materials furnished to prospective and current
                         Enrollees shall be available in English, Spanish,
                         Vietnamese, Chinese and Braille as well as other
                         languages that the District may designate if speakers
                         of that language comprise of the Contractor's Medicaid
                         enrollment. Additionally the information shall meet
                         threshold comprehension equivalent to a grade five (5)
                         reading level.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         54
--------------------------------------------------------------------------------

<PAGE>

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

               C.7.4.2   The Contractor shall have a protocol for communicating
                         member information accurately and completely to
                         Enrollees who speak languages other than those made
                         available or those who cannot read.

               C.7.4.3   The Contractor shall provide within five working days
                         the following information to any Medicaid client, upon
                         request:

                         C.7.4.3.1 Procedures for authorization of services;

                         C.7.4.3.2 The Contractor's financial condition;

                         C.7.4.3.3 Description of any provider incentive plans
                                   per 42 C.F.R. 417.479(h)(3);

                         C.7.4.3.4 Summaries of any Enrollee satisfaction
                                   surveys; and

                         C.7.4.3.5 Formularies, if any.

               C.7.4.4   If a subcontractor providing direct services to
                         Enrollees terminates his/her subcontract, the
                         Contractor shall ensure that all Enrollees in the
                         subcontractor's caseload are notified of the
                         termination thirty (30) days in advance, or as soon as
                         possible after a termination made with less than thirty
                         (30) days prior notice. The notice shall specify how
                         Enrollees can get needed services after the termination

C.8  Coverage of Services and Benefits

     The Contractor shall develop, contract, arrange and provide for all
     medically necessary covered services to Enrollees in each of the plans as
     specified in Attachment J.8, and as specified in the Medicare
     post-stabilization requirements, which are available in the Reference
     Library.

     C.8.l Medical Necessity

               C.8.1.1   The District defines medical necessity as services,
                         equipment, or pharmaceutical supplies that are:

                         C.8.1.1.1 Reasonably expected to prevent the onset of
                                   an illness, condition or disability; reduce
                                   or ameliorate the physical, behavioral, or
                                   developmental effects of an illness,
                                   condition, injury or disability, and assist
                                   the individual to achieve or maintain maximum
                                   functional capacity in performing daily

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         55
--------------------------------------------------------------------------------

<PAGE>

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

                                   activities, taking into account both the
                                   functional capacity of the individual and
                                   those functional capacities appropriate for
                                   individuals of the same age;

                         C.8.1.1.2 Reasonably expected to provide an accessible
                                   and cost-effective course of treatment or
                                   site of service that is equally effective in
                                   comparison to other available, appropriate
                                   and suitable alternatives, and is no more
                                   intrusive or restrictive than necessary;

                         C.8.1.1.3 Sufficient in amount, duration and scope to
                                   reasonably achieve their purpose as defined
                                   in federal law; and

                         C.8.1.1.4 Of a quality that meets standards of medical
                                   practice and/or health care generally
                                   accepted at the time services are rendered.

               C.8.1.2   The Contractor shall authorize mental health services
                         according to level of care criteria that reflect
                         standards of care promulgated by professional
                         organizations such as the American Academy of Child and
                         Adolescent Psychiatry, the American Psychiatric
                         Association, AMBHA, and other relevant standard setting
                         groups, and that reflect current evidence of treatment
                         efficacy from peer reviewed publications, medical
                         community acceptance and expert medical opinion. These
                         criteria shall be submitted to MAA for review and
                         approval by the Dixon Transitional Receiver.

                         C.8.1.2.1 These criteria shall allow authorizers to
                                   consider treatment needs for Enrollees who
                                   may become homeless, living at home or living
                                   in group residential settings, and for
                                   children in foster care.

                         C.8.1.2.2 The Contractor shall ensure that a Board
                                   certified child psychiatrist reviews criteria
                                   applicable to children and adolescents and a
                                   Board certified psychiatrist specializing in
                                   treatment of adults reviews criteria
                                   applicable to adults and updates them to

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         56
--------------------------------------------------------------------------------

<PAGE>

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

                                   reflect new research findings and best
                                   practices.

                         C.8.1.2.3 The Contractor shall disseminate Level of
                                   Care Criteria for mental health services to
                                   network mental health providers and to other
                                   network providers as needed to guide
                                   treatment and ensure consistency, and shall
                                   be available to them upon request.

               C.8.1.3   The Contractor shall cover all medically necessary
                         covered services, including those services that are:

                         C.8.1.3.1 Court-ordered. If the Contractor determines
                                   that Court-ordered services are not medically
                                   necessary the Contractor shall recommend an
                                   alternative level of care to the Court. In
                                   the event that the Court does not accept the
                                   alternative level of care recommended by the
                                   Contractor, the Contractor shall provide the
                                   court-ordered level of service.

                         C.8.1.3.2 Required to be furnished in a work, school,
                                   childcare, home or other settings in order to
                                   be appropriate for the Enrollee.

               C.8.1.4   If a covered EPSDT service is requested to assess a
                         child's eligibility for IDEA services, or as part of a
                         child's IDEA Individual Education Program or Early
                         Intervention Individual Family Services Plan, the
                         Contractor maydeny coverage only if it finds,
                         consistent with the requirements of this section, that
                         such service is not medically necessary. The
                         Contractor's Medical Director shall review all denials.
                         The Contractor shall report all denials and the reasons
                         for such denials to MAA on a quarterly basis.

               C.8.1.5   In the event the Contractor denies coverage of mental
                         health care otherwise covered under EPSDT requirements,
                         and otherwise included as part of a child's IDEA plan,
                         the Contractor shall seek prior approval of the denial
                         from MAA.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         57
--------------------------------------------------------------------------------

<PAGE>

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

     C.8.2 Service Determination Requirements

               C.8.2.1   In making determinations of medical necessity, the
                         Contractor shall take into account all available
                         clinical information about the Enrollee, as well as the
                         recommendations of the Enrollee's PCP and other health,
                         educational and social service professionals caring for
                         the Enrollee.

               C.8.2.2   In making determinations regarding the minimum amount
                         of services to be authorized, duration and scope of
                         coverage with respect to any service identified in
                         Attachment J.8, the Contractor shall be bound by the
                         same service definitions and coverage requirements
                         which apply to the District Medicaid program under
                         federal and District law, 42 U.S.C. Section 1396 et.
                         seq.; 42 C.F.R. Section 431 et. seq., any additional
                         federal and District regulations relating to coverage
                         of Medicaid benefits, and the specific coverage
                         criteria and procedures set forth in this contract.

               C.8.2.3   The Contractor shall not arbitrarily deny or reduce the
                         amount, duration or scope of a benefit covered under
                         this contract solely because of the diagnosis, type of
                         illness, or condition.

     C.8.3 Service Specific Requirements

               C.8.3.1   Early and Periodic Screening, Diagnosis and Treatment

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         58
--------------------------------------------------------------------------------

<PAGE>

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

                         C.8.3.1.1 The Contractor shall be responsible for
                                   coverage and provision of all medically
                                   necessary health care, diagnostic services,
                                   treatment, and other items and services
                                   described in Section 1905 of the Social
                                   Security Act to correct or ameliorate defects
                                   and physical and mental health illnesses and
                                   conditions discovered by the periodic or
                                   interperiodic screening services in children
                                   and adolescents through age 20 other than
                                   those services specifically excluded in the
                                   EPSDT Periodicity Schedule.

                         C.8.3.1.2 The Contractor shall cover all federally
                                   recognized services regardless of whether or
                                   not such services are available to MMCP
                                   Enrollees age 21 and older.

                         C.8.3.1.3 In the case of services specifically excluded
                                   by MAA from a Plan's benefit and covered
                                   under fee-for-service Medicaid, the
                                   Contractor shall arrange for such treatment
                                   services and is responsible for coordinating
                                   care for the Enrollee, but is not responsible
                                   for the cost of providing such treatment
                                   services.

                         C.8.3.1.4 The Contractor shall ensure that new
                                   Enrollees receive comprehensive, periodic
                                   well-child exams, referred to as "EPSDT
                                   screens" within ninety (90) days of
                                   enrollment and that current Enrollees receive
                                   an EPSDT screen within sixty (60) days after
                                   identification of probable need for EPSDT
                                   services.

                         C.8.3.1.5 At a minimum, these screening tools shall be
                                   submitted to MAA for approval and shall
                                   include:

                                   1) A comprehensive health and developmental
                                   history (including evaluation of both
                                   physical and mental health development as
                                   well as substance use);
                                   2) A comprehensive unclothed physical exam;

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         59
--------------------------------------------------------------------------------

<PAGE>

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

                                   3) Immunizations appropriate to age and
                                   health history in accordance with the
                                   immunization schedule of the Centers for
                                   Disease Control Advisory Committee on
                                   Immunization Practices;
                                   4) Laboratory tests set forth in the District
                                   of Columbia Periodicity Schedule (included in
                                   the Reference Library, Attachment J.9),
                                   including blood lead level for children at
                                   twelve (12) months and twenty four (24)
                                   months of age, and at other times where
                                   appropriate for risk assessment appropriate
                                   to age and risk;
                                   5) A mental health/alcohol and drug abuse
                                   screen;
                                   6) Vision services, including eyeglasses;
                                   7) Dental services, including both preventive
                                   and restorative services; and
                                   8) Hearing services, including hearing aids.

                         C.8.3.1.6 The Contractor shall be responsible for
                                   coverage and provision of all services
                                   required for diagnosing a condition.

                         C.8.3.1.7 The Contractor shall be responsible for
                                   provision of pediatric immunizations in
                                   accordance with the standards established by
                                   the Advisory Committee on Immunization
                                   Practices. All providers of Contractor's
                                   network who immunize children shall
                                   participate in the Vaccines for Children
                                   Program (VFC) as a condition of this contract
                                   The Contractor shall comply with all of the
                                   reporting requirements and procedures for
                                   provider participants in the VFC as described
                                   in the District's Medicaid State Plan
                                   Amendment.

                         C.8.3.1.8 The Contractor shall be responsible for the
                                   provision of scheduling and transportation
                                   for medically necessary services requested by
                                   an adolescent or by a child's family or
                                   caregiver.

               C.8.3.2   Emergency Services

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         60
--------------------------------------------------------------------------------

<PAGE>

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

                         In accordance with Section 1932(b)(2)(B) of the
                         Balanced Budget Act of 1997, the Contractor shall
                         provide access to and coverage of emergency services
                         for its Enrollees. Emergency services are covered
                         inpatient or outpatient services as specified in
                         Attachment J.8, needed to evaluate or stabilize an
                         emergency medical condition and furnished by a
                         qualified provider.

                         C.8.3.2.1 The Contractor shall adhere to the following
                                   definition of emergency medical condition,
                                   including a mental health/alcohol and drug
                                   abuse condition when determining coverage for
                                   Enrollees: a medical condition manifesting
                                   itself by acute symptoms of sufficient
                                   severity (including severe pain) that a
                                   prudent layperson, who possesses an average
                                   knowledge of health and medicine, could
                                   reasonably expect the absence of immediate
                                   medical attention to result in placing the
                                   health of the individual (or with respect to
                                   a pregnant woman, the health of the woman or
                                   her unborn child) in serious jeopardy,
                                   serious impairment to body functions, and/or
                                   serious dysfunction of any bodily organ or
                                   part.

                         C.8.3.2.2 The Contractor shall be responsible for
                                   covering triage services to determine whether
                                   an emergency exists and facilitate emergency
                                   treatment if needed. Triage services shall be
                                   available twenty-four (24) hours per day,
                                   seven (7) days per week.

                         C.8.3.2.3 The Contractor shall be responsible for
                                   covering emergency services, as defined
                                   above, provided to Enrollees at either
                                   in-network or out-of-network providers,
                                   without regard to prior authorization.

                         C.8.3.2.4 The Contractor shall provide coverage for
                                   severity of the symptoms at the time of
                                   presentation under the prudent layperson
                                   standard (as defined in Section C.8.3.2.1
                                   above) even when the condition, which
                                   appeared to be an emergency medical

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         61
--------------------------------------------------------------------------------

<PAGE>

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

                                   condition at the time of presentation, turned
                                   out to be non-emergency in nature.

               C.8.3.3   Prescription Drug Services

                         The Contractor shall provide pharmacy services either
                         directly or through a subcontractor.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         62
--------------------------------------------------------------------------------

<PAGE>

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

                         C.8.3.3.1 The Contractor may use a Pharmacy Benefit
                                   Manager (PBM) to process prescription claims
                                   if the proposed PBM subcontractor has
                                   received advance written approval from MAA.
                                   The PBM subcontract shall meet the
                                   requirements of this contract. If the
                                   Contractor elects to use a PBM, the
                                   administration of all denials, grievances,
                                   and appeals shall not be delegated to the
                                   PBM, but shall be handled by the Contractor.

                         C.8.3.3.2 The Contractor may use a restricted formulary
                                   as long as it allows access to other drug
                                   products not on the formulary through some
                                   process such as prior authorization, complies
                                   with 42 U.S.C. Section 1396r-8(d) with
                                   respect to formularies, prior authorization,
                                   and other permissible limitations, and has
                                   been formally approved by MAA.

                         C.8.3.3.3 The Contractor shall submit its formulary,
                                   including drugs subject to prior
                                   authorization or dispensing limitations, if
                                   any, for approval by MAA and shall notify MAA
                                   of any changes to the formulary on a
                                   quarterly basis. Approval will be provided by
                                   MAA within thirty (30) days of formulary
                                   submission. MAA may elect to use the Drug
                                   Utilization Review (DUR) Board for formulary
                                   reviews if it deems appropriate. The
                                   Contractor shall provide all medically
                                   necessary legend and non-legend drugs covered
                                   by the District of Columbia Medicaid Program.
                                   Plans may adopt a prescription formulary as
                                   long as it includes all items on the DC
                                   Medicaid formulary or their generic or
                                   therapeutic equivalents. A formulary shall
                                   not be used to deny coverage of any
                                   Medicaid-covered drug deemed medically
                                   necessary.

                         C.8.3.3.4 If prior approval is used for certain drug
                                   categories, the Contractor shall provide MAA
                                   with a written protocol that describes how
                                   and when the prior approval process will be
                                   applied to formulary drug products.

                         C.8.3.3.5 If the Contractor chooses to require prior
                                   authorization (either medical necessity or

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         63
--------------------------------------------------------------------------------

<PAGE>

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

                                   non-formulary) as a condition of coverage or
                                   payment for an outpatient prescription drug,
                                   it shall provide a response within
                                   twenty-four (24) hours from the time that the
                                   request for authorization is made, and shall
                                   provide at least a seventy-two (72) hour
                                   supply of the drug immediately. If an
                                   Enrollee presents a prescription for a
                                   medication that is part of the member's
                                   ongoing treatment regimen, whether subject to
                                   prior authorization for medical necessity or
                                   non-formulary, the Contractor shall allow the
                                   pharmacy to dispense the prescription for a
                                   period of at least fifteen (15) days or the
                                   length of the prescription, whichever is
                                   less.

               C.8.3.4   Pregnancy Related Services

                         In accordance with federa1 law, 42 U.S.C. 1396A(a)(10)
                         concerning pregnancy-related services, the Contractor
                         shall cover and provide the following care and
                         services:

                         C.8.3.4.1 Prenatal care;

                         C.8.3.4.2 Delivery services;

                         C.8.3.4.3 Post-partum care which continues until the
                                   last day of the month in which the Enrollee's
                                   sixtieth (60th) post-partum day occurs; and

                         C.8.3.4.4 Services related to any condition, including
                                   HIV/AIDS that may complicate pregnancy, other
                                   than transplant services and services
                                   excluded from the Plan's covered benefits.

               C.8.3.5   Mental Health Services

                         The Contractor shall be responsible for providing
                         mental health services under its capitation as
                         indicated in Attachment J.8. Services shall be provided
                         through an integrated, community based mental health
                         treatment network.

               C.8.3.6   Family Planning Services and Supplies

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         64
--------------------------------------------------------------------------------

<PAGE>

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

                         C.8.3.6.1 The Contractor shall be responsible for
                                   coverage of family planning services and
                                   supplies identified in Attachment AA.

                         C.8.3.6.2 The Contractor shall be responsible for
                                   payment of covered family planning services
                                   and supplies furnished by a Qualified Family
                                   Planning Provider regardless of whether
                                   Provider is a member of Provider's network.
                                   Such-payment shall be made in accordance with
                                   federal requirements governing payment of
                                   claims made by participating providers and
                                   shall utilize the District's fee schedule in
                                   the case of Qualified Family Planning
                                   Providers that are not members of Provider's
                                   network.

               C.8.3.7   Services for Persons with HIV or AIDS

                         C.8.3.7.1 The Contractor shall cover and provide
                                   services necessary to the diagnosis and
                                   treatment of persons with HIV and AIDS.

                         C.8.3.7.2 The Contractor shall ensure that PCPs for all
                                   Enrollees with HIV or AIDS assess whether the
                                   Enrollee meets criteria for Team Treatment
                                   Planning or Care Coordination and shall refer
                                   the eligible Enrollees for such services as
                                   necessary.

               C.8.3.8   Services of Advanced Nurse Practitioners and Nurse
                         Midwives

                         The Contractor shall ensure access to and pay for
                         necessary and appropriate advanced nurse practitioner
                         and certified nurse midwife services (in accordance
                         with the Health Occupation Revision Act of 1985 as
                         amended).

               C.8.3.9   Employment Related Testing

                         The Contractor shall cover medical testing required in
                         relation to determining eligibility for childcare,
                         restaurant, and certain other types of employment.

               C.8.3.10  Transplant Surgery Responsibilities and Exclusion

--------------------------------------------------------------------------------
CONTRACT NO.: PHC-2002-D-0003          65
--------------------------------------------------------------------------------

<PAGE>

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

                         C.8.3.10.1 The Contractor shall be responsible for
                                   arranging for the transplant surgery and
                                   obtaining authorization for the transplant
                                   surgery under the District's fee for service
                                   program.. The Contractor shall be responsible
                                   for transplant surgeries when the Contractor
                                   fails to seek District authorization for the
                                   transplant surgery.

                         C.8.3.10.2 The Contractor shall cover all transplant
                                   services, except for those services provided
                                   during the inpatient stay in which the
                                   transplant surgery takes place.

                         C.8.3.10.3 If the Contractor arranges for transplant
                                   surgery and fails to seek District
                                   authorization for the transplant surgery, the
                                   Contractor shall be responsible for the cost
                                   of the surgery.

               C.8.3.11  Transportation

                         C.8.3.11.1 The Contractor shall be responsible for the
                                   provision of the following transportation for
                                   Enrollees:

                                   a)   All transportation for emergency
                                        services;
                                   b)   Transportation requested and necessary
                                        to and from EPSDT-related services as
                                        indicated in Section 0. The Contractor
                                        shall not require that requests for
                                        routine services be made more than five
                                        (5) days in advance;
                                   c)   All medically necessary transportation
                                        for non-emergency situations;
                                   d)   Roundtrip transportation shall be
                                        provided from the Enrollees' home to the
                                        point of service. Transportation shall
                                        be provided in accordance with the
                                        requirements outlined in the DC Medicaid
                                        State Plan of the MAA; and

                         C.8.3.11.2 The Contractor or its agent shall verify
                                   that transportation personnel have a valid
                                   driver's license and shall conduct a criminal

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         66
--------------------------------------------------------------------------------

<PAGE>

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

                                   background check of all employees and shall
                                   not allow individuals who pose a risk to
                                   Enrollees to provide transportation. Further,
                                   the Contractor, or its agent shall conduct
                                   initial and regular unannounced drug testing
                                   of all transportation personnel. The
                                   Contractor or its agent shall not allow
                                   individuals who test positive for drugs
                                   and/or alcohol to transport Enrollees. The
                                   Contractor or its agent shall maintain
                                   personnel records with the results of
                                   criminal background checks, alcohol and drug
                                   testing.

                         C.8.3.11.3 The Contractor shall be responsible for
                                   services that are identified in the IEP.

     C.8.4 Coverage of Services at the Time of Enrollment

               The Contractor shall notify new Enrollees how they may exercise
               their right to use out-of-network services on a transitional
               basis for up to sixty (60) days after enrollment into the
               Contractor's Plan, with the exception of enrollees that are
               undergoing treatment for chronic illness, serious, potentially
               terminal illness and mental illness. Contractors shall allow
               Enrollees and/or their out-of-network providers sixty (60) days
               from the time of enrollment to report any ongoing services
               corresponding to a plan of care in place at the time of
               enrollment. The Contractor may require that the out-of-network
               provider contact the Contractor for authorization of such
               services.

               C.8.4.1   The Contractor shall be responsible for authorization
                         and payment of covered services included in any
                         treatment plan in effect at the time of enrollment
                         until the Enrollee is evaluated by his or her network
                         PCP and the treatment plan is modified, or for up to
                         sixty (60) days from enrollment, whichever comes first.

               C.8.4.2   The Contractor may cease payment for such care and
                         services under the following circumstances:

                         C.8.4.2.1 The Enrollee has either selected or been
                                   assigned to a network PCP and an appointment
                                   has occurred and the PCP has modified the
                                   treatment plan, or

                         C.8.4.2.2 The Enrollee has either selected or been
                                   assigned to a network PCP and the Enrollee

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         67
--------------------------------------------------------------------------------

<PAGE>

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

                                   fails to meet with his or her PCP after three
                                   (3) documented efforts. These efforts shall
                                   include a written record of an attempt to
                                   make a phone call indicating the name of the
                                   person calling, the date and time of the
                                   call, the number attempted, and the outcome
                                   of the call; copies of letters mailed to the
                                   Enrollee's address; and written records of an
                                   attempt to visit the Enrollee indicating the
                                   person making the visit, the date and time of
                                   the visit, the address sought, and the
                                   outcome of the visit. If the phone and
                                   address listed on the enrollment file do not
                                   reach the Enrollee, the Contractor shall make
                                   other efforts such as consulting public
                                   telephone listings and other sources for
                                   alternative phone numbers and/or addresses to
                                   attempt to reach the Enrollee.

               C.8.4.3   The Contractor shall not be responsible for the payment
                         of claims for covered services provided during a
                         hospital stay if the date of admission precedes the
                         date of enrollment with the Contractor. The Contractor
                         shall be responsible for the payment of claims for
                         covered services provided during the entire hospital
                         stay if the date of discharge is after the date of
                         disenrollment from the Contractor.

               C.8.4.4   Notwithstanding the prior provisions of sections C.8.4,
                         C.8.4.1, C.8.4.2 and C.8.4.3, the Contractor shall take
                         into consideration special situations such as those
                         involving members with serious, potentia1ly terminal
                         illnesses, mental illness and chronic illness who have
                         an existing provider relationship they do not wish to
                         change. In such situations, the Contractor will be
                         expected to respect the members wishes and continue
                         payment to that provider without regard to the sixty
                         (60) day limit for such individuals until the member
                         and Contractor agree the service from that provider is
                         not longer needed or desired.

               C.8.4.5   Out-of-Network

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         68
--------------------------------------------------------------------------------

<PAGE>

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

                         C.8.4.5.1 The Contractor shall be responsible for
                                   contacting out-of-network providers to
                                   explain how to bill for services rendered.

                         C.8.4.5.2 The Contractor shall provide five (5) days
                                   prior notice of denials of out-of-network
                                   services to the Enrollee and the
                                   out-of-network providers, if known to the
                                   Contractor, and instructions to the Enrollee
                                   on how to contact the Contractor in order to
                                   arrange for continued care with a network
                                   provider.

C.9 Network

     C.9.1 Network Composition and Capabilities

               The Contractor shall maintain a network of physicians, hospitals,
               and other health providers through whom it provides the items and
               services included in covered benefits in a manner that complies
               with the requirements of this section and meets access standards
               described in Section C.9.2. The Contractor shall ensure that its
               network providers are appropriately credentialed and well
               coordinated with other network services and Medicaid services
               available outside of the health plan network. This network shall
               include an adequate number of PCPs and specialists appropriately
               credentialed as health professionals located in geographically
               and physically accessible locations to meet the access standards
               specified in the Contract.

               C.9.1.1   This network shall include PCPs in sufficient numbers
                         so that no PCP has more than two thousand (2,000)
                         Medicaid Managed Care Program Enrollees in total across
                         all Contractors participating in the Medicaid Managed
                         Care Program. In evaluating the capacity of PCPs, the
                         Contractor shall take into consideration both a PCP's
                         existing Medicaid patient load as well as its total
                         patient load. Notwithstanding the fact that a PCP shall
                         not have more than two thousand (2,000) Medicaid
                         Managed Care Program patients, the Contractor shall not
                         assign additional patients to the PCP unless it
                         determines that the PCP can accept additional Enrollees
                         and continue to furnish care of reasonable quality and
                         accessibility as required under this contract.

               C.9.1.2   The Contractor may request to MAA that this standard be
                         relaxed. Any such request shall include relevant
                         documentation that demonstrates that the requested
                         level of

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         69
--------------------------------------------------------------------------------

<PAGE>

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

                         PCP coverage will be effective in meeting the standards
                         delineated below.

               C.9.1.3   With regards to the determination of the sufficient
                         number of PCPs, the following shall apply:

                         C.9.1.3.1 The Contractor shall establish procedures for
                                   Primary Care Physicians to notify the
                                   Contractor when they reach maximum capacity
                                   at least thirty (30) days in advance, and
                                   shall otherwise monitor PCPs' compliance with
                                   capacity standards.

                         C.9.1.3.2 The Contractor shall notify the District in
                                   writing at any time that there is no further
                                   capacity under the standards of Section
                                   C.9.1.1 in its network to accept additional
                                   Enrollees as patients.

                         C.9.1.3.3 The Contractor understands and agrees that
                                   the District, upon receipt of such
                                   notification, may suspend new enrollment into
                                   the Contractor's Plan until additional
                                   primary care capacity becomes available.

                         C.9.1.3.4 If the District determines that the
                                   Contractor has exceeded the permissible
                                   patient load for PCPs or assigns to a PCP
                                   more Enrollees than the PCP is capable of
                                   managing in light of its total patient load,
                                   the District may freeze Contractor's
                                   enrollment.

               C.9.1.4   The network shall include a sufficient number of
                         hospitals located in the District of Columbia so that
                         the Contractor can ensure that Enrollees are admitted
                         only to hospitals located in the District that can
                         provide them with the treatment they need. Out of
                         District hospital admissions may be made in the
                         following circumstances:

               C.9.1.5   The Enrollee has an emergency medical condition as
                         defined in Section 0, and is admitted to a hospital
                         located outside of the District, and cannot be
                         transferred because the Enrollee's condition has not
                         been stabilized as required prior to the transfer of an
                         individual under Section 1867 of the Social Security
                         Act; or

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         70
--------------------------------------------------------------------------------

<PAGE>

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

               C.9.1.6   The patient requires one or more specialized services,
                         which are available only from or through a hospital,
                         which is located outside of the District.

               C.9.1.7   The network shall include licensed pharmacies.

               C.9.1.8   All laboratories in the network shall be certified
                         under the provisions of the Clinical Laboratory
                         Improvement Amendments of 1988 (CLIA). Contractors are
                         responsible for ensuring that laboratories in their
                         network maintain current CLIA certification.

               C.9.1.9   The Contractor's network shall include facilities
                         providing integrated care for Enrollees with complex
                         conditions that require multi-disciplinary assessment,
                         diagnosis, and/or treatment. Such facilities may
                         include multi-disciplinary teams practicing at a common
                         location such as specialty outpatient departments,
                         specialty clinics, and developmental centers.

               C.9.1.10  The Contractor shall have and implement procedures and
                         protocols for ensuring access to specialty care centers
                         outside of the District when needed for the diagnosis
                         and treatment of rare disorders.

               C.9.1.11  The Contractor's network shall include certified early
                         intervention providers for health related IDEA services
                         to children under age three (3), and providers
                         qualified to perform evaluations for IDEA eligibility
                         and provide health related IDEA services for children
                         age three (3) and older, unless and until these
                         services are provided by DCPS. Such providers shall
                         include rehabilitation services for improvement,
                         maintenance, or restoration of functioning, including
                         respiratory (including home-based), occupational,
                         speech and physical therapies. The current list of
                         certified early intervention providers is included in
                         the Reference Library.

               C.9.1.12  The Contractor's network shall include sufficient
                         numbers of the following practitioners to meet the
                         needs of the Enrollees:

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         71
--------------------------------------------------------------------------------

<PAGE>

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

                         C.9.1.12.1 Home health nurses,

                         C.9.1.12.2 Home health providers,

                         C.9.1.12.3 Registered dieticians,

                         C.9.1.12.4 Speech, physical, occupational, and
                                   respiratory therapists,

                         C.9.1.12.5 Audiologists,

                         C.9.1.12.6 Providers of genetic screening and
                                   counseling, and

                         C.9.1.12.7 Dentists and orthodontists.

               C.9.1.13  The Contractor's network shall include Durable Medical
                         Equipment (DME) providers, including those that have
                         the capacity to individualize and customize equipment
                         for both children and adults, and to provide preventive
                         maintenance and repairs for such equipment. All DME
                         Services shall be provided in accordance with the
                         District's Medicaid policies, rules, and regulations.

               C.9.1.14  The Contractor's network for mental health shall
                         include providers who offer integrated, community-based
                         mental health care. The mental health network shall
                         include all the DC Commission on Mental Health Services
                         and its designated certified providers.

                         C.9.1.14.1 The mental health services network shall
                                   include sufficient numbers of appropriately
                                   skilled practitioners - either as independent
                                   practitioners and/or as employees of a
                                   network clinic or program - and programs to
                                   provide comprehensive mental health services
                                   for Enrollees, including:

                                   .    Psychiatrists,
                                   .    Specialists in developmental/behavioral
                                        medicine,
                                   .    Psychologists,
                                   .    Social workers for mental health and
                                        alcohol and drug abuse,
                                   .    Inpatient psychiatric units,
                                   .    Residential treatment facilities, and
                                   .    Psychiatric day treatment programs.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         72
--------------------------------------------------------------------------------

<PAGE>

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

               C.9.1.15  The Contractor shall ensure that its network has the
                         capacity to effectively treat individuals dually
                         diagnosed with both mental health and alcohol and drug
                         abuse disorders.

               C.9.1.16  The network shall include providers capable of
                         screening, assessing and treating individual with
                         mental health disorders who are also developmentally
                         disabled.

               C.9.1.17  Capacity to Serve Enrollees with Diverse Cultures and
                         Languages

                         C.9.1.17.1 The Contractor shall include in its network
                                   providers who understand and are respectful
                                   of health-related beliefs, cultural values,
                                   and communication styles, attitudes and
                                   behaviors of the cultures represented in the
                                   target population.

                         C.9.1.17.2 The Contractor shall ensure that its
                                   non-English speaking Enrollees have access to
                                   interpreters, if needed, in the following
                                   situations:

                                   a)   During emergencies, twenty-four (24)
                                        hours a day, seven (7) days a week;
                                   b)   During appointments with their providers
                                        and when talking to their health plan;
                                        and
                                   c)   When technical, medical, or treatment
                                        information is to be discussed.

                         C.9.1.17.3 Family members, especially minor children,
                                   shall not be used as interpreters in
                                   assessments, therapy, or other medical
                                   situations in which impartiality and
                                   confidentiality are critical, unless
                                   specifically requested by the Enrollee. Every
                                   attempt should be made to help the Enrollee
                                   understand the availability of non-familial
                                   interpreters and practitioner concerns with
                                   utilizing minor children as interpreters even
                                   at the Enrollee's request.

                         C.9.1.17.4 A family member or friend may be used as an
                                   interpreter if they can be relied upon to
                                   provide a complete and accurate translation

--------------------------------------------------------------------------------
CONTRACT NO.:P0HC-2002-D-0003          73
--------------------------------------------------------------------------------

<PAGE>

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

                                   of information between provider and the
                                   Enrollee, provided that the Enrollee is
                                   advised that there is a free interpreter
                                   available and the member expresses a
                                   preference to rely on the family member or
                                   friend.

                         C.9.1.17.5 The Contractor shall ensure that effective
                                   communication is provided for hearing
                                   impaired persons in its administrative and
                                   medical services, in accordance with Section
                                   504 of the Rehabilitation Act of 1973, and
                                   Title II of the Americans with Disabilities
                                   Act of 1990 42 USC Section 1212-14, including
                                   the availability of qualified sign language
                                   interpreters.

                         C.9.1.17.6 The Contractor shall ensure that its network
                                   includes providers who are capable of
                                   communicating effectively about health
                                   related issues with children and families
                                   that have special communication needs
                                   including limited cognitive capacity or
                                   speech limitations.

                         C.9.1.17.7 Written materials provided to Enrollees for
                                   instruction or education on health matters
                                   shall be made available in English, Spanish,
                                   Vietnamese, Chinese and Braille.

                         C.9.1.17.8The Contractor shall ensure that alternative
                                   forms of instruction or education are
                                   provided for Enrollees who speak other
                                   languages and those who are unable to read.

     C.9.2 Access Standards

               C.9.2.1   Service Timeliness

                         C.9.2.1.1 Appointments shall be available for Enrollees
                                   in accordance with the normal practice
                                   standards and hours of operations in the
                                   network. Maximum expected waiting times for
                                   appointments shall be as follows:

                         C.9.2.1.2 Emergency care, as defined in Section
                                   C.8.3.2.1, shall be provided immediately and

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         74
--------------------------------------------------------------------------------

<PAGE>

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

                                   without prior authorization. In general,
                                   emergency care shall be provided in
                                   accordance to the time frame dictated by the
                                   nature of the emergency, at the nearest
                                   available facility, twenty-four (24) hours a
                                   day, seven (7) days a week.

                         C.9.2.1.3 The Contractor shall ensure access to urgent
                                   care services from PCPs and from outpatient
                                   mental health programs and practitioners
                                   within twenty-four (24) hours of request; and
                                   from other specialists within forty-eight
                                   (48) hours of referral.

                         C.9.2.1.4 The Contractor shall ensure that services for
                                   assessment and/or stabilization of
                                   psychiatric crises, including those
                                   experienced by children or adolescents, are
                                   available on a twenty-four (24) hour basis.
                                   These services shall be provided by
                                   practitioners with appropriate expertise in
                                   mental health with on-call access to an adult
                                   or child and adolescent psychiatrist. When
                                   direct services are indicated, they shall be
                                   provided as flexibly as possible, including
                                   at the Enrollee's home or at another
                                   appropriate community site.

                                   a) Phone based assessment shall be provided
                                   within fifteen (15) minutes of request.
                                   Intervention or face-to-face assessment shall
                                   be provided within ninety (90) minutes of
                                   completion of phone assessment, when needed.

                         C.9.2.1.5 Initial appointments for pregnant women or
                                   persons desiring family planning services
                                   shall be provided within ten (10) days of
                                   request.

                         C.9.2.1.6 Appointments for initial EPSDT screens shall
                                   be offered to new Enrollees within thirty
                                   (30) days of the Enrollee's enrollment date
                                   with the Contractor or at an earlier time if
                                   an earlier exam is needed to comply with the
                                   periodicity schedule. The initial screen
                                   shall be completed within three (3) months

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         75
--------------------------------------------------------------------------------

<PAGE>

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

                                   of the Enrollee's enrollment date with the
                                   Contractor, unless the Contractor determines
                                   that the new Enrollee is up-to-date with the
                                   EPSDT periodicity schedule.

                         C.9.2.1.7 IDEA multidisciplinary assessments for
                                   infants and toddlers at risk of disability
                                   shall be completed within thirty (30) days of
                                   request, and any needed treatment shall begin
                                   within fifteen (15) days of the completed
                                   assessment.

                         C.9.2.1.8 Unless the Contractor has documented that the
                                   enrollee is up to date with a physical exam
                                   or regimen of treatment, the Contractor shall
                                   ensure that its PCPs shall offer new
                                   Enrollees ages twenty one (21) and over an
                                   initial appointment within ninety (90) days
                                   of their date of enrollment with the PCP or
                                   within thirty (30) days of request, whichever
                                   is sooner.

                         C.9.2.1.9 The following routine appointments shall take
                                   place within thirty (30) days of the request:

                                   a) Diagnosis and treatment of health
                                   conditions and problems that are not urgent;

                                   b) Asymptotic health assessments of adults
                                   ages twenty one (21) and older;

                                   c) Periodic EPSDT screening examinations;

                                   d) Non-urgent EPSDT vision screening,
                                   preventive dental services, and hearing
                                   evaluation services; and

                                   e) Non-urgent referral appointments with
                                   specialists.

                         C.9.2.1.10 To be considered timely, all EPSDT screens,
                                   laboratory tests, and immunizations shall
                                   take place within 30 (30 days of their
                                   scheduled due dates for children under the
                                   age of two (2) and within sixty (60) days of

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         76
--------------------------------------------------------------------------------

<PAGE>

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

                                   their due dates for children over the age of
                                   two (2).

                         C.9.2.1.11 Contractors and/or their network providers
                                   shall furnish evaluations and/or reports as
                                   required by the Court within timeframes
                                   specified by the Court

                         C.9.2.1.12 The average waiting time in a PCP's office
                                   for a scheduled appointment, computed on a
                                   monthly basis for each PCP, shall be no
                                   greater than one (1) hour.

               C.9.2.2   After Hours Access

                         To promote sufficient access for individuals who cannot
                         easily get leave from their employment, the Contractor
                         shall include in its network providers who offer
                         evening and weekend access to appointments. The
                         Contractor shall monitor whether evening and weekend
                         access is adequate to meet the requests of Enrollees
                         and adjust the network as needed.

               C.9.2.3   Geographic and Physical Access Requirements

                         C.9.2.3.1 All individuals shall have the option to
                                   select between at least two PCPs located
                                   within thirty (30) minutes travel time of
                                   their place of residence by public
                                   transportation.

                         C.9.2.3.2 Contractor shall ensure access to pharmacies
                                   based on the following criteria:

                                   a)   At least one (1) pharmacy is located
                                        within two (2) miles of Enrollee's
                                        residence;
                                   b)   Does not exceed the travel time limit of
                                        fifteen (15) minutes by public
                                        transportation from the Enrollee's place
                                        of residence; and
                                   c)   Pharmacy network shall include at least
                                        one twenty-four (24) hour/seven (7)
                                        day/week pharmacy. The network shall
                                        also include a pharmacy that provides
                                        home delivery service (excluding
                                        mail-order entities) within four (4)
                                        hours.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         77
--------------------------------------------------------------------------------

<PAGE>

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

                         C.9.2.3.3. The Contractor shall require that all
                                   network providers are in compliance with the
                                   requirements of the Americans with
                                   Disabilities Act, (ADA) 42 U.S.C. Section
                                   12101 et seq., and Section 504 of the
                                   Rehabilitation Act of 1973,29 U.S.C. Section
                                   794 or have plans for meeting ADA
                                   requirements.

               C.9.2.4   The Contractor shall subcontract with sufficient
                         outpatient mental health practitioners, as well as
                         clinics, and/or hospital outpatient departments that
                         Enrollees have at least one clinic or hospital
                         department or two independent practitioners for their
                         age group within thirty (30) minutes travel time of
                         their place of residence by public transportation. If
                         no providers meeting the Contractor's selection
                         criteria are available in some areas of the District,
                         the Contractor shall develop a plan for procuring
                         accessible services and submit it to MAA for review and
                         approval by the Dixon Transitional Receiver.

               C.9.2.5   Access to Out-of-Network Providers

                         C.9.2.5.1 The: Contractor shall authorize that services
                                   be provided by out-of-network providers who
                                   meet the Contractor's standards for quality
                                   and data reporting under the circumstances
                                   listed below:

                                   a)   For specialty care called for in the
                                        Enrollee's treatment plan, an
                                        Individualized Education Plan (IEP) or
                                        an Individualized Family Services Plan
                                        (IFSP) and not available in the
                                        Contractor's network;
                                   b)   To provide an extended period of
                                        transition from existing care providers
                                        not included in the Contractor's
                                        network, or to allow for the provider to
                                        complete the process of application to
                                        participate in the Contractor's network;
                                   c)   To complete a course of treatment begun
                                        with an out-of-network provider when
                                        notification of such treatment is
                                        received within the timeframes
                                        delineated in Section C.8.4;
                                   d)   Other as defined by the Contractor.

--------------------------------------------------------------------------------
CONTRACT NO. P0HC-2002-D-0003          78
--------------------------------------------------------------------------------

<PAGE>

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

                         C.9.2.5.2 The Contractor shall define criteria for such
                                   referrals, and shall include information in
                                   their Member handbook and provider manual
                                   indicating when such referrals will be
                                   approved and how PCPs and Enrollees may
                                   request such referrals.

                         C.9.2.5.3 The Contractor shall establish procedures and
                                   requirements for authorizing and paying
                                   out-of-network providers that comply with the
                                   provisions of Section 0.

                         C.9.2.5.4 All out-of-network providers shall be paid at
                                   the current Medicaid fee for service schedule
                                   for comparable services, or the Contractor's
                                   rates for these or comparable network
                                   services, whichever is lower.

                         C.9.2.5.5 Contractors shall follow protocols, policies
                                   and procedures established by MAA with input
                                   from the Contractor to refer and coordinate
                                   care for Enrollees in need of alcohol and
                                   drug abuse treatment services.

     C.9.3 Network Development

               The Contractor shall recruit, credential, evaluate, and monitor
               selected providers with an appropriate combination of skills,
               experience, and specialties to constitute a network to provide
               covered benefits to MMCP Enrollees within the acceptable
               geographic access standards.

               C.9.3.1   Credentialing and Selection

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         79
--------------------------------------------------------------------------------

<PAGE>

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

                         C.9.3.1.1. The Contractor's
                                   credentialing/recredentialing process shall
                                   conform to industry standards. As part of its
                                   credentialing and selection process, the
                                   Contractor shall request information from the
                                   DC Office of Consumer and Regulatory Affairs
                                   and from MAA on the standing of DC licensed
                                   practitioners, from the HHS website listing
                                   of disbarred providers and relevant licensing
                                   and Medicaid agencies for providers licensed
                                   in other states.

                         C.9.3.1.2 The Contractor shall include facilities that
                                   are JCAHO, CARF, or other equivalent
                                   accreditation and necessary state or District
                                   licenses in its network. In the event the
                                   Contractor wishes to contract with a facility
                                   that does not have accreditation, the
                                   Contractor shall review the facility's
                                   standards of care and qualifications to
                                   ensure that these standards are consistent
                                   with facilities having accreditation and
                                   shall submit documentation of that review to
                                   MAA for its approval prior to entering into a
                                   contract for MAA-covered services with that
                                   facility.

                         C.9.3.1.3 The Contractor shall not use criteria for
                                   selection of participants in its network that
                                   discriminate against providers that
                                   specialize in conditions that requires costly
                                   treatment.

                         C.9.3.1.4 The Contractor shall analyze the composition
                                   of its provider network quarterly to identify
                                   any gaps or areas requiring expansion
                                   including provision of primary care and
                                   mental health services on evenings and
                                   weekends, and recruit providers needed to
                                   provide comprehensive and accessible care on
                                   an ongoing basis. Any material change in the
                                   provider network that affects the
                                   Contractor's ability to meet network
                                   standards shall be reported to MAA
                                   immediately, along with a plan of correction.

     C.9.4 Network Management

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         80
--------------------------------------------------------------------------------

<PAGE>

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

               C.9.4.1   Provider Manual

                         C.9.4.1.1 Contractor shall maintain and distribute to
                                   network providers a Provider Manual that
                                   comprehensively documents the policies and
                                   procedures pertaining to the Contractor's
                                   providers. The Contractor shall issue updates
                                   to the Provider Manual prior to implementing
                                   significant changes in policy or procedure.
                                   Contractor shall notify provider(s) thirty
                                   (30) days in advance of change.

                         C.9.4.1.2 The Provider Manual shall address
                                   authorization of services, the contractual
                                   definition of medical necessity, medical
                                   necessity criteria necessary to guide
                                   provider management of treatment, prior
                                   authorization requirements, EPSDT
                                   requirements, protocols for fulfilling
                                   responsibilities to provide health related
                                   IDEA services, grievance and appeals
                                   procedures for reconsideration of
                                   authorization decisions, procedures for
                                   provider and Enrollee complaint resolutions;
                                   claims submission procedures, rights of
                                   Medicaid Enrollees (including those with
                                   limited English and those who are hearing
                                   impaired), process and timeliness for
                                   submitting and resolving complaints, mandated
                                   reporting requirements of the District, and a
                                   description of the Contractor's Quality
                                   Improvement program and goals. The manual
                                   should also include medical record
                                   requirements and advance directive
                                   procedures.

                         C.9.4.1.3 The Provider Manual shall contain information
                                   provided by MAA addressing access to mental
                                   health care and the role of the Dixon
                                   Transitional Receiver in ensuring that
                                   community-based services are provided to all
                                   Enrollees as needed.

                         C.9.4.1.4 The Provider Manual shall contain information
                                   on how to access substance

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         81
--------------------------------------------------------------------------------

<PAGE>

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

                                   abuse services through Medicaid Fee For
                                   Services.

               C.9.4.2   Provider Management

                         The Contractor shall assign responsibility and
                         establish procedures to monitor, manage and
                         continuously improve the performance of its provider
                         network. These procedures shall ensure that:

                         C.9.4.2.1 Each hospital participating in the
                                   Contractor's network complies with the
                                   requirements of Section 1867 of the Social
                                   Security Act, 42 U.S.C. Section 1395dd
                                   (Anti-dumping);

                         C.9.4.2.2 The network provides services of acceptable
                                   quality, accessibility, and efficiency;

                         C.9.4.2.3 Each physician providing EPSDT services is
                                   evaluated annually to determine whether he or
                                   she has the necessary equipment and knowledge
                                   to perform such services in accordance with
                                   standard medical practice;

                         C.9.4.2.4 Advances in medical practice are implemented
                                   promptly and consistently in accordance with
                                   industry standard;

                         C.9.4.2.5 Providers receive information (provider
                                   profiles) on their performance on key aspects
                                   of their practice in comparison to
                                   benchmarks. The Contractor shall specify in
                                   its Quality Management Plan its goals for
                                   profiling providers and establishing
                                   benchmarks and shall comply with reporting
                                   requirements specified in Section F; and

                         C.9.4.2.6 Unacceptable provider performance or
                                   indications of fraud and abuse are promptly
                                   identified, addressed, documented and
                                   reported to MAA Offices of Program Integrity,
                                   Managed Care and District OIG Office of
                                   Medicaid Fraud and Abuse.

               C.9.4.3   Management of Mental Health and Alcohol and Drug Abuse
                         Providers

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         82
--------------------------------------------------------------------------------

<PAGE>

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

                         C.9.4.3.1 The Contractor shall profile, on a
                                   semi-annual basis, utilization of mental
                                   health services for the Contractor's service
                                   population. The profile elements shall
                                   include a review of the following data
                                   stratified for children and adults: member
                                   satisfaction, complaints and grievances,
                                   treatment records, audit findings, quality
                                   indicators, and utilization statistics.
                                   Required profile elements and report format
                                   is included in Section F.

                         C.9.4.3.2 DCHFP Contractors shall profile, on a
                                   semi-annual basis, the number of referrals
                                   for alcohol and drug abuse treatment as well
                                   as efforts to coordinate care of Enrollees in
                                   need of alcohol and drug abuse treatment.

               C.9.4.4   Provider Training

                         The Contractor shall have an organized training program
                         for network providers based upon the Contractor's
                         annual assessment of training needs.

                         This program shall include training on current EPSDT
                         and IDEA requirements as follows: within three (3)
                         months of a new physician entering the network; within
                         twelve (12) months of the start date of this contract
                         for any current network physician who has not received
                         such training in the prior year; and every two years
                         for physicians who have received an initial training.

                         C.9.4.4.1 In the first contract year, the Contractor
                                   shall also provide training, at a minimum, on
                                   the following topics:

                                   a)   Policies and procedures on advance
                                        directives;
                                   b)   The availability and protocols for use
                                        of interpreters with Enrollees who speak
                                        limited English, and other skills for
                                        effective health related cross-cultural
                                        communication;
                                   c)   An overview of IDEA and the relative
                                        roles and responsibilities of schools,
                                        the Early Intervention Program, and
                                        Contractors; and

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         83
--------------------------------------------------------------------------------

<PAGE>

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

                                   d)   Manifestations of mental illness and
                                        alcohol and drug abuse, use of the MAA
                                        selected screening tool to identify such
                                        problems, and how to make appropriate
                                        referrals for treatment services.

C.10 Utilization Management and Care Coordination Capabilities

     The Contractor shall maintain a care management system, including
     utilization management and care coordination that ensures that all
     Enrollees are regularly examined to identify potential or actual health
     problems requiring prevention, treatment, rehabilitation, and/or education
     in self-care. This system shall be operated in accordance with applicable
     standards for high quality provision of services, including EPSDT, IDEA,
     standards for prenatal care, guidelines of the Office of Maternal and Child
     Health, and relevant professional standards for the provision of health
     care to adults. In addition, the Contractor shall identify children and
     adults with special health care needs and determine which cases warrant
     additional management and coordination. The Contractor shall establish
     procedures to ensure that their medical and adjunct care is comprehensively
     planned with the involvement of the Enrollee, family, and/or caretaker and
     appropriately qualified practitioners, the Enrollee is assisted to
     coordinate services when needed, and health care resources are used
     efficiently.

     C.10.l Utilization Management

               The Contractor shall operate a system for managing service
               utilization that both ensures adequate control over high cost and
               high-risk services and procedures and promotes timely access to
               preventive and needed treatment and rehabilitation services in
               accordance with current medical best practices. These procedures
               shall have the flexibility to efficiently authorize services for
               complex treatment plans and for medically necessary services in
               approved IDEA, IFSPs and IEPs.

               C.10.1.1  The Contractor's Medical Director shall be responsible
                         for overseeing utilization management so that
                         authorization decisions are based on all relevant
                         medical information available about the individual
                         Enrollees and in accordance with best medical practice.

               C.10.1.2  The Contractor's Medical Director shall review all
                         denials of care for EPSDT services pertaining to
                         physical health care and the Contractor's Psychiatric
                         Medical Director shall review all denials of care for
                         mental health treatment services.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         84
--------------------------------------------------------------------------------

<PAGE>

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

               C.10.1.3  The Contractor shall operate a well-defined utilization
                         management system that clearly specifies: services that
                         are available upon direct request; services that
                         require Primary Care Physician authorization; services
                         that require additional review and prior approval;
                         services that require concurrent review; circumstances
                         that warrant retrospective review; and special
                         procedures for management of high cost and high-risk
                         cases.

               C.10.1.4  The Contractor shall instruct and assist network
                         providers to verify an Enrollee's plan membership and
                         eligibility prior to providing any service. The only
                         exception to this requirement is when a person requests
                         services for an emergency medical condition. In the
                         event of an emergency medical condition, network
                         providers shall provide immediate medical services.

               C.10.1.5  The Contractor shall have established procedures that
                         ensure that authorization decisions are made within
                         established time standards by professionals with
                         appropriate credentials and experience who have been
                         trained in the application of criteria for the
                         determination of medical necessity, as defined in
                         Section 0.
                         ---------

                         C.10.1.5.1 The Contractor shall implement a system for
                                   authorization of ongoing mental health
                                   treatment that includes authorization by
                                   experienced mental health professionals who
                                   function within their scope of practice.

               C.10.1.6  The Contractor shall ensure twenty-four (24) hour
                         access to a qualified health professional that is able
                         to assess patient need and authorize services.

               C.10.1.7  Authorization decisions shall be communicated to the
                         provider of care being authorized within forty-eight
                         (48) hours of the decision.

               C.10.1.8  Authorization procedures shall be coordinated with IDEA
                         service planning procedures to facilitate authorization
                         of medically necessary IDEA services upon receipt of an
                         approved IEP or IFSP.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         85
--------------------------------------------------------------------------------

<PAGE>

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

               C.10.l.9  The Contractor shall authorize medical and
                         rehabilitative care according to written medical
                         necessity criteria, which accurately reflect the
                         definition of medical necessity in Section C.8.1, are
                         based on best available medical evidence, and are
                         updated on an annual basis. Criteria applicable to
                         children ages birth through twenty (20) shall reflect
                         EPSDT standards.

                         C.10.1.9.1 The Contractor shall communicate its medical
                                   necessity criteria along with any practice
                                   guidelines or other criteria the Contractor
                                   will use in making medical necessity
                                   determinations to its network physicians and
                                   utilization reviewers as needed to provide
                                   effective guidance and ensure consistency in
                                   authorization decisions. At no time shall any
                                   covered service be denied based upon cost.

                         C.10.1.9.2 The Contractor shall provide medical
                                   necessity criteria to its network providers.

                         C.10.1.9.3 Criteria and guidelines shall allow
                                   physicians and utilization reviewers to
                                   consider the nature of the Enrollee's home
                                   environment in determining what services to
                                   authorize.

                         C.10.1.9.4 The Contractor shall ensure that its PCPs
                                   and utilization reviewers authorize services
                                   consistent with these medical necessity
                                   criteria.

                         C.10.1.9.5 The Contractor, prior to the enrollment of
                                   recipients, shall provide its medical
                                   necessity criteria for MAA review on its own
                                   premises, and shall provide specific criteria
                                   to MAA upon MAA request.

               C.10.l.10 The Contractor shall submit to MAA and implement
                         clinical care standards and practice guidelines that
                         are based on national guidelines or promulgated by
                         professional medical associations or other expert
                         committees.

               C.10.1.11 Management of High Cost and High-Risk Cases

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         86
--------------------------------------------------------------------------------

<PAGE>

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

                         C.10.1.11.1 The Contractor shall establish a system to
                                   effectively manage the authorization of
                                   treatment for Enrollees with high cost and/or
                                   high-risk conditions. This function may be
                                   integrated with the care coordination
                                   function. The Contractor's model of case
                                   management shall clearly define the
                                   relationship of this function to care
                                   coordination.

                         C.10.l.ll.2 The Contractor shall establish criteria
                                   consistent with industry standards for cases
                                   that warrant case management and procedures
                                   for identifying Enrollees that meet these
                                   criteria. These criteria shall be submitted
                                   to MAA.

                         C.10.l.ll.3 The Contractor shall establish procedures
                                   for the operation of this function that:

                                   a)   Assign each case to an appropriately
                                        qualified staff member;
                                   b)   Define the role and responsibilities of
                                        staff responsible for high cost case
                                        management in working with PCPs,
                                        specialists, and care coordinators that
                                        also have responsibility for the case;
                                   c)   Require active involvement of the
                                        Enrollee and/or the Enrollee's
                                        caregivers as much as possible;
                                   d)   Provide appropriate supervision,
                                        oversight, and expert consultation to
                                        staff performing high cost case
                                        management; and
                                   e)   Regularly review the effectiveness of
                                        the high cost/high-risk case management
                                        function in containing costs and in
                                        promoting positive health outcomes.

               C.10.1.12 The Contractor shall inform children and adolescents
                         for whom residential treatment is being considered and
                         their parents or guardians, and adults for whom
                         inpatient treatment is being considered of all their
                         options for residential and/or inpatient placement, and
                         alternatives to residential and/or inpatient treatment
                         and the benefits, risks and limitations of each in
                         order that they can provide informed consent.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         87
--------------------------------------------------------------------------------

<PAGE>

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

               C.10.1.13 The Contractor shall inform Enrollees being considered
                         for prescription of psychotropic medications of the
                         benefits, risks, and side effects of the medication,
                         alternate medications, and other forms of treatment.

               C.10.1.14 Second Opinions

                         C.10.1.14.1 The Contractor shall provide for a second
                                   opinion in any situation when there is a
                                   question concerning a diagnosis or the
                                   options for surgery or other treatment of a
                                   health condition when requested by any member
                                   of the health care team, an Enrollee,
                                   parent(s) and/or guardian(s), or a social
                                   worker exercising custodial responsibility
                                   the right to request a second opinion.

               C.10.l.15 Authorization of Experimental Treatment

                         The Contractor shall establish guidelines and
                         procedures for considering an Enrollee's participation
                         in experimental treatment for rare disorders, and shall
                         ensure consistency and coordination with MAA's
                         procedures for review of proposed experimental
                         treatment.

               C.10.1.16 Denials

                         The Contractor shall ensure that any denial
                         determinations made by a member of the utilization
                         review staff or network providers, including PBMs, are
                         reviewed by a the Medical Director or Psychiatric
                         Medical Director prior to notifying the provider and
                         Enrollee in writing.

               C.10.1.17 Grievance and Appeals

                         C.10.1.17.1 The Contractor shall administer a formal
                                   grievance and appeals process that will
                                   assure reconsideration of care decisions in
                                   accordance with the requirements of
                                   delineated in Section C.l4.

     C.10.2 Planning and Monitoring Treatment

               The Contractor shall ensure that each Enrollee's care is
               appropriately planned with active involvement and informed
               consent of the Enrollee and his or her caregiver, is well
               coordinated with other needed

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         88
--------------------------------------------------------------------------------

<PAGE>

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

               Medicaid and non-Medicaid treatment services, and the Enrollee is
               assisted in accessing any supports needed to maintain the
               treatment plan.

               C.10.2.1  The Contractor shall define the relative
                         responsibilities of the PCP and other staff in
                         fulfilling the following diagnostic, planning and
                         treatment tasks, and shall monitor treatment planning
                         and provision of treatment to ensure that these
                         responsibilities are carried out.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         89
--------------------------------------------------------------------------------

<PAGE>

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

                         C.10.2.1.1 The Contractor shall forward to the PCP any
                                   information about Enrollees' health history
                                   or health conditions received upon enrollment
                                   from MAA, the Enrollment Broker, Enrollees,
                                   or other sources, in a manner that protects
                                   the Enrollee's confidentiality within thirty
                                   (30) days of receipt so that it can be
                                   considered in the Enrollee's initial
                                   evaluation.

                         C.10.2.1.2 An Enrollee's initial visit with a new PCP
                                   who has not previously cared for the Enrollee
                                   shall include a comprehensive initial
                                   examination, screening for mental health and
                                   alcohol and drug abuse problems using a
                                   validated screening tool approved by MAA, and
                                   referrals for any additional tests or
                                   examinations needed in order to complete a
                                   comprehensive assessment of the Enrollee's
                                   health condition.

                         C.10.2.1.3 During the initial examination and
                                   assessment of a child, the PCP shall perform
                                   EPSDT screening and any additional assessment
                                   needed to determine whether a child meets the
                                   definition of a child with special health
                                   care needs and shall report this
                                   determination to the Contractor according to
                                   the Contractor's defined procedure.

                         C.10.2.1.4 Treatment planning shall be based upon a
                                   comprehensive assessment of each Enrollee's
                                   condition and needs.

                         C.10.2.1.5 The Enrollee and the Enrollee's family (as
                                   clinically appropriate) shall be actively
                                   involved in developing a treatment plan for
                                   any identified health conditions.

                         C.10.2.1.6 Enrollees and their families shall be fully
                                   informed of all appropriate treatment
                                   options, their expected effects, and any
                                   risks or side effects of each option in order
                                   to make treatment decisions and give informed
                                   consent.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         90
--------------------------------------------------------------------------------

<PAGE>

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

                         C.10.2.1.7 The treatment plan shall specify mutually
                                   agreed upon goals, medically necessary
                                   medical services, mental health and alcohol
                                   and drug abuse services if the Enrollee has
                                   consented to share this information with the
                                   PCP and/or treatment team, any support
                                   services necessary to carry out or maintain
                                   the treatment plan, and, for children with
                                   more complex needs, planned care coordinator
                                   activities. The plan shall take into account
                                   the cultural values and any special
                                   communication needs of the family or the
                                   child.

                         C.10.2.1.8 The Contractor shall establish an effective
                                   system for PCPs to make referrals to other
                                   network services needed by Enrollees and for
                                   authorization of services that the PCP cannot
                                   authorize him or herself. The Contractor
                                   shall monitor timeliness of referrals and
                                   access to specialists.

                         C.102.1.9 The Contractor shall establish effective
                                   methods for referring Enrollees to
                                   non-network Medicaid services specified in
                                   the treatment plan.

                         C.102.1.10 When an Enrollee's treatment plan includes
                                   multiple services inside or outside the
                                   Contractor's network, the Contractor shall
                                   ensure effective communication and
                                   collaboration between network providers and
                                   other Medicaid providers inside or outside of
                                   the Contractor's network, the Contractor's
                                   Care Coordinators, and non-Medicaid
                                   providers. This shall include establishing
                                   effective methods to coordinate with the DC
                                   Commission on Mental Health Services, DCPS
                                   and its providers of healthrelated IDEA
                                   services for children receiving such services
                                   under approved Individual Education Plans or
                                   Individual Family Service Plans, and, for
                                   DCHFP Contractors, the MAA contracted alcohol
                                   and drug abuse provider network(s).

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         91
--------------------------------------------------------------------------------

<PAGE>

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

                         C.10.2.1.11 If not provided by DCPS or its providers,
                                   the Contractor shall ensure that medically
                                   necessary IDEA services continue during
                                   summer and school vacation periods.

                         C.10.2.1.12 The Contractor shall ensure that healthy
                                   Enrollee examinations are performed for
                                   children as required by EPSDT standards.

                         C.10.2.1.13 The Contractor shall ensure that healthy
                                   Enrollee examinations are performed for
                                   adults at a frequency determined by their age
                                   and risk factors. These examinations shall
                                   include routine preventive health screening
                                   for cancer following American Cancer Society
                                   guidelines, screening for diabetes for adults
                                   over forty (40) with risk factors, and annual
                                   lipid profiles and hypertension screenings
                                   for adult Enrollees. The Contractor may
                                   request that MAA approve the use of
                                   equivalent preventive screening guidelines,
                                   providing documentation demonstrating
                                   equivalent efficacy.

                         C.10.2.1.14 The Contractor shall provide influenza and
                                   pneumococcal vaccinations for appropriate
                                   high-risk individuals.

                         C.10.2.1.15 The Contractor shall establish procedures
                                   to monitor the provision of planned
                                   treatment, evaluate its effectiveness in
                                   meeting treatment goals, and revise and
                                   update treatment plans when needed.

                         C.10.2.1.16 The Contractor shall develop written
                                   policies and procedures that ensure that its
                                   staff and network providers comply with the
                                   requirements of 42 C.F.R. Ch. IV, Subpart I
                                   of part 489 regarding advance directives.

                                   a)   The Contractor shall educate its staff
                                        about its policies and procedures on
                                        advance directives, situations in which
                                        advance directives may be of benefit to
                                        Enrollees,and their responsibility to

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         92
--------------------------------------------------------------------------------

<PAGE>

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

                                        educate Enrollees about this tool and
                                        assist them to make use of it.
                                   b)   The Contractor shall educate Enrollees
                                        about their ability to direct their care
                                        using this mechanism and shall
                                        specifically designate which staff
                                        members and/or network providers are
                                        responsible for providing this
                                        education.
                                   c)   The Contractor shall inform Enrollees
                                        that complaints concerning the advance
                                        directive requirements may be filed with
                                        the state survey and certification
                                        agency.

                         C.10.2.1.17 The contractor shall establish procedures
                                   for arranging for transplant surgery that
                                   specify who is responsible for obtaining
                                   consent, following MAA prior approval
                                   procedures to request and document the need
                                   for these services, arranging for the surgery
                                   and managing the Enrollee's aftercare.

     C.10.3 Coordination of Care

               The Contractor shall coordinate care. Coordination of care
               activities shall include EPSDT Outreach, IDEA, Care Coordination,
               Health Education, and, for DCHFP Contractors, coordination with
               the MAA approved alcohol and drug abuse provider network(s).

               C.10.3.1  EPSDT Outreach Activities

                         C.10.3.1.1. The Contractor shall track the compliance
                                   of children's treatment with EPSDT
                                   periodicity schedules and shall conduct
                                   outreach activities to assist Enrollees
                                   through age twenty one (21) to make and keep
                                   EPSDT appointments.

                         C.10.3.1.2 The outreach activities shall include every
                                   reasonable effort, including a telephone call
                                   or mailed reminder prior to the date of each
                                   visit; in the case of a first missed
                                   appointment, a telephone call or mailed
                                   reminder; and, if there is still no response,
                                   a personal appointment urge the parent(s)
                                   and/or guardian(s) to bring the child for his
                                   or her EPSDT appointment,

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         93
--------------------------------------------------------------------------------

<PAGE>

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

                                   or personal visit where feasible. When
                                   appropriate such contacts should also be
                                   directed to sui juris teenagers.
                                               --- -----

                         C.10.3.1.3 The Contractor shall offer scheduling and
                                   transportation assistance prior to the due
                                   date of each enrolled child's periodic
                                   examination, and shall provide this
                                   assistance when requested and necessary.

                         C.1O.3.1.4 The Contractor shall track compliance with
                                   IDEA and shall provide appropriate staff to
                                   attend IEP and IFSP planning meetings.

     C.10.4 Care Coordination

                         C.10.4.1.1. The Contractor shall establish a care
                                   coordination department directed by a Senior
                                   Manager with a RN, MD, or the equivalent and
                                   staffed by care coordinators with appropriate
                                   clinical/medical training and experience.

                         C.10.4.1.2 The Contractor shall define criteria for the
                                   identification of Enrollees who are eligible
                                   for service from care coordinators. These
                                   criteria shall be submitted to MAA for review
                                   and approval, and shall include, at a
                                   minimum:

                                   a)   People with severe disabilities - Adults
                                        or children with HIV / AIDS or other
                                        disabling conditions with a cognitive,
                                        biological, or psychological basis that
                                        result in, but are not limited to, the
                                        following:
                                   b)   The need for medical care or special
                                        services at home, place of employment or
                                        school;
                                   c)   Dependency on daily medical care,
                                        special diet, medical technology,
                                        assistive devices, or personal
                                        assistance in order to function; or
                                   d)   Complex conditions requiring coordinated
                                        services from multiple treatment
                                        providers on a frequent basis;

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         94
--------------------------------------------------------------------------------

<PAGE>

                                   e)   Adolescents or women with high-risk
                                        pregnancies including, but not limited
                                        to, those with:
                                   f)   Young maternal age;
                                   g)   Short inter-conceptional period;
                                   h)   Late onset of prenatal care;
                                   i)   Alcohol and drug abuse or domestic
                                        violence in the home;
                                   j)   Documented barriers to accessing health
                                        care; or
                                   k)   Maternal illness that may affect the
                                        birth of the fetus;
                                   1)   Enrollees with complex disease
                                        management issues or complex
                                        psychosocial needs which could adversely
                                        affect their health status;
                                   m)   People with or at risk of serious life
                                        threatening conditions;
                                   n)   Children with mental health care needs;
                                        and
                                   o)   IDEA.

                         C.10.4.1.3 The Contractor shall review the cases of
                                   Enrollees referred by PCPs or otherwise
                                   identified as potentially eligible for care
                                   coordinator assistance and shall contact
                                   Enrollees determined to be eligible to offer
                                   assistance by care coordinators.

                         C.10.4.1.4 The care coordinator shall work with the
                                   family and the PCP or treatment team to plan
                                   care-coordinator activities. These activities
                                   shall be included in the treatment plan.

                         C.10.4.1.5 Care coordinators are responsible for
                                   assisting providers to coordinate treatment
                                   with the family and other practitioners by
                                   performing the following functions:

                                   a)   Facilitating development of a
                                        multidisciplinary treatment plan, when
                                        necessary;
                                   b)   Communicating relevant information and
                                        participating in development of an IEP
                                        or IFSP;

--------------------------------------------------------------------------------
CONTRACT NO.:P0HC-2002-D-0003          95
--------------------------------------------------------------------------------

<PAGE>

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

                                   c)   Coordination of the treatment plan
                                        including facilitation of transfer of
                                        medical information from one provider to
                                        another;
                                   d)   Coordination between network providers,
                                        out-of-network providers, schools, and
                                        district agencies that are involved with
                                        the Enrollee;
                                   e)   Monitoring the treatment plan to be sure
                                        that it is being followed and that it is
                                        effective in reaching treatment goals;
                                        and
                                   f)   Arranging periodic reassessments of
                                        Enrollee progress.

                         C.10.4.1.6 The care coordinator shall provide the
                                   following forms of assistance, when needed,
                                   to Enrollees and their caregivers, to ensure
                                   comprehensive and well-coordinated care. Care
                                   coordination assistance provided to Enrollees
                                   and their caregivers shall encourage
                                   empowerment and independence of the family.

                                   a)   In accordance with care coordinator's
                                        scope of practice, educating Enrollees
                                        and caregivers about their conditions,
                                        techniques for self-management, and
                                        administration of medication or other
                                        treatments.
                                   b)   Assisting Enrollees to gain access to
                                        and/or schedule medical, social,
                                        educational and other services, both
                                        within and outside the Contractor's
                                        plan.
                                   c)   Assisting Enrollees to arrange for
                                        services to be provided, when necessary,
                                        in non-traditional sites, including
                                        home, work or school; or outside of
                                        working hours.
                                   d)   Assisting Enrollees to arrange for
                                        medically necessary IDEA services.
                                   e)   Providing linkage with staff in other
                                        agencies and/or community service
                                        organizations involved with or providing
                                        services to an Enrollee.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         96
--------------------------------------------------------------------------------

<PAGE>

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

                                   f)   Assisting in planning for and arranging
                                        the services called for by a discharge
                                        plan after hospital treatment.
                                   g)   Assisting in planning for termination
                                        when the Enrollee is being disenrolled
                                        and facilitating communication of
                                        medical information to new providers,
                                        when the Enrollee gives consent.

                         C.10.4.1.7 The Contractor shall maintain a tracking
                                   system for its treatment plans that
                                   facilitates care coordinators'
                                   responsibilities for care planning,
                                   authorization of care and monitoring of
                                   receipt of planned services; meets the
                                   requirements for EPSDT tracking; and allows
                                   the Contractor to track and monitor other
                                   aspects of treatment planning and delivery.
                                   The system shall control online access to
                                   confidential information so that only
                                   authorized staff can use it. Further, the
                                   Contractor should monitor satisfaction with
                                   these services.

               C.10.4.2  Health Education

                         C.10.4.2.1 The Contractor shall ensure that its PCPs
                                   provide a written and oral explanation of
                                   EPSDT services to Enrollees including
                                   pregnant women, parent(s) and/or guardian(s),
                                   child custodians and sui juris teenagers.
                                                        --- -----
                                   This explanation shall occur on the first
                                   visit, and annually thereafter, and include
                                   distribution of a pocketsize card with the
                                   schedule for screens, laboratory tests and
                                   immunizations. The importance of the
                                   preventive aspects of the service and the
                                   benefits of early developmental and
                                   anticipatory guidance services should be
                                   emphasized for children under age three (3)
                                   and their caregivers.

                         C.10.4.2.2 The Contractor shall encourage and support
                                   its PCPs to provide Enrollees with education
                                   and information about health maintenance, the
                                   appropriate use of urgent care and emergency
                                   services and how to access care; how to
                                   access mental health care; self-

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         97
--------------------------------------------------------------------------------

<PAGE>

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

                                   management of health conditions; and selfcare
                                   strategies relevant to their age, culture and
                                   conditions.

                         C.l0.4.2.3 The Contractor shall provide an organized
                                   health education program including the
                                   following required elements:

                                   a)   The importance and availability of
                                        testing for HIV/AIDS and the services
                                        available for treatment of HIV/AIDS;
                                   b)   The importance and availability of early
                                        intervention for infants, toddlers and
                                        school-age children who either have been
                                        diagnosed as having, or who are
                                        suspected of having, a developmental
                                        disability or delay;
                                   c)   Proper nutrition for pregnant women and
                                        children and the WIC program and how to
                                        obtain benefits; and
                                   d)   Sexuality education for teenagers which
                                        addresses prevention of pregnancy,
                                        protection from sexually transmitted
                                        diseases, and issues of homosexuality
                                        and gender identification.

                         C.l0.4.2.4 The Contractor shall maintain up-to-date
                                   listings of available community health
                                   education programs and self-help
                                   organizations relevant to the needs of its
                                   Enrollees, and ensure that Enrollees are
                                   offered referrals to these organizations
                                   whenever relevant.

                         C.10.4.2.5 The Contractor shall provide MAA with a
                                   summary of health education activities on a
                                   quarterly basis including participation
                                   levels, curriculum, locations, and a schedule
                                   of sessions, in accordance with Section F.

     C.10.5 Collaboration with Other Service Systems

               C.10.5.1  Required Reporting

                         a)   The Contractor shall ensure compliance with
                              reporting requirements as specified in Section F.4
                              and consistent with confidentiality requirements;

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         98
--------------------------------------------------------------------------------

<PAGE>

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

                         b)   Persons that meet the District's definition of
                              developmental delay;
                         c)   Children and adults with vaccine-preventable
                              diseases; and
                         d)   Persons with sexually transmitted and other
                              communicable diseases.

                         C.10.5.1.1 The Contractor shall report Enrollees
                                   diagnosed with or suspected as being infected
                                   with tuberculosis to the DC Tuberculosis
                                   Control Program within forty-eight (48)
                                   hours, provide periodic reports on Enrollees
                                   in treatment, and notify the Program of
                                   Enrollees absent from treatment more than
                                   thirty (30) days.

                         C.10.5.1.2 The Contractor shall report any child with
                                   an elevated blood lead level (greater than 15
                                   ug/dl) to the District of Columbia Department
                                   of Health Childhood Lead Poisoning Prevention
                                   Program within seventy-two (72) hours after
                                   identification, shall refer such child for
                                   assessment of developmental delay, and shall
                                   coordinate services required to treat the
                                   exposed child with the lead inspection and
                                   abatement services furnished by the District.

                         C.10.5.1.3 The Contractor shall be responsible for
                                   referring pregnant and post-partum women and
                                   children up to age five (5) who have been or
                                   are at risk for nutritional deficiencies or
                                   have nutrition-related medical conditions to
                                   the Special Supplemental Food Program for
                                   Women, Infants and Children (WIC) and for
                                   furnishing the WIC agency with the results of
                                   tests conducted to ascertain nutritional
                                   status. The Contractor shall also direct all
                                   eligible members to the WIC program (Medicaid
                                   recipients are automatically income-eligible)
                                   and coordinate with existing WIC providers to
                                   ensure members have access to the special
                                   supplemental nutrition program for women,
                                   infants and children or the Contractor shall
                                   provide these services. The Contractor may
                                   use the

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         99
--------------------------------------------------------------------------------

<PAGE>

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

                                   nutrition education provided by WIC to
                                   satisfy related health education and
                                   promotion requirements.

               C.10.5.2  Court Ordered Evaluations and Services

                         C.10.5.2.1 The Contractor shall respond to direct
                                   referrals from the court system for
                                   court-ordered evaluation. Such referrals
                                   shall be forwarded to appropriately qualified
                                   providers who are able to promptly and fully
                                   respond to the needs of the court. The
                                   Contractor shall be responsible for oversight
                                   of the evaluation and for providing the
                                   evaluation results to the court.

                         C.10.5.2.2 The Contractor shall respond promptly to
                                   direct referrals from the court system for
                                   court-ordered services and ensure that
                                   appointments for medically necessary services
                                   are offered promptly. If the Contractor
                                   determines that court-ordered services are
                                   not medically necessary, the Contractor shall
                                   recommend to the court alternative services
                                   to address the Enrollee's needs.

               C.10.5.3  Coordination with Other District Agencies

                         C.10.5.3.1 The Contractor shall be responsible for
                                   designating a senior contact person for each
                                   of the following District agencies:

                                   a)   District of Columbia Public Schools
                                        Special Education;
                                   b)   Department of Human Services Early
                                        Intervention Program;
                                   c)   Department of Human Services, Youth
                                        Services Administration;
                                   d)   Child and Family Services Agency/LaShawn
                                        Receiver;
                                   e)   Commission on Mental Health
                                        Services/Dixon Transitional Receiver;
                                   f)   Department of Health Office of Maternal
                                        and Child Health;
                                   g)   DC Courts; and

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         100
--------------------------------------------------------------------------------

<PAGE>

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

                                   h)   Department of Health Addiction,
                                        Prevention, Recovery Administration
                                        (APRA).

               C.10.5.4  Coordination of Health-related IDEA Services

                         C.10.5.4.1 The Contractor shall ensure that appropriate
                                   staff members attend an MAA-sponsored
                                   training session to inform them about the
                                   requirements, services, and procedures of
                                   IDEA, and will communicate this information
                                   to its PCPs and other staff through
                                   appropriate and effective means.

                         C.10.5.4.2 The Contractor shall ensure that its
                                   designated contact person for DCPS and the
                                   Early Intervention Program regularly attends
                                   a working group sponsored by MAA that will
                                   develop protocols to implement MAA's
                                   Interagency Agreements with DCPS and with
                                   Early Intervention Program. The protocols
                                   shall specify procedures and performance
                                   expectations for coordination and
                                   communication concerning the medical and
                                   behavioral care of Enrollees served in
                                   common. Protocols shall include:

                                   a)   Procedures for accessing assessments,
                                        for collaborative service planning, and
                                        for authorization of services;
                                   b)   Procedures consistent with
                                        confidentia1ity laws for communication
                                        among service providers on progress in
                                        treatment and significant developments
                                        in the Enrollee's condition or
                                        treatment;
                                   c)   Where applicable, procedures for billing
                                        and payment of services whose cost is
                                        shared, or services provided by one
                                        party and paid for by another;
                                   d)   Designation of a point of contact from
                                        each system, responsible for
                                        coordinating resolution of case or
                                        system issues;
                                   e)   Regular meetings for ongoing planning,
                                        resolution of systems problems, and
                                        resolution of problems with specific
                                        cases;

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         101
--------------------------------------------------------------------------------

<PAGE>

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

                                   f)   Procedures for resolving conflicts that
                                        cannot be resolved in the established
                                        meetings;
                                   g)   If applicable, procedures for arranging
                                        and paying for court-ordered services
                                        that are not medically necessary; and
                                   h)   If applicable, procedures for responding
                                        to court orders concerning Enrollees.

               C.10.5.5  Coordination with Custodial Agencies

                         The contact people designated by each Contractor for
                         the Child and Family Services Agency and for the Youth
                         Services Administration shall meet with representatives
                         of each agency to develop any policies and procedures
                         needed to coordinate health care for wards of the
                         District who are enrolled in a health plan. Such
                         policies and procedures shall be documented in
                         memoranda between the Contractor and the agencies as
                         appropriate. If a system-wide approach is necessary,
                         MAA will facilitate meetings between all health plans
                         and the agencies involved.

               C.10.5.6  Coordination with Mental Health and Alcohol and Drug
                         Abuse Services

                         The Contractor shall establish a system that provides
                         Enrollees' access to covered mental health and alcohol
                         and drug abuse treatment. The Contractor's system shall
                         be subject to review and approval by the Commission on
                         Mental Health Services/Dixon Transitional Receiver.
                         This system shall also ensure effective coordination
                         between medical service providers and network mental
                         health and alcohol and drug abuse providers, to the
                         extent that the Enrollee consents to sharing
                         information about his or her mental health and alcohol
                         and drug abuse treatment. This system shall:

                                   a)   Disseminate and train PCPs in the use of
                                        a validated tool or tools designated by
                                        MAA for screening children and adults
                                        for mental health and alcohol and drug
                                        abuse problems;
                                   b)   Ensure that PCPs administer MAA-approved
                                        screening tools for mental health and
                                        alcohol and drug abuse needs as a
                                        routine part of every child and adult
                                        preventive health examination;

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         102
--------------------------------------------------------------------------------

<PAGE>

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

                                   c)   Identify Enrollees who are in need of
                                        mental health and alcohol and drug abuse
                                        treatment and assist Enrollees in
                                        selecting a mental health and alcohol
                                        and drug abuse provider and making an
                                        appointment, when requested and
                                        necessary;
                                   d)   Prepare a directory of all network
                                        mental health and alcohol and drug abuse
                                        providers. Distribute this directory to
                                        all PCPs in the network and ensure that
                                        they offer an appropriate directory to
                                        all Enrollees whose screening indicates
                                        possible mental health and alcohol and
                                        drug abuse problems;
                                   e)   Ensure that PCPs coordinate care with
                                        any mental health and alcohol and drug
                                        abuse treatment providers in or outside
                                        of the network serving their Enrollees,
                                        in accordance with the Enrollee's
                                        consent to share information about such
                                        treatment;
                                   f)   Assign appropriate staff to coordinate
                                        among primary care providers and network
                                        and non-network mental health and
                                        alcohol and drug abuse providers; and
                                        designate a single Senior Manager to
                                        oversee this function;
                                   g)   Establish procedures to identify
                                        problems that arise in specific cases or
                                        in mental health or alcohol and drug
                                        abuse treatment systems generally and
                                        bring them to the attention of the
                                        designated staff person on a timely
                                        basis; and
                                   h)   Develop and implement procedures to
                                        monitor compliance with these protocols
                                        and to improve compliance, if necessary.

               C.10.5.7  Memorandum of Agreements

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         103
--------------------------------------------------------------------------------

<PAGE>

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

                         C.10.5.7.1 The Contractor shall develop Memorandum of
                                   Agreements with the following agencies within
                                   sixty (60) days of contract award to ensure
                                   effective coordination of treatment.

                         C.10.5.7.2 District of Columbia Public Schools, Special
                                   Education;

                         C.10.5.7.3 Department of Human Services Early
                                   Intervention Program;

                         C.10.5.7.4 Child and Family Services Agency/LaShawn
                                   Receiver;

                         C.10.5.7.5 Department of Human Services Youth Services
                                   Administration;

                         C.10.5.7.6 Commission on Mental Health Services/Dixon
                                   Transitional Receiver; and

               C.10.5.8  Coordination with Other MMCP Health Plans The
                         Contractor shall establish procedures for transfer of
                         medical information, continuity of care and for linkage
                         of medical information of Enrollees who transfer
                         between the DCHFP plan.

C.11 Financial Functions

     C.11.1 Claims Payment Capacity

               The Contractor shall be responsible for paying all claims for
               properly accessed and, if necessary, authorized Medicaid services
               provided to Enrollees on dates of service when they were eligible
               for Medicaid unless the services are excluded under the Plan.

               C.11.1.1  The Contractor shall have written policies and
                         procedures for processing claims submitted for payment
                         from any source and shall monitor its compliance with
                         these procedures. The procedures shall specify time
                         frames for:

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         104
--------------------------------------------------------------------------------

<PAGE>

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

                         C.11.1.1.1 Date stamping claims when received;

                         C.ll.1.l.2 Determining, within a specific number of
                                   days from receipt, whether a claim is clean
                                   or not;

                         C.11.1.1.3 Follow-up of pended claims to obtain
                                   additional information;

                         C.11.1.1.4 Reaching a determination following receipt
                                   of additional information; and

                         C.11.1.1.5 Sending notice of the provider's appeal
                                   rights when a determination is made to deny
                                   the claim.

               C.11.1.2  The Contractor shall allow network and non-network
                         providers to submit an initial claim for covered and,
                         if required, prior authorized services for a maximum
                         period of ninety (90) days following the provision of
                         such services.

               C.11.1.3  The Contractor's claims payment system shall use
                         standard claims forms wherever possible. In addition,
                         the Contractor shall have the capability to
                         electronically accept and adjudicate claims.

               C.11.1.4  The Contractor's claims processing system shall ensure
                         that duplicate claims are denied.

               C.11.1.5  The Contractor shall pay or deny at least ninety
                         percent (90%) of "clean claims" (claims for which no
                         further written information or substantiation is
                         required) within thirty (30) calendar days of receipt
                         and at least ninety-nine percent (99%) of clean claims
                         within ninety (90) calendar days of receipt consistent
                         with the claims payment procedures described in Section
                         1902(a)(37)(A) of the Social Security Act. The
                         Contractor shall adhere to these claims payment
                         procedures unless the health care provider and the
                         Contractor agree to an alternative payment schedule.

               C.11.1.6  The Contractor shall verify that reimbursed services
                         were actually provided to Enrollees by providers and
                         subcontractors.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         105
--------------------------------------------------------------------------------

<PAGE>

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

               C.11.1.7  The Contractor shall provide MAA with information prior
                         to implementation of any changes to the software system
                         to be used to support the claims processing function as
                         described in the Contractor's proposal and incorporated
                         by reference in the contract.

     C.ll.2 Provider Relations

               The Contractor shall maintain staff to perform provider relation
               functions to include; training providers in the Contractor's
               procedures for authorization and claims payments, assisting
               providers to resolve billing and other administrative problems
               and responding to provider complaints about administrative
               processes.

C.12 Management Information System

     C.12.1 Minimum MIS Requirements

               The Contractor shall operate an MIS capable of maintaining,
               providing and documenting information sufficient to document
               contractor's compliance with the contract requirements that will
               include but not be limited to the following functions:

               .    Enrollee eligibility data - current and historical;
               .    Encounter and claim payment records - current and
                    historical;
               .    Authorization and care coordination data;
               .    Utilization management;
               .    Provider network information, i.e., provider affiliations,
                    credentialing information;
               .    EPSDT tracking;
               .    Outcome reports;
               .    Financial accounting data;
               .    Grievance and complaints statistics;
               .    Internal operations data, e.g., telephone response time;
               .    Clinical information;
               .    Serious incidents;
               .    Client satisfaction;
               .    Provider profiling; and
               .    Outcome measurements.

               C.12.1.1  The Contractor shall have an MIS capable of documenting
                         administrative and clinical procedures while
                         maintaining confidentiality of individual medical
                         information, including special confidentiality
                         provisions related to people with HIV/AIDS, mental
                         illness, and alcohol and drug abuse disorders. The
                         encounter data reporting system should be designed to
                         assure aggregated, unduplicated service counts

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         106
--------------------------------------------------------------------------------

<PAGE>

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

                         provided across service categories, provider types, and
                         treatment facilities.

               C.12.1.2  The Contractor shall have internal procedures to ensure
                         that data reported to the District are valid and to
                         test validity and consistency on a regular basis. The
                         Contractor shall also agree to cooperate in data
                         validation activities that may be conducted by the
                         District, at its discretion, by making available
                         medical records, claims records, and a sample of other
                         data according to specifications developed by the
                         District.

               C.12.1.3  The Contractor shall develop and implement required
                         corrective action plans to correct data validity
                         problems.

               C.12.1.4  The Contractor shall provide the District with
                         aggregate performance and outcome data, as well as its
                         policies for transmission of data from network
                         providers. The Contractor shall submit its work plan or
                         readiness survey assessing its ability to comply with
                         Health Insurance Portability and Accountability Act
                         (HIPAA) mandates in preparation for the standards and
                         regulations.

     C.12.2 Eligibility Data

               C.12.2.1  The Contractor's enrollment system shall be capable of
                         linking records for the same Enrollee that are
                         associated with different Medicaid identification
                         numbers, e.g., Enrollees who are re-enrolled and
                         assigned new numbers.

               C.12.2.2  A Contractor operating a District of Columbia DCHFP and
                         a CASSIP shall have a method linking the records of an
                         Enrollee who is disenrolled from the DCHFP and enrolled
                         in the CASSIP or vice versa.

               C.12.2.3  At the time of service, the Contractor or its
                         subcontractors shall verify every Enrollee's
                         eligibility through the Eligibility Verification System
                         (EVS) operated by the District.

               C.12.2.4  The Contractor shall update its eligibility database
                         whenever Enrollees change names, phone numbers, and/or
                         addresses, and shall notify the District of such
                         changes.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         107
--------------------------------------------------------------------------------

<PAGE>

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

               C.12.2.5  The Contractor shall notify the MAA of any Enrollees
                         for whom accurate addresses or current locations cannot
                         be determined and shall document the action that has
                         been taken to locate the Enrollees. The Contractor
                         shall notify the MAA of the known deaths of any
                         Enrollees within two (2) business days.

     C.12.3 Encounter and Claims Records

               C.12.3.1  The Contractor shall use a standardized methodology
                         capable of supporting HCFA reporting categories for
                         collecting service event data and costs associated with
                         each category of service.

               C.12.3.2  The Contractor shall collect and submit service
                         specific encounter data in the appropriate HCFA 1500 or
                         UB92 format or an alternative format if approved by
                         MAA. The data shall be submitted electronically within
                         seventy-five (75) days of the end of the month in which
                         the service occurs, or as needed. The data shall
                         include all services reimbursed by Medicaid.

     C.12.4 EPSDT Tracking System

               C.12.4.1  The Contractor shall operate a system that tracks EPSDT
                         activities for each enrolled child by name and Medicaid
                         identification number and allows the Contractor to
                         complete HCFA form 416 to report the timeliness of the
                         performance of scheduled activities. This system shall
                         be enhanced, if needed, to meet any other reporting
                         requirements instituted by HCFA for the District in the
                         future;

               C.12.4.2  The system shall also track the status of the child
                         with respect to WIC referrals; and

               C.12.4.3  The status of the child with respect to mental health
                         referra1s.

     C.l2.5 Authorization and Care Coordination Data

               C.12.5.1  The Contractor's system shall include all data
                         necessary to coordinate care, including, but not
                         limited to: client ID number, provider number,
                         treatment plan and treatment goals, progress toward
                         goals, referrals made, services requested and services
                         authorized, period of service

--------------------------------------------------------------------------------
CONTRACT NO.:P0HC-2002-D-0003          108
--------------------------------------------------------------------------------

<PAGE>

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

                         authorization, number of units authorized, diagnosis -
                         all axis, any applicable assessment information,
                         eligibility and legal status, reviewer ID, date of
                         request and date of review. The Contractor's MIS shall
                         support care coordination functions, including, but not
                         limited to, EPSDT compliance, treatment planning,
                         comments from service providers, and resources
                         available from the provider.

               C.12.5.2  Records in an electronic or digital on-line format
                         shall be easy to access and to transport in a
                         non-proprietary format.

               C.12.5.3  The system shall ensure flexibility to record and
                         easily access text describing clinical issues.

     C.12.6 Additional Clinical Information

               The Contractor shall extract clinical data from electronic
               databases, through chart reviews, or through other special data
               collection methods when needed for analyses to inform quality
               improvement, provider management, or development of clinical
               protocols.

     C.12.7 Provider Network

               C.12.7.1  In accordance with Section 1932(d)(4) of the Balanced
                         Budget Act of 1997, the Contractor shall require its
                         physicians who provide Medicaid services to have a
                         unique identifier in accordance with the system
                         established under Section 1173(b).

               C.12.7.2  The Contractor's provider database shall include but
                         not be limited to licensure status, professional
                         affiliations, hospital admitting privileges, languages
                         spoken, education and training and board eligibility/
                         certification. Basic demographic information, hours of
                         operations, office locations, languages spoken by
                         office staff, status of panel (open, closed),
                         satisfaction survey responses malpractice coverage, and
                         reported incidents shall also be available.

     C.12.8 Outcome Reporting

               The Contractor's MIS shall have the capacity to report on the
               measures outlined in Section C.17.7.

C.13 Quality Improvement

     The Contractor shall establish quality management functions to monitor its
     compliance with Quality Improvement System for Managed Care (QISMC)

--------------------------------------------------------------------------------
CONTRACT NO.:P0HC-2002-D-0003          109
--------------------------------------------------------------------------------

<PAGE>

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

     Interim Standards and Guidelines and industry standards for care planning,
     authorization, and provision, and to investigate serious incidents. In
     addition, the Contractor shall implement a structured process for
     continuously improving quality that addresses aspects of its performance
     that are of significance for its MMCP Enrollees and that meet QISMC
     standards.

     C.13.1 Chart Reviews

               The Contractor shall establish a system for periodic review of
               medical records, care coordination records, and claims records
               using explicit criteria to establish whether:

               C.13.1.1  Treatment is consistent with diagnosis;

               C.13.1.2  High-risk chronic or acute conditions receive
                         appropriate treatment and achieve appropriate outcomes;

               C.13.1.3  Services emphasize preventive care and result in early
                         detection;

               C.13.1.4  Treatment is provided in accordance with quality of
                         care guidelines;

               C.13.1.5  Enrollees are appropriately referred to specialty care;

               C.13.1.6  Enrollees are offered needed support services; and

               C.13.1.7  Barriers to appropriate care are identified and
                         patients are offered assistance in addressing them.

                         The results of such chart reviews will be provided to
                         MAA on an annual basis in accordance with Section F.4.

     C.13.2 Critical Incidents

               The Contractor shall adopt definitions for critical and serious
               incidents from a national accrediting body and adopt that body's
               procedures for reporting, investigating, addressing, and
               documenting them, including who is responsible for each activity.
               These policies shall be included in the Contractor's Provider
               Manual, which shall be reviewed for approval by MAA.

               C.13.2.1  The Contractor shall report all critical incidents to
                         MAA's Medical Director within twenty-four (24) hours of
                         their occurrence, along with measures taken to address
                         the situation and/or prevent additional occurrences.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         110
--------------------------------------------------------------------------------

<PAGE>

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

               C.13.2.2  The Contractor shall summarize and report quarterly to
                         MAA in accordance with Section F.4 serious incidents
                         and the Contractor's actions taken.

               C.13.2.3  In order to prevent and better manage such incidents,
                         the Contractor shall designate a multi-disciplinary
                         committee under the leadership of the Medical Director
                         to review critical incidents as they happen, as well as
                         to review summary reports on a quarterly and annual
                         basis.

               C.13.2.4  The Contractor's committee shall order and monitor
                         needed corrective actions and shall issue protocols
                         designed to guide practitioners in preventing or
                         providing appropriate responses to commonly experienced
                         incidents, and shall identify commonly experienced
                         incidents warranting development of improved approaches
                         to prevention or management.

     C.13.3 Quality Improvement (QI) Program

               C.13.3.1  The Contractor shall operate a Quality Improvement
                         Program. The Contractor shall develop a written QI Plan
                         annually that details plans, tasks, initiatives, and
                         staff responsible for improving quality and meeting the
                         requirements incorporated in this Contract.

                         C.13.3.1.1 The Contractor's QI Plan shall specify
                                   measures of effectiveness from such domains
                                   as observable health outcomes, provision of
                                   efficacious services, adherence to
                                   professional guidelines, family satisfaction,
                                   patient satisfaction and access to or
                                   utilization of services that will provide a
                                   basis for evaluation of effectiveness.

                         C.13.3.1.2 All initiatives shall set measurable
                                   improvement targets for health outcomes or
                                   for structures or processes that have been
                                   demonstrated by best practice or industry
                                   standards to be linked to positive outcomes.

                         C.13.3.1.3 The Contractor's QI Plan shall set
                                   measurable goals for reducing racial or
                                   ethnic disparities indicated by baseline data
                                   for health plan performance, either within

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         111
--------------------------------------------------------------------------------

<PAGE>

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

                                   the Plan or between the Plan and national
                                   benchmarks.

                         C.13.3.1.4 The Contractor shall include provisions for
                                   measuring the effectiveness of its proposed
                                   interventions, using a baseline and a
                                   post-intervention measurement and the
                                   relevant health outcomes that will also be
                                   measured.

                         C.13.3.1.5 When a measure is based on a sample rather
                                   than on all Enrollees, a sampling methodology
                                   shall be used which ensures that the results
                                   are representative of the enrolled
                                   population. The Contractor shall report on
                                   functional and health outcome measures as
                                   needed in connection with Plan or MAA Quality
                                   Improvement Initiatives.

                         C.13.3.1.6 The Contractor shall include an
                                   implementation schedule for quality
                                   improvement tasks outlined in the QI Plan.

                         C.13.3.1.7 The Contractor shall submit an annual
                                   Quality Improvement Report 30 days prior to
                                   the expiration of each year of the contract
                                   The QI Report shall summarize the findings
                                   from initiatives described in the annual QI
                                   Plan.

               C.13.3.2  The Contractor shall participate in MAA quality
                         improvement initiatives for managed care plans. This
                         shall involve sending appropriate staff with an
                         appropriate level of decision-making authority to
                         participate in planning meetings that may involve MAA,
                         other contracted managed care plans, the other District
                         agencies, the MAA Advisory Group, and other
                         stakeholders.

               C.13.3.3  The Contractor shall make available minutes from the
                         Contractors' internal Quality Improvement Committee
                         meetings upon request by the District for review at the
                         Contractor's site. All such minutes shall be kept
                         confidential by reviewing parties as required under the
                         District's Health Maintenance Organization Act of 1996.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         112
--------------------------------------------------------------------------------

<PAGE>

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

     C.13.4 Consumer and Family Surveys

               The Contractor shall conduct at least two surveys per year of its
               Enrollees.

               C.13.4.1  One survey shall assess the satisfaction of its
                         Enrollees and families at least once per year, using
                         appropriate nationally validated and normative tools
                         appropriate for Medicaid populations, such as the
                         Consumer Assessment of Health Plans Studies (CAHPS).

               C.13.4.2  The Contractor shall include in such surveys any
                         specific questions requested by MAA.

               C.13.4.3  The Contractor shall conduct one additional survey of
                         its Enrollees, or a subpopulation of Enrollees, at
                         least once per year to collect self-reported data
                         relevant to analysis of outcomes or quality improvement
                         initiatives.

     C.13.5 Provider Satisfaction

               The Contractor shall assess the satisfaction of the Enrollees of
               its Provider network at least once per year, using a provider
               satisfaction tool that addresses concerns of importance to
               providers treating its Enrollees.

C.14 Complaints, Grievances And Fair Hearings

     The Contractor shall maintain adequate staff to receive Enrollee complaints
     submitted by phone or in writing and meet by phone or in person with
     Enrollees to answer questions and attempt to resolve complaints. If the
     complaint cannot be resolved at this level, the staff shall submit
     complaints to the formal complaints and grievance process. The Contractor
     shall document all communications, written and verbal, with Enrollees and
     shall maintain written policies and procedures for the receipt and prompt
     resolution of complaints and grievances. This system shall comply with the
     requirements of 42 CFR 434.32. All reports and documentation shall be
     subject to review by the District as deemed necessary.

     C.14.1 General Requirements

               C.14.1.1  The Contractor shall establish a complaint and
                         grievance process that adheres to the following
                         requirements:

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         113
--------------------------------------------------------------------------------

<PAGE>

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

                         C.14.1.1.1 The Contractor shall inform enrollees of
                                   their right to file a grievance with the
                                   Office of Fair Hearing at any time during the
                                   process.

                         C.14.1.1.2 The Contractor shall offer to assist the
                                   enrollee with the filing of a complaint to
                                   the Office of Fair Hearing

                         C.14.1.1.3 The Contractor shall establish a reasonable
                                   time frame that allows Enrollees ninety (90)
                                   days from the date the Contractor mails a
                                   notice of action to file a complaint,
                                   grievance, or request a fair hearing.

                         C.14.1.1.4 After ninety (90) days, Enrollees or their
                                   designees shall have the right to file a
                                   grievance with "good cause".

                         C.14.1.1.5 The Contractor shall in no way penalize any
                                   Enrollee who files a complaint or grievance,
                                   or requests a fair hearing.

     C.14.2 Complaint Procedure

               C.14.2.1  The Contractor shall establish and maintain a defined
                         process for members, providers, or others to resolve
                         disputes regarding any aspect of service provision or
                         administration, other than a request for
                         reconsideration of an authorization decision. This
                         process shall specify timeframes for the completion of
                         each step in order to ensure timely response to the
                         complainant.

               C.14.2.2  The Contractor shall ensure that complaints are
                         investigated and resolved in a timely manner by an
                         individual who was not directly or indirectly involved
                         in the situation which gave rise to the complaint.

     C.14.3 Grievances and Appeals

               The Contractor shall reconsider a decision to deny, reduce,
               terminate, or delay authorization of a requested covered service
               or payment denial in response to an a grievance to request
               submitted by an Enrollee or a provider on behalf of an Enrollee.
               Should the Enrollee disagree with the Contractor's response to a
               grievance, the Enrollee or a provider on the Enrollee's behalf,
               may appeal the Contractor's decision.

               C.14.3.1  Levels of Reconsideration

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         114
--------------------------------------------------------------------------------

<PAGE>

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

                         C.14.3.1.1. Immediate Reconsideration (InformalReview)

                                   The Contractor shall establish a process for
                                   immediate reconsideration of the denial,
                                   termination, or reduction of services when
                                   there is a dispute about whether the Enrollee
                                   has an urgent or emergency medical condition
                                   or there is a delay in the furnishing of an
                                   emergency or urgent service. A physician not
                                   involved in the original decision shall
                                   perform the review and reconsideration of the
                                   matter and a decision shall be issued within
                                   one (1) hour.

                         C.14.3.1.2 The Contractor shall utilize the immediate
                                   reconsideration process under the following
                                   circumstances:

                                   a)   An Enrollee submits a grievance and
                                        taking the time for a standard
                                        resolution could seriously jeopardize
                                        the Enrollee's life or health;
                                   b)   A physician submits a grievance or
                                        supports an Enrollee's request and
                                        indicates that taking the time for a
                                        standard resolution could seriously
                                        jeopardize the Enrollee's life, health,
                                        or functioning; or
                                   c)   An Enrollee submits a grievance while
                                        accessing services for urgent or
                                        emergency care.

                         C.14.3.1.3 Expedited Grievance (First Level Review)

                                   The Contractor shall establish an expedited
                                   grievance process for making a first level
                                   reconsideration determination of an acute
                                   care denial within a seventy-two (72) hour
                                   period. The reviewer shall be an appropriate
                                   specialist who was not involved in the
                                   initial coverage determination. Aggrieved
                                   individuals shall have the right to submit
                                   additional data and meet with the reviewer
                                   prior to final determination.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         115
--------------------------------------------------------------------------------

<PAGE>

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

                         C.14.3.1.4 The Contractor shall ensure that, at a
                                   minimum, the expedited grievance process is
                                   utilized for:

                                   a)   Persons dissatisfied with the response
                                        to a request for urgent care;
                                   b)   Persons with HIV/AIDS dissatisfied with
                                        a Contractor's determination of
                                        coverage;
                                   c)   Other persons as designated by the
                                        Contractor based on stated criteria; and
                                   d)   Persons who are dissatisfied with an
                                        MCO's determination of coverage for
                                        acute services, or for services that may
                                        be authorized as alternatives to acute
                                        inpatient services.
                                   e)   Persons dissatisfied with decisions
                                        regarding denial of surgical procedures,
                                        including but not limited to
                                        circumcisions.

                         C.l4.3.1.5 Standard Grievance (First Level Review)

                                   The Contractor shall establish and maintain a
                                   standard grievance process for first level
                                   reconsideration of authorization decisions
                                   that resulted in the denial, termination,
                                   delay or reduction of a covered item or
                                   service. This process may also serve as a
                                   first level reconsideration of an unresolved
                                   complaint. The Contractor shall be
                                   responsible for the following activities
                                   regarding the grievance process:

                                   a)   The Contractor shall inform providers
                                        and Enrollees of procedures for grieving
                                        denials or reductions of requested
                                        services.
                                   b)   The Contractor shall inform Enrollees of
                                        their rights in the grievance process,
                                        including the right to appear in person
                                        before the Contractor's personnel
                                        responsible for resolving the grievance,
                                        the timing in which the review will be
                                        completed, and their rights to Fair
                                        Hearings at any point in the process.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         116
--------------------------------------------------------------------------------

<PAGE>

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

                                   c)   The Contractor shall ensure that all
                                        grievances regarding services for adults
                                        are reviewed by appropriate specialists
                                        and sub- specialists and that all
                                        grievances regarding services for
                                        children are reviewed by appropriate
                                        pediatric specialists and
                                        subspecialists.
                                   d)   The Contractor shall appoint a Grievance
                                        Committee to review all standard
                                        grievances. At a minimum, the Grievance
                                        Committee shall include the Medical
                                        Director or his/her designee, the
                                        Clinical Director or his/her designee,
                                        and a Supervising Care Coordinator
                                        representing a discipline other than the
                                        Clinical Director's. Other medical and
                                        clinical staff shall participate to
                                        substitute for a staff member involved
                                        in the matter being grieved, or to
                                        provide needed specialty expertise.
                                   e)   The Contractor shall resolve the
                                        grievance and notify the member or the
                                        member's designee in writing of the
                                        decision no later than thirty (30)
                                        working days from the date the grievance
                                        was received except in cases involving
                                        an expedited grievance. The Contractor
                                        may extend the thirty (30) day time
                                        frame by up to fourteen (14) calendar
                                        days if the Enrollee or the Enrollee's
                                        representative requests the extension.

                         C.14.3.1.6 Appeals (Second Level Review)

                                   The Contractor shall establish and maintain
                                   an appeals process to review and resolve
                                   disputes involving adverse decisions
                                   resulting from the standard grievance
                                   process. Contractors shall be responsible for
                                   ensuring:

                                   a)   The same resolution and notification
                                        timeframes described above for the
                                        standard grievance process are adhered
                                        to throughout the appeals process.
                                   b)   The appeals committee responsible for
                                        the review and reconsideration of the

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         117
--------------------------------------------------------------------------------

<PAGE>

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

                                        dispute includes a physician who was not
                                        involved in any previous decision
                                        regarding the dispute.

               C.14.3.2  Requirements for Notice of Action

                         The Contractor shall notify an Enrollee in writing and
                         in a timely manner of any intention to deny, limit,
                         reduce, delay or terminate a service or deny payment.
                         This notice shall clearly explain the following:

                         C.14.3.2.1 The action the Contractor intends to take
                                   and the supporting reasons, laws or rules for
                                   the action;

                         C.14.3.2.2 The Enrollee's right to file a complaint or
                                   grievance with the Contractor and the right
                                   to request a Fair Hearing at any time;

                         C.14.3.2.3 The Enrollee's right to appear in person in
                                   front of the Contractor's personnel if the
                                   Enrollee files a grievance;

                         C.14.3.2.4 The Enrollee's right to have a
                                   representative involved in the process;

                         C.14.3.2.5 The assistance that can be provided by the
                                   Ombudsman and how to contact the Ombudsman;

                         C.14.3.2.6 The Enrollee's right to obtain free copies
                                   of the documents, including the Enrollee's
                                   medical records, used to make the decision
                                   and the medical necessity criteria referenced
                                   in the decision; and

                         C.14.3.2.7 The circumstances under which benefits will
                                   continue pending resolution of the grievance
                                   or issuance of a District Fair Hearing
                                   decision.

               C.14.3.3  Written Notification of Receipt

                         The Contractor shall, within two (2) working days, send
                         to the member or the member's designee a letter of
                         notification of receipt of the complaint or grievance.

               C.14.3.4  Continuation of Coverage

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         118
--------------------------------------------------------------------------------

<PAGE>

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

                         C.14.3.4.1 The Contractor shall continue to furnish the
                                   item or service at the level and in the
                                   amount, scope, and duration that item or
                                   service was provided to the Enrollee prior to
                                   notification of the Contractor's
                                   determination pending resolution of the
                                   grievance or appeal.

                         C.14.3.4.2 This provision for continued coverage
                                   applies only to Enrollees or an Enrollee's
                                   designee who filed a standard grievance
                                   within ten (10) days of the date on which the
                                   Enrollee was notified of the Contractor's
                                   determination to terminate or reduce an item
                                   or service.

                         C.14.3.4.3 The Contractor shall provide continued
                                   coverage until the date that:

                                   a)   The grievance is resolved; and
                                   b)   The Enrollee has not requested a fair
                                        hearing.

                         C.14.3.4.4 The Contractor shall issue an authorization
                                   for any services authorized as a result of
                                   the grievance or fair hearing process within
                                   two (2) working days of a grievance or notice
                                   of a fair hearing decision.

     C.14.4 Fair Hearings

               C.14.4.1  The Contractor shall notify the Enrollee or the
                         Enrollee's designee of the right to a fair hearing with
                         a District hearing officer, each time notification of
                         an adverse decision on a complaint, grievance, or
                         appeal is sent to an Enrollee or the Enrollee's
                         designee.

               C.14.4.2  The Contractor shall submit all documents regarding the
                         Plan's action and the Enrollee's dispute to MAA no
                         later than five (5) working days from the date the
                         Contractor receives notice from the District that a
                         fair hearing request has been filed if an Enrollee
                         requests a fair hearing.

               C.14.4.3  An Enrollee may request a fair hearing before, during,
                         or after a Contractor's grievance process. However, an

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         119
--------------------------------------------------------------------------------

<PAGE>

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

                         Enrollee is allowed no more than ninety (90) days from
                         the date notice of action is mailed to request a
                         hearing.

               C.14.4.4  Pending the decision from the fair hearing, the
                         Contractor shall continue to furnish the item or
                         service at the level and in the amount, scope, and
                         duration that item or service was provided to the
                         Enrollee prior to notification of the Contractor's
                         determination.

               C.14.4.5  The Contractor shall assist the enrollee with filing of
                         any request for a fair hearing and send a copy of the
                         request filed to the enrollee's home address.

     C.14.5 Grievance and Fair Hearing Resolutions

               If the Contractor reverses or modifies an authorized decision
               through the grievance resolution process or is notified of the
               District's fair hearing decision to reverse a decision, the
               service shall be authorized or provided no later than two (2)
               working days after reversal or notification of reversal from the
               District. In the case of an expedited grievance, services must
               begin within twenty-four (24) hours of the reversal.

     C.14.6 Tracking Log

               The Contractor shall maintain a log to document all complaints
               and grievances. The log shall document the type and nature of
               each dispute, the Plan in which the complainant is enrolled, how
               the matter was addressed and what, if any, corrective action was
               taken.

C.15 Implementation Plan

     C.15.1 Implementation Requirements

               C.15.1.1  Organizational

               C.15.1.2  The Contractor shall designate a group composed of
                         individuals who are qualified to direct the
                         implementation of all required functions of the health
                         plan and to be responsible for developing the
                         Implementation Plan and carrying it out.

                         C.15.1.2.1 This group shall include individuals with
                                   experience with managed care, Medicaid
                                   managed care, mental health care, the
                                   District of Columbia's health system, and

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         120
--------------------------------------------------------------------------------

<PAGE>

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

                                   with the functions they will be implementing.

               C.15.1.3  The Contractor shall allocate sufficient resources to
                         carry out the Implementation Plan in accordance with
                         the Contract.

     Performance and Outcome Measures

     The Contractor shall generate and track the performance measures as
     described in Section C.17, and Section C.18 for evaluation of the
     Contractor's performance. MAA reserves the right to specify additional or
     change perfonnance measures or criteria within sixty (60) days of prior
     notification to the Contractor. Nothing in this Section precludes the
     requirement of the Contractor to fulfill reporting requirements specified
     in Section F or reports that are mandated by the Health Care Finance
     Administration (HCFA) or other federal or District governmental entities.

     C.16.1 Sample Based Reporting

               When a measure is based on a sample rather than on all Enrollees,
               the Contractor shall use a sampling methodology which ensures
               that the results are representative of the enrolled population of
               concern. The Contractor shall report on functional and health
               outcome measures as needed in connection with Plan or MAA Quality
               Improvement Initiatives.

     Specific Requirements and Responsibilities for DCHFP Contractors Only

     C.17.1 Authority to Operate

               C.17.1.1  The Contractor shall comply with the Medical Assistance
                         State Plan, Section 2.1, and health plan requirements,
                         which are incorporated herein by reference.

               C.17.1.2  The Contractor shall maintain a certificate of
                         authority to operate a health maintenance organization
                         in the District of Columbia from the Department of
                         Insurance and Securities Regulations.

     C.17.2 Additional Provision for Disenrollment of Enrollees

               The Contractor may request that MAA disenroll an individual from
               its DCHFP who has been admitted to a long term care facility
               other than a Residential Treatment Facility, and who is expected
               to remain in the facility for thirty (30) consecutive days. If
               approved by the MAA, disenrollment is effective the first day of
               the first full month following the date of MAA approval.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         121
--------------------------------------------------------------------------------

<PAGE>

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

     C.17.3 Coverage of Services and Benefits

               C.17.3.1  Contractors shall provide medically necessary health
                         care, diagnostic services, treatment, and other items
                         and services described in Section 1905 of the Social
                         Security Act to correct or ameliorate substance abuse
                         illnesses.

               C.17.3.2  In addition to those covered services listed in
                         Attachment J.8 and described in Section 0, the
                                                         ---------
                         Contractor shall develop, contract, and arrange for the
                         following medically necessary services for its
                         Enrollees.

               C.17.3.3  Mental lllness Treatment Services

                         C.17.3.3.1 The DCHFP Contractor shall be responsible
                                   for providing services for Enrollees who are
                                   dually diagnosed (mental illness and alcohol
                                   and drug abuse) as prescribed in protocols,
                                   policies and procedures developed by MAA with
                                   input from the Contractor.

               C.17.3.4  Alcohol and Drug Abuse Referral and Care Coordination

                         C.17.3.4.1 DCHFP contractors are responsible for
                                   facilitating access to emergency services
                                   related to alcohol and drug abuse even though
                                   treatment services are available through the
                                   MAA contracted network(s).

                         C.17.3.4.2 The DCHFP Contractor shall be responsible
                                   for referring and coordinating care for
                                   Enrollees in need of alcohol and drug abuse
                                   treatment.

               C.17.3.5  Long Term Care

                         C.17.3.5.1 The Contractor shall arrange for long term
                                   treatment services for its Enrollees who need
                                   them. These services shall be arranged in
                                   Medicaid-certified facilities.

                         C.17.3.5.2 The Contractor may submit a written request
                                   that MAA disenroll any such member from

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-OOO3         122
--------------------------------------------------------------------------------

<PAGE>

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

                                   its DCHFP. In order to do so the Contractor
                                   shall:

                                   a)   Notify MAA that a physician has
                                        certified that an Enrollee who is
                                        receiving such treatment will continue
                                        to need such treatment for longer than
                                        thirty (30) consecutive days

                                   b)   Submit the Enrollee's medical record to
                                        document the need for long term
                                        treatment and submit a plan for
                                        transition from the Contractor's DCHFP
                                        to fee-for-service providers; and

                                   c)   Request that the Enrollee be disenrolled
                                        at the end of the thirty (30) days.

                         C.17.3.5.3 The Contractor shall not be responsible for
                                   the cost of providing such treatment
                                   beginning on the first day of the month
                                   following the month during which the Enrollee
                                   is disenrolled from the Contractor's Plan.

                         C.17.3.5.4 The Contractor shall include an explanation
                                   of the right of an Enrollee needing alcohol
                                   and drug abuse treatment to self-refer to any
                                   provider in the MAA network(s);

                         C.17.3.5.5 The Contractor shall include an explanation
                                   of alcohol and drug abuse treatment services
                                   available through the MAA contracted
                                   network(s).

     C.17.4 Network

               C.17.4.1  In establishing a DCHFP network that meets the
                         requirement in Section O, the Contractor shall have
                         sufficient providers in each listed category with
                         specialized training and/or experience in pediatrics to
                         meet the needs of enrolled children in accessible
                         locations on a timely basis, and sufficient providers
                         in each category with training and experience in adult
                         medicine to meet the needs of adult Enrollees in
                         accessible locations on a timely basis.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         123
--------------------------------------------------------------------------------

<PAGE>

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

     C.17.5 Utilization Management and Care Coordination Capabilities

               C.17.5.1  DCHFP Contractors shall disseminate Level of Care
                         Criteria for alcohol and drug abuse treatment available
                         through the MAA contracted network to network providers
                         to guide treatment and ensure consistency and
                         coordination, and shall be available to them upon
                         request.

               C.17.5.2  Additional Requirements for Health Education

                         In addition to the health education programs required
                         in Section C.17.4.2, The Contractor shall provide DCHFP
                         health education programs that include, but are not
                         limited to the following topics:

                         C.17.5.2.1 Preventive services for adults, in
                                   particular cervical cancer screens and
                                   mammograms for women;

                         C.17.5.2.2 Routine family planning services, early
                                   pregnancy testing, and early and continuous
                                   prenatal care; and

                         C.17.5.2.3 Treatment for mental health, alcohol and
                                   alcohol and drug abuse.

                         C.17.5.2.4 For DCHFP plans, the Contractor shall
                                   designate a Senior Manager with overall
                                   responsibility for a Utilization Management
                                   Program to assess and substantiate the need
                                   for physical health and mental health
                                   services and to assure the Enrollee receives
                                   the appropriate level of care.

               C.17.4.3  Additional Requirements for Care Coordination

                         In addition to the requirements in Section C.10.4, the
                         Contractor shall establish methods to identify and
                         refer children with special health care needs according
                         to the process described in Section C.17.5.3.3.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         124
--------------------------------------------------------------------------------

<PAGE>

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

                         C.17.5.3.1 DCHFP Contractors shall refer Enrollees in
                                   need of alcohol and drug abuse treatment to
                                   the MAA contracted provider network(s).

                         C.17.5.3.2 The Contractor shall promptly forward any
                                   information that is relevant to the
                                   determination that a child has special health
                                   care needs to the child's PCP. This
                                   information includes but is not limited to
                                   information it receives from MAA, the
                                   Enrollment Broker, from the child or family,
                                   or that the Contractor produces from its own
                                   database.

                         C.17.5.3.3 The Contractor shall require PCPs to
                                   determine whether a child meets the
                                   definition of a child with special health
                                   care needs during initial examination and
                                   assessment, and to report any child
                                   determined to have special health care needs
                                   to the Contractor.

                         C.17.5.3.4 The Contractor shall contract for a board
                                   certified psychiatrist with combined
                                   experience in mental health and alcohol and
                                   drug abuse services, licensed in the
                                   District, to serve as contracted Psychiatric
                                   Medical Director of the Medicaid Managed Care
                                   Program contracted plans. The
                                   responsibilities of the contracted
                                   Psychiatric Medical Director for DCHFP plans
                                   pertain to the mental health delivery system
                                   and coordination with the alcohol and drug
                                   abuse treatment delivery system and include:

                         C.17.5.3.5 Development of mental health clinical
                                   practice standards, policies, procedures, and
                                   performance standards;

                         C.17.5.3.6 Implementation and review of quality of care
                                   programs for mental health services;

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         125
--------------------------------------------------------------------------------

<PAGE>

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

                         C.17.5.3.7 Participation in grievance and appeal
                                   processes related to mental health service
                                   denials and clinical practice;

                         C.17.5.3.8 Development, implementation and review of
                                   the internal quality assurance and
                                   utilization management programs for mental
                                   health services;

                         C.17.5.3.9 Oversight of the referral process for
                                   specialty and out-of-plan mental health
                                   services;

                         C.17.5.3.10 Leadership and direction to the
                                   Contractor's clinical staff in areas of
                                   recruitment, credentialing and privileging
                                   activities of mental health professionals;

                         C.17.5.3.11 Leadership and direction in the
                                   Contractor's prior authorization and
                                   utilization review process of mental health
                                   services;

                         C.17.5.3.12 Leadership and direction of policies and
                                   procedures relating to confidentiality of
                                   mental health clinical records;

                         C.17.5.3.13 Participation in meetings called by MAA and
                                   participation in meetings with the Commission
                                   on Mental Health Services/Dixon Transitional
                                   Receiver;

                         C.17.45.3.14 Ensuring the appropriate staffing levels
                                   of Board Certified child and adolescent
                                   psychiatrists.

                         C.17.5.3.15 For DCHFP plans, the Contractor shall
                                   designate a single Senior Manager, which may
                                   or may not be the contracted Psychiatric
                                   Medical Director, with overall responsibility
                                   for coordinating with MAA on the delivery of
                                   alcohol and drug abuse treatment services.

               C.17.5.4  Children with Special Health Care Needs

                         C.17.5.4.1 The Contractor shall have methods for
                                   producing and disseminating information

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         126
--------------------------------------------------------------------------------

<PAGE>

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

                                   relevant to this determination to PCPs or
                                   other staff capable of making a
                                   determination. This shall include information
                                   supplied by the Enrollment Broker about new
                                   pediatric Enrollees, analysis of claims data
                                   on Enrollees continuing with the Contractor
                                   from the previous contract period, use of
                                   other screening tools, or other valid and
                                   reliable methods.

                         C.17.5.4.2 The Contractor shall have a method for
                                   entering this designation on its clinical
                                   information system to facilitate analysis of
                                   the needs and care patterns of such children.

                         C.17.5.4.3 The Contractor shall participate with MAA
                                   and other plans in collaborative efforts to
                                   identify and adopt best practices for serving
                                   children with special health care needs.

     C.17.6 Quality Improvement

               C.17.6.1 Clinical Initiatives

                         As part of its Quality Improvement program, the
                         Contractor shall undertake clinical initiatives as
                         follows:

               C.17.6.2  The Contractor(s) that have not received an
                         accreditation by the NCQA shall conduct focused quality
                         of care studies in the following clinical areas:

                         a)   Childhood immunizations;
                         b)   Obesity in Children and Adults;
                         c)   Prenatal care and birth outcomes;
                         d)   Pediatric asthma and asthma related disease;
                         e)   Hypertension;
                         f)   Diabetes; and
                         g)   One other area determined by Contractor and
                              approved by MAA.

               C.17.6.3  The Contractor(s) that have received an accreditation
                         by NCQA shall submit their focused quality of care
                         study plans to be conducted during the contract term to
                         the MAA

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         127
--------------------------------------------------------------------------------

<PAGE>

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

                         for review and approval. MAA has the authority to
                         request the specific areas of study.

               C.17.6.4  Any clinical initiatives targeted to areas identified
                         by the United States Department of Health and Human
                         Services in which significant disparities in outcomes
                         of care between ethnic and racial groups have been
                         shown shall evaluate the presence of racial and ethnic
                         differences, analyze their root causes, and develop
                         targeted interventions. Areas for the clinical
                         initiatives include:

                         a)   Infant mortality;
                         b)   Childhood immunizations;
                         c)   HIV disease;
                         d)   Cardiovascular disease;
                         e)   Diabetes; and
                         f)   Cancer screening and management.

               C.17.6.5  The Contractor shall consult with the District of
                         Columbia Department of Health in undertaking these
                         clinical initiatives.

               C.17.6.6  Health Outcomes of Children with Special Health Care
                         Needs

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         128
--------------------------------------------------------------------------------

<PAGE>

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

                         C.17.6.6.1 The Contractor shall analyze the utilization
                                   and health outcomes of the children
                                   identified with special health care needs
                                   during the first six months of the second
                                   year of operation of the health care plan, in
                                   order to identify and propose to MAA
                                   opportunities for improvement of children
                                   with special health care needs.

                         C.17.6.6.2 The clinical quality improvement initiative
                                   for children with special health care needs
                                   shall begin during the second six (6) months
                                   of the second contract year.

                         C.17.6.6.3 During its first year of operation, the
                                   Contractor shall have a method for measuring
                                   the effectiveness of its implementation of
                                   the requirements for coordinating primary and
                                   mental health and alcohol and drug abuse
                                   care.

                         C.17.6.6.4 Based upon initial measurements of
                                   effectiveness of coordinating primary care
                                   and mental health and alcohol and drug abuse
                                   care, the Contractor shall develop
                                   improvement goals, develop interventions,
                                   implement them, and measure their
                                   effectiveness.

                         C.17.6.6.5 The Contractor shall establish a contact
                                   person responsible for communicating with the
                                   MAA designee about the QI initiative to
                                   improve local network capacity for children
                                   in or at risk of residential treatment.

                         C.17.6.6.6 The Contractor shall adopt the practices and
                                   policies developed by this QI initiative in
                                   conducting treatment planning for children in
                                   or at risk of residential treatment and in
                                   making residential treatment placements, or
                                   shall implement equivalent practices and
                                   policies.

     C.17.7 Table of Measures for DCHFP

            The Contractor shall report quarterly on the measures listed below
            in Tables 1 and 2.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         129
--------------------------------------------------------------------------------

<PAGE>

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

                                     Table 1
                 DCHFP Physical Health Care Performance Measures

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                                                   Reporting      Goal        Corrective Action
MEASURE          Eligible Population    Description                Frequency    Progression      Sanctions
--------------------------------------------------------------------------------------------------------------------
<S>              <C>                    <C>                        <C>         <C>            <C>
Early            Women who had a        % of women who             Quarterly   1st Year 65%   Corrective action
Identification   delivery and were      began prenatal care                    2nd Year       plan and sanctions in
of Pregnancy     enrolled 280 days      during first 13 weeks                  75%            the 1st year if
                 prior to delivery      of pregnancy and                       3rd Year       measures is less than
                                        delivered during the                   85%            65% based on the
                 Objective: Early       reporting quarter                                     aggregate MCO
                 identification of                                                            score; in the 2nd year
                 pregnant women                                                               if measure is less
                 using multiple data                                                          than 75% based on
                 sources to increase                                                          the aggregate MCO
                 prenatal services in                                                         score; in the 3rd year
                 the 1st trimester.                                                           if measure is less
                                                                                              than 85% based on
                                                                                              the aggregate MCO
                                                                                              score.
--------------------------------------------------------------------------------------------------------------------
DIABETES
--------------------------------------------------------------------------------------------------------------------
1. Eye Exam      Refer to HEDIS         % of enrollees age 32       Annual     Meet and/or    Corrective action
                 2000 Specifications,   years and older with         HEDIS     exceed         plan and sanctions if
                 page 91                diabetes who received       Report     National       the measure is less
                                        a retinal eye exam in      Measures    and/or         than the National
                                        the reporting year                     Commercial     HEDIS standard for
                                                                               HEDIS          the most recent years
                                                                               measures       reported data.
--------------------------------------------------------------------------------------------------------------------
2. HbA 1c        Refer to HEDIS         % of enrollees age 32       Annual     Meet and/or    Corrective action
   Testing       2000 Specifications,   years and older with         HEDIS     exceed         plan and sanctions if
                 page 91                diabetes who received       Report     National       the measure is less
                                        a at least 1 test in the   Measures    and/or         than the National
                                        reporting year                         Commercial     HEDIS standard for
                                                                               HEDIS          the most recent years
                                                                               measures       reported data.
--------------------------------------------------------------------------------------------------------------------
</TABLE>

--------------------------------------------------------------------------------
CONTRACT NO.: P0sHC-2002-D-0003        130
--------------------------------------------------------------------------------

<PAGE>

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

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
<S>              <C>                    <C>                        <C>         <C>            <C>
BETA             Refer to HEDIS         % of enrollees age 35       Annual     Meet and/or    Corrective action
BLOCKERS         2000 Specifications,   and older hospitalized       HEDIS     exceed         plan and sanctions if
                 page 84                and discharged with         Report     National       the measure is less
                                        the diagnosis of acute     Measures    and/or         than the National
                                        myocardial infarction                  Commercial     HEDIS standard for
                                        who received a                         HEDIS          the most recent years
                                        prescription for beta                  measures       reported data.
                                        blockers
--------------------------------------------------------------------------------------------------------------------
EPSDT*           Medicaid eligible      % of EPSDT Enrollees       Quarterly   85%            Establish benchmarks
                 children age 0-21      receiving EPSDT                                       in the first 90 days of
                                        screen                                                operation. Establish
                                                                                              corrective action plan
                                                                                              and assess financial
                                                                                              penalties in fast year
                                                                                              if performance is less
                                                                                              than 85% of
                                                                                              benchmark.
--------------------------------------------------------------------------------------------------------------------
</TABLE>

*    The Contractor shall comply with all EPSDT requirements as per the Salazar
     court order.

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         131
--------------------------------------------------------------------------------

<PAGE>

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

                                       Table 2
                    DCHFP Mental Health Care Performance Measures

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
                                                     **Quarterly Goal,
Measure                 Description                  Progression         Corrective Action/Sanctions
-------------------------------------------------------------------------------------------------------
<S>                     <C>                          <C>                 <C>
Prenatal Care           % of women who began         1st year 65%        Corrective action plan and
                        prenatal care during first   2nd year 75%        sanctions in the first year if
                        13 weeks of pregnancy        3rd year 85%        measure is less than 65%
                                                                         based on the aggregate
                                                                         MCO score; in the second
                                                                         year if measure is less than
                                                                         75% based on the aggregate MCO
                                                                         score, in the third year if
                                                                         measure is less than 85% based
                                                                         on the aggregate MCO score.
-------------------------------------------------------------------------------------------------------
Eye exam for diabetes   % of Enrollees age 32        1st year 65%        same
                        years and older with         2nd year 75%
                        diabetes who received a      3rd year 85%
                        retinal eye exam in the
                        reporting year
-------------------------------------------------------------------------------------------------------
Beta blockers           % of Enrollees age 35 and    1st year 65%        same
                        older hospitalized and       2nd year 75%
                        discharged with the          3rd year 85%
                        diagnosis of acute
                        myocardial infarction who
                        received a prescription for
                        beta blockers
-------------------------------------------------------------------------------------------------------
</TABLE>

**The progressive percentage goals are based on the DC MAA's belief that a
continuous level of improvement towards 100% compliance best serves the managed
care Medicaid population in providing quality service. Sanctions will be
implemented based on the MCO's rating as compared to the aggregate average of
all MCO's for the category. DC MAA reserves that right to evaluate each MCO's
incremental progress in meeting the Physical Health Care Performance Measures
weighing the totally of performance and efforts to enhance compliance.

                 REMAINDER OF THIS PAGE LEFT INTENTIONALLH BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         132
--------------------------------------------------------------------------------

<PAGE>

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

               C.17.7.1  Quality Improvement Reports

                         C.17.7.1.1 The Contractor shall submit to the MAA the
                                   following information relating to the quality
                                   assurance activities described in this
                                   section as they occur during the term of the
                                   contract:

                                   a)   Descriptions of, and results obtained
                                        from, clinical studies and analyses of
                                        the quality and appropriateness of care;
                                        and
                                   b)   Copies of the questionnaires used by the
                                        Contractor to conduct consumer and
                                        provider satisfaction studies and
                                        memoranda and analyses regarding the
                                        results of such studies in accordance
                                        with Section F.4.

C.18 RESERVED.

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         133
--------------------------------------------------------------------------------

<PAGE>

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

                        SECTION D - PACKAGING AND MARKING

D.   Packaging and Marking ..................................................135

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         134
--------------------------------------------------------------------------------

<PAGE>

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

                                    Section D

D. PACKAGING AND MARKING

     D.1.1 Packing and Marking

               D.1.1.1   The Contractor shall package and mark all deliverables
                         in such a manner that will ensure acceptance by common
                         carrier and safe delivery at the destination.

     D.1.2 Address

               D.1.2.1   Unless otherwise specified, all deliverables under this
                         contract will be shipped prepaid, FOB Destination, to
                         the following address:

                              Department of Health
                              Medical Assistance Administration
                              Managed Care Administration
                              Fifth Floor
                              825 North Capitol Street, NE
                              Washington, DC 20002

     D.1.3 All reports shall prominently show on the cover of the report:

               (1)  name and business address of the contractor
               (2)  contract number
               (3)  contract dollar amount

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         135
--------------------------------------------------------------------------------

<PAGE>

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

                      SECTION E - INSPECTION AND ACCEPTANCE

E.   Inspection and Acceptance....................................

E.l  Inspection of Work Performed.................................

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         136
--------------------------------------------------------------------------------

<PAGE>

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

                                    Section E

E.   INSPECTION AND ACCEPTANCE

E.l  Inspection of Work Performed

     E.1.1 Right to Enter Premises

          The Medical Assistance Administration or any authorized representative
          of the District of Columbia, the U.S. Department of Health and Human
          Services, the U.S. Comptroller General, the U.S. General Accounting
          Office, or their authorized representative shall, at all reasonable
          times, have the right to enter the Contractor's premises or such other
          places where duties under this contract are being performed to
          inspect, monitor, or otherwise evaluate (including periodic systems
          testing) the work being performed. The Contractor and all
          subcontractors shall provide reasonable access to all facilities and
          assistance to the District and federal representatives. All
          inspections and evaluations shall be performed in such a manner as
          will not unduly delay work.

     E.l.2 Inspection of Supplies: See Section I.4 regarding the requirements
     related to Inspection of Supplies.

     E.l.3 Inspection of Services: See Section I.5 regarding the requirements
     related to Inspection of Services.

     E.l.4 Inspection and Acceptance-Destination: Inspection and acceptance of
     the supplies/services to be furnished hereunder shall be made at
     destination by the Contracting Officer Technical Representative (COTR) or
     his/her duly authorized representative.

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         137
--------------------------------------------------------------------------------

<PAGE>

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

                      SECTION F - DELIVERIES OR PERFORMANCE

F.    Term of Contract ...................................................   139

F.l   Base Period ........................................................   139
F.2   The Per Member Per Month (PMPM) rate for the option period
      shall be as specified in the contract ..............................   139
F.3   Implementation Plan Deliverables ...................................   139
F.4   Comprehensive Reporting Requirements ...............................   141
F.5   Deliverables - Submission and Acceptance ...........................   149
F.6   Notice of Disapproval ..............................................   149
F.7   Resubmission with Corrections ......................................   149
F.8   Notice of Approval/Disapproval of Resubmission .....................   149
F.9   MAA Fails to Respond ...............................................   149
F.10  Representations ....................................................   149

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         138
--------------------------------------------------------------------------------

<PAGE>

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

                                    Section F

F.   TERM OF CONTRACT

F.l  BASE PERIOD

     F.1.1 The period of performance of this contract shall be from date of
     award through October 31, 2002.

               F.l.l.l   The District may extend the terms of this contract by
                         exercising up to four (4) one year options periods.

               F.l.l.2   The exercise of an option is subject to the
                         availability of funds at the time of the option period.

     F.l.2 Option to Extend the Term of the Contract

               F.l.2.1   The District may extend the term of this contract for a
                         period of one (1) year or multiple successive fractions
                         thereof, by written notice to the Contractor before the
                         expiration date of the contract. The District will give
                         the Contractor a preliminary written notice of its
                         intent to extend at least thirty (30) days before the
                         contract expires. The preliminary notice does not
                         commit the District to an extension. The Contractor may
                         waive the thirty (30) day notice requirements by
                         providing a written notice to the Contracting Officer
                         prior to expiration of the contract.

F.2  The Per Member Per Month (PMPM) Rate for the Option Period Shall be as
     Specified in the Contract.

     F.2.1 If the District exercises this option, the extended contract shall be
     considered to include this option provision.

     F.2.2 Maximum Duration of Contract Option

               F.2.2.1   The total duration of the contract including the
                         exercise of the exercise of any options, shall not
                         exceed five (5) years.

F.3 Implementation Plan Deliverables

     The Offeror shall submit the following deliverables for the DCHFP
     initiative.

     The table below indicates the deliverables that are required.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         139
--------------------------------------------------------------------------------

<PAGE>

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

                                     Table 4

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
[Illegible]                                 [Illegible]               [Illegible]
----------------------------------------------------------------------------------------------
<S>                                         <C>           <C>
Member Handbook/other                       X             Final 30 days after contract signing
Enrollment Materials (i.e., provider                      date.
directory)
----------------------------------------------------------------------------------------------
EPSDT description for Enrollees             X             Final 30 days after contract signing
                                                          date.
----------------------------------------------------------------------------------------------
Network Refinements Plan                                  60 days after contract signing date.
----------------------------------------------------------------------------------------------
Provider Manual including provider          X             Final 10 days after contract signing
policies and medical necessity                            date.
criteria
----------------------------------------------------------------------------------------------
List of designated contacts and             X             60 days after contract signing date.
MOU for the following agencies:

..    DC Public Schools, Special
     Education
..    Dept. of Human Services Early
     Intervention Program,
..    Child and Family Services
     Agency/LaShawn Receiver
..    Dept. of Human Services Youth
     Services Administration
..    Commission on Mental Health
     Services/Dixon Transitional Receiver
----------------------------------------------------------------------------------------------
Quality Improvement Plan                    X             Final 45 days after contract signing.
                                                          Updates annually 30 days after start
                                                          of each contract year
----------------------------------------------------------------------------------------------
Standards for identification of             X             Final 15 days after contract signing
children with special health care
needs
----------------------------------------------------------------------------------------------
Reports on Performance Measures             X             Quarterly
as specified in Sections C. 17.7 and
Section C. 18.7
----------------------------------------------------------------------------------------------
Reporting Requirements specified            X             Per schedule in Section F.4
in Section F.4
----------------------------------------------------------------------------------------------
</TABLE>

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         140
--------------------------------------------------------------------------------

<PAGE>

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

F.4  Comprehensive Reporting Requirements

     F.4.1 The Contractor shall submit the deliverables cited below for MAA
     acceptance and approval. Table 5 indicates which reports are required for
     the DCHFPs.

     F.4.2. The Contractor shall submit reports to the COTR according to the
     following timelines, unless other wise indicated below:

               F.4.2.1   Annual reports shall be submitted within thirty (30)
                         days following the twelfth month after the contract
                         start date;

               F.4.2.2   Bi-annual reports shall be submitted thirty (30) days
                         following each six month interval following the
                         contract start date;

               F.4.2.3   Quarterly Reports shall be submitted within thirty (30)
                         days following the end of the preceding quarter by
                         April 30, July 30, October 30, and January 30;

               F.4.2.4   Monthly reports shall be submitted within thirty (30)
                         days following the end of each month; and

               F.4.2.5   Failure to submit timely, accurate reports may result
                         in sanctions and liquidated damages described in
                         Section G.7 and Section G.8.

     F.4.3. The Contractor shall ensure that any reports that contain
     information about individuals which are protected by privacy laws shall be
     prominently marked as confidential and submitted to MAA in a fashion that
     ensures that unauthorized individuals do not have access to the
     information. No such reports shall be made public by the Contractor.

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         141
--------------------------------------------------------------------------------

<PAGE>

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

                                     Table 5
                         Reporting Requirements Summary

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
                                                      Reporting
Aspect Of Care And Report                     DCHFP   Schedule      Source
---------------------------------------------------------------------------------------
<S>                                           <C>     <C>           <C>
I. MCO's Capacity To Provide Services
---------------------------------------------------------------------------------------
Number of Medicaid PCPs and Dentists          X       Quarterly     Contractor database
.. With fully open panels                                            NCQA
.. With partially restricted panels
.. Who are Specialists authorized to serve
  as PCPs
---------------------------------------------------------------------------------------
PCPs by zip code of office locations          X       Quarterly     Contractor database
---------------------------------------------------------------------------------------
New Enrollee assignments to PCPs              X       Quarterly     Contractor database

---------------------------------------------------------------------------------------
Number of mental health practitioners         X       Quarterly     Contractor database
.. With open panels
.. With partially restricted panels
---------------------------------------------------------------------------------------
II. Access to Care
---------------------------------------------------------------------------------------
Penetration: number of Enrollees receiving    X       Quarterly     Claims data
any health service per 1,000 member                   and
months                                                Annually
---------------------------------------------------------------------------------------
Reserved
---------------------------------------------------------------------------------------
Time between request for service and          X       Bi-annually   Survey Data
scheduling of appointment for:
.. Physical health care
.. Specialty health care
Mental health
.. Within 7 days
.. Within 14 days
.. Within 21 days
.. Beyond 30 days
---------------------------------------------------------------------------------------
Availability and utilization of language      X       Bi-annually   Contractor database
interpretation services.                                            Current HEDIS
                                                                    Requirement
---------------------------------------------------------------------------------------
Mental Health Care Benefit Expenditures       X       Quarterly     Claims data

---------------------------------------------------------------------------------------
III. Process of Care
---------------------------------------------------------------------------------------
Preventive and Ambulatory Services
---------------------------------------------------------------------------------------
Health Education Activities Summary           X       Quarterly     Contractor
                                                                    documentation
---------------------------------------------------------------------------------------
</TABLE>

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         142
--------------------------------------------------------------------------------

<PAGE>

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

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
                                                      Reporting
Aspect Of Care And Report                     DCHFP   Schedule      Source
---------------------------------------------------------------------------------------
<S>                                           <C>     <C>           <C>
.. Number of Enrollees due for an EPSDT        X       Quarterly     Encounter Data and
  service                                                           EPSDT tracking
.. Number of Enrollees who received all                              system
  scheduled EPSDT services Number who                               HCFA
  received any dental service
.. Number who completed dental treatment
---------------------------------------------------------------------------------------
Percentage of enrolled children screened      X       Quarterly     EPSDT tracking
for mental health/alcohol and drug abuse                            system and
needs                                                               encounter data
---------------------------------------------------------------------------------------
.. Childhood immunization status               X       Quarterly     EPSDT tracking
.. Adolescent immunization status                                    system and
                                                                    encounter data
                                                                    Current HEDIS
                                                                    Requirement NCQA
---------------------------------------------------------------------------------------
Number and rate of lead screening             X       Quarterly     Claims data
---------------------------------------------------------------------------------------
Percentage of adults screened for mental      X       Annually      Chart reviews
health/alcohol and drug abuse needs                                 Contractor database
---------------------------------------------------------------------------------------
Cancer screening                              X       Annually      Encounter data
.. Breast cancer                                                     Current HEDIS
.. Cervical cancer                                                   Requirement
---------------------------------------------------------------------------------------
Prenatal, Perinatal and Newborns
---------------------------------------------------------------------------------------
Prenatal care visit for each trimester of     X       Quarterly     Claims data
pregnancy                                                           Current HEDIS
                                                                    Requirement NCQA
---------------------------------------------------------------------------------------
First prenatal care visit within six weeks    X       Quarterly     Claims data
of enrollment                                                       NCQA
---------------------------------------------------------------------------------------
Check-ups after delivery                      X       Quarterly     Claims data
                                                                    Current HEDIS
                                                                    Requirement NCQA
---------------------------------------------------------------------------------------
Number of live births and average length      X       Quarterly     Claims data
of stay for all, well and complex newborns                          Current HEDIS
                                                                    Requirement NCQA
---------------------------------------------------------------------------------------
Cesarean section rate, VBAC, days and         X       Quarterly     Claims data
ALOS for deliveries                                                 Current HEDIS
                                                                    Requirement NCQA
---------------------------------------------------------------------------------------
Time from birth to first outpatient visit     X       Monthly       Claims data
for newborn
---------------------------------------------------------------------------------------
Specialty Care
---------------------------------------------------------------------------------------
</TABLE>

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         143
--------------------------------------------------------------------------------

<PAGE>

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

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
                                                      Reporting
Aspect Of Care And Report                     DCHFP   Schedule      Source
---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------
<S>                                           <C>     <C>           <C>
Number of encounters by age group and         X       Quarterly     Claims data
specialty-Unduplicated Enrollees
---------------------------------------------------------------------------------------
Diabetes Care
---------------------------------------------------------------------------------------
Eye exams for people with diabetes            X       Quarterly     Encounter data
                                                                    NCQA
---------------------------------------------------------------------------------------
Comprehensive diabetes care                   X       Annually      Encounter data
                                                                    Voluntary Current
                                                                    HEDIS
                                                                    Requirement
---------------------------------------------------------------------------------------
Asthma Care
---------------------------------------------------------------------------------------
ER visits for asthma per 1,000 Enrollees      X       Monthly       Encounter data
---------------------------------------------------------------------------------------
Cardiac Care
---------------------------------------------------------------------------------------
Beta Blocker treatment after heart attack     X       Bi-Annually   Encounter data
                                                                    Current HEDIS
                                                                    Requirement
---------------------------------------------------------------------------------------
Cholesterol management after acute            X       Quarterly     Encounter data
cardiovascular events                                               Current HEDIS
                                                                    Requirement
---------------------------------------------------------------------------------------
Hospital Care
---------------------------------------------------------------------------------------
Hospital discharges and days/1,000            X       Quarterly     Claims data
member months                                                       NCQA
---------------------------------------------------------------------------------------
Number of hospital admissions for:            X       Annual        Encounter data
Ambulatory care
Sensitive conditions
---------------------------------------------------------------------------------------
Emergency Room
---------------------------------------------------------------------------------------
Number of ER denials/1,000 member             X       Monthly       Encounter data
months                                                              NCQA
---------------------------------------------------------------------------------------
Number of ER approvals/ 1,000 member          X       Bi Annually   Encounter Data
months                                                              NCQA
---------------------------------------------------------------------------------------
Injury related admissions                     X       Bi Annually   Encounter data
---------------------------------------------------------------------------------------
Inpatient Mental Health/Substance Abuse
---------------------------------------------------------------------------------------
Psychiatric Inpatient re-admissions within    X       Quarterly     Claims data
30 days
---------------------------------------------------------------------------------------
Number of denied inpatient psychiatric        X       Monthly       Claims data
days/1,000 member months by reason
---------------------------------------------------------------------------------------
Outpatient Mental Health
---------------------------------------------------------------------------------------
Number of outpatient mental health visits     X       Quarterly     Encounter data
by provider type, number of unduplicated              and           Current HEDIS
clients by age, and average visits per client         Annually      Requirement
---------------------------------------------------------------------------------------
</TABLE>

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         144
--------------------------------------------------------------------------------

<PAGE>

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

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
                                                      Reporting
Aspect Of Care And Report                     DCHFP   Schedule      Source
---------------------------------------------------------------------------------------
<S>                                           <C>     <C>           <C>
Follow-up after hospitalization for mental    X       Annually      Claims data,
illness                                                             Current HEDIS
                                                                    Requirement
---------------------------------------------------------------------------------------
Residential Treatment
---------------------------------------------------------------------------------------
Number of admissions to residential           X       Quarterly     Claims data
treatment/1,000 member months
.. Number of in-area admissions
.. Number of admissions out-of-area
---------------------------------------------------------------------------------------
Number of days in residential treatment per   X       Quarterly     Claims data
1,000 member months and average length
of stay per discharge
.. Distribution and average length of stay
  for all current placements
.. Disposition of discharges
---------------------------------------------------------------------------------------
Percentage of requests for residential care   X       Quarterly     Authorization data
diverted
.. Disposition of diversion
---------------------------------------------------------------------------------------
Readmission within 30 days of adolescents     X       Quarterly     Claims data
discharged from residential care
.. To residential only
.. To residential or psychiatric inpatient
---------------------------------------------------------------------------------------
Other Institutional Care
---------------------------------------------------------------------------------------
Log of children in institutional care during  X       Monthly       Contractor database
the month indicating name, ID, facility
(other than acute hospitals and residential
treatment facilities), primary treatment
need, date of admission, total days to date,
discharge potential, target discharge date,
date of discharge, discharge disposition
---------------------------------------------------------------------------------------
Pharmacy
---------------------------------------------------------------------------------------
Summary Statistics to include the             X       Monthly       Contractor
following, provided by Category of Aid:                             pharmacy claims
.. # Prescriptions per 1,000 members                                 database
.. # Utilizing Members
.. % Single source drugs (based on number
  of prescriptions)
.. Average cost per generic prescription
---------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         145
--------------------------------------------------------------------------------

<PAGE>

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

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
                                                       Reporting
Aspect of Care And Report                      DCHFP   Schedule      Source
---------------------------------------------------------------------------------------
<S>                                            <C>     <C>           <C>
Number of Drug Claims Rejected (due to         X       Monthly       Contractor
Prior Authorization and/or non-formulary                             pharmacy claims
status)                                                              database
Number of rejected claims for which Prior
Authorization was immediately secured
---------------------------------------------------------------------------------------
Top 100 drugs (by drug name, not NDC)          X       Quarterly     Contractor
based on total cost                                                  pharmacy claims
Includes drug cost, amount paid, #                                   database
prescriptions, average cost per prescription
and PMPM cost)
---------------------------------------------------------------------------------------
Top 100 drugs (by drug name, not NDC)          X       Quarterly     Contractor
based on number of prescriptions                                     pharmacy claims
Includes drug cost, amount paid, #                                   ease
prescriptions, average cost per prescription
and PMPM cost)
---------------------------------------------------------------------------------------
Therapeutic Class Summary Report               X       Quarterly     Contractor
Includes drug cost, amount paid, #                                   pharmacy claims
prescriptions, average cost per prescription                         database
and PMPM cost in descending cost order.
---------------------------------------------------------------------------------------
IV. Quality Management
---------------------------------------------------------------------------------------
Provider Profiling Reports                     X       Annually      Contractor database
---------------------------------------------------------------------------------------
Medical Necessity Criteria                     X       As            Contractor database
                                                       requested by
                                                       MAA
---------------------------------------------------------------------------------------
Formulary (if any)                             X       Annually/     Contractor database
                                                       Changes
                                                       submitted
                                                       Quarterly
---------------------------------------------------------------------------------------
Serious incident summary                       X       Quarterly     Contractor database
---------------------------------------------------------------------------------------
Summary of chart reviews                       X       Quarterly     Chart reviews
---------------------------------------------------------------------------------------
Comprehensive identification of enrolled       X       Monthly       Contractor database
children with special healthcare needs
---------------------------------------------------------------------------------------
Report on clinical initiatives                 X       Annually      Contractor database
---------------------------------------------------------------------------------------
V.Administrative Reports
---------------------------------------------------------------------------------------
</TABLE>

--------------------------------------------------------------------------------
CONTRACT NO.: P0HG-2002-D-0003         146
--------------------------------------------------------------------------------

<PAGE>

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

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                                                        Reporting
Aspect of Care And Report                       DCHFP   Schedule         Source
---------------------------------------------------------------------------------------------
<S>                                             <C>     <C>              <C>
Changes made to policies and procedures         X       Annually,        Contractor database
.. Marketing plans/marketing materials                   except
.. Utilization review activities                         material
.. Provider procedure manuals                            changes to
.. Quality improvement program                           be reported
.. Claims payment                                        prior to
                                                        implementation
                                                        of
                                                        policy
---------------------------------------------------------------------------------------------
Percentage of new Enrollees who attended        X       Bi-annually      Contractor database
an orientation or received a telephone or at-
home orientation
---------------------------------------------------------------------------------------------
.. Claims processing                             X       Quarterly        Contractor database
.. Claims aging report
.. Claims paid
.. Claims denied
.. Claims pended
.. Average days from receipt to
  adjudication
---------------------------------------------------------------------------------------------
Third party liability reports                   X       Quarterly,       Contractor database
---------------------------------------------------------------------------------------------
Independent Audit of Physician Incentive        X       Annually 30      Independent Audit
Plan                                                    days prior to
                                                        renewal of
                                                        contract
---------------------------------------------------------------------------------------------
Total Contractor enrollment, all lines of               Quarterly        Contractor database
business
---------------------------------------------------------------------------------------------
VI.MCO Financial Status
---------------------------------------------------------------------------------------------
Medicaid-only financial statements,             X       Quarterly        Contractor database
including balance sheets and Income
Statements by Category of Aid
.. Total revenues
.. Medical expenses
.. Incurred but not reported medical
  expense estimate
.. Administrative expenses
---------------------------------------------------------------------------------------------
Independent audited financial statements        X       Annually         Contractor database
plan-wide and DC Medicaid members
---------------------------------------------------------------------------------------------
VII: Member Satisfaction
---------------------------------------------------------------------------------------------
</TABLE>

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         147
--------------------------------------------------------------------------------

<PAGE>

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

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
                                                        Reporting
Aspect of Care And Report                    DCHFP      Schedule         Source
--------------------------------------------------------------------------------------------
<S>                                          <C>        <C>              <C>
Number and rate of Enrollees who change      X          Quarterly        Contractor
PCPs                                                                     Database
--------------------------------------------------------------------------------------------
Number of complaints by type                 X          Monthly          Contractor
                                                                         Database
--------------------------------------------------------------------------------------------
Number of grievances and appeals filed by    X          Monthly          Contractor
type and disposition                                                     Database
--------------------------------------------------------------------------------------------
Number of expedited grievances requested     X          Monthly          Contractor
                                                                         Database
--------------------------------------------------------------------------------------------
Average length of time required to process              Monthly          Contractor
expedited grievances in days)                                            Database
--------------------------------------------------------------------------------------------
Health plan member services telephone        X          Quarterly        Contractor
abandonment rate                                                         Database
--------------------------------------------------------------------------------------------
Health plan member services telephone        X          Quarterly        Contractor
average speed of answer                                                  Database
--------------------------------------------------------------------------------------------
Enrollee satisfaction survey results         X          Annually         Survey Data
--------------------------------------------------------------------------------------------
VIII. Provider Satisfaction
--------------------------------------------------------------------------------------------
Rate of PCP turnover                         X          Annually         Contractor database
                                                                         Current HEDIS
                                                                         Requirement
--------------------------------------------------------------------------------------------
Summary of Provider Satisfaction Survey      X          Annually         Survey data
Results
--------------------------------------------------------------------------------------------
</TABLE>

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         148
--------------------------------------------------------------------------------

<PAGE>

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

     Deliverables - Submission and Acceptance

     F.5.l Due Dates

               F.5.l.l   The Contractor shall perform its tasks and produce the
                         required Deliverables by the due dates presented in
                         Section F.3. and Section F.4.

F.6 Notice of Disapproval

     F.6.1 MAA shall provide written notice of disapproval of a Deliverable to
     the Contractor within thirty (30) days of submission if it is disapproved.
     The notice of disapproval shall state the reasons for disapproval as
     specifically as is reasonably necessary and the nature and extent of the
     corrections required for meeting the Contract requirements.

     Resubmission With Corrections

     F.7.1 Within fourteen (14) business days after receipt of a notice of
     disapproval, the Contractor shall make the corrections and resubmit the
     Deliverable.

     Notice of Approval/Disapproval of Resubmission

     F.8.1 Within thirty (30) business days following resubmission of any
     disapproved Deliverable, the MAA Contract Administrator shall give written
     notice to the Contractor of the Medical Assistance Administration's
     approval, conditional approval or disapproval.

     MAA Fails to Respond

     In the event that MAA fails to respond to a Contractor's resubmission
     within the applicable time period, the Contractor may elect either of the
     following two (2) courses:

               F.9.1.1   Notify MAA in writing that it intends to proceed with
                         subsequent work unless MAA provides written notice of
                         disapproval within fourteen (14) days from the date MAA
                         receives the Contractor's notice.

               F.9.1.2   Notify MAA that it intends to delay subsequent work
                         until MAA responds in writing to the resubmission.

     Representations

     F.10.1 By submitting a Deliverable, the Contractor represents that to the
     best of its knowledge, it has performed the associated tasks in a manner
     that will, in concert with other tasks, meet the objectives stated or
     referred to in the Contract. By approving a Deliverable, the MAA represents
     only that it has reviewed the Deliverable and detected no errors or
     omissions of sufficient gravity to defeat or substantially threaten the
     attainment of those objectives and to warrant the

--------------------------------------------------------------------------------
CONTRACT NO.:P0HC-2002-D-0003          149
--------------------------------------------------------------------------------

<PAGE>

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

     withholding or denial of payment for the work completed. MAA's acceptance
     of a Deliverable does not discharge any of the Contractor's contractual
     obligations with respect to that Deliverable, or to the quality,
     comprehensiveness, functionality, effectiveness or certification of the
     District of Columbia MAA as a whole.

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.:P0HC-2002-D-0003          150
--------------------------------------------------------------------------------

<PAGE>

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

                    SECTION G - CONTRACT ADMINISTRATION DATA

G.    Contract Administration Data........................................   152

G.1   Capitation Rate.....................................................   152
G.2   Other Payment Provisions............................................   152
G.3   Reserved ...........................................................   153
G.4   Upper Payment Limit ................................................   153
G.5   Provision for Adjustment of Rate ...................................   153
G.6   Right to Withhold Payment ..........................................   153
G.7   Sanctions...........................................................   153
G.8   Liquidated Damage Amounts:..........................................   153
G.9   Co-Payment Prohibition .............................................   155
G.10  Authority of Contracting Officer....................................   155
G.11  Authorized Changes Only by the Contracting Officer .................   156
G.12  Contracting Officer Technical Representative (COTR).................   156
G.13  Continuity of Services .............................................   157

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.:P0HC-2002-D-0003          151
--------------------------------------------------------------------------------

<PAGE>

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

                                    Section G

G.   CONTRACT ADMINISTRATION DATA

     The District will pay the Contractor in accordance with its 1915 (b)
     waiver, a prospective monthly capitation rate for each Medicaid Managed
     Care Program Enrollee that is enrolled with the Contractor on the first day
     of each month.

G.1  Capitation Rate

     G.1.1 Monthly Payments

               G.1.1.1   The District will make monthly capitation payments to
                         the selected Contractors as compensation for covered
                         services provided to DCHFP Enrollees in each contracted
                         DCHFP and Enrollment for each month is finalized by the
                         fifteenth (15th) of the prior month, and a final
                         enrollment list for the designated month, including all
                         continuing Enrollees and those whose enrollment will
                         begin on the first of that month is submitted to each
                         Contractor by the 20th of the prior month. The monthly
                         capitation payment will be based on this final
                         enrollment list and the applicable PMPM rate. The
                         Contractor shall reconcile each month's final
                         enrollment list submitted by MAA with its own records,
                         and shall report any discrepancies to MAA within thirty
                         (30) days of receipt.

     G.1.2 If an Enrollee reaches a birthday that results in a change in rate
          cell or ends coverage under this agreement, or is disenrolled for any
          reason, the District will terminate payments to the Contractor for
          that Enrollee effective the last day of the month in which the
          disenrollment becomes effective. New rates shall begin in the month
          following the birthday.

     G.1.3 Because the capitation payment will be calculated based on the number
          of Enrollees on the first day of each month, no adjustments will be
          made for members who are enrolled after the beginning of the month's
          payment or disenrolled after the beginning of the month's payment
          cycle.

G.2  Other Payment Provisions

     G.2.1 Basis for Payment

               G.2.1.1   The District will provide a remittance advice to the
                         Contractor on or before the first of the month that
                         shall serve as the basis for determining payment for
                         the month.

--------------------------------------------------------------------------------
CONTRACT NO.:P0HC-2002-D-0003          152
--------------------------------------------------------------------------------

<PAGE>

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

     Reserved

     Upper Payment Limit

     Payments to Contractor shall not exceed the upper payment limits as defined
     in 42 C.F.R.447.36l.

     Provision for Adjustment of Rate

     G.5.1 In the event that the District, pursuant to the Changes Clause of the
          Standard Contract Provisions, adds, deletes or changes any services to
          be covered by the Contractor under a DCHFP, the District will review
          the effect of the change and equitably adjust the capitation rate
          (either upwards or downwards) if appropriate. In the event a
          capitation rate adjustment needs to be made prospectively, an
          actuarial calculation will be made by the District to determine the
          increase or decrease in the total cost of care from the instituted
          change. If required, the adjusted rate will be applied by the
          District. The Contractor may request a review of the program with
          assumptions discussed with Contractor's change if it believes the
          program change is not equitable; the District will not unreasonably
          withhold such a review.

     Right to Withhold Payment

     G.6.1 The District reserves the right to withhold and/or recoup funds from
          the Contractor in accordance with any remedies allowed under the
          Contract or any policies and procedures.

     G.6.2 The District may withhold portions of capitation payments from health
          plans as provided in Section G.8, and elsewhere in the contract. When
          the Medical Assistance Administration has determined that the health
          plan has failed to provide one or more medically necessary services as
          defined in Section C.8.1, the District may withhold an estimated
          portion of the health plan's capitation payment in subsequent months.

     Sanctions

     G.7.1 In addition to any other remedies available to the District, the
          District may impose sanctions against the Contractor for poor
          performance or noncompliance with contract terms by the Contractor or
          its subcontracted providers.

     G.7.2 Any recoup or. sanctions imposed by the federal government to the
          District, that is related to the Contractor's non-compliance of any
          part of the Contract, may be passed to the Contractor.

     G.7.3 The Contractor shall be responsible for any fines of sanctions
          imposed upon the District by the courts in which the Contractors
          failure to meet the requirements of Salazar v. The District of
          Columbia et al, or the contract.

     Liquidated Damage Amounts

     G.8.1 Liquidated damages are set forth in the following table:

--------------------------------------------------------------------------------
CONTRACT NO.:P0HC-2002-D-0003          153
--------------------------------------------------------------------------------

<PAGE>

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

                                     Table 6

----------------------------------------------------------------------------
Contract Provision Violated                               Liquidated Damages
----------------------------------------------------------------------------
Medically Necessary Services, Section C.8.1                       4*
----------------------------------------------------------------------------
Contract provisions related to administrative
responsibilities                                                  1*
----------------------------------------------------------------------------
Contract provisions related to other access and quality
of care requirements.                                             2*
----------------------------------------------------------------------------
Failure to submit reports and late reporting                      3*
----------------------------------------------------------------------------
Denial of services based upon cost of services,
Section C.10.1.11                                                 2*
----------------------------------------------------------------------------

1*   Up to 1% of one monthly capitation payment for each month or fraction
     thereof in which the violation occurs.
2*   Up to 2% of one monthly capitation payment for each month or fraction
     thereof in which the violation occurs.
3*   Up to .5% of one monthly capitation payment for each month or fraction
     thereof in which the violation occurs.
4*   Up to 3% of one monthly capitation payment for each month or fraction
     thereof in which the violation occurs.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         154
--------------------------------------------------------------------------------

<PAGE>

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

     G.8.2 Written notice shall be provided by the Contracting Officer to the
          Contractor specifying the sanctions proposed, the grounds for the
          liquidated damage, identification of any subcontracted providers
          involved in the violation, the amount of funds to be withheld from
          payments to the Contractor and steps necessary to avoid future
          sanctions.

     G.8.3 The Contractor shall complete all steps necessary to correct the
          violation and to avoid future sanctions within the time frame
          established by the District in the notice of sanctions. Following the
          notice of sanctions, a full month's sanctions are due for the first
          month or any portion of a month during which the Contractor, or its
          subcontracted provider, is in violation. For any subsequent month, or
          portion of month, during which the Contractor, or its subcontracted
          providers, remains in violation, the District will impose additional
          sanctions.

     G.8.4 The District will have the right to offset against any payments due
          the Contractor until the full sanctions amount is paid. The Contractor
          has the right to appeal such adverse action in accordance with the
          dispute clause of the contract.

     Co-Payment Prohibition

     Contractor shall not impose co-payment requirements or other fees on
     Enrollees except as directed to do so by MAA, in accordance with the
     District's approved Medicaid waiver.

     Authority of Contracting Officer

     G.10.1 Contracting Officer

               G.10.l.l  Authority and responsibility to contract for authorized
                         supplies and services are vested in the Director,
                         Office of the Contracting and Procurement, who
                         establishes contracting activities and delegates to
                         heads of such contracting activities broad authority to
                         manage the agency's contracting functions. Contracts
                         may be entered into and signed on behalf of the
                         District Government only by contracting officers. The
                         address and telephone number of the Contracting Officer
                         for this contract is:

                              Ms. Esther Scarborough, Agency Chief
                              Contracting Officer
                              Department of Health
                              Office of Contracting and Procurement
                              441- 4th Street, NW
                              Suite 800 South
                              Washington, DC 20001
                              (202) 724-2144

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         155
--------------------------------------------------------------------------------

<PAGE>

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

     Authorized Changes Only by the Contracting Officer

     G.11.1 The Contracting Officer is the only person authorized to approve
          changes elsewhere in this contract.

     G.11.2 The Contractor shall not comply with any order, directive or request
          that changes or modifies the requirements of this contract, unless
          issued in writing and signed by the Contracting Officer, or pursuant
          to specific authority otherwise included as part of this contract.

     G.11.3 In the event the Contractor effects any change at the direction of
          any person other than the Contracting Officer, the change will be
          considered to have been made without authority and no adjustment will
          be made in the contract price to cover any cost increase incurred as a
          result thereof.

     Contracting Officer Technical Representative (COTR)

     G.12.1 The Contracting Officer Technical Representative (COTR) will have
          the responsibility of ensuring the work conforms to the requirements
          of this contract and such other responsibilities and authorities as
          may be specified in the contract. These may include:

     G.12.2 Keeping the Contracting Officer (CO) fully informed of any technical
          or contractual difficulties encountered during the performance
          period and advising the CO of any potential problem areas under the
          contract;

     G.12.3 Coordinating site entry for Contractor personnel, if applicable;

     G.12.4 Reviewing vouchers for cost-reimbursement type work and recommend
          approval by the CO if the Contractor's cost are consistent with the
          negotiated amounts and progress is satisfactory and commensurate with
          the rate of expenditure;

     G.12.5 Reviewing and approving invoices for deliverables to ensure receipt
          of goods and services. This includes the timely processing of invoices
          and vouchers in accordance with the District's Payment provisions; and

     G.12.6 Maintaining a file that includes all contract correspondence,
          modifications, records of inspections (site, data, equipment) and
          invoices/vouchers.

     G.12.7 It is understood and agreed, in particular, that the COTR shall not
          have the authority to:

     G.12.8 Award, agree to, or sign any contract, delivery order or task order.
          Only the CO shall make contractual agreements, commitments, or
          modifications;

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         156
--------------------------------------------------------------------------------

<PAGE>

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

     G.12.9 Grant deviations from or waive any of the terms and conditions of
          the contract;

     G.12.10 Increase the dollar limit of the contract or authorize work beyond
          the dollar limit of the contract, or authorize the expenditure of
          funds by the Contractor;

     G.12.11 Change the period of performance; and

     G.12.12 Authorize the furnishing of District property, except as specified
          under the contract.

     G.12.13 The address and telephone number of the Contracting Officer
          Technical Representative for this contract is:

               Maude Holt
               Administrator, Office of Managed Care
               Medical Assistance Administration
               825 North Capitol Street, NE
               Washington, DC 20002
               Telephone: (202) 442-9074
               Technical Direction

G.13 Continuity of Services

     G.13.1 The Contractor recognizes that the services provided under this
          contract are vital to the District of Columbia and shall be continued
          without interruption and that, upon contract expiration or
          termination, a successor, either the District Government or another
          contractor, at the District's option, may continue to provide these
          services. To that end, the Contractor agrees to:

               G.13.1.1  Furnish phase-out, phase-in (transition) training; and

               G.14.1.2  Exercise its best efforts and cooperation to effect an
                         orderly and efficient transition to a successor.

     G.13.2 The Contractor shall, upon the Contracting Officer's written notice,
          furnish transition services for up to one hundred twenty (120) days
          after this contract expires and negotiate in good faith a plan with a
          successor that identifies the nature and extent of transition services
          required.

     G.13.3 The Contractor shall provide, during the said transition period,
          sufficient experienced personnel to ensure that the services provided
          under this contract are maintained at the required level of
          effectiveness and efficiency.

     G.13.4 To facilitate a smooth transition, the Contractor shall allow as
          many personnel as practicable to remain on the job to help the
          successor maintain the continuity and consistency of the services
          required by this

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         157
--------------------------------------------------------------------------------

<PAGE>

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

          contract. The Contractor also shall disclose, with the consent of the
          employees, necessary personnel records and allow the successor to
          conduct onsite interviews with those employees. For those personnel
          who are interested in accepting a position with the successor and are
          selected by the successor, the Contractor shall release them at a
          mutually agreeable date.

     G.13.5 If authorized in writing by the Contracting Officer, the Contractor
          shall be reimbursed for all reasonable transition costs (i.e., costs
          incurred within the agreed period after contract
          expiration/termination that result from transition operations)
          specified under this contract.

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         158
--------------------------------------------------------------------------------

<PAGE>

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

                    SECTION H - SPECIAL CONTRACT REQUIREMENTS

H.     Special Contract Requirements .....................................   160
H.1    Medical Assistance Administration Role and Responsibilities .......   160
H.2    Medicaid Program and Recipients Held Harmless .....................   168
H.3    Responsibility for Prescription Drug Services .....................   168
H.4    Sanctions for Non-Compliance ......................................   169
H.5    Readiness Assessment ..............................................   170
H.6    Review and Approval of Subcontracts ...............................   171
H.7    General Subcontract Requirements ..................................   173
H.8    Fraud and Abuse Provisions and Protections ........................   174
H.9    Physician Incentive Plan ..........................................   177
H.10   Insurance .........................................................   177
H.11   Financial Requirements ............................................   178
H.12   Equity Balance, Solvency, and Financial Reserves ..................   179
H.13   Fiduciary Relationship ............................................   179
H.14   Provider Payment Arrangement ......................................   179
H.15   Special Provider Payment Arrangements .............................   179
H.16   Management Information System .....................................   183
H.17   Wage Rates ........................................................   185
H.18   Conflict of Interest ..............................................   186
H.19   Security Requirements .............................................   186
H.20   Key Personnel .....................................................   187

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-0-0003         159
--------------------------------------------------------------------------------

<PAGE>

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

                                    Section H

H.   SPECIAL CONTRACT REQUIREMENTS

H.1  Medical Assistance Administration Role and Responsibilities

     H.1.1 Eligibility, Enrollment and Discharge

               The District is responsible for notifying eligibles of their
               choices of managed care organizations, assisting them to make a
               choice, processing their enrollment, notifying the plans, and
               notifying each Enrollee of the opportunity to change enrollment
               sixty (60) days before each anniversary of the enrollment. In
               order to carry out these responsibilities, the District will
               procure the services of an Enrollment Broker. The Enrollment
               Broker is responsible for enrolling the DCHFP-related eligibles
               into contracted health plan, including administration of default
               enrollment procedures. The Enrollment Broker will also be
               responsible for maintaining, transmitting, and verifying
               enrollment data. In addition, the Enrollment Broker will maintain
               a consumer information telephone line to address consumer
               questions.

               H.1.1.1   Overall Enrollment Process

                         The notification and enrollment process for DCHFP
                         eligibles will be as follows: For TANF eligibles, MAA's
                         Enrollment Broker will send a notification letter to
                         the family or representative of each eligible
                         individual designated for notification, advising the
                         family or representative of the requirement to select a
                         plan. The letter will also inform each family or
                         representative that in the event the family or
                         representatives do not exercise the right to choose,
                         MAA will assign the individual to a plan. In addition,
                         the Enrollment Broker will distribute a reminder notice
                         (by mail or in person) ten (10) days before the
                         deadline for selecting a plan.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         160
--------------------------------------------------------------------------------

<PAGE>

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

                         H.1.1.1.1 In the event that the eligible individual or
                                   representative of an eligible individual does
                                   not exercise the right to choose within
                                   thirty (30) days of the date of the
                                   notification letter, the Enrollment Broker
                                   will automatically assign the individual to a
                                   Contractor according to assignment rules set
                                   forth in this section, applicable to DCHFP.

                         H.l.1.1.2 By the fifteenth (15th) of the month, MAA
                                   will notify each Contractor of all automatic
                                   enrollments made to its DCHFP. These
                                   enrollments shall have an effective date for
                                   enrollment of the first day of the following
                                   month.

                         H.l.l.l.3 MAA will provide the Contractor with a
                                   preliminary hard copy listing and a computer
                                   readable file containing information on
                                   eligible Enrollees who are either voluntarily
                                   enrolled in or auto-assigned to the
                                   Contractor. MAA will send the listing to the
                                   Contractor by the thirtieth (30th) day of the
                                   month.

                         H.l.l.l.4 The database shall include the following
                                   information:

                                   a)   Enrollee's name, recipient
                                        identification number, phone, address
                                        and birth date;
                                   b)   Enrollee's Medicaid eligibility code;
                                   c)   Method of enrollment - voluntary or
                                        auto-enrollment;
                                   d)   Current PCP or provider; and
                                   e)   Indication of designated high-risk
                                        conditions, if any are known to the
                                        Enrollment Broker.

                         H.l.l.l.5 The effective date of enrollment for
                                   individuals who are voluntarily enrolled or
                                   are auto-assigned to the Contractor will be
                                   the first (1st) day of the second (2nd) month
                                   following the District's notification letter.

                         H.l.l.l.6 An eligible individual or a representative
                                   for the individual may choose to disenroll
                                   from a Contractor during the individual's
                                   first

--------------------------------------------------------------------------------
CONTRACT NO.:P0HC-2002-D-0003          161
--------------------------------------------------------------------------------

<PAGE>

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

                                   ninety (90) days of enrollment or during the
                                   ninety (90) day period beginning upon every
                                   anniversary of the Enrollee's date of
                                   enrollment. In such a case, the individual or
                                   his or her representative shall select and
                                   enroll in another plan.

                         H.1.1.1.7 An individual who has been enrolled with a
                                   Contractor for ninety (90) days from the date
                                   of enrollment is locked in with that
                                   Contractor's plan and may disenroll from the
                                   plan between the ninety-first (91st) day and
                                   the three-hundred-sixty-fifth (365th) day of
                                   enrollment, only upon showing good cause as
                                   determined by the Medical Assistance
                                   Administration.

                         H.1.1.1.8 A family or representative of an eligible
                                   child that seeks disenrollment of the child
                                   from the Contractor shall notify the
                                   Contractor or MAA of the disenrollment
                                   request. If the request is approved by the
                                   District on or before the fifteenth (15th)
                                   day of the month then the child will be
                                   disenrolled effective the first (1st) day of
                                   the next month. If the request is approved
                                   after the fifteenth (15th) day of the month,
                                   then the child will be disenrolled no later
                                   than the first (1st) day of the second (2nd)
                                   month.

                         H.l.l.l.9 The Dixon Transitional Receiver/CMHS will
                                   review ail instances where the precipitating
                                   factors for the disenrollment request pertain
                                   to mental illness or alcohol and drug abuse,
                                   and advise MAA on a course of action. MAA
                                   shall make the final decision to disenroll
                                   any Enrollee.

               H.l.l.2   Newborn Enrollment

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         162
--------------------------------------------------------------------------------

<PAGE>

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

                         H.l.l.2.1 The Contractor shall notify MAA and Income
                                   Maintenance (IMA) of the birth of a newborn
                                   no later than ten (10) business days after
                                   the birth.

                         H.l.l.2.2 If the mother changes enrollment to another
                                   health plan the newborn will stay with the
                                   health plan of record on the date of birth
                                   until the newborn receives a Medicaid number.

                         H.l.l.2.3 If the Contractor fails to notify IMA and MAA
                                   of the birth of a newborn via the newborn
                                   notification form in Attachment AA, within
                                   ten (10) business working days of the birth,
                                   MAA will not reimburse the Contractor for
                                   services rendered to the newborn.

                         H.l.l.2.4 If the mother wants to select a health plan
                                   for the newborn other than the health plan of
                                   record on the newborn's date of birth, the
                                   Contractor shall inform the mother that she
                                   shall first receive a Medicaid number from
                                   the Income Maintenance Administration for the
                                   newborn. Upon receipt of the Medicaid number,
                                   the mother may select another health plan for
                                   her newborn.

                         H.l.l.2.5 When the Medicaid number for the newborn is
                                   received, the newborn will be enrolled in the
                                   health plan requested.

                         H.l.l.2.6 If the OMC has failed to notify the health
                                   plan of the newborn's Medicaid number by the
                                   fifteenth (15th) day of the sixth (6th)
                                   month, the health plan shall disenroll the
                                   child from the health plan at the end of the
                                   sixth (6th) month.

               H.l.l.3   Disenrollment of Enrollees

                         H.1.1.3.1 Prior to a request for disenrollment, the
                                   Contractor shall provide a written notice to
                                   the Enrollee and afford the Enrollee the
                                   opportunity to describe the circumstances of

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         163
--------------------------------------------------------------------------------

<PAGE>

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

                                   the dispute. MAA will reach a decision on
                                   Contractor's request within five (5) working
                                   days of receipt of the request. The Enrollee
                                   has the right to appeal the District's
                                   determination to the Office of Fair Hearing
                                   as described in Section C.14.

                         H.l.l.3.2 Involuntary disenrollment under this section
                                   shall be effective not later than the first
                                   (1st) day of the second (2nd) month following
                                   the approval of the involuntary disenrollment
                                   by the District.

                         H.1.1.3.3 Except as provided in Section C.17.2, no
                                   Enrollee shall be disenrolled solely because
                                   of an adverse change in health status.

               H.l.l.4   Provider Training

                         H.l.l.4.1 MAA has the right to restrict the assignment
                                   of new Enrollees to any Contractor, which has
                                   not met the provider training requirements in
                                   Section C.9.4.4.

               H.l.l.5   Effective Date of Enrollment for non Medicaid Immigrant
                         Eligible Children

                         H.1.1.5.1 Non-Medicaid eligible immigrant children will
                                   be enrolled or auto assigned upon the date
                                   they are deemed eligible by the Income
                                   Maintenance Administration. Children who are
                                   deemed eligible on or after the sixteenth
                                   (16th) of the month will be assigned to the
                                   Contractor effective the first of the
                                   following month.

                         H.l.l.5.2 Children that are deemed eligible prior to
                                   the sixteenth (16th) of the month will be
                                   assigned to a Contractor, effective
                                   immediately.

               H.l.l.6   Notification of the Opportunity to Change Enrollment

                         H.l.l.6.1 MMA's Enrollment Broker will send a
                                   notification letter (by mail or in person)
                                   sixty (60) days prior to the annual

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         164
--------------------------------------------------------------------------------

<PAGE>

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

                                   enrollment date to the individual, family or
                                   representative of each eligible individual
                                   designated for notification, advising of the
                                   opportunity to change enrollment.

               H.1.1.7   DCHFP Enrollment Process

                         The following describes the schedule for notification
                         and enrollment into the Contractors selected under this
                         requirement for DCHFP and DCHFP-related individuals.

                         H.1.1.7.1 One month after the date of contract signing,
                                   the District's Enrollment Broker will send a
                                   notification letter to all eligible
                                   individuals. The letter will advise the
                                   following two groups regarding the steps in
                                   the enrollment and selection process.

                         H.1.1.7.2 Current Enrollees of plans not selected to
                                   continue in MMCP will be notified by the
                                   District that they must choose a new plan
                                   from one of the Contractors selected as a
                                   result of this procurement. As outlined in
                                   Section 0, Enrollees will have thirty (30)
                                   days to select a new plan and those Enrollees
                                   who do not make a selection will be
                                   automatically assigned to a Contractor.

                         H.1.1.7.3 Current Enrollees of plans that will be
                                   continuing as DCHFPs will be notified that
                                   they may remain in the current plan or select
                                   a new plan. These Enrollees will also be
                                   notified of the lock-in provision as
                                   described in Section H.1.1.1.7. Enrollees who
                                   fail to communicate a choice by the selection
                                   deadline will continue to be enrolled with
                                   their current plan.

                         H.l.l.7.4 Individuals who do not voluntarily select a
                                   plan within thirty (30) days will be
                                   automatically assigned, except as been
                                   provided in Section H.l.l.7.3. Each of the
                                   selected contractors will receive an equal
                                   share of the default.

               H.1.1.8   RESERVED

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         165
--------------------------------------------------------------------------------

<PAGE>

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

               H.l.l.9   An individual who has been enrolled in one Plan, and
                         disenrolled within ninety (90) days to enroll in the
                         other Plan, will have the right to disenroll from the
                         second plan within ninety (90) days. However, if the
                         individual re-enrolls in the first plan, he or she
                         shall only be disenrolled for cause during the first
                         three hundred sixty-five (365) days of re-enrollment.

               H.1.1.10  An Enrollee shall be disenrolled due to loss of
                         eligibility under the following circumstances:

                         H.1.1.10.1 If the Enrollee is no longer eligible for
                                   SSI benefits or Medicaid, disenrollment shall
                                   be effective no later than the first (1st)
                                   day of the first (1st) full month following
                                   the loss of eligibility; or

                         H.l.l.10.2 If the Enrollee reaches his or her
                                   twenty-second (22nd) birthday the
                                   disenrollment shall be effective not later
                                   than the first (1st) day of the first (1st)
                                   full month following the date of the
                                   Enrollee's twenty-second (22nd) birthday.

               H.1.1.11  RESERVED

     H.l.2 Network Composition Requirements

               H.l.2.1   The Contractors shall contract for the provision of
                         primary care services, preventive care services, and/or
                         specialty/referral services with Federally Qualified
                         Health Centers (FQHCs) or FQHC look-alike if an FQHC or
                         FQHC look alike is not selected to be a Contractor. The
                         Contractors shall ensure Enrollees currently using FQHC
                         services shall be offered the opportunity to continue
                         receiving services from the FQHC. Additionally, if an
                         FQHC or FQHC look alike is not selected to be a
                         Contractor as a result of this then all selected
                         Contractors shall negotiate a formal agreement that
                         specifies the services and value of the contract with
                         the FQHC.

               H.l.2.2   The Public Benefits Corporation (PBC) is an important
                         safety-net provider for Medicaid eligible and uninsured
                         individuals. The Contractor shall include the PBC in
                         its network and shall contract with the PBC for the
                         provision

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         166
--------------------------------------------------------------------------------

<PAGE>

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

                         of hospital, primary care services, emergency services,
                         preventive care services, and/or specialty/referral.
                         Enrollees who currently use the services of PBC shall
                         be encouraged to continue their care through the PBC.
                         The Contractor shall negotiate a formal agreement that
                         specifies the services and value of the contract it
                         will enter into with the PBC.

     H.l.3 Coordination with Other Medicaid Services

               H.1.3.1   Medicaid Mental Health and Alcohol and Drug Abuse
                         Services.

                         H.l.3.1.1 MAA will furnish each contracted DCHFP with
                                   copies of a Mental Health/ Alcohol and Drug
                                   Abuse Directory listing the names, services
                                   and locations of the mental health and
                                   alcohol and drug abuse treatment providers
                                   certified as Medicaid providers by the
                                   District of Columbia.

                         H.l.3.1.2 MAA will review validated screening tools for
                                   identification of mental health and alcohol
                                   and drug abuse problems in primary care
                                   settings, and shall select a tool or tools
                                   for implementation by all Primary Care
                                   Providers in MMCP networks.

                         H.l.3.1.3 MAA may update procedures and protocols for
                                   referral and coordination between DCHFPs and
                                   certified Medicaid mental health and alcohol
                                   and drug abuse providers in the
                                   fee-for-service system.

                         H.l.3.1.4 MAA will develop, with input from contracted
                                   DCHFP, protocols, policies and procedures for
                                   the referral and care coordination of
                                   Enrollees in need of alcohol and drug abuse
                                   treatment.

               H.l.3.2   Transplant Surgery

                         H.l.3.2.1 Transplant surgery services provided during
                                   the inpatient stay in which the transplant
                                   surgery takes place will not be covered by
                                   the Contractor but will be covered by the
                                   Medicaid program and reimbursed by MAA

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         167
--------------------------------------------------------------------------------

<PAGE>

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

                                   on a fee-for-service basis in accordance with
                                   the rate or methodology described in the
                                   State Plan of Medical Assistance.

               H.l.3.3   Periodic Review of Claims Files and Medical Audits

                         MAA or its agent will periodically review claims files
                         and audit medical records, in conformance with HCFA
                         requirements.

               H.l.3.4   Evaluation

                         The terms of HCFA's waiver approval requires that the
                         Medicaid waiver program as operated by the selected
                         health plans, including DCHFP, shall be evaluated over
                         the two-year wavier period.

     Medicaid Program and Recipients Held Harmless

     H.2.1 Parties held Harmless

               H.2.2.1   In addition to the obligations set forth in Clause 10,
                         of the Standard Contract Provisions, the Contractor
                         shall hold harmless the District government, the
                         Department of Health and the Enrollee against any loss,
                         damage, expense and liability of any kind that arises
                         from any action of the organization or its
                         subcontractors in the performance of this contract.

     H.2.2 Subcontracts Look Solely to Contractors

               H.2.2.1   Each subcontract shall contain a provision that
                         requires the subcontractor to look solely to Contractor
                         for payment for services rendered.

     Responsibility for Prescription Drug Services

     H.3.1 The Contractor shall be responsible for the payment of all medically
          necessary prescription drugs written for its Enrollees including
          prescribed drugs required for the treatment of mental illness and
          addiction disorders and the treatment related to organ transplants
          prescribed outside the hospital inpatient stay in which the transplant
          occurred. The Contractor shall also be responsible for the payment of
          durable medical equipment related to diagnosis issues, such as glucose
          monitors and test strips for the treatment of diabetes.

     H.3.2 The Contractor is responsible for providing the MAA Office of Managed
          Care a copy in writing of all denials of prescription drugs within
          seventy

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         168
--------------------------------------------------------------------------------

<PAGE>

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

          two (72) hours of such denial. MAA reserves the right to access all
          denials and grievances to ensure the Contractor is providing
          appropriate care and adhering to all legal requirements.

     H.3.3 MAA reserves the right to require the Contractor to provide detailed
          pharmacy claims on a regular basis in order to develop a coordinated
          prospective drug utilization review program.

     H.3.4 The Contractor's formulary shall be approved by MAA before being
          implemented. MAA shall consult the Commission on Mental Health
          Services/Dixon Transitional Receiver for review and approval of the
          formulary with respect to psychotropic medications.

     H.3.5 MAA shall consult with the Commission on Mental Health Services/Dixon
          Transitional Receiver for review and approval of the Contractor's
          prior approval process for psychotropic medications.

H.4  Sanctions for Non-Compliance

     H.4.1 Written Notice to Contractor

               H.4.1.1   In addition to its rights under the Default Clause of
                         the Standard Contract Provisions, if the District
                         determines that the Contractor has failed to comply
                         with terms of this contract or has violated applicable
                         federal or District law or regulation or court orders
                         including but not limited to Salazar v. the District of
                         Columbia et al., the District may after 30 days written
                         notice of intent to the Contractor:

               H.4.1.2   Require submission of a corrective action plan before
                         exercising the right to impose any other sanctions for
                         non-compliance authorized by this section;

               H.4.1.3   Freeze enrollment;

               H.4.1.4   Withhold part of the Contractor's payment;

               H.4.1.5   Forfeit all or part of the deposit identified in
                         Section H.16.1;

               H.4.1.6   Deny payments for new Enrollees under 42 C.F.R. 434.42;

               H.4.1.7   Impose a financial sanction as approved by HCFA; and/or

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         169
--------------------------------------------------------------------------------

<PAGE>

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

               H.4.1.8   Utilize any other sanctions set forth in 29 DCM.R.
                         5320, et seq., as may be amended from time to time.

     H.4.2 Denial of Payment by the Health Care Financing Administration

               H.4.2.1   Payments provided for under this contract, shall be
                         denied for new Enrollees when and for so long as,
                         payment for those Enrollees is denied by the Health
                         Care Financing Administration under 42 C.F.R.
                         434.67(e).

          Content of Notice

               H.4.3.1.  Before taking any action described in Section 0, the
                         District will provide written notice which shall
                         include at least the following:

                                   a)   A citation to the law or regulation or
                                        contract provision that has been
                                        violated;

                                   b)   The sanction to be applied and the date
                                        the sanction will be imposed;

                                   c)   The basis for the District's
                                        determination that the sanction should
                                        be imposed; and

                                   d)   The time frame and procedure for the
                                        Contractor to appeal the District's
                                        determination.

     H.4.4 Effective Date

               H.4.4.1   A Contractor's appeal of an action pursuant to Section
                         0 shall not stay the effective date of the proposed
                         action.

H.5  Readiness Assessment

     H.5.1 Contractors to be Reviewed

               H.5.1.1   MAA will conduct a readiness assessment of all new
                         Contractors for DCHFP and any existing Contractors that
                         MAA determines require review. The Dixon Transitional
                         Receiver will participate in MAA's Readiness Review.

          Timing

               H.5.2.1   Readiness assessments will be conducted in the start-up
                         period, during the second and/or third month after
                         awards are announced and prior to the enrollment of any
                         recipients.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         170
--------------------------------------------------------------------------------

<PAGE>

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

     H.5.3 Content of Readiness Assessment

               H.5.3.1   The readiness assessment will include site visits and
                         review of documentation and deliverables that are
                         required prior to enrollment. Areas of special emphasis
                         for the readiness assessment may include, but are not
                         limited to, EPSDT, mental health care and care
                         coordination capacity, financial capacity, utilization
                         and quality management, network adequacy, enrollment
                         activities, provisions for monitoring the transition of
                         high-risk Enrollees, claims payment procedures and
                         reporting.

     H.5.4 Corrective Action Plan

               H.5.4.1   If MAA determines that any potential Contractor has not
                         met the criteria for readiness, the Contractor will be
                         notified and required to develop a corrective action
                         plan acceptable to MAA. Following the implementation of
                         the corrective action plan, MAA has the right to
                         conduct a site visit to the Contractor's office, to
                         verify implementation of the corrective actions. MAA
                         will approve the Contractor for enrollment once MAA
                         verifies that the corrective action plan has been
                         implemented to its satisfaction.

     H.5.5 Commencement of Enrollment

               H.5.5.l   MAA will not delay enrollment procedures eligibles
                         because a Contractor is not ready for enrollment.
                         Enrollment procedures will commence in accordance with
                         this Contract, but eligibles will be offered enrollment
                         choices only into plans that have been determined to
                         meet critical criteria for readiness.

               H.5.5.2   The effective date of the awarded capitation rate shall
                         be on date of contract award.

H.6  Review and Approval of Subcontracts

     H.6.1 Review and Approval of Subcontract(s).

               H.6.1.1   The Contracting Officer will notify the Contractor, in
                         writing, of its approval or disapproval of a proposed
                         model subcontract for service providers within fifteen
                         (15) business days of receipt of the proposed
                         subcontract and supporting documentation required by
                         the District. The District will specify the reasons for
                         any disapproval, which shall be based upon review of
                         the provisions of this

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         171
--------------------------------------------------------------------------------

<PAGE>

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

                         contract, the Contractor's proposal, and District or
                         federal law or regulations.

                         H.6.1.1.1 A proposed subcontract may be awarded by the
                                   Contractor if MAA fails to notify the
                                   Contractor within the fifteen (15) business
                                   day time limit.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         172
--------------------------------------------------------------------------------

<PAGE>

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

                         H.6.1.1.2 The District may delay enrollment or utilize
                                   any other remedy which it deems appropriate
                                   if a Contractor executes a subcontract for
                                   services furnished under this contract that
                                   is materially different from the model
                                   subcontract approved by the District.

                         H.6.1.1.3 The District may require the Contractor to
                                   furnish additional information relating to
                                   the ownership of the subcontractor, the
                                   subcontractor's ability to carry out the
                                   proposed obligations under the subcontract,
                                   and the procedures to be followed by the
                                   Contractor to monitor the execution of the
                                   subcontract.

                         H.6.1.1.4 The District may terminate its relationship
                                   with the Contractor if the District
                                   determines that the termination or expiration
                                   of a subcontract materially affects the
                                   ability of the Contractor to carry out its
                                   responsibility under this contract.

                         H.6.1.1.5 MAA staff will conduct site visits to the
                                   Plan's offices periodically, or as needed,
                                   and may review data on file there. MAA will
                                   provide the Contractor with a copy of the
                                   site visit results. The Contractor shall
                                   submit a plan to correct all deficiencies
                                   identified within fifteen (15) days of
                                   written notification of deficiencies. The
                                   District may terminate this contract for
                                   failure to correct identified deficiencies.

H.7  General Subcontract Requirements

     H.71 Allowable Subcontracting

               H.7.1.1   The Contractor shall ensure that all activities carried
                         out by any subcontractor conform to the provisions of
                         this contract. The terms of any subcontracts involving
                         the provision or administration of medical services
                         shall be subject to MAA approval via the Contracting
                         Officer.

                         H.7.1.1.1 It is the responsibility of the Contractor to
                                   insure its subcontractors are capable of
                                   meeting the reporting requirements under

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         173
--------------------------------------------------------------------------------

<PAGE>

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

                                   this contract and, if they cannot, the
                                   Contractor is not relieved of the reporting
                                   requirements.

     H.7.2 Termination of Subcontract

               H.7.2.1   The Contractor shall notify the District Contracting
                         Officer, in writing, of the termination of any
                         subcontract for the provision or administration of
                         medical services, including the arrangements made to
                         ensure continuation of the services covered by the
                         terminated subcontract, not less than forty-five (45)
                         days prior to the effective date of the termination,
                         unless immediate termination of the contract is
                         necessary to protect the health and safety of Enrollees
                         or prevent fraud and abuse. In such an event, the
                         Contractor shall notify MAA immediately upon taking
                         such action.

               H.7.2.2   If the District determines that the termination or
                         expiration of a subcontract materially affects the
                         ability of the Contractor to carry out its
                         responsibility under this contract, the District may
                         terminate this contract.

H.8  Fraud and Abuse Provisions and Protections

     H.8.1 Cooperation with the District

               H.8.1.1   This contract is subject to all state and federal laws
                         and regulations relating to fraud and abuse in health
                         care and the Medicaid program. The Contractor shall
                         cooperate and assist the District of Columbia and any
                         state or federal agency charged with the duty of
                         identifying, investigating, or prosecuting suspected
                         fraud and abuse. The Contractor shall provide originals
                         and/or copies of all records and information requested
                         and allow access to premises and provide records to MAA
                         or its authorized agent(s), HCFA, the U.S. Department
                         of Health and Human Services, FBI and the District's
                         Medicaid Fraud Control Unit. All copies of records
                         shall be provided free of charge. The Contractor shall
                         be responsible for promptly reporting suspected fraud,
                         abuse, or violation of the terms of this contract to
                         MAA via the Contracting Officer, taking prompt
                         corrective actions consistent with the terms of any
                         subcontract, and cooperating with MAA investigations.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         174
--------------------------------------------------------------------------------

<PAGE>

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

     H.8.2 Prohibiting Affiliations with Individuals Debarred by Federal
           Agencies

               H.8.2.1   In accordance with the Social Security Act (Section
                         1932(d) (1), as amended by the Balanced Budget Act of
                         1997) or Executive Order, the Contractor may not
                         knowingly have a director, officer, partner, or person,
                         who has been debarred or suspended by the federal
                         government, with more than 5% equity, or have an
                         employment, consulting, or other agreement with such a
                         person for the provision of items and services that are
                         significant and material to the entity's contractual
                         obligation with the District. The Contractor shall
                         notify MAA within three (3) days of the time it
                         receives notice that action is being taken against
                         Contractor or any person defined under the provisions
                         of section 1128(a) or (b) of the Social Security Act
                         (42 USC 1320 a-7) or any subcontractor which could
                         result in exclusion, debarment, or suspension of the
                         Contractor or a subcontractor from the Medicaid
                         program, or any program listed in Executive Order
                         12549.

     H.8.3 Fraud and Abuse Compliance Plan

               H.8.3.1   The Contractor shall have a written Fraud and Abuse
                         Compliance Plan. The Contractor shall submit any
                         updates or modifications prior to making them effective
                         to MAA for approval.

                         H.8.3.1.1 The plan shall ensure that all officers,
                                   directors, managers and employees know and
                                   understand the provisions of Contractor's
                                   fraud and abuse compliance plan.

                         H.8.3.1.2 The written plan shall contain procedures
                                   designed to prevent and detect potential or
                                   suspected abuse and fraud in the
                                   administration and delivery of services under
                                   this contract.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         175
--------------------------------------------------------------------------------

<PAGE>

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

                         H.8.3.1.3 The plan shall contain provisions for the
                                   confidential reporting of plan violations to
                                   the designated person, as described in
                                   Section H.8.3.4.plan.

                         H.8.3.1.4 The plan shall contain provisions for the
                                   investigation and follow-up of any compliance
                                   plan reports.

                         H.8.3.1.5 The fraud and abuse compliance plan shall
                                   ensure that the identities of individuals
                                   reporting violations of the plan are
                                   protected.

                         H.8.3.1.6 The plan shall contain specific and detailed
                                   internal procedures for officers, directors,
                                   managers and employees for detecting,
                                   reporting, and investigating fraud and abuse
                                   compliance plan violations.

                         H.8.3.1.7 The compliance plan shall require that
                                   confirmed violations be reported to MAA
                                   within 24 hours of it being confirmed.

                         H.8.3.1.8 The plan shall require any confirmed or
                                   suspected fraud and abuse under state or
                                   federal law be reported to the District of
                                   Columbia Office of the Inspector General
                                   Medicaid Fraud Unit, the Medicaid Program
                                   Integrity section of MAA, and the Office of
                                   Managed Care.

                         H.8.3.1.9 The written plan shall ensure that no
                                   individual who reports plan violations or
                                   suspected fraud and abuse is retaliated
                                   against.

               H.8.3.2   Contractors shall comply with the requirements of the
                         Model Compliance Plan for HMOs when this model plan is
                         issued by the U.S. Department of Health and Human
                         Services, the Office of Inspector General (OIG).

               H.8.3.3   Contractors shall designate executive and essential
                         personnel to attend mandatory training in fraud and
                         abuse detection, prevention and reporting. The training
                         will be conducted by the District of Columbia Office of
                         the

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         176
--------------------------------------------------------------------------------

<PAGE>

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

                         Inspector General, Medicaid Fraud Unit and will be
                         provided free of charge. Training shall be scheduled
                         not later than sixty (60) days after contract award.

               H.8.3.4   Contractors shall designate an officer or director in
                         its organization who has the responsibility and
                         authority for carrying out the provisions of the fraud
                         and abuse compliance plan.

               H.8.3.5   Contractors failure to report potential or suspected
                         fraud or abuse may result in sanctions, cancellation of
                         contract, or exclusion from participation in the
                         Medicaid program.

               H.8.3.6   Contractors shall allow the District of Columbia
                         Medicaid Fraud Unit or its representatives to conduct
                         private interviews of Contractor's employees,
                         subcontractors, and their employees, witnesses, and
                         patients. Requests for information shall be complied
                         with in the form and the language requested.
                         Contractors employees and its subcontractors and their
                         employees shall cooperate fully and be available in
                         person for interviews, consultation grand jury
                         proceedings, pre-trial conference, hearings, trial and
                         in any other process.

H.9  Physician Incentive Plan

     H.9.1 Per 42 CFR 417.479(a), no specific payment can be made directly or
          indirectly under a physician incentive plan to a physician group as an
          inducement reduce or limit medically necessary services furnished to
          an individual Enrollee. Prior to contract award and annually ninety
          (90) days prior to contract renewal thereafter, the Contractor shall
          submit to the District for the District's approval the information on
          provider incentive plans listed in 42 CFR 4l7 .479(h)(1) and
          417.479(I) at the times indicated at 42 CFR 434.70(a)(3), in order to
          determine whether the incentive plan(s) meets the requirements.

     H.9.2 Per 42 CFR 417.4 79(d)-(g). The Contractor shall provide the
          capitation data required under paragraph (h)(l)(vi) for previous
          calendar year to the state by application/contract prior to Contract
          renewal of each year. The Contractor will provide the information on
          the its physician incentive plans listed in 42 CFR 417.479(h)(3) to
          any Medicaid client, upon request.

H.10 Insurance

     H.10.1 The successful offeror at its expense shall obtain the minimum
          insurance coverage set forth below within five (5) calendar days after
          being called

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         177
--------------------------------------------------------------------------------

<PAGE>

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

          upon by the District to do so and keep such insurance in force
          throughout the contract period.

     H.10.2 Public Liability and Property Damage Insurance: Insurance against
          liability for personal and bodily injury and property damage and
          machinery insurance in the amount of at least one hundred thousand
          dollars ($100,000) for each individual and five hundred thousand
          dollars ($500,000) in the aggregate (liability) and two hundred fifty
          thousand dollars ($250,000) (property).

     H.10.3 Worker's Compensation: The contractor shall carry workers
          compensation insurance covering all of its employees employed upon the
          premises and in connection with its other operations pertaining to
          this agreement, and the contractor agrees to comply at all times with
          the provisions of the workers compensation laws of the District

     H.10.4 Employer's Liability: The Contractor shall carry employer's
          liability of at least one hundred thousand dollars ($100,000).

     H.10.5 Comprehensive Automobile Liability Insurance (applicable to owned,
          non-owned and hired vehicles): The Contractor shall carry
          comprehensive automobile liability insurance applicable to owned,
          non-owned and hired vehicles against liability for bodily injury and
          property damage and in the amount not less than that required by the
          District's Compulsory/No-Fault Vehicle Insurance Act of 1982, as
          amended, and in 27 DCMR 2712.6.

     H.10.6 All insurance provided by the Contractor as required by this
          section, except Comprehensive Automobile Liability Insurance, shall
          set forth the District as an additional insured. All insurance shall
          be written with responsible companies licensed by the District with a
          duplicate copy to be sent to the District. The policies of insurance
          shall provide for at least thirty (30) days written notice to the
          District prior to their termination or material alteration.

H.11 Financial Requirements

     H.11.1 Debts of Contractor

               H.11.1.1  The Contractor shall ensure through its contracts,
                         subcontracts and in any other appropriate manner that
                         neither Enrollees nor the District are held liable for
                         Contractor's debts in the event of Contractor's
                         insolvency.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         178
--------------------------------------------------------------------------------

<PAGE>

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

     Equity Balance, Solvency, and Financial Reserves

     H.12.1 Consistent with the Balanced Budget Act of 1997, the Contractor
          shall maintain a positive net worth, and insolvency reserves or
          deposits that equal or exceed the minimum requirements established by
          the District of Columbia's Department of Insurance and Securities
          Regulations as a condition for maintaining a certificate of authority
          to operate a health maintenance organization in the District.

     H.12.2 The Contractor shall otherwise have demonstrated the ability to
          maintain a strong financial position in order to provide a sound
          financial foundation for its operations and to ensure the provision of
          high quality medical care.

     Fiduciary Relationship

     H.13.1 Any director, officer, employee, or partner of a Contractor who
          receives, collects, disburses, or invests funds in connection with the
          activities of such Contractor shall be responsible for such funds in a
          fiduciary relationship to the Contractor.

     H.13.2 The Contractor shall maintain in force and provide evidence of a
          fidelity bond in an amount of not less than one hundred thousand
          dollars ($100,000) per person for each officer and employee who has a
          fiduciary responsibility or duty to the organization.

     Provider Payment Arrangement

     H.14.1 The Contractor shall make its provider rate agreements available to
          MAA.

     Special Provider Payment Arrangements

     H.15.1 Contractors that subcontract with a Federally Qualified Health
          Center (FQHC), shall reimburse the FQHC with a negotiated rate on the
          same payment terms as other providers of similar services. Under the
          Balanced Budget Act of 1997, FQHCs are entitled to. reasonable
          cost-based reimbursement as subcontractors of Medicaid health plans.
          The District will be responsible for the excess of reasonable cost, as
          defined under federal law, over the amount paid to the FQHC by
          Contractor. The reimbursement to FQHCs is not a payment under this
          contract.

     H.15.2 The Contractor shall pay all network emergency facilities at the
          contracted rate and non-network facilities at the current Medicaid
          rates for the following services:

               H.15.2.1  The screening examination and the services required to
                         stabilize an Enrollee determined by the examining
                         physician to have an emergency medical condition as
                         defined in Section 0.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         179
--------------------------------------------------------------------------------

<PAGE>

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

               H.l5.2.2  The screening examination for Enrollees determined by
                         the examining physician not to have an emergency
                         medical condition, if the Contractor's review of the
                         presenting symptoms of the Enrollee finds that the
                         symptoms were of sufficient severity to have warranted
                         emergency attention under the prudent layperson
                         standard.

               H.l5.2.3  The screening examination and any medically necessary
                         emergency services for Enrollees instructed by a PCP or
                         other representative of the Contractor to seek
                         emergency treatment in-network or out-of-network,
                         without regard to whether the Enrollee's symptoms meet
                         the prudent layperson standard.

               H.15.2.4  A triage fee for screening services provided when
                         Enrollee's symptoms did not meet the prudent layperson
                         standard and no PCP or other Contractor employee
                         instructed the Enrollee to seek emergency treatment.

               H.15.2.5  The emergency services and ambulance services provided
                         by the District Fire and Emergency Medical Services
                         Department.

               H.15.2.6  Emergency services are considered to be medically
                         necessary in order to ensure, within reasonable medical
                         probability, that no material deterioration of the
                         Enrollee's condition is likely to result from or occur
                         during, discharge of the Enrollee or transfer of the
                         Enrollee to another facility.

               H.l5.2.7  If there is a disagreement between a hospital and the
                         Contractor concerning whether the Enrollee is stable
                         enough for discharge or transfer, or whether the
                         medical benefits of an unstabilized transfer outweigh
                         the risks, the judgment of the attending physician(s)
                         actually caring for the Enrollee at the treating
                         facility prevails.

               H.l5.2.8  The Contractor may establish arrangements with
                         hospitals whereby it may send one of its own physicians
                         with appropriate emergency room privileges to assume
                         the attending physician's responsibilities to
                         stabilize, treat, and transfer the Enrollee.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         180
--------------------------------------------------------------------------------

<PAGE>

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

               H.15.2.9  The Contractor shall be responsible for payment of
                         services provided to Enrollee as defined under the
                         Balanced Budget Act of 1997 and medically appropriate
                         transfers as defined under the Emergency Medical and
                         Treatment Labor Act.

     H.l5.3 Third Party Liability (TPL) and Coordination of Benefits

               H.15.3.1  The Contractor shall comply with all applicable federal
                         statutes and regulations including Section 1902(a)(25)
                         of the Social Security Act and the Health Care
                         Assistance Reimbursement Act of 1984 (DC Law 5-86: DC,
                         Code Section 3-501 et seq.).

               H.15.3.2  The Contractor shall be responsible for the
                         identification and collection of all health insurance
                         benefits available for payment of covered services
                         described in this contract and rendered to Enrollees
                         including court-ordered medical support available from
                         an absent parent.

               H.15.3.3  Recovery from all third party payers, other than Health
                         Insurance, is the responsibility of MAA's Third Party
                         Liability Section. This includes but is not limited to
                         the following types of resources: casualty, torts and
                         worker's compensation.

               H.l5.3.4  The Contractor shall not release copies of itemized
                         medical bills directly to an Enrollee or his/her
                         designee. Instead, such requests (including copies of
                         the requested documentation) shall be directed to the
                         TPL section of MAA within thirty (30) days from the
                         date the request is received by the Contractor.

               H.15.3.5  Contractors are responsible for obtaining from
                         Enrollees any third party payment source to the
                         Contractor pursuant to notification of this
                         responsibility in the Enrollees' written Evidence of
                         Coverage.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         181
--------------------------------------------------------------------------------

<PAGE>

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

               H.15.3.6  The Contractor shall not consider an enrolled child
                         with an IEP or an IFSP to be an Enrollee with third
                         party coverage.

               H.15.3.7  The Contractor shall submit third party liability
                         reports as defined by MAA on a quarterly basis by the
                         tenth (10th) day of the month following the end of each
                         quarter in accordance with Section F.4.

               H.15.3.8  The Contractor shall forward all information relating
                         to a potential third party resource available to an
                         Enrollee to the TPL section within thirty (30) days of
                         learning of the existence of the third party in a
                         format to be prescribed by MAA.

     H.15.4 Financial Statements

               H.15.4.1  The Contractor shall submit audited calendar year
                         financial statements in compliance with NAIC guidelines
                         audited by an independent certified public accountant
                         to the District by June 1 of each year. The financial
                         statements shall clearly show both total expenses and
                         revenues and the expenses and revenues attributable to
                         DCHFP Enrollees, including all direct medical expenses
                         and administrative costs charged to the Plan.

               H.15.4.2  The Contractor shall submit all reports that are
                         submitted to the Department of Insurance to MAA within
                         thirty (30) days that such reports are submitted to the
                         Department of Insurance, and security regulations.

               H.15.4.3  The District is considering the implementation of a
                         Financial Reporting Guide that will separately account
                         for funds received pursuant to this Contract on an
                         annual, quarterly, and if needed, monthly basis. This
                         Financial Reporting Guide will assist the District in
                         monitoring the financial viability of the Contractors
                         and will assist in the tracking of medical expenditures
                         as compared to the revenues received. If implemented,
                         the Contractor shall have ninety (90) days after the
                         date of implementation to

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         182
--------------------------------------------------------------------------------

<PAGE>

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

                         commence reporting under the guidelines of the
                         Financial Reporting Guide.

               H.l5.4.4  Upon the District's written request, the Contractor
                         shall permit, and shall assist the federal government,
                         its agents or the District in the inspection and audit
                         of any financial records of the Contractor or its
                         subcontractors. The records of the Contractor and its
                         subcontractors shall be available for inspection and
                         audit by the District.

               H.15.4.5  The Contractor shall retain annual audit reports and
                         records for at least five (5) years.

               H.15.4.6  If any litigation, claim, negotiation, audit, or other
                         action involving the records described in this section
                         is initiated before the expiration of the five (5) year
                         period, the records shall be retained until completion
                         of the action and final resolution of all issues that
                         arise from the litigation, claim, negotiation, audit,
                         or other action, including any appeal and the
                         expiration of any right of appeal, or until the end of
                         the five (5) year period, whichever is later.

H.16 Management Information System

     H.16.1 Confidentiality

               H.16.1.1  Client eligibility information from MAA's Enrollment
                         Broker will be supplied to the Contractor on a periodic
                         basis through a taped exchange. File specifications
                         will be available in the Reference Library.

     H.16.2 Use of Information and Data

               H.16.2.1  The District agrees to maintain, and to cause its
                         employees, agents or representatives to maintain on a
                         confidential basis information concerning the
                         Contractor's relations and operations as well as any
                         other information compiled or created by Contractor
                         which is proprietary to Contractor and which Contractor
                         identifies as proprietary to the District in writing.
                         If the District receives a request pursuant to the
                         Freedom of Information Act, the District will determine
                         what information is required by law to be

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         183
--------------------------------------------------------------------------------

<PAGE>

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

                         released and retain authority over the release of that
                         information.

     H.16.3 Year 2000 Certification

               H.16.3.1  Each signature on the offer is considered to be a
                         certification by the signatory that:

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         184
--------------------------------------------------------------------------------

<PAGE>

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

                         H.16.3.1.1 The Contractor warrants that each hardware,
                                   software, and firm product delivered under
                                   this contract and listed in this contract
                                   shall be able to process accurately date/time
                                   data (including, but not limited to
                                   calculating, comparing, and sequencing) from,
                                   into, and between the twentieth and
                                   twenty-first centuries, and the years 1999
                                   and 2000 and leap year calculations to the
                                   extent that other information technology,
                                   used in combination with the information
                                   technology being acquired, properly exchanges
                                   date/time data with it. If the contract
                                   requires that specific listed products shall
                                   perform as a system in accordance with the
                                   foregoing warranty and the remedies available
                                   to the District of Columbia for breach of
                                   this warranty shall be defined in, and
                                   subject to, the terms and limitations of the
                                   Contractor's standard commercial warranty or
                                   warranties contained in this contract,
                                   provided that notwithstanding any provision
                                   to the contrary in such commercial warranty
                                   or warranties, the remedies available to the
                                   District of Columbia under this warranty
                                   shall include repair or replacement of any
                                   listed product whose non-compliance is
                                   discovered and made known to the Contractor
                                   in writing within ninety (90) days after
                                   acceptance. Nothing in this warranty shall be
                                   construed to limit any rights or remedies the
                                   District of Columbia may otherwise have under
                                   this contract with respect to defects other
                                   than Year 2000 performance.

H.17 Wage Rates

     H.17.1 The contractor is bound by Wage Determination No. 1994-2103,
          Revision No. 24, dated May 31, 2001, incorporated herein as Attachment
          J.1, issued by the U.S. Department of Labor in accordance with the
          Service Contract Act of 1965, as amended (41 U.S.C. 351). The
          Contractor shall be bound by the wage rates for the term of the
          contract. If an option is exercised, the Contractor shall be bound by
          the applicable wage rate at the time of the option. If the option is
          exercised and the Contracting Officer for the option obtains a revised
          wage determination, that determination is

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         185
--------------------------------------------------------------------------------

<PAGE>

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

          applicable for the option periods; the Contractor may be entitled to
          an equitable adjustment.

H.18 Conflict of Interest

     H.18.1 No official or employee of the District of Columbia or the Federal
          government who exercises any functions or responsibilities in the
          review of approval of the undertaking or carrying out of this contract
          shall, prior to the completion of the project, voluntarily acquire any
          personal interest, direct or indirect, in the contract or proposed
          contract. (DC Procurement Practices Act of 1985, DC Law 6-85 and
          Chapter 18 of the DC Personnel Regulations).

     H.18.2 The Contractor represents and covenants that it presently has no
          interest and shall not acquire any interest, direct or indirect, which
          would conflict in any manner or degree with the performance of its
          services hereunder. The Contractor further covenants that, in the
          performance of the contract, no person having any such known
          interests shall be employed.

H.19 Security Requirements

     H.19.1 The Contractor shall conduct routine pre-employment criminal record
          background checks of all Contractor's staff that will provide services
          under this contract to the extent permitted under D.C. law. The
          Contractor shall not employ any staff in the fulfillment of the work
          under this contract unless said person has successfully cleared a
          background check, to include a National Criminal Information Center
          report. The Contractor shall provide the results of the background
          checks to the Contract Administrator prior to Contractor's staff
          providing services under this contract. The Contractor shall conduct
          the criminal record background checks on an annual basis and for all
          newly acquired staff.

     H.19.2 The Contractor's staff and administrative personnel that will visit
          or supervise the clients at the designated facility site shall
          complete a DOH background check except for licensed professionals
          pursuant to D.C. Code, Chapter 33. No personnel employed by the
          Contractor in the fulfillment of the work included in this
          solicitation shall have a criminal conviction, for any offenses
          enumerated in D.C. Code Sec.32-1352(e).

     H.19.3 Employees of the Contractor shall disclosure to DOH through the
          Contractor, any arrests or convictions that may occur subsequent to
          employment. Any conviction or arrest of the Contractor's employees
          after DOH/Office of Inspection and Compliance, which will determine
          the employee's suitability for continued employment.

     H.19.4 The Contractor's employees shall not bring into the facility any
          form of weapons or contraband; shall be subject to search; shall
          conduct themselves in a professional manner at all times; and shall
          not cause any disturbance in the facility; and shall be subject to all
          other rules and regulations of the facility and DOH. The Contractor
          shall be provided a copy of all applicable rules and regulations of
          the facility. The Contractor

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         186
--------------------------------------------------------------------------------

<PAGE>

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

          shall ascertain that each civilian employee is issued a copy of said
          rules and signs a statement acknowledging the receipt of said rules.
          The Contractor shall maintain the acknowledgement of receipt in the
          individual employee's personnel folder.

H.20 Key Personnel

     H.20.1 The key personnel specified below are considered to be essential to
          the work being performed hereunder. Prior to diverting any of the
          specified key personnel for any reason, the Contractor shall notify
          the Contracting Officer at least thirty (30) calendar days in advance
          and shall submit justification (including proposed substitutions) in
          sufficient detail to permit evaluation of the impact on the contract.
          The Contractor shall not reassign these key personnel or appoint
          replacements, without written permission from the Contracting Officer.

          The Contractor shall identify Key Personnel in the spaces below:

          ----------------------------------------------------------------------
                 NAME                             POSITION
          ----------------------------------------------------------------------
          Jane Thompson                 Chief Executive Officer
          ----------------------------------------------------------------------
          Scott Tabakin, CPA            Chief Financial Officer
          ----------------------------------------------------------------------
          Shirley Grant, M.D.           Medical Director - Physical Health
          ----------------------------------------------------------------------
          Conway McDanald, M.D.         Medical Director - Behavioral Health
          ----------------------------------------------------------------------
          Gerald B. Niewenhous, MSW     Senior Manager - Mental Health
          ----------------------------------------------------------------------
          Kathleen M. Scelzo, RN, MSN   Senior Manager - Quality Assurance
          ----------------------------------------------------------------------
          Dorothy Johnson, RN           Senior Manager - Care Coordination
          ----------------------------------------------------------------------
          Paul A. Richardson            Senior Manager - Member Services
          ----------------------------------------------------------------------
          Paul A. Richardson            Senior Manager - Provider Services
          ----------------------------------------------------------------------
          Scott Pickens                 Senior Manager - MIS
          ----------------------------------------------------------------------
          Stanley Baldwin, Esq., JD     Officer - Compliance and Fraud
          ----------------------------------------------------------------------

                 REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         187
--------------------------------------------------------------------------------

<PAGE>

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

                          SECTION I - CONTRACT CLAUSES

<TABLE>
<S>                                                                                       <C>
I.     Standard Contract Clauses..........................................................189

I.1    Covenant Against Contingent Fees...................................................189
I.2    Patents............................................................................189
I.3    Quality............................................................................189
I.4    Inspection of Supplies.............................................................189
I.5    Inspection of Services.............................................................193
I.6    Waiver.............................................................................193
I.7    Default.........:..................................................................193
I.8    Indemnification....................................................................195
I.9    Transfer...........................................................................195
I.10   Taxes..............................................................................196
I.11   Payments...........................................................................196
I.12   Evaluation of Prompt Payment Discount..............................................196
I.13   Responsibility for Supplies Tendered...............................................196
I.14   Appointment of Attorney............................................................197
I.15   Officers Not to Benefit............................................................197
I.16   Disputes...........................................................................198
I.17   Claims by the District Against a Contractor........................................199
I.18   Changes............................................................................200
I.19   Termination for Convenience of the District........................................201
I.20   Recovery of Debts Owed the District................................................208
I.21   Examination of Books, etc. by the Office of Inspector General and the District
       of Columbia Auditor................................................................208
I.22   Non-Discrimination Clause..........................................................208
I.23   Definitions........................................................................210
I.24   Health and Safety Standards........................................................210
I.25   Appropriation of Funds.............................................................210
I.26   Hiring of District Residents.......................................................211
I.27   Buy American Act...................................................................211
I.28   Service Contract Act of 1965.......................................................212
I.29   Cost and Pricing Data..............................................................218
I.30   Cost-Reimbursement Contracts - CLIN 0002 Only......................................220
I.31   Termination of Contracts for Certain Crimes and Violations.........................220
I.32   Additional Standard Clauses........................................................220
I.33   Contract Type and Price............................................................229
I.34   Accounting and Audits for CLIN 0002................................................229
I.35   Assignment of Funds................................................................229
</TABLE>

REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         188
--------------------------------------------------------------------------------

<PAGE>

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

I.   STANDARD CONTRACT CLAUSES

I.1  Covenant Against Contingent Fees

     I.1.1 The Contractor warrants that no person or selling agency has been
          employed or retained to solicit or secure the contract upon an
          agreement or understanding for a commission, percentage, brokerage, or
          contingent fee, excepting bona fide employees or bona fide established
          commercial or selling agencies maintained by the Contractor for the
          purpose of securing business. For breach or violation of this
          warranty, the District government shall have the right to terminate
          the contract without liability or in its discretion to deduct from the
          contract price or consideration or otherwise recover, the full amount
          of the commission, percentage, brokerage, or contingent fee.

I.2  Patents

     I.2.1 The Contractor shall hold and save the District, its officers,
          agents, servants, and employees harmless from liability of any nature
          or kind, including costs, expenses, for or on account of any patented
          or un-patented invention, article process, or appliance, manufactured
          or used in the performance of this contract, including their use by
          the District, unless otherwise specifically stipulated in this
          contract.

I.3  Quality

     I.3.1 Unless otherwise specified, all materials used for the manufacture or
          construction of any supplies covered by this bid/proposal shall be new
          and of the best quality and the workmanship shall be of the highest
          grade. The use of the name of a manufacturer or of any special brand
          or make in describing any item in this bid/proposal does not restrict
          Offeror to that manufacturer, or specific brand or make; the reference
          thereto indicates the character or quality of article desired, but
          articles on which bids/proposals are submitted shall be equal to those
          referred to. Offerors offering any article other than the specific
          make, brand or manufacture named in this solicitation shall so state
          in each instance, otherwise the bid/proposal will be considered as
          being based upon furnishing the specific make, brand or manufacture
          named in the solicitation.

I.4  Inspection of Supplies

     I.4.1 Definition. "Supplies," as used in this clause, includes, but is not
          limited to raw materials, components, intermediate assemblies, end
          products, and lots of supplies.

     I.4.2 The Contractor shall provide and maintain an inspection system
          acceptable to the District covering supplies under this contract and
          shall tender to the District for acceptance only supplies that have
          been inspected in accordance with the inspection system and have been
          found by the

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         189
--------------------------------------------------------------------------------

<PAGE>

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

          Contractor to be in conformity with contract requirements. As part of
          the system, the Contractor shall prepare records evidencing all
          inspections made under the system and the outcome. These records shall
          be kept complete and made available to the District during contract
          performance and for as long afterwards as the contract requires. The
          District may perform reviews and evaluations as reasonably necessary
          to ascertain compliance with this paragraph. These reviews and
          evaluations shall be conducted in a manner that will not unduly delay
          the contract work. The right of review, whether exercised or not, does
          not relieve the Contractor of the obligations under this contract.

     I.4.3 The District has the right to inspect and test all supplies called
          for by the contract, to the extent practicable, at all places and
          times, including the period of manufacture, and in any event before
          acceptance. The District will perform inspections and tests in a
          manner that will not unduly delay the work. The District assumes no
          contractual obligation to perform any inspection and test for the
          benefit of the Contractor unless specifically set forth elsewhere in
          the contract.

          If the District performs inspection or test on the premises of the
          Contractor or subcontractor, the Contractor shall furnish, and shall
          require subcontractors to furnish, without additional charge, all
          reasonable facilities and assistance for the safe and convenient
          performance of these duties. Except as otherwise provided in the
          contract, the District shall bear the expense of District inspections
          or tests made at other than Contractor's or subcontractor's premise;
          provided, that in case of rejection, the District shall not be liable
          for any reduction in the value of inspection or test samples.

               I.4.4.1   When supplies are not ready at the time specified by
                         the Contractor for inspection or test, the Contracting
                         Officer may charge to the Contractor the additiona1
                         cost of inspection or test.

               I.4.4.2   The Contracting Officer may also charge the Contractor
                         for any additional cost of inspection or test when
                         prior rejection makes re-inspection or retest
                         necessary.

          The District has the right either to reject or to require correction
          of nonconforming supplies. Supplies are nonconforming when they are
          defective in material or workmanship or otherwise not in conformity
          with contract requirements. The District may reject nonconforming
          supplies with or without disposition instructions.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         190
--------------------------------------------------------------------------------

<PAGE>

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

               I.4.5.1   The Contractor shall remove supplies rejected or
                         required to be corrected. However, the Contracting
                         Officer may require or permit correction in place,
                         promptly after notice, by and at the expense of the
                         Contractor. The Contractor shall not tender for
                         acceptance corrected or rejected supplies without
                         disclosing the former rejection or requirement for
                         correction, and when required, shall disclose the
                         corrective action taken.

               I.4.5.2   If the Contractor fails to promptly remove, replace, or
                         correct rejected supplies that are required to be
                         replaced or corrected, the District may either (1) by
                         contract or otherwise, remove, replace or correct the
                         supplies and charge the cost to the Contractor or (2)
                         terminate the contract for default. Unless the
                         Contractor corrects or replaces the supplies within the
                         delivery schedule, the Contracting Officer may require
                         their delivery and make an equitable price reduction.
                         Failure to agree to a price reduction shall be a
                         dispute.

                         I.4.5.2.1 If this contract provides for the performance
                                   of District quality assurance at source, and
                                   if requested by the District, the Contractor
                                   shall furnish advance notification of the
                                   time (i) when Contractor inspection or tests
                                   will be performed in accordance with the
                                   terms and conditions of the contract and (ii)
                                   when the supplies will be ready for District
                                   inspection.

                         I.4.5.2.2 The District request shall specify the period
                                   and method of the advance notification and
                                   the District representative to whom it shall
                                   be furnished. Requests shall not require more
                                   than two (2) workdays of advance notification
                                   if the District representative is in
                                   residence in the Contractor's plant, nor more
                                   than seven (7) workdays in other instances.

               I.4.5.3   The District shall accept or reject supplies as
                         promptly as practicable after delivery, unless
                         otherwise provided in the contract. District failure to
                         inspect and accept or reject the supplies shall not
                         relieve the Contractor from

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         191
--------------------------------------------------------------------------------

<PAGE>

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

                         responsibility, nor impose liability upon the District,
                         for non-conforming supplies.

               I.4.5.4   Inspections and tests by the District do not relieve
                         the Contractor of responsibility for defects or other
                         failures to meet contract requirements discovered
                         before acceptance. Acceptance shall be conclusive,
                         except for latent defects, fraud, gross mistakes
                         amounting to fraud, or as otherwise provided in the
                         contract.

               I.4.5.5   If acceptance is not conclusive for any of the reasons
                         in Section I.6.11 hereof, the District, in addition to
                         any other rights and remedies provided by law, or under
                         provisions of this contract, shall have the right to
                         require the Contractor (1) at no increase in contract
                         price, to correct or replace the defective or
                         nonconforming supplies at the original point of
                         delivery or at the Contractor's plant at the
                         Contracting Officer's election, and in accordance with
                         a reasonable delivery schedule as may be agreed upon
                         between the Contractor and the Contracting Officer;
                         provided, that the Contracting Officer may require a
                         reduction in contract price if the Contractor fails to
                         meet such delivery schedule, or (2) within a reasonable
                         time after receipt by the Contractor of notice of
                         defects or noncompliance, to repay such portion of the
                         contract as is equitable under the circumstances if the
                         Contracting Officer elects not to require correction or
                         replacement. When supplies are returned to the
                         Contractor, the Contractor shall bear the
                         transportation cost from the original point of delivery
                         to the Contractor's plant and return to the original
                         point when that point is not the Contractor's plant. If
                         the Contractor fails to perform or act as required in
                         (1) or (2) above and does not cure such failure within
                         a period of 10 days (or such longer period as the
                         Contracting Officer may authorize in writing) after
                         receipt of notice from the Contracting Officer
                         specifying such failure, the District shall have the
                         right to contract or otherwise to replace or correct
                         such supplies and charge to the Contractor the cost
                         occasioned the District thereby.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         192
--------------------------------------------------------------------------------

<PAGE>

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

I.5  Inspection of Services

     I.5.1 Definition. "Services" as used in this clause includes services
          performed, workmanship, and material furnished or utilized in the
          performance of services.

     I.5.2 The Contractor shall provide and maintain an inspection system
          acceptable to the District covering the services under this contract.
          Complete records of all inspection work performed by the Contractor
          shall be maintained and made available to the District during contract
          performance and for as long afterwards as the contract requires.

     I.5.3 The District has the right to inspect and test all services called
          for by the contract, to the extent practicable at all times and places
          during the term of the contract. The District shall perform
          inspections and tests in a manner that will not unduly delay the work.

     I.5.4 If the District performs inspections or tests on the premises of the
          Contractor or subcontractor, the Contractor shall furnish, without
          additional charge, all reasonable facilities and assistance for the
          safety and convenient performance of these duties.

     I.5.5 If any of the services do not conform to the contract requirements,
          the District may require the Contractor to perform these services
          again in conformity with contract requirements, at not increase in
          contract amount. When the defects in services cannot be corrected by
          performance, the District may (1) require the Contractor to take
          necessary action to ensure that future performance conforms to
          contract requirements and reduce the contract price to reflect value
          of services performed.

     I.5.6 If the Contractor fails to promptly perform the services again or
          take the necessary action to ensure future performance in conformity
          to contract requirements, the District may (1) by contract or
          otherwise, perform the services and charge the Contractor any cost
          incurred by the District that is directly related to the performance
          of such services, or (2) terminate the contract for default. The
          waiver of any breach of the contract will not constitute a waiver of
          any subsequent breach thereof, nor a waiver of the contract.

I.6  Waiver

     I.6.1 The waiver of any breach of this contract will not constitute a
          waiver of any subsequent breach thereof, nor a waiver of the contract.

I.7 Default

     I.7.1 The District may, subject to the provisions of Section I.7.3 below,
          by written notice of default to the Contractor, terminate the whole or
          any part of this contract in any one of the following circumstances:

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         193
--------------------------------------------------------------------------------

<PAGE>

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

               I.7.1.1   If the Contractor fails to make delivery of the
                         supplies or to perform the services within the time
                         specified herein or any extension thereof; or

               I.7.1.2   If the Contractor fails to perform any of the other
                         provisions of this contract, or so fails to make
                         progress as to endanger performance of this contract in
                         accordance with its terms, and in either of these two
                         circumstances does not cure such failure within a
                         period of ten (10) days (or such longer period as the
                         Contracting Officer may authorize in writing) after
                         receipt of notice from the Contracting Officer
                         specifying such failure.

          In the event the District terminates this contract in whole or in part
          as provided in Section I.7.1 of this clause, the District may procure,
          upon such terms and in such manner as the Contracting Officer may deem
          appropriate, supplies or service similar to those so terminated, and
          the Contractor shall be liable to the District for any excess costs
          for similar supplies or services; provided, that the Contractor shall
          continue the performance of this contract to the extent not terminated
          under the provisions of this clause.

          Except with respect to defaults of subcontractors, the Contractor
          shall not be liable for any excess costs if the failure to perform the
          contract arises out of causes beyond the control and without the fault
          or negligence of the Contractor. Such causes may include, but are not
          restricted to, acts of God or of the public enemy, acts of the
          District or Federal Government in either their sovereign or
          contractual capacity, fires, floods, epidemics, quarantine
          restrictions, strikes, freight embargoes, and unusually severe
          weather; but in every case the failure to perform shall be beyond the
          control and without fault or negligence of the Contractor. If the
          failure to perform is caused by the default of the subcontractor, and
          if such default arises out of causes beyond the control of both the
          Contractor and the subcontractor, and without the fault or negligence
          of either of them, the Contractor shall not be liable for any excess
          cost for failure to perform, unless the supplies or services to be
          furnished by the subcontractor were obtainable from other sources in
          sufficient time to permit the Contractor to meet the required delivery
          schedule.

          If this contract is terminated as provided in paragraph (a) of this
          clause, the District, in addition to any other rights provided in this
          clause, may require the Contractor to transfer title and deliver to
          the District, in the manner and to the extent directed by the
          Contracting Officer, (i) completed supplies, and (ii) such partially
          completed supplies and

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         194
--------------------------------------------------------------------------------

<PAGE>

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

          materials, parts, tools, dies, jigs, fixtures plans, drawing
          information, and contract rights (hereinafter called "manufacturing
          materials") as the Contractor has specifically produced or
          specifically acquired for the performance of such part of this
          contract as has been terminated; and the Contractor shall, upon
          direction of the Contracting Officer, protect and preserve property in
          possession of the Contractor in which the District has an interest.
          Payment for completed supplies delivered to and accepted by the
          District shall be at the contract price. Payment for manufacturing
          materials delivered to and accepted by the District shall be at the
          contract price. Payment for manufacturing materials delivered to and
          accepted by the District and for the protection and preservation of
          property shall be in an amount agreed upon by the Contractor and
          Contracting Officer; failure to agree to such amount shall be a
          dispute concerning a question of fact within the meaning of the clause
          of this contract entitled "Disputes." The District may withhold from
          amounts otherwise due the Contractor for such completed supplies or
          manufacturing materials such sum as the Contracting Officer determines
          to be necessary to protect the District against loss because of
          outstanding liens or claims of former lien holders.

          If, after notice of termination of this contract under the provisions
          of this clause, it is determined for any reason that the Contractor
          was not in default under the provisions of this clause, or that the
          default was excusable under the provisions of this clause, the rights
          and obligations of the parties shall, if the contract contains a
          clause providing for termination of convenience of the Government, be
          the same as if the notice of termination had been issued pursuant to
          such clause. See Section I.19 for Termination for Convenience of the
          District.

          The rights and remedies of the District provided in this clause shall
          not be exclusive and are in addition to any other rights and remedies
          provided by law or under this contract.

          As used in Section I.7.3 of this clause, the term "subcontractor(s)"
          means subcontractor(s) at any tier.

I.8  Indemnification

     I.8.1 The Contractor shall indemnify and hold harmless the District and all
          its officers, agents and servants against any and all claims or
          liability arising from or based on, or as consequence of or result of,
          any act, omission or default of the Contractor, its employees, or its
          subcontractors, in the performance of this contract. Monies due or to
          become due the Contractor under the contract may be retained by the
          District as necessary to satisfy any outstanding claim which the
          District may have against the Contractor.

I.9  Transfer

          No contract or any interest therein shall be transferred by the
          parties to whom the award is made; such transfer will be null and void
          and will be cause to annul the contract.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         195
--------------------------------------------------------------------------------

<PAGE>

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

     Taxes

     I.10.1 The Government of the District of Columbia is exempt from and will
          not pay Federal Excise Tax, Transportation Tax, and the District of
          Columbia Sales and Use.

     I.10.2 Tax exemption certificates no longer issued by the District for
          Federal Excise Tax. The following statement may be used by the
          supplier when claiming tax deductions for Federal Excise Tax exempt
          items sold to the District.

               I.10.2.1  "The District of Columbia Government Is Exempt From
                         Federal Excise Tax - Registration No. 52-73-0206-K
                         Internal Revenue Service, Baltimore, Maryland."

               I.l0.2.2  Exempt From Maryland Sales Tax, Registered With The
                         Comptroller Of The Treasury As Follows:

               I.10.2.3  Deliveries to Children's Center-Exemption No. 4648

               I.10.2.4  Deliveries to other District Departments or Agencies -
                         Exemption No. 09339

     Payments

     I.11.1 Unless otherwise specified in this contract, payments will be made
          only after performance of the contract in accordance with all
          provisions thereof.

     Evaluation of Prompt Payment Discount

     I.12.1 Prompt payment discounts shall not be considered in the evaluation
          of offers. However, any discount offered will form a part of the
          award and will be taken by the District if payment is made within the
          discount period specified by the Offeror.

     I.12.2 In connection with any discount offered, time will be computed from
          the date of delivery of the supplies to carrier when delivery and
          acceptance are at point of origin, or from date of delivery at
          destination when delivery, installation and acceptance are at that, or
          from the date correct invoice or voucher is received in the office
          specified by the District, if the latter date is later than date of
          delivery. Payment is deemed to be made for the purpose of earning the
          discount on the date of mailing of the Government check.

     Responsibility for Supplies Tendered

     I.13.1 The Contractor shall be responsible for the materials or supplies
          covered by this contract until they are delivered at the designated
          point, but the Contractor shall bear all risk on rejected materials or
          supplies after

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         196
--------------------------------------------------------------------------------

<PAGE>

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

          notification of rejection. Upon failure to do so within ten(10) days
          after date of notification, the District may return the rejected
          materials or supplies to the Contractor at his risk and expense.

     Appointment of Attorney

     I.14.1 The Offeror or Contractor (whichever the case may be) does hereby
          irrevocably designate and appoint the Clerk of the District of
          Columbia Superior Court and his successor in office as the true and
          lawful attorney of the Contractor for the purpose of receiving service
          of all notices and processes issued by any court in the District of
          Columbia, as well as service all pleadings and other papers, in
          relation to any action or legal proceeding arising out of or
          pertaining to this contract or the work required or performed
          hereunder.

     I.14.2 The Offeror or Contractor (whichever the case may be) expressly
          agrees that the validity of any service upon the said Clerk as herein
          authorized shall not be affected either by the fact that the
          Contractor was personally within the District of Columbia and
          otherwise subject to personal service at the time of such service upon
          the said Clerk or by the fact that the Contractor failed to receive a
          copy of such process, notice or other paper so served upon the said
          Clerk provided the said Clerk shall have deposited in the United
          States mail, registered and postage prepaid, a copy of such process,
          notice pleading or other paper addressed to the Offeror or Contractor
          at the address stated in this contract.

     Officers Not to Benefit

     No member of or delegate to Congress, or officer or employee of the
     District shall be admitted to any share or part of this contract or to any
     benefit that may arise therefrom, and any contract made by the Contracting
     Officer of any District employee authorized to execute contract which they
     or the employee of the District shall be personally interested shall be
     void, and no payment shall be made thereon by the District or any officer
     thereof, but this provision shall not be construed to extend to this
     contract if made with a corporation for its general benefit. However,
     should a federal or District employee submit a bid for his personal
     benefit, the Contracting Officer reserves the right to waive the
     aforementioned restriction; providing that said employee furnishes a
     Notarized Affidavit prior to the time set for opening of bids or submission
     of proposal, setting forth intention to resign his/her federal or District
     employment in the event said employee shall be considered for an award of
     contract. Failure to submit such affidavit shall automatically render
     his/her bid/proposal non-responsive and no further consideration shall be
     given thereto. (See Representations, Certifications and Acknowledgements.)

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         197
--------------------------------------------------------------------------------

<PAGE>

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

I.16 Disputes

     I.16.1 All disputes arising under or relating to this contract shall be
          resolved as provided herein.

     I.16.2 Claims by a Contractor against the District.

               I.16.2.1  Claim, as used in Section B of this clause, means a
                         written assertion by the Contractor seeking, as a
                         matter of right, the payment of money in a sum certain,
                         the adjustment or interpretation of contract terms, or
                         other relief arising under or relating to this
                         contract. A claim arising under a contract, unlike a
                         claim relating to that contract, is a claim that can be
                         resolved under a contract clause that provides for the
                         relief sought by the claimant.

               I.16.2.2  All claims by a Contractor against the District arising
                         under or relating to a contract shall be in writing and
                         shall be submitted to the Contracting Officer for a
                         decision

               I.16.2.3  For any claim of $50,000 or less, the Contracting
                         Officer shall issue a decision within sixty (60) days
                         from receipt of a written request from a Contractor
                         that a decision be rendered within that period.

               I.16.2.4  For any claim over $50,000, the Contracting Officer
                         shall issue a decision within ninety (90) days of
                         receipt of the claim. Whenever possible, the
                         Contracting Officer shall take into account factors
                         such as the size and complexity of the claim and the
                         adequacy of the information in support of the claim
                         provided by the Contractor.

               I.16.2.5  Any failure by the Contracting Officer to issue a
                         decision on a contract claim within the required time
                         period will be deemed to be a denial of the claim. The
                         Contractor may appeal denial of the claim as provided
                         herein.

               I.16.2.6  If a Contractor is unable to support any part of his or
                         her claim and it is determined that the inability is
                         attributable to a material misrepresentation of fact or
                         fraud on the part of the Contractor, the Contractor
                         shall be liable to the District for an amount equal to
                         the unsupported part of the claim in addition to all
                         costs to the District attributable to the cost of
                         reviewing that part of the Contractor's claim.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         198
--------------------------------------------------------------------------------

<PAGE>

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

               I.16.2.7  Liability under Section I.16.2.6 shall be determined
                         within six (6) years of the commission of the
                         misrepresentation of fact or fraud

     I.16.3 Interest on amounts found due to a Contractor on claims shall be
          payable at a rate set in DC Code Section 28-3302(b) applicable to
          judgments against the District and shall begin accruing from the date
          the Contracting Officer receives the claim until payment of the claim.

     I.16.4 The decision of the Contracting Officer shall be final and not
          subject to review unless an administrative appeal or action for
          judicial review is timely commenced by the Contractor as authorized by
          DC Code Section 1-1189.4.

     I.16.5 Pending final decision of an appeal, action, or final settlement, a
          Contractor shall proceed diligently with performance of the contract
          in accordance with the decision of the Contracting Officer.

I.17 Claims by the District Against a Contractor

     I.17.1 Claim as used in Section I.17.1.3 of this clause, means a written
          demand or written assertion by the District seeking, as a matter of
          right, the payment of money in a sum certain, the adjustment of
          contract terms, or other relief arising under or relating to this
          contract. A claim arising under a contract, unlike a claim relating to
          that contract, is a claim that can be resolved under a contract clause
          that provides for the relief sought by the claimant.

               I.17.1.1  All claims by the District against a Contractor arising
                         under or relating to a contract shall be decided by the
                         Contracting Officer.

               I.17.1.2  The Contracting Officer shall send written notice of
                         the claim to the Contractor. The Contractor may respond
                         to the claim within thirty (30) days from the date the
                         Contractor receives the claim.

               I.17.1.3  After the expiration of sixty (60) days from the date
                         the Contractor receives the claim, the Contracting
                         Officer shall issue a decision in writing, and furnish
                         a copy of the decision to the Contractor.

               I.17.1.4  The decision shall be supported by reasons and shall
                         inform the Contractor of his or her rights as provided
                         herein. Specific findings of fact are not required,
                         but, if made, shall not be binding in any subsequent
                         proceeding.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         199
--------------------------------------------------------------------------------

<PAGE>

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

               I.17.1.5  The authority contained in this clause shall not apply
                         to a claim or dispute for penalties or forfeitures
                         prescribed by statute or regulation which another
                         District agency is specifically authorized to
                         administer, settle, or determine.

               I.17.1.6  This clause shall not authorize the Contracting Officer
                         to settle, compromise, pay, or otherwise adjust any
                         claim involving fraud.

     I.17.2 Interest on amounts found due to the District from a Contractor on
          claims shall be payable at the rate set in DC Code Section 28-3302(b)
          applicable to judgments against the District, and shall begin accruing
          from the date the Contractor receives a Contracting Officer's written
          decision on behalf of the District until payment of the claim.

     I.17.3 The decision of the Contracting Officer shall be final and not
          subject to review unless an administrative appeal or action for
          judicial review is timely commenced by the District as authorized by
          DC Code Section 1-1189.4.

     I.17.4 Pending final decision of an appeal, action, or final settlement,
          the Contractor shall proceed diligently with performance of the
          contract in accordance with the decision of the Contracting Officer.

I.18 Changes

     I.18.1 The Contracting Officer may, at any time, by written order, and
          without notice to the surety, if any, make changes in the contract
          within the general scope hereof. If such change causes an increase or
          decrease in the cost of performance of this contract, or in the time
          required for performance, an equitable adjustment shall be made. Any
          claim for adjustment under this paragraph shall be asserted within ten
          (10) days from the date the change is offered, provided, however, that
          the Contracting Officer, if he or she determines that the facts
          justify such action, may receive, consider and adjust any such claim
          asserted at any time prior to the date of final settlement of the
          contract. If the parties fail to agree upon the adjustment to be made,
          the dispute shall be determineed as provided in the Dispute clause
          hereto. Nothing in this clause shall excuse the Contractor from
          proceeding with the contract as changed.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         200
--------------------------------------------------------------------------------

<PAGE>

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

I.19 Termination for Convenience of the District

     I.19.1 The District may terminate performance of work under this contract
          in whole or, from time to time, in part if the Contracting Officer
          determines that a termination is in the District's interest. The
          Contracting Officer shall terminate by delivering to the Contractor a
          Notice of Termination specifying the extent of termination and
          effective date.

     I.19.2 After receipt of a Notice of Termination, and except as directed by
          the Contracting Officer, the Contractor shall immediately proceed with
          the following obligations, regardless of any delay in determining or
          adjusting any amounts due under this clause:

               I.19.2.1  Stop work as specified in the notice

               I.19.2.2  Place no further subcontracts or orders (referred to as
                         subcontracts in this clause) for materials, services,
                         or facilities, except as necessary to complete the
                         continued portion of the contract.

               I.19.2.3  Terminate all contracts to the extent they relate to
                         the work terminated.

               I.19.2.4  Assign to the District, as directed by the Contracting
                         Officer, all rights, title and interest of the
                         Contractor under the subcontracts terminated, in which
                         case the District shall have the right to settle or pay
                         any termination settlement proposal arising out of
                         those terminations.

               I.19.2.5  With approval or ratification to the extent required by
                         the Contracting Officer, settle all outstanding
                         liabilities and termination settlement proposals
                         arising from the termination of subcontracts. The
                         approval or ratification will be final for purposes of
                         this clause.

               I.19.2.6  As directed by the Contracting Officer, transfer title
                         and deliver to the District (i) the fabricated or
                         unfabricated parts, work in process, completed work,
                         supplies, and other materials produced or acquired for
                         the work terminated, and (ii) the completed or
                         partially completed plans, drawings, information, and
                         other property that, if the contract has been
                         completed, would be required to be furnished to the
                         District.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         201
--------------------------------------------------------------------------------

<PAGE>

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

               I.19.2.7  Complete performance of the work not terminated.

               I.19.2.8  Take any action that may be necessary, or that the
                         Contracting Officer may direct, for the protection and
                         preservation of the property related to this contract
                         that is in the possession of the Contractor and in
                         which the District has or may acquire an interest.

               I.19.2.9  Use its best efforts to sell, as directed or authorized
                         by the Contracting Officer, any property of the types
                         referred to in Section I.19.2.6 above; provided,
                         however, that the Contractor (i) is not required to
                         extend credit to any purchaser and (ii) may acquire the
                         property under the conditions prescribed by, and at
                         prices approved by, the Contracting Officer. The
                         proceeds of any transfer or disposition will be applied
                         to reduce any payments to be made by the District under
                         this contract, credited to the price or cost of the
                         work, or paid in any other manner directed by the
                         Contracting Officer.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         202
--------------------------------------------------------------------------------

<PAGE>

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

     I.19.3 After the expiration of ninety (90) days (or such longer period as
          may be agreed to) after receipt by the Contracting Officer of
          acceptable inventory schedules, the Contractor may submit to the
          Contracting Officer a list, certified as to quantity and quality of
          termination inventory not previously disposed of excluding items
          authorized for disposition by the Contracting Officer. The Contractor
          may request the District to remove those items or enter into an
          agreement for their storage. Within fifteen (15) days, the District
          will accept title to those items and remove them or enter into a
          storage agreement. The Contracting Officer may verify the list upon
          removal of the items, or if stored, within forty-five (45) days from
          submission of the list, and shall correct the list, as necessary,
          before final settlement.

     I.19.4 After termination, the Contractor shall submit a final termination
          Settlement proposal to the Contracting Officer in the form and with
          the certification prescribed by the Contracting Officer. The
          Contractor shall submit the proposal promptly, but no later than six
          (6) months from the effective date of termination, unless extended in
          writing by the Contracting Officer upon written request of the
          Contractor within this six (6) month period. However, if the
          Contracting Officer determines that the facts justify it, a
          termination settlement proposal may be received and acted on after six
          (6) months or any extension. If the Contractor fails to submit the
          proposal within the time allowed, the Contracting Officer may
          determine, on the basis of information available, the amount, if any,
          due to the Contractor because of the termination and shall pay the
          amount determined.

     I.19.5 Subject to Section I.19.4 above, the Contractor and the Contracting
          Officer may agree upon the whole or any part of the amount to be paid
          because of the termination. The amount may include a reasonable
          allowance for profit on work done. However, the agreed amount, whether
          under this Section I.19.5 or Section I.16.6 below, exclusive of costs
          shown in Section I.19.6.3 below, may not exceed the total contract
          price as reduced by (1) the amount of payment previously made and (2)
          the contract price of work not terminated. The contract shall be
          amended, and the Contractor paid the agreed amount. Section I.19.6
          below shall not limit, restrict, or affect the amount that may be
          agreed upon to be paid under this paragraph.

     I.19.6 If the Contractor and the Contracting Officer fail to agree on the
          whole amount to be paid because of the termination work, the
          Contracting Officer shall pay the Contractor the amounts determined by
          the Contracting Officer as follows, but without duplication of any
          amounts agreed on under Section I.19.5 above:

               I.19.6.1  The contract price for completed supplies or Services
                         accepted by the District (or sold or

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         203
--------------------------------------------------------------------------------

<PAGE>

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

                         acquired under Section I.19.5 (above) not previously
                         paid for, adjusted for any saving of freight and other
                         charges.

               I.19.6.2  The total of:

                         I.19.6.2.1 The costs incurred in the performance of the
                                   work terminated, including initial costs and
                                   preparatory expense allocable thereto, but
                                   excluding any costs attributable to supplies
                                   or services paid or to be paid under Section
                                   I.19.2.9 above;

                         I.19.6.2.2 The cost of settling and paying termination
                                   settlement proposals under terminated
                                   subcontracts that are properly chargeable to
                                   the terminated portion of the contract if not
                                   included in subparagraph above; and

                         I.19.6.2.3 A sum, as profit on subparagraph above,
                                   determined by the Contracting Officer to be
                                   fair and reasonable; however, if it appears
                                   that the Contractor would have sustained a
                                   loss on the entire contract had it been
                                   completed, the Contracting Officer shall
                                   allow no profit under this subparagraph and
                                   shall reduce the settlement to reflect the
                                   indicated rate of loss.

               I.19.6.3  The reasonable cost of settlement of the work
                         terminated, including:

--------------------------------------------------------------------------------
CONTRACT NO, P0HC-2002-D-0003          204
--------------------------------------------------------------------------------

<PAGE>

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

                         I.19.6.3.1 Accounting, legal, clerical, and other
                                   expenses reasonably necessary for the
                                   preparation of termination settlement
                                   proposals and supporting data;

                         I.19.6.3.2 The termination and settlement of
                                   subcontractors (excluding the amounts of such
                                   settlements) and

                         I.19.6.3.3 Storage, transportation, and other costs
                                   incurred, reasonably necessary for the
                                   preservation, protection, or disposition of
                                   the termination inventory.

               I.19.6.4  Except for normal spoilage, and except to the extent
                         that the District expressly assumed the risk of loss,
                         the Contracting Officer shall exclude from the amounts
                         payable to the Contractor under Section I.19.2.9 above,
                         the fair value as determined by the Contracting
                         Officer, of property that is destroyed, lost, stolen,
                         or damaged so as to become undeliverable to the
                         Government or to a buyer.

               I.19.6.5  The Contractor shall have the right of appeal, under
                         the Disputes clause, from any determination made by the
                         Contracting Officer under paragraphs (d), (f) or (j),
                         except that if the Contractor failed to submit the
                         termination settlement proposal within the time
                         provided in paragraph (d) or (j), and failed to request
                         a time extension, there is no right of appeal. If the
                         Contracting Officer has made a determination of the
                         amount due under paragraph (d), (f) or (j), the
                         District shall pay the Contractor (1) the amount
                         determined by the Contracting Officer if there is no
                         right of appeal or if no timely appeal has been taken,
                         or (2) the amount finally determined on an appeal.

               I.19.6.6  In arriving at the amount due the Contractor under this
                         clause, there shall be deducted:

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         205
--------------------------------------------------------------------------------

<PAGE>

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

                         I.19.6.6.1 All unliquidated advance or other payments
                                   to the Contractor under the termination
                                   portion of the contract;

                         I.19.6.6.2 Any claim which the District has against the
                                   Contractor under this contract; and

                         I.19.6.6.3 The agreed price for, or the proceeds of
                                   sale of, materials, supplies, or other things
                                   acquired by the Contractor or sold under the
                                   provisions of this clause and not recovered
                                   by or credited to the District.

               I.19.6.7  If the termination is partial, the Contractor may file
                         a proposal with the Contracting Officer for an
                         equitable adjustment of the price(s) of the continued
                         portion of the contract. The Contracting Officer shall
                         make any equitable adjustment agreed upon. Any proposal
                         by the Contractor for an equitable adjustment under
                         this clause shall be requested within ninety (90) days
                         from the effective date of termination unless extended
                         in writing by the Contracting Officer.

                         I.19.6.7.1 The District may, under the terms and
                                   conditions it prescribes, make partial
                                   payments and payments against costs incurred
                                   by the Contractor for the terminated portion
                                   of the contract, if the Contracting Officer
                                   believes the total of these payments will not
                                   exceed the amount to which the Contractor
                                   will be entitled

                         I.19.6.7.2 If the total payments exceed the amount
                                   finally determined to be due, the Contractor
                                   shall repay the excess to the District upon
                                   demand together with interest computed at the
                                   rate of 10 percent (10%) per year. Interest
                                   shall be computed for the period from the
                                   date the excess payment is received by the
                                   Contractor to the date the excess payment is
                                   repaid. Interest shall not be charged on any
                                   excess payment due to a reduction in the
                                   Contractor's termination settlement proposal
                                   because of retention or other disposition of
                                   termination inventory

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         206
--------------------------------------------------------------------------------

<PAGE>

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

                                   until ten (10) days after the date of the
                                   retention or disposition, or a later date
                                   determined by the Contracting Officer because
                                   of the circumstances.

               I.19.6.8  Unless otherwise provided in this contract or by
                         statue, the Contractor shall maintain all records and
                         documents relating to the terminated portion of this
                         contract for three (3) years after final settlement.
                         This includes all books and other evidence bearing on
                         the Contractor's costs and expenses under this
                         contract. The Contractor shall make these records and
                         documents available to the District, at the
                         Contractor's office, at all reasonable times, without
                         any direct charge. If approved by the Contracting
                         Officer, photographs, micrographs, or other authentic
                         reproductions may be maintained instead of original
                         records and documents.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         207
--------------------------------------------------------------------------------

<PAGE>

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

I.20 Recovery of Debts Owed the District

     I.20.1 The Contractor hereby agrees that the District of Columbia may use
          all or any portion of any consideration or refund due the Contractor
          under the present contract to satisfy in whole or part, any debt due
          the District.

I.21 Examination of Books, etc. by the Office of Inspector General and the
     District of Columbia Auditor

     I.21.1 The Contracting Officer, the Inspector General and the District of
          Columbia Auditor, or any of their duly authorized representatives
          shall, until five (5) years after final payment, have the right to
          examine any directly pertinent books, documents, papers and records of
          the Contractor involving transactions related to the contract.

I.22 Non-Discrimination Clause

     I.22.1 The Contractor shall not discriminate in any manner against any
          employee or applicant for employment that would constitute a Violation
          of the District of Columbia Human Rights Act, approved December 13,
          1977 (DC Law 2-38: DC Code I-2512) (1981 Ed.). The Contractor shall
          include a similar clause in all subcontracts, except subcontracts for
          standard commercial supplies or raw materials. In addition, Contractor
          agrees and any subcontractor shall agree to post in conspicuous
          places, available to employees and applicants for employment, notice
          setting forth the provisions of this non-discrimination clause proved
          in Section 251 of the District of Columbia Human Rights Act (DC Code
          1-2522).

     I.22.2 Pursuant to rules of the Department of Human Rights and Local
          Business Development, published on August 15, 1986 in the DC Register,
          the following clauses apply to this contract:

               I.22.2.1  1103.2 - The Contractor shall not discriminate against
                         any employee or applicant for employment because of
                         race, color, religion, national origin, sex, age,
                         marital status, personal appearance, sexual
                         orientation, family responsibilities, matriculation,
                         political affiliation, or physical handicap.

               I.22.2.2  1103.3 - The Contractor agrees to take affirmative
                         action to ensure that applicants are employed, and that
                         employees are treated during employment, without regard
                         to their race, color, religion, national origin, sex,
                         age, marital status, personal appearance, sexual
                         orientation, family responsibilities, matriculation,
                         political affiliation, or physical handicap. The
                         affirmative action shall include, but not be limited to
                         the following:

                         .    employment, upgrading or transfer;

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         208
--------------------------------------------------------------------------------

<PAGE>

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

                         .    recruitment, or recruitment advertising;
                         .    demotion, layoff, or termination;
                         .    rates of pay, or other forms of compensation;
                         .    and selection for training and apprenticeship.

               I.22.2.3  1103.4 - The Contractor agrees to post in conspicuous
                         places, available to employees and applicants for
                         employment, notices to be provided by the Contracting
                         Agency, setting forth the provisions in subsections
                         1103.2 and 1103.3 concerning non-discrimination and
                         affirmative action.

               I.22.2.4  1103.5 - The Contractor shall, in all solicitations or
                         advertisements for employees placed by or on behalf of
                         the Contractor, state that all qualified applicants
                         will receive consideration for employment pursuant to
                         the non-discrimination requirements set forth in
                         subsection 1103.2.

               I.22.2.5  1103.6 - The Contractor agrees to send to each labor
                         union or representative of workers with which he has a
                         collective bargaining agreement or other contract or
                         understanding, a notice to be provided by the
                         Contracting Officer, advising the said labor union or
                         workers' representative of that Contractor's
                         commitments under this chapter, and shall post copies
                         of the notice in conspicuous places available to
                         employees and applicants for employment.

               I.22.2.6  1103.7 - The Contractor agrees to permit access to his
                         books, records and accounts pertaining to its
                         employment practices, by the Chief Procurement Officer
                         or his/her alternates, for purposes of investigation to
                         ascertain compliance with this chapter, and to require
                         under terms of any subcontractor agreement each
                         subcontractor to permit access of such subcontractors'
                         books, records, and accounts for such purposes.

               I.22.2.7  1103.8 - The Contractor agrees to comply with the
                         provisions of this chapter and with all guidelines for
                         equal employment opportunity applicable in the District
                         of Columbia adopted by the Chief Procurement Officer,
                         or any authorized official.

               I.22.2.8  1103.9 - The prime Contractor shall include in every
                         subcontract the equal opportunity clauses, subsection
                         1103.2 through 1103.10 of this section, so that such

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         209
--------------------------------------------------------------------------------

<PAGE>

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

                         provisions shall be binding upon each subcontractor or
                         vendor.

               I.22.2.9  1103.10 - The prime Contractor shall take such action
                         with respect to any subcontract as the Contracting
                         Officer may direct as a means of enforcing these
                         provisions, including sanctions for noncompliance;
                         provided, however, that in the event the prime
                         Contractor becomes involved in, or is threatened with,
                         litigation with a subcontractor or vendor as a result
                         of such direction by the contracting agency, the prime
                         Contractor may request the District to enter into such
                         litigation to protect the interest of the District.

     Definitions

     I.23.1 The terms Mayor, Chief Procurement Officer, Contract Appeals Board
          and District shall mean the Mayor of the District of Columbia, the
          Chief Procurement Officer of the District of Columbia or his/her
          alternate, the Contract Appeals Board of the District of Columbia, and
          the Government of the District of Columbia respectively. If the
          Contractor is an individual, the term Contractor shall mean the
          Contractor, his heirs, his executive and his administrator. If the
          Contractor is a corporation, the term Contractor shall mean the
          Contractor and its successor.

     Health and Safety Standards

     I.24.1 Items delivered under this contract shall conform to all
          requirements of the Occupational Safety and Health Act of 1970, as
          amended, and Department of Labor Regulations under the Act, and all
          Federal requirements in effect at time of bid opening/proposal
          submission.

     Appropriation of Funds

     I.25.1 The District's liability under this contract is contingent upon the
          future availability of appropriated monies with which to make payment
          for the contract purposes. The legal liability on the part of the
          District for the payment of any money shall not arise unless and until
          such appropriation shall have been provided.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         210
--------------------------------------------------------------------------------

<PAGE>

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

     Hiring of District Residents

     I.26.1 All new employment resulting from this contract or subcontracts
          hereto, as defined in Mayor's Order 83-265 and implementing
          instructions, shall include the following basic goals and objectives
          for utilization of bona fide residents of the District of Columbia in
          each project's labor force:

               I.26.1.1  At least fifty-one (51) percent of all jobs created are
                         to be performed by employees who are residents of the
                         District of Columbia.

               I.26.1.2  At least fifty-one (51) percent of apprentices and
                         trainees employed shall be residents of the District of
                         Columbia registered in programs approved by the
                         District of Columbia Apprenticeship Council. The
                         Contractor shall negotiate an Employment Agreement with
                         the District of Columbia Department of Employment
                         Services for jobs created as a result of this contract.
                         The Department of Employment Services shall be the
                         Contractor's first source of referral for qualified
                         applicants, trainees and other workers in the
                         implementation of employment goals contained in this
                         clause.

     Buy American Act

     I.27.1 The Buy American Act (41 U.S.C. 10) provides that the District give
          preference to domestic end products.

     I.27.2 "Components," as used in this clause, means those articles,
          materials, and supplies incorporated directly into the end products.

     I.27.3 "Domestic end product," as used in this clause, means, (1) an
          unmanufactured end product mined or produced in the United States, or
          (2) an end product manufactured in the United States, if the cost of
          its components mined, produced, or manufactured in the United States,
          exceeds 50 percent (50%) of the cost of all its components. Components
          of foreign origin of the same class or kind as the products referred
          to in Sections I.27.5.3 or I.27.5.4 of this clause shall be treated as
          domestic. Scrap generated, collected and prepared for processing in
          the United States is considered domestic.

     I.27.4 "End products," as used in this clause, means those articles,
          materials, and supplies to be acquired for public use under this
          contract.

     I.27.5 The Contractor shall deliver only domestic end products, except
          those:

               I.27.5.1  For use outside the United States;

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         211
--------------------------------------------------------------------------------

<PAGE>

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

               I.27.5.2  That the District determines are not mined, produced,
                         or manufactured in the United States in sufficient and
                         reasonably available commercial quantities of a
                         satisfactory quality;

               I.27.5.3  For which the agency determines that domestic
                         preference would be inconsistent with the public
                         interest; or

               I.27.5.3  For which the agency determines the cost to be
                         unreasonable.

I.28 Service Contract Act of 1965

     I.28.1 Definitions

               I.28.1.1  "Act, as used in this clause, means the Service
                         Contract Act of 1965, as amended (41 U.S.C. 351-358).

               I.28.1.2  "Contractor," as used in this clause, means the prime
                         Contractor or any subcontractor at any tier.

               I.28.1.3  "Service employee," as used in this clause, means any
                         person (other than a person employed in a bona fide
                         executive, administrative, or professional capacity as
                         defined in 29 CFR 541) engaged in performing a
                         Government contract not exempted under 41 U.S.C. 356,
                         the principal purpose of which is to furnish services
                         in the United States, as defined in section 22.1001 of
                         the Federal Acquisition Regulation. It includes all
                         such persons regardless of the actual or alleged
                         contractual relationship between them and a contractor.

     I.28.2 Applicability

               I.28.2.1  To the extent that the Act applies, this contract is
                         subject to the following provisions and to all other
                         applicable provisions of the Act and regulations of the
                         Secretary of Labor (20 CFR 4). All interpretations of
                         the Act in Subpart C of 29 CFR 4 are incorporated in
                         this contract by reference. This clause does not apply
                         to contracts or subcontracts administratively exempted
                         by the Secretary of Labor or exempted by 41 U.S.C. 356,
                         as interpreted in Subpart C of 29 CFR 4.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         212
--------------------------------------------------------------------------------

<PAGE>

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

     I.28.3 Compensation

               I.28.3.1  The Contractor shall pay not less than the minimum wage
                         and shall furnish fringe benefits to each service
                         employee under this contract in accordance with the
                         wages and benefits determined by the Secretary of Labor
                         or the Secretary's authorized representative, as
                         specified in any attachments to this contract.

               I.28.3.2  If there is an attachment, the Contractor shall
                         classify any class of service employees not listed in
                         it, but to be employed under this contract. The
                         classification shall provide a reasonable relationship
                         to those listed in the attachment. The Contractor shall
                         pay that class wages and fringe benefits determined by
                         agreement of the interested parties: The contracting
                         agency, the Contractor, and the employees who will
                         perform the contract or their representatives. If the
                         interested parties do not agree, the Contracting
                         Officer shall submit the question, with a
                         recommendation, for final determination by the Office
                         of Government Contract Wage Standards, Wage and Hour
                         Division, Employment Standards Administration (ESA),
                         Department of Labor. Failure to pay such employees the
                         compensation agreed upon by the interested parties or
                         finally determined by ESA is a contract violation.

               I.28.3.3  If the term of this contract is more than one (1) year,
                         the minimum wages and fringe benefits required for
                         service employees under this contract shall be subject
                         to adjustment after one (1) year and not less often
                         than once every two (2) years, under wage
                         determinations issued by ESA.

               I.28.3.4  The Contractor can discharge the obligation to furnish
                         fringe benefits specified in the attachment or
                         determined under Section I.28.3.1 of this clause by
                         furnishing any equivalent combinations of bona fide
                         fringe benefits, or by making equivalent or
                         differential cash payments, in accordance with Subpart
                         Band C of 29 CFR 4.

     I.28.4 Minimum wage

               I.28.4.1  In the absence of a minimum wage attachment for this
                         contract, the Contractor shall not pay any service or
                         other employees performing this contract less than the
                         minimum

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         213
--------------------------------------------------------------------------------

<PAGE>

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

                         wage specified by section 6(a)(l) of the Fair Labor
                         Standards Act of 1938, as amended (29 U.S.C. 206).
                         Nothing in this clause shall relieve the Contractor of
                         any other legal or contractual obligation to pay a
                         higher wage to any employee.

     I.28.5 Successor contracts

               I.28.5.1  If this contract succeeds a contract subject to the Act
                         under which substantially the same services were
                         furnished and service employees were paid wages and
                         fringe benefits provided for in a collective bargaining
                         agreement, then, in the absence of a minimum wage
                         attachment to this contract, the Contractor may not pay
                         any service employee performing this contract less than
                         the wages and benefits, including those accrued and any
                         prospective increases, provided for under that
                         agreement. No Contractor may be relieved of this
                         obligation unless the limitations of 29 CFR 4.1c(b)
                         apply or unless the Secretary of Labor or the
                         Secretary's authorized representative,

                         I.28.5.1.1 Determines that the agreement under the
                                   predecessor was not the result of arms-length
                                   negotiations; or

                         I.28.5.1.2 Finds, after a hearing under 29 CFR 4.10.
                                   that the wages and benefits provided for by
                                   that agreement vary substantially from those
                                   prevailing for similar services in the
                                   locality.

     I.28.6 Notification to employees

               I.28.6.1  The Contractor shall notify each service employee
                         commencing work on this contract of a minimum wage and
                         any fringe benefits required to be paid, or shall post
                         a notice of these wages and benefits in a prominent and
                         accessible place at the worksite, using such poster as
                         may be provided by the Department of Labor.

     I.28.7 Safe and sanitary working conditions

               I.28.7.1  The Contractor shall not permit services called for by
                         this contract to be performed in buildings or
                         surroundings or under working conditions provided by or
                         under the control or supervision of the Contractor that
                         are unsanitary, hazardous, or dangerous to the health
                         or safety of service

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         214
--------------------------------------------------------------------------------

<PAGE>

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

                         employees. The Contractor shall comply with the health
                         standards applied under 29 CFR Part 1925.

     I.28.8 Records

               I.28.8.1. The Contractor shall maintain for three (3) years from
                         the completion of work, and make available for
                         inspection and transcription by authorized ESA
                         representatives, a record of the following:

                         I.28.8.1.1 For each employee subject to the Act:

                                   a)   Name and address;
                                   b)   Work classification or classifications,
                                        rate or rates of wages and fringe
                                        benefits provided, rate or rates of
                                        payments in lieu of fringe benefits, and
                                        total daily and weekly compensation;
                                   c)   Daily and weekly hours worked; and
                                   e)   Any deductions, rebates, or refunds from
                                        total daily or weekly compensation.

                         I.28.8.1.2 For those classes of service employees not
                                   included in any wage determination attached
                                   to this contract, wage rates or fringe
                                   benefits determined by the interested parties
                                   or by ESA under the terms of Section I.28.4.1
                                   of this clause. A copy of the report required
                                   by Section I.28.4 of this clause will fulfill
                                   this requirement.

               I.28.8.2  Withholding of payments and termination of contract

                         I.28.8.2.1 The Contracting Officer shall withhold from
                                   the prime Contractor under this or any other
                                   Government contract with the prime Contractor
                                   any sums the Contracting Officer, or an
                                   appropriate officer of the Labor Department,
                                   decides may be necessary to pay underpaid
                                   employees. Additionally, any failure to
                                   comply with the requirements of this clause
                                   may be grounds for termination for default.

               I.28.8.3  Subcontracts

                         The Contractor agrees to insert this clause in all
                         subcontracts.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         215
--------------------------------------------------------------------------------

<PAGE>

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

               I.28.8.4  Contractor's report

                         I.28.8.4.1 If there is a wage determination attachment
                                   to this contract and any classes of service
                                   employees not listed on it are to be employed
                                   under the contract, the Contractor shall
                                   report promptly to the Contracting Officer
                                   the wages to be paid and the fringe benefits
                                   to be provided each of these classes, when
                                   determined under Section I.28.3.2 of this
                                   clause.

                         I.28.8.4.2 If wages to be paid or fringe benefits to be
                                   furnished any service employees under the
                                   contract are covered in a collective
                                   bargaining agreement effective at any time
                                   when the contract is being performed, the
                                   prime Contractor shall provide to the
                                   Contracting Officer a copy of the agreement
                                   and full information on the application and
                                   accrual of wages and benefits (including any
                                   prospective increases) to service employees
                                   working on the contract. The prime Contractor
                                   shall report when contract performance
                                   begins, in the case of agreements then in
                                   effect, and shall report subsequently
                                   effective agreements, provisions, or
                                   amendments promptly after they are
                                   negotiated.

               I.28.8.5  Variations, tolerances, and exemptions involving
                         employment. Notwithstanding any of the provisions in
                         Sections I.28.3.2 through I.28.4 of this clause, the
                         following employees may be employed in accordance with
                         the following variations, tolerances, and exemptions
                         authorized by the Secretary of Labor.

                         I.28.8.5.1 In accordance with regulations issued under
                                   Section 14 of the Fair Labor Standards Act of
                                   1938 by the Administrator of the Wage and
                                   Hour Division, ESA (29 CFR 520, 521, 524, and
                                   525), apprentices, student learners, and
                                   workers whose earning capacity is impaired by
                                   age or by physical or mental deficiency or
                                   injury, may be employed at wages lower than
                                   the minimum wages

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         216
--------------------------------------------------------------------------------

<PAGE>

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

                                   otherwise required by section 2(a)(1) or
                                   2(b)(1) of the Service Contract Act, without
                                   diminishing any fringe benefits or payments
                                   in lieu of these benefits required under
                                   section 2(a)(2) of the Act.

                                   a)   The Administrator will issue
                                        certificates under the Act for employing
                                        apprentices, student-learners,
                                        handicapped persons, or handicapped
                                        clients of sheltered workshops not
                                        subject to the Fair Labor Standards Act
                                        of 1938, or subject to different minimum
                                        rates of pay under the two acts,
                                        authorizing appropriate rates of minimum
                                        wages, but without changing requirements
                                        concerning fringe benefits or
                                        supplementary cash payments in lieu of
                                        these benefits.
                                   b)   The Administrator may also withdraw,
                                        annul, or cancel such certificates under
                                        29 CFR 525 and 528.
                                   c)   An employee engaged in an occupation in
                                        which the employee customarily and
                                        regularly receives more than $30 a month
                                        in tips credited by the employer against
                                        the minimum wage required by section
                                        2(a)(1) or section 2(b)(1) of the Act,
                                        in accordance with regulations in 29 CFR
                                        531. However, the amount of credit shall
                                        not exceed 40 percent of the minimum
                                        rate specified in section 6(a)(1) of
                                        the Fair Labor Standards Act of 1938 as
                                        amended.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         217
--------------------------------------------------------------------------------

<PAGE>

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

I.29 Cost and Pricing Data

     I.29.1 This paragraph and paragraphs b through e below shall apply to
          Contractors or Offerors in regards to: (1) any procurement in excess
          of $100,000, (2) any contract awarded through competitive sealed
          proposals, (3) any contract awarded through sole source procurement,
          or (4) any change order or contract modification. By entering into
          this contract or submitting this offer, the Contractor or Offeror
          certifies that, to the best of the Contractor's or Offeror's knowledge
          and belief, any cost and pricing data submitted was accurate, complete
          and current as of the date specified in the contract or offer.

     I.29.2 Unless otherwise provided in the solicitation, the Offeror or
          Contractor shall, before entering into any contract awarded through
          competitive sealed proposals or through sole source procurement or
          before negotiating any price adjustments pursuant to a change order or
          modification, submit cost or pricing data and certification that, to
          the best of the Contractor's knowledge and belief, the cost or pricing
          data submitted was accurate, complete, and current as of the date of
          award of this contract or as of the date of negotiation of the change
          order or modification.

     I.29.3 If any price, including profit or fee, negotiated in connection with
          this contract, or any cost reimbursable under this contract, was
          increased by any significant amount because (1) the Contractor or a
          subcontractor furnished cost or pricing data that were not complete,
          accurate, and current as certified by the Contractor, (2) a
          subcontractor or prospective subcontractor furnished the Contractor
          cost or pricing data that were not complete, accurate, and current as
          certified by the Contractor, or (3) any of these parties furnished
          data of any description that were not accurate, the price or cost
          shall be reduced accordingly and the contract shall be modified to
          reflect the reduction.

     I.29.4 Any reduction in the contract price under paragraph c above due to
          defective data from a prospective subcontractor that was not
          subsequently awarded the subcontract shall be limited to the amount,
          plus applicable overhead and profit markup, by which (1) the actual
          subcontract or (2) the actual cost to the Contractor, if there was no
          subcontract, was less than the prospective subcontract cost estimate
          submitted by the Contractor; provided that the actual subcontract
          price was not itself affected by defective cost or pricing data.

     I.29.5 Cost or pricing data includes all facts as of the time of price
          agreement that prudent buyers and sellers would reasonably expect to
          affect price negotiations significantly. Cost or pricing data are
          factual, not judgmental, and are therefore verifiable. While they do
          not indicate the accuracy of the prospective Contractor's judgment
          about estimated future costs or projections, cost or pricing data do
          include the data forming the basis for that judgment. Cost or pricing
          data are more than historical accounting

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         218
--------------------------------------------------------------------------------

<PAGE>

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

          data; they are all the facts that can be reasonably expected to
          contribute to the soundness of estimates of future costs and to the
          validity of determinations of costs already incurred.

     I.29.6 The following specific information should be included as cost or
          pricing data, as applicable:

               I.29.6.1  Vender quotations;

               I.29.6.2  Nonrecurring costs;

               I.29.6.3  Information on changes in production methods or
                         purchasing volume;

               I.29.6.4  Data supporting projections of business prospects and
                         objectives and related operations costs;

               I.29.6.5  Unit/cost trends such as those associated with labor
                         efficiency;

               I.29.6.6  Make-or-buy decisions;

               I.29.6.7  Estimated resources to attain business goals;

               I.29.6.8  Information on management decisions that could have a
                         significant bearing on costs.

     I.29.7 If the Offeror or Contractor is required by law to submit cost or
          pricing data in connection with pricing this contract or any change
          order or modification of this contract, the Contracting Officer or
          representatives of the Contracting Officer shall have the right to
          examine all books, records, documents and other data of the Con-
          tractor (including computations and projections) related to
          negotiating, pricing, or performing the contract, change order or
          modification, in order to evaluate the accuracy, completeness, and
          currency of the cost or pricing data. The right of examination shall
          extend to all documents necessary to permit adequate evaluation of the
          cost or pricing data submitted, along with the computations and
          projections used. Contractor shall make available at its office at all
          reasonable times the materials described above for examination, audit,
          or re- production until three years after the later of:

               I.29.7.1  Final payment under the contract;

               I.29.7.2  Final termination settlement; or

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         219
--------------------------------------------------------------------------------

<PAGE>

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

               I.29.7.3  Final disposition of any appeals under the disputes
                         clause or of litigation or the settlement of claims
                         arising under or relating to the contract.

     Cost-Reimbursement Contracts - CLIN 0002 Only

     I.30.1 Contract line item number 0002 is a cost-reimbursement contract,
          the only costs determined in writing to be reimbursable by the
          Contracting Officer, in accordance with the cost principles set forth
          in rules issued pursuant to Title VI of the Procurement Practices Act
          of 1985 shall be reimbursable.

     Termination of Contracts for Certain Crimes and Violations

     I.31.1 The District may terminate without liability any contract and may
          deduct from the contract price or otherwise recover the full amount of
          any fee, commission, percentage, gift, or consideration paid in
          violation of this title if:

     I.31.2 The Contractor has been convicted of a crime arising out of or in
          connection with the procurement of any work to be done or any payment
          to be made under the contract; or

     I.31.3 There has been any breach or violation of:

               I.31.3.1  Any provision of the Procurement Practices Act of 1985,
                         as amended, or

               I.31.3.2  The contract provision against contingent fees.

     I.31.4 If a contract is terminated pursuant to this section, the
          Contractor:

               I.31.4.1  May be paid only the actual costs of the work performed
                         to the date of termination, plus termination costs, if
                         any; and

               I.31.4.2  Shall refund all profits or fixed fees realized under
                         the Contract.

     I.31.5 The rights and remedies contained in this are in addition to any
          other right or remedy provided by law, and the exercise of any of them
          is not a waiver of any other right or remedy provided by law.

     Additional Standard Clauses

     I.32.1 Contract Clauses

               I.32.1.1  Disclosure of Information

                         I.32.1.1.1 Documents or data submitted under the
                                   contract are subject to disclosure under the

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         220
--------------------------------------------------------------------------------

<PAGE>

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

                                   Freedom of Information Act, DC Code 1- 521
                                   and other applicable disclosure statutes.

               I.32.1.2  Applicability of Standard Contract Provisions The
                         Standard Contract Provisions for use with District of
                         Columbia Government Supply and Services Contracts dated
                         October 1999 shall be applicable to the contract
                         resulting from this solicitation.

               I.32.1.3  Time

                         I.32.1.3.1 Time, if stated in a number of days, will
                                   include Saturdays, Sundays, and holidays,
                                   unless otherwise stated herein.

               I.32.1.4  Restriction on Disclosure and Use of Information Before
                         Awarded

                         I.32.1.4  Offerors who include in their proposal data
                                   that they do not want disclosed to the public
                                   or used by the District Government except for
                                   use in the procurement process shall:

               I.32.1.5  Make the title page with the following legend

                         I.32.1.5.1 "This proposal includes data that shall not
                                   be disclosed outside the District Government
                                   and shall not be duplicated, used or
                                   disclosed in whole or in part for any purpose
                                   except for use in the procurement process."

     I.32.2 Drug-Free Workplace

               I.32.2.1  Definitions

                         I.32.2.1.1 As used in this provision "Controlled
                                   substance" means a controlled substance in
                                   schedules I through V of section 202 of the
                                   Controlled Substance Act (21 U.S.C. 812) and
                                   as further defined in regulation at 21 CFR
                                   1308.11 - 1308.15.

                         I.32.2.1.2 "Conviction" means a finding of guilt
                                   (including a plea of nolo contendere) or
                                   imposition of sentence, or both, charged

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         221
--------------------------------------------------------------------------------

<PAGE>

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

                                   with the responsibility to determine
                                   violations of the federal or state criminal
                                   drug statutes.

                         I.32.2.1.3 "Criminal drug statute" means a federal or
                                   non-federal criminal statute involving the
                                   manufacture, distribution, dispensing,
                                   possession or use of any controlled
                                   substance.

                         I.32.2.1.4 "Drug-free workplace" means a site for the
                                   performance of work done by the Contractor in
                                   connection with a specific contract at which
                                   employees of the Contractor are prohibited
                                   from engaging in the unlawful manufacture,
                                   distribution, dispensing, possession, or use
                                   of a controlled substance.

                         I.32.2.1.5 "Directly engaged" is defined to include all
                                   direct cost employees and any other
                                   Contractor employee who has other than a
                                   minimal impact or involvement in contract
                                   performance.

                         I.32.2.1.6 "Employee" means an employee of a Contractor
                                   directly engaged in the performance of work
                                   under a Government contract.

                         I.32.2.1.7 "Individuals" means an Offeror/Contractor
                                   that has no more than one employee including
                                   the Offeror/Contractor.

               I.32.2.2  The Contractor, if other than an individual, shall,
                         within 30 calendar days after award (unless a longer
                         period is agreed in writing for contracts of 30
                         calendar days or more performance duration) or as soon
                         as possible for contracts of less than 30 calendar days
                         performance duration:

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         222
--------------------------------------------------------------------------------

<PAGE>

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

                         I.32.2.2.1 Publish a statement notifying its employees
                                   that the unlawful manufacture, distribution,
                                   dispensing, possession, or use of a
                                   controlled substance is prohibited in the
                                   Contractor's workplace and specifying the
                                   actions that will be taken against employees
                                   for violations of such prohibition;

                         I.32.2.2.2 Establish an ongoing drug-free awareness
                                   program to inform such employees about:

                                   a)   The dangers of drug abuse in the
                                        workplace:
                                   b)   The Contractor's policy of maintaining a
                                        drug-free workplace;
                                   c)   Any available drug counseling,
                                        rehabilitation, and employee assistance
                                        programs; and
                                   d)   The penalties that may be imposed upon
                                        employees for drug abuse violations
                                        occurring in the workplace;

                         I.32.2.2.3 Provide all employees engaged in performance
                                   of the contract with a copy of the statement
                                   required by this clause;

                         I.32.2.2.4 Notify such employees in writing in the
                                   statement required by this clause that as a
                                   condition of continued employment on this
                                   contract the employee will:

                                   a)   Abide by the terms of the statement; and
                                   b)   Notify the employer in writing of the
                                        employee's conviction under a criminal
                                        drug statue for a violation occurring in
                                        the work place no later than five (5)
                                        calendar days after such conviction.
                                   c)   Notify the Contracting Officer in
                                        writing within ten (10) calendar days
                                        after receiving notice of this clause,
                                        from an employee or otherwise receiving
                                        actual notice of such conviction. The
                                        notice shall include the position title
                                        of the employee;

                         I.32.2.2.5 Within thirty (30) calendar days after
                                   receiving notice under this clause of a
                                   conviction, take one of the following

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         223
--------------------------------------------------------------------------------

<PAGE>

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

                                   actions with respect to any employee who is
                                   convicted of a drug abuse violation occurring
                                   in the workplace:

                                   a)   Taking appropriate personnel action
                                        against such employee, up to and
                                        including termination; or
                                   b)   Require such employee to satisfactorily
                                        participate in a drug abuse assistance
                                        or rehabilitation program approved for
                                        such purposes by a federal, state or
                                        local health, law enforcement, or other
                                        appropriate agency; and
                                   c)   Make a good faith effort to maintain a
                                        drug-free workplace through
                                        implementation of this clause.

               I.32.2.3  The Contractor, if an individual, agrees by award of
                         the contract or acceptance of a purchase order, not to
                         engage in the unlawful manufacture, distribution,
                         dispensing, possession, or use of a controlled
                         substance in performance of this contract.

               I.32.2.4  In addition to other remedies available to the
                         Government, the Contractor's failure to comply with the
                         requirements of paragraphs I.7.2 or I.7.4 or this
                         clause may, pursuant to FAR 23.506, render the
                         Contractor subject to suspension of contract payments,
                         termination of the contract for default, and suspension
                         or debarment.

     I.32.3 Confidentiality of Information

               I.32.3.1  All information obtained by the Contractor relating to
                         any employee of the District shall be kept in absolute
                         confidence and shall not be used by the Contractor in
                         connection with any other matters, nor shall any such
                         information be disclosed to any other person, firm or
                         corporation, in accordance with the District and
                         federal laws governing the confidentiality of records.

     I.32.4. Equal Employment Opportunity

               I.32.4.1  In accordance with the District of Columbia
                         administrative Issuance System, Mayors Order 85-85
                         dated June 10, 1985, the forms for completion of the
                         Equal Employment Opportunity Information Report is
                         incorporated herein as Attachment J.2. An award cannot
                         be made to any Offeror

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         224
--------------------------------------------------------------------------------

<PAGE>

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

                         who has satisfied the equal employment requirements as
                         set forth by the Office of Human Rights.

     I.32.5 Other Contractors

               I.32.5.1  The Contractor shall not commit or permit any act,
                         which will interfere with the performance of work by
                         another District Contractor or by any District
                         employee. If another Contractor is awarded a future
                         contract for performance of the required services, the
                         Contractor shall cooperate fully with the District and
                         the new Contractor in any transition activities, which
                         the Contracting Officer deems necessary during the term
                         of the contract.

     I.32.6 Rights In Data

               I.32.6.1  "Data," as used herein, means recorded information,
                         regardless of form or the media on which it may be
                         recorded. The term includes technical data and computer
                         software. The term does not include information
                         incidental to contract administration, such as
                         financial, administrative, cost or pricing, or
                         management information.

               I.32.6.2  The term "Technical Data," as used herein, means
                         recorded information, regardless of form or
                         characteristic, of a scientific or technical nature. It
                         may, for example, be document research, experimental,
                         developmental or engineering work, or be usable or used
                         to define a design or process or to procure, produce,
                         support, maintain, or operate material. The data may be
                         graphic or pictorial, delineation in media such as
                         drawings or photographs, text in specifications or
                         related performance design type documents, or computer
                         printouts. Examples to technical data include research
                         and engineering data, engineering drawings and
                         associated list, specifications, standards, process
                         sheets, manuals, technical reports, catalog item
                         identifications and related information, and computer
                         software documentation. Technical data does not include
                         computer software or financial, administrative, cost
                         and pricing, and management data or other information
                         incidental to contract administration.

               I.32.6.3  The term "Computer Software," as used herein, means
                         computer programs and computer databases. "Computer
                         programs" include operating systems, assemblers,
                         compilers, interpreters, data management systems,
                         utility

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         225
--------------------------------------------------------------------------------

<PAGE>

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

                         programs, sort/merge programs such as payroll,
                         inventory control and engineering analysis programs.

                         I.32.6.3.1 Computer Programs may be either
                                   machine-idependent or machine-independent,
                                   and may be general-purpose in nature or
                                   designed to satisfy the requirements of a
                                   particular user.

               I.32.6.4  The term "Computer Databases," as used herein, means a
                         collection of data in a form capable of being processed
                         and operated on by a computer.

               I.32.6.5  All data first produced in the performance of this
                         contract shall be the sole property of the District.
                         The Contractor hereby acknowledges that all data
                         including, without limitation, computer program codes
                         produced by Contractor for the District under this
                         Contract are works made for hire and are the property
                         of the District; but, to the extent any such data may
                         not, by operation of law, be works made for hire,
                         Contractor hereby transfers and assigns to the District
                         the ownership of copyright in such works, whether
                         published or unpublished. The Contractor agrees to give
                         the District all assistance reasonably necessary to
                         perfect such rights including, but not limited to, the
                         works and supporting documentation and the execution of
                         any instrument required to register copyrights. The
                         Contractor agrees not to assert any rights at common
                         law or in equity in such data. The Contractor shall not
                         publish or reproduce such data in whole or in part or
                         in any manner or form, or authorize others to do so,
                         without written consent of the District, until such
                         time as the District may have released such data to the
                         public.

               I.32.6.6. The District shall have restricted rights in computer
                         software and all accompanying documentation, manuals
                         and instructional materials listed or described in a
                         license or agreement made a part of the contract, which
                         the parties have agreed will be furnished with
                         restricted rights, provided however, notwithstanding
                         any contrary provision in any such license or
                         agreement, such restricted right shall include, as a
                         minimum, the right to:

               I.32.6.7  Use the computer software and all accompanying
                         documentation, and manuals or instructional materials
                         with the computer for which or with which it was
                         required,

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         226
--------------------------------------------------------------------------------

<PAGE>

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

                         including use at any District installation to which the
                         computer may be transferred by the District;

               I.32.6.8  Use the computer software and all accompanying
                         documentation and manuals or instructional materials
                         with a backup computer if the computer for which or
                         with which it was acquired are inoperative;

               I.32.6.9  Copy computer programs for safekeeping (archives) or
                         backup purposes; and

               I.32.6.10 Modify the computer software and all accompanying
                         documentation and manuals or instructional materials,
                         or combine it with other software, subject to the
                         provision that modified portions shall remain subject
                         to these restrictions.

     I.32.7 The restricted rights set forth in paragraph I.32.6 are of no effect
          unless (i) the computer software is marked by the Contractor with the
          following legend:

               I.32.7.1  RESTRICTED RIGHTS LEGEND

               I.32.7.2  Use, duplication, or disclousre is subject to
                         restrictions stated in Contract
                         No.                     with
                            ---------------------     -----------------------
                                                         (Contractor's Name)

               I.32.7.3  and (ii) the related computer software documentation
                         includes a prominent statement of the restrictions
                         applicable to the computer software.

               I.32.7.4  The Contractor may not place any legend on computer
                         software indicating restrictions on the District's
                         rights in such software unless the restrictions are set
                         forth in a license or agreement made a part of the
                         contract prior to the delivery date of the software.
                         Failure of the Contractor to apply a restricted rights
                         legend to such computer software shall relieve the
                         District of liability with respect to such unmarked
                         software.

               I.32.7.5  In addition to the rights granted in paragraph I.32.6
                         above, the Contractor hereby grants to the District a
                         nonexclusive, paid-up license throughout the world, of
                         the same scope as restricted rights set forth in
                         paragraph I.32.6 above, under

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         227
--------------------------------------------------------------------------------

<PAGE>

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

                         any copyright owned by the Contractor, in any work of
                         authorship prepared for and acquired by the District
                         under the contract. Unless written approval of the
                         Contracting Officer is obtained, the Contractor shall
                         not include technical data or computer software
                         prepared for, or acquired by the District under the
                         contract any works of authorship in which copyright is
                         not owned by the Contractor without acquiring for the
                         District any rights necessary to perfect a copyright
                         license of the scope specified in the first sentence of
                         this paragraph.

               I.32.7.6  Whenever any data, including computer software, are to
                         be obtained from a subcontractor under this contract,
                         the Contractor shall use this same clause in the
                         subcontract, without alteration, and no other clause
                         shall be used to enlarge or diminish the District's or
                         the Contractor's rights in that subcontractor data or
                         computer software which is required for the District.

     I.32.8 For all computer software furnished to the District with the rights
          specified in paragraph I.32.6, the Contractor shall furnish to the
          District a copy of the source code with such rights of the scope
          specified in paragraph I.32.6. For all computer software furnished to
          the District with the restricted rights specified in paragraph I.32.6,
          the District, if the Contractor, either directly or through a
          successor or affiliate shall cease to provide the maintenance or
          warranty services provided the District under this contract or any
          paid-up maintenance agreement, or if Contractor should be declared
          bankrupt or insolvent by a court of competent jurisdiction, shall have
          the right to obtain, for its own and sole use only, a single copy of
          the then current vision of the source code supplied under this
          contract, and a single copy of the documentation associated therewith,
          upon payment to the person in control of the source code the
          reasonable cost of making each copy.

     I.32.9 The Contractor shall indemnify and save and hold harmless the
          District, its officers, agents and employees acting within the scope
          of their official duties against any liability. Including costs and
          expenses, (i) for violation of proprietary rights, copyrights, or
          rights of privacy, arising out of the publication, translation,
          reproduction, delivery, performance, use or disposition of any data
          furnished under this contract or (ii) based upon any data furnished
          under

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         228
--------------------------------------------------------------------------------

<PAGE>

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

          this contract, or based upon libelous other unlawful matter contained
          in such data.

     I.32.10 Nothing contained in this clause shall imply a license to the
          District under any patent, or be construed as affecting the scope of
          any license or other right otherwise granted to the District under any
          patent.

     I.32.11 Paragraphs I.32.6.1, I.32.6.2, I.32.6.3, I.32.6.5, and I.32.6.6
          above are not applicable to material furnished to the Contractor by
          the District and incorporated in the work furnished under contract,
          provided that such incorporated materials is identified by the
          Contractor at the time of delivery of such work.

     Contract Type and Price

     I.33.1 Contract line item number 0001 is based on an Indefinite Delivery/
          Indefinite Quantity (IDIQ)

               I.33.1.1  The price for performing this contract shall not exceed
                         the total specified in Section A, Block 20.

     I.33.2 RESERVED.
     Reserved

     Assignment of Funds

     I.35.1 No contract or any interest therein shall be transferred by the
     party to whom the award is made; such transfer will be null and void, and
     will be cause to annul the contract.

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         229
--------------------------------------------------------------------------------

<PAGE>

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

                         SECTION J - LIST OF ATTACHMENTS

FOR ATTACHMENTS SEE SECTION AA OF THIS CONTRACT.

               REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK

--------------------------------------------------------------------------------
CONTRACT NO.: P0HC-2002-D-0003         230
--------------------------------------------------------------------------------

<PAGE>

                                  ATTACHMENT 7

                      Minimum Covered Services for Minimum
                   Covered Services for Medicaid Managed Care
                                 Program (MMCP)

<PAGE>

         Minimum Covered Services for the Medicaid Managed Care Program
                                     (MMCP)

Services Included in the Capitation Rate

     1.   Inpatient hospital services (other than services in institutions for
          mental diseases, as defined in federal law, 42 U.S.C. Section 1396d).
          Inpatient hospital care includes cosmetic surgery, limited to services
          required to correct the following conditions: (a) a condition
          resulting from surgery or disease; (b) an accidental injury; (c) a
          congenital deformity; and (d) correction of a functional problem, i.e.
          a condition that impairs the normal function of a part of the body.
          Covered dental surgery is limited to emergency repair of accidental
          injury to the jaw and related structures.

     2.   Outpatient hospital services: surgery is limited as in 1. above.

     3.   Federally qualified health center services and other ambulatory
          services covered by federally qualified health centers.

     4.   Laboratory and x-ray services.

     5.   Nursing facility services that are not otherwise excluded under this
          agreement.

     6.   Physician services: preventive and non-routine care, including
          medically necessary elective surgery, anesthesia; maternity care;
          emergency care; family planning, except the treatment of infertility;
          allergy testing and injections; radiation, chemotherapy and dialysis
          treatment; plastic surgery, gastric bypass surgery, reduction
          mammoplasty, intestinal bypass for morbid obesity and insertion of a
          penile prosthesis. Not covered are sterilizations of patients under
          21.

     7.   Medical and surgical services furnished by a dentist.

     8.   Podiatrists services excluding routine foot care for asymptomatic
          individuals.

     9.   Optometrist services including contact lenses and special eyeglasses
          and sunglasses when authorized as medically necessary. Eyeglasses or
          contacts limited to one pair every 24 months except for persons under
          age 21, persons experiencing a change of more than plus or minus one
          half diopter and to replace broken or lost eyeglasses. In these
          exception cases, eyeglasses or contacts are limited to one pair every
          six months.

     10.  Home health services for individuals of all ages including
          intermittent or part-time nursing care, home health aide services
          provided by a home health agency, medical supplies, equipment, and
          appliances suitable for use in the home, and physical therapy,
          occupational therapy or speech pathology and audiology services.
          Services for individuals with speech, language and hearing disorders
          are limited to children under 21.

     11.  Private duty nursing services limited to individuals who require more
          individual and continuous care than is routinely provided by home
          health agencies, a nursing facility, or a hospital.

                                                                               2

<PAGE>

     12.  Physical therapy and related services including physical and
          occupational therapy and services for individuals with speech,
          language and hearing disorders furnished under the supervision of a
          speech pathologist or audiologist. Services for speech, language and
          hearing disorders are limited to children under 21 and include
          services furnished by the District's school system.

     13.  Prescribed drugs limited to legend drugs approved as safe and
          effective by the FDA and over-the-counter medications in the District
          specified categories. Only those over-the-counter drugs that fall into
          the following categories are covered if they are prescribed on a
          written prescription by a participating health care professional:

               Oral analgesics
               Ferrous sulfate
               Antacids
               Diabetic preparations
               Pediatric and prenatal vitamin formulations
               Senna extract, single dose preparations when required for
                  diagnostic radiological procedures performed under the
                  supervision of a participating physician
               Family planning drugs and supplies
               Psychotropic medications as approved by the Dixon Transitional
                  Receiver

     14.  Durable Medical Equipment including prosthetic devices including items
          listed in the program's Medical Equipment/Medical Supplies Procedure
          Code and Price List as well as other devices as authorized for medical
          necessity.

     15.  Nurse midwife services.

     16.  Pediatric nurse practitioner services and family nurse practitioner
          services.

     17.  Transportation services other than those specifically excluded.
          Covered transportation include emergency transportation, medially
          necessary transportation for non-emergency situations, and as
          requested and necessary transportation to EPSDT services.

     18.  Personal care services not to exceed 1,040 hours annually except as
          authorized for medical necessity.

     19.  Abortions as permitted under federal law.

     20.  Adult day treatment services for persons with mental retardation to
          prepare for independent living.

     21.  Family planning services and supplies as defined in Section B.

     22.  Early and periodic screening diagnosis and treatment (EPSDT) services
          for persons under 21 as defined in Section C.

                                                                               3

<PAGE>

     23.  Mental health and alcohol and drug abuse services

               Diagnostic evaluation/assessment
               Psychiatric outpatient clinic services (individual, group &
                  family therapy)
               Crisis Intervention
               Medication Management
               Psychological Testing
               Residential Treatment Centers
               Psychiatric Inpatient Hospitalization
               Therapeutic Nursery
               Lab

          CASSIP Only:
               Inpatient drug and alcohol detoxification
               Inpatient/residential drug and alcohol rehabilitation
               Outpatient drug and alcohol rehabilitation.
               Drug and alcohol rehabilitation day treatment

          NOTE: For DCHFP Enrollees, alcohol and drug abuse treatment services
          will be provided through a provider network contracted by MAA. DCHFP
          will be responsible for referral and care coordination for DCHFP
          Enrollees. This includes screening and the provision of emergency
          services.

Excluded Services for MMCP

     Inpatient Transplantation Surgery and Services provided during the
     inpatient stay in which the transplant surgery takes place.

2.   Cosmetic surgery, except services required to correct the following
     conditions: (a) a condition resulting from surgery or disease; (b) an
     accidental injury; (c) a congenital deformity; and (d) correction of a
     functional problem, i.e. a condition that impairs the normal function of
     a part of the body.

3.   Steri1izations~ if the Enrollee is under 21

4.   Health related IDEA services and transportation to or from them when
     provided by the District of Columbia Public Schools or one of its
     Contractors.

Benefits for CASSIP Only

1.   Intermediate Care Facilities for Mental Retardation.

2.   Long Term Nursing Facilities.

3.   Substance abuse treatment services as identified above

                                                                               4

<PAGE>

Eligibility Guidelines

Persons Eligible For The MMCP DC Healthy Families Plans.

Except as provided in Section 0 enrollment in an MMCP DC Healthy Families Plan
will be mandatory for the following individuals:

1.   All children under age 19, pregnant women and the parents, legal guardians,
     and relative caretakers of eligible children who are:
          Citizens or qualified immigrants;
          Residents of the District of Columbia;
          Have family income at or below 200 percent of the federal poverty
             guidelines; and
          Have been determined to be eligible for Medical Assistance by the
             Department of Human Services.
2.   Individuals ages 19 or 20 who are
          Citizens or qualified immigrants;
          Residents of the District of Columbia;
          Have family income at the medically needy level; and
          Have been determined to be eligible for Medical Assistance by the
             Department of Human Services.
3.   Infants born to Medicaid-eligible women.
4.   Immigrants
          Up to 500 children in FY 2000 and 850 children in FY 2001 who are:
               Not eligible for Medicaid;
               Residents of the District of Columbia;
               Have family income at or below 200 percent of the federal poverty
                  guidelines;
               Have been determined to be eligible by the Department of Human
                  Services

Persons excluded from the DC Healthy Families Plans

Individuals who meet the requirements of Section 0 and are included in one or
more of the following categories are excluded from enrollment in an MMCP DC
Healthy Families Plan:

1.   Individuals whose eligibility for Medicaid is retroactive, to the extent of
     that period;
2.   Individuals receiving supplemental security income disability or aging
     benefits, or who qualify for Medicaid due to old age or disability;
3.   Foster care children and other wards of the District of Columbia under
     guardianship of the department of human services unless enrolled
     voluntarily;
4.   Individuals who have been identified by the department of human services as
     homeless;
5.   Individuals who have been restricted to a specific provider by the medical
     assistance administration;
6.   Individuals eligible for both Medicare and Medicaid;
7.   Individuals who have gained eligibility through the "spend-down" process;
8.   Individuals who are residing in a long-term care facility (nursing
     facility, intermediate care facility for the mentally retarded, residential
     treatment center, Hospital for Sick Children, or mental institution);
9.   Individuals participating in services provided under a Section 1915c Home
     and Community Based Waiver; or
10.  Women who are twenty-six (26) weeks or more pregnant at the time they are
     notified that they shall select a managed care plan and who have requested
     exemption from enrollment in managed care.

                                                                               5

<PAGE>

Persons Eligible for the MMCP Child and Adolescent SSI Plans

Participation in the MMCP Child and Adolescent SSI Plan is open only to children
under age 22 who are receiving Supplemental Security Income disability benefits
except for:

1.   Individuals whose eligibility for Medicaid is retroactive, to the extent of
     that period;
2.   Individuals who have been restricted to a specific provider by the Medical
     Assistance Administration;
3.   Individuals eligible for both Medicare and Medicaid; or
4.   Individuals participating in services provided under a Section 1915(c)
     Home and Community Based Waiver.
5.   Individuals aged 20 or 21 who are placed in an Intermediate Care Facility
     for Mental Retardation (ICF/MR) at the time of enrollment.

Automatic enrollment of Newborns

          Infants born to (an) Enrollee(s) of a Child and Adolescent SSI or
          SSI-related Plan are not automatically eligible for SSI Medicaid
          themselves. Most however, will be eligible for Medicaid in the
          categories defined in Section 0.

          If the Contractor is operating the CASSIP in which the mother is
          enrolled, the Contractor will be responsible for coordinating the care
          of the infant. However if the infant is not a special needs child, the
          infant will be enrolled in the fee-for-service program and care will
          continue to be coordinated by the CASSIP Contractor.

Other Persons Eligible for the MMCP

The District reserves the right to expand the targeted populations to include
the following individuals:
     1.   Actuarially equivalent individuals that may become eligible for
          Medicaid through expansions; and
     2.   Individuals who are not actuarially equivalent but for whom MAA will
          negotiate an appropriate capitation rate with the Contractor.

Managed care services for the homeless population and other subpopulations will
be contingent upon federal approval of the District's 1115 waiver.

                                                                               6

<PAGE>

Principles and Goals

MAA has incorporated the following standards and principles into its planning
for its Medicaid Managed Care program, and has set the following goals for the
continued development of Medicaid managed care.

Family-Based Principles

MAA's Medicaid Managed Care Program for families enrolled in a DCHFP and for
children and adolescents on SSI/1/ is built on a family-based model of care and
reflects the principles listed below.

1.   Every child deserves quality primary and specialty health care that is
     affordable and within geographic reach.
2.   Families are the core of this nation's health system, their children's most
     important health providers and caregivers.
3.   Quality health care is family-centered, community-based, coordinated, and
     culturally competent.
4.   Health benefits and services shall be flexible, guided by what children
     need.
5.   Strong family-professional partnerships improve decision-making, enhance
     outcomes and assure quality.
6.   Families practice cost-effectiveness and expect the same from health
     systems.

Early and Periodic Screening Diagnosis and Treatment Services (EPSDT)

The EPSDT program is the major pediatric component of Medicaid and its
requirements for child and adolescent services are integrated throughout this
document. EPSDT requires coverage of periodic and interperiodic screens; vision,
dental, and hearing care; other diagnostic services needed to confirm the
existence of a physical or mental illness or condition; and treatment for any
illness or condition. All federally recognized (under Section 1905 of the Social
Security Act) Medicaid services shall be provided to children age 20 and under
if needed to provide the coverage described above even if some of those
federally recognized services are not offered to persons age 21 and older under
the state plan.

----------
Both Family Voices and a similar set of principles put forth by the Child and
Adolescent Service System Program (CASSP) stress individualization of care and
flexibility of service provision. These depend upon a continuum of care that
can provide a progression from brief community-based interventions to inpatient
hospitalization.

Source: Family Voices, http://www.familyvoices.org/survey.html, 1999.

                                                                               7

<PAGE>

                                  ATTACHMENT 9

                           Newborn Notification Report

<PAGE>

                                             Hospital
                                                      --------------------------
                                             Submission Date
                                                             -------------------
                                             DHS/IMS Receipt Date
                                                                  --------------

                             REQUEST TO ADD NEWBORNS
             TO DC MEDICAID, PUBLIC ASSISTANCE AND FOOD STAMP ROLLS

To enable the D.C. Department of Human Services to add all eligible newborns to
our Medicaid and Public Assistance Program, as appropriate, please provide us
with the information requested below and forward to:

                        Income Maintenance Administration
                        645 H Street, N.E.
                        3rd Floor
                        Washington, D.C. 20002
                        Attention: Branch Manager

Mother's Medicaid I.D. Number:                   Eligibility Period:
                              ----------------                      ------------
Mother's Name                                       Telephone:
             -----------------------------------              ------------------
Mother's Address:
                 ----------------------------------

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

Father's Name:                                      Telephone:
              ----------------------------------              ------------------
Newborn's Name:                          Sex:       Date of Birth:
               ------------------------                           --------------

Place of Birth:
               ------------------------------------

I hereby request that my child,                       , be added to my Medicaid
                               -----------------------
eligibility case.

This also serves as the official report to D.C. DHS of this birth for Public
Assistance and/or Food Stamp Program purposes. If I am currently receiving these
services, I am requesting that my child be added to my PA and/or FS household

                                              ----------------------------------
                                              Mother's Signature

                                              ----------------------------------
                                              Date of Report

--------------------------------------------------------------------------------
I do hereby certify that the above information is the same as reflected on our
Medical Records

---------------------------------                -------------------------------
Utilization Reviewer                             HMO Medical Director

Telephone:                                       Telephone:
          -----------------------                          ---------------------

                                                                               2

<PAGE>

<TABLE>
<S>                                                  <C>                                              <C>
------------------------------------------------------------------------------------------------------------------------------------
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT   1. Contract Number                                 Page of Pages
                                                     POHC-2002-D-0003                                 1              23
------------------------------------------------------------------------------------------------------------------------------------
2. Amendment/Modification Number   3. Effective Date        4. Requisition/Purchase Request No.   5. Project No. (If applicable)
             'M0001                   SEE BLOCK 16C BELOW              HCOP2-210457
------------------------------------------------------------------------------------------------------------------------------------
6. Issued By                                  Code[______________]   7. Administered By (If other than line 6)
Office of Contracting and Procurement                                   Department of Health, Office of Managed Care
Public Safety Cluster, Department of Health Bureau                      Medical Assistance Administration
441 4th Street, N.W., Suite 800 South                                   825 North Capitol Street, N.E.
Washington, DC 20001                                                    Attention: Ms. Maude Holt
------------------------------------------------------------------      Telephone: (202)442-9074
------------------------------------------------------------------------------------------------------------------------------------
8. Name and Address of Contractor (No. Street, city, country, state and ZIP Code)  (X)9A. Amendment of Solicitation No.
                                                                                   ---
                                                                                      ------------------------------------------
                                                                                      9B. Dated (See Item 11)
     AMERICAID COMMUNITY CARE
     514 10TH STREET, N.W., SUITE 500                                              ---------------------------------------------
     WASHINGTON, D. C. 20004                                                          10A. Modification of Contract/Order No.
     ATTN: MS. JANE E. THOMPSON                                                         POHC-2002-D-0003
     TELEPHONE NO.: (202)783-8100                                                   X ------------------------------------------
--------------------------------------------------------------------------------      10B. Dated (See Item 13)
       Code                                          Facility                           APRIL 1, 2002
------------------------------------------------------------------------------------------------------------------------------------
                                      11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
------------------------------------------------------------------------------------------------------------------------------------

[__]The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers[___]is
    extended.[___]is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the
    solicitation or as amended, by one of the following methods: (a) By completing Items 8 and 15, and returning [__________]copies
    of the amendment: (b) By acknowledging receipt of this amendment on each copy of the offer submitted: or (c) By separate letter
    or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED
    AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER.
    If by virtue of this amendment you desire to change an offer already submitted, such change may be made by letter or telegram,
    provided each letter or telegram makes reference to the solicitation and this amendment, and is received prior to the opening
    hour and date specified.
------------------------------------------------------------------------------------------------------------------------------------
12. Accounting and Appropriation Data (If Required)

------------------------------------------------------------------------------------------------------------------------------------
                                    13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
                                        IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14
------------------------------------------------------------------------------------------------------------------------------------
  (X)   A. This change order is issued pursuant to: (Specify Authority)
        The changes set forth in Item 14 are made in the contract/order no. in item 10A.
------------------------------------------------------------------------------------------------------------------------------------
        B. The above numbered contract/order is modified to reflect the administrative changes (such as changes in paying office,
        appropriation date, etc.) set forth in item 14, pursuant to the authority of 27 dCMR, Chapter 36, Section 3601.2.
------------------------------------------------------------------------------------------------------------------------------------
        C. This supplemental agreement is entered into pursuant to authority of:

------------------------------------------------------------------------------------------------------------------------------------
  X     D. Other (Specify type of modification and authority)
         DISTRICT OF COLUMBIA MUNICIPAL REGULATIONS 3601.2 (c) Bilateral Contract Modification and agreement between the parties
------------------------------------------------------------------------------------------------------------------------------------
 E. IMPORTANT:    Contractor[____]is not,   [X]  is required to sign this document and return      2 copies to the issuing office
                                            ---                                                   --
------------------------------------------------------------------------------------------------------------------------------------
14. Description of amendment/modification (Organized by USC Section headings, including solicitation/contract subject matter where
    feasible.)

     THE CONTRACT REFERENCED IN BLOCK 10A ABOVE IS MODIFIED AS STATED ON PAGES 2 THROUGH 27 OF THIS MODIFICATION.

------------------------------------------------------------------------------------------------------------------------------------
Except as provided herin, all terms and conditions of the document referenced in Item (9A or 10A as heretofore changed, remains
unchanged and in full force and effect
------------------------------------------------------------------------------------------------------------------------------------
15A. Name and Title of Signer (Type or print)                     16A. Name of Contracting Officer
JANE E. THOMPSON  CEO-DC OPERATIONS                                     ESTHER M. SCARBOROUGH
------------------------------------------------------------------------------------------------------------------------------------
15B. Name of Contractor                      15C. Date Signed     16B. District of Columbia                      16C. Date Signed
AMERIGROUP District of Columbia                  4/9/02                                                               4-9-02

/s/ Jane E. Thompson                                               /s/ E. M. Scarborough
--------------------                                               ---------------------
     (Signature of person authorized to sign)                            (Signature of Contracting Officer)
------------------------------------------------------------------------------------------------------------------------------------
[LOGO] Government of the District of Columbia          [LOGO] Office of Contracting & Procurement           DC OCP 202 (7-99)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

--------------------------------------------------------------------------------
                         SECTION B - Supplies / Services
--------------------------------------------------------------------------------

Section B - Contract Line Item Number (CLIN) 0001 for DC Health Families Program
(DCHFP) The Contractor shall provide healthcare services to individuals in
Temporary Assistance to Needy Families (TANF) or TANF-related Medicaid
eligibility categories using the rate cells and total per member per month price
noted below. The period of performance shall be from April 1, 2002 through
October 31, 2002.

------------------------------------------------------------------------
 CLIN          SUPPLIES/SERVICES/RATE CELL                   TOTAL PMPM.
------------------------------------------------------------------------
0001     Infants Under 1 year of age
------------------------------------------------------------------------
0001AA         .    Delivery month (projected delivery)
------------------------------------------------------------------------
               .    Birth month (actual month of birth)
------------------------------------------------------------------------
0001AB   Children of 1 year of age through 12 years of age
------------------------------------------------------------------------
0001AC   Females ages 13 through 18 years of age
------------------------------------------------------------------------
0001AD   Males ages 13 through 18 years of age
------------------------------------------------------------------------
0001AE   Females ages 19 through 36 years of age
------------------------------------------------------------------------
0001AF   Males ages 19 through 36 years of age
------------------------------------------------------------------------
0001AG   Females 37 years of age and older
------------------------------------------------------------------------
0001AH   Males 37 years of age and older
------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                    PAGE 2 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
  SECTION                CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------

C.1.2                                             ADDITIONAL CITATIONS ADDED

                                                  Section 1932 (b)(3) of the
                                                  Social Security Act

                                                  SSA 1128B (d)(1)--BBA 4704(b)

                                                  SSA 1932(f)--BBA4708(c)

                                                  Social Security Act 1124(a)
                                                  (2)(A)--BBA 4704(c)

                                                  Social Security Act 1932 (d)
                                                  (3)--BBA 4707(a)

                                                  Social Security Act 1932(b)(6)

                                                  Social Security Act 1932(b)(7)

                                                  Section 504 of the
                                                  Rehabilitation Act

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

C.1.3            REPLACE THE TERM:                REPLACE THE TERM WITH:
C.3.2.6
C.3.2.12.2       Commission on Mental Health      Department of Mental Health
C.9.14
C.10.2.1.10
C.10.5.3.1(e)
C.10.5.6
C.10.5.7
0.17.5.3.13
0.18.8.7.2
C.18.9.1(e)
F.3, Table 4
H.3.4
H.3.5

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

C.1.3            DELETE DEFINITION
                 ACRONYM PBS - PUBLIC
                 BENEFITS CORPORATION
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                    PAGE 3 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
  SECTION                CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------

C.2.3            DELETE THE FIRST SENTENCE:       REPLACE WITH NEW SENTENCE:

                                                  DCHFP is responsible for
                 DCHFP responsibility for         providing and coordinating
                 Proposed Alcohol and Drug        inpatient substance abuse
                 Abuse Services Contingent upon   services. The Contractor shall
                 HCFA approval of the             coordinate the enrollee's
                 District's waiver request, the   outpatient substance abuse
                 District MAA will select a       services that are purchased in
                 network(s) of alcohol and drug   the Medicaid fee-for-service
                 abuse treatment providers to     system.
                 provide outpatient, day
                 treatment, methadone,
                 residential and detoxification
                 services to DCHFP Enrollees.
--------------------------------------------------------------------------------

C.3.3                                             INSERT NEW SECTION C.3.3

                                                  Health plans must ensure that
                                                  all individually identifiable
                                                  information relating to
                                                  Medicaid enrollees is kept
                                                  confidential pursuant to
                                                  District of Columbia, 42
                                                  U.S.C. Section 1396a(a)(7)
                                                  {Section 1902(a)(7) of the
                                                  Federal Social Security Act},
                                                  42CFR Part 2 and other
                                                  regulations promulgated
                                                  thereunder. Such information
                                                  may be used by the plan or its
                                                  providers only for a purpose
                                                  directly connected with
                                                  performance of the plan's
                                                  obligations under this
                                                  program. The provisions of
                                                  this section will survive the
                                                  termination of a health plan's
                                                  participation in the Medicaid
                                                  managed care program and will
                                                  remain in effect as long as
                                                  the plan maintains any
                                                  individually identifiable
                                                  information relating to
                                                  Medicaid beneficiaries.

                                                  The Contractor must ensure
                                                  compliance with the Health
                                                  Insurance Portability and
                                                  Accountability Act of 1996
                                                  (Public Law 104-191, August
                                                  21, 1996) and all applicable
                                                  regulations promulgated
                                                  thereunder. Such regulations
                                                  include but are not limited
                                                  to, the medical privacy rule
                                                  65 Federal Regulations 82462
                                                  (December
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                    PAGE 4 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
  SECTION                CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                                                  28, 2000) (codified at 45
                                                  C.F.R. Parts 160-164) and the
                                                  electronic transactions and
                                                  code set standards rule, 65
                                                  Federal Regulations 50312
                                                  (August 17, 2000) (codified at
                                                  45 C.F.R. Parts 160 and 162).
                                                  The Contractor shall maintain
                                                  written procedures for
                                                  compliance with all applicable
                                                  privacy, confidentiality, and
                                                  information security
                                                  requirements. The Contractor
                                                  shall train employees and
                                                  subcontractors on compliance
                                                  with all applicable privacy,
                                                  confidentiality, and
                                                  information security
                                                  requirements.

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

C.3.4                                             INSERT NEW SECTION C.3.4

                                                  The Contractor is responsible
                                                  to DC MAA or their designee
                                                  for complying with all
                                                  activities of the External
                                                  Quality Review (EQR) process
                                                  including:

                                                  .    Submitting requested
                                                       pre-site survey documents
                                                       and/or information in
                                                       accordance with published
                                                       timelines;
                                                  .    Submitting documents
                                                       and/or information
                                                       required during the
                                                       on-site reviews within
                                                       specified timelines;
                                                  .    Submitting requested
                                                       member medical
                                                       records/information for
                                                       annual clinical studies
                                                       within specified
                                                       timelines;
                                                  .    Adhering to HIPAA
                                                       guidelines when securing
                                                       and/or submitting
                                                       consumer related
                                                       information;
                                                  .    Maintaining Quality
                                                       Improvement Programs and
                                                       Plans that focus on
                                                       meeting and/or exceeding
                                                       the Performance Standards
                                                       with Guidelines required
                                                       by the District of
                                                       Columbia Medical
                                                       Assistance Administration
                                                       or their designee.
                                                  .    Submitting corrective
                                                       action plans (CAPs)
                                                       within pre-established
                                                       timelines.
                                                  .    Having a representative
                                                       in attendance at all
                                                       meetings related to the
                                                       EQR process.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                    PAGE 5 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                                                  .    Making available
                                                       organizational documents,
                                                       member clinical records
                                                       and/or information
                                                       requested by DC MAA or
                                                       their designee related to
                                                       any type of health care
                                                       quality review or study.

                                                  The Contractor shall ensure
                                                  that the Contractor and each
                                                  provider participating in the
                                                  Contractor's provider network
                                                  collects and reports the data
                                                  and information required by an
                                                  external quality review
                                                  organization to carry out its
                                                  responsibilities under
                                                  1902(a)(30)(C) and 1932(c)(2)
                                                  of the Social Security Act, 42
                                                  U.S.C. 1396a(a)(30)(C) and 42
                                                  U.S.C. 139u-2(c)(2).

                                                  The Contractor agrees that the
                                                  results of each annual
                                                  external independent quality
                                                  review conducted by DC MAA or
                                                  its designee shall be
                                                  available to each provider
                                                  participating in the
                                                  Contractor's provider network.

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

C.5.4.5                                           INSERT NEW SECTION C.5.4.5

                                                  C.5.4.5 Every month the
                                                  Contractor will send a current
                                                  Provider File to Benova via
                                                  FTP. The file should be sent
                                                  by the 13th of each month.
                                                  If the 13th falls on a weekend
                                                  or holiday, the file should be
                                                  sent on the previous business
                                                  day.

                                                  The file name should be in the
                                                  following format:
                                                  XXXMMDDYY.dat, where XXX is
                                                  the Contractor identifier and
                                                  the MMDDYY is the date the
                                                  file was sent.

                                                  Benova will process the
                                                  Provider File. Benova will not
                                                  be processing any mid-month
                                                  files. All errors will be
                                                  corrected with the following
                                                  months processing. Benova will
                                                  load all records from the
                                                  Provider File that have a
                                                  valid Contractor's
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                    PAGE 6 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                                                  number. Any records with an
                                                  invalid Contractor's number
                                                  will be rejected, and reported
                                                  back to the Contractor within
                                                  ten business days. These
                                                  records will not be loaded in
                                                  that month's processing, and
                                                  must be corrected by the
                                                  Contractor before the next
                                                  monthly processing in order
                                                  for the records to load
                                                  successfully at that time.

                                                  Any records from the Provider
                                                  File that do not conform to
                                                  the Provider File format will
                                                  be loaded into Benova's
                                                  system. An error log will be
                                                  produced identifying those
                                                  records that do not conform to
                                                  the Provider File format, and
                                                  the error log will be sent to
                                                  the Contractor. These records
                                                  should be corrected by the
                                                  Contractor before the next
                                                  monthly processing and sent on
                                                  the next monthly file to
                                                  Benova.

                                                  On the Provider File, Benova
                                                  collects data on the number of
                                                  active recipients per PCP, and
                                                  reports that information to
                                                  the MAA. If the PCP has more
                                                  than one location, the MCO
                                                  should only report the # of
                                                  Active Recipients for that PCP
                                                  at one location, filling in
                                                  that field with a 0 for the
                                                  remaining locations.

                                                  Benova will send the following
                                                  reports to the MAA to forward
                                                  to the Contractor based on
                                                  information collected by the
                                                  Customer Service
                                                  Representatives:

                                                  .    Health Assessment Report
                                                       ------------------------
                                                       - This report will
                                                       identify the individual
                                                       recipients' answers to
                                                       the Health Assessment
                                                       Questions. This is a
                                                       weekly report that will
                                                       be sent out from Benova
                                                       by the close of business
                                                       each Monday (or Tuesday,
                                                       if Monday is a holiday)

                                                  .    Address/Phone Change
                                                       --------------------
                                                       Report - This report will
                                                       ------
                                                       identify any changes in
                                                       address or phone number
                                                       that have been reported
                                                       to Benova during the
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                    PAGE 7 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                                                       previous month. This
                                                       report will be sent out
                                                       from Benova within ten
                                                       business days following
                                                       the end of each month.

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

C.8.3.2                                           INSERT NEW SECOND PARAGRAPH IN
                                                  C.8.3.2

                                                  The Contractor is required to
                                                  follow all applicable laws,
                                                  regulations and rules
                                                  governing emergency care
                                                  including but not limited to:

                                                  C.1.2 Applicable Documents

                                                  42 C.F.R. Section 434.30

                                                  42 C.F.R. Section 434.32 as
                                                  amended

                                                  42 C.F.R. Section 431.210,
                                                  431.211, 431.213, 431.214

                                                  Section 1867 of the Social
                                                  Security Act

                                                  Section 1902 (a)(25) of the
                                                  Social Security Act, (42
                                                  U.S.C. Section 1396a(a)(25),

                                                  42 C.F.R. Part 431, Subpart F,
                                                  as amended, regarding
                                                  confidentiality of information
                                                  concerning applicants and
                                                  recipients of public
                                                  assistance,

                                                  42 C.F.R. Part 2, as amended,
                                                  regarding confidentiality of
                                                  alcohol and drug abuse patient
                                                  records,

                                                  42 C.F.R. Section 431.302,

                                                  42 C.F.R. 431,

                                                  Part C of the Individuals with
                                                  Disabilities Education Act (20
                                                  U.S.C. Section 1471 et seq.),

                                                  Early Periodic Screening,
                                                  Diagnosis, and Treatment
                                                  (EPSDT) Section 1905(r) of the
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                    PAGE 8 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                                                  Social Security Act, 42 USC
                                                  Section 1396 d (r),

                                                  Section 1932 (a)(4)(A) of
                                                  Title XIX.

                                                  42 C.F.R. Section 405.2401(b),
                                                  as amended,

                                                  42 C.F.R. Section 493.3, as
                                                  amended,

                                                  42 C.F.R. Section 440.230,

                                                  42 C.F.R. Section 441.150,

                                                  42 C.F.R. Section 441.152,
                                                  441.153, 441.156,

                                                  42 C.F.R. Section 447.331

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

C.8.3.1.5        DELETE THE FOLLOWING WORDS:

                 ...shall be submitted to MAA
                 for approval

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

C.8.3.2.5 -                                       INSERT NEW SECTIONS
C.8.3.2.17                                        C.8.3.2.5 - C.8.3.2.17

                                                  C.8.3.2.5 In accordance with
                                                  42 C.F.R. Section 434.30, the
                                                  Contractor shall ensure that
                                                  all covered emergency services
                                                  are available twenty-four (24)
                                                  hours a day and seven (7) days
                                                  a week through the
                                                  Contractor's network.

                                                  C.8.3.2.6 The Contractor shall
                                                  cover all emergency services
                                                  provided by out of-net-work
                                                  providers.

                                                  C.8.3.2.7 In the absence of an
                                                  agreement otherwise, all
                                                  claims for emergency services
                                                  shall be reimbursed at the
                                                  applicable Medicaid
                                                  fee-for-service rate in effect
                                                  at the time the service was
                                                  rendered.

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

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                    PAGE 9 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                                                  C.8.3.2.8 The Contractor may
                                                  not retroactively deny a claim
                                                  for a claim for an emergency
                                                  screening examination because
                                                  the condition, which appeared
                                                  to be an emergency medical
                                                  condition under the "prudent
                                                  layperson" standard, as
                                                  defined herein, was in fact
                                                  non-emergency in nature.

                                                  C.8.3.2.9 The Contractor may
                                                  not require prior
                                                  authorization for emergency
                                                  services. This applies to
                                                  out-of-network as well as to
                                                  in-network services, which an
                                                  enrollee seeks in an
                                                  emergency.

                                                  C.8.3.2.10 In accordance with
                                                  Section 1867 of the Social
                                                  Security Act, hospitals that
                                                  offer emergency services are
                                                  required to perform a medical
                                                  screening examination on all
                                                  people who come to the
                                                  hospital seeking emergency
                                                  care, regardless of their
                                                  insurance status or other
                                                  personal characteristics. If
                                                  an emergency medical condition
                                                  is found to exist, the
                                                  hospital must provide whatever
                                                  treatment is necessary to
                                                  stabilize that condition. A
                                                  hospital may not transfer a
                                                  patient in unstabilized
                                                  emergency condition to another
                                                  facility unless the medical
                                                  benefits of the transfer
                                                  outweigh the risks, and the
                                                  transfer conforms to all
                                                  applicable requirements. When
                                                  emergency services are
                                                  provided to an enrollee of the
                                                  Contractor, the organization's
                                                  liability for payment is
                                                  determined as follows:
                                                  .    Presence of a Clinical
                                                       ----------------------
                                                       Emergency - If the
                                                       ---------
                                                       screening examination
                                                       leads to a clinical
                                                       determination by the
                                                       examining physician that
                                                       an actual emergency
                                                       medical condition exists,
                                                       the Contractor must pay
                                                       for both the services
                                                       involved in the screening
                                                       examination and the
                                                       services required to
                                                       stabilize the patient.
                                                  .    Emergency Services
                                                       ------------------
                                                       Continue Until the
                                                       ------------------
                                                       Patient Can be Safely
                                                       ---------------------
                                                       Discharged or
                                                       -------------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                   PAGE 10 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                                                       Transferred - The
                                                       -----------
                                                       Contractor shall pay for
                                                       all emergency services,
                                                       which are medically
                                                       necessary until the
                                                       clinical emergency is
                                                       stabilized. This shall
                                                       include payment for all
                                                       treatment that may be
                                                       necessary to assure,
                                                       within reasonable medical
                                                       probability, that no
                                                       material deterioration of
                                                       the patient's condition
                                                       is likely to result from,
                                                       or occur during,
                                                       discharge of the patient
                                                       or transfer of the
                                                       patient of the patient or
                                                       transfer of the patient
                                                       to another facility.

                                                       If there is a
                                                       disagreement between a
                                                       hospital and the
                                                       Contractor concerning
                                                       whether the patient is
                                                       stable enough for
                                                       discharge or transfer, or
                                                       whether the medical
                                                       benefits of an
                                                       unstabilized transfer
                                                       outweigh the risks, the
                                                       judgment of the attending
                                                       physician(s) actually
                                                       caring for the enrollee
                                                       at the treating facility
                                                       prevails and is binding
                                                       on the Contractor. The
                                                       Contractor may establish
                                                       arrangements with
                                                       hospitals whereby the
                                                       Contractor may send one
                                                       of its own physicians
                                                       with appropriate ER
                                                       privileges to assume the
                                                       attending physician's
                                                       responsibilities to
                                                       stabilize, treat, and
                                                       transfer the patient.

                                                  .    Post Stabilization Care -
                                                       -----------------------
                                                       Post stabilization
                                                       services are services
                                                       subsequent to an
                                                       emergency that a treating
                                                       physician views as
                                                       medically necessary AFTER
                                                       an emergency medical
                                                       condition has been
                                                       stabilized

                                                  C.8.3.2.11 In accordance with
                                                  42 C.F.R. Section 422.
                                                  100(b)(1)(iv), the Contractor
                                                  must cover the following
                                                  services without requiring
                                                  authorization, and regardless
                                                  of whether the enrollee
                                                  obtains the services within or
                                                  outside the Contractor's
                                                  network.

                                                  C.8.3.2.12 Post stabilization
                                                  care services
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                   PAGE 11 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                                                  that were pre-approved by the
                                                  Contractor, or were not
                                                  pre-approved by the Contractor
                                                  because the Contractor did not
                                                  respond to the provider of
                                                  post-stabilization care
                                                  services request for
                                                  pre-approval within one (1)
                                                  hour after being requested to
                                                  approve such care, or could
                                                  not be contacted for
                                                  pre-approval.

                                                  C.8.3.2.13 If the screening
                                                  examination leads to a
                                                  clinical determination by the
                                                  examining physician that an
                                                  actual emergency medical
                                                  condition does not exist, the
                                                  Contractor shall pay for all
                                                  services involved in the
                                                  screening examination if the
                                                  presenting symptoms (including
                                                  severe pain) were of
                                                  sufficient severity to have
                                                  warranted emergency attention
                                                  under the "prudent layperson"
                                                  standard, as defined herein.
                                                  If an enrollee believes that a
                                                  claim for emergency services
                                                  has been inappropriately
                                                  denied by the Contractor, the
                                                  enrollee may seek recourse
                                                  through the MCO or the
                                                  District appeal process.

                                                  C.8.3.2.14 When an enrollee's
                                                  primary care physician or
                                                  other plan representative
                                                  instructs the enrollee to seek
                                                  emergency care in-network or
                                                  out-of-network, the MCO shall
                                                  be responsible for payment for
                                                  the medical screening
                                                  examination and for other
                                                  medically necessary emergency
                                                  services, without regard to
                                                  whether the patient meets the
                                                  "prudent layperson" standard,
                                                  as defined herein.

                                                  C.8.3.2.15 The Contractor
                                                  shall cover those medical
                                                  examinations performed in
                                                  emergency departments for
                                                  enrolled children as part of a
                                                  child protective services
                                                  investigation. In absence of
                                                  an agreement otherwise, these
                                                  services shall be reimbursed
                                                  at the applicable District of
                                                  Columbia Medicaid
                                                  fee-for-service rate in effect
                                                  at the time the service was
                                                  rendered.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                   PAGE 12 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------

                                                  C.8.3.2.16 The Contractor may
                                                  require that continuing care
                                                  following the conclusion of an
                                                  emergency, be obtained from a
                                                  network provider or another
                                                  health care provider specified
                                                  by the Contractor. An
                                                  emergency shall be deemed to
                                                  have concluded at such time as
                                                  the enrollee can, without
                                                  medically harmful
                                                  consequences, travel or be
                                                  transported to an appropriate
                                                  Contractor facility or to such
                                                  other facility as the
                                                  Contractor may designate.

                                                  C.8.3.2.17 Required payments
                                                  for emergency services are
                                                  summarized below:
                                                  .    In-network provider paid
                                                       at negotiated rate for
                                                       non-emergency condition
                                                       and emergency condition.
                                                  .    Out-of-network provider
                                                       paid at applicable
                                                       Medicaid fee-for-service
                                                       rate in effect at the
                                                       time the service was
                                                       rendered for
                                                       non-emergency condition
                                                       and emergency condition.

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

C.8.4.5.3                                         INSERT NEW SECTION C.8.4.5.3

                                                  Section 1932(b)(3) of the
                                                  Social Security Act requires
                                                  that a "Medicaid managed care
                                                  organization shall not
                                                  prohibit or otherwise restrict
                                                  a covered health care
                                                  professional from advising
                                                  such an individual who is a
                                                  patient of the professional
                                                  about the health status of the
                                                  individual or medical care or
                                                  treatment for the individual's
                                                  conditions or disease,
                                                  regardless of whether benefits
                                                  for such care or treatment are
                                                  provided under the contract,
                                                  if the professional is acting
                                                  within the lawful scope of
                                                  practice." In accordance with
                                                  subsection(b) as required by
                                                  1903(m)(2)(A)(xi) of the
                                                  Social Security Act, 42 U.S.C.
                                                  1396b(m)(2)(A)(xi), the
                                                  Contractor shall comply with
                                                  prohibitions on interference
                                                  with communications between
                                                  health professionals and
                                                  patients.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                   PAGE 13 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------

                                                  The Contractor shall comply
                                                  with provisions of
                                                  1932(b)(3)(A) of the Social
                                                  Security Act, 42 U.S.C.
                                                  1396u-2(b)(3)(A), which bar
                                                  the Contractor from
                                                  prohibiting or restricting any
                                                  physician or other health care
                                                  professional (whether or not
                                                  such provider participates in
                                                  the Contractor's provider
                                                  network) from advising an
                                                  individual about the
                                                  individual's health status or
                                                  medical care or treatment for
                                                  the individual's condition or
                                                  disease, regardless of whether
                                                  items and services for such
                                                  care or treatment are covered
                                                  under this Contract, if the
                                                  professional is acting within
                                                  the lawful scope of practice.

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

C.9.1.17.9                                        INSERT NEW SECTION C.9.1.17.9

                                                  The Contractor must comply
                                                  with Section 1932(b)(7) of the
                                                  Social Security Act. The
                                                  Contractor shall not apply any
                                                  credentialing requirements,
                                                  measures of financial or other
                                                  performance, or any other
                                                  participation criteria to
                                                  applicants for, or
                                                  participants in, the plan's
                                                  provider network that
                                                  discriminate against
                                                  particular providers that
                                                  specialize in conditions that
                                                  require costly treatment or
                                                  are otherwise inconsistent
                                                  with the requirements of this
                                                  contract. The Contractor shall
                                                  not otherwise 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 District of
                                                  Columbia law, solely on the
                                                  basis of such license or
                                                  certification.

                                                  The Contractor may not refuse
                                                  an assignment or seek to
                                                  disenroll a member or
                                                  otherwise discriminate against
                                                  a member on the basis of
                                                  age, sex, race, gender,
                                                  physical or mental
                                                  handicap/developmental
                                                  disability, national origin,
                                                  or type of illness
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                   PAGE 14 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                                                  or condition, except when that
                                                  condition can better be
                                                  treated by another provider
                                                  type.

                                                  The Contractor shall notify in
                                                  writing the Contracting
                                                  Officer Technical
                                                  Representative and the Agency
                                                  Chief Contracting Officer
                                                  thirty (30) days in advance of
                                                  any change in network
                                                  composition that negatively
                                                  affect member access to
                                                  services. Such changes may be
                                                  grounds for contract
                                                  termination.

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

C.9.2:5.4        DELETE SECTION C.9.2.5.4         REPLACE WITH NEW SECTION
                                                  C.9.2.5.4

                                                  The Contractor is required to
                                                  pay out of network provider
                                                  the Medicaid rate for
                                                  emergency services. Emergency
                                                  services are defined as
                                                  covered inpatient and
                                                  outpatient services furnished
                                                  by a qualified Medicaid
                                                  provider that are necessary to
                                                  evaluate or stabilize and
                                                  emergency medical condition.

                                                  In-network providers will be
                                                  paid based on the previously
                                                  negotiated rates with the
                                                  Contractor.

                                                  Any services other than
                                                  emergency services that are
                                                  not in-network will be paid at
                                                  a rate negotiated between the
                                                  provider and the Contractor.

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

C.10.1.15        DELETE SECTION C.10.1.15         REPLACE WITH NEW SECTION
                                                  C.10.1.15

                                                  A contractor who receives or
                                                  identifies a request for
                                                  experimental treatment must
                                                  submit the request to the MAA
                                                  medical director for review
                                                  within 24 hours of identifying
                                                  or receiving the request.

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

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                   PAGE 15 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
C.10.5.1.2       DELETE SECTION C.10.5.1.2        REPLACE WITH NEW SECTION
                                                  C.10.5.1.2:

                                                  The Contractor shall arrange
                                                  with contracted laboratories
                                                  to submit all lead screening
                                                  results to the District of
                                                  Columbia Department of Health
                                                  Childhood Lead Poisoning
                                                  Prevention Program. Any child
                                                  with an elevated blood lead
                                                  level (greater than 15 ug/dl)
                                                  must be reported within
                                                  seventy-two (72) hours after
                                                  identification to the
                                                  Department of Health Childhood
                                                  Lead Poisoning Prevention
                                                  Program. The contractor shall
                                                  refer such a child for
                                                  assessment of developmental
                                                  delay, and shall coordinate
                                                  services required to treat the
                                                  exposed child with the lead
                                                  inspection and abatement
                                                  services furnished by the
                                                  District.
--------------------------------------------------------------------------------

C.10.5.7.7                                        INSERT NEW SECTION C.10.5.7.7

                                                  Department of Health/Maternal
                                                  and Family Health
                                                  Administration

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

C.13.1                                            INSERT NEW SECTION C.13.1

                                                  MCOs are responsible for
                                                  actively conducting valid
                                                  reviews of members' medical
                                                  records as a regular,
                                                  consistent component of the
                                                  health plan's Quality
                                                  Management program.

                                                  All medical record reviews and
                                                  evaluation will be conducted
                                                  using accepted industry
                                                  standards for quality
                                                  assurance and quality
                                                  improvement related to:

                                                  .    The diagnosis and
                                                       treatment of injury,
                                                       illness and disease;

                                                  .    Disease prevention,
                                                       health promotion and
                                                       health education
                                                       activities;
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                  PAGE 16 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------

                                                  .    The appropriate
                                                       documentation of care in
                                                       clinical records.

                                                  .    Medical record reviews
                                                       and evaluations will
                                                       occur on population
                                                       samples of sufficient
                                                       size so as to yield
                                                       valid, reliable
                                                       statistical information;

                                                  .    Medical record reviews
                                                       will be conducted in
                                                       compliance with HIPAA
                                                       regulations.

                                                  The Contractor is responsible
                                                  for submitting members'
                                                  medical records for review
                                                  upon request from DC MAA or
                                                  their designee.
--------------------------------------------------------------------------------

C.14.5                                            INSERT NEW SECOND PARAGRAPH
                                                  IN C.14.5

                                                  The Contractor shall comply
                                                  with the Office of Managed
                                                  Care and the Office of Fair
                                                  Hearing decision. The Office
                                                  of Managed Care and the Office
                                                  of Fair Hearing decisions in
                                                  these matters shall be final
                                                  and shall not be subject to
                                                  appeal by the Contractor. The
                                                  Contractor shall provide to
                                                  the Office of Managed Care and
                                                  or Office Fair Hearing all
                                                  information necessary for any
                                                  enrollee appeal within a time
                                                  frame established by Office of
                                                  Managed Care and or the Office
                                                  of Fair Hearing.

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

C.14.6           DELETE SECTION C.14.6            REPLACE WITH NEW SECTION
                                                  C.14.6

                 Tracking Log                     Tracking Log

                 The Contractor shall maintain    The Contractor shall maintain
                 a log to document all            a record keeping and tracking
                 complaints and grievances. The   system for complaints,
                 log shall document the type      grievances and appeals that
                 and nature of each dispute,      includes copy of the original
                 the Plan in which the            written complaint, grievance,
                 complainant is                   or appeal, the decision, and
                                                  the nature of the
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                  PAGE 17 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                 enrolled, how the matter was     decision and any corrective
                 addressed and what, if any,      action that was taken.
                 corrective action was taken.
--------------------------------------------------------------------------------

H.1.1.2.3        DELETE SECTION H.1.1.2.3         REPLACE WITH NEW SECTION
                                                  H.1.1.2.3:

                                                  If the Contractor fails to
                                                  notify IMA and MAA of the
                                                  birth of a newborn via the
                                                  "Request to Add Newborns Form"
                                                  and "Add Newborn Log Form" in
                                                  Attachment J.23., within ten
                                                  (10) business working days of
                                                  the birth, MAA will not
                                                  process the kick payment or
                                                  reimburse the contractor for
                                                  services rendered to the
                                                  newborn. Attachment J.23
                                                  supercedes attachment J.4.

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

H.1.1.2.7                                         INSERT NEW SECTION H.1.1.2.7

                                                  If more than one MCO is
                                                  claiming payment for a
                                                  newborn, MAA will only pay the
                                                  MCO that demonstrates services
                                                  rendered to the newborn. The
                                                  MCO must submit written
                                                  notification to MAA of the
                                                  following information:

                                                  .    Newborn's name;
                                                  .    Newborn's Medicaid
                                                       number;
                                                  .    Newborn's Date of birth;
                                                  .    Date of service;
                                                  .    Diagnosis treatment;
                                                  .    Provider of service; and
                                                  .    Provider's address and
                                                       telephone number.

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

H.1.1.2.6        DELETE SECTION H.1.1.2.6         REPLACE WITH NEW SECTION
                                                  H.1.1.2.6:

                                                  If the OMC has failed to
                                                  notify the health plan of the
                                                  newborn's Medicaid number by
                                                  the fifteenth (15th) day of
                                                  the third (3rd) month, the
                                                  health plan must submit
                                                  written notification to MAA
                                                  with the following
                                                  information:
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                  PAGE 18 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------

                                                  .    Mother's name;
                                                  .    Mother's Medicaid number
                                                  .    Newborn's Name;
                                                  .    Newborn's Date of Birth;
                                                       and
                                                  .    Name of hospital newborn
                                                       was born.

                                                  Newborns who do not receive a
                                                  Medicaid number by the end of
                                                  the third month will convert
                                                  to the fee for service
                                                  Medicaid program. After a
                                                  Medicaid number is received,
                                                  the newborn will be
                                                  re-enrolled through the
                                                  provider continuity process.

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

H.1.2.2          DELETE SECTION H.1.2.2

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

H.93                                              INSERT NEW SECTION H.9.3

                                                  Any physician incentive plan
                                                  applicable to physicians
                                                  participating in the
                                                  Contractor's provider network
                                                  shall meet the requirements
                                                  applicable to physician
                                                  incentive plans under
                                                  1876(I)(8) of the Social
                                                  Security Act, 42 U.S.C.
                                                  1395mm(I)(8), 42 C.F.R.
                                                  417.479. The contractor must
                                                  submit with the Physician
                                                  Incentive Forms the following
                                                  information:

                                                  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 plan,
                                                  disclosure of other aspects of
                                                  the plan need not be made.
                                                  (h)(ii) The type of incentive
                                                  arrangement; for example,
                                                  withhold, bonus, capitation.

                                                  If the incentive plan involves
                                                  a withhold or bonus, the
                                                  percent of the withhold or
                                                  bonus. (h)(iv) Proof that the
                                                  physician or physician group
                                                  has adequate stop-loss
                                                  protection, including
                                                  specification of the amount
                                                  and
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                  PAGE 19 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                                                  type of stop-loss protection.

                                                  The panel size and, if
                                                  patients are pooled according
                                                  to either or both of the
                                                  following permitted methods,
                                                  the method used including
                                                  commercial, Medicare, and/or
                                                  Medicaid patients in the
                                                  calculation of the panel size.
                                                  and pooling together (by the
                                                  physician groups that
                                                  contracts with more than one
                                                  HMO, CMP, health insuring
                                                  organization (HIO) or prepaid
                                                  health plan (PHP)), the
                                                  patients of each of those
                                                  HMOs, CMPs, HIOs and PHPs.

                                                  The Contractor shall submit
                                                  Physician Incentive Plans on
                                                  an annual basis thirty (30)
                                                  days prior to date of the
                                                  exercise of the following year
                                                  option.

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

H.11.1           DELETE SECTION H.11.1            INSERT NEW SECTION H.11.1

                 Debts of Contractor              Protection of Enrollees
                                                  Against Liability for Payment

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

H.11.1.1         DELETE SECTION H.11.1.1          INSERT NEW SECTION H.11.1.1

                 The Contractor shall ensure      The Contractor and each
                 through its contracts,           provider (whether or not the
                 subcontracts and in any other    provider participates in the
                 appropriate manner that          Contractor's provider network)
                 neither Enrollees nor the        through which the Contractor
                 District are held liable for     furnishes or arranges for the
                 Contractor's debts in the        furnishing of items or
                 event of Contractor's            services covered under the
                 insolvency.                      contract to an enrolled
                                                  individual shall comply with
                                                  the requirements of 1932(b)(6)
                                                  of the Social Security Act, 42
                                                  U.S.C. 1396u-2(b)(6), that an
                                                  enrolled individual or the
                                                  individual's family or
                                                  caregiver may not be held
                                                  liable or be subject to
                                                  collection efforts for:
                                                  .    debts or other
                                                       obligations of the
                                                       Contractor or any
                                                       provider participating in
                                                       the Contractor's provider
                                                       network in the event of
                                                       insolvency;
                                                  .    the cost of items and
                                                       services covered under
                                                       the contract in the event
                                                       that the
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                  PAGE 20 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                                                       Contractor fails to
                                                       receive payment from DC;
                                                  .    the cost of items and
                                                       services covered under
                                                       the contract if a
                                                       provider participating in
                                                       the Contractor's provider
                                                       network fails to receive
                                                       payments from the
                                                       Contractor; or
                                                  .    payments to a provider
                                                       that furnishes items and
                                                       services covered under
                                                       the contract to an
                                                       enrolled individual under
                                                       a contractual, referral,
                                                       or other arrangement with
                                                       the Contractor in excess
                                                       of the amount that would
                                                       be owed by the enrolled
                                                       individual if the
                                                       Contractor had furnished
                                                       such items or services
                                                       directly.

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

H.11.2                                            INSERT NEW SECTION H.11.2

                                                  Cost Sharing

                                                  The Contractor and each
                                                  provider (whether or not the
                                                  provider participates in the
                                                  Contractor's provider network)
                                                  through which the Contractor
                                                  furnishes or arranges for the
                                                  furnishing of items or
                                                  services covered under the
                                                  contract to an enrolled
                                                  individual shall comply with
                                                  requirements of 1916(a)(2)(A)
                                                  of the Social Security Act, 42
                                                  U.S.C. 1396o(a)(2)(A),
                                                  prohibiting the imposition of
                                                  cost-sharing or similar
                                                  charges on enrolled
                                                  individuals under this
                                                  contract.

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

H.14.2                                            INSERT NEW SECTION H.14.2

                                                  The Contractor shall provide
                                                  language in all of their
                                                  provider's contracts and
                                                  subcontracts that preclude
                                                  balance billing, except for
                                                  any outstanding co-payments.
                                                  Medicaid payment is "payment
                                                  in full". The contractor's
                                                  contract shall preclude their
                                                  providers from sending
                                                  individual Medicaid
                                                  recipient's bills to
                                                  collections agencies.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                   PAGE 21 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                                                  Protection of enrollees
                                                  against balance billing
                                                  through subcontractors (Amends
                                                  SSA 1128B (d)(1) --BBA 4704(b)
                                                  Section 1128b(d)(1) of the
                                                  Act authorizes criminal
                                                  penalties to providers in the
                                                  case of services provided to
                                                  an individual enrolled with a
                                                  managed care organization
                                                  under contract under section
                                                  1903(m) of the Act which are
                                                  charged at a rate in excess of
                                                  the rate permitted under the
                                                  organization's contract.

                                                  Section 1128B(d)(1) of the Act
                                                  states that whoever knowingly
                                                  and willfully charges, for any
                                                  service provided to a patient
                                                  under a State plan approved
                                                  under Title XIX or under a
                                                  managed care organization
                                                  contract under 1903(m) of the
                                                  Act, money or other
                                                  consideration at a rate in
                                                  excess of the rates
                                                  established by the State or
                                                  contract shall be guilty of a
                                                  felony and upon conviction
                                                  shall be fined no more than
                                                  $25,000 or imprisoned for no
                                                  more than five years, or both.

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

I.9.2                                             INSERT NEW SECTION 1.9.2

                                                  The contractor shall notify
                                                  the Agency Chief Contracting
                                                  Officer in writing of any
                                                  changes to MCO ownership and
                                                  key personnel at least thirty
                                                  days prior to any change in
                                                  ownership or key personnel.
                                                  The Contractor must provide
                                                  information concerning each
                                                  Person with Ownership or
                                                  Control Interest as defined in
                                                  this Contract. This
                                                  information includes but is
                                                  not limited to the following:
                                                  .    Name, address, and
                                                       official position;
                                                  .    A biographical summary;
                                                  .    A statement as whether
                                                       the person with ownership
                                                       or control interest is
                                                       related to any other
                                                       person with ownership or
                                                       control interest such as
                                                       a spouse, parent, child,
                                                       or sibling;
                                                  .    The name of any
                                                       organization in which the
                                                       person with ownership or
                                                       control
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                   PAGE 22 OF 23
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
                          CONTRACT MODIFICATION - M0001
                                      DCHFP
                                  SUMMARY SHEET
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  CONTRACT
   SECTION               CHANGED FROM                        CHANGED TO
--------------------------------------------------------------------------------
                                                       interest in the
                                                       Contractor also has an
                                                       ownership or control
                                                       interest, to the extent
                                                       obtainable from the other
                                                       organization by the
                                                       Contractor through
                                                       reasonable written
                                                       request. The Contractor
                                                       must keep copies of all
                                                       written requests and
                                                       responses and provide
                                                       them to the Agency Chief
                                                       Contracting Officer when
                                                       requested;
                                                       and
                                                       The identity of any
                                                       person, principal, agent,
                                                       managing employee, or key
                                                       provider of health care
                                                       services who (1) has been
                                                       convicted of a criminal
                                                       offense related to that
                                                       individual's or entity's
                                                       involvement in any
                                                       program under Medicaid or
                                                       Medicare since the
                                                       inception of those
                                                       programs (1965) or (2)
                                                       has been excluded from
                                                       the Medicare or Medicaid
                                                       programs for any reason.
                                                       This disclosure must be
                                                       in compliance with
                                                       Section 1128, as amended,
                                                       of the Social Security
                                                       Act, 42 U.S.C. Section
                                                       1320a-7, as amended, and
                                                       42 C.F.R. Section
                                                       455.106, as amended, and
                                                       must be submitted on
                                                       behalf of the Contractor
                                                       and any subcontractor as
                                                       well as any provider of
                                                       health care services or
                                                       supplies.

                                                  Federal regulations contained
                                                  in 42 C.F.R. Section 455.104
                                                  and 42 C.F.R. Section 455.106
                                                  also require disclosure of all
                                                  entities with which a Medicaid
                                                  provider has an ownership or
                                                  control relationship. The
                                                  Contractor shall provide
                                                  information concerning each
                                                  Person with Ownership or
                                                  Control.

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

--------------------------------------------------------------------------------
POHC-2002-D-0003                                                   PAGE 23 OF 23
--------------------------------------------------------------------------------

<PAGE>

                          CORRECTION OF INCONSISTENCIES
                          -----------------------------

Section Reference                        Correction
-----------------                        ----------

C.5.3.1             Section C.5.3.1 references Section 0; the correct reference
                    is Section C.5.1 in stated in the Request For Proposal (RFP)
                    as amended.

C.6.3.18            Section C.6.3.18 references Attachment A.2.1 (g), the
                    correct is reference Section A.2.1 which includes Attachment
                    7 - Covered Services.

C.6.5.2.3           Section C.6.5.2.3 reference Attachment J.4; the correct
                    reference is Attachment 9 - Newborn Notification Report.

C.8                 Section C.8 references Attachment J.8; the correct reference
                    is Attachment 7 - Covered Services.

C.8.3.2             Section C.8.3.2 references Attachment J.8; the correct
                    reference is Attachment 7 - Covered Services.

C.8.3.2.4           The following language was inadvertently omitted from the
                    contract:

                         ...emergency services including screening and
                         diagnostic services necessary to diagnose the
                         condition, based on the...

C.8.3.5             Section C.8.3.5 references Attachment J.8; the correct
                    reference is Attachment 7 - Covered Services.

C.8.3.6.1           Section C.8.3.6.1 references Attachment AA; the correct
                    reference is Attachment 7 - Covered Services.

C.8.3.11.1(b)       Section C.8.3.11.1 (b) references Section 0; the correct
                    reference is Section C.8.3.1.8.

C.9.1.5             Section C.9.1.5 reference Section 0, the correct reference
                    is Section C.8.3.2.1.

C.9.2.5.3           Section C.9.2.5.3 reference Section 0, the correct reference
                    is C.8.4

C.10.1.5            Section C.10.1.5 references Section 0, the correct reference
                    is C.8.1.

C.17.3.2            Section C.17.3.2 references Attachment J.8 and Section 0,
                    the correct references are Attachment 7 - and Section C.8.

                                Page   of 2
                                    --

<PAGE>

                          CORRECTION OF INCONSISTENCIES
                          -----------------------------

Section Reference                        Correction
-----------------                        ----------

C.17.4.1            Section C.17.4.1 reference Section 0, the correct reference
                    is C.9.1 as stated in the RFP.

H.1.1.2.3           Section H.1.1.2.3 reference Attachment AA, the correct
                    reference is Attachment 9 - Newborn Notification Report
                    sample.

H.1.1.7.2           Section H.1.1.7.2. reference Section 0, the correct
                    reference is H.1.1.1.1.

H.4.3.1             Section H.4.3.1 references Section 0, the correct reference
                    is H.4.

H.1.4.4.1           Section H.4.4.1 references Section 0; the correct reference
                    is Section H.4.

H.15.2.1            Section H.15.2.1 references Section 0; the correct reference
                    is Section C.8.3.2.1 as stated in the RFP.

                                   Page 2 of 2

<PAGE>

<TABLE>
<S>                                                  <C>                                              <C>
------------------------------------------------------------------------------------------------------------------------------------
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT   1. Contract Number                                 Page of Pages
                                                     POHC-2002-D-0003                                 1               1
------------------------------------------------------------------------------------------------------------------------------------
2. Amendment/Modification Number   3. Effective Date        4. Requisition/Purchase Request No.   5. Project No. (If applicable)
             'M0002                   SEE BLOCK 16C BELOW         HCOP2-210457
------------------------------------------------------------------------------------------------------------------------------------
6. Issued By                                  Code[______________]   7. Administered By (If other than line 6)
Office of Contracting and Procurement                                   Department of Health, Office of Managed Care
Public Safety Cluster, Department of Health Bureau                      Medical Assistance Administration
441 4th Street. N.W., Suite 800 South                                   825 North Capitol Street, N.E.
Washington, DC 20001                                                    Attention: Ms. Maude Holt
------------------------------------------------------------------      Telephone: (202)442-9074
------------------------------------------------------------------------------------------------------------------------------------
8. Name and Address of Contractor (No. Street, city, country, state and ZIP Code)  (X)9A. Amendment of Solicitation No.
                                                                                   ---
                                                                                      ----------------------------------------------
                                                                                      9B. Dated (See Item 11)
     AMERICAID COMMUNITY CARE
     514 10TH STREET, N.W., SUITE 500                                              -------------------------------------------------
     WASHINGTON, D. C. 20004                                                          10A. Modification of Contract/Order No.
     ATTN: MS. JANE E. THOMPSON                                                         POHC-2002-D-0003
     TELEPHONE NO.: (202)783-8100                                                   X ----------------------------------------------
--------------------------------------------------------------------------------      10B. Dated (See Item 13)
       Code                                          Facility                           APRIL 1, 2002
------------------------------------------------------------------------------------------------------------------------------------
                                      11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
------------------------------------------------------------------------------------------------------------------------------------

[__]The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers[___]is
    extended.[___]is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the
    solicitation or as amended, by one of the following methods: (a) By completing Items 8 and 15, and returning [__________]copies
    of the amendment: (b) By acknowledging receipt of this amendment on each copy of the offer submitted: or (c) By separate letter
    or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED
    AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER.
    If by virtue of this amendment you desire to change an offer already submitted, such change may be made by letter or telegram,
    provided each letter or telegram makes reference to the solicitation and this amendment, and is received prior to the opening
    hour and date
------------------------------------------------------------------------------------------------------------------------------------
12. Accounting and Appropriation Data (If Required)

------------------------------------------------------------------------------------------------------------------------------------
                                    13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
                                        IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14
------------------------------------------------------------------------------------------------------------------------------------
  (X)   A. This change order is issued pursuant to: (Specify Authority)
        The changes set forth in Item 14 are made in the contract/order no. in item 10A.
------------------------------------------------------------------------------------------------------------------------------------
        B. The above numbered contract/order is modified to reflect the administrative changes (such as changes in paying office,
        appropriation date, etc.) set forth in item 14, pursuant to the authority of 27 dCMR, Chapter 36, Section 3601.2.
------------------------------------------------------------------------------------------------------------------------------------
        C. This supplemental agreement is entered into pursuant to authority of:
         DISTRICT OF COLUMBIA MUNICIPAL REGULATIONS 3601.2 (c) Bilateral Contract Modification and agreement between the parties
------------------------------------------------------------------------------------------------------------------------------------
  X     D. Other (Specify type of modification and authority)
         DISTRICT OF COLUMBIA MUNICIPAL REGULATIONS 3601.2 (c) Bilateral Contract Modification and agreement between the parties
------------------------------------------------------------------------------------------------------------------------------------
 E. IMPORTANT:    Contractor[____]is not,   [X]  is required to sign this document and return      2 copies to the issuing office
                                            ---                                                   --
------------------------------------------------------------------------------------------------------------------------------------
14. Description of amendment/modification (Organized by USC Section headings, including solicitation/contract subject matter where
    feasible.)

    THE CONTRACT REFERENCED IN BLOCK 10A ABOVE IS MODIFIED AS FOLLOWS:

    The purpose of this modification is to correct the TERM OF THE CONTRACT Base Period as stated in SECTION F.1.1. The Term of the
    Contract currently states from date of award through October 31, 2002, this is corrected to read "Date of Award through twelve
    (12) months thereafter."

    The District's intent was to award a contract with a based period of twelve months and four-one year options as stated in
    SECTIONS B.5.1 and F.2.2.1 of the solicitation and the contract.

------------------------------------------------------------------------------------------------------------------------------------
Except as provided herin, all terms and conditions of the document referenced in Item (9A or 10A as heretofore changed, remains
unchanged and in full force and effect
------------------------------------------------------------------------------------------------------------------------------------
15A. Name and Title of Signer (Type or print)                     16A. Name of Contracting Officer
JANE E. THOMPSON  CEO-DC OPERATIONS                                     ESTHER M. SCARBOROUGH
------------------------------------------------------------------------------------------------------------------------------------
15B. Name of Contractor                      15C. Date Signed     16B. District of Columbia                      16C. Date Signed
AMERIGROUP DC                                     4/9/02                                                           4-9-02

/s/ Jane E. Thompson                                              /s/ E. M. Scarborough
--------------------                                              ---------------------
     (Signature of person authorized to sign)                            (Signature of Contracting Officer)
------------------------------------------------------------------------------------------------------------------------------------
[LOGO] Government of the District of Columbia          [LOGO] Office of Contracting & Procurement           DC OCP 202 (7-99)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<S>                                                  <C>                                     <C>
------------------------------------------------------------------------------------------------------------------------------------
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT   1. Contract Number                                 Page of Pages
                                                     POHC-2002-D-0003                                 1              1
------------------------------------------------------------------------------------------------------------------------------------
2. Amendment/Modification Number   3. Effective Date        4. Requisition/Purchase Request No.   5. Project No. (If applicable)
             'M0001                   SEE BLOCK 16C BELOW      POHC-2002-F-0001
------------------------------------------------------------------------------------------------------------------------------------
6. Issued By                                  Code[______________]   7. Administered By (If other than line 6)
Office of Contracting and Procurement                                   Department of Health, Office of Managed Care
Public Safety Cluster, Department of Health Bureau                      Medical Assistance Administration
441 4th Street, N.W., Suite 800 South                                   825 North Capitol Street, N.E.
Washington, DC 20001                                                    Attention: Ms. Maude Holt
------------------------------------------------------------------      Telephone:(202)442-9074
------------------------------------------------------------------------------------------------------------------------------------
8. Name and Address of Contractor (No. Street, city, country, state and ZIP Code)  (X)9A. Amendment of Solicitation No.
                                                                                   ---
                                                                                      ----------------------------------------------
                                                                                      9B. Dated (See Item 11)
     AMERICAID COMMUNITY CARE
     514 10TH STREET, N.W., SUITE 500                                              -------------------------------------------------
     WASHINGTON, D. C. 20004                                                          10A. Modification of Contract/Order No.
     ATTN: MS. JANE E. THOMPSON                                                         POHC-2002-D-0003/POHC-2002-F-0001(D.O)
     TELEPHONE NO.: (202) 783-8100                                                  X ----------------------------------------------
--------------------------------------------------------------------------------      10B. Dated (See Item 13)
       Code                                          Facility                           APRIL 9, 2002
------------------------------------------------------------------------------------------------------------------------------------
                                      11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
------------------------------------------------------------------------------------------------------------------------------------

[__]The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers[___]is
    extended.[___]is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the
    solicitation or as amended, by one of the following methods: (a) By completing Items 8 and 15, and returning [__________]copies
    of the amendment: (b) By acknowledging receipt of this amendment on each copy of the offer submitted: or (c) By separate letter
    or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED
    AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER.
    If by virtue of this amendment you desire to change an offer already submitted, such change may be made by letter or telegram,
    provided each letter or telegram makes reference to the solicitation and this amendment, and is received prior to the opening
    hour and date specified.
------------------------------------------------------------------------------------------------------------------------------------
12. Accounting and Appropriation Data (If Required)

------------------------------------------------------------------------------------------------------------------------------------
                                    13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
                                        IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14
------------------------------------------------------------------------------------------------------------------------------------
  (X)   A. This change order is issued pursuant to: (Specify Authority)
------- The changes set forth in Item 14 are made in the contract/order no. in item 10A.
------------------------------------------------------------------------------------------------------------------------------------
        B. The above numbered contract/order is modified to reflect the administrative changes (such as changes in paying office,
        appropriation date, etc.) set forth in item 14, pursuant to the authority of 27 dCMR, Chapter 36, Section 3601.2.
------------------------------------------------------------------------------------------------------------------------------------
        C. This supplemental agreement is entered into pursuant to authority of:

------------------------------------------------------------------------------------------------------------------------------------
  X     D. Other (Specify type of modification and authority)
         DISTRICT OF COLUMBIA MUNICIPAL REGULATIONS 3601.2 (c) Bilateral Contract Modification and agreement between the parties
------------------------------------------------------------------------------------------------------------------------------------
 E. IMPORTANT:    Contractor[____]is not,   [X]  is required to sign this document and return      2 copies to the issuing office.
                                            ---                                                   --
------------------------------------------------------------------------------------------------------------------------------------
14. Description of amendment/modification (Organized by USC Section headings, including solicitation/contract subject matter where
    feasible.)

    THE DELIVERY ORDER REFERENCED IN BLOCK 10A ABOVE IS MODIFIED AS FOLLOWS:

F.3.1 IMPLEMENTATION:
The implementation date of this Delivery Order shall be one hundred and twenty (120) days after date of contract award, August 1,
2002. through October 31, 2002.

------------------------------------------------------------------------------------------------------------------------------------
Except as provided herin, all terms and conditions of the document referenced in Item (9A or 10A as heretofore changed, remains
unchanged and in full force and effect
------------------------------------------------------------------------------------------------------------------------------------
15A. Name and Title of Signer (Type or print)                     16A. Name of Contracting Officer
JANE E. THOMPSON  CEO-DC Operations                                     ESTHER M. SCARBOROUGH
------------------------------------------------------------------------------------------------------------------------------------
15B. Name of Contractor                      15C. Date Signed     168. District of Columbia                      16C. Date Signed
AMERIGROUP District of Columbia                      4/9/02                                                           4-9-02

/s/ Jane E. Thompson                                               /s/ E. M. Scarborough
--------------------                                               ---------------------
     (Signature of person authorized to sign)                            (Signature of Contracting Officer)
------------------------------------------------------------------------------------------------------------------------------------
[LOGO] Government of the District of Columbia         [LOGO] Office of Contracting & Procurement               DC OCP 202 (7-99)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}]]