Document:

<PAGE>
                                                                    EXHIBIT 10.2

                            HEALTH INSURANCE CONTRACT
                               NORTH HEALTH REGION

                                     Between

                             THE PUERTO RICO HEALTH
                            INSURANCE ADMINISTRATION

                                       and

                                 TRIPLE S, INC.

                                  July 1, 2002

<PAGE>

                                    CONTRACT

         This Agreement entered into this 13th day of June, 2002 at San Juan,
Puerto Rico, by and between PUERTO RICO HEALTH INSURANCE ADMINISTRATION, a
public instrumentality of the Commonwealth of Puerto Rico, organized under Law
72 approved on September 7, 1993, hereinafter referred to as the
"ADMINISTRATION", represented by its Executive Director, ORLANDO GONZALEZ
RIVERA, and TRIPLE-S, Inc., a domestic corporation duly organized and doing
business under the laws of the Commonwealth of Puerto Rico, with employer social
security number 66-0229064, hereinafter referred to as the "INSURER",
represented by its President, SOCORRO RIVAS.

                                   WITNESSETH

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

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

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

         THIRD: The ADMINISTRATION published a Request For Proposals for the
NORTH Health Area/Region, seeking to provide health insurance coverage to all
eligible beneficiaries in said health Area/Region, by contracting with private
insurers.

         FOURTH: Pursuant to the terms of the aforementioned Request For
Proposals, published on April, 2002 different private health insurers submitted
to the ADMINISTRATION proposals to underwrite the health insurance for the
Health Area/Region.

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

         SIXTH: The Board of Directors of the ADMINISTRATION, after a careful
and complete analysis of all technical and administrative elements of the
proposals, decided to award the INSURER the contract to underwrite and
administer the health insurance for the NORTH Health Area/Region, composed of
ARECIBO, BARCELONETA, CAMUY,

                                       1
<PAGE>

CIALES, FLORIDA, HATILLO, LARES, MANATI, MOROVIS, QUEBRADILLAS, UTUADO AND VEGA
BAJA.

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

                              TERMS AND CONDITIONS

                                    ARTICLE I
                                   DEFINITIONS

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

ADMINISTRATION: Puerto Rico Health Insurance Administration.

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

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

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

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

                                       2
<PAGE>

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

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

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

CONTRACT TERM: The contract term is for three consecutive twelve (12) month
periods after the effective date of this contract. The contract may be
terminated at the conclusion of each twelve month period pursuant to Article
XXVIII (3) (4).

CMS: Acronym for the Centers for Medicare and Medicaid Services.

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

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

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

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

FAMILY CONTRACT: The benefits provided to the following eligible beneficiaries;
1) principal subscriber; and 2) his or her spouse (legally married or common
law); and 3) his or her children (legally, adopted, foster or step children)
under 21 years old that depend on the principal subscriber for subsistence; and
4) individuals under 21 years of age who have no children and live in common law
with one of the eligible children in the same household; and 5) his or her
dependents, of any age, who are blind or permanently disabled and live in the
same household. Female beneficiaries (except

                                       3
<PAGE>

spouse) covered under family contract who become pregnant shall constitute a
separate subscriber under an individual contract as of the first day of the
month the pregnancy is diagnosed and reported to the INSURER.

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

HEALTH AREA/REGION: The NORTH Health Area/Region as defined by the
ADMINISTRATION, composed of ARECIBO, BARCELONETA, CAMUY, CIALES, FLORIDA,
HATILLO, LARES, MANATI, MOROVIS, QUEBRADILLAS, UTUADO AND VEGA BAJA.

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

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

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

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

                                       4
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

                                       5
<PAGE>

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

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

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

PBM: Acronym for Pharmacy Benefits Manager.

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

PHARMACY BENEFITS MANAGER: The private entity contracted by the ADMINISTRATION
under the Health Reform Program to function as their pharmaceutical benefit
manager responsible, for claims processing, drug utilization review, disease
management, formulary control and beneficiary/customer information services for
pharmaceutical benefits provided by the basic, special and mental health
coverage of the Health Reform Program.

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

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

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

                                       6
<PAGE>

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

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

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

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

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

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

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

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

                                       7
<PAGE>

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

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

                         ORGANIZATION AND ADMINISTRATION

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

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

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

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

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

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

                                   ARTICLE II
                           ELIGIBILITY AND ENROLLMENT

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

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

                                       8
<PAGE>

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

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

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

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

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

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

                                       9
<PAGE>

         enrollment requirements. Initial orientation and enrollment will be
         conducted pursuant to the Instructions to Insurers for Implementation
         of Orientation and Subscription Process contained in Addendum II.

7.       The INSURER shall be responsible to provide the subscriber with
         specific information allowing for the prompt and reliable enrollment of
         all eligible individuals. The ADMINISTRATION shall notify the INSURER
         on a daily basis of all beneficiaries who have become eligible, as well
         as those who have ceased to be eligible. The INSURER shall guarantee
         the maintenance, functionality, and reliability of all necessary
         systems to allow enrollment or disenrollment of subscribers.

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

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

10.      If, following disenrollment, a beneficiary's contract is reinstated and
         the beneficiary is re-enrolled on the same month of disenrollment, the
         contract will be reinstated as of the date of re-enrollment.

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

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

                                       10
<PAGE>

         INSURER upon enrollment of the newborn. The INSURER will be required to
         pay the providers for the services rendered to an unenrolled newborn
         during ninety (90) days from the date of birth.

         The INSURER, PCP or HCO will provide orientation to the beneficiary as
         soon as a baby is born to go to the INSURER's office with the necessary
         documentation to receive a manual certification from the INSURER for
         the newborn.

         The INSURER, PCP or HCO will make every effort to make the beneficiary
         go to the Department of Health Medicaid Office to register the newborn
         within the ninety (90) days of his/her date of birth. It should be
         emphasized to the beneficiary that failure to register the newborn
         within that period will cause the newborn to loose coverage. After the
         90 days period, the INSURER will not be paid premiums if the newborn is
         not enrolled.

         In the case in which a newborn dies before being registered at the
         Medicaid Office, the INSURER must provide ASES with proof of the birth
         and of the death of the newborn. ASES will then pay premiums for the
         period from the birth of the newborn until his death.

         In the case in which the family unit ceases to be eligible before the
         newborn is registered at the Medicaid Office, the INSURER must provide
         ASES with proof of the birth of the newborn. ASES will then pay
         premiums from the date of birth of the newborn until the termination of
         eligibility of the family.

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

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

                                       11
<PAGE>

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

15.      In the event that a female beneficiary, included as a dependent in a
         family group, other than as the spouse, becomes pregnant, that
         beneficiary will be transferred to a new family and become the head of
         household of the new family. The effective date of the new family will
         be the date of the first diagnosis of the pregnancy.

         Such beneficiary has the right to all the services under maternity
         coverage.

         At the time of being diagnosed as pregnant, the physicians, the HCO
         and/or the INSURER are required to provide orientation to the
         beneficiary towards certifying with the Department of Health Medicaid
         Office and to present herself at the INSURER to have a membership card
         issued.

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

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

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

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

                                       12
<PAGE>

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

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

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

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

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

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

                                       13
<PAGE>

23.      DISENROLLMENT

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

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

         (a)      Beneficiary misuses or loans his/her membership card to
                  another person to obtain services.

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

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

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

         If the beneficiary disagrees with the decision to disenroll the
         beneficiary from INSURER, the beneficiary must be notified of the
         availability of the Complaints and Grievances Procedure and the
         ADMINISTRATION's fair hearing process, as provided by Law 72 of
         September 7, 1993, as amended.

                                   ARTICLE III
                                 RIGHT TO CHOOSE

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

         The right of beneficiaries to transfer or change from an HCO shall be
         made at any time without cause during the first 90 days following the
         date of the

                                       14
<PAGE>

         beneficiary's initial enrollment or the date of enrollment notice is
         sent, whichever is later, and at most once every twelve (12) months
         thereafter. The following examples are considered causes for
         disenrollment: (1) the beneficiary moves out of the area of service of
         the HCO and is not within a reasonable distance from the area of the
         service of the HCO; (2) the HCO does not cover the service because of
         moral and religious objections; (3) the beneficiary needs related
         services to be performed at the same time; not all related services are
         available within the network; and the beneficiary's primary care
         provider or another provider determines that receipt of services
         separately would subject the beneficiary to unnecessary risk; and, (4)
         other reasons, including but not limited to, poor quality of care, lack
         of access to services and lack of access to experienced providers
         dealing with the beneficiary's health care needs. The beneficiary shall
         receive proper written notification at least 60 days prior to the end
         of each 12 month enrollment period from the INSURER.

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

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

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

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

                                       15
<PAGE>

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

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

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

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

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

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

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

                                       16
<PAGE>

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

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

                                   ARTICLE IV
                                 SECONDARY PAYOR

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

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

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

4.       The INSURER will make the most diligent best efforts to determine if
         beneficiaries have third party coverage and will attempt to utilize
         such coverage when applicable.

                                       17
<PAGE>

         The INSURER will be permitted to retain 100% of the collections from
         subrogation. The plan's experience will be credited with the
         amount collected from said primary payor, once payment is made and the
         INSURER recovers payments according to the corresponding transaction
         process established. If the provider detect that a beneficiary have
         other health plan coverage not identified in the beneficiary card, the
         provider will bill the primary payor and will provide the information
         to the INSURER.

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

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

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

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

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

                                    ARTICLE V
                                   EMERGENCIES

1.       In cases of emergency or immediate need of medical care within the
         Commonwealth of Puerto Rico, the INSURER will be responsible for the
         payment of emergency service provided to beneficiaries when the
         emergency or

                                       18
<PAGE>

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

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

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

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

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

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

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

6.       The INSURER and each HCO is required to provide access to emergency
         care and ambulance transportation services within their own facilities,
         through their contracted, participating providers or through contract
         with third parties that

                                       19
<PAGE>

         guarantee said emergency care and ambulance transportation twenty four
         (24) hours a day, seven (7) days a week.

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

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

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

                                   ARTICLE VI
                               ACCESS TO BENEFITS

1.       The INSURER will contract all available private providers that meet its
         credentialing process and agree to its contractual terms, in order to
         assure sufficient participating providers, to satisfy the demand of
         covered services by the beneficiaries enrolled in the program.
         Considering the expected mix between private patients and beneficiaries
         the accepted physician/beneficiary ratio will be 1:1,700 for primary
         care physicians; 1:2,200 for specialists and 1:1,600 for all
         physicians. In the event that the HCO's provides services only to
         beneficiaries under this contract, the physician/beneficiary ratio will
         be the same to that applicable when there is a mix between private
         patients and beneficiaries. The INSURER will assure compliance with
         said physician/beneficiary ratio.

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

                                       20
<PAGE>

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

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

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

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

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

8.       The INSURER is responsible for the implementation, development and
         maintenance of an adequate system for referrals of health services
         under this contract. The referral system must be approved by the
         ADMINISTRATION and must be audited periodically by the INSURER and the
         ADMINISTRATION. In no way the INSURER, the HCO's or any participating
         provider or health organization will submit for approval, specialists
         referrals to any internal or external committee or will interfere,
         prohibit, or restrict any health care professional's advice within
         their scope of practice.

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

10.      The INSURER assures the ADMINISTRATION that no HCO'S or participating
         providers will impose limit quotas or restrain services to
         subcontracted providers

                                       21
<PAGE>

         for the services medically needed (e.g. laboratory, pharmacies, or
         other services).

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

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

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

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

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

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

                                       22
<PAGE>

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

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

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

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

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

22.      The INSURER assures that it will provide an adequate stop-loss
         insurance set at no more than ten thousand ($10,000) dollars to protect
         physicians from loss and comply with to the risk thresholds established
         under sections 42CFR 422.208. In the event, INSURER places physicians
         at substantial risk it shall conduct enrollee/disenrollee surveys not
         later than one year after the effective date of the contract and at
         least annually thereafter.

                                       23
<PAGE>

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

         -        Urgent Care within 24 hours of request;

         -        Routine care within 2 weeks of request;

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

         -        Referrals: Appointments of referrals must be delivered and
                  notified to beneficiaries within five (5) days from the date
                  prescribed by the provider. THE SERVICES REQUIRED MUST BE
                  DELIVERED OR RENDERED WITHIN A REASONABLE PERIOD AS MEDICALLY
                  NEEDED BY THE BENEFICIARY, IN A TIME FRAME WHICH MAY NOT
                  EXCEED THIRTY (30) DAYS FROM THE TIME OF THE APPOINTMENT,
                  EXCEPT IN CASES WERE THE PARTICULAR NATURE OF SPECIALIST
                  SERVICES REQUIRE ADDITIONAL WAITING TIME BECAUSE OF
                  UNAVAILABILITY OF A SPECIALTY SERVICE.

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

                                   ARTICLE VII
              CONTRACTS WITH HCO's AND ALL PARTICIPATING PROVIDERS

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

                                       24
<PAGE>

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

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

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

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

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

         a.       A payment time schedule to pay the HCO's for services rendered
                  and for payment for services rendered by the participating
                  providers to the HCO's, the schedules will not exceed the time
                  limitation standards required by the Administration under
                  this contract to assure prompt payments of sums due to
                  providers.
         b.       A warranty by the HCO insuring that the method and system used
                  to pay for the services rendered by the HCO's network of
                  participating providers are reasonable and that the negotiated
                  terms do not jeopardize or infringe upon the quality of the
                  services provided.
         c.       A procedure that establishes how the HCO's network of
                  participating providers can recover from the INSURER monies
                  owed for services

                                       25
<PAGE>

                  rendered and not paid by the HCO, after the HCO's
                  participating provider has demanded payment from the HCO.

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

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

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

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

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

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

         j.       The INSURER will establish directives for allowing providers
                  to write prescriptions for psychotropic drugs in accordance
                  with the applicable agreement with the ADMINISTRATION's
                  Pharmacy Benefit Manager (PBM). The ADMINISTRATION's terms and
                  conditions for pharmacy benefit management have been agreed by
                  the parties and WILL BE

                                       26
<PAGE>

                  complied and implemented according to Addendum XIV, to the
                  Request for Proposal and the Benefits Coverage included
                  herein.

         k.       All performance, timeframes, administrative standards and
                  requirements as established under this contract.

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

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

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

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

9.       To the extent feasible within INSURER'S existing claims processing
         systems, INSURER should have a single or central address to which
         providers must

                                       27
<PAGE>

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

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

11.      PROVIDER MANUAL AND PROVIDER TRAINING

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

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

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

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

12.      PROVIDER QUALIFICATIONS - GENERAL

The providers in INSURER network must meet the following qualifications:

                                       28
<PAGE>

--------------------------------------------------------------------------------
FQHC              A Federally Qualified Health Center is an entity that
                  provides outpatient health services pursuant to 42 U.S.C.
                  201 et. seq. and meets the standards and regulations
                  established by the federal law and is an eligible provider
                  enrolled in the Medicaid Program.
--------------------------------------------------------------------------------
Physician         An individual who is licensed to practice medicine as an M.D.
                  or a D.O. in Puerto Rico either as a primary care provider or
                  in the area of specialization under which they will
                  provide medical services under contract with INSURER; who is
                  a provider enrolled in the Medicaid program; and who has a
                  valid Drug Enforcement Agency registration number and a
                  Puerto Rico Controlled Substance Certificate, if either is
                  required in their practice.
--------------------------------------------------------------------------------
Hospital          An institution licensed as a general or special hospital by
                  the Puerto Rico Health Department under Chapter 241 of the
                  Health and Safety Code and Private Psychiatric Hospitals
                  under Chapter 577 of the Health and Safety Code (or is a
                  provider which is a component part of a State or local
                  government entity which does not require a license under the
                  laws of the Commonwealth of Puerto Rico), which is enrolled
                  as a provider in the Puerto Rico Medicaid Program.
--------------------------------------------------------------------------------
Non-Physician     An individual holding a license issued by the applicable
Practitioner      licensing agency of the Commonwealth of Puerto Rico who is
Provider          enrolled in the Puerto Rico Medicaid Program or an individual
                  properly trained to provide health support services who
                  practices under the direct supervision of an appropriately
                  licensed professional.
--------------------------------------------------------------------------------
Clinical          An entity having a current certificate issued under the
Laboratory        Federal Clinical Laboratory Improvement Act (CLIA) and has a
                  license issued by the Commonwealth's licensing agency the
                  Puerto Rico Department of Health.
--------------------------------------------------------------------------------
Rural Health      A health facility that has been determined by the Secretary
Clinic (RHC)      to meet the requirements of section 1861(aa)(2) of the Act and
                  part 491; of this chapter; and has filed an agreement with
                  the Secretary to provide RHC services under Medicare and
                  pursuant to 42 CFR 405.2402.
--------------------------------------------------------------------------------
Local Health      A local health department established pursuant to Health and
Department        Safety Code, Title 2, Local Public Health Reorganization Act
                  ss. 121.031ff.
--------------------------------------------------------------------------------
Non-Hospital      A provider of health care services which is licensed and
Facility          credentialed to provide services, and enrolled in our program.
Provider
--------------------------------------------------------------------------------
School Based      Clinics located at school campuses that provide on-site
Health Clinic     primary and preventive care to children and adolescents.
(SBHC)

                                       29
<PAGE>

                                  ARTICLE VIII
                  SUBSCRIPTION PROCESS AND IDENTIFICATION CARDS

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

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

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

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

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

6.       The identification cards shall contain the following information:

         a)       Name of Beneficiary

         b)       INSURER's Group Number

         c)       Subscriber's Social Security Number

         d)       Relationship of beneficiary with subscriber (if applicable)

         e)       HCO name and number

         f)       Issue Date

         g)       Type of Contract (individual or family)

         h)       Coverage effective date

         i)       Other Insurance code

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

7.       The INSURER will replace lost, stolen, mutilated cards and will have
         the right to charge in beneficiaries one dollar ($1.00) for each card
         replaced. This charge will not be applicable to Medicaid Beneficiaries,
         which are categorized within the established indigence level 0
         (0%-50%).

                                       30

<PAGE>

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

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

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

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

12.      INSURER will comply with all changes requested by the ADMINISTRATION
         resulting from the implementation of the "Smart Card". Monetary
         implications as a result of such changes, will be negotiated with the
         INSURER.

                                   ARTICLE IX
            SUMMARY PLAN DESCRIPTION BOOKLET AND ORIENTATION PROGRAMS
                              MARKETING PROVISIONS

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

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

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

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

                                       31

<PAGE>

         c)       Beneficiary's rights and responsibilities, in accordance with
                  specific rights and requirements to be afforded in accordance
                  with Medicaid Program regulations as amended, the Puerto Rico
                  Patient Bill of Rights Law 194 of August 25, 2000, the Puerto
                  Rico Mental Health Code, of October 2, 2000, as amended and
                  implemented by their regulations, and Law 11 creating the
                  Office of Patients Solicitor General of April 11, 2001.

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

         e)       Official grievances and appeal filing procedures.

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

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

         h)       Explanations of instances under which a beneficiary's
                  disenrollment may be requested without his/her consent by a
                  provider.

         i)       Explanations of right of beneficiary to transfer from HCO at
                  any time for cause and to transfer or change within first
                  ninety (90) days of the date of enrollment or the later date
                  of receipt of notice of enrollment, and at least every (12)
                  months thereafter without cause.

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

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

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

                                       32

<PAGE>

6.       All participating providers are mandated required to receive yearly
         during the contract term at least fifteen (15) hours of orientation,
         education and familiarization with different aspects related to this
         contract on/or before the expiration of the first four and a half
         (4 1/2) months of the contract term. Failure to comply with this
         requirement will be sufficient grounds to exclude from the Health
         Insurance Program the participating provider. If, at the expiration of
         the first four and half (4 1/2 months) of the contract term, the
         participating provider has not fully complied with this requirement, it
         will be excluded as participating provider for subsequent periods of
         the contract or the contract term. At the discretion of the
         ADMINISTRATION, and for good cause the excluded provider may be
         authorized to be contracted as a participating provider if it
         subsequently complies with the requirement.

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

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

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

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

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

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

                  a)       Clear description of health care benefits coverage
                           and exclusions to enrollees;

                  b)       Explain how, when, where benefits are available to
                           enrollees;

                  c)       Explain how to access emergency, family-planning
                           services, and services that do or do not require
                           referrals and authorizations;

                                       33

<PAGE>

                  d)       Explain any benefits enrollees are entitled to, that
                           are not available through the INSURER and how to
                           obtain them;

                  e)       Enrollees rights and responsibilities;

                  f)       Grievance and appeal procedures.

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

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

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

                                    ARTICLE X
                               GRIEVANCE PROCEDURE

1.       The INSURER represents that it has established an effective procedure
         that assures the filing, receipt, and prompt handling and resolution of
         all grievances and complaints made by the beneficiaries and the
         participating providers. The INSURER will prepare a grievance form that
         must be approved by the ADMINISTRATION. The approved grievance form
         shall be made available to all beneficiaries, HCO's, HCO's network of
         participating providers and the INSURER's participating providers. The
         parties will make whatever adjustments are necessary to reconcile their
         grievance procedure with provisions of Law 194 of August 25, 2000
         (known as "Patient Bill of Rights") or those contained in Law 11 of
         April 11, 2001 (known as "Law Creating the Office of Patient's
         Solicitor General") as implemented by regulations.

2.       Any written or telephone communication from a beneficiary or
         participating provider, which expresses dissatisfaction with an action
         or decision arising under the health insurance contracted, shall be
         promptly and properly handled and

                                       34

<PAGE>

         resolved through a routine complaint procedure to be implemented by the
         INSURER, after prior approval from the ADMINISTRATION. The INSURER
         shall be responsible for documenting in writing all aspects and details
         of said complaints.

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

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

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

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

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

8.       INSURER must have written policies and procedures for receiving,
         tracking, reviewing, and reporting and resolving of beneficiaries
         complaints. The

                                       35

<PAGE>

         procedures must be reviewed and approved in writing by THE
         ADMINISTRATION. Any changes or modifications to the procedures must be
         submitted to THE ADMINISTRATION for approval thirty (30) days prior to
         the effective date of the amendment.

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

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

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

12.      The INSURER Grievance Procedures must comply with the reasonable
         standards and timeframes for prompt resolution of grievances to be
         established under the Puerto Rico Patients Bill of Rights Act, Law 194
         approved October 2, 2000 and the Mental Health Code, Law 408, approved
         in August 25, 2000. The State established standards, shall comply
         with Medicaid Regulations to ensure that in the case of standard
         resolution of grievances, the standard time frames for prompt
         resolution, do not exceed 30 days after an insurer receives grievances.
         And in the case of grievances concerning the particular enrollees'
         health condition, which requires expedited resolution, they shall, be
         resolved, within a time frame that shall not exceed, 72 hours after a
         grievance is received.

                                   ARTICLE XI
                            HEALTH CARE ORGANIZATIONS

1.       All Health Care Organizations (HCO's) shall have a sufficient number of
         primary care physicians as specified in Article VI to attend to the
         medical needs of the

                                       36

<PAGE>

         beneficiaries. All specialties specified in this section have to be
         available at each HCO. The following are considered primary care
         physicians (PCP):

         a)       General Practitioners

         b)       Internists

         c)       Family Physicians

         d)       Pediatricians

         e)       Obstetricians and Gynecologists

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

         a)       Optometrists

         b)       Podiatrists

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

         d)       Radiological facilities

         e)       Health Related Professionals

         f)       Hospitals

         g)       Pharmacies

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

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

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

                                       37

<PAGE>

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

         a)       Ophthalmologists

         b)       Radiologists

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

5.       Considering the expected mix between private patients and beneficiaries
         the accepted physician/beneficiary ratio will be 1:1,700 for primary
         care physicians; 1:2,200 for specialists and 1:1,600 for all
         physicians. In the event that the HCO's provides services only to
         beneficiaries under this contract, the physician/beneficiary ratio will
         be the same to that applicable when there is a mix between private
         patients and beneficiaries. The INSURER will assure compliance with
         said physician/beneficiary ratio.

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

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

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

9.       The INSURER agrees to enforce and assure compliance by the HCO's with
         all provisions contained in this contract.

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

                                       38

<PAGE>

                                   ARTICLE XII
                              GUARANTEE OF PAYMENT

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

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

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

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

         In case the INSURER owes money to the HCO's or any provider, following
         due process, the Administration may retain the amounts owed to the
         providers.

4.       The INSURER agrees to pay all monies due to the HCO's and/or
         participating providers according to the agreed payment schedule in the
         contracts with said parties. The INSURER represents as of the date of
         this contract that payment to HCO's, HCO's network of participating
         providers and INSURER's participating providers will be made no later
         than thirty (30) days or as provided by legislation from the date that
         a full, complete and ready to process claim is received at the INSURER,
         when received within sixty (60) days of date of service. The INSURER
         expressly commits to implement all internal systems necessary to
         promptly pay its HCO's and providers all full, complete and ready to
         process claims within the term provided in this section, and to avoid
         unjustifiable delay in payment by submitting said claims to audits and
         evaluation of contested claims; said practice is expressly prohibited,
         and may result in the remedies set forth at Article XXXVI or
         termination as provided in Article XXXIII. A complete and ready to
         process claim (clean claim) is a claim received by the INSURER for
         adjudication, and which requires no further information, adjustment, or
         alteration by the provider of the services in order to be processed and
         paid by the INSURER.

                                       39

<PAGE>

5.       In the event that, following the receipt of the claim, the same is
         totally or partially contested by the INSURER or HCO, the participating
         provider shall be notified in writing within thirty (30) days that the
         claim is contested with the contested portion identified and provided
         the reasons thereof. Upon receipt of a new or supplemented claim, the
         INSURER or the HCO, shall pay or deny the contested claim or portion of
         the contested claim within thirty (30) days. Upon expiration of any of
         the aforementioned periods of time, the overdue payments shall bear
         interest at the prevailing rate for personal loans as determined by the
         Financial Board of the Office of the Commissioner of Financial
         Institutions.

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

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

8.       All payments distribution within the capitated services will be made by
         the INSURER accordingly within sound actuarial methods and in
         compliance with the ADMINISTRATION's commitments and efforts to assure
         a more uniform and equitable distribution of risk among providers
         throughout all the island health regions. In the event that
         participating providers in their arrangements with the HCO's consent to
         the disbursement of the payment checks directly to the HCO's, the
         INSURER will assure and require the HCO's to provide on a monthly basis
         a schedule of the amount of the payments made to said participating
         providers. In any event, the INSURER will provide the ADMINISTRATION
         with a detailed monthly report listing by providers the monthly payment
         distribution. The claims for services rendered will be generated and
         forwarded by the participating providers directly to the INSURER. The
         claims submitted by the participating providers will comply with the
         requirements contained in Article XV, Sections four (4) and eight (8).

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

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

                                       40

<PAGE>

11.      Inasmuch as the INSURER will be the central payor for all payments for
         valid claims for services rendered by the HCO's, HCO's network of
         participating providers and INSURER's participating providers the
         INSURER agrees to incorporate in the contracts with the HCO's, and to
         require the HCO's to incorporate in their arrangements with their
         participating providers a provision whereby the INSURER is authorized
         to adjudicate and determine the validity of any claim or dispute
         between the HCO and its participating providers regarding a controversy
         surrounding the validity of the claims of services submitted by said
         participating provider. Said provision will assure that the payment to
         the HCO's network of participating providers for a valid claim for
         services is not improperly withheld and that in no event payment in
         this situation is made more than sixty (60) days from the date that the
         claim or dispute is received by the INSURER. It will be the INSURER's
         responsibility to verify the terms of the arrangements between the HCO
         and its network of participating providers, the rendering of the
         services, the reasonableness of the claim and that payment has not been
         made.

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

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

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

                                       41

<PAGE>

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

16.      The INSURER will abide with the ADMINISTRATION efforts to implement
         cost reduction measures and future implementation of payment methods
         based on fee schedules or diagnosis related group that may be
         established. In no way a beneficiary will be discriminated nor will
         health services be rationed based on diagnosis or illness or an
         expectation that the beneficiary may require high cost care.

                                  ARTICLE XIII
                    UTILIZATION REVIEW AND QUALITY ASSURANCE

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

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

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

         c)       INSPECTION OF ALL FACILITIES: The INSURER will insure that all
                  providers' physical facilities are safe, sanitary and follow
                  sound operating procedures, as described in the INSURER's
                  Proposal and that all laboratory testing site providing
                  services under this contract have their duly CLIA
                  certification along with their identification number or waiver
                  certificate. The ADMINISTRATION may review participating
                  provider

                                       42

<PAGE>

                  facilities at any time and submit its findings to the INSURER
                  for consideration by the INSURER if necessary. The INSURER
                  shall notify the ADMINISTRATION quarterly of all inspections
                  done.

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

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

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

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

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

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

                                       43

<PAGE>

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

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

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

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

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

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

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

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

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

         d)       INDIVIDUAL CASE MANAGEMENT PROGRAM: The INSURER will establish
                  a program to identify and manage cases that involve high
                  health care costs, as described in the INSURER's Proposal. The
                  INSURER shall submit a report to the ADMINISTRATION on a
                  quarterly basis of all

                                       44

<PAGE>

                  findings in the Individual Case Management Program. The
                  ADMINISTRATION may review and/or audit the program findings
                  and reports at any time.

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

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

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

                                    (i)      the provider's name and number;

                                    (ii)     the source of the complaint;

                                    (iii)    the type of provider;

                                    (iv)     the nature of the complaint;

                                    (v)      the approximate range of dollars
                                             involved,

                                    (vi)     the legal and administrative
                                             disposition or status of the case.

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

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

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

                                       45

<PAGE>

5.       The INSURER shall continue to submit the ADMINISTRATION on a monthly
         basis a report that includes all services rendered by diagnosis and
         procedures identified by all specialties, by place of service including
         those under dental coverage, and procedures in laboratories and X-rays.
         It will be reported beginning with the most common diagnosis and
         procedures until reaching the least common.

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

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

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

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

                                   ARTICLE XIV
                            COMPLIANCE AND AGREEMENT
                            FOR INSPECTION OF RECORDS

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

                                       46

<PAGE>

         mandated by law and regulation, to the HIPAA regulations described
         elsewhere in this agreement.

2.       The INSURER shall require from the HCO's and all participating
         providers that they maintain an appropriate record system for services
         rendered to beneficiaries, including separate medical files and records
         for each beneficiary as is necessary to record all clinical information
         pertaining to said beneficiaries, including notations of personal
         contacts, primary care visits, diagnostic studies and all other
         services. The INSURER shall also maintain records to document fiscal
         activities and expenditures relating to compliance under this
         agreement. The INSURER and all participating providers shall preserve,
         and retain in readily accessible form, the records mentioned herein
         during the term of this contract and for the period of six (6) years
         thereafter.

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

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

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

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

                                       47

<PAGE>

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

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

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

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

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

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

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

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

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

11.      The INSURER agrees to require all HCO's and participating providers to
         permit the ADMINISTRATION to review and audit all aspects related to
         quality,

                                       48

<PAGE>

         appropriateness, timeliness and cost of services rendered, and to
         demonstrate that the services for which payment was made were actually
         provided.

                                   ARTICLE XV
                             INFORMATION SYSTEMS AND
                             REPORTING REQUIREMENTS

1.       The INSURER agrees to comply with the reporting and information systems
         requirements as provided for in the Request for Proposals and the
         Proposal submitted by the INSURER. Accordingly the INSURER must submit
         to the ADMINISTRATION a detailed Systems Requirements Inventory Report
         which details the following:

         a)       Plan's compliance with each information system requirement;

         b)       Action plan of INSURER's response to the requirements;

         c)       Actual date that each system requirement will be completely
                  operational, not to exceed the effective date of coverage
                  under this contract.

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

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

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

                                       49

<PAGE>

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

6.       The information systems of all HCO's shall be compatible with the
         systems in use by the INSURER.

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

8.       The INSURER agrees to submit to the ADMINISTRATION in such form and
         detail as indicated in the Claim File Layout format and any other
         formats the ADMINISTRATION requires in the RFP, the following
         information:

         a)       Within fifteen (15) days of the end of each month:

                  1)       Data pertaining to health insurance claims, and
                           encounters for all services provided to
                           beneficiaries.

                  2)       Enrollment data

         b)       Within twenty-five (25) days of the end of each month:

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

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

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

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

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

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

                                       50

<PAGE>

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

         a.       Evaluation of the effectiveness of the delivery of services by
                  providers and the adequacy of these services.

         b.       Monitoring and evaluation of the efficiency and propriety of
                  the services that are being received by the beneficiaries and
                  their dependents.

         c.       Comparison of experience with that of other providers.

         d.       Comparison of the utilization of health care and the cost
                  tendencies within the community and the group that renders
                  service.

         e.       Demonstration of how the quality of care is being improved for
                  the insured and their dependents.

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

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

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

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

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

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

                                       51

<PAGE>
         end of each month. Quarterly reports are due thirty (30) days after the
         end of each quarter.

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

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

17.      The INSURER will coordinate the enrollment of beneficiaries.

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

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

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

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

         a.       The security and integrity of the information and
                  communication systems through:

                  1.       Regular Backups on a daily basis

                  2.       Controlled Access to the physical plant

                  3.       Control logical access to information systems

                  4.       Verification of the accuracy of the data and
                           information

         b.       The continuity of services through:

                  1.       Regular maintenance of the systems, programs and
                           equipment

                  2.       A staff of duly trained personnel

                  3.       An established and proven system of Disaster Recovery

                  4.       Cost Effective systems.

                                       52

<PAGE>

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

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

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

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

                  1.       by patient/family

                  2.       by region, area/region town, (zip code)

                  3.       by provider (provider's identification number or
                           social security account numbers)

                  4.       by diagnosis

                  5.       by procedure or service

                  6.       by date of service

         g.       Financial and Actuarial reports

         h.       System of Control for claims payment that includes payment
                  history.

         i.       Computerized pharmacy system that permits its integration to
                  the payment procedures to the providers.

         j.       Outcome Analysis

         k.       Electronic creation of data files related to mortality,
                  morbidity, and vital statistics.

         l.       Integration to central systems

                  1.       Procedures and communications protocol compatibility;

                  2.       Ability to transmit reports, and or files via
                           electronic means.

         m.       Electronic Handling of:

                  1.       The process of Admission to hospitals and ambulatory
                           services

                  2.       Verification of eligibility and subscription to the
                           plan.

                  3.       Verification of benefits

                  4.       Verification of Financial information (Deductibles,
                           Co-payments, etc.)

                  5.       Verification of individual demographic data

                  6.       Coordination of Benefits.

         n.       Computerized applications for general accounting.

         o.       As to HCO's and all Participating Providers the information
                  system shall provide for:

                  1.       On line access to service history for each
                           beneficiary.

                  2.       Register of diagnosis and procedures for each service
                           rendered.

                  3.       Complete demography on line, including the aspect of
                           coverage and financial responsibility of the patient.

                  4.       Individual and family transactions

                                       53

<PAGE>

                  5.       Annotations on line (General notes such as allergies,
                           reminders or other clinical aspects (free form)

                  6.       Analysis of activity by:

                           a.       department

                           b.       provider

                           c.       diagnosis

                           d.       procedures

                           e.       age

                           f.       sex

                           g.       origin

                           h.       others, as mutually agreed upon.

                  7.       Diagnosis history by patient with multiple codes per
                           service.

                  8.       AD Hoc Reports

                  9.       Referrals Control

                  10.      Electronic Billing

                  11.      Pharmacy system

                  12.      Dental system

                  13.      Ability to handle requirements of the Medicare
                           programs such as RBRVS (Relative Base Relative Value
                           System).

                  14.      Ability to collect data as to the quarter in which
                           the pregnant female beneficiary commences her ob-gyn
                           treatment. The format for the collection of this data
                           shall be approved by the ADMINISTRATION prior to its
                           implementation.

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

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

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

                                       54

<PAGE>
         ADMINISTRATION to enforce compliance through the Circuit Court of
         Appeals of Puerto Rico, Part of San Juan.

24.      The INSURER shall provide the ADMINISTRATION with one or more telephone
         numbers of dial-in data lines, and a minimum of three user's ID's and
         passwords that will allow the ADMINISTRATION's authorized personnel
         access to the INSURER's on-line computer applications, Such access will
         allow the ADMINISTRATION use of the same systems and access to the same
         information as used by the INSURER and enable the inquiry on
         beneficiaries, providers, and statistics files related to this
         contract.

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

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

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

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

                                       55
<PAGE>

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

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

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

28.      INSURER TELEPHONE ACCESS REQUIREMENTS

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

         1.       80% of all telephone calls must be answered within an average
                  of 30 seconds;
         2.       The lost (abandonment) rate must not exceed 5%;
         3.       INSURER cannot impose maximum call duration limits but must
                  allow calls to be of sufficient length to ensure adequate
                  information is provided to the Beneficiaries or Provider.
         4.       The INSURER shall abide with the present Information Systems
                  and Reporting Requirements established in this agreement and
                  shall cooperate with the ADMINISTRATION in the development and
                  implementation of any future systems.

                                       56
<PAGE>

                                   ARTICLE XVI
                             FINANCIAL REQUIREMENTS

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

2.       The INSURER shall provide to the ADMINISTRATION copies of audited
         financial statements following Generally Accepted Accounting Principles
         (GAAP) and of the report to the Insurance Commissioner in the format
         agreed to by the National ASSOCIATION of Insurance Commissioners
         (NAIC), for the year ending on December 31, 2001, and subsequently
         thereafter for the contract term not later than March 15 of each
         subsequent year. Unaudited GAAP financial statements for each quarter
         during the contract term shall be presented to the ADMINISTRATION not
         later than forty five (45) days after the closing of each quarter.

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

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

5.       The INSURER's Incurred But Not Reported (IBNR) reserve will be
         reconciled and reevaluated every ninety (90) days and in no way the
         IBNR reserve shall exceed 10% of the total monthly capitation payments
         made to HCO's. The ADMINISTRATION reserves the right to retain for
         custody purposes such IBNR reserve if becomes necessary.

6.       The INSURER will ensure that the administrative costs and expenses
         incurred on an annual basis do not exceed 7.5% of the total premium
         payments made by the ADMINISTRATION. The INSURER's net earnings in
         excess of 2.5% premium payments in any given year will be shared with
         the ADMINISTRATION. The ADMINISTRATION share apportionment of the
         earnings shall be 75% and the INSURER shall be 25%.

7.       The INSURER agrees to provide to the ADMINISTRATION, upon the
         expiration of each period of twelve (12) consecutive months of the
         contract year, and not later than ninety (90) days thereafter, audited
         financial statements following Generally Accepted Accounting Principles
         (GAAP) which exclusively present the

                                       57
<PAGE>

         operational financial situation related to the execution of this
         contract. The ADMINISTRATION reserves the right to request interim
         audited financial statements not to exceed two (2) during the contract
         term.

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

                                  ARTICLE XVII
                       PLAN COMPLIANCE EVALUATION PROGRAM

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

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

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

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

                                       58
<PAGE>

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

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

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

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

8.       DEFAULT AND REMEDIES under Plan Compliance Program.

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

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

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

         -        Terminate the contract if the applicable conditions set forth
                  in Section 10.1 are met;
         -        Suspend payment to INSURER;
         -        Recommend to CMS that sanctions be taken against INSURER as
                  set out in Section 10.7;
         -        Remove the EPSDT's component from the capitation paid to
                  INSURER if the benchmarks(s) missed is for EPSDT's;
         -        Assess civil monetary penalties as set out in section 10.8;
                  and/or
         -        Withhold premium payment.

         DEFAULTS BY INSURER

                                       59
<PAGE>

a.       FAILURE TO PERFORM AN ADMINISTRATIVE FUNCTION

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

b.       ADVERSE ACTION AGAINST INSURER BY PRICO

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

c.       INSOLVENCY

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

d.       FAILURE TO COMPLY WITH FEDERAL LAWS AND REGULATIONS

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

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

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

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

                                       60
<PAGE>

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

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

         INSURER's failure to comply with physician incentive requirements
         1876(1)(8), 1903(m)(2)(A)(v) of the Social Security Act and 42 Code of
         Federal Regulations 417.479.

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

e.       MISREPRESENTATION OR FRAUD

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

f.       EXCLUSION FROM PARTICIPATION IN MEDICARE OR MEDICAID

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

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

g.       FAILURE TO MAKE PAYMENTS TO NETWORK PROVIDERS AND SUBCONTRACTORS

                                       61
<PAGE>

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

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

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

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

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

i.       PLACING THE HEALTH AND SAFETY OF BENEFICIARIES IN
         JEOPARDY

         INSURER's placing the health and safety of the beneficiaries in
         jeopardy is a default under this contract, and the ADMINISTRATION may
         immediately terminate the agreement, providing the INSURER a due
         process hearing to determine any monetary obligations.

j.       FAILURE TO MEET ESTABLISHED BENCHMARK

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

9.       NOTICE OF DEFAULT AND CURE OF DEFAULT WHEN APPLICABLE

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

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

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

                                       62
<PAGE>

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

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

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

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

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

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

10.               EXPLANATION OF REMEDIES

10.1              TERMINATION

10.1.1            TERMINATION BY THE ADMINISTRATION
                  THE ADMINISTRATION may terminate this contract if:

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

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

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

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

                                       63
<PAGE>

10.1.1.5          THE ADMINISTRATION has a reasonable belief that INSURER has
                  placed the health or welfare of beneficiaries in jeopardy, as
                  established in Article XVII, (8) (i).

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

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

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

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

10.1.9            TERMINATION BY MUTUAL CONSENT

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

10.2              DUTIES OF CONTRACTING PARTIES UPON TERMINATION BY REASON OF
                  DEFAULT

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

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

                                       64
<PAGE>

                  termination is the result of THE ADMINISTRATION's reasonable
                  belief that INSURER is placing the health or welfare of
                  beneficiaries in jeopardy.

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

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

10.2.2.4          If the contract is terminated by mutual consent:

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

10.7              RECOMMENDATION TO CMS THAT SANCTIONS BE TAKEN AGAINST INSURER

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

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

10.8              CIVIL MONETARY PENALTIES

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

10.10             REVIEW OF REMEDY OR REMEDIES TO BE IMPOSED

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

                                       65
<PAGE>

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

11.               The ADMINISTRATION, in coordination with the INSURER, will
                  implement a comprehensive fraud, errors and irregularities
                  program. The INSURER will be required to ensure compliance
                  with this program. If after a reasonable period to be
                  determine by the parties, the ADMINISTRATION detected any
                  violation of the program; the ADMINISTRATION may withheld such
                  amount from the INSURER premium. The INSURER will have the
                  right to present its position with following XXXVII (5) (B).

                                  ARTICLE XVIII
                               PAYMENT OF PREMIUMS

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

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

         Calculations by ASES of premiums due will be based on the status of
         beneficiaries eligible at the end of the prior month, following all
         processing of updates and cancellations effective in that month.

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

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

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

                                       66
<PAGE>

         1)       Per member per month rate (PMPM) (Beneficiary) established at
                  FIFTY EIGHT WITH EIGHTY CENTS ($58.80).

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

         a)       The billing by providers to Medicare for services rendered to
                  beneficiaries who are also Medicare recipients. The INSURER
                  will not cover deductibles or co-insurance of Part A, but will
                  cover deductibles and co-insurance of Part B of Medicare,
                  except for deductibles and co-insurance for outpatient
                  services provided in hospital setting, other than physician
                  services.
         b)       The recognition as a covered reimbursable Medicare Program
                  cost as bad debts by reason of non-payment of Part A
                  deductibles and/or coinsurance, and for deductibles and
                  co-insurance for outpatient services provided in hospital
                  setting under Medicare Part B, other than physician services.

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

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

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

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

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

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

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

                                       67
<PAGE>

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

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

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

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

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

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

14.      If any differences arise in the ADMINISTRATION's payment of premiums to
         the INSURER, the latter will proceed to analyze the differences between
         the original billing submitted by the INSURER and the amount paid by
         the ADMINISTRATION. The INSURER will proceed, after proper analysis, to
         submit to the ADMINISTRATION a diskette as well as all relevant
         documentation that supports and details the INSURER's claim not later
         than thirty (30) working days after payment is made to the INSURER by
         the ADMINISTRATION. Once this term has ended, the INSURER waives its
         right to claim any amounts from differences arising from the monthly
         payment made by the ADMINISTRATION

                                       68
<PAGE>

         and releases the ADMINISTRATION from any and all obligation to pay any
         additional premiums, including differences to billing by more than one
         insurer. During the following one hundred and twenty (120) days the
         ADMINISTRATION will confirm the validity of the claim and make payment
         thereof.

                                   ARTICLE XIX
                             ACTUARIAL REQUIREMENTS

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

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

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

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

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

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

7.       The INSURER will provide to the ADMINISTRATION, on a monthly basis, the
         actuarial data, premium distribution, and reports as contained in the
         RFP's Actuarial Report formats. Failure to comply with the requirements
         contained herein will be

                                       69
<PAGE>

         sufficient cause for the imposition against the INSURER of the penalty
         provided for in Article XXXVI of this contract.

                                   ARTICLE XX
                           PREVENTIVE MEDICINE PROGRAM

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

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

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

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

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

5.       The INSURER will be responsible to direct to a network of other
         agencies and community resources serving each municipality within the
         Area/Region so as to guarantee that participating providers and
         beneficiaries are aware of and understand the available services in
         their community and the process by which to access them.

6.       The INSURER will assure that discharge of the mother and her baby from
         the hospital is based upon sound clinical judgment determined by the
         clinician. The coverage for hospital stay following a normal vaginal
         delivery may not be limited

                                       70
<PAGE>

         to less than 48 hours for both the mother and newborn child and in the
         case of childbirth following cesarean section; the hospital stay may
         not be limited to less than 96 hours for both mother and newborns.

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

         a)       A disease management program developed by the INSURER in
                  collaboration with the Department of Health which shall
                  develop standardized processes to address major public health
                  programs such as ASTHMA, DIABETES, HYPERTENSION AND
                  CONGESTIVE HEART FAILURE. This program shall include
                  identification treatment protocols/guidelines and
                  surveillance/monitoring. In cooperation with the Department of
                  Health and the Centers for Disease Control (CDC) annual
                  reports will be published detailing the results.

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

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

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

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

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

         g)       The INSURER will assure that all pregnant women are properly
                  educated about the WIC Program. Those eligible individuals
                  will be referred to the

                                       71
<PAGE>

                  WIC Program of the Department of Health. It will be the
                  immediate responsibility of the participating providers to
                  comply with all requirements in order to arrange the referral
                  to the WIC Program without any cost to the patient.

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

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

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

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

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

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

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

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

                                       72
<PAGE>

                                   ARTICLE XXI
                 MENTAL HEALTH PROGRAM AND DEMONSTRATION PROJECT

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

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

3.       The INSURER acknowledges that the ADMINISTRATION has been delegated by
         the Department of Health, the implementation of a demonstration project
         for contracting and ensuring the provision of health services through
         direct contracts with health care organizations or other governmental
         health care organizations. INSURER agrees to collaborate with the
         ADMINISTRATION in the implementation of any demonstration project the
         ADMINISTRATION intends to simultaneously or progressively develop the
         contracted health region or another region or municipality during the
         term of this contract.

                                  ARTICLE XXII
                       PHARMACY BENEFITS MANAGEMENT (PBM)

1.       The ADMINISTRATION will monitor the Physical Health Program provided
         through the INSURER contracted in the Health Region/Area. This will be
         with sufficient specificity in order to provide for all Physical Health
         needs for all eligible beneficiaries residing within the municipalities
         comprising said area.

2.       The INSURER will abide with the ADMINISTRATION's guidelines for
         expediting access of beneficiaries to the Physical health Program and
         benefits covered under the Health Reform Program.

3.       Concurrently with the terms of this contract, the INSURER agrees to
         work with the ADMINISTRATION's Pharmacy Benefit Manager as selected by
         the ADMINISTRATION. This will include cooperating with the selected PBM
         to facilitate claims processing in a period specified, working with the
         selected PBM

                                       73
<PAGE>

         to specify, develop and implement the flow of information, utilization
         review and customer service protocols, as well as, to cease billing and
         collection of rebates from drug manufacturers, if applicable.

4.       The ADMINISTRATION's PBM, will provide the INSURER the services set
         forth in this Section and the services described in any attachment,
         addendum or amendment hereto:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
        ITEM                                DESCRIPTION
----------------------------------------------------------------------------------------------
<S>                       <C>  <C>
Claims Processing         -    Contracting and administration of the pharmacy network. The
and Administrative             PBM will create a network of Participating Pharmacies, which
Services                       will perform pharmacy services for Members at specified fees
                               and discounts
                          -    Claims payments summary reports for each payment cycle
                               every two weeks
                          -    Notify each INSURER of the payment process, systems involved
                               (NCPDP 2.0) and relevant time line.
                          -    Processing and mailing of pharmacy checks and remittance
                               reports
                          -    Reconciliation of zero balance accounts
                          -    Generate list of participating pharmacies
                          -    Coordination of Benefits
                          -    On-line access to current eligibility and claims history
                          -    Plan set-up
                          -    Develop policies and procedures for denials and rejections
                          -    Process reasonable denials
                          -    Maintenance of plan
                          -    Adjudication of electronic claims. The PBM will adjudicate
                               claims submitted by Participating Pharmacies to the PBM based
                               on the participating pharmacy's agreement with the PBM and
                               including online edits for preauthorization requirements and
                               other edits that may be deemed necessary for the accurate
                               payment of claims
                          -    Approval and rejection of claims consistent with plan design
                               and concurrent Drug Utilization Review (DUR)
                          -    Standard electronic eligibility
                          -    Maintain call center
                          -    Loading of INSURER providers in network and eligible members
                          -    Develop remedies for addressing problems with pharmacies
                          -    Pharmacy audits
----------------------------------------------------------------------------------------------
Concurrent Fraud          -    Develop process for INSURER to notify the PBM of fraud
Investigations                 and abuse complaints made by their beneficiaries.
                          -    Track and Investigate fraud and abuse allegations
----------------------------------------------------------------------------------------------
</TABLE>

                                       74

<PAGE>

<TABLE>
<S>                       <C>  <C>
----------------------------------------------------------------------------------------------
Formulary                 -    Incorporate INSURER related issues, such as providing guidance
Management                     into development of the Preferred Drug List (PDL), into the
Program                        existing ADMINISTRATION's Pharmacy  and Therapeutic Committee.
                          -    Administer the Central Administrative Committee (CAC), a cross
                               functional sub-committee tasked with rebate maximization. The
                               subcommittee will take recommendations on the PDL from the P&T
                               committee and will manage the PDL.
----------------------------------------------------------------------------------------------
Drug Utilization          -    Incorporate DUR reports and evaluation reviews into the tasks
Review/Drug                    of the Central Administrative Committee (CAC).
Utilization               -    Evaluate new therapeutic classes and determine if drugs
Evaluations                    need to be added or deleted from PDL.
                          -    Therapeutic intervention and switching
----------------------------------------------------------------------------------------------
Reports                   -    According to Agreements.
----------------------------------------------------------------------------------------------
Rebates and               -    Develop and maintain contracts with drug manufacturers for
Discounts                        rebates
                          -    Utilize the Central Administrative Committee (CAC) to maximize
                               rebates
----------------------------------------------------------------------------------------------
Optional Services         -    Custom Management Reports
                          -    Manual Claims Input
                          -    Special Programming
----------------------------------------------------------------------------------------------
</TABLE>

5.       The INSURER will provide the following services set forth in this
         Section and the services described in any attachment, addendum or
         amendment hereto:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
        ITEM                                DESCRIPTION
----------------------------------------------------------------------------------------------
<S>                       <C>  <C>
Claims Processing         -    Assume cost of implementing and maintaining on-line
and Administrative             connections - The INSURER will be responsible for all of its
Services                       own costs of implementation, including but not limited to
                               payment processes, utilization review and approval processes,
                               connection and line charges, and other costs incurred to
                               implement the payment arrangements for pharmacy claims.
                          -    Maintain or improve ratio of paid claims to processed
                               claims - Based on past performance, ADMINISTRATION will
                               develop an acceptable ratio of paid claims to processed claims
                               for which each INSURER will be responsible for maintaining or
                               improving.
                          -    Review bi-monthly claim payments summary reports for each
                               payment cycle and approve transfer of funds
                          -    Review denials and rejections
                          -    Maintain call center - INSURER will operate a customer call
                               center to provide for preauthorization of drugs for drugs for
                               which the INSURER retains risk, according to its policies and
                               the approved formulary.
----------------------------------------------------------------------------------------------
</TABLE>

                                       75

<PAGE>

<TABLE>
<S>                       <C>  <C>
----------------------------------------------------------------------------------------------
                          -    Electronically submit a list of all INSURER providers in
                               network and eligible members to PBM
----------------------------------------------------------------------------------------------
Concurrent Fraud          -    Develop tracking mechanisms for fraud and abuse issues
Investigations            -    Forward fraud and abuse complaints from members to PBM
----------------------------------------------------------------------------------------------
Formulary                 -    Designate and maintain a representative to assist on the
Management                     P&T Committee in developing the official formulary.
Program                   -    Submit candidates who are primary care physicians for the
                               Pharmacy and Therapeutic Committee.
                          -    Select two (2) representatives of the INSURER to serve on the
                               Central Administrative Committee (CAC), a cross functional
                               committee tasked with rebate maximization. The subcommittee
                               will take recommendations on the PDL from the P&T committee and
                               will update and manage the PDL.
----------------------------------------------------------------------------------------------
Drug Utilization          -    Perform drug utilization review.
Review/Drug               -    Develop and distribute protocols, when necessary.
Utilization               -    Perform utilization management functions - The INSURER will
Evaluations                    perform utilization review that meets the minimum standards of
                               ADMINISTRATION or that may be required by the Medicaid program.
                          -    Perform disease management functions - The INSURER will perform
                               disease management that meets the minimum standards of the
                               ADMINISTRATION or that may be required by the Medicaid program.
----------------------------------------------------------------------------------------------
Reports                   -    Meet with PBM to determine the reports that should be the sole
                               responsibility of the PBM, those performed by the INSURER and
                               those that should be duplicated in order to cross check.
----------------------------------------------------------------------------------------------
</TABLE>

6.       The INSURER will abide and comply with following payment process hereby
         established:

         a)       The INSURER will pay claims costs. Every two weeks, the PBM
                  will provide the INSURER with the proposed claims listing. The
                  INSURER will promptly review the payment listing.

         b)       Submit funds for claims payment to zero-balance account. The
                  INSURER will provide funds, wire transfers or otherwise submit
                  payment within two business days to a bank account established
                  for the payment of the claims applicable to each INSURER.

         c)       Payment failure by INSURER or the establishment of a Medicaid
                  Rebate Program. The following payment process will be
                  implemented if either the INSURER fails to make a timely or
                  correct payment to the established zero-balance account or if
                  the ADMINISTRATION enters into a Medicaid Rebate Program:

                                       76

<PAGE>

                  (i)      The contract amounts paid to the INSURER will be
                           reduced by the estimated claims cost for the
                           succeeding month, any deficit in funds provided
                           versus the cash requirements for the zero-balance
                           account. Estimates will be made based on actual
                           claims experience. After a reasonable period of time,
                           adjustments will be made to the monthly withholds for
                           the actual experience of the prior month(s) versus
                           the estimated. A final settlement shall be made
                           within a specified period after the end of the
                           contract year.

         d)       Payment of PBM and Collection of Rebates and Discounts: The
                  ADMINISTRATION will collect rebates and provide for the
                  payment of reasonable PBM fees for defined services. The
                  ADMINISTRATION will pay the INSURER seventy five (75%) percent
                  of the net rebates collected; the INSURER will share such
                  rebates with the primary care providers according to their
                  risk.

         e)       Other Savings: The INSURER, the ADMINISTRATION, and the PBM
                  shall cooperate to identify additional savings opportunities,
                  including special purchasing opportunities, changes in network
                  fees, etc. Payment to the INSURER will be adjusted to provide
                  the ADMINISTRATION for its share of the incremental net
                  savings.

         f)       Fees per transaction and DUR and Formulary Management fees
                  will be paid by the INSURER.

                                  ARTICLE XXIII
                                    BENEFITS

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

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

                                       77

<PAGE>

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

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

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

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

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

                                  ARTICLE XXIV
                                CONVERSION CLAUSE

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

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

         b)       The premium for the direct payment policy will be in
                  accordance with the rate then in effect at INSURER, applicable
                  to the form and benefits of the direct payment policy, in
                  accordance with the risk category the person falls in at the
                  moment, and the age reached on the effective date of the
                  direct payment policy. The health condition at the moment of
                  conversion will

                                       78

<PAGE>

                  have no bearing in the eligibility nor will it be an
                  acceptable base for the risk classification.

         c)       The direct payment policy should also provide for coverage to
                  any other individual, if these were considered eligible
                  beneficiaries at the termination date of the health insurance
                  under this contract. Under option by INSURER, a separate
                  direct payment policy may be issued to cover the other
                  individuals who formerly were eligible beneficiaries.

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

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

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

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

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

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

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

                                       79

<PAGE>

5.       If any eligible beneficiary under this contract subsequently acquires
         the right to obtain a direct payment policy, under the terms and
         conditions of the INSURER's policies without providing evidence of
         qualifications for such insurance, subject to the request and payment
         of the first premium during the period specified in the policy; and if
         this person is not notified of the existence of this right, at least
         fifteen (15) days prior to the expiration of such period, such person
         will be granted an additional period during which time he/she can claim
         his/her right, none of the above implying the continuation of a policy
         for a period longer than stipulated in said policy. The additional
         period will expire fifteen (15) days after the person is notified, but
         in no case will it be extended beyond sixty (60) days after the
         expiration date of the policy. Written notification handed to the
         person or mailed to the last known address of the person, as
         acknowledged by the policy holder, will be considered as notification,
         for the purposes of this paragraph. If an additional period is granted
         for the right of conversion as hereby provided, and if the written
         application for direct payment, enclosed with the first premium
         payment, is made during the additional period, the effective date of
         the direct payment policy will be the termination of the health
         insurance coverage under this contract.

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

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

         b)       termination date of this contract; or

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

                                   ARTICLE XXV
                          TRANSACTIONS WITH THE INSURER

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

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

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

                                       80

<PAGE>

                                  ARTICLE XXVI
                             NON-CANCELLATION CLAUSE

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

                                  ARTICLE XXVII
                                 APPLICABLE LAW

The Request for Proposal that originated this contract, the Proposal submitted
by the INSURER, this contract and/or any other document or provision
incorporated to it by reference, shall be interpreted and construed according to
the laws of the Commonwealth of Puerto Rico. If any controversy may arise
regarding the interpretation or performance of this contract, the parties
voluntary submit for its resolution to the jurisdiction of the Superior Court of
the Commonwealth of Puerto Rico, San Juan Part.

                                 ARTICLE XXVIII
                             EFFECTIVE DATE AND TERM

1.       This contract shall be in effect for (3) consecutive twelve months
         periods, starting at 12:01 AM, Puerto Rico time on July 1, 2002, the
         first day that coverage begins and payment of the premium is due.

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

3.       The second and third periods of the contract will require premium
         payment renegotiation by the ADMINISTRATION and the INSURER taking into
         consideration actual claims paid and incurred for The Health
         Area/Region and an assessment of specific trends actuarially based for
         both medical and prescription cost to reach the applicable premiums for
         any subsequent period of time.

In the event an agreement can not be reached on the premium for the next period
after good faith negotiations by the ADMINISTRATION and the INSURER according to
the parameters set forth in (3) supra, the contract may be terminated if deemed
in the best interest of these beneficiaries, the ADMINISTRATION and the
Government of Puerto Rico.

                                  ARTICLE XXIX
                              CONFLICT OF INTEREST

                                       81

<PAGE>

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

                                   ARTICLE XXX
                                  INCOME TAXES

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

                                  ARTICLE XXXI
                               ADVANCE DIRECTIVES

The INSURER agrees to enforce and require compliance by all applicable
participating providers with 42 CFR 434, Part 489, Subpart I relating to
maintaining written policies and procedures respecting advance directives. This
requirement includes provisions to inform and distribute written information to
adult individuals concerning policies on advance directives, including a
description of applicable Commonwealth law.

                                  ARTICLE XXXII
                     OWNERSHIP AND THIRD PARTY TRANSACTIONS

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

                                 ARTICLE XXXIII
                            MODIFICATION OF CONTRACT

If the ADMINISTRATION finds that, because of amendments to Law 72 of
September 7, 1993, or by reason of budget reductions, or subsequent Federal or
local legislative changes that affect this contract, or because of any reasons
deemed by the ADMINISTRATION to be in the best interest of the Government of
Puerto Rico in carrying out the provisions of Law 72 of September 7, 1993, or in
order to perform experiments and demonstration projects pursuant to legislative
enactment, modification

                                       82

<PAGE>

of this contract is necessary, the ADMINISTRATION may modify any of the
requirements, terms and conditions, functions, part thereof or any other
services to be performed by the INSURER. Prior to any such modification, the
ADMINISTRATION shall afford the INSURER an opportunity to consult and
participate in planning for adjustments which might be necessary and thereafter
provide the INSURER written notice that the modification is to be made within
ninety (90) days after a date specified in the notice. Said modifications will
take place after consultation and cost negotiation with the INSURER.

                                  ARTICLE XXXIV
                            TERMINATION OF AGREEMENT

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

2.       In the event that there is non-compliance by the INSURER with any
         specific clause of this contract, the ADMINISTRATION will notify the
         INSURER in writing, indicating the area/region(s) of non-compliance.
         The INSURER will be granted the opportunity to present and discuss its
         position regarding the issue within fifteen (15) days from the date of
         the notification. After considering the allegations presented by the
         INSURER following adequate hearing and the opportunity to present all
         necessary evidence in support of its position, and the ADMINISTRATION
         formally determines that there is a non-compliance, at the discretion
         of the ADMINISTRATION, this contract may be cancelled by giving thirty
         (30) days prior written notice before the effective date of
         cancellation.

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

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

         In the event that this contract is terminated, the INSURER shall
         promptly provide the ADMINISTRATION all necessary information for the
         reimbursement of any pending and outstanding Claims. The INSURER hereby
         recognizes that in the event of termination under this Article it shall
         be bound to provide reasonable

                                       83

<PAGE>

         cooperation to the ADMINISTRATION beyond the date of termination in
         order to properly effect the transition to the new INSURER taking over
         the region covered by this Contract. This obligation to reasonably
         cooperate shall survive the date of said effective termination
         provided, at the ADMINISTRATION'S discretion.

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

                                  ARTICLE XXXV
                                PHASE-OUT CLAUSE

1.       In the event that the contract is terminated, the INSURER will continue
         to provide services for a reasonable term to guarantee the continuance
         of services until the ADMINISTRATION has made adequate arrangements to
         continue the rendering of health care benefits to beneficiaries in the
         areas affected by the termination. The duration of such transition term
         will not exceed sixty (60) days. Adjustments in the PMPM during the
         transition term shall not be borne or agreed upon by ADMINISTRATION, in
         the event of a termination based on default or breach of contract by
         the INSURER.

2.       Upon the expiration or termination of a contract, the INSURER will
         provide the ADMINISTRATION with the historical/utilization data of
         services rendered to beneficiaries in the area/region in formats
         specified/agreed with the ADMINISTRATION, in order to prevent fraud and
         double billing of services by the incoming INSURER.

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

4.       The INSURER acknowledges that it will collaborate with the
         ADMINISTRATION efforts in any health regions or geographic area in
         transition processes.

5.       If in the best interest of the beneficiaries or the Commonwealth of
         Puerto Rico the ADMINISTRATION terminates any demonstration project,
         the INSURER will assume responsibility for the geographic areas
         (municipalities/regions) managed by any health organization in
         accordance with the contracted premium.

6.       If in the best interest of the beneficiaries or the Commonwealth of
         Puerto Rico the ADMINISTRATION expands the direct contracting
         demonstration project with

                                       84

<PAGE>

         health care organization, the INSURER will assist in the transition
         process after ninety (90) days of a written notification and payments
         of premiums will be adjusted accordingly.

                                 ARTICLE XXXVI
                             THIRD PARTY DISCLAIMER

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

                                 ARTICLE XXXVII
                         PENALTIES AND SANCTIONS CLAUSES

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

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

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

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

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

         Whenever the above events take place, the ADMINISTRATION may retain one
         monthly premium payment for each month in default. Retention will be
         effective ten (10) working days after the notice of non-compliance.
         Once the INSURER

                                       85

<PAGE>

         corrects the problem, at the satisfaction of the ADMINISTRATION and
         according to Article XV of this contract, the amount retained will be
         fully paid to the INSURER, within five days after receiving full and
         complete reports for the subsequent month.

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

If the INSURER owes money to the Administration as a result of the imposition of
penalties, excess premiums paid or any other reason, the Administration may
withhold such amount from any payments due related to the same contract or any
other contracts between the parties.

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

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

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

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

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

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

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

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

                                       86

<PAGE>

         dollars $25,000; or the resolution of the contract and temporary
         management; suspension, and/or with-holding of premium payments, which
         may range from a percent amount, or more than one monthly premium
         payments. The imposition of sanctions will depend on the extent and
         severity of the actions.

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

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

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

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

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

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

                  a)       Shall notify the Secretary of non-compliance;

                                       87

<PAGE>

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

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

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

                                 ARTICLE XXXVIII
                              HOLD HARMLESS CLAUSE

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

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

                                       88

<PAGE>
                                  ARTICLE XXXIX
               CENTERS FOR MEDICARE AND MEDICAID SERVICES CONTRACT
                                  REQUIREMENTS

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

                                   ARTICLE XL
                                  FORCE MAJEURE

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

                                   ARTICLE XLI
                                YEAR 2000 CLAUSE

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

                                  ARTICLE XLII
                           FEDERAL GOVERNMENT APPROVAL

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

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

                                       89

<PAGE>

                                  ARTICLE XLIII
                          ACKNOWLEDGMENT AS TO INSURER

1.       All responsibilities, obligations, assurances and representations,
         made, taken, and assumed by the INSURER under this contract will be
         fully, solely, and entirely assumed by the INSURER. Notwithstanding,
         the ADMINISTRATION acknowledges that Triple-C will carry out the
         responsibilities as to the administration and operational management of
         the Health Insurance subject of this contract and that its officers are
         authorized to represent Triple-S, Inc. in matters related to be carried
         out.

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

                                  ARTICLE XLIV
                                ENTIRE AGREEMENT

The parties agree that they accept, consent and promise to abide by each and
every one of the clauses contained in this contract and that the contract
contains the entire agreement between the parties. In order to acknowledge so,
they initial the margin of each of the pages and affix below their respective
signatures, in San Juan, Puerto Rico, this 13 day of June 2002.

PUERTO RICO HEALTH INSURANCE                 TRIPLE-S
ADMINISTRATION

by                                           by

/s/ Orlando Gonzalez Rivera                  /s/ Socorro Rivas
-----------------------------                ----------------------------------
ORLANDO GONZALEZ RIVERA                      SOCORRO RIVAS

                                             TRIPLE-C

                                             /s/ Luis A. Marini
                                             ----------------------------------
                                             LUIS A. MARINI

                                       90<PAGE>

                                                                    EXHIBIT 10.3

                            HEALTH INSURANCE CONTRACT
                            SOUTH WEST HEALTH REGION

                                     Between

                             THE PUERTO RICO HEALTH
                            INSURANCE ADMINISTRATION

                                       and

                                 TRIPLE S, INC.

                                  July 1, 2002

<PAGE>

                                    CONTRACT

         This Agreement entered into this 13th day of June, 2002 at San Juan,
Puerto Rico, by and between PUERTO RICO HEALTH INSURANCE ADMINISTRATION, a
public instrumentality of the Commonwealth of Puerto Rico, organized under
Law 72 approved on September 7, 1993, hereinafter referred to as the
"ADMINISTRATION", represented by its Executive Director, ORLANDO GONZALEZ
RIVERA, and TRIPLE-S, INC., a domestic corporation duly organized and doing
business under the laws of the Commonwealth of Puerto Rico, with employer social
security number 66-0229064 hereinafter referred to as the "INSURER", represented
by its President, SOCORRO RIVAS.

                                   WITNESSETH

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

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

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

         THIRD: The ADMINISTRATION published a Request For Proposals for the
SOUTH WEST Health Area/Region, seeking to provide health insurance coverage to
all eligible beneficiaries in said health Area/Region, by contracting with
private insurers.

         FOURTH: Pursuant to the terms of the aforementioned Request For
Proposals, published on April, 2002 different private health insurers submitted
to the ADMINISTRATION proposals to underwrite the health insurance for the
Health Area/Region.

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

         SIXTH: The Board of Directors of the ADMINISTRATION, after a careful
and complete analysis of all technical and administrative elements of the
proposals, decided to award the INSURER the contract to underwrite and
administer the health insurance for the SOUTH WEST Health Area/Region, composed
of ADJUNTAS, GUANICA, GUAYANILLA, JAYUYA, PENUELAS, PONCE and YAUCO.

                                        1

<PAGE>

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

                              TERMS AND CONDITIONS
                                    ARTICLE 1
                                   DEFINITIONS

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

ADMINISTRATION: Puerto Rico Health Insurance Administration.

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

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

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

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

                                        2

<PAGE>

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

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

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

CONTRACT TERM: The contract term is for three consecutive twelve (12) month
periods after the effective date of this contract. The contract may be
terminated at the conclusion of each twelve month period pursuant to Article
XXVIII (3) (4).

CMS: Acronym for the Centers for Medicare and Medicaid Services.

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

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

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

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

FAMILY CONTRACT: The benefits provided to the following eligible beneficiaries;
1) principal subscriber; and 2) his or her spouse (legally married or common
law); and 3) his or her children (legally, adopted, foster or step children)
under 21 years old that depend on the principal subscriber for subsistence; and
4) individuals under 21 years of age who have no children and live in common law
with one of the eligible children in the same household; and 5) his or her
dependents, of any age, who are blind or permanently disabled and live in the
same household. Female beneficiaries (except

                                       3

<PAGE>

spouse) covered under family contract who become pregnant shall constitute a
separate subscriber under an individual contract as of the first day of the
month the pregnancy is diagnosed and reported to the INSURER.

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

HEALTH AREA/REGION: The SOUTH WEST Health Area/Region as defined by the
ADMINISTRATION, composed of ADJUNTAS, GUANICA, GUAYANILLA, JAYUYA, PENUELAS,
PONCE AND YAUCO.

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

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

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

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

                                        4

<PAGE>

served by the entity and meets the solvency standards under the law as a state
licensed risk-bearing entity.

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

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

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

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

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

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

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

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

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

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

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

                                        5

<PAGE>

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

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

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

PBM: Acronym for Pharmacy Benefits Manager.

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

PHARMACY BENEFITS MANAGER: The private entity contracted by the ADMINISTRATION
under the Health Reform Program to function as their pharmaceutical benefit
manager responsible, for claims processing, drug utilization review, disease
management, formulary control and beneficiary/customer information services for
pharmaceutical benefits provided by the basic, special and mental health
coverage of the Health Reform Program.

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

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

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

                                        6

<PAGE>

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

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

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

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

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

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

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

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

                                       7

<PAGE>

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

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

                        ORGANIZATION AND ADMINISTRATION

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

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

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

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

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

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

                                   ARTICLE II
                           ELIGIBILITY AND ENROLLMENT

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

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

                                       8

<PAGE>

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

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

         b)       payment for covered Part A services;

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

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

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

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

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

                                        9

<PAGE>

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

7.       The INSURER shall be responsible to provide the subscriber with
         specific information allowing for the prompt and reliable enrollment of
         all eligible individuals. The ADMINISTRATION shall notify the INSURER
         on a daily basis of all beneficiaries who have become eligible, as well
         as those who have ceased to be eligible. The INSURER shall guarantee
         the maintenance, functionality, and reliability of all necessary
         systems to allow enrollment or disenrollment of subscribers.

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

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

10.      If, following disenrollment, a beneficiary's contract is reinstated and
         the beneficiary is re-enrolled on the same month of disenrollment, the
         contract will be reinstated as of the date of re-enrollment.

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

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

                                       10

<PAGE>

         the providers for the services rendered to an unenrolled newborn during
         ninety (90) days from the date of birth.

         The INSURER, PCP or HCO will provide orientation to the beneficiary as
         soon as a baby is born to go to the INSURER's office with the necessary
         documentation to receive a manual certification from the INSURER for
         the newborn.

         The INSURER, PCP or HCO will make every effort to make the beneficiary
         go to the Department of Health Medicaid Office to register the newborn
         within the ninety (90) days of his/her date of birth. It should be
         emphasized to the beneficiary that failure to register the newborn
         within that period will cause the newborn to loose coverage. After the
         90 days period, the INSURER will not be paid premiums if the newborn is
         not enrolled.

         In the case in which a newborn dies before being registered at the
         Medicaid Office, the INSURER must provide ASES with proof of the birth
         and of the death of the newborn. ASES will then pay premiums for the
         period from the birth of the newborn until his death.

         In the case in which the family unit ceases to be eligible before the
         newborn is registered at the Medicaid Office, the INSURER must provide
         ASES with proof of the birth of the newborn. ASES will then pay
         premiums from the date of birth of the newborn until the termination of
         eligibility of the family.

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

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

                                       11

<PAGE>

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

15.      In the event that a female beneficiary, included as a dependent in a
         family group, other than as the spouse, becomes pregnant, that
         beneficiary will be transferred to a new family and become the head of
         household of the new family. The effective date of the new family will
         be the date of the first diagnosis of the pregnancy.

         Such beneficiary has the right to all the services under maternity
         coverage.

         At the time of being diagnosed as pregnant, the physicians, the HCO
         and/or the INSURER are required to provide orientation to the
         beneficiary towards certifying with the Department of Health Medicaid
         Office and to present herself at the INSURER to have a membership card
         issued.

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

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

                  a)       includes each subscriber and all beneficiaries;

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

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

                                       12

<PAGE>

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

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

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

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

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

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

                                       13

<PAGE>

23.      DISENROLLMENT

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

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

         (a)      Beneficiary misuses or loans his/her membership card to
                  another person to obtain services.

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

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

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

If the beneficiary disagrees with the decision to disenroll the beneficiary from
INSURER, the beneficiary must be notified of the availability of the Complaints
and Grievances Procedure and the ADMINISTRATION's fair hearing process, as
provided by Law 72 of September 7, 1993, as amended.

                                   ARTICLE III
                                 RIGHT TO CHOOSE

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

         The right of beneficiaries to transfer or change from an HCO shall be
         made at any time without cause during the first 90 days following the
         date of the

                                       14

<PAGE>

         beneficiary's initial enrollment or the date of enrollment notice is
         sent, whichever is later, and at most once every twelve (12) months
         thereafter. The following examples are considered causes for
         disenrollment: (1) the beneficiary moves out of the area of service of
         the HCO and is not within a reasonable distance from the area of the
         service of the HCO; (2) the HCO does not cover the service because of
         moral and religious objections; (3) the beneficiary needs related
         services to be performed at the same time; not all related services are
         available within the network; and the beneficiary's primary care
         provider or another provider determines that receipt of services
         separately would subject the beneficiary to unnecessary risk; and, (4)
         other reasons, including but not limited to, poor quality of care, lack
         of access to services and lack of access to experienced providers
         dealing with the beneficiary's health care needs. The beneficiary shall
         receive proper written notification at least 60 days prior to the end
         of each 12 month enrollment period from the INSURER.

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

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

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

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

                                       15

<PAGE>

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

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

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

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

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

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

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

                                       16

<PAGE>

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

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

                                   ARTICLE IV
                                 SECONDARY PAYOR

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

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

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

4.       The INSURER will make the most diligent best efforts to determine if
         beneficiaries have third party coverage and will attempt to utilize
         such coverage when applicable.

                                       17

<PAGE>

         The INSURER will be permitted to retain 100% of the collections from
         subrogation. The plan's experience will be credited with the amount
         collected from said primary payor, once payment is made and the INSURER
         recovers payments according to the corresponding transaction process
         established. If the provider detect that a beneficiary have other
         health plan coverage not identified in the beneficiary card, the
         provider will bill the primary payor and will provide the information
         to the INSURER.

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

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

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

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

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

                                   ARTICLE V
                                  EMERGENCIES

1.       In cases of emergency or immediate need of medical care within the
         Commonwealth of Puerto Rico, the INSURER will be responsible for the
         payment of emergency service provided to beneficiaries when the
         emergency or

                                       18

<PAGE>

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

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

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

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

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

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

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

6.       The INSURER and each HCO is required to provide access to emergency
         care and ambulance transportation services within their own facilities,
         through their contracted, participating providers or through contract
         with third parties that

                                       19

<PAGE>

         guarantee said emergency care and ambulance transportation twenty four
         (24) hours a day, seven (7) days a week.

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

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

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

                                   ARTICLE VI
                               ACCESS TO BENEFITS

1.       The INSURER will contract all available private providers that meet its
         credentialing process and agree to its contractual terms, in order to
         assure sufficient participating providers, to satisfy the demand of
         covered services by the beneficiaries enrolled in the program.
         Considering the expected mix between private patients and beneficiaries
         the accepted physician/beneficiary ratio will be 1:1,700 for primary
         care physicians; 1:2,200 for specialists and 1:1,600 for all
         physicians. In the event that the HCO's provides services only to
         beneficiaries under this contract, the physician/beneficiary ratio will
         be the same to that applicable when there is a mix between private
         patients and beneficiaries. The INSURER will assure compliance with
         said physician/beneficiary ratio.

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

                                       20

<PAGE>

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

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

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

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

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

8.       The INSURER is responsible for the implementation, development and
         maintenance of an adequate system for referrals of health services
         under this contract. The referral system must be approved by the
         ADMINISTRATION and must be audited periodically by the INSURER and the
         ADMINISTRATION. In no way the INSURER, the HCO's or any participating
         provider or health organization will submit for approval, specialists
         referrals to any internal or external committee or will interfere,
         prohibit, or restrict any health care professional's advice within
         their scope of practice.

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

10.      The INSURER assures the ADMINISTRATION that no HCO'S or participating
         providers will impose limit quotas or restrain services to
         subcontracted providers

                                       21

<PAGE>

         for the services medically needed (e.g. laboratory, pharmacies, or
         other services).

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

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

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

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

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

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

                                       22

<PAGE>

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

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

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

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

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

22.      The INSURER assures that it will provide an adequate stop-loss
         insurance set at no more than ten thousand ($10,000) dollars to protect
         physicians from loss and comply with to the risk thresholds established
         under sections 42CFR 422.208. In the event, INSURER places physicians
         at substantial risk it shall conduct enrollee/disenrollee surveys not
         later than one year after the effective date of the contract and at
         least annually thereafter.

                                       23

<PAGE>

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

         -        Urgent Care within 24 hours of request;

         -        Routine care within 2 weeks of request;

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

         -        Referrals: Appointments of referrals must be delivered and
                  notified to beneficiaries within five (5) days from the date
                  prescribed by the provider. The services required must be
                  delivered or rendered within a reasonable period as medically
                  needed by the beneficiary, in a time frame which may not
                  exceed thirty (30) days from the time of the appointment,
                  except in cases were the particular nature of specialist
                  services require additional waiting time because of
                  unavailability of a specialty service.

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

                                   ARTICLE VII
              CONTRACTS WITH HCO'S AND ALL PARTICIPATING PROVIDERS

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

                                       24

<PAGE>

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

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

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

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

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

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

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

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

                                       25

<PAGE>

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

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

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

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

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

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

         j.       The INSURER will establish directives for allowing providers
                  to write prescriptions for psychotropic drugs in accordance
                  with the applicable agreement with the ADMINISTRATION's
                  Pharmacy Benefit Manager (PBM). The ADMINISTRATION's terms and
                  conditions for pharmacy benefit management have been agreed
                  by the parties and will be complied and implemented according
                  to Addendum XIV, to the Request for Proposal and the Benefits
                  Coverage included herein.

                                       26

<PAGE>

         k.       All performance, timeframes, administrative standards and
                  requirements as established under this contract.

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

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

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

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

9.       To the extent feasible within INSURER'S existing claims processing
         systems, INSURER should have a single or central address to which
         providers must submit claims. If a central processing center is not
         possible within INSURER's existing claims processing system, INSURER
         must provide each network

                                       27

<PAGE>

         provider a complete list of all entities to whom the providers must
         submit claims for processing and/or adjudication. The list must include
         the name of the entity, the address to which claims must be sent,
         explanation for determination of the correct claims payer based on
         services rendered, and a phone number the provider may call to make
         claims inquiries. INSURER must notify providers in writing of any
         changes in the claims filing list at least 30 days prior to effective
         date of change. If INSURER is unable to provide 30 days notice,
         providers must be given a 30-day extension on their claims filing
         deadline to ensure claims are routed to correct processing center.

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

11.      PROVIDER MANUAL AND PROVIDER TRAINING

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

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

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

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

12.      PROVIDER QUALIFICATIONS - GENERAL

The providers in INSURER network must meet the following qualifications:

                                       28

<PAGE>

FQHC               A Federally Qualified Health Center is an entity that
                   provides outpatient health services pursuant to 42 U.S. C.
                   201 et. seg. and meets the standards and regulations
                   established by the federal law and is an eligible provider
                   enrolled in the Medicaid Program.

Physician          An individual who is licensed to practice medicine as an M.D.
                   or a D.O. in Puerto Rico either as a primary care provider or
                   in the area of specialization under which they will provide
                   medical services under contract with INSURER; who is a
                   provider enrolled in the Medicaid program; and who has a
                   valid Drug Enforcement Agency registration number and a
                   Puerto Rico Controlled Substance Certificate, if either is
                   required in their practice.

Hospital           An institution licensed as a general or special hospital by
                   the Puerto Rico Health Department under Chapter 241 of the
                   Health and Safety Code and Private Psychiatric Hospitals
                   under Chapter 577 of the Health and Safety Code (or is a
                   provider which is a component part of a State or local
                   government entity which does not require a license under the
                   laws of the Commonwealth of Puerto Rico), which is enrolled
                   as a provider in the Puerto Rico Medicaid Program.

Non-Physician      An individual holding a license issued by the applicable
Practitioner       licensing agency of the Commonwealth of Puerto Rico who is
Provider           enrolled in the Puerto Rico Medicaid Program or an individual
                   properly trained to provide health support services who
                   practices under the direct supervision of an appropriately
                   licensed professional.

Clinical           An entity having a current certificate issued under the
Laboratory         Federal Clinical Laboratory Improvement Act (CLIA) and has a
                   license issued by the Commonwealth's licensing agency the
                   Puerto Rico Department of Health.

Rural Health       A health facility that has been determined by the Secretary
Clinic (RHC)       to meet the requirements of section 1861(aa) (2) of the Act
                   and part 491; of this chapter; and has filed an agreement
                   with the Secretary to provide RHC services under Medicare and
                   pursuant to 42 CFR 405.2402.

Local Health       A local health department established pursuant to Health and
Department         Safety Code, Title 2, Local Public Health Reorganization Act
                   ss. 121.031ff.

Non-Hospital       A provider of health care services which is licensed and
Facility           credentialed to provide services, and enrolled in our
Provider           program.

School Based       Clinics located at school campuses that provide on-site
Health Clinic      primary and preventive care to children and adolescents.
(SBHC)

                                       29

<PAGE>

                                  ARTICLE VIII
                  SUBSCRIPTION PROCESS AND IDENTIFICATION CARDS

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

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

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

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

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

6.       The identification cards shall contain the following information:

         a)       Name of Beneficiary

         b)       INSURER's Group Number

         c)       Subscriber's Social Security Number

         d)       Relationship of beneficiary with subscriber (if applicable)

         e)       HCO name and number

         f)       Issue Date

         g)       Type of Contract (individual or family)

         h)       Coverage effective date

         i)       Other Insurance code

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

7.       The INSURER will replace lost, stolen, mutilated cards and will have
         the right to charge in beneficiaries one dollar ($1.00) for each card
         replaced. This charge will not be applicable to Medicaid Beneficiaries,
         which are categorized within the established indigence level 0
         (0%-50%).

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

                                       30

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

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

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

12.      INSURER will comply with all changes requested by the ADMINISTRATION
         resulting from the implementation of the "Smart Card". Monetary
         implications as a result of such changes, will be negotiated with the
         INSURER.

                                   ARTICLE IX
            SUMMARY PLAN DESCRIPTION BOOKLET AND ORIENTATION PROGRAMS
                              MARKETING PROVISIONS

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

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

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

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

         c)       Beneficiary's rights and responsibilities, in accordance with
                  specific rights and requirements to be afforded in accordance
                  with Medicaid Program regulations as amended, the Puerto Rico
                  Patient Bill of Rights Law 194 of

                                       31
<PAGE>

                  August 25, 2000, the Puerto Rico Mental Health Code, of
                  October 2, 2000, as amended and implemented by their
                  regulations, and Law 11 creating the Office of Patients
                  Solicitor General of April 11, 2001.

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

         e)       Official grievances and appeal filing procedures.

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

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

         h)       Explanations of instances under which a beneficiary's
                  disenrollment may be requested without his/her consent by a
                  provider.

         i)       Explanations of right of beneficiary to transfer from HCO at
                  any time for cause and to transfer or change within first
                  ninety (90) days of the date of enrollment or the later date
                  of receipt of notice of enrollment, and at least every (12)
                  months thereafter without cause.

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

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

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

6.       All participating providers are mandated required to receive yearly
         during the contract term at least fifteen (15) hours of orientation,
         education and familiarization with different aspects related to this
         contract on/or before the

                                       32
<PAGE>

         expiration of the first four and a half (4 1/2) months of the contract
         term. Failure to comply with this requirement will be sufficient
         grounds to exclude from the Health Insurance Program the participating
         provider. If, at the expiration of the first four and half (4 1/2
         months) of the contract term, the participating provider has not fully
         complied with this requirement, it will be excluded as participating
         provider for subsequent periods of the contract or the contract term.
         At the discretion of the ADMINISTRATION, and for good cause the
         excluded provider may be authorized to be contracted as a participating
         provider if it subsequently complies with the requirement.

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

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

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

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

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

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

         a)       Clear description of health care benefits coverage and
                  exclusions to enrollees;

         b)       Explain how, when, where benefits are available to enrollees;

         c)       Explain how to access emergency, family-planning services, and
                  services that do or do not require referrals and
                  authorizations;

         d)       Explain any benefits enrollees are entitled to, that are not
                  available through the INSURER and how to obtain them;

         e)       Enrollees rights and responsibilities;

                                       33
<PAGE>

         f)       Grievance and appeal procedures.

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

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

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

                                    ARTICLE X
                               GRIEVANCE PROCEDURE

1.       The INSURER represents that it has established an effective procedure
         that assures the filing, receipt, and prompt handling and resolution of
         all grievances and complaints made by the beneficiaries and the
         participating providers. The INSURER will prepare a grievance form that
         must be approved by the ADMINISTRATION. The approved grievance form
         shall be made available to all beneficiaries, HCO's, HCO's network of
         participating providers and the INSURER's participating providers. The
         parties will make whatever adjustments are necessary to reconcile their
         grievance procedure with provisions of Law 194 of August 25, 2000
         (known as "Patient Bill of Rights") or those contained in Law 11 of
         April 11, 2001 (known as "Law Creating the Office of Patient's
         Solicitor General") as implemented by regulations.

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

                                       34
<PAGE>

         shall be responsible for documenting in writing all aspects and details
         of said complaints.

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

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

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

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

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

8.       INSURER must have written policies and procedures for receiving,
         tracking, reviewing, and reporting and resolving of beneficiaries
         complaints. The procedures must be reviewed and approved in writing by
         THE ADMINISTRATION. Any changes or modifications to the procedures must
         be

                                       35
<PAGE>

         submitted to THE ADMINISTRATION for approval thirty (30) days prior to
         the effective date of the amendment.

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

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

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

12.      The INSURER Grievance Procedures must comply with the reasonable
         standards and timeframes for prompt resolution of grievances to be
         established under the Puerto Rico Patients Bill of Rights Act, Law 194
         approved October 2, 2000 and the Mental Health Code, Law 408, approved
         in August 25, 2000. The State established standards, shall comply with
         Medicaid Regulations to ensure that in the case of standard resolution
         of grievances, the standard time frames for prompt resolution, do not
         exceed 30 days after an insurer receives grievances. And in the case of
         grievances concerning the particular enrollees' health condition, which
         requires expedited resolution, they shall, be resolved, within a time
         frame that shall not exceed, 72 hours after a grievance is received.

                                   ARTICLE XI
                            HEALTH CARE ORGANIZATIONS

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

                                       36
<PAGE>

         a)       General Practitioners

         b)       Internists

         c)       Family Physicians

         d)       Pediatricians

         e)       Obstetricians and Gynecologists

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

         a)       Optometrists

         b)       Podiatrists

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

         d)       Radiological facilities

         e)       Health Related Professionals

         f)       Hospitals

         g)       Pharmacies

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

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

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

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

                                       37
<PAGE>

         a)       Ophthalmologists

         b)       Radiologists

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

5.       Considering the expected mix between private patients and beneficiaries
         the accepted physician/beneficiary ratio will be 1:1,700 for primary
         care physicians; 1:2,200 for specialists and 1:1,600 for all
         physicians. In the event that the HCO's provides services only to
         beneficiaries under this contract, the physician/beneficiary ratio will
         be the same to that applicable when there is a mix between private
         patients and beneficiaries. The INSURER will assure compliance with
         said physician/beneficiary ratio.

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

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

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

9.       The INSURER agrees to enforce and assure compliance by the HCO's with
         all provisions contained in this contract.

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

                                       38
<PAGE>

                                   ARTICLE XII
                              GUARANTEE OF PAYMENT

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

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

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

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

         In case the INSURER owes money to the HCO's or any provider, following
         due process, the Administration may retain the amounts owed to the
         providers.

4.       The INSURER agrees to pay all monies due to the HCO's and/or
         participating providers according to the agreed payment schedule in the
         contracts with said parties. The INSURER represents as of the date of
         this contract that payment to HCO's, HCO's network of participating
         providers and INSURER's participating providers will be made no later
         than thirty (30) days or as provided by legislation from the date that
         a full, complete and ready to process claim is received at the INSURER,
         when received within sixty (60) days of date of service. The INSURER
         expressly commits to implement all internal systems necessary to
         promptly pay its HCO's and providers all full, complete and ready to
         process claims within the term provided in this section, and to avoid
         unjustifiable delay in payment by submitting said claims to audits and
         evaluation of contested claims; said practice is expressly prohibited,
         and may result in the remedies set forth at Article XXXVI or
         termination as provided in Article XXXIII. A complete and ready to
         process claim (clean claim) is a claim received by the INSURER for
         adjudication, and which requires no further information, adjustment, or
         alteration by the provider of the services in order to be processed and
         paid by the INSURER.

                                       39
<PAGE>

5.       In the event that, following the receipt of the claim, the same is
         totally or partially contested by the INSURER or HCO, the participating
         provider shall be notified in writing within thirty (30) days that the
         claim is contested with the contested portion identified and provided
         the reasons thereof. Upon receipt of a new or supplemented claim, the
         INSURER or the HCO, shall pay or deny the contested claim or portion of
         the contested claim within thirty (30) days. Upon expiration of any of
         the aforementioned periods of time, the overdue payments shall bear
         interest at the prevailing rate for personal loans as determined by the
         Financial Board of the Office of the Commissioner of Financial
         Institutions.

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

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

8.       All payments distribution within the capitated services will be made by
         the INSURER accordingly within sound actuarial methods and in
         compliance with the ADMINISTRATION's commitments and efforts to assure
         a more uniform and equitable distribution of risk among providers
         throughout all the island health regions. In the event that
         participating providers in their arrangements with the HCO's consent to
         the disbursement of the payment checks directly to the HCO's, the
         INSURER will assure and require the HCO's to provide on a monthly basis
         a schedule of the amount of the payments made to said participating
         providers. In any event, the INSURER will provide the ADMINISTRATION
         with a detailed monthly report listing by providers the monthly payment
         distribution. The claims for services rendered will be generated and
         forwarded by the participating providers directly to the INSURER. The
         claims submitted by the participating providers will comply with the
         requirements contained in Article XV, Sections four (4) and eight (8).

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

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

                                       40
<PAGE>

11.      Inasmuch as the INSURER will be the central payor for all payments for
         valid claims for services rendered by the HCO's, HCO's network of
         participating providers and INSURER's participating providers the
         INSURER agrees to incorporate in the contracts with the HCO's, and to
         require the HCO's to incorporate in their arrangements with their
         participating providers a provision whereby the INSURER is authorized
         to adjudicate and determine the validity of any claim or dispute
         between the HCO and its participating providers regarding a controversy
         surrounding the validity of the claims of services submitted by said
         participating provider. Said provision will assure that the payment to
         the HCO's network of participating providers for a valid claim for
         services is not improperly withheld and that in no event payment in
         this situation is made more than sixty (60) days from the date that the
         claim or dispute is received by the INSURER. It will be the INSURER's
         responsibility to verify the terms of the arrangements between the HCO
         and its network of participating providers, the rendering of the
         services, the reasonableness of the claim and that payment has not been
         made.

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

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

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

                                       41
<PAGE>

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

16.      The INSURER will abide with the ADMINISTRATION efforts to implement
         cost reduction measures and future implementation of payment methods
         based on fee schedules or diagnosis related group that may be
         established. In no way a beneficiary will be discriminated nor will
         health services be rationed based on diagnosis or illness or an
         expectation that the beneficiary may require high cost care.

                                  ARTICLE XIII
                    UTILIZATION REVIEW AND QUALITY ASSURANCE

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

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

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

         c)       INSPECTION OF ALL FACILITIES: The INSURER will insure that all
                  providers' physical facilities are safe, sanitary and follow
                  sound operating procedures, as described in the INSURER's
                  Proposal and that all laboratory testing site providing
                  services under this contract have their duly CLIA
                  certification along with their identification number or waiver
                  certificate. The ADMINISTRATION may review participating
                  provider

                                       42
<PAGE>

                  facilities at any time and submit its findings to the INSURER
                  for consideration by the INSURER if necessary. The INSURER
                  shall notify the ADMINISTRATION quarterly of all inspections
                  done.

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

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

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

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

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

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

                                       43
<PAGE>

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

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

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

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

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

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

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

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

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

         d)       INDIVIDUAL CASE MANAGEMENT PROGRAM: The INSURER will establish
                  a program to identify and manage cases that involve high
                  health care costs, as described in the INSURER's Proposal. The
                  INSURER shall submit a report to the ADMINISTRATION on a
                  quarterly basis of all

                                       44
<PAGE>

                  findings in the Individual Case Management Program. The
                  ADMINISTRATION may review and/or audit the program findings
                  and reports at any time.

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

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

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

                           (i)      the provider's name and number;

                           (ii)     the source of the complaint;

                           (iii)    the type of provider;

                           (iv)     the nature of the complaint;

                           (v)      the approximate range of dollars involved,

                           (vi)     the legal and administrative disposition or
                                    status of the case.

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

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

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

                                       45
<PAGE>

5.       The INSURER shall continue to submit the ADMINISTRATION on a monthly
         basis a report that includes all services rendered by diagnosis and
         procedures identified by all specialties, by place of service including
         those under dental coverage, and procedures in laboratories and X-rays.
         It will be reported beginning with the most common diagnosis and
         procedures until reaching the least common.

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

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

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

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

                                   ARTICLE XIV
                            COMPLIANCE AND AGREEMENT
                            FOR INSPECTION OF RECORDS

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

                                       46
<PAGE>

         mandated by law and regulation, to the HIPAA regulations described
         elsewhere in this agreement.

2.       The INSURER shall require from the HCO's and all participating
         providers that they maintain an appropriate record system for services
         rendered to beneficiaries, including separate medical files and
         records for each beneficiary as is necessary to record all clinical
         information pertaining to said beneficiaries, including notations of
         personal contacts, primary care visits, diagnostic studies and all
         other services. The INSURER shall also maintain records to document
         fiscal activities and expenditures relating to compliance under this
         agreement. The INSURER and all participating providers shall preserve,
         and retain in readily accessible form, the records mentioned herein
         during the term of this contract and for the period of six (6) years
         thereafter.

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

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

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

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

                                       47
<PAGE>

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

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

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

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

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

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

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

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

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

11.      The INSURER agrees to require all HCO's and participating providers to
         permit the ADMINISTRATION to review and audit all aspects related to
         quality,

                                       48
<PAGE>

         appropriateness, timeliness and cost of services rendered, and to
         demonstrate that the services for which payment was made were actually
         provided.

                                   ARTICLE XV
                             INFORMATION SYSTEMS AND
                             REPORTING REQUIREMENTS

1.       The INSURER agrees to comply with the reporting and information systems
         requirements as provided for in the Request for Proposals and the
         Proposal submitted by the INSURER. Accordingly the INSURER must submit
         to the ADMINISTRATION a detailed Systems Requirements Inventory Report
         which details the following:

         a)       Plan's compliance with each information system requirement;

         b)       Action plan of INSURER's response to the requirements;

         c)       Actual date that each system requirement will be completely
                  operational, not to exceed the effective date of coverage
                  under this contract.

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

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

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

                                       49
<PAGE>

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

6.       The information systems of all HCO's shall be compatible with the
         systems in use by the INSURER.

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

8.       The INSURER agrees to submit to the ADMINISTRATION in such form and
         detail as indicated in the Claim File Layout format and any other
         formats the ADMINISTRATION requires in the RFP, the following
         information:

         a)       Within fifteen (15) days of the end of each month:

                  1)       Data pertaining to health insurance claims, and
                           encounters for all services provided to
                           beneficiaries.

                  2)       Enrollment data

         b)       Within twenty-five (25) days of the end of each month:

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

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

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

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

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

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

                                       50
<PAGE>

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

         a.       Evaluation of the effectiveness of the delivery of services by
                  providers and the adequacy of these services.

         b.       Monitoring and evaluation of the efficiency and propriety of
                  the services that are being received by the beneficiaries and
                  their dependents.

         c.       Comparison of experience with that of other providers.

         d.       Comparison of the utilization of health care and the cost
                  tendencies within the community and the group that renders
                  service.

         e.       Demonstration of how the quality of care is being improved for
                  the insured and their dependents.

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

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

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

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

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

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

                                       51
<PAGE>

         end of each month. Quarterly reports are due thirty (30) days after the
         end of each quarter.

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

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

17.      The INSURER will coordinate the enrollment of beneficiaries.

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

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

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

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

         a.       The security and integrity of the information and
                  communication systems through:

                  1.       Regular Backups on a daily basis

                  2.       Controlled Access to the physical plant

                  3.       Control logical access to information systems

                  4.       Verification of the accuracy of the data and
                           information

         b.       The continuity of services through:

                  1.       Regular maintenance of the systems, programs and
                           equipment

                  2.       A staff of duly trained personnel

                  3.       An established and proven system of Disaster Recovery

                  4.       Cost Effective systems.

                                       52
<PAGE>

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

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

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

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

                  1.       by patient/family

                  2.       by region, area/region town, (zip code)

                  3.       by provider (provider's identification number or
                           social security account numbers)

                  4.       by diagnosis

                  5.       by procedure or service

                  6.       by date of service

         g.       Financial and Actuarial reports

         h.       System of Control for claims payment that includes payment
                  history.

         i.       Computerized pharmacy system that permits its integration to
                  the payment procedures to the providers.

         j.       Outcome Analysis

         k.       Electronic creation of data files related to mortality,
                  morbidity, and vital statistics.

         l.       Integration to central systems

                  1.       Procedures and communications protocol compatibility;

                  2.       Ability to transmit reports, and or files via
                           electronic means.

         m.       Electronic Handling of:

                  1.       The process of Admission to hospitals and ambulatory
                           services

                  2.       Verification of eligibility and subscription to the
                           plan.

                  3.       Verification of benefits

                  4.       Verification of Financial information (Deductibles,
                           Co-payments, etc.)

                  5.       Verification of individual demographic data

                  6.       Coordination of Benefits.

         n.       Computerized applications for general accounting.

         o.       As to HCO's and all Participating Providers the information
                  system shall provide for:

                  1.       On line access to service history for each
                           beneficiary

                  2.       Register of diagnosis and procedures for each service
                           rendered.

                  3.       Complete demography on line, including the aspect of
                           coverage and financial responsibility of the patient.

                  4.       Individual and family transactions

                                       53
<PAGE>

                  5.       Annotations on line (General notes such as allergies,
                           reminders or other clinical aspects (free form)

                  6.       Analysis of activity by:

                           a.       department

                           b.       provider

                           c.       diagnosis

                           d.       procedures

                           e.       age

                           f.       sex

                           g.       origin

                           h.       others, as mutually agreed upon.

                  7.       Diagnosis history by patient with multiple codes per
                           service.

                  8.       AD Hoc Reports

                  9.       Referrals Control

                  10.      Electronic Billing

                  11.      Pharmacy system

                  12.      Dental system

                  13.      Ability to handle requirements of the Medicare
                           programs such as RBRVS (Relative Base Relative Value
                           System).

                  14.      Ability to collect data as to the quarter in which
                           the pregnant female beneficiary commences her ob-gyn
                           treatment. The format for the collection of this data
                           shall be approved by the ADMINISTRATION prior to its
                           implementation.

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

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

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

                                       54
<PAGE>

         ADMINISTRATION to enforce compliance through the Circuit Court of
         Appeals of Puerto Rico, Part of San Juan.

24.      The INSURER shall provide the ADMINISTRATION with one or more telephone
         numbers of dial-in data lines, and a minimum of three user's ID's and
         passwords that will allow the ADMINISTRATION's authorized personnel
         access to the INSURER's on-line computer applications, Such access will
         allow the ADMINISTRATION use of the same systems and access to the same
         information as used by the INSURER and enable the inquiry on
         beneficiaries, providers, and statistics files related to this
         contract.

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

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

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

         a)       Whether services not furnished by the physician or physician
                  group are covered by the incentive plan. If only the services
                  furnished by the physician or physician group are covered by
                  the incentive plan, disclosure of other aspects of the plan
                  need not be made.

         b)       The type of incentive arrangement (i.e., withhold, bonus,
                  capitation).

         c)       A determination on the percent of payment under the contract
                  that is based on the use of referral services. If the
                  incentive plan involves a withholding or bonus, the percent of
                  the withholding of bonus. If the calculated amount is 25% or
                  less, disclosure of the remaining elements in this list is not
                  required and there is no substantial risk.

         d)       Proof that the physician or physician group has adequate
                  stop-loss protection, including the amount and type of
                  stop-loss protection.

         e)       The panel size and, if patients are pooled, the method used.

         f)       In the case of those prepaid plans that are required to
                  conduct beneficiary surveys, the survey's results.

                                       55
<PAGE>
         The information items (a) through (e) above, must be disclosed to the
         ADMINISTRATION: (1) prior to approval of its initial contracts or
         agreements, upon the contract or agreements anniversary or renewal
         effective date or upon request by the Administration or CMS. The
         disclosure item (f) is due 3 months after the end of the contract year
         or upon request by CMS.

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

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

28.      INSURER TELEPHONE ACCESS REQUIREMENTS

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

         1.       80% of all telephone calls must be answered within an average
                  of 30 seconds;
         2.       The lost (abandonment) rate must not exceed 5%;
         3.       INSURER cannot impose maximum call duration limits but must
                  allow calls to be of sufficient length to ensure adequate
                  information is provided to the Beneficiaries or Provider.
         4.       The INSURER shall abide with the present Information Systems
                  and Reporting Requirements established in this agreement and
                  shall cooperate with the ADMINISTRATION in the development and
                  implementation of any future systems.

                                       56

<PAGE>
                                   ARTICLE XVI
                             FINANCIAL REQUIREMENTS

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

2.       The INSURER shall provide to the ADMINISTRATION copies of audited
         financial statements following Generally Accepted Accounting Principles
         (GAAP) and of the report to the Insurance Commissioner in the format
         agreed to by the National ASSOCIATION of Insurance Commissioners
         (NAIC), for the year ending on December 31, 2001, and subsequently
         thereafter for the contract term not later than March 15 of each
         subsequent year. Unaudited GAAP financial statements for each quarter
         during the contract term shall be presented to the ADMINISTRATION not
         later than forty five (45) days after the closing of each quarter.

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

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

5.       The INSURER's Incurred But Not Reported (IBNR) reserve will be
         reconciled and reevaluated every ninety (90) days and in no way the
         IBNR reserve shall exceed 10% of the total monthly capitation payments
         made to HCO's. The ADMINISTRATION reserves the right to retain for
         custody purposes such IBNR reserve if becomes necessary.

6.       The INSURER will ensure that the administrative costs and expenses
         incurred on an annual basis do not exceed 7.5% of the total premium
         payments made by the ADMINISTRATION. The INSURER's net earnings in
         excess of 2.5% premium payments in any given year will be shared with
         the ADMINISTRATION. The ADMINISTRATION share apportionment of the
         earnings shall be 75% and the INSURER shall be 25%.

7.       The INSURER agrees to provide to the ADMINISTRATION, upon the
         expiration of each period of twelve (12) consecutive months of the
         contract year, and not later than ninety (90) days thereafter, audited
         financial statements following Generally Accepted Accounting Principles
         (GAAP) which exclusively present the

                                       57
<PAGE>
         operational financial situation related to the execution of this
         contract. The ADMINISTRATION reserves the right to request interim
         audited financial statements not to exceed two (2) during the contract
         term.

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

                                  ARTICLE XVII
                       PLAN COMPLIANCE EVALUATION PROGRAM

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

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

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

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

                                       58
<PAGE>

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

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

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

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

8.       DEFAULT AND REMEDIES under Plan Compliance Program.

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

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

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

         -        Terminate the contract if the applicable conditions set forth
                  in Section 10.1 are met;
         -        Suspend payment to INSURER;
         -        Recommend to CMS that sanctions be taken against INSURER as
                  set out in Section 10.7;
         -        Remove the EPSDT's component from the capitation paid to
                  INSURER if the benchmarks(s) missed is for EPSDT's;
         -        Assess civil monetary penalties as set out in section 10.8;
                  and/or
         -        Withhold premium payment.

                                       59
<PAGE>

         DEFAULTS BY INSURER

a.       FAILURE TO PERFORM AN ADMINISTRATIVE FUNCTION

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

b.       ADVERSE ACTION AGAINST INSURER BY PRICO

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

c.       INSOLVENCY

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

d.       FAILURE TO COMPLY WITH FEDERAL LAWS AND REGULATIONS

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

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

                  INSURER's substantial failure to provide medically necessary
                  items and services that are required under this contract to be
                  provided to beneficiaries;

                  INSURER's imposition of premiums or charges on beneficiaries
                  in excess of the premiums or charge permitted by federal law;

                                       60
<PAGE>

                  INSURER's acting to discriminate among beneficiaries on the
                  basis of their health status or requirements for health care
                  services, including expulsion or refusal to enroll an
                  individual, except as permitted by federal law, or engaging in
                  any practice that would reasonably be expected to have the
                  effect of denying or discouraging enrollment with INSURER by
                  eligible individuals whose medical condition or history
                  indicates a need for substantial future medical services;

                  INSURER's misrepresentation or falsification of information
                  that is furnished to CMS, THE ADMINISTRATION, a beneficiary, a
                  potential beneficiary, or a health care provider;

                  INSURER's failure to comply with physician incentive
                  requirements 1876(I)(8), 1903(m)(2)(A)(v) of the Social
                  Security Act and 42 Code of Federal Regulations 417.479.

                  INSURER's distribution, either directly or through any agent
                  or independent contractor, of marketing materials that contain
                  false or misleading information, excluding materials
                  previously approved by THE ADMINISTRATION.

e.       MISREPRESENTATION OR FRAUD

                  INSURER's misrepresentation or fraud with respect of any
                  provision of this contract is a default under this contract.

f.       EXCLUSION FROM PARTICIPATION IN MEDICARE OR MEDICAID

                  Exclusion of INSURER or any of the managing employees or
                  persons with an ownership interest whose disclosure is
                  required by Section 1124(a) of the Social Security Act (the
                  Act) from the Medicaid or Medicare program under the
                  provisions of Section 1128(a) and/or (b) of the Act is a
                  default under this contract.

                  Exclusion of any provider or subcontractor or any of the
                  managing employees or persons with an ownership interest of
                  the provider or subcontractor whose disclosure is required by
                  Section 1124(a) of the Social Security Act (the Act) from the
                  Medicaid or Medicare program under the provisions of Section
                  1128(a) and/or (b) of the Act is a default under this
                  contract if the exclusion will materially affect INSURER's
                  performance under this contract.

                                       61
<PAGE>
g.                FAILURE TO MAKE PAYMENTS TO NETWORK PROVIDERS AND
                  SUBCONTRACTORS

                  INSURER's failure to make timely and appropriate payments to
                  network providers and subcontractors is a default under this
                  contract.

h.                FAILURE TO MONITOR AND/OR SUPERVISE ACTIVITIES OF CONTRACTORS
                  OR NETWORK PROVIDERS

                  Failure of INSURER to audit, monitor, supervise, or enforce
                  functions delegated by contract to another entity that results
                  in a default under this contract or constitutes a violation of
                  state or federal laws, rules, or regulations is a default
                  under this contract.

                  Failure of INSURER to properly credential its providers,
                  conduct reasonable utilization review, or conduct quality
                  monitoring is a default under this contract.

                  Failure of INSURER to require providers and contractors to
                  provide timely and accurate encounter, financial, statistical
                  and utilization data is default under this contract.

i.                PLACING THE HEALTH AND SAFETY OF BENEFICIARIES IN JEOPARDY

                  INSURER's placing the health and safety of the beneficiaries
                  in jeopardy is a default under this contract, and the
                  ADMINISTRATION may immediately terminate the agreement,
                  providing the INSURER a due process hearing to determine any
                  monetary obligations.

j.       FAILURE TO MEET ESTABLISHED BENCHMARK

                  Failure of INSURER to repeatedly meet any benchmark
                  established by THE ADMINISTRATION under this contract is a
                  default under this contract.

9.       NOTICE OF DEFAULT AND CURE OF DEFAULT WHEN APPLICABLE

         THE ADMINISTRATION will provide INSURER with written notice of default
         (Notice of Default) under this contract. The Notice of Default may be
         given by any means that provides verification of receipt. The Notice of
         Default must contain the following information:

         i.       A clear and concise statement of the circumstances or
                  conditions that constitute a default under this contract;

                                       62
<PAGE>
         ii.      The contract provision(s) under which default is being
                  declared;

         iii.     A clear and concise statement of how and/or whether the
                  default may be cured;

         iv.      A clear and concise statement of the time period during which
                  INSURER, when applicable, may cure the default;

         v.       The remedy or remedies THE ADMINISTRATION is electing to
                  pursue and when the remedy or remedies will take effect;

         vi.      If THE ADMINISTRATION is electing to impose civil monetary
                  penalties, the amount that THE ADMINISTRATION intends to
                  withhold or impose and the factual basis on which THE
                  ADMINISTRATION is imposing the chosen remedy or remedies;

         vii.     Whether any part of a civil monetary penalty, if THE
                  ADMINISTRATION elects to pursue these remedy, may be passed
                  through to an individual or entity who is or may be
                  responsible for the act or omission for which default is
                  declared;

         viii.    Whether failure to cure the default within the given time
                  period, if any, will result in THE ADMINISTRATION pursuing an
                  additional remedy or remedies, including, but not limited to,
                  additional sanctions, referral for investigation or action by
                  another agency, and/or termination of the contract.

10.      EXPLANATION OF REMEDIES

10.1     TERMINATION

10.1.1   TERMINATION BY THE ADMINISTRATION

         THE ADMINISTRATION may terminate this contract if:

10.1.1.1 INSURER substantially fails or refuses to provide payment for or access
         to medically necessary services and items that are required under this
         contract to be provided to beneficiaries after notice and opportunity
         to cure;

10.1.1.2 INSURER substantially fails or refuses to perform administrative
         functions under this contract after notice and opportunity to cure;

10.1.1.3 INSURER materially defaults under any of the provisions of Article XVI;

10.1.1.4 Federal or Commonwealth funds for the Medicaid program are no longer
         available; or

                                       63
<PAGE>

10.1.1.5 THE ADMINISTRATION has a reasonable belief that INSURER has placed the
         health or welfare of beneficiaries in jeopardy, as established in
         Article XVII, (8) (i).

10.1.2   THE ADMINISTRATION must give INSURER 30 days written notice of intent
         to terminate this contract if termination is the result of INSURER's
         substantial failure or refusal to perform administrative functions or a
         material default as established in Article XXXIII, except as otherwise
         stated.

10.1.3   THE ADMINISTRATION may, when termination is due to INSURER's
         substantial failure or refusal to provide payment for or access to
         medically necessary services and items, notify INSURER's beneficiaries
         of any hearing requested by INSURER. Additionally, if THE
         ADMINISTRATION terminates for this reason, THE ADMINISTRATION may
         enroll INSURER's beneficiaries with another INSURER or permit INSURER's
         beneficiaries to receive Medicaid-covered services other than from an
         INSURER.

10.1.4   INSURER must continue to perform services under the transition plan
         described in Section 10.2.1 if the termination is for any reason other
         than THE ADMINISTRATION's reasonable belief that INSURER is placing the
         health and safety of the beneficiaries in jeopardy. If termination is
         due to this reason, THE ADMINISTRATION may prohibit INSURER's further
         performance of services under the contract.

10.1.5   If THE ADMINISTRATION terminates this contract, INSURER may appeal the
         termination under Article VI Section 12 Law 72 September 7, 1993, as
         amended.

10.1.9   TERMINATION BY MUTUAL CONSENT

         This contract may be terminated at any time by mutual consent of both
         INSURER and THE ADMINISTRATION.

10.2     DUTIES OF CONTRACTING PARTIES UPON TERMINATION BY REASON OF DEFAULT

         When termination of the contract occurs by reason of default, THE
         ADMINISTRATION and INSURER must meet the following obligations:

10.2.1   THE ADMINISTRATION and INSURER must prepare a transition plan, which is
         acceptable to and approved by THE ADMINISTRATION, to ensure that
         beneficiaries are reassigned to other plans without interruption of
         services. That transition plan will be implemented during the 90-day

                                       64
<PAGE>
         period between receipt of notice and the termination date unless
         termination is the result of THE ADMINISTRATION's reasonable belief
         that INSURER is placing the health or welfare of beneficiaries in
         jeopardy.

10.2.2.2 INSURER is responsible for all expenses related to giving notice to
         beneficiaries; and

10.2.2.3 INSURER is responsible for all expenses incurred by THE ADMINISTRATION
         in implementing the transition plan.

10.2.2.4 If the contract is terminated by mutual consent:

10.2.3.1 THE INSURER is responsible for notifying all beneficiaries of the date
         of termination and how beneficiaries can continue to receive contract
         services and the provisions of Article XXXIV shall apply.

10.7     RECOMMENDATION TO CMS THAT SANCTIONS BE TAKEN AGAINST INSURER

10.7.1   If CMS determines that INSURER has violated federal law or regulations
         and that federal payments will be withheld, THE ADMINISTRATION will
         deny and withhold payments for new enrollees of INSURER.

10.7.2   INSURER must be given notice and opportunity to appeal a decision of
         THE ADMINISTRATION and CMS pursuant to 42 CFR 434.67.

10.8     CIVIL MONETARY PENALTIES 10.8.1 The Administration may impose monetary
         penalties according to Article XXXVI, Section 4.

10.10    REVIEW OF REMEDY OR REMEDIES TO BE IMPOSED

10.1     INSURER may dispute the notice by the ADMINISTRATION that
         ADMINISTRATION intends to impose any sanction under this contract.
         INSURER may notify THE ADMINISTRATION of its objections by filing a
         written response to the Notice of Default, clearly stating the reason
         INSURER disputes the proposed sanction. With the written response,
         INSURER must submit to THE ADMINISTRATION any documentation that
         supports INSURER's position. INSURER must file the review within
         fifteen (15) days from INSURER's receipt of the Notice of Default as
         provided in Article XXXIII, subparagraph 2. Filing a dispute in a
         written response to the Notice of Default suspends imposition of the
         proposed sanction.

                                       65
<PAGE>
10.10.2  INSURER and THE ADMINISTRATION must attempt to informally resolve the
         dispute. If INSURER and THE ADMINISTRATION are unable to informally
         resolve the dispute THE ADMINISTRATION will make the remedy final.

11.      The ADMINISTRATION in coordination with the INSURER, will implement a
         comprehensive fraud, errors and irregularities program. The INSURER
         will be required to ensure compliance with this program. If after a
         reasonable period to be determine by the parties, the ADMINISTRATION
         detected any violation of the program, the ADMINISTRATION may withheld
         such amount from the INSURER premium. The INSURER will have the right
         to present its position with following XXXVII (5) (B).

                                  ARTICLE XVIII
                               PAYMENT OF PREMIUMS

1.       The payment for the first month of coverage under this contract will be
         made upon the certification by the INSURER that it has complied with
         all the terms and conditions contained in this contract to the
         satisfaction of the ADMINISTRATION.

         For subsequent months the ADMINISTRATION shall pay to the INSURER the
         corresponding monthly premium within five (5) working days following
         submission by the INSURER of an invoice containing the list of the
         beneficiaries enrolled for the month of the invoice.

         Calculations by ASES of premiums due will be based on the status of
         beneficiaries eligible at the end of the prior month, following all
         processing of updates and cancellations effective in that month.

2.       The monthly premium calculation for beneficiaries not enrolled for the
         full month shall be determined on a pro-rata basis by dividing the
         corresponding monthly premium amount by the number of days in the month
         and multiplying the result by the number of days the beneficiary was
         actually enrolled.

3.       The monthly premiums for the months comprised within the contract term
         and covered by this contract are as follows:

         a)       For all beneficiaries including all those who are sixty-five
                  (65) years and older who are Medicare beneficiaries with Part
                  A or Parts A and B and those who are sixty-five years and
                  older who are not Medicare recipients:

                                       66
<PAGE>
                  1)       Per member per month rate (PMPM) (Beneficiary)
                           established at FIFTY SEVEN DOLLARS WITH TEN CENTS
                           ($57.10)

4.       The per member per month rate (PMPM) herein agreed provides for:

         a)       The billing by providers to Medicare for services rendered to
                  beneficiaries who are also Medicare recipients. The INSURER
                  will not cover deductibles or co-insurance of Part A, but will
                  cover deductibles and co-insurance of Part B of Medicare,
                  except for deductibles and co-insurance for outpatient
                  services provided in hospital setting, other than physician
                  services.
         b)       The recognition as a covered reimbursable Medicare Program
                  cost as bad debts by reason of non-payment of Part A
                  deductibles and/or coinsurance, and for deductibles and
                  co-insurance for outpatient services provided in hospital
                  setting under Medicare Part B, other than physician services.
         c)       Pharmacy coverage for beneficiaries who are also Part A and
                  Part A and B Medicare recipients, as long as the benefits are
                  accessed through the PCP, HCO's, HCO's network of
                  participating providers or the INSURER's participating
                  providers and the prescription is issued by a participating
                  provider of the INSURER.
         d)       Dental coverage for beneficiaries who are also Part A and Part
                  A and B Medicare recipients, the INSURER's participating
                  providers.
         e)       All benefits included in Addendum I that are not covered under
                  Medicare Part A or Part B.

5.       The INSURER shall not, at any time, increase the rate agreed in the
         contract nor reduce the benefits agreed to as defined in Addendum I of
         this contract.

6.       The INSURER guarantees the ADMINISTRATION that the rate and any
         applicable deductibles or co-payments constitute full payment for the
         benefits contracted under the plan, and that participating providers
         cannot collect any additional amount from the beneficiaries. Balance
         billing is expressly prohibited.

         Upon a determination made by the ADMINISTRATION that the INSURER or its
         agents that the INSURER has engaged in balance billing, the
         ADMINISTRATION will proceed to enforce provisions as established in
         Article XXXVI.

7.       The INSURER understands that the payment of premium by the
         ADMINISTRATION and the INSURER's payments to its HCO's, HCO's network
         of participating providers and INSURER's participating providers, shall
         be considered as full and complete payment for all services rendered
         except for the deductibles established in Addendum I of the contract
         herein.

                                       67
<PAGE>
8.       For those Medicare beneficiaries with Part A, any recovery by the
         provider for Part A deductibles and/or co-insurance will be made
         exclusively through the Medicare Part A Program as bad debts. In this
         instance, beneficiaries would neither pay any reimbursement for
         rendered services to a participating provider nor pay the deductibles
         included in Addendum I of this contract.

9.       For those Medicare beneficiaries with Part B, any recovery by the
         participating provider for Part B deductibles and/or co-insurance,
         other than services provided on an outpatient basis to hospital
         clinics, will be made through the INSURER and/or the HCOs. In this
         instance, beneficiaries would neither pay any reimbursement for
         rendered services to a participating provider nor pay the deductibles
         included in Addendum I of this contract.

10.      Co-insurance and deductible for Part B services provided on an
         outpatient basis to hospital clinics, other than physician services,
         will be considered as a covered bad debt reimbursement item under the
         Medicare program cost. In this instance, the INSURER will pay for the
         co-insurance and deductibles related to the physician services provided
         as a Part B service, through the capitation paid to the HCO.

11.      Newborns shall be immediately covered by the INSURER if born to an
         eligible individual and/or family unit as defined herein the Medicaid
         Commonwealth Plan, the law and its regulations.

12.      The INSURER understands that if the Federal Government submits an
         alternative to the agreement hereof that is more cost effective and for
         the benefit of the Government of the Commonwealth Puerto Rico, the
         ADMINISTRATION along with the INSURER will attempt to renegotiate the
         coverage for Medicare beneficiaries with Part A or Part A and B.

13.      The INSURER certifies that the monthly billing submitted to the
         ADMINISTRATION includes all beneficiaries, who have been issued an
         identification card and for which payment of premiums are due either on
         a monthly or pro-rated basis. The ADMINISTRATION will not accept any
         new billing once the monthly billing is submitted by the INSURER to the
         ADMINISTRATION, unless there is a justifiable reason for the omission.

14.      If any differences arise in the ADMINISTRATION's payment of premiums to
         the INSURER, the latter will proceed to analyze the differences between
         the original billing submitted by the INSURER and the amount paid by
         the ADMINISTRATION. The INSURER will proceed, after proper analysis, to
         submit to the ADMINISTRATION a diskette as well as all relevant
         documentation that supports and details the INSURER's claim not later
         than thirty (30) working days after payment is made to the INSURER by
         the ADMINISTRATION. Once this term has ended, the INSURER waives its
         right to claim any amounts from differences arising from the monthly
         payment made by the ADMINISTRATION

                                       68
<PAGE>
         and releases the ADMINISTRATION from any and all obligation to pay any
         additional premiums, including differences to billing by more than one
         insurer. During the following one hundred and twenty (120) days the
         ADMINISTRATION will confirm the validity of the claim and make payment
         thereof.

                                   ARTICLE XIX
                             ACTUARIAL REQUIREMENTS

1.       For the purpose of determining future premiums, the loss experience of
         this contract shall be based exclusively on the results of the cost of
         health care services provided to the beneficiaries covered under this
         contract. The INSURER shall maintain all the utilization and financial
         data related to this contract duly segregated from its regular
         accounting system including, but not limited to the General Ledger and
         the necessary Accounting Registers classified by the Area/Region
         subject to this contract.

2.       Administrative expenses to be included in determining the experience of
         the program are those directly related to this contract. Separate
         allocations of expenses from the INSURER's regular business, INSURER's
         related companies, INSURER's parent company or other entities will be
         reflected or made a part of the financial and accounting records
         described in the preceding section.

3.       Any pooling of operating expenses with other of the INSURER's groups,
         cost shifting, financial consolidation or the implementation of other
         combined financial measures is expressly forbidden.

4.       Amounts paid for claims or encounters resulting from services
         determined to be medically unnecessary by the INSURER will not be
         considered in the contract's experience.

5.       The INSURER shall provide the ADMINISTRATION every month with a Premium
         Disbursement Illustration. Said illustration shall present the
         distribution of the capitation, claim expenses by coverage, reserves,
         administrative expenses and premium distributions as referred and
         contained in the RFP's Actuarial Reports formats. Failure to comply
         with the requirements contained herein will be sufficient cause for the
         imposition against the INSURER of the penalty provided for in Article
         XXXVI of this contract.

6.       The determination by the INSURER as to the payment of the capitation
         fee and as to any other payments by virtue of this contract will be
         computed on an actuarially sound basis.

7.       The INSURER will provide to the ADMINISTRATION, on a monthly basis, the
         actuarial data, premium distribution, and reports as contained in the
         RFP's Actuarial Report formats. Failure to comply with the requirements
         contained herein will be

                                       69
<PAGE>
         sufficient cause for the imposition against the INSURER of the penalty
         provided for in Article XXXVI of this contract.

                                   ARTICLE XX
                           PREVENTIVE MEDICINE PROGRAM

1.       The Department of Health will provide for and effectively implement a
         preventive medicine program with primary emphasis on public health
         education which will include, but will not be limited to, guidance on
         lifestyles, AIDS, drug abuse, cancer and mother and child care. This is
         typically referred to as Primary Prevention. The INSURER will
         collaborate with the Department of Health and provide for a preventive
         medicine program with primary emphasis on the provision of clinical
         services in support of the Preventive Medicine Program, including but
         not limited to, screening and education of individual patients, such as
         PAP Smears, colorectal screening mammograms and cholesterol screening
         as indicated by the best practices of medicine.

         In cooperation with the INSURER, the Department of Health will develop
         a surveillance methodology to identify compliance with this program.

2.       The INSURER, through its secondary and tertiary Preventive Program,
         will address, analyze and implement measures to provide effective
         clinical and educational activities seeking to combat the specific
         causes of morbidity and mortality in the Area/Region.

3.       The INSURER will develop and effective) implement a case management
         system in order to monitor high risk cases and attend to the covered
         health care needs of the beneficiaries and dependents within said
         category.

4.       The INSURER represents that under its Preventive Program it will
         contract, sufficient medical specialists and specialized teams in order
         to combine the resources of the HCO's and the professional staff of the
         HCO's, including but not limited to, health educators, nutritionists,
         dieticians, nurses, other trained personnel and physicians who will act
         as the team's educator, manager and coordinator.

5.       The INSURER will be responsible to direct to a network of other
         agencies and community resources serving each municipality within the
         Area/Region so as to guarantee that participating providers and
         beneficiaries are aware of and understand the available services in
         their community and the process by which to access them.

6.       The INSURER will assure that discharge of the mother and her baby from
         the hospital is based upon sound clinical judgment determined by the
         clinician. The coverage for hospital stay following a normal vaginal
         delivery may not be limited

                                       70
<PAGE>
         to less than 48 hours for both the mother and newborn child and in the
         case of childbirth following cesarean section; the hospital stay may
         not be limited to less than 96 hours for both mother and newborns.

7.       The responsibilities of the INSURER in the Preventive Program will
         include the following:

         a)       A disease management program developed by the INSURER in
                  collaboration with the Department of Health which shall
                  develop standardized processes to address major public health
                  programs such as ASTHMA, DIABETES, HYPERTENSION AND CONGESTIVE
                  HEART FAILURE. This program shall include identification
                  treatment protocols/guidelines and surveillance/monitoring. In
                  cooperation with the Department of Health and the Centers for
                  Disease Control (CDC) annual reports will be published
                  detailing the results.

         b)       A case management program which initially will be under the
                  responsibility of a nurse. Case management will not be limited
                  to the physician's offices or a determined center.
                  Coordination of the services provided is required within the
                  community and at the home of the beneficiary, if necessary.

         c)       An outreach program shall be developed in collaboration with
                  the Department of Health to target specific clinical issues as
                  identified by the Department of Health, for those
                  beneficiaries who cannot access those services. The clinical
                  standard shall conform to the published HEDIS measures. These
                  measures can be modified or supplemented by the Department of
                  Health.

         d)       The INSURER will assure that all pregnant women are screened
                  for alcohol use following the Department of Health Guidelines.

         e)       The INSURER will assure that all pregnant women will obtain
                  counseling for the HIV test. All pregnant women who accept
                  the HIV test will be referred to the HIV Prevention and
                  Detection Program of the Department of Health. The participant
                  provider shall coordinate all referrals with the Department
                  of Health. Pre-natal care and HIV testing will continue to be
                  covered benefits under this contract.

         f)       The INSURER will assure that all pregnant women, following the
                  administration of the HIV test that reports a positive result,
                  are allowed to be treated under the guidelines for the
                  utilization of ZDV in pregnant women and neonatal infants to
                  reduce the risk of mother-infant HIV transmission, published
                  by the Department of Health.

         g)       The INSURER will assure that all pregnant women are properly
                  educated about the WIC Program. Those eligible individuals
                  will be referred to the

                                       71
<PAGE>
                  WIC Program of the Department of Health. It will be the
                  immediate responsibility of the participating providers to
                  comply with all requirements in order to arrange the referral
                  to the WIC Program without any cost to the patient.

         h)       The INSURER will assure that all providers comply with the
                  EPSDT (Early Periodic Screening Diagnosis and Treatment)
                  Program and the Guidelines for Adolescent Preventive Services
                  (GAPS) from the American Medical Association. The itinerary of
                  services that have to be rendered by providers will comply
                  with the EPSDT Itinerary Services Formats.

         i)       The INSURER will be responsible to develop and demonstrate its
                  strategy to meet the appropriate prevention program guidelines
                  as required by the Department of Health.

         j)       The INSURER will provide the ADMINISTRATION monthly reports
                  detailing all services rendered to mother and child classified
                  by age groups and listing the numbers of pregnant women that
                  have: (i) received prenatal care on each month in the
                  reporting period; (ii) counseled as to HIV testing; (iii)
                  referred to the HIV Prevention and Detection Program of the
                  Department of Health; and (iv) referred to the WIC Program.

         k)       The INSURER agrees to comply and assure that all participating
                  providers will comply with the federal and local laws referred
                  in Article XV paragraph (11) (g) of this contract. The INSURER
                  will assure the submission by the participating provider of
                  all the protocols and formats requested by the Department of
                  Health, Department of the Family, Department of Education and
                  Department of Justice as contained in the RFP formats.

8.       The INSURER will develop and effectively implement incentive-based
         programs whereby the providers are motivated toward compliance with all
         requirements of their Preventive Medicine Program such as EPSDT,
         Immunizations, Prenatal care, reduction in cesarean sections, and other
         related services.

9.       The ADMINISTRATION shall evaluate these preventive programs through
         HEDIS and other applicable performance standards.

10.      The INSURER will provide the ADMINISTRATION quarterly reports needed by
         the Department of Health detailing services rendered in the Preventive
         Program described below.

11.      The ADMINISTRATION shall have the right to audit the compliance with
         these requirements as needed. Non-compliance shall be a determining
         factor in nonrenewal of this contract or breach thereof as defined in
         Article of XXXIII.

                                       72
<PAGE>
                                  ARTICLE XXI,
                MENTAL HEALTH PROGRAM AND DEMONSTRATION PROJECT

1.       The INSURER shall direct beneficiaries to access Mental Health and
         Substance Abuse benefits in coordination with the Managed Behavioral
         Healthcare Organization in the health region contracted by the
         ADMINISTRATION and ASSMCA. The ASSMCA will monitor the Mental Health
         and Substance Abuse Program provided through the MBHO contracted in
         the Health Region/Area. This will be with sufficient specificity in
         order to provide for all mental health and substance abuse needs for
         all eligible beneficiaries residing within the municipalities forming
         part of said area.

2.       The INSURER will abide with the ADMINISTRATION and ASSMCA's guidelines
         for expediting access of beneficiaries to the mental health and
         substance abuse benefits covered under the Health Insurance Program.

3.       The INSURER acknowledges that the ADMINISTRATION has been delegated by
         the Department of Health, the implementation of a demonstration
         project for contracting and ensuring the provision of health services
         through direct contracts with health care organizations or other
         governmental health care organizations. INSURER agrees to collaborate
         with the ADMINISTRATION in the implementation of any demonstration
         project the ADMINISTRATION intends to simultaneously or progressively
         develop the contracted health region or another region or municipality
         during the term of this contract.

                                  ARTICLE XXII
                       PHARMACY BENEFITS MANAGEMENT (PBM)

1.       The ADMINISTRATION will monitor the Physical Health Program provided
         through the INSURER contracted in the Health Region/Area. This will be
         with sufficient specificity in order to provide for all Physical
         Health needs for all eligible beneficiaries residing within the
         municipalities comprising said area.

2.       The INSURER will abide with the ADMINISTRATION's guidelines for
         expediting access of beneficiaries to the Physical health Program and
         benefits covered under the Health Reform Program.

3.       Concurrently with the terms of this contract, the INSURER agrees to
         work with the ADMINISTRATION's Pharmacy Benefit Manager as selected by
         the ADMINISTRATION. This will include cooperating with the selected
         PBM to facilitate claims processing in a period specified, working
         with the selected PBM

                                       73
<PAGE>

         to specify, develop and implement the flow of information, utilization
         review and customer service protocols, as well as, to cease billing
         and collection of rebates from drug manufacturers, if applicable.

4.       The ADMINISTRATION's PBM, will provide the INSURER the services set
         forth in this Section and the services described in any attachment,
         addendum or amendment hereto:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
     ITEM                                 DESCRIPTION
--------------------------------------------------------------------------------
<S>                      <C>
Claims Processing        - Contracting and administration of the pharmacy
and Administrative         network. The PBM will create a network of
Services                   Participating Pharmacies, which will perform
                           pharmacy services for Members at specified
                           fees and discounts
                         - Claims payments summary reports for each payment
                           cycle every two weeks
                         - Notify each INSURER of the payment process,
                           systems involved (NCPDP 2.0) and relevant time line.
                         - Processing and mailing of pharmacy checks and
                           remittance reports
                         - Reconciliation of zero balance accounts
                         - Generate list of participating pharmacies
                         - Coordination of Benefits
                         - On-line access to current eligibility and claims
                           history
                         - Plan set-up
                         - Develop policies and procedures for denials and
                           rejections
                         - Process reasonable denials
                         - Maintenance of plan
                         - Adjudication of electronic claims. The PBM will
                           adjudicate claims submitted by Participating
                           Pharmacies to the PBM based on the participating
                           pharmacy's agreement with the PBM and including
                           online edits for preauthorization requirements and
                           other edits that may be deemed necessary for the
                           accurate payment of claims
                         - Approval and rejection of claims consistent with
                           plan design and concurrent Drug Utilization Review
                           (DUR)
                         - Standard electronic eligibility
                         - Maintain call center
                         - Loading of INSURER providers in network and
                           eligible members
                         - Develop remedies for addressing problems with
                           pharmacies
                         - Pharmacy audits
--------------------------------------------------------------------------------
Concurrent Fraud         - Develop process for INSURER to notify the PBM of
Investigations             fraud and abuse complaints made by
                           their beneficiaries.
                         - Track and Investigate fraud and abuse allegations
--------------------------------------------------------------------------------
</TABLE>

                                       74
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
     ITEM                                 DESCRIPTION
--------------------------------------------------------------------------------
<S>                      <C>
Formulary                - Incorporate INSURER related issues, such as
Management                 providing guidance into development of the Preferred
Program                    Drug List (PDL), into the existing ADMINISTRATION's
                           Pharmacy and Therapeutic Committee.
                         - Administer the Central Administrative Committee
                           (CAC), a cross functional sub-committee tasked with
                           rebate maximization. The subcommittee will take
                           recommendations on the PDL from the P&T committee
                           and will manage the PDL.
--------------------------------------------------------------------------------
Drug Utilization         - Incorporate DUR reports and evaluation reviews
Review/Drug                into the tasks of the Central Administrative
Utilization                Committee (CAC).
Evaluations              - Evaluate new therapeutic classes and determine if
                           drugs need to be added or deleted from PDL.
                         - Therapeutic intervention and switching
--------------------------------------------------------------------------------
Reports                  - According to Agreements.
--------------------------------------------------------------------------------
Rebates and              - Develop and maintain contracts with drug
Discounts                  manufacturers for rebates
                         - Utilize the Central Administrative Committee (CAC)
                           to maximize rebates
--------------------------------------------------------------------------------
Optional Services        - Custom Management Reports
                         - Manual Claims Input
                         - Special Programming
--------------------------------------------------------------------------------
</TABLE>

5.       The INSURER will provide the following services set forth in this
         Section and the services described in any attachment, addendum or
         amendment hereto:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
     ITEM                                 DESCRIPTION
--------------------------------------------------------------------------------
<S>                      <C>
Claims Processing        - Assume cost of implementing and maintaining on-line
and Administrative         connections- The INSURER will be responsible for all
Services                   of its own costs of implementation, including but not
                           limited to payment processes, utilization review and
                           approval processes, connection and line charges, and
                           other costs incurred to implement the payment
                           arrangements for pharmacy claims.
                         - Maintain or improve ratio of paid claims to
                           processed claims- Based on past performance,
                           ADMINISTRATION will develop an acceptable ratio of
                           paid claims to processed claims for which each
                           INSURER will be responsible for maintaining or
                           improving.
                         - Review bi-monthly claim payments summary reports
                           for each payment cycle and approve transfer of funds
                         - Review denials and rejections
                         - Maintain call center- INSURER will operate a
                           customer call center to provide for preauthorization
                           of drugs for drugs for which the INSURER retains
                           risk, according to its policies and the approved
                           formulary.
--------------------------------------------------------------------------------
</TABLE>

                                      75
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
     ITEM                                 DESCRIPTION
--------------------------------------------------------------------------------
<S>                      <C>
                         - Electronically submit a list of all INSURER
                           providers in network and eligible members to PBM
--------------------------------------------------------------------------------
Concurrent Fraud         - Develop tracking mechanisms for fraud and abuse
Investigations             issues
                         - Forward fraud and abuse complaints from members to
                           PBM
--------------------------------------------------------------------------------
Formulary                - Designate and maintain a representative to assist
Management                 on the P&T Committee in developing the official
Program                    formulary.
                         - Submit candidates who are primary care physicians
                           for the Pharmacy and Therapeutic Committee.
                         - Select two (2) representatives of the INSURER to
                           serve on the Central Administrative Committee (CAC),
                           a cross functional committee tasked with rebate
                           maximization. The subcommittee will take
                           recommendations on the PDL from the P&T committee
                           and will update and manage the PDL.
--------------------------------------------------------------------------------
Drug Utilization         - Perform drug utilization review.
Review/Drug              - Develop and distribute protocols, when necessary.
Utilization              - Perform utilization management functions- The
Evaluations                INSURER will perform utilization review that meets
                           the minimum standards of ADMINISTRATION or that may
                           be required by the Medicaid program.
                         - Perform disease management functions- The INSURER
                           will perform disease management that meets the
                           minimum standards of the ADMINISTRATION or that may
                           be required by the Medicaid program.
--------------------------------------------------------------------------------
Reports                  - Meet with PBM to determine the reports that should
                           be the sole responsibility of the PBM, those
                           performed by the INSURER and those that should be
                           duplicated in order to cross check.
--------------------------------------------------------------------------------
</TABLE>

6.       The INSURER will abide and comply with following payment process
         hereby established:

                  a)       The INSURER will pay claims costs. Every two weeks,
                           the PBM will provide the INSURER with the proposed
                           claims listing. The INSURER will promptly review the
                           payment listing.

                  b)       Submit funds for claims payment to zero-balance
                           account. The INSURER will provide funds, wire
                           transfers or otherwise submit payment within two
                           business days to a bank account established for the
                           payment of the claims applicable to each INSURER.

                  c)       Payment failure by INSURER or the establishment of a
                           Medicaid Rebate Program. The following payment
                           process will be implemented if either the INSURER
                           fails to make a timely or correct payment to the
                           established zero-balance account or if the
                           ADMINISTRATION enters into a Medicaid Rebate
                           Program:

                                      76
<PAGE>

                           (i)      The contract amounts paid to the INSURER
                                    will be reduced by the estimated claims
                                    cost for the succeeding month, any deficit
                                    in funds provided versus the cash
                                    requirements for the zero-balance account.
                                    Estimates will be made based on actual
                                    claims experience. After a reasonable
                                    period of time, adjustments will be made to
                                    the monthly withholds for the actual
                                    experience of the prior month(s) versus the
                                    estimated. A final settlement shall be made
                                    within a specified period after the end of
                                    the contract year.

                  d)       Payment of PBM and Collection of Rebates and
                           Discounts: The ADMINISTRATION will collect rebates
                           and provide for the payment of reasonable PBM fees
                           for defined services. The ADMINISTRATION will pay
                           the INSURER seventy five (75%) percent of the net
                           rebates collected; the INSURER will share such
                           rebates with the primary care providers according to
                           their risk.

                  e)       Other Savings: The INSURER, the ADMINISTRATION, and
                           the PBM shall cooperate to identify additional
                           savings opportunities, including special purchasing
                           opportunities, changes in network fees, etc. Payment
                           to the INSURER will be adjusted to provide the
                           ADMINISTRATION for its share of the incremental net
                           savings.

                  f)       Fees per transaction and DUR and Formulary
                           Management fees will be paid by the INSURER.

                                 ARTICLE XXIII
                                    BENEFITS

1.       The INSURER agrees to provide to the enrolled beneficiaries the
         benefits included in Addendum I of this contract. The benefits to be
         provided under the program are divided in three types of coverage: 1)
         the Basic Coverage that includes preventive, medical, hospital,
         surgical, diagnostic tests, clinical laboratory tests, x-rays,
         emergency room, ambulance, maternity and prescription drug services,
         2) Dental Coverage based on the right to choose one of the
         participating dentists from the INSURER's network and 3) the Special
         Coverage that includes benefits for catastrophic conditions, expensive
         procedures and specialized diagnostic tests.

2.       The INSURER may not modify, change, limit, reduce, or otherwise alter
         said benefits nor the agreed terms and conditions for their delivery
         without the express written consent of the ADMINISTRATION.

                                       77
<PAGE>

3.       The coverage for Medicare beneficiaries is established as follows:

                  (a)      Beneficiaries with Part A of Medicare- the INSURER
                           will pay for all services not included in Part A of
                           Medicare, and included in the contract herein. The
                           INSURER will not pay the applicable Part A
                           deductibles and coinsurance.

                  (b)      Beneficiaries with Part A and Part B of Medicare-
                           the INSURER will pay for prescription drugs
                           prescribed by PCP and dental coverage. The INSURER
                           will not cover the payment of the applicable Part A
                           deductibles and coinsurance, but will cover the
                           payment of the applicable Part B deductible and
                           co-insurance.

                  (c)      Access to services contemplated herein will be
                           through a selected HCO. Beneficiaries with Part A
                           can select from the Medicare's providers list, in
                           which case the benefits under this contract would
                           not be covered.

4.       The Medicare beneficiary can select a Part A provider from the
         Medicare Part A providers list, but has to select a HCO for Part B
         services for beneficiaries with Part B services or Part B equivalent
         services for beneficiaries without Part B of Medicare.

                                  ARTICLE XXIV
                               CONVERSION CLAUSE

1.       If during the term of this contract, the insurance coverage for a
         beneficiary terminates because the beneficiary ceases to be eligible
         and is disenrolled, such person has the right to receive a direct
         payment policy from INSURER without submitting evidence of
         eligibility. The direct payment policy will be issued by the INSURER
         without taking into consideration pre-existing conditions or waiting
         periods. The written request for a direct payment policy must be made,
         and the first premium submitted to INSURER on or before thirty-one
         (31) days after the date of disenrollment, bearing in mind that:

         a)       The direct payment policy should be an option of such person,
                  through any of the means which at that date INSURER has
                  currently made available according to the age and benefits
                  requested. It will be subject to the terms and conditions of
                  the direct payment policy.

         b)       The premium for the direct payment policy will be in
                  accordance with the rate then in effect at INSURER,
                  applicable to the form and benefits of the direct payment
                  policy, in accordance with the risk category the person falls
                  in at the moment, and the age reached on the effective date
                  of the direct payment policy. The health condition at the
                  moment of conversion will

                                       78
<PAGE>

                  have no bearing in the eligibility nor will it be an
                  acceptable base for the risk classification.

         c)       The direct payment policy should also provide for coverage to
                  any other individual, if these were considered eligible
                  beneficiaries at the termination date of the health insurance
                  under this contract. Under option by INSURER, a separate
                  direct payment policy may be issued to cover the other
                  individuals who formerly were eligible beneficiaries.

         d)       The direct payment policy will be effective upon termination
                  of coverage under the health insurance contracted.

         e)       INSURER will not be obligated to issue a direct payment
                  policy covering a person who has the right to receive similar
                  services provided by any insurance coverage or under the
                  Medicare Program of the Federal Social Security legislation,
                  as subsequently amended, if such benefits, jointly provided
                  under the direct payment policy, result in an excess of
                  coverage (over insurance), according to the standards of the
                  INSURER.

2.       When coverage under this contract terminates due to the expiration of
         its term, all persons formerly considered eligible beneficiaries, who
         have been insured for a period of three (3) years prior to the
         termination date, will be eligible for a INSURER direct payment
         policy, subject to the conditions and limitations stipulated in clause
         1 of this section.

3.       Subject to the conditions and limitations stipulated in clause 1 of
         this section, the conversion privilege will be granted:

         a)       to all eligible beneficiaries whose coverage under the health
                  insurance contracted is terminated because they cease to be
                  eligible beneficiaries and are disenrolled.

         b)       to any eligible beneficiary whose coverage under the health
                  insurance contracted ceases because he no longer qualifies as
                  an eligible beneficiary, regardless of the fact that the
                  principal subscriber and/or any other eligible beneficiary
                  continues covered by said health insurance coverage under this
                  contract.

4.       In case an eligible beneficiary under this contract suffers a loss
         covered by the direct payment policy, described in clause 1 of this
         section, during the period he/she would have qualified for a direct
         payment policy and before the said direct payment policy is in effect,
         the benefits which he/she would have a right to collect under such
         direct payment policy will be paid as a claim under the direct payment
         policy, subject to having requested the direct payment policy and the
         payment of the first premium.

                                       79
<PAGE>

5.       If any eligible beneficiary under this contract subsequently acquires
         the right to obtain a direct payment policy, under the terms and
         conditions of the INSURER's policies without providing evidence of
         qualifications for such insurance, subject to the request and payment
         of the first premium during the period specified in the policy; and if
         this person is not notified of the existence of this right, at least
         fifteen (15) days prior to the expiration of such period, such person
         will be granted an additional period during which time he/she can
         claim his/her right, none of the above implying the continuation of a
         policy for a period longer than stipulated in said policy. The
         additional period will expire fifteen (15) days after the person is
         notified, but in no case will it be extended beyond sixty (60) days
         after the expiration date of the policy. Written notification handed
         to the person or mailed to the last known address of the person, as
         acknowledged by the policy holder, will be considered as notification,
         for the purposes of this paragraph. If an additional period is granted
         for the right of conversion as hereby provided, and if the written
         application for direct payment, enclosed with the first premium
         payment, is made during the additional period, the effective date of
         the direct payment policy will be the termination of the health
         insurance coverage under this contract.

6.       Subject to the other conditions expressed before, the eligible
         beneficiaries will have the right to conversion, up to one of the
         following dates:

         a)       date of termination of his/her eligibility under this
                  contract; or
         b)       termination date of this contract; or
         c)       date of amendment of this contract, if said amendment in any
                  way eliminates the beneficiaries' eligibility.

                                  ARTICLE XXV
                         TRANSACTIONS WITH THE INSURER

1.       All transactions between the ADMINISTRATION and the INSURER shall be
         handled according to the terms and conditions set forth in this
         contract.

2.       The INSURER shall appoint a person that shall be responsible for all
         transactions with the ADMINISTRATION.

3.       All eligibility transactions shall be coordinated on a daily basis.

                                       80
<PAGE>
                                  ARTICLE XXVI
                             NON-CANCELLATION CLAUSE

The INSURER may not cancel this contract, or make modifications to it for any
reason, or otherwise change, restrict or reduce the insurance or the benefits,
except for nonpayment of premiums.

                                  ARTICLE XXVII
                                 APPLICABLE LAW

The Request for Proposal that originated this contract, the Proposal submitted
by the INSURER, this contract and/or any other document or provision
incorporated to it by reference, shall be interpreted and construed according to
the laws of the Commonwealth of Puerto Rico. If any controversy may arise
regarding the interpretation or performance of this contract, the parties
voluntary submit for its resolution to the jurisdiction of the Superior Court of
the Commonwealth of Puerto Rico, San Juan Part.

                                 ARTICLE XXVIII
                             EFFECTIVE DATE AND TERM

1.       This contract shall be in effect for (3) consecutive twelve months
         periods, starting at 12:01 AM, Puerto Rico time on July 1, 2002, the
         first day that coverage begins and payment of the premium is due.

2.       This contract may not be assigned, transferred or pledged by the
         INSURER without the express written consent of the ADMINISTRATION.

3.       The second and third periods of the contract will require premium
         payment renegotiation by the ADMINISTRATION and the INSURER taking into
         consideration actual claims paid and incurred for The Health
         Area/Region and an assessment of specific trends actuarially based for
         both medical and prescription cost to reach the applicable premiums for
         any subsequent period of time.

4.       In the event an agreement can not be reached on the premium for the
         next period after good faith negotiations by the ADMINISTRATION and the
         INSURER according to the parameters set forth in (3) supra, the
         contract may be terminated if deemed in the best interest of these
         beneficiaries, the ADMINISTRATION and the Government of Puerto Rico.

                                       81
<PAGE>

                                  ARTICLE XXIX
                              CONFLICT OF INTEREST

Any officer, director, employee or agent of the ADMINISTRATION, the Government
of the Commonwealth of Puerto Rico, its municipalities or corporations cannot be
part of this contract or derive any economic benefit that may arise from its
execution.

                                   ARTICLE XXX
                                  INCOME TAXES

The INSURER certifies and guarantees that at the time of execution of this
contract, 1) it is a corporation duly authorized to conduct business in Puerto
Rico and that has filed income tax returns for the previous five (5) years; 2)
that it complied with and paid unemployment insurance tax, disability insurance
tax (Law 139), social security for drivers ("seguro social choferil"), if
applicable); 3) filed State Department reports, during the five (5) years
preceding this contract and 4) that it does not owe any kind of taxes to the
Commonwealth of Puerto Rico.

                                  ARTICLE XXXI
                               ADVANCE DIRECTIVES

The INSURER agrees to enforce and require compliance by all applicable
participating providers with 42 CFR 434, Part 489, Subpart I relating to
maintaining written policies and procedures respecting advance directives. This
requirement includes provisions to inform and distribute written information to
adult individuals concerning policies on advance directives, including a
description of applicable Commonwealth law.

                                  ARTICLE XXXII
                     OWNERSHIP AND THIRD PARTY TRANSACTIONS

The INSURER shall report ownership, control interest, and related information to
the ADMINISTRATION, and upon request, to the Secretary of the Department of
Health and Human Services, the Inspector General of the Department of Health and
Human Services, and the Comptroller General of the United States, in accordance
with Sections 1124 and 1903 (m)(4) of the Federal Social Security Act.

                                 ARTICLE XXXIII
                            MODIFICATION OF CONTRACT

If the ADMINISTRATION finds that, because of amendments to Law 72 of September
7, 1993, or by reason of budget reductions, or subsequent Federal or local
legislative changes that affect this contract, or because of any reasons deemed
by the

                                       82
<PAGE>

ADMINISTRATION to be in the best interest of the Government of Puerto Rico in
carrying out the provisions of Law 72 of September 7, 1993, or in order to
perform experiments and demonstration projects pursuant to legislative
enactment, modification of this contract is necessary, the ADMINISTRATION may
modify any of the requirements, terms and conditions, functions, part thereof or
any other services to be performed by the INSURER. Prior to any such
modification, the ADMINISTRATION shall afford the INSURER an opportunity to
consult and participate in planning for adjustments which might be necessary and
thereafter provide the INSURER written notice that the modification is to be
made within ninety (90) days after a date specified in the notice. Said
modifications will take place after consultation and cost negotiation with the
INSURER.

                                  ARTICLE XXXIV
                            TERMINATION OF AGREEMENT

1.       If the ADMINISTRATION finds, after reasonable notice and opportunity
         for a hearing to the INSURER the INSURER has failed substantially to
         carry out the material terms and conditions of this contract, the
         ADMINISTRATION may terminate this contract at any time, as provided in
         Section 10.1, above.

2.       In the event that there is non-compliance by the INSURER with any
         specific clause of this contract, the ADMINISTRATION will notify the
         INSURER in writing, indicating the area/region(s) of non-compliance.
         The INSURER will be granted the opportunity to present and discuss its
         position regarding the issue within fifteen (15) days from the date of
         the notification. After considering the allegations presented by the
         INSURER following adequate hearing and the opportunity to present all
         necessary evidence in support of its position, and the ADMINISTRATION
         formally determines that there is a non-compliance, at the discretion
         of the ADMINISTRATION, this contract may be cancelled by giving thirty
         (30) days prior written notice before the effective date of
         cancellation.

         In the event that the INSURER does not remedy, correct or cure the
         material deficiencies noted in the Plan Compliance Evaluation Report,
         as provided for in Article XVII of this contract, and following the
         opportunity of an adequate hearing and the presentation of evidence in
         support of its position, and the ADMINISTRATION confirms the
         deficiency, then at the discretion of the ADMINISTRATION this contract
         may be cancelled by giving thirty (30) days prior notice.

         If the INSURER were to be declared insolvent, files for bankruptcy or
         is placed under liquidation, the ADMINISTRATION shall have the option
         to cancel and immediately terminate this contract. In the event of this
         happening an enrollee will not be liable for payments under this
         contract.

                                       83
<PAGE>

         In the event that this contract is terminated, the INSURER shall
         promptly provide the ADMINISTRATION all necessary information for the
         reimbursement of any pending and outstanding Claims. The INSURER hereby
         recognizes that in the event of termination under this Article it shall
         be bound to provide reasonable cooperation to the ADMINISTRATION beyond
         the date of termination in order to properly effect the transition to
         the new INSURER taking over the region covered by this Contract. This
         obligation to reasonably cooperate shall survive the date of said
         effective termination provided, at the ADMINISTRATION' discretion.

         The INSURER agrees and recognizes that in the event there are no
         sufficient enough funds designated for the payment of premium, the
         ADMINISTRATION reserves the right to terminate this contract, effective
         ninety (90) days after prior written notification.

                                  ARTICLE XXXV
                                PHASE-OUT CLAUSE

1.       In the event that the contract is terminated, the INSURER will continue
         to provide services for a reasonable term to guarantee the continuance
         of services until the ADMINISTRATION has made adequate arrangements to
         continue the rendering of health care benefits to beneficiaries in the
         areas affected by the termination. The duration of such transition term
         will not exceed sixty (60) days. Adjustments in the PMPM during the
         transition term shall not be borne or agreed upon by ADMINISTRATION, in
         the event of a termination based on default or breach of contract by
         the INSURER.

2.       Upon the expiration or termination of a contract, the INSURER will
         provide the ADMINISTRATION with the historical/utilization data of
         services rendered to beneficiaries in the area/region in formats
         specified/agreed with the ADMINISTRATION, in order to prevent fraud and
         double billing of services by the incoming INSURER.

3.       Any INSURER phasing out of a Health Region will guarantee payment for
         services rendered to beneficiaries under the previous contract. Failure
         to do so, shall entail in accordance with the fair hearing process
         established on Article XXXIII, the retention of a determined amount of
         premium payment of INSURER's Health Region Contract. The amount to be
         retained shall be sufficient to cover the amount owed.

4.       The INSURER acknowledges that it will collaborate with the
         ADMINISTRATION efforts in any health regions or geographic area in
         transition processes.

5.       If in the best interest of the beneficiaries or the Commonwealth of
         Puerto Rico the ADMINISTRATION terminates any demonstration project,
         the INSURER will assume responsibility for the geographic areas
         (municipalities/regions) managed by any health organization in
         accordance with the contracted premium.

                                       84
<PAGE>

6.       If in the best interest of the beneficiaries or the Commonwealth of
         Puerto Rico the ADMINISTRATION expands the direct contracting
         demonstration project with health care organization, the INSURER will
         assist in the transition process after ninety (90) days of a written
         notification and payments of premiums will be adjusted accordingly.

                                  ARTICLE XXXVI
                             THIRD PARTY DISCLAIMER

None of the obligations, covenants, duties, and responsibilities incurred or
assumed under the present Contract, the Request For Proposal, Proposal, the
representations and assurances provided at the clarification meeting held on
June 11, 2001, by either: (I) the INSURER towards the ADMINISTRATION and any
governmental agencies, or (ii) the ADMINISTRATION towards the INSURER, shall be
deemed as the assumption by the INSURER or the ADMINISTRATION, as the case might
be, of any legal liability or responsibility towards a third party in the event
that a negligent or intentional injury, malpractice, damage or wrongdoing, or
any harm whatsoever is incurred by or caused by the HCO's, the HCO's network of
participating providers and/or the INSURER's participating providers.

                                 ARTICLE XXXVII
                         PENALTIES AND SANCTIONS CLAUSES

1.       In the event that the INSURER does not furnish the ADMINISTRATION with
         any kind of monthly reports related to the gathering and reporting of
         encounter information, the ADMINISTRATION may retain one monthly
         premium for each month in default said retention to be effective for
         the subsequent month after the default. Once the INSURER complies with
         said requirement, the amount retained will be fully paid to the
         INSURER, within five days after receiving the required reports for the
         subsequent month.

2.       In the event that the INSURER does not comply with its obligation
         related to the monthly gathering and accurate reporting of encounter
         information, according to Article XV of this contract, the
         ADMINISTRATION may retain one monthly premium payable to the INSURER
         for each month in default, provided:

         a.       the ADMINISTRATION gives, within ten (10) working days after
                  receipt of the monthly report, written notification by
                  certified mail, or personally hand delivers said notification
                  to the INSURER of the non-compliance and the reasons thereof;
                  and
         b.       the ADMINISTRATION grants ten (10) working days for the
                  INSURER to cure the default; and

                                       85
<PAGE>

         c.       the INSURER fails to correct it within said term.

         Whenever the above events take place, the ADMINISTRATION may retain one
         monthly premium payment for each month in default. Retention will be
         effective ten (10) working days after the notice of non-compliance.
         Once the INSURER corrects the problem, at the satisfaction of the
         ADMINISTRATION and according to Article XV of this contract, the amount
         retained will be fully paid to the INSURER, within five days after
         receiving full and complete reports for the subsequent month.

3.       For the purpose of subparagraphs 1 and 2, above, default is defined as
         the non-compliance by the INSURER of the reporting requirements
         established for the gathering and reporting of encounter information as
         established in Article XV of this contract, or when the INSURER does
         not submit the reports within the established term set in this
         contract.

If the INSURER owes money to the Administration as a result of the imposition of
penalties, excess premiums paid or any other reason, the Administration may
withhold such amount from any payments due related to the same contract or any
other contracts between the parties.

5.       A. Civil Monetary Penalties: In the event that there is a
         non-compliance with Article VI, XII, XVI, XVII and/or with any specific
         clause of this contract or the INSURER engages in any of the following
         practices:

                           (a)      Fails to substantially provide medically
                                    necessary services to enrollees under this
                                    contract;
                           (b)      imposes on enrollees premiums and charges in
                                    excess of the ones permitted under this
                                    contract;
                           (c)      discriminates among enrollees on the basis
                                    of their health status or requirements for
                                    health care (such as terminating an
                                    enrollment or refusing to reenroll) except
                                    as permitted under the Program or engages in
                                    practices to discourage enrollment by
                                    recipients whose medical condition or
                                    history indicates need for substantial
                                    medical services;
                           (d)      misrepresents or falsifies information that
                                    is furnished to CMS, to the ADMINISTRATION,
                                    to an enrollee, potential enrollee or
                                    provider of services;
                           (e)      distributes, directly or indirectly through
                                    any agent, independent contractor, marketing
                                    material not approved by the ADMINISTRATION,
                                    or that contains false or misleading
                                    information;
                           (f)      Fails to comply with the requirements for
                                    physician incentive plans in section 1876
                                    (i) (8) of the Social Security Act, and at
                                    42 CFR 417.479, or fails to submit to the
                                    ADMINISTRATION its physician incentive plans
                                    as requested in 42 CFR 434.70

                                       86
<PAGE>

         The ADMINISTRATION will notify the INSURER in writing, the findings of
         the violation and the impending intention to impose intermediate
         sanctions for each violation which could consist of: monetary penalties
         at the discretion of the Administration may range from five hundred
         dollars $500 to twenty five thousand dollars $25,000; or the resolution
         of the contract and temporary management; suspension, and/or
         with-holding of premium payments, which may range from a percent
         amount, or more than one monthly premium payments. The imposition of
         sanctions will depend on the extent and severity of the actions.

         At the sole discretion of the ADMINISTRATION and after affording the
         INSURER due process to submit a corrective action as established in
         paragraph (B), below, the ADMINISTRATION will deduct any amount it may
         deem adequate from the premium payments or any other administrative
         items of said payments.

         The Office of the Inspector General may impose civil money penalties of
         up to $25,000.00 in addition to, or in lieu of each determination by
         the ADMINISTRATION, or CMS, for non-compliance conduct as set forth on
         subparagraphs (a) through (f).

The Secretary of the Department of Health and Human Services may seek the
enforcement of felony charges, for violation regarding subparagraph (b), above.

         B.       The INSURER will have the right to present and discuss its
                  position regarding the ADMINISTRATION'S finding within
                  thirty (30) days from the receipt of the notification. After
                  such period expires the Administration will issue its decision
                  regarding the contemplated sanctions which could be (i) let
                  stand the initial determination, (ii) modify the sanction or
                  (iii) eliminate the sanction if the Insurer has taken
                  affirmative corrective actions. Upon notifying the INSURER of
                  the final decision, if in disagreement, the INSURER will have
                  (30) days to request a hearing before the Administration. Upon
                  the expiration of the thirty (30) days without invoking a
                  formal hearing, or after the celebration of a hearing and
                  after issuance of findings and recommendations of the hearing
                  examiner, the decision will then become final, subject to the
                  appeal process provided in section 12, Art. VI of Law 72,
                  September 7, 1993, as amended.

         C.       The ADMINISTRATION, shall appoint temporary management only if
                  it finds that the INSURER has egregiously or repeatedly
                  engaged in any of the stated practices on paragraph (A) of
                  this article; or places a substantial risk on the health of
                  enrollees; or there is a need to assure the health of an
                  organization's enrollees during an orderly termination,
                  reorganization of the Insurer or while improvements are being
                  made to correct violations. The temporary management may not
                  be removed until the INSURER assures the ADMINISTRATION that
                  the violations will not recur.

                                       87
<PAGE>

6.       If a contractor is found to be in non-compliance with the provisions on
         ARTICLE VII concerning affiliation with debarred or suspended
         individuals, the ADMINISTRATION:

                           a)       Shall notify the Secretary of
                                    non-compliance;

                           b)       May continue the existing contract with the
                                    Insurer, unless the Secretary (in
                                    consultation with the Inspector General of
                                    the Department of Health Services directs
                                    otherwise); and,

                           c)       May not review or otherwise extend the
                                    duration of an existing contract with the
                                    INSURER unless the Secretary (in
                                    consultation with the Inspector General of
                                    the DHHS) provides to the ADMINISTRATION and
                                    to Congress a written statement describing
                                    compelling reasons that exist for renewing
                                    or extending the contract.

7.       Notwithstanding the provisions set in this Article, the ADMINISTRATION
         reserves the right to terminate this contract, as established in
         Article XXXIII.

                                 ARTICLE XXXVIII
                              HOLD HARMLESS CLAUSE

1.       The INSURER warrants and agrees to indemnify and save harmless the
         ADMINISTRATION from and against any loss or expense by reason of any
         liability imposed by law upon the ADMINISTRATION and from and against
         claims against the ADMINISTRATION for damages because of bodily
         injuries, including death, at any time resulting therefrom, accidents
         sustained by any person or persons on account of damage to property
         arising out of or in consequence of the performance of this contract,
         whether such injuries to persons or damage to property are due or
         claimed to be due to any negligence of the INSURER, the INSURER's
         participating providers, the HCO's, the HCO's network of participating
         providers, their agents, servants, or employees or of any other person.

2.       The INSURER warrants and agrees to purchase insurance coverage to
         include Contractual Liability Coverage incorporating the obligations
         herein assumed by the INSURER with limits of liability which shall not
         be less than one (1) million dollars with said insurance coverage
         providing for the INSURER's obligation and the insurance company of
         INSURER to defend and appear on behalf of the ADMINISTRATION in any and
         all claims or suits which may be brought against the ADMINISTRATION on
         account of the obligations herein assumed by the INSURER.

                                       88
<PAGE>

                                  ARTICLE XXXIX
               CENTERS FOR MEDICARE AND MEDICAID SERVICES CONTRACT
                                  REQUIREMENTS

The ADMINISTRATION and INSURER agree and recognize that guidance and directives
from the Centers for Medicare and Medicaid Services (CMS) are incorporated in
contracts subject to its approval, such as the present one, and that they
constitute binding obligations on the part of the INSURER.

                                   ARTICLE XL
                                  FORCE MAJEURE

Whenever a period of time is herein prescribed for action to be taken by the
INSURER, the INSURER shall not be liable or responsible for, and there shall be
excluded from the computation for any such period of time, any delays due to
strikes, acts of God, shortages of labor or materials, war, terrorism,
governmental laws, regulations or restrictions or any other causes of any kind
whatsoever which are beyond the control of the INSURER.

                                  ARTICLE XLI
                                YEAR 2000 CLAUSE

The parties hereby assure that all hardware and software that it uses with
respect to this Agreement are Year 2000 Compliant in accordance to CMS's Year
Compliance definitions as stated in the RFP. The Parties acknowledge that this
provision is an essential condition to this Agreement.

                                  ARTICLE XLII
                           FEDERAL GOVERNMENT APPROVAL

1.       Inasmuch as it is a requirement that the Centers for Medicare and
         Medicaid Services (CMS) approves this contract in order to authorize
         the use of federal funds to finance the health insurance contracted,
         the same may be subject to modifications in order to incorporate or
         modify the terms and conditions of this contract.

2.       Any provision of this contract which is in conflict with any Federal
         Laws, Federal Medicaid Statutes, Health Insurance Portability and
         Accountability Act, Federal Regulations, or CMS policy guidance, as
         applicable, is hereby amended to conform to the provisions of those
         laws, regulations, and Federal policy. Such amendment of the contract
         will be effective on the effective date of the statutes or regulations
         necessitating it, and will be binding on the parties even though such
         amendment may not have been reduced to writing and formally agreed upon
         and executed by the parties.

                                       89
<PAGE>

                                  ARTICLE XLIII
                          ACKNOWLEDGMENT AS TO INSURER

1.       All responsibilities, obligations, assurances and representations,
         made, taken, and assumed by the INSURER under this contract will be
         fully, solely, and entirely assumed by the INSURER. Notwithstanding,
         the ADMINISTRATION acknowledges that Triple-C will carry out the
         responsibilities as to the administration and operational management of
         the Health Insurance subject of this contract and that its officers are
         authorized to represent Triple-S, Inc. in matters related to be carried
         out.

2.       The ADMINISTRATION acknowledges that the INSURER is in a corporate
         reorganizational process. The INSURER will notify the ADMINISTRATION
         the date when the reorganizational process is completed. The INSURER
         represents that the reorganizational process shall not constituted an
         assignment of this Contract.

                                  ARTICLE XLIV
                                ENTIRE AGREEMENT

The parties agree that they accept, consent and promise to abide by each and
every one of the clauses contained in this contract and that the contract
contains the entire agreement between the parties. In order to acknowledge so,
they initial the margin of each of the pages and affix below their respective
signatures, in San Juan, Puerto Rico, this 13 day of June 2002.

PUERTO RICO HEALTH INSURANCE                 TRIPLE-S
ADMINISTRATION

by                                           by

/s/ Orlando Gonzalez Rivera                  /s/ Socorro Rivas
-------------------------------------        ----------------------------------
ORLANDO GONZALEZ RIVERA                      SOCORRO RIVAS

                                             TRIPLE-C

                                             /s/ Luis A. Marini
                                             ----------------------------------
                                             LUIS A. MARINI

                                       90

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}]]