SECTION 1307 LOAN AGREEMENT

      THIS AGREEMENT, made and entered into as of the ___ day of July, 1998, by
and between LIPH, LLC, a limited liability company duly created, organized, and
existing under and by virtue of the Laws of the State of New York and having its
principal office at One Huntington Quadrangle, Suite 4C01, Melville, New York,
11747 (hereinafter referred to as "Lender"), and MDNY HEALTHCARE, INC., a
corporation duly created, organized, and existing under and by virtue of the
Laws of the State of New York and having its principal office at One Huntington
Quadrangle, Suite 4C01, Melville, New York 11747 (hereinafter referred to as
"Borrower").

                              W I T N E S S E T H:

      WHEREAS, Borrower desires to borrow the sum of $1.0 million and Lender is
willing to lend said sum to Borrower upon the terms, provisions and conditions
hereinafter set forth; and

      WHEREAS, the Insurance Law of the State of New York, Section 1307
(Contingent liability for borrowings) provides that a domestic insurer or health
maintenance organization may, without pledging any of its assets, borrow funds
pursuant to said Section 1307 upon the approval of the Superintendent of
Insurance of the State of New York.

      NOW THEREFORE, in consideration of the premiums and for other good and
valuable consideration, and intending to be legally bound hereby, Lender and
Borrower agree as follows:

      1. Upon approval of this Agreement by the Superintendent of Insurance of
the State of New York, Pursuant to Section 1307 of the New York Insurance Law,
Lender agrees to lend to Borrower, and Borrower agrees to borrow from Lender,
the sum of ONE MILLION DOLLAWS ($1,000,000) (THE "Loan"). Upon receipt of such
approval, Lender shall promptly disburse the full amount of the Loan to Borrower
in good and immediately available funds.

<PAGE>

      2. Interest shall accrue on the principal amount of the Loan at a per
annum rate equal to the Prime Rate (as defined in this Section 2) in effect on
the date hereof, adjusted as of each Interest Payment Date (as defined below in
Section 3), until the Loan has been repaid in full. "Prime Rate" means the rate
of interest publicly announced by Citibank N.A., New York, New York, or any
successor to such bank, as its prime rate from time to time. Notwithstanding the
foregoing, the per annum rate of interest on the Loan shall at no time exceed
that rate then permitted pursuant to the provisions of Section 5-501 of the
General Obligations Law of the State of New York and as further defined in
Section 14-a of the Regulations of the Department of Banking of the State of New
York, as amended.

      3. Accrued interest on the principal amount of the Loan shall be due and
payable to Lender on the first day of each calendar quarter, commencing with the
calendar quarter beginning on October 1, 1998 (each, an "Interest Payment
Date"), and the principal amount of the Loan shall be repaid to Lender in a lump
sum of July 1, 1999; provided, however, that in no event shall any principal or
interest payment in respect of the Loan be made except in accordance with the
provisions of Sections 4 and 6 hereof; and provided, further, that no default in
respect of the Loan shall have occurred or be deemed to have occurred if any
principal or interest payment that would otherwise be due and payable is not
made by reason of the provision of Sections 4 and 6 hereof.

      4. Notwithstanding anything to the contrary contained herein, repayment of
the principal of, and payment of accrued interest on, the Loan shall only be
made out of free and divisible surplus of the Borrower and all such amounts to
be paid or repaid will be subject to the prior approval of the Superintendent of
Insurance of the State of New York.

      5. The Loan made pursuant to this Agreement shall not form a part of the
Borrower's legal liabilities and shall not be a basis of any setoff, but, until
repaid, all statements published or filed with the Superintendent of Insurance
of the State of New York by Borrower shall show, as a footnote thereto, the
amount thereof then remaining unpaid.

      6. In the event of the liquidation of the Borrower, repayment of any
outstanding principal balance of the Loan and payment of any accrued and unpaid
interest then due and owing shall be paid to Lender out of any assets remaining
after the payment of all policy obligations and all other liabilities of the
Borrower but before distribution of assets to shareholders.

<PAGE>

      7. All payments of principal and interest payable by Borrower in respect
of the Loan shall be made to Lender at its offices at One Huntington Quadrangle,
Suite 4C01, Melville, New York 11747, or as otherwise directed by Lender in
writing. All interest payments shall be computed on the basis of a year of 365
days, in each case for the actual days elapsed (including the first day but
excluding the last) occurring in the period for which such interest is payable.
All payments in respect of the Loan shall be made in such coin or currency of
the United States as at the time of payment shall be legal tender for the
payment of public and private debts.

      8. This Agreement, and all of the comments and conditions hereinabove
contained, shall be binding upon and inure to the benefit of Lender and Borrower
and their respective successors, or assigns, and on request of Lender, Borrower
shall furnish to Lender such note, loan certificate, or other evidence of this
indebtedness, as Lender may request.

      9. This Agreement, and the rights and obligations of the parties
hereunder, shall be construed in accordance with, and governed by, the
provisions of Section 1307 of the New York Insurance Law.


<PAGE>


      IN WITNESS WHEREOF, the parties hereto have caused these premiums to be
executed by their proper corporation officers as of the day and year first above
written.



BORROWER:



ATTEST:

/s/                                          By: /s/
------------------------------------             -------------------------------
      Secretary                                     President
                                                    Board of Director MDNY



LENDER:



ATTEST:


/s/                                          By: /s/
------------------------------------             -------------------------------
    Secretary                                         President
    Treasurer, LIPH


<PAGE>

                    AMENDMENT TO SECTION 1307 LOAN AGREEMENT


      THIS AGREEMENT, made and entered into this _ day of April, 1999, by and
between LIPH, LLC, a limited liability company duly created, organized and
existing under and by virtue of the Laws of the State of New York and having its
principal office at One Huntington Quadrangle, Suite 4C01, Melville, New York
(hereinafter referred to "Lender"), and MDNY HEALTHCARE, INC., a corporation
duly created, organized, and existing under and by virtue of the Laws of the
State of New York and having its principal office at One Huntington Quadrangle,
Suite 4C01, Melville, New York 11747 (hereinafter referred to as "Borrower"),
amends a certain prior agreement, made and entered into on or about July 9, 1998
between the parties, by which the Lender, in accordance with the terms of
section 1307 of the Insurance Law, loaned to the Borrower the sum of $1.0
million.

                              W I T N E S S E T H:

      WHEREAS, the prior agreement, in accordance with the terms of section 1307
of the Insurance Law, required Borrower to repay Lender principal and interest
on the loan out of free and divisible surplus of the Borrower at rates of
interest specified in the prior agreement, subject to the prior approval of the
Superintendent of Insurance of the State of New York; and

      WHEREAS, no payments have been made and the amount owed has been properly
recorded on Borrower's financial statements and required financial filings; and

      WHEREAS, the parties have agreed that it would be in their mutual best
interest to include a provision of the loan that would permit the loan to be
converted to equity.

      NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, and intending to be legally bound hereby, Lender and
Borrower agree as follows:

      1. Upon approval of the Agreement by the Superintendent of Insurance of
the State of New York, if such approval is necessary, the prior agreement is
amended to provide that the Lender shall have the unilateral right to convert
all or a portion of the above-described loan to an equity investment in Borrower
at any time while at least some principal and interest have remain unpaid.

<PAGE>

      2. In the event that Lender exercises the option to convert all or a
portion of the loan (including outstanding principal and interest) to equity,
the Borrower shall issue to Lender in Class A shares of Borrower an amount of
shares equal to the amount so converted. The valuation of the shares shall be
undertaken by the Board of Borrower, upon advice from an investment advisor, to
provide the Lender with the appropriate number of shares representing the value
of the converted principal and interest, calculated as of the date of the loan.

      3. In the event that any principal or interest has been repaid by the time
that the Lender exercises this option, the amount of any shares issued to Lender
will be reduced by such payments. In the event that only a portion of the
outstanding principal and interest has been converted by Lender, the amount of
any shares issued to Lender will correspond to the amount so converted.

      4. This Amendment to the prior agreement and the rights and obligations of
the parties hereunder, shall continue to be construed in accordance with, and
governed by, the provisions of Section 1307 of the New York Insurance Law and
other applicable provisions of Law.


<PAGE>


      IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed by their proper corporate officers as of the day and year first above
written.


BORROWER:


ATTEST:


/s/                                          By: /s/
------------------------------------             -------------------------------
       Secretary                                        President




LENDER:



ATTEST:


/s/                                          By: /s/
------------------------------------             -------------------------------
      Secretary                                         President