HEALTHCARE INTEGRATED SERVICES, INC.
                                          Shrewsbury Executive Center II
                                                 1040 Broad Street
                                               Shrewsbury, NJ 07702

                                                          September 26, 2000

MedicalEdge Technologies, Inc.
18 West 18th Street
10th floor
New York, NY 10011

                                    Re:  Proposed Merger

Gentlemen:

         This  letter  confirms  the  understanding  of  HealthCare   Integrated
Services,  Inc., a Delaware corporation  ("HII"), and MedicalEdge  Technologies,
Inc., a Delaware  corporation  ("ME"), with respect to the proposed merger of ME
and a wholly-owned subsidiary of HII (the "Merger").

         This letter  contains only a general summary of the terms of the Merger
and,  except as  expressly  provided in Sections 4, 5, 6, 7, 8, 9, 10, 12 and 14
below, is not intended to be a binding  agreement or an agreement to agree.  The
definitive  terms  of the  Merger  will be  contained  in a formal  and  binding
agreement  and plan of merger  between ME and a  wholly-owned  subsidiary of HII
(the "Merger Agreement"), which  will contain such representations, warranties,
covenants,  indemnifications  and  other  provisions  as are  acceptable  to the
parties in their sole discretion.

         1.   Structure of the Transaction.  The terms of the proposed
              transaction are as follows:

                  (a)  Merger.   At  the  effective  time  of  the  Merger  (the
"Effective Time"), ME will merge with and into a wholly-owned  subsidiary of HII
("Newco"),  with ME surviving the Merger.  At the Effective  Time, all ownership
interests in ME then issued and outstanding  will be converted into the right to
receive shares of HII common stock.  The number of shares of HII common stock to
be issued to the ME owners in the Merger will equal,  in the  aggregate,  72% of
the issued and  outstanding  shares of HII common  stock  immediately  after the
Merger  (on  a  fully-diluted  basis,  including,   without  limitation,   those
securities described in Section 3(b) below. The Merger is intended to qualify as
a tax-free  reorganization  under the Internal  Revenue Code of 1986, as amended
(the "Code").

     (b) Transaction  Steps. The parties anticipate the transaction will involve
the following principal steps:


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(i)   Negotiation of Merger Agreement.  Promptly after the execution of this
letter, the parties will negotiate the terms of the Merger Agreement.

(ii) Due  Diligence  Investigation.  During  the  period  that the  parties  are
negotiating the terms of the Merger Agreement,  in accordance with Sections 4, 5
and 10 below,  the parties will undertake due diligence  investigations  of each
other.

 (iii)    Preparation of Proxy Statement/Prospectus.  Following the execution
 of the Merger Agreement,  HII will prepare, with the assistance of ME,
a proxy  statement/prospectus  on Form S-4 to be filed with the  Securities  and
Exchange Commission in order to (A) solicit the approval of the HII stockholders
to the Merger,  (B) solicit the approval of the HII  stockholders to the sale of
the  Diagnostic  Imaging  Business,  as described in clause (iv) below,  and (C)
register  the offer and sale of the shares of HII common  stock to the ME owners
in the Merger.  Such proxy  statement/prospectus  also may  solicit  stockholder
approval of the issuance of  securities  by HII prior to the  Effective  Time in
connection with the Beran acquisition consummated in October 1998 and the Jersey
Integrated  merger  (substantially  in accordance with the term  sheet/letter of
intent attached hereto as Exhibits A-1 and A-2), to the extent that  stockholder
approval of such matters has not previously been obtained.

(iv) Disposition of Diagnostic  Imaging  Business.  Prior to the Effective Time,
HII will  dispose of  (including,  without  limitation,  by way of  spin-off  or
otherwise)  the  assets  and  liabilities  relating  to its  diagnostic  imaging
operations (the "Diagnostic Imaging Business"),  including,  without limitation,
its membership interests in HIS Imaging LLC and Atlantic Imaging Group, LLC, all
on terms and  conditions  subject  to the prior  written  approval  of ME (which
approval shall not be  unreasonably  withheld or delayed,  i.e., ME shall inform
HII within three  business days of its receipt of the terms and conditions if it
approves or rejects such terms and conditions,  in whole or in part). Subsequent
to the divestiture, HII will not be a guarantor or have any other liabilities or
obligations with respect to the Diagnostic Imaging Business,  other than minimal
transitional  agreements relating to administrative  services and certain common
insurance  and  benefit  plans.  HII will use its  reasonable  best  efforts  to
periodically update ME as to its negotiations with respect to the disposition of
the Diagnostic  Imaging  Business and provide ME with a copy of any documents it
may execute in connection therewith.

(v) Merger.  At the Effective  Time, ME will merge with and into Newco,  with ME
surviving the Merger,  and the ME owners will receive those shares of HII common
stock  described in Section 1 above.  Concurrently  with the Effective Time, HII
will  change  its  name  to  "MedicalEdge  Technologies,  Inc."  Notwithstanding
anything contained herein to the contrary, in its discretion, but subject to the
prior written approval of ME, (which approval shall not be unreasonably withheld
or delayed,  i.e., ME shall inform HII within three business days of its receipt
of the terms and conditions if it approves or rejects such terms and conditions,
in whole or




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in part) HII may  restructure  the  transaction  prior to the Effective  Time by
effecting  a  spin-off  in a  public  distribution  of  its  physician  practice
management  operations  and ME would  then  merge  with and into such new public
entity, or, in the alternative, a spin-off of its imaging operations.

         2.       Additional Agreements.

                  (a) HII  Stock  Options.  Immediately  prior to the  Effective
Time,  all  outstanding  options  to  purchase  shares  of  common  stock of HII
(including  all  stock  options  held by  directors,  officers,  employees,  and
consultants of HII) shall become vested and immediately exercisable.

                  (b) Lock-Up  Agreement.  Except as  contemplated by the Jersey
Integrated merger agreements,  the shares of HII common stock held by Elliott H.
Vernon,  Manmohan  Patel,  the other  directors  and  executive  officers of HII
immediately prior to the Effective Time, and Jersey  Integrated  HealthPractice,
Inc.,  and each of their  affiliates,  and the shares of HII common  stock to be
issued to the ME owners in the Merger  will be subject  to a  six-month  lock-up
from the Effective Time to be described in the Merger Agreement.

                  (c) Voting  Commitment.  Concurrent  with the execution of the
Merger  Agreement,  Elliott  H.  Vernon  and  Manmohan  Patel will enter into an
agreement  with ME pursuant to which they will agree to vote all of their shares
of the  common  stock of HII in favor of the  transactions  contemplated  by the
Merger Agreement.

         3.       Closing Conditions.

                  (a)  The  obligation  of  HII  and  Newco  to  consummate  the
transactions  contemplated by the Merger  Agreement will be subject to customary
conditions including the following: (i) the receipt by HII of an opinion from an
investment banking firm to the effect that the Merger and the disposition of the
Diagnostic Imaging Business is fair to HII and its stockholders from a financial
point of view, (ii) the receipt of approval of the Merger and the disposition of
the Diagnostic  Imaging Business from HII stockholders  owning a majority of the
issued and outstanding shares of HII common stock, and (iii) no material adverse
change in the business or prospects (financial, market or otherwise) of ME shall
have occurred between the execution of this letter and the Effective Time.

                  (b)  The  obligation  of ME  to  consummate  the  transactions
contemplated  by the Merger  Agreement  will be subject to customary  conditions
including  the  following:  (i) no material  adverse  change in the  business or
prospects  (financial,  market or otherwise) of HII shall have occurred  between
the  execution of this letter and the  Effective  Time,  and after the effective
date of this letter HII shall not issue any  additional  securities or engage in
any equity financing without




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the prior written  approval of ME (except (A) in connection with the exercise of
currently outstanding options,  warrants or convertible preferred stock, (B) for
options to certain officers, directors,  employees and consultants in connection
with HII's  operations  after the  Effective  Time and (C)  except as  otherwise
contemplated by Sections 8 and 12 below),  (ii) the listing of the shares of HII
common stock to be issued to the ME owners in the Merger on The  American  Stock
Exchange,  (iii) the  receipt of an opinion of counsel to ME to the effect  that
the Merger qualifies as a tax-free  reorganization under the Code, (iv) the only
class of  outstanding  stock of HII at the  Effective  Time  being  the class of
common  stock of HII  issued  to ME in the  Merger  (other  than the  shares  of
preferred stock to be issued in the Jersey Integrated merger),  (v) all of HII's
stockholders  (other than ME) shall hold in the  aggregate 28% of the issued and
outstanding  shares of HII  common  stock  immediately  after the  Merger  (on a
fully-diluted  basis),  including  those  securities  issued in accordance  with
clause (i) above, and (vi) HII will have at least $500,000 in cash.

         4. Due  Diligence  Investigation  by HII.

     From the execution of this letter and pending the execution and delivery of
the Merger Agreement (but subject to the execution by HII of the Confidentiality
Agreement  described in Section 10 below),  HII will be permitted to make a full
and complete  investigation  of the business and  condition of ME. In connection
therewith, it is understood that, pending the execution of the Merger Agreement,
HII and its directors,  officers, employees, agents, attorneys,  accountants and
other  representatives  (upon reasonable prior notice and during normal business
hours) will have full access to the employees and  financial,  legal (subject to
legal privilege) and other representatives of ME with knowledge of ME's business
and  operations  (which persons will be instructed by ME to make full and candid
disclosure   (subject  to  legal   privilege)  of  all  information   reasonably
requested),  and to the books,  records and properties relating to ME's business
and operations.  HII will use its best efforts not to unreasonably  disrupt ME's
operations or impinge upon the time of ME's employees.

         5. Due Diligence Investigation by ME.

     From the execution of this letter and pending the execution and delivery of
the Merger  Agreement  (but  subject  to the  execution  of the  Confidentiality
Agreement by ME  described in Section 10 below),  ME will be permitted to make a
full and  complete  investigation  of the  business  and  condition  of HII.  In
connection therewith, it is understood that, pending the execution of the Merger
Agreement,  ME  and  its  directors,  officers,  employees,  agents,  attorneys,
accountants and other  representatives  (upon reasonable prior notice and during
normal  business  hours) will have full access to the employees  and  financial,
legal  (subject  to  legal  privilege)  and  other  representatives  of HII with
knowledge of HII's business and operations  (which persons will be instructed by
HII to make full and  candid  disclosure  (subject  to legal  privilege)  of all
information  reasonably  requested),  and to the books,  records and  properties
relating to HII's business and  operations.  ME will use its best efforts not to
unreasonably  disrupt  HII's  operations  or  impinge  upon  the  time of  HII's
employees.

        6. Fees and Expenses.

Except as expressly provided in Section 9 below, each party



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will pay their own costs and expenses,  including  accounting and legal fees and
any brokerage  fees,  commissions  or finder's  fees incurred by such party,  in
connection  with the  Merger  and the other  transactions  contemplated  by this
letter (without any right of  reimbursement  from the other party and regardless
of  whether  or not the Merger is  consummated).  Each party (the  "Indemnifying
Party") will  indemnify and hold the other party hereto  harmless from any loss,
liability or expense (including, without limitation, reasonable attorney's fees)
arising  from any claims made by any broker or finder  engaged (or who claims it
was engaged) by the Indemnifying Party.

         7.  Public  Announcements.

     Each  party  agrees  not to issue  any  press  release  or make  any  other
statement (whether to its employees or otherwise,  except as contemplated by the
Confidentiality  Agreement)  or  disclosure  with respect to this letter and the
transactions contemplated hereby without obtaining the prior written approval of
the other party hereto  (which  approval  shall not be  unreasonably  withheld).
Nothing contained herein shall prevent any party at any time from furnishing any
required information to any governmental agency or authority or from issuing any
press release or making any other  statement or disclosure  with respect to this
letter and the transactions contemplated hereby (after consulting with the other
parties hereto) if required by law or the requirements of any regulatory agency.

         8.       Exclusive Dealing.

                  From the  execution  of this letter and pending the  execution
and delivery of the Merger  Agreement  (but in any event  expiring 30 days after
the execution of this letter),  each of HII (other than as contemplated  hereby)
and ME (other than as contemplated hereby) agrees that it: (a) shall conduct its
business  diligently,  in good  faith and in the  ordinary  course  of  business
consistent with prior  practice;  (b) shall not issue or sell, or agree to issue
or sell, any of its securities or options,  warrants or other rights to purchase
such  securities,  except under its employee  benefit  plans or otherwise to its
directors,  officers,  employees and  consultants,  and except for shares issued
upon exercise of options,  warrants and other convertible  securities  currently
outstanding;  (c)  shall  not  enter  into any  agreement  (written  or oral) or
transaction  (i)  not  in  the  ordinary  course  of  business,  (ii)  involving
consideration  in excess of  $50,000  (other  than  inventory  acquisitions  and
dispositions  in the ordinary  course) or (iii) for the sale or  acquisition  or
lease of any material assets.

                  In addition, from the execution of this letter and pending the
execution  and delivery of the Merger  Agreement  (but in any event  expiring 30
days after the execution of this  letter),  each of HII (other than with respect
to the  Diagnostic  Imaging  Business)  and ME agrees that it will not (and will
exert  reasonable  efforts to insure that its  directors,  officers,  employees,
representatives,  agents or  stockholders  will not),  directly  or  indirectly,
solicit or initiate any  discussions or  negotiations  with,  participate in any
negotiations  with,  provide any  information  to or otherwise  cooperate in any
other way with,  or  facilitate  or  encourage  any  effort or  attempt  by, any
corporation,  partnership, person or other entity or group, other than the other
party hereto




<PAGE>



and its directors,  officers, employees,  representatives and agents, concerning
any  merger,  sale of  substantial  assets,  sale of shares of capital  stock or
similar  transaction  involving such party.  Such party will promptly advise the
other  party of any  proposal  or  inquiry  made to it or any of its  directors,
officers, employees, representatives, agents or stockholders with respect to any
of the foregoing transactions.

                  Notwithstanding the foregoing,  nothing contained herein shall
preclude  any actions  that may be taken by HII,  subject to the approval of ME,
not to be unreasonably withheld or delayed, in respect of (i) its acquisition of
Jersey Integrated HealthPractice, Inc. in the manner set forth in Paragraph 1(b)
above;  (ii) the  offer  and sale of HII  securities  to the  Aries  Fund or any
affiliate  thereof,  substantially  in accordance  with the term sheet  attached
hereto as  Exhibit  B, or  another  financing  source  on terms  and  conditions
reasonably acceptable to ME; and (iii) the disposition of the Diagnostic Imaging
Business, in the manner set forth in Paragraph 1(b) above.

         9. Loan.

     HII agrees to loan (the "Loan") $500,000 to International Commerce Exchange
Systems, Inc. ("ICES") upon execution of this letter. The Loan will be evidenced
by a promissory  note of ICES to HII, which note will bear interest at the prime
rate  charged by  Citibank,  N.A. on the date of the  execution  of this letter.
Subject to the  proviso at the end of this  sentence,  the  proceeds of the Loan
will be used for the  development  of the business,  products and services to be
operated/owned/provided  by the surviving  company  after the Merger;  provided,
however,  that to the extent that any such proceeds are expended on behalf of or
are otherwise advanced,  distributed or disbursed to any affiliate of ME or ICES
(other than ME) or any securityholder of ME, ICES or any such affiliate then, no
later than and as a condition  to  consummation  of the  Merger,  all such funds
shall be paid to ME, such that upon the Effective  Time ME has all such funds in
its accounts. The outstanding principal and accrued interest of the Loan will be
payable in full in cash on or prior to the earlier of (i) the 30th day after the
Effective  Time and (ii) the  180th  day after  the  execution  of this  letter;
provided that if the Merger has not been consummated prior to such 180th day and
(A) ME is using  its  reasonable  efforts  in good  faith to  close  the  Merger
Agreement,  and (B) the Merger is not  consummated  as a consequence  of (x) HII
deciding not to proceed with a  transaction  based  substantially  upon the same
terms,  conditions and purchase price contemplated herein, (y) HII breaching the
provisions of this letter or of the Merger Agreement,  or (z) HII failing to use
its  reasonable  efforts  in good  faith to  negotiate  the terms of the  Merger
Agreement,  then in lieu of repayment of such principal and accrued  interest in
cash,  HII shall be issued shares (the "ICES Shares") of class A common stock of
ICES having an aggregate  value equal to such repayment  amount based on an ICES
pre-money  fixed valuation of $500 million.  In addition,  if the Merger has not
been  consummated  prior to the 180th day after the execution of this letter and
(A) HII is using  its  reasonable  efforts  in good  faith to close  the  Merger
Agreement,  and (B) the Merger is not  consummated  as a  consequence  of (x) ME
deciding not to proceed with a  transaction  based  substantially  upon the same
terms,  conditions and purchase price contemplated  herein, (y) ME breaching the
provisions of this letter or of the Merger  Agreement,  or (z) ME failing to use
its reasonable efforts in good faith to




<PAGE>



negotiate the terms of the Merger  Agreement,  including  failing to include the
put  provisions  described in Section 13 below,  then on such date (1) HII shall
have the option, upon written notice to ICES, to receive either repayment of the
Loan in full in cash or the ICES Shares at the valuation set forth above and (2)
ME shall reimburse HII its actual out-of-pocket  expenses incurred in connection
with the Merger, up to an aggregate of $200,000, of which up to $100,000 of such
reimbursement  shall  consist of cash and up to $100,000  shall  consist of ICES
Shares at the valuation set forth above.

                  HII shall be entitled to such  piggyback  registration  rights
with respect to the ICES Shares that have been granted by ICES to any  purchaser
of ICES class A common  stock as of the date  hereof,  or as are  granted to any
purchaser of ICES class A common stock from the date hereof  through the date of
issuance  of  the  ICES  Shares,  subject  to  customary  underwriter  cutbacks,
including the priority of holders of demand  registration rights and significant
stockholders of ICES.

     10.  Confidentiality.

     The  parties  agree  to  execute,  and  be  bound  by  the  terms  of,  the
Confidentiality   Agreement   in  the  form   attached   to  this   letter  (the
"Confidentiality Agreement"). Any termination or expiration of this letter shall
not affect the parties' obligations under such Confidentiality Agreement.

         11.  Voting  Agreement.

     Subject to the provisions of the Jersey Integrated merger agreements, it is
understood that as a condition to the Merger Agreement for at least (i) one year
from the  Effective  Time,  the  post-merger  Board of  Directors of HII and the
surviving  company  shall  consist  of seven  directors,  four of whom  shall be
designated  by ME and  three of whom  shall be  designated  by HII  prior to the
Effective  Time and (ii)  three  years from the  Effective  Time both of Elliott
Vernon and Manmohan Patel shall be members of the post-merger Board of Directors
of HII. The parties hereto agree to vote the shares of the common stock of Newco
controlled by them in favor of such appointees.

         12.  HII  Stock  Being  Delivered  Herewith.

     Simultaneously  with the execution and delivery hereof, HII is delivering a
stock  certificate to ME representing 100 shares of fully-paid and nonassessable
preferred stock of HII (the "Preferred Stock") automatically  convertible at the
Effective Time into 100,000 shares of Common Stock (the  "Pre-Closing  Shares").
At the Effective Time, the Pre-Closing  Shares shall constitute a portion of the
72% of the HII shares to be issued to the ME owners at the  Effective  Time.  In
the event the Merger is not  consummated  for any reason prior to the nine-month
anniversary  of the execution of this letter (the "Exercise  Date"),  other than
(x) ME deciding not to proceed with a transaction based  substantially  upon the
same terms,  conditions and purchase price contemplated herein, (y) ME breaching
the provisions of this letter or of the Merger  Agreement,  or (z) ME failing to
use its  reasonable  efforts in good faith to negotiate  the terms of the Merger
Agreement,  including failing to include the put provisions described in Section
13 below, then ME shall have the option to require HII to




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repurchase  all, but not less than all, of the  Preferred  Stock  (which  shares
shall be free and clear of all liens, charges and encumbrances). In exchange for
the Preferred Stock, HII shall deliver to ME (as HII shall determine in its sole
discretion) either (1) a cash amount equal to 100,000 (the "Multiplier  Number")
multiplied  by the average per share closing sales price of the HII common stock
for the 20  consecutive  trading  days prior to the  Exercise  Date or (2) up to
100,000 shares of common stock of HII. In the event that HII determines,  in its
sole  discretion,  to deliver less than 100,000 shares of common stock,  then in
addition  to such  shares of common  stock ME also shall be  entitled  to a cash
amount equal to (A) the difference between the Multiplier Number and such number
of shares which HII  delivers  multiplied  by (B) the average per share  closing
sales price of the HII common stock for the 20 consecutive trading days prior to
the Exercise Date. Written notice to HII (the "Notice") of ME's exercise of this
put right shall be given to HII within 20 days after the Exercise  Date, and the
closing of such repurchase shall be specified in the Notice and shall take place
at the  principal  offices of HII no earlier than 30 days nor later than 60 days
after the date of the  Notice.  If HII is to  deliver  all or a  portion  of the
repurchase  price in cash but is financially or legally unable to fully pay such
repurchase  price in cash, then one-half of such repurchase  price shall be paid
in cash and  one-half of such  repurchase  price shall be payable by delivery by
HII of a promissory  note in such amount bearing  interest at the rate of 9% per
annum,  with principal and interest payable in full on the first  anniversary of
the date of the Notice.

         13. Put.

     In the event that the  average  per share  closing  sales  price of the HII
common stock for the 20 consecutive  trading days prior to the first anniversary
of the Effective Time is not equal to $2.50 or more, each  stockholder of HII as
of the  execution  date of this letter  shall have the right (the "Put  Right"),
upon written notice (the "Put Exercise Notice") to HII within 30 days after such
anniversary date, to require HII to purchase, in whole or in part, the shares of
HII common stock it owned as of such  execution  date and which it still owns as
of such  anniversary  date,  for a per share  purchase  price of $2.50 (the "Put
Price").  Subject to applicable  law, HII shall  purchase such shares at the Put
Price within 90 calendar  days after  receipt by the Company of the Put Exercise
Notice.  If HII is financially  unable to pay all of the Put Price in cash, then
the Put Price may be payable  by  delivery  of an HII  promissory  note  bearing
interest at the rate of 9% per annum,  with  principal  and interest  payable in
full on the first anniversary of the date of the Put Exercise Notice.

     14.  Miscellaneous.

     This letter may be signed in one or more  counterparts,  each of which will
be considered an original and all of which will  constitute  the same  document.
This  letter  will be  governed  by the laws of New York  without  regard to its
principles  of conflicts of laws.  Neither party may assign any of its rights or
obligations hereunder.

         This letter, when executed by the parties hereto,  shall form the basis
upon which we shall mutually endeavor, promptly and in good faith, to consummate
the Merger along the lines described above;  and, except as provided in Sections
4, 5, 6, 7, 8, 9, 10, 12 and 14 of this letter,  this letter is not intended to,
and shall not, create any binding commitment by, or right in favor of,




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either party with respect to the Merger and the other transactions  contemplated
hereby. If you have any questions  concerning this letter,  please contact me at
your earliest convenience.






<PAGE>


         If the  foregoing  accurately  describes our  understanding,  please so
indicate by signing and returning the enclosed copy of this letter to me.

                                HEALTHCARE INTEGRATED SERVICES, INC.


                                By:      /s/ Elliott H. Vernon
                                         ---------------------
                                Name:    Elliott H. Vernon
                                Title:   Chairman and Chief Executive Officer


Accepted and agreed to as of the date set forth above:

MEDICALEDGE TECHNOLOGIES, INC.


By:    /s/ Henry Kauftheil
       -------------------
Name:  Henry Kauftheil
Title: Chairman


Accepted and agreed to as of the date set forth above as to Section 9 only:

INTERNATIONAL COMMERCE EXCHANGE SYSTEMS, INC.


By:    /s/ Henry Kauftheil
Name:  Henry Kauftheil
Title: Chairman