Document:

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                                                                   Exhibit 10.22
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                                     FORM OF

                         RECEIVABLES PURCHASE AGREEMENT

                                  by and among

                          MEDCO HEALTH RECEIVABLES, LLC
                                    as Seller

                          MEDCO HEALTH SOLUTIONS, INC.
                                   as Servicer

                          The Persons Parties hereto as
                   Conduit Purchasers and Committed Purchasers

                          CITICORP NORTH AMERICA, INC.
                                       and
                       BANK ONE, NA (MAIN OFFICE CHICAGO)
                               as Managing Agents

                                       and

                          CITICORP NORTH AMERICA, INC.
                             as Administrative Agent

                          Dated as of August [__], 2003

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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                    ARTICLE I

                                   DEFINITIONS

SECTION 1.01  Certain Defined Terms............................................1
SECTION 1.02  Other Terms.....................................................31

                                   ARTICLE II

                       AMOUNTS AND TERMS OF THE PURCHASES

SECTION 2.01  Purchase Facility...............................................32
SECTION 2.02  Making Incremental Purchases....................................32
SECTION 2.03  Receivable Interest Computation.................................34
SECTION 2.04  Application of Collections Prior to Termination Date............35
SECTION 2.05  Application of Collections After Termination Date...............37
SECTION 2.06  General Settlement Procedures...................................38
SECTION 2.07  Yield and Fees..................................................39
SECTION 2.08  Payments and Computations, Etc..................................39
SECTION 2.09  Dividing or Combining Receivable Interests......................40
SECTION 2.10  Breakage Costs..................................................40
SECTION 2.11  Illegality......................................................40
SECTION 2.12  Inability to Determine Eurodollar Rate..........................41
SECTION 2.13  Indemnity for Reserves and Expenses.............................41
SECTION 2.14  Indemnity for Taxes.............................................42
SECTION 2.15  Security Interest...............................................45
SECTION 2.16  Optional Liquidation............................................46
SECTION 2.17  Optional Repurchase.............................................46
SECTION 2.18  Termination of Purchaser Groups.................................46

                                   ARTICLE III

                             CONDITIONS OF PURCHASES

SECTION 3.01  Conditions Precedent to Initial Purchase........................47
SECTION 3.02  Conditions Precedent to All Purchases...........................49

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

SECTION 4.01  Representations and Warranties of the Seller....................50
SECTION 4.02  Representations and Warranties of the Servicer..................53

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                                    ARTICLE V

                                    COVENANTS

SECTION 5.01  Covenants of the Seller.........................................55
SECTION 5.02  Audits..........................................................63
SECTION 5.03  Additional Covenants of the Servicer............................64

                                   ARTICLE VI

                  ADMINISTRATION AND COLLECTION OF RECEIVABLES

SECTION 6.01  Designation of Servicer.........................................65
SECTION 6.02  Duties of Servicer..............................................66
SECTION 6.03  Reports.........................................................67
SECTION 6.04  Certain Rights of the Administrative Agent......................68
SECTION 6.05  Rights and Remedies.............................................69
SECTION 6.06  Indemnities by the Servicer.....................................70
SECTION 6.07  Administrative Agent Account....................................71
SECTION 6.08  Servicer Replacement Event......................................73

                                   ARTICLE VII

                               TERMINATION EVENTS

SECTION 7.01  Termination Events..............................................73

                                  ARTICLE VIII

                            THE ADMINISTRATIVE AGENT

SECTION 8.01  Authorization and Action........................................76
SECTION 8.02  Agent's Reliance, Etc...........................................76
SECTION 8.03  CNAI and Affiliates.............................................77
SECTION 8.04  Indemnification of Administrative Agent.........................77
SECTION 8.05  Delegation of Duties............................................77
SECTION 8.06  Action or Inaction by Administrative Agent......................77
SECTION 8.07  Notice of Events of Termination; Action by
              Administrative Agent............................................78
SECTION 8.08  Non-Reliance on Administrative Agent and Other Parties..........78
SECTION 8.09  Successor Administrative Agent..................................78

                                   ARTICLE IX

                               THE MANAGING AGENTS

SECTION 9.01  Authorization and Action........................................79
SECTION 9.02  Managing Agent's Reliance, Etc..................................79
SECTION 9.03  Managing Agent and Affiliates...................................80

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SECTION 9.04  Indemnification of Managing Agents..............................80
SECTION 9.05  Delegation of Duties............................................80
SECTION 9.06  Action or Inaction by Managing Agent............................80
SECTION 9.07  Notice of Events of Termination.................................81
SECTION 9.08  Non-Reliance on Managing Agent and Other Parties................81
SECTION 9.09  Successor Managing Agent........................................82
SECTION 9.10  Reliance on Managing Agent......................................82

                                    ARTICLE X

                                 INDEMNIFICATION

SECTION 10.01 Indemnities by the Seller.......................................82

                                   ARTICLE XI

                                  MISCELLANEOUS

SECTION 11.01 Amendments, Etc.................................................84
SECTION 11.02 Notices, Etc....................................................85
SECTION 11.03 Assignability...................................................86
SECTION 11.04 Costs and Expenses..............................................91
SECTION 11.05 No Proceedings..................................................91
SECTION 11.06 Confidentiality.................................................91
SECTION 11.07 Amendments to Financial Covenants...............................93
SECTION 11.08 GOVERNING LAW...................................................93
SECTION 11.09 Execution in Counterparts.......................................93
SECTION 11.10 Integration; Binding Effect; Survival of Termination............94
SECTION 11.11 Consent to Jurisdiction.........................................94
SECTION 11.12 WAIVER OF JURY TRIAL............................................94
SECTION 11.13 Right of Setoff.................................................94
SECTION 11.14 Ratable Payments................................................95
SECTION 11.15 Limitation of Liability.........................................95
SECTION 11.16 Intent of the Parties...........................................96

                                    SCHEDULES
                                    ---------

SCHEDULE I    -  Purchaser Groups
SCHEDULE II   -  CP Rates
SCHEDULE III  -  Deposit Accounts and Deposit Account Banks
SCHEDULE IV   -  Credit and Collection Policy
SCHEDULE V    -  Financial Covenants
SCHEDULE VI   -  Reviewed Contracts
SCHEDULE VII     Aggregate Accounts Payable Deduction Amount and Formulary
                 Rebate Deduction Amount

                                      iii

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                                     ANNEXES
                                     -------

ANNEX A-1     -  Form of Monthly Report
ANNEX A-2     -  Form of Weekly Report
ANNEX B-1     -  Form of Control Agreement (Deposit Account)
ANNEX B-2     -  Form of Control Agreement (Administrative Agent Account)
ANNEX C       -  Form of Assignment and Acceptance
ANNEX D       -  Form of Funds Transfer Letter
ANNEX E       -  Form of Joinder Agreement

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                         RECEIVABLES PURCHASE AGREEMENT

                          Dated as of August [__], 2003

          RECEIVABLES PURCHASE AGREEMENT (as amended, supplemented or otherwise
modified and in effect from time to time, this "Agreement"), dated as of August
[__], 2003, by and among (i) MEDCO HEALTH RECEIVABLES, LLC, a Delaware limited
liability company, as Seller, (ii) MEDCO HEALTH SOLUTIONS, INC., a Delaware
corporation, as initial Servicer, (iii) the Conduit Purchasers from time to time
parties hereto, (iv) the Committed Purchasers from time to time parties hereto,
(v) CITICORP NORTH AMERICA, INC. and BANK ONE, NA (MAIN OFFICE CHICAGO), as
Managing Agents and (vi) CITICORP NORTH AMERICA, INC., as Administrative Agent.

                             PRELIMINARY STATEMENTS
                             ----------------------

     A.   The Seller has acquired, and may continue to acquire, Receivables from
the Originator pursuant to the Originator Purchase Agreement by purchase or as a
contribution to the capital of the Seller.

     B.   The Seller may desire to convey, transfer and assign, from time to
time, undivided percentage interests in the Receivables (referred to herein as
"Receivable Interests") on the terms and conditions of this Agreement.

     C.   The Conduit Purchasers may, in their sole discretion, purchase the
Receivable Interests so offered for sale from time to time, and if a Conduit
Purchaser in any Purchaser Group elects not to make any such purchase, the
Committed Purchasers in such Purchaser Group have agreed that they shall make
such purchase, in each case subject to the terms and conditions of this
Agreement.

          Accordingly, the parties hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

          SECTION 1.01  Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

          "Accountants' Report" has the meaning specified in Section 5.02.

          "Accrual" means Receivables accrued on the books of the Originator in
accordance with GAAP and, to the extent consistent with GAAP, in a manner
consistent with the practices of the Originator as in effect on the date hereof.

          "Adjusted Eurodollar Rate" means, for any Fixed Period, an interest
rate per annum obtained by dividing (i) the Eurodollar Rate for such Fixed
Period by (ii) a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage for such Fixed Period.

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          "Administrative Agent" means CNAI, in its capacity as contractual
representative for the Conduit Purchasers and Committed Purchasers hereunder,
and any successor thereto in such capacity appointed pursuant to Article VIII.

          "Administrative Agent Account" has the meaning specified in Section
6.07.

          "Administrative Agent Fee Letter" has the meaning specified in Section
2.07(b).

          "Adverse Claim" means a lien, security interest or other charge or
encumbrance, or other right or claim in, of or on any asset or property of a
Person in favor of another Person.

          "Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, a Person shall be deemed to
be "controlled by" a Person if such Person possesses, directly or indirectly,
power to direct or cause the direction of the management and policies of such
Person, whether through the ability to exercise voting power, by contract or
otherwise.

          "Aggregate Accounts Payable Deduction Amount" has the meaning
specified on Schedule VII.

          "Aggregate Commitment" means, at any time, the sum of the Commitments
then in effect. The initial Aggregate Commitment is $500,000,000.

          "Alternate Base Rate" means, with respect to any Receivable Interest
of any Purchaser, a fluctuating interest rate per annum as shall be in effect
from time to time, which rate shall at all times be equal to the higher of:

               (a)  (i) in the case of a Purchaser for which CNAI acts as
          Managing Agent, the rate of interest announced publicly by Citibank in
          New York, New York, from time to time as Citibank's base rate and (ii)
          in the case of any other Purchaser, the rate of interest announced
          publicly by the applicable Managing Agent from time to time as its
          prime or base rate; and

               (b)  the Federal Funds Rate plus 0.50%.

          "Amortization Date" for any Receivable Interest means (i) in the case
of a Receivable Interest owned by a Conduit Purchaser, the earliest of (a) the
date on which a Conduit Purchaser's Termination Event occurs with respect to
such Conduit Purchaser, (b) the Scheduled Commitment Termination Date for such
Conduit Purchaser's Purchaser Group and (c) the Termination Date and (ii) in the
case of a Receivable Interest owned by a Committed Purchaser, the earlier of (a)
the Scheduled Commitment Termination Date for such Committed Purchaser's
Purchaser Group and (b) the Termination Date.

          "Applicable Eurodollar Rate Margin" has the meaning specified in the
Purchaser Fee Letter.

          "Asset Purchase Agreement" means, in the case of any Purchaser Group,
a secondary market agreement, asset purchase agreement or other liquidity
agreement entered into

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by the Committed Purchasers in such Purchaser Group or any of their respective
Affiliates for the benefit of one or more Conduit Purchasers in such Purchaser
Group, to the extent relating to the sale or transfer of interests in, or other
financing of, Receivable Interests.

          "Assignee Rate" for any Fixed Period for any Receivable Interest means
an interest rate per annum equal to the sum of the Applicable Eurodollar Rate
Margin plus the Adjusted Eurodollar Rate for such Fixed Period; provided,
however, that in case of:

               (i)   any Fixed Period with respect to which the Adjusted
          Eurodollar Rate is not available pursuant to Section 2.11 or 2.12,

               (ii)  any Fixed Period of less than one month,

               (iii) any Fixed Period as to which the applicable Managing Agent
          does not receive notice, by no later than 11:00 A.M. (New York City
          time) on the second Business Day preceding the first day of such Fixed
          Period, that the related Receivable Interest will not be funded by a
          Conduit Purchaser through the issuance of Promissory Notes, or

               (iv)  any Fixed Period for a Receivable Interest the Capital of
          which is less than $500,000,

the Assignee Rate for such Fixed Period shall be an interest rate per annum
equal to the Alternate Base Rate in effect from time to time during such Fixed
Period.

          "Assignment and Acceptance" means an assignment and acceptance
agreement entered into by a Committed Purchaser, an Eligible Assignee and such
Committed Purchaser's Managing Agent, pursuant to which such Eligible Assignee
may become a party to this Agreement, in substantially the form of Annex C
hereto.

          "Bad Debts Reserve" means the amount of the reserve established by the
Servicer (in accordance with GAAP and, to the extent consistent with GAAP, in a
manner consistent with the practices of the Originator as in effect on the date
hereof) in respect of (i) Receivables that are unpaid 61 days or more from the
original invoice date of such Receivables and (ii) unbilled Receivables that the
Servicer has determined to be a collection risk.

          "Bank One" means Bank One, NA (Main Office Chicago), and any successor
thereto.

          "Base Rate Receivable Interest" has the meaning specified in Section
2.11.

          "Business Day" means any day on which (i) banks are not authorized or
required to close in New York City, New York and (ii) if this definition of
"Business Day" is utilized in connection with the determination of the
Eurodollar Rate or any notice related thereto, dealings are carried out in the
London interbank market.

          "Calculation Period" means each period from and including the first
day of a calendar month to and including the last day of such calendar month.

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          "Capital" means, with respect to any Receivable Interest, the original
amount paid to the Seller for such Receivable Interest pursuant to Article II,
as such amount may be divided or combined in accordance with Section 2.09, in
each case as reduced from time to time by Collections received by the applicable
Purchaser(s) holding such Receivable Interest from distributions made pursuant
to Section 2.04 or Section 2.05, as applicable, on account of the Capital of
such Receivable Interest; provided that if such Capital shall have been reduced
by any distribution and thereafter all or a portion of such distribution is
rescinded or must otherwise be returned for any reason, such Capital shall be
increased by the amount of such rescinded or returned distribution as though it
had not been received by such Purchaser(s).

          "Capital Lease" means any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of the Originator and its Subsidiaries under GAAP.

          "Capital Lease Obligations" means the obligations of the Originator or
its Subsidiaries to pay rent or other amounts under any Capital Lease, and the
amount of such obligations shall be the capitalized amount thereof determined in
accordance with GAAP.

          "Change of Control" means (a) (i) at any time prior to consummation of
the Spin-Off, Merck failing to own, beneficially and of record, directly 100% of
the aggregate issued and outstanding Equity Interests of the Originator and (ii)
at any time following consummation of the Spin-Off, the acquisition of
ownership, directly or indirectly, beneficially or of record, by any Person or
group (each within the meaning of the Securities Exchange Act of 1934 and the
rules of the SEC thereunder as in effect on the date hereof) not an Affiliate of
the Originator or Merck of Equity Interests representing more than 30% of the
aggregate ordinary voting power represented by the issued and outstanding Equity
Interests of the Originator, or (b) commencing after the date hereof, during any
period of up to 12 consecutive months, the occupation of a majority of the seats
(other than vacant seats) on the board of directors of the Originator by Persons
who were neither nominated nor appointed by a vote of a majority or more of the
members of the Originator's board of directors who were either in office at the
beginning of such 12 month period or were so nominated or appointed.

          "Citibank" means Citibank, N.A. and any successor thereto.

          "Client" means any Person for whom the Originator or any of its
Affiliates provides PBM Services.

          "Client Contract" means an agreement with one or more Clients pursuant
to which Medco and/or any of its Affiliates provides PBM Services.

          "Closing Date" means August [__], 2003.

          "CNAI" means Citicorp North America, Inc., and any successor thereto.

          "Collection Account" means (i) at any time prior to the establishment
of the Administrative Agent Account pursuant to Section 6.07(a), the Deposit
Account specified as such on Schedule III and (ii) at any other time, the
Administrative Agent Account.

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          "Collection Account Bank" means the bank at which the Collection
Account is maintained.

          "Collections" means, with respect to any Receivable, all cash
collections and other cash Proceeds of such Receivable, including, without
limitation, (i) all cash Proceeds of Related Security with respect to such
Receivable, and (ii) any Deemed Collections of such Receivable.

          "Commitment" of any Committed Purchaser means the dollar amount set
forth on Schedule I hereto opposite such Committed Purchaser's name or, in the
case of a Committed Purchaser that became a party to this Agreement pursuant to
an Assignment and Acceptance or Joinder Agreement, the amount set forth therein
as such Committed Purchaser's Commitment, in each case as such amount may be (i)
reduced or increased by any Assignment and Acceptance entered into by such
Committed Purchaser in accordance with the terms hereof and (ii) reduced
pursuant to Section 2.01(c) or Section 2.18.

          "Committed Purchaser Participant" has the meaning specified in Section
11.03(g).

          "Committed Purchasers" means, collectively, the Persons identified as
"Committed Purchasers" on Schedule I and their respective successors and
permitted assigns.

          "Concentration Limit" means, at any time for any Obligor:

          (a)  if such Obligor has Debt Ratings of AA- or better from S&P and
     Aa3 or better from Moody's, an amount equal to the product of (i) the Loss
     Reserve Percentage Floor and (ii) the Net Receivables Pool Balance at such
     time;

          (b)  if such Obligor has Debt Ratings of A- or better from S&P and A3
     or better from Moody's (and clause (a) does not apply), an amount equal to
     the product of (i) 50%, (ii) the Loss Reserve Percentage Floor and (iii)
     the Net Receivables Pool Balance at such time; and

          (c)  in the case of any other Obligor, 5% of the Net Receivables Pool
     Balance at such time (the "Normal Concentration Limit"); provided that if
     at the time of determination a Rating Level 2 Period, Rating Level 3 Period
     or Rating Level 4 Period is in effect, the Normal Concentration Limit shall
     be 4% of the Net Receivables Pool Balance at such time;

provided, however, that, notwithstanding the foregoing, the Administrative Agent
(acting either on its own initiative or at the direction of any Managing Agent)
may at any time reduce the Concentration Limit of an Obligor described in
clauses (a) and (b) above to the Normal Concentration Limit upon not less than
three (3) Business Days' notice to the Servicer. In the case of an Obligor and
its Affiliates, the Concentration Limit shall be calculated as if such Obligor
and such Affiliates were a single Obligor.

          "Conduit Assignee" means, with respect to any assignment by a Conduit
Purchaser, any Person that (i) issues commercial paper rated at least A-1 by S&P
or P-1 by Moody's, (ii) is managed by the Managing Agent for such assigning
Conduit Purchaser or any

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Affiliate of such Managing Agent and (iii) is designated by such Managing Agent
to accept an assignment from such Conduit Purchaser of such Conduit Purchaser's
rights and obligations pursuant to Section 11.03(b).

          "Conduit Participant" means any Person that shall have acquired a
participation in a Receivable Interest from a Conduit Purchaser (but excluding,
for purposes of the definition of "CP Rate", interests sold pursuant to an Asset
Purchase Agreement).

          "Conduit Purchasers" means, collectively, the Persons identified as
"Conduit Purchasers" on Schedule I and their respective successors and permitted
assigns.

          "Conduit Purchase Limit" of any Conduit Purchaser means the dollar
amount set forth on Schedule I hereto opposite such Conduit Purchaser's name, as
such amount may be reduced pursuant to Section 2.01(c) or Section 2.18.

          "Conduit Purchaser's Termination Event" means, with respect to any
Conduit Purchaser, that the Managing Agent for such Conduit Purchaser shall have
notified the Administrative Agent and the Seller that no further Purchases shall
be made by such Conduit Purchaser hereunder.

          "Contract" means an agreement pursuant to or under which a
pharmaceutical manufacturer shall be obligated to pay rebates, administrative
fees, data fees or other fees to the Originator, in each case as such agreement
may be amended, restated, supplemented, renewed or otherwise modified from time
to time and any replacement or substitute agreement; provided that the term
"Contract" shall not include any agreement with Merck or any of its Affiliates
so long as no payments under such agreement are remitted to a Deposit Account.

          "Control Agreement" means (i) with respect to any Deposit Account, an
agreement among the Servicer, the Seller, the Administrative Agent and the
applicable Deposit Account Bank in substantially the form of Annex B-1 (or in
such other form as the Administrative Agent shall approve) and (ii) with respect
to any Administrative Agent Account established pursuant to Section 6.07, an
agreement among the Seller, the Administrative Agent and the bank at which the
Administrative Agent Account is maintained in substantially the form of Annex
B-2 (or in such other form as the Administrative Agent shall approve).

          "CP Fixed Period Date" means the last day of each calendar month.

          "CP Rate" when used in reference to any Conduit Purchaser shall have
the meaning specified on Schedule II or, in the case of a Conduit Purchaser that
becomes a party hereto pursuant to a Joinder Agreement, such other meaning (if
any) as may be specified in such Joinder Agreement.

          "Credit and Collection Policy" means those standard operating
procedures of the Originator relating to the Contracts and Receivables in effect
on the date of this Agreement and summarized in Schedule IV hereto, as modified
in compliance with this Agreement.

          "Current Calculation Period" means, with respect to any Monthly
Reporting Date, the Calculation Period then most recently ended.

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          "Daily Report" means a report furnished by the Servicer pursuant to
Section 6.03(c). Each such report shall be (i) if a form of daily report is
delivered by the Administrative Agent to the Servicer, substantially in the form
so provided (which form shall be consistent with the form of Monthly Report,
with such changes as may be appropriate to reflect differences in the duration
of the periods being reported and such other changes as any Managing Agent may
reasonably request) or (ii) if a form of daily report is not so delivered by the
Administrative Agent to the Servicer, in a form prepared by the Servicer and
reasonably acceptable to the Managing Agents.

          "Debt Rating" for any Person at any time, means the then-current
published rating by S&P or Moody's of such Person's long-term senior unsecured
non-credit-enhanced debt.

          "Deemed Collections" means any Collections on any Receivable deemed to
have been received by the Seller pursuant to Section 2.06(b) of this Agreement
or by the Originator pursuant to Section 2.04 of the Originator Purchase
Agreement.

          "Deemed Loss Ratio" means the ratio (expressed as a percentage)
computed as of each Monthly Reporting Date for the Current Calculation Period by
dividing (i) the sum of (a) the aggregate Outstanding Balance of all Receivables
as of the end of the Current Calculation Period that remained unpaid more than
60 days from their original due dates but less than 91 days from their original
due dates and (b) (without duplication) the aggregate Outstanding Balance of all
Receivables that were (or which, pursuant to the Credit and Collection Policy,
should have been) written-off during the Current Calculation Period for credit
reasons and which were less than 61 days from their original due dates at the
time such write-off occurred by (ii) the aggregate amount of Accruals that arose
during the ninth Calculation Period immediately prior to the Current Calculation
Period.

          "Default Ratio" means the ratio (expressed as a percentage) computed
as of each Monthly Reporting Date for the immediately preceding Calculation
Period by dividing (i) the aggregate Outstanding Balance of all Receivables that
were Defaulted Receivables as of the last day of such Calculation Period
(excluding, for the avoidance of doubt, any Defaulted Receivables that were
written off as uncollectible prior to such last day in accordance with the
Credit and Collection Policy) by (ii) the aggregate Outstanding Balance of all
Receivables that have been billed as of the last day of such Calculation Period.

          "Defaulted Receivable" means a Receivable: (i) which remains unpaid
for more than 60 days from the original due date for such Receivable; (ii) as to
which an Event of Bankruptcy has occurred and is continuing with respect to the
Obligor thereof; or (iii) which, in accordance with the Credit and Collection
Policy, has been or should be written off as uncollectible.

          "Delinquency Ratio" means the ratio (expressed as a percentage)
computed as of each Monthly Reporting Date for the immediately preceding
Calculation Period by dividing (i) the aggregate Outstanding Balance of all
Delinquent Receivables as of the end of such Calculation Period by (ii)
aggregate Outstanding Balance of all Receivables that have been billed as of the
end of such Calculation Period.

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          "Delinquent Receivable" means a Receivable (other than a Defaulted
Receivable) which (i) remains unpaid for more than 30 days but equal to or less
than 60 days from the original due date for such Receivable or (ii) pursuant to
the Credit and Collection Policy, has been or should be classified as
delinquent.

          "Deposit Account" means an account maintained at a bank for the
purpose of receiving Collections.

          "Deposit Account Bank" means any bank at which a Deposit Account is
maintained.

          "Diluted Receivable" means that portion (and only that portion) of any
Receivable which is either (a) reduced or canceled as a result of (i) any
failure by any Transaction Party to perform any services or otherwise to perform
under any Contract or invoice or any dispute under any Contract or invoice, (ii)
any change in the terms of, or cancellation of, any Contract or invoice, (iii)
any administrative fee, discount, credit memo, refund, non-cash payment,
chargeback, allowance or other adjustment of any kind (including, without
limitation, any adjustment resulting from an erroneous estimate of the
Outstanding Balance of an Unbilled Receivable, but excluding any such adjustment
made by reason of such Receivable being uncollectible solely on account of the
insolvency, bankruptcy or financial inability to pay of the applicable Obligor)
or (iv) any set-off by an Obligor in respect of any claim by such Obligor
(whether such claim arises out of the same or a related transaction or an
unrelated transaction) or (b) subject to any specific offset, counterclaim or
defense whatsoever (except the discharge in bankruptcy of the Obligor thereof).

          "Dilution Horizon" means, as of any Monthly Reporting Date and
continuing until (but not including) the next Monthly Reporting Date, a number
equal to a fraction, the numerator of which is the (i) the aggregate original
Outstanding Balance of all Accruals during the four most recent Calculation
Periods immediately preceding such earlier Monthly Reporting Date and (ii) the
denominator of which is the aggregate Outstanding Balance of all Receivables as
of the end of the Current Calculation Period minus the aggregate Outstanding
Balance of Defaulted Receivables as of the end of the Current Calculation
Period.

          "Dilution Ratio" means the ratio (expressed as a percentage) computed
as of each Monthly Reporting Date for the immediately preceding Calculation
Period (the "current Calculation Period") by dividing (i) the sum (without
duplication) of (a) the aggregate amount of Receivables which became Diluted
Receivables during such Calculation Period and (b) the aggregate amount of
negative "true-ups" to the Accruals made during such Calculation Period, by (ii)
the aggregate original Outstanding Balance of all Receivables which arose during
the fourth Calculation Period immediately preceding the current Calculation
Period.

          "Dilution Reserve" means, on any date, an amount equal to:

              the greater of (i) DRP x NRPB and (ii) BDR x 2

where:

          DRP   =  the Dilution Reserve Percentage on such date.

                                       8

<PAGE>

          NRPB  =  the Net Receivables Pool Balance at the close of business of
                   the Servicer on such date.

          BDR   =  the Bad Debts Reserve as of the close of business of the
                   Servicer on such date.

          "Dilution Reserve Percentage" means, as of any Monthly Reporting Date,
and continuing until (but not including) the next Monthly Reporting Date, the
higher of (i) the Dynamic Dilution Reserve Ratio and (ii) 5%.

          "Dollars" and "$" each mean the lawful currency of the United States
of America.

          "Dynamic Dilution Reserve Ratio" means, as of any Monthly Reporting
Date, and continuing until (but not including) the next Monthly Reporting Date,
an amount (expressed as a percentage) that is calculated as follows:

               DDRR = [(SF x AD) + [(DS-AD) x (DS/AD)]] x DH

Where:

DDRR  =   Dynamic Dilution Reserve Ratio;

SF    =   the Stress Factor;

AD    =   the "Average Dilution", defined as the twelve-month rolling average of
          the three-month rolling average Dilution Ratio that occurred during
          the period of twelve consecutive Calculation Periods ending
          immediately prior to such earlier Monthly Reporting Date;

DS    =   the "Dilution Spike", defined as the highest four-month rolling
          average Dilution Ratio that occurred during the period of twelve
          consecutive Calculation Periods ending immediately prior to such
          earlier Monthly Reporting Date; and

DH    =   the Dilution Horizon.

          "Dynamic Loss Reserve Ratio" means, as of any Monthly Reporting Date,
and continuing until (but not including) the next Monthly Reporting Date, an
amount (expressed as a percentage) calculated as follows:

                              DLRR = SF x DLR x LHR

Where:

                                       9

<PAGE>

DLRR  =  Dynamic Loss Reserve Ratio;

SF    =  the Stress Factor;

DLR   =  the highest three-month rolling average Deemed Loss Ratio that occurred
         during the period of twelve consecutive Calculation Periods immediately
         preceding such earlier Monthly Reporting Date; and

LHR   =  the Loss Horizon Ratio.

          "Eligible Assignee" means, with respect to any Purchaser Group, (i)
any Person that is a Managing Agent, a Purchaser, Scotiabank or an Affiliate
thereof, (ii) any Person managed by a Managing Agent, a Purchaser, Scotiabank or
an Affiliate thereof and rated at least A-1 by S&P or P-1 by Moody's and (iii)
any other Person that has been approved by the Managing Agent for such Purchaser
Group and, so long as no Termination Event has occurred and is continuing, that
has been approved by the Seller (such approval not to be unreasonably withheld
or delayed).

          "Eligible Contract" means a Contract (i) that is in full force and
effect and constitutes the legal, valid and binding obligation of the related
Obligor, enforceable against such Obligor in accordance with its terms, (ii)
with respect to which the Originator has performed in all material respects all
obligations required to be performed by it thereunder, (iii) except in the case
of the Contract with Pfizer, Inc., that requires the Obligor to pay all accrued
Receivables (including, without limitation, all Unbilled Receivables) upon
termination of such Contract (whether such termination results from a breach on
the part of the Originator or for any other reason), and (iv) that conforms in
all material respects to one of the forms of contract reviewed and approved by
the Administrative Agent or its counsel as listed on Schedule VI under the
heading "Reviewed Contracts."

          "Eligible Obligor" means any Obligor (i) that is a United States
resident, (ii) that is not an Official Body or an Affiliate of any of the
Originator or the Seller, (iii) that is not the subject of an Event of
Bankruptcy, (iv) with respect to which not more than 10% of the aggregate
Outstanding Balance of such Obligor's Receivables are Defaulted Receivables and
(v) is not Merck or an Affiliate thereof.

          "Eligible Receivable" means, at any time, any Receivable:

          (a)  which arises under an Eligible Contract;

          (b)  the Obligor of which is an Eligible Obligor;

          (c)  which is fully assignable to the Seller and the Purchasers;

          (d)  which constitutes the legal, valid and binding obligation of the
     related Obligor to pay the Outstanding Balance thereof, enforceable against
     such Obligor in accordance with the terms of the related Contract, subject
     to bankruptcy, insolvency, reorganization, moratorium and other similar
     laws affecting creditors' rights generally and general principals of
     equity;

                                       10

<PAGE>

          (e)  which has been fully earned by the Originator in accordance with
     the terms of the related Contract and no further performance or other
     action is required by the Originator in order for such Receivable to become
     due and payable in full (except, in the case of an Unbilled Receivable, for
     the presentation of an invoice therefor together with the relevant
     supporting data required to be delivered under the terms of the related
     Contract);

          (f)  which is an "account" or a "payment intangible" within the
     meaning of Section 9-102 of the UCC of the applicable jurisdiction
     governing the perfection of the Administrative Agent's security interest
     therein;

          (g)  which is not subject to (i) any Adverse Claim (other than Adverse
     Claims created under the Originator Purchase Agreement or this Agreement)
     or (ii) any litigation, dispute, offset, set-off, counterclaim or other
     defense, provided that only such portion of such Receivable subject to any
     such dispute, offset, counterclaim or defense shall be deemed ineligible
     under this criterion;

          (h)  which is denominated and payable only in United States dollars in
     the United States;

          (i)  which was originated in the ordinary course of the Originator's
     business in accordance with the terms of the related Contract and satisfies
     in all material respects all applicable requirements of the Credit and
     Collection Policy;

          (j)  which was not a Defaulted Receivable as of the date on which such
     Receivable was acquired by the Seller under the Originator Purchase
     Agreement;

          (k)  which has not been extended, compromised, adjusted or modified
     from the original terms thereof (including by the granting of any
     discounts, allowances or credits) except in accordance with the Credit and
     Collection Policy, provided that only such portion of such Receivable that
     has been so extended, compromised, adjusted or modified shall be deemed
     ineligible pursuant to this criterion;

          (l)  which, according to the Contract related thereto, is required to
     be paid in full within 90 days of the original billing date therefor;

          (m)  which either (i) has been billed within the time limits specified
     in the related Contract or (ii) is an Eligible Unbilled Receivable;

          (n)  which, pursuant to the terms of the related Contract, is billable
     no less frequently than once each calendar quarter;

          (o)  which, together with the Contract related thereto, does not
     contravene in any material respect any Laws applicable thereto (including,
     without limitation, Laws relating to truth in lending, fair credit billing,
     fair credit reporting, equal credit opportunity, fair debt collection
     practices, ERISA and privacy) and with respect to which no part of the
     Contract related thereto is in violation of any such Law in any material
     respect;

                                       11

<PAGE>

          (p)  which has been originated by the Originator and has been sold to
     the Seller pursuant to (and in accordance with) the Originator Purchase
     Agreement, with the result that the Seller has good and marketable title to
     such Receivable (together with the Collections and Related Security related
     thereto), free and clear of all Adverse Claims (except as created under
     this Agreement); and

          (q)  which (together with the Collections and Related Security related
     thereto) is subject to a first priority perfected security interest therein
     in favor of the Administrative Agent, on behalf of the Purchasers.

          "Eligible Unbilled Receivable" means an Unbilled Receivable (i) which
satisfies all criteria specified in the definition of "Eligible Receivable"
other than subclause (i) of clause (m) of such definition, (ii) has accrued in
accordance with the terms of the relevant Contract and would be required to be
paid in full by the Obligor thereof within 90 days following presentation of an
invoice therefor together with the relevant supporting data required to be
delivered under the terms of the related Contract, (iii) has been recognized as
a receivable in the Originator's accounting records in accordance with GAAP and,
to the extent consistent with GAAP, the accounting practices of the Originator
as in effect on the date of this Agreement and (iv) with respect to which the
time limit specified in the related Contract for the billing of such Receivable
has not yet expired.

          "Equity Interests" means, with respect to any Person, shares of
capital stock, partnership interests, membership interests in a limited
liability company, beneficial interests in a trust or other equity ownership
interests issued by such Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such equity interest.

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

          "ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Originator, is treated as a single
employer under Section 414(b) or (c) of the IRC or, solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, is treated as a single employer
under Section 414 of the IRC.

          "ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the IRC or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the IRC or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Originator or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Originator or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Originator or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Originator or any ERISA Affiliate of any notice, or the receipt
by any Multiemployer Plan from

                                       12

<PAGE>

the Originator or any ERISA Affiliate of any notice, concerning the imposition
of Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.

          "Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

          "Eurodollar Rate" means for any Fixed Period, the rate appearing on
Page 3750 of the Telerate Service (or on any successor or substitute page of
such service, or any successor to or substitute for such service, providing rate
quotations comparable to those currently provided on such page of such service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Fixed Period, as the rate for dollar
deposits with a maturity comparable to such Fixed Period. In the event that such
rate is not available at such time for any reason, then the "Eurodollar Rate"
shall be the rate at which dollar deposits of $5,000,000 and for a maturity
comparable to such Fixed Period are offered by the principal London office of
Citibank in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Fixed Period, as determined by the Administrative Agent.

          "Eurodollar Rate Reserve Percentage" means for any Fixed Period in
respect of which Yield is computed by reference to the Eurodollar Rate the
reserve percentage applicable two Business Days before the first day of such
Fixed Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) (or if more than one
such percentage shall be applicable, the daily average of such percentages for
those days in such Fixed Period during which any such percentage shall be so
applicable) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that includes
deposits by reference to which the interest rate on Eurocurrency Liabilities is
determined) having a term equal to such Fixed Period.

          "Eurodollar Receivable Interest" has the meaning specified in Section
2.11.

          "Event of Bankruptcy" means, with respect to any Person, that:

          (i)   such Person (a) shall generally not pay its debts as such debts
     become due or (b) shall admit in writing its inability to pay its debts
     generally or (c) shall make a general assignment for the benefit of
     creditors;

          (ii)  any proceeding shall be instituted by or against such Person
     seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation,
     winding up, reorganization, arrangement, adjustment, protection, relief or
     composition of it or its debts under any law relating to bankruptcy,
     insolvency or reorganization or relief of debtors, or seeking the entry of
     an order for relief or the appointment of a receiver, trustee or other
     similar

                                       13

<PAGE>

     official for it or any substantial part of its property, and, if instituted
     against such Person, shall remain undischarged for a period of 60 days; or

          (iii) such Person or any Subsidiary shall take any corporate or
     similar action to authorize any of the actions set forth in the preceding
     clauses (i) or (ii).

          "Executive Officer" means the chief executive officer, the chief
financial officer, the general counsel or any other "officer" (as defined in
Rule 16a-1 of the Securities Exchange Act of 1934, as amended) of the
Originator.

          "Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it

          "Fee Letters" means, collectively, the Administrative Agent Fee Letter
and the Purchaser Fee Letter.

          "Fees" has the meaning specified in Section 2.07(b).

          "Final Payout Date" means the date after the Termination Date on which
the Seller Obligations have been reduced to zero by payment in full in cash.

          "Financial Covenant Default" has the meaning specified on Schedule V.

          "Financial Officer" means, with respect to any Transaction Party, the
chief financial officer, the principal accounting officer, the treasurer, the
controller, the general counsel or any other "officer" (as defined in Rule 16a-1
of the Securities Exchange Act of 1934, as amended) of such Transaction Party.

          "Fixed Period" means, with respect to any Receivable Interest:

          (a)  in the case of any Receivable Interest held by a Conduit
Purchaser and in respect of which Yield is computed by reference to the CP Rate,
(i) initially, the period commencing on (and including) the date of purchase of
such Receivable Interest and ending on (and including) the next succeeding CP
Fixed Period Date, and (ii) thereafter, each successive period commencing on
(but excluding) a CP Fixed Period Date and ending on (and including) the next
succeeding CP Fixed Period Date; and

          (b)  in the case of any Receivable Interest in respect of which Yield
is computed by reference to the Assignee Rate, each successive period of from
one to and including ten Business Days, or a period of one month, as the Seller
shall select on notice given by the Seller and received by the applicable
Managing Agent (including notice by telephone, confirmed in writing) not later
than 11:00 A.M. (New York City time) on the second Business Day before

                                       14

<PAGE>

the first day of such Fixed Period, each such Fixed Period for such Receivable
Interest to commence on the last day of the immediately preceding Fixed Period
for such Receivable Interest (or, if there is no such Fixed Period, on the date
of purchase of such Receivable Interest), except that if such Managing Agent
shall not have received such notice before 11:00 A.M. (New York City time) on
such second Business Day, such Fixed Period shall be one day;

provided, however, that:

               (i)   any Fixed Period (other than of one day) which would
          otherwise end on a day which is not a Business Day shall be extended
          to the next succeeding Business Day; provided, however, that if Yield
          in respect of such Fixed Period is computed by reference to the
          Eurodollar Rate, and such Fixed Period would otherwise end on a day
          which is not a Business Day, and there is no subsequent Business Day
          in the same calendar month as such day, such Fixed Period shall end on
          the next preceding Business Day;

               (ii)  in the case of any Fixed Period of one day, (A) if such
          Fixed Period is the initial Fixed Period for a Receivable Interest,
          such Fixed Period shall be the day of the purchase of such Receivable
          Interest; (B) any subsequently occurring Fixed Period which is one day
          shall, if the immediately preceding Fixed Period is more than one day,
          be the last day of such immediately preceding Fixed Period and, if the
          immediately preceding Fixed Period is one day, be the day next
          following such immediately preceding Fixed Period; and (C) if such
          Fixed Period occurs on a day immediately preceding a day which is not
          a Business Day, such Fixed Period shall be extended to the next
          succeeding Business Day;

               (iii) in the case of any Fixed Period for any Receivable Interest
          which commences before the Amortization Date for such Receivable
          Interest and would otherwise end on a date occurring after such
          Amortization Date, such Fixed Period shall end on such Amortization
          Date and the duration of each Fixed Period which commences on or after
          the Amortization Date for such Receivable Interest shall be of such
          duration (including, without limitation, one day) as shall be selected
          by the applicable Managing Agent; and

               (iv)  at any time when the Alternate Base Rate shall have been in
          effect for a Fixed Period of ten consecutive Business Days, and the
          conditions set forth in clauses (i) and (iv) of the definition of
          Assignee Rate do not exist, any Managing Agent may, on behalf of the
          Committed Purchasers in its Purchaser Group, upon one Business Day's
          notice to the Seller (with a copy to the Administrative Agent), select
          as the next succeeding Fixed Period for such Receivable Interest (and
          any subsequent Fixed Periods designated by such Managing Agent) a
          period of one month during which Yield shall be computed by reference
          to the Adjusted Eurodollar Rate; provided, however, that prior to such
          selection the Seller may notify the applicable Managing Agent that, in
          view of anticipated Collections and repayments, Yield should continue
          to be computed by reference to the Alternate Base Rate.

                                       15

<PAGE>

          "Formulary Rebate Conditions" has the meaning specified on Schedule
VII.

          "Formulary Rebate Deduction Amount" has the meaning specified on
Schedule VII.

          "Formulary Rebate Receivable" means any "base rebate", "formulary
rebate" or similar rebate payable by an Obligor under a Contract resulting from
the inclusion of such Obligor's products on a formulary.

          "Funds Transfer Letter" means a letter in substantially the form of
Annex D hereto executed and delivered by the Seller to the Administrative Agent
and the Managing Agents, as the same may be amended or restated in accordance
with the terms thereof.

          "GAAP" means generally accepted accounting principles as in effect in
the United States of America from time to time, consistently applied.

          "Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing any
Indebtedness or other obligation of any other Person (the "primary obligor") in
any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation to
purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or services
primarily for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (d) as an account party in respect of any letter of credit or
letter of guarantee issued to support such Indebtedness or other obligation;
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business.

          "Incipient Termination Event" means an event that but for notice or
lapse of time or both would constitute a Termination Event.

          "Incremental Purchase" has the meaning specified in Section 2.01(a).

          "Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are being paid (but excluding obligations that are
trade payables), (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable and accrued expenses
incurred in the ordinary course of business), (f) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Adverse Claim on property owned
or acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g)

                                       16

<PAGE>

all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise, of
such Person as an account party in respect of the face amount of letters of
credit and letters of guarantee, (j) all obligations, contingent or otherwise,
of such Person in respect of the face amount of bankers' acceptances and (k)
Off-Balance Sheet Liabilities; provided that Indebtedness shall not include
deferred tax liabilities, employee and retiree benefit obligations or
endorsements for collection or deposit in the ordinary course of business. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.

          "Indemnified Amounts" has the meaning specified in Section 10.01.

          "Indemnified Party" has the meaning specified in Section 10.01.

          "Involuntary Bankruptcy Event" means the occurrence of an event that,
but for notice or lapse of time or both, would constitute any Event of
Bankruptcy with respect to any Transaction Party.

          "IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

          "Joinder Agreement" means an agreement substantially in the form of
Annex E pursuant to which a new Purchaser Group is established hereunder
pursuant to Section 11.03(i).

          "Law" means any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of
any Official Body.

          "Liquidating Receivable Interest" has the meaning specified in Section
2.04.

          "Liquidation Day" means for any Receivable Interest, (i) each day
during a Fixed Period for such Receivable Interest on which the conditions set
forth in Section 3.02 are not satisfied, (ii) each day on which Reinvestment
Purchases have been suspended by the Seller pursuant to Section 2.16 and (iii)
each day which occurs on or after the Amortization Date for such Receivable
Interest.

          "Liquidation Fee" means for (i) any Fixed Period for which Yield is
computed by reference to the CP Rate and a reduction of Capital is made for any
reason or (ii) any Fixed Period for which Yield is computed by reference to the
Eurodollar Rate and a reduction of Capital is made for any reason on any day
other than the last day of such Fixed Period, the amount, if any, by which (A)
the additional Yield (calculated without taking into account any Liquidation Fee
or any shortened duration of such Fixed Period pursuant to clause (iii) of the
definition thereof) which would have accrued during such Fixed Period (or, in
the case of clause (i) above, during the period until the maturity of the
underlying Promissory Note tranches) on the reductions of Capital of the
Receivable Interest relating to such Fixed Period had such reductions not
occurred, exceeds (B) the income, if any, received by the Purchaser which holds
such Receivable Interest from the investment of the proceeds of such reductions
of Capital. A

                                       17

<PAGE>

certificate as to the amount of any Liquidation Fee (including the computation
of such amount) shall be submitted by the affected Purchaser to the Seller and
shall be conclusive and binding for all purposes, absent manifest error.

          "Loss Horizon Ratio" means, as of any Monthly Reporting Date and
continuing until (but not including) the next Monthly Reporting Date, the amount
obtained by dividing (i) the aggregate Accruals which arose during the nine
Calculation Periods immediately preceding such earlier Monthly Reporting Date by
(ii) the aggregate Outstanding Balance of Receivables as of the end of the
Current Calculation Period minus the aggregate Outstanding Balance of Defaulted
Receivables as of the end of the Current Calculation Period.

          "Loss Reserve" means, on any date, an amount equal to:

                               LRP x NRPB

where:

          LRP   =   the Loss Reserve Percentage on such date.

          NRPB  =   the Net Receivables Pool Balance at the close of
                    business of the Servicer on such date.

          "Loss Reserve Percentage" means, on any date, the greatest of (i) the
Dynamic Loss Reserve Ratio, (ii) four times the Normal Concentration Limit
during a Rating Level 1 Period and, during any other period, five times the
Normal Concentration Limit and (iii) the Loss Reserve Percentage Floor.

          "Loss Reserve Percentage Floor" means 22%.

          "Loss-to-Liquidation Ratio" means the ratio (expressed as a
percentage) computed as of each Monthly Reporting Date for the immediately
preceding Calculation Period by dividing (i) the aggregate Outstanding Balance
of all Receivables written-off by the Originator, the Servicer or the Seller, or
which should have been written-off by the Originator, the Servicer or the Seller
in accordance with the Credit and Collection Policy, during such Calculation
Period by (ii) the aggregate amount of Collections of Receivables actually
received during such Calculation Period.

          "Majority Committed Purchasers" means Committed Purchasers
representing more than 50% of the Aggregate Commitment (determined without
giving effect to any termination of the Commitments hereunder).

          "Majority Managing Agents" shall mean Managing Agents for Committed
Purchasers representing more than 50% of the Aggregate Commitment (determined
without giving effect to any termination of the Commitments hereunder);
provided, however, that so long as there are only two Managing Agents, the term
"Majority Managing Agents" shall mean each such Managing Agent.

                                       18

<PAGE>

          "Manager" means a "manager" of the Seller under (and as defined in)
the limited liability company agreement of the Seller.

          "Managing Agent" means, with respect to any Purchaser Group, the
Person identified as the "Managing Agent" for such Purchaser Group on Schedule
I, together with (i) any successor thereto designated pursuant to Article IX and
(ii) any Person that becomes a Managing Agent for a new Purchaser Group pursuant
to Section 11.03(i).

          "Material Adverse Effect" means a material adverse effect on (i) the
ability of any Transaction Party to perform its obligations under any
Transaction Document, subject to applicable cure and grace periods, (ii) the
legality, validity or enforceability of this Agreement or any other Transaction
Document, (iii) any Purchaser's or the Administrative Agent's interest in the
Receivables generally or in any material portion of the Receivables, the Related
Security or the Collections with respect thereto, (iv) the collectibility of the
Receivables generally or of any material portion of the Receivables or the
legality, validity or enforceability of the Contracts generally or of any
material portion of the Contracts or (v) the business, operations, properties,
assets, liabilities or condition (financial or otherwise) of either (A) the
Originator and its Subsidiaries, taken as a whole or (B) the Seller.

          "Material Indebtedness" means Indebtedness, or net termination payment
obligations in respect of one or more Swap Agreements, of any one or more of (i)
the Originator and its Subsidiaries in an aggregate principal amount exceeding
$25,000,000 or (ii) the Seller in an aggregate principal amount exceeding
$25,000. For purposes of determining Material Indebtedness, the "principal
amount" of the obligations of the Originator or any Subsidiary or of the Seller
in respect of any Swap Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Originator or such
Subsidiary or the Seller would be required to pay if such Swap Agreement were
terminated at such time. As used herein, the term "Swap Agreement" means any
agreement with respect to any swap, forward, future or derivative transaction or
option or similar agreement involving, or settled by reference to, one or more
rates, currencies, commodities, equity or debt instruments or securities, or
economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions; provided, however, that no phantom stock or similar plan providing
for payments only on account of services provided by current or former
directors, officers, employees or consultants of the Originator or its
Subsidiaries shall be a Swap Agreement.

          "Maximum Receivable Interest Percentage" means (i) during any period
that the Servicer is delivering Daily Reports hereunder, 100% and (ii) during
any other period, 99%.

          "Medco" means Medco Health Solutions, Inc., a Delaware corporation,
and any successor thereto.

          "Merck" means Merck & Co., Inc., a New Jersey corporation.

          "Monthly Report" means a report in substantially the form of, and
containing the information described in, Annex A-1, and such additional
information as any Managing Agent may reasonably request from time to time, duly
completed and furnished by the Servicer to each

                                       19

<PAGE>

Managing Agent pursuant to Section 6.03(a), as such form may be amended by the
Administrative Agent from time to time subject to the prior consent of the
Servicer (such consent not to be unreasonably withheld); provided, however, that
if the Servicer fails to object within 10 days following receipt of any material
change to the form of Monthly Report, the Servicer will be deemed to have
consented to such amendment.

          "Monthly Reporting Date" means the [15]th day of each calendar month,
or if that day is not a Business Day, the next following Business Day.

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

          "Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

          "Net Receivables Pool Balance" means at any time the aggregate
Outstanding Balance of Pool Receivables reduced by the sum (without duplication)
of:

          (i)    the aggregate Outstanding Balance of Pool Receivables that are
     not Eligible Receivables,

          (ii)   the aggregate Outstanding Balance of all Eligible Receivables
     that are Defaulted Receivables,

          (iii)  the aggregate amount by which the Outstanding Balance of
     Eligible Receivables of each Obligor (treating each Obligor and its
     Affiliates as if they were a single Obligor) exceeds the Concentration
     Limit for such Obligor,

          (iv)   the aggregate amount of Collections that have been received,
     which Collections have not yet been applied to reduce the Outstanding
     Balance of any Receivables,

          (v)    the aggregate amount by which the Outstanding Balances of
     Receivables which are to be reduced or cancelled pursuant to any credit
     memos or other events or circumstances described in the definition of
     "Diluted Receivable," to the extent such reduction or cancellation has not
     yet occurred,

          (vi)   the Aggregate Accounts Payable Deduction Amount,

          (vii)  the excess, if any, of (A) the aggregate Outstanding Balance of
     Eligible Unbilled Receivables that remain unbilled as of the end of the
     third (3rd) calendar month after the first date (the "Billing Cut-off
     Date") on which such Unbilled Receivables could have been billed under the
     terms of the related Contract (excluding any such Receivables included in
     clauses (viii) and (ix) below) over (B) 20% of the aggregate Outstanding
     Balance of such Unbilled Receivables as of their respective Billing Cut-off
     Dates,

          (viii) the excess, if any, of (A) the aggregate Outstanding Balance of
     Eligible Unbilled Receivables that remain unbilled as of the end of the
     fourth (4th) calendar month after their respective Billing Cut-off Dates
     (excluding any such Receivables

                                       20

<PAGE>

     included in clause (ix) below) over (B) 5% of the aggregate Outstanding
     Balance of such Unbilled Receivables as of their respective Billing Cut-off
     Dates,

          (ix)   the aggregate Outstanding Balance of Eligible Unbilled
     Receivables that remain unbilled as of the end of the fifth (5th) calendar
     month after their respective Billing Cut-off Dates;

          (x)    the product of (a) the aggregate Specific Reserve for all
     Obligors of Eligible Receivables (excluding any portion thereof allocable
     to Defaulted Receivables included in clause (ii)) multiplied by (b) 1.2,

          (xi)   the Formulary Rebate Deduction Amount, and

          (xii)  the Pfizer Deduction Amount;

provided, however, that no deduction will be made pursuant to clauses (vii),
(viii) and (ix) until the Monthly Reporting Date for the Calculation Period
ending October 31, 2003.

          "Non-U.S. Person" has the meaning specified in Section 2.14(d).

          "Normal Concentration Limit" has the meaning specified in the
definition of "Concentration Limit."

          "Obligor" means a Person obligated to make payments pursuant to a
Contract.

          "Off-Balance Sheet Liability" of a Person shall mean (i) any liability
under any Sale and Leaseback or any lease leaseback transaction which is not a
Capital Lease Obligation and (ii) any liability under any so called "synthetic
lease" transaction entered into by such Person.

          "Official Body" shall mean any government or political subdivision or
any agency, authority, bureau, central bank, commission, department or
instrumentality of any such government or political subdivision, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

          "Originator" means Medco.

          "Originator Purchase Agreement" means the Receivables Purchase and
Contribution Agreement of even date herewith between the Seller and Medco, as
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof and thereof.

          "Other Medco Companies" means, collectively, the Originator and all of
its Subsidiaries and Affiliates except the Seller.

          "Outstanding Balance" means, with respect to any Receivable at any
time, the then outstanding principal amount thereof, excluding any finance
charges related thereto. In the case of an Unbilled Receivable, the Outstanding
Balance thereof shall be determined by the

                                       21

<PAGE>

Servicer in accordance with GAAP and, to the extent consistent with GAAP, in a
manner consistent with the practices of the Originator as in effect on the date
hereof.

          "Participant" means a Conduit Participant or a Committed Purchaser
Participant.

          "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

          "PBM Services" means any drug benefit management services, including,
without limitation, management of retail pharmacy networks, payment of claims to
pharmacies for prescription drugs, drug utilization review and formulary
management services.

          "Percentage" means, at any time with respect to any Committed
Purchaser, a fraction (expressed as a percentage), the numerator of which is
equal to its Commitment at such time, and the denominator of which is equal to
the Aggregate Commitment.

          "Permitted Investments" means any of the following investments
denominated and payable solely in Dollars: (a) readily marketable debt
securities issued by, or the full and timely payment of which is guaranteed by
the full faith and credit of, the federal government of the United States of
America, (b) insured demand deposits, time deposits and certificates of deposit
of any commercial bank rated at least A-1+ by S&P and P-1 by Moody's, (c) no
load money market funds rated in the highest ratings category by each of Moody's
and S&P (without the "r" symbol attached to any such rating by S&P), (d)
commercial paper of any corporation incorporated under the laws of the United
States or any political subdivision thereof, provided that such commercial paper
is rated at least A-1+ (and without any "r" symbol attached to any such rating)
by S&P and at least Prime-1 by Moody's and (e) any other securities or
investments of a passive nature approved in writing by each Managing Agent.

          "Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.

          "Pfizer Deduction Amount" means, on any date, the aggregate
Outstanding Balance of the Eligible Receivables owing by Pfizer, Inc. or any of
its Affiliates (other than Pharmacia Corporation); provided that if (i) such
date occurs prior to the first date on which the Formulary Rebate Conditions are
satisfied and (ii) the Originator has Debt Ratings of at least BBB- by S&P and
Ba2 by Moody's, then the Pfizer Deduction Amount shall be zero.

          "Pharmaceutical Plan" means any third-party payor plan, agreement or
arrangement through which Persons are entitled to receive pharmaceutical
products.

          "Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the IRC or Section 302 of ERISA, and in respect of which the Originator
or any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.

                                       22

<PAGE>

          "Pool Receivable" means any Receivable which has been sold or
contributed to the Seller from the Originator pursuant to the Originator
Purchase Agreement.

          "Portfolio Turnover Rate" means, as of any Monthly Reporting Date and
continuing until (but not including) the next Monthly Reporting Date, a
fraction, the numerator of which is equal to the aggregate Outstanding Balance
of the Receivables as of the last day of the immediately preceding Calculation
Period and the denominator of which is equal to the aggregate amount of Accruals
which arose during such Calculation Period.

          "Proceeds" means "proceeds" as defined in Section 9-102 of the UCC as
in effect on the date hereof in the State of New York.

          "Program Support Provider" means, with respect to any Conduit
Purchaser, (i) each Committed Purchaser with respect to such Conduit Purchaser
and (ii) any other Person now or hereafter (A) extending credit, or having a
commitment to extend credit to or for the account of, or to make purchases from,
such Conduit Purchaser or (B) issuing a letter of credit, surety bond or other
instrument to support any obligations arising under or in connection with such
Conduit Purchaser's securitization program.

          "Promissory Notes" means, collectively, (i) commercial paper and other
promissory notes issued by a Conduit Purchaser and (ii) solely in the case of a
Conduit Purchaser for which CNAI acts as Managing Agent, participations sold by
such Conduit Purchaser to a Participant; provided that the term "Promissory
Note" shall not include any interest sold by a Conduit Purchaser pursuant to any
Asset Purchase Agreement.

          "Purchase" means an Incremental Purchase or a Reinvestment Purchase.

          "Purchase Limit" shall mean, at any time, the Aggregate Commitment
then in effect; provided, however, that from and after the Termination Date, the
Purchase Limit shall at all times equal the aggregate outstanding Capital of all
Receivable Interests; and provided further that the Purchase Limit may be
reduced in connection with the termination of a Purchaser Group as provided in
Section 2.18. The initial Purchase Limit shall be $500,000,000.

          "Purchase Price" has the meaning specified in Section 2.02(a).

          "Purchaser Fee Letter" has the meaning specified in Section 2.07(b).

          "Purchaser Group" means a group consisting of one or more Conduit
Purchasers, one or more Committed Purchasers and a Managing Agent for such
Purchasers, as specified on Schedule I or in the Joinder Agreement pursuant to
which such Purchaser Group is established pursuant to Section 11.03(i).

          "Purchaser Group Account" means, with respect to any Purchaser Group,
the account specified on Schedule I for such Purchaser Group or such other
account as the relevant Managing Agent may designate in writing from time to
time to the Seller and the Servicer.

          "Purchaser Group Limit" means, with respect to any Purchaser Group,
the aggregate Conduit Purchase Limit(s) of the Conduit Purchaser(s) in such
Purchaser Group.

                                       23

<PAGE>

          "Purchasers" means, collectively, the Committed Purchasers and the
Conduit Purchasers.

          "Rating Agencies" shall mean, on any date of determination, the rating
agencies then rating Promissory Notes at the request of any Conduit Purchaser.

          "Rating Level 1 Period" means any period during which the Originator
has a Debt Rating of BBB- or higher by S&P or Baa3 or higher by Moody's;
provided that a Rating Level 1 Period shall not be in effect at any time that
the Originator (i) has a Debt Rating below BB+ by S&P or below Ba1 by Moody's,
(ii) does not have a Debt Rating from S&P or (iii) does not have a Debt Rating
from Moody's.

          "Rating Level 2 Period" means any period during which the Originator
has a Debt Rating of BB or higher by S&P and Ba2 or higher by Moody's (and a
Rating Level 1 Period is not then in effect).

          "Rating Level 3 Period" means any period during which the Originator
has a Debt Rating of BB- or higher by S&P and Ba3 or higher by Moody's (and
neither a Rating Level 1 Period nor a Rating Level 2 Period is then in effect).

          "Rating Level 4 Period" means any period during which the Originator
(i) has a Debt Rating of B+ or lower by S&P or B1 or lower by Moody's, (ii) does
not have a Debt Rating from S&P or (iii) does not have a Debt Rating from
Moody's.

          "Receivable" means all indebtedness and other obligations (in each
case whether present or future, due or to become due, billed or unbilled) of any
Obligor arising under or pursuant to a Contract, including, without limitation,
the right to payment of any rebates, administrative fees, data fees, interest or
finance charges, late payment charges, delinquency charges, extension or
collection fees and all other obligations of such Obligor with respect thereto.

          "Receivable Interest" means, at any time, an undivided percentage
ownership interest in (i) all Pool Receivables then existing or thereafter
arising, (ii) all Related Security with respect to such Pool Receivables, and
(iii) all Collections with respect to, and other Proceeds of, such Pool
Receivables. Such undivided percentage ownership interest at any time shall be
equal to the product of (A) the Receivable Interest Percentage at such time and
(B) a fraction, (1) the numerator of which is equal to the Capital of such
Receivable Interest at such time and (2) the denominator of which is the total
Capital of all Receivable Interests at such time.

          "Receivable Interest Percentage" means a fraction (expressed as a
percentage) computed on any date of determination as follows:

                                     AC + TR
                                     -------
                                      NRPB

Where:

                                       24

<PAGE>

          AC    =   the aggregate Capital of all Receivable Interests on the
                    date of such computation; provided that if the
                    Administrative Agent Account has been established pursuant
                    to Section 6.07 then, solely for purposes of computing the
                    Receivable Interest Percentage, the aggregate Capital on any
                    day shall be deemed to be reduced by an amount equal to the
                    excess, if any, of (i) the aggregate amount of funds then
                    held in the Administrative Agent Account over (ii) the
                    aggregate accrued and unpaid Yield, Fees and Servicing Fees.

          TR    =   The Total Reserves on the date of such computation.

          NRPB  =   the Net Receivables Pool Balance on the date of such
                    computation.

Notwithstanding the foregoing, (i) from and after the date of the Termination
Date until the Final Payout Date, the aggregate Receivable Interests of the
Purchasers shall equal 100% and (ii) from and after the Final Payout Date, the
Receivable Interest Percentage shall be reduced to zero as provided in Section
2.03(c).

          "Reduction Amount" has the meaning specified in Section 2.16.

          "Register" has the meaning specified in Section 11.03(d).

          "Reinvestment Purchase" has the meaning specified in Section 2.01(b).

          "Related Security" means with respect to any Receivable:

               (i)   all security interests or liens and property subject
          thereto from time to time purporting to secure payment of such
          Receivable, whether pursuant to the Contract related to such
          Receivable or otherwise, together with all financing statements
          authorized by an Obligor describing any collateral securing such
          Receivable;

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

               (iii) all other books, records and other information (including,
          without limitation, computer programs, tapes, discs, punch cards, data
          processing software and related property and rights) relating to such
          Receivable and the related Obligor;

               (iv)  all of the Seller's and the Originator's right, title and
          interest in and to all Contracts or other agreements or documents that
          evidence, secure or otherwise relate to such Receivable;

               (v)   all of the Seller's right, title and interest in, to and
          under the Originator Purchase Agreement including, without limitation,
          (i) all rights of the

                                       25

<PAGE>

          Seller to receive moneys due or to become due under or pursuant to the
          Originator Purchase Agreement, (ii) all security interests and
          property subject thereto from time to time purporting to secure
          payment of monies due or to become due under or pursuant to the
          Originator Purchase Agreement, (iii) all rights of the Seller to
          receive proceeds of any insurance, indemnity, warranty or guaranty
          with respect to the Originator Purchase Agreement, (iv) claims of the
          Seller for damages arising out of or for breach of or default under
          the Originator Purchase Agreement, and (v) the right of the Seller to
          compel performance and otherwise exercise all remedies thereunder; and

               (vi)  all Proceeds, products and profits of the foregoing.

          "Restricted Payments" has the meaning specified in Section 5.01(o).

          "Revolving Credit Agreement" means the credit agreement, dated as of
August [___], 2003, among Medco, the lenders and issuing bank party thereto,
JPMorgan Chase Bank, as administrative agent, and the co-syndication agents and
co-documentation agents party thereto, as amended, restated, supplemented or
otherwise modified from time to time, and any substitute for or replacement of
such credit agreement.

          "Sale and Leaseback" means any lease of any property (whether real,
personal or mixed), whether now owned or hereafter acquired, to which the
Originator or any of its Subsidiaries, directly or indirectly, becomes or
remains liable as lessee or as a guarantor or other surety and which the
Originator has sold or transferred or is to sell or to transfer to any other
Person (other than any of its Subsidiaries).

          "S&P" means Standard & Poor's Rating Services, a division of
McGraw-Hill Companies, Inc.

          "Scheduled Commitment Termination Date" means, with respect to any
Purchaser Group, August [__], 2004, unless, prior to such date (or the date so
extended pursuant to this definition), upon the Seller's request, made not more
than 60 nor less than 45 days prior to the then Scheduled Commitment Termination
Date, each Committed Purchaser in such Purchaser Group shall in its sole
discretion consent, which consent shall be given not more than 30 days prior to
the then current Scheduled Commitment Termination Date for such Purchaser Group,
to the extension of the Scheduled Commitment Termination Date to a date
occurring up to 364 days after the then current Scheduled Commitment Termination
Date. Each Committed Purchaser hereby agrees to respond to any such request from
the Seller within 30 days of its receipt thereof; provided, however, that any
failure of any Committed Purchaser to respond to the Seller's request for such
extension shall be deemed a denial of such request by such Committed Purchaser.
Notwithstanding the foregoing, the Seller may declare the Scheduled Commitment
Termination Date to have occurred for any Purchaser Group for the reasons, and
in accordance with the procedures, specified in Section 2.18.

          "Scotiabank" means The Bank of Nova Scotia, and any successor thereto.

          "SEC" means the Securities and Exchange Commission.

                                       26

<PAGE>

          "Seller" means Medco Health Receivables, LLC, a Delaware limited
liability company, and any successor thereto.

          "Seller Obligations" means all present and future indebtedness and
other liabilities and obligations (howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, or due or to become due) of
the Seller to any Purchaser, any Managing Agent, the Administrative Agent and/or
any other Indemnified Party, arising under or in connection with this Agreement
or any other Transaction Document or the transactions contemplated hereby or
thereby, and shall include, without limitation, all Capital, Yield, Fees and
Servicing Fees and all other amounts due or to become due under the Transaction
Documents (whether in respect of fees, expenses, indemnifications or otherwise),
including, without limitation, interest, fees and other obligations that accrue
after the commencement of any bankruptcy, insolvency or similar proceeding with
respect to any Transaction Party (in each case whether or not allowed as a claim
in such proceeding).

          "Servicer" means at any time the Person then authorized pursuant to
Section 6.01 to administer and collect Receivables.

          "Servicer Replacement Event" has the meaning specified in Section
6.08.

          "Servicer Report" means any Monthly Report, Weekly Report or Daily
Report.

          "Servicing Fee" has the meaning specified in Section 2.07(a).

          "Servicing Fee Payment Date" means the third day of each calendar
month (or, if such day is not a Business Day, the next succeeding Business Day).

          "Servicing Fee Rate" has the meaning specified in Section 2.07(a).

          "Servicing Fee Reserve" means, on any date, an amount equal to

                              (OBR x SFRR) + AUSF

where:

          OBR   =   the aggregate Outstanding Balance of all Pool
                    Receivables as of the end of the Current Calculation
                    Period.

          SFRR  =   the Servicing Fee Reserve Ratio on such date.

          AUSF  =   the accrued and unpaid Servicing Fee as of such date.

          "Servicing Fee Reserve Ratio" means, as of any Monthly Reporting Date
and continuing until (but not including) the next succeeding Monthly Reporting
Date, an amount equal to the product of (i) the Servicing Fee Rate and (ii) a
fraction having as the numerator the

                                       27

<PAGE>

Portfolio Turnover Rate as of such earlier Monthly Reporting Date times 30 times
1.25, and as the denominator, 360.

          "Settlement Date" for any Receivable Interest means (i) the last day
of each Fixed Period for such Receivable Interest and (ii) following the
occurrence of the Termination Date, each other Business Day specified by the
Administrative Agent (at the direction of any Managing Agent) in a written
notice to the Servicer and each Managing Agent; provided, however, that, in the
case of a Receivable Interest held by a Conduit Purchaser, if Yield with respect
to such Receivable Interest is computed by reference to the CP Rate and no
Liquidation Day exists on the last day of a Fixed Period for such Receivable
Interest, the Settlement Date for such Receivable Interest for such Fixed Period
shall be the third day after the last day of such Fixed Period (or, if such day
is not a Business Day, the next succeeding Business Day).

          "Significant Subsidiary" means a Subsidiary that satisfies the
definition of "significant subsidiary", as such term is defined in Regulation
S-X of the SEC, as amended from time to time; provided, however, that for
purposes of the determining whether such Subsidiary is a "significant
subsidiary" under Regulation S-X, the relevant threshold percentage to be used
in determining a "significant subsidiary" shall be 5% (and not as otherwise
specified in Regulation S-X).

          "Solvent" means, with respect to any Person, that as of the date of
determination (a) the sum of such Person's debt (including contingent
liabilities) does not exceed all of its property, at a present fair valuation on
a going concern basis; (b) the fair saleable value of the property on a going
concern basis of such Person is not less than the amount that will be required
to pay the probable liabilities on such Person's then existing debts as they
become absolute and matured; (c) such Person's capital is not unreasonably small
in relation to its business or any contemplated or undertaken transaction; and
(d) such Person does not intend to incur, or believe (nor should it reasonably
believe) that it will incur, debts beyond its ability to pay such debts as they
become due. For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all of
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability
(irrespective of whether such contingent liabilities meet the criteria for
accrual under Statement of Financial Accounting Standard No. 5).

          "Special Indemnified Amounts" has the meaning specified in Section
6.06.

          "Specified Bankruptcy Opinion Provisions" means the factual
assumptions (including those contained in the factual certificate referred to
therein) and the actions to be taken by the Originator or the Seller, in each
case as specified in the legal opinion of Arent Fox Kintner Plotkin & Kahn, PLLC
relating to certain bankruptcy matters delivered on the Closing Date.

          "Specific Reserve" means the reserve established by the Servicer (in
accordance with GAAP and, to the extent consistent with GAAP, in a manner
consistent with the practices of the Originator as in effect on the date hereof)
in respect of the Receivables of any specific Obligor that the Servicer has
determined to be a collection risk.

                                       28

<PAGE>

          "Spin-Off" means the distribution of all the common stock of the
Originator to stockholders of Merck as described in the General Form for
Registration of Securities (Form 10) filed by the Originator with the Securities
and Exchange Commission on May 28, 2003 (registration statement number 1-31312),
as amended.

          "Stress Factor" means: (i) during a Rating Level 1 Period, 2.0 and
(ii) at any other time, 2.25.

          "Subordinated Note" has the meaning specified in the Originator
Purchase Agreement.

          "Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the ordinary voting power or, in the case of a partnership, more than 50%
of the general partnership interests are, as of such date, owned, controlled or
held. Unless the context otherwise requires, all references to "Subsidiary"
shall mean a Subsidiary of the Originator.

          "Tangible Net Worth" means at any time (a) the Outstanding Balance of
all Receivables other than Defaulted Receivables, plus (b) cash and cash
equivalents owned by the Seller, minus (c) the aggregate outstanding Capital
hereunder, minus (d) the outstanding principal balance of the Subordinated Note.

          "Taxes" has the meaning specified in Section 2.14.

          "Termination Date" means the earliest of (a) the latest occurring
Scheduled Commitment Termination Date for any Purchaser Group, (b) the date
determined pursuant to Section 7.01, (c) the date specified by the Seller on not
less than five (5) Business Days' notice to each Managing Agent and (d) August
[___], 2006.

          "Termination Event" has the meaning specified in Section 7.01.

          "Total Reserve" means, at any time, an amount equal to the sum of (i)
the Loss Reserve, plus (ii) the Dilution Reserve, plus (iii) the Yield and Fee
Reserve.

          "Transaction Documents" means this Agreement, the Originator Purchase
Agreement, the Control Agreements, the Fee Letters, the Asset Purchase
Agreements, the limited liability company agreement of the Seller and all other
instruments, documents and agreements executed and/or delivered in connection
therewith.

          "Transaction Party" means any of the Seller, the Originator or (so
long as it is Medco or an Affiliate thereof) the Servicer.

          "UCC" means the Uniform Commercial Code as from time to time in effect
in the specified jurisdiction.

                                       29

<PAGE>

          "Unbilled Receivable" means any Receivable that has not been billed to
the Obligor by either the Originator or the Servicer.

          "Weekly Report" means a report in substantially the form of, and
containing the information described in, Annex A-2, and such additional
information as any Managing Agent may reasonably request from time to time, duly
completed and furnished by the Servicer to each Managing Agent pursuant to
Section 6.03(b).

          "Yield" means, for any Receivable Interest and any Fixed Period, the
sum for each day during such Fixed Period of the following:

                                 YR x C + LF
                                 ------
                                    Y
where:

          YR    =   the Yield Rate for such Receivable Interest for such day

          C     =   the Capital of such Receivable Interest on such day

          Y     =   (a) in the case of a Receivable Interest, the Yield
                    Rate for which is based on the Alternate Base Rate, 365
                    or 366 as applicable and (b) in the case of any other
                    Receivable Interest, 360

          LF    =   the Liquidation Fee, if any, for such Receivable
                    Interest for such Fixed Period;

provided, however, that no provision of this Agreement shall require the payment
or permit the collection of Yield in excess of the maximum permitted by
applicable law; provided, further, that Yield for any Receivable Interest shall
not be considered paid by any distribution to the extent that at any time all or
a portion of such distribution is rescinded or must otherwise be returned for
any reason.

          "Yield and Fee Reserve" means, on any date, an amount equal to

                           [(AC x YFRR) + AUYF] + SFR

where:

          AC    =   the aggregate Capital of all Receivable Interests
                    at the close of business of the Servicer on such
                    date.

          YFRR  =   the Yield and Fee Reserve Ratio on such date.

          AUYF  =   accrued and unpaid Yield and Fees on such date.

                                       30

<PAGE>

          SFR   =    the Servicing Fee Reserve on such date.

          "Yield and Fee Reserve Ratio" means, on any Monthly Reporting Date and
continuing until (but not including) the next Monthly Reporting Date, an amount,
expressed as a percentage, equal to:

          YFRR  = [(ER x 1.5) + (AEM + PFR)] x (PTR x 30 x 1.25)/360

where:

          ER    =   the one-month Eurodollar Rate as of the end of the Current
                    Calculation Period

          AEM   =   the Applicable Eurodollar Margin as of the end of the
                    Current Calculation Period

          PFR   =    the Program Fee Rate (as defined in the Purchaser Fee
                    Letter) as of the end of the Current Calculation Period

          PTR   =   Portfolio Turnover Rate as of the end of the Current
                    Calculation Period

          "Yield Rate" means, with respect to any Receivable Interest for any
day (i) to the extent such Receivable Interest is funded on such day by a
Conduit Purchaser through the issuance of Promissory Notes, the CP Rate and (ii)
otherwise, the Assignee Rate; provided, however, that at all times following the
occurrence and during the continuation of a Termination Event the Yield Rate for
all Receivable Interests shall be a rate per annum equal to the Alternate Base
Rate in effect from time to time plus 2.00%.

          "Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

          SECTION 1.02  Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the State of New York, as in effect on the date hereof
and not specifically defined herein, are used herein as defined in such Article
9. Unless otherwise expressly indicated, all references herein to "Article,"
"Section," "Schedule" or "Annex" means articles and sections of, and schedules
and annexes to, this Agreement. Headings are for purposes of reference only and
shall not otherwise affect the meaning or interpretation of any provision
hereof. Any reference to any Law shall be deemed to be a reference to such Law
as the same may be amended or re-enacted from time to time. Any reference to any
Person appearing in any of the Transaction Documents shall include its
successors and permitted assigns.

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<PAGE>

                                   ARTICLE II
                       AMOUNTS AND TERMS OF THE PURCHASES

          SECTION 2.01  Purchase Facility. (a) The Seller may, at its option
from time to time prior to the Termination Date, offer to sell and assign
Receivable Interests to the Purchasers in each Purchaser Group at the applicable
Purchase Price specified pursuant to Section 2.02 (each such sale and
assignment, an "Incremental Purchase"). On the terms and conditions set forth
herein, (i) the Conduit Purchasers, ratably, in accordance with their respective
Conduit Purchase Limits, may, in their sole discretion, purchase the Receivable
Interests so offered for sale by the Seller and (ii) if a Conduit Purchaser in
any Purchaser Group declines to purchase any such Receivable Interest, or if a
Conduit Purchaser's Termination Event has occurred and is continuing with
respect to such Conduit Purchaser, the Committed Purchasers in such Purchaser
Group shall, ratably in accordance with their respective Commitments, severally
and not jointly, purchase such Receivable Interest. Each Incremental Purchase
shall be made among the Purchaser Groups ratably in accordance with their
respective Purchaser Group Limits, except as provided in Section 2.02(b). Under
no circumstances shall an Incremental Purchase be made hereunder if, after
giving effect thereto, (i) the aggregate outstanding Capital would exceed the
Purchase Limit or (ii) the Receivable Interest Percentage would exceed the
Maximum Receivable Interest Percentage, as determined by reference to the
information set forth in the most recent Servicer Report delivered hereunder.

          (b)  Until the Amortization Date for a Receivable Interest, the
Collections attributable to such Receivable Interest shall be automatically
reinvested in the Pool Receivables and Related Security and Collections with
respect thereto pursuant to (and subject to the priority of payments set forth
in) Section 2.04 (each a "Reinvestment Purchase").

          (c)  Upon five (5) Business Days' written notice to the
Administrative Agent and each Managing Agent, the Seller may reduce the
Commitments of the Committed Purchasers by an amount equal to $10,000,000 or by
a whole multiple of $1,000,000 in excess thereof; provided that no such
termination or reduction shall be permitted if, after giving effect thereto, the
aggregate Capital would exceed the Aggregate Commitment. Upon any such
reduction, the Commitment of each Committed Purchaser and the Conduit Purchase
Limit of each Conduit Purchaser shall be reduced in an amount equal to such
Committed Purchaser's or Conduit Purchaser's ratable share of the amount of such
reduction. Once reduced, the Commitments shall not be subsequently reinstated
without the consent of each Committed Purchaser.

          SECTION 2.02  Making Incremental Purchases. (a) Each Incremental
Purchase hereunder shall be made on notice delivered by the Seller to each
Managing Agent not later than 11:00 A.M. (New York City time) on the second
Business Day prior to the date of such Incremental Purchase. Each such notice
shall specify:

               (i)    the aggregate amount (which shall not be less than
          $5,000,000 and integral multiples of $100,000 in excess thereof)
          requested to be paid to the Seller for the Receivable Interests which
          are the subject of such Incremental Purchase (the "Purchase Price");

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<PAGE>

               (ii)   the allocation of such Purchase Price among the Purchaser
          Groups (which shall be proportional to the respective Conduit Purchase
          Limits of the Conduit Purchaser(s) in each Purchaser Group, unless
          such purchase is to be made by the Committed Purchasers in a
          particular Purchaser Group and the proceeds of such purchase are to be
          used solely to repay the Capital of the Receivable Interest of a
          Conduit Purchaser pursuant to Section 2.02(b));

               (iii)  the date of such Incremental Purchase (which shall be a
          Business Day); and

               (iv)   if the Assignee Rate is to apply to any such Receivable
          Interest, the requested duration of the initial Fixed Period for such
          Receivable Interest.

          No more than two Incremental Purchases may be requested by the Seller
during any single calendar month.

          Each Conduit Purchaser shall promptly notify its Managing Agent
whether it has determined to make the requested Incremental Purchase on the
terms specified by the Seller. If any Conduit Purchaser has determined not to
fund all or any portion of its share of the Purchase Price for an Incremental
Purchase, the Managing Agent for such Conduit Purchaser shall promptly send
notice of the proposed Incremental Purchase to the Committed Purchasers in such
Conduit Purchaser's Purchaser Group concurrently by telecopier specifying the
date of such Incremental Purchase, the aggregate amount of Capital of the
Receivable Interest being purchased by such Committed Purchasers (which amount
shall be equal to the portion of the Purchase Price that would otherwise have
been funded by the applicable Conduit Purchaser), each such Committed
Purchaser's portion thereof (determined ratably in accordance with their
respective Commitments), whether the Yield for the initial Fixed Period for such
Receivable Interest is calculated based on the Adjusted Eurodollar Rate (which
may be selected only if such notice is given at not later than 11:00 A.M. (New
York City time) on the second Business Day prior to the purchase date) or the
Alternate Base Rate, and the duration of the Fixed Period for such Receivable
Interest (which shall be one day if the Seller has not selected another period
in accordance with the provisions set forth in the definition of "Fixed
Period").

          (b)  On the date of each such Incremental Purchase, the applicable
Conduit Purchasers and/or Committed Purchasers shall, upon satisfaction of the
applicable conditions set forth in Article III, make available to the Seller in
same day funds an aggregate amount equal to the Purchase Price for the
Receivable Interests which are the subject of such Incremental Purchase, at the
account set forth in the Funds Transfer Letter; provided, however, if such
Incremental Purchase is being made by the Committed Purchasers in a Purchaser
Group following the Amortization Date for a Receivable Interest owned by a
Conduit Purchaser pursuant to clause (i)(a) of the definition of Amortization
Date and any Capital of such Receivable Interest is outstanding on such date of
purchase, the Seller hereby directs such Committed Purchasers to pay the
Purchase Price for such Incremental Purchase (to the extent of such outstanding
Capital) to the applicable Purchaser Group Account, for application to the
reduction of the outstanding Capital of such Receivable Interest.

                                       33

<PAGE>

          (c)  Effective on the date of each Purchase, the Seller hereby
sells and assigns to the Purchaser(s) participating in such Purchase, an
undivided percentage ownership interest, to the extent of the Receivable
Interests then being purchased or in respect of which the reinvestment is being
made, in each Pool Receivable then existing or thereafter arising and in the
Related Security and Collections with respect thereto.

          (d)  No Conduit Purchaser shall participate in an Incremental
Purchase under this Agreement at any time in an amount which would exceed such
Conduit Purchaser's Conduit Purchase Limit less an amount equal to the aggregate
outstanding Capital held by such Conduit Purchaser.

          (e)  Notwithstanding anything herein to the contrary, a Committed
Purchaser shall not be obligated to participate in an Incremental Purchase if,
after giving effect thereto and the application of the proceeds thereof, the
aggregate Capital held by such Committed Purchaser would exceed an amount equal
to (i) such Committed Purchaser's Commitment less (ii) such Committed
Purchaser's ratable share of the aggregate outstanding Capital held by the
Conduit Purchaser(s) in such Committed Purchaser's Purchaser Group (whether or
not any portion thereof has been assigned by such Conduit Purchaser(s) under an
Asset Purchase Agreement). Each Committed Purchaser's obligation shall be
several, such that the failure of any Committed Purchaser to make available to
the Seller any funds in connection with any Incremental Purchase shall not
relieve any other Committed Purchaser of its obligation, if any, hereunder to
make funds available on the date of such Incremental Purchase, but no Committed
Purchaser shall be responsible for the failure of any other Committed Purchaser
to make funds available in connection with any Incremental Purchase.

          SECTION 2.03  Receivable Interest Computation. (a) Upon the payment of
the Purchase Price for any Incremental Purchase hereunder, (i) each Conduit
Purchaser participating in such Purchase shall acquire a Receivable Interest the
initial Capital of which is equal to the portion of the Purchase Price paid by
such Conduit Purchaser and (ii) to the extent the Committed Purchasers in any
Purchaser Group participate in such Purchase, such Committed Purchasers shall
acquire (ratably in accordance with their respective Commitments) a Receivable
Interest the initial Capital of which is equal to the portion of the Purchase
Price paid by such Committed Purchasers.

          (b)  Each Receivable Interest shall be initially computed on its
date of Purchase. Thereafter until the Amortization Date for such Receivable
Interest, such Receivable Interest shall be automatically recomputed (or deemed
to be recomputed) on each day other than a Liquidation Day. Any Receivable
Interest, as computed (or deemed recomputed) as of the day immediately preceding
the Amortization Date for such Receivable Interest, shall thereafter remain
constant until the Termination Date occurs. From and after the Termination Date
until the Final Payout Date, each Receivable Interest shall be equal to a
fraction (expressed as a percentage) the numerator of which is equal to the
Capital of such Receivable Interest as of the Termination Date and the
denominator of which is equal to the aggregate Capital of all Receivable
Interests as of the Termination Date.

          (c)  Each Purchase shall constitute a purchase of undivided
percentage ownership interests in each and every Pool Receivable, together with
all Related Security and

                                       34

<PAGE>

Collections with respect thereto, then existing, as well as in each and every
Pool Receivable, together with all Related Security and Collections with respect
thereto, which arises at any time after the date of such Purchase. From and
after the Termination Date, the aggregate Receivable Interests of the Purchasers
shall equal 100%. On the Final Payout Date, the Administrative Agent, on behalf
of the Conduit Purchasers and the Committed Purchasers, shall be deemed to have
reconveyed to the Seller all of the Conduit Purchasers' and the Committed
Purchasers' respective right, title and interest in, to and under the Pool
Receivables and Related Security and Collections with respect thereto, and the
Receivable Interests shall accordingly be reduced to zero. Following the Final
Payout Date, the Administrative Agent, on behalf of the Conduit Purchasers and
the Committed Purchasers, shall execute and deliver to the Seller, at the
Seller's expense, such documents or instruments as the Seller may reasonably
request to terminate the Conduit Purchasers' and the Committed Purchasers'
respective interests in the Receivables and Related Security and Collections
with respect thereto. Any such documents shall be prepared by and at the expense
of the Seller.

          SECTION 2.04  Application of Collections Prior to Termination Date.

          (a)  On each Business Day prior to the Termination Date, the Servicer
shall, out of the Collections received prior to such Business Day and not
previously applied pursuant to this Section 2.04 (including, if applicable, any
investment earnings received with respect to funds on deposit in the Collection
Account), apply such Collections in the following order and priority:

               (i)   set aside on its books and hold in trust for the
          Purchasers, the Managing Agents and the Administrative Agent an amount
          equal to the aggregate Yield, Fees and Servicing Fees accrued through
          such day and not previously set aside, such amount to be allocated
          among the Purchasers, the Managing Agents, the Administrative Agent
          and the Servicer ratably in accordance with the proportion of such
          amounts owing to each such Person;

               (ii)  if the Servicer Report with the most recent data delivered
          hereunder indicates that the Receivable Interest Percentage exceeds
          the Maximum Receivable Interest Percentage, either (A) pay to the
          Purchasers (ratably in accordance with the outstanding Capital of
          their respective Receivable Interests) the amount necessary to cause
          the Receivable Interest Percentage to be less than or equal to the
          Maximum Receivable Interest Percentage or (B) if the Administrative
          Agent Account has been established pursuant to Section 6.07, deposit
          to the Administrative Agent Account the amount necessary to cause the
          Receivable Interest Percentage to be less than or equal to the Maximum
          Receivable Interest Percentage;

               (iii) if such day is a Liquidation Day for one or more
          Receivable Interests (each a "Liquidating Receivable Interest"), set
          aside and hold in trust for the relevant Purchasers an amount equal to
          the excess, if any, of (1) the portion of the Capital allocable to
          such Liquidating Receivable Interests over (2) the Collections
          previously so set aside and allocable to such Capital pursuant to this
          Section 2.04(a) and not yet distributed to the applicable Purchasers
          hereunder, such amount to be allocated to such Liquidating Receivable
          Interests ratably in

                                       35

<PAGE>
          proportion to the Capital of each; provided, however, that if such day
          is a Liquidation Day by reason of the suspension of Reinvestment
          Purchases pursuant to Section 2.16, then the amount required to be set
          aside pursuant to this clause (iii) shall not exceed the applicable
          Reduction Amount;

               (iv)  if any Seller Obligations (other than Yield, Fees,
          Servicing Fees and Capital) are then due and payable by the Seller to
          any Indemnified Party, pay to each such Indemnified Party (ratably in
          accordance with the amounts owing to each) the Seller Obligations so
          due and payable; and

               (v)   remit any remaining Collections to the Seller as a
          Reinvestment Purchase, for the benefit of the Purchasers then holding
          Receivable Interests, pursuant to Section 2.01(b).

          (b)  On each Settlement Date for a Receivable Interest, the Servicer
shall pay to the relevant Purchaser(s) all Yield payable to such Purchaser(s)
pursuant to Section 2.07 out of Collections allocated or set aside for such
purpose pursuant to Section 2.04(a). On each date on which any Fees are payable
pursuant to the Fee Letters, the Servicer shall pay such Fees to the Persons
entitled thereto pursuant to the Fee Letters out of Collections allocated or set
aside for such purpose pursuant to Section 2.04(a). On each Servicing Fee
Payment Date, the Servicer shall pay to itself the accrued and unpaid Servicing
Fee out of Collections allocated or set aside for such purpose pursuant to
Section 2.04(a).

          (c)  In the event any deposit is made to the Administrative Agent
Account pursuant to Section 2.04(a)(ii)(B), the amount of such deposit shall be
allocated among the Purchaser Groups ratably in proportion to the outstanding
Capital of their respective Receivable Interests. If the amount on deposit in
the Administrative Agent Account exceeds $25,000,000, then on the next
Settlement Date applicable to any Receivable Interest (or such earlier date as
the Servicer may specify upon not less than three Business Days notice to each
Managing Agent), the Servicer shall distribute to each Purchaser then holding a
Receivable Interest such Purchaser's allocable share of such deposit for
application to the reduction of the Capital of such Receivable Interest.
Notwithstanding the foregoing, if on any Business Day after such deposit is made
and prior to the distribution of all or any portion of such deposit pursuant to
this Section 2.04(c), the Servicer delivers a Servicer Report evidencing that
the Receivable Interest Percentage is less than the Maximum Receivable Interest
Percentage, the Servicer may withdraw the Collections so deposited for
application in accordance with Section 2.04(a) to the extent that, after giving
effect to such withdrawal and application, the Receivable Interest Percentage
would not exceed the Maximum Receivable Interest Percentage.

          (d)  In the event any Collections are set aside in respect of any
Liquidating Receivable Interest pursuant to Section 2.04(a)(iii), the Servicer
shall distribute such Collections to the relevant Purchaser(s) on or prior to
the first Settlement Date for any such Receivable Interest; provided, however,
that if at any time prior to such distribution, such Receivable Interest ceases
to be a Liquidating Receivable Interest, the Servicer need not distribute such
Collections pursuant to this Section 2.04(d) but instead may apply such
Collections in accordance with the provisions of Section 2.04(a).

                                       36

<PAGE>

          (e)  Following the occurrence and during the continuation of any
Termination Event or any Involuntary Bankruptcy Event, and at all times during
any Rating Level 3 Period or any Rating Level 4 Period, the Servicer shall (i)
transfer to the Collection Account all Collections set aside or required to be
set aside pursuant to this Section 2.04 by the Business Day following the
Servicer's receipt of such Collections, (ii) make all distributions of such
Collections pursuant to this Section 2.04 by withdrawing such Collections from
the Collection Account on the date such distribution is to be made and (iii) not
permit any withdrawals of such Collections from the Collection Account except
for the purpose of distributing such Collections in accordance with this Section
2.04. Except as provided herein, the Servicer shall not be required to segregate
any amounts set aside by it pursuant to this Section 2.04 from its other funds.

          SECTION 2.05  Application of Collections After Termination Date. (a)
On the Termination Date, the Servicer shall deposit to the Collection Account
all Collections held by it on such date (including amounts previously set aside
pursuant to Section 2.04(a)). On each Business Day thereafter until the Final
Payout Date, the Servicer shall deposit to the Collection Account all
Collections received prior to such Business Day that have not previously been
deposited to the Collection Account. The Servicer shall not make any withdrawals
from the Collection Account during such period except for the purpose of
distributing such Collections in accordance with this Section 2.05.

          (b)  From and after the Termination Date, the Servicer shall apply all
funds on deposit in the Collection Account on any Business Day that have not
been previously applied hereunder (including, without limitation, any investment
earnings received with respect to such funds) in the following order of
priority:

          (i)   first, pay to the Administrative Agent an amount equal to the
     Seller Obligations owing to the Administrative Agent in respect of costs
     and expenses incurred in connection with the enforcement of any Transaction
     Document or the collection of any amounts due thereunder;

          (ii)  second, set aside and hold in trust for the Purchasers, the
     Managing Agents and the Administrative Agent an amount equal to the
     aggregate Yield and Fees and, if the Servicer is a Person other than Medco
     or an Affiliate thereof, Servicing Fees accrued through such day and not
     previously set aside, such amount to be allocated among the Purchasers, the
     Managing Agents, the Administrative Agent and (if applicable) the Servicer
     ratably in accordance with the proportion of such amounts owing to each
     such Person;

          (iii) third, set aside in the Collection Account an amount equal to
     the aggregate Capital for all outstanding Receivable Interests (to the
     extent not previously set aside), such amount to be allocated among the
     Receivable Interests ratably in proportion to the Capital of each;

          (iv)  fourth, if any Seller Obligations (other than Yield, Fees,
     Servicing Fees and Capital) are then due and payable by the Seller to any
     Indemnified Party, pay to each

                                       37

<PAGE>

     such Indemnified Party (ratably in accordance with the amounts owing to
     each) the Seller Obligations so due and payable;

          (v)   sixth, if the Servicer is Medco or an Affiliate thereof, set
     aside in the Collection Account the accrued and unpaid Servicing Fee not
     previously set aside; and

          (vi)  seventh, on the Final Payout Date, pay to the Seller any
     remaining funds.

          (c)  On each Settlement Date for a Receivable Interest from and after
the Termination Date, the Servicer shall withdraw from the Collection Account
and pay to the relevant Purchaser all amounts set aside in the Collection
Account in respect of the accrued Yield and the Capital of such Receivable
Interest. On each date on which any Fees are payable pursuant to the Fee
Letters, the Servicer shall pay such Fees to the Persons entitled thereto
pursuant to the Fee Letters out of Collections set aside for such purpose
pursuant to Section 2.05.

          (d)  On each Servicing Fee Payment Date from and after the Termination
Date, the Servicer shall pay to the Servicer the accrued Servicing Fee out of
Collections set aside for such purpose pursuant to this Section 2.05.

          SECTION 2.06  General Settlement Procedures.

          (a)  Except as otherwise required by applicable law or the relevant
Contract, any payment received from an Obligor of any Receivables shall be
applied as a Collection of the Pool Receivables of such Obligor in the order of
the age of such Receivables, starting with the oldest such Receivable.

          (b)  If on any day any Pool Receivable (or portion thereof) becomes a
Diluted Receivable, the Seller shall be deemed to have received on such day a
Collection of such Pool Receivable in the amount of such Diluted Receivable.

          (c)  If and to the extent the Administrative Agent, any Managing Agent
or any Purchaser shall be required for any reason to pay over to an Obligor any
amount received on its behalf hereunder, such amount shall be deemed not to have
been so received but rather to have been retained by the Seller and,
accordingly, the Administrative Agent, such Managing Agent or such Purchaser, as
the case may be, shall have a claim against the Seller for such amount, payable
when and only to the extent that any distribution from or on behalf of such
Obligor is made in respect thereof.

          (d)  Within one Business Day after the end of each Fixed Period in
respect of which Yield is computed by reference to the CP Rate, the relevant
Managing Agent shall furnish the Seller with an invoice setting forth the amount
of the accrued and unpaid Yield and Fees for such Fixed Period with respect to
the Receivable Interests held by the Conduit Purchaser(s) in such Managing
Agent's Purchaser Group.

          (e)  All payments required to be made hereunder to any Purchaser shall
be made by paying such amount to the applicable Purchaser Group Account in
accordance with Section 2.08. Upon receipt of funds, such Managing Agent shall
pay such funds to the related Purchaser(s) owed such funds in accordance with
the records maintained by such Managing

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<PAGE>

Agent. If a Managing Agent shall have paid to any Purchaser any funds that (i)
must be returned for any reason (including any Event of Bankruptcy) or (ii)
exceeds that which such Purchaser was entitled to receive, such amount shall be
promptly repaid to such Managing Agent by such Purchaser.

          SECTION 2.07  Yield and Fees. (a) The Servicer shall be entitled to
receive a fee (the "Servicing Fee") of 0.25% per annum (the "Servicing Fee
Rate") on the average daily Outstanding Balance of the Pool Receivables, payable
in arrears on each Servicing Fee Payment Date. Upon three Business Days' notice
to the Managing Agents, the Servicer (if not an Originator, the Seller or its
designee or an Affiliate of the Seller) may, with the prior written consent of
each Managing Agent, elect to be paid, as such fee, another percentage per annum
on the average daily Outstanding Balance of the Pool Receivables; provided,
however, that in no event shall the new Servicing Fee exceed 110% of the actual
costs and expenses of such Servicer. Notwithstanding anything herein to the
contrary, the Servicing Fee shall be payable only from Collections pursuant to,
and subject to the priority of payments set forth in, Sections 2.04 and 2.05. To
the extent such Collections are not sufficient to pay the Servicing Fee in full,
none of the Seller, the Administrative Agent, the Managing Agents or the
Purchasers shall have any liability for the deficiency.

          (b)  The Seller shall pay to the Administrative Agent and each
Managing Agent certain fees (collectively, the "Fees") in the amounts and on the
dates set forth in (i) the fee letter agreement of even date herewith between
the Seller and the Administrative Agent (as the same may be amended or restated
from time to time, the "Administrative Agent Fee Letter") and (ii) the fee
letter agreement of even date among the Seller, the Administrative Agent and the
Managing Agents (as the same may be amended or restated from time to time, the
"Purchaser Fee Letter").

          (c)  On each Settlement Date for a Receivable Interest, the Seller
shall pay to the relevant Managing Agent all accrued and unpaid Yield with
respect to such Receivable Interest.

          SECTION 2.08  Payments and Computations, Etc. (a) All amounts to be
paid by the Seller or the Servicer to the Administrative Agent, any Managing
Agent or any Purchaser hereunder shall be paid no later than 12:00 noon (New
York City time) on the day when due in same day funds to the applicable
Purchaser Group Account. All amounts to be deposited by the Seller or the
Servicer into the Collection Account, any Purchaser Group Account or any other
account shall be deposited no later than 12:00 noon (New York City time) on the
date when due.

          (b)  Each of the Seller and the Servicer shall, to the extent
permitted by law, pay interest on any amount not paid or deposited by it when
due hereunder, at an interest rate per annum equal to 2.00% per annum above the
Alternate Base Rate, payable on demand.

          (c)  All computations of Yield, Fees, and other amounts hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed, except that
computations of interest and Yield based on the Alternate Base Rate shall be
made on the basis of a year of 365 days (or 366, as applicable).

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<PAGE>

Whenever any payment or deposit to be made hereunder shall be due on a day other
than a Business Day, such payment or deposit shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of such payment or deposit. Any computations by the Administrative
Agent or the applicable Managing Agent of amounts payable by the Seller
hereunder shall be binding upon the Seller absent manifest error.

          SECTION 2.09  Dividing or Combining Receivable Interests. Either the
Seller or (following a Termination Event or an Incipient Termination Event) the
Administrative Agent may, upon notice to the other party received at least three
Business Days prior to the last day of any Fixed Period in the case of the
Seller giving notice, or up to the last day of such Fixed Period in the case of
the Administrative Agent giving notice, either (i) divide any Receivable
Interest into two or more Receivable Interests having an aggregate Capital equal
to the Capital of such divided Receivable Interest, or (ii) combine any two or
more Receivable Interests originating on such last day or having Fixed Periods
ending on such last day into a single Receivable Interest having a Capital equal
to the aggregate of the Capital of such Receivable Interests; provided, however,
that no Receivable Interest owned by any Conduit Purchaser may be combined with
a Receivable Interest owned by any other Purchaser, and a Receivable Interest
held by the Committed Purchasers in any Purchaser Group may not be combined with
any Receivable Interest held by Purchasers in any other Purchaser Group.

          SECTION 2.10  Breakage Costs.

          (a)  The Seller shall indemnify the Purchasers against any loss or
expense incurred by the Purchasers, either directly or indirectly, as a result
of the failure of any Incremental Purchase to be made for any reason on the date
specified by the Seller pursuant to Section 2.02, including any loss or expense
incurred by the Purchasers by reason of the liquidation or reemployment of funds
acquired by the Purchasers (including funds obtained by issuing Promissory
Notes, obtaining deposits as loans from third parties and reemployment of funds)
to fund such Incremental Purchase.

          (b)  The Seller further agrees to pay all Liquidation Fees associated
with a reduction of the Capital at any time.

          (c)  A certificate as to any loss, expense or Liquidation Fees payable
pursuant to this Section 2.10 submitted by any Purchaser, through its Managing
Agent, to the Seller shall be conclusive in the absence of manifest error.

          SECTION 2.11  Illegality. Notwithstanding any other provision of this
Agreement, if the adoption of or any change in any Law or in the interpretation
or application thereof by any relevant Official Body shall make it unlawful for
any Purchaser to make or maintain Receivable Interests for which Yield is
calculated by reference to the Adjusted Eurodollar Rate (each a "Eurodollar
Receivable Interest") as contemplated by this Agreement or to obtain in the
interbank eurodollar market the funds with which to make or maintain any such
Eurodollar Receivable Interest, (a) such Purchaser shall promptly notify the
Administrative Agent, its Purchaser Managing Agent and the Seller thereof, (b)
the obligation of such Purchaser to fund or maintain Eurodollar Receivable
Interests or continue Eurodollar Receivable Interests as such shall forthwith be
cancelled and (c) such Purchaser's Receivable Interests then

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<PAGE>

outstanding as Eurodollar Receivable Interests, if any, shall be converted on
the last day of the Fixed Period for such Receivable Interests or within such
earlier period as required by Law into Receivable Interest that accrue Yield
based on the Alternate Base Rate (each a "Base Rate Receivable Interest").

          SECTION 2.12  Inability to Determine Eurodollar Rate. Notwithstanding
any other provision of this Agreement, if (i) the Administrative Agent
reasonably determines that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining a rate for
Eurodollar Receivable Interests as provided in the definition of Adjusted
Eurodollar Rate for any Fixed Period or (ii) Committed Purchasers representing
at least a majority of the Aggregate Commitment shall determine (which
determination shall be conclusive) that the rates for the purpose of computing
the Adjusted Eurodollar Rate do not adequately and fairly reflect the cost to
such Committed Purchasers of funding a Eurodollar Receivable Interests that the
Seller has requested be outstanding as a Eurodollar Receivable Interest during
such Fixed Period, the Administrative Agent shall forthwith give telephone
notice of such determination, confirmed in writing, to the Seller and each
Managing Agent at least two Business Days prior to the first day of such Fixed
Period. Unless the Seller shall have notified the applicable Managing Agent upon
receipt of such telephone notice that it wishes to rescind or modify its request
regarding such Eurodollar Receivable Interest, any Receivable Interests that
were requested to be funded as Eurodollar Receivable Interests shall be Base
Rate Receivable Interests and any Receivable Interests that were requested to be
converted into or continued as Eurodollar Receivable Interests shall be
converted into Base Rate Receivable Interests. Until any such notice has been
withdrawn by the Administrative Agent, no further Receivable Interests shall be
funded as, continued as, or converted into, Eurodollar Receivable Interests.

          SECTION 2.13  Indemnity for Reserves and Expenses. (a) If the adoption
of or any change in any Law or in the interpretation or application thereof or
compliance by any Indemnified Party with any request or directive (whether or
not having the force of law) from any central bank or other Official Body made
subsequent to the date hereof (other than any such change that relates to Taxes,
which are governed by Section 2.14):

               (i)   does or shall impose, modify or hold applicable any
          reserve, special deposit, compulsory loan or similar requirement
          against assets held by, or deposits or other liabilities in or for the
          account of, advances or loans or purchases by, or other credit
          extended by, or any other acquisition of funds by, any office of such
          Indemnified Party which are not otherwise covered by the adjustment to
          the Eurodollar Rate for the Eurodollar Rate Reserve Percentage as
          contemplated by the definition of "Adjusted Eurodollar Rate"; or

               (ii)  does or shall impose on such Indemnified Party any other
          condition affecting this Agreement or any Receivable Interest or
          participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Indemnified Party of making or maintaining Receivable Interests (or of
maintaining its obligation to make any such Receivable Interest) or to reduce
any amount sum received or receivable by such Indemnified Party hereunder, then,
in any such case, the Seller shall promptly pay such Indemnified Party,

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<PAGE>

upon demand from such Indemnified Party, any additional amounts necessary to
compensate such Indemnified Party for such additional costs or reduction
suffered which such Indemnified Party reasonably deems to be material as
determined by such Indemnified Party with respect to its Receivable Interests. A
certificate as to any additional amounts payable pursuant to this subsection
submitted by such Indemnified Party, through its Managing Agent, to the Seller
setting forth, in reasonable detail, the basis for and the calculation thereof,
shall be conclusive in the absence of manifest error.

          (b)  If any Indemnified Party shall have determined that the adoption
of any applicable Law or bank regulatory guideline regarding capital adequacy or
any change therein, or any change in the interpretation or administration
thereof by any Official Body, or any request or directive regarding capital
adequacy (in the case of any bank regulatory guideline, whether or not having
the force of law) of any such Official Body, has or would have the effect of
reducing the rate of return on capital of such Indemnified Party (or its parent)
as a consequence of such Indemnified Party's obligations hereunder or with
respect hereto or otherwise as a consequence of the transactions contemplated
hereby to a level below that which such Indemnified Party (or its parent) could
have achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Indemnified Party to be material, then from time to time, within fifteen
days after demand by such Indemnified Party through its Managing Agent, the
Seller shall pay to such Managing Agent, for the benefit of such Indemnified
Party, such additional amount or amounts as will compensate such Indemnified
Party (or its parent) for such reduction. A certificate as to any additional
amounts payable pursuant to this subsection submitted by such Indemnified Party,
through its Managing Agent, to the Seller setting forth, in reasonable detail,
the basis for and the calculation thereof, shall be conclusive in the absence of
manifest error.

          (c)  Failure or delay on the part of any Indemnified Party to demand
compensation pursuant to this Section 2.13 shall not constitute a waiver of such
Indemnified Party's right to demand such compensation; provided, however, that
the Seller shall not be required to compensate an Indemnified Party pursuant to
this Section 2.13 for any increased costs or reductions incurred more than 180
days prior to the date that such Indemnified Party notifies the Seller of the
change, event or circumstance giving rise to such increased costs or reductions
and of such Lender's or the Issuing Bank's intention to claim compensation
therefor; provided, further, that, if the change giving rise to such increased
costs or reductions is retroactive, then the 180-day period referred to above
shall be extended to include the period of retroactive effect thereof.

          (d)  Upon the occurrence of an Accounting Based Consolidation Event
(as defined the Purchaser Fee Letter) in relation to any Conduit Purchaser, the
Seller shall be obligated to pay the Accounting Based Consolidation Event Fee
(as defined therein) in accordance with the terms thereof.

          SECTION 2.14  Indemnity for Taxes. (a) Any and all payments and
deposits required to be made hereunder or under any other Transaction Document
by the Servicer or the Seller shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding net
income, profits or branch profits taxes that are imposed by the

                                       42

<PAGE>

United States and franchise, profits, branch profits and net income taxes that
are imposed on an Indemnified Party by the state or foreign jurisdiction under
the laws of which such Indemnified Party is organized or in which it is a
citizen, resident or domiciliary, or the jurisdiction in which any office making
or participating in a purchase hereunder is located, or in each case any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Seller or the Servicer shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder to any Indemnified
Party, (i) the Seller shall make an additional payment to such Indemnified
Party, in an amount sufficient so that, after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.14), such Indemnified Party receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Seller or the Servicer, as
the case may be, shall make such deductions and (iii) the Seller or the
Servicer, as the case may be, shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.

          (b)  In addition, the Seller agrees to pay any present or future stamp
or other documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any other
Transaction Document or from the execution, delivery or registration of this
Agreement or any other Transaction Document (hereinafter referred to as "Other
Taxes").

          (c)  The Seller will indemnify each Indemnified Party for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.14) paid by such Indemnified Party and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto whether or not
such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within thirty days from the date the Indemnified
Party makes written demand therefor (and a copy of such demand shall be
delivered to the Administrative Agent and the Managing Agent for such
Indemnified Party's Group). A certificate as to the amount of such
indemnification submitted to the Seller, the Administrative Agent and the
Managing Agent for such Indemnified Party's Group by such Indemnified Party,
setting forth, in reasonable detail, the basis for and the calculation thereof,
shall be conclusive and binding for all purposes absent manifest error.

          (d)  Each Purchaser or Participant who is organized outside the United
States (each, a "Non-U.S. Person") shall, prior to the date hereof (or, in the
case of any Person who becomes a Purchaser or a Participant after the date
hereof, prior to the date on which it so becomes a Purchaser or a Participant),
(x) deliver to the Seller and the Administrative Agent such properly completed
and duly executed certificates, documents or other evidence, as required by the
IRC or Treasury regulations issued pursuant thereto, including Internal Revenue
Service Form W-8BEN or Form W-8ECI and any other certificate or statement of
exemption required to establish that such payment is (i) not subject to
withholding under the IRC because such payment is effectively connected with the
conduct by such Indemnified Party of a trade or business in the United States or
(ii) totally exempt from United States tax under a provision of an applicable
tax treaty and (y) upon request of the Seller or the Administrative Agent, and
to the extent it may do so under applicable law, furnish any other government
forms which are necessary or required under an applicable tax treaty or
otherwise by law to reduce or eliminate any withholding tax;

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<PAGE>

provided, however, that in the event that a Non-U.S. Person is classified as
other than a corporation for U.S. federal income tax purposes, such Non-U.S.
Person agrees to provide any other form certificate or statement of exemption
necessary to fully establish such Non-U.S. Person's (and, if applicable, such
Non-U.S. Person's beneficial owners') entitlement to a complete exemption from
withholding of U.S. taxes on all amounts to be received by such Non-U.S. Person
(or, if applicable, such Non-U.S. Person's beneficial owners') pursuant to this
Agreement and the other Transaction Documents. Each such Purchaser that changes
its funding office shall promptly notify the Seller and the Administrative Agent
of such change and, upon written request from the Seller or the Administrative
Agent, shall deliver any new certificates, documents or other evidence required
pursuant to the preceding sentence prior to the immediately following due date
of any payment by the Seller hereunder. Unless the Seller and the Administrative
Agent have received forms or other documents satisfactory to them indicating
that payments hereunder are not subject to United States withholding tax,
notwithstanding paragraph (a), the Seller or the Administrative Agent shall
withhold taxes from such payments at the applicable statutory rate in the case
of payments to or for any Indemnified Party organized under the laws of a
jurisdiction outside the United States, and the applicable provisions of
paragraph (g) below shall apply to such Purchaser.

          (e)  Further, each Non-U.S. Person agrees (i) to deliver to the Seller
and the Administrative Agent, and if applicable, the assigning Purchaser (or, in
the case of a Participant, to the Purchaser from which the related participation
shall have been transferred) two further duly completed and signed copies of any
forms required to be delivered pursuant to Section 2.14(d), or successor and
related applicable forms, on or before the date that any such form expires or
becomes obsolete and promptly after the occurrence of any event requiring a
change from the most recent form(s) previously delivered by it to the Seller and
Administrative Agent, and, if applicable, the assigning Purchaser (or, in the
case of a Participant, to the Purchaser from which the related participation
shall have been transferred) in accordance with applicable U.S. laws and
regulations and (ii) to notify promptly the Seller and the Administrative Agent,
and, if applicable, the assigning Purchaser (or, in the case of a Participant,
the Purchaser from which the related participation shall have been transferred)
if it is no longer able to deliver, or if it is required to withdraw or cancel,
any form or statement previously delivered by it.

          (f)  Each Purchaser or Participant that is not a Non-U.S. Person shall
deliver to the Seller and the Administrative Agent and, if applicable, the
assigning Purchaser (or, in the case of a Participant, to the Purchaser from
which the related participation shall have been transferred) two duly completed
copies of United States Internal Revenue Service Form W-9 (or applicable
successor form) unless it establishes to the reasonable satisfaction of the
Seller that it is otherwise eligible for an exemption from backup withholding
tax or other applicable withholding tax. Each such Purchaser or Participant
shall deliver to the Seller and the Administrative Agent and, if applicable, the
assigning Purchaser (or, in the case of a Participant, to the Purchaser from
which the related participation shall have been transferred) two further
properly completed and duly executed forms and statements (or applicable
successor forms) at or before the time any such form or statement becomes
obsolete.

          (g)  The Seller shall not be required to pay any amounts to any
Purchaser in respect of Taxes and Other Taxes pursuant to paragraphs (a), (b)
and (c) above if the obligation to pay such amounts would not have arisen but
for a failure by such Purchaser to comply with

                                       44

<PAGE>

the provisions of paragraphs (d) and (f) above unless such Purchaser is unable
to comply with paragraphs (d) and (f) because of (i) a change in applicable law,
regulation or official interpretation thereof or (ii) an amendment, modification
or revocation of any applicable tax treaty or a change in official position
regarding the application or interpretation thereof, in each case after the date
hereof (or, in the case of any Person who became a Purchaser after the date
hereof, after the date on which it so became a Purchaser).

          (h)  If the Administrative Agent or any Purchaser or Participant
determines, in its sole discretion, that it has received a refund in respect of
taxes paid or indemnified by the Seller, it shall promptly pay such refund to
the Seller, but only to the extent of amounts paid or indemnified by the Seller
with respect to Taxes, provided, however, that the Seller agrees to promptly
return such refund to the Administrative Agent or the applicable Purchaser or
Participant, as the case may be, if it receives notice from the applicable
Purchaser or Participant that such person is required to repay such refund, plus
any penalties, interest or other charges imposed by the relevant governmental
authority. This Section shall not be construed to require the Administrative
Agent or any Purchaser or Participant to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Seller or any other Person.

          SECTION 2.15  Security Interest. As security for the performance by
the Seller of all the terms, covenants and agreements on the part of the Seller
(whether as Seller or otherwise) to be performed under this Agreement or any
other Transaction Document, including the punctual payment when due of all
Seller Obligations, the Seller hereby assigns to the Administrative Agent for
its benefit and the ratable benefit of the other Indemnified Parties, and hereby
grants to the Administrative Agent for its benefit and the ratable benefit of
the other Indemnified Parties, a security interest in, all of the Seller's
right, title and interest in and to:

          (a)  all Receivables, whether now owned and existing or hereafter
     acquired or arising, together with all Related Security and Collections
     with respect thereto;

          (b)  all Contracts, whether now owned or existing or hereafter
     acquired or arising, together with all Related Security and Collections
     with respect thereto;

          (c)  the Deposit Accounts and the Collection Account, including,
     without limitation, (i) all funds and other evidences of payment held
     therein and all certificates and instruments, if any, from time to time
     representing or evidencing any of such accounts or any funds and other
     evidences of payment held therein, (ii) all investment property and other
     financial assets held in, or acquired with funds from, such accounts and
     all certificates and instruments from time to time representing or
     evidencing such investment property and financial assets, (iii) all notes,
     certificates of deposit and other instruments from time to time hereafter
     delivered or transferred to, or otherwise possessed by, the Administrative
     Agent in substitution for any of the then existing accounts and (iv) all
     interest, dividends, cash, instruments, financial assets, investment
     property and other property from time to time received, receivable or
     otherwise distributed in respect of or in exchange for any and all of such
     accounts;

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<PAGE>

          (d)  all other assets of the Seller, whether now owned and existing or
     hereafter acquired or arising, including, without limitation, all accounts,
     chattel paper, goods, instruments, investment property, deposit accounts
     and general intangibles (as those terms are defined in the UCC as in effect
     on the date hereof in the State of New York), in which the Seller has any
     interest; and

          (e)  to the extent not included in the foregoing, all Proceeds of any
     and all of the foregoing.

          SECTION 2.16  Optional Liquidation. The Seller may at any time direct
that Reinvestment Purchases cease for the Receivable Interests of all
Purchasers. Any such direction shall be made by giving the Administrative Agent
and the Servicer at least two Business Days' prior written (including telecopy
or other facsimile communication) notice (each a "Reduction Notice") specifying
the date on which such Reinvestment Purchases shall cease and, if desired, when
such Reinvestment Purchases shall re-commence, identified as when the aggregate
outstanding Capital is reduced by a specified amount (the "Reduction Amount").
If the Seller does not so specify the date on which Reinvestment Purchases shall
re-commence, it may cause Reinvestment Purchases to re-commence at any time
before the Termination Date, subject to the terms and conditions set forth
herein, by notifying the Administrative Agent and the Servicer in writing
(including by telecopy or other facsimile communication) at least one Business
Day before the date on which it desires such Reinvestment Purchases to
re-commence.

          SECTION 2.17  Optional Repurchase. The Seller may at any time at its
option elect to repurchase all or any portion of the Receivable Interests, such
repurchase to be made ratably among the Purchasers then holding Receivable
Interests in proportion to the Capital of each. Any such repurchase shall be
made on not less than three (3) Business Days' prior written notice (each a
"Repurchase Notice") specifying the date on which such repurchase shall occur
(the "Repurchase Date") and the aggregate Capital of the Receivable Interest to
be repurchased (the "Repurchase Amount"). On the Repurchase Date, the Seller
shall pay the Repurchase Amount to the Purchasers ratably in accordance with the
outstanding Capital of their respective Receivable Interests.

          SECTION 2.18  Termination of Purchaser Groups. If any Indemnified
Party in a Purchaser Group makes a claim for payment pursuant to Section 2.13,
or if any Indemnified Party in a Purchaser Group requests payment of the
Accounting Based Consolidation Event Fee pursuant to (and as such term is
defined in) the Purchaser Fee Letter, then the Seller may, at its option, take
either of the actions specified below.

               (i)   The Seller may remove such Purchaser Group and terminate
          the Commitments of the Committed Purchasers in such Purchaser Group by
          paying to the Managing Agent for such Purchaser Group an amount (the
          "Payout Amount") equal to the sum of (i) the aggregate Capital held by
          the Purchasers in such Purchaser Group, (ii) all Yield accrued and to
          accrue thereon through the last day of the applicable Fixed Period(s)
          to which such Capital has been allocated, (iii) all accrued and unpaid
          Fees owing to the members of such Purchaser Group and (iv) all other
          Seller Obligations owing to the members of such Purchaser Group under
          the Transaction Documents accrued through the date of such payment.
          Any such

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<PAGE>

          removal and termination shall be made upon not less than five (5)
          Business Days notice delivered by the Seller to the applicable
          Managing Agent and the Administrative Agent. The Payout Amount for any
          Purchaser Group shall be calculated by the relevant Managing Agent and
          notified to the Seller, which calculation shall be conclusive and
          binding absent manifest error. Upon such removal and termination, (x)
          the members of such Purchaser Group shall cease to be parties to this
          Agreement and the Commitments and Conduit Purchase Limits of the
          Purchasers in such Purchaser Group shall be reduced to zero and (y)
          the Purchase Limit will be reduced by an amount equal to the
          Commitments (determined immediately prior to such termination) of the
          Committed Purchasers in such Purchaser Group.

               (ii)  The Seller may declare the Scheduled Commitment Termination
          Date to have occurred for all Purchasers in such Purchaser Group. Any
          such declaration shall be made upon not less than five (5) Business
          Days notice delivered by the Seller to the applicable Managing Agent
          and the Administrative Agent. Upon the effectiveness of such
          declaration, (w) the Conduit Purchase Limit(s) and Purchaser Group
          Limit of such Purchaser Group shall be deemed to have been reduced to
          zero and Purchasers in such Purchaser Group shall have no further
          right or obligation to make any Purchases hereunder, (x) Amortization
          Date shall be deemed to have occurred for all Receivable Interests
          held by the Purchasers in such Purchaser Group, (y) the Capital
          allocable to such Receivable Interests shall be reduced out of
          Collections available for such purpose pursuant to Section 2.04 or
          2.05, as applicable and (z) on each date on which such Capital is so
          reduced the Purchase Limit shall be deemed to be reduced by a
          corresponding amount. Once the Capital of such Receivable Interests
          has been reduced to zero and the members of such Purchaser Group shall
          have received payment in full of all accrued Yield, Fees and other
          Seller Obligations owing to them, the members of such Purchaser Group
          shall cease to be parties to this Agreement.

                                   ARTICLE III

                             CONDITIONS OF PURCHASES

          SECTION 3.01  Conditions Precedent to Initial Purchase. The initial
Incremental Purchase under this Agreement by each applicable Purchaser is
subject to the conditions precedent that (i) all Fees required to have been paid
on or prior to the Closing Date pursuant to the Fee Letters shall have been paid
in full and (ii) the Administrative Agent and each Managing Agent shall have
received on or before the date of such Incremental Purchase the following, each
(unless otherwise indicated) dated such date, in form and substance satisfactory
to the Administrative Agent and each Managing Agent:

          (a)  Certified copies of the resolutions of the Board of Directors or
Managers, as the case may be, of each Transaction Party approving each
Transaction Document to which it is a party and certified copies of all
documents evidencing other necessary corporate or limited

                                       47

<PAGE>

liability company action and governmental approvals, if any, with respect to
this Agreement and the other Transaction Documents.

          (b)  A certificate of the Secretary or Assistant Secretary of each
Transaction Party certifying the names and true signatures of the officers of
such Transaction Party authorized to sign the Transaction Documents to which it
is a party.

          (c)  Acknowledgment copies or time stamped receipt copies (or other
evidence of filing) of proper financing statements, duly filed on or before the
date of such initial purchase under the UCC of all jurisdictions that the
Administrative Agent or any Managing Agent may deem necessary or desirable in
order to perfect the ownership and security interests contemplated by this
Agreement and the Originator Purchase Agreement.

          (d)  Acknowledgment copies or time stamped receipt copies of proper
financing statements necessary to release all security interests and other
rights of any Person in the Receivables, Contracts or Related Security
previously granted by any Transaction Party or any of their respective
Affiliates.

          (e)  Completed requests for information, dated on or before the date
of such initial Incremental Purchase, listing all effective financing statements
filed in the jurisdictions referred to in subsection (c) above that name the
Seller or the Originator as debtor, together with copies of such financing
statements (none of which shall cover any Receivables, Contracts, Related
Security or the collateral referred to in Section 2.15 except to the extent the
Administrative Agent shall have received executed termination statements
therefor pursuant to subsection (d) above or is otherwise released).

          (f)  An opinion of Arent Fox Kintner Plotkin & Kahn PLLC, counsel to
the Seller and the Originator, addressed to the Administrative Agent, the
Conduit Purchasers, the Committed Purchasers, the Managing Agents and the Rating
Agencies, regarding substantive consolidation in the event of a bankruptcy of
the Originator and true sale between the Originator and the Seller.

          (g)  An opinion of Arent Fox Kintner Plotkin & Kahn PLLC, special
counsel to the Transaction Parties addressed to the Administrative Agent, the
Conduit Purchasers, the Committed Purchasers, the Managing Agents and the Rating
Agencies, regarding priority of the security interests arising under this
Agreement and the Originator Purchase Agreement and such other matters as any
Managing Agent may reasonably request.

          (h)  An opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel
to the Transaction Parties, addressed to the Administrative Agent, the Conduit
Purchasers, the Committed Purchasers, the Managing Agents and the Rating
Agencies, regarding the enforceability of the Transaction Documents, certain
corporate matters, perfection of the security interests arising under this
Agreement and the Originator Purchase Agreement and such other matters as any
Managing Agent may reasonably request.

          (i)  An opinion of general counsel of Medco, addressed to the
Administrative Agent, the Conduit Purchasers, the Committed Purchasers, the
Managing Agents and the Rating

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<PAGE>

Agencies, regarding certain corporate matters and such other matters as any
Managing Agent may reasonably request.

          (j)  Executed copies of the Fee Letters.

          (k)  An executed copy of the Funds Transfer Letter.

          (l)  An executed copy of the Originator Purchase Agreement.

          (m)  A copy of the limited liability company agreement of the Seller
and the by-laws of Medco, certified by the Secretary or Assistant Secretary of
the applicable Transaction Party.

          (n)  A copy of the certificate of incorporation or certificate of
formation (as applicable) of each Transaction Party, certified as of a recent
date by the Secretary of State or other appropriate official of the State of
incorporation or formation (as applicable) of such Transaction Party.

          (o)  A certificate as to the good standing of each Transaction Party
from the Secretary of State or other appropriate official of the State of
incorporation or formation (as applicable) of such Transaction Party, dated as
of a recent date.

          (p)  The opening pro forma balance sheet of the Seller referred to in
Section 4.01(e).

          (q)  A completed Monthly Report for the Calculation Period ended June
30, 2003.

          (r)  Copies of the documentation relating to the Spin-Off and the
related financing transactions;

          (s)  A certificate from the chief financial officer of the Originator
to the effect that, both as of the Closing Date and immediately after giving
effect to the Incremental Purchase to be made on the Closing Date, the Spin-Off,
the payment of the contemplated dividend to Merck and all related financing
transactions, the Originator and each Significant Subsidiary is and will be
Solvent;

          (t)  Confirmation that the final ratings of the Revolving Credit
Agreement from each of S&P and Moody's are not less than the minimum long-term
debt ratings required in order to satisfy the conditions precedent set forth in
the Revolving Credit Agreement; and

          (u)  Such other documents, instruments, certificates and opinions as
the Administrative Agent or any Managing Agent shall reasonably request.

          SECTION 3.02  Conditions Precedent to All Purchases. Each Purchase
(including the initial Incremental Purchase and each Reinvestment Purchase)
hereunder shall be subject to the further conditions precedent that (a) the
Servicer shall have delivered to the Administrative Agent and each Managing
Agent all Servicer Reports required to be delivered

                                       49

<PAGE>

hereunder, each duly completed and containing information covering the most
recently ended reporting period for which information is required pursuant to
Section 6.03 and (b) on the date of such Purchase the following statements shall
be true (and acceptance of the proceeds of such Purchase shall be deemed a
representation and warranty by the Seller and the Servicer (each as to itself)
that such statements are then true):

               (i)   The representations and warranties contained in Sections
          4.01 and 4.02 of this Agreement and Section 4.01 of the Originator
          Purchase Agreement are true and correct in all material respects
          (except that, to the extent any such representation or warranty is
          qualified by materiality or Material Adverse Effect, such
          representation or warranty must be true and correct in all respects,
          subject only to the materiality or Material Adverse Effect
          qualification set forth therein) on and as of the date of such
          Purchase as though made on and as of such date, and

               (ii)  No event has occurred and is continuing, or would result
          from such Purchase, that constitutes a Termination Event or an
          Incipient Termination Event, and

               (iii) In the case of any Purchase by a Conduit Purchaser, the
          applicable Managing Agent shall not have given the Seller notice (with
          a copy to the Administrative Agent) that such Conduit Purchaser has
          terminated the Reinvestment Purchases hereunder (unless such notice
          has been revoked by such Managing Agent), and

               (iv)  Medco shall have sold or contributed to the Seller,
          pursuant to the Originator Purchase Agreement, all outstanding
          Receivables as of such date; and

          (c)  The Administrative Agent and each Managing Agent shall have
received such other approvals, opinions or documents as it may reasonably
request for purposes of confirming compliance with the foregoing conditions.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

          SECTION 4.01  Representations and Warranties of the Seller. The Seller
hereby represents and warrants as follows as of the date hereof and as of the
date of each Purchase hereunder:

          (a)  The Seller is a limited liability company duly formed, validly
existing and in good standing under the laws of Delaware. The Seller is duly
qualified to do business, and is in good standing, in every other jurisdiction
where the nature of its business requires it to be so qualified, unless the
failure to so qualify would not reasonably be expected to have a Material
Adverse Effect.

          (b)  The execution, delivery and performance by the Seller of the
Transaction Documents, including the Seller's use of the proceeds of Purchases,
(i) are within the Seller's limited liability company powers, (ii) have been
duly authorized by all necessary limited liability

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company action, (iii) do not contravene (1) the Seller's certificate of
formation or limited liability company agreement, (2) any law, rule or
regulation applicable to the Seller, (3) any contractual restriction binding on
or affecting the Seller or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its property, and
(iv) do not result in or require the creation of any Adverse Claim upon or with
respect to any of its properties (except as created pursuant to this Agreement).
Each of the Transaction Documents has been duly executed and delivered by the
Seller.

          (c)  No authorization or approval or other action by, and no notice to
or filing with, any Official Body is required for the due execution, delivery
and performance by the Seller of the Transaction Documents to which it is a
party or any other document to be delivered thereunder, except for the filing of
UCC financing statements referred to in Section 3.01.

          (d)  Each of the Transaction Documents to which the Seller is a party
constitutes the legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.

          (e)  The opening pro forma balance sheet of the Seller as of June 30,
2003, giving effect to the initial Incremental Purchase to be made under this
Agreement, a copy of which has been furnished to the Administrative Agent and
each Managing Agent, fairly presents the financial condition of the Seller as of
such date, in accordance with GAAP. Since its formation no change, occurrence or
development has occurred (including, without limitation, with respect to any
commenced or threatened material litigation or proceeding) that has had or could
reasonably be expected to have a Material Adverse Effect.

          (f)  There is no pending or (to the best knowledge of the Seller)
threatened action or proceeding affecting the Seller before any Official Body.
The Seller is not in default in any material respect of any order of any
Official Body.

          (g)  No proceeds of any Purchase will be used for a purpose that
violates or would be inconsistent with, Regulation T, U or X promulgated by the
Board of Governors of the Federal Reserve System from time to time.

          (h)  Each Receivable treated as or represented to be a Pool Receivable
is owned by the Seller free and clear of any Adverse Claim (other than Adverse
Claims created hereunder). The Purchasers have acquired a valid and perfected
first priority security interest in each Pool Receivable now existing or
hereafter arising and in the Related Security and Collections with respect
thereto, in each case free and clear of any Adverse Claim (other than Adverse
Claims created hereunder). No effective financing statement or other instrument
similar in effect is filed in any recording office listing the Seller as debtor,
covering any asset of the Seller except such as may be filed in favor of the
Administrative Agent in accordance with this Agreement. No effective financing
statement or other instrument similar in effect, is filed in any recording
office listing the Originator as debtor, covering any Receivable, Related
Security or Collections except such as may be filed in favor of the Seller and
assigned to the Administrative

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<PAGE>

Agent in accordance with this Agreement. Prior to giving effect to any transfer
under the Originator Purchase Agreement, all Receivables were payable to the
Originator as principal for its own account. The Originator has no obligation
(whether pursuant to any contract, any requirement of Law or otherwise) to remit
any Collections on the Receivables to any Pharmaceutical Plan or to any other
Person, other than to the Sellers and the Purchasers as provided in the
Originator Purchase Agreement and this Agreement.

          (i)  Each Servicer Report (if prepared by any Transaction Party or one
of their respective Affiliates, or to the extent that information contained
therein is supplied by any Transaction Party or an Affiliate), information,
exhibit, financial statement, document, book, record or report furnished or to
be furnished in writing at any time (whether before, on or after the date of
this Agreement) by or on behalf of any Transaction Party to the Administrative
Agent, any Managing Agent or any Purchaser in connection with this Agreement is
or will be accurate in all material respects as of its date or (except as
otherwise disclosed to the Administrative Agent, such Managing Agent or such
Purchaser, as the case may be, at such time) as of the date so furnished, and no
such Servicer Report, information, exhibit, financial statement, document, book,
record or report contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order to make
the statements contained therein, in the light of the circumstances under which
they were made, not misleading.

          (j)  The principal place of business and chief executive office of the
Seller and the office where the Seller keeps its records concerning the
Receivables are located at the address or addresses referred to in Section
5.01(b).

          (k)  The names and addresses of all the Deposit Account Banks together
with the account numbers of the Deposit Accounts at such Deposit Account Banks
are as specified in Schedule III hereto, as such Schedule III may be updated
from time to time pursuant to Section 5.01(g).

          (l)  Since the date of its formation, the Seller has not used any
company name, tradename or doing-business-as name other than the name in which
it has executed this Agreement. The Seller's Federal Employer Identification
Number is 83-08665.

          (m)  The Seller was formed on July 10, 2003 and the Seller did not
engage in any business activities prior to the date of this Agreement. The
Seller has no Subsidiaries. Medco directly owns 100% of the membership interests
of the Seller, free and clear of any Adverse Claims.

          (n)  The Seller is not, and is not controlled by, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or is exempt from all provisions of such Act.

          (o)  The Seller is Solvent.

          (p)  With respect to each Receivable treated as or represented to be a
Pool Receivable, the Seller (i) received such Receivable as a contribution to
the capital of the Seller by the Originator or (ii) purchased such Receivable
from the Originator in exchange for payment

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<PAGE>

(made by the Seller to the Originator in accordance with the provisions of the
Originator Purchase Agreement) of cash, an addition to the principal amount of
the Subordinated Note, or a combination thereof in an amount which constitutes
fair consideration and reasonably equivalent value. No such sale or contribution
was made for or on account of an antecedent debt owed by the Originator to the
Seller and no such sale or capital contribution is or may be voidable or subject
to avoidance under any section of the United States Bankruptcy Code.

          (q)  Each Receivable included in the calculation of the Net
Receivables Pool Balance on any date shall be an Eligible Receivable as of such
date.

          (r)  The Receivable Interest Percentage does not exceed the Maximum
Receivable Interest Percentage.

          (s)  No event has occurred and is continuing and no condition exists
which constitutes a Termination Event or Incipient Termination Event.

          SECTION 4.02  Representations and Warranties of the Servicer. Medco,
in its capacity as Servicer, hereby represents and warrants as follows as of the
date hereof and as of the date of each Purchase hereunder:

          (a)  The Servicer is a corporation duly incorporated, validly existing
and in good standing under the laws of Delaware, and is duly qualified to do
business, and is in good standing, in every jurisdiction where the nature of its
business requires it to be so qualified, unless the failure to so qualify would
not reasonably be expected to have a Material Adverse Effect.

          (b)  The execution, delivery and performance by the Servicer of this
Agreement and any other documents to be delivered by it hereunder (i) are within
the Servicer's corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) do not contravene (1) the Servicer's certificate of
incorporation or by-laws, (2) any Law applicable to the Servicer, (3) any
material contractual restriction binding on or affecting the Servicer or its
property or (4) any order, writ, judgment, award, injunction or decree binding
on or affecting the Servicer or its property, except, in the case of each of
sub-clauses (2) through (4) of this clause (iii), to the extent that such
contravention would not be reasonably expected to have a Material Adverse
Effect, and (iv) do not result in or require the creation of any Adverse Claim
upon or with respect to any of its properties. This Agreement has been duly
executed and delivered by the Servicer.

          (c)  No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Servicer of this Agreement or
any other Transaction Document to which it is a party.

          (d)  This Agreement constitutes the legal, valid and binding
obligation of the Servicer enforceable against the Servicer in accordance with
its terms.

          (e)  (i) The Servicer has heretofore furnished to the Purchasers its
          consolidated balance sheet and statements of income, stockholders'
          equity and

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<PAGE>

          cash flows (i) for the fiscal years ending, and at, December 29, 2001
          and December 28, 2002, and (ii) as of and for the fiscal quarter and
          the portion of the fiscal year ended March 29, 2003. The financial
          statements described in clause (i) of this Section 4.02(e) were
          reported on by PricewaterhouseCoopers LLP for such fiscal years
          ending, and at, December 29, 2001 and December 28 2002, and in clause
          (ii) of this Section 4.02(e) were certified by the Servicer's chief
          financial officer. Such financial statements present fairly, in all
          material respects, the financial position and results of operations
          and cash flows of the Servicer and its consolidated Subsidiaries as of
          such dates and for such periods in conformity with GAAP, subject to
          year-end audit adjustments and the absence of footnotes in the case of
          the statements referred to in clause (ii) above of this Section
          4.02(e). The Servicer has heretofore also furnished to the Purchasers
          its unaudited pro forma condensed consolidated statement of income,
          for its fiscal year ended December 28, 2002, and for its fiscal
          quarter ended March 29, 2003 and its unaudited pro forma condensed
          consolidated balance sheet at March 29, 2003. Such pro forma financial
          statements comply, in all material respects, with the requirements of
          Article XI of Regulation S-X of the SEC.

               (ii)  Since December 28, 2002, there has been no change,
          occurrence or development that has had or could reasonably be expected
          to have a Material Adverse Effect.

          (f)  There are no actions, suits or proceedings by or before any
Official Body pending against or, to the knowledge of the Executive Officers,
threatened against or affecting the Servicer or any of its Subsidiaries that (i)
would reasonably be expected to be adversely determined, and (ii) if so
determined either (x) would reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (y) seek to enjoin, unwind
or otherwise materially and adversely affect the transactions contemplated by
the Transaction Documents.

          (g)  All Obligors have been instructed to remit all their payments in
respect of Receivables directly to a Deposit Account with respect to which a
duly executed Control Agreement is in full force and effect or will be in full
force and effect within 30 days of the Closing Date.

          (h)  On the date of each Purchase hereunder (and after giving effect
thereto) the Receivable Interest Percentage does not exceed the Maximum
Receivable Interest Percentage.

          (i)  No event has occurred and is continuing and no condition exists
which constitutes a Termination Event or Incipient Termination Event.

          (j)  All of the representations and warranties of Medco made pursuant
to the Originator Purchase Agreement are true and correct.

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                                    ARTICLE V

                                    COVENANTS

          SECTION 5.01  Covenants of the Seller. Until the Final Payout Date:

          (a)  Compliance with Laws, Etc. The Seller will comply in all respects
with all applicable Laws and preserve and maintain its limited liability company
existence, rights, franchises, qualifications, and privileges except to the
extent that the failure so to comply with such Laws or the failure so to
preserve and maintain such rights, franchises, qualifications, and privileges
would not reasonably be expected to have a Material Adverse Effect.

          (b)  Offices, Records and Books of Account. The Seller will keep its
principal place of business and chief executive office and the office where it
keeps its records concerning the Receivables at (i) the address of the Seller
specified in Section 11.02 as of the date of this Agreement or (ii) upon 30
days' prior written notice to each Managing Agent, at any other locations in
jurisdictions where all actions reasonably requested by any Managing Agent to
protect and perfect the interests of the Administrative Agent and the Purchasers
in the Receivables and the other assets referred to in Section 2.15 have been
taken and completed. The Seller also will maintain and implement administrative
and operating procedures (including, without limitation, an ability to recreate
records evidencing Receivables and related Contracts in the event of the
destruction of the originals thereof), and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Receivables (including, without limitation, records adequate
to permit the daily identification of each Receivable and all Collections of and
adjustments to each existing Receivable).

          (c)  Performance and Compliance with Contracts and Credit and
Collection Policy. The Seller will, at its expense, (i) timely and fully perform
and comply in all material respects with all provisions, covenants and other
promises required to be observed by it under the Contracts related to the
Receivables and (ii) timely and fully comply in all material respects with the
Credit and Collection Policy in regard to each Receivable and the related
Contracts.

          (d)  Sales, Liens, Etc. The Seller will not sell, assign (by operation
of law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim (except for Adverse Claims created hereunder) upon or with respect
to, any Receivable, Related Security, or Collections, or upon or with respect to
any Deposit Account, the Collection Account or any other asset of the Seller, or
assign any right to receive income in respect thereof.

          (e)  Extension or Amendment of Receivables and Contracts. Except as
provided in Section 6.02(c), the Seller will not, and will not permit the
Originator to, extend, amend or otherwise modify the terms of any Receivable.

          (f)  Change in Business or Credit and Collection Policy. The Seller
will not make any change in the character of its business or in the Credit and
Collection Policy, except for any such change in a Credit and Collection Policy
that would not (i) impair the collectibility of any Receivables in any material
respect or (ii) otherwise be reasonably likely to have a Material Adverse
Effect.

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<PAGE>

          (g)  Change in Payment Instructions to Obligors. The Seller will not
add or terminate any Deposit Account from those listed in Schedule III to this
Agreement, or make any change in its instructions to Obligors regarding payments
to be made in respect of the Receivables or payments to be made to any Deposit
Account, unless the Administrative Agent shall have received notice of such
addition, termination or change (including an updated Schedule III) and a fully
executed Control Agreement with respect to each new Deposit Account. Each
Deposit Account shall be maintained at all times in the name of the Seller.

          (h)  Deposits to Deposit Accounts. The Seller will cause all Obligors
to be instructed to remit all their payments in respect of Receivables to
Deposit Accounts directly by wire transfer or electronic funds transfer to the
relevant Deposit Account Bank. If the Seller or the Servicer shall receive any
Collections directly, the Seller shall promptly (and in any event within one
Business Day) cause such Collections to be deposited into a Deposit Account. The
Seller will not permit funds which do not constitute Collections of Receivables
from being deposited into any Deposit Account.

          (i)  Further Assurances; Change in Name or Jurisdiction of
Organization, etc.

               (A)  The Seller agrees from time to time, at its expense,
          promptly to execute and deliver all further instruments and documents,
          and to take all further actions, that may be necessary or desirable,
          or that the Administrative Agent or any Managing Agent may reasonably
          request, to perfect, protect or more fully evidence the Receivable
          Interests purchased under this Agreement and/or security interest
          granted pursuant to this Agreement, or to enable the Conduit
          Purchasers, the Committed Purchasers, the Managing Agents or the
          Administrative Agent to exercise and enforce their respective rights
          and remedies under this Agreement. Without limiting the foregoing, the
          Seller will, upon the request of the Administrative Agent or any
          Managing Agent, execute and file such financing or continuation
          statements, or amendments thereto, and such other instruments and
          documents, that may be necessary or desirable, or that the
          Administrative Agent or any Managing Agent may reasonably request, to
          perfect, protect or evidence such Receivable Interests and/or such
          security interest.

               (B)  The Seller authorizes the Administrative Agent to file
          financing or continuation statements, and amendments thereto and
          assignments thereof, relating to the Receivables and the Related
          Security, the related Contracts and the Collections with respect
          thereto and the other collateral described in Section 2.15 without the
          signature of the Seller. A photocopy or other reproduction of this
          Agreement shall be sufficient as a financing statement where permitted
          by law.

               (C)  The Seller shall at all times be organized under the laws of
          the State of Delaware and shall not take any action to change its
          jurisdiction of organization.

               (D)  The Seller will not change its name, identity, limited
          liability company structure or tax identification number unless (1)
          the Administrative Agent shall have received at least thirty (30) days
          advance written notice of such

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<PAGE>

          change and (2) all actions by the Seller necessary or appropriate to
          perfect or maintain the perfection of the Receivable Interests and the
          security interest of the Administrative Agent granted pursuant to
          Section 2.15 (including, without limitation, the filing of all
          financing statements and the taking of such other actions as the
          Administrative Agent may request in connection with such change) shall
          have been duly taken.

          (j)  Reporting Requirements. The Seller will cause to be provided to
each Managing Agent the following:

                    (i)    not later than the earlier of (i) 100 days after the
               end of each fiscal year of the Originator and (ii) 5 Business
               Days after the filing thereof with the SEC, (A) the audited
               consolidated balance sheet of the Originator and related
               statements of operations, stockholders' equity and cash flows as
               of the end of and for such year, setting forth in each case in
               comparative form the figures for the previous fiscal year, all
               reported on by PricewaterhouseCoopers LLP or other independent
               public accountants of recognized national standing (without a
               "going concern" or like qualification or exception and without
               any qualification or exception as to the scope of such audit) to
               the effect that such consolidated financial statements present
               fairly in all material respects the financial condition and
               results of operations of the Originator and its consolidated
               Subsidiaries on a consolidated basis, as of such dates and for
               such periods, in conformity with GAAP and (B) the consolidated
               balance sheet of the Seller and related statements of operations,
               stockholders' equity and cash flows as of the end of and for such
               year, setting forth in each case in comparative form the figures
               for the previous fiscal year, all certified by one of its
               Financial Officers as presenting fairly in all material respects
               the financial condition and results of operations of the Seller
               as of such dates and for such periods, in conformity with GAAP;
               provided that delivery within the time frame specified above of
               copies of the Originator's Annual Report on Form 10-K filed with
               the SEC shall satisfy the requirements for the delivery of the
               Originator's financial statements set forth in this clause (i);

                    (ii)   not later than the earlier of (i) 55 days after the
               end of each of the first three fiscal quarters of each fiscal
               year of the Originator and (ii) 5 Business Days after the filing
               thereof with the SEC, the unaudited consolidated balance sheet of
               the Originator and related statements of operations,
               stockholders' equity and cash flows as of the end of and for such
               fiscal quarter and the then elapsed portion of the fiscal year,
               setting forth in each case in comparative form the figures for
               the corresponding period or periods of (or, in the case of the
               balance sheet, as of the end of) the previous fiscal year, all
               certified by one of its Financial Officers as presenting fairly
               in all material respects the financial condition and results of
               operations of the Originator and its consolidated Subsidiaries,
               on a consolidated basis, as of such dates and for such periods,
               in conformity with GAAP, subject to normal year-end audit
               adjustments and the absence

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<PAGE>

               of footnotes; provided, however, that delivery within the time
               frame specified above of copies of Originator's Quarterly Report
               on Form 10-Q filed with the SEC shall satisfy the requirements
               for the delivery of the Originator's financial statements set
               forth in this clause (ii);

                    (iii)  at the time of the delivery of the financial
               statements provided for in clause (i) or clause (ii) of this
               Section 5.01(j), a certificate of a Financial Officer of the
               Originator or the Seller, as applicable, to the effect that, to
               the best of such officer's knowledge, no Termination Event or
               Incipient Termination Event has occurred and is continuing or, if
               any Termination Event or Incipient Termination Event has occurred
               and is continuing, specifying the nature and extent thereof;

                    (iv)   as soon as possible and in any event within one
               Business Day after obtaining knowledge of the occurrence of each
               Termination Event or Incipient Termination Event, a statement of
               a Financial Officer of the Seller setting forth details of such
               Termination Event or Incipient Termination Event and the action
               that the Seller has taken and proposes to take with respect
               thereto;

                    (v)    promptly upon a Financial Officer becoming aware
               thereof, notice of the occurrence of any ERISA Event that, alone
               or together with any other ERISA Events that have occurred and
               are then outstanding, would reasonably be expected to result in
               liability of the Originator and its Subsidiaries in an aggregate
               amount exceeding $5,000,000;

                    (vi)   at least thirty (30) days prior to any change in the
               name, jurisdiction of organization, corporate structure or tax
               identification number of any Transaction Party, a notice setting
               forth the new name, jurisdiction of organization, corporate
               structure or tax identification number, as applicable, and the
               effective date thereof;

                    (vii)  as soon as possible and in any event no later than
               the day of occurrence thereof, notice that the Originator has
               stopped selling or contributing to the Seller, pursuant to the
               Originator Purchase Agreement, all newly arising Receivables;

                    (viii) promptly after receipt thereof, copies of all
               notices received by the Seller from the Originator under or in
               connection with the Originator Purchase Agreement;

                    (ix)   promptly upon learning thereof, notice of any
               downgrade in the Debt Rating (or the withdrawal by either S&P or
               Moody's of a Debt Rating) of Medco, setting forth the
               Indebtedness affected and the nature of such change (or
               withdrawal);

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                    (x)    promptly after the occurrence thereof any pending or
               threatened litigation or other event or condition that has had,
               or could reasonably be expected to have, a Material Adverse
               Effect;

                    (xi)   promptly upon learning thereof, and in any event no
               later than the effective date thereof, notice of any amendment,
               waiver, termination or other modification to, or replacement or
               substitution for, the Revolving Credit Agreement;

                    (xii)  as soon as possible and in any event within one
               Business Day after obtaining knowledge of any event or
               circumstance described in any of clauses (ii), (iii) or (iv) of
               the definition of "Formulary Rebate Conditions," a statement of
               an Executive Officer of the Originator setting forth in
               reasonable detail the nature of such event or circumstance;

                    (xiii) promptly upon the occurrence thereof, notice of any
               amendment to the Credit and Collection Policy; and

                    (xiv)  such other information respecting the Receivables or
               the condition or operations, financial or otherwise, of any
               Transaction Party (including, without limitation, information
               regarding any pending or threatened litigation) as the
               Administrative Agent or any Managing Agent may from time to time
               reasonably request.

          (k)  Separateness. (i) The Seller shall at all times maintain at least
one independent Manager who (w) is not currently and has not been during the
five years preceding the date of this Agreement an officer, director, manager or
employee of, or a major vendor or supplier of services to, an Affiliate of the
Seller or any Other Medco Company, (x) is not a current or former officer or
employee of the Seller, (y) is not a stockholder or equity owner of any Other
Medco Company or any of their respective Affiliates (except through a mutual
fund or similar pooled investment vehicle) and (z) who (A) has prior experience
as an independent director for a corporation and/or independent manager of a
limited liability company whose charter documents required the unanimous consent
of all independent directors or independent managers, as the case may be,
thereof before such corporation could consent to the institution of bankruptcy
or insolvency proceedings against it or could file a petition seeking relief
under any applicable federal or state law relating to bankruptcy and (B) has at
least three years of employment experience with one or more entities that
provide, in the ordinary course of their respective businesses, or has otherwise
been engaged for at least three years in the business of providing, advisory,
management or placement services to issuers of securitization or structured
finance instruments, agreements or securities.

               (ii)    The Seller shall not direct or participate in the
          management of any other Person's operations.

               (iii)   The Seller shall conduct its business from an office
          separate from that of the Other Medco Companies (but which may be
          located in the same facility as one or more of the Other Medco
          Companies). The Seller shall have

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<PAGE>

          stationery and other business forms separate from that of the Other
          Medco Companies.

               (iv)    The Seller shall at all times be adequately capitalized
          in light of its contemplated business.

               (v)     The Seller shall at all times provide for its own
          operating expenses and liabilities from its own funds except that (A)
          common overhead expenses may be shared by the Seller and the Other
          Medco Companies on a basis reasonably related to use and (B) the
          Servicer may pay operating expenses on the Seller's behalf so long as
          the Seller promptly reimburses the Servicer for such expenses out of
          the Seller's own funds.

               (vi)    The Seller shall maintain its assets and transactions
          separately from those of any other Person, and the Seller shall
          reflect such assets and transactions in financial statements separate
          and distinct from those of the Other Medco Companies and evidence such
          assets and transactions by appropriate entries in books and records
          separate and distinct from those of any other Person. The Seller shall
          hold itself out to the public under the Seller's own name as a legal
          entity separate and distinct from any other Person. The Seller shall
          not hold itself out as having agreed to pay, or as being liable,
          primarily or secondarily, for, any obligations of any other Person.

               (vii)   The Seller shall not maintain any joint account with any
          Other Medco Company or become liable as a guarantor or otherwise with
          respect to any Indebtedness or contractual obligation of any Other
          Medco Company. The membership interests of the Seller and any
          Indebtedness (whether or not represented by promissory notes) of or
          issued by the Seller to the Originator or any of its Subsidiaries may
          not be pledged to secure Indebtedness of the Originator or any Other
          Medco Company.

               (viii)  The Seller shall not make any payment or distribution of
          assets with respect to any obligation of any other Person or grant an
          Adverse Claim on any of its assets to secure any obligation of any
          Other Person.

               (ix)    The Seller shall not make loans, advances or otherwise
          extend credit to any other Person except as expressly contemplated by
          the Originator Purchase Agreement.

               (x)     The Seller shall hold regular duly noticed meetings (or
          authorize actions by unanimous written consent) of its Board of
          Managers, make and retain minutes of such meetings and otherwise
          observe all limited liability company formalities.

               (xi)    The Seller shall have bills of sale (or similar
          instruments of assignment) with respect to all assets (other than
          Receivables or interests therein acquired under the Originator
          Purchase Agreement) purchased from any of the

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          Other Medco Companies, in each case to the extent such bills of sale
          would be customarily prepared in transactions with non-Affiliates.

               (xii)   The Seller shall not engage in any transaction with any
          other Person, except as contemplated by this Agreement and the
          Originator Purchase Agreement.

               (xiii)  The Seller shall prepare its financial statements
          separately from those of any of the Other Medco Companies and shall
          insure that any consolidated financial statements of any Other Medco
          Company that are filed with the Securities and Exchange Commission or
          any other Official Body or are furnished to any creditors of any Other
          Medco Company have notes clearly stating that (A) the Seller is the
          owner of the Pool Receivables and is a separate entity and (B) the
          Seller's assets will be available first and foremost to satisfy the
          claims of the creditors of the Seller.

               (xiv)   The Seller shall take, or refrain from taking, as the
          case may be, all other actions that are necessary to be taken or not
          to be taken in order to (x) ensure that the assumptions and factual
          recitations set forth in the Specified Bankruptcy Opinion Provisions
          remain true and correct with respect to the Seller and (y) comply with
          those procedures described in such provisions which are applicable to
          the Seller.

               (xv)    The Seller will not commingle its funds or assets with
          those of any other Person or entity. The Seller will provide
          separately for its expenses and liabilities from its own funds (except
          as provided in paragraph (v) above), and will fairly and reasonably
          allocate any expenses associated with services provided by common
          employees, office space, or other overhead and administrative expenses
          with any affiliate.

               (xvi)   The Seller will not identify itself as a division of any
          other person or entity, and will hold itself out to creditors and the
          public as a legal entity separate and distinct from any other entity
          and will correct any known misunderstanding regarding its separate
          identity.

               (xvii)  The Seller will transact all business with Affiliates on
          an arms' length basis and pursuant to commercially reasonable
          agreements.

               (xviii) After entering into the transactions contemplated by this
          Agreement and the Originator Purchase Agreement, the Seller will not
          transfer any of its assets to the Originator other than (i) transfers
          for fair or reasonably equivalent consideration and without the intent
          to hinder, delay or defraud the Seller's creditors, and (ii)
          distributions that are not fraudulent or in violation of applicable
          entity law. If, after entering into the transactions contemplated by
          this Agreement and the Originator Purchase Agreement, the Originator
          transfers any of its assets to the Seller, the Seller will properly
          account for such transfers as

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          capital contributions or sales made in accordance with the Originator
          Purchase Agreement and its limited liability company agreement, as
          applicable.

          (l)  Transaction Documents. The Seller will not terminate, amend,
waive or modify, or consent to any termination, amendment, waiver or
modification of, any provision of any Transaction Document or grant any other
consent or other indulgence under any Transaction Document, in each case without
the prior written consent of each Managing Agent. The Seller will perform all of
its obligations under the Originator Purchase Agreement and will enforce the
Originator Purchase Agreement in accordance with its terms. The Seller will take
all actions to perfect and enforce its rights and interests (and the rights and
interests of the Administrative Agent and the Purchasers as assignees of Seller)
under the Originator Purchase Agreement as the Administrative Agent may from
time to time reasonably request, including, without limitation, making claims to
which it may be entitled under any indemnity, reimbursement or similar provision
contained in the Originator Purchase Agreement.

          (m)  Nature of Business. The Seller will not engage in any business or
engage in any transactions other than the purchase of Receivables, Related
Security and Collections from the Originator and the transactions contemplated
by this Agreement and the Originator Purchase Agreement. The Seller will not
create or form any Subsidiary.

          (n)  Mergers, Etc. The Seller will not merge with or into or
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter acquired) to, or
acquire all or substantially all of the assets or capital stock or other
ownership interest of, or enter into any joint venture or partnership agreement
with, any Person, other than as contemplated by this Agreement and the
Originator Purchase Agreement.

          (o)  Distributions, Etc. The Seller will not (A) declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any membership interests or other equity
interests in the Seller, or return any capital to its members or other equity
holders as such, or purchase, retire, defease, redeem or otherwise acquire for
value or make any payment in respect of any membership interests or other equity
of the Seller or any warrants, rights or options to acquire any membership
interests or other equity of the Seller, now or hereafter outstanding, (B)
prepay, purchase or redeem any Indebtedness (other than Indebtedness hereunder),
(C) lend or advance any funds or (D) repay any loans or advances to, for or from
any of its Affiliates (the amounts described in clauses (A) through (D) being
referred to as "Restricted Payments"); provided, however, that, prior to the
Termination Date, the Seller may declare and pay cash dividends to its sole
member, and may make payments in respect of the Subordinated Note, in each case
out of Collections available for such purpose pursuant to Section 2.04 so long
as (i) no Termination Event or Incipient Termination Event shall then exist or
would occur as a result thereof and (ii) any such dividends are in compliance
with all applicable law including the Delaware Limited Liability Company Act,
and have been approved by all necessary and appropriate limited liability
company action of the Seller and its Board of Managers.

          (p)  Indebtedness. The Seller shall not create, incur, guarantee,
assume or suffer to exist any Indebtedness or other liabilities, whether direct
or contingent, other than (i) as

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a result of the endorsement of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business, (ii) the incurrence
of obligations under this Agreement, (iii) the incurrence of other obligations
pursuant to, and, as expressly contemplated in, the Originator Purchase
Agreement, and (iv) the incurrence of operating expenses in the ordinary course
of business.

          (q)  Limited Liability Company Agreement. The Seller will not amend,
modify or delete (or permit any amendment, modification or deletion of) (i) the
definition of "Independent Manager" in its limited liability company agreement
as in effect on the date hereof or (ii) any other provision of its limited
liability company agreement as in effect on the date hereof if, pursuant to the
terms thereof, such amendment, modification or deletion requires the consent of
the Independent Manager thereunder.

          (r)  Tangible Net Worth. The Seller will maintain Tangible Net Worth
at all times equal to at least 3% of the Outstanding Balance of the Pool
Receivables at such time.

          (s)  Taxes. The Seller will file all material tax returns and reports
required by law to be filed by it and will promptly pay all taxes and
governmental charges at any time owing, except such as are being contested in
good faith by appropriate proceedings and for which appropriate reserves have
been established. The Seller will pay when due any taxes payable in connection
with the Receivables, exclusive of taxes on or measured by income or gross
receipts of the Administrative Agent, the Managing Agents, the Conduit
Purchasers or the Committed Purchasers.

          (t)  Treatment as Sales. The Seller shall not account for or treat
(whether in financial statements or otherwise) the transactions contemplated by
the Originator Purchase Agreement in any manner other than as the sale and/or
absolute conveyance of Receivables by Medco to the Seller.

          (u)  Investments. The Seller shall not make any loans to, advances to,
investments in or otherwise acquire any capital stock or equity security of, or
any equity interest in, any other Person.

          (v)  Control Agreements. Within 30 days of the Closing Date, the
Seller shall cause all Deposit Accounts and the Collection Account to be subject
at all times to a Control Agreement duly executed by the Servicer, the Seller,
the Administrative Agent and the applicable bank at which such account is
maintained.

          SECTION 5.02  Audits. Until the Final Payout Date, each of the Seller
and the Servicer will, at their respective expense, from time to time during
regular business hours as requested by the Administrative Agent or any Managing
Agent upon reasonable prior notice, permit the Administrative Agent, any
Managing Agent, or their respective agents or representatives (including
independent public accountants, which may be the Seller's or the Servicer's
independent public accountants), (i) to conduct periodic audits of the
Receivables, the Related Security and the related Contracts, books and records
and collections systems of the Seller or the Servicer, as the case may be, (ii)
to examine and make copies of and abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in the

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possession or under the control of the Seller or the Servicer, as the case may
be, relating to Receivables and the Related Security, including, without
limitation, the Contracts, and (iii) to visit the offices and properties of the
Seller or the Servicer, as the case may be, for the purpose of examining such
materials described in clause (ii) above, and to discuss matters relating to
Receivables and the Related Security or the Seller's or the Servicer's
performance under the Transaction Documents or under the Contracts with any of
the officers or employees of the Seller or the Servicer, as the case may be,
having knowledge of such matters. In addition, upon the Administrative Agent's
request (acting either on its own initiative or at the request of any Managing
Agent), the Servicer will, at its expense, appoint independent public
accountants acceptable to the Administrative Agent, or utilize any Managing
Agent's representatives or auditors, to prepare and deliver to the
Administrative Agent and each Managing Agent a written report (each an
"Accountants' Report") with respect to the Receivables and the Servicer Reports
(including, in each case, the systems, procedures and records relating thereto)
on a scope and in a form reasonably requested by the Administrative Agent and
the Managing Agents; provided, however, that, so long as no Termination Event or
Incipient Termination Event has occurred and is continuing, the Administrative
Agent may only request such a report at the Servicer's expense once per calendar
year; and provided, further, that any follow-up audit resulting from a material
discrepancy disclosed in such report shall also be at the Servicer's expense.

          SECTION 5.03  Additional Covenants of the Servicer.

          (a)  Compliance with Laws, Etc. The Servicer will comply in all
respects with all applicable Laws and preserve and maintain its corporate
existence, rights, franchises, qualifications, and privileges except to the
extent that the failure so to comply with such Laws or the failure so to
preserve and maintain such rights, franchises, qualifications, and privileges
would not reasonably be expected to have a Material Adverse Effect.

          (b)  Records and Books of Account. The Servicer will maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables and related
Contracts in the event of the destruction of the originals thereof), and keep
and maintain all documents, books, records and other information reasonably
necessary or advisable for the collection of all Receivables (including, without
limitation, records adequate to permit the daily identification of each
Receivable and all Collections of and adjustments to each existing Receivable).

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

          (d)  Extension or Amendment of Receivables and Contracts. Except as
provided in Section 6.02(c), the Servicer will not extend, amend or otherwise
modify the terms of any Receivable.

          (e)  Change in Credit and Collection Policy. The Servicer will not
make any change in the Credit and Collection Policy, except for any such change
that would not (i) impair

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the collectibility of any Receivables in any material respect or (ii) otherwise
be reasonably likely to have a Material Adverse Effect. In the event that the
Servicer makes any material change to the Credit and Collection Policy, it
shall, promptly following such change, provide the Administrative Agent and each
Managing Agent with an updated Credit and Collection Policy and a summary of all
material changes.

          (f)  Change in Payment Instructions to Obligors. The Servicer will not
add or terminate any Deposit Account from those listed in Schedule III to this
Agreement, or make any change in its instructions to Obligors regarding payments
to be made in respect of the Receivables or payments to be made to any Deposit
Account, unless the Administrative Agent shall have received notice of such
addition, termination or change (including an updated Schedule III) and a fully
executed Control Agreement with respect to each new Deposit Account. Each
Deposit Account shall be maintained at all times in the name of the Seller.

          (g)  Deposits to Deposit Accounts. The Servicer will instruct all
Obligors to remit all their payments in respect of Receivables to Deposit
Accounts directly by wire transfer or electronic funds transfer to the relevant
Deposit Account Bank. If the Servicer shall receive any Collections directly,
the Servicer shall promptly (and in any event within one Business Day) cause
such Collections to be either (i) deposited into a Deposit Account or (ii) in
the case of checks received by the Servicer, mailed to a Deposit Account Bank
for deposit into a Deposit Account. The Servicer will not permit funds which do
not constitute Collections of Receivables from being deposited into any Deposit
Account.

          (h)  Control Agreements. Within 30 days of the Closing Date, the
Servicer shall cause all Deposit Accounts and the Collection Account to be
subject at all times to a Control Agreement duly executed by the Servicer, the
Seller, the Administrative Agent and the applicable bank.

          (i)  Billing of Receivables. The Servicer shall bill all Unbilled
Receivables as soon as practicable under the terms of the relevant Contract, and
shall furnish to the applicable Obligor all supporting data and other
information required to be furnished under the terms of such Contract in order
to cause such Receivable to become due and payable.

          (j)  Other Covenants. Medco (both individually and in its capacity as
Servicer) shall perform and comply with all covenants required to be performed
or observed by it pursuant to the Originator Purchase Agreement and each other
Transaction Document to which it is a party.

                                   ARTICLE VI

                          ADMINISTRATION AND COLLECTION
                                 OF RECEIVABLES

          SECTION 6.01  Designation of Servicer. The servicing, billing,
administration and collection of the Pool Receivables shall be conducted by the
Servicer so designated hereunder from time to time. Until the Administrative
Agent (with the consent or at the direction of the Majority Managing Agents)
gives notice to the Seller of the designation of a

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<PAGE>

new Servicer (which notice may be given at any time following the occurrence and
during the continuation of a Servicer Replacement Event), Medco is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Servicer pursuant to the terms hereof. Medco may not resign from the obligations
and liabilities hereby imposed on it, unless required to do so by law as
evidenced by an opinion of counsel in form and substance satisfactory to each
Managing Agent. The Administrative Agent (with the consent or at the direction
of the Majority Managing Agents), at any time after the occurrence and during
the continuation of a Servicer Replacement Event, may designate as Servicer any
Person (including itself) to succeed Medco or any successor Servicer, on such
terms and conditions as the Administrative Agent and such successor Servicer
shall agree. The Servicer may, with the prior consent of the Administrative
Agent, subcontract with any other Person for the servicing, administration or
collection of the Receivables. Any such subcontract shall not affect the
Servicer's liability for performance of its duties and obligations pursuant to
the terms hereof. Without limiting the generality of the foregoing, any action
taken or omitted to be taken by any Person that has entered into a subcontract
with the Servicer shall be deemed to be an action or omission by the Servicer
(including, without limitation, for purposes of determining whether any
Receivable is a Diluted Receivable and for purposes of Sections 6.06 and 10.01).

          SECTION 6.02  Duties of Servicer. (a) The Servicer shall take or cause
to be taken all such actions as may be necessary or advisable to bill and
collect each Pool Receivable from time to time, all in accordance in all
material respects with applicable Laws, with reasonable care and diligence, and
in accordance with the Credit and Collection Policy and the terms of the
Contracts. The Seller, each Purchaser and the Administrative Agent hereby
appoint the Servicer, from time to time designated pursuant to Section 6.01, as
their agent to enforce their respective rights and interests in the Pool
Receivables, the Related Security and the related Contracts. In performing its
duties as Servicer, the Servicer shall exercise the same care and apply the same
policies as it would exercise and apply if it owned such Receivables and shall
act in such manner as it reasonably deems to be in the best interests of the
Purchasers and the Administrative Agent. Following the occurrence and during the
continuation of a Servicer Replacement Event the Administrative Agent (with the
consent or at the direction of the Majority Managing Agents) shall have the sole
right to direct the Servicer to commence or settle any legal action to enforce
collection of any Pool Receivable or any Related Security with respect thereto.

          (b)  The Servicer shall administer the Collections in accordance with
Article II.

          (c)  If no Termination Event shall have occurred and be continuing,
the Servicer, may, in accordance with the Credit and Collection Policy, extend
the maturity or adjust the Outstanding Balance of any Pool Receivable as the
Servicer deems appropriate to maximize Collections thereof; provided, however,
that the classification of any such Receivable as a Delinquent Receivable or
Defaulted Receivable shall not be affected by any such extension; provided,
further, that if such Receivable is an Eligible Receivable, the Servicer shall
not amend or modify such Receivable or any term or condition of any Contract
related thereto in a manner that would cause such Receivable to cease to be an
Eligible Receivable; provided, further, that the Servicer shall not, nor permit
the Originator to, amend, modify or waive any term or condition of any term or
condition of any Receivable or any Contract related thereto, unless such
amendment, modification or waiver (i) is made in accordance with the Credit and
Collection

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Policy and (ii) could not reasonably be expected to cause any existing
Receivable to cease to be an Eligible Receivable or otherwise have a Material
Adverse Effect. The Servicer shall notify each Managing Agent of any such
extension or adjustment that affects Pool Receivables having an aggregate
Outstanding Balance of $50,000,000 or more. Following the occurrence and during
the continuation of a Termination Event, the Servicer may grant such extensions
or adjustments only with the prior written consent of the Administrative Agent
(acting with the consent or at the direction of the Majority Managing Agents).
In no event shall the Servicer be entitled to make any Purchaser, any Managing
Agent or the Administrative Agent a party to any litigation involving the
Transaction Documents or the Receivables without such Purchaser's, such Managing
Agent's or the Administrative Agent's prior written consent.

          (d)  The Servicer shall hold in trust for the Seller, the
Administrative Agent, the Managing Agents and each Purchaser, in accordance with
their respective interests, all documents, instruments and records (including,
without limitation, computer tapes or disks) which evidence or relate to Pool
Receivables or Related Security. The Servicer shall mark the Seller's and the
Originator's master data processing records evidencing the Pool Receivables with
a legend, reasonably acceptable to the Administrative Agent, evidencing that
Receivable Interests therein have been sold. At the request of the
Administrative Agent following a Termination Event or Involuntary Bankruptcy
Event, the Servicer shall mark each Contract and each invoice which evidence or
relate to Pool Receivables with a legend, reasonably acceptable to the
Administrative Agent, evidencing that Receivable Interests therein have been
sold and shall deliver to the Administrative Agent a copy (which may be in
electronic form) of each invoice evidencing each Receivable.

          (e)  The Servicer shall, as soon as practicable following receipt and
identification thereof, and in any event within one Business Day, turn over to
the Seller or such other Person as may be entitled thereto any cash collections
or other cash proceeds received in the Deposit Accounts and not constituting
Collections of Receivables.

          SECTION 6.03  Reports. (a) Monthly Report. No later than 4:00 p.m.,
New York City time, on each Monthly Reporting Date, the Servicer shall deliver
to each Managing Agent and the Seller a monthly report, substantially in the
form of Annex A-1, containing the information listed in Annex A-1 with respect
to the immediately preceding Calculation Period and such other information as
the Administrative Agent or any Managing Agent may reasonably request.

          (b)  Weekly Reports. During any Rating Level 2 Period, the Servicer
shall deliver to each Managing Agent and the Seller, no later than 11:00 a.m.,
New York City time, on the second Business Day of each calendar week, a Weekly
Report containing the information listed in Annex A-2 with respect to the
immediately preceding calendar week, and such other information as the
Administrative Agent or any Managing Agent may reasonably request.

          (c)  Daily Reports. During any Rating Level 3 Period or Rating Level 4
Period, the Servicer shall deliver to each Managing Agent and the Seller, no
later than 11:00 a.m., New York City time, on each Business Day, a Daily Report
setting forth total Collections received and Receivables originated during the
immediately preceding Business Day, the Net

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Receivables Pool Balance at the end of the immediately preceding Business Day,
and such other information as the Administrative Agent or any Managing Agent may
reasonably request.

          (d)  Reports following Termination Event. On each Business Day after
the occurrence of a Termination Event, to the extent the Servicer is not
otherwise required to deliver Daily Reports pursuant to this Section 6.03, the
Servicer shall deliver to each Managing Agent a daily report setting forth
Collections received on the previous Business Day and the Outstanding Balance of
Eligible Receivables as of the close of business on the previous Business Day,
and such other information as the Administrative Agent or any Managing Agent may
reasonably request.

          (e)  Transmission of Servicer Reports. The Servicer shall transmit
each Servicer Report to each Managing Agent by electronic mail. In addition, the
Servicer shall transmit a copy of each such Servicer Report to the Managing
Agents by facsimile (certified by a Financial Officer of the Servicer or such
other employee of the Servicer as shall have primary responsibility for the
preparation of such report and shall have been authorized to certify Servicer
Reports hereunder by a Financial Officer).

          (f)  Notice of Termination Events. The Servicer shall provide to each
Managing Agent, promptly, and in any event within one Business Day after the
Servicer obtains knowledge thereof, notice of any Termination Event or Incipient
Termination Event.

          (g)  Notice of Downgrades. Promptly upon learning thereof, the
Servicer shall provide to each Managing Agent notice of any downgrade in the
Debt Rating (or the withdrawal by either S&P or Moody's of a Debt Rating) of the
Originator, setting forth the Indebtedness affected and the nature of such
change (or withdrawal).

          (h)  Other Information. The Servicer shall provide to each Managing
Agent, promptly upon request, such other information respecting the Receivables
or the condition or operations, financial or otherwise, of the Servicer
(including, without limitation, information regarding any pending or threatened
litigation) as the Administrative Agent or any Managing Agent may from time to
time reasonably request.

          SECTION 6.04  Certain Rights of the Administrative Agent. (a) At any
time following the occurrence and during the continuation of (i) a Termination
Event, (ii) an Involuntary Bankruptcy Event, (iii) Rating Level 3 Period or (iv)
Rating Level 4 Period, the Administrative Agent may have each Deposit Account
transferred into the name of the Administrative Agent and/or assume exclusive
control of the Deposit Accounts, and may take such actions to effect such
transfer or assumption as it may determine to be necessary or appropriate
(including, without limitation, delivering the notices attached to the Control
Agreements).

          (b)  At any time following the occurrence and during the continuation
of a Termination Event or a Rating Level 4 Period:

               (i)     At the Administrative Agent's request (acting on its own
          initiative or at the direction of the Majority Managing Agents) and at
          the Seller's expense, the Servicer shall (and if the Servicer shall
          fail to do so within three Business

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          Days, the Administrative Agent may) notify each Obligor of Receivables
          of the ownership of Receivable Interests under this Agreement and
          direct that payments be made directly to the Administrative Agent or
          its designee.

               (ii)    At the Administrative Agent's request (acting on its own
          initiative or at the direction of the Majority Managing Agents) and at
          the Seller's or the Servicer's expense, the Seller and the Servicer
          shall (A) assemble all of the documents, instruments and other records
          (including, without limitation, computer tapes and disks) that
          evidence or relate to the Receivables and the related Contracts and
          Related Security, or that are otherwise necessary or desirable to
          collect the Receivables, and shall make the same available to the
          Administrative Agent at a place selected by the Administrative Agent
          or its designee, and (B) segregate all cash, checks and other
          instruments received by it from time to time constituting Collections
          of Receivables in a manner acceptable to the Administrative Agent and,
          promptly upon receipt, remit all such cash, checks and instruments,
          duly indorsed or with duly executed instruments of transfer, to the
          Administrative Agent or its designee.

          (c)  Each of the Seller and the Servicer authorizes the Administrative
Agent, and hereby irrevocably appoints the Administrative Agent as its
attorney-in-fact coupled with an interest, with full power of substitution and
with full authority in place of the Seller or the Servicer, following the
occurrence and during the continuation of a Termination Event or any Rating
Level 4 Period, to take any and all steps in the Seller's or the Servicer's name
and on behalf of the Seller or the Servicer that are necessary or desirable, in
the determination of the Administrative Agent, to collect amounts due under the
Receivables, including, without limitation, endorsing the Seller's, the
Servicer's or the Originator's name on checks and other instruments representing
Collections of Receivables and enforcing the Receivables and the Related
Security and related Contracts.

          SECTION 6.05  Rights and Remedies. (a) If the Servicer or the Seller
fails to perform any of its obligations under this Agreement, the Administrative
Agent may (but shall not be required to) itself perform, or cause performance
of, such obligation; and the Administrative Agent's costs and expenses
reasonably incurred in connection therewith shall be payable by the Servicer or
the Seller, as applicable.

          (b)  The Seller and the Originator shall perform their respective
obligations under the Contracts related to the Receivables to the same extent as
if Receivable Interests had not been sold and the exercise by the Administrative
Agent on behalf of the Conduit Purchasers, the Managing Agents and the Committed
Purchasers of their rights under this Agreement shall not release the Originator
or the Seller from any of their duties or obligations with respect to any
Receivables or related Contracts. None of the Administrative Agent, the Conduit
Purchasers, the Managing Agents or the Committed Purchasers shall have any
obligation or liability with respect to any Receivables or related Contracts,
nor shall any of them be obligated to perform the obligations of the Seller or
the Originator thereunder.

          (c)  The Administrative Agent's rights and powers under this Article
VI shall not subject the Administrative Agent to any liability if any action
taken by it proves to be

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<PAGE>

inadequate or invalid, nor shall such powers confer any obligation whatsoever
upon the Administrative Agent.

          SECTION 6.06  Indemnities by the Servicer. Without limiting any other
rights that the Indemnified Parties may have hereunder or under applicable law,
and in consideration of its appointment as Servicer, the Servicer hereby agrees
to indemnify each Indemnified Party from and against any and all damages,
losses, claims, liabilities, deficiencies, costs, disbursements and expenses,
including, without limitation, interest, penalties, amounts paid in settlement
and reasonable attorneys' fees (all of the foregoing being collectively referred
to as "Special Indemnified Amounts") arising out of or resulting from any of the
following (excluding, however, (a) Special Indemnified Amounts to the extent a
final non-appealable judgment of a court of competent jurisdiction finds that
such Special Indemnified Amounts resulted from gross negligence or willful
misconduct on the part of such Indemnified Party and (b) any income taxes or any
other tax or fee measured by income incurred by such Indemnified Party arising
out of or as a result of this Agreement or the ownership of Receivable Interests
or in respect of any Receivable or any Contract):

               (i)     any representation, warranty, certification, report or
          other statement made or deemed made by the Servicer under or in
          connection with this Agreement or any other Transaction Document which
          shall have been incorrect in any respect when made or deemed made;

               (ii)    the failure by the Servicer to comply with any applicable
          Law with respect to any Receivable or Contract;

               (iii)   the failure to have filed, or any delay in filing,
          financing statements or other similar instruments or documents under
          the UCC of any applicable jurisdiction or other applicable laws with
          respect to any Receivables, the Contracts and the Related Security and
          Collections in respect thereof, whether at the time of any purchase or
          reinvestment or at any subsequent time;

               (iv)    any failure of the Servicer to perform its duties or
          obligations in accordance with the provisions of this Agreement or any
          other Transaction Document;

               (v)     the commingling of Collections of Receivables at any time
          by the Servicer or any of its Affiliates (other than the Seller) with
          other funds;

               (vi)    any action by the Servicer (other than an action required
          by the Transaction Documents) reducing or impairing the rights of the
          Administrative Agent, the Conduit Purchasers or the Committed
          Purchasers with respect to any Receivable or the value of any
          Receivable;

               (vii)   any Servicing Fees or other costs and expenses payable to
          any replacement Servicer, to the extent in excess of the Servicing
          Fees payable to Medco in its capacity as Servicer hereunder;

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               (viii)  any claim brought by any Person other than an Indemnified
          Party arising from any activity by the Servicer or its Affiliates in
          servicing, administering, billing or collecting any Receivable; or

               (ix)    any change in the Credit and Collection Policy which
          impairs the collectibility of any Receivable or the ability of the
          Servicer to perform its obligations under this Agreement.

          Notwithstanding anything to the contrary in this Agreement, solely for
purposes of the Servicer's indemnification obligations in clauses (i) and (iv)
of this Section 6.06, any representation, warranty or covenant qualified by the
occurrence or non-occurrence of a Material Adverse Effect or similar concepts of
materiality shall be deemed to be not so qualified. It is expressly agreed and
understood by the parties hereto (x) that the foregoing indemnification is not
intended to, and shall not, constitute a guarantee of collectibility or payment
of the Receivables and (y) that nothing in this Section 6.06 shall require the
Servicer to indemnify any Person for Receivables that are not collected, not
paid or uncollectible solely on account of the insolvency, bankruptcy, or
financial inability to pay of the applicable Obligor except to the extent of any
Indemnified Amounts arising from the improper characterization of any such
Receivables as Eligible Receivables.

          SECTION 6.07  Administrative Agent Account. (a) At the request of the
Administrative Agent, upon the earliest to occur of (i) 30 days after the
commencement of a Ratings Level 2 Period, (ii) two Business Days after the
commencement of a Ratings Level 3 Period or Ratings Level 4 Period, (iii) the
Termination Date or (iv) the occurrence and continuance of any Termination Event
or any Involuntary Bankruptcy Event, the Servicer shall (and if the Servicer
fails to do so, the Administrative Agent may) cause to be established with
Citibank (or another bank satisfactory to each Managing Agent) in the name of
the Administrative Agent, a segregated account (the "Administrative Agent
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Purchasers. Upon the establishment of
such account, such account shall constitute the "Collection Account" for all
purposes hereunder. The Servicer shall deliver, or cause to be delivered to the
Administrative Agent, as soon as practicable and in any event no later than two
Business Days after such Administrative Agent Account is required to be
established as provided above, a Control Agreement with respect to such account
in substantially the form attached as Annex B-2 or in such other form as the
Administrative Agent may approve, duly executed by the Seller, the Servicer and
the bank at which such account is maintained.

          (b)  Each of the Seller and the Servicer agrees that the
Administrative Agent shall have exclusive dominion and control over the
Administrative Agent Account and all monies, instruments and other property from
time to time deposited in or credited to the Administrative Agent Account;
provided, however, that, until notified to the contrary by the Administrative
Agent, the Servicer shall have the right to withdraw funds from the
Administrative Agent Account for application in accordance with Sections 2.04 or
2.05, as applicable. The Servicer shall cause the Administrative Agent Account
to be subject at all times to a Control Agreement, duly executed by the Seller,
the Servicer, the Administrative Agent and the bank at which the Administrative
Agent Account is maintained.

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          (c)  The Servicer may invest funds on deposit in the Administrative
Agent Account, reinvest proceeds of any such investments which may mature or be
sold, and invest interest or other income received from any such investments, in
each case in such Permitted Investments as the Servicer may select; provided,
however, that each such Permitted Investment shall have a maturity date no later
than the next succeeding Settlement Date. Such proceeds, interest or income
which are not so invested or reinvested in Permitted Investments shall, except
as otherwise provided in this Agreement, be deposited and held in the
Administrative Agent Account. Neither the Administrative Agent nor any of its
Affiliates shall be liable to the Seller, the Servicer or any other Person for,
or with respect to, any decline in value of amounts on deposit in the
Administrative Agent Account. Permitted Investments from time to time purchased
and held pursuant to this Section 6.07 shall be referred to as "Collateral
Securities" and shall, for purposes of this Agreement, constitute part of the
funds held in the Administrative Agent Account in amounts equal to their
respective outstanding principal amounts. Each such Permitted Investment shall
be made in the name of the Administrative Agent or its designee.

          (d)  Following the occurrence of any Termination Event, the
Administrative Agent may, at any time or from time to time after funds are
either deposited in the Administrative Agent Account or invested in Collateral
Securities, and after selling, if necessary, any Collateral Securities, withdraw
funds then held in the Administrative Agent Account and remit the same to the
respective Purchaser Group Account for each Purchaser Group (ratably in
proportion to the Capital held by the Purchasers in each such Purchaser Group
or, to the extent no such Capital remains outstanding, in proportion to the
remaining Seller Obligations then owing to the members of each such Purchaser
Group). The Seller agrees that Permitted Investments are of a type customarily
sold on a recognized market and, accordingly, no notice of sale of any Permitted
Investments shall be required. To the extent notice of sale of any Collateral
Securities shall be required by law, at least ten days' notice to the Seller of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Administrative Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.

          (e)  Except as expressly provided herein, the Administrative Agent
shall have the sole right of withdrawal with respect to the Administrative Agent
Account. None of the Seller, the Servicer or any Person claiming on behalf of or
through the Seller or the Servicer shall have any right to withdraw any of the
funds held in the Administrative Agent Account except, in the case of the
Servicer, for withdrawals made in accordance with Section 2.04 or 2.05, as
applicable. The Administrative Agent may at any time terminate the Servicer's
right to make withdrawals from the Administrative Agent Account. In such event,
the Administrative Agent shall make all withdrawals and distributions from the
Administrative Agent Account required to be made pursuant to Section 2.04 or
2.05, as applicable, that would otherwise be made by the Servicer.

          (f)  The Administrative Agent shall exercise reasonable care in the
custody and preservation of any funds held in the Administrative Agent Account
and shall be deemed to have exercised such care if such funds are accorded
treatment substantially equivalent to that which the Administrative Agent
accords its own property, it being understood that the

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Administrative Agent shall not have any responsibility for taking any necessary
steps to preserve rights against any parties with respect to any such funds.

          (g)  The Servicer shall cause the bank at which the Administrative
Agent Account is maintained to deliver a duplicate copy of all statements
relating to the Administrative Agent Account directly to the Administrative
Agent.

          (h)  On the Final Payout Date, any funds remaining on deposit in the
Administrative Agent Account shall be paid to the Seller.

          SECTION 6.08  Servicer Replacement Event. At any time following the
occurrence and during the continuation of (i) any Termination Event or (ii) a
Rating Level 4 Period (each, a "Servicer Replacement Event"), the Administrative
Agent may (with the consent or at the direction of the Majority Managing Agents)
designate another Person to succeed Medco as the Servicer. If replaced as
Servicer, Medco agrees that it will (i) terminate, and cause each existing
sub-servicer to terminate, its collection activities in a manner and to the
extent requested by the Administrative Agent to facilitate the transition to a
new Servicer and (ii) transfer to the Administrative Agent (or its designee), or
(to the extent permitted by applicable Law and contract) license to the
Administrative Agent (or its designee) the use of, all software used in
connection with the billing and collection of the Receivables. To the extent any
such transfer or license would require the payment of any license fee or other
amount the Servicer agrees to pay such fee or other amount out of its own funds
promptly upon demand by the Administrative Agent. The Servicer shall cooperate
with and assist any successor Servicer in the performance of its
responsibilities as Servicer (including, without limitation, providing access
to, and transferring, to such successor Servicer all records related to the
Receivables and allowing (to the extent permitted by applicable law and
contract) the successor Servicer to use all licenses, hardware or software
necessary or desirable to collect or obtain or store information regarding the
Receivables). Notwithstanding its removal as Servicer, Medco irrevocably agrees
(to the extent requested to do so by the Administrative Agent) (i) to continue
to bill the Receivables and to provide all supporting data required to be
delivered to, or requested by, the Obligors pursuant to the Contracts and (ii)
to act as the data-processing agent for any successor Servicer, in each case in
substantially the same manner as Medco conducted such functions while it acted
as the Servicer.

                                   ARTICLE VII

                               TERMINATION EVENTS

          SECTION 7.01  Termination Events. If any of the following events (each
a "Termination Event") shall occur and be continuing:

          (a)  any Transaction Party shall fail to make any payment or deposit
required to be made by it hereunder in respect of Capital when due; or any
Transaction Party shall fail to make any other payment or deposit required to be
made by it hereunder or under any of the Transaction Documents when due
hereunder or thereunder and such failure shall remain unremedied for one
Business Day; or

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          (b)  any representation, warranty, certification or statement made by
any Transaction Party in this Agreement, any other Transaction Document to which
it is a party or in any other document delivered pursuant hereto or thereto
shall prove to have been incorrect in any material respect (or, to the extent
any such representation or warranty is qualified by materiality or Material
Adverse Effect, such representation or warranty shall prove to have been
incorrect in any respect subject only to the materiality or Material Adverse
Effect qualification set forth therein) when made or deemed made; or

          (c)  any Transaction Party shall fail to perform or observe (A) any
term, covenant or agreement contained in Section 5.01(a) (as to maintenance of
existence only), 5.01(d), 5.01(j)(iv), 5.01(n) or 5.01(v) of this Agreement or
Section 5.01(a) (as to maintenance of existence only), 5.01(d) or 5.01(l)(iv) of
the Originator Purchase Agreement or (B) any other term, covenant or agreement
contained in this Agreement or any other Transaction Document on its part to be
performed or observed and, solely in the case of this clause (B), such failure
shall remain unremedied for ten (10) days after such Transaction Party has
knowledge or receives notice thereof; or

          (d)  (i) any Transaction Party shall fail to make any payment (whether
of principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable; or (ii) any
event or condition occurs that results in any Material Indebtedness becoming due
prior to its scheduled maturity, other than at the election of the Originator or
any Subsidiary, or that, subject to any applicable grace period, enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided, however, that this clause (d)(ii) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness;

          (e)  any Event of Bankruptcy shall occur with respect to any
Transaction Party; or

          (f)  the Administrative Agent, on behalf of the Purchasers, shall, for
any reason, fail or cease to have a valid and perfected first priority security
interest in the Receivables and Related Security and Collections with respect
thereto or there shall exist any Adverse Claims (except as created in favor of
the Seller pursuant to the Originator Purchase Agreement or in favor of the
Administrative Agent and the Purchasers pursuant to this Agreement) on the
Receivables or the Related Security or Collections with respect thereto; or

          (g)  any Change of Control shall occur or the Originator shall cease
to own directly 100% of the issued and outstanding Equity Interests of the
Seller; or

          (h)  there shall have occurred since the Closing Date any event or
condition which has had or could reasonably be expected to have a material
adverse effect on (A) the ability of any Transaction Party to perform its
obligations under the Transaction Documents or (B) the collectibility of the
Receivables; or

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          (i)  the Receivable Interest Percentage exceeds the Maximum Receivable
Interest Percentage unless, within two Business Days of obtaining notice or
knowledge thereof, the Seller reduces the Capital from previously received
Collections or other funds available to the Seller so as to reduce the
Receivable Interest Percentage to less than or equal to the Maximum Receivable
Interest Percentage; or

          (j)  the average of the Dilution Ratios for any three consecutive
Calculation Periods exceeds 4.50%; or

          (k)  the average of the Default Ratios for any three consecutive
Calculation Periods exceeds 4.50%; or

          (l)  the average of the Delinquency Ratios for any three consecutive
Calculation Periods exceeds 5.25%; or

          (m)  the average of the Loss-to-Liquidation Ratios for any twelve
consecutive Calculation Periods exceeds 1.00%; or

          (n)  the average of the Portfolio Turnover Rates for any three
consecutive Calculation Periods exceeds 8; or

          (o)  any Transaction Party receives notice or becomes aware that (i) a
notice of federal tax lien has been filed against any Transaction Party or (ii)
a notice of lien has been filed against any Transaction Party under Section
412(n) of the IRC or Section 302(f) of ERISA for a failure to make a required
installment or other payment to a plan to which Section 412(n) of the IRC or
Section 302(f) of ERISA applies; or

          (p)  a "Termination Event" shall occur under (and as defined in) the
Originator Purchase Agreement; or

          (q)  one or more judgments for the payment of money in an aggregate
amount in excess of $25,000,000 or, in the case of the Seller, in an aggregate
amount in excess of $25,000 (except in each case to the extent covered by
insurance or other right of reimbursement or indemnification), or which have or
would reasonably be expected to have a Material Adverse Effect, shall be
rendered against the Originator, the Seller, any Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 60 consecutive
days during which execution shall not be effectively stayed or bonded pending
appeal;

          (r)  any of this Agreement or the Originator Purchase Agreement shall
cease, for any reason, to be in full force and effect, or any Transaction Party
shall so assert in writing or any Transaction Party shall otherwise seek to
terminate or disaffirm its obligations under any such Transaction Document; or

          (s)  any Financial Covenant Default shall occur; or

          (t)  an ERISA Event shall have occurred and shall be outstanding that,
when taken together with all other ERISA Events that have occurred and are then
outstanding, would

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reasonably be expected to result in liability of the Originator and its
Subsidiaries in an aggregate amount exceeding $25,000,000, individually or in
the aggregate;

then, and in any such event, the Administrative Agent may, in its discretion,
and shall, at the direction of any Managing Agent or the Majority Committed
Purchasers, declare the Termination Date to have occurred upon notice to the
Seller (in which case the Termination Date shall be deemed to have occurred);
provided, however, that the Termination Date shall occur automatically upon the
occurrence of any Event of Bankruptcy with respect to any Transaction Party
without any requirement for the giving of notice. Upon any such declaration or
upon such automatic occurrence, the Purchasers, the Managing Agents and the
Administrative Agent shall have, in addition to the rights and remedies which
they may have under this Agreement, all other rights and remedies provided after
default under the UCC and under other applicable law, which rights and remedies
shall be cumulative.

                                  ARTICLE VIII

                            THE ADMINISTRATIVE AGENT

          SECTION 8.01  Authorization and Action. Each Purchaser hereby appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. The Administrative Agent shall not have any
duties other than those expressly set forth in the Transaction Documents, and no
implied obligations or liabilities shall be read into any Transaction Document,
or otherwise exist, against the Administrative Agent. The Administrative Agent
does not assume, nor shall it be deemed to have assumed, any obligation to, or
relationship of trust or agency with, any Transaction Party, the Conduit
Purchasers, the Committed Purchasers or the Managing Agents. Notwithstanding any
provision of this Agreement or any other Transaction Document, in no event shall
the Administrative Agent ever be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to any provision
of any Transaction Document or applicable law.

          SECTION 8.02  Agent's Reliance, Etc. Neither the Administrative Agent
nor any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as Administrative Agent under
or in connection with this Agreement (including, without limitation, the
Administrative Agent's servicing, administering or collecting Receivables as
Servicer), in the absence of its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Administrative
Agent: (a) may consult with legal counsel (including counsel for a Managing
Agent, the Seller or the Servicer), independent certified public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (b) makes no warranty or representation to any
Managing Agent, Conduit Purchaser or Committed Purchaser (whether written or
oral) and shall not be responsible to any Managing Agent, Conduit Purchaser or
Committed Purchaser for any statements, warranties or representations (whether
written or oral) made in or in connection with this Agreement or any other
Transaction Document; (c) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
this

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Agreement or any other Transaction Document on the part of any Transaction Party
or to inspect the property (including the books and records) of any Transaction
Party; (d) shall not be responsible to any Managing Agent, Conduit Purchaser or
Committed Purchaser for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Transaction
Document; and (e) shall incur no liability under or in respect of this Agreement
by acting upon any notice (including notice by telephone), consent, certificate
or other instrument or writing (which may be by telecopier) believed by it to be
genuine and signed or sent by the proper party or parties.

          SECTION 8.03  CNAI and Affiliates. The obligation of Citibank to
purchase Receivable Interests under this Agreement may be satisfied by CNAI or
any of its Affiliates. With respect to any Receivable Interest or interest
therein owned by it, CNAI and its Affiliates shall have the same rights and
powers under this Agreement as any Committed Purchaser and may exercise the same
as though it were not the Administrative Agent. CNAI and any of its Affiliates
may generally engage in any kind of business with the Transaction Parties or any
Obligor, any of their respective Affiliates and any Person who may do business
with or own securities of the Transaction Parties or any Obligor or any of their
respective Affiliates, all as if CNAI were not the Administrative Agent and
without any duty to account therefor to the Managing Agents, the Conduit
Purchasers or the Committed Purchasers.

          SECTION 8.04  Indemnification of Administrative Agent. Each Committed
Purchaser agrees to indemnify the Administrative Agent (to the extent not
reimbursed by the Transaction Parties), ratably according to the respective
Percentage of such Committed Purchaser, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or any other Transaction Document
or any action taken or omitted by the Administrative Agent under this Agreement
or any other Transaction Document, provided that no Committed Purchaser shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct.

          SECTION 8.05  Delegation of Duties. The Administrative Agent may
execute any of its duties through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.

          SECTION 8.06  Action or Inaction by Administrative Agent. The
Administrative Agent shall in all cases be fully justified in failing or
refusing to take action under any Transaction Document unless it shall first
receive such advice or concurrence of the Majority Managing Agents, and
assurance of its indemnification by the Committed Purchasers, as it deems
appropriate. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other
Transaction Document in accordance with a request or at the direction of the
Majority Managing Agents, and such request or direction and any action taken or
failure to act pursuant thereto shall be binding upon all Conduit Purchasers,
Committed Purchasers and the Managing Agents. The Purchasers, the Managing

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Agents, and the Administrative Agent agree that unless any action to be taken by
the Administrative Agent under a Transaction Document (i) specifically requires
the advice or concurrence of all the Managing Agents or all the Purchasers or
(ii) may be taken by the Administrative Agent alone or without any advice or
concurrence of any Managing Agent or any Purchaser, then the Administrative
Agent may take action based upon the advice or concurrence of the Majority
Managing Agents.

          SECTION 8.07  Notice of Events of Termination; Action by
Administrative Agent. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Incipient Termination Event or of
any Termination Event unless the Administrative Agent has received notice from
any Managing Agent, Purchaser or the Seller stating that an Incipient
Termination Event or Termination Event has occurred hereunder and describing
such Incipient Termination Event or Termination Event. If the Administrative
Agent receives such a notice, it shall promptly give notice thereof to each
Managing Agent whereupon each Managing Agent shall promptly give notice thereof
to the Purchasers in its Purchaser Group. The Administrative Agent shall take
such action concerning an Incipient Termination Event or a Termination Event or
any other matter hereunder as may be directed by the Majority Managing Agents
(subject to the other provisions of this Article VIII), but until the
Administrative Agent receives such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
as the Administrative Agent deems advisable and in the best interests of the
Purchasers.

          SECTION 8.08  Non-Reliance on Administrative Agent and Other Parties.
Each Managing Agent and Purchaser expressly acknowledges (i) that neither the
Administrative Agent nor any of its directors, officers, agents or employees has
made any representations or warranties to it and (ii) that no act by the
Administrative Agent hereafter taken, including any review of the affairs of the
Transaction Parties, shall be deemed to constitute any representation or
warranty by the Administrative Agent. Each Purchaser represents and warrants to
the Administrative Agent that, independently and without reliance upon the
Administrative Agent, any Managing Agent or any other Purchaser and based on
such documents and information as it has deemed appropriate, it has made and
will continue to make its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and
creditworthiness of each Transaction Party and the Receivables and Contracts and
its own decision to enter into this Agreement and to take, or omit, action under
any Transaction Document. Except for items expressly required to be delivered
under any Transaction Document by the Administrative Agent to any Managing Agent
or Purchaser, the Administrative Agent shall not have any duty or responsibility
to provide any Managing Agent or Purchaser with any information concerning the
Transaction Parties or any of their Affiliates that comes into the possession of
the Administrative Agent or any of its directors, officers, agents, employees,
attorneys-in-fact or Affiliates.

          SECTION 8.09  Successor Administrative Agent. The Administrative Agent
may, upon at least thirty (30) days notice to the Seller, the Servicer and each
Managing Agent, resign as Administrative Agent. Except as provided below, such
resignation shall not become effective until a successor Administrative Agent is
appointed by the Majority Managing Agents and has accepted such appointment. If
no successor Administrative Agent shall have been so appointed by the Majority
Managing Agents within 30 days after the departing

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Administrative Agent's giving of notice of resignation, the departing
Administrative Agent may, on behalf of the Majority Managing Agents, appoint a
successor Administrative Agent, which successor Administrative Agent shall have
short-term debt ratings of at least A-1 from S&P and P-1 from Moody's and shall
be either a commercial bank having a combined capital and surplus of at least
$250,000,000 or an Affiliate of such an institution. If no successor
Administrative Agent shall have been so appointed by the Majority Managing
Agents within 60 days after the departing Administrative Agent's giving of
notice of resignation, the departing Administrative Agent may, on behalf of the
Majority Managing Agents, petition a court of competent jurisdiction to appoint
a successor Administrative Agent, which successor Administrative Agent shall
have short-term debt ratings of at least A-1 from S&P and P-1 from Moody's, and
shall be either a commercial bank having a combined capital and surplus of at
least $250,000,000 or an Affiliate of such an institution. Upon such acceptance
of its appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall succeed to and
become vested with all the rights and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations under the Transaction Documents. After any retiring
Administrative Agent's resignation hereunder, the provisions of Section 6.06,
Article X and this Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Administrative Agent.

                                   ARTICLE IX

                               THE MANAGING AGENTS

          SECTION 9.01  Authorization and Action. Each Conduit Purchaser and
each Committed Purchaser which belongs to the same Purchaser Group hereby
appoints and authorizes the Managing Agent for such Purchaser Group to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to such Managing Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. No Managing Agent shall have any
duties other than those expressly set forth in the Transaction Documents, and no
implied obligations or liabilities shall be read into any Transaction Document,
or otherwise exist, against any Managing Agent. No Managing Agent assumes, nor
shall it be deemed to have assumed, any obligation to, or relationship of trust
or agency with any Transaction Party, Conduit Purchaser or Committed Purchaser.
Notwithstanding any provision of this Agreement or any other Transaction
Document, in no event shall any Managing Agent ever be required to take any
action which exposes such Managing Agent to personal liability or which is
contrary to any provision of any Transaction Document or applicable law.

          SECTION 9.02  Managing Agent's Reliance, Etc. No Managing Agent nor
any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as a Managing Agent under or
in connection with this Agreement or the other Transaction Documents in the
absence of its or their own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, a Managing Agent: (a) may consult with
legal counsel (including counsel for the Administrative Agent, the Seller or the
Servicer), independent certified public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (b) makes no warranty or representation to any Conduit Purchaser or
Committed Purchaser (whether written or oral) and shall not be responsible to
any

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Conduit Purchaser or Committed Purchaser for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement or any other Transaction Document; (c) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement or any other Transaction Document on
the part of any Transaction Party or any other Person or to inspect the property
(including the books and records) of any Transaction Party; (d) shall not be
responsible to any Conduit Purchaser or any Committed Purchaser for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any other Transaction Documents or any other instrument or
document furnished pursuant hereto; and (e) shall incur no liability under or in
respect of this Agreement or any other Transaction Document by acting upon any
notice (including notice by telephone), consent, certificate or other instrument
or writing (which may be by telecopier) believed by it to be genuine and signed
or sent by the proper party or parties.

          SECTION 9.03  Managing Agent and Affiliates. With respect to any
Receivable Interest or interests therein owned by it, each Managing Agent shall
have the same rights and powers under this Agreement as any Committed Purchaser
and may exercise the same as though it were not a Managing Agent. A Managing
Agent and any of its Affiliates may generally engage in any kind of business
with any Transaction Party or any Obligor, any of their respective Affiliates
and any Person who may do business with or own securities of any Transaction
Party or any Obligor or any of their respective Affiliates, all as if such
Managing Agent were not a Managing Agent and without any duty to account
therefor to any Conduit Purchasers or Committed Purchasers.

          SECTION 9.04  Indemnification of Managing Agents. Each Committed
Purchaser in any Purchaser Group agrees to indemnify the Managing Agent for such
Purchaser Group (to the extent not reimbursed by the Transaction Parties),
ratably according to the proportion of the Percentage of such Committed
Purchaser to the aggregate Percentages of all Committed Purchasers in such
Purchaser Group, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against such Managing Agent in any way relating to or arising out of
this Agreement or any other Transaction Document or any action taken or omitted
by such Managing Agent under this Agreement or any other Transaction Document,
provided that no Committed Purchaser shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Managing Agent's gross
negligence or willful misconduct.

          SECTION 9.05  Delegation of Duties. Each Managing Agent may execute
any of its duties through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. No Managing
Agent shall be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.

          SECTION 9.06  Action or Inaction by Managing Agent. Each Managing
Agent shall in all cases be fully justified in failing or refusing to take
action under any Transaction Document unless it shall first receive such advice
or concurrence of the Conduit Purchasers and Committed Purchasers in its
Purchaser Group and assurance of its

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indemnification by the Committed Purchasers in its Purchaser Group, as it deems
appropriate. Each Managing Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other
Transaction Document in accordance with a request or at the direction of the
Committed Purchasers in its Purchaser Group representing a majority of the
Commitments in such Purchaser Group, and such request or direction and any
action taken or failure to act pursuant thereto shall be binding upon all
Conduit Purchasers and Committed Purchasers in its Purchaser Group.

          SECTION 9.07  Notice of Events of Termination. No Managing Agent shall
be deemed to have knowledge or notice of the occurrence of any Incipient
Termination Event or of any Termination Event unless such Managing Agent has
received notice from the Administrative Agent, any other Managing Agent, any
Conduit Purchaser or Committed Purchaser or the Seller stating that an Incipient
Termination Event or Termination Event has occurred hereunder and describing
such Incipient Termination Event or Termination Event. If a Managing Agent
receives such a notice, it shall promptly give notice thereof to the Conduit
Purchasers and Committed Purchasers in its Purchaser Group and to the
Administrative Agent (but only if such notice received by such Managing Agent
was not sent by the Administrative Agent). The Managing Agent may take such
action concerning an Incipient Termination Event or a Termination Event as may
be directed by Committed Purchasers in its Purchaser Group representing a
majority of the Commitments in such Purchaser Group (subject to the other
provisions of this Article IX), but until such Managing Agent receives such
directions, such Managing Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, as such Managing Agent deems
advisable and in the best interests of the Conduit Purchasers and Committed
Purchasers in its Purchaser Group.

          SECTION 9.08  Non-Reliance on Managing Agent and Other Parties. Except
to the extent otherwise agreed to in writing between a Conduit Purchaser and its
Managing Agent, each Conduit Purchaser and Committed Purchaser in the same
Purchaser Group expressly acknowledges that neither the Managing Agent for its
Purchaser Group nor any of such Managing Agent's directors, officers, agents or
employees has made any representations or warranties to it and that no act by
such Managing Agent hereafter taken, including any review of the affairs of the
Transaction Parties, shall be deemed to constitute any representation or
warranty by such Managing Agent. Each Conduit Purchaser and Committed Purchaser
in the same Purchaser Group represents and warrants to the Managing Agent for
such Purchaser Group that, independently and without reliance upon such Managing
Agent, any other Managing Agent, the Administrative Agent or any other Conduit
Purchaser or Committed Purchaser and based on such documents and information as
it has deemed appropriate, it has made and will continue to make its own
appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the
Transaction Parties and the Receivables and Contracts and its own decision to
enter into this Agreement and to take, or omit, action under any Transaction
Document. Except for items expressly required to be delivered under any
Transaction Document by a Managing Agent to any Conduit Purchaser or Committed
Purchaser in its Purchaser Group, no Managing Agent shall have any duty or
responsibility to provide any Conduit Purchaser or Committed Purchaser in its
Purchaser Group with any information concerning the Transaction Parties or any
of their Affiliates that comes into the possession of such Managing Agent or any
of its directors, officers, agents, employees, attorneys-in-fact or Affiliates.

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          SECTION 9.09  Successor Managing Agent. Any Managing Agent may, upon
at least thirty (30) days' notice to the Administrative Agent, the Seller, the
Servicer and the Conduit Purchasers and Committed Purchasers in its Purchaser
Group, resign as Managing Agent for its Purchaser Group. Such resignation shall
not become effective until a successor Managi ng Agent is appointed in the
manner prescribed by the relevant Asset Purchase Agreement or, in the absence of
any provisions in such Asset Purchase Agreement providing for the appointment of
a successor Managing Agent, until a successor Managing Agent is appointed by the
Conduit Purchaser(s) in such Purchaser Group (with the consent of Committed
Purchasers representing a majority of the Commitments in such Purchaser Group)
and has accepted such appointment. If no successor Managing Agent shall have
been so appointed within 30 days after the departing Managing Agent's giving of
notice of resignation, then the departing Managing Agent may, on behalf of the
Purchasers in its Purchaser Group, appoint a successor Managing Agent for such
Purchaser Group, which successor Managing Agent shall have short-term debt
ratings of at least A-1 from S&P and P-1 from Moody's and shall be either a
commercial bank having a combined capital and surplus of at least $250,000,000
or an Affiliate of such an institution. Upon such acceptance of its appointment
as Managing Agent for such Purchaser Group hereunder by a successor Managing
Agent, such successor Managing Agent shall succeed to and become vested with all
the rights and duties of the retiring Managing Agent, and the retiring Managing
Agent shall be discharged from its duties and obligations under the Transaction
Documents. After any retiring Managing Agent's resignation hereunder, the
provisions of Section 6.06, Article X and this Article IX shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was a
Managing Agent.

          SECTION 9.10  Reliance on Managing Agent. Unless otherwise advised in
writing by a Managing Agent or by any Conduit Purchaser or Committed Purchaser
in such Managing Agent's Purchaser Group, each party to this Agreement may
assume that (i) such Managing Agent is acting for the benefit and on behalf of
each of the Conduit Purchasers and Committed Purchasers in its Purchaser Group,
as well as for the benefit of each assignee or other transferee from any such
Person, and (ii) each action taken by such Managing Agent has been duly
authorized and approved by all necessary action on the part of the Conduit
Purchasers and Committed Purchasers in its Purchaser Group.

                                    ARTICLE X

                                 INDEMNIFICATION

          SECTION 10.01 Indemnities by the Seller. Without limiting any other
rights that the Administrative Agent, the Managing Agents, the Conduit
Purchasers, the Committed Purchasers, the Program Support Providers or any of
their respective Affiliates (each, an "Indemnified Party") may have hereunder or
under applicable law, the Seller hereby agrees to indemnify each Indemnified
Party from and against any and all damages, losses, claims, liabilities,
deficiencies, costs, disbursements and expenses, including, without limitation,
interest, penalties, amounts paid in settlement and reasonable attorneys' fees
(all of the foregoing being collectively referred to as "Indemnified Amounts")
arising out of or resulting from this Agreement or any other Transaction
Document or the use of proceeds of purchases or reinvestments or the ownership
of Receivable Interests or in respect of any Receivable or any Contract,
excluding, however, (a) Indemnified Amounts to the extent a final non-appealable

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judgment of a court of competent jurisdiction finds that such Indemnified
Amounts resulted from gross negligence or willful misconduct on the part of such
Indemnified Party, (b) recourse (except as otherwise specifically provided in
this Agreement) for Receivables that are uncollectible solely on account of the
insolvency, bankruptcy or financial inability of the Obligor to pay or (c) any
income, franchise, profits, branch profits or similar taxes incurred by such
Indemnified Party arising out of or as a result of this Agreement or the
ownership of Receivable Interests or in respect of any Receivable or any
Contract. Without limiting or being limited by the foregoing, the Seller shall
pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from any of the following (including, without
limitation, Indemnified Amounts arising on account of uncollectible Receivables,
but excluding Indemnified Amounts and taxes described in clauses (a) and (c)
above):

               (i)    any Receivable which the Seller or the Servicer includes
          as part of the Net Receivables Pool Balance but which is not an
          Eligible Receivable as of the date it was transferred to the Seller by
          the Originator or which thereafter ceases to be an Eligible
          Receivable;

               (ii)   any representation, warranty, certification, report or
          other statement made or deemed made by any Transaction Party (or any
          of their respective officers) under or in connection with this
          Agreement or any of the other Transaction Documents which shall have
          been incorrect in any respect when made;

               (iii)  the failure by any Transaction Party to comply with any
          applicable Law with respect to any Receivable or the related Contract;
          or the failure of any Receivable or the related Contract to conform to
          any such applicable Law;

               (iv)   the failure to vest (a) in the Purchasers a first priority
          perfected undivided percentage ownership interest, to the extent of
          each Receivable Interest, in the Receivables and the Related Security
          and Collections in respect thereof, or (b) in the Administrative Agent
          a first priority perfected security interest in all of the property
          described in Section 2.15, in each case free and clear of any Adverse
          Claim;

               (v)    the failure to have filed, or any delay in filing,
          financing statements or other similar instruments or documents under
          the UCC of any applicable jurisdiction or other applicable laws with
          respect to any Receivables and the Related Security and Collections in
          respect thereof, whether at the time of any purchase or reinvestment
          or at any subsequent time;

               (vi)   any dispute, claim or defense (other than discharge in
          bankruptcy) of an Obligor to the payment of any Receivable (including,
          without limitation, a defense based on such Receivable or the related
          Contract not being a legal, valid and binding obligation of such
          Obligor enforceable against it in accordance with its terms), or any
          other claim relating to any Contract or relating to billing or
          collection activities with respect to any such Contract or any
          Receivable (if such

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          billing or collection activities were performed by the Seller or any
          of its Affiliates acting as Servicer) or relating to any Contract
          related thereto;

               (vii)  any failure of any Transaction Party to perform its duties
          or obligations in accordance with the provisions hereof and each other
          Transaction Document or to perform its duties or obligations under the
          Contracts or to timely and fully comply in all respects with the
          Credit and Collection Policy in regard to each Receivable and the
          related Contract;

               (viii) any products liability, environmental or other claim
          arising out of or in connection with merchandise, goods or services
          which are the subject of any Contract or the sale of which gave rise
          to any Receivable;

               (ix)   the commingling of Collections of Receivables at any time
          with other funds;

               (x)    any investigation, litigation or proceeding (actual or
          threatened) related to this Agreement or any other Transaction
          Document or the use of proceeds of Purchases or the ownership of
          Receivable Interests or in respect of any Receivable or Related
          Security or Contract;

               (xi)   any Receivable becoming a Diluted Receivable or any other
          setoff with respect to any Receivable;

               (xii)  any claim brought by any Person other than an Indemnified
          Party arising from any activity by the Seller or any Affiliate of the
          Seller in servicing, administering or collecting any Receivable; or

               (xiii) the failure by any Transaction Party to pay when due any
          taxes, including, without limitation, sales, excise or personal
          property taxes.

          Notwithstanding anything to the contrary in this Agreement, solely for
purposes of the Seller's indemnification obligations in clauses (ii) and (vii)
of this Article X, any representation, warranty or covenant qualified by the
occurrence or non-occurrence of a Material Adverse Effect or similar concepts of
materiality shall be deemed to be not so qualified.

                                   ARTICLE XI

                                  MISCELLANEOUS

          SECTION 11.01 Amendments, Etc. No failure on the part of the Managing
Agents, the Purchasers or the Administrative Agent to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. No amendment or waiver of
any provision of this Agreement or consent to any departure by any Transaction
Party therefrom shall be effective unless in a writing signed by the
Administrative Agent, each Managing Agent and the Majority Committed Purchasers
(and, in the case of any amendment, also signed by the Seller and the Servicer),
and then such amendment, waiver or

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consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that the consent of the Seller shall
not be required for any amendment which modifies the representations,
warranties, covenants or responsibilities of the Servicer at any time when the
Servicer is not the Originator or any Affiliate of the Originator; provided,
further, that no amendment, waiver or consent shall, unless in writing and
signed by each Purchaser (or, in the case of clauses (c) and (d) below, each
Purchaser having its fees reduced or delayed or its Scheduled Commitment
Termination Date extended, as applicable) in addition to the Administrative
Agent:

               (a)  amend the definitions of Eligible Receivable, Delinquent
          Receivable, Defaulted Receivable, Net Receivables Pool Balance, Loss
          Reserve, Dilution Reserve, Yield and Fee Reserve or Total Reserve
          contained in this Agreement, or change the calculation of the
          Receivable Interests as set forth in such definition;

               (b)  reduce the amount of Capital or Yield that is payable on
          account of any Receivable Interest or delay any scheduled date for
          payment thereof;

               (c)  reduce fees payable by the Seller to the Managing Agents,
          the Conduit Purchasers or the Committed Purchasers or delay the dates
          on which such fees are payable;

               (d)  extend the Scheduled Commitment Termination Date for such
          Purchaser (except as set forth in the definition thereof); or

               (f)  change any of the provisions of this Section or the
          definition of "Majority Committed Purchasers";

and provided, further, that no amendment, waiver or consent shall increase the
Commitment of any Committed Purchaser or the Conduit Purchase Limit of any
Conduit Purchaser unless in writing and signed by such Committed Purchaser or
such Conduit Purchaser, as the case may be, and the relevant Managing Agent.

          SECTION 11.02 Notices, Etc. Except as provided below, all
communications and notices provided for hereunder shall be in writing (including
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other party at its address or telecopy number specified below or at
such other address or telecopy number as such party may hereafter specify for
the purposes of notice to such party. Each such notice or other communication
shall be effective (i) if given by telecopy, when such telecopy is transmitted
to the telecopy number specified in this Section 11.02 and confirmation is
received, (ii) if given by mail three (3) Business Days following such posting,
postage prepaid, U.S. certified or registered, (iii) if given by overnight
courier, one (1) Business Day after deposit thereof with a national overnight
courier service, or (iv) if given by any other means, when received at the
address specified in this Section 11.02. However, anything in this Section 11.02
to the contrary notwithstanding, the Seller hereby authorizes the Administrative
Agent and each Managing Agent to effect Purchases and Fixed Period and Yield
Rate selections based on telephonic notices made by any Person which the
Administrative Agent or such Managing Agent in good

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faith believes to be acting on behalf of the Seller. The Seller agrees to
deliver promptly to the Administrative Agent and each Managing Agent a written
confirmation of each telephonic notice signed by an authorized officer of
Seller. However, the absence of such confirmation shall not affect the validity
of such notice. If the written confirmation differs in any material respect from
the action taken by the Administrative Agent or such Managing Agent, the records
of the Administrative Agent or such Managing Agent shall govern absent manifest
error.

          If to a Committed Purchaser, to its address set forth on Schedule I.

          If to a Conduit Purchaser, to its address set forth on Schedule I.

          If to a Managing Agent, to its address set forth on Schedule I.

          If to the Seller:

          Medco Health Receivables, LLC
          100 Parsons Pond Drive
          Franklin Lakes, NJ 07417
          Attention:  [_____]
          Telephone:    [_____]
          Telecopy:     [_____]

          If to the Servicer:

          100 Parsons Pond Drive
          Franklin Lakes, NJ 07417
          Attention:  [_____]
          Telephone:    [_____]
          Telecopy:     [_____]

          If to the Administrative Agent:

          Citicorp North America, Inc.
          450 Mamaroneck Avenue
          Harrison, N.Y. 10528
          Attention: Global Securitization
          Facsimile No. 914-899-7890

          SECTION 11.03 Assignability. (a) This Agreement and each Purchasers'
rights and obligations hereunder (including ownership of each Receivable
Interest) shall be assignable by such Purchaser and its successors and permitted
assigns to any Eligible Assignee. Each assignor of a Receivable Interest or any
interest therein shall notify the Administrative Agent and the Seller of any
such assignment. Each assignor of a Receivable Interest or any interest therein
may, in connection with the assignment or participation, disclose to the
assignee or participant any information relating to the Transaction Parties,
including the Receivables, furnished to such assignor by or on behalf of any
Transaction Party or by the Administrative Agent; provided, however, that, prior
to any such disclosure, the assignee or participant agrees to preserve the
confidentiality of any confidential information relating to the Transaction
Parties

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received by it from any of the foregoing entities in a manner consistent with
Section 11.06(b). The Servicer and the Seller agree to assist each Committed
Purchaser, upon its reasonable request, in syndicating their respective
Commitments hereunder, including making management and representatives of the
Servicer and the Seller reasonably available to participate in information
meetings with potential assignees.

          (b)  Assignments by Conduit Purchasers. Each Conduit Purchaser may
assign, grant security interests in or otherwise transfer all or any portion of
the Receivable Interests to any Eligible Assignee or Program Support Provider
with respect to such Conduit Purchaser without prior notice to or consent from
any other party or any other condition or restriction of any kind. Without
limiting the generality of the foregoing, each Conduit Purchaser may, from time
to time with prior or concurrent notice to the Seller and each Managing Agent,
assign all or any portion of its interest in the Receivable Interest and its
rights and obligations under this Agreement and any other Transaction Documents
to which it is a party to a Conduit Assignee with respect to such Conduit
Purchaser. Upon such assignment by a Conduit Purchaser to a Conduit Assignee,
(A) unless a new Purchaser Group is being established pursuant to Section
11.03(i) below, the Managing Agent for the assigning Conduit Purchaser will act
as the Managing Agent for the Conduit Assignee hereunder, (B) such Conduit
Assignee and its liquidity support provider(s) and credit support provider(s)
and other related parties shall have the benefit of all the rights and
protections provided to such Conduit Purchaser and its related Committed
Purchasers herein and in the other Transaction Documents (including, without
limitation, any limitation on recourse against such Conduit Assignee), (C) such
Conduit Assignee shall assume all of such Conduit Purchaser's obligations
hereunder or under any other Transaction Document (whenever created, whether
before or after such assignment) with respect to the assigned portion of the
Receivable Interests held by such Conduit Purchaser and such Conduit Purchaser
shall be released from all such obligations, (D) all distributions to such
Conduit Purchaser hereunder with respect to the assigned portion of the
Receivable Interest shall be made to such Conduit Assignee, (E) the definition
of the term "CP Rate" shall be determined on the basis of the interest rate or
discount applicable to Promissory Notes issued by such Conduit Assignee (rather
than such assigning Conduit Purchaser), (F) the defined terms and other terms
and provisions of this Agreement and the other Transaction Documents shall be
interpreted in accordance with the foregoing, and (G) if requested by the
Administrative Agent or Managing Agent with respect to the Conduit Assignee, the
parties will execute and deliver such further agreements and documents
(including amendments to this Agreement) and take such other actions as the
Administrative Agent or such Managing Agent may reasonably request to evidence
and give effect to the foregoing.

          (c)  Assignment by Committed Purchasers. Each Committed Purchaser may
assign to any Eligible Assignee or to any other Committed Purchaser all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and any Receivable Interests or
interests therein owned by it); provided, however that

               (i)   each such assignment shall be of a constant, and not a
          varying, percentage of all rights and obligations under this
          Agreement,

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               (ii)  the amount being assigned pursuant to each such assignment
          (determined as of the date of the Assignment and Acceptance with
          respect to such assignment) shall in no event be less than the lesser
          of (x) $10,000,000 and (y) all of the assigning Committed Purchaser's
          Commitment,

               (iii) the parties to each such assignment shall execute and
          deliver to the Administrative Agent, for its acceptance and recording
          in the Register (as defined below), an Assignment and Acceptance, and

               (iv)  concurrently with such assignment, it shall assign to such
          assignee Committed Purchaser or other Eligible Assignee an equal
          percentage of its rights and obligations under the Asset Purchase
          Agreement to which such assignor Committed Purchaser is a party.

          Upon such execution, delivery, acceptance and recording from and after
the effective date specified in such Assignment and Acceptance, (x) the assignee
thereunder shall be a party to this Agreement and, to the extent that rights and
obligations under this Agreement have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Committed
Purchaser thereunder and (y) the assigning Committed Purchaser shall, to the
extent that rights and obligations have been assigned by it pursuant to such
Assignment and Acceptance, relinquish such rights and be released from such
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Committed
Purchaser's rights and obligations under this Agreement, such Committed
Purchaser shall cease to be a party hereto). In addition, any Committed
Purchaser or any of its Affiliates may assign any of its rights (including,
without limitation, rights to payment of Capital and Yield) under this Agreement
to any Federal Reserve Bank without notice to or consent of any Transaction
Party, any other Committed Purchaser or Conduit Purchaser, any Managing Agent or
the Administrative Agent.

          (d)  Register. The Administrative Agent shall maintain at its address
referred to on the signature page of this Agreement (or such other address of
the Administrative Agent notified by the Administrative Agent to the other
parties hereto) a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Committed Purchasers and the Conduit Purchasers, the Commitment of each
Committed Purchaser and the aggregate outstanding Capital of the Receivable
Interest or interests therein owned by each Conduit Purchaser and Committed
Purchaser from time to time (the "Register"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Seller, the Servicer, the Administrative Agent, the Managing Agents, the Conduit
Purchasers and the Committed Purchasers may treat each Person whose name is
recorded in the Register as a Committed Purchaser or Conduit Purchaser, as the
case may be, under this Agreement for all purposes of this Agreement. The
Register shall be available for inspection by the Seller, any Managing Agent,
any Conduit Purchaser or any Committed Purchaser at any reasonable time and from
time to time upon reasonable prior notice.

          (e)  Procedure. Upon its receipt of an Assignment and Acceptance
executed by an assigning Committed Purchaser and an Eligible Assignee or
assignee Committed Purchaser, the Administrative Agent shall, if such Assignment
and Acceptance has been duly

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completed, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Seller.

          (f)  Participations by Conduit Purchasers. Each Conduit Purchaser may,
without the consent of the Seller or any other Person, sell participations to
one or more banks or other entities in all or a portion of its rights and
obligations hereunder (including the outstanding Receivable Interests);
provided, however, that

               (i)   such Conduit Purchaser's obligations under this Agreement
          shall remain unchanged,

               (ii)  such Conduit Purchaser shall remain solely responsible to
          the other parties to this Agreement for the performance of such
          obligations, and

               (iii) the Administrative Agent, the Managing Agents, the Conduit
          Purchasers, the other Purchasers, the Seller and the Servicer shall
          have the right to continue to deal solely and directly with such
          Conduit Purchaser in connection with such Conduit Purchaser's rights
          and obligations under this Agreement.

          Any agreement or instrument pursuant to which a Conduit Purchaser
sells such a participation shall provide that the Participant shall not have any
right to direct the enforcement of this Agreement or other Transaction Documents
or to approve any amendment, modification or waiver of any provision of this
Agreement or the other Transaction Documents; provided, however, that such
agreement or instrument may provide that such Conduit Purchaser will not,
without the consent of the Participant, agree to any amendment, modification or
waiver of a type that would require the consent of each Purchaser affected
thereby pursuant to Section 11.01. Seller acknowledges and agrees that a Conduit
Purchaser's source of funds may derive in part from its Participants.
Accordingly, references in Sections 2.10, 2.13, 2.14, 6.06, 10.01 and 11.04 and
the other terms and provisions of this Agreement and the other Transaction
Documents to determinations, reserve and capital adequacy requirements,
expenses, increased costs, reduced receipts, Indemnified Amounts and the like as
they pertain to such Conduit Purchaser shall be deemed also to include those of
its Participants.

          (g)  Participations by Committed Purchasers. Each Committed Purchaser
may sell participations to one or more banks or other entities (each a
"Committed Purchaser Participant") in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the interests in the Receivable Interests owned by
it); provided, however, that

               (i)   such Committed Purchaser's obligations under this Agreement
          (including, without limitation, its Commitment to the Seller
          hereunder) shall remain unchanged,

               (ii)  such Committed Purchaser shall remain solely responsible to
          the other parties to this Agreement for the performance of such
          obligations,

               (iii) concurrently with the sale of such participation, the
          selling Committed Purchaser shall sell to such bank or other entity a
          participation in an

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          equal percentage of its rights and obligations under the Asset
          Purchase Agreement to which such Committed Purchaser is a party, and

               (iv)  the Administrative Agent, the Managing Agents, the Conduit
          Purchasers, the other Committed Purchasers, the Seller and the
          Servicer shall have the right to continue to deal solely and directly
          with such Committed Purchaser in connection with such Committed
          Purchaser's rights and obligations under this Agreement.

          Any agreement or instrument pursuant to which a Committed Purchaser
sells such a participation shall provide that the Participant shall not have any
right to direct the enforcement of this Agreement or other Transaction Documents
or to approve any amendment, modification or waiver of any provision of this
Agreement or the other Transaction Documents; provided, however, that such
agreement or instrument may provide that such Committed Purchaser will not,
without the consent of the Participant, agree to any amendment, modification or
waiver of a type that would require the consent of each Purchaser affected
thereby pursuant to Section 11.01. Seller acknowledges and agrees that a
Committed Purchaser's source of funds may derive in part from its Participants.
Accordingly, references in Sections 2.10, 2.13, 2.14, 6.06, 10.01 and 11.04 and
the other terms and provisions of this Agreement and the other Program Documents
to determinations, reserve and capital adequacy requirements, expenses,
increased costs, reduced receipts, Indemnified Amounts and the like as they
pertain to such Committed Purchaser shall be deemed also to include those of its
Participants.

          (h)  Assignments by Seller and Servicer. Neither the Seller nor the
Servicer may assign any of its rights or obligations hereunder or any interest
herein without the prior written consent of each Managing Agent.

          (i)  Additional Purchaser Groups. In connection with any assignment by
a Conduit Purchaser of all or any portion of its Conduit Purchase Limit to a
Conduit Assignee, such Conduit Assignee may elect to establish a new Purchaser
Group hereunder by the execution and delivery of a Joinder Agreement by such
Conduit Assignee, the Committed Purchasers which are to be in its Purchaser
Group and the Person which is to be the Managing Agent for such Purchaser Group,
in each case without the consent of any other party. Upon the effective date of
such Joinder Agreement, (a) the Person specified therein as a "New Managing
Agent" shall become a party hereto and a party to the Purchaser Fee Letter as a
Managing Agent, entitled to the rights and subject to the obligations of a
Managing Agent hereunder, (b) each Person specified therein as a "New Conduit
Purchaser" shall become a party hereto as a Conduit Purchaser, entitled to the
rights and subject to the obligations of a Conduit Purchaser hereunder, (c) each
Person specified therein as a "New Committed Purchaser" shall become a party
hereto as a Committed Purchaser, entitled to the rights and subject to the
obligations of a Committed Purchaser hereunder and (d) Schedule I shall be
deemed to have been amended as appropriate to incorporate the information set
forth in such Joinder Agreement.

          (j)  Participants. No Participant shall receive any amount pursuant to
Sections 2.10, 2.13, 2.14, 6.06, 10.01 or 11.04 of this Agreement greater than
the amount the Purchaser, from whom such participation was made, would have been
entitled to receive under such Sections of this Agreement had no such
participation occurred.

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          SECTION 11.04 Costs and Expenses. (a) In addition to the rights of
indemnification granted under Section 10.01 hereof, the Seller agrees to pay on
demand all reasonable costs and expenses in connection with the preparation,
execution, delivery and administration of this Agreement, any Asset Purchase
Agreement and the Transaction Documents, including, without limitation, (i) the
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent, the Conduit Purchasers, the Managing Agents, the Committed Purchasers and
their respective Affiliates with respect thereto and with respect to advising
the Administrative Agent, the Managing Agents, the Conduit Purchasers, the
Committed Purchasers and their respective Affiliates as to their rights and
remedies under this Agreement, (ii) all rating agency fees, (iii) all reasonable
fees and expenses associated with any audits and other due diligence conducted
prior to or after the Closing Date and (iv) any amendments, waivers or consents
under the Transaction Documents. In addition, the Seller agrees to pay on demand
all costs and expenses (including reasonable counsel fees and expenses) of the
Administrative Agent, the Managing Agents, the Conduit Purchasers, the Committed
Purchasers and their respective Affiliates incurred in connection with the
enforcement of, or any dispute, work-out, litigation or preparation for
litigation involving, this Agreement or any other Transaction Document.

          (b)  In addition, the Seller shall pay on demand each of the following
to the extent not included in the CP Rate for the applicable Conduit Purchaser:
(i) any and all commissions of placement agents and Promissory Notes dealers in
respect of Promissory Notes issued to fund the Receivable Interests, (ii) any
and all reasonable costs and expenses of any issuing and paying agent or other
Person responsible for the administration of any Conduit Purchaser's Promissory
Notes program in connection with the preparation, completion, issuance, delivery
of payment of Promissory Notes issued to fund the Promissory Notes up to a
maximum amount of $20,000 per calendar year per Conduit Purchaser and (iii) the
applicable pro-rata costs and expenses of any Rating Agency rating any Conduit
Purchaser's Promissory Notes (to the extent not paid pursuant to Section
11.04(a) above); provided, however, that if any Conduit Purchaser enters into
agreements for the purchase of interests in receivables from one or more Persons
(each an "Other Seller"), such Conduit Purchaser shall equitably allocate such
expenses to the Seller and each Other Seller; and provided, further, that if
such expenses are attributable solely to the Seller, the Seller shall be solely
liable for such expenses, and if such expenses are attributable solely to Other
Sellers, such Other Sellers shall be solely liable for such expenses.

          SECTION 11.05 No Proceedings. Each of the Seller, the Administrative
Agent, the Servicer, each Managing Agent, each Conduit Purchaser, each Committed
Purchaser, each assignee of a Receivable Interest or any interest therein and
each Person which enters into a commitment to purchase Receivable Interests or
interests therein hereby agrees that it will not institute against any Conduit
Purchaser any proceeding of the type referred to in the definition of "Event of
Bankruptcy" so long as any Promissory Notes or other senior indebtedness issued
by such Conduit Purchaser shall be outstanding or there shall not have elapsed
one year plus one day since the last day on which any such Promissory Notes or
other senior indebtedness shall have been outstanding.

          SECTION 11.06 Confidentiality. (a) Each of the parties hereto hereby
agrees that, from the commencement of discussions with respect to the
transactions contemplated by the Transaction Documents (the "Transaction"), each
of the parties hereto (and each of their

                                       91

<PAGE>

respective, and their respective affiliates, employees, officers, directors,
advisors, representatives and agents) are permitted to disclose to any and all
Persons, without limitation of any kind, the structure and tax aspects (as such
terms are used in Internal Revenue Code Sections 6011, 6111 and 6112 and the
regulations promulgated thereunder) of the Transaction, and all materials of any
kind (including opinions or other tax analyses) that are provided to any party
related to such structure and tax aspects. In this regard, the parties hereto
acknowledge and agree that the disclosure of the structure or tax aspects of the
Transaction is not limited in any way by an express or implied understanding or
agreement, oral or written (whether or not such understanding or agreement is
legally binding). Furthermore, each of the parties hereto acknowledges and
agrees that it does not know or have reason to know that its use or disclosure
of information relating to the structure or tax aspects of the Transaction is
limited in any other manner (such as where the Transaction is claimed to be
proprietary or exclusive) for the benefit of any other Person.

          (b)  Subject to Section 11.06(a), the Transaction Documents, the terms
thereof (including, without limitation, any specific pricing information
contained therein), the structure of the Transaction, any related structures
developed by the Administrative Agent or any Managing Agent for the Seller or
any of its Affiliates, any related analyses, computer models, information or
documents, any written or oral reports from Administrative Agent or any Managing
Agent to the Seller or any of its Affiliates or any related written information
(collectively, "Product Information") is confidential. Each of the Seller and
the Servicer agrees:

          (i)   to keep all Product Information confidential and to disclose
     Product Information only to those of its officers, employees, agents,
     accountants, legal counsel and other representatives (collectively
     "Representatives") who have a need to know such Product Information for the
     purpose of assisting in the Transaction;

          (ii)  to use the Product Information only in connection with the
     Transaction and not for any other purpose; and

          (iii) to cause its Representatives to comply with these provisions and
     to be responsible for any failure of any Representative to so comply.

          The provisions of this Section shall not apply to Product Information
that is or hereafter becomes (through a source other than the Seller, the
Servicer or any of their respective Affiliates or Representatives) a matter of
general public knowledge. The provisions of this Section shall not prohibit the
Seller or the Servicer from (i) filing with any governmental or regulatory
agency any information or other documents with respect to the Transaction as may
be required by applicable Law or (ii) making any other disclosure to the extent
required by applicable law, Subpoena or other legal process. The parties hereto
acknowledge that the Originator will file this Agreement and the Originator
Purchase Agreement, and any other material agreements related thereto (other
than the Fee Letters) as the Originator may determine in its sole discretion,
with the SEC.

          (c)  Each Purchaser, each Managing Agent, and the Administrative Agent
agrees to maintain the confidentiality of all non-public information with
respect to the Seller, the Originator, the Contracts or the Receivables
furnished or delivered to it pursuant to this

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<PAGE>

Agreement; provided, however, that such information may be disclosed (i) to such
party's officers, employees, agents, accountants, legal counsel and other
representatives (collectively "Purchaser Representatives") who have a need to
know such information for the purpose of assisting in the negotiation,
completion and administration of the facility contemplated hereby, (ii) to such
party's assignees and participants and potential assignees and participants to
the extent such disclosure is made pursuant to a written agreement of
confidentiality substantially similar to this Section 11.06(c), (iii) to the
Rating Agencies, (iv) to the Program Support Providers for each Conduit
Purchaser and the dealers and investors in respect of the Promissory Notes of
any Conduit Purchaser, in each case in accordance with the customary practices
of such Conduit Purchaser for disclosures to Program Support Providers, dealers
or investors, as the case may be (it being understood and agreed that any
disclosures to dealers or investors will not identify the Originator or its
Affiliates by name) and (v) to the extent required by applicable Law, Subpoena
or other legal process or by any Official Body.

          The provisions of Section 11.06(b) shall not apply to information that
is or hereafter becomes (through a source other than the applicable Purchaser,
Managing Agent or the Administrative Agent or any Purchaser Representative
associated with such party) a matter of general public knowledge. The provisions
of this Section shall not prohibit any Purchaser, Managing Agent or the
Administrative Agent from filing with or making available to any Official Body
any information or other documents with respect to the Transaction as may be
required by applicable Law or requested by such Official Body .

          SECTION 11.07 Amendments to Financial Covenants. If the Revolving
Credit Agreement is amended, restated, supplemented or otherwise modified, or is
substituted or replaced with a new credit facility (each a "Modification"), and
such Modification includes one or more financial covenants which are different
from the financial covenants set forth on Schedule V (including, without
limitation, by reasons of a difference in levels), then the parties hereto
agree, promptly upon request of each Managing Agent, to amend this Agreement as
appropriate to modify the financial covenants set forth in Schedule V to
incorporate the financial covenant or covenants contained in such Modification
(which amendment shall include conforming amendments to the definitions
contained in Schedule V).

          SECTION 11.08 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK BUT
OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES) EXCEPT TO THE EXTENT
THAT THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE
INTERESTS OF THE ADMINISTRATIVE AGENT, THE CONDUIT PURCHASERS AND THE COMMITTED
PURCHASERS IN THE RECEIVABLES AND ANY OTHER COLLATERAL DESCRIBED IN SECTION 2.15
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

          SECTION 11.09 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement.

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<PAGE>

Delivery of an executed counterpart of a signature page to this Agreement by
facsimile shall be effective as delivery of a manually executed counterpart of
this Agreement.

          SECTION 11.10 Integration; Binding Effect; Survival of Termination.
This Agreement and the other Transaction Documents executed by the parties
hereto on the date hereof contain the final and complete integration of all
prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire agreement among the parties hereto with
respect to the subject matter hereof superseding all prior oral or written
understandings. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns
(including any trustee in bankruptcy). Any provisions of this Agreement which
are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. This Agreement
shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms and shall remain in full force and effect until the
Final Payout Date; provided, however, that the provisions of Sections 2.10,
2.13, 2.14, 6.06, 10.01, 11.04, 11.05 and 11.06 shall survive any termination of
this Agreement.

          SECTION 11.11 Consent to Jurisdiction. (a) Each party hereto hereby
irrevocably submits to the non-exclusive jurisdiction of any New York State or
Federal court sitting in New York City in any action or proceeding arising out
of or relating to this Agreement, and each party hereto hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State court or, to the extent permitted by law, in
such Federal court. The parties hereto hereby irrevocably waive, to the fullest
extent they may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

          (b)  Each of the Seller and the Servicer consents to the service of
any and all process in any such action or proceeding by the mailing of copies of
such process to it at its address specified in Section 11.02. Nothing in this
Section 11.11 shall affect the right of any Conduit Purchaser, any Committed
Purchaser, any Managing Agent or the Administrative Agent to serve legal process
in any other manner permitted by law.

          SECTION 11.12 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.

          SECTION 11.13 Right of Setoff. Each of the Purchasers is hereby
authorized (in addition to any other rights it may have) at any time after the
occurrence of the Termination Date due to the occurrence of a Termination Event,
or during the continuation of an

                                       94

<PAGE>

Incipient Termination Event, to set off, appropriate and apply (without
presentment, demand, protest or other notice which are hereby expressly waived)
any deposits and any other indebtedness held or owing by such Purchaser to, or
for the account of, the Seller against the amount of the Seller Obligations
owing by the Seller to such Person.

          SECTION 11.14 Ratable Payments. If any Committed Purchaser, whether by
setoff or otherwise, has a payment made to it with respect to any Seller
Obligations in a greater proportion than that received by any other Committed
Purchaser entitled to receive a ratable share of such Seller Obligations, such
Committed Purchaser agrees, promptly upon demand, to purchase for cash without
recourse or warranty a portion of such Seller Obligations held by the other
Committed Purchasers so that after such purchase each Committed Purchaser will
hold its ratable proportion of such Seller Obligations; provided that if all or
any portion of such excess amount is thereafter recovered from such Committed
Purchaser, such purchase shall be rescinded and the purchase price restored to
the extent of such recovery, but without interest.

          SECTION 11.15 Limitation of Liability. (a) No claim may be made by any
Transaction Party or any other Person against any Purchaser, any Managing Agent,
the Administrative Agent or their respective Affiliates, directors, officers,
employees, attorneys or agents (each a "Purchaser Party") for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or any other Transaction Document,
or any act, omission or event occurring in connection herewith or therewith,
except with respect to any claim arising out of the willful misconduct or gross
negligence of such Purchaser Party; and each of the Seller and the Servicer
hereby waives, releases, and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.

          (b)  Notwithstanding anything to the contrary contained herein, the
obligations of the respective Conduit Purchasers under this Agreement are solely
the corporate obligations of each such Conduit Purchaser and shall be payable
only at such time as funds are actually received by, or are available to, such
Conduit Purchaser in excess of funds necessary to pay in full all outstanding
Promissory Notes issued by such Conduit Purchaser and, to the extent funds are
not available to pay such obligations, the claims relating thereto shall not
constitute a claim against such Conduit Purchaser. Each party hereto agrees that
the payment of any claim (as defined in Section 101 of Title 11 of the
Bankruptcy Code) of any such party shall be subordinated to the payment in full
of all Promissory Notes.

          (c)  No recourse under any obligation, covenant or agreement of any
Conduit Purchaser contained in this Agreement shall be had against any
incorporator, stockholder, officer, director, member, manager, employee or agent
of such Conduit Purchaser, the Managing Agent with respect to such Conduit
Purchaser or any of their Affiliates (solely by virtue of such capacity) by the
enforcement of any assessment or by any legal or equitable proceeding, by virtue
of any statute or otherwise; it being expressly agreed and understood that this
Agreement is solely a corporate obligation of such Conduit Purchaser, and that
no personal liability whatever shall attach to or be incurred by any
incorporator, stockholder, officer, director, member, manager, employee or agent
of any Conduit Purchaser, any Managing Agent or any of their Affiliates (solely
by virtue of such capacity) or any of them under or by reason of any of the

                                       95

<PAGE>

obligations, covenants or agreements of such Conduit Purchaser contained in this
Agreement, or implied therefrom, and that any and all personal liability for
breaches by any Conduit Purchaser of any of such obligations, covenants or
agreements, either at common law or at equity, or by statute, rule or
regulation, of every such incorporator, stockholder, officer, director, member,
manager, employee or agent is hereby expressly waived as a condition of and in
consideration for the execution of this Agreement; provided, however, that the
foregoing shall not relieve any such Person from any liability it might
otherwise have as a result of fraudulent actions taken or fraudulent omissions
made by them.

          SECTION 11.16 Intent of the Parties. (a) It is the intention of the
parties hereto that each purchase of Receivable Interests shall convey to the
Administrative Agent for the benefit of the applicable Purchasers, to the extent
of such Receivable Interests, an undivided interest in the Receivables and the
Related Security and Collections in respect thereof and that such transaction
shall constitute a purchase and sale and not a secured loan for all purposes
other than for United States federal, state and local income tax purposes.
However, if a determination is made that such purchase shall not be so treated,
the transactions effected hereby shall be deemed to constitute a secured
financing under applicable law.

          (b)  The Seller has structured the Transaction Documents with the
intention that the Receivable Interests and the obligations of the Seller
hereunder will be treated under United States federal, and applicable state,
local and foreign tax law as debt (the "Intended Tax Treatment"). The Seller,
Medco, the Administrative Agent, the Conduit Purchasers and the Committed
Purchasers agree to file no tax return, or take any action, inconsistent with
the Intended Tax Treatment. Each assignee and each participant acquiring an
interest in a Receivable Interest, by its acceptance of such assignment or
participation, agrees to comply with the immediately preceding sentence.

                  [Remainder of page intentionally left blank]

                                       96

<PAGE>

          IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

     SELLER:                            MEDCO HEALTH RECEIVABLES, LLC

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

     CONDUIT PURCHASERS:                CAFCO, LLC

                                        By: Citicorp North America, Inc.,
                                             as Attorney-in-Fact

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

                                        FALCON ASSET SECURITIZATION CORPORATION

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

ADMINISTRATIVE AGENT:                   CITICORP NORTH AMERICA, INC.,
                                         as Administrative Agent

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

<PAGE>

MANAGING AGENTS:                        CITICORP NORTH AMERICA, INC.,
                                        as Managing Agent

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

                                        BANK ONE, NA (MAIN OFFICE CHICAGO),
                                        as Managing Agent

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

COMMITTED PURCHASERS:                   CITIBANK, N.A.

                                        By:
                                            ------------------------------------
                                            Attorney-in-Fact

                                        BANK ONE, NA (MAIN OFFICE CHICAGO)

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

SERVICER:                               MEDCO HEALTH SOLUTIONS, INC.

                                        By:
                                            -----------------------------------
                                            Name:
                                            Title:<PAGE>

                                                                   Exhibit 10.18

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

                           MASTER REPURCHASE AGREEMENT

           CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL, LLC, as buyer
                                 ("Buyer"), and

               CAPITALSOURCE SNF FUNDING LLC, as seller ("Seller")

                           Dated as of August 1, 2003

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

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          Page
                                                                                          ----
<S>     <C>                                                                               <C>
1.      Applicability........................................................................1

2.      Definitions..........................................................................1

3.      Program; Initiation of Transactions.................................................14

4.      Repurchase..........................................................................15

5.      Price Differential..................................................................16

6.      Margin Maintenance and Repurchase...................................................17

7.      Income Payments.....................................................................17

8.      Security Interest...................................................................17

9.      Payment and Transfer................................................................19

10.     Conditions Precedent................................................................19

11.     Program; Costs......................................................................22

12.     Servicing...........................................................................23

13.     Representations and Warranties......................................................24

14.     Covenants...........................................................................29

15.     Events of Default...................................................................34

16.     Remedies Upon Default...............................................................36

17.     Reports.............................................................................38

18.     Repurchase Transactions.............................................................41

19.     Single Agreement....................................................................41

20.     Notices and Other Communications....................................................42

21.     Entire Agreement; Severability......................................................42

22.     Non assignability...................................................................43

23.     Set-off.............................................................................43
</TABLE>

                                       -i-
<PAGE>

<TABLE>
<S>     <C>                                                                               <C>
24.     Binding Effect; Governing Law; Jurisdiction.........................................43

25.     No Waivers, Etc.....................................................................44

26.     Intent..............................................................................44

27.     Disclosure Relating to Certain Federal Protections..................................45

28.     Power of Attorney...................................................................45

29.     Buyer May Act Through Affiliates....................................................45

30.     Indemnification; Obligations........................................................46

31.     Counterparts........................................................................47

32.     Confidentiality.....................................................................47

33.     Recording of Communications.........................................................47

34.     Periodic Due Diligence Review.......................................................47

35.     Facility Fee........................................................................48

36.     Authorizations......................................................................48
</TABLE>

SCHEDULES

Schedule 1 - Representations and Warranties with Respect to Purchased Mortgage
             Loans

Schedule 2 - Authorized Representatives

EXHIBITS

Exhibit A - Form of Transaction Request

Exhibit B - Form of Purchase Confirmation

Exhibit C - Form of Mortgage Loan Schedule and Exception Report

Exhibit D - Form of Officer's Compliance Certificate

Exhibit E - Intentionally Omitted

Exhibit F - Underwriting Guidelines

Exhibit G - Authorized Signatories of Seller

Exhibit H - Officer's Certificate of the Seller and Corporate Resolutions of
            Seller

                                      -ii-
<PAGE>

Exhibit I - Seller's Tax Identification Number

Exhibit J - Intentionally Omitted

Exhibit K - Blocked Account Agreement

Exhibit L - Distribution Worksheet

                                      -iii-
<PAGE>

        1. APPLICABILITY

                From time to time the parties hereto may enter into transactions
in which Seller agrees to transfer to Buyer Mortgage Loans (as hereinafter
defined) against the transfer of funds by Buyer, with a simultaneous agreement
by Buyer to transfer to Seller such Mortgage Loans at a date certain or on
demand, against the transfer of funds by Seller. Each such transaction shall be
referred to herein as a "Transaction" and, unless otherwise agreed in writing,
shall be governed by this Agreement, including any supplemental terms or
conditions contained in any annexes identified herein, as applicable hereunder.

        2. DEFINITIONS

                Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:

                "Accepted Servicing Practices" means, with respect to any
Mortgage Loan the higher of the following standards of care (A) the same manner
in which, and with the same care, skill, prudence and diligence with which the
Primary Servicer services and administers similar commercial mortgage loans for
third parties, giving due consideration to the customary and usual standards of
practice of prudent institutional commercial mortgage master servicers servicing
commercial mortgage loans for third parties, and (B) the same care, skill,
prudence and diligence with which the Servicer services and administers similar
commercial mortgage loans owned by the Servicer exercising reasonable business
judgment and acting in accordance with applicable laws, in each case, without
regard to (a) any relationship that the Servicer or any Affiliate thereof may
have with any Mortgagor any of their respective Affiliates, (b) the Servicer's
obligation to make advances, (c) the ownership, servicing or management for
others by the Servicer or any Affiliate thereof of any mortgage loan or
property, (d) the right of the Servicer to receive reimbursement of costs, or
the sufficiency of any compensation payable to it under this Agreement or with
respect to any particular transaction; and (e) the origination of the Mortgage
Loans by the originator.

                "Act of Insolvency" means, with respect to any Person or its
Affiliates, (i) the filing of a petition, commencing, or authorizing the
commencement of any case or proceeding, or the voluntary joining of any case or
proceeding under any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar law relating to the protection of creditors, or suffering
any such petition or proceeding to be commenced by another which is consented
to, not timely contested or results in entry of an order for relief; (ii) the
seeking of the appointment of a receiver, trustee, custodian or similar official
for such party or an Affiliate or any substantial part of the property of
either; (iii) the appointment of a receiver, conservator, or manager for such
party or an Affiliate by any governmental agency or authority having the
jurisdiction to do so; (iv) the making or offering by such party or an Affiliate
of a composition with its creditors or a general assignment for the benefit of
creditors; (v) the admission by such party or an Affiliate of such party of its
inability to pay its debts or discharge its obligations as they become due or
mature; or (vi) that any governmental authority or agency or any person, agency
or entity acting or purporting to act under governmental authority shall have
taken any action to condemn, seize

<PAGE>

or appropriate, or to assume custody or control of, all or any substantial part
of the property of such party or of any of its Affiliates, or shall have taken
any action to displace the management of such party or of any of its Affiliates
or to curtail its authority in the conduct of the business of such party or of
any of its Affiliates.

                "Affiliate" means, with respect to any Person, any "affiliate"
of such Person, as such term is defined in the Bankruptcy Code.

                "Agreement" means this Master Repurchase Agreement, as it may be
amended, supplemented or otherwise modified from time to time.

                "Appraised Value" means the value set forth in an appraisal made
in connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.

                "Asset Tape" means a remittance report on a monthly basis or as
requested by Buyer pursuant to Section 17d hereof containing servicing
information, including, without limitation, those fields reasonably requested by
Buyer from time to time, on a loan-by-loan basis and in the aggregate, with
respect to the Purchased Mortgage Loans serviced by Seller or any Servicer for
the month (or any portion thereof) prior to the Reporting Date.

                "Assignment of Mortgage" means an assignment of the Mortgage,
notice of transfer or equivalent instrument in recordable form, sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to reflect the sale of the Mortgage to Buyer.

                "Authorized Person" means a person authorized to act for the
Seller as set forth on Exhibit L.

                "Bank" means Bank of American, N.A. or another bank approved by
the Buyer in its sole discretion, in its capacity as bank with respect to the
Blocked Account Agreement.

                "Bankruptcy Code" means the United States Bankruptcy Code of
1978, as amended from time to time.

                "Blocked Account" shall mean any bank account subject to a
Blocked Account Agreement, including, without limitation, the Collection
Account.

                "Blocked Account Agreement" shall mean with respect to any
Purchased Mortgage Loan the agreement between the Servicer and the Buyer
substantially in the form of Exhibit K, attached hereto.

                "Business Day" means any day other than (A) a Saturday or Sunday
and (B) a public or bank holiday in New York City.

                "Buyer" means Credit Suisse First Boston Mortgage Capital LLC,
and any successor hereunder.

                "Buyer's Margin Amount" means with respect to any Transaction as
of any date of determination, an amount equal to the product of (A) the Purchase
Price Percentage as of such

                                       -2-
<PAGE>

date of determination with respect to each Eligible Mortgage Loan subject to
such Transaction and (B) the outstanding principal amount of such Eligible
Mortgage Loans subject to such Transaction.

                "Capital Lease Obligations" means, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.

                "Cash Equivalents" means (a) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed or insured
by the United States Government or any agency thereof, (b) certificates of
deposit and eurodollar time deposits with maturities of one year or less from
the date of acquisition and overnight bank deposits of any Lender or of any
commercial bank having capital and surplus in excess of $200,000,000, (c)
repurchase obligations of any Lender or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than
seven days with respect to securities issued or fully guaranteed or insured by
the United States Government, (d) commercial paper of a domestic issuer rated at
least A-1 or the equivalent thereof by Standard and Poor's Ratings Group ("S&P")
or P-1 or the equivalent thereof by Moody's Investors Service, Inc. ("Moody's")
and in either case maturing within one year after the day of acquisition, (e)
securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which
state, commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or A2 by
Moody's, (f) securities with maturities of one year or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this definition or
(g) shares of money market mutual or similar funds which invest exclusively in
assets satisfying the requirements of clauses (a) through (f) of this
definition.

                "Change in Control" means:

                (A) any transaction or event as a result of which Parent ceases
        to own, beneficially or of record, 100% of the stock of Seller;

                (B) any transaction or event as a result of which the current
        members of the Parent ceases to own, beneficially or of record, either
        30% of the membership interests of Parent or voting control of the
        Parent;

                (C) the sale, transfer, or other disposition of all or
        substantially all of Seller's or Parent's assets (excluding any such
        action taken in connection with any securitization transaction); or

                (D) the consummation of a merger or consolidation of Seller or
        the Parent with or into another entity or any other corporate
        reorganization, if more than 50% of the

                                       -3-
<PAGE>

        combined voting power of the continuing or surviving entity's stock
        outstanding immediately after such merger, consolidation or such other
        reorganization is owned by persons who were not stockholders of Seller
        immediately prior to such merger, consolidation or other reorganization

                        provided, that an initial public offering of the Parent
                or any Affiliate of the Parent (other than Seller) which is
                widely distributed shall not be deemed to be a Change in
                Control.

                "Code" means the Internal Revenue Code of 1986, as amended.

                "Collection Account" means one or more accounts established by
the Servicer for the benefit of Buyer, into which all collections and proceeds
on or in respect of the Mortgage Loans shall be deposited by Servicer which is
subject to the Blocked Account Agreement.

                "Cross-Default Event: has the meaning set forth in Section
10b.7(e) hereof.

                "Custodial Agreement" means the custodial agreement dated as of
the date hereof, among Seller, Buyer and Custodian as the same may be amended
from time to time.

                "Custodian" means Deutsche Bank National Trust Company or such
other party specified by Buyer and agreed to by Seller, which approval shall not
be unreasonably withheld.

                "Debt Service Coverage Ratio" or "DSCR" means, with respect to
any Mortgage Loan, as of any date of determination, Net Underwritable Cash Flow
for such Mortgage Loan divided by 11.83% of the principal balance of the
Mortgage Loan.

                "Default" means an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.

                "Defaulted Mortgage Loan" means any Mortgage Loan (a) which is
90 days or more delinquent or (b) for which there is a breach of the
representations and warranties set forth on Schedule 1 hereto that materially
and adversely affects the value of the Mortgaged Loan or (c) for which there is
a material non-monetary default under the related Mortgage Loan Documents that
has not been cured within the applicable cure period in the related Mortgage
Loan Documents, if any.

                "Delinquent Mortgage Loan" means either a 30 Day Delinquent
Mortgage Loan or a 60 Day Delinquent Mortgage Loan.

                "Determination Date" shall mean, with respect to any Interest
Period, the date that is two (2) London Business Days prior to the fifteenth
(15th) day of the calendar month in which such Interest Period commences.

                "Distribution Worksheet" means a worksheet setting forth the
amounts and recipients of remittances to be made on the next succeeding Price
Differential Payment Date, substantially in the form of Exhibit L.

                                       -4-
<PAGE>

                "Dollars" and "$" means dollars in lawful currency of the United
States of America.

                "Due Date" means the day of the month on which the Monthly
Payment is due on a Mortgage Loan, exclusive of any days of grace.

                "E&O Insurance" means insurance coverage with respect to
employee dishonesty, forgery or alteration, theft, disappearance and
destruction, robbery and safe burglary, property (other than money and
securities) and computer fraud in an aggregate amount acceptable to the Buyer.

                "Effective Date" means the date upon which the conditions
precedent set forth in Section 10 shall have been satisfied.

                "Eligible Mortgage Loan" shall mean any Mortgage Loan which has
been approved as an Approved Loan under Article II of the Program Agreement.

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

                "ERISA Affiliate" means any corporation or trade or business
that is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code of which Seller is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which Seller is a
member.

                "Event of Default" has the meaning specified in Section 15
hereof.

                "Event of Termination" means with respect to Seller (i) with
respect to any Plan, a reportable event, as defined in Section 4043 of ERISA, as
to which the PBGC has not by regulation waived the requirement of Section
4043(a) of ERISA that it be notified with 30 days of the occurrence of such
event, or (ii) the withdrawal of Seller or any ERISA Affiliate thereof from a
Plan during a plan year in which it is a substantial employer, as defined in
Section 4001(a)(2) of ERISA, or (iii) the failure by Seller or any ERISA
Affiliate thereof to meet the minimum funding standard of Section 412 of the
Code or Section 302 of ERISA with respect to any Plan, including, without
limitation, the failure to make on or before its due date a required installment
under Section 412(m) of the Code or Section 302(e) of ERISA, or (iv) the
distribution under Section 4041 of ERISA of a notice of intent to terminate any
Plan or any action taken by Seller or any ERISA Affiliate thereof to terminate
any plan, or (v) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the loss
of tax-exempt status of the trust of which such Plan is a part if Seller or any
ERISA Affiliate thereof fails to timely provide security to the Plan in
accordance with the provisions of said sections, or (vi) the institution by the
PBGC of proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or (vii) the receipt by Seller
or any ERISA Affiliate thereof of a notice from a Multiemployer Plan that action
of the type described in the previous clause (vi) has been taken by the PBGC
with respect to such Multiemployer Plan, or (viii) any event or circumstance
exists which may reasonably be expected to constitute grounds for Seller or any
ERISA Affiliate

                                       -5-
<PAGE>

thereof to incur liability under Title IV of ERISA or under Sections 412(c)(11)
or 412(n) of the Code with respect to any Plan.

                "Existing Indebtedness" has the meaning specified in Section
13(a)(23) hereof.

                "Facility" means a skilled nursing facility securing a Mortgage
Loan.

                "Facility Agreements" means, collectively, this Agreement, the
Custodial Agreement, the Program Agreement, the Transfer Agreement, the Interim
Servicing Agreement and the Blocked Account Agreement.

                "GAAP" means generally accepted accounting principles in effect
from time to time in the United States of America and applied on a consistent
basis.

                "Governmental Authority" means any nation or government, any
state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions over
Seller or Buyer, as applicable.

                "Guarantee" means, as to any Person, any obligation of such
Person directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such Indebtedness against loss
(whether by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, or to take-or-pay or otherwise);
provided that the term "Guarantee" shall not include (i) endorsements for
collection or deposit in the ordinary course of business, or (ii) obligations to
make servicing advances for delinquent taxes and insurance or other obligations
in respect of a Mortgaged Property, to the extent required by Buyer. The amount
of any Guarantee of a Person shall be deemed to be an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith. The terms "Guarantee" and "Guaranteed" used as verbs shall have
correlative meanings.

                "Hedging Agreement" means, with respect to any or all of the
Mortgage Loans, any short sale of a US Treasury Security, or futures contract,
or mortgage related security, or Eurodollar futures contract, or options related
contract, or interest rate swap, cap or collar agreement or take-out commitment,
or similar arrangement providing for protection against fluctuations in interest
rates or the exchange of nominal interest obligations, either generally or under
specific contingencies, entered into by Seller and an Affiliate of Buyer or such
other party acceptable to Buyer in its sole discretion, which agreement is
acceptable to Buyer in its sole discretion.

                "Holdings" means, CapitalSource Holdings LLC or its successors
and assigns.

                "Income" means with respect to any Purchased Mortgage Loan at
any time until repurchased by the Seller, any principal received thereon or in
respect thereof and all interest, dividends or other distributions thereon.

                                       -6-
<PAGE>

                "Indebtedness" means, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business, so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for the account of such Person; (e) Capital Lease Obligations of such Person;
(f) obligations of such Person under repurchase agreements, sale/buy-back
agreements or like arrangements; (g) Indebtedness of others Guaranteed by such
Person; (h) all obligations of such Person incurred in connection with the
acquisition or carrying of fixed assets by such Person; and (i) Indebtedness of
general partnerships of which such Person is a general partner.

                "Interest Period" shall mean, with respect to any Price
Differential Payment Date, the period commencing on the ninth (9th) day of the
preceding calendar month and terminating on the eighth (8th) day of the calendar
month in which such Price Differential Payment Date occurs; and with respect to
each Transaction, the initial Interest Period shall begin on the Purchase Date
and shall end on the immediately following eighth (8th) day of a calendar month.

                "Interim Servicing Agreement" means a servicing agreement, by
and between the Seller, the Primary Servicer, and the Master Servicer, in form
and substance acceptable to the Buyer.

                "Late Fee" means, with respect to any payment not made on the
date due, a fee equal to 5% of the amount of such payment.

                "LIBOR" shall mean, with respect to each Interest Period, the
rate (expressed as a percentage per annum and rounded upward, if necessary, to
the next nearest 1/8 of 1%) for deposits in U.S. dollars, for a one-month
period, that appears on Telerate Page 3750 (or the successor thereto) as of
11:00 a.m., London time, on the related Determination Date. If such rate does
not appear on Telerate Page 3750 as of 11:00 a.m., London time, on such
Determination Date, LIBOR shall be the arithmetic mean of the offered rates
(expressed as a percentage per annum) for deposits in U.S. dollars for a
one-month period that appear on the Reuters Screen Libor Page as of 11:00 a.m.,
London time, on such Determination Date, if at least two such offered rates so
appear. If fewer than two such offered rates appear on the Reuters Screen Libor
Page as of 11:00 a.m., London time, on such Determination Date, Lender shall
request the principal London office of any four major reference banks in the
London interbank market selected by Lender to provide such bank's offered
quotation (expressed as a percentage per annum) to prime banks in the London
interbank market for deposits in U.S. dollars for a one-month period as of 11:00
a.m., London time, on such Determination Date for the amounts of not less than
U.S. $1,000,000. If at least two such offered quotations are so provided, LIBOR
shall be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided,

                                       -7-
<PAGE>

Lender shall request any three major banks in New York City selected by Lender
to provide such bank's rate (expressed as a percentage per annum) for loans in
U.S. dollars to leading European banks for a one-month period as of
approximately 11:00 a.m., New York City time on the applicable Determination
Date for amounts of not less than U.S. $1,000,000. If at least two such rates
are so provided, LIBOR shall be the arithmetic mean of such rates. LIBOR shall
be determined conclusively by Lender or its agent.

                "Lien" means any mortgage, lien, pledge, charge, security
interest or similar encumbrance.

                "Loan-to-Value Ratio" or "LTV": means, with respect to any
Mortgage Loan, the ratio of the outstanding principal amount of the Mortgage
Loan as of the Purchase Date to the value of the Mortgaged Property (calculated
as the Net Underwritable Cash Flow on the Mortgage Loan divided by 13.5%),
expressed as a percentage.

                "London Business Day" means any day other than a Saturday,
Sunday or any other day on which commercial banks in London, England are not
open for business.

                "Margin Call" has the meaning specified in Section 6(a) hereof.

                "Margin Deadline" has the meaning specified in Section 6(b)
hereof.

                "Margin Deficit" has the meaning specified in Section 6(a)
hereof.

                "Master Servicer" means ORIX Capital Markets LLC or another
servicer mutually agreed upon between the Seller and the Parent.

                "Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
financial condition or prospects of Seller, the Servicer, the Parent or any
Affiliate that is a party to any Facility Agreement taken as a whole; (b) a
material impairment of the ability of Seller, the Parent, the Servicer or any
Affiliate that is a party to any Facility Agreement to perform under any
Facility Agreement and to avoid any Event of Default; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability of any
Facility Agreement against Seller, the Parent, the Servicer or any Affiliate of
any of the foregoing that is a party to any Facility Agreement.

                "Maximum Aggregate Purchase Price" means THREE HUNDRED MILLION
DOLLARS ($300,000,000).

                "Member" means CapitalSource Finance LLC, a Delaware limited
liability company, as the initial member of the Seller, and includes any Person
admitted as an additional member of the Seller or a substitute member of the
Seller pursuant to the provisions of the Seller's operating agreement (the "LLC
Agreement"), each in its capacity as a member of the Seller; provided, however,
the term "Member" shall not include an Independent Member.

                "Monthly Payment" means the scheduled monthly payment of
principal and/or interest on a Mortgage Loan.

                                       -8-
<PAGE>

                "Moody's" means Moody's Investors Service, Inc. or any
successors thereto.

                "Mortgage" means each mortgage, assignment of rents, security
agreement and fixture filing, or deed of trust, assignment of rents, security
agreement and fixture filing, deed to secure debt, assignment of rents, security
agreement and fixture filing, or similar instrument creating and evidencing a
lien on real property and other property and rights incidental thereto.

                "Mortgage File" means, with respect to a Mortgage Loan, the
documents and instruments relating to such Mortgage Loan and set forth on
Exhibit 1 to the Custodial Agreement.

                "Mortgage Interest Rate" means the rate of interest borne on a
Mortgage Loan from time to time in accordance with the terms of the related
Mortgage Note.

                "Mortgage Loan" means a first lien mortgage loan secured by a
skilled nursing facility.

                "Mortgage Loan Documents" means the documents in the related
Mortgage File to be delivered to the Custodian.

                "Mortgage Loan Schedule" means with respect to any Transaction
as of any date, a mortgage loan schedule in the form of either (a) Exhibit C
attached hereto or (b) a computer tape or other electronic medium generated by
Seller, and delivered to Buyer and Custodian, which provides information
(including, without limitation, the information set forth on Exhibit C attached
hereto) relating to the Purchased Mortgage Loans in a format acceptable to
Buyer.

                "Mortgage Loan Schedule and Exception Report" has the meaning
assigned to such term in the Custodial Agreement.

                "Mortgage Note" means the promissory note or other evidence of
the indebtedness of a Mortgagor secured by a Mortgage.

                "Mortgaged Property" means the real property securing repayment
of the debt evidenced by a Mortgage Note.

                "Mortgagor" means the obligor or obligors on a Mortgage Note,
including any person who has assumed or guaranteed the obligations of the
obligor thereunder.

                "Multiemployer Plan" means a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been or are required to be
made by Seller or any ERISA Affiliate and that is covered by Title IV of ERISA.

                "Net Underwritable Cash Flow" shall mean, with respect to each
Mortgage Loan, the underwritable cash flow from the related Mortgaged Property
or Properties, as determined in good faith by the Buyer.

                "Net Worth" means, with respect to any Person, an amount equal
to, on a consolidated basis, such Person's stockholder equity (determined in
accordance with GAAP).

                                       -9-
<PAGE>

                "1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time.

                "Notice Date" has the meaning given to it in Section 3(b)
hereof.

                "Obligations" means (a) all of Seller's indebtedness,
obligations to pay the Repurchase Price on the Repurchase Date, the Price
Differential on each Price Differential Payment Date, and other obligations and
liabilities, to Buyer, its Affiliates or Custodian arising under, or in
connection with, the Facility Agreements, whether now existing or hereafter
arising; (b) any and all sums paid by Buyer or on behalf of Buyer in order to
preserve any Purchased Mortgage Loan or its interest therein; (c) in the event
of any proceeding for the collection or enforcement of any of Seller's
indebtedness, obligations or liabilities referred to in clause (a), the
reasonable expenses of retaking, holding, collecting, preparing for sale,
selling or otherwise disposing of or realizing on any Purchased Mortgage Loan,
or of any exercise by Buyer of its rights under the Facility Agreements,
including, without limitation, attorneys' fees and disbursements and court
costs; and (d) all of Seller's indemnity obligations to Buyer or Custodian or
both pursuant to the Facility Agreements.

                "Parent" means CapitalSource Finance LLC, a Delaware limited
liability company, or its permitted successors and assigns.

                "PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.

                "Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.

                "Plan" means an employee benefit or other plan established or
maintained by any Seller or any ERISA Affiliate and covered by Title IV of
ERISA, other than a Multiemployer Plan.

                "Portfolio" means all Portfolio Mortgage Loans which are
cross-collateralized and/or cross-defaulted with each other.

                "Portfolio Mortgage Loan" means a Mortgage Loan which is part of
a portfolio of cross-collateralized and/or cross-defaulted mortgage loans.

                "Post Default Rate" means an annual rate of interest equal to
the Pricing Rate plus 5%.

                "Price Differential" means with respect to any Transaction as of
any date of determination, an amount equal to the product of (A) the Pricing
Rate for such Transaction and (B) the Purchase Price for such Transaction,
calculated daily on the basis of a 360-day year for the actual number of days
during the period commencing on (and including) the Purchase Date for such
Transaction and ending on (but excluding) the Repurchase Date.

                                      -10-
<PAGE>

                "Price Differential Payment Date" means, with respect to a
Purchased Mortgage Loan, the 9th calendar day of the month following the related
Purchase Date and each succeeding 9th calendar day of the month thereafter;
provided, that, with respect to such Purchased Mortgage Loan, the final Price
Differential Payment Date shall be the related Repurchase Date; and provided,
further, that if any such day is not a Business Day, the Price Differential
Payment Date shall be the immediately preceding Business Day.

                "Pricing Rate" means LIBOR plus 1.25%. The Pricing Rate shall
change in accordance with LIBOR, as provided in Section 5(a).

                "Primary Servicer" means CapitalSource Finance LLC, a Delaware
limited liability company, as Servicer, or its permitted successors and assigns.

                "Program Agreement" means the Master Program Agreement by and
among Parent, Buyer, Credit Suisse First Boston, LLC and Column Financial, Inc.

                "Property" means any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.

                "Purchase Confirmation" means a confirmation of a Transaction,
in the form attached as Exhibit B hereto.

                "Purchase Date" means the date on which Purchased Mortgage Loans
are to be transferred by Seller to Buyer.

                "Purchase Price" means (i) the price at which each Purchased
Mortgage Loan is transferred by Seller to Buyer, which shall equal the product
of (1) the outstanding principal amount thereof as set forth on the related
Mortgage Loan Schedule and Exception Report multiplied by (2) the applicable
Purchase Price Percentage and (ii) thereafter, except where Buyer and Seller
agree otherwise, the amount determined under the immediately preceding clause
(i) decreased by the amount of any cash transferred by Seller to Buyer pursuant
to Section 6) hereof or applied to reduce Seller's obligations under clause (3)
of Section 7d hereof.

                "Purchase Price Percentage" means, with respect to each Mortgage
Loan, the following percentage, as applicable:

                (a)     with respect to each Mortgage Loan (other than a
        Defaulted Mortgage Loan or Delinquent Mortgage Loan):

                        (i) which has been subject to a Transaction hereunder
                for 12 months or less, 70%;

                        (ii) which has been subject to a Transaction hereunder
                for more than 12 months but not more than 15 months, 60%;

                        (iiii) which has been subject to a Transaction hereunder
                for more than 15 months but not more than 18 months, 50%;

                                      -11-
<PAGE>

                (b)     with respect to each 30 Day Delinquent Mortgage Loan,
        50%;

                (c)     with respect to each 60 Day Delinquent Mortgage Loan,
        25%

                (d)     with respect to each Defaulted Mortgage Loan, 0%.

                "Purchased Mortgage Loans" means the collective reference to
Mortgage Loans together with the Repurchase Assets related to such Mortgage
Loans transferred by Seller to Buyer in a Transaction hereunder, listed on the
related Mortgage Loan Schedule attached to the related Transaction Request,
which such Mortgage Loans the Custodian has been instructed to hold pursuant to
the Custodial Agreement.

                "Qualified Originator" means an originator of Mortgage Loans
which is acceptable to the Buyer.

                Receivable Loan" means, with respect to any Mortgage Loan, any
loan made by the Parent to the Mortgagor or Operator secured by a lien on the
Mortgagor's Medicare and Medicaid accounts receivable.

                "Records" means all instruments, agreements and other books,
records, and reports and data generated by other media for the storage of
information maintained by Seller, or any other person or entity with respect to
a Purchased Mortgage Loan. Records shall include the mortgage notes, any
Mortgages, the Mortgage Files, the credit files related to the Purchased
Mortgage Loan and any other instruments necessary to document or service a
Mortgage Loan.

                REMIC:  A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.

                "Reporting Date" means the 5th day of each month or, if such day
is not a Business Day, the next succeeding Business Day.

                "Repurchase Assets" has the meaning assigned thereto in Section
8 hereof.

                "Repurchase Date" means the earlier of (i) the Termination Date,
(ii) the date set forth in the applicable Purchase Confirmation (which date
shall be eighteen months after the related Purchase Date), (iii) the date
determined by application of Section 16 hereof, or (iv) the date of any
voluntary repurchase pursuant to Section 4b.

                "Repurchase Price" means the price at which Purchased Mortgage
Loans are to be transferred from Buyer to Seller upon termination of a
Transaction, which will be determined in each case (including Transactions
terminable upon demand) as the sum of the Purchase Price and the accrued but
unpaid Price Differential as of the date of such determination.

                "Request for Certification" means a notice sent to the Custodian
reflecting the sale of one or more Purchased Mortgage Loans to Buyer hereunder.

                "Requirement of Law" means, with respect to any Person, any law,
treaty, rule or regulation or determination of an arbitrator, a court or other
governmental authority, applicable

                                      -12-
<PAGE>

to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

                "Responsible Officer" means shall mean, as to any Person, the
chief executive officer or, with respect to financial matters, the chief
financial officer of such Person.

                "Rolling Termination Date" means, with respect to any date, the
date which is 364 days from such date, provided, that on and after the date on
which the Buyer delivers to the Seller written notice that the Buyer shall no
longer roll the Rolling Termination Date forward (the "Rolling Termination
Notice Date"), the Rolling Termination Date shall be the date which is 364 days
after the Rolling Termination Notice Date.

                "S&P" means Standard & Poor's Ratings Services, or any successor
thereto.

                "SEC" means the Securities and Exchange Commission, or any
successor thereto.

                "Seller" means CapitalSource SNF Funding LLC or its permitted
successors and assigns.

                "SIPA" means the Securities Investor Protection Act of 1970, as
amended from time to time.

                "60 Day Delinquent Mortgage Loan" means a mortgage loan which is
60 or more days, but less than 90 days, delinquent.

                "Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.

                "Termination Date" means the earlier of (a) July 31, 2008, (b)
the Rolling Termination Date, or (c) the date on which the Buyer has declared an
Event of Default to have occurred pursuant to Section 16.a hereof.

                "Test Period" means any period of three (3) consecutive calendar
months.

                "30 Day Delinquent Mortgage Loan" means a mortgage loan which is
30 or more days, but less than 60 days, delinquent.

                "Transaction" has the meaning set forth in Section 1 hereof.

                "Transaction Request" means a request from Seller to Buyer, in
the form attached as Exhibit A hereto, to enter into a Transaction.

                                      -13-
<PAGE>

                "Transfer Agreement" means that certain Mortgage Loan Purchase
Agreement dated the same date as this Repurchase Agreement by and between the
Parent and the Seller.

                "Transfer Assignment" means the assignment entered into between
the Parent and the Seller on the Purchase Date in the form of Exhibit A to the
Transfer Agreement.

                "Trust Receipt and Certification" means, with respect to any
Transaction as of any date, a receipt and certification in the form attached as
an exhibit to the Custodial Agreement.

                "Underwriting Guidelines" means the standards, procedures and
guidelines of the Parent for underwriting and acquiring Mortgage Loans, which
are set forth in the written policies and procedures of the Parent, a copy of
which is attached hereto as Exhibit F and such other guidelines as are approved
in writing by Buyer.

                "Uniform Commercial Code" means the Uniform Commercial Code as
in effect on the date hereof in the State of New York or the Uniform Commercial
Code as in effect in the applicable jurisdiction.

        3. PROGRAM; INITIATION OF TRANSACTIONS

                a. From time to time, Buyer will purchase from Seller certain
                Eligible Mortgage Loans that have been either originated by
                Seller or purchased by Seller from other originators. All
                Purchased Mortgage Loans shall have been approved by the Buyer
                pursuant to the Program Agreement and shall exceed or meet the
                Underwriting Guidelines, and shall be serviced by Servicer. The
                aggregate Purchase Price of Purchased Mortgage Loans subject to
                outstanding Transactions shall not exceed the Maximum Aggregate
                Purchase Price.

                b. Seller shall give Buyer and Custodian at least six Business
                Day's prior notice of any proposed Purchase Date (the date on
                which such notice is given, the "Notice Date"). On the Notice
                Date, Seller shall (i) request that Buyer enter into a
                Transaction by furnishing to Buyer a Transaction Request, (ii)
                deliver to Buyer and Custodian a Mortgage Loan Schedule and
                (iii) deliver to Custodian a Request for Certification and each
                Mortgage File in accordance with Section 10(b)(2). In the event
                the Mortgage Loan Schedule provided by Seller contains erroneous
                computer data, is not formatted properly or the computer fields
                are otherwise improperly aligned, Buyer shall provide written or
                electronic notice to Seller describing such error and Seller may
                either (a) give Buyer written or electronic authority to correct
                the computer data, reformat the Mortgage Loans or properly align
                the computer fields or (b) correct the computer data, reformat
                or properly align the computer fields itself and resubmit the
                Mortgage Loan Schedule as required herein. The Seller shall hold
                Buyer harmless for such correction, reformatting or realigning,
                as applicable, except as otherwise expressly provided herein.

                c. With respect to each Mortgage Loan, upon receipt of the
                Transaction Request, Buyer shall, consistent with this
                Agreement, specify the terms for such proposed

                                      -14-
<PAGE>

                Transaction, including the Purchase Price, the Pricing Rate, and
                the Repurchase Date in respect of such Transaction. The terms
                thereof shall be set forth in the Purchase Confirmation to be
                delivered to Seller on or prior to the Purchase Date.

                d. With respect to each Mortgage Loan, the Purchase
                Confirmation, together with this Agreement, shall constitute
                conclusive evidence of the terms agreed between Buyer and Seller
                with respect to the Transaction to which the Purchase
                Confirmation relates, and Seller's acceptance of the related
                proceeds shall constitute Seller's agreement to the terms of
                such Purchase Confirmation. It is the intention of the parties
                that, with respect to each Mortgage Loan, each Purchase
                Confirmation shall not be separate from this Agreement but shall
                be made a part of this Agreement. In the event of any conflict
                between this Agreement and, with respect to each Mortgage Loan,
                a Purchase Confirmation, the terms of the Purchase Confirmation
                shall control with respect to the related Transaction.

                e. Upon the satisfaction of the applicable conditions precedent
                set forth in Section 10 hereof, all of Seller's interest in the
                Repurchase Assets shall pass to Buyer on the Purchase Date,
                against the transfer of the Purchase Price to Seller. Upon
                transfer of the Mortgage Loans to Buyer as set forth in this
                Section and until termination of any related Transactions as set
                forth in Sections 4 or 16 of this Agreement, ownership of each
                Mortgage Loan, including each document in the related Mortgage
                File and Records, is vested in Buyer; provided that, prior to
                the recordation by the Custodian as provided for in the
                Custodial Agreement record title in the name of Seller to each
                Mortgage shall be retained by Seller in trust, for the benefit
                of Buyer, for the sole purpose of facilitating the servicing and
                the supervision of the servicing of the Mortgage Loans.

        4. REPURCHASE

                a. Seller shall repurchase the related Purchased Mortgage Loans
                from Buyer on each related Repurchase Date. Such obligation to
                repurchase exists without regard to any prior or intervening
                liquidation or foreclosure with respect to any Purchased
                Mortgage Loan (but liquidation or foreclosure proceeds received
                by Buyer shall be applied to reduce the Repurchase Price for
                such Purchased Mortgage Loan on each Price Differential Payment
                Date except as otherwise provided herein). Seller is obligated
                to repurchase and take physical possession of the Purchased
                Mortgage Loans from Buyer or its designee (including the
                Custodian) at Seller's expense on the related Repurchase Date.

                b. The Seller may repurchase any or all of the Purchased
                Mortgage Loans upon one (1) Business Day's prior written notice
                thereof by the Seller to the Buyer, designating the Purchased
                Mortgage Loans to be repurchased. If such notice is given, the
                amount specified in such notice shall be due and payable on the
                date specified therein, and, on receipt, such amount shall be
                applied to the Repurchase Price for the designated Purchased
                Mortgage Loans. Said Repurchase Price shall be accompanied by
                the Exit Fee described in Section 4.c below in those
                circumstances when an Exit Fee is payable under Section 4.c
                below.

                                      -15-
<PAGE>

                c. Upon the repurchase of any Purchased Mortgage Loan subject to
                a Transaction hereunder other than a Purchased Mortgage Loan (x)
                which the Seller is obligated to repurchase or has the specific
                right to repurchase pursuant to Section 4.a, Section 6.c,
                Section 10.b(7), Section 11.b, Section 13.c, Section 22 or
                Section 35 of this Agreement or (y) with respect to which Buyer
                has advised Seller will not be included in a securitization
                pursuant to the Program Agreement, the Seller shall pay to the
                Buyer a fee in an amount equal to 1.00% of the outstanding
                principal balance of such Mortgage Loan as of the date on which
                such Purchased Mortgage Loan is removed (the "Exit Fee"), such
                Exit Fee to be paid in Dollars, in immediately available funds,
                without deduction, set-off or counterclaim to the account set
                forth in Section 9 hereof.

                d. Provided that no Default shall have occurred and is
                continuing, and Buyer has received the related Repurchase Price
                upon repurchase of the Purchased Mortgage Loans, Buyer agrees to
                release its ownership interest hereunder in the Purchased
                Mortgage Loans (including, the Repurchase Assets related
                thereto) at the request of Seller. With respect to payments in
                full by the related Mortgagor of a Purchased Mortgage Loan,
                Seller agrees to (i) provide Buyer with a copy of a report from
                the related Servicer indicating that such Purchased Mortgage
                Loan has been paid in full, (ii) remit to Buyer, within two
                Business Days, the Repurchase Price with respect to such
                Purchased Mortgage Loans and (iii) provide Buyer a notice
                specifying each Purchased Mortgage Loan that has been prepaid in
                full. Buyer agrees to release its ownership interest in
                Purchased Mortgage Loans which have been prepaid in full after
                receipt of evidence of compliance with clauses (i) through (iii)
                of the immediately preceding sentence.

        5. PRICE DIFFERENTIAL.

                a. On the first day of each Interest Period that a Transaction
                is outstanding, the Pricing Rate shall be reset and, unless
                otherwise agreed, the accrued and unpaid Price Differential
                shall be settled in cash on each related Price Differential
                Payment Date. Two Business Days prior to the Price Differential
                Payment Date, Buyer shall give Seller written or electronic
                notice of the amount of the Price Differential due on such Price
                Differential Payment Date. On the Price Differential Payment
                Date, Seller shall pay to Buyer the Price Differential for such
                Price Differential Payment Date (along with any other amounts to
                be paid pursuant to Sections 7, and 35 hereof), by wire transfer
                in immediately available funds.

                b. If Seller fails to pay all or part of the Price Differential
                by 3:00 p.m. (New York City time) on the related Price
                Differential Payment Date, with respect to any Purchased
                Mortgage Loan, Seller shall be obligated to pay to Buyer (in
                addition to, and together with, the amount of such Price
                Differential) interest on the unpaid Repurchase Price at a rate
                per annum equal to the Post Default Rate until the Price
                Differential is received in full by Buyer.

                                      -16-
<PAGE>

        6. MARGIN MAINTENANCE AND REPURCHASE

                a. If on any date the Buyer's Margin Amount of any Purchased
                Mortgage Loan subject to a Transaction is less than the Purchase
                Price paid on the Purchase Date for such Transaction as reduced
                pursuant to the definition thereof (a "Margin Deficit"), the
                Buyer may by notice to the Seller require the Seller to transfer
                to Buyer cash in an amount at least equal to the Margin Deficit.
                Notice delivered pursuant to this Section may be given by any
                written means

                b. Such payment shall be made not later than 5:00 p.m. (New York
                City time) on the date which is two Business Days after the date
                of notice to the Seller of the occurrence of the Margin Deficit
                (the foregoing time requirement is referred to as the "Margin
                Deadline"). The failure of Buyer, on any one or more occasions,
                to exercise its rights hereunder, shall not change or alter the
                terms and conditions to which this Agreement is subject or limit
                the right of Buyer to do so at a later date. Seller and Buyer
                each agree that a failure or delay by Buyer to exercise its
                rights hereunder shall not limit or waive Buyer's rights under
                this Agreement or otherwise existing by law or in any way create
                additional rights for Seller.

                c. In lieu of making a payment to Buyer in an amount at least
                equal to the Margin Deficit pursuant to Section 6.a above,
                Seller, at Seller's option, may elect to repurchase any
                Purchased Mortgage Loan for which there is a Margin Deficit by
                notifying Buyer thereof and paying to Buyer, on or before the
                Margin Deadline, the Repurchase Price for such Mortgaged Loan. A
                repurchase of a Mortgaged Loan pursuant to this Section 6.c
                shall be without penalty, premium or Exit Fee.

        7. INCOME PAYMENTS

                a. Notwithstanding that Buyer and Seller intend that the
                Transactions hereunder be sales to Buyer of the Purchased
                Mortgage Loans, Seller shall pay to Buyer the accreted value of
                the Price Differential on each Price Differential Payment Date.

                b. Servicer shall cause each Mortgagor to remit all amounts paid
                on account of the Purchased Mortgage Loans to the Collection
                Account held pursuant to the Blocked Account Agreement.

                c. Servicer shall hold for the benefit of, and in trust for,
                Buyer all Income, including without limitation all Income
                received by or on behalf of Seller (or deposited into the
                lockbox account) with respect to such Purchased Mortgage Loans.
                Servicer shall deposit such Income in a trust account (the title
                of which shall indicate that the funds therein are being held in
                trust for Buyer) (the "Collection Account") with a financial
                institution acceptable to Buyer and subject to the Blocked
                Account Agreement within two Business Days of receipt by the
                Servicer.

                d. All such Income shall be held in trust for Buyer, shall
                constitute the property of Buyer and shall not be commingled
                with other property of Seller, any Affiliate

                                      -17-
<PAGE>

                of Seller or the Servicer. Funds deposited in the Collection
                Account during any month shall be held therein, in trust for the
                Buyer, until the next Price Differential Payment Date. On or
                before 3 p.m. (New York time) on the date prior to the Price
                Differential Payment Date, the Seller shall deliver to the Buyer
                and the Bank a Distribution Worksheet. Subject to the terms of
                the Blocked Account Agreement and in accordance with the Buyer
                authorization, the Bank shall withdraw any funds on deposit in
                the Collection Account and apply such funds as follows:

                                (1) first, to the Buyer in payment of any
                accrued and unpaid Price Differential;

                                (2) second, without limiting the rights of Buyer
                under Section 6 of this Repurchase Agreement, to the Buyer, in
                the amount of any unpaid Margin Deficit;

                                (3) third, to the Buyer in an amount equal to,
                with respect to each Mortgage Loan, the product of (a) all
                Income received on account of principal on such Mortgage Loan,
                multiplied by (b) the applicable Purchase Price Percentage;

                                (4) fourth, to the payment of all costs and fees
                payable by the Seller pursuant to this Repurchase Agreement
                (including Late Fees with respect to any late payments); and

                                (5) fifth, to the Seller.

                e. Notwithstanding the preceding provisions, if an Event of
                Default has occurred and Buyer shall have declared an Event of
                Default to have occurred hereunder under Section 16.a hereof,
                all funds in the Collection Account shall be withdrawn and
                applied as determined by the Buyer.

                f. Buyer shall offset against the accrued and outstanding Price
                Differential all Price Differential payments actually received
                by Buyer pursuant to Section 5, excluding any amounts paid
                pursuant to any Price Differential payments made at the
                Post-Default Rate pursuant to Section 5(b) and any Late Fees.
                Buyer shall offset against the Repurchase Price all amounts on
                account of principal actually received by Buyer pursuant to
                Section 7(d).

        8. SECURITY INTEREST

                Although the parties intend that all Transactions hereunder be
sales and purchases and not loans, in the event any such Transactions are deemed
to be loans, Seller hereby pledges to Buyer as security for the performance by
Seller of its Obligations and hereby grants, assigns and pledges to Buyer a
security interest in the Purchased Mortgage Loans, the Records, and all related
servicing rights, the Facility Agreements (to the extent such Facility
Agreements and Seller's right thereunder relate to the Purchased Mortgage
Loans), any Property relating to the Purchased Mortgage Loans, all insurance
policies and insurance proceeds relating to any Purchased Mortgage Loan or the
related Mortgaged Property, including, but not limited to, any

                                      -18-
<PAGE>

payments or proceeds under any related primary insurance, hazard insurance,
Income relating to the Purchased Mortgage Loan, all Blocked Accounts and the
balance from time to time standing to the credit of Blocked Accounts and all
rights with respect thereto, Hedging Agreements relating to the Purchased
Mortgage Loan, accounts (including any interest of Seller in escrow accounts)
and any other contract rights, accounts, payments, rights to payment (including
payments of interest or finance charges) general intangibles, (including,
without limitation, any other accounts) or any interest in the Purchased
Mortgage Loans, the servicing of the Purchased Mortgage Loans, and any proceeds
(including the related securitization proceeds) and distributions with respect
to any of the foregoing and any other property, rights, title or interest as are
specified on a Transaction Request and/or Trust Receipt and Certification, in
all instances described herein, whether now owned or hereafter acquired, now
existing or hereafter created (collectively, the "Repurchase Assets"). Seller
agrees to execute, deliver and/or file such documents and perform such acts as
may be reasonably necessary to fully perfect Buyer's security interest created
hereby. Furthermore, the Seller hereby authorizes the Buyer to file financing
statements relating to the Repurchase Assets without the signature of the
Seller, as the Buyer, at its option, may deem appropriate. The Seller shall pay
the filing costs for any financing statement or statements prepared pursuant to
this Section.

        9. PAYMENT AND TRANSFER

                Unless otherwise mutually agreed in writing, all transfers of
funds to be made by Seller hereunder shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to Buyer at the
following account maintained by Buyer: Citibank, ABA# 021000089, Column
Financial Inc, A/C# 30489046 or such other account as Buyer shall specify to
Seller in writing. Seller acknowledges that it has no rights of withdrawal from
the foregoing account. All Purchased Mortgage Loans transferred by one party
hereto to the other party shall be in the case of a purchase by Buyer in
suitable form for transfer or shall be accompanied by duly executed instruments
of transfer or assignment in blank and such other documentation as Buyer may
reasonably request. All Purchased Mortgage Loans shall be evidenced by a Trust
Receipt and Certification. Any Repurchase Price received by Buyer after 2:00
p.m. (New York City time) shall be deemed received on the next succeeding
Business Day.

        10. CONDITIONS PRECEDENT

                a. Initial Transaction. As conditions precedent to the initial
                Transaction, Buyer shall have received on or before the day of
                such initial Transaction the following, in form and substance
                satisfactory to Buyer and duly executed by Seller and each other
                party thereto:

                                (1) Facility Agreements. The Facility Agreements
                (including a Custodial Agreement in a form acceptable to Buyer)
                duly executed and delivered by the parties thereto and being in
                full force and effect, free of any modification, breach or
                waiver.

                                (2) Security Interest. Evidence that all other
                actions necessary or, in the opinion of Buyer, desirable to
                perfect and protect Buyer's interest in the Purchased Mortgage
                Loans and other Repurchase Assets have been taken,

                                      -19-
<PAGE>

                including, without limitation, duly executed and filed Uniform
                Commercial Code financing statements on Form UCC-1.

                                (3) Collection Account. The Buyer shall have
                received evidence satisfactory to the Buyer of the existence of
                the Collection Account which constitutes a "securities account"
                within the meaning of the applicable Uniform Commercial Code in
                the state in which the Collection Account is located.

                                (4) Blocked Account Agreement. With respect to
                each Collection Account, the Seller has delivered to Buyer a
                fully executed Blocked Account Agreement.

                                (5) Organizational Documents. A certificate of
                the secretary of Seller, substantially in the form of Exhibit H
                hereto, attaching certified copies of Seller's operating
                agreement, certificate of formation and resolutions approving
                the Facility Agreements and transactions thereunder (either
                specifically or by general resolution) and all documents
                evidencing other necessary limited liability company action or
                governmental approvals as may be required in connection with the
                Facility Agreements.

                                (6) Parent Organizational Documents. A
                certificate of the secretary of Parent, substantially in the
                form of Exhibit H hereto, attaching certified copies of Parent's
                operating agreement and certificate of formation.

                                (7) Good Standing Certificate. A certified copy
                of a good standing certificate of Seller, dated as of no earlier
                than the date 10 Business Days prior to the Purchase Date with
                respect to the initial Transaction hereunder.

                                (8) Incumbency Certificate. An incumbency
                certificate of the corporate secretary of Seller, certifying the
                names, true signatures and titles of the representatives duly
                authorized to request transactions hereunder and to execute the
                Facility Agreements.

                                (9) Opinions of Counsel.

                                (a) An opinion of Seller's counsel, in form and
                        substance acceptable to the Buyer.

                                (b) An opinion or opinions of outside counsel to
                        the Seller with respect to nonconsolidation and true
                        sale in form and substance acceptable to the Buyer.

                                (c) An opinion of Parent's counsel, in form and
                        substance substantially acceptable to the Buyer.

                                (10) Underwriting Guidelines. A true and correct
                copy of the Underwriting Guidelines certified by an officer of
                the Seller.

                                      -20-
<PAGE>

                                (11) Fees. Payment of any fees due to Buyer
                hereunder.

                                (12) Insurance. Evidence that Seller has added
                Buyer as a loss payee under the Seller's E&O Insurance.

                b. All Transactions. The obligation of Buyer to enter into each
                Transaction pursuant to this Agreement is subject to the
                following conditions precedent:

                                (1) Due Diligence Review. Without limiting the
                generality of Section 34 hereof, Buyer shall have completed its
                due diligence review of the related Mortgage Loans and Seller
                and determined that the results are acceptable to the Buyer.

                                (2) Required Documents. With respect to each
                Purchased Mortgage Loan the Mortgage File has been delivered to
                the Custodian at least 24 hours prior to the related Purchase
                Date;

                                (3) Transaction Documents. Buyer or its designee
                shall have received on or before the day of such Transaction
                (unless otherwise specified in this Agreement) the following, in
                form and substance satisfactory to Buyer and (if applicable)
                duly executed:

                        (a) A Transaction Request delivered pursuant to Section
                3(c) hereof and a Purchase Confirmation.

                        (b) The Request for Certification and the related
                Mortgage Loan Schedule and Exception Report, and the Trust
                Receipt.

                        (c) Such certificates, opinions of counsel or other
                documents as Buyer may reasonably request.

                                (4) No Default. No Default or Event of Default
                shall have occurred and be continuing;

                                (5) Requirements of Law. Buyer shall not have
                determined that the introduction of or a change in any
                Requirement of Law or in the interpretation or administration of
                any Requirement of Law applicable to Buyer has made it unlawful,
                and no Governmental Authority shall have asserted that it is
                unlawful, for Buyer to enter into Transactions with a Pricing
                Rate based on LIBOR.

                                (6) Representations and Warranties. Both
                immediately prior to the related Transaction and also after
                giving effect thereto and to the intended use thereof, the
                representations and warranties made by Seller in each Facility
                Agreement shall be true, correct and complete on and as of such
                Purchase Date in all material respects with the same force and
                effect as if made on and as of such date (or, if any such
                representation or warranty is expressly stated to have been made
                as of a specific date, as of such specific date).

                                      -21-
<PAGE>

                                (7) Material Adverse Change. None of the
                following shall have occurred and/or be continuing:

                        (a) Credit Suisse First Boston, New York Branch's
                corporate bond rating as calculated by S&P or Moody's has been
                lowered or downgraded to a rating below investment grade by S&P
                or Moody's;

                        (b) an event or events shall have occurred in the good
                faith determination of Buyer resulting in the effective absence
                of a "repo market" or comparable "lending market" for financing
                debt obligations secured by mortgage loans or securities or an
                event or events shall have occurred resulting in Buyer not being
                able to finance Purchased Mortgage Loans through the "repo
                market" or "lending market" with traditional counterparties at
                rates which would have been reasonable prior to the occurrence
                of such event or events; or

                        (c) an event or events shall have occurred resulting in
                the effective absence of a "securities market" for securities
                backed by mortgage loans or an event or events shall have
                occurred resulting in Buyer not being able to sell securities
                backed by mortgage loans at prices which would have been
                reasonable prior to such event or events; or

                        (d) there shall have occurred a material adverse change
                in the financial condition of Buyer which affects (or can
                reasonably be expected to affect) materially and adversely the
                ability of Buyer to fund its obligations under this Agreement;
                or

                        (e) Parent, Affiliate or subsidiary of the Parent shall
                be in default under (i) any Indebtedness of Parent, Affiliate or
                subsidiary of the Parent with an outstanding principal balance
                in excess of $4,000,000, which default (1) involves the failure
                to pay a matured obligation, or (2) permits the acceleration of
                the maturity of obligations by any other party to or beneficiary
                with respect to such Indebtedness, or (ii) any other contract to
                which Parent, Affiliate or subsidiary of the Parent is a party
                which default (1) involves the failure to pay a matured
                obligation with an outstanding principal balance in excess of
                $4,000,000, or (2) permits the acceleration of the maturity of
                obligations with an outstanding principal balance in excess of
                $4,000,000 by any other party to or beneficiary of such contract
                (any such event, a 'Cross-Default Event").

        11. PROGRAM; COSTS

                a. Seller shall reimburse Buyer for any of Buyer's reasonable
                out-of-pocket costs, including due diligence review costs and
                reasonable attorney's fees, incurred by Buyer in determining the
                acceptability to Buyer of any Mortgage Loans. Buyer shall notify
                the Seller if the costs incurred to review any single Mortgage
                Loan exceed $2,500. Seller shall also pay, or reimburse Buyer if
                Buyer shall pay, any termination fee, which may be due any
                servicer. Seller shall pay to the Buyer an amount equal to one
                half of the reasonable fees and expenses of

                                      -22-
<PAGE>

                Buyer's counsel in connection with the Facility Agreements.
                Reasonable legal fees for any subsequent amendments to this
                Agreement or related documents shall be borne by Seller. Seller
                shall pay ongoing custodial and bank fees and expenses as set
                forth in the Custodial Agreement, and any other ongoing fees and
                expenses under any other Program Document.

                b. If Buyer determines that, due to the introduction of, any
                change in, or the compliance by Buyer with (i) any eurocurrency
                reserve requirement or (ii) the interpretation of any law,
                regulation or any guideline or request from any central bank or
                other Governmental Authority (whether or not having the force of
                law), there shall be an increase in the cost to Buyer in
                engaging in the present or any future Transactions, then Seller
                agrees to pay to Buyer, from time to time, upon demand by Buyer
                (with a copy to Custodian) the actual cost of additional amounts
                as specified by Buyer to compensate Buyer for such increased
                costs. In the event that any additional amounts are payable
                pursuant to the foregoing sentence, Seller, at Seller's option,
                may elect to repurchase any Purchased Mortgage Loan for which
                additional amounts may be due by notifying Buyer thereof and
                paying to Buyer, on or before the date which is thirty (30) days
                after the date on which Buyer shall have notified the Seller
                that such additional amounts are due, by payment of the
                Repurchase Price plus any accrued additional amounts for such
                Mortgaged Loans. A repurchase of a Mortgaged Loan pursuant to
                this Section 11.b shall be without penalty, premium or Exit Fee.

                c. With respect to any Transaction, Buyer may conclusively rely
                upon, and shall incur no liability to Seller in acting upon, any
                request or other communication that Buyer reasonably believes to
                have been given or made by an Authorized Person on Seller's
                behalf, whether or not such person is listed on the certificate
                delivered pursuant to Section 10(a)(7) hereof. In each such
                case, Seller hereby waives the right to dispute Buyer's record
                of the terms of the Purchase Confirmation, request or other
                communication.

                d. Any payments made by Seller to Buyer shall be free and clear
                of, and without deduction or withholding for, any taxes;
                provided, however, that if such payer shall be required by law
                to deduct or withhold any taxes from any sums payable to Buyer,
                then such payer shall (A) make such deductions or withholdings
                and pay such amounts to the relevant authority in accordance
                with applicable law, (B) pay to Buyer the sum that would have
                been payable had such deduction or withholding not been made,
                and (C) at the time Price Differential is paid, pay to Buyer all
                additional amounts as specified by Buyer to preserve the
                after-tax yield Buyer would have received if such tax had not
                been imposed.

        12. SERVICING

                a. Seller, on Buyer's behalf, shall contract with Master
                Servicer to service the Mortgage Loans. The Primary Servicer
                shall service pursuant to the Interim Servicing Agreement,
                consistent with the degree of skill and care that Seller
                customarily requires with respect to similar Mortgage Loans
                owned or managed

                                      -23-
<PAGE>

                by it and in accordance with Accepted Servicing Practices. The
                Servicer shall (i) comply with all applicable Federal, State and
                local laws and regulations, (ii) maintain all state and federal
                licenses necessary for it to perform its servicing
                responsibilities hereunder and (iii) not impair the rights of
                Buyer in any Mortgage Loans or any payment thereunder. Buyer may
                terminate the servicing of any Mortgage Loan with the
                then-existing servicer in accordance with Section 12(e) hereof.

                b. Seller shall cause the Servicer to direct all Mortgagors to
                deliver all payments with respect to the Purchased Mortgage
                Loans to the Collection Account. Seller shall cause the Servicer
                not to commingle any funds with respect to the Purchased
                Mortgage Loans with any other funds held by the Servicer.

                c. Seller shall cause the Servicer to deposit all collections
                received by Servicer on account of the Purchased Mortgage Loans
                in the Collection Account no later than two Business Days
                following receipt.

                d. Upon the occurrence of any of (i) a Default or Event of
                Default hereunder, (ii) a Default or Event of Default under the
                Interim Servicing Agreement, or (iii) a Cross-Default Event,
                Buyer shall have the right to immediately terminate the
                Servicer's right to service the Purchased Mortgage Loans without
                payment of any penalty or termination fee. Seller and the
                Servicer shall cooperate in transferring the servicing of the
                Purchased Mortgage Loans to a successor servicer appointed by
                Buyer in its sole discretion.

                e. If Seller should discover that, for any reason whatsoever,
                Servicer or any entity responsible to Seller for managing or
                servicing any such Purchased Mortgage Loan has failed to perform
                fully Seller's obligations under the Facility Agreements or any
                of the obligations of such entities with respect to the
                Purchased Mortgage Loans, Seller shall promptly notify Buyer.

        13. REPRESENTATIONS AND WARRANTIES

                a. Seller represents and warrants to Buyer as of the date hereof
                and as of each Purchase Date for any Transaction that:

                                (1) Seller Existence. Seller has been duly
                organized and is validly existing as a limited liability company
                in good standing under the laws of the State of Delaware.

                                (2) Licenses. Seller is duly licensed or is
                otherwise qualified in each jurisdiction in which it transacts
                business for the business which it conducts and is not in
                default of any applicable federal, state or local laws, rules
                and regulations unless, in either instance, the failure to take
                such action is not reasonably likely (either individually or in
                the aggregate) to cause a Material Adverse Effect. Seller has
                the requisite power and authority and legal right to purchase
                Mortgage Loans and to own, sell and grant a lien on all of its
                right, title and interest in and to the Mortgage Loans, and to
                execute and deliver, engage in

                                      -24-
<PAGE>

                the transactions contemplated by, and perform and observe the
                terms and conditions of, this Agreement, each Facility Agreement
                and any Transaction Request or, if applicable, Purchase
                Confirmation.

                                (3) Power. Seller has all requisite corporate or
                other power, and has all governmental licenses, authorizations,
                consents and approvals necessary to own its assets and carry on
                its business as now being or as proposed to be conducted, except
                where the lack of such licenses, authorizations, consents and
                approvals would not be reasonably likely to have a Material
                Adverse Effect.

                                (4) Due Authorization. Seller has all necessary
                corporate or other power, authority and legal right to execute,
                deliver and perform its obligations under each of the Facility
                Agreements, as applicable. This Agreement, any Transaction
                Request, Purchase Confirmation and the Facility Agreements have
                been (or, in the case of Facility Agreements and any Transaction
                Request, Purchase Confirmation not yet executed, will be) duly
                authorized, executed and delivered by Seller, all requisite
                action having been taken, and each is valid, binding and
                enforceable against Seller in accordance with its terms except
                as such enforcement may be affected by bankruptcy, by other
                insolvency laws, or by general principles of equity.

                                (5) Financial Statements. The Seller has
                heretofore furnished to Buyer a copy of (a) the consolidated
                balance sheet of Holdings and the consolidated balance sheets of
                Holdings' consolidated Subsidiaries for the fiscal year of
                Holdings ended December 31, 2002 and the related consolidated
                statements of income and members' equity and of cash flows for
                Holdings and Holdings' consolidated Subsidiaries for such fiscal
                year, setting forth in each case in comparative form the figures
                for the previous year, with the opinion thereon of Ernst &
                Young. All such financial statements are complete and correct
                and fairly present, in all material respects, the consolidated
                financial condition of Holdings and its Subsidiaries and the
                consolidated results of their operations as at such dates and
                for such fiscal periods, all in accordance with GAAP applied on
                a consistent basis. Since December 31, 2002, there has been no
                material adverse change in the consolidated business, operations
                or financial condition of Holdings and its consolidated
                Subsidiaries taken as a whole from that set forth in said
                financial statements nor is Seller aware of any state of facts
                which (without notice or the lapse of time) would or could
                result in any such material adverse change. Holdings has, on the
                date of the statements delivered pursuant to this Section (the
                "Statement Date") no material liabilities, direct or indirect,
                fixed or contingent, matured or unmatured, known or unknown, or
                liabilities for taxes, long-term leases or unusual forward or
                long-term commitments not disclosed by, or reserved against in,
                said balance sheet and related statements, and at the present
                time there are no material unrealized or anticipated losses from
                any loans, advances or other commitments of Seller except as
                heretofore disclosed to Buyer in writing.

                                (6) Event of Default. There exists no Event of
                Default under Section 15(b) hereof, which default gives rise to
                a right to accelerate indebtedness

                                      -25-
<PAGE>

                as referenced in Section 15(b) hereof, under any mortgage,
                borrowing agreement or other instrument or agreement pertaining
                to indebtedness for borrowed money or to the repurchase of
                mortgage loans or securities.

                                (7) Solvency. Seller is solvent and will not be
                rendered insolvent by any Transaction and, after giving effect
                to such Transaction, will not be left with an unreasonably small
                amount of capital with which to engage in its business. Seller
                does not intend to incur, and does not believe that it has
                incurred, debts beyond its ability to pay such debts as they
                mature and is not contemplating the commencement of insolvency,
                bankruptcy, liquidation or consolidation proceedings or the
                appointment of a receiver, liquidator, conservator, trustee or
                similar official in respect of such entity or any of its assets.
                The amount of consideration being received by Seller upon the
                sale of the Purchased Mortgage Loans to Buyer constitutes
                reasonably equivalent value and fair consideration for such
                Purchased Mortgage Loans. Seller is not transferring any
                Purchased Mortgage Loans with any intent to hinder, delay or
                defraud any of its creditors.

                                (8) No Conflicts. The execution, delivery and
                performance by Seller of this Agreement, any Transaction Request
                or Purchase Confirmation hereunder and the Facility Agreements
                do not conflict with any term or provision of the certificate of
                formation or operating agreement of Seller or any law, rule,
                regulation, order, judgment, writ, injunction or decree
                applicable to Seller of any court, regulatory body,
                administrative agency or governmental body having jurisdiction
                over Seller, which conflict would have a Material Adverse Effect
                and will not result in any violation of any such mortgage,
                instrument, agreement or obligation to which Seller is a party.

                                (9) True and Complete Disclosure. All
                information, reports, exhibits, schedules, financial statements
                or certificates of Seller, Holdings or any Affiliate thereof or
                any of their officers furnished or to be furnished to Buyer in
                connection with the initial or any ongoing due diligence of
                Seller, Holdings or any Affiliate or officer thereof,
                negotiation, preparation, or delivery of the Facility Agreements
                are true and complete in all material respects and do not omit
                to disclose any material facts necessary to make the statements
                herein or therein, in light of the circumstances in which they
                are made, not misleading. All financial statements have been
                prepared in accordance with GAAP.

                                (10) Approvals. No consent, approval,
                authorization or order of, registration or filing with, or
                notice to any governmental authority or court is required under
                applicable law in connection with the execution, delivery and
                performance by Seller of this Agreement, any Transaction
                Request, Purchase Confirmation and the Facility Agreements.

                                (11) Litigation. There is no action, proceeding
                or investigation pending with respect to which Seller has
                received service of process or, to the best of Seller's
                knowledge threatened against it before any court, administrative
                agency or other tribunal (A) asserting the invalidity of this
                Agreement, any

                                      -26-
<PAGE>

                Transaction, Transaction Request, Purchase Confirmation or any
                Facility Agreement, (B) seeking to prevent the consummation of
                any of the transactions contemplated by this Agreement, any
                Transaction Request, Purchase Confirmation or any Facility
                Agreement, (C) makes a claim individually in an amount greater
                than $500,000 or in an aggregate amount greater than $1,000,000,
                (D) which requires filing with the Securities and Exchange
                Commission in accordance with the 1934 Act or any rules
                thereunder or (E) which might materially and adversely affect
                the validity of the Mortgage Loans or the performance by it of
                its obligations under, or the validity or enforceability of,
                this Agreement, any Transaction Request, Purchase Confirmation
                or any Facility Agreement.

                                (12) Material Adverse Change. There has been no
                material adverse change in the business, operations, financial
                condition, properties or prospects of Seller or its Affiliates
                since the date set forth in the most recent financial statements
                supplied to Buyer.

                                (13) Ownership. Upon payment of the Purchase
                Price and the filing of the financing statement and delivery of
                the Mortgage Files to the Custodian and the Custodian's receipt
                of the related Request for Certification, Buyer shall become the
                sole owner of the Purchased Mortgage Loans and related
                Repurchase Assets, free and clear of all liens and encumbrances.

                                (14) Underwriting Guidelines. The Underwriting
                Guidelines provided to Buyer are the true and correct
                Underwriting Guidelines of the Parent.

                                (15) Taxes. Seller and its Subsidiaries have
                filed all Federal income tax returns and all other material tax
                returns that are required to be filed by it and have paid all
                taxes due pursuant to such returns or pursuant to any assessment
                received by it, except for any such taxes as are being
                appropriately contested in good faith by appropriate proceedings
                diligently conducted and with respect to which adequate reserves
                have been provided. The charges, accruals and reserves on the
                books of Seller and its Subsidiaries in respect of taxes and
                other governmental charges are, in the opinion of Seller,
                adequate.

                                (16) Investment Company. Neither Seller nor any
                of its Subsidiaries is required to be registered as an
                "investment company", or a company "controlled" by an
                "investment company," within the meaning of the Investment
                Company Act of 1940, as amended.

                                (17) Chief Executive Office; Jurisdiction of
                Organization. On the Effective Date, Seller's chief executive
                office is located at 4445 Willard Avenue, Chevy Chase, Maryland
                20815. On the Effective Date, Seller's jurisdiction of
                organization is Delaware. Seller shall provide Buyer with thirty
                days advance notice of any change in Seller's principal office
                or place of business or jurisdiction. Seller has no trade name.
                During the preceding five years, Seller has not been known by or
                done business under any other name, corporate or

                                      -27-
<PAGE>

                fictitious, and has not filed or had filed against it any
                bankruptcy receivership or similar petitions nor has it made any
                assignments for the benefit of creditors.

                                (18) Location of Books and Records. The location
                where Seller keeps its books and records, including all computer
                tapes and records relating to the Purchased Mortgage Loans and
                the related Repurchase Assets is its chief executive office.

                                (19) Net Worth. On the Effective Date, Holdings'
                Net Worth is not less than $200,000,000.

                                (20) ERISA. Each Plan to which Parent or its
                Subsidiaries make direct contributions, and, to the knowledge of
                Seller, each other Plan and each Multiemployer Plan, is in
                compliance in all material respects with, and has been
                administered in all material respects in compliance with, the
                applicable provisions of ERISA, the Code and any other Federal
                or State law.

                                (21) Adverse Selection. Seller has not selected
                the Purchased Mortgage Loans in a manner so as to adversely
                affect Buyer's interests.

                                (22) Agreements. Neither Parent nor any
                Affiliate of Parent is a party to any agreement, instrument, or
                indenture or subject to any restriction materially and adversely
                affecting its business, operations, assets or financial
                condition, except as disclosed in the financial statements
                described in Section 13(a)(5) hereof. Neither Parent nor any
                Affiliate of Parent is in default in the performance, observance
                or fulfillment of any of the obligations, covenants or
                conditions contained in any agreement, instrument, or indenture
                which default could have a material adverse effect on the
                business, operations, properties, or financial condition of
                Parent as a whole. No holder of any indebtedness of Parent or of
                any Affiliate of Parent has given notice of any asserted default
                thereunder.

                                (23) Other Indebtedness. As of June 30, 2003,
                the total borrowings of Holdings and its consolidated
                subsidiaries (as set forth in the Form S-1 Registration
                Statement of CapitalSource Inc. as filed with the Securities and
                Exchange Commission (the "SEC") on June 12, 2003, as amended
                from time to time, including by Amendment No. 3 to S-1
                Registration Statement filed with the SEC on July 24, 2003, and
                as may be amended subsequent to the date hereof) was
                $1,141,297,000.

                                (24) No Reliance. Seller has made its own
                independent decisions to enter into the Facility Agreements and
                each Transaction and as to whether such Transaction is
                appropriate and proper for it based upon its own judgment and
                upon advice from such advisors (including without limitation,
                legal counsel and accountants) as it has deemed necessary.
                Seller is not relying upon any advice from Buyer as to any
                aspect of the Transactions, including without limitation, the
                legal, accounting or tax treatment of such Transactions.

                                      -28-
<PAGE>

                                (25) Purchase of Each Mortgage Loan. a. Each
                Mortgage Loan was purchased by the Seller on the relevant
                Purchase Date pursuant to the Transfer Agreement and the related
                Transfer Assignment.

                b. With respect to every Purchased Mortgage Loan, Seller
                represents and warrants to Buyer as of the applicable Purchase
                Date for any Transaction and each date thereafter that each
                representation and warranty set forth on Schedule 1 is true and
                correct.

                c. The representations and warranties set forth in this
                Agreement shall survive transfer of the Purchased Mortgage Loans
                to Buyer and shall continue for so long as the Purchased
                Mortgage Loans are subject to this Agreement.

        14. COVENANTS

Seller covenants with Buyer that, during the term of this facility:

                a. Litigation. Seller will promptly, and in any event within ten
                (10) days after service of process on any of the following, give
                to Buyer notice of (a) all litigation, actions, suits,
                arbitrations, investigations (including, without limitation, any
                of the foregoing which are threatened or pending) or other legal
                or arbitrable proceedings affecting Seller or affecting any of
                the Property of any of them before any Governmental Authority or
                (b) all litigation, actions, suits, arbitrations, investigations
                (including, without limitation, any of the foregoing which are
                threatened or pending) or other legal or arbitrable proceedings
                affecting Seller or affecting any of the Property of any of them
                before any Governmental Authority that (i) questions or
                challenges the validity or enforceability of any of the Facility
                Agreements or any action to be taken in connection with the
                transactions contemplated hereby, (ii) makes a claim or in an
                aggregate amount greater than $500,000, or (iii) which,
                individually or in the aggregate, if adversely determined, could
                be reasonably likely to have a Material Adverse Effect.

                b. Prohibition of Fundamental Changes. Seller shall not enter
                into any transaction of merger or consolidation or amalgamation,
                or liquidate, wind up or dissolve itself (or suffer any
                liquidation, winding up or dissolution) or sell all or
                substantially all of its assets.

                c. Servicer; Asset Tape. Upon the occurrence of any of the
                following (a) the occurrence and continuation of an Event of
                Default, (b) the fifth Business Day of each month, or (c) upon
                the request of Buyer, Seller shall cause Servicer to provide to
                Buyer, electronically, in a format mutually acceptable to Buyer
                and Seller, an Asset Tape. Seller shall not cause the Mortgage
                Loans to be serviced by any servicer other than a servicer
                expressly approved in writing by Buyer, which approval shall be
                deemed granted by Buyer with respect to Seller with the
                execution of this Agreement.

                d. Insurance. Seller will continue to maintain insurance
                coverage with respect to employee dishonesty, forgery or
                alteration, theft, disappearance and destruction,

                                      -29-
<PAGE>

                robbery and safe burglary, property (other than money and
                securities) and computer fraud in an aggregate amount equal to
                at least $2,000,000.

                e. No Adverse Claims. Seller warrants and will defend, and shall
                cause any Servicer to defend, the right, title and interest of
                Buyer in and to all Purchased Mortgage Loans and the related
                Repurchase Assets against all adverse claims and demands.

                f. Assignment. Except as permitted herein, neither Seller nor
                any Servicer shall sell, assign, transfer or otherwise dispose
                of, or grant any option with respect to, or pledge, hypothecate
                or grant a security interest in or lien on or otherwise encumber
                (except pursuant to the Facility Agreements), any of the
                Purchased Mortgage Loans or any interest therein.

                g. Security Interest. Seller shall do all things necessary to
                preserve the Purchased Mortgage Loans and the related Repurchase
                Assets so that they remain subject to a first priority perfected
                security interest hereunder. Without limiting the foregoing,
                Seller will comply with all rules, regulations and other laws of
                any Governmental Authority and cause the Purchased Mortgage
                Loans or the related Repurchase Assets to comply with all
                applicable rules, regulations and other laws. Seller will not
                allow any default for which Seller is responsible to occur under
                any Purchased Mortgage Loans or the related Repurchase Assets or
                any Facility Agreement and Seller shall fully perform or cause
                to be performed when due all of its obligations under any
                Purchased Mortgage Loans or the related Repurchase Assets and
                any Facility Agreement.

                h. Records.

                                (1) Seller shall collect and maintain or cause
                to be collected and maintained all Records relating to the
                Purchased Mortgage Loans in accordance with industry custom and
                practice for assets similar to the Purchased Mortgage Loans,
                including those maintained pursuant to the preceding
                subparagraph, and all such Records shall be in Custodian's
                possession unless Buyer otherwise approves. Seller will not
                allow any such papers, records or files that are an original or
                an only copy to leave Custodian's possession, except for
                individual items removed in connection with servicing a specific
                Mortgage Loan, in which event Seller will obtain or cause to be
                obtained a receipt from a financially responsible person for any
                such paper, record or file. Seller or the Servicer of the
                Purchased Mortgage Loans will maintain all such Records not in
                the possession of Custodian in good and complete condition in
                accordance with industry practices for assets similar to the
                Purchased Mortgage Loans and preserve them against loss.

                                (2) For so long as Buyer has an interest in or
                lien on any Purchased Mortgage Loan, Seller will hold or cause
                to be held all related Records in trust for Buyer. Seller shall
                notify, or cause to be notified, every other party holding any
                such Records of the interests and liens in favor of Buyer
                granted hereby.

                                      -30-
<PAGE>

                                (3) Upon reasonable advance notice from
                Custodian or Buyer, Seller shall (x) make any and all such
                Records available to Custodian or Buyer to examine any such
                Records, either by its own officers or employees, or by agents
                or contractors, or both, and make copies of all or any portion
                thereof, and (y) permit Buyer or its authorized agents to
                discuss the affairs, finances and accounts of Seller with its
                chief operating officer and chief financial officer and to
                discuss the affairs, finances and accounts of Seller with its
                independent certified public accountants.

                i. Books. Seller shall keep or cause to be kept in reasonable
                detail books and records of account of its assets and business
                and shall clearly reflect therein the transfer of Purchased
                Mortgage Loans to Buyer.

                j. Approvals. Seller shall maintain all licenses, permits or
                other approvals necessary for Seller to conduct its business and
                to perform its obligations under the Facility Agreements, and
                Seller shall conduct its business strictly in accordance with
                applicable law.

                k. Material Change in Business. Seller shall not make any
                material change in the nature of its business as carried on at
                the date hereof. At least one of the following individuals shall
                be part of the senior management of the Parent: Dean Graham,
                Jason Fish or John Delaney.

                l. Underwriting Guidelines. Without the prior written consent of
                Buyer, Seller shall not permit the Servicer to amend or
                otherwise modify the Underwriting Guidelines in any material
                respect in any manner that might adversely affect the Mortgage
                Loans. Without limiting the foregoing, in the event that the
                Servicer makes any amendment or modification to the Underwriting
                Guidelines, Seller shall promptly deliver to Buyer a complete
                copy of the amended or modified Underwriting Guidelines.

                m. Applicable Law. Seller shall comply with the requirements of
                all applicable laws, rules, regulations and orders of any
                Governmental Authority, except where the failure to comply would
                not have a Material Adverse Effect..

                n. Existence. Seller shall preserve and maintain its legal
                existence and all of its material rights, privileges, licenses
                and franchises.

                o. Chief Executive Office; Jurisdiction of Organization. Seller
                shall not move its chief executive office from the address
                referred to in Section 13(a)(17) or change its jurisdiction of
                organization from the jurisdiction referred to in Section
                13(a)(17) unless it shall have provided Buyer 30 days' prior
                written notice of such change.

                p. Taxes. Seller shall pay and discharge all taxes, assessments
                and governmental charges or levies imposed on it or on its
                income or profits or on any of its property prior to the date on
                which penalties attach thereto, except for any such tax,
                assessment, charge or levy the payment of which is being
                contested in good

                                      -31-
<PAGE>

                faith and by proper proceedings and against which adequate
                reserves are being maintained.

                q. Transactions with Affiliates. Seller will not enter into any
                transaction, including, without limitation, any purchase, sale,
                lease or exchange of property or the rendering of any service,
                with any Affiliate unless such transaction is (a) otherwise
                permitted under the Facility Agreements, (b) in the ordinary
                course of Seller's business and (c) upon fair and reasonable
                terms no less favorable to Seller than it would obtain in a
                comparable arm's length transaction with a Person which is not
                an Affiliate, or make a payment that is not otherwise permitted
                by this Section to any Affiliate.

                r. Guarantees. Seller shall not create, incur, assume or suffer
                to exist any Guarantees.

                s. True and Correct Information. All information, reports,
                exhibits, schedules, financial statements or certificates of
                Seller, Holdings, any Affiliate thereof or any of their officers
                furnished to Buyer hereunder and during Buyer's diligence of
                Seller are and will be true and complete and do not omit to
                disclose any material facts necessary to make the statements
                herein or therein, in light of the circumstances in which they
                are made, not misleading. All required financial statements,
                information and reports delivered by Seller to Buyer pursuant to
                this Agreement shall be prepared in accordance with U.S. GAAP,
                or, if applicable, to SEC filings, the appropriate SEC
                accounting regulations.

                t. Blocked Account. The Seller shall maintain the Collection
                Account subject to the Blocked Account Agreement.

                u. Amendment. Without the prior written consent of the Buyer,
                neither the Seller nor the Servicer shall enter into any
                amendment, supplement or modification of any Mortgage Loan
                subject to a Transaction hereunder which would (A) change the
                aggregate principal amount evidenced by the Mortgage Note, (B)
                change the interest rate payable under the Mortgage Note, (C)
                modify the maturity date of the Mortgage Loan, (D) provide for
                the payment of any additional interest, additional fees, kicker
                or similar equity feature in respect of the Mortgage Loan or (E)
                change the amount of any payments required under the Note or
                modify any related amortization schedule.

                v. Special Purpose Entity. Seller shall (i) maintain its own
                separate books and records and bank accounts (except that, for
                accounting and reporting purposes, the Seller may be included in
                the consolidated financial statements of an equity owner of the
                Seller in accordance with GAAP) provided that (A) appropriate
                notation shall be made on such consolidated financial statements
                to indicate the separateness of the Seller from such Affiliate
                and to indicate that the Seller's assets and credit are not
                available to satisfy the debts and other obligations of such
                Affiliate or any other Person and (B) such assets shall also be
                listed on the Seller's own separate balance sheet); (ii) at all
                times hold itself out to the public

                                      -32-
<PAGE>

                and all other Persons as a legal entity separate from the Member
                and any other Person (except for inclusion in consolidated
                financial statements of an equity owner, as described in clause
                (i) above) (iii) have a Board of Managers composed differently
                from that of the Member and any other Person; (iv) conduct its
                business in its own name (or any trade name that will not be
                reasonably likely to cause confusion as to its separate
                existence) and strictly comply with all organizational
                formalities to maintain its separate existence; (v) maintain
                separate financial statements (except for inclusion in
                consolidated financial statements of an equity owner, as
                described in clause (i) above); (vi) except as contemplated
                under the provisions of clause (ix) below, pay its own
                liabilities only out of its own funds; (vii) maintain an arm's
                length relationship with its Affiliates and the Member and any
                other party furnishing services to it; (viii) maintain a
                sufficient number of employees (which may be zero) for its
                contemplated business and pay the salaries of its own employees,
                if any; (ix) allocate fairly and reasonably, and pay its share
                of, any overhead expenses and other common expenses for shared
                office space and facilities, goods or services provided to
                multiple entities; (xi) maintain adequate capital in light of
                its contemplated business purpose, transactions and liabilities;
                (xii) observe all limited liability company formalities
                necessary to maintain its separate identity as an entity
                separate and distinct from the Member and all of its other
                Affiliates; (xiii) hold title to its assets in its own name;
                (xv) not engage, directly or indirectly, in any business other
                than the actions required or permitted to be performed under
                Article 4 of the LLC Agreement, the Facility Agreements or this
                Section 14 v.; (xvi) not incur, create or assume any
                indebtedness other than as expressly permitted under the
                Facility Agreements; (xvii) not to the fullest extent permitted
                by law, engage in or seek or consent to any dissolution, winding
                up, liquidation, consolidation, merger or sale or transfer of
                all or substantially all of its assets except as expressly
                permitted pursuant to any provision of the Facility Agreements;
                (xviii) not fail to file separate federal or state income tax
                returns, if any, as may be required under applicable law (to the
                extent (1) not part of a consolidated return or returns or (2)
                not treated as a division of another taxpayer or a disregarded
                entity for tax purposes), and pay any taxes so required to be
                paid under applicable law; (xix) not assume or guarantee or
                become obligated for the debts of any other Person or hold out
                its credit as being available to satisfy the obligations of any
                other Person; provided, however, that this provision shall not
                be deemed to prohibit indemnification and contribution
                agreements by the Company and its Affiliates entered into under
                the LLC Agreement, or (to the extent not prohibited under the
                Facility Agreements) commercially reasonable indemnification
                obligations incurred in the ordinary course of business of the
                Company; (xx) not fail to correct any known misunderstanding
                regarding its separate identity; (xxi) not except as otherwise
                contemplated under the Facility Agreements, commingle its funds
                or other assets with those of any other Person; (xxii) not
                acquire obligations or securities of its Members; (xxiii) not
                pledge any of its assets for the benefit of any other Person,
                except as otherwise contemplated or permitted by the Facility
                Agreements; (xxiv) not make any loans to any other Person, or
                buy or hold evidence of indebtedness issued by any other Person;
                (xxv) not identify its

                                      -33-
<PAGE>

                Members or any of its Affiliates as a division or part of it
                (except for inclusion in consolidated financial statements of an
                equity owner); (xxvi) not engage (either as transferor or
                transferee) in any material transaction with any Affiliate other
                than for fair value and on terms similar to those obtainable in
                arms-length transactions with unaffiliated parties, or engage in
                any transaction with any Affiliate involving any intent to
                hinder, delay or defraud any entity; (xxvii) not have or create
                any subsidiaries, or hold any equity interest in any other
                Person and (xxviii) except as provided in the Facility
                Agreements, deposit all of its funds in checking accounts,
                savings accounts, time deposits or certificates of deposit in
                its own name. The Member will (i) observe all customary
                formalities necessary to maintain its identity as an entity
                separate and distinct from the Seller; (ii) hold itself out as a
                separate and distinct entity from the Seller and not identify
                the Seller as a division of the Member; (iii) maintain its books
                and records and bank accounts separate from the Seller; and (iv)
                hold its assets in its own name.

                w. Subsidiaries. The Seller shall have no Subsidiaries.

        15. EVENTS OF DEFAULT

                Each of the following shall constitute an "Event of Default"
hereunder:

                a. Payment Failure. Failure of Seller to (i) make any payment of
                Price Differential or Repurchase Price or any other sum which
                has become due, on a Price Differential Payment Date or a
                Repurchase Date or otherwise, whether by acceleration or
                otherwise, under the terms of this Agreement, any other
                warehouse and security agreement or any other document
                evidencing or securing Indebtedness of Seller to Buyer or to any
                Affiliate of Buyer, and, in the case of a failure to make a
                payment of any sum other than a Price Differential or a
                Repurchase Price, the continuance of such failure for a period
                of two (2) Business Days after Buyer notifies Seller of such
                failure or (ii) cure any Margin Deficit when due pursuant to
                Section 6 hereof.

                b. Cross Default. (i) Seller shall be in default under (i) any
                Indebtedness of Seller which default (1) involves the failure to
                pay a matured obligation, or (2) permits the acceleration of the
                maturity of obligations by any other party to or beneficiary
                with respect to such Indebtedness, or (ii) any other contract to
                which Seller is a party which default (1) involves the failure
                to pay a matured obligation, or (2) permits the acceleration of
                the maturity of obligations by any other party to or beneficiary
                of such contract or (iii) Seller or any of Seller's Affiliates
                shall be in default under any Facility Agreement.

                c. Assignment. Assignment or attempted assignment by Seller of
                this Agreement or any rights hereunder without first obtaining
                the specific written consent of Buyer, or the granting by Seller
                of any security interest, lien or other encumbrances on any
                Purchased Mortgage Loans to any person other than Buyer.

                                      -34-
<PAGE>

                d. Insolvency. An Act of Insolvency shall have occurred with
                respect to Seller, the Parent or any Affiliate.

                e. Material Adverse Change. Any material adverse change in the
                Property, business, financial condition or operations of Seller
                or any of its Affiliates shall occur, in each case as determined
                by Buyer in its sole good faith discretion, or any other
                condition shall exist which, in Buyer's sole good faith
                discretion, constitutes a material impairment of Seller's
                ability to perform its obligations under this Agreement or any
                other Facility Agreement.

                f. Breach of Financial Representation or Covenant or Obligation.
                A breach by Seller of any of the representations, warranties or
                covenants or obligations set forth in Sections 13(a)(1),
                13(a)(7), 13(a)(12), 13(a)(19), 13(a)(25), 14a, 14b, 14d, 14k,
                14n, 14p, 14q, 14r, 14t, 14u or 14v of this Agreement.

                g. Breach of Non-Financial Representation or Covenant. A breach
                by Seller of any other material representation, warranty or
                covenant set forth in this Agreement (and not otherwise
                specified in Section 15(f) above), if such breach is not cured
                within five (5) Business Days (other than the representations
                and warranties set forth in Schedule 1, which shall be
                considered solely for the purpose of determining the existence
                of a Margin Deficit and the obligation to repurchase such
                Mortgage Loan) unless (i) such party shall have made any such
                representations and warranties with knowledge that they were
                materially false or misleading at the time made, (ii) any such
                representations and warranties have been determined by Buyer in
                its sole discretion to be materially false or misleading on a
                regular basis, or (iii) Buyer, in its sole discretion,
                determines that such breach of a material representation,
                warranty or covenant materially and adversely affects (A) the
                financial condition of such party, its Subsidiaries or
                Affiliates; or (B) Buyer's determination to enter into this
                Agreement or Transactions with such party, then such breach
                shall constitute an immediate Event of Default and Seller shall
                have no cure right hereunder).

                h. Change of Control. The occurrence of a Change in Control of
                the Seller or the Parent.

                i. Failure to Transfer. Seller fails to transfer the Purchased
                Mortgage Loans to Buyer on the applicable Purchase Date
                (provided Buyer has tendered the related Purchase Price).

                j. Judgment.

                                (1) A final judgment or judgments for the
                        payment of money shall be rendered against the Seller by
                        one or more courts, administrative tribunals or other
                        bodies having jurisdiction and the same shall not be
                        satisfied, discharged (or provision shall not be made
                        for such discharge) or bonded, or a stay of execution
                        thereof shall not be procured, within 30 days from the
                        date of entry thereof.

                                      -35-
<PAGE>

                                (2) A final judgment or judgments for the
                        payment of money in excess of $2,000,000 in the
                        aggregate shall be rendered against the Parent or any of
                        its Affiliates by one or more courts, administrative
                        tribunals or other bodies having jurisdiction and the
                        same shall not be satisfied, discharged (or provision
                        shall not be made for such discharge) or bonded, or a
                        stay of execution thereof shall not be procured, within
                        30 days from the date of entry thereof.

                k. Government Action. Any Governmental Authority or any person,
                agency or entity acting or purporting to act under governmental
                authority shall have taken any action to condemn, seize or
                appropriate, or to assume custody or control of, all or any
                substantial part of the Property of Seller, or shall have taken
                any action to displace the management of Seller or to curtail
                its authority in the conduct of the business of Seller, or takes
                any action in the nature of enforcement to remove, limit or
                restrict the approval of Seller as an issuer, buyer or a
                seller/servicer of Mortgage Loans or securities backed thereby,
                and such action provided for in this subparagraph (m) shall not
                have been discontinued or stayed within 30 days.

                l. Inability to Perform. An officer of Seller shall admit its
                inability to, or its intention not to, perform any of Seller's
                Obligations hereunder.

                m. Security Interest. This Agreement shall for any reason cease
                to create a valid, first priority security interest in any
                material portion of the Purchased Mortgage Loans or other
                Repurchase Assets purported to be covered hereby.

                n. Financial Statements. Holdings' audited annual financial
                statements or the notes thereto or other opinions or conclusions
                stated therein shall be qualified or limited by reference to the
                status of Holdings as a "going concern" or a reference of
                similar import.

                An Event of Default shall be deemed to be continuing unless
expressly waived by Buyer in writing.

        16. REMEDIES UPON DEFAULT

                In the event that an Event of Default shall have occurred:

                a. Buyer may, at its option (which option shall be deemed to
                have been exercised immediately upon the occurrence of an Act of
                Insolvency of Seller or any Affiliate), declare an Event of
                Default to have occurred hereunder and, upon the exercise or
                deemed exercise of such option, the Repurchase Date for each
                Transaction hereunder shall, if it has not already occurred, be
                deemed immediately to occur (except that, in the event that the
                Purchase Date for any Transaction has not yet occurred as of the
                date of such exercise or deemed exercise, such Transaction shall
                be deemed immediately canceled). Buyer shall (except upon the
                occurrence of an Act of Insolvency) give notice to Seller of the
                exercise of such option as promptly as practicable.

                                      -36-
<PAGE>

                b. If Buyer exercises or is deemed to have exercised the option
                referred to in subparagraph (a) of this Section, (i) Seller's
                obligations in such Transactions to repurchase all Purchased
                Mortgage Loans, at the Repurchase Price therefor on the
                Repurchase Date determined in accordance with subparagraph (a)
                of this Section, shall thereupon become immediately due and
                payable, (ii) all Income paid after such exercise or deemed
                exercise shall be retained by Buyer and applied, in Buyer's sole
                discretion, to the aggregate unpaid Repurchase Prices for all
                outstanding Transactions and any other amounts owing by Seller
                hereunder, and (iii) Seller shall immediately deliver to Buyer
                the Mortgage Files relating to any Purchased Mortgage Loans
                subject to such Transactions then in Seller's possession or
                control.

                c. Buyer also shall have the right to obtain physical
                possession, and to commence an action to obtain physical
                possession, of all Records and files of Seller relating to the
                Purchased Mortgage Loans and all documents relating to the
                Purchased Mortgage Loans (including, without limitation, any
                legal, credit or servicing files with respect to the Purchased
                Mortgage Loans) which are then or may thereafter come in to the
                possession of Seller or any third party acting for Seller. To
                obtain physical possession of any Purchased Mortgage Loans held
                by Custodian, Buyer shall present to Custodian a Trust Receipt
                and Certification. Buyer shall be entitled to specific
                performance of all agreements of Seller contained in this
                Agreement.

                d. Buyer shall have the right to direct all servicers then
                servicing any Purchased Mortgage Loans to remit all collections
                thereon to Buyer, and if any such payments are received by
                Seller, Seller shall not commingle the amounts received with
                other funds of Seller and shall promptly pay them over to Buyer.
                Buyer shall also have the right to terminate any one or all of
                the servicers then servicing any Purchased Mortgage Loans with
                or without cause. In addition, Buyer shall have the right to
                immediately sell the Purchased Mortgage Loans and liquidate all
                Repurchase Assets. Such disposition of Purchased Mortgage Loans
                may be, at Buyer's option, on either a servicing-released or a
                servicing-retained basis. Buyer shall be entitled to place the
                Purchased Mortgage Loans in a pool for issuance of
                mortgage-backed securities at the then-prevailing price for such
                securities and to sell such securities for such prevailing price
                in the open market. Buyer shall also be entitled to sell any or
                all of such Mortgage Loans individually for the prevailing
                price.

                e. Upon the happening of one or more Events of Default, Buyer
                may apply any proceeds from the liquidation of the Purchased
                Mortgage Loans and Repurchase Assets to the Repurchase Prices
                hereunder and all other Obligations in the manner Buyer deems
                appropriate in its sole discretion.

                f. Seller shall be liable to Buyer for (i) the amount of all
                reasonable legal or other expenses, including, without
                limitation, all costs and expenses of Buyer in connection with
                the enforcement of this Agreement or any other agreement
                evidencing a Transaction, whether in action, suit or litigation
                or bankruptcy,

                                      -37-
<PAGE>

                insolvency or other similar proceeding affecting creditors'
                rights generally, further including, without limitation, the
                reasonable fees and expenses of counsel (including the costs of
                internal counsel of Buyer) incurred in connection with or as a
                result of an Event of Default, (ii) damages in an amount equal
                to the cost (including all fees, expenses and commissions) of
                entering into replacement transactions and entering into or
                terminating hedge transactions in connection with or as a result
                of an Event of Default, and (iii) any other loss, damage, cost
                or expense directly arising or resulting from the occurrence of
                an Event of Default in respect of a Transaction.

                g. To the extent permitted by applicable law, Seller shall be
                liable to Buyer for interest on any amounts owing by Seller
                hereunder, from the date Seller becomes liable for such amounts
                hereunder until such amounts are (i) paid in full by Seller or
                (ii) satisfied in full by the exercise of Buyer's rights
                hereunder. Interest on any sum payable by Seller under this
                Section 16(g) shall be at a rate equal to the Post-Default Rate.

                h. Buyer shall have, in addition to its rights hereunder, any
                rights otherwise available to it under any other agreement or
                applicable law.

                i. Buyer may exercise one or more of the remedies available to
                Buyer immediately upon the occurrence of an Event of Default
                and, except to the extent provided in subsections (a) and (d) of
                this Section, at any time thereafter without notice to Seller.
                All rights and remedies arising under this Agreement as amended
                from time to time hereunder are cumulative and not exclusive of
                any other rights or remedies which Buyer may have.

                j. Buyer may enforce its rights and remedies hereunder without
                prior judicial process or hearing, and Seller hereby expressly
                waives any defenses Seller might otherwise have to require Buyer
                to enforce its rights by judicial process. Seller also waives
                any defense (other than a defense of payment or performance)
                Seller might otherwise have arising from the use of nonjudicial
                process, enforcement and sale of all or any portion of the
                Purchased Mortgage Loans, or from any other election of
                remedies. Seller recognizes that nonjudicial remedies are
                consistent with the usages of the trade, are responsive to
                commercial necessity and are the result of a bargain at arm's
                length.

                k. Buyer shall have the right to perform reasonable due
                diligence with respect to Seller and the Mortgage Loans, which
                review shall be at the expense of Seller.

        17. REPORTS

                a. Notices. Seller shall furnish to Buyer (x) promptly, copies
                of any material and adverse notices (including, without
                limitation, notices of defaults, breaches, potential defaults or
                potential breaches) and any material financial information that
                is not otherwise required to be provided by Seller hereunder
                which is given to Seller's lenders, (y) immediately, notice of
                the occurrence of any Event of Default

                                      -38-
<PAGE>

                hereunder or default or breach by Seller or Parent of any
                obligation under any Facility Agreement or any material contract
                or agreement of Seller or Parent or the occurrence of any event
                or circumstance that such party reasonably expects has resulted
                in, or will, with the passage of time, result in, a Material
                Adverse Effect or an Event of Default or such a default or
                breach by such party and (z) the following:

                                (1) as soon as available and in any event within
                forty-five (45) calendar days after the end of each calendar
                quarter, the unaudited consolidated balance sheets of Holdings
                and its consolidated Subsidiaries as at the end of such period
                and the related unaudited consolidated statements of income and
                retained earnings and of cash flows for Holdings and its
                consolidated Subsidiaries for such period and the portion of the
                fiscal year through the end of such period, accompanied by a
                certificate of a Responsible Officer of Holdings, which
                certificate shall state that said consolidated financial
                statements fairly present in all material respects the
                consolidated financial condition and results of operations of
                Holdings and its consolidated Subsidiaries in accordance with
                GAAP, consistently applied, as at the end of, and for, such
                period (subject to normal year-end adjustments);

                                (2) as soon as available and in any event within
                ninety (90) days after the end of each fiscal year of Holdings,
                the consolidated balance sheets of Holdings and its consolidated
                Subsidiaries as at the end of such fiscal year and the related
                consolidated statements of income and members' equity and of
                cash flows for Holdings and its consolidated Subsidiaries for
                such year, setting forth in each case in comparative form the
                figures for the previous year, accompanied by an opinion thereon
                of independent certified public accountants of recognized
                national standing, which opinion and the scope of audit shall be
                acceptable to Buyer in its sole discretion, shall have no "going
                concern" qualification and shall state that said consolidated
                financial statements fairly present the consolidated financial
                condition and results of operations of Holdings and its
                respective consolidated Subsidiaries as at the end of, and for,
                such fiscal year in accordance with GAAP;

                                (3) such other prepared statements that Buyer
                may reasonably request;

                                (4) if applicable, copies of any 10-Ks, 10-Qs,
                registration statements and other "corporate finance" SEC
                filings (other than 8-Ks) by Seller, within 5 Business Days of
                their filing with the SEC; provided, that, Seller or any
                Affiliate will provide Buyer and Credit Suisse First Boston LLC
                with a copy of the annual 10-K filed with the SEC by Seller or
                its affiliates, no later than 90 days after the end of the year;

                                (5) as soon as available, and in any event
                within thirty (30) days of receipt, copies of relevant portions
                of all final written Governmental Authority and investor audits,
                examinations, evaluations, monitoring reviews and reports of

                                      -39-
<PAGE>

                operations (including those prepared on a contract basis) with
                respect to the Seller or Parent, which provide for or relate to
                (i) material corrective action required, (ii) material sanctions
                proposed, imposed or required, including without limitation
                notices of defaults, notices of termination of approved status,
                notices of imposition of supervisory agreements or interim
                servicing agreements, and notices of probation, suspension, or
                non-renewal, or (iii) "report cards," "grades" or other
                classifications of the quality of Seller's operations;

                                (6) from time to time such other information
                regarding the financial condition, operations, or business of
                the Seller as Buyer may reasonably request;

                                (7) as soon as reasonably possible, and in any
                event within thirty (30) days after a Responsible Officer of the
                Seller has knowledge of the occurrence of any Event of
                Termination, stating the particulars of such Event of
                Termination in reasonable detail;

                                (8) As soon as reasonably possible, notice of
                any of the following events:

                        (a) reduction in the insurance coverage required of
                Seller, Servicer or any other Person pursuant to any Facility
                Agreement, with a copy of evidence of same attached;

                        (b) any material dispute, litigation, investigation,
                proceeding or suspension between Seller or Parent, on the one
                hand, and any Governmental Authority or any Person;

                        (c) any material change in accounting policies or
                financial reporting practices of Seller or Parent;

                        (d) with respect to any Purchased Mortgage Loan,
                immediately upon receipt of notice or knowledge thereof, that
                the underlying Mortgaged Property has been damaged by waste,
                fire, earthquake or earth movement, windstorm, flood, tornado or
                other casualty, or otherwise damaged so as to affect adversely
                the value of such Mortgaged Loan;

                        (e) any material issues raised upon examination of
                Seller or Seller's facilities by any Governmental Authority;

                        (f) promptly upon receipt of notice or knowledge of (i)
                any default related to any Repurchase Asset, (ii) any lien or
                security interest (other than security interests created hereby
                or by the other Facility Agreements) on, or claim asserted
                against, any of the Purchased Mortgage Loans; and

                        (g) any other event, circumstance or condition that has
                resulted, or is reasonably likely to result in a Material
                Adverse Effect with respect to Seller or Parent.

                                      -40-
<PAGE>

                b. Officer's Certificates. Seller will furnish to Buyer, at the
                time the Seller furnishes each set of financial statements
                pursuant to Section 17(a)(1) or (2) above, a certificate of a
                Responsible Officer of Seller in the form of Exhibit D hereto. -

                c. Mortgage Loan Reports. Seller will furnish to Buyer monthly
                electronic Mortgage Loan performance data, including, without
                limitation, delinquency reports (i.e., delinquency, foreclosure
                and net charge-off reports).

                d. Asset Tape. Seller shall provide to Buyer, electronically, in
                a format mutually acceptable to Buyer and Seller, an Asset Tape
                by no later than the Reporting Date.

                e. Other. Seller shall deliver to Buyer any other reports or
                information reasonably requested by Buyer or as otherwise
                required pursuant to this Agreement.

        18. REPURCHASE TRANSACTIONS

                Buyer may, in its sole election, engage in repurchase
transactions with the Purchased Mortgage Loans or otherwise pledge, hypothecate,
assign, transfer or otherwise convey the Purchased Mortgage Loans with a
counterparty of Buyer's choice. Unless an Event of Default shall have occurred,
no such transaction shall relieve Buyer of its obligations to transfer Purchased
Mortgage Loans to Seller pursuant to Section 4 hereof, or of Buyer's obligation
to credit or pay Income to, or apply Income to the obligations of, Seller
pursuant to Section 7 hereof. In the event Buyer engages in a repurchase
transaction with any of the Purchased Mortgage Loans or otherwise pledges or
hypothecates any of the Purchased Mortgage Loans, Buyer shall have the right to
assign to Buyer's counterparty any of the applicable representations or
warranties herein and the remedies for breach thereof, as they relate to the
Purchased Mortgage Loans that are subject to such repurchase transaction.

        19. SINGLE AGREEMENT

                Buyer and Seller acknowledge that, and have entered hereunto,
and will enter into each Transaction hereunder, in consideration of and in
reliance upon the fact that, all Transactions hereunder constitute a single
business and contractual relationship and have been made in consideration of
each other. Accordingly, each of Buyer and Seller agrees (i) to perform all of
its obligations in respect of each Transaction hereunder, and that a default in
the performance of any such obligations shall constitute a default by it in
respect of all Transactions hereunder, (ii) that each of them shall be entitled
to set-off claims and apply property held by them in respect of any Transaction
against obligations owing to them in respect of any other Transactions hereunder
and (iii) that payments, deliveries and other transfers made by either of them
in respect of any Transaction shall be deemed to have been made in consideration
of payments, deliveries and other transfers in respect of any other Transactions
hereunder, and the obligations to make any such payments, deliveries and other
transfers may be applied against each other and netted.

                                      -41-
<PAGE>

        20. NOTICES AND OTHER COMMUNICATIONS

                Any and all notices (with the exception of Transaction Requests
or Purchase Confirmations, which shall be delivered via facsimile only),
statements, demands or other communications hereunder may be given by a party to
the other by mail, facsimile, messenger or otherwise to the address specified
below, or so sent to such party at any other place specified in a notice of
change of address hereafter received by the other. All notices, demands and
requests hereunder may be made orally, to be confirmed promptly in writing, or
by other communication as specified in the preceding sentence.

                If to Seller:

                      CapitalSource SNF Funding LLC
                      4445 Willard Avenue
                      Chevy Chase, Maryland 20815
                      Attention: Steven A. Museles
                      Telephone: (301) 841-2700
                      Fax: (301) 841-2340

                With a copy to:

                      Lee E. Berner, Esq.
                      Hogan & Hartson L.L.P.
                      8300 Greensboro Drive
                      Suite 1100
                      McLean, Virginia 22102
                      Telephone: (703) 610-6137
                      Fax: (703) 610-6200

                If to Buyer:

                      Credit Suisse First Boston Mortgage Capital LLC
                      Eleven Madison Avenue
                      New York, New York 10010
                      Attention: Richard Lerner
                      Phone Number: (212) 538-5858
                      Fax Number:   (212) 743-5540

        21. ENTIRE AGREEMENT; SEVERABILITY

                This Agreement shall supersede any existing agreements between
the parties containing general terms and conditions for repurchase transactions.
Each provision and agreement herein shall be treated as separate and independent
from any other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or agreement.

                                      -42-
<PAGE>

        22. NON ASSIGNABILITY

The Facility Agreements are not assignable by Seller. Buyer may from time to
time assign all or a portion of its rights and obligations under this Agreement
and the Facility Agreements; provided, however that (a) Buyer shall not assign
its ongoing obligations under this Agreement to any entity unless such entity or
its Affiliate is rated at least BBB- by S&P, and (b) Buyer shall maintain, for
review by Seller upon written request, a register of assignees and a copy of an
executed assignment and acceptance by Buyer and assignee ("Assignment and
Acceptance"), specifying the percentage or portion of such rights and
obligations assigned; and provided further, that in the event that the Buyer
assigns its rights to an entity which originates loans secured by skilled
nursing facilities, the Seller shall have the right to repurchase all Mortgage
Loans without penalty, premium or Exit Fee. Upon such assignment, such assignee
shall be a party hereto and to each Facility Agreement to the extent of the
percentage or portion set forth in the Assignment and Acceptance, and shall
succeed to the applicable rights and obligations of Buyer hereunder, and Buyer
shall be released from its obligations hereunder and under the Facility
Agreements. Unless otherwise stated in the Assignment and Acceptance, Seller
shall continue to take directions solely from Buyer unless otherwise notified by
Buyer in writing. Buyer may distribute to any prospective assignee any document
or other information delivered to Buyer by Seller.

        23. SET-OFF

                In addition to any rights and remedies of Buyer provided by law,
Buyer shall have the right, without prior notice to Seller, any such notice
being expressly waived by Seller to the extent permitted by applicable law, upon
any amount becoming due and payable by Seller hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by Buyer or any
branch or agency thereof to or for the credit or the account of Seller. Buyer
agrees promptly to notify Seller after any such set-off and application made by
Buyer; provided, that the failure to give such notice shall not affect the
validity of such set-off and application.

        24. BINDING EFFECT; GOVERNING LAW; JURISDICTION

                a. This Agreement shall be binding and inure to the benefit of
                the parties hereto and their respective successors and permitted
                assigns. Seller acknowledges that the obligations of Buyer
                hereunder or otherwise are not the subject of any guaranty by,
                or recourse to, any direct or indirect parent or other Affiliate
                of Buyer. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH,
                AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT
                GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

                b. SELLER HEREBY WAIVES TRIAL BY JURY. SELLER HEREBY IRREVOCABLY
                CONSENTS TO THE EXCLUSIVE JURISDICTION OF

                                      -43-
<PAGE>

                ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES
                DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING
                OUT OF OR RELATING TO THE FACILITY AGREEMENTS IN ANY ACTION OR
                PROCEEDING. SELLER HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION
                IT MAY HAVE TO, EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN THE
                COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT
                COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY
                DISPUTES ARISING OUT OF OR RELATING TO THE FACILITY AGREEMENTS.

        25. NO WAIVERS, ETC.

                No express or implied waiver of any Event of Default by either
party shall constitute a waiver of any other Event of Default and no exercise of
any remedy hereunder by any party shall constitute a waiver of its right to
exercise any other remedy hereunder. No modification or waiver of any provision
of this Agreement and no consent by any party to a departure herefrom shall be
effective unless and until such shall be in writing and duly executed by both of
the parties hereto. Without limitation on any of the foregoing, the failure to
give a notice pursuant to Section 6(a), 16(a) or otherwise, will not constitute
a waiver of any right to do so at a later date.

        26. INTENT

                a. The parties recognize that each Transaction is a "repurchase
                agreement" as that term is defined in Section 101 of Title 11 of
                the United States Code, as amended (except insofar as the type
                of Purchased Mortgage Loans subject to such Transaction or the
                term of such Transaction would render such definition
                inapplicable), and a "securities contract" as that term is
                defined in Section 741 of Title 11 of the United States Code, as
                amended (except insofar as the type of assets subject to such
                Transaction would render such definition inapplicable).

                b. It is understood that either party's right to liquidate
                Purchased Mortgage Loans delivered to it in connection with
                Transactions hereunder or to exercise any other remedies
                pursuant to Section 16 hereof is a contractual right to
                liquidate such Transaction as described in Sections 555 and 559
                of Title 11 of the United States Code, as amended.

                c. The parties agree and acknowledge that if a party hereto is
                an "insured depository institution," as such term is defined in
                the Federal Deposit Insurance Act, as amended ("FDIA"), then
                each Transaction hereunder is a "qualified financial contract,"
                as that term is defined in FDIA and any rules, orders or policy
                statements thereunder (except insofar as the type of assets
                subject to such Transaction would render such definition
                inapplicable).

                d. It is understood that this Agreement constitutes a "netting
                contract" as defined in and subject to Title IV of the Federal
                Deposit Insurance Corporation

                                      -44-
<PAGE>

                Improvement Act of 1991 ("FDICIA") and each payment entitlement
                and payment obligation under any Transaction hereunder shall
                constitute a "covered contractual payment entitlement" or
                "covered contractual payment obligation", respectively, as
                defined in and subject to FDICIA (except insofar as one or both
                of the parties is not a "financial institution" as that term is
                defined in FDICIA).

        27. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

                The parties acknowledge that they have been advised that:

                a. in the case of Transactions in which one of the parties is a
                broker or dealer registered with the SEC under Section 15 of the
                1934 Act, the Securities Investor Protection Corporation has
                taken the position that the provisions of the SIPA do not
                protect the other party with respect to any Transaction
                hereunder;

                b. in the case of Transactions in which one of the parties is a
                government securities broker or a government securities dealer
                registered with the SEC under Section 15C of the 1934 Act, SIPA
                will not provide protection to the other party with respect to
                any Transaction hereunder; and

                c. in the case of Transactions in which one of the parties is a
                financial institution, funds held by the financial institution
                pursuant to a Transaction hereunder are not a deposit and
                therefore are not insured by the Federal Deposit Insurance
                Corporation or the National Credit Union Share Insurance Fund,
                as applicable.

        28. POWER OF ATTORNEY

                Seller hereby authorizes Buyer to file such financing statement
or statements relating to the Purchased Mortgage Loans without Seller's
signature thereon as Buyer, at its option, may deem appropriate. Seller hereby
appoints Buyer as Seller's agent and attorney-in-fact to execute any such
financing statement or statements in Seller's name and to perform all other acts
which Buyer deems appropriate to perfect and continue its ownership interest in
and/or the security interest granted hereby, if applicable, and to protect,
preserve and realize upon the Purchased Mortgage Loans, including, but not
limited to, the right to endorse notes, complete blanks in documents, transfer
servicing, and sign assignments on behalf of Seller as its agent and
attorney-in-fact. This agency and power of attorney is coupled with an interest
and is irrevocable without Buyer's consent. Notwithstanding the foregoing, the
power of attorney hereby granted may be exercised only during the occurrence and
continuance of any Event of Default hereunder. Seller shall pay the filing costs
for any financing statement or statements prepared pursuant to this Section 28.

        29. BUYER MAY ACT THROUGH AFFILIATES

                Buyer may, from time to time, designate one or more affiliates
for the purpose of performing any action hereunder.

                                      -45-
<PAGE>

        30. INDEMNIFICATION; OBLIGATIONS

                a. Seller agrees to hold Buyer and each of its respective
                Affiliates and their officers, directors, employees, agents and
                advisors (each, an "Indemnified Party") harmless from and
                indemnify each Indemnified Party (and will reimburse each
                Indemnified Party as the same is incurred) against all
                liabilities, losses, damages, judgments, costs and expenses
                (including, without limitation, reasonable fees and expenses of
                counsel) of any kind which may be imposed on, incurred by, or
                asserted against any Indemnified Party relating to or arising
                out of this Agreement, any Transaction Request, Purchase
                Confirmation, any Facility Agreement or any transaction
                contemplated hereby or thereby resulting from anything other
                than the Indemnified Party's gross negligence or willful
                misconduct. Without limiting the generality of the foregoing,
                the Seller agrees to hold any Indemnified Party harmless from
                and indemnify such Indemnified Party against all Costs with
                respect to all Mortgage Loans relating to or arising out of any
                violation or alleged violation of any environmental law, rule or
                regulation. Seller also agrees to reimburse each Indemnified
                Party for all reasonable expenses in connection with the
                enforcement of this Agreement and the exercise of any right or
                remedy provided for herein, any Transaction Request, Purchase
                Confirmation and any Facility Agreement, including, without
                limitation, the reasonable fees and disbursements of counsel.
                Seller's agreements in this Section 30 shall survive the payment
                in full of the Repurchase Price and the expiration or
                termination of this Agreement. Seller hereby acknowledges that
                (1) its obligations hereunder are recourse obligations of Seller
                and are not limited to recoveries each Indemnified Party may
                have with respect to the Purchased Mortgage Loans and (2) Buyer
                shall have no recourse to any equity owner of the Seller;
                provided, however, that the Parent, by executing this Agreement,
                hereby agrees to be liable to the Buyer, on a joint and several
                basis with the Seller, solely for losses incurred by the Buyer
                hereunder as a result of (i) fraud or intentional
                misrepresentation by the Seller or the Parent in connection with
                a Mortgage Loan, (ii) the gross negligence or willful misconduct
                of the Seller or the Parent in connection with a Mortgage Loan
                or (iii) the breach of any representation, warranty, covenant or
                indemnification provision in a Mortgage concerning a
                environmental laws, hazardous substances and asbestos or in any
                separate indemnity executed in connection with a Mortgage Loan.
                Seller also agrees not to assert any claim against Buyer or any
                of its Affiliates, or any of their respective officers,
                directors, employees, attorneys and agents, on any theory of
                liability, for special, indirect, consequential or punitive
                damages arising out of or otherwise relating to the facility
                established hereunder, the actual or proposed use of the
                proceeds of the Transactions, this Agreement or any of the
                transactions contemplated thereby.

                b. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS
                EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT
                NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED
                PARTIES.

                                      -46-
<PAGE>

                c. Without limitation to the provisions of Section 4, if any
                payment of the Repurchase Price of any Transaction is made by
                Seller other than on the then scheduled Repurchase Date thereto
                as a result of an acceleration of the Repurchase Date pursuant
                to Section 16 or for any other reason, Seller shall, upon demand
                by Buyer, pay to Buyer an amount sufficient to compensate Buyer
                for any losses, costs or expenses that it may reasonably incur
                as of a result of such payment.

                d. Without limiting the provisions of Section 30(a) hereof, if
                Seller fails to pay when due any costs, expenses or other
                amounts payable by it under this Agreement, including, without
                limitation, fees and expenses of counsel and indemnities, such
                amount may be paid on behalf of Seller by Buyer, in its sole
                discretion.

        31. COUNTERPARTS

                This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, and all such counterparts shall
together constitute one and the same instrument.

        32. CONFIDENTIALITY

                This Agreement and its terms, provisions, supplements and
amendments, and notices hereunder, are proprietary to Buyer and shall be held by
Seller in strict confidence and shall not be disclosed to any third party
without the written consent of Buyer except for (i) disclosure to Seller's
direct and indirect Affiliates and Subsidiaries, attorneys or accountants, but
only to the extent such disclosure is necessary and such parties agree to hold
all information in strict confidence, or (ii) disclosure required by law, rule,
regulation or order of a court or other regulatory body.

        33. RECORDING OF COMMUNICATIONS

                Buyer and Seller shall have the right (but not the obligation)
from time to time to make or cause to be made tape recordings of communications
between its employees and those of the other party with respect to Transactions.
Buyer and Seller consent to the admissibility of such tape recordings in any
court, arbitration, or other proceedings. The parties agree that a duly
authenticated transcript of such a tape recording shall be deemed to be a
writing conclusively evidencing the parties' agreement.

        34. PERIODIC DUE DILIGENCE REVIEW

                Seller acknowledges that Buyer has the right to perform
continuing due diligence reviews with respect to the Seller and the Mortgage
Loans, for purposes of verifying compliance with the representations, warranties
and specifications made hereunder, or otherwise, and Seller agrees that upon
reasonable (but no less than five (5) Business Day's) prior notice unless a
Default or an Event of Default shall have occurred, in which case no notice is
required, to Seller, Buyer or its authorized representatives will be permitted
during normal business hours to examine, inspect, and make copies and extracts
of, the Mortgage Files and any and all

                                      -47-
<PAGE>

documents, records, agreements, instruments or information relating to such
Mortgage Loans in the possession or under the control of Seller, the Servicer
and/or the Custodian. Seller also shall make available to Buyer a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the Mortgage Files and the Mortgage Loans. Without limiting the
generality of the foregoing, Seller acknowledges that Buyer may purchase
Mortgage Loans from Seller based solely upon the information provided by Seller
to Buyer in the Mortgage Loan Schedule and the representations, warranties and
covenants contained herein, and that Buyer, at its option, has the right at any
time to conduct a partial or complete due diligence review on some or all of the
Mortgage Loans purchased in a Transaction, including, without limitation,
ordering Broker's price opinions, new credit reports and new appraisals on the
related Mortgaged Properties and otherwise re-generating the information used to
originate such Mortgage Loan. Buyer may underwrite such Mortgage Loans itself or
engage a mutually agreed upon third party underwriter to perform such
underwriting. Seller agrees to cooperate with Buyer and any third party
underwriter in connection with such underwriting, including, but not limited to,
providing Buyer and any third party underwriter with access to any and all
documents, records, agreements, instruments or information relating to such
Mortgage Loans in the possession, or under the control, of Seller. Seller
further agrees that Seller shall pay all out-of-pocket costs and expenses
incurred by Buyer in connection with Buyer's activities pursuant to this Section
34 ("Due Diligence Costs"); provided, that so long as no Default has occurred,
Seller shall pay for only one (1) due diligence review of a Mortgage Loan in any
calendar year (not including any initial due diligence of the Mortgage Loan
prior to the Purchase Date.

        35. FACILITY FEE

                Subject to the provisions of the following paragraph, the Seller
shall pay to Buyer on each Purchase Date a facility fee in an amount equal to
the product of (a) 0.50% and (b) the amount by which the aggregate Purchase
Price of all outstanding Transactions (including the aggregate Purchase Price of
Transactions entered into on such Purchase Date) exceeds the highest aggregate
Purchase Price of Transactions outstanding on any day prior to such Purchase
Date; provided, that the aggregate facility fees paid pursuant to this section
during the period prior to the Termination Date shall not exceed $1,500,000.

                Each such fee shall be payable in immediately available funds on
the related Purchase Date. Such payment shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to Buyer at the
account set forth in Section 9 hereof.

        36. AUTHORIZATIONS Any of the persons whose signatures and titles appear
on Schedule 2 are authorized, acting singly, to act for Seller or Buyer, as the
case may be, under this Agreement.

                            [Signature Page Follows]

                                      -48-
<PAGE>

                IN WITNESS WHEREOF, the parties have entered into this
Repurchase Agreement as of the date set forth above.

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC

By: /s/
   --------------------------------------------
Title:
      -----------------------------------------
Date:
     ------------------------------------------

CAPITALSOURCE SNF FUNDING LLC

By: /s/
   --------------------------------------------
Title:
      -----------------------------------------
Date:
     ------------------------------------------

Solely for purposes of Section 30 hereof:

CAPITALSOURCE FINANCE LLC

By: /s/
   --------------------------------------------
Title:
      -----------------------------------------
Date:
     ------------------------------------------
<PAGE>

                                   SCHEDULE 1

                    REPRESENTATIONS AND WARRANTIES OF SELLER
                            REGARDING MORTGAGE LOANS

                The Seller represents and warrants to the Buyer, with respect to
each Mortgage Loan, that as of the Purchase Date for the purchase of any
Purchased Mortgage Loans by the Buyer from the Seller and as of the date of this
Repurchase Agreement and any Transaction hereunder and at all times while the
Repurchase Documents and any Transaction hereunder is in full force and effect:
For purposes of this Schedule 1 and the representations and warranties set forth
herein, a breach of a representation or warranty shall be deemed to have been
cured with respect to a Mortgage Loan if and when the Seller has taken or caused
to be taken action such that the event, circumstance or condition that gave rise
to such breach no longer adversely affects such Mortgage Loan. With respect to
those representations and warranties which are made to the best of the Seller's
knowledge, if it is discovered by the Seller or the Buyer that the substance of
such representation and warranty is inaccurate, notwithstanding the Seller's
lack of knowledge with respect to the substance of such representation and
warranty, such inaccuracy shall be deemed a breach of the applicable
representation and warranty.

        (1) No Mortgage Note or Mortgage was subject to any assignment (other
    than assignments which show a complete chain of assignment to the Seller),
    participation or pledge, and the Seller had good and marketable title to,
    and was the sole owner of, the related Mortgage Loan;

        (2) The Seller has full right and authority to sell, assign and transfer
    such Mortgage Loan and the assignment to the Buyer constitutes a legal,
    valid and binding assignment of such Mortgage Loan;

        (3) The Seller is transferring such Mortgage Loan free and clear of any
    and all liens, pledges, charges or security interests of any nature
    encumbering such Mortgage Loan;

        (4) Each related Mortgage Note, Mortgage, assignment of leases (if any)
    and other agreement executed by or for the benefit of the related Mortgagor,
    any guarantor or their successors or assigns in connection with such
    Mortgage Loan is the legal, valid and binding obligation of the related
    Mortgagor, enforceable in accordance with its terms, except as such
    enforcement may be limited by bankruptcy, insolvency, reorganization,
    moratorium or other laws affecting the enforcement of creditors' rights or
    by general principles of equity (regardless of whether such enforceability
    is considered in a proceeding in equity or at law); and there is no valid
    defense, counterclaim, or right of rescission available to the related
    Mortgagor with respect to such Mortgage Note, Mortgage, assignment of leases
    and other agreements, except as the enforcement thereof may be limited by
    bankruptcy, insolvency, reorganization, moratorium or other laws affecting
    the enforcement of creditors' rights or by general principles of equity
    (regardless of whether such enforceability is considered in a proceeding in
    equity or at law);

<PAGE>

        (5) Each related assignment of leases creates a valid first priority
    collateral assignment of, or a valid first priority lien or security
    interest in, certain rights under the related lease or leases, subject only
    to a license granted to the related Mortgagor to exercise certain rights and
    to perform certain obligations of the lessor under such lease or leases,
    including the right to operate the related leased property, except as the
    enforcement thereof may be limited by bankruptcy, insolvency,
    reorganization, moratorium or other laws affecting the enforcement of
    creditors' rights or by general principles of equity (regardless of whether
    such enforceability is considered in a proceeding in equity or at law); no
    person other than the related Mortgagor owns any interest in any payments
    due under such lease or leases that is superior to or of equal priority with
    the lender's interest therein;

        (6) Each related assignment of Mortgage from the Seller to the Buyer and
    related assignment of the assignment of leases, if any, or assignment of any
    other agreement executed by or for the benefit of the related Mortgagor, any
    guarantor or their successors or assigns in connection with such Mortgage
    Loan from the Seller to the Buyer constitutes the legal, valid and binding
    assignment from the Seller to the Buyer, except as the enforcement thereof
    may be limited by bankruptcy, insolvency, reorganization, liquidation,
    receivership, moratorium or other laws relating to or affecting the
    enforcement of creditors' rights or by general principles of equity
    (regardless of whether such enforceability is considered in a proceeding in
    equity or at law);

        (7) Since origination, and except as set forth in the related mortgage
    file and except as permitted by this Agreement, (a) such Mortgage Loan has
    not been modified, altered, satisfied, canceled, subordinated or rescinded
    and (b) each related Mortgaged Property has not been released from the lien
    of the related Mortgage in any manner which materially interferes with the
    security intended to be provided by such Mortgage;

        (8) Each related Mortgage is a valid and enforceable first lien on the
    related Mortgaged Property (subject to Permitted Encumbrances (as defined
    below)), except as the enforcement thereof may be limited by bankruptcy,
    insolvency, reorganization, moratorium or other laws affecting the
    enforcement of creditors' rights or by general principles of equity
    (regardless of whether such enforceability is considered in a proceeding in
    equity or at law); and such Mortgaged Property is free and clear of any
    mechanics' and materialmen's liens which are prior to or equal with the lien
    of the related Mortgage, except those which are insured against by a
    lender's title insurance policy (as described below) or covered by a bond. A
    UCC financing statement has been filed and/or recorded (or sent for filing
    or recording) in all places necessary to perfect a valid security interest
    in the personal property necessary to operate the Mortgaged Property; any
    security agreement, chattel mortgage or equivalent document related to and
    delivered in connection with the Mortgage Loan establishes and creates a
    valid and enforceable lien on property described therein, except as such
    enforcement may be limited by bankruptcy, insolvency, reorganization,
    moratorium or other laws affecting the enforcement of creditors' rights or
    by general principles of equity (regardless of whether such enforceability
    is considered in a proceeding in equity or at law);

        (9) None of the Seller, the Servicer or the Parent has taken any action
    that would cause the representations and warranties made by the related
    Mortgagor in the related Mortgage Loan Documents not to be true;

<PAGE>

        (10) None of the Seller, the Parent, or the Servicer has any knowledge
    that the material representations and warranties made by the related
    Mortgagor in the related Mortgage Loan Documents are not true in any
    material respect;

        (11) The lien of each related Mortgage is a first priority lien on the
    fee or leasehold interest of the related Mortgagor in the principal amount
    of such Mortgage Loan or allocated loan amount of the portions of the
    Mortgaged Property covered thereby (as set forth in the related Mortgage)
    after all advances of principal and is insured by an ALTA lender's title
    insurance policy (or a binding commitment therefor), or its equivalent as
    adopted in the applicable jurisdiction, insuring the Seller and its
    successors and assigns as to such lien, subject only to (a) the lien of
    current real property taxes, ground rents, water charges, sewer rents and
    assessments not yet delinquent or accruing interest or penalties, (b)
    covenants, conditions and restrictions, rights of way, easements and other
    matters of public record, none of which, individually or in the aggregate,
    materially interferes with the current use of the Mortgaged Property or the
    security intended to be provided by such Mortgage or with the Mortgagor's
    ability to pay its obligations when they become due or the value of the
    Mortgaged Property and (c) the exceptions (general and specific) and
    exclusions set forth in such policy, none of which, individually or in the
    aggregate, materially interferes with the current general use of the
    Mortgaged Property or materially interferes with the security intended to be
    provided by such Mortgage or with the related Mortgagor's ability to pay its
    obligations when they become due or the value of the Mortgaged Property
    (items (a), (b) and (c) collectively, "Permitted Encumbrances"); the premium
    for such policy was paid in full; such policy (or if it is yet to be issued,
    the coverage to be afforded thereby) is issued by a title insurance company
    licensed to issue policies in the state in which the related Mortgaged
    Property is located (unless such state is Iowa) and is assignable (with the
    related Mortgage Loan) to the Buyer without the consent of or any
    notification to the insurer, and is in full force and effect upon the
    consummation of the transactions contemplated by the Agreement; no claims
    have been made under such policy and none of the Seller, the Parent or the
    Servicer has (a) undertaken any action or omitted to take any action, and
    (b) knowledge of any such act or omission, in each case, which would impair
    or diminish the coverage of such policy;

        (12) Except where approved by the Buyer, the proceeds of such Mortgage
    Loan have been fully disbursed and there is no requirement for future
    advances thereunder, and no future advances have been made which are not
    reflected in the related mortgage file;

        (13) Except as set forth in a property inspection report or engineering
    report prepared in connection with the origination of the Mortgage Loan, as
    of the later of the date of origination of such Mortgage Loan or the most
    recent inspection of the related Mortgaged Property by the Seller, the
    Parent or the Servicer, as applicable, and to the knowledge of Seller, the
    Parent and the Servicer as of the date hereof, each related Mortgaged
    Property is free of any material damage that would affect materially and
    adversely the value of such Mortgaged Property as security for the Mortgage
    Loan or reserves have been established to cover the costs to remediate such
    damage and, as of the closing date for each Mortgage Loan and, to the and
    the Seller's, the Parent's and the Servicer's knowledge, as of the date
    hereof, there is no proceeding pending for the total or partial condemnation
    of such Mortgaged Property that would have a material adverse effect on the
    value of the Mortgaged Property;

<PAGE>

        (14) The Seller, the Parent or the Servicer has inspected or caused to
    be inspected each related Mortgaged Property within the past twelve months,
    or the originator of the Mortgage Loan inspected or caused to be inspected
    each related Mortgage Property within three months of origination of the
    Mortgage Loan;

        (15) No Mortgage Loan has a shared appreciation feature, any other
    contingent interest feature or a negative amortization feature;

        (16) Each Mortgage Loan is a whole loan and contains no equity
    participation by Seller or any affiliate of Seller;

        (17) The Mortgage Interest Rate (exclusive of any default interest, late
    charges, or prepayment premiums) of such Mortgage Loan complied as of the
    date of origination with, or was exempt from, applicable state or federal
    laws, regulations and other requirements pertaining to usury. Except to the
    extent any noncompliance did not materially and adversely affect the value
    of the related Mortgaged Property, the security provided by the Mortgage or
    the related Mortgagor's operations at the related Mortgaged Property, any
    and all other requirements of any federal, state or local laws, including,
    without limitation, truth-in-lending, real estate settlement procedures,
    equal credit opportunity or disclosure laws, applicable to such Mortgage
    Loan have been complied with as of the date of origination of such Mortgage
    Loan;

        (18) None of the Seller, the Parent or the Servicer or to the Seller's,
    the Parent's or Servicer's knowledge, any originator, committed any
    fraudulent acts during the origination process of any Mortgage Loan and the
    origination, servicing and collection of each Mortgage Loan is in all
    respects legal, proper and prudent in accordance with customary commercial
    mortgage lending standards, and no person other than the Servicer has been
    granted or conveyed the right to service the Mortgage Loans or receive any
    consideration in connection therewith;

        (19) Except as disclosed in the Mortgage Loan Schedule, all taxes and
    governmental assessments that became due and owing prior to the date hereof
    with respect to each related Mortgaged Property and that are or may become a
    lien of priority equal to or higher than the lien of the related Mortgage
    have been paid or an escrow of funds has been established and such escrow
    (including all escrow payments required to be made prior to the delinquency
    of such taxes and assessments) is sufficient to cover the payment of such
    taxes and assessments;

        (20) All escrow deposits and payments required pursuant to each Mortgage
    Loan are in the possession, or under the control, of the Seller, the
    Servicer or their respective agents and there are no deficiencies (subject
    to any applicable grace or cure periods) in connection therewith and all
    such escrows and deposits are being conveyed by the Seller to the Buyer and
    identified as such with appropriate detail;

        (21) Each related Mortgaged Property is insured by a fire and extended
    perils insurance policy or an "all-risk" insurance policy, issued by an
    insurer meeting the requirements of the Agreement, in an amount not less
    than the lesser of the principal amount of the related Mortgage Loan and the
    replacement cost (with no deduction for physical

<PAGE>

    depreciation) and not less than the amount necessary to avoid the operation
    of any co-insurance provisions with respect to the related Mortgaged
    Property; each related Mortgaged Property is also covered by business
    interruption or rental loss insurance which covers a period of not less than
    12 months and comprehensive general liability insurance in amounts generally
    required by commercial mortgage lenders for similar properties; all premiums
    on such insurance policies required to be paid as of the date hereof have
    been paid; such insurance policies require prior notice to the insured of
    termination or cancellation, and no such notice has been received by the
    Seller, the Parent or the Servicer; such insurance names the lender under
    the Mortgage Loan and its successors and assigns as a named or additional
    insured; each related Mortgage Loan obligates the related Mortgagor to
    maintain all such insurance and, at such Mortgagor's failure to do so,
    authorizes the lender to maintain such insurance at the Mortgagor's cost and
    expense and to seek reimbursement therefor from such Mortgagor;

        (22) Except for a Mortgage Loan that is a Defaulted or Delinquent
    Mortgage Loan, there is no monetary default, breach, violation or event of
    acceleration existing under the related Mortgage Loan. To the Seller's, the
    Parent's and the Servicer's knowledge, there is no (a) non-monetary default,
    breach, violation or event of acceleration existing under the related
    Mortgage Loan or (b) event (other than payments due but not yet delinquent)
    which, with the passage of time or with notice and the expiration of any
    grace or cure period, would and does constitute a default, breach, violation
    or event of acceleration, which default, breach, violation or event of
    acceleration, in the case of either (a) or (b), materially and adversely
    affects the value of the Mortgage Loan or the related Mortgaged Property;
    provided, however, that this representation and warranty does not address or
    otherwise cover any default, breach, violation or event of acceleration that
    specifically pertains to any matter otherwise covered by any other
    representation or warranty made by the Seller in any of paragraphs (13),
    (19), (23), (25), (27), and (29) of this Schedule 1;

        (23) Except for a Mortgage Loan that is a Defaulted or Delinquent
    Mortgage Loan, no Mortgage Loan has been more than 30 days delinquent in
    making required payments since origination and as of the related Purchase
    Date no Mortgage Loan is 30 or more days delinquent in making required
    payments;

        (24) (a) Each related Mortgage contains provisions so as to render the
    rights and remedies of the holder thereof adequate for the practical
    realization against the Mortgaged Property of the principal benefits of the
    security, including realization by judicial or, if applicable, non-judicial
    foreclosure, and (b) there is no exemption available to the Mortgagor which
    would interfere with such right to foreclose, except, in the case of either
    (a) or (b), as the enforcement of the Mortgage may be limited by bankruptcy,
    insolvency, reorganization, moratorium, redemption or other laws affecting
    the enforcement of creditors' rights or by general principles of equity
    (regardless of whether such enforceability is considered in a proceeding in
    equity or at law). To the Seller's, the Parent's and the Servicer's
    knowledge, no Mortgagor is a debtor in a state or federal bankruptcy or
    insolvency proceeding;

        (25) At origination, each Mortgagor represented and warranted in all
    material respects that to its knowledge, except as set forth in certain
    environmental reports, no hazardous materials or any other substances or
    materials which are included under or regulated by

<PAGE>

    Environmental Laws are located on or have been handled, manufactured,
    generated, stored, processed, or disposed of on or released or discharged
    from the Mortgaged Property, except for those substances used by Mortgagor
    in the ordinary course of its business and in compliance with all
    Environmental Laws. A Phase I environmental report and with respect to
    certain Mortgage Loans, a Phase II environmental report, was conducted by a
    reputable environmental engineer in connection with such Mortgage Loan,
    which report did not indicate any material non-compliance with applicable
    environmental laws or material existence of hazardous materials or, if any
    material non-compliance or material existence of hazardous materials was
    indicated in any such report, then at least one of the following statements
    is true: (A) funds reasonably estimated to be sufficient to cover the cost
    to cure any material non-compliance with applicable environmental laws or
    material existence of hazardous materials have been escrowed by the related
    Mortgagor and held by the related mortgagee; (B) an operations or
    maintenance plan has been required to be instituted by the related
    Mortgagor; (C) the environmental condition identified in the related
    environmental report was remediated or abated in all material respects prior
    to the date hereof and a no further action or closure letter was obtained
    from the applicable governmental regulatory authority (or the environmental
    issue affecting the related Mortgaged Property was otherwise listed by such
    governmental authority as "closed"); or (D) a lender's environmental
    insurance policy was obtained and is a part of the related mortgage file. To
    the best of the Seller's, the Parent's and the Servicer's knowledge, in
    reliance on such environmental reports and except as set forth in such
    environmental reports, each Mortgaged Property is in material compliance
    with all applicable federal, state and local environmental laws, and to the
    best of the Seller's, the Parent's and the Servicer's knowledge, no notice
    of violation of such laws has been issued by any governmental agency or
    authority; and none of the Seller, the Parent or the Servicer has taken any
    action which would cause the Mortgaged Property to not be in compliance with
    all federal, state and local environmental laws pertaining to environmental
    hazards;

        (26)(1) Each Mortgage Loan contains provisions for the acceleration of
    the payment of the unpaid principal balance of such Mortgage Loan if,
    without the consent of the holder of the Mortgage (and the Mortgage requires
    the mortgagor to pay all fees and expenses associated with obtaining such
    consent), the related Mortgaged Property is directly or indirectly
    transferred or sold, and (2) except with respect to transfers of certain
    interests in the related Mortgagor to persons already holding interests in
    the Mortgagor, their family members, affiliated companies and other estate
    planning related transfers that satisfy certain criteria specified in the
    related Mortgage (which criteria is consistent with the practices of prudent
    commercial mortgage lenders), each Mortgage Loan with a Stated Principal
    Balance of over $20,000,000 also contains the provisions for the
    acceleration of the payment of the unpaid principal balance of such Mortgage
    Loan if, without the consent of the holder of the Mortgage, (and the
    Mortgage requires the mortgagor to pay all fees and expenses associated with
    obtaining such consent) a majority interest in the related Mortgagor is
    directly or indirectly transferred or sold;

        (27) All improvements included in the related appraisal are within the
    boundaries of the related Mortgaged Property, except for encroachments onto
    adjoining parcels for which the Seller, the Parent or the Servicer has
    obtained title insurance against losses arising therefrom or that do not
    materially and adversely affect the value of such Mortgaged

<PAGE>

    Property. No improvements on adjoining parcels encroach onto the related
    Mortgaged Property except for encroachments that do not materially and
    adversely affect the value of such Mortgaged Property, the security provided
    by the Mortgage or the related Mortgagor's operations at the Mortgaged
    Property;

        (28)The information pertaining to the Mortgage Loan set forth in the
    Mortgage Loan Schedule is complete and accurate in all material respects as
    of the dates of the information set forth therein (or, if not set forth
    therein, as of the related Purchase Date);

        (29)With respect to any Mortgage Loan where all or a material portion of
    the estate of the related Mortgagor therein is a leasehold estate, and the
    related Mortgage does not also encumber the related lessor's fee interest in
    such Mortgaged Property, based upon the terms of the ground lease and any
    estoppel received from the ground lessor, the Seller represents and warrants
    that:

                A.      The ground lease or a memorandum regarding such ground
        lease has been duly recorded. The ground lease permits the interest of
        the lessee to be encumbered by the related Mortgage and does not
        restrict the use of the related Mortgaged Property by such lessee, its
        successors or assigns in a manner that would adversely affect the
        security provided by the related Mortgage. To the Seller's, the Parent's
        and the Servicer's best knowledge, there has been no material change in
        the terms of the ground lease since its recordation, except by any
        written instruments which are included in the related mortgage file;

                B.      The lessor under such ground lease has agreed in a
        writing included in the related mortgage file that the ground lease may
        not be amended, modified, canceled or terminated without the prior
        written consent of the lender and that any such action without such
        consent is not binding on the lender, its successors or assigns;

                C.      The ground lease has an original term (or an original
        term plus one or more optional renewal terms, which, under all
        circumstances, may be exercised, and will be enforceable, by the lender)
        that extends not less than 20 years beyond the stated maturity of the
        related Mortgage Loan;

                D.      Based on the title insurance policy (or binding
        commitment therefor) obtained by the Seller, the Parent or the Servicer,
        the ground lease is not subject to any liens or encumbrances superior
        to, or of equal priority with, the Mortgage, subject to Permitted
        Encumbrances and liens that encumber the ground lessor's fee interest;

                E.      The ground lease is assignable to the lender under the
        leasehold estate and its assigns without the consent of the lessor
        thereunder;

                F.      As of the Purchase Date, the ground lease is in full
        force and effect, none of the Seller, the Parent or the Servicer has any
        actual knowledge that any default beyond applicable notice and grace
        periods has occurred, and there is no existing condition which, but for
        the passage of time or giving of notice, would result in a default under
        the terms of the ground lease;

<PAGE>

                G.      The ground lease or ancillary agreement between the
        lessor and the lessee requires the lessor to give notice of any default
        by the lessee to the lender;

                H.      A lender is permitted a reasonable opportunity
        (including, where necessary, sufficient time to gain possession of the
        interest of the lessee under the ground lease through legal proceedings,
        or to take other action so long as the lender is proceeding diligently)
        to cure any default under the ground lease which is curable after the
        receipt of notice of any default before the lessor may terminate the
        ground lease. All rights of the lender under the ground lease and the
        related Mortgage (insofar as it relates to the ground lease) may be
        exercised by or on behalf of the lender;

                I.      The ground lease does not impose any restrictions on
        subletting that would be viewed as commercially unreasonable by an
        institutional investor. The lessor is not permitted to disturb the
        possession, interest or quiet enjoyment of any subtenant of the lessee
        in the relevant portion of the Mortgaged Property subject to the ground
        lease for any reason, or in any manner, which would adversely affect the
        security provided by the related Mortgage;

                J.      Under the terms of the ground lease and the related
        Mortgage, any related insurance proceeds or condemnation award (other
        than in respect of a total or substantially total loss or taking) will
        be applied either to the repair or restoration of all or part of the
        related Mortgaged Property, with the lender or a trustee appointed by it
        having the right to hold and disburse such proceeds as repair or
        restoration progresses, or to the payment of the outstanding principal
        balance of the Mortgage Loan, together with any accrued interest, except
        that in the case of condemnation awards, the ground lessor may be
        entitled to a portion of such award;

                K.      Under the terms of the ground lease and the related
        Mortgage, any related insurance proceeds, or condemnation award in
        respect of a total or substantially total loss or taking of the related
        Mortgaged Property will be applied first to the payment of the
        outstanding principal balance of the Mortgage Loan, together with any
        accrued interest (except as provided by applicable law or in cases where
        a different allocation would not be viewed as commercially unreasonable
        by any institutional investor, taking into account the relative duration
        of the ground lease and the related Mortgage and the ratio of the market
        value of the related Mortgaged Property to the outstanding principal
        balance of such Mortgage Loan). Until the principal balance and accrued
        interest are paid in full, neither the lessee nor the lessor under the
        ground lease will have an option to terminate or modify the ground lease
        without the prior written consent of the lender as a result of any
        casualty or partial condemnation, except to provide for an abatement of
        the rent; and

                L.      Provided that the lender cures any defaults which are
        susceptible to being cured, the lessor has agreed to enter into a new
        lease upon termination of the ground lease for any reason, including
        rejection of the ground lease in a bankruptcy proceeding;

<PAGE>

        (30) With respect to any Mortgage Loan where all or a material portion
    of the estate of the related Mortgagor therein is a leasehold estate, but
    the related Mortgage also encumbers the related lessor's fee interest in
    such Mortgaged Property: (a) such lien on the related fee interest is
    evidenced by the related Mortgage, (b) such Mortgage does not by its terms
    provide that it will be subordinated to the lien of any other mortgage or
    encumbrance upon such fee interest, (c) upon the occurrence of a default
    under the terms of such Mortgage by the related Mortgagor, any right of the
    related lessor to receive notice of, and to cure, such default granted to
    such lessor under any agreement binding upon the Seller, the Parent or the
    Servicer would not be considered commercially unreasonable in any material
    respect by prudent commercial mortgage lenders, (d) the related lessor has
    agreed in a writing included in the related mortgage file that the related
    ground lease may not be amended or modified without the prior written
    consent of the lender and that any such action without such consent is not
    binding on the lender, its successors or assigns, and (e) the related ground
    lease is in full force and effect, and none of the Seller, the Parent or the
    Servicer has actual knowledge that any default beyond applicable notice and
    grace periods has occurred or that there is any existing condition which,
    but for the passage of time or giving of notice, would result in a default
    under the terms of such ground lease;

        (31) With respect to Mortgage Loans that are cross-collateralized or
    cross-defaulted, all other loans that are cross-collateralized by or
    cross-defaulted with such Mortgage Loans (other than Receivables Loans) are
    being transferred to the Buyer;

        (32) Neither Seller nor any affiliate thereof has any obligation to make
    any capital contribution to any Mortgagor under a Mortgage Loan, other than
    contributions made on or prior to the date hereof;

        (33) (1) The Mortgage Loan is directly secured by a Mortgage on a
    skilled nursing facility, and (2) the fair market value of such real
    property, as evidenced by an appraisal satisfying the requirements of FIRREA
    conducted within 12 months of the origination of the Mortgage Loan, was at
    least equal to 80% of the principal amount of the Mortgage Loan (a) at
    origination (or if the Mortgage Loan has been modified in a manner that
    constituted a deemed exchange under Section 1001 of the Code at a time when
    the Mortgage Loan was not in default or default with respect thereto was not
    reasonably foreseeable, the date of the last such modification) or (b) at
    the date hereof; provided that the fair market value of the real property
    must first be reduced by (A) the amount of any lien on the real property
    interest that is senior to the Mortgage Loan and (B) a proportionate amount
    of any lien that is in parity with the Mortgage Loan (unless such other lien
    secures a Mortgage Loan that is cross-collateralized with such Mortgage
    Loan, in which event the computation described in (a) and (b) shall be made
    on an aggregated basis);

        (34) There are no subordinate mortgages encumbering the related
    Mortgaged Property, nor are there any preferred equity interests held by the
    Seller, the Parent or the Servicer or any mezzanine debt related to such
    Mortgaged Property, except as set forth in the Mortgage Loan Schedule;

        (35) The Mortgage Loan Documents executed in connection with each
    Mortgage Loan require that the related Mortgagor be a single-purpose entity
    (for this purpose,

<PAGE>

    "single-purpose entity" shall mean an entity, other than an individual,
    having organizational documents which provide substantially to the effect
    that it is formed or organized solely for the purpose of owning and
    operating one or more Mortgaged Properties, is prohibited from engaging in
    any business unrelated to such property and the related Mortgage Loan, does
    not have any assets other than those related to its interest in the related
    Mortgaged Property or its financing, or any indebtedness other than as
    permitted under the related Mortgage Loan);

        (36) Each Mortgage Loan prohibits the related Mortgagor from mortgaging
    or otherwise encumbering the Mortgaged Property without the prior written
    consent of the mortgagee or the satisfaction of debt service coverage or
    similar criteria specified therein and, except in connection with trade debt
    and equipment financings in the ordinary course of Mortgagor's business,
    from carrying any additional indebtedness, except, in each case, liens
    contested in accordance with the terms of the Mortgage Loans;

        (37) Each Mortgagor covenants in the Mortgage Loan documents that it
    shall keep all licenses, permits, franchises, certificates of occupancy,
    consents, and other approvals necessary for the operation of the Property in
    full force and effect;

        (38) Each Mortgaged Property (a) is located on or adjacent to a
    dedicated road, or has access to an irrevocable easement permitting ingress
    and egress, (b) is served by public utilities and services generally
    available in the surrounding community or otherwise appropriate for the use
    in which the Mortgaged Property is currently being utilized, and (c)
    constitutes one or more separate tax parcels or is covered by an endorsement
    with respect to the matters described in (a), (b) or (c) under the related
    title insurance policy (or the binding commitment therefor);

        (39) Based solely on a flood zone certification or a survey of the
    related Mortgaged Property, if any portion of the improvements on the
    Mortgaged Property is located in an area identified by the Federal Emergency
    Management Agency or the Secretary of Housing and Urban Development as
    having special flood hazards categorized as Zone "A" or Zone "V" and flood
    insurance is available, the terms of the Mortgage Loan require the Mortgagor
    to maintain flood insurance, or at such Mortgagor's failure to do so,
    authorizes the lender to maintain such insurance at the cost and expense of
    the Mortgagor;

        (40) To the knowledge of the Seller, the Parent and the Servicer, with
    respect to each Mortgage which is a deed of trust, a trustee, duly qualified
    under applicable law to serve as such, currently so serves and is named in
    the deed of trust or has been substituted in accordance with applicable law
    or may be substituted in accordance with applicable law by the related
    mortgagee, and except in connection with a trustee's sale after a default by
    the related Mortgagor, no fees are payable to such trustee;

        (41) Except as disclosed in the Mortgage Loan Schedule, to the knowledge
    of the Seller, the Parent and the Servicer, as of the date hereof, there was
    no pending action, suit or proceeding, arbitration or governmental
    investigation (other than routine regulatory investigations) against any
    Mortgagor or Mortgaged Property, an adverse outcome of which would
    materially and adversely affect such Mortgagor's ability to perform under
    the related Mortgage Loan;

<PAGE>

        (42) No advance of funds has been made by the Seller to the related
    Mortgagor and no funds have, to the Seller's knowledge, been received from
    any person other than, or on behalf of, the related Mortgagor, for, or on
    account of, payments due on the Mortgage Loan;

        (43) To the extent required under applicable law, as of the related
    Purchase Date or as of the date that such entity held the Mortgage Note,
    each holder of the Mortgage Note was authorized to transact and do business
    in the jurisdiction in which each related Mortgaged Property is located,
    except if the failure to be so authorized did not materially and adversely
    affect the enforceability of such Mortgage Loan;

        (44) All collateral for the Mortgage Loans is being transferred as part
    of the Mortgage Loans;

        (45) No Mortgage Loan requires the lender to release any portion of the
    Mortgaged Property from the lien of the related Mortgage except upon (a)
    payment in full of the related Mortgage Loan, (b) the satisfaction of
    certain legal and underwriting requirements, (c) releases of unimproved
    out-parcels or (d) releases of portions of the Mortgaged Property which will
    not have a material adverse effect on the value of the collateral for the
    related Mortgage Loan;

        (46) Except as provided in paragraphs (29) (J) and (K) above, any
    insurance proceeds in respect of a casualty loss or taking will be applied
    either to (a) the repair or restoration of all or part of the related
    Mortgaged Property, with, in the case of all Mortgage Loans and with respect
    to all casualty losses or takings in excess of a specified percentage of the
    related loan amount, the lender (or a trustee appointed by it) having the
    right to hold and disburse such proceeds as the repair or restoration
    progresses (except in any case where a provision entitling another party to
    hold and disburse such proceeds would not be viewed as commercially
    unreasonable by a prudent commercial mortgage lender) or (b) to the payment
    of the outstanding principal balance of such Mortgage Loan together with any
    accrued interest thereon;

        (47) Each Form UCC-1 financing statement, if any, filed with respect to
    personal property constituting a part of the related Mortgaged Property and
    each Form UCC-2 or UCC-3 assignment, if any, of such financing statement to
    the Seller or the Servicer was, and each Form UCC-3 assignment, if any, of
    such financing statement in blank which the Trustee or its designee is
    authorized to complete (but for the insertion of the name of the assignee
    and any related filing information which is not yet available to the Seller
    or the Servicer) is, in suitable form for filing in the filing office in
    which such financing statement was filed;

        (48) Based upon an opinion of counsel and/or other due diligence
    considered reasonable by prudent commercial mortgage lenders, the
    improvements located on or forming part of each Mortgaged Property comply
    with applicable zoning laws and ordinances, or constitute a legal
    non-conforming use or structure or, if any such improvement does not so
    comply, such non-compliance does not materially and adversely affect the
    value of the related Mortgaged Property. With respect to properties with a
    principal balance of over $10,000,000, if the related Mortgaged Property
    does not so comply, to the extent the Seller, the Parent or the Servicer is
    aware of such non-compliance, it has required the related

<PAGE>

    Mortgagor to obtain law and ordinance insurance coverage in amounts
    customarily required by prudent commercial mortgage lenders;

        (49) Each Mortgage Loan constitutes a "qualified mortgage" within the
    meaning of Section 860G(a)(3) of the Code (but without regard to the rule in
    Treasury Regulation (as defined herein) Section 1.860G-2(f)(2) that treats a
    defective obligation as a qualified mortgage or any substantially similar
    successor provision) and all prepayment premiums and yield maintenance
    charges constitute "customary prepayment penalties" within the meaning of
    Treasury Regulation Section 1.860G-1(b)(2);

        (50) The Mortgage Loan Documents for each Mortgage Loan provide that the
    related Mortgagor thereunder shall be liable to the Seller for any losses
    incurred by the Seller due to (i) the misapplication or misappropriation of
    rents, insurance proceeds or condemnation awards, (ii) any willful act of
    material waste, (iii) any breach of the environmental covenants contained in
    the related Mortgage Loan Documents, and (iv) fraud;

        (51) The Seller or the Servicer has delivered to the Custodian, with
    respect to each Mortgage Loan, in accordance the Custodial Agreement, a
    complete Mortgage File;

        (52) The Mortgage Loan has not been subject to a Transaction hereunder
    for a period of greater than 540 days;

        (53) The Mortgage Loan Documents are on forms approved by the Buyer;

        (54) No material adverse change in the Property, business, financial
    condition or operations of the Mortgagor has occurred since the origination
    date of the related Mortgage Loan, as determined by Buyer in its sole good
    faith discretion; and

        (55)There is no payment default, or material breach, or event of
    acceleration existing under any related Receivables Loan.

        (56) As of the Purchase Date, the Loan-to-Value Ratio does not exceed
    80%.

With respect to each Mortgaged Property:

(a)     The Mortgagor, the Facility and the operator, administrator or manager
        of the Facility (each, as "Operator") are in compliance with the
        applicable provisions of the laws, ordinances, statutes, regulations,
        orders, standards, policies, accreditation standards, restrictions or
        rules of any federal, state, local or other governmental or
        quasi-governmental agency, authority, intermediary or other entity
        having jurisdiction over the ownership or operation of the Facility
        including, without limitation, (1) health and fire safety codes and (2)
        the applicable provisions of laws, rules, regulations and published
        interpretations or policies to which the Facility and/or the Mortgagor
        is subject, including, without limitation, Medicare, Medicaid, or other
        federal, state, local or other governmental or quasi-governmental
        authorities', agencies', intermediaries' or other entities' laws, rules,
        regulations or published interpretations or policies relating to the
        prevention of fraud and abuse, prohibitions against self-referral,
        billing for services provided, the quality and adequacy of medical care,
        distribution of pharmaceuticals, rate

<PAGE>

        setting, equipment, personnel, operating policies, additions to
        facilities and services and fee-splitting.

(b)     All certificates, certifications, permits, licenses and approvals,
        including, without limitation, certificates of completion and occupancy
        and certificates of need ("CON"), required, necessary or desirable in
        connection with the Mortgage Loan and for the legal use, occupancy and
        operation of the Facility and approved provider status in any applicable
        approved provider payment program (collectively, the "Licenses") have
        been obtained and are in full force and effect. The Mortgagor has
        obtained all regulatory approvals necessary for construction on, or
        renovation of, the Mortgaged Property, or the purchase of new equipment
        for the Mortgaged Property, including any certificates of need.

(c)     The Licenses, including, without limitation, the CON:

        (i)     have not been transferred to any location other than the
                Facility;

        (ii)    have not been pledged as collateral security for any other
                Mortgage Loan or indebtedness; and

        (iii)   are held free from restrictions or known conflicts which would
                materially impair the use or operation of the Facility as
                intended, and are not provisional, probationary or restricted in
                any way.

(d)     So long as the Mortgage remains outstanding, neither Mortgagor nor
        Operator is permitted pursuant to the terms of the Mortgage without the
        consent of the holder of the Mortgage and, if required, the consent or
        approval of any federal, state, local or other governmental and
        quasi-governmental authorities, agencies, intermediaries or other
        entities that have direct or indirect authority or oversight over the
        Mortgagor, the Mortgaged Property, or the operations conducted on the
        Mortgaged Property, to:

        (i)     rescind, withdraw, revoke, amend, modify, supplement, or
                otherwise alter the nature, tenor or scope of the Licenses for
                any Facility (other than the addition of services or other
                matters expanding or improving the scope of such license);

        (ii)    amend or otherwise change any Facility's authorized bed capacity
                and/or the number of approved beds; or

        (iii)   replace or transfer all or any part of any Facility's beds to
                another site or location.

(e)     The Facility is in compliance with the requirements for participation in
        Medicare and Medicaid; each Facility is in conformance with all
        insurance, reimbursement and cost reporting requirements, and has a
        current provider agreement under Title XVIII (Medicare) and/or XIX
        (Medicaid) of the Social Security Act or any other applicable laws or
        regulations for reimbursement for the type of care or services provided
        by Mortgagor.

<PAGE>

(f)     There is no threatened or pending revocation, suspension, termination,
        probation, restriction, limitation, or nonrenewal affecting any
        Mortgagor, Operator, or the Facility or any participation or provider
        agreement with any third-party payor, including Medicare, Medicaid, Blue
        Cross and/or Blue Shield, and any other private commercial insurance
        managed care or employee assistance program (such programs, the
        "Third-Party Payors' Programs") to which the Mortgagor, Operator or
        Facility presently is subject. None of the Mortgagor, Operator nor the
        Facility is currently a target or subject of, or participant in, any
        investigation, or a defendant or respondent in any administrative
        proceeding, arbitration, lawsuit or threatened administrative
        proceeding, audit, investigation, arbitration or lawsuit brought by any
        governmental or other third-party payor, including, without limitation,
        any managed care company, insurance company, or other commercial payor.
        The Mortgage contains representations and covenants by the Mortgagor
        that all Medicaid, Medicare, Third-Party Payors' Programs, and private
        insurance cost reports and financial reports submitted by the Mortgagor,
        Operator, or Facility are and will be true, accurate and complete and
        have not been and will not be misleading in any material respects, and
        except as otherwise disclosed, no cost reports for any Facility remain
        "open" or unsettled.

(g)     None of the Mortgagor, Operator or Facility is currently the target or
        subject of any current or threatened action, proceeding, suit, audit,
        investigation or sanction by any federal, state, local or other
        governmental or quasi-governmental agency, authority, intermediary or
        other entity or any other third party or any patient or resident
        (including, without limitation, whistleblower suits, suits brought
        pursuant to federal or state False Claims Acts, and
        Medicaid/Medicare/state/commonwealth fraud/abuse laws or other
        investigations) which may directly or indirectly, or with the passage of
        time:

        (i)     result in the imposition of a fine, penalty, alternative,
                interim or final sanction, a lower rate certification,
                suspension, discontinuance or recoupment of all or part of
                reimbursement from any federal, state, commonwealth or local
                government or quasi-government body, or by any intermediary,
                third-party, insurance carrier or private payor, or a lower
                reimbursement rate for services rendered to eligible patients or
                other civil or criminal remedy, or the suspension, denial or
                recoupment of all or part of payments;

        (ii)    have a material adverse effect on the Mortgagor, Operator or
                Facility;

        (iii)   result in the appointment of a receiver or manager;

        (iv)    result in the revocation, transfer, surrender, suspension or
                other impairment of the operating certificate(s), provider
                agreement(s), license(s), permit(s), approval(s) or
                authorization(s) of the Mortgagor or Operator or the operations
                of the Facility; and

        (v)     have a material adverse impact on the Mortgagor's, Operators or
                Facility's ability to accept and/or retain patients or
                residents.

<PAGE>

(h)     The Facility and the use thereof complies in all material respects with
        all applicable federal, state, local and other building codes, fire
        codes, health care, hospital, nursing facility, assisted living
        facility, senior housing, continuing care retirement community,
        psychiatric facility, intermediate care facility for the developmentally
        disabled and other similar regulatory requirements, including, but not
        limited to, Medicare, Medicaid or other federal, state, local or
        intermediary laws, rules, regulations or published interpretations or
        guidelines relating to the prevention of fraud, abuse, neglect or
        mistreatment (the "Physical Plant Standards") and no waivers of Physical
        Plant Standards exist at any of the Facilities.

(i)     No warning statement of charges or deficiencies, or other equivalent
        report or letter, has been issued or penalty enforcement action has been
        undertaken against the Operator, Facility or Mortgagor, or against any
        officer, director or stockholder of the Operator, Facility or Mortgagor
        by any governmental agency during the last three calendar years, and
        there have been no violations over the past three years which have
        resulted in the loss of Mortgagor's, Facility's or Operator's license or
        termination of a provider agreement for any period whatsoever, nor have
        there been repeated citations of those deficiencies which may lead to
        the termination of a provider agreement when they are cited in
        consecutive surveys.

(j)     There are no current, pending or outstanding Medicaid, Medicare,
        Third-Party Payors' Programs or other reimbursement audits or appeals
        pending for any of the Mortgagors, Operators or Facilities concerning
        allegations of fraud or that might have a material adverse effect on the
        operations of the Facility.

(k)     There are no current or pending Medicaid, Medicare, or Third-Party
        Payors' Programs recoupment efforts at the Facility that might have a
        material adverse effect on the operations of the Facility.

(l)     There are no agreements with residents of the Facility or with any other
        persons or organizations which deviate in any material adverse respect
        from the standard form customarily used at the Facility or which
        conflict with any statutory or regulatory requirements.

(m)     All resident records at the Facility, including patient or resident
        account records, are true, and correct in all material respects.

(n)     Any existing agreement relating to the management, administration or
        operation of the Facility with respect to such Facility is in full force
        and effect and is not in default by any party thereto.

(o)     The terms of the related Mortgage require that no Facility, Operator or
        Mortgagor shall, other than in the normal course of business or were
        required by law, change the terms of any of the Third-Party Payors'
        Programs or its normal billing payment or reimbursement policies and
        procedures with respect thereto (including, without limitation, the
        amount and timing of finance charges, fees and write-offs) without the
        prior written consent of the holder of the Mortgage and, if required,
        the consent or approval of any federal, state,

<PAGE>

        local or other governmental and quasi-governmental authorities,
        agencies, intermediaries or other entities that have direct or indirect
        authority or oversight over the Mortgagor, the Mortgaged Property, or
        the operations conducted on the Mortgaged Property.

(p)     The Mortgagor is not a participant in any federal, state, local or other
        governmental program (other than Medicare and Medicaid) whereby any
        federal, state, local or other governmental or quasi-governmental
        authority, agency, intermediary, board or other authority or entity may
        have the right to recover funds by reason of the advance of federal,
        state or local funds, including, without limitation, those authorized
        under the Hill-Burton Act (42 U.S.C. 291, et seq.). The Mortgagor has
        not received notice of and is not aware of any violation of applicable
        antitrust laws of any federal, state, commonwealth or local government
        or quasi-governmental body.

(q)     The Mortgagor maintains professional liability and malpractice insurance
        with limits of at least $2 million per occurrence (claim)/$6 million in
        the aggregate which coverage includes healthcare professionals employed
        by the Facility.

(r)     Other than the Medicare and Medicaid programs, Mortgagor is not a
        participant in any federal, state or local program whereby any federal,
        state or local government or quasi-governmental body, or any
        intermediary, agency, board or other authority or entity may have the
        right to recover funds by reason of the advance of federal, state or
        local funds, including, without limitation, those authorized under the
        Hill-Burton Act (42 U.S.C. 291, et seq.). Mortgagor has received no
        notice, and is not aware of any violation of applicable antitrust laws.

(s)     Mortgagor is not a party to any collective bargaining agreement or other
        labor contract applicable to persons employed by it and there are no
        threatened or pending labor disputes at the Facility, provided that
        Mortgagor may adopt or may be deemed to have adopted collective
        bargaining agreements respecting employees employed at the Facility
        prior to the date hereof, copies of which have been or will be provided
        to Mortgagee.

(t)     If the Facility does not have a compliance plan in place, Mortgagor
        shall institute (or cause Operator to institute) within thirty (30) days
        from the date hereof, and shall operate (or cause the Operate to
        operate) the Facility in accordance with, a compliance plan which
        follows applicable guidelines established by the United States
        Department of Health and Human Services.

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