Document:

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                                                                  EXHIBIT 10.111

                           LOAN AND SECURITY AGREEMENT

                            Dated as of April 6, 2001

                                     Between

                                ATC FUNDING, LLC
                                   as Borrower

                                       and

                               HFG HEALTHCO-4 LLC
                                    as Lender

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                                TABLE OF CONTENTS

                                      Page

ARTICLE I. COMMITMENT; AMOUNTS AND TERMS OF THE REVOLVING LOAN

                       Section 1.01. Revolving Advances 1
            Section 1.02. Revolving Commitment and Borrowing Limit 1
           Section 1.03. Notice of Borrowing; Borrower's Certificate;
                          Borrowing Base Certificate 2
              Section 1.04. Termination of Revolving Commitment 2
                       Section 1.05. Interest and Fees 2
                      Section 1.06. Voluntary Reductions 2
                    Section 1.07. Computation of Interest 2
                     Section 1.08. Procedures for Payment 2
                          Section 1.09. Indemnities 3
                       Section 1.10. Telephonic Notice 4
                        Section 1.11. Maximum Interest 4

ARTICLE II. COLLECTION AND DISTRIBUTION

                 Section 2.01. Collections on the Receivables 4
                         Section 2.02. Distributions 5
              Section 2.03. Distribution of Funds at the Maturity
                       Date or Upon an Event of Default 5
            Section 2.04. Distributions to the Borrower Generally 5

ARTICLE III. REPRESENTATIONS AND WARRANTIES; COVENANTS;EVENTS OF DEFAULT

           Section 3.01. Representations and Warranties; Covenants 5
                  Section 3.02. Events of Default; Remedies 5
                        Section 3.03. Attorney-in-Fact 5

ARTICLE IV. SECURITY

                   Section 4.01. Grant of Security Interest 6

ARTICLE V. MISCELLANEOUS

                        Section 5.01. Amendments, etc. 6
                         Section 5.02. Notices, etc. 6
                         Section 5.03. Assignability 6
                       Section 5.04. Further Assurances 7
              Section 5.05. Costs and Expenses; Collection Costs 7
                        Section 5.06. Confidentiality 7
          Section 5.07. Term and Termination; Early Termination Fee 8
                    Section 5.08. No Liability of Lender 9
                Section 5.09. Entire Agreement; Severability 9
                         Section 5.10. GOVERNING LAW 9
         Section 5.11. WAIVER OF JURY TRIAL, JURISDICTION AND VENUE 9

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                   Section 5.12. Execution in Counterparts 10
                        Section 5.13. No Proceedings 10

                                    EXHIBITS

                             Exhibit I Definitions
                  Exhibit II Conditions of Revolving Advances
                   Exhibit III Representations and Warranties
                              Exhibit IV Covenants
                          Exhibit V Events of Default
                        Exhibit VI Eligibility Criteria
                 Exhibit VII Form of Borrowing Base Certificate
                   Exhibit VIII Form of Depositary Agreement
                    Exhibit IX-A Form of Opinion of Counsel
                    Exhibit IX-B Form of Opinion of Counsel
                       Exhibit X Form of Pledge Agreement

                                   SCHEDULES

                        Schedule I Addresses for Notices
                    Schedule II Credit and Collection Policy
                            Schedule III Disclosures
        Schedule IV Concentration Account and Lender Lockbox Information
                          Schedule V Net Value Factors

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                  LOAN AND SECURITY AGREEMENT, dated as of April 6, 2001,
between ATC FUNDING, LLC, a limited liability company organized under the laws
of the State of Delaware (together with its successors and assigns, the
"BORROWER"), and HFG HEALTHCO-4 LLC, a Delaware limited liability company
(together with its successors and assigns, the "LENDER"), agree as follows:

                  Certain terms that are capitalized and used throughout this
Agreement are defined in Exhibit I to this Agreement. References herein, and in
the Exhibits and Schedules hereto, to the "Agreement" refer to this Agreement,
as amended, restated, modified or supplemented from time to time in accordance
with its terms (this "AGREEMENT").

                  The Borrower (i) is a limited liability company owned by the
Providers, (ii) has acquired and will acquire receivables from the Providers by
purchase or contribution to the capital of the Borrower pursuant to the RPTA, as
determined from time to time by the Borrower and the Providers, and (iii) wishes
to borrow funds from the Lender on a continuing and revolving basis secured by
all of its assets, including the receivables acquired from the Providers.

                  The Lender is prepared to make a revolving loan secured by the
Borrower's assets, including such receivables on the terms and subject to the
conditions set forth herein.

                  Accordingly, the parties agree as follows:

                                   ARTICLE I.
               COMMITMENT; AMOUNTS AND TERMS OF THE REVOLVING LOAN

                  Section I.1. Revolving Advances. (a) The Lender agrees to lend
from time to time to the Borrower, subject to and upon the terms and conditions
herein set forth, on each Funding Date, such amounts as, in accordance with the
terms hereof, may be requested by the Borrower (each such borrowing, a
"REVOLVING ADVANCE" and the aggregate outstanding principal balance of all
Revolving Advances from time to time, the "REVOLVING Loan").

                  (b) Each Revolving Advance shall be in a minimum amount of
$100,000 or any amount in excess thereof and shall be made on the date specified
in the Borrowing Base Certificate requesting such Revolving Advance, or
telephonic notice confirmed in writing, as described in Section 1.03 hereof.

                  Section I.2. Revolving Commitment and Borrowing Limit. (a) The
Revolving Loan at any time shall not exceed an amount equal to the lesser of (i)
$25,000,000 (such amount, or such greater or lesser amount after giving effect
to any increase or decrease pursuant to the provisions of Section 1.02(d) and
(e) hereof, the "REVOLVING COMMITMENT"), and (ii) the Borrowing Base as of such
time (the lesser of (i) and (ii) being the "BORROWING LIMIT").

                  (b) Subject to the limitations herein and of Exhibit II
hereof, the Borrower may borrow, repay (without premium or penalty) and reborrow
under the Revolving Commitment. The Revolving Loan shall not exceed, and the
Lender shall not have any obligation to make any Revolving Advance which shall
result in the Revolving Loan being in excess of, the Borrowing Limit.

                  (c) If at any time the Revolving Loan exceeds the Borrowing
Limit at such time, the Borrower shall promptly, in accordance with Article II
hereof, eliminate such excess by paying an amount equal to such excess until
such excess is eliminated in full.

                  (d) The Borrower may request the Lender to increase the
Revolving Commitment by up to $25,000,000 and the Lender, in its sole discretion
upon any such request, may decide to increase the Revolving Commitment. Lender
shall respond, in writing, within five (5) Business Days after the date Lender
has received all

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of the information reasonably requested by the Lender to make such
determination. Each such increase shall be in an amount equal to (i) $2,500,000
or an integral multiple thereof if, as of the time of such request, the
Revolving Commitment is less than $35,000,000 or (ii) $5,000,000 or an integral
multiple thereof if, as of the time of such request, the Revolving Commitment is
$35,000,000 or greater, and upon the effective date of such increase the
Borrower shall pay to the Lender a fee in an amount equal to 1.00% of any such
increase to the Revolving Commitment.

                  Section I.3. Notice of Borrowing; Borrowing Base Certificate.
Whenever the Borrower desires a Revolving Advance be made, the Borrower shall
give the Lender, (A) not later than 10:30 a.m. (New York City time) on the
proposed Funding Date of the Revolving Advance, written notice, or telephonic
notice from an Authorized Representative confirmed promptly by a Written Notice
(which notice, in each case, shall be irrevocable) of its desire to make a
borrowing of a Revolving Advance. Each notice of borrowing under this Section
1.03 shall (i) be indicated on a fully completed Borrowing Base Certificate
signed by the Borrower and dated as of such date, and shall specify the proposed
Funding Date (which in each instance shall be a Business Day) and the amount of
such Borrowing.

                  Section I.4. Termination of Revolving Commitment. On the
Maturity Date, the Revolving Commitment shall be canceled automatically and the
Revolving Loan shall become due and payable in full. In addition, prior to the
Maturity Date, the Borrower may terminate the Revolving Commitment pursuant to
Section 5.07(c). Upon such cancellation, the Revolving Loan (together with all
other Lender Debt) shall become, without further action by any Person,
immediately due and payable together with all accrued interest thereon and any
fees (including without limitation, the Early Termination Fee), premiums,
charges or costs provided for hereunder with respect thereto.

                  Section I.5. Interest and Fees. (a) Interest. The Borrower
shall pay interest on the on the average daily Outstanding Balance of the
Revolving Loan during the prior Month on (i) each Interest Payment Date and (ii)
the Maturity Date (whether by acceleration or otherwise), in each case, at an
interest rate per annum equal to LIBOR plus the Applicable Margin, in each case,
as in effect for the applicable Interest Period.

                  (b) Default Interest. Notwithstanding anything to the contrary
contained herein, while any Event of Default is continuing, interest on the
Revolving Loan shall be payable on demand at a rate per annum equal to 2.50% in
excess of the rate then otherwise applicable to the Revolving Loan.

                  (c) Non-Utilization Fee. The Borrower shall pay to the Lender
on the first Business Day of each Month a fee (the "NON-UTILIZATION FEE") equal
to 0.50% per annum on the average amount, calculated on a daily basis, by which
the Revolving Commitment exceeded the Revolving Loan during the prior Month.

                  Section I.6. Voluntary Reductions. The Borrower may on any
Funding Date reduce the outstanding principal amount of the Revolving Loan;
provided, however, that the Borrower shall provide the Lender with at least 15
days' prior Written Notice to the extent such reduction shall be more than 20%
of the then outstanding principal amount of the Revolving Loan

                  Section I.7. Computation of Interest. (a) Interest on the
Revolving Loan and fees and other amounts calculated by the Lender on the basis
of a rate per annum shall be computed on the basis of actual days elapsed over a
360-day year.

                  (b) Whenever any payment to be made hereunder or under any
other Document shall be stated to be due and payable on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time shall in such case be included in computing interest on
such payment.

                  Section I.8. Procedures for Payment. (a) Each payment
hereunder shall be made not later than 12:00 noon (New York City time) on the
day when due in lawful money of the United States of America to the Lender
without counterclaim, offset, claim or recoupment of any kind and free and clear
of, and without deduction for, any present or future withholding or other taxes,
duties or charges of any nature imposed on such payments or prepayments by or on
behalf of any Governmental Entity thereof or therein, except for Excluded Taxes.
If any such

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taxes, duties or charges are so levied or imposed on any payment to the Lender,
the Borrower will make additional payments in such amounts as may be necessary
so that the net amount received by the Lender, after withholding or deduction
for or on account of all taxes, duties or charges, including deductions
applicable to additional sums payable under this Section 1.08, will be equal to
the amount provided for herein. Whenever any taxes, duties or charges are
payable by the Borrower with respect to any payments hereunder, the Borrower
shall furnish promptly to the Lender information, including certified copies of
official receipts (to the extent that the relevant governmental authority
delivers such receipts), evidencing payment of any such taxes, duties or charges
so withheld or deducted. If the Borrower fails to pay any such taxes, duties or
charges when due to the appropriate taxing authority or fails to remit to the
Lender the required information evidencing payment of any such taxes, duties or
charges so withheld or deducted, the Borrower shall indemnify the Lender for any
incremental taxes, duties, charges, interest or penalties that may become
payable by the Lender as a result of any such failure.

                  (b) Notwithstanding anything to the contrary contained in this
Agreement, the Borrower agrees to pay any present or future stamp or documentary
taxes, any intangibles tax or any other sales, excise or property taxes, charges
or similar levies now or hereafter assessed that arise from and are attributable
to any payment made hereunder or from the execution, delivery of, or otherwise
with respect to, this Agreement or any other Documents and any and all recording
fees relating to any Documents securing any Lender Debt ("OTHER TAXES").

                  (c) The Borrower shall indemnify the Lender for the full
amount of any taxes, duties or charges other than Excluded Taxes (including,
without limitation, any taxes other than Excluded Taxes imposed by any
jurisdiction on amounts payable under this Section 1.08) duly paid or payable by
the Lender and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. Indemnification payments shall be
made within 30 days from the date the Lender makes written demand therefor.

                  (d) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 1.08 shall survive the payment in full of principal
and interest hereunder.

                  Section I.9. Indemnities. (a) The Borrower hereby agrees to
indemnify the Lender on demand against any loss or expense which the Lender or a
branch or an Affiliate of the Lender may sustain or incur as a consequence of:
(i) any default in payment or prepayment of the principal amount of any
Revolving Advance made to it or any portion thereof or interest accrued thereon,
as and when due and payable (at the due date thereof, by irrevocable notice of
payment or prepayment, or otherwise); (ii) the effect of the occurrence of any
Event of Default upon any Revolving Advance made to it; (iii) the payment or
prepayment of the principal amount of any Revolving Advance made to it or any
portion thereof; or (iv) the failure by the Borrower to accept a Revolving
Advance after it has requested such borrowing, conversion or renewal; in each
case including, but not limited to, any loss or expense sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain such Revolving Advance or any portion thereof. The Lender shall provide
to the Borrower a statement, supported when applicable by documentary evidence,
explaining the amount of any such loss or expense it incurs, which statement
shall be conclusive absent manifest error.

                  (b) The Borrower hereby agrees to indemnify and hold harmless
the Lender, the Program Manager, the Master Servicer and their respective
Affiliates, directors, officers, agents, representatives, counsel and employees
and each other Person, if any, controlling them or any of their respective
Affiliates within the meaning of either Section 15 of the Securities Act of
1933, as amended, or Section 20(a) of the Exchange Act of 1934, as amended (each
an "INDEMNIFIED PARTY"), from and against any and all losses, claims, damages,
costs, expenses (including reasonable counsel fees and disbursements) and
liabilities which may be incurred by or asserted against such Indemnified Party
with respect to or arising out of the commitments hereunder to make the
Revolving Advances, or the financings contemplated hereby, the other Documents,
the Collateral (including, without limitation, the use thereof by any of such
Persons or any other Person, the exercise by the Lender of rights and remedies
or any power of attorney with respect thereto, and any action or inaction of the
Lender under and in accordance with any Documents), the use of proceeds of any
financial accommodations provided hereunder, any investigation, litigation or
other proceeding (brought or threatened) relating thereto, or the role of any
such Person or Persons in connection with the foregoing, whether or not they or
any other Indemnified Party is named as a party to any legal action or
proceeding ("CLAIMS"). The Borrower will not, however, be responsible to any
Indemnified

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Party hereunder for any Claims to the extent that a court having jurisdiction
shall have determined by a final nonappealable judgment that any such Claim
shall have arisen out of or resulted solely from (a)(i) actions taken or omitted
to be taken by such Indemnified Party by reason of the bad faith, willful
misconduct or gross negligence of any Indemnified Party, or (ii) in violation of
any law or regulation applicable to such Indemnified Party (except to the extent
that such violation is attributable to any breach of any representation,
warranty or agreement by or on behalf of the Borrower, any Provider or any of
their respective designees, in each case, as determined by a final nonappealable
decision of a court of competent jurisdiction), or (b) a successful claim by the
Borrower or any Provider against such Indemnified Party ("EXCLUDED CLAIMS").
Further, should any employee of the Lender, in connection with such employee's
employment by the Lender, be involved in any legal action or proceeding in
connection with the transactions contemplated hereby (other than relating to an
Excluded Claim), the Borrower hereby agrees to pay to the Lender such reasonable
per diem compensation as the Lender shall request for each employee for each day
or portion thereof that such employee is involved in preparation and testimony
pertaining to any such legal action or proceeding. The Indemnified Party shall
give the Borrower prompt Written Notice of any Claim setting forth a description
of those elements of the Claim of which such Indemnified Party has knowledge.
The Lender, as an Indemnified Party shall be permitted hereunder to select
counsel to defend such Claim at the expense of the Borrower and, if such
Indemnified Party shall decide to do so, then all such Indemnified Parties shall
select the same counsel to defend such Indemnified Parties with respect to such
Claim; provided, however, that if any such Indemnified Party shall in its
reasonable opinion consider that the retention of one joint counsel as aforesaid
shall result in a conflict of interest, such Indemnified Party may, at the
expense of the Borrower, select its own counsel to defend such Indemnified Party
with respect to such Claim. The Indemnified Parties and the Borrower and their
respective counsel shall cooperate with each other in all reasonable respects in
any investigation, trial and defense of any such Claim and any appeal arising
therefrom.

                  Section I.10. Telephonic Notice. Without in any way limiting
the Borrower's obligation to confirm in writing any telephonic notice of a
borrowing, conversion or renewal, the Lender may act without liability upon the
basis of telephonic notice believed by the Lender in good faith to be from an
Authorized Representative of the Borrower prior to receipt of written
confirmation.

                  Section I.11. Maximum Interest. (a) No provision of this
Agreement shall require the payment to the Lender or permit the collection by
the Lender of interest in excess of the maximum rate of interest from time to
time permitted (after taking into account all consideration which constitutes
interest) by laws applicable to the Lender Debt and binding on the Lender (such
maximum rate being the Lender's "MAXIMUM PERMISSIBLE RATE").

                  (b) If the amount of interest (computed without giving effect
to this Section 1.11) payable on any Interest Payment Date in respect of the
preceding interest computation period would exceed the amount of interest
computed in respect of such period at the Maximum Permissible Rate, the amount
of interest payable to the Lender on such date in respect of such period shall
be computed at the Maximum Permissible Rate.

                  (c) If at any time and from time to time: (i) the amount of
interest payable to the Lender on any Interest Payment Date shall be computed at
the Maximum Permissible Rate pursuant to the preceding subsection (b); and (ii)
in respect of any subsequent interest computation period the amount of interest
otherwise payable to the Lender would be less than the amount of interest
payable to the Lender computed at the Maximum Permissible Rate, then the amount
of interest payable to the Lender in respect of such subsequent interest
computation period shall continue to be computed at the Maximum Permissible Rate
until the amount of interest payable to the Lender shall equal the total amount
of interest which would have been payable to the Lender if the total amount of
interest had been computed without giving effect to the preceding subsection
(b).

                                   ARTICLE II.
                           COLLECTION AND DISTRIBUTION

                  Section II.1. Collections on the Receivables. The Lender shall
be entitled with respect to all Receivables, (i) to receive and to hold as
collateral all Receivables and all Collections on Receivables in accordance with
the terms hereof, and (ii) to have and to exercise any and all rights to
collect, record, track and, during the continuance of an Event of Default, take
all actions to obtain Collections with respect to all Receivables.

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                  Section II.2. Distributions. On each Business Day, and
provided, that no Event of Default is continuing the Lender shall distribute any
and all Collections actually received in the Concentration Account prior to
12:00 p.m. (New York City time) on the immediately prior Business Day as
follows: FIRST, to the Lender, an amount in cash equal to fees and interest that
are due and payable as of such Business Day and have not otherwise been paid in
full by the Borrower, if any, until such amounts have been paid in full; SECOND,
to the Lender, an amount in cash equal to the Borrowing Base Deficiency, if any,
until such amount is paid in full; THIRD, to the Lender, an amount in cash equal
to the reduction of the principal amount of the Revolving Loan directed by the
Borrower to be repaid on such Business Day pursuant to Section 1.02(b), if any,
until such amount has been paid in full; FOURTH, to the Lender, an amount in
cash equal to the payment of any Lender Debt due and payable on such Business
Day, if any, until such amount has been paid in full; and FIFTH, to the
Borrower, all remaining amounts of Collections.

                  Section II.3. Distribution of Funds at the Maturity Date or
Upon an Event of Default. At the Maturity Date or upon the occurrence and during
the continuance of an Event of Default, subject to the rights and remedies of
the Lender pursuant to Section 3.02 hereof, the Lender shall distribute any and
all Collections as follows: FIRST, to the Lender, an amount in cash equal to any
and all accrued fees and collection costs as set forth in Sections 1.05 and
5.05, until such amount has been paid in full; SECOND, to the Lender, an amount
in cash equal to all accrued and unpaid interest on the Revolving Loan (at the
rates established under Section 1.05) until such amount has been paid in full;
THIRD, to the Lender, an amount in cash equal to the principal amount of the
Revolving Loan, until such amount is paid in full; FOURTH, to the Lender, an
amount in cash equal to the payment of any other Lender Debt due and payable on
such date, until such amount has been paid in full; and FIFTH, to the Borrower,
all remaining amounts of Collections.

                  Section II.4. Distributions to the Borrower Generally.
Distributions to the Borrower on each Business Day shall be deposited in the
Borrower Account.

                                  ARTICLE III.
                   REPRESENTATIONS AND WARRANTIES; COVENANTS;
                                EVENTS OF DEFAULT

                  Section III.1. Representations and Warranties; Covenants. The
Borrower makes on the Initial Funding Date and on each subsequent Funding Date,
the representations and warranties set forth in Exhibit III hereto, and hereby
agrees to perform and observe the covenants set forth in Exhibit IV hereto.

                  Section III.2. Events of Default; Remedies. (a) If any Event
of Default shall occur and be continuing, the Lender may, by Written Notice to
the Borrower, take either or both of the following actions: (x) declare the
Maturity Date to have occurred, and (y) without limiting any rights hereunder
and subject to applicable law, replace the Borrower or the Borrower's agent, as
the case may be, in its performance of any or all of the "Primary Servicer
Responsibilities" under the RPTA (which replacement may be effectuated through
the outplacement to a qualified and experienced third-party of all back office
duties, including billing, collection and processing responsibilities, and
access to all personnel, hardware and software utilized in connection with such
responsibilities); provided, that with respect to the Event of Default in clause
(h) of Exhibit V, the Maturity Date shall be deemed to have occurred
automatically and without notice. Upon any such declaration or designation, the
Lender shall have, in addition to the rights and remedies which it 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.

                  (b) Right of Set-Off. The Borrower hereby irrevocably
authorizes and instructs the Lender to set-off the full amount of any Lender
Debt due and payable against (i) any Collections, or (ii) the principal amount
of any Revolving Advance requested on or after such due date. No further
notification, act or consent of any nature whatsoever is required prior to the
right of the Lender to exercise such right of set-off; provided, however, a
member of the Lender Group shall notify the Borrower: (1) a set-off pursuant to
this Section 3.02 occurred, (2) the amount of such set-off and (3) a description
of the Lender Debt that was due and payable.

                  Section III.3. Attorney-in-Fact. The Borrower hereby
irrevocably designates and appoints the Lender, the Master Servicer and each
other Person in the Lender Group, to the extent permitted by applicable law

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and regulation, as the Borrower's attorneys-in-fact, which irrevocable power of
attorney is coupled with an interest, with authority, upon the continuance of an
Event of Default (and to the extent not prohibited under applicable law and
regulations) to (i) endorse or sign the Borrower's name to financing statements,
remittances, invoices, assignments, checks, drafts, or other instruments or
documents in respect of the Receivables, (ii) notify Obligors to make payments
on the Receivables directly to the Lender, and (iii) bring suit in the
Borrower's name and settle or compromise such Receivables as the Lender or the
Master Servicer may, in its discretion, deem appropriate.

                                   ARTICLE IV.
                                    SECURITY

                  Section IV.1. Grant of Security Interest. (a) As collateral
security for the Borrower's obligations to pay the Lender Debt when due and
payable and its indemnification obligations hereunder, the Borrower hereby
grants to the Lender a first priority Lien on and security interest in and right
of set-off against all of the rights, title and interest of the Borrower in and
to (i) the Provider Documents, (ii) all of the Borrower's Accounts whether now
owned or hereafter acquired, (iii) any and all amounts held in any accounts
maintained at Fleet Bank. N.A., Wachovia Bank, N.A., Mellon Bank, N.A., The
Chase Manhattan Bank or any other bank in respect of any of the foregoing or in
compliance with any terms of this Agreement, (iv) all of the Additional
Collateral, (v) each Lender Lockbox and Lender Lockbox Account and (vi) all
proceeds of the foregoing (all of the foregoing, the "COLLATERAL"). This
Agreement shall be deemed to be a security agreement as understood under the
UCC.

                  (b) The Borrower agrees to execute, and hereby authorizes the
Lender to file, one or more financing statements or continuation statements or
amendments thereto or assignments thereof in respect of the Lien created
pursuant to this Section 4.01 which may at any time be required or, in the
opinion of the Lender, be desirable, and to do so without the signature of the
Borrower where permitted by law.

                                   ARTICLE V.
                                  MISCELLANEOUS

                  Section V.1. Amendments, etc. (a) No amendment or waiver of
any provision of this Agreement or consent to any departure therefrom by a party
hereto shall be effective unless in a writing signed by the Lender and the
Borrower and then such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No failure
on the part of the Lender or the Borrower 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.

                  (b) The parties hereto agree to make any change, modification
or amendment to this Agreement as may be requested by Fitch, Inc. or any other
rating agency then rating the healthcare financing program of the Lender, so
long as any such change, modification or amendment does not materially adversely
affect the parties hereto.

                  Section V.2. Notices, etc. All notices and other
communications hereunder shall, unless otherwise stated herein, be in writing
(which may include facsimile communication) and shall be faxed or delivered, (i)
to each party hereto (and the Lender hereby agrees that notices to or for its
benefit may be delivered to the Program Manager and such delivery to the Program
Manager shall be deemed received by the Lender), at its address set forth under
its name on the signature pages hereof or at such other address as shall be
designated by such party in a Written Notice to the other parties hereto, and
(ii) to the Program Manager and the Master Servicer at the addresses set forth
on Schedule I attached hereto and as such schedule may be amended from time to
time by the Lender. Notices and communications by facsimile shall be effective
when sent (and shall be immediately followed by hard copy sent by regular mail),
and notices and communications sent by other means shall be effective when
received.

                  Section V.3. Assignability. (a) This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
permitted successors and assigns.

                  (b) The Borrower may not assign its rights or obligations
hereunder or any interest herein without the prior written consent of the
Lender.

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                  Section V.4. Further Assurances. The Borrower shall, at its
cost and expense, upon the request of the Lender, duly execute and deliver, or
cause to be duly executed and delivered, to the Lender such further instruments
and do and cause to be done such further acts as may be necessary or proper in
the reasonable opinion of the Lender to carry out more effectively the
provisions and purposes of this Agreement.

                  Section V.5. Costs and Expenses; Collection Costs. (a) The
Borrower agrees to pay on demand (i) all reasonable non-legal costs and expenses
in connection with the preparation, execution and delivery of this Agreement;
(ii) the reasonable fees and out-of-pocket expenses of counsels for the Lender
and its Affiliates in connection with this transaction; and (iii) all reasonable
costs and expenses, if any (including reasonable counsel fees and expenses), of
the Lender and its Affiliates in connection with any waiver, modification,
supplement or amendment hereto, or the enforcement of this Agreement. The
Borrower further agrees to pay on the Initial Funding Date (and with respect to
costs and expenses incurred following the Initial Funding Date, within seven
days of demand therefor) (a) all reasonable costs and expenses incurred by the
Lender or its agent in connection with periodic audits of the Receivables, (b)
all reasonable costs and expenses (not to exceed $3,000 in any fiscal year of
the Borrower) incurred by the Master Servicer or the Program Manager to
accommodate any significant coding or data system changes made by the Borrower
that would affect the transmission or interpretation of data received through
the interface, and (c) all reasonable costs and expenses incurred by the Lender
for additional time and material expenses of the Master Servicer resulting from
a lack of either commercially reasonably cooperation or responsiveness of the
Borrower to agreed-upon protocol and schedules with the Master Servicer;
provided, that the Borrower has received Written Notice of the alleged lack of
cooperation or responsiveness and has been provided the opportunity to correct
such problems.

                  (b) In the event that the Lender shall retain an attorney or
attorneys to collect, enforce, protect, maintain, preserve or foreclose its
interests with respect to this Agreement, any other Documents, any Lender Debt,
any Receivable or the Lien on any Collateral or any other security for the
Lender Debt or under any instrument or document delivered pursuant to this
Agreement, or in connection with any Lender Debt, the Borrower shall pay all of
the reasonable costs and expenses of such collection, enforcement, protection,
maintenance, preservation or foreclosure, including reasonable attorneys' fees,
which amounts shall be part of the Lender Debt, and the Lender may take judgment
for all such amounts. The attorney's fees arising from such services, including
those of any appellate proceedings, and all reasonable expenses, costs, charges
and other fees incurred by such counsel in any way or with respect to or arising
out of or in connection with or relating to any of the events or actions
described in this Section 5.05 shall be payable by the Borrower to the Lender on
demand (with interest accruing from the earlier of two Business Days following
(i) the date of such demand and (ii) the date the Borrower became aware of the
incurrence of such cost), and shall be additional obligations under this
Agreement. Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include: recording costs, appraisal costs, paralegal
fees, costs and expenses; accountants' fees, costs and expenses; court costs and
expenses; photocopying and duplicating expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; telegram
charges; telecopier charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal services.

                  Section V.6. Confidentiality. (a) The Borrower and the Lender
hereby acknowledge that this Agreement and documents delivered hereunder or
under the Provider Documents (including, without limitation, any information
relating to the Borrower, any member of the Lender Group or any Provider)
contain confidential and proprietary information. Unless otherwise required by
applicable law, the Borrower and the Lender each hereby agrees to maintain the
confidentiality of this Agreement (and all drafts and other documents delivered
in connection therewith including, without limitation, any information relating
to the Borrower, any member of the Lender Group or any Provider delivered
hereunder or under the Provider Documents) in communications with third parties
and otherwise and to take all reasonable actions to prevent the unauthorized use
or disclosure of and to protect the confidentiality of such confidential
information; provided, that, such confidential information may be disclosed to
(i) the Borrower's legal counsel, accountants and auditors, the Providers under
the Provider Documents, and the Providers' investors, creditors, legal counsel,
accountants and auditors, (ii) the Program Manager, the Person then fulfilling
the "Primary Servicer Responsibilities" under the Provider Documents, each
member of the Lender Group, investors in and creditors of the Lender,
appropriate rating agencies with respect to the Lender, and each of their
respective legal counsel and auditors, (iii) any Person, if such information
otherwise becomes available to such Person or publicly available through no
fault of any party governed by this Section 5.06, (iv) any Governmental

                                       7
<PAGE>   11

Entity requesting such information, and (v) any other Person with the written
consent of the other party, which consent shall not be unreasonably withheld,
and provided further that the Borrower shall not disclose such confidential
information to any financial adviser, except with the consent of Lender, which
will not be unreasonably withheld. Notwithstanding the foregoing, the parties
hereto agree that the Parent, as a public company, may make such disclosure as
is required by state and federal law, including, but not limited to, such
filings as are required by the Securities and Exchange Commission.

                  (b) The Borrower understands and agrees that the Lender or the
Lender Group may suffer irreparable harm if the Borrower breaches its
obligations under Section 5.06(a) and that monetary damages shall be inadequate
to compensate the Lender for such breach. Accordingly, the Borrower agrees that,
in the event of a breach by the Borrower of Section 5.06(a), the Lender (or the
applicable member of the Lender Group, as the case may be), in addition and not
in limitation of its rights and remedies under law, shall be entitled to a
temporary restraining order, preliminary injunction and permanent injunction to
prevent or restrain any such breach.

                  Section V.7. Term and Termination; Early Termination Fee. (a)
This Agreement shall have an initial term commencing on the Initial Funding Date
and expiring on April 6, 2004 (the "INITIAL TERM"). Thereafter, the term of this
Agreement shall be automatically extended for annual successive terms (each a
"RENEWAL TERM") commencing on the last day of the Initial Term or a Renewal
Term, as the case may be, and expiring on the date twelve (12) Months
thereafter, unless the Lender or the Borrower provides Written Notice not less
than forty-five (45) days prior to the expiration of the Initial Term or a
Renewal Term, as the case may be, that such Person does not intend to extend the
term of this Agreement; provided, however, that if an Event of Default shall
have occurred and be continuing at the end of the Initial Term or a Renewal
Term, as the case may be, this Agreement will not automatically be extended
without the prior written consent of the Lender. The Borrower shall pay to the
Lender on the first day of each Renewal Term a fee equal to 0.50% of the
Revolving Commitment then in effect.

                  (b) The obligations of the Lender under this Agreement shall
continue in full force and effect from the date hereof until the Maturity Date.
Upon the payment in full of all Lender Debt, the Lender shall take all actions
and deliver all assignments, certificates, releases, notices and other
documents, at the Borrower's expense, as the Borrower may reasonably request to
effect such termination.

                  (c) The Borrower may terminate this Agreement at any time
prior to the Maturity Date upon (i) lapse of not less than thirty days' prior
Written Notice (which shall be irrevocable) to the Lender of default of the
commitment by the Lender pursuant to Article I hereof to make Revolving Advances
and (ii) payment in full of all Lender Debt, including all applicable fees,
charges, premiums and costs, all as provided hereunder, and in such occurrence
of clauses (i) and (ii) the commitment hereunder shall be deemed to be
terminated.

                  (d) If the Revolving Commitment is terminated or the Revolving
Loan becomes due and payable prior to the scheduled end of the Initial Term or
Renewal Term (including by reason of an Event of Default) the Borrower shall pay
to the Lender the Early Termination Fee; provided however that if the Lender
refuses a request by the Borrower to increase the Revolving Commitment pursuant
to Section 1.02(d) hereof and (i) within 105 days of the date the Borrower
receives written notice of the Lender's refusal, the Borrower, the Providers or
the Parent consummate a financing arrangement with another lender or lenders
(the "ALTERNATIVE FINANCING") and (ii) the commitments of the lending parties
under the Alternative Financing is equal to or greater than the Revolving
Commitment requested by the Borrower and all such commitments are effective
immediately upon the consummation of the Alternative Financing, no Early
Termination Fee shall be payable.

                  (e) The termination of this Agreement shall not affect any
rights of the Lender or any obligations of the Borrower arising on or prior to
the effective date of such termination, and the provisions hereof shall continue
to be fully operative until all Lender Debt incurred on or prior to such
termination has been paid and performed in full.

                  (f) Upon the giving of notice of an Event of Default under
this Agreement, all Lender Debt shall be due and payable on the date of the
Event of Default specified in such notice. Upon the (i) the termination of all
commitments and obligations of the Lender, and (ii) the indefeasible payment in
full of all Lender Debt, the Lender shall, at the Borrower's request and sole
cost and expense, execute and deliver to the Borrower such documents as the
Borrower shall reasonably request to evidence such termination.

                                       8
<PAGE>   12

                  (g) The Liens and rights granted to the Lender hereunder shall
continue in full force and effect, notwithstanding the termination of this
Agreement, until all of the Lender Debt has been indefeasibly paid in full in
cash.

                  (h) All indemnities representations, warranties, covenants,
waivers and agreements contained herein shall survive termination hereof unless
otherwise provided.

                  (i) Notwithstanding the foregoing, if after receipt of any
payment of all or any part of the Lender Debt, the Lender is for any reason
compelled to surrender such payment to any Person or entity because such payment
is determined to be void or voidable as a preference, an impermissible setoff, a
diversion of trust funds or for any other reason, this Agreement shall continue
in full force (except that the Revolving Commitment of the Lender shall have
been terminated), and the Borrower shall be liable to, and shall indemnify and
hold the Lender harmless for the amount of such payment surrendered until the
Lender shall have been finally and irrevocably paid in full. The provisions of
the foregoing sentence shall be and remain effective notwithstanding any
contrary action which may have been taken by the Lender in reliance upon such
payment, and any such contrary action so taken shall be without prejudice to the
Lender's rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.

                  Section V.8. No Liability of Lender. (a) Neither this
Agreement nor any document executed in connection herewith shall constitute an
assumption by the Lender of any obligation of the Borrower to any Obligor or the
Providers.

                  (b) Notwithstanding any other provision herein, no recourse
under any obligation, covenant, agreement or instrument of the Lender contained
herein or with respect hereto shall be had against any Related Person whether
arising by breach of contract, or otherwise at law or in equity (including any
claim in tort), whether express or implied, it being understood that the
agreements and other obligations of the Lender herein and with respect hereto
are solely its corporate obligations; provided, however, nothing herein above
shall operate as a release of any liability which may arise as a result of such
Related Person's gross negligence or willful misconduct. The provisions of this
Section 5.08 shall survive the termination of this Agreement.

                  Section V.9. Entire Agreement; Severability. (a) This
Agreement, including all exhibits and schedules hereto and the documents
referred to herein, embody the entire agreement and understanding of the parties
concerning the subject matter contained herein. This Agreement supersedes any
and all prior agreements and understandings between the parties, whether written
or oral.

                  (b) If any provision of this Agreement shall be declared
invalid or unenforceable, the parties hereto agree that the remaining provisions
of this Agreement shall continue in full force and effect.

                  Section V.10. GOVERNING LAW. THIS AGREEMENT SHALL, IN
ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATION LAW OF THE STATE OF NEW
YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTERESTS GRANTED HEREUNDER, OR REMEDIES RELATED
THERETO, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.

                  Section V.11. WAIVER OF JURY TRIAL, JURISDICTION AND VENUE.
EACH OF THE PARTIES HERETO HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE
EVENT OF ANY LITIGATION WITH RESPECT TO ANY MATTER RELATED TO THIS AGREEMENT,
AND HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN NEW YORK COUNTY, NEW YORK CITY, NEW YORK IN CONNECTION WITH
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. IN ANY
SUCH LITIGATION, EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE

                                       9
<PAGE>   13

MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO THE PARTIES HERETO AT THEIR
ADDRESSES SET FORTH ON THE SIGNATURE PAGE HEREOF. THE PARTIES HERETO SHALL
APPEAR IN ANSWER TO SUCH SUMMONS, COMPLAINT OR OTHER PROCESS WITHIN THE TIME
PRESCRIBED BY LAW, FAILING WHICH THE PARTY FAILING TO SO APPEAR SHALL BE DEEMED
IN DEFAULT AND JUDGMENT MAY BE ENTERED BY THE OTHER PARTY FOR THE AMOUNT OF THE
CLAIM AND OTHER RELIEF REQUESTED THEREIN.

                  Section V.12. Execution in Counterparts. This Agreement may be
executed in 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.

                  Section V.13. No Proceedings. The Borrower hereby agrees that
it will not institute against thE Lender any proceeding of the type referred to
in clause (h) of Exhibit V so long as any senior indebtedness issued by the
Lender shall be outstanding or there shall not have elapsed one year plus one
day since the last day on which any such senior indebtedness shall have been
outstanding.

               [Remainder of this page intentionally left blank.]

                                       10
<PAGE>   14

                  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.

      BORROWER:                         ATC FUNDING, LLC

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

                                        Address:  ATC Funding, LLC
                                                  1983 Marcus Avenue
                                                  Suite E-122
                                                  Lake Success, NY 11042

                                        Attention: Alan Levy, CFO
                                        Facsimile Number: (516) 750-1764

      LENDER:                           HFG HEALTHCO-4 LLC

                                        By:   HFG Healthco-4, Inc.

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

                                           c/o Lord Securities Corporation
                                           Two Wall Street
                                           New York, NY  10005
                                           Attention: Dwight Jenkins
                                           Facsimile Number:  (212) 346-9012

<PAGE>   15

                                   EXHIBIT I.

                                   DEFINITIONS

                  As used in the Agreement (including its Exhibits and
Schedules), 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):

                  "ACCOUNTS" means all accounts, chattel paper, instruments,
general intangibles and goodwill, whether now existing or hereafter arising,
including, all Receivables and all proceeds of the foregoing.

                  "ACCRUED AMOUNTS" means, as at any date, the aggregate amount
of accrued but unpaid (whether or not due and payable) (a) interest and (b)
Non-Utilization Fees.

                  "ADDITIONAL COLLATERAL" means all (i)(a) present and future
securities, security entitlements and securities accounts (collectively,
"INVESTMENT PROPERTY"); (b) all deposit accounts and all other goods and
personal property (including, without limitation, patents, patent applications,
trade names and trademarks and Federal, state and local tax refund claims of all
kinds), whether tangible or intangible, or whether now owned or hereafter
acquired and wherever located; and (c) all proceeds of every kind and nature,
including proceeds of proceeds, of any and all of the foregoing, and (ii) money
and cash; and all books, records and other property relating to or referring to
any of the foregoing including all books, records, ledger cards, data processing
records, computer software and other property and general intangibles at any
time used or useful in connection with, evidencing, embodying, referring to, or
relating to, any of the foregoing.

                  "AFFILIATE" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person. For the
purposes of this definition, "control", when used with respect to any specified
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise.

                  "AGREEMENT" has the meaning set forth in the preamble hereto.

                  "ALTERNATIVE FINANCING" has the meaning set forth in Section
5.07(d) hereto.

                  "APPLICABLE MARGIN" means, as of the first day of any Interest
Period, (i) if the average outstanding balance of the Revolving Loan during the
most recently ended Interest Period is $30,000,000 or less, 3.40% and (ii) if
the average outstanding balance of the Revolving Loan during the most recently
ended Interest Period is greater than $30,000,000, 3.00%.

                  "APPLIED MANAGEMENT" means Applied Management Solutions, Inc.,
a Delaware corporation.

                  "AUTHORIZED REPRESENTATIVE" means each Person designated from
time to time, as appropriate, in a Written Notice by the Borrower to the Lender
for the purposes of giving notices of borrowing, conversion or renewal of
Revolving Advances, which designation shall continue in force and effect until
terminated in a Written Notice to the Lender.

                  "BORROWER" has the meaning set forth in the preamble hereto.

                  "BORROWER ACCOUNT" means such bank account designated by the
Borrower by Written Notice to the Master Servicer, the Lender and the Program
Manager from time to time.

                  "BORROWING BASE" means, as of any time, an amount equal to (i)
85% of the Expected Net Value of Eligible Receivables as of such time (without
duplication of Unbilled Receivables) in each case and at all times as determined
by reference to and as set forth in the most recent Borrowing Base Certificate
delivered to the Lender by the Borrower as of such time minus (ii) the sum of
(x) Accrued Amounts and unpaid expenses under Sections 1.05 and 5.05 plus (y)
the Reserves, in each case as of such time.

                                       I-1
<PAGE>   16

                  "BORROWING BASE CERTIFICATE" means a certificate (which may be
sent by Transmission) signed by the Borrower and the Primary Servicer,
substantially in the form set forth in Exhibit VII hereto, which shall (i) if
the Borrower is requesting a Revolving Advance, specify the proposed Funding
Date and amount of such Revolving Advance and (ii) provide the most recently
available information (including updated information as of the close of business
on the day immediately prior to the day such Borrowing Base Certificate is
delivered) with respect to the Eligible Receivables of the Borrower (segregated
by the classes set forth in the definition of "Net Value Factor") that is set
forth in the general trial balance of the Providers, in form and substance
satisfactory to the Lender and the Master Servicer.

                  "BORROWING BASE DEFICIENCY" means, as of any date, the
positive difference, if any, between (x) the Revolving Loan minus (y) the
Borrowing Base indicated on the most recent Borrowing Base Certificate.

                  "BORROWING LIMIT" has the meaning set forth in Section
1.02(a).

                  "BUSINESS DAY" means any day on which banks are not authorized
or required to close in New York City, New York.

                  "CLAIMS" has the meaning set forth in Section 1.09(b).

                  "COLLATERAL" has the meaning set forth in Section 4.01(a).

                  "COLLECTIONS" means all cash collections, wire transfers,
electronic funds transfers and other cash proceeds of Receivables deposited in
or transferred to the Concentration Account, including, without limitation, all
cash proceeds thereof.

                  "CONCENTRATION ACCOUNT" means account number 205779 at the
Bank of New York ABA # 021000018.

                  "CONCENTRATION ACCOUNT AGREEMENT" means that certain
Concentration Account Agreement, dated the date hereof, among the Borrower, the
Lender, and the Concentration Account Bank, in substantially the form attached
hereto as Exhibit VIII-B, as such agreement may be amended, modified or
supplemented from time to time in accordance with its terms.

                  "CONCENTRATION ACCOUNT BANK" means Bank of New York.

                  "CREDIT AND COLLECTION POLICY" means those receivables credit
and collection policies and practices of the Borrower in effect on the date of
the Agreement and set forth in Schedule II hereto, as modified in accordance
with the terms hereof.

                  "DEBT" of any Person means (without duplication): (i) all
obligations of such party for borrowed money, (ii) all obligations of such party
evidenced by bonds, notes, debentures, or other similar instruments, (iii) all
obligations of such party to pay the deferred purchase price of property or
services (other than trade payables in the ordinary course of business), (iv)
all "capital leases" (as defined by GAAP) of such party, (v) all Debt of others
directly or indirectly guaranteed (which term shall not include endorsements in
the ordinary course of business) by such party, (vi) all obligations secured by
a Lien existing on property owned by such party, whether or not the obligations
secured thereby have been assumed by such party or are non-recourse to the
credit of such party (but only to the extent of the value of such property), and
(vii) all reimbursement obligations of such party (whether contingent or
otherwise) in respect of letters of credit, bankers' acceptances and similar
instruments.

                  "DEFAULT" means an event, act or condition which with the
giving of notice or the lapse of time, or both, would constitute an Event of
Default.

                  "DEFAULTED RECEIVABLE" means a Receivable (i) which is not a
Priority DIP Receivable and as to which the Obligor thereof or any other Person
obligated thereon has taken any action, or suffered any event to occur,

                                      I-2
<PAGE>   17

of the type described in paragraph (h) of Exhibit V, or (ii) which, consistent
with the Credit and Collection Policy, would be written off the applicable
Provider's books as uncollectible.

                  "DELINQUENCY RATIO" has the meaning set forth in the RPTA.

                  "DELINQUENT RECEIVABLE" means a Receivable (a) that has not
been paid in full on or following the 180th day following the date of original
invoicing thereof, or (b) that is a Denied Receivable.

                  "DENIED RECEIVABLE" means any Receivable as to which any
related representations or warranties have been discovered at any time to have
been breached.

                  "DEPOSITARY AGREEMENT" means those certain depositary account
agreements, among the Lender and a Lockbox Bank, in substantially the form
attached hereto as Exhibit VIII-A, as such agreement may be amended, modified or
supplemented from time to time in accordance with its terms.

                  "DISTRIBUTION" means any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any capital interest in the Borrower, or return any capital to its
members as such, or purchase, retire, defease, redeem or otherwise acquire for
value or make any payment in respect of any shares of any class of capital
interests in the Borrower or any warrants, rights or options to acquire any such
interests, now or hereafter outstanding.

                  "DOCUMENTS" means this Agreement, the Provider Documents, each
Borrowing Base Certificate, and each other document or instrument now or
hereafter executed and delivered to the Lender by or on behalf of the Borrower
pursuant to or in connection herewith or therewith.

                  "EARLY TERMINATION FEE" means, as of the termination of this
Agreement, a fee in an amount equal to the product of (A) the Revolving
Commitment at such time times (B) the percentage set forth below opposite the
applicable period for effective date of such termination:

<TABLE>
<CAPTION>
Effective date of decrease in Revolving Commitment        Fee percentage
--------------------------------------------------        --------------
<S>                                                       <C>
Initial Funding Date through April 5, 2002                3.0%

April 6, 2002 through April 5, 2003                       1.5%

April 6, 2003 through April 5, 2004                       1.0%

April 6, 2004 and thereafter                              0.0%
</TABLE>

                  "ELIGIBILITY CRITERIA" means the criteria and basis for
determining whether a Receivable shall be deemed by the Lender Group to qualify
as an Eligible Receivable, all as set forth in Exhibit VI hereto, as such
Eligibility Criteria may be modified from time to time by the Lender in its good
faith discretion upon Written Notice to the Borrower.

                  "ELIGIBLE RECEIVABLES" means Receivables that satisfy the
Eligibility Criteria, as determined by the Lender Group.

                  "EMPLOYEE BENEFIT PLAN" means any employee benefit plan within
the meaning of Section 3(3) of ERISA maintained by the Providers, the Borrower,
any of their respective ERISA Affiliates, or with respect to which any of them
have any liability.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

                                      I-3
<PAGE>   18
                  "ERISA AFFILIATE" means any entity which is under common
control with the Borrower within the meaning of ERISA or which is treated as a
single employer with the Borrower under the Internal Revenue Code of 1986, as
amended.

                  "EVENT OF DEFAULT" means any of the events specified in
Exhibit V hereto.

                  "EVENT OF TERMINATION" has the meaning set forth in the RPTA.

                  "EXCLUDED CLAIMS" has the meaning set forth in Section
1.09(b).

                  "EXCLUDED TAXES" means taxes upon or determined by reference
to the Lender's net income.

                  "EXPECTED NET VALUE" means, with respect to any Eligible
Receivable, the gross unpaid amount of such Receivable on date of creation
thereof, times the applicable Net Value Factor.

                  "FUNDING DATE" means, the Initial Funding Date and any
Business Day on which a Revolving Advance is made at the Borrower's request in
accordance with the provisions of this Agreement.

                  "GAAP" means generally accepted accounting principles in the
United States of America, applied on a consistent basis as set forth in Opinions
of the Accounting Principles Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards Board
and/or the rules and regulations of the Securities and Exchange Commission
and/or their respective successors and which are applicable in the circumstances
as of the date in question.

                  "GOVERNMENTAL ENTITY" means the United States of America, any
state, any political subdivision of a state and any agency or instrumentality of
the United States of America or any state or political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

                  "INDEMNIFIED PARTY" has the meaning set forth in Section
1.09(b).

                  "INITIAL FUNDING DATE" means the date of the initial Revolving
Advance in respect of Receivables hereunder.

                  "INITIAL TERM" has the meaning set forth in Section 5.07(a).

                  "INTEREST PAYMENT DATE" means the first Business Day of each
Month, commencing May 1, 2001 .

                  "INTEREST PERIOD" means each one Month period (or shorter
period ending on the Maturity Date); provided, that the initial Interest Period
shall commence on the Initial Funding Date and shall end on April 30, 2001.

                  "INVESTMENT GRADE RATED OBLIGOR" means an Obligor which as of
the date of determination has a rating from Standard & Poor's Rating Services, a
division of The McGraw-Hill Companies, Inc. of not less than BBB- and from
Moody's Investors Service, Inc. of not less than Baa.

                  "LAST SERVICE DATE" means, with respect to any Eligible
Receivable the date set forth on the related invoice or statement as the most
recent date on which medical personnel, services or goods were provided by the
related Provider to the related Obligor .

                  "LENDER" has the meaning set forth in the preamble hereto.

                  "LENDER DEBT" means and includes any and all amounts due,
whether now existing or hereafter arising, under the Agreement, including,
without limitation, any and all principal, interest, penalties, fees, charges,
premiums, indemnities and costs owed or owing to the Lender, the Program Manager
or the Master Servicer by the Borrower, any Provider, or any Affiliate of the
Borrower or any Provider, arising under or in connection with this Agreement,
the Provider Documents, the Depositary Agreement or any other Document, in each
instance, whether absolute or contingent, direct or indirect, secured or
unsecured, due or not, arising by operation of law or otherwise,

                                      I-4
<PAGE>   19

and all interest and other charges thereon, including, without limitation,
post-petition interest whether or not such interest is an allowable claim in a
bankruptcy.

                  "LENDER GROUP" means (i) the Lender, the Program Manager and
the Master Servicer, and (ii) the Lender's agents and delegates identified from
time to time to effectuate this Agreement.

                  "LENDER LOCKBOXES" means those lockboxes located at the
addresses set forth on Schedule IV to receive checks with respect to
Receivables.

                  "LENDER LOCKBOX ACCOUNTS" means those accounts at the Lockbox
Banks as set forth on Schedule IV as associated with the corresponding Lender
Lockboxes and established by the Providers in the name of and for the benefit
for the Lender to deposit collections, including collections received in the
Lender Lockboxes and collections received by wire transfer directly from
Obligors, all as more fully set forth in the applicable Depositary Agreement.

                  "LIBOR" means the rate established by the Program Manager two
Business Days prior to the first day of each Interest Period based on an
annualized 30-day interest rate (calculated on the basis of actual days elapsed
over a 360-day year) equal to the offered rate that appears on page 3750 of the
Telerate Service for U.S. dollar deposits of amounts and in funds comparable to
the principal amount of the Revolving Loan.

                  "LIEN" means any lien, mortgage, security interest, tax lien,
pledge, hypothecation, assignment, preference, priority, other charge or
encumbrance, or any other type of preferential arrangement of any kind or nature
whatsoever by or with any Person (including, without limitation, any conditional
sale or title retention agreement), whether arising by contract, operation of
law, or otherwise.

                  "LOCKBOX BANK" means each lockbox bank under a Depositary
Agreement.

                  "LOSS-TO-LIQUIDATION RATIO" means, as of the last Business Day
of each Month, a percentage equal to:

                                       DFR
                                       ---
                                        C

where:

                  DFR               = The Expected Net Value of all Eligible
                                    Receivables which became Defaulted
                                    Receivables in the Month immediately prior
                                    to the date of calculation.

                  C                 = Collections on such Eligible Receivables
                                    in the Month immediately prior to the date
                                    of calculation.

                  "MASTER SERVICER" means the Program Manager and any other
Person then identified by the Lender to the Borrower as being authorized to
administer and service Receivables.

                  "MATERIAL ADVERSE EFFECT" means any event, condition, change
or effect that (a) has a materially adverse effect on the business, Properties,
capitalization, liabilities, operations, prospects or financial condition of (i)
the Providers (in the aggregate) or (ii) the Borrower, (b) materially impairs
the ability of the Borrower to perform its obligations under this Agreement or
any other Document, (c) materially impairs the ability of the Providers (in the
aggregate) or the Borrower to perform their respective obligations under the
RPTA or any other Document, or (d) materially impairs the validity or
enforceability of, or materially impairs the rights, remedies or benefits
available to the Lender under this Agreement or (as assignee of the Borrower)
under the RPTA or any other Document.

                  "MATURITY DATE" means the earliest of (a) the date on which
this Agreement terminates in accordance with the provisions of Section 5.07(a),
(b) the occurrence of an Event of Default pursuant to clause (h) of Exhibit V
and (c) the date on which the Lender declares the Maturity Date to have occurred
upon an Event of Default in a Written Notice to the Borrower.

                                      I-5
<PAGE>   20

                  "MAXIMUM PERMISSIBLE RATE" has the meaning set forth in
Section 1.11(a).

                  "MONTH" means a calendar month.

                  "MULTIEMPLOYER PLAN" means a plan, within the meaning of
Section 3(37) of ERISA, as to which thE Borrower or any ERISA Affiliate
contributed or was required to contribute within the preceding five years.

                  "NET VALUE FACTOR" means, initially, the percentages set forth
on Schedule V attached hereto, as such percentages may be adjusted, upwards or
downwards with notice (which may be telephonic) to the Borrower, in the good
faith discretion of the Lender but in consultation with the Borrower and the
Primary Servicer. In adjusting the Net Value Factor, the Lender shall consider,
among other factors, the final Collections received within 180 days of the Last
Service Date of Receivables which arose during the one-Month, three-Month and
six-Month periods, ended at the end of the sixth preceding Month (without regard
to the factors set forth in the definition of "Defaulted Receivables").

                  "NON-UTILIZATION FEE" has the meaning set forth in Section
1.05(c).

                  "OBLIGOR" means any Person, who is responsible for the payment
of all or any portion of a Receivable.

                  "OTHER CORPORATIONS" means the Providers and each of their
direct and indirect parents or subsidiaries other than the Borrower.

                  "OTHER TAXES" has the meaning set forth in Section 1.08(b).

                  "OUTSTANDING BALANCE" means, as of any date of determination,
the aggregate outstanding principal balance of all Revolving Loans (plus
interest that is due and payable on the Revolving Loans that remains unpaid
beyond the Interest Payment Date), provided, that any Collections utilized to
reduce the principal amount of the Revolving Loan shall reduce the "Outstanding
Balance" hereunder only following a three Business Day clearance period applied
thereto.

                  "PARENT" means Staff Builders, Inc., a Delaware corporation.

                  "PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any 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.

                  "PLEDGE AGREEMENT" means that certain Pledge Agreement, dated
the date hereof, made by Parent and ATC Healthcare in favor of the Lender, in
substantially the form attached hereto as Exhibit X, as such agreement may be
amended, modified or supplemented from time to time in accordance with its
terms.

                  "PRIMARY SERVICER" has the meaning set forth in the RPTA.

                  "PRIORITY DIP RECEIVABLE" means a Receivable:

                  (i) the Obligor of which is the subject of a federal
bankruptcy case; and

                  (ii) the indebtedness of which constitutes a priority under 11
U.S.C.Section 507(a)(1).

                  "PROGRAM MANAGER" means (i) Healthcare Finance Group, Inc. or
(ii) any other Person then identified by the Lender to the Borrower as being
authorized to provide administrative services with respect to the Lender and the
Lender's finance, funding and collection of receivables.

                                      I-6
<PAGE>   21

                  "PROPERTY" means property of all kinds, movable, immovable,
corporeal, incorporeal, real, personal or mixed, tangible or intangible
(including, without limitation, all rights relating thereto), whether owned or
acquired on or after the date of this Agreement.

                  "PROVIDER DOCUMENTS" has the meaning set forth in the RPTA.

                  "PROVIDERS" has the meaning set forth in the RPTA.

                  "RECEIVABLE INFORMATION" has the meaning set forth in the
RPTA.

                  "RECEIVABLES" means all accounts or general intangibles and
all other obligations for the payment of money, in each case, owing (or in the
case of Unbilled Receivables, to be owing) by an Obligor to a Provider and
arising out of the rendition of professional services, or the sale of products
by a Provider in the ordinary course of its business, including all rights to
reimbursement under any agreements with and payments from Obligors or other
Persons, together with, to the maximum extent permitted by law, all accounts and
general intangibles related thereto, all rights, remedies, guaranties, security
interests and Liens in respect of the foregoing, all books, records and other
Property evidencing or related to the foregoing, and all proceeds of any of the
foregoing.

                  "RELATED PERSON" means any incorporator, stockholder,
Affiliate (other than the Program Manager), agent, attorney, officer, director,
member, manager, employee or partner of the Lender or its members or its
stockholders.

                  "RENEWAL TERM" has the meaning set forth in Section 5.07(a).

                  "RESERVE" means, as of any date, an amount equal to the sum of
(i) the aggregate of any accrued, unpaid and past due, federally or state
mandated payment obligations owing by the Parent or any Provider and (ii) the
aggregate amount of any fees owed by ATC Healthcare to its franchisees who have
not executed, within 30 days of the Initial Funding Date, a letter confirming
ATC Healthcare's ownership of the Receivables.

                  "RESPONSIBLE OFFICER" of any Person, mean the president, chief
executive officer, chief operating officer, chief financial officer or
controller of such Person.

                  "REVOLVING ADVANCE" has the meaning set forth in Section
1.01(a).

                  "REVOLVING COMMITMENT" has the meaning set forth in Section
1.02(a).

                  "REVOLVING LOAN" has the meaning set forth in Section 1.01(a).

                  "RPTA" means that certain Receivables Purchase and Transfer
Agreement, dated as of the date of this Agreement, among the Primary Servicer,
the Providers, the Parent and the Borrower, as such agreement may be amended,
modified or supplemented from time to time in accordance with the terms hereof
and thereof.

                  "SERVICER TERMINATION EVENT" has the meaning set forth in the
RPTA.

                  "TANGIBLE NET WORTH" with respect to the Borrower, means, at
any time, the excess of (i) the Expected Net Value of all Receivables owned by
the Borrower, plus cash, plus investments, plus amounts which are owing from the
Lender to the Borrower minus (ii) the sum of all accrued unpaid monetary
obligations and accrued unpaid fees and expenses payable hereunder or otherwise
owed by the Borrower.

                  "TRANSMISSION" means, upon establishment of computer interface
between the Borrower and the Master Servicer in accordance with the
specifications established by the Master Servicer, the transmission of
Receivable Information through computer interface to the Master Servicer in a
manner satisfactory to the Master Servicer.

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

                                      I-7
<PAGE>   22

                  "UNBILLED RECEIVABLE" means a Receivable in respect of which
the goods have been shipped, or the services rendered, to the relevant Obligor,
and rights to payment therefor have accrued, but the invoice has not been
rendered to the applicable Obligor.

                  "WRITTEN NOTICE" and "IN WRITING" means any form of written
communication or a communication by means of telex, telecopier device, telegraph
or cable.

                  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, and not specifically defined herein, are
used herein as defined in such Article 9.

                                      I-8
<PAGE>   23

                                   EXHIBIT II.

                        CONDITIONS OF REVOLVING ADVANCES

                  1 Conditions Precedent on Initial Funding Date. The making of
the Revolving Advance on the Initial Funding Date is subject to the conditions
precedent that the Lender shall have received on or before the Initial Funding
Date the following, each (unless otherwise indicated) dated such date, in form
and substance satisfactory to the Lender:

                  (a) A certificate issued by the Secretary of State of the
State of Delaware, dated as of a recent date, as to the legal existence and good
standing of the Borrower (which certificate may be dated not more than 20 days
prior to the Initial Funding Date).

                  (b) Certified copies of the organizational documents and all
amendments thereto, certified copies of resolutions of the managers of the
Borrower approving this Agreement, certified copies of all documents filed to
register any and all assumed/trade names of the Borrower, and certified copies
of all documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement.

                  (c) A certificate of the Secretary or Assistant Secretary of
the Borrower certifying the names and true signatures of the officers of the
Borrower authorized to sign this Agreement and the other documents to be
delivered by it hereunder.

                  (d) A copy of the opening balance sheet of the Borrower as at
the Initial Funding Date, certified by a Responsible Officer of the Borrower.

                  (e) Acknowledgment or time-stamped receipt copies of proper
financing statements (showing the Borrower as debtor and the Lender as secured
party) duly filed on or before the Initial Funding Date under the UCC of all
jurisdictions that the Lender may deem necessary or reasonably desirable in
order to perfect the security interests contemplated by the Agreement.

                  (f) Completed requests for information (UCC search results)
and a schedule thereof listing all effective financing statements filed in the
applicable jurisdictions that name the Borrower as debtor, together with copies
of such financing statements.

                  (g) Releases of, and acknowledgment copies of proper
termination statements (Form UCC-3), if any, necessary to evidence the release
of all security interests, ownership and other rights of any Person previously
granted by Borrower in the Collateral.

                  (h) A favorable opinion of Clifford Chance Rogers & Wells LLP,
counsel to the Borrower, substantially in the form attached hereto as Exhibit
IX-A, and as to such other matters as the Lender Group requests.

                  (i) A favorable opinion of Clifford Chance Rogers & Wells LLP,
counsel for the Borrower, substantially in the form attached hereto as Exhibit
IX-B, and as to such other matters as the Lender Group requests.

                  (j) The Assignment of Contract as Collateral Security with
respect to the RPTA and the Pledge Agreement and assignments of all other
documents, lockboxes and lockbox accounts with respect to the RPTA, and the
other Provider Documents, duly executed by the Borrower and acknowledged by the
other Persons party to such Provider Documents.

                  (k) Originally executed copies of the RPTA and the other
Provider Documents, all other documentation required to be delivered with
respect to this Agreement, the RPTA and the other Documents, all in form and
substance satisfactory to the Lender, which agreements shall be in full force
and effect and enforceable in accordance with their respective terms.

                  (l) Evidence that all of the conditions precedent with respect
to the initial purchase under the RPTA have been satisfied or waived.

                                      II-1
<PAGE>   24

                  (m) Duly executed Depositary Agreements, together with
evidence satisfactory to the Lender that the Lender Lockboxes and the Lender
Lockbox Accounts have been established.

                  (n) Payment of a facility fee of $250,000 to Healthcare
Finance Group, Inc.

                  (o) Payment of all reasonable attorneys' fees incurred by the
Lender Group plus reasonable disbursements.

                  (p) A duly executed Pledge Agreement together with stock
certificates representing 100% of the issued and outstanding capital stock of
each Provider and Applied Management and stock powers for each such certificate,
undated and executed in blank.

                  (q) Evidence that the capitalization of the Borrower is
satisfactory to the Lender.

                  (r) Master Servicer Certificate. On or before the Initial
Funding Date, the Lender shall receive a certificate from the Master Servicer
stating that all computer linkups and interfaces necessary or desirable, in the
judgment of the Master Servicer, to effectuate the transactions and information
transfers contemplated hereunder, are fully operational to the reasonable
satisfaction of the Master Servicer.

                  (s) Completion of a due diligence review by the Lender (or its
agent) of the Providers, the results of which are satisfactory to the Lender.

                  2 Conditions Precedent on All Funding Dates. Each Revolving
Advance on a Funding Date (including the Initial Funding Date) shall be subject
to the further conditions precedent that the Borrower and the Lender shall have
agreed upon the terms of such Revolving Advance and also that:

                  (a) Intentionally omitted;

                  (b) the Borrower shall have delivered to the Lender, no later
than 10:30 a.m. on such Funding Date, in form and substance satisfactory to the
Lender a completed Borrowing Base Certificate together with such additional
information as may reasonably be requested by the Lender or the Master Servicer;
and

                  (c) on such Funding Date the following statements shall be
true and correct (and acceptance of the proceeds of such Revolving Advance shall
be deemed a representation and warranty by the Borrower that such statements are
then true and correct):

                           (i) the representations and warranties contained in
         Exhibits III and VII are true and correct in all material respects on
         and as of the date of such Revolving Advance as though made on and as
         of such date, and

                           (ii) no event has occurred and is continuing, or
         would result from such Revolving Advance or any actions connected
         therewith, that constitutes a Default or an Event of Default.

                                      II-2
<PAGE>   25

                                  EXHIBIT III.

                         REPRESENTATIONS AND WARRANTIES

                  The Borrower represents and warrants as follows:

                  (a) The Borrower is a limited liability company duly
organized, validly existing and in good standing under the laws of the State 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.

                  (b) The execution, delivery and performance by the Borrower of
the Agreement and the other documents to be delivered by it thereunder, (i) are
within the Borrower's powers, (ii) have been duly authorized by all necessary
limited liability company action, (iii) do not contravene (1) the Borrower's
operating agreement or certificate of formation, (2) any law, rule or regulation
applicable to the Borrower, (3) any contractual restriction binding on or
affecting the Borrower or its Property, or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting the Borrower or its Property, and
(iv) do not result in or require the creation of any Lien upon or with respect
to any of its Properties, other than the security interest created by the
Agreement. The Agreement has been duly executed and delivered by the Borrower.
The Borrower has previously furnished to the Lender a correct and complete copy
of the Borrower's certificate of formation and operating agreement including all
amendments thereto.

                  (c) No authorization or approval or other action by, and no
notice to or filing with, any Governmental Entity is required for the due
execution, delivery and performance by the Borrower of the Agreement or any
other document to be delivered thereunder.

                  (d) The Agreement constitutes the legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance with
its terms, except as limited by bankruptcy, insolvency, moratorium, fraudulent
conveyance or other laws relating to the enforcement of creditors' rights
generally and general principles of equity (regardless of whether enforcement is
sought at equity or law).

                  (e) The Borrower has all power and authority, and has all
permits, licenses, accreditations, certifications, authorizations, approvals,
consents and agreements of all Obligors, accreditation agencies and any other
Person necessary or required for the Borrower (i) to own the assets (including
Receivables) that it now owns, (ii) to carry on its business as now conducted,
(iii) to execute, deliver and perform the Agreement and the other Documents to
which it is a party, and (iv) to receive payments from the Obligors in the
manner contemplated in the Agreement and the RPTA.

                  (f) Except as disclosed on Schedule III, no Provider has been
notified by any Obligor or instrumentality, accreditation agency or any other
person, during the immediately preceding 12 Month period, that such party has
rescinded or not renewed, or is reasonably likely to rescind or not renew, any
such permit, license, accreditation, certification, authorization, approval,
consent or agreement granted by it to such Provider or to which it and such
Provider is a party, the recission, cancellation or non-renewal of which could
reasonably be expected to cause a Material Adverse Effect.

                  (g) As of the Initial Funding Date, all conditions precedent
set forth in Exhibit II have been fulfilled or waived in writing by the Lender,
and as of each Funding Date, the conditions precedent set forth in paragraph 2
of such Exhibit II shall have been fulfilled or waived in writing by the Lender.

                  (h) The opening balance sheet of the Borrower, copies of which
have been furnished to the Lender, fairly present the financial condition of the
Borrower as of the date thereof all in accordance with GAAP.

                  (i) The RPTA is in full force and effect and no Event of
Termination or Servicer Termination Event is continuing thereunder.

                  (j) There is no pending or, to the Borrower's knowledge,
threatened action or proceeding or injunction, writ or restraining order
affecting the Borrower or any Provider before any court, Governmental Entity or

                                      III-1
<PAGE>   26

arbitrator which could reasonably be expected to result in a Material Adverse
Effect, or which purports to affect the legality, validity or enforceability of
the Agreement, the RPTA or any other Document, and neither the Borrower nor any
Provider is currently the subject of, or has any present intention of
commencing, an insolvency proceeding or petition in bankruptcy.

                  (k) The Borrower is the legal and beneficial owner of the
Collateral free and clear of any Lien. Upon the effectiveness of this Agreement
the Lender shall acquire a valid security interest in the Collateral free and
clear of any Lien. No effective financing statement or other instrument similar
in effect covering any item of Collateral is on file in any recording office,
except those being terminated on or before the Initial Funding Date and those
filed in favor of the Borrower relating to the purchase of the Receivables under
the RPTA and those in favor of the Lender relating to the Agreement, and no
competing notice or notice inconsistent with the transactions contemplated in
the Agreement has been sent to any Obligor.

                  (l) All Receivable Information, information provided in the
application for the program effectuated by the Agreement, and each other
Document, report and Transmission provided by the Borrower to the Lender Group
is or shall be accurate in all material respects as of its date and as of the
date so furnished, and no such document 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.

                  (m) The principal place of business and chief executive office
of the Borrower and the office where the Borrower keeps its records concerning
the Collateral are located at the address referred to on the signature page of
the Agreement and there have been no other such locations for the four
immediately prior Months.

                  (n) The provisions of the Agreement create, legal and valid
Liens in all of the Collateral in the Lender's favor and when all proper filings
and other actions necessary to perfect such Liens have been completed, will
constitute a perfected and continuing Lien on all of the Collateral, having
priority over all other Liens on such Collateral, enforceable against the
Borrower and all third parties.

                  (o) The Borrower has not changed its principal place of
business or chief executive office in the last five years.

                  (p) The exact name of the Borrower is as set forth on the
signature page of the Agreement, and except as notified in writing to the
Lender, the Borrower has not changed its name in the last 12 Months, and, except
as notified in writing to the Lender, the Borrower did not use, nor does the
Borrower now use, any fictitious or trade name.

                  (q) Since the Funding Date prior to the making of this
representation, there has occurred no event which has or is reasonably likely to
have a Material Adverse Effect.

                  (r) Neither the Borrower nor any Provider is in violation
under any applicable statute, rule, order, decree or regulation of any court,
arbitrator or governmental body or agency having jurisdiction over the Borrower
or such Provider which has or is reasonably likely to have a Material Adverse
Effect.

                  (s) The Borrower has filed on a timely basis all tax returns
(federal, state and local) required to be filed and has paid, or made adequate
provision for payment of, all taxes, assessments and other governmental charges
due from the Borrower. No tax Lien has been filed and is now effective against
the Borrower or any of its Properties except any Lien in respect of taxes and
other charges not yet due or contested in good faith by appropriate proceedings.
To the Borrower's knowledge, there is no pending investigations of the Borrower
by any taxing authority nor any pending but unassessed tax liability of the
Borrower.

                  (t) The Borrower is solvent and will not become insolvent
after giving effect to the transactions contemplated by this Agreement; the
Borrower has not incurred debts or liabilities beyond its ability to pay; the
Borrower will, after giving effect to the transaction contemplated by this
Agreement, have an adequate amount of capital to conduct its business in the
foreseeable future.

                                      III-2
<PAGE>   27

                  (u) Other than as set forth on Schedule III hereto, the Lender
Lockboxes are the only post office boxes and the Lender Lockbox Accounts are the
only lockbox account maintained for Receivables, all checks and other
collections received in the Lender Lockboxes are deposited into the
corresponding Lender Lockbox Account within one Business Day of receipt thereof,
all funds on deposit in each Lender Lockbox Account are transmitted each
Business Day to the Concentration Account, and no direction is in effect
directing Obligors to remit payments on Receivables other than to the Lender
Lockbox or the Lender Lockbox Account, each as described on Schedule IV. The
Borrower agrees (i) not to instruct any Obligor to make any payment in respect
of the Receivables to the account described on Schedule III and to use
reasonable efforts (including, without limitation, the sending of a Notice to
Obligors to the applicable Obligors, in multiple copies if necessary) to prevent
any payment in respect of the Receivables from being made to such account and
(ii) to deposit any funds received in such account into a Lockbox Account within
one Business Day of receipt thereof.

                  (v) The Borrower has no pension plans or profit sharing plans.

                  (w) Except as disclosed on Schedule III hereto, there are no
pending civil or criminal investigations by any Governmental Entity involving
the Borrower, any Provider or any of their respective officers or directors and
none of the Borrower, any Provider or any of their respective officers or
directors has been involved in, or the subject of, any civil or criminal
investigation by any Governmental Entity.

                  (x) The sole business of the Borrower is as provided in its
organizational documents.

                  (y) The assets of the Borrower are free and clear of any Liens
in favor of the Internal Revenue Service, any Employee Benefit Plan, any
Multiemployer Plan or the PBGC other than inchoate tax Liens resulting from an
assessment of the Providers or the Borrower.

                  (z) None of the Eligible Receivables constitutes or has
constituted an obligation of any Person which is an Affiliate of the Borrower.

                  (aa) No transaction contemplated under this Agreement requires
compliance with any bulk sales act or similar law.

                  (bb) The Borrower has no Debt except hereunder and under the
RPTA.

                  (cc) All of the employees of the Providers are salaried
employees and are not, and do not claim to be independent contractors. No such
employee has any rights in, and has not claimed any rights in any Receivable.

                  (dd) Each Receivable represents the direct payment obligation
of the applicable Obligor, and is not subject to any condition that such Obligor
receive any payment or reimbursement from any third party.

                                      III-3
<PAGE>   28

                                   EXHIBIT IV.

                                    COVENANTS

                  Until the payment in full of all Lender Debt and the
termination of the Revolving Commitment hereunder:

                  (a) Compliance with Laws, etc. The Borrower will comply in all
material respects with all applicable laws, rules, regulations and orders and
preserve and maintain its limited liability company existence, rights,
franchises, qualifications, and privileges.

                  (b) Offices, Records and Books of Account. The Borrower will
keep its principal place of business and chief executive office and the office
where it keeps its records concerning the Collateral at the address of the
Borrower set forth under its name on the signature page to the Agreement or,
upon 30 days' prior Written Notice to the Lender, at any other locations in
jurisdictions where all actions reasonably requested by the Lender or otherwise
necessary to protect and perfect the Lender's interest in the Collateral have
been taken and completed. The Borrower shall keep its books and accounts in
accordance with GAAP and shall make a notation on its books and records,
including any computer files, to indicate that the Receivables have been
assigned as security to the Lender. The Borrower shall 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 collecting 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) and for providing
the Receivable Information.

                  (c) Performance and Compliance with Contracts and Credit and
Collection Policy. The Borrower will, at its expense, timely and fully perform
and comply (and will cause the Primary Servicer, the Providers or their
designees to fully perform and comply) with all material provisions, covenants
and other promises required to be observed by it under the contracts related to
the Receivables, and timely and fully comply in all material respects with the
Credit and Collection Policy in regard to each Receivable and the related
contract, and the Borrower shall maintain, at its expense, in full operation
each of the bank accounts and lockboxes required to be maintained under the
Agreement. The Borrower shall do nothing, nor suffer or permit any other Person,
to impede or interfere with the collection by the Lender, or the Master Servicer
on behalf of the Lender, of the Receivables.

                  (d) Notice of Breach of Representations and Warranties. The
Borrower shall promptly (and in no event later than two Business Days following
actual knowledge thereof) inform the Lender and the Master Servicer of any
breach of covenants or representations and warranties hereunder and under the
Provider Documents, including, without limitation, upon discovery of a breach of
the Eligibility Criteria set forth in Exhibit VI hereof. Notwithstanding the
foregoing, notice with regard to a breach of the Eligibility Criteria set forth
in Exhibit VI hereof shall be deemed given if appropriate information is
contained in a Transmission promptly after the occurrence of such breach;
provided that the Borrower must promptly, and in any event within two Business
Days notify the Lender (i) of any bankruptcy of an Obligor of which the Borrower
is aware and (ii) of the to writing-off of more than 10% or the current
Outstanding Balance of Eligible Receivables owing from any Obligor.

                  (e) Debt, Sales, Liens, etc. The Borrower will not incur or
assume any Debt or issue any securities except under or as contemplated by this
Agreement. The Borrower will not sell, assign (by operation of law or otherwise)
or otherwise dispose of, or create or suffer to exist any Liens upon or with
respect to, the Borrower's Properties, or upon or with respect to any account to
which any collections of the Receivables are sent, or assign any right to
receive income in respect thereof except (i) those Liens in favor of the Lender
or any assignee of the Lender relating to the Agreement, and (ii) those
assignments of Denied Receivables to the Providers upon receipt by the Borrower
of the respective Repurchase Price (as defined in the RPTA).

                  (f) Extension or Amendment of Receivables. Other than as
consistent with the past practices of the Providers, the Borrower shall not
amend, waive or agree, or otherwise suffer or permit any Provider to amend,
waive or agree, to any deviation from the terms or conditions of any Receivable
owned by the Borrower in a manner inconsistent with the Credit and Collection
Policy.

                                      IV-1
<PAGE>   29

                  (g) Change in Credit and Collection Policy. The Borrower will
not make any material change in the Credit and Collection Policy without the
prior written consent of the Lender; provided, however, that during the
continuance of an Event of Default, it will not make any change in the Credit
and Collection Policy.

                  (h) Audits and Visits. The Borrower will, from time to time
during regular business hours as requested by the Lender, permit the Lender upon
reasonable notice, without interfering with the Borrower's or the Providers'
businesses or operations and subject to compliance with applicable law in the
case of review of patient/customer information, or its agents or representatives
(including the Master Servicer), (i) to examine and make copies of and abstracts
from all books, records and documents (including, without limitation, computer
tapes and disks) in the possession or under the control of the Borrower relating
to Receivables including, without limitation, the related contracts, and (ii) to
visit the offices and properties of the Borrower for the purpose of examining
and auditing such materials described in clause (i) above, and to discuss
matters relating to Receivables or the Borrower's performance hereunder or under
the contracts with any of the officers or employees of the Borrower having
knowledge of such matters. During the continuance of an Event of Default, the
Borrower shall permit the Master Servicer to have at least one of its agents or
representatives physically present in the Borrower's administrative office
during normal business hours to assist the Borrower in the collection of
Receivables.

                  (i) Change in Payment Instructions. The Borrower will not
terminate any Lender Lockbox or Lender Lockbox Account, or make any change or
replacement in the instructions contained in any invoice, Notice to Obligor or
otherwise, or regarding payments with respect to the Receivables to be made to
the Borrower, the Lender or the Master Servicer, except upon the prior and
express direction of the Program Manager or the Lender.

                  (j) Reporting Requirements. The Borrower will provide to the
Lender (in multiple copies, if requested by the Lender) the following:

                              (i) on the first Business Day of each week, a copy
               of the Weekly Report delivered by the Primary Servicer to the
               Purchaser pursuant to Section 1.03 of the RPTA and a Borrowing
               Base Certificate based on reconciliations and adjustments
               reflected in such Weekly Report certified by a Responsible
               Officer of the Borrower and the Primary Servicer;

                              (ii) as soon as available and in any event within
               45 days after the end of each of the first three quarters of each
               fiscal year of the Borrower, balance sheets of the Borrower as of
               the end of such quarter and statements of income, cash flows and
               retained earnings of the Borrower for the period commencing at
               the beginning of the current fiscal year and ending with the end
               of such quarter, certified by the chief financial officer of the
               Borrower, and accompanied by a certificate of an authorized
               officer of the Borrower detailing its compliance for such fiscal
               period with the financial covenants contained in this Agreement;

                              (iii) as soon as available and in any event within
               90 days after the end of each fiscal year of the Borrower,
               balance sheets as of, and statements of income for, such fiscal
               year, and accompanied by a certificate of an authorized officer
               of the Borrower detailing its compliance for such fiscal period
               with the financial covenants contained in this Agreement;

                              (iv) promptly and in any event within five
               Business Days after the occurrence of each Default or Event of
               Default, a statement of a Responsible Officer of the Borrower
               setting forth details of such Default or Event of Default, and
               the action that the Borrower has taken and proposes to take with
               respect thereto;

                              (v) at least ten Business Days prior to any change
               in the Borrower's name, a notice setting forth the new name and
               the proposed effective date thereof;

                              (vi) promptly (and in no event later than two
               Business Days following actual knowledge or receipt thereof),
               Written Notice in reasonable detail, of (x) any Lien asserted or
               claim made against a Receivable, (y) the occurrence of an Event
               of Default, including the occurrence of any other event which
               could have a material adverse effect on the value of a
               Receivable, or (z) the results of any cost

                                      IV-2
<PAGE>   30

               report, investigations or similar audits of any Provider being
               conducted by any federal, state or county Governmental Entity or
               its agents or designees;

                              (vii) no later than two Business Days after the
               commencement thereof, Written Notice of all actions, suits, and
               proceedings before any Governmental Entity or arbitrator
               affecting the Borrower which, if determined adversely to the
               Borrower, could reasonably be expected to have a Material Adverse
               Effect;

                              (viii) as soon as possible and in any event within
               two Business Days after becoming aware of the occurrence thereof,
               Written Notice of any matter that could reasonably be expected to
               have a Material Adverse Effect;

                              (ix) within 90 days after the end of each fiscal
               year of the Borrower, a certificate from the chief financial
               officer of the Borrower stating that to his knowledge no Servicer
               Termination Event has occurred and exists as of the end of such
               fiscal year, or if in his opinion such a Servicer Termination
               Event has occurred and is continuing, a statement as to the
               nature thereof; and

                              (x) such other information respecting the
               Receivables or the condition or operations, financial or
               otherwise, of the Borrower as the Lender may from time to time
               reasonably request.

                  (k) Notice of Proceedings; Overpayments. The Borrower shall
promptly notify the Master Servicer (and modify the next Borrowing Base
Certificate to be delivered hereunder) in the event of any action, suit,
proceeding, dispute, set-off, deduction, defense or counterclaim, in excess of
$50,000, in the aggregate at any time, that is or may be asserted by an Obligor
with respect to Receivables related to such Obligor. The Borrower shall make, or
cause to be made, all payments to the Obligors necessary to prevent the Obligors
from offsetting any earlier overpayment to the Borrower or the Providers against
any amounts the Obligors owe on any Receivables.

                  (l) Officer's Certificate. On the dates the financial
statements referred to in clause (j) above are to be delivered after the Initial
Funding Date, the chief financial officer (or in the case of the Weekly Report
delivered pursuant to clause (j)(i), a Responsible Officer)of the Borrower shall
deliver a certificate to the Lender, stating that, as of such date, (i) all
representations and warranties are true and correct, (ii) the conditions
precedent set forth in paragraph 2 of Exhibit II have been fulfilled or waived
in writing by the Lender, and (iii) no Event of Default exists and is
continuing.

                  (m) Further Instruments, Continuation Statements. The Borrower
shall, at its expense, promptly execute and deliver all further instruments and
documents, and take all further action that the Program Manager or the Lender
may reasonably request, from time to time, in order to perfect, protect or more
fully evidence the Lender's security interest in the Collateral, or to enable
the Lender or the Program Manager to exercise or enforce the rights of the
Lender hereunder or in the Collateral. Without limiting the generality of the
foregoing, the Borrower will upon the request of the Program Manager execute and
file such UCC financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be, in the
opinion of the Program Manager, necessary or appropriate. The Borrower hereby
authorizes the Program Manager to file one or more financing or continuation
statements and amendments thereto and assignments thereof, relative to all or
any of the Collateral now existing or hereafter arising without the signature of
the Borrower where permitted by law. If the Borrower fails to perform any of its
agreements or obligations under the Agreement, the Program Manager may (but
shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the expenses of the Program Manager incurred in
connection therewith shall be payable by the Borrower.

                  (n) Merger, Consolidation. The Borrower shall not merge with
or into, consolidate with or into, or enter into any agreement to merge or
consolidate with or into, another Person, or convey, transfer, lease or
otherwise dispose of all or substantially all of its assets (whether now owned
or hereafter acquired).

                  (o) No "Instruments". The Borrower shall not take any action
which would allow, result in or cause any Eligible Receivable to be evidenced by
an "instrument" within the meaning of the UCC of the applicable jurisdiction.

                                      IV-3
<PAGE>   31

                  (p) Preservation of Company Existence. The Borrower shall
preserve and maintain its existence, rights, franchises and privileges in the
jurisdiction of its organization, and qualify and remain qualified in good
standing as a foreign corporation in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualification would have a Material Adverse Effect.

                  (q) Provider Documents. The Borrower will, at its sole
expense, timely and fully perform and comply with all provisions, covenants and
other promises required to be observed by it under the Provider Documents,
maintain the Provider Documents in full force and effect, enforce the Provider
Documents in accordance with its terms, take all such action to such end as may
be from time to time reasonably requested by the Lender, and make to any party
to the Provider Documents such demands and requests for information and reports
or for action as the Borrower is entitled to make thereunder and as may be from
time to time reasonably requested by the Lender. The Borrower shall not permit
any waiver, modification or amendment of the Provider Documents.

                                      IV-4
<PAGE>   32

                                SPECIAL COVENANTS
                               ENTITY SEPARATENESS

                  Until the payment in full of all Lender Debt and the
termination of the Revolving Commitment hereunder:

                  (i) The Borrower will at all times maintain at least one
independent manager who is (x) not a current or former officer, director,
manager or employee of an Affiliate of the Borrower or any Other Corporation and
who is not a current or former officer or employee of the Borrower and (y) not
the holder of any stock or any other equity interest in any Other Corporation or
any of their respective Affiliates.

                  (ii) The Borrower will not direct or participate in the
management of any of the Other Corporations' operations.

                  (iii) The Borrower will at all times be adequately capitalized
in light of its contemplated business.

                  (iv) The Borrower will at all times provide for its own
operating expenses and liabilities from its own funds.

                  (v) Subject to consolidation with the Providers for accounting
and tax purposes, the Borrower will maintain its assets and transactions
separately from those of the Other Corporations and reflect such assets and
transactions in financial statements separate and distinct from those of the
Other Corporations and evidence such assets and transactions by appropriate
entries in books and records separate and distinct from those of the Other
Corporations. The Borrower will not hold itself out as being liable, primarily
or secondarily, for any obligations of the Other Corporations.

                  (vi) The Borrower will not maintain any joint account with any
Provider or any Other Corporation, or be a party, whether as a co-obligor or
otherwise, to any agreement to which any Other Corporation is a party (other
than any Provider Document) or become liable as a guarantor or otherwise with
respect to any indebtedness or contractual obligation of any Other Corporation.

                  (vii) Other than as contemplated under this Agreement or under
any other Document and the payment of dividends or distributions to its members,
the Borrower will not make any payment or distribution of assets with respect to
any obligation of any Other Corporation or grant a Lien on any of its assets to
secure any obligation of any Other Corporation.

                  (viii) The Borrower will not make any loans, advances or
otherwise extend credit to any of the Other Corporations, provided, that the
Borrower may issue dividends or distributions to each of its members to the
extent otherwise permitted under this Agreement and under applicable law.

                  (ix) The Borrower will hold regular duly noticed meetings of
its members and make and retain minutes of such meetings.

                  (x) The Borrower will comply in full with the procedures set
forth in the Documents with respect to the assignment of all assets from any of
the Other Corporations.

                  (xi) The Borrower will not engage in any transaction with any
of the Other Corporations or any of their respective subsidiaries, except as
permitted or contemplated by the Agreement and as contemplated by the Documents.

                  (xii) The Borrower will not enter into any transaction with
any Affiliate or third party except (a)(x) as permitted or contemplated by this
Agreement or the Documents or (y) investments of cash and cash equivalents with
third parties and (b) on terms and conditions which reasonably approximate an
arm's length transaction between unaffiliated parties.

                                      IV-5
<PAGE>   33

                  (xiii) The Borrower will not amend, modify or supplement its
organizational documents.

                  (xiv) The Borrower will not have any subsidiaries nor
ownership interest in any other entities.

                                      IV-6
<PAGE>   34

                                   EXHIBIT V.

                                EVENTS OF DEFAULT

                  Each of the following shall be an "EVENT OF DEFAULT":

                  (a) The Borrower shall default in the due and punctual payment
of the principal of the Revolving Loan, when and as the same shall become due
and payable (except that the Borrower shall have up five Business Days to cure
such a default with respect to a Borrowing Base Deficiency) whether pursuant to
Article II of this Agreement, at maturity, by acceleration or otherwise.

                  (b) The Borrower shall default in the due and punctual payment
of any installment of interest on the Revolving Loan or any other Lender Debt,
including, without limitation, any fee or expense owing to the Lender pursuant
to any of the Documents, when and as such amount of interest, fee or expense
shall become due and payable and such default shall continue unremedied for
three Business Days.

                  (c) Any material provision of any Document is no longer in
full force and effect or there shall be continuing a default in the performance
or observance of any covenant, agreement or provision (other than as described
in clause (a) or (b) above) contained in this Agreement or any other Document or
in any instrument or document evidencing or creating any obligation, guaranty or
Lien directly or indirectly in favor of the Lender in connection with or
pursuant to this Agreement or any Lender Debt, and, except in the case of the
agreements and covenants contained in any Document as to each of which no notice
or grace period shall apply, such default continues for a period of 30 days (or,
in the case where agreements and covenants contained in any Document provide for
a grace period that is less than 30 days, continuance of a default for such
shorter period) after the earlier of (i) there has been given Written Notice of
such default to either of the Borrower or the Primary Servicer on behalf of any
Provider by the Lender or (ii) discovery thereof by the Borrower; or if this
Agreement or any other Document or any such other instrument or document shall
terminate, be terminated or become void or unenforceable for any reason
whatsoever without the written consent of the Lender.

                  (d) An Event of Termination shall have occurred under the
RPTA.

                  (e) Any representation or warranty made or deemed made by the
Borrower (other than with respect to the eligibility of Receivables as Eligible
Receivables hereunder) under or in connection with the Agreement or any other
Document or any information or report delivered by the Borrower (other than with
respect to the Providers) pursuant to the Agreement or any other Document shall
prove to have been incorrect or untrue in any material respect when made or
deemed made or delivered.

                  (f) The Borrower shall incur any Debt other than under the
Agreement or the RPTA.

                  (g) This Agreement shall for any reason (other than pursuant
to the terms hereof) fail or cease to create, or the security interest created
by this Agreement fails or ceases to be, a valid and perfected first priority
security interest in the Collateral free and clear of all Liens (other than
Liens referred to in clauses (i) and (ii) of paragraph (e) of Exhibit IV).

                  (h) The Borrower or any Provider shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Borrower or
any Provider seeking to adjudicate it a 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, custodian or other
similar official for it or for any substantial part of its Property and, in the
case of any such proceeding instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or unstayed for a period of 30
days, or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its Property) shall occur; or the Borrower or any Provider
shall take any action to authorize any of the actions set forth above in this
paragraph (i).

                                      V-1
<PAGE>   35

                  (i) There shall have occurred any Material Adverse Effect.

                  (j) The Borrower (x) shall have entered into any material
transaction or agreement and not provided prompt Written Notice thereof to the
Lender, or (y) shall have consummated, any transaction or agreement intended to
result in (i) the merger or consolidation of the Borrower, (ii) the acquisition
of all or a substantial portion of the assets of any Person, (iii) the transfer,
sale, assignment, lease or other disposition of all or a substantial portion of
the Borrower's assets or Properties, (iv) a change in the general nature of the
Borrower's business, or (v) the sale of a controlling interest, directly or
indirectly, in the Borrower.

                  (k) The Loss-to-Liquidation Ratio at end of any Month exceeds
7.5%.

                  (l) The arithmetic average of the Loss-to-Liquidation Ratios
for any three Months exceeds 5%.

                  (m) The Delinquency Ratio at the end of any Month exceeds 15%.

                  (n) The arithmetic average of the Delinquency Ratios for any
three consecutive Months exceeds 12%.

                  (o) Judgments or orders for payment of money (other than
judgments or orders in respect of which adequate insurance is maintained for the
payment thereof) in excess of $10,000 in the aggregate against the Borrower
remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a
period of 30 days or more.

                  (p) Any governmental authority (including, without limitation,
the Internal Revenue Service or the PBGC) files a notice of a Lien against (i)
any of the Receivables or (ii) assets other than the Receivables involving an
aggregate amount in excess of $25,000 which remains unpaid or discharged for a
period of 30 days or more.

                  (q) The Borrower shall fail to discharge within a period of 30
days after the commencement thereof any attachment, sequestration, forfeiture,
or similar proceeding or proceedings involving an aggregate amount in excess of
$25,000 against any of its Properties.

                  (r) The Borrower does not pay or discharge at or before
maturity or before becoming delinquent all taxes, levies, assessments, and
governmental charges imposed on it or its income or profits or any of its
Property, except any taxes, levies, assessments or charges contested in good
faith by appropriate proceedings.

                  (s) The Borrower sells, leases, assigns, transfers, or
otherwise disposes of any of its Receivables, except as permitted or
contemplated under the Agreement.

                  (t) The Borrower declares or makes any Distribution, unless
both prior and subsequent to the effectiveness of such proposed Distribution,
(i) no Event of Default is continuing, including an Event of Default under
clause (u) of this Exhibit V hereof, (ii) such Distribution is in full
compliance with applicable law, including the law of the State of Delaware as in
effect at such time, and (iii) the Borrower and the recipient of such
Distribution have taken all necessary and appropriate action to effectuate such
Distribution.

                  (u) The Borrower engages in any business other than solely the
businesses of directly or indirectly purchasing Receivables from the Providers
and in financing such Receivables with the Lender hereunder and the other
transactions permitted or contemplated hereby.

                  (v) The Borrower shall at any time fail to maintain a Tangible
Net Worth of at least 3% of the higher of (i) the Borrowing Limit, and (ii) the
then outstanding amount of the Revolving Loan.

                  (w) Any representation or warranty made or deemed made by any
Provider under or in connection with the RPTA or any information or report
delivered by any Provider pursuant to the RPTA shall prove to have been
incorrect or untrue in any material respect when made or deemed made or
delivered and such misstatement causes an Event of Default under the RPTA.

                                      V-2
<PAGE>   36

                  (x) As of any date after the Initial Funding Date, more than
15% of all outstanding Eligible Receivables are aged more than 120 days but less
than 180 days from the respective Last Service Date of such Eligible
Receivables.

                  (y) As of any date, Collections on all Eligible Receivables
that have been liquidated or written off during the then most recent 13 week
period, are less than 85% of the aggregate gross value (billed amount) of such
Eligible Receivables.

                                      V-3
<PAGE>   37

                                   EXHIBIT VI.

                              ELIGIBILITY CRITERIA

                  The following shall constitute the eligibility criteria for
acceptance of Receivables for financing and inclusion in the Borrowing Base
under the Agreement (the "ELIGIBILITY CRITERIA"):

                  (a) The information provided by the Borrower with respect to
each such Receivable is complete and correct and all documents, attestations and
agreements relating thereto that have been delivered to the Lender are true and
correct. Except with respect to Unbilled Receivables sold or contributed to the
Borrower, the related Provider has billed the applicable Obligor and has
delivered to such Obligor all requested supporting claim documents with respect
to such Receivable and no amounts with respect to such Receivable have been paid
as of the date and time of the inclusion of such Receivable in the Borrowing
Base. Each Provider has, or has the right to use, valid provider identification
numbers and licenses to generate valid Receivables. Except with respect to
Unbilled Receivables sold or contributed to the Borrower, all information set
forth in the bill and supporting claim documents with respect to such Receivable
is true, complete and correct; if additional information is requested by the
Obligor, the Borrower (or the related Provider) has or will promptly provide the
same, and if any error has been made with respect to such information, the
Borrower (or the related Provider) will promptly correct the same and, if
necessary, rebill such Receivable. The Obligor of each such Receivable has duly
and validly executed the time card related to such Receivable.

                  (b) Each such Receivable (i) is payable, in an amount not less
than its Expected Net Value, by the Obligor identified by the related Provider
as being obligated to do so, (ii) is based on an actual and bona fide rendition
of services or sale of goods to the Obligor by the related Provider in the
ordinary course of business, (iii) is denominated and payable only in U.S.
dollars in the United States and (iv) is an account or general intangible within
the meaning of the UCC of the state in which the related Provider has its
principal place of business and is not evidenced by any instrument or chattel
paper.

                  (c) Each such Receivable (i) is not the subject of any action,
suit, proceeding or dispute (pending or threatened), setoff, counterclaim,
defense, abatement, suspension, deferment, deductible, reduction or termination
by the Obligor thereof (other than any portion of such Receivable which is being
disputed by the Obligor which portion shall not be an "Eligible Receivable"),
(ii) is not past, or within 60 days of, the statutory limit for collection
applicable to the Obligor thereof or is not aged more than 180 days from its
Last Service Date, and (iii) has been billed (or, in the case of Unbilled
Receivables sold or contributed to the Borrower, shall be billed) to the Obligor
thereof on a date fewer than fourteen (14) days after the Last Service Date
provided that with respect to Receivables billed on a monthly cycle at the
request of the Obligor, such Receivable has been billed (or, if such Receivable
is an Unbilled Receivable and has been sold or contributed to the Borrower,
shall be billed) within forty-five (45) days after the Last Service Date.

                  (d) Neither the Borrower nor the related Provider has any
guaranty of, letter of credit providing credit support for, or collateral
security for, such Receivable, other than any such guaranty, letter of credit or
collateral security as has been assigned to the Lender, and any such guaranty,
letter of credit or collateral security is not subject to any Lien in favor of
any other Person.

                  (e) The relevant Provider has provided (or on the day such
Receivable is included in the Borrowing Base, is providing) the goods and
services related to such Receivable to the relevant Obligor.

                  (f) Intentionally omitted.

                  (g) The Obligor with respect to each such Receivable is (i)
not currently the subject of any bankruptcy, insolvency or receivership
proceeding (other than with respect to Priority DIP Receivables), nor is it
unable to make payments on its obligations when due, (ii) located in the United
States of America, (iii) not a subsidiary, parent or other Person that is an
Affiliate of any Provider and (iv) not the Obligor of Defaulted Receivables in
the past 12 Months (other than, for the purpose of this clause, as a result of
good faith disputes and discounts given in accordance with the Credit and
Collection Policy) which, in the aggregate, exceed 10% of the current gross
unpaid amount of all Eligible Receivables of such Obligor.

                                      VI-1
<PAGE>   38

                  (h) The financing of such Receivables hereunder is made in
good faith and without actual intent to hinder, delay or defraud present or
future creditors of the Borrower.

                  (i) The contract or other instrument obligating an Obligor to
make payment with respect to such Receivable (i) does not contain any provision
prohibiting the grant of a security interest in or the assignment of such
payment obligation from the relevant Provider to the Borrower, or from the
Borrower to the Lender, (ii) has been duly authorized and, together with such
Receivable, constitutes the legal, valid and binding obligation of the Obligor
in accordance with its terms, (iii) together with such Receivable, does not
contravene in any material respect any requirement of law applicable thereto,
and (iv) was in full force and effect and applicable to the Obligor at the time
the goods or services constituting the basis for such Receivable were sold or
performed.

                  (j) No consents by any third party to the sale of such
Receivable are required other than consents previously obtained in writing by
the Borrower, a copy of each such consent having been provided to the Lender.

                  (k) The inclusion of such Receivable in the Borrowing Base
would not increase the fraction expressed as a percentage where (i) the
numerator is the sum of the then outstanding principal amount of Eligible
Receivables for any Obligor (or group of Obligors) listed below included in the
Borrowing Base, and (ii) the denominator is the Borrowing Base for all Eligible
Receivables, above the corresponding maximum percentage listed below:

<TABLE>
<CAPTION>
           Obligor                                                Maximum
           -------                                                Percentage
                                                                  ----------
<S>                                                               <C>
           Each Investment Grade Rated Obligor                           15%

           Each other Obligor                                             3%
</TABLE>

                  (l) If a Priority DIP Receivable, the inclusion of such
Priority DIP Receivable in the Borrowing Base would not increase the fraction
expressed as a percentage where (i) the numerator is the sum of the then
outstanding principal amount of Priority DIP Receivables included in the
Borrowing Base, and (ii) the denominator is the Borrowing Base for all Eligible
Receivables, above 2%.

                  (m) No prior sale or assignment of security interest which is
still in effect on the applicable Funding Date has been made with respect to or
granted in any such Receivable.

                  (n) All personnel provided by any Provider to Obligors giving
rise to such Receivables are salaried employees of such Provider, are not
independent contractors of such Provider, and no Provider is aware of any claim
by any such personnel to be, or have the status of, an independent contractor.

                                      VI-2
<PAGE>   39

                                   EXHIBIT VII

                       FORM OF BORROWING BASE CERTIFICATE

HFG Healthco-4 LLC
Two Wall Street
New York, New York 10005

Ladies and Gentlemen:

                  The undersigned refers to the Loan and Security Agreement,
dated as of April 6, 2001 (as the same may be amended, supplemented, restated,
or modified from time to time, the "Loan Agreement") between ATC Funding, LLC (
the "Borrower") and HFG Healthco-4 LLC (the "Lender"). Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to them in the
Loan Agreement.

Part 1: Request for Revolving Advance. [To be completed only if a Revolving
Advance is being requested.]

                  In accordance with Section 1.03 of the Loan Agreement and in
fulfillment of the condition precedent set forth in Section 2(a) of Exhibit II
thereto, the Borrower hereby gives you irrevocable notice that the undersigned
requests a Revolving Advance under the Loan Agreement, and in connection
therewith sets forth below the information relating to such Revolving Advance as
required by Section 1.03 of the Loan Agreement:

                  Proposed Revolving Advance:

                              (i) The Funding Date of such Revolving Advance is
               requested to be _______ __, 200_; and

                              (ii) The amount of the Revolving Advance is
               requested to be $_______________.

                                      VII-1
<PAGE>   40

Part 2. Calculation of Borrowing Base
HFG HEALTHCO-4 LLC
Borrowing Base Report
Report Submission Date:_____________
Schedule #:______________
Transmission Date:______________

     Gross Receivables (from Transmission)

<TABLE>
<S>                                                                             <C>
II.      LESS: INELIGIBLE A/R, UNAPPLIED CASH AND OTHER
           MISCELLANEOUS (FROM TRANSMISSION)

     Eligible Receivables (from Transmission) (I - II )

     Additions since Transmission Date

     Unbilled from Weekly Download Report

     Unbilled from cut off of Weekly Download Report to end of
     business of day prior to this Report Submission Date

     Total Eligible Receivables (III + IV + V )

     Net Value Factor                                                                          96%

     Expected Total Value of Eligible Receivables (VI * VII)

     Deductions from ENV

     Unposted cash as of cut off for Transmission Date

     Collections since cut off for Transmission Date

     Other: discounts, adjustments, repurchased claims, bad debts, etc.

     Total deductions (IX + X + XI)

     Expected Net Value of Eligible Receivables (VIII - XII )

     Advance Rate Percentage                                                                   85%

     Maximum Loan Available on Collateral (XIII * XIV)

     Reserves

     Maximum Loan Available on Collateral net of Reserves (XV - XVII)

     Maximum Loan Available per Agreement                                                 $25,000,000

     Total Loan Availability (the lesser of XVII or XVIII)
</TABLE>

                                     VII-2

<PAGE>   41

     Outstanding Loan Balance Prior Report

     Plus Draws Since Prior Report

     Interest Due/Fees

     Additional Advance Requested

     LOAN BALANCE THIS REPORT

     NET AVAILABILITY (XIX minus XXIV)

Each of the undersigned represents and warrants that:

(i) the foregoing information is true, complete and correct on the date hereof
and will be true, complete and correct on the date of the proposed Revolving
Advance; (ii) the collateral reflected herein complies with and conforms to the
Eligibility Criteria set forth in Exhibit VI to the Loan Agreement; (iii) the
representations, warranties and covenants contained in Exhibits III and IV of
the Loan Agreement are true, correct, and in compliance on and as of the date
hereof, and, if a Revolving Advance is requested herein, will be true, correct
and in compliance after giving effect to such Revolving Advance and to the
application of the proceeds thereof on and as of such date; (iv) the Borrower is
in compliance with each of the terms, covenants, and conditions set forth in the
Loan Agreement; (v) no Default or Event of Default has occurred and is
continuing, or would result from the Revolving Advance requested herein or from
the application of the proceeds thereof; (vi) neither the Borrower nor any
Provider has diverted or permitted to be diverted any such payments on Accounts
from the Lender Lockbox Accounts or the Concentration Account; and (vii) the
aggregate outstanding principal amount of the Revolving Advances after giving
effect to the Revolving Advance requested herein is not in excess of the
Borrowing Limit.

The Borrower promises to pay to HFG Healthco-4 LLC the new loan balances
reflected above, plus interest, as set forth in the Loan Agreement.

                                              Very truly yours,

                                              ATC FUNDING, LLC

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

                                              ATC HEALTHCARE SERVICES, INC.

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

                                              ATC STAFFING SERVICES, INC.

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

                                     VII-3
<PAGE>   42

EXHIBIT VIII-A

FORM OF DEPOSITARY AGREEMENT

[See Tab 18]

                                    VIII-A-1
<PAGE>   43

         EXHIBIT VIII-B

         FORM OF CONCENTRATION ACCOUNT AGREEMENT

         [N/A]

                                    VIII-B-1
<PAGE>   44

         EXHIBIT IX-A

         FORM OF OPINION OF COUNSEL

                                   [See Tab 9]

                                     IX-A-1
<PAGE>   45

                                  EXHIBIT IX-B

                           FORM OF OPINION OF COUNSEL

                                  [See Tab 10]

                                     IX-B-1
<PAGE>   46

                                    EXHIBIT X

                              FORM OF PARENT PLEDGE

                                       X-1
<PAGE>   47

                                   SCHEDULE I
                              ADDRESSES FOR NOTICE

                           If to the Program Manager:

                                        Healthcare Finance Group, Inc.
                                          110 Wall Street, 2nd Floor
                                           New York, New York 10005
                                 Attention: David Hyams, Chief Credit Officer
                                              Tel:(212) 785-9212
                                              Fax:(212) 785-9211

                           If to the Master Servicer:

                                       Healthcare Finance Group, Inc.
                                         110 Wall Street, 2nd Floor
                                          New York, New York 10005
                                Attention: David Hyams, Chief Credit Officer
                                             Tel:(212) 785-9212
                                             Fax:(212) 785-9211

                               If to the Borrower:
                        c/o ATC Healthcare Services, Inc.
                               1983 Marcus Avenue
                             Lake Success, NY 11042
                            Attention: Alan Levy, CFO
                               Tel:(516) 750-1666
                               Fax:(516) 750-1754

<PAGE>   48

                                   SCHEDULE II

                          CREDIT AND COLLECTION POLICY

                                  See attached.

<PAGE>   49

                                  SCHEDULE III

                                   DISCLOSURES

                          [TO BE DELIVERED BY BORROWER]

<PAGE>   50

                                   SCHEDULE IV

                               LOCKBOX INFORMATION

                             Concentration Account:
                               HFG HEALTHCO-4 LLC
                                Account #2057779
                                Bank of New York
                                 ABA #021000018

<TABLE>
<CAPTION>
Lockboxes:                                                  Lockbox Accounts:
---------                                                   ----------------
<S>                                                         <C>
Post Office Box 40116                                       HFG HEALTHCO-4 LLC
College Park, GA   30349                                    Account #8-236-697
                                                            Mellon Bank, N.A.
                                                            ABA #031000037

Post Office Box 31718                                       HFG HEALTHCO-4 LLC
Hartford, CT   06150                                        Account #9428406280
                                                            Fleet Bank, N.A.
                                                            ABA #011900571

Post Office Box 31726                                       HFG HEALTHCO-4 LLC
Hartford, CT   06150                                        Account #9428406299
                                                            Fleet Bank, N.A.
                                                            ABA #011900571

Post Office Box 531283                                      HFG HEALTHCO-4 LLC
Atlanta, GA   30353                                         Account #9428406301
                                                            Fleet Bank, N.A.
                                                            ABA #011900571
</TABLE>

<PAGE>   51

                                   SCHEDULE V

                                NET VALUE FACTORS

                                       96%<PAGE>   1

                                                                  EXHIBIT 10.112

                                   RECEIVABLES
                              PURCHASE AND TRANSFER
                                    AGREEMENT

                            Dated as of April 6, 2001

                                      Among

                          ATC HEALTHCARE SERVICES, INC.
                      as a Provider and as Primary Servicer

                                       and

                          ATC STAFFING SERVICES, INC.,
                                  as a Provider

                                       and

                              STAFF BUILDERS, INC.,
                                  as the Parent

                                       and

                                ATC FUNDING, LLC,
                                  as Purchaser

         ALL THE RIGHT, TITLE AND INTEREST OF THE PURCHASER IN AND TO, ALL
         BENEFITS OF THE PURCHASER UNDER AND ALL MONIES DUE OR TO BECOME DUE TO
         THE PURCHASER UNDER OR IN CONNECTION WITH, THIS AGREEMENT HAVE BEEN
         ASSIGNED TO HFG HEALTHCO-4 LLC, AS COLLATERAL SECURITY FOR ANY AND ALL
         THE OBLIGATIONS OF THE PURCHASER PURSUANT TO A LOAN AND SECURITY
         AGREEMENT DATED AS OF APRIL 6, 2001 BETWEEN THE PURCHASER AND HFG
         HEALTHCO-4 LLC.

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page

ARTICLE I. TERMS OF THE PURCHASES AND CONTRIBUTIONS
<S>                                                                        <C>
                 SECTION 1.01  Sale, Contribution and Purchase of
                                 Receivables..................................1
                 SECTION 1.02  Receivable Information and Transferred Batch
                                 Determination................................1
                 SECTION 1.03  The Transfers..................................1
                 SECTION 1.04  Collection and Payment Procedures..............2
                 SECTION 1.05  Allocation of Servicer Responsibilities........2

ARTICLE II. PAYMENT MECHANICS; MISDIRECTED PAYMENTS

                 SECTION 2.01  Payment Mechanics..............................3
                 SECTION 2.02  Misdirected Payments...........................3
                 SECTION 2.03  Unidentified Payments; Purchaser's Right of
                                 Presumption..................................4
                 SECTION 2.04  No Rights of Withdrawal........................4

ARTICLE III. REPRESENTATIONS AND WARRANTIES; COVENANTS; EVENTS OF TERMINATION

                 SECTION 3.01  Representations and Warranties; Covenants......4
                 SECTION 3.02  Events of Termination..........................4

ARTICLE IV. INDEMNIFICATION; GRANT OF SECURITY INTEREST

                 SECTION 4.01  Denied Receivables.............................4
                 SECTION 4.02  Indemnities by the Providers...................5
                 SECTION 4.03  Right of Set-Off...............................6
                 SECTION 4.04  Grant of Security Interest.....................6

ARTICLE V. MISCELLANEOUS

                 SECTION 5.01  Amendments, etc................................7
                 SECTION 5.02  Notices, etc...................................7
                 SECTION 5.03  Assignability..................................7
                 SECTION 5.04  Further Assurances.............................8
                 SECTION 5.05  Costs, Expenses and Termination Fee............8
                 SECTION 5.06  Confidentiality................................9
                 SECTION 5.07  Term and Termination...........................9
                 SECTION 5.08  Sale Treatment.................................9
                 SECTION 5.09  Grant of Security Interest....................10
                 SECTION 5.10  No Liability of the Purchaser.................10
                 SECTION 5.11  Attorney-in-Fact..............................10
                 SECTION 5.12  Entire Agreement; Severability................10
                 SECTION 5.13  GOVERNING LAW.................................10
                 SECTION 5.14  WAIVER OF JURY TRIAL, JURISDICTION AND
                                 VENUE.......................................10
                 SECTION 5.15  Execution in Counterparts.....................11
                 SECTION 5.16  No Proceedings................................11
                 SECTION 5.17  Survival of Termination.......................11
</TABLE>

<PAGE>   3

EXHIBITS

Exhibit I        Definitions
Exhibit II       Conditions of Purchases
Exhibit III      Representations and Warranties
Exhibit IV       Covenants
Exhibit V        Events of Termination
Exhibit VI       Receivable Information
Exhibit VII      Form of Notice to Obligors
Exhibit VIII     Primary Servicer Responsibilities
Exhibit IX       Servicer Termination Events
Exhibit X        Interface Between Master Servicer and the Primary Servicer
Exhibit XI-A     Form of Opinion of Provider's and Purchaser's Counsel
                 with Respect to Certain Corporate Matters
Exhibit XI-B     Form of Opinion of Provider's and Purchaser's Counsel
                 with Respect to Certain Bankruptcy Matters
Exhibit XII      Form of Depositary Agreement

SCHEDULES

Schedule I       Addresses for Notices
Schedule II      Credit and Collection Policy
Schedule III     Disclosures
Schedule IV      Lockbox Information
Schedule V       Tradenames
Schedule VI      Net Value Factors
Schedule VII     Permitted Liens
Schedule VIII    Debt

<PAGE>   4

RECEIVABLES PURCHASE AND TRANSFER AGREEMENT

                            Dated as of April 6, 2001

                  ATC HEALTHCARE SERVICES, INC., a corporation organized under
the laws of the State of Georgia ("ATC HEALTHCARE"), ATC STAFFING SERVICES,
INC., a corporation organized under the laws of the State of New York ("ATC
STAFFING"; ATC Staffing and ATC Healthcare, each a "PROVIDER" and together, the
"PROVIDERS", and ATC Healthcare in its capacity as primary servicer hereunder,
the "PRIMARY SERVICER"), and ATC FUNDING, LLC, a limited liability company
organized under the laws of the State of Delaware (together with its corporate
successors and assigns, the "PURCHASER"), and STAFF BUILDERS, INC., a Delaware
corporation ("PARENT") agree as follows:

                  PRELIMINARY STATEMENTS. Certain terms that are capitalized and
used throughout this Agreement are defined in Exhibit I to this Agreement.
References herein and in the Exhibits and Schedules hereto to the "Agreement"
refer to this Agreement, as amended, restated, modified or supplemented from
time to time in accordance with its terms (the "AGREEMENT").

                  The Providers wish to sell or contribute to the Purchaser on a
continuing basis all of their healthcare receivables. The Purchaser is prepared
to purchase or to accept the contribution of such healthcare receivables on the
terms and subject to the conditions set forth herein. Accordingly, the parties
agree as follows:

              ARTICLE 1. TERMS OF THE PURCHASES AND CONTRIBUTIONS

                  SECTION 1.1 Sale, Contribution and Purchase of Receivables. On
each Transfer Date until the Facility Termination Date and on the terms and
conditions set forth herein, each Provider agrees to sell or contribute, without
recourse except to the extent expressly provided herein, all of such Provider's
Receivables to the Purchaser, and the Purchaser agrees to purchase or accept
such contribution of, all of each Provider's Receivables.

                  SECTION 1.2 Weekly Report. On or prior to the first Business
Day of each Week, the Primary Servicer, on behalf of each Provider, shall
provide the Master Servicer by Transmission (or, if the Primary Servicer has
used reasonable efforts to send a Transmission but cannot do so, another method
of transmission acceptable to the Master Servicer) a report (the "WEEKLY
REPORT") containing the information listed on Exhibit VI hereto (as such Exhibit
may be modified by the Purchaser from time to time, the "RECEIVABLE
INFORMATION") with respect to new Receivables sold or contributed to the
Purchaser during the Week ended the second Saturday prior to such Business Day
and all other outstanding Receivables sold or contributed to the Purchaser prior
to such Week. Based on the Weekly Report, the Providers and the Purchaser shall
designate those Receivables that were purchased and those that were contributed,
and record such determination on their respective books and records.

                  SECTION 1.3 The Transfers. (a) On each Transfer Date (i)
subject to satisfaction of the applicable conditions set forth in Exhibit II
hereto, the Providers shall sell to the Purchaser all Eligible Receivables that
the Providers have submitted to the Purchaser for purchase hereunder and to be
included in the Purchased Batch, (ii) the Providers will contribute to the
capital of the Purchaser all other Eligible Receivables in the Transferred
Batch, and (iii) the Providers will contribute to the capital of the Purchaser
all Receivables that do not constitute Eligible Receivables. The Purchase shall
(x) pay to the Primary Servicer for the benefit of the Providers, at the Primary
Servicer Account, an amount equal to the

                                        1
<PAGE>   5

Purchase Price of the Purchased Batch, and (y) record on the books and records
of the Purchaser the capital contribution with respect to those Receivables
contributed to the capital of the Purchaser in such Transferred Batch, in each
case, promptly and in no event later than three Business Days after the
applicable Transfer Date for such Batch. The Primary Servicer shall remit the
proceeds of the Purchase Price of the Purchased Batch to each Provider in
accordance with their respective interests.

                  (1) Effective on each Transfer Date, in consideration of the
payment of the Purchase Price, or the increase in the capital accounts of the
applicable Provider in the Purchaser, and for other good and valuable
consideration, each Provider hereby sells, contributes, assigns and conveys to
the Purchaser and the Purchaser hereby purchases and accepts, as absolute owner,
all right, title and interest in and to the Batch Receivables purchased or
contributed on such Transfer Date.

                  SECTION 1.4 Collection and Payment Procedures. (a) Collections
on Batches. The Purchaser shall be entitled with respect to each Batch, (i) to
receive all Collections on such Batch and (ii) to have and to exercise any and
all rights to collect, record, track and, during the continuance of an Event of
Termination or a Servicer Termination Event, take all actions to obtain
Collections with respect to each Receivable included in a Batch.

                  (1) Collections Not Part of a Batch. On each Settlement Date,
and provided that (i) each Provider shall have paid all amounts then due and
owing to the Purchaser under this Agreement and (ii) each Provider, or the
Primary Servicer on behalf of such Provider, shall have successfully sent by
Transmission to the Master Servicer all information required with respect to the
Batch Receivables for the immediately preceding Settlement Period, and (iii) no
Event of Termination shall have occurred and be continuing, the Purchaser shall
pay or turn over, as the case may be, to the Primary Servicer for the benefit of
the applicable Provider any and all cash collections or other cash or non-cash
proceeds received by the Purchaser during the immediately preceding Settlement
Period with respect to Receivables that are not part of any Batch. The Primary
Servicer shall remit such cash and proceeds to each Provider in accordance with
their respective interests.

                  (2) Distributions on Each Business Day. On each Business Day
and with respect to each Batch, Total Collections shall be distributed to the
Purchaser.

                  SECTION 1.5 Allocation of Servicer Responsibilities. (a)
Tracking of purchases, Collections and other transactions pertaining to each
Batch shall be administered by the Master Servicer in a manner consistent with
the terms of this Agreement. The responsibilities of the Providers and Primary
Servicer are set forth in Exhibit X attached hereto. Each Provider shall
cooperate fully with the Primary Servicer and the Master Servicer in
establishing and maintaining the Transmission of the Receivable Information,
including, without limitation, the matters described in Exhibit X, and shall
provide promptly to the Master Servicer such other information necessary or
desirable for the administration of Collections on the Batch Receivables as may
be requested from time to time.

                  (1) The Purchaser hereby appoints ATC Healthcare as its agent
for the administration and servicing obligations set forth in Exhibit VIII
hereto with respect to the Receivables sold or transferred by the Providers to
the Purchaser hereunder (the "PRIMARY SERVICER RESPONSIBILITIES"), and ATC
Healthcare hereby accepts such appointment and agrees to perform the Primary
Servicer Responsibilities on behalf of the Providers and ATC Staffing hereby
consents to such appointment; provided, however, that such appointment shall not
release any Provider from any of its duties, responsibilities, liabilities and
obligations resulting or arising hereunder. Each Provider and the Purchaser
hereby acknowledges that ATC Healthcare's appointment as Primary Servicer is
expressly limited by and subject to Healthco-4's right under the Loan Agreement
to replace the Purchaser or its agent as the

                                        2
<PAGE>   6

Primary Servicer (which replacement may be effectuated through the outplacement
to a qualified and experienced third-party of all back office duties, including
billing, collection and processing responsibilities, and access to all
personnel, hardware and software utilized in connection with such
responsibilities). The Purchaser may, at any time following the occurrence of a
Servicer Termination Event (and shall, without requirement of notice to any
party, upon a Servicer Termination Event resulting from the events described in
clauses (g) or (i) of Exhibit V hereto) appoint another Person (which may be the
Master Servicer) to succeed ATC Healthcare as its agent for performance of the
Primary Servicer Responsibilities (which appointment may be effectuated through
the outplacement to a qualified and experienced third-party of all back office
duties, including billing, collection and processing responsibilities, and
access to all personnel, hardware and software utilized in connection with such
responsibilities).

                  (2) As compensation for the performance of the Primary
Servicer Responsibilities, the Providers shall pay ATC Healthcare (or the
successor Primary Servicer who performs such Primary Servicer Responsibilities)
the Primary Servicing Fee.

               ARTICLE 2. PAYMENT MECHANICS; MISDIRECTED PAYMENTS

                  SECTION 2.1 Payment Mechanics. (a) On or prior to the Initial
Transfer Date each of the Primary Servicer, the Providers, the Purchaser,
Healthco-4 and the Lockbox Bank shall have entered into the Lockbox Agreements
and shall have caused the Lockbox Bank to establish the Lockboxes and the
Lockbox Account.

                  (1) Each Provider shall prepare, execute and deliver to each
of its Obligors, with copies to the Purchaser, on or prior to the Initial
Transfer Date, a Notice to Obligors addressed to each such Obligor, which Notice
to Obligors shall state that all present and future Receivables owing to such
Provider have been and will be transferred to the Purchaser and that all checks
from such Obligor on account of Receivables shall be sent to a Lockbox and all
wire transfers from such Obligor on account of Receivables shall be wired
directly into a Lockbox Account.

                  (2) Each Provider covenants and agrees that, on and after the
Initial Transfer Date, all invoices (and, if provided by such Provider, return
envelopes) to be sent to Obligors shall set forth only the address of a Lockbox
as a return address for payment of Receivables and only the Lockbox Account with
respect to wire transfers for payment of Receivables. Each Provider hereby
further covenants and agrees to instruct and notify each of the members of its
accounting and collections staff to provide identical information in
communications with Obligors with respect to payment of Receivables and wire
transfers.

                  SECTION 2.2 Misdirected Payments. (a) In the event that the
Parent or any Provider receives a Misdirected Payment in the form of a check,
the Parent or such Provider shall immediately send such Misdirected Payment, in
the form received by the Parent or such Provider, by hand or overnight delivery
service to a Lockbox for deposit into the corresponding Lockbox Account. In the
event the Parent or any Provider receives a Misdirected Payment in the form of
cash or wire transfer, the Parent or such Provider shall immediately wire
transfer the amount of such Misdirected Payment directly to the Lockbox Account.
All Misdirected Payments shall be sent promptly upon receipt thereof, and in no
event later than the close of business, on the first Business Day after receipt
thereof.

                  (1) If a Misdirected Payment in the form of a check is
received by the Parent or any Provider more than six days after the date of such
check with respect thereto, then the relevant Provider shall pay interest on
such Misdirected Payment to the Purchaser from such sixth subsequent day to and

                                        3
<PAGE>   7

including the date such check is received in the Lockbox Account, at a rate
equal to LIBOR then in effect under the Loan Agreement.

                  (2) Each Provider hereby agrees and consents to the Purchaser
taking such actions as are reasonably necessary to ensure that future payments
from the Obligor of a Misdirected Payment shall be made in accordance with the
Notice to Obligors previously delivered to such Obligor, including, without
limitation, to the maximum extent permitted by law, (i) the Purchaser, its
assigns or designees, or any member of the HFG Group executing on such
Provider's behalf and delivering to such Obligor a new Notice to Obligors, and
(ii) the Purchaser, its assigns or designees, or any member of the HFG Group
contacting such Obligor by telephone to confirm the instructions previously set
forth in the Notice to Obligor to such Obligor. Upon the Purchaser's request,
each Provider shall promptly (and in any event, within two Business Days from
such request) take such similar actions as the Purchaser may reasonably request.

                  SECTION 2.3 Unidentified Payments; Purchaser's Right of
Presumption. Each Provider and the Purchaser agree and consent that the HFG
Group or its designees or assigns, may apply any payment it receives from an
Obligor or any other payor against a Transferred Batch if the HFG Group is
unable in good faith to determine whether such payment relates to a Transferred
Batch.

                  SECTION 2.4 No Rights of Withdrawal. None of the Parent, the
Providers, the Primary Servicer or the Purchaser shall have any rights of
direction or withdrawal with respect to amounts held in the Lockbox Accounts or
the Concentration Account.

        ARTICLE 3. REPRESENTATIONS AND WARRANTIES; COVENANTS; EVENTS OF
                                   TERMINATION

                  SECTION 3.1 Representations and Warranties; Covenants. The
Parent and each Provider makes, on the Initial Transfer Date and on each
subsequent Transfer Date, the representations and warranties on and as of such
dates, and hereby agrees to perform and observe the covenants, set forth in
Exhibits III and IV, respectively, hereto.

                  SECTION 3.2 Events of Termination. If an Event of Termination
shall occur and be continuing, the Purchaser may, by notice to the Providers
(which notice shall be deemed to have been given to the Providers and the
Primary Servicer), take either or both of the following actions: (x) declare the
Facility Termination Date to have occurred (except with respect to the Event of
Termination in clause (g) of Exhibit V, in which case the Facility Termination
Date shall be deemed to have occurred automatically and without notice), and (y)
without limiting any rights hereunder, terminate the appointment of ATC
Healthcare as Primary Servicer and replace ATC Healthcare as Primary Servicer in
the manner set forth in Section 1.05(b). Upon any such declaration or
designation, the Purchaser shall have, in addition to the rights and remedies
which it 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 4. INDEMNIFICATION; GRANT OF SECURITY INTEREST

                  SECTION 4.1 Denied Receivables. (a) If a breach of any of the
representations or warranties contained herein relating to a Batch Receivable
shall be discovered at any time (each, a "DENIED RECEIVABLE"), the Primary
Servicer or the relevant Provider shall on the next Settlement Date, purchase
such Denied Receivable from the Purchaser at the Return Price.

                                       4
<PAGE>   8

                  (1) For ease of administration, the Purchaser shall be
entitled to presume that the failure of any Batch Receivable (or portion
thereof) to be paid in full on or after the 180th day following the Last Service
Date thereof is the result of a breach of a representation or warranty contained
herein with respect to such Batch Receivable unless (i) the Purchaser shall have
actual knowledge to the contrary (such as, by way of example, actual knowledge
of the financial inability of an Obligor to pay its obligations represented by a
Receivable), or (ii) the Primary Servicer shall have submitted a certificate to
the Program Manager (which certificate and underlying documentation shall be
reasonably satisfactory to the Program Manager) stating that (1) it has reviewed
the representations and warranties and Eligibility Criteria and has made due and
appropriate inquiry of the applicable Obligor and such Batch Receivables, (2)
the Obligor does not maintain and has not asserted any dispute with the
applicable Provider that could impair payment by the Obligor of its payment
obligations with respect to such Batch Receivable, and (3) all representations
and warranties and Eligibility Criteria with respect to such Batch Receivable
were, as of the date of transfer thereof, true and correct in their entirety and
such failure to pay is exclusively the result of reasons unrelated to the breach
of such representations, warranties or Eligibility Criteria (such as the
financial inability of an Obligor to pay its obligations). In the event the
Purchaser receives the Return Price for any such Batch Receivable and it is
thereafter determined that the failure of such Batch Receivable to be paid in
full was not the result of a breach of representation or warranty contained
herein, the parties hereto shall make an appropriate adjustment by increasing
the Purchase Price of any Purchased Batch to be purchased on or after such date.

                  (2) Upon receipt by (or on behalf of) the Purchaser of the
Return Price with respect to any Denied Receivable, the Purchaser shall be
deemed to have reassigned and resold to the relevant Provider such Denied
Receivable without any representation, warranty or recourse whatsoever, and,
thereafter, neither the Purchaser nor any member of the HFG Group shall have any
further servicing or other obligation to such Provider with respect to such
Denied Receivable.

                  (3) From time to time at the request of any Provider, the
Purchaser shall promptly deliver to such Provider (at such Provider's sole cost
and expense) such documents, assignments, releases, notices and instruments of
termination as such Provider may reasonably request to evidence the reconveyance
by the Purchaser of a Denied Receivable pursuant to the terms of Section
4.01(c).

                  SECTION 4.2 Indemnities by the Providers. Without limiting any
other rights that the Purchaser, the Program Manager, the Master Servicer or any
of their respective Affiliates (together with their respective officers,
directors, agents, representatives, shareholders, counsel, employees and
lenders, each, an "INDEMNIFIED PARTY") may have hereunder or under applicable
law, each Provider hereby, jointly and severally, agrees to indemnify each
Indemnified Party from and against any and all claims, losses and liabilities
(including, without limitation, reasonable attorneys' fees) (all of the
foregoing being collectively referred to as "INDEMNIFIED AMOUNTS") arising out
of or resulting from any of the following:

                         (1) the sale or contribution of any Receivable which
         purports to be part of a Transferred Batch but which is not, at the
         date of such sale or contribution, an Eligible Receivable;

                         (2) any representation or warranty made or deemed made
         by any Provider (or any of its officers) under or in connection with
         this Agreement (and not relating to the Eligibility Criteria) which
         shall have been incorrect in any material respect when made; (1)

                         (3) the failure by any Provider or any Batch Receivable
         to comply with any applicable law, rule or regulation;

                                       5
<PAGE>   9
                         (4) the failure to vest in the Purchaser a perfected
         ownership interest in each Receivable included in a Transferred Batch
         and the proceeds and Collections in respect thereof, free and clear of
         any Liens;

                         (5) any dispute, claim, set-off or defense to the
         payment, in whole or in part, of any Receivable (including, without
         limitation, a defense based on such Receivable not being a legal, valid
         and binding obligation) or any other claim resulting from the services
         or merchandise related to such Receivable or the furnishing or failure
         to furnish such services or merchandise or relating to collection
         activities with respect to such Receivable (if such collection
         activities were performed by any Provider or any of their Affiliates
         acting as Primary Servicer), provided, however, this clause (e) shall
         not be deemed to include any dispute, claim, set-off or defense to the
         payment of any Receivable (i) arising out of the financial inability of
         an Obligor to pay its obligations represented by such Receivable
         including, without limitation, a discharge in bankruptcy, or (ii)
         arising solely as a result of actions taken by any member of the HFG
         Group;

                         (6) a failure of any Provider, including, without
         limitation, the Primary Servicer's actions on behalf of the Providers
         under Section 1.05(b) of this Agreement with respect to Primary
         Servicer Responsibilities, to perform its duties or obligations in
         accordance with the provisions hereof or to perform its duties or
         obligations hereunder; or

                         (7) the commingling by any Provider of Collections at
         any time with other funds of any Provider;

provided, however, that in all events there shall be excluded from the foregoing
indemnification any claims, losses or liabilities resulting from the gross
negligence or willful misconduct of an Indemnified Party or which constitutes
credit recourse for an uncollectible Batch Receivable.

                  Such Indemnified Party shall notify the Primary Servicer, on
behalf of the Providers, of such claim, provided that the failure to so notify
shall not affect or invalidate the indemnity granted pursuant to this Section
4.02.

                  SECTION 4.3 Right of Set-Off. Each Provider hereby irrevocably
instructs the Purchaser to set-off the full amount of the Return Price or the
Indemnified Amounts, as the case may be, against the Purchase Price of any
Purchased Batch to be purchased on or after such date and unless any Provider
notifies the Purchaser in writing that it desires to pay on the date when due
the Return Price under Section 4.01 or any Indemnified Amounts under Section
4.02 and such Provider makes such payment to the Purchaser in immediately
available funds on such date any such amount shall be so set-off. No further
notification, act or consent of any nature whatsoever is required prior to the
right of the Purchaser to exercise such right of set-off; provided, however, the
Purchaser or a member of the HFG Group shall notify the Primary Servicer on
behalf of the Providers that a set-off pursuant to this Section 4.03 occurred,
the amount of such set-off and a description of the Denied Receivable or
Indemnified Amounts, as the case may be; provided, further that the failure to
so notify shall not affect or invalidate the indemnity granted pursuant to
Section 4.02. The Purchaser shall exercise its right to set-off hereunder to the
extent funds are available prior to making a demand for indemnification under
Section 4.02.

                  SECTION 4.4 Grant of Security Interest. (a) As collateral
security for each Provider's existing and future (i) obligations to purchase
Denied Receivables under Section 4.01 hereof, (ii) indemnification obligations
to the Purchaser under Section 4.02 hereof, and (iii) obligations to pay

                                       6
<PAGE>   10
costs, expenses and fees under Section 5.05 hereof, each Provider hereby grants
to the Purchaser a first priority lien on and security interest in, and right of
set-off against, (v) all of the Accounts now or hereafter owned or held by such
Provider, (w) all of the Additional Collateral, (x) any and all cash collateral
reserve accounts established pursuant to this Agreement from time to time, (y)
any and all amounts held in any accounts maintained at any bank and (z) all
proceeds of the foregoing (all of the foregoing, the "COLLATERAL").

                  (1) In connection with the grant under (a) above, this
Agreement shall be deemed to be a security agreement as understood under the
UCC. Each Provider agrees to execute, and hereby authorizes the Purchaser to
file, one or more financing statements or continuation statements or amendments
thereto or assignments thereof in respect of the lien created pursuant to this
Section 4.04 which may at any time be required or, in the opinion of the
Purchaser, be desirable, and to do so without the signature of such Provider
where permitted by law.

                            ARTICLE 5. MISCELLANEOUS

                  SECTION 5.1 Amendments, etc. (a) No amendment or waiver of any
provision of this Agreement or consent to any departure therefrom by a party
hereto shall be effective unless in writing signed by the Primary Servicer, the
Providers, the Purchaser, the Parent and consented to in writing by Healthco-4
as assignee of all of the Purchaser's rights and remedies hereunder, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part of
the Purchaser, the Parent, the Primary Servicer or any Provider 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.

                  (1) The parties hereto agree to make any change, modification
or amendment to this Agreement as may be requested by Fitch, Inc. or any other
rating agency then rating the healthcare finance program of Healthco-4, so long
as any such change, modification or amendment does not materially adversely
affect the parties hereto.

                  SECTION 5.2 Notices, etc. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which may
include facsimile communication) and shall be faxed or delivered, (i) to each
Provider, the Parent, the Primary Servicer and the Purchaser, at its address set
forth under its name on the signature pages hereof or at such other address as
shall be designated by such party in a Written Notice to the other parties
hereto (the Parent and each Provider hereby acknowledges and agrees that notices
and communications to or for the benefit of the Parent and such Provider may be
delivered to the Primary Servicer and such delivery to the Primary Servicer
shall be deemed to be received by the Parent and such Provider), and (ii) to the
Program Manager and the Master Servicer at the addresses set forth on Schedule I
attached hereto (as such Schedule may be amended from time to time). Notices and
communications by facsimile shall be effective when sent (and shall be followed
by hard copy sent by regular mail) and notices and communications sent by other
means shall be effective when received.

                  SECTION 5.3 Assignability. (a) This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
permitted successors and assigns.

                  (1) Subject to Section 5.03(b) of the Loan Agreement, this
Agreement and the Purchaser's rights and obligations herein (including, without
limitation, ownership of the Batch Receivables in each Transferred Batch, the
Lockboxes and the Lockbox Accounts and rights in relation to

                                       7
<PAGE>   11
the Lockboxes and the Lockbox Accounts) shall be assignable by the Purchaser and
its successors and assigns. Each Provider hereby acknowledges that the Purchaser
is granting to Healthco-4, which is further granting to its lenders, a security
interest in, and collateral assignment of, this Agreement and all of the
Purchaser's rights, title and interests hereunder (including, without
limitation, the Batch Receivables, such Provider's obligations hereunder, the
Lockboxes and the Lockbox Accounts, and rights in relation to the Lockboxes and
the Lockbox Accounts).

                  (2) Neither the Parent nor any Provider may assign its rights
or obligations hereunder or any interest herein without the prior written
consent of the Purchaser and Healthco-4.

                  SECTION 5.4 Further Assurances. The Parent and each Provider
shall, at its cost and expense, upon the request of the Purchaser, duly execute
and deliver, or cause to be duly executed and delivered, to the Purchaser such
further instruments and do and cause to be done such further acts as may be
necessary or proper in the reasonable opinion of the Purchaser to carry out more
effectively the provisions and purposes of this Agreement.

                  SECTION 5.5 Costs, Expenses and Termination Fee. (a) In
addition to the rights of indemnification granted under Section 4.02 hereof,
each Provider, jointly and severally, agrees to pay on demand all reasonable
costs and expenses in connection with the preparation, execution and delivery of
this Agreement and any waiver, modification, supplement or amendment hereto,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Purchaser and the members of the HFG Group, and all costs and
expenses, if any (including reasonable counsel fees and expenses), of the
Purchaser, its Affiliates and the members of the HFG Group in connection with
the enforcement of this Agreement. Each Provider further agrees to pay on the
Initial Transfer Date (and with respect to costs and expenses incurred following
the Initial Transfer Date, within seven days of demand therefor) (i) all
reasonable costs and expenses incurred by the Purchaser or its agent in
connection with periodic audits of the Receivables, (ii) all reasonable costs
and expenses (not to exceed $3,000 in any fiscal year of the Providers) incurred
by the Master Servicer or the Program Manager to accommodate any significant
coding or data system changes made by any Provider that would affect the
transmission or interpretation of data received through the interface, and (iii)
all reasonable costs and expenses incurred by the Purchaser for additional time
and material expenses of the Master Servicer resulting from a lack of
cooperation or responsiveness of any Provider or the Primary Servicer to
agreed-upon protocol and schedules with the Master Servicer; provided, that the
Providers or the Primary Servicer, as applicable, has received Written Notice of
the alleged lack of cooperation or responsiveness and has been provided an
opportunity to correct such problems.

                  (1) In the event that any Facility Termination Date is
declared (or is deemed to have occurred) pursuant to an Event of Termination,
the Providers shall pay to the Purchaser an early termination fee in an amount
equal to the termination fee payable by the Purchaser pursuant to Section
5.07(d) of the Loan Agreement.

                  (2) In the event that, following the occurrence and
continuance of an Event of Termination or a Servicer Termination Event, the
Purchaser or any member of the HFG Group shall retain an attorney or attorneys
to collect, enforce, protect, maintain, preserve or foreclose its interests with
respect to this Agreement, any related documents, any Collateral, any Lien, or
under any instrument or document delivered pursuant to this Agreement, the
Providers shall pay all of the reasonable costs and expenses of such collection,
enforcement, protection, maintenance, preservation or foreclosure, including
reasonable attorneys' fees, and the Purchaser may take judgment for all such
amounts. The attorneys' fees arising from such services, including those of any
appellate proceedings, and all reasonable out-of-pocket expenses, charges, costs
and other fees incurred by such counsel in any way or in any respect to or

                                        8
<PAGE>   12
arising out of or in connection with or relating to any of the events or actions
described in this Section 5.05 shall be payable by the Providers to the
Purchaser on demand (with interest accruing from the tenth Business Day
following the date of such demand).

                  SECTION 5.6 Confidentiality. (a) The Parent, each Provider,
the Primary Servicer and the Purchaser hereby acknowledge that this Agreement,
the Loan Agreement and the documents delivered hereunder, thereunder or in
connection with, including, without limitation, any information relating to any
member of the HFG Group, contains confidential and proprietary information.
Unless otherwise required by applicable law, the Parent, each Provider, the
Primary Servicer and the Purchaser hereby agree to maintain the confidentiality
of this Agreement (and all drafts, memos and other documents delivered in
connection therewith including, without limitation, any information relating to
any member of the HFG Group delivered hereunder or under the Loan Agreement) in
communications with third parties and otherwise and to take all reasonable
action to prevent the unauthorized use or disclosure of and to protect the
confidentiality of such confidential information; provided, that such
confidential information may be disclosed to (i) the Parent's, the Providers'
and the Purchaser's legal counsel, accountants and auditors, (ii) the Program
Manager, Healthco-4, the Primary Servicer, each member of the HFG Group,
investors in and creditors of Healthco-4, appropriate rating agencies with
respect to Healthco-4, and each of their respective legal counsel, accountants
and auditors, (iii) any Person, if such information otherwise becomes available
to such Person or publicly available through no fault of any party governed by
this Section 5.06, (iv) any Governmental Entity requesting such information, and
(v) to any other Person with the written consent of the applicable party, which
consent shall not be unreasonably withheld, and provided further that none of
the Parent, the Primary Servicer or any Provider shall disclose such
confidential information to any financial adviser except with the consent of the
Program Manager. Notwithstanding the foregoing, the parties hereto agree that
the Parent, as a public company, may make such disclosure as is required by
state and federal law, including, but not limited to, such filings as are
required by the Securities and Exchange Commission.

                  (1) The Parent, each of the Providers, the Primary Servicer
and the Purchaser understands and agrees that the other or the HFG Group may
suffer irreparable harm if the obligations under this Section 5.06 are breached
and that monetary damages shall be inadequate to compensate the injured party
for such breach. Accordingly, the Parent, each of the Providers, the Primary
Servicer and the Purchaser agrees that, in the event of their respective breach
of Section 5.06(a), the injured party, in addition and not in limitation of its
rights and remedies under law, shall be entitled to a temporary restraining
order, preliminary injunction and permanent injunction to prevent or restrain
any such breach.

                  SECTION 5.7 Term and Termination. This Agreement shall
continue in full force and effect from the date hereof until the Final Payment
Date; provided, however, that, with respect to any Transferred Batches
transferred prior to the Final Payment Date and not purchased pursuant to
Section 4.01, the occurrence of the Final Payment Date shall not terminate any
security interest of the Purchaser hereunder, nor shall it relieve or discharge
the Parent, any Provider, the Primary Servicer or the Purchaser of or from their
respective duties, obligations or covenants hereunder and all the terms,
provisions and conditions of this Agreement shall remain in effect for such
purpose until such obligations have been satisfied and performed in full. Upon
the satisfaction in full of all the obligations, the Purchaser shall deliver all
assignments, certificates, releases, notices and other documents at the
Providers' expense, as the Providers may reasonably request to effect such
termination.

                  SECTION 5.8 Sale and Contribution Treatment. The Providers and
the Purchaser have structured the transactions contemplated by this Agreement
with respect to each Transferred Batch as a sale or contribution and intend that
such transactions constitute a sale or contribution, and each Provider and the
Purchaser agree to treat each such transaction as a sale or contribution for all
purposes, including,

                                        9
<PAGE>   13
without limitation, in their respective books, records, computer files, tax
returns (federal, state and local), regulatory and governmental filings (and
shall reflect such sale in their respective financial statements). The Providers
will advise all persons inquiring about the ownership of the Receivables that
all Receivables have been sold or contributed to the Purchaser. The Providers
will pay all taxes (excluding income or franchise taxes of the Purchaser), if
any, relating to the transactions contemplated under this Agreement, including,
without limitation, the sale, transfer and contribution of each Batch to the
Purchaser.

                  SECTION 5.9 Grant of Security Interest. In the event that,
contrary to the mutual intent of the Providers and the Purchaser, any purchase
or contribution of a Batch is not characterized as a sale or contribution, each
Provider shall, effective as of the date hereof, be deemed to have granted (and
such Provider hereby does grant) (in addition to and not in substitution of the
grant under Section 4.04 hereof) to the Purchaser a first priority security
interest in and to any and all present and future Receivables and the proceeds
thereof to secure the repayment of all amounts paid to any Provider hereunder
with accrued interest thereon, and this Agreement shall be deemed to be a
security agreement. With respect to such grant of a security interest, the
Purchaser may at its option exercise from time to time any and all rights and
remedies available to it under the UCC or otherwise. Each Provider agrees that
five Business Days shall be reasonable prior notice to such Provider or to the
Primary Servicer on behalf of the Providers of the date of any public or private
sale or other disposition of all or any of the Batch Receivables.

                  SECTION 5.10 No Liability of the Purchaser. Neither this
Agreement nor any document executed in connection herewith shall constitute an
assumption by the Purchaser of any obligation to an Obligor.

                  SECTION 5.11 Attorney-in-Fact. Each Provider hereby
irrevocably designates and appoints the Purchaser, the Primary Servicer, the
Master Servicer and each Person in the HFG Group, to the extent permitted by
applicable law and regulation, as such Provider's attorneys-in-fact, which
irrevocable power of attorney is coupled with an interest, with authority to (i)
endorse or sign such Provider's name to financing statements, remittances,
invoices, assignments, checks, drafts or other instruments or documents in
respect of the Batch Receivables, (ii) notify Obligors to make payments on the
Batch Receivables directly to the Purchaser, and (iii) bring suit in such
Provider's name and settle or compromise such Batch Receivables as the
Purchaser, the Primary Servicer, the Master Servicer or any Person in the HFG
Group may, in its discretion, deem appropriate.

                  SECTION 5.12 Entire Agreement; Severability. (a) This
Agreement, including all exhibits and schedules hereto, and the documents
referred to herein, embody the entire agreement and understanding of the parties
concerning the subject matter contained herein. This Agreement supersedes any
and all prior agreements and understandings between the parties, whether written
or oral.

                  (1) If any provision of this Agreement shall be declared
invalid or unenforceable, the parties hereto agree that the remaining provisions
of this Agreement shall continue in full force and effect.

                  SECTION 5.13 GOVERNING LAW. THIS AGREEMENT SHALL, IN
ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
ANY CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF
THE LAWS OF ANY OTHER JURISDICTION.

                  SECTION 5.14 WAIVER OF JURY TRIAL, JURISDICTION AND VENUE.
EACH OF THE PARTIES HERETO HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY

                                       10
<PAGE>   14
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO ANY MATTER RELATED TO THIS
AGREEMENT, AND HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK CITY, NEW YORK IN CONNECTION
WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. IN
ANY SUCH LITIGATION, EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE
BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH PARTY AT ITS ADDRESS SET FORTH
ON THE SIGNATURE PAGE HEREOF. EACH OF THE PARTIES HERETO SHALL APPEAR IN ANSWER
TO SUCH SUMMONS, COMPLAINT OR OTHER PROCESS WITHIN THE TIME PRESCRIBED BY LAW,
FAILING WHICH SUCH PARTY FAILING TO SO APPEAR SHALL BE DEEMED IN DEFAULT AND
JUDGMENT MAY BE ENTERED BY THE OTHER PARTY FOR THE AMOUNT OF THE CLAIM AND OTHER
RELIEF REQUESTED THEREIN.

                  SECTION 5.15 Execution in Counterparts. This Agreement may be
executed in 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.

                  SECTION 5.16 No Proceedings. The Parent and each Provider
hereby agrees that it will not institute against the Purchaser or Healthco-4 any
proceeding of the type referred to in paragraph (g) of Exhibit V so long as any
senior indebtedness issued by the Purchaser or Healthco-4 shall be outstanding
or there shall not have elapsed one year plus one day since the last day on
which any such senior indebtedness shall have been outstanding.

                  SECTION 5.17 Survival of Termination. The provisions of
Article IV (and the representations and warranties with respect thereto) (other
than Section 4.04) and Sections 5.05, 5.06, 5.10 and 5.16 shall survive any
termination of this Agreement.

                  SECTION 5.18 Joint and Several Liability; Providers . Each
Provider agrees that each reference to "the Providers" in this Agreement shall
be deemed to refer to each such Provider jointly and severally with the other
Providers. Each Provider (i) shall be jointly and severally liable for the
obligations, duties and covenants of each other such Provider under this
Agreement and the acts and omissions of each other such Provider including,
without limitation, under Article IV hereof, and (ii) jointly and severally
makes each representation and warranty for itself and each other Provider under
this Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       11
<PAGE>   15

                  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.

PROVIDERS:                         ATC HEALTHCARE SERVICES, INC.

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

                                         Address:  ATC Healthcare Services, Inc.
                                                   1983 Marcus Avenue
                                                   Lake Success, NY 11042
                                                   Attention: Alan Levy, CFO
                                         Facsimile Number:(516) 750-1754

                                   ATC STAFFING SERVICES, INC.

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

                                         Address:  ATC Staffing Services, Inc.
                                                   1983 Marcus Avenue
                                                   Lake Success, NY 11042
                                                   Attention: Alan Levy, CFO
                                         Facsimile Number: (516) 750-1754

PURCHASER:                   ATC FUNDING, LLC

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

                                         Address:  ATC Funding, LLC
                                                   1983 Marcus Avenue
                                                   Suite E-122
                                                   Lake Success, NY 11042
                                                   Attention: Alan Levy, CFO
                                         Facsimile Number: (516) 750-1764

                                       12
<PAGE>   16

PRIMARY SERVICER:            ATC HEALTHCARE SERVICES, INC.

                                   By:
                                       ----------------------------------------
                                         Name:
                                         Title:
                                         Address:    ATC Healthcare Services,
                                                       Inc.
                                                     1983 Marcus Avenue
                                                     Lake Success, NY 11042
                                                     Attention: Alan Levy, CFO
                                         Facsimile Number: (516) 750-1754

PARENT:                      STAFF BUILDERS, INC.

                                   By:
                                       ----------------------------------------
                                         Name:
                                         Title:
                                         Address:    Staff Builders, Inc.
                                                     1983 Marcus Avenue
                                                     Lake Success, NY 11042
                                                     Attention: Alan Levy, CFO
                                         Facsimile Number: (516) 750-1754

                                       13
<PAGE>   17

                                    EXHIBIT I

                                   DEFINITIONS

                  As used in the Agreement (including its Exhibits and
Schedules), 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):

                  "ACCOUNTS" means all accounts, chattel paper, instruments,
general intangibles and goodwill, whether now existing or hereafter arising,
including, all Receivables and all proceeds of any of the foregoing.

                  "ACCOUNTS RECEIVABLE TURNOVER PARENT" means, at any date, for
the 12-Month period then ending, the quotient obtained by dividing (i) aggregate
gross revenue of the Parent and its Subsidiaries on a consolidated basis for
such period by (ii) aggregate Receivables of the Parent and its Subsidiaries on
a consolidated basis of such date.

                  "ACCOUNTS RECEIVABLE TURNOVER PROVIDERS" means, at any date,
for the 12-Month period then ending, the quotient obtained by dividing (i)
aggregate gross revenue of ATC Healthcare and its Subsidiaries on a consolidated
basis for such period by (ii) aggregate Receivables of ATC Healthcare and its
Subsidiaries on a consolidated basis as of such date.

                  "ADDITIONAL COLLATERAL" means (including, without limitation,
the items listed on any separate schedule(s) at any time or from time to time
furnished by any Provider to the Purchaser and made part of this Agreement and
all accessions to the Additional Collateral, substitutions and replacements
thereof (unless the description of Additional Collateral expressly excludes
after-acquired Additional Collateral), now owned or existing and hereafter
acquired, created or arising, and all products and proceeds thereof (including,
without limitation, claims of any Provider against third parties for loss or
damage to or destruction of any Additional Collateral)) (a) all of each
Provider's right, title and interest in and to all equipment in all of its
forms, wherever located, now or hereafter existing, including, but not limited
to, all fixtures and all parts thereof and all accessions thereto (any and all
such equipment, fixtures, parts and accessions being the "EQUIPMENT"); (b) all
inventory in all of its forms, wherever located, now or hereafter existing,
including, but not limited to, (i) all raw materials, work in process,
semi-finished products and finished products, intended for sale or lease or to
be furnished under contracts of service in the ordinary course of business, of
every kind and description; (ii) goods in which such Provider has an interest en
masse or a joint or other interest or right of any kind (including, without
limitation, goods in which such Provider has an interest or right as consignee),
and (iii) goods which are returned to or repossessed by such Provider, and all
accessions thereto and products thereof and documents (including, without
limitation, all warehouse receipts, negotiable documents, bills of lading and
other title documents) therefor (any and all such inventory, accessions,
products and documents being the "INVENTORY"); (c) all present and future
securities, security entitlements and securities accounts (collectively,
"INVESTMENT PROPERTY"); (d) all deposits and all other goods and personal
property (including, without limitation, patents, patent applications, trade
names and trademarks and Federal, state and local tax refund claims of all
kinds), whether tangible or intangible, or whether now owned or hereafter
acquired and wherever located; (e) all proceeds of every kind and nature,
including proceeds of proceeds, of any and all of the foregoing Additional
Collateral (including, without limitation, proceeds which constitute property of
the types described in clauses (a) through (e) of this paragraph) and, to the
extent not otherwise included, all (i) payments under insurance (whether or not
the Purchaser is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Additional Collateral and (ii) money and cash; and all
books, records and other property relating to or referring to any of the
foregoing Additional Collateral, including all books, records, ledger cards,
data processing records, computer software and other property and general
intangibles at any time used or useful

                                       I-1
<PAGE>   18

in connection with, evidencing, embodying, referring to, or relating to, any of
the foregoing Additional Collateral.

                  "ADDITIONAL REPORTING EVENT" means the formation by the Parent
of any Subsidiary other than ATC Healthcare and its Subsidiaries.

                  "AFFILIATE" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person. For the
purposes of this definition, "control", when used with respect to any specified
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise.

                  "AGREEMENT" has the meaning set forth in the preliminary
statements hereto.

                  "APPLIED MANAGEMENT" means Applied Management Solutions, Inc.,
a Delaware corporation.

                  "BATCH" means, with respect to any Transfer Date, all
Receivables, including the Transferred Batch with respect to such Transfer Date,
which are purchased by the Purchaser or contributed to capital of the Purchaser.

                  "BATCH RECEIVABLE" means a Receivable that is included in a
Transferred Batch, but excludes a Denied Receivable for which the Return Price
has been received by the Purchaser.

                  "BUSINESS DAY" means any day on which banks are not authorized
or required to close in New York City, New York.

                  "CAPITAL EXPENDITURES" means, with respect to any Person for
any period, the aggregate of all expenditures (including, without limitation,
obligations created under Capital Leases in the year in which created but
excluding payments made thereon) of any Person in respect of the purchase or
other acquisition of fixed or capital assets.

                  "CAPITAL LEASE" means, as applied to any Person, any lease of
any Property (whether real, personal or mixed) by that Person as lessee, the
obligations of which are required, in accordance with GAAP, to be capitalized on
the balance sheet of that Person.

                  "CAPITALIZED LEASE OBLIGATION" means an obligation to pay rent
or other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property which obligation is required to be classified
and accounted for as a capital lease on a balance sheet prepared in accordance
with GAAP, and for purposes hereof the amount of such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.

                  "CHANGE OF CONTROL" means (a) the sale, lease or transfer of
all or substantially all of the assets of the Parent or any Provider to any
Person or group (as such term is defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended); (b) the liquidation or dissolution of (or the
adoption of a plan of liquidation by) the Parent or any Provider; (c) the
acquisition by any Person or group (as such term is defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended) of a direct or indirect
majority interest (more than 25%) of the voting stock of the Parent or any
Provider by way of merger or consolidation or otherwise; or (d) the failure of
the Parent to own, directly or indirectly, 100% of the equity interests of each
Provider.

                                       I-2
<PAGE>   19

                  "CLOSING DATE" means April 6, 2001.

                  "COLLATERAL" has the meaning set forth in Section 4.04(a)
hereto.

                  "COLLECTIONS" means, with respect to any Receivable included
in a Batch, all cash collections, wire transfers, electronic funds transfers and
other cash proceeds of such Receivable, deposited in or transferred to a Lockbox
Account, including, without limitation, all cash proceeds thereof.

                  "CONCENTRATION ACCOUNT" means account number 205779 at the
Bank of New York, ABA#021000018.

                  "CONSOLIDATED CURRENT ASSETS PARENT" means, at any date of
determination, the aggregate amount of all assets of the Parent and its
Subsidiaries on a consolidated basis that would be classified as current assets
at such date, computed and calculated in accordance with GAAP.

                  "CONSOLIDATED CURRENT ASSETS PROVIDERS" means, at any date of
determination, the aggregate amount of all assets of ATC Healthcare and its
Subsidiaries on a consolidated basis that would be classified as current assets
at such date, computed and calculated in accordance with GAAP.

                  "CONSOLIDATED CURRENT LIABILITIES PARENT" means, at any date
of determination, the aggregate amount of all liabilities of the Parent and its
Subsidiaries on a consolidated basis that would be classified as current
liabilities at such date, computed and calculated in accordance with GAAP.

                  "CONSOLIDATED CURRENT LIABILITIES PROVIDERS" means, at any
date of determination, the aggregate amount of all liabilities of ATC Healthcare
and its Subsidiaries on a consolidated basis that would be classified as current
liabilities at such date, computed and calculated in accordance with GAAP.

                  "CONSOLIDATED DEBT SERVICE COVERAGE RATIO PARENT" means, for
the Parent and its Subsidiaries on a consolidated basis, at the end of each
fiscal quarter of the Parent, for the four fiscal quarter period then ended, the
quotient obtained by dividing (i) Consolidated EBITDA Parent for such period by
(ii) the sum of (x) Consolidated Interest Expense Parent for such period and (y)
the current portion of long term debt and Capital Leases as of such date of
determination.

                  "CONSOLIDATED DEBT SERVICE COVERAGE RATIO PROVIDERS" means,
for ATC Healthcare and its Subsidiaries on a consolidated basis, at the end of
each fiscal quarter of the Providers, for the four fiscal quarter period then
ended, the quotient obtained by dividing (i) Consolidated EBITDA Providers for
such period by (ii) the sum of (x) Consolidated Interest Expense Providers for
such period and (y) the current portion of long term debt and Capital Leases of
ATC Healthcare and its Subsidiaries on a consolidated basis, as of such date of
determination.

                  "CONSOLIDATED EBITDA PARENT" means, for any period, the EBITDA
of the Parent and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.

                  "CONSOLIDATED EBITDA PROVIDERS" means, for any period, the
EBITDA of ATC Healthcare and its Subsidiaries on a consolidated basis in
accordance with GAAP.

                  "CONSOLIDATED INTEREST COVERAGE RATIO PARENT" means, at the
end of each fiscal quarter of the Parent, for the four fiscal quarter period
ending on such date, the quotient obtained by dividing

                                       I-3
<PAGE>   20

(i) Consolidated EBITDA Parent for such period by (ii) Consolidated Interest
Expense Parent for such period.

                  "CONSOLIDATED INTEREST COVERAGE RATIO PROVIDERS" means, at the
end of each fiscal quarter of the Providers, for the four fiscal quarter period
ending on such date, the quotient obtained by dividing (i) Consolidated EBITDA
Providers for such period by (ii) Consolidated Interest Expense Providers for
such period.

                  "CONSOLIDATED INTEREST EXPENSE PARENT" means, for any period,
the Interest Expense of the Parent and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.

                  "CONSOLIDATED INTEREST EXPENSE PROVIDERS" means, for any
period, the Interest Expense of ATC Healthcare and its Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.

                  "CONSOLIDATED NET WORTH PARENT" means, at any date of
determination, an amount equal to (a) the total unrestricted assets of the
Parent and its Subsidiaries on a consolidated basis in accordance with GAAP
minus (b) the total liabilities of the Parent and its Subsidiaries on a
consolidated basis in accordance with GAAP .

                  "CONSOLIDATED NET WORTH PROVIDERS" means, at any date of
determination, an amount equal to (a) the total unrestricted assets of ATC
Healthcare and its Subsidiaries on a consolidated basis in accordance with GAAP
minus (b) the total liabilities of ATC Healthcare and its Subsidiaries on a
consolidated basis in accordance with GAAP

                  "CONSOLIDATED TANGIBLE NET WORTH PARENT" means with respect to
the Parent and its Subsidiaries determined on a consolidated basis in accordance
with GAAP, at any date of determination, (i) the sum of capital stock, capital
in excess of par or stated value of shares of its capital stock, retained
earnings and any other account which, in accordance with GAAP constitutes
stockholder's equity, less (ii) treasury stock and any minority interest in
subsidiaries, less (iii) the amount of any write-up subsequent to the Closing
Date in the value of any asset above the cost or depreciated cost thereof and
less (iv) all intangible assets, including, without limitation, goodwill, which
would be classified as such in accordance with GAAP.

                  "CONSOLIDATED TANGIBLE NET WORTH PROVIDERS" means with respect
to ATC Healthcare and its Subsidiaries on a consolidated basis in accordance
with GAAP, at any date of determination, (i) the sum of capital stock, capital
in excess of par or stated value of shares of its capital stock, retained
earnings and any other account which, in accordance with GAAP constitutes
stockholder's equity, less (ii) treasury stock and any minority interest in
subsidiaries, less (iii) the amount of any write-up subsequent to the Closing
Date in the value of any asset above the cost or depreciated cost thereof and
less (iv) all intangible assets, including, without limitation, goodwill, which
would be classified as such in accordance with GAAP.

                  "CONSOLIDATED TOTAL NET INCOME PARENT" means, for any period,
the total net income of the Parent and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.

                  "CONSOLIDATED TOTAL NET INCOME PROVIDERS" means, for any
period, the total net income of ATC Healthcare and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP.

                                       I-4
<PAGE>   21

                  "CONSOLIDATED WORKING CAPITAL PARENT" means at any date of
determination, an amount equal to Consolidated Current Assets Parent minus
Consolidated Current Liabilities Parent.

                  "CONSOLIDATED WORKING CAPITAL PROVIDERS" means at any date of
determination, an amount equal to Consolidated Current Assets Providers minus
Consolidated Current Liabilities Providers.

                  "CREDIT AND COLLECTION POLICY" means those receivables credit
and collection policies and practices of the Providers in effect on the date of
the Agreement and set forth in Schedule II hereto, as modified from time to time
with the consent of the Purchaser and Healthco-4.

                  "DEBT" means as to any Person (without duplication): (i) all
obligations of such party for borrowed money, (ii) all obligations of such party
evidenced by bonds, notes, debentures, or other similar instruments, (iii) all
obligations of such party to pay the deferred purchase price of property or
services (other than trade payables in the ordinary course of business), (iv)
all Capital Leases of such party, (v) all Debt of others directly or indirectly
Guaranteed (which term shall not include endorsements in the ordinary course of
business) by such party, (vi) all obligations secured by a Lien existing on
property owned by such party, whether or not the obligations secured thereby
have been assumed by such party or are non-recourse to the credit of such party
(but only to the extent of the value of such property), (vii) all reimbursement
obligations of such party (whether contingent or otherwise) in respect of
letters of credit, bankers' acceptance and similar instruments and (viii) all
obligations of such Party under this Agreement and the Loan Agreement.

                  "DEFAULTED RECEIVABLE" means a Batch Receivable (i) as to
which the Obligor thereof or any other Person obligated thereon has taken any
action, or suffered any event to occur, of the type described in paragraph (g)
of Exhibit V or (ii) which, consistent with the Credit and Collection Policy,
would be written off the applicable Provider's books as uncollectible.

                  "DELINQUENCY RATIO" means, as of the last Business Day of each
Month, a percentage equal to:

                                       DLR
                                       ---
                                       ENV

                  where:

                  DLR=     The Expected Net Value of all Receivables which
                           became Delinquent Receivables in the Month prior to
                           the date of calculation.

                  ENV=     The Expected Net Value of all Receivables which were
                           purchased in the Month immediately prior to the date
                           of calculation.

                  "DELINQUENT RECEIVABLE" means a Batch Receivable (a) that has
not been paid in full on or following the 180th day following the date of
original invoicing thereof, or (b) that is a Denied Receivable.

                  "DENIED RECEIVABLE" has the meaning set forth in Section
4.01(a) hereto.

                  "DEPOSITARY AGREEMENT" means those certain depositary account
agreements, among Healthco-4 and the applicable Lockbox Bank, in substantially
the form attached hereto as Exhibit XII, as such agreements may be amended,
modified or supplemented from time to time in accordance with their terms.

                                       I-5
<PAGE>   22

                  "EBITDA" means, for any Person during any period, the sum
(determined without duplication on a consolidated basis) of (a) net income (or
net loss) of such Person (calculated before extraordinary items) during such
period plus (b) the Interest Expense of such Person during such period deducted
in the determination of such net income (or net loss) plus (c) depreciation,
amortization and other non-cash items of such Person during such period to the
extent included in the determination of net income (or net loss) plus or minus
(d) all taxes accrued by such Person during such period on or measured by income
to the extent deducted or credited in determining such net income (or net loss)
minus or plus (e) gains (or losses) from asset dispositions by such Person
during outside of the normal course of business to the extent included in
determining such net income (or net loss) plus (f) losses due to asset
impairment minus (g) non-cash, non-recurring items to the extent included in
determining such net income (or net loss).

                  "ELIGIBILITY CRITERIA" has the meaning specified in the Loan
Agreement, as such Eligibility Criteria may be modified from time to time by
Healthco-4 upon Written Notice to the Primary Servicer.

                  "ELIGIBLE RECEIVABLES" has the meaning specified in the Loan
Agreement.

                  "EMPLOYEE BENEFIT PLAN" means any employee benefit plan within
the meaning of Section 3(3) of ERISA maintained by the Parent, any Provider or
any ERISA Affiliate thereof, or with respect to which any of them have any
liability.

                  "EQUITY" means the amount set forth on the balance sheet of
the any Provider as equity.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

                  "ERISA AFFILIATE" means any entity which is under common
control with the Parent or any Provider within the meaning of ERISA or which is
treated as a single employer with any Provider under the Internal Revenue Code
of 1986, as amended.

                  "EVENT OF TERMINATION" means any of the events specified in
Exhibit V hereto.

                  "EXPECTED NET VALUE" means, with respect to any Batch
Receivable, the gross unpaid amount of such Receivable on the Transfer Date
therefor, times the applicable Net Value Factor.

                  "FACILITY TERMINATION DATE" means the earlier of (a) April 5,
2004 (subject to automatic extensions of such date to coincide with extensions
under Section 5.07 of the Loan Agreement) and (b) the date of delivery of notice
of the occurrence of an Event of Termination, if required pursuant to Section
3.02 hereof, or the date of occurrence of an Event of Termination if no notice
is required, unless such Event of Termination is waived by the Purchaser in
writing.

                  "FINAL PAYMENT DATE" means the first Settlement Date following
the Settlement Period in which final collection has been received for all Batch
Receivables have become Denied Receivables or Defaulted Receivables.

                  "GAAP" means generally accepted accounting principles in the
United States of America, applied on a consistent basis, as set forth in
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants or in statements of the Financial Accounting
Standards Board or the rules and regulations of the Securities and Exchange
Commission or their respective successors and which are applicable in the
circumstances as of the date in question.

                                       I-6
<PAGE>   23
                  "GOVERNMENTAL ENTITY" means the United States of America, any
state, any political subdivision of a state and any agency or instrumentality of
the United States of America or any state or political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

                  "GUARANTY" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay), or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect the obligee of such Debt or other obligation of
the payment thereof or to protect the obligee against loss in respect thereof
(in whole or in part), provided that the term Guaranty shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "GUARANTEE" used as a verb has a corresponding meaning.

                  "HEALTHCO-4" means HFG Healthco-4 LLC, a Delaware limited
liability company.

                  "HFG GROUP" means (i) Healthco-4, the Program Manager and the
Master Servicer and (ii) Healthco-4's agents, delegates, designees and assigns
identified from time to time to effectuate the Agreement.

                  "INDEMNIFIED AMOUNTS" has the meaning set forth in Section
4.02 hereto.

                  "INDEMNIFIED PARTY" has the meaning set forth in Section 4.02
hereto.

                  "INITIAL TRANSFER DATE" means the date of the initial purchase
and contribution of Receivables hereunder.

                  "INTEREST EXPENSE" means, with respect to any Person for any
period, the interest expense of such Person during such period as determined in
accordance with GAAP.

                  "LAST SERVICE DATE" means, with respect to any Receivable the
date set forth on the related invoice or statement as the most recent date on
which services or merchandise were provided by the related Provider to the
related Obligor.

                  "LIBOR" has the meaning specified in the Loan Agreement.

                  "LIEN" means any lien, mortgage, security interest, tax lien,
pledge, hypothecation, assignment, preference, priority, other charge or
encumbrance, or any other type of preferential arrangement of any kind or nature
whatsoever by or with any Person (including, without limitation, any conditional
sale or title retention agreement), whether arising by contract, operation of
law, or otherwise.

                  "LOAN AGREEMENT" means the Loan and Security Agreement dated
as of the date hereof between the Purchaser as borrower and Healthco-4 as
lender, as such agreement may be modified, supplemented or amended from time to
time in accordance with its terms.

                  "LOCKBOX" means a lockbox set forth on Schedule IV hereto to
receive checks with respect to Receivables payable by Obligors.

                  "LOCKBOX ACCOUNT" means a lockbox account set forth on
Schedule IV hereto associated with a Lockbox established by the Providers, in
the name of and for the benefit of Healthco-4, to deposit

                                       I-7
<PAGE>   24

Collections from Obligors, including Collections received in related Lockbox and
Collections received by wire transfer directly from Obligors, all as more fully
set forth in the relevant Depositary Agreement.

                  "LOCKBOX BANK" means a financial institution in its capacity
as lockbox bank under a Depositary Agreement.

                  "LOSS-TO-LIQUIDATION RATIO" means, as of the last Business Day
of each Month, a percentage equal to:

                                       DFR
                                       ---
                                        C

                  where:

                  DFR=     The Expected Net Value of all Batch Receivables which
                           became Defaulted Receivables in the Month prior to
                           the date of calculation.

                  C=       Collections in the Month prior to the date of
                           calculation.

                  "MASTER SERVICER" means the Program Manager and any other
Person then identified by the Program Manager to the Providers, or the Primary
Servicer on behalf of the Providers, as being authorized to administer and
service Receivables.

                  "MATERIAL ADVERSE EFFECT" means any event, condition, change
or effect that (a) has a materially adverse effect on the business, Properties,
capitalization, liabilities, operations, prospects or financial condition of (i)
Providers (in the aggregate) or (ii) the Parent on a consolidated basis, (b)
materially impairs the ability of the Providers (in the aggregate) or the Parent
to perform its obligations under the Agreement, (c) materially impairs the
validity or enforceability of, or materially impairs the rights, remedies or
benefits available to the Purchaser under the Agreement, or (d) changes, or
could reasonably be expected to change, the characterization and treatment of
the sales and contributions of Receivables under the Agreement as something
other than a true sale or complete transfer of ownership.

                  "MISDIRECTED PAYMENT" means any form of payment in respect of
a Batch Receivable made by an Obligor in a manner other than as provided in the
Notice to Obligor sent to such Obligor.

                  "MONTH" means a calendar month.

                  "MULTIEMPLOYER PLAN" means a plan, within the meaning of
Section 3(37) of ERISA, as to which the Parent, Primary Servicer, any Provider
or any ERISA Affiliate contributed or was required to contribute within the
preceding five years.

                  "NET VALUE FACTOR" means, initially, the percentages set forth
on Schedule VI attached hereto, as such percentages may be adjusted, upwards or
downwards in accordance with the Loan Agreement based on the historical actual
final collections received on the Providers' Receivables within 180 days of the
Last Service Date of such Receivables (without regard to the factors set forth
in the definition of "Defaulted Receivable").

                  "NOTICE TO OBLIGOR" means a notice letter on the relevant
Provider's corporate letterhead in substantially the form attached hereto as
Exhibit VII.

                                       I-8
<PAGE>   25
                  "OBLIGOR" means the Person who is responsible for the payment
of all or any portion of a Receivable.

                  "PARENT" has the meaning set forth in the preamble hereto.

                  "PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.

                  "PERMITTED LIENS" means (i) those Liens on Additional
Collateral existing as of the date hereof and set forth on Schedule VII hereto
and (ii) Liens arising after the date hereof securing the purchase money Debt
and Capitalized Lease Obligations of the Parent or any Provider, in an aggregate
amount not to exceed $2,000,000 for the Parent and the Providers taken as a
whole at any time, provided that no such Lien described in this clause (ii),
shall apply to any other property of the Parent or any Provider.

                  "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.

                  "PLEDGE AGREEMENT" means that certain Pledge Agreement, dated
the date hereof, by the Parent and ATC Healthcare in favor of Healthco-4 as
lender under the Loan Agreement, as the same may be amended, modified or
supplemented from time to time.

                  "PRIMARY SERVICER" as defined in the preamble, means ATC
Healthcare, if then authorized to perform the Primary Servicer Responsibilities
pursuant to Section 1.05(b), or the Master Servicer, or any other Person then
authorized to perform the Primary Servicer Responsibilities that is acceptable
to the Program Manager.

                  "PRIMARY SERVICER ACCOUNT" means account number 777-522683 of
the Primary Servicer at The Chase Manhattan Bank, ABA number 021000021, or such
other bank account designated by the Primary Servicer by Written Notice to the
Master Servicer, the Purchaser and the Program Manager from time to time, as the
account for receipt of proceeds on behalf of the Providers.

                  "PRIMARY SERVICER RESPONSIBILITIES" has the meaning set forth
in Section 1.05(b) hereto.

                  "PRIMARY SERVICING FEE" means, with respect to any Transferred
Batch, an amount equal to $8.00 multiplied by the number of Receivables in such
Transferred Batch.

                  "PROGRAM MANAGER" means (i) Healthcare Finance Group, Inc. or
(ii) any other Person then identified by Healthco-4 to the Primary Servicer as
being authorized to provide administrative services with respect to the
Purchaser and the Purchaser's purchase, funding and collection of healthcare
receivables.

                  "PROPERTY" means property of all kinds, movable, immovable,
corporeal, incorporeal, real, personal or mixed, tangible or intangible
(including, without limitation, all rights relating thereto), whether owned or
acquired on or after the date of this Agreement.

                  "PROVIDER", "PROVIDERS" have the meanings set forth in the
preamble hereto.

                  "PROVIDER DOCUMENTS" means this Agreement, the Depositary
Agreement, the Pledge Agreement, each agreement now existing or hereafter
created providing collateral security for the payment

                                       I-9
<PAGE>   26
or performance of any Provider's obligations described in Section 4.04(a) or any
Person's obligations under a Guaranty of such obligations of the Providers, and
each other document or instrument now or hereafter executed and delivered to the
Purchaser by or on behalf of the Providers pursuant to or in connection herewith
or therewith.

                  "PURCHASE PRICE" means, with respect to Eligible Receivables
in each Purchased Batch, an amount equal to 95% of the aggregate Expected Net
Value of such Receivables.

                  "PURCHASED BATCH" means all Eligible Receivables purchased on
any Transfer Date.

                  "PURCHASED RECEIVABLE" means a Receivable that has been
purchased by the Purchaser.

                  "PURCHASER" has the meaning set forth in the preamble hereto.

                  "RECEIVABLE INFORMATION" has the meaning set forth in Section
1.02(a) hereto.

                  "RECEIVABLES" means all accounts or general intangibles and
all other obligations for the payment of money, in each case, owing (or in the
case of Unbilled Receivables, to be owing) by an Obligor to a Provider and
arising out of the rendition of professional services, or the sale of products
by a Provider in the ordinary course of its business, including all rights to
reimbursement under any agreements with and payments from Obligors or other
Persons, together with, to the maximum extent permitted by law, all accounts and
general intangibles related thereto, all rights, remedies, guaranties, security
interests and Liens in respect of the foregoing, all books, records and other
Property evidencing or related to the foregoing, and all proceeds of any of the
foregoing.

                  "RETURN PRICE" means, with respect to a Denied Receivable, an
amount equal to (x) either the Purchase Price or the increase in the capital
account of the applicable Provider with respect to the prior contribution
thereof, in each case, of such Denied Receivable, minus (y) any cash received
from the Obligor in a Lockbox Account with respect to such Denied Receivable,
plus (z) accrued and unpaid interest on such amount calculated at the interest
rate then in effect under the Loan Agreement on the average outstanding
difference between clauses (x) and (y) from and including the Business Day
following the Transfer Date of such Denied Receivable to the date the Return
Price is received by the Purchaser.

                  "SERVICER TERMINATION EVENT" means any of the events specified
in Exhibit IX hereto.

                  "SETTLEMENT DATE" means the third Business Day of each Week;
provided, that, if, following the occurrence of an Event of Termination, the
Purchaser shall have selected a period shorter than one Week as the Settlement
Period, the Settlement Date shall mean the fifth Business Day following the end
of each such Settlement Period.

                  "SETTLEMENT PERIOD" means each Week; provided, that
notwithstanding the foregoing, the first Settlement Period shall be the period
from and including the Initial Transfer Date through April 7, 2001; and
provided, further, that following the occurrence of an Event of Termination, the
Purchaser may from time to time, by notice to the Primary Servicer on behalf of
the Providers, select a shorter period as the Settlement Period.

                  "SUBSIDIARY" means, with respect to the Parent and each
Provider, any corporation or entity of which at least a majority of the
outstanding shares of stock or other ownership interests having by the terms
thereof ordinary voting power to elect a majority of the board of directors (or
Persons performing similar functions) of such corporation or entity
(irrespective of whether or not at the time, in the case of a

                                      I-10
<PAGE>   27
corporation, stock of any other class or classes of such corporation 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 the Parent or such
Provider.

                  "TANGIBLE NET WORTH" means, with respect to any Person at any
time, the sum of (i) such Person's capital stock, capital in excess of par or
stated value of shares of its capital stock, retained earnings and any other
account which, in accordance with GAAP, constitutes stockholders' equity, minus
(ii) treasury stock, minus (iii) the book value of all assets classified as
intangible under GAAP, including, without limitation, goodwill, deferred taxes,
deferred financing costs, trademarks, trade names, patents, copyrights and
licenses.

                  "TOTAL COLLECTIONS" means, as to each Batch, the sum of all
Collections, Return Prices and Indemnified Amounts (but only to the extent that
such Indemnified Amounts are received in lieu of Collections) distributed to and
received by the Purchaser with respect thereto.

                  "TRANSFER DATE" means the Initial Transfer Date and each
Business Day thereafter.

                  "TRANSFERRED BATCH" means, with respect to any Transfer Date,
all Receivables purported by the Primary Servicer and applicable Provider to
constitute Eligible Receivables and which are purchased by the Purchaser or
contributed to capital of the Purchaser as of such Transfer Date.

                  "TRANSMISSION" means, upon establishment of computer interface
between the Providers and the Master Servicer in accordance with the
specifications established by the Master Servicer, the transmission of
Receivable Information through computer interface to the Master Servicer in a
manner satisfactory to the Master Servicer.

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

                  "UNBILLED RECEIVABLE" means a Receivable in respect of which
the goods have been shipped, or the services rendered, to the relevant Obligor,
and rights to payment therefor have accrued, but the invoice has not been
rendered to the such Obligor.

                  "WEEK" means a calendar week which in each instance shall
begin on Sunday and end on Saturday.

                  "WEEKLY REPORT" has the meaning set forth in Section 1.02
hereof.

                  "WRITTEN NOTICE" and "IN WRITING" mean any form of written
communication or a communication by means of telex, facsimile device, telegraph
or cable.

                  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, and not specifically defined herein, are
used herein as defined in such Article 9.

                                      I-11
<PAGE>   28

                                   EXHIBIT II

                    CONDITIONS OF PURCHASES AND CONTRIBUTIONS

                  1. Conditions Precedent on the Initial Transfer Date. The
purchase or contribution of the Transferred Batch under the Agreement on the
Initial Transfer Date is subject to the conditions precedent that the Purchaser
shall have received on or before the Initial Transfer Date the following, each
(unless otherwise indicated) dated such date, in form and substance satisfactory
to the Purchaser:

                  (1) For the Parent, each Provider and the Primary Servicer, a
certificate issued by the Secretary of State of the state of such entity's (i)
organization as to the legal existence and good standing of such entity and (ii)
locale of operation, if different from its state of organization, as to the
foreign qualification, authorization and good standing of such entity in such
locale (all of which certificates shall be dated not more than 20 days prior to
the Initial Transfer Date).

                  (2) For the Parent, each Provider and the Primary Servicer,
certified copies of the charter and by-laws of such entity, certified copies of
resolutions of the board of directors of such entity approving the Agreement,
certified copies of all documents filed to register any and all assumed/trade
names of such entity, and certified copies of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
the Agreement.

                  (3) For the Parent, each Provider and the Primary Servicer, a
certificate of the Secretary or Assistant Secretary of such entity certifying
the names and true signatures of the incumbent officers of such entity
authorized to sign the Agreement and the other documents to be delivered by it
hereunder.

                  (4) (i) Certified copies of the balance sheets of the Parent
and its Subsidiaries as at February 29, 2000, and February 28,1999 and the
related statements of income and expense and retained earnings of the Parent and
its Subsidiaries for the fiscal year then ended, certified in a manner
acceptable to the Purchaser by independent public accountants acceptable to the
Purchaser and demonstrating that there has been no Material Adverse Effect and
(ii) unaudited balance sheets of the Parent and its Subsidiaries for the fiscal
quarters ended May 31, 2000, August 31, 2000 and November 30, 2000 and the
related statements of income and expense and retained earnings of the Parent and
its Subsidiaries for such fiscal quarter then ended.

                  (5) Acknowledgment or time stamped receipt copies of proper
financing statements (showing each Provider as debtor/seller, the Purchaser as
secured party/purchaser and Healthco-4 as assignee, and stating that the
financing statements are being filed because UCC Section 9-102 does not
distinguish between a sale and a secured loan for filing purposes) duly filed on
or before the Initial Transfer Date under the UCC of all jurisdictions that the
Purchaser may deem necessary or desirable in order to perfect the ownership
interests contemplated by the Agreement.

                  (6) Acknowledgment or time-stamped receipt copies of proper
financing statements (showing each Provider as debtor and the Purchaser as
secured party and Healthco-4 as assignee with respect to the grant by the
Providers of a first priority security interest to the Purchaser in the
Collateral, as contemplated by Section 4.04 of the Agreement) duly filed on or
before the Initial Transfer Date under the UCC of all jurisdictions that the
Purchaser may deem necessary or desirable in order to perfect such security
interest.

                  (7) Completed requests for information (UCC search results)
dated within 20 days of the Initial Transfer Date, and a schedule thereof
listing all effective financing statements filed in the jurisdictions referred
to in subsections (e) and (f) above that name the Parent or any Provider as
debtor,

                                      II-1
<PAGE>   29
together with copies of all other financing statements filed against the
Parent or any Provider (none of which shall cover any Collateral or the
Receivables).

                  (8) Releases of, and acknowledgment copies of proper
termination statements (Form UCC-3), if any, necessary to evidence the release
of all security interests, ownership and other rights of any Person previously
granted by the Parent or any Provider in any of the Collateral or the
Receivables.

                  (9) A favorable opinion of Clifford Chance Roger & Wells LLP,
counsel for the Primary Servicer, the Parent and the Providers, substantially in
the form attached hereto as Exhibit XI-A, and as to such other matters as the
HFG Group requests.

                  (10) A favorable opinion of Clifford Chance Roger & Wells LLP,
counsel for the Primary Servicer, the Parent and the Providers, substantially in
the form attached hereto as Exhibit XI-B, and as to such other matters as the
HFG Group requests.

                  (11) Proof of payment of the $250,000 facility fee payable by
the Purchaser to Healthcare Finance Group, Inc.

                  (12) Proof of payment of all reasonable attorneys' fees and
disbursements incurred by the Purchaser and the HFG Group.

                  (13) A duly executed Depositary Agreement for each Lockbox and
Lockbox Agreement, together with evidence satisfactory to the Purchaser that all
Lockboxes and the Lockbox Accounts have been established such that all funds on
deposit in the Lockbox Accounts are transmitted to the Concentration Account
each Business Day.

                  (14) Copies of all Notices to Obligors required pursuant to
Article II of the Agreement, together with evidence satisfactory to the
Purchaser that such Notices to Obligors have been or will be delivered to the
addressees thereof.

                  (15) A copy of each new form of invoice from each Provider
showing the proper Lockbox as the remittance address.

                  (16) A certificate from the Master Servicer stating that all
computer linkings and interfaces necessary or desirable, in the judgment of the
Master Servicer, to effectuate the transactions and information transfers
contemplated hereunder, are fully operational to the reasonable satisfaction of
the Master Servicer.

                  (17) Executed acknowledgment letters regarding the ownership
of the Receivables from franchisees who are owed fees in connection with
Receivables consisting of at least 90% of such Receivables.

                  2. Conditions Precedent on All Transfer Dates. Each purchase
and contribution of a Transferred Batch on a Transfer Date (including the
Initial Transfer Date) shall be subject to the further conditions precedent that
the Primary Servicer and the Providers and the Purchaser shall have agreed upon
the terms of such purchase and also that:

                  (1) The Providers shall have delivered to the Purchaser or the
Master Servicer, as the case may be, no later than 10:30 a.m. on such Transfer
Date, in form and substance satisfactory to the Purchaser or the Master Servicer
(as the case may be), to the extent not previously provided, an executed

                                      II-2
<PAGE>   30
Notice to Obligors to each Obligor responsible for the payment of any of the
Batch Receivables to be transferred on such Transfer Date, directing such
Obligors to make payment to the addresses and accounts designated in such Notice
to Obligors, as set forth in Article II hereof, together with evidence that such
Notice to Obligors has been delivered to such Obligors.

                  (2) On each such Transfer Date the following statements shall
be true and correct:

                  (1) the representations and warranties contained in Exhibit
         III are true and correct in all material respects on and as of the date
         of such purchase as though made on and as of such date, and

                  (2) no event has occurred and is continuing, or would result
         from such purchase, that constitutes an Event of Termination or that
         would constitute an Event of Termination but for the requirement that
         notice be given or time elapse or both.

                                      II-3
<PAGE>   31
                                   EXHIBIT III

                         REPRESENTATIONS AND WARRANTIES

                  The Parent, the Primary Servicer and each Provider represents
and warrants as follows:

                  (3) It is a corporation duly incorporated, validly existing
and in good standing under the laws of the state of its incorporation as set
forth in the preamble hereto, 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, except in any jurisdiction other than that of its chief
executive offices where the failure to be so qualified would not have a Material
Adverse Effect.

                  (4) The execution, delivery and performance by it of the
Agreement and the other documents to be delivered by it thereunder, (i) are
within its corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) do not contravene (1) its charter or by-laws, (2) any
law, rule or regulation applicable to it, (3) any contractual restriction
binding on or affecting it or its Property, or (4) any order, writ, judgment,
award, injunction or decree binding on or affecting it or its Property, and (iv)
do not result in or require the creation of any Lien upon or with respect to any
of its Properties, other than the interests created by the Agreement. The
Agreement has been duly executed and delivered by it. It has furnished to the
Purchaser a true, correct and complete copy of its certificate of incorporation
and by-laws, including all amendments thereto.

                  (5) No authorization or approval or other action by, and no
notice to or filing with, any Governmental Entity is required for the due
execution, delivery and performance by it of the Agreement or any other document
to be delivered thereunder.

                  (6) The Agreement constitutes the legal, valid and binding
obligation of it, enforceable against it in accordance with its terms, except as
limited by bankruptcy, insolvency, moratorium, fraudulent conveyance or other
laws relating to the enforcement of creditors' rights generally and general
principles of equity (regardless of whether enforcement is sought at equity or
law).

                  (7) It has all power and authority, and has all permits,
licenses, accreditations, certifications, authorizations, approvals, consents
and agreements of all Obligors, accreditation agencies and any other Person,
other than those permits, licenses, accreditations, certifications,
authorizations, approvals, consents and agreements, the failure of which to have
is not reasonably likely to result in a Material Adverse Effect, for it (i) to
own the assets (including Receivables) that it now owns, and (ii) to carry on
its business as now conducted.

                  (8) It has not been notified by any Obligor, or any other
Person, during the immediately preceding 12 Month period, that such party has
rescinded or not renewed, or is reasonably likely to rescind or not renew, any
such permit, license, accreditation, certification, authorization, approval,
consent or agreement granted to it or to which it is a party except as disclosed
in Schedule III hereto or which is not reasonably likely to result in a Material
Adverse Effect. (1)

                  (9) As of the Initial Transfer Date, all conditions precedent
set forth in Exhibit II have been fulfilled or waived in writing by the
Purchaser, and as of each Transfer Date, the conditions precedent set forth in
paragraph 2 of such Exhibit II have been fulfilled or waived in writing by the
Purchaser.

                  (10) The balance sheets of the Parent and its Subsidiaries as
at February 29, 2000, and the related statements of income and expense, cash
flows and retained earnings of the Parent and its Subsidiaries for the fiscal
periods then ended, copies of which have been furnished to the Purchaser, fairly
present the financial condition of the Parent and its Subsidiaries as at such
date and the results of the

                                      III-1
<PAGE>   32
operations of the Parent and its Subsidiaries for the period ended on such date,
all in accordance with GAAP, and since February 29, 2000 there has been no
change resulting in a Material Adverse Effect.

                  (11) There is no pending or, to its knowledge, threatened
action or proceeding or injunction, writ or restraining order affecting it or
any of its Subsidiaries before any court, Governmental Entity or arbitrator
which could reasonably be expected to result in a Material Adverse Effect, and
it or any Subsidiary thereof is not currently the subject of, and has no present
intention of commencing, an insolvency proceeding or petition in bankruptcy.

                  (12) Such Provider is the legal and beneficial owner of the
each Batch Receivable free and clear of any Lien; upon each purchase or
contribution of a Transferred Batch, the Purchaser shall acquire valid ownership
of each Batch Receivable therein and in the collections with respect thereto
prior to all other Liens thereon. No effective financing statement or other
instrument similar in effect covering any Collateral or any Batch Receivable is
on file in any recording office, except those filed in favor of the Purchaser,
Healthco-4 or any permitted assignee of Healthco-4 relating to the Agreement (or
with respect to the Additional Collateral those filed in connection with
Permitted Liens securing Debt which remains outstanding), and no competing
notice or notice inconsistent with the transactions contemplated in the
Agreement remains in effect with respect to any Obligor.

                  (13) All Receivable Information, information provided in the
application for the program effectuated by the Agreement, and each other
document, report and Transmission provided by the Primary Servicer or any
Provider to the HFG Group is or shall be accurate in all material respects as of
its date and as of the date so furnished, and no such document 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.

                  (14) The principal place of business and chief executive
office of the Parent and each Provider and the office where the Parent and such
Provider keeps its records concerning the Collateral and the Batch Receivables
are located at the respective address referred to on the signature pages of the
Agreement and there have been no other such locations for the four immediately
prior Months.

                  (15) Each transfer of a Transferred Batch will constitute a
purchase or other acquisition of notes, drafts, acceptances, open accounts
receivable or other obligations representing part or all of the sales price of
merchandise, insurance or services within the meaning of Section 3(c)(5) of the
Investment Company Act of 1940, as amended.

                  (16) Each Receivable included in a Purchased Batch is, as of
the Transfer Date of such Purchased Batch, an Eligible Receivable.

                  (17) The provisions of the Agreement create legal and valid
security interests in all of the Collateral owned or held by each Provider in
the Purchaser's favor, and when all proper filings and other actions necessary
to perfect such Liens have been completed, will constitute a perfected and
continuing Lien on all of the Collateral owned or held by such Provider
(excluding the Batch Receivables sold or contributed to the Purchaser pursuant
to the provisions of the Agreement), having priority over all other Liens on
such Collateral (other than Permitted Liens on Additional Collateral existing on
the date hereof) of such Provider, enforceable against such Provider and all
third parties.

                  (18) All required Notices to Obligors have been prepared and
delivered to each applicable Obligor, and all invoices now bear only the
appropriate remittance instructions for payment direction to the proper Lockbox
and the proper Lockbox Account, as the case may be.

                                       III-2
<PAGE>   33

                  (19) Except as disclosed on Schedule III hereto, neither the
Parent nor any Provider has changed its principal place of business or chief
executive office in the last five years.

                  (20) The exact name of the Parent and each Provider is as set
forth on the signature pages of the Agreement and, except as set forth on such
signature page, neither the Parent nor any Provider has changed its name in the
last five years and, except as set forth on Schedule III, during such period and
neither the Parent nor any Provider has used or now uses, any other fictitious,
assumed or trade name.

                  (21) With respect to itself or any Subsidiary there exists no
event which has or is reasonably likely to have a Material Adverse Effect.

                  (22) It is not in violation under any applicable statute,
rule, order, decree or regulation of any court, arbitrator or governmental body
or agency having jurisdiction over it which could reasonably be expected to have
a Material Adverse Effect.

                  (23) Except as disclosed in writing by the Parent to the
Master Servicer prior to the Closing Date, it has filed on a timely basis all
tax returns (federal, state and local) required to be filed and has paid, or
made adequate provision for payment of, all taxes, assessments and other
governmental charges due from it, unless contested in good faith by appropriate
proceedings. No tax Lien has been filed and is now effective against it or any
of its Properties, except any Lien in respect of taxes and other charges not yet
due or contested in good faith by appropriate proceedings. To its knowledge,
there are no pending investigations of it by any taxing authority or any pending
but unassessed tax liability of it. It does not have any obligation under any
tax sharing agreement. (1)

                  (24) It is solvent and will not become insolvent after giving
effect to the transactions contemplated by the Agreement; it has not incurred
debts or liabilities beyond its ability to pay; it will, after giving effect to
the transaction contemplated by the Agreement, have an adequate amount of
capital to conduct its business in the foreseeable future; the sales and
contributions of Receivables hereunder are made in good faith and without intent
to hinder, delay or defraud its present or future creditors.

                  (25) Other than as set forth on Schedule III attached hereto,
the Lockboxes are the only post office boxes and the Lockbox Accounts are the
only lockbox accounts maintained for Receivables, all funds on deposit in each
Lockbox Account are transmitted each Business Day to the Concentration Account,
and no direction is in effect directing Obligors to remit payments on
Receivables other than to the Provider Lockbox or the Lockbox Account, each as
described on Schedule IV. The Providers agree (i) not to instruct any Obligor to
make any payment in respect of the Receivables to the account described on
Schedule III and to use reasonable efforts (including, without limitation, the
sending of a Notice to Obligors to the applicable Obligors, in multiple copies
if necessary) to prevent any payment in respect of the Receivables from being
made to such account and (ii) to deposit any funds received in such account into
a Lockbox Account within one Business Day of receipt thereof.

                  (26) Each pension plan or profit sharing plan to which it is a
party has been fully funded in accordance with its obligations as set forth in
such plan.

                  (27) Except as disclosed on Schedule III, there are no pending
civil or criminal investigations by any Governmental Entity involving it or its
officers or directors, in their capacity as such, and neither it nor any of its
officers or directors, in their capacity as such, has been involved in, or the
subject of, any civil or criminal investigation by any Governmental Entity.

                                       III-3
<PAGE>   34

                  (28) The primary business of the Providers is the provision of
healthcare and healthcare related services, products, merchandise or equipment.

                  (29) The assets of the Parent each Provider are free and clear
of any Liens in favor of the Internal Revenue Service, any Employee Benefit Plan
or the PBGC other than inchoate tax liens resulting from an assessment of the
Parent or such Provider.

                  (30) With respect to each Employee Benefit Plan of it,
including to its knowledge as to any Multiemployer Plan, such Employee Benefit
Plan has complied and been administered in accordance with its terms and in
substantial compliance with all applicable provisions of ERISA and the Internal
Revenue Code of 1986, as amended; neither it nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or has been terminated, within the meaning of Title IV of
ERISA; and it has no material unpaid liability for any Employee Benefit Plan.

                  (31) No Batch Receivable constitutes or has constituted an
obligation of the Parent, the Primary Servicer, any Subsidiary or other Person
which is its Affiliate.

                  (32) No transaction contemplated under this Agreement requires
compliance with any bulk sales act or similar law.

                  (33) It has, or has the right to use, valid provider
identification numbers and licenses to generate the Receivables.

                  (34) It shall treat each sale of Receivables hereunder as a
sale for federal and state income tax, reporting and accounting purposes and
shall treat each contribution of Receivables hereunder as a contribution for
federal and state income tax, reporting and accounting purposes.

                  (35) It is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation T, U, or X of the Board
of Governors of the Federal Reserve System), and no part of the proceeds of any
extension of credit under this Agreement will be used to purchase or carry any
such margin stock or to extend credit to others for the purpose of purchasing or
carrying margin stock.

                  (36) With respect to each Receivable contributed to the
capital of the Purchaser in each Batch, the Purchaser shall record in each
applicable Provider's own capital account the aggregate Expected Net Value of
such Receivables as a capital contribution.

                  (37) All of the employees of each Provider are salaried
employees and are not, and do not claim to be independent contractors. No such
employee has any rights in, and has not claimed any rights in any Receivable.

                  (38) Each Receivable represents the direct payment obligation
of the applicable Obligor, and is not subject to any condition that such Obligor
receive any payment or reimbursement from any third party.

                  (39) ATC Staffing has no Subsidiary other than the Purchaser;
ATC Healthcare has no Subsidiaries other than the Purchaser, ATC Staffing and
Applied Management; Applied Management has no Subsidiaries; and the Purchaser
has no Subsidiaries.

                                       III-4
<PAGE>   35

                  (40) Except as listed on Schedule VIII hereto, no Provider or
any of their respective Subsidiaries has any Debt (other than the Debt of the
Purchaser under the Loan Agreement). (1)

                                       III-5
<PAGE>   36

                                   EXHIBIT IV

                                    COVENANTS

                  Until the later of the Facility Termination Date and the Final
Payment Date, the Parent, the Primary Servicer and each Provider agrees as
follows:

                  (41) Compliance With Laws, etc. It will comply in all material
respects with all applicable laws, rules, regulations and orders and preserve
and maintain its corporate existence, rights, franchises, qualifications, and
privileges.

                  (42) Offices, Records and Books of Account. It will keep its
principal place of business and chief executive office and the office where it
keeps its records concerning the Collateral and the Batch Receivables at the
address set forth under its name on the signature pages to the Agreement or,
upon 30 days' prior Written Notice to the Purchaser, at any other locations in
jurisdictions where all actions reasonably requested by the Purchaser or
otherwise necessary to protect, perfect and maintain the Purchaser's security
interest in the Collateral have been taken and completed. It shall keep its
books and accounts in accordance with GAAP and shall make a notation on its
books and records, including any computer files, to indicate which Receivables
have been sold or contributed to the Purchaser and the security interest of the
Purchaser in the Collateral and its Receivables not sold or contributed to the
Purchaser. It shall 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 collecting all Batch
Receivables (including, without limitation, records adequate to permit the daily
identification of each Batch Receivable and all Collections of and adjustments
to each existing Batch Receivable) and for providing the Receivable Information.

                  (43) Performance and Compliance With Contracts and Credit and
Collection Policy. It will, at its expense, timely and fully perform and comply
with all material provisions, covenants and other promises required to be
observed by it under the contracts and other documents related to the Batch
Receivables and its responsibilities under the Agreement, and timely and fully
comply in all material respects with the Credit and Collection Policy in regard
to each Batch Receivable and the related contract, and it shall maintain, at its
expense, in full operation each of the bank accounts and lockboxes required to
be maintained under the Agreement. It shall not do anything to impede or
interfere, or suffer or permit any other Person to impede or interfere in any
material respect, with the collection by the Purchaser, or the Master Servicer,
or any other Person designated by the Purchaser on behalf of the Purchaser, of
the Batch Receivables.

                  (44) Notice of Breach of Representations and Warranties. It
shall promptly (and in no event later than one Business Day following actual
knowledge thereof) inform the Purchaser and the Master Servicer of any breach of
covenants or representations and warranties hereunder, including, without
limitation, upon discovery of a breach of the Eligibility Criteria set forth in
the Loan Agreement. (1)

                  (45) Sales, Liens, etc. It will not sell, assign (by operation
of law or otherwise) or otherwise dispose of, or create or suffer to exist any
Liens (other than Permitted Liens on Additional Collateral) upon or with respect
to, the Collateral, the Batch Receivables, or upon or with respect to any
account to which any Collections of any Batch Receivable are sent, or assign any
right to receive income in respect thereof except those Liens in favor of the
Purchaser, Healthco-4 or any assignee of Healthco-4 relating to the Agreement.

                  (46) Extension or Amendment of Batch Receivables. It shall not
amend, waive or otherwise permit or agree to any deviation from the terms or
conditions of any Batch Receivable except in

                                      IV-1
<PAGE>   37
accordance with the Credit and Collection Policy or in the ordinary course of
its business consistent with its past practice.

                  (47) Change in Credit and Collection Policy. It will not make
any material change in the Credit and Collection Policy without the prior
written consent of the Purchaser; provided, however, that during the continuance
of an Event of Termination, it will not make any change in the Credit and
Collection Policy.

                  (48) Audits and Visits. It will, at any time and from time to
time during regular business hours as requested by the Purchaser, permit the
Purchaser, or its agents or representatives (including the Master Servicer),
upon reasonable notice, (i) on a confidential basis, to examine and make copies
of and abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) in its possession or under its control
relating to Batch Receivables including, without limitation, the related
contracts, and (ii) to visit its offices and properties for the purpose of
examining and auditing such materials described in clause (i) above, and to
discuss matters relating to Batch Receivables or its performance hereunder or
under the contracts with any of its officers or employees having knowledge of
such matters. During the continuance of an Event of Termination, it shall permit
the Master Servicer to have at least one agent or representative physically
present in its administrative office during normal business hours to assist it
in performing its obligations under the Agreement, including its obligations
with respect to the collection of Batch Receivables pursuant to Article I of the
Agreement.

                  (49) Change in Payment Instructions. It will not terminate any
Lockbox or Lockbox Account, or make any change or replacement in the
instructions contained in any invoice, Notice to Obligors or otherwise, or
regarding payments with respect to Receivables to be made to any Lockbox or
Lockbox Account, except upon the prior and express written consent of the
Program Manager.

                  (50) Reporting Requirements. It will provide to the Purchaser
and the Master Servicer (in multiple copies, if requested by the Purchaser or
the Master Servicer) the following:

                          (1) as soon as available and in any event within 45
         days after the end of each of the first three quarters of each fiscal
         year of the Parent, consolidated balance sheets of the Parent and its
         Subsidiaries and, if an Additional Reporting Event has occurred,
         consolidated balance sheets of ATC Healthcare and its Subsidiaries, in
         each case, as of the end of such quarter and consolidated statements of
         income, cash flows and retained earnings of the Parent and its
         Subsidiaries, and if an Additional Reporting Event has occurred
         consolidated statements of income, cash flows and retained earnings of
         ATC Healthcare and its Subsidiaries, in each case, for the period
         commencing at the beginning of the current fiscal year and ending with
         the end of such quarter, all in reasonable detail, fairly presenting
         the financial position and results of operations of the Parent and its
         Subsidiaries, or ATC Healthcare and its Subsidiaries, as the case may
         be, as set forth above, as at the date thereof and for such periods,
         and prepared in accordance with GAAP, certified by the chief financial
         officer of Parent and each Provider, and accompanied by a certificate
         of a Responsible Officer of the Parent, Primary Servicer and each
         Provider detailing the Parent's, Primary Servicer's and the Providers'
         compliance for such fiscal period with all terms, including the
         financial covenants, contained in the Agreement, and to the extent any
         non-compliance exists, a description of the steps being taken by the
         Parent, Primary Servicer or the Providers to address such
         non-compliance;

                          (2) as soon as available and in any event within 90
         days after the end of each fiscal year of the Parent, a copy of the
         audited consolidated financial statements (together with explanatory
         notes thereon) and the auditor's report letter for such year for the
         Parent and its

                                      IV-2
<PAGE>   38
         Subsidiaries, containing financial statements for such year audited by
         Deloitte & Touche or other independent public accountants of recognized
         standing acceptable to the Purchaser, and accompanied by a certificate
         of an authorized officer of the Parent, Primary Servicer and each
         Provider detailing the Parent's, Primary Servicer's and the Providers'
         compliance for such fiscal period with all terms, including the
         financial covenants, contained in the Agreement, and to the extent any
         non-compliance exists, a description of the steps being taken by the
         Parent, Primary Servicer or the Providers to address such
         non-compliance;

                          (3) if an Additional Reporting Event has occurred, as
         soon as available and in any event within 90 days after the end of each
         fiscal year of the Parent, a copy of consolidated financial statements
         for such year for ATC Healthcare and its Subsidiaries, containing
         financial statements for such year, all in reasonable detail, fairly
         presenting the financial position and results of operations of ATC
         Healthcare and its Subsidiaries as set forth above, as at the date
         thereof and for such period, and prepared in accordance with GAAP,
         certified by the chief financial officer of each Provider, and
         accompanied by a certificate of a Responsible Officer of each Provider
         detailing such Provider's compliance for such fiscal period with all
         terms, including the financial covenants, contained in the Agreement,
         and to the extent any non-compliance exists, a description of the steps
         being taken by such Provider to address such non-compliance;

                          (4) promptly and in any event within five Business
         Days after the occurrence of each Event of Termination or event which,
         with the giving of notice or lapse of time, or both, would constitute
         an Event of Termination, a statement of the chief financial officer of
         the Parent and each Provider setting forth details of such Event of
         Termination or event, and the action that it has taken and proposes to
         take with respect thereto;

                          (5) promptly after the sending or filing thereof, if
         any, copies of all reports and registration statements that the Parent,
         such Provider or any Subsidiary files with the Securities and Exchange
         Commission or any national securities exchange and official statements
         that the Parent, such Provider or any Subsidiary files with respect to
         the issuance of tax-exempt indebtedness and after an Event of
         Termination or Servicer Termination Event, copies of all reports (if
         any) that the Parent, such Provider or any Subsidiary sends to any of
         its security holders;

                          (6) promptly after the filing or receiving thereof,
         copies of all reports and notices that the Parent, such Provider or any
         of its Affiliates files under ERISA with the Internal Revenue Service
         or the PBGC or the U.S. Department of Labor or that the Parent, such
         Provider or any of its Affiliates receives from any of the foregoing or
         from any Multiemployer Plan to which the Parent, such Provider or any
         of its Affiliates is or was, within the preceding five years, a
         contributing employer, in each case in respect of the assessment of
         withdrawal liability or an event or condition which could, in the
         aggregate, result in the imposition of liability on the Parent, such
         Provider or any such Affiliate in excess of $250,000;

                          (7) at least ten Business Days prior to any change in
         the Parent's or such Provider's name or any implementation of a new
         trade/assumed name, a Written Notice setting forth the new name or
         trade name and the proposed effective date thereof and copies of all
         documents required to be filed in connection therewith;

                          (8) promptly (and in no event later than three
         Business Days following actual knowledge or receipt thereof), Written
         Notice in reasonable detail, of (w) any Lien in excess of $50,000
         asserted or claim made against the Batch Receivables, (x) the
         occurrence of a Servicer Termination Event, (y) the occurrence of any
         other event which could have a material adverse

                                      IV-3
<PAGE>   39
         effect on the value of a Batch Receivable or on the interest of the
         Purchaser in a Batch Receivable or (z) the results of any cost report,
         investigation or similar audit being conducted by any federal, state or
         county Governmental Entity or its agents or designees;

                          (9) at least 30 days prior to the commencement of each
         fiscal year, a consolidated and consolidating operating plan (together
         with a complete statement of the assumptions on which such plan is
         based) of each Provider certified by a Responsible Officer, which shall
         include quarterly budgets for the prospective year in reasonable detail
         acceptable to the Purchaser and will integrate operating profit and
         cash flow projections and personnel, capital expenditures, and
         facilities plans;

                          (10) promptly upon receipt thereof, a copy of any
         management letter or written report submitted to the Parent or such
         Provider by independent certified public accountants with respect to
         the Subsidiaries, business, condition (financial or otherwise),
         operations, prospects, or Properties of the Parent or such Provider;

                          (11) no later than five Business Days after the
         commencement thereof, Written Notice of all actions, suits, and
         proceedings before any Governmental Entity or arbitrator affecting the
         Parent or such Provider which, if determined adversely to the Parent or
         such Provider, could have a Material Adverse Effect;

                          (12) promptly after the furnishing thereof, copies of
         any statement or report furnished by the Parent or such Provider to any
         other party pursuant to the terms of any indenture, loan, or credit or
         similar agreement and not otherwise required to be furnished to the
         Purchaser pursuant to this Agreement;

                          (13) as soon as possible and in any event within three
         Business Days after becoming aware of the occurrence thereof, Written
         Notice of any matter that could reasonably be expected to result in a
         Material Adverse Effect;

                          (14) as soon as available, (A) one copy of each
         financial statement, report, notice or proxy statement sent by the
         Parent to its stockholders generally, (B) and one copy of each regular,
         periodic or special report, registration statement, or prospectus filed
         by the Parent or such Provider with any securities exchange or the
         Securities and Exchange Commission or any successor agency or the
         Bankruptcy Court, and (C) all press releases and other statements made
         available by the Parent or such Provider to the public concerning
         developments in the business of the Parent or such Provider;

                          (15) within the sixty (60) day period prior to the end
         of each fiscal year of the Parent, a report satisfactory in form to the
         Purchaser, listing all material insurance coverage maintained as of the
         date of such report by the Parent and its Subsidiaries and all material
         insurance planned to be maintained by the Parent and its Subsidiaries
         in the subsequent fiscal year; and

                          (16) such other information respecting the Receivables
         or the condition or operations, financial or otherwise, of the Parent,
         such Provider or any Subsidiary or Affiliate as the Purchaser may from
         time to time reasonably request.

                  (51) Notice of Proceedings; Overpayments. The Primary Servicer
shall promptly notify the Master Servicer in the event of any action, suit,
proceeding, dispute, set-off, deduction, defense or counterclaim in excess of
$35,000 that is or may be asserted by an Obligor with respect to Receivables

                                      IV-4
<PAGE>   40

related to such Obligor. The relevant Provider shall make any and all payments
to the Obligors necessary to prevent the Obligors from offsetting any earlier
overpayment to such Provider against any amounts the Obligors owe on any Batch
Receivables.

                  (52) Officer's Certificate. On the date the financial
statements referred to in clause (j) above are to be delivered in each fiscal
year after the Initial Transfer Date, the chief financial officer of the Parent
and each Provider shall deliver a certificate to the Purchaser, stating that, as
of such date, (i) all representations and warranties set forth in the Agreement
are true and correct, (ii) the conditions precedent set forth in paragraph 2 of
Exhibit II have been fulfilled or waived in writing by the Purchaser, (iii) the
Parent and each of its Subsidiaries has paid all payroll taxes and charges then
due and (iv) no Event of Termination exists and is continuing. (1)

                  (53) Further Instruments, Continuation Statements. It shall,
at its expense, promptly execute and deliver all further instruments and
documents, and take all further action that the Program Manager or the Purchaser
may reasonably request, from time to time, in order to perfect, protect or more
fully evidence the full and complete transfer of ownership of the Batch
Receivables and the security interest in the Collateral, or to enable the
Purchaser or the Program Manager to exercise or enforce the rights of the
Purchaser hereunder or under the Batch Receivables. Without limiting the
generality of the foregoing, the Parent, the Primary Servicer and each Provider
will upon the request of the Program Manager execute and file such UCC financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be, in the opinion of the Program
Manager, necessary or appropriate. The Parent, the Primary Servicer and each
Provider hereby authorizes the Program Manager or its designees, to file one or
more financing or continuation statements and amendments thereto and assignments
thereof, relative to all or any of the Batch Receivables or the Collateral now
existing or hereafter arising without the signature of the Parent or such
Provider where permitted by law. If the Parent, the Primary Servicer or any
Provider fails to perform any of its agreements or obligations under the
Agreement, the Program Manager may (but shall not be required to) itself
perform, or cause performance of, such agreement or obligation, and the expenses
of the Program Manager incurred in connection therewith shall be payable by the
Parent, the Primary Servicer or such Provider.

                  (54) Taxes. It shall pay any and all taxes (excluding the
Purchaser's income, gross receipts, franchise, doing business or similar taxes)
relating to the transactions contemplated under the Agreement, including but not
limited to the sale, transfer and assignment of each Batch Receivable.

                  (55) Deviation from Terms of Batch Receivable, etc. None of
the Parent, the Primary Servicer or any Provider shall, without the prior
written consent of the Purchaser:

                          (1) other than in connection with the purchase of a
         Denied Receivable or as consistent with past practice in the operation
         of its business, compromise, adjust, extend, satisfy, subordinate,
         rescind, set off, waive, amend, or otherwise modify, or permit or agree
         to any deviation from, the terms and conditions of any Batch
         Receivable, or materially or adversely amend, modify or waive any term
         or condition of any contract related thereto;

                          (2) (x) amend, modify, supplement or delete in any way
         or to any extent any provision for uncollectible accounts and free care
         applicable to any Batch Receivable or (y) amend, modify or supplement
         in any way or to any extent any financial category or change in any way
         or to any extent the manner in which any financial category is treated
         or reflected in the Parent or such Provider's records;

                          (3) materially or adversely alter or modify its claims
         processing system; or

                                      IV-5
<PAGE>   41

                          (4) change, modify or rescind any direction contained
         in any invoice or previously delivered Notice to Obligors. (1)

                  (56) Purchaser's Ownership of Batch Receivables. It shall not
prepare or permit to be prepared any financial statements which shall account
for the transactions contemplated hereby in a manner which is, or in any other
respect account for the transactions contemplated hereby in a manner which is,
inconsistent with the Purchaser's ownership of the Batch Receivables.

                  (57) Merger, Consolidation. It shall not, and shall not enter
into an agreement to, merge with or into or consolidate with or into, another
Person, or sell, convey, transfer, lease, assign or otherwise dispose of all or
substantially all of its assets (whether now owned or hereafter acquired).

                  (58) No "Instruments". It shall not take any action which
would allow, result in or cause any Transferred Batch or Batch Receivable to be
evidenced by an "instrument" within the meaning of the UCC of the applicable
jurisdiction.

                  (59) Intentionally omitted.

                  (60) Implementation of New Invoices. The Parent and such
Provider shall take all reasonable steps to ensure that all invoices rendered or
dispatched on or after the Initial Transfer Date contain only the remittance
instructions required under Article II of this Agreement.

                  (61) Notice of Termination or Suspension of Contracts. It
shall promptly (and in no event later than one Business Day following actual
knowledge thereof) inform the Purchaser and the Master Servicer of any
termination or suspension of any of its contracts, the termination or suspension
of which could reasonably be expected to have a Material Adverse Effect.

                  (62) Fiscal Year. To cause the fiscal year for the Parent and
each of its Subsidiaries to end on the last day of February of each year.

                  (63) Franchise Agreements. After the Initial Transfer Date no
Provider shall execute any franchise agreement unless (i) such franchise
agreement is in form and substance acceptable to the Program Manager or (ii) is
accompanied by an additional agreement in form and substance acceptable to the
Program Manager.

                                      IV-6
<PAGE>   42

                                    EXHIBIT V

                              EVENTS OF TERMINATION

                  Each of the following shall be an "EVENT OF TERMINATION":

                  (64) The Primary Servicer, in its capacity as agent for the
Providers and the Purchaser pursuant to Section 1.05(b), shall fail to perform
or observe any term, covenant or agreement included in the Primary Servicer
Responsibilities (other than a Servicer Termination Event resulting from the
events described in paragraph (g) of this Exhibit) and such failure shall remain
unremedied for 15 days or the Primary Servicer, the Parent or any Provider shall
fail to make when due any payment or deposit to be made by it under the
Agreement.

                  (65) The Parent or any Provider or the Primary Servicer (i)
fails to transfer in a timely manner any servicing rights and obligations with
respect to the Batch Receivables to any successor designated pursuant to Section
1.05(b) of the Agreement or (ii) fails to make any payment required under the
Agreement within three Business Days of the date when due (unless such payment
obligation has been fulfilled in full pursuant to the Purchaser's set-off rights
under Section 4.03 of the Agreement).

                  (66) Any representation or warranty (other than those
representations and warranties (i) with respect to the purchase of Receivables
that are covered by paragraph (f) of this Exhibit V and (ii) with respect to
Batch Receivables, the Return Price with respect thereto is paid to the
Purchaser in the manner set forth in Article IV of this Agreement within five
Business Days following demand therefor) made or deemed made by the Parent, the
Primary Servicer or any Provider under or in connection with the Agreement, any
Provider Document or any information or report delivered by the Parent, the
Primary Servicer or any Provider pursuant to the Agreement or any Provider
Document shall prove to have been incorrect or untrue in any material respect
when made or deemed made or delivered.

                  (67) The Parent, the Primary Servicer or any Provider fails to
perform or observe any other term, covenant or agreement contained in the
Agreement or in any Provider Document on its part to be performed or observed
and any such failure shall remain unremedied for fifteen (15) Business Days
after the earlier of (i) the discovery thereof by the Parent, the Primary
Servicer or such Provider and (ii) written notice thereof shall have been given
to the Parent, such Provider or the Primary Servicer by the Purchaser.

                  (68) The Parent or any Provider shall fail to pay any
principal of or premium or interest on any of its Debt which has an outstanding
balance in excess of $150,000 when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating to
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be declared to be due and payable, or required
to be prepaid (other than by a regularly scheduled required prepayment),
redeemed, purchased or defeased, or an offer to repay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the stated
maturity thereof.

                  (69) Any purchase or contribution of a Transferred Batch
pursuant to the Agreement shall for any reason (other than pursuant to the terms
hereof) fail or cease to create or fail or cease to be a valid and perfected
ownership interest in each Batch Receivable in such Transferred Batch and the
Collections with respect thereto free and clear of all Liens (other than Liens
in favor of the Purchaser, Healthco-4, or any assignee of Healthco-4 relating to
the Agreement) unless, as to any such Batch

                                       V-1
<PAGE>   43
Receivable, the Return Price with respect thereto is paid to the Purchaser in
the manner set forth in Article IV of the Agreement within five Business Days
following demand therefor.

                  (70) The Parent, the Primary Servicer or any Provider shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
the Parent, the Primary Servicer or such Provider seeking to adjudicate it a
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, custodian or other similar official for it or for any
substantial part of its Property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of 30 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its Property)
shall occur; or the Parent, the Primary Servicer or any Provider shall take any
action to authorize any of the actions set forth above in this paragraph (g).

                  (71) There shall have occurred any Material Adverse Effect.

                  (72) The Parent, the Primary Servicer or any Provider shall
have consummated, or have entered into any transaction or agreement which shall
result in the consummation of (i) the merger or consolidation of the Parent, the
Primary Servicer or any Provider into or with another Person, (ii) the
acquisition of all or a substantial portion of the assets of any Person, (iii)
the transfer, sale, assignment, lease or other disposition of all or a
substantial portion of the Parent, the Primary Servicer's or any Provider's
assets or Properties, (iv) a change in the general nature of the Primary
Servicer or any Provider's business, or the Parent engages in any activity other
than owning stock and activities incidental thereto, or (v) the sale of a
controlling interest, directly or indirectly, in the Parent, the Primary
Servicer or any Provider; provided, however, that the Parent or any Provider may
acquire all or substantially all of the assets or equity interests of any Person
so long as (i) in the case of an acquisition by a Provider, such Person engages
in a substantially similar line of business to such Provider and (ii) prior to
the consummation of such acquisition the Parent has delivered a certificate,
executed by its chief financial officer, to the Master Servicer demonstrating,
in a manner acceptable to the Master Servicer, pro forma compliance with each of
the financial covenants contained herein both immediately prior to and after
giving effect to such acquisition.

                  (73) Judgments or orders for payment of money (other than
judgments or orders in respect of which adequate insurance is maintained for the
payment thereof) against the Parent and its Subsidiaries in excess of $250,000
in the aggregate remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of 30 days or more.

                  (74) Any governmental authority (including, without
limitation, the Internal Revenue Service or the PBGC) files a notice of a Lien
against the assets of the Parent, the Primary Servicer or any Provider other
than a Lien (i) that is limited by its terms to assets other than Receivables,
and (ii) that does not result in a Material Adverse Effect.

                  (75) The Parent, the Primary Servicer or any Provider does not
maintain, keep, and preserve all of its material Properties necessary or useful
in the proper conduct of its business in good repair, working order, and
condition (ordinary wear and tear excepted) and make all necessary repairs,
renewals, replacements, betterments, and improvements thereof.

                                       V-2
<PAGE>   44

                  (76) The Parent, the Primary Servicer or any Provider does not
pay or discharge at or before maturity or before becoming delinquent (i) all
taxes, levies, assessments, and governmental charges imposed on it or its income
or profits or any of its Property, and (ii) all lawful claims for labor,
material, and supplies, which, if unpaid, might become a Lien upon any of its
Property, other than in connection with good faith disputes for which adequate
reserves in accordance with GAAP have been taken.

                  (77) The Parent or any Provider does not keep insured by
financially sound and reputable insurers all Property of a character usually
insured by corporations engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts customarily
insured against by such corporations and carry such other insurance as is
usually carried by such corporations. Each policy referred to in this clause (n)
shall provide that it will not be canceled, amended, or reduced except after not
less than thirty (30) days' prior written notice to the Purchaser and Healthco-4
and shall also provide that the interests of the Purchaser shall not be
invalidated by any act or negligence of the Parent or any Provider. The Parent
or any Provider does not advise the Purchaser promptly of any policy
cancellation, reduction, or amendment. Any insurance policy for property,
casualty, liability and business interruption coverage for the Parent or any
Provider does not name Healthco-4 as assignee of the Purchaser as loss payee (as
the Purchaser's interests may appear) or an additional insured, as appropriate.

                  (78) The Parent, the Primary Servicer or any Provider does not
maintain proper books of record and account in which full, true and correct
entries in conformity with GAAP are made of all dealings and transactions in
relation to its business and activities.

                  (79) The Parent, the Primary Servicer or any Provider does not
comply in all material respects with (i) any document directly relating to the
responsibilities of the Parent, the Primary Servicer or such Provider,
respectively, under the Agreement or (ii) any agreement, contract, or instrument
that results in a Material Adverse Effect.

                  (80) The Parent, the Primary Servicer or any Provider does not
comply with all minimum funding requirements and all other material requirements
of ERISA, if applicable, so as not to give rise to any liability thereunder.

                  (81) The Parent, the Primary Servicer or any Provider engages
in any line or lines of business activity other than businesses reasonably
related to the businesses in which it is engaged on the date hereof, provided,
however, after the Closing Date the Parent may form a new direct Subsidiary of
the Parent, which Subsidiary may engage in a business not related to the
businesses of the Parent on the Closing Date.

                  (82) An "Event of Default" (as defined in the Loan Agreement)
shall occur under the Loan Agreement.

                  (83) Any operative provision or any other material provision
of this Agreement shall for any reason cease to be valid and binding on the
Parent, the Primary Servicer or any Provider, or the Primary Servicer or any
Provider shall so state in writing.

                  (84) The Loss-to-Liquidation Ratio in any Month exceeds 7.50%.

                  (85) The Delinquency Ratio in any Month exceeds 15%.

                  (86) Consolidated Net Worth. Consolidated Net Worth Parent at
the end of any fiscal quarter is less than $8,000,000.

                                       V-3
<PAGE>   45

                  (87) Consolidated EBITDA. Consolidated EBITDA Parent as of the
end of any fiscal quarter for the four fiscal quarter period then most recently
ended, is less than $1,500,000.

                  (88) Accounts Receivable Turnover. The Accounts Receivable
Turnover Parent as of the end of any fiscal quarter, is less than 3.50.

                  (89) Debt to Consolidated Tangible Net Worth Ratio. The ratio
of Debt of the Parent and its Subsidiaries on a consolidated basis to its
Consolidated Tangible Net Worth Parent exceeds 20 at the end of any fiscal
quarter.

                  (90) Current Ratio. The ratio of Consolidated Current Assets
Parent to Consolidated Current Liabilities Parent at the end of any fiscal
quarter, is less than 1.75.

                  (91) Consolidated Interest Coverage Ratio. Consolidated
Interest Coverage Ratio Parent as of the end of any fiscal quarter, is less than
1.1.

                  (92) Consolidated Tangible Net Worth. Consolidated Tangible
Net Worth Parent at the end of any fiscal quarter (i) from the Closing Date
through the fiscal quarter ending February 28, 2002, is less than $400,000 and
(ii) thereafter, is less than $800,000.

                  (93) Restrictions on Parent. The Parent shall incur Debt
(including any Guaranty) in excess of $50,000, in the aggregate, or incur any
Liens other than Debt or Liens incurred in connection with this Agreement or any
of the Provider Documents and involuntary Liens which are discharged within 15
days of their creation or are being contested in good faith by the Parent and
for which the Parent is fully indemnified by a Person who is not a Affiliate of
the Parent to the satisfaction of the Master Servicer, in its good faith
discretion.

                  (94) Change of Control. A Change of Control shall occur.

                  (95) Debt Service Coverage Ratio. Consolidated Debt Service
Coverage Ratio Parent at the end of any fiscal quarter is less than 1.1.

If an Additional Reporting Event shall have occurred, in addition to the
foregoing, each of the following shall be an Event of Termination:

                  (96) Consolidated Net Worth. Consolidated Net Worth Providers
at the end of any fiscal quarter is less than $8,000,000.

                  (97) Consolidated EBITDA. Consolidated EBITDA Providers as of
the end of any fiscal quarter for the four fiscal quarter period then most
recently ended, is less than $1,500,000.

                  (98) Accounts Receivable Turnover. The Accounts Receivable
Turnover Providers, as of the end of any fiscal quarter, is less than 3.50.

                  (99) Debt to Consolidated Tangible Net Worth Ratio. The ratio
of Debt of ATC Healthcare and its Subsidiaries on a consolidated basis to
Consolidated Tangible Net Worth Providers, exceeds 20 at the end of any fiscal
quarter.

                                       V-4
<PAGE>   46

                  (100) Current Ratio. The ratio of Consolidated Current Assets
Providers to Consolidated Current Liabilities Providers, at the end of any
fiscal quarter, is less than 1.75.

                  (101) Consolidated Interest Coverage Ratio. Consolidated
Interest Coverage Ratio Providers as of the end of any fiscal quarter, is less
than 1.1.

                  (102) Consolidated Tangible Net Worth. Consolidated Tangible
Net Worth Providers at the end of any fiscal quarter (i) from the Closing Date
through the fiscal quarter ending February 28, 2002, is less than $400,000 and
(ii) thereafter, is less than $800,000.

                  (103) Debt Service Coverage Ratio. Consolidated Debt Service
Ratio Providers at the end of any fiscal quarter is less than 1.1. (1)

                                       V-5
<PAGE>   47
                                   EXHIBIT VI

                             RECEIVABLE INFORMATION

                  The following information shall, as appropriate, be provided
by each Provider to the Master Servicer with respect to each Batch Receivable,
together with such other information and in such form as may reasonably be
requested from time to time by the Master Servicer and as, in accordance with
applicable law, may be disclosed or released to the Master Servicer (the
"RECEIVABLE INFORMATION"):

                  (1) Obligor required information (i.e., information provided
         in the ordinary course of business to any specified Obligor or any
         other information required to be provided to an Obligor pursuant to any
         agreement, contract or other arrangement with such Obligor); and

                  (2) billing information (i.e., all information provided by the
         Providers on invoices to Obligors and any other information required to
         be provided pursuant to the Credit and Collection Policy and a detailed
         copy of the bill).

                                      VI-1
<PAGE>   48
                                   EXHIBIT VII

                           FORM OF NOTICE TO OBLIGORS

                      [Letterhead of the relevant Provider]

                                                                          [Date]
[Name and Address
of Obligor]

                  Re:  Change of Account and Address

To Whom it May Concern:

                  Please be advised that in connection with a financing, we (the
"Provider") are selling and contributing to ATC Funding, LLC (the "Purchaser"),
an affiliated company, all of our existing and future receivables payable by you
to us; and the Purchaser is assigning the aforementioned existing and future
arising receivables as collateral to HFG Healthco-4 LLC (the "Lender").
Accordingly, you are hereby directed to make:

                  (1)      All wire transfers directly to the following account:

                           -------------------------------
                           -------------------------------
                           -------------------------------
                           Account #
                                    ----------------------
                           ABA #
                                --------------------------
                           Confirm Phone Number:
                                                 ---------
                           Attention:
                                      --------------------

                  (2)      All remittance advices and other forms of payment,
                           including checks, to the following address:

                           -------------------------------
                           -------------------------------
                           Reference: HFG HEALTHCO-4 LLC

                  The foregoing directions shall apply to all existing
receivables payable to us and (until further written notice) to all receivables
arising in the future and may not be revoked except by a writing executed by the
Purchaser.

                  Please be advised that it is only the receivables being sold;
we shall continue to provide you the services we have provided you with to date.

                                     VII-1
<PAGE>   49

                  Please acknowledge your receipt of this notice by signing the
enclosed copy of this letter and returning it in the enclosed envelope.

                  Thank you for your cooperation in this matter.

                                  [RELEVANT PROVIDER]

                                  By:
                                      ---------------------------------
                                             [Authorized Officer]

ATC FUNDING, LLC

By:
   ------------------------------
         [Authorized Officer]

Receipt Acknowledged:
[Name of Obligor]

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

                                     VII-2
<PAGE>   50

                                  EXHIBIT VIII

                        PRIMARY SERVICER RESPONSIBILITIES

                  ATC Healthcare shall be responsible for the following
administration and servicing obligations (the "PRIMARY SERVICER
RESPONSIBILITIES") which shall be performed by the Primary Servicer on behalf of
the Providers until such time as a successor servicer shall be designated and
shall accept appointment pursuant to Section 1.05(b) of the Agreement:

                  (104) Servicing Standards and Activities. The Primary Servicer
agrees to administer and service the Batch Receivables sold or contributed by
the Providers in each Transferred Batch (i) to the extent consistent with the
standards set forth in clauses (b)(i) through (iv) below, with the same care
that it exercises in administering and servicing similar receivables for its own
account, (ii) within the parameters of services set forth in paragraph (b) of
this Exhibit VIII, as such parameters may be modified by mutual written
agreement of the Purchaser and the Primary Servicer, (iii) in compliance at all
times with applicable law and with the agreements, covenants, objectives,
policies and procedures set forth in the Agreement, and (iv) in accordance with
industry standards for servicing healthcare receivables unless such standards
conflict with the procedures set forth in paragraph (b) of this Exhibit VIII in
which case the provisions of paragraph (b) shall control. The Primary Servicer
shall establish and maintain electronic data processing services for monitoring,
administering and collecting the Batch Receivables in accordance with the
foregoing standards and shall, within three Business Days of the deposit of any
checks, other forms of cash deposits or other written matter into a Lockbox or
Lockbox Account, post such information to its electronic data processing
services.

                  (105) Parameters of Primary Servicing. The Primary Servicer
Responsibilities shall be performed within the following parameters:

                          (1) Subject to the review and authority of the
         Purchaser and except as otherwise provided herein, the Primary Servicer
         shall have full power and authority to take all actions that it may
         deem necessary or desirable, consistent in all material respects with
         its existing policies and procedures with respect to the administration
         and servicing of accounts receivable, in connection with the
         administration and servicing of Batch Receivables. Without limiting the
         generality of the foregoing, the Primary Servicer shall, in the
         performance of its servicing obligations hereunder, act in accordance
         with all legal requirements and subject to the terms and conditions of
         the Agreement. The Primary Servicer agrees that the Primary Servicing
         Fee has been calculated to cover all costs and expenses incurred in the
         performance of its servicing obligations hereunder and no other
         reimbursement of costs and expenses shall be payable to the Primary
         Servicer.

                          (2) The Primary Servicer shall not be entitled to sue
         to enforce or collect any Batch Receivable without the prior written
         consent of the Purchaser unless the Primary Servicer shall have
         purchased such Batch Receivable in accordance with the Agreement.

                          (3) The Primary Servicer shall not change in any
         material respect its existing policies and procedures with respect to
         the administration and servicing of accounts receivable (including,
         without limitation, the amount and timing of write-offs) without the
         prior written consent of the Purchaser.

                          (4) The Primary Servicer will be responsible for
         monitoring and collecting the Batch Receivables, including, without
         limitation, contacting Obligors that have not made payment

                                     VIII-1
<PAGE>   51
         on their respective Batch Receivables within the customary time period
         for such Obligor, and resubmitting any claim rejected by an Obligor due
         to incomplete information.

                          (5) If the Primary Servicer determines that a payment
         with respect to a Batch Receivable has been received by any other
         Person, the Primary Servicer shall promptly advise the Purchaser, and
         the Purchaser shall be entitled to presume that the reason such payment
         was made to such other Person was because of a breach of representation
         or warranty in the Agreement with respect to such Batch Receivable
         (such as, by way of example, the forms related to such Batch Receivable
         not being properly completed so as to provide for direct payment by the
         Obligor to the Primary Servicer), unless the Primary Servicer shall
         demonstrate that such is not the case. In the case of any such Batch
         Receivable which is determined not to be a Denied Receivable, the
         Primary Servicer shall promptly demand that such other Person remit and
         return such funds. If such funds are not promptly received by the
         applicable Provider, the Primary Servicer shall take all reasonable
         steps to obtain such funds.

                          (6) Notwithstanding anything to the contrary contained
         herein, no Provider may amend, waive or otherwise permit or agree to
         any deviation from the terms or conditions of any Batch Receivable in
         any material respect without the prior consent of the Purchaser.

                          (7) The Primary Servicer shall take no action
         inconsistent with the Purchaser's ownership of the Receivables.

                  (106) The Loan Agreement. The Primary Servicer shall be
responsible, with the Purchaser, for the determination and application of the
Eligibility Criteria and the delivery and certification of information relating
to the Receivables required to be delivered under the Loan Agreement.

                  (107) Aged Term Servicing. The parties hereby agree that at
such time as any Batch Receivable is unpaid for more than 365 days after the
Last Service Date, the Primary Servicer shall, upon the request of the
Purchaser, turn over all of its Primary Servicer Responsibilities under this
Agreement with respect to such Batch Receivable to a successor servicer selected
by the Purchaser, and such servicer shall thereafter service such Batch
Receivable.

                  (108) Termination of Primary Servicer Responsibilities;
Cooperation. Upon the termination of the performance of the Primary Servicer
Responsibilities by the Primary Servicer in accordance with Section 1.05(b) of
the Agreement, the Primary Servicer shall immediately transfer to a successor
servicer designated by the Purchaser all records, computer access and other
information as shall be necessary or desirable, in the reasonable judgment of
such successor servicer, to perform such responsibilities. The Primary Servicer
shall otherwise cooperate fully with such successor servicer.

                  (109) Primary Servicing Fee. Upon the transfer of servicing
with respect to any Receivable pursuant to this Agreement, the Primary Servicer
shall no longer be paid the Primary Servicing Fee relating to such Receivables,
and such Primary Servicing Fee will be paid to the successor Person performing
the Primary Servicer Responsibilities with respect thereto. (1)

                                     VIII-2
<PAGE>   52

                                   EXHIBIT IX

                           SERVICER TERMINATION EVENTS

                  Each of the following shall be a "SERVICER TERMINATION EVENT":

                  (110) An event has occurred and is continuing that constitutes
an Event of Termination or that would constitute an Event of Termination but for
the requirement that notice be given or time elapse or both.

                  (111) The Primary Servicer is not performing, or becomes
unable (in the commercially reasonable determination of the Purchaser) to
perform, fully the Primary Servicer Responsibilities set forth in Exhibit VIII
hereof or the Purchaser, in its sole judgment, which judgment shall be
commercially reasonable, is not satisfied with the performance by ATC
Healthcare, or the Primary Servicer on behalf of the Providers, of the Primary
Servicer Responsibilities.

                  (112) The Primary Servicer is unable to maintain the
Transmission interface described in Exhibit X to the satisfaction of the Master
Servicer, or the electronic information servicing capabilities of the Primary
Servicer are not functioning for a period of more than five consecutive Business
Days and the Primary Servicer has not replaced such system with another method
of transmission acceptable to the Master Servicer. During such five Business Day
period the most recent Transmission successfully sent shall be used until the
earlier of (i) five Business Days and (ii) the completion of the next successful
Transmission. The Primary Servicer and the Master Servicer agree to cooperate
in trying to correct any problem with the Transmission interface.

                  (113) The Primary Servicer has sent more than (i) one
Transmission in any one Month period or (ii) four Transmissions in any fiscal
year, to the Master Servicer in a manner that is not in compliance with the
specifications set forth in Exhibit X hereof.

                  (114) If, at any date, the aggregate Expected Net Value of all
Delinquent Receivables that became Delinquent during the prior 3 Months is in
excess of 15 % of the aggregate Expected Net Value of all Receivables sold by
the Providers to the Purchaser during the prior 3 Months (regardless of whether
the Denied Receivables are purchased by the relevant Provider or the Primary
Servicer pursuant to Article IV of the Agreement).

                  (115) As of any date after the Initial Transfer Date, more
than 15% of all outstanding Batch Receivables (excluding Denied Receivables) are
aged more than 120 days but less than 180 days from the respective Last Service
Dates of such Batch Receivables.

                                      IX-1
<PAGE>   53

                                    EXHIBIT X

           INTERFACE BETWEEN MASTER SERVICER AND THE PRIMARY SERVICER

         1.       The Master Servicer will convey appropriate data requirements
                  and instructions to the Primary Servicer to establish a
                  computer interface between the Primary Servicer's systems and
                  the Master Servicer's receivables monitoring system. The
                  interface will permit the Master Servicer to receive
                  electronically the Primary Servicer's accounts receivable
                  data, including the Receivable Information, billing data and
                  collection and other transaction data relating to the
                  Receivables.

         2.       The Primary Servicer shall give the Master Servicer and the
                  Purchaser at least ten Business Days' notice of any coding
                  changes or electronic data processing system modifications
                  made by the Primary Servicer which could affect the Master
                  Servicer's processing or interpretation of data received
                  through the interface.

         3.       The Master Servicer shall have no responsibility to return to
                  the Primary Servicer any information which the Master Servicer
                  receives pursuant to the computer interface.

         4.       The Primary Servicer will prepare weekly accounts receivable
                  data files of all transaction types for all of the Primary
                  Servicer's sites that are included in the program. The weekly
                  cutoff will occur at a predetermined time each week, and the
                  weekly cutoff date for all of the sites must occur at exactly
                  the same time. The cutoff date that will be selected will be
                  at the end of business for a specific day of the week, or in
                  other words, at the end of the Primary Servicer's transaction
                  posting process for that day. The Primary Servicer will
                  temporarily maintain a copy of the accounts data files in the
                  event that the data is degraded or corrupted during
                  transmission, and needs to be re-transmitted.

         5.       The Master Servicer will be responsible for the management of
                  the hardware, communications and software used in the program.

         6.       The Master Servicer's data center will receive the Receivable
                  files, and immediately confirm that the files have been passed
                  without degradation or corruption of data by balancing the
                  detailed items to the control totals that accompany the files.
                  Any problems in this process will be immediately reported to
                  the Primary Servicer so that the Receivable file can be
                  re-transmitted, if necessary.

         7.       Once the receipt of the Receivable data has been confirmed,
                  the Master Servicer will perform certain tests and edits to
                  ensure that each Receivable meets the specified eligibility
                  criteria for purchase by the Purchaser. Compliance with
                  concentration limits will be verified and the Master Servicer
                  will notify the Program Manager to initiate a Receivable
                  purchase using the Receivable file received. Upon the
                  successful completion of a purchase, the Master Servicer will
                  generate a one-line trial balance (listing all purchased
                  accounts) confirming the Receivables that have been purchased.
                  A copy of the trial balance will be forwarded to the
                  Providers, to the Primary Servicer, to the Purchaser, and to
                  the Program Manager to confirm the purchase.

                                      X-1
<PAGE>   54

         8.       The Primary Servicer's sites will continue to post daily
                  transactions to their respective Receivable files. The Primary
                  Servicer's Receivable files for each of the eligible sites
                  will include all transactions posted through that day. The
                  Primary Servicer will create a transaction report and a
                  Receivable file for each of the eligible sites. The
                  transaction report will contain all transactions posted to the
                  respective site Receivable file for the specified period (and
                  will indicate the respective site and the number of items and
                  total dollars on each transaction report for control
                  purposes). The Receivable file will contain balances that
                  reflect the transactions posted on the Primary Servicer's
                  systems through the end of business of the specified period.

         9.       The Primary Servicer will transmit the billing, transaction,
                  and the most current Receivable data files to the Master
                  Servicer's data center according to the established schedule.
                  Each Provider and the Primary Servicer should, again, maintain
                  the backup of each of these files in the event that a
                  re-transmission is necessary.

         10.      The Master Servicer's data center will confirm that the files
                  have been received intact, and will immediately communicate
                  any problems to the Primary Servicer in order to initiate a
                  re-transmission. The Master Servicer will then post the
                  transaction files to the accounts receivable for the
                  previously purchased accounts that the Master Servicer is
                  maintaining, and consequently update the affected balances.
                  Upon completion of the posting process, the Master Servicer
                  will generate summary reports of the posting process that the
                  Program Manager will use to complete various funding
                  activities. The Master Servicer summary reports will reference
                  the Primary Servicer's transaction codes and activity to codes
                  that are common to the funding program.

         11.      The Master Servicer will then compare the updated accounts
                  balances on the Master Servicer's system to the corresponding
                  account balances reflected on the Receivable file. The Master
                  Servicer expects that the balances for the funded Receivables
                  will be congruent, and any discrepancies will be immediately
                  examined and resolved through the cooperative effort of the
                  Master Servicer and the Primary Servicer. The Master Servicer
                  shall produce discrepancy reports (e.g., "Funding Only" or
                  "Out of Balance" reports) and the Primary Servicer shall
                  respond promptly to such reports.

         12.      Once the reconciliation process has been completed and any
                  discrepancies between the Master Servicer and the Primary
                  Servicer's Receivable files resolved through the discrepancy
                  report process described in paragraph 9 above, the Master
                  Servicer will then process the Receivable file and advise the
                  Purchaser that it may purchase any new Receivable that is
                  eligible. The Master Servicer will then proceed through
                  exactly the same process described in paragraph 6 above.

                                      X-2
<PAGE>   55

                                  EXHIBIT XI-A

              FORM OF OPINION OF PROVIDERS' AND PURCHASER'S COUNSEL
                    WITH RESPECT TO CERTAIN CORPORATE MATTERS

                                   [See Tab 9]

<PAGE>   56

                                  EXHIBIT XI-B

              FORM OF OPINION OF PROVIDERS' AND PURCHASER'S COUNSEL
                   WITH RESPECT TO CERTAIN BANKRUPTCY MATTERS

                                  [See Tab 10]

<PAGE>   57
                                   EXHIBIT XII

                          FORM OF DEPOSITARY AGREEMENT

                                   [See Tab 18]

<PAGE>   58

                                   SCHEDULE I

                              ADDRESSES FOR NOTICE

If to the Program Manager:
                                Healthcare Finance Group, Inc.
                                110 Wall Street, 2nd Floor
                                New York, New York 10005
                                Attention: David Hyams, Chief Credit Officer
                                Tel:    (212) 785-9212
                                Fax:    (212) 785-9211

If to the Master Servicer:
                                Healthcare Finance Group, Inc.
                                110 Wall Street, 2nd Floor
                                New York, New York 10005
                                Attention: David Hyams, Chief Credit Officer
                                Tel:    (212) 785-9212
                                Fax:    (212) 785-9211

If to the Providers:
                                ATC Healthcare Services, Inc.
                                1983 Marcus Avenue
                                Lake Success, NY 11042
                                Attention: Allan Levy, CFO
                                Tel:    (516) 750-1666
                                Fax:    (516) 750-1754

If to the Purchaser:
                                c/o ATC Healthcare Services, Inc.
                                1983 Marcus Avenue
                                Lake Success, NY 11042
                                Attention: Allan Levy, CFO
                                Tel:    (516) 750-1666
                                Fax:    (516) 750-1754

If to the Primary Servicer:
                                c/o ATC Healthcare Services, Inc.
                                1983 Marcus Avenue
                                Lake Success, NY 11042
                                Attention: Allan Levy, CFO
                                Tel:    (516) 750-1666
                                Fax:    (516) 750-1754

<PAGE>   59

                                   SCHEDULE II

                          CREDIT AND COLLECTION POLICY

                         [TO BE DELIVERED BY PROVIDERS]

<PAGE>   60

                                  SCHEDULE III

                                   DISCLOSURES

                         [TO BE DELIVERED BY PROVIDERS]

<PAGE>   61

                                   SCHEDULE IV

                               LOCKBOX INFORMATION

Concentration Account:
HFG HEALTHCO-4 LLC
Account #2057779
Bank of New York
ABA #021000018

<TABLE>
<CAPTION>
Lockboxes:                                                  Lockbox Accounts:
---------                                                   ----------------
<S>                                                         <C>
Post Office Box 40116                                       HFG HEALTHCO-4 LLC
College Park, GA 30349                                      Account #8-236-697
                                                            Mellon Bank, N.A.
                                                            ABA #031000037

Post Office Box 31718                                       HFG HEALTHCO-4 LLC
Hartford, CT 06150                                          Account #9428406280
                                                            Fleet Bank, N.A.
                                                            ABA #011900571

Post Office Box 31726                                       HFG HEALTHCO-4 LLC
Hartford, CT 06150                                          Account #9428406299
                                                            Fleet Bank, N.A.
                                                            ABA #011900571

Post Office Box 531283                                      HFG HEALTHCO-4 LLC
Atlanta, GA 30353                                           Account #9428406301
                                                            Fleet Bank, N.A.
                                                            ABA #011900571
</TABLE>

<PAGE>   62

                                   SCHEDULE V

                                   TRADENAMES

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