Document:

RIMMER COMPUTER, INC.
                        LETTER OF ENGAGEMENT - TIME BLOCK

      CLIENT                              DATE
      ADDRESS                             -HOUR TIME BLOCK @ $ /HOUR
 CITY, STATE, ZIP                         OUTSIDE OF NORMAL BUSINESS HOURS
                                             1.5 X hourly rate

SERVICES  PROVIDED/STATEMENT OF WORK: Rimmer Computer, Inc., (hereafter referred
to as Rimmer) provides  computer and network support,  troubleshooting,  repair,
training,  planning,  technical advice,  installation of new  hardware/software,
upgrades to existing  hardware/software and other tasks as required or requested
by Client.

BILLING:  There is a two-hour  minimum  for  on-site  support,  and a  15-minute
minimum for telephone support.  Payment for the total amount of this contract is
due upon Client  signature.  Rimmer will provide reports monthly,  detailing all
work that was accomplished in that month. A monthly service charge of the lesser
of 1 1/2% of the unpaid balance or the maximum permitted by law will be added to
all accounts not paid within  30-days after due date.  Rate shown on this Letter
of Engagement  (LOE) is subject to change until fully  executed by both parties.
All hardware  and  software  purchases  will be made  directly by Client,  or by
Rimmer with the prior approval of Client.  Payments for hardware and/or software
purchases made by Rimmer on Client's behalf are due upon placement of the order.

ESTIMATED  HOURS:  Rimmer makes  best-effort  estimates of the time  required to
perform specific consulting  services.  These estimates are based upon previous,
similar experiences.  Since no two computer  installations are exactly alike, it
is not possible to precisely determine the time required for completing computer
services.  This is particularly true in the case of  trouble-shooting  since the
nature of that task includes  eliminating an unknown number of potential problem
causes until the cause unique to each  situation is  identified  and  corrected.
Rimmer will discuss  progress  with Client  throughout  the  performance  of our
services so that the Client can direct  Rimmer's  further  activities.  This LOE
covers hourly on-site support, and is not a fixed price contract.

CLIENT  RESPONSIBILITIES:  Hardware and  software  warranties,  guarantees,  and
manufacturer  service  will be between  Client and the  manufacturer(s)  and not
Rimmer,  even though we may be the reseller.  Client is responsible for Client's
final purchase of software and hardware.  Rimmer is not  responsible for defects
or incompatibilities  in either hardware or software,  except in cases caused by
Rimmer's  willful  misconduct or gross  negligence.  Rimmer can assist Client in
determining  compatibility  and in resolving errors or problems,  as part of our
consulting  contract.  Client  is  responsible  for data  backup,  and  scanning
drives/diskettes  periodically  for  viruses.  Rimmer  Computer  will  assist in
restoring  Client's  files  in case  of  failure,  as  part  of this  consulting
contract.  Client is responsible to comply with state and federal laws governing
the use and distribution of software. Client also agrees to hold Rimmer harmless
for,  from,  and against  all claims,  losses,  judgments,  or other  actions in
connection  with  these  laws,  except  in  cases  caused  by  Rimmer's  willful
misconduct or gross negligence.

WARRANTY AND  DISCLAIMER:  Rimmer  warrants that the work under this LOE will be
performed in a  professional  manner in accordance  with  then-current  industry
standards.  Rimmer disclaims all implied  warranties and  representations  as to
product or  services,  including  but not  limited to any  implied  warranty  of
merchantability  or fitness  for a  particular  purpose.  Client  agrees to hold
Rimmer harmless from all lawsuits  arising from any  specifications  supplied by
Client.  Should an express or implied  warranty be breached,  the Client will be
entitled to no more than the actual cost to correct the problem. Further, Rimmer
will not be held  responsible for any  consequential  or secondary  damages as a
result of such a breach.

GENERAL PROVISIONS:
1 - It is  understood  and agreed that each party shall refrain from directly or
indirectly  soliciting or inducing any employee of the other to leave employment
or cease  rendering  services for any reason during the course of performance or
for six months after  completion  thereof,  except where the offering  party has
obtained prior express  written  permission  from the other.  Both parties agree
that such  actions  by one party  directly  and/or  indirectly  damage the other
party. In liquidation of such damages,  the offering party agrees to pay the sum
of $30,000.00 to the other party within  30-days of the offering  party's hiring
date of such employee(s) for each employee so hired.
2 - This LOE  expires12-months  from the date of initial service  provided under
this LOE,  regardless  of hours  remaining.
3 - This LOE supersedes any prior written or oral agreements between the parties
and may be modified or amended in writing if such  modification  or amendment is
signed  by both  parties.  This  LOE  shall  be  governed  by and  construed  in
accordance with the laws of the State of Arizona.

--------------------------------------                 -------------------------
CLIENT                                                 DATE

--------------------------------------                 -------------------------
RIMMER COMPUTER, INC.                                  DATE

7579 East Main Street Suite 600 { Scottsdale  AZ  85251-4557 { (480)  970-3336 {
Fax (480) 970-3340 { www.rimmercomputer.com================================================================================

                               INDENTURE OF TRUST

                                 by and between

                        MEDICAL CAPITAL MANAGEMENT, INC.

                                       and

                       [________________________________]
                                   as Trustee

                           Dated as of [_______], 2000

================================================================================
<PAGE>

         Reconciliation  and tie between  Trust  Indenture  Act of 1939 and Note
Issuance and Note Agreement dated as of _______, 2000.

          TRUST INDENTURE ACT SECTION                  NOTE AGREEMENT SECTION
          ---------------------------                  ----------------------

                Section 310(a)(1)                              5.02
                Section 310(a)(2)                              5.02
                Section 310 (b)                                5.02;5.03
                Section 311                                    5.04
                Section 312(a)                                 2.01(C)
                Section 312(b)                                 5.05
                Section 312(c)                                 5.05
                Section 313(a)                                 5.06
                Section 313(b)                                 5.06
                Section 313(c)                                 11.03(B)
                Section 313(d)                                 5.06
                Section 314(a)                                 5.07;11.03(B)
                Section 314(a)(4)                              5.08
                Section 314(c)(1)                              11.04
                Section 314(c)(2)                              11.04
                Section 314(d)                                    11.07
                Section 314(e)                                 11.05
                Section 315(a)                                 5.09(A)
                Section 315(b)                                 8.05
                Section 315(c)                                 5.09(A)
                Section 315(d)                                 11.07
                Section 315(e)                                 11.07
                Section 316(a)                                 11.07
                Section 316(b)                                 6.02;10(I)
                Section 3.17(a)(1)                             8.03(B)
                Section 317(a)(2)                              8.04
                Section 317(b)                                 11.07
                Section 318(a)                                 11.07
                Section 318(c)                                 11.07

----------
NOTE: This  reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Note Issuance and Security Agreement.

Attention  should also be directed to Section 318(c) of the Trust  Indenture Act
of 1939, which provides that the provisions of Sections 310 to and including 317
of the Trust  Indenture  Act of 1939 are a part of and  govern  every  qualified
indenture, whether or not physically contained therein.

<PAGE>

         (This Table of Contents is for convenience of reference only and is not
intended to define, limit or describe the purpose or intent of any provisions of
this Note Agreement.)

                                    ARTICLE I

Definitions...................................................................1

                                   Article II

                                      NOTES

Section 2.01.  The Notes......................................................7
Section 2.02.  Registration of and Limitations on Transfer and
                Exchange of Notes............................................10
Section 2.03.  Mutilated, Destroyed, Lost or Stolen Notes....................11
Section 2.04.  Persons Deemed Owners.........................................11
Section 2.05.  Redemption....................................................11

                                   ARTICLE III

                                    SECURITY

Section 3.01.  Grant of Security.............................................13
Section 3.02.  Pledge to Secure Obligations..................................15
Section 3.03.  Collateral Transfers and Other Liens..........................15
Section 3.04.  Sale of Collateral............................................16
Section 3.05.  Responsibilities of Debtor....................................17
Section 3.06.  Continuing Security Interest..................................17
Section 3.07.  Further Assurances............................................17

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

Section 4.01.  Representations and Warranties................................18
Section 4.02.  Replacement of Defective Collateral...........................19

                                    ARTICLE V

                  ACCOUNTS; TRUSTEE; COMMUNICATIONS AND REPORTS

Section 5.01.  Duties of Trustee.............................................20
Section 5.02.  Corporate Trustee Required; Eligibility; Conflicting
                Interests....................................................24
Section 5.03.  Replacement of Trustee........................................24
Section 5.04.  Preferential Collection of Claims Against Debtor..............25
Section 5.05.  Communication by Noteholders with Other Noteholders...........25
Section 5.06.  Reports by Trustee to Noteholders.............................25
Section 5.07.  Reports by Debtor.............................................25
Section 5.08.  Statement as to Compliance....................................26

                                       ii
<PAGE>
Section 5.09.  Performance by the Trustee....................................26
Section 5.10.  Indemnity and Expenses........................................27

                                   ARTICLE VI

Section 6.01.  Subordination of Notes to Senior Indebtedness.................28
Section 6.02.  Noteholders' Rights Not Impaired..............................29
Section 6.03.  Acceptance of Subordination by Noteholders....................29

                                   ARTICLE VII

[RESERVED]...................................................................29

                                  ARTICLE VIII

                                     DEFAULT

Section 8.01.  Events of Default.............................................29
Section 8.02.  Noteholder's Direction Upon Default...........................31
Section 8.03.  Remedies......................................................32
Section 8.04.  Trustee May File Proofs of Claim..............................33
Section 8.05.  Notice of Defaults............................................34
Section 8.06.  Trustee May Enforce Claims Without Possession of Notes........35
Section 8.07.  Limitation On Suits...........................................35

                                   ARTICLE IX

                          TERMINATION OF NOTE AGREEMENT

Section 9.01.  Deposit of Payment............................................36
Section 9.02.  Unclaimed Funds...............................................36

                                    ARTICLE X

                   AMENDMENTS AND SUPPLEMENTAL NOTE AGREEMENTS

Section 10.01. General.......................................................36
Section 10.02. Amendment Without Consent of Noteholders......................36
Section 10.03. Amendment With Consent of Noteholders.........................37
Section 10.04. Senior Indebtedness...........................................38
Section 10.05. Notice to Noteholders.........................................38
Section 10.06. Compliance With TIA...........................................38
Section 10.07. Rights of Noteholders Not Impaired............................38

                                      iii
<PAGE>
                                   ARTICLE XI

                                  MISCELLANEOUS

Section 11.01. Governing Law.................................................39
Section 11.02. Waiver........................................................39
Section 11.03. Notices.......................................................39
Section 11.04. Certificate and Opinion as to Conditions Precedent............40
Section 11.05. Statements Required in Certificate or Opinion.................40
Section 11.06. Severability..................................................40
Section 11.07. TIA...........................................................41
Section 11.08. Nonliability of Directors; No General Obligation..............41
Section 11.09. Scope Of Debtor's Liability...................................41
Section 11.10. Assignment....................................................41
Section 11.11. When the Debtor May Merge or Transfer Assets..................41

Schedule I     List of Collateral

                                       iv
<PAGE>
                      NOTE ISSUANCE AND SECURITY AGREEMENT

         THIS NOTE  ISSUANCE  AND  SECURITY  AGREEMENT  dated  this _____ day of
__________  2000, is made by and between  MEDICAL  CAPITAL  MANAGEMENT,  INC., a
Delaware   corporation   (hereinafter   referred   to  as  the   "Debtor")   and
________________,  a national banking  association duly organized,  existing and
authorized to accept and execute  trusts of the  character  herein set out under
and by  virtue  of the laws of the  United  States,  with its  principal  office
located in  _______________,  as trustee for the benefit of the Noteholders (the
"Trustee").

                              W I T N E S S E T H:

         WHEREAS,  Debtor has  executed  and issued,  or will  execute and issue
various  series  and  classes  of its  secured  notes each dated the date of its
issuance and denominated with a sequential  alphabetical  designation  beginning
with  Class A and the  series  of which are  designed  sequentially  with  Roman
numerals beginning with Series I

         WHEREAS,  the Notes are secured by the collateral  pledged  pursuant to
this Note Issuance and Note Agreement;

         WHEREAS,  the Debtor  desires to execute this Note Agreement to provide
for the issuance,  transfer,  rollover and exchange of the Notes,  and to secure
performance  of its  obligations  under the  Notes  and the  other  Transactions
Documents;

         WHEREAS,  this Note Agreement is subject to the provisions of the Trust
Indenture Act of 1939, as amended,  that are deemed to be incorporated into this
Note  Agreement  and  shall,  to the  extent  applicable,  be  governed  by such
provisions; and

         WHEREAS,  the  Trustee has agreed to accept the trusts  herein  created
upon the terms herein set forth.

         NOW, THEREFORE, in consideration of the foregoing premises and for good
and valuable  consideration,  the adequacy  and  sufficiency  of which is hereby
acknowledged,  each party agrees, for the benefit of the other and for the equal
and ratable benefit of the Noteholders as follows:

                                   ARTICLE I

                                  DEFINITIONS

         When used herein, the following terms shall have the meanings set forth
below:

         "ACCOUNTS"  means  each of the  accounts  created  pursuant  to Section
5.01(b) of this Note Agreement.

         "ACQUISITION  ACCOUNT"  shall mean the Account by that name  created in
Section 5.01(b)(i) of this Note Agreement,  including any subaccounts created by
the Trustee therein pursuant to this Note Agreement.
<PAGE>
         "ADMINISTRATION  AGREEMENT"  means  the  agreement  entered  into as of
________,   2000  between  the  Administrator  and  the  Debtor  concerning  the
administrative  services to be performed by the Administrator with regard to the
Receivables, as supplemented and amended.

         "ADMINISTRATOR"  means Medical Capital Corporation,  Inc., a __________
Corporation, or any other successor approved by the Trustee.

         "AGGREGATE NOTE BALANCE" means,  as of any date of  determination,  the
total unpaid  principal and accrued and unpaid interest  evidenced by all of the
outstanding Notes.

         "APPLICABLE  NOTES"  means (a) in the case of the Notes  (Series  I) an
Event of Default set forth in Section  2.01 of this Note  Agreement  and (b) the
Notes of each other  series in the case of an Event of Default  with  respect to
such series as provided in any supplemental Note Agreement relating to the Notes
of such series;  but in no event shall the term "Applicable Notes" include Notes
of more than one series unless there is an Event of Default with respect to such
series.

         "APPROVED PAYOR" means (a) any private medical  insurance company which
at the time of  purchase  of any  Receivable  payable  by such  private  medical
insurance  company,  the  private  medical  insurance  company  [WHICH  HAS BEEN
ASSIGNED A LONG-TERM  DEBT RATING OF [A RATED CLAIMS  PAYING  ABILITY?] of AA or
better by S&P, AA3 or better by Moody's,  A or better by A.M. Best or Fitch,  or
which the  Administrator  in its opinion  certified  in writing to the  Trustee,
otherwise believes is financially suitable; (ii) any Federal or State government
sponsored  health  care  program;  (iii)  large self  insured  corporations  (as
determined by the  Administrator  in its  discretion);  (iv) health  maintenance
organizations; and (v) skilled nursing facilities.

         "ASSETS"  shall have the meaning set forth in Section  3.01 (b) of this
Note Agreement.

         "BUSINESS  DAY" means each  Saturday and other day of the year on which
federally-chartered banking institutions are not required or authorized to close
in New York,  New York,  and in the city in which  the  principal  office of the
Trustee is located.

         "BATCH"  means a group of  Receivables  that were  acquired on the same
date from a single Health Care Provider.

         "COLLATERAL"  shall have the meaning  set forth in Section  3.01 (c) of
this Note Agreement.

         "COLLECTION  ACCOUNT"  means the  account  established  and  maintained
pursuant to Section 5.01(b)(iii) of this Note Agreement.

         "DEBTOR"   means   Medical   Capital   Management,   Inc.,  a  Delaware
corporation, or its successors in interest.

         "ELIGIBLE  ACCOUNT" means a trust account  established with (a) a trust
company or depositary  institution  subject to regulations on fiduciary funds on
deposit substantially similar to 12 CFR Section 9.10 (b), or (b) a trust company
or depository  institution the long-term unsecured debt obligations of which are
rated at least "A" by S&P and "A-1" by Moody's  (unless rated by only one of S&P
and Moody's in which case such rating shall suffice).

                                       2
<PAGE>
         "ELIGIBLE  RECEIVABLE"  means,  as of the date of that it is pledged to
the Trustee pursuant to this Note Agreement, any Receivable that:

          (a) an Approved  Payor is directly  obligated  to pay the  Receivable,
     which obligation is valid,  binding,  and enforceable  against the Approved
     Payor in accordance with its terms except that (i) such  enforcement may be
     subject to  bankruptcy,  insolvency,  reorganization,  moratorium  or other
     similar laws (whether statutory, regulatory or decisional) now or hereafter
     in effect  relating to creditors'  rights  generally and (ii) the remedy of
     specific performance and injunctive and other forms of equitable relief may
     be subject to certain equitable defenses and to the discretion of the court
     before which any proceeding  therefor may be brought,  whether a proceeding
     at law or in equity

          (b) is not subject to any dispute, offset, counterclaim or defense;

          (c) is denominated and payable or in U.S. dollars in the United States
     and that is acquired by the Debtor pursuant to a Purchase Document;

          (d) constitutes an "account" as defined in the Uniform Commercial Code
     as in effect in the jurisdiction in which the Debtor is required to perfect
     a security interest therein;

          (e) with regard to which each of the  representations  and  warranties
     set forth in Article VI of this Note Agreement is true and correct;

          (f) the Approved  Payor of which  (other than a Receivable  payable by
     Medicare  or  Medicaid)  has  received  written  notice  of the sale of the
     Receivable to Debtor;

          (g) with regard to which (i) the claim for payment has been  submitted
     to the Approved Payor not more than 180 days prior to the purchase  thereof
     by the Debtor (if the Receivable is part of the first Batch  purchased from
     a Health Care Provider); and

          (h) the claim for payment has been acknowledged by the Approved Payor;
     and the  Approved  Payor has received  written  notice that  payments  with
     respect thereto are to be sent solely to a Lock Box Account.

         "EVENT OF DEFAULT" (a) with respect to the Notes (Series I), shall have
the meaning set forth in Section 8.01 (a) through (j) of this Note Agreement and
(b) with  respect to each other series of Notes shall have the meaning set forth
in the supplemental Note Agreement creating such series.

         "FITCH"  shall mean Fitch  IBCA,  Inc.,  a  corporation  organized  and
existing under the laws of the State of Delaware, its successors.

         "HEALTH  CARE  PROVIDER"  means any  provider of  medical,  hospital or
dental services,  or durable medical  equipment,  and whose financial  condition
meets the criteria set forth by the Debtor.

                                       3
<PAGE>
         "INTEREST PAYMENT DATE" means, with respect to an outstanding Note, the
tenth Business Day of each month  commencing  with the tenth Business Day of the
month following  issuance  continuing on each  succeeding  tenth Business Day of
each month until the Note has been repaid in full.

         "LOCK BOX ACCOUNT"  means an account  established  by the Debtor or the
Trustee, or the Servicer on behalf of the Debtor, with a bank for the purpose of
collecting the proceeds of Receivables as set forth in the Purchase Agreement.

         "MONTHLY   ADMINISTRATION  FEE"  means  the  monthly  fee,  payable  to
Administrator as set forth in the  Administration  Agreement.  The Administrator
shall be allowed  at its  discretion  to leave all or any  portion of its earned
Monthly  Administration  Fees in the Collection  Account until  requested by the
Administrator.

          "MOODY'S" means Moody's Investors Services, Inc., and its successors.

         "NOTE" is any one of the  different  classes  or  series of  promissory
notes  executed  and issued by the Debtor  substantially  in the forms  attached
hereto pursuant to the terms of this Note Agreement that evidence obligations of
the Debtor under this Note Agreement.

         "NOTE  (SERIES I)" is any one of the  different  classes of  promissory
notes executed and issued by the Debtor pursuant to Section 2.01(d) of this Note
Agreement.

         "NOTE AGREEMENT" means this Note Issuance and Security  Agreement dated
as of __________, 2000 between the Trustee and Debtor, as amended,  supplemented
or otherwise modified from time to time.

         "NOTEHOLDER" means the Person in whose name a Note is registered on the
Note registration books maintained by the Trustee.

         "OBLIGATIONS"  has the meaning  set forth in Section  3.02 of this Note
Agreement.

         "OUTSTANDING"  shall mean (a) with  respect to a Note, a Note which has
been executed and delivered  pursuant to this Note Agreement  which at such time
remains unpaid as to principal or interest,  unless  provision has been made for
such payment  pursuant to Section 2.05 of this Note  Agreement,  excluding Notes
which have been replaced pursuant to this Note Agreement and (b) with respect to
any other Obligation, the unpaid amount of the Obligation.

         "PERMITTED INVESTMENTS" means any of the following which at the time of
investment are legal  investments  for the Trustee for the moneys proposed to be
invested  therein and, except with respect to funds in the Acquisition  Account,
which do not have a stated  maturity  date beyond the next  succeeding  Interest
Payment date or are payable on demand:

          (a) direct obligations of the United States of America;

          (b)  obligations,  the  payment of the  principal  of and  interest on
     which,  in the opinion of the  Attorney  General of the United  States,  is
     unconditionally guaranteed by the United States;

                                       4
<PAGE>
          (c) interest-bearing time or demand deposits,  certificates of deposit
     or  other  similar  banking  arrangements,   or  investment  agreements  or
     guaranteed investment contracts,  with a maturity of 12 months or less with
     any bank, trust company,  national banking  association or other depository
     institution,  including  those  of  the  Trustee  (and,  with  respect  to,
     investment agreements or guaranteed investment contracts, any corporation),
     provided  that,  at  the  time  of  deposit  or  purchase  such  depository
     institution  has  commercial  paper which is rated  "A-1" by S&P,  "P-1" by
     Moody's and "F-1" by Fitch;

          (d) interest-bearing time or demand deposits,  certificates of deposit
     or  other  similar  banking  arrangements,   or  investment  agreements  or
     guaranteed investment contracts,  with a maturity of 24 months or less, but
     more  than 12  months,  with any  bank,  trust  company,  national  banking
     association or other depository institution, including those of the Trustee
     and any of its affiliates (and, with respect to , investment  agreements or
     guaranteed  investment contracts,  any corporation),  provided that, at the
     time of deposit or purchase  such  depository  institution  has senior debt
     rated "A" or higher by S&P, "P-1" or higher by Moody's and "A" or higher by
     Fitch,  and, if commercial paper is outstanding,  commercial paper which is
     rated "A-1" by S&P, "P-1" by Moody's and "F-1" by Fitch;

          (e) interest-bearing time or demand deposits,  certificates of deposit
     or  other  similar  banking  arrangements,   or  investment  agreements  or
     guaranteed  investment  contracts,  with a maturity  of more than 24 months
     with  any  bank,  trust  company,  national  banking  association  or other
     depository  institution,  including  those  of the  Trustee  and any of its
     affiliates  (and,  with respect to ,  investment  agreements  or guaranteed
     investment  contracts,  any  corporation),  provided  that,  at the time of
     deposit or purchase such depository  institution has senior debt rated "AA"
     or higher by S&P,  "Aa2" or higher by  Moody's  and "AA" or higher by Fitch
     and, if commercial  paper is outstanding,  commercial  paper which is rated
     "A-1" by S&P, "Aa2" by Moody's and "F-1" by Fitch;

          (f)  commercial  paper,  including  that of the Trustee and any of its
     affiliates,  which is rated no less than "A-1" by S&P, "P-1" by Moody's and
     "F-1" by Fitch,  and which matures not more than 270 days after the date of
     purchase;

          (g) bonds, debentures, notes or other evidences of indebtedness issued
     or guaranteed by any of the following agencies:  Federal Farm Credit Banks,
     Federal Home Loan  Mortgage  Corporation;  Governmental  National  Mortgage
     Association;  Export-Import  Bank of the United  States;  Federal  National
     Mortgage  Association;  Student Loan  Marketing  Association;  Farmers Home
     Administration;  Federal Home Loan Banks; or any agency or  instrumentality
     of the United States of America which shall be established for the purposes
     of acquiring the obligations of any of the foregoing or otherwise providing
     financing therefor;

          (h) a money market  mutual fund  investing  solely in the above listed
     assets.

                                       5
<PAGE>
         "PERSON" or "PERSONS" means any individual,  corporation,  partnership,
joint  venture,   association,   joint-stock  company,   trust,   unincorporated
organization or government or any agency or political subdivision thereof.

          "PURCHASE  AGREEMENT"  means  each  agreement  between  a Health  Care
Provider and the Debtor or the  Administrator  pursuant to which Receivables are
acquired from such Health Care Provider.

         "PURCHASE  DOCUMENTS"  means with respect to each Health Care Provider,
(a) with regard to the initial  purchase  of  Receivables  from such Health Care
Provider,  the  Purchase  Agreement  executed by the Debtor and such Health Care
Provider,  including  Exhibit A thereto listing the Receivables to be purchased,
along  with  copies  of  all  security   documentation  executed  in  connection
therewith,  including all: UCC Financing Statements,  personal guarantees, bills
of sale and powers of attorney and (b) with regard to each  subsequent  purchase
of  Receivables  from such Health Care  Provider,  a supplement  to the Purchase
Agreement  listing the  additional  Receivables to be purchased from such Health
Care Provider,  along with all  additional  security  documentation  executed in
connection therewith,  including any amendments to previously delivered security
documentation.

         "RECEIVABLE"  means  any  right to  payment  or  reimbursement  from an
Approved Payor, whether constituting an account,  chattel paper, instrument or a
general intangible,  arising from the provision of medical,  hospital, or dental
services by a Health Care Provider or durable medical equipment to a Health Care
Provider [or from the provision of any other legal  business  product or service
performed by any business properly licensed and authorized to offer such product
or service for sale] that was (a)  acquired  by the Debtor with  balances in the
Acquisition   Account  or  otherwise  deposited  in  or  accounted  for  in  the
Acquisition  Account or otherwise  constituting  a part of the Collateral or (b)
substituted  or exchanged  for  Receivables  pursuant to Article IV of this Note
Agreement,  but does not include Receivables released from the lien of this Note
Agreement.

         "REDEMPTION PRICE" means the unpaid principal balance, plus all accrued
and unpaid interest  thereon to (but excluding) the date set for redemption,  of
an Outstanding Note (or part thereof)  selected for redemption,  all as pursuant
to Section 2.05 of this Note Agreement.  If a Note is issued with original issue
discount,  the  amount  payable  upon  full or  partial  redemption  will be the
applicable  portion of the amortized  face amount on the  redemption  date.  The
amortized  face amount of such an original  issue discount Note will be equal to
the issue price plus that portion of the difference  between the issue price and
the original  principal  amount of the Note that has accrued at the yield to the
maturity of the Note by the  redemption  date.  The amortized  face amount of an
original issue  discount Note will never be greater than its original  principal
amount.

         "REVENUE" or "REVENUES"  means all recoveries of principal,  dividends,
interest,  payments,  proceeds,  charges and other income or amounts received by
the Trustee or the Debtor from or on account of any of the Collateral (excluding
any and all interest  earned or gain realized from the  investment of amounts in
any Account) to the extent the Trustee has a first priority lien with respect to
such  Collateral  and,  with respect to Collateral as to which the Trustee has a
junior  priority lien, any such amounts not required to be held and disbursed by
the senior lienholder.

                                       6
<PAGE>
         "S&P"  means  Standard  &  Poor's  Ratings  Group,  a  Division  of The
McGraw-Hill Companies, Inc., and its successors.

         "SENIOR  INDEBTEDNESS"  has the meaning set forth in Article VI of this
Note Agreement.

         "SERVICER" means Medical Tracking Services,  Inc. a Nevada Corporation,
whose  rights  and  obligations  are  more  fully  set  forth  in the  Servicing
Agreement.

         "SERVICING  AGREEMENT" means the Master Servicing Agreement dated as of
____________  by and among  Debtor,  Servicer,  and Trustee,  as the same may be
amended, supplemented or otherwise modified from time to time.

         "TIA" means the Trust  Indenture Act of 1939, as amended,  as in effect
on the date of this Note Agreement.

         "TRANSACTION  DOCUMENTS"  means the  Notes,  this Note  Agreement,  the
Servicing  Agreement,  the Lock Box  Agreement,  the Purchase  Documents and any
other documents executed in connection therewith.

         "TRUSTEE" means [U.S. TRUST], or its successors in interest.

         "UCC" means the Uniform Commercial Code of the State of _______.

                                   ARTICLE II

                                      NOTES

SECTION 2.01. THE NOTES.

         (a)  ISSUABLE  IN  SERIES;  GENERAL  TITLE.  The Notes may be issued in
series as from time to time shall be authorized  by the Debtor.  With respect to
the Notes of any particular  series, the Debtor may incorporate in or add to the
general  title  of  such  Notes  any  words,  letters  or  figures  designed  to
distinguish that series. Each series shall be designated sequentially with Roman
numerals  beginning  with  Series I and each class  shall  contain a  sequential
alphabetic designation beginning with Class A.

         (b) TERMS OF  PARTICULAR  SERIES.  The Notes of each series (other than
the Notes (Series I) as to which specific  provision is made in Section  2.01(d)
of this Note Agreement)  shall be payable at such place or places,  shall mature
on such date or dates, shall bear interest at such rate or rates payable in such
installments  and on such  dates  and at such  place or  places  and to  Holders
registered as such,  and may be redeemable at such price or prices and upon such
terms, all as shall be provided for in the supplemental Note Agreement  creating
that  series.  The Debtor may at the time of the creation of any series of Notes
or at any time  thereafter  make,  and the  Notes of such  series  may  contain,
provision for:

          (i) the redemption of all, or of all or any part, of the Notes of such
     series prior to maturity;

                                       7
<PAGE>
          (ii) a sinking, amortizations improvement or other analogous fund;

          (iii)  limiting the  aggregate  principal  amount of the Notes of such
     series;

          (iv) the exchange or  conversion  of the Notes of that series,  at the
     option of the  Noteholders  thereof,  for or into new Notes of a  different
     series and/or shares of stock of the Debtor and/or other securities;

          (v) exchanging Notes of that series,  at the option of the Noteholders
     thereof, for other Notes of the same series of the same aggregate principal
     amount of a different  authorized  kind and/or  authorized  denomination or
     denominations; and/or

          (vi) the appointment by the Trustee of an authenticating  agent in one
     or more places  other than the  location of the office of the Trustee  with
     power to act on behalf of the Trustee and subject to its  direction  in the
     authentication  and  delivery  of the  Notes of any one or more  series  in
     connection  with such  transactions as shall be specified in the provisions
     of this Note Agreement creating such series or in a supplemental indenture;

all upon such terms as the Board of Directors  may  determine.  All Notes of the
same series shall be substantially identical in tenor and effect. Each series of
Notes,  except the Notes  (Series I),  shall be created by a  supplemental  Note
Agreement authorized by a resolution of the board of directors of the Debtor.

         (c) FORM  AND  DENOMINATIONS.  The  Notes  of each  series  shall be in
registered  form and  substantially  in the form  attached  hereto for the Notes
(Series I) with such  omissions,  variations  and insertions as are permitted by
this  Note  Agreement,  and may have such  letters,  numbers  or other  marks of
identification and such legends or endorsements  thereon,  as may be required to
comply with the rules of any  securities  exchange or to conform to any usage in
respect thereof.  The form of the Notes of each series (except the Notes (Series
I)) shall be established by the supplemental indenture creating such series. The
Notes of each series  shall be  distinguished  from the Notes of other series in
such manner as may be prescribed  in the  supplemental  indenture  creating such
series.  The Notes of each series shall be issued in such denominations as shall
be provided in the supplemental  indenture creating such series or as the Debtor
may  determine,  except  that  the  Notes  (Series  I) shall  be  issued  in the
denominations provided for in Section 2.01(d) below.

         (d)  NOTES  (SERIES  I).  There  shall be an  initial  series  of Notes
entitled  Secured  Notes,  Series  I. The  Notes  (Series  I) shall be issued as
various  classes  of Notes  substantially  in the forms  set forth in  Exhibit A
hereto. The Notes (Series I) shall be issued in minimum  denominations of $5,000
and integral  multiples of $1,000 in excess thereof.  Each Note (Series I) shall
be payable as provided in the form of Note and in this Note Agreement. The Notes
(Series  I) shall be  issued in the  maturities  and  class  denominations  with
interest rates upon the unpaid principal amounts thereof as follows

                                       8
<PAGE>
                                                               ANNUAL
         CLASS (1)            STATED MATURITY               INTEREST RATE
         ---------            ---------------               -------------
          Class A              _______, 2001                    ___ %
          Class B              _______, 2002                    ___ %
          Class C              _______, 2003                    ___ %
          Class D              _______, 2005                    ___ %

         (e) GENERAL  TERMS.  Notes may be issued by the Debtor  with  different
maturity dates based on the class or series designation for the Notes, but in no
event may a Note have a term of less  than one year or a term  greater  than ten
years.  Interest rates may vary as among the series and classes of Notes, but in
no event may any Note in the same  class of a series  have a  different  rate of
interest.  Following  execution and delivery of this Note Agreement,  a note, on
original issue,  shall be executed by the Debtor,  authenticated  by the Trustee
and delivered by the Trustee to or upon the order of the  Noteholder  only after
the Trustee's receipt of the Note issuance proceeds equal to the aggregate issue
price of the Note.  The Notes bear simple  interest at their  respective  stated
rates of interest per annum.  The interest on a Note will begin to accrue on the
date the issuance  proceeds  for the Note are  deposited  with the Trustee.  The
interest  will be paid  monthly  on each  Interest  Payment  Date  prior  to the
maturity date of the Note.  The initial  interest  payment will reflect  partial
month  payments.  Interest  will be  calculated  on the  basis  of 360 day  year
consisting of twelve 30-day  months.  If the Trustee holds,  in accordance  with
this Note Agreement,  on a date set for redemption or the stated maturity of one
or more Notes, money or securities, if permitted hereunder, sufficient to pay in
full the Notes to be  redeemed  on that  date,  then on and after that date such
Notes shall cease to be  outstanding  and interest,  if any, on such Notes shall
cease to  accrue;  provided,  if such Notes are to be  redeemed,  notice of such
redemption  has been duly given  pursuant to this Note  Agreement  or  provision
therefor satisfactory to the Trustee has been made.

         (f) Proceeds  received by the Trustee from the issuance of a Note shall
be distributed by the Trustee as follows:

          (i) To the  Debtor's  designated  underwriter  for sales  expenses  as
     Debtor directs in writing in amounts not to exceed 10% of such proceeds;

          (ii) To the Acquisition Account, the remaining amount of the proceeds.

         (g) Each Note shall be recorded on the records to be  maintained by the
Trustee and shall be numbered serially for identification. If the Trustee is not
the Note  registrar,  the Debtor  shall cause to be  furnished to the Trustee at
least  semiannually on February 10 and August 10 a listing of Noteholders  dated
within  15 days of the date on which  the list is  furnished  and at such  other
times as the Trustee may request in writing a list,  in such form and as of such
date as the  Trustee  may  reasonably  require,  of the names and  addresses  of
Noteholders,  and  the  Trustee  shall  preserve,  in as  current  a form  as is
reasonably  practicable,  all such information received by it. Notes bearing the
signatures  of  individuals  who were,  at the time when  such  signatures  were
affixed,  authorized  to sign on behalf of the Debtor or the trustee  shall bind
the  Trustee.  No  Notes  shall be  entitled  to any  benefit  under  this  Note

                                       9
<PAGE>
Agreement,  or be valid for any  purpose,  unless  such  Notes  shall  have been
manually  authenticated  by the Trustee and such manual  signature upon any Note
shall be conclusive  evidence,  and the only  evidence,  that such Note has been
duly authenticated and delivered hereunder. All Notes shall be dated the date of
their authentication and delivery.

         (h) Each Note shall  bear the  following  legend  and any other  legend
necessary or  appropriate  for the purpose of  complying  with federal and state
securities laws:

          "Unless   this   Note   is   presented   by  an   authorized
          representative of the recorded Noteholder, to the Trustee or
          its agent for recordation of transfer,  exchange,  pledge or
          payment,  and any Note issued is recorded in the name of the
          designated  holder as stated  hereon or such  other  name as
          requested  by  the   designated   holder  or  an  authorized
          representative of the designated  holder stated hereon,  any
          transfer,  pledge or other use hereof for value or otherwise
          by or to any person is wrongful since the  registered  owner
          hereof has an interest in this Note."

SECTION 2.02. REGISTRATION OF AND LIMITATIONS ON TRANSFER AND EXCHANGE OF NOTES.

         (a) The Trustee shall cause to be kept at its corporate  trust office a
Note  Register  in  which,  subject  to such  reasonable  regulations  as it may
prescribe,  the  Trustee  shall  provide  for the  recordation  of Notes  and of
transfers, pledges and exchanges of Notes as herein provided.

         (b) At the  option of the  Noteholders,  Notes may be  surrendered  for
transfer or  exchanged  for other Notes in the same series and of the same class
in authorized  denominations  evidencing  the same aggregate  principal  amount,
interest  rate and maturity  upon  surrender of the Notes to be  transferred  or
exchanged  at the  corporate  trust office of the Trustee.  Upon  surrender  for
recordation of transfer or exchange of any Note at the corporate trust office of
the Trustee,  the Debtor shall  execute and the Trustee shall  authenticate  and
deliver, in the name of the designated  transferee(s),  one or more new Notes in
authorized  denominations  evidencing  the  same  series  and  class,  aggregate
principal amount, interest rate and maturity. Each Note presented or surrendered
for recordation of transfer, pledge or exchange shall be duly endorsed by, or be
accompanied  by a written  instrument  of transfer in form  satisfactory  to the
Trustee  duly  executed  by,  the   Noteholder   thereof  or  the   Noteholder's
attorney-in-fact  duly  authorized  in writing.  Notes  delivered  upon any such
transfer,  pledge or exchange  will evidence the same  obligations,  and will be
entitled to the same rights and privileges, as the Notes surrendered.

         (c) All Notes  surrendered  for  recordation  of transfer  and exchange
shall be  canceled  by the  Trustee  without  payment of  principal  and have no
further legal rights or effect.

         SECTION 2.03.  MUTILATED,  DESTROYED,  LOST OR STOLEN NOTES. If (a) any
mutilated  Note is  surrendered  to the  Trustee  who  receives  evidence to its
satisfaction of the destruction,  loss or theft of any Note and of the ownership

                                       10
<PAGE>
thereof, and (b) there is delivered to the Trustee such security or indemnity as
may be required by it to save it and the Debtor harmless,  then the Debtor shall
execute and the Trustee shall  authenticate  and deliver,  in exchange for or in
lieu of any such mutilated,  destroyed,  lost or stolen Note, a new Note of like
tenor but bearing a number not contemporaneously  outstanding. Upon the issuance
of any new Note under this Section 2.03,  the Trustee may require the payment of
a sum  sufficient  to cover  any tax or other  governmental  charge  that may be
imposed in  relation  thereto  and any other  expenses  (including  the fees and
expenses  of the  Trustee)  connected  therewith.  Any  duplicated  Note  issued
pursuant to this Section shall constitute complete and indefeasible  evidence of
ownership of a like principal amount as if originally issued, whether or not the
lost, stolen or destroyed Note shall be found at any time. All Notes surrendered
to the  Trustee  under the terms of this  Section  2.03 shall be canceled by the
Trustee  and  delivered  to  the  Trustee  for  subsequent  destruction  without
liability on the part of either.

         SECTION 2.04.  PERSONS DEEMED OWNERS.  Prior to due  presentation  of a
Note for registration of transfer,  the Trustee and any agent of the Trustee may
treat the Person in whose name any Note is  registered as the owner of such Note
for the purpose of receiving payments and for all other purposes whatsoever, and
none of the Trustee,  nor any agent of the Trustee,  shall be affected by notice
to the contrary.

SECTION 2.05. REDEMPTION.

         (a) The Debtor,  at its  option,  at any time may redeem one or more of
the Outstanding Notes in whole or in part. If the Debtor elects to redeem all or
part of any Note, it shall notify the Trustee in writing of the redemption  date
and the  principal  amount of Notes to be  redeemed.  The Debtor  shall give the
notice  to the  Trustee  provided  for in this  Section  2.05 in the case of any
redemption of the Notes,  at least 30 days before the  redemption  date unless a
shorter notice shall be satisfactory to the Trustee.

         (b) If less than all the Notes are to be redeemed, (i) the Debtor shall
designate  in a writing  to the  Trustee  the Notes or  portions  thereof  to be
redeemed  or (ii)  if the  Debtor  does  not so  designate  or  such  method  is
prohibited by the rules of any securities  exchange or quotation system on which
the Notes are then listed or quoted,  the Trustee  shall  select the Notes to be
redeemed  pro  rata or by lot or by a  method  the  Trustee  considers  fair and
appropriate  (as  long as such  method  is not  prohibited  by the  rules of any
securities  exchange or  quotation  system on which the Notes are then listed or
quoted).  The Debtor or the Trustee  shall make the  selection at least 25 days,
but not more than 65 days, before the redemption date from Outstanding Notes not
previously  called  for  redemption.  The Debtor or the  Trustee  may select for
redemption  Notes  or  portions  of the  principal  amount  of Notes  that  have
denominations  of $1,000 or larger but only in  integral  multiples  of $1000 of
initial principal  amounts.  If the Trustee designates Notes or portions thereof
for  redemption,  the Trustee  shall notify the Debtor  promptly of the Notes or
portions thereof to be redeemed.

         (c) At  least 20 days but not  more  than 60 days  before a  redemption
date, the Debtor shall mail a notice of redemption by first-class mail,  postage
prepaid,  to each Noteholder of Notes (or portion  thereof) to be redeemed.  The
notice shall identify the Notes to be redeemed and shall state:

                                       11
<PAGE>
          (i) the redemption date;

          (ii) the Redemption Price;

          (iii) the name and address of the Trustee as paying agent;

          (iv) that  Notes  called for  redemption  must be  surrendered  to the
     Trustee to collect the Redemption Price;

          (v) if fewer than all the  Outstanding  Notes are to be redeemed,  the
     certificate  number and  principal  amounts of the  particular  Notes to be
     redeemed;

          (vi) that interest,  if any, on Notes (or portions thereof) called for
     redemption will cease to accrue on and after the redemption date; and

          (vii) the CUSIP number or numbers for the Notes to be redeemed.

         (d) The  notice,  if mailed in the  manner  herein  provided,  shall be
conclusively  presumed  to have been duly given,  whether or not the  Noteholder
receives  such notice.  In any case,  failure to give such notice by mail or any
defect in the notice to the Noteholder of any Note  designated for redemption as
a whole or in part shall not  affect the  validity  of the  proceedings  for the
redemption  of any other Note. At the Debtor's  request,  the Trustee shall give
the notice of redemption in the Debtor's name and at the Debtor's expense.

         (e) Once notice of redemption  is given  pursuant to this Section 2.05,
the Notes or portion of the Notes called for  redemption  become due and payable
on the  redemption  date and at the  Redemption  Price.  Upon  the  later of the
redemption  date or the date such Notes are  surrendered  to the  Trustee,  such
Notes shall be paid at the Redemption Price stated in the notice.

         (f) Prior to 10 a.m.,  Pacific  Standard Time, on the redemption  date,
the Debtor  shall  deposit  with the Trustee  good money  sufficient  to pay the
Redemption  Price of all Notes or  portion of the Notes to be  redeemed  on that
date other than Notes or portions  of Notes  called for  redemption  which prior
thereto have been delivered by the Debtor to the Trustee for  cancellation,  and
on or after the redemption  date (unless the Debtor shall default in the payment
of the Notes at the Redemption Price), interest, if any, on the Notes or portion
of Notes called for redemption  shall cease to accrue and, except as provided in
Section 11.08 below,  to be entitled to any benefit or security  under this Note
Agreement,  and the  Noteholders  thereof shall have no right in respect of such
Notes (or  portion  thereof)  except the right to receive the  Redemption  Price
thereof.  The Trustee shall as promptly as practicable  return to the Debtor any
money, with interest,  if any, thereon,  not required for that purpose.  If such
money is then held by the Debtor in trust and is not required for such  purpose,
it shall be discharged from such trust.

                                       12
<PAGE>
         (g) Upon surrender of a Note that is redeemed in part, the Debtor shall
execute and the Trustee shall  authenticate  and deliver to the Noteholder a new
Note Certificate in an authorized  denomination equal in principal amount to the
unredeemed portion of the Note surrendered.

         (h) Pursuant to this Note  Agreement,  any amounts held under this Note
Agreement which are available to redeem Notes may instead be used by the Trustee
to  purchase  Outstanding  Notes  at the  same  times  and  subject  to the same
conditions  (except as to price) as apply to the redemption of Notes.  Any Notes
purchased  shall be  retired  by the  Trustee  and  shall no  longer  be  deemed
Outstanding hereunder.

                                  ARTICLE III

                                    SECURITY

SECTION 3.01. GRANT OF SECURITY.

         (a)  Subject  to  Section  3.01(b)  below,  the  Debtor,  to secure the
obligations described in Section 3.02 below, hereby does grant, convey,  pledge,
transfer,  assign and  deliver to the  Trustee  for the equal and  proportionate
benefit and security of all present and future  registered  Noteholders  a first
and prior security interest in, all of the Debtor's right, title and interest in
and to the  following,  whether  now or  hereafter  existing  and/or  arising or
acquired:

          (i)  All  Receivables,   whether  eligible  or  ineligible,  that  are
     identified on Schedule I hereto or on subsequent  Schedules of  Receivables
     delivered to the Trustee and Servicer in connection  with the  disbursement
     of funds from the  Acquisition  Account  by the  Trustee  to  purchase  the
     Receivables  shown on such Schedule or the replacement of Receivables  that
     are not Eligible Receivables pursuant to Section 4.02;

          (ii) All  collections in respect of such  Receivables and all funds as
     may be held by the  Trustee or Servicer  from time to time in the  Accounts
     together with all certificates  and instruments,  if any, from time to time
     evidencing  such Accounts,  and funds on deposit and all  investments  made
     with such funds,  all claims  thereunder  or in connection  therewith,  and
     interest,  dividends,  moneys,  instruments,  securities and other property
     from time to time received,  receivable or otherwise distributed in respect
     of any or all of the foregoing;

          (iii)  All  moneys,   cash,   credits,   contract  rights,  and  other
     obligations of any kind now or hereafter  existing and/or arising out of or
     in connection with the Receivables and all rights now or hereafter existing
     in and to all  agreements and contracts  securing or otherwise  relating to
     any such Receivables;

          (iv)  The  rights  of the  Debtor  in and  to the  Purchase  Documents
     including,  without limitation, the rights of the Debtor (A) to enforce the
     Purchase  Documents  against the  respective  Health Care Providers and the
     obligations  thereunder  and (B) to cause  the  Health  Care  Providers  to

                                       13
<PAGE>
     repurchase  Receivables purchased under the respective Purchase Document as
     to which  there  has  occurred  a breach  of  representation,  warranty  or
     covenant in accordance with the provisions of the Purchase Documents;

          (v) All of the Debtor's rights,  (but not its  obligations)  under (A)
     the Servicing Agreement,  including any rights (if any) of Debtor in and to
     Servicer's  software  programs  and billing  systems,  if any,  and (B) the
     Purchase Documents;

          (vi) The Accounts;

          (vii) All products and proceeds of any and all of the  foregoing  and,
     to the extent not otherwise included, all payments under insurance (whether
     or not the Debtor 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; and

          (viii) Subject to Section  3.01(b) below,  any and all other property,
     rights and  interests of every kind or  description  that from time to time
     hereafter is granted, conveyed, pledged, transferred, assigned or delivered
     to the Trustee as additional security hereunder.

         (b) The Debtor,  to secure the  obligations  described  in Section 3.02
below, hereby does grant, convey,  pledge,  transfer,  assign and deliver to the
Trustee for the equal and proportionate  benefit and security of all present and
future registered  Noteholders a first and prior or junior security interest in,
all of the Debtor's right,  title and interest in and to the following,  whether
now or hereafter existing and/or arising or acquired:

          (i) All of the stock and other tangible and intangible assets, moneys,
     rights,  and  properties  related to the  healthcare  industry  (including,
     without limitation,  HMO's, PPO's, and third party administrators) that may
     be purchased by the Debtor from time to time from funds  disbursed from the
     Acquisition Account,  which shall be identified on Schedule provided to the
     Trustee (the "Assets");

          (ii) All  collections and  distributions  in respect of the Assets and
     all funds as may be held by the  Trustee or  Servicer  from time to time in
     the Collection Account from collections and distributions in respect of the
     Assets,  together with all certificates and instruments,  if any, from time
     to time evidencing such collections and distributions, and such collections
     and distributions on deposit and all investments made with such collections
     and  distributions,  all  claims in  connection  therewith,  and  interest,
     dividends, moneys, instruments,  securities and other property from time to
     time received, receivable or otherwise distributed in respect of any or all
     of the foregoing;

          (iii)  All  moneys,   cash,   credits,   contract  rights,  and  other
     obligations of any kind now or hereafter  existing and/or arising out of or
     in connection  with the Assets and all rights now or hereafter  existing in
     and to all agreements and contracts  securing or otherwise  relating to any
     such Assets; and

                                       14
<PAGE>
          (iv) All products  and proceeds of any and all of the assets,  moneys,
     rights,  and properties  described in Section  3.01(b)(i) above and, to the
     extent not otherwise included, all payments under insurance (whether or not
     the  Debtor 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.

         (c) All of the moneys,  rights,  and  properties  described in Sections
3.01(a)  and 3.01(b) of this Note  Agreement  are  referred as the  "Collateral"
unless  released  from the lien of this  Note  Agreement  pursuant  to the terms
hereof.

SECTION 3.02. PLEDGE TO SECURE OBLIGATIONS.

         This Note Agreement secures the Notes and enforcement of the payment of
the Notes in accordance with their terms,  and all other sums payable  hereunder
or on the Notes  (whether  now or  hereafter  existing,  whether for  principal,
interest, fees, expenses or otherwise, whether matured or unmatured, absolute or
continent),  and for the  performance  of and compliance  with the  obligations,
covenants,  and  conditions of this Note  Agreement,  as if all the Notes at any
time  outstanding  had  been  executed  and  delivered  simultaneously  with the
execution and delivery of this Note Agreement (collectively, the "Obligations");
provided  however,  that pursuant to the terms of  supplemental  Note  Agreement
under  which a series of Notes is issued,  the Assets and  Receivables  acquired
from the  proceeds  of such series of Notes and the  related  Collateral  can be
pledged to secure  only that series of Notes and the other  related  Obligations
and not any  other  series  of  Notes or  related  Obligations,  in  which  case
Collateral pledged to secure other series of Notes and related Obligations shall
not secure the series of Notes  issued  pursuant to the such  supplemental  Note
Agreement or other related Obligations.

SECTION 3.03. COLLATERAL TRANSFERS AND OTHER LIENS.

         Subject to Section 3.04 below, the Debtor shall not:

         (a) Assign (by operation of law or  otherwise) or otherwise  dispose of
any of the Collateral or any interest therein; or

         (b)  Create or suffer to exist  any lien,  security  interest  or other
charge or  encumbrance  upon or with respect to any of the  Collateral to secure
debt of any person or entity,  except (i) for the security  interest  created by
this  Note  Agreement  and  (ii)  with  respect  to  Collateral  other  than the
Receivables,  any security  interest set forth on the  schedule  describing  the
other  Collateral  provided to the Trustee upon  disbursement  of funds from the
Acquisition Account in connection with the acquisition of the other Collateral.

SECTION 3.04. SALE OF COLLATERAL.

         (a) Collateral may be sold, transferred or otherwise disposed of by the
Trustee  free  from  the  lien  of  this  Note   Agreement  and  any  applicable
supplemental Note Agreement at any time pursuant to a written direction from the
Debtor, provided that the Trustee receives from the Debtor a writing stating the
sale price and the Person to which the  Collateral is to be sold or  transferred
and certifying to the Trustee to the effect that:

                                       15
<PAGE>
          (i) the  disposition  price  is equal to or in  excess  of the  amount
     disbursed from the Acquisition  Account to acquire the Collateral (less any
     principal amounts received by the Trustee with respect to such Collateral);
     or

          (ii) the disposition price is lower than the amount disbursed from the
     Acquisition  Account to acquire the Collateral (less any principal  amounts
     received  by the  Trustee  with  respect to such  Collateral),  and (i) the
     Debtor  reasonably  believes that the Revenues expected to be received from
     the remaining Collateral (after giving effect to such disposition) would be
     at least equal to the  Revenues  required to timely pay the  principal  and
     interest on the Outstanding  Notes, or (ii) the Debtor shall remain able to
     pay debt service on the Notes and make payment on any other  Obligations on
     a timely  basis  (after  giving  effect  to such  sale,  transfer  or other
     disposition) whereas it would not have been able to do so on a timely basis
     if it had not sold,  transferred  or  disposed  of the  Collateral  at such
     discounted  amount,  or (iii)  the sum of the  amounts  on  deposit  in the
     Accounts  (less  moneys in any  Account  which  the  Debtor,  Servicer,  or
     Administrator  is then  entitled  to  receive  but  which  has not yet been
     removed from the Account) plus the principal  amount of the Receivables and
     the fair market value of other Collateral will be at least equal to 100% of
     the aggregate principal amount of the Outstanding  Obligations plus accrued
     interest after giving effect to such sale, transfer or other disposition.

         (b)  The  Trustee,  following  receipt  of the  foregoing,  such  other
certificates  as may be  required  by  this  Note  Agreement  or any  applicable
supplemental Note Agreement, shall deliver such Collateral free from the lien of
this Note  Agreement  upon the receipt of the  purchase  price or  consideration
specified in the written direction from the Debtor.

         (c) Proceeds to be received  upon any  disposition  of  Collateral  may
consist  of  cash,  Permitted  Investments,  and/or  Eligible  Receivables.  The
proceeds shall be deposited by the Trustee into the Acquisition Account.

SECTION 3.05. RESPONSIBILITIES OF DEBTOR.

         (a) If any other  Collateral  shall be evidenced by a promissory  note,
other instrument or chattel paper, the Debtor shall promptly deliver  possession
thereof to the  Trustee  duly  endorsed  and  accompanied  by the duly  executed
instruments of transfer or assignment.

         (b) The  Debtor  shall  keep its  chief  place of  business  and  chief
executive  office  and the  office  where it keeps its  records  concerning  the
Collateral  at the  location  as first  specified  above or,  upon 30 days prior
written notice to the Trustee,  at such other  locations  specified in a written
notice to the Trustee.  The Debtor will hold and preserve its records concerning
such  Collateral,  and  will  permit  representatives  of the  Trustee  and  the
Noteholders upon reasonable prior notice during normal business hours to inspect
and make abstracts  from such records  relating to the Collateral as well as any
contract, other agreements,  documents, instruments or chattel paper that relate
to the Collateral.

                                       16
<PAGE>
         (c)  In  order  to  perfect  the  Trustee's  security  interest  in the
Collateral,  the Debtor  shall  file,  or cause to be filed all UCC-1  financing
statements,  chattel mortgage  agreements and other documents with regard to the
Collateral in the applicable public recording office.

SECTION 3.06. CONTINUING SECURITY INTEREST.

         This  Agreement  shall  create a  continuing  security  interest in the
Collateral  and shall (a) remain in full force and effect until  payment in full
of all Notes,  (b) be binding upon the Debtor,  its successors and assigns,  and
(c) inure to the benefit of the Trustee,  the  Noteholders,  and any participant
and their respective successors, transferees, and assigns.

SECTION 3.07. FURTHER ASSURANCES.

         (a) The  Debtor  agrees  from time to time,  at  Debtor's  expense,  to
promptly execute and deliver all further instruments and documents, and take all
further  action,  that may be  necessary or  desirable,  or that the trustee may
reasonable  request,  in order to perfect  and  protect  any  security  interest
granted or purported  to be granted  hereby or to enable the Trustee to exercise
and enforce its rights and remedies  hereunder  with respect to any  Collateral.
Debtor shall from time to time at Trustee's or the Noteholders' request promptly
provide any of them a current,  accurate  and  complete  list of all Health Care
Providers  (and their  respective  addresses)  from whom Debtor has acquired any
Receivables.  Insofar as any property  and/or  documents which may be Collateral
hereunder,  the Debtor will sign and deliver to the Trustee on demand such forms
of financing statements as may be required by the Trustee,  will pay any related
filing fees, and will file, or cause to be filed,  such financing  statements in
the  applicable  jurisdictions.  The  Trustee's  rights as  specified  herein or
therein shall be in  furtherance of and/or in addition to, but not in limitation
of, the Trustee's rights under any applicable law.

         (b) The Debtor hereby  authorizes  the Trustee in  connection  with the
lapse or imminent lapse of any previously filed financing  statement to file one
or more financing or continuation statements,  and amendments thereto,  relative
to all or part of the then Collateral  without the signature of the Debtor where
permitted by law. The Debtor  agrees to reimburse the Trustee for the expense of
any such filings, including its legal fees incurred in connection herewith.

         (c) The Debtor will  furnish to the Trustee and the  Noteholders,  from
time to time,  statements and schedules  further  identifying and describing the
Collateral  and such other  reports in  connection  with the  Collateral  as the
Trustee or the Noteholders may reasonably request, all in reasonable detail.

                                       17
<PAGE>
                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         SECTION 4.01. REPRESENTATIONS AND WARRANTIES. The Debtor represents and
warrants as follows:

         (a) The Debtor owns the Collateral free and clear of any lien, security
interest, charge or encumbrance, except (i) for the security interest created by
this Note Agreement and any financing statement filed in favor of the Trustee in
connection  herewith and (ii) with respect to Collateral other than Receivables,
any security interest set forth on the schedule describing such other Collateral
provided to the Trustee upon disbursement of funds from the Acquisition  Account
in  connection  with the  acquisition  of such other  Collateral.  No  effective
financing  statement or other  instrument  similar in effect covering all or any
part of the  Collateral is on file in any recording  office,  except (i) such as
may have been filed in favor of the Trustee  relating to this Note Agreement and
(ii) with respect to Assets,  such as may have been filed in connection with any
security  interest set forth on the schedule  describing  such other  Collateral
provided to the Trustee upon disbursement of funds from the Acquisition  Account
in connection with the acquisition of such other Collateral.

         (b) This Note Agreement  creates a valid security  interest in favor of
the Trustee in the Collateral,  securing the payment of the Obligations, and all
filings  have been made that are  necessary  in any  jurisdiction  to perfect in
favor of the  Trustee for the benefit of the  Noteholders  (i) a first  priority
security interest in the Receivables and (ii) with respect to other Collateral a
first  or  junior  priority  security  interest  as set  forth  on the  schedule
describing the other  Collateral  provided to the Trustee upon  disbursement  of
funds from the  Acquisition  Account in connection  with the  acquisition of the
other Collateral.

         (c) Except as contemplated by this Note  Agreement,  no  authorization,
approval or other actions by, and no notice to or filing with, any  governmental
authority  or  regulatory  body is  required  by either (i) for the grant by the
Debtor of the security interest granted hereunder or for the execution, delivery
or performance of this Note Agreement by the Debtor,  or (ii) for the perfection
of or the exercise by the Trustee of its rights and remedies hereunder.

         (d) All of the Receivables are "accounts" with the meaning of Article 9
of the Uniform Commercial Code. [CONFIRM]

SECTION 4.02. REPLACEMENT OF DEFECTIVE COLLATERAL.

         (a) Upon  discovery  by the Debtor or the Trustee of a breach of any of
the such  representations  and warranties in Section 4.01 of this Note Agreement
which  materially  and  adversely  affects  the value of the  Collateral  or the
interest of the  Noteholders,  or which  materially  and  adversely  affects the
interests  of the  Noteholders  in the  related  item of  Collateral,  the party
discovering  such breach  shall give prompt  written  notice to the others.  The
Debtor  shall  within 90 days of the earlier of its  discovery or its receipt of
notice of any breach of a representation or warranty,  promptly cure such breach
in all  material  respects  or (i) if the  defective  item  of  Collateral  is a
Receivable,  replace the defective item of Collateral with Eligible  Receivables
as to which the Debtor is entitled to receive in the  aggregate at least as much
from the related Approved Payor as under the defective Receivable or (ii) if the
defective item of Collateral is not a Receivable,  replace it with collateral of

                                       18
<PAGE>
substantially  equivalent  fair  market  value,  or (iii)  prepay  principal  on
Outstanding  Notes in an amount at least equal to the funds  disbursed  from the
Acquisition Account to purchase the defective item of Collateral.

         (b) It is understood and agreed that the  obligations of the Debtor set
forth in this Section 4.02 to cure or substitute a defective  item of Collateral
or prepay Notes  constitute the sole remedies of the Trustee and the Noteholders
hereunder respecting a breach of the representations and warranties contained in
Section 4.01. Any cause of action against the Debtor  relating to or arising out
of a material  defect in a document  relating to  Collateral or arising out of a
breach of any  representations  and warranties made in Section 4.01 shall accrue
as to any item of Collateral  upon (i) discovery of such defect or breach by any
party and notice thereof to the Debtor,  (ii) failure by the Debtor to cure such
defect  or  breach or  replace  such  defective  collateral  or prepay  Notes as
provided in this Section  4.02,  and (iii) demand upon the Debtor by the Trustee
or a majority  of the  Noteholders  of the  aggregate  principal  amount of then
Outstanding Notes to take the actions described in Section 4.02(ii).

         (c) The  Debtor  shall  not have any duty to  conduct  any  affirmative
investigation as to the occurrence of any condition  requiring the prepayment of
Notes or  replacement  of any  defective  item of  Collateral  pursuant  to this
Section or the  eligibility  of any item of Collateral for purposes of this Note
Agreement.

         (d) In  connection  with a  prepayment  of  Notes or  replacement  of a
defective  item of Collateral  pursuant to this Section  4.02,  the Debtor shall
amend and deliver to the Trustee the applicable  schedule of Collateral provided
to the Trustee to reflect (i) the removal of the  applicable  item of  defective
Collateral  from the terms of this Note  Agreement and (ii) if  applicable,  the
replacement of the defective item of  Collateral.  Upon the Debtor's  compliance
with the terms of this Section  4.02,  the Trustee  shall cause the lien of this
Note  Agreement and any  applicable  supplemental  Note Agreement to be released
with respect to the item of  defective  collateral  and  promptly  return to the
Debtor all documents evidencing the item of defective Collateral.

                                   ARTICLE V

                  ACCOUNTS; TRUSTEE; COMMUNICATIONS AND REPORTS

         SECTION  5.01.  DUTIES OF TRUSTEE.  In addition to the duties set forth
under Section 5.09, the Trustee as trustee for the Noteholders shall:

         (a)  NOTES.  Authenticate,  transfer,  exchange  and  deliver  Notes as
provided in Article II hereof;

         (b)  ACCOUNTS.  Establish,  maintain  and  administer  the  Accounts as
follows:

          (i) ACQUISITION ACCOUNT. To (A) deposit net proceeds from the issuance
     of Notes (after the payment of sales expenses  pursuant to Section  2.01(b)
     hereof)  into the  Acquisition  Account as  described  in Section  2.01 and
     moneys  transferred to the  Acquisition  Account from the  Collection  Fund
     pursuant to Section  5.01(b)(iii)(C)  and (E) below, (B) invest the amounts

                                       19
<PAGE>
     in the Acquisition Account in Permitted  Investments as provided in Section
     5.01(d) below, (C) withdraw and transfer as directed in writing (or orally,
     confirmed in writing) by the Debtor to purchase  Eligible  Receivables  and
     Assets described on schedules delivered to the Trustee in which the Debtor,
     the Servicer or Administrator certifies in writing that the Receivables and
     Assets  to be  acquired  meet the  requirements  of an  Asset  or  Eligible
     Receivable,  (D) to redeem Notes in accordance  with the provisions of this
     Note  Agreement  and any  supplemental  Note  Agreement,  and (E) if on any
     Interest  Payment  Date  or  upon  the  maturity  of a Note  there  are not
     sufficient  moneys  on  deposit  in the  Collection  Account  to  make  the
     transfers  required by Section  5.01(f)(iv)  or (v), or both, to timely pay
     amounts due with respect to the Notes,  then,  as directed by the Debtor in
     writing,  the Trustee shall  transfer from the  Acquisition  Account to the
     Collection  Account an amount of funds not exceeding the amount of any such
     deficiency.[IF  FUNDS FROM NEW NOTES CAN BE USED TO REDEEM OLD NOTES,  THIS
     SHOULD BE DISCLOSED-CURRENTLY IT IS NOT A PERMISSIBLE USE OF NOTE PROCEEDS]

          Any direction by given by the Debtor pursuant to Section 5.01(b)(i)(C)
     above  shall  state  that such  proposed  use of moneys in the  Acquisition
     Account is in compliance with the provisions of this Note agreement. If the
     Debtor determines that all or any portion of such moneys cannot be so used,
     then the  Debtor may  direct  the  Trustee  in  writing to redeem  Notes in
     accordance with any supplemental Note Agreement.

          (ii) LOCK BOX ACCOUNT.  Moneys  collected  with respect to Receivables
     and deposited to the Lock Box Account shall be paid promptly to the Trustee
     and deposited to the Collection Account.

          (iii) COLLECTION  ACCOUNT.  To (A) deposit into the Collection Account
     all Revenues  derived from the  Collateral,  and all other Revenue  derived
     from moneys or assets on deposit in the  Acquisition  Account and any other
     amounts to be deposited  therein upon receipt of direction  from the Debtor
     in writing (or orally, confirmed in writing by the Debtor) and (B) withdraw
     amounts pursuant to Section 5.01(f) of this Note Agreement.

         (c) DEBTOR TO REMIT FUNDS. At the time during the period that this Note
Agreement is in effect,  the Debtor agrees and  covenants  that (a) all Revenues
received  by the  Debtor  in  respect  of the  Collateral  shall be  immediately
remitted  to the  Trustee  (subject  to  Article  VI below)  for  deposit in the
Collection  Account for the benefit of the Noteholders  hereunder,  and shall be
segregated  from  other  funds of the Debtor  and (b)  subject to Section  2.05,
interest and principal that is due and payable on any Note shall be deposited by
the Debtor into the Collection  Account prior to the date due and payable to the
Noteholder  to the  extent  that  amounts  on  deposit  therein on the date such
payment is due will not be sufficient to make such payment in full.

                                       20
<PAGE>
         (d) INVESTMENT OF FUNDS HELD BY TRUSTEE.

          (i) The Trustee  shall invest money held for the credit of any Account
     or  subaccount  held by the  Trustee  hereunder  as directed in writing (or
     orally,  confirmed  in  writing)  by  the  Debtor,  to the  fullest  extent
     practicable and reasonable,  in Permitted Investments which shall mature or
     be redeemed at the option of the holder prior to the respective  dates when
     the money  held for the credit of such  Account  will be  required  for the
     purposes  intended.  In the absence of any such direction and to the extent
     practicable,  the Trustee  shall  invest  amounts  held  hereunder in those
     Permitted  Investments  described in clause (a) or (b) of the definition of
     the Permitted Investments. All income and earning on such investments shall
     be  transferred  monthly to the  Collection  Account.  The  Trustee and the
     Debtor  hereby  agree that unless an Event of Default  shall have  occurred
     hereunder,  the Debtor  shall be entitled  to, and shall,  provide  written
     direction  or oral  direction  confirmed  in  writing to the  Trustee  with
     respect to any  discretionary  acts  required or  permitted  of the Trustee
     under  any  Permitted  Investment  and the  Trustee  shall  not  take  such
     discretionary acts without such written direction.

          (ii) The Permitted  Investments held by the Trustee shall be deemed at
     all times to be part of the related  Account or  subaccounts or combination
     thereof, and the Trustee shall inform the Debtor of the details of all such
     investments.  Upon  direction in writing (or orally,  confirmed in writing)
     from the Debtor, the Trustee shall use its best efforts to sell at the best
     price  obtainable,  or present for  redemption,  any  Permitted  Investment
     whenever it shall be  necessary  to provide  money to meet any payment from
     the applicable Account.  The Trustee shall advise the Debtor in writing, on
     or before  the  tenth day of each  calendar  month (or such  later  date as
     reasonably  consented to by the Debtor),  of all  investments  held for the
     credit of each  Account in its custody  under the  provisions  of this Note
     agreement as of the end of the preceding month and the value thereof.

          (iii)  Money in any  Account  may be pooled for the  purpose of making
     investments.  Notwithstanding  the  foregoing,  the  Trustee  shall  not be
     responsible  or liable for any losses on  investments  made by it hereunder
     or, except as provided in Section 5.01(d)(1), for keeping all Accounts held
     by it fully invested at all times, its only responsibility  being to comply
     with the investment instructions of the Debtor.

          (iv) Interest or other earnings on Permitted  Investments  held in any
     Account  shall be paid to the Debtor as  directed  in writing  (or  orally,
     confirmed in writing) by the Debtor.

         (e)  PAYMENT OF INTEREST  AND  PRINCIPAL.  Subject to Section  2.05 and
pursuant  to  Section  5.01(f) of this Note  Agreement,  the  Trustee  shall pay
interest and principal due the Notes from the funds on deposit in the Collection
Account. Such payments shall be made on the date due to the person in whose name
each Outstanding Note (or any predecessor  Note, as applicable) is registered at

                                       21
<PAGE>
the close of  business  on first day of the month  preceding  the month in which
such payment is due and payable.  Each payment of interest and  principal on any
Note shall be paid [WIRED??] in immediately available funds to each Noteholder's
address located inside the United States.

         (f) WITHDRAWALS FROM COLLECTION  ACCOUNT.  Subject to Section 2.05, the
Trustee shall withdraw from the Collection  Account and pay,  remit, or transfer
when  due and  payable  or  otherwise  required  the  following  amounts  in the
following  order of priority (any funds not so transferred or paid are to remain
in the Collection  Account until  subsequently  applied pursuant to this Section
5.01(f)):

          (i) As directed in writing  (or orally,  confirmed  in writing) by the
     Debtor,  any  amounts  constituting  Revenues  from  Collateral  other than
     Receivables to the extent necessary to promptly pay Senior Indebtedness;

          (ii) To the  trustee,  the  amount  of its fee  due  and  payable  for
     performing services under this Note Agreement;

          (iii) To the Servicer and Administrator, their respective fees due and
     payable  for  services  performed  under the  Servicing  Agreement  and the
     Administration  Agreement  with  respect to the  Collateral  following  its
     pledge to the Trustee hereunder;

          (iv) To the Noteholders of Outstanding Notes pro rata, interest on the
     Notes due on each Interest Payment Date;

          (v) To the Noteholders of Outstanding Notes pro rata, all principal of
     each Note then due an  payable  pursuant  to the terms of the Note and this
     Note Agreement;

          (vi) To the Acquisition Account as soon as practicable, all recoveries
     of principal  on the  Collateral  constituting  a portion of the Revenue as
     identified to the Trustee;

          (vii) At the option of the Debtor as  directed  in writing (or orally,
     confirmed in writing) by the Debtor, to the Acquisition Account;

          (viii) At the option of the Debtor as  directed in writing (or orally,
     confirmed  in  writing)  by the Debtor,  to the  Debtor,  provided  that no
     transfer  shall be made to the Debtor  unless the Debtor  certifies  to the
     Trustee before the transfer that immediately  after taking into account any
     such  transfer,  sum of the amounts on deposit in the Accounts (less moneys
     in any  Account  which  the  Debtor,  Servicer,  or  Administrator  is then
     entitled to receive but which has not yet been  removed  from the  Account)
     plus the principal  amount of the  Receivables and the fair market value of
     other Collateral will be, after taking into account such transfer, at least
     equal  to  100%  of the  aggregate  principal  amount  of  the  Outstanding
     Obligations plus accrued interest.

                                       22
<PAGE>
         (g) RELEASE.  The Trustee shall upon written directions from the Debtor
and  subject  to the  provisions  of  this  Note  Agreement,  take  all  actions
reasonably  necessary to effect the release of any  Collateral  from the lien of
this Note Agreement or any  supplemental  Note Agreement to the extent the terms
hereof permit the sale, disposition or transfer of such Collateral.

         (h) POWER OF ATTORNEY.  The Debtor  hereby  irrevocably  appoints,  and
hereby does appoint,  the Trustee both as trustee for the Noteholders and as the
Debtor's  Attorney-in-Fact  with  full  authority  in the place and stead of the
Debtor and in the name of Debtor, the Trustee or otherwise, from time to time in
the Trustee's discretion,  effective upon the occurrence of an Event of Default,
to take any action and to execute  any  instrument  which the  Trustee  may deem
necessary or advisable to enforce,  collect and dispose of the Collateral and to
enforce the Transaction Documents, including the authority to:

          (i) ask, demand, collect, sue for, recover, compound, receive and give
     acquaintance  and  receipts  for money  due and to  become  due under or in
     respect to any of the Collateral;

          (ii)  receive,  endorse,  collect  any  drafts  or other  instruments,
     documents  and  chattel  paper,  in  connection  with  clause  (a) above or
     otherwise;

          (iii) file any claims or take any action or institute any  proceedings
     which the Trustee may deem necessary or desirable for the collection of any
     of the  Collateral or otherwise to enforce the right to the Trustee for the
     benefit of the Noteholders with respect to any of the Collateral; and

          (iv) to notify the Servicer, any Health Care Provider and any Payor or
     Debtor's  collateral  assignment and/or grant of a security interest in the
     Receivables  to the Trustee for the  benefit of the  Noteholders  and cause
     such Persons to remit payments directly to the Trustee and its designee.

         The Debtor hereby  acknowledges,  consents and agrees that the power of
attorney  granted  pursuant to this Section  5.01(g) is irrevocable  and coupled
with an interest.

         SECTION 5.02.  CORPORATE  TRUSTEE  REQUIRED;  ELIGIBILITY;  CONFLICTING
INTERESTS.  There  shall at all  times be a  Trustee  hereunder  which  shall be
eligible to act as Trustee under TIA Section 310(a)(1) and shall have a combined
capital  and  surplus of at least  $50,000,000.  If such  corporation  publishes
reports of condition at least annually,  pursuant to law or the  requirements of
federal,  state,  territorial  or District of Columbia  supervising or examining
authority,  then for the purposes of this Section 5.02, the combined capital and
surplus  of such  corporation  shall be deemed to be its  combined  capital  and
surplus as set forth in its most recent report of condition so published.  If at
any  time  the  Trustee  shall  cease  to be  eligible  in  accordance  with the
provisions of this Section 5.02, it shall correct such  ineligibility  or resign
immediately in the manner and with the effect  hereinafter  specified in Section
5.03.  Neither the Debtor nor any Person  directly or indirectly  controlling or
controlled by, or under common control with, the Debtor shall serve as Trustee.

                                       23
<PAGE>
SECTION 5.03. REPLACEMENT OF TRUSTEE.

         (a) The  Trustee  may  resign by so  notifying  the  Debtor;  provided,
however,  no such  resignation  shall be effective  until a qualified  successor
Trustee  has  accepted  its  appointment  pursuant  to this  Section  5.03.  The
Noteholders of a majority in aggregate Outstanding principal amount of the Notes
may remove the Trustee by so  notifying  the Trustee and may appoint a successor
Trustee. The Debtor shall remove the Trustee if:

          (i) the Trustee fails to comply with, or ceases to be eligible  under,
     Section 5.02 hereof;

          (ii) the Trustee is adjudged bankrupt or insolvent;

          (iii) a  receiver  or public  officer  takes  charge or control of the
     Trustee or its property or affairs; or

          (iv) the Trustee otherwise in the Debtor's reasonable judgment becomes
     incapable of acting.

         (b) If the Trustee  resigns or is removed or if a vacancy exists in the
office of  Trustee  for any  reason,  the  Debtor  shall  promptly  appoint,  by
resolution  of its Board of  Directors,  a successor  Trustee.  Every  successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the Debtor
and to the  retiring  Trustee an  instrument  accepting  such  appointment,  and
thereupon  the  resignation  or removal of the  retiring  Trustee  shall  become
effective  and  such  successor  Trustee,  without  any  further  act,  deed  or
conveyance,  shall become vested with all the rights,  powers, trusts and duties
of the  retiring  Trustee;  but, on the  request of the Debtor or the  successor
Trustee,  such retiring Trustee shall, upon payment of its charges,  execute and
deliver an instrument  transferring  to such  successor  Trustee all the rights,
powers and trusts of the retiring  Trustee and shall duly  assign,  transfer and
deliver to such  successor  Trustee all property and money held by such retiring
Trustee hereunder.  Upon request of any such successor Trustee, the Debtor shall
execute  any and all  instruments  for more fully and  certainly  vesting in and
confirming  to such  successor  Trustee all such rights,  powers and trusts.  No
successor  Trustee  shall  accept  its  appointment  unless  at the time of such
acceptance such successor Trustee shall be eligible under this Note Agreement.

         (c) If no successor Trustee has been appointed by the date specified or
within a period  of 90 days  from  the  receipt  of the  notice  by the  Debtor,
whichever  period  is the  longer,  (i) the  Trustee  may  appoint  a  temporary
successor Trustee having the  qualifications  provided in Section 5.02 hereof or
(ii) the  retiring  Trustee,  the Debtor or the  Noteholders  of a  majority  in
aggregate  Outstanding  principal  amount  of the  Note may  request  a court of
competent  jurisdiction to appoint a Trustee having the qualifications  provided
in Section 5.02 hereof. In the event a temporary  successor Trustee is appointed
pursuant to (i) above, the Board may remove such temporary successor Trustee and
appoint a successor thereto.

                                       24
<PAGE>
         (d) If the  Trustee  fails to comply  with  Section  7.10  hereof,  any
Noteholder may petition any court of competent  jurisdiction  for the removal of
the Trustee and the appointment of a successor Trustee.

         SECTION 5.04.  PREFERENTIAL  COLLECTION OF CLAIMS AGAINST  DEBTOR.  The
Trustee   shall  comply  with  TIA  Section   311(a),   excluding  any  creditor
relationship  listed in TIA Section  311(b).  A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated  therein.
The Trustee  hereunder,  or any successor  Trustee,  in its  individual or other
capacity,  may become the owner or pledgee of Notes and may otherwise  deal with
the Debtor,  with the same rights it would have if it were not the Trustee.  The
Trustee may act as  depository  for, and permit any of its officers or directors
to act as a member of, or act in any other capacity in respect to, any committee
formed  to  protect  the  rights of the  Noteholders  or to effect or aid in any
reorganization  growing  out of the  enforcement  of the  Notes or of this  Note
Agreement,  whether or not any such committee shall represent the Noteholders of
more than 60% of the collective  aggregate  principal  amount of the Outstanding
Notes.

         SECTION 5.05.  COMMUNICATION  BY  NOTEHOLDERS  WITH OTHER  NOTEHOLDERS.
Noteholders  may   communicate   pursuant  to  TIA  Section  312(b)  with  other
Noteholders with respect to their rights under this Note Agreement or the Notes.
The  Debtor,  the  Trustee,  and anyone  else shall have the  protection  of TIA
Section 312(c).

         SECTION 5.06.  REPORTS BY TRUSTEE TO NOTEHOLDERS.  Within 30 days after
each twelve month interval  beginning with the date of this Note Agreement,  the
Trustee  shall mail to each  Noteholder  a brief report that  complies  with TIA
Section  313(a),  if required by such  Section  313(a).  The Trustee  also shall
comply with TIA Section 313(b). A copy of each report at the time of its mailing
to Noteholders shall be filed with the SEC and each securities exchange on which
the Notes are listed.  The Debtor agrees to promptly notify the Trustee whenever
the Notes become listed on any securities exchange and of any delisting thereof.

         SECTION 5.07. REPORTS BY DEBTOR. The Debtor will:

          (a) file with the Trustee, within 15 days after the Debtor is required
     to file the same with the Securities and Exchange Commission, copies of the
     annual  reports and of the  information,  documents  and other  reports (or
     copies of such portions of any of the foregoing as the Securities  Exchange
     Commission may from time to time by rules and regulations  prescribe) which
     the  Debtor  may be  required  to file  with the  Securities  and  Exchange
     Commission  pursuant to Section 13 or Section 15(d) of the  Securities  and
     Exchange Act of 1934, as amended (the "Securities Exchange Act");

          (b) file with the Trustee and the Securities and Exchange  Commission,
     in accordance  with rules and  regulations  prescribed from time to time by
     the Securities Exchange Commission, such additional information,  documents
     and reports with respect to  compliance  by the Debtor with the  conditions
     and  covenants of this Note  Agreement as may be required from time to time
     by such rules and regulations; and

          (c)  transmit  by mail to the  Noteholders,  within 30 days  after the
     filing thereof with the Trustee,  in the manner and to the extent  provided
     in TIA Section  313(c),  such summaries of any  information,  documents and

                                       25
<PAGE>
     reports  required to be filed by the Debtor pursuant to clauses (a) and (b)
     of this Section 5.07 as may be required by rules and regulations prescribed
     from time to time by the Securities and Exchange Commission.

         SECTION 5.08.  STATEMENT AS TO  COMPLIANCE.  The Debtor will deliver to
the  Trustee,  within  120 days  after the end of each  fiscal  year,  a written
certificate,  signed in the name of the Debtor by its  Chairman of the Board,  a
Vice  Chairman,  its President or a Vice  President and one other officer of the
Debtor,  and  delivered to the Trustee in which one of the two officers  signing
such certificate is either the principal executive officer,  principal financial
officer or principal accounting officer of the Debtor, stating whether or not to
the  knowledge  of the  signers  thereof  the Debtor is in  compliance  with all
conditions and covenants under this Note Agreement (without regard to any period
of grace or requirement of notice  provided  hereunder) and, in the event of any
noncompliance,  specifying such  noncompliance and the nature and status thereof
of which the signers may have knowledge.

         SECTION 5.09. PERFORMANCE BY THE TRUSTEE.

         (a) The Trustee  hereby accepts the trusts imposed upon it by this Note
Agreement,  and agrees to perform said trusts,  but only upon and subject to the
following terms and conditions.

          (i) Except during the continuance of an Event of Default,  the Trustee
     undertakes to perform such duties and only such duties as are  specifically
     set forth in this Note  Agreement  and the  Transaction  Documents,  and no
     implied  covenants or  obligations  shall be read into this Note  Agreement
     against the Trustee.  The Trustee  shall not be obligated to perform any of
     the obligations or duties of the Debtor thereunder or to take any action to
     collect or enforce any  Receivable,  Asset,  Transaction  Document or other
     claim for payment  assigned  hereunder,  except as the Trustee may elect to
     undertake   on  behalf   of  the   Noteholders   upon  full  and   adequate
     indemnification  acceptable  to the  Trustee  for  any and  all  costs  and
     liabilities that my result from such collection or enforcement.

          (ii)  In the  absence  of bad  faith  on its  part,  the  Trustee  may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein,  upon certificates or opinions furnished to
     the Trustee and conforming to the requirements of this Note Agreement;  but
     in the case of any such  certificates  or opinions  which by any provisions
     hereof are  specifically  required  to be  furnished  to the  Trustee,  the
     Trustee  shall be under a duty to examine the same to determine  whether or
     not they conform as to form with the  requirements  of this Note  Agreement
     and whether or not they  contain the  statements  required  under this Note
     Agreement.

          (iii) In case an Event of Default has occurred and is continuing,  the
     Trustee,  in  exercising  the rights  and powers  vested in it by this Note
     Agreement, shall use the same degree of care and skill in their exercise as
     a prudent  person  would  exercise  or use under the  circumstances  in the
     conduct of his or her own affairs.

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<PAGE>
         (b) If the Debtor fails to perform any agreement  contained herein, the
Trustee may itself perform,  or cause  performance  of, such agreement,  and the
expenses of the Trustee incurred in connection therewith shall be payable by the
Debtor under Section 5.10 of this Note Agreement.

         (c) The Trustee shall pay the Notes(s) when they mature,  principal and
interest that is due, from the cash  available in the  Collection  Account.  The
Trustee has no duty or obligation to pay the Notes from its own funds, assets or
corporate capital.

         (d) Except for the safe custody of any Collateral in its possession and
the accounting for moneys  actually  received by it hereunder,  if it reasonably
determined  that it may incur costs,  damages or  liability  for which it has no
adequate  source of payment or  indemnity,  the Trustee shall have no duty as to
the  Notes or any  Collateral  or as to the  taking  of any  necessary  steps to
preserve or exercise rights against any Persons or any other right pertaining to
any Collateral.

SECTION 5.10. INDEMNITY AND EXPENSES.

         (a)  The  Debtor  agrees  to  indemnify  each  of the  Trustee  and the
Noteholders from and against any and all claims,  losses and liabilities growing
out of or resulting  from this Note  Agreement or any other security held by the
Trustee  with  respect  to the  Notes,  except  claims,  losses  or  liabilities
resulting from such indemnified party's negligence or willful misconduct.

         (b) The Debtor  will pay upon  demand to the  Trustee the amount of any
and all reasonable expenses,  including the reasonable fees and disbursements of
its counsel and of any experts and agents,  which the Trustee may incur,  acting
in good faith,  in connection  with (i) the custody,  collection  from, or other
realization  upon,  any of the  Collateral  upon the  occurrence  of an Event of
Default, (ii) the exercise of or enforcement of any of the rights of the Trustee
hereunder,  or (iii) the  failure by the Debtor to perform or observe any of the
material provisions hereof.

         (c) The  Debtor's  payment  obligations  pursuant to this  Section 5.10
shall  survive the  discharge of this Note  Agreement.  When the Trustee  incurs
expenses  after the  occurrence  of an Event of  Default  specified  in  Section
8.01(g)  or  (h),  the  expenses   are  intended  to   constitute   expenses  of
administration  under Title 11, United  States Code,  or any similar  Federal or
state law for the relief of debtors.

                                       27
<PAGE>
                                   ARTICLE VI

                             SUBORDINATION OF NOTES

SECTION 6.01. SUBORDINATION OF NOTES TO SENIOR INDEBTEDNESS.

         (a) The  payment  of the  principal,  interest  and any  other  amounts
payable  in  respect  of  all  Outstanding   Notes  issued  hereunder  shall  be
subordinated and subject in right of payment to the prior payment in full of all
Senior Indebtedness of the Debtor,  whether outstanding at the date of this Note
Agreement or thereafter incurred, or thereafter created,  assumed or guaranteed.
Notwithstanding  the  foregoing,  amounts on deposit in an Account  from time to
time constituting Revenues from Receivables shall be used as provided in Section
5.01of this Note  Agreement  and shall not be withdrawn  and used to pay amounts
due with respect to Senior  Indebtedness  unless all Obligations with respect to
the Notes  secured by the  Receivables  have been paid in full.  No provision of
this Article VI shall prevent the occurrence of any Event of Default  hereunder.
Nothing in this Note  Agreement  shall restrict the right of the Debtor to issue
Senior  Indebtedness or any other indebtedness on terms deemed acceptable by the
Debtor, provided that the terms of this Note Agreement and any supplemental Note
Agreement may only be amended or modified pursuant to Article X below.

         (b) "Senior  Indebtedness"  is  indebtedness of the Debtor in which the
instrument  creating  or  evidencing  the  indebtedness  or  the  assumption  or
guarantee thereof expressly  provides that such indebtedness  shall be senior in
right of payment to the Notes or indebtedness which is senior by law in right of
payment to the Notes, including,  without limitation,  all deferrals,  renewals,
extensions or refundings of, or amendments, modifications or supplements to, the
foregoing.  The term "Senior  Indebtedness"  shall not include (i)  indebtedness
evidenced by the Notes, (ii) indebtedness of the Debtor to any subsidiary parent
or  affiliate  of the Debtor,  a majority of the voting stock of which is owned,
directly or indirectly,  by the same Persons,  (iii)  accounts  payable or other
indebtedness to trade creditors created or assumed by the Debtor in the ordinary
course of  business  unless  required by law to be senior in right of payment to
the Notes, and (iv) any particular indebtedness in which the instrument creating
or evidencing the same or the assumption or guarantee thereof expressly provides
that such  indebtedness  shall not be senior in right of payment  to, or is pari
passu with, or is subordinated or junior to, the Notes.

         (c) In the event that,  the Trustee or any  Notehoholder  receives  any
payment of any kind in  contravention  of the  subordination  provisions of this
Note Agreement or the Senior  Indebtedness (to the extent not inconsistent  with
this Note Agreement)  before full payment of the Senior  Indebtedness,  then the
payment will be held by the recipient in trust for the benefit of, and paid over
to, holders of Senior Indebtedness or their representatives.  These payments can
be made in any form of  consideration  but must take into account any concurrent
payment or distribution to the holders of Senior Indebtedness.

         SECTION 6.02.  NOTEHOLDERS'  RIGHTS NOT IMPAIRED.  Nothing contained in
this Article VI or elsewhere in this Note  Agreement or in the Notes is intended
to or shall impair, as between the Debtor,  its creditors other than the holders
of its Senior  Indebtedness and the  Noteholders,  the obligation of the Debtor,
which is absolute and  unconditional,  to pay to the Noteholders the amounts due
to them  hereunder  as and  when  the  same  shall  become  due and  payable  in

                                       28
<PAGE>
accordance with its terms, or is intended to or shall affect the relative rights
of the  Noteholders  and  creditors  of the Debtor other than the holders of its
Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or
the Noteholder of any Note from exercising all remedies  otherwise  permitted by
applicable law upon default under this Note Agreement, subject to the rights, if
any, under this Article VI of the holders of Senior Indebtedness.

         SECTION  6.03.   ACCEPTANCE  OF  SUBORDINATION  BY  NOTEHOLDERS.   Each
Noteholder by such  Noteholder's  acceptance of Notes,  acknowledges  and agrees
that the  foregoing  subordination  provisions  are,  and are intended to be, an
inducement  and a  consideration  to each  holder  of any  Senior  Indebtedness,
whether  such Senior  Indebtedness  was created,  assumed or acquired  before or
after the issuance of the Notes, to acquire and continue to hold, or to continue
to hold, such Senior  Indebtedness and such holder of Senior  Indebtedness shall
be deemed  conclusively  to have  relied  on such  subordination  provisions  in
acquiring  and  continuing  to  hold,  or in  continuing  to hold,  such  Senior
Indebtedness,  and no  amendment or  modification  of the  provisions  contained
herein shall diminish the rights of such holder or holders unless such holder or
holders  shall have  agreed in writing  thereto.  Each  Person  holding any Note
whether upon original issue or upon transfer or assignment thereof,  accepts and
agrees to be bound by such provisions of this Article VI.

                                  ARTICLE VII
                                   [RESERVED]

                                  ARTICLE VIII

                                     DEFAULT

         SECTION 8.01.  EVENTS OF DEFAULT.  With respect to the Notes (Series I)
and  except as  provided  in  Section  6.01,  each of the  following  events and
occurrences shall constitute an "Event of Default" under this Note Agreement:

         (a) Debtor shall default in the payment or  prepayment  when due of any
principal  or interest on any Note  (Series I), or Debtor shall fail to make any
payment or deposit when required hereunder with respect to the Notes (Series I),
and such default or failure shall continue unremedied for 30 days;

         (b) Except with respect to Section 4.01, any representation or warranty
made by Debtor hereunder or in any other Transaction Document securing the Notes
(Series  I) shall  have been  incorrect  in any  material  respect  when made or
confirmed,  or any  certificate of opinion of Debtor  furnished  hereunder or in
connection with the Notes (Series I) was false or misleading as of the date made
in any material respect, and which within 30 days of notice by the Trustee fails
to cure such inaccuracy;

         (c) Debtor  shall  breach any other  covenant or provision of this Note
Agreement  with  respect  to the  Notes  (Series  I) and such  breach  continues
unremedied  for a period of 30 days after receipt of notice from a Noteholder or
the Trustee;

                                       29
<PAGE>
         (d) Debtor  materially  breaches  any of the terms,  conditions  or its
obligations  in the Servicing  Agreement or the  Administration  Agreement  with
respect  to the Notes  (Series I) and such  breach  continues  unremedied  for a
period of 30 days  after  notice  from the  Servicer  or the  Administrator,  as
applicable;

         (e)  Any  judgment  against  the  Debtor  or any  attachment,  levy  or
execution against any material portion of its respective properties for which an
amount in excess of 25% of the Debtor's  total assets  shall remain  unpaid,  or
shall not be  discharged of record,  or bonded,  for a period of 90 days or more
after its entry, issue or levy, as the case may be;

         (f) The Debtor shall be unable,  or generally  fail to pay, or admit in
writing its inability or unwillingness to pay its debts as they mature or become
due;

         (g) The Debtor shall make any  assignment for the benefit of creditors,
or a trustee,  receiver or  liquidator  shall be appointed for the Debtor or for
any of their  property,  or the  commencement  of any case or proceedings by the
Debtor under any bankruptcy,  reorganization,  arrangement of debt,  insolvency,
readjustment of debt, receivership, liquidation or dissolution law or statute or
the  commencement  of any such case or  proceedings  without  the consent of the
Debtor and such proceeding shall continue undischarged for a period of 90 days;

         (h)  Debtor  ceases  to  do  business  for  any  reason  whatsoever  or
institutes any proceeding for its dissolution or termination;

          (i) A  moratorium  shall be agreed to or  declared  in  respect of any
     indebtedness of Debtor, or any governmental  authority or agency shall have
     seized, compulsorily purchased or appropriated all or a substantial part of
     the assets of Debtor; or

          (j) It becomes unlawful for Debtor to perform any material  obligation
     hereunder or under other documents executed in connection herewith.

         SECTION  8.02.  NOTEHOLDER'S  DIRECTION  UPON  DEFAULT.  If an Event of
Default  shall  occur,  (a)  Trustee  or  (b)  the  Noteholders  of  Outstanding
Applicable  Notes  evidencing  more  than  50%  of  the  principal  due  on  the
Outstanding  Applicable  Notes,  by notice to Debtor and Trustee,  may, in their
sole discretion  declare all Applicable Notes together with accrued interest and
any other sum payable hereunder, to be immediately due and payable (and the same
shall thereupon become due and payable without presentment,  demand,  protest or
notice of any kind,  other than are hereby  expressly  required by this  Section
8.02, all of which are hereby  expressly  waived by Debtor).  The Noteholders by
written  notice to the Trustee and the Debtor,  which  notice shall be effective
immediately upon receipt thereof by Trustee, may:

         (a) Instruct the Trustee to liquidate all funds in the Accounts related
to the Applicable  Notes (and all related funds that may thereafter be deposited
in such Accounts) and the Permitted Investments related to the Applicable Notes.
Upon such instructions, the proceeds realized from any such liquidation shall be
applied by the Trustee on each  subsequent  Interest  Payment  Date on which the
Applicable Notes are Outstanding in the following order of priority:

                                       30
<PAGE>
          (i) First,  to the payment of Senior  Indebtedness  to the extent that
     such  proceeds  are  otherwise  required  to be  used  to  pay  the  Senior
     Indebtedness;

          (ii)  Second,  to the payment of all of  Trustee's  costs and expenses
     incurred by it or incurred  by acting on behalf of the  Noteholders  of the
     Applicable Notes in enforcing its rights and remedies hereunder (including,
     without limitation, its attorneys fees);

          (iii)  Third,  to the payment of any unpaid fee that is payable to (A)
     the bank acting as the trustee for the Lock Box Account with respect to the
     Applicable  Notes  and (B) the  Servicer  and  Administrator  for  services
     performed under the Servicing  Agreement and the  Administration  Agreement
     with respect to the  Collateral  for the  Applicable  Notes  following  its
     pledge to the Trustee hereunder;

          (iv)  Fourth,  to the payment of all of the costs and  expenses of the
     Noteholders of the Applicable  notes incurred in enforcing their rights and
     remedies hereunder (including,  without limitation, its attorney's fees) or
     under the other related Transaction Documents;

          (v) Fifth, to the payment to the  Noteholders of the Applicable  Notes
     of the  amount  then  owing or  unpaid  under  the Note for  principal  and
     interest,  and in case any such proceeds shall be  insufficient  to pay the
     whole amount so due, then such order as the  Noteholders  of the Applicable
     Notes shall  designate,  and after giving  effect to such  payment,  to the
     payment to the  Noteholders  of the  Applicable  Notes of any other amounts
     payable thereto under the related Transaction Documents;

          (vi)  Sixth,  to the payment of the  Monthly  Administration  Fee with
     respect to the Applicable Notes; and

          (vii) Seventh, to the extent available,  to the payment to Debtor, its
     successors or assigns,  or to whomever may be lawfully  entitled to receive
     same any remaining proceeds of such liquidation.

         (b) Instruct the Trustee to apply all payments received thereafter with
respect to the Receivables or other Collateral  securing the Applicable Notes in
the order of priority set forth in Paragraph 8.02(a) above.

         (c)  Upon  providing  to the  Trustee  adequate  indemnity  for  costs,
expenses  and  liability,  instruct  the  Trustee  to take  any and all  actions
permitted  by law to realize  upon their  security  interest  in the  Collateral
securing the Applicable Notes and otherwise  exercise remedies and undertake all
actions as may be  desirable  or  necessary to recover all amounts due and owing
Noteholders of the Applicable  Notes, and upon any such instruction  pursuant to
subsection (a) and Subsection (b) above, the Trustee shall take such action;

                                       31
<PAGE>
         (d) Exercise all of the Debtor's rights, but not its obligations, under
the terms of the  Servicing  Agreement,  the  Purchase  Agreement  and the other
Transaction Documents with respect to the Applicable Notes; and

         (e) Waive the Event of Default,  except  failure to pay  principal  and
interest  when  due,  provided  that no waiver  of any  Event of  Default  shall
constitute  a waiver of any other or any  succeeding  Event of Default or of the
continuance  of the Event of Default  so waived  except in  accordance  with the
terms of the waiver.

SECTION 8.03. REMEDIES.

         (a)  Pursuant  to  the  Debtor's  collateral  assignment  of all of its
interest  in the  Collateral  to the  Trustee,  and  pursuant  to the  Servicing
Agreement,  Debtor agrees that the Trustee may,  upon  occurrence of an Event of
Default,  collect,  at the  Debtor's  expense,  all amounts due or to become due
under the Collateral  securing the  Applicable  Notes.  In connection  with such
collections,  the Debtor  agrees that the Trustee may take or direct such action
as the Trustee may deem  necessary or advisable  to enforce  collection  of such
Collateral.

         (b) If an Event of Default  occurs and is  continuing,  the Trustee may
recover  judgment in its own name and as trustee of an express trust against the
Debtor for the whole amount owing with respect to the  Applicable  Notes and the
amounts provided for in Section 5.10 of this Note Agreement.

         (c) Subject to Section 4.02 of this Note Agreement, upon the occurrence
of any uncured  Event of Default,  Trustee may (and shall upon the direction and
indemnity of the Noteholders as provided in Section 8.02. above) exercise any of
the rights provided for in this Note Agreement (including Section 8.02) or other
Transaction Document with respect to the Applicable Notes , or at law or equity,
including,  without  limitation,  all the rights and remedies of a secured party
under the UCC.  The  Trustee  may act only  upon  receipt  of full and  adequate
indemnification  from  Noteholders of the Applicable Notes for any and all costs
and  liabilities  that  may  result  from  exercise  of such  remedies  prior to
undertaking any thereof.

         (d) At any time after such a declaration of acceleration  has been made
pursuant to Section 8.02 of this Note  Agreement and before a judgment or decree
for payment of the money due has been obtained by the Trustee as provided herein
provided,  the Noteholders of Outstanding  Applicable Notes evidencing more than
50% of the principal due on the Outstanding  Applicable Notes, by written notice
to the Debtor and the Trustee,  may rescind and annul such  declaration  and its
consequences if:

          (i) the Debtor has paid or deposited with the Trustee a sum sufficient
     to pay:

               (A) all  overdue  installments  of  interest  on such  Applicable
          Notes,

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<PAGE>
               (B) the  principal  of and  premium,  if any, on such  Applicable
          Notes  which have become due  otherwise  than by such  declaration  of
          acceleration  and interest  thereon at the  respective  rates borne by
          such Applicable Notes,

               (C) to the  extent  that  payment  of such  interest  is  lawful,
          interest upon overdue installments of interest at the respective rates
          borne by such Applicable Notes, and

               (D) all sums paid or advanced by the  Trustee  hereunder  and the
          reasonable compensation,  expenses,  disbursements and advances of the
          Trustee,  its agents and counsel,  in each case,  with respect to such
          Applicable Notes;

          and

          (ii) all Events of Default, other than the nonpayment of the principal
     of such Applicable Notes which have become due solely by such acceleration,
     have been cured or waived as provided in this Note Agreement.

No such  rescission  shall  affect  any  subsequent  default or impair any right
consequent thereon.

SECTION 8.04. TRUSTEE MAY FILE PROOFS OF CLAIM.

         (a)  In  case  of  the  pendency  of  any   receivership,   insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial  proceeding  relative to the Debtor or any other obligor upon the
Notes or the property of the Debtor or of such other obligor or their creditors,
the Trustee  (irrespective of whether the principal of the Notes of any class or
series shall then be due and payable as therein  expressed or by  declaration or
otherwise and  irrespective of whether the Trustee shall have made any demand on
the Debtor for the payment of overdue principal,  premium,  if any, or interest)
shall  be  entitled  and  empowered,  by  intervention  in  such  proceeding  or
otherwise:

          (i) to file and  prove a claim for the whole  amount,  or such  lesser
     amount as may be provided for in the Notes,  of principal and interest,  if
     any, owing and unpaid in respect of the Notes and to file such other papers
     or  documents  as may be necessary or advisable in order to have the claims
     of the  Trustee  (including  any  claim  for the  reasonable  compensation,
     expenses,  disbursements  and  advances  of the  Trustee and its agents and
     counsel) and of the Noteholders allowed in such judicial proceeding; and

          (ii) to collect  and receive  any money or other  property  payable or
     deliverable  on any  such  claims  and to  distribute  the  same;  and  any
     custodian, receiver, assignee, trustee, liquidator,  sequestrator (or other
     similar  official) in any such judicial  proceeding is hereby authorized by
     each  Noteholder to make such  payments to the Trustee,  and if the Trustee

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<PAGE>
     shall consent to the making of such payments directly to the Noteholder, to
     pay to the  Trustee any amount due to it for the  reasonable  compensation,
     expenses,  disbursements  and  advances of the Trustee and any  predecessor
     Trustee, their agents and counsel, and any other amounts due the Trustee or
     any predecessor Trustee.

         (b) Nothing herein  contained  shall be deemed to authorize the Trustee
to  authorize or consent to or accept or adopt on behalf of any  Noteholder  any
plan of  reorganization,  arrangement,  adjustment or composition  affecting the
Notes or the rights of any  Noteholder  thereof,  or to authorize the Trustee to
vote in respect of the claim of any Noteholder of a Note in any such proceeding.

         (c) In any proceedings brought by the Trustee (and also any proceedings
involving the  interpretation  of any  provision of this  Indenture to which the
Trustee  shall be a  party),  the  Trustee  shall be held to  represent  all the
Noteholder of the Notes, and it shall not be necessary to make any Noteholder of
the Notes parties to any such proceedings.

         SECTION 8.05.  NOTICE OF DEFAULTS.  Within 90 days after the occurrence
of any default hereunder with respect to the Applicable Notes, the Trustee shall
transmit in the manner and to the extent  provided in Section 313(c) of the TIA,
notice of such default hereunder known to the Trustee, unless such default shall
have been cured or waived. Except in the case of a default in the payment of the
principal of or interest with respect to any Applicable  Note, or in the payment
of any sinking fund  installment with respect to the Notes, the Trustee shall be
protected in withholding such notice if and so long as an authorized  officer of
the Trustee in good faith  determines  that the withholding of such notice is in
the interest of the Noteholders.  The second sentence of this Section 8.04 shall
be in lieu of the proviso to Section  315(b) of the TIA,  and such  provision is
hereby expressly excluded from this Note Agreement, as permitted by the TIA. For
the purpose of this Section 8.04, the term  "default"  means any event which is,
or after notice or lapse of time or both would become,  an Event of Default with
respect to the Applicable  Notes. The Trustee shall not give notice of a default
in the payment of the  principal of or interest  with respect to any  Applicable
Note,  or in the payment of any sinking  fund  installment  with  respect to the
Applicable Notes, until at least 60 days have passed since its occurrence.

         SECTION 8.06.  TRUSTEE MAY ENFORCE CLAIMS WITHOUT  POSSESSION OF NOTES.
All rights of action and claims  under this Note  Agreement  or the Notes may be
prosecuted  and  enforced by the Trustee  without the  possession  of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation,  expenses, disbursements and advances of
the  Trustee,  its  agents  and  counsel,  be for  the  ratable  benefit  of the
Noteholders in respect of which such judgment has been recovered.

                                       34
<PAGE>
SECTION 8.07. LIMITATION ON SUITS.

         (a) No Holder of any Applicable  Note shall have any right to institute
any proceeding,  judicial or otherwise,  with respect to this Note Agreement, or
for the appointment of a receiver or trustee, or for any other remedy hereunder,
unless:

          (i) such Noteholder has previously given written notice to the Trustee
     of a continuing  Event of Default with respect to  Applicable  Notes of the
     same series;

          (ii) the Noteholders of Outstanding  Applicable  Notes  evidencing not
     less than 25% of the  principal  due on the  Outstanding  Applicable  Notes
     shall have made written request to the Trustee to institute  proceedings in
     respect of such Event of Default in its own name as Trustee hereunder;

          (iii) such  Noteholder  or  Noteholders  have  offered to the  Trustee
     reasonable  indemnity  against the costs,  expenses and  liabilities  to be
     incurred in compliance with such request;

          (iv) the Trustee for 60 days after its receipt of such notice, request
     and offer of indemnity has failed to institute any such proceeding; and

          (v) no direction inconsistent with such written request has been given
     to the Trustee during such 60-day period by the  Noteholders of Outstanding
     Applicable  Notes  evidencing  more  than 50% of the  principal  due on the
     Outstanding Applicable Notes;

         (b) One or more  Noteholders  shall  not have any  right in any  manner
whatever by virtue of, or by availing of, any  provision of this Note  Agreement
to affect,  disturb or  prejudice  the  rights of any other  Noteholders,  or to
obtain or to seek to obtain priority or preference over any other Noteholders or
to enforce  any right  under this Note  Agreement,  except in the manner  herein
provided and for the equal and ratable benefit of all the Noteholders.

                                   ARTICLE IX

                          TERMINATION OF NOTE AGREEMENT

         SECTION 9.01. DEPOSIT OF PAYMENT. When (i) the Trustee has received all
Outstanding  Notes for  cancellation,  or (ii) all Outstanding Notes have become
due and payable and the Debtor  deposits with the Trustee funds, as permitted by
the terms of this Note Agreement  including all  supplemental  Note  Agreements,
sufficient to pay at their stated  maturity the principal and accrued and unpaid
interest  of all  Outstanding  Notes,  and if in either  case the Debtor pays or
makes  adequate  provision  for, all other sums payable  hereunder by the Debtor
under this Note Agreement and all supplemental  Note Agreements,  then this Note
Agreement and all  supplemental  Note  Agreements and the trusts created thereby
shall,  subject to Section 5.10 above,  cease to be of force and further  effect
and shall  terminate.  The  Trustee  shall join in the  execution  of a document
prepared by the Debtor and  reasonably  acceptable to the Trustee  acknowledging
satisfaction  and  discharge of this Note  Agreement and all  supplemental  Note
Agreements on request of the Debtor.

                                       35
<PAGE>
         SECTION 9.02.  UNCLAIMED  FUNDS. The Trustee shall return to the Debtor
any money or securities held by it for the payment of any amount with respect to
the Notes that remains unclaimed one year subsequent to due date of such payment
provided,  the Trustee or, before being required to make any such return,  shall
mail to each such  Noteholder  notice  that  such  money or  securities  remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such  publication  or mailing,  any unclaimed  money or
then  remaining  will be  returned to the  Debtor.  After  return to the Debtor,
Noteholders  entitled  to the money or  securities  must look to the  Debtor for
payment  as  general  creditors  unless an  applicable  abandoned  property  law
designates another Person.

                                   ARTICLE X

                   AMENDMENTS AND SUPPLEMENTAL NOTE AGREEMENTS

         SECTION 10.01. GENERAL. Subject to Sections 10.02 and 10.03 below, this
Note  Agreement may be amended and any  provision of this Note  Agreement may be
waived only by an  instrument  in writing  signed by the Trustee and the Debtor.
Upon the execution of any amendment or  supplemental  Note Agreement  under this
Article X, this Note Agreement  shall be modified in accordance  therewith,  and
such amendment or  supplemental  Note  Agreement  shall form a part of this Note
Agreement  for all  purposes;  and every  Noteholder  theretofore  or thereafter
authenticated and delivered hereunder shall be bound thereby.

         SECTION 10.02. AMENDMENT WITHOUT CONSENT OF NOTEHOLDERS. The Debtor and
the Trustee  may,  without  the consent of or notice to any of the  Noteholders,
enter  amend or into any  indenture  or  indentures  supplemental  to this  Note
Agreement for any one or more of the following purposes:

         (a) to cure any  ambiguity  or formal  defect or  omission in this Note
Agreement;

         (b) to grant to or  confer  upon the  Trustee  for the  benefit  of the
Noteholders any additional  benefits,  rights,  remedies,  powers or authorities
that may  lawfully  be  granted  to or  conferred  upon the  Noteholders  or the
Trustee;

         (c)  to  subject  to  this  Note  Agreement  to  additional   revenues,
properties or collateral;

         (d) modify,  amend or supplement  this Note  Agreement or any indenture
supplemental  hereto in such manner as to permit the  qualification of this Note
Agreement  or any  supplemental  Note  Agreement  under  the TIA or any  similar
federal statute  hereafter in effect or to permit the qualification of the Notes
for sale under the securities  laws of the United States of America or of any of
the states of the United States of America, and, if they so determine, to add to
this Note  Agreement  or any  indenture  supplemental  hereto such other  terms,
conditions  and  provisions  as may be permitted  by the TIA or similar  federal
statute;

         (e) to  evidence  the  appointment  of a separate  or  co-Trustee  or a
co-registrar or transfer agent or the succession of a new Trustee hereunder;

                                       36
<PAGE>
         (f) to provide for the issuance or redemption of Notes pursuant to this
Note Agreement,  including the creation of appropriate  Accounts and subaccounts
with respect to such Notes;

         (g) to amend this Note Agreement to allow for any Notes to be supported
by a letter of credit or insurance policy or a liquidity agreement;

         (h) to make any other change  which,  in the judgment of the Trustee is
not to the material prejudice of the Noteholders;

         (i) to provide for the  assumption of the Debtor's  obligations  to the
Noteholders of the Notes in case of a merger or  consolidation or sale of all or
substantially all of the Debtor's assets;

         (j) to provide for the creation,  terms and provisions of any series of
Notes  (other  than Notes  (Series  I)) as  provided in Article III of this Note
Agreement;

provided,  however, that nothing in this Article X shall permit, or be construed
as permitting, any modification of the trusts, powers, rights, duties, remedies,
immunities and privileges of the Trustee  without the prior written  approval of
the Trustee,  which  approval  shall be evidenced by execution of a supplemental
Note Agreement.

         SECTION  10.03.  AMENDMENT  WITH CONSENT OF  NOTEHOLDERS.  Exclusive of
amendments and supplemental Note Agreements covered by Section 10.02 and subject
to the terms and provisions  contained in this Section 10.03, the Noteholders of
Outstanding  Notes  evidencing  more  than  50%  of  the  principal  due  on the
Outstanding  Notes  shall have the right,  from time to time,  to consent to and
approve the  execution by the Debtor and the Trustee of such other  indenture or
indentures supplemental hereto as shall be deemed necessary and desirable by the
Trustee  for  the  purpose  of  modifying,  altering,  amending,  adding  to  or
rescinding, in any particular,  any of the terms or provisions contained in this
Note Agreement or in any supplemental Note Agreement; provided, however, if such
modified,  altered,  amended,  added or  rescinded  provision  applies only to a
particular  series  of  Notes,  or the  rights  of  the  Noteholders  of  only a
particular  series  would  be  modified,  the  consent  of  the  Noteholders  of
Outstanding  Notes  evidencing  more  than  50%  of  the  principal  due  on the
Outstanding Notes of only such series shall be required,  and, provided further,
that nothing in this Article X shall permit, or be construed as permitting:

         (a) without the consent of such all Noteholders affected thereby,

          (i) an  extension  of the  maturity  date of the  principal  of or the
     interest on any Note;

          (ii) a reduction in the principal amount due on any Note or alteration
     of the manner or rate of accrual of interest thereon;

          (iii) a privilege or priority of any Note over any other Note;

                                       37
<PAGE>
          (iv) a  reduction  in the  aggregate  principal  amount  of the  Notes
     required for consent to a  supplemental  Note  Agreement  or  modification,
     alteration, amendment, addition to or rescission of this Note Agreement; or

          (v) the  creation  of any lien on the  Collateral  securing  the Notes
     other  than a lien  ratably  securing  all of the  obligations  under  Note
     Agreement  with  respect  to the  Notes at any time  outstanding  hereunder
     except as otherwise provided herein;

or

         (b)  any  modification  of the  trusts,  powers,  rights,  obligations,
duties,  remedies,  immunities and  privileges of the Trustee  without the prior
written approval of the Trustee.

It shall not be necessary for the consent of the Noteholders  under this Article
X to approve the particular form of any proposed  amendment or supplemental Note
Agreement,  but it shall be  sufficient  if such consent  approves the substance
thereof.

         SECTION 10.04. SENIOR  INDEBTEDNESS.  An amendment or supplemental Note
Agreement  under this Article X may not make any change that  adversely  affects
the  rights  under  Article  VI  of  any  holder  of  Senior  Indebtedness  then
outstanding unless the requisite holders of such Senior Indebtedness  consent to
such change pursuant to the terms of such Senior Indebtedness.

         SECTION   10.05.   NOTICE  TO   NOTEHOLDERS.   After  an  amendment  or
supplemental Note Agreement under this Article X becomes effective,  the Trustee
shall mail to each  Noteholder  a notice  briefly  describing  the  amendment or
supplemental Note Agreement.

         SECTION 10.06.  COMPLIANCE WITH TIA. Every  supplemental Note Agreement
executed pursuant to this Article X shall comply with the TIA as then in effect,
if then required to so comply.

         SECTION 10.07. RIGHTS OF NOTEHOLDERS NOT IMPAIRED.  Notwithstanding any
other  provision  of this Note  Agreement,  but subject to Article  VI,  Section
8.02(e),  and Section 11.02 of this Note Agreement,  the right of any Noteholder
to receive payment of the principal  amount,  Redemption  Price or interest,  if
any, in respect of the Notes held by such Noteholder, on or after the respective
due dates expressed in the Notes or any date of redemption, or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected adversely without the consent of each such Noteholder.

                                   ARTICLE XI

                                  MISCELLANEOUS

         SECTION 11.01.  GOVERNING LAW. This Agreement  shall be governed by and
construed  in  accordance  with the  internal  law of the  State of  ___________
[TRUSTEE JURISDICTION] without regard to applicable conflicts of law principles.

                                       38
<PAGE>
         SECTION 11.02. WAIVER. The Debtor hereby waives notice of acceptance of
this Note Agreement and also presentment, demand, protest and notice of dishonor
of any and all of its Obligations  herein or in the Notes, or other  Transaction
Documents,  and promptness in commencing suit against any party hereto or liable
thereon,  and in giving any notice to or of making any claim or demand hereunder
upon the Debtor. No failure on the part of Trustee to exercise,  and no delay in
exercising, any right hereunder or with respect to the obligations shall operate
as a waiver  thereof;  nor shall any  single or partial  exercise  of any rights
hereunder or with respect to the Obligations preclude any other right. No waiver
of any Event of Default shall constitute a waiver of any other or any succeeding
Event of Default or of the  continuance of the Event of Default so waived except
in accordance  with the terms of the waiver.  The remedies  herein  provided are
cumulative and not exclusive of any remedies provided by law or equity.

SECTION 11.03. NOTICES.

         (a) Any notice  hereunder  shall be in writing and shall be  personally
delivered  or  transmitted  by post  prepaid  registered  mail,  return  receipt
requested,  or express mail service addressed to the party receiving such notice
at the following address:

         If to Debtor :

         Medical Capital Management, Inc.
         2100 South State College Blvd.
         Anaheim, CA 92806

         Telephone:______________________
         Facsimile:______________________

         If to Trustee:

         ______________________
         ______________________
         ______________________

         Telephone:______________________
         Facsimile:______________________

its address set forth at the  beginning of this Note  Agreement or to such other
party as  directed  by the  receiving  party in  writing.  All notices and other
communications  shall be deemed to have been duly given on the date of  delivery
if delivered personally, the date five days after if transmitted by mail, in the
case of a telecopy,  telex,  telegram, or cable, at the time sent, provided that
any notice to be given to the  Noteholder or the Trustee shall be effective only
when received.  Any party may change its address for proposes  hereof by written
notice to the other.

         (b) The  Debtor or the  Trustee  by  notice to the other may  designate
additional or different  addresses  for  subsequent  notices or  communications.
Failure to mail a notice or  communication  to a Noteholder  or any defect in it
shall not affect its sufficiency with respect to other Noteholders.  If a notice
or  communication  is mailed in the manner  provided  above,  it is duly  given,
whether  or not  received  by the  addressee.  If the  Debtor  mails a notice or
communication to the Noteholders, it shall mail a copy to the Trustee.

                                       39
<PAGE>
         SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon
any request or application by the Debtor to the Trustee to take any action under
this Note Agreement, the Debtor shall furnish to the Trustee:

         (a) a  written  certificate  signed  in the name of the  Debtor  by its
Chairman of the Board, a Vice Chairman,  its President or a Vice President,  and
delivered  to the  Trustee  stating  that,  in the opinion of the  signers,  all
conditions  precedent,  if any, provided for in this Note Agreement  relating to
the proposed action have been complied with; and

         (b) an opinion of counsel reasonably  acceptable to the Trustee stating
that, in the opinion of such counsel,  all such  conditions  precedent have been
complied with.

         SECTION 11.05.  STATEMENTS  REQUIRED IN  CERTIFICATE  OR OPINION.  Each
officers'  certificate  or opinion of counsel with respect to compliance  with a
covenant or condition provided for in this Note Agreement shall include:

         (a) a statement that each individual making such officers'  certificate
or opinion of counsel has read such covenant or condition;

         (b) a brief  statement as to the nature and scope of the examination or
investigation  upon which the statements or opinions contained in such officers'
certificate or opinion of counsel are based;

         (c) a statement that, in the opinion of each such individual, he or she
has made such  examination or investigation as is necessary to enable him or her
to express an informed  opinion as to whether or not such  covenant or condition
has been complied with; and

         (d) a statement that, in the opinion of such individual,  such covenant
or condition has been complied with.

         SECTION 11.06. SEVERABILITY. Any provision of this Note Agreement which
is  prohibited  or  unenforceable   in  any  jurisdiction   shall,  as  to  such
jurisdiction,   be   ineffective   to  the   extent  of  such   prohibition   or
unenforceability  without  invalidating  the  remaining  provisions of this Note
Agreement or affecting the validity or  enforceability  of such provision in any
other jurisdiction.

         SECTION 11.07.  TIA. This Note Agreement is hereby made subject to, and
shall be governed  by, the  provisions  of the TIA required to be part of and to
govern  indentures  qualified  under  the TIA.  If any  provision  in this  Note
Agreement or any supplemental Note Agreement limits, qualifies or conflicts with
another  provision in this Note  Agreement or any  supplemental  Note  Agreement
which is required to be included in an indenture  qualified  under the TIA, such
required provision shall control.

                                       40
<PAGE>
         SECTION 11.08.  NONLIABILITY OF DIRECTORS; NO GENERAL OBLIGATION. It is
hereby  expressly made a condition of this Note  Agreement that any  agreements,
covenants,  or  representations  herein  contained  or contained in the Notes or
supplemental Note Agreements do not and shall never constitute or give rise to a
personal or pecuniary  liability or charge against the incorporators,  officers,
employees,  agents,  or  directors  of the  Debtor.  Nothing  contained  in this
Section,  however,  shall relieve the Debtor from the observance and performance
of the several covenants and agreements on its part herein contained.

         SECTION  11.09.  SCOPE OF DEBTOR'S  LIABILITY.  Anything  herein to the
contrary notwithstanding:

         (a) The Debtor shall remain liable under the Notes, Servicing Agreement
and the other  Transaction  Documents and all other  agreements  included in the
Collateral  to the  extent set forth  therein  to perform  all of its duties and
obligations thereunder to the same extent as if this Note Agreement has not been
executed; and

         (b) The  exercise by the Trustee of any of the rights  hereunder  shall
not release the Debtor from any of its duties or obligations under the Note, the
Receivables,  the Assets,  other Transaction  Documents and all other agreements
included in the Collateral.

         SECTION 11.10. ASSIGNMENT. The Trustee may assign or transfer this Note
Agreement or transfer  therewith the whole or any part of the security hereunder
only with the prior written consent of the  Noteholder.  The Debtor shall not be
entitled  to transfer  its rights and  obligations  hereunder  without the prior
written consent of the Trustee and the Noteholder.

         SECTION 11.11. WHEN THE DEBTOR MAY MERGE OR TRANSFER ASSETS.

         (a) The  Debtor  shall not  consolidate  with or merge with or into any
other Person (other than in a merger or consolidation in which the Debtor is the
surviving  Person)  or  convey,  transfer  or lease its  properties  and  assets
substantially as an entirety to any Person, unless:

          (i) the Person (if other than the Debtor) formed by such consolidation
     or into  which  the  Debtor  is  merged or the  Person  which  acquires  by
     conveyance,  transfer  or lease the  properties  and  assets of the  Debtor
     substantially  as an entirety  shall be a  corporation,  limited  liability
     company, partnership or trust organized and validly existing under the laws
     of the United States or any State thereof or the District of Columbia,  and
     shall  expressly  assume by a  supplemental  Note  Agreement,  executed and
     delivered to the Trustee in form  reasonably  satisfactory  to the Trustee,
     the due and punctual  payment of the Obligations  and Redemption  Price, if
     any,  on the Notes,  according  to their  tenor,  and the due and  punctual
     performance of all of the covenants and obligations of the Debtor under the
     Notes and this Note  Agreement,  and shall  have  provided  for  conversion
     rights in accordance with this Not Agreement; and

          (ii) immediately after giving effect to such transaction,  no Event of
     Default or any event, condition or occurrence that after notice or lapse of
     time or both,  would constitute an Event of Default shall have occurred and
     be continuing

                                       41
<PAGE>
         (b) The successor Person formed by such consolidation or into which the
Debtor is merged or the successor Person to which such  conveyance,  transfer or
lease is made shall succeed to, and be  substituted  for, and may exercise every
right and power of, the Debtor under this Note Agreement with the same effect as
if such successor had been named as the Debtor herein; and thereafter, except in
the case of a lease,  the Debtor shall be discharged  from all  obligations  and
covenants under this Note Agreement and the Notes.

                                       42
<PAGE>
IN WITNESS  WHEREOF,  the parties  hereto have caused this Note  Agreement to be
duly executed by their authorized  representatives  as of the date first written
above.

DEBTOR:                         MEDICAL CAPITAL MANAGEMENT, INC.

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

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

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