Document:

Exhibit 10.8

                           SECTION 1307 LOAN AGREEMENT

      THIS  AGREEMENT,  made and  entered  into as of the 18th day of  December,
1997,  by and  between  CATHOLIC  HEALTHCARE  NETWORK OF LONG  ISLAND,  INC.,  a
corporation  duly created,  organized,  and existing  under and by virtue of the
Laws of the State of New York and having its  principal  office at c/o  Catholic
Health Services of Long Island, One Huntington Quadrangle, Suite 4C04, Melville,
New York 11747 (hereinafter referred to as "Lender"), and MDNY HEALTHCARE, INC.,
a corporation duly created,  organized,  and existing under and by virtue of the
Laws of the State of New York and having its principal  office at One Huntington
Quadrangle,  Suite 4C01,  Melville,  New York 11747 (hereinafter  referred to as
"Borrower").

                              W I T N E S S E T H:

      WHEREAS,  Borrower desires to borrow the sum of $1.4 million and Lender is
willing to lend said sum to Borrower upon the terms,  provisions  and conditions
hereinafter set forth; and

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

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

      1. Upon approval of this Agreement by the  Superintendent  of Insurance of
the State of New York,  pursuant to Section 1307 of the New York  Insurance Law,
Lender  agrees to lend to Borrower,  and Borrower  agrees to borrow from Lender,
the sum of ONE MILLION FOUR HUNDRED  THOUSAND  AND 00/100  DOLLARS  ($1,400,000)
(the "Loan"). Upon receipt of such approval.  Lender shall promptly disburse the
full amount of the Loan to Borrower in good and immediately available funds.

<PAGE>

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

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

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

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

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

                                       2
<PAGE>

obligations and all other liabilities of the Borrower but before distribution of
assets to shareholders.

      7. All payments of principal  and interest  payable by Borrower in respect
of the Loan  shall be made to  Lender  at its  offices  at c/o  Catholic  Health
Services of Long Island, One Huntington  Quadrangle,  Suite 4C04, Melville,  New
York 11747,  Attention:  Chief  Financial  Officer - Terry Daly (or as otherwise
directed by Lender in writing).  All interest  payments shall be computed on the
basis of a year of 365 days, in each case for the actual days elapsed (including
the first day but  excluding  the last)  occurring  in the period for which such
interest is payable.  All  payments in respect of the Loan shall be made in such
coin or currency of the United  States as at the time of payment  shall be legal
tender for the payment of public and private debts.

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

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

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<PAGE>

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

BORROWER:

ATTEST:

/s/                                    By: /s/
________________________________           ________________________________
    Secretary                                  President

LENDER:

ATTEST:

/s/                                    By: /s/
________________________________           ________________________________
    Sr. Vice President                         President

                                       4THIS NOTE HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933, AS
AMENDED (THE  "SECURITIES  ACT") OR ANY  APPLICABLE  STATE  SECURITIES  LAWS. NO
TRANSFER OF THIS NOTE OR ANY INTEREST  HEREIN MAY BE MADE EXCEPT  PURSUANT TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR UNLESS SUCH TRANSFER IS EXEMPT FROM REGISTRATION  UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

                                SUBORDINATED NOTE

$1,400,000

                                                              New York, New York
                                                         As of December 18, 1997

      FOR  VALUE  RECEIVED,   MDNY  HEALTHCARE  INC.,  a  New  York  corporation
("Borrower"),  hereby  promises  to pay to the  order of  CATHOLIC  HEALTH  CARE
NETWORK OF LONG ISLAND INC., a New York  corporation  ("Lender"),  the principal
sum of ONE MILLION FOUR HUNDRED  THOUSAND AND 00/100 DOLLARS  ($1,400,000)  (the
"Loan")  on the  date  and  subject  to the  conditions  specified  in the  Loan
Agreement (as defined below).  Borrower  further promises to pay interest on the
principal  amount of the Loan  outstanding  from time to time at the  adjustable
interest rate specified in the Loan Agreement,  payable at the times and subject
to the conditions specified in the Loan Agreement.

      1. Certain Defined Terms. As used in this Note, the following  capitalized
terms shall have the following meanings:

      "Business Day" means any day other than  Saturday,  Sunday or other day on
which  commercial  banks in New York City are  authorized  or  required to close
under the laws of the State of New York.

      "Holdings" means MDNY Holdings, LLC, a New York limited liability company.

      "Loan  Agreement"  means  the  Section  1307 Loan  Agreement,  dated as of
December 18, 1997, between Lender and Borrower.

      "Merger"  means those  several  merger  transactions  as a result of which
Holdings  will be at the  effective  time  thereof,  the  holder of all of .the^
issued  and  outstanding  shares  of  the  capital  stock  of  Borrower,  all as
contemplated by that certain Agreement and Plan of Merger,  dated as of December
18, 1996, among Long Island Physician  Holdings  Corporation,  Holdings and MDNY
Holdings Delaware, Inc.

      "SCDs" means the series of Subordinated Convertible Debentures of Borrower
in an aggregate original principal amount of up to $10 million,  as contemplated
to  be   authorized,   offered  and  issued  by  that  certain   Memorandum   of
Understanding,  dated December _, 1997,  between Long Island Physician  Holdings
Corporation and Lender.

<PAGE>

      "Superintendent" means the Superintendent of Insurance of the Stale of New
York.

      2. Section 1307 Loan.

            a. This Note is the promissory note contemplated by Section 9 of the
Loan  Agreement,  evidences me indebtedness of Borrower to Lender under the Loan
Agreement  in respect of the Loan and is  entitled  to the  benefits  of, and is
subject to the conditions set forth in, the Loan Agreement.

            b. The Loan  Agreement,  among  other  things,  requires  the  prior
approval  of  the  Superintendent  prior  to  repayment  of any  portion  of the
principal  amount of, and  payment of any  portion of accrued  interest  on, the
Loan. Not later than five Business Days prior to each due dale for any principal
or interest  payment in respect of the Loan, and immediately upon the request of
Lender  following an Event of Default,  Borrower  shall make  application to the
Superintendent  for approval of the payment then due and owing to Lender. If the
Superintendent  shall  withhold  its  approval  to the  making of such  payment,
Borrower shall reapply for such approval,  until received,  at each such time as
Borrower or Lender may reasonably believe that Borrower's  financial position is
such that the Superintendent would grant its approval.

            c. Any payment of  principal or interest in respect of the Loan that
is not paid on the due date  therefor,  by reason of the  Borrower's  failure to
obtain the  Superintendent's  approval  thereof or for any other  reason,  shall
accrue  interest at the rate specified in the Loan  Agreement  until the lime at
which such payment is made.

            d. This Note  contains  provisions  which  are  supplemental  to the
provisions contained in the Loan Agreement. If and to the extent of any conflict
between  the  provisions  of this Note and the  express  provisions  of the Loan
Agreement, the provisions of the Loan Agreement shall control.

      3. SCD  Exchange  Right.  In the event that  Borrower  shall  commence  an
offering  of  SCDs,  Lender  shall  have  the  right  (the  "Exchange   Right"),
exercisable at its sole option, to exchange this Note, in whole or part, for one
or more SCDs, in accordance with the following:

            a. Promptly  following the  commencement by Borrower of its offering
of SCDs,  Borrower  shall give a written  notice thereof to Lender (the "Trigger
Notice"),  which notice  shall also set forth the original  issue price at which
each $100 of face  amount of SCDs is being  offered by Borrower  (the  "Original
Issue Price"). Within 15 days of its receipt of the Trigger Notice. Lender shall
give a written notice to Borrower (the "Election Notice")  specifying whether it
elects to exercise its Exchange  Right and. if so, the principal  amount of this
Note as to which it is exercising  the Exchange  Right (the  "Exchanged  Debt").
Failure by Lender to timely give an Election  Notice shall be deemed a waiver by
Lender of its Exchange Right.  If Lender  exercises its Exchange Right by timely
delivery to Borrower of the Election  Notice,  Borrower  shall not issue or sell
any SCDs to any other purchaser thereof unless and until the

                                       2
<PAGE>

consummation  of the Exchange  Right shall have taken place in  accordance  with
subsection b. below; and

            b. If Lender  exercises  its  Exchange  Right by timely  delivery to
Borrower of the Election  Notice,  then, on the tenth Business Day following the
date on which the  Election  Notice is deemed  delivered  pursuant  to Section 6
hereof (the "Exchange Date").  Borrower shall deliver to Lender: (i) one or more
duly issued SCDs having an  aggregate  original  principal  amount  equal to the
product of (x) the principal  amount of the Exchanged  Debt and (y) the quotient
obtained  by dividing  100 by the  Original  Issue  Price;  (ii)  payment of all
accrued  and  unpaid  interest  through  the  Exchange  Date in  respect  of the
principal  amount of the  Exchanged  Debt (if and to the extent  then  permitted
pursuant  to the  terms of the Loan  Agreement);  and  (iii) if  Lender  has not
exercised  the  Exchange  Right  as to me  entirety  of  the  `then  outstanding
principal  balance of this Note, a Note, of like tenor with this Note,  equal to
the  principal  balance of this Note as to which  Lender has not  exercised  its
Exchange Right; provided, however, that Borrower shall not be obligated to Issue
any SCDs to Lender until this Note is tendered for exchange to Borrower.

      4. Automatic  Exchange Upon Merger.  Lender,  Borrower and Holdings hereby
agree that,  immediately  following me effectiveness of the Merger, Lender shall
tender this Note to Holdings and Holdings  shall deliver to Lender,  in exchange
for this Note, a duly executed note of Holdings (the "Holdings  Note"),  of like
tenor with this Note (by incorporating herein such of the provisions of the Loan
Agreement as relate to the financial terms of the Loan and such other provisions
as  may  apply  to a  note  issued  by  Holdings),  but  without  any  provision
corresponding  to this  Section  4 and  with  such  other  modifications  as are
necessary to reflect  Holdings as the maker of the Holdings  Note.  The Holdings
Note shall have an original principal amount equal to the outstanding  principal
balance of this Note as of the date of exchange and shall reflect the obligation
of  Holdings  to pay to Lender all  interest  on this Note that has  accrued and
remains  unpaid  hereunder as of the date of exchange.  Holdings  further agrees
that,  upon  receipt  of this Note  from  Lender,  Holdings  shall  forgive  the
indebtedness of Borrower evidenced thereby and shall remit this Note to Borrower
for cancellation. Holdings is executing this Note at the foot hereof to evidence
its agreement to be bound and observe the provisions of this Section 4.

      5. Events of Default.  The occurrence and  continuation  of any one of the
following events ("Event of Default") shall constitute a default hereunder:  (i)
Borrower  shall fail to make any payment  required by this Note within 5 days of
the date it is due (other than as a result of the refusal of the  Superintendent
to  approve  such  payment)  (ii)  Holdings  shall  fail to issue to Lender  the
Holdings  Note upon the  effectiveness  of the Merger,  as required  pursuant to
Section 4 hereof;  or (iii)  Borrower  makes an  assignment  for the  benefit of
creditors, files a petition in bankruptcy, is adjudicated insolvent or bankrupt,
petitions a court for the  appointment  of any receiver or trustee for it or any
substantial part of its property,  commences any proceeding relating to Borrower
under any arrangement or debt  readjustment  law or statute of any  jurisdiction
whether now or hereafter in effect or there is  commenced  against  Borrower any
such  proceeding  which remains  undismissed for sixty (60) days, or Borrower by
any act indicates consent to, approval of or acquiescence in any such proceeding
or the appointment of any receiver or trustee for it or any substantial  part of
its  property,  or suffers  any such  receivership  or  trusteeship  to continue
undischarged for sixty (60) days.

                                       3
<PAGE>

      If an Event of Default  occurs and is  continuing,  then, at the option of
Lender,  the entire  unpaid  principal  balance  of, and all  accrued and unpaid
interest  on,  this Note shall,  upon  written  notice from Lender to  Borrower,
become immediately due and payable. The rights, remedies,  powers and privileges
provided for herein are  cumulative  and not exclusive of any rights,  remedies,
powers and privileges provided by law.

      6. Notices.  Unless  otherwise  provided  herein,  all notices,  requests,
demands  and other  communications  pursuant  to this Note shall be in  writing,
delivered by hand or  commercial  messenger  service or sent by certified  mail,
return receipt requested,  addressed as follows:  (i) if to Lender, to it at One
Huntington Quadrangle,  Suite 4C04, Melville, New York 11747,  Attention:  Chief
Financial Officer - Terry Daly; or (ii) if to Borrower,  to it at One Huntington
Quadrangle, Suite 4C01, Melville, New York 11747. Any notice, request, demand or
communication  hereunder  shall be deemed to have been given on the day on which
it is delivered  by hand or  commercial  messenger  service to such party at its
address  specified above,  or, if sent by certified or registered  mail,  return
receipt  requested,  on the third  Business  Day after the day  deposited in the
mail, postage prepaid.

      7. Miscellaneous.

            a. This Note shall not be prepayable, either in whole or in part.

            b. No waiver by Lender of any default  shall be effective  unless in
writing,  nor shall it operate  as a waiver of any other  default or of the same
default on a future  occasion.  No delay or omission by Lender in exercising any
of its rights, remedies, powers and privileges hereunder or at law and no course
of dealing  between  Lender and  Borrower or any other  person shall be deemed a
waiver by Lender of any of such rights, remedies,  powers and privileges even if
such  delay or  omission  is  continuous  or  repealed,  nor shall any single or
partial exercise of any right,  remedy, power or privilege preclude any other or
further exercise  thereof by Lender or the exercise of any other right,  remedy,
power or privilege by Lender.

            c. Borrower hereby waives presentment, demand, protest and notice of
any kind  (including  notice  of  presentment,  demand,  protest,  dishonor  and
nonpayment).

            d. If this Note  shall be  mutilated,  lost,  stolen  or  destroyed.
Borrower shall execute and deliver,  in exchange and  substitution  for and upon
cancellation of this Note (if mutilated),  or in lieu of or in substitution  for
this Note (if lost, stolen or destroyed), a new Note for the principal amount of
this Note but only upon receipt of evidence of such loss,  theft or  destruction
of this Note,  and of the ownership  hereof,  and indemnity,  if requested,  all
reasonably satisfactory to Borrower.

            e. Each  provision of this Note shall be  interpreted in such manner
as to be effective and valid under  applicable law, but if any provision of this
Note shall be  prohibited  by or invalid under  applicable  law, such  provision
shall be  ineffective to the extent of such  prohibition or invalidity,  without
invalidating the remainder of such provision or the remaining provisions of this
Note.

                                       4
<PAGE>

            f. This Note shall be binding upon Borrower and its  successors  and
permitted  assigns  and  shall  inure  to  the  benefit  of  Lender,  its  legal
representatives, successors and permitted assigns.

            g. This Note shall be  governed  by and  construed  and  enforced in
accordance  with Section 1307 of the New York  Insurance  Law and, to the extent
not  inconsistent  therewith,  other  applicable  laws of the State of New York,
without  giving effect to principles of conflicts of laws.  This Note may not be
changed  orally,  hut only by an instrument  in writing  executed by the parties
hereto.

      IN WITNESS  WHEREOF,  the undersigned has executed and delivered this Note
as of the date first written above.

                                            MDNY HEALTHCARE, INC.
                                            Borrower

                                            By: /s/
                                                -------------------------------
                                                Name:
                                                Title: CEO

SOLELY FOR PURPOSES OF SECTION 4:

MDNY HOLDINGS, LLC

By: /s/
    ------------------------------
    Name:
    Title:  CEO

                                       5

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