Document:

Exhibit 4.3

                     SUBSEQUENT CONTRACT TRANSFER AGREEMENT

                                     between

                           DVI RECEIVABLES CORP. XVI,
                                   as Company

                                       and

                          DVI RECEIVABLES XVI, L.L.C.,
                                    as Issuer

                          Dated as of November 1, 2001

ALL RIGHTS IN AND TO THIS AGREEMENT ON THE PART OF DVI  RECEIVABLES  XVI, L.L.C.
HAVE BEEN ASSIGNED AND ARE SUBJECT TO A SECURITY  INTEREST IN FAVOR OF U.S. BANK
TRUST NATIONAL ASSOCIATION, AS TRUSTEE, UNDER THE INDENTURE DATED AS OF NOVEMBER
1, 2001 FOR THE BENEFIT OF THE PERSONS REFERRED TO THEREIN.

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                                TABLE OF CONTENTS

                                                                            Page

                                    ARTICLE I
                                   DEFINITIONS

Section 1.01   Definitions ...................................................1

                                   ARTICLE II
                 PROCEDURES FOR PURCHASES OF ELIGIBLE CONTRACTS

Section 2.01   Transfer ......................................................2
Section 2.02   Substitute Contracts ..........................................2
Section 2.03   Intent of Parties; Security Interest ..........................3
Section 2.04   Obligations to Transfer Certain Collections ...................3
Section 2.05   Grant of Security Interest ....................................3

                                   ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Section 3.01   Organization and Good Standing ................................5
Section 3.02   Authorization .................................................5
Section 3.03   Binding Obligation ............................................5
Section 3.04   No Violation ..................................................5
Section 3.05   No Proceedings ................................................6
Section 3.06   Approvals .....................................................6
Section 3.07   Ability to Perform ............................................6
Section 3.08   Equipment and Contracts .......................................6
Section 3.09   Principal Executive Office ....................................7
Section 3.10   No Prior Assignments ..........................................7
Section 3.11   Fair Consideration ............................................7
Section 3.12   Nonconsolidation ..............................................7
Section 3.13   Ordinary Course; No Insolvency ................................8
Section 3.14   Assets and Liabilities ........................................8
Section 3.15   Valid Sale; Fair Consideration ................................9
Section 3.16   Ability to Pay Debts ..........................................9
Section 3.17   Bulk Transfer Provisions ......................................9
Section 3.18   Transfer Taxes ................................................9

                                   ARTICLE IV
                             CONDITIONS TO PURCHASE

Section 4.01   Representations and Warranties ................................9

                                    ARTICLE V
                            COVENANTS OF THE COMPANY

Section 5.01   Books and Records ............................................10

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                                TABLE OF CONTENTS
                                   (continued)
                                                                            Page

Section 5.02   Preservation of Office .......................................10
Section 5.03   Liens ........................................................10
Section 5.04   No Bankruptcy Petition Against the Issuer or Managing Member..10
Section 5.05   Protection of Right, Title and Interest.......................11

                                   ARTICLE VI
                   REPRESENTATIONS AND COVENANTS OF THE ISSUER

Section 6.01   Nonconsolidation .............................................11
Section 6.02   No Bankruptcy Petition Against the Company ...................12

                                   ARTICLE VII
                                  SUBSTITUTION

Section 7.01   Substitution .................................................12
Section 7.02   Notice of Substitution .......................................13
Section 7.03   Contributor's and Company's Subsequent Obligations ...........13
Section 7.04   Usage of Predecessor Contracts in Calculation ................13

                                  ARTICLE VIII
                                  MISCELLANEOUS

Section 8.01   Amendment ....................................................14
Section 8.02   Effect of Invalidity of Provisions ...........................14
Section 8.03   Notices ......................................................15
Section 8.04   Entire Agreement .............................................15
Section 8.05   Survival .....................................................15
Section 8.06   Consent to Service ...........................................15
Section 8.07   Jurisdiction Not Exclusive ...................................16
Section 8.08   Construction .................................................16
Section 8.09   Further Assurances ...........................................16
Section 8.10   Third Party Beneficiaries ....................................16
Section 8.11   Governing Law ................................................17
Section 8.12   Consent To Jurisdiction; Waiver Of Objection To Venue ........17
Section 8.13   Waiver Of Jury Trial .........................................17
Section 8.14   Headings and Cross-References ................................17
Section 8.15   Costs and Expenses ...........................................17
Section 8.16   Confidential Information .....................................18
Section 8.17   Statutory References .........................................18
Section 8.18   Execution in Counterparts ....................................18
Section 8.19   Power of Attorney ............................................18

EXHIBIT A SUBSEQUENT CONTRACT TRANSFER FORM

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                                TABLE OF CONTENTS
                                   (continued)
                                                                            Page

EXHIBIT B FORM OF  RE-ASSIGNMENT  OF  ISSUER'S  CERTIFICATE  PURSUANT TO SECTION
     1.04(c) or 5.01 OF THE SUBSEQUENT CONTRACT TRANSFER AGREEMENT

                                      iii
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     SUBSEQUENT  CONTRACT TRANSFER AGREEMENT  ("Agreement") dated as of November
1, 2001,  between DVI RECEIVABLES  XVI,  L.L.C.,  a Delaware  limited  liability
company (the "Issuer"),  and DVI RECEIVABLES  CORP. XVI, a Delaware  corporation
(the "Company").

     WHEREAS,  the Company will from time to time acquire certain  Contracts and
other  Contributed  Property  related thereto  pursuant to the  Contribution and
Servicing  Agreement  dated as of the date  hereof,  between the Company and DVI
Financial Services Inc. (the  "Contributor"),  the Company will acquire from DVI
Receivables  Corp. XV ("DVI Corp. XV") pursuant to a Sale Agreement (the "DVI XV
Sale  Agreement"),  dated the date hereof,  among the Company,  the Issuer,  DVI
Receivables  Corp. XV and DVI Receivables XV, L.L.C.  ("DVI Receivables XV") the
Sold Company  Assets (as defined in the DVI XV Sale  Agreement,  and the Company
will acquire from DVI Funding  Corporation  ("DFC") pursuant to a Sale Agreement
(the "Funding Sale Agreement"),  dated the date hereof,  among the Company,  the
Issuer,  DFC and DVI Funding,  L.L.C.  ("DVI  Funding  L.L.C.") the Sold Company
Assets (as defined in the Funding Sale Agreement).

     WHEREAS, the Company desires to transfer to Issuer all Contributed Property
(other than any  ownership  interest in  Equipment)  which it acquires  from the
Contributor  and certain  other  assets,  and Issuer  desires to  purchase  such
Contributed  Property and other assets,  in each instance in accordance with the
terms and conditions set forth in this Agreement.

     WHEREAS, pursuant to the Indenture (the "Indenture"),  dated as of the date
hereof, by and between the Issuer and U.S. Bank Trust National  Association (the
"Trustee"),  the Issuer intends to issue its Series 2001-2 Notes,  which will be
collateralized  by a pledge  by the  Issuer  to the  Trustee,  on  behalf of the
Noteholders  of all of the Issuer's  right,  title and interest in, to and under
the Trust Property.

     WHEREAS,  to facilitate the issuance of its Series 2001-2 Notes, the Issuer
and the Company desire to enter into this Agreement.

     NOW,  THEREFORE,  the  parties,  in  consideration  of  good  and  valuable
consideration,  the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound, hereby agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

Section 1.01 Definitions.

     For  purposes  of this  Agreement,  capitalized  terms used  herein but not
otherwise  defined shall have the respective  meanings assigned to such terms in
Appendix I to the Contribution and Servicing Agreement.

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                                   ARTICLE II
                 PROCEDURES FOR PURCHASES OF ELIGIBLE CONTRACTS

SECTION 2.01 Transfer.

     (a) Conveyance. Upon the terms and conditions herein set forth, in exchange
for cash  consideration  received  therefore  and for  other  good and  valuable
consideration,  the Company hereby transfers,  pledges, assigns and sells to the
Issuer on each  Contribution  Date (or, in the case of any Substitute  Contracts
the related Substitution Date), without recourse except as set forth herein, all
of the Company's  right,  title and interest in and to the Company Assets as set
forth on the related  Subsequent  Contract  Transfer Form. All funds received by
the  Company  on or in  connection  with the  Company  Assets  on and  after the
applicable  Cut-off Date shall be  received,  held and applied by the Company in
trust for the  benefit  of the  Issuer as owner of the  Contracts  and the other
Company Assets.

     (b) After giving  effect to such  transfer and sale,  the ownership of each
such  Contract  and  the  other  Company  Assets   transferred  on  the  related
Contribution  Date shall be vested in the  Issuer.  The  Contract  Files and any
other documents  relating to each Contract and the other Company Assets shall be
held in trust by the Trustee for the benefit of the Noteholders  pursuant to the
terms of the Indenture.  The Company agrees to take no action  inconsistent with
the ownership of any Contract or the other Company Assets,  to promptly indicate
to all parties with a valid interest  inquiring as to the true ownership of each
Contract, that each Contract and the other Company Assets have been transferred,
assigned and sold to the Issuer and to claim no  ownership  interest in any such
Contracts and the other Company Assets.

     (c) Any Company Assets  transferred by the  Contributor to the Company from
time to time shall  forthwith be transferred to the Issuer without  further act,
notwithstanding  the  delivery  of any  Subsequent  Contract  Transfer  Forms in
respect thereof.

     SECTION 2.02 Substitute Contracts.

(a) In  consideration  for the  transfer  by the  Issuer to the  Company  of any
Predecessor Contract transferred to the Company by the Issuer in accordance with
the  terms  and  conditions  of  Section  7 of the  Contribution  and  Servicing
Agreement,  the Company shall  transfer to the Issuer on the  Substitution  Date
related thereto,  and the Issuer shall accept, a Substitute  Contract;  provided
that such Substitute  Contract is in accordance with the terms and conditions of
the Contribution and Servicing Agreement.

(b) With respect to all Predecessor  Contracts and the ownership or the security
interest (as the case maybe) in the related  Equipment  purchased or replaced by
the  Contributor  pursuant  to  Section 5 or Section 7 of the  Contribution  and
Servicing  Agreement,  the Issuer shall  deliver to the Company,  an  instrument
substantially in the form of Exhibit B hereto, assigning to the Company, without
recourse, representation or warranty (except as to the absence of liens, claims,
or  encumbrances  resulting  from actions taken,  or failed to be taken,  by the
Issuer),  all of  the  Issuer's  right,  title  and  interest  in  and  to  such
Predecessor  Contracts and the  ownership or the security  interest (as the case
may be) in the  related  Equipment,  and all  security  and  documents  relating
thereto.

     SECTION 2.03 Intent of Parties; Security Interest.

     The  Issuer  and  the  Company   hereby   confirm  that  the   transactions
contemplated   in  this  Agreement  are  intended  as  transfers,   assignments,
conveyances and sales rather than as loan  transactions.  In the event,  for any
reason, and solely in such event, any transaction  hereunder is construed by any
court or  regulatory  authority as a loan or other than a transfer,  assignment,
conveyance  and sale of any or all Company  Assets,  then the  Company  shall be
deemed to have hereby

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pledged to the Issuer as security for the  performance  by the Company of all of
its obligations from time to time arising  hereunder and with respect to any and
all  purchases  effected  pursuant  hereto,  and shall be deemed to have  either
assigned or granted to the Issuer a first priority  perfected  (except Equipment
for which the Original  Equipment Cost is less than $25,000,  in which case, the
Company  shall be deemed to have  granted a valid  security  interest)  security
interest in all of the Company Assets. In furtherance of the foregoing, (i) this
Agreement  shall  constitute  a security  agreement,  (ii) the Trustee  shall be
deemed to be a bailee  for  purposes  of  perfection  of the  security  interest
granted to Issuer  (and its  assigns),  (iii) the  Issuer  shall have all of the
rights of a secured  party  with  respect  to the  Company  Assets  pursuant  to
applicable  law and (iv) in the  manner  consistent  with  this  Agreement,  the
Company  shall  execute  all  documents,  including,  but not  limited  to,  UCC
financing  statements,  to  effectively  perfect  and  evidence  Issuer's  first
priority  security  interest in the  Company  Assets  except that UCC  financing
statements  need not be filed with respect to  Equipment  for which the Original
Equipment  Cost is less than $25,000.  The Company also covenants not to pledge,
assign or grant any  security  interest to any other party in any of the Company
Assets. The consideration received and to be received by the Company in exchange
for the transfer, assignment and conveyance of the Company Assets is intended to
be fair  consideration  having value  equivalent to or in excess of the value of
the assets being transferred by the Company.

     SECTION 2.04 Obligations to Transfer Certain Collections. The Company shall
cause the Servicer to pay to the Issuer, by deposit into the Collection  Account
within two (2) business  days after  receipt  thereof,  any and all payments and
other amounts (other than Purchase Option Payments and any Excluded Amounts), if
any,  received by or on behalf of the Company in respect of any Equipment  owned
by the Transferor  following or as a result of any default or early  termination
under the related Contract.

     SECTION 2.05 Grant of Security Interest.

     (a) To secure the timely  payment of all  obligations  owing by the Company
and the performance and observance of all the obligations and liabilities of the
Company  contained  in  this  Agreement  and  the  other  Transaction  Documents
(collectively, the "Company Obligations"), the Company hereby conveys, warrants,
assigns,  transfers,  pledges  and grants a security  interest  unto (all of the
following are collectively,  the "Company  Collateral") (i) the Trustee, for the
benefit and  security  of the  Issuer,  all of the  Company's  right,  title and
interest in and to all Equipment of the Company subject to certificates of title
or similar  evidences  of  ownership,  and all  proceeds  thereof,  and (ii) the
Issuer,  all of the Company's right,  title and interest in and to all Equipment
of the Company, including all proceeds thereof.

     (b) This  Agreement  shall  create a  continuing  security  interest in the
Company Collateral and shall:

          (i)  remain  in full  force  and  effect  until  payment  in full  and
     performance of all Company Obligations;

          (ii) be binding upon the Company and its  successors,  transferees and
     assigns (except with respect to Company  Collateral as to which the Issuer,
     with the prior  written  consent of the  Trustee,  shall have  released its
     security interest therein); and

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          (iii)  inure,  together  with the  rights and  remedies  of the Issuer
     hereunder, to the benefit of the Issuer and its successors and assigns.

     (c) Upon the payment in full and  performance  of all Company  Obligations,
the security  interest  granted herein shall,  immediately  and without  further
action, terminate and be released and all rights to the Company Collateral shall
revert to the Company. Upon any such termination and release, the Issuer and the
Trustee  will,  at the  Company's  sole  expense,  deliver  to the  Company  all
certificates and instruments  representing or evidencing any Company Collateral,
and  execute  and deliver to the Company  such  documents  as the Company  shall
reasonably request to evidence such termination and release.

     (d) In the  event  that (i) the  Contributor  or the  Servicer  shall  have
substituted a Substitute Contract and an ownership interest or security interest
(as the case may be) in the Equipment subject thereto for a Predecessor Contract
in  accordance  with  the  Contribution  and  Servicing  Agreement,  or (ii) the
Contributor or the Servicer  shall have  repurchased a Contract and an ownership
interest or security  interest (as the case may be) in the related  Equipment in
accordance  with the  Contribution  and  Servicing  Agreement,  the  Predecessor
Contract or the repurchased Contract, as applicable,  and the ownership interest
or security  interest  (as the case may be) in the  Equipment  subject  thereto,
shall be released from the ownership  interest or security interest (as the case
may be) granted  hereunder  when the  Trustee  shall have (i) in the case of the
repurchase  of a  Contract,  deposited  in the  Collection  Account  all amounts
received  in  accordance  with the  section of the  Contribution  and  Servicing
Agreement  pursuant to which such Contract is  purchased,  (ii) in the case of a
Substitute  Contract,  received  a fully  executed  original  of the  Substitute
Contract  Transfer  Form and the Contract  File with respect to such  Substitute
Contract  plus any cash  amount  delivered  as  provided  in the  section of the
Contribution  and  Servicing  Agreement  pursuant  to  which  such  Contract  is
substituted and (iii) delivered to the Contributor or the Servicer,  as the case
may be,  acknowledgment  of its receipt of the related  Contract Files. If there
are such  unreimbursed  amounts,  any  proceeds  received  with  respect to such
Predecessor Contract or repurchased  Contract,  as applicable,  and the security
interest in the related  Equipment shall be applied hereunder only to the extent
necessary to reimburse the Collection Account for such amounts drawn thereon and
the balance of such  proceeds,  if any, shall be paid to, or as directed by, the
Contributor.

     (e) In the event that the Trustee shall have received written certification
from an  Authorized  Officer of the Servicer  that the Trustee has received from
amounts paid by the Obligor or from the proceeds of the Equipment subject to any
Contract (i) the final Contract  Payment due and payable under any Contractor or
(ii) a Prepayment  Amount in respect of any Contract and,  following  such final
Contract Payment or Prepayment Amount, no further payments on, or in respect of,
such  Contract are or will be due and payable,  such  Contract and the Equipment
subject thereto shall be released from the security interest granted hereunder.

     (f) The Issuer and the Trustee  shall  promptly  execute  and deliver  such
documents  (which  shall be  furnished  to the  Issuer  and the  Trustee  by the
Company) and take such other  actions as the Company may  reasonably  request to
fully effectuate the release from the security interest granted hereunder of any
Contract  and the  security  interest  relating to  Equipment  required to be so
released pursuant to this Section 1.05.

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                                  ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby makes the following  representations  and warranties for
the benefit of the Issuer,  the Trustee and the  Noteholders on which the Issuer
relies in purchasing and otherwise acquiring the Company Assets and on which the
Noteholders rely in funding advances under their respective Notes. Other than as
set forth in Section 3.08 hereof,  such  representations  and warranties are and
will be true and correct as of the Closing Date and as of each Contribution Date
or  Substitution  Date,  as the case may be (unless an earlier date is specified
therein) and shall survive each transfer, assignment, conveyance and sale to the
Issuer of the Company  Assets and the  subsequent  pledge  thereof by the Issuer
pursuant to the Indenture.

     SECTION 3.01 Organization and Good Standing.

     The Company is a corporation  duly organized,  validly existing and in good
standing under the laws of the State of Delaware.

     SECTION 3.02 Authorization.

     The  Company  has all  requisite  power  and  authority  and all  necessary
licenses  and  permits  to enter into and  perform  its  obligations  under this
Agreement and each Subsequent  Contract  Transfer Form (each, an "SCTF") and the
transactions  contemplated hereby and thereby, and the execution,  delivery, and
performance  of this Agreement and each SCTF,  have been duly  authorized by the
Company by all necessary corporate action.

     SECTION 3.03 Binding Obligation.

     This Agreement has been,  and each SCTF will be, duly and validly  executed
and  delivered  by the Company and will  constitute  a legal,  valid and binding
obligation of the Company,  enforceable  against the Company in accordance  with
its  respective  terms,  subject  to  bankruptcy,  insolvency  and other laws of
general application  affecting the rights of creditors and equitable  principles
(whether considered in a proceeding at law or in equity).

     SECTION 3.04 No Violation.

     The  consummation  of the  transactions  contemplated by this Agreement and
each SCTF and the  fulfillment  of the terms  thereof,  will not conflict  with,
result in any breach of any of the terms and provisions of, or constitute  (with
or without  notice,  lapse of time or both) a default under the  certificate  of
incorporation or bylaws of the Company, or any indenture,  agreement,  mortgage,
deed of trust or other instrument to which the Company is a party or by which it
is bound,  or result in the creation or  imposition  of any lien upon any of its
properties pursuant to the terms of such indenture, agreement, mortgage, deed of
trust or other such instrument,  other than this Agreement,  or violate any law,
or,  to the best of the  Company's  knowledge,  any  order,  rule or  regulation
applicable  to it of any  court  or of any  federal  or state  regulatory  body,
administrative agency or other governmental  instrumentality having jurisdiction
over the Company or any of its properties.

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     SECTION 3.05 No Proceedings.

     The  Company  is  not  subject  to  any  injunction,  writ,  action,  suit,
restraining order or other order of any nature, and there are no actions, suits,
proceedings or investigations to which the Company is a party pending or, to the
knowledge  of the  Company,  threatened,  before  any  court,  regulatory  body,
administrative  agency or other  tribunal or  governmental  instrumentality  (A)
asserting the  invalidity of this  Agreement or any SCTF, (B) seeking to prevent
the  consummation of any of the  transactions  contemplated by this Agreement or
any SCTF or (C) seeking any  determination  or ruling that would  materially and
adversely affect the performance by the Company of its obligations under, or the
validity or enforceability of this Agreement or any SCTF.

     SECTION 3.06 Approvals.

     All  approvals,  authorizations,  consents,  orders or other actions of any
person, corporation or other organization,  or of any court, governmental agency
or body or official,  required in connection with the execution and delivery of,
and compliance  with the terms of, this Agreement or any SCTF, have been or will
be taken or obtained on or prior to the related Contribution Date.

     SECTION 3.07 Ability to Perform.

     The Company has the  ability to perform all of its  obligations  under this
Agreement, any SCTF and the Contribution and Servicing Agreement.

     SECTION 3.08 Equipment and Contracts.

     With respect to each Contract,  the Company hereby  represents and warrants
to the Issuer, as of each Contribution Date that:

     (a) the sale to the Issuer of the  Company's  interest in such  Contract(s)
transferred on such date and the assignment of the Company's  security interest,
or grant of a first priority perfected security interest, as the case may be, in
the Equipment related thereto pursuant to Section 2.01,  Section 2.02 or Section
2.05 hereof  constitutes a valid transfer of all of the Company's  right,  title
and interest in such  Company  Assets or a grant of a  first-priority  perfected
(except  for  Equipment  for  which  the  Original  Equipment  Cost is less than
$25,000,  with  respect to which the Company  shall be deemed to have  granted a
valid security  interest) security interest therein from the Company in favor of
the  Issuer,  free and clear of any and all claims,  charges,  liens or security
interests created by the Company or any of its affiliates (other than the rights
of each Obligor  under the  Contract to which such  Obligor is a party,  claims,
charges,  liens or security  interests to be discharged on the Contribution Date
related  thereto  and any liens for  taxes,  assessments,  and (x)  governmental
charges or levies not yet due and payable  and (y) liens  imposed by law arising
in the ordinary course of business which secure obligations that are not yet due
and  payable,  in  the  case  of (x)  and  (y) to  the  extent  no  enforcement,
collection,   execution,   levy  or  foreclosure   proceeding  shall  have  been
commenced);

     (b) the  Company  did not,  in the  exercise  of its  interest  in any such
Company Assets waive,  discharge,  release or otherwise  permit any modification
thereto not in effect or agreed to at the time the Company acquired its interest
therein; and

     (c) notwithstanding the foregoing clauses (a) and (b), the Company makes no
representation  or warranty with respect to claims,  charges,  liens or security
interests created,  or waivers,  discharges,  releases or modifications made, by
the Contributor.

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     The  representations  and  warranties  described in this Section 3.08 shall
survive the conveyance of the Company Assets to the Issuer.

     SECTION 3.09 Principal Executive Office.

     The principal executive office of the Company is located at 2500 York Road,
Jamison,  PA 18929,  and has been  located  in the same  county and state for at
least four months  immediately  preceding the Closing  Date.  The Company has no
trade names,  fictitious names,  assumed names or "doing business as" names, and
at all times has been originated under the laws of the State of Delaware. If any
change in any of the jurisidiction of organization of the Company, the Company's
name,  structure  or the  location of its  principal  place of business or chief
executive office occurs,  then the Company shall deliver thirty (30) days' prior
written notice of such change or relocation to the Issuer and the Trustee, then,
no later  than  sixty  (60) days  after  the  effective  date of such  change or
relocation,  the Company  shall file such  amendments  or  statements  as may be
required to preserve and protect the Issuer's and the Trustee's  interest in the
Contracts, the Equipment and the other Trust Property. The Company shall pay all
filing fees or taxes  payable in respect of any UCC  financing  or  continuation
statements required to be filed pursuant to Section 1.03 of the Contribution and
Servicing Agreement and not paid by the Contributor.

     SECTION 3.10 No Prior Assignments.

     Except as  permitted  by the  Transaction  Documents,  the  Company has not
pledged,  assigned or encumbered or terminated,  in whole or in part, any of the
Company Assets.

     SECTION 3.11 Fair Consideration.

     The  consideration  received by the Company in connection with the transfer
and sale of the Company Assets constitutes  reasonably equivalent value and fair
consideration for the Company Assets.

     SECTION 3.12 Nonconsolidation.

     The Company is operated in such a manner that it would not be substantively
consolidated with Contributor,  such that the separate  existence of the Company
and  Contributor  would  not be  disregarded  in the  event of a  bankruptcy  or
insolvency  of the  Company or  Contributor,  and in such  regard,  among  other
things:

     (a)  the  Company  is  not  involved  in  the  day  to  day  management  of
Contributor;

     (b) the Company maintains  separate  corporate records and books of account
from Contributor and otherwise observes corporate formalities and has a separate
business  office  from  Contributor  (which  may  be  at  the  same  address  as
Contributor,  provided  that the Company and  Contributor  have  entered  into a
written agreement specifying a reasonable allocation of expenses with respect to
overhead  and other  shared  costs  with  respect  to such  premises  or a lease
agreement);

     (c) the financial  statements and books and records of the Company prepared
after the date of creation of Contributor  reflect and will reflect the separate
existence of Contributor;

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     (d) the  Company  maintains  its  assets  separately  from  the  assets  of
Contributor  (including through the maintenance of a separate bank account), the
Company's funds and assets, and records relating thereto,  have not been and are
not  commingled  with  those  of  Contributor  and  the  separate  creditors  of
Contributor will be entitled to be satisfied out of  Contributor's  assets prior
to any value in Contributor becoming available to Contributor's equityholders or
the Company's creditors;

     (e) all business correspondence of the Company and other communications are
conducted in the Company's own name and on its own stationery;

     (f) Contributor does not act as an agent of the Company in any capacity and
the Company does not act as agent for  Contributor,  but instead presents itself
to  the  public  as a  corporation  separate  from  Contributor,  provided  that
Contributor is the Servicer under the Contribution and Servicing Agreement; and

     (g) the  Company  has caused  its  accounting  records  to be  clearly  and
unambiguously  marked to show that such  Contract  has been  transferred  by the
Company to the Issuer and  pledged by the Issuer to the  Trustee for the benefit
of the Noteholders.

     SECTION 3.13 Ordinary Course; No Insolvency.

     The  transactions  contemplated by this Agreement are being  consummated by
the  Company and the  Issuer,  respectively,  in  furtherance  of the  Company's
ordinary  business  purposes and constitute a practical and reasonable course of
action by the Company designed to improve the financial  position of the Company
with no  contemplation  of  insolvency  and with no intent to  hinder,  delay or
defraud  any of its  present  or future  creditors.  Neither  as a result of the
transactions  contemplated  by this Agreement,  nor immediately  before or after
such transactions,  will the Company be insolvent,  and the Company has adequate
capital  for  the  conduct  of its  business  and  the  payment  of  anticipated
obligations.

     SECTION 3.14 Assets and Liabilities.

     (a)  Both  immediately  before  and  after  the  assignment,  transfer  and
conveyance of Contracts  (including  the right to receive all payments due or to
become due thereunder)  and the other Company  Assets,  the present fair salable
value of the  Company's  assets  will be in  excess of the  amount  that will be
required to pay the  Company's  probable  liabilities  as they then exist and as
they become absolute and matured.

     (b) Both  immediately  before  and after the  assignment  and  transfer  of
Contracts and the other Company Assets,  the sum of the Company's assets will be
greater than the sum of the Company's  debts,  valuing the Company's assets at a
fair salable value.

     SECTION 3.15 Valid Sale; Fair Consideration.

     This Agreement effects a valid  assignment,  transfer and conveyance of the
Company's interest in the Company Assets,  enforceable  against creditors of the
Company.  The  consideration  received  by the  Transferor  upon the sale of the
Company Assets to the Issuer  constitutes  reasonably  equivalent value and fair
consideration for such Company Assets.

                                       8
<PAGE>

     SECTION 3.16 Ability to Pay Debts.

     Neither as a result of the transactions  contemplated by this Agreement nor
otherwise  does the Company  believe that it will incur debts beyond its ability
to pay or which would be  prohibited  by its charter  documents or by-laws.  The
Company's assets and cash flow enable it to meet its present  obligations in the
ordinary course of business as they become due.

     SECTION 3.17 Bulk Transfer Provisions.

     No transfer,  assignment  or  conveyance  of Contracts or the other Company
Assets by the  Company  to the Issuer  contemplated  by this  Agreement  will be
subject to the bulk  transfer or any similar  statutory  provisions in effect in
any applicable jurisdiction.

     SECTION 3.18 Transfer Taxes.

     No transfer,  assignment or conveyance of Company  Assets  contemplated  by
this  Agreement  is subject to or will  result in any tax,  fee or  governmental
charge  payable  by the  Company or the  Issuer to any  federal,  state or local
government  ("Transfer  Taxes").  In the event  that the  Company  or the Issuer
receives  actual  notice of any  Transfer  Taxes  arising  out of the  transfer,
assignment  and  conveyance  of any  Company  Assets,  on written  demand by the
Issuer,  or upon the Company  otherwise being given notice thereof,  the Company
shall pay,  and  otherwise  indemnify  and hold the Issuer,  the Trustee and the
holders of the Notes harmless,  on an after-tax basis,  from and against any and
all such  Transfer  Taxes (it being  understood  that neither the holders of the
Notes nor the Trustee shall have any obligation to pay such Transfer Taxes).

                                   ARTICLE IV
                             CONDITIONS TO PURCHASE

     SECTION 4.01 Representations and Warranties.

     The  obligation of the Issuer to purchase any Contracts on the Closing Date
and each Contribution Date is subject to receipt by the Issuer of the following:

     (a) an Officer's  Certificate from Company to the effect that, on or before
such  Contribution  Date  (after  giving  effect  to the sale of the  Subsequent
Contracts  on such date),  all  representations  and  warranties  of the Company
contained herein shall be true and correct in all respects, with respect to each
Contract  individually  and all Contracts in the aggregate,  with the same force
and effect as though such representations and warranties had been made on and as
of such date (unless such representations and warranties  specifically relate to
an earlier date); and

     (b) an Officer's Certificate from the Contributor to the effect that, on or
before such  Contribution  Date (after  giving  effect to the sale of Subsequent
Contracts on such date), all  representations  and warranties of the Contributor
contained in Section 2 of the Amended and Restated  Contribution  and  Servicing
Agreement  shall be true and  correct  in all  respects,  with  respect  to each
Contract individually and all Contracts in the aggregate as stated therein, with
the same force and effect as though such representations and warranties had been
made  on and  as of  such  date  (unless  such  representations  and  warranties
specifically relate to an earlier date).

                                       9
<PAGE>

                                   ARTICLE V
                            COVENANTS OF THE COMPANY

     So long as this  Agreement  remains in effect or the Company shall have any
obligations  hereunder,  Company  hereby  covenants  and agrees  with  Issuer as
follows:

     SECTION 5.01 Books and Records.

     The Company will clearly mark its books and records to reflect each sale to
the Issuer of all  Company  Assets and to show that the Issuer  owns the Company
Assets absolutely.

     SECTION 5.02 Preservation of Office.

     The Company will give the Issuer,  each  Noteholder  and the Trustee  prior
written  notice of any  relocation  of its principal  executive  office if, as a
result of such  relocation,  the applicable  provisions of the UCC would require
the filing of any amendment of any previously  filed  financing or  continuation
statement  or of any new  financing  statement.  If any  change  in  either  the
Company's name,  structure or the location of its  jurisdiction of organization,
principal place of business or chief executive  office occurs,  then the Company
shall  deliver  thirty  (30)  days'  prior  written  notice  of such  change  or
relocation  to the Issuer and the Trustee,  then,  no later than sixty (60) days
after  the  effective  date  of such  change  or  relocation,  shall  file  such
amendments or statements as may be required to preserve and protect the Issuer's
and the Trustee's  interest in the Contracts,  the Equipment and the other Trust
Property.  The Company  shall pay all filing fees or taxes payable in respect of
any UCC financing or  continuation  statements  required to be filed pursuant to
SECTION 1.03 of the  Contribution  and  Servicing  Agreement and not paid by the
Contributor.

     SECTION 5.03 Liens.

     The Company shall defend the right, title and interest of the Issuer in the
Company Assets against all claims of third parties claiming through or under the
Company  (excluding  claims  arising  from  actions of the  Contributor,  in its
capacity as Servicer  under the  Contribution  and Servicing  Agreement,  or any
agent of Contributor as such Servicer).

     SECTION 5.04 No Bankruptcy Petition Against the Issuer or Managing Member.

     The Company covenants and agrees it will not, prior to the date that is one
year and one day after the payment in full of all amounts owing  pursuant to the
Transaction   Documents,   institute  against,  or  join  any  other  Person  in
instituting  against,  any of the Issuer,  the  Managing  Member or itself,  any
bankruptcy, reorganization, receivership, arrangement, insolvency or liquidation
proceedings or other similar  proceedings  under any federal or state bankruptcy
or  similar  law.  This  Section  5.04 shall  survive  the  termination  of this
Agreement.

     SECTION 5.05 Protection of Right, Title and Interest.

     (a) The Company shall not change its name, identity, or corporate structure
in any manner that would,  could,  or might make any UCC financing  statement or
continuation  statement  filed by the  Contributor  in  accordance  with Section
1.01(d) of the Contribution and Servicing Agreement seriously  misleading within
the meaning of Section  9-506 of the UCC,  unless it shall have given the Issuer
at least

                                       10
<PAGE>

thirty  (30)  days'  prior  written  notice  thereof  and  shall  promptly  file
appropriate  amendments  to all  previously  filed UCC  financing  statements or
continuation statements.

     (b) If at any time the  Company  shall  propose  to sell,  grant a security
interest in or otherwise  transfer any interest in contracts to any  prospective
lender, or other transferee,  the Company shall give to such prospective lender,
or other  transferee,  computer  tapes,  records,  or print-outs  (including any
restored from archives)that, if they shall refer in any manner whatsoever to any
Contract, shall indicate clearly that such Contract have been sold to the Issuer
and pledged by the Issuer to the Trustee for the benefit of the Noteholders.

     (c) The Company shall not amend its  certificate of  incorporation  without
the prior written consent of the Rating Agencies.

                                   ARTICLE VI
                   REPRESENTATIONS AND COVENANTS OF THE ISSUER

     The Issuer hereby  represents and warrants to the Company as of the Closing
Date and as of each Contribution Date:

     SECTION 6.01 Nonconsolidation.

     The Issuer is operated in such a manner that it would not be  substantively
consolidated  with Contributor,  such that the separate  existence of the Issuer
and  Contributor  would  not be  disregarded  in the  event of a  bankruptcy  or
insolvency of the Issuer or Contributor, and in such regard, among other things:

     (a) the Issuer is not involved in the day to day management of Contributor;

     (b) the Issuer maintains separate company records and books of account from
Contributor  and  otherwise  observes  company  formalities  and has a  separate
business office from the Company;

     (c) the financial  statements and books and records of the Issuer  prepared
after the date of creation of Contributor  reflect and will reflect the separate
existence of Contributor;

     (d)  the  Issuer  maintains  its  assets  separately  from  the  assets  of
Contributor  (including through the maintenance of a separate bank account), the
Issuer's funds and assets,  and records relating thereto,  have not been and are
not  commingled  with  those  of  Contributor  and  the  separate  creditors  of
Contributor will be entitled to be satisfied out of  Contributor's  assets prior
to any value in Contributor becoming available to Contributor's equityholders or
the Issuer's creditors;

     (e) all business  correspondence of the Issuer and other communications are
conducted in the Issuer's own name and on its own stationery;

     (f) Contributor  does not act as an agent of the Issuer in any capacity and
the Issuer does not act as agent for Contributor, but instead presents itself to
the public as a limited  liability  company  separate from  Contributor  and the
Company;  provided that  Contributor is the Servicer under the  Contribution and
Servicing Agreement.

                                       11
<PAGE>

     (g) The Issuer shall not issue any  securities or cause any Person of which
it is the sole shareholder or economic owner to issue any securities (other than
the  Notes,  any Class F  Instruments  and any  securities  issued  prior to the
Closing Date) unless it shall have  received from the Rating  Agencies a written
confirmation  that the issuance of such  securities will not result in a Ratings
Effect with respect to any class of Notes.

     SECTION 6.02 No Bankruptcy Petition Against the Company.

     The Issuer  covenants and agrees it will not, prior to the date that is one
year and one day after the payment in full of all amounts owing  pursuant to the
Transaction   Documents,   institute  against,  or  join  any  other  Person  in
instituting  against,  any of the Company,  the Managing  Member or itself,  any
bankruptcy, reorganization, receivership, arrangement, insolvency or liquidation
proceedings or other similar  proceedings  under any federal or state bankruptcy
or  similar  law.  This  Section  6.01 shall  survive  the  termination  of this
Agreement.

                                  ARTICLE VII
                                  SUBSTITUTION

     SECTION 7.01 Substitution.

     In the event that the Contributor contributes,  transfers, sells or assigns
a  Substitute   Contract  to  the  Company  pursuant  to  Section  7.01  of  the
Contribution  and  Servicing  Agreement,  the  Company  hereby  agrees  to sell,
transfer,  convey and  assign  any such  Substitute  Contract  and the  security
interest in the related  Equipment to the Issuer (or, in the case of Fair Market
Value Leases,  grant a valid  security  interest in the related  Equipment).  In
addition,  the  Company  hereby  agrees  to take any  action to  facilitate  the
transfer of any Predecessor Contract,  including (i) delivery to the Trustee and
the Issuer of the Substitute  Contract Transfer Form,  substantially in the form
of Exhibit C to the  Contribution and Servicing  Agreement,  transferring to the
Issuer all  right,  title and  interest  of the  Company in and to the  Eligible
Contract  being  substituted  and a security  interest in the related  Equipment
subject  thereto,  and granting the Trustee a valid and first priority  security
interest in such Substitute  Contracts and the related  Equipment (in accordance
with the Transaction Documents),  (ii) delivery to the Trustee of amendments to,
or executed  originals of, the UCC financing  statements  referred to in Section
1.01(c) of the Contribution and Servicing  Agreement  reflecting the deletion of
the  Predecessor  Contract and the addition of the  Substitute  Contract,  (iii)
delivery to the Contributor or the Servicer,  as the case may be, by the Company
of an instrument, substantially in the form of Exhibit D of the Contribution and
Servicing  Agreement,  transferring to the  Contributor or the Servicer,  as the
case may be, without  representation  or warranty,  all of the Company's  right,
title and interest in and to the related Predecessor Contract,  (iv) delivery to
the Trustee of the original, manually executed counterpart of each Contract that
constitutes  "chattel paper" or an "instrument" under the UCC as appropriate for
the purposes of perfecting a security interest under the UCC and (v) delivery to
the Trustee of an amendment to the Contract Schedule, reflecting the deletion of
the  Predecessor  Contract and the  addition of the  Substitute  Contract.  Upon
delivery of each Substitute  Contract and the Substitute  Contract Transfer Form
therefor,  the definition of "Company Assets" will be  automatically  amended to
(1)  include  such  Substitute  Contract  and all  related  property  and rights
contained  in the  definition  of  Contributed  Property and (2) not include the
related  Predecessor  Contract and all related  property and rights contained in
the definition of Contributed Property.

                                       12
<PAGE>

     SECTION 7.02 Notice of Substitution.

     In the Monthly Servicer Report to be delivered on each Determination  Date,
the Company shall cause the Servicer to give written notice to the Trustee, each
Noteholder,  and the  Company of each  substitution  of  Contracts  pursuant  to
Section  7.01  hereof  during the  preceding  Collection  Period.  Such  Monthly
Servicer  Report or other  written  notice  shall (i) specify the amount of each
periodic Contract Payment under the Predecessor  Contract and the amount of each
periodic Contract Payment under each Eligible Contract being  substituted,  (ii)
specify the residual values of the Equipment subject to the Predecessor Contract
and the Equipment  subject to the Eligible  Contract  being  substituted,  (iii)
specify  the  Discounted  Contract  Balance of the  Predecessor  Contracts,  the
Discounted Contract Balance of the Substitute  Contracts,  and any amounts to be
deposited in the Collection Account in connection with such Substitute Contracts
and (iv) with respect to a  substitution  pursuant to Section  7.01  hereof,  be
accompanied by an Officer's Certificate,  substantially in the form of Exhibit F
of the  Contribution and Servicing  Agreement,  certifying as to compliance with
the provisions of Section 7.01 hereof.

     SECTION 7.03 Contributor's and Company's Subsequent Obligations.

     Upon any  substitution  of Contracts in accordance  with the  provisions of
this  Section  7,  the  Company's  obligations  hereunder  with  respect  to the
Predecessor  Contract shall cease but the Contributor and the Company shall each
thereafter  have the same  obligations  with respect to the Substitute  Contract
substituted as it has with respect to all other  Contracts  subject to the terms
hereof.

     SECTION 7.04 Usage of Predecessor Contracts in Calculation.

     After substitution  therefor in accordance with the terms and conditions of
the  Transaction  Documents,  no  Predecessor  Contract  or any  other  Contract
repurchased  or substituted  for in accordance  with the terms and conditions of
the  Transaction  Documents,  including the subsequent  default,  delinquency or
breach thereof, shall be included in any calculation or determination made under
the Transaction  Documents,  including,  without limitation,  the calculation of
either any Amortization Event or Indenture Event of Default.

                                  ARTICLE VIII
                                  MISCELLANEOUS

     SECTION 8.01 Amendment.

     (a) This  Agreement  may be amended from time to time by the Issuer and the
Company with the consent of the Rating  Agencies (but without the consent of the
Trustee  or any of the  Noteholders),  to cure  any  ambiguity,  to  correct  or
supplement  any  provision  herein  that  may be  inconsistent  with  any  other
provisions  herein,  or to add or amend any other  provisions  with  respect  to
matters or questions arising under this Agreement;  provided, however, that such
amendment  shall not adversely  affect in any material  respect the interests of
either the Trustee or the Noteholders,  unless so consented to by each entity so
affected.

     (b) This  Agreement may also be amended from time to time by the Issuer and
the Company,  with the consent of the Rating Agencies and the Majority of Voting
Rights, for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement;  provided, however, that no
such  amendment  shall (a)  increase  or reduce in any  manner the

                                       13
<PAGE>

amount of, or  accelerate  or delay the timing of,  collections  of  payments on
Contracts  or  payments  that are  required  to be made on any Note  without the
consent of the Holder of such Note, (b) reduce the aforesaid percentage required
to consent to any such amendment or (c) adversely affect in any material respect
the interests of the Trustee or any Noteholder  without,  in each instance,  the
consent of each entity so affected.

     (c) Approval of the  particular  form of any proposed  amendment or consent
shall not be necessary for the consent of the Noteholders under Section 8.01(b),
but it shall be sufficient if such consent shall approve the substance  thereof.
The manner of obtaining such consents and of evidencing the authorization of the
execution   thereof  by  Noteholders   shall  be  subject  to  such   reasonable
requirements as the Trustee may prescribe.

     (d) Prior to the execution of any such amendment to this Agreement proposed
in  accordance  with Section  8.01(b),  the Issuer  shall  deliver a copy of the
proposed amendment to the Company, the Rating Agencies and the Trustee.

     (e) In executing any amendment to this  Agreement  pursuant to this Section
8.01,  the Trustee shall be entitled to receive (i) an Officer's  Certificate of
the  Company  stating  that all  conditions  precedent  for  entering  into such
amendment as set forth in this  Agreement  have been met, and (ii) an Opinion of
Counsel  stating that the execution of such amendment is authorized or permitted
by this Agreement.

     SECTION 8.02 Effect of Invalidity of Provisions.

     In  case  any one or more of the  provisions  contained  in this  Agreement
should be or become  invalid,  illegal  or  unenforceable  in any  respect,  the
validity,  legality,  and enforceability of the remaining  provisions  contained
herein shall in no way be affected, prejudiced or disturbed thereby.

     SECTION 8.03 Notices.

     All  demands,  notices and  communications  hereunder  shall be in writing,
personally  delivered or mailed by certified  mail-return receipt requested,  or
delivered by courier,  or delivered  by facsimile to a facsimile  and  telephone
number  provided by the relevant Person in writing,  with  subsequent  telephone
confirmation of the receipt thereof, and shall be deemed to have been duly given
upon receipt (a) in the case of the Trustee, at the following address:  180 East
Fifth  Street,  St.  Paul,  Minnesota  55101,  Attention:   Structured  Finance,
Facsimile:  (651)  244-0089,  (b) in the case of the Servicer,  at the following
address: 2500 York Road, Jamison, Pennsylvania 18929, Attention:  Securitization
Manager,  Facsimile:  (215) 488-5416,  (c) in the case of the Issuer,  2500 York
Road, Jamison, Pennsylvania 18929, Attn: Securitization Manager, Facsimile (215)
488-5416,  with a copy to the  Servicer  at the  address set forth in clause (b)
above, (d) in the case of the Company at the following address:  2500 York Road,
Jamison, Pennsylvania 18929, Attention: Securitization Manager, Facsimile: (215)
488-5416,  (e) in the case of the Rating Agencies,  to the following  addresses:
Fitch,  Inc., 55 East Monroe Street,  Chicago,  Illinois 60603,  Attention:  Mr.
Joseph Tuczak,  Facsimile:  (312) 368-2069; and Moody's Investors Service, Inc.,
99 Church Street, 4th Fl., New York, New York 10007,  Attention:  ABS Monitoring
Department,  Facsimile:  (212) 553-3856,  or at other such respective address as
shall be designated by such party in a written notice to the other parties.  Any
notice  required or  permitted  to be mailed to a  Noteholder  shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in the
Note Register. Any notice so mailed within the time prescribed in this

                                       14
<PAGE>

Agreement shall be conclusively presumed to have been duly given, whether or not
the Noteholder receives such notice.

     SECTION 8.04 Entire Agreement.

     This  Agreement,   including  the  Exhibits  hereto,  contains  the  entire
agreement of the parties hereto with respect to the subject  matter hereof,  and
supersedes all prior and  contemporaneous  agreements between them, whether oral
or written, of any nature whatsoever with respect to the subject matter hereof.

     SECTION 8.05 Survival.

     All  indemnities and  undertakings of the Company and the Issuer  hereunder
shall survive the termination of this Agreement.

     SECTION 8.06 Consent to Service.

     Each party irrevocably  consents to the service of process by registered or
certified mail, postage prepaid,  to it at its address provided on the signature
page hereto.

     SECTION 8.07 Jurisdiction Not Exclusive.

     Nothing herein will be deemed to preclude either party hereto from bringing
an action or proceeding in respect of this Agreement in any  jurisdiction  other
than as set forth in Section 8.12 hereof.

     SECTION 8.08 Construction.

     The  headings  in this  Agreement  are  for  convenience  only  and are not
intended to influence its  construction.  References to Sections,  Schedules and
Exhibits in this  Agreement are to the Sections of and Schedules and Exhibits to
this Agreement. Any Schedules and Exhibits are hereby incorporated into and form
a part of this Agreement.  In this Agreement,  the singular includes the plural,
the plural the singular, the words "and" and "or" are used in the conjunctive or
disjunctive as the sense and  circumstances may require and the word "including"
means  "including,  but  not  limited  to."  Unless  otherwise  stated  in  this
Agreement,  in the  computation  of a period of time from a specified  date to a
later  specified  date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding".

     SECTION 8.09 Further Assurances.

     In  addition  to its  agreements  set forth  herein,  the  Company  (at the
Issuer's  expense)  agrees to do such further acts and things and to execute and
deliver such additional assignments,  agreements,  powers and instruments as are
reasonably  requested  by the Issuer to carry into  effect the  purposes of this
Agreement  and  the  transactions   contemplated  herein,   including,   without
limitation, such documents as are necessary to protect the Trustee's interest in
the  Contracts,  the security  interest in the  Equipment  and the other Company
Assets in accordance with the Transaction Documents.

                                       15
<PAGE>

     SECTION 8.10 Third Party Beneficiaries.

     Each Noteholder and the Trustee shall be an express third party beneficiary
of this Agreement.  The obligations of the Company  hereunder may be assigned by
the Issuer to the Trustee under the Indenture. The Company acknowledges that the
Issuer  intends,  pursuant  to the  Indenture,  to pledge  the  Company  Assets,
together with its  respective  rights under this Agreement to the Trustee on the
Closing Date, each Contribution Date and each Substitution Date, with respect to
each  Contract  and each  Substitute  Contract.  The  Company  acknowledges  and
consents to such  conveyance and waives any further notice thereof and covenants
and agrees that the  representations  and warranties of the Company contained in
this Agreement and the rights of the Issuer  hereunder,  are intended to benefit
the Trustee,  and each  Securityholder.  In furtherance  of the  foregoing,  the
Company covenants and agrees to perform its duties and obligations hereunder, in
accordance  with the terms  hereof and for the  benefit of the  Trustee  and the
Noteholder and that, notwithstanding anything to the contrary in this Agreement,
the Company shall be directly liable to the Trustee (notwithstanding any failure
by the Servicer or the Issuer to perform its duties and  obligations  hereunder,
or under the Indenture or Contribution  and Servicing  Agreement),  and that the
Trustee  may  enforce  the  duties and  obligations  of the  Company  under this
Agreement against the Company for the benefit of the Securityholder.

     SECTION 8.11 GOVERNING LAW.

     THIS  AGREEMENT  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS RULES REGARDING CONFLICT OF
LAWS.

     SECTION 8.12 CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO VENUE.

     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH, THE
LAWS OF THE STATE OF NEW YORK,  EACH OF THE ISSUER AND THE COMPANY HEREBY AGREED
TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED WITH THE STATE OF
NEW YORK. EACH OF THE PARTIES HERETO  IRREVOCABLY  SUBMITS TO THE  NON-EXCLUSIVE
JURISDICTION  OF THE  COURTS  OF THE  STATE OF NEW YORK  AND THE  UNITED  STATES
DISTRICT  COURT LOCATED IN THE BOROUGH OF MANHATTAN,  CITY OF NEW YORK, AND EACH
PARTY IRREVOCABLY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND
ANY  OBJECTION  TO  VENUE  OF  ANY  ACTION  INSTITUTED  HEREUNDER  IN ANY OF THE
AFOREMENTIONED  COURTS AND CONSENT TO THE  GRANTING  OF SUCH LEGAL OR  EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.

     SECTION 8.13 WAIVER OF JURY TRIAL.

     TO THE  EXTENT  PERMITTED  BY  APPLICABLE  LAW,  EACH OF THE ISSUER AND THE
COMPANY  WAIVES ANY RIGHT TO HAVE A JURY  PARTICIPATE  IN RESOLVING ANY DISPUTE,
WHETHER  SOUNDING IN CONTRACT,  TORT,  OR OTHERWISE  BETWEEN THE PARTIES  HERETO
ARISING OUT OF,  CONNECTED WITH,  RELATED TO, OR INCIDENTAL TO THE  RELATIONSHIP
BETWEEN  ANY OF THEM IN  CONNECTION  WITH  THIS  AGREEMENT  OR THE  TRANSACTIONS
CONTEMPLATED  HEREBY.  INSTEAD,  ANY SUCH  DISPUTE  RESOLVED  IN  COURT  WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

                                       16
<PAGE>

     SECTION 8.14 Headings and Cross-References.

     The various  headings in this Agreement are included for  convenience  only
and shall not affect the  meaning or  interpretation  of any  provision  of this
Agreement.  References in this Agreement to Section names or numbers are to such
Sections of this Agreement.

     SECTION 8.15 Costs and Expenses.

     The Company will pay all reasonable expenses incident to the performance of
its  obligations  under this  Agreement  and under the Indenture and the Company
agrees to pay all  reasonable  out-of-pocket  costs and  expenses of the Issuer,
including fees and expenses of counsel,  in connection  with the  enforcement of
any obligation of the Company hereunder.

     SECTION 8.16 Confidential Information.

     The Issuer  agrees and  covenants  that it will neither use nor disclose to
any person the names and  addresses of the Obligors,  except in connection  with
the enforcement of the Issuer's rights hereunder, under the Contracts, under the
applicable Transaction Documents or as required by law.

     SECTION 8.17 Statutory References.

     References  in this  Agreement to any section of the UCC shall mean, on and
after  the  effective  date  of  adoption  of any  revision  to  the  UCC in the
applicable jurisdiction, such revised or successor section thereto.

     SECTION 8.18 Execution in Counterparts.

     This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original,  and all of which shall constitute one and the same
instrument.

     SECTION 8.19 Power of Attorney.  The Company  hereby  grants to each of the
Issuer  and the  Trustee  the  power  as its  attorney-in-fact  (i) to file  UCC
financing statements in the appropriate offices evidencing the conveyance of the
Contracts and other Company  Assets to the Issuer and (ii) in the event an event
of default exists under any Transaction  Document,  to do any and all other acts
as may be  necessary  or  appropriate  to effect  the  transaction  contemplated
herein.  The Company will execute any document or instrument deemed necessary by
the Issuer or the Trustee to effect or to evidence  this power of attorney.  All
costs associated with such filings or instructions shall be paid by the Company.

                            [Signature page follows]

                                       17
<PAGE>

                                          Subsequent Contract Transfer Agreement

     IN WITNESS  WHEREOF,  Issuer and Company have duly executed this Subsequent
Contract Transfer Agreement as of the date and year first above written.

                                   DVI RECEIVABLES CORP. XVI

                                   By________________________________________
                                      Name:   Matthew E. Goldenberg
                                      Title:  Assistant Treasurer

                                   Address:   2500 York Road
                                              Jamison, Pennsylvania 18929
                                   Attention: Securitization Manager

                                   Telephone: (215) 488-5042
                                   Facsimile: (215) 488-5416

                                   DVI RECEIVABLES XVI, L.L.C.

                                   By:        DVI Receivables Corp. VIII,
                                              its managing member

                                   By:_______________________________________
                                      Name:   Matthew E. Goldenberg
                                      Title:  Assistant Treasurer

                                   Address:   2500 York Road
                                              Jamison, Pennsylvania 18929
                                   Attention: Securitization Manager

                                   Telephone: (215) 488-5042
                                   Facsimile: (215) 488-5416

<PAGE>

                                    EXHIBIT A

                        SUBSEQUENT CONTRACT TRANSFER FORM

                                                                          [DATE]

     DVI Receivables  Corp. XVI, (the "Company") and DVI Receivables XVI, L.L.C.
(the "Issuer"), pursuant to the Subsequent Contract Transfer Agreement, dated as
of  November 1, 2001 (the  "SCTA"),  hereby  confirm  their  understanding  with
respect to the sale,  transfer,  assignment and conveyance by the Company to the
Issuer  of  those   Contracts   listed  on  Schedule  1  attached   hereto  (the
"Contracts"),  together with a first priority  perfected  (except with regard to
Equipment  that had an Original  Equipment  Cost of less than $25,000)  security
interest in all of the Company's right, title and interest in and to the related
Equipment (except for (i) such item of Equipment that had an Original  Equipment
Cost of less  than  $25,000  and (ii) any  ownership  interest  in such  item of
Equipment,  with  respect to which the  Company  instead  grants to the Issuer a
first priority perfected security interest therein),  and other related property
described herein.

     Conveyance  of Company  Assets.  On the date set forth  above,  the Company
hereby transfers to the Issuer all of the Company's  rights,  title and interest
in, to, and under the Contracts listed on Schedule 1 hereto  including,  without
limitation,  its  interests  in the  proceeds  of such  Contracts,  the right to
receive all amounts due or to become due thereunder after  _______________  (the
"Cut-off Date") together with all of the other Company Assets related thereto.

     The Company hereby confirms that:

     (1) On or prior to the  date  hereof  (the  "Subsequent  Contract  Transfer
Date"),  the  Contributor  shall have  deposited in the  Collection  Account all
collections  in respect of the  Contracts  that were due on or after the Cut-off
Date;

     (2) Each  representation and warranty of the Company under the Contribution
and Servicing  Agreement and the SCTA is true and correct as of the date hereof,
the  Contributor was not insolvent nor will it be made insolvent by the transfer
contemplated herein nor is it aware of any pending insolvency and the Company is
not in breach of any covenant under the SCTA;

     (3) Each Contract sold, transferred,  assigned and conveyed pursuant hereto
is an Eligible Contract;

     (4) On or prior to the Subsequent Contract Transfer Date, the Company shall
have delivered to the Trustee the sole original,  manually executed  counterpart
of each Contract;

     (5) The sum of the Discounted  Contract  Balances as of the Cut-off Date of
the Contracts  listed on Schedule 1 attached  hereto is $__________  (calculated
using a Discount Rate of __________%);

     (6) Reserved;

     (7) When the Contracts are added to the Trust Property, all representations
and  warranties  of the  Company in the SCTA will be true and  correct as of the
date set forth in the heading of this

                                      A-1
<PAGE>

Subsequent Contract Transfer Form unless any breach of such  representations and
warranties  resulting from the inclusion of such Contract shall have been waived
in advance by Noteholders evidencing more than 50% of the Voting Rights; and

     (8) The  Contributor  has  delivered to the Trustee (i)  amendments  to, or
executed  originals  of, the UCC  financing  statements  referred  to in Section
1.01(d) of the  Contribution  and Servicing  Agreement  (the  "Contribution  and
Servicing  Agreement"),  dated as of  November  1, 2001  between  DVI  Financial
Services Inc. and the Company,  reflecting the addition of the  Contract(s)  and
(ii) an amendment to the Contract Schedule.

     All terms and  conditions  of the SCTA with  respect to the Company and the
Contracts  have  been  complied  with and are  hereby  ratified,  confirmed  and
incorporated herein; provided that, in the event of any conflict, the provisions
of this  Subsequent  Contract  Transfer Form shall control over the  conflicting
provisions of the Contribution and Servicing Agreement.

                            [signature page follows]

                                      A-2
<PAGE>

     Terms capitalized herein and not defined herein shall have their respective
meanings as set forth in the SCTA and if not defined therein, then as such terms
are defined in Appendix I to the Contribution and Servicing Agreement.

                                          DVI RECEIVABLES CORP. XVI

                                               By:
                                               Name:
                                               Title:

                                          DVI RECEIVABLES XVI, L.L.C.

                                               By:  DVI RECEIVABLES CORP. VIII,
                                                    its managing member
                                               By:
                                               Name:
                                               Title:

                                      A-3
<PAGE>

                                    EXHIBIT B

                  FORM OF RE-ASSIGNMENT OF ISSUER'S CERTIFICATE
                   PURSUANT TO SECTION 1.04(c) or 5.01 OF THE
                     SUBSEQUENT CONTRACT TRANSFER AGREEMENT

     DVI  Receivables  XVI,  L.L.C.  (the  "Issuer")  pursuant to the Subsequent
Contract Transfer  Agreement,  dated as of November 1, 2001,  between the Issuer
and DVI  Receivables  Corp.  XVI (the  "Company")  does hereby  sell,  transfer,
assign,   deliver   and   otherwise   convey  to  Company,   without   recourse,
representation or warranty, all of the Issuer's right, title and interest in and
to all of the Predecessor Contracts listed on Schedule A hereto and all security
and documents relating thereto.

     IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  this  ____  day of
__________________.

                                             DVI RECEIVABLES XVI, L.L.C.

                                             By:  DVI Receivables Corp. VIII,
                                                  its managing member

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

                                      B-1Exhibit 4.4

                  LIMITED LIABILITY COMPANY OPERATING AGREEMENT

                                       OF

                           DVI RECEIVABLES XVI, L.L.C.

                          Dated as of November 1, 2001

<PAGE>

                  Limited Liability Company Operating Agreement

                                       of

                           DVI Receivables XVI, L.L.C.

                                TABLE OF CONTENTS

                                    ARTICLE I
                                   DEFINITIONS

1.1   Act.....................................................................1
1.2   Affiliate...............................................................1
1.3   Agreement...............................................................1
1.4   Articles................................................................1
1.5   Assignee................................................................1
1.6   Capital Contribution....................................................1
1.7   Closing.................................................................1
1.8   Company.................................................................1
1.9   Contribution and Servicing Agreement....................................2
1.10  Disposition (Dispose)...................................................2
1.11  Dissolution Event.......................................................2
1.12  Distribution............................................................2
1.13  DVI.....................................................................2
1.14  Effective Date..........................................................2
1.15  Event of Bankruptcy.....................................................2
1.16  Fiscal Year.............................................................2
1.17  Indenture...............................................................2
1.18  Independent Director....................................................2
1.19  Management Right........................................................3
1.20  Managing Member.........................................................3
1.21  Member..................................................................3
1.22  Membership Interest.....................................................3
1.23  Notes...................................................................3
1.24  Officer.................................................................3
1.25  Organization............................................................3
1.26  Person..................................................................3
1.27  Principal Office........................................................3
1.28  Proceeding..............................................................3
1.29  Property................................................................3
1.30  Related Company.........................................................3
1.32  Tax Characterization and Additional Tax Terms...........................4
1.33  Term....................................................................4
1.34  Unit....................................................................4

                                      -i-

<PAGE>

                                ARTICLE II
                                 FORMATION

2.1   Organization............................................................4
2.2   Agreement...............................................................4
2.3   Name....................................................................5
2.4   Term....................................................................5
2.5   Registered Agent and Office.............................................5
2.6   Principal Office........................................................5

                                ARTICLE III
                    LIMITED PURPOSE; NATURE OF BUSINESS

3.1   Limited Business Purpose................................................6

                                ARTICLE IV
                         LIMITATIONS ON ACTIVITIES

4.1   Limitations on Activities...............................................7

                                 ARTICLE V
                          ACCOUNTING AND RECORDS

5.1   Records to be Maintained................................................9
5.2   Reports.................................................................9
5.3   Tax Returns and Reports.................................................9
5.4   Records to be Kept Separate.............................................9

                                ARTICLE VI
                        NAME AND ADDRESS OF MEMBER

                                ARTICLE VII
                        RIGHTS AND DUTIES OF MEMBER

7.1   Liability of Member....................................................10
7.2   Representations and Warranties.........................................10
7.3   Conflicts of Interest..................................................10

                               ARTICLE VIII
                                MANAGEMENT

8.1   Management of the Company..............................................11
8.2   Authority of Managing Member to Bind the Company.......................11
8.3   Actions of the Managing Member.........................................12
8.4   Compensation of Managing Member........................................12
8.5   Managing Member's Standard of Care.....................................12

                                      -ii-

<PAGE>

8.6   Resignation............................................................13
8.7   Payment of Liabilities.................................................13

                                   ARTICLE IX
                                  CONTRIBUTIONS

9.1   Membership Interest....................................................13
9.2   Contributions..........................................................13
9.3   Withdrawal.............................................................13
9.4   Interest...............................................................13
9.5   No Personal Liability..................................................13

                                    ARTICLE X
                          ALLOCATIONS AND DISTRIBUTIONS

10.1  Taxable Income Allocations.............................................13
10.2  Distributions..........................................................14

                                   ARTICLE XI
                         TRANSFER OF MEMBERSHIP INTEREST

11.1  Compliance with Securities Laws........................................14
11.2  Transfer of Economic Interest..........................................14
11.3  Transfer of Membership Interest........................................14
11.4  Status of Transferee...................................................15
11.5  Dissolution or Bankruptcy of the Member................................15

                                   ARTICLE XII
                           DISSOLUTION AND WINDING UP

12.1  Dissolution............................................................15
12.2  Effect of Dissolution..................................................16
12.3  Distribution of Assets on Dissolution..................................16
12.4  Winding Up and Filing Articles of Dissolution..........................17

                                  ARTICLE XIII
                                  MISCELLANEOUS

13.1  Notices................................................................17
13.2  Headings...............................................................17
13.3  Entire Agreement.......................................................17
13.4  Binding Agreement......................................................17
13.5  Saving Clause..........................................................17
13.6  Counterparts...........................................................18
13.7  Governing Law..........................................................18
13.8  No Membership Intended for Nontax Purposes.............................18
13.9  No Rights of Creditors and Third Parties under Agreement...............18
13.10 General Interpretive Principles........................................18

                                     -iii-

<PAGE>

                  Limited Liability Company Operating Agreement

                                       of

                           DVI Receivables XVI, L.L.C.

     This Limited Liability Company Operating  Agreement of DVI Receivables XVI,
L.L.C. (the "Company"),  a Delaware limited liability company organized pursuant
to the  Delaware  Limited  Liability  Company  Act, is entered into and shall be
effective as of November 1, 2001, by and between the Company and DVI Receivables
Corp. VIII, as the sole member of the Company.

                                    ARTICLE I
                                   DEFINITIONS

     Capitalized  terms not defined  herein  shall have the meaning set forth in
the Indenture  (as defined  below).  For purposes of this  Agreement (as defined
below),  unless the context  clearly  indicates  otherwise,  the following terms
shall have the following meanings:

     1.1 Act.  The Delaware  Limited  Liability  Company Act and all  amendments
thereto.

     1.2   Affiliate.   Any  entity   other  than  the  Member  (i)  which  owns
beneficially,  directly or indirectly,  10% or more of the outstanding shares of
common  stock  of the  Managing  Member;  or  (ii) of  which  10% or more of the
outstanding  shares  of its  common  stock is owned  beneficially,  directly  or
indirectly,  by any entity  described  in clause (i)  above,  or (iii)  which is
"controlled",  as defined in Section 230.405 of the Rules and Regulations of the
Securities and Exchange  Commission,  17 C.F.R.  Section  230.405,  by an entity
described in clause (i) above.

     1.3 Agreement. This Limited Liability Company Operating Agreement including
all amendments adopted in accordance with this Agreement and the Act.

     1.4 Articles.  The Articles of Organization of the Company, as amended from
time to time, and filed with the Department of State of the State of Delaware.

     1.5 Assignee. A transferee of the Membership Interest.

     1.6 Capital Contribution.  Any contribution of rights, Property or services
made by or on behalf of the Member or its Assignee.

     1.7 Closing.  The Closing as defined in that certain  Indenture,  dated the
date  hereof,  by and between the  Company,  DVI and the  Purchaser  (as defined
therein).

     1.8 Company.  DVI Receivables  XVI,  L.L.C.,  a limited  liability  company
formed under the laws of Delaware, and any successor limited liability company.

     1.9 Contribution  and Servicing  Agreement.  That certain  Contribution and
Servicing  Agreement (as amended,  supplemented,  restated or otherwise modified
from time to time), dated of

<PAGE>

even date  herewith,  by and between the  Company  and DVI, as  contributor  and
servicer.

     1.10  Disposition  (Dispose).  Any sale,  assignment,  exchange,  mortgage,
pledge,  grant,  hypothecation,  or other  transfer,  absolute or as security or
encumbrance (including dispositions by operation of law).

     1.11  Dissolution  Event. An event,  the occurrence of which will result in
the dissolution of the Company under Article XIV.

     1.12  Distribution.  A transfer of Property to the Member on account of its
Membership Interest as described in Article X.

     1.13 DVI. DVI Financial Services Inc., a Delaware corporation.

     1.14 Effective Date. November 1, 2001.

     1.15 Event of  Bankruptcy.  As to any Person means the filing of a petition
for relief as to such Person as debtor or bankrupt under the  Bankruptcy  Reform
Act of 1978, as amended,  or other similar  provision of law of any jurisdiction
(except if such  petition is  contested  by such  Person and has been  dismissed
within 90 days);  insolvency  of such  Person as finally  determined  by a court
proceeding; filing by such Person of a petition or application to accomplish the
same or for the  appointment  of a receiver  or a trustee  for such  Person or a
substantial part of its assets; commencement of any proceedings relating to such
Person  as a debtor  under any other  reorganization,  arrangement,  insolvency,
adjustment  of debt  or  liquidation  law of any  jurisdiction,  whether  now in
existence or hereinafter  enacted, if such Person indicates its approval of such
proceeding,  consents  thereto or  acquiesces  therein,  or such  proceeding  is
contested by such Person and has not been finally dismissed within 90 days.

     1.16 Fiscal  Year.  The year  commencing  on the opening of business on the
first day of July of each calendar year and terminating on the close of business
on the last day of June of the immediately succeeding calendar year thereto.

     1.17 Indenture. That certain Indenture (as amended, supplemented,  restated
or otherwise  modified from time to time),  dated of even date herewith,  by and
between the Company and U.S. Bank Trust National Association, as Trustee.

     1.18 Independent Director. An individual who is not, at the time of initial
appointment,  nor has been, a director of any  Affiliate  of the Member  (except
that an individual who serves in similar  capacities for other "special  purpose
corporations"  formed by DVI or its affiliates is not thereby  disqualified from
being an  Independent  Director)  or is an officer of,  employed by, a creditor,
supplier or contractor of, or holding any beneficial or economic interest in the
Member  or any  Affiliate  of the  Member,  or is a family  member of any of the
foregoing.

     1.19  Management  Right.  The  right of the  Member to  participate  in the
management  of the Company,  to vote on any matter,  and to grant or to withhold
consent or approval of actions of the Company.

     1.20 Managing Member. The Member, as set forth in Section 8.1.

                                       2
<PAGE>

     1.21 Member. DVI Receivables Corp. VIII, or any Assignee thereof.

     1.22  Membership  Interest.  The  rights  of the  Member  to  Distributions
(liquidating  or  otherwise)  and  allocations  of the profits,  losses,  gains,
deductions,  and credits of the  Company,  and, to the extent  permitted by this
Agreement, to possess and exercise Management Rights.

     1.23  Notes.  The  Notes,  as set  forth in the  Indenture  and any Class F
Instruments.

     1.24 Officer. An individual appointed as an officer of the Company pursuant
to Section 8.1(c).

     1.25 Organization.  A Person other than a natural person, including without
limitation  corporations (both non-profit and other corporations),  partnerships
(both  limited  and  general),  joint  ventures,  limited  liability  companies,
business trusts and unincorporated  associations,  but the term does not include
joint tenancies and tenancies by the entirety.

     1.26 Person. An individual, trust, estate, or any Organization permitted to
be a member  of a  limited  liability  company  under  the laws of the  State of
Delaware.

     1.27  Principal  Office.  The Principal  Office of the Company set forth in
Section 2.6.

     1.28  Proceeding.   Any  administrative,   judicial,   or  other  adversary
proceeding, including without limitation litigation, arbitration, administrative
adjudication, mediation, and appeal or review of any of the foregoing.

     1.29  Property.  Any property,  real or personal,  tangible or  intangible,
including  money,  and any legal or  equitable  interest in such  property,  but
excluding services and promises to perform services in the future.

     1.30  Related  Company.  The Member of the Company or any entity other than
the Company now or  hereafter  controlled  directly or  indirectly  by, or under
direct or indirect common control with, the Member of the Company.

     1.31 SCTA. That certain Subsequent  Contract Transfer  Agreement,  dated of
even date herewith, by and between the Company and DVI Receivables Corp XVI.

     1.32 Tax  Characterization and Additional Tax Terms. For federal income tax
purposes,  and to the extent applicable for state and local income and franchise
tax  purposes,  it is  intended  that the  Company be  disregarded  as an entity
separate from the Member; provided,  however, if it is determined that there are
two or more  members of the  Company  then it is  intended  that the  Company be
treated as a partnership  for such purposes,  and the Managing  Member shall (i)
file any  information  returns and reports  and make any  elections  or take any
other similar action  required for the Company to be classified as a partnership
for such  purposes  and  (ii)  act as the tax  matters  partner  of the  Company
pursuant to Section 6231(a)(7) of the Code and applicable Tax Regulations.

          (a) Code shall mean the Internal Revenue Code of 1986.

                                       3
<PAGE>

          (b) Tax  Regulations  shall mean the  federal  income tax  regulations
     promulgated by the United States Treasury Department under the Code as such
     Tax Regulations may be amended from time to time. All references  herein to
     a specific section of the Tax Regulations  shall be deemed also to refer to
     any corresponding provision of succeeding Tax Regulations.

     1.33 Term. The term of this Agreement, as set forth in Section 2.4 hereof.

     1.34 Unit.  One of the one hundred (100) units of Membership  Interest that
are  authorized  to be issued  under  this  Agreement.  Each unit  represents  a
Membership  Interest  of one  percent  (1%).  All  Units  issued  pursuant  this
Agreement are issued to the Member, as sole member of the Company.

                                   ARTICLE II
                                    FORMATION

     2.1  Organization.  The Member  hereby  organizes the Company as a Delaware
limited liability company pursuant to the provisions of the Act.

     2.2 Agreement.  (a) For and in consideration of the mutual covenants herein
contained  and for  other  good and  valuable  consideration,  the  receipt  and
sufficiency of which is hereby acknowledged, (i) the Company and DVI Receivables
Corp. VIII hereby agree to the terms and conditions of this Agreement, as it may
from time to time be  amended  and (ii) in  exchange  for the  agreement  of DVI
Receivables  Corp.  VIII to act as Managing  Member of the Company,  the Company
hereby issues, assigns, transfers and conveys all of its Membership Interests to
DVI Receivables  Corp.  VIII, and, prior to and at all times after the Effective
Date, the term "Member" shall be deemed to refer to DVI Receivables  Corp. VIII,
its successors and assigns.  It is the express  intention of the Company and DVI
Receivables Corp. VIII that this Agreement shall be the sole source of agreement
of the  parties,  and,  except  to the  extent  a  provision  of this  Agreement
expressly  incorporates federal income tax rules by reference to sections of the
Code or Tax Regulations or is expressly prohibited or ineffective under the Act,
this Agreement shall govern, even when inconsistent with, or different than, the
provisions of the Act or any other law or rule,  and to the extent any provision
of this  Agreement is prohibited or  ineffective  under the Act, this  Agreement
shall be deemed to be amended  to the least  extent  necessary  in order to make
this  Agreement  effective  under the Act, in the event the Act is  subsequently
amended or  interpreted  in such a way to make any  provision of this  Agreement
that was formerly invalid valid,  such provision shall be considered to be valid
from the effective date of such interpretation or amendment.

     (b) The Company has been formed by DVI Receivables Corp. VIII to serve as a
special purpose entity in connection with  securitization  of certain  financial
assets of DVI  Receivables  Corp.  VIII or its  Affiliates.  To  facilitate  the
optimal   securitization  of  the  Contributed   Property  (as  defined  in  the
Contribution and Servicing Agreement),  DVI has formed DVI Receivables Corp. XVI
to receive from DVI all Contributed  Property  pursuant to the  Contribution and
Servicing  Agreement,  and to  transfer  all such  Contributed  Property  to the
Company pursuant to the Subsequent  Contract Transfer  Agreement.  To facilitate
the  optimal  securitization  of  such  assets,  pursuant  to the  Funding  Sale
Agreement,  the Company will also receive the Sold Company Assets (as defined in
the Funding Sale  Agreement)  and,  pursuant to the DVI XV Sale  Agreement,  the
Company  will  receive  the Sold Trust  Property  (as defined in the DVI XV Sale
Agreement).

                                       4
<PAGE>

     2.3 Name. The name of the Company is DVI Receivables XVI,  L.L.C.,  and all
business of the Company shall be conducted under that name.

     2.4 Term.  The  Company  shall be  dissolved  and its  affairs  wound up in
accordance  with the Act and this Agreement one year and one day after the Notes
have been paid in full  pursuant  to the  Indenture,  unless  the Term  shall be
extended by amendment to this Agreement and the Articles.

     2.5 Registered  Agent and Office.  The registered  agent for the service of
process and the registered office shall be that Person and location reflected in
the Articles.  The Member may, from time to time, change the registered agent or
office through  appropriate  filings with the Secretary of State of the State of
Delaware. In the event the registered agent ceases to act as such for any reason
or the  registered  office  shall  change,  the Managing  Member shall  promptly
designate a replacement  registered  agent or file a notice of change of address
as the case may be.

     2.6 Principal Office.  The Principal Office of the Company shall be located
at

                   c/o DVI Financial Services Inc.
                   2500 York Road
                   Jamison, PA 18929
                   Attention: Securitization Manager
                   Telephone: (215) 488-5042

or at such other address as such person may  designate by written  notice to the
Managing Member.

                                   ARTICLE III
                       LIMITED PURPOSE; NATURE OF BUSINESS

     3.1 Limited  Business  Purpose.  The  business  purpose to be  conducted or
promoted by the Company is limited to the following activities and none other:

          (a) To acquire,  own, purchase,  hold, transfer,  pledge and otherwise
     deal with notes, debt, or other securities;

          (b) To  acquire,  own,  and  hold  one or more  series  of  securities
     ("Pass-Through   Securities")  issued  pursuant  to  one  or  more  pooling
     agreements (each, a "Pooling  Agreement"),  and to issue one or more series
     of Pass-Through Securities; such Pass-Through Securities of each series (i)
     will represent  ownership interests in various equipment finance contracts,
     the cash flow,  income,  payments  and proceeds  therefrom  and any related
     property and/or collections in respect thereof,  and (ii) may be structured
     to contain  one or more  classes  of  Pass-Through  Securities,  each class
     having the characteristics  specified in the related Pooling Agreement; and
     to sell, transfer,  assign,  finance and refinance one or more Pass-Through
     Securities or classes of Pass-Through Securities of any series;

          (c) To  issue,  acquire,  own  and  hold  one or more  series  of debt
     obligations  ("Notes")  pursuant  to  one  or  more  indentures  (each,  an
     "Indenture"), which Notes are collateralized by equipment finance contracts
     or  income,   payments  or  proceeds  therefrom   ("Funding   Agreements"),
     Pass-Through  Securities  or  supplemental  collateral  (collectively,  the

                                       5
<PAGE>

     "Collateral");  and to sell,  transfer,  assign and finance such Notes with
     Merrill  Lynch,  Pierce,  Fenner & Smith  Incorporated  or Banc One Capital
     Markets,  Inc.  and  such  other  organizations  as  either  of them  shall
     designate, at any time on or after November 1, 2001;

          (d) To establish one or more trusts ("Trusts") to engage in any one or
     more of the  activities  described in any of the clauses above or to issue,
     acquire,  own,  hold and sell a  particular  series  of notes to be  issued
     pursuant to an indenture  between such trust and an indenture  trustee (the
     "Trustee");  to receive  upon the  formation  of any such Trust one or more
     certificates ("Trust  Certificates")  representing the beneficial ownership
     interest in such Trust; and to acquire, own, hold, sell, transfer,  assign,
     pledge, finance,  refinance and otherwise deal with any or all of the Trust
     Certificates in any such Trust;

          (e) To invest and  reinvest  the funds  received or  collected  by the
     Company  on  Collateral  in  other  investments  of such  types or in other
     interest-bearing or discount securities, loans or other investments;

          (f) To convey or transfer all or any portion of the  Company's  right,
     title  and  interest  in and to the  Collateral  for any  series  of Notes,
     subject and subordinate to the rights of the related Noteholders;

          (g) To transfer the Company's rights to (i) any cash flow in excess of
     amounts  necessary to pay holders of the Notes remitted,  or to be remitted
     to, the Company pursuant to an indenture with respect to such Notes or (ii)
     amounts  remitted or to be  remitted  to the Company  pursuant to a pooling
     agreement or a funding agreement;

          (h) To acquire, own, hold, sell, transfer,  assign,  pledge,  finance,
     refinance  and  otherwise  deal  with  (i)  installment   sales  contracts,
     equipment  leases,  equipment  finance  leases,  rental and other  contract
     payments from leases or other contracts,  equipment finance loans and notes
     secured  (in  whole or in part)  by  income  and  proceeds  from  equipment
     (collectively,  "Contracts"),  (ii) the  equipment  which is the subject of
     such  Contracts,  (iii) policies of insurance  relating to such  Contracts,
     Contract  payments  due  thereunder,  equipment,  or proceeds of any of the
     foregoing,  (iv) any other assets which may be  incidental to the ownership
     of such Contracts,  or (v) any participation  interest in or security based
     on or backed by assets described in (i) through (iv) (collectively,  "Lease
     Receivables"); and

          (i) To borrow money pursuant to one or more interim finance agreements
     between the Company and one or more lenders and acquiring, owning, leasing,
     purchasing,  investing,   transferring,  selling  and/or  pledging  certain
     property  to be  contributed  to the  Company  pursuant  to a  contribution
     agreement or subsequent contract transfer agreement in connection with such
     borrowing;  provided,  however,  that there may be only one interim finance
     agreement  outstanding  at one  time,  unless  all other  existing  interim
     finance providers shall have so consented;

          (j) To engage in any other  acts or  activities  and to  exercise  any
     power  permitted  to the  Company  under  the Act so long as the  same  are
     incidental to, or connected with, the foregoing or are necessary,  suitable
     or convenient to accomplish the foregoing;

          (k) Provided, however, that the Company shall not engage in any of the
     permitted

                                       6
<PAGE>

     activities set forth in (a) through (j) above if doing so shall result in a
     downgrade of the rating by a nationally  recognized rating agency requested
     by the Company to rate the securities  related to any previously issued (by
     the Company or one of the Trusts) Notes,  Pass-Through  Securities or Trust
     Certificates; and

          (l) The Company shall pay its liabilities from its own assets, and not
     have any  liability  to any Related  Company or any creditor of any Related
     Company.

                                   ARTICLE IV
                            LIMITATIONS ON ACTIVITIES

     4.1 Limitations on Activities.  Notwithstanding any other provision of this
Agreement and any provision of law which otherwise so empowers the Company,  the
Company  shall not,  and no Member  shall have any right,  power or authority to
cause the Company,  without the unanimous affirmative vote of the Member's board
of directors, to perform any act in contravention of any of the following:

          (a) The Company shall not

               (i)  consolidate or merge with or into any other entity or person
          or  dissolve  or  liquidate  in  whole  or in  part  or  transfer  its
          properties and assets substantially as an entirety to any entity or

               (ii)  engage  in any  other  action  that  bears on  whether  the
          separate  legal  identity  of the  Company  and  the  Member  will  be
          respected,  including,  without  limitation  (A) holding itself out as
          being liable for the debts of any other party; (B) forming, or causing
          to be formed,  any  subsidiaries  or (C) acting other than in its name
          and through its duly authorized officers or agents;

          (b) The Company shall not engage in any joint  activity or transaction
     of any kind with or for the benefit of any Related Company, including loans
     to or from any Related Company and any guarantee of the indebtedness of any
     Related Company, except for

               (i) entering into the agreements referenced in or contemplated by
          Article III,

               (ii) purchasing  management  services and leasing office space or
          equipment,  in each case only to the extent  necessary for the conduct
          of the Company's business, and

               (iii) payment of capital distributions to the Member;

          (c) The Company shall not create,  incur, assume,  guarantee or in any
     manner  become liable in respect of any  indebtedness,  except as stated in
     Article III, other than trade payables and expense accruals incurred in the
     ordinary course of business and which are incident to the business  purpose
     of the Company as stated in Article III above;

                                       7
<PAGE>

          (d) The Company shall not commingle its funds and assets with those of
     any Related Company;

          (e)  Neither  the  Member  nor the  Company  shall  file or  otherwise
     initiate on behalf of the Company (i) a voluntary petition for relief under
     any Chapter of the Bankruptcy Code, (ii) a receivership, conservatorship or
     custodianship, (iii) an assignment for the benefit of creditors or (iv) any
     other bankruptcy or insolvency related proceeding;

          (f) The Company  shall not  dissolve  or wind up its affairs  upon the
     dissociation, dissolution or Event of Bankruptcy of any of its Members;

          (g) The Company shall not dissolve even if it has no remaining Members
     if a  personal  representative  of the last  Member  agrees in  writing  to
     continue the Company and to act as the Member  hereunder until such time as
     another Member is effectively  appointed hereunder or, in the event that no
     such personal representative shall agree, the Company shall make reasonable
     commercial  efforts to cause the Trustee to act as interim  Member  until a
     replacement Member is effectively appointed; and

          (h) In the event that the Member undergoes an Event of Bankruptcy, the
     Member shall not reject the Agreement.

                                    ARTICLE V
                             ACCOUNTING AND RECORDS

     5.1 Records to be  Maintained.  The Company  shall  maintain the  following
records at the Principal Office:

          (a) a record of the full name and last  known  mailing  address of the
     Member,  together  with  information  relating to the  Member's  Membership
     Interest;

          (b) a copy of the Articles and all amendments  thereto,  together with
     executed copies of any powers of attorney pursuant to which the Articles or
     any such amendment has been executed;

          (c) a copy  of the  Company's  federal,  state  and  local  income  or
     information tax returns and reports;

          (d) a copy of this Agreement including all amendments thereto; and

          (e) the Company's books and records, including financial statements of
     the Company, which shall be open to inspections by the Member or its agents
     at reasonable times.

     5.2 Reports. The Managing Member shall prepare annual reports,  including a
balance sheet, statement of profit and loss and changes in the Member's account,
and a statement of cash flows.

     5.3 Tax Returns and Reports.  The Managing  Member shall prepare and timely
file income tax returns of the Company in all  jurisdictions  where such filings
are required.

                                       8
<PAGE>

     5.4  Records  to be Kept  Separate.  The  Company  (a) shall  maintain  its
financial  and  accounting  books and records  separate  from those of any other
entity or person, (b) shall pay from its assets all obligations and indebtedness
of any kind incurred by it, and shall not pay from its assets any obligations or
indebtedness  of  any  other  entity  or  person,  and  (c)  shall  observe  all
formalities  required by its Articles,  this Agreement and the laws of the State
of Delaware.

                                   ARTICLE VI
                           NAME AND ADDRESS OF MEMBER

     The name and address (or such other  address as designated by the Member to
the Company from time to time) of the Member on and after the Closing shall be:

                            DVI Receivables Corp. VIII
                            c/o DVI Financial Services Inc.
                            2500 York Road
                            Jamison, PA 18929

                                   ARTICLE VII
                           RIGHTS AND DUTIES OF MEMBER

     7.1  Liability of Member.  The Member shall not have any  liability for the
obligations or  liabilities of the Company except to the extent  provided in the
Act.

     7.2  Representations  and  Warranties.  The Member  hereby  represents  and
warrants  to the  Company  that:  (a) the Member is an entity  that has power to
enter into this Agreement and to perform its obligations  hereunder and that the
persons  executing  this  Agreement on behalf of the entity have the power to do
so; and (b) the Member is acquiring its interest in the Company for the Member's
own account as an investment  and without an intent to distribute  the interest.
The Member acknowledges that its interest in the Company has not been registered
under the  Securities Act of 1933 or any state  securities  laws, and may not be
resold or transferred without appropriate registration or the availability of an
exemption from such requirements.

     7.3 Conflicts of Interest.

          (a) The Member shall be entitled to enter into  transactions  that may
     be  considered  to be  competitive  with the  Company,  it being  expressly
     understood that the Member may enter into  transactions that are similar to
     the  transactions  into which the  Company may enter.  Notwithstanding  the
     foregoing,  the Member shall account to the Company and hold as trustee for
     it any Property,  profit,  or benefit  derived by the Member in the conduct
     and winding up of the Company  business or from a use or  appropriation  by
     the  Member  of the  Company's  Property  including  information  developed
     exclusively  for the Company  and  opportunities  expressly  offered to the
     Company.

          (b) The Member  does not violate a duty or  obligation  to the Company
     merely because the Member's conduct furthers the Member's own interest.  No
     transaction  with the

                                       9
<PAGE>

     Company  shall be  voidable  solely  because  the  Member  has a direct  or
     indirect  interest  in the  transaction  if the  transaction  is  fair  and
     reasonable to the Company.

                                  ARTICLE VIII
                                   MANAGEMENT

     8.1 Management of the Company.

          (a) The  Member  shall be the  managing  member  of the  Company  (the
     "Managing  Member")  and,  in such  capacity,  shall  manage the Company in
     accordance  with this  Agreement.  The  Managing  Member is an agent of the
     Company's  business,  and the actions of the Managing  Member taken in such
     capacity and in accordance with this Agreement shall bind the Company.

          (b) The  Managing  Member  shall have  full,  exclusive  and  complete
     discretion  to manage and control the  business and affairs of the Company,
     to make all decisions affecting the business and affairs of the Company and
     to take all such actions as it deems necessary or appropriate to accomplish
     the purpose of the Company as set forth herein.  The Managing  Member shall
     be the sole person or entity with the power to bind the Company, except and
     to the extent that such power is expressly delegated to any other person or
     entity by the  Managing  Member,  and such  delegation  shall not cause the
     Managing  Member to cease to be the Member or the  Managing  Member.  There
     shall not be a "manager" (within the meaning of the Act) of the Company.

          (c) The Managing Member may appoint  individuals  ("Officers") with or
     without  such titles as it may elect,  including  the titles of  President,
     Vice President,  Treasurer,  Secretary,  and Assistant Secretary, to act on
     behalf of the Company with such power and authority as the Managing  Member
     may delegate in writing to any such persons.

     8.2  Authority of Managing  Member to Bind the  Company.  Only the Managing
Member,  the  officers  and  authorized  agents of the  Company  shall  have the
authority to bind the Company.  Subject to Section 4.1, the Managing  Member has
the power, on behalf of the Company, to do all things necessary or convenient to
carry out the business and affairs of the Company (as described in Article III),
including, without limitation:

          (a) the institution,  prosecution and defense of any Proceeding in the
     Company's name;

          (b) the entering into contracts;

          (c) investment and  reinvestment of the Company's  funds,  and receipt
     and holding of Property as security for repayment;

          (d) the  conduct  of the  Company's  business,  the  establishment  of
     Company offices, and the exercise of the powers of the Company;

          (e) the  appointment  of  employees  and  agents of the  Company,  the
     defining of their duties and the establishment of their  compensation,  and
     the dealing with tradespeople,

                                       10
<PAGE>

     accountants and attorneys, on such terms as the Managers shall determine;

          (f) the indemnification of any Person;

          (g) the making of such  elections  under the Code and Tax  Regulations
     and other relevant tax laws as to the treatment of items of Company income,
     gain, loss,  deduction and credit,  and as to all other relevant matters as
     the Managing  Member  deems  necessary or  appropriate,  including  without
     limitation,  elections  referred  to  in  Section  754  of  the  Code,  the
     determination of which items of cash outlay shall be capitalized or treated
     as current  expenses,  and the  selection of the method of  accounting  and
     bookkeeping procedures to be used by the Company;

          (h)  the  amendment  of any  provision  to this  Agreement;  provided,
     however,  that no  provision  of Article  III and  Article  IV  hereof,  or
     Sections  8.01,  8.06 and 5.04 of the SCTA  shall be  amended  without  the
     consent of the Independent Directors of the Member.

     8.3 Actions of the Managing  Member.  The Managing  Member has the power to
bind the Company as provided in this Article  VIII.  No Person  dealing with the
Company shall have any  obligation to inquire into the power or authority of the
Managing Member acting on behalf of the Company.

     8.4  Compensation  of  Managing  Member.   The  Managing  Member  shall  be
reimbursed  for all  reasonable  expenses  incurred in managing  the Company and
shall be entitled to  compensation,  in an amount to be determined  from time to
time by consent of the Member, in its sole discretion. The Managing Member shall
not be required to devote full time to the  management of the Company  business,
but only so much  time as shall  be  necessary  or  appropriate  for the  proper
management of such business.

     8.5 Managing Member's Standard of Care. The Managing Member shall discharge
its duties to the  Company  in good  faith and with that  degree of care that an
ordinarily  prudent  person  in a  similar  position  would  use  under  similar
circumstances.  In discharging  its duties,  the Managing  Member shall be fully
protected  in relying in good faith upon the records  required to be  maintained
under Article VI and upon such information,  opinions,  reports or statements by
any Person as to matters the Managing Member reasonably believes are within such
other Person's  professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company, including information, opinions,
reports or  statements  as to the value and amount of the  assets,  liabilities,
profits or losses of the Company or any other facts  pertinent to the  existence
and amount of assets from which  Distributions  to the Member might  properly be
paid. The Company shall  indemnify and hold harmless the Managing Member against
any loss, damage or expense (including attorneys' fees) incurred by the Managing
Member as a result of any act  performed  or omitted on behalf of the Company or
in  furtherance  of the  Company's  interests  without,  however,  relieving the
Managing  Member of  liability  for  failure  to  perform  his or her  duties in
accordance  with  the  standards  set  forth  herein.  The  satisfaction  of any
indemnification  and any  holding  harmless  shall  be from and  limited  to the
Company's Property.

     8.6  Resignation.  Other than as set forth in Section  4.1(g)  hereof,  the
Member  shall not resign or  disassociate  itself  from the  Company at any time
without first obtaining the effective appointment of a successor Member approved
by the Rating Agencies.

                                       11
<PAGE>

     8.7  Payment  of  Liabilities.  The  Member  shall  at all  times  pay  its
liabilities  from its own  assets,  and not have any  liability  to any  Related
Company or any creditor thereof.

                                   ARTICLE IX
                                  CONTRIBUTIONS

     9.1  Membership  Interest.  The Member holds all of the Units of Membership
Interest.

     9.2  Contributions.  The  Member  is  not  required  to  make  any  Capital
Contribution to the Company.

     9.3  Withdrawal.  The Member  shall not be entitled to withdraw any part of
its Capital Contribution or to receive any distribution from the Company, except
after  payment in full of all  outstanding  debt  securities  of the  Company or
otherwise as specifically provided in this Agreement.

     9.4  Interest.  The Member shall not be entitled to interest on any Capital
Contribution or on any profits retained by the Company.

     9.5 No Personal Liability.  The Member shall not have any liability for the
obligations or  liabilities of the Company except to the extent  provided in the
Act.

                                    ARTICLE X
                          ALLOCATIONS AND DISTRIBUTIONS

     10.1  Taxable  Income  Allocations.  Profits and  losses,  and each item of
Company income,  gain, loss,  deduction,  credit and tax preference with respect
thereto,  for each Fiscal Year (or shorter period in respect of which such items
are to be allocated) shall be allocated to the Member; provided,  however, if it
is determined that there are two or more members of the Company, then such items
shall be  allocated  among the  members  in  accordance  with  their  respective
economic interests in the Company,  determined  generally by taking into account
the priorities of cash distributions,  the actual distributions and the economic
allocation  of losses and other  expenses  among the  Members as  determined  in
accordance  with  Sections  3.04(b),  3.04(c)  and  6.06  of  the  Indenture  as
applicable.

     10.2  Distributions.  Distributions  shall  be  made to the  Member  or its
designee in accordance with Section  3.04(b)(xii) and 6.06 of the Indenture,  as
applicable.

                                   ARTICLE XI
                         TRANSFER OF MEMBERSHIP INTEREST

     11.1 Compliance with  Securities  Laws. No Unit of Membership  Interest has
been  registered  under the  Securities  Act of 1933,  as amended,  or under any
applicable state  securities laws. The Member may not transfer (a transfer,  for
purposes of this Agreement,  shall be deemed to include,  but not be limited to,
any sale, transfer, assignment, pledge, creation of a security interest or other
Disposition)  all or any  part of the  Member's  Units of  Membership  Interest,
except upon compliance with the applicable  federal and state  securities  laws.
The Managing  Member shall have no obligation to register the Member's  Units of
Membership  Interest under the Securities Act of 1933, as amended,  or

                                       12
<PAGE>

under any applicable state  securities laws, or to make any exemption  therefrom
available to the Member.

     11.2 Transfer of Economic  Interest.  The right to receive  allocations  of
profits and losses and to receive  Distributions may not be transferred in whole
or in part unless the following terms and conditions have been satisfied:

     The transferor shall have:

          (a) assumed all costs  incurred by the Company in connection  with the
     transfer;

          (b)  furnished  the  Company  with  a  written   opinion  of  counsel,
     satisfactory  in form and  substance to counsel for the Company,  that such
     transfer  complies with  applicable  federal and state  securities laws and
     this  Agreement and that such  transfer,  for federal  income tax purposes,
     will not cause the  termination  of the Company under Section 708(b) of the
     Code,  cause the  Company  to be  treated  as an  association  taxable as a
     corporation  for income tax  purposes  or  otherwise  adversely  affect the
     Company or the Member; and

          (c) complied  with such other  conditions  as the Managing  Member may
     reasonably require from time to time.

Transfers  will be recognized by the Company as effective only upon the close of
business on the last day of the calendar  month  following  satisfaction  of the
above  conditions.  Any  transfer in  contravention  of this  Article XI and any
transfer  which if made would  cause a  termination  of the  Company for federal
income tax purposes under Section 708(b) of the Code shall be void ab initio and
ineffectual and shall not bind the Company.

     11.3 Transfer of Membership Interest.

          (a) The Member may not sell, assign,  encumber,  transfer or otherwise
     Dispose of any Units of its  Membership  Interest  (or take or omit to take
     any action, filing,  election or other action that could result in a deemed
     sale, assignment,  encumbrance,  transfer or other Disposition);  provided,
     however  that the Member may make such a transfer  to an  Affiliate  of the
     Member,  which  Affiliate  shall have a special  purpose charter and bylaws
     substantially  similar in all material respects to those of the Member. Any
     attempted Disposition not in accordance with this Agreement shall be void.

          (b) Upon the transfer of Units and admission of an  additional  Member
     in  accordance  with this  Agreement,  this  Agreement  shall be amended to
     reflect the admission of the substitute  Member,  and the Member shall take
     any action required to record to reflect such admission.

     11.4 Status of  Transferee.  A transferee of a Unit of Membership  Interest
shall be entitled to receive  that share of Profits,  Losses and  Distributions,
and the  return  of any  Capital  Contribution  to which  the  transferor  would
otherwise be entitled with respect to the interest  transferred,  and shall have
the  rights  of the  transferring  Member of the  Company  under the Act or this
Agreement.  The Company shall also, if the  transferee  and  transferor  jointly
advise the Company in writing of a transfer of the Unit of Membership  Interest,
furnish the transferee  with pertinent tax information at the end of each Fiscal

                                       13
<PAGE>

Year.

     11.5  Dissolution  or Bankruptcy  of the Member.  Upon the  dissolution  or
adjudication  of  bankruptcy of the Member,  the Member's  successors or assigns
shall have all the rights of the Member for the  purpose of settling or managing
the Member's estate.

                                   ARTICLE XII
                           DISSOLUTION AND WINDING UP

     12.1 Dissolution.  The Company shall be dissolved and its affairs wound up,
upon the  first to occur of any of the  following  events  (each of which  shall
constitute a Dissolution Event):

          (a) the expiration of the Term of this  Agreement,  unless the Company
     is continued with the consent of the Member, in its sole discretion; or

          (b) the  determination  in writing of the Managing  Member to dissolve
     and  terminate the Company;  provided,  however,  that the Managing  Member
     shall not, and the Managing Member hereby agrees not to, take any action to
     dissolve or terminate the Company prior to the expiration of the Term;

          (c) the entry of a decree of judicial dissolution pursuant to the Act;
     or

          (d) the  occurrence  of an Event of  Bankruptcy  as to a Member or the
     resignation,  expulsion or dissolution of a Member or the occurrence of any
     other event that terminates the membership of a Member,  unless,  within 90
     days  of such  event,  there  is at  least  one  remaining  Member  and the
     remaining  Members  unanimously  agree  to  continue  the  business  of the
     Company,  in which event the Company shall not be dissolved and the Company
     and the business of the Company shall be continued; provided, however, that
     if any Member is a partnership or a limited  liability  company on the date
     of such  occurrence,  the  dissolution  of such  Member  as a result of the
     dissolution,  termination,  resignation,  death,  incompetence,  removal or
     Event of Bankruptcy of a partner or member in such  partnership  or limited
     liability company, as the case may be, shall not be an event of dissolution
     of  this  Company  if the  business  of such  Member  is  continued  by its
     remaining partner(s) or member(s), as the case may be, either alone or with
     additional  partners  or  members,  and such  Member and such  partners  or
     members comply with any other applicable requirements of this Agreement; or

          (e) the passage of 30 days after the sale or other  disposition of all
     or substantially  all the assets of the Company (except that if the Company
     receives an  installment  obligation as  consideration  for such sale,  the
     Company shall  continue,  unless sooner  dissolved  under the provisions of
     this Agreement, until such time as such note or notes are paid in full).

     Upon the  dissolution  of the  Company  for any  reason,  the Member  shall
proceed promptly to wind up the affairs of and liquidate the Company;  provided,
however,  that if the Notes are outstanding,  the Member shall not liquidate the
assets of the Company  securing  the Notes,  except as  permitted by the deed of
trust and  assignment of leases  pursuant to which such assets were  encumbered,
without the consent of the secured party under such document, which may continue
to exercise  all of its rights under such  document and shall have  complete and
independent ability to retain such assets until the Notes

                                       14
<PAGE>

have  been  paid in full or  otherwise  completely  discharged  pursuant  to the
Indenture. Subject to the foregoing, the Member shall have reasonable discretion
to determine  the time,  manner and terms of any sale or sales of the  Company's
property pursuant to such liquidation.

     12.2 Effect of  Dissolution.  Upon  dissolution,  the Company  shall not be
terminated and shall continue until the winding up of the affairs of the Company
is completed and a certificate of  dissolution  has been issued by the Secretary
of State of Delaware.

     12.3  Distribution  of Assets on  Dissolution.  Upon the  winding up of the
Company,  the  Managing  Member  shall  take  full  account  of the  assets  and
liabilities  of the Company,  shall  liquidate  the assets  (unless the Managing
Member  determines that a distribution of any of the Company's  Property in-kind
would be more  advantageous  to the Member than the sale thereof) as promptly as
is  consistent  with  obtaining  the fair  value  thereof,  and shall  apply and
distribute the proceeds therefrom in the following order:

          (a) first,  to the payment of the debts and liabilities of the Company
     to  creditors,  including  the Member,  if it is a creditor,  to the extent
     permitted by law, in satisfaction of such debts and liabilities, and to the
     payment of necessary expenses of liquidation;

          (b)  second,  to the  setting up of any  reserves  which the  Managing
     Member may deem necessary or appropriate for any anticipated obligations or
     contingencies  of the  Company  arising  out of or in  connection  with the
     operation or business of the Company. Such reserves may be paid over by the
     Managing  Member to an escrow  agent or trustee  selected  by the  Managing
     Member to be disbursed by such escrow agent or trustee in payment of any of
     the aforementioned obligations or contingencies and, if any balance remains
     at the  expiration  of  such  period  as the  Managing  Member  shall  deem
     advisable,  shall be  distributed  by such  escrow  agent or trustee in the
     manner hereinafter provided;

          (c) then, to the Member.

Liquidation  proceeds  shall be paid within 60 days of the end of the  Company's
taxable year in which the liquidation  occurs.  Such  distributions  shall be in
cash or Property  (which need not be distributed  proportionately)  or partly in
both, as determined by the Managing Member.

If at the time of  liquidation  the  Managing  Member  shall  determine  that an
immediate  sale of some or all of the Company's  Property would cause undue loss
to the Member,  the  Managing  Member  may,  in order to avoid such loss,  defer
liquidation.

     12.4 Winding Up and Filing Articles of Dissolution.  Upon the  commencement
of the winding up of the Company,  articles of dissolution shall be delivered by
the Company to the  Secretary of the State of Delaware for filing.  The articles
of dissolution shall set forth the information  required by the Act. The winding
up  of  the  Company  shall  be  completed  when  all  debts,  liabilities,  and
obligations of the Company have been paid and discharged or reasonably  adequate
provision  therefor  has been made,  and all of the  remaining  Property  of the
Company has been distributed to the Member.

                                       15
<PAGE>

                                  ARTICLE XIII
                                  MISCELLANEOUS

     13.1 Notices.  Notices to the Member shall be sent to the Principal  Office
of the  Company.  Any  notice  or  other  communication  required  or  permitted
hereunder  shall be in  writing,  and shall be deemed  to have been  given  with
receipt confirmed if and when delivered personally, given by prepaid telegram or
mailed first class, postage prepaid, delivered by courier, or sent by facsimile,
to the Member at such address.

     13.2 Headings.  All Article and section  headings in this Agreement are for
convenience of reference only and are not intended to qualify the meaning of any
Article or section.

     13.3 Entire  Agreement.  This Agreement  constitutes  the entire  agreement
between the parties and supersedes any prior agreement or understanding  between
them respecting the subject matter of this Agreement.

     13.4 Binding Agreement.  This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto and their permitted successors and assigns.

     13.5 Saving Clause. If any provision of this Agreement,  or the application
of such  provision to any Person or  circumstance,  shall be held  invalid,  the
remainder of this Agreement,  or the application of such provision to Persons or
circumstances  other  than  those as to which it is held  invalid,  shall not be
affected  thereby.  If the  operation of any provision of this  Agreement  would
contravene  the  provisions  of the  Act,  such  provision  shall  be  void  and
ineffectual.

     13.6 Counterparts.  This Agreement may be executed in several counterparts,
and all so executed shall  constitute one agreement,  binding on all the parties
hereto,  even though all parties are not  signatory  to the original or the same
counterpart.  Any counterpart of either this Agreement shall for all purposes be
deemed a fully executed instrument.

     13.7 Governing  Law. This  Agreement  shall be governed by and construed in
accordance with the laws of the State of Delaware.

     13.8 No Membership Intended for Nontax Purposes.  The Member has formed the
Company  under  the  Act,  and  expressly  does  not  intend  hereby  to  form a
partnership, either general or limited, under the Delaware partnership laws.

     13.9 No Rights  of  Creditors  and  Third  Parties  under  Agreement.  This
Agreement is entered  into between the Company and the Member for the  exclusive
benefit of the Company,  its Member,  and their  successors and assignees.  This
Agreement  is  expressly  not  intended  for the benefit of any  creditor of the
Company  or any  other  Person.  Except  and  only  to the  extent  provided  by
applicable  statute,  no such  creditor or any third party shall have any rights
under this  Agreement or any  agreement  between the Company and the Member with
respect to any Capital Contribution or otherwise.

     13.10  General  Interpretive  Principles.  For purposes of this  Agreement,
except as otherwise expressly provided or unless the context otherwise requires:

          (a) the terms defined in this Agreement  include the plural as well as
     the  singular,  and the use of any gender herein shall be deemed to include
     the other gender;

                                       16
<PAGE>

          (b)  accounting  terms not otherwise  defined herein have the meanings
     given to them in the United States in accordance  with  generally  accepted
     accounting principles;

          (c)  references   herein  to  "Sections",   "paragraphs",   and  other
     subdivisions  without  reference to a document are to designated  Sections,
     paragraphs and other subdivisions of this Agreement;

          (d) a reference to a paragraph  without further reference to a Section
     is a reference to such  paragraph as contained in the same Section in which
     the   reference   appears,   and  this  rule  shall  also  apply  to  other
     subdivisions;

          (e) the words  "herein",  "hereof",  "hereunder"  and  other  words of
     similar import refer to this Agreement as a whole and not to any particular
     provision; and

          (f) the term "include" or "including" shall mean without limitation by
     reason of enumeration.

                                       17
<PAGE>

                                   Limited Liability Company Operating Agreement

     IN WITNESS  WHEREOF,  the parties  hereto have hereunto set their hands and
seals as of the Effective Date.

                                         DVI Receivables Corp. VIII

                                         By:
                                             ------------------------------
                                         Name: Matthew E. Goldenberg
                                         Title: Assistant Treasurer

                                         DVI Receivables XIV, L.L.C.

                                         By:  DVI Receivables Corp. VIII
                                              Its Managing Member

                                         By:
                                             ------------------------------
                                         Name: Matthew E. Goldenberg
                                         Title: Assistant Treasurer

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