Document:

Exhibit A

                           FORM OF WARRANT CERTIFICATE

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.

                                _______ Warrants

                           PALATIN TECHNOLOGIES, INC.
                    COMMON STOCK PURCHASE WARRANT CERTIFICATE

                   THE WARRANTS EVIDENCED BY THIS CERTIFICATE
                      ARE NOT EXERCISABLE AFTER 5:00 P.M.,
                             NEW YORK CITY TIME, ON
                              ______________, 2005

THIS CERTIFIES THAT:

Or registered assigns is the registered holder (the "Registered Holder") of the
number of Warrants set forth above, each of which represents the right to
purchase ________ fully paid and nonassessable shares of Common Stock, par value
$0.01 per share (the "Common Stock"), of Palatin Technologies, Inc., a Delaware
corporation (the "Company"), at the initial exercise price of $_____ per Warrant
(the "Exercise Price") at any time after the date on which the shares of Common
Stock issuable upon exercise of the Warrants evidenced hereby have been
registered under the Securities Act of 1933, as amended, or such other action as
may be required by federal or state law relating to the issuance or distribution
of securities shall have been taken, or prior to the Expiration Date (as
hereinafter defined), by surrendering this Warrant Certificate, with the Form of
Election to Purchase duly executed at the principal office of the Company and by
paying in full the Exercise Price, plus transfer taxes, if any. Payment of the
Exercise Price shall be made in United States currency, by certified check or
money order payable to the order of the Company. Unless otherwise defined
herein, the capitalized terms used herein shall have the meaning assigned to
such terms in the Purchase Agreement.

<PAGE>

         The Warrants have been issued pursuant to a private placement of Common
Stock and Warrants.

         This Warrant Certificate is issued under and in accordance with the
Purchase Agreement dated as of ___________, 2000, between the Company and the
Registered Holder, as amended and is subject to the terms and provisions
contained in said Purchase Agreement. The Registration Rights Agreement between
the Company and the Registered Holder governs the registration rights of the
shares of Common Stock underlying the Warrants.

         As soon as practicable after the date of exercise of any Warrants, the
Company shall issue, or cause the transfer agent for the Common Stock, if any,
to issue a certificate or certificates for the number of full shares of Common
Stock to which such Registered Holder is entitled, registered in accordance with
the instructions set forth in the Form of Election to Purchase. All shares of
Common Stock issued upon the exercise of any Warrants shall be validly
authorized and issued, fully paid and nonassessable, and free from all taxes,
liens and charges created by the Company in respect of the issue thereof. Each
person in whose name any such certificate for shares of Common Stock is issued
shall for all purposes be deemed to have become the holder of record of the
Common Stock represented thereby on the date of exercise of the Warrants
resulting in the issuance of such shares, irrespective of the date of issuance
or delivery of such certificate for shares of Common Stock.

         In the event that less than all of the Warrants represented by a
Warrant Certificate are exercised, the Company shall execute and mail, by
first-class mail, within 30 days of the date of exercise, to the Registered
Holder of such Warrant Certificate, or such other person as shall be designated
in the Form of Election to Purchase, a new Warrant Certificate representing the
number of full Warrants not exercised. In no event shall a fraction of a Warrant
be exercised, and the Company shall distribute no Warrant Certificates
representing fractions of Warrants. Final fractions of shares shall be treated
as provided for herein.

         The Company shall at all times reserve and keep available for issuance
upon the exercise of Warrants a number of its authorized but unissued shares of
Common Stock that will be sufficient to permit the exercise in full of all
outstanding Warrants.

Subject to the provisions hereof, the Exercise Price in effect from time to time
shall be subject to adjustment, as follows:

         (a) In case the Company shall at any time after the date hereof (i)
declare a dividend on the outstanding Common Stock payable in shares of its
capital stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock by reclassification of the Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then, in each case, the Exercise
Price, and the number of shares of Common Stock issuable upon exercise of the
Warrants in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination, or reclassification, shall be
proportionately adjusted so that the Holders of the

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<PAGE>

Warrants after such time shall be entitled to receive the aggregate number and
kind of shares which, if such Warrants had been exercised immediately prior to
such time, such Registered Holders would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any event
listed above shall occur.

         (b) In case the Company shall issue or fix a record date for the
issuance to all holders of Common Stock of rights, options, or warrants to
subscribe for or purchase Common Stock (or securities convertible into or
exchangeable for Common Stock) at a price per share (or having a conversion or
exchange price per share, if a security convertible into or exchangeable for
Common Stock) less than the Current Market Price per share of Common Stock (as
determined below) on such record date, then, in each case, the Exercise Price
shall be adjusted by multiplying the Exercise Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on such record date plus the number of shares
of Common Stock which the aggregate offering price of the total number of shares
of Common Stock so to be offered (or the aggregate initial conversion or
exchange price of the convertible or exchangeable securities so to be offered)
would purchase at such Current Market Price and the denominator of which shall
be the number of shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock to be offered for subscription or
purchase (or into which the convertible or exchangeable securities so to be
offered are initially convertible or exchangeable). Such adjustment shall become
effective at the close of business on such record date; provided, however, that,
to the extent the shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) are not delivered, the Exercise Price
shall be readjusted after the expiration of such rights, options, or warrants
(but only with respect to Warrants exercised after such expiration), to the
Exercise Price which would then be in effect had the adjustments made upon the
issuance of such rights, options, or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or securities convertible
into or exchangeable for shares of Common Stock) actually issued.
Notwithstanding anything to the contrary contained herein, no adjustment shall
be made to the Exercise Price until any condition to the vesting of such rights,
options or warrants shall be fulfilled or satisfied (and then only with respect
to the portion thereof which shall have vested). In case any subscription price
may be paid in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the board of directors of the Company, whose determination shall be
conclusive absent manifest error. Shares of Common Stock owned by or held for
the account of the Company or any majority-owned subsidiary shall not be deemed
outstanding for the purpose of any such computation.

         (c) In case the Company shall distribute to all holders of Common Stock
(including any such distribution made to the stockholders of the Company in
connection with a consolidation or merger in which the Company is the continuing
corporation) evidences of its indebtedness, cash (other than any cash dividend
which, together with any cash dividends paid within the twelve (12) months prior
to the record date for such distribution, does not exceed 5% of the Current
Market Price at the record date for such distribution) or assets (other than
distributions and dividends payable in shares of Common Stock), or rights,
options, or warrants

                                       3

<PAGE>

to subscribe for or purchase Common Stock, or securities convertible into or
exchangeable for shares of Common Stock (excluding those with respect to the
issuance of which an adjustment of the Exercise Price is provided pursuant to
the foregoing paragraph), then, in each case, the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to the
record date for the determination of stockholders entitled to receive such
distribution by a fraction, the numerator of which shall be the Current Market
Price per share of Common Stock on such record date, less the fair market value
(as determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error) of the portion of the
evidences of indebtedness or assets so to be distributed, or of such rights,
options, or warrants or convertible or exchangeable securities, or the amount of
such cash, applicable to one share, and the denominator of which shall be such
Current Market Price per share of Common Stock. Such adjustment shall become
effective at the close of business on such record date.

         For the purpose of any computation under this Warrant, the Current
Market Price per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices for the fifteen (15) consecutive trading
days immediately preceding the date in question. The closing price for each day
shall be (a) the last reported sales price regular way or, in case no such
reported sale takes place on such day, the closing bid price regular way, in
either case on the principal national securities exchange or market system
(including, for purposes hereof, the NASDAQ National Market System or the NASDAQ
SmallCap) on which the Common Stock, is listed or admitted to trading, (b) if
the Common Stock, is not listed or admitted to trading on any national
securities exchange or market system, the highest reported bid price for the
Common Stock, as furnished by the National Association of Securities Dealers,
Inc. through NASDAQ or a similar organization if NASDAQ is no longer reporting
such information, or (c) if on any such date the Common Stock is not listed or
admitted to trading on any national securities exchange and is not quoted by
NASDAQ National Market System or NASDAQ SmallCap System or any similar
organization, as determined by reference to the "pink sheets" published by the
National Quotation Bureau or, if not so published, by such other method of
determining the market value of a share of Common Stock, as the board of
directors of the Company shall in good faith from time to time deem to be fair,
whose determination shall be conclusive absent manifest error shall be used.

         No adjustment in the Exercise Price shall be required if such
adjustment is less than $.05; PROVIDED, HOWEVER, that any adjustments which by
reason of this Warrant are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Warrant shall be made to the nearest cent or to the nearest one thousandth of a
share, as the case may be.

         In any case in which this Warrant shall require that an adjustment in
the Exercise Price be made effective as of a record date for a specified event,
the Company may elect to defer, until the occurrence of such event, issuing to
the Registered Holders of the Warrants, if any Registered Holder has exercised a
Warrant after such record date, the shares of Common Stock, if any, issuable
upon such exercise over and above the shares of Common Stock, if any, issuable
upon such exercise on the basis of the Exercise Price in effect prior to such
adjustment; PROVIDED, HOWEVER, that the Company shall deliver to such exercising
Registered Holder a due

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<PAGE>

bill or other appropriate instrument evidencing such Registered Holder's right
to receive such additional shares upon the occurrence of the event requiring
such adjustment.

         Upon each adjustment of the Exercise Price as a result of the
calculations made above the Warrants shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of shares (calculated to
the nearest thousandth) obtained by dividing (A) the product obtained by
multiplying the number of shares purchasable upon exercise of the Warrants prior
to adjustment of the number of shares by the Exercise Price in effect prior to
adjustment of the Exercise Price by (B) the Exercise Price in effect after such
adjustment of the Exercise Price.

         In case of any capital reorganization, other than in the cases referred
to above, or the consolidation or merger of the Company with or into another
corporation (other than a merger or consolidation in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding shares of Common Stock or the conversion of such outstanding shares
of Common Stock into shares of other stock or other securities or property), or
the sale of the property of the Company as an entirety or substantially as an
entirety (collectively such actions being hereinafter referred to as
"Reorganizations"), there shall thereafter be deliverable upon exercise of any
Warrant (in lieu of the number of shares of Common Stock theretofore
deliverable) the number of shares of stock or other securities or property to
which a Registered Holder of the number of shares of Common Stock which would
otherwise have been deliverable upon the exercise of such Warrant would have
been entitled upon such Reorganization if such Warrant had been exercised in
full immediately prior to such Reorganization. In case of any Reorganization,
appropriate adjustment, as determined in good faith by the Board of Directors of
the Company, shall be made in the application of the provisions herein set forth
with respect to the rights and interests of Registered Holders so that the
provisions set forth herein shall thereafter be applicable, as nearly as
practicable, in relation to any shares or other property thereafter deliverable
upon exercise of Warrants. The Company shall not effect any such Reorganization,
unless upon or prior to the consummation thereof the successor corporation, or
if the Company shall be the surviving corporation in any such Reorganization and
is not the issuer of the shares of stock or other securities or property to be
delivered to holders of shares of the Common Stock outstanding at the effective
time thereof, then such issuer, shall assume by written instrument the
obligation to deliver to the Registered Holder of any Warrant Certificate such
shares of stock, securities, cash or other property as such holder shall be
entitled to purchase in accordance with the foregoing provisions.
Notwithstanding anything to the contrary contained herein, in the event of sale
or conveyance or other transfer of all or substantially all of the assets of the
Company as a part of a plan for liquidation of the Company, all rights to
exercise any Warrant shall terminate thirty (30) days after the Company gives
written notice to each Registered Holder of a Warrant Certificate that such sale
or conveyance of other transfer has been consummated.

         In case of any reclassification or change of the shares of Common Stock
issuable upon exercise of the Warrants (other than a change in par value or from
no par value to a specified par value, or as a result of a subdivision or
combination, but including any change in the shares into two or more classes or
series of shares), the Registered Holders of the Warrants shall have the right
thereafter to receive upon exercise of the Warrants solely the kind and amount
of shares of stock and other securities, property, cash, or any combination
thereof receivable upon

                                       5

<PAGE>

such reclassification or change by a Registered Holder of the number of shares
of Common Stock for which the Warrants might have been exercised immediately
prior to such reclassification or change. Thereafter, appropriate provision
shall be as nearly equivalent as practicable to the adjustments in this Warrant.
The above provisions of this paragraph shall similarly apply to successive
reclassifications and changes of shares of Common Stock.

         Notwithstanding anything to the contrary herein contained, in the event
of a transaction contemplated by the prior paragraph in which the surviving,
continuing, successor, or purchasing corporation demands that all outstanding
Warrants be extinguished prior to the closing date of the contemplated
transaction, the Company shall give prior notice (the "Merger Notice") thereof
to the Registered Holders advising them of such transaction. The Registered
Holders shall have ten (10) days after the date of the Merger Notice to elect to
(i) exercise the Warrants in the manner provided herein or (ii) receive from the
surviving, continuing, successor, or purchasing corporation, with respect to
outstanding Warrants, the same consideration receivable by a Registered Holder
of the number of shares of Common Stock for which the Warrants might have been
exercised immediately prior to such consolidation, merger, sale, or purchase
reduced by such amount of the consideration as has a market value equal to the
exercise price of the Warrants, as determined by the Board of Directors of the
Company, whose determination shall be conclusive absent manifest error. If any
Registered Holder fails to timely notify the Company of its election, the Holder
shall be deemed for all purposes to have elected the option set forth in (ii)
above. Any amounts receivable by a Holder who has elected the option set forth
in (ii) above shall be payable at the same time as amounts payable to
stockholders in connection with any such transaction.

         Whenever the Exercise Price is adjusted as provided in this Warrant,
the Company will promptly obtain a certificate of the chief financial officer of
the Company setting forth the Exercise Price as so adjusted and a brief
statement of the facts accounting for such adjustment, and will make available a
brief summary thereof to the Registered Holders of the Warrant Certificates, at
their addresses listed on the register maintained for the purpose by the
Company.

In no event shall the Exercise Price be adjusted below the par value per share
of the Common Stock.

In case at any time the Company shall propose:

          (a) to pay any dividend or make any distribution on shares of Common
     Stock in shares of Common Stock or make any other distribution (other than
     regularly scheduled cash dividends which are not in a greater amount per
     share than the most recent such cash dividend) to all holders of Common
     Stock; or

          (b) to issue any rights, warrants, or other securities to all holders
     of Common Stock entitling them to purchase any additional shares of Common
     Stock or any other rights, warrants, or other securities; or

                                       6

<PAGE>

          (c) to effect any reclassification or change of outstanding shares of
     Common Stock, or any consolidation, merger, sale, lease, or conveyance of
     property, described above; or

          (d) to effect any liquidation, dissolution, or winding-up of the
     Company;

then, in each such case, the Company shall cause notice of such proposed action
to be mailed to each Registered Holder of a Warrant Certificate. Such notice
shall be mailed, at least ten (10) days prior to the record date for determining
holders of the Common Stock for purposes of receiving such payment or offer or
at least ten (10) days prior to the earlier of the date upon which such action
is to take place or any record date to determine holders of Common Stock
entitled to receive such securities or other property, as the case may be.

         Whenever any adjustment is made pursuant to this Warrant, the Company
shall cause notice of such adjustment to be mailed to each Registered Holder of
a Warrant Certificate within fifteen (15) days thereafter, such notice to
include in reasonable detail (i) the events precipitating the adjustment, (ii)
the computation of any adjustments, and (iii) the Exercise Price, the number of
shares or the securities or other property purchasable upon exercise of each
Warrant after giving effect to such adjustment.

         Irrespective of any adjustments pursuant to this Warrant, Warrant
Certificates theretofore or thereafter issued need not be amended or replaced,
but certificates thereafter issued shall bear an appropriate legend or other
notice of any adjustments.

         The Company shall not be required upon the exercise of any Warrant to
issue fractional shares of Common Stock which may result from adjustments in
accordance with this Warrant to the Exercise Price or number of shares of Common
Stock purchasable under each Warrant. If more than one Warrant is exercised at
one time by the same Registered Holder, the number of full shares of Common
Stock which shall be deliverable shall be computed based on the number of shares
deliverable in exchange for the aggregate number of Warrants exercised. With
respect to any final fraction of a share called for upon the exercise of any
Warrant or Warrants, the Company shall pay a cash adjustment in respect of such
final fraction in an amount equal to the same fraction of the Current Market
Price of a share of Common Stock calculated in accordance with this Warrant.

         If any change to the capitalization of the Company should occur with
respect to which a favorable adjustment to the rights and interests of the
Registered Holders of the Warrants should be made, and such adjustment is not
otherwise provided for in this Warrant, such appropriate adjustment should be
made as determined in good faith by the Board of Directors of the Company.

         No Warrant may be exercised after 5:00 P.M., New York City time, on the
expiration date (the "Expiration Date") which will be ____________, 2005. All
Warrants evidenced hereby shall thereafter become void.

                                       7

<PAGE>

         No Warrant Certificate shall entitle the registered holder thereof to
any of the rights of a stockholder of the Company, including, without
limitation, the right to vote, to receive dividends and other distributions, to
receive any notice of, or to attend, meetings of stockholders or any other
proceedings of the Company.

         If any Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company in its discretion may execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated Warrant Certificate,
or in lieu of or in substitution for a lost, stolen or destroyed Warrant
Certificate, a new Warrant Certificate for the number of Warrants represented by
the Warrant Certificate so mutilated, lost, stolen or destroyed but only upon
receipt of evidence of such loss, theft or destruction of such Warrant
Certificate, and of the ownership thereof, and indemnity, if requested, all
satisfactory to the Company. Applicants for such substitute Warrant Certificates
shall also comply with such other reasonable regulations and pay such other
reasonable charge incidental thereto as the Company may prescribe. Any such new
Warrant Certificate shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant Certificate shall be at any time enforceable by anyone.

         Prior to the latest time at which the Warrants may be exercised,
subject to any applicable laws, rules or regulations restricting
transferability, Warrant Certificates, subject to the provisions hereof, may be
split up, combined or exchanged for other Warrant Certificates representing a
like aggregate number of Warrants or may be transferred in whole or in part. Any
holder desiring to split up, combine or exchange a Warrant Certificate or
Warrant Certificates shall make such request in writing delivered to the Company
at its principal office and shall surrender the Warrant Certificate or Warrant
Certificates so to be split up, combined or exchanged at said office with the
Form of Assignment. Upon any such surrender for split up, combination, exchange
or transfer, the Company shall execute and deliver to the person entitled
thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so
requested in the Form of Assignment. The Company may require the holder to pay a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any split up, combination, exchange or transfer of Warrant
Certificates prior to the issuance of any new Warrant Certificate.

         Any Warrant Certificate surrendered upon the exercise of Warrants or
for split up, combination, exchange or transfer, or purchased or otherwise
acquired by the Company, shall be canceled and shall not be reissued by the
Company; and, except as otherwise provided herein in case of the exercise of
less than all of the Warrants evidenced by a Warrant Certificate or in case of a
split up, combination, exchange or transfer, no Warrant Certificate shall be
issued hereunder in lieu of such canceled Warrant Certificate. The Company shall
destroy any Warrant Certificate so canceled.

         Every holder of a Warrant Certificate by accepting the same consents
and agrees with the Company and with every other holder of a Warrant Certificate
that:

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<PAGE>

                  (a) transfer of the Warrant Certificates shall be registered
         on the books of the Company only if surrendered at the principal office
         of the Company, duly endorsed or accompanied by a proper instrument of
         transfer; and

                  (b) prior to due presentment for registration of transfer, the
         Company may deem and treat the person in whose name the Warrant
         Certificate is registered as the absolute owner thereof and of the
         Warrants evidenced thereby (notwithstanding any notations of ownership
         or writing on the Warrant Certificates made by anyone other than the
         Company) for all purposes whatsoever, and the Company shall not be
         affected by any notice to the contrary.

         The laws of the State of New York shall govern this Warrant
Certificate.

         IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed.

                                               PALATIN TECHNOLOGIES, INC.

                                               By:_____________________________
                                                  Stephen T. Wills, CFO

                                       9

<PAGE>

                                     FORM OF
                              ELECTION TO PURCHASE

     The undersigned hereby irrevocably elects to exercise of the Warrants
represented by this Warrant Certificate and to purchase the shares of Common
Stock issuable upon the exercise of said Warrants, and requests that
certificates for such shares be issued and delivered as follows:

ISSUE
TO:

                                     (NAME)

                          (ADDRESS, INCLUDING ZIP CODE)

                (SOCIAL SECURITY OR OTHER TAX IDENTIFYING NUMBER)

DELIVER
                                      TO:
                                     (NAME)

At

                          (ADDRESS, INCLUDING ZIP CODE)

     If the number of Warrants hereby exercised is less than all the Warrants
represented by this Warrant Certificate, the undersigned requests that a new
Warrant Certificate representing the number of full Warrants not exercised be
issued and delivered as set forth below.

     In full payment of the purchase price with respect to the Warrants
exercised and transfer taxes, if any, the undersigned hereby tenders payment of
$_____ by certified check or money order payable in United States currency to
the order of the Company.

                                       10

<PAGE>

Dated:

__________________
(Insert Social Security or                       (Signature of registered
Other identifying number                         holder)
Of holder)

                                                 (Signature of registered
                                                 holder, if co-owned)

NOTE: Signature must conform in all respects to name of holder as specified on
the face of the Warrant Certificate.

                                       11

<PAGE>

                                     FORM OF
                                   ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned represented by the
within Warrant Certificate, with respect to the number of Warrants set forth
below:

Name of Assignee                    Address                      No. Of Warrants
--------------------------------------------------------------------------------

and does hereby irrevocably constitute and appoint _______________________
Attorney to make such transfer on the books of Palatin Technologies, Inc.
maintained for that purpose, with full power of substitution in the premises.

Dated: __________________ , 2000.

(Insert Social Security or      Signature
 Other identifying number
 Of holder)

                                   (Signature must conform in all respects to
                                   name of holder as specified on the face of
                                   the Warrant Certificate.)

                                       12LOAN AND SECURITY AGREEMENT

                          Dated as of November 1, 2000

                                     Between

                                 MIM FUNDING LLC
                                   as Borrower

                                       and

                               HFG HEALTHCO-4 LLC
                                    as Lender

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                               Page
                                                                                                               ----
ARTICLE I      COMMITMENT; AMOUNTS AND TERMS OF THE
                          REVOLVING LOAN
<S>                   <C>                                                                                        <C>
                  ss. 1.01.    Revolving Advances.................................................................1
                  ss. 1.02.    Revolving Commitment and Borrowing Limit...........................................1
                  ss. 1.03.    Notice of Borrowing; Borrower's Certificate........................................2
                  ss. 1.04.    Termination of Revolving Commitment................................................2
                  ss. 1.05.    Interest and Fees..................................................................2
                  ss. 1.06.    Voluntary Reductions...............................................................3
                  ss. 1.07.    Computation of Interest............................................................3
                  ss. 1.08.    Procedures for Payment.............................................................3
                  ss. 1.09.    Indemnities........................................................................4
                  ss. 1.10.    Telephonic Notice..................................................................5
                  ss. 1.11.    Maximum Interest...................................................................5

ARTICLE II     COLLECTION AND DISTRIBUTION
                  ss. 2.01.    Collections on the Receivables.....................................................6
                  ss. 2.02.    Distribution of Funds..............................................................6
                  ss. 2.03.    Distribution of Funds at the Maturity Date or Upon an Event of Default.............6
                  ss. 2.04.    Distributions to the Borrower Generally............................................6
                  ss. 2.05.    Avoidance of Breakage Costs........................................................6

ARTICLE III    REPRESENTATIONS AND WARRANTIES; COVENANTS;
                         EVENTS OF DEFAULT
                  ss. 3.01.    Representations and Warranties; Covenants..........................................7
                  ss. 3.02.    Events of Default; Remedies........................................................7
                  ss. 3.03.    Attorney-in-Fact...................................................................7

ARTICLE IV     SECURITY
                  ss. 4.01.    Grant of Security Interest.........................................................8

ARTICLE V      MISCELLANEOUS
                  ss. 5.01.    Amendments, etc....................................................................8
                  ss. 5.02.    Notices, etc.......................................................................9
                  ss. 5.03.    Assignability......................................................................9
                  ss. 5.04.    Further Assurances.................................................................9
                  ss. 5.05.    Costs and Expenses; Collection Costs...............................................9
                  ss. 5.06.    Confidentiality...................................................................10
                  ss. 5.07.    Term and Termination; Early Termination Fee.......................................11
                  ss. 5.08.    No Liability of Lender............................................................12
                  ss. 5.09.    Entire Agreement; Severability....................................................12
                  ss. 5.10.    GOVERNING LAW.....................................................................13
                  ss. 5.11.    WAIVER OF JURY TRIAL, JURISDICTION AND VENUE......................................13

                                        i

<PAGE>

                                                                                                               Page
                  ss. 5.12.    Execution in Counterparts.........................................................13
                  ss. 5.13.    No Proceedings....................................................................13
                  ss. 5.14.    Survival of Termination...........................................................13
</TABLE>

EXHIBITS

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

SCHEDULES

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

                                       ii

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         LOAN AND SECURITY AGREEMENT,  dated as of November 1, 2000, between MIM
FUNDING LLC, a limited  liability  company organized under the laws of the State
of Delaware (together with its successors and assigns, the "BORROWER"),  and HFG
HEALTHCO-4  LLC,  a  Delaware  limited  liability  company  (together  with  its
successors and assigns, the "LENDER"), agree as follows:

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

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

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

         Accordingly, the parties agree as follows:

                                     ARTICLE I
               COMMITMENT; AMOUNTS AND TERMS OF THE REVOLVING LOAN

           ss. 1.01. Revolving Advances. (a) The Lender agrees to lend from time
to time to the Borrower, subject to and upon the terms and conditions herein set
forth,  on any  Funding  Date,  such  amounts as, in  accordance  with the terms
hereof,  may be  requested by the Borrower  (each such  borrowing,  a "REVOLVING
ADVANCE"  and the  aggregate  outstanding  principal  balance  of all  Revolving
Advances from time to time, the "REVOLVING LOAN").

           (b)Each  Revolving Advance shall be made on the date specified in the
Borrower's Certificate,  or telephonic notice confirmed in writing, as described
in Section 1.03 hereof.

           ss. 1.02. (a) Revolving Commitment and Borrowing Limit. The Revolving
Loan at any  time  shall  not  exceed  an  amount  equal  to the  lesser  of (i)
$45,000,000  (such  amount,  or such lesser  amount after  giving  effect to any
decrease  pursuant to the provisions of Section 1.02(d)  hereof,  the "REVOLVING
COMMITMENT"), and (ii) the Borrowing Base as of such time (the lesser of (i) and
(ii) being the "BORROWING LIMIT").

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

<PAGE>

Revolving  Advance which shall result in the Revolving  Loan being in excess of,
the Revolving Commitment.

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

           ss. 1.03. Notice of Borrowing;  Borrower's Certificate.  Whenever the
Borrower  desires a  Revolving  Advance  be made,  the  Borrower  shall give the
Lender,  not later than 11:00 a.m.  (New York time) one  Business  Day's  prior,
written notice, or telephonic notice from an Authorized Representative confirmed
promptly by a Written  Notice,  (which  notice,  in each case,  shall be irrevo-
cable) of its desire to make a borrowing of a Revolving Advance.  Each notice of
borrowing under this Section 1.03 shall (i) be signed by the Borrower,  and (ii)
be  substantially  in the  form of  Exhibit  VII-B  hereto  (each a  "BORROWER'S
CERTIFICATE")  and  specify  the date on which the  Borrower  desires  to make a
borrowing  of a Revolving  Advance  (which in each  instance  shall be a Funding
Date),  the  amount of such  borrowing  and shall have  attached  to it the most
recent Borrowing Base Certificate.

           ss. 1.04. Termination of Revolving Commitment.  On the Maturity Date,
the Revolving Commitment shall be canceled automatically.  In addition, prior to
the Maturity Date, the Borrower may terminate the Revolving  Commitment pursuant
to Section 5.07(b).  Upon such  cancellation,  the Revolving Loan (together with
all other  Lender  Debt) shall  become,  without  further  action by any Person,
immediately due and payable  together with all accrued  interest thereon to such
date plus any fees, premiums, charges or costs provided for hereunder.

           ss. 1.05.  Interest and Fees. (a) Interest.  The Borrower shall, upon
demand, pay interest on the Revolving Loan on (i) each Interest Payment Date and
(ii) the Maturity Date (whether by acceleration or otherwise),  in each case, at
an interest  rate per annum equal to the LIBO Rate in effect for the  applicable
Interest Period plus 2.10%.

           (b)  Default  Interest.  Notwithstanding  anything  to  the  contrary
contained  herein,  while any Event of Default is  continuing,  interest  on the
Revolving  Loan shall be payable on demand at a rate per annum equal to 4.00% in
excess of the rate then otherwise applicable to the Revolving Loan.

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

           (d) A/R Fee. The Borrower shall pay to the Lender the A/R Fee on the
first Business Day of each month.

           (e) Facility  Management  Fee. The Borrower shall pay to the Lender a
fee (the "FACILITY MANAGEMENT FEE"), payable in 36 equal installments of $20,000
on the  Initial  Funding  Date  and on the  first  Business  Day of  each  month
thereafter  from the Facility  Reserve.  Upon the  termination of this Agreement
(for any reason other than the default hereof by the Lender or a Rating

                                        2

<PAGE>

Agency Amendment that the Providers,  in their  reasonable  judgment and in good
faith  determine is  unacceptable)  prior to the Maturity  Date,  the  remaining
monthly payments of the Facility Management Fee shall become immediately due and
payable.

         ss. 1.06. Voluntary  Reductions.  Upon not less than two Business Days'
Written  Notice and at its sole  election,  the Borrower may on any Funding Date
reduce  the  outstanding  principal  amount  of the  Revolving  Loan;  provided,
however, that the Borrower shall provide the Lender with at least 30 days' prior
Written Notice to the extent such  reduction  shall be more than 10% of the then
outstanding principal amount of the Revolving Loan.

         ss. 1.07.  Computation of Interest.  (a) Interest on the Revolving Loan
and fees and other  amounts  calculated by the Lender on the basis of a rate per
annum shall be computed on the basis of actual days elapsed over a 360-day year.

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

         ss. 1.08.  Procedures for Payment.  (a) Each payment hereunder shall be
made not later  than  12:00  noon  (New  York City  time) on the day when due in
lawful money of the United States of America to the Lender without counterclaim,
offset,  claim or  recoupment  of any kind and free and  clear of,  and  without
deduction  for,  any present or future  withholding  or other  taxes,  duties or
charges of any nature imposed on such payments or prepayments by or on behalf of
any  Governmental  Entity thereof or therein,  except for Excluded Taxes. If any
such  taxes,  duties or charges  are so levied or imposed on any  payment to the
Lender,  the Borrower  will make  additional  payments in such amounts as may be
necessary so that the net amount  received by the Lender,  after  withholding or
deduction  for  or on  account  of  all  taxes,  duties  or  charges,  including
deductions  applicable to additional  sums payable under this Section 1.08, will
be equal to the amount  provided  for  herein.  Whenever  any  taxes,  duties or
charges are payable by the Borrower with respect to any payments hereunder,  the
Borrower shall furnish promptly to the Lender  information,  including certified
copies of  official  receipts  (to the  extent  that the  relevant  governmental
authority delivers such receipts),  evidencing payment of any such taxes, duties
or charges so withheld or deducted. If the Borrower fails to pay any such taxes,
duties or charges when due to the appropriate taxing authority or fails to remit
to the Lender the  required  information  evidencing  payment of any such taxes,
duties or charges so withheld or deducted,  the  Borrower  shall  indemnify  the
Lender for any incremental taxes,  duties,  charges,  interest or penalties that
may become payable by the Lender as a result of any such failure.

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

                                        3

<PAGE>

         (c) The Borrower shall  indemnify the Lender for the full amount of any
taxes,  duties  or  charges  other  than  Excluded  Taxes  (including,   without
limitation,  any taxes other than Excluded Taxes imposed by any  jurisdiction on
amounts  payable under this Section 1.08) duly paid or payable by the Lender and
any liability (including penalties,  interest and expenses) arising therefrom or
with respect thereto. Indemnification payments shall be made within 30 days from
the date the Lender makes written demand  therefor.  The Lender shall provide to
the Borrower a statement,  supported when  applicable by  documentary  evidence,
explaining the amount of any such liability it incurs,  which statement shall be
conclusive absent manifest error.

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

         ss. 1.09. Indemnities.  (a) The Borrower hereby agrees to indemnify the
Lender on demand  against any loss or expense which the Lender or a branch or an
Affiliate of the Lender  actually  incurred as a consequence of: (i) any default
in payment or prepayment of the principal  amount of any Revolving  Advance made
to it or any portion thereof or interest  accrued  thereon,  as and when due and
payable  (at  the  due  date  thereof,  by  irrevocable  notice  of  payment  or
prepayment,  or  otherwise);  (ii) the effect of the  occurrence of any Event of
Default upon any  Revolving  Advance made to it; (iii) the payment or prepayment
of the  principal  amount of any  Revolving  Advance  made to it or any  portion
thereof,  on any day  other  than a Funding  Date;  or (iv) the  failure  by the
Borrower to accept a Revolving  Advance after it has requested  such  borrowing,
conversion or renewal;  in each case including,  but not limited to, any loss or
expense  sustained or incurred in liquidating  or employing  deposits from third
parties  acquired to effect or maintain  such  Revolving  Advance or any portion
thereof;  provided,  however, that so long as no Event of Default is continuing,
no  payment  shall be made with  respect  to any loss or  expense  that is being
contested  in good  faith by the  Borrower.  The  Lender  shall  provide  to the
Borrower  a  statement,  supported  when  applicable  by  documentary  evidence,
explaining  the amount of any such loss or expense  it incurs,  which  statement
shall be conclusive absent manifest error.

         (b) The  Borrower  hereby  agrees to  indemnify  and hold  harmless the
Lender,   the  Program  Manager,   the  Master  Servicer  and  their  respective
Affiliates,   (together  with  their  respective  directors,  officers,  agents,
representatives,   shareholders,   lenders,  counsel  and  employees,   each  an
"INDEMNIFIED  PARTY"),  from and against any and all  losses,  claims,  damages,
costs,  expenses  (including  reasonable  counsel  fees and  disbursements)  and
liabilities which are actually incurred by such Indemnified Party arising out of
the  commitments  hereunder to make the Revolving  Advances,  or the  financings
contemplated  hereby, the other Documents,  the Collateral  (including,  without
limitation,  the use  thereof by any of such  Persons or any other  Person,  the
exercise  by the Lender of rights and  remedies  or any power of  attorney  with
respect  thereto,  and  any  action  or  inaction  of the  Lender  under  and in
accordance  with  any   Documents),   the  use  of  proceeds  of  any  financial
accommodations  provided  hereunder,  any  investigation,  litigation  or  other
proceeding  (brought or threatened)  relating  thereto,  or the role of any such
Person  or  Persons  in  connection  with  the  foregoing,  whether  or not  any
Indemnified  Party  is  named  as a party  to any  legal  action  or  proceeding
("CLAIMS").  The Borrower will not,  however,  be responsible to any Indemnified
Party  hereunder  for any Claims to the extent that a court having  jurisdiction
shall have  determined  by a final  nonappealable  judgment  that any such Claim
shall have arisen out of or resulted directly and

                                        4

<PAGE>

principally from (i)(1) actions taken or omitted to be taken by such Indemnified
Party by reason of the bad faith,  willful misconduct or gross negligence of any
Indemnified  Party,  or (2) in violation of any law or regulation  applicable to
such Indemnified Party (except to the extent that such violation is attributable
to any breach of any  representation,  warranty or  agreement by or on behalf of
the Borrower,  any Provider or any of their respective designees,  in each case,
as  determined  by a  final  nonappealable  decision  of a  court  of  competent
jurisdiction), or (ii) a successful claim by a Provider against such Indemnified
Party ("EXCLUDED CLAIMS").  The Indemnified Party shall give the Borrower prompt
Written Notice of any Claim setting forth a description of those elements of the
Claim  of  which  such  Indemnified  Party  has  knowledge.  The  Lender,  as an
Indemnified Party, shall be permitted hereunder to select counsel to defend such
Claim with the consent of the  Providers,  such  consent not to be  unreasonably
withheld,  at the expense of the Borrower and, if such  Indemnified  Party shall
decide to do so, then all such Indemnified Parties shall select the same counsel
to defend  such  Indemnified  Parties  with  respect  to such  Claim;  provided,
however,  that if any such  Indemnified  Party shall in its  reasonable  opinion
consider that the retention of one joint counsel as aforesaid  shall result in a
conflict  of  interest,  such  Indemnified  Party  may,  at the  expense  of the
Borrower,  select its own counsel to defend such Indemnified  Party with respect
to such Claim.  The  Indemnified  Parties and the Borrower and their  respective
counsel  shall  cooperate  with each  other in all  reasonable  respects  in any
investigation,  trial  and  defense  of any such  Claim and any  appeal  arising
therefrom.

         ss. 1.10. Telephonic Notice. Without in any way limiting the Borrower's
obligation  to  confirm  in  writing  any  telephonic  notice  of  a  borrowing,
conversion or renewal,  the Lender may act without  liability  upon the basis of
telephonic  notice believed by the Lender in good faith to be from an Authorized
Representative of the Borrower prior to receipt of written confirmation.

         ss. 1.11.  Maximum  Interest.  (a) No provision of this Agreement shall
require  the  payment to the Lender or permit  the  collection  by the Lender of
interest in excess of the maximum rate of interest  from time to time  permitted
(after taking into account all consideration which constitutes interest) by laws
applicable to the Lender Debt and binding on the Lender (such maximum rate being
the Lender's "MAXIMUM PERMISSIBLE RATE").

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

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

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<PAGE>

                                   ARTICLE II
                           COLLECTION AND DISTRIBUTION

         ss. 2.01. Collections on the Receivables.  The Lender shall be entitled
with respect to all  Receivables,  (i) to receive and to hold as collateral  all
Receivables  and all  Collections on Receivables in accordance with the terms of
the Depositary Agreement, and (ii) to have and to exercise any and all rights to
collect,  record, track and, during the continuance of an Event of Default, take
all actions to obtain Collections with respect to all Receivables.

         ss. 2.02.  Distribution  of Funds.  On each Funding Date, and provided,
that (i) no Event of Default is  continuing,  and (ii) the  Borrower  shall have
successfully  sent  by  Transmission  to  the  Master  Servicer  all  Receivable
Information for the period since the immediately  prior Funding Date, the Lender
shall  distribute any and all  Collections  received in the  Collection  Account
prior to 12:00 p.m. on the immediately prior Funding Date as follows:  FIRST, to
the Lender, an amount in cash equal to the Fee and Interest  Shortfall,  if any,
until such amount has been paid in full;  SECOND,  to the  Lender,  an amount in
cash equal to the Borrowing Base  Deficiency,  if any, until such amount is paid
in full; THIRD, to the Lender,  an amount in cash equal to the payment,  if any,
of principal on the Revolving  Loan due and payable on such Funding Date,  until
such  amount has been paid in full;  FOURTH,  to the  Lender,  an amount in cash
equal to the payment of any other  Lender  Debt due and payable on such  Funding
Date,  if any,  until  such  amount  has been paid in full;  and  FIFTH,  to the
Borrower, all remaining amounts of Collections, as requested.

         ss. 2.03.  Distribution  of Funds at the Maturity Date or Upon an Event
of  Default.  At the  Maturity  Date or  upon  the  occurrence  and  during  the
continuance  of an Event of Default,  subject to the rights and  remedies of the
Lender pursuant to Section 3.02 hereof,  the Lender shall distribute any and all
Collections as follows: FIRST, to the Lender, an amount in cash equal to any and
all accrued fees and  collection  costs as set forth in Sections  1.05 and 5.05,
until such amount has been paid in full;  SECOND,  to the  Lender,  an amount in
cash equal to all accrued  and unpaid  interest  on the  Revolving  Loan (at the
rates  established  under Section 1.05) until such amount has been paid in full;
THIRD,  to the Lender,  an amount in cash equal to the  principal  amount of the
Revolving Loan,  until such amount is paid in full;  FOURTH,  to the Lender,  an
amount in cash equal to the payment of any other  Lender Debt due and payable on
such date,  until such amount has been paid in full; and FIFTH, to the Borrower,
all remaining amounts of Collections.

         ss. 2.04. Distributions to the Borrower Generally. Distributions to the
Borrower on each Funding Date shall be deposited in the Borrower Account.

         ss. 2.05.  Avoidance of Breakage  Costs. So long as no Default or Event
of Default is  continuing  or the  Borrower has provided at least 30 days' prior
Written Notice  thereof,  the Lender shall not apply out of the  Collections any
payment of  principal to any portion of the  Revolving  Loan in excess of 10% of
the Revolving Loan outstanding at such time.

                                        6

<PAGE>

                                   ARTICLE III
                   REPRESENTATIONS AND WARRANTIES; COVENANTS;
                                EVENTS OF DEFAULT

         ss. 3.01 Representations and Warranties;  Covenants. The Borrower makes
on  the  Initial  Funding  Date  and  on  each  subsequent   Funding  Date,  the
representations  and  warranties  set forth in Exhibit  III  hereto,  and hereby
agrees to perform and observe the covenants set forth in Exhibit IV hereto.

         ss.  3.02.  Events of  Default;  Remedies.  (a) If any Event of Default
shall  occur  and be  continuing,  the  Lender  may,  by  Written  Notice to the
Borrower, take either or both of the following actions: (x) declare the Maturity
Date to have occurred, and (y) without limiting any rights hereunder and subject
to  applicable  law,  replace  the  Borrower  and the  Borrower's  agent  in its
performance of any or all of the "Primary Servicer  Responsibilities"  under the
RPTA  (which  replacement  may be  effectuated  through  the  outplacement  to a
qualified  and  experienced  third-party  of all back office  duties,  including
billing,  collection  and  processing   responsibilities,   and  access  to  all
personnel,   hardware   and   software   utilized   in   connection   with  such
responsibilities); provided, that with respect to the Event of Default in clause
(i)  of  Exhibit  V,  the  Maturity  Date  shall  be  deemed  to  have  occurred
automatically and without notice. Upon any such declaration or designation,  the
Lender  shall have,  in addition  to the rights and  remedies  which it may have
under this Agreement, all other rights and remedies provided after default under
the UCC and under other  applicable  law,  which  rights and  remedies  shall be
cumulative.

         (b) Right of Set-Off.  The Borrower hereby  irrevocably  authorizes and
instructs  the Lender to  set-off  the full  amount of any  Lender  Debt due and
payable  against  (i) any  Collections,  or (ii)  the  principal  amount  of any
Revolving Advance requested on or after such due date, provided,  however,  that
so long as no Event of Default is  continuing,  the Lender  will not set-off any
amounts  that are being  contested  in good faith by the  Purchaser.  No further
notification,  act or consent of any nature  whatsoever is required prior to the
right of the Lender to exercise  such right of  set-off;  provided,  however,  a
member of the Lender Group shall  promptly  notify the  Borrower:  (1) a set-off
pursuant to this Section 3.02 occurred, (2) the amount of such set-off and (3) a
description of the Lender Debt that was due and payable.

         ss. 3.03  Attorney-in-Fact.  The Borrower hereby irrevocably designates
and appoints the Lender, the Master Servicer and each other Person in the Lender
Group,  to the  extent  permitted  by  applicable  law  and  regulation,  as the
Borrower's  attorneys-in-fact,  which  irrevocable  power of attorney is coupled
with an interest,  with  authority,  upon the continuance of an Event of Default
(and to the extent not prohibited  under  applicable law and regulations) to (i)
endorse  or sign  the  Borrower's  name to  financing  statements,  remittances,
invoices,  assignments,  checks,  drafts,  or other  instruments or documents in
respect  of the  Receivables,  (ii)  notify  Obligors  to make  payments  on the
Receivables  directly to the Lender, and (iii) bring suit in the Borrower's name
and settle or compromise  such  Receivables as the Lender or the Master Servicer
may, in its discretion, deem appropriate.

                                        7

<PAGE>

                                   ARTICLE IV
                                    SECURITY

         ss. 4.01 Grant of Security  Interest.  As  collateral  security for the
Borrower's  obligations  to pay the  Lender  Debt when due and  payable  and its
indemnification  obligations hereunder, the Borrower hereby grants to the Lender
a first priority Lien on and security  interest in and right of set-off  against
all of the rights,  title and  interest of the Borrower in and to: (i) the RPTA;
(ii) to the  maximum  extent  permitted  by law,  the  Lockbox  and the  Lockbox
Account;  (iii) all  Accounts of the  Borrower  whether  now owned or  hereafter
acquired;  (iv) any and all amounts  held in any  accounts  maintained  at Fleet
National  Bank  or any  other  bank in  respect  of any of the  foregoing  or in
compliance  with  any  terms  of  this  Agreement;  (v)  all of  the  Additional
Collateral;  (vi) (x) any amounts held in the Facility Reserve,  any investments
thereof,   including,   without  limitation,  any  certificates  or  instruments
evidencing any such investments,  and all claims and choses in action in respect
of the  foregoing,  (y) any  interest or other  payment  made in respect of such
investments  and (z) any and all proceeds of any of the above and all claims and
choses in action in respect of the foregoing (to the extent the Lender makes any
such  investments,  the Borrower hereby  authorizes the Lender to hold in pledge
any  certificate  or  instrument  evidencing  such  investments),  and (vii) all
proceeds of the  foregoing;  (all of the  foregoing  clauses  (i)  through  (vi)
inclusive,  the  "COLLATERAL").  This Agreement shall be deemed to be a security
agreement as understood under the UCC.

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

                                    ARTICLE V
                                  MISCELLANEOUS

         ss. 5.01. Amendments,  etc. (a) No amendment or waiver of any provision
of this Agreement or consent to any departure  therefrom by a party hereto shall
be effective  unless in a writing signed by the Lender and the Borrower and then
such  amendment,  waiver or  consent  shall be  effective  only in the  specific
instance and for the specific purpose for which given. No failure on the part of
the Lender or the Borrower to exercise,  and no delay in  exercising,  any right
hereunder  shall  operate as a waiver  thereof;  nor shall any single or partial
exercise of any right hereunder  preclude any other or further  exercise thereof
or the exercise of any other right.

         (b) The  parties  hereto  agree to make  any  change,  modification  or
amendment to this  Agreement as may be requested by Duff & Phelps  Credit Rating
Co. or any other rating agency then rating the  receivables  finance  program of
the Lender,  so long as any such  change,  modification  or  amendment  does not
materially   adversely   affect  the  parties  hereto  (each  a  "Rating  Agency
Amendment").

                                        8

<PAGE>

           ss. 5.02 Notices, etc. All notices and other communications hereunder
shall,  unless  otherwise  stated  herein,  be in  writing  (which  may  include
facsimile  communication)  and shall be faxed or  delivered,  (i) to each  party
hereto (and the Lender  hereby  agrees that notices to or for its benefit may be
delivered to the Program  Manager and such delivery to the Program Manager shall
be deemed  received by the  Lender),  at its address set forth under its name on
the  signature  pages hereof or at such other  address as shall be designated by
such  party in a Written  Notice to the other  parties  hereto,  and (ii) to the
Program Manager and the Master Servicer at the addresses set forth on Schedule I
attached  hereto and as such  schedule  may be amended  from time to time by the
Lender. Notices and communications by facsimile shall be effective when sent and
confirmation received (and shall be promptly followed by hard copy), and notices
and communications sent by other means shall be effective when received.

           ss.  5.03.  Assignability.  (a)  This  Agreement  shall  inure to the
benefit of and be binding upon the parties hereto and their respective permitted
successors and assigns.

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

           ss. 5.04.  Further  Assurances.  The Borrower  shall, at its cost and
expense, upon the reasonable request of the Lender, duly execute and deliver, or
cause to be duly executed and delivered,  to the Lender such further instruments
and do and cause to be done such  further  acts as may be necessary or proper in
the  reasonable  opinion  of the  Lender  to  carry  out  more  effectively  the
provisions and purposes of this Agreement.

           ss. 5.05. Costs and Expenses;  Collection  Costs. The Borrower agrees
to pay (i) on the  Initial  Funding  Date and (ii)  with  respect  to costs  and
expenses  incurred  thereafter,  within  seven days of invoicing  therefor,  all
reasonable costs and expenses in connection with the preparation,  execution and
delivery of this Agreement and any waiver, modification, supplement or amendment
hereto,  including,  without  limitation,  the reasonable fees and out-of-pocket
expenses  of  counsel  for the  Lender  and its  Affiliates  and all  costs  and
expenses, if any (including reasonable counsel fees and expenses), of the Lender
and its Affiliates in connection  with the waiver,  amendment and enforcement of
this Agreement.

           (b) The Borrower  further  agrees to pay on the Initial  Funding Date
(and with respect to costs and expenses  incurred  following the Initial Funding
Date,  within seven days of invoicing  therefor)  (i) all  reasonable  costs and
expenses  incurred by the Lender or its agent in connection with (x) semi-annual
audits of the  Receivables,  (y) all audits  conducted  in  connection  with any
material  change in the  Receivables  or a change in the Credit  and  Collection
Policy  (z) and all  audits  conducted  during  the  continuance  of an Event of
Default,  (ii) all reasonable costs and expenses incurred by the Master Servicer
or the Program  Manager to  accommodate  any  significant  coding or data system
changes  necessitated  by the  Borrower  that would affect the  transmission  or
interpretation of data received through the interface,  and (iii) all reasonable
costs and  expenses  incurred  by the Lender for  additional  time and  material
expenses of the Master Servicer  resulting from a lack of either  cooperation or
responsiveness  of the Borrower to  agreed-upon  protocol and schedules with the
Master Servicer; provided, that the Borrower has been informed of the alleged

                                        9

<PAGE>

lack of cooperation or  responsiveness  and has been provided the opportunity to
correct such problems.

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

           ss. 5.06.  Confidentiality.  (a) The  Borrower and the Lender  hereby
acknowledge  that this Agreement,  the RPTA and documents  delivered  hereunder,
thereunder or in connection with, including, without limitation, any information
relating  to the  Borrower,  any  member of the  Lender  Group or any  Provider,
contain confidential and proprietary  information.  Unless otherwise required by
applicable  law, the Borrower and the Lender each hereby  agrees to maintain the
confidentiality  of this  Agreement (and all drafts,  memos and other  documents
delivered in connection therewith including, without limitation, any information
relating to the Borrower, any member of the Lender Group or a Provider delivered
hereunder or under the RPTA) in communications  with third parties and otherwise
and to take all reasonable actions to prevent the unauthorized use or disclosure
of  and  to  protect  the  confidentiality  of  such  confidential  information;
provided, that, such confidential information may be disclosed to (i) subject to
an  agreement  to keep  same  confidential  (1) the  Borrower's  legal  counsel,
accountants  and  auditors,  a  Provider  under  the  RPTA,  and the  Providers'
investors,  creditors, legal counsel,  accountants and auditors, (2) the Program
Manager,   the  Parent,   the  Person  then  fulfilling  the  "Primary  Servicer
Responsibilities"  under the RPTA, each member of the Lender Group, investors in
and  creditors of the Lender,  appropriate  rating  agencies with respect to the
Lender,  and each of their respective legal counsel,  accountants,  advisers and
auditors,  (3) to any other  Person with the written  consent of the  applicable
other party  hereto,  which  consent shall not be  unreasonably  withheld;  (ii)
subject to reasonable prior notice to the extent  practicable and not prohibited
by law, (1) pursuant to subpoena or other court of legal  process and (2) to the
extent  reasonably  required in connection  with any litigation or proceeding to
which  any party  hereto  is a party;  (iii)to  any  Person if such  information
otherwise  becomes  available  to such Person or publicly  available  through no
fault of any party governed by this Section 5.06; (iv) to any Governmental

                                       10

<PAGE>

Entity  requesting such  information;  and (v) in compliance with any law, rule,
regulation or order applicable to one of the parties hereto.

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

           (c) The Lender and the Borrower each hereby agrees to, and the Lender
shall take reasonable  steps to cause each member of the Lender Group to, comply
with all applicable state or federal statutes or regulations relating to patient
medical record confidentiality.

           ss.  5.07.  Term and  Termination;  Early  Termination  Fee.  (a) The
obligations of the Lender under this Agreement  shall continue in full force and
effect from the date hereof until the Maturity Date. Upon the payment in full of
all Lender Debt, the Lender shall take all actions and deliver all  assignments,
certificates,  releases, notices and other documents, at the Borrower's expense,
as the Borrower may reasonably request to effect such termination.

           (b) The Borrower may  terminate  this  Agreement at any time prior to
the Maturity Date upon (i) lapse of not less than ten days' prior Written Notice
(which  shall be  irrevocable)  to the  Lender  and (ii)  payment in full of all
Lender Debt,  including,  without limitation,  all applicable accrued and unpaid
fees,  charges and costs, all as provided  hereunder,  and in such occurrence of
clauses (i) and (ii) the commitment hereunder shall be deemed to be terminated.

           (c) Upon the termination of this Agreement (for any reason other than
the default hereof by the Lender or a Rating Agency Amendment that the Borrower,
in its reasonable  judgment and in good faith determines is unacceptable)  prior
to the Maturity Date, the Borrower shall pay to the Lender an early  termination
fee in an amount equal to the sum of (i) 2% of the Revolving  Commitment then in
effect and (ii) the remaining monthly payments of the Facility Management Fee.

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

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

                                       11

<PAGE>

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

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

           ss. 5.08. No Liability of Lender.  (a) Neither this Agreement nor any
document  executed in connection  herewith shall constitute an assumption by the
Lender of any obligation to any Obligor or any plan  participant of the Obligor,
or any obligation of the Borrower or any Provider.

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

           ss.  5.09.  Entire  Agreement;   Severability.  (a)  This  Agreement,
including  all  exhibits  and  schedules  hereto and the  documents  referred to
herein,  embody the entire agreement and understanding of the parties concerning
the subject matter contained herein. This Agreement supersedes any and all prior
agreements and understandings between the parties, whether written or oral.

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

           ss. 5.10.  GOVERNING LAW. THIS AGREEMENT  SHALL,  IN ACCORDANCE  WITH
SECTION  5-1401 OF THE  GENERAL  OBLIGATIONS  LAW OF THE  STATE OF NEW YORK,  BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICT OF
LAWS  PRINCIPLES  THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY
OTHER JURISDICTION, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION

                                       12

<PAGE>

OF THE SECURITY  INTEREST GRANTED  HEREUNDER,  OR REMEDIES  RELATED THERETO,  IN
RESPECT OF ANY PARTICULAR  COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.

           ss. 5.11.  WAIVER OF JURY TRIAL,  JURISDICTION AND VENUE. EACH OF THE
PARTIES  HERETO  HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY
LITIGATION  WITH  RESPECT TO ANY MATTER  RELATED TO THIS  AGREEMENT,  AND HEREBY
IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED
IN NEW YORK COUNTY,  NEW YORK CITY,  NEW YORK IN  CONNECTION  WITH ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. IN ANY SUCH LITIGATION,
EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS,  COMPLAINT OR
OTHER  PROCESS  AND AGREES THAT  SERVICE  THEREOF  MAY BE MADE BY  CERTIFIED  OR
REGISTERED  MAIL DIRECTED TO THE PARTIES HERETO AT THEIR  ADDRESSES SET FORTH ON
THE SIGNATURE PAGE HEREOF.

           ss. 5.12.  Execution in Counterparts.  This Agreement may be executed
in  counterparts,  each of  which  when so  executed  shall be  deemed  to be an
original and all of which when taken together shall  constitute one and the same
agreement.

           ss. 5.13. No Proceedings. The Borrower hereby agrees that it will not
institute  against the Lender any  proceeding  of the type referred to in clause
(i) of Exhibit V so long as any senior  indebtedness  issued by the Lender shall
be  outstanding  or there shall not have elapsed one year plus one day since the
last day on which any such senior indebtedness shall have been outstanding.

           ss. 5.14. Survival of Termination.  All indemnities  contained herein
shall survive the termination hereof unless otherwise provided. In addition, the
provisions of Sections  3.02(b),  5.05,  5.06,  5.08, 5.13 and this Section 5.14
shall survive any termination of this Agreement.

           ss. 5.15. Facility Reserve.  The Lender has established with The Bank
of New York a deposit  account in the name and sole  dominion and control of the
Lender  (the  "FACILITY  RESERVE")  for the purpose of  reserving  funds for the
payment of the Facility  Management Fee. The Facility Reserve shall be funded on
the Initial Funding Date in an amount equal to $720,000.

                                       13

<PAGE>

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

         BORROWER:             MIM FUNDING LLC

                               By: /s/ Edward J. Sitar
                                   -----------------------
                                        Name: Edward J. Sitar
                                        Title: Treasurer

                               Address: 100 Clearbrook Road
                                        Elmsford, NY 10523

                                        Attention: Edward J. Sitar
                                        Facsimile Number: (914) 460-1670

         LENDER:                        HFG HEALTHCO-4 LLC

                               By: HFG Healthco-4, Inc., a member

                               By: /s/ Dwight Jenkins
                                   ----------------------
                                        Name:  Dwight Jenkins
                                        Title: Vice President

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

                                       14

<PAGE>

                                    EXHIBIT I

                                   DEFINITIONS

         As used in the Agreement  (including its Exhibits and  Schedules),  the
following  terms shall have the following  meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

         "ACCOUNTS"  means all  accounts  (including,  without  limitation,  all
Receivables),   all  general   intangibles,   related  goodwill  and  all  other
obligations  for the  payment  of  money  arising  out of a  Provider's  sale of
merchandise or rendition of services in the ordinary course of business, whether
now existing or hereafter arising,  including all rights to reimbursement  under
any  agreements  with and payments  from Obligors and all proceeds of any of the
foregoing.

         "ACCOUNTS  RECEIVABLE  TURNOVER"  means,  at any date, for the 12-month
period then most recently  ended,  the product  obtained by multiplying  (a) the
quotient  obtained by dividing (i) aggregate  Receivables of the Providers as of
such date, by (ii) aggregate revenue of the Providers generated from Receivables
for the 12-month period then ended, by (b) 365 days.

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

         "ADDITIONAL COLLATERAL" means (including, without limitation, the items
listed on any separate schedule(s) at any time or from time to time furnished by
the Borrower to the Lender and made part of this Agreement and all accessions to
the Additional  Collateral,  substitutions and replacements  thereof (unless the
description  of  Additional   Collateral   expressly   excludes   after-acquired
Additional Collateral), now owned or existing and hereafter acquired, created or
arising,  and all products and proceeds thereof (including,  without limitation,
claims  of  the  Borrower  against  third  parties  for  loss  or  damage  to or
destruction of any Additional  Collateral)):  (a) all of Borrower's right, title
and interest in and to all equipment in all of its forms,  wherever located, now
or hereafter existing, including, but not limited to, all fixtures and all parts
thereof and all accessions thereto (any and all such equipment,  fixtures, parts
and accessions  being the  "EQUIPMENT");  (b) all inventory in all of its forms,
wherever located, now or hereafter existing,  including, but not limited to, (i)
all  raw  materials,  work  in  process,  semi-finished  products  and  finished
products,  intended  for sale or lease or to be  furnished  under  contracts  of
service in the ordinary course of business, of every kind and description;  (ii)
goods in which Borrower has an interest en masse or a joint or other interest or
right of any kind (including, without limitation, goods in which Borrower has an
interest  or right as  consignee),  and (iii)  goods  which are  returned  to or
repossessed  by Borrower,  and all accessions  thereto and products  thereof and
documents  (including,  without limitation,  all warehouse receipts,  negotiable
documents, bills of lading and other title documents) therefor (any and all such
inventory,  accessions,  products and documents being the "INVENTORY");  (c) all
present and future  securities,  security  entitlements and securities  accounts
(collectively,   "INVESTMENT  PROPERTY");  (d)  all  other  goods  and  personal
property,  whether  tangible or  intangible,  or whether now owned or  hereafter
acquired  and  wherever  located;  (e) all  proceeds  of every kind and  nature,
including  proceeds  of  proceeds,  of any and all of the  foregoing  Additional
Collateral (including, without limitation, proceeds which constitute property of
the types described in clauses (a) through (e) of this

                                       I-1

<PAGE>

paragraph)  and, to the extent not otherwise  included,  all (i) payments  under
insurance  (whether  or not  the  Lender  is the  loss  payee  thereof),  or any
indemnity,  warranty  or  guaranty,  payable  by  reason of loss or damage to or
otherwise  with respect to any of the foregoing  Additional  Collateral and (ii)
money  and cash;  and all  books,  records  and other  property  relating  to or
referring to any of the foregoing  Additional  Collateral,  including all books,
records,  ledger cards,  data processing  records,  computer  software and other
property and general  intangibles at any time used or useful in connection with,
evidencing,  embodying,  referring  to, or  relating  to,  any of the  foregoing
Additional Collateral.

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

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

         "A/R FEE" means the account  receivable  tracking fee, due on the first
Business Day of each Month, in an amount equal to:

                       AORA  x    TD    x ARP
                                 ----
                                 360
where:

         AORA    =  The average outstanding amount of the Revolving Loan for the
                    prior Month,  calculated  as the  arithmetic  average of all
                    daily balances

         TD      =  The actual amount of days in such prior Month

         ARP     =  The applicable A/R Fee Percentage,
                    determined  by reference to the AORA for the
                    prior Month, as follows:

AORA for                                                               A/R Fee
the Prior Month                                                       Percentage

less than or equal to $3,000,000                                         0.60%
greater than $3,000,000 but less than or equal to $5,000,000             0.55%
greater than $5,000,000 but less than or equal to $7,000,000             0.50%
greater than $7,000,000 but less than or equal to $10,000,000            0.40%
greater than $10,000,000 but less than or equal to $15,000,000           0.35%
greater than $15,000,000                                                 0.30%

         "AUTHORIZED  REPRESENTATIVE"  means each Person designated from time to
time, as appropriate,  in a Written Notice by the Borrower to the Lender for the
purposes of giving notices of

                                       I-2

<PAGE>

borrowing,  conversion or renewal of Revolving Advances, which designation shall
continue in force and effect until terminated in a Written Notice to the Lender.

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

         "BORROWER ACCOUNT" means initially account # 9428451209 of the Borrower
at Fleet National Bank, ABA # 011000390, or, thereafter, such other bank account
designated by the Borrower by Written Notice to the Master Servicer,  the Lender
and the Program Manager from time to time.

         "BORROWER'S CERTIFICATE" has the meaning set forth in Section 1.03.

         "BORROWING  BASE" means,  as of any time, an amount equal to (i) 85% of
the Expected Net Value of Eligible  Receivables as of such time in each case and
at all times as  determined  by reference to and as set forth in the most recent
Borrowing  Base  Certificate  delivered to the Lender by the Borrower as of such
time pursuant to Exhibit IV, clause (j)(i) minus (ii) Accrued Amounts and unpaid
expenses under Sections 1.05 and 5.05 as of such time.

         "BORROWING BASE CERTIFICATE"  means a certificate (which may be sent by
Transmission) signed by the Borrower and the Primary Servicer,  substantially in
the form of  Exhibit  VII-A  hereto,  which  shall  provide  the  most  recently
available  information  (including  updated  information)  with  respect  to the
Eligible  Receivables  of the Borrower  (segregated  by the classes set forth in
Schedule V attached  hereto) that is set forth in the general  trial  balance of
each of the Providers.

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

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

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

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

         "CHAMPUS"  means  the  Civilian  Health  and  Medical  Program  of  the
Uniformed  Service,  a program of medical  benefits  covering  former and active
members of the uniformed services and certain of their dependents,  financed and
administered  by the United  States  Departments  of  Defense,  Health and Human
Services and Transportation and established pursuant to 10 USC ss.ss. 1071-1106,
and all regulations  promulgated thereunder including without limitation (a) all
federal  statutes  (whether set forth in 10 USC ss.ss.  1071-1106 or  elsewhere)
affecting  CHAMPUS;  and (b) all  rules,  regulations  (including  32 CFR  199),
manuals,  orders and  administrative,  reimbursement and other guidelines of all
Governmental Entities (including, without limitation, the Department of

                                       I-3

<PAGE>

Health  and Human  Services,  the  Department  of  Defense,  the  Department  of
Transportation,  the Assistant  Secretary of Defense (Health  Affairs),  and the
Office of CHAMPUS, or any Person or entity succeeding to the functions of any of
the  foregoing)  promulgated  pursuant  to or in  connection  with  any  of  the
foregoing  (whether  or not  having  the  force  of law) in each  case as may be
amended, supplemented or otherwise modified from time to time.

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

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

         "COLLECTION  ACCOUNT"  has the  meaning  set  forth  in the  Depositary
Agreement.

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

         "CREDIT  AND  COLLECTION  POLICY"  means those  receivables  credit and
collection  policies and  practices of the Borrower in effect on the date of the
Agreement and attached as Schedule II hereto, as modified from time to time with
the consent of the Lender.

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

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

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

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

                                  DR
                                  --
                                  Pool

                  where:

                                       I-4

<PAGE>

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

                  Pool    =      The  Expected  Net Value of all  Purchased
                                 Receivables in the Month  immediately  prior
                                 to the date of calculation.

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

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

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

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

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

         "ELIGIBILITY  CRITERIA"  means the criteria  and basis for  determining
whether a Receivable  qualifies as an Eligible  Receivable,  all as set forth in
Exhibit VI hereto,  as such  Eligibility  Criteria may be modified  from time to
time by the  Lender  in its  good  faith  discretion  and  based  on  historical
performance and other Provider-related or Obligor-related factually-based credit
criteria upon Written Notice to the Borrower.

         "ELIGIBLE INVESTMENTS" means one or more of the following:

          (a) direct  obligations of, and obligations  fully  guaranteed by, the
     United States of America,  or any agency or  instrumentality  of the United
     States of America the obligations of which are backed by the full faith and
     credit of the United States of America, that are non-callable,  that have a
     fixed  dollar  amount of  principal  due at  maturity  that  cannot vary or
     change,  and, if rated by Standard & Poor's, do not have an 'r' highlighter
     affixed to its rating; or

                                       I-5

<PAGE>

          (b) securities  bearing  interest or sold at a discount  issued by any
     corporation  incorporated under the laws of the United States of America or
     any State  thereof  which have a  long-term  unsecured  debt  rating in the
     highest rating category of at least two rating  agencies;  and, in the case
     of  Standard  & Poor's  rating,  that  such  securities  do not have an 'r'
     highlighter affixed to its rating; or

          (c)  commercial  paper with (i) an original  maturity of less than 270
     days,  (ii) a rating in the highest rating  category of at least two rating
     agencies,  and  (iii) if rated by  Standard  & Poor's,  no 'r'  highlighter
     affixed to its rating; or

          (d)  certificates  of deposit of, banker's  acceptances  issued by, or
     federal  funds  sold  by,  any  depository  institution  or  trust  company
     (including  any bank  incorporated  under the laws of the United  States of
     America or any State thereof and subject to supervision  and examination by
     federal and/or state authorities) so long as at the time of such investment
     or contractual  commitment  providing for such  investment  such depository
     institution or trust company has a short-term  unsecured debt rating in the
     highest rating category (without regard to modifiers such as "+" or "-") of
     at least two rating agencies and provided, that each such investment has an
     original maturity of less than 365 days, and provided,  further that in the
     case of a Standard & Poor's rating,  that such  investment does not have an
     'r' highlighter affixed to its rating; or

          (e) repurchase  agreements governing direct general obligations of the
     United  States of America  having a maturity  of not more than 60 days from
     the date of acquisition  with an obligor having the highest rating category
     of at least two rating  agencies at the time of such  investment  provided,
     that in the case of a Standard & Poor's rating,  that such  investment does
     not have an 'r' highlighter affixed to its rating; or

          (f)  shares of no-load  money  market  funds (i) rated in the  highest
     rating category by at least two rating agencies or (ii) the assets of which
     are invested  solely in  investments  of the type specified in clauses (a),
     (b), (c) or (d) of the definition of Eligible Investments.

         "ELIGIBLE  RECEIVABLES"  means Receivables that satisfy the Eligibility
Criteria.

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

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

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

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

                                       I-6

<PAGE>

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

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

         "EXCLUDED  TAXES"  means taxes upon or  determined  by reference to the
Lender's  net  income  imposed  by the  jurisdiction  in which  such  Lender  is
organized or has its principal or registered office.

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

         "FACILITY MANAGEMENT FEE" has the meaning set forth in Section 1.05(e).

         "FACILITY RESERVE" has the meaning set forth in Section 5.15.

         "FEE AND INTEREST  SHORTFALL"  as of any Funding  Date,  shall mean the
amount,  if any,  of  fees or  interest  that  is due  and  payable  and has not
otherwise been paid in full by the Borrower.

         "FUNDING  DATE"  means,  at the sole  discretion  of the  Lender,  each
Business  Day after the Initial  Funding  Date until the  Maturity  Date or such
other dates as the Lender may establish  from time to time,  provided that there
shall be a minimum of one Funding  Date per week for the  Borrower to be able to
borrow.

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

         "GOVERNMENTAL  ENTITY" means the United  States of America,  any state,
any political  subdivision of a state and any agency or  instrumentality  of the
United States of America or any state or political  subdivision  thereof and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.  Payments from  Governmental  Entities
shall be deemed to include  payments  governed under the Social Security Act (42
U.S.C.  ss.ss. 1395 et seq.),  including  payments under Medicare,  Medicaid and
CHAMPUS, and payments administered or regulated by HCFA.

         "GUARANTY" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly  guaranteeing any Debt or other obligation
of any other Person and, without  limiting the generality of the foregoing,  any
obligation,  direct or indirect,  contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay),  or (ii)  entered  into for the  purpose of  assuring in any other
manner the obligee of such Debt or other obligation of the payment thereof or to
protect the obligee of such Debt or other obligation of the

                                       I-7

<PAGE>

payment  thereof or to protect the obligee  against loss in respect  thereof (in
whole  or  in  part),   provided  that  the  term  Guaranty  shall  not  include
endorsements  for collection or deposit in the ordinary course of business.  The
term "Guarantee" used as a verb has a corresponding meaning.

         "HCFA"  means the Health Care  Financing  Administration  of the United
States Department of Health and Human Services.

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

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

         "INTEREST  PAYMENT DATE" means the last day of each Interest Period, or
if such day is not a Business Day, the next succeeding Business Day.

         "INTEREST  PERIOD"  means,  with  respect to a Revolving  Advance,  the
period  commencing on, as the case may be, the borrowing or conversion date with
respect to such  Revolving  Advance and ending one month  thereafter;  provided,
that no Interest  Period may be selected  that expires  later than the Scheduled
Maturity Date; and provided,  further,  that any Interest  Period that begins on
the last Business Day of a Month (or on a day for which there is no  numerically
corresponding day in the Month at the end of the Interest Period) shall, subject
to the foregoing proviso, end on the last Business Day of a Month.

         "INVOICE  DATE"  means,  with respect to any  Receivable,  the date set
forth on the related invoice or statement

         "LAST SERVICE DATE" means, with respect to any Receivable that is not a
Rebate Receivable,  the earlier of (i) the date on which the applicable Provider
has received the data required to bill such Receivable and (ii) the last day for
submission  of the related claim under any related  contracts.  "LENDER" has the
meaning set forth in the preamble hereto.

         "LENDER  DEBT"  means,  without  duplication,  and includes any and all
amounts due,  whether now existing or hereafter  arising,  under the  Agreement,
including, without limitation, any and all principal, interest, penalties, fees,
charges,  premiums,  indemnities  and  costs  owed or owing to the  Lender,  the
Program  Manager or the Master  Servicer by the Borrower,  any Provider,  or any
Affiliate of the Borrower or a Provider,  arising  under or in  connection  with
this Agreement, the RPTA or the Depositary Agreement, in each instance,  whether
absolute or contingent,  direct or indirect,  secured or unsecured,  due or not,
arising by operation  of law or  otherwise,  and all interest and other  charges
thereon,  including,  without limitation,  post-petition interest whether or not
such interest is an allowable claim in a bankruptcy.

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

                                       I-8

<PAGE>

         "LENDER  LOCKBOX" means the lockboxes  located at the address set forth
on  Schedule  IV to  receive  checks  with  respect  to  Receivables  payable by
Insurers.

         "LENDER LOCKBOX  ACCOUNT" means the accounts at the Lockbox Bank as set
forth on Schedule IV as associated  with the Lender  Lockbox and  established by
the  Borrower  to deposit  Collections,  including  Collections  received in the
Lender Lockbox and Collections received by wire transfer directly from Insurers,
all as more fully set forth in the Depositary Agreement.

         "LIBO RATE" means the rate established by the Program Manager from time
to time based on an annualized  30-day interest rate (calculated on the basis of
actual days elapsed over a 360-day  year) equal to the offered rate that appears
on page 3751 (or any successor or substitute  pages) of the Telerate Service (or
any successor to or substitute for such Telerate  Service  providing  comparable
rate  quotations)  for the Bank of Tokyo for U.S. dollar deposits of amounts and
in funds comparable to the principal amount of the Revolving Loan.

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

         "LOCKBOX" means either the Provider  Lockbox or the Lender Lockbox,  as
the context requires.

         "LOCKBOX  ACCOUNT"  means  either the Provider  Lockbox  Account or the
Lender Lockbox Account,  each associated with the respective  Lockbox to deposit
Collections,  including  Collections received by wire transfer directly,  all as
more fully set forth in the Depositary Agreement.

         "LOCKBOX  BANK" means  Fleet  National  Bank as lockbox  bank under the
Depositary Agreement.

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

                                            DR
                                            --
                                             C

where:

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

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

                                       I-9

<PAGE>

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

         "MATERIAL ADVERSE EFFECT" means any event, condition,  change or effect
that (a) has a materially adverse effect on the business, Properties, operations
or financial  condition of (i) the Providers on a consolidated  basis,  (ii) the
Borrower,  (iii) the  Primary  Servicer,  or (iv) the  Parent on a  consolidated
basis,  (b)  materially  impairs  the  ability of the  Borrower  to perform  its
obligations  under this  Agreement,  (c)  materially  impairs the ability of the
Primary  Servicer or the Providers or the Borrower to perform  their  respective
obligations   under  the  RPTA,   (d)   materially   impairs  the   validity  or
enforceability  of, or  materially  impairs  the  rights,  remedies  or benefits
available  to the Lender under this  Agreement or (as assignee of the  Borrower)
under the RPTA, or (e) due to acts or actions within the control or influence of
any of the  Providers,  the Primary  Servicer or the Parent,  changes,  or could
reasonably  be expected to change,  the  characterization  and  treatment of the
sales of Receivables under the RPTA as something other than a true sale.

         "MATURITY  DATE" means the earlier of (a) the Scheduled  Maturity Date,
and (b) the occurrence of an Event of Default unless such event is waived by the
Lender in writing.

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

         "MONTH" means a calendar month.

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

         "NET VALUE  FACTOR"  means,  initially,  the  percentages  set forth on
Schedule V attached  hereto,  as such  percentages  may be adjusted,  upwards or
downwards on a prospective  basis with Written  Notice to the  Borrower,  in the
good faith  discretion of the Lender but in  consultation  with the Borrower and
the Primary  Servicer,  based on (i) the  historical  actual  final  collections
received  on the  Receivables  within  180  days  of the  Invoice  Date  of such
Receivables  (without  regard  to the  factors  set forth in the  definition  of
"Defaulted Receivable"), divided by (ii) the gross value of such Receivables.

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

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

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

         "OTHER ENTITIES" means any Provider and each of its direct and indirect
parents or  subsidiaries  other than the Borrower,  in whatever form of business
such entity exists.

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

                                      I-10

<PAGE>

         "OVERNIGHT  RATE" means the interest rate for overnight funds as set by
the Lockbox Bank from time to time.

         "PARENT" means MIM Corporation.

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

         "PERMITTED LIEN" means a Lien that is expressly subordinated in writing
to the Lien created  hereunder in a manner acceptable to the Lender, in its sole
discretion,  and, with respect to any such Lien existing on the Closing Date, is
described on Schedule III hereto.

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

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

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

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

         "PROVIDER"  means  each  party  listed  as a  Provider  under the RPTA,
together with its Affiliates, corporate successors and permitted assigns.

         "PROVIDER  LOCKBOX"means  the lockboxes set forth on Schedule IV hereto
to receive checks with respect to Receivables payable by Governmental Entities.

         "PROVIDER  LOCKBOX ACCOUNT" means the accounts set forth on Schedule IV
hereto in the name of the Providers  and  associated  with the Provider  Lockbox
established  and  controlled  by  the  Providers  to  deposit  Collections  from
Governmental  Entities,  including  Collections received in the Provider Lockbox
and Collections  received by wire transfer directly from Governmental  Entities,
all as more fully set forth in the Depositary Agreement.

         "PURCHASED  RECEIVABLE"  means a Receivable  that has been purchased by
the Borrower under the RPTA.

         "RATING AGENCY AMENDMENT" has the meaning set forth in Section 5.01(b).

         "REBATE  RECEIVABLE"  means a  Receivable,  the  Obligor  of which is a
manufacturer or distributor of pharmaceutical products.

                                      I-11

<PAGE>

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

         "RECEIVABLES"  means all accounts  receivable  or general  intangibles,
owing (or in the case of  Unbilled  Receivables,  to be owing) to the  Borrower,
including  those arising out of the rendition of pharmacy  benefit and formulary
management or rebate  administration  services provided to any Person (including
the   provision  of  market   information)   or  the  sale  of  medical   and/or
pharmaceutical  products  by a Provider  and any  medical  services  rendered in
connection  therewith,  including,  without  limitation,  all  amounts  due from
manufacturers  or distributors of  pharmaceutical  products based on contractual
payments and all rights to reimbursement  under any agreements with and payments
from  Obligors,  together  with,  to the maximum  extent  permitted  by law, all
accounts  receivable  and  general  intangibles  related  thereto,  all  rights,
remedies, guaranties,  security interests and Liens in respect of the foregoing,
all books,  records and other  Property  evidencing or related to the foregoing,
and all proceeds of any of the foregoing.

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

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

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

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

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

         "SCHEDULED  MATURITY DATE" means the date  thirty-six  months after the
Initial Funding Date, as such date may, in the sole discretion of the Lender, be
extended.

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

         "SUBSIDIARY"means,  with respect to any Provider,  any  corporation  or
entity of which at least a majority of the outstanding  shares of stock or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors (or Persons  performing similar functions) of
such  corporation or entity  (irrespective of whether or not at the time, in the
case of a corporation,  stock of any other class or classes of such  corporation
shall  have or  might  have  voting  power by  reason  of the  happening  of any
contingency)  is at the time directly or indirectly  owned or controlled by such
Provider.

         "TANGIBLE NET WORTH" with respect to the Borrower,  means, at any time,
the  excess  of (i) the  Expected  Net  Value  of all  Receivables  owned by the
Borrower  and not  financed by the Lender,  plus cash,  plus  investments,  plus
amounts which are owing from the Lender to the Borrower

                                      I-12

<PAGE>

minus (ii) the sum of all accrued unpaid monetary obligations and accrued unpaid
fees and expenses payable hereunder or otherwise owed by the Borrower.

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

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

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

         "WRITTEN   NOTICE"  and  "IN   WRITING"   means  any  form  of  written
communication or a communication by means of telex, telecopier device, telegraph
or cable as provided in Section 5.02.

         Other Terms. All accounting terms not specifically defined herein shall
be construed in accordance  with GAAP. All terms used in Article 9 of the UCC in
the State of New York, and not specifically  defined herein,  are used herein as
defined in such Article 9.

                                      I-13

<PAGE>

                                   EXHIBIT II

                        CONDITIONS OF REVOLVING ADVANCES

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

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

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

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

     (d)  A copy of the opening  balance sheet of the Borrower as at the Initial
          Funding  Date,  certified  by  the  chief  financial  officer  of  the
          Borrower.

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

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

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

     (h)  A  favorable  opinion of King &  Spalding,  counsel  to the  Borrower,
          substantially in the form attached hereto as Exhibit IX-A.

                                      II-1

<PAGE>

     (i)  A favorable  opinion of King & Spalding,  counsel for the Borrower and
          the Providers,  substantially  in the form attached  hereto as Exhibit
          IX-B.

     (j)  The  Assignment  of  Receivables  Purchase and  Transfer  Agreement as
          Collateral  Security with respect to the RPTA and  assignments  of all
          other  documents,  lockboxes and lockbox  accounts with respect to the
          RPTA, duly executed by the Borrower and acknowledged by the Providers.

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

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

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

     (n)  Payment of a facility  fee of $450,000 to  Healthcare  Finance  Group,
          Inc.

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

     (p)  Affirmation by Duff & Phelps Credit Rating Co. or an equivalent rating
          agency  acceptable  to the  Lender  of the  transactions  contemplated
          hereunder with a minimum rating of AA/BBB-.

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

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

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

         It shall be a further  condition  precedent on the Initial Funding Date
that the Lender shall have paid the following:  (i) $600,000 to General Electric
Capital Corporation  ("GECC"),  on behalf of the Primary Servicer,  representing
the  termination  fee payable by the Primary  Servicer  in  connection  with the
termination,  on the date hereof, of the Primary Servicer's credit facility with
GECC  and  (ii)  to the  Primary  Servicer,  an  amount  equal  to  the  current
unamortized  portion of the closing fee paid by the Primary  Servicer  under its
credit facility with GECC.

                                      II-2

<PAGE>

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

     (a)  the Borrower  shall have  delivered  to the Lender,  by 10:00 a.m. New
          York City time,  at least one Business Day prior to such Funding Date,
          in  form  and  substance   satisfactory  to  the  Lender  a  completed
          Borrower's Certificate and a Borrowing Base Certificate, together with
          such  additional  information  as may  reasonably  be requested by the
          Lender or the Master Servicer;

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

          (i)  the representations and warranties  contained in Exhibits III and
               VII are true and  correct in all  material  respects on and as of
               the date of such  Revolving  Advance as though  made on and as of
               such date (except any  representation  or warranty that expressly
               indicates  that it is being made as of a specific  date, in which
               case such  representation  or warranty shall be correct on and as
               of such date), and

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

     (c)  the Lender  shall have  received  such other  approvals,  opinions  or
          documents as it may reasonably request.

                                      II-3

<PAGE>

                                   EXHIBIT III

                         REPRESENTATIONS AND WARRANTIES

         The Borrower represents and warrants as follows:

         (a) The Borrower is a limited liability company duly organized, validly
existing and in good  standing  under the laws of the State of Delaware,  and is
duly qualified to do business,  and is in good standing,  in every  jurisdiction
where the nature of its business  requires it to be so qualified,  except in any
jurisdiction other than that of its chief executive offices where the failure to
be so qualified would not have a Material Adverse Effect.

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

         (c) Except for financing statements or termination statements that have
been delivered to the Lender for filing in accordance with  subsections 1(e) and
(g) of Exhibit  II, no  authorization  or  approval  or other  action by, and no
notice to or filing  with,  any  Governmental  Entity  is  required  for the due
execution, delivery and performance by it of the Agreement or any other document
to be delivered thereunder.

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

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

         (f) Except as disclosed on Schedule  III, no Provider has been notified
by any Obligor, Governmental Entity or instrumentality,  accreditation agency or
any other person, during

                                      III-1

<PAGE>

the immediately  preceding 24 month period, that such party has rescinded or not
renewed,  or is  reasonably  likely to rescind or not renew,  any such  material
permit, license, accreditation,  certification, authorization, approval, consent
or  agreement  granted  by it to a Provider  or to which it and a  Provider  are
parties.

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

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

         (i) The RPTA is in full force and effect and no Event of Termination or
Servicer  Termination  Event  (without  regard to waivers  granted or sought) is
continuing thereunder.

         (j) Except as disclosed in Schedule III hereto, there is no pending or,
to the Borrower's knowledge, threatened action or proceeding or injunction, writ
or restraining  order  affecting the Borrower or any Provider  before any court,
Governmental  Entity or arbitrator  which could reasonably be expected to result
in a Material Adverse Effect, or which purports to affect the legality, validity
or enforceability of the Agreement,  the RPTA or any other Document, and neither
the Borrower  nor any  Provider is currently  the subject of, or has any present
intention of  commencing,  an insolvency  proceeding or petition in  bankruptcy.
Furthermore, to the Borrower's knowledge, there are no pending civil or criminal
investigations  by any  Governmental  Entity  involving  it or its  officers  or
directors  and neither it nor any of its officers or directors has been involved
in,  or  is  the  subject  of,  any  civil  or  criminal  investigation  by  any
Governmental Entity.

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

         (l) All Receivable Information, information provided in the application
for the program  effectuated  by the RPTA, and each other  document,  report and
Transmission  provided  by the  Borrower  to the  Lender  Group  is or  shall be
accurate  in all  material  respects  as of its  date  and  as of  the  date  so
furnished, and no such document contains or will contain any untrue statement of
a material  fact or omits or will omit to state a  material  fact  necessary  in
order  to  make  the  statements   contained  therein,   in  the  light  of  the
circumstances  under  which  they  were  made  and when  taken  as a whole,  not
misleading.

                                      III-2

<PAGE>

         (m) The principal place of business and chief  executive  office of the
Borrower  and the office  where the Borrower  keeps its records  concerning  the
Receivables are located at the address  referred to on the signature page of the
Agreement  and except as disclosed  on Schedule  III hereto,  there have been no
other such locations for the four immediately prior months.

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

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

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

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

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

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

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

         (u) The  Lockboxes  are the only  post  office  boxes  and the  Lockbox
Accounts are the only lockbox  accounts  maintained for Receivables  (other than
those lockboxes and lockbox

                                      III-3

<PAGE>

accounts  terminated  or being  terminated  prior to or on the  Initial  Funding
Date);  and,  except as disclosed  on Schedule  III hereto,  no direction of any
Provider is in effect directing  Obligors to remit payments on Receivables other
than to the Lockboxes or the Lockbox Accounts.

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

         (w)  There  are no  pending  civil or  criminal  investigations  by any
Governmental  Entity  involving  the  Borrower,  a  Provider  or  any  of  their
respective officers or directors and none of the Borrower,  the Providers or any
of their  respective  officers or directors has been involved in, or the subject
of, any civil or criminal investigation by any Governmental Entity.

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

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

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

         (aa) The Obligor of each Eligible  Receivable  has not been the Obligor
of any Defaulted  Receivables in the past 12 months (other than, for the purpose
of this clause, as a result of good faith disputes).

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

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

         (dd) Each  Receivable  that is an Unbilled  Receivable  will be, or has
been,  billed  to the  Obligor  of such  Receivable  within  30 days of the Last
Service  Date,  or in the case of a Rebate  Receivable,  will be,  or has  been,
billed to the Obligor of the Rebate  Receivable  within 60 days after the end of
the fiscal quarter in which such Rebate Receivable became due and payable.

         (ee) All computer software used by any Provider or the Primary Servicer
in  connection  with the  Receivables  is date  compliant,  and no problems have
occurred as a result of the date conversion.

                                      III-4

<PAGE>

                                   EXHIBIT IV

                                    COVENANTS

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

         (a) Compliance with Laws, etc. The Borrower will comply in all material
respects with all applicable  laws,  rules,  regulations and orders and preserve
and maintain its corporate existence,  rights, franchises,  qualifications,  and
privileges  except to the extent  that the  failure so to comply with such laws,
rules and regulations or the failure so to preserve and maintain such existence,
rights, franchises,  qualifications, and privileges would not result in Material
Adverse Effect.

         (b) Offices,  Records and Books of Account.  The Borrower will keep its
principal place of business and chief  executive  office and the office where it
keeps its records  concerning the Receivables at the address of the Borrower set
forth under its name on the  signature  page to the  Agreement or, upon 30 days'
prior  Written  Notice to the Lender,  at any other  locations in  jurisdictions
where all actions reasonably  requested by the Lender or otherwise  necessary to
protect and perfect the Lender's  interest in the  Receivables  and all proceeds
thereof have been taken and  completed.  The  Borrower  shall keep its books and
accounts  in  accordance  with GAAP and shall make a  notation  on its books and
records,  including any computer files, to indicate which  Receivables have been
assigned as  security to the Lender and, to the extent not sold or  transferred,
the security  interest of the Lender in the Borrower's  Accounts not assigned to
the Lender.  The  Borrower  shall  maintain  and  implement  administrative  and
operating  procedures  (including,  without  limitation,  an ability to recreate
records  evidencing  Receivables  and  related  contracts  in the  event  of the
destruction  of the  originals  thereof),  and keep and maintain all  documents,
books,  records and other  information  reasonably  necessary or  advisable  for
collecting all Receivables (including,  without limitation,  records adequate to
permit the daily  identification  of each  Receivable and all Collections of and
adjustments  to each  existing  Receivable)  and for  providing  the  Receivable
Information.

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

         (d) Notice of Breach of  Representations  and Warranties.  The Borrower
shall promptly (and in no event later than five Business Days  following  actual
knowledge  thereof)  inform the Lender and the Master  Servicer of any breach of
covenants or representations and warranties

                                      IV-1

<PAGE>

hereunder and under the RPTA, including, without limitation, upon discovery of a
breach of the Eligibility Criteria set forth in Exhibit VI hereof and thereof.

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

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

         (g)  Extension  or  Amendment of  Receivables.  The Borrower  shall not
amend,  waive or agree, or otherwise suffer or permit a Provider to amend, waive
or agree, to any deviation from the terms or conditions of any Receivable  owned
by the Borrower in a manner inconsistent with the Credit and Collection Policy.

         (h) Change in Business or Credit and  Collection  Policy.  The Borrower
will not any change in the Credit  and  Collection  Policy or make any change in
the character of its business  that, in either  event,  is reasonably  likely to
result  in a  Material  Adverse  Effect.  The  Borrower  will not make any other
material  changes in the Credit and Collection  Policy without the prior written
consent of the Lender.

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

         (j) Change in Payment Instructions. The Borrower will not terminate the
Lockboxes  or the Lockbox  Accounts,  or make any change or  replacement  in the
instructions

                                      IV-2

<PAGE>

contained in any  invoice,  Notice or  otherwise,  or  regarding  payments  with
respect  to  Accounts  to be made to the  Borrower,  the  Lender  or the  Master
Servicer,  except  upon the prior and  express  written  consent of the  Program
Manager or the Lender.

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

          (i)  on Monday of each week,  or such other day as is mutually  agreed
               upon by the Lender and the  Borrower,  (or,  if such day is not a
               Business  Day,  the  immediately   following   Business  Day),  a
               Borrowing Base Certificate;

          (ii) as soon as  available  and in any event  within 45 days after the
               end of each of the first  three  quarters  of each fiscal year of
               the  Borrower,  balance  sheets of the  Borrower as of the end of
               such quarter and  statements  of income,  cash flows and retained
               earnings  of  the  Borrower  for  the  period  commencing  at the
               beginning  of the current  fiscal year and ending with the end of
               such  quarter,  certified by the chief  financial  officer of the
               Borrower,  and  accompanied  by a  certificate  of an  authorized
               officer of the Borrower  stating  that,  as of such date,  (i) no
               Event   of   Default   exists   and  is   continuing,   (ii)  all
               representations  and  warranties  are  true  and  correct  in all
               material  respects  (except any  representation  or warranty that
               expressly  indicates that it is being made as of a specific date,
               in which case such  representation  or warranty shall be true and
               correct  on  and  as of  such  date)  and  (iii)  the  conditions
               precedent  set  forth in  paragraph  2 of  Exhibit  II have  been
               fulfilled or waived in writing by the Lender,  and  detailing its
               compliance  for such fiscal period with the  financial  covenants
               contained in this Agreement;

         (iii) as soon as  available  and in any event  within 90 days after the
               end of each fiscal year of the  Borrower,  balance  sheets as of,
               and statements of income for, such fiscal year,  and  accompanied
               by a certificate of an authorized officer of the Borrower stating
               that,  as of such  date,  (i) no Event of  Default  exists and is
               continuing,  (ii) all representations and warranties are true and
               correct in all material  respects (except any  representation  or
               warranty that  expressly  indicates that it is being made as of a
               specific  date,  in which case such  representation  or  warranty
               shall be true and  correct  on and as of such date) and (iii) the
               conditions  precedent set forth in paragraph 2 of Exhibit II have
               been fulfilled or waived in writing by the Lender,  and detailing
               its   compliance  for  such  fiscal  period  with  the  financial
               covenants contained in this Agreement;

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

                                      IV-3

<PAGE>

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

          (vi) promptly (and in no event later than five Business Days following
               actual   knowledge  or  receipt   thereof),   Written  Notice  in
               reasonable detail, of (x) any Lien asserted or claim made against
               a   Receivable   or  (y)  the   results   of  any  cost   report,
               investigations or similar audits of a Provider being conducted by
               any federal, state or county Governmental Entity or its agents or
               designees;

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

        (viii) as soon as possible  and in any event  within five (5) Business
               Days after  becoming  aware of the  occurrence  thereof,  Written
               Notice of any matter that could  reasonably be expected to result
               in a Material Adverse Effect;

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

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

         (l) Notice of  Proceedings;  Overpayments.  The Borrower shall promptly
notify the Master Servicer (and modify the next Borrowing Base Certificate to be
delivered  hereunder)  in the event of any action,  suit,  proceeding,  dispute,
set-off, deduction, defense or counterclaim involving in excess of $100,000 that
is or has been  threatened  to be  asserted  by an Obligor  with  respect to any
Receivable.  The Borrower  shall make, or cause to be made,  all payments to the
Obligors   necessary  to  prevent  the  Obligors  from  offsetting  any  earlier
overpayment to the Borrower or any Provider against any amounts the Obligors owe
on any Receivables.

         (m)  Officer's  Certificate.  On the  dates  the  financial  statements
referred to in clause (j) above are to be  delivered  after the Initial  Funding
Date, the chief financial officer of the Borrower shall deliver a certificate to
the  Lender,  stating  that,  as of  such  date,  (i)  all  representations  and
warranties  are  true  and  correct  in  all  material   respects   (except  any
representation or warranty that expressly  indicates that it is being made as of
a specific date, in which case such representation or warranty shall be true and
correct as of such specific  date),  (ii) the conditions  precedent set forth in
paragraph  2 of  Exhibit  II have been  fulfilled  or waived in  writing  by the
Lender, and (iii) no Event of Default exists and is continuing.

                                      IV-4

<PAGE>

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

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

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

         (q)  Preservation of Corporate  Existence.  The Borrower shall preserve
and maintain its corporate existence,  rights,  franchises and privileges in the
jurisdiction  of its  organization,  and  qualify and remain  qualified  in good
standing  as a foreign  corporation  in each  jurisdiction  where the failure to
preserve  and  maintain  such  existence,  rights,  franchises,  privileges  and
qualification  would materially  adversely affect the interests of the Lender or
the Program  Manager or their  ability to perform their  respective  obligations
hereunder or under the RPTA.

         (r) RPTA.  The Borrower  will,  at its sole  expense,  timely and fully
perform and comply with all provisions, covenants and other promises required to
be  observed by it under the RPTA,  maintain  the RPTA in full force and effect,
enforce the RPTA in  accordance  with its terms,  take all such action as may be
from time to time reasonably  requested by the Lender,  and make to any party to
the RPTA such demands and requests for  information and reports or for action as
the  Borrower  is entitled  to make  thereunder  and as may be from time to time
reasonably  requested by the Lender.  The Borrower  shall not permit any waiver,
modification  or amendment of the RPTA.  The Borrower shall not permit any other
Person to become a "Provider"  under the RPTA without the prior written  consent
of the Lender.

                                      IV-5

<PAGE>

                                SPECIAL COVENANTS
                               ENTITY SEPARATENESS

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

          (i)  The Borrower will at all times maintain at least one  independent
               manager/director  who is (x) not a  current  or  former  officer,
               manager,  director or employee of an Affiliate of the Borrower or
               any Other  Entity and who is not a current  or former  officer or
               employee of the Borrower and (y) not a  stockholder  of any Other
               Entity or any of their respective Affiliates.

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

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

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

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

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

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

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

                                      IV-6

<PAGE>

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

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

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

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

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

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

                                      IV-7

<PAGE>

                                    EXHIBIT V

                                EVENTS OF DEFAULT

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

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

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

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

         (d) An Event of Termination shall have occurred under the RPTA (without
regard to waivers granted or sought).

         (e) Reserved.

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

         (g) The Borrower shall incur any Debt other than under the Agreement.

                                       V-1

<PAGE>

         (h) This  Agreement  shall for any reason  (other than  pursuant to the
terms hereof) fail or cease to create,  or the security interest created by this
Agreement fails or ceases to be, a valid and perfected  security interest in the
Receivables and the Collections with respect thereto free and clear of all Liens
(other than Permitted Liens).

         (i) The Borrower or any Provider  shall  generally not pay its debts as
such debts become due, or shall admit in writing its  inability to pay its debts
generally,  or shall make a general assignment for the benefit of creditors;  or
any  proceeding  shall be  instituted by or against the Borrower or any Provider
seeking  to  adjudicate  it a bankrupt  or  insolvent,  or seeking  liquidation,
winding up,  reorganization,  arrangement,  adjustment,  protection,  relief, or
composition of it or its debts under any law relating to bankruptcy,  insolvency
or  reorganization  or relief of  debtors,  or seeking the entry of an order for
relief or the  appointment  of a receiver,  trustee,  custodian or other similar
official for it or for any substantial  part of its Property and, in the case of
any such  proceeding  instituted  against it (but not instituted by it),  either
such proceeding shall remain undismissed or unstayed for a period of 45 days, or
any of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar  official for, it or for any substantial  part of its
Property)  shall occur; or the Borrower or any Provider shall take any action to
authorize any of the actions set forth above in this paragraph (i).

         (j) There  shall  have  occurred  any  Material  Adverse  Effect  since
December 31, 1999.

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

         (l) The Loss-to-Liquidation Ratio in any Month exceeds 5 %.

         (m) The  arithmetic  average of the  Loss-to-Liquidation  Ratios in any
three consecutive Months exceeds 3%.

         (n) The Delinquency Ratio in any Month exceeds 10%.

         (o) The  arithmetic  average  of the  Delinquency  Ratios  in any three
consecutive Months exceeds 8%.

         (p)  Judgments or orders for payment of money (other than  judgments or
orders in respect of which  adequate  insurance  is  maintained  for the payment
thereof) in excess of  $500,000 in the  aggregate  against the  Borrower  remain
unpaid, unstayed on appeal,  undischarged,  unbonded or undismissed for a period
of 30 days or more.

                                       V-2

<PAGE>

         (q) Any governmental  authority  (including,  without  limitation,  the
Internal  Revenue  Service or the PBGC) files a notice of a Lien against (i) any
of the  Receivables  or (ii)  assets  other than the  Receivables  involving  an
aggregate  amount in excess of $500,000 which remains unpaid or discharged for a
period of 30 days or more.

         (r) The  Borrower  shall fail to  discharge  within a period of 30 days
after the commencement  thereof any attachment,  sequestration,  forfeiture,  or
similar  proceeding or  proceedings  involving an aggregate  amount in excess of
$500,000 against any of its Properties.

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

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

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

         (v) The  Borrower  shall at any time fail to  maintain a  Tangible  Net
Worth of at least 5% of the then outstanding amount of the Revolving Loan.

         (w) If, at any date, the aggregate Expected Net Value of all Delinquent
Receivables that became Delinquent  Receivables  during the prior 3 months is in
excess of 8% of the aggregate  Expected Net Value of all Receivables  pledged by
the Borrower to the Lender during the prior 3 months  (regardless of whether the
Denied  Receivables  are  repurchased  by the Providers or the Primary  Servicer
pursuant to Article IV of the RPTA).

         (x)  As  of  any  date  after  the  Initial   Funding  Date,   (i)  the
dollar-weighted  average  days  outstanding  with  respect  to  all  outstanding
Eligible  Receivables  on  such  date  and on the  same  day of  each of the two
preceding  Months  (or if there is no  corresponding  day in any such  preceding
month,  the last day of such month) is greater than 75 days, or (ii) the average
over the preceding 90 day period of the dollar-weighted average days outstanding
with respect to all  outstanding  Eligible  Receivables  on each day during such
period is greater than 75 days.

         (y) As of any date after the Initial Funding Date, more than 10% of all
outstanding  Eligible  Receivables are aged more than 120 days but less than 180
days from the respective Invoice Dates of such Eligible Receivables.

         (z) As of any date,  Collections on all Eligible  Receivables that have
been  liquidated or written off during the then most recent 13 week period,  are
less than 10% of the  aggregate  gross value  (billed  amount) of such  Eligible
Receivables.

                                       V-3

<PAGE>

                                   EXHIBIT VI

                              ELIGIBILITY CRITERIA

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

         (a) The information  provided by the Borrower with respect to each such
Receivable  is  complete  and  correct  and  all  documents,   attestations  and
agreements  relating thereto that have been delivered to the Lender are true and
correct,  and, other than with respect to Unbilled  Receivables,  the applicable
Provider has billed the applicable Obligor and has delivered to such Obligor all
requested  supporting  claim  documents  with respect to such  Receivable and no
amounts with respect to such  Receivable  have been paid as of the date and time
of the inclusion of such  Receivable in the Borrowing  Base. All information set
forth in the bill and supporting claim documents with respect to such Receivable
is true,  complete and correct;  if additional  information  is requested by the
Obligor,  the Borrower (or the applicable Provider) has or will promptly provide
the same, and if any error has been made with respect to such  information,  the
Borrower  will  promptly  correct  the  same  and,  if  necessary,  rebill  such
Receivable.

         (b) Each such Receivable (i) is payable, in an amount not less than its
Expected Net Value,  by the Obligor  identified  by the  applicable  Provider as
being  obligated to do so, (ii) is based on an actual and bona fide rendition of
services to the Obligor or sale of goods to an Obligor or a plan  participant of
the Obligor in the ordinary course of business, (iii) is denominated and payable
only in U.S. dollars in the United States,  and (iv) is an account receivable or
general  intangible  within  the  meaning  of the UCC of the  state in which the
applicable  Provider  has its  principal  place  of  business,  or is a right to
payment under a policy of insurance or proceeds thereof, and is not evidenced by
any  instrument  or chattel  paper.  There is no payor  other  than the  Obligor
identified by the Borrower as the payor primarily liable on such Receivable.

         (c) Each such  Receivable  (i) is not the subject of any action,  suit,
proceeding or dispute (pending or threatened),  setoff,  counterclaim,  defense,
abatement,  suspension,  deferment,  deductible, reduction or termination by the
Obligor  (except for  statutory  rights of  Governmental  Entities  that are not
pending or  threatened),  (ii) is not past,  or within 60 days of, the statutory
limit for collection applicable to the Obligor or is not aged more than 180 days
from its Invoice  Date,  (iii) in the case of a Receivable  that is not a Rebate
Receivable,  was not billed to the Obligor on a date more than 30 days after the
Last Service Date, and (iv) in the case of a Rebate  Receivable,  was not billed
to the  Obligor on a date more than 60 days after the end of the fiscal  quarter
in which such Rebate Receivable became due and payable.

         (d) Each such Receivable is not due from any Governmental  Entity other
than Medicare,  Medicaid, State of Rhode Island, State of Tennessee and State of
Arizona; provided that no Receivable due from the State of Rhode Island shall be
considered  to satisfy  the  Eligibility  Criteria  until the Lender  shall have
received a favorable  opinion of Rhode Island counsel to the Providers,  in form
and substance satisfactory to the Lender.

                                      VI-1

<PAGE>

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

         (f) Each such Receivable is an obligation  representing  all or part of
the sales price of  merchandise,  insurance  or  services  within the meaning of
Section  3(c)(5) of the  Investment  Company Act of 1940,  as  amended,  and the
nature of which is such  that its  purchase  with the  proceeds  of notes  would
constitute a "current  transaction" within the meaning of Section 3(a)(3) of the
Securities Act of 1933, as amended.

         (g) The  Obligor  with  respect  to  each  such  Receivable  is (i) not
currently the subject of any bankruptcy,  insolvency or receivership proceeding,
nor is it  unable  to make  payments  on its  obligations  when  due;  provided,
however, that Receivables with respect to which Xantus Health Plan of Tennessee,
Inc. is the Obligor shall not be  ineligible  solely as a result of such Obligor
being in such a proceeding,  (ii) located in the United States of America, (iii)
one of the following:  (x) a Person which in the ordinary course of its business
or activities  agrees to pay for healthcare  services  received by  individuals,
including,  without  limitation,  commercial  insurance companies and non-profit
insurance  companies  (such as Blue  Cross  and  Blue  Shield)  issuing  health,
personal injury, worker's compensation or other types of insurance, employers or
unions  which  self-insure  for  employee or member  health  insurance,  prepaid
healthcare organizations,  preferred provider organizations,  health maintenance
organizations,  commercial  hospitals,  physician's  groups or any other similar
person or (y) an individual, (iv) not a Subsidiary,  parent or other Person that
is an Affiliate of any Provider and (v) not the Obligor of any  Receivable  that
was a Defaulted Receivable in the past 12 months.

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

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

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

         (k) The inclusion of each such  Receivable in the Borrowing  Base would
not increase the fraction  expressed as a percentage  where (i) the numerator is
the sum of the then outstanding principal amount of Eligible Receivables for any
obligor (or group of obligors) listed

                                      VI-2

<PAGE>

below included in the Borrowing  Base, and (ii) the denominator is the Borrowing
Base for all Eligible  Receivables,  above the corresponding  maximum percentage
listed below:

                                                                  Maximum
Obligor                                                          Percentage
-------                                                          ----------
Health Maintenance Organizations                                    100%
Managed Care Organizations                                          100%
Long-Term Care Facilities                                            20%
Employer Plans                                                       50%
any single AAA rated Obligor                                         10%
any single AA rated Obligor                                           6%
any single A rated Obligor                                            4%
any single BBB rated Obligor                                          3%
any single unrated Obligor                                            3%

         (l) Unless specifically verified and accepted by the Master Servicer or
Program Manager,  no single Eligible  Receivable that is not a Rebate Receivable
has an Expected Net Value greater than $800,000.

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

                                      VI-3

<PAGE>

                                  EXHIBIT VII-A

                       FORM OF BORROWING BASE CERTIFICATE

                               HFG HEALTHCO-4 LLC
                              Borrowing Base Report

Report Submission Date:_____________
Schedule #:______________
As of Date:______________

<TABLE>
<CAPTION>
                                                                       ------------------------------------------------
I                  Beginning A/R Balance (from Previous Report)
                                                                       ------------------------------------------------

                                                                       ------------------------------------------------
II                  Additions:
                                                                       ------------------------------------------------
<S>                                 <C>
                                ss. 2.01. New billings
                                                                       ------------------------------------------------
                                ss. 2.02. Late Charges/Adjustments
                                                                       ------------------------------------------------
         Total Additions
                                                                       ------------------------------------------------

                                                                       ------------------------------------------------
III                  Deductions:
                                                                       ------------------------------------------------
                                ss. 3.01.  Collections
                                                                       ------------------------------------------------
                                ss. 3.02.  Contractual/Discounts
                                                                       ------------------------------------------------
                                ss. 3.03.  Transfers Bad Debt
                                                                       ------------------------------------------------
                                ss. 3.04.  Other Discounts/Adjustments
                                                                       ------------------------------------------------
Total Deductions
                                                                       ------------------------------------------------

                                                                       ------------------------------------------------
IV                 Accounts Receivable Balance
                                                                       ------------------------------------------------

                                                                       ------------------------------------------------
V                  Less:  Ineligible Collateral
                                                                       ------------------------------------------------

                                                                       ------------------------------------------------
VI                 Total Eligible Collateral (Gross)
                                                                       ------------------------------------------------
VII               Estimated Net Value %
                                                                       ------------------------------------------------
VIII              Total Eligible Collateral (Net)
                                                                       ------------------------------------------------
IX                Less:  Unposted Cash
                                                                       ------------------------------------------------
X                 Adjusted Net Eligible Collateral
                                                                       ------------------------------------------------
XI                Advance Rate Percentage                                                    85%
                                                                       ------------------------------------------------
XII               Maximum Loan Availability on Collateral

                                     VII-A-1

<PAGE>

                                                                       ------------------------------------------------
XIII              Maximum Loan Availability per Agreement                                   $45,000,000
                                                                       ------------------------------------------------

                                                                       ------------------------------------------------
XIV               TOTAL LOAN AVAILABILITY (LESSOR OF
                  12 OR 13)
                                                                       ------------------------------------------------

                                                                       ------------------------------------------------
XV                Outstanding Loan Balance Prior Report
                                                                       ------------------------------------------------
XVI               Less Collections (Net Cash)
                                                                       ------------------------------------------------
XVII              Plus Draws Since Prior Report
                                                                       ------------------------------------------------
XVIII             Interest Due/Fees
                                                                       ------------------------------------------------
XIX               Additional Advance Requested
                                                                       ------------------------------------------------

                                                                       ------------------------------------------------
XX                LOAN BALANCE THIS REPORT
                                                                       ------------------------------------------------

                                                                       ------------------------------------------------
XXI               NET AVAILABILITY (14. minus 20.)
                                                                       ------------------------------------------------
</TABLE>

The undersigned  represents and warrants that the foregoing information is true,
complete and correct and that the collateral  reflected herein complies with and
conforms  to the  Eligibility  Criteria  set forth in Exhibit VI to the Loan and
Security  Agreement  between  the  undersigned  and HFG  Healthco-4  LLC and any
supplements and amendments,  if any, thereto (the "Agreement").  MIM Funding LLC
promises to pay to HFG  Healthco-4  LLC the new loan balances  reflected  above,
plus interest, as set forth in the Agreement.

MIM FUNDING LLC

By:_______________Date:____________
      Name:
      Title:

MIM HEALTH PLANS, INC.

By:_______________Date:____________
      Name:
      Title:

                                     VII-A-2

<PAGE>

AMERICAN DISEASE MANAGEMENT ASSOCIATES, LLC

By:_______________Date:____________
      Name:
      Title:

CONTINENTAL PHARMACY, INC.

By:_______________Date:____________
      Name:
      Title:

                                     VII-A-3

<PAGE>

                                  EXHIBIT VII-B

                         FORM OF BORROWER'S CERTIFICATE

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

Ladies and Gentlemen:

         The undersigned refers to the Loan and Security Agreement,  dated as of
November  __,  2000 (as the  same may be  amended,  supplemented,  restated,  or
modified from time to time, the "Loan Agreement")  between MIM Funding LLC ( the
"Borrower") and HFG Healthco-4 LLC (the "Lender"). Capitalized terms used herein
and not otherwise  defined shall have the meanings  ascribed to them in the Loan
Agreement.

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

                  Proposed Revolving Advance:
                  --------------------------

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

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

                    (iii) Attached is the Borrowing Base  Certificate  delivered
               to you on the immediately prior [ Day ].

         The Borrower  hereby  certifies that the following  statements are true
and correct on the date hereof,  and will be true and correct on the date of the
proposed Revolving Advance:

                    (A) the representations,  warranties and covenants contained
               in  Exhibits  III and IV of the  Loan  Agreement  are and will be
               true,  correct,  and in  compliance  both before and after giving
               effect  to the  Revolving  Advance  requested  herein  and to the
               application of the proceeds thereof,  as though made on and as of
               such date (it being understood and agreed that any representation
               or warranty  which by its terms is made on a specified date shall
               be  required  to be true and  correct  only as of such  specified
               date); and

                                     VII-B-1

<PAGE>

                    (B) no event has occurred and is continuing, or would result
               from  the  Revolving   Advance   requested  herein  or  from  the
               application of the proceeds  thereof that constitutes or an Event
               of Default; and

                    (C)  the  aggregate  outstanding  principal  amount  of  the
               Revolving  Advances after giving effect to the Revolving  Advance
               requested  herein is not in excess of the lesser of the Revolving
               Commitment and the Borrowing Limit.

                                          Very truly yours,

                                          MIM FUNDING LLC

                                          By:__________________________
                                                Name:
                                                Title:

                                     VII-B-2

<PAGE>

                                  EXHIBIT VIII

                          FORM OF DEPOSITARY AGREEMENT

                                 [SEE ATTACHED]

                                     VIII-1

<PAGE>

                                  EXHIBIT IX-A

                           FORM OF OPINION OF COUNSEL

                                 [SEE ATTACHED]

                                     IX-A-1

<PAGE>

                                  EXHIBIT IX-B

                           FORM OF OPINION OF COUNSEL

                                 [SEE ATTACHED]

                                     IX-B-1

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