Document:

$4,000,000.00

                           LOAN AND SECURITY AGREEMENT
                           ---------------------------

                                  by and among

                           NEW YORK HEALTH CARE, INC.
                             NYHC NEWCO PAXXON, INC.
                                   ("Borrower")

                                       and

                         HELLER HEALTHCARE FINANCE, INC.
                                   ("Lender")

                                November 28, 2000

<PAGE>
                           LOAN AND SECURITY AGREEMENT
                           ---------------------------

     THIS  LOAN  AND SECURITY AGREEMENT (the "Agreement") is made as of November
28,  2000,  by and among NEW YORK HEALTH CARE, INC., a New York corporation, and
NYHC  NEWCO PAXXON, INC., a New York corporation (collectively, "Borrower"), and
HELLER  HEALTHCARE  FINANCE,  INC.,  a  Delaware  corporation  ("Lender").

                                    RECITALS
                                    --------

     A.     Borrower  desires  to  establish certain financing arrangements with
and  borrow  funds  from  Lender,  and  Lender  is  willing  to  establish  such
arrangements  for  and  make  loans and extensions of credit to Borrower, on the
terms  and  conditions  set  forth  below.

     B.     The  parties  desire  to  define  the  terms and conditions of their
relationship  and  to  reduce  their  agreements  to  writing.

     NOW, THEREFORE, in consideration of the promises and covenants contained in
this  Agreement,  and  for  other  consideration, the receipt and sufficiency of
which  are  hereby  acknowledged,  the  parties  agree  as  follows:

                                    ARTICLE I

                                   DEFINITIONS
                                   -----------

     As  used  in  this Agreement, unless otherwise specified, all references to
"Sections"  shall  be  deemed  to  refer  to Sections of this Agreement, and the
following  terms  shall  have  the  meanings  set  forth  below:

     SECTION  1.1.     ACCOUNT.  "Account"  means any right to payment for goods
                       --------
sold  or  leased or services rendered, whether or not evidenced by an instrument
or  chattel  paper, and whether or not earned by performance, including, without
limitation,  the  right  to  payment  of  management  fees.

     SECTION  1.2.     ACCOUNT  DEBTOR.  "Account  Debtor"  means  any  Person
                       ----------------
obligated  on any Account of Borrower, including without limitation, any Insurer
and  any  Medicaid/Medicare  Account  Debtor.

     SECTION 1.3.     AFFILIATE.  "Affiliate" means, with respect to a specified
                      ----------
Person,  any  Person directly or indirectly controlling, controlled by, or under
common  control  with  the  specified Person, including without limitation their
stockholders  and any Affiliates thereof.  A Person shall be deemed to control a

                                        1
<PAGE>
corporation or other entity if the Person possesses, directly or indirectly, the
power  to  direct  or  cause the direction of the management and business of the
corporation or other entity, whether through the ownership of voting securities,
by  contract,  or  otherwise.

     SECTION  1.4.     AGREEMENT.  "Agreement"  means  this  Loan  and  Security
                       ----------
Agreement,  as  it  may  be  amended  or  supplemented  from  time  to  time.

     SECTION  1.5.     BASE RATE.  "Base Rate" means a rate of interest equal to
                       ----------
two  and  one  half  percent  (2.5%)  above  the  "Prime  Rate  of  Interest".

     SECTION  1.6.     BORROWED MONEY.  "Borrowed Money" means any obligation to
                       ---------------
repay  money,  any indebtedness evidenced by notes, bonds, debentures or similar
obligations,  any  obligation  under a conditional sale or other title retention
agreement  and  the net aggregate rentals under any lease which under GAAP would
be  capitalized  on the books of Borrower or which is the substantial equivalent
of  the  financing  of  the  property  so  leased.

     SECTION  1.7.     BORROWER.  "Borrower"  has  the  meaning set forth in the
                       ---------
Preamble.

     SECTION 1.8.     BORROWING BASE. "Borrowing Base" has the meaning set forth
                      ---------------
in  Section  2.1(d).

     SECTION  1.9.     BUSINESS  DAY.  "Business  Day"  means  any  day on which
                       --------------
financial institutions are open for business in the State of Maryland, excluding
Saturdays  and  Sundays.

     SECTION 1.10.     CERTIFICATE OF VALIDITY.  "Certificate of Validity" means
                       -----------------------
that Certificate of Validity issued by an officer of Borrower for the benefit of
lender  and  dated  as  of  even  date  with  this  Agreement.

     SECTION  1.10a.     CHANGE  IN  CONTROL.  "Change  in  Control"  means  (a)
                         --------------------
individuals  who,  as of the Closing Date, constituted the board of directors of
Borrower  (together  with  any  new  directors  whose  election by that board of
directors  or  whose nomination for election by the stockholders of Borrower was
approved  by  two-thirds  of  the directors of Borrower then still in office who
were  either  directors  at  the  beginning  of  the period or whose election or
nomination  for  election  was  previously  approved),  cease  for any reason to
constitute  a  majority of the board of directors of Borrower then in office, or
(b)  either  of  Jerry  Braun  or Jacob Rosenberg (i) ceases to be a director of
Borrower,  or  (ii)  ceases  to be President and Chief Executive Officer or Vice
President  and  Secretary,  respectively,  or  otherwise  ceases  to  act  as an
executive  officer who is vested with the management of the business of Borrower
by  the  board  of  directors  of  Borrower, as determined by Lender in its sole
discretion.

     SECTION 1.11.     CLOSING; CLOSING DATE.  "Closing" and "Closing Date" have
                       ----------------------
the  meanings  set  forth  in  Section  5.3.

                                        2
<PAGE>
     SECTION  1.12.     COLLATERAL.  "Collateral"  has  the meaning set forth in
                        ----------
Section  3.1.

     SECTION  1.13.     COMMITMENT  FEE.  "Commitment  Fee"  has the meaning set
                        ----------------
forth  in  Section  2.4(a).

     SECTION  1.14.     CONCENTRATION  ACCOUNT.  "Concentration Account" has the
                        -----------------------
meaning  set  forth  in  Section  2.3.

     SECTION  1.15.     CONTROLLED  GROUP.  "Controlled  Group"  means  all
                        ------------------
businesses  that  would be treated as a single employer under Section 4001(b) of
ERISA.

     SECTION  1.16.     COST REPORT SETTLEMENT ACCOUNT.  "Cost Report Settlement
                        ------------------------------
Account" means an Account owed to Borrower by a Medicaid/Medicare Account Debtor
pursuant  to  any  cost report, either interim, filed or audited, as the context
may  require.

     SECTION  1.17.     DEFAULT  RATE.     "Default Rate" means a rate per annum
                        --------------
equal  to  five  percent  (5%)  above  the  then  applicable  Base  Rate.

     SECTION  1.18.     ERISA.  "ERISA"  has  the  meaning  set forth in Section
                        ------
4.12.

     SECTION  1.19.     EVENT  OF  DEFAULT.  "Event  of  Default" and "Events of
                        -------------------
Default"  have  the  meanings  set  forth  in  Section  8.1.

     SECTION  1.20.     GAAP.  "GAAP"  means  generally  accepted  accounting
                        -----
principles  applied  in  a  consistent  manner.

     SECTION  1.21.     GOVERNMENTAL  AUTHORITY.  "Governmental Authority" means
                        ------------------------
and  includes  any  federal,  state, District of Columbia, county, municipal, or
other  government  and  any  department,  commission,  board,  bureau, agency or
instrumentality  thereof,  whether  domestic  or  foreign.

     SECTION  1.22.     HAZARDOUS  MATERIAL.  "Hazardous  Material"  means  any
                        --------------------
substances defined or designated as hazardous or toxic waste, hazardous or toxic
material,  hazardous  or  toxic substance, or similar term, by any environmental
statute, rule or regulation or any Governmental Authority applicable to Borrower
or  its  business,  operations  or  assets.

     SECTION  1.23.     HIGHEST  LAWFUL  RATE.  "Highest  Lawful  Rate"  has the
                        ----------------------
meaning  set  forth  in  Section  2.7.

     SECTION 1.24.     INSURER.  "Insurer" means a Person that insures a Patient
                       -------
against  certain of the costs incurred in the receipt by such Patient of Medical
Services,  or  that  has  an  agreement with Borrower to compensate Borrower for
providing  services  to  a  Patient.

                                        3
<PAGE>
     SECTION  1.25.     LENDER.  "Lender"  has  the  meaning  set  forth  in the
                        -------
Preamble.

     SECTION  1.26.     LOAN.  "Loan"  has  the  meaning  set  forth  in Section
                        -----
2.1(a).

     SECTION 1.27.     LOAN DOCUMENTS.  "Loan Documents" means and includes this
                       ---------------
Agreement,  the  Note,  the  Certificate  of  Validity, and each and every other
document now or hereafter delivered in connection with this Agreement, as any of
them  may  be  amended,  modified,  or  supplemented  from  time  to  time.

     SECTION  1.28.  LOAN MANAGEMENT FEE.  "Loan Management Fee" has the meaning
                     --------------------
set  forth  in  Section  2.4(c).

     SECTION  1.29.     LOCKBOX.  "Lockbox" has the meaning set forth in Section
                        --------
2.3.

     SECTION  1.30.     LOCKBOX  ACCOUNT.  "Lockbox  Account"  means  an account
                        -----------------
maintained  by  Borrower  at  the  Lockbox  Bank  into  which all collections of
Accounts  are  paid  directly.

     SECTION  1.31.     LOCKBOX  BANK.  "Lockbox Bank" has the meaning set forth
                        --------------
in  Section  2.3.

     SECTION  1.31a.     MATERIAL  ADVERSE  EFFECT.  "Material  Adverse  Effect"
                         --------------------------
shall mean any event or condition that, alone or when taken with other events or
conditions  occurring  or existing concurrently with such event or condition (a)
has or is reasonably expected to have a material adverse effect on the business,
operations,  condition (financial or otherwise), assets, liabilities, prospects,
or  properties  of  Borrower;  (b)  has  or  is  reasonably expected to have any
material  adverse  effect on the validity or enforceability of this Agreement or
any  Loan  Document;  (c)  materially  impairs  or  is  reasonably  expected  to
materially  impair  the  ability of Borrower to pay and perform the Obligations;
(d)  materially  impairs  or  is  reasonably  expected  to materially impair the
ability of Lender to enforce its rights and remedies under this Agreement or any
of  the  Loan  Documents;  or  (e)  has  or  is  reasonably expected to have any
material adverse effect on the Collateral, the liens of Lender in the Collateral
or  the  priority  of  such  liens.

     SECTION  1.32.     MAXIMUM  LOAN  AMOUNT.  "Maximum  Loan  Amount"  has the
                        ----------------------
meaning  set  forth  in  Section  2.1(a).

     SECTION  1.33.     MEDICAID/MEDICARE  ACCOUNT  DEBTOR.  "Medicaid/ Medicare
                        -----------------------------------
Account  Debtor"  means  any  Account  Debtor  that  is (a) the United States of
America  acting  under the Medicaid/Medicare program established pursuant to the
Social  Security  Act, (b) any state or the District of Columbia acting pursuant
to  a  health  plan  adopted pursuant to Title XIX of the Social Security Act or
(iii)  any  agent,  carrier,  administrator  or  intermediary  for  any  of  the
foregoing.

                                        4
<PAGE>
     SECTION  1.34.     MEDICAL  SERVICES.  "Medical Services" means medical and
                        -----------------
health  care  services  provided  to  a  Patient, including, but not limited to,
medical and health care services provided to a Patient and performed by Borrower
that  are  covered  by  a policy of insurance issued by an Insurer, and includes
physician  services,  nurse  and  therapist  services, dental services, hospital
services,  skilled  nursing  facility  services,  comprehensive  outpatient
rehabilitation  services, home health care services, residential and out-patient
behavioral  healthcare  services, and medicine or health care equipment provided
by  Borrower  to  a  Patient for a necessary or specifically requested valid and
proper  medical  or  health  purpose.

     SECTION  1.35.     NOTE.  "Note"  has  the  meaning  set  forth  in Section
                        -----
2.1(c).

     SECTION  1.36.     OBLIGATIONS.  "Obligations" has the meaning set forth in
                        ------------
Section  3.1.

     SECTION  1.37.     PATIENT.  "Patient"  means  any Person receiving Medical
                        -------
Services  from  Borrower and all Persons legally liable to pay Borrower for such
Medical  Services  other  than  Insurers.

     SECTION  1.38.     PERMITTED  LIENS.  "Permitted Liens" means: (a) deposits
                        -----------------
or  pledges  to secure obligations under workmen's compensation, social security
or  similar  laws,  or  under unemployment insurance; (b) deposits or pledges to
secure bids, tenders, contracts (other than contracts for the payment of money),
leases,  statutory obligations, surety and appeal bonds and other obligations of
like  nature  arising  in  the  ordinary  course  of  business;  (c) mechanic's,
workmen's,  materialmen's  or other like liens arising in the ordinary course of
business  with  respect  to  obligations  that  are  not due, or which are being
contested  in good faith by appropriate proceedings which suspend the collection
thereof  and in respect of which adequate reserves have been made (provided that
such  proceedings  do  not, in Lender's sole discretion, involve any substantial
risk  of the sale, loss or forfeiture of such property or assets or any interest
therein); (d) liens and encumbrances in favor of Lender; and (e) liens set forth
on  Schedule  1.38.
    --------------

     SECTION  1.39.     PERSON.  "Person"  means  an  individual,  partnership,
                        -------
corporation,  trust,  joint  venture,  joint  stock  company,  limited liability
company,  association,  unincorporated  organization, Governmental Authority, or
any  other  entity.

     SECTION  1.40.     PLAN.  "Plan" has the meaning set forth in Section 4.12.
                        -----

     SECTION  1.41.     PREMISES.  "Premises"  has  the  meaning  set  forth  in
                        ---------
Section  4.14.

     SECTION  1.42. PRIME RATE OF INTEREST.  "Prime Rate of Interest" means that
                    -----------------------
rate  of  interest  designated  as  such  by  Fleet Bank, N.A., or any successor
thereto,  as  the  same  may  from  time  to  time  fluctuate.

     SECTION  1.42a.     PRIVATE  PAY  ACCOUNT.  "Private  Pay  Account" has the
                         ----------------------
meaning  set  forth  in  Section  1.44(a).

                                        5
<PAGE>
     SECTION 1.43.     PROHIBITED TRANSACTION.  "Prohibited Transaction" means a
                       -----------------------
"prohibited  transaction"  within the meaning of Section 406 of ERISA or Section
4975(c)(1)  of the Internal Revenue Code that is not exempt under Section 407 or
Section  408  of ERISA or Section 4975(c)(2) or (d) of the Internal Revenue Code
or  under  a  class  exemption  granted  by  the  U.S.  Department  of  Labor.

     SECTION  1.44.     QUALIFIED ACCOUNT.  "Qualified Account" means an Account
                        ------------------
of  Borrower  generated  in  the ordinary course of Borrower's business from the
sale  of goods or rendition of Medical Services which Lender, in its sole credit
judgment,  deems  to be a Qualified Account.  Without limiting the generality of
the foregoing, no Account shall be a Qualified Account if:    (a) the Account or
any portion of the Account is payable by an individual beneficiary, recipient or
subscriber  individually  and  not  directly  to Borrower by a Medicaid/Medicare
Account  Debtor  or  other  third  party  payor acceptable to Lender in its sole
discretion  ("Private  Pay  Accounts"); (b) the Account remains unpaid more than
one  hundred  fifty  (150)  days past the claim or invoice date (but in no event
more  than  one  hundred  sixty  five  (165)  days  after the applicable Medical
Services  have  been  rendered);  (c)  the  Account  is  subject to any defense,
set-off,  counterclaim,  deduction, discount, credit, chargeback, freight claim,
allowance,  or  adjustment  of  any  kind; (d) any part of any goods the sale of
which  has  given  rise  to  the  Account  has been returned, rejected, lost, or
damaged;  (e)  if  the Account arises from the sale of goods by Borrower; (f) if
the  Account  arises  from  the  performance of Medical Services and the Medical
Services  have  not  been  actually  been performed or the Medical Services were
undertaken  in  violation of any law; (g) the Account is subject to a lien other
than  a  Permitted  Lien;  (h)  Borrower  knows of the bankruptcy, receivership,
reorganization,  or  insolvency  of  the  Account  Debtor;  (i)  the  Account is
evidenced  by chattel paper or an instrument of any kind, or has been reduced to
judgment;  (j)  the  Account  is  an  Account  of  an  Account Debtor having its
principal  place  of business or executive office outside the United States; (k)
the  Account Debtor is an Affiliate or Subsidiary of Borrower; (l) sixty percent
(60%)  or  more  of the aggregate unpaid Accounts from any single Account Debtor
are  not  deemed  Qualified  Accounts under this Agreement following the date of
execution  of  this  Agreement;  (m)  the  total  unpaid Accounts of the Account
Debtor,  except  for  a  Medicaid/Medicare Account Debtor, exceed twenty percent
(20%)  of  the net amount of all Qualified Accounts (including Medicaid/Medicare
Account  Debtors); (n) any covenant, representation or warranty contained in the
Loan  Documents  with  respect  to  such  Account  has been breached; or (o) the
Account  fails to meet such other specifications and requirements which may from
time  to  time  be  established  by  Lender.

     SECTION 1.45.     REPORTABLE EVENT.  "Reportable Event" means a "reportable
                       -----------------
event"  as defined in Section 4043(c) of ERISA for which the notice requirements
of  Section  4043(a)  of  ERISA  are  not  waived.

     SECTION  1.46.     REVOLVING  CREDIT LOAN.  "Revolving Credit Loan" has the
                        -----------------------
meaning  set  forth  in  Section  2.1(b).

                                        6
<PAGE>
     SECTION  1.47.     TERM.  "Term"  has the meaning set forth in Section 2.8.
                        -----

     SECTION  1.48     TERMINATION  FEE.  "Termination  Fee  "  shall mean a fee
                       -----------------
equal  to  (a)  two  percent  (2%)  of  the Maximum Loan Amount in the event the
effective  date  of  termination  of  this  Agreement  is on or before the first
anniversary  of the execution of this Agreement, or (b) zero percent (0%) of the
Maximum  Loan  Amount  in  the  event  the effective date of termination of this
Agreement  is after the first anniversary but prior to the second anniversary of
the  execution  of  this  Agreement.

                                   ARTICLE II

                                      LOAN
                                      ----

     SECTION  2.1.  TERMS.
                    ------

          (a)     The  maximum  aggregate principal amount of credit extended by
Lender to Borrower under this Agreement (the "Loan") that will be outstanding at
any  time  is Four Million and No/100 Dollars ($4,000,000.00) (the "Maximum Loan
Amount").

          (b)     The Loan shall be in the nature of a revolving line of credit,
and  shall  include  sums advanced and other credit extended by Lender to or for
the  benefit  of  Borrower  from  time  to  time  under  this Article II (each a
"Revolving  Credit  Loan")  up  to  the  Maximum  Loan Amount depending upon the
availability  in  the  Borrowing  Base, the requests of Borrower pursuant to the
terms  and  conditions  of  Section  2.2,  and on such other basis as Lender may
reasonably  determine.  The  outstanding  principal  balance  of  the  Loan  may
fluctuate from time to time, to be reduced by repayments made by Borrower (which
may be made without penalty or premium), and to be increased by future Revolving
Credit  Loans,  advances and other extensions of credit to or for the benefit of
Borrower,  and shall be due and payable in full upon the expiration of the Term.
For  purposes  of  this  Agreement,  any  determination  as  to whether there is
availability  within  the  Borrowing  Base  for advances or extensions of credit
shall  be  made  by Lender in its sole discretion and shall be final and binding
upon  Borrower.

          (c)     At  Closing,  Borrower  shall  execute and deliver to Lender a
promissory  note  evidencing Borrower's unconditional obligation to repay Lender
for  Revolving Credit Loans, advances, and other extensions of credit made under
the  Loan,  in  the  form  of Exhibit A to this Agreement (as amended, modified,
                              ---------
restated  or  replaced  from  time  to time, the "Note"), dated the date of this
Agreement,  payable to the order of Lender in accordance with the terms thereof.
The  Note  shall  bear interest on the outstanding principal balance of the Note
from the date of the Note until repaid, with interest payable monthly in arrears
on  the  first  Business Day of each month, at a rate per annum (on the basis of
the  actual  number  of  days elapsed over a year of 360 days) equal to the Base
Rate,  provided that after the occurrence and during the continuance of an Event
of  Default such rate shall be equal to the Default Rate.  Each Revolving Credit
Loan,  advance  and  other  extension of credit shall be deemed evidenced by the
Note,  which  is  deemed  incorporated into and made a part of this Agreement by
this  reference.

                                        7
<PAGE>
          (d)     Subject  to  the  terms  and  conditions  of  this  Agreement,
advances  under  the  Loan  shall  be  made  against  a  borrowing base equal to
eighty-five  percent  (85%)  of  Qualified  Accounts  due  and  owing  from  any
Medicaid/Medicare  Account  Debtor,  Insurer  or  other  Account  Debtor  (the
"Borrowing  Base").  Lender, in its sole credit judgment, may further adjust the
Borrowing  Base  by  applying  percentages  (known  as  "liquidity  factors") to
Qualified Accounts by payor class based upon Borrower's actual recent collection
history  for  each  such  payor  class  (i.e.,  Medicare,  Medicaid,  commercial
insurance, etc.) in a manner consistent with Lender's underwriting practices and
procedures.(1)  Such  liquidity factors may be adjusted by Lender throughout the
Term  as  warranted  by  collection  histories.

     SECTION  2.2.  LOAN  ADMINISTRATION.  Borrowings under the Loan shall be as
                    ---------------------
follows:

          (a)     A  request for a Revolving Credit Loan shall be made, or shall
be  deemed  to  be  made, in the following manner:  (i) Borrower may give Lender
written  notice  of  its  intention  to  borrow,  in which notice Borrower shall
specify  the  amount  of the proposed borrowing and the proposed borrowing date,
not  later than 2:00 p.m. Eastern time two (2) Business Days before the proposed
borrowing  date;  provided,  however, that no such request may be made at a time
                  --------   -------
when  there  exists  an Event of Default; or (ii) when any amount required to be
paid  under  this  Agreement,  whether  as interest or for any other Obligation,
becomes  due,  such  event  shall  be  deemed  irrevocably to be a request for a
Revolving  Credit  Loan on the day following the due date in the amount required
to pay such interest or other Obligation if such was not paid by Borrower on the
due  date.

          (b)     Borrower  hereby irrevocably authorizes Lender to disburse the
proceeds  of each Revolving Credit Loan requested, or deemed to be requested, as
follows:  (i)  the  proceeds  of  each  Revolving  Credit  Loan  requested under
subsection  2.2(a)(i) shall be disbursed by Lender by wire transfer to such bank
account  as  may  be  agreed  upon  by  Borrower and Lender from time to time or
elsewhere  pursuant to written direction from Borrower; and (ii) the proceeds of
each  Revolving  Credit  Loan deemed to be requested under subsection 2.2(a)(ii)
shall  be  disbursed by Lender by way of direct payment of the relevant interest
or  other  Obligation.

          (c)     All  Revolving  Credit Loans, advances and other extensions of
credit to or for the benefit of Borrower shall constitute one general Obligation
of  Borrower,  and shall be secured by Lender's lien upon all of the Collateral.
______________________
1    To  demonstrate  the  methodology,  the following is an illustration of the
application  of  liquidity  factors:  If  Borrower  historically  collects x% of
invoiced  insurance  claims  (where  x is a number between 0 and 100) within the
eligibility  period,  the  liquidity  factor  would  be x%, so that availability
against  such  class  of  Accounts  in the aggregate would be equal to Qualified
Accounts  multiplied  by  an  x% liquidity factor and then multiplied by the 85%
                                                      ----
advance  rate.

                                        8
<PAGE>
          (d)     Lender  shall  enter all Revolving Credit Loans as debits to a
loan  account in the name of Borrower and shall also record in said loan account
all  payments made by Borrower on any Obligations and all proceeds of Collateral
that are indefeasibly paid to Lender, and may record therein, in accordance with
customary  accounting practice, other debits and credits, including interest and
all  charges and expenses properly chargeable to Borrower.  All collections into
the  Concentration  Account  pursuant  to  Section 2.3 shall be applied first to
fees,  costs  and  expenses  due  and  owing  under  the Loan Documents, then to
interest  due  and  owing  under  the  Loan  Documents,  and  then  to principal
outstanding  with  respect  to  Revolving  Credit  Loans.

          (e)     Lender  shall  provide  Borrower  on  a  monthly  basis with a
statement  of Revolving Credit Loans, charges and payments made pursuant to this
Agreement,  and such statement provided by Lender shall be deemed final, binding
and  conclusive  upon Borrower, absent manifest error, unless Lender is notified
by  Borrower in writing to the contrary within thirty (30) days of the date each
accounting  is  mailed to Borrower.  Such notice shall be deemed an objection to
those  items  specifically  objected  to  in  the  notice.

     SECTION  2.3.  COLLECTIONS,  DISBURSEMENTS,  BORROWING  AVAILABILITY,  AND
                    -----------------------------------------------------------
LOCKBOX ACCOUNT.  Borrower shall maintain a lockbox account (the "Lockbox") with
---------------
Fleet  National  Bank  (the  "Lockbox  Bank"), subject to the provisions of this
Agreement,  and  shall  execute with the Lockbox Bank a Lockbox Agreement in the
form  attached  as  Exhibit  B, and such other agreements related to the Lockbox
                    ----------
Agreement  as Lender may require.  Borrower shall ensure that all collections of
Accounts,  except  Private Pay Accounts], are paid directly from Account Debtors
into  the  Lockbox,  and  that  all  funds paid into the Lockbox are immediately
transferred into a depository account maintained by Lender at Bank One, N.A., or
such other financial institution as determined by Lender in its sole discretion,
by  written  notice  to  Borrowers  and  the  Lockbox  Bank  (the "Concentration
Account").  Lender shall apply, on a daily basis, all funds transferred into the
Concentration  Account  pursuant  to  this Section 2.3 to reduce the outstanding
indebtedness  under the Loan (in accordance with Section 2.2(d)), and all future
Revolving  Credit  Loans,  advances and other extensions of credit to be made by
Lender  under  the  conditions set forth in this Article II.  To the extent that
any  collections of Accounts or proceeds of other Collateral, except Private Pay
Accounts,  are  not  sent  directly to the Lockbox but are received by Borrower,
such  collections  shall  be  held  in  trust  for  the  benefit  of  Lender and
immediately  remitted, in the form received, to the Lockbox Bank for transfer to
the  Concentration  Account  immediately  upon  receipt  by  Borrower.  Borrower
acknowledges  and  agrees that its compliance with the terms of this Section 2.3
is  essential,  and that Lender will suffer immediate and irreparable injury and
have  no  adequate  remedy  at  law  if Borrower, through its acts or omissions,
causes  or  permits Account Debtors to pay other than to the Lockbox Account, or
if  Borrower fails to immediately deposit collections of Accounts or proceeds of
other  Collateral  in the Lockbox Account as herein required; provided, that any
non-compliance  with  the  foregoing provisions, which non-compliance causes the
aggregate amount of deposits made to the Lockbox Account in any calendar quarter
to  be up to $15,000 less than the amount that should have been deposited in the
Lockbox  Account  absent such  non-compliance,  shall  be  permitted  hereunder.

                                        9
<PAGE>
Upon  Borrower's  failure  to  comply with the terms of this Section 2.3, Lender
shall  be  entitled,  in  addition  to  exercising any other rights and remedies
available  to it, to assess a non-compliance fee which shall operate to increase
the Base Rate by two percent (2%) per annum during any period of non-compliance.
Lender  shall  be entitled to assess such fee whether or not an Event of Default
is  declared  or otherwise occurs.  All funds transferred from the Concentration
Account for application to Borrower's indebtedness to Lender shall be applied to
reduce  the  Loan  balance,  but  for  purposes of calculating interest shall be
subject  to  a  three  (3)  Business  Day clearance period.  If as the result of
collections of Accounts pursuant to the terms and conditions of this Section 2.3
a  credit  balance exists with respect to the Concentration Account, such credit
balance  shall  not accrue interest in favor of Borrower, but shall be available
to  Borrower  at  any  time  or times for so long as no Event of Default, and no
event  or  circumstance which, with notice or the passage of time or both, would
constitute  an  Event  of  Default,  exists.

     SECTION  2.4.  FEES.
                    -----

          (a)     By  executing  this Agreement, Borrower agrees unconditionally
to  pay to Lender a commitment fee equal to three quarters of one percent (.75%)
of the Maximum Loan Amount (the "Commitment Fee"), which Commitment Fee shall be
payable  by  Borrower  to  Lender  in  installments  as  follows:

                    (i)     On the date of execution of this Agreement, Borrower
     shall pay Lender Ten Thousand and No/100  Dollars  ($10,000) in immediately
     available  funds,  representing  one-third (1/3) of the aggregate amount of
     the Commitment Fee.  Borrower hereby authorizes Lender to deduct the amount
     due under this Section  2.4(a)(i) from the amount of the initial  Revolving
     Credit Loan made hereunder;

                    (ii)     On  that date that is sixty (60) days from the date
     of execution of this Agreement,  Borrower shall pay Lender Ten Thousand and
     No/100  Dollars  ($10,000) in  immediately  available  funds,  representing
     one-third of the aggregate amount of the Commitment Fee; and

                    (iii)     On that date that is one hundred twenty (120) days
     from the date of execution of this Agreement, Borrower shall pay Lender Ten
     Thousand and No/100  Dollars  ($10,000)  in  immediately  available  funds,
     representing one-third of the aggregate amount of the Commitment Fee.

          (b)     INTENTIONALLY  LEFT  BLANK

          (c)     INTENTIONALLY  LEFT  BLANK

          (d)     Provided  that no Event of Default exists under this Agreement
or  any of the other Loan Documents, Borrower shall be required to pay to Lender
all  out-of-pocket  audit  and  appraisal  fees  in  connection  with audits and

                                       10
<PAGE>
appraisals  of  Borrower's  books  and  records and such other matters as Lender
shall  deem  appropriate  up  to  a  maximum  of  $30,000.00 per year; provided,
                                                                       --------
however,  that  upon  the  occurrence and during the continuance of any Event of
-------
Default  under  this Agreement or any of the other Loan Documents, the foregoing
cap  shall not apply, and (i) Borrower shall be obligated to pay for any and all
fees  described in this Section 2.8(d) that are incurred during such period, and
(ii)  the  aggregate amount of the fees incurred pursuant to (i) above shall not
be  applied towards the amount of such annual cap.  All fees required to be paid
by  Borrower  pursuant  to  this  Section 2.8(d) shall be due and payable on the
first  Business  Day  of the month following the date of issuance by Lender of a
request  for  payment  thereof  to  Borrower.  Notwithstanding  anything in this
Section 2.8(d) to the contrary, Lender shall not be limited in the number of any
audits, appraisals or other actions conducted or permitted to be conducted under
this  Section  2.8(d).

          (e)     Borrower  shall  pay  to  Lender, on demand, any and all fees,
costs or expenses that Lender or any participant pays to a bank or other similar
institution  (including,  without  limitation,  any  fees  paid by Lender to any
participant) arising out of or in connection with (i) the forwarding to Borrower
or  any  other Person on behalf of Borrower, by Lender, of proceeds of Revolving
Credit Loans made by Lender to Borrower pursuant to this Agreement, and (ii) the
depositing for collection, by Lender or any participant, of any check or item of
payment  received  or  delivered  to Lender or any participant on account of the
Obligations.

     SECTION  2.5.  PAYMENTS.  Principal  payable on account of Revolving Credit
                    ---------
Loans  shall  be  payable by Borrower to Lender immediately upon the earliest of
(a) the receipt by Borrower or Lender of any payments on or proceeds from any of
the  Collateral,  to the extent of such proceeds, (b) the occurrence of an Event
of  Default  if  the Loan and the maturity of the payment of the Obligations are
accelerated, or (c) the termination of this Agreement pursuant to Section 2.8 of
this  Agreement; provided, however, that if any advance made by Lender in excess
                 --------  -------
of  the Borrowing Base shall exist at any time, Borrower shall, immediately upon
demand,  repay such overadvance.  Interest accrued on the Revolving Credit Loans
shall  be  due  on the earliest of      (a) the first Business Day of each month
(for  the immediately preceding month), computed on the last calendar day of the
preceding  month, (b) the occurrence of an Event of Default if the Loan  and the
maturity  of  the  payment  of  the  Obligations  are  accelerated,  or  (c) the
termination  of  this  Agreement  pursuant to Section 2.8.  Except to the extent
otherwise set forth in this Agreement, all payments of principal and of interest
on  the Loan, all other charges and any other obligations of Borrower under this
Agreement,  shall be made to Lender to the Concentration Account, in immediately
available  funds.

     SECTION 2.6.  USE OF PROCEEDS.  The proceeds of Lender's advances under the
                   ---------------
Loan  shall  be  used solely for working capital and for other costs of Borrower
arising  in  the  ordinary  course  of  Borrower's  business.

                                       11
<PAGE>
     SECTION  2.7.  INTEREST  RATE  LIMITATION.  The  parties  intend to conform
                    --------------------------
strictly  to  the  applicable  usury laws in effect from time to time during the
term  of  the  Loan.  Accordingly,  if  any  transaction  contemplated  by  this
Agreement  or  the  Note would be usurious under such laws, then notwithstanding
any  other  provision  of  this  Agreement or the Note: (a) the aggregate of all
interest  that is contracted for, charged, or received under this Agreement, the
Note  or  under  any  other Loan Document shall not exceed the maximum amount of
interest  allowed  by applicable law (the "Highest Lawful Rate"), and any excess
shall  be  promptly  credited to Borrower by Lender (or, to the extent that such
consideration  shall  have  been paid, such excess shall be promptly refunded to
Borrower  by Lender); (b) neither Borrower nor any other Person now or hereafter
liable  under  this  Agreement  shall  be  obligated  to  pay the amount of such
interest  to the extent that it is in excess of the Highest Lawful Rate; and (c)
the effective rate of interest shall be reduced to the Highest Lawful Rate.  All
sums  paid,  or  agreed  to  be  paid,  to  Lender for the use, forbearance, and
detention  of  the  debt of Borrower to Lender shall, to the extent permitted by
applicable  law, be allocated throughout the full term of the Note until payment
is  made in full so that the actual rate of interest does not exceed the Highest
Lawful  Rate  in effect at any particular time during the full term thereof.  If
at  any  time  the rate of interest under this Agreement or the Note exceeds the
Highest  Lawful  Rate, the rate of interest to accrue pursuant to this Agreement
and  the Note shall be limited, notwithstanding anything to the contrary in this
Agreement or the Note, to the Highest Lawful Rate, but any subsequent reductions
in  the  Base  Rate  shall  not  reduce  the interest to accrue pursuant to this
Agreement  or  the  Note below the Highest Lawful Rate until the total amount of
interest  accrued  equals  the  amount  of interest that would have accrued if a
varying  rate  per  annum equal to the interest rate under this Agreement or the
Note  had  at all times been in effect.  If the total amount of interest paid or
accrued pursuant to this Agreement or the Note under the foregoing provisions is
less than the total amount of interest that would have accrued if a varying rate
per  annum  equal to the interest rate under this Agreement or the Note had been
in  effect,  then  Borrower  agrees  to  pay  to  Lender  an amount equal to the
difference  between (x) the lesser of (A) the amount of interest that would have
accrued  if  the Highest Lawful Rate had at all times been in effect, or (B) the
amount  of interest that would have accrued if a varying rate per annum equal to
the  interest  rate  under  this  Agreement or the Note had at all times been in
effect,  and  (y)  the  amount  of interest accrued in accordance with the other
provisions  of  this  Agreement  or  the  Note.

     SECTION  2.8.  TERM.
                    -----

          (a)     Subject  to  Lender's  right  to cease making Revolving Credit
Loans to Borrower upon or after any Event of Default, this Agreement shall be in
effect  for  a  period  of  two  (2) years from the Closing Date, unless earlier
terminated  as  provided  in  this  Section  2.8  (the  "Term").

          (b)     Notwithstanding  anything  in  this Agreement to the contrary,
Lender  may terminate this Agreement without notice upon or after the occurrence
of  an  Event  of  Default.

          (c)     Upon  at least thirty (30) days prior written notice to Lender
(the  "Termination  Notice  Period"),  Borrower  may  terminate  this Agreement,
provided  however, that on the effective date of any termination, Borrower shall
pay  to  Lender (in addition to the then outstanding principal, accrued interest
and other Obligations owing under the terms of this Agreement and any other Loan
Documents)  as  liquidated  damages and not as a penalty, an amount equal to the
Termination  Fee.

                                       12
<PAGE>
          (d)     All  of  the  Obligations shall be immediately due and payable
upon  the termination date stated in any notice of termination of this Agreement
(the  "Termination  Date");  provided  that, notwithstanding anything in Section
2.8(c)  to the contrary, the Termination Date shall be effective no earlier than
the  first Business Day of the month following the expiration of the Termination
Notice  Period.

          (e)     Notwithstanding  any  provision  of  this Agreement that makes
reference  to  the continuance of an Event of Default, nothing in this Agreement
shall  be construed to permit Borrower to cure an Event of Default following the
lapse  of  the  applicable cure period, and Borrower shall have no such right in
any  instance  unless  specifically  granted  in  writing  by  Lender.

                                   ARTICLE III

                                   COLLATERAL
                                   ----------

     SECTION 3.1.  GENERALLY.  As security for the payment of all liabilities of
                   ---------
Borrower  to  Lender,  including  without limitation: (A) indebtedness evidenced
under  the  Note,  repayment  of  Revolving  Credit  Loans,  advances  and other
extensions of credit, all fees and charges owing by Borrower, (including without
limitation  the  Termination  Fee)  and all other liabilities and obligations of
every  kind  or nature whatsoever of Borrower to Lender, whether now existing or
hereafter  incurred, joint or several, matured or unmatured, direct or indirect,
primary  or secondary, related or unrelated, due or to become due, including but
not  limited  to  any  extensions,  modifications,  substitutions, increases and
renewals thereof, (B) the payment of all amounts advanced by Lender to preserve,
protect,  defend,  and  enforce  its  rights  under  this  Agreement  and in the
following  property  in accordance with the terms of this Agreement, and (C) the
payment  of  all  expenses  incurred  by  Lender  in  connection  therewith
(collectively,  the "Obligations"), Borrower hereby assigns and grants to Lender
a  continuing  first priority lien on and security interest in, upon, and to the
following  property  (the  "Collateral"):

          (a)     All  of Borrower's now-owned and hereafter acquired or arising
Accounts,  accounts  receivable  and  rights  to  payment  of  every  kind  and
description, and all of Borrower's contract rights, chattel paper, documents and
instruments  with  respect  thereto,  and  all  of  Borrower's rights, remedies,
security  and  liens,  in, to and in respect of the Accounts, including, without
limitation,  rights  of  stoppage  in  transit,  replevin,  repossession  and
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, guaranties or other contracts of suretyship with respect to the Accounts,
deposits  or other security for the obligation of any Account Debtor, and credit
and  other  insurance;

                                       13
<PAGE>
          (b)     All  moneys,  securities  and  other property and the proceeds
thereof,  now or hereafter held or received by, in transit to, in possession of,
or  under  the control of Lender or a bailee or Affiliate of Lender, from or for
Borrower,  whether for safekeeping, pledge, custody, transmission, collection or
otherwise,  and  all of Borrower's deposits (general or special), balances, sums
and  credits  with  Lender  at  any  time  existing;

          (c)     All  of  Borrower's  right,  title  and interest in, to and in
respect  of  all goods relating to, or which by sale have resulted in, Accounts,
including,  without  limitation,  all  goods  described  in  invoices  or  other
documents  or  instruments  with  respect  to,  or  otherwise  representing  or
evidencing,  any  Account,  and  all  returned,  reclaimed or repossessed goods;

          (d)     All  of  Borrower's  now  owned  or hereafter acquired deposit
accounts  into  which  Accounts  are  deposited,  including the Lockbox Account;

          (e)     All  of Borrower's now owned and hereafter acquired or arising
general  intangibles  and  other  property  of  every  kind and description with
respect  to,  evidencing  or  relating  to its Accounts, accounts receivable and
other  rights to payment, including, but not limited to, all existing and future
customer  lists,  choses  in  action,  claims,  books,  records,  ledger  cards,
contracts,  licenses,  formulae,  tax  and  other types of refunds, returned and
unearned  insurance  premiums,  rights  and claims under insurance policies, and
computer programs, information, software, records, and data, as the same relates
to  the  Accounts;

          (f)     All  of  Borrower's  other  general  intangibles  (including,
without  limitation, any proceeds from insurance policies after payment of prior
interests),  patents, unpatented inventions, trade secrets, copyrights, contract
rights, goodwill, literary rights, rights to performance, rights under licenses,
choses-in-action,  claims, information contained in computer media (such as data
bases,  source  and  object  codes,  and information therein), things in action,
trademarks  and  trademarks  applied  for (together with the goodwill associated
therewith)  and  derivatives  thereof, trade names, including the right to make,
use,  and  vend  goods  utilizing  any  of the foregoing, and permits, licenses,
certifications,  authorizations  and  approvals,  and  the  rights  of  Borrower
thereunder,  issued  by  any  governmental,  regulatory,  or  private authority,
agency,  or  entity  whether  now owned or hereafter acquired, together with all
cash  and  non-cash  proceeds  and  products  thereof;

          (g)     All of Borrower's now owned or hereafter acquired inventory of
every description which is held by Borrower for sale or lease or is furnished by
Borrower  under any contract of service or is held by Borrower as raw materials,
work  in  process or materials used or consumed in a business, wherever located,
and as the same may now and hereafter from time to time be constituted, together
with  all  cash  and  non-cash  proceeds  and  products  thereof;

          (h)     All  of  Borrower's now owned or hereafter acquired machinery,
equipment,  computer  equipment,  tools,  tooling,  furniture,  fixtures, goods,
supplies,  materials,  work in process, whether now owned or hereafter acquired,
together  with  all  additions,  parts,  fittings,  accessories,  special tools,
attachments,  and  accessions  now  and hereafter affixed thereto and/or used in
connection  therewith,  all replacements thereof and substitutions therefor, and
all  cash  and  non-cash  proceeds  and  products  thereof;  and

                                       14
<PAGE>
          (i)     The  proceeds  (including,  without  limitation,  insurance
proceeds)  of  all  of  the  foregoing.

     SECTION  3.2.  LIEN  DOCUMENTS.  At  Closing and thereafter as Lender deems
                    ---------------
necessary  in  its  sole discretion, Borrower shall execute and deliver, or have
executed  and  delivered,  to  Lender (all in form and substance satisfactory to
Lender  in  its  sole  discretion):

          (a)     UCC-1  Financing Statements pursuant to the Uniform Commercial
Code  in  effect in the jurisdiction(s) in which Borrower operates, which Lender
may  file  in  any jurisdiction where any Collateral is or may be located and in
any  other  jurisdiction  that Lender deems appropriate; provided that a carbon,
                                                         --------
photographic,  or  other  reproduction  or  other copy of this Agreement or of a
financing  statement  is  sufficient  as and may be filed in lieu of a financing
statement;  and

          (b)     Any  other  agreements,  documents,  instruments, and writings
deemed  necessary  by  Lender or as Lender may otherwise reasonably request from
time  to  time  in its sole discretion to evidence, perfect, or protect Lender's
lien  and  security  interest  in  the Collateral required under this Agreement.

     SECTION  3.3.  COLLATERAL  ADMINISTRATION.
                    ---------------------------

          (a)     All Collateral (except deposit accounts) shall at all times be
kept  by  Borrower  at its principal office(s) as set forth on Schedule 4.15 and
                                                               -------------
shall  not  be  moved  from  such  locations without (i) providing prior written
notice  to  Lender in accordance with Section 6.15, and (ii) obtaining the prior
written  consent  of  Lender,  which consent shall not be unreasonably withheld.

          (b)     Borrower  shall  keep  accurate  and  complete  records of its
Accounts  and all payments and collections thereon and shall submit to Lender on
such  periodic  basis as Lender shall request a sales and collections report for
the  preceding period, in form satisfactory to Lender.  In addition, if Accounts
in  an  aggregate  face amount in excess of $50,000.00 become ineligible because
they  fall  within one of the specified categories of ineligibility set forth in
the  definition of Qualified Accounts or otherwise, Borrower shall notify Lender
of  such  occurrence on the first Business Day following such occurrence and the
Borrowing  Base  shall  thereupon  be  adjusted  to reflect such occurrence.  If
requested by Lender, Borrower shall execute and deliver to Lender formal written
assignments of all of its Accounts on a quarterly basis, which shall include all
Accounts  that have been created since the date of the last assignment, together
with  copies  of  claims,  invoices  or  other  information  related  thereto.

                                       15
<PAGE>
          (c)     Whether  or  not  an  Event  of  Default  has occurred, any of
Lender's  officers,  employees  or  agents  shall have the right, at any time or
times hereafter, in the name of Lender or any designee of Lender or Borrower, to
verify  the  validity,  amount  or  any other matter relating to any Accounts by
mail,  telephone,  telegraph  or otherwise.  Borrower shall cooperate fully with
Lender  in  an  effort  to  facilitate  and  promptly conclude such verification
process.

          (d)     To  expedite  collection, Borrower shall endeavor in the first
instance  to  make  collection  of  its Accounts for Lender.  Lender retains the
right  at  all times after the occurrence and during the continuance of an Event
of  Default,  subject  to  applicable  law  regarding  Medicaid/Medicare Account
Debtors,  to  notify  Account Debtors that Accounts have been assigned to Lender
and  to  collect  Accounts directly in its own name and to charge the collection
costs  and  expenses,  including  attorneys'  fees,  to  Borrower.

     SECTION  3.4.  OTHER  ACTIONS.  In  addition to the foregoing, Borrower (a)
                    --------------
shall  provide  prompt written notice to each private indemnity, managed care or
other  Insurer  who  either is currently an Account Debtor or becomes an Account
Debtor  at  any  time  following  the  date  of this Agreement that directs each
Account  Debtor to make payments into the Lockbox, and hereby authorizes Lender,
upon Borrower's failure to send such notices within ten (10) days after the date
of  this  Agreement  (or  ten  (10)  days  after  the Insurer becomes an Account
Debtor),  to  send  any  and all similar notices to such Insurers, and (b) shall
take  any and all other such action lawfully required by Lender to secure Lender
and  effectuate  the intentions and objects of this Agreement, including but not
limited to executing and delivering lockbox agreements, continuation statements,
amendments  to financing statements, and any other documents required under this
Agreement.  At  Lender's  request,  Borrower  shall  also immediately deliver to
Lender  all items for which Lender must receive possession to obtain a perfected
security  interest.  Borrower  shall,  on Lender's demand, deliver to Lender all
notes,  certificates, and documents of title, chattel paper, warehouse receipts,
instruments,  and  any  other  similar  instruments  constituting  Collateral.

     SECTION  3.5.  SEARCHES.  Before  Closing,  and  thereafter  (as  and  when
                    --------
determined  by  Lender in its sole discretion), Lender will perform the searches
described  in  clauses  (a) and (b) below against Borrower (the results of which
are  to  be consistent with Borrower's representations and warranties under this
Agreement):

          (a)     Uniform  Commercial  Code searches with the Secretary of State
and  local  filing  offices  of  each  jurisdiction where Borrower maintains its
executive  offices,  a  place  of  business,  or  assets;

          (b)     Judgment,  federal  tax lien and corporate and partnership tax
lien  searches,  in  each  jurisdiction  searched  under  clause  (a)  above.

                                       16
<PAGE>
     Provided that no Event of Default exists under this Agreement or any of the
other Loan Documents, Borrower shall pay, or shall reimburse Lender, as the case
may  be,  for  the  cost  of  up  to three (3) searches per Borrower or Borrower
facility performed by Lender hereunder per calendar year during the Term of this
Agreement;  provided,  however,  that  upon  the  occurrence  and  during  the
            --------   -------
continuance  of  any  Event  of Default under this Agreement or any of the other
Loan  Documents,  the  limitation  set forth in the foregoing sentence shall not
apply, and (i) Borrower shall be required to pay, or to reimburse Lender, as the
case  may be, for the cost of any and all searches described in this Section 2.5
that  may  be  performed  by  Lender  during  such  period and (ii) any searches
performed  pursuant to (i) above shall not be applied towards such annual limit.
Notwithstanding  anything  in this Section 3.5 to the contrary, Lender shall not
be  limited in the number of any searches performed or permitted to be performed
under  this  Section 3.5.  In addition, prior to Closing, at Borrower's expense,
Borrower  shall  obtain and deliver to Lender good standing certificates showing
Borrower  to  be  in  good  standing in its state of formation and in each other
state  in  which  it  is  doing  and  currently intends to do business for which
qualification  is  required.

     SECTION  3.6.  POWER  OF ATTORNEY.   (a) Upon the occurrence and during the
                    -------------------
continuance  of  any Event of Default or (b) ten (10) days following any request
by  Lender  that  Borrower  take  any  or  all  of the following actions, unless
Lender's  rights would be materially impaired by virtue of Borrower's failure to
take  any  or  all  of such actions during such 10-day period, in which case the
provisions of this Section 3.6 shall become automatically effective, each of the
officers  of  Lender  is  hereby irrevocably made, constituted and appointed the
true  and  lawful attorney for Borrower (without requiring any of them to act as
such)  with full power of substitution to do the following: (x) endorse the name
of Borrower upon any and all checks, drafts, money orders, and other instruments
for the payment of money that are payable to Borrower and constitute collections
on  Borrower's  Accounts;  (y)  execute  in  the  name of Borrower any financing
statements,  schedules, assignments, instruments, documents, and statements that
Lender  may  deem  necessary  or  desirable  to  enforce  any  Account  or other
Collateral  or perfect Lender's security interest or lien in any Collateral; and
(z) do such other and further acts and deeds in the name of Borrower that Lender
may  deem  necessary  or desirable to enforce any Account or other Collateral or
perfect  Lender's  security interest or lien in any Collateral.  In addition, if
Borrower  breaches  its  obligation  to  direct  payments of the proceeds of the
Collateral  to the Lockbox Account, Lender, as the irrevocably made, constituted
and  appointed true and lawful attorney for Borrower pursuant to this paragraph,
may,  by  the  signature  or  other  act  of  any  of Lender's officers (without
requiring  any  of  them  to  do  so),  direct  any  federal,  state  or  fiscal
intermediary.  or, during an Event of Default, any private payor as well, to pay
proceeds  of  the  Collateral  to  Borrower  by directing payment to the Lockbox
Account.

                                       17
<PAGE>
                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

     Borrower  represents  and  warrants  to  Lender,  and  shall  be  deemed to
represent  and warrant on each day on which any Obligations shall be outstanding
under  this  Agreement,  that:

     SECTION  4.1.  SUBSIDIARIES.  Except as set forth in Schedule 4.1, Borrower
                    -------------                         ------------
has  no  subsidiaries.

     SECTION  4.2.  ORGANIZATION  AND  GOOD STANDING.  Borrower is a corporation
                    --------------------------------
duly  organized,  validly  existing,  and in good standing under the laws of its
state  of  formation,  is  in  good  standing  as  a foreign corporation in each
jurisdiction  in  which  the  character  of the properties owned or leased by it
therein  or  the  nature of its business makes such qualification necessary, has
the corporate power and authority to own its assets and transact the business in
which  it  is  engaged,  and  has  obtained  all  certificates,  licenses  and
qualifications  required  under  all laws, regulations, ordinances, or orders of
public  authorities  necessary  for  the  ownership  and operation of all of its
properties  and  transaction  of  all  of  its  business.

     SECTION  4.3.  AUTHORITY.  Borrower  has full corporate power and authority
                    ---------
to  enter  into,  execute,  and  deliver  this  Agreement  and  to  perform  its
obligations under this Agreement, to borrow the Loan, to execute and deliver the
Note,  and  to  incur  and  perform  the  obligations  provided  for in the Loan
Documents,  all  of  which have been duly authorized by all necessary  corporate
action.  No  consent or approval of shareholders of, or lenders to, Borrower and
no  consent, approval, filing or registration with any Governmental Authority is
required as a condition to the validity of the Loan Documents or the performance
by  Borrower  of  its  obligations  under  the  Loan  Documents.

     SECTION  4.4.  BINDING  AGREEMENT.  This  Agreement  and  all  other  Loan
                    ------------------
Documents  constitute,  and the Note, when issued and delivered pursuant to this
Agreement  for  value  received,  will constitute, the valid and legally binding
obligations  of  Borrower, enforceable against Borrower in accordance with their
respective  terms.

     SECTION  4.5.  LITIGATION.  Except  as disclosed in Schedule 4.5, there are
                    ----------                           ------------
no  actions,  suits, proceedings or investigations pending or threatened against
Borrower  before  any  court  or  arbitrator  or  before  or by any Governmental
Authority which, in any one case or in the aggregate, if determined adversely to
the interest of Borrower, could have a Material Adverse Effect.  Borrower is not
in  default  with respect to any order of any court, arbitrator, or Governmental
Authority  applicable  to  Borrower  or  its  properties.

     SECTION 4.6.  NO CONFLICTS.  The execution and delivery by Borrower of this
                   ------------
Agreement  and  the  other  Loan  Documents  do  not, and the performance of its
obligations  under  the  Loan  Documents  will  not,  violate,  conflict  with,
constitute  a  default  or  an event that, with the giving of notice or lapse of

                                       18
<PAGE>
time,  or both, could become an Event of Default, or result in the creation of a
lien or encumbrance upon the property of Borrower (other than for the benefit of
Lender)  under  (a)  any  provision  of  Borrower's articles of incorporation or
bylaws,  (b)  any  provision  of  any  law,  rule,  or  regulation applicable to
Borrower,  (c)  any indenture or other agreement or instrument to which Borrower
is  a  party or by which Borrower or its property is bound, or (d) any judgment,
order  or  decree  of any court, arbitration tribunal, or Governmental Authority
having  jurisdiction  over  Borrower  which  is  applicable  to  Borrower.

     SECTION  4.7.  FINANCIAL  CONDITION.  The  annual  financial  statements of
                    ---------------------
Borrower as of and for the year ended December 31, 1999 audited by M.R. Weiser &
Co.  LLP  and  the  unaudited financial statements of Borrower as of and for the
period  ending  September  30, 2000, certified by the chief financial officer of
Borrower,  which  have  been  delivered  to Lender, fairly present the financial
condition of Borrower and the results of its operations and changes in financial
condition  as  of  the  dates  and  for  the  periods referred to, and have been
prepared  in  accordance  with  GAAP.  There  are  no  material  unrealized  or
anticipated liabilities, direct or indirect, fixed or contingent, of Borrower as
of  the  dates  of  such  financial  statements  which are not reflected in such
financial  statements  or  in  the notes to such financial statements. There has
been  no  adverse  change  in  the business, properties, condition (financial or
otherwise)  or  operations  (current or prospective) of Borrower since September
30,  2000.  Borrower's  fiscal  year  ends  on  December  31.  The  federal  tax
identification  numbers  of  each entity comprising Borrower are as set forth on
Schedule  4.7.
-------------

     SECTION 4.8.  NO DEFAULT.  Borrower is not in default under or with respect
                   ----------
to  any  obligation  in  any  respect  that  could  be  adverse to its business,
operations, property or financial condition, or which could adversely affect the
ability  of  Borrower  to  perform its obligations under the Loan Documents.  No
Event  of  Default or event that, with the giving of notice or lapse of time, or
both,  could  become  an  Event  of  Default,  has  occurred  and is continuing.

     SECTION  4.9.  TITLE TO PROPERTIES.  Borrower has good and marketable title
                    -------------------
to  its  properties  and assets, including the Collateral and the properties and
assets  reflected in the financial statements described in Section 4.7, and none
of  such  properties  or  assets  is  subject  to  any  lien,  mortgage, pledge,
encumbrance or charge of any kind, other than Permitted Liens.  Borrower has not
agreed  or  consented to cause any of its properties or assets whether owned now
or  hereafter  acquired  to  be  subject  in the future (upon the happening of a
contingency  or  otherwise) to any lien, mortgage, pledge, encumbrance or charge
of  any  kind  other  than  Permitted  Liens.

     SECTION  4.10.  TAXES.  Borrower  has filed, or has obtained extensions for
                     -----
the filing of, all federal, state and other tax returns which are required to be
filed, and has paid all taxes shown as due on those returns and all assessments,
fees  and  other  amounts  due  as  of  the  date  of  this  Agreement.  All tax
liabilities  of  Borrower were, as of September 30, 2000 and are now, adequately
provided  for  on  Borrower's  books.  No tax liability has been asserted by the
Internal Revenue Service or other taxing authority against Borrower for taxes in
excess  of  those  already  paid.

                                       19
<PAGE>
     SECTION  4.11.  SECURITIES  AND  BANKING  LAWS  AND  REGULATIONS.
                     -------------------------------------------------

          (a)     The use of the proceeds of the Loan and Borrower's issuance of
the Note will not directly or indirectly violate or result in a violation of the
Securities  Act  of  1933 or the Securities Exchange Act of 1934, as amended, or
any  regulations  issued  pursuant  thereto,  including  without  limitation
Regulations  U,  T or X of the Board of Governors of the Federal Reserve System.
Borrower  is  not engaged in the business of extending credit for the purpose of
the  purchasing  or  carrying  of  "margin  stock"  within  the meaning of those
regulations.  No  part  of the proceeds of the Loan under this Agreement will be
used  to  purchase  or  carry any margin stock or to extend credit to others for
such  purpose.

          (b)     Borrower  is  not  an investment company within the meaning of
the  Investment  Company  Act  of  1940,  as  amended,  nor  is  it, directly or
indirectly,  controlled  by  or  acting  on  behalf  of  any  Person which is an
investment  company  within  the  meaning  of  that  Act.

     SECTION  4.12.  ERISA.  No  employee benefit plan (a "Plan") subject to the
                     -----
Employee Retirement Income Security Act of 1974 ("ERISA") and regulations issued
pursuant  to  ERISA that is maintained by Borrower or under which Borrower could
have  any  material liability under ERISA (a) has failed to meet minimum funding
standards  established  in Section 302 of ERISA, (b) has failed to substantially
comply  with  all  applicable  requirements of ERISA and of the Internal Revenue
Code,  including  all  applicable rulings and regulations thereunder, or (c) has
engaged  in  or  been involved in a prohibited transaction (as defined in ERISA)
under  ERISA  or  under  the  Internal Revenue Code.    Neither Borrower nor any
member  of  a  Controlled  Group that includes Borrower has assumed, or received
notice  of a claim asserted against Borrower or another member of the Controlled
Group  for,  withdrawal liability (as defined in the Multi-Employer Pension Plan
Amendments  Act  of 1980, as amended) with respect to any multi-employer pension
plan.  Borrower  has  timely made when due all contributions with respect to any
multi-employer  pension  plan in which it participates and no event has occurred
triggering  a  material  claim  against  Borrower  for withdrawal liability with
respect  to  any  multi-employer  pension  plan  in which Borrower participates.

     SECTION  4.13.  COMPLIANCE WITH LAW.  Except as described in Schedule 4.13,
                     --------------------                         -------------
Borrower  is  not  in  violation  of  any  statute,  rule  or  regulation of any
Governmental  Authority  (including,  without  limitation,  any statute, rule or
regulation  relating  to  employment practices or to environmental, occupational
and  health  standards  and  controls).  Borrower  has  obtained  all  licenses,
permits,  franchises,  and  other  governmental authorizations necessary for the
ownership  of  its  properties  and  the  conduct  of its business.  Borrower is
current  with  all  reports and documents required to be filed with any state or
federal  securities  commission or similar Governmental Authority and is in full
compliance  with  all  applicable  rules  and  regulations  of such commissions.

                                       20
<PAGE>
     SECTION  4.14.  INTENTIONALLY LEFT BLANK.

     SECTION  4.15.  PLACES OF BUSINESS. As of the Closing Date, the only places
                     ------------------
of  business  of Borrower, and the places where it keeps and intends to keep the
Collateral and records concerning the Collateral, are at the addresses set forth
in  Schedule  4.15.  Schedule  4.15  also lists the owner of record of each such
    --------------   --------------
property.

     SECTION  4.16.  INTELLECTUAL  PROPERTY.  Borrower  exclusively  owns  or
                     -----------------------
possesses  all  the  patents,  patent  applications,  trademarks,  trademark
applications,  service marks, trade names, copyrights, franchises, licenses, and
rights  with  respect  to  the  foregoing  necessary for the current and planned
future  conduct of its business, without any conflict with the rights of others.
A  list  of  all such intellectual property (indicating the nature of Borrower's
interest),  as  well as all outstanding franchises and licenses given by or held
by  Borrower,  is  attached as Schedule 4.16.  Borrower is not in default of any
                               -------------
obligation  or undertaking with respect to such intellectual property or rights.
Borrower  is  not  infringing  on  any patents, patent applications, trademarks,
trademark  applications,  service  marks,  trade  names, copyrights, franchises,
licenses,  any  rights  with respect to the foregoing, or any other intellectual
property  rights  of others and the Borrower is not aware of any infringement by
others  of  any  such  rights  owned  by  Borrower.

     SECTION 4.17.  STOCK OWNERSHIP.  The identity of the stockholders of record
                    ---------------
owning  more  than  five  percent (5%) of each class of the outstanding stock of
Borrower, together with their respective ownership percentages, are as set forth
on  Schedule  4.17.
    --------------

     SECTION  4.18.     MATERIAL  FACTS.  Neither  this  Agreement nor any other
                        ----------------
Loan  Document  nor  any  other  agreement,  document, certificate, or statement
furnished  to  Lender  by  or  on  behalf  of  Borrower  in  connection with the
transactions  contemplated  by  this  Agreement contains any untrue statement of
material fact or omits to state a material fact necessary to make the statements
contained  in this Agreement or other Loan Document not misleading.  There is no
fact  known  to  Borrower  that adversely affects or in the future may adversely
affect  the business, operations, affairs or financial condition of Borrower, or
any  of  its  properties  or  assets.

     SECTION  4.19.  INVESTMENTS,  GUARANTEES,  AND CERTAIN CONTRACTS.  Borrower
                     -------------------------------------------------
does  not  own  or  hold  any  equity or long-term debt investments in, have any
outstanding advances to, have any outstanding guarantees for the obligations of,
or  have  any  outstanding  borrowings  from, any Person, except as described on
Schedule 4.19.  Borrower is not a party to any contract or agreement, or subject
-------------
to  any  corporate  restriction,  which  would  have  a Material Adverse Effect.

     SECTION  4.20.  BUSINESS  INTERRUPTIONS.  Within five years before the date
                     -----------------------
of  this  Agreement,  neither the business, property or assets, or operations of
Borrower  has  been  adversely  affected  in  any  way  by any casualty, strike,
lockout,  combination  of  workers,  or order of the United States of America or
other  Governmental  Authority, directed against Borrower.  There are no pending
or  threatened  labor  disputes,  strikes,  lockouts,  or similar occurrences or
grievances  against  Borrower  or  its  business.

                                       21
<PAGE>
     SECTION 4.21.  NAMES.  Within five years before the date of this Agreement,
                    -----
Borrower  has  not  conducted  business  under  or  used any other name (whether
corporate,  partnership  or  assumed)  other  than  as  shown  on Schedule 4.21.
                                                                  -------------
Borrower  is the sole owner of all names listed on that Schedule and any and all
business  done and invoices issued in such names are Borrower's sales, business,
and  invoices.  Each  trade  name  of  Borrower represents a division or trading
style  of  Borrower  and  not  a  separate  Person  or  independent  Affiliate.

     SECTION 4.22  JOINT VENTURES.  Borrower is not engaged in any joint venture
                   ---------------
or  partnership  with  any  other  Person, except as set forth on Schedule 4.22.
                                                                  -------------

     SECTION 4.23  ACCOUNTS.  Lender may rely, in determining which Accounts are
                   ---------
Qualified  Accounts, on all statements and representations made by Borrower with
respect  to  any  Account or Accounts.  Unless otherwise indicated in writing to
Lender,  with  respect  to  each  Qualified  Account,  Borrower represents that:

          (a)     The Account is genuine and in all respects what it purports to
be,  and  is  not  evidenced  by  a  judgment;

          (b)     The  Account  arises  out  of  a completed, bona fide sale and
                                                              ---- ----
delivery  of  goods or rendition of Medical Services by Borrower in the ordinary
course  of  its  business and in accordance with the terms and conditions of all
purchase  orders,  contracts, certification, participation, certificate of need,
or  other  documents relating thereto and forming a part of the contract between
Borrower  and  the  Account  Debtor;

          (c)     The Account is for a liquidated amount maturing as stated in a
duplicate  claim or invoice covering such sale or rendition of Medical Services,
a  copy  of  which  has  been  furnished  or  is  available  to  Lender;

          (d)     The Account, and Lender's security interest in the Account, is
not,  and will not (by voluntary act or omission by Borrower), be in the future,
subject  to  any  offset, lien, deduction, defense, dispute, counterclaim or any
other  adverse  condition, and each such Account is absolutely owing to Borrower
and  is  not  contingent  in  any  respect  or  for  any  reason;

          (e)     There  are  no  facts,  events  or occurrences that in any way
impair  the  validity  or  enforceability  of any Accounts or tend to reduce the
amount  payable  thereunder  from  the  face  amount of the claim or invoice and
statements  delivered  to  Lender  with  respect  thereto;

          (f)     To  the  best  of Borrower's knowledge, (i) the Account Debtor
under the Account had the capacity to contract at the time any contract or other
document giving rise to the Account was executed and (ii) such Account Debtor is
solvent;

                                       22
<PAGE>
          (g)     To  the best of Borrower's knowledge, there are no proceedings
or  actions  threatened  or pending against any Account Debtor under the Account
that  might  result  in  any  material  adverse  change in such Account Debtor's
financial  condition  or  the  collectability  of  such  Account;

          (h)     The  Account  has  been  billed  and  forwarded to the Account
Debtor  for  payment  in  accordance  with  applicable  laws  and compliance and
conformance  with  any  and  requisite  procedures, requirements and regulations
governing  payment by such Account Debtor with respect to such Account, and such
Account  if  due  from  a  Medicaid/Medicare  Account Debtor is properly payable
directly  to  Borrower;  and

          (i)     Borrower  has  obtained  and currently has all certificates of
need,  Medicaid  and  Medicare  provider  numbers,  licenses,  permits  and
authorizations  that  are  necessary  in  the  generation  of  such  Accounts.

     Notwithstanding  the representations set forth in this Section 4.23, Lender
acknowledges  that (x) from time to time, Borrower has knowledge that certain of
its Accounts may not comply with the foregoing representations (a "Non-Compliant
Account");  provided,  that  Borrower agrees that promptly on its becoming aware
that  any  of  its  Accounts is a Non-Complaint Account, it shall provide Lender
with  written  notice  of  same; and (y) Borrower believes that, at any time and
from  time  to  time  in  the  ordinary  course  of its business, certain of its
Accounts  may  be  Non-Complaint  Accounts,  and  that Borrower may be unable to
identify  such  Non-Compliant  Accounts to Lender specifically as required under
clause (x) above.  Notwithstanding the foregoing, or anything in this Agreement,
to  the  contrary,  Borrower  represents  that  the  aggregate  value  of  all
Non-Compliant  Accounts described in clauses (x) and (y) above shall not, in any
event,  exceed  two  percent  (2%)  of the aggregate outstanding value of all of
Borrower's  Qualified  Accounts  at  any  time.

     SECTION  4.24.  SOLVENCY.  Both  before  and  after  giving  effect  to the
                     --------
transactions  contemplated  by  the  terms  and  provisions  of  this Agreement,
Borrower (taken as a whole) (a) owns assets whose fair saleable value is greater
than  the  amount  required  to  pay  all  of Borrower's Indebtedness (including
contingent  debts),  (b)  was and is able to pay all of its Indebtedness as such
Indebtedness  matures,  and  (c)  had and has capital sufficient to carry on its
business and transactions and all business and transactions in which it about to
engage.  For  purposes of this Agreement, the term "Indebtedness" means, without
duplication  (x)  all  items  which in accordance with GAAP would be included in
determining  total liabilities as shown on the liability side of a balance sheet
of  such  Borrower as of the date on which Indebtedness is to be determined, (y)
all  obligations  of  any  other  person  or  entity  which  such  Borrower  has
guaranteed,  and  (z)  the  Obligations.

     SECTION  4.25.   INTENTIONALLY  LEFT  BLANK.

                                       23
<PAGE>
                                    ARTICLE V

                        CLOSING AND CONDITIONS OF LENDING
                        ---------------------------------

     SECTION  5.1.  CONDITIONS PRECEDENT TO AGREEMENT.  The obligation of Lender
                    ---------------------------------
to  enter  into and perform this Agreement and to make Revolving Credit Loans is
subject  to  the  following  conditions  precedent:

          (a)     Lender  shall  have  received  two  (2)  originals  of  this
Agreement, the Certificate of Validity, and all other Loan Documents required to
be executed and delivered at or before Closing (other than the Note, as to which
Lender  shall receive only one (1) original), executed by Borrower and any other
required  Persons,  as  applicable.

          (b)     Lender  shall  have  received  all  searches and good standing
certificates  required  by  Section  3.5.

          (c)     Borrower  shall  have complied and shall then be in compliance
with  all  the  terms,  covenants  and  conditions  of  the  Loan  Documents.

          (d)     There  shall  have  occurred  and  be  continuing  no Event of
Default  and  no  event which, with the giving of notice or the lapse of time or
both,  could  constitute  an  Event  of  Default.

          (e)     The  representations  and  warranties  contained in Article IV
shall  be  true  and  correct.

          (f)     Lender  shall  have  received copies of all board of directors
resolutions  of  Borrower,  and  other action taken by Borrower to authorize the
execution,  delivery  and performance of the Loan Documents and the borrowing of
the  Loan  under  the Loan Documents, as well as the names and signatures of the
officers of Borrower authorized to execute documents on its behalf in connection
with  the  Loan,  all  as  also  certified  as  of the date of this Agreement by
Borrower's  chief  financial  officer,  or  equivalent, and such other papers as
Lender  may  require.

          (g)     Lender  shall have received copies, certified as true, correct
and  complete  by  a  corporate  officer  of  Borrower,  of  the  articles  of
incorporation  of Borrower, with any amendments to any of the foregoing, and all
other  documents  necessary for performance of the obligations of Borrower under
this  Agreement  and  the  other  Loan  Documents.

          (h)     Lender  shall  have  received a written opinion of counsel for
Borrower, dated the date of this Agreement, substantially in the form of Exhibit
                                                                         -------
C  attached  hereto.
-

                                       24
<PAGE>
          (i)     Lender shall have received such financial statements, reports,
certifications, and other operational information required to be delivered under
this  Agreement,  including  without  limitation  an  initial  borrowing  base
certificate  calculating  the  Borrowing  Base.

          (j)     Lender  shall  have  received  the  Commitment Fee pursuant to
Section  2.4(a)(i)-(iii).

          (k)     The  Lockbox,  Lockbox  Account  and the Concentration Account
shall  have  been  established, or, with respect to the initial Revolving Credit
Loan made hereunder only, Borrower shall have agreed in writing that the Lockbox
and the Lockbox Account shall be established, and an agreement executed with the
Lockbox  Bank,  within  thirty  (30)  days  of  the  date  of  execution of this
Agreement;  provided  that, in such event, during such 30-day period or prior to
the Lockbox and the Lockbox Account having been established hereunder, whichever
is  later (provided that the foregoing language shall not constitute a waiver by
Lender  of  the  covenant  set forth in this Section 5.1(k)), all collections of
Accounts  or proceeds of other Collateral, except Private Pay Accounts, received
by  Borrower during such period shall be held in trust for the benefit of Lender
and  immediately  remitted,  in  the  form  received,  to the bank designated by
Lender.

          (l)     Lender  shall  have received a certificate of Borrower's chief
financial officer, dated the Closing Date, certifying that all of the conditions
specified  in  this  Section  have  been  fulfilled.

          (m)     Lender  shall  have  received  an  executed  Payoff Letter and
Release  from  the  Bank  of  New  York,  substantially in the form of Exhibit D
                                                                       ---------
attached  hereto.

     SECTION  5.2.  CONDITIONS PRECEDENT TO ADVANCES.  Notwithstanding any other
                    --------------------------------
provision  of this Agreement, no Loan proceeds, Revolving Credit Loans, advances
or  other  extensions  of  credit  under  the Loan shall be disbursed under this
Agreement  unless  the  following  conditions  have  been  satisfied  or  waived
immediately  before  such  disbursement:

          (a)     The  representations  and  warranties  on the part of Borrower
contained  in  Article  IV  of  this  Agreement shall be true and correct in all
respects at and as of the date of disbursement or advance, as though made on and
as  of  such date (except to the extent that such representations and warranties
expressly  relate  solely  to  an earlier date and except that the references in
Section  4.7  to  financial  statements shall be deemed to be a reference to the
then  most  recent annual and interim financial statements of Borrower furnished
to  Lender  pursuant  to  Section  6.1).

          (b)     No  Event of Default or event which, with the giving of notice
of  the  lapse  of  time,  or  both, could become an Event of Default shall have
occurred  and  be continuing or would result from the making of the disbursement
or  advance.

                                       25
<PAGE>
          (c)     No  adverse  change in the condition (financial or otherwise),
properties,  business,  or  operations  of  Borrower  shall have occurred and be
continuing  with  respect  to  Borrower  since  the  date  of  this  Agreement.

     SECTION  5.3.  CLOSING.  Subject  to  the conditions of this Article V, the
                    -------
Loan  shall  be  made available on the date as is mutually agreed by the parties
(the  "Closing  Date")  at such time as may be mutually agreeable to the parties
upon  the  execution  of  this Agreement (the "Closing") at such place as may be
requested  by  Lender.

     SECTION  5.4.  WAIVER  OF  RIGHTS.  By  completing  the  Closing under this
                    ------------------
Agreement,  or by making advances under the Loan, Lender does not waive a breach
of any representation or warranty of Borrower  under this Agreement or under any
other  Loan  Document,  and all of Lender's claims and rights resulting from any
breach  or  misrepresentation  by  Borrower are specifically reserved by Lender.

                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS
                              ---------------------

     Borrower covenants and agrees that for so long as Borrower may borrow under
this  Agreement  and  until  payment  in full of the Note and performance of all
other  obligations  of  Borrower  under  the  Loan  Documents:

     SECTION  6.1.  FINANCIAL STATEMENTS AND COLLATERAL REPORTS.  Borrower shall
                    -------------------------------------------
furnish  to  Lender  (a)  a sales and collections report and accounts receivable
aging  schedule  on  Borrower's form as it exists as of the date of execution of
this  Agreement  unless  otherwise  agreed  to  in  writing  by  Lender  within
twenty-five (25) days after the end of each calendar month, which shall include,
but  not  be  limited  to,  a  report  of sales, credits issued, and collections
received;  (b)  payables  aging schedules within twenty-five (25) days after the
end of each calendar month; (c) internally prepared monthly financial statements
for  Borrower,  certified  by  the  chief  financial officer of Borrower, within
forty-five  (45)  days  of  the  end  of  each calendar month; (d) to the extent
prepared  by  Borrower,  annual projections, profit and loss statements, balance
sheets,  and  cash flow reports (prepared on a monthly basis) for the succeeding
fiscal  year within thirty (30) days before the end of each of Borrower's fiscal
years;  (e)  internally prepared annual financial statements for Borrower within
ninety  (90)  days  after the end of each of Borrower's fiscal years; (f) annual
audited  financial statements for Borrower prepared by M.R. Weiser & Co. LLP, or
another  firm  of  independent public accountants satisfactory to Lender, within
one  hundred  (100)  days  after the end of each of Borrower's fiscal years; (g)
promptly  upon  receipt  thereof, copies of any reports submitted to Borrower by
the independent accountants in connection with any interim audit of the books of
Borrower  and  copies  of each management control letter provided to Borrower by
independent  accountants;  (h)  as  soon  as  available, copies of all financial
statements  and notices provided by Borrower to all of its stockholders; and (i)
such  additional  information,  reports or statements as Lender may from time to
time  request.  Annual  financial statements shall set forth in comparative form
figures  for  the corresponding periods in the prior fiscal year.  All financial
statements  shall include a balance sheet and statement of earnings and shall be
prepared  in  accordance  with  GAAP.

                                       26
<PAGE>
     SECTION  6.2.  PAYMENTS  UNDER  THIS  AGREEMENT.  Borrower  will  make  all
                    --------------------------------
payments  of  principal,  interest,  fees, and all other payments required under
this Agreement and under the Loan, and under any other agreements with Lender to
which  Borrower  is  a  party,  as  and  when  due.

     SECTION 6.3.  EXISTENCE, GOOD STANDING, AND COMPLIANCE WITH LAWS.  Borrower
                   --------------------------------------------------
will  do or cause to be done all things necessary (a) to obtain and keep in full
force  and  effect  all  corporate  existence, rights, licenses, privileges, and
franchises  of  Borrower  necessary to own its property or conduct its business,
and  comply  with  all  applicable  current  and future laws, ordinances, rules,
regulations, orders and decrees of any Governmental Authority having or claiming
jurisdiction  over Borrower; and (b) to maintain and protect the properties used
or  useful  in  the  conduct of the operations of Borrower, in a prudent manner,
including without limitation the maintenance at all times of such insurance upon
its  insurable  property  and  operations  as required by law or by Section 6.7.

     SECTION  6.4.  LEGALITY.  The  making  of the Loan and each disbursement or
                    --------
advance under the Loan shall not be subject to any penalty or special tax, shall
not  be  prohibited  by  any  governmental  order  or  regulation  applicable to
Borrower,  and  shall  not  violate  any  rule or regulation of any Governmental
Authority,  and  necessary  consents,  approvals  and  authorizations  of  any
Governmental Authority to or of any such disbursement or advance shall have been
obtained.

     SECTION  6.5.  LENDER'S  SATISFACTION.  All instruments and legal documents
                    ----------------------
and  proceedings  in  connection  with  the  transactions  contemplated  by this
Agreement shall be satisfactory in form and substance to Lender and its counsel,
and  Lender  shall  have  received all documents, including records of corporate
proceedings  and  opinions  of  counsel,  which  Lender  may  have  requested in
connection  therewith.

     SECTION  6.6.   TAXES  AND  CHARGES.  Borrower  shall  timely  file all tax
                     -------------------
reports and pay and discharge all taxes, assessments and governmental charges or
levies imposed upon Borrower, or its income or profits or upon its properties or
any  part  thereof,  before  the same shall be in default and before the date on
which  penalties  attach  thereto,  as  well  as  all  lawful  claims for labor,
material,  supplies or otherwise which, if unpaid, might become a lien or charge
upon  the  properties  or  any part thereof of Borrower; provided, however, that
                                                         --------  -------
Borrower  shall  not  be  required  to pay and discharge or cause to be paid and
discharged  any  such  tax,  assessment,  charge,  levy  or claim so long as the
validity  or  amount thereof shall be contested in good faith and by appropriate
proceedings  by  Borrower,  and  Borrower  shall  have  set aside on their books
adequate  reserve therefor; and provided further, that such deferment of payment
                                -------- -------
is  permissible  only  so long as Borrower's title to, and its right to use, the
Collateral  is  not adversely affected thereby and Lender's lien and priority on
the  Collateral  are  not  adversely  affected,  altered  or  impaired  thereby.

                                       27
<PAGE>
     SECTION  6.7.  INSURANCE.  Borrower  shall  carry adequate public liability
                    ---------
and  professional  liability  insurance  with  responsible  companies reasonably
satisfactory to Lender in such amounts and against such risks as are customarily
maintained  by  similar businesses and by owners of similar property in the same
general  area.

     SECTION  6.8.  INFORMATION; VISITS AND INSPECTIONS.  Borrower shall furnish
                    ------------------------------------
to  Lender  such  information  as  Lender  may,  from time to time, request with
respect  to  the business or financial affairs of Borrower.  Borrower shall also
permit  any  officer, employee, agent or representative of Lender, during normal
business hours and on no less than five (5) Business Days notice to Borrower, to
visit  and inspect any of the properties of Borrower, to inspect, audit and make
copies of or prepare extracts from Borrower's minute books, books of account and
other records, including management letters prepared by Borrower's auditors, and
to  discuss the business affairs, finances and accounts of Borrower with, and be
advised  as  to the same by, the officers, employees and independent accountants
of  Borrower.

     SECTION  6.9.  MAINTENANCE  OF PROPERTY.  Borrower shall maintain, keep and
                    -------------------------
preserve  all  of its properties in good repair, working order and condition and
from  time  to  time  make  all  necessary  repairs,  renewals,  replacements,
betterments  and  improvements  thereto,  so  that  the  business  carried on in
connection  therewith  may  be  properly  conducted  at  all  times.

     SECTION  6.10.  NOTIFICATION OF EVENTS OF DEFAULT AND ADVERSE DEVELOPMENTS.
                     -----------------------------------------------------------
Borrower  shall  notify Lender promptly upon the occurrence of: (a) any Event of
Default;  (b)  any  event  which,  with the giving of notice or lapse of time or
both,  could  constitute  an  Event  of  Default;  (c) any event, development or
circumstance  whereby  the  financial  statements previously furnished to Lender
fail  in  any  material  respect to present fairly, in accordance with GAAP, the
financial  condition  and  operational  results  of  Borrower; (d) any judicial,
administrative  or  arbitration  proceeding  pending  against  Borrower, and any
judicial or administrative proceeding known by Borrower to be threatened against
it  which, if adversely decided, could adversely affect its condition (financial
or  otherwise)  or  operations  (current  or  prospective)  or  which may expose
Borrower  to  uninsured liability of $75,000.00 or more; (e) any default claimed
by  any other creditor for Borrowed Money of Borrower other than Lender; and (f)
any  other  development  in  the  business  or  affairs of Borrower which may be
adverse; in each case describing the nature of the event or development.  In the
case  of  notification  under clauses (a) and (b)), Borrower shall set forth the
action  Borrower  proposes  to  take  with  respect  to  such  event.

                                       28
<PAGE>
     SECTION  6.11.  EMPLOYEE BENEFIT PLANS.  Borrower shall (a) comply with the
                     -----------------------
funding  requirements  of  ERISA with respect to the Plans for its employees, or
will  promptly  satisfy  any  accumulated  funding  deficiency that arises under
Section  302  of ERISA; (b) furnish Lender, promptly after filing the same, with
copies  of  all  reports  or  other  statements  filed  with  the  United States
Department  of  Labor, the Pension Benefit Guaranty Corporation, or the Internal
Revenue Service with respect to all Plans, or which Borrower, or any member of a
Controlled  Group,  may receive from such Governmental Authority with respect to
any  such  Plans,  and  (c)  promptly  advise  Lender  of  the occurrence of any
Reportable Event or Prohibited Transaction with respect to any such Plan and the
action which Borrower proposes to take with respect thereto.  Borrower will make
all  contributions  when  due with respect to any multi-employer pension plan in
which  it  participates and will promptly advise Lender: (x) upon its receipt of
notice  of  the  assertion against Borrower of a claim for withdrawal liability;
(y)  upon  the  occurrence  of  any event which could trigger the assertion of a
claim  for withdrawal liability against Borrower; and (z) upon the occurrence of
any  event which would place Borrower in a Controlled Group as a result of which
any member (including Borrower) thereof may be subject to a claim for withdrawal
liability,  whether  liquidated  or  contingent.

     SECTION  6.12.  FINANCING  STATEMENTS.  Borrower  shall provide Lender with
                     ----------------------
evidence  satisfactory  to  Lender  as  to  the  due  recording  of  termination
statements,  releases  of  collateral,  and  Forms  UCC-3, and shall cause to be
recorded  financing  statements  on  Form  UCC-1,  duly executed by Borrower and
Lender,  in  all places necessary to release all existing security interests and
other liens in the Collateral (other than as permitted by this Agreement) and to
perfect  and  protect  Lender's first priority lien and security interest in the
Collateral,  as  Lender  may  request.

     SECTION 6.13.  FINANCIAL RECORDS.  Borrower shall keep current and accurate
                    ------------------
books of records and accounts in which full and correct entries shall be made of
all  of its business transactions, and shall reflect in its financial statements
adequate  accruals  and appropriations to reserves, all in accordance with GAAP.

     SECTION  6.14.  COLLECTION OF ACCOUNTS.  Borrower shall continue to collect
                     -----------------------
its  Accounts  in  the  ordinary  course  of  business.

     SECTION  6.15.  PLACES  OF BUSINESS.  Borrower shall give thirty (30) days'
                     --------------------
prior  written  notice  to  Lender  of  any change in the location of any of its
places  of business, of the places where its records concerning its Accounts are
kept, of the places where the Collateral is kept, or of the establishment of any
new  places  of  business.

     SECTION 6.16.  BUSINESS CONDUCTED.  Borrower shall continue in the business
                    -------------------
currently  conducted  by it using its best efforts to maintain its customers and
goodwill.  Borrower  shall  not  engage,  directly or indirectly, in any line of
business  substantially  different from the business conducted by it immediately
before the Closing Date, or engage in business or lines of business that are not
reasonably  related  thereto.

     SECTION  6.17.  LITIGATION  AND  OTHER  PROCEEDINGS.  Borrower  shall  give
                     ------------------------------------
prompt  notice  to  Lender  of  any litigation, arbitration, or other proceeding
before  any  Governmental  Authority against or affecting Borrower if the amount
claimed  is  more  than  $75,000.00.

                                       29
<PAGE>
     SECTION  6.18.   BANK  ACCOUNTS.  On  the  occurrence  and  during  the
                      ---------------
continuance of an Event of Default under this Agreement or any of the other Loan
Documents,  Borrower  shall  assign  to  Lender  all  of  its  depository  and
disbursement  accounts  into  which  collections  of  Accounts  are  deposited;
provided,  that,  on the occurrence of such an Event of Default, and pursuant to
the  terms  of Section 3.6 hereof (and without in any way limiting the effect of
Section  3.6  hereof), Borrower shall be deemed, without any action by or notice
from  Lender,  to  have  irrevocably made, constituted and appointed each of the
officers  of Lender as the true and lawful attorney for Borrower with full power
of  substitution to execute, among other things, any and all documents necessary
to  affect  such  assignment  hereunder.

     SECTION  6.19.  SUBMISSION  OF  COLLATERAL  DOCUMENTS.  Borrower  shall, on
                     --------------------------------------
demand  of  Lender,  make  available  to  Lender copies of shipping and delivery
receipts  evidencing the shipment of goods that gave rise to an Account, medical
records,  insurance verification forms, assignment of benefits, in-take forms or
other  proof  of  the  satisfactory performance of services that gave rise to an
Account,  a  copy  of  the  claim  or invoice for each Account and copies of any
written contract or order from which the Account arose.  Borrower shall promptly
notify  Lender  if  an  Account becomes evidenced or secured by an instrument or
chattel  paper  and  upon  request  of  Lender,  shall promptly deliver any such
instrument  or  chattel  paper  to  Lender.

     SECTION  6.20.  LICENSURE;  MEDICAID/MEDICARE COST REPORTS.  Borrower shall
                     -------------------------------------------
maintain  all  certificates  of need, provider numbers and licenses necessary to
conduct  its  business  as  currently  conducted, and take any steps required to
comply  with  any  such  new  or  additional requirements that may be imposed on
providers  of  medical  products  and  Medical  Services.  If  required,  all
Medicaid/Medicare  cost  reports  will  be  properly  filed.

     SECTION 6.21.  OFFICER'S CERTIFICATES.  Together with the monthly financial
                    -----------------------
statements  delivered pursuant to clause (iii) of Section 6.1, and together with
the  audited  annual  financial  statements  delivered  pursuant  to clause (vi)
Section  6.1,  Borrower  shall  deliver  to  Lender  a  certificate of its chief
financial  officer,  in  form  and  substance  satisfactory  to  Lender:

          (a)     Setting  forth  the  information  (including  detailed
calculations)  required  to establish whether Borrower is in compliance with the
requirements  of  Articles VI and VII as of the end of the period covered by the
financial  statements  then  being  furnished;  and

          (b)     Stating  that  such officer has reviewed the relevant terms of
this  Agreement,  and  has  made  (or  caused  to  be  made under such officer's
supervision)  a  review  of the transactions and conditions of Borrower from the
beginning  of  the  accounting  period  covered  by  the income statements being
delivered to the date of the certificate, and that such review has not disclosed
the  existence during such period of any condition or event which constitutes an
Event  of  Default  or  which  is then, or with the passage of time or giving of
notice  or  both, could become an Event of Default, and if any such condition or
event existed during such period or now exists, specifying the nature and period
of existence thereof and what action Borrower has taken or proposes to take with
respect  thereto.

                                       30
<PAGE>
     SECTION  6.22. NET WORTH.  Borrower will not at any time allow its tangible
                    ----------
net  worth,  as  computed  in  accordance  with GAAP, to fall below $500,000.00.

                                   ARTICLE VII

                               NEGATIVE COVENANTS
                               ------------------

     Borrower  covenants  and  agrees  that so long as Borrower may borrow under
this  Agreement  and  until  payment  in full of the Note and performance of all
other  obligations  of  Borrower  under  the  Loan  Documents:

     SECTION  7.1.  BORROWING.  Borrower  shall  not  create,  incur,  assume or
                    ---------
suffer  to  exist  any  liability for Borrowed Money except: (a) indebtedness to
Lender; (b) indebtedness of Borrower secured by mortgages, encumbrances or liens
expressly  permitted by Section 7.3; (c) accounts payable to trade creditors and
current  operating  expenses  (other than for borrowed money) which are not aged
more  than  one  hundred  eighty  (180)  days from the billing date or more than
ninety (90) days from the due date, in each case incurred in the ordinary course
of  business  and  paid  within  such  time  period,  unless  the same are being
contested  in good faith and by appropriate and lawful proceedings, and Borrower
shall have set aside such reserves, if any, with respect thereto as are required
by GAAP and deemed adequate by Borrower and its independent accountants; and (d)
borrowings  incurred  in  the  ordinary course of its business and not exceeding
$100,000.00  in  the  aggregate outstanding at any one time.  Borrower shall not
make  prepayments  on  any existing or future indebtedness for Borrowed Money to
any  Person (other than Lender, to the extent permitted by this Agreement or any
subsequent  agreement  between  Borrower  and Lender), unless (x) Borrower shall
have  notified  Lender  in  writing  of  Borrower's  desire  to  make  any  such
prepayment,  which notice shall be received by Lender at least ten (10) Business
Days  before  the  proposed  date  of  such prepayment and (y) Lender shall have
consented  in  writing  to  Borrower  making  such  prepayment.

     SECTION  7.2.  JOINT  VENTURES.  Borrower  shall  not  invest  directly  or
                    ---------------
indirectly in any joint venture for any purpose without the prior written notice
to,  and  the  prior  written  consent  of,  Lender,  which consent shall not be
unreasonably  withheld.

     SECTION  7.3.  LIENS  AND  ENCUMBRANCES.  Borrower shall not create, incur,
                    ------------------------
assume or suffer to exist any mortgage, pledge, lien or other encumbrance of any
kind  (including  the charge upon property purchased under a conditional sale or
other  title  retention agreement) upon, or any security interest in, any of its
Collateral, whether now owned or hereafter acquired, except for Permitted Liens.

                                       31
<PAGE>
     SECTION  7.4.  RESTRICTION ON FUNDAMENTAL CHANGES.  Borrower shall not: (a)
                    -----------------------------------
enter into any transaction of merger or consolidation; (b) liquidate, wind-up or
dissolve  itself  (or  suffer any liquidation or dissolution); (c) convey, sell,
lease,  sublease,  transfer  or  otherwise  dispose  of, in one transaction or a
series  of  transactions,  any  of  its  assets,  or  the  capital  stock of any
subsidiary  of Borrower, whether now owned or hereafter acquired; or (d) acquire
by  purchase  or otherwise all or any substantial part of the business or assets
of, or stock or other evidence of beneficial ownership of, any Person.  Borrower
agrees  that  compliance  with  this  Section  7.4  is  a material inducement to
Lender's  advancing credit under this Agreement and Borrower further agrees that
any  breach  of  the terms of this Section 7.4 shall constitute fraud.  Borrower
further  agrees  that  in  addition  to  all other remedies available to Lender,
Lender  shall  be  entitled  to  specific  enforcement  of the covenants in this
Section  7.4,  including  injunctive  relief.

     SECTION  7.5.  SALE  AND  LEASEBACK.  Borrower  shall  not,  directly  or
                    ---------------------
indirectly,  enter  into any arrangement whereby Borrower sells or transfers all
or  any part of its assets and thereupon and within one year thereafter rents or
leases the assets so sold or transferred without prior written notice to and the
prior  written  consent  of  Lender,  which  consent  shall  not be unreasonably
withheld.

     SECTION  7.6.  DIVIDENDS,  DISTRIBUTIONS  AND MANAGEMENT FEES.  Upon notice
                    -----------------------------------------------
from  Lender  to  Borrower  of  the  existence of an Event of Default under this
Agreement,  Borrower  shall  not  declare  or  pay  any  dividends  or  other
distributions  with  respect to, purchase, redeem or otherwise acquire for value
any of its outstanding stock now or hereafter outstanding, or return any capital
of its stockholders, nor shall Borrower pay management fees or fees of a similar
nature  to  any  Person.

     SECTION  7.7.  LOANS.  Except  for  loans or advances to any Person that do
                    ------
not  exceed  (a)  $10,000.00  individually  or (b) $100,000.00 in the aggregate,
Borrower  shall  not  make loans or advances to any Person, other than (x) trade
credit  extended  in  the  ordinary course of its business, and (y) advances for
business  travel  and  similar temporary advances made in the ordinary course of
business  to  officers,  stockholders,  directors,  and  employees.

     SECTION  7.8.  CONTINGENT  LIABILITIES.  Borrower  shall  not  assume,
                    ------------------------
guarantee,  endorse,  contingently  agree to purchase or otherwise become liable
upon  the  obligation  of  any  Person,  except by the endorsement of negotiable
instruments  for  deposit  or collection or similar transactions in the ordinary
course  of  business.

     SECTION  7.9.  SUBSIDIARIES.  Borrower  shall  not  form any subsidiary, or
                    -------------
make  any investment in or any loan in the nature of an investment to, any other
Person.

     SECTION  7.10.  COMPLIANCE  WITH  ERISA.  Borrower  shall  not  permit with
                     ------------------------
respect  to  any Plan covered by Title IV of ERISA any Prohibited Transaction or
any  Reportable  Event.

                                       32
<PAGE>
     SECTION  7.11.  CERTIFICATES  OF  NEED.  Borrower shall not amend, alter or
                     -----------------------
suspend or terminate or make provisional in any material way, any certificate of
need  or  provider  number  without  the  prior written consent of Lender, which
consent  shall  not  be  unreasonably  withheld.

     SECTION 7.12.  TRANSACTIONS WITH AFFILIATES.  Borrower shall not enter into
                    -----------------------------
any transaction, including without limitation the purchase, sale, or exchange of
property,  or  the  loaning  or  giving of funds to any Affiliate or subsidiary,
except  in  the  ordinary  course  of  business  and  pursuant to the reasonable
requirements of Borrower's business and upon terms substantially the same and no
less  favorable  to  Borrower  as  it  would obtain in a comparable arm's length
transaction  with  any Person not an Affiliate or subsidiary, and so long as the
transaction  is  not otherwise prohibited under this Agreement.  For purposes of
the  foregoing,  Lender consents to the transactions described on Schedule 7.12.
                                                                  -------------

     SECTION  7.13.  USE OF LENDER'S NAME.  Borrower shall not use Lender's name
                     ---------------------
(or  the  name  of  any  of  Lender's  affiliates) in connection with any of its
business operations.  Borrower may disclose to third parties that Borrower has a
borrowing  relationship  with  Lender.  Nothing  contained  in this Agreement is
intended  to  permit  or  authorize  Borrower  to make any contract on behalf of
Lender.

     SECTION 7.14.  CHANGE IN CAPITAL STRUCTURE.  There shall occur no change in
                    ----------------------------
the  ownership of Borrower's capital stock or in Borrower's capital structure as
set  forth in Schedule 4.17, except (a) as described in Schedule 7.14 and (b) to
              -------------                             -------------
the  extent  such  change  does  not  constitute  a  Change  in  Control.

     SECTION 7.15.  CONTRACTS AND AGREEMENTS.  Borrower shall not become or be a
                    -------------------------
party  to any contract or agreement which would breach this Agreement, or breach
any  other instrument, agreement, or document to which Borrower is a party or by
which  it  is  or  may  be  bound.

     SECTION  7.16.  MARGIN  STOCK.  Borrower  shall  not  carry or purchase any
                     --------------
"margin  security"  within  the meaning of Regulations U, T or X of the Board of
Governors  of  the  Federal  Reserve  System.

     SECTION  7.17.  TRUTH  OF  STATEMENTS AND CERTIFICATES.  Borrower shall not
                     ---------------------------------------
furnish  to  Lender  any  certificate or other document that contains any untrue
statement of a material fact or that omits to state a material fact necessary to
make  it  not  misleading  in  light  of  the  circumstances  under which it was
furnished.

                                       33
<PAGE>
                                  ARTICLE VIII

                                EVENTS OF DEFAULT
                                -----------------

     SECTION  8.1.  EVENTS  OF DEFAULT.  Each of the following (individually, an
                    -------------------
"Event  of  Default" and collectively, the "Events of Default") shall constitute
an  event  of  default  under  this  Agreement:

          (a)     A  default  in the payment of any installment of principal of,
or  interest  upon,  the  Note  when  due  and  payable,  whether at maturity or
otherwise, or any breach of Section 2.3, which default or breach, as applicable,
shall  have  continued  unremedied  for  a period of five (5) days after written
notice  of  the  default  or  breach  from  Lender  to  Borrower;

          (b)     A  default in the payment of any other charges, fees, or other
monetary  obligations  owing  to Lender arising out of or incurred in connection
with  this  Agreement  when such payment is due and payable, which default shall
have  continued unremedied for a period of five (5) days after written notice of
the  default  from  Lender  to  Borrower;

          (c)     A  default in the due observance or performance by Borrower or
any  guarantor  of  the  Obligations  of  any  other term, covenant or agreement
contained  in  any  of  the  Loan  Documents, which default shall have continued
unremedied for a period of fifteen (15) days after written notice of the default
from  Lender  to  Borrower;

          (d)     Any  representation  or  warranty  made  by  Borrower  in this
Agreement or in any of the other Loan Documents, any financial statement, or any
statement  or  representation  made  in any other certificate, report or opinion
delivered  in  connection with this Agreement or the other Loan Documents proves
to  have  been  incorrect or misleading in any material respect when made, which
default  shall have continued unremedied for a period of fifteen (15) days after
written  notice  of  the  default  from  Lender  to  Borrower;

          (e)     Any  obligation  of Borrower (other than its Obligations under
this Agreement) for the payment of Borrowed Money is not paid when due or within
any applicable grace period, or such obligation becomes or is declared to be due
and payable before the expressed maturity of the obligation, or there shall have
occurred  an  event  which, with the giving of notice or lapse of time, or both,
would  cause  any  such obligation to become, or allow any such obligation to be
declared  to  be,  due  and  payable;

          (f)     Borrower  makes  an  assignment  for the benefit of creditors,
offers  a  composition or extension to creditors, or makes or sends notice of an
intended  bulk  sale  of  any  business  or assets now or hereafter conducted by
Borrower;

                                       34
<PAGE>
          (g)     (i)  Borrower files a petition in bankruptcy, (ii) Borrower is
adjudicated  insolvent or bankrupt, petitions or applies to any tribunal for any
receiver  of  or any trustee for itself or any substantial part of its property,
(iii)  Borrower  commences  any  proceeding  relating  to  itself  under  any
reorganization,  arrangement,  readjustment  or debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect, (iv) any
such  proceeding  is  commenced  against  Borrower  and  such proceeding remains
undismissed  for  a period of sixty (60) days, (v) Borrower by any act indicates
its  consent  to,  approval  of,  or acquiescence in, any such proceeding or the
appointment  of any receiver of or any trustee for a Borrower or any substantial
part  of  its  property,  or  suffers  any  such  receivership or trusteeship to
continue  undischarged  for  a  period  of  sixty  (60)  days;

          (h)     One  or  more  final judgments against Borrower or attachments
against its property not fully and unconditionally covered by insurance shall be
rendered  by  a  court  of  record  and shall remain unpaid, unstayed on appeal,
undischarged,  unbonded  and  undismissed  for  a  period  of  twenty (20) days;
provided  that  final  judgments or attachments against Borrower or its property
described  in  this Section 8.1(h) of up to (i) $25,000.00 individually, or (ii)
$100,000.00  in  the  aggregate,  shall  not  constitute  an  Event  of Default;

          (i)     A  Reportable  Event  which  might  constitute  grounds  for
termination  of  any Plan covered by Title IV of ERISA or for the appointment by
the appropriate United States District Court of a trustee to administer any such
Plan  or  for  the  entry of a lien or encumbrance to secure any deficiency, has
occurred  and  is  continuing thirty (30) days after its occurrence, or any such
Plan  is  terminated,  or a trustee is appointed by an appropriate United States
District  Court  to  administer  any  such Plan, or the Pension Benefit Guaranty
Corporation  institutes  proceedings  to terminate any such Plan or to appoint a
trustee  to  administer  any  such  Plan, or a lien or encumbrance is entered to
secure  any  deficiency  or  claim;

          (j)     A  Change  in  Control  occurs;

          (k)     There  shall  occur  any uninsured damage to or loss, theft or
destruction  of  any  portion  of  the Collateral that exceeds $75,000.00 in the
aggregate;

          (l)     Borrower breaches or violates the terms of, or a default or an
event  which  could,  whether  with  notice  or  the  passage  of time, or both,
constitute  a  default,  occurs  under  any  other  existing or future agreement
(related  or  unrelated)  between  Borrower  and  Lender;

          (m)     Upon  the  issuance  of  any  execution  or  distraint process
against  Borrower  or  any  of  its  property  or  assets;  provided  that  any
garnishments  or  attachments levied or imposed by any governmental authority on
or  against  any  wages,  salaries,  commissions  or other amounts earned by any
employee  of and properly payable by Borrower in the ordinary course of business
shall  not  constitute  an  Event  of  Default;

          (n)     Borrower  ceases  any  portion  of  its business operations as
currently  conducted,  which  cessation  has  a  Material  Adverse  Effect;

                                       35
<PAGE>
          (o)     Any indication or evidence is received by Lender that Borrower
may  have  directly or indirectly been engaged in any type of activity which, in
Lender's discretion, may result in the forfeiture of any property of Borrower to
any  Governmental Authority, which default shall have continued unremedied for a
period  of  twenty  (20)  days  after  written  notice  from  Lender;

          (p)     Borrower  or  any  Affiliate  of  Borrower, shall challenge or
contest,  in  any  action, suit or proceeding, the validity or enforceability of
this  Agreement,  or  any  of  the  other  Loan  Documents,  the legality or the
enforceability  of  any  of the Obligations or the perfection or priority of any
Lien  granted  to  Lender;

          (q)     Borrower  shall  be criminally indicted or convicted under any
law  that  could  lead  to  a  forfeiture  of  any  Collateral;

          (r)     A  Material  Adverse  Effect shall occur, or if Lender in good
faith  deems  itself  insecure  as  a  result of acts or events bearing upon the
financial  condition  of  Borrower  or  the repayment of the Note, which default
shall have continued unremedied for a period of ten (10) Business Days after the
date  of  written  notice  thereof  by  Lender;  provided,  that no such default
                                                 --------
hereunder  shall  be  deemed  to  be an Event of Default if such default, by its
nature,  is incapable of being remedied within such period identified above, and
Borrower shall within such period commence a remedy and diligently, continuously
and  in  good  faith pursue such remedy, and such default is cured within thirty
(30)  days  of  the date of the original notice of default by Lender referred to
above,  or

          (s)     A  default  or  event  of default occurs under any other note,
instrument,  deed of trust, mortgage, loan agreement, security agreement, letter
agreement or other document executed and delivered by Borrower, or any Affiliate
of  Borrower,  in  connection  with  any  financing provided by Lender or any of
Lender's  Affiliates  to  Borrower.

     SECTION  8.2.  ACCELERATION.  Upon  the  occurrence of any of the foregoing
                    ------------
Events of Default, the Note shall become and be immediately due and payable upon
declaration  to that effect delivered by Lender to Borrower; provided that, upon
the  happening  of  any  event  specified  in  Section 8.1(g), the Note shall be
immediately  due  and  payable  without declaration or other notice to Borrower.

     SECTION  8.3.  REMEDIES.
                    ---------

          (a)     Upon  the occurrence of and during the continuance of an Event
of Default under this Agreement or the other Loan Documents, Lender, in addition
to  all  other  rights,  options,  and  remedies  granted  to  Lender under this
Agreement  or  at  law  or in equity, may take any of the following steps (which
list  is given by way of example and is not intended to be an exhaustive list of
all  such  rights  and  remedies):

                                       36
<PAGE>
               (i)     Terminate the Loan, whereupon all outstanding Obligations
(including  without  limitation  the Termination Fee which fee shall also be due
and  payable  upon acceleration hereunder) shall be immediately due and payable;

               (ii)    Exercise  all  other  rights  granted  to  it  under this
Agreement  and  all  rights  under  the  UCC  in  effect  in  the  applicable
jurisdiction(s)  and  under  any  other  applicable  law;  and

               (iii)   Exercise   all   rights  and  remedies  under  all  Loan
Documents  now  or  hereafter  in  effect,  including  but  not  limited  to:

                    (A)     The  right  to  take  possession  of,  send  notices
regarding,  and  collect  directly  the  Collateral,  with  or  without judicial
process;

                    (B)     The  right  to  (by  its  own means or with judicial
assistance)  enter  any  of  Borrower's  premises  and  take  possession  of the
Collateral, or render it unusable, or dispose of the Collateral on such premises
in  compliance  with  subsection  (C)  below,  without  any  liability for rent,
storage,  utilities,  or  other sums, and Borrower shall not resist or interfere
with  such  action;

                    (C)     The  right to require Borrower at Borrower's expense
to assemble all or any part of the Collateral and make it available to Lender at
any  place  designated  by  Lender;  and

                    (D)     The  right  to  reduce the Maximum Loan Amount or to
use  the  Collateral  and/or funds in the Concentration Account in amounts up to
the  Maximum  Loan  Amount  for  any  reason.

          (b)     Borrower agrees that a notice received by it at least five (5)
days  before  the  time of any intended public sale, or the time after which any
private  sale  or  other  disposition  of the Collateral is to be made, shall be
deemed  to be reasonable notice of such sale or other disposition.  If permitted
by applicable law, any perishable Collateral which threatens to speedily decline
in  value  or  which  is  sold on a recognized market may be sold immediately by
Lender  without  prior  notice  to  Borrower.  At  any  sale  or  disposition of
Collateral,  Lender may (to the extent permitted by applicable law) purchase all
or  any  part  of the Collateral, free from any right of redemption by Borrower,
which right is hereby waived and released.  Borrower covenants and agrees not to
interfere  with  or  impose  any obstacle to Lender's exercise of its rights and
remedies  with  respect  to  the  Collateral.

                                       37
<PAGE>
     SECTION  8.4.  NATURE  OF REMEDIES.  Lender shall have the right to proceed
                    --------------------
against  all  or  any  portion  of the Collateral to satisfy the liabilities and
Obligations of Borrower to Lender in any order.  All rights and remedies granted
Lender  under  this  Agreement  and  under  any  agreement  referred  to in this
Agreement,  or  otherwise  available  at  law  or  in  equity,  shall  be deemed
concurrent  and cumulative, and not alternative remedies, and Lender may proceed
with  any  number  of  remedies  at the same time until the Loans, and all other
existing  and  future  liabilities  and  obligations  of Borrower to Lender, are
satisfied  in full.  The exercise of any one right or remedy shall not be deemed
a  waiver  or  release  of  any  other  right  or  remedy,  and Lender, upon the
occurrence  of  an  Event  of  Default, may proceed against Borrower, and/or the
Collateral,  at  any time, under any agreement, with any available remedy and in
any  order.

                                   ARTICLE IX

                                  MISCELLANEOUS
                                  -------------

     SECTION  9.1.  EXPENSES  AND  TAXES.
                    ---------------------

          (a)     Borrower  agrees  to pay, whether or not the Closing occurs, a
reasonable  documentation  preparation  fee,  together  with  actual  audit  and
appraisal  fees  and  all  other  out-of-pocket charges and expenses incurred by
Lender  in  connection  with  the  negotiation,  preparation,  legal  review and
execution  of  each  of the Loan Documents, including but not limited to UCC and
judgment  lien  searches  and  UCC  filings  and  fees  for post-Closing UCC and
judgment lien searches. In addition, Borrower shall pay all such fees associated
with  any  amendments  to  the  Loan  Documents  following  Closing.

          (b)     Borrower  also  agrees  to  pay  all  reasonable out-of-pocket
charges  and  expenses  incurred  by  Lender (including the fees and expenses of
Lender's counsel) in connection with the enforcement, protection or preservation
of  any  right  or  claim  of  Lender,  the  termination  of this Agreement, the
termination  of any liens of Lender on the Collateral, and the collection of any
amounts due under the Loan Documents. If Lender uses in-house counsel for any of
these  purposes  (i.e.,  for  any  task  in  connection  with  the  enforcement,
protection or preservation of any right or claim of Lender and the collection of
any  amounts  due  under  its  Loan Documents), Borrower further agrees that its
Obligations  under  the  Loan Documents include reasonable charges for such work
commensurate  with  the  fees  that  would otherwise be charged by outside legal
counsel  selected  by  Lender  for  the  work  performed.

          (c)     Borrower  shall  pay all taxes (other than taxes based upon or
measured  by  Lender's income or revenues or any personal property tax), if any,
in  connection  with  the issuance of the Note and the recording of the security
documents  therefor.  The  obligations  of  Borrower under this clause (c) shall
survive  the  payment  of  Borrower's  indebtedness under this Agreement and the
termination  of  this  Agreement.

     SECTION  9.2.  ENTIRE  AGREEMENT; AMENDMENTS.  This Agreement and the other
                    ------------------------------
Loan  Documents constitute the full and entire understanding and agreement among
the  parties with regard to their subject matter and supersede all prior written
or  oral  agreements,  understandings,  representations and warranties made with
respect thereto.  No amendment, supplement or modification of this Agreement nor
any  waiver of any provision thereof shall be made except in writing executed by
the  party  against  whom  enforcement  is  sought.

                                       38
<PAGE>
     SECTION 9.3.  NO WAIVER; CUMULATIVE RIGHTS.  No waiver by any party to this
                   -----------------------------
Agreement  of  any one or more defaults by the other party in the performance of
any  of  the  provisions  of  this  Agreement shall operate or be construed as a
waiver of any future default or defaults, whether of a like or different nature.
No  failure  or delay on the part of any party in exercising any right, power or
remedy  under  this  Agreement shall operate as a waiver of such right, power or
remedy  nor  shall  any  single  or partial exercise of any such right, power or
remedy  preclude any other or further exercise of such right, power or remedy or
the  exercise of any other right, power or remedy.  The remedies provided for in
this  Agreement are cumulative and are not exclusive of any remedies that may be
available  to  any  party  to  this  Agreement  at  law, in equity or otherwise.

     SECTION  9.4.  NOTICES.  Any  notice  or  other  communication  required or
                    --------
permitted  under  this  Agreement  shall be in writing and personally delivered,
mailed  by  registered  or  certified mail (return receipt requested and postage
prepaid),  sent  by telecopier (with a confirming copy sent by regular mail), or
sent  by  prepaid overnight courier service, and addressed to the relevant party
at  its  address set forth below, or at such other address as such party may, by
written  notice,  designate  as  its  address  for purposes of notice under this
Agreement:

          (a)  If  to  Lender,  at:

               Heller  Healthcare  Finance,  Inc.
               2  Wisconsin  Circle,  4th  Floor
               Chevy  Chase,  Maryland  20815
               Attention:  Steven  M.  Curwin,  Deputy  General  Counsel
               Telephone:  (301)  961-1640
               Telecopier:  (301)  664-9866

          (b)  If  to  Borrower,  at:

               New  York  Health  Care,  Inc.
               1850  McDonald  Avenue
               Brooklyn,  New  York  11223
               Attention:  Jerry  Braun,  Chief  Executive  Officer
               Telephone:  (718)  375-6700
               Telecopier:  (718)  375-4007

If  mailed,  notice  shall be deemed to be given five (5) days after being sent,
and if sent by personal delivery, telecopier or prepaid courier, notice shall be
deemed  to  be  given  when  delivered.

                                       39
<PAGE>
     SECTION  9.5.  SEVERABILITY.  If  any  term,  covenant or condition of this
                    -------------
Agreement,  or  the application of such term, covenant or condition to any party
or  circumstance  shall  be found by a court of competent jurisdiction to be, to
any  extent,  invalid  or unenforceable, the remainder of this Agreement and the
application  of  such  term,  covenant, or condition to parties or circumstances
other  than  those as to which it is held invalid or unenforceable, shall not be
affected  thereby,  and  each  term,  covenant  or  condition shall be valid and
enforced  to  the  fullest extent permitted by law.  Upon determination that any
such term is invalid, illegal or unenforceable, Lender may, but is not obligated
to,  advance  funds  to  Borrower under this Agreement until the parties to this
Agreement  amend  this  Agreement  so  as  to  effect the original intent of the
parties  as  closely  as  possible  in  a  valid  and  enforceable  manner.

     SECTION  9.6.  SUCCESSORS  AND  ASSIGNS.  This Agreement, the Note, and the
                    -------------------------
other  Loan Documents shall be binding upon and inure to the benefit of Borrower
and  Lender  and  their  respective  successors and assigns. Notwithstanding the
foregoing,  Borrower  may  not  assign  any of its rights or delegate any of its
obligations  under  this  Agreement without the prior written consent of Lender,
which  may  be  withheld  in  its  sole  discretion.  Lender  may  sell, assign,
transfer,  or  participate  any  or  all of its rights or obligations under this
Agreement  without  notice  to  or  consent  of  Borrower.

     SECTION  9.7.  COUNTERPARTS.  This  Agreement may be executed in any number
                    -------------
of  counterparts,  each  of  which shall be deemed an original, but all of which
together  shall  constitute  but  one  instrument.

     SECTION  9.8.  INTERPRETATION.  No provision of this Agreement or any other
                    ---------------
Loan  Document  shall be interpreted or construed against any party because that
party  or  its  legal  representative drafted that provision.  The titles of the
paragraphs  of  this Agreement are for convenience of reference only and are not
to  be  considered  in  construing  this  Agreement.  Any  pronoun  used in this
Agreement shall be deemed to include singular and plural and masculine, feminine
and  neuter  gender  as  the  case  may  be.  The  words "herein," "hereof," and
"hereunder"  shall  be  deemed  to refer to this entire Agreement, except as the
context  otherwise  requires.

     SECTION  9.9.  SURVIVAL  OF  TERMS.  All  covenants,  agreements,
                    --------------------
representations  and warranties made in this Agreement, any other Loan Document,
and  in any certificates and other instruments delivered in connection with this
Agreement  shall  be  considered  to  have  been relied upon by Lender and shall
survive the making by Lender of the Loans contemplated by this Agreement and the
execution  and  delivery to Lender of the Note, and shall continue in full force
and  effect  until  all  liabilities  and  obligations of Borrower to Lender are
satisfied  in  full  in  immediately  available  funds.

                                       40
<PAGE>
     SECTION  9.10.  RELEASE  OF  LENDER.  For and in consideration of the Loan,
                     --------------------
Borrower voluntarily, knowingly, unconditionally, and irrevocably, with specific
and  express  intent,  for  and  on  behalf of itself and its agents, attorneys,
heirs,  successors,  and  assigns  (collectively  the  "Releasing Parties") does
hereby fully and completely release, acquit and forever discharge Lender and its
successors,  assigns,  heirs,  affiliates,  subsidiaries,  parent  companies,
principals, directors, officers, employees, shareholders and agents (hereinafter
called the "Lender Parties"), and any other person, firm, business, corporation,
insurer,  or  association  which  may  be  responsible or liable for the acts or
omissions  of  the Lender Parties, or who may be liable for the injury or damage
resulting  therefrom  (collectively the "Released Parties"), of and from any and
all  actions,  causes  of  action,  suits,  debts,  disputes,  damages,  claims,
obligations, liabilities, costs, expenses and demands of any kind whatsoever, at
law  or  in  equity,  whether  matured or unmatured, liquidated or unliquidated,
vested  or  contingent,  choate or inchoate, known or unknown that the Releasing
Parties  (or  any of them) have, whether now or in the future, (whether directly
or  indirectly)  against  the  Released  Parties  or  any of them.  The Borrower
acknowledges  that  the  provision  by it of the foregoing release is a material
inducement  to  Lender's  decision  to  extend  to  Borrower  the  financial
accommodations  hereunder and has been relied upon by Lender in agreeing to make
the  Loan.

     SECTION  9.11.  TIME.  Whenever Borrower is required to make any payment or
                     -----
perform any act on any day other than a Business Day, or on any day during which
the  financial  institutions  in  any jurisdiction where Borrower is required to
make  such  payment or perform such act are not open, the payment may be made or
the  act  performed  on  the  next  Business  Day.  Time  is  of  the essence in
Borrower's  performance  under  this  Agreement  and  all  other Loan Documents.

     SECTION  9.12.  COMMISSIONS.  The  transactions  contemplated  by  this
                     ------------
Agreement  were  brought  about  by Lender and Borrower acting as principals and
without  any  brokers,  agents  or  finders being the effective procuring cause.
Borrower  represents  that  it  has  not  committed Lender to the payment of any
brokerage fee, commission or charge in connection with this transaction.  If any
such  claim  is  made  on Lender by any broker, finder or agent or other person,
Borrower  will  indemnify, defend, and hold Lender harmless from and against the
claim  and  will  defend any action to recover on that claim, at Borrower's cost
and  expense,  including  Lender's  counsel  fees.  Borrower further agrees that
until  any  such  claim  or  demand is adjudicated in Lender's favor, the amount
demanded will be deemed a liability of Borrower under this Agreement, secured by
the  Collateral.

     SECTION  9.13.  THIRD  PARTIES.  No rights are intended to be created under
                     ---------------
this  Agreement  or  under  any other Loan Document for the benefit of any third
party  donee,  creditor  or  incidental  beneficiary  of  Borrower.

     SECTION  9.14.  DISCHARGE  OF  BORROWER'S OBLIGATIONS.  Lender, in its sole
                     --------------------------------------
discretion,  shall  have  the  right at any time, and from time to time, without
prior  notice  to  Borrower if Borrower fails to do so, to: (a) obtain insurance
covering any of the Collateral as required under this Agreement; (b) pay for the
performance of any of Borrower's obligations under this Agreement; (c) discharge
taxes,  liens,  security  interests, or other encumbrances at any time levied or
placed  on  any of the Collateral in violation of this Agreement unless Borrower

                                       41
<PAGE>
is  in good faith with due diligence by appropriate proceedings contesting those
items;  and  (d)  pay  for  the  maintenance  and  preservation  of  any  of the
Collateral.  All  expenses  and advances incurred under this Section 9.14 during
any  Event  of  Default  under this Agreement or any of the other Loan Documents
shall  be added to the Loan, until reimbursed to Lender, and shall be secured by
the Collateral; provided that Borrower shall not be required to reimburse Lender
for  any  expenses  or  advances  incurred  under this Section 9.14 that are not
incurred  during  any  Event  of  Default under this Agreement or any other Loan
Document.  Any  such payments and advances by Lender shall not be construed as a
waiver  by Lender of any Event of Default under this Agreement or any other Loan
Document.  Nothing  contained in this Section 9.14 or in this Agreement shall be
construed as a delegation to Lender of Borrower's duty of performance, including
without  limitation  Borrower's  duties  under  any account or contract in which
Lender  has  a  security  interest.

     SECTION  9.15.  INFORMATION  TO  PARTICIPANTS.  Lender  may  divulge to any
                     ------------------------------
participant  it  may  obtain  in  the  Loan,  or  any  portion  of the Loan, all
information,  and  furnish  to  such  participant  copies  of reports, financial
statements,  certificates,  and  documents  obtained under any provision of this
Agreement or any other Loan Document; provided that Lender shall notify Borrower
in  writing  if  Lender  divulges or furnishes information to any participant or
prospective  participant  in  the  Loan  pursuant  to  this  Section  9.15.

     SECTION  9.16.     INDEMNITY.  Borrower hereby agrees to indemnify and hold
                        ----------
harmless  Lender,  its  partners,  officers, agents and employees (collectively,
"Indemnitee")  from  and  against  any  liability,  loss,  cost, expense, claim,
damage,  suit,  action  or  proceeding  ever  suffered  or  incurred  by  Lender
(including  reasonable  attorneys'  fees  and  expenses) arising from Borrower's
failure  to  observe,  perform  or  discharge any of its covenants, obligations,
agreements  or  duties  under  this  Agreement, or from the breach of any of the
representations  or  warranties  contained  in  Article IV of this Agreement. In
addition, Borrower shall defend Indemnitee against and save it harmless from all
claims  of  any  Person  with  respect  to  the Collateral.  Notwithstanding any
contrary  provision  in  this  Agreement,  the obligation of Borrower under this
Section  9.16  shall  survive  the  payment  in  full of the Obligations and the
termination  of  this  Agreement.

     SECTION  9.17.     LENDER  APPROVALS.  Unless  expressly provided herein to
                        ------------------
the  contrary,  any  approval,  consent,  waiver  or satisfaction of Lender with
respect  to  any  matter  that  is the subject of this Agreement, the other Loan
Documents  may  be  granted  or  withheld  by  Lender  in  its sole and absolute
discretion.

     SECTION  9.18.  CHOICE  OF  LAW;  CONSENT  TO JURISDICTION. THIS AGREEMENT,
                     -------------------------------------------
INCLUDING  THE  INTERPRETATION AND PERFORMANCE THEREOF, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO
ANY  OTHERWISE  APPLICABLE  CONFLICTS  OF  LAWS  PRINCIPLES.  THE PARTIES HERETO
EXPRESSLY  CONSENT  AND AGREE TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF
THE  STATE  OF MARYLAND AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF

                                       42
<PAGE>
MARYLAND AND TO THE LAYING OF VENUE IN THE STATE OF MARYLAND, WAIVING ALL CLAIMS
OR DEFENSES BASED ON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE, INCONVENIENT
FORUM  OR  THE  LIKE.  BORROWER  HEREBY  CONSENTS  TO  SERVICE OF PROCESS BY THE
MAILING  A  COPY  OF  THE  SUMMONS TO BORROWER, BY CERTIFIED OR REGISTERED MAIL,
POSTAGE  PREPAID,  TO  BORROWER'S  ADDRESS  SET FORTH IN SECTION 9.4 OF THE LOAN
AGREEMENT.  BORROWER  FURTHER  WAIVES  ANY  CLAIM  FOR  CONSEQUENTIAL DAMAGES IN
RESPECT  OF  ANY  ACTION  TAKEN  OR OMITTED TO BE TAKEN BY LENDER IN GOOD FAITH.

     SECTION 9.19.  COOPERATION IN DISCOVERY AND LITIGATION.  IN ANY LITIGATION,
                    ----------------------------------------
TRIAL,  ARBITRATION  OR  OTHER  DISPUTE  RESOLUTION  PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, ALL DIRECTORS, OFFICERS, EMPLOYEES
AND  AGENTS  OF BORROWER OR OF ITS AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR
MANAGING  AGENTS  OF  BORROWER FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES
REGARDING  THE  PRODUCTION  OF  WITNESSES  BY NOTICE FOR TESTIMONY (WHETHER IN A
DEPOSITION,  AT  TRIAL  OR OTHERWISE).  BORROWER AGREES THAT LENDER'S COUNSEL IN
ANY  SUCH  DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE INDIVIDUALS AS
IF  UNDER CROSS-EXAMINATION AND THAT ANY DISCOVERY DEPOSITION OF ANY OF THEM MAY
BE  USED  IN  THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION.  BORROWER IN
ANY  EVENT  SHALL USE ALL COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH
DISPUTE  RESOLUTION  PROCEEDING,  AT  THE  TIME  AND  IN THE MANNER REQUESTED BY
LENDER,  ALL  PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER FORM)
OR  OTHER  THINGS  UNDER  ITS  CONTROL  AND  RELATING  TO  THE  DISPUTE  IN  ANY
JURISDICTION  THAT  RECOGNIZES  THAT  (OR  ANY  SIMILAR)  DISTINCTION.

     SECTION  9.20.  WAIVER OF TRIAL BY JURY.  BORROWER HEREBY (A) COVENANTS AND
                     ------------------------
AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND
(B)  WAIVES  ANY  RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT
SHALL  NOW  OR  HEREAFTER  EXIST.  THIS  WAIVER  OF  RIGHT  TO  TRIAL BY JURY IS
SEPARATELY  GIVEN,  KNOWINGLY  AND  VOLUNTARILY, BY BORROWER, AND THIS WAIVER IS
INTENDED  TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT  TO  A JURY TRIAL WOULD OTHERWISE ACCRUE.  LENDER IS HEREBY AUTHORIZED AND
REQUESTED  TO  SUBMIT  THIS  AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE
SUBJECT  MATTER  AND THE PARTIES TO THIS AGREEMENT, SO AS TO SERVE AS CONCLUSIVE
EVIDENCE  OF  BORROWER'S  WAIVER  OF THE RIGHT TO JURY TRIAL.  FURTHER, BORROWER
HEREBY  CERTIFIES  THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING LENDER'S
COUNSEL)  HAS  REPRESENTED, EXPRESSLY OR OTHERWISE, TO BORROWER THAT LENDER WILL
NOT  SEEK  TO  ENFORCE  THIS  WAIVER  OF  RIGHT  TO  JURY  TRIAL  PROVISION.

                                       43
<PAGE>
     SECTION  9.21.     CONFESSION  OF JUDGMENT.  UPON THE OCCURRENCE AND DURING
                        -----------------------
THE CONTINUANCE OF ANY EVENT OF DEFAULT UNDER THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS, BORROWER AUTHORIZES ANY ATTORNEY ADMITTED TO PRACTICE BEFORE ANY
COURT  OF  RECORD  IN  THE UNITED STATES OR THE CLERK OF SUCH COURT TO APPEAR ON
BEHALF  OF BORROWER IN ANY COURT IN ONE OR MORE PROCEEDINGS, OR BEFORE ANY CLERK
THEREOF OF PROTHONOTARY OR OTHER COURT OFFICIAL, AND TO CONFESS JUDGMENT AGAINST
BORROWER  IN FAVOR OF LENDER IN THE FULL AMOUNT DUE ON THIS AGREEMENT (INCLUDING
PRINCIPAL,  ACCRUED  INTEREST  AND  ANY  AND  ALL  CHARGES, FEES AND COSTS) PLUS
ATTORNEYS'  FEES  EQUAL  TO  FIFTEEN PERCENT (15%) OF THE AMOUNT DUE, PLUS COURT
COSTS,  ALL  WITHOUT  PRIOR NOTICE OR OPPORTUNITY OF BORROWER FOR PRIOR HEARING.
BORROWER  AGREES AND CONSENTS THAT VENUE AND JURISDICTION SHALL BE PROPER IN THE
CIRCUIT  COURT  OF  ANY  COUNTY  OF  THE STATE OF MARYLAND OR OF BALTIMORE CITY,
MARYLAND,  OR  IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND.
BORROWER  WAIVES  THE  BENEFIT  OF  ANY AND EVERY STATUTE, ORDINANCE, OR RULE OF
COURT  THAT  MAY  BE  LAWFULLY  WAIVED  CONFERRING  UPON  BORROWER  ANY RIGHT OR
PRIVILEGE  OF  EXEMPTION,  HOMESTEAD RIGHTS, STAY OF EXECUTION, OR SUPPLEMENTARY
PROCEEDINGS,  OR OTHER RELIEF FROM THE ENFORCEMENT OR IMMEDIATE ENFORCEMENT OF A
JUDGMENT  OR  RELATED  PROCEEDINGS  ON  A  JUDGMENT.  THE AUTHORITY AND POWER TO
APPEAR  FOR AND ENTER JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY ONE OR
MORE  EXERCISES  THEREOF, OR BY ANY IMPERFECT EXERCISE THEREOF, AND SHALL NOT BE
EXTINGUISHED  BY ANY JUDGMENT ENTERED PURSUANT THERETO; SUCH AUTHORITY AND POWER
MAY  BE  EXERCISED  ON  ONE  OR MORE OCCASIONS FROM TIME TO TIME, IN THE SAME OR
DIFFERENT JURISDICTIONS, AS OFTEN AS LENDER SHALL DEEM NECESSARY, CONVENIENT, OR
PROPER.

                               [SIGNATURES FOLLOW]

                                       44
<PAGE>
          IN  WITNESS  WHEREOF,  the  parties  have  caused this Agreement to be
executed  as  of  the  date  first  written  above.

                              LENDER:

                              HELLER  HEALTHCARE  FINANCE,  INC.,
                              a  Delaware  corporation

                              By:/s/________________________________
                              Name:
                              Title:

                              BORROWER:

                              NEW  YORK  HEALTH  CARE,  INC.,
                              a  New  York  corporation

                              By:/s/_________________________________
                              Name:
                              Title:

                              NYHC  NEWCO  PAXXON,  INC.,
                              a  New  York  corporation

                              By:/s/_________________________________
                              Name:
                              Title:

                                       45
<PAGE>
LIST  OF  EXHIBITS
------------------

Exhibit  A  -  Form  of  Revolving  Credit  Note

Exhibit  B  -  Form  of  Lockbox  Agreement

Exhibit  C  -  Form  of  Legal  Opinion

Exhibit  D  -  Form  of  Payoff  Letter  and  Release

                                       46
<PAGE>
                                LIST OF SCHEDULES
                                -----------------

Schedule  1.38     -     Permitted  Liens

Schedule  4.1     -      Subsidiaries

Schedule  4.5     -      Litigation

Schedule  4.7     -      Federal  Tax  Identification  Numbers

Schedule  4.13     -     Non-Compliance  with  Laws

Schedule  4.14     -     Environmental  Matters

Schedule  4.15     -     Places  of  Business;  Ownership

Schedule  4.16     -     Intellectual  Property;  Franchises;  Licenses

Schedule  4.17     -     Stock  Ownership

Schedule  4.19     -     Borrowings  and  Guarantees

Schedule  4.21     -     Trade  Names

Schedule  4.22     -     Joint  Ventures  and  Partnerships

Schedule  7.12     -     Transactions  with  Affiliates

Schedule  7.14     -     Change  in  Capital  Structure

                                       47
<PAGE>REVOLVING CREDIT NOTE
                              ---------------------

$4,000,000.00                                             NOVEMBER  28,  2000
                                                                    --

     FOR VALUE RECEIVED, the undersigned, NEW YORK HEALTH CARE, INC., a New York
corporation,  and  NYHC  NEWCO  PAXXON,  INC., a New York corporation (together,
"Borrower"), promises to pay, in lawful money of the United States, to the order
---------
of  HELLER  HEALTHCARE  FINANCE, INC., a Delaware corporation (together with its
successors  and assigns, "Lender"), the principal sum of FOUR MILLION AND NO/100
                          ------
DOLLARS  ($4,000,000.00),  or so much of such principal sum as shall be advanced
or  readvanced  and  shall  remain unpaid under the Loan established pursuant to
that certain Loan and Security Agreement dated as of even date with this Note by
and  between  the  undersigned  and  Lender  (as  amended, modified, restated or
replaced  from  time to time, the "Loan Agreement"), plus interest on the unpaid
                                   --------------
balance  thereof, computed on a 360-day basis, at the rate per annum that is set
forth  in  the  Loan  Agreement.

     1.     All capitalized terms used and not otherwise specifically defined in
this Revolving Credit Note (as amended, modified, restated or replaced from time
to  time,  the  "Note")  shall  have  the  meanings  given  to  them in the Loan
                 ----
Agreement.

     2.     This  Note  shall evidence the undersigned's obligation to repay all
sums  advanced  by Lender from time to time under the Loan Agreement and as part
of  the Loan.  The actual amount due and owing from time to time under this Note
shall  be  evidenced  by  Lender's  records  of  receipts and disbursements with
respect  to  the Loan, which shall be conclusive evidence of such amount, absent
manifest  error.

     3.     Interest  due  pursuant  to  this  Note shall be payable monthly, in
arrears,  on  the  first  Business Day of each month after the date of this Note
(for  the  previous  month).  For  purposes of this Note, a "Business Day" shall
                                                             ------------
mean  any day on which financial institutions are open for business in the State
of  Maryland,  excluding  Saturdays  and  Sundays.

     4.     This  Note shall become due and payable upon the earlier to occur of
(a)  the  expiration  of the Term, or (b) the occurrence of any Event of Default
under the Loan Agreement, or any other event under any other Loan Documents that
would  result  in  this Note becoming due and payable.  At such time, the entire
principal  balance  of this Note and all other fees, costs and expenses, if any,
shall be due and payable in full.  Lender shall then have the option at any time
and  from  time  to time to exercise all of the rights and remedies set forth in
this  Note  and  in the other Loan Documents, as well as all rights and remedies
otherwise  available  to  Lender  at  law  or  in  equity, to collect the unpaid
indebtedness  under this Note and the other Loan Documents. This Note is secured
by  the  Collateral,  as  defined  in  and  described  in  the  Loan  Agreement.

     5.     Whenever  any  principal  and/or interest and/or fee under this Note
shall  not  be paid when due, whether at the stated maturity or by acceleration,
interest  on such unpaid amounts shall thereafter be payable at a rate per annum
equal  to  five  (5) percentage points above the stated rate of interest on this
Note  until  such  amounts  shall  be  paid.

<PAGE>
     6.     The  undersigned  and  Lender  intend  to  conform  strictly  to the
applicable  usury  laws in effect from time to time during the term of the Loan.
Accordingly,  if any transaction contemplated by the Loan Agreement or this Note
would  be  usurious  under  such  laws, then notwithstanding any other provision
hereof:  (a)  the  aggregate of all interest that is contracted for, charged, or
received  under  this  Note, the Loan Agreement or under any other Loan Document
shall  not  exceed the maximum amount of interest allowed by applicable law (the
"Highest  Lawful  Rate"),  and  any  excess  shall  be  promptly credited to the
undersigned by Lender (or, to the extent that such consideration shall have been
paid,  such excess shall be promptly refunded to the undersigned by Lender); (b)
neither  the  undersigned nor any other Person now or hereafter liable hereunder
shall  be  obligated to pay the amount of such interest to the extent that it is
in  excess  of  the  Highest Lawful Rate; and (c) the effective rate of interest
shall  be  reduced  to  the Highest Lawful Rate.  All sums paid, or agreed to be
paid,  to Lender for the use, forbearance, and detention of the debt of Borrower
to  Lender  shall,  to  the  extent  permitted  by  applicable law, be allocated
throughout  the full term of this Note until payment is made in full so that the
actual rate of interest does not exceed the Highest Lawful Rate in effect at any
particular  time  during  the  full  term  thereof.  If  at any time the rate of
interest  under  this Note exceeds the Highest Lawful Rate, the rate of interest
to  accrue  pursuant  to  this  Note  and  the  Loan Agreement shall be limited,
notwithstanding anything to the contrary in this Note and the Loan Agreement, to
the  Highest  Lawful  Rate, but any subsequent reductions in the Base Rate shall
not  reduce  the interest to accrue pursuant to this Note and the Loan Agreement
below  the Highest Lawful Rate until the total amount of interest accrued equals
the amount of interest that would have accrued if a varying rate per annum equal
to the interest rate under the Note and the Loan Agreement had at all times been
in  effect.  If  the  total  amount of interest paid or accrued pursuant to this
Note  and  the  Loan  Agreement  under the foregoing provisions is less than the
total  amount  of  interest  that would have accrued if a varying rate per annum
equal  to  the  interest rate under this Note and the Loan Agreement had been in
effect,  then  the  undersigned  agrees  to pay to Lender an amount equal to the
difference  between (x) the lesser of (A) the amount of interest that would have
accrued  if  the Highest Lawful Rate had at all times been in effect, or (B) the
amount  of interest that would have accrued if a varying rate per annum equal to
the  interest  rate  under  this Note and the Agreement had at all times been in
effect,  and  (y)  the  amount  of interest accrued in accordance with the other
provisions  of  this  Note  and  the  Loan  Agreement.

     7.     This  Note  is  the "Note" referred to in the Loan Agreement, and is
issued  pursuant  to the Loan Agreement. Reference is made to the Loan Agreement
for  a statement of the additional rights and obligations of the undersigned and
Lender.  In  the  event  of  any conflict between the terms of this Note and the
terms of the Loan Agreement, the terms of the Loan Agreement shall prevail.  All
of  the  terms,  covenants,  provisions,  conditions, stipulations, promises and
agreements contained in the Loan Documents to be kept, observed and/or performed
by  the  undersigned are made a part of this Note and are incorporated into this
Note  by this reference to the same extent and with the same force and effect as
if  they  were fully set forth in this Note; the undersigned promises and agrees
to  keep,  observe  and  perform  them  or  cause  them to be kept, observed and
performed,  strictly  in  accordance  with  the  terms  and  provisions thereof.

                                        2
<PAGE>
     8.     Each  party  liable  on this Note in any capacity, whether as maker,
endorser,  surety,  guarantor  or otherwise, (a) waives presentment for payment,
demand,  protest  and  notice  of  presentment,  notice  of  protest,  notice of
non-payment  and notice of dishonor of this debt and each and every other notice
of  any  kind  respecting  this  Note  and  all  lack  of diligence or delays in
collection  or  enforcement hereof; (b) agrees that Lender at any time or times,
without  notice to the undersigned or its consent, may grant extensions of time,
without  limit  as to the number of the aggregate period of such extensions, for
the  payment  of any principal, interest or other sums due hereunder; (c) to the
extent  permitted  by  law, waives all exemptions under the laws of the State of
Maryland  and/or  any state or territory of the United States; (d) to the extent
permitted  by law, waives the benefit of any law or rule of law intended for its
advantage  or  protection  as  an  obligor  under this Note or providing for its
release  or  discharge  from  liability  on  this  Note, in whole or in part, on
account  of  any  facts or circumstances other than full and complete payment of
all amounts due under this Note; and (e) agrees to pay, in addition to all other
sums  of  money due, all cost of collection and attorney's fees, whether suit be
brought or not, if this Note is not paid in full when due, whether at the stated
maturity  or  by  acceleration.

     9.     No  waiver  by Lender of any one or more defaults by the undersigned
in the performance of any of its obligations under this Note shall operate or be
construed  as  a  waiver of any future default or defaults, whether of a like or
different  nature.  No  failure or delay on the part of Lender in exercising any
right, power or remedy under this Note (including, without limitation, the right
to  declare  this Note due and payable) shall operate as a waiver of such right,
power  or  remedy  nor  shall  any single or partial exercise of any such right,
power  or  remedy preclude any other or further exercise of such right, power or
remedy  or  the  exercise  of  any  other  right,  power  or  remedy.

     10.     If  any  term, provision, covenant or condition of this Note or the
application  of  any  term, provision, covenant or condition of this Note to any
party or circumstance shall be found by a court of competent jurisdiction to be,
to any extent, invalid or unenforceable, then the remainder of this Note and the
application  of  such  term,  provision,  covenant,  or  condition to parties or
circumstances  other than those as to which it is held invalid or unenforceable,
shall  not  be affected thereby, and each term, provision, covenant or condition
shall  be  valid  and  enforced  to  the  fullest extent permitted by law.  Upon
determination  that  any such term, provision, covenant or condition is invalid,
illegal  or unenforceable, Lender may, but is not obligated to, advance funds to
Borrower  under  this  Note  until  Borrower and Lender amend this Note so as to
effect  the original intent of the parties as closely as possible in a valid and
enforceable  manner.

     11.     No  amendment,  supplement  or  modification  of  this Note nor any
waiver of any provision of this Note shall be made except in writing executed by
both  parties.

                                        3
<PAGE>
     12.     This  Note shall be binding upon the undersigned and its successors
and  assigns.  Notwithstanding the foregoing, the undersigned may not assign any
of  its  rights  or  delegate any of its obligations under this Note without the
prior  written  consent of Lender, which may be withheld in its sole discretion.

     13.     THIS  NOTE,  INCLUDING  THE INTERPRETATION AND PERFORMANCE THEREOF,
SHALL  BE  GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MARYLAND  WITHOUT  REGARD  TO  ANY  OTHERWISE  APPLICABLE  CONFLICTS  OF  LAWS
PRINCIPLES.  THE  PARTIES  EXPRESSLY  CONSENT  AND  AGREE  TO  THE NON-EXCLUSIVE
JURISDICTION  OF  THE  COURTS  OF  THE  STATE  OF MARYLAND AND THE UNITED STATES
DISTRICT  COURT  FOR  THE DISTRICT OF MARYLAND AND TO THE LAYING OF VENUE IN THE
STATE  OF  MARYLAND,  WAIVING  ALL  CLAIMS OR DEFENSES BASED ON LACK OF PERSONAL
JURISDICTION,  IMPROPER  VENUE, INCONVENIENT FORUM OR THE LIKE.  BORROWER HEREBY
CONSENTS TO SERVICE OF PROCESS BY THE MAILING A COPY OF THE SUMMONS TO BORROWER,
BY  CERTIFIED  OR  REGISTERED  MAIL,  POSTAGE PREPAID, TO BORROWER'S ADDRESS SET
FORTH  IN  SECTION 9.4 OF THE LOAN AGREEMENT.  BORROWER FURTHER WAIVES ANY CLAIM
FOR  CONSEQUENTIAL DAMAGES IN RESPECT OF ANY ACTION TAKEN OR OMITTED TO BE TAKEN
BY  LENDER  IN  GOOD  FAITH.

     14.     IN  ANY  LITIGATION, TRIAL, ARBITRATION OR OTHER DISPUTE RESOLUTION
PROCEEDING  RELATING TO THIS NOTE, ALL DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
OF  BORROWER  OR  OF  ITS AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING
AGENTS  OF  BORROWER FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES REGARDING
THE PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A DEPOSITION, AT
TRIAL  OR OTHERWISE).  BORROWER AGREES THAT LENDER'S COUNSEL IN ANY SUCH DISPUTE
RESOLUTION  PROCEEDING  MAY  EXAMINE  ANY  OF  THESE  INDIVIDUALS  AS  IF  UNDER
CROSS-EXAMINATION  AND  THAT ANY DISCOVERY DEPOSITION OF ANY OF THEM MAY BE USED
IN  THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION.  BORROWER IN ANY EVENT
SHALL  USE  ALL  COMMERCIALLY  REASONABLE EFFORTS TO PRODUCE IN ANY SUCH DISPUTE
RESOLUTION  PROCEEDING,  AT  THE TIME AND IN THE MANNER REQUESTED BY LENDER, ALL
PERSONS,  DOCUMENTS  (WHETHER  IN  TANGIBLE,  ELECTRONIC OR OTHER FORM) OR OTHER
THINGS  UNDER  ITS  CONTROL AND RELATING TO THE DISPUTE IN ANY JURISDICTION THAT
RECOGNIZES  THAT  (OR  ANY  SIMILAR)  DISTINCTION.

                                        4
<PAGE>
     15.     THE  UNDERSIGNED  HEREBY  (A)  COVENANTS  AND AGREES NOT TO ELECT A
TRIAL  BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND (B) WAIVES ANY RIGHT
TO  TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY
BY  THE  UNDERSIGNED, AND THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE  AND  EACH  ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE
ACCRUE.  LENDER  IS  HEREBY  AUTHORIZED AND REQUESTED TO SUBMIT THIS NOTE TO ANY
COURT  HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES HERETO, SO AS
TO SERVE AS CONCLUSIVE EVIDENCE OF THE UNDERSIGNED'S WAIVER OF THE RIGHT TO JURY
TRIAL.  FURTHER,  THE  UNDERSIGNED  HEREBY  CERTIFIES  THAT NO REPRESENTATIVE OR
AGENT  OF  LENDER  (INCLUDING  LENDER'S  COUNSEL)  HAS REPRESENTED, EXPRESSLY OR
OTHERWISE,  TO  ANY BORROWER THAT LENDER WILL NOT SEEK TO ENFORCE THIS WAIVER OF
RIGHT  TO  JURY  TRIAL  PROVISION.

     16.     UPON  THE  OCCURRENCE  AND  DURING  THE CONTINUANCE OF ANY EVENT OF
DEFAULT UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, THE UNDERSIGNED
HEREBY  AUTHORIZES  ANY ATTORNEY ADMITTED TO PRACTICE BEFORE ANY COURT OF RECORD
IN  THE  UNITED  STATES  OR  THE  CLERK OF SUCH COURT TO APPEAR ON BEHALF OF THE
UNDERSIGNED IN ANY COURT IN ONE OR MORE PROCEEDINGS, OR BEFORE ANY CLERK THEREOF
OF  PROTHONOTARY  OR  OTHER  COURT OFFICIAL, AND TO CONFESS JUDGMENT AGAINST THE
UNDERSIGNED  IN  FAVOR  OF LENDER IN THE FULL AMOUNT DUE ON THIS NOTE (INCLUDING
PRINCIPAL,  ACCRUED  INTEREST  AND  ANY  AND  ALL  CHARGES, FEES AND COSTS) PLUS
ATTORNEYS'  FEES  EQUAL  TO  FIFTEEN PERCENT (15%) OF THE AMOUNT DUE, PLUS COURT
COSTS,  ALL  WITHOUT  PRIOR NOTICE OR OPPORTUNITY OF BORROWER FOR PRIOR HEARING.
THE  UNDERSIGNED AGREES AND CONSENTS THAT VENUE AND JURISDICTION SHALL BE PROPER
IN  THE  CIRCUIT  COURT  OF  ANY COUNTY OF THE STATE OF MARYLAND OR OF BALTIMORE
CITY,  MARYLAND,  OR  IN  THE  UNITED  STATES DISTRICT COURT FOR THE DISTRICT OF
MARYLAND.  THE  UNDERSIGNED  WAIVES  THE  BENEFIT  OF  ANY  AND  EVERY  STATUTE,
ORDINANCE, OR RULE OF COURT THAT MAY BE LAWFULLY WAIVED CONFERRING UPON BORROWER
ANY  RIGHT  OR  PRIVILEGE  OF EXEMPTION, HOMESTEAD RIGHTS, STAY OF EXECUTION, OR
SUPPLEMENTARY  PROCEEDINGS,  OR  OTHER  RELIEF FROM THE ENFORCEMENT OR IMMEDIATE
ENFORCEMENT  OF  A JUDGMENT OR RELATED PROCEEDINGS ON A JUDGMENT.  THE AUTHORITY
AND  POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST THE UNDERSIGNED SHALL NOT BE
EXHAUSTED  BY  ONE  OR  MORE  EXERCISES  THEREOF,  OR  BY ANY IMPERFECT EXERCISE
THEREOF, AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT ENTERED PURSUANT THERETO;
SUCH  AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR MORE OCCASIONS FROM TIME TO
TIME,  IN  THE  SAME  OR  DIFFERENT JURISDICTIONS, AS OFTEN AS LENDER SHALL DEEM
NECESSARY,  CONVENIENT,  OR  PROPER.

                                        5
<PAGE>

                                 [SIGNATURES  FOLLOW]

                                        6
<PAGE>
     IN  WITNESS  WHEREOF, the undersigned has executed this Note as of the date
first  above  written.

                                         BORROWER:

                                         NEW  YORK  HEALTH  CARE,  INC.,
                                         a  New  York  corporation

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

                                         NYHC  NEWCO  PAXXON,  INC.,
                                         a  New  York  corporation

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

                                        7
<PAGE>

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