Document:

RECEIVABLES
                              PURCHASE AND TRANSFER
                                    AGREEMENT

                          Dated as of November 1, 2000

                                      Among

                             MIM HEALTH PLANS, INC.,
                     as a Provider and as Primary Servicer,

                                EACH OTHER PERSON
                                  PARTY HERETO,
                                  as Providers

                                       and

                                MIM FUNDING LLC,
                                  as Purchaser

         ALL THE  RIGHT,  TITLE AND  INTEREST  OF THE  PURCHASER  IN AND TO, ALL
         BENEFITS OF THE PURCHASER  UNDER AND ALL MONIES DUE OR TO BECOME DUE TO
         THE PURCHASER  UNDER OR IN CONNECTION  WITH,  THIS  AGREEMENT HAVE BEEN
         ASSIGNED TO HFG HEALTHCO-4 LLC, AS COLLATERAL  SECURITY FOR ANY AND ALL
         THE  OBLIGATIONS  OF THE  PURCHASER  PURSUANT  TO A LOAN  AND  SECURITY
         AGREEMENT  DATED AS OF NOVEMBER 1, 2000 BETWEEN THE  PURCHASER  AND HFG
         HEALTHCO-4 LLC.

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                                              TABLE OF CONTENTS
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ARTICLE I      TERMS OF THE PURCHASES AND CONTRIBUTIONS
<S>                           <C>                                                                         <C>
                      SECTION 1.01   Sale, Contribution and Purchase of Accounts...........................1
                      SECTION 1.02   Receivable Information and Transferred Batch Determination............1
                      SECTION 1.03   The Transfers.........................................................2
                      SECTION 1.04   Collection and Payment Procedures.....................................2
                      SECTION 1.05   Allocation of Servicer Responsibilities...............................3

ARTICLE II     GENERAL PAYMENT MECHANICS; GOVERNMENTAL ENTITIES PAYMENT
               MECHANICS; MISDIRECTED PAYMENTS
                      SECTION 2.01   General Payment Mechanics.............................................4
                      SECTION 2.02   Governmental Entities Payment Mechanics...............................4
                      SECTION 2.03   Misdirected Payments..................................................5
                      SECTION 2.04   Unidentified Payments; Right of Presumption...........................6
                      SECTION 2.05   No Rights of Withdrawal...............................................6

ARTICLE III    REPRESENTATIONS AND WARRANTIES; COVENANTS; EVENTS OF
               TERMINATION
                      SECTION 3.01   Representations and Warranties; Covenants.............................6
                      SECTION 3.02   Group-Wide Events of Termination; Events of Termination...............6

ARTICLE IV     INDEMNIFICATION; GRANT OF SECURITY INTEREST
                      SECTION 4.01   Indemnification and Set-Off Rights for Denied Receivables.............7
                      SECTION 4.02   Indemnities by the Provider...........................................8
                      SECTION 4.03   Right of Set-Off......................................................9
                      SECTION 4.04   Grant of Security Interest............................................9

ARTICLE V      MISCELLANEOUS
                      SECTION 5.01   Amendments, etc......................................................10
                      SECTION 5.02   Notices, etc.........................................................10
                      SECTION 5.03   Assignability........................................................10
                      SECTION 5.04   Further Assurances...................................................11
                      SECTION 5.05   Costs, Expenses and Termination Fee..................................11
                      SECTION 5.06   Confidentiality......................................................12
                      SECTION 5.07   Term and Termination.................................................12
                      SECTION 5.08   Sale Treatment.......................................................13
                      SECTION 5.09   Grant of Security Interest...........................................13
                      SECTION 5.10   No Liability of the Purchaser........................................13
                      SECTION 5.11   No Proceedings.......................................................13
                      SECTION 5.12   Attorney-in-Fact.....................................................14
                      SECTION 5.13   Entire Agreement; Severability.......................................14
                      SECTION 5.14   GOVERNING LAW........................................................14
                      SECTION 5.15   WAIVER OF JURY TRIAL, JURISDICTION AND VENUE.........................14
                      SECTION 5.16   Execution in Counterparts............................................14

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                      SECTION 5.17   Survival of Termination..............................................15
                      SECTION 5.18   Addition, Removal and Suspension of Providers........................15
                      SECTION 5.19   Joint and Several Liability; Providers...............................17
</TABLE>

EXHIBITS

Exhibit I      Definitions
Exhibit II     Conditions of Purchases
Exhibit III    Representations and Warranties
Exhibit IV     Covenants
Exhibit V      Events of Termination
Exhibit VI     Receivable Information
Exhibit VII-A  Form of Notice to  Governmental  Entities
Exhibit VII-B  Form of Notice   to   Non-Governmental    Entities
Exhibit VIII   Primary   Servicer Responsibilities
Exhibit IX     Servicer  Termination  Events
Exhibit X      Interface Between Master  Servicer and the Primary  Servicer
Exhibit XI-A   Form of Opinion
Exhibit XI-B   Form of Opinion of Provider's and Purchaser's Counsel
                 With Respect to Certain Corporate Matters
Exhibit XI-C   Form of Opinion of General Counsel of Borrower
Exhibit XII    Form of Depositary Agreement
Exhibit XIII   Form of Deferred Purchase Price Note
Exhibit XIV    Form of Subscription Agreement
Exhibit XV     Eligibility Criteria

SCHEDULES

Schedule I     List of  Providers
Schedule II    Addresses  for Notices
Schedule III   Credit  and  Collection  Policy
Schedule  IV   Disclosures
Schedule  V    Lockbox Information
Schedule  VI   Net Value Factors
Schedule  VII  Monthly Financial Reporting

<PAGE>

                   RECEIVABLES PURCHASE AND TRANSFER AGREEMENT

                          Dated as of November 1, 2000

         MIM HEALTH PLANS, INC., a corporation organized under the laws
of the State of Delaware  (together  with its corporate  successors and assigns,
"MIM,"  and  in  its  capacity  as  primary  servicer  hereunder,  the  "PRIMARY
SERVICER"),  each of the parties named on Schedule I hereto and as such Schedule
may be  amended  from  time to time  pursuant  to  Section  5.18  herein  (each,
including MIM,  together with each one's  corporate  successors  and assigns,  a
"PROVIDER" and,  collectively,  the  "PROVIDERS") and MIM FUNDING LLC, a limited
liability  company  organized under the laws of the State of Delaware  (together
with its successors and assigns, the "PURCHASER"), agree as follows:

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

         Each Provider wishes to sell or contribute to the Purchaser on
a continuing basis all of its receivables. The Purchaser is prepared to purchase
or to accept the  contribution  of such  receivables on the terms and subject to
the conditions set forth herein. Accordingly, the parties agree as follows:

                                    ARTICLE I

                    TERMS OF THE PURCHASES AND CONTRIBUTIONS

         SECTION  1.01 Sale,  Contribution  and  Purchase of  Accounts.  On each
Transfer  Date  until  the  Facility  Termination  Date  and  on the  terms  and
conditions set forth herein, each Provider agrees to sell or contribute, without
recourse  except to the  extent of a  required  repurchase  due to a breach of a
representation or warranty, all of the Provider's Accounts to the Purchaser, and
the  Purchaser  agrees to purchase or accept such  contribution  of, all of such
Provider's Accounts.

         SECTION   1.02   Receivable    Information   and   Transferred    Batch
Determination.  (a) On each Batching Day after the Initial  Transfer  Date,  the
Primary Servicer, on behalf of each Provider,  shall provide the Master Servicer
by Transmission the information listed on Exhibit VI hereto (as such Exhibit may
be modified by the Purchaser  from time to time, the  "RECEIVABLE  INFORMATION")
with  respect  to new  Accounts  that  it  has  determined  constitute  Eligible
Receivables  (the  "PROPOSED  ELIGIBLE  RECEIVABLES")  and with  respect  to new
Accounts that it has determined do not constitute Eligible Receivables.

         (b) All Proposed Eligible Receivables for which Receivable  Information
has been received by the Master Servicer between the prior Batching Time and the
current  Batching  Time shall be reviewed by the HFG Group.  On or prior to each
Transfer Date, the Purchaser or the Program  Manager shall prepare a list of all
Proposed Eligible  Receivables  delineating those Proposed Eligible  Receivables
that the Purchaser will purchase on the Transfer Date (a "PURCHASED

<PAGE>

BATCH",  and together with the remaining  Proposed Eligible  Receivables and all
other  Receivables that are not Eligible  Receivables that will not be purchased
and instead will be  contributed  to the Purchaser,  the  "TRANSFERRED  BATCH"),
together  with an  explanation  stating that the  identified  Proposed  Eligible
Receivables not included in the Purchased Batch are not Eligible Receivables and
the basis therefor.

         SECTION 1.03 The  Transfers.  (a) On each Transfer Date, (i) subject to
satisfaction  of the applicable  conditions set forth in Exhibit II hereto,  the
Purchaser shall pay to the Primary  Servicer for the benefit of the Providers an
amount  equal  to the  Purchase  Price of the  Purchased  Batch,  and (ii)  each
Provider will  contribute to the capital of the Purchaser all other  Receivables
in the Transferred  Batch.  Payment of the Purchase Price shall be made therefor
by means of any one or a combination of the following: (a) a deposit in same day
funds to the  Primary  Servicer  Account  and (b) an  increase  in the  Deferred
Purchase  Price  (subject  at all  times  to the  limitations  contained  in the
definition  thereof).  The  Primary  Servicer  shall  remit the  proceeds of the
Purchase Price of the Purchased  Batch to the applicable  Provider in accordance
with their respective interests.

         (b) Effective on each Transfer Date, in  consideration  of the Purchase
Price,  increased  capital  accounts  with the  Purchaser,  and  other  good and
valuable  consideration,  each Provider hereby sells,  contributes,  assigns and
conveys to the  Purchaser  and the Purchaser  hereby  purchases and accepts,  as
absolute owner,  all right,  title and interest in and to the Transferred  Batch
purchased or contributed on such Transfer Date.

         SECTION 1.04 Collection and Payment Procedures.  (a) Collections on the
Transferred  Batch. With respect to each Transferred  Batch, the Purchaser shall
be entitled to: (i) receive all Collections on such  Transferred  Batch and (ii)
have and exercise any and all rights (x) to collect,  record,  track and, during
the continuance of an Event of Termination or a Servicer Termination Event, take
all actions to obtain  Collections with respect to each Batch Receivable payable
by Persons other than Governmental  Entities, and (y) to the extent permitted by
law and in a manner  consistent  with all applicable  laws and  regulations,  to
record,  track  and,  during the  continuance  of an Event of  Termination  or a
Servicer  Termination Event, take all actions to obtain Collections with respect
to each Batch Receivable payable by Governmental Entities.

         (b)  Distributions on Each Settlement Date. On each Settlement Date and
with respect to each Transferred  Batch,  Total Collections shall be distributed
to the Purchaser.

         (c) Payment of Deferred  Purchase Price.  On each Settlement  Date, the
Purchaser  shall pay to the Primary  Servicer  accrued  interest on the Deferred
Purchase Price and the Purchaser may, at its option,  prepay in whole or in part
the  principal  amount of the Deferred  Purchase  Price;  provided  that no such
payment shall be made at any time when an Event of  Termination is continuing or
would result from such payment. At such time following the Facility  Termination
Date  when  all  principal,  interest,  fees,  expenses,  costs  and  all  other
obligations  and amounts owed by the Purchaser  under the Loan  Agreement  shall
have been paid in full,  the Purchaser  shall apply,  on each  Settlement  Date,
Total Collections received by the Purchaser pursuant to Section 1.04(b) (and not
previously  distributed)  first to the  repayment  of  accrued  interest  on the
Deferred  Purchase Price,  and then to the reduction of the principal  amount of
the Deferred  Purchase  Price.  All payments by the Purchaser under this Section
1.04(c) shall be made by a deposit in same day funds

                                        2

<PAGE>

to the  Primary  Servicer  Account,  and the  Primary  Servicer  shall remit the
amounts so received, on a pro rata basis, to the applicable Providers.

         SECTION 1.05 Allocation of Servicer  Responsibilities.  (a) Tracking of
purchases,  Collections and other  transactions  pertaining to each  Transferred
Batch shall be administered  by the Master Servicer in a manner  consistent with
the terms of this  Agreement.  The  responsibilities  of the  Providers  and the
Primary  Servicer  to the  Master  Servicer  have  been set  forth in  Exhibit X
attached  hereto.  Each Provider shall cooperate fully with the Primary Servicer
and the Master Servicer in establishing  and maintaining the Transmission of the
Receivable Information,  including, without limitation, the matters described in
Exhibit  X, and  shall  provide  promptly  to the  Master  Servicer  such  other
information  necessary or desirable for the administration of Collections on the
Batch Receivables as may be reasonably requested from time to time.

         (b) The  Purchaser  hereby  appoints each Provider as its agent for the
administration  and servicing  obligations set forth in Exhibit VIII hereto with
respect to the Accounts  transferred by such Provider to the Purchaser hereunder
(the "PRIMARY SERVICER RESPONSIBILITIES"), and each Provider hereby accepts such
appointment and agrees to perform the Primary Servicer Responsibilities. Each of
the Providers  hereby  contracts its Primary  Servicer  Responsibilities  to the
Primary  Servicer and appoints the Primary Servicer to act as its agent (in such
capacity,  the "SERVICER") hereunder,  provided,  however, that such contracting
and  appointment  shall  not  relieve  any  Provider  from  any of  its  duties,
responsibilities,  liabilities and obligations  resulting or arising  hereunder.
The Primary  Servicer hereby accepts such  appointment as Servicer and agrees to
perform the Primary Servicer  Responsibilities on behalf of the Providers.  Each
of the Providers,  the Servicer and the Purchaser  hereby  acknowledge  that the
Servicer's appointment is subject to and limited by Healthco-4's  appointment of
the   Purchaser  as  its  agent  for   performance   of  the  Primary   Servicer
Responsibilities  under the Loan Agreement and Healthco-4's rights thereunder to
replace  the  Purchaser  (which  replacement  may  be  effectuated  through  the
outplacement  to a  qualified  and  experienced  third-party  of all back office
duties,  including  billing,  collection  and processing  responsibilities,  and
access to all personnel,  hardware and software utilized in connection with such
responsibilities).  The Purchaser may, at any time following the occurrence of a
Servicer  Termination  Event (and shall,  without  requirement  of notice to any
party, upon a Servicer  Termination Event resulting from the events described in
clauses (g) or (i) of Exhibit V hereto)  appoint  another  Person to succeed the
Servicer as its agent for performance of the Primary  Servicer  Responsibilities
(which  appointment may be effectuated  through the  outplacement to a qualified
and  experienced  third-party  of all back  office  duties,  including  billing,
collection  and  processing  responsibilities,  and  access  to  all  personnel,
hardware and software  utilized in connection with such  responsibilities).  The
Purchaser  may, at any time  following  the  occurrence  of one or more Servicer
Termination  Events (and may, without  requirement of notice to any party,  upon
one or more Servicer  Termination  Events resulting from the events described in
clauses (g) or (i) of Exhibit V hereto)  affecting the Providers  that have sold
or contributed to the Purchaser more than 20% of the Batch Receivables  (whether
or not  purchased) in the prior ninety days (or the number of days from the date
of this  Agreement  to such date,  if less than  ninety  days) (in each case,  a
"GROUP-WIDE SERVICER  TERMINATION EVENT"),  designate the Master Servicer or any
other Person to succeed the Servicer as its agent for performance of the Primary
Servicer Responsibilities.

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<PAGE>

         (c)  As  compensation  for  the  performance  of the  Primary  Servicer
Responsibilities,  the Servicer  (or the  successor  Servicer who performs  such
Primary Servicer  Responsibilities) shall be entitled to a Primary Servicing Fee
with respect to each Purchased  Batch serviced by it;  provided that the Primary
Servicing Fee shall be payable solely,  to the extent  received,  from a similar
fee payable by Healthco-4 to the Purchaser, and, to the extent not received, the
Servicer hereby waives its right to receive it.

                                   ARTICLE II

                GENERAL PAYMENT MECHANICS; GOVERNMENTAL ENTITIES
                     PAYMENT MECHANICS; MISDIRECTED PAYMENTS

         SECTION 2.01 General Payment Mechanics.  (a) On or prior to the Initial
Transfer  Date,  each of the Primary  Servicer,  the  Providers,  the Purchaser,
Healthco-4,  and the  Lockbox  Bank  shall  have  entered  into  the  Depositary
Agreement  and shall have caused the Lockbox  Bank to  establish  the  Purchaser
Lockbox and the Purchaser Lockbox Account.

         (b)  Each  Provider  shall   prepare,   execute  and  deliver  to  each
non-Governmental  Entity  who is  proposed  to be a payor of  Receivables,  with
copies to the Purchaser,  on or prior to the Initial  Transfer Date, a Notice to
Obligors  addressed  to each  such  non-Governmental  Entity,  which  Notice  to
Obligors  shall  state that all  present  and future  Receivables  owing to such
Provider have been and will be  transferred to the Purchaser and that all checks
from such non-Governmental Entity on account of Receivables shall be sent to the
Purchaser  Lockbox and all wire transfers from such  non-Governmental  Entity on
account  of  Receivables  shall be wired  directly  into the  Purchaser  Lockbox
Account.

         (c) Each  Provider  covenants and agrees that, on and after the Initial
Transfer  Date,  all  invoices  (and,  if  provided  by  such  Provider,  return
envelopes)  to be sent to  non-Governmental  Entities  shall set forth  only the
address of the Purchaser Lockbox as a return address for payment of Receivables,
and only the  Purchaser  Lockbox  Account  with  respect to wire  transfers  for
payment of  Receivables.  Each Provider  hereby further  covenants and agrees to
instruct and notify each of the members of its accounting and collections  staff
to  provide  identical   information  in  communications  with  non-Governmental
Entities with respect to Collections.

         SECTION 2.02 Governmental  Entities Payment Mechanics.  (a) On or prior
to the Initial Transfer Date, each of the Primary Servicer,  the Providers,  the
Purchaser,  Healthco-4,  and the  Lockbox  Bank  shall  have  entered  into  the
Depositary  Agreement,  and the Providers  shall have caused the Lockbox Bank to
establish the Provider Lockbox and the Provider  Lockbox Account.  Each Provider
shall  prepare,  execute and deliver to each  Governmental  Entity or its fiscal
intermediary who is proposed to be an Obligor of Receivables, with copies to the
Purchaser,  on or prior to the Initial  Transfer Date,  Notices to  Governmental
Entities,  which Notices to Governmental  Entities shall provide that all checks
from  Governmental  Entities  on  account  of  Receivables  shall be sent to the
Provider Lockbox and all wire transfers on account of Receivables shall be wired
directly into the Provider Lockbox Account.

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<PAGE>

         (b) Each  Provider  covenants and agrees that, on and after the Initial
Transfer  Date,  all  invoices  to be sent to  Governmental  Entities  (and,  if
provided by such Provider, return envelopes) shall set forth only the address of
the Provider  Lockbox as a return address for payment of  Receivables,  and only
the  Provider  Lockbox  Account with  respect to wire  transfers  for payment of
Receivables.  Each Provider further  covenants and agrees to instruct and notify
each of the members of its accounting and collections staff to provide identical
information  in  communications  with  Governmental  Entities  with  respect  to
Collections.

         (c)  The  Providers   shall  maintain  the  Provider   Lockbox  Account
exclusively  for  the  receipt  of  payments  on  account  of  Receivables  from
Governmental  Entities.  The Providers and the Primary  Servicer  shall take all
actions  necessary  to ensure  that no  payments  from any  Person  other than a
Governmental Entity shall be deposited in the Provider Lockbox Account.

         SECTION  2.03  Misdirected  Payments.  (a) In the event that a Provider
receives a  Misdirected  Payment  in the form of a check,  such  Provider  shall
immediately send such Misdirected Payment, in the form received by the Provider,
by overnight  delivery service to the appropriate  Purchaser Lockbox or Provider
Lockbox,  as the case may be,  together  with the envelope in which such payment
was received. In the event a Provider receives a Misdirected Payment in the form
of cash or wire  transfer,  such Provider  shall  immediately  wire transfer the
amount of such Misdirected  Payment  directly to the Purchaser  Lockbox Account.
All Misdirected  Payments shall be sent promptly upon receipt thereof, and in no
event later than the close of business,  on the first Business Day after receipt
thereof.

         (b) If a Misdirected  Payment in the form of a check is received by the
Purchaser  more than seven Business Days after the postmark date on the envelope
enclosing  a check from the  Obligor  (or,  if no such  envelope  is sent to the
Purchaser Lockbox by a Provider, more than seven Business Days after the date of
such check or wire transfer with respect thereto),  then the Providers shall pay
interest  on  such  Misdirected  Payment  to the  Purchaser  from  such  seventh
subsequent day to and including the date such check is received in the Purchaser
Lockbox,  at a rate  equal  to the  LIBO  Rate  then in  effect  under  the Loan
Agreement (or the maximum rate legally permitted if less than such rate).

         (c) Each Provider  hereby  agrees and consents to the Purchaser  taking
such actions, solely during the continuation of an Event of Termination,  as are
reasonably  necessary  to ensure  that  future  payments  from the  Obligor of a
Misdirected  Payment  shall be made in  accordance  with the  Notice  previously
delivered to such Obligor, including,  without limitation, to the maximum extent
permitted by law, (i) the Purchaser,  its assigns or designees, or any member of
the HFG Group executing on a Provider's  behalf and delivering to such Obligor a
new Notice, and (ii) the Purchaser,  its assigns or designees,  or any member of
the HFG Group  contacting such Obligor by telephone to confirm the  instructions
previously  set forth in the  Notice  to such  Obligor.  At any  time,  upon the
Purchaser's  request,  a Provider shall  promptly (and in any event,  within two
Business Days from such request) take such similar  actions as the Purchaser may
request.

         SECTION 2.04 Unidentified Payments; Right of Presumption.  If a payment
is received and, after consultation with the Primary Servicer,  the Purchaser is
unable to determine  the invoice or the Obligor to which it should  apply,  such
payment shall be applied against the oldest

                                        5

<PAGE>

Purchased Batch as the Purchaser  reasonably  determines.  Each of the Providers
and the Purchaser  agrees and consents that, after the occurrence of an Event of
Termination,  the HFG Group or its designees or assigns may apply any payment it
receives from an Obligor or any other payor against a Purchased Batch if the HFG
Group is unable in good faith to determine  whether  such  payment  relates to a
Purchased Batch.

         SECTION  2.05 No  Rights  of  Withdrawal.  None of the  Providers,  the
Primary  Servicer  nor the  Purchaser  shall  have any  rights of  direction  or
withdrawal with respect to amounts held in the Purchaser Lockbox Account.

                                   ARTICLE III

                   REPRESENTATIONS AND WARRANTIES; COVENANTS;
                              EVENTS OF TERMINATION

         SECTION 3.01 Representations and Warranties;  Covenants.  Each Provider
makes, on the Initial  Transfer Date and on each  subsequent  Transfer Date, the
representations  and  warranties  on and as of such dates,  and hereby agrees to
perform  and  observe  the  covenants,   set  forth  in  Exhibits  III  and  IV,
respectively, hereto.

         SECTION  3.02  Group-Wide   Events  of   Termination;   (a)  Events  of
Termination.  If  any  Group-Wide  Event  of  Termination  shall  occur  and  be
continuing,  the Purchaser  may, by notice to the Primary  Servicer on behalf of
each of the  Providers  (which notice shall be deemed to have been given to each
Provider),  take  either  or both of the  following  actions:  (x)  declare  the
Facility  Termination  Date  to  have  occurred  (except  with  respect  to  the
Group-Wide  Event of  Termination  in clause (g) of Exhibit V, in which case the
Facility  Termination  Date shall be deemed to have occurred  automatically  and
without notice),  and (y) without limiting any rights  hereunder,  terminate the
appointment  of the Providers and the Primary  Servicer to perform any or all of
the Primary Servicer Responsibilities and replace the Servicer in the manner set
forth in  Section  1.05(b).  Upon  any  such  declaration  or  designation,  the
Purchaser  shall have, in addition to the rights and remedies  which it may have
under this Agreement, all other rights and remedies provided after default under
the UCC and under other  applicable  law,  which  rights and  remedies  shall be
cumulative.

         (b) If an Event of  Termination  shall  occur  and be  continuing,  the
Purchaser  may  terminate  the  appointment  of the  Providers  and the  Primary
Servicer,  or any of their agents, to perform any or all of the Primary Servicer
Responsibilities  in the manner set forth in Section 1.05(b),  and, with respect
to an  individual  Provider  that  does not  constitute  a  Group-Wide  Event of
Termination,  the Purchaser,  in its sole discretion,  may require the immediate
removal of such Provider from the program.  In such event,  such Provider  shall
also  withdraw  as a member  of the  Purchaser;  provided,  however,  that  such
Provider's  capital  account as a member of the Purchaser  shall not be paid out
until the date of  termination  of this  Agreement  as set forth in Section 5.07
herein.

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<PAGE>

                                   ARTICLE IV

                                INDEMNIFICATION;
                           GRANT OF SECURITY INTEREST

         SECTION 4.01 Indemnification and Set-Off Rights for Denied Receivables.
(a) If a breach of any of the  representations  or warranties  contained  herein
relating to a Purchased  Receivable  shall be  discovered  at any time (each,  a
"DENIED  RECEIVABLE"),  the Primary Servicer or the Providers shall, on the next
Settlement  Date,  repurchase  such Denied  Receivable from the Purchaser at the
Repurchase Price.

         (b) For ease of  administration,  the  Purchaser  shall be  entitled to
presume that the failure of any Purchased  Receivable (or portion thereof) to be
paid in full on or after the 180th day following the Invoice Date thereof is the
result of a breach of a representation or warranty contained herein with respect
to such Purchased  Receivable,  unless the Purchaser shall have actual knowledge
to the contrary (such as, by way of example,  actual  knowledge of the financial
inability of an Obligor to pay its obligations represented by a Receivable).  In
the event the Purchaser  receives the  Repurchase  Price for any such  Purchased
Receivable  and it is thereafter  determined  that the failure of such Purchased
Receivable  to be paid in full was not the result of a breach of  representation
or warranty  contained  herein,  the parties  hereto  shall make an  appropriate
adjustment  by  increasing  the  Purchase  Price  of any  Purchased  Batch to be
purchased on or after such date.

         (c) Upon receipt by (or on behalf of) the  Purchaser of the  Repurchase
Price with respect to any Denied  Receivable,  the Purchaser  shall be deemed to
have  reassigned  and resold to the applicable  Provider such Denied  Receivable
without any representation,  warranty or recourse  whatsoever,  and, thereafter,
neither  the  Purchaser  nor any member of the HFG Group  shall have any further
servicing  or other  obligation  to such  Provider  with  respect to such Denied
Receivable.

         (d) From time to time at the request of a Provider, the Purchaser shall
deliver  to such  Provider  (at such  Provider's  sole  cost and  expense)  such
documents, assignments, releases, notices and instruments of termination as such
Provider may reasonably request to evidence the reconveyance by the Purchaser of
a Denied Receivable pursuant to the terms of Section 4.01(c).

         SECTION 4.02  Indemnities by the Provider.  Without  limiting any other
rights that the Purchaser,  the Program  Manager,  the Master Servicer or any of
their respective Affiliates (together with their respective directors, officers,
agents, representatives,  shareholders, lenders, counsel and employees, each, an
"INDEMNIFIED  PARTY") may have hereunder or under  applicable law, each Provider
hereby agrees jointly and severally to indemnify each Indemnified Party from and
against any and all claims, losses and liabilities actually incurred (including,
without  limitation,  reasonable  attorneys'  fees) (all of the foregoing  being
collectively  referred to as "INDEMNIFIED  AMOUNTS") arising out of or resulting
from any of the following:

               (a) the sale of any  Receivable  which  purports  to be part of a
          Purchased  Batch  but  which  is not,  at the  date of such  sale,  an
          Eligible Receivable;

                                                         7

<PAGE>

               (b) any  representation  or  warranty  made or deemed made by any
          Provider (or any of its  officers)  under or in  connection  with this
          Agreement which shall have been incorrect in any material respect when
          made;

               (c) the failure by any Provider or any Batch Receivable to comply
          with any applicable law, rule or regulation;

               (d) the failure to vest in the  Purchaser  a perfected  ownership
          interest in each  Receivable  included in a Transferred  Batch and the
          Collections in respect thereof, free and clear of any Liens except for
          Permitted Liens;

               (e) any dispute,  claim,  set-off or defense to the  payment,  in
          whole or in part, of any Receivable (including,  without limitation, a
          defense based on such Receivable not being a legal,  valid and binding
          obligation)  or  any  other  claim  resulting  from  the  services  or
          merchandise related to such Receivable or the furnishing or failure to
          furnish  such  services  or  merchandise  or  relating  to  collection
          activities  with  respect  to  such  Receivable  (if  such  collection
          activities  were  performed by any  Provider or any of its  Affiliates
          acting as Servicer),  provided,  however, this clause (e) shall not be
          deemed to  include  any  dispute,  claim,  set-off  or  defense to the
          payment of any Receivable  (i) arising out of the financial  inability
          of an Obligor to pay its  obligations  represented by such  Receivable
          including,  without  limitation,  a discharge in  bankruptcy,  or (ii)
          arising  principally  and directly as a result of actions taken by any
          member of the HFG Group;

               (f) a failure of any Provider, including, without limitation, the
          Servicer's actions on behalf of the Providers under Section 1.05(b) of
          this Agreement with respect to Primary Servicer  Responsibilities,  to
          perform its duties or  obligations  in accordance  with the provisions
          hereof or to perform its duties or obligations hereunder; or

               (g) the  commingling  by any Provider of  Collections at any time
          with other funds of such or any other Provider,

provided, however, that in all events there shall be excluded from the foregoing
indemnification of any claims,  losses or liabilities  resulting solely from the
gross  negligence  or  willful  misconduct  of an  Indemnified  Party  or  which
constitute recourse for an uncollectible Purchased Receivable.

         Such Indemnified Party shall promptly notify the Primary  Servicer,  on
behalf of the Providers,  of such claim,  provided that the failure to so notify
shall not affect or invalidate  the indemnity  granted  pursuant to this Section
4.02.

         SECTION 4.03 Right of Set-Off. Unless a Provider notifies the Purchaser
in  writing  that it desires  to pay on the date when due the  Repurchase  Price
under  Section  4.01 or any  Indemnified  Amounts  under  Section  4.02 and such
Provider makes such payment to the Purchaser in immediately  available  funds on
such date,  each such  Provider  hereby  irrevocably  instructs the Purchaser to
set-off the full amount of the Repurchase Price or the Indemnified  Amounts,  as
the  case may be,  against  the  Purchase  Price  of any  Purchased  Batch to be
purchased on or after such date. No further notification,  act or consent of any
nature whatsoever is required prior to the right of the

                                        8

<PAGE>

Purchaser to exercise such right of set-off, provided,  however, that so long as
no Event of  Termination  is  continuing,  the  Purchaser  will not  set-off any
Repurchase  Price or any  Indemnified  Amounts that are being  contested in good
faith by a Provider;  provided,  further,  that the Purchaser or a member of the
HFG Group shall notify the Primary  Servicer on behalf of such  Provider  that a
set-off pursuant to this Section 4.03 occurred, the amount of such set-off and a
description of the Denied Receivable or Indemnified Amounts, as the case may be,
so long as the failure to so notify shall not affect or invalidate the indemnity
granted  pursuant to Section  4.02.  The Purchaser  shall  exercise its right to
set-off hereunder to the extent funds are available prior to making a demand for
indemnification under Section 4.02.

         SECTION 4.04 Grant of Security Interest. (a) As collateral security for
the  Providers'  existing  and  future  (i)  obligations  to  repurchase  Denied
Receivables under Section 4.01 hereof, (ii)  indemnification  obligations to the
Purchaser  under  Section  4.02  hereof,  and (iii)  obligations  to pay  costs,
expenses and fees under Section 5.05 hereof,  each Provider hereby grants to the
Purchaser  a first  priority  lien on and  security  interest  in,  and right of
set-off against,  (x) all of the Accounts now or hereafter owned or held by such
Provider,  (y) all proceeds thereof and (z) any and all cash collateral  reserve
accounts established pursuant to this Agreement from time to time.

         (b) In connection with the grant under (a) above,  this Agreement shall
be deemed to be a security  agreement as understood under the UCC. Each Provider
agrees to execute,  and hereby  authorizes  the  Purchaser to file,  one or more
financing  statements  or  continuation  statements  or  amendments  thereto  or
assignments thereof in respect of the lien created pursuant to this Section 4.04
which  may at any time be  required  or, in the  opinion  of the  Purchaser,  be
desirable,  and to do so without the signature of such Provider where  permitted
by law.

                                    ARTICLE V

                                  MISCELLANEOUS

         SECTION  5.01  Amendments,  etc.  (a) No  amendment  or  waiver  of any
provision  of this  Agreement or consent to any  departure  therefrom by a party
hereto shall be effective unless in writing signed by the Primary Servicer,  the
Providers,  the Purchaser,  and Healthco-4 as assignee of all of the Purchaser's
rights and remedies hereunder, and then such amendment,  waiver or consent shall
be  effective  only in the specific  instance  and for the specific  purpose for
which given. No failure on the part of the Purchaser,  the Primary Servicer or a
Provider to exercise,  and no delay in  exercising,  any right  hereunder  shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
right hereunder  preclude any other or further  exercise thereof or the exercise
of any other right.

         (b) The  parties  hereto  agree to make  any  change,  modification  or
amendment to this  Agreement as may be requested by Duff & Phelps  Credit Rating
Co. or any other rating agency then rating the  receivables  finance  program of
Healthco-4,  so long as any such  change,  modification  or  amendment  does not
materially adversely affect the parties hereto.

                                        9

<PAGE>

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

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

         (b) Subject to Section  5.03(b) of the Loan  Agreement,  this Agreement
and  the  Purchaser's  rights  and  obligations   herein   (including,   without
limitation,  ownership of the Purchased Receivables in each Purchased Batch, the
Lockboxes and the Lockbox Accounts) shall be assignable by the Purchaser and its
successors and assigns.  Each Provider hereby acknowledges that the Purchaser is
granting to  Healthco-4  (which is further  granting to its  lenders) a security
interest  in  and  collateral  assignment  of  this  Agreement  and  all  of the
Purchaser's   rights,   title  and  interests  hereunder   (including,   without
limitation,  the Purchased  Receivables,  each Provider's obligations hereunder,
the Lockboxes and the Lockbox Accounts).

         (c) No Provider may assign its rights or  obligations  hereunder or any
interest  herein  without  the  prior  written  consent  of  the  Purchaser  and
Healthco-4.

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

         SECTION 5.05 Costs,  Expenses and  Termination  Fee. (a) In addition to
the rights of  indemnification  granted under Section 4.02 hereof, the Providers
agree to pay (i) on the Closing Date and (ii) with respect to costs and expenses
incurred thereafter, within seven days of invoicing therefor, (x) all reasonable
costs and expenses in connection with the preparation, execution and delivery of
this  Agreement and any waiver,  modification,  supplement or amendment  hereto,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the  Purchaser  and the members of the HFG Group,  and (y) all costs
and expenses,  if any (including  reasonable counsel fees and expenses),  of the
Purchaser,  its Affiliates  and the members of the HFG Group in connection  with
the   collection,   enforcement,   protection,   maintenance,   preservation  or
foreclosure  of its  interests  with  respect  to this  Agreement,  any  related
documents,  any Account, any Lien, or under any instrument or document delivered
pursuant to this  Agreement,  and the  Purchaser  may take judgment for all such
amounts. The attorneys' fees arising from such services,  including those of any
appellate proceedings, and all reasonable out-of-pocket expenses, charges, costs
and

                                       10

<PAGE>

other fees incurred by such counsel in any way or with respect to or arising out
of or in connection  with or relating to any of the events or actions  described
in this Section 5.05 shall be payable by the Provider to the Purchaser on demand
(with  interest  accruing from the tenth Business Day following the date of such
demand).

         (b) The  Providers  further  agree to pay on the Initial  Transfer Date
(and with respect to costs and expenses incurred  following the Initial Transfer
Date,  within seven days of invoicing  therefor)  (i) all  reasonable  costs and
expenses  incurred by the  Purchaser or its agent in  connection  with  periodic
audits  of the  Receivables;  provided,  however,  that so long as no  Event  of
Termination  or Servicer  Termination  Event or event which,  with the giving of
notice or lapse of time, or both,  would  constitute an Event of  Termination or
Servicer Termination Event, shall have occurred and be continuing, the Providers
shall not be  obligated  to pay for more than two such audits  during any fiscal
year, (ii) all reasonable costs and expenses  incurred by the Master Servicer or
the Program Manager to accommodate any significant coding or data system changes
made by a Provider that would affect the transmission or  interpretation of data
received  through the  interface,  and (iii) all  reasonable  costs and expenses
incurred by the  Purchaser  for  additional  time and  material  expenses of the
Master Servicer  resulting from a lack of cooperation or  responsiveness  of any
Provider or the Primary Servicer to agreed-upon  protocol and schedules with the
Master Servicer;  provided,  that such Provider or the Primary Servicer has been
informed of the  alleged  lack of  cooperation  or  responsiveness  and has been
provided an opportunity to correct such problems.

         (c) In the event that any Facility  Termination Date is declared (or is
deemed to have  occurred)  pursuant to an Event of  Termination,  the  Providers
shall pay to the  Purchaser an early  termination  fee in an amount equal to the
termination fee payable by the Purchaser pursuant to Section 5.07(b) of the Loan
Agreement.

         SECTION 5.06 Confidentiality.  (a) Each Provider,  the Primary Servicer
and the Purchaser hereby acknowledge that this Agreement, the Loan Agreement and
the documents delivered hereunder,  thereunder or in connection with, including,
without  limitation,  any  information  relating to any member of the HFG Group,
contains confidential and proprietary information.  Unless otherwise required by
applicable  law, each of the Providers,  the Primary  Servicer and the Purchaser
hereby agrees to maintain the confidentiality of this Agreement (and all drafts,
memos and other documents delivered in connection therewith  including,  without
limitation,  any  information  relating to any member of the HFG Group delivered
hereunder or under the Loan Agreement) in communications  with third parties and
otherwise and to take all reasonable  action to prevent the  unauthorized use or
disclosure  of  and  to  protect  the   confidentiality   of  such  confidential
information;  provided, that such confidential  information may be disclosed (i)
subject to an agreement to keep the same confidential, to (1) the Providers' and
Purchaser's  legal counsel,  accountants and auditors,  (2) the Program Manager,
Healthco-4,  the  Parent,  the Primary  Servicer,  each member of the HFG Group,
investors in and  creditors of  Healthco-4,  appropriate  rating  agencies  with
respect to Healthco- 4, and each of their respective legal counsel, accountants,
advisers and auditors,  and (3) to any other Person with the written  consent of
the  applicable  other party hereto,  which  consent  shall not be  unreasonably
withheld;  (ii) subject to reasonable prior notice to the extent practicable and
not  prohibited  by  applicable  law, (1) pursuant to subpoena or other court or
legal process and (2) to the extent  reasonably  required in connection with any
litigation  or  proceeding  to which any party  hereto is a party;  (iii) to any
Person if such information otherwise becomes available to such Person or

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<PAGE>

publicly  available through no fault of any party governed by this Section 5.06;
(iv)  to  any  Governmental  Entity  requesting  such  information;  and  (v) in
compliance  with any law,  rule,  regulation  or order  applicable to one of the
parties hereto.

         (b) Each of the  Providers,  the  Primary  Servicer  and the  Purchaser
understands  and agrees  that the other or the HFG Group may suffer  irreparable
harm if the  obligations  under this Section 5.06 are breached and that monetary
damages shall be  inadequate  to  compensate  the injured party for such breach.
Accordingly,  each of the  Providers,  the Primary  Servicer  and the  Purchaser
agrees that, in the event of their  respective  breach of Section  5.06(a),  the
injured  party,  in addition  and not in  limitation  of its rights and remedies
under law,  shall be  entitled  to a temporary  restraining  order,  preliminary
injunction and permanent injunction to prevent or restrain any such breach.

         (c) All parties  hereto  agree to comply with all  applicable  state or
federal   statutes   or   regulations   relating  to  patient   medical   record
confidentiality.

         SECTION 5.07 Term and  Termination.  This  Agreement  shall continue in
full  force and  effect  from the date  hereof  until the  Final  Payment  Date;
provided,  however,  that, with respect to any Transferred  Batches  transferred
prior to the Final  Payment Date and not  repurchased  pursuant to Section 4.01,
the  occurrence  of the Final  Payment  Date shall not  terminate  any  security
interest of the  Purchaser  hereunder,  nor shall it relieve or discharge any of
the Providers, the Primary Servicer or the Purchaser of or from their respective
duties,  obligations  or covenants  hereunder and all the terms,  provisions and
conditions of this Agreement  shall remain in effect for such purpose until such
obligations  have been satisfied and performed in full. Upon the satisfaction in
full of all the  obligations,  the  Purchaser  shall  deliver  all  assignments,
certificates,  releases,  notices and other documents at the Providers' expense,
as the Providers may reasonably request to effect such termination.

         SECTION 5.08 Sale  Treatment.  The  Providers  and the  Purchaser  have
structured the transactions  contemplated by this Agreement with respect to each
Purchased Batch as a sale and intend that such  transactions  constitute a sale,
and each of the Providers and the Purchaser agree to treat each such transaction
as a sale for all purposes,  including,  without limitation, in their respective
books,  records,  computer  files,  tax  returns  (federal,  state  and  local),
regulatory  and  governmental  filings  (and  shall  reflect  such sale in their
respective  financial  statements).   Each  Provider  will  advise  all  persons
inquiring  about  the  ownership  of  the  Batch   Receivables  that  all  Batch
Receivables  have been sold or contributed to the Purchaser.  The Providers will
pay all taxes  (excluding  income or franchise taxes of the Purchaser),  if any,
relating  to the  transactions  contemplated  under this  Agreement,  including,
without  limitation,  the sale,  transfer and  contribution of each  Transferred
Batch to the Purchaser.

         SECTION 5.09 Grant of Security Interest. In the event that, contrary to
the  mutual  intent  of the  Providers  and the  Purchaser,  any  purchase  of a
Purchased Batch is not  characterized as a sale, each Provider shall,  effective
as of the date hereof,  be deemed to have granted (and each Provider hereby does
grant) (in addition to and not in  substitution  of the grant under Section 4.04
herein) to the Purchaser a first  priority  security  interest in and to any and
all present and future Batch  Receivables and the proceeds thereof to secure the
repayment of all amounts paid to the Providers  hereunder with accrued  interest
thereon, and this Agreement shall be deemed to be a security

                                       12

<PAGE>

agreement.  With respect to such grant of a security interest, the Purchaser may
at its  option  exercise  from  time to time  any and all  rights  and  remedies
available to it under the UCC or otherwise.  Each Provider  agrees that ten days
shall be reasonable  prior notice to the  applicable  Provider or to the Primary
Servicer on behalf of such Provider of the date of any public or private sale or
other disposition of all or any of the Batch Receivables.

         SECTION 5.10 No Liability of the Purchaser.  Neither this Agreement nor
any document  executed in connection  herewith shall constitute an assumption by
the    Purchaser    of   any    obligation    to   an    Obligor   or   a   plan
participant/patient/customer of any Obligor.

         SECTION 5.11 No Proceedings.  Each of the Providers  hereby agrees that
it will not institute  against the Purchaser or Healthco-4 any proceeding of the
type  referred  to  in  paragraph  (g)  of  Exhibit  V so  long  as  any  senior
indebtedness issued by the Purchaser or Healthco-4 shall be outstanding or there
shall  not have  elapsed  one year  plus one day since the last day on which any
such senior indebtedness shall have been outstanding.

         SECTION  5.12   Attorney-in-Fact.   Each  Provider  hereby  irrevocably
designates and appoints the Purchaser, the Primary Servicer, the Master Servicer
and each Person in the HFG Group, to the extent  permitted by applicable law and
regulation,  as such Provider's  attorneys-in-fact,  which  irrevocable power of
attorney is coupled with an interest, with authority to (i) endorse or sign such
Provider's name to financing  statements,  remittances,  invoices,  assignments,
checks  (other  than  payments  from  Governmental  Entities),  drafts  or other
instruments  or  documents  in respect  of the Batch  Receivables,  (ii)  notify
Obligors to make payments on the Batch  Receivables  directly to the  Purchaser,
and (iii) bring suit in such Provider's name and settle or compromise such Batch
Receivables as the Purchaser,  the Primary Servicer,  the Master Servicer or any
Person in the HFG Group may, in its discretion, deem appropriate.

         SECTION  5.13  Entire  Agreement;  Severability.  (a)  This  Agreement,
including  all exhibits and  schedules  hereto,  and the  documents  referred to
herein,  embody the entire agreement and understanding of the parties concerning
the subject matter contained herein. This Agreement supersedes any and all prior
agreements and understandings between the parties, whether written or oral.

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

         SECTION 5.14 GOVERNING LAW. THIS AGREEMENT  SHALL,  IN ACCORDANCE  WITH
SECTION  5-1401 OF THE  GENERAL  OBLIGATIONS  LAW OF THE  STATE OF NEW YORK,  BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICT OF
LAWS  PRINCIPLES  THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY
OTHER JURISDICTION.

         SECTION 5.15 WAIVER OF JURY TRIAL,  JURISDICTION AND VENUE. EACH OF THE
PARTIES HERETO HEREBY WAIVES ALL RIGHTS TO A TRIAL BY

                                       13

<PAGE>

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

         SECTION 5.16 Execution in Counterparts.  This Agreement may be executed
in  counterparts,  each of  which  when so  executed  shall be  deemed  to be an
original and all of which when taken together shall  constitute one and the same
agreement.

         SECTION 5.17 Survival of Termination. The provisions of Article IV (and
the  representations  and warranties  with respect  thereto) (other than Section
4.04) and Sections 5.05,  5.06,  5.10,  5.11 and this Section 5.17 shall survive
any termination of this Agreement.

         SECTION 5.18 Addition, Removal and Suspension of Providers. (a) Subject
to the conditions set forth below, upon 30-days' prior written request from time
to time of the Primary  Servicer,  the Purchaser  hereby agrees to the adding of
other  Persons  designated  by the  Primary  Servicer  as  additional  Providers
hereunder (each such event, an  "ADDITION");  provided,  that, in the reasonable
commercial judgment of the Purchaser and its designees and assignees):

               (i) no  Group-Wide  Event  of  Termination  is  existing  and the
          proposed  Addition  shall not cause,  or not reasonably be expected to
          cause, a Group-Wide Event of Termination;

               (ii) as of the effective date of such Addition, such applicable
          conditions  precedent  set forth in Exhibit II hereto  shall have been
          fulfilled with respect to such Person;

               (iii) as of the effective date of such Addition,  each applicable
          representation  and  warranty set forth in Exhibit III hereto shall be
          true and correct in all material respects with respect to such Person;

               (iv) if such Person is not an Affiliate of the Primary  Servicer,
          the Purchaser  shall have  determined that such Person will be able to
          perform the  Primary  Servicer  Responsibilities,  or have waived such
          requirement in writing;

               (v) the  Purchaser  shall have  received a  certificate  from the
          Master  Servicer  stating  that all  computer  linkups and  interfaces
          necessary or desirable, in the sole discretion of the Master Servicer,
          to effectuate the  transactions  and information  transfers under this
          Agreement  with respect to the Addition are fully  operational  to the
          satisfaction of the Master Servicer and the Master Servicer shall have
          received an interface fee for each additional computer interface;

                                       14

<PAGE>

               (vi) such Person shall execute such  agreements,  instruments and
          documents  as the  Purchaser  may  reasonably  request,  in  form  and
          substance  satisfactory  to the Purchaser to effectuate  the Addition,
          including   without   limitation  (x)  the  appropriate   subscription
          agreement  in the form of  Exhibit  XIV  attached  (the  "SUBSCRIPTION
          AGREEMENT") to this  Agreement  whereby such Person agrees to be bound
          by the terms of this Agreement,  and (y) financing statements covering
          Receivables that such Person may sell or contribute to the Purchaser;

               (vii) the Purchaser and its assigns shall have been provided with
          such information  (whether  financial or otherwise) and time necessary
          and  desirable  (in  the  sole  discretion  of the  Purchaser  and its
          assigns) to make the  assessments  under  clauses (i), (ii) and (iii);
          and

               (viii) such Person shall become a member of the Purchaser.

         (b) Subject to the  conditions  set forth below,  upon  30-days'  prior
written request from time to time of the Primary Servicer,  the Purchaser hereby
agrees to the removal of any Provider  designated  by the Primary  Servicer from
time to time (each such event, a "REMOVAL");  provided,  that, in the reasonable
commercial judgment of the Purchaser (and Healthco-4 as its assignee):

               (i) no  Group-Wide  Event  of  Termination  is  existing  and the
          proposed  Removal  shall not cause,  or not  reasonably be expected to
          cause, a Group-Wide Event of Termination;

               (ii) after giving effect to such Removal,  the aggregate  minimum
          Tangible  Net Worth of the  remaining  Providers  hereunder  shall (x)
          equal at least  $5,000,000,  and (y) not have decreased as a result of
          the Removal (combined with all other Removals) by greater than 25%;

               (iii) such Person shall execute such agreements,  instruments and
          documents  as the  Purchaser  may  reasonably  request,  in  form  and
          substance  satisfactory  to the Purchaser to  effectuate  the Removal,
          including   without   limitation   an  amendment  to  this   Agreement
          effectuating such Removal;

               (iv) the Purchaser  and  Healthco-4,  as its assignee,  have been
          provided with such  information  (whether  financial or otherwise) and
          time necessary and desirable (in the sole  discretion of the Purchaser
          and Healthco-4, as its assignee) to make the assessments under clauses
          (i), (ii) and (iii) above; and

               (v) such  Person  shall  withdraw  as a member of the  Purchaser;
          provided, however, that such Provider's capital account as a member of
          the Purchaser  shall not be paid out until the earlier of (x) the date
          of  termination  of this Agreement as set forth in Section 5.07 herein
          and (y) the Final Payment Date with respect to the Receivables of such
          Provider.

                                       15

<PAGE>

         (c) The  Purchaser  hereby  agrees to the  suspension  of any  Provider
designated  by the  Primary  Servicer  from  time to  time  (each  such  event a
"SUSPENSION");  provided,  that in the  reasonable  commercial  judgment  of the
Purchaser (and Healthco-4 as its assignee),  no Group-Wide  Event of Termination
is existing and the proposed  Suspension  shall not cause,  or not reasonably be
expected to cause,  a  Group-Wide  Event of  Termination.  For the period of the
Suspension, such suspended Provider shall be deemed not to be a Provider for the
purpose hereof or for the purposes of the Loan Agreement.  Such Suspension shall
cure any breach of a covenant,  representation  or  warranty  by such  suspended
Provider,  provided,  that such cure shall not be deemed,  in and of itself,  to
cure a Group-Wide Event of Termination.

         SECTION  5.19 Joint and Several  Liability;  Providers.  Each  Provider
agrees that each reference to "the  Providers" in this Agreement shall be deemed
to refer to each such Provider jointly and severally. Each Provider (i) shall be
jointly and severally  liable for the  obligations,  duties and covenants  under
this Agreement and the acts and omissions of each other such Provider including,
without  limitation,  under  Article IV hereof,  and (ii) jointly and  severally
makes each representation and warranty under this Agreement;  provided, however,
that the breach of an obligation, duty, covenant,  representation or warranty by
one  Provider  shall not result in an Event of  Termination  with respect to any
other Provider unless such breach constitutes a Group-Wide Event of Termination.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       16

<PAGE>

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

PROVIDER:                      MIM HEALTH PLANS, INC.

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

                                        Address:    100 Clearbrook Road
                                                    Elmsford, NY 10523

                                        Facsimile Number: (914) 460-1670

                                  AMERICAN DISEASE MANAGEMENT
                                  ASSOCIATES, LLC

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

                                        Address     5N Regent Street, Suite 506
                                                    Livingston, NJ  07039

                                          Facsimile Number: (914) 460-1670

                                  CONTINENTAL PHARMACY, INC.

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

                                         Address:   2791 Charter Street
                                                         Columbus, Ohio  43228

                                         Facsimile: (914) 460-1670

<PAGE>

PURCHASER:                       MIM FUNDING LLC

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

                                           Address: 100 Clearbrook Road
                                                        Elmsford, NY 10523

                                           Facsimile Number: (914) 460-1670

PRIMARY SERVICER:          MIM HEALTH PLANS, INC.

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

                                           Address: 100 Clearbrook Road
                                                       Elmsford, NY 10523

                                           Facsimile Number: (914) 460-1670

<PAGE>

                                    EXHIBIT I

                                   DEFINITIONS

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

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

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

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

         "AGREEMENT"  has the  meaning set forth in the  preliminary  statements
hereto.

         "BATCH RECEIVABLE" means a Receivable that is included in a Transferred
Batch, but excludes a Denied  Receivable for which the Repurchase Price has been
received by the Purchaser.

         "BATCHING  DAY" means each Monday of each week, or if such day is not a
Business Day, the next preceding Business Day.

         "BATCHING  TIME" means 11:00 a.m. New York City time,  on each Batching
Day.

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

         "CAPITAL  EXPENDITURES"  means,  with  respect  to any  Person  for any
period,  the  aggregate  of all  expenditures  (including,  without  limitation,
obligations  created  under  Capital  Leases  in the year in which  created  but
excluding  payments  made  thereon) of any Person in respect of the  purchase or
other acquisition of fixed or capital assets.

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

                                       I-1

<PAGE>

         "CHAMPUS"  means  the  Civilian  Health  and  Medical  Program  of  the
Uniformed  Service,  a program of medical  benefits  covering  former and active
members of the uniformed services and certain of their dependents,  financed and
administered  by the United  States  Departments  of  Defense,  Health and Human
Services and  Transportation  and  established  pursuant to 10 USC ss.ss.  1071-
1106, and all regulations  promulgated  thereunder  including without limitation
(a) all  federal  statutes  (whether  set forth in 10 USC  ss.ss.  1071-1106  or
elsewhere) affecting CHAMPUS; and (b) all rules,  regulations  (including 32 CFR
199), manuals, orders and administrative,  reimbursement and other guidelines of
all Governmental  Entities  (including,  without  limitation,  the Department of
Health  and Human  Services,  the  Department  of  Defense,  the  Department  of
Transportation,  the Assistant  Secretary of Defense (Health  Affairs),  and the
Office of CHAMPUS, or any Person or entity succeeding to the functions of any of
the  foregoing)  promulgated  pursuant  to or in  connection  with  any  of  the
foregoing  (whether  or not  having  the  force  of law) in each  case as may be
amended, supplemented or otherwise modified from time to time.

         "CHANGE OF CONTROL" means any Provider  shall have  consummated or have
entered into any transaction or agreement which shall result in the consummation
of  the  sale,  lease,  transfer,  assignment  or  other  disposition  of all or
substantially all of the assets or Property of a Provider to any Person or group
(as such term is defined in Section  13(d)(3) of the Securities  Exchange Act of
1934, as amended);  the liquidation or dissolution of (or the adoption of a plan
of liquidation by) a Provider;  the merger or consolidation of any Provider into
or with another Person;  the acquisition of all or a substantial  portion of the
assets of any Person;  or any transaction the result of which is that any Person
or group (as such term is defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended) beneficially owns, directly or indirectly,  more of the
voting  stock of a  Provider  than is owned on the  date  hereof,  other  than a
Permitted Acquisition.

         "CLOSING DATE" means November 1, 2000.

         "COLLECTIONS"   means,   with  respect  to  any  Batch   Receivable  or
Transferred  Batch,  all cash  collections,  wire  transfers,  electronic  funds
transfers and other cash proceeds of such Batch Receivable or Transferred Batch,
as the  case  may be,  deposited  in or  transferred  to the  Purchaser  Lockbox
Account, including, without limitation, all cash proceeds thereof.

         "CONSOLIDATED  CAPITAL  EXPENDITURE" means, for any period, the Capital
Expenditures of the Parent and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.

         "CONSOLIDATED  EBITDA" means, for any period,  the EBITDA of the Parent
and its  Subsidiaries  for such period,  determined on a  consolidated  basis in
accordance with GAAP.

         "CONSOLIDATED  INTEREST  COVERAGE  RATIO"  means,  for any period,  the
quotient obtained by dividing (i) Consolidated EBITDA minus Consolidated Capital
Expenditures by (ii) Consolidated Interest Expense.

         "CONSOLIDATED  INTEREST  EXPENSE" means,  for any period,  the Interest
Expense of the Parent and its  Subsidiaries  for such  period,  determined  on a
consolidated basis in accordance with GAAP.

                                       I-2

<PAGE>

         "CONSOLIDATED NET WORTH" means, at any date of determination, an amount
equal  to (a)  the  total  assets  of  the  Parent  and  its  Subsidiaries  on a
consolidated  basis  minus  (b) the  total  liabilities  of the  Parent  and its
Subsidiaries on a consolidated basis.

         "CONSOLIDATED  TANGIBLE NET WORTH" means with respect to the Parent and
its   Subsidiaries   determined  on  a  consolidated   basis,  at  any  date  of
determination,  (i) the sum of capital stock, capital in excess of par or stated
value of shares of its capital  stock,  retained  earnings and any other account
which,  in accordance  with GAAP  constitutes  stockholder's  equity,  less (ii)
treasury stock and any minority interest in subsidiaries,  less (iii) the amount
of any write-up  subsequent  to the Closing Date in the value of any asset above
the cost or  depreciated  cost  thereof  and less  (iv) all  intangible  assets,
including,  without limitation,  goodwill,  which would be classified as such in
accordance with GAAP.

         "CONSOLIDATED  TOTAL NET INCOME" means,  for any period,  the total Net
Income of the Parent  and its  Subsidiaries  for such  period,  determined  on a
consolidated basis.

         "CONSOLIDATED  WORKING  CAPITAL"means at any date of determination,  an
amount equal to Current Assets minus Current Liabilities.

         "CREDIT  AND  COLLECTION  POLICY"  means those  receivables  credit and
collection  policies and practices of the Providers in effect on the date of the
Agreement as set forth as Schedule III hereto,  and as may be modified from time
to time with the consent of the Purchaser and Healthco-4.

         "CURRENT  ASSETS" means,  at any date of  determination,  the aggregate
amount of all assets of the Parent and its Subsidiaries on a consolidated  basis
that would be classified as current assets at such date, computed and calculated
in  accordance  with GAAP,  adjusted  for prepaid  expenses  and "other  current
assets".

         "CURRENT  LIABILITIES"  means,  at  any  date  of  determination,   the
aggregate  amount of all  liabilities  of the Parent and its  Subsidiaries  on a
consolidated  basis  (including  tax and other proper  accruals)  which would be
classified  as current  liabilities  at such date,  computed and  calculated  in
accordance with GAAP and shall exclude any borrowings under the Loan Agreement.

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

         "DEFAULTED  RECEIVABLE"  means a Batch  Receivable  (i) as to which the
Obligor thereof or any other Person obligated  thereon has taken any action,  or
suffered any event to occur, of the type

                                      I-3

<PAGE>

described  in  paragraph  (g) of Exhibit V or (ii)  which,  consistent  with the
Credit and Collection  Policy,  would be written off the  applicable  Provider's
books as uncollectible.

         "DEFERRED  PURCHASE PRICE" means the portion of the Purchase Price of a
Purchased  Batch  purchased on any  Transfer  Date  exceeding  the amount of the
Purchase  Price under Section 1.03 to be paid in cash,  which portion when added
to the cumulative  amount of all previous Deferred Purchase Prices (after giving
effect to any payments made on account  thereof)  shall not exceed the lesser of
(a)  $6,750,000  or  (b)  15% of  the  Expected  Net  Value  of the  Transferred
receivables.  The  obligations  of the  Purchaser  in  respect  of the  Deferred
Purchase  Price shall be evidenced by the  Purchaser's  subordinated  promissory
note in the form of Exhibit D hereto.

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

                                      DR
                                      --
                                      Pool

                  where:

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

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

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

         "DENIED RECEIVABLE" has the meaning set forth in Section 4.01 hereto.

         "DEPOSITARY AGREEMENT" means that certain Depositary Account Agreement,
dated the date hereof,  among the Providers,  the Purchaser,  Healthco-4 and the
Lockbox Bank, in substantially  the form attached hereto as Exhibit XII, as such
agreement  may be  amended,  modified  or  supplemented  from  time  to  time in
accordance with its terms.

         "EBITDA" means, for any period, the sum (determined without duplication
on a consolidated  basis) for the Providers and  Subsidiaries  of (a) net income
(or net loss) of the Providers and Subsidiaries (calculated before extraordinary
items),  plus (b) Consolidated  Interest Expense for such period deducted in the
determination  of  such  net  income  (or  net  loss)  plus  (c)   depreciation,
amortization  and other non-cash items for such period to the extent included in
the  determination  of net  income  (or net  loss)  plus or minus  (d) all taxes
accrued  for such  period on or  measured  by income to the extent  deducted  or
credited  in  determining  such net income (or net loss) minus or plus (e) gains
(or losses) from asset dispositions  outside of the normal course of business to
the extent included in determining such net income (or net loss) plus (f) losses
due to asset impairment.

                                      I-4

<PAGE>

         "ELIGIBILITY  CRITERIA"  means the criteria  and basis for  determining
whether a Receivable  qualifies as an Eligible  Receivable,  all as set forth in
Exhibit XV hereto,  as such  Eligibility  Criteria may be modified  from time to
time by the Purchaser and Healthco-4 in their good faith discretion and based on
historical   performance   and   other   Provider-related   or   Obligor-related
factually-based credit criteria upon Written Notice to the Primary Servicer.

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

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

         "EQUITY"  means the amount set forth on the balance sheet of a Provider
as equity.

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

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

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

         "EXPECTED NET VALUE" means, with respect to any Batch  Receivable,  the
gross unpaid amount of such Receivable on the Transfer Date therefor,  times the
Net Value Factor.

         "FACILITY   TERMINATION  DATE"  means  the  earlier  of  (a)  the  date
twenty-four  months  after the Initial  Transfer  Date  (subject to an automatic
extension of such date to coincide with the "Scheduled  Maturity Date" under the
Loan  Agreement)  and (b) the date of delivery of notice of the  occurrence of a
Group-Wide Event of Termination, if required pursuant to Section 3.02 hereof, or
the date of  occurrence  of an Event of  Termination  if no notice is  required,
unless such event is waived by the Purchaser in writing.

         "FINAL  PAYMENT  DATE" means the first  Settlement  Date  following the
Settlement  Period in which final collection has been received for all Purchased
Receivables  or such  Purchased  Receivables  have become Denied  Receivables or
Defaulted Receivables.

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

         "GOVERNMENTAL  ENTITY" means the United  States of America,  any state,
any political  subdivision of a state and any agency or  instrumentality  of the
United States of America or any state or political  subdivision  thereof and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.  Payments from  Governmental  Entities
shall

                                      I-5

<PAGE>

be  deemed to  include  payments  governed  under the  Social  Security  Act (42
U.S.C.ss.ss.  1395 et seq.),  including payments under Medicare,  Medicaid,  and
CHAMPUS, and payments administered or regulated by HCFA.

         "GROUP-WIDE  EVENT OF TERMINATION" has the meaning set forth in Exhibit
V.

         "GROUP-WIDE PROVIDERS" has the meaning set forth in Exhibit V.

         "GROUP-WIDE  SERVICER  TERMINATION  EVENT" has the meaning set forth in
Section 1.05(b).

         "GUARANTY" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly  guaranteeing any Debt or other obligation
of any other Person and, without  limiting the generality of the foregoing,  any
obligation,  direct or indirect,  contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay),  or (ii)  entered  into for the  purpose of  assuring in any other
manner the obligee of such Debt or other obligation of the payment thereof or to
protect the obligee of such Debt or other  obligation of the payment  thereof or
to protect the obligee  against  loss in respect  thereof (in whole or in part),
provided that the term Guaranty shall not include endorsements for collection or
deposit in the ordinary course of business.  The term "Guarantee" used as a verb
has a corresponding meaning.

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

         "HEALTHCO-4"  means HFG Healthco-4  LLC, a Delaware  limited  liability
company.

         "HFG GROUP" means (i)  Healthco-4,  the Program  Manager and the Master
Servicer and (ii) Healthco-4's agents,  delegates,  designees and assigns (other
than any  Provider  or the  Primary  Servicer)  identified  from time to time to
effectuate the Agreement.

         "INDEMNIFIED AMOUNTS" has the meaning set forth in Section 4.02 hereto.

         "INDEMNIFIED PARTY" has the meaning set forth in Section 4.02 hereto.

         "INITIAL  TRANSFER  DATE"  means the date of the initial  purchase  and
contribution of Receivables hereunder.

         "INTEREST  EXPENSE"  means,  with respect to any Person for any period,
the gross interest expense of such Person  (exclusive of interest income) during
such period as determined in accordance with GAAP.

                                      I-6

<PAGE>

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

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

         "LIBO RATE" has the meaning specified in the Loan Agreement.

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

         "LOAN AGREEMENT" means the Loan and Security  Agreement dated as of the
date hereof between the Purchaser as borrower and Healthco-4 as lender,  as such
agreement  may be  modified,  supplemented  or  amended  from  time  to  time in
accordance with its terms.

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

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

         "LOCKBOX  BANK" means  Fleet  National  Bank as lockbox  bank under the
Depositary Agreement. "LOSS-TO-LIQUIDATION RATIO" means, as of the last Business
Day of each Month, a percentage equal to:

                                       DR
                                       --
                                       C

                  where:

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

                  C        =        Collections in the Month immediately prior
                                    to the date of calculation.

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

                                      I-7

<PAGE>

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

         "MISDIRECTED  PAYMENT"  means any form of payment in respect of a Batch
Receivable  made by an Obligor in a manner  other than as provided in the Notice
sent to such Obligor.

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

         "NET  INCOME"  means,  for any period,  for any Person,  the net income
(loss) of such Person for such period determined in accordance with GAAP.

         "NET VALUE  FACTOR"  means,  initially,  the  percentages  set forth on
Schedule VI attached  hereto,  as such  percentages may be adjusted,  upwards or
downwards on a prospective  basis with Written Notice to the  Purchaser,  in the
good faith  discretion of Healthco-4 but in consultation  with the Purchaser and
the Primary  Servicer,  based on (i) the  historical  actual  final  collections
received  on the  Receivables  within  180  days  of the  Invoice  Date  of such
Receivables  (without  regard  to the  factors  set forth in the  definition  of
"Defaulted Receivable"), divided by (ii) the gross value of such Receivables.

         "NOTICE TO GOVERNMENTAL ENTITIES" means a notice letter on a Provider's
corporate letterhead in substantially the form attached hereto as Exhibit VII-A.

         "NOTICE  TO  NON-GOVERNMENTAL  ENTITIES"  means a  notice  letter  on a
Provider's  corporate  letterhead in  substantially  the form attached hereto as
Exhibit VII-B.

         "NOTICE TO OBLIGORS" means either a Notice to Governmental  Entities or
a Notice to non-Governmental Entities, as the context requires.

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

         "PARENT" means MIM Corporation.

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

                                      I-8

<PAGE>

         "PERMITTED  ACQUISITION"  means  the  acquisition  by a  Provider  of a
business or of businesses or the merger or  consolidation  of a Provider into or
with another Person;  provided that (1) both before and immediately after giving
effect to such proposed  acquisition  (including without limitation,  compliance
with the  financial  covenants on a pro forma basis after  giving  effect to the
proposed  acquisition),  no Default or Event of Default  has or will occur or be
continuing  and no Event of  Termination  has  occurred  or would be  reasonably
likely to occur,  (2) the proposed  acquisition  is of a business or  businesses
involving  the  rendition  of pharmacy  benefit  (including  specialty  pharmacy
products  and  services)   and/or  formulary   management   services  or  rebate
administration  services, the sale of medical and/or pharmaceutical  products or
the rendition of medical services,  (3) the proposed acquisition is accretive to
both (x) EBITDA and (y) the sum of Net Income plus the  amortization of goodwill
related  to  the  acquisition  of  the  acquiring  Provider,  (4)  the  proposed
acquisition  is not  subject  to, and is not  reasonably  likely to subject  any
Provider  to,  any  governmental  investigation,  material  litigation  or other
material  liabilities for which adequate  reserves are not available or have not
been taken, (5) the Provider is the surviving Person,  (6) such surviving Person
shall have a Tangible  Net Worth that is no less than the  Tangible Net Worth of
such  Provider,  (7) the Provider has delivered to the Purchaser and  Healthco-4
financial  statements for the trailing 12 month period prior to the  acquisition
on a pro  forma  basis  giving  effect  to the  proposed  acquisition  and  such
financial  statements show that the acquisition would not cause and would not be
reasonably likely to cause an Event of Termination,  (8) the total consideration
for any single  acquisition does not exceed $30,000,000 and (9) the cash portion
of the total  consideration for any single  acquisition,  together with any debt
assumed in connection therewith, does not exceed $15,000,000.

         "PERMITTED LIEN" means a Lien that is expressly subordinated in writing
to the Lien created hereunder in a manner acceptable to Healthco-4,  in its sole
discretion,  and, with respect to any such Lien existing on the Closing Date, is
described on Schedule IV hereto.

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

         "PRIMARY SERVICER" as defined in the preamble,  means MIM Health Plans,
Inc., if it is then authorized to perform the Primary Servicer  Responsibilities
pursuant to Section 1.05(b),  or any other Person then authorized to perform the
Primary Servicer Responsibilities that is acceptable to the Program Manager.

         "PRIMARY  SERVICER  ACCOUNT"  means  account # 09069730  of the Primary
Servicer at Fleet National Bank,  ABA # 011000390,  Providence,  Rhode Island or
such other bank account  designated by the Primary Servicer by Written Notice to
the Master Servicer, the Purchaser and the Program Manager from time to time, as
the account for receipt of proceeds on behalf of the Providers.

         "PRIMARY  SERVICER  RESPONSIBILITIES"  has the  meaning  set  forth  in
Section 1.05(b) hereto.

         "PRIMARY  SERVICING FEE" means, with respect to any Purchased Batch, an
amount equal to $8.00  multiplied by the number of Receivables in such Purchased
Batch.

                                      I-9
<PAGE>

         "PROGRAM MANAGER" means (i) Healthcare Finance Group, Inc., or (ii) any
other Person then  identified  by  Healthco-4  to the Primary  Servicer as being
authorized to provide administrative  services with respect to the Purchaser and
the  Purchaser's   purchase,   funding  and  collection  of   healthcare-related
receivables.

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

         "PROPOSED  ELIGIBLE  RECEIVABLES"  has the meaning set forth in Section
1.02 hereto.

         "PROVIDER"  or  "PROVIDERS"  has the meaning set forth in the  preamble
hereto.

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

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

         "PURCHASE  PRICE" means,  with respect to Receivables in each Purchased
Batch, (i) the aggregate Expected Net Value of the Receivables, minus (ii) 5%.

         "PURCHASED BATCH" has the meaning set forth in Section 1.02(b) hereto.

         "PURCHASED  RECEIVABLE"  means a Receivable  that has been purchased by
the Purchaser.

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

         "PURCHASER  LOCKBOX" means the lockboxes set forth on Schedule V hereto
to receive  checks  with  respect  to  Receivables  payable by  non-Governmental
Entities.

         "PURCHASER  LOCKBOX  ACCOUNT"  means the lockbox  accounts set forth on
Schedule V hereto  associated  with the  Purchaser  Lockbox  established  by the
Purchaser  to deposit  Collections  from  non-Governmental  Entities,  including
Collections  received in the Purchaser Lockbox and Collections  received by wire
transfer directly from non-Governmental Entities, all as more fully set forth in
the Depositary Agreement.

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

         "RECEIVABLE  INFORMATION"  has the  meaning  set forth in Section  1.02
hereto.

                                      I-10
<PAGE>

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

         "REPURCHASE  PRICE" means an amount equal to (x) the Purchase  Price of
such  Denied  Receivable,  minus (y) any cash  received  from the Obligor in the
Purchaser  Lockbox  Account  with  respect to such Denied  Receivable,  plus (z)
interest on such amount calculated at the interest rate then in effect under the
Loan Agreement (or the maximum rate legally permitted if less than such rate) on
the  average  outstanding  difference  between  clauses  (x)  and (y)  from  and
including the Business Day following the Transfer Date of such Denied Receivable
to the date the Repurchase Price is received by the Purchaser.

         "SERVICER"  means the Primary  Servicer,  if it is then  authorized  to
perform the Primary Servicer  Responsibilities  pursuant to Section 1.05(b),  or
the Master  Servicer,  or any other Person then authorized  hereunder to perform
the Primary Servicer Responsibilities.

         "SERVICER  TERMINATION  EVENT"  means any of the  events  specified  in
Exhibit IX hereto.

         "SETTLEMENT DATE" means, with respect to a Settlement  Period,  Tuesday
of each week; or if such day is not a Business Day, the next succeeding Business
Day;  provided,  that, if,  following the occurrence of an Event of Termination,
the  Purchaser  shall  have  selected  a  period  shorter  than  one week as the
Settlement  Period,  the  Settlement  Date  shall  mean the fifth  Business  Day
following the end of each such Settlement Period.

         "SETTLEMENT  PERIOD" means the period  beginning on Friday of each week
and  ending at the close of  Thursday  of the  following  week;  provided,  that
notwithstanding  the foregoing,  the first Settlement Period shall be the period
from and  including  the Initial  Transfer  Date through  November 2, 2000;  and
provided, further, that following the occurrence of an Event of Termination, the
Purchaser may from time to time, by notice to the Primary  Servicer on behalf of
the Providers, select a shorter period as the Settlement Period.

         "SUBSCRIPTION  AGREEMENT"  has the  meaning  set forth in Section  5.18
hereto.

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

                                      I-11

<PAGE>

power by reason of the happening of any  contingency) is at the time directly or
indirectly owned or controlled by such Provider.

         "TANGIBLE NET WORTH" means, with respect to any Person at any time, the
sum of (i) such Person's capital stock, capital in excess of par or stated value
of shares of its capital stock,  retained  earnings and any other account which,
in accordance with GAAP,  constitutes  stockholders'  equity, less (ii) treasury
stock,  minus (iii) the book value of all assets  classified as intangible under
GAAP,  including,   without  limitation,   goodwill,  deferred  taxes,  deferred
financing costs, trademarks, trade names, patents, copyrights and licenses.

         "TOTAL COLLECTIONS" means, as to each Transferred Batch, the sum of all
Collections,  Repurchase Prices and Indemnified  Amounts (but only to the extent
that such Indemnified  Amounts are received in lieu of Collections)  distributed
to and received by the Purchaser with respect thereto.

         "TRANSFER DATE" means any Business Day after the Initial  Transfer Date
on which there is a purchase or contribution of Receivables hereunder, provided,
that there shall be at least one Transfer Date in any single week, and provided,
further,  that a Transfer Date shall occur simultaneously with each Funding Date
as defined in the Loan Agreement.

         "TRANSFERRED BATCH" has the meaning set forth in Section 1.02 hereto.

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

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

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

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

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

                                      I-12
<PAGE>

                                   EXHIBIT II

                             CONDITIONS OF PURCHASES

         2. Conditions Precedent on the Initial Transfer Date. The purchase of a
Purchased  Batch under the Agreement on the Initial  Transfer Date is subject to
the conditions precedent that the Purchaser shall have received on or before the
Initial  Transfer Date the following,  each (unless  otherwise  indicated) dated
such date, in form and substance satisfactory to the Purchaser:

         (a) For each Provider and the Primary Servicer, a certificate issued by
the Secretary of State of the state of such entity's (i)  organization as to the
legal  existence  and good standing of such entity and (ii) locale of operation,
if different from its state of  organization,  as to the foreign  qualification,
authorization  and good  standing  of such  entity in such  locale (all of which
certificates  shall be dated not more than 20 days prior to the Initial Transfer
Date).

         (b) For each Provider and the Primary Servicer, certified copies of the
charter and by-laws or other organizational  documents of such entity, certified
copies of  resolutions  of the Board of Directors or similar  governing  body of
such entity approving the Agreement,  certified copies of all documents filed to
register any and all assumed/trade names of such entity, and certified copies of
all documents  evidencing  other  necessary  corporate  action and  governmental
approvals, if any, with respect to the Agreement.

         (c) For each Provider and the Primary  Servicer,  a certificate  of the
Secretary or Assistant  Secretary of such entity  certifying  the names and true
signatures  of the  incumbent  officers  of such entity  authorized  to sign the
Agreement and the other documents to be delivered by it hereunder.

         (d) (i) Certified  copies of the balance sheets of the Primary Servicer
and its  Subsidiaries  as at December 31, 1999, and for the prior 3 fiscal years
and the related  statements  of income and expense and retained  earnings of MIM
Corporation and its Subsidiaries for the fiscal year then ended,  certified in a
manner acceptable to the Purchaser by independent public accountants  acceptable
to the Purchaser and (ii) unaudited  balance sheets of the Primary  Servicer and
its  Subsidiaries  for the fiscal  quarter  ended June 30,  2000 and the related
statements of income and expense and retained  earnings of the Primary  Servicer
and its Subsidiaries for such fiscal quarter then ended.

         (e)  Acknowledgment  or time stamped receipt copies of proper financing
statements  (showing  each Provider as  debtor/seller,  the Purchaser as secured
party/purchaser  and  Healthco-4  as assignee,  and stating  that the  financing
statements  are being  filed  because  UCC  Section  9-102 does not  distinguish
between a sale and a secured loan for filing  purposes)  duly filed on or before
the Initial Transfer Date under the UCC of all jurisdictions  that the Purchaser
may deem  necessary  or desirable  in order to perfect the  ownership  interests
contemplated by the Agreement.

         (f)  Acknowledgment or time-stamped  receipt copies of proper financing
statements  (showing  each Provider as debtor and the Purchaser as secured party
and Healthco-4 as assignee with respect to the grant by the Providers of a first
priority security interest to the Purchaser in the

                                      II-1
<PAGE>

Providers' Accounts and the proceeds thereof, as contemplated by Section 4.04 of
the Agreement)  duly filed on or before the Initial  Transfer Date under the UCC
of all jurisdictions that the Purchaser may deem necessary or desirable in order
to perfect such security interest.

         (g)  Completed  requests for  information  (UCC search  results)  dated
within 20 days of the Initial  Transfer Date, and a schedule thereof listing all
effective  financing  statements  filed  in  the  jurisdictions  referred  to in
subsections  (e) and (f) above that name each Provider as debtor,  together with
copies of all other  financing  statements  filed against the Providers (none of
which shall cover any Accounts or any proceeds thereof).

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

         (i) Favorable  opinions of Tennessee  local counsel for the  Providers,
substantially in the form attached hereto as Exhibit XI-A,  regarding compliance
with patient confidentiality laws in Tennessee, and to such other matters as the
HFG Group requests and a survey  prepared by King & Spalding  regarding  patient
confidentiality  laws in Ohio, Nevada, New Jersey, New York and Texas, and as to
such other matters as the HFG Group requests.

         (j) Favorable opinions of (1) King & Spalding,  counsel for the Primary
Servicer and the Providers,  and (2) Barry Posner, Esq., General Counsel for the
Borrower,  substantially  in the form attached hereto as Exhibits XI-B and XI-C,
respectively, and as to such other matters as the HFG Group requests.

         (k) Proof of payment of $450,000 which sum is equal to the facility fee
payable by the Purchaser to Healthcare Finance Group, Inc.

         (l)  Proof  of  payment   of  all   reasonable   attorneys'   fees  and
disbursements incurred by the Purchaser and the HFG Group.

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

         (n) Copies of all Notices to Obligors  required  pursuant to Article II
of the Agreement, together with evidence satisfactory to the Purchaser that such
Notices to Obligors have been or will be delivered to the addressees thereof.

         (o) A copy of each new form of invoice from the  Providers  showing the
appropriate Lockbox as the remittance address.

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

                                      II-2

<PAGE>

         It shall be a further condition  precedent on the Initial Transfer Date
that Healthco-4 shall have paid the following:  (i) $600,000 to General Electric
Capital Corporation ("GECC"), on behalf of MIM, representing the termination fee
payable by MIM in connection with the termination,  on the date hereof, of MIM's
credit  facility  with  GECC and (ii) to MIM,  an  amount  equal to the  current
unamortized  portion of the  closing  fee paid by MIM under its credit  facility
with GECC.

         3.  Conditions  Precedent on All  Transfer  Dates.  Each  purchase of a
Purchased Batch on a Transfer Date  (including the Initial  Transfer Date) shall
be subject to the further conditions  precedent that the Primary Servicer,  each
Provider and the Purchaser shall have agreed upon the terms of such purchase and
also that:

         (a) The Providers  shall have  delivered to the Purchaser or the Master
Servicer,  as the case may be, at least two Business Days prior to such Transfer
Date, in form and substance satisfactory to the Purchaser:

          (i)  completed  Receivable  Information  with respect to each Proposed
               Eligible  Receivable  (such  Receivable  Information  having been
               delivered on or prior to the most recent  Batching Time preceding
               such Transfer Date), together with such additional information as
               may  reasonably  be  requested  by the  Purchaser  or the  Master
               Servicer; and

          (ii) to the extent not previously  provided,  executed Notices to each
               Obligor   responsible  for  the  payment  of  any  of  the  Batch
               Receivables to be purchased on such Transfer Date, directing such
               Obligors to make payment to the addresses and accounts designated
               in the Notices, as set forth in Article II hereof,  together with
               evidence that such Notices have been delivered to such Obligors.

         (b) On each such Transfer Date the following  statements  shall be true
(and  acceptance  of the  proceeds of such  purchase by the Primary  Servicer on
behalf of the Providers  shall be deemed a  representation  and warranty by each
Provider that such statements are then true):

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

          (ii) no event has  occurred  and is  continuing,  or would result from
               such purchase, that constitutes a Group-Wide Event of Termination
               or that would  constitute a Group-Wide  Event of Termination  but
               for the requirement that notice be given or time elapse or both.

         (c) The  Purchaser  shall have  received a duly  executed  Subscription
Agreement for each Provider  that became a Provider  after the Initial  Transfer
Date.

                                      II-3
<PAGE>

         (d) The Purchaser shall have received such other approvals, opinions or
documents as it may reasonably request.

                                      II-4

<PAGE>

                                   EXHIBIT III

                         REPRESENTATIONS AND WARRANTIES

         Each of the Providers and the Primary Servicer  represents and warrants
as follows:

         (a) It is a corporation duly incorporated, validly existing and in good
standing  under  the laws of the  state  of its  incorporation  as set  forth on
Schedule  I  hereto,  and is  duly  qualified  to do  business,  and is in  good
standing,  in every jurisdiction where the nature of its business requires it to
be so  qualified,  except  in any  jurisdiction  other  than  that of its  chief
executive offices where the failure to be so qualified would not have a Material
Adverse Effect.

         (b) The execution,  delivery and performance by it of the Agreement and
the other  documents  to be  delivered  by it  thereunder,  (i) are  within  its
corporate or limited liability company powers, (ii) have been duly authorized by
all  necessary  corporate  or limited  liability  company  action,  (iii) do not
contravene  (1) its charter or by-laws or  certificate of formation or operating
agreement, as applicable, (2) any material law, rule or regulation applicable to
it, (3) any material  contractual  restriction binding on or affecting it or its
Property, or (4) any order, writ, judgment,  award, injunction or decree binding
on or  affecting  it or its  Property,  and (iv) do not result in or require the
creation of any Lien upon or with respect to any of its  Properties,  other than
the interests created by the Agreement. The Agreement has been duly executed and
delivered by it. It has  furnished to the  Purchaser a correct and complete copy
of its  certificate  of  incorporation  and by-laws,  including  all  amendments
thereto.

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

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

         (e) Except as  disclosed  on Schedule  IV hereto,  it has all power and
authority,  and  has  all  permits,  licenses,  accreditations,  certifications,
authorizations, approvals, consents and agreements of all Obligors, Governmental
Entities,  accreditation  agencies  and  any  other  Person  (including  without
limitation,  accreditation by the appropriate Governmental Entities and industry
accreditation agencies and accreditation and certifications necessary to receive
payment and compensation and to participate under Medicare,  Medicaid,  CHAMPUS,
Blue Cross/Blue Shield and other equivalent  programs relevant to any Provider),
necessary or required for it (i) to own the assets (including  Receivables) that
it now owns,  and (ii) to carry on its business as now  conducted,  except where
failure to have such permits,  licenses,  authorizations,  approvals,  consents,
agreements with third-party payors, accreditation and certifications (including,
without limitation, accreditation by the

                                     III-1
<PAGE>

appropriate  Governmental  Entities  and  industry  accreditation  agencies  and
accreditation and  certifications  necessary to receive payment and compensation
and to participate under Medicare, Medicaid, CHAMPUS, Blue Cross/Blue Shield and
other equivalent programs) would not have a Material Adverse Effect.

         (f) Except as disclosed in Schedule IV hereto, it has not been notified
by any Obligor, Governmental Entity or instrumentality,  accreditation agency or
any other Person,  during the immediately  preceding 24 month period,  that such
party has rescinded or not renewed,  or is  reasonably  likely to rescind or not
renew,  any  such  material  permit,  license,   accreditation,   certification,
authorization,  approval, consent or agreement granted to it or to which it is a
party.

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

         (h)  The  balance  sheets  of the  Parent  and its  Subsidiaries  as at
December 31, 1999, and the related statements of income and expense,  cash flows
and retained  earnings of the Parent and its Subsidiaries for the fiscal periods
then ended, copies of which have been furnished to the Purchaser, fairly present
the financial  condition of the Parent and its  Subsidiaries as at such date and
the results of the operations of the Parent and its  Subsidiaries for the period
ended on such date,  all in accordance  with GAAP,  and since  December 31, 1999
there has been no change resulting in a Material Adverse Effect.

         (i) Except as disclosed on Schedule IV hereto,  there is no pending or,
to any  Provider's or the Primary  Servicer's  knowledge,  threatened  action or
proceeding  or  injunction,  writ or  restraining  order  affecting  the Primary
Servicer,  any Provider or any Subsidiary before any court,  Governmental Entity
or arbitrator which could reasonably be expected to result in a Material Adverse
Effect,  and  the  Primary  Servicer,  any  Provider  or any  Subsidiary  is not
currently  the  subject  of,  and has no present  intention  of  commencing,  an
insolvency proceeding or petition in bankruptcy.  Furthermore, to its knowledge,
there are no pending civil or criminal investigations by any Governmental Entity
involving it or its officers or directors and neither it nor any of its officers
or directors  has been  involved in, or is the subject of, any civil or criminal
investigation by any Governmental Entity.

         (j) Each Provider is the legal and beneficial  owner of the Receivables
in each  Transferred  Batch  free and clear of any Lien  (other  than  Permitted
Liens); upon each purchase or contribution of a Transferred Batch, the Purchaser
shall acquire valid ownership of each Receivable in such  Transferred  Batch and
in the  Collections  with respect  thereto prior to all other Liens thereon.  No
effective financing statement or other instrument similar in effect covering any
Accounts or the Collections with respect thereto, or any proceeds thereof, is on
file in any  recording  office,  except  those filed in favor of the  Purchaser,
Healthco-4 or any permitted  assignee of Healthco-4  relating to the  Agreement,
and  no  competing   notice  or  notice   inconsistent   with  the  transactions
contemplated in the Agreement remains in effect with respect to any Obligor.

                                     III-2

<PAGE>

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

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

         (m) Each  purchase of a Purchased  Batch will  constitute a purchase or
other acquisition of notes,  drafts,  acceptances,  open accounts  receivable or
other  obligations  representing  part or all of the sales price of merchandise,
insurance or services  within the meaning of Section  3(c)(5) of the  Investment
Company Act of 1940, as amended.

         (n)  Each  Receivable  included  in a  Purchased  Batch  is,  as of the
Transfer Date of such Purchased Batch, an Eligible Receivable.

         (o) The provisions of the Agreement create in the Purchaser's favor, on
the Initial Transfer Date, legal and valid liens in all of the Accounts owned or
held by the Providers  (other than the Batch  Receivables that have been sold or
contributed  to the Purchaser  pursuant to the  provisions of the Agreement) and
all proceeds thereof, and when all proper filings and other actions necessary to
perfect  such  liens  have been  completed,  will  constitute  a  perfected  and
continuing  Lien on all of the Accounts  owned or held by the  Providers  (other
than the Batch  Receivables  that have been sold or contributed to the Purchaser
pursuant to the provisions of the Agreement)  and all proceeds  thereof,  having
priority  over all other  liens on such  Accounts  and  proceeds  thereof of the
Providers, enforceable against each Provider and all third parties.

         (p) Except as  disclosed on Schedule IV hereto,  all  required  Notices
have been prepared and delivered to each Obligor, and all invoices now bear only
the appropriate remittance  instructions for payment direction to the applicable
Lockbox or Lockbox Account, as the case may be.

         (q) Except as disclosed on Schedule IV hereto,  no Provider has changed
its  principal  place of  business  or chief  executive  office in the last five
years.

         (r) The exact name of each  Provider  is as set forth on the  signature
pages of the Agreement  and,  except as set forth on such signature  page,  such
Provider  has not  changed  its name in the last five years  and,  except as set
forth  opposite  such  Provider's  name on Schedule IV,  during such period such
Provider has not used,  nor does such  Provider  now use, any other  fictitious,
assumed or trade name.

         (s) With respect to itself or any of its Subsidiaries taken as a whole,
there exists no event which could reasonably be expected to result in a Material
Adverse Effect.

                                     III-3

<PAGE>

         (t) It is not in violation under any applicable statute,  rule, order,
decree or regulation of any court,  arbitrator  or  governmental  body or agency
having jurisdiction over it which could have a Material Adverse Effect.

         (u) It has filed on a timely basis all tax returns (federal,  state and
local) required to be filed and has paid, or made adequate provision for payment
of, all taxes,  assessments and other  governmental  charges due from it, unless
contested in good faith by appropriate  proceedings.  No tax Lien has been filed
and is now  effective  against it or any of its  Properties,  except any Lien in
respect of taxes and other  charges  not yet due or  contested  in good faith by
appropriate proceedings.  To its knowledge,  there are no pending investigations
of it by any taxing authority or any pending but unassessed tax liability of it.
It does not have any obligation under any tax sharing agreement.

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

         (w) The  Lockboxes  are the only  post  office  boxes  and the  Lockbox
Accounts  are the only  lockbox  accounts  maintained  for  Receivables;  and no
direction of any Provider is in effect  directing  Obligors to remit payments on
Batch Receivables other than to the Lockboxes or Lockbox Accounts.

         (x) Each pension plan or profit sharing plan to which it is a party has
been fully funded in accordance with its obligations as set forth in such plan.

         (y)  The  primary  business  of  each  Provider  is  the  provision  of
independent  pharmacy  benefit and formulary  management  services,  the sale of
medical and/or pharmaceutical  products and the rendition of medical services in
connection therewith.

         (z) The  assets  of each  Provider  are free and  clear of any liens in
favor of any Employee Benefit Plan or the PBGC.

         (aa) With respect to each Employee Benefit Plan of it, including to its
knowledge as to any Multiemployer  Plan, such Employee Benefit Plan has complied
and been administered in accordance with its terms and in substantial compliance
with all applicable  provisions of ERISA and the Internal  Revenue Code of 1986,
as amended;  neither it nor any ERISA Affiliate has been notified by the sponsor
of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has
been terminated, within the meaning of Title IV of ERISA; and it has no material
unpaid liability for any Employee Benefit Plan.

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

                                     III-4

<PAGE>

         (cc)  It is  not  engaged  principally,  or as  one  of  its  important
activities, in the business of extending credit for the purpose of purchasing or
carrying  margin stock (within the meaning of Regulation T, U, or X of the Board
of Governors of the Federal Reserve System),  and no part of the proceeds of any
extension of credit under this  Agreement  will be used to purchase or carry any
such margin stock or to extend credit to others for the purpose of purchasing or
carrying margin stock.

         (dd) With  respect  to each  Transferred  Batch,  each  Provider  shall
receive,  for its own capital  account,  its  proportional  share (based on such
Provider's  portion of the  Receivables  contributed  to the  Purchaser)  of the
aggregate  Expected Net Value of the Receivables in the Transferred  Batch which
are not Purchased Receivables.

         (ee)  It is  not  in  violation  of  any  applicable  material  patient
confidentiality law.

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

                                     III-5

<PAGE>

                                   EXHIBIT IV

                                    COVENANTS

         Until the later of the Facility  Termination Date and the Final Payment
Date, each Provider agrees as follows:

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

         (b) Offices,  Records and Books of Account.  It will keep its principal
place of business and chief executive  office at the address set forth under its
name on the  signature  pages to the Agreement and the office where it keeps its
records concerning the Accounts at 33 North Road, Wakefield, Rhode Island 02879,
or, upon 30 days' prior Written Notice to the Purchaser,  at any other locations
in  jurisdictions  where all actions  reasonably  requested by the  Purchaser or
otherwise  necessary to protect,  perfect and maintain the Purchaser's  security
interest in the Accounts and all proceeds thereof have been taken and completed.
It shall keep its books and  accounts in  accordance  with GAAP and shall make a
notation on its books and records,  including  any computer  files,  to indicate
which  Receivables  have  been  sold or  contributed  to the  Purchaser  and the
security interest of the Purchaser in its Accounts not sold to the Purchaser. It
shall maintain and implement administrative and operating procedures (including,
without  limitation,  an ability to recreate records evidencing  Receivables and
related contracts in the event of the destruction of the originals thereof), and
keep and maintain all documents, books, records and other information reasonably
necessary or advisable for collecting all Batch Receivables (including,  without
limitation,  records adequate to permit the daily  identification  of each Batch
Receivable  and  all  Collections  of and  adjustments  to each  existing  Batch
Receivable) and for providing the Receivable Information.

         (c) Performance and Compliance With Contracts and Credit and Collection
Policy.  It will,  at its expense,  timely and fully perform and comply with all
material provisions,  covenants and other promises required to be observed by it
under the contracts and other documents  related to the Batch Receivables and to
its  responsibilities  under the  Agreement,  and timely and fully comply in all
material  respects with the Credit and Collection Policy in regard to each Batch
Receivable and the related contract,  and it shall maintain,  at its expense, in
full  operation  each  of  the  Lockbox  Accounts  and  Lockboxes.   During  the
continuation of an Event of Termination or a Servicer  Termination  Event and at
any time it is not the Primary  Servicer or has turned over its Primary Servicer
Responsibilities  with respect to any Batch  Receivable in  accordance  with the
provisions of this  Agreement,  it shall not do anything to impede or interfere,
or suffer or permit  any other  Person to impede or  interfere  in any  material
respect,  with the collection by the Purchaser,  or the Master Servicer,  or any
other Person  designated by the Purchaser,  on behalf of the  Purchaser,  of the
Batch Receivables or such Batch Receivable..

         (d)  Sales,   Liens,  etc.  Except  for  the  sales  and  contributions
contemplated under this Agreement, it will not sell, assign (by operation of law
or otherwise) or otherwise dispose of, or create

                                      IV-1

<PAGE>

or suffer to exist any Liens upon or with respect to, its  Accounts,  or upon or
with respect to any account to which any Collections of any Batch Receivable are
sent,  or assign  any right to  receive  income in  respect  thereof  except (i)
Permitted  Liens and (ii) those Liens in favor of the  Purchaser,  Healthco-4 or
any assignee of Healthco-4 relating to the Agreement.

         (e)  Extension or Amendment of Batch  Receivables.  It shall not amend,
waive or otherwise permit or agree to any deviation in any material respect from
the terms or conditions of any Batch  Receivable  except in accordance  with the
Credit and  Collection  Policy or with respect to a Denied  Receivable for which
the Repurchase Price has been received by the Purchaser.

         (f) Change in Business  or Credit and  Collection  Policy.  It will not
make any change in the Credit  and  Collection  Policy or make any change in the
character of its business that, in either event, could reasonably be expected to
result in a Material  Adverse  Effect,  and it will not make any other  material
changes in the Credit and Collection Policy without the prior written consent of
the Purchaser;  provided,  however, that if an Event of Termination has occurred
and is  continuing,  it will not make any change in the  Credit  and  Collection
Policy.

         (g)  Audits  and  Visits.  It will,  at any time and from  time to time
during  regular  business  hours  as  requested  by the  Purchaser,  permit  the
Purchaser,  or its agents or  representatives  (including the Master  Servicer),
upon reasonable notice, (i) on a confidential  basis, to examine and make copies
of and  abstracts  from all books,  records and  documents  (including,  without
limitation,  computer  tapes and disks) in its  possession  or under its control
relating  to  Batch  Receivables  including,  without  limitation,  the  related
contracts,  and (ii) to visit its  offices  and  properties  for the  purpose of
examining  and auditing  such  materials  described in clause (i) above,  and to
discuss matters  relating to Batch  Receivables or its performance  hereunder or
under the contracts  with any of its officers or employees  having  knowledge of
such matters.  It shall permit the Master Servicer to have at least one agent or
representative  physically  present in its  administrative  office during normal
business hours to assist it in performing its  obligations  under the Agreement,
including its  obligations  with respect to the collection of Batch  Receivables
pursuant  to Article I of the  Agreement.  Notwithstanding  the  foregoing,  and
provided  that no  Event of  Termination,  Servicer  Termination  Event or event
which,  with the giving of notice or lapse of time, or both, would constitute an
Event of  Termination or Servicer  Termination  Event shall have occurred and be
continuing,   all  visits  and  examinations  shall  be  scheduled  at  mutually
convenient times.

         (h) Change in Payment Instructions. It will not terminate the Lockboxes
or the Lockbox  Accounts,  or make any change or replacement in the instructions
contained in any  invoice,  Notice or  otherwise,  or  regarding  payments  with
respect to Receivables to be made to the Lockboxes,  the Lockbox  Accounts,  the
Purchaser  or the Master  Servicer,  except upon the prior and  express  written
consent of the Program Manager or the Purchaser.

         (i)  Reporting  Requirements.  It will  provide  to the  Purchaser  (in
multiple copies, if requested by the Purchaser) the following:

          (i)  as soon as  available  and in any event  within 45 days after the
               end of each of the first  three  quarters  of each fiscal year of
               the Parent, (x) consolidated and consolidating  balance sheets of
               the Parent and its Subsidiaries as of the end of

                                      IV-2

<PAGE>

               such quarter and  consolidated  and  consolidating  statements of
               income,  cash flows and  retained  earnings of the Parent and its
               Subsidiaries  for the period  commencing  at the beginning of the
               current  fiscal year and ending  with the end of such  quarter or
               (y) a copy of the  Parent's  quarterly  reports  on Form 10-Q for
               such  quarters  as  filed  with  the   Securities   and  Exchange
               Commission,  in either  case,  certified  by the chief  financial
               officer of the  Parent and  accompanied  by a  certificate  of an
               authorized  officer of each  Provider  stating  that,  as of such
               date,  (i)  no  Event  of   Termination,   Group-Wide   Event  of
               Termination or event which, with the giving of notice or lapse of
               time,  or both,  would  constitute an Event of  Termination  or a
               Group-Wide  Event of Termination  has occurred and is continuing,
               (ii)  all   representations  and  warranties  set  forth  in  the
               Agreement are true and correct in all material  respects  (except
               any  representation or warranty that expressly  indicates that it
               is  being  made  as  of a  specific  date,  in  which  case  such
               representation or warranty shall be true and correct on and as of
               such  date)  and  (iii)  the  conditions  precedent  set forth in
               paragraph  2 of  Exhibit  II have  been  fulfilled  or  waived in
               writing  by  the  Purchaser,   and  detailing   such   Provider's
               compliance  for such fiscal period with all  financial  covenants
               contained  in the  Agreement,  and to the  extent  any  Event  of
               Termination,  Group-Wide  Event of  Termination or other event or
               non- compliance exists, a description of the steps being taken by
               such  Provider to address such Event of  Termination,  Group-Wide
               Event of Termination, other event or non-compliance;

          (ii) as soon as  available  and in any event  within 90 days after the
               end of each fiscal year of the Parent,  (x) a copy of the audited
               consolidated  financial  statements  (together  with  explanatory
               notes thereon) and the auditor's  report letter for such year for
               the Parent and its Subsidiaries,  containing financial statements
               for such year  audited by Arthur  Anderson  or other  independent
               public  accountants  of  recognized  standing  acceptable  to the
               Purchaser  or (y) a copy of the  Parent's  annual  report on Form
               10-K as filed with the  Securities  and Exchange  Commission,  in
               either  case,  accompanied  by a  certificate  of  an  authorized
               officer of each Provider  stating that, as of such date, no Event
               of  Termination  Group-Wide  Event of Termination or event which,
               with the  giving  of  notice  or lapse  of time,  or both,  would
               constitute  an Event of  Termination  or a Group-  Wide  Event of
               Termination   has   occurred   and  is   continuing,   (ii)   all
               representations  and  warranties  set forth in the  Agreement are
               true  and   correct  in  all   material   respects   (except  any
               representation  or warranty that  expressly  indicates that it is
               being   made  as  of  a  specific   date,   in  which  case  such
               representation or warranty shall be true and correct on and as of
               such  date)  and  (iii)  the  conditions  precedent  set forth in
               paragraph  2 of  Exhibit  II have  been  fulfilled  or  waived in
               writing  by  the  Purchaser,   and  detailing   such   Provider's
               compliance   for  such  fiscal  period  with  all  the  financial
               covenants contained in the Agreement, and to the extent any Event
               of Termination,  Group-Wide Event of Termination,  other event or
               non-compliance  exists, a description of the steps being taken by
               such Provider to address such Event of  Termination,  Group- Wide
               Event of Termination, other event or non-compliance;

                                      IV-3

<PAGE>

         (iii) on or before the 25th of each  month,  monthly  and  year-to-date
               statistical  and financial  reports,  in  substantially  the form
               attached hereto as Schedule VII;

          (iv) promptly and in any event  within five  Business  Days  following
               actual knowledge thereof by a Provider or the Primary Servicer of
               an Event of  Termination  or an event  which,  with the giving of
               notice or lapse of time,  or both,  would  constitute an Event of
               Termination,  a statement of the chief  financial  officer of the
               Primary   Servicer   setting  forth  details  of  such  Event  of
               Termination  or  event,  and the  action  that it has  taken  and
               proposes to take with respect thereto;

          (v)  promptly after the sending or filing  thereof,  if any, copies of
               all  reports and  registration  statements  that the Parent,  any
               Provider or any Subsidiary files with the Securities and Exchange
               Commission  or any  national  securities  exchange  and  official
               statements that any Provider or any Subsidiary files with respect
               to the issuance of tax-exempt  indebtedness and after an Event of
               Termination or Servicer  Termination Event, copies of all reports
               (if any) that any Provider or any Subsidiary  sends to any of its
               security holders;

          (vi) promptly  after the filing or  receiving  thereof,  copies of all
               reports and notices  that any  Provider or any of its  Affiliates
               files under ERISA with the Internal  Revenue  Service or the PBGC
               or the U.S.  Department  of Labor or that any  Provider or any of
               its  Affiliates  receives  from any of the  foregoing or from any
               Multiemployer Plan to which any Provider or any of its Affiliates
               is or was,  within  the  preceding  five  years,  a  contributing
               employer, in each case in respect of the assessment of withdrawal
               liability or an event or condition which could, in the aggregate,
               result in the imposition of liability on any Provider or any such
               Affiliate in excess of $100,000;

         (vii) at least ten Business Days prior to any change in any  Provider's
               name or any implementation of a new trade/assumed name, a Written
               Notice  setting forth the new name or trade name and the proposed
               effective date thereof and copies of all documents required to be
               filed in connection therewith;

        (viii) promptly (and in no event later than ten days following  actual
               knowledge  or  receipt  thereof),  Written  Notice in  reasonable
               detail,  of (w) any Lien  asserted or claim made  against a Batch
               Receivable,  (x) the occurrence of a Servicer  Termination Event,
               (y) the occurrence of any other event which could have a Material
               Adverse  Effect  on the  value  of a Batch  Receivable  or on the
               interest  of the  Purchaser  in a  Batch  Receivable  or (z)  the
               results of any  material  cost report,  investigation  or similar
               audit  being   conducted   by  any   federal,   state  or  county
               Governmental Entity or its agents or designees;

          (ix) promptly upon approval by the Board of Directors, and in no event
               later  than  March  31st  in  each  year,  a   consolidated   and
               consolidating operating plan

                                      IV-4

<PAGE>

               (together with a complete  statement of the  assumptions on which
               such plan is based) of the Primary  Servicer and its Subsidiaries
               approved by its Board of Directors,  which shall include  monthly
               budgets for the prospective year in reasonable  detail acceptable
               to the Purchaser  and will  integrate  operating  profit and cash
               flow  projections  and  personnel,   capital  expenditures,   and
               facilities plans;

          (x)  promptly upon receipt thereof, a copy of any management letter or
               written report  submitted to the Primary  Servicer by independent
               certified public  accountants  with respect to the  Subsidiaries,
               business,   condition   (financial  or  otherwise),   operations,
               prospects, or Properties of the Providers;

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

         (xii) promptly  after the furnishing  thereof,  copies of any statement
               or report  furnished by a Provider to any other party pursuant to
               the terms of any indenture,  loan, or credit or similar agreement
               in  excess  of  $1,000,000  and  not  otherwise  required  to  be
               furnished to the Purchaser pursuant to this Agreement;

        (xiii) except as otherwise  required to be furnished to the  Purchaser
               pursuant to this Agreement, as soon as available, (A) one copy of
               each financial statement,  report, notice or proxy statement sent
               by the Parent or any Provider to its stockholders generally,  (B)
               and  one  copy of  each  regular,  periodic  or  special  report,
               registration  statement,  or prospectus  filed by any Provider or
               any of its  Subsidiaries  with  any  securities  exchange  or the
               Securities and Exchange Commission or any successor agency or the
               Bankruptcy Court, and (C) all press releases and other statements
               made   available  by  any  Provider  to  the  public   concerning
               developments in the business of any Provider;

        (xiv)  within the sixty (60) day period  prior to the end of each fiscal
               year of  each  Provider,  a  report  satisfactory  in form to the
               Purchaser,  listing all material insurance coverage maintained as
               of the date of such  report  by such  Provider  and all  material
               insurance  planned  to be  maintained  by  such  Provider  in the
               subsequent fiscal year; and

          (xv) such  other   information   respecting  the  Receivables  or  the
               condition or operations,  financial or otherwise, of any Provider
               or any  Subsidiary or Affiliate as the Purchaser may from time to
               time reasonably request.

         (j) Notice of  Proceedings;  Overpayments.  The Primary  Servicer shall
promptly  notify  the  Master  Servicer  in  the  event  of  any  action,  suit,
proceeding,  dispute, set-off,  deduction,  defense or counterclaim involving in
excess of $100,000  that is or has been  threatened to be asserted by an Obligor
with  respect to any Batch  Receivable.  The Primary  Servicer  shall cause each
Provider

                                      IV-5

<PAGE>

to make any and all payments to the  Obligors  necessary to prevent the Obligors
from offsetting any earlier  overpayment to any Provider against any amounts the
Obligors owe on any Batch Receivables.

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

         (l) Taxes.  The Providers  shall pay any and all taxes  (excluding  the
Purchaser's income, gross receipts,  franchise, doing business or similar taxes)
relating to the transactions contemplated under the Agreement, including but not
limited to the sale, transfer and assignment of each Batch Receivable.

         (m) Purchaser's Ownership of Batch Receivables. It shall not prepare or
permit to be prepared  any  financial  statements  which  shall  account for the
transactions  contemplated  hereby in a manner which is, or in any other respect
account  for  the  transactions  contemplated  hereby  in  a  manner  which  is,
inconsistent with the Purchaser's ownership of the Batch Receivables.

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

         (o)  Implementation  of New  Invoices.  Each  Provider  shall  take all
reasonable steps to ensure that all invoices  rendered or dispatched on or after
the Initial  Transfer  Date contain only the  remittance  instructions  required
under Article II of this Agreement.

         (p) Assumed/Trade Name Certificates. On or before the Closing Date, the
Purchaser  shall receive  copies of all  certificates  filed by the Providers in
each applicable  jurisdiction  regarding the use of each of the trade or assumed
names set forth opposite each Provider's name on Schedule IV attached hereto.

         (q) Notice of Termination or Suspension of Contracts. It shall promptly
(and in no event later than one Business Day following actual knowledge thereof)
inform the Purchaser and the

                                      IV-6

<PAGE>

Master  Servicer of any  termination or suspension of any of its contracts which
could reasonably be expected to reduce revenue by 3% or more.

         (r)  Treatment  as a Sale.  It shall  treat  each  sale of  Receivables
hereunder as a sale for federal and state income tax,  reporting and  accounting
purposes  and shall  treat  each  contribution  of  Receivables  hereunder  as a
contribution  for  federal  and  state  income  tax,  reporting  and  accounting
purposes.

         (s) Maintain  Properties.  Each  Provider  shall  maintain,  keep,  and
preserve all of its Properties  necessary or useful in the proper conduct of its
business in good repair,  working order,  and condition  (ordinary wear and tear
excepted) and make all necessary repairs, renewals,  replacements,  betterments,
and improvements thereof.

         (t) Payment of Taxes,  etc. Each Provider  shall pay or discharge at or
before   maturity  or  before  becoming   delinquent  (i)  all  taxes,   levies,
assessments,  and governmental charges imposed on it or its income or profits or
any of its Property,  except any taxes,  levies,  assessments,  and governmental
charges  contested in good faith by appropriate  proceedings and (ii) all lawful
claims for labor, material, and supplies,  which, if unpaid, might become a Lien
upon any of its Property.

                                      IV-7

<PAGE>

                                    EXHIBIT V

                              EVENTS OF TERMINATION

         Each of the following shall be an "EVENT OF  TERMINATION"  with respect
to each individual  provider and, if any Event of Termination relates either (in
each case, a "GROUP-WIDE  EVENT OF  TERMINATION")  to the Primary Servicer or to
Providers  responsible  in the  aggregate  for the sale or  contribution  to the
Purchaser of more than 20% of the Batch  Receivables  (whether or not purchased)
in the prior 90 days (or the  number of days from the date of the  Agreement  to
the  date of such  Event of  Termination,  if less  than 90  days)  ("GROUP-WIDE
PROVIDERS"), such Event of Termination shall relate to each Provider:

         (a) The Primary  Servicer,  in its capacity as agent for the  Purchaser
pursuant to Section  1.05(b),  shall fail to perform or observe in any  material
respect  any term,  covenant  or  agreement  included  in the  Primary  Servicer
Responsibilities  (other than a Servicer  Termination  Event  resulting from the
events described in paragraph (g) of this Exhibit) and such failure shall remain
unremedied  for 15 days or the Primary  Servicer or any  Provider  shall fail to
make when due any payment or deposit to be made by it under the Agreement.

         (b) Any  Provider  or the Primary  Servicer  (i) fails to transfer in a
timely manner any  servicing  rights and  obligations  with respect to the Batch
Receivables  to any  successor  designated  pursuant  to Section  1.05(b) of the
Agreement,  (ii) fails to make any payment required under the Agreement  (unless
such payment  obligation has been fulfilled in full pursuant to the  Purchaser's
set-  off  rights  under  Section  4.03  of the  Agreement)  or  (iii)  sends  a
"Revocation Order" (as defined in the Depositary  Agreement) or makes any change
or  replacement  in the  "Standing  Revocable  Instruction"  (as  defined in the
Depositary Agreement).

         (c) Any  representation  or warranty (other than those  representations
and warranties (i) with respect to the purchase of Receivables  that are covered
by paragraph (f) of this Exhibit and (ii) with respect to Batch Receivables, the
Repurchase Price with respect thereto is paid to the Purchaser in the manner set
forth in Article IV of this Agreement within five Business Days following demand
therefor)  made or deemed  made by a Provider  under or in  connection  with the
Agreement or any information or report  delivered by a Provider  pursuant to the
Agreement  shall prove to have been incorrect or untrue in any material  respect
when made or deemed made or delivered.

         (d) Any Provider  fails to perform or observe in any  material  respect
any other term,  covenant or agreement contained in the Agreement on its part to
be performed or observed and any such failure  shall remain  unremedied  for ten
Business  Days after the earlier of (i) the  discovery  thereof by such Provider
and (ii) written  notice  thereof  shall have been given to such Provider or the
Primary Servicer by the Purchaser, unless such Provider is removed as a Provider
in accordance with Section 5.18(b) of the Agreement after the earlier of clauses
(i) and (ii).

         (e) Any  Provider  shall  fail to pay any  principal  of or  premium or
interest  on any of its Debt  which  individually  or in the  aggregate  exceeds
$100,000 when the same becomes due and payable  (whether by scheduled  maturity,
required prepayment,  acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period,  if any,  specified in the agreement
or

                                      V-1
<PAGE>

instrument  relating to such Debt;  or any other event shall occur or  condition
shall  exist under any  agreement  or  instrument  relating to any such Debt and
shall  continue  after the applicable  grace period,  if any,  specified in such
agreement  or  instrument,  if the  effect  of such  event  or  condition  is to
accelerate,  or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be  declared  to be due and  payable,  or required to be prepaid
(other than by a regularly scheduled required prepayment),  redeemed,  purchased
or defeased,  or an offer to repay, redeem,  purchase or defease such Debt shall
be required to be made, in each case prior to the stated maturity thereof.

         (f) Any purchase of a Purchased  Batch pursuant to the Agreement  shall
for any reason (other than pursuant to the terms hereof) fail or cease to create
or fail or cease to be a valid and  perfected  ownership  interest in each Batch
Receivable in such Purchased Batch and the Collections with respect thereto free
and clear of all Liens (other than Liens  referred to in clauses (i) and (ii) of
paragraph  (d) of  Exhibit  IV)  unless,  as to any such Batch  Receivable,  the
Repurchase Price with respect thereto is paid to the Purchaser in the manner set
forth in Article IV of the Agreement  within five Business Days following demand
therefor.

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

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

         (i) A Change of Control shall occur.

         (j)  Judgments or orders for payment of money (other than  judgments or
orders in respect of which  adequate  insurance  is  maintained  for the payment
thereof)  against the  Providers in excess of $100,000 in the  aggregate  remain
unpaid, unstayed on appeal,  undischarged,  unbonded or undismissed for a period
of 45 days or more.

         (k) Any governmental  authority  (including,  without  limitation,  the
Internal  Revenue  Service  or the PBGC)  files a notice of a Lien  against  the
assets  of a  Provider  other  than a Lien (i) that is  limited  by its terms to
assets  other than  Accounts and all  proceeds  thereof,  and (ii) that does not
result in a Material Adverse Effect.

                                      V-2
<PAGE>

         (l) Any  Provider  does not  keep  insured  by  financially  sound  and
reputable  insurers all Property of a character  usually insured by corporations
engaged in the same or  similar  business  similarly  situated  against  loss or
damage of the kinds  and in the  amounts  customarily  insured  against  by such
corporations  and carry  such  other  insurance  as is  usually  carried by such
corporations.  Each policy referred to in this clause (n) shall provide that the
interests of the Purchaser  shall not be invalidated by any act or negligence of
the Provider.  Any Provider does not advise the Purchaser promptly of any policy
cancellation,  reduction,  or  amendment.  Any  insurance  policy for  property,
casualty,  liability and business  interruption coverage for a Provider does not
name  DH-3 as  assignee  of the  Purchaser  as loss  payee  (as the  Purchaser's
interests may appear) or an additional insured, as appropriate.

         (m) Any Provider  does not maintain  proper books of record and account
in which full,  true and correct entries in conformity with GAAP are made of all
dealings and  transactions  in relation to its business and  activities and such
failure remains unremedied for 10 days.

         (n) Any Provider does not comply with all minimum funding  requirements
and all other material  requirements of ERISA, if applicable,  so as not to give
rise to any liability thereunder.

         (o) Any Provider engages in any line or lines of business activity that
is materially  different  from the businesses in which it is engaged on the date
hereof.

         (p) Any contracts  with Obligors  located in the State of Tennessee are
terminated  for any reason or are not  extended at the end of their term and the
aggregate effect of such terminations and  non-extensions is a loss of more than
20% of the combined revenue of the Providers.

         (q) An "Event of  Default"  (as  defined in the Loan  Agreement)  shall
occur and be continuing under the Loan Agreement.

         (r) Any  provision of this  Agreement  shall for any reason cease to be
valid and binding on the Primary  Servicer or a Provider or the Primary Servicer
or a Provider shall so state in writing.

         (s) Consolidated  Net Worth. The Consolidated Net Worth,  calculated at
the end of each fiscal quarter of the Parent,  is less than the amount indicated
opposite each such fiscal quarter ended as follows:

                     Fiscal Quarter Ending                  Amount

                     September 30, 2000                     $41,750,000
                     December 31, 2000                      $40,700,000
                     March 31, 2001                         $42,640,000
                     June 30, 2001                          $44,080,000
                     September 30, 2001                     $45,619,000
                     December 31, 2001                      $46,311,000
                     each fiscal quarter thereafter

                                      V-3

<PAGE>

         (t) Consolidated  Interest  Coverage Ratio.  The Consolidated  Interest
Coverage  Ratio,  calculated as of the end of each fiscal  quarter of the Parent
for the four fiscal  quarters of the Parent then most  recently  ended,  is less
than the ratio set forth below as of the end of the corresponding fiscal quarter
indicated below:

                           Fiscal Quarter Ending              Ratio
                           ---------------------              -----

                           September 30, 2000                 2.0:1.00
                           December 31, 2000                  2.0:1.00
                           March 31, 2001 and                 4.0:1.00
                           each fiscal quarter thereafter

         (u)  Capital   Expenditures.   The  Consolidated  Capital  Expenditures
calculated as of (i) the end of the fiscal quarter of the Parent ended September
30, 2000 is more than $900,000 during such fiscal  quarter,  (ii) the end of the
fiscal  quarter of the Parent ending  December 31, 2000 is more than  $2,000,000
during such fiscal  quarter,  (iii) the end of the fiscal  quarter of the Parent
ending March 31, 2001 and each fiscal  quarter  ending  thereafter  is more than
$2,000,000 during such fiscal quarter and (iv) the end of the fiscal year of the
Parent ending  December 31, 2001 and each fiscal year ending  thereafter is more
than $3,000,000 during such fiscal year.

         (v) Consolidated EBITDA. The Consolidated EBITDA,  calculated as of the
end of each  fiscal  quarter of the Parent for the four  fiscal  quarters of the
Parent then most recently  ended,  is less than the amount set forth below as of
the end of the corresponding fiscal quarter indicated below:

                      Fiscal Quarter Ending                       Amount
                      ---------------------                       ------

                      September 30, 2000                          $450,000
                      December 31, 2000                           $275,000
                      March 31, 2001                              $2,250,000
                      June 30, 2001                               $2,250,000
                      September 30, 2001                          $2,250,000
                      December 31, 2001                           $1,750,000
                      Each fiscal quarter thereafter $2,500,000

         (w) Accounts Receivable  Turnover.  The Accounts  Receivable  Turnover,
calculated  as of the end of each  fiscal  quarter  of the  Parent  for the four
fiscal quarters of the Providers then most recently ended, is more than 75 days.

         (x) The  Providers'  Debt to  Equity  Ratio.  The  ratio of Debt of the
Providers to their Equity exceeds the ratio set forth below as of the end of the
corresponding fiscal quarter indicated below:

                                      V-4

<PAGE>

                           Fiscal Quarter Ending         Ratio
                           ---------------------         -----

                           September 30, 2000            1.75:1.00
                           December 31, 2000             1.75:1.00
                           March 31,  2001               1.80:1.00
                           June 30,  2001                1.80:1.00
                           September 30, 200             1.80:1.00
                           December and                  2.10:1.00
                           each fiscal quarter thereafter

         (y) The Provider's Debt to Consolidated  Tangible Net Worth Ratio.  The
ratio of Debt of the Providers to their Consolidated  Tangible Net Worth exceeds
the ratio  set forth  below as of the end of the  corresponding  fiscal  quarter
indicated below:

                           Fiscal Quarter Ending      Ratio
                           ---------------------      -----

                           September 30, 2000        22.5:1.00
                           December 31, 2000         26.5:1.00
                           March 31, 2001            15.5:1.00
                           June 30, 2001 and         10.5:1.00
                           each fiscal quarter thereafter

         (z) Current Ratio.  The ratio of Current Assets to Current  Liabilities
is less than the ratio set forth below as of the end of the corresponding fiscal
quarter indicated below:

                           Fiscal Quarter Ending      Ratio
                           ---------------------      -----

                           September 30, 2000        0.9:1.00
                           December 31, 2000         0.9:1.00
                           March 31, 2001            1.00:1.00
                           June 30, 2001 and         1.00:1.00
                           each fiscal quarter thereafter

         (aa) Consolidated  Working Capital.  The Consolidated  Working Capital,
calculated as of the end of each fiscal quarter of the Parent,  is less than the
amount  set  forth  below  as of the  end of the  corresponding  fiscal  quarter
indicated below:

                           Fiscal Quarter Ending     Amount
                           ---------------------     ------

                           September 30, 2000        ($4,250,000)
                           December 31, 2000         ($5,000,000)
                           March 31, 2001             $1,750,000
                           June 30, 2001 and          $4,000,000
                           each fiscal quarter thereafter

                                      V-5

<PAGE>

         (bb)  Consolidated  Tangible Net Worth. The  Consolidated  Tangible Net
Worth,calculated  at the end of each fiscal quarter of the Parent,  is less than
the amount indicated opposite each such fiscal quarter ended as follows:

                           Fiscal Quarter Ending      Amount
                           ---------------------      ------

                           September 30, 2000        $3,300,000
                           December 31, 2000         $2,100,000
                           March 31, 2001            $4,750,000
                           June 30, 2001             $6,600,000
                           September 30, 2001        $8,650,000
                           December 31, 2001         $9,800,000
                           each fiscal quarter thereafter

                                      V-6

<PAGE>

                                   EXHIBIT VI

                             RECEIVABLE INFORMATION

         The following  information  shall, as appropriate,  be provided by each
Provider to the Master Servicer with respect to each Batch Receivable,  together
with such other information and in such form as may reasonably be requested from
time to time by the Master  Servicer and as, in accordance  with applicable law,
may  be  disclosed  or  released  to  the  Master   Servicer  (the   "RECEIVABLE
INFORMATION"):

          (i) Cash Receipts Report - Cash receipt transaction data containing:

                    o    Transaction date
                    o    Transaction number
                    o    Customer number
                    o    Cash receipt amount

          (ii) Invoices Report - Invoice transaction data containing:

                    o    Transaction date
                    o    Transaction number
                    o    Customer number
                    o    Invoice amount

          (iii) Adjustments Report - Adjustment transaction data containing:

                    o    Transaction date
                    o    Transaction number
                    o    Customer number
                    o    Amount of adjustment

                                      VI-1
<PAGE>

                                  EXHIBIT VII-A

                     FORM OF NOTICE TO GOVERNMENTAL ENTITIES

                     [Letterhead of the applicable Provider]

                                                            [Date]
[Name and Address
of Governmental Entity]

              Re:      Change of Account and Address [for Medicare Supplier No.]
                       ---------------------------------------------------------

To Whom it May Concern:

         Please  be  advised  that we have  opened a new bank  account  at Fleet
National  Bank  and a  post-office  box  with  respect  to  such  bank  account.
Accordingly,  effective  immediately and until further notice, we hereby request
that:

         (1) All wire transfers be made directly into our account at:

                           Fleet National Bank
                           Boston, MA
                           Account # ___________
                           ABA # 011000390

         (2) All  remittance  advices  and  other  forms of  payment,  including
checks, be made to our post office box located at:

                           --------------------
                           P.O. Box ___________
                           Boston, MA 02241-
                           Reference: Account # ________

         As  provided  in  the  Medicare   Carriers  Manual  ss.  3060.11,   the
undersigned  hereby  certifies  that this payment  arrangement  will continue in
effect only so long as the following requirements are met:

                    a)   Fleet  National Bank does not provide  financing to the
                         undersigned  nor acts on  behalf  of  another  party in
                         connection with the provision of such financing; and

                    b)   The  undersigned  has sole control of the account,  and
                         Fleet National Bank is subject only to the instructions
                         of  the  undersigned  (or  its  agents)  regarding  the
                         account.

         Thank you for your cooperation in this matter.

                                    VII-A-1

<PAGE>

                                         [MIM HEALTH PLANS, INC. d/b/a Scrip
                                         PHARMACY SOLUTIONS] [AMERICAN
                                         DISEASE MANAGEMENT ASSOCIATES, LLC]
                                         [CONTINENTAL PHARMACY, INC.]

                                         By:____________________
                                                  Edward J. Sitar, CFO

                                    VII-A-2

<PAGE>

                                  EXHIBIT VII-B

                   FORM OF NOTICE TO NON-GOVERNMENTAL ENTITIES

                     [Letterhead of the Applicable Provider]

                                              [Date]
[Name and Address
of Obligor]

                  Re:    Change of Account and Address
                         -----------------------------

To Whom it May Concern:

         We are pleased to announce  that we have entered  into a new  long-term
financing  arrangement  with the Healthcare  Finance Group,  Inc. This financing
arrangement  will allow us to continue  to provide  you with new and  innovative
services  and  products.  As part of this  arrangement,  we will be selling  and
contributing all of our existing and future receivables  payable by you to us to
MIM Funding LLC, an affiliated  company.  Also as part of this arrangement,  MIM
Funding  LLC  is  assigning  the  aforementioned  existing  and  future  arising
receivables as collateral to its lender -- HFG Healthco-4 LLC  ("Healthco-  4").
Accordingly, you are hereby directed to make:

         (1) All wire transfers directly to the following account:

                           Fleet National Bank
                           Boston, MA
                           Account # _________
                           ABA # 011000390

         (2) All  remittance  advices  and  other  forms of  payment,  including
checks, to the following address:

                           --------------
                           P.O. Box ________
                           Boston, MA 02241-
                           Reference: Account # ________

         Please note that this is the same remittance name,  address and account
to which you currently send payment.

         The  foregoing  directions  shall  apply  to all  existing  receivables
payable to us and (until further written  notice) to all receivables  arising in
the future and may not be revoked  except by a writing  executed  by MIM Funding
LLC and Healthco-4.

                                    VII-B-1

<PAGE>

         Please  acknowledge your receipt of this notice by signing the enclosed
copy of this letter and returning it in the enclosed envelope.

         Thank you for your cooperation in this matter.

                  [MIM HEALTH PLANS, INC. d/b/a Scrip PHARMACY
                  SOLUTIONS][AMERICAN DISEASEMANAGEMENT
                  ASSOCIATES, LLC][CONTINENTAL PHARMACY,
                  INC.]

                   By:____________________
                      Edward J. Sitar, CFO

                    MIM FUNDING LLC

                    By: MIM Health Plans, Inc., its managing member

                    By:____________________
                       Edward J. Sitar, CFO

                                    VII-B-2

<PAGE>

                                     EXHIBIT VIII

                        PRIMARY SERVICER RESPONSIBILITIES

         Each Provider shall be responsible for the following administration and
servicing obligations (the "PRIMARY SERVICER  RESPONSIBILITIES")  which shall be
performed by the Primary  Servicer on behalf of the Providers until such time as
a successor servicer shall be designated and shall accept  appointment  pursuant
to Section 1.05(b) of the Agreement:

         (a) Servicing  Standards and Activities.  Each provider and the Primary
Servicer  agree  to  administer  and  service  the  Batch  Receivables  sold  or
contributed  by the  Providers  in  each  Transferred  Batch  (i) to the  extent
consistent  with the standards set forth in clauses  (b)(i)  through (iv) below,
with the same care that it  exercises in  administering  and  servicing  similar
receivables  for its own  account,  (ii) within the  parameters  of services set
forth in paragraph (b) of this Exhibit VIII, as such  parameters may be modified
by mutual written agreement of the Purchaser and the Primary Servicer,  (iii) in
compliance at all times with applicable law and with the agreements,  covenants,
objectives,  policies and  procedures  set forth in the  Agreement,  and (iv) in
accordance with industry standards for servicing  healthcare  receivables unless
such  standards  conflict with the procedures set forth in paragraph (b) of this
Exhibit VIII in which case the  provisions of paragraph (b) shall  control.  The
Primary  Servicer  shall  establish  and  maintain  electronic  data  processing
services for monitoring,  administering  and collecting the Batch Receivables in
accordance with the foregoing standards and shall, within three Business Days of
the deposit of any checks, other forms of cash deposits, or other written matter
into a  Lockbox,  post  such  information  to  its  electronic  data  processing
services.

         (b)   Parameters   of   Primary   Servicing.   The   Primary   Servicer
Responsibilities shall be performed within the following parameters:

          (i)  Subject to the review and  authority of the  Purchaser and except
               as otherwise  provided  herein,  the Primary  Servicer shall have
               full power and  authority  to take all  actions  that it may deem
               necessary or desirable,  consistent in all material respects with
               its  existing   policies  and  procedures  with  respect  to  the
               administration   and   servicing  of  accounts   receivable,   in
               connection  with  the   administration  and  servicing  of  Batch
               Receivables.  Without  limiting the  generality of the foregoing,
               the Primary  Servicer  shall, in the performance of its servicing
               obligations   hereunder,   act  in  accordance   with  all  legal
               requirements  and  subject  to the  terms and  conditions  of the
               Agreement. The Primary Servicer agrees that the Primary Servicing
               Fee has been calculated to cover all costs and expenses  incurred
               in the performance of its servicing  obligations hereunder and no
               other reimbursement of costs and expenses shall be payable to the
               Primary Servicer.

          (ii) The Primary  Servicer  shall not be entitled to sue to enforce or
               collect any Batch Receivable without the prior written consent of
               the Purchaser unless

                                     VIII-1

<PAGE>

the Primary  Servicer shall have repurchased such Batch Receivable in accordance
with the Agreement.

               The Primary Servicer shall not change in any material respect its
               existing   policies   and   procedures   with   respect   to  the
               administration and servicing of accounts  receivable  (including,
               without limitation,  the amount and timing of write-offs) without
               the prior written consent of the Purchaser.

        (iii)  The Primary  Servicer  will be  responsible  for  monitoring  and
               collecting the Batch Receivables,  including, without limitation,
               contacting   Obligors   that  have  not  made  payment  on  their
               respective Batch Receivables within the customary time period for
               such Obligor,  and  resubmitting any claim rejected by an Obligor
               due to incomplete information.

          (iv) If the Primary Servicer determines that a payment with respect to
               a Batch  Receivable  has been received  directly by a pharmacy or
               any other Person,  the Primary Servicer shall promptly advise the
               Purchaser,  and the  Purchaser  shall be entitled to presume that
               the reason such payment was made to such pharmacy or other Person
               was  because of a breach of  representation  or  warranty  in the
               Agreement with respect to such Batch  Receivable (such as, by way
               of example,  the forms related to such Batch Receivable not being
               properly  completed  so as to provide  for direct  payment by the
               Obligor to the Primary  Servicer),  unless the  Primary  Servicer
               shall  demonstrate  that such is not the case. In the case of any
               such  Batch  Receivable  which is  determined  not to be a Denied
               Receivable,  the Primary Servicer shall promptly demand that such
               pharmacy or other  Person  remit and return  such funds.  If such
               funds are not  promptly  received  by the  Provider,  the Primary
               Servicer shall take all reasonable steps to obtain such funds.

          (vi) Notwithstanding  anything to the contrary  contained  herein,  no
               Provider  may amend,  waive or  otherwise  permit or agree to any
               deviation from the terms or conditions of any Batch Receivable in
               any material respect without the prior consent of the Purchaser.

         (c) The Primary Servicer shall be responsible,  with the Purchaser, for
the determination  and application of the Eligibility  Criteria and the delivery
and certification of the Borrowing Base Certificate.

         (d) Aged Term Servicing.  The parties hereby agree that at such time as
any Batch  Receivable  is unpaid for more than 120 days after the Invoice  Date,
the Primary Servicer shall, upon the request of the Purchaser,  turn over all of
its Primary Servicer  Responsibilities under this Agreement with respect to such
Batch  Receivable to a successor  servicer  selected by the Purchaser,  and such
servicer shall thereafter service such Batch Receivable.

                                     VIII-2

<PAGE>

         (e) Termination of Primary Servicer Responsibilities; Cooperation. Upon
the occurrence of a Servicer  Termination  Event,  the Purchaser may, by written
notice,  terminate the performance of the Primary Servicer  Responsibilities  by
the Primary  Servicer,  in which event the Primary  Servicer  shall  immediately
transfer  to a successor  servicer  designated  by the  Purchaser  all  records,
computer access and other information as shall be necessary or desirable, in the
reasonable   judgment   of   such   successor   servicer,    to   perform   such
responsibilities. The Primary Servicer shall otherwise cooperate fully with such
successor servicer.

         (f) Primary  Servicing Fee. Upon the transfer of servicing with respect
to any Purchased  Receivable  pursuant to this Agreement,  the Primary  Servicer
shall no longer be paid the Primary  Servicing  Fee  relating to such  Purchased
Receivables, and such Primary Servicing Fee will be paid to the successor Person
performing the Primary Servicer Responsibilities with respect thereto.

                                     VIII-3

<PAGE>

                                   EXHIBIT XI

                           SERVICER TERMINATION EVENTS

         Each of the following shall be a "SERVICER TERMINATION EVENT":

         (a) An event has occurred and is continuing  that  constitutes an Event
of  Termination  or that would  constitute an Event of  Termination  but for the
requirement that notice be given or time elapse or both.

         (b) The Primary  Servicer is not performing in any material respect the
Primary  Servicer  Responsibilities  set forth in Exhibit  VIII  hereof,  or the
Purchaser,  in  its  sole  judgement,   which  judgment  shall  be  commercially
reasonable,  is not satisfied with the performance by the Primary  Servicer,  or
the  Providers,  of the Primary  Servicer  Responsibilities  with respect to the
Batch Receivables.

         (c) The  Primary  Servicer  is  unable  to  maintain  the  Transmission
interface described in Exhibit X to the satisfaction of the Master Servicer,  or
the electronic  information  servicing  capabilities of the Primary Servicer are
not  functioning for a period of more than three  consecutive  Business Days for
any reason other than force majeure.

         (d) The Primary Servicer has sent multiple  Transmissions to the Master
Servicer in a manner that is not in compliance with the specifications set forth
in Exhibit X hereof.

                                      IX-1

<PAGE>

                                    EXHIBIT X

           INTERFACE BETWEEN MASTER SERVICER AND THE PRIMARY SERVICER

1.   The  Master  Servicer  will  convey   appropriate  data   requirements  and
     instructions  to the  Primary  Servicer to  establish a computer  interface
     between  the  Primary   Servicer's   systems  and  the  Master   Servicer's
     receivables  monitoring  system.  The  interface  will  permit  the  Master
     Servicer  to  receive   electronically  the  Primary  Servicer's   accounts
     receivable  data,  including the Receivable  Information,  billing data and
     collection and other transaction data relating to the Receivables.

2.   The Primary  Servicer  shall give the Master  Servicer and the Purchaser at
     least ten Business  Days' notice of any coding  changes or electronic  data
     processing  system  modifications  made by the Primary Servicer which could
     affect the Master Servicer's  processing or interpretation of data received
     through the interface.

3.   The Master Servicer shall have no  responsibility  to return to the Primary
     Servicer any information which the Master Servicer receives pursuant to the
     computer interface.

4.   The Primary Servicer will prepare weekly accounts  receivable data files of
     all  transaction  types for all of the  Primary  Servicer's  sites that are
     included in the program.  The weekly  cutoff will occur at a  predetermined
     time each week,  and the weekly cutoff date for all of the sites must occur
     at exactly the same time.  The cutoff date that will be selected will be at
     the end of business for a specific day of the week,  or in other words,  at
     the end of the Primary Servicer's transaction posting process for that day.
     The Primary Servicer will temporarily  maintain a copy of the accounts data
     files  in  the  event  that  the  data  is  degraded  or  corrupted  during
     transmission, and needs to be re-transmitted.

5.   The Master Servicer will be responsible for the management of the hardware,
     communications and software used in the program.

6.   The Master  Servicer's data center will receive the Receivable  files,  and
     immediately  confirm that the files have been passed without degradation or
     corruption  of data by balancing the detailed  items to the control  totals
     that accompany the files.  Any problems in this process will be immediately
     reported  to the  Primary  Servicer  so that  the  Receivable  file  can be
     re-transmitted, if necessary.

7.   Once the  receipt of the  Receivable  data has been  confirmed,  the Master
     Servicer  will  perform  certain  tests  and  edits  to  ensure  that  each
     Receivable  meets the  specified  eligibility  criteria for purchase by the
     Purchaser.  Compliance with  concentration  limits will be verified and the
     Master   Servicer  will  notify  the  Program  Manager  that  the  Eligible
     Receivables  have been  determined.  Upon the  successful  completion  of a
     purchase,  the Master  Servicer  will  generate a  one-line  trial  balance
     (listing all purchased accounts) confirming the Receivables that have been

                                      X-1

<PAGE>

     purchased.  A copy of the trial balance will be forwarded to each Provider,
     to the Primary  Servicer,  to the Purchaser,  and to the Program Manager to
     confirm the purchase.

8.   The Primary  Servicer's  sites will continue to post daily  transactions to
     their respective  Receivable files. The Primary Servicer's Receivable files
     for each of the eligible sites will include all transactions posted through
     that day.  The  Primary  Servicer  will create a  transaction  report and a
     Receivable file for each of the eligible sites. The transaction report will
     contain all transactions  posted to the respective site Receivable file for
     the specified  period (and will indicate the respective site and the number
     of  items  and  total  dollars  on  each  transaction  report  for  control
     purposes).  The  Receivable  file will  contain  balances  that reflect the
     transactions  posted on the Primary  Servicer's  systems through the end of
     business of the specified period.

9.   The Primary Servicer will transmit the billing,  transaction,  and the most
     current  Receivable  data  files  to  the  Master  Servicer's  data  center
     according  to the  established  schedule.  The  Providers  and the  Primary
     Servicer should,  again,  maintain the backup of each of these files in the
     event that a re-transmission is necessary.

10.  The Master  Servicer's  data center will  confirm  that the files have been
     received  intact,  and will  immediately  communicate  any  problems to the
     Primary  Servicer  in order  to  initiate  a  re-transmission.  The  Master
     Servicer will then post the  transaction  files to the accounts  receivable
     for  the  previously   purchased  accounts  that  the  Master  Servicer  is
     maintaining, and consequently update the affected balances. Upon completion
     of the posting  process,  the Master Servicer will generate summary reports
     of the  posting  process  that the  Program  Manager  will use to  complete
     various  funding  activities.  The Master  Servicer  summary  reports  will
     reference the Primary  Servicer's  transaction  codes and activity to codes
     that are common to the funding program.

11.  The Master Servicer will then compare the updated accounts  balances on the
     Master Servicer's system to the corresponding account balances reflected on
     the Receivable  file. The Master Servicer expects that the balances for the
     funded  Receivables  will  be  congruent,  and  any  discrepancies  will be
     immediately  examined and resolved  through the  cooperative  effort of the
     Master Servicer and the Primary Servicer. The Master Servicer shall produce
     discrepancy reports (e.g.,  "Funding Only" or "Out of Balance" reports) and
     the Primary Servicer shall respond promptly to such reports.

12.  Once the  reconciliation  process has been completed and any  discrepancies
     between the Master  Servicer and the Primary  Servicer's  Receivable  files
     resolved  through the discrepancy  report process  described in paragraph 9
     above, the Master Servicer will then process the Receivable file and advise
     the Purchaser that it may purchase any new Receivable that is eligible. The
     Master  Servicer  will  then  proceed  through  exactly  the  same  process
     described in paragraph 6 above.

                                      X-2

<PAGE>

                                  EXHIBIT XI-A

                                 FORM OF OPINION

                                 [SEE ATTACHED]

                                      XI-A-1

<PAGE>

                                  EXHIBIT XI-B

              FORM OF OPINION OF PROVIDERS' AND PURCHASER'S COUNSEL
                    WITH RESPECT TO CERTAIN CORPORATE MATTERS

                                 [SEE ATTACHED]

                                     XI-B-1

<PAGE>

                                  EXHIBIT XI-C

                     OPINION OF GENERAL COUNSEL FOR BORROWER

                                 [SEE ATTACHED]

                                     XI-C-1
<PAGE>

                                   EXHIBIT XII

                          FORM OF DEPOSITARY AGREEMENT

                                 [SEE ATTACHED]

                                     XII-1

<PAGE>

                                  EXHIBIT XIII

                      FORM OF DEFERRED PURCHASE PRICE NOTE

                                 [SEE ATTACHED]

                                     XIII-1

<PAGE>

                                   EXHIBIT XIV

                         FORM OF SUBSCRIPTION AGREEMENT

                                 [SEE ATTACHED]

                                     XIV-1

<PAGE>

                                   EXHIBIT XV

                              ELIGIBILITY CRITERIA

         The following shall constitute the eligibility criteria for determining
Receivables   eligible  for  purchase  under  the  Agreement  (the  "ELIGIBILITY
CRITERIA"):

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

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

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

         (d) Each such Receivable is not due from any Governmental  Entity other
than Medicare,  Medicaid, State of Rhode Island, State of Tennessee and State of
Arizona; provided that no Receivable due from the State of Rhode Island shall be
considered to

                                      X-V1
<PAGE>

satisfy  the  Eligibility  Criteria  until  Healthco-4  shall  have  received  a
favorable  opinion  of  Rhode  Island  counsel  to the  Providers,  in form  and
substance satisfactory to Healthco-4.

         (e) The  applicable  Provider  does not have any guaranty of, letter of
credit  providing   credit  support  for,  or  collateral   security  for,  such
Receivable,  other  than any such  guaranty,  letter  of  credit  or  collateral
security as has been assigned to the Purchaser, and any such guaranty, letter of
credit or  collateral  security is not subject to any Lien in favor of any other
Person.

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

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

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

         (i) The insurance  policy,  contract or other instrument  obligating an
Obligor to make payment with respect to such Receivable (i) does not contain any
provision  prohibiting  the  grant  of  a  security  interest  in  such  payment
obligation from the applicable Provider to the Purchaser,  or from the Purchaser
to the  Healthco-4,  (ii) has been  duly  authorized  and,  together  with  such
Receivable,  constitutes the legal,  valid and binding obligation of the Obligor
in accordance  with its terms,  (iii)  together with such  Receivable,  does not
contravene in any material  respect any  requirement of law applicable  thereto,
and (iv) was in full force and effect and  applicable to the Obligor at the time
the goods or services  constituting  the basis for such  Receivable were sold or
performed.

                                      XV-2

<PAGE>

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

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

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

                                      XV-3

<PAGE>

                                   SCHEDULE I

                                LIST OF PROVIDERS

         NAME                                                JURISDICTION OF
         ----                                                ---------------
                                                              INCORPORATION
                                                              -------------

         American Disease Management Associates, LLC             Delaware

         Continental Pharmacy, Inc.                              Ohio

         MIM Health Plans, Inc.                                  DelawareExhibit 10.1

                       FIRST AMENDMENT TO CREDIT AGREEMENT

           FIRST AMENDMENT TO CREDIT AGREEMENT (this  "Amendment"),  dated as of
June 30, 2000, to that certain Credit  Agreement  dated as of November 17, 1999,
among Equivest  Finance,  Inc. (the  "Borrower"),  Peppertree  Acquisition Corp.
("Newco"),  Peppertree  Acquisition  Corp.  II ("Newco II") and Bank of America,
N.A. (the "Lender")

                                   ----------

                                   WITNESSETH:

           WHEREAS,  the Lender,  the Borrower,  Newco and Newco II entered into
the Credit Agreement; and

           WHEREAS the Borrower has  requested  that certain  amendments  to the
Credit  Agreement be made and the Lender is on the terms and  conditions  stated
below willing to grant such requests to' the Borrower;

           NOW,  THEREFORE,  in  consideration  of the  premises  and the mutual
covenants herein, the parties hereby agree as follows:

           1 -  Definitions.  Except as otherwise set forth herein,  capitalized
terms not defined  herein shall have the  respective  meanings  assigned to such
terms in the Credit Agreement.

           2. Amendments to the Credit Agreement.

           Effective  as of the date hereof and subject to the  satisfaction  of
the conditions  precedent set forth in Section 5 hereof, the Credit Agreement is
hereby amended as follows:

           (a) Section 1.1 is amended by amending the proviso to the  definition
of "Change of Control" to read in its entirety as follows: "; provided, however,
that it is understood  and agreed that any sale of stock of the Borrower held by
the Estate in an aggregate  amount equal to or greater than 10% of the shares of
the Borrower  held by the Estate on the  Agreement  Date shall be deemed to be a
Change of Control";

           (b)  Section  1.1 is  amended  by  deleting  "Extension  Fee" and its
definition in its entirety;

           (c)  Section  1.1 is amended by deleting  the  definitions  of "First
Extension  Period" and "Second  Extension Period" and adding a new definition in
alphabetical order as follows : `"Extension Period' has the meaning specified in
Section 2.8(a) hereof';

           (d)  Section  1.1 is amended by  deleting  the  definition  of "LIBOR
Basis" in its  entirety and adding in its place the  following:  "means a simple
per annum  interest  rate equal to the lesser of (a) the Highest Lawful Rate and
(b)(i) during the Initial Term, the sum of the LIBOR Base Rate plus 3.00%;  (ii)
for the period from and including  August 18, 2000 through  393814.8.02  8114100
1:54 PM

<PAGE>

and  including  November 17, 2000,  the sum of the LIBOR Base Rate plus 350%; or
(iii) during the Extension Period, the sum of the LIBOR Base Rate plus 3.75%";

           (e)  Section  1.1 is  amended  by  deleting  from the  definition  of
"Maturity  Date" the  following:  "August 17,  2000" and adding in its place the
following: "November 17, 2000";

           (f) Section 1.1 is amended by deleting  clause (a) of the  definition
of  "Reference  Rate" in its  entirety  and  adding in its place the  following:
"(a)(i)  during the  Initial  Tern,  0.50%,  (ii)  during  the  period  from and
including August 18,2000 through and including November 17, 2000, 1.00% or (iii)
during the Extension Period, 1.25%. plus, in each case";

           (g) Section 11 is amended by  deleting  clause (ii) of the proviso of
the  definition  of  "Subsidiary"  in its  entirety  and adding in its place the
following: "(ii) no Securitization Subsidiary shall be deemed to be a Subsidiary
for purposes of this  Agreement  other than with respect to the  calculation  of
Excess Cash Flow";

           (h) Section 2.3(d) is hereby deleted in its entirety;

           (i) The first  sentence of Section  2.5(b)(ii)  is amended to read in
its entirety as follows:"  On the date!  of any (A) Asset Sale or (B)  Offering,
the  Borrower  shall  prepay the Term Note in an amount  equal to all of the Net
Cash Proceeds of such Asset Sale or Offering";

           (j)  Section  2.5 (1,) (iii) is amended  to read in its  entirety  as
follows:  "Unless the Borrower  and the Lender shall have  negotiated a mutually
acceptable  amortization  schedule for the Term Loan in accordance  with Section
2.8(a)(ii)  and provided  that the  Extension  Period shall have been  exercised
pursuant  to  Section  2.8 hereof on January  1,2001  and on each  Payment  Date
thereafter  the Borrower  shall apply an amount equal to 80% of Excess Cash Flow
for the second  preceding  calendar  month to the  prepayment  of the Term Note,
provided,  however,  that, in the event that Net Cash Proceeds of any Asset Sale
have been applied to prepay the Term Note pursuant to Section  2.5(b)(ii) above,
such Net Cash  Proceeds  shall be excluded from the  calculation  of Excess Cash
Flow";

           (k) Section 25(b) is amended by adding a new subsection (iv) thereto,
to read in its  entirety as  follows;  "(iv) On each of  September  17, 2000 and
October 17, 2000,  the Borrower shall prepay the Term Note in an amount equal to
$300,000 and,  provided the Extension Period shall have been exercised  pursuant
to Section 2.8, on November 17, 2000, the Borrower shall prepay the Term Note in
an amount equal to the greater of (A) $300,000 and (B) the amortization  payment
for such date  agreed to by the Lender and the  Borrower,  if any,  pursuant  to
Section 2. 8(a)(ii) hereof';

           (I)  Clauses  (i) and (ii) of Section  2.8(a) are  amended to read in
their  entirety as follows:  "(i) a written  notice  stating  that the  Borrower
desires to extend the  Maturity  Date of the Term Note until  February 17, 2001,
and  certifying  to the effect  that (A) no  Default or Event of Default  Exists
under any of the Loan  Documents;  (B) an  interested  buyer  has been  found to
purchase the shares o f the Borrower held by the Estate (the  "Buyer");  (C) the
Buyer has the

                                        2

<PAGE>

financial  means to consummate  the purchase of such shares from the Estate (the
"Estate  Purchase");  and (D) the  Borrower  and the Buyer are in the process of
finalizing  the purchase  documents  and closing the Estate  Purchase;  and (ii)
payment of an advisory fee on the date notice is given in an amount set forth in
a fee letter dated as of June 30, 2000  between the Borrower and the Lender,  in
which  case  the  Term  Note  shall,   subject  to  written   notice  that  such
certification  is true and  correct  on the  current  Maturity  Date,  mature On
February  17,2001  (the  "Extension  Period");   provided,   however,  that,  in
connection with the satisfaction of the conditions for the Extension Period, the
Lender and the Borrower agree to renegotiate  the terms of the  amortization  of
the Term Note to  substitute  an  amortization  schedule for the  provisions  of
Section 2.5(b)(iii),  it 1,eing understood and agreed that if the Lender and the
Borrower  are unable to agree upon an  amortization  schedule for the Term Note,
the  provisions  with  respect  to the  application  of Excess  Cash Flow to the
prepayment of the Term Note set forth in Section 2.5(b)(iii) shall apply";

                      (in) Section 2.8 is amended by deleting  subsection (b) in
its entirety and adding in its place the following:
"Reserved"; and

"1.90:1.00".
(n) Section 7.11 is amended by deleting "2.25:1.00" and adding in its place

           3. Representations and Warranties. To induce the Lender to enter into
this  Amendment,  each of the  Borrower,  Newco  and Newco  II,  represents  and
warrants, as of the date of the execution and delivery of this Amendment, that:

           (a) It has the power,  authority  and legal right to make and deliver
this Amendment and to perform its  obligations  under the Credit  Agreement,  as
amended  by  this   Amendment,   without  any  notice,   consent,   approval  or
authorization not already obtained,  and that it has taken. all necessary action
to authorize the same.

           (1,) The making and delivery of this Amendment and the performance of
the Credit  Agreement,  as  amended  by this  Amendment,  does not  violate  any
provision of law or any regulation,  or its charter or by-laws, or result in the
breach of or  constitute  a  default  under or  require  any  consent  under any
indenture or other agreement or instrument to which it is a party or by which it
or any of its  properties  may be bound or affected.  The Credit  Agreement,  as
amended by this Amendment,  constitutes its legal, valid and binding obligation,
enforceable   against  it  in   accordance   with  its  terms,   except  as  the
enforceability   thereof   may  be   limited  by  any   applicable   bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors' rights
generally.

           (c) The  representations  and warranties  made by it contained in the
Credit  Agreement are true and correct on the date of the execution and delivery
of this Amendment and after giving effect hereto.

                                        3

<PAGE>

           (d) No Event of Default or Default  has  occurred  and is  continuing
under the Credit  Agreement  on the date of the  execution  and delivery of this
Amendment and after giving effect hereto.

           4. Conditions Precedent. This Amendment shall become effective, as of
the date  hereof,  upon  receipt  by the  Lender  of (I) a  counterpart  of this
Amendment, duly executed and delivered by the Borrower, (ii) the fees payable on
the date of the  execution  and  delivery  of this  Amendment  set forth in that
certain  Fee  Letter  dated as of the date  hereof  between  the  Lender and the
Borrower and (iii) all other costs and expenses,  including, without limitation,
the fees and expenses of counsel to the Lender.

           5. Reference to and Effect on the Loan Documents.

           (a) On and after the date hereof,  (i) all  references  in the Credit
Agreement to "this Agreement",  "hereof',  "herein",  or similar terms, (ii) all
references  to the Credit  Agreement  in each  agreement,  in3trument  and other
document executed or delivered in connection with the Credit Agreement and (iii)
all references to the Credit Agreement and all other Loan Documents,  shall mean
and refer to the Credit Agreement as amended by this Amendment.

           (b) Except as specifically  amended hereby,  the Credit Agreement and
all other Loan  Documents  shall continue to be in full force and effect and are
hereby in all respects ratified and confirmed.

           (c) The execution, delivery and effectiveness of this Amendment shall
not,  operate as a waiver of any right,  power or remedy of the Lender under any
Loan Document, nor constitute a waiver of any provision of any Loan Document.

           6.  Counterparts.  This  Amendment  may be  signed  in any  number of
counterparts, each of which shall be an original and all of which taken together
shall  constitute a single  instrument with the same effect as if the signatures
thereto and hereto were upon the same instrument.

           7. Governing  Law. This Amendment  shall be governed by and construed
in  accordance  with the laws of the  State of New York  without  regard  to the
conflict  of law  principles  thereof  (except  Section  5-1401  of the  General
Obligations Law).

                                        4

<PAGE>

           IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and  delivered by their proper and duly  authorized  officers as of the
day and year first above written.

                                 BANK OF AMERICA, N.A., as Lender

                                            By: s/ Robert N. Allen
                                                ----------------------
                                                Name:  Robert N. Allen
                                                Title: Vice President

                                 EQUIVEST FINANCE, INC., as Borrower

                                            By:  s/ Gerald L. Klaben, Jr.
                                                ------------------------
                                                Name:  Gerald L. Klaben, Jr.
                                                Title: Senior VP &
                                                       Chief Financial Officer

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