Document:

Exhibit 4.12

            PORTFOLIO RESERVE LOAN AND COLLATERAL ACCOUNT AGREEMENT

This Agreement establishes the terms and conditions that will govern Borrower's
Loan (the "Loan") from Merrill Lynch bank USA. The Loan is secured by a pledge
of assets held in a special securities account established and maintained with
Merrill Lynch, Pierce, Fenner & Smith Incorporated in accordance with this
Agreement. This Agreement becomes effective only upon your sending notice to
Borrower in writing that Borrower's Loan has been approved.

DEFINITIONS

In this Agreement, "Borrower" means the individual or individuals (individually
and jointly, if more than one) or the corporation, partnership (general or
limited), limited liabilitiy company, sole proprietorship or other legal entity
which signs the Application as Applicant, "You," "your" and "Bank" means Merrill
Lynch Bank USA. "MLPF&S" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated. "Merrill Lynch Group" means Merrill Lynch & Co., Inc. and its
subsidiaries. "Loan Party" means, individually and collectively, Borrower and
any person who guarantees to the Bank the payment and/or performance of
Borrower's obligations under this Agreement and/or pledges collateral to the
Bank to secure the Borrower's obligations under this Agreement. "Agreement"
means this Portfolio Reserve Loan and Collateral Account Agreement, the
Application, the Account Application, the Approval Letter, and any other
documents or agreements identified by you as being part of the "Agreement."
"Application" means the Merrill Lynch Bank USA Portfolio Reserve Loan
Application Borrower has completed and submitted to you in connection with the
Loan. "Approval Letter" means the letter the Bank will send to the loan parties
if the Application is approved, which will contain the terms relating to my Loan
described in paragraph 1 below. "Account Application" means the WCMA Collateral
Account Application (or CMA Collateral Account Application if Borrower is an
individual) Borrower has completed and submitted to MLPF&S and you in connection
with the Securities Account.

"Securities Account" means the cash securities account, including the ISA
account established pursuant to the Account Application and this Agreement. "ISA
account" means the Insured Savings account, established pursuant to the Account
Application and this Agreement. "Collateral" has the meaning given to that term
in paragraph 17 below. "Security Interest" has the meaning given to that term in
paragraph 17 below. "Borrowing Power" means the amount you are willing to lend
against a fully paid for security, as determined by you from time to time in
your discretion. "Maintenance Requirement" means the Value of Collateral which
must be maintained in the Securities Account, as determined by you from time to
time in your discretion. "Value" means the value assigned to the Collateral by
you from time to time in accordance with your standard valuation procedures, as
such procedures may be modified, amended or supplemented by you from time to
time in your discretion.

"Periodic Payment" means the amount described in paragraph 4 below, to be paid
by Borrower to you on a monthly, quarterly or other periodic basis, as indicated
in the Approval Letter. "Principal Amount" means the principal amount of the
Loam made by you to Borrower, as indicated in the Approval Letter. "Interest
Rate" means the annual interest rate applied to my Outstanding Principal
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Balance, as described in Paragraph 5 below and as indicated in the Approval
Letter. "Fixed Rate," "LIBOR Rate," and "Prime Rate" have the meanings given
those terms in Paragraph 5 below. "Outstanding Principal Balance" means the
original Principal Amount, less the aggregate amount of any principal payments
made by borrower under the Loan. "Outstanding Total Balance" means the
Outstanding Principal Balance plus accrued but unpaid interest and all other
amounts then owing by Borrower under this Agreement. "Loan Term" means the
length of the term of the Loan, as indicated in the Approval Letter.

GENERAL TERMS

1. Borrower has applied for a Loan pursuant to the Application. If you approve
Borrower's Application, you will send to Borrower a completed Approval Letter
signed by you. Among other things, the Approval Letter will set forth the
following terms of my Loan:

(a)  the Principal Amount,
(b)  the Interest Rate,
(c)  the frequency and amounts (or the manner in which the amount is determined)
     of the Periodic Payment, and
(d)  the Loan Term.

Borrower acknowledges and agrees that the terms set forth in the Approval Letter
are part of this Agreement.

LIMITATION ON USE OF LOAN PROCEEDS

2. UNLESS DISCLOSED IN WRITING TO YOU AT THE TIME OF THE APPLICATION, AND
APPROVED BY YOU, BORROWER MAY NOT USE ANY PORTION OF THE LOAN PROCEEDS TO
FINANCE THE PURCHASE OF SECURITIES, OR TO REPAY ANY DEBTS INCURRED (A) TO
PURCHASE, CARRY OR TRADE SECURITIES OR (B) TO ANY MEMBER OR THE MERRILL LYNCH
GROUP.

PROMISE TO PAY, PROMISE TO MAINTAIN COLLATERAL

3. Borrower promises to pay to you or your order when DUE THE principal Amount,
interest, and all other amounts and charges permitted under and payable in
accordance with this Agreement. Borrower also promises to maintain such
Collateral in the Securities Account as you may require from time to time in
accordance with your Maintenance Requirements.

PAYMENTS

4. Borrower's Periodic Payments must be made at the address indicated on
Borrower's periodic billing statement. Unless you agree in writing otherwise,
each Periodic Payment will be equal to all accrued but unpaid interest, any
payment of the Outstanding Principal Balance then due, and any past due amounts.
Borrower may elect to make its Periodic Payments by authorizing you to directly
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debit its Merrill Lynch Working Capital Management Account (or the Borrower's
Merrill Lynch Cash Management Account if Borrower is an individual), or such
other account specified by Borrower, or deposit account at another institution
on a periodic basis for the amount of the Periodic Payment. Borrower must pay
each Periodic Payment by the payment due date shown on the periodic billing
statement, even if Borrower has paid more than the Periodic Payment in any prior
period. The Outstanding Total Balance will be due and payable with the final
Periodic Payment.

Borrower's payments may be applied in any manner which you elect, although,
generally, payments will first be applied to fees and charges Borrower owns
under this Agreement, then to interest, and finally to reduce the Outstanding
Principal Balance.

INTEREST RATE

5. The Interest Rate for the Loan will be calculated on the basis of a year of
365 days (366 days in the case of a leap year). Interest will begin to accrue on
the date the Loan proceeds are disbursed to Borrower or, if different, the date
indicated in the Approval Letter. The Interest Rate for the Loan will be one of
the following, as requested by Borrower, approved by you, and specified in the
Approval Letter:

a) Fixed Rate: the Interest Rate is fixed for the Loan Term.

b) Prime Rate: the floating "Prime Rate" as published in THE WALL STREET JOURNAL
(U.S. Eastern Edition) plus an additional amount expressed as partial or whole
percentage (%) points specified by the Bank and set forth in the Approval
Letter. The Prime Rate will change as and when the Prime Rate as published in
THE WALL STREET JOURNAL changes. In the event THE WALL STREET JOURNAL does not
publish a Prime Rate, the Prime Rate shall be the rate as determined by the Bank
in good faith.

c) LIBOR Rate: the LIBOR Rate, plus an additional amount expressed as partial or
whole percentage (%) points specified by the Bank and set forth in the Approval
Letter. The LIBOR Rate will be set by the Bank on the first business day of each
week and will be equal to the three (3) month (or such other LIBOR period as may
be specified in the Approval Letter) LIBOR Rate as published in THE WALL STREET
JOURNAL "Money Rates" table on such day. If THE WALL STREET JOURNAL does not
publish such a LIBOR Rate, the LIBOR Rate shall be: (i) the rate equal to the
rate Merrill Lynch International Bank Limited ("MLIB") offers to take deposits
from leading banks in the London Inter Bank Market, for the corresponding time
period or (ii) if no such offers are being made by MLIB, the rate as determined
by the Bank in good faith. In no event will the Interest Rate charged by the
Bank, (including the default interest described in paragraph 7(b)) exceed the
highest rate allowed by applicable state and federal law.

FIXED RATE LOANS PAID IN ADVANCE OF DUE DATE

6. With respect to Fixed Rate Loans, Borrower acknowledges that the Interest
Rate is set by the Bank on the assumption that the entire principal amount of
the Loan will remain outstanding for the entire Loan Term. Accordingly, Borrower
agrees that in the event all or any portion of the Loan is paid in advance of

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its due date, Borrower will pay to the Bank, upon request, such amount as the
Bank shall determine will compensate it for any hardship (including loss of
profit), cost of expense incurred by it as a result of such early payment.
Borrower further agrees that the amount payable by Borrower under this paragraph
will, in any event, be no less than an amount equal to 1% of the amount of the
loan being paid in advance of its due date times the number of years (up to a
maximum of 5 years) remaining in the Loan Term, with partial years counted as an
entire year. The foregoing liability, if any, constitutes an obligation under
this Agreement and is secured by the Collateral.

OTHER CHARGES; DEFAULT INTEREST

7. (a) You reserve the right to charge (a) any third party costs you may incur
at Borrower's request, or (b) any stamp, documentary, registration or similar
tax payable in connection with this Agreement or the Loan, together with any
liability with respect to or resulting from any delay in paying or omission to
pay any such tax. Such costs and charges may, at your option, be charged or
added to the Outstanding Principal Balance or to Borrower's next Periodic
Payment.

(b) To the extent permitted by applicable law, in the event the Borrower does
not make any payment to the Bank when due, the interest Rate payable with
respect to the outstanding amount of the Loan (both before and after judgement,
if any) may, in the discretion of the Bank, increase, effective as of the date
when such payment was due, by two percent (2.00%) until all payments due
(including any late payments and any amounts accelerated) are paid to the Bank
in full. Any default interest payable: (i) which is not paid when due may be
added to the overdue sum and itself bear interest accordingly; and (ii)
constitutes an obligation under this Agreement and is secured by the Collateral.

BANKRUPTCY

8. Borrower must first notify you in writing before filing any petition seeking
the protection of any state or federal bankruptcy statutes, and Borrower must
not take any action (or fail to take any necessary action) which may cause a
petition in bankruptcy to be filed against Borrower.

DEFAULT

9. A default ("Default") will occur under this Agreement if: (a) Borrower fails
to make any payment when it is due as required by this Agreement or breaches any
other provision of this Agreement; (b) the Value of the Collateral in the
Securities Account falls below the applicable Maintenance Requirement, and
Borrower has not deposited additional Collateral or reduced the Outstanding
Principal Balance as required under paragraph 21 below; (c) Borrower or any Loan
Party makes, or you discover that Borrower or any Loan Party has made, a
material misrepresentation in connection with the Application and the Loan; (d)
Borrower or any Loan Party files, or there is filed against Borrower or any Loan
Party, any petition seeking the protection of any state or federal bankruptcy
statutes or the Borrower or any other Loan Party becomes insolvent or is
generally unable to pay his, her or its debts when due; (e) an attachment is
levied against all or any portion of the Securities Account or any other

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collateral directly or indirectly securing the Loan; (f) you determine that
there is a material adverse change in the Borrower's or any Loan Party's
financial condition or prospects or the Collateral securing the loan; (g) a Loan
Party or the sole proprietor, majority shareholder or controlling owner of a
Loan Party dies or is declared incompetent or of unsound mind; or (h) Borrower
or any other Loan Party fails to satisfy any obligation to you or any other
member of the Merrill Lynch Group, or a default occurs under any other agreement
the Borrower or any other Loan Party has entered into with you or any other
member or the Merrill Lynch Group.

ACCELERATION UPON DEFAULT

10. If a Default occurs, you may declare due and payable the Outstanding Total
Balance. With respect to Fixed Rate Loans, Borrower acknowledges and agrees that
additional changes, calculated in accordance with paragraph 6 above, will be due
and payable in connection with the acceleration of the Outstanding Principal
Balance pursuant to this paragraph. If Borrower fails to pay the amounts
described in the preceding two sentences in full upon your demand, you may, in
addition to any other rights you may have, exercise all of your rights and
remedies under this Agreement, including, but not limited to, those described in
paragraph 21 below.

COSTS OF COLLECTION

11. If Borrower fails to make any payment under this Agreement as and when
required, Borrower must pay, to the extent permitted by applicable law, your
court and collection costs, any costs incurred in the disposition of the
Collateral, and, if the Loan is referred for collection to any attorney not
employed by you or one of your affiliates, your reasonable attorney fees and
expenses.

DELAY IN ENFORCEMENT

12. You can choose to delay or not to enforce any of your rights under this
Agreement without losing them.

NO WAIVER

13. If you choose not to exercise or enforce any of your rights, you are not
waiving the right to enforce such rights at a later time or any of your other
rights. Any waiver of your rights under this Agreement must be in writing.

STATEMENTS AND NOTICES

14. Statements and notices will be sent to the address shown on the Application,
unless Borrower notifies you in writing of a change in address. Borrower must
notify you of any change in address or name. Borrower must send correspondence
to you at the address shown for notices appearing on the periodic billing
statement unless you notify Borrower otherwise. If the Securities Account is

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linked to a WCMA account, CMA account (each as defined in paragraph 16 below) or
other securities account maintained with MLPF&S, Borrower authorizes MLPF&S to
send all notices, monthly statements and other communications regarding the
Securities Account to the address designated for such account or account from
time to time.

WAIVERS

15. Borrower waives Borrower's rights to require you to do certain things, to
the extent permitted by applicable law. Those things are: (a) to demand payments
of amounts due (known as "presentment"); (b) to give notice that amounts due
have not been paid (known as "notice of dishonor"); and (c) to obtain an
official certification of nonpayment (known as "protest").

PARAGRAPHS 16 THROUGH 24 GOVERN THE ESTABLISHMENT AND MAINTENANCE OF THE
SECURITIES ACCOUNT THE MLPF&S AND BORROWER'S PLEDGE AND GRANT TO YOU OF A
SECURITY INTEREST IN THE COLLATERAL.

ESTABLISHMENT OF THE SECURITIES ACCOUNT

16. MLPF&S shall establish the Securities Account (which shall include an ISA
account), which shall be known as "(Borrower's Name) Pledged Collateral Account
for Merrill Lynch Bank USA," (or such other title, including abbreviations,
acceptable to Bank), and Borrower agrees, as a condition to your obligation to
extend the Loan, to place Collateral in the Securities Account with Borrowing
Power sufficient to permit the Bank to make a Loan in the Principal Amount.
Borrower agrees at all times to maintain Collateral in the Securities Account
with Value sufficient to satisfy your Maintenance Requirements, until all of
Borrower's obligations under this Agreement have been satisfied indefeasibly in
full. Borrower acknowledges that in establishing and maintaining the Securities
Account, MLPF&S is acting as your agent for purposes of perfecting your Security
Interest, and shall be deemed a party to this Agreement as is relates to the
Security Interest and the Securities Account.

Borrower understands that the Securities Account is a special, limited version
of the Merrill Lynch Working Capital Management Account ("WCMA account") (or a
Merrill Lynch Cash Management Account if Borrower is an individual ("CMA
account")) financial service. In accordance with the terms of the Insured
Savings Account Fact Sheet, available free credit balances in the Securities
Account will be deposited in the ISA account at least once each week. Borrower
understands that amounts Borrower may owe from time to time in connection with
the Securities Account (such as payment for transactions) may be satisfied,
subject to your Security Interest, by MLPF&S from amounts deposited in the ISA
account.

SECURITY INTEREST

17. As security for Borrower's obligation to you under the Loan and this
Agreement, Borrower hereby assigns, pledges, grants, and conveys to you a
continuing first priority lien and security interest (the "Security Interest")

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in (a) The Securities Account and all stocks, bonds, or other securities or
securities entitlements or any other property or financial asset now or
hereafter in the Securities Account; (b) all credit balances, accounts, contract
rights, general intangibles, instruments, documents, money, certificates of
deposit and all other property of whatever kind or description now or hereafter
in the Securities Account; (c) any securities or other financial assets
described in confirmations and other reports delivered by MLPF&S to Borrower or
you in connection with the Securities Account, which securities are deemed to be
in the Securities Account for purposes of this Agreement; (d) all dividends,
interest and proceeds of any such property, including without limitation,
proceeds or proceeds; and (e) all of Borrower's right, title and interest in and
to all monies, debts, claims, securities, financial assets and other property
deposited by Borrower with or owed or owing to Borrower by the Bank or any
member of the Merrill Lynch Group (collectively, the "Collateral"). Terms used
in this Agreement which are not defined shall have the meanings set forth in the
Uniform Commercial Code, as in effect from time to time in New Your (the "UCC").
For purposes of this Agreement, the ISA account will be deemed to be included in
and a part of the Securities Account. Borrower acknowledges that control over
the Securities Account, and all Collateral in the Securities Account, shall be
in the Bank and MLPF&S for all purposes, including establishing and perfecting a
security interest therein.

All assets and property in or credited towards the Securities Account shall be
treated as a "financial asset" as that term is defined in the UCC.

Borrower will take all action which you request or which is reasonably necessary
to assure that you have a continuing perfected first priority Security Interest
while this Agreement is in effect. Upon your request, Borrower will execute and
deliver to you financing statement(s) conforming to the UCC and in a form you
deem to be acceptable. Upon your request, Borrower also agrees to execute and
deliver continuation statement(s) conforming to the UCC in a form you deem to be
acceptable. If Borrower fails to deliver to you financing statements or
continuation statements you request, you may, to the extent permitted by law and
without limiting your other rights under this Agreement, execute and file in
Borrower's name, as Borrower's attorney-in-fact, such documents. If the location
of Borrower's chief executive office changes, Borrower will immediately notify
you in writing to that effect and will execute and deliver to you any additional
financing statements or similar documentation you may reasonably request to
assure the continued effectiveness of your Security Interest. Once you agree
that Borrower has fully and indefeasibly performed Borrower's obligations under
this Agreement, your Security Interest in any Collateral in your possession will
be terminated and any such Collateral will be returned to Borrower.

CERTAIN BANK RIGHTS IN THE SECURITIES ACCOUNT

18. You may provide MLPF&S entitlement orders or other instructions with respect
to the Securities Account at any time. Your instructions may include
instructions to liquidate Collateral and other property in the Securities
Account, to pay credit balances from the Securities Account to you or your
designees, or to move the Collateral from the Securities Account to you or into
an account in your name or the name of your designees. In following your
instructions, MLPF&S is under no duty to Borrower whatsoever to determine

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whether a Default has occurred or is continuing. Borrower understands that you
have ultimate control over all instructions made with respect to the Securities
Account, and that if there is a conflict between the instructions you and
Borrower give to MLPF&S with respect to the Securities Account, your
instructions will prevail.

You are entitled to receive duplicates of any and all notices, confirmations and
statements of account that Borrower is entitled to receive with respect to the
Securities Account. MLPF&S is authorized to provide you with any and all
information in its possession or control relating to the Securities Account, and
to provide you with on-line access to MLPF&S systems relating to the Securities
Account.

MY TRANSACTIONS IN THE SECURITIES ACCOUNT

19. Borrower may request withdrawals of Collateral from the Securities Account
if the Value of the Collateral remaining in the Securities Account after the
withdrawal continues to satisfy your Maintenance Requirement and applicable
securities credit regulations. Borrower also may purchase, sell or substitute
Collateral in the Securities Account if the Value of the Collateral remaining in
the Securities Account after the purchase, sale or substitution continues to
satisfy your Maintenance Requirement and applicable securities credit
regulations. Borrower understands that Borrower will not be permitted to execute
any transaction in the Securities Account if, following the transaction,
Borrower will not be in compliance with your Maintenance Requirement and
applicable securities credit regulations. Borrower also understands that
transactions made in the Securities Account may be reversed if the transaction
would result in Borrower's breach of this Agreement.

Borrower irrevocably waives for your benefit any right Borrower may have to
instruct any depository institution holding Borrower's ISA account to register
Borrower's deposit in Borrower's name on the books and records of the
depository.

ELIGIBLE COLLATERAL

20. Subject to your rights under this Agreement (including without limitation
your right to change or limit the types of securities used as collateral as set
forth in this paragraph 20 and your rights under paragraph 18), the following
securities are eligible to be held as Collateral under this Agreement: (1)
securities and instruments which are traded on a national securities exchange,
NASDAQ or recognized over-the-counter markets; (2) mutual fund shares; (3) unit
investment trusts; (4) negotiable certificates of deposit acceptable to the
Bank; (5) United States Treasury notes, bills or bonds; (6) corporate or
municipal bonds; or (7) any other securities which you may approve in writing.
BORROWER ACKNOWLEDGES, HOWEVER, THAT DUE TO FEDERAL REGULATIONS, BORROWER MAY
NOT HOLD IN THE SECURITIES ACCOUNT ANY SECURITY ISSUED BY ANY MEMBER OF THE
MERRILL LYNCH GROUP, ANY SECURITY IN AN INVESTMENT COMPANY (MUTUAL FUND) AS TO
WHICH ANY MEMBER OF THE MERRILL LYNCH GROUP ACTS AS INVESTMENT ADVISOR, OR ANY
INTEREST IN A UNIT INVESTMENT TRUST SPONSORED AND ADVISED BY ANY MEMBER OF THE
MERRILL LYNCH GROUP. Borrower acknowledges that if Borrower violates any of the
restrictions on eligible Collateral provided for in this Agreement (including
the restrictions described in the preceding sentence), you may, in exercising
(and without limiting) your remedies under this Agreement, liquidate all or a
portion of any securities placed into the Securities Account in violation of
this Agreement.

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You reserve the right to change or limit in your discretion the types of
securities which Borrower may use as Collateral. In addition, Borrower may not
borrow any amounts on margin (including short sales) using the Securities
Account or any Collateral in the Securities Account. Borrower may not sell,
assign, pledge or grant a Security Interest in the Securities Account or the
Collateral in the Securities Account to anyone other than you, as provided in
this Agreement, or MLPF&S. Any interest MLPF&S may have in the Securities
Account and the Collateral is subordinated to your Security Interest.

REMEDIES

21. (a) Upon the occurrence of a Default, you may, at your option, instruct
MLPF&S to cancel any open orders and close any and all outstanding contracts,
liquidate the Collateral, withdraw and/or sell any such Collateral, and apply
any such Collateral, as well as the proceeds of any such Collateral to all
unpaid amounts owing under the Loan and this Agreement. Borrower will be
responsible for any decrease in the Value of the Collateral occurring prior to
or during liquidation. Upon the occurrence of a Default, you may also setoff,
against any amount owing to you under this Agreement, any securities, cash or
other property of Borrower (including without limitation any deposit account of
Borrower with you, including any deposit with you made in connection with the
ISA account) in your possession, directly or through MLPF&S as your agent or in
the possession of any other member of the Merrill Lynch Group.

(b) You may exercise any or all of your rights under this paragraph 21 without
further demand for additional Collateral, or notice of sale or purchase, or
other notice or advertisement. If at any time the Value of the Collateral is les
than the Maintenance Requirement and Borrower has not reduced the Outstanding
Principal Balance or deposited in the Securities Account additional funds and/or
securities eligible to be held as Collateral (as defined in Section 20 above)
with a Value sufficient to increase the Value of the Collateral to at least the
Maintenance Requirement, then you may, at your option, from time to time, and
without any obligation on your part to give notice, instruct MLPF&S to cancel
any open orders and close any or all outstanding contracts, liquidate the
Collateral, withdraw and/or sell any or all Collateral and any proceeds of the
Collateral and reduce the amount owing to you under the Loan. Any sales or
purchases made pursuant to this paragraph 21 may be made at your discretion on
any exchange or other market where such business is usually transacted, or at
public auction or private sale, and you or your agent may be the purchaser for
your or your agent's own account. It is understood that the giving of any prior
demand or call or prior notice of the time and place of such sale or purchase by
you or your agent will not be considered a waiver of your right to sell or buy
without any such demand, call or notice as provided in this Agreement.

(c) With respect a Fixed Rate Loan, Borrower agrees to pay to you additional
charges, if any, payable under paragraph 6 above, if the Outstanding Principal
Balance is reduced pursuant to this paragraph.

(d) In addition to your rights and remedies described in this Agreement, you
have the right to exercise any one or more of the rights and remedies of a
secured creditor under the UCC. All the rights and remedies which are available

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to you under this Agreement are cumulative and are in addition to any and all
other rights and remedies which are otherwise available to you either at law,
equity or otherwise. You may exercise any one or more of such rights and
remedies simultaneously or successively.

OTHER ACCOUNT PROVISIONS

22. MLPF&S and Borrower each acknowledge that no VISA card, funds transfer
service, wire transfer, check writing or margin capabilities exist or will be
permitted with respect to the Securities Account without your prior written
consent.

This Agreement does not create any obligations or duties on MLPF&S to Borrower
greater than or in addition to the customary and usual obligations and duties
which MLPF&S has as a stockbroker and custodian of securities, except to the
extent expressly provided in this Agreement.
All transactions in the Securities Account are subject to the constitution,
rules, regulations, customs and usages of the exchange or market and its
clearinghouse, if any, on which MLPF&S or its agents (including MLPF&S'
subsidiaries and affiliates) execute such transactions. Borrower agrees to pay
customary brokerage fees in connection with any transactions in the Securities
Account made in accordance with this Agreement.

23. Unless indicated otherwise on the Account Application, the Applicant shall
be the legal owner (the "accountholder") of the Securities Account. If more than
one natural person signs the Application as Applicant or Co-Applicant, each such
person shall be account holder of the Securities Account. With respect to
natural persons, the legal ownership of the Securities Account shall be in such
form as the Borrower instructs in the Account Application. In the event no
designation is made, the Bank and MLPF&S are authorized to deal with the
accountholders as tenants in common (without right of survivorship).

Subject to the limitations in this Agreement, all accountholders agree that (i)
with respect to Borrowers which are not natural persons, each person designated
by accountholder from time to time shall have authority to transact any business
on behalf of the Securities Account, (ii) with respect to a Securities Account
in the name of more than one natural person, each accountholder has authority to
transact any business on behalf of the Securities Account as fully and
completely as if each accountholder were the sole owner of the Securities
Account, and (iii) MLPF&S may accept orders and instructions, written or oral,
with respect to the Securities Account from each such person or accountholder
referred to in (i) and (ii) above, without notice to accountholder, for the
receipt, transfer and withdrawal of funds and for the purchase, sale, exchange,
transfer or other disposition of securities and other property.

Upon the occurrence of any event that causes a change in legal ownership of the
Securities Account, (including, without limitation, death of an accountholder or
divorce of married accountholders), all accountholders or the surviving
accountholder, as the case may be, shall immediately give the Bank and MLPF&S
written notice thereof, and the Bank or MLPF&S may, in such event, take such
action, including requiring such documents or imposing such restrictions on the
Securities Account, as the Bank or MLPF&S may deem necessary in the
circumstances. Subject to the limitations in this Agreement, the accountholder,
the estate of a deceased accountholder and a departing accountholder by
assignment or divorce shall remain liable jointly and severally for any
obligations to the Bank or MLPF&S arising in connection with the Loan or the
Securities Account.

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Subject to the limitations in this Agreement, in the event of any such change of
ownership of the Securities Account, MLPF&S is authorized to divide or retitle
the Securities Account in accordance with the form of legal ownership of the
Securities Account as reflected on the records of MLPF&S or by written
instructions of the Bank and the accountholder(s), or by obtaining a court
order, as MLPF&S and the Bank may reasonably determine is appropriate in the
circumstances. With respect to natural persons, unless agreed otherwise among
the accountholders in a writing provided to MLPF&S, joint accounts designated
"with right of survivorship" (e.g. JTWROS) shall, subject to your rights under
this Agreement, vest the interest of a deceased accountholder in the surviving
accountholder(s) and Securities Account designated "without right of
survivorship" (e.g. TIC) shall, subject to your rights under this agreement,
entitle the estate of a deceased accountholder and the surviving
accountholder(s) to equal shares of the Securities Account. All accountholders
agree to indemnify and hold harmless MLPF&S and you against any liability, loss
or expense incurred from acting in accordance with this agreement in the event
of a change in ownership of the Loan or Securities Account.

Borrower may not change ownership of the Securities Account except in accordance
with this paragraph 23, and subject to your Security Interest. No change in
ownership of the Securities Account will be effective until the change is
consented to by you and reflected in the account records of MLPF&S. All
statements, notices or other communications sent or given to one accountholder
by your or MLPF&S shall be considered notice to all accountholders. Subject to
the limitations in this Agreement, in the event MLPF&S receives inconsistent
instructions from two or more accountholders, reasonably believes instructions
received from one accountholder is not mutually agreeable to all accountholders,
or receives a court order with respect to the Securities Account, MLPF&S may,
but is not obligated to, restrict activity in the Securities Account, require
that all instructions of any accountholder be in writing signed by all
accountholders, suspend or terminate the service and/or file an interpleader
action in an appropriate court at the expense of the accountholders.

HOLD HARMLESS; ARBITRATION WITH MLPF&S

24. Borrower hereby agrees to hold harmless MLPF&S, its affiliates (excluding
you), and its employees from any and all claims, liabilities, and/or damages, in
any way related to, or arising out of, or in connection with, Borrower's
granting the Security Interest, your exercise of rights under this Agreement,
including any action or inaction by MLPF&S in following your instructions
regarding the Securities Account in accordance with this Agreement.

Borrower agrees that all controversies which may arise between MLPF&S and
Borrower concerning the Securities Account, including, but not limited to, those
involving any transaction or the construction, performance, or breach of this or
any other agreement between MLPF&S and Borrower, whether entered into prior to,
on or subsequent to the date hereof shall be determined by arbitration. Any

                                       10
<PAGE>
arbitration under this Agreement shall be conducted only before the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. or an arbitration
facility provided by any other exchange, the National Association of Securities
Dealers, Inc. or the Municipal Securities Rulemaking Board, and in accordance
with its arbitration rules then in force. Borrower may elect in the first
instance whether arbitration shall be conducted before the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., other exchanges, the National
Association of Securities Dealers, Inc. or the Municipal Securities Rulemaking
Board, but if Borrower fails to make such election, by registered letter or
telegram addressed to you at the office where the Securities Account is
maintained, before the expiration of five days after receipt of a written
request from MLPF&S to make such election, then MLPF&S may make such election.
Judgment upon the award of the arbitrators may be entered in any court, state or
federal, having jurisdiction.

No person shall bring a putative or certified class action to arbitration, nor
seek to enforce any pre-dispute arbitration agreement against any person who has
initiated in court a putative class action; or who is a member of a putative
class who has not opted out of the class with respect to any claims encompassed
by the putative class action until:

I. The class certification is denied;

II. The class is decertified; or

III. The customer is excluded from the class by the court. Such forbearance to
enforce an agreement to arbitrate shall not constitute a waiver of any rights
under this Agreement except to the extent stated herein.

-    Arbitration is final and binding on the parties.
-    The parties are waiving their right to seek remedies in court, including
     the right to jury trial.
-    Pre-arbitration discovery is generally more limited than and different from
     court proceedings.
-    The arbitrator's award is not required to include factual findings or legal
     reasoning and any party's right to appeal or to seek modification of
     rulings by the arbitrators is strictly limited.
-    The panel of arbitrators will typically include a minority of arbitrators
     who were or are affiliated with the securities industry.

FINANCIAL AND CREDIT INFORMATION

25. Borrower agrees:

(a) To notify you immediately, in writing, of any change in Borrower's financial
condition or prospects which would adversely affect Borrower's ability to repay
any obligation(s) to you according to the Loan terms;

(b) To supply to you such current financial information or other information as
you may reasonably request from time to time;

(c) That you and any member of the Merrill Lynch Group may share with one
another and any affiliated companies, or any person authorized by Borrower, for
legitimate business purposes, any information about Borrower which each may
currently possess or obtain in the future, unless Borrower notifies you at the
time of application for the Loan that Borrower does not agree to such sharing of
information;

                                       11
<PAGE>
(d) That you, or anyone authorized by you, may obtain, from time to time, third
party credit and investigative reports with respect to the Borrower, and may
answer any questions about your credit experience with Borrower; and

(e) That there may be additional documentation required to be filed or executed
by Borrower from time to time by applicable law or the policies and procedures
of MLPF&S or the Bank, and Borrower agrees to comply with any requests for
additional documents.

WARRANTIES AND COVENANTS

26. On a continuing basis, Borrower warrants and covenants to you that:

(a) Except for your rights established under this Agreement, Borrower owns the
Collateral free of any interest or lien in favor of any third party (other than
any subordinated interest MLPF&S may have in the Securities Account);

(b) The Security Interest is and shall remain a perfected and valid first
priority lien and security interest upon the Collateral;

(c) Borrower will not pledge or hypothecate the Collateral or grant a security
interest in the Collateral or grant a security interest in the Collateral to any
third party during the term of this Agreement;

(d) With respect to the issuer of any securities in the Securities Account,
Borrower and its affiliates, in the aggregate, are not the beneficial owners of
more than three (3%) percent of the number of outstanding shares of any class of
equity securities;

(e) With respect to any securities in the Securities Account, Borrower does not
control the issuer of such securities;

(f) The Loan proceeds will be used only in accordance with paragraph 2 above;

(g) Borrower has been duly organized or formed under the jurisdiction of its
organization or formation. Borrower is in good standing under the laws of the
jurisdiction of its organization or formation and is duly qualified to do
business in all jurisdictions in which the nature of its activities requires
such qualification;

(h) Borrower has the full right, power and authority to make, execute, deliver
and perform its obligations under this Agreement and the execution, delivery and
performance of the documents contemplated by this Agreement and consummation of
the transactions contemplated by this Agreement have been duly authorized by all
necessary action on the part of the Borrower;

(i) Neither the execution, delivery or performance by Borrower of this Agreement
and the related documents, the consummation of the transactions contemplated by
this Agreement, nor compliance with the provisions of this Agreement will (i)
violate any law, regulation, order, judgment or decree binding on Borrower, (ii)
violate or conflict with, as applicable, Borrower's articles or certificate of
incorporation, by-laws, partnership agreement or other organizational or
governing documents, (iii) conflict with, cause a breach of, constitute a
default under, be cause for the acceleration of the maturity of, or create or
result in the creation or imposition of any lien, charge or encumbrance (other
than in your favor) on any of Borrower's property under, any agreement, note,
indenture, instrument or other undertaking to which Borrower is a party;

(j) No order, consent, license, authorization, recording or registration is
required to authorize or is required in connection with the execution, delivery,
and performance of or the legality, validity, binding effect or enforceability
of this Agreement, any documents executed in connection with this Agreement or
any transactions contemplated by this Agreement;

                                       12
<PAGE>
(k) There are no actions, suits, litigations or investigations, pending or
threatened, against Borrower that could (i) have a material adverse effect on
the business, condition (financial or otherwise), obligations, operations,
performance, properties or prospects of Borrower or (ii) affect Borrower's
ability to enter into and perform its obligations under this Agreement or any of
the transactions contemplated by this Agreement;

(l) The operations of Borrower are and have been in compliance in all respects
with all federal, state and local laws and regulations, including, without
limitation, tax, environmental and health and safety laws an regulation;

(m) Since the date of the most recent financial statements of Borrower delivered
to you, there has been no material adverse change in the business, condition
(financial or otherwise), obligations, operations, performance, properties or
prospects of Borrower;

(n) After giving effect to the Loan, (i) the present fair value of Borrower's
assets (plus, in the event Borrower is a partnership, the sum of the excess of
the fair value of each general partner's nonpartnership assets over such general
partner's nonpartnership debts) exceeds the total amount of Borrower's
liabilities (including, without limitation, contingent liabilities), (ii)
Borrower has capital and assets sufficient to carry on its business, (iii)
Borrower is not engaged and is not about to engage in a business or a
transaction for which its remaining assets are unreasonably small in relation to
such business or transaction and (iv) Borrower does not intend to incur or
believe that it will incur debts beyond its ability to pay as they become due.
Borrower will not be rendered insolvent by the execution, delivery and
performance of documents relating to this Agreement or by the consummation of
the transactions contemplated under this Agreement; and

(o) The address of the chief executive office of Borrower is as set forth in the
Application.

MISCELLANEOUS

27. This Agreement shall be binding upon and inure to the benefit of the heirs,
successors and assigns of all the parties to this Agreement. You may assign at
your sole option all or part of your rights, obligations and remedies under this
Agreement.

28. (a) Borrower's Application will be accepted by the Bank in the State of
Utah, and all decisions made by the Bank with respect to the Loan will be made
in Utah. The terms of this Agreement with respect to the Bank shall be governed
by and interpreted under the federal laws of the United States and the State of
Utah, except that: (1) with respect to the Securities Account and your Security
Interest, this Agreement shall be governed by and interpreted under the laws of
the State of New York; (ii) Notwithstanding the choice of law provisions of this
paragraph which shall govern the contractual obligations of the parties under
this Agreement, the legal ownership of the Securities Account shall be governed
by and interpreted under the internal laws of the state where the chief
executive office of the Borrower is located, with respect to a Borrower which is
incorporated under the laws of a state in the United States. Nonresident aliens
and foreign corporations agree that the form of ownership for the Securities
Account shall be governed (notwithstanding the laws of any other jurisdiction to
the contrary) by the internal laws of the State of New York.

                                       13
<PAGE>
(b) Borrower agrees to submit to the jurisdiction of the State Courts of Utah
and the Federal Courts in Utah for the purposes of any suit, action or
proceeding arising out of this Agreement and the Loan and Borrower consents to
service of process by certified mail to Borrower's address of record.

(c) Except to the extent prohibited by applicable law which cannot be waived,
Borrower waives, and covenants that Borrower will not assert any right to trial
by jury in any forum in respect of any issue, claim, demand, action or cause of
action arising out of this Agreement and the Loan.

29. No amendment of any provision of this Agreement shall be effective unless
such amendment is in writing and signed by the Borrower and the Bank.

30. The heading of each provision of this Agreement is for descriptive purposes
only and shall not be deemed to modify or qualify any of the rights or
obligations described in each such provision.

31. If any provision of this Agreement is held to be invalid, illegal, void or
unenforceable, by reason of any law, rule, administrative order or judicial or
arbitral decision, such determination shall not affect the validity of the
remaining provisions of this Agreement.

32. This Agreement constitutes the entire agreement between Borrower, you and
MLPF&S regarding the matters contemplated by this Agreement, and supersedes any
and all prior agreements (whether written or oral).

                                       14
<PAGE>
January 12, 2001

Dimensional Visions, Inc.
Attn: Dale Riker
2301 West Dunlap Ave. #207
Phoenix, AZ 85021

Dear Mr. Riker:

Merrill Lynch Bank USA (the "Bank") is pleased to advise you that your
application for a securities-based loan (the "Loan") has been approved. Your
Loan will be governed by the provisions of the Portfolio Reserve Loan and
Collateral Account Agreement (Form #F5059 6/98) and is made on the following
terms:

     1. Maximum Principal Amount $500,000.00, of which $100,000.00 was disbursed
on January 12, 2001 (the "Initial Disbursement Date") by wire transfer, in
accordance with your instructions. Interest on that portion of the Loan will
begin to accrue as of the Initial Disbursement Date. The remaining amount of the
Loan will be disbursed to you in installments. For each requested loan
disbursement, you must submit a Loan Disbursement Request in the form attached
to this letter. In addition, each loan disbursement is subject to the following
terms and conditions:

     (i)  there must be eligible collateral in the Securities Account in an
          amount sufficient to support the Outstanding Principal Amount after
          giving effect to the requested disbursement, and you must otherwise be
          in compliance with the terms and conditions of the Portfolio Reserve
          Loan and Collateral Account Agreement;

     (ii) each disbursement request must be in an amount no less than $25, 001

     (iii) the Loan Term for each disbursement shall end on the expiration of
          the Loan Term applicable to the initial disbursement.

     2. Interest Rate: 3-Month LIBOR Rate (adjusted weekly), plus 2.5%

     3. Loan Term: 1 year
<PAGE>
     4. Frequency of Periodic Payments: Monthly

     5. All Periodic Payments, other than the final one, will consist of
interest only. Your Periodic Payments (plus any fees or charges, if applicable)
will be calculated at the end of each calendar month and are payable by the 15th
day of the following month. The exact payment amount will depend on the number
of days in the billing period and the Outstanding Principal Amount. The
repayment of the Outstanding Principal Amount will be due and payable with your
final Periodic Payment on January 13, 2002. We will send you a billing statement
each billing cycle setting forth the exact amount of each Periodic Payment.

     6. If you do not agree with the terms and conditions of your Loan as set
forth in this Approval Letter, you may repay the amount disbursed to you on the
Initial Disbursement Date in good funds no later than the fifth calendar day
(excluding Saturdays, Sundays and legal holidays) following the Initial
Disbursement Date. If you repay the outstanding portion of the Loan in
accordance with this paragraph, the Bank's agreement to make the Loan stall
terminate and no fees or interest due under the terms of the Portfolio Reserve
Loan and Collateral Agreement will be charged to you.

Thank you for your interest in Merrill Lynch Bank USA. We look forward to
serving you and providing you assistance in meeting your financing needs.

Sincerely,
/s/ Chris Greenhalgh
-----------------------------------
Chris Greenhalgh
Assistant Vice President
Merrill Lynch Bank USA<PAGE>   1

                                                                   EXHIBIT 10.16

                    SETTLEMENT AGREEMENT AND MUTUAL RELEASES

        THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASES (this "Agreement") is
entered into effective the 19th day of March 2001 (the "Effective Date") by and
among e-MedSoft.com, a Nevada corporation ("e-Med"), PrimeRX.com, Inc., a
Delaware corporation ("PrimeRX"), Network Pharmaceuticals, Inc., a Delaware
corporation ("Network"), PrimeMed Pharmacy Services, Inc., a Delaware
corporation ("PrimeMed"), Prem Reddy, M.D. ("Reddy"), Prime A Investments, LLC
("Prime A"), David W. Rombro ("Rombro"), Raymond Matko ("Matko") and Richard A.
Hayes ("Hayes").

                                    RECITALS:

        WHEREAS, PrimeRX and e-Med are parties to a Management Services and
Joint Venture Agreement (the "Management Agreement") and a Master Preferred
Provider Agreement (the "Provider Agreement"); and

        WHEREAS, e-Med and all of the shareholders of PrimeRX, including Reddy
and Prime A, entered into an Agreement dated April 7, 2000 (the "Stock
Agreement"); and

        WHEREAS, Reddy and Prime A (collectively the "Shareholders") currently
hold common stock and preferred stock of PrimeRX as set forth in Exhibit "A"
attached hereto (the "PrimeRX Shares"). Reddy executed a written notice dated as
of April 12, 2000 for the acquisition by the Shareholders of 2,640,000 shares
(hereinafter "Shares") of common stock of e-Med (the "Stock Option Exercise") in
exchange for a portion of the common stock included in the PrimeRX shares
constituting approximately twenty nine (29) percent of the common stock of
PrimeRX (the "PrimeRX Option Shares"), pursuant to the Stock Agreement, and the
Shareholders abandoned the Shares by written notice on December 30, 2000 and
have not yet transferred the PrimeRX Option Shares to e-Med. Reddy and PrimeA
acquired no other shares in PrimeRX from and after April 12, 2000; and

        WHEREAS, PrimeMed and Network are both wholly owned subsidiaries of
PrimeRX, and engaged in the business of owning, operating and managing
pharmacies and providing pharmacy related services; and

        WHEREAS, disputes have arisen over the Management Agreement, the
Provider Agreement, the Stock Agreement and the validity of the Stock Option
Exercise, and the parties entered into a Standstill Agreement in order to
provide time for resolution of the disputes; and

        WHEREAS, the parties now desire to resolve all of the disputes by
providing for an exchange by the Shareholders of all of their shares in PrimeRX
for all of the outstanding shares of Network, and providing for termination or
modification of the various agreements.

<PAGE>   2

        NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                                    ARTICLE I
                           EXCHANGE OF SHARES; CLOSING

        1.1 Exchange of Shares. Subject to the terms and conditions set forth in
this Agreement, (i) the Shareholders will exchange all of their common and
preferred stock in PrimeRX, other than the PrimeRX Option Shares, for all of the
outstanding stock of Network (the "Share Exchange"); and (ii) the Shareholders
will transfer the PrimeRX Option Shares to e-Med. At the request of the
Shareholders, Prime RX will make a Section 338(h)(10) election with respect to
Network. It is understood that all of the outstanding the shares of Network (the
"Network Shares") are held as collateral for the CNB Loan (as hereinafter
defined), and that as a result, PrimeRX may not be able to transfer the Network
Shares to the Shareholders at the Closing. Accordingly, the PrimeRX Shares will
be held in escrow until such time as the Network Shares are free and clear of
all debts, liens and liabilities of Network, PrimeRX and PrimeMed or the consent
of City National Bank is obtained. If City National Bank agrees, the Network
Shares shall be re-issued in the name of the Shareholders and held until
released by City National Bank.

        1.2 Exchange Value. The parties agree that the value of Network in
connection with the Share Exchange is the sum of Seven Million Five Hundred
Thousand Dollars ($7,500,000.00), and each party hereto agrees to use such value
for tax reporting purposes.

        1.3 California Operations. Immediately prior to the Closing, e-Med,
PrimeRX and PrimeMed (collectively the "e-Med Parties") shall transfer to and
consolidate into Network the pharmacies, pharmacy assets, pharmacy management
and ancillary pharmacy businesses owned or conducted by the e-Med Parties and
their subsidiaries located in the High Desert Region in the State of California
(the "High Desert Operations"). For purposes of this Agreement, the High Desert
Operations shall be deemed to be included in Network.

        1.4 Debts and Liabilities of Network.

                1.4.1 Closing Obligations. Except for the obligations as
hereinafter provided, within sixty (60) days after the Closing, the e-Med
Parties will pay out of their own funds, and not out of assets of Network, all
of the legitimate debts, obligations and liabilities of Network, and expressly
including payment of all of Network's trade payables that are greater than
fifteen (15) days old (collectively the "Closing Obligations"). All
inter-company obligations appertaining or relating to the e-Med Parties and
Network (e.g., monies carried on the books of e-Med prior to this Agreement as
owed by PrimeRX to Network and by Network to an e-Med Party) are hereby
confirmed to have been forever and finally discharged, waived and given up by
virtue of this Agreement and the releases set forth below.

                                       2
<PAGE>   3

                1.4.2 City National Bank Loan. Network is currently indebted to
City National Bank in the approximate amount of Six Million Dollars
($6,000,000.00) (the "CNB Loan"), which is secured by all of the assets of
Network and the Network Shares (the "Security"). The e-Med Parties agree, within
one hundred eighty (180) days of the Closing, to pay or assume the CNB Loan in
such fashion as to obtain release of Reddy and Network from liability on the CNB
Loan and release of the Security for the CNB loan, so that all of the assets and
the stock of Network are owned by Network free and clear from all liens, debts
and encumbrances (hereinafter "CNB Release"). The e-Med Parties shall have the
right to extend the time for obtaining the CNB Release for an additional thirty
(30) days in consideration for the contribution of the then existing balance on
the e-med Advances, as hereinafter defined. The e-Med Parties acknowledge that
their failure to obtain the CNB Release will cause Network to incur costs not
contemplated by this Agreement, and the exact amount of such costs being
extremely difficult and impracticable to fix. Therefore, if the e-Med Parties do
not obtain the CNB Release in a timely manner hereunder within two hundred and
(210) days after the Closing, the e-Med Parties shall pay to Network the
additional sum of ten percent (10%) of the then unpaid balance of the CNB Loan
as a late charge. The parties agree that this late charge represents a fair and
reasonable estimate of the costs that Network will incur by reason of late
payment. Subsequent to paying this late charge, the e-Med Parties shall
nonetheless have the affirmative obligation obtain the CNB Release hereunder.

                1.4.3 Bergen Brunswig Guaranty. It is acknowledged that Reddy
has personally guaranteed the payment of obligations to Bergen Brunswig incurred
by the e-Med Parties and Network in the purchase of pharmaceutical products (the
"Bergen Guaranty"). The e-Med Parties agree, within one hundred fifty (150) days
of the Closing, to obtain the release of Reddy from the Bergen Guaranty. It is
agreed that Reddy will not terminate his Bergen Guaranty so long as the total
liability under the Bergen Guaranty is not increased from the amount due as of
the Effective Date. The e-Med Parties acknowledge that their failure to obtain
the release of Reddy from the Bergen Guaranty will cause Reddy to incur costs
not contemplated by this Agreement, and the exact amount of such costs being
extremely difficult and impracticable to fix. Therefore, if Reddy is not timely
released from the Bergen Guaranty, the e-Med Parties shall pay to Reddy the sum
of ten percent (10%) of the then unpaid balance of the Bergen Guaranty as a late
charge. The parties agree that this late charge represents a fair and reasonable
estimate of the costs that Reddy will incur by reason of failure of the e-Med
Parties to perform their obligations under this Section 1.4.3. Subsequent to
paying this late charge, the e-Med Parties shall nonetheless have the
affirmative obligation to obtain the release of the Bergen Guaranty hereunder.

                1.4.4 Other Personal Guarantees. The e-Med Parties agree, within
one hundred fifty (150) days of the Closing, to obtain the release of Reddy from
all legitimate debts, obligations and liabilities of the e-Med Parties and
Network which Reddy has either personally guaranteed or incurred direct
liability (such as entering into a lease in his name for the benefit of an e-Med
Party) by reason of a written instrument signed by Reddy, but not including
facility leases for pharmacies currently operated by Network. In order to assist
e-Med Parties in identifying and releasing these guaranteed obligations, Reddy
shall, within five

                                       3
<PAGE>   4

(5) days following the Closing -- deliver copies of the written guaranty
instruments to the e-Med Parties with respect to all such legitimate
liabilities.

                1.4.5 Working Capital Loan. Until such time as the e-Med Parties
have performed all of their obligations under this Section 1.4.2, the e-Med
Parties agree to provide working capital funding to Network in the amount of
Three Hundred Thousand Dollars ($300,000.00) per month (the "e-Med Advances").
The e-Med Advances will be repayable in full by Network no later than one (1)
year following the discharge of all obligations provided in Section 1.4.2, with
interest at the "applicable federal rate" (as defined in the Internal Revenue
Code) in existence as of the Closing. In the event that e-Med fails to timely
perform its obligations under Section 1.4.2, then the e-Med Advances shall be
contributed to the capital of Network as additional consideration for this
transaction. Network's obligations under this Section 1.4.5 are hereby
unconditionally guaranteed by Reddy.

                1.4.6 Network Shall Pay $2.2 Million. Network hereby agrees to
pay a total of Two Million Two Hundred Thousand Dollars ($2,200,000.00) towards
debts of Network, to be applied first towards trade payables of Network not more
than fifteen (15) days old, then to other trade payables of Network, and then if
any portion of the assumed amount remains, to general debts of Network.

        1.5 Management and Other Agreements. At the Closing, (i) the Management
Agreement and the Provider Agreement will be amended to expressly exclude
Network; (ii) the Stock Agreement shall be amended to eliminate the Shareholders
and Hayes; (iii) Hayes hereby agrees that he has abandoned, released and given
up -- forever any and all shares of capital stock he or anybody acting on his
behalf ever held in PrimeRX; (iv) other than the obligations under this
Agreement, all agreements, understandings and commitments by or among the
parties hereto shall be effectively terminated and of no further force and
effect in view of the effectiveness of the mutual general releases set forth
below. By executing this Agreement, Hayes acknowledges that Hayes has released
and forever given up any and all shares of capital stock he or anybody acting on
his behalf ever held in PrimeRX.

        1.6 Network Management Agreement. Within thirty (30) days after the
Closing. Network and e-Med will enter into a new management services agreement
in the manner provided in this paragraph (the "Network Agreement"). Absent the
preparation and execution of a written instrument confirming the Network
Agreement , this paragraph shall constitute the Network Agreement. The Network
Agreement shall provide, and the legal agreement between the parties is, that
all accounting and financial functions of Network shall be managed exclusively
by a management team headed by Reddy, Lex Reddy or assignee and on an ongoing
basis which is appointed under the Network Agreement and which is approved by
either Reddy, Lex Reddy or their assignee (the "Network Management"). The
persons constituting the Network Management shall be employees of e-Med, but
shall have full operational authority to manage Network absent theft or fraud.
E-Med shall have no obligation to pay such employees. E-med shall have the right
to designate one or more persons who will, at the sole cost and expense of e-Med
and not Network, assist the Network Management in performing the management
functions under the Network Agreement. It is

                                       4
<PAGE>   5

understood that the Network Management may devote such time and attention to
the business of Network as they deem necessary. Although the financial
statements of Network shall be consolidated with the financial statements of
e-Med while the Network Agreement are in effect (and it shall be obligation of
all parties, without any further consideration due any party, to do all
reasonable acts to effectuate consolidation of Network into e-Med, so long as
the Network Agreement is consistent with the provisions of this Agreement and
such acts do not increase costs to Network or the Reddy Parties), all operations
of Network shall be conducted out of its Redlands facility, which shall be
solely occupied by Network. The Network Management shall have sole authority
over all aspects of the business of Network, and all Network assets and
liabilities shall remain segregated from the assets and liabilities of the e-Med
Parties. Network liabilities shall be limited to those specifically related to
the business of Network or those historically paid by Network as a part of its
operations, and Network shall not be obligated to incur or guaranty or provide
assets as collateral for debts or obligations of the e-Med Parties, or any of
their subsidiaries or affiliated entities. No management fees shall be payable
to e-Med for services rendered under the Network Agreement. Network shall have
the right to terminate the Network Agreement immediately upon the occurrence of
any of the following: (i) in the event that there is any change to the Network
Management or interference with the operations of Network without the express
written consent of Reddy, Lex Reddy or their assignee; or (ii) the sale of
Network to a third party which sale may not take place until after January 1,
2002; or (iii) the breach by an e-Med party of any of the material provision of
this Agreement.

        1.7 Stock Agreement. It is understood that after the Network Shares have
been released from the security, for the CNB Loan, substantially all of the
outstanding stock of PrimeRX shall be held by e-Med, and e-Med shall be
responsible for resolving the claims of Rombro and Matko as stockholders and
stock option holders of PrimeRX, and any other stock option holders of PrimeRX.
By executing this Agreement, Rombro and Matko agree that e-Med shall and hereby
does have an irrevocable proxy over all of their shares of stock in PrimeRX for
all purposes.

        1.8 Closing. The Share Exchange and other transactions contemplated by
this Agreement (the "Closing") shall take place at 10:00 a.m. on March 26, 2001
in the lobby of the St. Regis Hotel, or such other time and date as is agreed
upon by the parties (the "Closing Date").

                1.8.1 Deliveries by e-Med. At the Closing, e-Med shall deliver
to Reddy the following: (i) corporate resolutions of the e-Med Parties
authorizing the execution and delivery of this Agreement and the performance by
the e-Med Parties of their obligations hereunder; (ii) stock assignment separate
from certificate for the Network Shares; (iii) evidence of the full satisfaction
of the Closing Obligations; and (iv) any other documents requested by Reddy and
reasonably required or necessary for the consummation of the transactions
contemplated by this Agreement.

                                       5
<PAGE>   6

                1.8.2 Deliveries by Reddy. At the Closing, Reddy shall deliver
to e-Med the following: (i) stock assignment separate from certificate for the
PrimeRX Option Shares, duly endorsed for transfer to e-Med; (ii) stock
assignment separate from certificate for the PrimeRX Shares other than the
PrimeRX Option Shares, duly endorsed for transfer to PrimeRX, with the original
certificates delivered to an escrow holder mutually agreed upon by the
Shareholders and e-Med; and (iii) any other documents requested by e-Med and
reasonably required or necessary for the consummation of the transactions
contemplated by this Agreement.

        1.9 Releases.

                1.9.1 Release by the e-Med Parties. Excepting the obligations
set out in this Agreement, the e-Med Parties, Rombro and Matko, for themselves
and for their respective officers, directors, legal predecessors, successors,
assigns, and those who at any time purport for any reason to be acting in
association with it or on its behalf (collectively the "e-Med Group"), do hereby
forever and finally release, relieve, acquit, remise, absolve and discharge
Reddy, Prime A, Network and Hayes (collectively the "Reddy Parties") and their
respective past and present employees, officers, partners, associates,
affiliates, subsidiaries, related companies, joint venture partners, directors,
agents, representatives, attorneys, shareholders, spouses, children, fiancees
and former spouses from any and all losses, claims, debts, liabilities, demands,
obligations, promises, acts, omissions, agreements, costs and expenses, damages,
injuries, suits, actions and causes of action, of whatever kind or nature,
whether known or unknown, suspected or unsuspected, contingent or fixed, that
the e-Med Group may have against the Reddy Parties (or against their past and
present employees, officers, partners, associates, affiliates, subsidiaries,
related companies, joint venture partners, directors, agents, representatives,
attorneys, shareholders, spouses, children, fiancees and former spouses) based
upon, related to, or by reason of any matter, cause, fact, act or omission
occurring or arising at any moment from the beginning of time to the Closing ,
including, without limitation matters existing by reason of any contract
(express or implied in fact or implied in law), lien, liability, cause, fact,
thing, act or omission whatever, occurring or existing at any time up to the
Closing. Each person released by operation of this Agreement is an intended
third party beneficiary of this Agreement. Immediately upon execution of this
Agreement, e-Med shall dismiss with prejudice the pending action filed by e-Med
against Reddy, et al.

                1.9.2 Release by the Reddy Parties. Excepting the obligations
set out in this Agreement, the Reddy Parties, for themselves and for their,
officers, directors, legal predecessors, successors, assigns, and those who at
any time purport for any reason to be acting in association with it or on its
behalf, do hereby forever and finally release, relieve, acquit, remise, absolve
and discharge the e-Med Group and their respective past and present employees,
officers, partners, associates, affiliates, subsidiaries, related companies,
joint venture partners, directors, agents, representatives, attorneys,
shareholders, spouses, children, fiancees and former spouses from any and all
losses, claims, debts, liabilities, demands, obligations, promises, acts,
omissions, agreements, costs and expenses, damages, injuries, suits, actions and
causes of action, of whatever kind or nature, whether known or unknown,
suspected or unsuspected, contingent or fixed, that the Reddy Parties may have
against the e-

                                       6
<PAGE>   7

Med Group (or against their past and present employees, officers, partners,
associates, affiliates, subsidiaries, related companies, joint venture partners,
directors, agents, representatives, attorneys, shareholders, spouses, children,
fiancees and former spouses) based upon, related to, or by reason of any matter,
cause, fact, act or omission occurring or arising at any moment from the
beginning of time to the Closing, including, without limitation matters existing
by reason of any contract (express or implied in fact or implied in law), lien,
liability, cause, fact, thing, act or omission whatever, occurring or existing
at any time up to the Closing. Each person released by operation of this
Agreement is an intended third party beneficiary of this Agreement. The Reddy
parties represent and warrant that there are not, as of the date of this
Agreement, any pending lawsuits by any of them against any party hereto and thus
there is no lawsuit for them to dismiss after execution of this Agreement.
Notwithstanding the foregoing, Rex Beaber shall not be released individually
unless and until he executes an agreement releasing the Reddy Parties in the
exact same form and content of the releases contained herein; in the event he
does so, this Agreement and all releases set forth herein shall inure to Rex
Beaber's benefit.

                1.9.3 Release of Mitchell J. Stein. The parties hereto
acknowledge that Mitchell J. Stein -- a former director of the e-Med Group --
acted as an intermediary in connection with this Settlement Agreement and Mutual
Releases and the parties hereto absolutely and completely (a) stipulate, recite
and agree that Mitchell J. Stein has no affirmative or implied obligation
hereunder; and (b) for themselves and for their, officers, directors, legal
predecessors, successors, assigns, and those who at any time purport for any
reason to be acting in association with it or on its behalf, do hereby, except
for the obligations under this Agreement, forever and finally release, relieve,
acquit, remise, absolve and discharge Mitchell J. Stein and any of his past and
present employees, officers, partners, associates, affiliates, subsidiaries,
related companies, joint venture partners, directors, agents, representatives,
attorneys, shareholders, spouses, children, fiancees and former spouses from any
and all losses, claims, debts, liabilities, demands, obligations, promises,
acts, omissions, agreements, costs and expenses, damages, injuries, suits,
actions and causes of action, of whatever kind or nature, whether known or
unknown, suspected or unsuspected, contingent or fixed, that the Reddy Parties
or the e-Med Parties may have against Mitchell J. Stein (or his past and present
employees, officers, partners, associates, affiliates, subsidiaries, related
companies, joint venture partners, directors, agents, representatives,
attorneys, shareholders, spouses, children, fiancees and former spouses) based
upon, related to, or by reason of any matter, cause, fact, act or omission
occurring or arising at any moment from the beginning of time to the Closing,
including, without limitation matters existing by reason of any contract
(express or implied in fact or implied in law), lien, liability, cause, fact,
thing, act or omission whatever, occurring or existing at any time up to the
Closing, but not including any obligations under this Agreement. Each person
released by operation of this Agreement is an intended third party beneficiary
of this Agreement. This release is subject to Mitchell J. Stein executing the
mutual general release attached hereto as Exhibit "B."

                1.9.4 Related Parties. As used in this Agreement, the term
"related companies" shall mean any person or company that a person released by
operation of this Agreement has an ownership interest in or a legal affiliation
with, whether that interest or

                                       7
<PAGE>   8

legal affiliation is held or reflected as a partnership interest (in the case of
a partnership), a membership interest (in the case of a limited liability
company), a stock interest (in the case of a corporation), a joint venture
interest (in the case of other contractual relationships) or any other interest
recognized under the law, it being the intention of the parties that all
"related companies" of the persons released above shall by this document be
released as well from any liability and shall receive the same protection under
this Agreement as has been provided to the persons actually named herein.

                1.9.5 Full Releases. By executing this Agreement below, Rombro,
Matko and Hayes approve of all terms and conditions of this Agreement and they
hereby agree that the foregoing releases are binding against each and all of
them.

                1.9.6 Finality and Scope of Releases. The parties hereto
acknowledge and agree that it is their intention, through this Agreement and the
releases set forth above, to fully, finally and forever settle and release each
other from all those matters released herein, and all claims related thereto,
which do now exist, may exist or heretofore have existed or may hereafter exist.
It is the intent of the parties to this Agreement to release each other from
claims or causes of action arising from facts that were willfully, wrongfully,
or tortuously concealed from the aggrieved party.

                1.9.7 Releases of Unknown or Unsuspected Claims. THE PARTIES
HAVE BEEN INFORMED BY THEIR RESPECTIVE ATTORNEYS AND ADVISORS ABOUT CALIFORNIA
CIVIL CODE SECTION 1542, AND THE PARTIES ACKNOWLEDGE THAT THEY ARE FAMILIAR WITH
AND HEREBY EXPRESSLY WAIVE THE PROVISIONS OF THIS SECTION, AND ANY SIMILAR
STATUTE, CODE, LAW OR REGULATION OF ANY STATE IN THE UNITED STATES TO THE
FULLEST EXTENT THAT THEY MAY WAIVE SUCH RIGHTS AND BENEFITS. SECTION 1542 OF THE
CALIFORNIA CIVIL CODE PROVIDES:

                A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
                WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
                EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
                RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
                MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
                DEBTOR.

                1.9.8 Final Accord and Satisfaction. This Agreement and the
releases contained herein are intended to be final and binding between the
parties hereto and are further to be effective as a full and final accord and
satisfaction between the parties hereto, and each party to this Agreement
expressly relies on the finality of this Agreement as a substantial, material
factor inducing that party's execution of this Agreement.

                1.9.9 The Effect of Discovery of Different or Additional Facts.
The parties hereto acknowledge that they are aware that they may hereafter
discover claims presently unknown or unsuspected, or facts in addition to or
different from those which they now know

                                       8
<PAGE>   9

or believe to be true, or related or associated parties in addition to or
different from those which are listed herein and which the parties believe to
exist, pertaining to the matters released herein. Nevertheless, it is the
intention of the parties hereto, through this Agreement and the releases herein,
to fully, finally, and forever settle and release all such matters, and all
claims and parties related thereto, which do now exist, may exist in the future
or heretofore have existed. In furtherance of such intention, the releases
herein given shall be and remain in effect as a full and complete release of
such matters and parties, notwithstanding the discovery or existence of any such
additional or different claims or facts or parties related thereto by the
parties hereto. In entering into these releases, the parties hereto are not
relying upon any statement, representation, inducement or promise of any other
parties, except as expressly stated in this Agreement. It is the intent of the
parties to this Agreement to release each other from claims or causes of action
arising from facts that were willfully, wrongfully, or tortuously concealed from
the aggrieved parties.

                1.9.10 Assumption of Risks. In entering into this Agreement and
the releases contained herein, the parties hereto recognize that no facts or
representations are ever absolutely certain; accordingly, each party hereto
assumes the risk of any misrepresentation, concealment or mistake, and if any
party hereto should subsequently discover that any fact the said party relied
upon in entering into this Agreement was untrue, or that any fact was concealed
from that party, or that any understanding of the facts or the law was
incorrect, said party shall not be entitled to set aside this Agreement by
reason thereof, regardless of any claim of fraud, misrepresentation, promise
made without the intention of performing it, fraud in the inducement,
concealment of fact, mistake of fact or law, or any other circumstances
whatsoever. This Agreement and the releases contained herein are intended to be
final and binding upon the parties hereto, and each of them, and is further
intended to be effective as a full and final accord and satisfaction among the
parties hereto, regardless of any claim of fraud, misrepresentation, promise
made without the intention of performing it, fraud in the inducement,
concealment of fact, mistake of fact or law, or any other circumstances
whatsoever. Each party relies upon the finality of this Agreement and the
releases herein as a material factor inducing the party's execution of this
Agreement.

                  1.9.11 Generality and Specificity of Releases; Covenant Not to
Sue or Make Claims. The parties hereto intend these releases to be construed in
the broadest possible terms so that the effect of this Agreement is that the
persons released hereby may not be sued by the persons releasing them hereby,
whether directly or indirectly, and no claims may be made related to such
releases whether by way of offset or otherwise or indeed in any manner and for
any reason, under any theory of fact, under any theory of law, under any alleged
set of facts, under any alleged reading of the law and under or pursuant to any
claim of any kind, including (without limitation) claims for negligence, breach
of contract, fraud, theft, breach of fiduciary duty, lender liability and indeed
for any of the disputes set out in any of the recitals set forth above.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

                                       9
<PAGE>   10

        Each party to this Agreement hereto represents and warrants to the other
parties hereto as follows:

        2.1 Authority and Authorization of Agreement. Such party has all
necessary power and authority to execute and deliver this Agreement and the
other closing documents to which it is a party, to consummate the transactions
contemplated by this Agreement, and to perform all the terms and conditions of
this Agreement and any closing documents to be performed by him or it. No other
proceedings on the part of such party are necessary to authorize this Agreement
or to consummate such transactions. This Agreement, and the other documents,
certificates, and instruments delivered by such party hereunder, have been duly
executed and delivered by such party and constitute the legal, valid, and
binding obligations of such party, enforceable against him or it in accordance
with their terms.

        2.2 Consents and Approvals; No Violations. The execution and delivery by
such party of this Agreement and the other closing documents to which he or it
is a party do not, and the consummation by such party of the transactions
contemplated hereby and compliance by such party with the provisions hereof will
not, conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligations or the loss of a benefit under
or result in the creation of any lien upon or right of first refusal with
respect to any of the properties or assets of such party under, (i) any
provision of the articles of incorporation or bylaws of such party; and (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, obligation, instrument, permit, concession, franchise of license
applicable to such party.

        2.3 Brokers. No agent, broker, person or firm acting on behalf of such
party, is, or will be, entitled to any commission or broker's or finder's fees
from such party, or from any person controlled by such party, in connection with
any of the transactions contemplated by this Agreement.

        2.4 Litigation. There is no action pending or, to the knowledge of such
party, threatened against or affecting such party that would affect materially
the ability of such party to carry out the transactions contemplated by this
Agreement.

        2.5 No Material Transactions. Except as set forth in Schedule 2.5, the
all parties hereto warrant to one another that, since April 7, 2000 to the
Closing, there have not been any (i) transactions by or on behalf of Network
other than in the ordinary course of business; (ii) change in the accounting
methods or practices; (iii) revaluation by Network of any of its assets; (iv)
declaration, setting aside, or payment of a dividend or other distribution in
respect of any of the capital stock of Network; (v) sale or transfer of any
Network assets, except in the ordinary course of business, or mortgage, pledge
or other encumbrance of any asset of Network other than in the ordinary course
of business; or (vi) transfer of any of the pharmacies or assets of the
pharmacies owned or operated by Network.

                                       10
<PAGE>   11

        2.6 Disclosure. There is no event, fact, condition or occurrence that
makes any of the representations and warranties contained in this Article II or
any certificate, schedule or exhibit prepared and delivered by or on behalf of
such party pursuant to this Agreement untrue or, if not disclosed, would make
such representations and warranties misleading in light of the circumstances
under which they were furnished.

                                   ARTICLE III
                             POST-CLOSING COVENANTS

        3.1 Cooperation. The parties hereto agree to cooperate as is necessary
to effectuate the terms of this Agreement and a smooth transition from an
accounting, tax and operational standpoint.

        3.2 PrimeMed Name. From and after the Closing, Network shall have the
sole and exclusive right to use for all purposes the names "PrimeMed", "PrimeMed
Network", or any variation thereof, and the e-Med Parties shall have the sole
and exclusive right to use for all purposes the names PrimeRX or any variation
thereof.

        3.3 Indemnity.

                3.3.1 Indemnification by the e-Med Parties. The e-Med Parties
covenant and agree to indemnify, defend and hold harmless Reddy, Prime A and
Network (the "Reddy Group") and their subsidiaries, shareholders, managers,
members, directors, officers, employees, agents and affiliates from any and all
demands, claims, actions or causes or action, costs, expenses, losses, damages
and liabilities incurred or suffered, directly or indirectly, by any of them
(including, without limitation, reasonable legal fees and expenses) resulting
from or attributable to (i) the breach of any of the covenants, representations
or warranties of the e-Med Parties under this Agreement or any misstatement in
any one or more of the representations or warranties of the e-Med Parties made
in or pursuant to this Agreement; (ii) any and all obligations, debts or other
liabilities of Network relating to operations of Network by e-Med under the
Management Agreement prior to the Closing, other than Network's trade payables
not more than fifteen (15) days old, and not including breach of contract of an
obligation not arising in the ordinary course of business, or third party tort
claims, relating to operations of Network prior to April 7, 2000; and (iii) all
pharmacy leases and other obligations of PrimeMed and PrimeRX (but not Network)
personally guaranteed by Reddy or personally entered into by Reddy on behalf of
an e-Med Party.

                3.3.2 Indemnification by the Reddy Group. The Reddy Group
covenants and agrees to indemnify, defend and hold harmless the e-Med Parties
from any and all costs, expenses, losses, damages and liabilities incurred or
suffered by the e-Med Parties (including reasonable legal fees and costs)
resulting from or attributable to (i) the breach of any of the covenants,
representation or warranties of the Reddy Group under this Agreement, or any
misstatement in any one or more of the representations or warranties of the
Reddy Group

                                       11
<PAGE>   12

made in or pursuant to this Agreement; (ii) any and all obligations, debts or
other liabilities of Network relating to operations of Network subsequent to the
Closing; and (iv) breach of contract of an obligation not arising in the
ordinary course of business or third party tort claims relating to operations of
Network prior to April 7, 2000.

                3.3.3 Notice, Cooperation and Opportunity to Defend. The party
indemnified under this Section 3.3 (the "Indemnified Party") shall promptly
notify in writing the indemnifying party (the "Indemnifying Party") of any
matter giving rise to an obligation to indemnify, and the Indemnifying Party
shall defend such claim at its expense with counsel reasonably acceptable to the
Indemnified Party, provided that the Indemnifying Party may not settle any such
claim without the consent of the Indemnified Party, which consent will not be
unreasonably withheld or delayed. The Indemnified Party agrees to cooperate with
the Indemnifying Party and to make reasonably available to the Indemnifying
Party any necessary records or documents in the possession of the Indemnified
Party that are necessary to defend such claim. If the Indemnified Party desires
to participate in the defense of a claim being defended by the Indemnifying
Party it may do so at its sole cost and expense, provided that the Indemnifying
Party shall retain control over such defense. In the event the Indemnifying
Party does not defend or settle such claim, the Indemnified Party may do so
without the Indemnifying Party's participation, in which case the Indemnifying
Party shall pay the expenses of such defense, and the Indemnified Party may
settle or compromise such claim without the Indemnifying Party's consent. The
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations hereunder except to the extent
that the Indemnifying Party is actually prejudiced by such failure to give
notice.

        3.4 Sale of Network. The Shareholders agree that they will not close a
transaction for the sale of tall of substantially all of the Network Shares or
the assets of Network at any time prior to January 1, 2002.

        3.5 Survival of Representations, Warranties and Covenants.
Notwithstanding the closing of the transactions contemplated under this
Agreement, or any investigation made by or on behalf of a party hereto, the
representations, warranties and covenants of each of the parties to this
Agreement will continue to survive.

                                   ARTICLE IV
                                  MISCELLANEOUS

        4.1 Knowledge of the Parties. Each party hereto is entering into this
Agreement based upon his and its knowledge of PrimeRX, Network, e-Med and
PrimeMed, that all parties stipulate that such knowledge was independently
sufficient justification for them to enter into the transactions contemplated
hereby, including the business, financial condition and prospects of such
entities, and that none of the agreements set out herein were founded upon any
representation or warranty by a party, other than as set forth herein. It is
understood that this Agreement is entered into in settlement and compromise of
disputed claims between the parties, and this Agreement does not constitute and
shall not be construed as an admission by any of the parties of any liability or
of any fact or matter whatsoever. The parties agree

                                       12
<PAGE>   13

that they have exchanged consideration that is reasonably equivalent in value.
Each of the parties acknowledges and represents that such party has been given
an opportunity to consult with, and has been represented by and has consulted
with an attorney of such party's own choice in connection with the execution of
this Agreement, and such party has relied upon the advice of such attorney in
negotiating and executing this Agreement.

        4.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to its
conflicts of laws provisions. Should any provision of this Agreement require
interpretation by an arbitrator or court of competent jurisdiction, it is agreed
by the parties that the arbitrator or court interpreting this Agreement shall
not apply a presumption that the terms of this Agreement shall be more strictly
construed against one party by reason of the rule of construction that a
document is to be construed more strictly against the party who by such party or
through such party's agent prepared such document, it being agreed that the
agents of all parties have participated in the preparation of this Agreement.

        4.3 Notices. Any notice or other communication required or permitted
under this Agreement shall be sufficiently given if delivered in person or sent
by telecopy (confirmed telephonically) or by registered or certified mail
(postage prepaid), or by courier (return receipt requested), addressed as
follows, with a copy provided to each of the other parties: (i) to the e-Med
Parties: 1300 Marsh Landing Parkway, Suite 106, Jacksonville, Florida 32250,
Attention: John Andrews Facsimile Number: (904) 543-1071; (ii) to PrimeRX,
PrimeMed and Network: 16850 Bear Valley Road, Victorville, CA 92392, Attention:
Prem N. Reddy, M.D. Facsimile Number (760) 241-8220; and (iii) to Reddy and
Prime A: 16850 Bear Valley Road, Victorville, CA 92392, Attention: Prem N.
Reddy, M.D. Facsimile Number (760) 241-8220. A party may change the address and
facsimile number to which notices are to be given by giving written notice as
provided above.

        4.4 Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and permitted assigns.

        4.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. In addition, the
signatures to this Agreement may be made by fax transmission, and the fax
transmittal signature may be attached to this Agreement as if it was an
original.

        4.6 Entire Agreement. The parties warrant and represent that their
entering into this Agreement is free and voluntary and has not been induced or
influenced by any representation, promise or other agreements or understandings
other than those expressed herein. This Agreement, including the other documents
referred to herein and therein which form a part hereof and thereof, contain the
entire understanding of the parties hereto with respect to the subject matter
contained herein and therein. This Agreement supersedes all prior agreements and
understandings between the parties of any kind.

                                       13
<PAGE>   14

        4.7 Amendments and Waivers. This Agreement may not be modified or
amended except by a written instrument executed by all of the parties. Any
waiver of any term, covenant or condition of this Agreement by any party hereto
shall not be effective unless set forth in writing, signed by the party granting
such waiver, and in no event shall any such waiver be deemed to be a waiver of
any other term, covenant or condition of this Agreement or of any subsequent
waiver of the same term, covenant or condition.

        4.8 Severability. In case any provision in this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof will not in any way be affected or impaired
thereby.

        4.9 Additional Acts. The parties hereto agree to execute such other
documents and to take such other actions as may be reasonably necessary or
appropriate in order to carry out the purposes of this Agreement.

        4.10 Arbitration and Jurisdiction. Any controversy or claim arising out
of or relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the rules of the American Arbitration Association
in the County of Los Angeles, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. Each party
hereby irrevocably waives, and agrees not to assert, by way of motion, as a
defense, counterclaim or otherwise, in any action or proceeding with respect to
this Agreement, (i) any claim that is not personally subject to the jurisdiction
as provided herein for any reason other than the failure to lawfully serve
process; (ii) that it or its property is exempt or immune from such
jurisdiction; (iii) that the proceeding is brought in an inconvenient forum;
(iv) that the venue of such proceeding is improper; and (v) any right to a trial
by jury.

        4.11 Remedies. Except as otherwise expressly provided herein, none of
the remedies set forth in this Agreement is intended to be exclusive, and each
party shall have all other remedies now or hereafter existing at law or in
equity or by statute or otherwise, and the election of any one or more remedies
shall not constitute a waiver of the right to pursue other available remedies.

        4.12 Time of Essence. Time of is expressly made of the essence of this
Agreement.

        4.13 Attorneys' Fees. If an arbitration or other proceeding is brought
for the enforcement of this Agreement, or because of any alleged or actual
dispute, breach, default or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorney's fees and other costs incurred in that
action or proceeding in addition to any other relief to which such party may be
entitled.

        4.14 Gender and Number. As used in this Agreement, the masculine,
feminine or neuter gender, and the singular or plural number shall be deemed to
include the others whenever the context so indicates.

                                       14
<PAGE>   15

        WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed on its own behalf or by its respective officer thereunto duly
authorized, all as of the day and year first above written.

                                       PrimeRX.com, Inc.

                                       By: /s/ Prem Reddy, M.D.
                                           -------------------------------------
                                           Prem Reddy, M.D., Chairman

                                       PrimeMed Pharmacy Services, Inc.

                                       By: /s/ Lex Reddy
                                           -------------------------------------
                                           Lex Reddy, President

                                       Network Pharmaceuticals, Inc.

                                       By: /s/ Lex Reddy
                                           -------------------------------------
                                           Lex Reddy, President

                                       e-MedSoft.com

                                       By: /s/ John Andrews
                                           -------------------------------------
                                           John Andrews, President

                                       Prime A Investments LLC

                                       By: /s/ Prem Reddy, M.D.
                                           -------------------------------------
                                           Prem Reddy, M.D., Manager

                                       15
<PAGE>   16

                                           /s/ Prem Reddy, M.D.
                                           -------------------------------------
                                           Prem Reddy, M.D.

                                           /s/ David W. Rombro
                                           -------------------------------------
                                           David W. Rombro

                                           /s/ Raymond Matko
                                           -------------------------------------
                                           Raymond Matko

                                           /s/ Richard A. Hayes
                                           -------------------------------------
                                           Richard A. Hayes

                                       16
<PAGE>   17

                                   EXHIBIT A

                                 PrimeRX Shares

<TABLE>
<S>                                <C>
Prem Reddy, M.D.                   7,168,500 Shares Common Stock

                                     729,544 Shares Series A Preferred Stock

Prime A Investments, LLC             931,500 Shares Common Stock
</TABLE>

                                       17
<PAGE>   18
                                   EXHIBIT B

                                MUTUAL RELEASES

     This MUTUAL RELEASES ("Agreement") is made and created this 14th day of
March, 2001, by and between Prem Reddy, M.D., Prime A Investments, LLC, David
W. Rombro, Raymond Matko, Richard A. Hayes and Mitchell J. Stein.

     WHEREAS, the parties hereto have engaged in several disputes which they
now intend to settle and release.

     NOW, THEREFORE, the parties - for the mutual promises and covenants set
out below - do hereby agree as follows:

                                   ARTICLE I

     1.   Releases. Excepting the obligations set out in this Agreement, the
parties hereto, for their respective officers, directors, legal predecessors,
successors, assigns, and those who at any time purport for any reason to be
acting in association with them or on their behalf, do hereby forever and
finally release, relieve, acquit, remise, absolve and discharge each other and
their respective past and present employees, officers, partners, associates,
affiliates, subsidiaries, related companies, joint venture partners, directors,
agents, representatives, attorneys, shareholders, spouses, children, fiancees
and former spouses from any and all losses, claims, debts, liabilities, demands,
obligations, promises, acts, omissions, agreements, costs and expenses, damages,
injuries, suits, actions and causes of action, of whatever kind or nature,
whether known or unknown, suspected or unsuspected, contingent or fixed, that
they may have against each other (or against their past and present employees,
officers, partners, associates, affiliates, subsidiaries, related companies,
joint venture partners, directors, agents, representatives, attorneys,
shareholders, spouses, children, fiancees and former spouses) based upon,
related to, or by reason of any matter, cause, fact, act or omission occurring
or arising at any moment from the beginning of time to and including the date
hereof, including, without limitation matters existing by reason of any contract
(express or implied in fact or implied in law), lien, liability, cause, fact,
thing, act or omission whatever, occurring or existing at any time up to the
current date. Each person released by operation of this Agreement is an intended
third party beneficiary of this Agreement.

     2.   Related Parties. As used in this Agreement, the term "related
companies" shall mean any person or company that a person released by
operation of this Agreement has an ownership interest in or a legal affiliation
with, whether that interest or legal affiliation is held or reflected as a
partnership interest (in the case of a partnership), a membership interest (in
the case of a limited liability company), a stock interest (in the case of a
corporation), a joint venture interest (in the case of other contractual
relationships) or any other interest recognized under the law, it being the
intention of the parties that all "related companies" of the persons released
above shall by this document
<PAGE>   19
be released as well from any liability and shall receive the same protection
under this Agreement as has been provided to the persons actually named herein.

     3.   Finality and Scope of Releases.  The parties hereto acknowledge and
agree that it is their intention, through this Agreement and the releases set
forth above, to fully, finally and forever settle and release each other from
all those matters released herein, and all claims related thereto, which do now
exist, may exist or heretofore have existed or may hereafter exist. It is the
intent of the parties to this Agreement to release each other from claims or
causes of action arising from facts that were willfully, wrongfully, or
tortuously concealed from the aggrieved party.

     4.   Releases of Unknown or Unsuspected Claims.  THE PARTIES HAVE BEEN
INFORMED BY THEIR RESPECTIVE ATTORNEYS AND ADVISORS ABOUT CALIFORNIA CIVIL CODE
SECTION 1542, AND THE PARTIES ACKNOWLEDGE THAT THEY ARE FAMILIAR WITH AND
HEREBY EXPRESSLY WAIVE THE PROVISIONS OF THIS SECTION, AND ANY SIMILAR STATUTE,
CODE, LAW OR REGULATION OF ANY STATE IN THE UNITED STATES TO THE FULLEST EXTENT
THAT THEY MAY WAIVE SUCH RIGHTS AND BENEFITS. SECTION 1542 OF THE CALIFORNIA
CIVIL CODE PROVIDES:

          A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
          NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
          THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
          SETTLEMENT WITH THE DEBTOR.

     5.   Final Accord and Satisfaction.  This Agreement and the releases
contained herein are intended to be final and binding between the parties hereto
and are further to be effective as a full and final accord and satisfaction
between the parties hereto, and each party to this Agreement expressly relies
on the finality of this Agreement as a substantial, material factor inducing
that party's execution of this Agreement.

     6.   The Effect of Discovery of Different or Additional Facts.  The
parties hereto acknowledge that they are aware that they may hereafter
discover claims presently unknown or unsuspected, or facts in addition to or
different from those which they now know or believe to be true, or related or
associated parties in addition to or different from those which are listed
herein and which the parties believe to exist, pertaining to the matters
released herein. Nevertheless, it is the intention of the parties hereto,
through this Agreement and the releases herein, to fully, finally, and forever
settle and release all such matters, and all claims and parties related
thereto, which do now exist, may exist in the future or heretofore have
existed. In furtherance of such intention, the releases herein given shall be
and remain in effect as a full and complete release of such matters and
parties, notwithstanding the discovery or existence of any such additional or
different claims or facts or parties related thereto by the parties hereto. In
entering into these releases, the parties hereto are not relying upon any
statement, representation, inducement

<PAGE>   20
or promise of any other parties, except as expressly stated in this Agreement.
It is the intent of the parties to this Agreement to release each other from
claims or causes of action arising from facts that were willfully, wrongfully,
or tortuously concealed from the aggrieved parties.

     7.   Assumption of Risks. In entering into this Agreement and the releases
contained herein, the parties hereto recognize that no facts or representations
are ever absolutely certain; accordingly, each party hereto assume the risk of
any misrepresentation, concealment or mistake, and if any party hereto should
subsequently discover that any fact the said party relied upon in entering into
this Agreement was untrue, or that any fact was concealed from that party, or
that any understanding of the facts or the law was incorrect, said party shall
not be entitled to set aside this Agreement by reason thereof, regardless of
any claim of fraud, misrepresentation, promise made without the intention of
performing it, fraud in the inducement, concealment of fact, mistake of fact or
law, or any other circumstances whatsoever. This Agreement and the releases
contained herein are intended to be final and binding upon the parties hereto,
and each of them, and is further intended to be effective as a full and final
accord and satisfaction among the parties hereto, regardless of any claim of
fraud, misrepresentation, promise made without the intention of performing it,
fraud in the inducement, concealment of fact, mistake of fact or law, or any
other circumstances whatsoever. Each party relies upon the finality of this
Agreement and the releases herein as a material factor inducing the party's
execution of this Agreement.

     8.   Generality and Specificity of Releases; Covenant Not to Sue or Make
Claims. The parties hereto intend these releases to be construed in the
broadest possible terms so that the effect of this Agreement is that the
persons released hereby may not be sued by the persons releasing them hereby,
whether directly or indirectly, and no claims may be made related to such
releases whether by way of offset or otherwise or indeed in any manner and for
any reason, under any theory of fact, under any theory of law, under any
alleged set of facts, under any alleged reading of the law and under or
pursuant to any claim of any kind, including (without limitation) claims for
negligence, breach of contract, fraud, theft, breach of fiduciary duty, lender
liability and indeed for any of the disputes set out in any of the recitals set
forth above.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

     Each party to this Agreement hereto represents and warrants to the other
parties hereto as follows:

     9.   Authority and Authorization of Agreement. Such party has all
necessary power and authority to execute and deliver this Agreement and the
other closing documents to which it is a party, to consummate the transactions
contemplated by this Agreement, and to perform all the terms and conditions of
this Agreement and any closing documents to be performed by him or it. No other
proceedings on the part of such party are necessary to authorize this Agreement
or to consummate such transactions.

<PAGE>   21
This Agreement, and the other documents, certificates, and instruments
delivered by such party hereunder, have been duly executed and delivered by
such party and constitute the legal, valid, and binding obligations of such
party, enforceable against him or it in accordance with their terms.

      10.   Consents and Approvals; No Violations. The execution and delivery
by such party of this Agreement and the other closing documents to which he or
it is a party do not, and the consummation by such party of the transactions
contemplated hereby and compliance by such party with the provisions hereof
will not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation of acceleration of any obligations or the loss of a
benefit under or result in the creation of any lien upon or right of first
refusal with respect to any of the properties or assets of such party under,
(i) any provision of the articles of incorporation or bylaws of such party; and
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, obligation, instrument, permit, concession, franchise of
license applicable to such party.

      11.   Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to its
conflicts of laws provisions. Should any provision of this Agreement require
interpretation by an arbitrator or court of competent jurisdiction, it is
agreed by the parties that the arbitrator or court interpreting this Agreement
shall not apply a presumption that the terms of this Agreement shall be more
strictly construed against one party by reason of the rule of construction that
a document is to be construed more strictly against the party who by such party
or through such party's agent prepared such document, it being agreed that the
agents of all parties have participated in the preparation of this Agreement.

      12.   Notices. Any notice or other communication required or permitted
under this Agreement shall be sufficiently given if delivered in person or sent
by telecopy (confirmed telephonically) or by registered or certified mail
(postage prepaid), or by courier (return receipt requested), addressed to the
last known address of the party.

      13.   Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and permitted assigns.

      14.   Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. In addition, the
signature to this Agreement may be made by fax transmission, and the fax
transmittal signature may be attached to this Agreement as if it was an
original.

      15.   Entire Agreement. The parties warrant and represent that their
entering into this Agreement is free and voluntary and has not been induced or
influenced by any representation, promise or other agreements or understandings
other than those expressed herein. This Agreement, including the other
documents referred to herein and therein which form a part hereof and thereof,
contain the entire understanding of the parties
<PAGE>   22
hereto with respect to the subject matter contained herein and therein. This
Agreement supersedes all prior agreements and understandings between the
parties of any kind.

     16.  Amendments and Waivers. This Agreement may not be modified or amended
except by a written instrument executed by all of the parties. Any waiver of
any term, covenant or condition of this Agreement by any party hereto shall not
be effective unless set forth in writing, signed by the party granting such
waiver, and in no event shall any such waiver be deemed to be a waiver of any
other term, covenant or condition of this Agreement or of any subsequent waiver
of the same term, covenant or condition.

     17.  Severability. In case any provision in this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof will not in any way be affected or impaired
thereby.

     18.  Arbitration and Jurisdiction. Any controversy or claim arising out of
or relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association in the County of Los Angeles, and judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction thereof. Each
party hereby irrevocably waives, and agrees not to assert, by way of motion, as
a defense, counterclaim or otherwise, in any action or proceeding with respect
to this Agreement, (i) any claim that is not personally subject to the
jurisdiction as provided herein for any reason other than the failure to
lawfully serve process; (ii) that it or its property is exempt or immune from
such jurisdiction; (iii) that the proceeding is brought in an inconvenient
forum; (iv) that the venue of such proceeding is improper, and (v) any right to
a trial by jury.

     19.  Remedies. Except as otherwise expressly provided herein, none of the
remedies set forth in this Agreement is intended to be exclusive, and each
party shall have all other remedies now or hereafter existing at law or in
equity or by statute or otherwise, and the election of any one or more remedies
shall not constitute a waiver of the right to pursue other available remedies.

     20.  Time of Essence. Time of is expressly made of the essence of this
Agreement.

     21.  Attorneys' Fees. If an arbitrator or other proceeding is brought for
the enforcement of this Agreement, or because of any alleged or actual dispute,
breach, default or misrepresentation in connection with any of the provisions
of this Agreement, the successful or prevailing party shall be entitled to
recover reasonable attorney's fees and other costs incurred in that action or
proceeding in addition to any other relief to which such party may be entitled.

     22.  Gender and Number. As used in this Agreement, the masculine, feminine
or neuter gender, and the singular or plural number shall be deemed to include
the others whenever the context so indicates.

<PAGE>   23
                                    Prime A Investments LLC

                                    By: /s/ PREM REDDY, M.D.
                                       -------------------------------
                                       Prem Reddy, M.D., Manager

                                    /s/ PREM REDDY, M.D.
                                    ----------------------------------
                                    Prem Reddy, M.D.

                                    /s/ DAVID W. ROMBRO
                                    ----------------------------------
                                    David W. Rombro

                                    /s/ RAYMOND MATKO
                                    ----------------------------------
                                    Raymond Matko

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