AMENDED AND RESTATED CREDIT AGREEMENT

                  THIS AMENDED AND RESTATED  CREDIT  AGREEMENT  dated as of June
12,  2000,  among  PROMEDCO  MANAGEMENT  COMPANY,  a Delaware  corporation  (the
"Borrower"),  the  lenders  from  time to time  party  to  this  Agreement  (the
"Lenders"),  BANK OF AMERICA,  N.A.  (formerly  known as  NationsBank,  N.A.), a
national banking association, as administrative agent for the Lenders hereunder,
and BANC OF AMERICA  SECURITIES LLC (formerly  known as  NationsBanc  Montgomery
Securities LLC), as arranger (the "Arranger").

                          Preliminary Statements

                  A. The Agent,  the  Arranger,  the  Lenders  and the  Borrower
entered into that certain  Credit  Agreement  dated as of December 17, 1998,  as
amended by that certain First Amendment to Credit Agreement dated as of December
31, 1998,  as amended and restated by that certain  Amended and Restated  Credit
Agreement and First Amendment to Guarantee and Collateral  Agreement dated as of
June 29, 1999, as further amended by that certain First Amendment to Amended and
Restated  Credit  Agreement  dated as of November 9, 1999, as further amended by
that  certain  Consent  and Second  Amendment  to Amended  and  Restated  Credit
Agreement  dated as of November  12,  1999,  as further  amended by that certain
Consent and Third Amendment to Credit Agreement dated as of January 13, 2000, as
further amended by that certain Fourth  Amendment to Amended and Restated Credit
Agreement  dated  as of March  25,  2000  (collectively,  the  "Existing  Credit
Agreement").

                  B. The parties hereto desire to amend and restate the Existing
Credit Agreement as set forth herein.

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


                          SECTION 1.  DEFINITIONS

                  1.1 Defined Terms.  As used in this  Agreement,  the following
terms shall have the following meanings:


                  "Acquired Asset" means the Capital Stock, assets, control of a
         Physician Group, or management rights with respect to a Physician Group
         acquired or to be acquired by the Borrower or any  Subsidiary  pursuant
         to  a  Permitted   Physician   Transaction  or  a  Permitted  Ancillary
         Acquisition.



<PAGE>




                                        2

                  "Acquired  EBITDA" means,  with respect to any Acquired Assets
         (exclusive of Single Physician  Transactions) for any time period prior
         to the  acquisition  of such assets by the Borrower or any  Subsidiary,
         (a) in the case of a  Permitted  Physician  Transaction,  the Pro Forma
         ProMedCo  Distribution for such period attributable to such assets plus
         depreciation  for such period  attributable to such assets,  and (b) in
         the  case  of  a  Permitted  Ancillary  Acquisition,   the  portion  of
         consolidated  net income of the Prior  Owner  thereof  for such  period
         attributable to the Capital Stock or assets acquired by the Borrower or
         such Subsidiary pursuant to such Permitted Ancillary Acquisition, plus,
         to the extent  deducted in computing such portion of  consolidated  net
         income  for  such  period,  the sum of (i)  income  tax  expense,  (ii)
         interest expense and (iii) depreciation and amortization  expense,  all
         as determined  with respect to such Capital Stock or assets while under
         the ownership of the Prior Owner in accordance with GAAP.

                  "Acquisition"  means as to any Person,  the  acquisition (in a
         single transaction or a series of related  transactions) by such Person
         of (a) at least  20% of the  outstanding  Capital  Stock  of any  other
         Person,  (b) all or substantially all of the assets of any other Person
         or (c) assets  constituting  one or more business units or divisions of
         any other Person. The term "Acquisition"  shall not include a Physician
         Transaction.

                  "Adjusted  Eurodollar Rate" means, for any Eurodollar Loan for
         any Interest Period therefor,  the rate per annum (rounded upwards,  if
         necessary,  to the nearest  1/100 of 1%)  determined by the Agent to be
         equal to the quotient  obtained by dividing (a) the Eurodollar Rate for
         such  Eurodollar  Loan  for such  Interest  Period  by (b) 1 minus  the
         Reserve Requirement for such Eurodollar Loan for such Interest Period.

                  "Affected  Eurodollar  Loans"  has the  meaning  specified  in
subsection 3.7(g).

                  "Affiliate"  means as to any Person,  any other  Person  that,
         directly or indirectly,  controls, is controlled by, or is under common
         control  with,  such Person or is a director or officer of such Person.
         For  purposes  of  this  definition,  "control"  (including  the  terms
         "controlled  by" and "under common control with") of a Person means the
         power,  directly  or  indirectly,  either to (a) vote 5% or more of the
         Capital  Stock  having  ordinary  voting  power  for  the  election  of
         directors  or other  managers of such Person or (b) direct or cause the
         direction of the management or policies of such Person, whether through
         ownership, by contract or otherwise.

                  "Affiliated Provider" means any Person that employs physicians
         for the purpose of  rendering  medical care and that has entered into a
         Service Agreement with the Borrower or any of its Subsidiaries, and any
         individual physician or other licensed health care provider, including,
         but not limited to, a physician's assistant or nurse practitioner,  who
         is employed by such Person.

                  "Agent"  means  Bank of  America,  N.A.,  a  national  banking
         association,  in its  capacity  as the  administrative  agent  for  the
         Lenders  under this  Agreement  and the other Loan  Documents,  and its
         successors and permitted assigns in such capacity.



<PAGE>



                  "Aggregate  Exposure" means, with respect to any Lender at any
         time,  an amount  equal to (a) until the  funding of the Tranche B Term
         Loan,  the aggregate  amount of such Lender's  Commitments at such time
         and (b) thereafter,  the sum of (i) the aggregate then unpaid principal
         amount  of such  Lender's  Term  Loans,  and  (ii) the  amount  of such
         Lender's  Revolving  Credit  Commitment  then  in  effect  or,  if  the
         Revolving Credit  Commitments have been terminated,  the amount of such
         Lender's Aggregate Outstanding Revolving Credit.

                  "Aggregate  Outstanding  Revolving  Credit"  means  as to  any
         Revolving  Credit Lender at any time, an amount equal to the sum of (a)
         the aggregate  principal  amount of all Revolving  Credit Loans made by
         such Revolving  Credit Lender then  outstanding  and (b) such Revolving
         Credit Lender's  Revolving Credit Percentage of the LC Obligations then
         outstanding.

                  "Agreement"   means  this   Credit   Agreement,   as  amended,
         supplemented, modified or restated from time to time.

                  "Applicable  Lending  Office"  means,  for each Lender and for
         each  Type of Loan,  the  "Lending  Office"  of such  Lender  (or of an
         Affiliate of such Lender)  designated for such Type of Loan on Schedule
         1.1(c) or such other  office of such  Lender (or an  Affiliate  of such
         Lender) as such  Lender may from time to time  specify to the Agent and
         the Borrower by written  notice in accordance  with the terms hereof as
         the  office  by  which  its  Loans  of such  Type  are to be  made  and
         maintained.

                  "Applicable Margin" means the applicable percentage determined
         pursuant to the Pricing Grid.

                  "Application"  means  an  application,  in  such  form  as the
         Issuing  Lender may specify from time to time,  requesting  the Issuing
         Lender to issue a Letter of Credit.

                  "Asset  Sale" means any  Disposition  of property or series of
         related  Dispositions  of  property  (excluding  any  such  Disposition
         permitted by clauses (a), (c), (d) and (e) of Section 7.6).

                  "Assignment and Acceptance" means an Assignment and Acceptance
         substantially in the form of Exhibit P.

                  "Available  Cash" means, at any time, the aggregate  amount of
         cash and Cash Equivalents of the Borrower and its Subsidiaries  that is
         not subject to any Lien except Liens  created  pursuant to the Security
         Documents. Available Cash shall not include Restricted Cash.

                  "Available  Revolving  Credit  Commitment"  means,  as to  any
         Revolving Credit Lender at any time, an amount equal to the excess,  if
         any, of (a) such Revolving Credit Lender's  Revolving Credit Commitment
         at such  time,  over  (b)  such  Revolving  Credit  Lender's  Aggregate
         Outstanding Revolving Credit.

                  "Bank of  America"  means Bank of  America,  N.A.,  a national
         banking association.




<PAGE>



                  "Base Rate"  means,  for any day,  the rate per annum equal to
         the higher of (a) the Federal  Funds Rate for such day plus one-half of
         one  percent  (.5%) and (b) the Prime Rate for such day.  Any change in
         the Base Rate due to a change in the Prime  Rate or the  Federal  Funds
         Rate shall be  effective  on the  effective  date of such change in the
         Prime Rate or the Federal Funds Rate.

                  "Base Rate  Loans"  means  Loans that bear  interest  at rates
         based upon the Base Rate.

                  "Borrowing  Date" means any  Business  Day  specified in (a) a
         notice pursuant to Section 2.2 as a date on which the Borrower requests
         the Revolving  Credit Lenders to make Revolving Credit Loans hereunder,
         and (b) a  notice  pursuant  to  Section  2.13 as a date on  which  the
         Borrower requests the Tranche B Term Lenders to make the Tranche B Term
         Loans hereunder.

                  "Business" has the meaning specified in subsection 5.17(b).

                  "Business Day" means (a) a Domestic  Business Day and (b) with
         respect  to any  Eurodollar  Loans,  a Domestic  Business  Day on which
         dealings in Dollar  deposits  are  carried out in the London  interbank
         market.

                  "Calculation  Date" means each date on or after June 30, 2000,
         that is the fifth  Business Day  following  the date that (a) financial
         statements are required to be delivered  pursuant to subsection  6.1(a)
         or 6.1(b), as applicable, for the most recently completed fiscal period
         of the Borrower and (b) the related Compliance  Certificate is required
         to be delivered pursuant to subsection 6.2(b).

                  "Capital Expenditures" means, as to any Person for any period,
         the   aggregate   amount  paid  or  accrued  by  such  Person  and  its
         Subsidiaries  for  rental,  lease,  purchase  (including  by way of the
         acquisition  of  securities  of a Person),  construction  or use of any
         property during such period,  the value or cost of which, in accordance
         with GAAP, would appear on such Person's  consolidated balance sheet in
         the category of property, plant or equipment at the end of such period.

                  "Capital  Lease  Obligations"  means,  as to any  Person,  the
         obligations  of such Person to pay rent or other  amounts under a lease
         of (or other agreement conveying the right to use) real and/or personal
         property which  obligations are required to be classified and accounted
         for as a capital  lease on a balance  sheet of such  Person  under GAAP
         and, for  purposes of this  Agreement,  the amount of such  obligations
         shall be the capitalized amount thereof,  determined in accordance with
         GAAP.

                  "Capital Stock" means, as to any Person,  the equity interests
         in such Person, including, without limitation, the shares of each class
         of capital  stock in any Person  that is a  corporation,  each class of
         partnership interest (including,  without limitation,  general, limited
         and  preference  units) in any Person that is a  partnership,  and each
         class of member  interest  in any  Person  that is a limited  liability
         company  and any and all  warrants  or options to  purchase  any of the
         foregoing.



<PAGE>



                  "Cash  Collateral  Account"  means a cash  collateral  account
         established by the Borrower with the Agent.

                  "Cash Equivalents" means with respect to the Borrower and each
         of its  Subsidiaries (a) securities with maturities of one year or less
         from the date of acquisition  issued or fully  guaranteed or insured by
         the United States Government or any agency thereof, (b) certificates of
         deposit and  eurodollar  time deposits  with  maturities of one year or
         less from the date of  acquisition  and overnight  bank deposits of any
         Lender or of any  commercial  bank having capital and surplus in excess
         of  $500,000,000,  (c)  repurchase  obligations of any Lender or of any
         commercial  bank  satisfying  the  requirements  of clause  (b) of this
         definition,  having a term of not more than thirty days with respect to
         securities  issued or fully  guaranteed or insured by the United States
         Government,  (d) commercial  paper of a domestic  issuer rated at least
         A-2 by S&P or P-2 by Moody's,  (e)  securities  with  maturities of one
         year or less from the date of acquisition issued or fully guaranteed by
         any state,  commonwealth  or  territory  of the United  States,  by any
         political   subdivision   or  taxing   authority  of  any  such  state,
         commonwealth or territory or by any foreign government,  the securities
         of which state, commonwealth,  territory, political subdivision, taxing
         authority or foreign government (as the case may be) are rated at least
         A by S&P or A by Moody's, (f) securities with maturities of one year or
         less from the date of acquisition  backed by standby  letters of credit
         issued by any Lender or any commercial bank satisfying the requirements
         of clause (b) of this  definition  or (g) shares of money market mutual
         or similar  funds which invest  exclusively  in assets  satisfying  the
         requirements of clauses (a) through (f) of this definition.

                  "Certificates   of  Designation"   means  the  Certificate  of
         Designation of Series A Convertible Preferred Stock and the Certificate
         of Designation of Series B Convertible  Preferred Stock of the Borrower
         in the form of  Exhibits  R-1 and R-2,  respectively,  which  are to be
         filed with the  Secretary of State of Delaware in  connection  with the
         Second Closing.

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



<PAGE>



                  "CHAMPVA" means the Civilian Health and Medical Program of the
         Department of Veteran Affairs,  a program of medical benefits  covering
         retirees  and  dependents  of a former  member of the  armed  services,
         established pursuant to 38 U.S.C. ss.ss.  7301-1713 and administered by
         the  Secretary  of Veteran  Affairs,  and all  regulations  promulgated
         thereunder  including  without  limitation  (a)  all  federal  statutes
         (whether set forth in 10 USC ss.ss.  1071-1713 or elsewhere)  affecting
         CHAMPVA,   (b)  to  the  extent  applicable  to  CHAMPVA,  the  CHAMPUS
         regulations  and (c) all rules,  regulations  (including  38 CFR ss.ss.
         17.54),  manuals,  orders and  administrative,  reimbursement and other
         guidelines  of  all  Governmental   Authorities   (including,   without
         limitation, the Department of Health and Human Services, the Department
         of Defense, the Department of Transportation, the Department of Veteran
         Affairs,  the Assistant Secretary of Defense (Health Affairs),  and the
         Office of CHAMPUS,  or any Person succeeding to the functions of any of
         the foregoing) promulgated pursuant to or in connection with any of the
         foregoing (whether or not having the force of law), in each case as may
         be amended, supplemented or otherwise modified from time to time.

                  "Class",  when  used in  reference  to any Loan or  borrowing,
         refers to whether such Loan, or other Loans  comprising such borrowing,
         are  Revolving  Credit Loans,  Tranche A Term Loans,  or Tranche B Term
         Loans.

                  "Closing Date" means June 12, 2000.

                  "Code"  means the Internal  Revenue  Code of 1986,  as amended
         from time to time.

                  "Collateral"  means all assets of the Loan Parties,  now owned
         or hereafter acquired,  upon which a Lien is purported to be created by
         any Security Document.

                  "Commercial  Letter of Credit"  has the meaning  specified  in
         subsection 2.4(b).

                  "Commitment  Fee"  has the  meaning  specified  in  subsection
         3.2(a).

                  "Commitments"  means the  Revolving  Credit  Commitments,  the
         Tranche A Term Commitments, and the Tranche B Term Commitments.

                  "Commonly  Controlled Entity" means an entity,  whether or not
         incorporated,  which is under common  control with the Borrower  within
         the  meaning  of  Section  4001 of  ERISA  or is part of a group  which
         includes the Borrower and which is treated as a single  employer  under
         Section 414 of the Code.

                  "Compliance Certificate" means a compliance certificate in the
         form of Exhibit M.



<PAGE>



                  "Consolidated  EBITDA" shall mean, for any period,  the sum of
         (a) Consolidated Net Income for such period,  plus (b) an amount which,
         in the  determination of Consolidated  Net Income for such period,  has
         been  deducted  for  (i)  Consolidated  Interest  Expense,  (ii)  total
         federal,  state and local  income  taxes  and  (iii)  depreciation  and
         amortization  expense,  all as determined  in accordance  with GAAP and
         Section 1.4.  Notwithstanding the foregoing (and without  duplication),
         (x) if an Acquired Asset has not been an Acquired Asset of the Borrower
         and its  Subsidiaries  for an entire  fiscal  quarter of the  Borrower,
         Consolidated  EBITDA shall include the Acquired EBITDA  attributable to
         such  Acquired  Asset for the  entire  four  quarter  period  for which
         Consolidated  EBITDA is being  measured,  (y) if an Acquired  Asset has
         been an  Acquired  Asset for one or more but less than four full fiscal
         quarters of the Borrower,  Consolidated  EBITDA for such Acquired Asset
         shall be  calculated  by  annualizing  the actual  Consolidated  EBITDA
         attributable to such Acquired Asset for such period of completed fiscal
         quarters over a period of four fiscal quarters,  and (z) in the case of
         a physician that has joined an Affiliated Provider pursuant to a Single
         Physician  Transaction and has been employed by the Affiliated Provider
         for three or fewer, but more than one, fiscal quarters of the Borrower,
         Consolidated  EBITDA for the relevant four quarter period shall include
         the  product  of (aa) the  actual  revenue  (gross  revenue  net of all
         discounts,  allowances and bad debt write-offs and reserves)  generated
         by such a physician  during such fiscal period,  (bb) the Clinic EBITDA
         Margin  (hereinafter  defined) for such fiscal period of the Affiliated
         Provider at which the physician provides services,  and (cc) three (3),
         if such physician has generated fees for one full fiscal  quarter,  one
         (1), if such physician has generated fees for two full fiscal quarters,
         and by one-third  (1/3), if such physician has generated fees for three
         full fiscal quarters. For purposes of this definition, the term "Clinic
         EBITDA Margin" means,  for any period,  the percentage equal to (a) the
         consolidated net income of the relevant  Affiliated  Provider or clinic
         that employs such  physician,  plus to the extent deducted in computing
         consolidated net income for such period,  the sum of (i) total federal,
         state  and  local  income  taxes,  (ii)  interest  expense,  and  (iii)
         depreciation  and  amortization  expense,  divided  by (b)  the  actual
         revenue (gross  revenue net of all  discounts,  allowances and bad debt
         write-offs and reserves) for such Affiliated Provider.

                  "Consolidated  Fixed  Charges"  means for any  period  for the
         Borrower and its  Subsidiaries on a consolidated  basis, the sum of (a)
         Consolidated  Interest Expense for such period (less interest income of
         the Borrower and its Subsidiaries received in cash during such period),
         plus (b) all  scheduled  payments of principal of  Indebtedness  of the
         Borrower  and  its  Subsidiaries  during  such  period  (including  any
         redemption or purchase of such Indebtedness and any scheduled  payments
         or fundings of Program  Loans and split  dollar life  insurance  policy
         premiums)  and  discount or premium  relating to any such  Indebtedness
         (but excluding the Revolving Credit Loans), plus (c) all dividends paid
         by the  Borrower in cash or property  during such  period,  plus (d) an
         amount equal to 20% of the Aggregate  Outstanding  Revolving  Credit on
         the last day of such period in each case  determined on a  consolidated
         basis in accordance with GAAP.

                  "Consolidated  Interest  Expense" means,  for any period,  the
         amount of interest expense,  both expensed and capitalized,  in respect
         of Indebtedness of the Borrower or any of its Consolidated Subsidiaries
         outstanding  during such period (including  imputed interest on Capital
         Lease  Obligations)  determined on a  consolidated  basis in accordance
         with GAAP.



<PAGE>



                  "Consolidated  Net  Income"  means,  for any  period,  the net
         income (or loss) of the Borrower and its Subsidiaries,  determined on a
         consolidated  basis in accordance with GAAP, for such period;  provided
         that there shall be excluded  from such  calculation  of net income (or
         loss) (a) the  income  (if  positive)  of any Person in which any other
         Person  (other than the  Borrower or any of its  Subsidiaries)  has any
         interest,  unless the  Borrower  has the legal right to cause  (through
         control or otherwise)  dividends or other  distributions  to be paid to
         the  Borrower or any of its  Subsidiaries  by such  Person  during such
         period in an amount equal to (i) the amount of such income,  multiplied
         by (ii) the  percentage  ownership  interest  of the  Borrower  and its
         Subsidiaries  in such  Person,  (b) the  income (or loss) of any Person
         accrued prior to the date it becomes a Subsidiary of the Borrower or is
         merged  into  or   consolidated   with  the  Borrower  or  any  of  its
         Subsidiaries  or the date such  Person's  assets  are  acquired  by the
         Borrower  or  any  of  its  Subsidiaries  and  (c)  the  income  of any
         Subsidiary  of the  Borrower  to the  extent  that the  declaration  or
         payment of dividends or similar  distributions  by such  Subsidiary  of
         that income is not at the time  permitted by any  Requirement of Law or
         Contractual Obligation applicable to such Subsidiary.

                  "Consolidated  Net  Worth"  means,  as  of  the  date  of  any
         determination  thereof,  the amount of the shareholders'  equity of the
         Borrower  and its  Consolidated  Subsidiaries  as would be shown on the
         consolidated  balance  sheet  of  the  Borrower  and  its  Consolidated
         Subsidiaries  determined on a  consolidated  basis in  accordance  with
         GAAP.

                  "Consolidated  Senior  Indebtedness" means all Indebtedness of
         the   Borrower   and  its   Subsidiaries,   except   (a)   Subordinated
         Indebtedness,  (b) any  commitment or obligation of the Borrower or any
         Subsidiary to fund or advance premiums for split-dollar  life insurance
         policies  permitted by subsection  7.8(i) and (c)  Indebtedness  of the
         type referred to in clause (m) of the definition of  "Indebtedness"  in
         this Section 1.1.

                  "Consolidated  Subsidiary" means at any date any Subsidiary or
         other Person the accounts of which, in accordance  with GAAP,  would be
         consolidated  with those of the Borrower in its consolidated  financial
         statements as of such date.

                  "Continue," "Continuation," and "Continued" shall refer to the
         continuation  pursuant to subsection  3.5(b) of a Eurodollar  Loan from
         one Interest Period to the next Interest Period.

                  "Continuing Directors" has the meaning specified in subsection
         8(k).

                  "Contract  Rate"  has  the  meaning  specified  in  subsection
         10.16(c).

                  "Contractual   Obligation"   means,  as  to  any  Person,  any
         provision  of any security  issued by such Person or of any  agreement,
         instrument or other  undertaking  to which such Person is a party or by
         which  it  or  any  of  its  property  is  bound,  including,   without
         limitation,   any  provision  in  any  Medicare  or  Medicaid  provider
         agreement to which such Person is a party.



<PAGE>



                  "Convert,"  "Conversion,"  and  "Converted"  shall  refer to a
         conversion pursuant to subsection 3.5(a) or Section 3.12 of one Type of
         Loan into another Type of Loan.

                  "Debt  Issuance"  means the  issuance  by the  Borrower or any
         Subsidiary  of  indebtedness  for  borrowed  money  evidenced by notes,
         bonds,  debentures  or similar  instruments  in the private  placement,
         public  debt,  loan or  syndicated  loan  markets,  including,  without
         limitation,  Subordinated  Debt and debt  convertible  into  equity  or
         Capital Stock.

                  "Default"  means  any  Event of  Default,  whether  or not any
         requirement  for the giving of notice,  the lapse of time,  or both, or
         any other condition, has been satisfied.

                  "Deferred  Purchase  Price" means the deferred  purchase price
         owed by the Borrower (and not a Subsidiary)  to a Physician  Group that
         arises in connection with (a) a Permitted Physician Transaction, or (b)
         any other Physician  Transaction or other  acquisition that is approved
         in writing in advance by the Required Lenders, where (i) the obligation
         to pay the deferred  purchase price arises pursuant to an instrument or
         agreement other than a promissory  note and (ii) the deferred  purchase
         price is to be amortized  on a straight  line basis over a period of at
         least four years,  whether  such  amortization  consists of  quarterly,
         annual,  or  semi-annual  payments.  Deferred  Purchase  Price does not
         include the  portion of the  purchase  price for a Permitted  Physician
         Transaction  or other  acquisition  that is  retained  by the  Borrower
         (exclusive of amounts in escrow) as a holdback pending  verification of
         financial information relevant to calculating the acquisition price.

                  "Deposit  Account" has the meaning  specified in the Guarantee
         and Collateral Agreement.

                  "Deposit  Agreement" means a Deposit Agreement,  substantially
         in the form of Exhibit J, with such  changes or  additions to such form
         as shall be  approved by the Agent,  among a  Depository  Bank,  a Loan
         Party and the relevant Affiliated Provider, as the same may be amended,
         restated, supplemented, waived or otherwise modified from time to time.

                  "Depository  Bank"  means each bank which  shall  enter into a
         Deposit  Agreement as a  "Depository  Bank"  thereunder  and as defined
         therein,  which  shall be (a) a Lender or (b) a  Qualified  Bank.  Each
         Depository Bank and Deposit Account as of the Closing Date is listed on
         Schedule 1.1(a).

                  "Disposition"  means with respect to any  property,  any sale,
         lease, sale and leaseback,  assignment,  conveyance,  transfer or other
         disposition  thereof.  The terms "Dispose" and "Disposed of" shall have
         correlative meanings.

                  "Dollars"  and "$" means  dollars  in lawful  currency  of the
         United States of America.



<PAGE>



                  "Domestic  Business  Day"  means  any day  except a  Saturday,
         Sunday  or other  day on which  commercial  banks in  Charlotte,  North
         Carolina, are required or authorized by law to close.

                  "Eligible  Assignee" means (a) a Lender, (b) an Affiliate of a
         Lender and (c) any other  Person  approved by the Agent and,  unless an
         Event of Default or a Default has  occurred  and is  continuing  at the
         time any  assignment is effected in accordance  with Section 10.6,  the
         Borrower,  such approval not to be unreasonably  withheld or delayed by
         the Borrower and such approval to be deemed given by the Borrower if no
         objection  is received by the  assigning  Lender and the Agent from the
         Borrower  within  two  Business  Days  after  notice  of such  proposed
         assignment  has been provided by the assigning  Lender to the Borrower;
         provided,  however,  that  neither the Borrower nor an Affiliate of the
         Borrower shall qualify as an Eligible Assignee.

                  "Environmental  Laws"  means  any  and all  foreign,  Federal,
         state, local or municipal laws, rules, orders,  regulations,  statutes,
         ordinances,  codes,  decrees,  bases of liability,  requirements of any
         Governmental  Authority or other  Requirements of Law (including common
         law)  regulating,  relating to or imposing  liability  or  standards of
         conduct  concerning the  regulation or protection of health,  safety or
         the environment, as now or may at any time hereafter be in effect.

                  "Equity  Issuance"  means any  issuance by the Borrower or any
         Subsidiary  of  Capital  Stock  to any  Person  or the  receipt  by the
         Borrower or any  Subsidiary  of a capital  contribution  from any other
         Person.  The term "Equity  Issuance"  shall include the issuance by the
         Borrower or any Subsidiary of Capital Stock pursuant to the exercise of
         options or warrants and the conversion of any Indebtedness to equity.

                  "ERISA" means the Employee  Retirement  Income Security Act of
         1974, as amended from time to time, and the regulations promulgated and
         rulings issued thereunder.

                  "Eurodollar  Loans"  means  Loans that bear  interest at rates
         based upon the Adjusted Eurodollar Rate.



<PAGE>



                  "Eurodollar  Rate"  means,  for any  Eurodollar  Loan  for any
         Interest  Period  therefor,  the rate per annum  (rounded  upwards,  if
         necessary,  to the nearest 1/100 of 1%) appearing on Telerate Page 3750
         (or any  successor  page)  as the  London  interbank  offered  rate for
         deposits  in Dollars at  approximately  11:00  A.M.  (London  time) two
         Business Days prior to the first day of such Interest Period for a term
         comparable to such Interest Period.  If for any reason such rate is not
         available,  the term  "Eurodollar  Rate" shall mean, for any Eurodollar
         Loan for any  Interest  Period  therefor,  the rate per annum  (rounded
         upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
         Screen LIBO Page as the London  interbank  offered rate for deposits in
         Dollars at  approximately  11:00 A.M.  (London  time) two Business Days
         prior to the first day of such Interest Period for a term comparable to
         such  Interest  Period;  provided,  however,  if more  than one rate is
         specified on Reuters Screen LIBO Page, the applicable rate shall be the
         arithmetic mean of all such rates (rounded  upwards,  if necessary,  to
         the nearest 1/100 of 1%).

                  "Eurodollar   Tranche"  means  the  collective   reference  to
         Eurodollar  Loans the then current Interest Periods with respect to all
         of which begin on the same date and end on the same later date (whether
         or not such Loans shall originally have been made on the same day).

                  "Event  of  Default"  means  any of the  events  specified  in
         Section 8, provided that any requirement for the giving of notice,  the
         lapse of time, or both, or any other condition, has been satisfied.

                  "Exchange Act" means the  Securities  Exchange Act of 1934, as
         amended from time to time.

                  "Existing  Credit  Agreement"  has the  meaning  specified  in
         Recital A of this Agreement.

                  "Existing  Tranche B Term Lender" has the meaning specified in
         Section 2.14.

                  "Existing  Letters  of  Credit"  means  Letter of  Credit  No.
         T00000000001219  issued  on  August  2,  1999,  in the face  amount  of
         $500,000 to Humana Health Plan.

                  "Existing Subordinated Indebtedness" means all Indebtedness of
         the Borrower and its  Subsidiaries  that,  as of the Closing  Date,  is
         subordinated to the prior payment in full of the Obligations.

                  "Extension of Credit" means, as to any Lender,  the making of,
         or the issuance of, or  participation  in, a Loan by such Lender or the
         issuance of, or participation in, a Letter of Credit by such Lender.

                  "Extraordinary  Receipt" means any cash received by or paid to
         or for  the  account  of the  Borrower  or  any  Subsidiary  not in the
         ordinary  course  of  business,   including,  without  limitation,  tax
         refunds,  pension plan reversions,  payments from Service Agreement and
         split  dollar  agreement  terminations,   repayments  of  split  dollar
         insurance   premiums,   indemnity   payments  and  any  purchase  price
         adjustment   received  in  connection  with  any  purchase   agreement;
         provided,  however, that an Extraordinary Receipt shall not include (A)
         proceeds of any Debt Issuance, Equity Issuance, Asset Sale, or Recovery
         Event,  (B) purchase  price  adjustments  in connection  with Permitted
         Physician  Transactions and Permitted  Ancillary  Acquisitions,  or (C)
         cash  receipts  that are received by the Borrower or any  Subsidiary in
         respect of any third party claim against the Borrower or any Subsidiary
         and applied to pay (or to reimburse the Borrower or any  Subsidiary for
         its prior  payment  of) such  claim and the costs and  expenses  of the
         Borrower or any Subsidiary with respect thereto.


<PAGE>



                  "Facility" means each of (a) the Revolving Credit  Commitments
         and the Revolving  Credit Loans made thereunder (the "Revolving  Credit
         Facility"),  (b) the Tranche A Term  Commitments and the Tranche A Term
         Loans  (the  "Tranche  A Term  Facility"),  and (c) the  Tranche B Term
         Commitments  and  the  Tranche  B  Term  Loans  (the  "Tranche  B  Term
         Facility").

                  "Federal  Funds Rate"  means,  for any day, the rate per annum
         (rounded  upwards,  if necessary,  to the nearest 1/100 of 1%) equal to
         the  weighted   average  of  the  rates  on  overnight   Federal  funds
         transactions  with members of the Federal  Reserve  System  arranged by
         Federal funds brokers on such day, as published by the Federal  Reserve
         Bank of New York on the Business Day next succeeding such day; provided
         that (a) if such day is not a Business  Day, the Federal Funds Rate for
         such day shall be such rate on such  transactions on the next preceding
         Business Day as so published  on the next  succeeding  Business Day and
         (b) if no such rate is so  published on such next  succeeding  Business
         Day,  the  Federal  Funds Rate for such day shall be the  average  rate
         charged to the Agent (in its  individual  capacity) on such day on such
         transactions as determined by the Agent.

                  "Fixed Charge Coverage Ratio" means, for any day, the ratio of
         (a)  Consolidated  EBITDA  for the  period of four  consecutive  fiscal
         quarters of the Borrower  ending on, or most recently  preceding,  such
         day, to (b) Consolidated Fixed Charges for such period.

                  "GAAP" means generally accepted  accounting  principles in the
         United States of America applied on a consistent basis,  subject to the
         terms of Section 1.3.

                  "Goldman Transaction" means the Second Closing and all related
         transactions  pursuant  to the  Transaction  Documents,  including  the
         Initial Investors'  purchase of (a) 425,000 shares of Class A Preferred
         Stock of the  Borrower in exchange for all  Subordinated  Notes held by
         the Initial Investors, 1,250,000 shares of common stock of the Borrower
         and  $26,500,000  in cash and (b) 125,000  shares of Series B Preferred
         Stock of the Borrower in exchange for  $12,500,000  in cash pursuant to
         the  exercise  of the  Initial  Investors'  rights  under  the  Warrant
         Agreement.

                  "Governmental  Authority" means any nation or government,  any
         state or other political  subdivision thereof and any entity exercising
         executive,   legislative,   judicial,   regulatory  or   administrative
         functions of or pertaining to government.

                  "Governmental  Programs"  means Medicare,  Medicaid,  CHAMPUS,
         CHAMPVA and all other governmental health care benefit programs.

                  "Guarantee"  means (a) the Guarantee and Collateral  Agreement
         or (b) any other  guarantee  delivered  to the Agent  guaranteeing  the
         Obligations.

                  "Guarantee and Collateral  Agreement"  means the Guarantee and
         Collateral  Agreement to be executed and  delivered by Borrower and its
         Subsidiaries in substantially the form of Exhibit D, as the same may be
         amended,  restated,  supplemented  or otherwise  modified  from time to
         time.


<PAGE>



                  "Guarantee   Obligation"   means   as  to  any   Person   (the
         "guaranteeing  person"),  any obligation of (a) the guaranteeing person
         or (b) another Person (including,  without  limitation,  any bank under
         any letter of credit) to induce the creation of which the  guaranteeing
         person  has  issued  a  reimbursement,   counterindemnity   or  similar
         obligation,  in either case guaranteeing or in effect  guaranteeing any
         Indebtedness,  leases,  dividends or other  obligations  (the  "primary
         obligations") of any other third Person (the "primary  obligor") in any
         manner, whether directly or indirectly,  including, without limitation,
         any obligation of the guaranteeing  person,  whether or not contingent,
         (i)  to  purchase   any  such  primary   obligation   or  any  property
         constituting  direct or indirect security therefor,  (ii) to advance or
         supply  funds  (A) for the  purchase  or  payment  of any such  primary
         obligation or (B) to maintain working capital, equity capital, earnings
         or other  financial  performance of the primary obligor or otherwise to
         maintain  the net worth or solvency of the  primary  obligor,  (iii) to
         purchase property,  securities or services primarily for the purpose of
         assuring the owner of any such primary obligation of the ability of the
         primary  obligor to make  payment of such  primary  obligation  or (iv)
         otherwise  to assure  or hold  harmless  the owner of any such  primary
         obligation against loss in respect thereof; provided, however, that the
         term Guarantee Obligation shall not include endorsements of instruments
         for deposit or  collection  in the  ordinary  course of  business.  The
         amount of any Guarantee  Obligation of any guaranteeing person shall be
         deemed  to be the  lower  of (a)  an  amount  equal  to the  stated  or
         determinable  amount of the primary obligation in respect of which such
         Guarantee  Obligation is made and (b) the maximum amount for which such
         guaranteeing  person  may  be  liable  pursuant  to  the  terms  of the
         instrument  embodying  such Guarantee  Obligation,  unless such primary
         obligation  and the maximum amount for which such  guaranteeing  person
         may be liable are not stated or determinable,  in which case the amount
         of  such  Guarantee  Obligation  shall  be such  guaranteeing  person's
         maximum  reasonably   anticipated   liability  in  respect  thereof  as
         determined by the Borrower in good faith.

                  "Guarantor"   means  any  Person  (other  than  the  Borrower)
         delivering a Guarantee pursuant to this Agreement.

                  "HCFA"  means the Health  Care  Financing  Administration,  an
         agency of the United States Department of Health and Human Services, or
         any successor.

                  "Health  Care  Permit"   means  any  license,   certification,
         registration,   permit,   approval,   accreditation  or  authorization,
         including  but  not  limited  to,  any  state  medical  license,   Drug
         Enforcement   Agency    registration,    state   controlled   substance
         certificate,  Clinical  Laboratory  Improvements of 1988 identification
         number,  pharmacy permit or business license that is required  pursuant
         to any Requirement of Law to provide medical care or other professional
         health  care  services  or to own,  operate  or  manage  an  Affiliated
         Provider practice.

                  "Hedge  Agreements"  means  interest rate swap,  cap or collar
         agreements,  interest  rate future or option  contracts,  currency swap
         agreements,  currency  future or option  contracts,  and other  similar
         agreements.



<PAGE>



                  "Highest Lawful Rate" means at the particular time in question
         the maximum  non-usurious rate of interest which, under applicable law,
         the Lenders are then  permitted  to charge on the  Obligations.  If the
         maximum rate of interest which,  under  applicable law, the Lenders are
         permitted  to charge on the  Obligations  shall  change  after the date
         hereof,  the Highest  Lawful Rate shall be  automatically  increased or
         decreased,  as the case may be,  from time to time as of the  effective
         time of each change in the Highest  Lawful Rate  without  notice to the
         Borrower.  To the extent,  if any, that Chapter 303 ("Chapter  303") of
         the Texas  Finance  Code, as amended,  establishes  the Highest  Lawful
         Rate, the Highest Lawful Rate shall be the "weekly ceiling" (as defined
         in Chapter 303).

                  "Indebtedness"  means,  with  respect to any  Person,  without
         duplication, (a) all obligations of such Person for borrowed money, (b)
         all obligations of such Person evidenced by bonds, debentures, notes or
         similar   instruments,   (c)  all  obligations  of  such  Person  under
         conditional  sale or  other  title  retention  agreements  relating  to
         property or assets  purchased by such Person,  (d) all  obligations  of
         such  Person for the  deferred  purchase  price of property or services
         (excluding  trade  accounts  payable not more than ninety days past due
         incurred in the ordinary course of business,  but including commitments
         or  obligations  to  advance  or fund  premiums  on  split-dollar  life
         insurance policies),  (e) all obligations of such Person secured by any
         Lien on any property or asset owned by such Person,  whether or not the
         obligations of such Person secured thereby shall have been assumed, (f)
         all Capital Lease  Obligations of such Person,  (g) all  obligations of
         such Person in respect of letters of credit,  bankers'  acceptances and
         similar  instruments,  (h) all  obligations  of such Person under Hedge
         Agreements,  (i) any "withdrawal liability" of such Person as such term
         is  defined  under Part I of  Subtitle E of Title IV of ERISA,  (j) the
         principal portion of all obligations of such Person under any Synthetic
         Lease, (k) all Guarantee Obligations of such Person, (l) all Redeemable
         Securities  of  such  Person,  (m) at any  date of  determination,  all
         obligations  or  commitments of such Person to make or fund advances or
         payments  with respect to Program  Loans during the twelve month period
         following  such date (and with  respect  to any  specific  period,  all
         Program  Loans  scheduled  to be made during  such  period) and (n) the
         aggregate  amount of  uncollected  accounts  receivable  of such Person
         subject at such time to a sale of receivables (or similar  transaction)
         regardless of whether such  transaction is effected without recourse to
         such Person or in a manner that would not be  reflected  on the balance
         sheet of such Person in accordance  with GAAP. The  Indebtedness of any
         Person  shall  include  the   Indebtedness   of  any   partnership   or
         unincorporated  joint venture in which such Person is a general partner
         or joint venturer.

                  "Indemnified  Party" has the meaning  specified in  subsection
         10.5(c).

                  "Initial Closing Date" means December 17, 1998.

                  "Initial  Investors"  means GS Capital  Partners III, L.P., GS
Capital Partners III Offshore,  L.P., Goldman Sachs & Co., Verwaltungs GMBH, and
Stone Street Fund 2000, LLC.



<PAGE>



                  "Insolvency"  means, with respect to any  Multiemployer  Plan,
         the condition that such Plan is insolvent within the meaning of Section
         4245 of ERISA.

                  "Insolvent" means pertaining to a condition of Insolvency.

                  "Intellectual  Property" has the meaning  specified in Section
         5.9.

                  "Interest  Payment  Date"  means (a) as to any Base Rate Loan,
         the last day of each March, June, September and December, (b) as to any
         Eurodollar  Loan having an Interest Period of three months or less, the
         last day of such  Interest  Period  and (c) as to any  Eurodollar  Loan
         having an Interest  Period longer than three months,  each day which is
         three months after the first day of such  Interest  Period and the last
         day of such Interest Period.

                  "Interest Period" means with respect to any Eurodollar Loan:

                  (i) initially,  the period commencing on the Borrowing Date or
         Conversion  date,  as the case may be, with respect to such  Eurodollar
         Loan and ending one, two, three or six months  thereafter,  as selected
         by the Borrower in its Notice of Borrowing or Notice of Conversion,  as
         the case may be, given with respect thereto; and

                  (ii) thereafter, each period commencing on the last day of the
         next preceding  Interest Period  applicable to such Eurodollar Loan and
         ending one,  two,  three or six months  thereafter,  as selected by the
         Borrower  by  irrevocable  notice  to the  Agent  not less  than  three
         Business Days prior to the last day of the then current Interest Period
         with respect thereto; provided that, all of the foregoing provisions
         relating to Interest Periods are subject to the following:

                  (1) if any Interest  Period  pertaining to any Eurodollar Loan
         would  otherwise end on a day that is not a Business Day, such Interest
         Period shall be extended to the next succeeding Business Day (unless in
         the case of a Eurodollar Loan, the result of such extension would be to
         carry such Interest  Period into another  calendar month in which event
         such Interest  Period shall end on the immediately  preceding  Business
         Day);

                  (2) any Interest Period that would otherwise extend beyond the
         Revolving Credit  Termination  Date, the Tranche A Maturity Date or the
         Tranche B Maturity Date shall end on the Revolving  Credit  Termination
         Date,  the Tranche A Maturity  Date, or the Tranche B Maturity Date, as
         the case may be;

                  (3) any Interest  Period  pertaining to a Eurodollar Loan that
         begins on the last  Business  Day of a calendar  month (or on a day for
         which there is no numerically  corresponding  day in the calendar month
         at the end of such Interest  Period) shall end on the last Business Day
         of a calendar month; and



<PAGE>



                  (4) the Borrower  shall select  Interest  Periods so as not to
         require  a payment  or  prepayment  of any  Eurodollar  Loan  during an
         Interest Period for such Loan.

                  "Investment" has the meaning specified in Section 7.8.

                  "Issuing  Lender"  means Bank of America,  in its  capacity as
         issuer of any Letter of Credit.

                  "Joinder Agreement" means a Joinder Agreement in substantially
         the form of Exhibit Q.

                  "LC Commitment" means $10,000,000.

                  "LC Fee Payment Date" means the last day of each March,  June,
         September and December.

                  "LC Obligations" means at any time, an amount equal to the sum
         of (a) the  aggregate  then  undrawn and  unexpired  amount of the then
         outstanding  Letters of Credit and (b) the aggregate amount of drawings
         under Letters of Credit which have not then been reimbursed pursuant to
         subsection 2.7(a).

                  "LC Participants" means the collective reference to all of the
         Revolving Credit Lenders other than the Issuing Lender.

                  "Lending Party" has the meaning specified in Section 10.15.

                  "Letters of Credit"  has the  meaning set forth in  subsection
         2.4(a), and shall include the Existing Letter of Credit.

                  "Leverage  Ratio" shall mean,  as of any day, the ratio of (a)
         Total Debt (less  Restricted  Cash) as of such day to (b)  Consolidated
         EBITDA  for the  period  of four  consecutive  fiscal  quarters  of the
         Borrower ending on, or most recently preceding, such day.

                  "Lien" means any mortgage, pledge, hypothecation,  assignment,
         deposit arrangement,  encumbrance,  lien (statutory or other),  charge,
         levy, execution, seizure, attachment, garnishment, security interest or
         other  encumbrance  or  any  preference,  priority  or  other  security
         agreement or preferential  arrangement of any kind or nature whatsoever
         (including,  without  limitation,  any conditional  sale or other title
         retention  agreement having  substantially  the same economic effect as
         any of the foregoing and any Synthetic Lease).

                  "Loan" means any Revolving  Credit Loan,  Tranche A Term Loan,
         or Tranche B Term Loan.



<PAGE>



                  "Loan  Documents"  means this  Agreement,  the Notes,  and the
         Security  Documents,  in each case as  amended,  restated,  modified or
         supplemented from time to time.

                  "Loan Parties"  means the Borrower and each  Subsidiary of the
         Borrower which is a party to a Loan Document.

                  "Lockbox  Account" has the meaning  specified in the Guarantee
         and Collateral Agreement.

                  "Lockbox  Agreement" means a Lockbox Agreement,  substantially
         in the form of Exhibit I, with such  changes or  additions to such form
         as shall be approved by the Agent,  among a Loan Party,  a Lockbox Bank
         and the  Agent,  as the same may be  amended,  restated,  supplemented,
         waived or otherwise modified from time to time.

                  "Lockbox  Bank"  means  each bank  which  shall  enter  into a
         Lockbox  Agreement  as the  "Lockbox  Bank"  thereunder  and as defined
         therein,  which  shall be (a) a Lender or (b) a  Qualified  Bank.  Each
         Lockbox  Bank and Lockbox  Account as of the Closing  Date is listed on
         Schedule 1.1(b).

                  "Material Adverse Effect" means any act, circumstance or event
         that (a) could be  material  and adverse to the  business,  operations,
         property,  condition  (financial  or  otherwise)  or  prospects  of the
         Borrower  and its  Subsidiaries  taken  as a whole,  (b) in any  manner
         whatsoever  could  materially and adversely  affect (i) the validity or
         enforceability  of this  Agreement or any of the other Loan  Documents,
         (ii) the rights,  remedies,  powers or  privileges  of the Agent or the
         Lenders under this  Agreement or under any of the other Loan  Documents
         or  (iii)  the  Collateral,  or (c)  changes,  or could  reasonably  be
         expected to change, the  characterization  and treatment of assignments
         of Receivables  from the  Affiliated  Providers to the Borrower and its
         Subsidiaries pursuant to the Service Agreements as something other than
         true sales.

                  "Material   Contract"  means,  as  to  the  Borrower  and  its
         Subsidiaries,  (a) any Service Agreement, and (b) any supply, purchase,
         employment,  tax, tax sharing,  indemnity,  shareholder,  debt or other
         agreement  that,  under  applicable  Requirements  of  Law  (including,
         without limitation,  the rules,  regulations and interpretations of the
         Securities and Exchange Commission), is required to be disclosed to the
         public.

                  "Material Environmental Amount" means an amount payable by the
         Borrower  and/or its  Subsidiaries  in excess of $100,000  for remedial
         costs, compliance costs, compensatory damages, punitive damages, fines,
         penalties or any combination thereof.

                  "Materials  of  Environmental  Concern"  means any gasoline or
         petroleum  (including crude oil) or petroleum products or any hazardous
         or toxic substances,  materials or wastes, defined, listed,  classified
         or  regulated  as such in or under any  Environmental  Law,  including,
         without   limitation,   asbestos,   petroleum  or  petroleum   products
         polychlorinated biphenyls and urea-formaldehyde insulation.


<PAGE>



                  "Medicaid" means the medical assistance program established by
         Title XIX of the Social  Security Act (42 USC ss.ss.  1396 et seq.) and
         any  statutes  succeeding  thereto,  and  all  regulations  promulgated
         thereunder,  including  without  limitation  (a) all  federal  statutes
         (whether  set  forth  in  Title  XIX  of  the  Social  Security  Act or
         elsewhere)  affecting  Medicaid,  (b) all state  statutes and plans for
         medical assistance enacted in connection with such statutes and federal
         rules and  regulations  promulgated  pursuant to or in connection  with
         such  statutes  and  (c)  all  applicable   provisions  of  all  rules,
         regulations,  manuals,  orders and  administrative,  reimbursement  and
         other guidelines of all Governmental  Authorities  (including,  without
         limitation,  the  Department of Health and Human  Resources,  HCFA, the
         office of the Inspector  General for the Department of Health and Human
         Services,  or any  Person  succeeding  to the  functions  of any of the
         foregoing)  promulgated  pursuant to or in  connection  with any of the
         foregoing  (whether  or not having  the force of law),  in each case as
         amended, supplemented or otherwise modified from time to time.

                  "Medicare" means the health insurance program for the aged and
         disabled  established by Title XVIII of the Social Security Act (42 USC
         ss.ss.  1395 et seq.)  and any  statutes  succeeding  thereto,  and all
         regulations  promulgated  thereunder,  including without limitation (a)
         all federal  statutes  (whether  set forth in Title XVIII of the Social
         Security Act or elsewhere)  affecting  Medicare and (b) all  applicable
         provisions   of   all   rules,   regulations,   manuals,   orders   and
         administrative,  reimbursement and other guidelines of all Governmental
         Authorities  (including,  without limitation,  the Department of Health
         and Human Services,  HCFA, the office of the Inspector  General for the
         Department of Health and Human  Services,  or any Person  succeeding to
         the functions of any of the  foregoing)  promulgated  pursuant to or in
         connection  with any of the foregoing  (whether or not having the force
         of law), in each case as amended,  supplemented  or otherwise  modified
         from time to time.

                  "Moody's" means Moody's Investors Service, Inc.

                  "Mortgaged  Properties"  means  the real  property  listed  on
         Schedule  5.27(b) and such other  properties  as to which the Agent for
         the  benefit  of the  Lenders  shall be  granted a Lien  pursuant  to a
         Mortgage.

                  "Mortgages"  means the collective  reference to the mortgages,
         deeds of trust and other similar documents  executed and delivered from
         time to time by the Borrower and its  Subsidiaries  in favor of, or for
         the benefit,  of the Agent, as security for the Obligations or any part
         thereof,  (with such changes  thereto as may be required by the Agent),
         as the  same  may be  amended,  restated,  supplemented,  or  otherwise
         modified from time to time.

                  "Multiemployer  Plan"  means a Plan  which is a  multiemployer
         plan as defined in Section 4001(a)(3) of ERISA.



<PAGE>



                  "Net Cash  Proceeds"  means with  respect  to any Asset  Sale,
         Equity  Issuance,  Debt  Issuance,  Recovery  Event,  or  Extraordinary
         Receipt,  the gross amount of cash  proceeds paid to or received by the
         Borrower  or any  Subsidiary  in  respect of such  Asset  Sale,  Equity
         Issuance,  Debt Issuance,  Recovery Event, or Extraordinary Receipt, as
         the case may be (including cash proceeds  subsequently  received at any
         time in respect of such Asset Sale,  Equity  Issuance,  Debt  Issuance,
         Recovery Event or Extraordinary  Receipt,  from non-cash  consideration
         initially  received or otherwise),  net of  underwriting  discounts and
         commissions or placement  fees,  investment  banking fees,  legal fees,
         consulting fees,  accounting fees and other customary fees and expenses
         directly  incurred by the  Borrower  or any  Subsidiary  in  connection
         therewith  (other than those payable to the Borrower or any  Subsidiary
         or any Affiliate of any such Person).

                  "New  Tranche B Term  Lender"  has the  meaning  specified  in
         Section 2.14.

                  "Notes" means the Revolving  Credit Notes,  the Tranche A Term
         Notes, and the Tranche B Term Notes.

                  "Notice of Borrowing" means a notice in substantially the form
         of Exhibit A.

                  "Notice   of   Conversion/Continuation"   means  a  notice  in
         substantially the form of Exhibit B.

                  "Obligations"  means  all  present  and  future  indebtedness,
         obligations  and  liabilities  of  every  type and  description  of the
         Borrower  or any  other  Loan  Party  at any time  arising  under or in
         connection  with this  Agreement  or any other Loan  Document,  whether
         fixed or contingent, due or to become due to the Agent, any Lender, any
         Person required to be indemnified  under any Loan Document or any other
         Person  and  shall  include  (a) all  liability  for  principal  of and
         interest (including post-petition interest) on the Loans, the Notes and
         Reimbursement   Obligations  and  (b)  all  liability  under  the  Loan
         Documents  for any  additional  interest,  fees,  taxes,  compensation,
         costs, losses, expense reimbursements and indemnification.

                  "Offering   Memorandum"   means  the   Confidential   Offering
         Memorandum  dated February 2000,  used by the Agent in connection  with
         the syndication of the Commitments.

                  "Other Taxes" has the meaning specified in subsection 3.14(b).

                  "Participant" has the meaning specified in subsection 10.6(e).

                  "PBGC"  means  the  Pension   Benefit   Guaranty   Corporation
         established pursuant to Subtitle A of Title IV of ERISA.



<PAGE>



                  "Permitted  Ancillary   Acquisition"  means  any  Acquisition,
         provided that (a) such  Acquisition  will not cause the Borrower or any
         Subsidiary to violate Section 7.16, (b) such Acquisition is approved by
         the board of  directors  (or other  comparable  governing  body) of the
         Person whose  assets or Capital  Stock are being  acquired  pursuant to
         such  Acquisition,  (c) no  Default  or Event  of  Default  shall  have
         occurred and be continuing or would result from such Acquisition or the
         incurrence of Indebtedness in connection with such Acquisition,  (d) as
         of the closing date of such Acquisition (before and after giving effect
         to such Acquisition),  the  representations and warranties of each Loan
         Party in each Loan Document shall be true and correct on such date with
         the same force and  effect as if made on such date,  (e) in the case of
         an acquisition  of Capital Stock,  there shall be no restriction on the
         ability  of the  relevant  Loan  Party to grant the Agent a  perfected,
         first  priority  security  interest  in such  Capital  Stock  or on the
         ability of the Agent to convey,  assign, sell, or transfer such Capital
         Stock pursuant to the Security Documents, (f) the aggregate Transaction
         Amount for  Acquisitions  shall not exceed  the  Permitted  Transaction
         Amount,  and (g) at the closing of such  Acquisition  (and after giving
         effect   thereto  and  all   Extensions   of  Credit  to  finance  such
         Acquisition), the Borrower shall have at least $15,000,000 of borrowing
         availability  under  the  Revolving  Credit  Commitments  (or,  if  the
         Revolving Credit  Commitments have terminated,  at least $15,000,000 of
         Available  Cash).  Any  Acquisition  that does not  satisfy  all of the
         requirements  of this  definition  shall  not  constitute  a  Permitted
         Ancillary Acquisition.




<PAGE>



                  "Permitted   Physician    Transaction"   means   a   Physician
         Transaction  that satisfies each of the following terms and conditions:
         (a) the Physician  Transaction  relates to a line of business permitted
         by Section  7.16,  (b) a Physician  Transaction  structured as an asset
         acquisition (except for Physician  Transactions of the type referred to
         in clause (e) of the  definition of "Physician  Transaction")  shall be
         for the entire business,  division, facility, operation or product line
         of the Physician  Group or other Person,  excluding  medical assets not
         acquired by the Borrower or a Subsidiary,  (c) a Physician  Transaction
         structured  as an  acquisition  of Capital  Stock (except for Physician
         Transactions of the type referred to in clause (e) of the definition of
         "Physician Transaction") shall be effected through the purchase of 100%
         of the  Capital  Stock of the  Physician  Group or other  Person by the
         Borrower  or through a merger  between  such  Physician  Group or other
         Person and the Borrower or a Wholly Owned  Subsidiary  of the Borrower,
         as the case may be, so that after giving  effect to such merger 100% of
         the Capital  Stock of the  surviving  entity of such merger is owned by
         the  Borrower or a Wholly  Owned  Subsidiary  of the  Borrower,  (d) no
         Default or Event of Default  shall have  occurred and be  continuing or
         would result from such  Physician  Transaction or the incurrence of any
         Indebtedness in connection with such Physician  Transaction,  (e) as of
         the closing date of such Physician Transaction (before and after giving
         effect to such transaction), the representations and warranties of each
         Loan Party in each Loan Document shall be true and correct on such date
         with the same force and  effect as if made on such  date,  (f) prior to
         the date of such  Physician  Transaction,  such  Physician  Transaction
         shall have been approved by the board of directors (or other  governing
         body) and, if applicable,  the  shareholders  of the Physician Group or
         other  Person  whose  Capital  Stock or assets  are being  acquired  in
         connection  with such Physician  Transaction  and no claim or challenge
         shall have been  threatened  by any  shareholder  or  director  of such
         Physician  Group or other Person which could  reasonably be expected to
         have a  material  adverse  effect on such  Physician  Transaction  or a
         Material  Adverse  Effect,  (g) the  Transaction  Amount  for each such
         Physician  Transaction shall not exceed $10,000,000,  (h) the aggregate
         Transaction  Amount  for  Permitted  Physician  Transactions  shall not
         exceed the Permitted Transaction Amount, and (i) at the closing of each
         Permitted Physician Transaction (and after giving effect thereto and to
         all  Extensions of Credit to finance such Physician  Transaction),  the
         Borrower  shall have at least  $15,000,000  of  borrowing  availability
         under the Revolving  Credit  Commitments  (or, if the Revolving  Credit
         Commitments  have expired or been terminated,  at least  $15,000,000 of
         Available Cash). Any Physician Transaction that does not satisfy all of
         the  requirements of this  definition  shall not constitute a Permitted
         Physician Transaction.

                  "Permitted Transaction Amount"  means:

                  (a) with respect to Physician  Transactions  that close during
         any  twelve-month  period after the Closing Date,  an aggregate  amount
         equal to the difference  between (i) $25,000,000 and (ii) the aggregate
         Transaction  Amount for all  Acquisitions  that have closed during such
         period;

                  (b) with respect to Physician  Transactions  that close during
         any calendar quarter, $10,000,000;  provided, however, that (i) between
         the Closing  Date and  September  30,  2000,  the  aggregate  Permitted
         Transaction  Amount for Physician  Transactions  that close during such
         period  shall be  $15,000,000  and (ii)  between the  Closing  Date and
         December 31,  2000,  the  aggregate  Permitted  Transaction  Amount for
         Physician   Transactions   that  close  during  such  period  shall  be
         $20,000,000; and

                  (c)  with  respect  to  Acquisitions  that  close  during  any
         twelve-month  period after the Closing Date, an aggregate  amount equal
         to the lesser of (i)  $5,000,000 and (ii) the amount  determined  under
         clause (a) above of this definition for such period.

                  "Person"  means  an  individual,   partnership,   corporation,
         limited  liability  company,  limited liability  partnership,  business
         trust, joint stock company, trust,  unincorporated  association,  joint
         venture,    professional    corporation,    professional   association,
         Governmental Authority or other entity of whatever nature.

                  "Physician Group" means (a) any individual  physician or other
         licensed  health care  provider,  (b) any  professional  corporation or
         professional  association  that employs or  contracts  with one or more
         licensed  physicians  for the purpose of  engaging  in the  delivery of
         medical care, and (c) any physician practice management company.



<PAGE>



                  "Physician  Transaction"  means any  transaction  or series of
         related  transactions by which the Borrower or any Subsidiary  directly
         or  indirectly  (a)  acquires  all or  part of the  assets,  or a going
         business  concern or division,  of a Physician  Group,  whether through
         purchase of assets or Capital Stock, merger or otherwise,  (b) acquires
         control of a  Physician  Group,  (c)  acquires  the right to manage the
         non-medical aspects of the business of a Physician Group (including the
         acquisition  and/or  assumption of management  service  agreements with
         Physician  Groups),   (d)  employs   physicians,   (e)  enters  into  a
         development   agreement  with  a  Physician  Group  for  physician  and
         physician related services,  or (f) provides loans,  bonuses,  or other
         inducements  with respect to any of the  foregoing.  For the purpose of
         this   definition,   "control"  means  the   possession,   directly  or
         indirectly, of the power to direct or cause the direction of management
         and  non-medical  policies,  whether  through the  ownership  of voting
         securities,  by  contract  or  otherwise.  Notwithstanding  the  above,
         "control" shall not include, and shall not be construed to include, the
         power to direct any  physician's  practice  of medicine or the power to
         interfere in any  physician/patient  relationship.  The term "Physician
         Transaction"  shall  include any  amendment,  modification,  extension,
         renewal,  restructuring,  replacement  or  restatement  of any  Service
         Agreement.

                  "Plan" means, at a particular  time, any employee benefit plan
         which is covered by ERISA and in  respect  of which the  Borrower  or a
         Commonly Controlled Entity is (or, if such plan were terminated at such
         time,  would under Section 4069 of ERISA be deemed to be) an "employer"
         as defined in Section 3(5) of ERISA.

                  "Preferred  Stock" means Series A Convertible  Preferred Stock
         and  Series  B  Convertible  Preferred  Stock  of the  Borrower  issued
         pursuant to the Securities  Purchase  Agreement and the Certificates of
         Designation.

                  "Pricing Grid" means the Pricing Grid attached hereto as Annex
         A.

                  "Prime Rate" means the per annum rate of interest  established
         from time to time by Bank of America as its prime rate,  which rate may
         not be the lowest  rate of  interest  charged by Bank of America to its
         customers.

                  "Prior Owner" means,  with respect to any Permitted  Ancillary
         Acquisition by the Borrower or any of its  Subsidiaries,  the Person or
         Person(s)  that was or were the owner(s) of the Capital Stock or assets
         acquired by the Borrower or such Subsidiary  pursuant to such Permitted
         Ancillary Acquisition.

                  "Pro  Forma  Balance  Sheet"  has  the  meaning  specified  in
         subsection 5.1(b).

                  "Pro Forma ProMedCo  Distribution"  means, with respect to any
         Acquired Asset for any period, the Pro Forma ProMedCo  Distribution (as
         such  term is  defined  in  Schedule  1.1(e))  based  upon the  actual,
         historical financial performance of such Acquired Asset.

                  "Program  Loan" means a loan or advance by the Borrower or any
         Subsidiary to a Physician  Group, or a commitment to make any such loan
         or  advance,  in  connection  with such  Physician  Group  becoming  an
         Affiliated  Provider pursuant to a Permitted  Physician  Transaction or
         any other Physician  Transaction  approved by the Required Lenders, the
         proceeds of which have been or will be used by the Affiliated  Provider
         to make loans or  advances  to the  physicians  who are members of such
         Physician Group.

                  "Properties" has the meaning specified in subsection 5.17(a).

                  "Qualified  Bank" means any bank (a) having  combined  capital
         and surplus of at least  $50,000,000  and (b) the  deposit  accounts of
         which are insured by the Federal Deposit Insurance  Corporation (or any
         successor).


<PAGE>



                  "Qualified   Subordinated   Indebtedness"  means  Subordinated
         Indebtedness   issued   after  the  date  hereof  by  the  Borrower  to
         institutional   investors  in  an  amount  greater  than  or  equal  to
         $80,000,000  where the Borrower  receives the Net Cash Proceeds of such
         issuance within one Business Day after such issuance.

                  "Receivable"  means any  right to  payment  for goods  sold or
         leased or for services rendered, whether or not such right is evidenced
         by an Instrument or Chattel Paper and whether or not it has been earned
         by performance  (including,  without  limitation,  any Account or other
         receivable).

                  "Recovery Event" means any settlement of or payment in respect
         of any  property  or  casualty  insurance  claim  or  any  condemnation
         proceeding relating to any asset of the Borrower or any Subsidiary.

                  "Redeemable  Securities" of any Person means any Capital Stock
         of such Person which by its terms (or by the terms of any security into
         which  it  is   convertible  or  for  which  it  is   exchangeable   or
         exercisable),  upon the happening of any event or otherwise (a) matures
         or is  mandatorily  redeemable or subject to any  mandatory  repurchase
         requirement  (other  than as a result of a Change of  Control,  as such
         term is defined in the  Certificates  of  Designation),  pursuant  to a
         sinking  fund  obligation  or  otherwise,  (b) is  convertible  into or
         exchangeable or exercisable for  Indebtedness or Redeemable  Securities
         or (c) is redeemable or subject to any repurchase  requirement  arising
         at the option of the holder thereof (other than as a result of a Change
         of  Control,   as  such  term  is  defined  in  the   Certificates   of
         Designation),  in  whole or in  part,  in each  case on or prior to the
         Tranche B Maturity Date.

                  "Register" has the meaning specified in subsection 10.6(c).

                  "Registration  Rights Agreement" means the Registration Rights
         Agreement  dated  January 13,  2000,  among the Company and the Initial
         Investors.

                  "Regulation U" means Regulation U of the Board of Governors of
         the Federal Reserve System as in effect from time to time.

                  "Regulations"  means  Regulations  T, U and X of the  Board of
         Governors of the Federal Reserve System as in effect from time to time.

                  "Reimbursement   Obligation"   means  the  obligation  of  the
         Borrower to reimburse the Issuing Lender pursuant to subsection  2.7(a)
         for amounts drawn under Letters of Credit.

                  "Reinvestment  Deferred  Amount"  means  with  respect  to any
         Reinvestment  Event,  the aggregate  Net Cash Proceeds  received by the
         Borrower or any of its  Subsidiaries  in connection  therewith that are
         not  applied  to prepay the Term Loans or the  Revolving  Credit  Loans
         pursuant  to  subsection  3.7(d)  as a  result  of  the  delivery  of a
         Reinvestment Notice.


<PAGE>



                  "Reinvestment Event" means any Asset Sale or Recovery Event in
         respect of which the Borrower has delivered a Reinvestment Notice.

                  "Reinvestment  Notice"  means a written  notice  executed by a
         Responsible  Officer  stating  that no Event of Default or Default  has
         occurred  and  is  continuing  and  that  the  Borrower   (directly  or
         indirectly  through a  Subsidiary)  intends and expects to use all or a
         specified portion of the Net Cash Proceeds of an Asset Sale or Recovery
         Event to acquire assets useful in its business.

                  "Reinvestment  Prepayment  Amount"  means with  respect to any
         Reinvestment  Event, the Reinvestment  Deferred Amount relating thereto
         less any amount expended prior to the relevant Reinvestment  Prepayment
         Date to acquire assets useful in the Borrower's business.

                  "Reinvestment  Prepayment  Date"  means  with  respect  to any
         Reinvestment  Event,  the earlier of (a) the date  occurring six months
         after such  Reinvestment  Event and (b) the date on which the  Borrower
         shall  have  determined  not to, or shall  have  otherwise  ceased  to,
         acquire  assets  useful  in the  Borrower's  business  with  all or any
         portion of the relevant Reinvestment Deferred Amount.

                  "Reorganization"  means,  with  respect  to any  Multiemployer
         Plan,  the  condition  that such plan is in  reorganization  within the
         meaning of Section 4241 of ERISA.

                  "Reportable  Event"  means  any of the  events  set  forth  in
         Section  4043(b)  of ERISA,  other  than  those  events as to which the
         thirty day notice  period is waived under  subsections  .13,  .14, .16,
         .18, .19 or .20 of PBGC Reg. ss. 2615.

                  "Required   Facility  Lenders"  means,  with  respect  to  any
         Facility,  the  holders  of at least  66_% of the  Loans  or  Aggregate
         Outstanding  Revolving  Credit,  as the case may be,  outstanding under
         such Facility (or, in the case of the Revolving Credit Facility,  prior
         to any termination of the Revolving Credit Commitments,  the holders of
         at least 66_% of the Revolving Credit Commitments).

                  "Required Lenders" means, at any time, the holders of at least
         66_%  of (a)  until  the  funding  of the  Tranche  B  Term  Loan,  the
         Commitments  then  in  effect  and (b)  thereafter,  the sum of (i) the
         aggregate principal amount of the Term Loans then outstanding, and (ii)
         the Revolving Credit  Commitments  then in effect,  or if the Revolving
         Credit  Commitments  have been  terminated  or expired,  the  Aggregate
         Outstanding Revolving Credit.

                  "Required  Revolving  Credit  Lenders"  means,  at  any  time,
         Revolving  Credit  Lenders the Revolving  Credit  Percentages  of which
         aggregate at least 66_%.

                  "Required  Tranche A Term  Lenders"  means,  at any time,  the
         Tranche  A Term  Lenders  the  Tranche  A  Term  Percentages  of  which
         aggregate at least 66_%.



<PAGE>



                  "Required  Tranche B Term  Lenders"  means,  at any time,  the
         Tranche  B Term  Lenders  the  Tranche  B  Term  Percentages  of  which
         aggregate at least 66_%.

                  "Requirement of Law" means, as to any Person,  the certificate
         of  incorporation  and  by-laws or other  organizational  or  governing
         documents of such Person, and any law, statute, ordinance, code, order,
         decree, treaty, rule or regulation or determination of an arbitrator or
         a court or other Governmental  Authority, in each case applicable to or
         binding upon such Person or any of its property or to which such Person
         or any of its property is subject,  including,  without limitation, all
         laws, statutes, rules, regulations,  ordinances, codes, decrees, orders
         and  guidelines   governing,   relating  or  otherwise   applicable  to
         Governmental  Programs to which such Person or its  property is subject
         or in which such Person has elected to  participate  or with which such
         Person has contracted.

                  "Reserve  Requirement" means, at any time, the maximum rate at
         which reserves (including,  without limitation, any marginal,  special,
         supplemental,  or emergency  reserves)  are  required to be  maintained
         under regulations issued from time to time by the Board of Governors of
         the Federal  Reserve  System (or any  successor) by member banks of the
         Federal Reserve System against "Eurocurrency liabilities" (as such term
         is used in Regulation D). Without limiting the effect of the foregoing,
         the Reserve Requirement shall reflect any other reserves required to be
         maintained  by such  member  banks  with  respect  to any  category  of
         liabilities  which includes deposits by reference to which the Adjusted
         Eurodollar Rate is to be determined. The Adjusted Eurodollar Rate shall
         be adjusted automatically on and as of the effective date of any change
         in the Reserve Requirement.

                  "Responsible  Officer" means the chief  executive  officer and
         the  president of the  Borrower or, with respect to financial  matters,
         the chief financial officer of the Borrower.

                  "Restricted  Cash"  means  cash  or  Cash  Equivalents  of the
         Borrower and its Subsidiaries that have been specifically escrowed in a
         manner  satisfactory  to the  Required  Lenders  for the payment of the
         split-dollar life insurance premiums permitted by subsection 7.8(i).

                  "Revolving  Credit  Commitment"  means, as to any Lender,  the
         obligation  of such  Lender to make  Revolving  Credit  Loans and issue
         and/or  participate  in Letters of Credit  pursuant  to Section 2 in an
         aggregate  principal  and/or  face amount not to exceed at any one time
         outstanding  the  amount  set  forth  opposite  such  Lender's  name in
         Schedule 1.1(c) under the heading  "Revolving Credit Commitment" or, in
         the  case  of  an  Eligible  Assignee,  the  amount  specified  in  the
         Assignment  and  Acceptance  pursuant to which it assumed its Revolving
         Credit  Commitment  (in each case as such amount may be  adjusted  from
         time  to  time  as  provided  herein,  including  any  increase  in the
         Revolving Credit Commitments  pursuant to Section 2.14);  collectively,
         as to all the Lenders, the "Revolving Credit Commitments." The original
         aggregate amount of the Revolving Credit Commitments is $100,000,000.



<PAGE>



                  "Revolving Credit Commitment Period" means the period from and
         including the Closing  Date, to but not including the Revolving  Credit
         Termination  Date,  or  such  earlier  date  as  the  Revolving  Credit
         Commitments shall terminate as provided herein.

                  "Revolving  Credit Lender" means any Lender having a Revolving
         Credit Commitment hereunder or that holds outstanding  Revolving Credit
         Loans.

                  "Revolving  Credit Loan" has the meaning  specified in Section
         2.1.

                  "Revolving   Credit   Note"  has  the  meaning   specified  in
         subsection 3.3(h).

                  "Revolving  Credit  Percentage"  means,  as to  any  Revolving
         Credit  Lender,  the  percentage  of  the  aggregate  Revolving  Credit
         Commitments  constituted by its Revolving Credit Commitment (or, if the
         Revolving Credit Commitments have terminated or expired, the percentage
         which  (a)  the  sum  of  (i)  such  Revolving   Credit  Lender's  then
         outstanding  Revolving  Credit  Loans plus (ii) such  Revolving  Credit
         Lender's  interests in the aggregate LC  Obligations  then  outstanding
         then  constitutes of (b) the sum of (i) the aggregate  Revolving Credit
         Loans of all the Revolving  Credit Lenders then  outstanding  plus (ii)
         the aggregate LC Obligations then outstanding).

                  "Revolving Credit Termination Date" means December 17, 2003.

                  "Second  Closing" has the meaning  specified in the Securities
         Purchase Agreement.

                  "Securities  Act" means the Securities Act of 1933, as amended
         from time to time.

                  "Securities  Purchase Agreement" means the Securities Purchase
         Agreement  dated as of January 13,  2000,  among the  Borrower  and the
         Initial  Investors,  as  amended by that  certain  First  Amendment  to
         Securities  Purchase  Agreement,  dated as of May 5,  2000,  among  the
         Borrower  and  the  Initial  Investors,  as the  same  may be  amended,
         restated, supplemented or otherwise modified from time to time.

                  "Security  Documents"  means the  collective  reference to the
         Guarantee and Collateral  Agreement,  the Trademark Security Agreement,
         the Lockbox Agreements,  the Deposit Agreements, the Mortgages, and all
         other  security  documents  now or  hereafter  delivered  to the  Agent
         granting  a Lien on any  asset or assets  of any  Person to secure  the
         Obligations or any part thereof.

                  "Seller Notes" means any promissory  note or other  instrument
         evidencing  a  portion  of  the  Transaction  Amount  for  a  Permitted
         Physician  Transaction or Permitted Ancillary Acquisition issued by the
         Borrower or any  Subsidiary to the  Physician  Group that is a party to
         such  Permitted  Physician  Transaction or any member thereof or to the
         seller in any Permitted Ancillary Acquisition.



<PAGE>



                  "Service  Agreement" means any agreement pursuant to which the
         Borrower or any Subsidiary  provides management  services,  facilities,
         personnel,  equipment,  supplies or other services to a Physician Group
         or an  independent  physicians  association,  as such  agreement may be
         amended, restated, modified, or supplemented from time to time.

                  "Significant  Preferred  Stock  Shareholder"  means any single
         holder of more  than 25% of the  Preferred  Stock  (on a fully  diluted
         basis).

                  "Single  Employer  Plan"  means any Plan  which is  covered by
         Title IV of ERISA, but which is not a Multiemployer Plan.

                  "Single  Physician  Transaction"  means (a) the acquisition by
         the Borrower, any Subsidiary,  or an Affiliated Provider of the medical
         practice of a single physician,  or (b) the hiring by the Borrower, any
         Subsidiary, or an Affiliated Provider of a single physician.

                  "Solvent"  means with  respect  to any Person on a  particular
         date,  the  condition  that on such  date,  (a) the  fair  value of the
         property  of  such  Person  is  greater   than  the  total   amount  of
         liabilities,  including, without limitation, contingent liabilities, of
         such Person,  (b) the present fair salable  value of the assets of such
         Person is not less than the  amount  that will be  required  to pay the
         probable  liability of such Person on its debts as they become absolute
         and  matured,  (c) such Person does not intend to, and does not believe
         that it will,  incur debts or liabilities  beyond such Person's ability
         to pay as such debts and liabilities  mature and (d) such Person is not
         engaged in  business  or a  transaction,  and is not about to engage in
         business  or a  transaction,  for which such  Person's  property  would
         constitute an unreasonably small amount of capital.

                  "S&P" means Standard and Poor's Rating Group.

                  "Star Program" means the Supplemental Tax Advantage Retirement
         Program as  described  in the  memorandum  of the Borrower to the Agent
         dated as of October 6, 1999.

                  "Standby  Letter  of  Credit"  has the  meaning  specified  in
         subsection 2.4(b).

                  "Star Program SPV" means Doctors Benefit Company,  a Tennessee
         limited  liability  company  that has  been  established  to  purchase,
         pursuant to the Star Program,  split-dollar life insurance policies for
         physicians;  provided  that (a) the  activities of the Star Program SPV
         are limited to the purchase of  split-dollar  life insurance  policies,
         disability  insurance,  and other  types of  insurance  for  physicians
         pursuant  to  the  Star  Program  and  activities  directly  incidental
         thereto,  (b) the  Borrower and its  Subsidiaries,  may not own Capital
         Stock in the Star  Program  SPV, and (c) the Star Program SPV shall not
         have or incur any Indebtedness except Indebtedness incurred to fund the
         Star Program that is non-recourse to the Borrower and its  Subsidiaries
         and their respective assets.



<PAGE>



                  "Subordinated    Indebtedness"    means   (a)   the   Existing
         Subordinated Indebtedness,  and (b) any other unsecured Indebtedness of
         the Borrower or any Subsidiary (i) no part of the principal of which is
         required  to  be  paid  (whether  by  way  of  scheduled  amortization,
         mandatory sinking fund, mandatory  redemption,  mandatory prepayment or
         otherwise)  prior to the  Tranche  B  Maturity  Date  (other  than with
         respect to Deferred  Purchase Price and future loans or advances to pay
         premiums on split-dollar life insurance policies),  (ii) the payment of
         the  principal  of and interest on which and other  obligations  of the
         Borrower or any Subsidiary in respect  thereof are  subordinated to the
         prior  payment  in full of the  principal  of and  interest  (including
         post-petition interest) on the Loans and all other Obligations on terms
         and conditions at least as favorable to the Lenders as those  contained
         on Schedule 1.1(d), or in the case of Deferred Purchase Price, on terms
         and  conditions  at least as favorable  as those  contained on Schedule
         1.1(d)-1, and (iii) all other terms and conditions of which (other than
         with respect to Deferred  Purchase Price) are  satisfactory in form and
         substance to the Required  Lenders (as evidenced by their prior written
         approval thereof).

                  "Subordinated    Indebtedness    Documentation"    means   the
         agreements,  indentures and other  documentation  pursuant to which any
         Subordinated Indebtedness is or has been issued.

                  "Subsidiary" of any Person means any corporation, partnership,
         joint  venture,  limited  liability  company,  trust or estate or other
         Person of which  shares of stock or other  ownership  interests  having
         ordinary  voting  power  (other  than  stock  or such  other  ownership
         interests  having  such  power  only by  reason of the  happening  of a
         contingency)  to elect a majority  of the board of  directors  or other
         managers of such  corporation,  partnership  or other entity are at the
         time  owned,  or the  management  of  which  is  otherwise  controlled,
         directly or indirectly, through one or more intermediaries, or both, by
         such  Person.   Unless  otherwise   qualified,   all  references  to  a
         "Subsidiary"  or to  "Subsidiaries"  in this Agreement shall refer to a
         Subsidiary  or  Subsidiaries  of the  Borrower.  For  purposes  of this
         Agreement (except for subsections 8(e), (f), and (g)), the Star Program
         SPV shall not constitute or be deemed a Subsidiary of the Borrower.

                  "Synthetic  Lease" means any  synthetic  lease,  tax retention
         operating  lease or  off-balance  sheet  financing  product  where such
         transaction is considered  borrowed money indebtedness for tax purposes
         but which is classified as an operating lease pursuant to GAAP.

                  "Taxes" has the meaning specified in subsection 3.14(a).

                  "Term Loans" means the Tranche A Term Loans and Tranche B Term
         Loans.

                  "Total Credit Percentage" means, with respect to any Lender at
         any time,  the  ratio  (expressed  as a  percentage)  of such  Lender's
         Aggregate  Exposure  at such  time  to the  Aggregate  Exposure  of all
         Lenders at such time.

                  "Total  Debt" shall mean,  as of any day,  the total amount of
         Indebtedness  of the Borrower and its  Consolidated  Subsidiaries as of
         such day.



<PAGE>



                  "Trademark  Security  Agreement" means the Trademark  Security
         Agreement  dated as of December 17,  1998,  executed by the Borrower in
         favor of the Agent, as the same may be amended, restated, supplemented,
         or otherwise modified from time to time.

                  "Tranche A Term  Commitment"  means,  as to any Tranche A Term
         Lender, the obligation of such Lender, if any, to make a Tranche A Term
         Loan to the Borrower  hereunder in a principal amount not to exceed the
         amount set forth under the heading "Tranche A Term Commitment" opposite
         such Lender's name on Schedule 1.1(c). The original aggregate amount of
         the Tranche A Term Commitments is $57,500,000.

                  "Tranche A Maturity Date" means March 30, 2006.

                  "Tranche A Term Lender"  means each holder of a Tranche A Term
         Loan.

                  "Tranche A Term  Loan" has the  meaning  specified  in Section
         2.11.

                  "Tranche A Term Note" has the meaning  specified in subsection
         3.3(h).

                  "Tranche A Term  Percentage"  means,  as to any Tranche A Term
         Lender,  the  percentage  which such Tranche A Term Lender's  Tranche A
         Term Commitment then  constitutes of the Tranche A Term  Commitments of
         all the Tranche A Term Lenders (or,  after the Tranche A Term Loans are
         made, the percentage  which the  outstanding  principal  amount of such
         Tranche A Term  Lender's  Tranche A Term Loan then  constitutes  of the
         aggregate principal amount of Tranche A Term Loans of all the Tranche A
         Term Lenders then outstanding).

                  "Tranche B Maturity Date" means June 12, 2006.

                  "Tranche B Term  Commitment"  means,  as to any Tranche B Term
         Lender, the obligation of such Lender, if any, to make a Tranche B Term
         Loan to the Borrower  hereunder in a principal amount not to exceed the
         amount set forth under the heading "Tranche B Term Commitment" opposite
         such Lender's name on Schedule 1.1(c). The original aggregate amount of
         the Tranche B Term Commitments is $20,000,000.

                  "Tranche B Term Lender" means each Lender that has a Tranche B
         Term Commitment or that holds a Tranche B Term Loan.

                  "Tranche B Term  Loan" has the  meaning  specified  in Section
         2.12.

                  "Tranche B Term Note" has the meaning  specified in subsection
         3.3(h).



<PAGE>



                  "Tranche B Term  Percentage"  means,  as to any Tranche B Term
         Lender,  the  percentage  which such Tranche B Term Lender's  Tranche B
         Term Commitment then  constitutes of the Tranche B Term  Commitments of
         all the Tranche B Term Lenders (or,  after the Tranche B Term Loans are
         made, the percentage  which the  outstanding  principal  amount of such
         Tranche B Term  Lender's  Tranche B Term Loan then  constitutes  of the
         aggregate principal amount of Tranche B Term Loans of all the Tranche B
         Term Lenders then outstanding).

                  "Transaction  Amount"  means,  with  respect to any  Physician
         Transaction  or  Acquisition,  the  sum  (without  duplication)  of the
         following,  in each case  determined in accordance  with GAAP:  (a) the
         aggregate  original principal amount of all Loans the proceeds of which
         are utilized to finance such Physician  Transaction or Acquisition,  in
         part or in whole,  (b) the amount of cash paid by the  Borrower and its
         Subsidiaries   in  connection   with  such  Physician   Transaction  or
         Acquisition,  (c) the outstanding  principal amount of all Indebtedness
         incurred,  assumed  or  acquired  in  connection  with  such  Physician
         Transaction or Acquisition,  (d) all additional  purchase price amounts
         in the form of notes and other contingent obligations,  (e) all amounts
         paid in  consideration  of  parties'  entering  into  covenants  not to
         compete and  consulting  agreements in connection  with such  Physician
         Transaction or Acquisition  and (f ) the aggregate fair market value of
         all other consideration  (including  deferred payments,  obligations to
         fund premiums for split dollar  insurance  policies,  Program Loans and
         commitments  to make loans or advances  with respect to Program  Loans)
         given by the  Borrower and its  Subsidiaries  in  connection  with such
         Physician Transaction or Acquisition (exclusive of Capital Stock issued
         by the Borrower or any  Subsidiary  to the seller,  but  including  any
         treasury stock reissued by the Borrower pursuant to subsection 7.7(c)).

                  "Transaction   Documents"   means  the   Securities   Purchase
         Agreement,  the Certificates of Designation,  the  Registration  Rights
         Agreement,  the Warrant Agreement, the Lock-Up Agreements (as such term
         is  defined  in the  Securities  Purchase  Agreement),  and the  Voting
         Agreements  (as  such  term  is  defined  in  the  Securities  Purchase
         Agreement).

                  "Transaction  Notice"  means a notice of, or  request  for the
         Required  Lenders to consent to, a Physician  Transaction  or Permitted
         Ancillary  Acquisition,  such notice to be substantially in the form of
         Exhibit K.

                  "Type"  means  any type of Loan  (i.e.,  a Base Rate Loan or a
         Eurodollar Loan).

                  "Uniform  Customs" means the Uniform  Customs and Practice for
         Documentary Credits (1993 Revision),  International Chamber of Commerce
         Publication No. 500, as the same may be amended from time to time.

                  "Warrant  Agreement"  means the Warrant  Agreement dated as of
         June 12, 2000,  among the Borrower  and the Initial  Investors,  as the
         same may be amended, modified or supplemented from time to time.

                  "Wholly  Owned  Subsidiary"  means,  as  to  any  Person,  any
         Subsidiary  of such  Person of which  such  Person  owns,  directly  or
         indirectly  through one or more Wholly Owned  Subsidiaries,  all of the
         Capital  Stock of such  Subsidiary  other  than  directors'  qualifying
         shares or shares held by nominees.



<PAGE>



                  "Year 2000  Compliant"  has the meaning  specified  in Section
         5.20.

                  "Year 2000 Problem" has the meaning specified in Section 5.20.

                  1.2  Other  Definitional  Provisions.   (a)  Unless  otherwise
specified  therein,  all terms defined in this Agreement  shall have the defined
meanings when used in any Notes,  any other Loan Documents or any certificate or
other document made or delivered pursuant hereto.

                  (b) For purposes of computation of time periods hereunder, the
word "from" means "from and  including" and the words "to" and "until" each mean
"to but excluding."

                  (c) The words "hereof,"  "herein" and "hereunder" and words of
similar  import when used in this  Agreement  shall refer to this Agreement as a
whole  and not to any  particular  provision  of this  Agreement,  and  Section,
subsection,  Schedule  and  Exhibit  references  are to  this  Agreement  unless
otherwise specified.

                  (d)  Capitalized  terms used  herein  that are  defined in the
Uniform  Commercial  Code as  adopted by the State of Texas and in effect on the
Closing Date, unless otherwise defined herein,  shall have the meanings assigned
therein.

                  (e) The  meanings  given  to  terms  defined  herein  shall be
equally applicable to both the singular and plural forms of such terms.

                  1.3 Accounting Terms.  Except as otherwise  expressly provided
herein, all accounting terms used herein shall be interpreted, and all financial
statements and certificates  and reports as to financial  matters required to be
delivered  to the  Agent  and  the  Lenders  hereunder  shall  be  prepared,  in
accordance with GAAP applied on a consistent  basis. All  calculations  made for
the purposes of  determining  compliance  with this  Agreement  shall (except as
otherwise  expressly  provided herein) be made by application of GAAP on a basis
consistent  with  the most  recent  annual  or  quarterly  financial  statements
delivered  pursuant  to  Section  6.1 (or,  prior to the  delivery  of the first
financial  statements  pursuant  to Section  6.1,  consistent  with the  audited
financial statements described in Section 5.1); provided,  however,  that if (a)
the Borrower  shall object to determining  such  compliance on such basis at the
time of delivery of such  financial  statements due to any change in GAAP or the
rules  promulgated with respect thereto or (b) the Agent or the Required Lenders
shall so object in writing  within ninety days after  delivery of such financial
statements,  then such calculations shall be made on a basis consistent with the
most recent financial  statements delivered by the Borrower to the Lenders as to
which no such objection shall have been made.

                  1.4 Star Program SPV. For purposes of the  financial  covenant
calculations  pursuant to Section  7.1,  Consolidated  EBITDA  shall not include
increased gross payments pursuant to Service Agreements that are remitted by the
Borrower or a Subsidiary  to the Star Program SPV to fund  payments of insurance
premiums on split-dollar  life insurance  policies pursuant to the Star Program.
Repayments  of  advances  made by the  Borrower  or any  Subsidiary  to the Star
Program SPV pursuant to Section 7.8(l) may be included in Consolidated EBITDA of
the Borrower and its Subsidiaries.


<PAGE>




                  SECTION 2.  AMOUNT AND TERMS OF COMMITMENTS

                  2.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions of this Agreement,  each Revolving  Credit Lender severally agrees to
make one or more loans (each,  a "Revolving  Credit  Loan") to the Borrower from
time to time  during the  Revolving  Credit  Commitment  Period in an  aggregate
principal amount at any one time outstanding  which, when added to such Lender's
Revolving  Credit  Percentage of the sum of the then outstanding LC Obligations,
does not exceed the amount of such Lender's  Revolving Credit Commitment then in
effect.  On the Closing Date, the Revolving  Credit  Commitments  shall be fully
utilized by converting  Revolving  Credit Loans and 364-Day Loans (as such terms
are defined in the Existing Credit  Agreement) and the Existing Letter of Credit
into  Revolving  Credit  Loans and  Letters  of  Credit  under  this  Agreement.
Revolving Credit Loans and LC Obligations  under this Agreement shall be held by
the  Revolving   Credit  Lenders  in  accordance  with  their  Revolving  Credit
Percentages. During the Revolving Credit Commitment Period, the Borrower may use
the Revolving  Credit  Commitments by borrowing,  prepaying the Revolving Credit
Loans in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.

                  (b) The  Revolving  Credit  Loans shall be made in Dollars and
may from time to time be (i) Eurodollar  Loans,  (ii) Base Rate Loans or (iii) a
combination  thereof, as determined by the Borrower and notified to the Agent in
accordance  with Sections 2.2 and 3.5,  provided  that no Revolving  Credit Loan
shall be made as a Eurodollar  Loan after the day that is one month prior to the
Revolving Credit Termination Date.



<PAGE>



                  2.2 Procedure for Revolving Credit Borrowing. The Borrower may
borrow  under the  Revolving  Credit  Commitments  during the  Revolving  Credit
Commitment Period on any Business Day, provided that the Borrower shall give the
Agent an irrevocable  notice in the form of a Notice of Borrowing  (which notice
must be received by the Agent prior to (a) 12:00 Noon (Charlotte, North Carolina
time) at least three Business Days prior to the requested Borrowing Date, if all
or  any  part  of the  requested  Revolving  Credit  Loans  are to be  initially
Eurodollar Loans, or (b) prior to 12:00 Noon (Charlotte, North Carolina time) on
the requested  Borrowing Date, if the requested Revolving Credit Loans are to be
initially Base Rate Loans),  specifying (i) the amount to be borrowed,  (ii) the
requested  Borrowing  Date,  (iii)  whether the borrowing is to be of Eurodollar
Loans, Base Rate Loans, or a combination thereof and (iv) if the borrowing is to
be entirely or partly of Eurodollar  Loans, the respective  amounts of each such
Type  of  Loan  and the  respective  lengths  of the  initial  Interest  Periods
therefor.  Each borrowing under the Revolving Credit  Commitments shall be in an
amount  equal  to (x) in the  case of Base  Rate  Loans,  $1,000,000  or a whole
multiple of  $500,000 in excess  thereof  (or, if the then  Available  Revolving
Credit Commitments are less than $1,000,000,  such lesser amount) and (y) in the
case of Eurodollar Loans, $5,000,000 or a whole multiple of $1,000,000 in excess
thereof.  Upon  receipt of any such  notice from the  Borrower,  the Agent shall
promptly  (or in the case of a Base  Rate Loan by 1:00  p.m.  (Charlotte,  North
Carolina time)) notify each Lender thereof.  Subject to the  satisfaction of the
conditions  precedent  specified in Section 4, each Revolving Credit Lender will
make  the  amount  of its  Revolving  Credit  Percentage  of each  borrowing  of
Revolving Credit Loans available to the Agent for the account of the Borrower at
the office of the Agent specified in Section 10.2 prior to 2:00 P.M. (Charlotte,
North  Carolina time) on the Borrowing Date requested by the Borrower in Dollars
and in funds  immediately  available to the Agent.  Such  borrowing will then be
made available to the Borrower by the Agent crediting an account of the Borrower
at such office with the aggregate of the amounts made  available to the Agent by
the Revolving Credit Lenders and in like funds as received by the Agent.

                  2.3 Termination or Reduction of Revolving Credit  Commitments.
The  Borrower  shall  have the  right,  upon not less  than five  Business  Days
irrevocable  notice to the Agent, to terminate the Revolving Credit  Commitments
or, from time to time, to reduce the amount of the Revolving Credit Commitments,
provided  that no such  termination  or reduction  shall be permitted  if, after
giving effect thereto and to any prepayments of the Revolving  Credit Loans made
on the effective date thereof, the Aggregate Outstanding Revolving Credit of all
Revolving Credit Lenders would exceed the Revolving  Credit  Commitments then in
effect.  Any such reduction shall be in an amount equal to $5,000,000 or a whole
multiple of  $1,000,000  in excess  thereof  and shall  reduce  permanently  the
Revolving Credit Commitments then in effect.

                  2.4 LC  Commitment.  (a)  Subject to the terms and  conditions
hereof, the Issuing Lender, in reliance on the agreements of the other Revolving
Credit Lenders set forth in subsection  2.6(a) agrees to issue letters of credit
("Letters of Credit") for the account of the Borrower on any Business Day during
the Revolving Credit Commitment Period in such form as may be approved from time
to time by the Issuing  Lender;  provided that the Issuing  Lender shall have no
obligation  to issue any  Letter  of  Credit  if,  after  giving  effect to such
issuance,  (i) the LC  Obligations  would exceed the LC  Commitment  or (ii) the
Available Revolving Credit Commitment would be less than zero.

                  (b)      Each Letter of Credit shall:

                           (i) be denominated in Dollars and shall be either (1)
         a standby  letter  of  credit  issued  to  support  obligations  of the
         Borrower  or  any of  its  Subsidiaries,  contingent  or  otherwise  (a
         "Standby  Letter  of  Credit"),  or (2) a  commercial  letter of credit
         issued in respect of the  purchase of goods or services by the Borrower
         and its  Subsidiaries in the ordinary course of business (a "Commercial
         Letter of Credit");

                           (ii)     expire no later than the Revolving Credit
         Termination Date; and

                           (iii) unless otherwise agreed to by the Agent, expire
         no later  than  365 days  after  the  date of  issuance  in the case of
         Standby  Letters of Credit,  and 180 days after the date of issuance in
         the case of Commercial Letters of Credit.

                  (c) Each  Letter of Credit  shall be  subject  to the  Uniform
Customs.

                  (d) The Issuing  Lender  shall not at any time be obligated to
issue any Letter of Credit  hereunder if such issuance  would  conflict with, or
cause the Issuing  Lender or any LC Participant to exceed any limits imposed by,
any Requirement of Law.



<PAGE>



                  2.5 Procedure for Issuance of Letters of Credit.  The Borrower
may from time to time request  that the Issuing  Lender issue a Letter of Credit
by delivering to the Issuing Lender at its address for notices  specified herein
an Application  therefor,  completed to the  satisfaction of the Issuing Lender,
and such other  certificates,  documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application,  the Issuing Lender
will process such Application and the  certificates,  documents and other papers
and information  delivered to it in connection  therewith in accordance with its
customary  procedures and shall  promptly  issue the Letter of Credit  requested
thereby  (but in no event  shall the  Issuing  Lender be  required  to issue any
Letter of Credit  earlier  than three  Business  Days  after its  receipt of the
Application therefor and all such other certificates, documents and other papers
and  information  relating  thereto) by issuing  the  original of such Letter of
Credit to the  beneficiary  thereof or as otherwise may be agreed by the Issuing
Lender and the Borrower.  The Issuing Lender shall furnish a copy of such Letter
of Credit to the Borrower promptly following the issuance thereof.

                  2.6 LC  Participations.  (a) The  Issuing  Lender  irrevocably
agrees to grant and hereby  grants to each LC  Participant,  and,  to induce the
Issuing  Lender  to issue  Letters  of  Credit  hereunder,  each LC  Participant
irrevocably  agrees to accept and purchase and hereby accepts and purchases from
the Issuing Lender, on the terms and conditions  hereinafter stated, for such LC
Participant's  own  account  and  risk an  undivided  interest  equal to such LC
Participant's Revolving Credit Percentage (determined on the date of issuance of
the relevant  Letter of Credit) in the Issuing  Lender's  obligations and rights
under each Letter of Credit  issued  hereunder and the amount of each draft paid
by the  Issuing  Lender  thereunder.  Each LC  Participant  unconditionally  and
irrevocably  agrees with the Issuing  Lender that,  if a draft is paid under any
Letter of Credit for which the Issuing  Lender is not  reimbursed in full by the
Borrower in accordance  with the terms of this  Agreement,  such LC  Participant
shall pay to the Issuing Lender upon demand at the Issuing  Lender's address for
notices  specified  herein an amount  equal to such LC  Participant's  Revolving
Credit Percentage of the amount of such draft, or any part thereof, which is not
so reimbursed.

                  (b If any amount  required to be paid by any LC Participant to
the Issuing Lender pursuant to subsection  2.6(a) in respect of any unreimbursed
portion of any payment made by the Issuing  Lender under any Letter of Credit is
paid to the  Issuing  Lender  within  three  Business  Days  after the date such
payment is due, such LC Participant shall pay to the Issuing Lender on demand an
amount  equal to the product of (i) such  amount,  times (ii) the daily  average
Federal Funds Rate during the period from and including the date such payment is
required  to the date on which such  payment  is  immediately  available  to the
Issuing  Lender,  times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the  denominator of which is 360. If any
such amount  required to be paid by any LC  Participant  pursuant to  subsection
2.6(a)  is not in  fact  made  available  to  the  Issuing  Lender  by  such  LC
Participant  within three  Business Days after the date such payment is due, the
Issuing Lender shall be entitled to recover from such LC Participant, on demand,
such amount with interest thereon  calculated from such due date at the rate per
annum  applicable to Base Rate Loans  hereunder.  A  certificate  of the Issuing
Lender  submitted to any LC Participant  with respect to any amounts owing under
this subsection shall be conclusive in the absence of manifest error.



<PAGE>



                  (c  Whenever,  at any time after the  Issuing  Lender has made
payment under any Letter of Credit and has received from any LC Participant  its
pro rata share of such payment in accordance with subsection 2.6(a), the Issuing
Lender receives any payment  related to such Letter of Credit (whether  directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by the Issuing  Lender),  or any payment of  interest  on account  thereof,  the
Issuing Lender will, if such payment is received prior to 1:00 P.M.  (Charlotte,
North  Carolina time) on a Business Day,  distribute to such LC Participant  its
pro rata share  thereof  prior to the end of such Business Day and otherwise the
Issuing Lender will distribute such payment on the next succeeding Business Day;
provided,  however,  that in the event  that any such  payment  received  by the
Issuing Lender shall be required to be returned by the Issuing  Lender,  such LC
Participant  shall return to the Issuing Lender the portion  thereof  previously
distributed by the Issuing Lender to it.

                  2.7 Reimbursement Obligation of the Borrower. (a) The Borrower
shall  reimburse the Issuing  Lender upon receipt by the Borrower of notice from
the Issuing Lender of the date and amount of a draft  presented under any Letter
of Credit  and paid by the  Issuing  Lender  for the amount of (i) such draft so
paid and (ii) any taxes,  fees,  charges or other costs or expenses  incurred by
the Issuing Lender in connection  with such payment.  Each such payment shall be
made to the  Issuing  Lender at its  address  for  notices  specified  herein in
Dollars and in  immediately  available  funds,  on the Business Day  immediately
following the date on which the Borrower receives such notice.

                  (b Interest shall be payable on any and all amounts  remaining
unpaid by the Borrower  under this Section 2.7 from the date such amounts become
payable (whether at stated maturity, by acceleration or otherwise) until payment
in full at the rate which  would be payable on any  outstanding  Base Rate Loans
which were then overdue.

                  2.8 Obligations Absolute. (a) The Borrower's obligations under
Sections 2.4 through 2.7 shall be absolute and  unconditional  under any and all
circumstances  and  irrespective  of any  set-off,  counterclaim  or  defense to
payment which the Borrower may have or have had against the Issuing Lender,  any
LC Participant or any beneficiary of a Letter of Credit.

                  (b The Borrower  also agrees with the Issuing  Lender that the
Issuing  Lender shall not be responsible  for, and the Borrower's  Reimbursement
Obligations  under  subsection  2.7(a)  shall not be  affected  by,  among other
things,  (i) the validity or  genuineness  of  documents or of any  endorsements
thereon,  even  though  such  documents  shall  in  fact  prove  to be  invalid,
fraudulent  or forged,  (ii) any dispute  between or among the  Borrower and any
beneficiary  of any Letter of Credit or any other  party to which such Letter of
Credit may be transferred or (iii) any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee.

                  (c Neither the Issuing Lender nor any LC Participant  shall be
liable for any error, omission, interruption or delay in transmission,  dispatch
or delivery of any message or advice,  however  transmitted,  in connection with
any Letter of Credit,  except for errors or  omissions  caused by such  Person's
gross negligence or willful misconduct.



<PAGE>



                  (d The Borrower agrees that any action taken or omitted by the
Issuing  Lender under or in connection  with any Letter of Credit or the related
drafts or  documents,  if done in the  absence  or gross  negligence  or willful
misconduct and in accordance with the standards of care specified in the Uniform
Customs,  shall be binding on the Borrower and shall not result in any liability
of the Issuing Lender or any LC Participant to the Borrower.

                  2.9 Letter of Credit Payments. If any draft shall be presented
for payment under any Letter of Credit, the Issuing Lender shall promptly notify
the Borrower of the date and amount thereof.  The  responsibility of the Issuing
Lender to the Borrower in connection  with any draft presented for payment under
any Letter of Credit  shall,  in addition to any  payment  obligation  expressly
provided  for in such  Letter of  Credit,  be limited  to  determining  that the
documents  (including  each  draft)  delivered  under  such  Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.

                  2.10  Application.  To the extent  that any  provision  of any
Application  related to any Letter of Credit is inconsistent with the provisions
of this Agreement, the provisions of this Agreement shall apply.

                  2.11 Tranche A Term Loan Commitments. Subject to the terms and
conditions of this  Agreement,  each Tranche A Term Lender  severally  agrees to
make a term loan  (each,  a "Tranche  A Term  Loan") on the  Closing  Date in an
amount equal to the Tranche A Term Commitment of such Lender. The Tranche A Term
Lenders  shall make the Tranche A Term Loans on the Closing  Date by  converting
Revolving  Credit  Loans and  364-Day  Loans (as such  terms are  defined in the
Existing Credit  Agreement) into Tranche A Term Loans.  The Tranche A Term Loans
shall be held by the Tranche A Term Lenders in  accordance  with their Tranche A
Term  Percentages.  The Tranche A Term Loans shall be denominated in Dollars and
may from time to time be (i) Eurodollar  Loans,  (ii) Base Rate Loans or (iii) a
combination  thereof, as determined by the Borrower and notified to the Agent in
accordance  with  Section  3.5;  provided  that the  Tranche A Term Loans  shall
initially be Base Rate Loans.

                  2.12  Tranche  B Term  Commitments.  Subject  to the terms and
conditions  hereof,  each Tranche B Term Lender  severally agrees to make a term
loan (each,  a "Tranche B Term Loan") to the  Borrower on the Closing Date in an
amount not to exceed the amount of the Tranche B Term Commitment of such Lender.
The Tranche B Term Loans may from time to time be Eurodollar  Loans or Base Rate
Loans,  as  determined  by the Borrower and notified to the Agent in  accordance
with Sections 2.13 and 3.5.



<PAGE>



                  2.13 Procedure for Tranche B Term Loan Borrowing. The Borrower
shall  give the Agent  irrevocable  notice in the form of a Notice of  Borrowing
(which  notice must be  received  by the Agent  prior to 12:00 Noon  (Charlotte,
North Carolina time) one Business Day prior to the Closing Date) requesting that
the Tranche B Term Lenders make the Tranche B Term Loans on the Closing Date and
specifying  the  amount to be  borrowed.  The  Tranche B Term  Loans made on the
Closing Date shall initially be Base Rate Loans. Upon receipt of such notice the
Agent shall promptly notify each Tranche B Term Lender  thereof.  Not later than
12:00 Noon  (Charlotte,  North Carolina time) on the Closing Date each Tranche B
Term  Lender  shall  make  available  to the  Agent at the  office  of the Agent
specified in Section 10.2 an amount in immediately  available funds equal to the
Tranche B Term Loan or Tranche B Term Loans to be made by such Lender. The Agent
shall  credit the  account of the  Borrower  on the books of such  office of the
Agent with the  aggregate  of the  amounts  made  available  to the Agent by the
Tranche B Term Lenders in immediately available funds.

                  2.14 Increase of Tranche B Facility.  At any time or from time
to time on or before December 17, 2001, the Borrower may, with the prior written
approval of the Agent,  increase the aggregate  Tranche B Term Commitments up to
an amount not greater than  $230,000,000  minus the sum of the then  outstanding
Aggregate  Exposure  under the  Revolving  Credit  Facility  and  Tranche A Term
Facility,  through (i) the addition of one or more new Tranche B Term Lenders (a
"New Tranche B Term  Lender"),  and/or (ii) the  agreement of one or more of the
then existing  Tranche B Term Lenders (an "Existing  Tranche B Term Lender") (at
sole  discretion of such Existing  Tranche B Term  Lender(s)) to increase  their
Tranche B Term  Commitments.  In the event the  Borrower has agreed to pay a New
Tranche  B Term  Lender  fees or  interest  at a rate  higher  than  the fees or
interest then payable to the Existing Tranche B Term Lenders, the Borrower shall
pay to the then Existing Tranche B Term Lenders fees and interest at such higher
rate.  Any increase in the Tranche B  Commitments  pursuant to this Section 2.14
shall  be  effectuated  pursuant  to  documentation  satisfactory  in  form  and
substance to the Agent.


                  SECTION 3.        GENERAL PROVISIONS APPLICABLE TO
                                    LOANS AND LETTERS OF CREDIT

                  3.1  Interest  Rates and  Payment  Dates.  (a) Each  Revolving
Credit  Loan and  Tranche A Term  Loan  that is a  Eurodollar  Loan  shall  bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Adjusted Eurodollar Rate plus the Applicable Margin.

                  (b Each Revolving  Credit Loan and Tranche A Term Loan that is
a Base Rate Loan shall bear  interest for each day that it is  outstanding  at a
rate per annum equal to the Base Rate for such day plus the Applicable Margin.

                  (c Each  Tranche B Term Loan that is a  Eurodollar  Loan shall
bear  interest  at a rate per annum  equal to the  greater  of (i) the  Adjusted
Eurodollar  Rate  plus  4.25%,  and  (ii)  Adjusted  Eurodollar  Rate  plus  the
Applicable  Margin for Tranche A Term Loans that are Eurodollar Loans plus .25%.
Each Tranche B Term Loan that is a Base Rate Loan shall bear  interest at a rate
per annum equal to the greater of (i) the  Alternate  Base Rate plus 2.75%,  and
(ii) the Alternate Base Rate plus the Applicable Margin for Tranche A Term Loans
that are Base Rate Loans plus .25%.

                  (d Upon the  occurrence,  and  during the  continuance,  of an
Event of Default,  the  principal of and, to the extent  permitted by applicable
law,  past due  interest  on the  Loans  and any other  past due  amounts  owing
hereunder or under the other Loan Documents shall bear interest,  at a per annum
rate equal to (a) in the case of principal of any Loan,  the rate  applicable to
such Loan during such period  pursuant to this Section 3.1,  plus 2%, (b) in the
case of interest  on any Loan,  the Base Rate plus 2% and (c) in the case of any
other amount, the Base Rate plus 2%.



<PAGE>



                  (e  Interest  shall be payable  in  arrears  on each  Interest
Payment  Date,  the  Revolving  Credit  Termination  Date  (in  the  case of the
Revolving Credit Loans), the Tranche A Maturity Date (in the case of the Tranche
A Term  Loans),  and the  Tranche B Maturity  Date (in the case of the Tranche B
Term Loans);  provided that  interest  accruing  pursuant to subsection  3.1(c),
shall be payable from time to time on demand.

                  3.2 Commitment  Fee; Other Fees. (a) The Borrower shall pay to
the Agent for the account of each  Revolving  Credit Lender a commitment fee for
the period from and including the first day of the Revolving  Credit  Commitment
Period to the Revolving Credit  Termination  Date,  computed at a rate per annum
equal to the Applicable  Margin for Commitment  Fees on the average daily amount
of the Available  Revolving  Credit  Commitment of such Revolving  Credit Lender
during the period for which payment is made, payable quarterly in arrears on the
last day of each March, June, September and December and on the Revolving Credit
Termination Date or such earlier date as the Revolving Credit  Commitments shall
terminate  or be reduced as  provided  herein,  commencing  on the first of such
dates to occur after the date  hereof.  The  commitment  fee payable  under this
subsection 3.2(a) are referred to herein as the "Commitment Fee".

                  (b The Borrower shall pay to the Agent and the Arranger,  each
for its own account,  the fees on the dates and in the amounts previously agreed
to  by  the  Borrower,   the  Arranger  and  the  Agent.   Such  fees  shall  be
nonrefundable.

                  (c The Borrower  shall pay to the Issuing  Lender with respect
to each Letter of Credit issued by it under this  Agreement,  for the account of
the Issuing  Lender,  a fronting fee with respect to the period from the date of
issuance of such Letter of Credit to the expiration or termination  date of such
Letter of Credit,  computed  at a rate of .125% per annum on the face  amount of
such Letter of Credit during the period for which such fee is  calculated.  Such
fronting fee shall be payable in arrears on each LC Fee Payment  Date  occurring
after  the  issuance  of such  Letter  of  Credit  and on the  Revolving  Credit
Termination  Date (or on such earlier date as the Revolving  Credit  Commitments
terminate as provided herein) and shall be nonrefundable.

                  (d The Borrower shall pay to the Agent, for the account of the
LC  Participants,  a letter of credit  commission with respect to each Letter of
Credit issued under this  Agreement  with respect to the period from the date of
issuance of such Letter of Credit to the expiration or termination  date of such
Letter of Credit, computed at a rate per annum equal to the Applicable Margin in
respect of Revolving  Credit Loans which are Eurodollar  Loans from time to time
in effect on the face  amount of such  Letter of Credit  during  the  period for
which such fee is calculated.  Such commission shall be shared ratably among the
LC   Participants  in  accordance  with  their   respective   Revolving   Credit
Percentages.  Such commission shall be payable in arrears on each LC Fee Payment
Date to occur after the  issuance of such Letter of Credit and on the  Revolving
Credit  Termination  Date  (or on  such  earlier  date as the  Revolving  Credit
Commitments shall terminate as provided herein) and shall be nonrefundable.



<PAGE>



                  (e In  addition to the  foregoing  fees and  commissions,  the
Borrower shall pay or reimburse the Issuing Lender for such normal and customary
costs and expenses as are incurred or charged by the Issuing  Lender in issuing,
effecting payment under,  transferring,  amending or otherwise administering any
Letter of Credit.

                  3.3  Repayment  of Loans;  Evidence of Debt.  (a) The Borrower
hereby  unconditionally  promises  to pay to the Agent for the  account  of each
Revolving  Credit  Lender the then  unpaid  principal  amount of each  Revolving
Credit Loan of such Revolving Credit Lender on the Revolving Credit  Termination
Date (or such  earlier date on which the  Revolving  Credit Loans become due and
payable pursuant to Section 8).

                  (b The Borrower hereby unconditionally  promises to pay to the
Agent  for the  account  of each  Tranche  A Term  Lender on the dates set forth
below,  an  amount  equal to (i) such  Tranche  A Term  Lender's  Tranche A Term
Percentage   multiplied  by  (ii)  the  amount  set  forth  below  opposite  the
corresponding  date (or on such  earlier  date on which the Tranche A Term Loans
become due and payable pursuant to Section 8), subject to adjustment pursuant to
subsections 3.7(b) and 3.7(c):

------------------------------------------- -----------------------------
               Installment                             Amount
------------------------------------------- -----------------------------

March 31, 2003                                 $      2,500,000
------------------------------------------- -----------------------------

June 30, 2003                                  $      2,500,000
------------------------------------------- -----------------------------

September 30, 2003                             $      2,500,000
------------------------------------------- -----------------------------

December 31, 2003                              $      2,500,000
------------------------------------------- -----------------------------

March 31, 2004                                 $      4,750,000
------------------------------------------- -----------------------------

June 30, 2004                                  $      4,750,000
------------------------------------------- -----------------------------

September 30, 2004                             $      4,750,000
------------------------------------------- -----------------------------

December 31, 2004                              $      4,750,000
------------------------------------------- -----------------------------

March 31, 2005                                 $      4,750,000
------------------------------------------- -----------------------------

June 30, 2005                                  $      4,750,000
------------------------------------------- -----------------------------

September 30, 2005                             $      4,750,000
------------------------------------------- -----------------------------

December 31, 2005                              $      4,750,000
------------------------------------------- -----------------------------

March 30, 2006                                 $      9,500,000
------------------------------------------- -----------------------------




<PAGE>



                  (c The Borrower hereby unconditionally  promises to pay to the
Agent for the  account of each  Tranche B Lender the Tranche B Term Loan of each
such Tranche B Term Lender in 12 consecutive installments on the dates set forth
below,  commencing  on September  30, 2003,  each of which shall be in an amount
equal to (i) such  Lender's  Tranche  B Term  Percentage  multiplied  by (ii) an
amount  equal to the  percentage  set  forth  below  opposite  such  installment
multiplied  by the sum of all  Tranche B Term  Loans  made  hereunder,  (or such
earlier date on which the Tranche B Term Loans  become due and payable  pursuant
to Section 8), subject to adjustment pursuant to subsections 3.7(b) and 3.7(c):


                               Installment                    Percentage

                      September 30, 2003                     8.33%
                      December 31, 2003                      8.33%
                      March 31, 2004                         8.33%
                      June 30, 2004                          8.33%
                      September 30, 2004                     8.33%
                      December 31, 2004                      8.33%
                      March 31, 2005                         8.33%
                      June 30, 2005                          8.33%
                      September 30, 2005                     8.33%
                      December 31, 2005                      8.33%
                      March 31, 2006                         8.33%
                      June 12, 2006                          8.37%

                  (d The Borrower  hereby  further agrees to pay interest on the
unpaid principal amount of the Loans from time to time outstanding from the date
hereof until  payment in full thereof at the rates per annum,  and on the dates,
set forth in Section 3.1.

                  (e Each Lender  shall  maintain in  accordance  with its usual
practice an account or accounts evidencing  indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time,  including the
amounts of principal  and interest  payable and paid to such Lender from time to
time under this Agreement.

                  (f  The  Agent  shall   maintain  the  Register   pursuant  to
subsection 10.6(c),  and a subaccount therein for each Lender, in which shall be
recorded  (i) the  amount  of each Loan  hereunder,  the Type  thereof  and each
Interest Period, if any, applicable thereto, (ii) the amount of any principal or
interest  due and payable or to become due and payable from the Borrower to each
Lender  hereunder  and (iii)  both the amount of any sum  received  by the Agent
hereunder from the Borrower and each Lender's share thereof.

                  (g The entries  made in the  Register and the accounts of each
Lender  maintained  pursuant to subsection 3.3(e) shall, to the extent permitted
by applicable  law, be prima facie  evidence of the existence and amounts of the
obligations  of the  Borrower  therein  recorded;  provided,  however,  that the
failure of any Lender or the Agent to maintain the Register or any such account,
or any error  therein,  shall not in any  manner  affect the  obligation  of the
Borrower to repay (with  applicable  interest) the Loans made to the Borrower by
such Lender in accordance with the terms of this Agreement.



<PAGE>



                  (h The Borrower agrees that it will execute and deliver to (i)
each Revolving Credit Lender,  a promissory note of the Borrower  evidencing the
Revolving  Credit Loans of such Revolving  Credit Lender,  substantially  in the
form of Exhibit  C-1,  with a principal  amount equal to such  Revolving  Credit
Lender's  Revolving Credit  Commitment  (each, as amended,  modified,  extended,
renewed,  or replaced from time to time, a "Revolving  Credit Note"),  (ii) each
Tranche A Term Lender,  a promissory note evidencing the Tranche A Term Loans of
such Tranche A Term  Lender,  in  substantially  the form of Exhibit C-2 hereto,
with a principal  amount  equal to such Tranche A Term  Lender's  Tranche A Term
Commitment (each, as amended, modified,  extended, renewed or replaced from time
to time,  a "Tranche A Term  Note"),  and (iii) each  Tranche B Term  Lender,  a
promissory  note  evidencing  the  Tranche B Term  Loans of such  Tranche B Term
Lender,  in substantially the form of Exhibit C-3, with a principal amount equal
to such Tranche B Term Lender's  Tranche B Term  Commitment  (each,  as amended,
modified,  extended,  renewed or replaced  from time to time,  a "Tranche B Term
Note").

                  3.4  Computation of Interest and Fees. (a) Interest,  whenever
it is calculated on the basis of the Base Rate, shall be calculated on the basis
of a 365 (or 366,  as the case may be) day  year for the  actual  days  elapsed.
Interest,  whenever it is  calculated  on the basis of the  Adjusted  Eurodollar
Rate, the Commitment Fee and all other fees and  commissions  hereunder shall be
calculated on the basis of a 360-day year for the actual days elapsed. The Agent
shall  as soon as  practicable  notify  the  Borrower  and the  Lenders  of each
determination  of the Adjusted  Eurodollar Rate. Any change in the interest rate
on a Loan or any other obligation  hereunder resulting from a change in the Base
Rate, the Federal Funds Rate, the Applicable  Margin or the Reserve  Requirement
shall  become  effective  as of the opening of business on the day on which such
change  becomes  effective.  The Agent shall as soon as  practicable  notify the
Borrower  and the  Lenders  of the  effective  date and the  amount of each such
change in interest rate.

                  (b  Each  determination  of an  interest  rate  by  the  Agent
pursuant to any provision of this  Agreement  shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error.  The Agent shall,
at the request of the Borrower,  deliver to the Borrower a statement showing the
quotations  used by the Agent in  determining  any  interest  rate  pursuant  to
Section 3.1.

                  3.5 Conversion and Continuation  Options. (a) The Borrower may
by notice to the Agent in accordance with  subsection  3.5(c) elect from time to
time to Convert  Eurodollar  Loans to Base Rate  Loans and to Convert  Base Rate
Loans to Eurodollar  Loans. All or any part of outstanding  Eurodollar Loans and
Base Rate Loans may be Converted as provided  herein,  provided that (i) no Base
Rate Loan may be Converted  into a Eurodollar  Loan when any Default or Event of
Default has occurred  and is  continuing  and, in the case of any  Default,  the
Agent has given notice to the Borrower  that such a Conversion  may not be made,
(ii) no Base Rate Loan may be Converted  into a  Eurodollar  Loan after the date
that is one month prior to the Revolving Credit Termination Date (in the case of
Revolving Credit Loans),  one month prior to the Tranche A Maturity Date (in the
case of Tranche A Term Loans), or one month prior to the Tranche B Maturity Date
(in the case of Tranche B Term Loans),  and (iii) any  Conversion  of Eurodollar
Loans  may only be made on the  last day of the  Interest  Period  with  respect
thereto.



<PAGE>



                  (b Any  Eurodollar  Loans  may be  Continued  as such upon the
expiration  of the then  current  Interest  Period with  respect  thereto by the
Borrower  giving  notice  to  the  Agent,  in  accordance  with  the  applicable
provisions of the term "Interest Period" set forth in Section 1.1 and subsection
3.5(c),  of the  length of the next  Interest  Period to be  applicable  to such
Loans,  provided that no  Eurodollar  Loan may be Continued as such (i) when any
Default or Event of Default has occurred and is  continuing  and, in the case of
any Default, the Agent has given notice to the Borrower that such a Continuation
may not be made or (ii) after the date that is one month prior to the  Revolving
Credit Termination Date (in the case of Revolving Credit Loans), one month prior
to the  Tranche A Maturity  Date (in the case of Tranche A Term  Loans),  or one
month  prior to the  Tranche  B  Maturity  Date (in the case of  Tranche  B Term
Loans), and provided,  further, in the case of Eurodollar Loans, if the Borrower
shall fail to give any required  notice as described  above in this paragraph or
if such Continuation is not permitted  pursuant to the preceding  proviso,  such
Eurodollar Loans shall be automatically Converted to Base Rate Loans on the last
day of such then expiring Interest Period.

                  (c The  Borrower  shall  deliver  notices of  Conversions  and
Continuations  to the Agent in the form of a Notice  of  Conversion/Continuation
prior to 12:00 Noon (Charlotte, North Carolina time) at least (i) three Business
Days prior to the requested date of  Continuation,  if Loans are to be Continued
as Eurodollar  Loans,  (ii) three  Business Days prior to the requested  date of
Conversion,  if Base Rate Loans are to be Converted  into  Eurodollar  Loans and
(iii) one Business Day prior to the requested date of  Conversion,  if Loans are
to be Converted into Base Rate Loans, specifying:

                  (A) the proposed date of Conversion or Continuation;

                  (B) the Class and aggregate amount of Loans to be Converted or
Continued;

                  (C) the Type of Loans  resulting from the proposed  Conversion
or Continuation; and

                  (D)  except  for  Conversions  into the Base Rate  Loans,  the
duration of the requested Interest Period.

                  (d Notwithstanding  anything to the contrary contained herein,
during the existence of a Default or an Event of Default, all or any part of any
outstanding  Eurodollar  Loans with respect to any  Facility  shall be Converted
into Base Rate Loans upon the request of the Required  Facility Lenders for such
Facility.  The Agent will  promptly  notify the  Borrower and the Lenders of any
such Conversion request.



<PAGE>



                  3.6 Pro Rata  Treatment  and Payments.  (a) Each  borrowing of
Revolving  Credit  Loans by the  Borrower  from  the  Revolving  Credit  Lenders
hereunder,  each payment by the Borrower of the Commitment Fee in respect of the
Revolving Credit Loans and any reduction of the Revolving Credit  Commitments of
the Revolving Credit Lenders, shall be made pro rata according to the respective
Revolving  Credit  Percentages  of the Revolving  Credit  Lenders.  Each payment
(including  each  prepayment)  by the  Borrower on account of  principal  of and
interest on the Revolving  Credit Loans shall be made pro rata  according to the
respective outstanding principal amounts of the Revolving Credit Loans then held
by the Revolving Credit Lenders. Each payment (including each prepayment) by the
Borrower on account of principal  and interest on the Tranche A Term Loans shall
be made pro rata according to the respective  outstanding  principal  amounts of
the Tranche A Term Loans held by the Tranche A Term Lenders.  Each  borrowing of
Tranche B Term Loans by the Borrower  from the Tranche B Term Lenders  hereunder
shall  be made pro rata  according  to the  Tranche  B Term  Percentages  of the
Tranche B Term Lenders. Each payment (including each prepayment) by the Borrower
on account of  principal  and interest on the Tranche B Term Loans shall be made
pro rata  according  to the  respective  outstanding  principal  amounts  of the
Tranche B Term Loans held by the Tranche B Term Lenders. All payments (including
prepayments)  to be made by the Borrower under this Agreement and the other Loan
Documents,  whether on account of principal,  interest, fees or otherwise, shall
be made without set-off,  deduction,  recoupment,  counterclaim or other defense
and shall be made prior to 2:00 P.M. (Charlotte, North Carolina time) on the due
date thereof to the Agent, for the account of the Lenders, at the Agent's office
specified  in Section  10.2,  in Dollars  and in  immediately  available  funds.
Payments  received  by the Agent  after  such time  shall be deemed to have been
received on the next Business Day. The Agent shall  distribute  such payments to
the  Lenders,  if any such payment is received  prior to 12:00 Noon  (Charlotte,
North  Carolina  time) on a Business Day, in like funds as received prior to the
end of such Business Day and otherwise the Agent shall  distribute  such payment
to the Lenders on the next  succeeding  Business  Day. If any payment  hereunder
becomes due and payable on a day other than a Business  Day,  such payment shall
be extended to the next succeeding Business Day and, with respect to payments of
principal,  interest thereon shall be payable at the then applicable rate during
such  extension,  unless the result of such  extension  would be to extend  such
payment into another calendar month, in which event,  such payment shall be made
on the immediately preceding Business Day.

                  (b Unless the Agent shall have been notified in writing by any
Lender  prior to a borrowing of a Loan that such Lender will not make the amount
that  would  constitute  its  Revolving  Credit  Percentage  or  Tranche  B Term
Percentage,  as the case may be, of such borrowing  available to the Agent,  the
Agent may assume that such Lender is making such amount  available to the Agent,
and the Agent may, in  reliance  upon such  assumption,  make  available  to the
Borrower in respect of such borrowing a corresponding  amount. If such amount is
not made  available  to the Agent by the  required  time on the  Borrowing  Date
therefor,  such  Lender  shall pay to the Agent,  on demand,  such  amount  with
interest  thereon at a rate equal to the  Federal  Funds Rate until such  Lender
makes such amount immediately available to the Agent. A certificate of the Agent
submitted to any Lender with respect to any amounts owing under this Section 3.6
shall be conclusive in the absence of manifest error. If such Lender's Revolving
Credit  Percentage  or  Tranche B Term  Percentage,  as the case may be, of such
borrowing  is not made  available  to the  Agent  by such  Lender  within  three
Business  Days of such  Borrowing  Date,  the Agent  shall also be  entitled  to
recover such amount with interest thereon calculated from such Borrowing Date at
the rate per annum equal to the Base Rate.



<PAGE>



                  3.7 Optional and Mandatory Prepayments.  (a) The Borrower may,
at any time  and  from  time to time,  prepay  the  Loans,  in whole or in part,
without  premium or penalty,  upon at least one Business Days prior  irrevocable
notice to the Agent in the case of a prepayment  of the  Revolving  Credit Loans
and at least five  Business Days prior  irrevocable  notice to the Agent and the
holders  of the  Term  Loans  in the case of a  prepayment  of the  Term  Loans,
specifying  the date and amount of  prepayment,  the Class of Loan being prepaid
and  whether the  prepayment  is of  Eurodollar  Loans,  Base Rate  Loans,  or a
combination  thereof,  and,  if a  combination  thereof,  the  principal  amount
allocable to each.  Upon receipt of any such  notice,  the Agent shall  promptly
notify each Lender thereof. If any such notice is given, the amount specified in
such notice  shall be due and payable on the date  specified  therein,  together
with  any  amounts  payable  pursuant  to  Section  3.13  and,  in the  case  of
prepayments  of the Term  Loans,  accrued  interest  to such date on the  amount
prepaid.  Prepayments of the Revolving  Credit Loans pursuant to this subsection
3.7(a) shall not reduce the Revolving Credit  Commitments.  Partial  prepayments
shall be in an aggregate  principal  amount of $1,000,000 or a whole multiple of
$1,000,000 in excess thereof. Partial prepayments of Term Loans pursuant to this
subsection 3.7(a) shall be applied (x) pro rata (based on outstanding  principal
amount)  to the  Tranche A Term  Loans and the  Tranche B Term Loans and (y) pro
rata to the  respective  then remaining  principal  installments  thereof.  Each
prepayment pursuant to this subsection 3.7(a) of Loans that are Eurodollar Loans
shall be accompanied by accrued and unpaid interest on the amount prepaid.

                  (b In the  event  of an  Equity  Issuance  (other  than  (i) a
conversion of Indebtedness to equity, (ii) the exercise of stock options held by
employees  of the  Borrower or any of its  Subsidiaries,  (iii) the  issuance of
Capital Stock to a Physician Group or any physician  associated with a Physician
Group as a portion of the consideration for a Permitted Physician Transaction or
a Permitted  Ancillary  Acquisition,  (iv) the  issuance  of Capital  Stock by a
Subsidiary to the Borrower or another Subsidiary,  (v) the issuance of Preferred
Stock to the  Initial  Investors  on the  Closing  Date  pursuant to the Goldman
Transaction,  or  (vi)  any  issuance  of  Capital  Stock  to,  or  any  capital
contribution  by, the  Initial  Investors,  Evercore  Partners  (and its related
funds),  a Significant  Preferred  Stock  Shareholder,  and/or their  respective
Affiliates),  an amount equal to 50% of the Net Cash  Proceeds  thereof shall be
paid by the Borrower to the Agent on the date of such issuance or incurrence and
applied  toward the  prepayment of the  Obligations  as set forth in subsections
3.7(f) and 3.7(g).

                  (c) In  the  event  of a  Debt  Issuance  (excluding  (i)  any
Indebtedness  issued  pursuant to clauses (a) through  (g),  (i),  (j) or (k) of
Section 7.2, (ii) the issuance of Seller Notes, (iii) the incurrence of Deferred
Purchase Price, and (iv) the issuance of Indebtedness pursuant to Section 2.14),
an amount equal to 100% of the Net Cash  Proceeds  thereof  shall be paid by the
Borrower  to the Agent on the date of such  issuance or  incurrence  and applied
toward the prepayment of the Obligations as set forth in subsections  3.7(f) and
3.7(g).



<PAGE>



                  (d) If on any date  the  Borrower  or any of its  Subsidiaries
shall  receive Net Cash  Proceeds  from any Asset Sale or  Recovery  Event then,
unless a  Reinvestment  Notice shall be delivered in respect  thereof,  such Net
Cash  Proceeds  shall be  applied  on such date  toward  the  prepayment  of the
Obligations  as set forth in  subsections  3.7(f) and  3.7(g);  provided,  that,
notwithstanding  the  foregoing,  (i) the  aggregate  Net Cash Proceeds of Asset
Sales and Recovery  Events that may be excluded from the  foregoing  requirement
pursuant to a Reinvestment Notice shall not exceed $3,000,000 in any fiscal year
of the Borrower,  (ii) the Reinvestment  Deferred Amount shall be held in a Cash
Collateral  Account as security  for the  Obligations,  (iii) the  Borrower  may
withdraw  funds  from such Cash  Collateral  Account  to  acquire,  prior to the
Reinvestment  Prepayment Date,  assets useful in its business,  provided that no
Default or Event of Default shall have occurred and be continuing at the time of
withdrawal,  and (iv) on each  Reinvestment  Prepayment Date, an amount equal to
the  Reinvestment  Prepayment  Amount  shall be applied  toward  the  prepayment
(through  application of amounts in the Collateral  Account or otherwise) of the
Obligations as set forth in subsections 3.7(f) and 3.7(g).

                  (e) If on any date  the  Borrower  or any of its  Subsidiaries
shall receive Net Cash Proceeds from any  Extraordinary  Receipt,  then 100% (or
50%,  if the  Leverage  Ratio,  as of the last day of the fiscal  quarter of the
Borrower  then  most  recently  ended,  is less than 3.0 to 1.0) of the Net Cash
Proceeds  thereof  shall be paid by the  Borrower  to the Agent on such date and
applied  toward the  prepayment of the  Obligations  as set forth in subsections
3.7(f) and 3.7(g).

                  (f) Amounts to be applied in connection with  prepayments made
pursuant to subsections 3.7(b), (c), (d), or (e) shall be applied, first, to the
Term Loans, and second,  to the Revolving  Credit  Facility.  Prepayments of the
Term Loans pursuant to subsections  3.7(b), (c), (d) or (e) shall be applied (i)
pro rata (based on outstanding principal amount) to the Tranche A Term Loans and
Tranche  B Term  Loans  and  (ii)  pro  rata to the  respective  then  remaining
principal  installments  thereof.  Prepayments of the Revolving  Credit Facility
pursuant to subsections 3.7(b), (c), (d) or (e) shall be applied,  first, to the
outstanding  Reimbursement  Obligations  and, second,  to outstanding  Revolving
Credit  Loans  and shall not  reduce  the  Revolving  Credit  Commitments.  Each
prepayment of the Loans pursuant to subsection 3.7(b),  (c), (d) or (e) shall be
accompanied  by accrued  interest to the date of such  prepayment  on the amount
prepaid. Each prepayment of Loans pursuant to subsection 3.7(b), (c), (d) or (e)
shall be made, first, to Base Rate Loans and, second, to Eurodollar Loans.

                  (g) Notwithstanding  the foregoing,  in respect of any partial
prepayment of the Term Loans  pursuant to subsections  3.7(a),  (b), (c), (d) or
(e),  any Lender  holding a Tranche B Term Loan may elect to decline  receipt of
all or part of its  share  of any  such  prepayment,  and,  if  such  Lender  so
declines,  such share  shall be applied to the then  outstanding  Tranche A Term
Loans in accordance with subsection 3.7(f);  provided, that (i) any such Tranche
B Term Lender that wishes to decline  receipt of all or part of its share of any
such prepayment shall promptly, and, in any event no later than one Business Day
prior to the date specified for such prepayment  pursuant to subsection  3.7(h),
notify the Agent of such  election and the  percentage  that such Tranche B Term
Lender has elected to decline of the  prepayment  that it would  otherwise  have
been entitled to receive  pursuant to  subsections  3.7(b),  (c), (d) or (e) and
(ii) after giving effect to any concurrent  payment of the Loans (other than the
Tranche B Term  Loans) or  Reimbursement  Obligations  pursuant  to  subsections
3.7(a), (b), (c), (d) or (e) the Loans (other than the Tranche B Term Loans) and
Reimbursement Obligations shall not have been paid in full.

                  (h) The  Borrower  shall give to the Agent and the  Lenders at
least five (5) Business  Days' prior  written  notice of each event  requiring a
prepayment of Term Loans under subsection 3.7(b), (c), (d) or (e), including the
amount of Net Cash  Proceeds  expected to be received  therefrom and the date of
prepayment;  provided,  however,  that in the  case  of a  Recovery  Event,  the
Borrower  shall  give such  notice  within  three (3)  Business  Days  after the
occurrence of such event.



<PAGE>



                  (i) Notwithstanding the provisions of subsection 3.7(f), if at
any time a mandatory prepayment of Loans pursuant to subsection 3.7(b), (c), (d)
or (e) would result,  after giving effect to the procedures set forth above,  in
the  Borrower's  incurring  breakage  costs  under  Section  3.13 as a result of
Eurodollar  Loans being prepaid other than on the last day of an Interest Period
applicable thereto (the "Affected  Eurodollar Loans"),  then the Borrower may in
its sole  discretion,  so long as no Default or Event of Default shall have then
occurred  and be  continuing,  deposit a portion  (up to 100%) of the amounts in
Dollars  that  otherwise  would  have  been  paid  in  respect  of the  Affected
Eurodollar  Loans with the Agent  (which  deposit must be equal in amount to the
amount of the  Affected  Eurodollar  Loans not  immediately  prepaid)  in a Cash
Collateral  Account to be held as security for the  Obligations,  with such cash
collateral to be directly applied by the Agent to prepay the Affected Eurodollar
Loans  on the last  day of the  Interest  Periods  applicable  thereto  (or such
earlier  date or  dates as shall be  requested  by the  Borrower  or as shall be
determined  by the  Agent  at any time  after  the  occurrence  and  during  the
continuation of a Default or Event of Default).  Notwithstanding anything to the
contrary contained in the immediately preceding sentence,  all amounts deposited
in the Cash Collateral  Account pursuant to the immediately  preceding  sentence
shall be held for the sole  benefit of the Lenders  whose Loans would  otherwise
have been immediately  prepaid with the amounts deposited,  and, upon the taking
of any action by the Agent or the Lenders pursuant to the remedial provisions of
Section 8, any  amounts  held as cash  collateral  pursuant  to this  subsection
3.7(i) shall,  subject to the  requirements  of applicable  law, be  immediately
applied to prepay such Loans.

                  (j) If at any time the Aggregate  Outstanding Revolving Credit
exceeds the Revolving Credit Commitments,  the Borrower shall immediately prepay
the excess, together with accrued and unpaid interest on the amount prepaid.

                  (k) To the extent that any prepayment of a Eurodollar  Loan is
made on a date  other than the last day of its  Interest  Period,  the  Borrower
shall  compensate each Lender in accordance  with Section 3.13.  Amounts paid or
prepaid on account of the Term Loans may not be reborrowed.

                  3.8 Minimum Amounts and Maximum Number of Eurodollar Tranches.
All  borrowings,  Conversions  and  Continuations  of  Loans  hereunder  and all
selections of Interest  Periods  hereunder  shall be in such amounts and be made
pursuant to such elections so that,  after giving effect thereto,  the aggregate
principal amount of the Loans comprising each Eurodollar  Tranche shall be equal
to $5,000,000 or a whole multiple of $1,000,000 in excess  thereof.  In no event
shall there be more than eight Eurodollar Tranches outstanding at any time.

                  3.9 Increased Cost and Reduced Return.  (a) If, after the date
hereof, the adoption of any Requirement of Law, or any change in any Requirement
of Law, or any change in the  interpretation  or  administration  thereof by any
Governmental  Authority,  central bank, or  comparable  agency  charged with the
interpretation  or administration  thereof,  or compliance by any Lender (or its
Applicable  Lending Office) with any request or directive (whether or not having
the  force  of  law)  of any  such  Governmental  Authority,  central  bank,  or
comparable agency:



<PAGE>



                  (i) shall  subject  such  Lender  (or its  Applicable  Lending
Office) to any tax, duty or other charge with respect to any  Eurodollar  Loans,
its Notes or its  obligation to make  Eurodollar  Loans,  or change the basis of
taxation  of any  amounts  payable  to such  Lender (or its  Applicable  Lending
Office)  under this  Agreement or its Notes in respect of any  Eurodollar  Loans
(other  than taxes  imposed  on the  overall  net  income of such  Lender by the
jurisdiction  in which such Lender has its principal  office or such  Applicable
Lending Office);

                  (ii) shall impose,  modify,  or deem  applicable  any reserve,
special  deposit,  assessment,  or similar  requirement  (other than the Reserve
Requirement  utilized in the  determination  of the  Adjusted  Eurodollar  Rate)
relating to any extensions of credit or other assets of, or any deposits with or
other  liabilities  or commitments  of, such Lender (or its  Applicable  Lending
Office), including the Commitments of such Lender hereunder; or

                  (iii) shall impose on such Lender (or its  Applicable  Lending
Office) or on the London  interbank  market any other  condition  affecting this
Agreement,  its Notes or any of such  extensions  of credit  or  liabilities  or
commitments;

and the result of any of the  foregoing  is to increase  the cost to such Lender
(or its Applicable Lending Office) of making,  Converting into,  Continuing,  or
maintaining any Eurodollar  Loans or to reduce any sum received or receivable by
such Lender (or its Applicable  Lending Office) under this Agreement or its Note
with respect to any Eurodollar Loans, then the Borrower shall pay to such Lender
on demand  such  amount or  amounts  as will  compensate  such  Lender  for such
increased cost or reduction. If any Lender requests compensation by the Borrower
under this subsection 3.9(a), the Borrower may, by notice to such Lender (with a
copy to the Agent),  suspend the  obligation  of such Lender to make or Continue
Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until the
event or condition  giving rise to such request ceases to be in effect (in which
case the  provisions  of Section 3.12 shall be  applicable);  provided that such
suspension shall not affect the right of such Lender to receive the compensation
so requested.

                  (b If, after the date hereof, any Lender shall have determined
that the adoption of any  Requirement of Law regarding  capital  adequacy or any
change  therein  or in  the  interpretation  or  administration  thereof  by any
Governmental  Authority,  central  bank or  comparable  agency  charged with the
interpretation or administration  thereof, or any request or directive regarding
capital  adequacy  (whether  or not  having  the  force  of  law)  of  any  such
Governmental Authority, central bank or comparable agency, has or would have the
effect  of  reducing  the rate of return on the  capital  of such  Lender or any
corporation   controlling   such  Lender  as  a  consequence  of  such  Lender's
obligations  hereunder  to  a  level  below  that  which  such  Lender  or  such
corporation  could  have  achieved  but for such  adoption,  change,  request or
directive  (taking  into  consideration  its  policies  with  respect to capital
adequacy),  then from time to time upon  demand the  Borrower  shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.



<PAGE>



                  (c Each Lender  shall  promptly  notify the  Borrower  and the
Agent of any event of which it has knowledge,  occurring  after the date hereof,
which will entitle such Lender to compensation  pursuant to this Section 3.9 and
will designate a different  Applicable  Lending Office if such  designation will
avoid the need for, or reduce the amount of, such  compensation and will not, in
the judgment of such  Lender,  be  otherwise  disadvantageous  to it. Any Lender
claiming  compensation  under this Section 3.9 shall furnish to the Borrower and
the Agent a statement  setting forth the additional amount or amounts to be paid
to it hereunder  which shall be conclusive in the absence of manifest  error. In
determining  such  amount,  such  Lender may use any  reasonable  averaging  and
attribution methods.

                  (d  Failure  or  delay  on the part of any  Lender  to  demand
compensation  pursuant to this Section 3.9 shall not constitute a waiver of such
Lender's right to demand such compensation; provided, however, that the Borrower
shall not be required to compensate any Lender  pursuant to this Section 3.9 for
any  increased  costs or  reduction in amounts  receivable  or rate of return on
capital  incurred more than 180 days prior to the date that such Lender notifies
the Borrower of the event or occurrence  giving rise to such increased  costs or
reductions  and of such  Lender's  intention  to  claim  compensation  therefor;
provided, further that, if the event or occurrence giving rise to such increased
costs or reductions is  retroactive,  then the 180-day period  referred to above
shall be extended to include the period of retroactive effect thereof.

                  3.10 Limitation on Types of Loans. If on or prior to the first
day of any Interest Period for any Eurodollar Loan:

                  (a  the  Agent  determines  (which   determination   shall  be
conclusive)  that by reason of  circumstances  affecting  the  relevant  market,
adequate and reasonable  means do not exist for ascertaining the Eurodollar Rate
for such Interest Period; or

                  (b the Required Lenders determine (which  determination  shall
be conclusive)  and notify the Agent that the Adjusted  Eurodollar Rate will not
adequately  and fairly  reflect  the cost to the  Lenders of funding  Eurodollar
Loans for such Interest Period;

then the Agent shall give the Borrower  prompt  notice  thereof,  and so long as
such  condition  remains in effect,  the Lenders shall be under no obligation to
make Eurodollar Loans,  Continue Eurodollar Loans, or to Convert Base Rate Loans
into  Eurodollar  Loans and the Borrower  shall,  on the last day(s) of the then
current Interest Period(s) for the outstanding  Eurodollar Loans,  either prepay
such Loans or Convert  such  Loans into Base Rate Loans in  accordance  with the
terms of this Agreement.

                  3.11 Illegality.  Notwithstanding  any other provision of this
Agreement,  in the  event  that  it  becomes  unlawful  for  any  Lender  or its
Applicable Lending Office to make, maintain, or fund Eurodollar Loans hereunder,
then such Lender shall  promptly  notify the Borrower  thereof and such Lender's
obligation to make or Continue  Eurodollar  Loans and to Convert Base Rate Loans
into  Eurodollar  Loans  shall be  suspended  until such time as such Lender may
again make, maintain, and fund Eurodollar Loans (in which case the provisions of
Section 3.12 shall be applicable).



<PAGE>



                  3.12  Treatment of Affected  Loans.  If the  obligation of any
Lender to make  Eurodollar  Loans or to Continue,  or to Convert Base Rate Loans
into Eurodollar  Loans shall be suspended  pursuant to Section 3.9 or 3.11, such
Lender's Eurodollar Loans shall be automatically  Converted into Base Rate Loans
on the last day(s) of the then current Interest  Period(s) (or, in the case of a
Conversion  required by Section  3.11,  on such  earlier date as such Lender may
specify to the  Borrower  with a copy to the Agent)  and,  unless and until such
Lender  gives  notice as  provided  below that the  circumstances  specified  in
Section 3.9 or 3.11 that gave rise to such Conversion no longer exists:

                  (a to the extent that such Lender's Eurodollar Loans have been
so Converted,  all payments and prepayments of principal that would otherwise be
applied to such Lender's  Eurodollar  Loans shall be applied instead to its Base
Rate Loans; and

                  (b all Loans that would otherwise be made or Continued by such
Lender as  Eurodollar  Loans  shall be made or  Continued  instead  as Base Rate
Loans,  and all Loans of such  Lender that would  otherwise  be  Converted  into
Eurodollar Loans shall be Converted  instead into (or shall remain as) Base Rate
Loans.

If such Lender gives notice to the Borrower  (with a copy to the Agent) that the
circumstances  specified in Section 3.9 or 3.11 that gave rise to the Conversion
of such Lender's  Eurodollar Loans pursuant to this Section 3.12 no longer exist
(which such  Lender  agrees to do promptly  upon such  circumstances  ceasing to
exist) at a time when  Eurodollar  Loans of the same Class made by other Lenders
are  outstanding,  such  Lender's  Base  Rate  Loans  of  such  Class  shall  be
automatically  Converted,  on the first day(s) of the next  succeeding  Interest
Period(s) for such  outstanding  Eurodollar  Loans,  to the extent  necessary so
that,  after giving effect thereto,  all Loans of such Class held by the Lenders
holding  Eurodollar  Loans and by such Lender are held pro rata (as to principal
amounts,  Types,  and  Interest  Periods) in  accordance  with their  respective
Commitments  (or, in the case of Term Loans,  in accordance with the outstanding
principal amounts thereof).

                  3.13  Compensation.  Upon  the  request  of  any  Lender,  the
Borrower  shall pay to such Lender such amount or amounts as shall be sufficient
(in the reasonable  opinion of such Lender) to compensate it for any loss, cost,
or expense  (including loss of anticipated  profits)  incurred by it as a result
of:

                  (a) any payment,  prepayment,  or  Conversion  of a Eurodollar
Loan for any reason  (including,  without  limitation,  the  acceleration of the
Loans  pursuant to Section 8) on a date other than the last day of the  Interest
Period for such Loan; or

                  (b) any  failure by the  Borrower  for any reason  (including,
without limitation,  the failure of any condition precedent specified in Section
4 to be satisfied) to borrow,  Convert,  Continue or prepay a Eurodollar Loan on
the date for such borrowing, Conversion, Continuation or prepayment specified in
the relevant notice of borrowing,  prepayment,  Continuation or Conversion under
this Agreement.



<PAGE>



                  3.14 Taxes. (a) Any and all payments by the Borrower to or for
the  account  of any  Lender or the  Agent  hereunder  or under  any other  Loan
Document  shall be made free and clear of and without  deduction for any and all
present  or future  taxes,  duties,  levies,  imposts,  deductions,  charges  or
withholdings,  and all liabilities with respect, thereto, excluding, in the case
of each Lender and the Agent,  taxes imposed on its income,  and franchise taxes
imposed on it, by the  jurisdiction  under the laws of which such Lender (or its
Applicable Lending Office) or the Agent (as the case may be) is organized or any
political  subdivision  thereof (all such non-excluded  taxes,  duties,  levies,
imposts,  deductions,  charges,  withholdings and liabilities  being hereinafter
referred to as "Taxes").  If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable  under this  Agreement  or any other
Loan Document to any Lender or the Agent, (i) the sum payable shall be increased
as necessary so that after making all required deductions  (including deductions
applicable  to  additional  sums payable under this Section 3.14) such Lender or
the Agent receives an amount equal to the sum it would have received had no such
deductions  been made, (ii) the Borrower shall make such  deductions,  (iii) the
Borrower shall pay the full amount deducted to the relevant  taxation  authority
or other authority in accordance with applicable law and (iv) the Borrower shall
furnish to the Agent,  at its address  referred to in Section 10.2, the original
or a certified copy of a receipt evidencing payment thereof.

                  (b) In  addition,  the  Borrower  agrees  to pay  any  and all
present or future  stamp or  documentary  taxes and any other excise or property
taxes or charges or similar  levies which arise from any payment made under this
Agreement  or any other Loan  Document or from the  execution or delivery of, or
otherwise   with  respect  to,  this   Agreement  or  any  other  Loan  Document
(hereinafter referred to as "Other Taxes").

                  (c) THE BORROWER AGREES TO INDEMNIFY EACH LENDER AND THE AGENT
FOR THE FULL AMOUNT OF TAXES AND OTHER TAXES (INCLUDING, WITHOUT LIMITATION, ANY
TAXES OR OTHER TAXES IMPOSED OR ASSERTED BY ANY  JURISDICTION ON AMOUNTS PAYABLE
UNDER THIS  SECTION  3.14) PAID BY SUCH LENDER OR THE AGENT (AS THE CASE MAY BE)
AND  ANY  LIABILITY  (INCLUDING  PENALTIES,   INTEREST,  AND  EXPENSES)  ARISING
THEREFROM OR WITH RESPECT THERETO.

                  (d) Each  Lender  organized  under the laws of a  jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this  Agreement  in the case of each  Lender  listed on the  signature  pages
hereof  and on or prior to the date on which it  becomes a Lender in the case of
each other Lender,  and from time to time  thereafter if requested in writing by
the Borrower or the Agent (but only so long as such Lender remains lawfully able
to do so),  shall  provide the Borrower and the Agent with (i) Internal  Revenue
Service Form 1001 or 4224, as  appropriate,  or any successor form prescribed by
the  Internal  Revenue  Service,  certifying  that such  Lender is  entitled  to
benefits  under an income tax treaty to which the United States is a party which
reduces the rate of withholding  tax on payments of interest or certifying  that
the income receivable  pursuant to this Agreement is effectively  connected with
the conduct of a trade or business in the United States,  (ii) Internal  Revenue
Service Form W-8 or W-9, as appropriate, or any successor form prescribed by the
Internal Revenue Service and (iii) any other form or certificate required by any
taxing  authority  (including any  certificate  required by Sections  871(h) and
881(c) of the Code),  certifying  that such Lender is  entitled to an  exemption
from or a reduced rate of tax on payments  pursuant to this  Agreement or any of
the other Loan Documents.



<PAGE>



                  (e) For any period  with  respect to which a Lender has failed
to provide the  Borrower  and the Agent with the  appropriate  form  pursuant to
subsection  3.14(d)  (unless such failure is due to a change in treaty,  law, or
regulation  occurring  subsequent  to the  date on which a form  originally  was
required to be provided),  such Lender shall not be entitled to  indemnification
under  subsection  3.14(a) with respect to Taxes  imposed by the United  States;
provided,  however,  that  should a Lender,  which is  otherwise  exempt from or
subject to a reduced rate of withholding tax, become subject to Taxes because of
its failure to deliver a form required  hereunder,  the Borrower shall take such
steps as such Lender shall  reasonably  request to assist such Lender to recover
such Taxes.

                  (f) If the Borrower is required to pay  additional  amounts to
or for the account of any Lender pursuant to this Section 3.14, then such Lender
will  agree  to  use  reasonable  efforts  to  change  the  jurisdiction  of its
Applicable  Lending  Office so as to  eliminate  or reduce  any such  additional
payment  which may  thereafter  accrue if such  change,  in the judgment of such
Lender, is not otherwise disadvantageous to such Lender.

                  (g) Within  thirty days after the date of any payment of Taxes
or Other  Taxes,  the  Borrower  shall  furnish to the Agent the  original  or a
certified copy of a receipt evidencing such payment.

                  (h) Without  prejudice to the survival of any other  agreement
of the  Borrower  hereunder,  the  agreements  and  obligations  of the Borrower
contained in this Section 3.14 shall survive the  termination of the Commitments
and the payment in full of the Notes.

                  3.15  Replacement  of  Lenders.  In the event  (a) any  Lender
requests  compensation pursuant to Section 3.9, (b) any Lender delivers a notice
to the Borrower  pursuant to Section 3.11 or (c) the Borrower is required to pay
any additional amount to any Lender or any Governmental  Authority on account of
any Lender  pursuant to Section 3.14,  the Borrower may, at its sole expense and
effort (including with respect to the processing and recordation fee referred to
in subsection  10.6(b)(iv)),  upon notice to such Lender and the Agent,  require
such Lender to transfer and assign,  without  recourse (in  accordance  with and
subject to the  restrictions  contained in Section 10.6),  all of its interests,
rights and  obligations  under this Agreement and the other Loan Documents to an
Eligible  Assignee that shall assume such assigned  obligations  (which assignee
may be another Lender, if a Lender accepts such  assignment),  provided that (i)
such assignment  shall not conflict with any Requirement of Law, (ii) no Default
or Event of Default shall have occurred and be continuing and (iii) the Borrower
or such Eligible  Assignee shall have paid to the affected Lender in immediately
available  funds  an  amount  equal to the sum of 100% of the  principal  of and
interest  accrued  to the date of such  payment  on the  outstanding  Loans  and
Reimbursement Obligations of such Lender, respectively, plus all Commitment Fees
and other amounts  accrued for the account of such Lender  hereunder  (including
any amounts under Sections 3.9, 3.13 and 3.14);  provided  further that if prior
to any such assignment the circumstances or event that resulted in such Lender's
request or notice  under  Section 3.9 or 3.11 or demand for  additional  amounts
under  Section  3.14,  as the case  may be,  shall  cease  to  exist  or  become
inapplicable  for any reason or if such Lender shall waive its rights in respect
of such  circumstances or event under Section 3.9, 3.11 or 3.14, as the case may
be, then such Lender shall not be required to make such assignment hereunder.


<PAGE>




                     SECTION 4.  CONDITIONS PRECEDENT

                  4.1 Conditions to this Agreement.  The  effectiveness  of this
Agreement is subject to the satisfaction,  on or before the Closing Date, of the
following conditions precedent (in form and substance acceptable to the Agent):

                  (a)  Loan  Documents.   The  Agent  shall  have  received  the
following Loan Documents, duly executed and delivered as required below:

                  (i)  this   Agreement,   executed  and  delivered  by  a  duly
authorized officer of the Borrower, with a counterpart for each Lender;

                  (ii) a Revolving Credit Note, executed and delivered by a duly
authorized  officer  of the  Borrower,  payable  to the order of each  Revolving
Credit Lender and in a principal  amount for each Revolving  Credit Lender equal
to its Revolving Credit Commitment;

                  (iii) a Tranche A Term Note,  executed and delivered by a duly
authorized officer of the Borrower,  payable to the order of each Tranche A Term
Lender and in a principal  amount for each  Tranche A Term Note Lender  equal to
its Tranche A Term Commitment;

                  (iv) a Tranche B Term Note,  executed and  delivered by a duly
authorized officer of the Borrower,  payable to the order of each Tranche B Term
Lender and in a principal amount equal to its Tranche B Term Commitment;

                  (v) the  Guarantee  and  Collateral  Agreement,  executed  and
delivered  by  duly  authorized  officers  of  the  Borrower  and  each  of  its
Subsidiaries, with a counterpart or a conformed copy for each Lender;

                  (vi) a  Consent,  in  substantially  the  form of  Exhibit  E,
executed by each Affiliated  Provider as may be required by the Agent, with such
changes thereto as may be approved by the Agent;

                  (vii) the First Amendment to Mortgage,  executed and delivered
by a duly authorized officer of ProMedCo of the Hudson Valley,  Inc. in the form
of Exhibit F; and

                  (viii) a Split Dollar Policy Agreement and  Acknowledgment  in
substantially  the form of Exhibit G duly executed by (A) each insurance company
that has issued a split dollar life  insurance  policy that has been assigned to
the  Borrower or any of its  Subsidiaries  and (B) the  Borrower and each of its
Subsidiaries that is an assignee of any such split dollar life insurance policy,
or the execution and delivery of such notices to, or consents by, such insurance
companies as may be required by the Agent.



<PAGE>



                  (b) Closing Certificates.  The Agent shall have received, with
a  counterpart  for each Lender,  (i) a certificate  of the Borrower,  dated the
Closing Date,  substantially  in the form of Exhibit H-1, and (ii) a certificate
of each other Loan Party,  dated the Closing Date,  substantially in the form of
Exhibit H-2,  each of which  certificates  shall be completed  with  appropriate
insertions and attachments.

                  (c) Fees.  The  Agent  and each  Lender  shall  have  received
payment of all fees and expenses owed to it by the Borrower,  including, without
limitation,  the fees to be received on or before the Closing  Date  pursuant to
subsection 3.2.

                  (d) Legal  Opinions.  The Agent  shall have  received,  with a
counterpart for each Lender, the following executed legal opinions:

                  (i) the executed  legal opinion of Dyer Ellis & Joseph,  P.C.,
counsel  to the  Borrower  and its  Subsidiaries,  substantially  in the form of
Exhibit L-1;

                  (ii) the executed  legal opinion of Deborah A. Johnson,  Esq.,
General Counsel for the Borrower and its Subsidiaries, substantially in the form
of Exhibit L-2;

                  (iii) the executed legal opinion of Boult, Cummings, Conners &
Berry, PLC, special counsel to the Borrower and its Subsidiaries,  substantially
in the form of Exhibit L-3; and

                  (iv) the executed  legal opinion of  McDermott,  Will & Emery,
special counsel to the Borrower and the Subsidiaries,  substantially in the form
of Exhibit L-4.

Each  such  legal  opinion  shall  cover  such  other  matters  incident  to the
transactions contemplated by this Agreement as the Agent may reasonably require.

                  (e) Actions to Perfect  Liens Under  Security  Documents.  The
Agent shall have received evidence in form and substance satisfactory to it that
all filings,  recordings,  registrations and other actions,  including,  without
limitation,  the filing of duly executed financing statements on form UCC-1, the
delivery of certificates  representing  shares of stock pledged  pursuant to any
Security  Document,  together with undated stock powers, and the delivery of the
promissory notes pledged pursuant to any Security  Document,  each endorsed in a
manner  satisfactory  to the Agent,  necessary  or, in the opinion of the Agent,
desirable to perfect the Liens created by the Security Documents shall have been
completed,  and all agreements,  statements and other documents relating thereto
shall be in form and substance satisfactory to the Agent.



<PAGE>



                  (f)  Actions  to  Perfect  Assignments  of  Receivables  Under
Service Agreements. The Agent shall have received evidence in form and substance
satisfactory  to it that (i) all filings,  recordings,  registrations  and other
actions,  including,  without limitation,  the filing of financing statements on
form UCC-1,  necessary, or in the opinion of the Agent, desirable to perfect the
ownership  interest of the  Borrower  and its  Subsidiaries  in all  Receivables
assigned to the Borrower and its Subsidiaries from Affiliated Providers pursuant
to the Service Agreements,  shall have been completed and (ii) all such filings,
recordings,  registrations and other actions have been assigned of record to the
Agent.

                  (g) Insurance.  The Agent shall have received evidence in form
and substance  satisfactory to it that all of the requirements of Section 5.3 of
the  Guarantee  and  Collateral  Agreement  and each  Mortgage  shall  have been
satisfied.

                  (h) Pro Forma Balance Sheet; Financial Statements. The Lenders
shall  have  received  (i)  the  Pro  Forma  Balance  Sheet,  and  (ii)  audited
consolidated  financial  statements of the Borrower and its Subsidiaries for the
1997, 1998, and 1999 fiscal years,  and such financial  statements shall not, in
the reasonable  judgment of the Lenders,  reflect any material adverse change in
the consolidated financial condition of the Borrower and its Subsidiaries.

                  (i) Related Agreements. The Agent shall have received true and
correct copies,  certified as to  authenticity by the Borrower,  of each Service
Agreement  (including all amendments  thereto) in effect on the Closing Date and
each agreement or instrument evidencing Existing Subordinated Indebtedness.

                  (j) Receivables  Report.  The Agent shall have received a copy
of a receivables  report in substantially the form of Exhibit M, satisfactory to
the Agent,  with respect to  Receivables  of the  Borrower and its  Subsidiaries
outstanding on April 30, 2000.

                  (k)  Due  Diligence.  The  completion  of due  diligence  with
respect  to the  Borrower  and  its  Subsidiaries  in  scope  and  determination
satisfactory to the Agent in its sole discretion, including, without limitation,
due diligence with respect to historical financial information, litigation, tax,
accounting,  labor, insurance, pension liabilities (actual or contingent),  real
estate  leases,   Material  Contracts,   agreements   evidencing   Indebtedness,
contingent  liabilities,  property  ownership,  management,  and compliance with
Requirements of Law.

                  (l) No  Disruption  of Financial  Markets.  The absence of any
disruption or adverse change in the financial or capital markets generally which
the  Agent,  in its sole  discretion,  deems  material  in  connection  with the
syndication of the credit facility evidenced by this Agreement.

                  (m) No Material Adverse Change.  There shall not have occurred
a material  adverse  change since  December 31, 1999, in the  business,  assets,
liabilities  (actual  or  contingent),   operations,  conditions  (financial  or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole or
in the facts and information regarding such entities as represented to the Agent
and the Lenders.

                  (n) Year 2000. Receipt and review,  with results  satisfactory
to the Agent and the  Lenders,  of  information  confirming  that the "Year 2000
problem"  (i.e.,  the  inability of certain  computer  applications  and devices
containing   imbedded   computer  chips  to  recognize   correctly  and  perform
date-sensitive functions involving certain dates prior to and after December 31,
1999),  has not had and  reasonably  is not expected to have a Material  Adverse
Effect.



<PAGE>



                  (o) Goldman  Transaction.  The Goldman  Transaction shall have
closed or will close  simultaneously  with this Agreement.  The Agent shall have
received  copies  of  all  documents  and  agreements   evidencing  the  Goldman
Transaction and such documents and agreements  shall be reasonably  satisfactory
to the Agent.  There  shall not exist any  order,  decree,  judgment,  ruling or
injunction  which restrains the  consummation of the Goldman  Transaction or the
transactions contemplated by the Loan Documents.

                  (p) Proxy.  The Agent shall have  received a copy of the proxy
and all  supplements  thereto  distributed by the Borrower to its  shareholders,
certified by the Secretary or an Assistant Secretary of the Borrower.

                  (q) No  Default.  No Default  or Event of  Default  shall have
occurred and be continuing.

                  (r) Representations and Warranties. All of the representations
and  warranties  of the Loan Parties  contained in this  Agreement and the other
Loan Documents shall be true and correct on and as of the date hereof as if made
on and as of such date.

                  (s) Accrued  Interest  and  Commitment  Fees.  All accrued and
unpaid  interest and fees under the  Existing  Credit  Agreement,  up to but not
including the Closing Date, shall have been paid by the Borrower to the Agent.

                  (t)  Post  Closing  Matters.  The  Borrower  shall  have  duly
executed and  delivered to the Agent an agreement  substantially  in the form of
Exhibit S.

                  4.2 Conditions to Each Extension of Credit.  The obligation of
each Lender to make any Extension of Credit (including,  without limitation, its
initial  Extension of Credit) is subject to the  satisfaction  of the  following
conditions precedent:

                  (a)    Representations    and   Warranties.    Each   of   the
representations and warranties made by any of the Loan Parties in or pursuant to
the  Loan  Documents  shall be true  and  correct  on and as of the date of such
Extension of Credit as if made on and as of such date.

                  (b) No  Default.  No Default  or Event of  Default  shall have
occurred and be  continuing  immediately  before or after giving  effect to such
Extension of Credit.

                  (c) Additional  Matters.  All corporate and other  proceedings
and all documents,  instruments  and other legal matters in connection  with the
transactions  contemplated  by this Agreement and the other Loan Documents shall
be  satisfactory  in form and  substance to the Agent,  and the Agent shall have
received  such other  documents  and legal  opinions in respect of any aspect or
consequence  of the  transactions  contemplated  hereby or  thereby  as it shall
reasonably request.

Each  Extension  of Credit  hereunder  shall  constitute  a  representation  and
warranty by the Borrower as of the date thereof that the conditions contained in
this Section 4.2 have been satisfied.


<PAGE>




                  SECTION 5.  REPRESENTATIONS AND WARRANTIES

                  To  induce  the  Agent  and the  Lenders  to enter  into  this
Agreement and to make the Extensions of Credit,  the Borrower hereby  represents
and warrants to the Agent and each Lender that:

                  5.1 Financial Condition.  (a) The audited consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as at December 31, 1999,
and the related audited consolidated  statements of income and of cash flows for
the fiscal year ended on such date,  reported on by Arthur  Andersen LLP, copies
of which have heretofore been furnished to each Lender, are complete and correct
and present fairly the consolidated  financial condition of the Borrower and its
Consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the fiscal year then ended. The
unaudited  consolidated  balance  sheet  of the  Borrower  and its  Consolidated
Subsidiaries  as at March  31,  2000,  and the  related  unaudited  consolidated
statements  of income and cash flows for the 3-month  period ended on such date,
are complete and correct and present fairly the consolidated financial condition
of the  Borrower  and its  Consolidated  Subsidiaries  as at such date,  and the
consolidated  results of their operations and their  consolidated cash flows for
the 3-month  period then ended (subject to normal  year-end audit  adjustments).
All such  financial  statements,  including  the  related  schedules  and  notes
thereto,  have  been  prepared  in  accordance  with GAAP  applied  consistently
throughout  the periods  involved  (except as approved  by such  accountants  or
Responsible Officer, as the case may be, and as disclosed therein).  Neither the
Borrower  nor  any of its  Consolidated  Subsidiaries  had,  at the  date of the
balance sheet referred to above, any material Guarantee  Obligation,  contingent
liability or liability for taxes,  or any long-term  lease or unusual forward or
long-term  commitment,  including,  without  limitation,  any  interest  rate or
foreign  currency  swap or exchange  transaction,  which is not reflected in the
foregoing  statements or in the notes  thereto.  Except as set forth on Schedule
5.1, during the period from December 31, 1999, to and including the date hereof,
there has been no sale,  transfer or other disposition by the Borrower or any of
its  Consolidated  Subsidiaries of any material part of its business or property
and no purchase or other acquisition of any business or property  (including any
Capital  Stock of any other  Person)  material in  relation to the  consolidated
financial  condition  of the  Borrower  and  its  Consolidated  Subsidiaries  at
December 31, 1999.

                  (b) The pro forma  consolidated  balance sheet of the Borrower
and its  Consolidated  Subsidiaries  as of March 31, 2000  (including  the notes
thereto) (the "Pro Forma Balance  Sheet"),  copies of which have heretofore been
furnished to each Lender, has been prepared giving effect (as if such events had
occurred on such date) to (i) the  Goldman  Transaction,  (ii) the  transactions
contemplated by this  Agreement,  and (iii) the payment of all fees and expenses
in connection  with this  Agreement and the Goldman  Transaction.  The Pro Forma
Balance Sheet has been prepared based on the best  information  available to the
Borrower as of the date of delivery  thereof,  and presents on a pro forma basis
the estimated  financial position of Borrower and its consolidated  Subsidiaries
as of the Closing  Date  assuming  that the events  specified  in the  preceding
sentence had actually  occurred at such date.  The Pro Forma  Balance  Sheet has
been prepared in accordance  with the  requirements  of Regulation S-X under the
Securities Act applicable to a registration  statement  under the Securities Act
on Form S-1.


<PAGE>



                  5.2 No Change;  Solvent.  Since  December 31, 1999,  there has
been no  development  or event which has had or could  reasonably be expected to
have a Material Adverse Effect. Each Loan Party is Solvent.

                  5.3  Corporate  Existence;  Compliance  with Law.  Each of the
Borrower and its  Subsidiaries  and, to the best of its  knowledge,  each of the
Affiliated  Providers  (a) is  duly  organized,  validly  existing  and in  good
standing under the laws of the  jurisdiction  of its  organization,  (b) has the
corporate  power and  authority,  and the legal  right,  to own and  operate its
property,  to lease the  property  it  operates  as lessee  and to  conduct  the
business in which it is currently  engaged,  (c) is duly  qualified as a foreign
corporation and in good standing under the laws of each  jurisdiction  where its
ownership,  lease or  operation  of  property  or the  conduct  of its  business
requires  such  qualification,  except where failure to so qualify or be in good
standing could not reasonably be expected to have a Material Adverse Effect, (d)
has  all  licenses,  accreditations,   authorizations,   permits,  consents  and
approvals (including,  without limitation, all accreditations and certifications
as  a  provider  of  health  care  services  eligible  to  receive  payment  and
compensation under, and to participate in, any Governmental Program) required to
carry on its business as now  conducted,  except where  failure to have the same
could not,  individually  or in the aggregate,  reasonably be expected to have a
Material  Adverse Effect and (e) is in compliance with all  Requirements of Law,
except  to  the  extent  that  the  failure  to  comply   therewith  could  not,
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse Effect.

                  5.4 Corporate Power;  Authorization;  Enforceable Obligations.
The Borrower has the  corporate  power and  authority,  and the legal right,  to
execute,  deliver and perform the Loan  Documents  to which it is a party and to
borrow  Loans  hereunder,  and has  taken  all  necessary  corporate  action  to
authorize the Loans on the terms and conditions of this Agreement, the Notes and
each other Loan Document to which it is a party and to authorize the  execution,
delivery  and  performance  of the Loan  Documents  to  which it is a party.  No
consent  or  authorization  of,  filing  with,  notice  to or other act by or in
respect of, any  Governmental  Authority  or any other  Person is required to be
obtained  or made  by or on  behalf  of the  Borrower  in  connection  with  the
Extensions of Credit  hereunder or with the  execution,  delivery,  performance,
validity or  enforceability  of the Loan  Documents  to which the  Borrower is a
party.  This  Agreement has been,  and each other Loan Document to which it is a
party will be, duly executed and delivered on behalf of the Borrower.  Each Loan
Document  to which the  Borrower is a party when  executed  and  delivered  will
constitute,  a legal, valid and binding  obligation of the Borrower  enforceable
against the Borrower in accordance with its terms,  except as enforceability may
be limited by the effects of bankruptcy, insolvency, reorganization,  moratorium
and other similar laws relating to or affecting  creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity or at
law).

                  5.5 No Legal Bar. The execution,  delivery and  performance of
the Loan  Documents to which the Borrower is a party,  the  Extensions of Credit
hereunder  and  the  use of the  proceeds  thereof  (a)  will  not  violate  any
Requirement  of Law or  Contractual  Obligation of the Borrower and (b) will not
result in, or require,  the creation or  imposition of any Lien on any of its or
its  Subsidiaries'  respective  properties  or  revenues  pursuant  to any  such
Requirement of Law or Contractual Obligation.



<PAGE>



                  5.6 No Material  Litigation.  Except as  disclosed in Schedule
5.6, no litigation,  investigation  or proceeding of or before any arbitrator or
Governmental  Authority  is  pending  or,  to the  knowledge  of  the  Borrower,
threatened by or against the Borrower,  any  Subsidiary or against any of its or
their  respective  properties  or revenues  (a) with  respect to any of the Loan
Documents or any of the transactions  contemplated  hereby or thereby,  (b) with
respect to the Goldman Transaction, or (c) which could reasonably be expected to
have a Material  Adverse Effect.  Except as disclosed in Schedule 5.6 and to the
best of the Borrower's knowledge, no litigation,  investigation or proceeding of
or before any arbitrator or  Governmental  Authority is pending or threatened by
or against any Affiliated  Provider or against any of its properties or revenues
(a) with respect to any of the Loan  Documents or Service  Agreements  or any of
the transactions contemplated hereby or thereby or (b) which could reasonably be
expected to have a Material Adverse Effect.

                  5.7 No Default.  Neither the Borrower nor any Subsidiary  nor,
to the best of the Borrower's  knowledge,  any of the Affiliated Providers is in
default  under or with  respect  to any of its  Contractual  Obligations  in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.

                  5.8 Ownership of Property; Liens. Each of the Borrower and its
Subsidiaries  has good record and marketable  title in fee simple to, or a valid
leasehold  interest  in,  all its real  property,  and good title to, or a valid
leasehold  interest  in, all its other  property,  and none of such  property is
subject to any Lien except as  permitted  by Section  7.3.  Schedule  5.8 hereto
lists all of the real  property  owned in fee or leased by the  Borrower and its
Subsidiaries on the Closing Date.

                  5.9  Intellectual  Property.  The  Borrower  and  each  of its
Subsidiaries  owns,  or is licensed to use,  all patents,  patent  applications,
trademarks, trademark applications, tradenames, copyrights, technology, know-how
and processes  necessary for the conduct of its business as currently  conducted
or as proposed to be conducted (the "Intellectual  Property"),  except for those
the failure to own or license  which could not  reasonably be expected to have a
Material Adverse Effect. No claim has been asserted and is pending by any Person
challenging  or  questioning  the use of any such  Intellectual  Property or the
validity  or  effectiveness  of any  such  Intellectual  Property,  nor does the
Borrower  know  of any  valid  basis  for  any  such  claim.  The  use  of  such
Intellectual  Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person,  except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

                  5.10 No  Burdensome  Restrictions.  No  Requirement  of Law or
Contractual  Obligation  of  the  Borrower  or any  of  its  Subsidiaries  could
reasonably  be expected to have a Material  Adverse  Effect.  Schedule 5.10 sets
forth a complete  and  accurate  list as of the  Closing  Date of each  Material
Contract to which the  Borrower or any  Subsidiary  is a party or by which it or
any of its assets are bound or subject.  All of the  Material  Contracts  are in
full force and effect, and neither the Borrower nor any Subsidiary is in default
under any Material  Contract  and no other Person that is a party  thereto is in
default  under  any  Material  Contract,  except  for  defaults  that  could not
reasonably be expected to have,  individually  or in the  aggregate,  a Material
Adverse Effect.


<PAGE>



                  5.11 Taxes.  Each of the  Borrower  and its  Subsidiaries  has
filed or caused to be filed all tax returns  which are  required to be filed and
has paid all  material  taxes shown to be due and payable on said  returns or on
any  material  assessments  made against it or any of its property and all other
material  taxes,  fees or other charges  imposed on it or any of its property by
any Governmental  Authority  (other than those taxes,  fees or other charges the
amount or  validity  of which are  currently  being  contested  in good faith by
appropriate  proceedings diligently conducted and with respect to which reserves
in  conformity  with GAAP have been provided on the books of the Borrower or its
Subsidiaries,  as the case may be) and no tax Lien has been filed,  and no claim
is being asserted, with respect to any such tax, fee or other charge.

                  5.12 Federal Regulations.  No part of the proceeds of any Loan
will be used for  "purchasing"  or  "carrying"  any  "margin  stock"  within the
respective meanings of each of the quoted terms under the Regulations, including
without limitation,  Regulation U. The Borrower is not engaged principally or as
one of its  important  activities  in the business of  extending  credit for the
purpose of  purchasing or carrying any margin stock within the meaning of any of
the  Regulations.  No  more  than  25% of the  assets  of the  Borrower  and its
Subsidiaries are margin stock. None of the Borrower and its Subsidiaries nor any
agent  acting on their  behalf,  have taken or will take any action  which might
cause the Borrower,  the Lenders,  this  Agreement or any other Loan Document to
violate any  regulation of the Board of Governors of the Federal  Reserve System
or to violate the Exchange Act, in each case as in effect now or as the same may
hereafter be in effect.  Neither the making of any Loans nor the  application of
any proceeds  thereof will violate,  or be inconsistent  with, the provisions of
any of the  Regulations.  If requested by any Lender or the Agent,  the Borrower
will furnish to the Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in Regulation U.

                  5.13 ERISA.  Schedule  5.13 sets forth a complete and accurate
list as of the  Closing  Date of all Plans.  Neither a  Reportable  Event nor an
"accumulated  funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred  during the five-year  period prior to the
date on which this  representation  is made or deemed  made with  respect to any
Plan that could  reasonably be expected to have a Material  Adverse Effect,  and
each Plan has complied in all material  respects with the applicable  provisions
of ERISA and the Code.  No  termination  of a Single  Employer Plan has occurred
that could reasonably be expected to have a Material Adverse Effect, and no Lien
on the property of the Borrower or any of its  Subsidiaries in favor of the PBGC
or a Plan has arisen, during such five-year period. Neither the Borrower nor any
Commonly  Controlled  Entity has had a complete or partial  withdrawal  from any
Multiemployer  Plan that could reasonably be expected to have a Material Adverse
Effect, and neither the Borrower nor any Commonly Controlled Entity would become
subject to any liability under ERISA that could reasonably be expected to have a
Material Adverse Effect if the Borrower or any such Commonly  Controlled  Entity
were to withdraw  completely  from all  Multiemployer  Plans as of the valuation
date most closely  preceding  the date on which this  representation  is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent. There
have been no transactions  that resulted or could result in any liability to the
Borrower  or any  Commonly  Controlled  Entity  under  Section  4069 of ERISA or
Section  4212(c) of ERISA that could  reasonably  be expected to have a Material
Adverse Effect.



<PAGE>



                  5.14 Investment Company Act; Other  Regulations.  The Borrower
is not an  "investment  company," or a company  "controlled"  by an  "investment
company," within the meaning of the Investment  Company Act of 1940, as amended.
The Borrower is not subject to regulation  under any Federal or State statute or
regulation  (other than  Regulation  X of the Board of  Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.

                  5.15   Subsidiaries.   Schedule   5.15  sets   forth  all  the
Subsidiaries  of the  Borrower at the date  hereof,  the  jurisdiction  of their
incorporation  and the direct or indirect  ownership  interest  of the  Borrower
therein.

                  5.16 Purpose of Loans.  The proceeds of the  Revolving  Credit
Loans and the  Tranche B Term Loans  shall be used by the  Borrower  for working
capital in the ordinary course of business and Permitted Physician  Transactions
and Permitted Ancillary  Acquisitions.  The Tranche A Term Loans result from the
conversion  and  extension of Revolving  Credit Loans and 364-Day Loans (as such
terms are defined in the Existing Credit Agreement) into Tranche A Term Loans.

                  5.17  Environmental  Matters.  Except as set forth on Schedule
5.17:

                  (a) To the best knowledge of the Borrower,  the facilities and
properties owned,  leased or operated by the Borrower or any of its Subsidiaries
(the  "Properties")  do not  contain,  and have not  previously  contained,  any
Materials  of  Environmental  Concern  in amounts  or  concentrations  which (i)
constitute or  constituted a violation of, or (ii) could  reasonably be expected
to give rise to liability  under,  any  Environmental  Law except in either case
insofar as such  violation or  liability,  or any  aggregation  thereof,  is not
reasonably likely to result in the payment of a Material Environmental Amount.

                  (b) To the best knowledge of the Borrower,  the Properties and
all operations at the Properties are in compliance,  and at all times during the
last five years  have been in  compliance,  in all  material  respects  with all
applicable  Environmental Laws, and there is no contamination at, under or about
the  Properties  or  violation  of any  Environmental  Law with  respect  to the
Properties or the business  operated by the Borrower or any of its  Subsidiaries
(the  "Business")  which could reasonably be expected to have a Material Adverse
Effect.  The  Borrower  has  not  assumed  any  liability  of any  Person  under
Environmental Laws.

                  (c)  Neither  the  Borrower  nor any of its  Subsidiaries  has
received or is aware of any claim or any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental matters
or compliance  with  Environmental  Laws with regard to any of the Properties or
the Business, nor does the Borrower have knowledge or reason to believe that any
such claim or notice will be received or is being  contemplated,  considered  or
threatened except insofar as such claim or notice or threatened claim or notice,
or any aggregation thereof,  does not involve a matter or matters that is or are
reasonably likely to result in the payment of a Material Environmental Amount.



<PAGE>



                  (d) To the best  knowledge of the Borrower  after due inquiry,
Materials of Environmental Concern have not been transported or disposed of from
the  Properties  in  violation  of, or in a manner or to a location  which could
reasonably be expected to give rise to liability under, any  Environmental  Law,
nor have any Materials of Environmental Concern been generated,  treated, stored
or disposed of at, on or under any of the  Properties  in violation  of, or in a
manner that could  reasonably be expected to give rise to liability  under,  any
applicable  Environmental  Law except insofar as any such violation or liability
referred to in this  paragraph,  or any aggregation  thereof,  is not reasonably
likely to result in the payment of a Material Environmental Amount.

                  (e) No judicial  proceeding or governmental or  administrative
action or  investigation  is pending or, to the best  knowledge  of the Borrower
after due inquiry,  contemplated or threatened,  under any  Environmental Law to
which the Borrower or any Subsidiary is or will be named as a party with respect
to the  Properties or the Business,  nor are there any consent  decrees or other
decrees,  consent  orders,  administrative  orders  or  other  orders,  or other
administrative or judicial requirements  outstanding under any Environmental Law
with  respect  to  the  Properties  or  the  Business  except  insofar  as  such
proceeding,  action,  decree,  order or other  requirement,  or any  aggregation
thereof,  is not  reasonably  likely  to  result in the  payment  of a  Material
Environmental Amount.

                  (f) To the best  knowledge of the Borrower  after due inquiry,
there has been no release or threat of release  of  Materials  of  Environmental
Concern at or from the Properties,  or arising from or related to the operations
of the Borrower or any Subsidiary in connection with the Properties or otherwise
in connection  with the  Business,  in violation of or in amounts or in a manner
that could  reasonably  give rise to liability under  Environmental  Laws except
insofar as any such violation or liability referred to in this paragraph, or any
aggregation  thereof,  is not  reasonably  likely to result in the  payment of a
Material Environmental Amount.

                  5.18 No Material  Misstatements.  The Offering Memorandum does
not contain  any  material  misstatement  of fact and does not omit to state any
material  fact  necessary  to  make   statements   therein,   in  light  of  the
circumstances under which they were made, not materially misleading. The written
information,  reports, financial statements, exhibits and schedules furnished by
or on behalf of the Borrower and its  Subsidiaries  to the Lender in  connection
with the  negotiation  of any Loan  Document  or included  therein or  delivered
pursuant thereto,  taken as a whole, do not contain any material misstatement of
fact and do not omit to state any material fact necessary to make the statements
therein,  in the light of the  circumstances  under  which they were  made,  not
materially misleading.

                  5.19 Labor  Matters.  Except as  disclosed  in Schedule  5.19,
there are no collective  bargaining  agreements  covering the Borrower or any of
its Subsidiaries as of the Closing Date. There are no strikes pending or, to the
knowledge  of  the  Borrower,  threatened  against  the  Borrower  or any of its
Subsidiaries  which,  individually  or in the  aggregate,  could  reasonably  be
expected to have a Material  Adverse Effect.  The hours worked and payments made
to  employees  of the  Borrower  and each of its  Subsidiaries  have not been in
violation of any applicable  Requirements  of Law,  except where such violations
could not reasonably be expected to have a Material Adverse Effect.



<PAGE>



                  5.20 Year 2000  Compliance.  The Borrower has (a)  initiated a
review  and  assessment  of all  material  areas  within  its  and  each  of its
Subsidiaries'  business and operations  (including  those affected by suppliers,
vendors  and  customers)  that  could be  adversely  affected  by the "Year 2000
Problem" (that is, the risk that computer  applications  used by the Borrower or
any of its Subsidiaries  (or suppliers,  vendors and customers) may be unable to
recognize and perform properly date-sensitive  functions involving certain dates
prior to and any  date  after  December  31,  1999),  (b)  developed  a plan and
timeline for addressing the Year 2000 Problem on a timely basis and (c) to date,
implemented that plan in accordance with that timetable. Based on the foregoing,
the Borrower  believes that all computer  applications  (including  those of its
suppliers,  vendors  and  customers)  that  are  material  to  its or any of its
Subsidiaries'   business   and   operations   are  able  to   perform   properly
date-sensitive  functions  for all dates before and after  January 1, 2000 (that
is, be "Year  2000  Compliant"),  except to the  extent  that a failure to do so
could not reasonably be expected to have a Material Adverse Effect.

                  5.21 Indebtedness. Schedule 5.21 sets forth, as of the Closing
Date, all Indebtedness of the Borrower and its Subsidiaries,  including, without
limitation, each instrument or agreement evidencing Indebtedness of the Borrower
or any of its  Subsidiaries,  all Guarantee  Obligations of the Borrower and its
Subsidiaries, and all Existing Subordinated Indebtedness.

                  5.22 Health Care Permits. (a) (i) The Borrower and each of the
Subsidiaries  and,  to  the  best  of its  knowledge,  each  of  the  Affiliated
Providers, now have, and have no reason to believe that they will not be able to
maintain in effect,  all Health Care Permits  necessary for the conduct of their
respective  businesses or operations in accordance with all Requirements of Law,
(ii) all such Health Care Permits are in full force and effect and have not been
amended or  otherwise  modified,  canceled,  terminated,  rescinded,  revoked or
suspended,  (iii) neither the Borrower nor any of its  Subsidiaries  nor, to the
best of its knowledge,  any of the Affiliated Providers, is in default under, or
in violation  of, any such Health Care Permit (and to the best  knowledge of the
Borrower, no event has occurred, and no condition exists, which, with the giving
of notice or passage of time or both, would  constitute a default  thereunder or
violation  thereof) that has caused or could reasonably be expected to cause the
loss  of any  such  Health  Care  Permit,  (iv)  neither  the  Borrower  nor any
Subsidiary  nor,  to the best of its  knowledge,  any  Affiliated  Provider  has
received  any notice of a violation  of any  Requirement  of Law or  Contractual
Obligation  which has caused or could  reasonably  be expected to cause any such
Health Care Permit to be modified, canceled,  terminated,  rescinded, revoked or
suspended,  (v) no condition exists or event has occurred which could reasonably
be expected to result in the suspension, cancellation,  termination, revocation,
impairment,  forfeiture or  non-renewal  of any such Health Care Permit and (vi)
the  continuation,  validity and  effectiveness  of all such Health Care Permits
will not in any way be adversely  affected by the  transactions  contemplated by
this Agreement, except for such instances that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.



<PAGE>



                  (b)  Each  Affiliated  Provider  is  (i)  fully  qualified  to
participate in, receive payment under,  and in compliance with the conditions of
participation in each Governmental Program in which such Affiliated Provider has
elected to participate or with which such  Affiliated  Provider has  contracted,
and (ii) fully qualified and eligible to receive  reimbursement from private and
commercial payors, including, but not limited to employers,  insurers and health
maintenance organizations,  except where the loss of the right to participate in
or receive  payments  under such  Governmental  Programs  or from such payors or
organizations  could not reasonably be expected to have,  individually or in the
aggregate, a Material Adverse Effect.

                  5.23  Fraud  and  Abuse.  Neither  (i)  the  Borrower  nor any
Subsidiary, (ii) nor any of their respective shareholders,  officers,  directors
or employees, (iii) nor, to the best of the Borrower's knowledge, any Affiliated
Provider,  has engaged in or is being investigated  (exclusive of routine audits
in the ordinary course of business) for any activities that are prohibited under
the Federal False Claims Act (31 U.S.C.  ss.ss. 3729 - 3733), 42 U.S.C. 1395 nn,
18 U.S.C. ss. 1347 or the federal fraud and abuse laws (42 U.S.C. ss.ss. 1320a -
7a or 1320a - 7b), or the regulations  promulgated  pursuant to such statutes or
similar state or local statutes or regulations, or which are prohibited by rules
of  professional  conduct,  including,  but not limited to, the  following:  (a)
knowingly  presenting or causing to be presented a false claim for payment,  (b)
knowingly  presenting  or causing  to be  presented  a false  record in order to
receive payment for a claim, (c) knowingly and willfully making or causing to be
made a false statement or  representation  of a material fact in any application
for any benefit or payment,  (d) knowingly and willfully making or causing to be
made  any  false  statement  or  representation  of a  material  fact for use in
determining rights to any benefit or payment,  (e) failing to disclose knowledge
by a claimant of the occurrence of any event  affecting the initial or continued
right to any benefit or payment on its own behalf or on behalf of another,  with
intent to secure  such  benefit  or  payment  fraudulently,  (f)  knowingly  and
willfully  soliciting or receiving  any  remuneration  (including  any kickback,
bribe or rebate),  directly or  indirectly,  overtly or covertly,  in cash or in
kind or  offering  to pay such  remuneration  (i) in  return  for  referring  an
individual to a Person for the furnishing or arranging for the furnishing of any
item or service for which  payment may be made in whole or in part by  Medicare,
Medicaid or other third party payors, or (ii) in return for purchasing,  leasing
or ordering or arranging for or recommending the purchasing, leasing or ordering
of any good, facility, service or item for which payment may be made in whole or
in part by Medicare,  Medicaid or other  third-party  payors, or (g) referring a
patient for "designated  health services" to a Person with which a physician has
a financial  relationship,  except for such  instances of prohibited  activities
that could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect. Neither the Borrower nor any Subsidiary or Affiliated
Provider,  nor any of their  respective  officers or directors has been excluded
from participation in any Governmental Program.

                  5.24  Reimbursement  from Third Party Payors.  The Receivables
assigned to the Borrower and each  Subsidiary by the  Affiliated  Providers have
been and will  continue to be  adjusted  so as to comply with the  reimbursement
policies of Government  Programs and third party payors such as Blue  Cross/Blue
Shield, private insurance companies, health maintenance organizations, preferred
provider organizations,  alternative delivery systems, and managed care systems.
The Receivables so assigned do not and shall not exceed in any material  respect
the amounts that the relevant  Affiliated  Providers are entitled to receive for
their services under any capitation arrangement, fee schedule, discount formula,
cost-based  reimbursement or other adjustment or limitation to the usual charges
of such Affiliated Providers.



<PAGE>



                  5.25  Title  to  Receivables.  Upon  the  assignment  of  each
Receivable of an Affiliated Provider to the Borrower or a Subsidiary pursuant to
a Service Agreement,  the Borrower or the relevant  Subsidiary shall acquire all
of the right,  title and interest of the Affiliated  Provider in such Receivable
free and clear of any Lien or adverse  claim and shall have a  perfected,  first
priority  ownership  interest  in such  Receivable  (except  for  Liens  created
pursuant to the Security  Documents).  Each  assignment  of a  Receivable  by an
Affiliated  Provider  to the  Borrower  or a  Subsidiary  pursuant  to a Service
Agreement will constitute a true and absolute  assignment (and not an assignment
for security purposes) under the laws of all relevant jurisdictions, and no such
assigned  Receivable will constitute  property of such Affiliated  Provider.  No
financing  statement or other instrument  similar in effect covering all or part
of any  Receivable  assigned  by an  Affiliated  Provider  to the  Borrower or a
Subsidiary is on file in any filing or recording office, except as may have been
filed in favor of the Agent  pursuant to the  Security  Documents or in favor of
the Borrower or a Subsidiary (with the Agent named as assignee)  pursuant to the
relevant Service Agreement.

                  5.26 Investments. Set forth on Schedule 5.26 is a complete and
accurate list of all  Investments  held by the Borrower and its  Subsidiaries on
the Closing Date,  showing as of the Closing Date, the type of  Investment,  the
amount, the obligor or issuer and maturity, if any, thereof.

                  5.27 Security  Documents.  (a) The  Guarantee  and  Collateral
Agreement  creates in favor of the Agent,  for the  benefit  of the  Lenders,  a
legal,  valid and  enforceable  security  interest in the  Collateral  described
therein and the proceeds  thereof.  In the case of the Pledged Notes and Pledged
Stock (as such terms are defined in the Guarantee and Collateral Agreement), the
delivery of the Pledged  Notes and the  Pledged  Stock to the Agent,  and in the
case  of  the  other  Collateral  described  in  the  Guarantee  and  Collateral
Agreement, the financing statements and other filings listed on Schedule 5.27(a)
(together with any other filings specified in Joinder  Agreements after the date
hereof),  perfect in favor of the Agent, for the benefit of the Lenders,  a Lien
on and security  interest in the  Collateral  (as defined in the  Guarantee  and
Collateral  Agreement) and the proceeds thereof, as security for the Obligations
(as defined in the Guarantee and Collateral  Agreement),  in each case prior and
superior in right to any other Person  (except in the case of  Collateral  other
than Pledged Notes or Pledged Stock, Liens permitted by Section 7.3).

                  (b) Each of the  Mortgages  is effective to create in favor of
the Agent, for the benefit of the Lenders,  a legal,  valid and enforceable Lien
on the Mortgaged Properties described therein and proceeds thereof, and when the
Mortgages  are filed in the offices  specified  on Schedule  5.27(b),  each such
Mortgage shall  constitute a fully perfected Lien on, and security  interest in,
all right,  title and interest of the Loan Parties in the  Mortgaged  Properties
and the proceeds  thereof,  as security for the  Obligations  (as defined in the
relevant Mortgage), in each case prior and superior in right to any other Person
except for Liens permitted by Section 7.3.

                  5.28 Bank Accounts. As of the Closing Date, Schedule 5.28 sets
forth the account numbers and locations of all bank accounts,  deposit accounts,
investment accounts and other accounts of the Borrower and its Subsidiaries.



<PAGE>



                  5.29 Split Dollar Agreements. As of the Closing Date, Schedule
5.29 sets forth all split dollar  agreements to which the Borrower or any of its
Subsidiaries is a party, all collateral assignments relating to such agreements,
all split dollar life insurance policies that have been assigned to the Borrower
or any of its Subsidiaries,  all rabbi trust agreements to which the Borrower or
any  Subsidiary is a party,  and all related  escrow  agreements  and promissory
notes.

                  5.30 Form of Service  Agreement.  Attached as Exhibit T is the
form of Service  Agreement being used by the Borrower and its Subsidiaries as of
the Closing Date.

                      SECTION 6.  AFFIRMATIVE COVENANTS

                  The Borrower  hereby agrees that,  so long as the  Commitments
remain  in  effect,  any  Note  remains  outstanding  and  unpaid  or any  other
Obligation is owing to any Lender or the Agent,  the Borrower  shall and (except
in the case of delivery of financial  information,  reports and  notices)  shall
cause each of its Subsidiaries to:

                  6.1  Financial  Statements.  Furnish  to the  Agent  and  each
Lender:

                  (a) as soon as  available,  but in any event  within  100 days
after the end of each fiscal year of the  Borrower,  a copy of the  consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as at the end of
such  year and the  related  consolidated  statements  of  income  and  retained
earnings  and of cash  flows  for  such  year,  setting  forth  in each  case in
comparative form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising out of the
scope of the audit, by Arthur Andersen LLP or other independent certified public
accountants  of nationally  recognized  standing  acceptable to the Agent in its
reasonable judgment; and

                  (b) as soon as  available,  but in any event not later than 50
days after the end of each of the first three  quarterly  periods of each fiscal
year of the Borrower,  the unaudited  consolidated balance sheet of the Borrower
and its Consolidated  Subsidiaries as at the end of such quarter and the related
unaudited  consolidated  statements of income and retained  earnings and of cash
flows of the Borrower and its Consolidated Subsidiaries for such quarter and the
portion of the fiscal year  through the end of such  quarter,  setting  forth in
each case in comparative form the figures for the previous year,  certified by a
Responsible  Officer as being fairly stated in all material respects (subject to
normal year-end audit adjustments);

all such  financial  statements  shall be complete  and correct in all  material
respects and shall be prepared in reasonable detail and in accordance with GAAP.

                  6.2 Certificates;  Other Information. Furnish to the Agent and
(except in the case of clause (m)) each Lender:

                  (a) concurrently with the delivery of the financial statements
referred to in subsection  6.1(a),  a certificate of the  independent  certified
public accountants reporting on such financial statements stating that in making
the examination  necessary  therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate;



<PAGE>



                  (b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a Compliance  Certificate signed by a
Responsible  Officer (i) stating that, to the best of such officer's  knowledge,
no  Default or Event of Default  exists,  or if any  Default or Event of Default
does  exist,  specifying  the  nature  and extent  thereof  and what  action the
Borrower proposes to take with respect thereto, (ii) setting forth in reasonable
detail the  calculations  required to determine (A) compliance with Section 7.1,
and (B) the  Applicable  Margin  that will take effect on the  Calculation  Date
immediately  following  the  date  on  which  such  Compliance   Certificate  is
delivered,  (iii) stating that no Subsidiary has been formed or acquired (or, if
any Subsidiary  has been formed or acquired,  the Borrower has complied with the
requirements of Section 6.10 with respect thereto), (iv) containing rolling four
quarter projections for the Borrower and its Subsidiaries,  and (v) stating that
neither the  Borrower  nor any of its  Subsidiaries  has  changed its name,  its
principal place of business,  its chief executive  office or the location of any
material item of tangible  Collateral without complying with the requirements of
the Loan Documents with respect thereto;

                  (c) as soon as  available,  but in any event  not  later  than
thirty days after the end of each fiscal year of the Borrower, (i) a copy of the
detailed  projections by the Borrower of the operating budget,  cash flow budget
and capital budget of the Borrower and its Subsidiaries on a quarterly basis for
the succeeding  fiscal year, such projections to be accompanied by a certificate
of a Responsible  Officer to the effect that such projections have been prepared
on the basis of sound financial  planning  practice and that such officer has no
reason to believe they are incorrect or  misleading in any material  respect and
(ii) in the event that the budgeted Capital Expenditures of the Borrower and its
Subsidiaries  contained  in  such  projections  exceed  the  amount  of  Capital
Expenditures  permitted by Section  7.10, a request in the form of Exhibit N for
the consent of the Required  Lenders (at their sole discretion) to such budgeted
Capital Expenditures;

                  (d) within  five days  after  receipt  thereof,  a copy of any
report or  "management  letter"  submitted  by  independent  accountants  to the
Borrower or any  Subsidiary  in connection  with any annual,  interim or special
audit of the books of such Person;

                  (e) within  five days  after the same are sent,  copies of all
financial  statements and reports which the Borrower sends to its  stockholders,
and  within  five  days  after  the  same are  filed,  copies  of all  financial
statements  and  reports  which  the  Borrower  may make to, or file  with,  the
Securities  and Exchange  Commission or any successor or analogous  Governmental
Authority;

                  (f) within  five days after the same are filed,  copies of all
registration  statements  and any  amendments  and exhibits  thereto,  which the
Borrower may file with the Securities  and Exchange  Commission or any successor
or analogous Governmental Authority,  and such other documents or instruments as
may be reasonably requested by the Agent in connection therewith;

                  (g) within one day after the issuance thereof,  a copy of each
press release and other statement that the Borrower or any Subsidiary shall make
available generally to the public;



<PAGE>



                  (h) not less than  fourteen  days prior to the  closing of any
Permitted   Physician   Transaction  or  Permitted  Ancillary   Acquisition,   a
Transaction  Notice  containing the following items,  each in form and substance
reasonably satisfactory to the Agent:

                  (i) a description of the Acquired Assets;

                  (ii) a  description  of the material  terms of such  Permitted
Physician  Transaction or Permitted Ancillary  Acquisition  (including,  without
limitation,  the purchase price,  method and structure of payment,  and proposed
closing date), provided that a description of any additional or changed material
terms of such Permitted Physician Transaction or Permitted Ancillary Acquisition
shall be  disclosed  to the  Agent  within  three (3) days of such  addition  or
change;

                  (iii) projected revenue and Consolidated  EBITDA  contribution
levels with respect to the Acquired  Assets,  prepared on a quarterly  basis for
the two-year  period  following the  consummation  of such  Permitted  Physician
Transaction  or  Permitted  Ancillary  Acquisition,  in  reasonable  detail  and
containing an explanation of the underlying assumptions;

                  (iv)   confirmation,    supported   by   reasonably   detailed
calculations  (including  an  explanation  of the  underlying  assumptions),  of
projected covenant  compliance under this Agreement over the four quarter period
following  such   Permitted   Physician   Transaction  or  Permitted   Ancillary
Acquisition  after giving effect to the pro forma  consolidation of the Acquired
Assets with the  Borrower and its  Subsidiaries;  provided,  however,  that such
confirmation is not required for separate  individual  roll-ins of five or fewer
doctors  representing an aggregate  Transaction  Amount of less than $1,500,000;
and

                  (v) a  description  of any Liens to be  incurred or assumed in
connection  with such Permitted  Physician  Transaction  or Permitted  Ancillary
Acquisition;

                  (i) at least seven days (or such shorter time period as may be
approved  by the  Agent)  prior  to the  closing  of  each  Permitted  Physician
Transaction  or  Permitted  Ancillary  Acquisition,  a  copy  of  each  material
agreement or document,  including any acquisition  agreement,  merger agreement,
master  transaction  agreement or Service  Agreement  relating to such Physician
Transaction or Permitted Ancillary Acquisition;

                  (j) within  thirty  days  after the last day of each  calendar
month of the Borrower, an Accounts Receivable Aging Report as of the last day of
the preceding  calendar month, in substantially the form of Exhibit M, certified
by a Responsible Officer;

                  (k) within  thirty  days  after the last day of each  calendar
month, a detailed  report of all Physician  Transactions  closed by the Borrower
and its Subsidiaries during the twelve month period then most recently ended, in
a format  reasonably  satisfactory  to the  Agent,  certified  by a  Responsible
Officer;



<PAGE>



                  (l) within  thirty  days  after the last day of each  calendar
month, a detailed report of projected Single Physician  Transactions for the six
month period following such calendar month, in a format reasonably  satisfactory
to the Agent, certified by a Responsible Officer;

                  (m) within thirty days after the end of each  calendar  month,
such information regarding the capitation liability and risk of the Borrower and
its Subsidiaries  directly or indirectly  relating to Berkshire,  Massachusetts,
and the  surrounding  market  (and  other  markets  where  the  Borrower  or its
Subsidiaries  have  entered  into  capitation   arrangements  similar  to  those
undertaken by the Borrower and Subsidiaries in Berkshire, Massachusetts), as the
Agent may request;

                  (n) within  fourteen  days  after the  creation  thereof,  the
account number and location of each bank account,  deposit  account,  investment
account or similar account created by the Borrower or any Subsidiary;

                  (o) on or before the last day of each calendar month, detailed
cash flow  projections  for the  Borrower  and its  Subsidiaries  for each month
during the three month period  immediately  following  such calendar  month in a
format satisfactory to the Agent;

                  (p) on or before the second  anniversary  of the Closing  Date
and on the date occurring every two years  thereafter,  a viability study of the
Star Program by an independent consultant acceptable to the Agent; and

                  (q) promptly,  such additional financial and other information
as the Agent or any Lender may from time to time reasonably request.

                  6.3  Payment  of  Obligations.  Pay,  discharge  or  otherwise
satisfy at or before maturity or before they become delinquent,  as the case may
be, all its obligations of whatever nature,  except where the amount or validity
thereof is currently  being  contested in good faith by appropriate  proceedings
and reserves in conformity  with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be.

                  6.4 Conduct of Business and Maintenance of Existence. Continue
to engage in business of the same  general type as conducted by the Borrower and
its Subsidiaries on the Closing Date and preserve,  renew and keep in full force
and  effect  its  corporate  existence  and  maintain  all  rights,  privileges,
licenses,  accreditations,  authorizations,  permits and franchises necessary or
desirable  in the  normal  conduct  of the  business  of the  Borrower  and  its
Subsidiaries,  except as otherwise permitted pursuant to Section 7.5; and comply
with all Contractual  Obligations  and  Requirements of Law except to the extent
that failure to comply  therewith  could not, in the  aggregate,  be  reasonably
expected to have a Material Adverse Effect.



<PAGE>



                  6.5  Maintenance  of  Property;  Insurance.  Keep all property
useful and  necessary in the business of the  Borrower and its  Subsidiaries  in
good working order and condition;  maintain with financially sound and reputable
insurance  companies  insurance on all its property in at least such amounts and
against  at least  such  risks (but  including  in any event  public  liability,
product  liability and business  interruption  insurance) as are usually insured
against in the same general  area by companies  engaged in the same or a similar
business; and furnish to each Lender, upon written request,  information in full
detail as to the insurance carried.

                  6.6  Inspection of Property;  Books and Records;  Discussions.
Keep proper books of records and account in which full, true and correct entries
in  conformity  with  GAAP  and all  Requirements  of Law  shall  be made of all
dealings and transactions in relation to its business and activities; and permit
representatives  of any Lender to visit and  inspect any of its  properties  and
examine and make  abstracts from any of its books and records and to discuss the
business,  operations,  properties  and  financial  and other  condition  of the
Borrower and its  Subsidiaries  with  officers and employees of the Borrower and
its Subsidiaries and with its independent certified public accountants,  in each
case at any reasonable time and as often as may reasonably be desired.

                  6.7 Notices. Promptly give notice to the Agent and each Lender
of:

                  (a) as soon as  possible  and in any  event  within  five days
after the occurrence thereof, any Default or Event of Default;

                  (b) as soon as  possible  and in any  event  within  five days
after the Borrower knows or reasonably  should know thereof,  any (i) default or
event of default under any Contractual  Obligation of the Borrower or any of its
Subsidiaries or (ii) litigation,  investigation or proceeding which may exist at
any time between the Borrower or any of its  Subsidiaries  and any  Governmental
Authority, which in either case, if not cured or if adversely determined, as the
case may be, could reasonably be expected to have a Material Adverse Effect;

                  (c) as soon as possible and in any event within two days after
the  Borrower  knows or  reasonably  should  know  thereof,  any  litigation  or
proceeding affecting the Borrower or any of its Subsidiaries in which the amount
involved  is  $5,000,000  or more  and not  covered  by  insurance  or in  which
injunctive or similar relief is sought;

                  (d) any of the  following  events,  as soon as possible and in
any event  within  thirty  days after the  Borrower  knows or has reason to know
thereof:  (i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required  contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any  withdrawal  from, or
the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii)
the  institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly  Controlled Entity or any  Multiemployer  Plan with
respect to the withdrawal from, or the termination, Reorganization or Insolvency
of, any Plan;



<PAGE>



                  (e) any of the  following  events,  as soon as possible and in
any event  within  thirty  days after the  Borrower  knows or has reason to know
thereof:  (i) any release or discharge by the Borrower or any  Subsidiary of any
Materials of Environmental  Concern required to be reported under  Environmental
Laws to any Governmental Authority, (ii) any condition, circumstance, occurrence
or event that could result in liability under  Environmental  Laws in a Material
Environmental  Amount  or could  result in the  imposition  of any Lien or other
restriction on the title, ownership or transferability of any Property and (iii)
any  proposed  action to be taken by the Borrower or any  Subsidiary  that could
subject the Borrower or any  Subsidiary to any material  additional or different
requirements or liabilities under Environmental Law;

                  (f) as soon as  possible  and in any  event  within  five days
after the occurrence  thereof,  the termination,  cancellation or repudiation of
any  Service  Agreement  by any party  thereto  or receipt  or  issuance  by the
Borrower or any Subsidiary of any notice thereof;

                  (g) any of the  following  events,  as soon as possible and in
any event within five days,  after the Borrower knows or reasonably  should know
thereof,  (i) notice of the  occurrence  of any event that is or would (with the
passage of time, notice or both) be a default under or a violation of any Health
Care Permit  necessary  for the lawful  conduct of the business or operations of
the Borrower, any Subsidiary or any Affiliated Provider that could reasonably be
expected  to  have  a  Material  Adverse  Effect,  (ii)  any  violation  of  any
Requirement  of Law that could  reasonably  be expected to cause any such Health
Care  Permit to be  modified,  suspended,  canceled,  terminated,  rescinded  or
revoked,  and (iii) any  investigation  of the Borrower,  any  Subsidiary or any
Affiliated  Provider or its business by the Office of the  Inspector  General of
the United  States  Department of Health and Human  Services,  the United States
Department of Justice, or any other Governmental Authority;

                  (h) as soon as  possible  and in any  event  within  five days
after  receipt  thereof  by the  Borrower  or any  Subsidiary,  notice  from any
Governmental  Authority of a violation by the Borrower or any  Subsidiary of any
Requirement of Law; and

                  (i) as soon as  possible  and in any  event  within  five days
after the Borrower knows or reasonably  should know thereof,  any development or
event which could reasonably be expected to have a Material Adverse Effect.

Each notice  pursuant to this Section 6.7 shall be accompanied by a statement of
a  Responsible  Officer  setting  forth  details of the  occurrence  referred to
therein  and  stating  what action the  Borrower  proposes to take with  respect
thereto.

                  6.8 Environmental Laws. (a) Comply with, and ensure compliance
by all tenants and subtenants,  if any, with all applicable  Environmental  Laws
and  obtain and comply  with and  maintain,  and  ensure  that all  tenants  and
subtenants obtain and comply with and maintain, any and all licenses, approvals,
notifications,  registrations  or permits  required by applicable  Environmental
Laws except to the extent that failure to do so could not be reasonably expected
to have a Material Adverse Effect.

                  (b) Conduct and complete all investigations, studies, sampling
and  testing,  and all  remedial,  removal  and  other  actions  required  under
Environmental  Laws and promptly comply with all lawful orders and directives of
all Governmental  Authorities regarding  Environmental Laws except to the extent
that the same are being  contested in good faith by appropriate  proceedings and
the  pendency of such  proceedings  could not be  reasonably  expected to have a
Material Adverse Effect.



<PAGE>



                  6.9  Further  Assurances.  Upon  the  request  of  the  Agent,
promptly  perform or cause to be performed any and all acts and execute or cause
to be executed  any and all  documents,  instruments  and  agreements  which are
necessary  or  advisable  to  carry  out the  provisions  and  purposes  of this
Agreement  and  the  Security  Documents,  including,  without  limitation,  the
execution  of any and all  documents  for  filing  under the  provisions  of the
Uniform  Commercial Code or any other  Requirement of Law which are necessary or
advisable  to create or maintain  in favor of the Agent,  for the benefit of the
Agent and the Lenders,  Liens on the Collateral that are perfected in accordance
with all applicable Requirements of Law.

                  6.10  Additional  Collateral;  Service  Agreements.  (a)  With
respect to each  acquisition  of any assets (other than  leasehold  interests in
real property) made after the Initial Closing Date by the Borrower or any of its
Subsidiaries,  immediately prior to, or simultaneously with, the closing of each
such  acquisition:  (i) execute and deliver to the Agent such  amendments to the
relevant Security Documents or such other documents (including Mortgages) as the
Agent shall deem  necessary or advisable to grant to the Agent,  for the benefit
of the Agent  and the  Lenders,  a Lien on such  assets,  (ii) take all  actions
necessary  or advisable  to cause such Lien to be duly  perfected in  accordance
with all applicable  Requirements of Law,  including,  without  limitation,  the
filing of financing  statements in such jurisdictions as may be requested by the
Agent,  (iii)  with  respect to real  property,  deliver to the Agent such title
insurance policies,  surveys,  environmental  reports and other documents as the
Agent may require,  (iv) take all actions  necessary or advisable to perfect the
ownership  interest  of the  Borrower  and each  Subsidiary  in all  Receivables
assigned to it from time to time by an Affiliated Provider pursuant to a Service
Agreement or otherwise in accordance  with all applicable  Requirements  of Law,
including,  without limitation,  the filing of such financing statements in such
jurisdictions as may be requested by the Agent, (v) deliver to the Agent Uniform
Commercial  Code and other Lien searches  confirming the perfection and priority
of the Liens created  pursuant to this subsection  6.10(a) and (vi) if requested
by the Agent,  deliver  to the Agent  legal  opinions  relating  to the  matters
described in clauses (i),  (ii) and (iv)  immediately  preceding  (and any other
matters  relating to the Borrower and its  Subsidiaries or the Loan Documents in
the relevant  jurisdiction  as may be requested  by the Agent),  which  opinions
shall be in form and substance, and from counsel, reasonably satisfactory to the
Agent.



<PAGE>



                  (b)  With  respect  to each  Person  that,  subsequent  to the
Initial  Closing  Date,   becomes  a  Subsidiary,   immediately   prior  to,  or
simultaneously  with,  each such Person  becoming a Subsidiary:  (i) execute and
deliver to the Agent,  for the benefit of itself and the  Lenders,  a new pledge
agreement or such  amendments to the Guarantee and  Collateral  Agreement as the
Agent shall deem  necessary or advisable to grant to the Agent,  for the benefit
of the Lenders, a Lien on the Capital Stock of such Subsidiary which is owned by
the  Borrower  or  any of its  Subsidiaries,  (ii)  deliver  to  the  Agent  the
certificates representing such Capital Stock, together with undated stock powers
executed and delivered in blank by a duly authorized  officer of the Borrower or
such  Subsidiary,  as the case may be,  (iii) cause such new  Subsidiary  (A) to
become a party to the  Guarantee  and  Collateral  Agreement,  by execution  and
delivery to the Agent of a Joinder Agreement,  (B) to take all actions necessary
or advisable to cause the Lien created by the Guarantee and Collateral Agreement
to be duly  perfected in accordance  with all  applicable  Requirements  of Law,
including,  without  limitation,  the  filing of  financing  statements  in such
jurisdictions  as may be  requested  by the  Agent,  (C)  to  take  all  actions
necessary or advisable to perfect such new  Subsidiary's  ownership  interest in
all  Receivables  assigned from time to time to such Subsidiary by an Affiliated
Provider  pursuant to a Service  Agreement or otherwise in  accordance  with all
applicable  Requirements of Law, including,  without  limitation,  the filing of
financing statements in such jurisdictions as may be requested by the Agent, (D)
except with respect to leasehold interests in real property, to take all actions
necessary or advisable to create and perfect a Lien in favor of the Agent on all
other  assets of such  Subsidiary  (including  the  execution  and  delivery  of
Mortgages), (E) with respect to real property (other than leasehold interests in
real property), deliver to the Agent such title insurance policies, surveys, and
other documents (including  environmental  assessments) as the Agent may require
and (F) to execute and deliver such documents and  certificates  as the Agent or
its counsel may reasonably  request relating to the organization,  existence and
good  standing  of  such  Subsidiary,  the  authorization  of  the  transactions
contemplated  hereby and by the other Loan Documents relating to such Subsidiary
and any other legal matters  relating to such  Subsidiary and the Loan Documents
to which it is or is to become a party,  all in form and substance  satisfactory
to the Agent and its counsel,  (iv) deliver to the Agent Uniform Commercial Code
and other Lien  searches  confirming  the  perfection  and priority of the Liens
created  pursuant  to clause  (iii)  above and (v) if  requested  by the  Agent,
deliver to the Agent legal opinions relating to the matters described in clauses
(i), (ii), (iii), and (iv) immediately preceding (and any other matters relating
to the  Borrower  and its  Subsidiaries  or the Loan  Documents  in the relevant
jurisdiction as may be requested by the Agent),  which opinions shall be in form
and substance, and from counsel, reasonably satisfactory to the Agent.

                  (c) With respect to each Service Agreement entered into by the
Borrower or any of its Subsidiaries after the Initial Closing Date,  immediately
prior to, or simultaneously with, execution of each such Service Agreement:  (i)
deliver to the Agent a copy of such Service Agreement, (ii) deliver to the Agent
a Consent in  substantially  the form of Exhibit E  executed  by the  Affiliated
Provider  that is a party to such Service  Agreement,  and (iii)  deliver to the
Agent a copy of a legal opinion issued to the Borrower or such Subsidiary (which
by its terms may be relied upon by the Agent and the Lenders) by counsel for the
Affiliated  Provider that is a party to such Service Agreement regarding the due
organization and existence of the Affiliated Provider,  the due authorization of
its execution and delivery of the Service  Agreement,  the enforceability of the
Service Agreement,  and the perfection and priority of the ownership interest of
the Borrower or such  Subsidiary in all  Receivables  assigned to it thereunder;
provided,  however,  that the  Borrower  shall not be required to deliver such a
legal  opinion  with respect to a Physician  Transaction  involving no more than
three physicians.

                  (d) Each Service Agreement entered into by the Borrower or any
Subsidiary  with an  Affiliated  Provider  after the Closing Date shall  contain
terms and  conditions  substantially  the same as those  contained  in  Sections
3.1.10, 7, and 12.12 of the form of Service Agreement attached hereto as Exhibit
T.

                  6.11 Year 2000  Compliance.  Promptly  notify the Agent in the
event  the  Borrower  discovers  or  determines  that any  computer  application
(including  those of its suppliers,  vendors and customers)  that is material to
its or any of its Subsidiaries' or Affiliated Providers' business and operations
is not Year 2000  Compliant,  except to the extent that such  failure  could not
reasonably be expected to have a Material Adverse Effect.


<PAGE>




                                           SECTION 7.  NEGATIVE COVENANTS

                  The Borrower  hereby agrees that,  so long as the  Commitments
remain  in  effect,  any  Note  remains  outstanding  and  unpaid  or any  other
Obligation  is owing to any Lender or the Agent,  the  Borrower  shall not,  and
(except with  respect to Section  7.1) shall not permit any of its  Subsidiaries
to, directly or indirectly:

                  7.1      Financial Covenants.

                  (a) Consolidated Net Worth.  Permit  Consolidated Net Worth as
of the  last day of any  fiscal  quarter  of the  Borrower  to be less  than the
"Minimum  Compliance Level". The Minimum Compliance Level shall be $170,312,000,
and shall be increased as of the last day of each fiscal quarter of the Borrower
ending after March 31, 2000,  commencing with the fiscal quarter ending June 30,
2000,  by an amount equal to the sum of (i) 75% of  Consolidated  Net Income (if
positive)  for such  fiscal  quarter  and (ii) 75% of the  amount of any  Equity
Issuance (net of reasonable transaction costs) by the Borrower or any Subsidiary
during such fiscal quarter (other than any capital  contribution by the Borrower
or any of its  Subsidiaries  to any Subsidiary of the  Borrower).  The foregoing
increases  in the  Minimum  Compliance  Level shall be fully  cumulative  and no
reduction  in the Minimum  Compliance  Level  shall be made to reflect  negative
Consolidated Net Income for any period.

                  (b) Fixed  Charge  Coverage  Ratio.  Permit  the Fixed  Charge
Coverage Ratio, as of the last day of any fiscal quarter of the Borrower,  to be
less than the ratio set forth  below for the  calendar  year  during  which such
fiscal quarter end occurs:

-------------------------------------------------- ----------------------------
             Calendar Year Ratio
-------------------------------------------------- ----------------------------
                      2000                                1.13 to 1.00
-------------------------------------------------- ----------------------------
                      2001                                1.20 to 1.00
-------------------------------------------------- ----------------------------
                      2002                                1.35 to 1.00
-------------------------------------------------- ----------------------------
                      2003                                1.35 to 1.00
-------------------------------------------------- ----------------------------
                      2004                                1.15 to 1.00
-------------------------------------------------- ----------------------------
                      2005                                1.15 to 1.00
-------------------------------------------------- ----------------------------
                      2006                                1.15 to 1.00
-------------------------------------------------- ----------------------------

                  (c) Ratio of Consolidated  Senior Indebtedness to Consolidated
EBITDA.   Permit  the  ratio  of  (i)  Consolidated  Senior  Indebtedness  (less
Restricted Cash) to (ii)  Consolidated  EBITDA, as of the last day of any period
of four  consecutive  fiscal  quarters of the  Borrower,  to be greater than the
ratio set forth below for the  calendar  year in which the last day of such four
fiscal quarter period occurs:



<PAGE>



-------------------------------------------------- ----------------------------
             Calendar Year Ratio
-------------------------------------------------- ----------------------------
                      2000                                3.00 to 1.00
-------------------------------------------------- ----------------------------
                      2001                                3.00 to 1.00
-------------------------------------------------- ----------------------------
                      2002                                2.85 to 1.00
-------------------------------------------------- ----------------------------
                      2003                                2.50 to 1.00
-------------------------------------------------- ----------------------------
                      2004                                2.25 to 1.00
-------------------------------------------------- ----------------------------
                      2005                                2.00 to 1.00
-------------------------------------------------- ----------------------------
                      2006                                1.75 to 1.00
-------------------------------------------------- ----------------------------

In the event the Borrower issues Qualified  Subordinated  Indebtedness after the
Closing Date, from and after the date of such issuance then each ratio specified
above in this subsection 7.1(c) shall be reduced by 0.50.

                  (d) Ratio of Total  Debt to  Consolidated  EBITDA.  Permit the
ratio of (i) Total Debt (less Restricted Cash) to (ii)  Consolidated  EBITDA, as
of the  last  day of any  period  of four  consecutive  fiscal  quarters  of the
Borrower to be greater than the ratio set forth below for the  calendar  year in
which the last day of such four fiscal quarter period occurs:

-------------------------------------------------- ----------------------------
             Calendar Year Ratio
-------------------------------------------------- ----------------------------
                      2000                                3.75 to 1.00
-------------------------------------------------- ----------------------------
                      2001                                3.50 to 1.00
-------------------------------------------------- ----------------------------
                      2002                                3.25 to 1.00
-------------------------------------------------- ----------------------------
                      2003                                3.00 to 1.00
-------------------------------------------------- ----------------------------
                      2004                                2.50 to 1.00
-------------------------------------------------- ----------------------------
                      2005                                2.25 to 1.00
-------------------------------------------------- ----------------------------
                      2006                                2.00 to 1.00
-------------------------------------------------- ----------------------------

In the event the Borrower issues Qualified  Subordinated  Indebtedness after the
Closing  Date,  from and after the date of such  issuance  each ratio  specified
above in this subsection 7.1(b) shall be increased by 0.50.

                  7.2  Limitation  on  Indebtedness.  Create,  incur,  assume or
suffer to exist any Indebtedness, except:

                  (a)      Indebtedness of the Borrower under this Agreement;



<PAGE>



                  (b)  Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary;

                  (c)  Indebtedness of the Borrower and any of its  Subsidiaries
incurred to finance the acquisition of fixed or capital assets (whether pursuant
to a loan, a Synthetic  Lease,  a Capital  Lease  Obligation or otherwise) in an
aggregate principal amount not exceeding as to the Borrower and its Subsidiaries
$10,000,000 at any time outstanding, provided that such Indebtedness is incurred
simultaneously with such acquisition;

                  (d)  Indebtedness  of  the  Borrower  under  Hedge  Agreements
incurred in the  ordinary  course of business and not for  speculative  purposes
that have been  approved by the  Borrower's  board of directors and that have an
aggregate  notional amount not to at any time exceed, at the time any such Hedge
Agreement is entered into (and after giving effect to such Hedge Agreement), the
lesser of (i) $50,000,000 and (ii) 50% of the aggregate  principal amount of the
Extensions of Credit outstanding at such time;

                  (e) Indebtedness  outstanding on the date hereof and listed on
Schedule 5.21 and any refinancings,  refundings,  renewals or extensions thereof
on  financial  and other  terms,  in the  reasonable  judgment  of the  Required
Lenders,  no more  onerous to the Borrower or any of its  Subsidiaries  than the
financial and other terms of such Indebtedness; provided that the amount of such
Indebtedness  is not  increased  at the  time  of such  refinancing,  refunding,
renewal or extension;

                  (f)      Guarantee Obligations permitted under Section 7.4;

                  (g)  Indebtedness of a Person which becomes a Subsidiary after
the  date  hereof  in  accordance  with  Section  7.17,  provided  that (i) such
indebtedness  existed at the time such Person  became a  Subsidiary  and was not
created in anticipation  thereof and (ii) immediately after giving effect to the
acquisition  of such  corporation by the Borrower no Default or Event of Default
shall have occurred and be continuing;

                  (h)  unsecured  Subordinated   Indebtedness  in  an  aggregate
principal amount not to exceed $200,000,000 at any one time outstanding;

                  (i)  Indebtedness  of  the  Borrower  or any  Subsidiary  with
respect to (x)  split-dollar  life  insurance  policies  permitted by subsection
7.8(i) (it being agreed that split dollar insurance premium funding  obligations
incurred  after the Closing Date shall be  subordinated  to the  Obligations  in
accordance with Schedule 1.1(d)-1) and (y) Program Loans permitted by subsection
7.8(j);

                  (j) unsecured  Indebtedness of the Borrower which  constitutes
Deferred  Purchase  Price (not otherwise  permitted by the preceding  clauses of
this Section 7.2) in an aggregate  principal amount not to exceed $10,000,000 at
any time outstanding; and



<PAGE>



                  (k) additional unsecured  Indebtedness of the Borrower and its
Subsidiaries  not otherwise  permitted by the preceding  clauses of this Section
7.2 not  exceeding  $1,000,000  in  aggregate  principal  amount at any one time
outstanding.

                  7.3 Limitation on Liens.  Create,  incur,  assume or suffer to
exist any Lien upon any of its property,  assets or revenues,  whether now owned
or hereafter acquired, except for:

                  (a) Liens  for taxes not yet due or which are being  contested
in good faith by appropriate  proceedings  diligently  conducted,  provided that
adequate  reserves  with  respect  thereto  are  maintained  on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with GAAP;

                  (b)   carriers',   warehousemen's,   landlords',   mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business  securing amounts which are not overdue for a period of more than sixty
days or which are  being  contested  in good  faith by  appropriate  proceedings
diligently conducted;

                  (c)  pledges,  deposits  or  other  Liens in  connection  with
workers'   compensation,   unemployment  insurance  and  other  social  security
benefits, including, without limitation,  pledges or deposits securing liability
to insurance carriers under insurance or self-insurance arrangements;

                  (d)  deposits  to  secure  the  performance  of  bids,   trade
contracts  (other than for  Indebtedness),  obligations  for utilities,  leases,
statutory  obligations  (except  pursuant  to  ERISA  and  Environmental  Laws),
performance  bonds  and  other  obligations  of a like  nature  incurred  in the
ordinary course of business;

                  (e)    easements,    zoning    restrictions,    rights-of-way,
restrictions and other similar  encumbrances  incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount and which do not
in any case materially detract from the value of the property subject thereto or
materially  interfere with the ordinary  conduct of the business of the Borrower
or such Subsidiary;

                  (f) Liens in existence  on the date hereof  listed on Schedule
7.3, securing Indebtedness permitted by subsection 7.2(e), provided that no such
Lien is spread to cover any additional  property after the Closing Date and that
the amount of Indebtedness secured thereby is not increased;

                  (g)  Liens  securing  Indebtedness  of the  Borrower  and  its
Subsidiaries  permitted by subsection 7.2(c) incurred to finance the acquisition
of fixed or  capital  assets,  provided  that (i) such  Liens  shall be  created
substantially  simultaneously  with the  acquisition  of such  fixed or  capital
assets,  (ii) such Liens do not at any time encumber any property other than the
property financed by such Indebtedness, (iii) the amount of Indebtedness secured
thereby is not increased and (iv) the principal  amount of Indebtedness  secured
by any such Lien shall at no time exceed 100% of the original  purchase price of
such property at the time it was acquired;


<PAGE>



                  (h) Liens on the property or assets of a Person which  becomes
a Subsidiary after the date hereof securing Indebtedness permitted by subsection
7.2(g),  provided  that (i) such Liens  existed at the time such Person became a
Subsidiary and were not created in anticipation  thereof,  (ii) any such Lien is
not spread to cover any  property or assets of such  corporation  after the time
such  corporation  becomes a  Subsidiary  and (iii) the  amount of  Indebtedness
secured thereby is not increased; and

                  (i)      Liens created pursuant to the Security Documents.

                  7.4 Limitation on Guarantee Obligations. Create, incur, assume
or suffer to exist any Guarantee Obligation except:

                  (a) Guarantee Obligations incurred after the date hereof in an
aggregate amount not to exceed $1,000,000 at any one time outstanding;

                  (b)  Guarantee  Obligations  with respect to Hedge  Agreements
permitted by subsection 7.2(d);

                  (c) Guarantee  Obligations  incurred in the ordinary course of
business  by the  Borrower  with  respect to  obligations  of its  Subsidiaries,
provided that such obligations of the Subsidiaries are otherwise permitted under
this Agreement;

                  (d)      the Guarantees; and

                  (e)  Guarantee  Obligations  by  Subsidiaries  with respect to
Indebtedness permitted by subsection 7.2(k).

                  7.5 Limitation on Fundamental Changes.  Enter into any merger,
consolidation  or  amalgamation,  or liquidate,  wind up or dissolve  itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially  all of its property,  business or
assets,  or make  any  material  change  in its  present  method  of  conducting
business, except:

                  (a) any Subsidiary may be merged or consolidated  with or into
the Borrower  (provided  that the Borrower  shall be the continuing or surviving
entity) or with or into a Wholly Owned  Subsidiary  (provided  that (i) a Wholly
Owned  Subsidiary  shall be the  continuing  or  surviving  entity  and (ii) the
surviving  entity must be a Guarantor  and a Grantor (as such term is defined in
the Guarantee and Collateral Agreement);

                  (b) the  Borrower  may merge with and into any other Person to
effect a Permitted Physician  Transaction or Permitted Ancillary  Acquisition so
long as the surviving entity is the Borrower;



<PAGE>



                  (c) any  Subsidiary  may sell,  lease,  transfer or  otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise) to
the  Borrower  or any  other  Wholly  Owned  Subsidiary,  provided  that  if the
Subsidiary whose assets are sold,  leased,  transferred or otherwise disposed of
is  a  Guarantor,  any  Subsidiary  to  which  such  assets  are  sold,  leased,
transferred or otherwise disposed of must also be a Guarantor; and

                  (d) any  Subsidiary  may be merged  with any  other  Person to
effect a Permitted  Physician  Transaction  or Permitted  Ancillary  Acquisition
(provided  that the surviving  entity is (i) a Subsidiary,  and (ii) a Guarantor
and a  Grantor  (as  such  term  is  defined  in the  Guarantee  and  Collateral
Agreement).

                  7.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer  or  otherwise  dispose  of any of its  property,  business  or  assets
(including,  without limitation,  receivables and leasehold interests),  whether
now owned or hereafter  acquired,  or, in the case of any  Subsidiary,  issue or
sell any shares of such Subsidiary's  Capital Stock to any Person other than the
Borrower or any Wholly Owned Subsidiary of the Borrower, except:

                  (a) the  sale or other  disposition  of  obsolete  or worn out
property  in the  ordinary  course of  business,  provided  that if the net cash
proceeds from any transaction or series of related transactions exceed $500,000,
then the Borrower shall immediately repay the Loans by the amount of the excess;

                  (b) the sale or other  disposition of any property (other than
Receivables  or  property of the type  described  in clauses (a) and (c) of this
Section 7.6) in the ordinary  course of business,  provided  that the  aggregate
book  value  of all  assets  so sold or  disposed  of in any  period  of  twelve
consecutive  months  shall  not  exceed  5%  of  consolidated   tangible  assets
(exclusive  of amounts  owed by the Star  Program  SPV to the  Borrower  and its
Subsidiaries)  of the Borrower and its  Subsidiaries as at the beginning of such
twelve-month period;

                  (c) the sale of inventory in the ordinary course of business;

                  (d)  the  sale  or  discount   without  recourse  of  accounts
receivable  arising in the ordinary  course of business in  connection  with the
compromise or collection thereof; and

                  (e)      as permitted by subsection 7.5(c).

                  7.7  Limitation  on  Restricted  Payments.  Declare or pay any
dividend (other than dividends  payable solely in Capital Stock of the Borrower)
on, or make any  payment  on  account  of, or set apart  assets for a sinking or
other analogous fund for, the purchase,  redemption,  defeasance,  retirement or
other acquisition of, any Capital Stock of the Borrower or any Subsidiary or any
warrants or options to purchase any such Capital Stock, whether now or hereafter
outstanding,  or make any other distribution in respect thereof, either directly
or indirectly,  whether in cash or property or in obligations of the Borrower or
any Subsidiary, except:

                  (a)  any  Subsidiary  may  declare  and pay  dividends  to the
Borrower or a Wholly Owned Subsidiary;



<PAGE>



                  (b) the Borrower may repurchase,  redeem or otherwise  acquire
or retire for value any Capital  Stock of the Borrower  held by employees of the
Borrower or any of its Subsidiaries pursuant to any employee equity subscription
agreement, stock option agreement or stock ownership arrangement,  provided that
(i) the aggregate  price paid for all such  repurchased,  redeemed,  acquired or
retired  Capital  Stock during any fiscal year of the Borrower  shall not exceed
$1,000,000  and (ii) no Default or Event of Default  shall have  occurred and be
continuing or would result therefrom;

                  (c) the redemption or repurchase by the Borrower of its common
stock,  provided  that (i) any common stock so redeemed or  repurchased  must be
held  by the  Borrower  as  treasury  stock  or  reissued  as a  portion  of the
consideration for Permitted Physician Transactions,  (ii) any such stock held in
treasury may not be canceled, (iii) the aggregate amount paid for the redemption
or  repurchase  of any  such  stock  held in  treasury  by the  Borrower  at any
particular time shall not exceed  $3,000,000 (plus up to an additional  $500,000
with respect to Kings Daughters Clinic and Primergy under agreements existing on
the Closing  Date),  and (iv) no common stock of the Borrower may be redeemed or
repurchased  if a  Default  or Event  of  Default  shall  have  occurred  and be
continuing or would result therefrom;

                  (d) the Borrower may pay cash dividends on the Preferred Stock
at the rate of six  percent  per  annum,  provided  that no  Default or Event of
Default  shall have  occurred and be  continuing at the time of payment or would
result therefrom; and

                  (e)  the  issuance  by the  Borrower  of  Preferred  Stock  in
accordance with the Securities Purchase Agreement and the Warrant Agreement.

                  7.8 Limitation on  Investments,  Loans and Advances.  Make any
advance,  loan,  extension of credit or capital contribution to, or purchase any
stock,  bonds,   notes,   debentures  or  other  securities  of  or  any  assets
constituting  a  business  unit of, or make any other  investment  in, any other
Person (each, an "Investment"), except:

                  (a)  extensions  of trade  credit  in the  ordinary  course of
business;

                  (b)      Investments in cash and Cash Equivalents;

                  (c) Permitted  Physician  Transactions and Permitted Ancillary
Acquisitions;

                  (d) Investments  existing on the Closing Date and described on
Schedule 5.26,  setting forth the respective  amounts of such  Investments as of
the Closing Date;

                  (e) loans and advances to officers,  directors or employees of
the  Borrower  or its  Subsidiaries  in the  ordinary  course of  business in an
aggregate amount for the Borrower and its Subsidiaries not to exceed  $2,500,000
at any one time outstanding, provided that (i) all such loans and advances shall
be evidenced by recourse  promissory notes, (ii) such promissory notes shall not
contain any  restriction on assignment or transfer and (iii) the Agent,  for the
ratable benefit of itself and the other Lenders,  shall hold a perfected,  first
priority  security  interest in all such promissory  notes and related  security
pursuant to the Security Documents;


<PAGE>



                  (f) loans and advances to physicians  in  connection  with the
recruitment or retention of such  physicians by Affiliated  Providers,  provided
that (i) the  aggregate  principal  amount of all such loans and advances at any
time  outstanding  shall not  exceed an amount  equal to  $17,300,000,  (ii) the
aggregate loans and advances to any physician shall not exceed  $300,000,  (iii)
no loan or advance shall have a maturity greater than three years, (iv) all such
loans and advances  shall be evidenced by recourse  promissory  notes,  (v) such
promissory notes shall not contain any restriction on assignment or transfer and
(vi) the Agent,  for the ratable benefit of itself and the other Lenders,  shall
hold a perfected,  first priority security interest in all such promissory notes
and related security pursuant to the Security Documents;

                  (g)  Investments  by  the  Borrower  in its  Subsidiaries  and
investments by such Subsidiaries in the Borrower and in other Subsidiaries;

                  (h) Investments of the Borrower and its Subsidiaries under the
Hedge Agreements permitted by subsection 7.2(d);

                  (i) advances of premiums  under  split-dollar  life  insurance
policies,  provided  that  (i) the  owner of each  such  policy  is a  physician
employed by an Affiliated Provider, (ii) such split-dollar life insurance policy
was purchased as partial consideration for the employment of the physician by an
Affiliated  Provider in connection with a Physician  Transaction  involving such
Affiliated  Provider,  and (iii) the  insurance  policy has been assigned to the
Borrower  or a  Subsidiary  to secure  premium  advances  on such  policy by the
Borrower or such Subsidiary and reassigned to the Agent, for the ratable benefit
of itself and the Lenders, pursuant to the Security Documents;

                  (j) Program  Loans by the  Borrower  and its  Subsidiaries  to
Affiliated  Providers  pursuant to Service  Agreements,  provided  that (i) each
Program Loan shall be evidenced by a recourse  promissory  note,  (ii) each such
promissory  note shall not contain any restriction on assignment or transfer and
(iii) the Agent shall hold a perfected,  first priority security interest in all
Program Loans and all security  therefor,  for the ratable benefit of itself and
the Lenders, pursuant to the Security Documents;

                  (k) other  Investments  in an  aggregate  amount not to exceed
$1,000,000 at any one time outstanding; and

                  (l)  Investments  constituting  advances by the  Borrower or a
Subsidiary  to the Star  Program SPV to fund the  purchase of split  dollar life
insurance  policies for physicians  participating in the Star Program,  provided
that  such  advances  shall  not  exceed  an  amount  equal to the net after tax
additional fees paid in cash by the Affiliated Providers pursuant to the Service
Agreements to the Borrower and its Subsidiaries to fund such advances.



<PAGE>



                  7.9 Limitation on Optional  Payments and Modifications of Debt
Instruments.  (a) Make any optional payment or prepayment of principal of or any
redemption, purchase or defeasance of any Indebtedness (other than the Loans and
Reimbursement Obligations),  (b) make any payment of principal of or interest on
or any other amount with respect to any Subordinated Indebtedness if any Default
or Event of Default  shall have  occurred  and be  continuing,  or would  result
therefrom,  (c) amend,  modify or change,  or consent or agree to any amendment,
modification  or  change  to any  of  the  terms  relating  to any  Subordinated
Indebtedness (other than any such amendment,  modification or change which would
extend the maturity or reduce the amount of any payment of principal  thereof or
which would reduce the rate or extend the date for payment of interest  thereon)
or  (d)  amend  the  subordination  provisions  contained  in  the  Subordinated
Indebtedness Documentation.

                  7.10  Limitation  on Capital  Expenditures.  Make or commit to
make a Capital  Expenditure,  except Capital Expenditures in the ordinary course
of business not exceeding, in the aggregate for the Company and its Subsidiaries
during  any  fiscal  year of the  Borrower,  an  amount  in  excess of (a) 5% of
consolidated  tangible assets (excluding amounts owed by the Star Program SPV to
the Borrower and its  Subsidiaries)  of the Borrower and its Subsidiaries on the
last day of the immediately  preceding fiscal year or (b) such greater amount as
may be  approved  for such  fiscal year by the  Required  Lenders  pursuant to a
request by the Borrower under subsection 6.2(c)(ii);  provided, however, that in
addition  to the  Capital  Expenditures  permitted  by clauses (a) and (b) above
(which may be used for information technology investments), the Borrower and its
Subsidiaries  may make  Capital  Expenditures  for  investments  in  information
technology  in an  additional  aggregate  amount  not  to  at  any  time  exceed
$5,000,000 during the term of this Agreement.

                  7.11 Limitation on Transactions  with Affiliates.  Except with
respect to the transactions specified in the Transaction  Documents,  enter into
any transaction,  including,  without limitation,  any purchase,  sale, lease or
exchange of property or the rendering of any service,  with any Affiliate unless
such  transaction is (a) otherwise  permitted under this  Agreement,  (b) in the
ordinary  course of the  Borrower's or such  Subsidiary's  business and (c) upon
fair and reasonable  terms no less favorable to the Borrower or such Subsidiary,
as the  case  may  be,  than  it  would  obtain  in a  comparable  arm's  length
transaction with a Person which is not an Affiliate.

                  7.12  Limitation  on  Sales  and  Leasebacks.  Enter  into any
arrangement  with any Person  providing  for the leasing by the  Borrower or any
Subsidiary  of real or  personal  property  which  has  been or is to be sold or
transferred  by the Borrower or such  Subsidiary  to such Person or to any other
Person to whom  funds  have  been or are to be  advanced  by such  Person on the
security  of  such  property  or  rental  obligations  of the  Borrower  or such
Subsidiary, except the sale and leaseback of equipment in the ordinary course of
business  where the  Borrower or a Subsidiary  (a)  transfers to such Person its
right to purchase such  equipment  within ninety days after the Borrower or such
Subsidiary  has entered  into an agreement to purchase  such  equipment  and (b)
leases the equipment from such Person.

                  7.13  Limitation on Changes in Fiscal Year.  Permit the fiscal
year of the Borrower to end on a day other than December 31.



<PAGE>



                  7.14  Limitation on Negative  Pledges.  Enter into,  assume or
become  subject  to any  agreement  prohibiting  or  otherwise  restricting  the
creation or  assumption of any Lien upon its  properties or assets,  whether now
owned or hereafter  acquired,  or  requiring  the grant of any security for such
obligation if security is given for some other  obligation,  except  pursuant to
(a) this  Agreement  and other Loan  Documents,  (b) any document or  instrument
governing  Indebtedness  incurred  pursuant  to  subsection  7.2(c)  or  7.2(g),
provided that any such restriction  contained  therein relates only to the asset
or assets  acquired in connection  therewith,  or (c) the terms of  Indebtedness
permitted pursuant to subsection 7.2(k).

                  7.15 Limitation on Restricted Actions. Enter into or permit to
exist or become  effective any  consensual  encumbrance  or  restriction  on the
ability of any  Subsidiary to (a) pay dividends or make any other  distributions
on its Capital Stock,  (b) pay any  Indebtedness or other obligation owed to the
Borrower or any other Subsidiary,  (c) make loans or advances to the Borrower or
any other  Subsidiary,  (d) sell,  lease or transfer  any of its  properties  or
assets to the Borrower or any other  Subsidiary or (e) act as a Guarantor  under
the Loan Documents,  except for such  encumbrances or restrictions that exist in
(i) the Loan Documents,  and (ii) the terms of Indebtedness incurred pursuant to
subsection 7.2(k).

                  7.16 Limitation on Lines of Business. Enter into any business,
either   directly  or  through  any  Subsidiary  or  joint  venture  or  similar
arrangement,  except  for  those  businesses  in  which  the  Borrower  and  its
Subsidiaries  are engaged on the date of this  Agreement  or which are  directly
related thereto.

                  7.17  Limitations  on  Acquisitions.  Acquire by  purchase  or
otherwise  all or a  substantial  part of the  business or assets of, or Capital
Stock or other evidences of beneficial  ownership of, or any line of business or
division of, any Person,  or enter into any  Physician  Transaction  or make any
Acquisition, other than Permitted Physician Transactions and Permitted Ancillary
Acquisitions.

                  7.18 Health Care Permits and Approvals.  Engage, or permit any
Affiliated  Provider to engage,  in any activity that (a) is or could reasonably
be expected to result in a default  under or violation of any Health Care Permit
necessary for the lawful  conduct of the business or operations of the Borrower,
any Subsidiary or any Affiliated Provider or (b) could reasonably be expected to
cause the loss by the Borrower, any Subsidiary or any Affiliated Provider of the
right to participate in, and receive  payment under,  any  Governmental  Program
with which it has  contracted or in which it has elected to  participate,  or to
receive  reimbursement from private and commercial payors and health maintenance
organizations,  except where the loss of such Health Care  Permit(s) or right(s)
to participate in or receive payments under such  Governmental  Programs or from
such payors or organizations  could not reasonably be expected,  individually or
in the aggregate, to have a Material Adverse Effect.



<PAGE>



                  7.19  Fraud  and  Abuse.  Engage,  or  permit  any  Affiliated
Provider or any of the  shareholders,  officers,  directors  or employees of the
Borrower, any Subsidiary or any Affiliated Provider to engage, in any activities
that are prohibited under the Federal False Claims Act (31 U.S.C.  ss.ss. 3729 -
3733), 42 U.S.C. ss. 1395 nn, 18 U.S.C. 1347 or the federal fraud and abuse laws
(42 U.S.C.  ss.ss.  1320a - 7a or 1320a - 7b),  or the  regulations  promulgated
pursuant to such statutes or similar state or local statutes or regulations,  or
which  are  prohibited  by rules of  professional  conduct,  including,  but not
limited to, the following: (a) knowingly presenting or causing to be presented a
false claim for payment,  (b) knowingly  making or using a false record in order
to receive payment for a claim, (c) knowingly and willfully making or causing to
be  made  a  false  statement  or  representation  of a  material  fact  in  any
application  for any benefit or payment,  (d) knowingly and willfully  making or
causing to be made any false statement or  representation of a material fact for
use in  determining  rights to any benefit or  payment,  (e) failing to disclose
knowledge by a claimant of the occurrence of any event  affecting the initial or
continued  right to any  benefit  or  payment  on its own behalf or on behalf of
another,  with  intent to secure  such  benefit  or  payment  fraudulently,  (f)
knowingly and willfully soliciting or receiving any remuneration  (including any
kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash
or in kind or offering to pay such  remuneration  (i) in return for referring an
individual to a Person for the furnishing or arranging for the furnishing of any
item or service for which  payment may be made in whole or in part by  Medicare,
Medicaid or other third party payors or (ii) in return for  purchasing,  leasing
or ordering or arranging for or recommending the purchasing, leasing or ordering
of any good, facility, service or item for which payment may be made in whole or
in part by any Governmental Program or other third party payors or (g) referring
a patient for "designated  health services" to a Person with which the referring
physician has a financial relationship,  except for such instances of prohibited
activities that could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Neither the Borrower nor any Subsidiary or
Affiliated  Provider,  nor  any  of  their  respective  officers,  directors  or
employees  shall take any  action or omit to take any action  that will have the
effect of excluding the Borrower, any Subsidiary or any Affiliated Provider from
contracting with or participating in any Governmental Program.

         7.20  Limitation  on  Modification  of Other  Agreements.  (a)  Modify,
terminate, amend, supplement or waiver or permit any modification,  termination,
amendment,  supplement  or waiver of (i) any Material  Contract  (other than the
Transaction  Documents),  (ii) the  certificate of  incorporation  or bylaws (or
analogous  constitutional  documents) of the Borrower of any  Subsidiary  (other
than  pursuant  to the  Certificates  of  Designation)  or (iii) any Health Care
Permit, if any of the same,  individually or in the aggregate,  could reasonably
be expected to have a Material Adverse Effect, or (b) modify or amend any of the
Transaction  Documents  in any  manner  that  would  be  disadvantageous  to the
Lenders.

         7.21 Accounting for  Assignments of Receivables.  Prepare any financial
statements,  tax returns or schedules  which shall account for the assignment of
any  Receivable  by an  Affiliated  Provider to the  Borrower or any  Subsidiary
pursuant to a Service  Agreement or otherwise in any manner other than as a true
sale thereof,  or in any other respect  account for or treat any such assignment
in any manner  other than as a true sale of such  Receivable  by the  Affiliated
Provider to the Borrower or a Subsidiary.


                                            SECTION 8.  EVENTS OF DEFAULT

                  If any of the following events shall occur and be continuing:



<PAGE>



                  (a) The Borrower  shall fail to pay any  principal of any Loan
or  Reimbursement  Obligation  when due in accordance  with the terms thereof or
hereof;  or the  Borrower  shall  fail  to pay  any  interest  on  any  Loan  or
Reimbursement  Obligation,  or any other amount payable hereunder,  within three
days after any such interest or other amount becomes due in accordance  with the
terms thereof or hereof; or

                  (b) Any  representation or warranty made or deemed made by the
Borrower or any other Loan Party  herein or in any other Loan  Document or which
is  contained  in any  certificate,  document or  financial  or other  statement
furnished by it at any time under or in  connection  with this  Agreement or any
such other Loan  Document  shall prove to have been  incorrect  in any  material
respect on or as of the date made or deemed made; or

                  (c) The Borrower or any other Loan Party shall  default in the
observance or performance of any agreement contained in Sections 6.1, 6.2, or 7;
or

                  (d) The Borrower or any other Loan Party shall  default in the
observance or performance of any other agreement  contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a) through (c) of
this  Section 8), and such default  shall  continue  unremedied  for a period of
thirty days; or

                  (e) The Borrower or any of its Subsidiaries  shall (i) default
in any payment of principal of or interest of any  Indebtedness  (other than the
Loans  or  Reimbursement  Obligations)  or (ii)  default  in the  observance  or
performance  of  any  other   agreement  or  condition   relating  to  any  such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto,  or any other event shall occur or condition exist, the effect
of which  default  or other  event or  condition  is to cause,  or to permit the
holder or holders of such  Indebtedness (or a trustee or agent on behalf of such
holder or  holders)  to cause,  with the  giving  of  notice if  required,  such
Indebtedness to become due prior to its stated maturity; provided, however, that
no Default or Event of  Default  shall  exist  under this  paragraph  unless the
aggregate  amount of Indebtedness in respect of which any default or other event
or condition referred to in this paragraph shall have occurred shall be equal to
at least $5,000,000; or



<PAGE>



                  (f) (i) The Borrower or any of its Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or future law of any
jurisdiction,   domestic  or  foreign,   relating  to  bankruptcy,   insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with  respect to it, or seeking to  adjudicate  it a bankrupt or  insolvent,  or
seeking  reorganization,   arrangement,   adjustment,  winding-up,  liquidation,
dissolution,  composition or other relief with respect to it or its debts or (B)
seeking  appointment  of a receiver,  trustee,  custodian,  conservator or other
similar  official for it or for all or any substantial part of its assets or the
Borrower  or any of its  Subsidiaries  shall make a general  assignment  for the
benefit of its creditors;  or (ii) there shall be commenced against the Borrower
or any of its  Subsidiaries  any case,  proceeding  or other  action of a nature
referred  to in clause (i) above  which (A) results in the entry of an order for
relief or any such  adjudication  or  appointment  or (B)  remains  undismissed,
undischarged  or unbonded  for a period of sixty  days;  or (iii) there shall be
commenced  against the Borrower or any of its Subsidiaries any case,  proceeding
or  other  action  seeking  issuance  of a  warrant  of  attachment,  execution,
distraint or similar process  against all or any substantial  part of its assets
which  results in the entry of an order for any such relief which shall not have
been vacated,  discharged or stayed or bonded  pending  appeal within sixty days
from the entry thereof;  or (iv) the Borrower or any of its  Subsidiaries  shall
take any action in furtherance of, or indicating its consent to, approval of, or
acquiescence  in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) the Borrower or any of its Subsidiaries  shall generally not, or shall be
unable to, or shall  admit in writing  its  inability  to, pay its debts as they
become due; or

                  (g)  (i)  Any   Person   shall   engage  in  any   "prohibited
transaction"  (as defined in Section  406 of ERISA or Section  4975 of the Code)
involving any Plan,  (ii) any  "accumulated  funding  deficiency" (as defined in
Section 302 of ERISA),  whether or not waived,  shall exist with  respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed,  to administer or to terminate,  any Single Employer
Plan,  which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders,  likely to result
in the  termination  of such Plan for  purposes  of Title IV of ERISA,  (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA,  (v) the
Borrower or any Commonly  Controlled Entity shall, or in the reasonable  opinion
of the Required  Lenders is likely to, incur any liability in connection  with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or  condition  shall occur or exist with respect to a Plan;
and in each case in clauses (i) through  (vi)  above,  such event or  condition,
together with all other such events or conditions,  if any, involve an aggregate
amount in excess of $5,000,000; or

                  (h) One or more judgments or decrees shall be entered  against
the Borrower or any of its  Subsidiaries  involving in the aggregate a liability
(not paid or fully covered by  insurance)  of  $5,000,000 or more,  and all such
judgments or decrees shall not have been vacated,  discharged,  stayed or bonded
pending appeal within sixty days from the entry thereof; or

                  (i) (i) Any of the Security  Documents  shall  cease,  for any
reason,  to be in full force and effect, or the Borrower or any other Loan Party
which is a party to any of the  Security  Documents  shall so assert or (ii) the
Lien  created by any of the  Security  Documents  shall cease to be perfected or
enforceable and of the same effect as to perfection and priority purported to be
created thereby; or

                  (j)  Any  Loan  Document  (other  than  any  of  the  Security
Documents)  shall cease,  for any reason,  to be in full force and effect or any
Loan Party shall so assert; or



<PAGE>



                  (k) (i) Any Person or "group"  (within  the meaning of Section
13(d) or 14(d) of the Exchange Act),  excluding the Initial  Investors and their
Affiliates,  (A) shall have acquired beneficial  ownership of 30% or more of any
outstanding  class of Capital Stock having ordinary voting power in the election
of  directors  or other  managers of the  Borrower or (B) shall obtain the power
(whether or not exercised) to elect a majority of the Borrower's  directors,  or
(ii) the Board of Directors  of the Borrower  shall not consist of a majority of
Continuing  Directors;  "Continuing  Directors"  shall mean the directors of the
Borrower on the Closing Date and each other director,  if such other  director's
nomination for election to the Board of Directors of the Borrower is recommended
by a majority of the then  Continuing  Directors,  or (iii) the  occurrence of a
Change of  Control  (as such term is defined  in the  Subordinated  Notes or any
other Subordinated Indebtedness Documentation); or

                  (l) Any Service Agreement(s),  with respect to which more than
10% of the management fee revenue of the Borrower and its  Subsidiaries  for the
immediately  preceding fiscal year was attributable,  shall be (i) determined to
be  illegal or invalid  or not  binding  on one or more  parties  thereto by any
arbitrator or  Governmental  Authority and such Service  Agreement(s)  shall not
have  been  amended,   modified  or  restated   within  sixty  days  after  such
determination  in  a  manner  that  corrects  such  illegality,   invalidity  or
nonbinding effect, or (ii) terminated or repudiated by any party thereto, except
pursuant to a termination  permitted by the relevant Service  Agreement(s) where
the relevant Affiliated  Provider(s)  repurchase for cash in accordance with the
terms  of  such  Service   Agreement(s)  all  assets  sold  by  such  Affiliated
Provider(s)  to the  Borrower  or any  Subsidiary  for an  amount  equal  to the
repurchase price specified in the relevant Service Agreement(s); or

                  (m) Any  Service  Agreement  shall  for any  reason  cease  to
evidence the true and absolute assignment and transfer by an Affiliated Provider
to the  Borrower or any  Subsidiary  (or any of their  respective  assignees  or
transferees)  of the full legal and  equitable  title to, and ownership of, each
Receivable assigned thereunder; or

                  (n) Any change  shall  occur in any  Requirement  of Law or in
Governmental  Program  reimbursement  rates or payment  methodologies that could
reasonably be expected to have a Material Adverse Effect;

then, and in any such event, (A) if such event is an Event of Default  specified
in clause  (i) or (ii) of  paragraph  (f) of this  Section  with  respect to the
Borrower,  automatically the Commitments  (including,  without  limitation,  the
obligation of the Issuing  Lender to issue Letters of Credit) shall  immediately
terminate and the Loans hereunder (with accrued interest  thereon) and all other
amounts  owing  under  this  Agreement  and  the  other  Loan  Documents   shall
immediately  become due and  payable and (B) if such event is any other Event of
Default,  either or both of the  following  actions  may be taken:  (i) with the
consent  of the  Required  Lenders,  the Agent may,  or upon the  request of the
Required  Lenders,  the  Agent  shall,  by notice to the  Borrower  declare  the
Commitments to be terminated (including,  without limitation,  the obligation of
the  Issuing  Lender  to issue  Letters  of  Credit)  forthwith,  whereupon  the
Commitments  shall  immediately  terminate  and  (ii)  with the  consent  of the
Required  Lenders,  the Agent may, or upon the request of the Required  Lenders,
the Agent shall,  by notice to the Borrower,  declare the Loans  hereunder (with
accrued  interest  thereon) and all other amounts owing under this Agreement and
the other Loan  Documents to be due and payable  forthwith,  whereupon  the same
shall immediately become due and payable.



<PAGE>



                  With  respect to all Letters of Credit  with  respect to which
presentment  for honor shall not have  occurred  at the time of an  acceleration
pursuant to the preceding paragraph,  the Borrower shall at such time deposit in
a cash  collateral  account opened by the Agent an amount equal to the aggregate
then undrawn and unexpired amount of such Letters of Credit. The Borrower hereby
grants  to  the  Agent,  for  the  benefit  of the  Issuing  Lender  and  the LC
Participants,  a  security  interest  in such  cash  collateral  to  secure  the
Obligations.  The  Borrower  shall  execute  and  deliver to the Agent,  for the
account of the Issuing Lender and the LC  Participants,  such further  documents
and instruments as the Agent may request to evidence the creation and perfection
of such security interest in such cash collateral account.  Amounts held in such
cash  collateral  account shall be applied by the Agent to the payment of drafts
drawn under such Letters of Credit,  and the unused  portion  thereof  after all
such  Letters of Credit  shall have  expired or been fully drawn  upon,  if any,
shall be  applied  to repay the other  Obligations.  After all such  Letters  of
Credit  shall  have  expired  or  been  fully  drawn  upon,  all   Reimbursement
Obligations  shall have been satisfied and all other Obligations shall have been
paid in full,  the balance,  if any, in such cash  collateral  account  shall be
returned to the Borrower.

                  Except  as  expressly   provided  above  in  this  Section  8,
presentment,  demand,  protest,  notice of acceleration or intent to accelerate,
and all other notices and formalities of any kind are hereby expressly waived by
the Borrower.


                        SECTION 9.  THE AGENT



<PAGE>



                  9.1 Appointment,  Powers,  and Immunities.  Each Lender hereby
irrevocably  appoints  and  authorizes  the Agent to act as its agent under this
Agreement and the other Loan  Documents  with such powers and  discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan  Documents,  together with such other powers as are  reasonably  incidental
thereto.  The Agent (which term as used in this  sentence and in Section 9.5 and
the first  sentence of Section 9.6 shall include its  Affiliates and its own and
its Affiliates' officers, directors, employees, agents, and advisors): (a) shall
not have any duties or responsibilities except those expressly set forth in this
Agreement and shall not be a trustee or fiduciary for any Lender,  (b) shall not
be responsible  to the Lenders for any recital,  statement,  representation,  or
warranty  (whether  written  or  oral)  made in or in  connection  with any Loan
Document or any certificate or other document referred to or provided for in, or
received by any of them under,  any Loan Document,  or for the value,  validity,
effectiveness, genuineness, enforceability, or sufficiency of any Loan Document,
or any other document  referred to or provided for therein or for any failure by
any Loan Party or any other Person to perform any of its obligations thereunder,
(c) shall not be responsible for or have any duty to ascertain, inquire into, or
verify the  performance or observance of any covenants or agreements by any Loan
Party or the satisfaction of any condition or to inspect the property (including
the  books  and  records)  of any  Loan  Party  or any  of its  Subsidiaries  or
Affiliates,  (d) shall not be required to initiate or conduct any  litigation or
collection proceedings under any Loan Document except pursuant to the request of
the Required Lenders (but subject to Sections 9.2 and 9.3), and (e) shall not be
responsible  for any  action  taken  or  omitted  to be  taken by it under or in
connection  with any Loan  Document,  except  for its own  gross  negligence  or
willful misconduct.  The Agent may employ agents and attorneys-in-fact and shall
not be  responsible  for the  negligence  or  misconduct  of any such  agents or
attorneys-in-fact  selected by it with reasonable care. The Issuing Lender shall
act on behalf of the Lenders with respect to Letters of Credit issued under this
Agreement and the documents  associated  therewith.  It is understood and agreed
that the Issuing  Lender (x) shall have all of the benefits and  immunities  (i)
provided to the Agent in this  Section 9 with respect to acts taken or omissions
suffered by the Issuing Lender in connection with Letters of Credit issued under
this  Agreement and the documents  associated  therewith as fully as if the term
"Agent" as used in this  Section 9 included  the Issuing  Lender with respect to
such acts or omissions and (ii) as provided  elsewhere in this Agreement and (y)
shall have all of the benefits of the  provisions  of Section 9.5 as fully as if
the term "Agent" as used in Section 9.5 included the Issuing Lender.

                  9.2 Reliance by the Agent. The Agent shall be entitled to rely
upon any certification,  notice,  instrument,  writing,  or other  communication
(including,  without limitation,  any thereof by telephone or telecopy) believed
by it to be genuine and correct and to have been  signed,  sent or made by or on
behalf of the proper Person or Persons,  and upon advice and statements of legal
counsel (including  counsel for any Loan Party),  independent  accountants,  and
other experts  selected by the Agent.  The Agent may deem and treat the payee of
any Note as the holder  thereof  for all  purposes  hereof  unless and until the
Agent receives and accepts an Assignment  and Acceptance  executed in accordance
with  Section  10.6.  As to any  matters  not  expressly  provided  for by  this
Agreement,  the Agent shall not be required to exercise any  discretion  or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the  Required  Lenders,  and such  instructions  shall be  binding on all of the
Lenders;  provided,  however,  that the Agent  shall not be required to take any
action that  exposes the Agent to personal  liability or that is contrary to any
Loan Document or  Requirement  of Law or unless it shall first be indemnified to
its  satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking any such action.

                  9.3 Defaults.  The Agent shall not be deemed to have knowledge
or notice of the  occurrence  of any  Default  or Event of Default  (other  than
nonpayment   of  principal  of  or  interest  on  the  Loans  or   Reimbursement
Obligations)  unless the Agent has received  written notice from a Lender or the
Borrower  specifying  such  Default or Event of Default  and  stating  that such
notice is a "Notice of  Default."  In the event that the Agent  receives  such a
notice of the occurrence of a Default or Event of Default or an Event or Default
occurs as a result of a failure of the Borrower to pay when due any principal of
or  interest  on the Loans or  Reimbursement  Obligations,  the Agent shall give
prompt notice  thereof to the Lenders.  The Agent shall (subject to Section 9.2)
take such  action  with  respect  to such  Default  or Event of Default as shall
reasonably be directed by the Required Lenders;  provided that, unless and until
the Agent shall have received such  directions,  the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such  Default  or Event of Default  as it shall  deem  advisable  in the best
interests of the Lenders.



<PAGE>



                  9.4 Rights as Lender.  With respect to its Commitments and the
Loans made by it,  Bank of America  (and any  successor  acting as Agent) in its
capacity as a Lender  hereunder shall have the same rights and powers  hereunder
as any other  Lender and may  exercise  the same as though it were not acting as
the  Agent,  and the term  "Lender"  or  "Lenders"  shall,  unless  the  context
otherwise  indicates,  include  the Agent in its  individual  capacity.  Bank of
America  (and any  successor  acting as Agent) and its  Affiliates  may (without
having to account  therefor to any Lender) accept  deposits from, lend money to,
make  investments in, provide  services to, and generally  engage in any kind of
lending, trust, or other business with any Loan Party or any of its Subsidiaries
or  Affiliates  as if it were not acting as Agent,  and Bank of America (and any
successor  acting  as  Agent)  and its  Affiliates  may  accept  fees and  other
consideration  from any Loan Party or any of its  Subsidiaries or Affiliates for
services in  connection  with this  Agreement  or  otherwise  without  having to
account for the same to the Lenders.

                  9.5 INDEMNIFICATION.  THE LENDERS AGREE TO INDEMNIFY THE AGENT
(TO THE  EXTENT  NOT  REIMBURSED  BY THE  BORROWER,  BUT  WITHOUT  LIMITING  THE
OBLIGATION OF THE BORROWER TO DO SO) RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE
TOTAL  CREDIT  PERCENTAGES  FOR ANY AND ALL  LIABILITIES,  OBLIGATIONS,  LOSSES,
DAMAGES,  PENALTIES,  ACTIONS,  JUDGMENTS,  SUITS,  COSTS,  EXPENSES  (INCLUDING
ATTORNEYS' FEES), OR DISBURSEMENTS OF ANY KIND AND NATURE WHATSOEVER THAT MAY BE
IMPOSED ON, INCURRED BY OR ASSERTED  AGAINST THE AGENT (INCLUDING BY ANY LENDER)
IN ANY WAY RELATING TO OR ARISING OUT OF ANY LOAN  DOCUMENT OR THE  TRANSACTIONS
CONTEMPLATED  THEREBY OR ANY ACTION TAKEN OR OMITTED BY THE AGENT UNDER ANY LOAN
DOCUMENT (INCLUDING ANY OF THE FOREGOING ARISING FROM THE ORDINARY NEGLIGENCE OF
THE AGENT);  PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY OF THE FOREGOING TO
THE EXTENT THEY ARISE FROM THE GROSS  NEGLIGENCE  OR WILLFUL  MISCONDUCT  OF THE
PERSON TO BE  INDEMNIFIED.  WITHOUT  LIMITATION  OF THE  FOREGOING,  EACH LENDER
AGREES TO REIMBURSE THE AGENT  PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE OF ANY
COSTS OR EXPENSES PAYABLE BY THE BORROWER UNDER SECTION 10.5, TO THE EXTENT THAT
THE  AGENT  IS NOT  PROMPTLY  REIMBURSED  FOR SUCH  COSTS  AND  EXPENSES  BY THE
BORROWER.  THE AGREEMENTS CONTAINED IN THIS SECTION 9.5 SHALL SURVIVE PAYMENT IN
FULL OF THE LOANS AND  REIMBURSEMENT  OBLIGATIONS  AND ALL OTHER AMOUNTS PAYABLE
UNDER THIS AGREEMENT.

                  9.6  Non-Reliance on the Agent and Other Lenders.  Each Lender
agrees that it has, independently and without reliance on the Agent or any other
Lender,   and  based  on  such  documents  and  information  as  it  has  deemed
appropriate,  made  its own  credit  analysis  of the  Loan  Parties  and  their
Subsidiaries and its own decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such  documents and  information  as it shall deem  appropriate  at the time,
continue to make its own analysis and  decisions in taking or not taking  action
under the Loan Documents.  Except for notices,  reports, and other documents and
information  expressly  required  to be  furnished  to the  Lenders by the Agent
hereunder,  the Agent shall not have any duty or  responsibility  to provide any
Lender with any credit or other  information  concerning the affairs,  financial
condition,  or  business  of any  Loan  Party  or any  of  its  Subsidiaries  or
Affiliates  that  may  come  into  the  possession  of the  Agent  or any of its
Affiliates.



<PAGE>



                  9.7 Resignation of the Agent. The Agent may resign at any time
by  giving  notice  thereof  to the  Lenders  and the  Borrower.  Upon  any such
resignation,  the Required  Lenders  shall have the right to appoint a successor
Agent.  If no  successor  Agent  shall have been so  appointed  by the  Required
Lenders and shall have  accepted such  appointment  within thirty days after the
retiring  Agent's giving of notice of resignation,  then the retiring Agent may,
on behalf of the Lenders,  appoint a successor Agent which shall be a commercial
bank organized  under the laws of the United States of America  having  combined
capital  and  surplus  of at  least  $100,000,000.  Upon the  acceptance  of any
appointment as Agent  hereunder by a successor,  such successor  shall thereupon
succeed  to  and  become  vested  with  all  the  rights,  powers,   discretion,
privileges,  and duties of the retiring  Agent,  and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation  hereunder as Agent, the provisions of this Section 9 shall continue
in effect for its benefit in respect of any actions taken or omitted to by taken
by it while it was acting as Agent.

                  9.8 Duties of Arranger.  Notwithstanding  any other  provision
contained in this  Agreement to the contrary,  the Arranger shall have no duties
or obligations under this Agreement or any other Loan Document.


                          SECTION 10.  MISCELLANEOUS

                  10.1  Amendments  and Waivers.  Neither this Agreement nor any
other  Loan  Document,   nor  any  terms  hereof  or  thereof  may  be  amended,
supplemented  or  modified  except in  accordance  with the  provisions  of this
Section.  The Required Lenders may, or, with the written consent of the Required
Lenders, the Agent may, from time to time, (a) enter into with the Borrower, and
the other Loan Parties, written amendments,  supplements or modifications hereto
and to the other Loan  Documents  for the purpose of,  amending,  supplementing,
modifying  or adding any  provisions  of or to this  Agreement or the other Loan
Documents  or changing  in any manner the rights of the Lenders or the  Borrower
hereunder  or  thereunder  or (b)  waive,  on such terms and  conditions  as the
Required  Lenders  or the  Agent,  as the  case  may  be,  may  specify  in such
instrument,  any of the  requirements  of  this  Agreement  or  the  other  Loan
Documents  or any  Default or Event of Default and its  consequences;  provided,
however,  that no such waiver and no such amendment,  supplement or modification
shall:

                  (i) reduce the amount or extend the scheduled date of maturity
of any Loan or any  Reimbursement  Obligation  or any scheduled  installment  of
principal  thereof,  or reduce the stated  rate of any  interest  or fee payable
hereunder or extend the  scheduled  date of any payment  thereof or increase the
amount or extend the expiration  date of any Lender's  Commitment,  in each case
without the consent of each Lender directly affected thereby;

                  (ii) consent to the  assignment or transfer by the Borrower of
any of its  rights  and  obligations  under  this  Agreement  and the other Loan
Documents,  or release all or substantially all of the Collateral or release any
material  Guarantor (other than as expressly  permitted by this Agreement or any
Security Document), in each case without the written consent of all the Lenders;

                  (iii)  amend,  modify or waive any  provision  of this Section
10.1 or reduce the percentage  specified in the definition of Required  Lenders,
without the written consent of all the Lenders;



<PAGE>



                  (iv) reduce the percentage  specified in the definition of the
Required  Revolving  Credit Lenders  without the written consent of the Required
Revolving Credit Lenders;

                  (v) reduce  the  percentage  specified  in the  definition  of
Required  Tranche A Term Lenders  without the consent of the Required  Tranche A
Term Lenders;

                  (vi) reduce the  percentage  specified  in the  definition  of
Required  Tranche B Term Lenders  without the consent of the Required  Tranche B
Term Lenders;

                  (vii) reduce the  percentage  specified in the  definition  of
Required  Facility  Lenders with respect to any Facility  without the consent of
all Lenders under such Facility;

                  (viii)  amend,  modify or waive  any  provision  of  Section 9
without the written consent of the then Agent;

                  (ix) amend,  modify or waive Sections 2.1 through 2.10 without
the consent of the Required Revolving Credit Lenders;

                  (x) amend,  modify,  or waive Section 2.11 without the consent
of the Required Tranche A Term Lenders;

                  (xi) amend,  modify or waive Sections 2.12 or 2.13 without the
written consent of the Required Tranche B Term Lenders;

                  (xii)  amend,  modify or waive  Section  2.4  through  2.10 or
Section 9.1 without the written consent of the Issuing Lender;

                  (xiii)  effect any waiver of any  condition  precedent  to the
making of any  Revolving  Credit  Loan or the  issuance  of any Letter of Credit
without the written consent of the Required Revolving Credit Lenders,  or effect
any waiver of any condition  precedent to the making of the Tranche A Term Loans
without the prior written  consent of the Required  Tranche A Term  Lenders,  or
effect any waiver of any condition precedent to the making of the Tranche B Term
Loan without the prior written consent of the Tranche B Term Lenders;

                  (xiv) amend,  modify or waive the  provisions of any Letter of
Credit or any LC Obligation  without the written  consent of the Issuing  Lender
and each affected LC Participant;

                  (xv)  amend,  modify,  or waive any  provision  of  subsection
3.5(d) or Section 3.7 without the consent of the  Required  Facility  Lenders in
respect of each Facility adversely affected thereby; or


<PAGE>



                  (xvi)  except as  permitted  by  Section  2.14,  increase  the
aggregate amount of the Commitments without the consent of all of the Lenders.

Any such waiver and any such amendment,  supplement or modification  shall apply
equally to each of the Lenders  and shall be binding  upon the  applicable  Loan
Parties, the Lenders, the Agent and all future holders of the Loans. In the case
of any waiver, the Loan Parties,  the Lenders and the Agent shall be restored to
their former  positions and rights hereunder and under the other Loan Documents,
and any Default or Event of Default  waived  shall be deemed to be cured and not
continuing;  no such waiver shall extend to any  subsequent  or other Default or
Event of Default or impair any right consequent thereon.

                  10.2 Notices. All notices, requests and demands to or upon the
respective  parties  hereto to be effective  shall be in writing  (including  by
facsimile  transmission) and, unless otherwise expressly provided herein,  shall
be deemed to have been duly given or made (a) in the case of  delivery  by hand,
when  delivered,  (b) in the case of delivery by mail,  five Business Days after
being deposited in the mails,  postage prepaid or (c) in the case of delivery by
facsimile transmission,  when sent and receipt has been confirmed,  addressed as
follows in the case of the Borrower and the Agent,  and as set forth in Schedule
1.1(c) in the case of the other parties hereto,  or to such other address as may
be hereafter notified by the respective parties hereto and any future holders of
the Loans:

         The Borrower:                      ProMedCo Management Company
                                            801 Cherry Street, Suite 1450
                                            Fort Worth, Texas  76102
                                            Attention:  Mr. Robert D. Smith
                                            Facsimile:  (817) 335-8321

         The Agent:                         Bank of America, N.A.
                                            NC1-001-15-04
                                            101 North Tryon Street
                                            Charlotte, North Carolina  28255
                                            Attention:  Agency Services
                                            Facsimile:  (704) 386-9923

         with a copy to:                    Bank of America, N.A.
                                            700 Louisiana St., 8th Floor
                                            Houston, Texas  77002-2700
                                            Attention:  Mr. Lawrence J. Gordon
                                            Facsimile:  (713) 247-6719

provided that any notice,  request or demand to or upon the Agent or the Lenders
pursuant to Sections  2.2,  2.3,  2.4,  2.13,  3.5, 3.6, 3.7 or 6.2 shall not be
effective until received.



<PAGE>



                  10.3 No Waiver;  Cumulative  Remedies.  No failure to exercise
and no delay in exercising,  on the part of the Agent or any Lender,  any right,
remedy,  power or privilege  hereunder or under the other Loan  Documents  shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
right,  remedy,  power or  privilege  hereunder  preclude  any other or  further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights,  remedies,  powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

                  10.4  Survival  of   Representations   and   Warranties.   All
representations  and warranties made hereunder,  in the other Loan Documents and
in any  document,  certificate  or  statement  delivered  pursuant  hereto or in
connection  herewith  shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.

                  10.5 PAYMENT OF EXPENSES AND TAXES;  INDEMNIFICATION.  (a) THE
BORROWER  AGREES  TO PAY ON  DEMAND  ALL  COSTS  AND  EXPENSES  OF THE  AGENT IN
CONNECTION WITH THE SYNDICATION,  PREPARATION, NEGOTIATION, EXECUTION, DELIVERY,
ADMINISTRATION,  MODIFICATION,  AND AMENDMENT OF (AND ANY WAIVER OR CONSENT WITH
RESPECT TO) THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, AND THE OTHER DOCUMENTS TO
BE DELIVERED HEREUNDER,  INCLUDING,  WITHOUT LIMITATION, THE REASONABLE FEES AND
EXPENSES OF COUNSEL FOR THE AGENT WITH RESPECT THERETO (INCLUDING, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE COST OF INTERNAL COUNSEL),  THE REASONABLE FEES
AND EXPENSES OF OTHER  PROFESSIONALS OR ADVISORS  RETAINED BY THE AGENT, AND THE
REASONABLE  FEES AND  EXPENSES OF COUNSEL FOR THE AGENT WITH RESPECT TO ADVISING
THE AGENT AS TO ITS RIGHTS AND  RESPONSIBILITIES  UNDER THE LOAN DOCUMENTS.  THE
BORROWER FURTHER AGREES TO PAY ON DEMAND ALL COSTS AND EXPENSES OF THE AGENT AND
THE LENDERS (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND, WITH
RESPECT TO THE AGENT AND TO THE EXTENT  PERMITTED BY APPLICABLE LAW, THE COST OF
INTERNAL  COUNSEL)  IN  CONNECTION  WITH ANY DEFAULT OR EVENT OF DEFAULT AND THE
ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS,  LEGAL PROCEEDINGS,  OR OTHERWISE) OF
THE LOAN DOCUMENTS AND THE OTHER DOCUMENTS TO BE DELIVERED HEREUNDER.

                  (b) THE BORROWER AGREES TO PAY, INDEMNIFY AND HOLD EACH LENDER
AND THE AGENT  HARMLESS  FROM, ANY AND ALL RECORDING AND FILING FEES AND ANY AND
ALL LIABILITIES  WITH RESPECT TO, OR RESULTING FROM ANY DELAY IN PAYING,  STAMP,
EXCISE AND OTHER TAXES, IF ANY, WHICH MAY BE PAYABLE OR DETERMINED TO BE PAYABLE
IN  CONNECTION   WITH  THE  EXECUTION  AND  DELIVERY  OF,  OR   CONSUMMATION  OR
ADMINISTRATION  OF ANY OF THE  TRANSACTIONS  CONTEMPLATED  BY, OR ANY AMENDMENT,
SUPPLEMENT OR MODIFICATION  OF, OR ANY WAIVER OR CONSENT UNDER OR IN RESPECT OF,
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ANY SUCH OTHER DOCUMENTS.



<PAGE>



                  (c) THE  BORROWER  AGREES TO INDEMNIFY  AND HOLD  HARMLESS THE
AGENT  AND EACH  LENDER  AND  EACH OF  THEIR  AFFILIATES  AND  THEIR  RESPECTIVE
OFFICERS,  DIRECTORS,  EMPLOYEES,  AGENTS AND ADVISORS  (EACH,  AN  "INDEMNIFIED
PARTY") FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS
AND EXPENSES  (INCLUDING,  WITHOUT  LIMITATION,  SETTLEMENT COSTS AND REASONABLE
ATTORNEYS'  FEES AND  EXPENSES)  THAT MAY BE  INCURRED BY OR ASSERTED OR AWARDED
AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT OF OR IN CONNECTION WITH
OR  BY  REASON  OF  (INCLUDING,  WITHOUT  LIMITATION,  IN  CONNECTION  WITH  ANY
INVESTIGATION, LITIGATION, OR PROCEEDING OR PREPARATION OF DEFENSE IN CONNECTION
THEREWITH) (I) THE LOAN DOCUMENTS,  ANY OF THE TRANSACTIONS  CONTEMPLATED HEREIN
OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE LOANS (INCLUDING ANY OF THE
FOREGOING  ARISING FROM THE NEGLIGENCE OF THE  INDEMNIFIED  PARTY),  OR (II) THE
ACTUAL OR ALLEGED PRESENCE OF MATERIALS OF ENVIRONMENTAL CONCERN ON ANY PROPERTY
NOW OR  HEREAFTER  OWNED OR LEASED BY THE  BORROWER OR ANY OF ITS  SUBSIDIARIES,
EXCEPT TO THE EXTENT SUCH CLAIM,  DAMAGE,  LOSS,  LIABILITY,  COST OR EXPENSE IS
FOUND IN A FINAL,  NON-APPEALABLE  JUDGMENT BY A COURT OF COMPETENT JURISDICTION
TO HAVE  RESULTED  FROM SUCH  INDEMNIFIED  PARTY'S  GROSS  NEGLIGENCE OR WILLFUL
MISCONDUCT.  IN THE CASE OF AN INVESTIGATION,  LITIGATION OR OTHER PROCEEDING TO
WHICH THE INDEMNITY IN THIS SUBSECTION 10.5(C) APPLIES,  SUCH INDEMNITY SHALL BE
EFFECTIVE WHETHER OR NOT SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT
BY THE BORROWER,  ITS  DIRECTORS,  SHAREHOLDERS  OR CREDITORS OR AN  INDEMNIFIED
PARTY OR ANY OTHER PERSON OR ANY INDEMNIFIED  PARTY IS OTHERWISE A PARTY THERETO
AND WHETHER OR NOT THE TRANSACTIONS  CONTEMPLATED  HEREBY ARE  CONSUMMATED.  THE
BORROWER  AGREES NOT TO ASSERT ANY CLAIM AGAINST THE AGENT,  ANY LENDER,  ANY OF
THEIR AFFILIATES,  OR ANY OF THEIR RESPECTIVE  DIRECTORS,  OFFICERS,  EMPLOYEES,
ATTORNEYS,  AGENTS  AND  ADVISERS,  ON ANY  THEORY OF  LIABILITY,  FOR  SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING
TO THE LOAN DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN OR
THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE LOANS.

                  (d) Without  prejudice to the survival of any other  agreement
of the  Borrower  hereunder,  the  agreements  and  obligations  of the Borrower
contained in this Section 10.5 shall survive the  termination of the Commitments
and payment in full of the Loans and all other  Obligations  payable  under this
Agreement.



<PAGE>



                  10.6 Successors and Assigns;  Participations  and Assignments.
(a)  This  Agreement  shall be  binding  upon and  inure to the  benefit  of the
Borrower,  the Lenders,  the Agent and their respective  successors and assigns,
except  that the  Borrower  may not  assign  or  transfer  any of its  rights or
obligations  under this  Agreement  without  the prior  written  consent of each
Lender.

                  (b) Each Lender may assign to one or more  Eligible  Assignees
all or a portion of its rights and obligations under this Agreement  (including,
without  limitation,  all or a  portion  of its  Commitment(s),  the  Loans  and
Reimbursement  Obligations  owing  to it and the  Notes  held by it);  provided,
however, that

                           (i)      each such assignment shall be to an Eligible
         Assignee;

                           (ii) except in the case of an  assignment  to another
         Lender or an  assignment  of all of a Lender's  rights and  obligations
         under this Agreement, any such partial assignment shall be in an amount
         at least equal to $10,000,000 or an integral  multiple of $1,000,000 in
         excess thereof;

                           (iii) each such  assignment by a Lender shall be of a
         constant,  and  not  varying,  percentage  of  all of  its  rights  and
         obligations under one or more of the Facilities; and

                           (iv) the parties to such assignment shall execute and
         deliver to the Agent for its acceptance an Assignment  and  Acceptance,
         together with any Notes subject to such assignment and a processing fee
         of $3,500.

Upon  execution,  delivery and acceptance of such  Assignment and Acceptance and
payment  to the  Agent of the  processing  fee  specified  above,  the  assignee
thereunder shall be a party hereto and, to the extent of such  assignment,  have
the  obligations,  rights,  and benefits of a Lender hereunder and the assigning
Lender shall,  to the extent of such  assignment,  relinquish  its rights and be
released from its obligations under this Agreement. Upon the consummation of any
assignment  pursuant  to this  Section  10.6,  the  assignor,  the Agent and the
Borrower shall make appropriate arrangements so that, if required, new Notes are
issued to the assignor  and the  assignee.  If the assignee is not  incorporated
under the laws of the  United  States of America  or a state  thereof,  it shall
deliver  to the  Borrower  and the  Agent  certification  as to  exemption  from
deduction or withholding of Taxes in accordance with subsection 3.14(d).

                  (c) The Agent shall,  on behalf of the  Borrower,  maintain at
its address referred to in Section 10.2 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the  recordation of the names
and  addresses  of the  Lenders  and the  Revolving  Credit  Commitment  of, and
principal  amount of the  Loans  owing to,  each  Lender  from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agent and the Lenders may
treat each Person whose name is recorded in the  Register as a Lender  hereunder
for all  purposes  of this  Agreement.  The  Register  shall  be  available  for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.



<PAGE>



                  (d) Upon its receipt of an Assignment and Acceptance  executed
by the parties  thereto,  together with any Note subject to such  assignment and
payment  of the  processing  fee,  the  Agent  shall,  if  such  Assignment  and
Acceptance has been completed,  (i) accept such Assignment and Acceptance,  (ii)
record the information  contained  therein in the Register and (iii) give prompt
notice thereof to the parties thereto.

                  (e) Each Lender may sell participations to one or more Persons
(each, a "Participant") in all or a portion of its rights, obligations or rights
and  obligations  under  this  Agreement  (including  all  or a  portion  of its
Commitments or the Loans or  Reimbursement  Obligations  held by it);  provided,
however,  that (i) such Lender's  obligations  under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such  obligations,  (iii) the Participant shall be
entitled to the benefit of the yield protection provisions contained in Sections
3.9,  3.13 and 3.14 and the right of set-off  contained in Section 10.7 and (iv)
the Borrower,  the Agent and the other Lenders shall continue to deal solely and
directly  with  such  Lender  in  connection   with  such  Lender's  rights  and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower  relating to the Loans or  Reimbursement
Obligations owing to it and the Note(s) held by it in which  participations have
been sold and to approve any amendment,  modification or waiver of any provision
of this Agreement (other than amendments,  modifications,  or waivers decreasing
the  amount of  principal  of or the rate at which  interest  is payable on such
Loans,  Reimbursement Obligations or Note(s),  extending any scheduled principal
payment  date  or date  fixed  for  the  payment  of  interest  on  such  Loans,
Reimbursement  Obligations or Note(s) or extending its  Commitments in which the
participation has been sold).

                  (f)  Notwithstanding  any  other  provision  set forth in this
Agreement,  any Lender may at any time  assign and pledge all or any  portion of
its Loans and  Reimbursement  Obligations  and its Notes to any Federal  Reserve
Bank as collateral  security pursuant to Regulation A and any Operating Circular
issued by such  Federal  Reserve  Bank.  No such  assignment  shall  release the
assigning Lender from its obligations hereunder.

                  (g) Any Lender may  furnish  any  information  concerning  the
Borrower or any of its  Subsidiaries  in the possession of such Lender from time
to time to assignees  and  Participants  (including  prospective  assignees  and
Participants), subject, however, to the provisions of Section 10.15.

                  10.7 Adjustments;  Set-off. (a) Upon the occurrence and during
the  continuance  of  any  Event  of  Default,  each  Lender  (and  each  of its
Affiliates)  is  hereby  authorized  at any time and from  time to time,  to the
fullest  extent  permitted  by law,  to set off and apply  any and all  deposits
(general or special, time or demand,  provisional or final) at any time held and
other  indebtedness  at any time owing by such Lender (or any of its Affiliates)
to or for the credit or the account of the  Borrower  against any and all of the
Obligations  of the Borrower held by such Lender,  irrespective  of whether such
Lender shall have made any demand under this Agreement or such  Obligations  and
although  such  Obligations  may be unmatured.  Each Lender  agrees  promptly to
notify the Borrower after any such set-off and application  made by such Lender;
provided,  however,  that the failure to give such  notice  shall not affect the
validity of such set-off and  application.  The rights of each Lender under this
Section  are in  addition  to other  rights  and  remedies  (including,  without
limitation, other rights of set-off) that such Lender may have.



<PAGE>



                  (b)  Except  to  the  extent  that  this  Agreement  expressly
provides for payments to be allocated to a particular  Lender or Lenders under a
particular  Facility,  if any Lender (a  "benefitted  Lender") shall at any time
receive  any payment of all or part of the  Obligations  owing to it, or receive
any collateral in respect  thereof  (whether  voluntarily or  involuntarily,  by
set-off,  or  otherwise),  in a greater  proportion  than any such payment to or
collateral  received by any other Lender,  if any, in respect of the Obligations
owing to such other Lender,  such benefitted Lender shall purchase for cash from
the other Lenders a  participating  interest in such portion of the  Obligations
owing to each such other  Lender,  or shall  provide such other Lenders with the
benefits of any such collateral,  or the proceeds thereof, as shall be necessary
to cause such benefitted  Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded,  and the purchase
price and  benefits  returned,  to the  extent  of such  recovery,  but  without
interest. The Borrower agrees that any Lender so purchasing a participation from
a Lender  pursuant to this Section 10.7 may, to the fullest extent  permitted by
law, exercise all of its rights of payment (including the right of set-off) with
respect  to such  participation  as fully  as if such  Person  were  the  direct
creditor of the Borrower in the amount of such participation.

                  10.8  Counterparts.  This  Agreement may be executed by one or
more of the parties to this  Agreement  on any number of separate  counterparts,
and all of said  counterparts  taken  together shall be deemed to constitute one
and  the  same  instrument.  Delivery  of an  executed  signature  page  of this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed  counterpart  thereof.  A set of the copies of this Agreement signed by
all the parties shall be delivered to the Borrower and the Agent.

                  10.9  Severability.  Any provision of this Agreement  which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.

                  10.10 ENTIRE  AGREEMENT.  THIS  AGREEMENT,  TOGETHER  WITH THE
OTHER  LOAN  DOCUMENTS,  REPRESENT  THE  FINAL  AGREEMENT  BETWEEN  THE  PARTIES
REGARDING THE SUBJECT MATTER HEREIN AND THEREIN AND MAY NOT BE  CONTRADICTED  BY
EVIDENCE OF PRIOR,  CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                  10.11  Governing  Law.  This  Agreement  and  the  rights  and
obligations  of the parties  hereunder  shall be governed by, and  construed and
interpreted in accordance  with, the law of the State of Texas without regard to
the principles of conflicts of laws thereof.

                  10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:



<PAGE>



                  (a) submits for itself and its property in any legal action or
proceeding  relating to this  Agreement and the other Loan Documents to which it
is a party,  or for  recognition  and  enforcement  of any  judgement in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
Texas,  the courts of the United States of America for the Northern  District of
Texas, and appellate courts from any thereof;

                  (b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or  proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

                  (c) agrees  that  service  of  process  in any such  action or
proceeding  may be effected by mailing a copy thereof by registered or certified
mail (or any  substantially  similar  form of  mail),  postage  prepaid,  to the
Borrower at its address  set forth in Section  10.2 or at such other  address of
which the Agent shall have been notified pursuant thereto; and

                  (d)  agrees  that  nothing  herein  shall  affect the right to
effect  service of process in any other  manner  permitted by law or shall limit
the right to sue in any other jurisdiction.

                  10.13 Acknowledgments. The Borrower hereby acknowledges that:

                  (a)  it has  been  advised  by  counsel  in  the  negotiation,
execution and delivery of this Agreement and the other Loan Documents;

                  (b)  neither  the  Agent  nor any  Lender  has  any  fiduciary
relationship  with or duty to the Borrower  arising out of or in connection with
this Agreement or any of the other Loan Documents,  and the relationship between
Agent and  Lenders,  on one  hand,  and the  Borrower,  on the  other  hand,  in
connection herewith or therewith is solely that of debtor and creditor; and

                  (c) no joint  venture is  created  hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions  contemplated hereby
among the Lenders or among the Borrower and the Lenders.

                  10.14  WAIVER OF JURY TRIAL.  TO THE EXTENT  PERMITTED BY LAW,
THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY  WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.



<PAGE>



                  10.15  Confidentiality.  The Agent and each  Lender  (each,  a
"Lending Party") agrees to keep  confidential any information  furnished or made
available  to it by the  Borrower  pursuant  to this  Agreement  that is  marked
confidential;  provided that nothing herein shall prevent any Lending Party from
disclosing  such  information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director,  employee, agent, or advisor of any
Lending  Party or  Affiliate  of any Lending  Party,  (b) to any other Person if
reasonably  incidental to the  administration  of the credit  facility  provided
herein,  (c) as required by any  Requirement  of Law,  (d) upon the order of any
court or administrative agency, (e) upon the request or demand of any regulatory
agency or authority,  (f) that is or becomes  available to the public or that is
or becomes available to any Lending Party other than as a result of a disclosure
by any Lending Party  prohibited by this  Agreement,  (g) in connection with any
litigation to which such Lending Party or any of its  Affiliates may be a party,
(h) to the extent  necessary in connection with the exercise of any remedy under
this  Agreement  or any  other  Loan  Document  and (i)  subject  to  provisions
substantially similar to those contained in this Section 10.15, to any actual or
proposed Participant or assignee.

                  10.16 Interest and Charges. (a) It is not the intention of any
parties to this  Agreement  to make an agreement in violation of the laws of any
applicable  jurisdiction  relating to usury.  Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to charge, receive,  collect or
apply,  as  interest  on the  Obligations,  any amount in excess of the  Highest
Lawful Rate. If any Lender ever receives,  collects or applies, as interest, any
such excess,  such amount which would be  excessive  interest  shall be deemed a
partial  repayment of principal and treated  hereunder as such; and if principal
is paid in full, any remaining excess shall be paid to the Borrower.

                  (b) The Borrower  agrees that Chapter 346 of the Texas Finance
Code Annotated  (which  regulates  certain  revolving credit accounts) shall not
govern or in any manner apply to this Agreement or any of the Obligations.

                  (c) If at any time the interest rate (the "Contract Rate") for
any obligation of the Borrower under the Loan Documents shall exceed the Highest
Lawful Rate,  thereby  causing the interest  accruing on such  obligation  to be
limited  to the  Highest  Lawful  Rate,  then any  subsequent  reduction  in the
Contract Rate for such obligation  shall not reduce the rate of interest on such
obligation  below the Highest Lawful Rate until the aggregate amount of interest
accrued on such obligation  equals the aggregate  amount of interest which would
have accrued on such  obligation if the Contract Rate for such obligation had at
all times been in effect.

                  10.17  Releases of Guarantees and Liens.  (a)  Notwithstanding
anything to the contrary  contained  herein or in any other Loan  Document,  the
Agent is hereby  irrevocably  authorized by each Lender (without  requirement of
notice to or consent of any Lender except as expressly required by Section 10.1)
to take any action  requested by the Borrower having the effect of releasing any
Collateral or Guarantee (i) to the extent  necessary to permit  consummation  of
any  transaction  not prohibited by any Loan Document or that has been consented
to in accordance  with Section 10.1,  (ii) to the extent that the  Collateral or
Guarantee in question has a value of less than  $1,000,000  as determined by the
Agent, or (iii) under the circumstances described in paragraph (b) below.



<PAGE>



                  (b) At such time as the Loans, the  Reimbursement  Obligations
and the other  Obligations  shall have been paid in full, the  Commitments  have
been  terminated and no Letters of Credit shall be  outstanding,  the Collateral
shall be released  from the Liens  created by the  Security  Documents,  and the
Security  Documents and all obligations  (other than those  expressly  stated to
survive  such  termination)  of the Agent and each Loan Party under the Security
Documents shall terminate, all without delivery of any instrument or performance
of any act by any Person.


                                         [SIGNATURE PAGES FOLLOW THIS PAGE]


<PAGE>




                                       S-1

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


                BORROWER:
                --------

                PROMEDCO MANAGEMENT COMPANY


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


<PAGE>








                ARRANGER:
                --------

                BANC OF AMERICA SECURITIES LLC


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


<PAGE>








                LENDERS:
                -------

                BANK OF AMERICA, N.A.
                  as the Agent, the Issuing Lender and as a Lender


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


<PAGE>








                AMSOUTH BANK


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


<PAGE>








                BANK ONE, N.A.
                (formerly known as The First National Bank of Chicago)


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


<PAGE>




                                       S-6



                COOPERATIEVE CENTRALE RAIFFEISEN-
                BOERENLEENBANK B.A., "RABOBANK
                INTERNATIONAL", NEW YORK BRANCH



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



<PAGE>




                                       S-7



                U.S. BANK NATIONAL ASSOCIATION



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



<PAGE>




                                       S-8
DL:  1104629v12


                            FLEET CAPITAL CORPORATION



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




<PAGE>




                             GE CAPITAL CORPORATION



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


<PAGE>




                                       A-1
                                                                        ANNEX A

PRICING GRID FOR REVOLVING CREDIT LOANS, TRANCHE A TERM LOANS AND COMMITMENT
FEES

                  The  term   "Applicable   Margin"   means,   for  purposes  of
         calculating  the  applicable  interest rate for any day for  Eurodollar
         Loans and Base Rate Loans that are Revolving  Credit Loans or Tranche A
         Term Loans and the  applicable  rate for the Commitment Fee for any day
         for  purposes  of  subsection   3.2(a),   the  appropriate   applicable
         percentage  set forth below  corresponding  to the Leverage Ratio as of
         the most recent Calculation Date:
<TABLE>
<CAPTION>

    ------------ ----------------------- ----------------------- ----------------------- -----------------------
                   Applicable Margin For Applicable Margin For
                        Revolving Credit Revolving Credit
      Pricing                             Loans, and Tranche A    Loans, and Tranche A   Applicable Margin For
       Level            Leverage               Term Loans              Term Loans         Commitment Fees For
                          Ratio                 that are                that are            Revolving Credit
                                            Eurodollar Loans        Base Rate Loans           Commitments
    ------------ ----------------------- ----------------------- ----------------------- -----------------------
<S>              <C>                     <C>                     <C>                     <C>
         I       < 1.000 to 1.000                2.500%                  1.000%                  .375%
    ------------ ----------------------- ----------------------- ----------------------- -----------------------
        II       =>1.000 to 1.000 but            2.625%                  1.125%                  .500%
                 < 2.000 to 1.000
    ------------ ----------------------- ----------------------- ----------------------- -----------------------
        III      =>2.000 to 1.000 but            3.000%                  1.500%                  .500%
                 < 2.750 to 1.000
    ------------ ----------------------- ----------------------- ----------------------- -----------------------
        IV       =>2.750 to 1.000 but            3.500%                  2.000%                  .500%
                 < 3.250 to 1.000
    ------------ ----------------------- ----------------------- ----------------------- -----------------------
         V       =>3.250 to 1.000 but            4.000%                  2.500%                  .750%
                 < 3.750 to 1.000
    ------------ ----------------------- ----------------------- ----------------------- -----------------------
        VI       => 3.750 to 1.000 but           4.500%                  3.000%                  .750%
                 < 4.000 to 1.000
    ------------ ----------------------- ----------------------- ----------------------- -----------------------
        VII      => 4.000 to 1.000               5.000%                  3.500%                  .750%
    ------------ ----------------------- ----------------------- ----------------------- -----------------------
</TABLE>



<PAGE>



         Each  Applicable  Margin shall be determined and adjusted  quarterly on
         each  Calculation  Date occurring after the date hereof on the basis of
         the  financial   statements  delivered  by  the  Borrower  pursuant  to
         subsection  6.1(a)  or  6.1(b),  as  applicable,   and  the  Compliance
         Certificate  delivered by the Borrower  pursuant to subsection  6.2(b);
         provided,  however, that (a) from the Closing Date to but excluding the
         first  Calculation Date following June 30, 2000, the Applicable  Margin
         shall be determined  in accordance  with the grid above on the basis of
         the financial  statements then most recently  delivered by the Borrower
         pursuant to Section 6.1(b) of the Existing Credit  Agreement,  (b) from
         and including the first  Calculation Date following June 30, 2000, each
         Applicable  Margin shall be based on the Pricing Level (as shown above)
         corresponding  to the  Leverage  Ratio  as of the  last day of the most
         recently  ended fiscal  quarter or year of the Borrower  preceding  the
         applicable  Calculation  Date,  (c) if the Borrower fails to deliver to
         the Agent and the Lenders  such  financial  statements  and  Compliance
         Certificate  for the most recently  ended fiscal quarter or year of the
         Borrower  preceding the applicable  Calculation  Date,  each Applicable
         Margin from such  Calculation  Date shall be based on Pricing Level VII
         (as  shown  above)  until  the  date  such  financial   statements  and
         Compliance  Certificate  are  delivered  to the Agent and the  Lenders,
         after which each Applicable  Margin shall be based on the Pricing Level
         (as shown above) corresponding to the Leverage Ratio as of the last day
         of the most  recently  ended  fiscal  quarter  or year of the  Borrower
         preceding  such  Calculation  Date,  and  (d) if and for so long as any
         Default or Event of Default shall have occurred and be continuing, each
         Applicable Margin shall be based on Pricing Level VII (as shown above).
         Each  Applicable  Margin shall be effective from one  Calculation  Date
         until the next  Calculation  Date.  Any  adjustment  in the  Applicable
         Margins shall be applicable to all Revolving Credit Loans and Tranche A
         Term Loans then existing or subsequently made.