<PAGE>   1
                                                                     Exhibit 4.1

                                CREDIT AGREEMENT

DATED AS OF:    February 1, 1997

BETWEEN:        PHYSICIAN PARTNERS, INC., a Delaware corporation ("Company"),
                whose address is 111 S.W. Columbia Street, Suite 725, Portland,
                Oregon 97201, Attention, Mr. David M. Goldberg for mail and
                street delivery; and 503-224-4713, Attention: Mr. David M.
                Goldberg, by telecopy

AND:            UNITED STATES NATIONAL BANK OF OREGON, a national banking
                association ("Bank"), whose address is Corporate Banking, 111
                S.W. Fifth Avenue (T-4), Portland, Oregon 97204, Attention: Mr.
                Al Munson, for street delivery; Corporate Banking Division, Post
                Office Box 4412, Portland, Oregon 97208, Attention: Mr. Al
                Munson, for mail; and 503-275-5795, Attention: Mr. Al Munson,
                for telecopy


                                R E C I T A L S

        A.      Company is the surviving entity from a merger of The Corvallis
Clinic, Inc. (formerly known as The Corvallis Clinic, P.C.), HealthFirst
Medical Group, Inc. (formerly known as HealthFirst Medical Group, P.C., and
Metropolitan Clinic, P.C.), and Medford Clinic, Inc. (formerly known as Medford
Clinic, P.C.), into Company (the "Merger").

        B.      Bank and Company desire to consolidate, amend, and restate
certain revolving loan facilities aggregating $5,500,000, to which Bank and
each of the merged entities were parties, copies of which are attached hereto
as Exhibit A.

        C.      Bank has agreed to extend credit to Company in the amount of
$5,500,000, subject to the terms and conditions of this Agreement.

        D.      Company desires to assume certain other loan facilities and
related obligations to which various of the merged parties and U.S. Bank were
party.

        Therefore the parties agree as follows:


                                      -1-
<PAGE>   2
                                   SECTION 1

                                  DEFINITIONS

        1.1 Certain Defined Terms. As used in this Agreement, the following
terms have the following meanings, which apply to both the singular and plural
forms of the terms defined:

        "ADA" means the Americans with Disabilities Act of 1990.

        "Advance" has the meaning given in Section 2.1.

        "Affiliate" means any Person (1) that directly or indirectly controls,
or is controlled by, or is under common control with Company; or (2) that
directly or indirectly beneficially owns or holds 5 percent or more of any
class of voting stock of Company. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

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

        "Bank Account" means Company's deposit account No. 240-0001-455 at the
Portland Main branch of Bank.

        "Banking Day" means a day in which dealings in United States dollars
are carried out on the interbank market.

        "Basis Point" means the interest rate of one one-hundredth percent
(0.01%) per annum.

        "Business Day" means a day on which Bank's Oregon corporate Banking
department at 111 SW Fifth Avenue, Portland, Oregon, or such other address at
which it may become located, is open for business.

        "Commitment Period: has the meaning given in Section 2.1.

        "Environmental Laws" means all federal, state, and local laws,
regulations, and orders relating to the storage, transportation, release,
remediation, or removal of hazardous or toxic substances, pollutants, or
contaminants.

        "Event of Default" has the meaning given in Section 7.1.

        "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereof.


                                      -2-
<PAGE>   3
            "Financial Statements" means the balance sheets, statements of
income and retained earnings, and other reports required under Section 5.6.

            "GAAP" means generally accepted accounting principles and practices
in the United States.


            "IBOR Rate" means a rate of interest determined by Bank equal to
the rates (rounded up to the nearest 1/16th of 1 percent) at which recognized
dealers on the interbank market in London or New York would offer to place a
U.S. dollar-denominated deposit in a foreign branch or office of Bank in an
amount equal to the amount of the Advance requested by Company and for a period
equal to the Interest period selected by Company for the Advance. The IBOR Rate
shall be increased to take into account (a) the cost to Bank to maintain any
reserves for a eurodollar deposit made during an Interest Period to a IBOR Loan
and (b) any required statutory and regulatory reserves for foreign loans to
United States residents.

            "IBOR Rate Loan" means an Advance for which Company has selected a
IBOR Rate.

            "Interest Period" has the meaning given in Section 2.1(e).

            "Interest Rate" means the rate of interest on the Line of Credit, as
determined pursuant to Section 2.1(d).

            "line of Credit" means the credit facility described in Section 2.1.

            "Loan" means the Line of Credit and any Advance.

            "Loan Documents" means this Agreement, the Note, and all other
documents executed by Company and required to be delivered to Bank in
connection with the Loan.

            "Merger" means the merger and reorganization described in the
Recitals.

            "Note" means the promissory note in the form of Exhibit B hereto.

            "PC Affiliates" means Physician Partners Corvallis, P.C., Physician
Partners HealthFirst, P.C., and Physician Partners Medford, P.C., each an
Oregon professional corporation.

            "Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority, or other entity of whatever nature.


            "Prime Rate" means on any day the rate per annum publicly announced
by Bank on that day at its principal office as its "prime rate of interest,"
and is not, for




                                      -3-


 
<PAGE>   4
example, the lowest rate of interest that Bank collects from any borrower or a
class of borrowers.

            "Prime Rate Loans" means an Advance for which Company has selected
the Prime Rate.

            "Security Agreement" means the security agreement in the form of
Exhibit C hereto.

      1.2   Accounting Terms. Except as otherwise provided herein, accounting
terms not specifically defined shall be construed, and all accounting
procedures shall be performed, in accordance with GAAP.


                                        
                                   SECTION 2
                         DESCRIPTION OF LINE OF CREDIT

      2.1   Line of Credit. Bank agrees, on the terms and conditions of this
Agreement and the Note, at the sole discretion of Bank, to make loans and
advances of credit ("Advances") to company from time to time on Business Days
during the period commencing on the date of this Agreement and ending on June
30, 1997 (the "Commitment Period"), in an aggregate amount not exceeding at any
one time $5,500,000. The agreement in this Section 2.1 is for a revolving
credit and within the amount and time specified, Company may borrow, prepay,
and reborrow.

      (a)   Manner of Borrowing.  Company may request an Advance on any
Business Day by providing Bank with notice of the requested Advance as provided
herein by 11:00 a.m., Portland, Oregon, time (i) on the same Business Day as
the day of the Advance in the case of Prime Rate Loans and (ii) three Business
Days prior to the day of the Advance in the case of IBOR Rate Loans. The request
for an Advance may be oral or written and must be made by a duly authorized
officer or employee and must state the date and the amount of the requested
Advance. Any such request shall be irrevocable and shall constitute a
representation and warranty that as of the date of the request (i) no Event of
Default, or no event which, with notice or lapse of time or both, would
constitute an Event of Default, has occurred and is continuing, and (ii) the
representations and warranties of Company contained in this Agreement are true
and correct as of the date of the Advance. Amounts advanced pursuant to this
Agreement shall be made available to Company by deposit to the Bank Account.
IBOR Rate Advances shall be in the amount of $500,000, plus additional
increments of $100,000. The list of officers and employees initially authorized
to request Advances and specimens of their signatures is attached hereto as
Schedule 2.1 a. Company may amend this list from time to time by supplements
executed by the president and chief financial officer and by the officer or
employee who is being added to the list. Bank may act in reliance upon any oral
or written request believed in good faith to have been authorized by any of the
Persons identified in Schedule 2.1 a, as amended from time to time.


                                      -4-
<PAGE>   5
            (b)   Note.  Bank's aggregate Commitment shall be evidenced by an
Optional Advance Revolving Line of Credit Note, maturing on the last day of the
Commitment Period, in the form of the attached Exhibit B.

            (c)   Repayment of Principal.  Company promises to repay to Bank or
its order (i) the principal amount of all IBOR Rate Loans on the last day of
the applicable Interest Periods and (ii) the principal amount of all Prime Rate
Loans on the last day of the Commitment Period.

            (d)   Interest Rate.  Company promises to pay interest on the
unpaid principal amount from the date of each Advance until such Advance shall
be due and payable in accordance with the rate option or options chosen by
Company, at the annual rate applicable on the date of the Advance equal to (i)
the Prime Rate with respect to Prime Rate Loans or (ii) the IBOR Rate plus 200
Basis Points (2%) with respect to IBOR Rate Loans.  If Company fails to state
its preference among the two interest rate options, the Prime Rate shall apply.

            (e)   Interest Period.  When selecting an IBOR Rate Loan, Company
shall also select the applicable interest period for the Advance (the "interest
period"). The Interest Period shall be for one, two, three, or six months,
beginning on the date of the IBOR Rate Loan and ending on and including the day
preceding the same day (or if there is no such same day, the day preceding the
last day) in the first, second, third, or sixth calendar month thereafter,
provided that Company shall not select an Interest Period that extends beyond
the Commitment Period

            (f)   Interest Payments.  Subject to Section 2.2(d), accrued
interest on the Advances shall be payable in arrears as follows: (i) for IBOR
Rate Loans, on the last day of each month and on the last day of the Interest
Period and (ii) for Prime Rate Loans, on the last day of each month.

            (g)   Late Charge.  If any payment is 19 days or more past due,
Company will pay a late charge of 5 percent of the delinquent payment.

            (h)   Prior Facilities. Upon satisfaction of the conditions set
forth in Section 3, the notes in the form attached as Exhibit A shall be
superseded, restated, and amended by the Note.

            2.2   Manner of Payments.

            (a)   Place of Payment.  All payments and prepayments of principal
and interest on the Line of Credit and all other amounts payable hereunder by
Company to Bank shall be made in United States dollars and in immediately
available funds to Bank at the corporate banking note department of its head
office branch at 111 S.W. Fifth Avenue, Portland, Oregon, by 1 p.m. Portland,
Oregon, time on the date due and may be withdrawn when due 


                                      -5-


<PAGE>   6
by Bank debiting the Bank Account. Company shall provide Bank with notice of any
payment or prepayment prior to 11:30 a.m. on the day of such payment.

     (b)  Setoff. Company hereby authorizes Bank, if and to the extent any
payment to be made by Company under the Loan Documents is not promptly made when
due, to set off any such payment from time to time against any of or all the
accounts of Company with Bank or any Affiliate of Bank.

     (c)  Interest Computation. All computations of interest and fees shall be
made on the basis of a year of 360 days for the actual number of days (including
the first day but excluding the last day) occurring in the period for which such
interest or fees are payable. Upon any change in the Prime Rate, the applicable
Interest Rate on all Prime Rate Loans shall simultaneously change whether or not
Company has received notice of such change.

     (d)  Payment Date. Whenever any payment hereunder or under the Note is due
on a day other than a Business Day, the payment shall be made on the next
succeeding Business Day and such extension of time shall in such case be
included in the computation of interest; provided that if the last day of an
Interest Period falls on a day other than a Business Day, payment of the IBOR
Rate Loan shall be made on the first Business Day preceding the last day of the
Interest Period.

     (e)  Application of Payments. Any payment made by Company hereunder shall
be applied first against fees, expenses, and indemnities due hereunder, if any;
second against interest due on amounts in default, if any; third, against
interest due on the Loan; and thereafter against Loan principal.

     2.3  IBOR Rate Loans.

     (a)  Renewal. Company may, subject to the terms of this Agreement, renew an
IBOR Rate Loan upon the expiration of an Interest Period, upon three Business
Days' prior notice to Bank. If Company fails to give notice of renewal, Company
shall be deemed to have selected a Prime Rate Loan to the extent of any maturing
IBOR Rate Loan.

     (b)  Prepayment. During any Interest Period, Company may not prepay the
principal amount of any IBOR Rate Loan, unless Company pays Bank at all costs,
losses, fees, and expenses incurred by Bank in connection with such repayment,
as reasonably determined by Bank.

     (c)  Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period: (i) by reason of circumstances affecting the
IBOR market generally, deposits in dollars in the applicable amounts are not
being offered to bank in the interbank markets for such Interest Period, or (ii)
the IBOR Rate will not adequately and fairly reflect the cost to Bank of
maintaining or funding its IBOR Rate Loans for such Interest Period, Bank shall
notify Company. Thereafter, until Bank notifies Company that the circumstances
giving rise to such suspension no longer exist (a) the obligations of Bank to
make IBOR Rate

                                     - 6 -
<PAGE>   7
Loans shall be suspended and (b) Company shall repay in full the then
outstanding principal amount of each IBOR Rate Loan, together with accrued
interest thereon, on the last day of the then current Interest Period applicable
to such Loan. If not then in default, Company may repay the affected IBOR Rate
Loan by requesting a Prime Rate Loan in an equal principal amount.

     (d)  Illegality. If, after the date of this Agreement, the adoption of any
applicable law, rule, or regulation, or any change therein, 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 Bank with any request or directive (whether or not
having the force of law) of any such authority, central bank, or comparable
agency shall make it unlawful or impossible for Bank to make, maintain, or fund
its IBOR Rate Loans, Bank shall forthwith give notice thereof to Company. Upon
receipt of such notice, Company shall repay in full the then outstanding
principal amount of each IBOR Rate Loan of Bank, together with accrued interest
thereon, on either (a) the last day of the then current Interest Period
applicable to such IBOR Rate Loan if Bank may lawfully continue to maintain and
fund such IBOR Rate Loans to such day or (b) immediately if Bank may not
lawfully continue to fund and maintain such IBOR Rate Loan to such day. If not
then in default, Company may repay the affected IBOR Rate Loan by requesting a
Prime Rate Loan in an equal principal amount from the Bank. Upon any such
repayment, Company also shall pay all accrued interest to the date of the
repayment, plus such additional amounts as may be necessary to compensate Bank
for any loss and any direct or indirect costs, including the cost of
re-employment of the repaid funds at lower Interest Rates.

     (e)  Increased Cost. If the adoption of any applicable law, rule, or
regulation, or any change therein, or any change in the interpretation of
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
compliance by Bank with any request or directive (whether or not having the
force of law) of any such authority, central bank, or comparable agency:

     (i)  shall subject Bank to any tax, duty, or other charge with respect to
  its IBOR Rate Loans or its obligation to make IBOR Rate Loans, or shall change
  the basis of taxation of payments to Bank of the principal of or interest on
  its IBOR Rate Loans or any other amounts due under this Agreement in respect
  to its IBOR Rate Loans, or its obligation to make IBOR Rate Loans (except for
  changes in the rate of tax on the overall net income of Bank imposed by the
  jurisdiction in which Bank's principal executive office is located); or

     (ii) shall impose or modify any reserve (including, without limitation, any
  imposed by the Board of Governors of the Federal Reserve System), special
  deposit, or similar requirement against assets of, deposits with or for the
  account of, or credit extended by Bank or

                                     - 7 -
<PAGE>   8
     shall impose on Bank any other condition affecting its IBOR Rate Loans, the
     Note, or its obligation to make IBOR Rate Loans;

and the result of any of the foregoing is to increase the cost to Bank of
making or maintaining its IBOR Rate Loans, or to reduce the amount of any sum
received or receivable by Bank under this Agreement by an amount deemed by Bank
to be material, then, within 15 days after demand by Bank, Company shall pay to
Bank such additional amount as will compensate Bank for such increased cost or
reduction. Bank will promptly notify Company of any event of which it has
knowledge, occurring after the date hereof, which will entitle Bank to
compensation pursuant to this section. A certificate of Bank claiming
compensation under this section defining such reason for said compensation and
setting forth the additional amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. If Bank demands compensation under
this section, Company may at any time, upon at least five Banking Days' prior
notice to Bank, repay in full the then outstanding IBOR Rate Loans of Bank,
together with accrued interest thereon to the date of prepayment. If not then
in default, Company may repay the affected IBOR Rate Loan by requesting a Prime
Rate Loan in an equal principal amount. Upon any such repayment, Company also
shall pay all accrued interest to the date of the repayment, plus such
additional amounts as may be necessary to compensate Bank for any loss and any
direct or indirect costs, including the cost of re-employment of the repaid
funds at lower Interest Rates.

          (f) Effect on Prime Rate Loans. If notice has been given pursuant to
Section 2.3(c) or (d) requiring the IBOR Rate Loans to be repaid, then, unless
and until Bank notifies Company that the circumstances giving rise to such
repayment no longer apply, all Loans which would otherwise be made by Bank as
IBOR Rate Loans shall be made instead as Prime Rate Loans. If Bank notifies
Company that the circumstances giving rise to such repayment no longer apply,
Company may obtain a IBOR Rate Loan from Bank on the first day of the next
succeeding Interest Period applicable to each outstanding IBOR borrowing in the
amount of the IBOR Rate Loan which would have been outstanding from Bank as
part of such IBOR borrowing as if the provisions of Section 2.3(c) or (d) had
never applied.


                                   SECTION 3
                             CONDITIONS OF LENDING

          3.1 Conditions to Loan. The obligation of Bank to make any advance 
under the Loan is subject to fulfillment of the following conditions:

          (a) Notice of Borrowing. Bank shall have received due notice of the
borrowing pursuant to Section 2.1(a).

          (b) Loan Documents. The following shall have been delivered to Bank
in form and substance reasonably satisfactory to Bank:



                                      -8-



     
<PAGE>   9
          (i)  The duly executed Note, Security Agreement, and associated
     financing statements.

          (ii)  Copies of Company's certificate of incorporation and bylaws,
     certified by the Secretary of Company as true and correct, a copy of the
     resolutions of the board of directors of Company, authorizing the
     execution and performance of the Loan Documents, certified by the Secretary
     of Company as true and correct and in full force and effect, and an
     incumbency certificate executed by the Secretary of Company specifying the
     officers authorized to execute the Loan Documents and the officers and
     employees initially authorized to request Advances.

          (iii) A certificate or certificates of the Secretary of State of the
     state of Delaware certifying the due incorporation and continued existence
     of Company under the laws of the state of Delaware, and due consummation
     of the Merger.

          (iv) Copies of the articles of incorporation and bylaws of each of
     the PC Affiliates, certified by the secretary of each as true and correct,
     a copy of the resolutions of the board of directors of each of the PC
     Affiliates, authorizing the execution and performance of the Loan Document
     to which each is a party, certified by the secretary as true and correct
     and in full force and effect, and an incumbency certificate executed by
     the secretary of each of the PC Affiliates specifying the officers
     authorized to execute Loan Documents to which each PC Affiliate is a party.

          (v) Assumption Agreement between Bank and Company relating to
     facilities described in recital D, in the form of Exhibits D through N
     hereto.

          (c) Loan Assumption Fee.  Bank shall have received payment of a loan
assumption fee of $75,000 for this facility.

          (d) Absence of Default.  At the date of the Note and each Advance, no
Event of Default and no event which, with notice or lapse of time or both,
would constitute an Event of Default, shall have occurred and be continuing or
will have occurred as a result of the making of the Loan.

          (e) Representations and Warranties.  The representations and
warranties in Section 4 hereof shall be true and correct as of the date of the
Note and as of the date of each Advance.


                                     - 9 -
<PAGE>   10
        (f) Other Information. Bank shall have received such other statements,
opinions, certificates, documents, and information with respect to the matters
contemplated by this Agreement as it may reasonably request.


                                   SECTION 4
                   REPRESENTATIONS AND WARRANTIES OF COMPANY

        To induce Bank to make each and every Advance, Company represents and
warrants to Bank that:

        4.1 Use of Advances. All Advances will be used by Company only for
working capital and general corporate purposes and not to acquire any "margin
stock" as that term is used in Regulation U of the Federal Reserve Board or for
any illegal purpose.

        4.2 Corporate Existence. Company is a duly formed and organized and
validly existing Delaware corporation and is duly qualified to transact
business in all other states where such qualification is necessary for the
proper conduct of its business or the ownership of its property. Company has
provided to Bank true and correct copies of its Certificate of Incorporation,
Bylaws, and the Certificate of Merger of the Merger.

        4.3 Authorization. The execution, delivery, and performance of the Loan
Documents by Company has been duly authorized by Company's board of directors
and any shareholder authorization required by the Company or other Persons has
been duly obtained. The resolutions of its board of directors furnished to Bank
pursuant to Section 3.1 are in full force and effect without alteration. The
Loan Documents have been executed and delivered to Bank by an officer of
Company who has been duly authorized to perform such acts.

        4.4 Enforceability. The Loan Documents are the legally valid and
binding obligations of Company, each enforceable against Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization, or similar laws affecting
the rights of creditors generally.

        4.5 Financial Information. The financial information provided by
Company to Bank is true, correct, and complete in all material respects as of
the date of such information, and no material adverse change in the business
affairs, financial condition, prospects, or property of Company has occurred
since the delivery of such financial information to Bank.

        4.6 Compliance with Laws. Company is in material compliance with all
federal, state, and local laws, regulations, and orders affecting its business
affairs and property, including Environmental Laws, the Fair Labor Standards
Act, ERISA, ADA, and the Internal Revenue Code.


                                      -10-
<PAGE>   11
        4.7 No Default. Company is not in breach of or in default under (nor
does there exist conditions which, with notice or lapse of time or both, would
constitute a breach of or a default under) the Loan Documents or any other
material contract to which it is a party or that affects or binds its property.

        4.8 Litigation. There is no litigation, investigation, or proceeding of
any nature whatsoever pending or, to Company's knowledge, threatened or
impending involving Company or its business or property that could reasonably
be anticipated to materially and adversely affect the ability of Company to
perform its obligations to Bank under the Loan Documents.


                                   SECTION 5
                        AFFIRMATIVE COVENANTS OF COMPANY

        At all times during the term of this Agreement and until payment in
full of the Note and performance of all obligations of Company under the Note
and this Agreement, Company will comply with the following affirmative
covenants:

        5.1 Corporate Status. Company will preserve its legal status and
franchises and pay all taxes and annual fees in connection therewith.

        5.2 Compliance with Law. Company will comply with all federal, state,
and local laws, regulations, and orders applicable to its business or property,
including without limitation, Environmental Laws, the Fair Labor Standards Act,
ERISA, ADA, and the Internal Revenue Code.

        5.3 Insurance. Company will obtain and maintain with responsible
carriers such worker's compensation, fire with extended coverage endorsement,
public liability, property damage, and other insurance in coverage amounts,
deductibles, and terms as may be consistent with industry practices and as may
be reasonably acceptable to Bank and will provide evidence of such insurance to
Bank as and when required by Bank. Alternatively, Company may self insure, so
long as such self insurance is on terms consistent with industry practices and
reasonably acceptable to Bank.

        5.4 Payment of Obligations. Company will pay and perform when due all
material obligations to all third Persons except for those obligations being
contested by Company in good faith, by appropriate means and with an adequate
reserve being maintained for payment in the event of an adverse outcome.

        5.5 Taxes. Company will file all tax returns required by law to be
filed and will pay all taxes and similar government impositions when due except
for those taxes and impositions being contested by Company in good faith, by
appropriate means and with an adequate reserve being maintained for payment in
the event of an adverse outcome.


                                      -11-

<PAGE>   12
                5.6     Financial Information. Company shall provide periodic
financial statements, information, and reports as reasonably requested by Bank.
All such statements, information, and reports shall be complete and accurate in
all material respects. At a minimum, Company will provide Bank:

                (a)     Year-end Audited Report. As soon as available and not
later than 120 days after the close of each fiscal year, a true copy of
Company's Financial Statements for such year audited by a recognized firm of
independent certified public accountants and in a form and level of detail
acceptable to Bank, together with an unqualified opinion of such accountants
that such Financial Statements have been prepared in accordance with GAAP and
present fairly Company's financial position and the results of its operations
and cash flows for the period covered thereby.

                (b)     Interim Financial Statements. As soon as available, and
in any event within 20 days after the end of each calendar month, the unaudited
balance sheet and statements of income, cash flows, and retained earnings of
Company as of the end of such month, accompanied at the end of each calendar
quarter by a certificate of the chief financial officer of Company stating
that: (i) such unaudited balance sheet and statements of income, cash flows,
and retained earnings have been prepared in accordance with GAAP and present
fairly the financial position and the results of operations of Company as of
the end of and for such quarter subject to normal year-end adjustments, (ii) as
of the date of such certificate, no Event of Default and no event which, with
notice or lapse of time or both, would constitute an Event of Default, has
occurred and is continuing, and (iii) the representations and warranties in
Section 4 are true and correct as though made as of the date of such
certificate.

                (c)     SEC Filings. Copies of any documents or reports Company
files with the Securities and Exchange Commission.

                (d)     Other Information. All other statements, reports, and
other information as Bank may reasonably request concerning the financial
condition and business affairs of Company.

                (e)     GAAP. The Financial Statements and all financial books
and records of Company shall be maintained or prepared by the application of
GAAP, with such changes in GAAP as are approved by its independent public
accountants. The Financial Statements shall present fairly the financial
position of Company at their respective dates and the results of its operations
and cash flows for the periods covered thereby, subject, with respect to
interim financial statements, to year-end audit adjustments, consisting of only
normal recurring accruals, necessary for a fair statement of the results of
operations and cash flows for the periods covered thereby.



                                      -12-
<PAGE>   13
      5.7   Financial Covenants

      (a)   Current Ratio. Company will have a ratio of current assets to
current liabilities of not less than .75:1 at the date of the first Advance, not
less than .85:1 at March 31, 1997, and not less than .9:1 at June 30, 1997.

      (b)   Tangible Net Worth. Company will have a minimum tangible net worth
(net book value minus intangible asset value) of $4,900,000 at the date of the
first Advance, $5,500,000 at March 31, 1997, and $6,200,000 at June 30, 1997.

      (c)   Cash Flow Coverage. Company will maintain a cash flow coverage
ratio, measured on a cumulative basis as of the end of each of Company's fiscal
quarters, of not less than 1.2:1. Cash flow coverage ratio shall mean, for the
relevant period, the ratio of (i) net income after taxes plus depreciation plus
amortization to (ii) the current portion of long-term debt plus dividends and
distributions plus internally funded cash capital expenditures.

      5.8   Inspection. Company will keep accurate books and records relating
to its business at its corporate offices located in Portland, Oregon. Bank will
have the right to inspect all Company's financial records at all reasonable
times and to discuss with Company's accounting employees and outside
accountants such records and the Financial Statements. Bank will give prior
notice to Company of its intention to discuss such matters with Company's
outside accountants in order to provide Company the opportunity to be present
at such discussions. Bank will have the right to make extracts or photocopies
of all of Company's books and records. The phrase "books and records"  is used
in its broadest sense, and it includes data compilations held on disks, tapes,
and other media. If such information is so stored, Company will provide the
hardware and disk operating systems necessary for retrieval, review, and
reprinting of such information.

      5.9   Notice of Default. Company will notify Bank in writing immediately
if it becomes aware of the occurrence of any Event of Default or of any fact,
condition, or event that with the giving of notice or passage of time or both,
would become an Event of Default (an "incipient default") or if it becomes
aware of any material adverse change in the business prospects, financial
condition (including, without limitation, proceedings in bankruptcy,
insolvency, reorganization, or the appointment of a receiver or trustee), or
results of operations of Company or of the failure of Company to observe any of
its undertakings hereunder or under any other Loan Document. Such notice shall
include the manner and methods Company proposes, and any action Company has
taken, to cure the default or incipient default.
<PAGE>   14
                                   SECTION 6
                         NEGATIVE COVENANTS OF COMPANY

      At all times during the term of this Agreement and until payment in full
of the Note and performance of all obligations of Company under the Note and
this Agreement, Company will comply with the following negative covenants:

      6.1 Change in Corporation. Company will not change its name, enter into
any merger, consolidation, reorganization, or recapitalization, or reclassify
its capital stock without the prior written consent of Bank, which consent will
not be unreasonably withheld.

      6.2 Sale of Assets or Operations. Company will not sell, transfer, lease,
or otherwise dispose of all or (except in the ordinary course of business) any
material part of its assets. Company will not sell or otherwise dispose of, or
for any reason cease operating, any of its divisions, franchises, or lines of
business.

      6.3  Negative Pledge. Company will not mortgage, assign, sell, transfer,
pledge, grant, or permit to exist any lien or security interest upon any of its
accounts receivable or currently unencumbered assets of any kind, now existing
or hereafter arising.

      6.4 Accuracy of Information. Company will not furnish Bank any certificate
or other document that contains any untrue statement of material fact or that,
taken together with all other information furnished, omits to state a material
fact necessary to make it not misleading in light of the circumstances under
which it was furnished.

      6.5 Margin Stock. Company will not directly or indirectly apply any part
of the proceeds of the Advances to the purchasing or carrying of any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, or any regulations, interpretations, or rulings
thereunder.

      6.6 Key Contracts. Company will not amend or terminate the Practice
Management Agreement between it and the PC Affiliates, or any subsequent
Practice Management Agreements it may enter into with other Person(s) without
the written consent of Bank, which consent shall not be unreasonably withheld.

                                   SECTION 7
                               EVENTS OF DEFAULT

      7.1 Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" hereunder:

      (a) Any failure of Company to make any principal or interest payment on
the Note when due;

                                      -14-
<PAGE>   15

          (b)  Any failure of Company to make any payments (other than as
specified in Section 7.1(a) under the Note or this Agreement when due and such
failure continues for more than 10 days after written notice thereof by Bank to
Company;

          (c)  Default (other than as stated in Section 7.1(a) and 7.1(b)
above) in the performance or observance by Company of any of the covenants,
agreements, terms, or promises contained in the Loan Documents and such default
is not remedied within 30 days after written notice thereof by Bank to Company;

          (d)  Any representation, warranty, covenant, statement, certificate,
or report made herein or furnished in connection with the Loan Documents proves
to have been false or misleading in any material respect as of the time made
or furnished;

          (e)  Any debt to third Persons for which Company is liable as
principal, guarantor, or otherwise becomes due by acceleration or formal demand
and is not promptly paid by Company or Company has been declared in default
under any agreement binding on it under which Company has borrowed money or
otherwise obtained an extension of credit from a lender other than Bank;

          (f)  Company defaults on any other present or future debt to Bank or
any Affiliate of Bank and such debt becomes due by acceleration or formal
demand;

          (g)  Company fails to meet its minimum funding requirements under
ERISA with respect to any plan, or any plan becomes the subject of voluntary or
involuntary termination proceedings which may result in a liability to the
Pension Benefit Guaranty Corporation in an amount which is material in
relation to Company's net worth;

          (h)  Company (i) applied for or consents to the appointment of, or
the taking of possession by, a receiver, custodian, trustee, or liquidator of
itself or of all or a substantial part of its property, (ii) admits in writing
its inability to pay, or generally not be paying, its debts as they become due,
(iii) makes a general assignment for the benefit of creditors, (iv) commences a
voluntary action under the Federal Bankruptcy Code (as now or hereafter in
effect), (v) files a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, (vi) fails to controvert in a timely or appropriate
manner, or acquiesces or consents in writing to, any petition filed against it,
in an involuntary action under the Bankruptcy Code, or (vii) takes any
corporate action for the purpose of effecting any of the foregoing;

          (i)  Either (i) a  proceeding or case is commenced against Company,
without its consent, in any court of competent jurisdiction, seeking the
liquidation, reorganization, dissolution, wind-up, or composition or
readjustment of the debts of Company, (ii) a receiver, trustee, custodian,
liquidator, or the like is appointed for Company, or for all or a substantial
part of its assets, or (iii) relief is granted to Company under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, and such proceeding or case continues undismissed, or
an order, judgment, or decree


                                      -15-
<PAGE>   16
approving or ordering any of the foregoing is entered and continues unstayed and
in effect for any period of 60 days, or an order for relief against Company is
entered in an involuntary case under the Bankruptcy Code; or

     (j)  Company suffers any material adverse change in its business
prospects, financial condition, or results of operations.

     7.2  Bank's Rights and Remedies on Default.  Without in any way
prejudicing Bank's demand rights under the Note, if any Event of Default
occurs and continues beyond any applicable cure period as stated in Section
7.1(b), (c), or (i), or if any Event of Default occurs under Section 7.1(a),
(e), (f), (g), (h), or (j), Bank may, at its option, do any one or more of the
following:

     (a)  Declare the Note and all other indebtedness of Company to Bank
forthwith due and payable, whereupon the same shall become forthwith due and
payable without further notice of any kind and without presentment, demand, or
protest, all of which are hereby expressly waived;

     (b)  Proceed to enforce Bank's rights against Company by any appropriate
proceeding, whether for the specific performance of, or for an injunction
against a violation of, any term hereof or promise herein, in the Note or in
any other Loan Document or in aid of the exercise of any power granted hereby
or thereby or by law;

     (c)  Exercise any rights of Bank under the Note;

     (d)  Set off any deposits or other sums due from Bank to Company against
Company's obligations under this Agreement, the Note, or any other Loan
Documents; or

     (e)  Take any other action permitted in any agreement with Company and
take any other action permitted by law.

     7.3  Arbitration.

     a.  Either Bank or Company may require that all disputes, claims,
counterclaims, and defenses, including those based on or arising from any
alleged tort ("Claims") relating in any way to this Agreement, the Note, or any
transaction of which this Agreement is a part (the "Loan"), be settled by
binding arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association and Title 9 of the U.S. Code. All Claims will
be subject to the statutes of limitation applicable if they were litigated.
This provision is void if the Loan, at the time of the proposed submission to
arbitration, is secured by real property located outside of Oregon or
Washington, or if the effect of the arbitration procedure (as opposed to any
Claims by Company) would be to materially impair Bank's ability to realize on
any collateral securing the Loan.




                                      -16-
<PAGE>   17
     b.   If arbitration occurs and each party's Claim is less than $250,000,
one neutral arbitrator will decide all issues; if any party's Claim is more
than $250,000, three neutral arbitrators will decide all issues. All arbitrators
will be active Oregon State Bar members in good standing. All arbitration
hearings will be held in Portland, Oregon. In addition to all other powers, the
arbitrator(s) shall have the exclusive right to determine all issues of
arbitrability and shall have the authority to issue subpoenas. Judgment on any
arbitration award may be entered in any court with jurisdiction.

     c.   If either party institutes any judicial proceeding relating to the
Loan, such action shall not be a waiver of the right to submit any Claim to
arbitration. In addition, whether or not the parties arbitrate any Claim, each
has the right before, during, and after any arbitration to exercise any number
of the following remedies, in any order or concurrently: (i) setoff; (ii)
self-help repossession of any collateral; (iii) judicial or non-judicial
foreclosure against any real or personal property collateral; and (iv)
provisional remedies, including injunction, appointment of receiver,
attachment, claim, and delivery and replevin.

     d.   This arbitration clause cannot be modified or waived by either party
except in writing, which writing must refer to this arbitration clause and be
signed by both Bank and Company.

     7.4  Rights and Remedies Cumulative.  All rights and remedies on this
Agreement and on the Notes are cumulative and in addition to any other remedy
Bank may have by agreement, at law, or in equity. Partial exercise of any right
or remedy shall not limit or restrict Bank's subsequent exercise of such right
or remedy nor shall its restrict Bank's contemporaneous or subsequent exercise
of any other right or remedy.

     7.5  No Waiver.  No failure to delay of Bank in exercising any right
hereunder shall operate as a waiver of that right or any other right. No
modification or waiver of any provision of this Agreement, the Note, or any
other document or agreement executed shall be effective unless in writing, and
then only in the specific instance and for the purpose given. No notice or
demand on Company shall entitle Company to any other notice or demand in other
similar circumstances.

     7.6  Payment of Costs.  Company agrees to pay Bank's reasonable costs and
disbursements (including reasonable attorney fees) incurred in documentation of
this Agreement and associated facilities assumed in or affected by the Merger.
In addition, in case of a default in the payment of any principal or interest
payment under the Note, or in case of a default under this Agreement, the Note,
or any other document or agreement executed hereunder, Company shall pay Bank's
reasonable costs and expenses incurred in connection therewith (including
reasonable attorney fees), and in the event litigation or arbitration is
commenced to enforce any term of any such agreement, the losing party will pay
to the prevailing party such amounts as shall be sufficient to cover the cost
and expense of collection or enforcement, including reasonable attorney fees
and costs at arbitration proceedings, trial, and on appeal.


                                      - 17 -
<PAGE>   18

                                   SECTION 8
                                 MISCELLANEOUS

          8.1  Survival. All agreements, representations, and warranties
contained herein or made in writing by Company or any of its officers in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement, any investigation at any time made by Bank or on
its behalf, the making of the Loan, and the delivery of the Note. All statements
contained in any certificate or other instrument delivered by Company or any of
its officers pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed representations and warranties of Company hereunder.

          8.2  Notices. All communications pursuant to this Agreement shall be
made in writing by telecopy, hand delivery, or by U.S. First Class mail
addressed to the appropriate party at the address shown above. A communication
shall be effective, if given by telecopy, upon telecopy transmission to the
number shown above, with oral advice of transmission and a confirmation copy
sent by U.S. first class mail addressed to the appropriate party at the address
shown above. A communication shall be effective, if given by hand delivery,
upon delivery to the appropriate party's address shown above. A communication
shall be effective, if given by mail, when actually delivered at the address
specified in this section, or if delivery is refused or otherwise cannot be
made, then on the third day following the day when the communication, properly
addressed and postage prepaid was deposited in the U.S. mails.

          8.3  Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties, their successors, and permitted
assigns.

          8.4  Governing Law. This Agreement, the Note, and any other documents
or agreements executed hereunder shall be governed by Oregon law.

          8.5  Assignment and Participation. Company may not assign its rights
under the Note or this Agreement, nor delegate any duties or obligations
hereunder or under the Note without the prior written consent of Bank. Bank
may, at any time, transfer its commitment hereunder, to subsidiaries or
Affiliates, and may at any time assign, grant participation in, or otherwise
dispose of all or part of its rights and interests hereunder and under the Note.

          8.6  Modification; Prior Agreements; Headings. This Agreement may not
be modified or amended except by an instrument in writing signed by Company and
Bank. This Agreement taken together with the other Loan Documents reflects and
sets forth the entire agreement and understanding of the parties, and
supersedes all prior agreements and understanding relating to the subject
matter hereof. The headings in this Agreement are for the purpose of reference
only and shall not limit or otherwise affect any of the terms hereof.



                                      -18-

<PAGE>   19

               8.7 Counterparts. This Agreement may be executed in any number
of counterparts, and any single counterpart or set of counterparts signed, in
either case, by all the parties hereto shall constitute a full and original
instrument, but all of which shall together constitute one and the same
instrument.

               8.8 Statutory Notice. UNDER OREGON LAW, MOST AGREEMENTS,
PROMISES, AND OTHER COMMITMENTS MADE BY BANK AFTER OCTOBER 3, 1989, CONCERNING
LOANS OR OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY, OR
HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN
WRITING, EXPRESS CONSIDERATION, AND BE SIGNED BY BANK TO BE ENFORCEABLE.

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

                                        PHYSICIAN PARTNERS, INC.


                                        By /s/ DAVID M. GOLDBERG
                                           -------------------------------------
                                           David M. Goldberg, President



                                        UNITED STATES NATIONAL BANK OF OREGON


                                        By /s/ AL MUNSON        
                                           -------------------------------------
                                           Al Munson, Vice President









                                      -19-




<PAGE>   20
                         CORPORATE RESOLUTION TO BORROW
<TABLE>
<CAPTION>


PRINCIPAL     LOAN DATE     MATURITY     LOAN NO.     CALL     COLLATERAL     ACCOUNT     OFFICER     INITIALS
              02-01-97
--------------------------------------------------------------------------------------------------------------
<S>           <C>             <C>         <C>         <C>         <C>         <C>         <C>          <C>
--------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to
                          any particular loan or item.
--------------------------------------------------------------------------------------------------------------
</TABLE>

BORROWER: PHYSICIAN PARTNERS, INC.  LENDER:UNITED STATES NATIONAL BANK
          111 SW COLUMBIA STREET,          OF OREGON
          SUITE 725                        CORPORATE BANKING DIVISION
          PORTLAND, OR 97201               PL-7 OREGON COMMERCIAL LOAN SERVICING
                                           555 S.W. OAK
                                           PORTLAND, OR 97204
--------------------------------------------------------------------------------

I, the undersigned Secretary of Assistant Secretary of PHYSICIAN PARTNERS, INC.
(the "Corporation"), HEREBY CERTIFY that the Corporation is organized and
existing under and by virtue of the laws of the State of Delaware as a
corporation for profit, with its principal office at 111 SW COLUMBIA STREET,
SUITE 725, PORTLAND, OR 97201, and is duly authorized to transact business in
the State of Oregon.

I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly
called and held on February 1, 1997, at which a quorum was present and voting,
or by other duly authorized corporate action in lieu of a meeting, the following
resolutions were adopted:

BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:

<TABLE>
<CAPTION>  

NAMES             POSITIONS               ACTUAL SIGNATURES
----              ---------               -----------------
<S>               <C>                     <C>
Tim Dupell        C.F.O.                  /s/ TIM DUPELL
David Goldberg    CEO                     /s/DAVID GOLDBERG

</TABLE>

acting for and on behalf of the Corporation and as its act and deed be and they
hereby are authorized and empowered:

     Borrow Money. To borrow from time to time from UNITED STATES NATIONAL BANK
     OF OREGON ("Lender"), on such terms as may be agreed upon between the
     Corporation and Lender, such sum or sums of money as in their judgment
     should be borrowed, without limitation.

     Execute Notes. To execute and deliver to Lender the promissory note or
     notes, or other evidence of credit accomodations of the Corporation, on
     Lender's forms, at such rates of Interest and on such terms as may be
     agreed upon, evidencing the sums of money so borrowed or any indebtedness
     of the Corporation to Lender, and also to execute and deliver to Lender one
     or more renewals, extensions, modifications, refinancings, consolidations,
     or substitutions for one or more of the notes, any portion of the notes, or
     any other evidence of credit accomodations.

     Grant Security. To mortgage, pledge, transfer, endorse, hypothecate, or
     otherwise encumber and deliver to Lender, as security for the payment of
     any loans or credit accomodations so obtained, any promissory notes so
     executed (including any amendments to or modifications, renewals, and
     extensions of such promissory notes), or any other or further indebtedness
     of the Corporation to Lender at any time owing, however the same may be
     evidenced, any property now or hereafter belonging to the Corporation or in
     which the Corporation now or hereafter may have an interest, including
     without limitation all real property and all personal property (tangible or
     intangible) of the Corporation. Such property may be mortgaged, pledged,
     transferred, endorsed, hypothecated, or encumbered at the time such loans
     are obtained or such indebtedness is incurred, or at any other time or
     times, and may be either in addition to or in lieu of any property
     theretofore mortgaged, pledged, transferred, endorsed, hypothecated, or
     encumbered.

     Execute Security Documents. To execute and deliver to Lender the forms of
     mortgage, deed of trust, pledge agreement, hypothecation agreement, and
     other security agreements and financing statements which may be submitted
     by Lender, and which shall evidence the terms and conditions under and
     pursuant to which such liens and encumbrances, of any of them, are given;
     and also to execute and deliver to Lender any other written instruments,
     any entitled paper, or any other collateral, of any kind or nature, which
     they may in their discretion deem reasonably necessary or proper in
     connection with of pertaining to the giving of the liens and encumbrances.

     Negotiate items. To draw, endorsed, and discount with Lender all drafts,
     trade acceptances, promissory notes, or other evidences of indebtedness
     payable to or belonging to the Corporation in which the Corporation may
     have an interest, and either to receive cash for the same or to cause such
     proceeds to be credited to the account of the Corporation with Lender, or
     to cause such other disposition of the proceeds derived therefrom as they
     may deem advisable.

     Further Acts. In the case of lines of credit, to designate additional or
     alternate individuals as being authorized to request advances thereunder,
     and in all cases, to do and perform such other acts and things, to pay any
     and all fees and costs, and to execute and deliver such other documents and
     agreements as they may in their discretion deem reasonably necessary or
     proper in order to carry into effect the provisions of these Resolutions.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions and hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Lender may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect
at the time notice is given.

BE IT FURTHER RESOLVED, that the Corporation will notify Lender's address shown
above (or such other address as Lender may designate from time to time) prior
to any (a) change in the name of the Corporation, (b) change in the assumed
business name(s) of the Corporation, (c) change in the management of the
Corporation, (d) change in the authorized signer(s), (e) conversion of the
Corporation to a new or different type of business entity, or (f) change in any
other aspect of the Corporation that directly or indirectly relates to any
agreements between the Corporation and Lender. No change in the name of the
Corporation will take effect until after Lender has been notified.

I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Corporation; and
that the Resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever. The Corporation has no corporate seal, and
therefore, no seal is affixed to this certificate.

IN TESTIMONY WHEREOF, I have hereunto set my hand on February 1, 1997 and
attest that the signatures set opposite the names listed above are their
genuine signatures.

                  CERTIFIED TO AND ATTESTED BY:

                  /s/ DAVID M. GOLDBERG
                  ------------------------------

                  /S/ TIM DUPELL
                  ------------------------------

NOTE: In case the Secretary or other certifying officer is designated by the
[ILLEGIBLE]

<PAGE>   21
                            PHYSICIAN PARTNERS, INC.

$7,500,000.00                                                   Portland, Oregon
                                                                   March 7, 1997


                                OPTIONAL ADVANCE
                         REVOLVING LINE OF CREDIT NOTE


     For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned ("Company") promises and agrees to pay to the
order and assigns of United States National Bank of Oregon ("Bank") at Oregon
Corporate Banking, 111 S.W. Fifth Avenue, Suite 400, P.O. Box 4412, Portland,
Oregon 97208 (or at such other address as Bank may hereafter specify in writing
from time to time): (1) on the earlier of demand or June 30, 1997, the total
unpaid principal amount, not to exceed Seven Million Five Hundred Thousand
Dollars, advanced by Bank from time to time under this Note, (2) on the earlier
of demand or monthly, interest on the outstanding balance of all advances under
this Note at either the Prime Rate or the IBOR Rate plus 200 basis points, as
designated by Company in accordance with and at the time and on the terms
described in the Credit Agreement dated as of February 1, 1997, between Company
and Bank (as amended from time to time, the "Loan Agreement"), and (3) when and
as due, fees, costs, and disbursements provided for in the Loan Agreement and
this Note.

     This Note is a revolving loan note, so amounts may be borrowed, repaid,
and reborrowed, provided that all advances under this Note shall be at the sole
discretion of Bank. In addition, no amounts shall be advanced under this Note
if, as a result of such advance, the total principal amount outstanding under
this Note would exceed $7,500,000. No advance shall be made under this Note
after June 30, 1997. Unless payment in full shall have been previously demanded
or made, Company shall pay the entire outstanding principal amount together
with all accrued interest on this Note, on June 30, 1997.

     Repayment of the indebtedness evidenced by this Note is secured by the
collateral granted in the Security Agreement and is subject to prepayment and
acceleration pursuant to, and could otherwise become governed by, the terms of
the Loan Agreement and the agreements and instruments required thereunder.

     Capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed thereto in the Loan Agreement.




                                      -1-
<PAGE>   22
          Company also promises and agrees to pay on demand the costs and
disbursements, including reasonable attorney fees, incurred by Bank in
collecting this Note and/or in foreclosing on the collateral securing payment
of this Note, whether or not a civil action, arbitration proceeding, or
insolvency proceeding or claim is commenced, tried, or appealed, plus interest
thereon at the Prime Rate from the date of the demand until payment is
received.

          Company hereby waives acceptance, presentment, demand, diligence,
protest, nonpayment, dishonor, and notice of any of the foregoing and consents
to impairment of subrogation rights and of collateral. Company acknowledges
that forbearance by Bank, including any failure to make demand or other failure
by Bank to exercise any right or remedy upon demand or default, shall not
constitute a waiver or grounds for a claim of estoppel.

     STATUTORY NOTICE:  Under Oregon law, most agreements, promises, and
     commitments made by Lender after October 3, 1989, concerning loans and
     other credit extensions which are not for personal, family, or household
     purposes or secured solely by the borrowers' residence must be in writing,
     express consideration, and be signed by Lender to be enforceable.


                                        PHYSICIAN PARTNERS, INC.

                                        By: /s/ DAVID M. GOLDBERG
                                            ----------------------------
                                            David M. Goldberg, President 



<PAGE>   23
                         AMENDMENT TO CREDIT AGREEMENT

Dated effective:    August 25, 1997

Parties:  PHYSICIAN PARTNERS, INC.                                  ("Borrower")

And:      UNITED STATES NATIONAL BANK OF OREGON                         ("Bank")


Recitals:

A.   Bank has extended credit to Borrower pursuant to the terms of a Credit
Agreement dated as of February 1, 1997 ("Credit Agreement").

B.   The parties wish to amend the Credit Agreement as set forth in this
Amendment.

C.   Capitalized terms not otherwise defined herein shall have the meanings
given to them in the Credit Agreement.

The parties therefore agree as follows:

1.   DEFINITIONS. Definitions for the words "Business Day", "IBOR Rate", "IBOR
Rate Loan" and "Note" are hereby deleted and the following definitions are added
to Section 1.

     1.1  " "Business Day" means any day other than a Saturday, Sunday, or other
day that commercial banks in Portland, Oregon or New York City are authorized or
required by law to close; provided, however that when used in connection with a
LIBOR Rate, LIBOR Rate Loan or LIBOR Interest Period such term shall also
exclude any day on which dealings in U.S. dollar deposits are not carried on in
the London interbank market.

     1.2  " "Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP."

     1.3  " "Funded Debt" means (a) all obligations evidenced by notes, bonds,
debentures or similar instruments and all other indebtedness with respect to
borrowed money; (b) all obligations as lessee under Capital Leases; (c) all
obligations for the deferred purchase price of any property or assets (excluding
short term trade payables incurred in the ordinary course of business and not
more than 90 days past due); and (d) all obligations under conditional sales
contracts or other title retention agreements, other than operating leases."

     1.4  " "LIBOR Borrowing Rate" means, for any specified LIBOR Interest
Period, the LIBOR Rate plus the applicable Margin."


                                      -1-

<PAGE>   24
     1.5  " 'LIBOR RATE' means, for any LIBOR Interest Period, the rate per
annum (computed on the basis of a 360-day year and the actual number of days
elapsed and rounded upward to the nearest 1/16 of 1%) established by Bank as its
LIBOR Rate, based on Bank's determination, on the basis of such factors as Bank
deems relevant, of the rate of interest at which U.S. dollar deposits would be
offered to U.S. Bank in the London interbank market at approximately 11 a.m.
London time on the date which is two Business Days prior to the first day of
such LIBOR Interest Period for delivery on the first day of such LIBOR Interest
Period for the number of months therein; provided, however, that the LIBOR Rate
shall be adjusted to take into account the maximum reserves required to be
maintained for Eurocurrency liabilities by banks during such LIBOR Interest
Period as specified in Regulation D of the Board of Governors of the Federal
Reserve System or any successor regulation."

     1.6  " 'LIBOR Rate Loan' means an Advance for which Company has selected a
LIBOR Rate."

     1.7  " 'Margin' means (a) for the period from the closing date through
September 30, 1997, 1.60 percent for the LIBOR Borrowing Rate; and (b)
thereafter, the percentage per annum set forth below opposite the Maximum Funded
Debt/EBITDAR Ratio.

<TABLE>
<CAPTION>
                                                               Commitment Fee
  Maximum Funded Debt/EBITDAR Ratio       LIBOR Margin             Margin
  ---------------------------------       ------------             ------
<S>                                       <C>                      <C>
Greater than 2.00 to 1.0                     1.85%                  .375%

Equal to or less than 2.0 to 1.0
  or greater than 1.5 to 1.0                 1.60%                  .25%

Equal to or less than 1.5 to 1.0             1.25%                  .25%
</TABLE>


The Margin shall be determined as of the last day of each fiscal quarter based
upon the compliance certificate furnished not later than the time set forth in
Section 5.6 and shall be applicable to the LIBOR Borrowing Rate as of the first
day of any LIBOR Interest period commencing after such time; provided however,
that if any compliance certificate is not timely furnished to Bank and a default
rate is not applicable, the Margin shall automatically increase, as of the time
set forth above to the highest rate set forth herein."

     1.8  " 'Note' means the promissory note described in Section 2.1(b)."

     1.9  " 'Unfunded Capital Expenditures' means for any time period the sum of
the purchase price of all fixed assets acquired during such time period minus
the sum of all long-term debt (whether payable to the Seller or any other
person) incurred to finance the acquisition of such fixed assets."

2.   LINE OF CREDIT. The first sentence of Section 2.1 is hereby deleted and the
following is substituted therefor:


                                      -2-

<PAGE>   25
      "Bank agrees, on the terms and conditions of this Agreement and the Note,
      to make loans and advances of credit ("Advances") to Company from time to
      time on Business Days during the period commencing on the date of this
      Agreement and ending on July 31, 1999 (the "Commitment Period"), in an
      aggregate amount not exceeding at any one time $15,000,000."

3.    TERMS. All references to the terms "IBOR", "IBOR Rate Loan" and "IBOR
Rate" contained in the Credit Agreement are deleted and the terms "LIBOR",
"LIBOR Rate Loan" and "LIBOR Rate" are substituted therefor.

4.    MANNER OF BORROWING. The fifth sentence of Section 2.1(a) is hereby
deleted and the following is substituted therefor:

      "LIBOR Rate Advances shall be in the amount of $500,000, plus additional
      increments of $500,000."

5.    NOTE. Exhibit B referred to in Section 2.1(b) is hereby replaced with
Exhibit B attached hereto.

6.    INTEREST RATE. Clause (ii) of Section 2.1(d) is hereby deleted and the
following is substituted therefor: "(ii) the LIBOR Borrowing Rate with respect
to LIBOR Rate Loans."

7.    INTEREST PERIOD. The words "three, or six" and "third, or sixth" are
deleted from the second sentence in Section 2.1(e) and replaced with "or three"
and "or third", respectively.

8.    FACILITY LOAN FEE. The following is added to Section 3.1(c):

      "Bank shall have received payment of a facility loan fee of $90,000,
      payable in installments of $11,250, the first of which is due upon
      execution of this Amendment. The remaining payments shall be due on
      November 1, 1997, February 1, 1998, May 1, 1998, August 1, 1998, November
      1, 1998, February 1, 1999 and May 1, 1999, respectively. Bank shall have
      received payment of a commitment fee on the unused portion of the Line of
      Credit based on the applicable Commitment Fee Margin set forth in the
      definition of Margin, payable quarterly in arrears beginning October 30,
      1997."

9.    CONDITIONS TO ACQUISITION. The following Section 3.2 is added to the
Credit Agreement:

      "3.2  Conditions to Acquisitions. In addition to the conditions contained
      in Section 3.1, the obligation of Bank to make any Advance under the Loan
      for the purpose of making an acquisition in the physician practice
      management industry is subject to fulfillment of the following conditions:


                                      -3-
<PAGE>   26

          (a)  Borrower is in compliance with all terms and conditions of the
               credit agreement.

          (b)  Bank shall have received pro forma financials that include the
               proposed acquisition and reflect Borrower's continued compliance
               with the financial covenants contained herein.

          (c)  No more than three acquisitions may be undertaken in any twelve
               month period."

10.  FINANCIAL COVENANTS. Section 5.7 is deleted in its entirety and the
following is substituted therefor:

     "5.7 Financial Covenants.

          (a)  Maximum Funded Debt/EBITDAR Ratio. Company will maintain a
               maximum funded debt/EBITDAR ratio of not more than 3.0 to 1.0.
               This ratio shall be measured quarterly. For purposes of
               calculating this ratio: a) as of June 30, 1997, EBITDAR shall be
               an amount equal to EBITDAR for such fiscal quarter multiplied by
               four, b) as of September 30, 1997, EBITDAR shall be an amount
               equal to EBITDAR for the two consecutive fiscal quarters ending
               on such date multiplied by two; c) as of December 31, 1997,
               EBITDAR shall be an amount equal to EBITDAR for the three
               consecutive fiscal quarters ending on such date multiplied by
               1.333; and d) as of March 31, 1998, and the last day of each
               fiscal quarter thereafter for the four consecutive fiscal
               quarters ending on such day of each fiscal quarter thereafter
               for the four consecutive fiscal quarter period ending on such
               date. Funded debt/EBITDAR ratio shall mean, for the relevant
               period, the ratio of (i) all liabilities for borrowed money plus
               all Capital Lease obligations to (ii) earnings before interest,
               income taxes, depreciation, amortization and rental/lease
               expense ("EBITDAR").

          (b)  EBITDAR/Interest and Lease Expense Ratio. Company will maintain
               an EBITDAR/interest and lease expense ratio of not less than 1.8
               to 1.0 as of the last day of the fiscal quarter ending December
               31, 1997 and 2.0 to 1.0 on the last day of each fiscal quarter
               thereafter. EBITDAR/interest and lease expense ratio shall mean,
               for the relevant period, the ratio of (i) EBITDAR to (ii)
               interest plus leases and rents.

          (c)  Capital Expenditures. Company shall not make Unfunded Capital
               Expenditures which exceed $3,000,000 (a) from the date of this
               amendment through December 31, 1997, and (b) $4,000,000 in any
               fiscal year thereafter.


                                      -4-
<PAGE>   27
          (d)  Total Debt/Total Capital Ratio.  Company will maintain a ratio
               of (a) Funded Debt to (b) the sum of (i) Funded Debt plus (ii)
               shareholder's equity of not more than .70 to 1.0 as of the last
               day of the fiscal quarter ending December 31, 1997. Thereafter
               the ratio shall be .60 to 1.0."

11.  REAFFIRMATION.  Borrower acknowledges and agrees to all terms and
conditions of this agreement and reaffirms the representations and warranties
in each of the documents executed by Borrower, in connection with any
indebtedness of Borrower to Bank ("Documents"). Borrower acknowledges and
agrees that: (a) except as amended previously or herein, each Document is and
shall remain valid and enforceable in accordance with its terms and (b) it
does not have any defenses, setoffs, counterclaims or claims for recoupment
against the indebtedness represented by such Documents.

12.  NO OTHER MODIFICATIONS.  The parties agree that except as modified
previously or by this instrument, all of the terms and provisions of the Credit
Agreement shall remain in full force and effect.

13.  STATUTORY DISCLOSURE.  BY OREGON STATUTE (ORS 41.580), THE FOLLOWING
DISCLOSURE SHALL BE MADE:

UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY LENDERS
AFTER OCTOBER 31, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE
BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY
THE LENDER TO BE ENFORCEABLE.

14.  RECEIPT.  Borrower acknowledges receipt of a completed copy of this
Agreement.


PHYSICIAN PARTNERS, INC.                  UNITED STATES NATIONAL BANK OF 
                                          OREGON


By: /s/ TIM DUPELL                        By: AL MUNSON
    ---------------------------------         ------------------------------
    Tim Dupell, C.F.O., Secretary and         Al Munson, Vice President
    Treasurer



                                      -5-
<PAGE>   28
                                                                       EXHIBIT B

                            PHYSICIAN PARTNERS, INC.

$15,000,000                                                     Portland, Oregon
                                                                 August 25, 1997

                                OPTIONAL ADVANCE
                         REVOLVING LINE OF CREDIT NOTE

     For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned ("Company") promises and agrees to pay to the
order and assigns of United States National Bank of Oregon ("Bank") at Oregon
Corporate Banking, 111 S.W. Fifth Avenue, Suite 400, P.O. Box 4412, Portland,
Oregon 97208 (or at such other address as Bank may hereafter specify in writing
from time to time): (1) on July 31, 1999, the total unpaid principal amount, not
to exceed Fifteen Million Dollars, advanced by Bank from time to time under this
Note, (2) monthly, interest on the outstanding balance of all advances under
this Note at either the Prime Rate or the LIBOR Borrowing Rate, as designated by
Company in accordance with and at the time and on the terms described in the
Credit Agreement dated as of February 1, 1997, between Company and Bank and
amended August 25, 1997 (as further amended from time to time, the "Loan
Agreement"), and (3) when and as due, fees, costs, and disbursements provided
for in the Loan Agreement and this Note.

     This Note is a revolving loan note, so amounts may be borrowed, repaid,
and reborrowed. In addition, no amounts shall be advanced under this Note if,
as a result of such advance, the total principal amount outstanding under this
Note would exceed $15,000,000. No advance shall be made under this Note after
July 31, 1999. Unless payment in full shall have been previously demanded or
made, the Company shall pay the entire outstanding principal amount, together
with all accrued interest on this Note, on July 31, 1999.

     Repayment of the indebtedness evidenced by this Note is secured by the 
collateral granted in the Security Agreement and is subject to prepayment and
acceleration pursuant to, and could otherwise become governed by, the terms of
the Loan Agreement and the agreements and instruments required thereunder.

    Capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed thereto in the Loan Agreement.

     Company also promises and agrees to pay on demand the costs and
disbursements, including reasonable attorney fees, incurred by Bank in
collecting this Note and/or in foreclosing on the collateral securing payment
of this Note, whether or not a civil action, arbitration proceeding, or
insolvency proceeding or claim is commenced, tried, or appealed, plus interest
thereon at the prime Rate from the date of the demand until payment is received.



                                      -1-

<PAGE>   29

     Company hereby waives acceptance, presentment, demand, diligence, protest,
nonpayment, dishonor, and notice of any of the foregoing and consents to
impairment of subrogation rights and of collateral. Company acknowledges that
forbearance by Bank, including any failure to make demand or other failure by
Bank to exercise any right or remedy upon demand or default, shall not
constitute a waiver or grounds for a claim of estoppel.

     STATUTORY NOTICE; UNDER OREGON LAW, MOST AGREEMENTS, PROMISES, AND
     COMMITMENTS MADE BY LENDER AFTER OCTOBER 3, 1989, CONCERNING LOANS AND
     OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY, OR HOUSEHOLD
     PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING,
     EXPRESS CONSIDERATION, AND BE SIGNED BY LENDER TO BE ENFORCEABLE.


     PHYSICIAN PARTNERS, INC.


     By: /s/ TIM DUPELL
         -------------------------------
         Tim Dupell, C.F.O., 
         Secretary and Treasurer









                                      -2-