AMENDED AND RESTATED CREDIT AGREEMENT

                    DATED AS OF NOVEMBER 13, 1997


                                AMONG

                     PROMEDCO MANAGEMENT COMPANY


                   THE LENDERS REFERRED TO HEREIN


                                 AND


                NATIONSCREDIT COMMERCIAL CORPORATION,
                              AS AGENT





<PAGE>



                               TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                               Page

<S>                        <C>                                                                                <C>      
ARTICLE I                  DEFINITIONS............................................................................1
SECTION 1.01.              Certain Defined Terms..................................................................1
SECTION 1.02.              Accounting Terms and Determinations...................................................18
SECTION 1.03.              Other Definitional Provisions.........................................................18

ARTICLE II                 REVOLVING CREDIT LOANS................................................................19

SECTION 2.01.              Revolving Credit Loans and Commitments................................................19
SECTION 2.02.              Revolving Credit Notes................................................................20
SECTION 2.03.              Interest on the Revolving Credit Loans................................................20
SECTION 2.04.              Advancing Revolving Credit Loans......................................................22
SECTION 2.05.              Mandatory Repayments and Prepayments..................................................22
SECTION 2.06.              Optional Prepayments..................................................................23
SECTION 2.07.              Application of Payments...............................................................23
SECTION 2.08.              Reduction of Commitment...............................................................23

ARTICLE III                CONDITIONS............................................................................24

SECTION 3.01.              Conditions to Closing.................................................................24
SECTION 3.02.              Conditions to Acquisition Loans.......................................................26
SECTION 3.03.              Conditions to Each Loan...............................................................27

ARTICLE IV                 REPRESENTATIONS AND WARRANTIES........................................................27

SECTION 4.01.              Corporate Existence and Power.........................................................27
SECTION 4.02.              Corporate and Governmental Authorization; No Contravention............................28
SECTION 4.03.              Binding Effect; Liens of Security Documents...........................................28
SECTION 4.04.              Financial Information.................................................................28
SECTION 4.05.              Litigation............................................................................29
SECTION 4.06.              Ownership of Property, Liens..........................................................30
SECTION 4.07.              No Default............................................................................30
SECTION 4.08.              No Burdensome Restrictions............................................................30
SECTION 4.09.              Labor Matters.........................................................................30
SECTION 4.10.              Subsidiaries; Other Equity Investments................................................30
SECTION 4.11.              Investment Company Act................................................................31
SECTION 4.12.              Margin Regulations....................................................................31
SECTION 4.13.              Taxes.................................................................................31
SECTION 4.14.              Compliance with ERISA.................................................................31
SECTION 4.15.              Brokers...............................................................................32
SECTION 4.16.              Employment, Shareholders and Subscription Agreements..................................32
SECTION 4.17.              Full Disclosure.......................................................................32
SECTION 4.18.              Private Offering......................................................................32
SECTION 4.19.              Compliance with Environmental Requirements; No Hazardous Materials....................32
SECTION 4.20.              Real Property Interests...............................................................34
SECTION 4.21.              Third Party Reimbursement.............................................................34
SECTION 4.22               Additional Representations; Schedules.................................................34

ARTICLE V                  AFFIRMATIVE COVENANTS.................................................................35

SECTION 5.01.              Financial Statements and Other Reports................................................35
SECTION 5.02.              Payment of Obligations................................................................39
SECTION 5.03.              Conduct of Business and Maintenance of Existence......................................39
SECTION 5.04.              Maintenance of Property; Insurance....................................................39
SECTION 5.05.              Compliance with Laws..................................................................40
SECTION 5.06.              Inspection of Property, Books and Records.............................................40
SECTION 5.07.              Use of Proceeds.......................................................................41
SECTION 5.08.              Further Assurances....................................................................41
SECTION 5.09.              Lenders' Meetings.....................................................................41
SECTION 5.10.              Hedging Facilities....................................................................41
SECTION 5.11.              Hazardous Materials; Remediation......................................................41
SECTION 5.12.              Collateral Reports....................................................................42
SECTION 5.13.              Collections; Right to Notify Account Debtors..........................................42
SECTION 5.14.              Enforcement of Covenants Not to Compete...............................................42
SECTION 5.15.              Landlord and Warehouseman Waivers.....................................................42
SECTION 5.16.              Additional Subsidiaries...............................................................43
SECTION 5.17.              Accreditation and Licensing...........................................................43

ARTICLE VI                 NEGATIVE COVENANTS....................................................................43

SECTION 6.01.              Debt..................................................................................43
SECTION 6.02.              Negative Pledge.......................................................................44
SECTION 6.03.              Capital Stock.........................................................................45
SECTION 6.04.              Restricted Payments...................................................................45
SECTION 6.05.              ERISA.................................................................................45
SECTION 6.06.              Consolidations, Mergers and Sales of Assets...........................................46
SECTION 6.07.              Purchase of Assets, Investments.......................................................46
SECTION 6.08.              Transactions with Affiliates..........................................................47
SECTION 6.09.              Amendments or Waivers.................................................................47
SECTION 6.10.              Fiscal Year...........................................................................47
SECTION 6.11.              Management Compensation...............................................................48
SECTION 6.12.              Lease Payments........................................................................48
SECTION 6.13.              Capital Expenditures..................................................................48
SECTION 6.14.              Total Debt Coverage Ratio.............................................................48
SECTION 6.15.              Debt to Capitalization................................................................48
SECTION 6.16.              Senior Debt to EBITDA.................................................................49
SECTION 6.17.              [Reserved]............................................................................49
SECTION 6.18.              Minimum Net Worth.....................................................................49
SECTION 6.19.              Transition Rules......................................................................49

ARTICLE VII                EVENTS OF DEFAULT.....................................................................50

SECTION 7.01.              Events of Default.....................................................................50

ARTICLE VIII               FEES, EXPENSES AND INDEMNITIES; GENERAL PROVISIONS RELATING TO
                           PAYMENTS..............................................................................54

SECTION 8.01.              Fees..................................................................................54
SECTION 8.02.              Computation of Interest and Fees......................................................54
SECTION 8.03.              General Provisions Regarding Payments.................................................54
SECTION 8.04.              Expenses..............................................................................54
SECTION 8.05.              Indemnity.............................................................................55
SECTION 8.06.              Taxes.................................................................................56
SECTION 8.07.              Funding Losses........................................................................56
SECTION 8.08.              Maximum Interest......................................................................56

ARTICLE IX                 THE AGENT.............................................................................57

SECTION 9.01.              Appointment and Authorization.........................................................57
SECTION 9.02.              Agent and Affiliates..................................................................57
SECTION 9.03.              Action by Agent.......................................................................57
SECTION 9.04.              Consultation with Experts.............................................................57
SECTION 9.05.              Liability of Agent....................................................................58
SECTION 9.06.              Indemnification.......................................................................58
SECTION 9.07.              Credit Decision.......................................................................58
SECTION 9.08.              Successor Agent.......................................................................58

ARTICLE X                  MISCELLANEOUS.........................................................................59

SECTION 10.01.             Survival..............................................................................59
SECTION 10.02.             No Waivers............................................................................59
SECTION 10.03.             Notices...............................................................................59
SECTION 10.04.             Severability..........................................................................59
SECTION 10.05.             Amendments and Waivers................................................................59
SECTION 10.06.             Successors and Assigns; Registration..................................................60
SECTION 10.07.             Collateral............................................................................62
SECTION 10.08.             Headings..............................................................................62
SECTION 10.09.             Governing Law; Submission to Jurisdiction.............................................62
SECTION 10.10.             Notice of Breach by Agent or Lender...................................................62
SECTION 10.11.             Waiver of Jury Trial..................................................................63
SECTION 10.12.             Counterparts..........................................................................63
SECTION 10.13.             Special Provision Relating to this Amendment and Restatement..........................63

EXHIBIT A.........-        Revolving Credit Note
EXHIBIT B.........-        Notice of Borrowing
EXHIBIT C.........-        Company Security Agreement
EXHIBIT D.........-        Pledge Agreement
EXHIBIT E.........-        Subsidiary Guaranty Agreement
EXHIBIT F.........-        Subsidiary Security Agreement
EXHIBIT G.........-        Professional Service Provider Security Agreement
EXHIBIT H.........-        Borrowing Base Certificate
EXHIBIT I.........-        Opinion of counsel to the Company
EXHIBIT J.........-        Opinion of Kilpatrick Stockton LLP, Special Counsel to the Agent
EXHIBIT K.........-        Option Agreement

SCHEDULE 3.01(n)..-        Schedule of Management
SCHEDULE 4.10.....-        Schedule of Subsidiaries
SCHEDULE 4.16.....-        Employment, Shareholders' and Subscription Agreements
SCHEDULE 4.19.....-        Environmental Matters
SCHEDULE 4.20.....-        Real Property Interests
SCHEDULE 5.04.....-        Required Insurance
SCHEDULE 6.01.....-        Outstanding Debt
SCHEDULE 6.04.....-        Existing Additional Acquisition Liabilities
</TABLE>



<PAGE>


                             CREDIT AGREEMENT


                  CREDIT AGREEMENT dated as of November 13, 1997, among PROMEDCO
MANAGEMENT  COMPANY (F/K/A PROMEDCO,  INC.), the LENDERS listed on the signature
pages hereof and NATIONSCREDIT COMMERCIAL CORPORATION, as Agent.

                  The parties hereto agree as follows:


                                    ARTICLE I

                                  DEFINITIONS

SECTION 1.01. Certain Defined Terms. The following terms have the following 
meanings:

                   "Account  Debtor"  shall  mean  any  Person  who  may  become
obligated  to any  Credit  Party  under,  with  respect  to, or on  account of a
Receivable of such Credit Party (including  without  limitation any guarantor of
the payment or performance of a Receivable or any Third Party Payor).

                  "Acquisition"  means  the  purchase  by  the  Company  of  any
physician  practice or physician practice group or a majority of the assets of a
physician  practice or  physician  practice  group or of any other  business the
purchase  of which the  Required  Lenders  shall  consent  to in their  sole and
absolute discretion,  with the proceeds of an Acquisition Loan provided pursuant
to Section 2.01(c).

                  "Acquisition Availability" has the Meaning specified in 
Section 2.01(c).

                  "Acquisition Loans" means, collectively,  the Revolving Credit
Loans of the Lenders to be made to the Company pursuant to Section 2.01(c).

                  "Additional  Acquisition  Liabilities" means the Existing 
Additional Acquisition  Liabilities and the Future Additional Acquisition 
Liabilities.

                  "Adjusted  LIBOR" means a rate per annum (rounded  upward,  if
necessary to the next higher 1/16 of 1%) equal to the rate  obtained by dividing
(a) LIBOR  (similarly  rounded) by (b) a percentage equal to 1 minus the Reserve
Requirement in effect from time to time.

                  "Affiliate" means (i) any Person that directly,  or indirectly
through  one or  more  intermediaries,  controls  the  Company  (a  "Controlling
Person") or (ii) any Person (other than the Company or any of its  Subsidiaries)
which is controlled by or is under common control with a Controlling  Person. As
used herein,  the term "control" of a Person means the  possession,  directly or
indirectly,  of the power to vote 10% or more of any class of voting  securities
of such Person or to direct or cause the direction of the management or policies
of a Person, whether through the ownership of voting securities,  by contract or
otherwise.

                  "Agent" means  NationsCredit  in its capacity as agent for the
Lenders hereunder, and its successors in such capacity.

                  "Agreement  Date," "date hereof," "even date herewith,"  "date
of this  Agreement"  and words of similar  import mean the date as of which this
Agreement was originally executed, or June 12, 1996.

                  "AmSouth Bank" means AmSouth Bank, an Alabama banking 
corporation, and its successors.

                  "Applicable  Margin" means for any Revolving  Credit Loan held
by  AmSouth  Bank or any  assignee  thereof,  (i) in the case of  Loans  bearing
interest based on Adjusted LIBOR,  3.25% per annum, in the case of Loans bearing
interest  based on the Index  Rate,  3.25% per  annum,  and in the case of Loans
bearing  interest based on the Prime Rate,  1.75% per annum,  in each case, from
and including the Restatement  Effective Date, to but excluding the first day of
the month in which the Company shall first deliver  financial  statements to the
Lenders pursuant to Section 5.01(a) subsequent to the Restatement Effective Date
that relate to a month ended on the last day of a fiscal  quarter of the Company
(the "Initial  Adjustment  Date"), and (ii) commencing on the Initial Adjustment
Date and on the first day of each month  thereafter  in which the Company  shall
deliver  financial  statements to the Lenders  pursuant to Section  5.01(a) that
relate to a month ended on the last day of a fiscal quarter of the Company,  the
per annum  interest  rate  margin  shall be that set forth  hereafter  below the
applicable  rate  determination  option  that is  opposite  the  Leverage  Ratio
determined from such statements for the fiscal quarter covered thereby:
<TABLE>
<CAPTION>

       Leverage Ratio                  Index Rate                 Adjusted LIBOR                    Prime
<S>                                    <C>                         <C>                          <C>
          = 1.00                        1.375%                       1.375%                       0.000%
     1.00 but  = 2.00                   1.500%                       1.500%                       0.000%
     2.00 but  = 2.50                   1.750%                       1.750%                       0.250%
     2.50 but  = 3.00                   2.000%                       2.000%                       0.500%
     3.00 but  = 3.50                   2.250%                       2.250%                       0.750%
     3.50 but  = 4.00                   2.750%                       2.750%                       1.250%
     4.00                               3.250%                       3.250%                       1.750%
</TABLE>

Notwithstanding  the foregoing,  so long as a Default shall have occurred and be
continuing,  the Applicable  Margins shall be the highest rates specified in the
table above.

                  "Authorized Signatory" means a Person designated as such by 
the Company to the Agent in writing.

                  "Availability  Termination  Date" means  December 31, 1998, or
such later date to which the  Lenders  and the  Company  may  mutually  agree to
extend the Company's ability to incur Revolving Loans.

                  "Benefit  Arrangement"  means at any time an employee  benefit
plan  within  the  meaning  of  Section  3(3) of ERISA  which is not a Plan or a
Multiemployer  Plan and which is maintained or otherwise  contributed  to by any
member of the ERISA Group.

                  "Blue  Cross/Blue  Shield"  means  any  and all  contracts  or
agreements  in force  between any Credit  Party and any Blue  Cross/Blue  Shield
plan.

                  "Borrowing  Base"  means,  on any date,  a dollar  amount  
equal to 80% of  Eligible  Receivables determined as of such date.

                  "Borrowing  Base  Certificate"   means  a  certificate,   duly
executed  by  the  chief   financial   officer  or  treasurer  of  the  Company,
appropriately completed and substantially in the form of Exhibit I.

                  "Business  Day"  means any day  except a  Saturday,  Sunday or
other day on which commercial  banks in Chicago,  Nashville or New York City are
authorized by law to close.

                  "Capital  Lease" of any Person means any lease of any property
(whether  real,  personal or mixed) by such  Person as lessee  which  would,  in
accordance  with GAAP, be required to be accounted for as a capital lease on the
balance sheet of such Person.

                  "CERCLA"  means  the  Comprehensive   Environmental  Response,
Compensation  and  Liability Act of 1980 (42 U.S.C.  Sections 9601 et seq.),  as
amended from time to time, and regulations promulgated thereunder.

                  "CHAMPUS Receivable" means a Receivable payable pursuant to 
CHAMPUS.

                  "CHAMPUS" means, collectively, 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 all  laws,  rules,  regulations,
manuals, orders, guidelines or requirements pertaining to such program including
(a) all federal  statutes  (whether  set forth in 10 U.S.C.  ss.ss.1071-1106  or
elsewhere) affecting such program; and (b) all rules,  regulations (including 32
C.F.R.  ss.199),  manuals,  orders and  administrative,  reimbursement and other
guidelines of all governmental  authorities  promulgated in connection with such
program  (whether or not having the force of law),  in each case as the same may
be amended, supplemented or otherwise modified from time to time.

                  "CHAMPVA Receivable" means a Receivable payable pursuant to 
CHAMPVA.

                  "CHAMPVA" means, collectively, the Civilian Health and Medical
Program of the  Department  of Veteran  Affairs,  a program of medical  benefits
covering  retirees  and  dependents  of former  members  of the  armed  services
administered by the United States  Department of Veteran Affairs,  and all laws,
rules,  regulations,  manuals, orders,  guidelines or requirements pertaining to
such program  including (a) all federal statutes (whether set forth in 38 U.S.C.
ss.1713 or  elsewhere)  affecting  such program or, to the extent  applicable to
CHAMPVA, CHAMPUS; and (b) all rules, regulations (including 38 C.F.R. ss.17.54),
manuals,  orders and  administrative,  reimbursement and other guidelines of all
governmental authorities promulgated in connection with such program (whether or
not  having  the  force  of  law),  in each  case as the  same  may be  amended,
supplemented or otherwise modified from time to time.

                  "Class"  defines a Revolving  Credit Loan by  reference to the
subfacility  under which it is made. A Revolving Credit Loan is either a Working
Capital Loan or an Acquisition Loan.

                  "Closing  Date" means the date of the  initial  funding of the
Loans which funding shall not in any event occur later than July 15, 1996.

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

                  "Collateral"   means  all  property   mortgaged,   pledged  or
otherwise  purported  to  be  subjected  to a  Lien  pursuant  to  the  Security
Documents.

                  "Commitment" means the Revolving Credit Commitment.

                  "Commitment Termination Date" shall have the meaning assigned 
to it in Section 2.05.

                  "Common Stock" means the company's common stock, par value 
___, per share.

                  "Company"  means  ProMedCo   Management  Company,  a  Delaware
corporation,  which is the  successor  by  merger  to  ProMedCo,  Inc.,  a Texas
corporation.

                  "Company Account" means the account specified on the signature
pages  hereof into which all Loans to the Company  shall be made  available,  or
such other  account as the Company  shall from time to time specify by notice to
the Lenders.

                  "Company  Security  Agreement"  means the  Security  Agreement
dated as of the  Original  Agreement  Date  between  the  Company and the Agent,
substantially in the form of Exhibit C.

                  "Consolidated Capital Expenditures" means, for any period, the
aggregate   amount  of  expenditures   by  the  Company  and  its   Consolidated
Subsidiaries for plant,  property and equipment during such period but excluding
any such  expenditures  made for the replacement or restoration of assets to the
extent  financed by condemnation  awards or proceeds of insurance  received with
respect to the loss or taking of or damage to the asset or assets being replaced
or restored.

                  "Consolidated   Capitalization"   means   at   any   time   of
determination,  the sum of (a) the Consolidated Total Debt at such time, and (b)
the Consolidated Net Worth at such time.

                  "Consolidated  Free Cash Flow" means, for any period,  EBITDA 
for such period minus the following amounts:

                  (a)      all cash  payments  of income  taxes by the Company  
         and its  Consolidated  Subsidiaries during such period;

                  (b) Consolidated  Capital Expenditures for such period, to the
         extent that such  Consolidated  Capital  Expenditures  are not financed
         during  such  period  (and are not  anticipated  to be  financed in any
         future period) with the proceeds of Debt of the Company; and

                  (c) any net gain in respect of asset sales during such period.

                  "Consolidated Net Income" means, for any period, net income of
the Company and its Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP.

                  "Consolidated   Net  Worth"  means  as  of  the  date  of  any
determination thereof, the amount of the shareholder's equity of the Company and
its  Consolidated  Subsidiaries  as would be shown on the  consolidated  balance
sheet  of  the  Company  and  its  Consolidated  Subsidiaries,  determined  on a
consolidated  basis in accordance with GAAP;  provided that the Company shall be
deemed to have  received  $4,000,000  of Net  Proceeds  in  connection  with the
issuance of its common stock in the  acquisition of Western  Medical  Management
Corporation,  Inc.,  which  amount  shall  be  included  in the  calculation  of
Consolidated Net Worth.

                  "Consolidated  Senior  Debt"  means at any date the  principal
amount of the  Obligations  and any Debt other than debt that is subordinated to
the  Obligations  on terms  and  conditions  satisfactory  to the  Agent and the
Required Lenders.

                  "Consolidated  Subsidiary" means at any date any Subsidiary or
other  entity the  accounts  of which  would be  consolidated  with those of the
Company  in its  consolidated  financial  statements  if  such  statements  were
prepared as of such date.

                  "Consolidated  Total  Debt"  means at any date the Debt of the
Company and its Consolidated Subsidiaries, determined on a consolidated basis at
such date.

                  "Credit Party" means any of the Company, any Subsidiary or any
party to a Service Agreement.

                  "Debt" of a Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money,  (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services,  except  trade  accounts  payable  arising in the  ordinary  course of
business,  (iv) all Capital Leases of such Person,  (v) all  obligations of such
Person to  purchase  securities  (or other  property)  which  arise out of or in
connection  with  the  issuance  or sale of the  same or  substantially  similar
securities (or property), (vi) all non-contingent  obligations of such Person to
reimburse  any bank or other Person in respect of amounts paid under a letter of
credit or similar instrument, (vii) all equity securities of such Person subject
to repurchase or  redemption  otherwise  than at the sole option of such Person,
(viii) all  obligations of such Person to make payments or advances with respect
to Program  Loans (ix) all Debt  secured by a Lien on any asset of such  Person,
whether or not such Debt is otherwise an obligation of such Person, and (ix) all
Debt of others Guaranteed by such Person.

                  "Default"  means any condition or event which  constitutes  an
Event of  Default  or which  with the  giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.

                  "Default  Rate" has the meaning set forth in Section  2.03(e),
provided that with respect to any Obligation for which a rate of interest is not
otherwise  specified herein, the Default Rate shall be the Prime Rate plus 3.75%
per annum.

                  "EBITDA" means, for any period, the consolidated net income of
the  Company  and its  Consolidated  Subsidiaries  for such  period,  after  all
expenses and other proper charges except  depreciation,  interest,  amortization
and  income  taxes,  determined  in  accordance  with GAAP  eliminating  without
duplication:  (i) all  intercompany  items,  (ii) all earnings  attributable  to
equity interests in Persons that are not Subsidiaries  unless actually  received
by the Company or a Consolidated  Subsidiary,  (iii) all income arising from the
forgiveness,  adjustment, or negotiated settlement of any indebtedness, (iv) any
extraordinary items of income or expense, (v) any increase or decrease in income
arising  from any  change in the  Company's  method of  accounting,  subject  to
Section 1.02, and (vi) any interest  income other than interest  income received
in connection with Program Loans.

                  "Eligible  Receivables"  means,  at any date of  determination
thereof, the aggregate amount of all Receivables at such date due to the Company
and each of its  Subsidiaries  other  than  the  following  (determined  without
duplication):

                  (a) any Receivable due from an Account Debtor that is not both
         domiciled in the United States of America and (if not a natural person)
         organized  under  the  laws of the  United  States  of  America  or any
         political   subdivision   thereof  and  any  Receivable   that  is  not
         denominated and payable in U.S. dollars;

                  (b) any  Receivable  that does not comply with all  applicable
         legal requirements,  including,  without  limitation,  all laws, rules,
         regulations  and  orders  of any  governmental  or  judicial  authority
         (including  any  Receivable  due from an Account  Debtor located in the
         States of Indiana,  New Jersey or Minnesota,  unless the Company or the
         applicable  Subsidiary  (at the time the  Receivable was created and at
         all times  thereafter)  (i) had filed and has  maintained  effective  a
         current  notice of  business  activities  report  with the  appropriate
         office or agency of the State of Indiana,  New Jersey or Minnesota,  as
         applicable, or (ii) was and has continued to be exempt from filing such
         report and has provided Agent with satisfactory evidence thereof);

                  (c) any Receivable in respect of which there is any unresolved
         dispute  with  the  Account  Debtor,  but  only to the  extent  of such
         dispute;

                  (d) any Receivable payable more than 30 days after the date of
         the issuance of the original invoice therefor;

                  (e) any Receivable  that remains unpaid for more than 120 days
         from the date of the original issuance of the invoice therefor;

                  (f)      any unbilled Receivable;

                  (g) any  Receivable  arising  outside the  ordinary  course of
         business of the Credit Party whose activities gave rise thereto;

                  (h) (i) that  portion  of any  Receivable  in respect of which
         there has been,  or should  have  been,  established  by the  Company a
         contra  account  whether in respect of  contractual  allowances,  audit
         adjustments,  anticipated  discounts or  otherwise,  or (ii) which is a
         Private  Receivable  and is due  from an  Account  Debtor  to whom  the
         Company owes a trade payable, but only to the extent of such account or
         trade  payable  or (iii)  which  Receivable  is subject to any right of
         recession,  set-off,  recoupment,   counterclaim  or  defense,  whether
         arising  out  of  transactions  concerning  the  provision  of  medical
         services or otherwise,  provided that this clause (iii) shall not apply
         to  adjustments  in the  ordinary  course  with  respect to  Government
         Receivables;

                  (i) any  Receivable  that is not  subject to a first  priority
         perfected  Lien  under  the  Security   Documents  and  any  Receivable
         evidenced  by an  "instrument"  (as  defined  in  the  UCC)  not in the
         possession of the Agent;

                  (j) any  Receivable  due from any Third  Party Payor (i) as to
         which on such date Receivables  representing more than 25% of aggregate
         amount of all  Receivables  of such Third  Party  Payor  have  remained
         unpaid for more than 120 days from the original  due date  specified at
         the time of the  original  issuance of the original  invoice  therefor,
         (ii) in respect of which a credit loss has been  recognized or reserved
         by any Credit  Party,  (iii) in  respect of which the Agent  shall have
         notified  the  Company  that such  Third  Party  Payor  does not have a
         satisfactory  credit standing as determined in good faith by the Agent,
         (iv) that is a Subsidiary or Affiliate of the Company, (v) that, except
         in the case of a Government Receivable, is the United States of America
         or any state  government or any department,  agency or  instrumentality
         thereof,  unless the Company  has  complied  in all  respects  with the
         Federal Assignment of Claims Act of 1940 or the corresponding provision
         of any  applicable  state law, or (vi) that is the subject of a case or
         proceeding of the type described in clauses (g) and (h) of Section 7.01
         or that is not Solvent;

                  (k) any Receivables other than Government Receivables due from
         a Third  Party  Payor at any time,  to the  extent  that the  aggregate
         outstanding  amount of Receivables  due from such Third Party Payor and
         its affiliates at such time exceeds 10% of the aggregate  amount of all
         Receivables  due to the Company at such time, but only to the extent of
         such excess;

                  (l) if such  Receivable  is a  Private  Receivable,  the Third
         Party Payor  thereon  has not  received  such notice of the  assignment
         thereof to the Agent as the Agent shall reasonably require; and

                  (m) the Credit Party owning such Receivable has not executed a
         Security  Agreement or such other  documents as the Agent shall require
         assigning its rights to such  Receivables  to the Agent as security for
         the Obligations.

                  "Employment   Contracts"   means  the   employment   contracts
delivered  by the  Company to  NationsCredit  on the  Closing  Date  pursuant to
Section 3.01(n), and listed on Schedule 4.16 from time to time.

                  "Environmental  Laws" means any and all federal,  state, local
and foreign statutes, laws, judicial decisions, regulations,  ordinances, rules,
judgments,  orders, decrees, codes, plans,  injunctions,  permits,  concessions,
grants, franchises, licenses, agreements and governmental restrictions,  whether
now or hereafter in effect,  relating to human  health,  the  environment  or to
emissions,  discharges  or  releases  of  pollutants,   contaminants,  Hazardous
Materials or wastes into the environment,  including ambient air, surface water,
ground water or land,  or  otherwise  relating to the  manufacture,  processing,
distribution,  use,  treatment,  storage,  disposal,  transport  or  handling of
pollutants, contaminants, Hazardous Materials or wastes or the clean-up or other
remediation thereof.

                  "ERISA" means the Employee  Retirement  Income Security Act of
1974, as amended from time to time, or any successor statute.

                  "ERISA  Group"  means  the  Company,  any  Subsidiary  and all
members of a  controlled  group of  corporations  and all  trades or  businesses
(whether or not  incorporated)  under common  control  which,  together with the
Company or any Subsidiary, are treated as a single employer under Section 414 of
the Code.

                  "Event of Default" has the meaning set forth in Section 7.01.

                  "Excess Cash Flow" means, for any period,  an amount equal to:
(i) EBITDA for such  period,  minus  (ii) the sum of: (x)  Consolidated  Capital
Expenditures (to the extent such Consolidated Capital Expenditures are permitted
pursuant to Section  6.13 and except to the extent  financed by the  proceeds of
Debt  of the  Company  permitted  by  Section  6.01),  (y)  Total  Debt  Service
(exclusive of  amortization  of debt discount or premium) and all prepayments of
the Loans hereunder that result in a permanent reduction of the Commitment,  and
(z) all cash payments of income taxes by the Company and its  Subsidiaries,  all
as determined for such period, plus (iii) any interest income for such period.

                  "Existing  Additional  Acquisition  Liabilities"  means  those
obligations (actual or contingent) of the Company and/or any of its Subsidiaries
to pay  additional  consideration  in respect of  acquisitions  existing  on the
Agreement  Date and  described  on  Schedule  6.04,  whether  arising  under the
acquisition agreement relating thereto or any Service Agreement,  in the amounts
and upon the terms described on Schedule 6.04.

                  "Financing  Documents"  means this Agreement,  the Notes,  the
Subsidiary Guaranty Agreement, the Option Agreement and the Security Documents.

                  "Fiscal Year" means a fiscal year of the Company.

                  "Future  Additional   Acquisition   Liabilities"  means  those
obligations   (actual  or  contingent),   of  the  Company  and/or  any  of  its
Subsidiaries to pay additional consideration in respect of acquisitions, whether
arising  under  the  acquisition  agreement  relating  thereto,  or any  Service
Agreement, that are not described on Schedule 6.04.

                  "GAAP" has the meaning set forth in Section 1.02.

                  "Government  Receivables"  means,  collectively,  any  and all
Receivables which are (a) Medicare Receivables,  (b) Medicaid  Receivables,  (c)
CHAMPUS  Receivables,  (d)  CHAMPVA  Receivables,  or (e) any  other  Receivable
payable by a governmental authority approved by the Required Lenders.

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

                  "HCFA" shall mean the Health Care Financing  Administration,  
an agency of HHS, and any successor thereto.

                  "HHS" means the United  States  Department of Health and Human
Services or any successor thereto.

                  "Hazardous  Materials" means (i) any "hazardous  substance" as
defined  in  CERCLA;  (ii)  asbestos;  (iii)  polychlorinated   biphenyls;  (iv)
petroleum,  its  derivatives,  by-products and other  hydrocarbons;  and (v) any
other toxic,  radioactive,  caustic or otherwise  hazardous  substance regulated
under Environmental Laws.

                  "Hazardous   Materials   Contamination"   means  contamination
(whether now existing or hereafter  occurring) of the  improvements,  buildings,
facilities,  personalty,  soil, groundwater,  air or other elements on or of the
relevant property by Hazardous  Materials,  or any derivatives thereof, or on or
of any other  property as a result of Hazardous  Materials,  or any  derivatives
thereof,  generated on,  emanating  from or disposed of in  connection  with the
relevant property.

                  "Healthcare  Law" means,  collectively,  any and all  federal,
state or  local  laws,  rules,  regulations,  manuals,  orders,  guidelines  and
requirements pertaining to Government Receivables,  including without limitation
all laws,  rules,  regulations,  manuals,  orders,  guidelines and  requirements
pertaining to CHAMPUS, CHAMPVA, Medicaid or Medicare

                  "Indemnitees" has the meaning set forth in Section 8.05.

                  "Index Rate" means for any day in any calendar month, the rate
of interest equivalent to the money market yield for the Interest  Determination
Date  falling  in  such  month  on the  one  month  commercial  paper  rate  for
dealer-placed  commercial  paper of issuers whose corporate bonds are rated "AA"
or its equivalent by a nationally recognized rating agency, as such rate is made
available on a discount  basis or  otherwise by the Federal  Reserve Bank of New
York and  published  weekly by the Board of  Governors  of the  Federal  Reserve
System in its H.15 report, or any successor  publication  published by the Board
of Governors of the Federal Reserve System or, if such rate for such date is not
yet published in such  statistical  release,  the rate for that date will be the
rate set forth in the weekly  statistical  release  designated  as such,  or any
successor  publication,  published  by the  Board of  Governors  of the  Federal
Reserve System.

                  "Interest Determination Date" means June 3, 1996 and the first
Business Day of each calendar month thereafter.

                  "Inventory" means inventory as defined in Article 9 of the 
UCC.

                  "Investment"  means any  investment in any Person,  whether by
means of share purchase, capital contribution, loan, time deposit or otherwise.

                  "Lender" shall mean NationsCredit,  the other Lenders named on
the  signature  pages of the  Agreement,  and each other  Person that  becomes a
holder of a Note pursuant to Section 10.06, and their respective successors, and
"Lenders" means all of the foregoing.

                  "Leverage  Ratio"  shall mean,  for any fiscal  quarter of the
Company,  the  ratio  of  Consolidated  Senior  Debt as of the  last day of such
quarter,  to EBITDA for the four fiscal  quarters  ended on the last day of such
quarter.

                  "LIBOR"  means,  with  respect to any  Interest  Determination
Date, (i) the London  Interbank  Offered Rate for deposits in U.S. dollars for a
period  of time  comparable  to the  period  from and  including  such  Interest
Determination Date to and including the next succeeding  Interest  Determination
Date which is published in The Wall Street Journal  (Eastern  Edition) under the
caption "Money Rates - London Interbank  Offered Rates (LIBOR)" on such Interest
Determination  Date;  or (ii) if The Wall Street  Journal  does not publish such
rate,  the  offered  rate for  deposits  in U.S.  dollars  for a period  of time
comparable to the period from and including such Interest  Determination Date to
and including the next succeeding  Interest  Determination Date which appears on
the Dow  Jones  Markets  Page  3750 as of 10:00  a.m.,  New York  time,  on such
Interest  Determination  Date, provided that if at least two rates appear on the
Dow Jones Markets Page 3750, the "London  Interbank  Offered Rate" applicable to
such period  shall be the  arithmetic  mean of such rates;  or (iii) if The Wall
Street  Journal  does not publish  such rate and no such rate appears on the Dow
Jones  Markets Page 3750 at such time,  the rate per annum at which  deposits in
U.S.  dollars are offered by the principal  London office of The Chase Manhattan
Bank,  N.A. to leading  banks in the London  interbank  market at  approximately
11:00  a.m.,  London  time,  on such  Interest  Determination  Date in an amount
approximately  equal to the  principal  amount of the Loans for a period of time
comparable to the period from and including such Interest  Determination Date to
and including the next succeeding  Interest  Determination Date, in each case as
determined by the Agent whose  determination shall be conclusive absent manifest
error.

                  "Lien" means,  with respect to any asset, any mortgage,  lien,
pledge, charge,  security interest or encumbrance of any kind, or any other type
of preferential arrangement that has the practical effect of creating a security
interest,  in respect of such asset.  For the purposes of this Agreement and the
other Financing Documents,  the Company or any Subsidiary shall be deemed to own
subject  to a Lien any  asset  which it has  acquired  or holds  subject  to the
interest of a vendor or lessor under any  conditional  sale  agreement,  Capital
Lease or other title retention agreement relating to such asset.

                  "Loans" means the Revolving Credit Loans.

                  "Lockbox Accounts" has the meaning set forth in the Security 
Agreements.

                  "Lockbox   Agreement"   means,   collectively,   the   Lockbox
Agreements each in form and substance satisfactory to Lender, entered into among
the Agent,  the Company and its  Subsidiaries  and the Lockbox Banks pursuant to
the Security Agreements.

                  "Lockbox  Bank"  means,  collectively,   the  banks  or  other
depository   institutions   at  which  Lockbox   Accounts  are  established  and
maintained.

                  "Margin Stock" has the meaning  assigned thereto in Regulation
G, U or X of the Federal Reserve Board, as the same may be amended, supplemented
or modified from time to time.

                  "Material  Adverse  Effect" means,  with respect to any event,
act,   condition  or  occurrence  of  whatever  nature  (including  any  adverse
determination in any litigation,  arbitration,  or governmental investigation or
proceeding),  whether singly or in  conjunction  with any other event or events,
act or acts, condition or conditions,  occurrence or occurrences, whether or not
related, a material adverse change in, or a material adverse effect upon, any of
(a) the financial condition,  operations,  business,  properties or prospects of
the Company and its Subsidiaries,  taken as a whole, (b) the rights and remedies
of the Agent or the Lenders under the Financing Documents, or the ability of the
Company  or any  Subsidiary  to  perform  its  obligations  under the  Financing
Documents to which it is a party, as applicable,  (c) the legality,  validity or
enforceability of any Financing  Document,  or (d) the existence,  perfection or
priority of any security interest granted in the Financing Documents.

                  "Material Plan" means at any time a Plan having Unfunded 
Liabilities.

                  "Maximum Lawful Rate" has the meaning set forth in Section 
2.03.

                  "Medicaid"  means,  collectively,  the  healthcare  assistance
program  established  by  Title  XIX of  the  Social  Security  Act  (42  U.S.C.
ss.ss.1396 et seq.) and any statutes  succeeding  thereto,  and all laws, rules,
regulations,  manuals,  orders,  guidelines or  requirements  pertaining to such
program  including (a) all federal  statutes  (whether set forth in Title XIX of
the Social  Security Act or elsewhere)  affecting  such  program;  (b) all state
statutes  and plans for  medical  assistance  enacted  in  connection  with such
program and federal rules and  regulations  promulgated in connection  with such
program; and (c) all applicable provisions of all rules,  regulations,  manuals,
orders and  administrative,  reimbursement,  guidelines and  requirements of all
government  authorities  promulgated in connection with such program (whether or
not  having  the  force  of  law),  in each  case as the  same  may be  amended,
supplemented or otherwise modified from time to time.

                  "Medicaid Receivable" means a Receivable payable pursuant to 
a Medicaid Provider Agreement.

                  "Medicaid  Certification" means certification of a facility by
HCFA or a state agency or entity under  contract with HCFA that such  healthcare
facility fully complies with all the conditions of Medicaid.

                  "Medicaid Provider  Agreement" means an agreement entered into
between a state agency or other entity administering  Medicaid in such state and
a health care  facility  or  physician  under which the health care  facility or
physician agrees to provide services or merchandise for Medicaid patients.

                  "Medicare" means,  collectively,  the health insurance program
for the aged and disabled  established by Title XVIII of the Social Security Act
(42 U.S.C.  ss.ss.1395  et seq.) and any statutes  succeeding  thereto,  and all
laws,  rules,  regulations,  manuals,  orders or  guidelines  pertaining to such
program  including (a) all federal statutes (whether set forth in Title XVIII of
the Social  Security  Act or  elsewhere)  affecting  such  program;  and (b) all
applicable   provisions  of  all  rules,   regulations,   manuals,   orders  and
administrative,  reimbursement,  guidelines and requirements of all governmental
authorities  promulgated in connected  with such program  (whether or not having
the force of law),  in each  case as the same may be  amended,  supplemented  or
otherwise modified from time to time.

                  "Medicare  Receivable " means a Receivable payable pursuant to
Medicare Provider Agreement.

                  "Medicare  Certification"  mean certification of a facility by
HCFA or a state agency or entity under  contract with HCFA that such  healthcare
facility fully complies with all conditions for such facility's participation in
Medicare.

                  "Medicare Provider  Agreement" means an agreement entered into
between a state agency or other entity administering  Medicare in such state and
a health care  facility  or  physician  under which the health care  facility or
physician agrees to provide services or merchandise for Medicare patients.

                  "Multiemployer  Plan"  means at any time an  employee  pension
benefit  plan  within the  meaning of Section  4001(a)(3)  of ERISA to which any
member of the ERISA  Group is then  making or  accruing  an  obligation  to make
contributions  or has within the preceding  five plan years made  contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.

                  "NationsCredit"  means NationsCredit  Commercial  Corporation,
a Delaware  corporation,  and its successors.

                  "Net  Proceeds  of  Capital  Stock"  means  any  consideration
received by the Company or any of its  Consolidated  Subsidiaries  in respect of
the  issuance  of  capital  stock  (including,  without  limitation,  by  way of
conversion  of Debt into such capital  stock),  after  deducting  therefrom  all
reasonable  and  customary  costs and  expenses  incurred by such Person or such
Subsidiary directly in connection with the issuance of such capital stock.

                  "Note" means a Revolving Credit Note.

                  "Notice of Borrowing" has the meaning set forth in Section 
2.04.

                  "Obligations"  means all unpaid  principal  of and accrued and
unpaid  interest on the Loans,  all  accrued  and unpaid fees and all  expenses,
reimbursements,  indemnities and other obligations of the Company to the Lenders
or to any Lender, the Agent or any indemnified party hereunder arising under the
Financing Documents.

                  "Officers' Certificate" means a certificate executed on behalf
of a Person  by its  chairman  of the  board (if an  officer),  chief  executive
officer or president or one of its vice  presidents  and by its chief  financial
officer or treasurer.

                  "Option  Agreement"  means  the  Option  Agreement,  dated the
Original Agreement Date, in substantially the form of Exhibit K.

                  "Options"  means the  rights to  acquire  Common  Stock of the
Company issued to NationsCredit pursuant to the Option Agreement.

                  "Original Agreement Date" means June 12, 1996.

                  "Payment  Account"  means,  with respect to each  Lender,  the
account specified on the signature pages hereof into which all payments by or on
behalf of the  Company to such Lender  under the  Financing  Documents  shall be
made,  or such other  account as such Lender  shall from time to time specify by
notice to the Company.

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

                  "Permitted  Contest" means a contest  maintained in good faith
by appropriate proceedings promptly instituted and diligently conducted and with
respect to which such reserve or other appropriate  provision,  if any, as shall
be  required  in  conformity  with GAAP  shall  have been  made;  provided  that
compliance  with  the  obligation  that  is  the  subject  of  such  contest  is
effectively stayed during such challenge.

                  "Permitted Liens" means Liens permitted pursuant to Section 
6.02.

                  "Permitted  Refinancing" means any refunding or refinancing of
an item of Debt at a market rate of interest;  provided,  that (i) the principal
amount  thereof  shall not be  increased  except,  in the case of a public  debt
offering  for  accrued  interest  thereon  (in an amount  not to exceed 6 months
interest),  (ii) the time for repayment therefor shall not be reduced, (iii) the
security  thereof shall not be  increased,  and (iv) the terms thereof shall not
otherwise be materially altered.

                  "Person"  means  any  natural  person,  corporation,   limited
partnership,   limited  liability  company,  professional  association,  general
partnership,  joint stock company, joint venture,  association,  company, trust,
bank, trust company, land trust,  business trust or other organization,  whether
or not a legal  entity,  and any  government  agency  or  political  subdivision
thereof.

                  "Plan"  means at any time an  employee  pension  benefit  plan
(other  than a  Multiemployer  Plan)  which is  covered  by Title IV of ERISA or
subject to the  minimum  funding  standards  under  Section  412 of the Code and
either (i) is maintained,  or  contributed  to, by any member of the ERISA Group
for  employees  of any member of the ERISA  Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for  employees  of any Person which
was at such time a member of the ERISA Group.

                  "Pledge  Agreement" means the Pledge Agreement dated as of the
Original Agreement Date between the Company and the Agent,  substantially in the
form of Exhibit D.

                  "Prime Rate" means the rate  publicly  announced  from time to
time by NationsBank of North Carolina,  N.A. as its "prime rate". Changes in the
Prime Rate shall be  effective as of the opening of business on the date of each
announced change therein.

                  "Private  Receivables"  mean,  collectively,  any and all  
Receivables  that  are not  Government Receivables.

                  "Professional  Service Provider Security  Agreement" means any
Professional  Service  Provider  Security  Agreement  between  the Agent and any
professional service provider that has entered into a Service Agreement with the
Company, which agreement shall be in substantially the form of Exhibit G hereto.

                  "Program  Loans" shall mean loans made, or commitments to make
loans, to physician groups or professional associations, on terms and conditions
satisfactory  to the  Required  Lenders,  for the  purpose of  funding  loans or
advances  to members  of such  groups or  associations  or other  physicians  in
connection with the affiliation of such  professional  association or group with
the Company and the  execution of a management  services  agreement  between the
Company or one of its Subsidiaries and such association or group.

                  "Quarterly Date" means the first Business Day of each January,
April, July and October occurring after the Agreement Date.

                  "Receivable"  means, as at any date of determination  thereof,
the unpaid portion of the obligation,  as stated in the respective invoice, of a
patient of any Credit Party in respect of Inventory or medical services rendered
in the ordinary course of business,  which amount has been earned by performance
under the terms of the related  contract and  recognized as revenue on the books
of the Company,  net of any  credits,  rebates or offsets owed to the patient or
any Third Party Payor in respect thereof and also net of any commissions payable
to Persons other than a Credit Party or any employee thereof.

                  "Receivables Report" has the meaning given such term in 
Section 5.01(m).

                  "Required  Lenders" means at any time,  Lenders who hold Notes
evidencing at least 51% of the aggregate  unpaid  principal  amount of the Loans
or, if no Loans are outstanding,  having at least 51% of the aggregate amount of
the  Commitments,  provided  that so long as there  are at least 2  unaffiliated
lenders  hereunder,  Required Lenders must also include at least two Lenders who
are not affiliates of one another.

                  "Reserve  Requirement"  means at any  time  the  then  current
maximum  rate for  which  reserves  (including  any  marginal,  supplemental  or
emergency  reserve) are required to be maintained  under  Regulation D by member
banks of the Federal Reserve System in New York City with deposits comparable in
amount to those of NationsBank of North  Carolina,  N.A.  against  "Eurocurrency
liabilities",  as that  term is used  Regulation  D.  Adjusted  LIBOR  shall  be
adjusted  automatically  on and as of the  effective  date of any  change in the
Reserve Requirement.

                  "Restatement  Effective Date" means the date upon which all of
the conditions to the  effectiveness  of this Agreement under Section 10.13 have
been satisfied.

                  "Restricted   Payment"   means  (i)  any   dividend  or  other
distribution  on any shares of the Company's  capital  stock  (except  dividends
payable  solely in shares of its  capital  stock of the same class or payment of
cash in lieu of fractional shares), (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (a) any shares of the Company's capital
stock or (b) any  option,  warrant  or  other  right to  acquire  shares  of the
Company's capital stock, and (iii) any payment in respect of subordinated Debt.

                  "Revolving  Credit   Commitment"  means  (i)  as  to  each  of
NationsCredit  and  AmSouth  Bank,  initially  such  Lender's  Revolving  Credit
Commitment as set forth on the signature page to the Agreement,  less any amount
assigned  to  another  person  that  becomes a Lender  after the date  hereof (a
"Subsequent Lender") and (ii) for any Subsequent Lender, the amount of Revolving
Credit  Commitment  assigned to such Lender,  in each case as such amount may be
reduced from time to time in accordance with this agreement.

                  "Revolving Credit Loan" shall have the meaning assigned to it 
in Section 2.01(a).

                  "Revolving  Credit Note" shall have the meaning assigned to it
in Section 2.03 and each  Revolving  Credit Note shall be  substantially  in the
form of Exhibit A hereto.

                  "Securities  Act" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations promulgated thereunder.

                  "Security   Agreements"  means,   collectively,   the  Company
Security Agreement and the Subsidiary Security Agreement.

                  "Security  Documents"  means  the  Security  Agreements,   the
Professional Service Provider Security Agreements,  the Pledge Agreement and any
other  agreement  pursuant  to which the Company or any of its  Subsidiaries  or
Affiliates  or any other Credit Party  provides a Lien on its assets in favor of
the Agent for the benefit of the  Lenders,  and all  supplementary  assignments,
security  agreements,  pledge  agreements,  acknowledgments  or other  documents
delivered  or to be  delivered  pursuant  to the  terms  hereof  or of any other
Security Document.

                  "Service  Agreement"  means an  agreement  between the Company
and/or one or more of its Subsidiaries and one or more physician practice groups
pursuant to which the Company and/or such  Subsidiary  agrees to provide certain
management services to the group.

                  "Solvent" shall mean, with respect to any Person, such Person:
(i) owns property  whose fair salable value is greater than the amount  required
to pay all of such Person's  liabilities  (including  contingent debts), (ii) is
able to pay all of its  liabilities as such  liabilities  mature,  and (iii) has
capital  sufficient to carry on its business and  transactions  and all business
and transactions to which it is about to engage.

                  "Subsidiary"  means any  Person of which  securities  or other
ownership  interests  having  ordinary  voting  power to elect a majority of the
board of directors or other persons performing similar functions are at the time
directly or indirectly owned by the Company.

                  "Subsidiary  Guaranty  Agreement" means the guaranty agreement
between   the   Subsidiaries   listed  on  Exhibit  A  thereto  and  the  Agent,
substantially in the form of Exhibit E.

                  "Subsidiary  Security  Agreement" means the Security Agreement
between   the   Subsidiaries   listed  on  Exhibit  A  thereto  and  the  Agent,
substantially in the form of Exhibit F.

                  "Temporary  Cash  Investment"  means any  Investment  in:  (i)
direct  obligations of the United States or any agency  thereof,  or obligations
guaranteed by the United States or any agency  thereof,  (ii)  commercial  paper
rated  at least  A-1 by  Standard  &  Poor's  Rating  Group  and P-1 by  Moody's
Investors  Service,  Inc., (iii) time deposits with,  including  certificates of
deposit  issued by, any office located in the United States of any bank or trust
company  which is  organized  under the laws of the  United  States or any State
thereof and has capital,  surplus and  undivided  profits  aggregating  at least
$500,000,000  and which issues (or the parent of which issues)  certificates  of
deposit or commercial paper with a rating  described in clause (ii) above,  (iv)
repurchase  agreements with respect to securities  described in clause (i) above
entered  into with an office of a bank or trust  company  meeting  the  criteria
specified  in clause  (iii)  above,  provided in each case that such  Investment
matures within one year from the date of  acquisition  thereof by the Company or
any of its Subsidiaries or (v) any open ended, redeemable money market or mutual
fund that  invests  only in the  foregoing,  the sponsor of which is  nationally
recognized as a responsible sponsor.

                  "Third Party Payor" means any governmental  entity,  insurance
company,  health maintenance  organization,  preferred provider  organization or
similar entity that is obligated to make payments with respect to a Receivable.

                  "Total Debt Service"  means,  for any period,  the sum of: (i)
Total Interest Expense, and (ii) the aggregate amount of all scheduled principal
payments on all Debt,  including the portion of any payment under Capital Leases
that is allocable to principal.

                  "Total Interest Expense" means, for any period,  the aggregate
interest charges  incurred by the Company and its Consolidated  Subsidiaries and
required to be paid in cash for such period,  whether  expensed or  capitalized,
including the cash portion of any obligation  under Capital Leases  allocable to
interest expense in accordance with GAAP, less any interest income earned by the
Company and its  Consolidated  Subsidiaries  for such period other than interest
income received in respect of Program Loans..

                  "UCC" has the meaning set forth in the Security Agreements.

                  "Unfunded  Liabilities" means, with respect to any Plan at any
time,  the  amount  (if any) by which (i) the value of all  benefit  liabilities
under such Plan,  determined on a plan  termination  basis using the assumptions
prescribed  by the PBGC for purposes of Section 4044 of ERISA,  exceeds (ii) the
fair market value of all Plan assets allocable to such  liabilities  under Title
IV of ERISA (excluding any accrued but unpaid contributions),  all determined as
of the then most  recent  valuation  date for such Plan,  but only to the extent
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA.

                  "Working Capital Availability" has the meaning specified in 
Section 2.01(b).

                  "Working  Capital  Loans" means  Revolving  Credit Loans made 
to the Company  pursuant to Section 2.01(b).

                  SECTION  1.02.  Accounting  Terms and  Determinations.  Unless
otherwise   specified  herein,   all  accounting  terms  used  herein  shall  be
interpreted,  all  accounting  determinations  hereunder  shall be made, and all
financial  statements  required to be delivered  hereunder  shall be prepared in
accordance with generally accepted accounting  principles as in effect from time
to time ("GAAP"), applied on a basis consistent (except for changes concurred in
by the Company's  independent  public  accountants) with the most recent audited
consolidated   financial   statements  of  the  Company  and  its   Consolidated
Subsidiaries  delivered to the Lenders;  provided that, if the Company  notifies
the Lenders  that the Company  wishes to amend any covenant in Article VI or the
definition  of "Excess Cash Flow" or any related  definition  to  eliminate  the
effect  of any  change  in  GAAP  on  the  operation  of  such  covenant  or the
determination  of "Excess Cash Flow" (or if the Agent  notifies the Company that
the Required  Lenders wish to amend Article VI or the definition of "Excess Cash
Flow" or any related definition for such purpose), then the Company's compliance
with  such  covenant  or  "Excess  Cash  Flow",  as the  case  may be,  shall be
determined on the basis of GAAP in effect immediately before the relevant change
in GAAP became effective, until either such notice is withdrawn or such covenant
is amended in a manner satisfactory to the Company and the Required Lenders.

                  SECTION 1.03.  Other  Definitional  Provisions.  References in
this Agreement to "Articles",  "Sections", "Schedules" or "Exhibits" shall be to
Articles,  Sections,  Schedules  or  Exhibits  of or to  this  Agreement  unless
otherwise  specifically  provided. Any of the terms defined in Section 1.01 may,
unless  the  context  otherwise  requires,  be used in the  singular  or  plural
depending on the  reference.  "Include",  "includes"  and  "including"  shall be
deemed to be followed by  "without  limitation"  whether or not they are in fact
followed  by such  words or  words  of like  import.  "Writing",  "written"  and
comparable terms refer to printing,  typing and other means of reproducing words
in a visible form. References to any agreement or contract are to such agreement
or contract as amended, modified or supplemented from time to time in accordance
with the  terms  hereof  and  thereof.  References  to any  Person  include  the
successors and assigns of such Person.  References  "from" or "through" any date
mean,  unless  otherwise  specified,   "from  and  including"  or  "through  and
including", respectively.


                                 ARTICLE II

                           REVOLVING CREDIT LOANS

                  SECTION 2.01. Revolving Credit Loans and Commitments. (a) Upon
the terms and  subject to the  conditions  set forth  herein,  from time to time
prior to the  Availability  Termination  Date,  each  Lender  severally  and not
jointly agrees to make revolving  credit loans  ("Revolving  Credit Loans") from
time to  time to the  Company  in an  aggregate  principal  amount  at any  time
outstanding  not to exceed  such  Lender's  Revolving  Credit  Commitment.  Such
Revolving  Credit  Loans  shall  constitute  either  Working  Capital  Loans  or
Acquisition  Loans.  All Loans made by the Lenders  hereunder  shall be made pro
rata in the proportion that each such Lender's Revolving Credit Commitment bears
to the Revolving Credit Commitments.

                  (b) (i)  Working  Capital  Loans  shall be  available  for the
working capital needs of the Company and its  Subsidiaries  and shall not exceed
in aggregate principal amount at any time outstanding the least of (the "Working
Capital Availability"):

                           (A)     $10,000,000,

                           (B)     prior to the  Availability  Termination Date,
                                   an amount equal to the Borrowing Base, and

                           (C)     the  Revolving  Credit   Commitment  then  in
                                   effect,   less  the   aggregate   outstanding
                                   principal amount of Acquisition Loans.

(ii) Each borrowing of Working Capital Loans shall be in an aggregate  amount of
$100,000 or an integral multiple of $10,000 in excess thereof.  No more than two
borrowings of Working  Capital Loans shall be made within any week  beginning on
Monday of such week and ending on the last Business Day of such week.

                  (c) (i) Acquisition  Loans shall be available in the sole good
faith  discretion  of the Agent and the  Required  Lenders  for the  purpose  of
financing  Acquisitions by the Company,  in an aggregate principal amount not to
exceed at any time outstanding (the  "Acquisition  Availability")  the Revolving
Credit  Commitment  then in effect,  less the  aggregate  outstanding  principal
amount of Working Capital Loans.

     (ii) Acquisition Loans may be made in such amounts and at such times as the
Agent and the Required Lenders shall agree in good faith and upon such terms and
conditions as the Agent and the Required Lenders shall require.

     (iii) In connection with the Agent's and Required  Lenders' approval of any
Acquisition  and any  borrowing  of  Acquisition  Loans,  the Company  agrees to
provide  the  Agent  and  the  Lenders,  as soon as  practicable  following  the
execution thereof,  with copies of any term sheet or commitment letter agreed to
in  connection  with such  Acquisition.  As  promptly as  practicable  following
receipt of such term sheet and/or commitment, the Agent and the Required Lenders
agree to notify the Company whether they can consent to the proposed Acquisition
as the  basic  terms  thereof  are  outlined  in the  documents  provided.  Such
indication shall be subject to approval of the definitive  documentation and the
results of any due diligence performed in connection  therewith.  At the time of
such approval, the Agent shall notify the Company of any due diligence materials
that it  wishes  to  review.  Promptly  upon the  completion  of the  definitive
documentation and as soon as the due diligence materials required are available,
the Company shall furnish a copy of such documentation  and/or such materials to
the  Agent  and the  Agent and the  Required  Lenders  agree to review  the same
promptly  and respond to the Company as  promptly as  practicable  as to whether
they approve the Acquisition.

                  (d)  Within  the  foregoing   limits,  to  but  excluding  the
Availability  Termination  Date, the Company may borrow under this Section 2.01,
prepay or repay  Revolving  Credit Loans as required under Section 2.05(b) or to
the extent  permitted by Section  2.06,  and  reborrow  pursuant to this Section
2.01.

                  SECTION 2.02.  Revolving  Credit Notes.  The Revolving  Credit
Loans of each Lender  shall be  evidenced  by a single  Revolving  Credit  Note,
substantially  in the form of  Exhibit A (each such note,  a  "Revolving  Credit
Note"),  dated the Restatement  Effective Date in an aggregate  principal amount
equal to the amount of such Lender's Revolving Credit Commitment,  duly executed
and delivered and payable to such Lender.  Each Lender shall record the date and
amount of each Revolving  Credit Loan made by it, whether such Revolving  Credit
Loan was a Working Capital Loan or an Acquisition  Loan, and the date and amount
of each payment of principal made by the Company with respect thereto, and prior
to any transfer of its Revolving Credit Note shall endorse on Schedule A thereto
(or any continuation  thereof) forming a part thereof  appropriate  notations to
evidence the foregoing  information  with respect to each such Revolving  Credit
Loan then outstanding;  provided that the failure of any Lender to make any such
recordation  or  endorsement  shall not affect the  obligations  of the  Company
hereunder or under the Revolving Credit Notes. Each Lender is hereby irrevocably
authorized by the Company so to endorse its Revolving  Credit Note and to attach
to and  make a part of its  Revolving  Credit  Note a  continuation  of any such
schedule as and when required.

                  SECTION 2.03.  Interest on the Revolving Credit Loans. (a) The
Company shall pay interest on the Revolving  Credit Loans to the Lenders monthly
in arrears on the first (1st) day of each calendar month immediately  succeeding
the month for which such interest  accrues,  commencing with the first (1st) day
of the calendar  month  following  the calendar  month in which the Closing Date
occurs. In all cases accrued interest on all of the Revolving Credit Loans shall
be payable by the Company to the  Lenders on the  Commitment  Termination  Date.
Interest  that  accrues at the Default  Rate shall be payable upon demand by the
Lenders. If any interest on any of the Revolving Credit Loans accrues or remains
payable after the Commitment Termination Date, such interest shall be payable by
the Company upon demand by the Lenders.

     (b) (i) Except as provided in  paragraphs  (c) below,  the Company shall be
obligated to pay interest to the Lenders on the outstanding principal balance of
each  Revolving  Credit  Loan from the date such  Revolving  Credit Loan is made
until such Revolving Credit Loan is repaid in full.

     (ii) Subject to Section  2.03(e),  interest on all  Revolving  Credit Loans
held by NationsCredit, or any Lender to whom NationsCredit has assigned its Note
or  any  portion  thereof  in  accordance  with  the  terms  of  Section  10.06,
outstanding during any month shall accrue at a floating rate per annum equal, at
the Company's  option,  to one of: (i) the Index Rate plus three and one-quarter
percentage  points  (3.25%),  (ii)  Adjusted  LIBOR plus  three and  one-quarter
percentage points (3.25%), or (iii) the Prime Rate plus one-half of a percentage
point (0.50%).

     (iii) Subject to 2.03(e),  interest on all  Revolving  Credit Loans held by
AmSouth  Bank, or any other Lender to whom AmSouth Bank has assigned its Note or
any portion thereof in accordance  with the terms of Section 10.06,  outstanding
during  any month  shall  accrue at a  floating  rate per  annum  equal,  at the
Company's  option, to one of: (A) the Index Rate, (B) the Adjusted LIBOR, or (C)
the Prime Rate, in each case ((A),(B), and (C)) plus the Applicable Margin.

     (iv) On the Closing Date,  continuing  through the last day of the calendar
month in which the Closing Date occurs and  thereafter  unless the Company shall
have selected  another rate or shall be deemed to have selected  another rate as
provided  below,  the Revolving  Credit Loans shall bear  interest  based on the
Prime  Rate.  Thereafter,  provided  that no  Default  or Event of  Default  has
occurred and is then  continuing,  and subject to the terms and  conditions  set
forth  herein,  the  Company  may by  written  notice (or by  telephonic  notice
confirmed  promptly in writing) delivered to the Agent not later than the Second
Business Day preceding the beginning of each calendar  month,  elect whether the
interest  payable to the Lenders for such  calendar  month shall be based on the
Prime Rate, Adjusted LIBOR or the Index Rate (each such notice being referred to
as a "Notice of Floating  Rate  Election").  In the event that the Company shall
fail to deliver any Notice of Floating Rate Election on the date required above,
provided  that no  Default  or Event  of  Default  shall  have  occurred  and be
continuing,  the Company shall be deemed to have  delivered a Notice of Floating
Rate  Election  that  elects to continue  in effect for the  calendar  month the
interest rate determination mechanism in effect for the previous month.

     (c) The Agent shall be  entitled to rely upon and shall be fully  protected
under this Agreement in relying on any Notice of Floating Rate Election believed
by the Agent to be genuine  and to assume  that the  persons  giving the same on
behalf of the Company were duly  authorized  unless the  responsible  individual
acting thereon for the Agent shall have actual notice to the contrary.

     (d) All  computations  of  interest  hereunder  or  under  the  other  Loan
Documents for Revolving  Credit Loans shall be made by the Agent on the basis of
a 360 day year for the actual  number of days  occurring in the period for which
such interest is payable.  Each  determination  by the Agent of an interest rate
hereunder  shall be  conclusive  and binding for all purposes,  absent  manifest
error.

     (e) So long as any Event of Default shall have occurred and be  continuing,
the interest rate applicable to the Loans or other Obligations of the Company or
any of its  Subsidiaries  under the Financing  Documents may be increased by the
Required Lenders, at their option, by up to two percentage points (2%) per annum
above the rate otherwise applicable (the "Default Rate").

  (a) Except as provided  in the last  sentence of this  Section  2.04(a),  each
Revolving  Credit  Loan shall be made on notice by the  Company to the  Lenders,
given no later  than  11:00  a.m.  (New York  time) on the  Business  Day of the
proposed Revolving Credit Loan. Such notice (each a "Notice of Borrowing") shall
be  substantially  in the form of Exhibit B hereto,  shall be duly completed and
executed by an Authorized  Signatory,  and shall  specify  therein the requested
date and amount of such Revolving Credit Loan, and such other information as may
be required by the Agent. Each Notice of Borrowing shall be given in writing (by
telecopy,  telex or cable) or by telephone and confirmed immediately in writing.
Notwithstanding  the  foregoing,   no  Notice  of  Borrowing  that  requests  an
Acquisition  Loan shall be effective  until the Agent  notifies the Company that
the Agent and the Required  Lenders have  consented to the proposed  Acquisition
after having been provided such information  respecting the proposed Acquisition
as is required to be delivered  pursuant to Section 3.02 and such time to review
the same as the Agent and the Required Lenders shall reasonably deem necessary.

           (b) Not later than 1:00 P.M. (New York City time) on the date of each
borrowing  specified in a Notice of Borrowing,  each Lender shall make available
its ratable share of such borrowing of Loans, in immediately available funds, to
the Company Account.

           (c) The  failure  of any  Lender to make a Loan on any date shall not
relieve any other Lender of its obligation,  if any,  hereunder to make its Loan
on that date.  Neither  the Agent nor any Lender  shall be  responsible  for the
failure  of any other  Person to make any Loan  hereunder  on the date  required
therefor.

                  SECTION 2.05.  Mandatory  Repayments and Prepayments.  (a) The
Revolving  Credit  Commitment  of each Lender shall  terminate at the opening of
business on January 2, 2004 (the "Commitment Termination Date"), and there shall
become due and the Company shall pay on the  Commitment  Termination  Date,  the
entire outstanding principal amount of each Revolving Credit Loan, together with
accrued and unpaid interest thereon to but excluding the Termination Date.

                  (b) If at any time (i) the aggregate unpaid principal  balance
of the Working Capital Loans exceeds the Working Capital  Availability,  or (ii)
the aggregate  unpaid  principal  balance of the  Acquisition  Loans exceeds the
Acquisition Availability, then, on the next succeeding Business Day, the Company
shall prepay  Working  Capital  Loans and/or  Acquisition  Loans in an aggregate
principal amount equal to such excess.

                  (c)   Commencing   on  April  1,   1999   (the   "Amortization
Commencement  Date") and  continuing  on each  Quarterly  Date  thereafter,  the
Company shall repay the Revolving  Credit Loans in equal quarterly  installments
of principal  equal to 5% of the  aggregate  principal  amount of the  Revolving
Credit Loan outstanding on the Amortization Commencement Date.

                  (d) There shall become due and payable,  and the Company shall
prepay,  on the 90th day following  the last day of each Fiscal Year,  beginning
with the Fiscal Year ending December 31, 1999, an aggregate  principal amount of
Revolving  Credit Loans equal to fifty percent (50%) of the Excess Cash Flow for
such Fiscal Year.

                  SECTION 2.06. Optional Prepayments. The Company may prepay the
Revolving  Credit  Loans in whole or in part (in  minimum  principal  amounts of
$100,000 or in any larger integral  multiple of $10,000,  or the total remaining
amount outstanding) upon at least three Business Days' prior irrevocable written
notice to the  Lenders,  without  premium or penalty.  The  aggregate  principal
amount of the Revolving  Credit Loans designated for prepayment in any notice of
optional  prepayment given pursuant to this section shall become due and payable
on the date fixed for prepayment as specified in such notice.

                  SECTION  2.07.  Application  of  Payments.   Each  payment  or
prepayment of the  principal of the Revolving  Credit Loans shall be applied pro
rata to the Revolving  Credit Loans of each Lender according to their respective
outstanding  principal  amounts,  and  shall  be  applied  to the  Class of Loan
required  under  this  Agreement  or, if not so  required,  as  directed  by the
Company. The principal amount of each payment on Revolving Credit Loans pursuant
to Section 2.05(d) shall be applied to reduce the remaining payments required by
Section 2.05(c) in inverse order of the maturity  thereof.  The principal amount
of each  payment on  Revolving  Credit  Loans  pursuant to Section 2.06 shall be
applied to reduce the remaining  payments required by Section 2.05(c) (i) 50% in
inverse  order of the  maturity  thereof,  and (ii) 50% in the order of maturity
thereof. Except as provided in the definition of Excess Cash Flow, no payment of
the principal amount of Acquisition  Loans pursuant to Section 2.05(b),  2.05(c)
or 2.06 shall reduce the amount of any payment required by 2.05(d). Each payment
of less than all  outstanding  aggregate  principal  amount of Revolving  Credit
Loans of any Class shall be applied by the Lender  receiving  such payment,  pro
rata to all  Revolving  Credit  Loans  of such  Class  held  by such  Lender  in
according to their respective outstanding principal amounts.

     SECTION 2.08. Reduction of Commitments. (a) The Revolving Credit Commitment
shall reduce: (i) to the amount of the aggregate outstanding principal amount of
the Revolving Credit Loans on the Availability  Termination Date, and after such
date by the amount of each payment made  pursuant to Section  2.06,  and (ii) by
the amount of each payment required pursuant to Section 2.05(c) or (d).

          (b) The Company shall have the right at any time to terminate in whole
this Agreement,  or from time to time,  irrevocably to reduce in part the amount
of the Revolving  Credit  Commitment,  in each case without  penalty or premium,
upon at least 15 days' prior written  notice to the Agent.  Such notice shall be
irrevocable  on the part of the Company and shall specify the effective  date of
such reduction or termination, whether a termination or reduction is being made,
and, in the case of any  reduction,  the amount thereof shall be in an amount of
Two Million Five Hundred Thousand Dollars  ($2,500,000) or an integral  multiple
thereof.  Upon any such reduction,  the Company shall simultaneously  prepay any
outstanding Revolving Credit Loans to the extent necessary so that the aggregate
outstanding  principal  amount of the Revolving Credit Loans does not exceed the
amount of the  Revolving  Credit  Commitment  after giving effect to any partial
reduction thereof. The aforesaid prior notice requirement shall not apply to the
Agent's  exercise  of  remedies  under  Section  7.01.  In the event the Company
exercises its rights under this  paragraph to prepay the Revolving  Credit Loans
and terminate this Agreement,  the Company agrees that such prepayment  shall be
accompanied by the payment by the Company of all accrued and unpaid interest and
all fees and other  remaining  Obligations.  The amount of the Revolving  Credit
Commitment  may not be  reinstated  if it is  reduced  or if this  Agreement  is
terminated by the Company.


                              ARTICLE III

                               CONDITIONS

                  SECTION 3.01.  Conditions to Closing.  The obligation of each 
Lender to make Loans on the Closing Date shall be subject to the satisfaction of
the following conditions precedent:

                  (a) receipt by the Agent of counterparts hereof signed by each
         of the  parties  hereto  (or,  in the case of any  party as to which an
         executed counterpart shall not have been received, receipt by the Agent
         in form  satisfactory  to it of  telegraphic,  telex or  other  written
         confirmation  from such party of execution of a  counterpart  hereof by
         such party);

                  (b)  receipt by  NationsCredit  of a duly  executed  Revolving
         Credit Note for its account, in the form provided for herein;

                  (c) receipt by the Agent of duly executed counterparts of each
         Security  Document  required  to  be  effective  on  the  Closing  Date
         (including the Lockbox Agreements), together with evidence satisfactory
         to it in its sole good faith discretion of the effectiveness,  priority
         and perfection of the security contemplated thereby and the lien search
         reports and any additional documents reasonably requested by the Agent;

                  (d) receipt by the Agent of a duly executed counterpart of the
         Option Agreement, substantially in the form of Exhibit K;

                  (e) receipt by the Agent of duly executed  counterparts of the
         Subsidiary  Guaranty  in the form of Exhibit E, duly  executed  by each
         Subsidiary of the Company;

                  (f)  receipt  by the  Agent  of  the  initial  Borrowing  Base
         Certificate,  in the form of Exhibit H, duly  executed and completed by
         the Company;

                  (g)  receipt by the Agent of an  opinion  of  counsel  for the
         Company and its  Subsidiaries,  substantially in the form of Exhibit I,
         and  covering  such  additional  matters  relating to the  transactions
         contemplated  hereby as  NationsCredit  may reasonably  request (by its
         execution and delivery of this  Agreement,  the Company  authorizes and
         directs such counsel to deliver such opinions to the Agent);

                  (h) receipt by the Agent of an opinion of Kilpatrick  Stockton
         LLP,  special  counsel  for the  Agent,  substantially  in the  form of
         Exhibit  J,  and  covering  such  additional  matters  relating  to the
         transactions   contemplated  hereby  as  NationsCredit  may  reasonably
         request;

                  (i) receipt by  NationsCredit,  including  in its  capacity as
         Agent,  of all fees and any other  amounts  due and  payable  hereunder
         (including fees and expenses payable pursuant to Section 8.04) of which
         the Company has received notice;

                  (j) receipt by NationsCredit of any information it may request
         concerning the financial condition, results of operations,  liabilities
         (contingent  and  otherwise,  including  with respect to  environmental
         liabilities  and employee and retiree  benefits)  and prospects of, and
         the  financial  reporting  and  accounting  systems and the  management
         information systems of, the Company;

                  (k)  satisfaction  of  NationsCredit  in its sole  good  faith
         discretion as to the absence of any event, act, condition or occurrence
         of whatever nature that  constitutes,  or that is reasonably  likely to
         result in, a Material Adverse Effect;

                  (l) receipt by  NationsCredit  of a certificate  signed by the
         chief financial officer or treasurer of the Company to the effect that,
         both  before and  immediately  after the  making of the Loans,  and the
         other transactions  contemplated to take place on the Closing Date, (i)
         no  Default  shall  have  occurred  and  be  continuing  and  (ii)  the
         representations   and  warranties  of  the  Company  and  each  of  its
         Subsidiaries made in or pursuant to the Financing Documents executed by
         such Person are true in all material respects;

                  (m) receipt by NationsCredit  of (i) the financial  statements
         and balance  sheet  referred to in Sections  4.04(a),  (b) and (c), and
         (ii) payment instructions with respect to each wire transfer to be made
         by the Agent on the  Closing  Date  setting  forth  the  amount of such
         transfer,  the  purpose  of such  transfer,  the name and number of the
         account to which such  transfer is to be made,  the name and ABA number
         of the  bank or other  financial  institution  where  such  account  is
         located and the name and telephone  number of an individual that can be
         contacted to confirm receipt of such transfer;

                  (n) receipt by the Agent of evidence satisfactory to it in its
         sole good faith discretion of the effectiveness of employment contracts
         between the Company and the Persons listed on Schedule 3.01(n); and

                  (o) receipt by the Agent of all  documents  it may  reasonably
         request relating to the existence of the Company and its  Subsidiaries,
         the  corporate   authority  for  and  the  validity  of  the  Financing
         Documents,  and any  other  matters  relevant  hereto,  all in form and
         substance satisfactory to the Agent in its sole good faith discretion.

The  documents  referred to in this  Section  shall be delivered to the Agent no
later than the Closing Date. The certificates  and opinions  referred to in this
Section shall be dated the Closing Date.

     SECTION 3.02. Conditions to Acquisition Loans. The obligation of any Lender
to make an  Acquisition  Loan on the occasion of any borrowing is subject to the
satisfaction of the following additional conditions:

                  (a)      receipt by the Lenders of a Notice of Borrowing in 
         accordance with Section 2.04;

                  (b)  receipt by the Agent of all  documents,  instruments  and
         agreements to be delivered in connection  with the  Acquisition  and/or
         any financing therefor;

                  (c)  completion  of,  and  satisfaction  of the  Agent and the
         Lenders with,  such legal and/or  business due diligence  review of the
         Acquisition, the terms thereof, and the target thereof as the Agent and
         the Lenders reasonably shall deem relevant;

                  (d) evidence satisfactory to the Agent that all property to be
         acquired in the Acquisition, including all property of any Person that,
         following such Acquisition,  is to become a Subsidiary, will be pledged
         to the Agent and the Lenders as security for the  Obligations  and that
         the Liens granted  pursuant  thereto will constitute  perfected  Liens,
         subject only to Permitted Liens, and that any Person that will become a
         Subsidiary as a result of such  Acquisition  has executed a guaranty of
         the Obligations in form and substance satisfactory to the Agent and the
         Required  Lenders  and  otherwise  complied  with the  requirements  of
         Section 6.07;

                  (e)  receipt by the Agent and the  Lenders of such  historical
         financial  statements  and  information  and  such  market  information
         respecting  the target of the  Acquisition as the Agent and the Lenders
         reasonably shall deem relevant;

                  (f)  receipt  by the  Agent  and  the  Lenders  of  pro  forma
         financial   statements   showing  the  target  and  the  Company  on  a
         consolidated  basis after giving effect to such  Acquisition  as of the
         date of the closing  thereof and a certificate  of the chief  financial
         officer or  treasurer  of the Company  demonstrating  that the Company,
         both  before and after  giving  effect to the  Acquisition,  will be in
         compliance with the financial and other covenants  contained herein and
         in the other Loan Documents; and

                  (g) such other  information  respecting the  Acquisition,  the
         target or the  Company as the Agent and the  Lenders  reasonably  shall
         deem relevant.

                  SECTION 3.03.  Conditions to Each Loan.  The obligation of any
Lender to make a Loan on the occasion of any borrowing thereof (including on the
Closing  Date)  is  subject  to the  satisfaction  of the  following  additional
conditions:

                  (a)      receipt by the Agent of a Notice of Borrowing in 
         accordance with Section 2.04;

                  (b)  the  fact  that,   immediately   before  and  after  such
         borrowing,  (i) in the case of all  borrowings,  no Default  shall have
         occurred  and be  continuing,  and (ii) in the case of a  borrowing  of
         Working Capital Loans,  the aggregate  outstanding  principal amount of
         Working   Capital  Loans  shall  be  less  than  the  Working   Capital
         Availability; and

                  (c) the fact that the  representations  and  warranties of the
         Company  contained  in the  Financing  Documents  shall  be true in all
         material  respects on and as of the date of such borrowing,  except for
         such changes  therein as are  expressly  permitted by the terms of this
         Agreement.

Each borrowing  hereunder shall be deemed to be a representation and warranty by
the Company on the date of such  borrowing as to the facts  specified in clauses
(b) and (c) of this Section.


                                ARTICLE IV

                        REPRESENTATIONS AND WARRANTIES

                  The Company  represents  and warrants as to itself and each of
its Subsidiaries that:

                  SECTION 4.01.  Corporate  Existence and Power. The Company and
each Subsidiary is a corporation duly incorporated, validly existing and in good
standing  under the laws of the State of its  organization,  and the Company and
each  other  Credit  Party has all  corporate  powers,  if  applicable,  and all
material governmental licenses, authorizations,  consents and approvals required
to carry on its business as now conducted  and as will be conducted  (including,
without  limitation,  accreditations  and certifications as a provider of health
care services  eligible to receive payment and  compensation  and to participate
under Medicare,  Medicaid,  CHAMPUS or CHAMPVA). The Company and each Subsidiary
is qualified to do business as a foreign  corporation  in each  jurisdiction  in
which the failure of the Company or such  Subsidiary  to be so  qualified  could
reasonably be expected to have a Material Adverse Effect.

                  SECTION 4.02.  Corporate and  Governmental  Authorization;  No
Contravention.  The execution,  delivery and performance by the Company and each
of its Subsidiaries of the Financing Documents to which it is a party are within
the Company's or such Subsidiary's (as the case may be) corporate  powers,  have
been duly authorized by all necessary corporate action,  require no action by or
in respect of, or filing with, any governmental  body, agency or official (other
than the filing of UCC-1 financing  statements,  which have been made and are in
full force and effect) and do not contravene, or constitute a default under, any
provision of applicable law or regulation (including specifically any applicable
rule or regulation  relating to the  eligibility  of any Credit Party to receive
payment and to  participate  as an accredited  and certified  provider of health
care services under Medicare,  Medicaid, CHAMPUS, CHAMPVA or any Blue Cross/Blue
Shield or  equivalent  program or relating to the licenses and permits  required
therein or in connection  therewith) or of the certificate of  incorporation  or
by-laws of the Company or any of its Subsidiaries or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company or any of
its Subsidiaries or result in the creation or imposition of any Lien (other than
the Liens created by the Security  Documents) on any asset of the Company or any
of its Subsidiaries.

                  SECTION 4.03. Binding Effect; Liens of Security Documents. (a)
Each of the Financing  Documents to which the Company is a party (other than the
Notes,)  constitutes a valid and binding  agreement of the Company,  and each of
the Notes,  when executed and delivered in accordance with this Agreement,  will
constitute  valid  and  binding   obligations  of  the  Company,  in  each  case
enforceable in accordance with its respective terms,  subject to: (i) the effect
of any  applicable  bankruptcy,  fraudulent  transfer,  moratorium,  insolvency,
reorganization   or  other  similar  laws  affecting  the  rights  of  creditors
generally;  and (ii) the effect of general  principles of equity whether applied
by a court of equity or law.

                  (b) Each of the Financing Documents to which any Subsidiary of
the  Company  is a party  constitutes  a valid  and  binding  agreement  of such
Subsidiary  enforceable in accordance with its terms, subject to: (i) the effect
of any  applicable  bankruptcy,  fraudulent  transfer,  moratorium,  insolvency,
reorganization   or  other  similar  laws  affecting  the  rights  of  creditors
generally;  and (ii) the effect of general  principles of equity whether applied
by a court of equity or law.

                  (c) The Security Documents create valid security interests in,
the Collateral purported to be covered thereby, which security interests are and
will remain perfected  security  interests,  prior to all other Liens other than
Permitted Liens. Each of the  representations and warranties made by the Company
or any of its Subsidiaries in the Security Documents is true and correct.

                  SECTION 4.04. Financial Information.

                  (a)  (i)  The  unaudited  consolidated  balance  sheet  of the
Company and its  Consolidated  Subsidiaries  as of June 30, 1995 and the related
unaudited  consolidated  statements of operations  and cash flows for the fiscal
year then ended,  (ii) the unaudited  consolidated  balance sheet of the Company
and its  Consolidated  Subsidiaries  as of  December  31,  1995 and the  related
unaudited consolidated  statements of operations and cash flows for the 6 months
then ended,  and (iii) the unaudited  consolidated  balance sheet of the Company
and its Consolidated Subsidiaries as of April 30, 1996 and the related unaudited
consolidated  statements  of  operations  and cash flows for the four (4) months
then ended, copies of each of which ((i), (ii) and (iii)) have been delivered to
each of the  Lenders,  fairly  present,  in  conformity  with GAAP  applied on a
consistent  basis the  consolidated  financial  position  of the Company and its
Consolidated  Subsidiaries  as of such date and their  consolidated  results  of
operations and cash flows for the periods then ended (subject to normal year-end
adjustments).  As of the date of the  latest  such  balance  sheet  and the date
hereof,  neither the Company nor any of its Subsidiaries had or has any material
liabilities, contingent or otherwise, including liabilities for taxes, long-term
leases or forward or long-term commitments,  which are not properly reflected on
such balance sheet.

                  (b) The information  contained in the most recently  delivered
Borrowing Base Certificate is complete and correct and the amounts shown therein
as "Eligible  Receivables"  have been  determined  as provided in the  Financing
Documents.

                  (c) Since  April  30,  1996,  there  has been no  event,  act,
condition  or  occurrence  of whatever  nature that  constitutes,  or that could
reasonably be expected to result in, a Material Adverse Effect.

                  SECTION  4.05.  Litigation.   There  is  no  action,  suit  or
proceeding  pending  against,  or to the  knowledge  of the  Company  threatened
against or affecting, the Company or any of its Subsidiaries before any court or
arbitrator or any  governmental  body,  agency or official  which,  if adversely
determined,  could  reasonably  be expected to have a Material  Adverse  Effect.
There is no action,  suit or proceeding pending against,  or to the knowledge of
the Company threatened  against or affecting,  any party to any of the Financing
Documents  before any court or arbitrator or any  governmental  body,  agency or
official  which in any manner  draws into  question  the  validity of any of the
Financing  Documents.  There is no pending  investigation of any Credit Party by
HCFA or any other governmental  authority,  which investigation is not otherwise
conducted  in the  ordinary  course  of  business  and  no  criminal,  civil  or
administrative action, audit, or investigation by a fiscal intermediary or by or
on behalf of any governmental  authority exists or, to the best knowledge of the
Company,  is threatened with respect to any Credit Party which could  reasonably
be expected to  materially  and  adversely  affect such Credit  Party's right to
receive  Medicare,  Medicaid,  CHAMPUS  or CHAMPVA  reimbursement  to which such
Credit  Party  would  otherwise  be  entitled,  or right to  participate  in the
Medicare,  Medicaid,  CHAMPUS or CHAMPVA programs,  or otherwise have a Material
Adverse  Effect  on the  receipt  of  Medicare,  Medicaid,  CHAMPUS  or  CHAMPVA
reimbursement  by such Credit Party,  and, to the best knowledge of the Company,
no Credit  Party is subject to any pending but  unassessed  Medicare,  Medicaid,
CHAMPUS or CHAMPVA  claim  payment  adjustments,  except to the extent that such
Credit  Party  is  contesting  such  assessment  in good  faith  by  appropriate
proceedings  diligently  pursued and has established and will maintain  adequate
reserves for such adjustments in accordance with GAAP.

                  SECTION 4.06.  Ownership of Property,  Liens. On and as of the
Restatement  Effective Date, the Company and each Subsidiary is the lawful owner
of,  has good and  marketable  title to and is in lawful  possession  of, or has
valid leasehold interests in, all properties and other assets (real or personal,
tangible,  intangible or mixed) purported to be owned or leased (as the case may
be) by such Person on the balance sheet referred to in Section 4.04(a), and none
of such Person's properties and assets is subject to any Liens, except Permitted
Liens.  The  Company  and  its  Subsidiaries   conduct  their  business  without
infringement  or  claim  of  infringement  of  any  material  license,   patent,
trademark,   trade  name,  service  mark,  copyright,   trade  secret  or  other
intellectual  property right of others and there is no  infringement or claim of
infringement by others of any material license, patent,  trademark,  trade name,
service mark,  copyright,  trade secret or other intellectual  property right of
the Company or any of its Subsidiaries.

                  SECTION  4.07.  No  Default.  No Default has  occurred  and is
continuing  and neither the  Company nor any of its  Subsidiaries  is in default
under  or with  respect  to any  material  contract,  agreement,  lease or other
material  instrument to which it is a party or by which its property is bound or
affected.   Neither  the  Company  nor  any  other  Credit  Party  has  received
notification  from  any  governmental   authority  that  any  such  governmental
authority has taken or intends to take action to revoke,  terminate or adversely
amend any  license,  certificate,  accreditation  or  permit  of such  Person to
operate a  healthcare  facility  or to  participate  under  Medicare,  Medicaid,
CHAMPUS or CHAMPVA.

                  SECTION 4.08. No Burdensome Restrictions.  No contract, lease,
agreement or other instrument to which the Company or any of its Subsidiaries is
a party or by  which  any of its  property  is bound  or  affected,  no  charge,
corporate restriction,  judgment, decree or order and no provision of applicable
law or  governmental  regulation  is  reasonably  likely  to have or result in a
Material Adverse Effect.

                  SECTION  4.09.  Labor  Matters.  There are no strikes or other
labor  disputes  pending or, to the best  knowledge of the Company,  threatened,
against the Company or any of its  Subsidiaries.  Hours worked and payments made
to the employees of the Company and its Subsidiaries  have not been in violation
of the Fair Labor  Standards Act or any other  applicable  law dealing with such
matters.  All payments due from the Company or any of its  Subsidiaries,  or for
which  any  claim  may be made  against  any of them,  on  account  of wages and
employee and retiree  health and welfare  insurance and other benefits have been
paid or  accrued  as a  liability  on  their  books,  as the  case  may be.  The
consummation of the  transactions  contemplated by the Financing  Documents will
not give rise to a right of termination or right of renegotiation on the part of
any union under any collective bargaining agreement to which it is a party or by
which it is bound.

                  SECTION 4.10.  Subsidiaries;  Other Equity Investments.  Other
than  as set  forth  on  Schedule  4.10,  the  Company  has no  Subsidiaries  on
Restatement  Effective  Date.  Each such  Subsidiary is, and, in the case of any
additional corporate  Subsidiaries formed after the Restatement  Effective Date,
each of such additional  corporate  Subsidiaries  will be at each time that this
representation  is made or deemed to be made  after  the  Restatement  Effective
Date, a wholly-owned Subsidiary that is a corporation duly incorporated, validly
existing  and  in  good  standing  under  the  laws  of  its   jurisdiction   of
incorporation,  and has all  corporate  powers  and  all  material  governmental
licenses,  authorizations,  consents  and  approvals  required  to  carry on its
business as then conducted.  Neither the Company nor any of its  Subsidiaries is
engaged in any joint venture or partnership with any other Person.

                  SECTION  4.11.  Investment  Company Act. The Company is not an
"investment  company"  as  defined in the  Investment  Company  Act of 1940,  as
amended.  The  consummation  of the  transactions  contemplated by the Financing
Documents  do not and will not  violate any  provision  of such Act or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder.

                  SECTION 4.12.  Margin  Regulations.  None of the proceeds from
the Loans have been or will be used, directly or indirectly,  for the purpose of
purchasing or carrying any Margin Stock, for the purpose of reducing or retiring
any indebtedness  which was originally  incurred to purchase or carry any Margin
Stock or for any other  purpose  which  might  cause any of the loans under this
Agreement to be considered a "purpose  credit"  within the meaning of Regulation
G, U or X of the Board of Governors of the Federal Reserve Board.

                  SECTION 4.13. Taxes. The Company's federal tax  identification
number  is  75-2529809  and the  federal  tax  identification  number  for  each
Subsidiary  is  accurately  listed for such  Subsidiary  on Schedule  4.10.  All
Federal,  state and local tax  returns,  reports and  statements  required to be
filed by or on behalf of the Company and its  Subsidiaries  have been filed with
the  appropriate  governmental  agencies  in all  jurisdictions  in  which  such
returns,  reports  and  statements  are  required  to be  filed,  and all  taxes
(including  real  property  taxes) and other charges shown to be due and payable
have been  timely paid prior to the date on which any fine,  penalty,  interest,
late charge or loss may be added thereto for nonpayment  thereof,  except any of
the  foregoing  as may be subject to a  Permitted  Contest.  All state and local
sales  and  use  taxes  required  to be  paid  by  the  Company  or  any  of its
Subsidiaries  have been paid, except any of the foregoing as may be subject to a
Permitted Contest.  All Federal and state returns have been filed by the Company
and its  Subsidiaries for all periods for which returns were due with respect to
employee income tax withholding, social security and unemployment taxes, and the
amounts  shown  thereon to be due and payable have been paid in full or adequate
provisions therefor have been made.

                  SECTION 4.14.  Compliance with ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of ERISA
and the Code with  respect  to each Plan and is in  compliance  in all  material
respects  with the  presently  applicable  provisions of ERISA and the Code with
respect  to each Plan.  No member of the ERISA  Group has (i) sought a waiver of
the minimum  funding  standard  under  Section 412 of the Code in respect of any
Plan,  (ii)  failed  to  make  any  contribution  or  payment  to  any  Plan  or
Multiemployer  Plan or in  respect  of any  Benefit  Arrangement,  or  made  any
amendment  to any Plan or  Benefit  Arrangement,  which  has  resulted  or could
reasonably be expected to result in the imposition of a Lien or the posting of a
bond or other  security  under ERISA or the Code or (iii) incurred any liability
under Title IV of ERISA other than a liability  to the PBGC for  premiums  under
Section 4007 of ERISA.

                  SECTION 4.15. Brokers. No broker, finder or other intermediary
has  brought  about  the  obtaining,  making  or  closing  of  the  transactions
contemplated  by the Financing  Documents,  and the Company has and will have no
obligation  to any  Person in  respect  of any  finder's  or  brokerage  fees in
connection herewith or therewith.

                  SECTION  4.16.   Employment,   Shareholders  and  Subscription
Agreements. Except for the agreements described in Schedule 4.16 (which schedule
may be updated  from time to time by the  Company  with the consent of the Agent
which consent shall not be unreasonably  withheld),  true and complete copies of
which have been delivered to the Lenders, there are no (i) employment agreements
covering  the  management  of the  Company  or any  of  its  Subsidiaries,  (ii)
collective bargaining agreements or other labor agreements covering any group of
employees of the Company or its Subsidiaries,  or (iii) agreements regarding the
Company or any of its Subsidiaries, their respective assets or operations or any
investment therein to which any of its stockholders is a party.

                  SECTION  4.17.  Full  Disclosure.   None  of  the  information
(financial or  otherwise)  furnished by or on behalf of the Company to the Agent
or  any  Lender  in  connection  with  the   consummation  of  the  transactions
contemplated by any of the Financing  Documents contains any untrue statement of
a  material  fact or  omits  to  state a  material  fact  necessary  to make the
statements  contained  herein  or  therein  not  misleading  in the light of the
circumstances  under which such statements were made. All financial  projections
delivered  to the Lenders  have been  prepared  on the basis of the  assumptions
stated  therein.  Except as previously  disclosed to the Agent in writing,  such
projections  represent  the  Company's  best  estimate of the  Company's  future
financial  performance  and such  assumptions  are believed by the Company to be
fair in light of current  business  conditions at the time such projections were
delivered to the Agent.

                  SECTION 4.18.  Private  Offering.  Neither the Company nor any
Person acting on its behalf has offered the Notes or any similar  securities for
sale to,  or  solicited  any  offer to buy any of the same  from,  or  otherwise
approached  or negotiated  in respect  thereof  with,  any Person other than the
Lenders  and not more than  five  other  institutional  investors.  Neither  the
Company nor any Person acting on its behalf has taken,  or will take, any action
which  would  subject  the  issuance  or sale of the  Notes to  Section 5 of the
Securities Act.

                  SECTION 4.19.  Compliance with  Environmental  Requirements;  
No Hazardous  Materials.  Except as provided on Schedule 4.19:

                  (a) Other than  generation in compliance  with all  applicable
         Environmental   Laws,  no  Hazardous   Materials  are  located  on  any
         properties now or previously  owned,  leased or operated by the Company
         or any of its  Subsidiaries or have been released into the environment,
         or deposited,  discharged,  placed or disposed of at, on, under or near
         any of such  properties  except  such of the  foregoing  as  could  not
         reasonably be expected to have a Material Adverse Effect. No portion of
         any such  property  is being used in, or has been used at any  previous
         time,  for  the  disposal,  storage,  treatment,  processing  or  other
         handling of  Hazardous  Materials  (other than  processing  or handling
         incidental to the generation of Hazardous  Materials in compliance with
         all applicable  Environmental  Laws), nor is any such property affected
         by  any  Hazardous  Materials  Contamination  except  for  such  of the
         foregoing  as could  not  reasonably  be  expected  to have a  Material
         Adverse Effect.

                  (b) No asbestos or  asbestos-containing  materials are present
         on any of the properties now or previously owned, leased or operated by
         the Company or any of its Subsidiaries  except such of the foregoing as
         could not reasonably be expected to have a Material Adverse Effect.

                  (c) No  polychlorinated  biphenyls  are  located  on or in any
         properties now or previously  owned,  leased or operated by the Company
         or any of its  Subsidiaries,  in the form of  electrical  transformers,
         fluorescent  light  fixtures with  ballasts,  cooling oils or any other
         device or form except such of the foregoing as could not  reasonably be
         expected to have a Material Adverse Effect.

                  (d) No underground storage tanks are located on any properties
         now or  previously  owned,  leased or operated by the Company or any of
         its Subsidiaries, or were located on any such property and subsequently
         removed or filled except such of the foregoing as could not  reasonably
         be expected to have a Material Adverse Effect.

                  (e) Except as disclosed on Schedule 4.19 (as such schedule may
         be updated  from time to time by the  Company  with the  consent of the
         Agent which consent  shall not be  unreasonably  withheld),  no notice,
         notification,  demand,  request for information,  complaint,  citation,
         summons,   investigation,   administrative  order,  consent  order  and
         agreement, litigation or settlement with respect to Hazardous Materials
         or  Hazardous  Materials  Contamination  is in  existence  or,  to  the
         Company's knowledge,  proposed,  threatened or anticipated with respect
         to or in  connection  with  the  operation  of  any  properties  now or
         previously  owned,  leased or  operated  by the  Company  or any of its
         Subsidiaries.  All such  properties  and their  existing and prior uses
         comply and at all times have complied with any applicable  governmental
         requirements  relating to environmental  matters or Hazardous Materials
         except for such  noncompliances  as could not reasonably be expected to
         have a Material  Adverse  Effect.  Except as disclosed on Schedule 4.19
         there is no condition on any of such  properties  which is in violation
         of any  applicable  governmental  requirements  relating  to  Hazardous
         Materials,  and neither the  Company  nor any of its  Subsidiaries  has
         received  any  communication  from  or on  behalf  of any  governmental
         authority that any such condition exists.  Except disclosed on Schedule
         4.19 (as such  schedule may be updated from time to time by the Company
         with the consent of the Agent which consent  shall not be  unreasonably
         withheld),  none of such  properties  nor any  property  to  which  the
         Company has,  directly or  indirectly,  transported or arranged for the
         transportation   of  any  material  is  listed  or,  to  the  Company's
         knowledge,  proposed  for  listing  on  the  National  Priorities  List
         promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on
         any  similar  federal,   state  or  foreign  list  of  sites  requiring
         investigation or cleanup,  nor, to the knowledge of the Company, is any
         such property anticipated or threatened to be placed on any such list.

                  (f)  There  has been no  environmental  investigation,  study,
         audit,  test,  review or other analysis  conducted of which the Company
         has  knowledge  in  relation  to the  current or prior  business of the
         Company or any property or facility now or previously owned,  leased or
         operated by the Company or any of its  Subsidiaries  which has not been
         delivered to the Lenders at least five days prior to the date hereof.

                  (g) For purposes of this Section 4.19, the terms "Company" and
         "Subsidiary" shall include any business or business entity (including a
         corporation)  which  is,  in  whole or in part,  a  predecessor  of the
         Company or any Subsidiary.

                  SECTION  4.20.  Real  Property   Interests.   Except  for  the
ownership,  leasehold or other interests set forth in Schedule 4.20, the Company
and its  Subsidiaries  have, as of the Closing Date, no ownership,  leasehold or
other interest in real property.

                  SECTION 4.21. Third Party  Reimbursement . If any Credit Party
is or has been  audited  by  Medicare,  Medicaid,  CHAMPUS,  CHAMPVA  or similar
governmental   Third  Party  Payors,  (i)  none  of  such  audits  provides  for
adjustments  in  reimbursable  costs or  asserts  claims  for  reimbursement  or
repayment by such Credit Party of costs and/or payments theretofore made by such
governmental Third Party Payor that, if adversely  determined,  could reasonably
be expected to have or result in a Material  Adverse Effect and (ii) none of the
Credit  Parties have had requests or assertions of claims for  reimbursement  or
repayment  by it of costs  and/or  payments  heretofore  made by any other Third
Party Payor that, if adversely determined,  could reasonably be expected to have
or result in a  Material  Adverse  Effect,  except in either  case to the extent
described on Schedule 4.21.

                  SECTION  4.22.  Additional  Representations;   Schedules.  All
certifications,  information,  statements, conclusions and the like contained in
any  Borrowing  Base  Certificate,  Receivable  Report,  certificate,  financial
statement  or other  instrument  delivered by or on behalf of the Company or any
Subsidiary pursuant to any of the Financing Documents (including but not limited
to any  such  made  in or in  connection  with  any  amendment  to  any of  such
documents)  shall  constitute  representations  and  warranties  made under this
Agreement.  Wherever a  representation  and warranty  made under this  Agreement
refers to a schedule or an amended schedule,  it shall be deemed to refer to the
schedule  attached  hereto  or,  if one or  more  amended  schedules  have  been
furnished,  the amended schedule most recently so furnished prior to the date as
of which the  representation  and warranty is made, and the later delivery of an
amended   schedule   shall  not   retroactively   effect  a  correction  of  any
representation and warranty which was incorrect or untrue when made.


                                   ARTICLE V

                             AFFIRMATIVE COVENANTS

                  The  Company  agrees  that,  so  long  as any  Lender  has any
Commitment hereunder or any amount payable under any Note remains unpaid:

                  SECTION 5.01.  Financial  Statements  and Other  Reports.  The
Company will maintain a system of accounting  established  and  administered  in
accordance  with sound  business  practices to permit  preparation  of financial
statements in accordance with GAAP, and will deliver to each of the Lenders:

                  (a) as soon as  practicable  and in any  event  within 45 days
         after  the end of each  month,  a  consolidated  balance  sheet  of the
         Company and its  Consolidated  Subsidiaries as at the end of such month
         and the related  consolidated  statements of operations  and cash flows
         for such month, and for the portion of the Fiscal Year ended at the end
         of such  month  setting  forth  in each  case in  comparative  form the
         figures for the  corresponding  periods of the previous Fiscal Year and
         the  figures  for such month and for such  portion  of the Fiscal  Year
         ended  at the end of  such  month  that  are set  forth  in the  annual
         operating  and  capital  expenditure  budgets  and cash  flow  forecast
         delivered  pursuant to Section  5.01(j),  all in reasonable  detail and
         certified  by the chief  financial  officer  of the  Company  as fairly
         presenting  the  financial  condition  and results of operations of the
         Company and its  Consolidated  Subsidiaries and as having been prepared
         in accordance with GAAP applied on a basis  consistent with the audited
         financial statements of the Company,  subject to changes resulting from
         audit and normal year-end adjustments;

                  (b) as soon as  available  and in any  event  within  100 days
         after the end of each Fiscal Year, a consolidated  balance sheet of the
         Company and its Consolidated  Subsidiaries as of the end of such Fiscal
         Year  and  the   related   consolidated   statements   of   operations,
         stockholders' equity and cash flows for such Fiscal Year, setting forth
         in each case in  comparative  form the figures for the previous  Fiscal
         Year and the  figures  for such  Fiscal  Year that are set forth in the
         annual operating and capital expenditure budgets and cash flow forecast
         delivered  pursuant to Section 5.01(j),  certified (solely with respect
         to such  consolidated  statements)  without  qualification  by  Arthur,
         Andersen & Co. or other  independent  public  accountants of nationally
         recognized standing;

                  (c) (i) together  with each  delivery of financial  statements
         pursuant to (a) and (b) above, an Officers'  Certificate of the Company
         stating that the officers  executing such certificate have reviewed the
         terms of this Agreement and have made, or caused to be made under their
         supervision,  a review in  reasonable  detail of the  transactions  and
         condition of the Company during the  accounting  period covered by such
         financial  statements  and  that  such  review  has not  disclosed  the
         existence during or at the end of such accounting period, and that such
         officers do not have  knowledge of the existence as at the date of such
         Officers' Certificate,  of any Default, or, if any such Default existed
         or exists,  specifying  the nature and period of existence  thereof and
         what action the Company has taken or is taking or proposes to take with
         respect  thereto;   (ii)  together  with  each  delivery  of  financial
         statements for each month and Fiscal Year, a compliance  certificate of
         the chief  financial  officer or treasurer of the Company (x) providing
         details of all transactions between the Company and any Person referred
         to in Section 6.08, (y)  demonstrating in reasonable  detail compliance
         during  and at the end of such  accounting  period  with the  covenants
         contained in Sections 6.11 through 6.18, provided,  however,  that such
         Officers'  Certificate  shall be required to calculate  compliance with
         Sections  6.12,  6.14,  6.16 and  6.17  only  quarterly  and (z) if not
         specified in the financial  statements delivered pursuant to (a) or (b)
         above, as the case may be,  specifying the aggregate amount of interest
         paid  or  accrued  and  the  aggregate   amount  of  depreciation   and
         amortization   charged,   during  such  accounting  period;  and  (iii)
         beginning  with the  delivery  of the  fiscal  year end 1998  financial
         statements,   together  with  each  delivery  of  financial  statements
         pursuant to (b) above, a statement  setting forth in reasonable  detail
         the  computation  of Excess Cash Flow,  if any,  for such Fiscal  Year,
         certified by the chief financial officer or treasurer of the Company as
         having been prepared from such financial  statements in accordance with
         this Agreement;

                  (d)  together  with  each  delivery  of  financial  statements
         pursuant to (b) above, a written  statement by the  independent  public
         accountants  giving the report  thereon  (i)  stating  that their audit
         examination  has included a review of the terms of this Agreement as it
         relates to accounting matters, (ii) stating whether, in connection with
         their audit examination,  any Default has come to their attention,  and
         if such a condition  or event has come to their  attention,  specifying
         the nature and period of  existence  thereof,  and (iii)  stating  that
         based on their audit  examination  nothing has come to their  attention
         which  causes them to believe  that the  information  contained  in the
         certificates  delivered  therewith pursuant to (c) above is not correct
         and that the matters set forth in the compliance  certificate delivered
         therewith  pursuant  to clause  (ii) of (c)  above  for the  applicable
         Fiscal  Year  are not  stated  in  accordance  with  the  terms of this
         Agreement;

                  (e)  promptly  upon  receipt  thereof,  copies of all  reports
         submitted  to  the  Company  by  independent   public   accountants  in
         connection with each annual,  interim or special audit of the financial
         statements  of the  Company  made by such  accountants,  including  the
         comment  letter   submitted  by  such   accountants  to  management  in
         connection with their annual audit;

                  (f) promptly upon their becoming available,  copies of (i) all
         financial  statements,  reports,  notices and proxy  statements sent or
         made available  generally by the Company to its security holders,  (ii)
         all regular and periodic  reports and all  registration  statements and
         prospectuses filed by the Company with any securities  exchange or with
         the Securities and Exchange  Commission or any  governmental  authority
         succeeding  to any of its  functions  and (iii) all press  releases and
         other statements made available  generally by the Company to the public
         concerning material developments in the business of the Company;

                  (g)  promptly  upon  any  officer  of  the  Company  obtaining
         knowledge (i) of the existence of any Default,  or becoming  aware that
         the holder of any Debt of the Company or any Subsidiary that singly, or
         when aggregated with all other Debt of the Company or its  Subsidiaries
         the  holders  of which  have taken  similar  action,  equals or exceeds
         $50,000 in principal  amount  outstanding has given any notice or taken
         any other action with respect to a claimed default thereunder,  (ii) of
         any change in the Company's certified accountant or any resignation, or
         decision not to stand for  re-election,  by any member of the Company's
         board of  directors,  (iii) that any Person has given any notice to the
         Company or any  Subsidiary  or taken any other action with respect to a
         claimed  default  under any  agreement  or  instrument  (other than the
         Financing Documents) to which the Company or any of its Subsidiaries is
         a party or by which any of their assets are bound the  indebtedness  or
         obligation  under which either singly or when aggregated with all other
         claims of Persons  taking similar  action,  is equal to or greater than
         $50,000 or (iv) of the  institution  of any  litigation or  arbitration
         involving   an  alleged   liability  of  the  Company  or  any  of  its
         Subsidiaries   equal  to  or  greater   than  $50,000  or  any  adverse
         determination in any litigation or arbitration  proceedings that singly
         or when aggregated with all other outstanding litigation or arbitration
         claims  involve a  potential  liability  of the  Company  or any of its
         Subsidiaries equal to or greater than $50,000, an Officers' Certificate
         of the Company  specifying  the nature and period of  existence  of any
         such condition or event, or specifying the notice given or action taken
         by such  holder  or  Person  and the  nature  of such  claimed  default
         (including  any  Default),  event or  condition,  and what  action  the
         Company or any affected  Subsidiary has taken, is taking or proposes to
         take with respect thereto;

                  (h) if and when any member of the ERISA  Group (i) gives or is
         required  to give  notice  to the PBGC of any  "reportable  event"  (as
         defined in Section  4043 of ERISA) with respect to any Plan which might
         constitute  grounds  for a  termination  of such Plan under Title IV of
         ERISA, or knows that the plan administrator of any Plan has given or is
         required to give  notice of any such  reportable  event,  a copy of the
         notice of such  reportable  event  given or required to be given to the
         PBGC; (ii) receives notice of complete or partial withdrawal  liability
         under  Title IV of ERISA or notice  that any  Multiemployer  Plan is in
         reorganization,  is  insolvent or has been  terminated,  a copy of such
         notice;  (iii) receives notice from the PBGC under Title IV of ERISA of
         an intent to terminate, impose liability (other than for premiums under
         Section  4007 of  ERISA)  in  respect  of,  or  appoint  a  trustee  to
         administer  any Plan, a copy of such notice;  (iv) applies for a waiver
         of the minimum  funding  standard under Section 412 of the Code, a copy
         of such  application;  (v) gives notice of intent to terminate any Plan
         under  Section  4041(c)  of  ERISA,  a copy of such  notice  and  other
         information  filed with the PBGC;  (vi) gives notice of withdrawal from
         any Plan pursuant to Section 4063 of ERISA,  a copy of such notice;  or
         (vii)  fails  to  make  any  payment  or  contribution  to any  Plan or
         Multiemployer  Plan or in respect of any Benefit  Arrangement  or makes
         any amendment to any Plan or Benefit  Arrangement which has resulted or
         could  result in the  imposition  of a Lien or the posting of a bond or
         other  security,  a certificate of the chief  financial  officer or the
         chief  accounting  officer of the Company  setting  forth details as to
         such  occurrence  and action,  if any,  which the Company or applicable
         member of the ERISA Group is required or proposes to take;

                  (i) copies of any material  reports or notices (but  excluding
         tax returns) related to taxes and any other material reports or notices
         received  by the  Company  from,  or filed  by the  Company  with,  any
         Federal,  state or local  governmental  agency or body  regulating  the
         activities of the Company;

                  (j) within 30 days after the  conclusion  of each Fiscal Year,
         the Company's annual operating and capital expenditure budgets and cash
         flow  forecast  for the  following  Fiscal Year  presented on a monthly
         basis,   which  shall  be  in  a  format  reasonably   consistent  with
         projections, budgets and forecasts theretofore provided to the Lenders;

                  (k) together  with each Notice of Borrowing and on the seventh
         Business  Day of each month,  a Borrowing  Base  Certificate  as of the
         close of business of the last Business Day of the preceding month;

                  (l) within five Business Days after any request therefor, such
         information  in such  detail  concerning  the amount,  composition  and
         manner  of  calculation  of  the  Borrowing  Base  as  any  Lender  may
         reasonably request;

                  (m) within twenty days after the end of each month,  a report,
         in form and  substance  acceptable to the Required  Lenders,  as to all
         accounts  receivable of the Company  outstanding  as of the last day of
         such month (a "Receivables  Report"),  which shall set forth in summary
         form an aging of such  Receivables  and such other  information  as the
         Agent shall reasonably request;

                  (n) together with the next  delivery of a  Receivables  Report
         after the Company becomes aware thereof,  notice of any dispute between
         any Third  Party Payor and the  Company,  any  Subsidiary  or any other
         Credit Party, with respect to any amounts due and owing that singly, or
         when aggregated with all other similar  disputes with other Third Party
         Payors of the Company,  the  Subsidiaries and the other Credit Parties,
         equals or exceeds $100,000, with an explanation in reasonable detail of
         the reason for the dispute,  all claims related  thereto and the amount
         in controversy; and

                  (o) with  reasonable  promptness,  such other  information and
         data with  respect  to the  Company or any of its  Subsidiaries  or any
         other Credit Party as from time to time may be reasonably  requested by
         any Lender.

                  SECTION 5.02.  Payment of  Obligations.  The Company (i) shall
pay and discharge,  and cause each of its Subsidiaries to pay and discharge,  at
or  before  maturity,   all  of  their  respective   material   obligations  and
liabilities, including tax liabilities, except where the same may be the subject
of a Permitted Contest, (ii) shall maintain,  and cause each of its Subsidiaries
to maintain,  in accordance with GAAP,  appropriate  reserves for the accrual of
any of the same and (iii) shall not breach or permit any of its  Subsidiaries to
breach, in any material respect, or permit to exist any default under, the terms
of any material lease, commitment,  contract,  instrument or obligation to which
it is a party,  or by which its  properties  or assets  are  bound,  subject  to
Permitted Contests.

                  SECTION  5.03.   Conduct  of  Business  and   Maintenance   of
Existence. The Company will continue, and will cause each of its Subsidiaries to
continue, to engage in business of the same general type as now conducted by the
Company and its  Subsidiaries,  and will preserve,  renew and keep in full force
and effect,  and will cause each Subsidiary to preserve,  renew and keep in full
force and effect  their  respective  corporate  existence  and their  respective
rights,  privileges and franchises  necessary or desirable in the normal conduct
of business;  provided that nothing contained in this Section shall be deemed to
prohibit any merger or consolidation  that is otherwise  permitted under Section
6.06.

                  SECTION  5.04.  Maintenance  of Property;  Insurance.  
(a) The Company will keep,  and will cause each of its  Subsidiaries  to keep, 
all property  necessary in its business in good working  order and  condition,
ordinary wear and tear excepted.

                  (b) The  Company  will  maintain,  and will  cause each of its
Subsidiaries to maintain, (i) physical damage insurance on all real and personal
property  on an all risks basis  (including  the perils of flood and quake where
reasonably required and available at a reasonable cost), covering the repair and
replacement  of all such property and  consequential  loss coverage for business
interruption  and extra expense,  covering such risks, for amounts not less than
those,  and with deductible  amounts not greater than those, set forth in Part I
of Schedule 5.04, (ii) public liability insurance (including  products/completed
operations  liability and professional  injury liability coverage) covering such
risks, for amounts not less than those, and with deductible  amounts not greater
than those, set forth in Part II of Schedule 5.04 and (iii) such other insurance
coverage in such amounts and with respect to such risks as the Required  Lenders
may reasonably request.  All such insurance shall be provided by insurers having
an A.M. Best policyholders  rating of not less than B+ or such other insurers as
the  Required  Lenders  may  approve in  writing.  The  Company  and each of its
Subsidiaries  will cause each other  Credit  Party to comply with the  insurance
requirements  specified in the Service Agreement to which such Credit Party is a
party.

                  (c) On or prior to the Closing  Date,  the Company shall cause
the Agent to be named as an additional  insured and loss payee on each insurance
policy required to be maintained pursuant to this Section 5.04. The Company will
deliver to the Lenders (i) on the Closing Date, a certificate from the Company's
insurance broker dated such date showing the amount of coverage as of such date,
and certifying that, in the opinion of such broker,  such amounts are reasonable
and  customary  for  companies of  established  repute  engaged in the same or a
similar  business,  that such policies will include  effective  waivers (whether
under the terms of any such  policy or  otherwise)  by the insurer of all claims
for insurance  premiums against all loss payees and additional  insureds and all
rights of subrogation against all loss payees and additional insureds,  and that
if all or any part of such  policy  is  canceled,  terminated  or  expires,  the
insurer will forthwith give notice thereof to each  additional  insured and loss
payee  and that no  cancellation,  reduction  in amount  or  material  change in
coverage thereof shall be effective until at least 30 days after receipt by each
additional  insured  and loss payee of  written  notice  thereof,  (ii) upon the
request  of the Agent  from time to time full  information  as to the  insurance
carried, (iii) within five days of receipt of notice from any insurer, a copy of
any notice of cancellation,  nonrenewal or material change in coverage from that
existing on the Closing Date and (iv) forthwith,  notice of any  cancellation or
nonrenewal of coverage by the Company or any of its Subsidiaries.

                  SECTION 5.05.  Compliance  with Laws. The Company will comply,
and  cause  each  of its  Subsidiaries  to  comply  with  all  applicable  laws,
ordinances,  rules,  regulations,  and requirements of governmental  authorities
(including   Environmental   Laws  and  ERISA  and  the  rules  and  regulations
thereunder),   except  for  such  noncompliances  that,   individually  or  when
aggregated  with all other  noncompliances,  could not reasonably be expected to
have a Material Adverse Effect.

                  SECTION 5.06.  Inspection of Property,  Books and Records. The
Company will keep, and will cause each of its  Subsidiaries and the other Credit
Parties to keep,  proper  books of record and  account in which  full,  true and
correct  entries shall be made of all dealings and  transactions  in relation to
its  business  and  activities;  and will  permit,  and will  cause  each of its
Subsidiaries  and the other  Credit  Parties to permit,  representatives  of any
Lender,  at the Lenders'  expense,  to visit and inspect any of their respective
properties, to examine and make abstracts or copies from any of their respective
books  and  records,  to  conduct  a  collateral  audit  and  analysis  of their
respective  inventories and accounts  receivable and to discuss their respective
affairs,  finances and accounts with their  respective  officers,  employees and
independent public accountants, all at such reasonable times and as often as may
reasonably be desired.

                  SECTION 5.07. Use of Proceeds. The proceeds of Working Capital
Loans  shall be used by the  Company  solely for  working  capital  needs of the
Company and its Subsidiaries. The proceeds of Acquisition Loans shall be used by
the  Company  solely  to fund  Acquisitions  consented  to by the  Agent and the
Lenders in their sole good faith discretion.  None of such proceeds will be used
in violation of any applicable law or regulation.

                  SECTION 5.08.  Further  Assurances.  The Company will, and the
Company will cause each of its  Subsidiaries  and each other Credit Party to, at
the Company's cost and expense,  cause to be promptly and duly taken,  executed,
acknowledged  and delivered all such further acts,  documents and assurances (x)
as may from time to time be necessary  or as the Required  Lenders may from time
to time reasonably  request in order to carry out the intent and purposes of the
Financing  Documents and the transactions  contemplated  thereby,  including all
such  actions to  establish,  preserve,  protect and perfect the estate,  right,
title and  interest  of the  Lenders  to the  Collateral  (including  Collateral
acquired after the date hereof), including first priority Liens thereon, subject
only to Permitted  Liens and (y) as the Lenders may from time to time reasonably
request,  to establish,  preserve,  protect and perfect first  priority Liens in
favor of the Lenders on any and all assets of the  Company and its  Subsidiaries
and on the  Receivables  of the other  Credit  Parties,  now owned or  hereafter
acquired, that are not Collateral on the date hereof. The Company shall promptly
give notice to the Agent of the acquisition after the Restatement Effective Date
by the Company or any Subsidiary of any real property  (including  leaseholds in
respect of real property), trademark, copyright or patent.

                  SECTION 5.09. Lenders' Meetings.  Within 45 days after the end
of each  Fiscal  Year,  the  Company  will  conduct a meeting of the  Lenders to
discuss such fiscal year's results and the financial condition of the Company at
which  shall be present  the chief  executive  officer  and the chief  financial
officer of the Company and such other  officers of the Company as the  Company's
chief executive  officer shall designate.  Such meetings shall be held at a time
and place convenient to the Lenders and to the Company.

                  SECTION 5.10. Hedging  Facilities.  If the aggregate principal
amount of Revolving Credit Loans outstanding reaches at any time an amount equal
to or greater than $15,000,000, the Lenders may require that the Company, at its
sole cost and  expense,  enter into and  thereafter  maintain  in full force and
effect  interest rate cap  agreements in such amounts and on such terms as shall
reasonably be requested by the Agent.

                  SECTION 5.11.  Hazardous Materials;  Remediation.  The Company
will (i) promptly give notice to the Lenders in writing of any complaint, order,
citation, notice or other written communication from any Person with respect to,
or if the Company becomes aware of, (x) the existence or alleged  existence of a
violation  of  any  applicable  Environmental  Law  or  the  incurrence  of  any
liability, obligation, loss, damage, cost, expense, fine, penalty or sanction or
the requirement to commence any remedial action  resulting from or in connection
with any air emission,  water discharge,  noise emission,  Hazardous Material or
any other  environmental,  health or safety matter at, upon, under or within any
of the properties now or previously owned,  leased or operated by the Company or
any of its Subsidiaries,  or due to the operations or activities of the Company,
any Subsidiary or any other Person on or in connection with any such property or
any part  thereof or (y) any  release  on any of such  properties  of  Hazardous
Materials in a quantity that is reportable  under any  applicable  Environmental
Law; (ii) promptly comply, subject to Permitted Contests,  with any governmental
requirements  requiring  the removal,  treatment  or disposal of such  Hazardous
Materials or Hazardous Materials Contamination and provide evidence satisfactory
to the  Required  Lenders of such  compliance;  and (iii)  provide the  Lenders,
within 30 days after  demand  therefor  by the  Required  Lenders,  with a bond,
letter of credit or similar financial  assurance  evidencing to the satisfaction
of the Required  Lenders that sufficient  funds are available to pay the cost of
removing,  treating  and  disposing  of such  Hazardous  Materials  or Hazardous
Materials  Contamination and discharging any assessment which may be established
on any such  property  as a result  thereof  where the  projected  cost  thereof
exceeds $100,000.

                  SECTION 5.12.  Collateral Reports. The Company shall keep, and
shall  cause  each of its  Subsidiaries  and the other  Credit  Parties to keep,
accurate and complete  records of its  accounts  receivable  in at least so much
detail as to enable the  Company to provide  the  Receivables  Reports and other
information described in Section 5.01.

                  SECTION 5.13. Collections; Right to Notify Account Debtors. At
any time  following  the  occurrence  of an  Event of  Default  and  during  the
continuance  thereof,  in addition to the  Lenders'  rights  under the  Security
Documents,  the Company hereby  authorizes the Agent, at any time, to (i) notify
any or all account  debtors that the accounts  receivable of the Company and its
Subsidiaries  and the other Credit  Parties have been  assigned to the Agent and
that the Agent has a security  interest  therein and (ii)  direct  such  account
debtors to make all  payments  due from them to the Company  upon such  accounts
receivable  directly to the Agent or to a lockbox  designated by the Agent.  The
Agent shall  promptly  furnish the Company  with a copy of any such notice sent.
Any such notice,  in the Agent's sole discretion,  may be sent on the Company's,
such Subsidiaries' or such other Credit Parties' stationery,  in which event the
Company  shall,  or shall cause such  Subsidiary  or other  Credit  Party to, if
requested by the Agent,  co-sign such notice with the Agent.  At any  subsequent
time that no Events of Default  are  continuing,  the Agent will  withdraw  such
notice at the Company's request.

                  SECTION 5.14.  Enforcement  of Covenants  Not to Compete.  The
Company and each of its Subsidiaries shall preserve,  protect and defend, to the
extent  permitted by applicable law, all of its rights,  if any, with respect to
any covenant not to compete  contained in any of the material  contracts of such
Person or contained in any  employment  agreement with any employee whose annual
salary and other  compensation  payable by the  Company  and any  Subsidiary  of
either thereof is $100,000 or more.

                  SECTION  5.15.  Landlord and  Warehouseman  Waivers.  Upon the
request of the Agent,  the Company  shall use its best efforts to deliver to the
Agent waivers of contractual and statutory  landlord's,  landlord's  mortgagee's
and warehouseman's  Liens in form and substance  satisfactory to the Agent under
each  existing  lease,  warehouse  agreement  or similar  agreement to which the
Company or any  Subsidiary  is a party;  provided  that such waivers will in any
event be incorporated  when the existing lease,  warehouse  agreement or similar
agreement is amended, renewed or extended and the Company will obtain waivers of
both   contractual  and  statutory   landlord's,   landlord's   mortgagee's  and
warehouseman's  Liens  in  form  and  substance  satisfactory  to the  Agent  in
connection with each new lease, warehouse agreement or similar agreement entered
into by the Company or any Subsidiary.

                  SECTION  5.16.  Additional  Subsidiaries.  Promptly  after the
creation or  acquisition  of any  Subsidiary  by the Company,  the Company shall
execute and  deliver or cause to be executed  and  delivered,  (i) a  Subsidiary
Guaranty  Agreement and a Subsidiary  Security  Agreement from such  Subsidiary,
(ii) one or more Professional  Service Provider Security  Agreements,  and (iii)
such  other  related  documents  as the  Lender  may  request,  all in form  and
substance reasonably satisfactory to the Agent.

                  SECTION 5.17.  Accreditation and Licensing. The Company shall,
and shall cause each other Credit Party to, keep itself fully  licensed with all
licenses  required to operate such Person's  business  under  applicable law and
maintain such Person's  qualification  for  participation in, and payment under,
Medicare,  Medicaid,  CHAMPUS,  CHAMPVA  and any other  federal,  state or local
governmental  program or private program  providing for payment or reimbursement
for  services  rendered  by such  Person,  except to the extent that the loss or
relinquishment  of such  qualification  would  not or could  not  reasonably  be
expected to have or result in a Material Adverse Effect; provided, however, that
nothing in this Agreement shall require the Company or any other Credit Party to
participate  in the  CHAMPUS  or  CHAMPVA  programs  if it elects  not to accept
patients  covered by such programs.  The Company will promptly furnish the Agent
with copies of all reports and correspondence relating to any loss or revocation
(or  threatened  loss or  revocation)  of any  qualification  described  in this
Section.

                                ARTICLE VI

                              NEGATIVE COVENANTS

                  The  Company  agrees  that,  so  long  as any  Lender  has any
Commitment hereunder or any amount payable under any Note remains unpaid:

                  SECTION 6.01.  Debt. The Company will not, and will not permit
any of its  Subsidiaries  to,  directly or indirectly,  create,  incur,  assume,
guarantee  or  otherwise  become or remain  directly or  indirectly  liable with
respect to, any Debt, except for:

                  (a)      Debt of the Company  outstanding  on the date of this
         Agreement as set forth in Schedule 6.01 and any Permitted Refinancing 
         thereof;

                  (b)      The Existing Additional Acquisition Liabilities;

                  (c)      Debt of the Company under the Financing Documents;

                  (d) Debt of the Company or any of its Subsidiaries incurred or
         assumed  for the  purpose of  financing  all or any part of the cost of
         acquiring any fixed asset  (including  through Capital  Leases),  in an
         aggregate  principal  amount at any time  outstanding  not greater than
         $500,000;

                  (e)  Debt  of the  Company  or any  of its  Subsidiaries  to a
         wholly-owned  Subsidiary  of the Company,  or of any  Subsidiary of the
         Company to the Company;

                  (f) Purchase money Debt of the Company  incurred in connection
         with an acquisition in accordance  with terms and conditions of Section
         6.07,  which Debt shall be  subordinated in all respects to any and all
         Debt of the  Company  to the  Agent  and the  Lenders,  upon  terms and
         conditions satisfactory to the Lenders and the incurrence of which Debt
         does not result in a Default or an Event of Default.

                  (g) Debt  constituting  liabilities  under  letters of credit,
         surety bonds or similar  instruments  issued in the ordinary  course of
         business to secure bids, purchase orders, statutory obligations such as
         workers compensation insurance or sales tax bonds, operating leases and
         similar  obligations  (but  not  Debt),  provided  that  the  aggregate
         outstanding obligation (whether fixed or contingent,  drawn or undrawn)
         of the Company and its Subsidiaries  under all such  instruments  shall
         not at any time exceed $50,000; and

                  (h)  Other  Debt of the  Company  and its  Subsidiaries  in an
         aggregate  principal  amount  (whether  fixed or  contingent,  drawn or
         undrawn) not to exceed at any time $50,000.

                  SECTION 6.02.  Negative  Pledge.  Neither the Company nor any 
Subsidiary  will create,  assume or suffer to exist any Lien on any asset now 
owned or hereafter acquired by it, except:

                  (a) any  Lien  on any  asset  securing  Debt  permitted  under
         Section 6.01(d) incurred or assumed for the purpose of financing all or
         any part of the cost of acquiring  such asset,  provided that such Lien
         attaches  to such asset  concurrently  with or within 90 days after the
         acquisition  thereof, and provided further that the principal amount of
         the Debt  secured  shall not be less than 70% of the value of the asset
         subject to such Lien;

                  (b) Liens existing on the date of this Agreement securing Debt
         permitted by Section 6.01(a);

                  (c) Liens arising in the ordinary course of its business which
         (i) do not secure Debt,  (ii) do not secure any obligation in an amount
         exceeding $50,000 and (iii) do not in the aggregate  materially detract
         from the value of its assets or  materially  impair the use  thereof in
         the operation of its business;

                  (d) Liens arising in connection with Debt incurred pursuant to
         Section 6.07;  provided,  however such Lien shall be subordinate to any
         Lien under  paragraph (e) below upon terms and conditions  satisfactory
         to the Lenders; and

                  (e)      Liens created by the Security Documents.

                  SECTION 6.03.  Capital Stock.  The Company will not permit any
Subsidiary  to, issue any shares of capital stock except shares of capital stock
issued by any  Subsidiary  to the Company  which are  delivered  to the Agent in
pledge for the benefit of the Agent and the Lenders.

                  SECTION 6.04.  Restricted Payments.  The Company will not, and
will not permit any Subsidiary to, directly or indirectly,  declare, order, pay,
make or set apart any sum for any  Restricted  Payment  or make any  payment  in
respect of any Additional Acquisition  Liabilities;  provided that the foregoing
shall not restrict or prohibit:

                  (i) dividends or distributions by the Company at such times or
         in such amounts as are  necessary to permit  purchases of shares of (or
         options  to  purchase  shares of) Common  Stock from  employees  of the
         Company  or  of  any  Subsidiary  upon  their  death,   termination  or
         retirement,  so long as, (x) before and after giving effect to any such
         dividend  or  distribution  for such  purpose,  no  Default  shall have
         occurred and be continuing and (y) such purchases or payments after the
         date hereof do not exceed in any one Fiscal Year $75,000;

                  (ii) payments of Additional Acquisition  Liabilities,  so long
         as, at the time of such payment,  no Default shall have occurred and be
         continuing,  and prior to making such  payment,  the Company shall have
         delivered to the Agent a certificate  showing that, after giving effect
         to such proposed payment, no Default will exist; and

                  (iii)  scheduled  payments  of  interest  with  respect to the
         subordinated  Debt,  provided that no Default or Event of Default shall
         have  occurred and be continuing or would result after giving effect to
         any payment pursuant to this clause (iii).


                  SECTION 6.05. ERISA. The Company will not, and will not permit
any of its Subsidiaries to:

                  (a) engage in any  transaction  in  connection  with which the
         Company or any of its  Subsidiaries  could be  subject to any  material
         liability  arising  from either a civil  penalty  assessed  pursuant to
         Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code;

                  (b) terminate any Plan in a manner,  or take any other action,
         which could result in any material liability of any member of the ERISA
         Group to the PBGC;

                  (c) fail to make full payment  when due of all amounts  which,
         under  the   provisions   of  any  Plan,  it  is  required  to  pay  as
         contributions  thereto,  or  permit to exist  any  accumulated  funding
         deficiency, whether or not waived, with respect to any Plan;

                  (d) permit the present value of all benefit  liabilities under
         all Plans to exceed the fair market  value of the assets of such Plans;
         or

                  (e) fail to make any payments to any  Multiemployer  Plan that
         it may be  required  to  make  under  any  agreement  relating  to such
         Multiemployer Plan or any law pertaining thereto.

                  SECTION 6.06. Consolidations, Mergers and Sales of Assets. The
Company  will  not,  and  will  not  permit  any of  its  Subsidiaries  to,  (i)
consolidate  or merge  with or into any  other  Person  or (ii)  sell,  lease or
otherwise transfer,  directly or indirectly,  any of its or their assets,  other
than (w) sales of any asset or group of related assets,  the value of which does
not exceed  $20,000,  (x) sales of  inventory  in the  ordinary  course of their
respective  businesses,  (y)  dispositions of Temporary Cash Investments and (z)
other dispositions for cash and fair value of assets that the board of directors
of the  Company  determines  in good  faith are no longer  used or useful in the
business of the Company and its  Subsidiaries,  provided that immediately  after
any such  disposition,  the  aggregate  fair  market  value  of all such  assets
disposed of pursuant to this clause (z) after the Original  Agreement  Date does
not exceed  $250,000  and the  aggregate  fair  market  value of all such assets
disposed  of during the Fiscal Year in which such  disposition  is made does not
exceed $100,000.

                  SECTION  6.07.  Purchase of Assets,  Investments.  The Company
will not, and will not permit any  Subsidiary  to, acquire any assets other than
in the ordinary course of business, or to make, acquire or own any Investment in
any  Person  other than (a)  Temporary  Cash  Investments,  (b)  Investments  in
Subsidiaries,  and (c) (i)  acquisitions  of a physician  practice or  physician
practice group or the assets of a physician practice or physician practice group
or an  Investment  (that  constitutes  a loan or advance for working  capital or
capital  expenditure  purposes  made  pursuant  to a  Service  Agreement  in the
ordinary course of business,  but not a Program Loan unless the Required Lenders
shall,  in their  sole  discretion,  give  their  prior  written  consent)  in a
physician  practice or  physician  practice  group which  acquisition  the chief
financial  officer or treasurer  shall  certify to the Agent meets the following
criteria:

         (v) the  physician  practice or group to be acquired will not represent
         more than 33% of the pro forma consolidated revenues of the Company,

         (w) the  purchase  price is not more than eight (8) times  greater than
         any first year management  fees reasonably  projected to be paid by the
         physician practice to the Company or any of its Subsidiaries,

         (x) the sole  consideration  for such  purchase is (1) the  issuance of
         Common   Stock   and/or  a  seller  note  upon  terms  and   conditions
         satisfactory  to the Lenders and that is subordinate to the Obligations
         on terms and conditions  satisfactory to the Lenders and/or (2) cash on
         hand of the Company, provided that the aggregate amount of cash on hand
         used  in any  one  acquisition  shall  not  exceed  $3,000,000  and the
         aggregate  amount of cash on hand used in all such  acquisitions in any
         one  Fiscal  Year  shall  not  exceed  $5,000,000  (cash on hand of the
         Company expressly excludes the proceeds of any Revolving Credit Loans);

         (y) the Service  Agreement and other agreements  executed in connection
         with such  acquisition  contain  terms that are  substantially  similar
         (except for price and payment terms) to the terms of acquisitions  made
         by the Company through the Closing Date, and

         (z) the Company shall  provide to the Agent a  certificate  immediately
         prior  to such  Acquisition  demonstrating  to the  Agent's  reasonable
         satisfactions  that  both  before  and  after  giving  effect  to  such
         acquisition no Default will have occurred and be continuing,

or (ii)  Acquisitions  approved by the Required Lenders in their sole good faith
discretion.  Without limiting the generality of the foregoing,  the Company will
not, and will not permit any Subsidiary to, (i) acquire or create any Subsidiary
without the consent of the Required  Lenders (except that such consent shall not
be required to create a corporate subsidiary that is wholly owned by the Company
and that is formed solely for the purpose of an acquisition  permitted  pursuant
to the preceding sentence) and arrangements satisfactory to the Required Lenders
for (w) a pledge of the stock of such Subsidiary to the Agent for the benefit of
the Lenders, (x) such Subsidiary to execute a joinder to the Subsidiary Guaranty
Agreement,  (y) such Subsidiary to execute a joinder to the Subsidiary  Security
Agreement  and all financing  statements  and other  documents  and  instruments
required  thereunder,  and (z) cause each  professional  association  party to a
Service  Agreement  with  such  Subsidiary  to  execute a  Professional  Service
Provider  Security  Agreement  and  all  financing  statements,   documents  and
instruments  required  in  connection  therewith,  or (ii)  engage  in any joint
venture or partnership with any other Person.

                  SECTION 6.08.  Transactions with Affiliates.  The Company will
not, and will not permit any Subsidiary to,  directly or indirectly,  enter into
or permit to exist any  transaction  (including  the  purchase,  sale,  lease or
exchange of any property or the  rendering of any service) with any Affiliate of
the Company, on terms that are less favorable to the Company or such Subsidiary,
as the case may be, than those which might be obtained at the time from a Person
who is not an Affiliate of the Company.

                  SECTION 6.09. Amendments or Waivers. Without the prior written
consent of the  Required  Lenders,  the Company will not, nor will it permit any
Subsidiary  to, agree to (i) any  amendment to or waiver of or in respect of the
certificate of incorporation or Bylaws of the Company or any Financing  Document
or (ii) any other  material  amendment  to or waiver  of any  material  contract
constituting a part of the Collateral.

                  SECTION  6.10.  Fiscal  Year.  The  Company  shall not change 
its fiscal  year from a fiscal year ending December 31.

                  SECTION 6.11. Management Compensation.  The Company shall not,
and shall not permit any  Subsidiary to,  directly or indirectly,  pay or become
obligated  to pay,  any  compensation  for  services  in any  form to or for the
account of any Person listed on Schedule 4.16,  except as expressly  provided in
the Employment Contracts. In addition to the foregoing,  the aggregate amount of
bonuses paid to such Persons in any Fiscal Year shall not exceed  $1,000,000 and
the aggregate  outstanding  amount of any deferred  compensation  payable to any
such Person or any other  employee  shall not at any time exceed  $500,000.  The
limitation  set forth in the preceding  sentence  shall not apply to payments in
the form of stock or stock options.

                  SECTION 6.12. Interest Coverage.  The Company shall not permit
the ratio,  calculated  on the last day of any fiscal  quarter for the number of
consecutive  fiscal  quarters  then most  recently  ended since the Closing Date
(considered as a single account period, but not to exceed four quarters), of (i)
Consolidated  Free Cash Flow to (ii) Total Interest  Expense to be less than the
ratio set forth below opposite the period in which such last day shall fall:

                                Period                                 Ratio

                  from the Closing Date through                        1.75
                       and including June 30, 1998

                  July 1, 1998 through and including
                      December 31, 1998                                2.00

                  January 1, 1999  and thereafter                      2.25

                  SECTION 6.13.  Capital  Expenditures.  The aggregate amount of
Consolidated  Capital  Expenditures  for any period of four  consecutive  fiscal
quarters  shall not exceed  2.50% of net  revenues  for such period  through and
including March 31, 1998, and thereafter 2.00% of such net revenues. Any amounts
permitted to be spent for Capital  Expenditures for any such period in excess of
the amounts  actually  expended during such period may be carried forward to the
next period of four fiscal  quarters as permitted  Capital  Expenditures  during
such period.

                  SECTION 6.14.  Total Debt Service  Coverage Ratio. The Company
shall not permit the ratio, calculated on the last day of any fiscal quarter for
the number of  consecutive  fiscal  quarters then most recently  ended since the
Restatement  Effective Date  (considered as a single account period,  but not to
exceed four  quarters),  of (i)  Consolidated  Free Cash Flow to (ii) Total Debt
Service, to be less than 1.20:1.00.

                  SECTION 6.15. Debt to  Capitalization.  At no time shall the 
ratio of (i) Consolidated Total Debt to (ii) Consolidated Capitalization exceed 
66.7%.

                  SECTION  6.16.  Senior Debt to EBITDA.  The Company  shall not
permit the ratio of (i) the sum, at such time, of (a)  Consolidated  Senior Debt
minus  (b) the  amount by which  cash plus  Temporary  Cash  Investments  of the
Company and its Consolidated Subsidiaries exceeds $2,000,000, to (ii) EBITDA for
the four consecutive  fiscal quarters then most recently ended  (considered as a
single  accounting  period),  to exceed the limit set forth below  opposite  the
period in which such fiscal quarter shall fall:

                   Period                                               Ratio

                   from the Closing Date  through and  including         4.50
                   December 31, 1998

                   from  January 1, 1999  through and  including         3.75
                   December 31, 1999

                   from  January 1, 2000  through and  including         3.25
                   December 31, 2000

                   from January 1, 2001 and thereafter                   2.75


                  SECTION 6.17.  [Reserved]

                  SECTION 6.18.  Minimum Net Worth.  At no time shall 
Consolidated  Net Worth be less than the sum of:

                  (i)      $3,300,000, plus

                  (ii)     75% of the positive amount of Consolidated Net Income
                           for each fiscal  period ended after the Closing Date,
                           plus

                  (iii)  100% of the Net  Proceeds  of  Capital  Stock  received
following the Agreement Date.

                  SECTION   6.19.   Transition   Rules.   Except  as   otherwise
specifically  provided  herein,  in  calculating  compliance  with the financial
covenants  for the period from the Closing  Date  through the first  anniversary
thereof, compliance will be measured from the Closing Date to the date that such
compliance  shall  be  required  to be  measured.  For any  test  that  requires
measurement  over an entire  year,  results for the period from the Closing Date
through  such  date  shall be  annualized.  In  delivering  pro  forma  covenant
calculations  at any time for or  including  any entity that is the target of an
acquisition  (whether  such  information  is required  pursuant to Section 3.02,
Section  6.04 or Section 6.07 or  otherwise)  or when  including an  acquisition
target  that  has  not  been  under  management  by  the  Company  or one of its
Subsidiaries  for an entire fiscal  quarter in  calculating  financial  covenant
compliance,  the  Company  shall use the actual  EBITDA for the target  over the
relevant  period,  as if such target had been a Subsidiary of the Company during
such period.  To the extent such target has been under management by the Company
or one of its  Subsidiaries for one or more entire fiscal quarters but less than
one year,  the Company shall  calculate  EBITDA and net revenues with respect to
the target based on the annualized  actual  performance of the target during the
most recently ended number of complete  quarters that such target has been under
management  of the  Company  or one of its  Subsidiaries.  For the  purposes  of
calculating  compliance with Sections 6.14, 6.15 and 6.16,  Existing  Additional
Acquisition Liabilities shall be excluded from:

                           (i)  in the case of Section 6.14, Total Debt Service,

                           (ii) in the case of Section 6.15,  Consolidated Total
                  Debt and Consolidated Total Capitalization (to the extent that
                  such amounts would otherwise be included in Consolidated Total
                  Debt), and


                           (iii)  in the  case  of  Section  6.16,  Consolidated
Senior Debt.

                  SECTION 6.20.  Changes Relating to Subordinated  Debt. Neither
the Company nor any of its  Subsidiaries  shall change or amend the terms of any
subordinated Debt (or any indenture or agreement in connection therewith) if the
effect  of  such  amendment  is to:  (a)  increase  the  interest  rate  on such
subordinated  Debt;  (b) change the dates upon which  payments of  principal  or
interest are due on such  subordinated Debt other than to extend such dates; (c)
change any default or event of default or covenant  other than to delete or make
less restrictive any default or covenant provision therein,  or add any covenant
with respect to such subordinated  Debt; (d) change the redemption or prepayment
provisions of such  subordinated Debt other than to extend the dates therefor or
to reduce the premiums payable in connection therewith;  (e) grant any security,
collateral  or  guaranty to secure  payment of such  subordinated  Debt;  or (f)
change or amend any other  term if such  change or  amendment  would  materially
increase the obligations of the obligor or confer additional  material rights to
the holder of such  subordinated  Debt in a manner  adverse to the Company,  any
Subsidiary, the Agent or any Lender.


                               ARTICLE VII

                           EVENTS OF DEFAULT

                  SECTION  7.01.  Events of  Default.  If any one or more of the
following  events (each an "Event of Default") shall occur and be continuing for
any reason whatsoever (whether voluntary or involuntary,  by operation of law or
otherwise):

                  (a) the  Company  shall fail to pay any  principal  amount due
         hereunder when due, or shall fail to pay any interest or premium on any
         Note, or any fees or any other amount payable  hereunder  within 3 days
         following the due date therefor;

                  (b) the Company  shall fail to observe or perform any covenant
         contained in Section 5.13 or Article VI hereof,  or Section 3(B) of the
         Pledge Agreement or the Company,  or any of its Subsidiaries shall fail
         to perform or observe any  covenant  contained in Section 5 or Sections
         4(A), (E) or (I) of the Security Agreements;

                  (c)  the  Company  or any of its  Subsidiaries  shall  fail to
         observe or perform any covenant or agreement contained in the Financing
         Documents  (other than those covered by clause (a) or (b) above) for 30
         days after notice thereof has been given to the Company by the Agent;

                  (d) any representation,  warranty,  certification or statement
         made  by  the  Company  or any of  its  Subsidiaries  in any  Financing
         Document or in any certificate,  financial  statement or other document
         delivered pursuant to the Financing  Documents shall prove to have been
         incorrect  in  any  respect  (or  in  any  material   respect  if  such
         representation,  warranty,  certification  or  statement  is not by its
         terms already qualified as to materiality) when made (or deemed made);

                  (e) the Company or any of its Subsidiaries  shall fail to make
         any payment in respect of any Debt (other than the Notes) the aggregate
         outstanding  principal  amount  of which  Debt,  either  singly or when
         aggregated with all other Debt with respect to which the Company or any
         of its  Subsidiaries  has  failed to make a payment  equals or  exceeds
         $100,000 (such Debt, hereinafter "Material Debt");

                  (f) any event or  condition  shall  occur which (i) results in
         the acceleration of the maturity of any Material Debt of the Company or
         any of its Subsidiaries, or (ii) enables (or, with the giving of notice
         or lapse of time or both,  would enable) the holder of such Debt or any
         Person  acting on such  holder's  behalf  to  accelerate  the  maturity
         thereof,  or (iii) results in a violation of, or a default  under,  any
         provision of the certificate of incorporation of the Company;

                  (g)  Company  or any  of its  Subsidiaries  shall  commence  a
         voluntary case or other proceeding seeking liquidation,  reorganization
         or  other  relief  with  respect  to  itself  or its  debts  under  any
         bankruptcy,  insolvency or other similar law now or hereafter in effect
         or  seeking  the  appointment  of  a  trustee,  receiver,  liquidation,
         custodian or other similar  official of it or any  substantial  part of
         its property, or shall consent to any such relief or to the appointment
         of or taking  possession by any such official in an involuntary case or
         other  proceeding  commenced  against  it,  or  shall  make  a  general
         assignment for the benefit of creditors, or shall fail generally to pay
         its debts as they  become due,  or shall take any  corporate  action to
         authorize any of the foregoing;

                  (h) an involuntary case or other proceeding shall be commenced
         against the  Company or any of its  Subsidiaries  seeking  liquidation,
         reorganization  or other  relief with  respect to it or its debts under
         any  bankruptcy,  insolvency  or other  similar law now or hereafter in
         effect or seeking the appointment of a trustee,  receiver,  liquidator,
         custodian or other similar  official of it or any  substantial  part of
         its  property,  and such  involuntary  case or other  proceeding  shall
         remain  undismissed  and unstayed for a period of 90 days;  or an order
         for  relief  shall  be  entered  against  the  Company  or  any  of its
         Subsidiaries  under the federal  bankruptcy laws as now or hereafter in
         effect;

                  (i) any one or more  members of the ERISA  Group shall fail to
         pay when due an amount or  amounts  aggregating  in excess of  $100,000
         which it shall have become  liable to pay under  Title IV of ERISA;  or
         notice of intent to  terminate  a Material  Plan  shall be filed  under
         Title  IV of  ERISA  by  any  member  of  the  ERISA  Group,  any  plan
         administrator  or any  combination of the foregoing;  or the PBGC shall
         institute  proceedings under Title IV of ERISA to terminate,  to impose
         liability  (other than for  premiums  under  Section  4007 of ERISA) in
         respect of, or to cause a trustee to be  appointed  to  administer  any
         Material  Plan; or a condition  shall exist by reason of which the PBGC
         would be entitled  to obtain a decree  adjudicating  that any  Material
         Plan must be  terminated;  or there  shall  occur a complete or partial
         withdrawal from, or a default, within the meaning of Section 4219(c)(5)
         of ERISA, with respect to, one or more Multiemployer  Plans which could
         cause one or more members of the ERISA Group to incur a current payment
         obligation in excess of $100,000;

                  (j) a judgment  or order for the  payment of money  which when
         aggregated  with  other  such  judgments  or orders  equals or  exceeds
         $100,000,  shall  be  rendered  against,  the  Company  or  any  of its
         Subsidiaries and such judgment or order shall continue  unsatisfied and
         unstayed  for a period  of 10 days or any  judgment  shall be  rendered
         against  the  Company  or any  Subsidiary  that  exceeds  by more  than
         $2,000,000 any insurance coverage applicable thereto;

                  (k) except as the result of any transfer  made pursuant to the
         Pledge  Agreement,  the Company shall fail at any time to be the record
         and  beneficial  owner of 100% of the  issued and  outstanding  capital
         stock any  Subsidiary,  free and clear of any Lien other than  inchoate
         tax Liens and Liens in favor of the Agent and the  Lenders;  any person
         or group of persons  (within the meaning of Rule 13d-3  promulgated  by
         the Securities and Exchanges  Commission under the Securities  Exchange
         Act of  1934,  as  amended),  other  than  the  current  owners,  other
         employees   and  other  than  doctors  who  acquire   Common  Stock  as
         consideration   for  acquisitions,   shall  have  acquired   beneficial
         ownership  (within the meaning of such Rule 13d-3) of 5% or more of the
         Common Stock of the Company;  or both Wayne Posey and Richard  D'Antoni
         shall cease to perform the  functions  of Chief  Executive  Officer and
         Chief Operating Officer,  respectively,  of the Company and a successor
         shall  not have been  appointed  by the  Company  and  approved  by the
         Required  Lenders within 90 days  thereafter;  or the Persons listed on
         Schedule 7.01(k), in the aggregate,  shall cease to own beneficially at
         least  51% of the  shares  (determined  assuming  the  exercise  of all
         options or warrants to purchase  Common  Stock and  adjusted  for stock
         splits, combinations and similar events) of each class of Common Stock;
         or,  during  any  period  of  twelve   consecutive   calendar   months,
         individuals  who were directors of the Company on the first day of such
         period  shall cease to  constitute a majority of the board of directors
         of the Company;

                  (l)  (i)  the  auditor's  report  or  reports  on the  audited
         statements  delivered  pursuant  to  Section  5.01  shall  include  any
         material  qualification  (including with respect to the scope of audit)
         or exception, or (ii) the Company shall fail to deliver to the Agent on
         or prior to July 30, 1996, either (A) consolidated financial statements
         for the Company for the fiscal period ended June 30,1996, with an audit
         report thereon without  qualification  as to opinion or scope of review
         by Arthur  Andersen  & Co. or other  nationally  recognized  accounting
         firm,  or (B) a  financial  due  diligence  review  performed  by  such
         accountants,  in each  case  (A) or (B),  which  financial  statements,
         audit,  report  and/or due  diligence  review  (including  the  results
         thereof)  shall be  satisfactory  to the Agent and the Lenders in their
         sole good faith discretion;

                  (m) the Lien created by any of the Security Documents shall at
         any time fail to constitute a valid and  perfected  Lien on any portion
         of the  Collateral  purported  to be  secured  thereby  which is deemed
         material  by the  Agent,  subject  to no  prior or  equal  Lien  except
         Permitted  Liens,  or the Company or any of its  Subsidiaries  shall so
         assert in writing;

                  (n) the Company or any of its Subsidiaries shall be prohibited
         or  otherwise  materially   restrained  from  conducting  the  business
         theretofore  conducted  by it by virtue of any  determination,  ruling,
         decision,  decree or order of any court or  governmental  authority  of
         competent jurisdiction and such determination, ruling, decision, decree
         or order  remains  unstayed  and in  effect  for any  period of 10 days
         beyond any period for which any business interruption  insurance policy
         of the Company and its  Subsidiary  shall  provide full coverage to the
         such person of any losses and lost profits; or

                  (o) any of the Financing  Documents  shall for any reason fail
         to constitute  the valid and binding  agreement of any party thereto to
         the extent described in Section 4.03, or any such party shall so assert
         in writing;

then, and in every such event and at any time thereafter  during the continuance
of such event,  the Agent shall if  requested by the  Required  Lenders,  (i) by
notice  to the  Company  terminate  the  Commitments  and they  shall  thereupon
terminate  and/or (ii) by notice to the Company declare the Notes (together with
accrued  interest  thereon)  to  be,  and  the  Notes  shall  thereupon  become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Company; provided that in the
case of any of the Events of Default  specified  in clause (g) or (h) above with
respect to the  Company,  without  any notice to the Company or any other act by
the Agent or the Lenders,  the  Commitments  shall  thereupon  terminate and the
Notes (together with accrued interest thereon) shall become  immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Company.



                                 ARTICLE VIII

                      FEES, EXPENSES AND INDEMNITIES;
                 GENERAL PROVISIONS RELATING TO PAYMENTS

     SECTION  8.01.  Fees.  (a)  Participation  Fees. On the earlier of: (i) the
Closing Date and (ii) July 15, 1996,  the Company shall pay to each Lender a fee
in an  amount  equal  to  2.0%  of the sum of  such  Lender's  Revolving  Credit
Commitment.  Such fee shall be fully earned and nonrefundable on the date of the
execution hereof, whether or not any funding hereunder shall occur.

                  (b)  Unused  Commitment  Fee.  The  Company  shall pay to each
Lender a fee on the daily  average  amount by which the amount of such  Lender's
Revolving Credit Commitment exceeds the aggregate  outstanding  principal amount
of its Loans,  (i) from and including  the Agreement  Date, to but excluding the
Restatement  Effective  Date, at the rate of 0.50% per annum,  and (ii) from and
including the Restatement  Effective Date and thereafter,  at the rate of 0.375%
per annum. Accrued fees under this Section shall be payable quarterly in arrears
on each Quarterly Date prior to the  Availability  Termination  Date and on such
date.

                  (c) Administrative Fee. On the Restatement  Effective Date and
on each anniversary thereof the Company shall pay to the Agent an administration
fee in the amount of $30,000.

                  SECTION  8.02.  Computation  of Interest and Fees.  Commitment
fees pursuant to Section 8.01(b) and all interest  hereunder and under the Notes
shall be calculated on the basis of a 360-day year for the actual number of days
elapsed.

                  SECTION  8.03.  General  Provisions  Regarding  Payments.  All
payments  (including  prepayments) to be made by the Company under any Financing
Document,  including  payments of  principal  of and premium and interest on the
Notes,  fees,  expenses  and  indemnities,  shall  be made  without  set-off  or
counterclaim  and in  immediately  available  funds.  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.  The Company shall make all payments in  immediately  available
funds to each Lender's Payment Account before 11:00 A.M. (New York City time) on
the date when due.  Each  payment  (including  prepayments)  by the  Company  on
account  of  principal  of and  interest  on any  Loans  shall  be made pro rata
according to the respective  outstanding principal amounts of Loans held by each
Lender.  All  amounts  payable  by the  Company  hereunder  or under  any  other
Financing  Document  not paid  within 5 days of the date  when due  (other  than
payments of principal  and interest on the Notes,  which shall bear  interest as
set forth therein) shall bear  interest,  payable on demand,  for each day until
paid at a rate per annum equal to the Default Rate.

                  SECTION  8.04.  Expenses.  Whether  or  not  the  transactions
contemplated  hereby shall be  consummated,  the Company agrees to pay on demand
(i) all costs and expenses of preparation of this Agreement, the other Financing
Documents and of the Company's performance of and compliance with all agreements
and  conditions  contained  herein  and  therein,  (ii) the fees,  expenses  and
disbursements of counsel to, and independent appraisers and consultants retained
by, the Lenders in connection with the negotiation,  preparation,  execution and
administration  of  this  Agreement,  the  other  Financing  Documents  and  any
amendments  hereto  or  thereto  and  waivers  hereof  and  thereof,  (iii)  all
reasonable  costs and expenses of creating,  perfecting  and/or  maintaining the
Liens pursuant to the Financing  Documents,  including filing and recording fees
and expenses,  the costs of any bonds required to be posted in respect of future
filing  and  recording  fees and  expenses,  title  investigations  and fees and
expenses  of such  local  counsel  as the  Agent  shall  request  (iv) the fees,
expenses and disbursements of independent  accountants or other experts retained
by the Agent in connection with  accounting and collateral  audits or reviews of
the Company,  its Subsidiaries and its and their affairs,  provided that, in the
absence of the  occurrence  and  continuance  of an Event of Default such audits
and/or reviews shall be limited to one per year (it being expressly  agreed that
audits and/or reviews conducted during an Event of Default shall not be limited)
and (v) if an Event of Default occurs,  all  out-of-pocket  expenses incurred by
the Agent and each Lender,  including  fees and  disbursements  of counsel based
upon time  spent),  in  connection  with such Event of Default  and  collection,
bankruptcy,  insolvency and other enforcement  proceedings  resulting therefrom.
Notwithstanding   the  foregoing,   the  fees,  expenses  and  disbursements  of
accountants,  appraisers,  attorney's and consultants, and the costs of lien and
title searches, in each case, to the extent (but only to the extent) incurred in
connection with the initial funding of the Loan, shall not exceed $40,000.

                  SECTION  8.05.  Indemnity.  Whether  or not  the  transactions
contemplated hereby shall be consummated,  the Company agrees to indemnify,  pay
and hold harmless the Agent and each Lender and any subsequent  holder of any of
the Notes, and the officers, directors,  employees and agents of the Agent, each
Lender and such holders (collectively called the "Indemnitees") from and against
any and all  liabilities,  obligations,  losses,  damages,  penalties,  actions,
judgments,  suits,  claims,  costs,  expenses and  disbursements  of any kind or
nature  whatsoever  (including  the fees and  disbursements  of counsel for such
Indemnitee) in connection  with any  investigative,  administrative  or judicial
proceeding,  whether or not such Indemnitee  shall be designated a party thereto
and  including any such  proceeding  initiated by or on behalf of the Company or
any Subsidiary,  and the expenses of investigation  by engineers,  environmental
consultants  and  similar  technical  personnel  and  any  commission,   fee  or
compensation   claimed  by  any  broker  (other  than  any  broker  retained  by
NationsCredit) asserting any right to payment for the transactions  contemplated
hereby, which may be imposed on, incurred by or asserted against such Indemnitee
as a result of or in connection with the transactions  contemplated hereby or by
the other Financing  Documents  (including (i)(A) as a direct or indirect result
of the presence on or under, or escape, seepage, leakage,  spillage,  discharge,
emission or release  from,  any  property  now or  previously  owned,  leased or
operated by the Company or any of its Subsidiaries of any Hazardous Materials or
any  Hazardous  Materials  Contamination,  (B) arising out of or relating to the
offsite  disposal of any materials  generated or present on any such property or
(C) arising out of or  resulting  from the  environmental  condition of any such
property  or the  applicability  of any  governmental  requirements  relating to
Hazardous  Materials,  whether  or  not  occasioned  wholly  or in  part  by any
condition, accident or event caused by any act or omission of the Company or any
of its  Subsidiaries,  and (ii)  proposed and actual  extensions of credit under
this Agreement) and the use or intended use of the proceeds of the Notes, except
that the  Company  shall have no  obligation  hereunder  to an  Indemnitee  with
respect  to any  liability  resulting  from  the  gross  negligence  or  willful
misconduct of such  Indemnitee.  To the extent that the undertaking set forth in
the  immediately  preceding  sentence may be  unenforceable,  the Company  shall
contribute  the maximum  portion  which it is permitted to pay and satisfy under
applicable  law  to  the  payment  and  satisfaction  of  all  such  indemnified
liabilities  incurred by the  Indemnitees or any of them.  Without  limiting the
generality of any provision of this Section,  to the fullest extent permitted by
law, the Company hereby waives all rights for  contribution  or any other rights
of recovery with respect to  liabilities,  losses,  damages,  costs and expenses
arising under or relating to Environmental Laws that it might have by statute or
otherwise  against  any  Indemnitee;  except to the extent  that any thereof are
finally  determined by a court of competent  jurisdiction  to have resulted from
the gross negligence or willful misconduct of such Indemnitee.

                  SECTION   8.06.   Taxes.   The  Company   agrees  to  pay  all
governmental assessments, charges or taxes (except income or other similar taxes
imposed  on any  Lender or any  holder of a Note),  including  any  interest  or
penalties thereon,  at any time payable or ruled to be payable in respect of the
existence,  execution  or  delivery  of  this  Agreement,  the  other  Financing
Documents,  or the issuance of the Notes,  and to indemnify and hold each Lender
and each and every holder of the Notes harmless against  liability in connection
with any such assessments, charges or taxes.

                  SECTION 8.07.  Funding Losses.  If the Company fails to borrow
any Loans after notice has been given to any Lender in  accordance  with Section
2.04 or make any payment  when due  (including  pursuant to a notice of optional
prepayment), the Company shall reimburse each Lender within 15 days after demand
for  any  resulting  loss  or  expense  incurred  by it  (or by an  existing  or
prospective  participant  in the related  Loan),  including any loss incurred in
obtaining,  liquidating or employing deposits from third parties,  but excluding
loss of margin  for the  period  after any such  payment  or  failure to borrow;
provided  that such Lender  shall have  delivered  to the Company a  certificate
calculating  in  reasonable  detail  the amount of such loss or  expense,  which
certificate shall be conclusive in the absence of manifest error.

                  SECTION  8.08.  Maximum  Interest.  (a) In no event  shall the
interest  charged  with  respect  to the Note or any  other  obligations  of the
Company or any  Subsidiary  under the  Financing  Documents  exceed the  maximum
amount  permitted  under  the  laws of the  State  of  Georgia  or of any  other
applicable jurisdiction.

                  (b)  Notwithstanding   anything  to  the  contrary  herein  or
elsewhere,  if at any time the rate of  interest  payable for the account of any
Lender  hereunder  or under the Note or other  Financing  Document  (the "Stated
Rate") would exceed the highest rate of interest  permitted under any applicable
law to be charged by such Lender (the "Maximum  Lawful Rate"),  then for so long
as the Maximum  Lawful Rate would be so exceeded,  the rate of interest  payable
for the  account  of such  Lender  shall be equal to the  Maximum  Lawful  Rate;
provided,  that if at any  time  thereafter  the  Stated  Rate is less  than the
Maximum Lawful Rate, the Company shall, to the extent permitted by law, continue
to pay interest for the account of such Lender at the Maximum  Lawful Rate until
such time as the total  interest  received  by such Lender is equal to the total
interest which such Lender would have received had the Stated Rate been (but for
the operation of this  provision)  the interest rate  payable.  Thereafter,  the
interest  rate  payable for the account of such Lender  shall be the Stated Rate
unless and until the Stated Rate again would exceed the Maximum  Lawful Rate, in
which event this provision shall again apply.

                  (c) In no event  shall  the  total  interest  received  by any
Lender exceed the amount which such Lender could  lawfully have received had the
interest  been  calculated  for the full term hereof at the Maximum  Lawful Rate
with respect to such Lender.

                  (d)  In  computing  interest  payable  with  reference  to the
Maximum Lawful Rate applicable to any Lender,  such interest shall be calculated
at a daily rate equal to the Maximum  Lawful Rate  divided by the number of days
in the year in which such calculation is made.

                  (e) If any Lender has received interest hereunder in excess of
the Maximum Lawful Rate with respect to such Lender, such excess amount shall be
applied  to the  reduction  of the  principal  balance  of its Loans or to other
amounts (other than  interest)  payable  hereunder,  and if no such principal or
other amounts are then outstanding,  such excess or part thereof remaining shall
be paid to the Company.


                                 ARTICLE IX

                                 THE AGENT

                  SECTION  9.01.  Appointment  and  Authorization.  Each  Lender
irrevocably appoints and authorizes the Agent to enter into each of the Security
Documents  on its behalf  and to take such  action as agent on its behalf and to
exercise such powers under the Financing Documents as are delegated to the Agent
by the terms thereof, together with all such powers as are reasonably incidental
thereto.

                  SECTION 9.02. Agent and Affiliates.  NationsCredit  shall have
the same rights and powers under the Financing Documents as any other Lender and
may  exercise  or  refrain  from  exercising  the same as though it were not the
Agent,  and  NationsCredit  and its  affiliates  may lend money to and generally
engage in any kind of business  with the Company or any  Subsidiary or affiliate
of the Company as if it were not the Agent hereunder.

                  SECTION 9.03.  Action by Agent.  The  obligations of the Agent
hereunder  are only  those  expressly  set  forth  herein  and  under  the other
Financing Documents. Without limiting the generality of the foregoing, the Agent
shall not be required to take any action with respect to any Default,  except as
expressly provided in Article VII.

                  SECTION 9.04. Consultation with Experts. The Agent may consult
with legal  counsel  (who may be counsel for the  Company),  independent  public
accountants  and other  experts  selected  by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in  accordance  with the
advice of such counsel, accountants or experts.

                  SECTION 9.05. Liability of Agent. Neither the Agent nor any of
its  directors,  officers,  agents or  employees  shall be liable for any action
taken or not taken by it in connection with the Financing Documents (i) with the
consent or at the request of the Required  Lenders or (ii) in the absence of its
own gross  negligence  or willful  misconduct.  Neither the Agent nor any of its
directors,  officers,  agents or employees  shall be responsible for or have any
duty to  ascertain,  inquire  into or  verify  (i) any  statement,  warranty  or
representation  made in connection with any Financing  Document or any borrowing
hereunder;  (ii)  the  performance  or  observance  of any of the  covenants  or
agreements of the Company;  (iii) the satisfaction of any condition specified in
Article III,  except receipt of items required to be delivered to the Agent;  or
(iv) the validity,  effectiveness,  sufficiency  or genuineness of any Financing
Document or any other instrument or writing  furnished in connection  therewith.
The Agent shall not incur any  liability by acting in reliance  upon any notice,
consent,  certificate,  statement,  or other writing  (which may be a bank wire,
telex,  facsimile  transmission or similar writing) believed by it to be genuine
or to be signed by the proper party or parties.

                  SECTION 9.06.  Indemnification.  Each Lender shall, ratably in
accordance with its Revolving  Credit  Commitment  (whether or not the Revolving
Credit Commitments have been terminated), indemnify the Agent (to the extent not
reimbursed by the Company) against any cost, expense (including counsel fees and
disbursements),  claim, demand, action, loss or liability (except such as result
from the Agent's  gross  negligence  or willful  misconduct)  that the Agent may
suffer or incur in connection  with the Financing  Documents or any action taken
or omitted by the Agent hereunder or thereunder.

                  SECTION 9.07. Credit Decision.  Each Lender  acknowledges that
it has,  independently  and without reliance upon the Agent or any other Lender,
and based on such documents and information as it has deemed  appropriate,  made
its own credit analysis and decision to enter into this  Agreement.  Each Lender
also  acknowledges  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 credit decisions in
taking or not taking any action under the Financing Documents.

                  SECTION  9.08.  Successor  Agent.  The Agent may resign at any
time by giving written  notice thereof to the Lenders and the Company.  Upon any
such  resignation,  the  Required  Lenders  shall  have the  right to  appoint a
successor Agent which, absent the occurrence and continuance of a Default,  must
be reasonably  acceptable to the Company.  If no successor Agent shall have been
so appointed by the Required Lenders,  and shall have accepted such appointment,
within 30 days after the retiring  Agent gives notice of  resignation,  then the
retiring Agent may, on behalf of the Lenders,  appoint a successor Agent,  which
shall be an  institution  organized  or  licensed  under the laws of the  United
States  of  America  or of  any  State  thereof.  Upon  the  acceptance  of  its
appointment as Agent hereunder by a successor Agent,  such successor Agent shall
thereupon  succeed  to and become  vested  with all the rights 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  Article  shall  inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.

                                 ARTICLE X

                               MISCELLANEOUS

                  SECTION 10.01. Survival.  All agreements,  representations and
warranties  made  herein  shall  survive  the  execution  and  delivery  of this
Agreement and the other Financing Documents and the execution, sale and delivery
of the Notes.  The  indemnities and agreements set forth in Articles VIII and IX
shall survive the payment of the Notes and the termination of this Agreement.

                  SECTION 10.02. No Waivers. No failure or delay by the Agent or
any Lender in  exercising  any right,  power or  privilege  under any  Financing
Document  shall  operate  as a waiver  thereof  nor shall any  single or partial
exercise  thereof preclude any other or further exercise thereof or the exercise
of any other  right,  power or  privilege.  The rights and  remedies  herein and
therein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

                  SECTION  10.03.  Notices.  All  notices,  requests  and  other
communications  to any party  hereunder shall be in writing  (including  prepaid
overnight courier,  telex,  facsimile transmission or similar writing) and shall
be given to such party at its address or  telecopy or telex  number set forth on
the  signature  pages  hereof  (or, in the case of any such Lender who becomes a
Lender after the date hereof, in a notice delivered to the Company and the Agent
by the assignee Lender  forthwith upon such assignment) or at such other address
or telecopy or telex number as such party may hereafter  specify for the purpose
by notice  to the Agent and the  Company.  Each such  notice,  request  or other
communication  shall be effective  (i) if given by telex or telecopy,  when such
telex or telecopy is  transmitted to the telex or telecopy  number  specified in
this Section and the  appropriate  answerback is received (in the case of telex)
or  telephonic  confirmation  of  receipt  thereof is  obtained  (in the case of
telecopy)  or (ii) if given by mail,  prepaid  overnight  courier  or any  other
means,  when received at the address  specified in this Section or when delivery
at such address is refused.

                  SECTION  10.04.  Severability.  In case  any  provision  of or
obligation  under this  Agreement or the Notes or any other  Financing  Document
shall be invalid,  illegal or unenforceable in any  jurisdiction,  the validity,
legality and  enforceability of the remaining  provisions or obligations,  or of
such provision or obligation in any other jurisdiction,  shall not in any way be
affected or impaired thereby.

                  SECTION 10.05.  Amendments and Waivers.  Any provision of this
Agreement or the other Financing Documents may be amended or waived if, but only
if, such  amendment or waiver is in writing and is signed by the Company and the
Required  Lenders  (and,  if the  rights or  duties  of the  Agent are  affected
thereby, by the Agent);  provided that no such amendment or waiver shall, unless
signed by all the  Lenders,  (i)  increase  or  decrease  any  Revolving  Credit
Commitment of any Lender (except for a ratable  decrease in the Revolving Credit
Commitments of all Lenders) or subject any Lender to any additional  obligation,
(ii) reduce the principal of or rate of interest on any Loan or fees  hereunder,
(iii)  postpone the date fixed for any payment of  principal of any Loan,  or of
interest  on any  Loan  or any  fees  hereunder  or for any  termination  of any
Commitment,  (iv) release any guarantor, or permit the modification,  release or
substitution of all or any substantial portion of the Collateral, or (iv) change
the definition of Required Lenders or amend this Section.

                  SECTION 10.06. Successors and Assigns;  Registration.  (a) The
provisions of this  Agreement  shall be binding upon and inure to the benefit of
the parties hereto and their  respective  successors and assigns  (including any
transferee  of any Note),  except that the  Company may not assign or  otherwise
transfer  any of its  rights  under this  Agreement  without  the prior  written
consent of all Lenders.

                  (b) The terms and provisions of this Agreement  shall inure to
the benefit of any  transferee or assignee of any Note to which the Company,  in
the absence of the occurrence  and  continuance of an Event of Default (in which
case no consent shall be required), shall have consented (such consent not to be
unreasonably  withheld)  and, in the event of such transfer or  assignment,  the
rights  and  privileges   herein  conferred  upon  the  assigning  Lender  shall
automatically  extend to and be  vested  in such  transferee  or  assignee,  all
subject to the terms and conditions hereof. Any assignment shall be for an equal
percentage of such assignor Lender's Loans and its Revolving Credit  Commitment,
and any such assignee Lender shall,  upon its  registration in the Note Register
referred to below, become a "Lender" for all purposes  hereunder.  Upon any such
assignment,  the assignor  Lender shall be released  from its  Revolving  Credit
Commitment  to the  extent  assigned  to and  assumed  by the  assignee  Lender.
Notwithstanding the foregoing,  in the absence of the occurrence and continuance
of an Event of Default,  NationsCredit  covenants for the benefit of the Company
that it will not assign its Revolving Credit Commitment below $15,000,000 except
that NationsCredit  retains the unrestricted  right to transfer,  sell or assign
any or all of its interest and  obligations in the Revolving  Credit  Commitment
and the Obligations without respect to this sentence in the following cases: the
transfer,  sale or  assignment  to any  Affiliate  of  NationsCredit,  (ii)  any
transfer, sale or assignment to any Person to the extent required to comply with
any order,  directive or request  from any  regulating  authority,  or (iii) any
transfer,  sale or  assignment  to any  Person  in  connection  with the sale by
NationsCredit  of all or  any  substantial  portion  of  its  corporate  finance
portfolio.

                  (c) Upon any assignment of any Note(s),  the assigning  Lender
shall  surrender  its  Note(s) to the Company for  exchange or  registration  of
transfer, and the Company will promptly execute and deliver in exchange therefor
a new  Note or  Note(s)  of the same  tenor  and  registered  in the name of the
assignor  Lender (if less than all of such Lender's  Notes are assigned) and the
name of the assignee Lender.

                  (d)  The  Company   shall   maintain  a  register  (the  "Note
Register")  of the Lenders and all assignee  Lenders that are the holders of all
the Notes issued pursuant to this  Agreement.  The Company will allow any Lender
to  inspect  and copy such list at the  Company's  principal  place of  business
during normal business hours.  Prior to the due presentment for  registration of
transfer of any Note,  the Company may deem and treat the Person in whose name a
Note is  registered  as the  absolute  owner  of such  Note for the  purpose  of
receiving  payment of principal of and premium and interest on such Note and for
all other purposes  whatsoever,  and the Company shall not be affected by notice
to the contrary.

                  (e) Each Lender  (including any assignee Lender at the time of
such  assignment)  represents  that it (i) is  acquiring  its  Note  solely  for
investment  purposes and not with a view toward, or for sale in connection with,
any distribution  thereof, (ii) has received and reviewed such information as it
deems  necessary to evaluate the merits and risks of its investment in the Note,
(iii) is an  "accredited  investor"  within the meaning of Rule 501(a) under the
Securities  Act and (iv) has such  knowledge  and  experience  in financial  and
business  matters  as to be capable  of  evaluating  the merits and risks of its
investment in the Note, including a complete loss of its investment.

                  (f) Each  Lender  understands  that the Note is being  offered
only in a transaction  not involving any public  offering  within the meaning of
the  Securities  Act, and that, if in the future such Lender  decides to resell,
pledge or  otherwise  transfer  the Note,  the Note may be  resold,  pledged  or
transferred only (i) to the Company, (ii) to a person who such Lender reasonably
believes is a qualified  institutional  buyer that purchases for its own account
or for the  account of a qualified  institutional  buyer to whom notice is given
that such  resale,  pledge or  transfer  is being made in  reliance on Rule 144A
under the Securities  Act or (iii)  pursuant to an exemption  from  registration
under the Securities Act.

                  (g)  Each  Lender  understands  that  the  Note  will,  unless
otherwise  agreed by the  Company and the holder  thereof,  bear a legend to the
following effect:

         THIS SECURITY IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF 1933,
         AS AMENDED (THE  "SECURITIES  ACT").  THE HOLDER HEREOF,  BY PURCHASING
         THIS SECURITY,  AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY
         MAY BE  RESOLD,  PLEDGED  OR  OTHERWISE  TRANSFERRED,  ONLY  (1) TO THE
         COMPANY,  (2) TO A  PERSON  WHO THE  SELLER  REASONABLY  BELIEVES  IS A
         QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
         SECURITIES  ACT  PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
         QUALIFIED  INSTITUTIONAL BUYER THAT IS AWARE THAT THE RESALE, PLEDGE OR
         OTHER  TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A OR (3)  PURSUANT
         TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.

                  (h) If the Note becomes  mutilated and is  surrendered  by the
Lender with  respect  thereto to the Company,  or if any Lender  claims that its
Note has been lost, destroyed or wrongfully taken, the Company shall execute and
deliver to such Lender a  replacement  Note,  upon the  affidavit of such Lender
attesting to such loss, destruction or wrongful taking with respect to such Note
and such lost, destroyed, mutilated,  surrendered or wrongfully taken Note shall
be deemed to be  canceled  for all  purposes  hereof.  Such  affidavit  shall be
accepted as  satisfactory  evidence of the loss,  wrongful taking or destruction
thereof and no indemnity  shall be required as a condition of the  execution and
delivery  of a  replacement  Note.  Any costs and  expenses  of the  Company  in
replacing any such Note shall be for the account of such Lender.

                  SECTION 10.07.  Collateral.  Each of the Lenders represents to
the Agent and each of the other  Lenders  that it in good  faith is not  relying
upon any Margin  Stock as  collateral  in the  extension or  maintenance  of the
credit provided for in this Agreement.

                  SECTION  10.08.  Headings.  Headings and captions  used in the
Financing  Documents  (including the Exhibits and Schedules  hereto and thereto)
are included  herein and therein for convenience of reference only and shall not
constitute  a part of this  Agreement  for any  other  purpose  or be given  any
substantive effect.

                  SECTION 10.09. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY AND  CONSTRUED IN  ACCORDANCE  WITH
THE LAWS OF THE STATE OF GEORGIA. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION  OF THE UNITED STATES  DISTRICT COURT FOR THE NORTHERN  DISTRICT OF
GEORGIA AND OF ANY  GEORGIA  COURT  SITTING IN THE CITY OF ATLANTA,  GEORGIA FOR
PURPOSES OF ALL LEGAL  PROCEEDINGS  ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS  CONTEMPLATED HEREBY. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST  EXTENT  PERMITTED BY LAW, ANY  OBJECTION  WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH  PROCEEDING  BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING  BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT  FORUM.  EACH OF THE PARTIES HERETO  IRREVOCABLY  CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.03.  NOTHING
IN THIS  AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

                  SECTION  10.10.  Notice  of  Breach  by Agent or  Lender.  The
Company  agrees  to give the  Agent  and the  Lenders  notice  of any  action or
inaction by the Agent or any Lender or any agent or attorney of the Agent or any
Lender in connection with this Agreement or any other Financing  Document or the
obligations of the Company under this Agreement or any other Financing  Document
that may be actionable  against the Agent or any Lender or any agent or attorney
of the Agent or any Lender or a defense to  payment  of any  obligations  of the
Company  under this  Agreement or any other  Financing  Document for any reason,
including  commission  of a tort or  violation of any  contractual  duty or duty
implied by law. The Company  agrees,  to the fullest extent that it may lawfully
do so, that unless such notice is given  promptly  (and in any event  within ten
(10) days after the Company has  knowledge,  or with the exercise of  reasonable
diligence could have had knowledge, of any such action or inaction), the Company
shall not assert,  and the Company shall be deemed to have waived,  any claim or
defense arising  therefrom to the extent that the Agent or any Lender could have
mitigated such claim or defense after receipt of such notice.

                  SECTION 10.11.  WAIVER OF JURY TRIAL.  THE COMPANY,  THE AGENT
AND THE LENDERS HEREBY  IRREVOCABLY  WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL  PROCEEDING  ARISING OUT OF OR RELATING TO THE FINANCING  DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW
WAIVES ANY RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE  CONSEQUENTIAL OR SPECIAL
DAMAGES IN CONNECTION  WITH ANY LEGAL  PROCEEDING  ARISING OUT OF OR RELATING TO
THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

                  SECTION 10.12.  Counterparts.  This Agreement may be signed in
any number of  counterparts,  each of which shall be an original,  with the same
effect as if the  signatures  thereto and hereto were upon the same  instrument.
This Agreement and the other Financing Documents constitute the entire agreement
and  understanding  among the  parties  hereto and  supersede  any and all prior
agreements and understandings,  oral or written,  relating to the subject matter
hereof.

     SECTION   10.13.   Special   Provision   Relating  to  this  Amendment  and
Restatement.  (a) This Agreement shall be effective upon receipt by the Agent of
the  following  items which shall be in form and substance  satisfactory  to the
Agent:

                  (i)  counterparts of this Agreement duly executed by the 
                  Borrower and AmSouth Bank;

                  (ii) receipt by  NationsCredit  of a duly executed Amended and
                  Restated $35,000,000 Revolving Credit Note for its account, in
                  the form provided for herein;

                  (iii) receipt by AmSouth Bank of a duly  executed  $15,000,000
                  Revolving  Credit Note for its account,  in the form  provided
                  for herein;

                  (iv) counterparts of the Agreement Regarding Security 
                  Documents duly executed by each Subsidiary in favor of the 
                  Agent;

                  (v)  counterparts  of  the  Agreement  Regarding  Professional
                  Service  Provider  Security  Agreement  duly  executed by each
                  physician  or  physician  practice  group  party to a  Service
                  Agreement;

                  (vi) an opinion of counsel to the Company and the Subsidiaries
                  as to the due execution and  enforceability of this Agreement,
                  the Notes and the Agreement Regarding Security documents;

                  (vii) a certificate  of the Company and each  Subsidiary as to
                  the due authorization,  execution and delivery of this Amended
                  and  Restated  Agreement,   Financing  Documents  executed  in
                  connection  therewith and the truth of the  representation and
                  warranties hereunder;

                  (viii)  receipt  by  NationsCredit  and  AmSouth  Bank  of its
                  commitment  fee  in  the  amount  of  $100,000  and  $150,000,
                  respectively,   which   fee   will   be   fully   earned   and
                  non-refundable on the date of this Agreement;

                  (ix) receipt by  NationsCredit  of its $30,000  Administration
                  Fee, which will be fully earned and non-refundable on the date
                  of this Agreement;

                  (x) receipt by NationsCredit  and AmSouth Bank of the fees and
                  expenses  due to their  respective  counsel  from the Company,
                  which amount will be $18,000 plus  expenses in respect of this
                  Amendment and  Restatement for counsel to  NationsCredit  plus
                  other amounts due with respect to other matters  arising under
                  this  Agreement  both  prior  to  and  concurrent   with  this
                  Amendment and Restatement,  and which amount will be $2,000 in
                  respect  of this  Amendment  and  Restatement  for  counsel to
                  AmSouth Bank; and

         (xi)    such other documents as the Agent or the Lenders shall request.

                    (b)  This  Agreement  may  be  executed  in  any  number  of
counterparts,  all of which shall be deemed to  constitute  but one original and
shall be binding upon all parties, their successors and permitted assigns.

                    (c) This Agreement  shall amend and restate and replace that
certain prior Credit Agreement,  dated as of June 12, 1996, between the Company,
the Lenders  signatories  thereto and the Agent (the "Prior Credit  Agreement").
This  Agreement is not intended nor shall it be construed to be a novation or an
accord  and   satisfaction  of  the  Obligations  or  any  other   indebtedness,
liabilities  or  obligations  of the Company  under this  Agreement or the other
Financing  Documents.  References to the Prior Credit Agreement contained in any
Financing  Document  shall be  deemed to be a  reference  to such  agreement  as
amended and restated hereby.

                    (d) The following Schedules and Exhibits to the Prior Credit
Agreement are being added or replaced by this Amendment and Restatement:

                           Schedule 4.10

                  (e) The Company hereby acknowledges that, the Company Security
Agreement  and the  Pledge  Agreement  are and shall  remain  in full  force and
effect,  and  hereby  ratifies,  confirms  and  approves  the  Company  Security
Agreement and the Pledge Agreement and all of the terms and provisions  thereof,
and agrees that each of the Company Security  Agreement and the Pledge Agreement
constitutes the valid and binding obligation of the Company,  enforceable by the
Agent and the Lenders in accordance with its terms.


<PAGE>






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

                                       BORROWER:

                                       PROMEDCO MANAGEMENT COMPANY


                                       By:
                                       Name:
                                       Title:


                                       LENDERS:

Revolving Loan Commitment:                  NATIONSCREDIT COMMERCIAL
$35,000,000                                 CORPORATION


                                            By:
                                            Name:
                                            Title:

                                            Address:


                                            Attn:
                                            Telecopy:



<PAGE>




Revolving Loan Commitment:                  AMSOUTH BANK
$15,000,000

                                             By:
                                             Name:
                                             Title:

                                             Address:


                                             Attn:
                                             Telecopy:


                                             AGENT:

                                             NATIONSCREDIT COMMERCIAL
                                             CORPORATION


                                             By:
                                             Name:
                                             Title:

                                             Address:


                                             Attn:
                                             Telecopy: