<PAGE>   1
                                                                    Exhibit 10.7


                                U.S. $250,000,000

                              AMENDED AND RESTATED

                           REVOLVING CREDIT AGREEMENT

                            DATED AS OF JULY 1, 1997

                                      AMONG

                                  PHYCOR, INC.

                                  AS BORROWER,

                             THE BANKS NAMED HEREIN,

                                    AS BANKS,

                                       AND

                                 CITIBANK, N.A.,

                                    AS AGENT





Amended and Restated Revolving Credit Agreement
DOCUMENT.02

<PAGE>   2

<TABLE>
<CAPTION>
                               TABLE OF CONTENTS

Section                                                                                   Page
-------                                                                                   ----
<S>                                                                                       <C>
ARTICLE I - DEFINITIONS AND ACCOUNTING TERMS...............................................1

          SECTION 1.01  Certain Defined Terms..............................................1
          SECTION 1.02  Computation of Time Periods.......................................24
          SECTION 1.03  Accounting Terms..................................................24

ARTICLE II - AMOUNTS AND TERMS OF THE ADVANCES............................................25

          SECTION 2.01  The Committed Rate Advances.......................................25
          SECTION 2.02  The Competitive Bid Advances......................................26
          SECTION 2.03  Fees..............................................................30
          SECTION 2.04  Optional Reduction of the Commitments.............................30
          SECTION 2.05  Repayment.........................................................31
          SECTION 2.06  Interest..........................................................31
          SECTION 2.07  Interest Rate Determination and Protection........................32
          SECTION 2.08  Voluntary and Automatic Conversion of Committed Rate Advances.....32
          SECTION 2.09  Prepayments.......................................................33
          SECTION 2.10  Increased Costs...................................................34
          SECTION 2.11  Illegality........................................................35
          SECTION 2.12  Payments and Computations.........................................35
          SECTION 2.13  Taxes.............................................................37
          SECTION 2.14  Sharing of Payments, Etc..........................................38
          SECTION 2.15  Evidence of Debt/Register.........................................39
          SECTION 2.16  Use of Proceeds...................................................39
          SECTION 2.17  Outstanding Advances; Existing Collateral.........................39

ARTICLE III - AMOUNT AND TERMS OF LETTERS OF CREDIT AND PARTICIPATIONS THEREIN............40

          SECTION 3.01  Letters of Credit.................................................40
          SECTION 3.02  Issuing the Letters of Credit.....................................40
          SECTION 3.03  Reimbursement Obligations.........................................41
          SECTION 3.04  Participations Purchased by the Banks.............................41
          SECTION 3.05  Letter of Credit Fees.............................................42
          SECTION 3.06  Indemnification Nature of the Issuing Bank's Duties...............43
          SECTION 3.07  Increased Costs...................................................44
          SECTION 3.08  Uniform Customs and Practice......................................45
</TABLE>


                                       i
<PAGE>   3

<TABLE>
<S>                                                                                       <C>
ARTICLE IV - CONDITIONS OF LENDING........................................................45

          SECTION 4.01 Conditions Precedent to Any Borrowing and Letter of Credit.........45
          SECTION 4.02  Conditions Precedent to Initial Advances..........................46

ARTICLE V - REPRESENTATIONS AND WARRANTIES................................................47

          SECTION 5.01  Representations and Warranties of the Borrower....................47

ARTICLE VI - COVENANTS OF THE BORROWER....................................................51

          SECTION 6.01  Affirmative Covenants.............................................51
          SECTION 6.02  Negative Covenants................................................55
          SECTION 6.03  Financial Covenants...............................................64
          SECTION 6.04  Reporting Requirements............................................66

ARTICLE VII - EVENTS OF DEFAULT...........................................................68

          SECTION 7.01  Events of Default.................................................68

ARTICLE VIII - THE AGENT..................................................................72

          SECTION 8.01  Authorization and Action..........................................72
          SECTION 8.02  Agent's Reliance, Etc.............................................72
          SECTION 8.03  Citibank and Affiliates...........................................73
          SECTION 8.04  Bank Credit Decision..............................................73
          SECTION 8.05  Indemnification...................................................73
          SECTION 8.06  Successor Agent/Issuing Bank......................................74
          SECTION 8.07  Documentation Agent...............................................74

ARTICLE IX - MISCELLANEOUS................................................................75

          SECTION 9.01  Amendments, Etc...................................................75
          SECTION 9.02  Notices, Etc......................................................75
          SECTION 9.03  No Waiver; Remedies...............................................76
          SECTION 9.04  Costs, Expenses and Taxes.........................................76
          SECTION 9.05  Right of Set-off..................................................76
          SECTION 9.06  Indemnification...................................................77
          SECTION 9.07  Binding Effect....................................................78
          SECTION 9.08  Assignments and Participations....................................78
          SECTION 9.09  Headings..........................................................81
          SECTION 9.10  Confidentiality...................................................81
          SECTION 9.11  Severability of Provisions........................................81
          SECTION 9.12  Independent of Provisions.........................................81
          SECTION 9.13  Consent to Jurisdiction...........................................82
</TABLE>



                                       ii
<PAGE>   4

<TABLE>
          <S>                                                                             <C>
          SECTION 9.14  GOVERNING LAW.....................................................82
          SECTION 9.15  WAIVER OF JURY TRIAL..............................................82
          SECTION 9.16  Execution in Counterparts.........................................82
</TABLE>




                                       iii
<PAGE>   5


                      SCHEDULES
<TABLE>
<S>                                 <C>
Schedule I                 -        Real Property

Schedule II                -        Subsidiaries

Schedule III               -        Service Agreements

Schedule IV                -        Existing Debt

Schedule V                 -        Existing Liens

Schedule VI                -        Litigation
</TABLE>

                                       iv
<PAGE>   6


                     EXHIBITS

<TABLE>
<S>                                 <C>
Exhibit A-1                -        Form of Committed Rate Note

Exhibit A-2                -        Form of Competitive Bid Note

Exhibit B-1                -        Form of Notice of Borrowing

Exhibit B-2                -        Form of Competitive Bid Request

Exhibit C                  -        Form of Guaranty

Exhibit D                  -        Form of Intercompany Subordination Agreement

Exhibit E                  -        Form of Assignment and Acceptance

Exhibit F                  -        Form of Subordination Agreement

Exhibit G                  -        Forms of Opinion of Counsel

Exhibit H                  -        Form of Acquisition Approval Letter
</TABLE>


                                       v
<PAGE>   7



         Amended and Restated Revolving Credit Agreement, dated as of July 1,
1997 (this "Agreement"), among PHYCOR, INC., a Tennessee corporation (the
"Borrower"), the banks (the "Banks") listed on the signature pages hereof and
from time to time parties hereto, and CITIBANK, N.A. ("Citibank"), as an Issuing
Bank hereunder and as agent (the "Agent") for the Banks and the Issuing Banks.

         PRELIMINARY STATEMENT:

         The Borrower has requested that a portion of the Fifth Amended and
Restated Revolving Credit Agreement, dated as of July 22, 1996, as amended,
among the Borrower, the banks named therein, NationsBank, N.A., as documentation
agent, and Citibank, as agent (the "Existing Credit Agreement"), be amended and
restated to provide for the making of advances to it and to provide for the
issuance of letters of credit for its account under a revolving credit facility
in the principal amount of up to $250,000,000, on the terms and conditions set
forth in this Agreement.

         NOW, THEREFORE, the parties hereto agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

         SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):



                  "$150,000,000 Credit Agreement" means the Credit Agreement,
         dated as of July 1, 1997, among the Borrower, the banks named therein,
         and Citibank, as agent for such banks, providing for a revolving credit
         facility in the principal amount of up to $150,000,000, as amended,
         supplemented, restated or otherwise modified from time to time.

                  "Accounts" means all present and future rights of the Borrower
         or any Subsidiary of the Borrower to payment for goods (including
         medications) sold or leased or for services rendered pursuant to any
         Service Agreement (except those evidenced by instruments or chattel
         paper), whether now existing or hereafter arising and wherever arising
         and whether or not earned by performance (including, without
         limitation, accounts receivable purchased by the Borrower or any of its
         Subsidiaries from any physician group which has entered into a Service
         Agreement with the Borrower or such Subsidiary).

                  "Administrative Details Reply Form" means, with respect to
         each Bank, an administrative questionnaire in the form prepared by the
         Agent, submitted by such Bank to the Agent (with a copy to the
         Borrower) and duly completed by such Bank.


<PAGE>   8

                  "Advance" means a Committed Rate Advance or a Competitive Bid
         Advance. In the case of Committed Rate Advances, "Advance" also refers
         to a Base Rate Advance or Eurodollar Rate Advance (each of which shall
         be a "Type" of Committed Rate Advance). In the case of Competitive Bid
         Advances, "Advance" also refers to a Fixed Rate Advance or a LIBOR
         Advance (each of which shall be a "Type" of Competitive Bid Advance).

                  "Affiliate" means, with respect to any Person, any other
         entity that, directly or indirectly through one or more intermediaries,
         controls, is controlled by, or is under common control with, such
         Person.

                  "Applicable Eurodollar Rate Margin" means for the Initial
         Effective Period (as defined below) 0.4375% per annum and thereafter
         0.5250% per annum; provided, however, that if the Borrower shall have
         satisfied the Consolidated Debt/EBITDA Ratio test indicated in the
         table below, the Applicable Eurodollar Rate Margin for any Advance, as
         applicable, made on or after the fifth Business Day after the delivery
         of quarterly certified Consolidated financial statements and a schedule
         evidencing financial covenant compliance delivered to the Banks
         pursuant to Section 6.04(b) (each a "Quarterly Delivery"), and while
         the Borrower is in compliance with Section 6.04(b), shall be the
         percentage rate per annum set forth opposite the appropriate test for
         the fiscal quarter reported on for such Quarterly Delivery for such
         Advance in the table below.

<TABLE>
<CAPTION>
                                                                            Applicable Eurodollar
                                    Consolidated                               Rate Margin for
                                  Debt/EBITDA Ratio                                Advances
                   ------------------------------------------------------------------------------

                   <S>                                                      <C>
                   Greater than 3.25 to 1.00                                       0.5250%

                   Less than or equal to 3.25 to 1.00 but greater                  0.4375%
                      than 2.50 to 1.00

                   Less than or equal to 2.50 to 1.00 but greater                  0.3250%
                      than 2.00 to 1.00

                   Less than or equal to 2.00 to 1.00 but greater                  0.2875%
                      than 1.50 to 1.00

                   Less than or equal to 1.50 to 1.00                              0.2500%
</TABLE>


                  The Applicable Eurodollar Rate Margin shall be determined by
                  the Agent each quarter on the basis of quarterly certified
                  Consolidated financial statements and a schedule evidencing
                  financial covenant compliance delivered to the Banks pursuant
                  to Section 6.04(b). The "Initial Effective Period" shall be
                  the period commencing on the Closing Date and ending the fifth
                  Business Day after the Quarterly Delivery for the fiscal
                  quarter ended June 30, 1997. Notwithstanding



                                       2
<PAGE>   9

                  the foregoing, the Applicable Eurodollar Rate Margin shall be
                  deemed to be 0.5250% per annum in respect of Advances made on
                  any day as of which the deliveries required to calculate the
                  Applicable Eurodollar Rate Margin shall not have been made.

                           "Applicable Facility Fee Rate" means for the Initial
                  Effective Period 0.1875% per annum and thereafter for each
                  Effective Period (as defined below) 0.2250% per annum;
                  provided, however, that if the Borrower shall have satisfied
                  the Consolidated Debt/EBITDA Ratio test indicated in the table
                  below, the Applicable Facility Fee Rate for the Effective
                  Period as to which such test is satisfied shall be the
                  percentage rate per annum set forth opposite the appropriate
                  test for the Commitment in the table below.

<TABLE>
<CAPTION>
                                    Consolidated                            Applicable Facility Fee
                                  Debt/EBITDA Ratio                         Rate for the Commitment
                   --------------------------------------------------------------------------------

                   <S>                                                       <C>
                   Greater than 3.25 to 1.00                                        0.2250%

                   Less than or equal to 3.25 to 1.00 but greater                   0.1875%
                      than 2.50 to 1.00

                   Less than or equal to 2.50 to 1.00 but greater                   0.1750%
                      than 2.00 to 1.00

                   Less than or equal to 2.00 to 1.00 but greater                   0.1500%
                      than 1.50 to 1.00

                   Less than or equal to 1.50 to 1.00                               0.1250%
</TABLE>
                  The Applicable Facility Fee Rate shall be determined by the
                  Agent each quarter on the basis of quarterly certified
                  Consolidated financial statements and a schedule evidencing
                  financial covenant compliance delivered to the Banks pursuant
                  to Section 6.04(b). The "Effective Period" with respect to the
                  Applicable Facility Fee Rate shall be the period commencing on
                  the fifth Business Day after the Borrower shall have delivered
                  to the Agent the quarterly certified Consolidated financial
                  statements and financial covenant compliance schedule for such
                  quarter and ending on the date that is five Business Days
                  after delivery to the Agent of quarterly certified
                  Consolidated financial statements and financial covenant
                  compliance certificate for the subsequent quarter.
                  Notwithstanding the foregoing, the Applicable Facility Fee
                  Rate shall be deemed to be 0.2250% per annum for each day
                  during an Effective Period as of which the deliveries required
                  to calculate the Applicable Facility Fee Rate shall not have
                  been made.

                           "Applicable Lending Office" means, with respect to
                  each Bank, such Bank's Domestic Lending Office in the case of
                  a Base Rate Advance or a Fixed


                                       3
<PAGE>   10

                  Rate Advance and such Bank's Eurodollar Lending Office in the
                  case of a Eurodollar Rate Advance or a LIBOR Advance.

                           "Asset Purchase Agreement" means any agreement
                  between the Borrower or any of its Subsidiaries and any Person
                  relating to the purchase by the Borrower or any of its
                  Subsidiaries of the assets of any Facility or Related
                  Business.

                           "Assignment and Acceptance" means an assignment and
                  acceptance entered into by an assigning Bank and an Eligible
                  Assignee, and accepted by the Agent, in accordance with
                  Section 9.08 and in substantially the form of Exhibit E.

                           "Banks" means the banks listed on the signature pages
                  hereof and, after the date hereof, includes each Eligible
                  Assignee that has entered into an Assignment and Acceptance
                  which has been accepted by the Agent.

                           "Base Rate" means, for any period, a fluctuating
                  interest rate per annum as shall be in effect from time to
                  time which rate per annum shall at all times be equal to the
                  highest of:

                                    (a) the rate of interest announced publicly
                           by Citibank in New York, New York, from time to time,
                           as Citibank's base rate; or

                                    (b) 1/2 of one percent per annum above the
                           latest three-week moving average of secondary market
                           morning offering rates in the United States for
                           three-month certificates of deposit of major United
                           States money market banks, such three-week moving
                           average being determined weekly on each Monday (or,
                           if any such day is not a Business Day, on the next
                           succeeding Business Day) for the three-week period
                           ending on the previous Friday by Citibank on the
                           basis of such rates reported by certificate of
                           deposit dealers to and published by the Federal
                           Reserve Bank of New York or, if such publication
                           shall be suspended or terminated, on the basis of
                           quotations for such rates received by Citibank from
                           three New York certificate of deposit dealers of
                           recognized standing selected by Citibank in either
                           case adjusted to the nearest 1/16 of one percent or,
                           if there is no nearest 1/16 of one percent, to the
                           next higher 1/16 of one percent; or

                                    (c) the Federal Funds Rate plus 1/2 of one
                           percent.

                           "Base Rate Advance" means a Committed Rate Advance
                  which bears interest as provided in Section 2.06(a)(i).

                           "Bid Due Date" has the meaning set forth in Section
                  2.02(c).

                           "Borrowing" means a Borrowing that is a Committed
                  Rate Borrowing or a Competitive Bid Borrowing.


                                       4
<PAGE>   11

                           "Business Day" means a day of the year on which banks
                  are not required or authorized to close in New York City and,
                  if the applicable Business Day relates to any Eurodollar Rate
                  Advances or LIBOR Advances, on which dealings in dollar
                  deposits are carried on in the London interbank market.

                           "Capital Expenditures" means, with respect to any
                  Person for any period, the aggregate of all expenditures paid
                  or accrued by such Person during such period that, in
                  accordance with generally accepted accounting principles,
                  should be included in or reflected by the property, plant or
                  equipment or similar fixed asset account reflected in the
                  balance sheet of such Person.

                           "Capital Investments" means (without duplication),
                  with respect to any Person for any period, the aggregate of
                  all investments by such Person in (i) Capital Expenditures,
                  (ii) joint ventures, general or limited partnerships, limited
                  liability companies or any other type of Person that is not a
                  Subsidiary, including loans and advances to such Person
                  (including loans and advances to any physician group or other
                  third party related to a Facility or Related Business, or any
                  third party with whom such Person has entered into a Service
                  Agreement), (iii) capital investments in, and loans and
                  advances to, a Subsidiary which becomes a Subsidiary as a
                  result of such investment, (iv) the purchase of the homes of
                  employees of such Person in connection with the relocation of
                  such employees, and (v) Existing Clinic Acquisitions.

                           "Capital Lease" of any Person means any lease of any
                  property (whether real, personal or mixed) by such Person as
                  lessee, which lease should, in accordance with generally
                  accepted accounting principles, 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, as amended
                  (42 U.S.C. ss. 9601 et seq.), and any regulations promulgated
                  thereunder.

                           "Change of Control" means the occurrence, after the
                  date of this Agreement, of (i) any Person or two or more
                  Persons acting in concert acquiring beneficial ownership
                  (within the meaning of Rule 13d-3 of the Securities and
                  Exchange Commission under the Securities Exchange Act of 1934,
                  as amended), directly or indirectly, of securities of the
                  Borrower (or other securities convertible into such
                  securities) representing 50% or more of the combined voting
                  power of all securities of the Borrower entitled to vote in
                  the election of directors; or (ii) during any period of up to
                  24 consecutive months, commencing before or after the date of
                  this Agreement, individuals who at the beginning of such
                  24-month period were directors of the Borrower ceasing for any
                  reason to constitute a majority of the Board of Directors of
                  the Borrower unless the Persons replacing such individuals
                  were nominated by the Board of Directors of the Borrower; or
                  (iii) any Person or two or more Persons acting in concert
                  acquiring by contract or


                                       5
<PAGE>   12

                  otherwise, or entering into a contract or arrangement which
                  upon consummation will result in its or their acquisition of,
                  or control over, securities of the Borrower (or other
                  securities convertible into such securities) representing 50%
                  or more of the combined voting power of all securities of the
                  Borrower entitled to vote in the election of directors.

                           "Closing Date" means the Business Day on which all of
                  the conditions set forth in Section 4.02 shall have been
                  fulfilled.

                           "Committed Rate Advance" means an Advance pursuant to
                  Section 2.01.

                           "Committed Rate Borrowing" means a Borrowing pursuant
                  to Section 2.01.

                           "Committed Rate Note" means a promissory note of the
                  Borrower payable to the order of a Bank, in substantially the
                  form of Exhibit A-1, evidencing the aggregate indebtedness of
                  the Borrower to such Bank resulting from the Committed Rate
                  Advances made by such Bank, and "Committed Rate Notes" means
                  such promissory notes collectively.

                           "Commitment" means, as to any Bank, the amount of
                  commitment to make Committed Rate Advances or participate in
                  Letters of Credit set forth opposite such Bank's name on the
                  signature pages hereof or, if such Bank has entered into one
                  or more Assignments and Acceptances, the amount thereof set
                  forth for such Bank in the Register maintained by the Agent
                  pursuant to Section 9.08(c), as such amount may be reduced
                  from time to time pursuant to Section 2.04.

                           "Commitment Percentage" means, as to any Bank, the
                  percentage equal to such Bank's Commitment divided by the
                  aggregate Commitments of all Banks.

                           "Common Stock" means Securities having ordinary
                  voting power for the election of directors that are not
                  entitled to any preference as to dividends or other
                  distributions or on liquidation.

                           "Competitive Bid" has the meaning set forth in
                  Section 2.02(c).

                           "Competitive Bid Advance" means an Advance made
                  pursuant to Section 2.02.

                           "Competitive Bid Borrowing" means a Borrowing
                  pursuant to Section 2.02.

                           "Competitive Bid Reduction" has the meaning set forth
                  in Section 2.01(a).


                                       6
<PAGE>   13

                           "Competitive Bid Note" means a promissory note of the
                  Borrower payable to the order of a Designated Bidder, in
                  substantially the form of Exhibit A-2, evidencing the
                  indebtedness of the Borrower to such Designated Bidder
                  resulting from Competitive Bid Advances made by such
                  Designated Bidder, and "Competitive Bid Notes" means such
                  promissory notes collectively.

                           "Competitive Bid Request" has the meaning set forth
                  in Section 2.02(b).

                           "Consolidated" and any derivative thereof each means,
                  with reference to the accounts or financial reports of any
                  Person, the consolidated accounts or financial reports of such
                  Person and each Subsidiary of such Person determined in
                  accordance with generally accepted accounting principles,
                  including principles of consolidation, consistent with those
                  applied in the preparation of the Borrower's December 31, 1996
                  Consolidated financial statements delivered to the Banks prior
                  to the date hereof.

                           "Contingent Obligation" of any Person means, without
                  duplication, (i) any direct or indirect liability, contingent
                  or otherwise, of such Person with respect to any obligation of
                  the type specified in clause (ii) or (iii) below or other
                  obligation of another Person, including, without limitation,
                  any obligation directly or indirectly guaranteed, endorsed
                  (other than for collection or deposit in the ordinary course
                  of business), co-made, discounted or sold with recourse by
                  such Person, or in respect of which such Person is otherwise
                  directly or indirectly liable (including, without limitation,
                  liable through any agreement to purchase, repurchase or
                  otherwise acquire such obligation or provide or purchase any
                  security therefor, or to provide funds for the payment or
                  discharge of such obligation, or to maintaining any financial
                  condition of the obligor of such obligation, or to make
                  payment for any products, materials or supplies or for any
                  transportation, services or lease (regardless of the
                  non-delivery or non-furnishing thereof), in any such case if
                  the purpose or intent of such agreement is to provide
                  assurance that such obligation will be paid or discharged, or
                  that any agreements relating thereto will be complied with, or
                  that the holders of such obligation will be protected against
                  loss in respect thereof), (ii) obligations of such Person with
                  respect to undrawn letters of credit or unpaid bankers'
                  acceptances, bankers' assurances or guarantees or similar
                  items, and (iii) obligations of such Person with respect to
                  any interest rate protection, hedge, cap, collar or similar
                  agreement or any foreign exchange or forward sale agreement,
                  or any similar agreement.

                           "Convert", "Conversion" and "Converted" each refers
                  to a conversion of Advances of one Type into Advances of
                  another Type pursuant to Section 2.07 or 2.08.

                           "Current Liabilities" of any Person means, as of any
                  date of determination, (i) all Debt (excluding any Debt under
                  Operating Leases) which by its terms is payable on demand or
                  matures within one year from the date of creation


                                       7
<PAGE>   14

                  (excluding any Debt renewable or extendible, at the exclusive
                  option of the debtor, to a date more than one year from such
                  date or arising under a revolving credit or similar agreement
                  that unconditionally obligates the lender or lenders to extend
                  credit in respect thereof during a period of more than one
                  year from such date), and (ii) all other items (including
                  taxes accrued as estimated) which in accordance with generally
                  accepted accounting principles should be included as current
                  liabilities of such Person, in each case, including all
                  amounts required to be paid or prepaid with respect to any
                  Debt of such Person within one year from the date of
                  determination.

                           "Debt" of any Person means, without duplication, (i)
                  all indebtedness of such Person for borrowed money or for the
                  deferred purchase price of property or services (but
                  excluding, in the case of the acquisition of any Facility (or
                  the assets thereof), any Existing Clinic Acquisition or the
                  acquisition of a Related Business, any contingent obligation
                  to make payments (other than deferred purchase price payments)
                  after the closing of such acquisition), (ii) all obligations
                  of such Person in connection with any agreement to purchase,
                  redeem, exchange, convert or otherwise acquire for value any
                  Securities of such Person or any warrants, rights or options
                  to acquire such Securities, now or hereafter outstanding,
                  (iii) all obligations of such Person evidenced by bonds,
                  notes, debentures, convertible debentures or other similar
                  instruments, (iv) all indebtedness created or arising under
                  any conditional sale or other title retention agreement with
                  respect to property acquired by such Person (even though the
                  rights and remedies of the seller or lender under such
                  agreement in the event of default, acceleration, or
                  termination are limited to repossession or sale of such
                  property), (v) all obligations of such Person under Capital
                  Leases, (vi) the amount of all Contingent Obligations (other
                  than guarantees of medical group real property leases at
                  Facilities to the extent the amount thereof incurred in any
                  twelve - month period does not exceed $5,000,000 in the
                  aggregate), (vii) all Debt referred to in clause (i), (ii),
                  (iii), (iv), (v) or (vi) above secured by (or for which the
                  holder of such Debt has an existing right, contingent or
                  otherwise, to be secured by) any lien, security interest or
                  other charge or encumbrance upon or in property (including,
                  without limitation, accounts and contract rights) owned by
                  such Person, even though such Person has not assumed or become
                  liable for the payment of such Debt, (viii) all mandatorily
                  redeemable preferred stock, valued at the applicable
                  redemption price, plus accrued and unpaid dividends payable in
                  respect of such mandatorily redeemable preferred stock, (ix)
                  if an ERISA Event shall have occurred with respect to any
                  Plan, the Insufficiency (if any) of such Plan (or, in the case
                  of a Plan with respect to which an ERISA Event described in
                  clauses (iii) through (vi) of the definition of ERISA Event
                  shall have occurred, the liability related thereto), and (x)
                  net obligations under any interest rate, currency or other
                  protection, hedge, cap, collar, swap or similar agreement.

                           "Debt/EBITDA Ratio" of any Person means, at any date
                  of determination, the ratio that (a) such Person's total Debt
                  outstanding at such date of determination


                                       8
<PAGE>   15

                  (including, without limitation, all Subordinated Debt other
                  than, in the case of the Borrower and its Subsidiaries, the
                  Excluded Convertible Acquisition Debt), less the amount, if
                  any, by which such Person's unrestricted cash and cash
                  equivalents exceeds $15,000,000 at such date of determination,
                  bears to (b) such Person's EBITDA.

                           "Debt/Total Capitalization Ratio" of any Person
                  means, at any date of determination, the ratio that such
                  Person's Funded Debt at such date of determination bears to
                  such Person's Total Capitalization.

                           "Deferred Acquisition Consideration" means, in the
                  case of the acquisition of any Facility (or the assets
                  thereof) or any Related Business, all deferred cash and
                  non-cash consideration to be paid by the Borrower or any of
                  its Subsidiaries after the closing of such acquisition;
                  provided that Deferred Acquisition Consideration shall not
                  include any contingent payments that may be made by the
                  Borrower or any of its Subsidiaries after such closing.

                           "Designated Bidder" means each Bank (or its nominee
                  so long as the beneficial interest in the Competitive Bid
                  Advances held by such nominee is retained by such Bank) unless
                  such Bank has elected, by notice in writing to the Agent, the
                  other Banks and the Borrower, not to be a potential bidder in
                  respect of Competitive Bid Advances. Any such election may be
                  terminated, at any time, by notice in writing to the Agent,
                  the other Banks and the Borrower.

                           "Documentation Agent" means NationsBank, N.A.

                           "Domestic Lending Office" means, with respect to any
                  Bank, the office of such Bank specified as its "Domestic
                  Lending Office" in its Administrative Details Reply Form or on
                  the signature page of the Assignment and Acceptance pursuant
                  to which it became a Bank, or such other office or Affiliate
                  of such Bank as such Bank may from time to time specify to the
                  Borrower and the Agent.

                           "EBITDA" means, with respect to any Person for any
                  fiscal period, the sum (without duplication) of (i) Net Income
                  (whether positive or negative), plus (ii) Interest Expense,
                  plus (iii) income tax expense, plus (iv) depreciation expense,
                  plus (v) amortization expense, plus (vi) extraordinary losses
                  (determined in accordance with GAAP), minus (vi) extraordinary
                  gains (determined in accordance with GAAP).

                           "EBITDAL" means, with respect to any Person for any
                  fiscal period, the sum (without duplication) of EBITDA plus
                  Lease Expense.

                           "Eligible Assignee" means (i) a commercial bank
                  organized under the laws of the United States, or any state
                  thereof, having a combined capital and surplus of at least
                  $100,000,000; (ii) a savings and loan association or savings
                  bank organized under the laws of the United States or any
                  state thereof, and having a


                                       9
<PAGE>   16

                  combined capital and surplus of at least $100,000,000; (iii) a
                  commercial bank organized under the laws of any other country
                  which is a member of the OECD, or a political subdivision of
                  any such country, and having a combined capital and surplus of
                  at least $100,000,000, provided, that, such bank is acting
                  through a branch, agency or Affiliate located in the United
                  States or managed and controlled by a branch, agency or
                  affiliate located in the United States; (iv) any Affiliate of
                  any Bank if such Affiliate has Total Assets in excess of
                  $100,000,000; (v) any insurance company organized under the
                  laws of the United States or any state thereof, and having
                  Total Assets in excess of $100,000,000 and any other
                  commercial financial entity having Total Assets in excess of
                  $100,000,000; and (vi) any other Person mutually agreed to in
                  writing by the Borrower and the Agent.

                           "Environmental Activity" means any past, present or
                  future storage, holding, existence, release, threatened
                  release, emission, discharge, generation, processing,
                  abatement, disposition, handling or transportation of any
                  Hazardous Substance (i) from, under, into or on any Facility,
                  or (ii) relating to any Facility, or the ownership, use,
                  operation or occupancy thereof, or any threat of such
                  activity.

                           "Environmental Laws" means any and all laws,
                  statutes, ordinances, rules, regulations, judgments, orders,
                  decrees, permits, licenses, or other governmental restrictions
                  or requirements relating to the environment, any Hazardous
                  Substance or any Environmental Activity in effect in any and
                  all jurisdictions in which the Borrower or any of its
                  Subsidiaries is or from time to time may be doing business, or
                  where any of the Facilities are from time to time located,
                  including, without limitation, CERCLA and RCRA.

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

                           "ERISA Affiliate" means any Person who for purposes
                  of Title IV of ERISA is a member of the Borrower's controlled
                  group, or under common control with the Borrower, within the
                  meaning of Section 414 of the Internal Revenue Code of 1986,
                  as amended from time to time, and the regulations promulgated
                  pursuant thereto and the rulings issued thereunder.

                           "ERISA Event" means (i) the occurrence of a
                  reportable event, within the meaning of Section 4043 of ERISA,
                  unless the 30-day notice requirement with respect thereto has
                  been waived by the PBGC; (ii) the provision by the
                  administrator of any Plan of a notice of intent to terminate
                  such Plan, pursuant to Section 4041(a)(2) of ERISA (including
                  any such notice with respect to a plan amendment referred to
                  in Section 4041(e) of ERISA); (iii) the cessation of
                  operations at a facility in the circumstances described in
                  Section 4062(e) of


                                       10
<PAGE>   17

                  ERISA; (iv) the withdrawal by the Borrower or an ERISA
                  Affiliate from a Multiple Employer Plan during a plan year for
                  which it was a substantial employer, as defined in Section
                  4001(a)(2) of ERISA; (v) the failure by the Borrower or any
                  ERISA Affiliate to make a material payment to a Plan required
                  under Section 302(f)(1) of ERISA; (vi) the adoption of an
                  amendment to a Plan requiring the provision of initial or
                  additional security to such Plan, pursuant to Section 307 of
                  ERISA; or (vii) the institution by the PBGC of proceedings to
                  terminate a Plan, pursuant to Section 4042 of ERISA, or the
                  occurrence of any event or condition which might constitute
                  grounds under Section 4042 of ERISA for the termination of, or
                  the appointment of a trustee to administer, a Plan.

                           "Eurocurrency Liabilities" has the meaning assigned
                  to that term in Regulation D of the Board of Governors of the
                  Federal Reserve System, as in effect from time to time.

                           "Eurodollar Lending Office" means, with respect to
                  any Bank, the office of such Bank specified as its "Eurodollar
                  Lending Office" in its Administrative Details Reply Form or on
                  the signature page of the Assignment and Acceptance pursuant
                  to which it became a Bank (or, if no such office is specified,
                  its Domestic Lending Office), or such other office of such
                  Bank as such Bank may from time to time specify to the
                  Borrower and the Agent.

                           "Eurodollar Rate" means, for any Interest Period for
                  each Eurodollar Rate Advance or LIBOR Advance comprising part
                  of the same Borrowing, an interest rate per annum obtained by
                  dividing (i) the rate of interest determined by the Agent to
                  be equal to the average (rounded upward to the nearest whole
                  multiple of 1/16 of one percent per annum, if such average is
                  not such a multiple) of the rate per annum at which deposits
                  in United States dollars are offered by the principal office
                  of Citibank in London to prime banks in the London interbank
                  market at 11:00 A.M. (London time) two Business Days before
                  the first day of such Interest Period in an amount
                  substantially equal to the Advance comprising part of such
                  Borrowing and for a period equal to such Interest Period by
                  (ii) a percentage equal to 100% minus the Eurodollar Rate
                  Reserve Percentage for such Interest Period. The Eurodollar
                  Rate for any Interest Period for each Eurodollar Rate Advance
                  or LIBOR Advance comprising part of the same Borrowing shall
                  be determined by the Agent on the basis of applicable rates
                  furnished to and received by the Agent from Citibank two
                  Business Days before the first day of such Interest Period,
                  subject, however, to the provisions of Section 2.07.

                           "Eurodollar Rate Advance" means a Committed Rate
                  Advance which bears interest as provided in Section
                  2.06(a)(ii).

                           "Eurodollar Rate Reserve Percentage" of any Bank for
                  any Interest Period for any Eurodollar Rate Advance or LIBOR
                  Advance means the reserve percentage applicable during such
                  Interest Period (or if more than one such


                                       11
<PAGE>   18

                  percentage shall be so applicable, the daily average of such
                  percentages for those days in such Interest Period during
                  which any such percentage shall be so applicable) under
                  regulations issued from time to time by the Board of Governors
                  of the Federal Reserve System (or any successor) for
                  determining the maximum reserve requirement (including,
                  without limitation, any emergency, supplemental or other
                  marginal reserve requirement) for such Bank with respect to
                  liabilities or assets consisting of or including Eurocurrency
                  Liabilities having a term equal to such Interest Period.

                           "Event of Default" has the meaning specified in
                  Section 7.01.

                           "Excluded Convertible Acquisition Debt" means the
                  subordinated convertible notes issued by the Borrower or any
                  of its Subsidiaries as consideration for the acquisition of
                  Facilities that, at any date of determination, are convertible
                  into shares of the Borrower's common stock having a Market
                  Value, as of such date, equal to 140% of the conversion price
                  of such notes.

                           "Existing Clinic Acquisition" means the acquisition
                  of an additional Facility or single-specialty clinic, or the
                  assets thereof, by the Borrower or a Subsidiary of the
                  Borrower which already owns and operates one or more
                  Facilities, or the addition of physicians to such Facilities,
                  which acquisition or addition will supplement the operations
                  of the existing Facilities.

                           "Facility" means any multi-specialty medical clinic
                  (including any satellite locations and all real, personal and
                  mixed property relating to any such clinic) and related
                  businesses certain of the assets of which are now owned or
                  leased and operated or hereafter owned or leased and operated
                  by the Borrower or any existing or future Subsidiary of the
                  Borrower or, in the case of an acquisition, that such a
                  Subsidiary intends to acquire.

                           "Federal Funds Rate" means, for any period, a
                  fluctuating interest rate per annum equal for each day during
                  such period to the weighted average of the rates on overnight
                  Federal funds transactions with members of the Federal Reserve
                  System arranged by Federal funds brokers, as published for
                  such day (or, if such day is not a Business Day, for the next
                  preceding Business Day) by the Federal Reserve Bank of New
                  York, or, if such rate is not so published for any day which
                  is a Business Day, the average of the quotations for such day
                  on such transactions received by the Agent from three Federal
                  funds brokers of recognized standing selected by it.

                           "Fixed Charge Coverage Ratio" of any Person means, at
                  any date of determination for any period, the ratio that such
                  Person's EBITDAL for such period, minus (i) Consolidated cash
                  income tax expense and minus (ii) Capital Expenditures other
                  than Capital Expenditures which are funded by Advances or
                  other Debt (to the extent such Debt is permitted under this
                  Agreement) or by Net


                                       12
<PAGE>   19

                  Cash Proceeds received from the issuance, sale or disposition
                  of the Borrower's Securities (common, preferred or special),
                  securities convertible into or exchangeable for Securities,
                  and any rights, options, warrants and similar instruments,
                  bears to such Person's Interest Expense for such period plus
                  (i) Lease Expense, and plus (ii) all scheduled Debt principal
                  payments (including the principal component of payments in
                  respect of Capital Leases but excluding payments of any
                  deferred purchase price in connection with the acquisition of
                  any Facility (or the assets thereof), any Existing Clinic
                  Acquisition or the acquisition of any Related Business and any
                  contingent payments made in connection with such acquisition)
                  for such period.

                           "Fixed Rate" has the meaning set forth in Section
                  2.02(c).

                           "Fixed Rate Advance" means a Competitive Bid Advance
                  which bears interest as provided in Section 2.06(b).

                           "Funded Debt" of any Person means Debt (including,
                  without limitation, all Subordinated Debt other than, in the
                  case of the Borrower and its Subsidiaries, the Excluded
                  Convertible Acquisition Debt) which matures more than one year
                  from the date of determination or matures within one year from
                  such date but is renewable or extendible, at the option of
                  such Person, to a date more than one year from such date or
                  arises under a revolving credit or similar agreement which
                  obligates the lender or lenders to extend credit during a
                  period of more than one year from such date, including,
                  without limitation, all amounts of Funded Debt required to be
                  paid or prepaid within one year from the date of
                  determination.

                           "Guarantors" means the Subsidiaries listed on
                  Schedule II hereto and each other Subsidiary that from time to
                  time may enter into a Guaranty pursuant hereto; provided that
                  Immaterial Subsidiaries shall not be required to be
                  Guarantors; provided further that Arnett Health Systems, Inc.
                  and its Subsidiaries as of the date hereof (the "Arnett
                  Subsidiaries") shall not be Guarantors so long as less than
                  3.0% of the EBITDA of the Borrower and its Subsidiaries
                  (calculated on a rolling four quarter basis) is attributable
                  to their interests in the Arnett Subsidiaries.

                           "Guaranty" means a guaranty of payment in favor of
                  the Agent, in substantially the form of Exhibit C, as amended,
                  supplemented, restated or otherwise modified from time to
                  time.

                           "Hazardous Substance" means (i) any hazardous
                  substance and toxic substance as such terms are presently
                  deemed or used in ss. 101(14) of CERCLA (42 U.S.C. ss.
                  9601(14)), in 33 U.S.C. ss. 1251 et seq. (Clean Water Act), or
                  15 U.S.C. ss. 2601 et seq. (Toxic Substances Control Act),
                  (ii) any additional substances or materials which are now or
                  hereafter hazardous or toxic substances under any applicable
                  laws, and (iii) as of any date of determination, any
                  additional substances or materials which are hereafter
                  incorporated in or added to the


                                       13
<PAGE>   20

                  definition or use of "hazardous substance" or "toxic
                  substance" for purposes of CERCLA or any other applicable law.

                           "Immaterial Subsidiary" means a Subsidiary of the
                  Borrower that, on a Consolidated basis with its Subsidiaries,
                  as of the end of each fiscal quarter, does not account for 1%
                  or more of the Consolidated Total Assets of the Borrower or 1%
                  or more of the Consolidated total revenues of the Borrower, as
                  determined in accordance with generally accepted accounting
                  principles; provided that if as of the end of any fiscal
                  quarter the Immaterial Subsidiaries shall account, in the
                  aggregate, for 5% or more of the Consolidated Total Assets of
                  the Borrower or 5% or more of the Consolidated total revenues
                  of the Borrower as so determined, the Borrower shall promptly,
                  by written notice to the Agent, designate one or more of such
                  Subsidiaries not to be Immaterial Subsidiaries so that the
                  Immaterial Subsidiaries do not account for 5% or more of such
                  Consolidated Total Assets or such Consolidated total revenues,
                  and the subsidiaries so designated shall thereupon cease to be
                  Immaterial Subsidiaries.

                           "Indemnitee" or "Indemnitees" has the meaning set
                  forth in Section 9.06.

                           "Insufficiency" means, with respect to any Plan, the
                  amount, if any, of its unfunded benefit liabilities, as
                  defined in Section 4001(a)(18) of ERISA.

                           "Intercompany Creditor" means PhyCor of Nashville,
                  Inc., a Tennessee corporation and wholly owned Subsidiary of
                  the Borrower.

                           "Intercompany Debt" means any and all indebtedness
                  from time to time owed (i) to the Borrower by any of its
                  Subsidiaries, (ii) to the Intercompany Creditor by any other
                  Subsidiary of the Borrower, or (iii) to any Subsidiary of the
                  Borrower by the Borrower, including any investments by the
                  Borrower in any of its Subsidiaries to the extent such
                  investments are made in the form of loans or advances by the
                  Borrower to such Subsidiary. All Intercompany Debt shall be
                  payable on demand.

                           "Intercompany Subordination Agreement" means an
                  intercompany subordination agreement in substantially the form
                  of Exhibit D among the Borrower and each of its Subsidiaries,
                  other than, subject to Section 6.01(j), Immaterial
                  Subsidiaries as the same may be amended, supplemented or
                  otherwise modified from time to time.

                           "Interest Expense" of any Person means the aggregate
                  amount of interest paid, accrued or scheduled to be paid or
                  accrued in respect of any Debt (including the interest portion
                  of rentals under Capital Leases, but excluding, in the case of
                  the Borrower and its Subsidiaries, any interest paid, accrued
                  or scheduled to be paid or accrued in respect of the Excluded
                  Convertible Acquisition Debt to the extent, and only to the
                  extent, that such interest is offset by a corresponding
                  increase in fees payable to the Borrower or its Subsidiary
                  pursuant to the Service


                                       14
<PAGE>   21

                  Agreement relating to such acquisition) and all but the
                  principal component of payments in respect of conditional
                  sales, equipment trust or other title retention agreements
                  paid, accrued or scheduled to be paid or accrued by such
                  Person, in each case determined in accordance with generally
                  accepted accounting principles.

                           "Interest Period" means, for each Eurodollar Rate
                  Advance or LIBOR Advance, as the case may be, comprising part
                  of the same Borrowing, the period commencing on the date of
                  such Advance or, in the case of a Eurodollar Rate Advance, the
                  date of the Conversion of any Advance into such Type of
                  Advance and ending on the last day of the period selected by
                  the Borrower pursuant to the provisions below and, thereafter,
                  in the case of a Eurodollar Rate Advance, each subsequent
                  period commencing on the last day of the immediately preceding
                  Interest Period and ending on the last day of the period
                  selected by the Borrower pursuant to the provisions below. The
                  duration of each such Interest Period shall be one, two, three
                  or six months in the case of a Eurodollar Rate Advance or a
                  LIBOR Advance; provided, however, that:

                           (i) the Borrower may not select any Interest Period
                  which ends after the Revolver Termination Date;

                           (ii) Interest Periods commencing on the same date for
                  Advances comprising part of the same Committed Rate Borrowing
                  shall be of the same duration;

                          (iii) whenever the last day of any Interest Period
                  would otherwise occur on a day other than a Business Day, the
                  last day of such Interest Period shall be extended to occur on
                  the next succeeding Business Day; provided, in the case of any
                  Interest Period for a Eurodollar Rate Advance or LIBOR
                  Advance, that if such extension would cause the last day of
                  such Interest Period to occur in the next following calendar
                  month, the last day of such Interest Period shall occur on the
                  next preceding Business Day; and

                           (iv) the Borrower may not have more than eight
                  Eurodollar Rate Borrowings outstanding on any given date.

                           "Investment Grade" means a rating of Debt of at least
                  BBB by Standard & Poor's Ratings Group or Baa2 by Moody's
                  Investors Service, Inc.

                           "Issue" means, with respect to any Letter of Credit,
                  either to issue, or to extend the expiry of, or to renew, or
                  to increase the amount of, such Letter of Credit, and the term
                  "Issued" or "Issuance" shall have corresponding meanings.

                           "Issuing Bank" means (i) Citibank, N.A. or any
                  Affiliate of Citibank, N.A. that may from time to time Issue
                  Letters of Credit for the account of the Borrower


                                       15
<PAGE>   22

                  and (ii) any other Bank that agrees in writing to act as an
                  Issuing Bank hereunder with the written consent of the
                  Borrower, the Majority Banks and the Agent.

                           "Lease" means any lease, rental contract, occupancy
                  agreement, license or other arrangement pursuant to which any
                  Person occupies or has the right to occupy all or any part of
                  the Real Property.

                           "Lease Expense" of any Person means all payments made
                  by such Person under Operating Leases. For the purpose of
                  calculating the Fixed Charge Coverage Ratio of the Borrower
                  and its Subsidiaries, Lease Expense shall refer to all
                  payments made by (i) PhyCor Vero Beach pursuant to that
                  certain Lease entered into by and between PhyCor Vero Beach
                  and Healthcare Realty Trust, and (ii) the Borrower or any of
                  its Subsidiaries in connection with any other Lease entered
                  into in the future by such Person which is not cancelable upon
                  termination of the related Service Agreement or for which the
                  payments thereunder are not fully reimbursable to the Borrower
                  or such Subsidiary pursuant to the related Service Agreement.

                           "Letter of Credit" means any standby letter of credit
                  in form satisfactory to the Issuing Bank therefor, which is at
                  any time Issued by such Issuing Bank pursuant to Article III,
                  in each case as amended, supplemented or otherwise modified
                  from time to time.

                           "Letter of Credit Liability" means, as of any date of
                  determination, all then existing liabilities of the Borrower
                  to the Issuing Banks in respect of the Letters of Credit
                  Issued for its account, whether such liability is contingent
                  or fixed, and shall, in each case, consist of the sum of (i)
                  the aggregate maximum amount then available to be drawn under
                  such Letters of Credit (the determination of such maximum
                  amount to assume compliance with all conditions for drawing)
                  and (ii) the aggregate amount which has then been paid by, and
                  not been reimbursed to, the Issuing Banks under such Letters
                  of Credit.

                           "LIBOR Advance" means a Competitive Bid Advance which
                  bears interest as provided in Section 2.06(b).

                           "LIBOR Margin" has the meaning set forth in Section
                  2.02(c).

                           "Lien" means any assignment, chattel mortgage, pledge
                  or other security interest or any mortgage, deed of trust or
                  other lien, or other charge or encumbrance, upon property or
                  rights (including after-acquired property or rights), or any
                  preferential arrangement with respect to property or rights
                  (including after-acquired property or rights) which has the
                  practical effect of constituting a security interest or lien.

                           "Loan Documents" means this Agreement, the Notes, the
                  Guaranty, the Subordination Agreements, the Intercompany
                  Subordination Agreement and all


                                       16
<PAGE>   23

                  other documents delivered by the Loan Parties in connection
                  with this Agreement, in each case as amended, supplemented,
                  restated or otherwise modified from time to time.

                           "Loan Party" means, individually, the Borrower and
                  each Guarantor; and "Loan Parties" means the Borrower and the
                  Guarantors, collectively.

                           "Majority Banks" means, at any time, Banks holding at
                  least 66-2/3% of the then aggregate unpaid principal amount of
                  the Committed Rate Advances owing to the Banks, or, if no such
                  principal amount is then outstanding, having at least 66-2/3%
                  of the Commitments.

                           "Market Value" means, with respect to any publicly
                  traded Security at any date of determination, the amount equal
                  to the average closing price for such Security during the 15
                  trading days immediately preceding the date of determination.
                  The closing price of a publicly traded security on each day
                  shall be the closing price on such day as reported on any
                  stock exchange, the National Market System of the National
                  Association of Securities Dealers' Automated Quotation System,
                  or an established securities quotation service, as the case
                  may be.

                           "Merger Agreement" means any agreement between the
                  Borrower or any of its Subsidiaries and any Person relating to
                  the purchase by and merger into the Borrower or any of its
                  Subsidiaries of any Facility (or the assets thereof) or any
                  Related Business.

                           "Multiemployer Plan" means a "multiemployer plan" as
                  defined in Section 4001(a)(3) of ERISA to which the Borrower
                  or any ERISA Affiliate is making or accruing an obligation to
                  make contributions, or has within any of the preceding five
                  plan years made or accrued an obligation to make
                  contributions, such plan being maintained pursuant to one or
                  more collective bargaining agreements.

                           "Multiple Employer Plan" means a single employer
                  plan, as defined in Section 4001(a)(15) of ERISA, which (i) is
                  maintained for employees of the Borrower or an ERlSA Affiliate
                  and at least one Person other than the Borrower and its ERISA
                  Affiliates or (ii) was so maintained and in respect of which
                  the Borrower or any ERISA Affiliate could have liability under
                  Section 4064 or 4069 of ERISA in the event such plan has been
                  or were to be terminated.

                           "NAMM" means North American Medical Management, Inc.,
                  a Tennessee corporation.

                           "Net Cash Proceeds" means, as to any sale, lease or
                  other disposition of any Facility (or the assets thereof) or
                  any Related Business, or of the assets of the Borrower and its
                  Subsidiaries, by the Borrower or any Subsidiary of the
                  Borrower


                                       17
<PAGE>   24

                  to any Person other than the Borrower or any Subsidiary of the
                  Borrower, or the sale or issuance of any Securities, any
                  securities convertible into or exchangeable for Securities, or
                  any warrants, rights or options to acquire Securities of the
                  Borrower or any of its Subsidiaries to any Person other than
                  the Borrower or any Subsidiary of the Borrower (other than
                  such sale or issuance pursuant to the Borrower's employee
                  stock purchase plans or employee and director stock option
                  plans and other than the issuance of Securities as
                  consideration for the acquisition of any Facility (or the
                  assets thereof), any Existing Clinic Acquisition or the
                  acquisition of any Related Business to the extent such
                  acquisition satisfies the applicable requirements of Section
                  6.02(f)(i) or (ii)), or the issuance of any Subordinated Debt,
                  whether convertible into or exchangeable for Securities (other
                  than in the case of the Borrower and its Subsidiaries, the
                  subordinated convertible notes issued by the Borrower or any
                  of its Subsidiaries as consideration for the acquisition of
                  Facilities (or the assets thereof), Existing Clinic
                  Acquisitions or the acquisition of Related Businesses), an
                  amount equal to (i) the cash and other consideration paid by
                  such Person (but not including (i) any Debt of the Borrower or
                  its Subsidiaries assumed by such Person in connection with
                  such sale, lease or other disposition or (ii) any Debt of the
                  Borrower or its Subsidiaries owed to such Person which is
                  offset against the Total Consideration of such Facility or
                  Related Business), minus (ii) the sum of (A) in the case of a
                  Facility, the unpaid principal balance on the date of such
                  sale or other disposition of any Debt secured by a Lien on
                  such Facility that may be accelerated as a result of such sale
                  or secured by Liens not prohibited by the terms of this
                  Agreement and affecting only such Facility, in each case which
                  is required to be repaid, and is actually repaid, by the
                  Borrower or any of its existing or future Subsidiaries on the
                  date of such sale or other disposition, (B) any tax paid or
                  payable by the Borrower or any of its existing or future
                  Subsidiaries in connection with or as a consequence of such
                  sale or other disposition (excluding any such tax for which
                  the Borrower or any of its existing or future Subsidiaries
                  seller is reimbursed by such Person to the extent not
                  otherwise included in the determination of Net Cash Proceeds),
                  (C) the amount of any reserve (other than in respect of
                  inventory) required to be retained in connection with such
                  sale or other disposition under generally accepted accounting
                  principles (excluding any reserve in respect of any amounts
                  not payable within 180 days), provided, however, that the
                  unused amount of such reserve at the termination of such
                  reserve in accordance with generally accepted accounting
                  principles shall be deemed Net Cash Proceeds in the amount of
                  such unused amount, and (D) reasonable out-of-pocket costs of
                  such sale or other disposition incurred by the Borrower or any
                  of its existing or future Subsidiaries to third parties
                  directly in connection therewith, including, without
                  limitation, sales commissions, escrow fees, legal fees, title
                  insurance premiums and similar expenses.

                           "Net Income" of any Person, for any period, means the
                  net income of such Person for such period, determined in
                  accordance with generally accepted accounting principles,
                  excluding:


                                       18
<PAGE>   25

                            (i)     the proceeds of any life insurance policy;

                           (ii) any earnings (or losses), prior to the date of
                  acquisition, of any other Person acquired in any manner;

                          (iii) in the case of a successor to such Person by
                  consolidation or merger or a transferee of its assets, any
                  earnings (or losses) of the successor or transferee
                  corporation prior to the consolidation, merger or transfer of
                  assets; and

                           (iv) any deferred credit (or debit) (or amortization
                  of a deferred credit) arising from the acquisition of any
                  Person.

                           "Net Worth" of any Person, as of any date of
                  determination, means the excess of such Person's Total Assets
                  over Total Liabilities.

                           "Note" means a Committed Rate Note or a Competitive
                  Bid Note, and "Notes" means such promissory notes
                  collectively.

                           "Notice of Borrowing" means a written notice, in
                  substantially the form of Exhibit B-1 hereto, delivered in
                  accordance with, and within the periods specified in, Section
                  2.01(b).

                           "OECD" means the Organization for Economic
                  Cooperation and Development or any successor.

                           "Operating Lease" means any lease of real, personal
                  or mixed property which is not a Capital Lease.

                           "Other Taxes" has the meaning set forth in Section
                  2.13(b).

                           "PBGC" means the Pension Benefit Guaranty Corporation
                  or any successor.

                           "Permitted Lien" means:

                            (i) Any Liens (other than Liens securing Debt,
                  taxes, assessments or governmental charges or levies,
                  obligations under ERISA or the Environmental Laws, or other
                  obligations) affecting any of the Real Property which do not
                  materially adversely affect the use of such Real Property;

                           (ii) Liens for taxes, assessments or governmental
                  charges or levies to the extent not past due or to the extent
                  contested, in good faith, by appropriate proceedings and for
                  which adequate reserves have been established;

                          (iii) Liens imposed by law, such as materialman's,
                  mechanic's, carrier's, workman's, and repairman's Liens and
                  other similar Liens arising in the ordinary course of business
                  which relate to obligations which are not overdue for a period


                                       19
<PAGE>   26

                  of more than 30 days or which are being contested in good
                  faith, by appropriate proceedings and for which adequate
                  reserves have been established;

                           (iv) pledges or deposits in the ordinary course of
                  business to secure nondelinquent obligations under workman's
                  compensation or unemployment laws or similar legislation or to
                  secure the performance of leases or contracts entered into in
                  the ordinary course of business or of public or nondelinquent
                  statutory obligations, bids, or appeal bonds;

                            (v) Liens upon or in any property acquired or held
                  by the Borrower or any of its Subsidiaries (other than the
                  Intercompany Creditor) to secure the purchase price or
                  construction costs (and, to the extent financed, sales and
                  excise taxes, delivery and installation costs and other
                  related expenses) of such property or to secure indebtedness
                  incurred solely for the purpose of financing or refinancing
                  the acquisition or construction of any such property to be
                  subject to such Liens, or Liens existing on any such property
                  at the time of acquisition, or extensions, renewals or
                  replacements of any of the foregoing for the same or a lesser
                  amount, provided that such Lien is established within thirty
                  days of the acquisition of said property or expenditure of
                  said construction costs, and provided, further, that no such
                  Lien shall extend to or cover any property other than the
                  property being acquired and no such extension, renewal or
                  replacement shall extend to or cover any property not
                  theretofore subject to the Lien being extended, renewed or
                  replaced, and provided, further, that the incurrence of any
                  Debt secured by the Liens permitted by this clause (v) shall
                  not exceed the amount then allowed under any of the covenants
                  set forth in Section 6.03;

                           (vi) zoning restrictions, easements, licenses,
                  landlord's liens or restrictions on the use of real property
                  owned or leased by the Borrower or any of its Subsidiaries,
                  which do not materially impair the use of such property in the
                  operation of the business of the Borrower or any of its
                  Subsidiaries or the value of such property for the purpose of
                  such business;

                          (vii) Liens on the property or assets of any
                  Subsidiary in favor of the Borrower or a Subsidiary, provided
                  that the holder and grantor of such Lien have each entered
                  into the Intercompany Subordination Agreement;

                         (viii)     Liens listed on Schedule V; and

                           (ix) Liens not described in subclauses (i) through
                  (viii) above that relate to liabilities which are not in
                  excess of $10,000,000 in the aggregate.

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


                                       20
<PAGE>   27

                           "Plan" means a Single Employer Plan or a Multiple
                  Employer Plan.

                           "Process Agent" has the meaning set forth in Section
                  9.13(a).

                           "RCRA" means the Resource Conservation and Recovery
                  Act of 1976, as amended (42 U.S.C. ss. 6901 et seq.), and any
                  regulations promulgated thereunder.

                           "Real Property" means the real property of the
                  Borrower and its Subsidiaries located in the United States
                  described in Schedule I hereto, consisting of real property or
                  any interest in real property, including a leasehold interest
                  or an option to purchase, and all buildings, structures and
                  improvements now or hereafter located on all or any portion of
                  said real property, provided, that, notwithstanding the
                  foregoing, only leasehold interests of the Borrower and its
                  Subsidiaries which relate to the main clinic of any Facility
                  or for which the Borrower or any of its Subsidiaries incurs
                  Lease Expense equal to or in excess of $100,000 per year shall
                  be described in Schedule I.

                           "Register" has the meaning specified in Section
                  9.08(c).

                           "Related Business" means (i) a business that
                  principally operates (A) one or more independent practice
                  associations (each an "IPA") providing general organizational
                  structure and management to physician networks and related
                  management companies providing information and operating
                  systems, actuarial and financial analysis, medical management
                  and provider contract services to the IPAs or (B) one or more
                  management service organizations (each a "MSO") providing IPAs
                  with practice management services, including billing, staffing
                  and financial management services, or (ii) a business (other
                  than a single-specialty clinic, or the assets thereof) related
                  to the operation of a Facility, IPA or MSO, the acquisition or
                  operation of which would not result in a material change in
                  the nature of the Borrower's business as of the date hereof. A
                  Related Business shall also include all real, personal and
                  mixed property relating thereto.

                           "Restricted Payment" of any Person, means any
                  dividend payment or other distribution of assets, properties,
                  cash, rights, obligations or securities on account of any
                  shares of any class of Securities of such Person, or any
                  purchase, redemption or other acquisition for value of any
                  shares of any class of Securities of such Person, or any
                  warrants, rights or options to acquire any such Securities,
                  now or hereafter outstanding; provided, however, that (i) any
                  dividend payment or other distribution payable in common stock
                  of such Person and (ii) any purchase, redemption or other
                  acquisition of shares of such Person's Securities or warrants,
                  rights or options to acquire any such Securities with the
                  proceeds received from the substantially concurrent issue of
                  new shares of such Person's Securities shall not be considered
                  a Restricted Payment.

                           "Revolver Termination Date" means June 30, 2002, or
                  the earlier date of termination in whole of the Commitments
                  pursuant to Section 2.04 or 7.01.


                                       21
<PAGE>   28

                           "Securities" means shares of capital stock of a
                  corporation (or similar property right in the case of
                  partnerships, limited liability companies and trusts).

                           "Senior Debt" means all Debt outstanding pursuant to
                  this Agreement and any other Debt of the Borrower and its
                  Subsidiaries not expressly subordinated on terms satisfactory
                  to the Majority Banks to the Debt outstanding under this
                  Agreement.

                           "Senior Debt/EBITDA Ratio" of any Person means, at
                  any date of determination, the ratio that (i) such Person's
                  total Senior Debt outstanding at such date of determination,
                  less the amount, if any, by which such Person's unrestricted
                  cash or cash equivalents exceed $15,000,000 at such date of
                  determination, bears to (ii) such Person's EBITDA.

                           "Service Agreement" means any of (i) the Service
                  Agreements listed on Schedule III and (ii) any similar
                  agreement entered into by the Borrower or any existing or
                  future Subsidiary of the Borrower or related professional
                  association or corporation after the Closing Date, in each
                  case as any of such agreements may from time to time be
                  amended, restated, supplemented or otherwise modified.

                           "Single-Employer Plan" means a single-employer plan,
                  as defined in Section 4001(a)(15) of ERISA, which (i) is
                  maintained for employees of the Borrower or an ERISA Affiliate
                  and no Person other than the Borrower and its ERISA Affiliates
                  or (ii) was so maintained and in respect of which the Borrower
                  or an ERISA Affiliate could have liability under Section 4069
                  of ERISA in the event such plan has been or were to be
                  terminated.

                           "Solvent" means, with respect to any Person, that as
                  of any date of determination, (i) the then fair saleable value
                  of the assets of such Person is (a) greater than the then
                  total amount of liabilities (including contingent,
                  subordinated, matured and unliquidated liabilities) of such
                  Person and (b) greater than the amount that will be required
                  to pay such Person's probable liability on such Person's then
                  existing debts as they become absolute and matured, (ii) such
                  Person's capital is not unreasonably small in relation to its
                  business or any contemplated or undertaken transaction, and
                  (iii) such Person does not intend to incur, or believe or
                  reasonably should believe that it will incur, debts beyond its
                  ability to pay such debts as they become due.

                           "Stock Purchase Agreement" means any agreement
                  between the Borrower or any of its Subsidiaries and any Person
                  that operates a Facility or a Related Business relating to the
                  purchase by the Borrower or any of its Subsidiaries of all of
                  the Securities of such Person.

                           "Subordinated Debt" means any Debt of the Borrower
                  that is subordinated to the Debt of the Borrower under this
                  Agreement and the Notes on, and that otherwise contains, terms
                  and conditions satisfactory to the Majority Banks.


                                       22
<PAGE>   29

                           "Subordination Agreement" means a duly executed
                  subordination agreement in substantially the form of Exhibit
                  F, as amended, supplemented or otherwise modified from time to
                  time.

                           "Subsidiary" means, with respect to any Person, any
                  corporation, partnership, limited liability company, trust or
                  other Person of which more than 50% of the outstanding
                  Securities having ordinary voting power to elect a majority of
                  the board of directors of such corporation (or similar
                  governing body or Person with respect to partnerships, limited
                  liability companies and trusts) (irrespective of whether or
                  not at the time Securities of any other class or classes of
                  such Person shall or might have voting power upon the
                  occurrence of any contingency) is at the time directly or
                  indirectly owned by such Person, or one or more other
                  Subsidiaries of such Person, or by one or more other
                  Subsidiaries of such Person.

                           "Tangible Net Assets" of any Person, as at any date
                  of determination, means (without duplication) such Person's
                  cash, net Accounts, inventory, equipment, fixtures, real
                  property and the refundable portion of any prepaid expense
                  which, in accordance with generally accepted accounting
                  principles, are treated as tangible assets of such Person, in
                  each case (to the extent applicable), less the sum of (i)
                  Current Liabilities, (ii) cash held in a sinking or other
                  analogous fund established for the purpose of redemption,
                  retirement or prepayment of Securities or Debt, and (iii) any
                  write-up in the book value of such asset resulting from a
                  revaluation (but not a valuation of an asset in connection
                  with an acquisition subject to purchase accounting treatment
                  under generally accepted accounting principles; provided that
                  such valuation is accomplished in accordance with such
                  principles).

                           "Taxes" has the meaning set forth in Section 2.13(a).

                           "Total Assets" of any Person, as of the date of
                  determination, means all property, whether real, personal,
                  tangible, intangible or otherwise, which, in accordance with
                  generally accepted accounting principles, should be included
                  in determining total assets as shown on the assets portion of
                  a balance sheet of such Person.

                           "Total Capitalization" of any Person, as of the date
                  of determination, means the sum of such Person's Funded Debt
                  plus Net Worth.

                           "Total Consideration" means, with respect to the
                  acquisition of any Facility (or the assets thereof) or Related
                  Business, whether or not such acquisition is accomplished by
                  Securities purchase or asset purchase or by merger, the sum of
                  (i) all cash and non-cash consideration (including, without
                  limitation, assumed liabilities and equity consideration) paid
                  by the Borrower or any of its Subsidiaries at the closing of
                  such transaction, and (ii) all Deferred Acquisition


                                       23
<PAGE>   30

                  Consideration; provided that Total Consideration shall not
                  include any contingent payments that may be made by the
                  Borrower or any of its Subsidiaries after such closing.

                           "Total Liabilities" of any Person, as of the date of
                  determination, means all obligations, including, without
                  limitation, all Debt of such Person, which, in accordance with
                  generally accepted accounting principles, should be included
                  in determining total liabilities as shown on the liabilities
                  portion of a balance sheet of such Person, including all
                  Subordinated Debt other than, in the case of the Borrower and
                  its Subsidiaries, the Excluded Convertible Acquisition Debt.

                           "UCP" has the meaning set forth in Section 3.08.

                           "Unused Commitment" means, with respect to any Bank
                  at any time, (a) such Bank's Commitment at such time (as such
                  Commitment may be reduced pursuant to Section 2.04 or on
                  account of an Assignment and Acceptance entered into by such
                  Bank) minus (b) the aggregate principal amount of all
                  Committed Rate Advances made by such Bank outstanding at such
                  time.

                           "Welfare Plan" means a welfare plan, as defined in
                  Section 3(1) of ERISA, which section covers plans, funds and
                  programs providing (among other things) medical, surgical, or
                  hospital care or benefits, or benefits in the event of
                  sickness, accident, disability, death or unemployment,
                  together with plans which provide workmen's compensation,
                  unemployment compensation or disability insurance benefits.

                           "Withdrawal Liability" has the meaning given such
                  term under Part I of Subtitle E of Title IV of ERISA.

         SECTION 1.02. Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
unless otherwise stated, the word "from" or "commencing" means "from and
including" and the word "to" or "until" means "to but excluding."

         SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with United States generally
accepted accounting principles consistent with those applied in the preparation
of the Borrower's December 31, 1996 Consolidated financial statements delivered
to the Banks prior to the date hereof.


                                       24
<PAGE>   31

                                   ARTICLE II

                       AMOUNTS AND TERMS OF THE ADVANCES

     SECTION 2.01.  The Committed Rate Advances.

     (a) Each Bank severally agrees, on the terms and conditions hereinafter
set forth, to make Committed Rate Advances to the Borrower from time to time on
any Business Day during the period from the Closing Date until the Revolver
Termination Date, in an amount for each such Advance not to exceed such Bank's
Unused Commitment on such Business Day; provided, however, that such Bank shall
not be obligated to make such Committed Rate Advance if, after giving effect to
such Committed Rate Advance and the other Committed Rate Advances to be made by
the other Banks as part of the same Borrowing, the then outstanding aggregate
principal amount of all Committed Rate Advances plus the then existing Letter
of Credit Liability shall exceed the aggregate Commitments of the Banks less
the then outstanding aggregate principal amount of all Competitive Bid
Advances; provided further that, for the purposes of this Section 2.01(a), such
Bank's Unused Commitment shall be deemed to be reduced on such Business Day by
an amount equal to the product of (i) the then outstanding principal amount of
all Competitive Bid Advances and (ii) such Bank's Commitment Percentage (the
"Competitive Bid Reduction").  Each Committed Rate Borrowing shall be in an
aggregate amount of $3,000,000 or an integral multiple of $1,000,000 in excess
thereof, and shall consist of Advances made on the same day by the Banks
ratably according to their respective Commitments.  Within the limits of each
Bank's Unused Commitment (as deemed reduced by the Competitive Bid Reduction)
in effect from time to time, the Borrower may borrow under this Section
2.01(a), prepay pursuant to Section 2.09 and reborrow under this Section
2.01(a).

     (b) Each Committed Rate Borrowing shall be made on notice, given not later
than 11:00 A.M. (New York City time) (i) on the second Business Day prior to the
date of the proposed Borrowing, in the case of Eurodollar Rate Advances, and
(ii) on the date of the proposed Borrowing, in the case of Base Rate Advances,
by the Borrower to the Agent, which shall give each Bank prompt notice thereof
by telecopier, telex or cable. Each such notice of a Borrowing (a "Notice of
Borrowing") shall be by telecopier, telex or cable, confirmed immediately in
writing, in substantially the form of Exhibit B-1 hereto, specifying therein
(i) the requested date of such Borrowing, (ii) the requested Type of Advances
comprising such Borrowing, (iii) the requested aggregate amount of such
Borrowing, and (iv) in the case of a Borrowing comprised of Eurodollar Rate
Advances, the requested initial Interest Period for each such Advance.  Each
Bank shall, before 12:00 noon (New York City time) on the date of such
Borrowing, make available for the account of its Applicable Lending Office to
the Agent at its address referred to in Section 9.02, in same day funds, such
Bank's ratable portion of such Borrowing.  After the Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article
IV, the Agent will make such funds available to the Borrower at the Agent's
aforesaid address.  Anything in this subsection (b) above to the contrary
notwithstanding, (A) the Borrower may not select Eurodollar Rate Advances for
any Committed Rate Borrowing if the obligation of the Banks to make Eurodollar
Rate Advances shall then be

                                     25


<PAGE>   32


suspended pursuant to Section 2.11 and (B) no more than eight Committed Rate
Borrowings consisting of Eurodollar Rate Advances may be outstanding at any one
time.

     (c) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Committed Rate Borrowing which the related Notice
of Borrowing specifies is to be comprised of Eurodollar Rate Advances, the
Borrower shall indemnify each Bank against any loss (including loss of
anticipated profits), cost or expense incurred by such Bank as a result of any
failure to fulfill on or before the date specified in such Notice of Borrowing
for such Borrowing the applicable conditions set forth in Article IV,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Bank to fund the Advance to be made by such Bank as part of such Borrowing when
such Advance, as a result of such failure, is not made on such date.

     (d) Unless the Agent shall have received notice from a Bank prior to the
date of any Committed Rate Borrowing that such Bank will not make available to
the Agent such Bank's ratable portion of such Borrowing, the Agent may assume
that such Bank has made such portion available to the Agent on the date of such
Borrowing in accordance with subsection (b) above and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount.  If and to the extent that such Bank shall not have so
made such ratable portion available to the Agent, such Bank and the Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount
is made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to Advances comprising such Borrowing and (ii) in the case of such Bank,
the Federal Funds Rate.  If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Bank's
Advance as part of such Borrowing for purposes of this Agreement.  To the
extent that any Bank makes a payment of principal or interest to the Agent
pursuant to this subsection (d), the Borrower shall not be obligated to make
such payment.

     (e) The failure of any Bank to make the Advance to be made by it as part
of any Committed Rate Borrowing shall not relieve any other Bank of its
obligation, if any, hereunder to make its Advance on the date of such
Borrowing, but no Bank shall be responsible for the failure of any other Bank
to make the Advance to be made by such other Bank on the date of any Committed
Rate Borrowing.

     SECTION 2.02.  The Competitive Bid Advances.

     (a) Each Designated Bidder severally agrees, on the terms and conditions
hereinafter set forth, that the Borrower may avail itself of Competitive Bid
Advances from time to time on any Business Day during the period from the
Closing Date until 30 days prior to the Revolver Termination Date, in the
manner set forth in this Section 2.02; provided that the aggregate principal
amount of Competitive Bid Advances made on any Business Day may not exceed the
aggregate Unused Commitments of the Banks on such Business Day less the then
existing Letter of Credit Liability and the then outstanding principal amount
of any other Competitive Bid Advances.


                                     26
<PAGE>   33

     (b) The Borrower may request a Competitive Bid Borrowing by delivering to
the Agent, by telecopier, telex or cable, confirmed immediately in writing, a
request, in substantially the form of Exhibit B-2 (a "Competitive Bid
Request"), specifying therein (i) whether Fixed Rate Advances or LIBOR Advances
are being requested, (ii) the date (which shall be a Business Day) and
aggregate amount of the proposed Competitive Bid Borrowing, (iii) the maturity
date for repayment of the Competitive Bid Advances to be made as part of such
Borrowing (which maturity date shall be a date occurring (A) not less than
seven days after the date of such Borrowing in the case of a request for Fixed
Rate Advances or 30 days after the date of such Borrowing in the case of a
request for LIBOR Advances, but (B) not later than the Revolver Termination
Date), (iv) the interest payment date or dates relating thereto, in the case of
a request for Fixed Rate Advances, and the applicable Interest Period, in the
case of a request for LIBOR Advances, and (v) any other terms to be applicable
to such Borrowing, not later than 11:00 A.M. (New York City time) at least (A)
one Business Day, in the case of a request for Fixed Rate Advances, or (B) four
Business Days, in the case of a request for LIBOR Advances, prior to the date
of the proposed Competitive Bid Borrowing.  The Agent shall in turn promptly
notify each Designated Bidder of each request for such Competitive Bid
Borrowing received by it by sending such Designated Bidder a copy of the
related Competitive Bid Request.

     (c) Each Designated Bidder may, if, in its sole discretion, it elects to
do so, irrevocably offer to make one or more Competitive Bid Advances to the
Borrower as part of such proposed Competitive Bid Borrowing at a rate or rates
of interest specified by such Designated Bidder in its sole discretion.  Any
such offer (a "Competitive Bid") may be made by notifying the Agent (i) before
10:00 A.M. (New York City time) on the date of such proposed Competitive Bid
Borrowing, in the case of a request for Fixed Rate Advances, and (ii) before
10:00 A.M. (New York City time) on the third Business Day before the date of
such proposed Competitive Bid Borrowing, in the case of a request for LIBOR
Advances (the "Bid Due Date"), specifying the following:

           (A) the amount of each Competitive Bid Borrowing which such
      Designated Bidder would be willing to make as part of such proposed
      Competitive Bid Borrowing (which amount may, subject to the proviso to
      the first sentence of subsection (a) above, exceed a Bank's Commitment
      but may not exceed the principal amount of the Competitive Bid Advances
      of the Type and maturity requested by the Borrower);

           (B) in the case of a request for a LIBOR Advance, the margin above
      or below the applicable Eurodollar Rate (the "LIBOR Margin") offered for
      such Competitive Bid Advance, expressed as a percentage (rounded upwards,
      if necessary, to the nearest 1/16 of one percent) to be added to or
      subtracted from the applicable Eurodollar Rate;

           (C) in the case of a request for a Fixed Rate Advance, the rate of
      interest per annum (rounded upwards, if necessary, to the nearest 1/16 of
      one percent) (the "Fixed Rate") offered for such Competitive Bid Advance;
      and

           (D) the identity of the Designated Bidder submitting the Competitive
      Bid;


                                     27

<PAGE>   34

provided that if the Agent in its capacity as a Designated Bidder shall, in its
sole discretion, elect to make any such Competitive Bid, it shall notify the
Borrower of such Competitive Bid before 9:30 A.M. (New York City time)
on the Bid Due Date.  If any Designated Bidder shall elect not to make such a
Competitive Bid, such Designated Bidder shall so notify the Agent, before 10:00
A.M. (New York City time) on the Bid Due Date, and such Designated Bidder shall
not be obligated to, and shall not, make any Advance as part of such
Competitive Bid Borrowing; provided that the failure by any Designated Bidder
to give such notice shall not cause such Designated Bidder to be obligated to
make any Advance as part of such proposed Competitive Bid Borrowing.  Unless
otherwise agreed by the Borrower and the Agent, no Competitive Bid shall
contain qualifying, conditional or similar language or propose terms other than
or in addition to those set forth in the Competitive Bid Request and, in
particular, no Competitive Bid may be conditioned upon acceptance by the
Borrower of all (or some specified minimum) of the principal amount of the
Competitive Bid Advances offered.

     (d) The Agent shall, as promptly as practicable after the Competitive Bid
is submitted (but in any event not later than 10:15 A.M. (New York City time)
on the Bid Due Date), notify the Borrower of the terms (A) of any Competitive
Bid submitted that is in accordance with subsection (c) above and (B) of any
Competitive Bid that amends, modifies or is otherwise inconsistent with a
previous Competitive Bid with respect to the same Competitive Bid Request.  Any
such subsequent Competitive Bid may be submitted solely to correct a manifest
error in such former Competitive Bid.  The Agent's notice to the Borrower shall
specify (1) the aggregate principal amount of the Competitive Bid Borrowing for
which Competitive Bids have been received and (2) the respective principal
amounts and the Fixed Rates and LIBOR Margins, as the case may be, so offered
by each Designated Bidder (identifying the Designated Bidder that made each
Competitive Bid).

     (e) The Borrower shall, in turn, before 11:00 A.M. (New York City time)
(i) on the day of the proposed Competitive Bid Borrowing, in the case of
requests for Fixed Rate Advances, or (ii) on the third Business Day prior to
the date of the proposed Competitive Bid Advances, in the case of a request for
LIBOR Advances, (or, in any such case, such other time and date as the Borrower
and the Agent, with the consent of the Majority Banks, may agree), either:

           (i)  cancel such Competitive Bid Borrowing by giving the Agent notice
      to that effect, or

           (ii) accept one or more of the Competitive Bids, in its sole
      discretion, by giving notice to the Agent of the amount of each
      Competitive Bid Advance to be made by each Designated Bidder as part of
      such Competitive Bid Borrowing, and reject any remaining Competitive Bids
      by giving the Agent notice to that effect; provided that (A) the Borrower
      may only accept Competitive Bids in the order of the lowest to the
      highest Fixed Rates or LIBOR Margins, as the case may be, offered, (B)
      the Borrower may not accept Competitive Bids in excess of the amount
      requested pursuant to subsection (b) above, or the amount offered
      pursuant to subsection (c) above, for any maturity date or Interest
      Period, and (C) if two or more Designated Bidders make


                                     28
<PAGE>   35

     Competitive Bids at the same Fixed Rates or LIBOR Margins, as the  case
     may be, for the same maturity date or Interest Period, the Borrower may
     only accept such Competitive Bids in proportion (as nearly as possible) to
     the amounts which such Designated Bidders offered at such rate for such
     maturity or Interest Period (in amounts of not less than $1,000,000 or an
     integral multiple of $100,000 in excess thereof).

     (f) If the Borrower notifies the Agent that such Competitive Bid Borrowing
is canceled pursuant to subsection (d)(i) above, the Agent shall give prompt
notice thereof to the Designated Bidders, and such Competitive Bid Borrowing
shall not be made.

     (g) If the Borrower accepts one or more of the Competitive Bids made by
any Designated Bidder or Designated Bidders pursuant to subsection (d)(ii)
above, the Agent shall in turn promptly notify (A) each Designated Bidder that
has made a Competitive Bid as described in subsection (c) above, of the date
and aggregate amount of such Competitive Bid Borrowing and whether or not any
Competitive Bid or Bids made by such Designated Bidder pursuant to subsection
(c) above have been accepted by the Borrower, (B) each Designated Bidder that
is to make an Advance as part of such Competitive Bid Borrowing, of the amount
of each Advance to be made by such Bank as part of such Borrowing, and (C) each
Designated Bidder that is to make an Advance as part of such Competitive Bid
Borrowing, as to whether such Competitive Bid Borrowing conforms of the
requirements of Section 2.02.  Each Designated Bidder that is to make an
Advance as part of such Competitive Bid Borrowing shall, before 11:30 A.M. (New
York City time) on the date of such Competitive Bid Borrowing specified in the
notice received from the Agent pursuant to clause (A) of the preceding sentence
(provided such Designated Bidder shall have received a Competitive Bid Note and
a favorable notice from the Agent pursuant to clause (C) of the preceding
sentence), make available to the Agent at its address referred to in Section
9.02, in same day funds, such Designated Bidder's portion of such Competitive
Bid Borrowing.  Upon fulfillment of the applicable conditions set forth in
Article IV and after receipt by the Agent of such funds, the Agent will make
such funds available to the Borrower at the Agent's aforesaid address.
Promptly after each Competitive Bid Borrowing, the Agent shall notify each Bank
of the amount of the Competitive Bid Borrowing, the consequent Competitive Bid
Reduction and the dates upon which such Competitive Bid Reduction commenced and
will terminate.

     (h) Each Competitive Bid Borrowing shall be in an aggregate amount not less
than $3,000,000 or an integral multiple of $1,000,000 in excess thereof and,
following the making of such Competitive Bid Borrowing, the Borrower shall be in
compliance with the limitations set forth in the proviso to the first sentence
of subsection (a) above.

     (i) Each acceptance by Borrower pursuant to subsection (g) above shall be
irrevocable and binding on the Borrower.  In the case of any acceptance of a
Competitive Bid for LIBOR Advances, the Borrower shall indemnify each
Designated Bidder against any loss (including loss of anticipated profits),
cost or expense incurred by such Designated Bidder as a result of any failure
to fulfill on or before the date specified pursuant to subsection (g) above for
such Competitive Bid Borrowing the applicable conditions set forth in Article
IV, including, without limitation, any loss, cost or expense incurred by reason
of the liquidation or


                                     29
<PAGE>   36


reemployment of deposits or other funds acquired by such Designated Bidder to
fund the LIBOR Advance to be made by such Bank as part of such Borrowing when
such Advance, as a result of such failure, is not made on such date.

     (j) The failure of any Designated Bidder to make the Advance to be made by
it as part of any Competitive Bid Borrowing shall not relieve any other
Designated Bidder of its obligation, if any, hereunder to make its Advance on
the date of such Borrowing, but no Designated Bidder shall be responsible for
the failure of any other Designated Bidder to make the Advance to be made by
such other Designated Bidder on the date of any Competitive Bid Borrowing.

     (k) Within the limits and on the conditions set forth in this Section
2.02, the Borrower may from time to time borrow under this Section 2.02, repay
pursuant to Section 2.05 and reborrow under this Section 2.02; provided that
not more than ten Competitive Bid Borrowings may be outstanding at any time
(for which purpose Competitive Bid Advances made on the same date, but having
different maturities or representing Borrowings under different Commitments,
shall be deemed to be separate Competitive Bid Borrowings).

     SECTION 2.03.  Fees.

     (a) Facility Fees.  The Borrower agrees to pay to the Agent, for the
account of each of the Banks, a facility fee on the average daily Commitment of
such Bank from the Closing Date until the Revolver Termination Date at the
Applicable Facility Fee Rate from time to time in effect, payable quarterly in
arrears on the last day of each March, June, September and December, commencing
September 30, 1997, and on the Revolver Termination Date.

     (b) Agency, Auction and Arrangement Fees.  The Borrower agrees to pay to
the Agent, for its own account, the agency fees and the auction fees and to an
Affiliate of the Agent, the arrangement fee, in such amounts and on such dates
as are specified in the letter agreement dated as of June 2, 1997, between the
Borrower and the Agent.

     SECTION 2.04.  Optional Reduction of the Commitments.  The Borrower shall
have the right, upon at least three Business Days' notice to the Agent,
permanently to terminate in whole or reduce ratably in part the Unused
Commitments; provided that (a) each partial reduction shall be in the aggregate
amount of $3,000,000 or an integral $1,000,000 multiple in excess thereof, (b)
each reduction shall be made ratably among the Banks in accordance with their
Unused Commitments, (c) no reduction may reduce the aggregate Commitments of
the Banks below the aggregate amount of the then outstanding Letter of Credit
Liability and the then outstanding principal amount of the Competitive Bid
Advances, and (d) no reduction may reduce the aggregate Commitments of the
Banks while any commitments to lend are in effect under the $150,000,000 Credit
Agreement.


                                     30
<PAGE>   37

     SECTION 2.05.  Repayment.

     (a) The Borrower shall repay on the Revolver Termination Date the
aggregate principal amount of the Committed Rate Advances of each Bank
outstanding on the Revolver Termination Date, together with accrued interest
thereon.

     (b) The Borrower shall repay the aggregate principal amount of the
Competitive Bid Advances of each Designated Bidder, together with accrued
interest thereon, in such amounts and on such dates as specified pursuant to
Section 2.02(b).

     SECTION 2.06.  Interest.

     (a) The Borrower shall pay interest on the unpaid principal amount of each
Committed Rate Advance made by each Bank from the date of such Advance until
such principal amount shall be paid in full, at the following rates per annum:

         (i) Base Rate Advances.  During such periods as such Advance is a Base
     Rate Advance, a rate per annum equal at all times to the sum of the Base
     Rate in effect from time to time, payable quarterly in arrears on the last
     day of each March, June, September and December during such periods and on
     the date such Base Rate Advance shall be Converted or paid in full.
     Notwithstanding the foregoing, during the continuance of an Event of
     Default, the principal amount of each Base Rate Advance shall bear
     interest, to the fullest extent permitted by law, from the date on which
     such amount is due until such amount is paid in full, payable on demand,
     at a fluctuating rate per annum equal at all times to 2% per annum above
     the Base Rate in effect from time to time.

         (ii) Eurodollar Rate Advances.  During such periods as such Advance
      is a Eurodollar Rate Advance, a rate per annum equal at all times during
      the Interest Period for such Advance to the sum of the Eurodollar Rate
      for such Interest Period plus the Applicable Eurodollar Rate Margin,
      payable on the last day of such Interest Period and, if such Interest
      Period has a duration of six months, on the day that occurs during such
      Interest Period three months from the first day of such Interest Period;
      provided, however, that in the event that the Applicable Eurodollar Rate
      Margin for any fiscal quarter of the Borrower has not yet been determined
      in accordance with the provisions of the definition of Applicable
      Eurodollar Rate Margin in Section 1.01 as of the time when interest on a
      Eurodollar Rate Advance becomes due, the Borrower shall pay such interest
      on the date when due based on the then existing Applicable Eurodollar
      Rate Margin and any necessary subsequent adjustments in the amount of
      interest payable hereunder (due to any subsequent change in the
      Applicable Eurodollar Rate Margin) shall be made on the first date on
      which any interest on any Committed Rate Advance is payable after the
      date of determination of the Applicable Eurodollar Rate Margin.
      Notwithstanding the foregoing, during the continuance of an Event of
      Default, the principal amount of each Eurodollar Rate Advance shall bear
      interest, to the fullest extent permitted by law, from the date on which
      such amount is due until such amount is paid in full, payable on demand,
      at a rate per annum equal at all times to 2% per annum above the
      Eurodollar


                                     31

<PAGE>   38


     Rate plus the Applicable Eurodollar Rate Margin until the end
     of the Interest Period applicable to such Eurodollar Rate Advance, at
     which time the rate per annum shall become 2% per annum above the Base
     Rate, in each case as in effect from time to time.

     (b) The Borrower shall pay interest on the unpaid principal amount of each
Competitive Bid Advance from the date of such Advance until such principal
amount shall be paid in full, at the rate of interest for such Advance specified
by the Designated Bidder making such Advance in its Competitive Bid with respect
thereto delivered pursuant to Section 2.02(c), payable on the interest payment
date or dates specified by the Borrower for such Advance in the related
Competitive Bid Request delivered pursuant to Section 2.02(b) and on the
maturity date of such Competitive Bid Advance.  Notwithstanding the foregoing,
during the continuance of an Event of Default, the principal amount of each
Competitive Bid Advance shall bear interest, to the fullest extent permitted by
law, from the date on which such amount is due until such amount is paid in
full, payable on demand, at a rate equal to 2% per annum above the interest rate
specified by the Designated Bidder that made such Advance in its Competitive Bid
with respect thereto delivered pursuant to Section 2.02(c).

     SECTION 2.07.  Interest Rate Determination and Protection.

     (a) The Agent shall give prompt notice to the Borrower and the Banks of
the applicable interest rate under Section 2.06(a)(i) or (ii).

     (b) If, with respect to any Eurodollar Rate Advance, the Majority Banks
notify the Agent that the Eurodollar Rate for any Interest Period for such
Advance will not adequately reflect the cost to such Majority Banks of making,
funding or maintaining their respective Eurodollar Rate Advance for such
Interest Period, the Agent shall forthwith so notify the Borrower and the
Banks, whereupon:

           (i) each Eurodollar Rate Advance will automatically, on the last day
      of the then existing Interest Period therefor, Convert into a Base Rate
      Advance, and

           (ii) the obligation of the Banks to make, or to Convert Advances
      into, Eurodollar Rate Advances shall be suspended until the Agent shall
      notify the Borrower and the Banks that the circumstances causing such
      suspension no longer exist.

     (c) If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advance in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the Agent
will forthwith so notify the Borrower and the Banks and such Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into Base Rate Advances.

     SECTION 2.08.  Voluntary and Automatic Conversion of Committed Rate
                    Advances.

     (a) The Borrower may on any Business Day, upon notice given to the Agent
not later than 11:00 A.M. (New York City time) on the second Business Day prior
to the date of the proposed Conversion and subject to the provisions of
Sections 2.07 and 2.11, Convert all


                                     32
<PAGE>   39


Committed Rate Advances of one Type comprising the same Borrowing into Committed
Rate Advances of another Type; provided, however, that any Conversion of any
Eurodollar Rate Advances into Base Rate Advances shall be made on, and only on,
the last day of an Interest Period for such Eurodollar Rate Advances. Each such
notice of Conversion shall, within the restrictions specified above, specify (i)
the date of such Conversion, (ii) the Advances to be Converted, and (iii) if
such Conversion is into Eurodollar Rate Advances, the duration of the Interest
Period for each such Advance.

     (b) On the date on which the unpaid aggregate principal amount of
Eurodollar Rate Advances comprising any Committed Rate Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $3,000,000, the
Eurodollar Rate Advances comprising such Borrowing shall automatically Convert
into Base Rate Advances, and on and after such date the Borrower may not
convert such Base Rate Advances to Eurodollar Rate Advances until such time as
the aggregate principal amount of Base Rate Advances equals or exceeds
$3,000,000.

     SECTION 2.09.  Prepayments.

     (a) Voluntary Prepayments.  The Borrower may, upon at least (i) in the
case of Eurodollar Rate Advances, two Business Days' and (ii) in the case of
Base Rate Advances, the same Business Day's notice to the Agent stating the
proposed date and aggregate principal amount of the prepayment, and if such
notice is given, the Borrower shall, prepay the outstanding principal amounts
of the Advances comprising part of the same Committed Rate Borrowing in whole
or ratably in part, together with accrued interest to the date of such
prepayment on the principal amount prepaid and, in the case of Eurodollar Rate
Advances, any amounts payable under Section 9.04(b); provided, however, that
(i) each partial prepayment shall be in an aggregate principal amount not less
than $3,000,000 or any integral multiple of $1,000,000 in excess thereof and
(ii) Advances may not be prepaid if any Committed Rate Advances (as defined in
the $150,000,000 Credit Agreement) are outstanding under the $150,000,000
Credit Agreement.  The Borrower may not prepay any Competitive Bid Advances.

     (b) Asset Sales Mandatory Prepayments.  Subject to Section 2.09(f), upon
the sale, lease or other disposition by the Borrower or any Subsidiary of the
Borrower of assets of the Borrower and its Subsidiaries constituting more than
5% of the Consolidated Total Assets of the Borrower and its Subsidiaries at the
time of sale, lease or other disposition, then (x) the Net Cash Proceeds of
such sale, lease or other disposition shall be delivered as soon as practicable
to the Agent and (y) any deferred cash proceeds of such sale, lease, or other
disposition shall be delivered to the Agent as soon as practicable after their
receipt (at which time the same shall become Net Cash Proceeds).  Any such Net
Cash Proceeds shall be applied in accordance with Section 2.09(e).

     (c) Subordinated Debt Issuance Mandatory Prepayments.  Subject to Section
2.09(f), upon the issuance, if permitted in writing by the Majority Banks, by
the Borrower or any of its Subsidiaries of any Subordinated Debt, whether or
not convertible into or exchangeable for Securities (other than the
subordinated convertible notes issued by the Borrower or any of its
Subsidiaries as consideration for the acquisition of Facilities (or the assets
thereof), any Existing


                                     33
<PAGE>   40
 Clinic Acquisitions or the acquisition of Related Businesses), then (x) 75% of
the Net Cash Proceeds of such issuance shall be delivered as soon as practicable
to the Agent and (y) 75% of any deferred cash proceeds of such issuance shall be
delivered to the Agent as soon as practicable after their receipt (at which time
the same shall become Net Cash Proceeds).  Any such Net Cash Proceeds shall be
applied in accordance with Section 2.09(e).

     (d) Securities Issuance Mandatory Prepayment.  Subject to Section 2.09(f),
upon the sale or issuance by the Borrower or any of its Subsidiaries of any
Securities, any securities convertible into or exchangeable for Securities
(other than Subordinated Debt subject to Section 2.09(c)), or any warrants,
rights or options to acquire Securities to any Person other than the Borrower
or any of its Subsidiaries other than such sale or issuance pursuant to the
Borrower's employee stock purchase plans or employee and director stock option
plans or similar plan available to physicians practicing at a Facility or
Related Business and other than the issuance of Securities as consideration
for, or the proceeds of which are within 180 days after receipt used for, or
the issuance of subordinated convertible notes as consideration for, the
acquisition of any Facility (or the assets thereof) or any Existing Clinic
Acquisitions or the acquisition of any Related Businesses to the extent such
acquisition satisfies all the requirements of Section 6.02(f)(i) or (ii), as
the case may be), then (x) 50% of the Net Cash Proceeds of such sale or
issuance shall be delivered as soon as practicable to the Agent and (y) 50% of
any deferred cash proceeds of such sale or issuance shall be delivered to the
Agent as soon as practicable after their receipt (at which time the same shall
become Net Cash Proceeds).  Any such Net Cash Proceeds shall be applied in
accordance with Section 2.09(e).

     (e) Application of Prepayments.  Mandatory prepayments pursuant to Section
2.09(b), (c) or (d) shall be:  first, applied to the payment of any amount
required to be prepaid or pledged under the $150,000,000 Credit Agreement;
second, applied to the ratable payment of outstanding Committed Rate Advances,
together with accrued interest to the date of such payment on the principal
amount repaid and any amounts payable pursuant to Section 9.04(b)
in respect thereof; and third, delivered to the Agent to be held as pledged
collateral to be applied to the ratable payment when due of outstanding
Competitive Bid Advances, together with accrued interest to the date of such
payment on the principal amount repaid, to the aggregate amount of such
principal and interest.

     (f) Effect of Investment Grade Rating.  Notwithstanding Sections 2.09(b),
(c), (d) or (e), no prepayment shall be required by any of such sections if at
the time of the sale, lease or other disposition, issuance or sale referred to
therein any of the then outstanding Debt of the Borrower shall then be rated
Investment Grade.

     SECTION 2.10.  Increased Costs.

     (a) If, due to either (i) the introduction of or any change (other than
any change by way of imposition or increase of reserve requirements, in the
case of Eurodollar Rate Advances or LIBOR Advances, included in the Eurodollar
Rate Reserve Percentage) in or in the interpretation of any law or regulation
or (ii) the compliance with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law), there


                                     34


<PAGE>   41

shall be any increase in the cost to any Bank of agreeing to make or making,
funding or maintaining Eurodollar Rate Advances or LIBOR Advances, then the
Borrower shall from time to time, upon demand by such Bank (with a copy of such
demand to the Agent), pay to the Agent for the account of such Bank additional
amounts sufficient to compensate such Bank for such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrower
and the Agent by such Bank, shall be conclusive and binding for all purposes,
absent manifest error.

     (b) If any Bank determines that compliance with any law or regulation or
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital (or the rate of return on capital) required or expected to be
maintained by such Bank or any corporation controlling such Bank and that the
amount of such capital is increased (or such rate of return is reduced) by or
based upon the existence of such Bank's commitment, or offer or agreement, to
lend hereunder and other commitments, or offers or agreements, of this type,
then, upon notice by such Bank (with a copy of such notice to the Agent), the
Borrower shall immediately pay to the Agent for the account of such Bank, from
time to time as specified by such Bank, additional amounts sufficient to
compensate such Bank or such corporation in the light of such circumstances, to
the extent that such Bank reasonably determines such increase in capital (or
reduction in rate of return) to be allocable to the existence of such Bank's
commitment, or offer or agreement, to lend hereunder. Such notice as to such
amounts submitted and delivered to the Borrower and the Agent by such Bank
shall set forth in summary fashion the basis of such allocation and shall be
conclusive and binding for all purposes, absent manifest error.

     SECTION 2.11.  Illegality.  Notwithstanding any other provision of this
Agreement, if any Bank shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is
unlawful, for any Bank or its Eurodollar Lending Office to perform its
obligations or agreements hereunder to make Eurodollar Rate Advances or LIBOR
Advances or to fund or maintain Eurodollar Rate Advances or LIBOR Advances
hereunder:  (a) in the case of Eurodollar Rate Advances, (i) the obligation of
the Banks to make, or to Convert Advances into, Eurodollar Rate Advances shall
be suspended until the Agent shall notify the Borrower and the Banks that the
circumstances causing such suspension no longer exist and (ii) the Borrower
shall forthwith prepay in full all Eurodollar Rate Advances of all Banks then
outstanding, together with interest accrued thereon and any costs payable
pursuant to Section 9.04(b), unless the Borrower, within five Business Days of
notice from the Agent, Converts all Eurodollar Rate Advances of all Banks then
outstanding into Base Rate Advances in accordance with Section 2.08, and (b) in
the case of LIBOR Advances, such Bank shall no longer be obligated to fund any
LIBOR Advance it has agreed to fund thereafter.

     SECTION 2.12.  Payments and Computations.

     (a) The Borrower shall make each payment hereunder and under the Notes not
later than 11:00 A.M. (New York City time) on the day when due free and clear
of any taxes, offset or other charge in United States dollars to the Agent at
its address referred to in Section 9.02 in


                                       35
<PAGE>   42


same day funds. The Agent will promptly thereafter cause to be distributed like
funds relating to the payment of principal or interest or facility fees (i)
ratably (other than amounts payable pursuant to Section 2.10, 2.13 or 9.04) to
the Banks for the account of their respective Applicable Lending Offices, in the
case of Committed Rate Advances, and to the applicable Designated Bidder (for
the account of its Applicable Lending Office), in the case of Competitive Bid
Advances, and like funds relating to the payment of any other amount payable to
any Bank to such Bank for the account of its Applicable Lending Office, in each
case to be applied in accordance with the terms of this Agreement.  Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 9.08(d), from and after
the effective date specified in such Assignment and Acceptance, the Agent shall
make all payments hereunder in respect of the interest assigned thereby to the
Bank assignee thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for periods prior to
such effective date directly between themselves.

     (b) The Borrower hereby authorizes each Bank, if and to the extent payment
owed to such Bank is not made when due hereunder or under the Note held by such
Bank, to charge from time to time against any or all of the Borrower's accounts
with such Bank any amount so due.

     (c) All computations of interest (other than interest on Base Rate
Advances) and of fees shall be made on the basis of a year of 360 days, and all
computations of interest on Base Rate Advances shall be made on the basis of a
year of 365 or 366 days (as the case may be), in each case for the actual
number of days (including the first day but excluding the last day) occurring
in the period for which such interest or fees are payable. Each determination
by the Agent of an interest rate or fee hereunder shall be conclusive and
binding for all purposes, absent manifest error.

     (d) Whenever any payment hereunder or under the Notes shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fee, as the case
may be; provided, however, if such extension would cause payment of interest on
or principal of Eurodollar Rate Advances or LIBOR Advances to be made in the
next following calendar month, such payment shall be made on the next preceding
Business Day.

     (e) Unless the Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Banks hereunder in respect of
Committed Rate Advances that the Borrower will not make such payment in full,
the Agent may assume that the Borrower has made such payment in full to the
Agent on such date and the Agent may, in reliance upon such assumption, cause
to be distributed to each Bank on such due date an amount equal to the amount
then due such Bank. If and to the extent the Borrower shall not have so made
such payment in full to the Agent, each Bank shall repay to the Agent forthwith
on demand such amount distributed to such Bank together with interest thereon,
for each day from the date such amount is distributed to such Bank until the
date such Bank repays such amount to the Agent, at the Federal Funds Rate.



                                     36
<PAGE>   43


     (f) Notwithstanding any provision in this Agreement or any other Loan
Document to the contrary, all payments received by the Agent under the other
Loan Documents, the application of which are not provided for in such Loan
Documents, may be then or at any time thereafter be applied in whole or
in part by the Agent for the ratable benefit of the Banks (except in the case
of Competitive Bid Advances), against all or part of the Advances or other
obligations of the Borrower hereunder or under the other Loan Documents, in
such order and manner as the Agent shall elect.

     SECTION 2.13.  Taxes.

     (a) Any and all payments by the Borrower hereunder or under the Notes
shall be made, in accordance with Section 2.12, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding,
in the case of each Bank and the Agent, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Bank or the Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Bank, taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes").  If the Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Bank or the Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.13) such Bank or the Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.

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

     (c) The Borrower will indemnify each Bank and the Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.13) paid by such Bank or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the
date such Bank or the Agent (as the case may be) makes written demand therefor.

     (d) Within 30 days after the date of any payment of Taxes, the Borrower
will furnish to the Agent, at its address referred to in Section 9.02, the
original or a certified copy of a receipt evidencing payment thereof.


                                     37
<PAGE>   44

     (e) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.13 shall survive the payment in full of principal and interest
hereunder and under the Notes.

     (f) Prior to the date of the first Borrowing under this Agreement in the
case of each Bank party hereto on the date hereof, on the date of the
effectiveness of the Assignment and Acceptance pursuant to which it became a
Bank in the case of each other Bank, and within 30 days following the first day
of each calendar year or if otherwise requested from time to time by the
Borrower or the Agent, each Bank organized under the laws of a jurisdiction
outside the United States shall provide the Agent and the Borrower with two
counterparts of each of the forms prescribed by the Internal Revenue Service
(Form 1001 or 4224, or successor form(s), as the case may be, or another
appropriate form) of the United States certifying as to such Bank's status for
purposes of determining exemption from United States withholding taxes with
respect to all payments to be made to such Bank under any Loan Document.
Unless the Borrower and the Agent have received such forms or other documents
satisfactory to them indicating that payments under any Loan Document are not
subject to United States withholding tax, the Borrower or the Agent (if not
withheld by the Borrower) shall withhold taxes from such payments at the
applicable statutory rate, without any obligation to "gross-up" or make such
Bank or the Agent whole under Section 2.13(a); provided, however, that the
Borrower shall have the obligation to make such Bank or the Agent whole and to
"gross-up" under Section 2.13(a), if the failure to so deliver such forms or
make such statements (other than the forms and statements required to be
delivered on or made prior to the date of the initial Borrowing, on the date of
the Assignment and Acceptance pursuant to which an Eligible Assignee became a
Bank) is the result of the occurrence of an event (including, without
limitation, any change in treaty, law or regulation) which (alone or in
conjunction with other events) renders such forms inapplicable, that would
prevent such Bank or the Agent from making the statements contemplated by such
forms or which removes or reduces an exemption (whether partial or complete)
from withholding tax previously available to such Bank or the Agent. Each Bank
(and the Agent, if applicable) will promptly notify the Borrower of the
occurrence (when known to it) of an event contemplated by the foregoing
proviso.

     SECTION 2.14.  Sharing of Payments. Etc.  If any Bank shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of any Committed Rate Advances made by it
(other than pursuant to Section 2.10, 2.13 or 9.04) in excess of its ratable
share of payments on account of such Committed Rate Advances obtained by all the
Banks, such Bank shall forthwith purchase from the other Banks such
participations in such Committed Rate Advances made by them as shall be
necessary to cause such purchasing Bank to share the excess payment ratably with
each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Bank, such purchase from
each Bank shall be rescinded and such Bank shall repay to the purchasing Bank
the purchase price to the extent of such recovery together with an amount equal
to such Bank's ratable share (according to the proportion of (i) the amount of
such Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered.  The Borrower
agrees that any Bank so purchasing a participation from another Bank


                                     38
<PAGE>   45


pursuant to this Section 2.14 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Bank were the direct creditor
of the Borrower in the amount of such participation.

     SECTION 2.15.  Evidence of Debt/Register.

     (a) The Debt of the Borrower resulting from the Committed Rate Advances
and Competitive Bid Advances shall be evidenced by the Committed Rate Notes and
the Competitive Bid Notes, respectively, delivered to the Banks pursuant to
Article IV, and the remaining principal amount thereof shall be recorded by the
Banks, and, prior to any transfer, endorsed on the grids thereto in accordance
with the terms of the Notes. The Agent shall also maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the
Borrower under this Agreement and the amounts of principal and interest payable
and paid to each Bank from time to time under this Agreement.

     (b) The Register maintained by the Agent pursuant to Section 9.08(c) shall
include a control account, and a subsidiary account for each Bank, in which
accounts (taken together) shall be recorded:  (i) the date and amount of each
Borrowing, the Commitment to which such Borrowing relates, the Type of Advance
comprising such Borrowing and the Interest Period applicable thereto (if any)
from time to time, (ii) the terms of each Assignment and Acceptance delivered
to and accepted by it, (iii) the amount of any principal or interest due
and payable or to become due and payable from the Borrower to each Bank, and
(iv) the amount of any sum received by the Agent from the Borrower hereunder
and each Bank's share thereof.

     SECTION 2.16.  Use of Proceeds.  The proceeds of the Advances shall be
used by the Borrower for Capital Investments (to the extent permitted under
this Agreement), including, without limitation, acquisitions of Facilities and
Related Businesses (to the extent permitted under this Agreement), and other
general corporate purposes.

     SECTION 2.17.  Outstanding Advances; Existing Collateral

     (a) Conversion to Advances; Termination of Commitment under Existing
Credit Agreement.  On the Closing Date:  (i) all outstanding Base Rate Advances
(as defined in the Existing Credit Agreement) shall automatically become Base
Rate Advances under the Commitments as if borrowed on the Closing Date and
shall thereafter bear interest as provided herein and payable at such times and
otherwise on such terms as are provided herein for Base Rate Advances under the
Commitments, (ii) there shall be no outstanding Eurodollar Rate Advances,
Competitive Bid Advances, or B Advances (as such terms are defined in the
Existing Credit Agreement) and (iii) the A Commitments (as such term is defined
in the Existing Credit Agreement) shall be permanently terminated in full.

     (b) Adjustment Assignments and Payments Among Banks.  Notwithstanding the
requirements set forth in Section 9.08 or any other provision to the contrary
contained herein, on the Closing Date, through the Agent, the Banks shall enter
into such assignments and make such payments (including any accrued interest or
fees) in immediately available funds among themselves as shall be necessary for
each Bank to have funded its ratable share, in accordance


                                     39
<PAGE>   46



with its Commitment hereunder, of all Existing Base Rate Advances as if such
Advances were borrowed on the Closing Date hereunder and to participate, in
accordance with its Commitment hereunder, in all Letters of Credit outstanding
on the Closing Date.

     (c) Release of Collateral.  On the Closing Date, all Liens on the
Collateral (as defined in the Existing Credit Agreement) shall be released and
terminated, and from and after the Closing Date, the Agent shall execute and
deliver, at the Borrower's expense, such termination statements and other
documents as the Borrower may reasonably request to evidence the release and
termination of such liens.

                                  ARTICLE III

                         AMOUNT AND TERMS OF LETTERS OF
                       CREDIT AND PARTICIPATIONS THEREIN

     SECTION 3.01.  Letters of Credit.  Each Issuing Bank agrees, on the terms
and conditions hereinafter set forth, to Issue for the account of the Borrower,
one or more Letters of Credit from time to time during the period from the
Closing Date until the date which occurs 30 days before the Revolver
Termination Date in an aggregate undrawn amount not to exceed at any time
$20,000,000, each such Letter of Credit upon its Issuance to expire on or
before the earlier of (x) the date which occurs one year from the date of its
Issuance or (y) the Revolver Termination Date; provided, however, that any
letter of credit issued under the Existing Credit Agreement which continues to
be undrawn in whole or in part on the Closing Date shall be deemed to be a
Letter of Credit Issued hereunder from and after the Closing Date; provided,
further, no Issuing Bank shall be obligated or permitted to Issue any Letter of
Credit if:

           (i) after giving effect to the Issuance of such Letter of Credit,
      the then outstanding aggregate amount of the Letter of Credit Liability
      and all Advances (including any Advances required to be made but not
      funded) shall exceed the aggregate amount of the Commitments of the
      Banks; or

           (ii) the Agent or the Majority Banks shall have notified such
      Issuing Bank and the Borrower, that no further Letters of Credit are to
      be Issued by such Issuing Bank due to failure to meet any of the
      applicable conditions set forth in Article IV, and such notice has not
      expired or been withdrawn by the Majority Banks.

Within the limits of the obligations of each Issuing Bank set forth above, the
Borrower may request an Issuing Bank to Issue one or more Letters of Credit,
reimburse such Issuing Bank for payments made thereunder pursuant to Section
3.03(a), and request any Issuing Bank to Issue one or more additional Letters
of Credit under this Section 3.01.

     SECTION 3.02.  Issuing the Letters of Credit.  Each Letter of Credit shall
be Issued on at least five Business Days' notice from the Borrower to the
Issuing Bank specifying the date, amount, expiry, and beneficiary thereof,
accompanied by such application and agreement for letter of credit and other
documents as the Issuing Bank may specify to the Borrower, each in form and
substance satisfactory to the Issuing Bank.  On the date specified by the
Borrower in


                                     40
<PAGE>   47


such notice and upon fulfillment of the applicable conditions set forth in
Section 3.01 and Article IV, the Issuing Bank shall Issue such Letter of Credit
in the form specified in such notice and such application and agreement for
letter of credit and shall promptly notify the Agent thereof.

     SECTION 3.03.  Reimbursement Obligations.

     (a) Notwithstanding any provisions to the contrary in any application and
agreement for letter of credit applicable to any Letter of Credit, the Borrower
shall:

           (i) pay to the Issuing Bank an amount equal to, and in reimbursement
      for, each amount which such Issuing Bank pays under any Letter of Credit
      on or before the earlier of (A) the time specified therefor in the
      application and agreement for letter of credit applicable to such Letter
      of Credit or (B) the date which occurs one Business Day after payment of
      such amount by such Issuing Bank under such Letter of Credit; and

           (ii) pay to the Issuing Bank interest on any amount remaining unpaid
      under clause (i) above from the date on which such Issuing Bank pays such
      amount under any Letter of Credit until such amount is reimbursed in full
      to such Issuing Bank pursuant to clause (i) above, payable on demand, at
      a fluctuating rate per annum equal to the sum of the Base Rate in effect
      from time to time, provided that any such amount which is not reimbursed
      to such Issuing Bank within one Business Day after notice thereof by the
      Issuing Bank shall thereafter bear interest, until such amount is
      reimbursed in full to such Issuing Bank pursuant to clause (i) above,
      payable on demand, at the Base Rate in effect from time to time plus
      2-1/2% per annum.

     (b) All amounts to be reimbursed to the Issuing Bank in accordance with
subsection (a) above may, subject to the limitations set forth in Section 2.01
(exclusive of the minimum borrowing limitations), be paid from the proceeds of
Committed Rate Advances.  The Borrower hereby authorizes the Banks to make
pursuant to Section 2.01 Committed Rate Advances which are in the amounts of
the reimbursement obligations of the Borrower set forth in subsection (a)
above, and further authorizes the Agent (i) to give the Banks, pursuant to
Section 2.01(b), a Notice of Borrowing with respect to the Borrowing comprised
of such Advances (which shall be Base Rate Advances) and (ii) to distribute the
proceeds of such Advances to the Issuing Bank to pay such amounts. The Borrower
agrees that all such Advances so made shall be deemed to have been requested by
it, and directs that all proceeds thereof shall be used to pay such
reimbursement obligations under subsection (a) above.

     SECTION 3.04.  Participations Purchased by the Banks.

     (a) On the date of Issuance of each Letter of Credit, the Issuing Bank
shall be deemed irrevocably and unconditionally to have sold and transferred to
each Bank without recourse or warranty, and each Bank shall be deemed to have
irrevocably and unconditionally purchased and received from such Issuing Bank,
an undivided interest and participation, to the extent of such Bank's
Commitment Percentage, in effect from time to time, in such Letter of Credit
and all Letter of Credit Liability relating to such Letter of Credit and all
Loan Documents securing,


                                     41



<PAGE>   48

guaranteeing, supporting, or otherwise benefiting the payment of such Letter of
Credit Liability.  As to each Letter of Credit Issued or to be Issued by the
Issuing Bank, the Agent will promptly (after it receives notification from the
Issuing Bank pursuant to Section 3.02) notify each Bank of such Letter of
Credit and its date of Issue, amount, expiry, and reference number.

     (b) In the event that any reimbursement obligation under Section 3.03(a)
is not paid when due to the Issuing Bank with respect to any Letter of Credit,
the Issuing Bank shall promptly notify the Agent to that effect, and the Agent
shall promptly notify the Banks of the amount of such reimbursement obligation
and each Bank shall immediately pay to the Issuing Bank, in lawful money of the
United States and in same day funds, an amount equal to such Bank's Commitment
Percentage then in effect of the amount of such unpaid reimbursement obligation
with interest at the Federal Funds Rate for each day after such notification
until such amount is paid to the Agent.

     (c) Promptly after the Issuing Bank receives a payment on account of a
reimbursement obligation with respect to any Letter of Credit, the Issuing Bank
shall promptly pay to the Agent, and the Agent shall promptly pay to each Bank
which funded its participation therein, in lawful money of the United States
and in the kind of funds so received, an amount equal to such Bank's ratable
share thereof.

     (d) Upon the request of any Bank, the Agent shall furnish to such Bank
copies of any Letter of Credit and any application and agreement for letter of
credit and other documents related thereto as may be reasonably requested by
such Bank.

     (e) The obligation of each Bank to make payments under Section 3.04(b)
above shall be unconditional and irrevocable and shall be made under all
circumstances, including, without limitation, any of the circumstances referred
to in Section 3.06(b).

     (f) If any payment received on account of any reimbursement obligation
with respect to a Letter of Credit and distributed to a Bank as a participant
under Section 3.04(c) is thereafter recovered from the Issuing Bank in
connection with any bankruptcy or insolvency proceeding relating to the
Borrower, each Bank which received such distribution shall, upon demand by the
Agent, repay to the Issuing Bank such Bank's ratable share of the amount so
recovered together with an amount equal to such Bank's ratable share (according
to the proportion of (i) the amount of such Bank's required repayment to (ii)
the total amount so recovered) of any interest or other amount paid or payable
by such Issuing Bank in respect of the total amount so recovered.

     SECTION 3.05.  Letter of Credit Fees.

     (a) The Borrower hereby agrees to pay nonrefundable letter of credit fees
with respect to each Letter of Credit on the maximum amount available to be
drawn under such Letter of Credit from time to time after giving effect to
scheduled reductions thereof (the determination of such maximum amount to
assume compliance with all conditions for drawing) from the date of Issuance of
such Letter of Credit until the expiry date of such Letter of Credit, (i) to
each Bank (in accordance with its Commitment Percentage) at a rate equal to (A)
the Applicable Eurodollar Rate Margin in effect on the date of Issuance thereof
less (B) 1/8 of one percent per annum and


                                     42
<PAGE>   49


(ii) to the Issuing Bank at a rate equal to 1/8 of one percent per annum, for
the number of months or any fraction thereof that such Letter of Credit is
outstanding, payable in advance on the  date of Issuance of each Letter of
Credit and on the last day of each March, June, September and December
thereafter prior to the expiry date of such Letter of Credit for the number of
months or fraction thereof until the earlier of (A) the expiry date of such
Letter of Credit and (B) the date three months after such date.

     (b) The Borrower shall pay to the Issuing Bank, for its own account and on
demand, sums equal to standard fees (other than its letter of credit fee),
charges and expenses that such Issuing Bank may impose, pay or incur in
connection with the Issuance, amendment, administration, transfer or
cancellation of any or all Letters of Credit or in connection with any payment
by such Issuing Bank thereunder.

     SECTION 3.06.  Indemnification: Nature of the Issuing Bank's Duties.

     (a) The Borrower agrees to indemnify and save harmless the Agent, each
Issuing Bank and each Bank from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) which the Agent, such Issuing Bank or such Bank may incur or
be subject to as a consequence, direct or indirect, of (i) the Issuance of any
Letter of Credit or (ii) any action or proceeding relating to a court order,
injunction, or other process or decree restraining or seeking to restrain such
Issuing Bank from paying any amount under any Letter of Credit.

     (b) The obligations of the Borrower hereunder with respect to Letters of
Credit shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms hereof under all circumstances, including, without
limitation, any of the following circumstances:

           (i)   any lack of validity or enforceability of any Letter of Credit
      or Loan Document or any agreement or instrument relating thereto;

           (ii)  the existence of any claim, setoff, defense or other right
      which the Borrower may have at any time against the beneficiary, or any
      transferee, of any Letter of Credit, or any Issuing Bank, any Bank, or
      any other Person;

           (iii) any draft, certificate, or other document presented under any
      Letter of Credit proving to be forged, fraudulent, invalid or
      insufficient in any respect or any statement therein being untrue or
      inaccurate in any respect;

           (iv)  any lack of validity, effectiveness, or sufficiency of any
      instrument transferring or assigning or purporting to transfer or assign
      any Letter of Credit or the rights or benefits thereunder or proceeds
      thereof, in whole or in part;

           (v)   any loss or delay in the transmission or otherwise of any
      document required in order to make a drawing under any Letter of Credit
      or of the proceeds thereof;

           (vi)  the release or non-perfection of any collateral;


                                     43

<PAGE>   50

           (vii)  any failure of the beneficiary of a Letter of Credit to
      strictly comply with the conditions required in order to draw upon any
      Letter of Credit;

           (viii) any misapplication by the beneficiary of any Letter of Credit
      of the proceeds of any drawing under such Letter of Credit; or

           (ix)   any other circumstance or happening whatsoever, whether or not
      similar to the foregoing;

provided, that, notwithstanding the foregoing, neither an Issuing Bank nor the
Agent shall be relieved of any liability it may otherwise have as a result of
its gross negligence or willful misconduct.

     SECTION 3.07.  Increased Costs.

     (a) Change in Law.  If any change in any law or regulation or in the
interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof shall either (i) impose, modify or deem
applicable any reserve, special deposit or similar requirement against letters
of credit issued by an Issuing Bank or (ii) impose on such Issuing Bank or any
Bank any other condition regarding letters of credit or, in the case of such
Bank, its participation hereunder in Letters of Credit, and the result of any
event referred to in the preceding clause (i) or (ii) shall be to increase the
cost to such Issuing Bank of Issuing or maintaining or, in the case of such
Bank, having a participation in Letters of Credit, then, upon demand by such
Issuing Bank or such Bank (with a copy to the Agent), the Borrower shall
immediately pay to such Issuing Bank or such Bank from time to time as
specified by such or such Bank (with a copy to the Agent) additional amounts
which shall be to compensate such Issuing Bank or such Bank for such increased
cost.  Each certificate as to such increased cost, and amount thereof, incurred
by any Issuing Bank or any Bank as a result of any event mentioned in clause
(i) or (ii) above, submitted by such Issuing Bank or such Bank to the Borrower
and the Agent, shall set out in reasonable detail the calculation of such
amounts and shall be conclusive and binding for all purposes, absent manifest
error.

     (b) Capital.  If any Issuing Bank or any Bank determines that compliance
with any law or regulation or with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law)
has or would have the effect of reducing the rate of return on the capital of
any Issuing Bank or such Bank or any corporation controlling such Issuing Bank
or such Bank as a consequence of, or with reference to, such Issuing Bank's
commitment to issue, issuance of, or, with respect to such Bank's commitment,
to participate in, any Letter of Credit hereunder below the rate that such
Issuing Bank, such Bank or such other corporation could have achieved but for
compliance (taking into account the policies of such Issuing Bank, such Bank or
corporation with capital), then the Borrower, shall from time to time, upon
demand by such Issuing Bank or such Bank (with a copy of such demand to the
Agent), immediately pay to such Issuing Bank or such Bank additional amounts
sufficient to compensate such Issuing Bank or other corporation for such
reduction.  A certificate as to such amounts, to the Borrower and the Agent by
such Issuing Bank or such Bank, shall be conclusive and binding


                                     44

<PAGE>   51

for all purposes, absent manifest error.  Each Issuing Bank and each Bank agree
promptly to notify the Borrower and the Agent of any circumstances that would
Borrower to pay additional amounts pursuant to this subsection (b), provided
that the failure to give such notice shall not affect the Borrower's
obligation to pay such additional amounts hereunder.

     (c) Survival of Obligations.  Without prejudice to the survival of any
other obligation of the Borrower hereunder, the agreements and obligations of
the Borrower contained in this Section 3.07 shall survive the payment in full
of the Advances (after the Revolver Termination Date).

     SECTION 3.08.  Uniform Customs and Practice.  The Uniform Customs and
Practice for Documentary Credits as most recently published by the
International Chamber of Commerce ("UCP") shall in all respects be deemed a
part of this Article III as if incorporated herein and shall apply to the
Letters of Credit.

                                   ARTICLE IV

                             CONDITIONS OF LENDING

     SECTION 4.01.  Conditions Precedent to Any Borrowing and Letter of Credit.
The obligation of each Bank to make an Advance on the occasion of any
Borrowing, and the obligation of each Issuing Bank to Issue any Letter of
Credit, shall be subject to the conditions precedent that on the date of such
Borrowing or Issuance (a) the following statements shall be true and the Agent
shall have received a certificate signed by a duly authorized officer of the
Borrower, dated the date of such Borrowing or Issuance, stating that such
statements are true (and each of the giving of the applicable Notice of
Borrowing and the acceptance by the Borrower of the proceeds of such Borrowing
or the issuance of such Letter of Credit shall constitute a representation and
warranty by the Borrower and each Loan Party (as to each Loan Document to which
it is a party) that on the date of such Borrowing or such Issuance such
statements are true):

           (i)  the representations and warranties contained in Section 5.01 of
      this Agreement, in Section 6 of the Guaranty, and in Section 11 of the
      Intercompany Subordination Agreement, are correct on and as of the date
      of such Borrowing or Issuance, before and after giving effect to such
      Borrowing or Issuance and to the application of the proceeds therefrom,
      as though made on and as of such date; and

           (ii) no event has occurred and is continuing, or would result from
      such Borrowing or such Issuance or from the application of the proceeds
      therefrom, which constitutes an Event of Default or would constitute an
      Event of Default but for the requirement that notice be given or time
      elapse or both;

and (b) the Competitive Bid Note, duly executed by the Borrower, to the order
of the appropriate Designated Bidder, shall have been received by the Agent,
and (c) the Agent shall have received such other approvals, opinions or
documents as the Agent may reasonably request.


                                     45
<PAGE>   52

     SECTION 4.02.  Conditions Precedent to Initial Advances.  The obligations
of each Bank to make its initial Advance and each Issuing Bank to Issue its
initial Letter of Credit on or after the Closing Date are subject to the
following conditions precedent:

           (i)  The Agent shall have received evidence satisfactory to it that
      all fees and expenses payable by the Borrower under the Existing Loan
      Agreement shall have been paid in full.

           (ii) The Agent shall have received the following documents, each
      dated the Closing Date and in form and substance satisfactory to the
      Agent and (with respect to the Guaranty and the Intercompany
      Subordination Agreement) in sufficient copies for each Bank:

                 (a) The Committed Rate Notes, each duly executed by the
            Borrower, to the order of the appropriate Banks.

                 (b) The Guaranty, duly executed by each Guarantor.

                 (c) The Intercompany Subordination Agreement, duly executed
            by each Loan Party.

                 (d) Certified copies of the (i) resolutions of the Board of
            Directors or other governing body of each Loan Party approving each
            Loan Document to which it is a party, and of all documents
            evidencing other necessary corporate, limited liability company or
            partnership action and governmental approvals, if any, with respect
            to each such Loan Document, (ii) all documents evidencing other
            corporate, limited liability company or partnership action or
            governmental approvals, if any, necessary or, in the reasonable
            opinion of the Agent, advisable in connection with the execution,
            delivery and performance of each Loan Document; (iii) the
            certificate or articles of incorporation, by-laws or other
            constituent instruments of the Borrower and of each of its
            Subsidiaries other than Immaterial Subsidiaries, as amended through
            the Closing Date or, with respect to any of the Borrower's
            Subsidiaries other than Immaterial Subsidiaries, a certification
            that such Subsidiary's certificate or articles of incorporation,
            bylaws or other constituent instruments delivered to Citibank in
            connection with the Existing Credit Agreement are true and correct
            copies of the certificate or articles of incorporation, bylaws or
            other constituent instruments of such Subsidiary and that such
            certificate or articles of incorporation, bylaws or other
            constituent instruments have not been amended or otherwise modified
            since the date such copies were delivered to Citibank and (iv) good
            standing certificates with respect to the Borrower and each of its
            Subsidiaries other than Immaterial Subsidiaries from the Secretary
            of State (or similar official) of the state in which the Borrower
            or such Subsidiary is incorporated or organized.

                 (e) A certificate of the Secretary or an Assistant Secretary
            of each Loan Party certifying the names and true signatures of the
            officers of such Loan


                                     46

<PAGE>   53

            Party authorized to sign each Loan Document to which it is a party
            and the other documents to be delivered hereunder.

                 (f) A certificate of the Borrower, signed on behalf of the
            Borrower by its President or a Vice President, certifying as to the
            absence of any event occurring and continuing, or resulting from
            this Agreement, that constitutes an Event of Default or would
            constitute an Event of Default but for the requirement that notice
            be given or time elapse or both.

                 (g) Favorable opinions of N. Carolyn Forehand, general counsel
            of the Borrower, and Waller Lansden Dortch & Davis, special counsel
            for the Borrower and the other Loan Parties, substantially in the
            forms of Exhibit G.

                 (h) A favorable opinion of Gibson, Dunn & Crutcher LLP,
            counsel for the Agent, satisfactory to the Agent.

                 (i) Such other agreements, certificates, consents and other
            documents that the Agent or any Bank may reasonably request.

            (iii) The Borrower shall have paid all fees payable hereunder on or
      before the Closing Date.

            (iv)  Other than as set forth on Schedule VI, no judgment, order,
      decree, injunction or other restraint affecting any Loan Party shall have
      been rendered or imposed by any court, governmental agency or arbitrator,
      and there shall be no pending or threatened action or proceeding
      affecting any Loan Party before any court, governmental agency or
      arbitrator, which could reasonably be expected to have a material adverse
      effect on the business, prospects or condition (financial or otherwise)
      or operations of the Borrower and its Subsidiaries, taken as a whole, or
      which purports to affect the legality, validity or enforceability of this
      Agreement or any other Loan Document.

                                   ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

     SECTION 5.01.  Representations and Warranties of the Borrower.  The
Borrower represents and warrants as follows:

           (a) The Borrower is a corporation duly incorporated, validly
      existing and in good standing under the laws of its jurisdiction of
      incorporation, is duly qualified as a foreign corporation and is in good
      standing in each jurisdiction as to which the location of its assets or
      the nature of its business makes qualification necessary, and has all
      power, corporate or otherwise, to conduct its business and to own, or
      hold under lease, its assets, and to execute and deliver, and to perform
      all of its obligations under, each of the Loan Documents to which it is
      or will be a party.  Each of the Borrower's Subsidiaries other than
      Immaterial Subsidiaries is a corporation, limited liability company or
      partnership


                                     47
<PAGE>   54


      duly organized, validly existing and in good standing under
      the laws of its respective jurisdiction of organization, is duly
      qualified as a foreign corporation, limited liability company or
      partnership and is in good standing in each jurisdiction as to which the
      location of its assets or the nature of its business makes qualification
      necessary, and has all power (corporate, limited liability company,
      partnership or otherwise) to conduct its business and to own, or hold
      under lease, its assets, and to execute and deliver, and to perform all
      of its obligations under, each of the Loan Documents to which it is or
      will be a party.

           (b) The execution, delivery and performance by each Loan Party of
      each Loan Document to which it is or will be a party are within such Loan
      Party's corporate, limited liability company or partnership powers, have
      been duly authorized by all necessary corporate, limited liability
      company or partnership action, and do not contravene (i) such Loan
      Party's certificate or articles of incorporation, by-laws or other
      constituent instruments, or (ii) any law, rule, regulation (including,
      without limitation, Regulation G, T, U or X of the Board of Governors of
      the Federal Reserve System), order, writ, judgment, injunction, decree,
      determination or award binding on or affecting such Loan Party or any of
      its properties, or (iii) any contractual restriction binding on or
      affecting such Loan Party or any of its properties, and do not result in
      or require the creation of any Lien upon or with respect to any of its
      properties; and no Loan Party is in default in any material respect under
      any such law, rule, regulation, order, writ, judgment, injunction,
      decree, determination, award or restriction.

           (c) No authorization or approval or other action by, and no notice
      to or filing with, any governmental authority or regulatory body is
      required for the due execution, delivery and performance by any Loan
      Party of any Loan Document to which it is or will be a party except for
      those which have been duly obtained or made and are in full force and
      effect.

           (d) This Agreement is, and each other Loan Document to which each
      Loan Party will be a party when executed and delivered hereunder will be,
      the legal, valid and binding obligation of such Loan Party enforceable
      against such Loan Party in accordance with its terms.

           (e) The Consolidated balance sheets of the Borrower and its
      Subsidiaries as at December 31, 1996 and March 31, 1997 and the related
      Consolidated statements of operations, stockholders' equity and cash flow
      of the Borrower and its Subsidiaries for the fiscal year and three
      months, respectively, then ended have been furnished to the Agent.  Such
      financial statements, and all financial statements hereafter delivered
      pursuant to Sections 6.04(b) and (c), fairly present, or will fairly
      present, the financial condition of the Borrower and its Subsidiaries as
      at the dates thereof and the results of the operations of the Borrower
      and its Subsidiaries for the periods then ended or ending, all in
      accordance with generally accepted accounting principles consistently
      applied.  Since December 31, 1996, there has been no material adverse
      change, in the business, prospects


                                     48


<PAGE>   55

      or condition (financial or otherwise) or in the results of operations of
      the Borrower and its Subsidiaries taken as a whole.

           (f) Each Loan Party has good title to all of its material property,
      free and clear of all Liens, except for Permitted Liens.  Each Lease or
      other agreement relating to the Real Property described in Schedule I
      operated by each Loan Party is a valid and subsisting Lease or other
      agreement and is in full force and effect in accordance with the terms
      thereof; and the Borrower or its Subsidiary is in possession of all such
      leaseholds and no material default by the Borrower or any of its
      Subsidiaries exists under any such Lease or other agreement and, to the
      best of the Borrower's knowledge, no lessor has any accrued right to
      terminate any such Lease or other agreement on account of a default by
      the Borrower or its Subsidiaries.

           (g) Each Service Agreement is a valid and subsisting agreement and
      is in full force and effect in accordance with the terms thereof; and no
      material default by the Borrower or any of its Subsidiaries exists under
      any Service Agreement and, to the best of the Borrower's knowledge, no
      party to any of the Service Agreements has any accrued right to terminate
      any Service Agreement on account of a default by the Borrower or any of
      its Subsidiaries.

           (h) Other than as set forth on Schedule VI, no judgment, order,
      decree, injunction or other restraint affecting any Loan Party has been
      rendered or imposed by any court, governmental agency or arbitrator, and
      there is no pending or, to the best knowledge of the Borrower, threatened
      action or proceeding affecting any Loan Party before any court,
      governmental agency or arbitrator, which could reasonably be expected to
      have a material adverse effect on the business, prospects or condition
      (financial or otherwise) or operations of the Borrower and its
      Subsidiaries, taken as a whole, or which purports to affect the legality,
      validity or enforceability of this Agreement or any other Loan Document.

           (i) Set forth on Schedule II is a complete and accurate list of all
      of the Subsidiaries of the Borrower, other than Immaterial Subsidiaries,
      as of the date hereof, showing as of such date (as to each such
      Subsidiary) the nature of its organization, the jurisdiction of its
      organization, the number of shares or the amount of interests of each
      class of Securities outstanding on the date hereof, the direct owner of
      the outstanding shares or the amount of interests of each such class
      owned, and the jurisdictions in which such Subsidiary is qualified to do
      business as a foreign entity.  There are no outstanding options,
      warrants, rights of conversion or purchase, and similar rights to acquire
      Securities of any of such Subsidiaries, except as set forth on Schedule
      II, and all of the outstanding Securities of all of such Subsidiaries
      have been validly issued, are fully paid and nonassessable and are owned
      by the Borrower or, in the case of limited liability companies, the
      Intercompany Creditor, free and clear of (i) all Liens and (ii) any
      restrictions (other than laws, rules or regulations) on the ability to
      vote or alienate such Securities.


                                     49

<PAGE>   56

           (j) All information, exhibits and reports furnished in writing by or
      on behalf of the Borrower or any of its Subsidiaries other than
      Immaterial Subsidiaries and made available to the Agent or any Bank
      relating to the condition (financial or otherwise), operations, business
      or properties of the Borrower or such Subsidiary, are true, correct and
      complete and not misleading in all material respects.

           (k) With respect to all business plans and other forecasts and
      projections furnished by or on behalf of the Borrower or any of its
      Subsidiaries other than Immaterial Subsidiaries and made available to the
      Agent or any Bank relating to the financial condition, operations,
      business, properties or prospects of the Borrower or such Subsidiary, to
      the best of the Borrower's knowledge:  (i) all facts stated as such
      therein are true and complete in all material respects, (ii) all facts
      upon which the forecasts or projections therein contained are based are
      true and complete in all material respects, and (iii) all estimates and
      assumptions were made in good faith and believed to be reasonable at the
      time made.

           (l) Schedule IV sets forth, as of the date hereof, all Debt of the
      Borrower and its Subsidiaries other than Debt representing miscellaneous
      liabilities not in excess of $5,000,000 in the aggregate.

           (m) Neither the business nor the properties of the Borrower or any
      of its Subsidiaries are affected by any strike, lockout, fire, explosion,
      earthquake, embargo, act of God or of the public enemy or other casualty
      which could reasonably be expected to have a material adverse effect on
      the business, prospects, condition (financial or otherwise) or results of
      operations of the Borrower and its Subsidiaries taken as a whole.

           (n) No ERISA Event has occurred with respect to any Plan or is
      reasonably expected to occur with respect to any Plan.

           (o) Schedule B (Actuarial Information) to the most recently
      completed annual report (Form 5500 Series) for each Plan of the Borrower
      or its Subsidiaries, copies of which have been or will be filed with the
      Internal Revenue Service, is complete and accurate in all material
      respects and fairly presents the funding status of such Plan, and since
      the date of such Schedule B there has been no material adverse change in
      such funding status.

           (p) Neither the Borrower nor any ERISA Affiliate has incurred or is
      reasonably expected to incur any material Withdrawal Liability to any
      Multiemployer Plan.

           (q) Neither the Borrower nor any ERISA Affiliate has been notified
      by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
      reorganization or has been terminated, within the meaning of Title IV of
      ERISA and no Multiemployer Plan is reasonably expected to be in
      reorganization or to be terminated, within the meaning of Title IV of
      ERISA.


                                     50


<PAGE>   57

           (r) The Borrower and its Subsidiaries on a Consolidated basis are,
      and each Loan Party individually is, and after receipt and application of
      the Advances in accordance with the terms of this Agreement and execution
      of each Loan Document to which it is or is to be a party will be,
      Solvent.

           (s) Neither the Borrower nor any Subsidiary of the Borrower is, or
      is required to be, registered under the Investment Company Act of 1940,
      as amended.

           (t) Each of the Borrower and its Subsidiaries is in compliance in
      all material respects with the provisions of all Environmental Laws.
      Neither the Borrower nor any of its Subsidiaries nor, to the knowledge of
      the Borrower, any other Person, has engaged in any Environmental
      Activity, nor, to the knowledge of the Borrower, has any Environmental
      Activity otherwise occurred, in material violation of any provision of
      any applicable Environmental Laws.

           (u) Neither the Borrower nor any of its Subsidiaries has any
      liability, absolute or contingent, in connection with any Environmental
      Activity the satisfaction of which could reasonably be expected to have a
      material adverse effect on the business, prospects, condition (financial
      or otherwise) or results of operations of the Borrower and its
      Subsidiaries taken as a whole.

           (v) The Borrower is not engaged in the business of extending credit
      for the purpose of purchasing or carrying margin stock (within the
      meaning of Regulation U issued by the Board of Governors of the Federal
      Reserve System).  No proceeds of any Advance will be used to purchase or
      carry any margin stock (within the meaning of Regulation U issued by the
      Board of Governors of the Federal Reserve System) or to extend credit to
      others for the purpose of purchasing or carrying any margin stock (within
      the meaning of Regulation U issued by the Board of Governors of the
      Federal Reserve System) in violation of applicable law, including,
      without limitation, Regulation U issued by the Board of Governors of the
      Federal Reserve System.

           (w) The Intercompany Creditor (i) is not liable in respect of any
      Debt other than Intercompany Debt, (ii) has no other liabilities or
      obligations other than contingent obligations that are not material in
      amount in respect of operating leases entered into prior to May 1, 1993,
      and (iii) has not engaged in any operations, and has not received any
      notice of a claim or threatened claim in respect of any operations or the
      sale thereof, since May 1, 1993.

                                   ARTICLE VI

                           COVENANTS OF THE BORROWER

     SECTION 6.01.  Affirmative Covenants.  So long as any Note shall remain
unpaid, any Letter of Credit shall remain outstanding, any amount shall remain
due hereunder, or any Bank shall have any Commitment hereunder, the Borrower
will, unless the Majority Banks shall otherwise consent in writing:


                                     51
<PAGE>   58

           (a) Payment of Taxes, Etc.  Pay and discharge, and cause each
      Subsidiary to pay and discharge, before the same shall become delinquent,
      (i) all taxes, assessments and governmental charges or levies imposed
      upon it or upon its property, and (ii) all lawful claims which, if
      unpaid, might by law become a Lien upon its property; provided, however,
      that neither the Borrower nor any Subsidiary shall be required to pay or
      discharge any such tax, assessment, charge or claim which is being
      contested in good faith and by proper proceedings and as to which
      appropriate reserves are being maintained.

           (b) Maintenance of Insurance.  Maintain, and cause each of its
      Subsidiaries to maintain, insurance with responsible and reputable
      insurance companies or associations (i) in such amounts and covering such
      risks as is usually carried by companies engaged in similar businesses
      and owning similar properties in the same general areas in which the
      Borrower or such Subsidiary operates, and (ii) reasonably satisfactory to
      the Agent, and naming the Agent as an additional insured or as loss payee
      as the respective interests appear.

           (c) Preservation of Corporate Existence, Etc.  Except as is
      otherwise expressly permitted hereby, preserve and maintain, and cause
      each Subsidiary to preserve and maintain, its corporate existence, rights
      (charter and statutory) and franchises.

           (d) Compliance with Laws, Etc.  Comply, and cause each of its
      Subsidiaries to comply, in all material respects, with the requirements
      of all applicable laws, rules, regulations and orders, including, without
      limitation, all Environmental Laws relating to the Real Property and the
      ownership, use, operation and occupancy thereof.

           (e) Visitation Rights.  At any reasonable time and from time to time
      after notice, permit the Agent or any of the Banks or any agents or
      representatives thereof, to examine and make copies of and abstracts from
      the records and books of account of, and visit the properties of, the
      Borrower and/or any of the Subsidiaries of the Borrower, and to discuss
      the affairs, finances and accounts of the Borrower and any such
      Subsidiary with any of their officers or directors and with their
      independent certified public accountants.

           (f) Keeping of Books.  Keep, and cause each Subsidiary of the
      Borrower to keep, proper books of record and account, in which full and
      correct entries shall be made of all financial transactions and the
      assets and business of the Borrower and each such Subsidiary in
      accordance with generally accepted accounting principles consistently
      applied.

           (g) Maintenance of Properties, Etc.  Maintain and preserve, and
      cause each Subsidiary of the Borrower to maintain and preserve, all of
      its properties which are used or useful in the conduct of its business
      in good working order and condition, ordinary wear and tear excepted.


                                     52

<PAGE>   59

            (h) Compliance with Terms of All Leaseholds.  Make all payments and
      otherwise perform, and cause each of its Subsidiaries to make all
      payments and otherwise perform, all of its material obligations in
      respect of all material Leases, and use its best efforts, and cause each
      of its Subsidiaries to use its best efforts, to keep, and to take all
      action to keep, such Leases in full force and effect and not allow any
      such Leases to lapse or be terminated or any rights to renew such Leases
      to be forfeited or canceled; provided, however, that any such Lease may
      lapse or be terminated or such renewal rights may be forfeited or
      canceled if in the reasonable business judgment of the Borrower or its
      Subsidiary, as the case may be, it is in its best economic interests to
      allow or cause such lapse, termination, forfeiture or cancellation.

            (i) Solvency.  Continue, and cause each of its Subsidiaries to
      continue, to be Solvent.

            (j) Further Assurances.

                 (A) If and to the extent requested by the Agent from time to
            time, execute and deliver such documents and take such other
            action, and cause each of its Subsidiaries to execute and deliver
            such documents and take such other action, as may be necessary or
            reasonably requested by the Agent, in order to assure and confirm
            that all obligations under this Agreement (including reimbursement
            obligations in respect of outstanding Letters of Credit), the Notes
            or any of the other Loan Documents are at all times guaranteed on
            terms satisfactory to the Agent by Guaranties of each of its
            present and future Subsidiaries other than Immaterial Subsidiaries.

                 (B) Promptly upon the acquisition by the Borrower or one of
            its Subsidiaries of the Securities of any Subsidiary that is not an
            Immaterial Subsidiary or, in the event any Subsidiary of the
            Borrower ceases to be an Immaterial Subsidiary, within 30 days
            after such Subsidiary ceases to be an Immaterial Subsidiary, the
            Borrower will cause such Subsidiary to enter into a Guaranty.

                 (C) Promptly upon the acquisition of the Securities of any
            Subsidiary of the Borrower or one of its Subsidiaries that is not
            an Immaterial Subsidiary or, in the event any Subsidiary of the
            Borrower ceases to be an Immaterial Subsidiary or is owed by the
            Borrower more than $100,000 in Intercompany Debt, within 30 days
            after such Subsidiary ceases to be an Immaterial Subsidiary or
            first is owed such amount of Intercompany Debt, the Borrower will
            cause such Subsidiary to enter into the Intercompany Subordination
            Agreement.

                 (D) Use its best efforts, from and after the Closing Date, to
            obtain supplements to the Subordination Agreements outstanding on
            the Closing Date confirming the continued subordination of the Debt
            referred to therein, in form and substance reasonably satisfactory
            to the Agent.


                                     53
<PAGE>   60

           (k)   Employment of Technology; Disposal of Hazardous Materials, Etc.
      (i) Employ, and cause each of its Subsidiaries to employ, in connection
      with its use, if any, of the Real Property, appropriate technology and
      compliance procedures to maintain compliance with any applicable
      Environmental Laws, (ii) obtain and maintain, and cause each of its
      Subsidiaries to obtain and maintain, any and all material permits
      required by applicable Environmental Laws in connection with its or its
      Subsidiaries' operations and (iii) dispose of, and cause each of its
      Subsidiaries to dispose of, any and all Hazardous Substances only at
      facilities and with carriers reasonably believed to possess valid permits
      under RCRA, if applicable, and any applicable state and local
      Environmental Laws.  The Borrower shall use its best efforts, and cause
      each of its Subsidiaries to use its best efforts, to obtain all
      certificates required by law to be obtained by the Borrower and its
      Subsidiaries from all contractors employed by the Borrower or any of its
      Subsidiaries in connection with the transport or disposal of any
      Hazardous Substances.

           (l)   Environmental Matters.  If the Borrower or any of its
      Subsidiaries shall:

                 (i)   receive written notice that any material violation of any
            Environmental Laws may have been committed or is about to be
            committed by the Borrower or any of its Subsidiaries;

                 (ii)  receive written notice that any administrative or
            judicial complaint or order has been filed or is about to be filed
            against the Borrower or any of its Subsidiaries alleging any
            material violation of any Environmental Laws or requiring the
            Borrower or any of its Subsidiaries to take any action in
            connection with the release or threatened release of Hazardous
            Substances or solid waste into the environment; or

                 (iii) receive written notice from a federal, state, foreign or
            local governmental agency or private party alleging that the
            Borrower or any of its Subsidiaries is liable or responsible for
            costs associated with the response to cleanup, stabilization or
            neutralization of any Environmental Activity;

      then it shall provide the Agent with a copy of such notice within five
      Business Days of the Borrower's or such Subsidiary's receipt thereof.
      Within ten days of the date the Borrower or such Subsidiary shall have
      learned of the enactment or promulgation of any Environmental Laws which
      may have a material adverse effect on the business, property, condition
      (financial or otherwise) or results of operations of the Borrower and its
      Subsidiaries, taken as a whole, the Borrower shall provide the Agent with
      notice thereof.  The Borrower shall monitor compliance with Environmental
      Laws by any and all owners or operators of the Real Property.

           (m) Violation of Law, Etc.  Prior to the Borrower or any Subsidiary
      of the Borrower commencing any acquisition of any margin stock (within
      the meaning of Regulation U issued by the Board of Governors of the
      Federal Reserve System), including, without limitation, commencing a
      merger or tender offer for shares of another


                                     54

<PAGE>   61

      Person, the Borrower will deliver to the Agent an opinion of the general
      counsel of the Borrower satisfactory to the Agent that such activity
      (taking into account Section 6.02(a) and the use or proposed use of the
      proceeds of any Advances in connection with such activity) does not
      violate any law, rule or regulation (including without limitation
      Regulation U issued by the Board of Governors of the Federal Reserve
      System).

      SECTION 6.02.  Negative Covenants.  So long as any Note shall remain
unpaid, any Letter of Credit shall remain outstanding, any amount shall remain
due hereunder, or any Bank shall have any Commitment hereunder, the Borrower
will not, without the written consent of the Majority Banks:

      (a) Liens, Etc.  Create, incur, assume or suffer to exist, or permit any
of its Subsidiaries to create, incur, assume or suffer to exist, any Lien upon
or with respect to any of its properties of any character (including, without
limitation, Accounts), whether now owned or hereafter acquired, or assign any
right to receive income, or sign or file, or permit any of its Subsidiaries to
sign or file, under the Uniform Commercial Code a financing statement that
names the Borrower or any of its Subsidiaries as debtor or the equivalent or
sign, or permit any of its Subsidiaries to sign, any security agreement
authorizing any secured party thereunder to file any such financing statement
or other document, or assign, or permit any of its Subsidiaries to assign, any
Accounts, excluding, however, from the operation of the foregoing restrictions
the Liens created by or pursuant to the Loan Documents or the $150,000,000
Credit Agreement and Permitted Liens.

      (b) Restrictive Covenants.  Enter into, or permit any of its
Subsidiaries to enter into, any agreement or instrument (other than the Loan
Documents) (i) which restricts the ability of the Borrower or any of its
Subsidiaries to create or suffer to exist any Lien upon or with respect to its
Securities, whether now or hereafter issued, or upon or with respect to any of
its properties, whether now owned or leased or hereafter acquired or leased,
except in connection with transactions contemplated by clause (v) of the
definition "Permitted Lien" in which case any such agreement shall be limited
to the property acquired in connection with such transactions and any Lien
granted is limited as provided in said clause (v) and except for investments of
no more than $10,000,000 in any individual case (or series of individual
cases), but in no event more than $20,000,000 in the aggregate at any time, by
the Borrower and its Subsidiaries in any Person which is not a Subsidiary, in
which the Borrower or its Subsidiaries hold less than 50% of the equity
interest and as to which the Borrower or its Subsidiaries are prohibited by law
to grant a Lien on any such equity interest, or (ii) which restricts the
ability of any Subsidiary of the Borrower to (A) pay dividends or make other
distributions on its Securities or to the Borrower or any other Subsidiary of
the Borrower, (B) make any loan or advance to the Borrower or any of its
Subsidiaries, or (C) create, incur, assume or suffer to exist, or pay or
prepay, any Intercompany Debt, provided, that any such agreement or instrument
mandated by any federal law, rule or regulation or order governing the business
of the Borrower and its Subsidiaries shall not be a violation of this Section
6.02(b)(ii).



                                     55


<PAGE>   62

      (c)  Debt.  Create, incur, assume or suffer to exist, or permit any of
its Subsidiaries to create, incur, assume or suffer to exist, any Debt other
than:

                 (i)    Debt hereunder;

                 (ii)   Debt under the Loan Documents or under the $150,000,000
            Credit Agreement (and the Loan Documents referred to and as defined
            therein);

                 (iii)  Debt secured by Liens permitted by clause (v) of the
            definition of "Permitted Lien";

                 (iv)   the Debt listed on Schedule IV, provided that such Debt
            may be renewed, extended or otherwise modified on terms no less
            favorable to the Borrower or its Subsidiaries or the Banks than the
            existing terms of such Debt;

                 (v)    Debt not otherwise permitted by this Section 6.02(c)
            incurred by the Borrower and/or its Subsidiaries (other than the
            Intercompany Creditor) in connection with the acquisition of any
            Facility (or the assets thereof), any Existing Clinic Acquisition
            or the acquisition of any Related Business, so long as such
            acquisition satisfies all the conditions precedent set forth in
            Section 6.02(f)(i) or (ii), as the case may be;

                 (vi)   convertible Subordinated Debt incurred by the Borrower
            or any Subsidiary of the Borrower (other than the Intercompany
            Creditor) in connection with the acquisition of a Facility (or the
            assets thereof), any Existing Clinic Acquisition or the acquisition
            of any Related Business, provided that the holder of any such Debt
            shall have executed and delivered a Subordination Agreement to the
            Agent;

                 (vii)  Subordinated Debt, whether convertible or not, in an
            aggregate principal amount not in excess of $150,000,000; provided
            that the Agent and the Majority Banks shall have approved in
            writing prior to the issuance thereof the terms and conditions
            relating to the issuance of such Subordinated Debt, including the
            terms of any indenture executed in connection therewith;

                 (viii) any Intercompany Debt or Debt permitted under the terms
            of Section 6.02(i) or 6.02(o);

                 (ix)   Contingent Obligations permitted under Section 6.02(d);

                 (x)    Debt under any interest rate, currency or other
            protection, hedge, cap, collar, swap or similar agreement entered
            into by the Borrower with any of the Banks or their respective
            Affiliates from time to time; and

                 (xi)   unsecured Senior Debt in an aggregate principal amount
            not in excess of $50,000,000 incurred by the Borrower or any of its
            Subsidiaries (other


                                     56

<PAGE>   63


            than the Intercompany Creditor) to fund any Existing Clinic
            Acquisition or the acquisition of any Facility (or the assets
            thereof) or any Related Business; provided, however, that such
            unsecured Senior Debt contains terms and conditions, including,
            without limitation, interest rates, covenants and defaults, no
            greater or more restrictive, as the case may be, than those
            contained herein; provided, further, that there can be no principal
            repayments of such unsecured Senior Debt until one year after the
            Revolver Termination Date.

           (d) Contingent Obligations.  Create, incur, assume or suffer to
      exist, or permit any of its Subsidiaries to create, incur, assume or
      suffer to exist, any Contingent Obligations except (i) by reason of
      endorsement of negotiable instruments for deposit or collection or
      similar transactions in the ordinary course of business, (ii) Contingent
      Obligations created pursuant to the Loan Documents or under the
      $150,000,000 Credit Agreement (and the Loan Documents referred to and as
      defined therein), (iii) guaranties by the Borrower of Capital Leases,
      Operating Leases or Service Agreements of any Subsidiary of the Borrower
      (including consents by the Borrower to the assignment of such
      guaranties), provided that such Capital Leases or Operating Leases are
      otherwise permitted hereunder, (iv) Contingent Obligations of the type
      specified in clauses (ii) and (iii) of the definition of "Contingent
      Obligation" created in the ordinary course of business, (v) miscellaneous
      Contingent Obligations not to exceed at any time outstanding $20,000,000,
      (vi) guaranties by the Subsidiaries of the Borrower of the Borrower's
      obligations under a Capital Lease or an Operating Lease provided that
      such Capital Lease or Operating Lease is otherwise permitted hereunder
      and only to the extent of the portion of such Capital Lease or Operating
      Lease that directly benefits such Subsidiary, (vii) Contingent
      Obligations not otherwise permitted by this Section 6.02(d) incurred by
      the Borrower and/or its Subsidiaries (other than the Intercompany
      Creditor) in connection with the acquisition of any Facility (or the
      assets thereof), any Existing Clinic Acquisition or the acquisition of
      any Related Business, so long as such acquisition satisfies all the
      conditions precedent set forth in Section 6.02(f)(i) or (ii), as the case
      may be, (viii) Contingent Obligations permitted pursuant to Section
      6.02(c) and Contingent Obligations listed on Schedule IV and (ix)
      Contingent Obligations to make recruitment subsidy advances pursuant to
      any Service Agreement.

           (e) Restricted Payments.  Make, or permit any of its Subsidiaries to
      make, any Restricted Payment if at the time such Restricted Payment is
      made none of the then outstanding Debt of the Borrower shall be rated
      Investment Grade, except that:

               (i) the Borrower may pay dividends on its Common Stock, or
           purchase or otherwise acquire for value any shares of its Common
           Stock (each a "Common Stock Payment"), provided that (A) no Event of
           Default or event that would constitute an Event of Default but for
           the requirement that notice be given or time elapse or both shall
           have occurred and be continuing or would result from such Common
           Stock Payment, (B) the aggregate amount of Common Stock Payments made
           during the period from January 1, 1997 through the date of such
           Common Stock Payment shall not exceed an amount equal to ten percent
           of the


                                     57

<PAGE>   64
            Consolidated Net Income of the Borrower and its Subsidiaries for the
            period from January 1, 1997 through the last day of the fiscal
            quarter most recently ended prior to the date of such Common Stock
            Payment (treated for such purposes as a single accounting period),
            provided that in no event may the aggregate amount of Common Stock
            Payments made to purchase or otherwise acquire for value shares of
            Common Stock exceed $20,000,000 in the aggregate for all such
            purchases or other acquisitions, and (C) the Borrower shall have
            provided the Agent with a certificate of the treasurer or chief
            financial officer of the Borrower setting forth computations in
            reasonable detail demonstrating satisfaction of the foregoing
            conditions; and

                 (ii) the Borrower and its Subsidiaries may make Restricted
            Payments to terminated employees in an amount not to exceed
            $100,000 in any year.

           (f) Capital Investments.  Make, or permit any of its Subsidiaries to
make, any Capital Investments, provided that:

                 (i) the Borrower and the Subsidiaries of the Borrower (other
            than the Intercompany Creditor) can make Capital Investments
            consisting of an acquisition of a Facility (or the assets thereof)
            or Related Businesses or Existing Clinic Acquisitions (whether
            through the acquisition of assets or Securities) that satisfy all
            of the following:

                       (A) the Total Consideration for each such acquisition
                  shall be less than $75,000,000;

                       (B) the aggregate Total Consideration for all such
                  acquisitions in any twelve-month period shall not exceed
                  $500,000,000;

                       (C) the aggregate number of such acquisitions (other
                  than Existing Clinic Acquisitions) in any twelve-month period
                  shall not exceed fifteen;

                       (D) except in the case of Existing Clinic Acquisitions,
                  the Agent and the Banks shall have received at least one day
                  before the scheduled closing for such acquisition the
                  following financial and other information:

                             (1) the Total Consideration to be paid for such
                        acquisition;

                             (2) summary financial information relating to the
                        Facility or Related Business to be acquired, including
                        operating forecasts and information as to the numbers
                        of physicians and physician assistants involved and any
                        other information reasonably requested by the Agent;
                        and


                                     58

<PAGE>   65

                             (3) a schedule, duly certified by the chief
                        financial officer of the Borrower, demonstrating
                        compliance on a pro forma basis with the financial
                        covenants contained in Section 6.03 after such
                        acquisition; provided, however, that in preparing such
                        pro forma schedule, the Borrower shall include all Debt
                        to be incurred in connection with such acquisition and
                        the EBITDA of the Facility or Related Business to be
                        acquired (which shall be based on audited, if
                        available, historical numbers, adjusted as contemplated
                        by Section 6.03);

                       (E) the Agent and the Banks shall have received at least
                  one day before the scheduled closing of such acquisition all
                  other information, financial or otherwise, regarding such
                  acquisition as the Agent or the Banks may reasonably request;

                       (F) except in the case of Existing Clinic Acquisitions,
                  the Agent shall have received, on or before the date of such
                  acquisition, each of the following documents:

                             (1) a Guaranty (dated on or before the date of such
                        acquisition), duly executed by the Subsidiary of the
                        Borrower formed to acquire or resulting from the
                        acquisition of such Facility (or the assets thereof) or
                        Related Business, unless immediately after giving effect
                        to such acquisition such Subsidiary will be an
                        Immaterial Subsidiary;

                             (2) an amendment (dated on or before the date of
                        such acquisition) to the Intercompany Subordination
                        Agreement, which amendment shall make the Subsidiary of
                        the Borrower formed to acquire or resulting from the
                        acquisition of such Facility (or the assets thereof) or
                        Related Business a "Subordinated Creditor" under such
                        Intercompany Subordination Agreement, unless
                        immediately after giving effect to the acquisition such
                        Subsidiary will be an Immaterial Subsidiary;

                             (3) certified copies of resolutions of the Board
                        of Directors or other governing body of such Subsidiary
                        authorizing the execution and delivery of such Loan
                        Documents, together with certificates of incumbency
                        with respect to the individuals executing such Loan
                        Documents;

                             (4) a supplement to Schedule I hereto to the
                        extent such supplement is necessary to make the
                        representation and warranty contained in Section
                        5.01(f) correct on and as of the date of such
                        acquisition; and


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<PAGE>   66

                             (5) such other documents (including a favorable
                        legal opinion of the general counsel of the Borrower)
                        as the Agent may reasonably request.

                 (ii) the Borrower and the Subsidiaries of the Borrower (other
            than the Intercompany Creditor) can make Capital Investments
            consisting of an acquisition of a Facility (or the assets thereof)
            or Related Businesses for which the Total Consideration (whether
            through the acquisition of assets or Securities) equals or exceeds
            $75,000,000 only with the prior approval in writing of the terms and
            conditions of such acquisition by the Majority Banks in
            substantially the form of Exhibit H (it being understood that the
            Banks shall use reasonable efforts to notify the Borrower within ten
            Business Days after receipt of all of the information regarding a
            proposed acquisition described in clause (A) below of their decision
            to approve or disapprove the proposed acquisition), and

                       (A) the Banks and the Agent shall have received complete
                  information, financial and otherwise, regarding the proposed
                  acquisition as may be necessary or desirable, in the
                  reasonable judgment of the Banks, to enable the Banks to
                  evaluate the proposed acquisition for the purpose of
                  approving such acquisition under this Section 6.02(f)(ii),
                  including, without limitation, information regarding the
                  Total Consideration to be paid, a schedule, duly certified by
                  the chief financial officer of the Borrower, demonstrating
                  compliance on a pro forma basis with the financial covenants
                  contained in Section 6.03 after such acquisition, and any
                  other information as the Banks may reasonably request;
                  provided, however, that in preparing such pro forma schedule,
                  the Borrower shall include all Debt to be incurred in
                  connection with such acquisition and the EBITDA of the
                  Facility or Related Business to be acquired (which shall be
                  based on audited, if available, historical numbers, adjusted
                  as contemplated by Section 6.03); and

                       (B) the Agent shall have received on or before the day
                  of such acquisition, in form and substance satisfactory to
                  the Agent, each of the documents described in subsection
                  6.02(f)(i)(F).

                 (iii) the Borrower and its Subsidiaries may make Capital
            Expenditures that are not acquisitions of, or other investments in,
            Facilities, Related Businesses or other Persons (or all or
            substantially all of the assets thereof) in the ordinary course of
            business, provided that no Event of Default or event that would
            constitute an Event of Default but for the requirement that notice
            be given or time elapse or both shall have occurred and be
            continuing or would result therefrom.

                 (iv) the Borrower and its Subsidiaries may make capital
            investments in, and loans and advances to, Subsidiary joint
            ventures, general or limited partnerships, limited liability
            companies or other types of Persons that are not

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<PAGE>   67

            wholly-owned by the Borrower and its Subsidiaries in an aggregate
            amount of not more than $10,000,000 during any fiscal year, and in
            no event in an aggregate amount exceeding $30,000,000 at any time
            outstanding.

                 (v) the Borrower and its Subsidiaries may make capital
            investments in, and loans and advances to, joint ventures, general
            or limited partnerships, limited liability companies or other types
            of Persons that are not Subsidiaries in an aggregate amount not
            exceeding $10,000,000 at any time outstanding.

                 (vi) without limiting amounts that may be invested in, or
            loaned or advanced to other Persons pursuant to Section 6.02(f)(v),
            the Borrower's Subsidiary PhyCor of Hawaii, Inc. ("PhyCor-Hawaii")
            may make secured loans to Straub Clinic & Hospital, Inc. ("Straub")
            to the extent required by, and in compliance with, Sections 5.8.1,
            5.8.2 and 5.8.3 of its Service Agreement with Straub (the "Straub
            Service Agreement"); provided that:

                       (A) at the time of each such loan and after giving
                  effect thereto, no Event of Default or event which would
                  constitute an Event of Default but for the requirement that
                  notice be given or time elapse or both shall occur and be
                  continuing;

                       (B) loans pursuant to Section 5.8.1 of the Straub
                  Service Agreement ("Straub Capital Loans") shall be secured
                  by a first priority security interest in all of the assets
                  directly or indirectly acquired by Straub from the proceeds
                  of any such loans, free and clear of any other Liens; and the
                  aggregate principal amount of all Straub Capital Loans may
                  not exceed $50,000,000 at any time outstanding;

                       (C) loans pursuant to Section 5.8.2 of the Straub
                  Service Agreement ("Straub Working Capital Loans";
                  collectively, with the Straub Capital Loans, the "Straub
                  Loans") shall be made pursuant to a single credit facility
                  providing loan availability for no more than one year from
                  the commencement of the term thereof (which may be renewed on
                  an annual basis, but not provide availability later than the
                  stated Revolver Termination Date) and shall be secured by a
                  first priority security interest in all of the accounts
                  receivable, inventory, supplies and other current assets of
                  Straub (the "Straub Loan Base"), free and clear of any other
                  Liens; and the aggregate principal amount of all Straub
                  Working Capital Loans may not exceed at any time
                  outstanding the lesser of (1) $40,000,000 or (2) the
                  aggregate book value (less any reserves applicable thereto)
                  of (x) the Straub Loan Base as of such time and (y) any
                  current assets acquired by the Borrower in its merger with
                  Straub Clinic & Hospital, Incorporated and held by the
                  Borrower at such time, all as determined in accordance with
                  generally accepted accounting principles; and


                                     61

<PAGE>   68

                       (D) each Straub Loan shall be evidenced by a promissory
                  note (1) that shall have a final maturity not later than the
                  stated Revolver Termination Date and provide for the
                  repayment of principal prior to final maturity at the annual
                  rate of one-sixth of the principal outstanding at the time
                  loan availability under the applicable credit facility for
                  Straub ceases and (2) that shall be subject to the repurchase
                  right of Straub provided in the Straub Service Agreement.

           (g) Mergers, Etc.  Merge or consolidate with or into, or convey,
      transfer, lease or otherwise dispose of (whether in one transaction or in
      a series of transactions) all or substantially all of its assets (whether
      now owned or hereafter acquired) to, or acquire all or substantially all
      of the assets (other than the acquisition of assets of any Facility or
      Related Business or an Existing Clinic Acquisition, whether or not such
      acquisition is accomplished by merger or by Securities or asset purchase,
      so long as such acquisition satisfies all the conditions precedent set
      forth in Section 6.02(f)(i) or (ii) and, if any merger involves the
      Borrower, the Borrower is the surviving corporation) of, any Person, or
      permit any of its Subsidiaries to do so, except that:

                 (i) any Subsidiary may consolidate with or merge into the
            Borrower (only if the Borrower shall be the continuing or surviving
            corporation) or (except for the Intercompany Creditor) with or into
            one or more other Subsidiaries that are Guarantors, provided that
            (A) immediately before and after giving effect to such
            consolidation or merger, the parties thereto and the survivor
            thereof all are Solvent, (B) all Guaranties shall continue in full
            force and effect, and (C) the Agent shall have been furnished with
            a favorable opinion of counsel reasonably satisfactory to the Agent
            covering such matters as the Agent may reasonably request; and

                 (ii) the Borrower may consolidate or merge with any other
            Person, provided that (A) immediately before and after giving
            effect to such consolidation or merger, the parties thereto and the
            survivor thereof all are Solvent, (B) the Borrower shall be the
            continuing or surviving corporation, (C) no Change of Control shall
            occur and (D) all Guaranties shall continue in full force and
            effect;

      provided, however, that immediately before and after any consolidation or
      merger under this Section 6.02(g), no Event of Default, or event which,
      with the giving of notice or lapse of time or both, would become an Event
      of Default, shall have occurred and be continuing.

           (h) Limitation on Sales of Assets.  Except for the sale of inventory
      in the ordinary course of business, the sale of worn-out or obsolete
      assets and intercompany transfers permitted under Section 6.02(g), sell,
      lease, transfer or otherwise dispose of its assets, or permit any
      Subsidiary to sell, lease, transfer or otherwise dispose of its assets
      (including any interest in a Subsidiary), unless (i) the book value of
      such assets sold constitutes less than 5% of the value of the Borrower's
      Consolidated Tangible Net Assets


                                     62
<PAGE>   69


      at the time of sale or other disposition, provided that the aggregate book
      value of all such assets sold in any twelve-month period shall not exceed
      15% of the value of the Borrower's average Consolidated Tangible Net
      Assets for the twelve-month period ending with the quarter immediately
      preceding the date of determination, as evidenced by a certificate duly
      executed by the chief financial officer of the selling entity on the date
      of such sale or disposition, and provided further that such assets do not
      constitute Securities of the Intercompany Creditor or Intercompany Debt,
      or (ii) such sale is required in connection with the termination of a
      Service Agreement or a change in control under the Amended Securities
      Purchase Agreement, dated as of January 1, 1995, with respect to NAMM,
      and, in each case, the Net Cash Proceeds of such sale are delivered
      directly to the Agent to be applied in accordance with Section 2.09(e).

           (i) Transactions with Affiliates.  Lend or advance money to,
      contract with or engage in any other transactions with, or permit any
      Subsidiary of the Borrower to lend or advance money to, contract with or
      engage in any other transactions with, Subsidiaries or Affiliates of the
      Borrower, except in the ordinary course of their business with third
      parties or on terms and for consideration which is no less favorable to
      the Borrower and its Subsidiaries than the terms and consideration which
      the Borrower or such Subsidiaries would be obligated to pay in an arms'
      length transaction, subject, however, to the limitation that the Borrower
      and its Subsidiaries shall not loan more than $100,000 times the number
      of Facilities operated by the Borrower and its Subsidiaries to employees
      at any one time outstanding; provided, however, that nothing in this
      Section 6.02(i) shall prohibit the Borrower and its Subsidiaries from
      engaging in transactions with joint ventures in which the Borrower or any
      of its Subsidiaries is a joint venture partner to the extent permitted by
      Section 6.02(f)(iv) or (v).

           (j) Prepayments of Debt.  Prepay, redeem, defease (whether actually
      or in substance) or purchase in any manner (or deposit or set aside funds
      or securities for the purpose of the foregoing), or make any payment
      (other than for scheduled payments of principal and interest due on the
      date of payment thereof, if such payment is permitted to be made pursuant
      to the terms of the documents evidencing or governing the applicable
      Debt) in respect of, or establish any sinking fund, reserve or like
      set-aside of funds or other property for the redemption, retirement or
      repayment of, any Debt, or transfer any property in payment of or as
      security for the payment of, or violate the subordination terms of, any
      Debt, or amend, modify or change in any manner less favorable to Borrower
      or any of its Subsidiaries or the Banks the terms of any Debt or any
      instrument, indenture or other document evidencing, governing or
      affecting the terms of any Debt, or cause or permit any of its
      Subsidiaries to do any of the foregoing; provided, however, that nothing
      in this Section 6.02(j) shall prohibit (i) any payments of the Debt under
      this Agreement or the $150,000,000 Credit Agreement in accordance with
      the terms hereof or thereof, (ii) the conversion of convertible
      Subordinated Debt of the Borrower into Securities of the Borrower, (iii)
      the prepayment in any fiscal year of the Borrower of up to $30,000,000 in
      principal amount of Senior Debt of the Borrower or any of its
      Subsidiaries if the effective yield payable in respect of such Senior
      Debt is greater than the interest payable hereunder in respect of Base
      Rate Advances or Eurodollar Rate



                                     63



<PAGE>   70
      Advances, whichever is lower, (iv) the prepayment of the existing
      operating capital notes payable to the various physicians listed on
      Schedule IV in the aggregate principal amount specified therein, (v)
      setoff of any convertible Subordinated Debt against the purchase price to
      be paid by the holder of such Debt in connection with the repurchase by
      such holder of any Facility pursuant to the Asset Purchase Agreement
      relating to such Facility, or (vi) payment of any Deferred Acquisition
      Consideration in connection with any acquisition of Facilities (or the
      assets thereof), any Existing Clinic Acquisition or any acquisition of a
      Related Business to the extent such acquisition satisfies the requirements
      of Section 6.02(f)(i) or (ii), as the case may be.

           (k) Accounting Changes.  Change its fiscal year, or make, or permit
      any of its Subsidiaries to make, any other significant change in
      Consolidated accounting treatment and reporting practices except as
      required or permitted by generally accepted accounting principles.

           (l) Change in Nature of Business.  Make, or permit any of its
      Subsidiaries to make, any material change in the nature of its business
      as conducted as of the date hereof.

           (m) Securities.  Except as is provided in Section 6.02(g), permit
      any of its Subsidiaries to issue or sell any of its Securities or any
      rights, warrants or options to acquire any of its Securities, or permit
      any of its Subsidiaries to sell or otherwise dispose of any Securities of
      any of its Subsidiaries, or permit any of its Subsidiaries to amend its
      charter, bylaws or other constituent instruments so as to affect the
      conversion rights, payments, privileges or other terms in respect of such
      Securities or in any respect that affects any of the foregoing interests
      of its respective securityholders.

           (n) Welfare Plan Liabilities.  Create or suffer to exist, or permit
      any of its Subsidiaries to create or suffer to exist, any liability with
      respect to Welfare Plans if, immediately after giving effect to such
      liability, the aggregate annualized cost (including, without limitation,
      the cost of insurance premiums) with respect to Welfare Plans and other
      benefit plans and insurance of the type described in the definition of
      "Welfare Plans" contained in Section 1.01 for which the Borrower and its
      Subsidiaries are or may become liable in any fiscal year of the Borrower
      could have a material adverse effect on the business, property,
      prospects, condition (financial or otherwise) or results of operations of
      the Borrower and its Subsidiaries, taken as a whole.

           (o) Intercompany Creditor.  Permit the Intercompany Creditor to
      engage in any business or operations except the receipt and advancing of
      Intercompany Debt and the holding of Intercompany Debt or Securities of
      other Subsidiaries of the Borrower.

     SECTION 6.03.  Financial Covenants.  So long as any Note shall remain
unpaid, any Letter of Credit shall remain outstanding, any amount shall remain
due hereunder, or any Banks shall have any Commitment hereunder, the Borrower
will not, without the written consent of the Majority Banks:


                                     64
<PAGE>   71

           (a) Consolidated Net Worth.  Permit at any date of determination the
      Consolidated Net Worth of the Borrower and its Subsidiaries to be less
      than $415,000,000, plus (i) 80% of the net proceeds received from the
      issuance, sale or disposition of the Borrower's Securities (common,
      preferred or special), securities converted into or exchanged for
      Securities, and any rights, options, warrants and similar instruments
      from December 31, 1996 to such date of determination and (ii) 50% of
      positive Consolidated Net Income (if any) earned from December 31, 1996
      through such date of determination.

           (b) Fixed Charge Coverage Ratio.  Permit, for the four consecutive
      fiscal quarters ending June 30, 1997 and for each period of four
      consecutive fiscal quarters ending thereafter, the Consolidated Fixed
      Charge Coverage Ratio of the Borrower and its Subsidiaries, calculated at
      the end of each fiscal quarter of the Borrower, to be less than 1.25 to
      1.00.

           (c) Consolidated Debt/Total Capitalization Ratio.  Permit, at any
      time, the Consolidated Debt/Total Capitalization Ratio of the Borrower
      and its Subsidiaries to be greater than 60%.

           (d) Consolidated Debt/EBITDA Ratio.  Permit, for each period of four
      consecutive fiscal quarters ending June 30, 1997 and for each period of
      four consecutive fiscal quarters ending thereafter, the Consolidated
      Debt/EBITDA Ratio of the Borrower and its Subsidiaries to be greater than
      3.75 to 1.00.

           (e) Consolidated Senior Debt/EBITDA Ratio.  Permit, for each period
      of four consecutive fiscal quarters ending June 30, 1997 and for each
      period of four consecutive fiscal quarters ending thereafter, the
      Consolidated Senior Debt/EBITDA Ratio of the Borrower and its
      Subsidiaries to be greater than 2.50 to 1.00.

For the purposes of subsections (b), (c), (d) and (e) above and the calculation
of any Applicable Eurodollar Rate Margin and the Applicable Facility Fee Rates,
if, as of any date, a determination of EBITDA, EBITDAL, Lease Expense, Capital
Expenditures or any other component of the ratios referred to in such
subsections (the "Ratio Components") is required to be made as to any period
prior to the date of such determination (a "Determination Period"), such
determination shall be made so as to give effect to the following:

           (i) if any Person, Facility or Related Business (an "Acquired
      Business") shall have been acquired in compliance with this Agreement
      since the beginning of such Determination Period and must be Consolidated
      with the Borrower and its Subsidiaries in accordance with GAAP, the Ratio
      Components of such Acquired Business from the beginning of the
      Determination Period to the date of acquisition shall be included on a
      pro forma basis with the same effect as if such Acquired Business had
      been a Consolidated Subsidiary of the Borrower for such portion of the
      Determination Period, subject to the following:


                                     65
<PAGE>   72


                 (A) for any date of determination occurring on or before the
            completion of one full fiscal quarter after the date of acquisition
            of such Acquired Business, pro forma adjustments may be made to
            reflect (1) specifically identified changes in physician
            compensation, complements of physicians, malpractice insurance costs
            and other group purchase arrangements, all of which shall be
            consistent with the terms and conditions of any Service Agreement
            entered into in connection with such acquisition and (2) other
            planned cost savings which will be realized by such Acquired
            Business as a consequence of such acquisition to the extent
            demonstrated by the Borrower to the satisfaction of the Majority
            Banks; and

                 (B) For any date of determination occurring after the
            completion of one full fiscal quarter after the date of such
            acquisition, the actual Ratio Components for the period through the
            end of the then most recently ended fiscal quarter shall be
            annualized for the Determination Period; and

           (ii) if any Person, Facility or Related Business (a "Disposed
      Business") which shall have been Consolidated with the Borrower and its
      Subsidiaries shall have been discontinued, lost, sold or otherwise
      disposed of as of the date of determination, the Ratio Components of such
      Disposed Business shall be excluded for the Determination Period.

     SECTION 6.04.  Reporting Requirements.  So long as any Note shall remain
unpaid, any Letter of Credit shall remain outstanding, or amount shall remain
due hereunder or any Bank shall have any Commitment hereunder, the Borrower
will furnish to the Agent, for distribution to the Banks, in sufficient copies
for each Bank, the following:

           (a) as soon as available and in any event within 30 days after the
      end of each month, Consolidated balance sheets of the Borrower and its
      Subsidiaries as of the end of such month and Consolidated statements of
      operations and cash flow position of the Borrower and its Subsidiaries
      for such month and for the period commencing at the end of the previous
      fiscal year and ending with the end of such month;

           (b) as soon as available and in any event within 45 days after the
      end of each fiscal quarter, Consolidated balance sheets of the Borrower
      and its Subsidiaries as of the end of such fiscal quarter and Consolidated
      statements of operations and cash flow of the Borrower and its
      Subsidiaries for the period commencing at the end of the previous fiscal
      year and ending with the end of such fiscal quarter, certified by the
      chief financial officer of the Borrower, together with (i) a certificate
      of said officer stating that no Event of Default has occurred and is
      continuing or, if an Event of Default has occurred and is continuing, a
      statement as to the nature thereof and the action that the Borrower has
      taken or proposes to take with respect thereto, (ii) a schedule in form
      satisfactory to the Agent of the computations used by the Borrower in
      determining compliance with the covenants contained in Section 6.03 and in
      sufficient detail for determining the Applicable Facility Fee Rates and
      the Applicable Eurodollar Rate Margins in accordance with the definitions
      of such terms set forth in Section 1.01, and (iii) a certificate of said
      officer or of the

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<PAGE>   73

      general counsel of the Borrower regarding additions to and deletions
      from Schedule I reflecting changes occurring during such fiscal quarter;

           (c) as soon as available and in any event within 120 days after the
      end of each fiscal year, a copy of the annual audit report for such year
      for the Borrower, including therein an audited Consolidated balance sheet
      of the Borrower and its Subsidiaries as of the end of such fiscal year
      and audited Consolidated statements of operations, stockholders' equity
      and cash flow of the Borrower and its Subsidiaries for such fiscal year
      (i) certified by a nationally recognized public accounting firm, together
      with a certificate of such accounting firm stating that in the course of
      the regular audit of the business of the Borrower, which audit was
      conducted in accordance with generally accepted auditing standards, such
      accounting firm has obtained no knowledge that an Event of Default has
      occurred and is continuing, or, if in the opinion of such accounting
      firm, an Event of Default has occurred and is continuing, a statement as
      to the nature thereof, and (ii) accompanied by a copy of the management
      letter from such accounting firm accompanying such financial statements;

           (d) as soon as possible and in any event within two days after the
      occurrence of an Event of Default of which the Borrower or any Subsidiary
      has knowledge, a statement of the chief financial officer of the Borrower
      setting forth details of such Event of Default and the action which the
      Borrower has taken and proposes to take with respect thereto;

           (e) promptly after any change in accounting policies or reporting
      practices that could reasonably be expected to have a material adverse
      effect on the condition (financial or otherwise), operations, business,
      assets or prospects of the Borrower or of any of its Subsidiaries or on
      the rights of the Banks under any of the Loan Documents, notice and a
      description in reasonable detail of such change;

           (f) promptly and in any event within ten days after the Borrower or
      any ERISA Affiliate knows or has reason to know that any ERISA Event has
      occurred, a statement of the chief financial officer of the Borrower
      describing such ERISA Event and the action, if any, that the Borrower or
      such ERISA Affiliate has taken or proposes to take with respect thereto;

           (g) promptly and in any event within two Business Days after receipt
      thereof by the Borrower or any ERISA Affiliate (i) copies of each notice
      from the PBGC stating its intention to terminate any Plan or to have a
      trustee appointed to administer any Plan and (ii) copies of each material
      notice received from the United States Department of Labor in connection
      with any ERISA requirements;

           (h) promptly and in any event within five Business Days after
      receipt thereof by the Borrower or any ERISA Affiliate from the sponsor
      of a Multiemployer Plan, a copy of each notice received by the Borrower
      or any ERISA Affiliate concerning (i) the imposition of Withdrawal
      Liability by a Multiemployer Plan, (ii) the determination that a


                                     67
<PAGE>   74

      Multiemployer Plan is, or is expected to be, in reorganization within the
      meaning of Title IV of ERISA, (iii) the termination of a Multiemployer
      Plan within the meaning of Title IV of ERISA or (iv) the amount of
      liability incurred, or expected to be incurred, by the Borrower or any
      ERISA Affiliate in connection with any event described in clause (i),
      (ii) or (iii) above;

           (i) promptly and in any event within ten days after the commencement
      thereof, notice of all actions, suits and proceedings before any court or
      governmental department, commission, board, bureau, agency or
      instrumentality, domestic or foreign, affecting the Borrower or any of
      its Subsidiaries, of the type described in Section 5.01(h);

           (j) promptly and in any event within ten days after the sending or
      filing in final form thereof, copies of all proxy statements and
      financial statements that the Borrower or any of its Subsidiaries sends
      to its securityholders generally, and copies of all registration
      statements (other than those relating to employee stock plans), without
      exhibits, all periodic reports on Forms 10-K and 10-Q and reports on Form
      8-K that the Borrower or any of its Subsidiaries files with the
      Securities and Exchange Commission or any governmental authority that
      may substituted therefor, or any national securities exchange or with
      the National Association of Securities Dealers;

           (k) promptly after the occurrence thereof, notice of (A) any event
      of which Borrower or any Subsidiary is aware which makes any of the
      representations obtained in Section 5.01 inaccurate in any respect or (B)
      the receipt by the Borrower or any Subsidiary of any notice, order,
      directive or other communication from a governmental authority alleging
      violations of or noncompliance with any Environmental Law; and

           (l) such other information respecting the condition or operations,
      financial or otherwise, of the Borrower or any of its Subsidiaries as any
      Bank through the Agent may from time to time reasonably request.

Notwithstanding the foregoing, upon the occurrence and during the continuance
of an Event of or a Default, the Borrower will, and will cause its Subsidiaries
to, provide to the Agent for each Bank additional information and any and all
of the above information more frequently to the extent reasonably requested by
the Agent or any Bank.

                                  ARTICLE VII

                               EVENTS OF DEFAULT

     SECTION 7.01.  Events of Default.  If any of the following events (each an
"Event of Default") shall occur and be continuing:

           (a) the Borrower shall fail to pay any principal of any Advance or
      Note or any reimbursement obligation under any Letter of Credit, in each
      case when the same becomes due and payable; or the Borrower shall fail to
      pay any interest on any Advance, Note or reimbursement obligation under
      any Letter of Credit, or any fees or other


                                     68
<PAGE>   75


      amounts payable under any Loan Document, in each case within five days
      after the same becomes due and payable; or

           (b) any representation or warranty made or deemed by any Loan Party
      (or any of its officers) in any Loan Document or certificate or other
      writing delivered pursuant thereto shall prove to have been incorrect in
      any material respect when made or deemed made; or

           (c) (i) any Loan Party shall fail to perform or observe any term,
      covenant or agreement contained in Section 6.01, Section 6.02 or Section
      6.03; or (ii) any Loan Party shall fail to perform or observe any other
      term, covenant or agreement contained in this Agreement or in any other
      Loan Document on its part to be performed or observed if such failure
      shall remain unremedied for ten days after written notice thereof shall
      have been given to such Loan Party by the Agent or any Bank; or

           (d) any Loan Party or any of its Subsidiaries shall fail to pay any
      principal of or premium or interest on any Debt which is outstanding
      under the $150,000,000 Credit Agreement or in a principal amount of at
      least $5,000,000 in the aggregate (but excluding Debt evidenced by the
      Notes or under Letters of Credit) of such Loan Party or such Subsidiary
      (as the case may be), when the same becomes due and payable (whether by
      scheduled maturity, required prepayment, acceleration, demand or
      otherwise), and such failure shall continue after the applicable grace
      period, if any, specified in the agreement or instrument relating to such
      Debt; or any other event shall occur or condition shall exist under any
      agreement or instrument relating to any such Debt and shall continue
      after the applicable grace period, if any, specified in such agreement or
      instrument, if the effect of such event or condition is to accelerate, or
      to permit the acceleration of, the maturity of such Debt; or any such
      Debt shall be declared to be due and payable, or required to be prepaid
      (other than by a regularly scheduled required prepayment and except as
      required by Section 2.09 of the $150,000,000 Credit Agreement), redeemed,
      purchased or defeased, or any offer to prepay, redeem, purchase or
      defease such Debt shall be required to be made, in each case prior to the
      stated maturity thereof; or

           (e) any Loan Party or any of its Subsidiaries shall generally not pay
      its debts as such debts become due, or shall admit in writing its
      inability to pay its debts generally, or shall make a general assignment
      for the benefit of creditors; or any proceeding shall be instituted by or
      against any Loan Party or any of its Subsidiaries seeking to adjudicate it
      a bankrupt or insolvent, or seeking liquidation, winding up,
      reorganization, arrangement, adjustment, protection, relief, or
      composition of it or its debts under any law relating to bankruptcy,
      insolvency or reorganization or relief of debtors, or seeking the entry of
      an order for relief or the appointment of a receiver, trustee, custodian
      or other similar official for it or for any substantial part of its
      property and, in the case of any such proceeding instituted against it
      (but not instituted by it), either such proceeding shall remain
      undismissed or unstayed for a period of 30 days, or any of the actions
      sought in such proceeding (including, without limitation, the entry of an
      order for relief against, or the appointment of a receiver, trustee,
      custodian or other similar official for, it or for any

                                     69



<PAGE>   76


      substantial part of its property) shall occur; or any Loan Party or any
      of its Subsidiaries shall take any corporate action to authorize any of
      the actions set forth above in this subsection (e); or

           (f) any proceeding shall be instituted against any Loan Party or any
      of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent or
      seeking liquidation, winding up, reorganization, arrangement, adjustment,
      protection, relief or composition of it or its debts under any law
      relating to bankruptcy, insolvency or reorganization or relief or
      protection of debtors or seeking the entry of an order for relief or the
      appointment of a receiver, trustee, custodian or other similar official
      for it or for any substantial part of its property, and either such
      proceeding shall remain undismissed or unstayed for a period of 30 days
      or any of the actions sought in such proceeding (including, without
      limitation, the entry of an order for relief against it or the
      appointment of a receiver, trustee, custodian or other similar official
      for it or for any substantial part of its property) shall occur; or

           (g) any judgment or order for the payment of money in excess of
      $5,000,000 which is not covered by insurance shall be rendered against
      any Loan Party or any of its Subsidiaries and either (i) enforcement
      proceedings shall have been commenced by any creditor upon such judgment
      or order or (ii) there shall be any period of ten consecutive days during
      which a stay of enforcement of such judgment or order, by reason of a
      pending appeal or otherwise, shall not be in effect; or

           (h) any non-monetary judgment or order shall be rendered against the
      Borrower or any of its Subsidiaries that is materially adverse to the
      business, property, prospects, condition (financial or otherwise) or
      results of operations of the Borrower and its Subsidiaries, taken as a
      whole, and either (i) enforcement proceedings shall have been commenced
      by any Person upon such judgment or order or (ii) there shall be any
      period of ten consecutive days during which a stay of enforcement of such
      judgment or order, by reason of a pending appeal or otherwise, shall not
      be in effect; or

           (i) any Loan Document after delivery thereof pursuant to Article IV
      hereof or otherwise shall, for any reason cease to be valid and binding
      on the respective Loan Party or Loan Parties thereto; or a Loan Party
      shall so state in writing or shall contest the validity or enforceability
      of any material term or provision of any Loan Document; or

           (j) any one or more Service Agreements shall be terminated during
      any period of four consecutive fiscal quarters that represent, in the
      aggregate, 5% of the Consolidated EBITDA of the Borrower and its
      Subsidiaries for such period, measured as of the end of any fiscal
      quarter ending after the date of any such termination, provided that it
      shall not be an Event of Default hereunder if the Service Agreement for
      the Facility owned by PhyCor of Ruston, Inc. is terminated without cause;
      or

           (k) any ERISA Event with respect to a Plan shall have occurred and,
      30 days after notice thereof shall have been given to the Borrower by the
      Agent, (i) such ERISA Event shall still exist and (ii) the sum
      (determined as of the date of occurrence of such


                                     70
<PAGE>   77


      ERISA Event) of the Insufficiency of such Plan and the Insufficiency of
      any and all other Plans with respect to which an ERISA Event shall have
      occurred and then exist (or in the case of a Plan with respect to which an
      ERISA Event described in clauses (iii) through (vi) of the definition of
      ERISA Event shall have occurred and then exist, the liability related
      thereto) is equal to or greater than $5,000,000 for any fiscal year; or

           (l) the Borrower or any ERISA Affiliate shall have been notified by
      the sponsor of a Multiemployer Plan that it has incurred Withdrawal
      Liability to such Multiemployer Plan in an amount that, when aggregated
      with all other amounts required to be paid to Multiemployer Plans by the
      Borrower and its ERISA Affiliates as Withdrawal Liability (determined as
      of the date of such notification), exceeds $5,000,000 for any fiscal
      year; or

           (m) the Borrower or any ERISA Affiliate shall have been notified by
      the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
      reorganization or is being terminated, within the meaning of Title IV of
      ERISA, if as a result of such reorganization or termination the aggregate
      annual contributions of the Borrower and its ERISA Affiliates to all
      Multiemployer Plans that are then in reorganization or being terminated
      have been or will be increased over the amounts contributed to such
      Multiemployer Plans for the respective plan year of each such
      Multiemployer Plan immediately preceding the plan year in which the
      reorganization or termination occurs by an amount exceeding $5,000,000;
      or

           (n) there shall occur any Change of Control; or

           (o) any three of Messrs. Joseph C. Hutts, Thompson S. Dent, Derril
      W. Reeves or Richard D. Wright shall, within any six-month period, cease
      to be employed full time as officers of the Borrower other than by reason
      of the death or incapacity of any such person; or

           (p) since December 31, 1996 there has been, in the reasonable
      judgment of the Agent or the Majority Banks, any material adverse change
      in the Consolidated condition, financial or otherwise, operations,
      properties or prospects of the Borrower and its Subsidiaries taken as a
      whole;

then, and in any such event, the Agent (i) shall at the request, or may with
the consent, of the Majority Banks, by notice to the Borrower, declare the
obligation of each Bank to make Advances and the obligations of the Issuing
Bank to Issue Letters of Credit to be terminated, whereupon the same shall
forthwith terminate, (ii) shall at the request, or may with the consent, of the
Majority Banks, by notice to the Borrower, declare the Notes, all interest
thereon and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived by the
Borrower, (iii) shall at the request, or may with the consent, of the Majority
Banks demand that the Borrower, and if such demand is made the Borrower shall,
pay


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<PAGE>   78


to the Agent for the benefit of the Issuing Banks, an amount in immediately
available funds equal to the then outstanding Letter of Credit Liability which
shall be held by the Agent (or the Issuing Banks) as cash collateral in a cash
collateral account under the exclusive control and dominion of the Agent (or
Issuing Banks) and applied to the reduction of such Letter of Credit Liability
as drawings are made on outstanding Letters of Credit and (iv) shall at the
request, or may with the consent, of the Majority Banks exercise any other
remedies provided hereunder or by law; provided, however, that in the event of
an actual or deemed entry of an order for relief with respect to the Borrower
or any of its Subsidiaries under the Federal Bankruptcy Code, (A) the
obligation of each Bank to make Advances and of the Issuing Banks to Issue
Letters of Credit shall automatically be terminated and (B) the Notes, all such
interest and all such amounts (including the amounts referred to in clause
(iii) above) shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.

                                  ARTICLE VIII

                                   THE AGENT

     SECTION 8.01.  Authorization and Action.  Each Bank and each Issuing Bank
hereby appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement (including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Majority Banks, and such instructions shall be binding upon all Banks and
all holders of Notes; provided, however, that the Agent shall not be required to
take any action which exposes the Agent to personal liability or which is
contrary to any Loan Document or applicable law.  The Agent agrees to give to
each Bank prompt notice of each notice given to it by the Borrower pursuant to
the terms of this Agreement.

     SECTION 8.02.  Agent's Reliance, Etc.  Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken
or omitted to be taken by it or them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent:  (i) may
treat the payee of any Note as the holder thereof, and treat the Bank that
purchased or funded a participation with respect to a Letter of Credit as the
holder or owner of the Debt resulting therefrom, until the Agent receives
written notice of the assignment or transfer thereof signed by such payee and
including the agreement of the assignee or transferee to be bound hereby as it
would have been if it had been an original Bank party hereto, in form
satisfactory to the Agent; (ii) may consult with legal counsel (including
counsel for the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Bank
and shall not be responsible to any Bank for any statements, warranties or
representations (whether written or oral) made in or in


                                     72



<PAGE>   79
connection with any Loan Document; (iv) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of any Loan Document on the part of the Borrower or any Subsidiary of
the Borrower or to inspect the property (including the books and records) of the
Borrower or any such Subsidiary; (v) shall not be responsible to any Bank for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of any Loan Document or any other instrument or document furnished
pursuant thereto; and (vi) shall incur no liability under or in respect of any
Loan Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopier, telegram, cable facsimile or
telex) believed by it to be genuine and signed or sent by the proper party or
parties.

     SECTION 8.03.  Citibank and Affiliates.  With respect to its Commitment,
the Advances made by it, the Notes issued to it and the participations in
Letters of Credit purchased by it, Citibank shall have the same rights and
powers under this Agreement as any other Bank and may exercise the same as
though it were not the Agent; and the term "Bank" or "Banks" shall, unless
otherwise expressly indicated, include Citibank in its individual capacity.
Citibank and its Affiliates may accept deposits from, lend money to, act as
trustee under indentures of, and generally engage in any kind of business with,
the Borrower, any of its Subsidiaries and any Person who may do business with
or own securities of the Borrower or any such Subsidiary, all as if Citibank
were not the Agent and without any duty to account therefor to the Banks.

     SECTION 8.04.  Bank Credit Decision.  Each Bank acknowledges that it has,
independently and without reliance upon the Agent, the Issuing Bank or any
other Bank and based on the financial statements referred to in Section 5.01(e)
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement and the other
Loan Documents.  Each Bank also acknowledges that it will, independently and
without reliance upon the Agent, any Issuing Bank or any other Bank 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 action under
this Agreement and the other Loan Documents.

     SECTION 8.05.  Indemnification.  The Banks agree to indemnify the Agent
and each Issuing Bank (in each case, to the extent not reimbursed by the
Borrower), ratably according to the respective principal amounts of the
Committed Rate Advances then held by each of them (or if no Committed Rate
Advances are at the time outstanding ratably according to the respective
amounts of their Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent or any Issuing Bank, as the case
may be, in any way relating to or arising out of this Agreement or any other
Loan Document or any Letter of Credit or any action taken or omitted by the
Agent or such Issuing Bank, as the case may be, under this Agreement or any
other Loan Document or any Letter of Credit, provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's or any Issuing Bank's, as the case may be, gross
negligence or willful misconduct. Without limitation of the foregoing, each
Bank agrees to


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<PAGE>   80
reimburse the Agent and each Issuing Bank promptly upon demand for its ratable
share of any out-of-pocket expenses (including counsel fees) incurred by the
Agent or such Issuing Bank, as the case may be, in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any Letter of Credit, to the extent that the Agent or such Issuing Bank, as
the case may be, is not reimbursed for such expenses by the Borrower.

     SECTION 8.06.  Successor Agent/Issuing Bank.  The Agent may resign at any
time by giving written notice thereof to the Banks and the Borrower and the
Agent and/or any Issuing Bank may be removed at any time with or without cause
by the Majority Banks.  Upon any such resignation or removal, in the case of
the Agent, or removal, in the case of any Issuing Bank, the Majority Banks
shall have the right, subject to the approval of the Borrower (which shall not
be unreasonably withheld), to appoint a successor Agent or a successor Issuing
Bank, as the case may be. If no successor Agent or successor Issuing Bank, as
the case may be, shall have been so appointed by the Majority Banks, and shall
have accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation or the Majority Banks' removal of the retiring
Agent or the retiring Issuing Bank, then the retiring Agent or the retiring
Issuing Bank, as the case may be, may, on behalf of the Banks, appoint a
successor Agent or a successor Issuing Bank, as the case may be, which shall be
a commercial bank organized under the laws of the United States of America or
of any State thereof and having a combined capital and surplus of at least
$100,000,000.  Upon the acceptance of any appointment as Agent or as an Issuing
Bank hereunder by a successor Agent or a successor Issuing Bank, respectively,
such successor Agent or Issuing Bank shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent
or the retiring Issuing Bank, as the case may be, and the retiring Agent or the
retiring Issuing Bank, as the case may be, shall be discharged from its duties
and obligations under this Agreement and the other Loan Documents. After any
retiring Agent's resignation or removal hereunder as Agent, or any retiring
Issuing Bank's removal hereunder as an Issuing Bank, the provisions of this
Article VIII shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent or an Issuing Bank, as the case may be, under
this Agreement and the other Loan Documents.  Notwithstanding the foregoing, no
Issuing Bank may be removed unless prior to or contemporaneously with such
removal it shall have received an amount, in immediately available funds, equal
to all outstanding Letter of Credit Liability then outstanding and then owing
to such Issuing Bank and shall have been indemnified by the Borrower, the Banks
and such successor Issuing Bank, to the Issuing Bank's satisfaction, against
all such Letter of Credit Liability. The fees referred to in Section 3.05(b)
shall continue to inure to such Issuing Bank's benefit, with respect to each
Letter of Credit Issued by it, until such time as all Letter of Credit
Liability in respect of such Letter of Credit has been discharged in full.

     SECTION 8.07.  Documentation Agent.  The Documentation Agent, as such,
shall have no duties or obligations whatsoever with respect to this Agreement,
the Notes or any of the other Loan Documents.


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<PAGE>   81

                                   ARTICLE IX

                                 MISCELLANEOUS

     SECTION 9.01.  Amendments, Etc.  No amendment or waiver of any provision
of this Agreement or the Notes or the Loan Documents, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Majority Banks (or consented to in
writing in the case of the Loan Documents), and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by all the Banks, do any of following:  (a) waive
any of the conditions specified in Article IV, (b) increase the Commitments of
the Banks or subject the Banks to any additional monetary obligations, (c)
reduce the principal of, or interest on, the Committed Rate Advances or the
Committed Rate Notes or any fees or other amounts payable hereunder, (d)
postpone the date fixed for the scheduled payment of principal of, or interest
on, the Committed Rate Advances or the Committed Rate Notes or any fees or
other amounts payable hereunder or waive any such payment when due, (e) change
the percentage of the Commitments or of the aggregate unpaid principal amount
of the Committed Rate Advances or the Committed Rate Notes, or the number or
percentage of Banks, which shall be required for the Banks or any of them to
take any action hereunder or (f) amend this Section 9.01; provided, further,
that no amendment, waiver or consent shall, in writing and signed by the Agent
in addition to the Banks required above to take such action, affect the rights
or duties of the Agent under this Agreement or any Note; and provided, further,
that no amendment, waiver or consent shall, unless in writing and signed by any
Issuing Bank in addition to the Banks required above to take such action,
affect the rights or duties of such Issuing Bank under this Agreement; and
provided also that no amendment, waiver or consent, unless in writing and
signed by the Designated Bidder holding such Note, affect the rights of the
holder of a Competitive Bid Note under such Note.

     SECTION 9.02.  Notices, Etc.  All notices and other communications provided
for hereunder shall be in writing (including telecopier, telegraphic, telex or
cable communication) and mailed (by certified mail, return receipt requested),
telecopied, telegraphed, telexed, cabled or delivered, if to the Borrower, at
its address at 30 Burton Hills Blvd., Suite 400, Nashville, TN 37215, Attention:
Mr. John K. Crawford, telecopier no. (615) 665-7840; if to any Bank, at its
Domestic Lending Office as specified in its Administrative Details Reply Form;
if to the Agent, at its address at 1 Court Square, 7th Floor, Zone 1, Long
Island City, New York, New York  11120, Attention:  Mr. Dennis Agnew, telecopier
no. (718) 248-4844; and if to any Issuing Bank, as specified in its
Administrative Details Reply Form; with a copy, in the cases of notices to the
Agent or the Issuing Bank, to Ms. Margaret A. Brown, 399 Park Avenue, 8th Floor,
Zone 11, New York 10043; or, as to each Person, at such other address or
telecopier number as shall be designated by such party in a written notice to
the other parties.  All such notices and communications shall, when mailed (by
certified mail, return receipt requested), telecopied, telegraphed, telexed,
cabled, or faxed be effective when deposited in the mails, telecopied, delivered
to the telegraph company, confirmed by telex answerback, delivered to the cable
company or confirmed received in the case of a telecopy or facsimile,
respectively, except that notices and communications to the Agent pursuant to
Article II or VIII or to any Issuing Bank


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<PAGE>   82

pursuant to Article III or VIII shall not be effective until received by the
Agent or such Issuing Bank, as the case may be.

     SECTION 9.03.  No Waiver: Remedies.  No failure on the part of any Bank,
any Issuing Bank or the Agent to exercise, and no delay in exercising, any
right under any Loan Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.  The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

     SECTION 9.04.  Costs. Expenses and Taxes.

     (a) The Borrower agrees to pay the Agent and each Issuing Bank on demand
all reasonable costs and expenses of the Agent and such Issuing Bank in
connection with the preparation, negotiation, approval, execution, delivery,
filing, recording, administration, modification and amendment of the Loan
Documents and the other documents to be delivered under the Loan Documents,
including, without limitation, the reasonable fees and out-of-pocket expenses of
special and local counsel for the Agent and such Issuing Bank with respect
thereto and with respect to advising the Agent and such Issuing Bank as to its
rights and responsibilities under the Loan Documents and the other documents to
be delivered hereunder and thereunder. The Borrower further agrees to pay on
demand (i) all costs and expenses, if any, of the Agent, each Issuing Bank or
any Bank in connection with the enforcement (whether through negotiations or
legal proceedings, in bankruptcy, reorganization or other insolvency proceedings
or otherwise) of the Loan Documents and the other documents to be delivered
under the Loan Documents, including, without limitation, reasonable counsel fees
and expenses in connection with the enforcement of rights under this Section
9.04(a), and (ii) all costs and expenses in connection with appraisals,
valuations, audits and search reports, all insurance and title costs, and all
filing and recording fees required hereby or associated with any enforcement of
rights or remedies specified in clause (i).

     (b) If any payment of principal of, or Conversion of, any Eurodollar Rate
Advance or LIBOR Advance is made other than on the last day of an Interest
Period relating to such Advance, as a result of a payment (including, without
limitation, any payment pursuant to Section 2.09) or Conversion pursuant to
Section 2.08 or 2.11 or acceleration of the maturity of the Notes pursuant to
Section 7.01 or for any other reason, the Borrower shall, upon demand by any
Bank (with a copy of such demand to the Agent), pay to the Agent for the
account of such Bank any amounts required to compensate such Bank for any
additional losses (including loss of anticipated profits), costs or expenses
which it may reasonably incur as a result of such payment or Conversion,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Bank to fund or maintain such Advance.

     SECTION 9.05.  Right of Set-off.  Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 7.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 7.01 or
to demand payment of (or cash collateralization of) all then


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<PAGE>   83
outstanding Letter of Credit Liability, each Bank is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such Bank
to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under any Loan Document to
such Bank (including, to the fullest extent permitted by law, obligations
indirectly owed to such Bank by virtue of its purchase of a participation of the
Letter of Credit Liability pursuant to Section 3.04), whether or not such Bank
shall have made any demand under this Agreement or such Note and although such
obligations may be unmatured.  Each Bank agrees promptly to notify the Borrower
after any such set-off and application made by such Bank, provided that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Bank under this Section 9.05 are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which such Bank may have.

     SECTION 9.06.  Indemnification.  The Borrower agrees to defend, protect,
indemnify and hold harmless the Agent, each Bank and each Issuing Bank and
their respective Affiliates and the directors, officers, employees, attorneys
and agents of the Agent, each Bank, each Issuing Bank and such Affiliates (each
of the foregoing being an "Indemnitee" and all of the foregoing being
collectively the "Indemnitees") from and against any and all claims, actions,
damages, liabilities, costs and expenses (including, without limitation, all
fees and disbursements of counsel and environmental consultants which may be
incurred in the investigation or defense of any matter) imposed upon, incurred
by or asserted against any Indemnitee by any third party, whether direct,
indirect or consequential and whether based on any federal, state or foreign
laws or other statutes or regulations (including, without limitation,
securities laws, commercial laws and Environmental Laws and regulations),
under common law or on equitable cause, or on contract, tort or otherwise,
including, without limitation, those arising:

           (a) by reason of, relating to or in connection with the execution,
      delivery, performance or enforcement of any Loan Document, any
      commitments relating thereto, or any transaction contemplated by any Loan
      Document; or

           (b) in connection with any investigation, litigation, proceeding or
      other action relating to any Loan Document (whether or not any Indemnitee
      is a party thereto); or

           (c) by reason of, relating to or in connection with any credit
      extended or used under the Loan Documents or any act done or omitted by
      any Person, or any event occurring, in connection therewith, or the
      exercise of any rights or remedies thereunder, including, without
      limitation, any Environmental Activity or Environmental Law; or

           (d) arising out of, related to or in connection with any acquisition
      or proposed acquisition (including, without limitation, by tender offer,
      merger or other method) by the Borrower or any of its Subsidiaries or
      Affiliates of any Facility (or the assets thereof) or any Related
      Businesses or any Existing Clinic Acquisition, whether or not an
      Indemnitee is a party thereto;


                                     77
<PAGE>   84

provided, however, that, notwithstanding the foregoing, the Borrower shall not
be liable to any Indemnitee for any portion of such claims, damages,
liabilities and expenses resulting from such Indemnitee's or such Indemnitee's
Affiliate's, director's, officer's, employee's, attorney's or agent's gross
negligence or willful misconduct.  In the event this indemnity is unenforceable
as a matter of law as to a particular matter or consequence referred to herein,
it shall be enforceable to the full extent permitted by law.

     This indemnification applies, without limitation, to any act, omission,
event or circumstance existing or occurring on or prior to the date of payment
in full of the Advances, including any Environmental Activity or Environmental
Law, regardless of whether the act, omission, event or circumstance constituted
a violation of any Environmental Law at the time of its existence or
occurrence.  The indemnification provisions set forth above shall be in
addition to any liability the Borrower may otherwise have.  Without prejudice
to the survival of any other obligation of the Borrower hereunder, the
indemnities and obligations of the Borrower contained in this Section 9.06
shall survive the payment in full of the Advances.

     SECTION 9.07.  Binding Effect.  This Agreement shall become effective when
it shall have been executed by the Borrower, the Agent and each Issuing Bank
and when the Agent shall have been notified by each Bank that such Bank has
executed it and thereafter shall be binding upon and inure to the benefit of
the Borrower, the Agent, each Issuing Bank and each Bank and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Banks.

     SECTION 9.08.  Assignments and Participations.

     (a) Each Bank may assign, with the prior consent of the Borrower, any
Issuing Bank and the Agent (which, in either case, shall not be unreasonably
withheld), to one or more banks, financial institutions or other entities all
or a portion of its rights and obligations as a Bank under this Agreement and
the other Loan Documents (including, without limitation, all or a portion of
its Commitment, the Advances owing to it and the Notes held by it in respect of
the Committed Rate Advances and its participation in reimbursement obligations
of the Borrower in respect of Letters of Credit); provided, however, that (i)
each such assignment shall be of a constant, and not a varying, percentage of
all of the assigning Bank's rights and obligations under the Loan Documents,
(ii) the amount of the Commitments, if any, of the assigning Bank being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $10,000,000, and shall be an integral multiple of $1,000,000 in
excess thereof, or the remaining amount of such Bank's Commitments, (iii) each
such assignment shall be to an Eligible Assignee, and (iv) the parties to each
such assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any
Notes subject to such assignment and a processing and recordation fee of
$3,000; provided, further, that each Bank may, without the consent of the
Borrower or the Agent, assign, as collateral or otherwise, any of its rights
under this Agreement and the other Loan Documents (including, without
limitation, the right to payment of principal and interest under the Notes) to
any Federal Reserve Bank, and such assignment of rights to the Federal
Reserve Bank shall not be subject to the conditions and restrictions set forth
in items (i) through (iv) of the immediately foregoing proviso; and provided,
further, that each Bank may, without the consent of (but with prior written
notice to) the Borrower or the Agent, assign, in whole or in part, any of its
rights and obligations under this Agreement and the other Loan Documents to any
of its Affiliates, and such assignment to Affiliates shall not be subject to
the conditions and


                                     78

<PAGE>   85
restrictions set forth in items (i) through (iv) of the proviso above.  Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, (x) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations under the
Loan Documents have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Bank hereunder and thereunder
and (y) the Bank assignor thereunder shall, to the extent that rights and
obligations under the Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Bank's rights
and obligations under the Loan Documents, such Bank shall cease to be a party
hereto).

     (b) By executing and delivering an Assignment and Acceptance, the Bank
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows:  (i) other than as provided in
such Assignment and Acceptance, such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with any Loan Document or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of any Loan Document or any other instrument or document furnished
pursuant hereto or thereto; (ii) such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant hereto or thereto; (iii) such assignee confirms that it has
received a copy of each of the Loan Documents, together with copies of the
financial statements referred to in Section 5.01(e) and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, any Issuing Bank, such
assigning Bank or any other Bank 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 action under this Agreement or any other Loan Document;
(v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Loan Documents are required to be performed by it as a Bank.

     (c) The Agent shall maintain at its address referred to in Section 9.02 a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Banks and the
Commitment and principal amount of the Advances owing to, each Bank from time
to time (the "Register").  The entries in the Register


                                     79

<PAGE>   86

shall be conclusive and binding for all purposes, absent manifest error,
and the Borrower, the Agent and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this
Agreement.  The Register shall be available for inspection by the Borrower or
any Bank at any reasonable time and from time to time upon reasonable prior
notice.

     (d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an assignee representing that it is an Eligible Assignee,
together with any Notes subject to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form
of Exhibit E, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, and (iii) give prompt notice
thereof to the Borrower.  Within five Business Days after its receipt of such
notice, the Borrower, at its own expense, shall execute and deliver to the
Agent in exchange for the surrendered Committed Rate Notes, new Committed Rate
Notes to the order of such Eligible Assignee in an aggregate principal amount
equal to the principal amount of Committed Rate Advances owed to it pursuant to
such Assignment and Acceptance and, if the assigning Bank has retained any
principal amount of Committed Rate Advances hereunder, new Committed Rate Notes
to the order of the assigning Bank in an aggregate principal amount equal to
such principal amount.  Such new Committed Rate Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Committed Rate Notes, shall be dated the effective date of such Assignment and
Acceptance, shall consist of Committed Rate Notes payable to the order of such
Eligible Assignee and, if the assigning Bank has retained ownership of any
Committed Rate Advances hereunder, the assigning Bank in the appropriate
principal amounts, and shall otherwise be in substantially the forms required
by this Agreement.

     (e) Each Bank may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under the Loan
Documents (including, without limitation, all or a portion of its Commitments,
the Notes held by it and reimbursement obligations of the Borrower in respect
of Letters of Credit); provided, however, that (i) such Bank's obligations
under the Loan Documents (including, without limitation, its Commitments to the
Borrower hereunder) shall remain unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) such Bank shall remain the holder of any such Notes for all
purposes of the Loan Documents, and (iv) the Borrower, the Agent, each Issuing
Bank and the other Banks shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under the Loan
Documents; provided, further, that, to the extent of any such participation
(unless otherwise stated therein and subject to the preceding proviso), the
assignee or purchaser of such participation shall, to the fullest extent
permitted by law, have the same rights and benefits hereunder as it would have
if it were a Bank hereunder; and provided, further, that each such
participation shall be granted pursuant to an agreement providing that the
purchaser thereof shall not have the right to consent or object to any action
by the selling Bank (who shall retain such right) other than an action which
would (i) reduce principal of or interest on any Advance or fees in which such
purchaser has an interest or (ii) postpone any date fixed for payment of
principal of or interest on any such Advance or such fees.


                                     80
<PAGE>   87


     (f) The Borrower agrees that any Bank purchasing a participation from
another Bank pursuant to Section 2.14 or 9.08(e) may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Bank were the
direct creditor of the Borrower in the amount of such participation.

     (g) Notwithstanding any other provision of this Section 9.08, each
Designated Bidder may assign to one or more Eligible Assignees any Competitive
Bid Note.

     SECTION 9.09.  Headings.  Article and Section headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.

     SECTION 9.10.  Confidentiality.  Neither the Agent nor any Bank shall
disclose to any third party any Confidential Information disclosed to the Agent
or such Bank pursuant to the Loan Documents, except that (i) the Agent or any
Bank may disclose Confidential Information to a third party to the extent
compelled by law, subpoena, civil investigative demand, interrogatory or
similar legal process or by any rule, regulation or request of any regulatory
authority having jurisdiction over the Agent or such Bank, as the case may be,
(ii) the Agent or any Bank may disclose Confidential Information to a potential
transferee who is an Eligible Assignee, provided that such potential transferee
agrees to be bound by the same confidentiality obligations as the Banks under
this Section and (iii) the Agent or any Bank may disclose Confidential
Information to its affiliates or its legal counsel or other agents provided
that prior to any such disclosure the Agent or such Bank, as the case may be,
informs such affiliates, counsel or agent of the confidential nature of
such Confidential Information.  For purposes hereof, "Confidential Information"
is written information disclosed by the Borrower or any of its Subsidiaries to
the Agent or any Bank pursuant hereto that is not information which (x) has
become generally available to the public, other than as a result of disclosure
by the Agent or such Bank, (y) was available on a non-confidential basis prior
to its disclosure to the Agent or such Bank by the Borrower or any of its
Subsidiaries, or (z) becomes available to the Agent or such Bank on a
non-confidential basis from a source other than the Borrower or any of its
Subsidiaries.  The Agent and the Banks acknowledge that the Confidential
Information may from time to time include material non-public information
relating to the Borrower or its Subsidiaries.

     SECTION 9.11.  Severability of Provisions.  Each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
or unenforceable in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remainder of such provision or the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.

     SECTION 9.12.  Independence of Provisions.  All agreements and covenants
hereunder and under the Loan Documents shall be given independent effect such
that if a particular action or condition is prohibited by the terms of any such
agreement or covenant, the fact that such


                                     81

<PAGE>   88

action or condition would be permitted within the limitations of another
agreement or covenant shall not be construed as allowing such action to be
taken or condition to exist.

     SECTION 9.13.  Consent to Jurisdiction.

     (a) The Borrower hereby irrevocably submits to the jurisdiction of any New
York State or Federal court sitting in New York City in any action or proceeding
arising out of or relating to this Agreement or any Loan Document, and the
Borrower hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State or Federal court.
The Borrower hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding.  The Borrower hereby irrevocably appoints CT
Corporation System (the "Process Agent"), with an office on the date hereof at
1633 Broadway, New York, New York 10019, United States, as its agent to receive
on behalf of the Borrower and its property service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding.  Such service may be made by mailing or delivering a copy of such
process to the Borrower in care of the Process Agent at the Process Agent's
above address, and the Borrower hereby irrevocably authorizes and directs the
Process Agent to accept such service on his behalf.  As an alternative method
of service, the Borrower also irrevocably consents to the service of any and
all process in any such action or proceeding by the mailing of copies of such
process to the Borrower at its address specified in Section 9.02.  The Borrower
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.

     (b) Nothing in this section shall affect the right of any Bank, any
Issuing Bank or the Agent to serve legal process in any other manner permitted
by law or affect the right of any Bank, any Issuing Bank or the Agent to bring
any action or proceeding against the Borrower or its property in the courts of
any other jurisdictions.

     SECTION 9.14.  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS THAT WOULD RESULT IN THE
APPLICATION OF ANY OTHER LAW.

     SECTION 9.15.  WAIVER OF JURY TRIAL.  EACH OF THE BORROWER, THE AGENT, THE
ISSUING BANK AND THE BANKS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT' OF OR RELATING TO ANY OF
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

     SECTION 9.16.  Execution in Counterparts.  This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.


                                     82
<PAGE>   89


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

                                  PHYCOR, INC.

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

                                  THE AGENT

                                  CITIBANK, N.A.,
                                    as Agent

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

                                  THE ISSUING BANK

                                  CITIBANK, N.A.,
                                    as Issuing Bank

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




                                     83
<PAGE>   90


                                  THE DOCUMENTATION AGENT

                                  NATIONSBANK, N.A.,
                                    as Documentation Agent

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



                                     84
<PAGE>   91



Commitment:                       THE BANKS

Commitment: $21,250,000.00        CITIBANK, N.A.

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

Commitment: $6,250,000.00         AMSOUTH BANK

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

Commitment: $9,375,000.00         BANK OF AMERICA ILLINOIS

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

Commitment: $16,875,000.00        THE BANK OF NOVA SCOTIA

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

Commitment: $9,375,000.00         BANKERS TRUST COMPANY

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


                                     85
<PAGE>   92


Commitment: $6,250,000.00         COOPERATIEVE CENTRALE
                                  RAIFFEISEN-BOERENLEENBANK B.A.,
                                  "RABOBANK NEDERLAND"

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

Commitment: $12,500,000.00        CORESTATES BANK, N.A.

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


Commitment: $12,500,000.00        CREDIT LYONNAIS NEW YORK BRANCH

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

Commitment: $12,500,000.00        DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN
                                  ISLANDS BRANCHES

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

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

Commitment: $15,625,000.00        FIRST AMERICAN NATIONAL BANK

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



                                     86

<PAGE>   93

Commitment: $6,250,000.00         THE FIRST NATIONAL BANK OF CHICAGO

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

Commitment: $16,875,000.00        FIRST UNION NATIONAL BANK

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

Commitment: $6,250,000.00         THE FUJI BANK, LIMITED

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

Commitment: $15,625,000.00        MELLON BANK, N.A.

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

Commitment: $18,750,000.00        NATIONSBANK, N.A.

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

Commitment: $12,500,000.00        PNC BANK, KENTUCKY, INC.

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



                                     87


<PAGE>   94

Commitment: $12,500,000.00        THE SUMITOMO BANK, LIMITED

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

Commitment: $16,875,000.00        SUNTRUST BANK, NASHVILLE, N.A.

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


Commitment: $15,625,000.00        TORONTO DOMINION (TEXAS), INC.

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

Commitment: $6,250,000.00         UNION BANK OF SWITZERLAND, NEW YORK BRANCH

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


Total Commitments: $250,000,000


                                     88