Document:

KEYSTONE FINANCIAL, INC. / (Bank)

                        EXECUTIVE SPLIT DOLLAR AGREEMENT

THIS AGREEMENT is made and entered into effective this 1st day of January, 1998,
by  and  between  KEYSTONE  FINANCIAL,   INC.  ("Sponsor)  through  one  of  its
affililated companies  _________________________ , ("Employer"),  a Pennsylvania
corporation, and _______________  ("Executive") an employee of the Employer, and
represents  the  final  understanding  of the  parties  regarding  the  benefits
provided hereunder.

W I T N E S S E T H

WHEREAS,  the Executive is insured under Policy  Number  _________________  (the
"Policy") issued by Metropolitan Life Insurance Company ("Metropolitan"); and

WHEREAS,  the owner of the Policy (the  "Owner")  shall be the  Executive or the
person or other  entity to whom the  Executive  assigns  the Policy  pursuant to
Section 4; and

WHEREAS, Sponsor  and Employer highly values Executive's efforts, abilities, and
accomplishments; and

WHEREAS, Executive is deemed a member of a select group of management and/or one
of the highly compensated employees of the Employer; and

WHEREAS,  Employer wishes to provide  Executive with permanent life insurance as
an  additional  employment  benefit  and is willing to assist in the  payment of
premiums under the Policy as provided in this Agreement; and

WHEREAS, the Executive has agreed to assign an interest in the Policy to Sponsor
as  collateral  security  for such  premium  payments,  at the time of the first
premium  payment,   on  a  form  of  agreement  approved  by  Metropolitan  (the
"Collateral Assignment Agreement"); and

WHEREAS, in order to be eligible for such benefit, Executive agrees to the terms
hereinafter provided;

NOW,  THEREFORE,  Employer and Executive  ("Parties"),  in  consideration of the
mutual covenants and agreements described below, hereby agree as follows:

<PAGE>

SECTION 1

Payment of Premiums

 1.1 The Employer shall pay the premiums on the Policy,  less the amount paid by
the Executive  pursuant to Section 1.4, until the termination of this Agreement,
pursuant to Section 5. The  Employer  may  increase or  decrease  the  scheduled
premium for any year after the first year. Each premium for the Policy following
execution of this  Agreement  will be remitted by the  Employer to  Metropolitan
within thirty-one (31) days following the anniversary date of the Policy.

 1.2 The  premium  payment  periods  may also be changed by the  Employer to the
extent  necessary to maintain  compliance  of the Policy with  Sections 7702 and
7702A of the Internal Revenue Code and the regulations thereunder.

 1.3 No payment of interest by  the Executive will be due on the premium amounts
paid by the Employer.

 1.4 The  Executive  shall pay that  portion of the  premium in amount  that for
federal  income tax purposes is equal to the value of the "economic  benefit" of
the life insurance  protection enjoyed by the Executive each year. The "economic
benefit" is to be determined by reference to IRS Rev.  Ruls.  64-328 and 66-110,
or any  rulings  which  may  substitute,  supercede,  replace,  or  amend  them,
governing the federal income tax consequences of split dollar arrangements.  The
Executive has been rated by Metropolitan  Life Insurance  Company less favorably
than "standard  non-smoker".  Since the Employer is  contributing to the premium
based on a standard  non-smoker  classification,  if the rating  continues,  the
policy at program  maturity date will likely not have  sufficient  cash value to
realize  the  objective  described  in Section  1.7B  below.  Therefore,  if the
Executive  wishes  to  attain  this  objective,  Executive  may,  in  his or her
discretion, make additional premium payments in amounts as may be indicated from
time to time by Metropolitan  Life Insurance  Company as necessary to create the
augmented value in the policy to realize such objective.

 1.5 The Employer shall continue to pay its portion of the premium if the Execu-
tive is disabled while actively employed.

 1.6 "Disability", for the purpose  of this Agreement means, that  the Executive
has  met  the  requirements  for  disability  under  the  Employer's  Long  Term
Disability  Plan,  is not  eligible  for full  retirement,  and is  incapable of
fulfilling job duties due to mental or physical disability.

<PAGE>

 1.7  "Premium",  for the  purpose  of this  Agreement,  means  the sum  paid to
Metropolitan   Life  Insurance  Company  as  consideration  for  the  individual
Universal Life Policy specifically referred to in this Agreement.  Premiums paid
are  scheduled  to be in an  amount  so as to  accumulate  policy  values at the
program  maturity date as if the Executive were to receive a standard  nonsmoker
classification sufficient to:

     A. Provide total death benefits equal to at least two times the Executive's
annual base salary plus the accumulated premiums paid by the Employer during the
Executive's active employment and equal to at least one (1) times the
Executive's final annual base salary plus accumulated premiums paid by the
Employer after the Executive's active  employment and prior to termination of
this Agreement;

     B. Keep the policy in force after the program maturity date with a death
benefit equal to one (1) times the Executive's final annual base salary until
the Executive attains the age of ninety-five (95); and

     C. Prior to the program maturity date, withdraw an amount to be paid to the
Employer equal to the accumulated premiums paid by the Employer.

        The sufficiency of  the amount needed to meet the provisions above shall
be  determined  as of the  program  maturity  date  and  shall  be  based on the
insurer's  current interest  crediting and mortality rates as of that same date.
The Employer shall not be  responsible  for events  occurring  subsequent to the
program  maturity date which may result in an  insufficient  level of funding to
meet the provisions above.

SECTION 2

Policy Beneficiary Designation

 2.1 The right to  designate  and  change the  beneficiary  of the Policy and to
elect an optional  mode of settlement is reserved to the person who would be the
Owner of the Policy in the absence of the Collateral Assignment Agreement.  Such
Owner  of  the  Policy  shall  have  the  right  to  designate  and  change  the
beneficiaries  and  contingent  beneficiaries  and to elect an optional  mode of
settlement  subject  to the  interest  of the  Employer  as  Assignee  under the
Collateral Assignment Agreement, and the Employer will make the Policy available
to the Owner, if required, for endorsement of a change of beneficiary.

<PAGE>

SECTION 3

Payment of Policy Proceeds in Event of Death of Employee

 3.1 If the Executive  dies (other than by suicide within two (2) years from the
Policy  issue  date)  while the  Policy  and this  Agreement  are in force,  the
proceeds of the Policy shall be payable as follows:

     A.  Part shall be payable to the Employer; this part shall be equal to the
proceeds of the Policy not payable to the beneficiary pursuant to paragraph B or
paragraph C of this section.

     B.  The designated  beneficiary of the Executive shall be  paid  an  amount
equal to two (2) times the Executive's annual base salary if  the Executive dies
while  actively  employed  by  Employer,  subject,  however,  to satisfying  any
applicable  underwriting  restrictions  or  guidelines  existing at  the time of
adjustment.

     C. The designated  beneficiary  of  the  Executive  shall be paid an amount
equal to one (1) times annual base salary, subject, however,  to  satisfying any
applicable underwriting restrictions or guidelines at the time of  adjustment if
the Executive dies after terminating active  employment  with  Employer  due  to
Disability  or  Normal  Retirement,  provided  that the  termination  of  active
employment occurs prior to the termination of this Agreement.

        (1) The benefit paid if the Executive dies after  terminating  active
        employment with Employer due to Disability is based on the  Executive's
        annual base salary at the time the Disability occurred.

 3.2 Insurance proceeds will not be paid if the Executive commits suicide, while
sane or insane,  within two (2) years from the date of the policy.  Instead,  an
amount  equal to all premiums  paid,  without  interest,  will be paid under the
terms of this Agreement.

 3.3 "Normal Retirement", for the purpose of this Agreement, means attaining the
age of sixty-five (65).

 3.4  "Annual  Base  Salary",  for the  purpose  of this  Agreement,  means  the
Executive's regular salary, without bonus, as of the date Executive was actively
at work.

<PAGE>

SECTION 4

Exercise of Rights

 4.1 The  Employer,  during  the  lifetime  of the  Executive  and  prior to the
termination of this Agreement, may exercise any of its rights as Assignee of the
Policy only upon thirty (30) days written notice to the  Executive.  Such notice
shall be given to the  Executive  either in person or by mailing as provided for
in Section 8.1 of this Agreement.

 4.2 Subject to the Employer's rights as Assignee,  the Owner retains all rights
as Owner of the Policy.  Notwithstanding the  aforementioned,  neither the Owner
nor the  Employer  shall  withdraw,  surrender,  borrow  against,  or  pledge as
security for a loan any portion of the Policy while this Agreement is in effect.

SECTION 5

Termination of Agreement

 5.1 This Agreement shall terminate if any of the following takes place:

     A.  Termination of the Executive's employment with the Employer prior to
the Executive's becoming eligible for disability benefits under a Disability
plan of the Employer or for a Normal Retirement benefit under any qualified
pension plan maintained by the Employer; or

     B.   Demotion of the Executive to a position which is not part of the group
of Employees eligible to participate in the Employer's Split Dollar Insurance
Program as determined by the Employer; or

     C.   The bankruptcy of the Employer; or

     D.   The failure of the Employer or the Executive to pay their respective
share of the premium under Section 1 of this Agreement; or

     E.   Payment to the Employer of the aggregate amount of the premiums paid
either directly by the Executive or by a withdrawal from the Policy.

     F.   Termination of this Agreement pursuant to Section 12.3; or

     G.   The death of the Executive; or

     H.   Program Maturity Date.  This occurs the year in which sufficient funds
will have accumulated in the Policy to sustain the projected death benefit
amount as if the Executive were to have received a standard nonsmoker classifi-
cation, or when the Executive attains the age of sixty-five (65), whichever
occurs later.

 5.2 In the event of termination of this Agreement,  the lesser of the aggregate
of the premiums paid by the Employer pursuant to this Agreement, or the net cash
value in the Policy,  shall  become due and payable to the  Employer,  except as
provided  for herein.  Upon  payment of such  amount  from the Policy,  from the
Executive,  or from whatever other source,  the Employer shall execute a release
of the Collateral  Assignment  Agreement and deliver such release and the Policy
to the Owner.

 5.3 In the event of a Change of Control,  as defined in the  written  severance
policy in effect at that time, such severance policy shall thereafter  remain in
force for  purposes of this  Agreement.  In the event of a Change of Control and
the Executive is entitled to benefits for  termination of employment  under such
severance  policy,  then,  in  addition,  he shall have no  obligation  to repay
premiums to the Employer as stated in Section 5.2.

 SECTION 6

Taxation

 6.1 All income taxes  attributable  to the Executive  which are relevant to the
Policy or this Agreement,  whether federal,  state or local, which may be due or
may become due, are the sole responsibility of the Executive, or the Executive's
beneficiary,  while this  Agreement is in force and after it has  terminated for
any reason.

SECTION 7

Insurer Not a Party

 7.1  Metropolitan  shall not be deemed to be a party to this  Agreement for any
purpose  nor  shall  it be  deemed  in any way  responsible  for  its  validity.
Metropolitan  shall  not be  obligated  to  inquire  as to the  distribution  or
application of any monies  payable or paid by it under the Policy,  and Payments
or other performance of its contract obligations in accordance with the terms of
the Policy shall fully discharge  Metropolitan  from any and all liability under
the Policy.

<PAGE>

SECTION 8

Notices

 8.1 Any notices required or permitted to be given under this Agreement shall be
in writing and shall be deemed properly given if sent by registered or certified
mail, addressed as follows:

         (1)      Notices to Executive:

         (2)      Notices to Employer:      _____________________________ (Bank)
                                                     c/o G. E. Aumiller
                                                     Keystone Financial, Inc.
                                                     P.O. Box 3660
                                                     Harrisburg, PA  17105-3660

         Either  party  may,  from time to time,  change  the  address  to which
notices shall be mailed by giving notice of such address in the manner  provided
herein.

SECTION 9

Other Benefits

 9.1  Participation in this Program is designed to supersede and render void the
group term life  insurance  currently  provided to the  Executive.  In all other
respects,  the benefits  described  herein are in addition to any other benefits
the Executive may have under any plan or program of the Employer, and, except as
aforementioned or otherwise expressly provided for herein,  shall supplement and
shall not supersede any other  agreement  between the Employer and the Executive
or any provision contained therein.

<PAGE>

SECTION 10

Named Fiduciary

10.1 The  Employer is hereby  designated  as the Named  Fiduciary  of this Split
Dollar  Insurance  Program,  in accordance with the Employee  Retirement  Income
Security Act of 1974.  The business  address and  telephone  number of the Named
Fiduciary are:

                  ___________________________ (Bank)
                  c/o G. E. Aumiller
                  Keystone Financial, Inc.
                  One Keystone Plaza
                  Front & Market Streets
                  P.O. Box 3660
                  Harrisburg, PA  17105-3660

         The Named  Fiduciary shall have the authority to control and manage the
operation and administration of this Program.  However,  the Named Fiduciary may
allocate its  responsibilities  for the  operation  and  administration  of this
Program, including the designation of persons who are not Named Fiduciaries,  to
carry out fiduciary responsibilities.

         The Named  Fiduciary of this Program  shall be  responsible  for making
timely delivery of any required premiums to the Insurer.

         All pertinent  documents  shall be retained by the Named  Fiduciary and
made available for examination at the above  indicated  business  address.  Upon
written request, the Program document and other information shall be provided to
the Parties of this Program.

SECTION 11

Claims Procedure

11.1  Benefits  shall be payable in accordance  with the  Agreement  provisions.
Should the  Executive  or  beneficiary  fail to receive  benefits  to which such
Executive or beneficiary  believes he or she is entitled,  a claim may be filed.
Any claim for a Program  benefit  hereunder  shall be filed by the  Executive or
beneficiary (claimant) of this Program by written  communication,  which is made
by the claimant or the claimant's authorized representative, which is reasonably
calculated to bring the claim to the attention of the Named Fiduciary.

         If a claim for a Program  benefit  is wholly  or  partially  denied,  a
written  notice of the decision  shall be furnished to the claimant by the Named
Fiduciary or his designee  within a reasonable  period of time after  receipt of
the claim by the Program, which notice shall include the following information:

(A)      The specific reason or reasons for the denial;

(B)      Specific reference to the pertinent Agreement provisions upon which the
         denial is based;

(C) A description  of any additional  material or information  necessary for the
claimant  to  perfect  the  claim and an  explanation  of why such  material  or
information is necessary; and

(D) An explanation of the Program's claim review procedures.

         In order that a claimant may appeal a denial of a claim,  a claimant or
his duly authorized representative:

(A) May request a review by written  application  to the Named  Fiduciary or his
designee  not later  than 60 days  after  receipt  by the  claimant  of  written
notification of denial of a claim;

(B)      May review pertinent documents; and

(C)      May submit issues and comments in writing.

         A decision of review of a denied  claim shall be made not later than 60
days  after the  Program's  receipt  of a request  for  review,  unless  special
circumstances  require  an  extension  of time for  processing,  in which case a
decision  shall be rendered  within a reasonable  period of time,  but not later
than 120 days after  receipt of a request  for  review.  The  decision on review
shall be in writing and shall  include the specific  reason(s)  for the decision
and the specific reference(s) to the pertinent Agreement provisions on which the
decision is based.

         Notwithstanding anything contained in this Section to the contrary, any
claim for a death benefit under an insurance  policy under this Program shall be
filed  with  the  Insurer  by  the   claimant  or  the   claimant's   authorized
representative  on the form or forms prescribed for such purpose by the Insurer.
The Insurer  shall have sole  authority  for  determining  whether a death claim
shall or shall not be paid,  either in whole or in part, in accordance  with the
terms of such  insurance  contract  which may have been purchased on the life of
the Executive.

<PAGE>

SECTION 12

Amendment and Assignment of Agreement

12.1 This Agreement shall not be modified or amended except in writing signed by
the Parties hereto.

12.2 This Agreement is binding upon the heirs, administrators or assigns of each
Party.

12.3 Subject to provisions of any written Employment  Agreement,  this Agreement
may be terminated  by either Party with thirty (30) days' written  notice to the
other.

SECTION 13

Employment

13.1 This  Agreement  shall not in any way  constitute an  employment  agreement
between the Executive and the Employer and shall in no way obligate the Employer
to continue  the  employment  of  Executive  with the  Employer,  nor shall this
Agreement  limit the right of the Employer to terminate  Executive's  employment
with the Employer for any reason.

SECTION 14

Jurisdiction

14.1 The Parties hereto consent to the exclusive  jurisdiction  of the courts of
the Commonwealth of Pennsylvania in any and all actions arising hereunder.

SECTION 15

State Law

15.1  This   Agreement,   all  matters   involving  its  validity,   effect  and
interpretation,  and the rights of the Parties  hereunder,  shall be governed by
and construed pursuant to the laws of the Commonwealth of Pennsylvania.

SECTION 16

Interpretation

16.1 Where appropriate,  words used in the singular shall include the plural and
words used in the masculine shall include the feminine and vice versa.

IN WITNESS  WHEREOF,  the Parties  hereto  intending to be legally  bound,  have
executed this Agreement as of the day and year first above written.

                                     KEYSTONE FINANCIAL, INC.

                                     By:  ____________________________
                                            Authorized Representative

                                    (Bank)

                                     By: _____________________________
WITNESS:                                   Authorized Representative

------------------------------      -----------------------------------------
                                                  Employee

KEYSTONE FINANCIAL, INC./(Bank)

EXECUTIVE SPLIT DOLLAR AGREEMENT

THIS AGREEMENT is made and entered into effective this 1st day of January, 1998,
by and between KEYSTONE FINANCIAL,INC. ("Sponsor") through one of its affiliated
companies  __________________ , ("Employer"),  a Pennsylvania  corporation,  and
___________________  ("Executive")  an employee of the Employer,  and represents
the  final   understanding  of  the  parties  regarding  the  benefits  provided
hereunder.

W I T N E S S E T H

WHEREAS,  the  Executive is insured under Policy  Number  ________________  (the
"Policy") issued by Metropolitan Life Insurance Company ("Metropolitan"); and

WHEREAS,  the owner of the Policy (the  "Owner")  shall be the  Executive or the
person or other  entity to whom the  Executive  assigns  the Policy  pursuant to
Section 4; and

WHEREAS, Sponsor and Employer highly values Executive's efforts, abilities, and
accomplishments; and

WHEREAS, Executive is deemed a member of a select group of management and/or one
of the highly compensated employees of the Employer; and

WHEREAS,  Employer wishes to provide  Executive with permanent life insurance as
an  additional  employment  benefit  and is willing to assist in the  payment of
premiums under the Policy as provided in this Agreement; and

WHEREAS, the Executive has agreed to assign an interest in the Policy to Sponsor
as  collateral  security  for such  premium  payments,  at the time of the first
premium  payment,   on  a  form  of  agreement  approved  by  Metropolitan  (the
"Collateral Assignment Agreement"); and

WHEREAS, in order to be eligible for such benefit, Executive agrees to the terms
hereinafter provided;

NOW,  THEREFORE,  Employer and Executive  ("Parties"),  in  consideration of the
mutual covenants and agreements described below, hereby agree as follows:

SECTION 1

Payment of Premiums

 1.1 The Employer shall pay the premiums on the Policy,  less the amount paid by
the Executive  pursuant to Section 1.4, until the termination of this Agreement,
pursuant to Section 5. The  Employer  may  increase or  decrease  the  scheduled
premium for any year after the first year. Each premium for the Policy following
execution of this  Agreement  will be remitted by the  Employer to  Metropolitan
within thirty-one (31) days following the anniversary date of the Policy.

 1.2 The  premium  payment  periods  may also be changed by the  Employer to the
extent  necessary to maintain  compliance  of the Policy with  Sections 7702 and
7702A of the Internal Revenue Code and the regulations thereunder.

 1.3 No payment of interest by the Executive will be due on the premium amounts
paid by the Employer.

 1.4 The  Executive  shall pay that  portion of the  premium in amount  that for
federal  income tax purposes is equal to the value of the "economic  benefit" of
the life insurance  protection enjoyed by the Executive each year. The "economic
benefit" is to be determined by reference to IRS Rev.  Ruls.  64-328 and 66-110,
or any  rulings  which  may  substitute,  supercede,  replace,  or  amend  them,
governing the federal income tax consequences of split dollar arrangements.  The
Executive has been rated by Metropolitan  Life Insurance  Company less favorably
than "standard  non-smoker".  Since the Employer is  contributing to the premium
based on a standard  non-smoker  classification,  if the rating  continues,  the
policy at program  maturity date will likely not have  sufficient  cash value to
realize  the  objective  described  in Section  1.7B  below.  Therefore,  if the
Executive  wishes  to  attain  this  objective,  Executive  may,  in  his or her
discretion, make additional premium payments in amounts as may be indicated from
time to time by Metropolitan  Life Insurance  Company as necessary to create the
augmented value in the policy to realize such objective.

 1.5 The Employer shall continue to pay its portion of the premium if the
Executive is disabled while actively employed.

 1.6  "Disability",  for the purpose of this Agreement means, that the Executive
has  met  the  requirements  for  disability  under  the  Employer's  Long  Term
Disability  Plan,  is not  eligible  for full  retirement,  and is  incapable of
fulfilling job duties due to mental or physical disability.

<PAGE>

 1.7  "Premium",  for the  purpose  of this  Agreement,  means  the sum  paid to
Metropolitan   Life  Insurance  Company  as  consideration  for  the  individual
Universal Life Policy specifically referred to in this Agreement.  Premiums paid
are  scheduled  to be in an  amount  so as to  accumulate  policy  values at the
program  maturity date as if the Executive were to receive a standard  nonsmoker
classification sufficient to:

      A.  Provide total death benefits equal to at least two times the
Executive's annual base salary plus the accumulated premiums paid by the
Employer during the Executive's active employment and equal to at least two (2)
times the Executive's final annual base salary plus accumulated premiums paid by
the Employer after the Executive's active employment and prior to termination of
this Agreement;

      B.   Keep the policy in force after the program maturity date with a death
benefit equal to two (2) times the Executive's final annual base salary until
the Executive attains the age of ninety-five (95); and

      C.   Prior to the program maturity date, withdraw an amount to be paid to
the Employer equal to the accumulated premiums paid by the Employer.

         The sufficiency of the amount needed to meet the provisions above shall
be determined as of the program maturity date and shall be based on the
insurer's current interest crediting and mortality rates as of that same date.
The Employer shall not be responsible for events occurring subsequent to the
program maturity date which may result in an  insufficient level of funding to
meet the provisions above.

SECTION 2

Policy Beneficiary Designation

 2.1 The right to  designate  and  change the  beneficiary  of the Policy and to
elect an optional  mode of settlement is reserved to the person who would be the
Owner of the Policy in the absence of the Collateral Assignment Agreement.  Such
Owner  of  the  Policy  shall  have  the  right  to  designate  and  change  the
beneficiaries  and  contingent  beneficiaries  and to elect an optional  mode of
settlement  subject  to the  interest  of the  Employer  as  Assignee  under the
Collateral Assignment Agreement, and the Employer will make the Policy available
to the Owner, if required, for endorsement of a change of beneficiary.

<PAGE>

SECTION 3

Payment of Policy Proceeds in Event of Death of Employee

 3.1 If the Executive  dies (other than by suicide within two (2) years from the
Policy  issue  date)  while the  Policy  and this  Agreement  are in force,  the
proceeds of the Policy shall be payable as follows:

     A.  Part shall be payable to the Employer; this part shall be equal to the
proceeds of the Policy not payable to the beneficiary pursuant to paragraph B or
paragraph C of this section.

     B. The designated beneficiary of the Executive shall be paid an amount
equal to two (2) times the Executive's annual base salary if the Executive dies
while actively employed by Employer, subject, however, to satisfying any
applicable underwriting restrictions or guidelines existing at the time
of adjustment.

     C. The designated beneficiary of the Executive shall be paid an amount
equal to two (2) times annual base salary, subject, however, to satisfying any
applicable underwriting restrictions or guidelines at the time of adjustment if
the Executive dies after terminating active employment with Employer due to
Disability or Normal Retirement, provided that the termination of active
employment occurs prior to the termination of this Agreement.

        (1) The benefit paid if the Executive dies after terminating active
employment with Employer due to Disability is based on the Executive's annual
base salary at the time the Disability occurred.

 3.2 Insurance proceeds will not be paid if the Executive commits suicide, while
sane or insane,  within two (2) years from the date of the policy.  Instead,  an
amount  equal to all premiums  paid,  without  interest,  will be paid under the
terms of this Agreement.

 3.3 "Normal Retirement", for the purpose of this Agreement, means attaining the
age of sixty-five (65).

 3.4  "Annual  Base  Salary",  for the  purpose  of this  Agreement,  means  the
Executive's regular salary, without bonus, as of the date Executive was actively
at work.

<PAGE>

SECTION 4

Exercise of Rights

 4.1 The  Employer,  during  the  lifetime  of the  Executive  and  prior to the
termination of this Agreement, may exercise any of its rights as Assignee of the
Policy only upon thirty (30) days written notice to the  Executive.  Such notice
shall be given to the  Executive  either in person or by mailing as provided for
in Section 8.1 of this Agreement.

 4.2 Subject to the Employer's rights as Assignee,  the Owner retains all rights
as Owner of the Policy.  Notwithstanding the  aforementioned,  neither the Owner
nor the  Employer  shall  withdraw,  surrender,  borrow  against,  or  pledge as
security for a loan any portion of the Policy while this Agreement is in effect.

SECTION 5

Termination of Agreement

 5.1 This Agreement shall terminate if any of the following takes place:

     A.  Termination of the Executive's employment with the Employer prior to
the Executive's becoming eligible for disability benefits under a Disability
plan of the Employer or for a Normal Retirement benefit under any qualified
pension plan maintained by the Employer; or

     B.  Demotion of the Executive to a position which is not part of the group
of Employees eligible to participate in the Employer's Split Dollar Insurance
Program as determined by the Employer; or

     C.  The bankruptcy of the Employer; or

     D.  The failure of the Employer or the Executive to pay their respective
share of the premium under Section 1 of this Agreement; or

     E.  Payment to the Employer of the aggregate amount of the premiums paid
either directly by the Executive or by a withdrawal from the Policy.

     F.  Termination of this Agreement pursuant to Section 12.3; or

     G.  The death of the Executive; or

     H.  Program Maturity Date.  This occurs the year in which sufficient funds
will have accumulated in the Policy to sustain the projected death benefit
amount as if the Executive were to have received a standard nonsmoker
classification, or when the Executive attains the age of sixty-five (65),
whichever occurs later.

 5.2 In the event of termination of this Agreement,  the lesser of the aggregate
of the premiums paid by the Employer pursuant to this Agreement, or the net cash
value in the Policy,  shall  become due and payable to the  Employer,  except as
provided  for herein.  Upon  payment of such  amount  from the Policy,  from the
Executive,  or from whatever other source,  the Employer shall execute a release
of the Collateral  Assignment  Agreement and deliver such release and the Policy
to the Owner.

 5.3 In the event of a Change of Control as defined in the  Executive's  written
Employment  Agreement  then in effect and the  Executive is entitled to benefits
for  termination  of  employment  as a result  of a Change of  Control,  then in
addition,  he shall have no  obligation  to repay  premiums  to the  Employer as
stated in Section 5.2.

SECTION 6

Taxation

 6.1 All income taxes  attributable  to the Executive  which are relevant to the
Policy or this Agreement,  whether federal,  state or local, which may be due or
may become due, are the sole responsibility of the Executive, or the Executive's
beneficiary,  while this  Agreement is in force and after it has  terminated for
any reason.

SECTION 7

Insurer Not a Party

 7.1  Metropolitan  shall not be deemed to be a party to this  Agreement for any
purpose  nor  shall  it be  deemed  in any way  responsible  for  its  validity.
Metropolitan  shall  not be  obligated  to  inquire  as to the  distribution  or
application of any monies  payable or paid by it under the Policy,  and Payments
or other performance of its contract obligations in accordance with the terms of
the Policy shall fully discharge  Metropolitan  from any and all liability under
the Policy.

SECTION 8

Notices

 8.1 Any notices required or permitted to be given under this Agreement shall be
in writing and shall be deemed properly given if sent by registered or certified
mail, addressed as follows:

         (1)      Notices to Executive:

         (2)      Notices to Employer:      ________________________ (Bank)
                                               c/o G. E. Aumiller
                                               Keystone Financial, Inc.
                                               P.O. Box 3660
                                               Harrisburg, PA  17105-3660

         Either  party  may,  from time to time,  change  the  address  to which
notices shall be mailed by giving notice of such address in the manner  provided
herein.

SECTION 9

Other Benefits

 9.1  Participation in this Program is designed to supersede and render void the
group term life  insurance  currently  provided to the  Executive.  In all other
respects,  the benefits  described  herein are in addition to any other benefits
the Executive may have under any plan or program of the Employer, and, except as
aforementioned or otherwise expressly provided for herein,  shall supplement and
shall not supersede any other  agreement  between the Employer and the Executive
or any provision contained therein.

SECTION 10

Named Fiduciary

10.1 The  Employer is hereby  designated  as the Named  Fiduciary  of this Split
Dollar  Insurance  Program,  in accordance with the Employee  Retirement  Income
Security Act of 1974.  The business  address and  telephone  number of the Named
Fiduciary are:

                  ________________________ (Bank)
                   c/o G. E. Aumiller
                   Keystone Financial, Inc.
                   One Keystone Plaza

                   Front & Market Streets
                   P.O. Box 3660
                   Harrisburg, PA 17105-3660

         The Named  Fiduciary shall have the authority to control and manage the
operation and administration of this Program.  However,  the Named Fiduciary may
allocate its  responsibilities  for the  operation  and  administration  of this
Program, including the designation of persons who are not Named Fiduciaries,  to
carry out fiduciary responsibilities.

         The Named  Fiduciary of this Program  shall be  responsible  for making
timely delivery of any required premiums to the Insurer.

         All pertinent  documents  shall be retained by the Named  Fiduciary and
made available for examination at the above  indicated  business  address.  Upon
written request, the Program document and other information shall be provided to
the Parties of this Program.

SECTION 11

Claims Procedure

11.1  Benefits  shall be payable in accordance  with the  Agreement  provisions.
Should the  Executive  or  beneficiary  fail to receive  benefits  to which such
Executive or beneficiary  believes he or she is entitled,  a claim may be filed.
Any claim for a Program  benefit  hereunder  shall be filed by the  Executive or
beneficiary (claimant) of this Program by written  communication,  which is made
by the claimant or the claimant's authorized representative, which is reasonably
calculated to bring the claim to the attention of the Named Fiduciary.

         If a claim for a Program  benefit  is wholly  or  partially  denied,  a
written  notice of the decision  shall be furnished to the claimant by the Named
Fiduciary or his designee  within a reasonable  period of time after  receipt of
the claim by the Program, which notice shall include the following information:

     (A) The specific reason or reasons for the denial;

     (B) Specific reference to the pertinent Agreement provisions upon which the
denial is based;

     (C) A description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such material or
information is necessary; and

     (D) An explanation of the Program's claim review procedures.

<PAGE>

         In order that a claimant may appeal a denial of a claim,  a claimant or
his duly authorized representative:

     (A) May request a review by written application to the Named Fiduciary or
his designee not later than 60 days after receipt by the claimant of written
notification of denial of a claim;

     (B) May review pertinent documents; and

     (C) May submit issues and comments in writing.

         A decision of review of a denied  claim shall be made not later than 60
days  after the  Program's  receipt  of a request  for  review,  unless  special
circumstances  require  an  extension  of time for  processing,  in which case a
decision  shall be rendered  within a reasonable  period of time,  but not later
than 120 days after  receipt of a request  for  review.  The  decision on review
shall be in writing and shall  include the specific  reason(s)  for the decision
and the specific reference(s) to the pertinent Agreement provisions on which the
decision is based.

         Notwithstanding anything contained in this Section to the contrary, any
claim for a death benefit under an insurance  policy under this Program shall be
filed  with  the  Insurer  by  the   claimant  or  the   claimant's   authorized
representative  on the form or forms prescribed for such purpose by the Insurer.
The Insurer  shall have sole  authority  for  determining  whether a death claim
shall or shall not be paid,  either in whole or in part, in accordance  with the
terms of such  insurance  contract  which may have been purchased on the life of
the Executive.

SECTION 12

Amendment and Assignment of Agreement

12.1 This Agreement shall not be modified or amended except in writing signed by
the Parties hereto.

12.2 This Agreement is binding upon the heirs, administrators or assigns of each
Party.

12.3 Subject to provisions of any written Employment  Agreement,  this Agreement
may be terminated  by either Party with thirty (30) days' written  notice to the
other.

<PAGE>

SECTION 13

Employment

13.1 This  Agreement  shall not in any way  constitute an  employment  agreement
between the Executive and the Employer and shall in no way obligate the Employer
to continue  the  employment  of  Executive  with the  Employer,  nor shall this
Agreement  limit the right of the Employer to terminate  Executive's  employment
with the Employer for any reason.

SECTION 14

Jurisdiction

14.1 The Parties hereto consent to the exclusive  jurisdiction  of the courts of
the Commonwealth of Pennsylvania in any and all actions arising hereunder.

SECTION 15

State Law

15.1  This   Agreement,   all  matters   involving  its  validity,   effect  and
interpretation,  and the rights of the Parties  hereunder,  shall be governed by
and construed pursuant to the laws of the Commonwealth of Pennsylvania.

<PAGE>

SECTION 16

Interpretation

16.1 Where appropriate,  words used in the singular shall include the plural and
words used in the masculine shall include the feminine and vice versa.

IN WITNESS  WHEREOF,  the Parties  hereto  intending to be legally  bound,  have
executed this Agreement as of the day and year first above written.

                                      KEYSTONE FINANCIAL, INC.

                                      By:  _____________________________________
                                               Authorized Representative

                                      (Bank)

                                      By: ___________________________________
WITNESS:                                       Authorized Representative

------------------------------      -----------------------------------------
                                                   Employee

KEYSTONE FINANCIAL, INC. / (Bank)

                        EXECUTIVE SPLIT DOLLAR AGREEMENT

THIS AGREEMENT made and entered into effective this 1st day of January, 1998, by
and between KEYSTONE FINANCIAL,  INC.  ("Sponsor") through one of its affiliated
companies  ________________  ,  ("Employer"),  a Pennsylvania  corporation,  and
____________ ("Executive") an employee of the Employer, and represents the final
understanding of the parties regarding the benefits provided hereunder.

W I T N E S S E T H

WHEREAS,  the  Executive  is insured  under  Policy  Number_______________  (the
"Policy") issued by Metropolitan Life Insurance Company ("Metropolitan"); and

WHEREAS,  the owner of the Policy (the  "Owner")  shall be the  Executive or the
person or other  entity to whom the  Executive  assigns  the Policy  pursuant to
Section 4; and

WHEREAS, Sponsor and Employer highly values Executive's efforts, abilities, and
accomplishments; and

WHEREAS, Executive is deemed a member of a select group of management and/or one
of the highly compensated employees of the Employer; and

WHEREAS,  Employer wishes to provide  Executive with permanent life insurance as
an  additional  employment  benefit  and is willing to assist in the  payment of
premiums under the Policy as provided in this Agreement; and

WHEREAS, the Executive has agreed to assign an interest in the Policy to Sponsor
as  collateral  security  for such  premium  payments,  at the time of the first
premium  payment,   on  a  form  of  agreement  approved  by  Metropolitan  (the
"Collateral Assignment Agreement"); and

WHEREAS, in order to be eligible for such benefit, Executive agrees to the terms
hereinafter provided;

NOW,  THEREFORE,  Employer and Executive  ("Parties"),  in  consideration of the
mutual covenants and agreements described below, hereby agree as follows:

<PAGE>

SECTION 1

Payment of Premiums

 1.1 The Employer shall pay the premiums on the Policy,  less the amount paid by
the Executive  pursuant to Section 1.4, until the termination of this Agreement,
pursuant to Section 5. The  Employer  may  increase or  decrease  the  scheduled
premium for any year after the first year. Each premium for the Policy following
execution of this  Agreement  will be remitted by the  Employer to  Metropolitan
within thirty-one (31) days following the anniversary date of the Policy.

 1.2 The  premium  payment  periods  may also be changed by the  Employer to the
extent  necessary to maintain  compliance  of the Policy with  Sections 7702 and
7702A of the Internal Revenue Code and the regulations thereunder.

 1.3 No payment of interest by the Executive will be due on the premium amounts
paid by the Employer.

 1.4 The  Executive  shall pay a portion of the  premium  in an amount  that for
federal  income tax purposes is equal to the value of the "economic  benefit" of
the life insurance  protection enjoyed by the Executive each year. The "economic
benefit" is to be determined by reference to IRS Rev.  Ruls.  64-328 and 66-110,
or any  rulings  which  may  substitute,  supercede,  replace,  or  amend  them,
governing the federal income tax consequences of split dollar  arrangements.  At
the inception of this Agreement,  Metropolitan  Life Insurance Company has rated
the  Executive as "standard  non-smoker".  The  Agreement  provides  that if the
Annual Base Salary of the  Executive  increases,  there will be a  corresponding
adjustment  to the benefit  hereunder.  Depending  on the amount of increase and
frequency  of such,  the  placement of the  additional  coverage may require new
underwriting.  If this occurs, and if at that time,  Metropolitan Life Insurance
Company rates the Executive  less  favorably  than  "standard  non-smoker",  the
Employer will contribute to the additional premium as herein provided,  however,
based on a  standard  non-smoker  classification.  Consequently,  if the  rating
continues as to such excess,  the policy at program  maturity  date may not have
sufficient cash value to realize the objective  described in Section 1.7B below.
Therefore,  if the Executive wishes to attain this objective,  Executive may, in
his or her  discretion,  make additional  premium  payments in amounts as may be
indicated from time to time by Metropolitan  Life Insurance Company as necessary
to create the augmented value in the policy to realize such objective.

 1.5  The Employer shall continue to pay its portion of the premium if the
Executive is disabled while actively employed.

 1.6  "Disability",  for the purpose of this Agreement means, that the Executive
has  met  the  requirements  for  disability  under  the  Employer's  Long  Term
Disability  Plan,  is not  eligible  for full  retirement,  and is  incapable of
fulfilling job duties due to mental or physical disability.

 1.7  "Premium",  for the  purpose  of this  Agreement,  means  the sum  paid to
Metropolitan   Life  Insurance  Company  as  consideration  for  the  individual
Universal Life Policy specifically referred to in this Agreement.  Premiums paid
are scheduled to be in an amount,  assuming that the Executive has  underwriting
status  of  "standard  non-smoker",  so as to  accumulate  policy  values at the
program maturity date sufficient to:

     A. Provide total death benefits equal to at least two times the Executive's
annual base salary plus the accumulated premiums paid by the Employer during
the Executive's active employment and equal to at least one (1) times the
Executive's final annual base salary plus accumulated premiums paid by the
Employer after the Executive's active employment and prior to termination of
this Agreement;

     B. Keep the policy in force after the program maturity date with a death
benefit equal to one (1) times the Executive's final annual base salary until
the Executive attains the age of ninety-five (95); and

     C. Prior to the program maturity date, withdraw an amount to be paid to the
Employer equal to the accumulated premiums paid by the Employer.

         The sufficiency of the amount needed to meet the provisions above shall
be  determined  as of the  program  maturity  date  and  shall  be  based on the
insurer's  current interest  crediting and mortality rates as of that same date.
The Employer shall not be  responsible  for events  occurring  subsequent to the
program  maturity date which may result in an  insufficient  level of funding to
meet the provisions above.

SECTION 2

Policy Beneficiary Designation

 2.1 The right to  designate  and  change the  beneficiary  of the Policy and to
elect an optional  mode of settlement is reserved to the person who would be the
Owner of the Policy in the absence of the Collateral Assignment Agreement.  Such
Owner  of  the  Policy  shall  have  the  right  to  designate  and  change  the
beneficiaries  and  contingent  beneficiaries  and to elect an optional  mode of
settlement  subject  to the  interest  of the  Employer  as  Assignee  under the
Collateral Assignment Agreement, and the Employer will make the Policy available
to the Owner, if required, for endorsement of a change of beneficiary.

<PAGE>

SECTION 3

Payment of Policy Proceeds in Event of Death of Employee

 3.1 If the Executive  dies (other than by suicide within two (2) years from the
Policy  issue  date)  while the  Policy  and this  Agreement  are in force,  the
proceeds of the Policy shall be

         payable as follows:

     A. Part shall be payable to the Employer; this part shall be equal to the
proceeds of the Policy not payable to the beneficiary pursuant to paragraph B or
paragraph C of this section.

     B. The designated beneficiary of the Executive shall be paid an amount
equal to two (2) times the Executive's annual base salary if the Executive dies
while actively employed by Employer, subject, however, to satisfying any
applicable underwriting restrictions or guidelines existing at the time of
adjustment.

     C. The designated beneficiary of the Executive shall be paid an amount
equal to one (1) times annual base salary, subject, however, to satisfying any
applicable underwriting restrictions or guidelines existing at the time of
adjustment, if the Executive dies after terminating active employment with
Employer due to Disability or Normal Retirement, provided that the termination
of active employment occurs prior to the termination of this Agreement.

        (1) The benefit paid if the Executive dies after terminating active
employment with Employer due to Disability is based on the Executive's annual
base salary at the time the Disability occurred.

 3.2 Insurance proceeds will not be paid if the Executive commits suicide, while
sane or insane,  within two (2) years from the date of the policy.  Instead,  an
amount  equal to all premiums  paid,  without  interest,  will be paid under the
terms of this Agreement.

 3.3 "Normal Retirement", for the purpose of this Agreement, means attaining the
age of sixty-five (65).

 3.4  "Annual  Base  Salary",  for the  purpose  of this  Agreement,  means  the
Executive's regular salary, without bonus, as of the date Executive was actively
at work.

<PAGE>

SECTION 4

Exercise of Rights

 4.1 The  Employer,  during  the  lifetime  of the  Executive  and  prior to the
termination of this Agreement, may exercise any of its rights as Assignee of the
Policy only upon thirty (30) days written notice to the  Executive.  Such notice
shall be given to the  Executive  either in person or by mailing as provided for
in Section 8.1 of this Agreement.

 4.2 Subject to the Employer's rights as Assignee,  the Owner retains all rights
as Owner of the Policy.  Notwithstanding the  aforementioned,  neither the Owner
nor the  Employer  shall  withdraw,  surrender,  borrow  against,  or  pledge as
security for a loan any portion of the Policy while this Agreement is in effect.

SECTION 5

Termination of Agreement

 5.1 This Agreement shall terminate if any of the following takes place:

     A. Termination of the Executive's employment with the Employer prior to the
Executive's becoming eligible for disability benefits under a Disability plan of
the Employer or for a Normal Retirement benefit under any qualified pension plan
maintained by the Employer; or

     B.  Demotion of the Executive to a position which is not part of the group
of Employees eligible to participate in the Employer's Split Dollar Insurance
Program as determined by the Employer; or

     C.  The bankruptcy of the Employer; or

     D.  The failure of the Employer or the Executive to pay their respective
share of the premium under Section 1 of this Agreement; or

     E.  Payment to the Employer of the aggregate amount of the premiums paid
either directly by the Executive or by a withdrawal from the Policy.

     F.  Termination of this Agreement pursuant to Section 12.3; or

     G.  The death of the Executive; or

     H.  Program Maturity Date.  This occurs the year in which sufficient funds
will have, or should have, accumulated assuming that the Executive has at all
times been classified as standard non-smoker, whether or not so classified, in
the Policy to sustain the projected death benefit amount, or when the Executive
attains the age of sixty-five (65), whichever occurs later.

 5.2 In the event of termination of this Agreement,  the lesser of the aggregate
of the premiums paid by the Employer pursuant to this Agreement, or the net cash
value in the Policy,  shall  become due and payable to the  Employer,  except as
provided  for herein.  Upon  payment of such  amount  from the Policy,  from the
Executive,  or from whatever other source,  the Employer shall execute a release
of the Collateral  Assignment  Agreement and deliver such release and the Policy
to the Owner.

 5.3 In the event of a Change of Control,  as defined in the  written  severance
policy in effect at that time, such severance policy shall thereafter  remain in
force for  purposes of this  Agreement.  In the event of a Change of Control and
the Executive is entitled to benefits for  termination of employment  under such
severance  policy,  then,  in  addition,  he shall have no  obligation  to repay
premiums to the Employer as stated in Section 5.2

SECTION 6

Taxation

 6.1 All income taxes  attributable  to the Executive  which are relevant to the
Policy or this Agreement,  whether federal,  state or local, which may be due or
may become due, are the sole responsibility of the Executive, or the Executive's
beneficiary,  while this  Agreement is in force and after it has  terminated for
any reason.

SECTION 7

Insurer Not a Party

 7.1  Metropolitan  shall not be deemed to be a party to this  Agreement for any
purpose  nor  shall  it be  deemed  in any way  responsible  for  its  validity.
Metropolitan  shall  not be  obligated  to  inquire  as to the  distribution  or
application of any monies  payable or paid by it under the Policy,  and Payments
or other performance of its contract obligations in accordance with the terms of
the Policy shall fully discharge  Metropolitan  from any and all liability under
the Policy.

<PAGE>

SECTION 8

Notices

 8.1 Any notices required or permitted to be given under this Agreement shall be
in writing and shall be deemed properly given if sent by registered or certified
mail, addressed as follows:

         (1)      Notices to Executive:

         (2)      Notices to Employer:      _______________________ (Bank)
                                             c/o G. E. Aumiller
                                             Keystone Financial, Inc.
                                             P.O. Box 3660
                                             Harrisburg, PA  17105-3660

         Either  party  may,  from time to time,  change  the  address  to which
notices shall be mailed by giving notice of such address in the manner  provided
herein.

SECTION 9

Other Benefits

 9.1  Participation in this Program is designed to supersede and render void the
group term life  insurance  currently  provided to the  Executive.  In all other
respects,  the benefits  described  herein are in addition to any other benefits
the Executive may have under any plan or program of the Employer, and, except as
aforementioned or otherwise expressly provided for herein,  shall supplement and
shall not supersede any other  agreement  between the Employer and the Executive
or any provision contained therein.

<PAGE>

SECTION 10
\Named Fiduciary

10.1 The  Employer is hereby  designated  as the Named  Fiduciary  of this Split
Dollar  Insurance  Program,  in accordance with the Employee  Retirement  Income
Security Act of 1974.  The business  address and  telephone  number of the Named
Fiduciary are:

                                            ________________________ (Bank)
                                              c/o G. E. Aumiller
                                              Keystone Financial, Inc.
                                              One Keystone Plaza
                                              Front & Market Streets

                                              P.O. Box 3660
                                              Harrisburg, PA  17105-3660

         The Named  Fiduciary shall have the authority to control and manage the
operation and administration of this Program.  However,  the Named Fiduciary may
allocate its  responsibilities  for the  operation  and  administration  of this
Program, including the designation of persons who are not Named Fiduciaries,  to
carry out fiduciary responsibilities.

         The Named  Fiduciary of this Program  shall be  responsible  for making
timely delivery of any required premiums to the Insurer.

         All pertinent  documents  shall be retained by the Named  Fiduciary and
made available for examination at the above  indicated  business  address.  Upon
written request, the Program document and other information shall be provided to
the Parties of this Program.

SECTION 11

Claims Procedure

11.1  Benefits  shall be payable in accordance  with the  Agreement  provisions.
Should the  Executive  or  beneficiary  fail to receive  benefits  to which such
Executive or beneficiary  believes he or she is entitled,  a claim may be filed.
Any claim for a Program  benefit  hereunder  shall be filed by the  Executive or
beneficiary (claimant) of this Program by written  communication,  which is made
by the claimant or the claimant's authorized representative, which is reasonably
calculated to bring the claim to the attention of the Named Fiduciary.

         If a claim for a Program  benefit  is wholly  or  partially  denied,  a
written  notice of the decision  shall be furnished to the claimant by the Named
Fiduciary or his designee  within a reasonable  period of time after  receipt of
the claim by the Program, which notice shall include the following information:

     (A) The specific reason or reasons for the denial;

     (B) Specific reference to the pertinent Agreement provisions upon which the
 denial is based;

     (C) A description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such material or
information is necessary; and

     (D) An explanation of the Program's claim review procedures.

         In order that a claimant may appeal a denial of a claim,  a claimant or
his duly authorized representative:

     (A) May request a review by written application to the Named Fiduciary or
his designee not later than 60 days after receipt by the claimant of written
notification of denial of a claim;

     (B) May review pertinent documents; and

     (C) May submit issues and comments in writing.

         A decision of review of a denied  claim shall be made not later than 60
days  after the  Program's  receipt  of a request  for  review,  unless  special
circumstances  require  an  extension  of time for  processing,  in which case a
decision  shall be rendered  within a reasonable  period of time,  but not later
than 120 days after  receipt of a request  for  review.  The  decision on review
shall be in writing and shall  include the specific  reason(s)  for the decision
and the specific reference(s) to the pertinent Agreement provisions on which the
decision is based.

         Notwithstanding anything contained in this Section to the contrary, any
claim for a death benefit under an insurance  policy under this Program shall be
filed  with  the  Insurer  by  the   claimant  or  the   claimant's   authorized
representative  on the form or forms prescribed for such purpose by the Insurer.
The Insurer  shall have sole  authority  for  determining  whether a death claim
shall or shall not be paid,  either in whole or in part, in accordance  with the
terms of such  insurance  contract  which may have been purchased on the life of
the Executive.

<PAGE>

SECTION 12

Amendment and Assignment of Agreement

12.1 This Agreement shall not be modified or amended except in writing signed by
the Parties hereto.

12.2 This Agreement is binding upon the heirs, administrators or assigns of each
Party.

12.3 Subject to  provisions of any written  severance  policy then in existence,
this  Agreement may be terminated by either Party with thirty (30) days' written
notice to the other.

SECTION 13

Employment

13.1 This  Agreement  shall not in any way  constitute an  employment  agreement
between the Executive and the Employer and shall in no way obligate the Employer
to continue  the  employment  of  Executive  with the  Employer,  nor shall this
Agreement  limit the right of the Employer to terminate  Executive's  employment
with the Employer for any reason.

SECTION 14

Jurisdiction

14.1 The Parties hereto consent to the exclusive  jurisdiction  of the courts of
the Commonwealth of Pennsylvania in any and all actions arising hereunder.

SECTION 15

State Law

15.1  This   Agreement,   all  matters   involving  its  validity,   effect  and
interpretation,  and the rights of the Parties  hereunder,  shall be governed by
and construed pursuant to the laws of the Commonwealth of Pennsylvania.

<PAGE>

SECTION 16

Interpretation

16.1 Where appropriate,  words used in the singular shall include the plural and
words used in the masculine shall include the feminine and vice versa.

IN WITNESS  WHEREOF,  the Parties  hereto  intending to be legally  bound,  have
executed this Agreement as of the day and year first above written.

                                       KEYSTONE FINANCIAL, INC.

                                       By:  __________________________________
                                                Authorized Representative

                                       (Bank)

                                       By: ___________________________________
WITNESS:                                       Authorized Representative

------------------------------      -----------------------------------------
                                                  Employee

KEYSTONE FINANCIAL, INC. /  (Bank)

                        EXECUTIVE SPLIT DOLLAR AGREEMENT

THIS AGREEMENT is made and entered into effective this 1st day of January, 1998,
by and between KEYSTONE FINANCIAL, INC.("Sponsor") through one of its affiliated
companies  _____________________ , ("Employer"), a Pennsylvania corporation, and
____________________  ("Executive") an employee of the Employer,  and represents
the  final   understanding  of  the  parties  regarding  the  benefits  provided
hereunder.

W I T N E S S E T H

WHEREAS,  the  Executive is insured  under Policy  Number  _______________  (the
"Policy") issued by Metropolitan Life Insurance Company ("Metropolitan"); and

WHEREAS,  the owner of the Policy (the  "Owner")  shall be the  Executive or the
person or other  entity to whom the  Executive  assigns  the Policy  pursuant to
Section 4; and

WHEREAS,  Sponsor and Employer highly values Executive's efforts, abilities, and
accomplishments; and

WHEREAS, Executive is deemed a member of a select group of management and/or one
of the highly compensated employees of the Employer; and

WHEREAS,  Employer wishes to provide  Executive with permanent life insurance as
an  additional  employment  benefit  and is willing to assist in the  payment of
premiums under the Policy as provided in this Agreement; and

WHEREAS, the Executive has agreed to assign an interest in the Policy to Sponsor
as  collateral  security  for such  premium  payments,  at the time of the first
premium  payment,   on  a  form  of  agreement  approved  by  Metropolitan  (the
"Collateral Assignment Agreement"); and

WHEREAS, in order to be eligible for such benefit, Executive agrees to the terms
hereinafter provided;

NOW,  THEREFORE,  Employer and Executive  ("Parties"),  in  consideration of the
mutual covenants and agreements described below, hereby agree as follows:

<PAGE>

SECTION 1

Payment of Premiums

 1.1 The Employer shall pay the premiums on the Policy,  less the amount paid by
the Executive  pursuant to Section 1.4, until the termination of this Agreement,
pursuant to Section 5. The  Employer  may  increase or  decrease  the  scheduled
premium for any year after the first year. Each premium for the Policy following
execution of this  Agreement  will be remitted by the  Employer to  Metropolitan
within thirty-one (31) days following the anniversary date of the Policy.

 1.2 The  premium  payment  periods  may also be changed by the  Employer to the
extent  necessary to maintain  compliance  of the Policy with  Sections 7702 and
7702A of the Internal Revenue Code and the regulations thereunder.

 1.3 No payment of interest by the Executive will be due on the premium amounts
paid by the Employer.

 1.4 The  Executive  shall pay a portion of the  premium  in an amount  that for
federal  income tax purposes is equal to the value of the "economic  benefit" of
the life insurance  protection enjoyed by the Executive each year. The "economic
benefit" is to be determined by reference to IRS Rev.  Ruls.  64-328 and 66-110,
or any  rulings  which  may  substitute,  supercede,  replace,  or  amend  them,
governing the federal income tax consequences of split dollar  arrangements.  At
the inception of this agreement,  Metropolitan  Life Insurance Company has rated
the  Executive as "standard  non-smoker".  The  Agreement  provides  that if the
Annual Base Salary of the  Executive  increases,  there will be a  corresponding
adjustment to the benefit hereunder. Depending on the amount of the increase and
frequency  of such,  the  placement of the  additional  coverage may require new
underwriting.  If this occurs, and if at that time,  Metropolitan Life Insurance
Company rates the Executive  less  favorably  than  "standard  non-smoker",  the
Employer will contribute to the additional premium as herein provided,  however,
based on a  standard  non-smoker  classification.  Consequently,  if the  rating
continues as to such excess,  the policy at program  maturity  date may not have
sufficient cash value to realize the objective  described in Section 1.7B below.
Therefore,  if the Executive wishes to attain this objective,  Executive may, in
his or her  discretion,  make additional  premium  payments in amounts as may be
indicated from time to time by Metropolitan  Life Insurance Company as necessary
to create the augmented value in the policy to realize such objective.

 1.5  The  Employer  shall continue  to  pay  its  portion of the premium if the
Executive is disabled while actively employed.

 1.6  "Disability",  for the purpose of this Agreement means, that the Executive
has  met  the  requirements  for  disability  under  the  Employer's  Long  Term
Disability  Plan,  is not  eligible  for full  retirement,  and is  incapable of
fulfilling job duties due to mental or physical disability.

 1.7  "Premium",  for the  purpose  of this  Agreement,  means  the sum  paid to
Metropolitan   Life  Insurance  Company  as  consideration  for  the  individual
Universal Life Policy specifically referred to in this Agreement.  Premiums paid
are  scheduled  to be  in  an  amount,  assuming  that  the  Executive  has  the
underwriting status of "standard non-smoker",  so as to accumulate policy values
at the program maturity date sufficient to:

      A. Provide total death benefits equal to at least two times the
Executive's annual base salary plus the accumulated premiums paid by the
Employer during the Executive's active employment and equal to at least two (2)
times the Executive's final annual base salary plus accumulated premiums paid by
the Employer after the Executive's active employment and prior to termination of
this Agreement;

      B. Keep the policy in force after the program maturity date with a death
benefit equal to two (2) times the Executive's final annual base salary until
the Executive attains the age of ninety-five (95); and

      C. Prior to the program maturity date, withdraw an amount to be paid to
the Employer equal to the accumulated premiums paid by the Employer.

         The sufficiency of the amount needed to meet the provisions above shall
be  determined  as of the  program  maturity  date  and  shall  be  based on the
insurer's  current interest  crediting and mortality rates as of that same date.
The Employer shall not be  responsible  for events  occurring  subsequent to the
program  maturity date which may result in an  insufficient  level of funding to
meet the provisions above.

SECTION 2

Policy Beneficiary Designation

 2.1 The right to  designate  and  change the  beneficiary  of the Policy and to
elect an optional  mode of settlement is reserved to the person who would be the
Owner of the Policy in the absence of the Collateral Assignment Agreement.  Such
Owner  of  the  Policy  shall  have  the  right  to  designate  and  change  the
beneficiaries  and  contingent  beneficiaries  and to elect an optional  mode of
settlement  subject  to the  interest  of the  Employer  as  Assignee  under the
Collateral Assignment Agreement, and the Employer will make the Policy available
to the Owner, if required, for endorsement of a change of beneficiary.

<PAGE>

SECTION 3

Payment of Policy Proceeds in Event of Death of Employee

 3.1 If the Executive  dies (other than by suicide within two (2) years from the
Policy  issue  date)  while the  Policy  and this  Agreement  are in force,  the
proceeds of the Policy shall be payable as follows:

     A. Part shall be payable to the Employer; this part shall be equal to the\
proceeds of the Policy not payable to the beneficiary pursuant to paragraph B or
paragraph C of this section.

     B. The designated beneficiary of the Executive shall be paid an amount
equal to two (2) times the Executive's annual base salary if the Executive dies
while actively employed by Employer, subject, however, to satisfying any
applicable underwriting restrictions or guidelines existing at the time of
adjustment.

     C. The designated beneficiary of the Executive shall be paid an amount
equal to two (2) times annual base salary, subject, however, to satisfying any
applicable underwriting restrictions or guidelines at the time of adjustment if
the Executive dies after terminating active employment with Employer due to
Disability or Normal Retirement, provided that the termination of active
employment occurs prior to the termination of this Agreement.

       (1) The benefit paid if the Executive dies after terminating active
employment with Employer due to Disability is based on the Executive's annual
base salary at the time the Disability occurred.

 3.2 Insurance proceeds will not be paid if the Executive commits suicide, while
sane or insane,  within two (2) years from the date of the policy.  Instead,  an
amount  equal to all premiums  paid,  without  interest,  will be paid under the
terms of this Agreement.

 3.3 "Normal Retirement", for the purpose of this Agreement, means attaining the
age of sixty-five (65).

 3.4 "Annual Base Salary", for the purpose of this Agreement, means the
Executive's regular salary, without bonus, as of the date Executive was actively
at work.

SECTION 4

Exercise of Rights

 4.1 The  Employer,  during  the  lifetime  of the  Executive  and  prior to the
termination of this Agreement, may exercise any of its rights as Assignee of the
Policy only upon thirty (30) days written notice to the  Executive.  Such notice
shall be given to the  Executive  either in person or by mailing as provided for
in Section 8.1 of this Agreement.

 4.2 Subject to the Employer's rights as Assignee,  the Owner retains all rights
as Owner of the Policy.  Notwithstanding the  aforementioned,  neither the Owner
nor the  Employer  shall  withdraw,  surrender,  borrow  against,  or  pledge as
security for a loan any portion of the Policy while this Agreement is in effect.

SECTION 5

Termination of Agreement

 5.1 This Agreement shall terminate if any of the following takes place:

     A. Termination of the Executive's employment with the Employer prior to the
Executive's becoming eligible for disability benefits under a Disability plan of
the Employer or for a Normal Retirement benefit under any qualified pension plan
maintained by the Employer; or

     B.  Demotion of the Executive to a position which is not part of the group
of Employees eligible to participate in the Employer's Split Dollar Insurance
Program as determined by the Employer; or

     C.  The bankruptcy of the Employer; or

     D.  The failure of the Employer or the Executive to pay their respective
share of the premium under Section 1 of this Agreement; or

     E.  Payment to the Employer of the aggregate amount of the premiums paid
either directly by the Executive or by a withdrawal from the Policy.

     F.  Termination of this Agreement pursuant to Section 12.3; or

     G.  The death of the Executive; or

     H.  Program Maturity Date.  This occurs the year in which sufficient funds
will have, or should have, accumulated assuming that the Executive has at all
times been classified as standard non-smoker, whether or not so classified in
the Policy to sustain the projected death benefit amount, or when the Executive
attains the age of sixty-five (65), whichever occurs later.

 5.2 In the event of termination of this Agreement,  the lesser of the aggregate
of the premiums paid by the Employer pursuant to this Agreement, or the net cash
value in the Policy,  shall  become due and payable to the  Employer,  except as
provided  for herein.  Upon  payment of such  amount  from the Policy,  from the
Executive,  or from whatever other source,  the Employer shall execute a release
of the Collateral  Assignment  Agreement and deliver such release and the Policy
to the Owner.

 5.3 In the event of a Change of Control as defined in the  Executive's  written
Employment  Agreement  then in effect and the  Executive is entitled to benefits
for  termination  of  employment  as a result  of a Change of  Control,  then in
addition,  he shall have no  obligation  to repay  premiums  to the  Employer as
stated in Section 5.2.

SECTION 6

Taxation

 6.1 All income taxes  attributable  to the Executive  which are relevant to the
Policy or this Agreement,  whether federal,  state or local, which may be due or
may become due, are the sole responsibility of the Executive, or the Executive's
beneficiary,  while this  Agreement is in force and after it has  terminated for
any reason.

SECTION 7

Insurer Not a Party

 7.1  Metropolitan  shall not be deemed to be a party to this  Agreement for any
purpose  nor  shall  it be  deemed  in any way  responsible  for  its  validity.
Metropolitan  shall  not be  obligated  to  inquire  as to the  distribution  or
application of any monies  payable or paid by it under the Policy,  and Payments
or other performance of its contract obligations in accordance with the terms of
the Policy shall fully discharge  Metropolitan  from any and all liability under
the Policy.

SECTION 8

Notices

 8.1 Any notices required or permitted to be given under this Agreement shall be
in writing and shall be deemed properly given if sent by registered or certified
mail, addressed as follows:

         (1) Notices to Executive:

<PAGE>

         (2)  Notices to Employer:       _________________ (Bank)
                                          c/o G. E. Aumiller
                                          Keystone Financial, Inc.
                                          P.O. Box 3660
                                          Harrisburg, PA  17105-3660

         Either  party  may,  from time to time,  change  the  address  to which
notices shall be mailed by giving notice of such address in the manner  provided
herein.

SECTION 9

Other Benefits

 9.1  Participation in this Program is designed to supersede and render void the
group term life  insurance  currently  provided to the  Executive.  In all other
respects,  the benefits  described  herein are in addition to any other benefits
the Executive may have under any plan or program of the Employer, and, except as
aforementioned or otherwise expressly provided for herein,  shall supplement and
shall not supersede any other  agreement  between the Employer and the Executive
or any provision contained therein.

SECTION 10

Named Fiduciary

10.1 The  Employer is hereby  designated  as the Named  Fiduciary  of this Split
Dollar  Insurance  Program,  in accordance with the Employee  Retirement  Income
Security Act of 1974.  The business  address and  telephone  number of the Named
Fiduciary are:

                  ________________________ (Bank)
                  c/o G. E. Aumiller
                  Keystone Financial, Inc.
                  One Keystone Plaza

                  Front & Market Streets
                  P.O. Box 3660
                  Harrisburg, PA 17105-3660

         The Named  Fiduciary shall have the authority to control and manage the
operation and administration of this Program.  However,  the Named Fiduciary may
allocate its  responsibilities  for the  operation  and  administration  of this
Program, including the designation of persons who are not Named Fiduciaries,  to
carry out fiduciary responsibilities.

         The Named  Fiduciary of this Program  shall be  responsible  for making
timely delivery of any required premiums to the Insurer.

         All pertinent  documents  shall be retained by the Named  Fiduciary and
made available for examination at the above  indicated  business  address.  Upon
written request, the Program document and other information shall be provided to
the Parties of this Program.

SECTION 11

Claims Procedure

11.1  Benefits  shall be payable in accordance  with the  Agreement  provisions.
Should the  Executive  or  beneficiary  fail to receive  benefits  to which such
Executive or beneficiary  believes he or she is entitled,  a claim may be filed.
Any claim for a Program  benefit  hereunder  shall be filed by the  Executive or
beneficiary (claimant) of this Program by written  communication,  which is made
by the claimant or the claimant's authorized representative, which is reasonably
calculated to bring the claim to the attention of the Named Fiduciary.

         If a claim for a Program  benefit  is wholly  or  partially  denied,  a
written  notice of the decision  shall be furnished to the claimant by the Named
Fiduciary or his designee  within a reasonable  period of time after  receipt of
the claim by the Program, which notice shall include the following information:

     (A) The specific reason or reasons for the denial;

     (B) Specific reference to the pertinent Agreement provisions upon which the
denial is based;

     (C) A description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such material or
information is necessary; and

     (D) An explanation of the Program's claim review procedures.

         In order that a claimant may appeal a denial of a claim,  a claimant or
his duly authorized representative:

     (A) May request a review by written application to the Named Fiduciary or
his designee not later than 60 days after receipt by the claimant of written
notification of denial of a claim;

     (B) May review pertinent documents; and

     (C) May submit issues and comments in writing.

         A decision of review of a denied  claim shall be made not later than 60
days  after the  Program's  receipt  of a request  for  review,  unless  special
circumstances  require  an  extension  of time for  processing,  in which case a
decision  shall be rendered  within a reasonable  period of time,  but not later
than 120 days after  receipt of a request  for  review.  The  decision on review
shall be in writing and shall  include the specific  reason(s)  for the decision
and the specific reference(s) to the pertinent Agreement provisions on which the
decision is based.

         Notwithstanding anything contained in this Section to the contrary, any
claim for a death benefit under an insurance  policy under this Program shall be
filed  with  the  Insurer  by  the   claimant  or  the   claimant's   authorized
representative  on the form or forms prescribed for such purpose by the Insurer.
The Insurer  shall have sole  authority  for  determining  whether a death claim
shall or shall not be paid,  either in whole or in part, in accordance  with the
terms of such  insurance  contract  which may have been purchased on the life of
the Executive.

SECTION 12

Amendment and Assignment of Agreement

12.1 This Agreement shall not be modified or amended except in writing signed by
the Parties hereto.

12.2 This Agreement is binding upon the heirs, administrators or assigns of each
Party.

12.3 Subject to provisions of any written Employment  Agreement,  this Agreement
may be terminated  by either Party with thirty (30) days' written  notice to the
other.

SECTION 13

Employment

13.1 This  Agreement  shall not in any way  constitute an  employment  agreement
between the Executive and the Employer and shall in no way obligate the Employer
to continue  the  employment  of  Executive  with the  Employer,  nor shall this
Agreement  limit the right of the Employer to terminate  Executive's  employment
with the Employer for any reason.

SECTION 14

Jurisdiction

14.1 The Parties hereto consent to the exclusive  jurisdiction  of the courts of
the Commonwealth of Pennsylvania in any and all actions arising hereunder.

SECTION 15

State Law

15.1  This   Agreement,   all  matters   involving  its  validity,   effect  and
interpretation,  and the rights of the Parties  hereunder,  shall be governed by
and construed pursuant to the laws of the Commonwealth of Pennsylvania.

SECTION 16

Interpretation

16.1 Where appropriate,  words used in the singular shall include the plural and
words used in the masculine shall include the feminine and vice versa.

IN WITNESS  WHEREOF,  the Parties  hereto  intending to be legally  bound,  have
executed this Agreement as of the day and year first above written.

                                     KEYSTONE FINANCIAL, INC.

                                     By:_____________________________________
                                              Authorized Representative

                                     (Bank)

                                     By: ___________________________________
WITNESS:                             Authorized Representative

_________________________________    _______________________________________
                                                  Employee

                            KEYSTONE FINANCIAL, INC.

                         COLLATERAL ASSIGNMENT AGREEMENT

1.   For value received, the undersigned (the "Policyowner"), as owner of Policy
     Number 200950011U (the "Policy") issued by Metropolitan Life Insurance
     Company (the "Insurer"), hereby assigns, sets over and transfers the Policy
     to Keystone Financial, Inc. and its affiliated companies  (the Assignee"),
     a corporation organized under the laws of the Commonwealth of Pennsylvania,
     as collateral security for those liabilities as may arise under the terms
     of the Split Dollar Agreement between the Policyowner and Assignee dated as
     of January 1, 2000 (the "Split Dollar Agreement"), subject to the terms and
     conditions in the Policy and to all superior liens, if any, which the
     Insurer has or may have against the Policy.

2.   The collateral  assignment  being made pursuant to this Agreement is solely
     for the purpose of  assuring  the  Assignee  of payment of the  liabilities
     under the terms of the Split Dollar Agreement.

3.   The Policyowner and the Assignee  expressly agree,  without detracting from
     the generality of the foregoing,  that the following rights are included in
     this Agreement and pass to the Assignee by virtue hereof:

     A.  The right to collect the proceeds of the Policy, up to its interest,
         from the Insurer when the Policy becomes a claim by death or becomes
         due in accordance with the Split Dollar Agreement.
     B.  The right to surrender the Policy and receive the cash surrender value,
         up to its interest, pursuant to the Policy
         provisions and in accordance with Paragraph 5(D) of this Agreement.
     C.  The right to assign,  sell or convey only the amount of its interest in
         the Policy, subject to the interest of the Policyowner,  to a successor
         company  in the event of a Change of  Control  as  defined in the Split
         Dollar Agreement.  In the event of such assignment,  sale or conveyance
         Assignee  must provide the  Policyowner  with  written  notice at least
         thirty (30) days prior to said assignment,  sale or conveyance,  either
         in person or by mail as provided for in the Split Dollar Agreement.

4.   The Policyowner and the Assignee expressly agree that as long as the Policy
     has  not  been  surrendered,  the  following  rights  are  reserved  by the
     Policyowner  and excluded from this  assignment,  and do not pass by virtue
     hereof.

     A.  The sole right to designate and change the beneficiary.
     B.  The sole right to elect any Optional Mode of Settlement permitted by
         the Policy or permitted by the Insurer

5.       The Assignee covenants and agrees with the Policyowner:

     A.  That the Insurer,  in the event of a death claim,  shall be authorized
         to issue separate  checks to pay the amounts due to each party,  up to
         their  interests,  and in accordance with this Agreement and the Split
         Dollar Agreement.

     B.  That any amounts  due to be paid by the Insurer  pursuant to the terms
         of the  Policy  and this  Agreement  in  excess  of the then  existing
         liabilities of the Policyowner  under the Split Dollar Agreement shall
         be paid by the  Insurer  to the  persons  entitled  thereto  under the
         Policy had this Agreement not been  executed,  provided  however,  any
         amount in excess of the entitlement of the policyowner under the Split
         Dollar Agreement shall be paid to the assignee.

     C.  In the event any  amounts  are paid to the  Assignee by the Insurer to
         which the Assignee is not entitled pursuant to the terms of the Policy
         and this  Agreement,  said amounts are to be immediately  forwarded to
         the persons entitled thereto. If this is not done within ten (10) days
         the persons so entitled to the benefits may initiate legal action in a
         court of  competent  jurisdiction  as provided for in the Split Dollar
         Agreement.  Any and all reasonable legal fees and expenses incurred by
         the entitled  persons to enforce their rights to receive such benefits
         shall be the sole responsibility of the Assignee.

     D.  That the Assignee  will not exercise  either the right to surrender or
         withdraw from the Policy unless and until there has been an occurrence
         of some event specifically  stated in the Split Dollar Agreement which
         calls for the  Assignee  to recover  amounts to which the  Assignee is
         entitled  under the  Policy.  In any  event,  the  Assignee  shall not
         exercise  any of its rights  under the Policy  until  thirty (30) days
         after the Assignee shall have mailed, by registered or certified mail,
         to the  Policyowner  at the address  last  supplied  to the  Assignee,
         specifically  referring  to this  assignment,  notice of  intention to
         exercise such right.

Upon the full payment of all liabilities under the Split Dollar Agreement by the
Policyowner  to  the  Assignee,   the  Assignee  shall  execute  an  appropriate
instrument of release of this assignment .

The Insurer shall be fully protected and discharged  from further  obligation by
paying  in  reliance  upon the  terms of the  Policy  and/or  the  terms of this
Agreement.  The  Insurer  shall not be bound by the  terms of the  Split  Dollar
Agreement  and may  rely on any  written  assurance  concerning  such  Agreement
provided  to the  Insurer by the  Policyowner  or the  Assignee.  Any  conflicts
between this assignment and any other  agreement,  with respect to the rights of
the Assignee under the Policy, shall be resolved in accordance with the terms of
this assignment.

By their signatures to this Agreement,  the parties acknowledge that (1) neither
the Insurer which is the issuer of the Policy,  nor any agent  thereof,  nor any
person acting on its behalf,  has given any legal or tax advice  concerning this
Agreement;  and (2)  that the  execution  of this  document  has  legal  and tax
consequences and should not be signed without the advice of their own attorneys.

ATTEST:                                        KEYSTONE FINANCIAL, INC.

__________________________________      By:  _________________________________

WITNESS:
__________________________________           _________________________________
                                                        ExecutiveExhibit 10.63

                          AGREEMENT AND PLAN OF MERGER

                                  BY AND AMONG

                               FEMPARTNERS, INC.,

                       FEMPARTNERS OF CENTRAL TEXAS, INC.

                                       AND

                         SYNTERA HEALTHCARE CORPORATION

                                 August 31, 1999

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

ARTICLE I   THE MERGER.........................................................1
            Section 1.1.  The Merger...........................................1
            Section 1.2.  Effective Time of the Merger.........................2

ARTICLE II  THE SURVIVING CORPORATION..........................................2
            Section 2.1.  Certificate of Incorporation.........................2
            Section 2.2.  Bylaws...............................................2
            Section 2.3.  Directors........................ ...................2
            Section 2.4.  Officers.............................................2

ARTICLE III CONVERSION OF SHARES...............................................2
            Section 3.1.  Effect on Capital Stock..............................2
            Section 3.2.  Adjustments to Merger Consideration..................4
            Section 3.3.  Anti-Dilution........................................7
            Section 3.4.  Exchange of Certificates.............................7
            Section 3.5.  Stock Transfer Books.................................7
            Section 3.6.  No Further Ownership Rights in Company Common Stock..7
            Section 3.7.  Tax and Accounting Consequences......................8
            Section 3.8.  Taking of Necessary Action; Further Action...........8
            Section 3.9.  Closing..............................................8

ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF PARENT AND
            MERGER SUB.........................................................8
            Section 4.1.  Organization and Qualification.......................8
            Section 4.2.  Capitalization.......................................9
            Section 4.3.  Subsidiaries........................................10
            Section 4.4.  Authority; Non-Contravention; Approvals.............10
            Section 4.5.  Parent Financial Information........................11
            Section 4.6.  Absence of Undisclosed Liabilities..................11
            Section 4.7.  Absence of Certain Changes or Events................11
            Section 4.8.  Litigation..........................................13
            Section 4.9.  Accounts Receivable.................................13
            Section 4.10.  No Violation of Law; Compliance with Agreements....13
            Section 4.11.  Insurance..........................................14
            Section 4.12.  Taxes..............................................14
            Section 4.13.  Employee Benefit Plans.............................15
            Section 4.14.    Employee and Labor Matters. .....................16
            Section 4.15.  Environmental Matters..............................17
            Section 4.16.  Non-Competition Agreements.........................18

                                       ii

<PAGE>

            Section 4.17.  Title to Assets....................................18
            Section 4.18.  Contracts..........................................18
            Section 4.19.  Brokers and Finders................................18
            Section 4.20.  Intellectual Property..............................19
            Section 4.21.  Relationships......................................19
            Section 4.22.  Certain Payments...................................19
            Section 4.23.  Books and Records..................................19
            Section 4.24.  Condition and Sufficiency of Assets................20
            Section 4.25.  Offering.  ........................................20
            Section 4.26.  Staff Privileges...................................20
            Section 4.27.  Fraud and Abuse....................................20
            Section 4.28.  Medicare, Medicaid, and Other Third-Party Payor
                                 Payment Liabilities. ........................21

ARTICLE V   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................21
            Section 5.1.  Organization and Qualification......................21
            Section 5.2.  Capitalization......................................21
            Section 5.3.  Subsidiaries........................................22
            Section 5.4.  Authority; Non-Contravention; Approvals.............22
            Section 5.5.  Company Financial Information.......................23
            Section 5.6.  Absence of Undisclosed Liabilities..................23
            Section 5.7.  Absence of Certain Changes or Events................24
            Section 5.8.  Litigation..........................................25
            Section 5.9.  Accounts Receivable.................................25
            Section 5.10.  No Violation of Law; Compliance with Agreements....26
            Section 5.11.  Insurance..........................................27
            Section 5.12.  Taxes..............................................27
            Section 5.13.  Employee Benefit Plans.............................28
            Section 5.14.  Employee and Labor Matters.........................29
            Section 5.15.  Environmental Matters..............................30
            Section 5.16.  Non-Competition Agreements.........................31
            Section 5.17.  Title to Assets....................................31
            Section 5.18.  Contracts, Agreements, Plans and Commitments.......32
            Section 5.19.   Section 368 Representations.......................33
            Section 5.20.  Brokers and Finders................................34
            Section 5.21.  Intellectual Property..............................34
            Section 5.22.  Relationships......................................34
            Section 5.23.  Certain Payments...................................34
            Section 5.24.  Books and Records..................................35
            Section 5.25.  Condition and Sufficiency of Assets................35
            Section 5.26.  Offering...........................................35
            Section 5.27.  Staff Privileges...................................35
            Section 5.28.  Fraud and Abuse....................................35

                                       iii

<PAGE>

            Section 5.29.  Medicare, Medicaid, and Other Third-Party
Payor Payment Liabilities. ...................................................36
            Section 5.30.  Bank Accounts; Powers of Attorney..................36
            Section 5.31.  Year 2000 Compliance...............................36

ARTICLE VI  CONDUCT OF BUSINESS PENDING THE MERGER............................37
            Section 6.1.  Conduct of Business Pending the Merger..............37
            Section 6.2.  Control of the Company's Operations.................39
            Section 6.3.  Other Offers........................................39

ARTICLE VII ADDITIONAL AGREEMENTS.............................................39
            Section 7.1.  Access to Information...............................39
            Section 7.2.  Expenses and Fees...................................39
            Section 7.3.  Agreement to Cooperate..............................40
            Section 7.4.  Public Statements...................................40
            Section 7.5.  Notification of Certain Matters.....................40
            Section 7.6.  Exclusivity.........................................40
            Section 7.7.  Confidentiality.....................................41
            Section 7.8.  Registration Rights.  ..............................41
            Section 7.9.  Share Exchange Agreements...........................49
            Section 7.10.  Employee Benefits.  ...............................49
            Section 7.11.  Filings.  .........................................49
            Section 7.12.  Net Working Capital................................49
            Section 7.13.  Advances under Promissory Note; Payables. .........52
            Section 7.14.  Advances under Promissory Note; Event of Default...54
            Section 7.15.  Non-Interference.  ................................55
            Section 7.16.  Insurance..........................................56

ARTICLE VIII CONDITIONS TO CLOSING............................................56
            Section 8.1.  Conditions to Each Party's Obligation to Effect
                                 the Merger...................................56
            Section 8.2.  Conditions to Obligation of the Company to Effect
                                 the Merger...................................57
            Section 8.3.  Conditions to Obligations of Parent and Merger Sub to
                                 Effect the Merger............................58

ARTICLE IX  TERMINATION, AMENDMENT AND WAIVER.................................60
            Section 9.1.  Termination.........................................60
            Section 9.2.  Effect of Termination...............................62
            Section 9.3.  Amendment...........................................62
            Section 9.4.  Extensions; Waiver..................................62

ARTICLE X   INDEMNIFICATION...................................................62
            Section 10.1.  The Shareholders' Indemnity Obligations............62

                                       iv

<PAGE>

            Section 10.2.  Parent's Indemnity Obligations.....................63
            Section 10.3.  Indemnification Procedures.........................63
            Section 10.4.  Determination and Payment of Indemnified Amounts...65
            Section 10.5.  Limitation of Shareholders' Liability..............67
            Section 10.6.  Limitation of Parent's Liability...................67
            Section 10.7. Limitation on Indemnified Amounts.  ................68
            Section 10.8. Right of Subrogation................................68

ARTICLE XI  GENERAL PROVISIONS................................................68
            Section 11.1.  Survival...........................................68
            Section 11.2.  Notices............................................69
            Section 11.3.  Interpretation.....................................70
            Section 11.4.  Miscellaneous......................................70
            Section 11.5.  Governing Law......................................70
            Section 11.6.  Binding Arbitration................................70
            Section 11.7.  Counterparts.......................................72
            Section 11.8.  Entire Agreement...................................72
            Section 11.9.  Parties in Interest................................72
            Section 11.10.  Enforcement of the Agreement......................73
            Section 11.11.  Validity..........................................73

                                        v

<PAGE>

EXHIBITS:
--------
Exhibit A             Glossary
Exhibit B             Company Existing Practices
Exhibit C             Existing Management Agreements

Exhibit D             Calculation of Management Fee Contribution Margin
Exhibit E             Replacement Promissory Note

Exhibit F             Adjustments to GAAP
Exhibit G             First Payables Balance Sheet
Exhibit H             Non-Competition Agreements
Exhibit I             Parent Guaranty
Exhibit J             Co-Sale Rights Agreement
Exhibit K             Lease Agreement
Exhibit L             Subordination Agreement
Exhibit M             Investors' Certificate
Exhibit N             Investors Rights Agreement
Exhibit O             Professional Service Provider Security Agreement
Exhibit P             Security Agreement

SCHEDULES:
---------
Schedule 2.1          Surviving Corporation's Certificate of Incorporation
Schedule 2.2          Surviving Corporation's Bylaws
Schedule 2.3          Directors of the Surviving Corporation
Schedule 2.4          Officers of the Surviving Corporation
Schedule 3.1(a)       Shareholder Consideration
Schedule 3.2(a)       Ancillary Services
Schedule 4.1          Merger Sub Assets
Schedule 4.2(a)       Parent Capitalization
Schedule 4.2(b)       Other Outstanding Capital Stock
Schedule 4.3          Subsidiaries
Schedule 4.5          Parent Financial Statements
Schedule 4.6          Absence of Undisclosed Liabilities
Schedule 4.7          Absence of Certain Changes or Events
Schedule 4.8          Parent Litigation
Schedule 4.9          Parent Accounts Receivable
Schedule 4.10         Parent Permits
Schedule 4.11         Insurance
Schedule 4.12         Parent Taxes
Schedule 4.13         Parent Employee Benefit Plans
Schedule 4.14         Parent Employment and Labor Matters
Schedule 4.16         Parent Non-Competition Agreements
Schedule 4.17         Title to Assets
Schedule 4.18         Contracts

                                       vi

<PAGE>

Schedule 4.20         Parent Intellectual Property
Schedule 4.21         Relationships
Schedule 5.2(b)       Other Outstanding Capital Stock
Schedule 5.5          Company Financial Statements
Schedule 5.6          Absence of Undisclosed Liabilities
Schedule 5.7          Absence of Certain Changes or Events
Schedule 5.8          Company Litigation
Schedule 5.9          Company Accounts Receivable
Schedule 5.10(b)      No Violation of Law; Compliance with Agreements
Schedule 5.11         Company Insurance Policies
Schedule 5.12         Company Taxes
Schedule 5.13         Company Employee Benefit Plans
Schedule 5.14         Company Employee and Labor Matters
Schedule 5.16         Company Non-Competition Agreement
Schedule 5.17         Title to Assets
Schedule 5.18         Contracts, Agreements, Plans and Commitments
Schedule 5.19(a)      Share Exchange Agreements
Schedule 5.19(c)      Section 368 Representations
Schedule 5.27         Staff Privileges
Schedule 5.30         Bank Accounts; Powers of Attorney
Schedule 5.31         Year 2000 Noncompliance
Schedule 6.1          Conduct of Business Pending Merger

                                       vii

<PAGE>

                          AGREEMENT AND PLAN OF MERGER

         THIS  AGREEMENT  AND PLAN OF MERGER,  dated  effective as of August 31,
1999  (the  "Agreement"),  is  by  and  among  FEMPARTNERS,   INC.,  a  Delaware
corporation   ("Parent"),   FEMPARTNERS  OF  CENTRAL  TEXAS,  INC.,  a  Delaware
corporation  and a wholly owned  subsidiary of Parent ("Merger Sub") and SYNTERA
HEALTHCARE CORPORATION, a Texas corporation (the "Company").

                               W I T N E S E T H:

         WHEREAS,  Parent,  Merger Sub and the  Company  desire that the Company
merge with and into the Merger Sub (the "Merger");

         WHEREAS,  Parent,  Merger  Sub and the  Company  intend  the  Merger to
qualify as a tax-free  reorganization under the provisions of Section 368 of the
Internal  Revenue Code of 1986,  as amended (the  "Code"),  and the  regulations
thereunder;

         WHEREAS,  Parent and Merger  Sub are  making  certain  representations,
warranties  and  indemnities  as an  inducement  to the  Company and each of its
shareholders  (individually a "Shareholder" and collectively the "Shareholders")
to enter into this Agreement;

         WHEREAS, the Company is making certain representations,  warranties and
indemnities  as an  inducement  to  Parent  and  Merger  Sub to enter  into this
Agreement; and

         WHEREAS,  capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to them in the Glossary attached as Exhibit A.

         NOW,   THEREFORE,   in   consideration   of  the   premises   and   the
representations,  warranties,  covenants and agreements  contained  herein,  the
parties hereto, intending to be legally bound, agree as follows:

                                    ARTICLE I

                                   THE MERGER

         Section 1.1. The Merger.  Upon the terms and subject to the  conditions
of this  Agreement,  at the  Effective  Time  (as  defined  in  Section  1.2) in
accordance  with the  Delaware  General  Corporation  Law ("DGCL") and the Texas
Business Corporation Act ("TBCA"), the Company shall be merged with and into the
Merger Sub and the separate  existence  of the Company  shall  thereupon  cease.
Merger Sub shall be the surviving  corporation  in the Merger and is hereinafter
sometimes referred to as the "Surviving Corporation."

         Section  1.2.  Effective  Time of the Merger.  The Merger  shall become
effective at such time (the "Effective  Time") as (i) a certificate of merger is
filed with the  Secretary of State of the

<PAGE>

State of Delaware in  accordance  with the DGCL and (ii)  articles of merger are
filed with the Secretary of State of the State of Texas in  accordance  with the
TBCA (the "Merger  Filings").  The Merger  Filings shall be made  simultaneously
with or as soon as practicable after the Closing (as defined in Section 3.10) in
accordance  with Article III.  The parties  acknowledge  that it is their mutual
desire and intent to consummate the Merger as soon as practicable after the date
hereof,  and in any event within five (5) business days after the  satisfaction,
or waiver,  of all  conditions  to Closing  set forth in  Article  VIII  hereof,
subject  to  the  terms  and  conditions  hereof.  Accordingly,  subject  to the
provisions  hereof,  the parties shall use all reasonable efforts to consummate,
as soon as  practicable,  the  transactions  contemplated  by this  Agreement in
accordance with Article VIII.

                                   ARTICLE II

                            THE SURVIVING CORPORATION

         Section  2.1.   Certificate  of   Incorporation.   The  Certificate  of
Incorporation of Merger Sub as in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation after the
Effective  Time, as the same may  thereafter  be amended in accordance  with its
terms and as provided under the DGCL. The  Certificate of  Incorporation  of the
Merger Sub is attached hereto on Schedule 2.1.

         Section 2.2. Bylaws.  The Bylaws of Merger Sub as in effect immediately
prior to the  Effective  Time shall be the Bylaws of the  Surviving  Corporation
after the Effective  Time,  as the same may  thereafter be amended in accordance
with their terms and as  provided by the  Certificate  of  Incorporation  of the
Surviving Corporation and DGCL. The Bylaws of the Merger Sub are attached hereto
on Schedule 2.2.

         Section 2.3.  Directors.  The  directors of the  Surviving  Corporation
shall be as  designated  in  Schedule  2.3,  and such  directors  shall serve in
accordance with the Bylaws of the Surviving  Corporation  until their respective
successors are duly elected or appointed and qualified.

         Section 2.4. Officers.  The officers of the Surviving Corporation shall
be as designated  in Schedule  2.4, and such officers  shall serve in accordance
with the Bylaws of the Surviving  Corporation until their respective  successors
are duly elected or appointed and qualified.

                                   ARTICLE III

                              CONVERSION OF SHARES

         Section  3.1.  Effect  on  Capital  Stock.  Subject  to the  terms  and
conditions of this Agreement, at the Effective Time, by virtue of the Merger and
without any action on the part of the Parent, Merger Sub or the Company:

                                        2

<PAGE>

                  (a)  Conversion of  Securities.  All of the  Company's  common
stock,  $0.001  par  value  per  share  ("Company  Common  Stock"),  issued  and
outstanding immediately prior to the Effective Time (excluding any shares of the
Company  Common  Stock to be  canceled  pursuant  to  Section  3.1(b))  shall be
converted into the right to receive at Closing, in the aggregate, 885,714 shares
(as such  number  may be  adjusted  pursuant  to  Section  3.2 and as  otherwise
provided  in  this  Agreement,   the  "Merger   Consideration")  of  issued  and
outstanding  common stock,  par value $.01 per share,  of Parent ("Parent Common
Stock").  The aggregate  consideration  payable to each Shareholder is set forth
opposite  each  Shareholder's  name on  Schedule  3.1(a),  and,  subject  to the
provisions  of the  Agreement,  shall  be paid in  full  at  Closing;  provided,
however,  that until  satisfaction  of the  obligations of the Company,  if any,
under  Sections  3.2 and 10.1  hereof,  the  Parent  shall  retain  in escrow an
aggregate of thirty percent (30%) of the Share Equivalent  Transaction Value (as
defined in Section 3.2) in shares of Parent  Common Stock (as such number may be
adjusted pursuant to Section 3.3 and as may be subject to forfeiture pursuant to
Article X, the  "Retained  Shares").  A number of the  Retained  Shares equal to
fifteen percent (15%) of the Share Equivalent Transaction Value are specifically
withheld solely for purposes of satisfying any indemnity  obligations  which may
be owed by the  Shareholders  pursuant to Section  10.1  hereof  (the  "Retained
Indemnity  Shares").  The Retained  Shares shall reduce the Parent  Common Stock
distributed to the  Shareholders at Closing on a pro-rata basis according to the
percentage of the total Merger Consideration being received by each Shareholder.
The Retained Shares shall be subsequently distributed among the Shareholders and
Parent in accordance with the terms of Sections 3.2 and 10.4 hereof.

                  (b)  Cancellation.  Each share of Company Common Stock held in
the  treasury of the Company and each share of Company  Common Stock held by any
direct or indirect wholly owned Subsidiary of the Company,  if any,  immediately
prior to the  Effective  Time  shall,  by virtue of the Merger and  without  any
action on the part of the holder thereof,  cease to be outstanding,  be canceled
and retired without payment of any consideration therefor and cease to exist.

                  (c) Capital  Stock of Merger Sub.  Each share of common stock,
par value $.01 per share,  of Merger Sub ("Merger Sub Common  Stock") issued and
outstanding  immediately  prior to the  Effective  Time shall remain  issued and
outstanding.

                  (d)  Adjustments to Parent Common Stock.  The number of shares
of  Parent  Common  Stock  constituting  the  Merger   Consideration   shall  be
appropriately  adjusted to reflect fully the effect of any stock split,  reverse
split,  stock dividend  (including any dividend of securities  convertible  into
Parent Common  Stock),  reorganization,  reclassification,  recapitalization  or
other similar  change with respect to Parent Common Stock  occurring  (including
the record date thereof) after the date hereof and prior to the Effective Time.

         Section 3.2.  Adjustments to Merger Consideration.

                  (a)      The capitalized terms used in this Section shall have
the following meanings:

                                        3

<PAGE>

                  "Adjustment  Amount,"  which  may be a  positive  or  negative
number,  equals (i) the Adjustment  Percentage  Ratio times the Share Equivalent
Transaction  Value. The Adjustment Amount,  however,  is limited to no more than
positive fifteen percent (15%) of the Share Equivalent Transaction Value, and to
no less than negative fifteen percent (15%) of the Share Equivalent  Transaction
Value.

                  "Adjustment  Percentage  Ratio,"  which may be a  positive  or
negative  number,  is equal to (i)  Management  Fee  Contribution  Margin  minus
$988,000, divided by (ii) $988,000.

                  "Company  Existing  Practices"  means  the  practices  of  all
individual  physicians  which the  Company  managed as of the  Closing  Date (as
defined in Section 3.9) and listed on Exhibit B attached hereto.

                  "Determination  Period"  means the eighteen  (18) month period
beginning on July 1, 1999 and ending on December 31, 2000.

                  "Existing   Management   Agreements"   means  all   Management
Agreements  relating  to  Company  Existing  Practices  and  listed on Exhibit C
attached hereto.

                  "Management Fee Contribution Margin" or "MFCM" means an amount
equal to the  aggregate  of all Service Fees (as such term is defined in each of
the Existing  Management  Agreements)  earned in  accordance  with GAAP from the
Company Existing Practices under the Existing  Management  Agreements during the
Determination  Period,  regardless  of the party to whom such  Service  Fees are
payable,  less the Regional  Expenses (as  hereinafter  defined).  MFCM shall be
calculated in accordance  with  methodology  set forth in the schedule  attached
hereto as Exhibit D, with the revenues and expenses  included in the calculation
to be calculated in accordance with GAAP. In addition,  MFCM shall be calculated
and stated on an  annualized  basis,  but only after  subtracting  the aggregate
Service  Fees  during the  Determination  Period  that are  directly  related to
ancillary  services added to the Company Existing  Practices by Parent or Merger
Sub (excluding those ancillary  services  identified on Schedule 3.2(a) hereto).
The  specific  Regional  Expenses  that are directly  related to such  ancillary
services  added to the  Company  Existing  Practices  by Parent  or  Merger  Sub
(excluding those ancillary services  identified on Schedule 3.2(a) hereto) shall
not be deducted in  calculating  MFCM.  Notwithstanding  any  provision  of this
Section 3.2 or any other  provision of this Agreement,  appropriate  adjustments
shall be made in  calculating  MFCM to ensure that MFCM is not  decreased by (i)
any  adjustments  to the Balance  Sheet (as  hereinafter  defined)  accounts for
events  occurring  prior to June 30, 1999 or after December 31, 2000 or (ii) any
adjustments  which affect the  calculation of Net Working Capital (as defined in
Section 7.12).

                                        4

<PAGE>

                  "Regional  Expenses"  shall  include  all the actual  expenses
incurred to operate or manage the Company Existing Practices that are not Clinic
and  Provider  Expenses  (as such  terms  are  defined  in each of the  Existing
Management  Agreements).  However,  during  the  Determination  Period,  for the
purpose of calculating  the Adjustment  Percentage  Ratio and MFCM, the Regional
Expenses  shall only  include  salaries  and wages and  related  benefits of the
regional controller,  accountant,  and regional  administrator and the following
expenses related to the regional corporate office: rent,  utilities,  insurance,
legal,  professional  and  consulting  services,   computer  services,   travel,
maintenance and repairs, telephone, postage, printing and other related charges,
leasing  of office  equipment,  supplies,  parking,  outside  contractors,  bank
service  charges,  property  taxes,  professional  license  fees  and  dues  and
employment  fees;  provided,  however,  that for  purposes  of  calculating  the
Adjustment  Percentage  Ratio  and MFCM,  Regional  Expenses  shall  not  exceed
$246,600 per annum.  In accordance with the foregoing,  Regional  Expenses shall
not include (a) amortization  expenses related to the acquisition of the Company
Existing  Practices,  (b) depreciation  expenses related to the Company Existing
Practices,  (c) the  salaries  and  benefits of the Parent  executive  officers,
defined as President,  Chief Executive Officer,  Chief Financial Officer,  Chief
Operating  Officer  and/or Vice  President of Operations  and Chief  Development
Officer,  (d) the  salaries  and benefits of the  Regional  Vice  Presidents  of
Development,  and Parent business development expenses of affiliating with other
established  physician practices,  (e) interest expense, and (f) income taxes of
Syntera, Parent or Merger Sub.

                  "Replacement  Promissory  Note" means that certain  promissory
note, as hereafter amended,  substituted or replaced,  executed by Merger Sub at
the  Closing,  payable to  American  Physicians  Service  Group,  Inc.,  a Texas
corporation  ("APS"),  attached  hereto as Exhibit E, replacing all  outstanding
amounts under that certain  original  promissory note (the "Original  Promissory
Note") in the maximum principal amount of $3,000,000, dated November 1, 1998.

                  "Share Equivalent  Transaction Value" is equal to (i) 885,714,
plus  (ii)  the  outstanding  amount  under  the  Replacement   Promissory  Note
immediately following the Closing divided by $7.00.

<PAGE>

                  (b) On December  31,  2000 (the  "Calculation  Date"),  Parent
shall  cause  the  Surviving  Corporation  to  calculate  MFCM,  the  Adjustment
Percentage  Ratio  and the  Adjustment  Amount  (collectively,  the  "Adjustment
Calculations").  Within ninety (90) days following the Calculation  Date, Parent
shall deliver to each of the Shareholders a copy of the Adjustment Calculations,
and a clear written  statement  setting forth with  reasonable  specificity  the
Adjustment  Calculations and the values,  procedures and any assumptions used in
obtaining the Adjustment  Calculations.  The Shareholders  shall have 15 days to
object in writing to the Adjustment Calculations,  setting forth with reasonable
specificity any objections.  If Shareholders holding, in the aggregate, at least
25% of the previously  distributed  portion of the Merger  Consideration  do not
object  prior to the  expiration  of such 15 day  period,  then  the  Adjustment
Calculations shall be binding on all parties.  If Shareholders  holding,  in the
aggregate,  at least 25% of the  previously  distributed  portion  of the Merger
Consideration  object  prior  to the  expiration  of  such  15 day  period  (the
"Objecting Shareholders"),  then all the Shareholders and Parent shall negotiate
in good faith and

                                        5

<PAGE>

attempt to resolve the  disagreement.  Should such  negotiations not result in a
unanimous   agreement  within  one  hundred  twenty  (120)  days  following  the
Calculation  Date, then the matter shall be submitted to a big five  independent
accounting firm (other than the auditors of Parent,  the Surviving  Corporation,
or APS at the  time  of  such  dispute)  mutually  acceptable  to the  Objecting
Shareholders and Parent (a "Neutral Auditor"); provided that both Parent and the
Objecting  Shareholders  place in escrow cash equal to one-half of the estimated
fees of the Neutral  Auditor  pending the  outcome of the  disagreement.  If the
Objecting  Shareholders  and Parent are unable to agree on the Neutral  Auditor,
then  the  Objecting   Shareholders   and  Parent  shall  request  the  American
Arbitration Association to appoint the Neutral Auditor. The Neutral Auditor will
deliver  to all of the  Shareholders  and Parent a written  determination  (such
determination  to include a worksheet  setting  forth all material  calculations
used in arriving at such  determination) of the disputed items within sixty (60)
days of receipt  of the  disputed  items,  which  determination  shall be final,
binding and conclusive. If the Neutral Auditor's determination of the Adjustment
Amount  multiplied by $7 (the "Dollar  Adjustment  Amount") is within $25,000 of
Parent's  calculation of the Dollar Adjustment Amount (whether the difference is
positive or  negative),  all fees and expenses  relating to  appointment  of the
Neutral  Auditor and the work,  if any, to be performed  by the Neutral  Auditor
will be borne by the Objecting  Shareholders (or, if APS is one of the Objecting
Shareholders,   by  APS).  If  the  difference  between  the  Neutral  Auditor's
determination of the Dollar  Adjustment  Amount and Parent's  calculation of the
Dollar  Adjustment  Amount is greater  than  $25,000,  but less than or equal to
$100,000 (whether the difference is positive or negative), all fees and expenses
relating  to  appointment  of the Neutral  Auditor  and the work,  if any, to be
performed  by  the  Neutral   Auditor  will  be  borne  half  by  the  Objecting
Shareholders (or, if APS is one of the Objecting Shareholders,  by APS) and half
by Parent. If the difference between the Neutral Auditor's  determination of the
Dollar  Adjustment  Amount and  Parent's  calculation  of the Dollar  Adjustment
Amount  is  greater  than  $100,000  (whether  the  difference  is  positive  or
negative),  all fees and expenses relating to appointment of the Neutral Auditor
and the work,  if any,  to be  performed  by the Neutral  Auditor  will be borne
exclusively by Parent. The Adjustment  Calculations in this Section 3.2 are made
independent of the ownership of the Surviving Corporation after Closing.

                  (c) Upon the  later to occur of (i) June 30,  2001 or (ii) ten
(10)  days  following  agreement  on or  delivery  of  the  final,  binding  and
conclusive  Adjustment  Calculations  (the  "Distribution  Date"),  Parent shall
promptly  distribute  to the  Shareholders  from  escrow that number of Retained
Shares equal to (i) the agreed upon or conclusively determined Adjustment Amount
(which  may be  positive  or  negative),  plus (ii) 30% of the Share  Equivalent
Transaction  Value  (collectively,  the  amounts  in  clauses  (i) and  (ii) are
referred to as the  "Earnout  Distribution"),  minus  (iii) all Final  Suspended
Indemnified  Amounts and Pending  Indemnified Amounts (as such terms are defined
in Section  10.4) that are or may become  payable by the  Shareholders,  in each
case divided by 7;  provided,  however,  that in no event may the sum of clauses
(i) through (iii) be negative and;  provided,  further,  that if any Shareholder
exchanges  shares of Parent Common Stock to APS prior to the  Distribution  Date
pursuant to the terms of the Share Exchange Agreements (as hereinafter defined),
APS shall be entitled to receive the  Shareholder's  proportionate  share of the
Retained Shares.  Any and all of the Retained Shares that are not distributed to
the Shareholders on the Distribution Date shall be distributed to Parent, except
for that number of Retained Shares which

                                        6

<PAGE>

may reasonably be necessary to satisfy Pending  Indemnified Amounts (such shares
to be distributed to the appropriate  party or parties upon final  determination
of the Pending Indemnified Amounts).

                  (d) All share amounts and related share values  referred to in
this Section shall be  appropriately  adjusted upon the occurrence of any of the
events described in Section 3.1(d).

         Section 3.3. Anti-Dilution. If, during the Determination Period, Parent
issues  any  one or more  voting  equity  securities,  or any  other  securities
convertible  into or  exchangeable  for any voting equity  securities  (the "New
Securities"),  at a price (the  "Dilution  Price") of less than $7.00 per share,
then promptly  thereafter  Parent shall issue to the  Shareholders the number of
additional  shares of Parent  Common Stock,  without  requiring or receiving any
consideration therefore (the "Anti-Dilution Shares"), equal to (a) the number of
shares of Merger  Consideration  multiplied  by 7 and  divided  by the  Dilution
Price,  minus (b) the number of shares of Merger  Consideration.  In determining
the price at which New  Securities  have been issued,  the per share cash amount
received by Parent in return for the New  Securities  shall be used,  or, if the
issuance was not wholly for cash, the per share value expressly  assigned in any
document or  agreement  governing  the  issuance  shall be used,  or, if no such
document or agreement  exists,  the per share value  determined in good faith by
the  Board  of  Directors  of  Parent  shall  be  used.  For  purposes  of  this
calculation,  if Parent issues New Securities for less than $5.00,  the Dilution
Price shall be deemed to equal  $5.00 per share.  Seventy  percent  (70%) of the
Anti-Dilution  Shares  shall be issued to the  Shareholders  on a pro rata basis
according to the amount of Merger  Consideration  received by each  Shareholder.
Thirty  percent (30%) of the  Anti-Dilution  Shares shall be retained as part of
the Retained  Shares and  distributed  in accordance  with Sections 3.2 and 10.1
hereof.  All share amounts and related share values  referred to in this Section
shall  be  appropriately  adjusted  upon  the  occurrence  of any of the  events
described in Section 3.1(d).

         Section 3.4. Exchange of Certificates.  Immediately after the Effective
Time,  Parent will deliver to each Shareholder the Merger  Consideration  due to
the  Shareholder,  upon  surrender  by  the  Shareholder  of  a  certificate  or
certificates   which   immediately  prior  to  the  Effective  Time  represented
outstanding shares of Company Common Stock (the "Certificates") for cancellation
together with such other customary documents as may be required.

         Section 3.5. Stock  Transfer  Books.  At the Effective  Time, the stock
transfer  books of the  Company  shall be closed,  and there shall be no further
registration of transfers of the Company Common Stock  thereafter on the records
of the Company.

         Section 3.6. No Further  Ownership  Rights in Company Common Stock. The
Merger  Consideration  delivered  upon the  surrender  for exchange of shares of
Company Common Stock in accordance with the terms hereof shall be deemed to have
been  issued in full  satisfaction  of all rights  pertaining  to such shares of
Company Common Stock, and there shall be no further registration of transfers on
the records of the Surviving Corporation of shares of Company Common Stock which
were  outstanding  immediately  prior  to the  Effective  Time.  If,  after  the
Effective Time,  Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled.

                                        7

<PAGE>

         Section 3.7.  Tax and  Accounting  Consequences.  It is intended by the
parties  hereto that the Merger  shall  constitute a  reorganization  within the
meaning  of  Section  368 of the Code.  The  parties  hereto  hereby  adopt this
Agreement  as  a  "plan  of  reorganization"  within  the  meaning  of  Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.

         Section  3.8.  Taking of  Necessary  Action;  Further  Action.  Each of
Parent,  Merger Sub and the  Company  will take all such  reasonable  and lawful
action as may be necessary or  appropriate  in order to effectuate the Merger in
accordance  with this  Agreement as promptly as possible.  If, at any time after
the Effective  Time,  any such further action is necessary or desirable to carry
out the purposes of this  Agreement and to vest the Surviving  Corporation  with
full right, title and possession to all assets,  property,  rights,  privileges,
powers and  franchises of the Company and Merger Sub, the officers and directors
of the Company and Merger Sub in office  immediately prior to the Effective Time
are fully authorized in the name of their  respective  corporations or otherwise
to take, and will take, all such lawful and necessary action.

         Section 3.9.  Closing.  The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at a location mutually agreeable
to Parent and the Company in Houston,  Texas, as promptly as practicable (but in
any event within five (5) business days) following the date on which the last of
the  conditions  set forth in Article VIII is  fulfilled  or waived,  or at such
other time and place as Parent and the Company shall agree in writing.  The date
on which the Closing  occurs is referred to in this  Agreement  as the  "Closing
Date."

                                   ARTICLE IV

                               REPRESENTATIONS AND

                       WARRANTIES OF PARENT AND MERGER SUB

         Parent and  Merger Sub each  represent  and  warrant to the  Company as
follows:

         Section 4.1. Organization and Qualification.  Each of Parent and Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the state of its incorporation and has the requisite corporate power
and authority to own,  lease and operate its assets and  properties and to carry
on its  business as it is now being  conducted.  Parent is duly  qualified to do
business as a foreign  corporation and is in good standing in each  jurisdiction
in which the properties  owned,  leased,  or operated by it or the nature of the
business  conducted by it makes such qualification  necessary,  except where the
failure to be so qualified  and in good  standing  would not have,  or could not
reasonably be anticipated to have,  individually or in the aggregate, a Material
Adverse Effect (as defined in Exhibit A). True,  accurate and complete copies of
each of Parent's and Merger Sub's Certificate of Incorporation and Bylaws,  each
as amended and in effect on the date hereof,  have  heretofore been delivered to
the Company.  Merger Sub has not  commenced  business  since its  incorporation.
Merger Sub is not a party to or subject to any  agreement  or other  instrument,
other than its  Certificate  of  Incorporation,  Bylaws,  this Agreement and any
other  agreements  related  to the  Merger.  Merger  Sub does not own any assets
(tangible or intangible) other than the assets set

                                        8

<PAGE>

forth  on  Schedule  4.1  attached  hereto  and  Merger  Sub  does  not have any
liabilities,  accrued,  contingent or otherwise  (known or unknown,  asserted or
unasserted).

         Section 4.2.  Capitalization.

                  (a)  The  authorized  capital  stock  of  Parent  consists  of
50,000,000 shares of Parent Common Stock,  271,470 shares of Series A Redeemable
Common  Stock,  par  value  $.01 per  share  ("Redeemable  Common  Stock"),  and
10,000,000  shares  of  Preferred  Stock,  par  value  $.01 per  share  ("Parent
Preferred  Stock").  As of July 31, 1999,  there were  600,897  shares of Parent
Common Stock issued and  outstanding  and 3,000,000  shares of Parent  Preferred
Stock  issued  and  outstanding,  all of  which  will be free  and  clear of all
security  interests,   claims,   liens  or  other  encumbrances  of  any  nature
whatsoever.  Each issued and outstanding share of Parent Common Stock and Parent
Preferred  Stock has been  legally  and  validly  issued  and is fully  paid and
nonassessable. As of the date hereof, except as set forth in Schedule 4.2(a), no
shares of capital stock of Parent are owned by Parent in treasury.

                  (b) Except as set forth in Section  4.2(a),  and except as set
forth on Schedule 4.2(b),  as of the date hereof,  there are not outstanding (i)
any (A) shares of  capital  stock or other  voting  securities  of  Parent,  (B)
securities  of Parent  convertible  into or  exchangeable  for shares of capital
stock or other voting securities of Parent, (C) equity equivalents, interests in
the ownership or earnings, or other similar rights of or with respect to Parent,
(D)  except  for the  obligations  pursuant  to this  Agreement,  subscriptions,
options,   calls,   contracts,   commitments,   understandings,    restrictions,
arrangements,  rights or warrants, including any right of conversion or exchange
under  any  outstanding  security,  debenture,  instrument  or other  agreement,
obligating Parent to issue, deliver or sell, or cause to be issued, delivered or
sold,  additional shares of the capital stock of Parent or obligating the Parent
to grant,  extend  or enter  into any such  agreement  or  commitment,  (ii) any
obligations of Parent to repurchase,  redeem or otherwise acquire any securities
referred to in clauses (A) through (D) above,  or (iii) any  preemptive  rights,
rights  of first  refusal,  stock  rights,  co-sale  or take  along  rights,  or
registration  rights with respect to any  securities  referred to in clauses (A)
through  (D)  above.  Except  as set  forth  on  Schedule  4.2(b),  to  Parent's
knowledge,   there  are  no  voting  trusts,  proxies  or  other  agreements  or
understandings to which Parent or, to Parent's  knowledge,  any shareholder is a
party or is bound with  respect to the voting of any shares of capital  stock of
Parent.  Parent shall have  available  to it at the  Effective  Time  sufficient
shares of duly  authorized  Parent  Common  Stock to issue in  exchange  for the
outstanding  Company  Common  Stock to be  converted  in the Merger  pursuant to
Article  III.  Copies of the  Certificate  of  Incorporation  (certified  by the
Secretary  of State of  Delaware)  and Bylaws  (certified  by the  Secretary  of
Parent) of Parent,  heretofore  delivered to the Company,  are true, correct and
complete and reflect all amendments thereto as of the date hereof.

                  (c) The  authorized  capital  stock of Merger Sub  consists of
1,000 shares of common stock,  par value $.01 per share, of which 100 shares are
outstanding. All the outstanding shares of capital stock of Merger Sub are owned
directly by Parent.

                                        9

<PAGE>

                  (d) The Parent  Common Stock to be issued to the  Shareholders
or placed in escrow  pursuant to this  Agreement,  when issued and  delivered by
Parent or placed in escrow in accordance  with the provisions of this Agreement,
will be validly issued and fully paid and nonassessable.  Any and all preemptive
rights  (whether  arising  contractually  or  otherwise),  or similar  rights to
subscribe for or acquire  additional  common stock, that are exercisable upon or
are triggered by the issuance of Parent Common Stock under this  Agreement  have
been waived in writing by the respective holders of such rights.

         Section 4.3. Subsidiaries.  Except as set forth on Schedule 4.3, Parent
does not have any  Subsidiaries  other than Merger Sub, nor does Parent hold any
equity interest in or control (directly or indirectly,  through the ownership of
securities,  by contract,  by proxy,  alone or in  combination  with others,  or
otherwise) any corporation,  limited liability  company,  partnership,  business
organization  or other  Person.  Schedule  4.3 sets forth the nature of Parent's
ownership interest (by number of class of securities or other interests) in each
of Parent's Subsidiaries.

         Section 4.4.  Authority; Non-Contravention; Approvals.

                  (a) Parent and Merger Sub each have full  corporate  power and
authority  to execute  and deliver  this  Agreement  and,  subject to the Parent
Required Statutory  Approvals (as defined in Section 4.4(c)),  to consummate the
transactions contemplated hereby. This Agreement has been approved by the Boards
of Directors of both Parent and Merger Sub and by Parent as the sole shareholder
of Merger Sub, and no other corporate  proceedings on the part of Parent, Merger
Sub or either of their  shareholders is necessary to authorize the execution and
delivery of this Agreement or the  consummation  by Parent and Merger Sub of the
transactions  contemplated  hereby.  This  Agreement  has been duly executed and
delivered by each of Parent and Merger Sub, and, assuming the due authorization,
execution  and delivery  hereof by the Company,  constitutes a valid and legally
binding  agreement of each of Parent and Merger Sub enforceable  against each of
them in accordance with its terms,  except that such  enforcement may be subject
to (i) bankruptcy, insolvency, reorganization,  moratorium or other similar laws
affecting or relating to  enforcement  of creditors'  rights  generally and (ii)
general equitable principles.

                  (b) The  execution  and delivery of this  Agreement by each of
Parent and Merger Sub and the  consummation  by each of Parent and Merger Sub of
the transactions  contemplated hereby in accordance with the terms hereof do not
and will not violate or result in a breach of any  provision of, or constitute a
default  (or an event  which,  with  notice  or  lapse  of time or  both,  would
constitute a default)  under, or result in the termination of, or accelerate the
performance  required by, or result in a right of  termination  or  acceleration
under,  or result in the  creation  of any lien,  security  interest,  charge or
encumbrance  upon  any of the  properties  or  assets  of  Parent  or any of its
Subsidiaries  under  any of the  terms,  conditions  or  provisions  of (i)  the
respective  charters  or bylaws of Parent or any of its  Subsidiaries,  (ii) any
statute, law, ordinance, rule, regulation,  judgment, decree, order, injunction,
writ,  permit or license of any court or  Governmental  Authority  applicable to
Parent or any of its Subsidiaries or any of their properties or assets (assuming
compliance  with the matters  referred to in Section  4.4(c)) or (iii) any note,
bond, mortgage, indenture, deed of trust,

                                       10

<PAGE>

license,  franchise,  permit,  concession,  contract, lease or other instrument,
obligation  or agreement of any kind to which Parent or any of its  Subsidiaries
is now a party or by which  Parent  or any of its  Subsidiaries  or any of their
respective  properties or assets may be bound or affected except, in the case of
clauses (ii) and (iii),  for matters as would not have, or could not  reasonably
be anticipated to have,  individually  or in the aggregate,  a Material  Adverse
Effect or  materially  impair the ability of Parent and Merger Sub to consummate
the transactions contemplated by this Agreement.

                  (c) Except for the making of the Merger  Filings in connection
with the Merger (the "Parent  Required  Statutory  Approvals"),  no declaration,
filing or registration with, or notice to, or authorization, consent or approval
of,  any  governmental  or  regulatory  body or  authority  (including,  without
limitation,  federal and state securities'  regulatory  bodies) is necessary for
the  execution  and  delivery of this  Agreement  by Parent or Merger Sub or the
consummation by Parent or Merger Sub of the  transactions  contemplated  hereby,
other than such declarations,  filings, registrations,  notices, authorizations,
consents or approvals which, if not made or obtained,  as the case may be, would
not, have, or could not reasonably be  anticipated to have,  individually  or in
the aggregate,  a Material  Adverse  Effect or materially  impair the ability of
Parent  or  Merger  Sub to  consummate  the  transactions  contemplated  by this
Agreement.

         Section 4.5.  Parent  Financial  Information.  Parent has furnished the
Company  with  copies of the  unaudited  balance  sheet of Parent  (the  "Parent
Balance Sheet") as of December 31, 1998 (the "Parent's Balance Sheet Date"), and
the  related   statements   of  earnings  for  the  two  (2)  years  then  ended
(collectively,  the "Parent  Financial  Statements"),  all of which are attached
hereto as part of Schedule  4.5.  Except as  described  in the Parent  Financial
Statements  or on Schedule  4.5, the Parent  Financial  Statements  are true and
accurate  and fairly  present the  financial  position of Parent as of the dates
thereof and the results of operations  of Parent for the periods then ended,  in
conformity  with GAAP and on a basis  consistent  with prior periods.  Except as
described on Schedule 4.5, all interim Parent Financial  Statements  provided to
the Company are true and accurate  and fairly  present or will  present,  as the
case may be, the  financial  position of Parent as of the dates  thereof and the
results of operation of Parent for the periods then ended on a basis  consistent
with prior periods.

         Section 4.6. Absence of Undisclosed Liabilities. Except as disclosed in
Schedule 4.6,  Parent has not incurred any  liabilities or obligations  (whether
absolute,  accrued,  contingent or otherwise) of any nature, except liabilities,
obligations  or  contingencies  (i) which are  accrued or  reserved  against the
Parent Financial Statements or (ii) which were incurred after December 31, 1998,
and were incurred in the ordinary  course of business and  consistent  with past
practices.

         Section  4.7.  Absence  of Certain  Changes  or  Events.  Other than as
contemplated  by this Agreement or as set forth on Schedule 4.7, Parent has not,
since the date of the Parent's Balance Sheet Date:

                                       11

<PAGE>

                           (i)  incurred any  material  obligation  or liability
         (absolute,  accrued,  contingent,  insured  or  otherwise),  except  in
         connection with the  performance of this  Agreement,  other than in the
         ordinary course of business;

                           (ii)  discharged  or satisfied  any material  lien or
         encumbrance,  or paid or satisfied any material obligation or liability
         (absolute,  accrued,  contingent,  insured or otherwise) other than (1)
         liabilities  shown or  reflected  on the  Parent  Balance  Sheet or (2)
         liabilities  incurred since the date of the Parent Balance Sheet in the
         ordinary course of business;

                           (iii)  increased or established any reserve for taxes
         or any other  liability  on its books or otherwise  provided  therefor,
         except as may have been  required due to ordinary  income or operations
         of Parent since the date of the Parent Balance Sheet;

                           (iv)  mortgaged,  pledged or  subjected  to any lien,
         charge or other  encumbrance  any of the assets of Parent,  tangible or
         intangible, other than in the ordinary course of business;

                           (v) sold or transferred  any of the assets of Parent,
         or, to Parent's  knowledge  cancelled any debts or claims or waived any
         rights, other than in the ordinary course of business;

                           (vi)  granted any general or uniform  increase in the
         rates of pay of employees or any substantial increase in salary payable
         or to become  payable by Parent to any officer or employee,  consultant
         or agent (other than normal merit  increases) or, by means of any bonus
         or  pension  plan,   contract  or  other   commitment,   increased  the
         compensation of any officer, employee,  consultant or agent, other than
         in the ordinary course of business;

                           (vii) except for the purchase of 230 shares of Parent
         Common Stock which were placed in the Treasury  and the  redemption  of
         the  Redeemable  Common Stock,  made any  declaration  setting aside or
         payment of dividends or other  distributions on or in respect of shares
         of the capital stock of Parent,  or any direct or indirect  redemption,
         retirement, purchase or other acquisition by Parent of any such shares;

                           (viii)   changed the accounting methods followed by
         Parent;

                           (ix)     terminated (except through  performance) or,
         to Parent's knowledge,  received notice of termination of any material
         agreement or commitment;

                           (x)      authorized any capital expenditures other
         than in the ordinary course of business;

                                       12

<PAGE>

                           (xi)  except  for  this   Agreement   and  any  other
         agreement  executed and delivered  pursuant to this Agreement,  entered
         into any  material  transaction  other than in the  ordinary  course of
         business;

                           (xii) to the Parent's knowledge,  experienced damage,
         destruction  or loss (whether or not covered by  insurance)  materially
         and adversely affecting any of its properties,  assets or business,  or
         experienced  any  other  material   adverse  change  in  its  financial
         condition, assets, liabilities or business; or

                          (xiii)   entered into any agreement to do or resulting
         in any of the foregoing.

         Section 4.8. Litigation. Except as set forth on Schedule 4.8 and except
for  malpractice  claims that have not been disclosed to Parent but are asserted
or may be asserted against the Parent Existing  Practices,  there are no claims,
actions, suits, proceedings (arbitration or otherwise) or investigations pending
or, to the knowledge of Parent or Merger Sub, threatened against Parent,  Merger
Sub or the Parent  Existing  Practices (as  hereinafter  defined),  at law or in
equity,  in any court or before or by any  Governmental  Authority,  and, to the
knowledge of Parent or Merger Sub,  there are no, and have not been any,  facts,
conditions  or  incidents  that are  reasonably  likely  to  result  in any such
actions, suits, proceedings (arbitration or otherwise) or investigations. To the
knowledge of Parent and Merger Sub,  neither Parent nor Merger Sub is in default
in respect of any judgment,  order,  writ,  injunction or decree of any court or
other  Governmental  Authority.  Except as set  forth on  Schedule  4.8,  to the
knowledge of Parent and Merger Sub, there have been no disciplinary,  revocation
or suspension  proceedings or similar types of claims,  actions or  proceedings,
hearings or  investigations  against  Parent,  Merger Sub or the Parent Existing
Practices,  and neither  Parent nor Merger Sub know of any facts,  conditions or
incidents that may result in any such proceedings,  claims, actions, hearings or
investigations.

         Section 4.9. Accounts Receivable. The Parent Balance Sheet reflects the
amount,  as of the Parent Balance Sheet Date and  determined in conformity  with
GAAP and on a basis  consistent with the past practices  employed by Parent,  of
Parent's current accounts receivable, net of contractual adjustments arising out
of third-party payor arrangements and allowances for bad debts ("Parent Accounts
Receivable").  Schedule 4.9 reflects the amount of Parent Accounts Receivable as
of April 30,  1999.  Except as set forth on Schedule  4.9,  the Parent  Accounts
Receivable (i) are valid,  binding and legally  enforceable  obligations and are
owned by Parent free and clear of all liens and  encumbrances and (ii) will not,
to Parent's knowledge,  be subject to any offset,  counterclaim or other adverse
claim or defense,  except for contractual adjustments arising out of third party
payor arrangements.  The Parent Accounts Receivable arose in the ordinary course
of business consistent with past practices.  Since December 31, 1998, Parent has
not change any principle or practice with respect to the recordation of accounts
receivable,  or  any  material  collection,  discount  or  write-off  policy  or
procedure,   and  Parent  has  not  sold  or  transferred  any  Parent  Accounts
Receivable. To Parent's knowledge,  Parent is in substantial compliance with the
terms and conditions of such third-party payor arrangements.

                                       13

<PAGE>

         Section 4.10.  No Violation of Law; Compliance with Agreements.

                  (a) To the Parent's  knowledge,  Parent is not in violation of
and has not been given notice or been charged  with any  violation  of, any law,
statute,  order, rule,  regulation,  ordinance or judgment  (including,  without
limitation, any applicable Environmental Law, the Occupational Safety and Health
Act, the Americans with  Disabilities Act and state and federal escheat laws) of
any governmental or regulatory body or authority.  To the Parent's knowledge, no
investigation  or review by any  governmental or regulatory body or authority is
pending or threatened,  nor has any governmental or regulatory body or authority
indicated  an  intention  to conduct  the same.  Parent and the Parent  Existing
Practices have all permits (including without limitation Environmental Permits),
licenses,  franchises,  variances,  exemptions,  orders  and other  governmental
authorizations,  consents  and  approvals  required or  necessary to conduct its
business as presently  conducted  (collectively,  the "Parent Permits").  To the
Parent's  knowledge,  Parent  and  the  Parent  Existing  Practices  are  not in
violation of the terms of any Parent Permit. All such permits,  licenses, orders
and approvals are in full force and effect, and no suspension or cancellation of
any of them is pending or, to the knowledge of Parent, threatened. Except as set
forth on Schedule 4.10, none of such permits, licenses, orders or approvals, and
no application  for any of such permits,  licenses,  orders or approvals will be
adversely affected by the consummation of the transactions  contemplated by this
Agreement.  Parent and the Parent Existing  Practices have not been disciplined,
sanctioned  or excluded  from the Medicare  program and have not been subject to
any plan of correction imposed by any professional review body.

                  (b) To the  Parent's  knowledge,  Parent  is not in  breach or
violation  of or in  default in the  performance  or  observance  of any term or
provision of, and no event has occurred which, with lapse of time or action by a
third party, could result in a default under, (a) the charter, bylaws or similar
organizational instruments of Parent or (b) any contract, commitment, agreement,
indenture,  mortgage,  loan agreement,  note, lease, bond, license,  approval or
other  instrument to which Parent is a party or by which it is bound or to which
any of its property is subject.

         Section 4.11. Insurance.  Schedule 4.11 hereto sets forth a list of all
insurance  policies  owned by Parent or Merger Sub or by which  Parent or Merger
Sub or either of their  properties or assets are covered against present losses,
all of which are now in full force and effect.  No  insurance  has been  refused
with respect to any operations, properties or assets of Parent or Merger Sub nor
has coverage of any  insurance  been limited by any  insurance  carrier that has
carried,  or received any  application  for, any such insurance  during the last
three years. No insurance  carrier has denied any claims made against any of the
policies listed on Schedule 4.11 hereto.

         Section 4.12.  Taxes.

                  (a) Except as set forth on Schedule  4.12,  (i) Parent has (x)
duly filed (or there has been filed on its behalf) with the  appropriate  taxing
authorities  all Tax Returns  required to be filed by it on or prior to the date
hereof,  and (y) duly paid in full or made  adequate  provision  therefor on its
financial statements in accordance with GAAP (or there has been paid or adequate
provision has

                                       14

<PAGE>

been made on its behalf)  for the  payment of all Taxes for all  periods  ending
through  the date  hereof;  (ii) all such Tax  Returns  filed by or on behalf of
Parent are true, correct and complete in all material respects;  (iii) Parent is
not the  beneficiary  of any  extension  of time  within  which  to file any Tax
Return;  (iv) no claim  has ever been made by any  authority  in a  jurisdiction
where  Parent does not file Tax Returns that it is or may be subject to taxation
by that  jurisdiction;  (v) the  liabilities and reserves for Taxes reflected in
the most recent balance sheet included in Parent  Financial  Statements to cover
all Taxes for all periods  ending at or prior to the date of such balance  sheet
have been properly  determined in accordance with GAAP, and there is no material
liability  for Taxes for any period  beginning  after such date other than Taxes
arising in the ordinary  course of  business;  (vi) there are no liens for Taxes
upon any  property or assets of Parent,  except for liens for Taxes not yet due;
(vii) Parent has not made any change in accounting  methods  since  December 31,
1998;  (viii)  Parent has not  received a ruling  from any taxing  authority  or
signed an agreement with any taxing  authority;  (ix) Parent has complied in all
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes (including,  without  limitation,  withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code, as amended or similar provisions
under any foreign  laws) and has,  within the time and the manner  prescribed by
law,  withheld and paid over to the  appropriate  taxing  authority  all amounts
required to be so withheld and paid over under all applicable laws in connection
with amounts paid or owing to any employee,  independent  contractor,  creditor,
stockholder or other third party; (x) no federal, state, local or foreign audits
or other  administrative  proceedings or court proceedings are presently pending
with regard to any Taxes or Tax  Returns of Parent,  and, as of the date of this
Agreement,  Parent has not  received a written  notice of any pending  audits or
proceedings; (xi) no shareholder or director or officer (or employee responsible
for Tax matters) of Parent expects any authority to assess any additional  Taxes
for any period for which Tax Returns have been filed;  (xii) the federal  income
Tax Returns of Parent have not been  examined by the  Internal  Revenue  Service
("IRS"); (xiii) no adjustments or deficiencies relating to Tax Returns of Parent
have been  proposed,  asserted or assessed by any taxing  authority,  except for
such adjustments or deficiencies  which have been fully paid or finally settled;
and (xiv) Parent has delivered to the Company true,  correct and complete copies
of all federal  income Tax  Returns,  examination  reports,  and  statements  of
deficiencies  assessed  against  or agreed  to by  Parent  or  Merger  Sub since
December 31, 1997.

                  (b) There are no outstanding requests, agreements, consents or
waivers to extend the statute of limitations applicable to the assessment of any
Taxes or deficiencies against Parent, and no power of attorney granted by Parent
with respect to any Taxes is  currently  in force.  Parent is not a party to any
agreement providing for the allocation or sharing of Taxes. Parent has not, with
regard to any assets or property held, acquired or to be acquired by it, filed a
consent  to the  application  of Section  341(f) of the Code,  or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is  defined  in Section  341(f)(4)  of the Code)  owned by Parent.
Parent (i) has not been a member of an  affiliate  group  filing a  consolidated
federal  income Tax Return  (other  than a group the common  parent of which was
Parent)  and (ii) has no  liability  for Taxes of any person  (other than any of
Parent  and its  Subsidiaries)  under  Section  1.1502-6  of the  United  States
Treasury  Regulations (or any similar provision of state, local or foreign law),
as a transferee or successor, by contract, or otherwise.

                                       15

<PAGE>

         Section 4.13.  Employee Benefit Plans.

                  (a) Each Parent Plan and each Parent Benefit  Program (as such
terms are defined  below) is listed on Schedule  4.13 hereto.  No Parent Plan or
Parent  Benefit  Program  is or has been  (i)  covered  by Title IV of  Employer
Retirement  Income Security Act of 1974, as amended  ("ERISA"),  (ii) subject to
the  minimum  funding  requirements  of  Section  412 of the  Code  or  (iii)  a
"multi-employer  plan" as  defined  in  Section  3(37) of ERISA,  nor has Parent
contributed to, or ever had any obligation to contribute to, any  multi-employer
plan. Each Parent Plan and Parent Benefit Program intended to be qualified under
Section  401(a) of the Code is  designated as a  tax-qualified  plan on Schedule
4.13 and is so qualified.  No Parent Plan or Parent Benefit Program provides for
any retiree health benefits for any employees or dependents of Parent other than
as required by COBRA (as hereinafter defined).  There are no claims pending with
respect to, or under, any Parent Plan or any Parent Benefit Program,  other than
routine claims for benefits, and there are no disputes or litigation pending or,
to the knowledge of Parent, threatened, with respect to any such Parent Plans or
Parent Benefit Programs.

                  (b) Each  Parent  Plan and  Parent  Benefit  Program  has been
maintained and  administered in compliance with its terms and in accordance with
all  applicable  laws,  rules  and  regulations.  Parent  has no  commitment  or
obligation  to establish or adopt any new or  additional  Parent Plans or Parent
Benefit  Programs or to increase the benefits under any existing  Parent Plan or
Parent Benefit Program.

                  (c)  Except  as  set  forth  in  Schedule  4.13,  neither  the
execution  and  delivery  of  this  Agreement,   nor  the  consummation  of  the
transactions  contemplated  hereby  will (i) result in any payment to be made by
Parent, including,  without limitation,  severance,  unemployment  compensation,
golden  parachute  (defined in Section 280G of the Code) or otherwise,  becoming
due to any employee of Parent,  or (ii) increase any benefits  otherwise payable
under any Parent Plan or any Parent Benefit Program.

                  (d) For purposes of this Agreement,  "Parent Benefit  Program"
means any plan, policy, contract,  program,  commitment or arrangement providing
for  bonuses,  deferred  compensation,   retirement  payments,  profit  sharing,
incentive pay, commissions,  hospitalization or medical expenses or insurance or
any other benefits for any officer, consultant, director, annuitant, employee or
independent contractor of the Parent as such or members of their families (other
than directors' and officers' liability  policies),  whether or not insured. For
purposes of this Agreement,  "Company Plan" means an "employee benefit plan" (as
defined  in  Section  3(3)  of  ERISA)  which  is or  has  been  established  or
maintained, or to which contributions are or have been made, by the Parent or by
any trade or business,  whether or not  incorporated,  which,  together with the
Parent,  is under common  control,  as described in Section 414(b) or (c) of the
Code.

         Section 4.14.    Employee and Labor Matters.

                                       16

<PAGE>

                  (a)  Except as set  forth on  Schedule  4.14,  Parent is not a
party to or bound by any written  employment  agreements or  commitments,  other
than on an at-will  basis.  Parent is in  compliance  with all  applicable  laws
respecting  the employment  and  employment  practices,  terms and conditions of
employment and wages and hours of its employees and is not engaged in any unfair
labor  practice.  All  employees  of Parent  who work in the  United  States are
lawfully   authorized  to  work  in  the  United  States  according  to  federal
immigration laws. There is no labor strike or labor  disturbance  pending or, to
the knowledge of Parent,  threatened against Parent with respect to the Business
and, during the past five years, Parent has not experienced a work stoppage.

                  (b) Except as set forth on Schedule  4.14, (i) Parent is not a
party to or bound by the terms of any collective  bargaining  agreement or other
union  contract  applicable  to any employee of Parent and no such  agreement or
contract has been requested by any employee or group of employees of Parent, nor
has there been any discussion  with respect thereto by management of Parent with
any  employees  of  Parent,  (ii)  Parent is not  aware of any union  organizing
activities or proceedings  involving,  or any pending  petitions for recognition
of, a labor union or association as the exclusive bargaining agent for, or where
the purpose is to organize, any group or groups of employees of Parent, or (iii)
there is not  currently  pending,  with  regard  to any of its  facilities,  any
proceeding  before  the  National  Labor  Relations  Board,  wherein  any  labor
organization is seeking representation of any employees of Parent.

         Section 4.15.  Environmental  Matters.  Without in any manner limiting
any other  representations  and warranties set forth in this Agreement:

                  (a) Neither  Parent nor any of its Business  Facilities  is in
violation of, or has violated,  or has been or is in  non-compliance  with,  any
Environmental  Laws,  including  but  not  limited  to in  connection  with  the
ownership,  use,  maintenance  or  operation  of, or conduct of the  business of
Parent or any of its Business Facilities.

                  (b) Without in any manner limiting the generality of (a)above:

                           (i)  Except in  compliance  with  Environmental  Laws
         (including,  without limitation,  by obtaining necessary  Environmental
         Permits),  no Materials of Environmental Concern (as defined in Exhibit
         A) have been used,  generated,  stored,  treated, or disposed of, or in
         any other way  released  (and no release is  threatened),  on, under or
         about any Business Facility (as defined in Exhibit A) or transferred or
         transported to or from any Business Facility.

                           (ii) Parent and all of its Business  Facilities  have
         and have timely  filed  applications  for renewal of all  Environmental
         Permits and Parent and its Business  Facilities are in compliance  with
         all terms and conditions of such Environmental Permits;

                           (iii) There are no Materials of Environmental Concern
         on any Business Facility of Parent exceeding any standard or limitation
         established, published or promulgated

                                       17

<PAGE>

         pursuant to Environmental Laws,
         or which would  require  reporting  to any  Governmental  Authority  or
         Remediation  to comply with  Environmental  Laws (as defined in Exhibit
         A);

                           (iv) To the knowledge of Parent, none of the off-site
         locations where Materials of Environmental  Concern  generated from any
         Business  Facility of Parent or for which Parent has arranged for their
         disposal, treatment or application, has been nominated or identified as
         a facility  which is subject to an  existing or  potential  claim under
         Environmental   Laws  which   could  be   expected   to  result  in  an
         Environmental Claim against Parent; and

                           (v) No current  Business  Facility of Parent contains
         any  asbestos  containing  materials  which  cannot be managed in place
         without  air  monitoring,  removal  or  encapsulation  and which is not
         managed under and in  compliance  with an  operations  and  maintenance
         program.

For purposes of this  Section,  "Parent"  shall  include any Entity which is, in
whole or in part, a predecessor of Parent and all of its former Subsidiaries and
their predecessors.

         Section  4.16.  Non-Competition  Agreements.  Except  as set  forth  on
Schedule 4.16,  neither Parent nor Merger Sub is a party to any agreement  which
purports to restrict or prohibit  either of them from,  directly or  indirectly,
engaging in any business currently engaged in by Parent. To Parent's  knowledge,
none of Parent's  or Merger  Sub's  shareholders,  officers,  directors,  or key
employees  is a party  to any  agreement  which,  by  virtue  of  such  person's
relationship  with Parent,  restricts  Parent or any  Subsidiary of Parent from,
directly or indirectly, engaging in any of the businesses described above.

         Section 4.17. Title to Assets.  Parent has good and marketable title in
fee  simple  to all its  real  property  and  good  title  to all its  leasehold
interests and other  properties,  as reflected in the most recent  balance sheet
included in the Parent  Financial  Statements,  except for properties and assets
that have been disposed of in the ordinary  course of business since the date of
the latest  balance sheet  included  therein,  free and clear of all  mortgages,
liens,  pledges,  charges or encumbrances of any nature  whatsoever,  except (i)
liens for current  taxes,  payments of which are not yet  delinquent,  (ii) such
imperfections  in title  and  easements  and  encumbrances,  if any,  as are not
substantial in character, amount or extent and do not detract from the value, or
interfere with the present use or  marketability of the property subject thereto
or affected thereby,  or otherwise impair Parent's  business  operations (in the
manner presently  carried on by Parent),  or (iii) any lien securing any debt or
obligation  described on Schedule  4.17 which is expressly  referenced  as being
secured.  To the Parent's  knowledge,  all leases under which Parent  leases any
real property have been delivered to the Company and are in good standing, valid
and effective in accordance with their respective terms, and there is not, under
any of such leases,  any existing default or event which with notice or lapse of
time  or  both  would  become  a  default  by or on  behalf  of  Parent  or  its
Subsidiaries, or by or on behalf of any third party.

                                       18

<PAGE>

         Section 4.18.  Contracts.  Except as set forth on Schedule 4.18, Parent
and  Merger  Sub  have  each  performed  in  all  material  respects  all of the
obligations required to be performed by it under each contract,  agreement, plan
or  commitment to which it is a party,  including  timely paying all interest on
its debt as such  interest  has become due and  payable.  Except as set forth on
Schedule  4.18,  there  are no  counterclaims  or  offsets  under  any  of  such
contracts, agreements, plans or commitments.

         Section  4.19.  Brokers and  Finders.  Parent has not entered  into any
contract,  arrangement or understanding with any person or firm which may result
in the  obligation  of  Parent  to pay any  finder's  fees,  brokerage  or agent
commissions  or  other  like  payments  in  connection  with  the   transactions
contemplated  hereby.  There is no claim for payment by Parent of any investment
banking  fees,  finder's  fees,  brokerage  or agent  commissions  or other like
payments in connection  with the  negotiations  leading to this Agreement or the
consummation of the transactions contemplated hereby.

         Section 4.20. Intellectual Property.  Parent has rights to use, whether
through  ownership,  licensing or otherwise,  all patents,  trademarks,  service
marks, trade names,  copyrights,  software,  trade secrets and other proprietary
rights  and  processes  that  are  material  to its  business  as now  conducted
(collectively the "Parent Intellectual Property Rights"). Except as set forth on
Schedule 4.20,  Parent does not own any patents.  Parent has no knowledge of any
infringement by any other person of any of Parent Intellectual  Property Rights,
and Parent has not  entered  into any  agreement  to  indemnify  any other party
against  any  charge  of  infringement  of any of Parent  Intellectual  Property
Rights.  Parent  has not and does  not  violate  or  infringe  any  intellectual
property   right  of  any  other  person,   and  Parent  has  not  received  any
communication  alleging that it violates or infringes the intellectual  property
right  of any  other  person.  Parent  has not  been  sued  for  infringing  any
intellectual  property right of another  person.  There is no claim or demand of
any  person  pertaining  to,  or any  proceeding  which is  pending  or,  to the
knowledge of Parent, threatened, that challenges the rights of Parent in respect
of any Parent  Intellectual  Property  Rights,  or that  claims that any default
exists  under  any  Parent  Intellectual  Property  Rights.  None of the  Parent
Intellectual  Property  Rights is  subject  to any  outstanding  order,  ruling,
decree, judgment or stipulation by or with any court, tribunal,  arbitrator,  or
other Governmental Authority.

         Section  4.21.  Relationships.  Except as set forth on  Schedule  4.21,
since  January  1, 1998,  Parent  has not  received  notice  from any  customer,
supplier or any party to any Contract  involving more than $50,000 annually with
Parent (each a "Parent Contract  Party") that such customer,  supplier or Parent
Contract Party intends to discontinue doing business with Parent, and since such
date,  no  customer,  supplier  or Parent  Contract  Party,  has  indicated  any
intention (a) to terminate its existing business relationship with Parent or (b)
not to continue its business  relationship  with Parent,  whether as a result of
the transactions contemplated hereby or otherwise. Except for the reorganization
of Parent on October 31, 1997,  Parent has not entered into or  participated  in
any related party transaction during the past three years.

                                       19

<PAGE>

         Section 4.22.  Certain  Payments.  Neither  Parent nor, to the Parent's
knowledge, any shareholder,  officer, director or employee of Parent has paid or
received or caused to be paid or received, directly or indirectly, in connection
with the business of Parent (a) any bribe,  kickback or other similar payment to
or from any domestic or foreign government or agency thereof or any other person
or (b) any contribution to any domestic or foreign  political party or candidate
(other  than from  personal  funds of such  shareholder,  officer,  director  or
employee not reimbursed by Parent or as permitted by applicable law).

         Section 4.23.  Books and Records.  The corporate minute books and other
corporate  records of Parent are correct and complete in all  material  respects
and the  signatures  appearing on all documents  contained  therein are the true
signatures  of the  person  purporting  to have  signed  the same.  All  actions
reflected  in said books and records were duly and validly  taken in  compliance
with the laws of the  applicable  jurisdiction  and no  meeting  of the board of
directors  of Parent or any  committee  thereof has been held for which  minutes
have been prepared and are not contained in the minute books. To the extent that
they  exist,  all  personnel  files,  reports,   strategic  planning  documents,
financial  forecasts,  accounting and tax records and all other records of every
type and  description  that relate to the business of Parent have been  prepared
and maintained in accordance  with good business  practices and applicable  laws
and regulations. All such books and records are located in the offices of Parent
or Parent Existing Practices.

         Section 4.24.  Condition and Sufficiency of Assets.  Except for certain
practice management  software,  firmware,  microprocessing  chips and other data
processing devices and services which are in the process of being replaced,  all
buildings, improvements and equipment owned or leased by Parent are structurally
sound,  are in good operating  condition and repair  (subject to normal wear and
tear) and are  adequate  for the uses to which they are being  put,  and none of
such  buildings,  improvements or equipment is in need of maintenance or repairs
except for ordinary,  routine  maintenance  and repairs that are not material in
nature or cost.

         Section  4.25.  Offering.  Subject  to the  truth and  accuracy  of the
Investors'  Certificates  to be delivered by the  Shareholders  at Closing,  the
offer and issuance of the Parent Common Stock as  contemplated by this Agreement
is exempt from the  registration  requirements  of the  Securities Act and state
securities'  laws,  and neither  Parent nor any agent  acting on its behalf will
take any action hereafter that would cause the loss of such exemption.

         Section 4.26. Staff Privileges.  Each of the Parent Existing  Practices
has staff  privileges at one or more hospitals,  and such staff  privileges have
not been revoked,  surrendered,  suspended or terminated, and except for routine
recredentialing   procedures,   there  are  no  disciplinary  actions  or  other
proceedings pending or threatened that may result in any revocation,  surrender,
suspension or termination  of such staff  privileges.  In addition,  to Parent's
knowledge,  there are no, and have not been, any facts,  conditions or incidents
that may result in any revocation,  surrender, suspension or termination of such
staff privileges.

                                       20

<PAGE>

         Section 4.27.  Fraud and Abuse. To the knowledge of Parent,  Parent and
all individual  physician  practices which Parent manages as of the Closing Date
(the "Parent  Existing  Practices") have not engaged in any activities which are
prohibited  under  ss.1320a-7b  of Title  42 of the  United  States  Code or the
regulations  promulgated  thereunder,  or  related  state or local  statutes  or
regulations,   or  which  are  prohibited  by  rules  of  professional  conduct,
including, but not limited to, the following: (i) knowingly and willfully making
or causing to be made a false statement or  representation of a material fact in
any application for any benefit or payment;  (ii) knowingly and willfully making
or causing to be made any false statement or  representation  of a material fact
for use in determining rights to any benefit or payment;  (iii) any failure by a
claimant to disclose  knowledge of the  occurrence  of any event  affecting  the
initial  or  continued  right to any  benefit or payment on its own behalf or on
behalf of another, with the intent to fraudulently secure such benefit; and (iv)
knowingly and willfully soliciting or receiving any remuneration  (including any
kickback, bribe or rebate) directly or indirectly,  overtly or covertly, in cash
or in kind,  or offering to pay or receive such  remuneration  (A) in return for
referring an  individual  to a person for the  furnishing  or arranging  for the
furnishing  of any item or service for which  payment may be made in whole or in
part by  Medicare  or  Medicaid,  or (B) in return  for  purchasing,  leasing or
ordering or arranging for, or recommending,  purchasing, leasing or ordering any
good,  facility,  service or item for which  payment  may be made in whole or in
part by Medicare or Medicaid.

         Section 4.28. Medicare,  Medicaid,  and Other Third-Party Payor Payment
Liabilities.  To the  knowledge  of  Parent,  Parent  and  the  Parent  Existing
Practices do not have any liabilities (i) to any third party fiscal intermediary
or carrier  administering  any state  Medicaid  program or the federal  Medicare
program, (ii) directly to any state Medicaid or the federal Medicare program, or
(iii)  to any  other  third  party  payor  for  the  recoupment  of any  amounts
previously paid to Parent or any  predecessor to Parent by any such  third-party
fiscal intermediary, carrier, Medicaid program, Medicare program, or third party
payor which exceed,  individually  or in the aggregate,  $100,000.  There are no
pending or, to the actual knowledge of Parent,  threatened  actions by any third
party fiscal  intermediary  or carrier  administering  any state Medicaid or the
federal Medicare  program,  by the Department of Health and Human Services,  any
state Medicaid  agency,  or any third party payor to suspend payments to Parent.
Neither Parent nor any licensed  employee of Parent (other than a physician in a
Parent  Existing  Practice)  has  been  convicted  of,  or pled  guilty  or nolo
contendere to,  patient abuse or  negligence,  or any other Medicare or Medicaid
related  offense,  and none of the  foregoing  persons has committed any offense
which is  reasonably  likely to serve as the basis for  suspension  or exclusion
from the Medicare and Medicaid programs.

                                    ARTICLE V

                               REPRESENTATIONS AND

                            WARRANTIES OF THE COMPANY

         The  Company  represents  and  warrants  to Parent  and  Merger  Sub as
follows:

         Section  5.1.   Organization  and  Qualification.   The  Company  is  a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas and has the
                                       21

<PAGE>

requisite corporate power and authority to own, lease and operate its assets and
properties  and to carry  on its  business  as it is now  being  conducted.  The
Company is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the properties owned, leased, or operated
by it or the nature of the  business  conducted  by it makes such  qualification
necessary,  except  where the failure to be so  qualified  and in good  standing
would not have, or could not reasonably be anticipated to have,  individually or
in the aggregate,  a Material Adverse Effect. True, accurate and complete copies
of the Company's  Articles of Incorporation  and Bylaws,  each as amended and in
effect on the date hereof, have heretofore been delivered to Parent.

         Section 5.2.  Capitalization.

                  (a) The  authorized  capital stock of the Company  consists of
51,000,000 shares of capital stock,  being 50,000,000 of $0.001 par value common
stock and 1,000,000 of $0.001 par value serial senior preferred stock. As of the
date of this  Agreement  there are, and as of Closing  there will be,  2,920,440
shares of Company  Common  Stock issued and  outstanding  and no other shares of
capital  stock of the  Company  issued and  outstanding.  All of such issued and
outstanding  shares of Company  Common  Stock are  validly  issued and are fully
paid,  nonassessable and free of preemptive rights and are free and clear of all
restrictions, liens, claims and encumbrances. No Subsidiary of the Company holds
any shares of the capital stock of the Company.

                  (b) Except as set forth in Section  5.2(a),  and except as set
forth on Schedule 5.2(b),  as of the date hereof,  there are not outstanding (i)
any (A) shares of capital stock or other voting  securities of the Company,  (B)
securities of the Company convertible into or exchangeable for shares of capital
stock or  other  voting  securities  of the  Company,  (C)  equity  equivalents,
interests  in the  ownership  or earnings,  or other  similar  rights of or with
respect  to the  Company,  (D)  except  for  the  obligations  pursuant  to this
Agreement,    subscriptions,    options,    calls,    contracts,    commitments,
understandings,  restrictions,  arrangements,  rights or warrants, including any
right of  conversion  or exchange  under any  outstanding  security,  debenture,
instrument or other  agreement,  obligating  the Company or (to the knowledge of
the Company) any  Shareholder to issue,  deliver or sell, or cause to be issued,
delivered  or sold,  additional  shares of the  capital  stock of the Company or
obligating  the Company or (to the knowledge of the Company) any  Shareholder to
grant,  extend or enter into any such agreement or commitment,  (ii) obligations
of  the  Company  or (to  the  knowledge  of the  Company)  any  Shareholder  to
repurchase,  redeem or otherwise  acquire any securities  referred to in clauses
(A) through (D) above, or (iii) any preemptive rights,  rights of first refusal,
stock rights,  co-sale or take along rights, or registration rights with respect
to any  securities  referred to in clauses (A) through (D) above.  Except as set
forth  on  Schedule  5.2(b),  there  are no  voting  trusts,  proxies  or  other
agreements  or  understandings  to which the Company or (to the knowledge of the
Company)  any  Shareholder  is a party or is bound with respect to the voting of
any shares of capital stock of the Company.

         Section 5.3. Subsidiaries.  Company does not have any Subsidiaries, nor
does the Company hold any equity interest in or control (directly or indirectly,
through  the  ownership  of  securities,  by

                                       22

<PAGE>

contract,  by proxy,  alone or in  combination  with others,  or otherwise)  any
corporation,  limited liability company,  partnership,  business organization or
other Person.

         Section 5.4.  Authority; Non-Contravention; Approvals.

                  (a) The  Company has full  corporate  power and  authority  to
execute  and  deliver  this  Agreement  and,  subject  to the  Company  Required
Statutory   Approvals  (as  defined  in  Section  5.4(c)),   to  consummate  the
transactions  contemplated hereby. This Agreement has been approved by the Board
of  Directors  of the  Company  and the  Shareholders,  and no  other  corporate
proceedings  on the part of the Company or the  Shareholders  are  necessary  to
authorize the execution and delivery of this  Agreement or the  consummation  by
the Company of the  transactions  contemplated  hereby.  This Agreement has been
duly executed and delivered by the Company, and, assuming the due authorization,
execution and delivery hereof by Parent and Merger Sub,  constitutes a valid and
legally  binding  agreement of the Company,  enforceable  against the Company in
accordance  with its terms,  except that such  enforcement may be subject to (i)
bankruptcy,  insolvency,  reorganization,   moratorium  or  other  similar  laws
affecting or relating to  enforcement  of creditors'  rights  generally and (ii)
general equitable principles.

                  (b)  The  execution  and  delivery  of this  Agreement  by the
Company and the  consummation  by the Company of the  transactions  contemplated
hereby in accordance with the terms hereof do not and will not, to the Company's
knowledge,  violate or result in a breach of any  provision  of, or constitute a
default  (or an event  which,  with  notice  or  lapse  of time or  both,  would
constitute a default)  under, or result in the termination of, or accelerate the
performance  required by, or result in a right of  termination  or  acceleration
under,  or result in the  creation  of any lien,  security  interest,  charge or
encumbrance upon any of the properties or assets of the Company under any of the
terms,  conditions or provisions of (i) the Articles of  Incorporation or Bylaws
of the Company, (ii) any statute, law, ordinance,  rule,  regulation,  judgment,
decree, order, injunction,  writ, permit or license of any court or Governmental
Authority  applicable  to the Company,  or any of its  respective  properties or
assets (assuming  compliance with the matters referred to in Section 5.4(c)), or
(iii) any note, bond, mortgage,  indenture,  deed of trust, license,  franchise,
permit, concession, contract, lease or other instrument, obligation or agreement
of any kind to which the  Company is now a party or by which the  Company or any
of its respective  properties or assets may be bound or affected except,  in the
case of clauses  (ii) and  (iii),  for  matters as would not have,  or could not
reasonably be anticipated to have,  individually or in the aggregate, a Material
Adverse Effect or materially impair the ability of the Company to consummate the
transactions contemplated by this Agreement.

                  (c)  Except  for the Merger  Filings  in  connection  with the
Merger (the "Company Required Statutory Approvals"),  no declaration,  filing or
registration  with, or notice to, or authorization,  consent or approval of, any
governmental or regulatory  body or authority  (including,  without  limitation,
federal and state securities'  regulatory bodies) is necessary for the execution
and  delivery  of this  Agreement  by the Company  and the  Shareholders  or the
consummation  by  the  Company  and  the   Shareholders   of  the   transactions
contemplated  hereby,  other  than such  declarations,  filings,  registrations,
notices, authorizations, consents or approvals which, if not made

                                       23

<PAGE>

or obtained,  as the case may be,  would not have,  or could not  reasonably  be
anticipated to have, individually or in the aggregate, a Material Adverse Effect
or materially  impair the ability of the Company to consummate the  transactions
contemplated by this Agreement.

         Section 5.5. Company Financial  Information.  The Company has furnished
Parent with copies of the unaudited  balance sheet (the "Company Balance Sheet")
of the Company as of December 31, 1998 (the "Company's Balance Sheet Date"), and
the  related   statements   of  earnings  for  the  two  (2)  years  then  ended
(collectively,  the "Company Financial  Statements"),  all of which are attached
hereto as part of  Schedule  5.5.  Except as  described  on  Schedule  5.5,  the
Company's  Financial  Statements  are true and accurate  and fairly  present the
financial  position  of the  Company as of the dates  thereof and the results of
operations of the Company for the periods then ended,  in  conformity  with GAAP
and on a basis consistent with prior periods, except as otherwise noted therein.
Except as described on Schedule 5.5, all interim Financial  Statements  provided
to the Parent are true and accurate and fairly  present or will present,  as the
case may be, the  financial  position of the Company as of the dates thereof and
the results of  operation  of the Company for the periods  then ended on a basis
consistent with prior periods.

         Section 5.6. Absence of Undisclosed Liabilities. Except as disclosed in
Schedule  5.6,  the Company has not  incurred  any  liabilities  or  obligations
(whether  absolute,  accrued,  contingent or  otherwise)  of any nature,  except
liabilities,  obligations  or  contingencies  (i) which are  accrued or reserved
against the  Company  Financial  Statements  or (ii) which were  incurred  after
December 31,  1998,  and were  incurred in the  ordinary  course of business and
consistent with past practices.

         Section  5.7.  Absence  of Certain  Changes  or  Events.  Other than as
contemplated  by this Agreement or as set forth on Schedule 5.7, the Company has
not, since the Company Balance Sheet Date:

                           (i)  incurred any  material  obligation  or liability
         (absolute,  accrued,  contingent,  insured  or  otherwise),  except  in
         connection with the  performance of this  Agreement,  other than in the
         ordinary course of business;

                           (ii)  discharged  or satisfied  any material  lien or
         encumbrance,  or paid or satisfied any material obligation or liability
         (absolute,  accrued,  contingent,  insured or otherwise) other than (1)
         liabilities  shown or  reflected  on the Company  Balance  Sheet or (2)
         liabilities incurred since the date of the Company Balance Sheet in the
         ordinary course of business;

                           (iii)  increased or established any reserve for taxes
         or any other  liability  on its books or otherwise  provided  therefor,
         except as may have been  required due to ordinary  income or operations
         of the Company since the date of the Company Balance Sheet;

                                       24

<PAGE>

                           (iv)  mortgaged,  pledged or  subjected  to any lien,
         charge or other encumbrance any of the assets of the Company,  tangible
         or intangible, other than in the ordinary course of business;

                           (v)      sold or transferred any of the assets of the
         Company or, to the Company's knowledge,  cancelled any debts or claims
         or waived any rights, other than in the ordinary course of business;

                           (vi)  granted any general or uniform  increase in the
         rates of pay of employees or any substantial increase in salary payable
         or to  become  payable  by the  Company  to any  officer  or  employee,
         consultant or agent (other than normal merit increases) or, by means of
         any bonus or pension plan, contract or other commitment,  increased the
         compensation of any officer, employee,  consultant or agent, other than
         in the ordinary course of business;

                           (vii) made any declaration,  setting aside or payment
         of dividends or other  distributions  on or in respect of shares of the
         capital  stock of the  Company,  or any direct or indirect  redemption,
         retirement,  purchase or other  acquisition  by the Company of any such
         shares;

                           (viii)   changed the accounting methods followed by
         the Company;

                           (ix)     terminated (except  through performance) or,
         to the  Company's  knowledge,  received  notice of
         termination of any material agreement or commitment;

                           (x)      authorized any capital expenditures other
         than in the ordinary course of business;

                           (xi)  except  for  this   Agreement   and  any  other
         agreement  executed and delivered  pursuant to this Agreement,  entered
         into any  material  transaction  other than in the  ordinary  course of
         business;

                           (xii) to the Company's knowledge, experienced damage,
         destruction  or loss (whether or not covered by  insurance)  materially
         and adversely affecting any of its properties,  assets or business,  or
         experienced  any  other  material   adverse  change  in  its  financial
         condition, assets, liabilities or business; or

                           (xiii)   entered into any agreement to do or
         resulting in any of the foregoing.

         Section  5.8.  Litigation.  Except as set forth on  Schedule  5.8,  and
except for  malpractice  claims that have not been  disclosed to the Company but
are asserted or may be asserted  against the Company Existing  Practices,  there
are no  claims,  actions,  suits,  proceedings  (arbitration  or  otherwise)  or
investigations pending or, to the Company's knowledge, threatened against the

                                       25

<PAGE>

Company or the Company Existing Practices,  at law or in equity, in any court or
before or by any Governmental Authority, and, to the Company's knowledge,  there
are no,  and  have  not  been  any,  facts,  conditions  or  incidents  that are
reasonably likely to result in any such actions, suits, proceedings (arbitration
or otherwise) or investigations. To the Company's knowledge, the Company and the
Company Existing Practices are not in default in respect of any judgment, order,
writ, injunction or decree of any court or other Governmental Authority.  Except
as set forth on Schedule  5.8, to the  knowledge of Company,  there have been no
disciplinary,  revocation or suspension  proceedings or similar types of claims,
actions or proceedings,  hearings or investigations  against the Company and the
Company  Existing  Practices,  and the  Company  does  not  know  of any  facts,
conditions  or  incidents  that  may  result  in any such  proceedings,  claims,
actions, hearings or investigations.

         Section 5.9.  Accounts  Receivable.  The Company Balance Sheet reflects
the amount,  as of the Company  Balance Sheet Date and  determined in conformity
with GAAP and on a basis  consistent  with the past  practices  employed  by the
Company,  of the Company's and the Company Existing  Practices  current accounts
receivable,  net of contractual  adjustments  arising out of  third-party  payor
arrangements  and  allowances  for bad debts  ("Company  Accounts  Receivable").
Schedule 5.9 reflects the amount of Company  Accounts  Receivable as of June 30,
1999. For all Company Accounts Receivable reflected on the Company Balance Sheet
there is a  corresponding  accounts  receivable  owed to the Company.  As of the
Closing  Date,  (i) the Company  knows of no reason  that the  Company  Accounts
Receivable  shall not be owned  solely by the  Company or (ii) the Company has a
security  agreement with the Company  Existing  Practices  pursuant to which the
Company  Existing  Practices have granted a security  interest to the Company in
the Company Accounts  Receivable in the amounts indicated in the Company Balance
Sheet which  represent  amounts  owed from the Company  Existing  Practices  for
services previously  rendered.  Except as set forth on Schedule 5.9, the Company
Accounts Receivable (i) are valid,  binding and legally enforceable  obligations
and are, subject to the preceding  sentence,  owned by the Company (or, prior to
the Closing Date, the Company  Existing  Practices)  free and clear of all liens
and encumbrances,  (ii) will not, to the Company's knowledge,  be subject to any
offset,  counterclaim or other adverse claim or defense,  except for contractual
adjustments arising out of third party payor arrangements, and (iii) may, to the
extent  permitted  by law, be sold and  transferred  to the Parent.  The Company
Accounts  Receivable  arose in the ordinary  course of business  consistent with
past  practices.  The Company  maintains  its  accounting  records in sufficient
detail to substantiate the Company Accounts Receivable  reflected on the Company
Balance Sheet and has given and will give to Parent full and complete  access to
those records,  including the right to make copies therefrom. Since December 31,
1998,  the Company has not changed any principle or practice with respect to the
recordation  of accounts  receivable,  or any material  collection,  discount or
write-off  policy or procedure,  and the Company has not sold or transferred any
Company  Accounts  Receivable.  To the  Company's  knowledge,  the Company is in
substantial  compliance with the terms and conditions of such third-party  payor
arrangements.

         Section 5.10.  No Violation of Law; Compliance with Agreements.

                                       26

<PAGE>

                  (a)  To  the  Company's  knowledge,  the  Company  is  not  in
violation of and has not been given  notice or been  charged with any  violation
of, any law, statute, order, rule, regulation, ordinance or judgment (including,
without  limitation,  any applicable  Environmental Law, the Occupational Safety
and Health  Act,  the  Americans  with  Disabilities  Act and state and  federal
escheat  laws) of any  governmental  or  regulatory  body or  authority.  To the
Company's  knowledge,   no  investigation  or  review  by  any  governmental  or
regulatory body or authority is pending or threatened,  nor has any governmental
or regulatory body or authority indicated an intention to conduct the same.

                  (b) Except as disclosed on Schedule 5.10(b),  to the Company's
knowledge,  the  Company is not in breach or  violation  of or in default in the
performance or observance of any term or provision of, and no event has occurred
which, with lapse of time or action by a third party,  could result in a default
under,  (a) the charter,  bylaws or similar  organizational  instruments  of the
Company or (b) any contract,  commitment,  agreement,  indenture, mortgage, loan
agreement, note, lease, bond, license, approval or other instrument to which the
Company  is a party or by which it is bound or to which any of its  property  is
subject.

                  (c) The Company and the Company  Existing  Practices  have all
permits  (including  without  limitation   Environmental   Permits),   licenses,
franchises, variances, exemptions, orders and other governmental authorizations,
consents  and  approvals  required  or  necessary  to conduct  its  business  as
presently  conducted  (collectively,  the "Company  Permits").  To the Company's
knowledge,  the Company and the Company Existing  Practices are not in violation
of the terms of any  Company  Permit.  All such  permits,  licenses,  orders and
approvals are in full force and effect, and no suspension or cancellation of any
of them is pending or, to the knowledge of the Company, threatened. None of such
permits,  licenses,  orders or  approvals,  and no  application  for any of such
permits,  licenses,  orders  or  approvals  will be  adversely  affected  by the
consummation of the transactions contemplated by this Agreement. The Company and
(to the knowledge of the Company) the Company  Existing  Practices have not been
disciplined,  sanctioned or excluded from the Medicare program and have not been
subject to any plan of correction imposed by any professional review body.

         Section 5.11. Insurance.  Schedule 5.11 hereto sets forth a list of all
insurance  policies  owned by the  Company or by which the Company or any of its
properties or assets is covered against present losses,  all of which are now in
full  force and  effect.  No  insurance  has been  refused  with  respect to any
operations,  properties  or  assets  of the  Company  nor  has  coverage  of any
insurance  been limited by any insurance  carrier that has carried,  or received
any  application  for,  any such  insurance  during  the last  three  years.  No
insurance  carrier has denied any claims made against any of the policies listed
on Schedule 5.11 hereto.

         Section 5.12.  Taxes.

                  (a) Except as set forth on Schedule  5.12, (i) the Company has
(x) duly  filed (or there has been  filed on its  behalf)  with the  appropriate
taxing authorities all Tax Returns, required

                                       27

<PAGE>

to be filed by it on or prior to
the date hereof,  and (y) duly paid in full or made adequate  provision therefor
on its financial  statements in accordance with GAAP (or, except as set forth on
Schedule  5.12,  there has been paid or adequate  provision has been made on its
behalf) for the payment of all Taxes) for all  periods  ending  through the date
hereof; (ii) all such Tax Returns filed by or on behalf of the Company are true,
correct and  complete  in all  material  respects;  (iii) the Company is not the
beneficiary  of any extension of time within which to file any Tax Return;  (iv)
no claim has ever been made by any authority in a jurisdiction where the Company
does not file Tax  Returns  that it is or may be  subject  to  taxation  by that
jurisdiction;  (v) the  liabilities and reserves for Taxes reflected in the most
recent balance sheet included in the Company  Financial  Statements to cover all
Taxes for all periods  ending at or prior to the date of such balance sheet have
been  properly  determined  in  accordance  with GAAP,  and there is no material
liability  for Taxes for any period  beginning  after such date other than Taxes
arising in the ordinary  course of  business;  (vi) there are no liens for Taxes
upon any property or assets of the  Company,  except for liens for Taxes not yet
due;  (vii) the  Company  has not made any change in  accounting  methods  since
December 31, 1998;  (viii) the Company has not received a ruling from any taxing
authority or signed an agreement with any taxing authority; (ix) the Company has
complied  in all  respects  with all  applicable  laws,  rules  and  regulations
relating to the payment and withholding of Taxes (including, without limitation,
withholding  of Taxes pursuant to Sections 1441 and 1442 of the Code, as amended
or similar  provisions  under any foreign laws) and has, within the time and the
manner  prescribed  by law,  withheld  and paid over to the  appropriate  taxing
authority  all  amounts  required  to be so  withheld  and paid  over  under all
applicable  laws in  connection  with  amounts  paid or owing  to any  employee,
independent  contractor,  creditor,  stockholder  or other third  party;  (x) no
federal,  state, local or foreign audits or other administrative  proceedings or
court  proceedings are presently pending with regard to any Taxes or Tax Returns
of the  Company,  and,  as of the date of this  Agreement,  the  Company has not
received  a  written  notice  of any  pending  audits  or  proceedings;  (xi) no
shareholder or director or officer (or employee  responsible for Tax matters) of
the Company expects any authority to assess any additional  Taxes for any period
for which Tax Returns have been filed;  (xii) the federal  income Tax Returns of
the  Company  have not  been  examined  by the IRS;  (xiii)  no  adjustments  or
deficiencies relating to Tax Returns of the Company have been proposed, asserted
or assessed by any taxing authority, except for such adjustments or deficiencies
which  have been  fully  paid or  finally  settled;  and (xiv) the  Company  has
delivered to the Parent true,  correct and complete copies of all federal income
Tax Returns,  examination  reports,  and  statements  of  deficiencies  assessed
against or agreed to by the Company since December 31, 1997.

                                       28

<PAGE>

                  (b) There are no outstanding requests, agreements, consents or
waivers to extend the statute of limitations applicable to the assessment of any
Taxes or deficiencies  against the Company,  and no power of attorney granted by
the Company with respect to any Taxes is currently in force.  The Company is not
a party to any agreement  providing for the allocation or sharing of Taxes.  The
Company has not, with regard to any assets or property  held,  acquired or to be
acquired  by it,  filed a consent to the  application  of Section  341(f) of the
Code, or agreed to have Section  341(f)(2) of the Code apply to any  disposition
of a subsection  (f) asset (as such term is defined in Section  341(f)(4) of the
Code)  owned  by the  Company.  The  Company  (i) has not  been a  member  of an
affiliate  group filing a  consolidated  federal income Tax Return (other than a
group the common  parent of which was the Company) and (ii) has no liability for
Taxes of any person (other than any of the Company and its  Subsidiaries)  under
Section  1.1502-6  of the United  States  Treasury  Regulations  (or any similar
provision of state,  local or foreign law),  as a transferee  or  successor,  by
contract, or otherwise.

         Section 5.13.  Employee Benefit Plans.

                  (a) Each  Company Plan and each  Company  Benefit  Program (as
such terms are defined  below) is listed on Schedule 5.13 hereto.  Except as set
forth on Schedule  5.13,  no Company Plan or Company  Benefit  Program is or has
been (i)  covered  by Title IV of ERISA,  (ii)  subject to the  minimum  funding
requirements  of  Section  412 of the Code or (iii) a  "multi-employer  plan" as
defined in Section 3(37) of ERISA,  nor has the Company  contributed to, or ever
had any obligation to contribute to, any multi-employer  plan. Each Company Plan
and Company Benefit Program intended to be qualified under Section 401(a) of the
Code is designated as a tax-qualified plan on Schedule 5.13 and is so qualified.
No Company  Plan or Company  Benefit  Program  provides  for any retiree  health
benefits for any  employees or  dependents of the Company other than as required
by COBRA.  There are no claims  pending with  respect to, or under,  any Company
Plan or any Company Benefit Program, other than routine claims for benefits, and
there are no disputes or litigation pending or, to the knowledge of the Company,
threatened, with respect to any such Company Plans or Company Benefit Programs.

                  (b)      The Company has heretofore delivered to Parent true
and correct copies of the following, if any:

                           (i)  each  Company  Plan  and  each  Company  Benefit
         Program listed on Schedule 5.13, all amendments  thereto as of the date
         hereof and all current summary plan descriptions  provided to employees
         regarding the Company Plans and Company Benefit Programs;

                           (ii) each trust  agreement  and annuity  contract (or
         any other funding  instruments)  pertaining to any of the Company Plans
         or Company Benefit Programs, including all amendments to such documents
         to the date hereof;

                                       29

<PAGE>

                           (iii)  each  management  or  employment  contract  or
         contract  for  personal  services  and a  complete  description  of any
         understanding  or  commitment  between  the  Company  and any  officer,
         consultant,   director,  employee  or  independent  contractor  of  the
         Company; and

                           (iv) a  complete  description  of  each  other  plan,
         policy,  contract,  program,  commitment or  arrangement  providing for
         bonuses,  deferred compensation,  retirement payments,  profit sharing,
         incentive  pay,  commissions,  hospitalization  or medical  expenses or
         insurance or any other benefits for any officer, consultant,  director,
         annuitant, employee or independent contractor of the Company as such or
         members  of  their  families   (other  than  directors'  and  officers'
         liability  policies),  whether  or  not  insured  (a  "Company  Benefit
         Program").  For  purposes of this  Agreement,  "Company  Plan" means an
         "employee  benefit plan" (as defined in Section 3(3) of ERISA) which is
         or has been established or maintained, or to which contributions are or
         have been made, by the Company or by any trade or business,  whether or
         not  incorporated,  which,  together with the Company,  is under common
         control, as described in Section 414(b) or (c) of the Code.

                  (c) Each  Company  Plan and Company  Benefit  Program has been
maintained and  administered in compliance with its terms and in accordance with
all applicable  laws,  rules and  regulations.  The Company has no commitment or
obligation to establish or adopt any new or additional  Company Plans or Company
Benefit  Programs or to increase the benefits under any existing Company Plan or
Company Benefit Program.

                  (d)  Except  as  set  forth  in  Schedule  5.13,  neither  the
execution  and  delivery  of  this  Agreement,   nor  the  consummation  of  the
transactions  contemplated  hereby  will (i) result in any payment to be made by
the   Company,   including,   without   limitation,    severance,   unemployment
compensation,  golden  parachute  (defined  in  Section  280G  of the  Code)  or
otherwise,  becoming due to any employee of the  Company,  or (ii)  increase any
benefits  otherwise  payable  under  any  Company  Plan or any  Company  Benefit
Program.  The Company does not have any severance  arrangements  with any of its
employees as of the Closing Date.

         Section 5.14.  Employee and Labor Matters.

                  (a) The Company has  provided  Parent with a true and complete
list dated as of June 11, 1999 (the  "Employee  Schedule ") of all  employees of
the Company listing the title or position held, base salary or wage rate and any
bonuses,  commissions,  profit sharing, the Company's vehicles, club memberships
or other compensation or perquisites  payable, all employee benefits received by
such employees and any other  material  terms of any written  agreement with the
Company.  Except as set forth on Schedule 5.14, as of the date of this Agreement
and as of the Closing  Date,  the Company has not entered into any  agreement or
agreements  pursuant  to which  the  combined  annual  payroll  of the  Company,
including projected pay increases,  overtime and fringe benefit costs,  required
to operate its business  (including all  administrative  and support  personnel)
would be greater than as listed on the Employee Schedule.

                                       30

<PAGE>

                  (b) Except as set forth on Schedule 5.14, the Company is not a
party to or bound by any written  employment  agreements or  commitments,  other
than on an at-will basis.  The Company is in compliance with all applicable laws
respecting  the employment  and  employment  practices,  terms and conditions of
employment and wages and hours of its employees and is not engaged in any unfair
labor  practice.  All employees of the Company who work in the United States are
lawfully   authorized  to  work  in  the  United  States  according  to  federal
immigration laws. There is no labor strike or labor  disturbance  pending or, to
the knowledge of the Company, threatened against the Company with respect to the
Business and, during the past five years, the Company has not experienced a work
stoppage.

                  (c) Except as set forth on Schedule  5.14,  (i) the Company is
not a party to or bound by the terms of any collective  bargaining  agreement or
other  union  contract  applicable  to any  employee  of the Company and no such
agreement or contract  has been  requested by any employee or group of employees
of the  Company,  nor has there  been any  discussion  with  respect  thereto by
management of the Company with any employees of the Company, (ii) the Company is
not aware of any union organizing  activities or proceedings  involving,  or any
pending  petitions  for  recognition  of, a labor  union or  association  as the
exclusive  bargaining agent for, or where the purpose is to organize,  any group
or groups of employees of the Company,  or (iii) there is not currently pending,
with regard to any of its facilities,  any proceeding  before the National Labor
Relations Board, wherein any labor organization is seeking representation of any
employees of the Company.

         Section 5.15.  Environmental  Matters.  Without in any manner limiting
any other  representations  and warranties set forth in this Agreement:

                  (a) Neither the Company nor any of its Business  Facilities is
in violation of, or has violated,  or has been or is in non-compliance with, any
Environmental  Laws,  including  but  not  limited  to in  connection  with  the
ownership,  use,  maintenance or operation of, or conduct of the business of the
Company or any of its Business Facilities.

                 (b) Without in any manner limiting the generality of (a) above:

                           (i)  Except in  compliance  with  Environmental  Laws
         (including,  without limitation,  by obtaining necessary  Environmental
         Permits),  no Materials of Environmental Concern (as defined in Exhibit
         A) have been used,  generated,  stored,  treated, or disposed of, or in
         any other way  released  (and no release is  threatened),  on, under or
         about any Business Facility (as defined in Exhibit A) or transferred or
         transported to or from any Business Facility.

                           (ii) The Company and all of its  Business  Facilities
         have  and  have   timely   filed   applications   for  renewal  of  all
         Environmental  Permits and the Company and its Business  Facilities are
         in  compliance  with all terms  and  conditions  of such  Environmental
         Permits;

                                       31

<PAGE>

                           (iii) There are no Materials of Environmental Concern
         on any  Business  Facility of the  Company  exceeding  any  standard or
         limitation   established,   published   or   promulgated   pursuant  to
         Environmental   Laws,   or  which  would   require   reporting  to  any
         Governmental Authority or Remediation to comply with Environmental Laws
         (as defined in Exhibit A);

                           (iv) To the  knowledge  of the  Company,  none of the
         off-site  locations where Materials of Environmental  Concern generated
         from any Business  Facility of the Company or for which the Company has
         arranged  for  their  disposal,  treatment  or  application,  has  been
         nominated or identified  as a facility  which is subject to an existing
         or potential claim under  Environmental Laws which could be expected to
         result in an Environmental Claim against the Company; and

                           (v) No  current  Business  Facility  of  the  Company
         contains any asbestos  containing  materials which cannot be managed in
         place without air monitoring, removal or encapsulation and which is not
         managed under and in  compliance  with an  operations  and  maintenance
         program.

For purposes of this Section,  the "Company"  shall include any Entity which is,
in  whole  or in  part,  a  predecessor  of the  Company  and all of its  former
Subsidiaries and their predecessors.

         Section  5.16.  Non-Competition  Agreements.  Except  as set  forth  on
Schedule 5.16, and except as required by this Agreement, neither the Company nor
(to the Company's  knowledge) any  Shareholder is a party to any agreement which
purports  to  restrict or  prohibit  any of them from,  directly or  indirectly,
engaging in any business  currently engaged in by the Company.  To the Company's
knowledge,  none of the  Company's  shareholders,  officers,  directors,  or key
employees  is a party  to any  agreement  which,  by  virtue  of  such  person's
relationship  with the Company,  restricts the Company or any  Subsidiary of the
Company  from,  directly  or  indirectly,  engaging  in any  of  the  businesses
described above.

         Section  5.17.  Title to Assets.  The Company  has good and  marketable
title in fee simple to all its real property and good title to all its leasehold
interests and other  properties,  as reflected in the most recent  balance sheet
included in the Company Financial  Statements,  except for properties and assets
that have been disposed of in the ordinary  course of business since the date of
the latest  balance sheet  included  therein,  free and clear of all  mortgages,
liens,  pledges,  charges or encumbrances of any nature  whatsoever,  except (i)
liens for current  taxes,  payments of which are not yet  delinquent,  (ii) such
imperfections  in title  and  easements  and  encumbrances,  if any,  as are not
substantial in character, amount or extent and do not detract from the value, or
interfere with the present use or  marketability of the property subject thereto
or affected thereby,  or otherwise impair the Company's business  operations (in
the manner presently carried on by the Company),  or (iii) any lien securing any
debt or obligation  described on Schedule 5.17 which is expressly  referenced as
being secured. To the Company's knowledge, all leases under which the Company

                                       32

<PAGE>

leases any real property have been delivered to Parent and are in good standing,
valid and effective in accordance with their respective terms, and there is not,
under any of such  leases,  any  existing  default or event which with notice or
lapse of time or both would  become a default by or on behalf of the  Company or
its Subsidiaries, or by or on behalf of any third party.

         Section 5.18. Contracts,  Agreements,  Plans and Commitments.  Schedule
5.18 hereto sets forth a complete list of the following  contracts,  agreements,
plans and commitments (collectively,  the "Contracts") to which the Company is a
party or by which the Company or any of its  properties  is bound as of the date
hereof:

                  (a)      any contract, commitment  or agreement  that involves
 aggregate  expenditures  by the Company of more than
$10,000 per year;

                  (b) any contract or agreement (including any such contracts or
agreements  entered  into  with  any  Governmental  Authority)  relating  to the
maintenance or operation of the business that involves aggregate expenditures by
the Company of more than $10,000;

                  (c)      any indenture, loan agreement or note under which the
Company has outstanding  indebtedness,  obligations or
liabilities for borrowed money;

                  (d)      any lease or sublease for the use or occupancy of
real property;

                  (e)      any agreement that restricts the right of the Company
to engage in any type of business;

                  (f)      any guarantee,  direct or indirect,  by any person of
any contract,  lease or agreement  entered into by the
Company;

                  (g)      any partnership, joint venture or construction and
operation agreement;

                  (h)     any  agreement of surety, guarantee or indemnification
with respect to which the Company is the obligor, outside of the ordinary course
of business;

                  (i) any contract that requires the Company to pay for goods or
services  substantially  in excess of its estimated  needs for such items or the
fair market value of such items;

                  (j) any contract, agreement, agreed order or consent agreement
that  requires  the  Company  to take any  actions or incur  expenses  to remedy
non-compliance with any Environmental Law; and

                  (k)      any other contract material to the Company or its
business.

                                       33

<PAGE>

True,  correct and complete  copies of the Contracts  have been  delivered to or
made  available for  inspection  by Parent.  All the Contracts (i) were duly and
validly  executed  and  delivered  by the Company and (to the  knowledge  of the
Company)  the other  parties  thereto  and (ii) are valid and in full  force and
effect.  Except as set forth on Schedule  5.18,  the Company has  performed  all
material  obligations  required under the Contracts to have been performed by it
prior to the date hereof,  including  timely  paying all interest on its debt as
such interest has become due and payable.  Except as set forth on Schedule 5.18,
there  are  no  counterclaims  or  offsets  under  any  of  the  Contracts.  The
consummation of the Merger will vest in the Survivor  Corporation all rights and
benefits under the Contracts and the right to operate the Company's business and
assets  under the terms of the  Contracts in the manner  currently  operated and
used  by the  Company;  provided,  however,  that  the  Company  makes  no  such
representation regarding Contracts to which the Company Existing Practices are a
party.  Schedule 5.18 does not include either  amendments  proposed by Parent to
the Company's Existing  Management  Agreements or the Share Exchange  Agreements
expected  to be  executed  by  the  physician  owners  of the  Company  Existing
Practices in replacement of the existing Share Exchange Agreements.  The Company
has provided to Parent copies of all managed care contracts in its possession to
which  the  Company  Existing  Practices  are  parties.  Except  as set forth on
Schedule 5.18,  there are no other side letters  (except as contemplated by this
Agreement), oral agreements or any other agreements that conflict with the terms
of the Company's Existing Management Agreements. The Company has no knowledge of
any  violation  of any of the terms of such  contracts  by the Company  Existing
Practices.

         Section 5.19.   Section 368 Representations.

                  (a) Except for those share  exchange  agreements  described on
Schedule 5.19(a) (the "Share Exchange Agreements"),  the Company is not aware of
any plan or intention by any  Shareholder  who is  anticipated  to receive 1% or
more of the total number of shares of Parent Common Stock to be issued  pursuant
to the Merger to dispose of such shares.

                  (b)  Neither  Parent nor  Merger Sub will  assume any debts or
obligations of the holders of the Company Common Stock as part of the Merger.

                  (c) Except as  described on Schedule  5.19(c),  there have not
been any sales or redemptions of the Company's capital stock in contemplation of
the Merger.

                  (d)  The  Company  and  (to  the  Company's   knowledge)   the
Shareholders  will pay their own expenses which are incurred in connection  with
the Merger.

                  (e) The  Company has not  disposed of any assets  (either as a
dividend or  otherwise)  constituting  more than 10% of the fair market value of
all of its assets  (ignoring any liabilities) at any time either during the past
twelve months or in contemplation of the Merger.

                  (f)     The Company is not an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.

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<PAGE>

                  (g) The Company is not under the  jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.

         Section 5.20. Brokers and Finders. The Company has not entered into any
contract,  arrangement or understanding with any person or firm which may result
in the  obligation of the Company to pay any finder's  fees,  brokerage or agent
commissions  or  other  like  payments  in  connection  with  the   transactions
contemplated  hereby.  There is no  claim  for  payment  by the  Company  of any
investment banking fees, finder's fees,  brokerage or agent commissions or other
like payments in connection with the  negotiations  leading to this Agreement or
the consummation of the transactions contemplated hereby.

         Section  5.21.  Intellectual  Property.  The Company has rights to use,
whether  through  ownership,  licensing or otherwise,  all patents,  trademarks,
service  marks,  trade  names,  copyrights,  software,  trade  secrets and other
proprietary  rights and  processes  that are  material  to its  business  as now
conducted (collectively the "Company Intellectual Property Rights"). The Company
does not own any patents.  The Company has no knowledge of any  infringement  by
any other person of any of the Company  Intellectual  Property  Rights,  and the
Company has not entered into any  agreement to indemnify any other party against
any charge of infringement of any of the Company  Intellectual  Property Rights.
The Company has not and does not violate or infringe any  intellectual  property
right of any other  person,  and the Company has not received any  communication
alleging that it violates or infringes the  intellectual  property  right of any
other  person.  The Company has not been sued for  infringing  any  intellectual
property  right of  another  person.  There is no claim or demand of any  person
pertaining  to, or any  proceeding  which is pending or, to the knowledge of the
Company, threatened, that challenges the rights of the Company in respect of any
Company  Intellectual  Property  Rights,  or that claims that any default exists
under any Company Intellectual  Property Rights. To the Company's knowledge,  no
Company Intellectual Property Right is subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any court, tribunal,  arbitrator,  or
other Governmental Authority.

         Section 5.22. Relationships. Since January 1, 1998, the Company has not
received  notice  from any  customer,  supplier  or any  party  to any  Contract
involving more than $15,000 annually with the Company (each a "Company  Contract
Party")  that such  customer,  supplier  or Company  Contract  Party  intends to
discontinue  doing business with the Company,  and since such date, no customer,
supplier or Company Contract Party, has indicated any intention (a) to terminate
its existing  business  relationship with the Company or (b) not to continue its
business relationship with the Company,  whether as a result of the transactions
contemplated  hereby  or  otherwise.   The  Company  has  not  entered  into  or
participated in any related party transaction during the past three years.

         Section  5.23.  Certain  Payments.  Neither  the  Company  nor,  to the
Company's  knowledge,  any  shareholder,  officer,  director  or employee of the
Company  has paid or  received  or caused to be paid or  received,  directly  or
indirectly,  in  connection  with the  business  of the  Company  (a) any bribe,
kickback or other similar payment to or from any domestic or foreign  government
or agency thereof

                                       35

<PAGE>

or any other person or (b) any contribution to any domestic or foreign political
party or candidate (other than from personal funds of such shareholder, officer,
director or employee not reimbursed by the Company or as permitted by applicable
law).

         Section 5.24. Books and Records.  The corporate minute books, and other
corporate  records of the  Company are  correct  and  complete  in all  material
respects and the signatures appearing on all documents contained therein are the
true  signatures of the person  purporting to have signed the same.  All actions
reflected  in said books and records were duly and validly  taken in  compliance
with the laws of the  applicable  jurisdiction  and no  meeting  of the board of
directors  of the  Company  or any  committee  thereof  has been  held for which
minutes have not been prepared and are not contained in the minute books. To the
extent  that they  exist,  all  personnel  files,  reports,  strategic  planning
documents, financial forecasts, accounting and tax records and all other records
of every type and  description  that relate to the  business of the Company have
been  prepared and  maintained in  accordance  with good business  practices and
applicable laws and  regulations.  All such books and records are located in the
offices of the Company or of the Company Existing Practices.

         Section 5.25. Condition and Sufficiency of Assets.  Except as described
in Section 5.31, all buildings,  improvements  and equipment  owned or leased by
the Company are structurally  sound, are in good operating  condition and repair
(subject  to normal wear and tear) and are  adequate  for the uses to which they
are being put, and none of such buildings,  improvements or equipment is in need
of maintenance or repairs except for ordinary,  routine  maintenance and repairs
that are not material in nature or cost.

         Section  5.26.  Offering.  Subject  to the  truth and  accuracy  of the
Investors'  Certificates  to be delivered by the  Shareholders  at Closing,  the
offer and issuance of Parent Common Stock as  contemplated  by this Agreement is
exempt from the registration requirements of the Securities Act, and neither the
Company nor any agent acting on its behalf will take any action  hereafter  that
will cause the loss of such exemption.

         Section 5.27.  Staff  Privileges.  Schedule 5.27 lists all hospitals at
which each Company Existing Practice has staff privileges and the extent of such
privileges. Such staff privileges have not been revoked, surrendered,  suspended
or terminated, and except for routine recredentialing  procedures,  there are no
disciplinary  actions or other proceedings pending or threatened that may result
in  any  revocation,   surrender,   suspension  or  termination  of  such  staff
privileges.  In  addition,  to Company's  knowledge,  there are no, and have not
been,  any facts,  conditions  or incidents  that may result in any  revocation,
surrender, suspension or termination of such staff privileges.

         Section 5.28. Fraud and Abuse. To the Company's knowledge,  the Company
and the Company Existing  Practices have not engaged in any activities which are
prohibited  under  ss.1320a-7b  of Title  42 of the  United  States  Code or the
regulations  promulgated  thereunder,  or  related  state or local  statutes  or
regulations,   or  which  are  prohibited  by  rules  of  professional  conduct,
including, but not limited to, the following: (i) knowingly and willfully making
or causing to be made a false statement or  representation of a material fact in
any application for any benefit or payment;  (ii) knowingly and willfully making
or causing to be made any false statement or  representation  of a material fact
for use in determining rights to any benefit or payment;

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<PAGE>

(iii) any failure by a
claimant to disclose  knowledge of the  occurrence  of any event  affecting  the
initial  or  continued  right to any  benefit or payment on its own behalf or on
behalf of another, with the intent to fraudulently secure such benefit; and (iv)
knowingly and willfully soliciting or receiving any remuneration  (including any
kickback, bribe or rebate) directly or indirectly,  overtly or covertly, in cash
or in kind,  or offering to pay or receive such  remuneration  (A) in return for
referring an  individual  to a person for the  furnishing  or arranging  for the
furnishing  of any item or service for which  payment may be made in whole or in
part by  Medicare  or  Medicaid,  or (B) in return  for  purchasing,  leasing or
ordering or arranging for, or recommending,  purchasing, leasing or ordering any
good,  facility,  service or item for which  payment  may be made in whole or in
part by Medicare or Medicaid.

         Section 5.29. Medicare,  Medicaid,  and Other Third-Party Payor Payment
Liabilities.  To the Company's  knowledge,  the Company and the Company Existing
Practices do not have any liabilities (i) to any third party fiscal intermediary
or carrier  administering  any state  Medicaid  program or the federal  Medicare
program, (ii) directly to any state Medicaid or the federal Medicare program, or
(iii)  to any  other  third  party  payor  for  the  recoupment  of any  amounts
previously paid to Company or any predecessor to Company by any such third-party
fiscal intermediary, carrier, Medicaid program, Medicare program, or third party
payor which exceed,  individually  or in the  aggregate,  $30,000.  There are no
pending or, to the Company's  knowledge,  threatened  actions by any third party
fiscal  intermediary or carrier  administering any state Medicaid or the federal
Medicare  program,  by the  Department of Health and Human  Services,  any state
Medicaid  agency,  or any third party payor to suspend  payments to the Company.
Neither  the  Company nor any  licensed  employee  of the Company  (other than a
physician in a Company Existing  Practice) has been convicted of, or pled guilty
or nolo  contendere to,  patient abuse or  negligence,  or any other Medicare or
Medicaid  related offense,  and none of the foregoing  persons has committed any
offense  which is  reasonably  likely to serve as the basis  for  suspension  or
exclusion from the Medicare and Medicaid programs.

         Section 5.30.  Bank Accounts;  Powers of Attorney.  The Company has set
forth on  Schedule  5.30 (i) the name of each  bank,  savings  and loan or other
financial  institution in which the Company has any account or safe deposit box,
the style and number of each such  account or safe  deposit box and the names of
all persons authorized to draw thereon or have access thereto, and (ii) the name
of each person  holding a general or special  power of attorney from the Company
and a summary of the terms thereof.

         Section 5.31.  Year 2000  Compliance.  The Company has not completed an
analysis to determine the extent to which its business and  operations  are Year
2000 Compliant (as hereinafter  defined).  The Company has determined,  however,
that it is not, to the best of its  knowledge,  Year 2000 Compliant with respect
to the items  disclosed on Schedule  5.31 hereto which items do not represent an
exhaustive list of instances in which the Company is not or may not be Year 2000
Compliant.  "Year  2000  Compliant"  means as to any  person or entity  that all
software, firmware,  microprocessing chips and other data processing devices and
services (both as a recipient and as a

                                       37

<PAGE>

provider), capabilities and facilities utilized by, and material to the business
operations  or  financial  condition  of,  that person or entity will be able to
record all calendar dates (whether before, in and after the year 2000) correctly
with  four-digit  year  processing  and will be able to  communicate  with other
applicable  systems to accept any two-digit  year data in a manner that resolves
any ambiguities as to century in a properly defined manner.

                                   ARTICLE VI

                     CONDUCT OF BUSINESS PENDING THE MERGER

         Section  6.1.  Conduct of Business  Pending  the Merger.  Except as set
forth on Schedule 6.1, after the date hereof and prior to the Closing Date, each
of Parent and the Company  agrees that it shall (unless  otherwise  permitted by
Parent or Company as applicable, in writing):

                  (a)    conduct its businesses in the ordinary and usual course
of business and consistent with past practice;

                  (b) not (i) amend or propose  to amend its  charter or bylaws,
(ii) split, combine,  reorganize,  reclassify,  recapitalize or take any similar
action with respect to its outstanding capital stock or (iii) declare, set aside
or pay any  dividend  or  distribution  payable  in  cash,  stock,  property  or
otherwise;

                  (c) not issue,  sell, pledge or dispose of, or agree to issue,
sell, pledge or dispose of, any additional share of, or any options, warrants or
rights of any kind to acquire  any share of, its  capital  stock of any class or
any debt or equity securities  convertible into or exchangeable for such capital
stock;

                  (d) not (i) incur or become  contingently  liable with respect
to any indebtedness for borrowed money, (ii) redeem, purchase,  acquire or offer
to redeem,  purchase or acquire any shares of its capital  stock or any options,
warrants  or  rights  to  acquire  any  of its  capital  stock  or any  security
convertible  into  or  exchangeable  for  its  capital  stock,  (iii)  make  any
acquisition of any assets or businesses  other than  expenditures at fair market
value for  fixed or  capital  assets in the  ordinary  course  of  business  not
exceeding  $10,000  in any  instance  or $50,000  in the  aggregate,  (iv) sell,
pledge,  dispose of or encumber any assets or businesses other than sales in the
ordinary course of business,  and in all cases such sale must be for fair market
value at the time of sale or (v) enter into any contract, agreement,  commitment
or arrangement with respect to any of the foregoing;

                  (e) use all reasonable efforts to preserve intact its business
organization  and  goodwill,  keep  available  the services of their  respective
present  officers  and key  employees,  and  preserve  the goodwill and business
relationships with customers and others having business  relationships with them
and not  engage  in any  action,  directly  or  indirectly,  with the  intent to
adversely impact the transactions contemplated by this Agreement;

                                       38

<PAGE>

                  (f) not enter into or amend any employment, severance, special
pay  arrangement  with respect to  termination  of  employment  or other similar
arrangements or agreements with any directors, officers or key employees;

                  (g) not adopt, enter into or amend any bonus,  profit sharing,
compensation,  stock option, pension, retirement, deferred compensation,  health
care,  employment  or other  employee  benefit  plan,  agreement,  trust fund or
arrangement  for the benefit or welfare of any  employee  or retiree,  except as
required to comply with changes in applicable law;

                  (h) use  commercially  reasonable  efforts  to  maintain  with
financially responsible insurance companies insurance on its tangible assets and
its  businesses  in such  amounts  and  against  such  risks  and  losses as are
consistent with past practice;

                  (i)      not make, change or revoke any material Tax election
or make any material agreement or settlement  regarding
Taxes with any taxing authority;

                  (j)      not make any change in the Company's financial, Tax
or accounting methods,  practices or policies, or in any
assumption underlying such a method, practice or policy;

                  (k) give prompt written  notice to Parent of the  commencement
of any  Environmental  Claim,  or  non-routine  inspection  by any  Governmental
Authority  with  responsibility  for enforcing or  implementing  any  applicable
Environmental  Laws,  and  provide  to Parent  such  information  as Parent  may
reasonably  request  regarding such  Environmental  Claim,  any  developments in
connection  therewith,  and, as applicable,  the Company's anticipated or actual
response thereto;

                  (l) use its  commercially  reasonable  efforts  to  cause  the
transfer of Environmental  Permits (on the same terms and  conditions),  and any
financial  assurance  required  thereunder  to Parent  or  Merger  Sub as may be
necessary   under   applicable   Environmental   Laws  in  connection  with  the
consummation of the transactions  under this Agreement to allow Parent or Merger
Sub to conduct the business of the Company, as currently conducted;

                  (m) not  enter  into or assume  any  contracts  or  agreements
having a value or imposing an  obligation  upon the Company in excess of $10,000
annually  and all  contracts  or  agreements  having a value to or  imposing  an
obligation on the Company that have  remaining  obligations  of $50,000 or more,
regardless of the annual payment;

                  (n)      maintain its books of account and records in the
usual, regular and ordinary manner consistent  with past policies and practice;

                  (o)      not  compromise, settle,  grant any waiver or release
 relating to or otherwise  adjust any  litigation  or claims of any nature
whatsoever pending against the Company;

                                       39

<PAGE>

                  (p)      not take any action or omit to take any action, which
action or omission would result in a breach of any of
the representations and warranties set forth in this Agreement; and

                  (q) not  make or  commit  to make  any  capital  expenditures,
except for capital expenditures in the ordinary course of business not in excess
of $50,000 in the aggregate.

         Section 6.2. Control of the Company's Operations.  Nothing contained in
this  Agreement  shall give to Parent or the  Company,  directly or  indirectly,
rights to control or direct the other party's  operations prior to the Effective
Time.  Prior to the  Effective  Time,  Parent and the  Company  shall  exercise,
consistent with the terms and conditions of this Agreement, complete control and
supervision of its operations.

         Section 6.3. Other Offers.  Except in connection with the  transactions
contemplated  by this  Agreement,  from and after the date  hereof,  the Company
shall  not,  and shall not  permit  any of the  Company's  officers,  directors,
employees, Affiliates, representatives or agents to, directly or indirectly, (i)
solicit,  initiate or  knowingly  encourage  any offer or  proposal  for, or any
indication  of  interest  in, a merger or  business  combination  involving  the
Company or the acquisition of an equity interest in, or any substantial  portion
of the assets of, the  Company or (ii) engage in  negotiations  with or disclose
any nonpublic information relating to the Company or Parent, or afford access to
the  properties,  books or records of the  Company,  to any Person.  The Company
shall  promptly  notify and provide  copies to Parent of any offer,  proposal or
indication of interest,  or communication with respect thereto,  delivered to or
received from any third party.

                                   ARTICLE VII

                              ADDITIONAL AGREEMENTS

         Section 7.1. Access to Information.  The Company shall afford to Parent
and Merger Sub and their respective accountants, counsel, financial advisors and
other representatives (the "Parent  Representatives")  full access during normal
business  hours  throughout the period prior to the Effective Time to all of its
respective   properties   (including   without   limitation   to  conduct  soil,
groundwater,  ambient air or other  environmental  testing or analyses),  books,
contracts,  personnel,  representatives  of or  contacts  with  governmental  or
regulatory authorities, agencies or bodies, commitments, and records (including,
but not limited to, Tax Returns and any and all records or  documents  which are
within the possession of  governmental  or regulatory  authorities,  agencies or
bodies,  and the disclosure of which the Company can facilitate or control) and,
during such  period,  shall  furnish  promptly to Parent and Merger Sub all such
information  concerning its respective  businesses,  properties and personnel as
Parent  or Merger  Sub,  as the case may be,  shall  request.  No  investigation
pursuant to this Section shall affect any representation or warranty made by any
party.

         Section 7.2.  Expenses and Fees.  Except when,  and to the extent that,
Parent  has  expressly  agreed  otherwise  in  writing,  APS has  undertaken  an
obligation,  enforceable  by  Parent,  to pay when due all  costs  and  expenses
incurred by the Company in connection  with the negotiation and entering into of
this Agreement and the consummation of the transactions contemplated hereby,

                                       40

<PAGE>

including, without limitation, any and all broker's commissions and the fees and
expenses of the Company's  attorneys and  accountants.  Each of the Shareholders
has undertaken an obligation to pay when due all costs and expenses  incurred by
that  Shareholder in connection  with the  negotiation and entering into of this
Agreement  and  the  consummation  of  the  transactions   contemplated  hereby,
including,  without limitation,  the fees and expenses of its personal attorneys
and accountants (in each case,  except to the extent Parent has expressly agreed
in writing to pay or reimburse the legal costs of the  Shareholders).  Except as
expressly provided above, the Company,  at or prior to Closing,  shall have made
all necessary arrangements so that the Company, Parent or Merger Sub will not be
charged with any such cost or expense,  including  expenses of the  Shareholders
not paid by Parent;  provided,  however,  that the  Company  Required  Statutory
Approvals  shall be paid by  Parent.  Parent  shall pay all  costs and  expenses
incurred  by Parent  and  Merger  Sub in  connection  with the  negotiation  and
entering  into  of  this  Agreement  and  the   consummation   of   transactions
contemplated  hereby,  including,  without limitation,  the fees and expenses of
their  attorneys and  accountants.  In furtherance of the foregoing,  Parent has
sole  responsibility  for all  costs  related  to  layoffs  or  terminations  of
employees following the Effective Time.

         Section  7.3.  Agreement  to  Cooperate.   Subject  to  the  terms  and
conditions herein provided,  each of the parties hereto shall use all reasonable
efforts  to take,  or cause to be taken,  all  action  and to do, or cause to be
done,  all things  necessary,  proper or  advisable  under  applicable  laws and
regulations to consummate and make effective the  transactions  contemplated  by
this Agreement,  including using its reasonable efforts to obtain all necessary,
proper or advisable  waivers,  consents and approvals under  applicable laws and
regulations to consummate and make effective the  transactions  contemplated  by
this Agreement,  including using its reasonable  efforts to obtain all necessary
or appropriate waivers, consents or approvals of third parties required in order
to preserve material contractual relationships of the Company.

         Section 7.4. Public Statements.  Except as required by law, the parties
shall obtain the written consent of the other prior to issuing any press release
or  any  written  public  statement  with  respect  to  this  Agreement  or  the
transactions  contemplated  hereby and shall not issue any such press release or
written public statement prior to such consent,  which shall not be unreasonably
withheld.

         Section  7.5.  Notification  of Certain  Matters.  Each of the Company,
Parent and Merger Sub agrees to give prompt  notice to each other of, and to use
their respective  reasonable best efforts to prevent or promptly remedy, (i) the
occurrence  or failure to occur or the  impending or  threatened  occurrence  or
failure to occur,  of any event  which  occurrence  or failure to occur would be
likely to cause any of its representations or warranties in this Agreement to be
untrue or inaccurate in any material  respect (or in all respects in the case of
any representation or warranty containing any materiality  qualification) at any
time from the date hereof to the  Effective  Time and (ii) any material  failure
(or any failure in the case of any covenant,  condition or agreement  containing
any  materiality  qualification)  on its  part to  comply  with or  satisfy  any
covenant,  condition  or  agreement  to be  complied  with  or  satisfied  by it
hereunder;  provided,  however, that the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available  hereunder to
the party receiving such notice.

                                       41

<PAGE>

         Section  7.6.  Exclusivity.  The  Company  acknowledges  that  the  due
diligence   and  other   investigations   permitted   herein  will  involve  the
expenditures  of  substantial  time and  expense  by  Parent.  In  consideration
thereof, the Company, on its own behalf and on behalf of its Affiliates,  agrees
that for a period of up to and  including  August 15, 1999,  it will not make or
encourage any offer or obtain any offer or otherwise  provide any  assistance in
aid of any  offer  for the  sale,  lease or  transfer  of all or any part of the
business  of the  Company  or of the  stock or  assets  of the  business  of the
Company,  to any  Person  other than  Parent.  Immediately  upon  receipt of any
unsolicited  offer,  the  Company  will  communicate  to Parent the terms of any
proposal or request for information and the identity of the parties involved.

         Section 7.7.  Confidentiality.  Without the express  written consent of
all of the  parties  hereto,  each of the parties  hereto  agrees to maintain in
confidence  and not disclose to any other  Person the terms of the  transactions
contemplated herein or the information delivered in connection with the proposed
due  diligence  investigation,  other than  disclosures  required  to obtain the
approvals  for  the  transactions  contemplated  hereby,  disclosures  to  those
professionals  and advisors who have a need to know,  disclosures of information
already available to the public or any other disclosures  required by applicable
law. In the event that either Parent or Merger Sub are at any time  requested or
required  (by  oral  questions,  interrogatories,  request  for  information  or
documents,  subpoena  or other  similar  process) to  disclose  any  information
supplied to it in connection with this transaction, such party agrees to provide
the other parties  hereto  prompt notice of such request so that an  appropriate
protective  order  may be sought  and/or  such  other  party may waive the first
party's compliance with the terms of this Section 7.7.

         Section 7.8.      Registration Rights.  Parent covenants and agrees as
follows:

                  (a)      Definitions.  For purposes of this Section, the
following terms shall have the following meanings:

                  "Form  S-3" means  such form  under the  Securities  Act as in
         effect on the date hereof or any registration form under the Securities
         Act  subsequently   adopted  by  the  SEC  that  permits  inclusion  or
         incorporation   of  substantial   information  by  reference  to  other
         documents filed by Parent with the SEC.

                  "Holder"  means  any  person  owning  or  having  the right to
         acquire  Registrable  Securities or any assignee  thereof in accordance
         with subsection (i) of this Section.

                  "Initial   Offering"  means  Parent's  first  firm  commitment
         underwritten  public  offering  of its Parent  Common  Stock  under the
         Securities Act.

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

                                       42

<PAGE>

                  "register,"   "registered,"  and  "registration"  refer  to  a
         registration effected by preparing and filing a registration  statement
         or similar  document in  compliance  with the  Securities  Act, and the
         declaration or ordering of effectiveness of such registration statement
         or document.

                  "Registrable  Securities" means the Parent Common Stock issued
         to the  Shareholders  pursuant  to this  Agreement  and any  additional
         shares of Parent Common Stock issued to the Shareholders  pursuant to a
         stock split,  reverse split, stock dividend  (including any dividend of
         securities  convertible  into  Parent  Common  Stock),  reorganization,
         reclassification, recapitalization or other similar change with respect
         to  Registrable  Securities,  excluding  in  all  cases,  however,  any
         Registrable  Securities  sold by a person in a transaction in which his
         rights under this Section are not assigned.

                  "SEC" shall mean the Securities and Exchange Commission.

                  (b) Parent Registration.  Except as otherwise provided in this
Section (but without any  obligation  under this  Agreement to do so), if Parent
proposes to register  (including  for this  purpose a  registration  effected by
Parent for  stockholders  other than the Holders,  whether or not required under
another  agreement)  any of the Parent Common Stock under the  Securities Act in
connection  with  the  public   offering  of  such  securities   (other  than  a
registration  relating  solely to the sale of  securities to  participants  in a
Parent  stock plan, a  registration  relating to a corporate  reorganization  or
other  transaction  under Rule 145 of the Securities  Act, a registration on any
form  that  does not  include  substantially  the same  information  as would be
required to be included in a  registration  statement  covering  the sale of the
Registrable Securities,  or a registration in which the only Parent Common Stock
being  registered  is Parent  Common  Stock  issuable  upon  conversion  of debt
securities that are also being registered),  Parent shall,  within ten (10) days
thereafter,  give each  Holder  written  notice of such  registration.  Upon the
written  request of each Holder,  provided  said request is given within  twenty
(20) days after mailing of the notice required of Parent under this  subsection,
Parent shall,  subject to the limits set forth in this Section, use commercially
reasonable efforts to cause to be registered under the Securities Act all of the
Registrable  Securities  that each such Holder has  requested to be  registered;
provided that:

                           (i)  Parent  shall  have the  right to  terminate  or
         withdraw any  registration  initiated by it under this subsection prior
         to the effectiveness of such registration whether or not any Holder has
         elected to include  securities  in such  registration.  The expenses of
         such withdrawn registration shall be borne by Parent in accordance with
         subsection (e) of this Section; and

                           (ii) In  connection  with any  offering  involving an
         underwriting  of shares of Parent  Common  Stock,  Parent  shall not be
         required  under  this   subsection  to  include  any  of  the  Holders'
         securities  in such  underwriting  unless  they accept the terms of the
         underwriting  as  agreed  upon  between  Parent  and  the  underwriters
         selected   by  it  (or  by  other   persons   entitled  to  select  the
         underwriters)  and enter into an  underwriting  agreement  in customary
         form with an underwriter or underwriters selected by Parent, and then

                                       43

<PAGE>

         only in such  quantity  as the  underwriters  determine  in their  sole
         discretion  will not  jeopardize the success of the offering by Parent.
         If the total amount of securities,  including  Registrable  Securities,
         requested by stockholders  to be included in such offering  exceeds the
         amount of  securities  that the  underwriters  determine  in their sole
         discretion is compatible with the success of the offering,  then Parent
         shall be  required to include in the  offering  only the number of such
         securities,  including  Registrable  Securities,  that the underwriters
         determine in their sole  discretion  will not jeopardize the success of
         the offering  (the  securities so included to be  apportioned  pro rata
         among the selling  Holders  according to the total amount of securities
         entitled to be included therein owned by each selling Holder or in such
         other  proportions  as shall  mutually  be  agreed  to by such  selling
         Holders);  provided,  however, in no event shall Registrable Securities
         held by a Holder be included in such registration statement (i) if such
         offering is the initial  public  offering  of Parent's  securities,  in
         which case the  selling  Holders'  securities  may be  excluded  if the
         underwriters make the determination  described above or (ii) unless all
         of  the  following   securities  are  included  in  such   Registration
         Statement:  (x) all shares of capital stock of Parent which are subject
         to  registration  rights  as of the  Closing  Date;  (y) all  shares of
         capital  stock of Parent which are held by officers of Parent that hold
         an office on the Closing  Date;  and (z) all shares of capital stock of
         Parent that are issued with  registration  rights after the date hereof
         in connection  with a cash financing  transaction (or any other type of
         transaction approved in writing by a majority of the Shareholders) with
         Parent or any  Subsidiary  of Parent.  For purposes of the  immediately
         preceding  parenthetical  concerning  apportionment,  for  any  selling
         stockholder  that is a Holder of  Registrable  Securities and that is a
         partnership  or  corporation,   the  partners,   retired  partners  and
         stockholders  of such Holder,  or the estates and family members of any
         such  partners  and retired  partners and any trusts for the benefit of
         any of the foregoing  persons  shall be deemed to be a single  "selling
         Holder," and any pro rata reduction with respect to such selling Holder
         shall be based  upon the  aggregate  amount of  Registrable  Securities
         owned by all such related entities and individuals.

                           (iii)  With  respect to any  underwriting  of shares,
         Parent shall have the right to designate  the managing  underwriter  or
         underwriters.

                  (c)  Obligations  of  Parent.  Whenever  required  under  this
Section 7.8 to effect the  registration  of any Registrable  Securities,  Parent
shall, as expeditiously as reasonably possible:

                           (i)  prepare  and file  with  the SEC a  registration
         statement  with  respect  to such  Registrable  Securities  and use its
         commercially reasonably efforts to cause such registration statement to
         become  effective;  provided,  however,  that in  connection  with  any
         proposed  registration intended to permit an offering of any securities
         from time to time (i.e.,  a "Shelf  Registration"),  Parent shall in no
         event be obligated to cause any such  registration to remain  effective
         for more than one-hundred twenty (120) days;

                           (ii)  prepare  and file with the SEC such  amendments
         and supplements to such registration

                                       44

<PAGE>

         statement and the prospectus used
         in connection with such  registration  statement as may be necessary to
         comply with the  provisions of the  Securities  Act with respect to the
         disposition of all securities covered by such registration statement;

                           (iii)  furnish to the Holders  such numbers of copies
         of a prospectus, including a preliminary prospectus, in conformity with
         the  requirements  of the Securities  Act, and such other  documents as
         they may reasonably  request in order to facilitate the  disposition of
         Registrable Securities owned by them;

                           (iv) use commercially  reasonable efforts to register
         and qualify the securities covered by such registration statement under
         such other  securities or Blue Sky laws of such  jurisdictions as shall
         be necessary  for the  distribution  of the  securities  covered by the
         registration  statement,  provided that Parent shall not be required in
         connection  therewith  or  as a  condition  thereto  to  qualify  to do
         business or to file a general consent to service of process in any such
         states or  jurisdictions  and further  provided that  (anything in this
         Agreement to the contrary  notwithstanding  with respect to the bearing
         of  expenses)  if any  jurisdiction  in which the  securities  shall be
         qualified  shall require that expenses  incurred in connection with the
         qualification  of the  securities  in that  jurisdiction  be  borne  by
         selling  stockholders,  then such expenses  shall be payable by selling
         stockholders pro rata, to the extent required by such jurisdiction;

                           (v) in the event of any underwritten public offering,
         enter into and perform its obligations under an underwriting agreement,
         in usual and  customary  form,  with the managing  underwriter  of such
         offering;

                           (vi)  notify each  Holder of  Registrable  Securities
         covered by such  registration  statement  at any time when a prospectus
         relating  thereto is required to be delivered  under the Securities Act
         or the  happening  of any  event as a result  of which  the  prospectus
         included in such registration statement, as then in effect, includes an
         untrue  statement of a material  fact or omits to state a material fact
         required  to be stated  therein  or  necessary  to make the  statements
         therein not misleading in the light of the circumstances then existing;

                           (vii)  use  reasonable  efforts  to  cause  all  such
         Registrable  Securities  registered  pursuant hereunder to be listed on
         each securities  exchange on which similar  securities issued by Parent
         are then listed; and

                           (viii) provide a transfer agent and registrar for all
         Registrable  Securities registered hereunder and a CUSIP number for all
         such Registrable Securities,  in each case not later than the effective
         date of such registration.

                  (d) Information from Holder. It shall be a condition precedent
to the  obligations  of Parent to take any action  pursuant to this Section with
respect to the  Registrable  Securities  of any selling  Holder that such Holder
shall furnish to Parent such information regarding itself, the Registrable

                                       45

<PAGE>

Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the  registration  of such  Holder's  Registrable
Securities.

                  (e)  Expenses  of   Registration.   All  reasonable   expenses
(excluding   underwriting  discounts  and  brokerage  commissions)  incurred  in
connection with registrations,  filings or qualifications pursuant to subsection
(b) of this Section, including without limitation, all registration,  filing and
qualification  fees,  printers' and accounting  fees, fees and  disbursements of
counsel for Parent and the reasonable fees and  disbursements of one counsel for
the selling Holders shall be borne by Parent.

                  (f) Delay of  Registration.  No Holder shall have any right to
obtain  or seek  an  injunction  restraining  or  otherwise  delaying  any  such
registration as the result of any  controversy  that might arise with respect to
the interpretation or implementation of this Section.

                  (g) Indemnification. In the event any  Registrable  Securities
are included in a registration  statement  under this Section:

                           (i) To the  extent  permitted  by  law,  Parent  will
         indemnify  and hold  harmless  each  Holder,  the partners or officers,
         directors  and   stockholders   of  each  Holder,   legal  counsel  and
         accountants  for  each  Holder,  any  underwriter  (as  defined  in the
         Securities  Act) for such Holder and each person,  if any, who controls
         such Holder or underwriter  within the meaning of the Securities Act or
         the 1934 Act, against any losses, claims, damages or liabilities (joint
         or several) to which they may become subject under the Securities  Act,
         the 1934 Act or any state  securities  laws,  insofar  as such  losses,
         claims,  damages,  or liabilities (or actions in respect thereof) arise
         out of or are based upon any of the following statements,  omissions or
         violations  (collectively a "Violation"):  (A) any untrue  statement or
         alleged  untrue   statement  of  a  material  fact  contained  in  such
         registration  statement,  including any preliminary prospectus or final
         prospectus  contained therein or any amendments or supplements thereto,
         (B) the omission or alleged  omission of a material fact required to be
         stated  therein,  or  necessary  to make  the  statements  therein  not
         misleading,  or (C) any violation or alleged violation by Parent of the
         Securities Act, the 1934 Act, any state  securities laws or any rule or
         regulation  promulgated  under the Securities  Act, the 1934 Act or any
         state  securities  laws;  and Parent will  reimburse  each such Holder,
         underwriter  or  controlling  person  for any  legal or other  expenses
         reasonably  incurred  by  them  in  connection  with  investigating  or
         defending any such loss, claim, damage,  liability or action; provided,
         however,  that the  indemnity  agreement  contained in this  subsection
         (g)(i) shall not apply to amounts paid in  settlement of any such loss,
         claim,  damage,  liability  or action if such  settlement  is  effected
         without the consent of Parent (which consent shall not be  unreasonably
         withheld),  nor  shall  Parent  be liable in any such case for any such
         loss, claim,  damage,  liability or action to the extent that it arises
         out of or is based upon a Violation that occurs in reliance upon and in
         conformity  with written  information  furnished  expressly  for use in
         connection with such  registration  by any such Holder,  underwriter or
         controlling  person;  provided  further,  however,  that the  foregoing
         indemnity agreement with respect to any

                                       46

<PAGE>

         preliminary  prospectus  shall
         not inure to the  benefit of any Holder or  underwriter,  or any person
         controlling such Holder or underwriter,  from whom the person asserting
         any such losses, claims, damages or liabilities purchased shares in the
         offering,  if a copy of the prospectus (as then amended or supplemented
         if Parent shall have furnished any  amendments or supplements  thereto)
         was not sent or given by or on behalf of such Holder or  underwriter to
         such person, if required by law so to have been delivered,  at or prior
         to the written  confirmation  of the sale of the shares to such person,
         and if the prospectus (as so amended or supplemented)  would have cured
         the defect giving rise to such loss, claim, damage or liability.

                           (ii) To the extent  permitted  by law,  each  selling
         Holder will indemnify and hold harmless Parent,  each of its directors,
         each of its officers who has signed the  registration  statement,  each
         person,  if  any,  who  controls  Parent  within  the  meaning  of  the
         Securities  Act,  legal  counsel  and   accountants  for  Parent,   any
         underwriter,  any other Holder selling  securities in such registration
         statement and any controlling  person of any such  underwriter or other
         Holder,  against any losses,  claims,  damages or liabilities (joint or
         several)  to which any of the  foregoing  persons  may become  subject,
         under the Securities  Act, the 1934 Act or any state  securities  laws,
         insofar as such losses,  claims,  damages or liabilities (or actions in
         respect thereto) arise out of or are based upon any Violation,  in each
         case to the extent (and only to the extent) that such Violation  occurs
         in reliance upon and in conformity with written  information  furnished
         by such Holder expressly for use in connection with such  registration;
         and  each  such  Holder  will  reimburse  any  person  intended  to  be
         indemnified pursuant to this subsection (g)(ii), for any legal or other
         expenses   reasonably  incurred  by  such  person  in  connection  with
         investigating or defending any such loss, claim,  damage,  liability or
         action;  provided,  however,  that the indemnity agreement contained in
         this  subsection  (g)(ii) shall not apply to amounts paid in settlement
         of any such loss, claim, damage, liability or action if such settlement
         is effected  without the consent of the Holder (which consent shall not
         be  unreasonably  withheld),  provided  that  in  no  event  shall  any
         indemnity  under this  subsection  (g)(ii) exceed the net proceeds from
         the offering received by such Holder.

                           (iii) Promptly after receipt by an indemnified  party
         under this  subsection (g) of notice of the  commencement of any action
         (including any governmental  action), such indemnified party will, if a
         claim in respect thereof is to be made against any  indemnifying  party
         under this subsection (g), deliver to the indemnifying  party a written
         notice of the  commencement  thereof and the  indemnifying  party shall
         have the right to participate  in, and, to the extent the  indemnifying
         party so desires,  jointly with any other  indemnifying party similarly
         noticed,   to  assume  the  defense   thereof  with  counsel   mutually
         satisfactory  to the parties;  provided,  however,  that an indemnified
         party  (together  with  all  other  indemnified  parties  that  may  be
         represented  without  conflict by one counsel)  shall have the right to
         retain one separate  counsel,  with the fees and expenses to be paid by
         the indemnifying  party, if representation of such indemnified party by
         the counsel retained by the  indemnifying  party would be inappropriate
         due to actual or potential differing interests between such indemnified

                                       47

<PAGE>

         party  and  any  other  party  represented  by  such  counsel  in  such
         proceeding.  The failure to deliver written notice to the  indemnifying
         party within a reasonable time of the  commencement of any such action,
         if prejudicial to its ability to defend such action, shall relieve such
         indemnifying party of any liability to the indemnified party under this
         subsection  (g), but the omission so to deliver  written  notice to the
         indemnifying  party will not  relieve it of any  liability  that it may
         have to any indemnified party otherwise than under this subsection (g).

                           (iv)  Notwithstanding  the  foregoing,  to the extent
         that the provisions on  indemnification  and contribution  contained in
         the  underwriting   agreement  entered  into  in  connection  with  the
         underwritten  public  offering  are  in  conflict  with  the  foregoing
         provisions, the provisions in the underwriting agreement shall control.

                           (v) The  obligations of Parent and Holders under this
         subsection  (g)  shall  survive  the  completion  of  any  offering  of
         Registrable  Securities in a registration  statement under this Section
         7.8, and otherwise.

                  (h) Reports Under Securities Exchange Act of 1934. With a view
to making  available to the Holders the benefits of Rule 144  promulgated  under
the  Securities  Act and any other rule or regulation of the SEC that may at any
time  permit a  Holder  to sell  securities  of  Parent  to the  public  without
registration or pursuant to a registration on Form S-3, Parent agrees that while
it has a class of equity  securities  registered under the 1934 Act, it will use
its commercially reasonable efforts to:

                           (i) make and keep public  information  available,  as
         those  terms are  understood  and defined in SEC Rule 144, at all times
         after the effective date of the Initial Offering;

                           (ii)     file with the SEC in a timely manner all
         reports and other documents required of Parent under the Securities Act
         and the 1934 Act; and

                           (iii)  furnish to any  Holder,  so long as the Holder
         owns any Registrable  Securities,  forthwith upon request (A) a written
         statement   by  Parent  that  it  has  complied   with  the   reporting
         requirements  of SEC Rule 144 (at any time after ninety (90) days after
         the  effective  date  of the  first  registration  statement  filed  by
         Parent),  the Securities Act and the 1934 Act (at any time after it has
         become subject to such reporting requirements), or that it qualifies as
         a registrant  whose  securities may be resold  pursuant to Form S-3 (at
         any time after it so  qualifies),  (B) a copy of the most recent annual
         or quarterly  report of Parent and such other  reports and documents so
         filed by Parent,  and (C) such other  information  as may be reasonably
         requested in availing any Holder of any rule or  regulation  of the SEC
         that permits the selling of any such securities without registration or
         pursuant to such form.

                                       48

<PAGE>

                  (i)  Assignment of  Registration  Rights.  The rights to cause
Parent to register  Registrable  Securities  pursuant to this Section 7.8 may be
assigned (but only with all related  obligations) by a Holder to a transferee or
assignee of such securities that (i) is a subsidiary,  parent, partner,  limited
partner,  retired partner or stockholder of a Holder,  (ii) is a Holder's family
member or trust for the  benefit of an  individual  Holder,  or (iii) after such
assignment or transfer,  holds at least 25,000 shares of Registrable  Securities
(subject  to  appropriate   adjustment  for  stock  splits,   stock   dividends,
combinations  and other  recapitalizations),  provided:  (x) Parent is, within a
reasonable  time after such transfer,  furnished with written notice of the name
and address of such  transferee or assignee and the  securities  with respect to
which  such  registration  rights are being  assigned;  (y) such  transferee  or
assignee  agrees  in  writing  to be  bound  by and  subject  to the  terms  and
conditions  of the  Investor  Rights  Agreement  and this  Agreement,  including
without  limitation,  the provisions of subsection (l) of this Section;  and (z)
such assignment  shall be effective only if immediately  following such transfer
the further  disposition  of such  securities  by the  transferee or assignee is
restricted under the Securities Act.

                  (j) Limitations on Subsequent  Registration Rights.  Except as
provided in the following  sentence,  from and after the date of this Agreement,
Parent shall not, without the prior written consent of the Holders of two-thirds
of the Registrable  Securities,  which will not be unreasonably withheld,  enter
into any agreement  with any holder or  prospective  holder of any securities of
Parent that would allow such holder or  prospective  holder (i) to include  such
securities  in any  registration  filed under  subsection  (b) of this  Section,
unless under the terms of such agreement,  such holder or prospective holder may
include such  securities  in any such  registration  only to the extent that the
inclusion  of such  securities  will not reduce  the  amount of the  Registrable
Securities  of the Holders that are included or (ii) to demand  registration  of
their  securities.   Notwithstanding  the  foregoing,   the  parties  agree  and
acknowledge  that  the   above-referenced   restriction  shall  not  affect  any
registration  rights  granted prior to the Closing Date,  and shall not prohibit
Parent from  granting  registration  rights  after the Closing  Date  (including
rights that may have priority  over those granted  pursuant to this Section 7.8)
with respect to the following securities:  (y) shares of capital stock of Parent
which are held by officers  of Parent  that hold an office on the Closing  Date;
and (z) shares of capital stock of Parent that are issued in  connection  with a
cash financing transaction with Parent or any Subsidiary of Parent.

                  (k) "Market  Stand-Off"  Agreement.  Each Holder hereby agrees
that it will not, without the prior written consent of the managing underwriter,
during the period  commencing  on the date of the final  prospectus  relating to
Parent's  initial public offering and ending on the date specified by Parent and
the managing  underwriter  (such  period not to exceed one hundred  eighty (180)
days) (i) lend,  offer,  pledge,  sell,  contract  to sell,  sell any  option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase,  or otherwise  transfer or dispose of, directly or
indirectly, any shares of Parent Common Stock or any securities convertible into
or exercisable or  exchangeable  for Parent Common Stock (whether such shares or
any such securities are then owned by the Holder or are thereafter acquired), or
(ii) enter into any swap or other  arrangement  that  transfers  to another,  in
whole or in part,  any of the economic  consequences  of ownership of the Parent
Common Stock, whether any such transaction described

                                       49

<PAGE>

in clause (i) or (ii) above
is to be settled by delivery of Common Stock or such other  securities,  in cash
or otherwise.  The foregoing  provisions of this subsection  shall apply only to
Parent's  initial public offering of equity  securities,  shall not apply to the
sale of any shares to an underwriter pursuant to an underwriting agreement,  and
shall only be  applicable  to the  Holders if all  officers  and  directors  and
greater  than five  percent  (5%)  stockholders  of Parent  enter  into  similar
agreements. The underwriters in connection with Parent's initial public offering
are intended  third party  beneficiaries  of this  subsection and shall have the
right,  power and authority to enforce the provisions hereof as though they were
a party hereto.  In order to enforce the foregoing  covenant,  Parent may impose
stop-transfer  instructions  with respect to the Registrable  Securities of each
Holder  (and the  shares or  securities  of every  other  person  subject to the
foregoing restriction) until the end of such period. _

                  (l)  Termination of  Registration  Rights.  No Holder shall be
entitled to exercise any right  provided for in this Section 7.8 after three (3)
years following the  consummation of the Initial  Offering or, as to any Holder,
such earlier time at which all  Registrable  Securities held by such Holder (and
any affiliate of the Holder with whom such Holder must aggregate its sales under
Rule 144) can be sold in any three  (3)-month  period  without  registration  in
compliance with Rule 144 of the Securities Act.

         Section  7.9.  Share  Exchange   Agreements.   Parent  and  Merger  Sub
acknowledge  the  existence  and  binding  and  enforceable  nature of the Share
Exchange  Agreements  and that  counsel to Parent  and Merger Sub has  carefully
reviewed  each Share  Exchange  Agreement.  Each of Parent and Merger Sub agrees
that (i) it has no rights to  enforce  any of the  provisions  of, and is not an
intended third party beneficiary under, any of the Share Exchange Agreements and
(ii) that it will take no action which  jeopardizes  the binding and enforceable
nature of the Share Exchange  Agreements and/or interfere with any of the rights
of any person or entity that is a party to any of the Share Exchange Agreements.

         Section  7.10.  Employee  Benefits.  Effective as of the  Closing,  all
welfare plans (as defined in ERISA Section 3(1)) provided, sponsored, or offered
by APS and made available to the Company and its employees  immediately prior to
the Closing ("APS Welfare  Plans") will continue to be made  available by APS to
the Surviving  Corporation  and its employees in the same manner and to the same
extent that such APS  Welfare  Plans were made  available  by APS to the Company
immediately prior to the Closing (except that the Surviving  Corporation may add
newly hired  employees  for coverage  under such APS Welfare  Plans).  For these
purposes, APS shall continue to make available all such APS Welfare Plans to the
Surviving  Corporation through December 31, 1999, or, if earlier, such date that
the Surviving  Corporation provides written notice to APS to modify or terminate
coverage  under  one or more  such APS  Welfare  Plans.  All  fees and  expenses
relating to the APS Welfare Plans shall be consistent with the fees and expenses
incurred by the Company prior to Closing on a per participant basis, and will be
paid by the Surviving  Corporation to APS.  Notwithstanding  the foregoing,  APS
shall not be liable  for any  liability  arising  under  COBRA  with  respect to
employees of the Surviving Corporation who are terminated by the Surviving

                                       50

<PAGE>

Corporation  after  the  Closing  Date,  and  the  Surviving  Corporation  shall
reimburse APS to the extent that APS incurs any such liability.

         Section 7.11.  Filings.  Parent or Merger Sub shall timely file all
forms,  notices,  or other filings  required by any state or federal securities'
regulator.

         Section 7.12.  Net Working Capital.

                  (a)  Initial  Principal  Amount.  Merger Sub hereby  agrees to
execute the Replacement  Promissory Note at the Closing.  Immediately  following
the Closing,  the principal amount outstanding under the Replacement  Promissory
Note shall equal all  outstanding  amounts  (including  principal  and interest)
under the Original Promissory Note at the time of Closing plus the First Advance
(as defined under  Section  7.13(a)),  if any;  provided,  however,  that if the
principal  amount of the  Replacement  Promissory  Note as of the  Closing  Date
exceeds  $2,000,000  (the  "Cap"),  there shall be either (i) a reduction in the
principal  amount of the  Replacement  Promissory Note by an amount equal to the
difference  between the  Replacement  Promissory  Note and the Cap (the "Closing
Credit  Amount"),  or (ii) an offset against  interest due under the Replacement
Promissory  Note in an amount equal to the Closing Credit  Amount,  which offset
shall be  taken  against  each  payment  of  accrued  and  unpaid  interest  due
thereunder until the Closing Credit Amount shall be paid in full and;  provided,
further, that any offset or reduction under subsection (a)(i) and (a)(ii) above,
plus any offset or reduction  under  Section  7.13(b)(ii)(y)  and (z),  shall be
deemed to have occurred prior to June 30, 1999 for purposes of  calculating  Net
Working  Capital under this Section 7.12. APS shall have the right to select one
of the  above-referenced  methodologies  with  respect  to such  Closing  Credit
Amount,  which  amount must be  disclosed  in writing to Parent on or before the
Closing Date. If APS does not make a selection  within thirty (30) days,  Parent
shall  then have the right to select one of the  above-referenced  methodologies
with respect to such Closing Credit  Amount,  which must be disclosed in writing
to APS on or before the date on which  first  interest  payment is due under the
Replacement  Promissory  Note. The payment terms of the  Replacement  Promissory
Note shall  include  interest  only  payments  for a period of twenty  four (24)
months immediately following the Closing Date, payable quarterly.

                  (b) Net Working  Capital.  For purposes of this Section  7.12,
"Net Working  Capital"  means an amount equal to the actual  current assets less
actual  current   liabilities  of  the  Company   existing  on  June  30,  1999,
(irrespective of when such amount is calculated),  determined in accordance with
GAAP (except as adjusted on Exhibit F hereto), and may be a positive or negative
number.

                  (c) First Actual Net Working  Capital  Calculation.  Within 90
days after the Closing  Date,  Parent shall cause the Surviving  Corporation  to
prepare a balance  sheet (the "First Net Working  Capital  Closing  Date Balance
Sheet") of the  Company as of June 30,  1999,  including  a  computation  of the
actual Net Working Capital (the "First Actual Net Working  Capital").  The First
Net Working  Capital  Closing Date Balance Sheet shall be prepared in accordance
with GAAP (except as adjusted on Exhibit F hereto) and agreed upon by APS and

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Parent. Any disagreements involving the First Actual Net Working Capital Closing
Date Balance Sheet or the  calculation  of the First Actual Net Working  Capital
shall be resolved in accordance  with the procedure set forth in Section 7.12(e)
below.  If the First Actual Net Working  Capital is greater than  $700,000  (the
"Threshold"), then no adjustment shall be made or other action taken pursuant to
this  subsection  (c). If the First Actual Net Working  Capital is less than the
Threshold,  there shall be either (i) a reduction in the principal amount of the
Replacement  Promissory  Note by an amount equal to the  difference  between the
First Actual Net Working Capital and the Threshold (the "First Credit  Amount"),
or (ii) an offset against interest due under the Replacement  Promissory Note in
an amount equal to the First Credit Amount,  which offset shall be taken against
each  payment of accrued  and unpaid  interest  due  thereunder  until the First
Credit  Amount shall be paid in full.  APS shall have the right to select one of
the  above-referenced  methodologies  with respect to such First Credit  Amount,
which must be disclosed in writing to Parent within ten (10) business days after
such amount is agreed upon or finally  determined under subsection (e) below. If
APS does not make a selection  within such ten (10) business day period,  Parent
shall  then have the right to select one of the  above-referenced  methodologies
with respect to such First Credit Amount,  which must be disclosed in writing to
APS on or before  the date on which the next  interest  payment is due under the
Replacement Promissory Note. Any reduction or offset pursuant to this subsection
(c) shall be effective contemporaneously with such determination.

                  (d) Second  Actual Net  Working  Capital  Calculation.  On the
Calculation  Date,  Parent shall cause the  Surviving  Corporation  to prepare a
second  balance  sheet (the  "Second Net Working  Capital  Closing  Date Balance
Sheet") of the  Company as of June 30,  1999,  including  a  computation  of the
actual Net Working Capital (the "Second Actual Net Working Capital"). The Second
Net Working  Capital  Closing Date Balance Sheet shall be prepared in accordance
with GAAP  (except  as  adjusted  on Exhibit F hereto).  Any  objections  to the
calculation  of the Second  Actual Net  Working  Capital  shall be  resolved  in
accordance with the procedure set forth in Section 7.12(e) below.

                            (i) If the  Second  Net  Working  Capital is greater
         than  the  First  Net  Working  Capital  (such  difference  hereinafter
         referred to as the "Surplus"), there shall be either (A) an increase in
         the principal  amount of the  Replacement  Promissory Note by an amount
         equal to the lesser of the Surplus or the First Credit  Amount,  or (B)
         an increase in the interest due under the  Replacement  Promissory Note
         (but not in excess of the maximum  non-usurious  rate of interest  that
         may be charged under applicable law),  beginning with the next interest
         payment due thereunder and continuing until the First Credit Amount has
         been paid in full,  in an amount  equal to the lesser of the Surplus or
         the First Credit Amount; provided, however, that there shall be no such
         increase  if both the First Net  Working  Capital  and the  Second  Net
         Working Capital exceed the Threshold. The methodology used in effecting
         any increase  pursuant to this subsection  shall be consistent with the
         methodology actually applied by the parties pursuant to Section 7.12(a)
         (but only to the extent not  prohibited  by the  immediately  preceding
         parenthetical).  Any increase  pursuant to this subsection (d)(i) shall
         be effective contemporaneously with such determination.

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<PAGE>

                           (ii) If the Second Net  Working  Capital is less than
         the First Net Working Capital, there shall be either (A) a reduction in
         the principal  amount of the  Replacement  Promissory Note by an amount
         equal to the lesser of the  Threshold  and the First Actual Net Working
         Capital,  minus the Second Net  Working  Capital  (the  "Second  Credit
         Amount"),  or (B) an offset against  interest due under the Replacement
         Promissory  Note in an amount equal to the Second Credit Amount,  which
         offset  shall be taken  against  each  payment  of  accrued  and unpaid
         interest due thereunder until the Second Credit Amount shall be paid in
         full;  provided,  however,  that there  shall be no such  reduction  or
         offset if both the First Net Working Capital and the Second Net Working
         Capital exceed the threshold. APS shall have the right to select one of
         the  above-referenced  methodologies with respect to such Second Credit
         Amount,  which must be disclosed  in writing to Parent  within ten (10)
         business  days after such amount is agreed  upon or finally  determined
         under  subsection  (e) below.  If APS does not make a selection  within
         such ten (10) business day period,  Parent shall then have the right to
         select one of the  above-referenced  methodologies with respect to such
         Second Credit  Amount,  which must be disclosed in writing to APS on or
         before  the  date on which  next  interest  payment  is due  under  the
         Replacement  Promissory  Note. Any reduction or offset pursuant to this
         subsection  (d)(ii)  shall be  effective  contemporaneously  with  such
         determination.

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<PAGE>

                  (e) Net Working Capital Dispute Resolution. If, within 15 days
following  APS'  receipt of the First Net Working  Capital  Closing Date Balance
Sheet, APS shall not have objected in writing thereto, then the First Actual Net
Working  Capital shall be computed using such First Net Working  Capital Closing
Date Balance Sheet.  If, within 15 days following APS' receipt of the Second Net
Working  Capital  Closing Date  Balance  Sheet,  APS shall not have  objected in
writing  thereto,  then the Second Actual Net Working  Capital shall be computed
using such Second Net Working Capital Closing Date Balance Sheet. If APS objects
in writing to either  computation,  then APS and the Parent  shall  negotiate in
good faith and attempt to resolve their  disagreement.  Should such negotiations
not result in an agreement  within 20 days of Parent's receipt of the objection,
then the matter shall be submitted to a Neutral  Auditor.  If APS and Parent are
unable to agree on the Neutral  Auditor,  then APS and Parent shall  request the
American  Arbitration  Association to appoint the Neutral  Auditor.  The Neutral
Auditor  will  deliver  to  APS  and  Parent  a  written   determination   (such
determination  to include a worksheet  setting  forth all material  calculations
used in arriving at such  determination  and to be based  solely on  information
provided  to the  Neutral  Auditors  by APS  and  Parent,  or  their  respective
affiliates)  of the  disputed  items  within 30 days of receipt of the  disputed
items, which determination will be final, binding and conclusive on the parties.
If the Neutral Auditor's  determination of Net Working Capital is within $25,000
of Parent's  calculation of the Net Working  Capital  (whether the difference is
positive or  negative),  all fees and expenses  relating to  appointment  of the
Neutral  Auditor and the work,  if any, to be performed  by the Neutral  Auditor
will  be  borne  by  APS.  If  the  difference  between  the  Neutral  Auditor's
determination  of Net Working  Capital and Parent's  calculation  of Net Working
Capital is greater than $25,000, but less than or equal to $100,000 (whether the
difference  is  positive  or  negative),  all  fees  and  expenses  relating  to
appointment of the Neutral  Auditor and the work, if any, to be performed by the
Neutral Auditor will be borne half by APS and half by Parent.  If the difference
between the Neutral Auditor's  determination of Net Working Capital and Parent's
calculation  of the Net Working  Capital is greater than  $100,000  (whether the
difference  is  positive  or  negative),  all  fees  and  expenses  relating  to
appointment of the Neutral  Auditor and the work, if any, to be performed by the
Neutral Auditor will be borne exclusively by Parent.

                  (f)   Calculations Independent of Ownership. The  calculations
of Net Working  Capital in this Section 7.12 are made independent of the
ownership of the Surviving Corporation after Closing.

                  (g) No Other  Offsets.  Except as  expressly  provided in this
Section or in Section  7.13  below,  Parent and Merger Sub each agree that it is
not under any  circumstances  entitled to offset any amounts  owed under or with
respect to the Replacement Promissory Note.

         Section 7.13.  Advances under Promissory Note; Payables.

                  (a) First  Payables  Estimate.  Prior to the Closing Date, the
Company shall deliver to Parent a June 30, 1999 balance sheet of the Company, in
the form attached as Exhibit G hereto, setting forth an estimate of the accounts
payable and accrued  expenses of the Company in accordance  with GAAP (except as
adjusted on Exhibit F hereto) as of such date (the "First Payables Estimate").

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<PAGE>

If the  First  Payables  Estimate  is  greater  than  $200,000  (the  "Allowable
Amount"),  then APS shall, on the Closing Date, make an advance to the Surviving
Corporation  (the "First  Advance") under the Replacement  Promissory Note in an
amount equal to the  difference  between the First  Payables  Estimate minus the
Allowable  Amount.  The First Advance  shall have the effect on the  Replacement
Promissory Note as set forth in Section  7.12(a)  hereof.  APS shall deposit the
First Advance  directly  into a bank account  controlled by Parent (the "Deposit
Account"),  which shall be maintained  separately from other funds of the Parent
and shall be used  exclusively  for the payment of accounts  payable and accrued
expenses of the Surviving  Corporation  arising on or prior to June 30, 1999 and
determined  in  accordance  with GAAP  (except as adjusted on Exhibit F hereto).
Parent shall maintain such Deposit Account for a period of one (1) year from the
Closing Date, and shall provide APS copies of monthly  statements of the Deposit
Account and supporting invoices or other expense  documentation for all payments
over $5,000 during such period. If any balance remains outstanding at the end of
such one (1) year  period,  the amount in excess of accrued  vacation,  property
taxes, escheat liabilities and profit sharing amounts outstanding as of June 30,
1999 shall be returned to APS.

                  (b) Second Payables Estimate.  Immediately following agreement
upon or final  determination  of the  First Net  Working  Capital  Closing  Date
Balance Sheet pursuant to Section 7.12(c) and, if applicable,  Section  7.12(e),
Parent  and APS shall add the  accounts  payable  and  accrued  expenses  of the
Company set forth in the First Net Working  Capital  Closing Date Balance  Sheet
(the "Second Payables Estimate").

                           (i) If the Second Payables  Estimate is less than the
         First Payables  Estimate (such  difference  being referred to herein as
         the "Refund"),  Parent shall  distribute to APS cash in an amount equal
         to the  lesser of (A) the  Refund or (B) the First  Advance;  provided,
         however,  that there  shall be no such  payment  under  subsection  (i)
         hereof and subsection  (ii) below if both the First  Payables  Estimate
         and the Second  Payables  Estimate are less than the Allowable  Amount.
         The aggregate  distribution  pursuant to the preceding  sentence  shall
         decrease the principal  outstanding  under the  Replacement  Promissory
         Note, in an identical amount, as of the date the funds are paid to APS.

                           (ii) If the Second Payables  Estimate is greater than
         both the First  Payables  Estimate and the Allowable  Amount,  then APS
         shall  make an  advance  under  the  Replacement  Promissory  Note (the
         "Second Advance") to Surviving Corporation equal to the Second Payables
         Estimate  minus the  greater  of (A) the  Allowable  Amount and (B) the
         First Payables Estimate.  APS shall deposit the Second Advance directly
         into the  Deposit  Account.  The  Second  Advance  shall  increase  the
         principal  outstanding  under  the  Replacement  Promissory  Note in an
         identical  amount  as of the  date  the  funds  are  disbursed  by APS;
         provided,  however,  that if all or any portion of the Second  Advance,
         when  added  to  the   outstanding   principal  under  the  Replacement
         Promissory Note,  exceeds the Cap (such amount being referred to herein
         as the "Excess Advance"),  there shall be either (y) a reduction in the
         principal amount of the Replacement  Promissory Note by an amount equal
         to the Excess Advance, or (z) an offset against interest due under the

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<PAGE>

         Replacement  Promissory  Note in an amount equal to the Excess Advance,
         which offset shall be taken  against each payment of accrued and unpaid
         interest due thereunder until the Excess Advance shall be paid in full.
         APS  shall  have  the  right  to  select  one of  the  above-referenced
         methodologies  with  respect  to such  Excess  Advance,  which  must be
         disclosed in writing to Parent within ten (10) business days after such
         amount is agreed upon or finally determined as set forth herein. If APS
         does not make a  selection  within such ten (10)  business  day period,
         Parent shall then have the right to select one of the  above-referenced
         methodologies  with  respect  to such  Excess  Advance,  which  must be
         disclosed  in  writing  to APS on or  before  the  date on  which  next
         interest payment is due under the Replacement  Promissory Note.  Except
         for purposes of calculating Net Working Capital under Section 7.12, any
         reduction  or  offset  pursuant  to this  subsection  (b)(ii)  shall be
         effective contemporaneously with such determination.

         Section 7.14.  Advances under Promissory  Note;  Event of Default.  The
Company is guarantor of the following notes in connection with the merger of APA
Transition,  Inc.,  a Texas  corporation  ("APA"),  with and into the Company in
accordance with the terms of that certain Agreement and Plan of  Reorganization,
dated December 31, 1998, by and among the Company,  APA and David L. Berry, M.D.
(the "Berry Merger"): (i) Promissory Note, dated March 11, 1997, in the original
principal  amount of  $170,000,  by and between  Horizon  Bank & Trust,  SSB and
Austin  Perinatal  Associates,  P.A. (this Promissory Note was later acquired by
Compass  Bank);  (ii)  Promissory  Note,  dated March 20, 1998,  in the original
principal amount of $59,000,  by and between Norwest Bank Texas, N.A. and Austin
Perinatal  Associates,  P.A.; (iii) Fixed Rate Commercial Promissory Note, dated
February 27, 1998, in the original  principal amount of $20,000,  by and between
Compass Bank and Austin  Perinatal  Associates,  P.A.; and (iv) Promissory Note,
dated  November 6, 1998, in the original  principal  amount of $114,500,  by and
between  Norwest  Bank  Texas,  N.A.  and  Austin  Perinatal  Associates,   P.A.
(collectively,  the "Notes").  If, as a result of the Berry Merger,  an event of
default  occurs (or has already  occurred)  under the terms of any of the Notes,
and the  event of  default  results  in all or any  portion  of the  outstanding
principal plus unpaid interest and any other indebtedness under any of the Notes
(the "Default Amount") to be due and payable  immediately,  then APS shall, upon
the  earlier  of (i) the final  date  payment is  demanded  by the note  holder;
provided,  that the  Surviving  Corporation  shall use its good faith efforts to
extend the deadline for the demand for payment,  or (ii)  twenty-five  (25) days
after a  written  demand  for  payment  has been  made by the note  holder  (the
"Payment  Period"),  make an  advance  to the  Surviving  Corporation  under the
Replacement Promissory Note in an amount equal to the Default Amount;  provided,
however,  that the Surviving  Corporation shall use its commercially  reasonable
efforts  during the Payment Period to cure the event of default under any of the
Notes on equally favorable terms to the Surviving  Corporation.  For purposes of
this Section 7.14 only, the principal amount of the Replacement  Promissory Note
(including the Default Amount) may exceed the Cap; provided,  however,  that the
principal  amount of the Replacement  Promissory Note that exceeds the Cap shall
be excluded  from the Net Working  Capital  calculation  for purposes of Section
7.12 of this Agreement.

         Section 7.15.  Non-Interference.

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<PAGE>

                  (a) At all times during the Determination Period, Parent shall
use its commercially reasonable efforts to ensure that (i) Parent and Merger Sub
(or other FemPartners'  subsidiary) operate the Company Existing Practices under
the terms of the Existing Management Agreements,  (ii) neither Parent nor Merger
Sub (or other  FemPartners'  subsidiary)  take (or fail to take) any action,  if
such  action or  omission  is done with the  primary  intent  of  causing  (A) a
decrease in the amount of Retained Shares that would otherwise be distributed to
the  Shareholders on the  Distribution  Date or (B) a decrease in the balance of
the  Replacement  Promissory  Note  pursuant to the operation of Section 7.12 or
Section 7.13, and (iii) neither Parent nor Merger Sub (or any other FemPartners'
subsidiary) take (or fail to take) any action, if such action or omission causes
Parent  or  Merger  Sub to be in  material  breach  of the  Existing  Management
Agreements.  Notwithstanding  anything in this Section 7.15 to the contrary,  in
the event  Parent or Merger Sub take (or fail to take) any action  because  such
action or omission is (i) required pursuant to any statute,  rule, regulation or
other legal requirement or (ii) approved by the Joint Planning Board pursuant to
the  terms  of the  Existing  Management  Agreement  of any  Existing  Practice,
including, without limitation,  approval of the budget of any Existing Practice,
then neither  Parent nor Merger Sub will be in breach of any Existing  Agreement
or this  Agreement  (regardless  of whether  such  action or  inaction  causes a
decrease in the number of Retained Shares that would otherwise be distributed to
the  Shareholders on the  Distribution  Date or a decrease in the balance of the
Replacement Promissory Note pursuant to the operation of Section 7.12 or Section
7.13).

                  (b)  Parent  and  Merger Sub each agree that if either of them
materially  violates any provision of this  Agreement  during the  Determination
Period,  or changes the terms of the Existing  Management  Agreements during the
Determination  Period,  and such  violation  or change has the direct  effect of
reducing the number of Retained  Shares that would  otherwise be  distributed to
the Shareholders on the Distribution Date or decreasing the amount payable under
the  Replacement  Promissory  Note  pursuant to the operation of Section 7.12 or
Section 7.13, then the Adjustment  Calculations and the amounts calculated under
Section  7.12 and Section 7.13 shall be  calculated  as if such breach or change
had not occurred.

                  (c)  Parent and Merger  Sub  acknowledge  that  certain of the
physicians in the Company  Existing  Practices owe the Company money because the
Company has advanced sums under the respective Existing Management Agreements in
excess of the difference  between the monthly  Practice Accrual Earnings and the
Service Fee (as defined in the respective  Existing  Management  Agreements) (as
reflected on the  Company's  books as of June 30,  1999,  and in the Side Letter
Agreements relating to the excess payments executed by certain  physicians,  the
"Advances").  Parent,  Merger Sub and the  Company  each  acknowledge  that each
Advance may be increased,  after the Closing, in order to correct any inaccurate
estimates  of  Adjustments  (as defined in the  respective  Existing  Management
Agreement)  with respect to accounts  receivable  existing on June 30, 1999 (the
amount of such increase, if any, the "Excess Advances").  Solely for purposes of
construing  Parent's and Merger Sub's  obligations  under this Section  7.15, if
Parent or Merger Sub (or any other FemPartners'  subsidiary) fails or refuses to
collect  that  portion of the  Excess  Advances  which  exceed the lesser of (i)
$12,000 (per physician) or (ii) ten percent (10%) of the net book value of the

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<PAGE>

accounts  receivable of the respective  Company Existing Practice as of June 30,
1999, then, except for the practices of M.R. Jafarnia, M.D. & Associates, Donald
Columbus,  M.D., P.A. and Lawrence M. Slocki,  M.D., P.A. (which are governed by
the Side  Letter  Agreements  between the  Company  and such  physicians),  such
failure or refusal will not be  considered  a material  breach of, or change to,
the respective Existing Management  Agreements or this Agreement  (regardless of
whether  such  action or  inaction  causes a decrease  in the number of Retained
Shares  that  would  otherwise  be  distributed  to  the   Shareholders  on  the
Distribution  Date or a decrease  in the balance of the  Replacement  Promissory
Note pursuant to the operation of Section 7.12 or 7.13). Subject to the terms of
the Existing  Management  Agreements and the applicable  Side Letter  Agreements
entered  into with the  physicians  with  respect  to the  Advances  and  Excess
Advances,  Parent and  Merger  Sub agree that they shall use their  commercially
reasonable efforts (as though Parent and Merger Sub were not affiliated with the
physicians)  to collect  (y) the total  amount of each  Advance  (subject to any
decrease,  after  the  Closing,  based  solely on  higher-than-estimated  actual
collections of accounts receivable existing on June 30, 1999), and (z) the total
amount  of any  Excess  Advance  subject  to the  limitations  above;  provided,
however, that Parent and Merger Sub shall not be required to collect any amounts
that Lawrence M. Slocki,  M.D. would have received from Medicaid  billings,  but
that are no longer  collectible  solely  because of the delay by the  Company in
billing  such  Medicaid  amounts.  Any  failure to use  commercially  reasonable
efforts  (as  though  Parent  and  Merger  Sub  were  not  affiliated  with  the
physicians)  to collect  the  amounts  described  in the  immediately  preceding
sentence  will be  considered  a breach  solely for the  purposes of  construing
Parent's and Merger Sub's obligations under this Section 7.15.

         Section 7.16. Insurance. Parent and Merger Sub agree to maintain at all
times  after the  Closing  Date and until July 1, 2001,  a prior acts  insurance
policy providing  insurance  coverage of the same scope, in the same amounts and
subject to the same deductibles as the Company's insurance in effect immediately
prior to the Closing Date.

                                  ARTICLE VIII

                              CONDITIONS TO CLOSING

         Section  8.1.  Conditions  to Each  Party's  Obligation  to Effect  the
Merger.  The respective  obligations of each party to effect the Merger shall be
subject  to the  fulfillment  or  waiver,  if  permissible,  at or  prior to the
Effective Time of the following conditions:

                  (a) no preliminary  or permanent  injunction or other order or
decree by any federal or state  court which  prevents  the  consummation  of the
Merger shall have been issued and remain in effect  (each party  agreeing to use
its reasonable efforts to have any such injunction, order or decree lifted); and

                  (b) no action shall have been taken,  and no statute,  rule or
regulation  shall  have been  enacted,  by any state or  federal  government  or
governmental agency in the United States which would prevent the consummation of
the Merger or make the consummation of the Merger illegal.

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<PAGE>

         Section  8.2.  Conditions  to  Obligation  of the Company to Effect the
Merger.  Unless waived by the Company,  the  obligation of the Company to effect
the Merger shall be subject to the fulfillment at or prior to the Effective Time
of the following additional conditions:

                  (a) Parent and Merger Sub shall have performed in all material
respects  (or in all  respects  in the  case  of any  agreement  containing  any
materiality qualification) their agreements contained in this Agreement required
to be performed on or prior to the Closing Date;

                  (b) the  representations  and  warranties of Parent and Merger
Sub  contained  in this  Agreement  shall be true and  correct  in all  material
respects  (or in all  respects  in the case of any  representation  or  warranty
containing any materiality  qualification) on and as of the date made and on and
as of the Closing Date as if made at and as of such date;

                  (c) since the date of this agreement, there shall have been no
changes that  constitute,  and no event or events shall have occurred which have
resulted in or constitute, a Material Adverse Effect;

                  (d)  all  governmental  waivers,   consents,   orders,  permit
transfers  (including  without limitation  Environmental  Permits) and approvals
legally   required  for  the   consummation  of  the  Merger  and   transactions
contemplated  hereby or to permit Parent to carry on the business of the Company
after  Closing in  accordance  with past  customs and  practice  shall have been
obtained and be in effect at the Closing  Date,  and no  Governmental  Authority
shall  have  promulgated  any  statute,  rule or  regulation  which,  when taken
together with all such  promulgations,  would materially impair the value of the
Company to Parent;

                  (e) all waivers,  consents and  approvals  from third  parties
necessary for the transfer of any material contracts,  financial  assurances and
any other rights and benefits in  connection  with the Merger,  or necessary for
the  consummation of the Merger and the transactions  contemplated  hereby shall
have been obtained and be in effect at the Closing Date;

                  (f) the  boards of  directors  of Parent  and Merger Sub shall
have authorized the execution, delivery and performance of the Agreement and all
related documents and agreements contemplated herein;

                  (g)  Parent  shall  execute  and  deliver  to each of  Kenneth
Shifrin,  Duane Boyd and John Hedrick a Non-Competition  Agreement,  in the form
attached hereto as Exhibit H (collectively, the "Noncompetition Agreements");

                  (h)      Merger Sub shall execute the Replacement Promissory
Note;

                  (i)      Parent shall execute and deliver to APS a Guaranty of
performance under the Replacement  Promissory Note, in the form attached hereto
as Exhibit I;

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                  (j)      Parent and Merger Sub shall  deliver  executed
Certificate  and Articles of Merger  necessary to effect the Merger referred to
in Section 1.1;

                  (k)  Parent  shall  have  delivered  to  the  Company  written
documentation,  satisfactory  to the  Company,  that  evidences  the  waiver  by
Parent's  preferred  stock  holders  of any rights  related  to or arising  from
Parent's  execution of this Agreement and the  consummation of the  transactions
contemplated  herein,  if such right would not otherwise have arisen or existed,
including without limitation, any mandatory redemption rights, rights to receive
additional  shares of capital stock of Parent upon conversion of preferred stock
or any other similar rights;

                  (l) the Company shall have completed its due diligence  review
regarding the Parent and its business, operations,  assets, liabilities,  taxes,
insurance,  contracts,  prospects  and  environmental  and other  matters as the
Company  deems  relevant  and  the  Company  shall  be  satisfied,  in its  sole
discretion, with the results of such review;

                  (m)  The  Company  shall  have   received  a  Co-Sale   Rights
Agreement,  in the form attached hereto as Exhibit J, executed by each holder of
Series A Preferred Stock of Parent;

                  (n) the Company shall have received a certificate  executed on
behalf of Parent by the Chief  Executive  Officer or a Vice  President of Parent
and on behalf of Merger Sub by the  President or a Vice  President of Merger Sub
with respect to (a) through (g) above;

                  (o) the Company shall have obtained  approval of the Merger by
each  of  its  shareholders  in the  form  required  under  the  Texas  Business
Corporation Act; and

                  (p) the Company shall have received an Investors'  Certificate
from each Shareholder, in the form attached hereto as Exhibit M.

         Section  8.3.  Conditions  to  Obligations  of Parent and Merger Sub to
Effect the Merger.  Unless waived by Parent and Merger Sub, the  obligations  of
Parent and Merger Sub to effect the Merger  shall be subject to the  fulfillment
at or prior to the Effective Time of the additional following conditions:

                  (a) the Company shall have performed in all material  respects
(or in all  respects in the case of any  agreement  containing  any  materiality
qualification)  its  agreements  contained  in  this  Agreement  required  to be
performed on or prior to the Closing Date;

                  (b)  the   representations   and  warranties  of  the  Company
contained in this Agreement  shall be true and correct in all material  respects
(or in all respects in the case of any representation or warranty containing any
materiality  qualification)  on  and as of the  date  made  and on and as of the
Closing Date as if made at and as of such date;

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                  (c) since the date  hereof,  there  shall have been no changes
that constitute,  and no event or events shall have occurred which have resulted
in or constitute, a Material Adverse Effect;

                  (d)  all  governmental  waivers,   consents,   orders,  permit
transfers  (including  without limitation  Environmental  Permits) and approvals
legally  required  for the  consummation  of the  Merger  and  the  transactions
contemplated  hereby or to permit Parent to carry on the business of the Company
after  Closing in  accordance  with past  customs and  practice  shall have been
obtained and be in effect at the Closing  Date,  and no  Governmental  Authority
shall  have  promulgated  any  statute,  rule or  regulation  which,  when taken
together with all such  promulgations,  would materially impair the value of the
Company to Parent;

                  (e) all waivers,  consents and  approvals  from third  parties
necessary for the transfer of any material contracts,  financial  assurances and
any other rights and benefits in  connection  with the Merger,  or necessary for
the  consummation of the Merger and the transactions  contemplated  hereby shall
have been obtained and be in effect at the Closing Date;

                  (f) all  transactions,  contracts,  agreements  and guarantees
between the Company and any  Shareholder  or any Affiliate of the Company or any
Shareholder  shall have been terminated and all amounts owed by the Shareholders
and their Affiliates to the Company shall have been paid in full, and the Parent
shall have received  releases in form and substance  satisfactory to Parent with
respect to same;

                  (g)  all  outstanding  subscriptions,  options,  calls,  share
purchase rights or voting trusts,  proxies or other arrangements relating to the
capital stock of the Company shall be  extinguished by the Closing Date, and the
Parent shall have received releases in form and substance satisfactory to Parent
with respect to same;

                  (h)   the board of directors and  shareholders  of the Company
shall approve this Agreement and the closing of the transactions contemplated
herein;

                  (i) the officers and directors of the Company shall deliver to
Parent an instrument  dated the Closing Date  releasing the Company from any and
all claims of such  officers and  directors  (except as to accrued  compensation
prior to the Closing Date in accordance with the terms of the Agreement);

                  (j)  Parent  shall have  completed  its due  diligence  review
regarding the Company and its business, operations, assets, liabilities,  taxes,
insurance,  contracts,  prospects and  environmental and other matters as Parent
deems relevant and Parent shall be satisfied,  in its sole discretion,  with the
results of such review;

                  (k)      Parent shall have received a lease agreement executed
by APS in the form attached hereto as Exhibit K;

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                  (l)      Parent shall have received a Subordination Agreement
executed by APS in the form attached hereto as Exhibit L;

                  (m)      Kenneth  Shifrin,  Duane Boyd and John  Hedrick shall
execute  and  deliver  to Parent the  Noncompetition Agreements;

                  (n)      Parent shall have received an Investors'  Certificate
from each Shareholder,  in the form attached hereto as Exhibit M;

                  (o)      Parent shall have received an Investor Rights
Agreement,  as amended,  executed by the  Shareholders in the form attached
hereto as Exhibit N;

                  (p)  Parent  shall  have  received  an  executed  Professional
Service Provider Security  Agreement  (including the Deposit Account  Agreement,
the Closing  Certificate of Managed Practice,  the Secretary's  Certificate with
the attached Board of Director  Resolutions and the UCC-7  Financing  Statement)
from each of the  Company  Existing  Practices  in the form  attached  hereto as
Exhibit O;

                  (q) Parent shall have received an executed Security  Agreement
from each of the  Company  Existing  Practices  in the form  attached  hereto as
Exhibit P;

                  (r)      the Company shall  deliver executed  Certificate  and
Articles of Merger  necessary  to effect the Merger referred to in Section 1.1;

                  (s) Parent shall have received a certificate, dated within ten
(10)  days  of  the  Closing  Date,  of the  Secretary  of the  State  of  Texas
establishing  that  the  Company  is in  existence  and is in good  standing  to
transact business in the state of incorporation;

                  (t)      Parent shall have received the resignations of the
directors and officers of the Company; and

                  (u) Parent  shall  have  received a  certificate  executed  on
behalf of the Company by the President or Chief Executive Officer of the Company
and each of the Shareholders with respect to (a) through (i) above.

                                   ARTICLE IX

                        TERMINATION, AMENDMENT AND WAIVER

         Section 9.1.  Termination. This Agreement may be terminated at any time
prior to the Effective Time as follows:

                  (a)      The Company shall have the right to terminate this
Agreement:

                           (i) if the  representations  and warranties of Parent
         and  Merger  Sub  shall  fail to be true and  correct  in all  material

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         respects  (or in all  respects  in the  case of any  representation  or
         warranty  containing any  materiality  qualification)  on and as of the
         date  made  or,  except  in the case of any  such  representations  and
         warranties  made as of a specified  date,  on and as of any  subsequent
         date as if made at and as of subsequent date and such failure shall not
         have been cured in all  material  respects  (or in all  respects in the
         case of any  representation  or  warranty  containing  any  materiality
         qualification)  within 30 days after written  notice of such failure is
         given to Parent by the Company;

                           (ii) if the  Merger is not  completed  by August  31,
         1999 (provided  that the right to terminate  this Agreement  under this
         Section 9.1(a)(ii) shall not be available to the Company if the failure
         of the  Company  to  fulfill  any  obligation  to  Parent  under  or in
         connection with this Agreement has been the cause of or resulted in the
         failure of the Merger to occur on or before such date);

                           (iii)    if the Merger is enjoined by a final,
unappealable court order; or

                           (iv) if Parent or Merger  Sub (A) fails to perform in
         any material  respect any of its  covenants  (or in all respects in the
         case of any covenant containing any materiality  qualification) in this
         Agreement  and (B) does not cure such default in all material  respects
         (or in all  respects  in  the  case  of  any  covenant  containing  any
         materiality  qualification) within 30 days after notice of such default
         is given to Parent by the Company.

                  (b)   Parent shall have the right to terminate this Agreement;

                           (i)  if the  representations  and  warranties  of the
         Company shall fail to be true and correct in all material  respects (or
         in  all  respects  in  the  case  of  any  representation  or  warranty
         containing any  materiality  qualification)  on and as of the date made
         or, except in the case of any such  representations and warranties made
         as of a specified  date, on and as of any subsequent date as if made at
         and as of such  subsequent  date and such  failure  shall not have been
         cured in all  material  respects (or in all respects in the case of any
         representation  or warranty  containing any materiality  qualification)
         within 30 days  after  written  notice of such  failure is given to the
         Company by Parent;

                           (ii) if the  Merger is not  completed  by August  31,
         1999 (provided  that the right to terminate  this Agreement  under this
         Section  9.1(b)(ii)  shall not be available to Parent if the failure of
         Parent to fulfill any  obligation to the Company under or in connection
         with this Agreement has been the cause of or resulted in the failure of
         the Merger to occur on or before such date);

                           (iii)    if the Merger is enjoined by a final,
unappealable court order; or

                           (iv) if the  Company  (A)  fails  to  perform  in any
         material  respect  (or in all  respects  in the  case  of any  covenant
         containing any materiality  qualification) any of its covenants in this
         Agreement and (B) does not cure such default in all material respects

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<PAGE>

         (or in all  respects  in  the  case  of  any  covenant  containing  any
         materiality  qualification) within 30 days after notice of such default
         is given to the Company by Parent.

                  (c)      The Company and Parent mutually agree.

         Section 9.2. Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company  pursuant to the provisions of Section
9.1, this Agreement  shall  forthwith  become void and there shall be no further
obligations on the part of the Company,  Parent,  Merger Sub or their respective
officers or directors  (except as set forth in Sections  11.5 and 11.6,  each of
which  shall  survive  termination);  provided,  however,  that  nothing in this
Section 9.2 shall  relieve  either party from  liability  for any breach of this
Agreement.

         Section 9.3.  Amendment.  This  Agreement may not be amended  except by
an  instrument  in writing  signed on behalf of all of the parties.

         Section 9.4.  Extensions;  Waiver.  At any time prior to the  Effective
Time, the parties  hereto may (a) extend the time for the  performance of any of
the  obligations  or other  acts of the  other  parties  hereto,  (b)  waive any
inaccuracies in the  representations  and warranties  contained herein or in any
document  delivered  pursuant  thereto and (c) waive  compliance with any of the
agreements or conditions  herein. Any agreement on the part of a party hereto to
any such  extension  or waiver shall be valid if set forth in an  instrument  in
writing signed on behalf of such party.

                                    ARTICLE X

                                 INDEMNIFICATION

         Section 10.1. The Shareholders' Indemnity Obligations. The Shareholders
shall,  severally  and not  jointly,  indemnify  and hold  harmless the Company,
Parent  and  the  Company's  and  Parent's   respective   officers,   directors,
stockholders,  employees, agents, representatives and Affiliates (each a "Parent
Indemnified  Party")  from and  against  any and all claims  (including  without
limitation,  Environmental  Claims malpractice  claims,  escheat laws and claims
pursuant to Sections 5.28 and 5.29),  actions,  causes of action,  arbitrations,
proceedings,  losses, damages,  remediations,  liabilities,  strict liabilities,
judgments,  fines,  penalties  and  expenses  (including,   without  limitation,
reasonable  attorneys' fees)  (collectively,  the  "Indemnified  Amounts") paid,
imposed on or incurred by a Parent  Indemnified  Party,  directly or indirectly,
relating  to,  resulting  from or arising out of, or any  allegation  of a third
party of (a) any breach or  misrepresentation  in any of the representations and
warranties made by the Company in this Agreement,  including without  limitation
with  respect  to  environmental  matters,  or  any  certificate  or  instrument
delivered in connection with this Agreement,  (b) any violation or breach by the
Company of or default by the Company  under the terms of this  Agreement  or any
certificate or instrument  delivered in connection with this Agreement,  (c) any
act or omission by the Company or any shareholder,  officer, director, employee,
agent or  representative  of the  Company,  occurring on or prior to the Closing
Date (including any claim by a third party,  including  employees and customers,
arising  out  of or  related  to any  act or  omission  by  the  Company  or any
shareholder, officer, director, employee, agent or representative of the Company

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<PAGE>

occurring on or prior to the Closing Date) or (d) any Environmental Claim and/or
any violation of any Environmental Law if such Environmental  Claim or violation
relates, directly or indirectly,  to events,  conditions,  operations,  facts or
circumstances  which  occurred or commenced on or prior to the Closing Date. The
obligation of Shareholders to provide  indemnification  to a Parent  Indemnified
Party  hereunder  based on a breach of  representation  or warranty  shall arise
without  regard to any  materiality  or  knowledge  qualifier  set forth in such
representation or warranty, except for any claim based on fraud. For purposes of
this Section 10.1,  Indemnified  Amounts shall include without  limitation those
Indemnified  Amounts  ARISING  OUT OF THE STRICT  LIABILITY  (INCLUDING  BUT NOT
LIMITED  TO  STRICT  LIABILITY  ARISING  PURSUANT  TO  ENVIRONMENTAL   LAWS)  OR
NEGLIGENCE OF ANY PARTY,  INCLUDING ANY PARENT INDEMNIFIED  PARTY,  WHETHER SUCH
NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE.

         Section 10.2.  Parent's  Indemnity  Obligations.  Parent and Merger Sub
shall indemnify and hold harmless the Shareholders and the Shareholders' agents,
representatives  and Affiliates (each a "Shareholders'  Indemnified Party") from
and  against  any  and  all  Indemnified  Amounts  incurred  by a  Shareholders'
Indemnified Party as a result of (a) any breach or  misrepresentation  in any of
the  representations and warranties made by or on behalf of Parent or Merger Sub
in this Agreement or any certificate or instrument  delivered in connection with
this  Agreement,  (b) any  violation  or breach  by  Parent or Merger  Sub of or
default  by Parent  under  the terms of this  Agreement  or any  certificate  or
instrument delivered in connection with this Agreement,  (c) any act or omission
by the Parent or any Parent Indemnified Party,  occurring after the Closing Date
(including  any  claim by a third  party,  including  employees  and  customers,
arising  out of or  related to any act or  omission  by the Parent or any Parent
Indemnified  Party  occurring  after the Closing Date) or (d) any  Environmental
Claim and/or any violation of any Environmental Law if such Environmental  Claim
or violation relates, directly or indirectly, to events, conditions, operations,
facts or  circumstances  which occurred or commenced after the Closing Date. The
obligation of Parent to provide  indemnification to a Shareholders'  Indemnified
Party  hereunder  based on a breach of  representation  or warranty  shall arise
without  regard to any  materiality  or  knowledge  qualifier  set forth in such
representation or warranty, except for any claim based on fraud. For purposes of
this Section 10.2,  Indemnified  Amounts shall include without  limitation those
Indemnified  Amounts  ARISING  OUT OF THE STRICT  LIABILITY  (INCLUDING  BUT NOT
LIMITED  TO  STRICT  LIABILITY  ARISING  PURSUANT  TO  ENVIRONMENTAL   LAWS)  OR
NEGLIGENCE OF ANY PARTY, INCLUDING ANY SHAREHOLDERS'  INDEMNIFIED PARTY, WHETHER
SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE. Notwithstanding
the foregoing, neither Parent nor Merger Sub shall indemnify the Shareholders or
Shareholders'  Indemnified  Parties under  subsections  (c) or (d) above for any
reduction in the value of the Parent Common Stock issued as Merger Consideration
pursuant to this Agreement based on an event or circumstance  which occurs after
the Closing Date.

         Section  10.3.  Indemnification  Procedures.  All claims  for
indemnification under this Agreement shall be asserted  and resolved as follows:

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<PAGE>

                  (a) A party claiming  indemnification under this Agreement (an
"Indemnified Party") shall with reasonable  promptness (i) notify the party from
whom  indemnification  is sought (the  "Indemnifying  Party") of any third-party
claim or claims asserted against the Indemnified Party ("Third Party Claim") for
which  indemnification  is sought and (ii) transmit to the Indemnifying  Party a
copy of all  papers  served  with  respect  to such claim (if any) and a written
notice ("Claim  Notice")  containing a description  in reasonable  detail of the
nature  of the  Third  Party  Claim,  an  estimate  of  the  amount  of  damages
attributable  to the Third Party Claim to the extent  feasible  (which  estimate
shall not be  conclusive of the final amount of such claim) and the basis of the
Indemnified Party's request for indemnification under this Agreement.

         Within  15 days  after  receipt  of any  Claim  Notice  (the  "Election
Period"),  the Indemnifying Party shall notify the Indemnified Party (i) whether
the Indemnifying Party disputes its potential liability to the Indemnified Party
with respect to such Third Party Claim and (ii) whether the  Indemnifying  Party
desires,  at the sole cost and expense of the Indemnifying  Party, to defend the
Indemnified Party against such Third Party Claim.

         If the  Indemnifying  Party notifies the  Indemnified  Party within the
Election Period that the Indemnifying  Party elects to assume the defense of the
Third Party Claim,  then the Indemnifying  Party shall have the right to defend,
at its  sole  cost and  expense,  such  Third  Party  Claim  by all  appropriate
proceedings,   which   proceedings   shall  be  prosecuted   diligently  by  the
Indemnifying  Party to a final  conclusion  or settled at the  discretion of the
Indemnifying  Party in accordance with this Section  10.3(a).  The  Indemnifying
Party shall have full control of such

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defense and  proceedings.  The Indemnified

Party is hereby  authorized,  at the sole cost and  expense of the  Indemnifying
Party,  to file,  during  the  Election  Period,  any  motion,  answer  or other
pleadings  that  the  Indemnified  Party  shall  reasonably  deem  necessary  or
appropriate to protect its interests.  If requested by the  Indemnifying  Party,
the Indemnified Party reasonably agrees to cooperate with the Indemnifying Party
and its counsel in contesting any Third Party Claim that the Indemnifying  Party
elects to  contest,  including,  without  limitation,  the making of any related
counterclaim  against  the  person  asserting  the  Third  Party  Claim  or  any
cross-complaint  against any person.  Except as otherwise  provided herein,  the
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party claim controlled by the  Indemnifying  Party pursuant to this
Section  10.3 and shall  bear its own costs and  expenses  with  respect to such
participation.

         If the Indemnifying  Party fails to notify the Indemnified Party within
the Election Period that the Indemnifying Party elects to defend the Indemnified
Party pursuant to the preceding  paragraph,  or if the Indemnifying Party elects
to defend the Indemnified Party but fails to prosecute or settle the Third Party
Claim as herein provided or if the Indemnified Party reasonably  objects to such
election on the grounds that counsel for such Indemnified Party cannot represent
both  the  Indemnified   Party  and  the   Indemnifying   Parties  because  such
representation  would be reasonably  likely to result in a conflict of interest,
then the Indemnified  Party shall have the right to defend, at the sole cost and
expense of the  Indemnifying  Party,  the Third Party  Claim by all  appropriate
proceedings,  which proceedings  shall be promptly and vigorously  prosecuted by
the Indemnified Party to a final conclusion or settled. In such a situation, the
Indemnified  Party shall have full control of such defense and  proceedings  and
the  Indemnifying  Party may  participate  in, but not  control,  any defense or
settlement  controlled by the  Indemnified  Party pursuant to this Section 10.3,
and the Indemnifying Party shall bear its own costs and expenses with respect to
such participation.

         The  Indemnifying  Party shall not settle or compromise any Third Party
Claim unless (i) the terms of such compromise or settlement require no more than
the payment of money (i.e.,  such  compromise or settlement does not require the
Indemnified  Party to admit any  wrongdoing  or take or refrain  from taking any
action),  (ii) the full amount of such monetary compromise or settlement will be
paid by the Indemnifying Party, and (iii) the Indemnified Party receives as part
of such settlement a legal, binding and enforceable  unconditional  satisfaction
and/or release, in form and substance  reasonably  satisfactory to it, providing
that such Third Party Claim and any claimed  lability of the  Indemnified  Party
with respect  thereto is being fully  satisfied by reason of such  compromise or
settlement  and that the  Indemnified  Party is being  released from any and all
obligations  or liabilities it may have with respect  thereto.  The  Indemnified
Party shall not settle or admit  liability to any Third Party Claim  without the
prior  written  consent of the  Indemnifying  Party unless (x) the  Indemnifying
Party has disputed its potential  liability to the Indemnified  Party,  and such
dispute  either  has not  been  resolved  or has been  resolved  in favor of the
Indemnifying  Party or (y) the  Indemnifying  Party has failed to respond to the
Indemnified Party's Claim Notice.

                  (b) In the event any  Indemnified  Party  should  have a claim
against any  Indemnifying  Party  hereunder  that does not involve a Third Party
Claim, the Indemnified Party shall transmit to the Indemnifying  Party a written
notice (the "Indemnity  Notice")  describing in reasonable  detail the nature of
the claim,  an estimate of the amount of damages  attributable  to such claim to
the extent  feasible (which estimate shall not be conclusive of the final amount
of  such  claim)  and  the  basis  of  the   Indemnified   Party's  request  for
indemnification under this Agreement.

         Section 10.4.  Determination and Payment of Indemnified Amounts.

                  (a)  Determination  of  Indemnified  Amounts.  Subject  to the
limitations  on Indemnified  Amounts set forth in Section 10.7, the  Indemnified
Amounts  payable by an  Indemnifying  Party hereunder shall be determined (i) by
binding arbitration pursuant to Section 11.6 hereof or (ii) if no party requests
such  arbitration,  then  by (A)  the  written  agreement  of the  parties,  (B)
mediation,  (C) final judgment or decree of any court of competent jurisdiction,
or (D) by any other  means  agreed to in writing by the  parties.  A judgment or
decree of a court shall be deemed final when the time for appeal,  if any, shall
have expired and no appeal shall have been taken or when all appeals  taken have
been fully determined.

                  (b)  Payment  of  Indemnified  Amounts.  For  the  purpose  of
satisfying any Indemnified Amounts under this Article X, the Parent Common Stock
shall be conclusively valued at a per share price of $7.00 per share. Subject in
all cases to the  limitations  on liability set forth in Sections 10.5 and 10.6,
the Indemnifying Party shall pay to the Indemnified Party the Indemnified Amount
to which the Indemnified  Party may become entitled by reason of this Agreement,
payable in the following manner:

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                           (i)  Indemnified  Amounts  Payable by Parent.  Parent
         may,  in its sole  discretion,  pay an  Indemnified  Amount by  issuing
         additional shares of Parent Common Stock or by making a cash payment to
         the Shareholders'  Indemnified Parties,  such payment to be made within
         fifteen (15) days after such Indemnified  Amount is finally  determined
         pursuant to this Section 10.4.

                           (ii) Indemnified  Amounts Payable by the Shareholders
         Prior to the  Distribution  Date.  With respect to the aggregate of all
         Indemnified  Amounts owed by the Shareholders that are determined prior
         to the  Distribution  Date,  Shareholders  shall (subject to subsection
         (iv) below)  fully  satisfy  such  Indemnified  Amounts by  immediately
         forfeiting their right to receive on the Distribution  Date that number
         of Retained  Indemnity  Shares which fully  satisfies such  Indemnified
         Amount; provided,  however, that the Shareholders shall not be required
         to  satisfy  or  pay  prior  to  the  Distribution  Date  such  finally
         determined  Indemnified  Amounts to the extent that such amounts exceed
         the value of the Retained Indemnity Shares;  provided further, that any
         portion of such finally  determined  Indemnified  Amounts which exceeds
         the  value of the  Retained  Indemnity  Shares  (the  "Final  Suspended
         Indemnified   Amounts")  shall  be  held  in  abeyance   pending  final
         calculation  of the  Earnout  Distribution  on the  Distribution  Date.
         Subject to subsection (iv), on the Distribution  Date, the Shareholders
         shall satisfy any Final Suspended Indemnified Amounts by forfeiting the
         right to receive  all or any portion of shares of Parent  Common  Stock
         constituting the Earnout Distribution as provided in Section 3.2.

                           (iii)   Indemnified   Amounts   Asserted   by  Parent
         Indemnified  Parties Prior to the  Distribution  Date,  but Not Finally
         Determined  Prior  to  the  Distribution  Date.  With  respect  to  the
         aggregate  of all  Indemnified  Amounts  first  asserted  prior  to the
         Distribution Date, but that are not finally determined on or before the
         Distribution  Date (the "Pending  Indemnified  Amounts"),  a sufficient
         number of shares of Parent Common Stock, otherwise distributable to the
         Shareholders on the Distribution  Date (including the Retained Shares),
         shall not be distributed to the  Shareholders but shall instead be held
         by Parent in escrow pending (and shall be distributed  only upon) final
         determination  of such  Pending  Indemnified  Amounts.  Shares  held by
         Parent  in  escrow  after  the  Distribution   Date  pursuant  to  this
         subsection  (iii) shall first be comprised  of any  Retained  Indemnity
         Shares not  forfeited  pursuant  to  subsection  (ii) above and next be
         comprised of any shares of Parent Common Stock constituting the Earnout
         Distribution,  if any, that were not  forfeited  pursuant to subsection
         (ii) above.

                           (iv)   Indemnified    Amounts   Payable   to   Parent
         Indemnified Parties Which Cannot be Satisfied by the Retained Indemnity
         Shares and the Shares of Parent Common Stock  Constituting  the Earnout
         Distribution.  With respect to the aggregate of all Indemnified Amounts
         payable to Parent  Indemnified  Parties  which (A) exceed the  Retained
         Indemnity Shares and the shares of Parent Common Stock constituting the
         Earnout  Distribution  and/or (B) are  asserted  after such shares have
         been distributed to the Shareholders, APS shall,

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<PAGE>

         subject  to APS'
         limitation  on  liability   set  forth  in  Section  10.5,   solely  be
         responsible  for paying 64% of such  Indemnified  Amounts  when finally
         determined (except for Indemnified Amounts exclusively arising directly
         out of a breach or misrepresentation under Sections 5.2 and 5.4 of this
         Agreement, which shall be 100% of such Indemnified Amounts when finally
         determined).  In the event that APS no longer owns a sufficient  number
         of  shares  of  Parent  Common  Stock  to  fully  satisfy  its  maximum
         obligation  under this subsection  (iv), then (and only then) shall APS
         be required to pay cash to satisfy such Indemnified  Amounts (up to its
         maximum  liability  provided in Section 10.5 and as further  limited in
         this subsection (iv)).

         Section 10.5.  Limitation of Shareholders' Liability.

                  (a)  Notwithstanding  anything to the  contrary  contained  in
Article X, the aggregate  liability of each Shareholder (other than APS) for any
event  or  occurrence  giving  rise to an  Indemnified  Amount  payable  by that
Shareholder   under  Section  10.1  shall  be  limited  to  that   Shareholders'
proportionate  share of the  Retained  Shares  plus any  other  shares of Parent
Common Stock constituting the Earnout Distribution, multiplied by $7, payable as
set forth in Section 10.4. The shares of Parent Common Stock  transferred to the
Parent  Indemnified  Parties  hereunder  shall be free and  clear of all  liens,
claims, options, pledges, encumbrances, restrictions and adverse interest of any
kind or nature  whatsoever.  The  Shareholders  shall  each  have the  option of
satisfying their respective  indemnification  obligations  under Section 10.1 by
using cash instead of Parent Common Stock.

                  (b)  Notwithstanding  anything to the  contrary  contained  in
Article X, the  aggregate  liability of APS for any event or  occurrence  giving
rise to an Indemnified Amount payable by APS under Section 10.1 shall be limited
to the  number of shares of  Parent  Common  Stock  issued to APS as part of the
Merger  Consideration,  multiplied by $7,  payable as set forth in Section 10.4.
The shares of Parent Common Stock transferred to the Parent Indemnified  Parties
hereunder  shall  be free and  clear of all  liens,  claims,  options,  pledges,
encumbrances,   restrictions   and  adverse  interest  of  any  kind  or  nature
whatsoever.  In accordance with Section 10.4(b)(iv) APS shall have the option of
satisfying  its  respective  indemnification  obligations  under Section 10.1 by
using cash  instead of Parent  Common  Stock.  Notwithstanding  anything  to the
contrary  contained  in  Article  X, APS  shall  never be  required  to pay cash
pursuant to this  Article X, except in instances  where,  and only to the extent
that (i) APS is  obligated  to pay an  Indemnified  Amount  under this Article X
after the  Distribution  Date, (ii) the aggregate  amount of APS' prior payments
under  this  Article  X is less  than the  maximum  aggregate  liability  of APS
determined  pursuant to the first sentence of this subsection (b), (iii) APS has
sold,  transferred or otherwise  disposed of any of its Parent Common Stock, and
(iv) as a result of such  disposition(s),  APS does not have a sufficient number
of shares of Parent Common Stock to satisfy such Indemnified Amount.

                  (c) Parent Indemnified Parties are entitled to indemnification
pursuant to Section  10.1 only to the extent that the amount of any  Indemnified
Amount, individually or in the aggregate, exceeds $100,000, and then to the full
amount of such Indemnified Amount, including the first $100,000.

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<PAGE>

         Section 10.6.  Limitation of Parent's Liability.

                  (a)  Notwithstanding  anything to the  contrary  contained  in
Article X, the aggregate  liability of Parent for any event or occurrence giving
rise to an  Indemnified  Amount  payable by Parent  under  Section 10.2 shall be
limited to the number of shares of parent  Common Stock issued to APS as part of
the  Merger  Consideration,  multiplied  by $7,  payable as set forth in Section
10.4.

                  (b)   Company    Indemnified    Parties   are    entitled   to
indemnification  pursuant to Section  10.2 only to the extent that the amount of
any Indemnified Amount,  individually or in the aggregate,  exceeds $100,000 and
then to the  full  amount  of  such  Indemnified  Amount,  including  the  first
$100,000.

         Section 10.7.  Limitation on Indemnified  Amounts.  Notwithstanding any
provision  of this  Article X to the  contrary,  Indemnified  Amounts owed by an
Indemnifying Party to an Indemnified Party shall be reduced by the amount of any
mitigating  recovery or benefit  (net of  reasonable  expenses and tax and other
costs incurred in obtaining such recovery or benefit) an Indemnified Party shall
have received or otherwise  enjoyed with respect thereto from any recovery under
any  insurance  policies,  without  regard to whether the  Indemnified  Party or
another  person paid the premiums  therefor.  If such a  mitigating  recovery is
received by an Indemnified  Party after it receives payment under this Agreement
with respect to Indemnified Amounts,  then a refund equal in aggregate amount to
the  mitigating  recovery,  net of  reasonable  expenses  and tax or other costs
incurred in  obtaining  recovery,  shall be made  promptly  to the  Indemnifying
Party.  Notwithstanding  the foregoing or any other provision of this Agreement,
no Parent Indemnified Person shall be entitled to indemnification hereunder with
respect to an indemnifiable claim to the extent such claim directly causes (i) a
reduction  to the  principal  amount of the  Replacement  Promissory  Note or an
offset against interest  otherwise due and payable thereunder as a result of the
operation of Section 7.12 of this Agreement,  or (ii) a reduction in the Earnout
Distribution pursuant to Section 3.2 of this Agreement.

         Section 10.8.  Right of  Subrogation.  Upon payment by an  Indemnifying
Party of an Indemnified  Amount,  the Indemnifying  Party shall, with respect to
the amount  paid,  be  subrogated  to all causes of action,  rights of  recovery
and/or  enforcement  rights  that  the  Indemnified  Party  may have  under  any
contract, agreement,  instrument or understanding (other than this Agreement and
the  other  agreements  entered  into  in  connection   herewith)  to  which  an
Indemnified Party is a party or otherwise receives benefits.

                                   ARTICLE XI

                               GENERAL PROVISIONS

         Section 11.1. Survival. The representations and warranties set forth in
this  Agreement and in any  certificate  or  instrument  delivered in connection

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<PAGE>

herewith  shall be continuing  and shall survive the Closing for a period of two
(2) years following the Closing Date; provided, however, that in the case of all
representations and warranties,  there shall be no such termination with respect
to any such  representation  or  warranty as to which a bona fide claim has been
asserted  by  written  notice of such  claim  delivered  to the party or parties
making such  representation  or warranty prior to the expiration of the survival
period; provided,  further, that the representations and warranties set forth in
Sections 4.2, 4.8, 4.12,  4.13, 4.15, 4.22, 5.2, 5.8, 5.12, 5.13, 5.15, and 5.23
hereof shall  survive the Closing for four (4) years  (provided,  however,  that
with respect to Section 4.8 and 5.8, the  representations  contained  therein do
not extend  past two years after the Closing  Date with  respect to  malpractice
claims  against  or  related to the Parent  Existing  Practices  or the  Company
Existing Practices). The covenants and agreements, including but not limited to,
indemnification  obligations, set forth in this Agreement and in any certificate
or instrument  delivered in connection  herewith shall be continuing and survive
Closing; provided,  however, that the indemnification obligations of the parties
hereto (i) set forth in Sections 10.1(a) and 10.2(a) with respect to a breach of
a  representation  or  warranty  shall  terminate  at the time  such  particular
representation  or  warranty  shall  terminate,  and (ii) set forth in  Sections
10.1(b),  (c),  and (d) and  10.2(b),  (c) and (d) shall  terminate  three years
following the Closing Date.

         Section 11.2. Notices. All notices and other  communications  hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or sent via facsimile to
the parties at the following  addresses (or at such other address for a party as
shall be specified by like notice):

                  (a)      If to Parent or Merger Sub to:

                           FemPartners, Inc.
                           1300 Post Oak Boulevard, Suite 600
                           Houston, Texas 77056
                           Attention: William C. Altman

                             Telecopy: 713/512-8080

                  with a copy to:

                           Locke Liddell & Sapp LLP
                           3400 Chase Tower
                           600 Travis
                           Houston, Texas 77002
                           Attention: H. William Swanstrom
                           Telecopy: 713/223-3717

              (b)  if to the Company (prior to Closing) or the Shareholders, to:

                           Syntera HealthCare Corporation
                           1301 S. Capital of Texas Highway, Suite C-300
                           Austin, Texas 78746
                           Attention: President

                           Telecopy: 512/314-4398

                                       71

<PAGE>

                  with a copy, in the case of notice to the Company, to:

                           Akin, Gump, Strauss, Hauer & Feld, L.L.P.
                         816 Congress Avenue, Suite 1900

                           Austin, Texas 78701
                              Attention: Tim LaFrey

                             Telecopy: 512/703-1111

         Section 11.3. Interpretation.  The headings contained in this Agreement
are  for   reference   purposes  only  and  shall  not  affect  in  any  way  or
interpretation of this Agreement. In this Agreement, unless a contrary intention
appears,  (i) the words  "herein",  "hereof" and  "hereunder" and other words of
similar  import  refer to this  Agreement  as a whole and not to any  particular
Article,  Section or other  subdivision  and (ii)  reference  to any  Article or
Section  means such Article or Section  hereof.  No provision of this  Agreement
shall be interpreted  or construed  against any party hereto solely because such
party or its legal representative drafted such provision.  When used herein, the
phrases  "Company's  knowledge,"  "knowledge of the Company" or similar words or
phrases shall exclusively refer to the current actual knowledge of the following
persons:  Ken Shifrin,  Duane Boyd,  John Hedrick,  Bill Hayes and Colleen Webb.
Furthermore,  when used herein, the phrases "Parent's knowledge,"  "knowledge of
Parent"  or similar  words or phrases  shall  exclusively  refer to the  current
actual knowledge of the following persons: William Altman, Danguole Spakevicius,
Jack Thompson and John Watson.

         Section 11.4.  Miscellaneous.  This Agreement  (including the documents
and instruments  referred to herein) (a)  constitutes  the entire  agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties,  or any of them,  with respect to the subject  matter  hereof
(including,  without  limitation,  that certain Letter of Intent dated March 24,
1999, and any amendments thereto or replacements  thereof), and (b) shall not be
assigned by operation of law or otherwise except that Merger Sub may assign this
Agreement to any other wholly-owned Subsidiary of Parent, but no such assignment
shall  relieve  the  Parent  or the  Merger  Sub,  as the  case  may be,  of its
obligations hereunder.

         Section 11.5.  Governing Law. THIS  AGREEMENT  SHALL BE GOVERNED IN ALL
RESPECTS,  INCLUDING  VALIDITY,  INTERPRETATION  AND EFFECT,  BY THE LAWS OF THE
STATE OF TEXAS  APPLICABLE  TO CONTRACTS  EXECUTED  AND TO BE  PERFORMED  WHOLLY
WITHIN SUCH STATE.

         Section 11.6.  Binding Arbitration.

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<PAGE>

                  (a) General.  Notwithstanding  any provision of this Agreement
to the contrary,  upon the request of any party (defined for the purpose of this
provision to include  affiliates,  principles and agents of any such party), any
dispute,  controversy  or claim (under any theory of law,  equity or  otherwise,
except  only for claims  exclusively  for  injunctive  relief)  arising  out of,
relating to, or in connection with, this Agreement or any agreement  executed in
connection  herewith  or  contemplated  hereby,  or  the  breach,   termination,
interpretation,  or  validity  hereof or thereof  (hereinafter  referred to as a
"Dispute"),  shall be finally  resolved by mandatory and binding  arbitration in
accordance with the terms hereof;  provided,  however, that any dispute relating
to the  non-payment  of the  Replacement  Promissory  Note or the  provisions of
Section  3.2 or the  provisions  of  Section  7.12  shall not be  subject to the
provisions of this Section.  Any party to this  Agreement may bring an action in
court to compel  arbitration  of any Dispute.  Any party who fails or refuses to
submit any  Dispute  to binding  arbitration  following  a lawful  demand by the
opposing party shall bear all costs and expenses  incurred by the opposing party
in compelling arbitration of such Dispute.

                  (b) Governing  Rules.  The  arbitration  shall be conducted in
accordance  with the Commercial  Arbitration  Rules of the American  Arbitration
Association  in  effect  at the time of the  arbitration,  except as they may be
modified  herein  or by  mutual  agreement  of  the  parties.  The  seat  of the
arbitration  shall  be  Dallas,   Texas.   Notwithstanding   Section  11.5,  the
arbitration and this clause shall be governed by the Federal  Arbitration Act, 9
U.S.C.  ss.ss. 1 et seq. (the "Federal  Arbitration  Act"). The arbitrator shall
award all reasonable  and necessary  costs  (including  the reasonable  fees and
expenses of counsel)  incurred in conducting  the  arbitration to the prevailing
party in any such Dispute.  The parties expressly waive all rights whatsoever to
file an appeal  against or otherwise to challenge  any award by the  arbitrators
hereunder;  provided,  that the  foregoing  shall not limit the rights of either
party to bring a proceeding in any applicable  jurisdiction to confirm,  enforce
or enter  judgment  upon such award (and the rights of the other party,  if such
proceeding  is brought to contest  such  confirmation,  enforcement  or entry of
judgment, but only to the extent permitted by the Federal Arbitration Act).

                  (c) No Waiver;  Preservation of Remedies. No provision of, nor
the  exercise of any rights  under this  Agreement  shall limit the right of any
party to apply for injunctive relief or similar equitable relief with respect to
the  enforcement  of this  Agreement  or any  agreement  executed in  connection
herewith or  contemplated  hereby,  and any such  action  shall not be deemed an
election of  remedies.  Such rights can be  exercised  at any time except to the
extent such  action is contrary to a final award or decision in any  arbitration
proceeding.  The institution and maintenance of an action for injunctive  relief
or similar  equitable  relief shall not  constitute a waiver of the right of any
party,  including  without  limitation the  plaintiff,  to submit any Dispute to
arbitration nor render  inapplicable  the compulsory  arbitration  provisions of
this Agreement.

                  (d)  Arbitration  Proceeding.  In  addition  to the  authority
conferred  on  the  arbitration  tribunal  by the  rules  specified  above,  the
arbitration  tribunal  shall have the authority to order  reasonable  discovery,
including the  deposition of party  witnesses and  production of documents.  The
arbitral  award  shall be in writing,  state the  reasons for the award,  and be
final and  binding  on the  parties.  All  statutes  of  limitations  that would
otherwise be applicable shall apply to

                                       73

<PAGE>

any  arbitration  proceeding.   Any
attorney-client   privilege   and  other   protection   against   disclosure  of
confidential  information,  including without limitation any protection afforded
the  work-product of any attorney,  that could otherwise be claimed by any party
shall be  available  to and may be claimed by any such party in any  arbitration
proceeding.   No  party  waives  any  attorney-client  privilege  or  any  other
protection against disclosure of confidential  information by reason of anything
contained in or done  pursuant to or in  connection  with this  Agreement.  Each
party  agrees  to  keep  all  Disputes  and  arbitration   proceedings  strictly
confidential,  except for  disclosures  of  information  to the  parties'  legal
counsel or auditors or those required by applicable law. The  arbitrators  shall
determine  the  matters in dispute in  accordance  with the  substantive  law of
Texas, without regard to conflict of law rules.

                  (e)  Appointment  of  Arbitrators.  The  arbitration  shall be
conducted  by three (3)  arbitrators.  The  party  initiating  arbitration  (the
"Claimant")  shall appoint its  arbitrator in its request for  arbitration  (the
"Request").  The other party (the  "Respondent")  shall  appoint its  arbitrator
within  thirty  (30) days after  receipt  of the  Request  and shall  notify the
Claimant of such  appointment in writing.  If the Respondent fails to appoint an
arbitrator  within  such thirty (30) day  period,  the  arbitrator  named in the
Request shall decide the controversy or claim as sole arbitrator. Otherwise, the
two (2)  arbitrators  appointed  by the  parties  shall  appoint  a third  (3rd)
arbitrator within thirty (30) days after the Respondent has notified Claimant of
the appointment of the Respondent's arbitrator.  When the third (3rd) arbitrator
has accepted the  appointment,  the two (2)  party-appointed  arbitrators  shall
promptly  notify the  parties  of the  appointment.  If the two (2)  arbitrators
appointed  by the  parties  fail to appoint a third  (3rd)  arbitrator  or so to
notify the parties within the time period prescribed above, then the appointment
of the  third  (3rd)  arbitrator  shall  be  made  by the  American  Arbitration
Association,  which shall promptly  notify the parties of the  appointment.  The
third (3rd) arbitrator shall act as Chair of the panel.

                  (f) Other Matters.  This arbitration provision constitutes the
entire  agreement  of the  parties  with  respect  to  its  subject  matter  and
supersedes  all  prior   discussions,   arrangements,   negotiations  and  other
communications on dispute resolution.  This arbitration  provision shall survive
any termination,  amendment,  renewal, extension or expiration of this Agreement
or any agreement executed in connection  herewith or contemplated  hereby unless
the parties  otherwise  expressly agree in writing.  The obligation to arbitrate
any  dispute  shall be binding  upon the  successors  and assigns of each of the
parties.

         Section  11.7.  Counterparts. This  Agreement may be executed in two or
more  counterparts,  each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.

         Section 11.8. Entire Agreement.  This Agreement  constitutes the entire
agreement  among the  parties  with  respect to the  subject  matter  hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof.

<PAGE>

         Section 11.9. Parties in Interest. This Agreement shall be binding upon
and inure  solely to the  benefit  of each  party  hereto,  and  nothing in this
Agreement,  express or implied,  is intended to confer upon any other person any
rights  or  remedies  of any  nature  whatsoever  under  or by  reason  of  this
Agreement;   provided,   however,   that  the  parties  hereto  agree  that  the
Shareholders  (including,  without  limitation,  APS) are  intended  third-party
beneficiaries under this Agreement and,  accordingly,  Shareholders  holding, in
the  aggregate,  greater  than  twenty  five  percent  (25%)  of the  previously
distributed portion of the Merger Consideration shall be entitled to enforce the
rights conferred upon the Shareholders under this Agreement.

         Section 11.10.  Enforcement of the Agreement.  The parties hereto agree
that  irreparable  damage would occur in the event that any of the provisions of
this  Agreement  were not performed in accordance  with their  specific terms or
were  otherwise  breached.  It is  accordingly  agreed that the parties shall be
entitled to an injunction or injunctions  to prevent  breaches of this Agreement
and to enforce specifically the terms and provisions hereof.

         Section  11.11.  Validity.  The invalidity or  unenforceability  of any
provision of this Agreement shall not affect the validity or  enforceability  of
any other  provisions  of this  Agreement,  which shall remain in full force and
effect.

                                              [Signature Page Follows]

                                       75

<PAGE>

         IN WITNESS WHEREOF,  Parent,  Merger Sub, and the Company have executed
and delivered this Agreement effective as of the date first written above.

                                     FEMPARTNERS, INC.

                                    By: /s/ William C. Altman
                                        -----------------------------------
                                    William C. Altman, Executive Vice President

                                    FEMPARTNERS OF CENTRAL TEXAS, INC.

                                    By: /s/ William C. Altman
                                        -----------------------------------
                                    William C. Altman, Executive Vice President

                                    SYNTERA HEALTHCARE CORPORATION

                                    By:      /s/ John A. Hedrick
                                            -------------------------
                                    Name:    John A. Hedrick
                                            -------------------------
                                    Title:   Senior Vice President
                                            -------------------------

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<PAGE>

                                    EXHIBIT A

                                    Glossary

         For  purposes of this  Agreement,  the  following  terms shall have the
meaning  specified or referred to below when capitalized (or if not capitalized,
unless the context clearly requires otherwise) when used in this Agreement.

         "Business  Facility"  includes any property  (whether real or personal)
which  Parent,  the  Company  or any of  their  Subsidiaries  currently  leases,
operates,  or owns or manages in any manner or which the Company or any of their
Subsidiaries or any of their  respective  organizational  predecessors  formerly
leased, operated, owned or managed in any manner.

         "Company Intellectual Property" includes all fictitious business names,
trade names, brand names, registered and unregistered trademarks,  service marks
and applications,  all patents and patent  applications,  all copyrights in both
published works and unpublished works, and all inventions,  processes, formulas,
patterns, designs, know-how, trade secrets, confidential information,  software,
technical  information,  process  technology,  plans,  drawings  and blue prints
owned,  used or  licensed  by the  Company or its  Subsidiaries  as  licensee or
licensor.

         "Environmental  Claim"  means any claim;  litigation;  demand;  action;
cause of action;  suit; loss; cost,  including,  but not limited to,  attorneys'
fees,  diminution in value, and expert's fees;  damage;  punitive damage;  fine,
penalty, expense,  liability,  criminal liability,  strict liability,  judgment,
governmental  or private  investigation  and testing;  notification of status of
being  potentially  responsible  for  clean-up  of any  facility or for being in
violation or in potential  violation of any  Requirement of  Environmental  Law;
proceeding;  consent or  administrative  orders,  agreements  or decrees;  lien;
personal injury or death of any person; or property damage,  whether threatened,
sought,  brought or imposed, that is related to or that seeks to recover losses,
damages,  costs,  expenses  and/or  liabilities  related  to, or seeks to impose
liability  for: (i)  improper  use or treatment of wetlands,  pinelands or other
protected land or wildlife;  (ii) noise; (iii) radioactive  materials (including
naturally  occurring  radioactive  materials  ["NORM"];  (iv)  explosives;   (v)
pollution, contamination, preservation, protection, decontamination, remediation
or clean-up of the air,  surface water,  groundwater,  soil or protected  lands;
(vi) solid, gaseous or liquid waste generation,  handling,  discharge,  release,
threatened  release,  treatment,  storage,  disposal  or  transportation;  (vii)
exposure of persons or property to  Materials of  Environmental  Concern and the
effects  thereof;  (viii) the release or threatened  release (into the indoor or
outdoor   environment),    generation,    extraction,   mining,   beneficiating,
manufacture,  processing,  distribution in commerce, use, application, transfer,
transportation,  treatment,  storage,  disposal or  Remediation  of Materials of
Environmental  Concern;  (ix)  injury  to,  death of or threat to the  health or
safety of any person or persons  caused  directly or  indirectly by Materials of
Environmental   Concern;  (x)  destruction  caused  directly  or  indirectly  by
Materials of Environmental  Concern or the release or threatened  release of any
Materials of Environmental  Concern or any property  (whether real or personal);
(xi) the  implementation  of spill prevention  and/or disaster plans relating to
Material of  Environmental  Concern;  (xiii) community  right-to-know  and other
disclosure laws; or (xiii) maintaining, disclosing or reporting information to

                                        1

<PAGE>

Governmental  Authorities of any other third person under any Environmental Law.
The term, "Environmental Claim," also includes,  without limitation, any losses,
damages, costs, expenses and/or liabilities incurred in testing.

         "Environmental  Law" means any  federal,  state,  local or foreign law,
statute,  ordinance,  rule, regulation,  code, license,  permit,  authorization,
approval,  consent, legal doctrine, guidance document, order, consent agreement,
order or consent judgment, decree, injunction, requirement or agreement with any
governmental  entity or any judicial or administrative  decision relating to (x)
the  protection,  preservation  or  restoration of the  environment  (including,
without limitation,  air, water,  vapor,  surface water,  groundwater,  drinking
water supply,  surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety, (y) the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing, handling,
labeling,   application,   production,  release  or  disposal  of  Materials  of
Environmental Concern, in each case as amended from time to time, or (z) health,
worker  protection or community's  right to know. The term  "Environmental  Law"
includes,  without  limitation,  (i)  the  Federal  Comprehensive  Environmental
Response  Compensation  and Liability Act of 1980, the Superfund  Amendments and
Reauthorization  Act,  the Federal  Water  Pollution  Control  Act of 1972,  the
Federal  Clean Air Act,  the  Federal  Clean  Water Act,  the  Federal  Resource
Conservation  and Recovery Act of 1976  (including the hazardous and Solid Waste
Amendments thereto),  the Federal Solid Waste Disposal Act and the Federal Toxic
Substances Control Act, the Federal Insecticide,  Fungicide and Rodenticide Act,
and the Federal Occupational Safety and Health Act of 1970, each as amended from
time to time, and (ii) any common law or equitable doctrine (including,  without
limitation,  injunctive relief and tort doctrines such as negligence,  nuisance,
trespass and strict  liability)  that may impose  liability or  obligations  for
injuries  or damages  due to, or  threatened  as a result of, the  presence  of,
effects of or exposure to any Materials of Environmental Concern.

         "Entity" means any corporation (including any non-profit  corporation),
general  partnership,   limited  partnership,   joint  venture,  estate,  trust,
cooperative,  union,  committee,  company  or  other  enterprise,   association,
organization or entity of any nature, other than a Governmental Authority.

         "Environmental  Permits"  means all  permits,  licenses,  certificates,
registrations,   identification  numbers,  applications,   consents,  approvals,
variances,  notices of intent, and exemptions  necessary for the ownership,  use
and/or  operation of any current  Business  Facility or to conduct the Company's
business as currently conducted in compliance with Requirements of Environmental
Laws.

         "GAAP" means  generally  accepted  accounting  principals  applied on a
consistent basis.

         "Governmental  Authority" means any foreign governmental authority, the
United States of America,  any State of the United States,  any local  authority
and  any  political  subdivision  of any of the  foregoing,  any  multi-national
organization or body, any agency, department,  commission,  board, bureau, court
or  other  authority  thereof,  or  any   quasi-governmental   or  private  body
exercising,  or purporting to exercise,  any executive,  legislative,  judicial,
administrative, police, regulatory or taxing authority or power of any nature.

                                        2

<PAGE>

         "Investor  Rights  Agreement" means the Agreement dated effective as of
October 31, 1997 between Parent and all the outstanding  shareholders of Parent,
as amended from time to time.

         "Material Adverse Effect" means any event, occurrence, fact, condition,
change,  development or effect that is or could  reasonably be anticipated to be
materially  adverse  to the  business,  assets  (including  intangible  assets),
liabilities,  financial condition, results of operations,  properties (including
intangible properties) or business prospects of the Company or Parent and all of
their Subsidiaries taken as a whole.

         "Materials  of  Environmental  Concern"  means:  (i)  those  substances
included  within the  statutory  and/or  regulatory  definitions  or listings of
"hazardous   substance,"   "solid  waste,"  "medical  waste,"  "special  waste,"
"hazardous  waste,"  "extremely  hazardous  substance,"  "regulated  substance,"
"hazardous  materials," or "toxic substances," under any Environmental Law; (ii)
any material,  waste or substance which is or contains: (A) petroleum,  oil or a
fraction  thereof,  (B)  explosives,  or (C)  radioactive  materials  (including
naturally  occurring  radioactive  materials);  and (iii) such other substances,
materials,  or wastes that are or become classified or regulated as hazardous or
toxic under any applicable  federal,  state or local law or  regulation.  To the
extent  that  the  laws  or  regulations  of  any  applicable   state  or  local
jurisdiction  establish a meaning for any term defined herein through  reference
to  federal  Environmental  Laws which is broader  than the  meaning  under such
federal Environmental Laws, such broader meaning shall apply.

         "Person" means any individual, Entity or Governmental Authority.

         "Remediation" means any action necessary to: (i) comply with and ensure
compliance with the  Requirements of  Environmental  Laws and (ii) the taking of
all  reasonably  necessary  precautions  to protect  against  and/or respond to,
remove or remediate or monitor the release or threatened release of Materials of
Environmental  Concern at, on, in, about,  under,  within or near the air, soil,
surface water, groundwater or soil vapor at any Business Facility of the Company
or  any  of  its  Subsidiaries  or of any  property  affected  by  the  business
operations, acts, omissions or Materials of Environmental Concern of the Company
or any of its Subsidiaries.

         "Requirement(s)   of  Environmental   Law(s)"means  all   requirements,
conditions,  restrictions or stipulations of Environmental  Laws imposed upon or
related  to the  Company  or any of its  Subsidiaries  or the  assets,  Business
Facilities and/or the business of the Company or any of its Subsidiaries.

         "Subsidiary"  shall mean,  when used with  reference to an entity,  any
other entity of which  securities or other ownership  interests  having ordinary
voting  power to elect a majority  of the board of  directors  or other  persons
performing similar functions, or a majority of the outstanding voting securities
of which, are owned directly or indirectly by such entity.

         "Taxes" shall mean any and all taxes,  charges,  fees,  levies or other
assessments, including, without limitation, income, gross receipts, excise, real
or personal property,  sales,  withholding,  social security,  occupation,  use,
severance, environmental, license, net worth, payroll, employment, franchise,

                                        3

<PAGE>

transfer and recording taxes, fees and charges,  imposed by the IRS or any other
taxing authority (whether domestic or foreign including, without limitation, any
state,  county,  local or foreign government or any subdivision or taxing agency
thereof (including a United States possession)), whether computed on a separate,
consolidated,  unitary, combined or any other basis; and such term shall include
any interest whether paid or received,  fines,  penalties or additional  amounts
attributable  to, or imposed upon, or with respect to, any such taxes,  charges,
fees, levies or other assessments.

         "Tax Return" shall mean any report,  return,  document,  declaration or
other  information or filing required to be supplied to any taxing  authority or
jurisdiction  (foreign or domestic)  with respect to Taxes,  including,  without
limitation,   information   returns  and   documents  (i)  with  respect  to  or
accompanying payments of estimated Taxes or (ii) with respect to or accompanying
requests for the  extension  of time in which to file any such  report,  return,
document, declaration or other information, including any schedule or attachment
thereto and any amendment thereof.

                                        4

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