Document:

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                                                                    EXHIBIT 10.9

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                         SECURITIES PURCHASE AGREEMENT

                                     among

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

                   WELSH, CARSON, ANDERSON & STOWE VII, L.P.

                       HEALTH CARE CAPITAL PARTNERS, L.P.

                                      and

              THE SEVERAL OTHER PURCHASERS NAMED IN ANNEX I HERETO

                          Dated as of October 26, 1998

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                                TABLE OF CONTENTS

                                                                        PAGE
I.   PURCHASE AND SALE OF SECURITIES

     SECTION 1.01  Issuance, Sale and Delivery of Securities
                   on the Initial Closing Date...................          2
     SECTION 1.02  Initial Closing Date..........................          2
     SECTION 1.03  The Company's Right to Request Purchases of
                   Additional Securities.........................          2
     SECTION 1.04  Issuance, Sale and Delivery of Additional
                   Securities on Subsequent Closing Dates........          4
     SECTION 1.05  Subsequent Closing Dates......................          5

II.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     SECTION 2.01  Organization, Qualifications and
                   Corporate Power...............................          5
     SECTION 2.02  Authorization of Agreements, Etc..............          6
     SECTION 2.03  Validity......................................          6
     SECTION 2.04  Authorized Capital Stock......................          7
     SECTION 2.05  Governmental Approvals .......................          7
     SECTION 2.06  Financial Statements .........................          7
     SECTION 2.07  Events Subsequent to Date of
                   Financial Statements..........................          8
     SECTION 2.08  Actions Pending...............................          8
     SECTION 2.09  Trade Secrets.................................          9
     SECTION 2.10  Taxes.........................................          9
     SECTION 2.11  Other Agreements..............................          9
     SECTION 2.12  Title to Properties...........................          9
     SECTION 2.13  Compliance with Laws, Etc.....................          9
     SECTION 2.14  Affiliated Transactions.......................          9
     SECTION 2.15  Brokers' or Finders' Fees.....................         10
     SECTION 2.16  Disclosure....................................         10

III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

     SECTION 3.01  Authorization.................................         10
     SECTION 3.02  Validity......................................         10
     SECTION 3.03  Investment Representations....................         11
     SECTION 3.04  Governmental Approvals........................         12
     SECTION 3.05  Brokers' or Finders' Fees.....................         12

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                                                                        PAGE

IV.  CONDITIONS PRECEDENT

     SECTION 4.01  Conditions Precedent to the Obligations
                   of the Purchasers.............................         12
     SECTION 4.02  Conditions Precedent to the Obligations
                   of the Company................................         14
     SECTION 4.03  Conditions Precedent to the Obligations
                   of the Purchasers with Respect to each
                   Subsequent Closing............................         15
     SECTION 4.04  Conditions Precedent to the Obligations of
                   the Company with Respect to each Subsequent
                   Closing.......................................         16

V.   COVENANTS

     SECTION 5.01  Financial Statements, Reports, Etc............         17
     SECTION 5.02  Rights of Inspection..........................         18
     SECTION 5.03  Notice of Certain Events......................         18
     SECTION 5.04  Use of Proceeds...............................         19
     SECTION 5.05  Consents and Approvals........................         19
     SECTION 5.06  Compliance with Laws..........................         19
     SECTION 5.07  Preemptive Rights.............................         19
     SECTION 5.08  Management Fee................................         20

VI.  MISCELLANEOUS

     SECTION 6.01  Expenses, Etc.................................         20
     SECTION 6.02  Survival of Agreements........................         21
     SECTION 6.03  Parties in Interest...........................         21
     SECTION 6.04  Notices.......................................         21
     SECTION 6.05  Waiver of Prior Preemptive Rights.............         22
     SECTION 6.06  Entire Agreement; Modifications...............         22
     SECTION 6.07  Assignment....................................         22
     SECTION 6.08  Counterparts..................................         22
     SECTION 6.09  Governing Law.................................         22

TESTIMONIUM

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                    INDEX TO EXHIBITS, ANNEXES AND SCHEDULES

EXHIBIT       DESCRIPTION

   A          Form of Senior Subordinated Note
   B          Form of Promissory Note
   C          Form of Amendment No.3 to the Amended and
              Restated Registration Rights Agreement
   D          Form of Amendment No.3 to the Amended and
              Restated Stockholders Agreement
   E          Form of Certificate of Amendment to the
              Certificate of Incorporation

ANNEX         DESCRIPTION

  I           Purchasers
 II           Initial Shares Purchased
III           Additional Securities to be Purchased
 IV           Subsequent Closing Representations

SCHEDULE      DESCRIPTION

  2.01(b)     Company Ownership of Stock or Other
              Interests
  2.04(a)     Ownership of Capital Stock of Company
  2.04(b)     Rights, Warrants, Options, Etc.
  2.05        Government Approvals
  2.06        Financial Statements
  2.07        Events Subsequent to Date of Financial
              Statements
  2.08        Actions Pending
  2.12        Title to Properties
  2.14        Affiliated Transactions
  2.15        Brokers' or Finders' Fee
  3.03(d)     Certain Purchasers
  3.05        Brokers' or Finders' Fee

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      SECURITIES PURCHASE AGREEMENT, dated as of October 26, 1998, among UNITED
SURGICAL PARTNERS INTERNATIONAL, INC., a Delaware corporation (the "Company"),
WELSH, CARSON, ANDERSON & STOWE VII, L.P., a Delaware limited partnership ("WCAS
VII"), HEALTH CARE CAPITAL PARTNERS, L.P., a Delaware limited partnership,
HEALTH CARE EXECUTIVE PARTNERS, L.P., a Delaware limited partnership (together
with Health Care Capital Partners, L.P., "HC Partners") and the several other
purchasers named in Annex I hereto (such purchasers, WCAS VII and HC Partners
being hereinafter at times referred to individually as a "Purchaser" and
collectively as the "Purchasers").

      WHEREAS, the Company is engaged in the business of owning and operating
hospitals and/or surgical centers and acquiring additional hospitals and/or
surgical centers and other businesses related thereto (collectively, the
"Business");

      WHEREAS, on the Initial Closing Date (as hereinafter defined), the Company
wishes to issue, sell and deliver (i) to WCAS VII, HC Partners and the several
other Purchasers listed on Annex I hereto under the heading "WCAS/HC Purchasers"
(WCAS VII and such listed Purchasers, other than HC Partners, Tucker Taylor,
Alyce Craddock, Greg Koonsman and Jon O'Sullivan being hereinafter collectively
called the "WCAS Purchasers", and the WCAS Purchasers, HC Partners, Tucker
Taylor, Alyce Craddock, Greg Koonsman and Jon O'Sullivan being hereinafter
collectively called the "WCAS/HC Purchasers") an aggregate 6,334,243 shares of
Class A Common Stock, $.01 par value ("Class A Common Stock") and (ii) to the
Purchasers listed on Annex I hereto under the heading "Management Purchasers"
(such listed Purchasers being hereinafter collectively called the "Management
Purchasers") an aggregate 392,638 shares of Class A Common Stock (said shares of
Class A Common Stock, together with the shares of Class A Common Stock referred
to in clause (i), being hereinafter collectively called the "Initial Shares");

      WHEREAS, the Purchasers, severally and not jointly, wish to purchase the
Initial Shares, all on the terms and subject to the conditions hereinafter set
forth;

      WHEREAS, from time to time during the five-year period after the Initial
Closing Date, subject to the terms and conditions hereinafter set forth, (i) the
WCAS/HC Purchasers may wish to purchase up to an aggregate 2,288,613 shares (the
"Additional WCAS/HC Class A Common Shares") of Class A Common Stock and, only
after the issuance, sale and delivery of the Additional WCAS/HC Class A Common
Shares and the Additional Management Class A Common Shares (as hereinafter
defined), up to an aggregate principal amount of $20, 120,000 of the Company's
7% Senior Subordinated Notes substantially in the form attached hereto as
Exhibit A (such notes being hereinafter at times referred to individually as a
"Senior Subordinated Note" and collectively as "Senior Subordinated Notes") and
(ii) the Management Purchasers may wish to purchase up to an aggregate 141,862
shares (the "Additional Management Class A Common Shares") of Class A Common
Stock (such Additional Management Class A Common Shares and the Additional
WCAS/HC Class A Common Shares being hereinafter collectively called the
"Additional Shares"), all in order to finance the expansion of the Business
through additional

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acquisitions or for certain operating expenses approved by the Board of
Directors of the Company;

      WHEREAS, the Company wishes to issue, sell and deliver said Additional
Shares and Senior Subordinated Notes (collectively, the "Additional
Securities"), all on the terms and subject to the conditions hereinafter set
forth;

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

                                    ARTICLE I

                         PURCHASE AND SALE OF SECURITIES

      SECTION 1.01 ISSUANCE SALE AND DELIVERY OF SECURITIES ON THE INITIAL
CLOSING. (a) Subject to the terms and conditions set forth herein, on the
Initial Closing Date, the Company shall issue, sell and deliver to each
Purchaser, and each Purchaser shall purchase from the Company the number of
shares of Class A Common Stock set forth opposite the name of such Purchaser on
Annex II hereto under the heading "Number of Initial Class A Common Shares" at a
purchase price of $3.50 per share. On the Initial Closing Date, the Company
shall issue a certificate or certificates in definitive form, registered in the
name of each Purchaser, evidencing the securities being purchased by each such
Purchaser hereunder.

      (b) As payment in full for the shares of Class A Common Stock being
purchased by each Purchaser hereunder on the Initial Closing Date, and against
delivery thereof as aforesaid, on the Initial Closing Date, each Purchaser shall
(i) pay to the Company, by wire transfer of immediately available funds to an
account or accounts designated by the Company, the amount set forth opposite the
name of such Purchaser on Annex II hereto under the heading "Cash Purchase
Price" and (ii) deliver to the Company a Promissory Note, substantially in the
form attached hereto as Exhibit B (each, a "Promissory Note"), in the principal
amount set forth opposite the name of such Purchaser on Annex II hereto under
the heading "Promissory Note Principal Amount."

      SECTION 1.02 INITIAL CLOSING DATE. The closing of the sale and purchase of
the Initial Shares shall take place at the offices of Nossaman, Guthner, Knox &
Elliott, LLP, 445 South Figueroa Street, Los Angeles California, at 10 a.m., Los
Angeles time, on October 26, 1998, or at such other date and time as may be
mutually agreed upon among the Purchasers and the Company (such closing being
herein called the "Initial Closing" and such date and time being herein called
the "Initial Closing Date").

      SECTION 1.03 THE COMPANY'S RIGHT TO REQUEST PURCHASES OF ADDITIONAL
SECURITIES. (a) In addition to the Initial Shares to be issued and sold to the
Purchasers on the

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Initial Closing Date, the Additional WCAS/HC Class A Common Shares shall be
reserved for issuance to the WCAS/HC Purchasers and the Additional Management
Class A Common Shares shall be reserved for issuance to the Management
Purchasers (together with the WCAS/HC Purchasers being hereinafter collectively
called the "Additional Purchasers"), all pursuant to this Section 1.03.

      (b) The maximum number of Additional Shares that may be purchased by each
Additional Purchaser on a Subsequent Closing Date (as hereinafter defined) is
set forth opposite the name of such Additional Purchaser on Annex III hereto
under the heading "Maximum Number of Additional Class A Common Shares" and the
maximum principal amount of Senior Subordinated Notes that may be purchased by
each Additional Purchaser (if applicable) on a Subsequent Closing Date is set
forth opposite the name of such Additional Purchaser on Annex III hereto under
the heading "Maximum Note Principal Amount." The issuance, sale and delivery of
the Additional WCAS/HC Class A Common Shares to the WCAS/HC Purchasers and the
Additional Management Class A Common Shares to the Management Purchasers on any
Subsequent Closing Date shall be PRO RATA among the WCAS/HC Purchasers and the
Management Purchasers in proportion to the number of shares of Class A Common
Stock purchased by such Purchaser on the Initial Closing Date. After all of such
Additional Shares have been issued, sold and delivered (it being understood and
agreed that the Company shall first issue, sell and deliver all the available
Additional Shares prior to the issuance, sale or delivery of any Senior
Subordinated Notes), the issuance, sale and delivery of the Senior Subordinated
Notes on any Subsequent Closing Date shall be PRO RATA among the WCAS/HC
Purchasers in proportion to the number of shares of Class A Common Stock
purchased by such WCAS/HC Purchaser on the Initial Closing Date. The aggregate
number of Additional Securities available for purchase by each Additional
Purchaser on a Subsequent Closing Date shall be reduced by the aggregate number
of Additional Shares or aggregate principal amount of Senior Subordinated Notes,
as the case may be, purchased by such Additional Purchaser on previous
Subsequent Closing Dates.

      (c) On the date (the "Termination Date") that is the earlier to occur of
(i) the fifth anniversary of the Initial Closing Date, (ii) such time as the
Company shall have consummated an initial public offering (an "IPO") of its
common stock registered under the Securities Act of 1933, as amended (the
"Securities Act"), and (iii) a Change of Control, the number, if any, of
Additional Securities available for purchase hereunder, after taking into
account all reductions thereof, shall no longer be subject to any of the
provisions of this Section 1.03.

      As used in this Section 1.03(c), the term "Change of Control" shall mean
(i) a consolidation or merger of the Company with or into any other corporation
(other than a merger which will not result in more than 50% of the voting
capital stock of the Company outstanding being owned of record or beneficially
by persons other than the holders of such capital stock immediately prior to
such merger in the same proportions in which such shares were held immediately
prior to such merger), (ii) a sale of all or substantially all of the properties
and assets of the Company as an entirety in a single transaction or in a series
or related transactions to any other person, or (iii) the acquisition of
"beneficial ownership" by any "person" or "group" (other

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than the WCAS Purchasers) of voting capital stock of the Company representing
more than 50% of the voting power of all outstanding shares of such voting
stock, whether by way of merger or consolidation or otherwise. In addition, (i)
the terms "person" and "group" shall have the meanings set forth in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not applicable, (ii) the term "beneficial owner" shall have
the meaning set forth in Rules 13d-3 and 13d-5 under the Exchange Act, whether
or not applicable, except that a person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time or upon
the occurrence of certain events, and (iii) any "person" or "group" will be
deemed to beneficially own any voting stock of the Company so long as such
person or group beneficially owns, directly or indirectly, in the aggregate a
majority of the voting stock of a registered holder of the voting stock of the
Company.

      (d) At any time prior to the Termination Date, in the event that the
Company desires to finance (x) capital expenditures approved by the Board of
Directors for the expansion of the Business through additional acquisitions or
(y) operating expenses approved by the Board of Directors of the Company, the
Company may, on one or more occasions, notify the WCAS/HC Purchasers and the
Management Purchasers that it wishes to issue and sell all or any portion of the
Additional Securities in accordance with paragraph (b) above. Such notice (a
"Notice of Financing Event") shall be in writing and shall specify (i) the
applicable capital expenditure or operating expense (including a brief
description thereto), (ii) the aggregate number of Additional Shares or
aggregate principal amount of Senior Subordinated Notes, as the case may be
(collectively, the "Call Securities") that the Company proposes to issue to the
WCAS/HC Purchasers and, if applicable, to the Management Purchasers, (iii) that
the Notice of Financing Event has been authorized by the Board of Directors of
the Company, (iv) that the anticipated net proceeds from the sale of the Call
Securities will not be greater than is reasonably necessary for the applicable
capital expenditure or operating expense and (v) the Subsequent Closing Date for
the issuance and sale of the Call Securities; PROVIDED that no Subsequent
Closing Date shall be scheduled to occur less than 12 business days or more than
45 days after the date of the Notice of Financing Event.

      (e) Within five business days after receipt of a Notice of Financing Event
pursuant to paragraph (d) above, WCAS VII (on behalf of the Additional
Purchasers) shall deliver a notice to the Company (a "Call Notice") that shall
state the number of Call Securities allocated to each Additional Purchaser and
confirm the Subsequent Closing Date specified in the Notice of Financing Event.
Upon receipt of a Call Notice, the Company shall be required to sell such Call
Securities to the Additional Purchasers in accordance with Section 1.04 below.

      (f) It is understood and agreed that the Additional Purchasers, as
determined by WCAS VII in its sole discretion, shall be entitled to deliver a
Call Notice to the Company to purchase any Additional Shares not previously
purchased by the Additional Purchasers pursuant to this Section 1.03 at any time
prior to the Termination Date, whether or not the Company shall have delivered a
Notice of Financing Event.

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      SECTION 1.04 ISSUANCE. SALE AND DELIVERY OF ADDITIONAL SECURITIES ON
SUBSEQUENT CLOSING DATES. (a) In the event that the Additional Purchasers shall
have delivered a Call Notice to the Company as specified in Section 1.03, then,
subject to the other terms and conditions of this Agreement, on the Subsequent
Closing Date specified in such Call Notice, the Company shall issue, sell and
deliver (i) to each WCAS/HC Purchaser, and each WCAS/HC Purchaser shall purchase
from the Company, (x) a Senior Subordinated Note with the principal amount
specified in the Call Notice (the "Note Principal Amount") and/or (y) the number
of Additional WCAS/HC Class A Common Shares specified in the Call Notice at a
purchase price equal to $3.50 per share and (ii) to each Management Purchaser,
and each Management Purchaser shall purchase from the Company, the number of
Additional Management Class A Common Shares specified in the Call Notice at a
purchase price equal to $3.50 per share. On each Subsequent Closing Date, the
Company shall (x) issue to each Additional Purchaser stock certificates in
definitive form, registered in the name of such Additional Purchaser evidencing
the Additional Shares and (y) deliver to such Additional Purchaser such
Additional Purchaser's Senior Subordinated Note, if applicable.

      (b) As payment in full for the Additional Securities being purchased by it
hereunder, and against delivery of the certificate or certificates therefore as
aforesaid, each Additional Purchaser shall transfer by wire transfer to the
account or accounts designated by the Company on each Subsequent Closing Date an
amount equal to (x) $3.50 multiplied by the number of Additional Shares set
forth in the relevant Call Notice and/or (y) the Note Principal Amount.

      SECTION 1.05 SUBSEQUENT CLOSING DATES. Each closing of a sale and purchase
of Additional Securities shall take place at the offices of the Company, 17103
Preston Road, Suite 190 North, Dallas, Texas, at 10 a.m., Dallas time, on such
date, (which shall not be a day on which banking institutions in the State of
Texas or New York are required or authorized to close) as shall be specified in
any Call Notice (each such closing being herein called a "Subsequent Closing"
and each such date and time being herein called a "Subsequent Closing Date").

                                       II

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

      The Company represents and warrants to the Purchasers as follows:

      SECTION 2.01 ORGANIZATION. QUALIFICATIONS AND CORPORATE POWER. (a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and is duly licensed or
qualified in each jurisdiction in which the nature of its business or the
ownership of its properties makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
material adverse effect on its ability to carry on its business. The Company has
the corporate power and authority to own

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and hold its properties, to carry on its business as currently conducted and to
execute and deliver this Agreement, the Senior Subordinated Notes, Amendment
No.3 to the Amended and Restated Registration Rights Agreement dated as of the
date hereof substantially in the form attached hereto as Exhibit C (the
"Registration Rights Agreement Amendment") among the Company and the several
other parties named therein and Amendment No.3 to the Amended and Restated
Stockholders Agreement dated as of the date hereof substantially in the form
attached hereto as Exhibit D (the "Stockholders Agreement Amendment") among the
Company and the several other parties named therein, to perform its obligations
under this Agreement, the Senior Subordinated Notes, the Stockholders Agreement
Amendment and the Registration Rights Agreement Amendment, and to issue, sell
and deliver the Initial Shares and the Additional Securities (collectively, the
"Securities").

      (b) Except as set forth on Schedule 2.01(b) hereto, the Company does not
own of record or beneficially, directly or indirectly, (i) any shares of capital
stock or securities convertible into capital stock of any other corporation or
(ii) any participating interest in any partnership, joint venture or other
non-corporate business enterprise.

      SECTION 2.02 AUTHORIZATION OF AGREEMENTS. ETC.

      (a) Each of the execution and delivery by the Company of this Agreement,
the Senior Subordinated Notes, the Stockholders Agreement Amendment and the
Registration Rights Agreement Amendment, the performance by the Company of its
obligations hereunder and thereunder, and the issuance, sale and delivery by the
Company of the Securities have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Certificate of Incorporation or By-laws of the
Company, or any provision of any indenture, agreement or other instrument to
which the Company or any of the properties or assets of the Company is bound, or
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or other instrument,
or result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the properties or assets of the Company or of
any corporation, partnership, joint venture or other entity in which the Company
owns, of record or beneficially, 50% or more of the voting interests of the same
(such an entity being hereinafter referred to individually as a "Subsidiary" and
collectively as "Subsidiaries").

      (b) The Initial Shares and Additional Shares have been duly authorized by
the Company and, when sold and paid for in accordance with this Agreement, will
be validly issued, fully paid and non-assessable shares of Class A Common Stock.
The issuance, sale and delivery of the Initial Shares and Additional Shares to
the Purchasers hereunder is not subject to any preemptive rights of stockholders
of the Company or to any right of first refusal or other similar right in favor
of any person.

      SECTION 2.03 VALIDITY. This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company,

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enforceable against the Company in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws from time to time in effect affecting the
enforcement of creditors' rights generally and to general equity principles. The
Senior Subordinated Notes, the Stockholders Agreement Amendment and the
Registration Rights Agreement Amendment, when executed and delivered by the
Company as provided in this Agreement, and when executed and delivered by the
other parties hereto (if applicable), will constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws from time to time in
effect affecting the enforcement of creditors' rights generally and to general
equity principles.

      SECTION 2.04 AUTHORIZED CAPITAL STOCK.

      (a) The authorized capital stock of the Company consists of (i) 40,000,000
shares of Common Stock, $.01 par value, (ii) 30,000,000 shares of Class A Common
Stock, (iii) 31,200 shares of Series A Redeemable Preferred Stock and (iv) 2,716
shares of Series B Convertible Preferred Stock, $.01 par value. All of the
issued and outstanding shares of capital stock of the Company are owned of
record as set forth on Schedule 2.04(a) hereto.

      (b) Except as contemplated by this Agreement, the Amended and Restated
Stockholders Agreement dated as of April 30, 1998 among the Company and the
several other parties named therein, as amended, the Company's Certificate of
incorporation or as set forth on Schedule 2.04(b) hereto, (i) no subscription,
warrant, option, convertible security or other right (contingent or other) to
purchase or acquire any shares of any class of capital stock of the Company is
authorized or outstanding, (ii) there is no binding commitment of the Company to
issue any shares, warrants, options or other such rights or to distribute to
holders of any class of the Company's capital stock, any evidences of
indebtedness or assets, and (iii) the Company has no obligations (contingent or
other) to purchase, redeem or otherwise acquire any shares of its capital stock
or any interest therein or to pay any dividend or make any other distribution in
respect thereof.

      SECTION 2.05 GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Article III
hereof, except as set forth on Schedule 2.05 hereto, no registration or filing
with, or consent or approval of, or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution and delivery of this Agreement, the Stockholders Agreement Amendment
and the Registration Rights Agreement Amendment, the performance of this
Agreement, the Stockholders Agreement Amendment and the Registration Rights
Agreement Amendment, or the issuance, sale and delivery of the Securities, other
than, if applicable, compliance with the requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act").

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      SECTION 2.06 FINANCIAL STATEMENTS. The unaudited consolidated balance
sheet of the Company as of July 31, 1998 and the related unaudited statement
of operations for the period from February 27, 1998 (the date of incorporation
of the Company) to July 31, 1998 are attached hereto as Schedule 2.06. Such
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied, and fairly present the consolidated
financial position of the Company as of the date of such financial statements
and the results of its operations for the period then ended in accordance with
generally accepted accounting principles, except for the absence of notes and
subject to year-end adjustments which consist only of normal recurring accruals.
Except as reflected in said financial statements or as disclosed in writing to
WCAS VII and HC Partners, the Company had no material (individually or in the
aggregate) obligations or liabilities, absolute, accrued or contingent, as of
the date of such financial statements that would be required to be reflected on
said financial statements. Since July 31, 1998 there has been no material
adverse change in the properties, assets, condition (financial or other),
prospects, operating results or business of the Company and its Subsidiaries
taken as a whole.

      SECTION 2.07 EVENTS SUBSEQUENT TO DATE OF FINANCIAL STATEMENTS. Since July
31, 1998, and except as set forth on Schedule 2.07 hereto, the Company has not
(i) issued any stock, bonds or other corporate securities, (ii) borrowed any
amount or incurred any liabilities (absolute or contingent) that would be
required to be disclosed on a balance sheet as of the date hereof prepared in
accordance with generally accepted accounting principles, except current
liabilities incurred, and liabilities under contracts entered into, in the
ordinary course of business, (iii) discharged or satisfied any lien or paid any
obligation or liability (absolute or contingent) other than current liabilities
shown on such financial statements and current liabilities incurred since that
date in the ordinary course of business, (iv) declared or made any payment or
distribution to stockholders or purchased or redeemed any shares of its capital
stock or other securities, (v) mortgaged, pledged or subjected to lien any of
its assets, tangible or intangible, other than liens of current real property
taxes not yet delinquent and payable, (vi) sold, assigned or transferred any of
its material tangible assets, except in the ordinary course of business, (vii)
acquired any material tangible assets or properties, except in the ordinary
course of business, (viii) canceled or compromised any debts or claims, except
in the ordinary course of business, (ix) sold, assigned or transferred any
patents, trademarks, tradenames, or other intangible rights (or licenses
thereto) or permitted any license, permit, or other form of authorization
relating to such rights to lapse, (x) suffered any material losses, or waived
any rights of material value, whether or not in the ordinary course of business,
(xi) received notification of cancellation, or canceled or waived any rights
which, individually or in the aggregate, are material with respect to any
currently existing agreement, contract, right or understanding, (xii) made any
changes in officer compensation, except for compensation attributed to newly
hired officers and for changes made in the ordinary course of business and
consistent with past practice or (xiii) entered into any transaction except in
the ordinary course of business.

      SECTION 2.08 ACTIONS PENDING. Except as set forth on Schedule 2.08 hereto,
there is no action, suit, investigation or proceeding pending or, to the
knowledge of the Company,

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threatened against or affecting the Company or any Subsidiary or any of their
respective properties or rights before any court or by or before any
governmental body or arbitration board or tribunal, the outcome of which might
reasonably be expected to result in any material adverse effect on the
properties, assets, condition (financial or other), prospects, operating results
or business of the Company and its Subsidiaries taken as a whole. To the
knowledge of the Company, except as set forth on Schedule 2.08 hereto, there
does not exist any reasonable basis for any such action, suit, investigation or
proceeding.

      SECTION 2.09 TRADE SECRETS. To the knowledge of the Company, (a) no third
party has claimed that any person affiliated with the Company or any Subsidiary
has violated any of the terms or conditions of his employment contract with such
third party, or disclosed or utilized any trade secrets or proprietary
information or documentation of such third party, or interfered in the
employment relationship between such third party and any of its employees and
(b) no person affiliated with the Company or any Subsidiary has employed any
trade secrets or any information or documentation proprietary to any former
employer.

      SECTION 2.10. TAXES The Company and each Subsidiary, as applicable, has
duly and timely filed or caused to be filed all Federal, state, local and
foreign tax returns that have been required to be filed to date by it and has
timely paid or caused to be timely paid all taxes or all assessments received by
it to the extent that such taxes or assessments have become due.

      SECTION 2.11 OTHER AGREEMENTS. Neither the Company nor any Subsidiary is
in default in any material respect in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any material
agreement or instrument to which it is a party.

      SECTION 2.12 TITLE TO PROPERTIES. Except as set forth on Schedule 2.12
hereto, the Company and each of its Subsidiaries owns its properties and assets
free and clear of mortgages, pledges, security interests, liens, charges and
other encumbrances.

      SECTION 2.13 COMPLIANCE WITH LAWS, ETC. (a) Each of the Company and its
Subsidiaries has all material governmental licenses, franchises and permits for
the conduct of its business as currently conducted (collectively, "Governmental
Permits").

      (b) The business of the Company and each of its Subsidiaries is being
conducted in compliance with all applicable laws, ordinances, rules and
regulations of all governmental authorities relating to their respective
properties or applicable to their respective businesses, including without
limitation the terms of all Governmental Permits and federal securities laws,
other than minor non-compliance that can be cured at nominal cost without
adversely affecting the business of the Company or any Subsidiary as it is
currently conducted. Neither the Company nor any Subsidiary has received any
notice of any alleged violation of any of the foregoing, nor is the Company
aware of any basis for any such allegation.

                                        9
<PAGE>
      SECTION 2.14 AFFILIATED TRANSACTIONS. Except as contemplated by this
Agreement or as set forth on Schedule 2.14 hereto, to the knowledge of the
Company, no officer, director or stockholder of the Company or any person
related by blood or marriage to any such person or any entity in which any such
person owns any beneficial interest, is a party to any agreement, contract,
commitment or transaction with the Company or has any material interest in any
material property used by the Company.

      SECTION 2.15 BROKERS' OR FINDERS' FEES. Except as set forth on Schedule
2.15, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Company with the Purchasers,
without the intervention of any person on behalf of the Company in such a manner
to give rise to any claim by any person for a finders' fee, brokerage commission
or similar payment.

      SECTION 2.16 DISCLOSURE. Neither this Agreement nor the Schedules and
Exhibits attached hereto contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein and therein, in the light of circumstances under which made,
not misleading.

                                      III

                REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

      Each Purchaser represents and warrants to the Company, severally and not
jointly, as follows:

      SECTION 3.01 AUTHORIZATION. The execution, delivery and performance by
such Purchaser of this Agreement, the Stockholders Agreement Amendment, the
Registration Rights Agreement Amendment and such Purchaser's Promissory Note, if
any, and the purchase and receipt by such Purchaser of the Securities being
purchased by it hereunder have been duly authorized by all requisite action on
the part of such Purchaser, and will not violate any provision of law, any order
of any court or other agency of government applicable to such Purchaser, or any
provision of any indenture, agreement or other instrument by which such
Purchaser or any of such Purchaser's properties or assets are bound, or conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument.

      SECTION 3.02 VALIDITY. This Agreement has been duly executed and delivered
by such Purchaser and constitutes the legal, valid and binding obligation of
such Purchaser, enforceable against such Purchaser in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws from time to time in effect affecting the enforcement of
creditors' rights generally and to general equity principles. The Stockholders
Agreement Amendment, the Registration Rights Agreement Amendment and such
Purchaser's

                                       10
<PAGE>
Promissory Note, if any, when executed and delivered by such Purchaser in
accordance with this Agreement, and when executed and delivered by the other
parties thereto, will constitute the legal, valid and binding obligation of such
Purchaser, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws from time to
time in effect affecting the enforcement of creditors' rights generally and to
general equity principles.

      SECTION 3.03 INVESTMENT REPRESENTATIONS. (a) Such Purchaser is acquiring
the Securities for its own account, for investment, and not with a view toward
the resale or distribution thereof in violation of applicable law.

      (b) Such Purchaser understands that it must bear the economic risk of its
investment for an indefinite period of time because the Securities are not
registered under the Securities Act or any applicable state securities laws, and
may not be resold unless subsequently registered under the Securities Act and
such other laws or unless an exemption from such registration is available. Such
Purchaser also understands that, except as provided in the Amended and Restated
Registration Rights Agreement dated as of April 30, 1998 among the Company and
the several other parties named therein, as amended (the "Amended and Restated
Registration Rights Agreement"), it is not contemplated that any registration
will be made under the Securities Act or that the Company will take steps which
will make the provisions of Rule 144 under the Securities Act available to
permit resale of the Securities. Such Purchaser will not pledge, transfer,
convey or otherwise dispose of any of the Securities, except in a transaction
that is the subject of either (x) an effective registration statement under the
Securities Act and any applicable state securities laws, or (y) an opinion of
counsel to the effect that such registration is not required (which opinion and
counsel shall be reasonably satisfactory to the Company, it being agreed that
Reboul, MacMurray, Hewitt, Maynard & Kristol shall be satisfactory, and may be
relied on by the Company in making such determination), it being intended that
the agreements with respect to the Securities contained in this sentence shall
be construed consistently with the provisions relating to the same subject
matter contained in the Amended and Restated Registration Rights Agreement.

      (c) Such Purchaser is able to fend for itself in the transactions
contemplated by this Agreement and has the ability to bear the economic risks of
its investment in the Shares being purchased by it for an indefinite period of
time. Such Purchaser has had the opportunity to ask questions of, and receive
answers from, officers of the Company with respect to the business and financial
condition of the Company and the terms and conditions of the offering of the
Shares and to obtain additional information necessary to verify such information
or can acquire it without unreasonable effort or expense.

      (d) Such Purchaser has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Securities. Such Purchaser (other than the Purchasers set
forth on Schedule 3.03(d) hereto) is an "accredited investor" as such term is
defined in Rule 501 of Regulation D under the Securities Act with

                                       11
<PAGE>
respect to its purchase of the Securities, and that if such Purchaser is a
partnership, it has not been formed solely for the purpose of purchasing the
Securities it is purchasing hereunder (unless each of the partners of such
partnership is an accredited investors).

      (e) Such Purchaser, to the extent that such Purchaser is subject to the
Connecticut Uniform Securities Act, is an institutional buyer under
ss.36b-21(b)(8) thereto.

      SECTION 3.04 GOVERNMENTAL APPROVALS. No registration or filing with, or
consent or approval of, or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary by such Purchaser
for the valid execution, delivery and performance of this Agreement, the
Stockholders Agreement Amendment, the Registration Rights Agreement Amendment
and such Purchaser's Promissory Note, if any, other than, if applicable,
compliance with the requirements of the HSR Act.

      SECTION 3.05 BROKERS' OR FINDERS' FEES. Except as set forth on Schedule
3.05, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Purchasers with the Company,
without the intervention of any person on behalf of the Purchasers in such a
manner as to give rise to any claim by any person for a finders' fee, brokerage
commission or similar payment.

                                       IV

                              CONDITIONS PRECEDENT

      SECTION 4.01 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASERS.
The obligations of each Purchaser hereunder are, at its option, subject to the
satisfaction, on or before the Initial Closing Date, of the following
conditions:

      (a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects on the Initial Closing Date, with
the same force and effect as though such representations and warranties had been
made on and as of such date, and the Company shall have certified to such effect
to the Purchasers in writing.

      (b) PERFORMANCE. The Company shall have performed and complied with all
agreements and conditions contained herein required to be performed or complied
with by it prior to or on the Initial Closing Date, and the Company shall have
certified to such effect to the Purchasers in writing.

      (c) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by the Company and all waivers and consents to be
obtained by the Company in connection with the transactions contemplated hereby
shall have been taken or obtained by the Company and

                                       12
<PAGE>
all documents incident thereto shall be satisfactory in form and substance to
such Purchaser and its counsel.

      (d) LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding shall have
been instituted or threatened seeking to restrain, prohibit, invalidate or
otherwise affect the consummation of the transactions contemplated hereby.

      (e) STOCKHOLDER AGREEMENT AMENDMENT AND REGISTRATION RIGHTS AGREEMENT
AMENDMENT. The Company and the other parties thereto shall have executed and
delivered the Stockholders Agreement Amendment and the Registration Rights
Agreement Amendment.

      (f) CERTIFICATE OF AMENDMENT. The Certificate of Amendment to the
Certificate of Incorporation of the Company substantially in the form of Exhibit
E hereto shall have been duly adopted and shall have been duly filed with the
Secretary of State of the State of Delaware and become legally effective.

      (g) OPINION OF COUNSEL. The Purchasers shall have received an opinion of
Nossaman, Guthner, Knox & Elliott, LLP, in form and substance reasonably
satisfactory to the Purchasers and their counsel.

      (h) SUPPORTING DOCUMENTS. WCAS VII (on behalf of the Purchasers) and its
counsel shall have received copies of the following supporting documents:

      (i)(x) copies of the Certificate of Incorporation of the Company, and all
   amendments thereto, certified as of a recent date by the Secretary of State
   of the State of Delaware, and (y) a certificate of said Secretary dated as of
   a recent date as to the due incorporation and good standing of the Company
   and listing all documents of the Company on file with said Secretary;

      (ii) a certificate of the Secretary or an Assistant Secretary of the
   Company dated the Initial Closing Date and certifying (w) that attached
   thereto is a true and complete copy of the By-laws of the Company as in
   effect on the date of such certification; (x) that attached thereto is a true
   and complete copy of resolutions adopted by the Board of Directors of the
   Company authorizing the execution, delivery and performance of this
   Agreement, the Registration Rights Agreement Amendment, the Stockholders
   Agreement Amendment and the issuance, sale and delivery of the Securities,
   and that all such resolutions are still in full force and effect and are all
   the resolutions adopted in connection with the transactions contemplated
   hereby and thereby; (y) that the Certificate of Incorporation of the Company
   has not been amended since the date of the last amendment referred to in the
   certificate delivered pursuant to clause (i)(x) above; and (z) as to the
   incumbency and specimen signature of each officer of the Company executing
   this Agreement, the Registration Rights Agreement Amendment, the Stockholders
   Agreement Amendment and the stock certificates representing the Initial
   Shares and any certificate or instrument

                                       13
<PAGE>
   furnished pursuant hereto, and a certification by another officer of the
   Company as to the incumbency and signature of the officer signing the
   certificate referred to in this paragraph (ii); and

      (iii) such additional supporting documents and other information with
   respect to the operations and affairs of the Company as the Purchasers or
   their counsel may reasonably request.

      All such documents shall be satisfactory in form and substance to the
Purchasers and their counsel.

      (i) CONSENTS: HSR ACT WAITING PERIOD. The Company shall have obtained all
consents required to be obtained pursuant to Section 5.05 hereof Without
limiting the generality of the foregoing, all applicable waiting periods under
the HSR Act with respect to the transactions contemplated hereby shall have
expired or been terminated.

      SECTION 4.02 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company hereunder are, at its option, subject to the
satisfaction, on or before the initial Closing Date of the following conditions:

      (a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Purchasers contained in this Agreement
shall be true and correct in all material respects on the Initial Closing Date,
with the same effect as though such representations and warranties had been made
on and as of such date.

      (b) PERFORMANCE. The Purchasers shall have performed and complied with all
agreements and conditions contained herein required to be performed or complied
with by them prior to or on the Initial Closing Date.

      (c) ALL PROCEEDINGS TO BE SATISFACTORY. All proceedings to be taken by the
Purchasers and any waivers and consents to be obtained by the Purchasers in
connection with the transactions contemplated hereby shall have been taken or
obtained by the Purchasers and all documents incident thereto shall be
satisfactory in form and substance to the Company and its counsel.

      (d) LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding shall have
been instituted or threatened seeking to restrain, prohibit, invalidate or
otherwise affect the consummation of the transactions contemplated hereby.

      (e) STOCKHOLDERS AGREEMENT AMENDMENT, REGISTRATION RIGHTS AGREEMENT
AMENDMENT AND PROMISSORY NOTE. Each of the parties thereto (other than the
Company) shall have executed and delivered the Stockholders Agreement Amendment,
the Registration Rights Agreement Amendment and the Promissory Note, if any.

                                       14
<PAGE>
      SECTION 4.03 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASERS
WITH RESPECT TO EACH SUBSEQUENT CLOSING. The obligations of each of the
Additional Purchasers to purchase and pay for the Additional Securities being
purchased by such Additional Purchaser on each Subsequent Closing Date are, at
such Additional Purchaser's option, subject to the satisfaction, on or before
such date, of the following conditions:

      (a) CONSUMMATION OF INITIAL CLOSING AND EACH PRIOR SUBSEQUENT CLOSING. On
the Initial Closing Date the Company shall have issued and sold the Initial
Shares, and on each prior Subsequent Closing Date, the Company shall have issued
and sold the Additional Securities being issued and sold on such Subsequent
Closing Date.

      (b) PRELIMINARY DOCUMENTATION. If applicable, a Notice of Financing Event
shall have been given and shall have been delivered to the Additional Purchasers
pursuant to Section 1.03(d) hereof.

      (c) OPINION OF COUNSEL. The Additional Purchasers shall have received from
Nossaman, Guthner, Knox & Elliott, LLP (or such other counsel satisfactory to
the Additional Purchasers) an opinion dated such Subsequent Closing Date
confirming the opinion delivered by such counsel in accordance with Section
4.01(g) hereof, with such other changes as may be required as a result of the
transactions contemplated by this Agreement.

      (d) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Company set forth herein shall be true and
correct as of such Subsequent Closing Date (except (i) as disclosed in writing
to the Additional Purchasers at least three business days prior to such
Subsequent Closing Date, which exceptions shall be acceptable to such Additional
Purchasers and (ii) that the representations contained in Section 2.06 hereto
shall be replaced in their entirety with the representations contained in Annex
IV hereto, which representations will be true and correct as of such Subsequent
Closing Date), and the Company shall have certified to such effect to the
Additional Purchasers in writing.

      (e) PERFORMANCE. The Company shall have performed and complied in all
material respects with all agreements and conditions contained herein required
to be performed or complied with by it prior to or at such Subsequent Closing
Date, and the Company shall have certified to such effect to the Additional
Purchasers in writing.

      (f) NO MATERIAL ADVERSE CHANGE. Since the Subsequent Closing Date next
preceding such Subsequent Closing Date (or in the case of the first Subsequent
Closing Date, since the Initial Closing Date), there shall have been no material
adverse change in the properties, assets, condition (financial or other),
prospects, operating results or business of the Company and its Subsidiaries
taken as a whole, and the Company shall have certified to such effect to the
Additional Purchasers in writing.

                                       15
<PAGE>
      (g) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by the Company and all waivers and consents to be
obtained by the Company in connection with the transactions contemplated hereby
and all documents incident thereto shall be satisfactory in form and substance
to the Additional Purchasers and their counsel, and the Additional Purchasers
and said counsel shall have received all such counterpart originals or certified
or other copies of such documents as they may reasonably request.

      (h) SUPPORTING DOCUMENTS. On or prior to such Subsequent Closing Date,
WCAS VII (on behalf of the Additional Purchasers) and its counsel shall have
received copies of the supporting documents referred to in Section 4. 0 1 (h)
above as if such Subsequent Closing Date were the Initial Closing Date.

      All such documents shall be satisfactory in form and substance to the
Additional Purchasers and their counsel.

      In the event that the Certificate of Incorporation and/or By-laws of the
Company shall not have been amended since the Initial Closing Date, the Company
may, in lieu of furnishing such documents, cause the certificate with respect
thereto contemplated by paragraphs 4.01(h)(i) and 4.01(h)(ii) above to be
replaced by a certificate as to the fact that such documents were previously
furnished and as to the absence of any amendments thereto.

      (i) LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding shall have
been instituted or threatened seeking to restrain, prohibit, invalidate or
otherwise affect the consummation of the transactions contemplated hereby.

      (j) CONSENTS; HSR ACT WAITING PERIOD. The Company shall have obtained all
consents required to be obtained pursuant to Section 5.05 hereof Without
limiting the generality of the foregoing, all applicable waiting periods under
the HSR Act with respect to the transactions contemplated hereby shall have
expired or been terminated.

      SECTION 4.04 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY WITH
RESPECT TO EACH SUBSEQUENT CLOSING. The obligations of the Company to issue and
sell the Additional Securities on each Subsequent Closing Date are, at its
option, subject to the satisfaction, on or before such date, of the following
conditions:

      (a) CONSUMMATION OF INITIAL CLOSING AND EACH PRIOR SUBSEQUENT CLOSING. On
the Initial Closing Date the Purchasers shall have purchased and paid for the
Initial Shares, and on each prior Subsequent Closing Date, the Additional
Purchasers shall have purchased and paid for the Additional Securities being
issued and sold on such Subsequent Closing Date.

      (b) PRELIMINARY DOCUMENTATION. A Call Notice shall have been given
pursuant to Section 1.03(e) or 1.03(f).

                                       16
<PAGE>
      (c) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties contained in Article III hereof as made by the
Additional Purchasers shall be true and correct in all material respects on such
Subsequent Closing Date with the same effect as though such representations and
warranties had been made on and as of such date.

      (d) PERFORMANCE. Each Additional Purchaser shall have performed and
complied in all material respects with all agreements and conditions contained
herein required to be performed or complied with by it prior to or at such
Subsequent Closing Date.

      (e) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate or partnership and
other proceedings to be taken by each Purchaser and all waivers and consents to
be obtained by any Purchaser in connection with the transactions contemplated
hereby and all documents incident thereto shall be satisfactory in form and
substance to the Company and its counsel.

                                       V

                                   COVENANTS

      SECTION 5.01 FINANCIAL STATEMENTS REOORTS ETC.

      The Company shall furnish to each of WCAS VII and HC Partners, prior to
the consummation of the Company's IPO and for so long as WCAS VII or HC
Partners, as applicable, shall hold at least 25% of the Securities (or
securities into which such Securities are converted, exchanged or reclassified)
purchased by WCAS VII or HC Partners hereunder:

      (a) within 90 days after the end of each fiscal year of the Company, a
   consolidated balance sheet of the Company as of the end of such fiscal year
   and the related consolidated statements of operations and retained earnings,
   changes in stockholders' equity and cash flows of the Company for the fiscal
   year then ended, together with supporting notes thereto, certified in
   accordance with generally accepted accounting principles, without
   qualification as to scope of audit, by a firm of independent public
   accountants of recognized national standing selected by the Company;

      (b) within 30 days after the end of each month in each fiscal year (other
   than the last month in each fiscal year), a consolidated balance sheet of the
   Company and the related consolidated statement of operations and retained
   earnings, unaudited but certified by the principal financial officer of the
   Company, such balance sheets to be as of the end of such month and such
   statements of operations and retained earnings to be for such month and for
   the period from the beginning of the fiscal year to the end of such month, in
   each case subject to normal year-end adjustments;

                                       17
<PAGE>
      (c) within 30 days prior to the beginning of each fiscal year of the
   Company (and with respect to any revision thereof, promptly after such
   revision has been prepared), a proposed annual operating budget for the
   Company, including projected monthly income statements, cash flow statements
   during such fiscal year and a projected consolidated balance sheet as of the
   end of such fiscal year, and each monthly financial statement furnished
   pursuant to (b) above shall reflect variances from such operating budget, as
   the same may from time to time be revised; and

      (d) promptly upon filing, copies of all registration statements,
   prospectuses, periodic reports and other documents filed by the Company or
   any Subsidiary with the Securities and Exchange Commission.

      SECTION 5.02 RIGHTS OF INSPECTION. The Company shall, and shall cause its
Subsidiaries, officers, directors, employees, representatives, advisors and
agents to, afford, from the date hereof, the representatives, advisors and
agents of WCAS VII (on behalf of the Additional Purchasers) complete access at
all reasonable times during normal business hours to its officers, employees,
agents, properties, books, records and workpapers, and shall furnish WCAS VII
all financial, operating and other information and data that WCAS VII may
reasonably request through such representatives, advisors or agents. At the
request of WCAS VII, the Company shall promptly furnish to the Additional
Purchasers a copy of all material written correspondence, filings,
communications (or memoranda setting forth the substance thereof) between the
Company or any of its officers, employees, representatives, advisors or agents
and any governmental entity with respect to the obtaining of any waivers,
consent or approvals and the making of any registrations or filings that are
necessary to the transactions contemplated by this Agreement. The Additional
Purchasers agree to keep confidential any confidential business information that
may be provided to them by the Company pursuant to this Agreement, unless
disclosure is required by law as advised by counsel.

      SECTION 5.03 NOTICE OF CERTAIN EVENTS. (a) The Company shall give WCAS VII
and HC Partners prompt notice of (i) the occurrence, or failure to occur, of any
event that the Company believes would be likely to (x) cause any of the
representations or warranties of the Company contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof or
(y) cause any covenant, condition or agreement contained in this Agreement not
to be complied with or satisfied in any material respect, (ii) any failure of
the Company, or any officer, director, employee or agent thereof, to comply in
any material respect with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it hereunder, (iii)
any event of default under any agreement with respect to indebtedness for
borrowed money or a purchase money obligation, and any event which, upon notice
or lapse of time or both, would constitute such an event of default, that would
permit the holder of such indebtedness or obligation to accelerate the maturity
thereof, (iv) any claim, action, suit or proceeding at law or in equity or by or
before any governmental instrumentality or agency which, if adversely
determined, would materially impair the ability of the Company to carry on its
business substantially as now or then conducted, and which, in the case of each
of the items set

                                       18
<PAGE>
forth in clauses (i) through (iv) above, would be likely to have material
adverse effect on the properties, assets, condition (financial or other),
prospects, operating results or business of the Company and its Subsidiaries
taken as a whole.

      (b) For purposes of permitting the Additional Purchasers to purchase any
of the remaining Additional Shares prior to the Termination Date pursuant to
Section 1.03(f) hereof, the Company shall give the WCAS/HC Purchasers notice of
an IPO or a Change of Control Event at least 20 days prior to the consummation
of such IPO or Change of Control Event.

      SECTION 5.04 USE OF PROCEEDS. The Company shall use the proceeds from the
sale of the Initial Shares hereunder for the acquisition of certain domestic
surgical centers (or assets relating thereto) and Spanish hospital companies
or assets relating thereto) and for general corporate or other purposes approved
by WCAS VII.

      SECTION 5.05 CONSENTS AND APPROVALS. Prior to the Initial Closing Date and
each Subsequent Closing Date, the Company shall promptly apply for or otherwise
seek and use its best efforts to obtain all authorizations, consents, waivers
and approvals (whether by or from any person, entity, court or governmental
agency or authority) as may be required in connection with the consummation of
this Agreement and the transactions contemplated hereby. In addition, the
Company shall pay any filing fees and expenses relating to compliance with the
HSR Act in connection with any transaction to which the Company is a party,
regardless of who may be deemed to be the "ultimate parent" of the Company (as
such term is defined in the HSR Act).

      SECTION 5.06 COMPLIANCE WITH LAWS. The Company shall comply, and shall
cause each of its Subsidiaries to comply, with all applicable laws, rules,
regulations and orders, the noncompliance with which could have a material
adverse effect on the properties, assets, condition (financial or other),
prospects, operating results or business of the Company and its Subsidiaries
taken as a whole.

      SECTION 5.07 PREEMPTIVE RIGHTS. (a) Until such time as the Company has
consummated an IPO, the Company hereby grants to HC Partners the right to
purchase HC Partners' Proportionate Percentage (as hereinafter defined) of any
future Eligible Offering (as hereinafter defined). For the purposes of this
Section 5.07, the following terms shall have the meanings set forth below:

      "PROPORTIONATE PERCENTAGE" means, with respect to HC Partners as of any
   date, the result (expressed as a percentage) obtained by dividing (i) the
   number of shares of Class A Common Stock and Common Stock owned by HC
   Partners as of such date, by (ii) the total number of shares of Class A
   Common Stock and Common Stock outstanding as of such date.

      "ELIGIBLE OFFERING" means an offer by the Company to sell to investors
   (including any of the Purchasers) for cash, shares of capital stock of the
   Company, or any security

                                       19
<PAGE>
   convertible into or exchangeable for, or carrying rights or options to
   purchase, capital stock of the Company, other than an offering of securities
   by the Company:

            (i) to its full-time employees, and/or officers and/or directors
      and/or consultants and/or advisors of options to purchase shares of Common
      Stock in connection with or pursuant to the Company's Stock Option Plan as
      in effect from time to time;

            (ii) in connection with the conversion or exercise of outstanding
      securities of the Company;

            (iii) in connection with any merger of, or acquisition by, the
      Company;

            (iv) in connection with the issuance of any Additional Shares; or

            (v) in an underwritten public offering of shares of Common Stock
      registered under the Securities Act.

      (b) The Company shall, before issuing any securities pursuant to an
Eligible Offering, give written notice thereof to HC Partners. Such notice shall
specify the security or securities the Company proposes to issue and the
consideration that the Company intends to receive therefore. For a period of ten
(10) days following the date of such notice, HC Partners shall be entitled, by
written notice to the Company, to elect to purchase all or any part of HC
Partners' Proportionate Percentage of the securities being sold in the Eligible
Offering; PROVIDED, HOWEVER, that if two or more securities shall be proposed to
be sold as a "unit" in an Eligible Offering, any such election must relate to
such unit of securities. In the event that elections pursuant to this Section
5.07 shall not be made with respect to any securities included in an Eligible
Offering within such ten (10) day period, then the Company may issue such
securities to investors, but only for a consideration payable in cash not less
than, and otherwise on no more favorable terms to the investors than, that set
forth in the Company's notice and only within 180 days after the end of such ten
(10) day period. In the event that any such offer is accepted by HC Partners, on
a mutually agreeable date not less than ten (10) business days following such
acceptance, the Company shall sell to HC Partners and HC Partners shall purchase
from the Company, for the consideration and on the terms set forth in the notice
as aforesaid, the securities that HC Partners shall have elected to purchase.

      SECTION 5.08 MANAGEMENT FEE. At no time shall WCAS VII (or its partners)
charge the Company for management or similar fees relating to its investment in
the Company.

                                       VI

                                  MISCELLANEOUS

                                       20
<PAGE>
      SECTION 6.01 EXPENSES, ETC. The Company shall pay its own expenses. All
fees and expense of WCAS VII incident to the negotiation, preparation and
execution of this Agreement, including the fees and expenses of counsel,
accountants or other advisors (i) shall be paid by the Company in the event that
such transactions are consummated and (ii) shall be borne by the party incurring
such expense in the event such transactions are not consummated. Each party
hereto will indemnify and hold harmless the others against and in respect of any
claim for brokerage or other commissions relative to this Agreement or to the
transactions contemplated hereby, made as a result of any agreements,
arrangements or understandings made or claimed to have been made by such party
with any third party.

      SECTION 6.02 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the issuance, sale and delivery of the Securities
pursuant hereto and all statements contained in any certificate or other
instrument delivered by the Company hereunder shall be deemed to constitute
representations and warranties made by the Company.

      SECTION 6.03 PARTIES IN INTEREST. All covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not.

      SECTION 6.04 NOTICES. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient if contained in a written
instrument delivered in person or by overnight courier or duly sent by first
class certified mail, postage prepaid, or by facsimile addressed to such party
at the address or facsimile number set forth below:

      if to the Company, to:

              United Surgical Partners International, Inc.
              17103 Preston Road
              Suite 190 North
              Dallas, Texas 75248
              Facsimile: 972-267-0084
              Attention: Donald Steen

              with a copy to:

              Nossaman, Guthner, Knox & Elliott, LLP
              445 South Figueroa Street, 31st Floor
              Los Angeles, CA 90071
              Facsimile: 213-612- 7801
              Attention: Robert D. Mosher, Esq.

                                       21
<PAGE>
      if to any Purchaser, to such Purchaser at the address appearing on Annex I
hereto;

or, in any case, at such other address or addresses as shall have been furnished
in writing by such party to the other parties hereto. All such notices,
requests, consents and other communications shall be deemed to have been
received (a) in the case of personal or courier delivery, on the date of such
delivery, (b) in the case of mailing, on the fifth business day following the
date of such mailing and (c) in the case of facsimile, when received.

      SECTION 6.05 WAIVER OF PRIOR PREEMPTIVE RIGHTS. Each of the WCAS
Purchasers and Donald Steen hereby waive their respective rights to purchase a
proportionate percentage of the Initial Shares and Additional Shares as set
forth in Section 5.07 of the Securities Purchase Agreement dated Apri130, 1998
among the Company, WCAS VII and the several other parties named therein.

      SECTION 6.06 ENTIRE AGREEMENT: MODIFICATIONS. This Agreement (including
the Exhibits, Annexes and Schedules hereto) constitutes the entire agreement of
the parties with respect to the subject matter hereof and may not be amended or
modified nor any provisions waived except in a writing signed by the party to be
charged.

      SECTION 6.07 Assignment. This Agreement may not be assigned by the Company
or the Purchasers without the prior written consent of the Company and each of
the Purchasers, except that (i) an Additional Purchaser who is an individual may
assign the obligation to purchase Additional Securities to an Individual
Retirement Account or trust established for such Additional Purchaser's benefit
and (ii) an Additional Purchaser may assign the obligation to purchase
Additional Securities to an affiliate (as defined in Rule 405 under the
Securities Act) of such Additional Purchaser; Provided, that in any such case
each assignee agrees to become a party to and be bound by this Agreement and the
Amended and Restated Stockholders Agreement.

      SECTION 6.08 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

      SECTION 6.09 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.

                                       22
<PAGE>
      IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.

                                 UNITED SURGICAL PARTNERS
                                   INTERNATIONAL, INC.

                                 By /s/ DONALD STEEN
                                        Donald Steen
                                        Chief Executive Officer

                                 WCAS PURCHASERS:

                                 WELSH, CARSON, ANDERSON
                                   & STOWE VII, L.P .

                                 By WCAS VII Partners, L.P.
                                 General Partner

                                 By /s/ LAURA VANBUREN
                                        Laura VanBuren
                                        General Partner

                                 WCAS HEALTHCARE PARTNERS, L.P.

                                 By WCAS HC Partners
                                 General Partner

                                 By /s/ LAURA VANBUREN
                                        Laura VanBuren
                                        Attorney-in-Fact

<PAGE>
                                 Patrick I. Welsh
                                 Russell L. Carson
                                 Bruce K. Anderson
                                 Richard H. Stowe
                                 Andrew M. Paul
                                 Thomas E. Mclnerney
                                 Robert A. Minicucci
                                 Anthony I. deNicola
                                 Paul B. Queally

                                 /s/ LAURA VANBUREN
                                  By Laura VanBuren
                                     Attorney-in-Fact

                                 /s/ LAURA VANBUREN
                                     Laura VanBuren

                                 /s/ RUDOLPH E. RUPERT
                                     Rudolph E. Rupert

                                 /s/ D. SCOTT MACKESY
                                     D. Scott Mackesy

                                 /s/ LAUREN MELKUS
                                     Lauren Melkus

                                 /s/ TUCKER TAYLOR
                                     Tucker Taylor

                                 /s/ ALYCE CRADDOCK
                                     Alyce Craddock

                                 /s/ GREG KOONSMAN
                                     Greg Koonsman

                                 /s/ JON O'SULLIVAN
                                     Jon O'Sullivan

                                 HEALTH CARE CAPITAL
                                   PARTNERS, L.P.

                                 By Ferrer Freeman Thompson & Co., LLC
                                 General Partner

                                 By /s/ ROBERT T. THOMPSON
                                 Name:  Robert T. Thompson
                                 Title: Member

                                 HEALTH CARE EXECUTIVE
                                   PARTNERS, L.P.

                                 By Ferrer Freeman Thompson & Co., LLC
                                 General Partner

                                 By /s/ ROBERT T. THOMPSON
                                 Name:  Robert T. Thompson
                                 Title: Member

                                 MANAGEMENT PURCHASERS

                                 /s/ DONALD STEEN
                                     Donald Steen

                                 /s/ WILLIAM WILCOX
                                     William Wilcox

                                 /s/ SUE SHELLEY
                                     Sue Shelley

                                 /s/ JEFFREY STOCKARD
                                     Jeffrey Stockard

                                 /s/ LAURIE HOGUE
                                     Laurie Hogue

                                 /s/ MICHAEL CREWS
                                     Michael Crews

                                 /s/ DAVID MCDONALD
                                     David McDonald FBO Tracy McDonald

                                 /s/ JAMES BRANON
                                     James Branon

<PAGE>

                               ANNEX - PURCHASERS

WCAS/HC PURCHASERS:

1. WCAS Purchasers

Welsh, Carson Anderson
 Stowe VII, L.P.
WCAS Healthcare Partners, L.P.
Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Richard H. Stowe
Andrew M. Paul
Thomas E. McInerney
Laura VanBuren
Robert A. Minicucci
Anthony deNicola
Rudolph E. Rupert
Paul B. Queally
O. Scott Mackesy
Lauren Melkus

c/o Welsh, Carson, Anderson
  & Stowe
320 Park Avenue
Suite 2500
New York, NY 10022-9500
Facsimile: 212-841-5725

with a copy to:

Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, NY  10111
Facsimile: 212-841-5725
Attention: Othon A. Prounis, Esq.

<PAGE>

2. HC Partners

Health Care Capital Partners, L.P.
Health Care Executive Partners, L.P.

c/o Fewer Freeman Thompson & Co.
10 Glenville Street
Greenwich, CT 06833
Facsimile: 203-532-8016

3.

Tucker Taylor

Shunpike at Bangall Road
Millbrook, NY 12545

Alyce Craddock

2805 Lombardy Road
Memphis, TN 38111

Greg Koonsmanm
Jon O'Sullivan

12222 Merit Drive
Suite 1380
Dallas, TX 75251

<PAGE>

                         ANNEX I - PURCHASERS [continued

MANAGEMENT PURCHASERS:

Donald Steen
William Wilcox
Sue Shelley
Jeffrey Stockard
Laurie Hogue
Michael Crews
David McDonald
James Branon

c/o United Surgical Partners
  International, Inc.
17103 Preston Road
Suite 190 North
Dallas, TX  75248
Facsimile: 972-267-0084

<PAGE>

                        Annex II Initial Shares Purchased

<TABLE>
<CAPTION>
                                      Number of Initial
                                       Class A Common          Cash Purchase            Promissory Note          Total Purchase
                                           Shares                  Price                Principal Amount             Price
<S>                                       <C>                 <C>                          <C>                  <C>
Welsh, Carson, Anderson & Stowe VII, L
                                          4,711,273           $16,489,455.50                   --               $16,489,455.50
WCAS Healthcare Partners,
L.P.                                         70,415              $246,452.50                   --                  $246,452.50
Patrick J. Welsh                             57,439              $201,036.50                   --                  $201,036.50
Russell L. Carson                            57,439              $201,036.50                   --                  $201,036.50
Bruce K. Anderson                            57,439              $201,036.50                   --                  $201,036.50
Richard H. Stowe                             10,060               $35,210.00                   --                   $35,210.00
Andrew M. Paul                               10,060               $35,210.00                   --                   $35,210.00
Thomas E. McInerney                          30,178              $105,623.00                   --                  $105,623.00
Laura VanBuren                                  503                $1,760.50                   --                    $1,760.50
Robert A. Minicucci                          10,060               $35,210.00                   --                   $35,210.00
Anthony deNicola                              3,521               $12,323.50                   --                   $12,323.50
Rudolph E. Rupert                             1,509                $5,281.50                   --                    $5,281.50
Paul B. Queally                               7,746               $27,111.00                   --                   $27,111.00
D. Scott Mackesy                              2,012                $7,042.00                   --                    $7,042.00
Lauren Melkus                                 7,518               $26,313.00                   --                   $26,313.00
                                                                                               --
Tucker Taylor                                12,593               $44,075.50                   --                   $44,075.50
Alyce Craddock                               12,593               $44,075.50                   --                   $44,075.50
Greg Koonsman                                 6,296               $22,036.00                   --                   $22,036.00
Jon O'Sullivan                                6,296               $22,036.00                   --                   $22,036.00

Health Care Capital, Partners,                                                                 --
L.P.                                      1,209,261            $4,232,413.50                                     $4,232,413.50
Health Care Executive                                                                          --
Partners, L.P.                               50,032              $175,112.00                                       $175,112.00
                                                                                               --
Donald Steen                                157,202              $550,207.00                   --                  $550,207.00
Willam Wilcox                               189,524              $263,334.00               $400,00.00              $663,334.00
Sue Shelley                                   7,346               $25,711.00                   --                   $25,711.00
Jeffrey Stockard                             14,692               $51,422.00                   --                   $51,422.00
Laurie Hogue                                  3,673               $12,855.50                   --                   $12,855.50
Michael Crews                                11,019               $38,566.50                   --                   $38,566.50
David McDonald FBO Tracy                                                                       --
McDonald                                      5,509               $19,281.50                                        $19,281.50
James Branon                                  3,673               $12,855.50                   --                   $12,855.50
Totals                                    6,726,881           $23,144,083.50               $400,000.00          $23,144,083.50
</TABLE>

<PAGE>

                 Annex III Additional Securities to be Purchased

<TABLE>
<CAPTION>
                                                  Maximum Number of
                                                 Additional Class A                              Maximum Note         Aggregate
                                                    Common Shares      Class A Purchase Price   Purchase Price      Purchase Price
<S>                                                   <C>                 <C>                   <C>                <C>
Welsh, Carson, Anderson & Stowe
VII, L.                                               1,702,219           $5,957,766.50         $14,960,000.00     $20,917,766.50

WCAS Healthcare Partners,
L.P.                                                     25,442              $89,047.00            $225,000.00        $314,047.00
Patrick J. Welsh                                         20,753              $72,635.50            $181,000.00        $253,635.50
Russell L. Carson                                        20,753              $72,635.50            $181,000.00        $253,635.50
Bruce K. Anderson                                        20,753              $72,635.50            $181,000.00        $253,635.50
Richard H. Stowe                                          3,635              $12,722.50             $32,000.00         $44,722.50
Andrew M. Paul                                            3,635                       $             $32,000.00         $44,722.50
Thomas E. McInerney                                      10,904              $38,164.00             $95,000.00        $133,164.00
Laura VanBuren                                              182                 $637.00              $6,000.00          $6.637.00
Robert A. Minicucci                                       3,635              $12,722.50             $32,000.00         $44,722.50
Anthony deNicola                                          1,272               $4,452.00             $13,000.00         $17,452.00
Rudolph E. Rupert                                           545               $1,907.00              $6,000.00          $7,907.50
Paul B. Queally                                           2,799               $9,796.50             $25,000.00         $34,796.50
D. Scott Mackesy                                            727               $2,544.50              $6,000.00          $8,544.50
Lauren Melkus                                             2,716               $9,506.00             $25,000.00         $34,506.00

Tucker Taylor                                             4,550              $15,925.00             $40,000.00         $55,925.00
Alyce Craddock                                            4,550              $15,925.00             $40,000.00         $55,925.00
Greg Koonsman                                             2,275               $7,962.50             $20,000.00         $27,962.50
Jon O'Sullivan                                            2,275               $7,962.50             $20,000.00         $27,962.50

Health Care Capital, Partners,
L.P.                                                    436,916           $1,529,206.00          $3,841,000.00      $5,370,206.00
Health Care Executive
Partners, L.P.                                           18,077              $63,269.50            $159,000.00        $222,269.50

Donald Steen                                             56,798             $198,793.00          --                   $198,793.00
Willam Wilcox                                            68,476             $239,666.00          --                   $239,666.00
Sue Shelley                                               2,654               $9,289.00          --                     $9,289.00
Jeffrey Stockard                                          5,308              $18,578.00          --                    $18,578.00
Laurie Hogue                                              1,327               $4,644.50          --                     $4,644.50
Michael Crews                                             3,981              $13,933.50          --                    $13,933.50
David McDonald FBO Tracy
McDonald                                                  1,991               $6,968.50          --                     $6,968.50
James Branon                                              1,327               $4,644.50          --                     $4,644.50
Totals                                                2,430,475           $8,506,662.50         $20,120,000.00     $28,626,662.50
</TABLE>

<PAGE>

                  ANNEX IV - SUBSEQUENT CLOSING REPRESENTATIONS

            SECTION 2.06 Financial Statements. The most recent monthly and
annual financial statements of the Company delivered to WCAS VII and HC Partners
pursuant to Section 5.01 hereof have been prepared in accordance with generally
accepted accounting principles consistently applied, and fairly present the
consolidated financial position of the Company as of the date of such financial
statements and the results of its operations for the period then ended in
accordance with generally accepted accounting principles, except (in the case of
the monthly financial statements) for the absence of notes and subject to year
end adjustments which consist only of normal recurring accruals. Except as
reflected in said financial statements or as disclosed in writing to WCAS VII
and HC Partners, the Company had no material (individually or in the aggregate)
obligations or liabilities, absolute, accrued or contingent, as of the date of
such financial statements that would be required to be reflected on said
financial statements.

<PAGE>
                                                                       Exhibit A

              THIS NOTE HAS NOT BEEN REGISTERED HER THE SECURITIES
             ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
            NEITHER THE SECURITIES EVIDENCED HEREBY, NOR ANY INTEREST
             THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED, ENCUMBERED
             OR OTHERWISE DISPOSED OF UNLESS EITHER (I) THERE IS AN
            EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND LAWS
            RELATING THERETO OR (II) THE CORPORATION HAS RECEIVED AN
             OPINION OF COUNSEL, REASONABLY SATISFACTORY IN FORM AND
                 SUBSTANCE TO THE CORPORATION, STATING THAT SUCH
                          REGISTRATION IS NOT REQUIRED.

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

                           7% Senior Subordinated Note

$[     ]                                                           [     , 1998]

            UNITED SURGICAL PARTNERS INTERNATIONAL, INC., a Delaware corporation
(hereinafter called the "Corporation"), for value received, hereby promises to
pay to [ ], the principal sum of [ ($[ ])] on [April , 2008] (subject to
applicable restrictions set forth in Section 12 hereof), and to pay interest
(computed on the basis of a 365-day year consisting of twelve 30-day months)
from the date hereof on the unpaid principal amount hereof at the rate of 7% per
annum, payable annually in arrears on [ I of each year (each said day being an
"Interest Payment Date"), commencing on [ ] and until the date the outstanding
principal amount hereof shall have become due and payable in full, whether at
maturity or by acceleration or otherwise. If the principal amount hereof shall
not be paid when the same shall have become due and payable in full, whether at
maturity or by acceleration or otherwise, then such overdue principal amount and
(to the extent permitted by applicable law) any overdue interest shall thereupon
bear interest at the rate of 9% per annum until paid in full.

            All payments of principal and interest on this Note shall be in such
coin or currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts, and shall be made at
the offices of the person deemed the holder hereof in accordance with Section 4
below.

            1. The Note. This Note is issued pursuant to and is subject to
provisions of the Securities Purchase Agreement dated as of October 26, 1998
(the "Securities Purchase Agreement") among the Corporation, Welsh, Carson,
Anderson and Stowe VII, L.P. ("WCAS VII"), Health Care Capital Partners, L.P.
and the several other parties named therein. As used herein, the term "Note" or
"Notes" includes all of the 7% Senior Subordinated Note or Notes due [April ,
2008] originally issued in connection with the Securities Purchase Agreement and
any 7% Senior Subordinated Note or Notes due [April , 2008] of the Corporation
subsequently issued upon exchange or transfer thereof.

<PAGE>

            2. Transfer. Etc. of Notes. The Corporation shall keep at its office
or agency maintained as provided in paragraph (a) of Section 6 a register in
which the Corporation shall provide for the registration of this Note and for
the registration of transfer and exchange of this Note. The holder of this Note
may, at its option, and either in person or by duly authorized attorney,
surrender the same for registration of transfer or exchange at the office or
agency of the Corporation maintained as provided in paragraph (a) of Section 6,
and, without expense to such holder (except for transfer taxes, if any, imposed
in connection therewith), receive in exchange therefor a Note or Notes each in
such denomination or denominations as such holder may request (which
denominations shall be $100,000 or an integral multiple thereof, except for any
balance which may be less than $100,000), dated as of the date to which interest
has been paid on the Note or Notes so surrendered for transfer or exchange, for
the same aggregate principal amount as the then unpaid principal amount of the
Note or Notes so surrendered for transfer or exchange, and registered in the
name of such person or persons as may be designated by such holder. This Note,
when presented or surrendered for registration of transfer or exchange, shall be
duly endorsed, or shall be accompanied by a written instrument of transfer,
satisfactory in form to the Corporation, duly executed by the holder of such
Note or his attorney duly authorized in writing. Every Note so made and
delivered in exchange for this Note shall in all other respects be in the same
form and have the same terms as this Note. No transfer or exchange of any Note
shall be valid unless made in the foregoing manner at such office or agency.

            3. Loss, Theft, Destruction or Mutilation of Note. Upon receipt of
evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of this Note, and, in the case of any such loss, theft or
destruction, upon receipt of an affidavit of loss and indemnity from the holder
hereof reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of this Note, the Corporation will
make and deliver, in lieu of this Note, a new Note of like tenor and unpaid
principal amount and dated as of the date to which interest has been paid on
this Note.

            4. Persons Deemed Owners: Holders. The Corporation may deem and
treat the person in whose name this Note is registered as the owner and holder
of this Note for the purpose of receiving payment of principal of and interest
on this Note and for all other purposes whatsoever, whether or not this Note
shall be overdue. With respect to any Note at any time outstanding, the term
"holder", as used herein, shall be deemed to mean the person in whose name such
Note is registered as aforesaid at such time.

            5. Prepayments. The Corporation may prepay this Note as follows:

            (a) Mandatory Prepayment. Except as and to the extent expressly
prohibited by applicable law, the Corporation shall prepay the principal amount,
plus accrued and unpaid interest, of all Notes which shall then be outstanding,
upon the consummation by the Corporation of an initial public offering of its
Common Stock, $.01 par value, registered under the Securities Act of 1933, as
amended. In case of the occurrence of any of the following (each a "Change of
Control Event"): (i) a consolidation or merger of the Corporation with or into
any other corporation (other than a merger which will not result in more than
50% of the voting capital stock of the Corporation outstanding immediately after
the effective date of such merger being owned of record or beneficially by
persons other than the holders of such voting capital stock immediately prior to
such merger in the same proportions in which such shares were held

<PAGE>

immediately prior to such merger), (ii) a sale of all or substantially all of
the properties and assets of the Corporation as an entirety in a single
transaction or in a series of related transactions to any other person or (iii)
the acquisition of "beneficial ownership" by any "person" or "group" (other than
CAS VII or its affiliates) of voting stock of the Corporation representing more
than 50% of the voting power of all outstanding shares of such voting stock,
whether by way of merger or consolidation or otherwise, the Corporation shall
not later than 20 days prior to the effective date of any such Change of Control
Event (the "Change of Control Event Date"), give notice thereof to the holder or
holders of the Notes and, in the event that within 15 days after receipt of such
notice, the holders of a majority of the outstanding aggregate principal amount
of the Notes elect, by written notice to the Corporation, to have such Notes
prepaid, the Corporation shall prepay 100% of the principal amount of the Notes,
plus any accrued but unpaid interest as of the Change of Control Event Date, on
or before such date.

            As used herein, (i) the terms "person" and "group" shall have the
meaning set forth in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), whether or not applicable, (ii) the term
"beneficial owner" shall have the meaning set forth in Rules 13d-3 and l3d-5
under the Exchange Act, whether or not applicable, except that a person shall be
deemed to have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time or upon the occurrence of certain events, and (iii) any
"person" or "group" will be deemed to beneficially own any voting stock of the
Corporation so long as such person or group beneficially owns, directly or
indirectly, in the aggregate a majority of the voting stock of a registered
holder of the voting stock of the Corporation.

            (b) Optional Prepayment. Upon notice given as provided in Section
5(c), the Corporation may, at its option, prepay this Note without penalty, as a
whole at any time or in part from time to time in amounts which shall be
integral multiples of $10,000. Any date on which the Corporation elects to
prepay any of the Notes as provided in this subparagraph 5(b) and each date on
which the Corporation shall be required to prepay the Notes as provide in
subparagraph 5(a) above shall be referred to as a "Prepayment Date."

            (c) Notice of Prepayment. Not less than 20 days prior to a
Prepayment Date, written notice shall be given by registered or certified mail
or by overnight courier to the holders of record of the Notes to be prepaid,
such notice to be addressed to each such holder at his post office address as
shown by the records of the Corporation, specifying the dollar amount to be
prepaid, the paragraph or paragraphs of this Note pursuant to which such
prepayment shall be made, and the date of such prepayment, which date shall not
be a day on which the banks of New York are required or authorized to be closed.
Upon notice of prepayment being given as aforesaid, the Corporation covenants
and agrees that it will prepay, on the date therein fixed for prepayment, this
Note or the portion hereof, as the case may be, so called for prepayment, at the
prepayment price determined in accordance with Section 5(a) or 5(b) hereof. A
prepayment of less than all of the outstanding principal amount of this Note
shall not relieve the Corporation of its obligation to make scheduled payments
of interest payable in respect of the principal remaining outstanding on the
Interest Payment Dates.

            (d) Allocation of All Payments. In the event of any partial payment
of less than all of the interest then due on the Notes then outstanding or any
prepayment, purchase,

<PAGE>

redemption or retirement of less than all of the outstanding principal amount of
the Notes, the Corporation will allocate the amount of interest so to be paid
and the principal amount so to be prepaid, purchased, redeemed or retired to
each Note in proportion, as nearly as may be, to the aggregate principal amount
of all Notes then outstanding.

            (e) Interest After Date Fixed for Prepay. If this Note or a portion
hereof is called for prepayment as herein provided, this Note or such portion
shall cease to bear interest on and after the date fixed for such prepayment
unless, upon presentation for such purpose, the Corporation shall fail to pay
this Note or such portion, as the case may be, in which event this Note or such
portion, as the case may be, and, so far as may be lawful, any overdue
installment of interest, shall bear interest on and after the date fixed for
such prepayment and until paid at the rate per annum provided herein.

            (f) Surrender of Note; Notation Thereon. Upon any prepayment of a
portion of the principal amount of this Note, the holder hereof, at its option,
may require the Corporation to execute and deliver at the expense of the
Corporation (other than for transfer taxes, if any), upon surrender of this
Note, a new Note registered in the name of such person or persons as may be
designated by such holder for the principal amount of this Note then remaining
unpaid, dated as of the date to which the interest has been paid on the
principal amount of this Note then remaining unpaid, or may present this Note to
the Corporation for notation hereon of the payment of the portion of the
principal amount of this Note so prepaid.

            6. Covenants: The Corporation covenants and agrees that, so long as
this Note shall be outstanding:

            (a) Maintenance of Office. The Corporation will maintain an office
or agency in such place in the United States of America as the Corporation may
designate in writing to the registered holder hereof, where this Note may be
presented for registration of transfer and exchange as herein provided, where
notices and demands to or upon the Corporation in respect of this Note may be
served and where, at the option of the holder thereof, this Note may be
presented for payment. Until the Corporation otherwise notifies the holder of
this Note, said office shall be the principal office of the Corporation at 17103
Preston Road, Suite 190 North, Dallas, Texas 75248.

            (b) Corporate Existence. The Corporation will do or cause to be done
all things necessary and lawful to preserve and keep in full force and effect
its corporate existence, rights and franchises and the corporate or partnership
existence, rights and franchises of each of its subsidiaries; provided, however,
that nothing in this paragraph (b) shall prevent (i) a consolidation or merger
of, or a sale, transfer or disposition of all or any substantial part of the
property and assets of, the Corporation or (ii) the abandonment or termination
of any rights or franchises of the Corporation, or the liquidation or
dissolution of, or a sale, transfer or disposition (whether through merger,
consolidation, sale or otherwise) of all or any substantial part of the property
and assets of, any subsidiary or the abandonment or termination of the corporate
or partnership existence, rights and franchises of any subsidiary if such
abandonment, termination, liquidation, dissolution, sale, transfer or
disposition is, in the good faith business judgment of the Corporation, in the
best interests of the Corporation and is not disadvantageous in any material
respect to the holder of this Note.

<PAGE>

            (c) Notice of Default. If any one or more events which constitute,
or which with notice or lapse of time or both would constitute, an Event of
Default under Section 8 of this Note shall occur, or if any holder of the Notes
shall demand payment or take any other action permitted upon the occurrence of
any such Event of Default, the Corporation shall, immediately after it becomes
aware that any such event has occurred or that such demand has been made or that
any such action has been taken, give notice to all holders of the Notes,
specifying the nature of such event or of such demand or action, as the case may
be; provide , however, that if such event, in the good faith judgment of the
Corporation, will be cured within ten days after the Corporation has knowledge
that such event would, with or without notice or lapse of time or both,
constitute such an Event of Default, no such notice need be given if such Event
of Default shall be cured within such ten-day period.

            (d) Merger or Consolidation. Without limitation of the rights of the
holder of this Note set forth in Section 5(a) hereof, if the Corporation shall
erect a merger or consolidation in which it is not the surviving entity, then
the Corporation shall take such action as may be necessary, as a condition to
consummating such transaction, to cause the surviving entity to assume all of
the Corporation's obligations under this Note, as if such entity had been the
original issuer thereof, and such entity shall acknowledge in writing its
obligation to fully and timely honor the Corporation's obligations under this
Note.

            (e) Optional Prepayments of Debt. Other than with respect to Senior
Indebtedness (as hereinafter defined), the Corporation will not make any
optional prepayment of any indebtedness for borrowed money, prior to the
repayment in full of this Note.

            7. Modification; Waiver. The Corporation may, with the written
consent of the holders of not less than 66 2/3% in principal amount of the Notes
then outstanding, modify the terms and provisions of the Notes or the rights of
the holders of the Notes or the obligations of the Corporation thereunder, and
the observance by the Corporation of any term or provision of the Notes may be
waived with the written consent of the holders of not less than 66 2/3% in
principal amount of the Notes then outstanding, provided, however, that no such
modification or waiver shall:

            (a) change the maturity of any Note or reduce the principal amount
thereof or reduce the rate or extend the time of payment of interest thereon or
reduce the amount or change the time of payment of premium payable on any
prepayment thereof without the consent of the holder of each Note so affected;
or

            (b) give any Note any preference over any other Note; or

            (c) reduce the aforesaid percentage of Notes, the consent of the
holders of which is required for any such modification.

            Any such modification or waiver shall apply equally to all the
holders of the Notes and shall be binding upon them, upon each future holder of
any Note and upon the Corporation, whether or not such Note shall have been
marked to indicate such modification or waiver, but any Note issued thereafter
shall bear a notation referring to any such modification or waiver. Promptly
after obtaining the written consent of the holders as herein provided, the

<PAGE>

Corporation shall transmit a copy of such modification or waiver to all the
holders of the Notes at the time

            8. Events of Default. If any one or more of the following events,
herein called Events of Default, shall occur, for any reason whatsoever, and
whether such occurrence shall, on the part of the Corporation or any subsidiary,
be voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of a court of
competent jurisdiction or any order, rule or regulation of any administrative or
other governmental authority, and such Event of Default shall be continuing:

            (a) default shall be made in the payment of the principal when and
as the same shall become due and payable, whether on demand or at a date fixed
for prepayment or by acceleration or otherwise; or

            (b) default shall be made in the payment of any installment of
interest when and as the same shall become due and payable or at a date fixed
for prepayment or by acceleration or otherwise and such default shall continue
for a period of 5 days; or

            (c) default shall be made in the due observance or performance of
any other covenant, condition or agreement on the part of the Corporation to be
observed or performed pursuant to the terms hereof and such default shall
continue for 30 days after written notice thereof, specifying such default and
requesting that the same be remedied, shall have been given to the Corporation
by the holders of at least 25% of the principal amount of the Notes then
outstanding (the Corporation to give forthwith to all other holders of Notes at
the time outstanding written notice of the receipt of such notice specifying the
default referred to therein); or

            (d) the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Corporation or any subsidiary in
an involuntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar laws, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of the
Corporation or any subsidiary or for any substantial part of any of their
property, or ordering the winding-up or liquidation of any of their affairs and
the continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days; or

            (e) the commencement by the Corporation or any subsidiary of a
voluntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar laws, or the consent by any of them to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the Corporation
or any subsidiary or for any substantial part of their property, or the making
by any of them of any assignment for the benefit of creditors, or the failure of
the Corporation or any subsidiary generally to pay its debts as such debts
become due;

then, the holder or holders of at least 25% in aggregate principal amount of the
Notes at the time outstanding may, at its or their option, by notice to the
Corporation, declare all the Notes to be,

<PAGE>

and all the Notes shall thereupon be and become, forthwith due and payable
together with interest accrued thereon without presentment, demand, protest or
further notice of any kind, all of which are expressly waived to the extent
permitted by law, provided, however, that, upon the occurrence and during the
continuance of any of the events specified in subsections (a) or (b) of this
Section 12, the holder of any Note at the time outstanding may, at its option by
notice in writing to the Corporation, declare any Note or Notes then held by it
to be, and such Note or Notes shall thereupon be and become, forthwith due and
payable together with interest accrued thereon without presentment, demand,
protest or further notice of any kind, all of which are expressly waived to the
extent permitted by law.

            At any time after any declaration of acceleration has been made as
provided in this Section 12, the holders of at least 66 2/3% in principal amount
of the Notes then outstanding may, by notice to the Corporation, rescind such
declaration and its consequences, provided, however, that no such rescission
shall extend to or affect any subsequent default or Event of Default or impair
any right consequent thereon.

            Without limiting the foregoing, the Corporation hereby waives any
right to trial by jury in any legal proceeding related in any way to this Note
or the Notes and agrees that any such proceeding may, if the holder so elects,
be brought and enforced in the Supreme Court of the State of New York for New
York County or the United States District Court for the Southern District of New
York and the Corporation hereby waives any objection to jurisdiction or venue in
any such proceeding commenced in such court. The Corporation further agrees that
any process required to be served on it for purposes of any such proceeding may
be served on it, with the same effect as personal service on it within the State
of New York, by registered mail addressed to it at its office or agency set
forth in subsection (a) of Section 6 for purposes of notices hereunder.

            9. Suits for Enforcement. Subject to the provisions of Section 12 of
this Note, in case any one or more of the Events of Default specified in Section
8 of this Note shall occur and be continuing, the holder of this Note may
proceed to protect and enforce its rights by suit in equity, action at law
and/or by other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Note or in aid of the exercise of
any power granted in this Note, or may proceed to enforce the payment of this
Note or to enforce any other legal or equitable right of the holder of this
Note.

            In case of any default under this Note, the Corporation will pay to
the holder thereof such amounts as shall be sufficient to cover the reasonable
costs and expenses of such holder due to said default, including, without
limitation, collection costs and reasonable attorneys' fees, to the extent
actually incurred.

            10. Remedies Cumulative. No remedy herein conferred upon the holder
of this Note is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.

<PAGE>

            11. Remedies Not Waived. No course of dealing between the
Corporation and the holder of this Note or any delay on the part of the holder
hereof in exercising any rights hereunder shall operate as a waiver of any right
of any holder of this Note.

            12. Subordination. (a) Anything contained in this Note to the
contrary notwithstanding, the indebtedness evidenced by this Note shall be
subordinate and junior, to the extent set forth in the following paragraphs (A),
(B), (C) and (D), to all Senior Indebtedness of the Corporation. "Senior
Indebtedness" shall mean the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law and
including any loans made to the Corporation as a debtor in possession in any
bankruptcy proceeding by any persons who were the holders of any Senior
Indebtedness on the date such bankruptcy proceeding was commenced) on all
indebtedness to a bank or banks for borrowed money now existing or hereinafter
incurred which by its terms is not subordinated to any other indebtedness of the
Corporation.

            (A) In the event of any insolvency, bankruptcy, liquidation,
      reorganization or other similar proceedings, or any receivership
      proceedings in connection therewith, relative to the Corporation or its
      creditors or its property, and in the event of any proceedings for
      voluntary liquidation, dissolution or other winding up of the Corporation,
      whether or not involving insolvency or bankruptcy proceedings, then all
      Senior Indebtedness shall first be paid in full before any payment,
      whether on account of principal, interest or otherwise, is made upon the
      Notes.

            (B) In any of the proceedings referred to in paragraph (A) above,
      any payment or distribution of any kind or character, whether in cash,
      property, stock or obligations which may be payable or deliverable in
      respect of the Notes shall be paid or delivered directly to the holders of
      Senior Indebtedness for application in payment thereof, unless and until
      all Senior Indebtedness shall have been paid in full.

            (C) No payment shall be made, directly or indirectly, on account of
      the Notes (i) upon maturity of any Senior Indebtedness obligation, by
      lapse of time, acceleration (unless waived), or otherwise, unless and
      until all principal thereof and interest thereon and all other obligations
      in respect thereof shall first be paid in full and have terminated, or
      (ii) upon the happening of any default in payment of any principal of,
      premium, if any, or interest on or any other amounts payable in respect of
      Senior Indebtedness when the same becomes due and payable whether at
      maturity or at a date fixed for prepayment or by declaration or otherwise
      (a "Senior Payment Default"), unless and until such Senior Payment Default
      shall have been cured or waived or shall have ceased to exist.

            (D) Upon the happening of an event of default (other than described
      in clause (A), (B) or (C) above) with respect to any Senior Indebtedness
      permitting (after notice or lapse of time or both) one or more holders of
      such Senior Indebtedness to declare such Senior Indebtedness due and
      payable prior to the date on which it is otherwise due and payable (a
      "Nonmonetary Default"), upon the occurrence of (i) receipt by the holder
      of this Note of written notice from the holders of said Senior
      Indebtedness

<PAGE>

      of a Nonmonetary Default (any such notice, a "Blockage Notice"), or (ii)
      if such Nonmonetary Default results from the acceleration of this Note,
      the date of such acceleration; then (x) the Corporation will not make,
      directly or indirectly, to the holder of this Note any payment of any kind
      of or on account of this Note; (y) the holder of this Note will not accept
      from the Corporation any payment of any kind of or on account of this Note
      and (z) the holder of this Note may not take, demand, receive, sue for,
      accelerate or commence any remedial proceedings with respect to any amount
      payable under this Note, unless and until in each case described in
      clauses (x), (y) and (z) all such Senior Indebtedness shall have been paid
      in full; provided, however, that if such Nonmonetary Default shall have
      occurred and be continuing for a period (a "Blockage Period") commencing
      on the earlier of the date of receipt of such Blockage Notice or the date
      of the acceleration of this Note and ending 179 days thereafter (it being
      understood that not more than one Blockage Period may be commenced with
      respect to this Note during any period of 360 consecutive days), and
      during such Blockage Period (i) such Nonmonetary Default shall not have
      been cured or waived, (ii) the holder of such Senior Indebtedness shall
      not have made a demand for payment and commenced an action, suit or other
      proceeding against the Corporation and (iii) none of the events described
      in subsection (A) above shall have occurred, then (to the extent not
      otherwise prohibited by subsections (A), (B) or (C) above) the Corporation
      may, not less than 10 days after receipt by the holders of such Senior
      Indebtedness of written notice to such effect from the holder of this
      Note, make and the holder of this Note may accept from the Corporation all
      past due and current payments of any kind of or on account of this Note,
      and such holder may demand, receive, retain, sue for or otherwise seek
      enforcement or collection of all amounts payable on account of principal
      of or interest on this Note.

            (b) Subject to the payment in full of all Senior Indebtedness as
aforesaid, the holder of this Note shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of any kind
or character, whether in cash, property, stock or obligations, which may be
payable or deliverable to the holders of Senior Indebtedness, until the
principal of, and interest on, this Note shall be paid in full in cash, and, as
between the Corporation, its creditors other than the holders of Senior
Indebtedness, and the holders of this Note, no such payment or distribution made
to the holders of Senior Indebtedness by virtue of this Section 12 which
otherwise would have been made to the holder of this Note shall be deemed a
payment by the Corporation on account of the Senior Indebtedness, it being
understood that the provisions of this Section 12 are and are intended solely
for the purposes of defining the relative rights of the holder of this Note, on
the one hand, and the holder of the Senior Indebtedness, on the other hand.
Subject to the rights, if any, under this Section 12 of holders of Senior
Indebtedness to receive cash, property, stock or obligations otherwise payable
or deliverable to the holder of this Note, nothing herein shall either impair,
as between the Corporation and the holder of this Note, the obligation of the
Corporation, which is unconditional and absolute, to pay to the holder thereof
the principal thereof and interest thereon in accordance with its terms or
prevent (except as otherwise specified therein) the holder of this Note from
exercising all remedies otherwise permitted by applicable law or hereunder upon
default hereunder.

            (c) If any payment or distribution of any character or any security,
whether in cash, securities or other property, shall be received by any holder
of this Note in contravention of

<PAGE>

any of the terms hereof or before all the Senior Indebtedness obligations have
been paid in full, such payment or distribution or security shall be received in
trust for the benefit of, and shall be paid over or delivered and transferred
to, the holders of the Senior Indebtedness at the time outstanding in accordance
with the priorities then existing among such holders for application to the
payment of all Senior Indebtedness remaining unpaid, to the extent necessary to
pay all such Senior Indebtedness in full in cash. In the event of the failure of
any such holder to endorse or assign any such payment, distribution or security,
each holder of any Senior Indebtedness is hereby irrevocably authorized to
endorse or assign the name.

            13. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Corporation shall bind its successors and assigns, whether so expressed or
not.

            14. Governing Law. This Note shall be governed and construed in
accordance with the laws of the State of Delaware.

            15. Headings. The headings of the Sections and paragraphs of this
Note are k for convenience only and do not constitute a part of this Note.

<PAGE>

            IN WITNESS WHEREOF, UNITED SURGICAL PARTNERS INTERNATIONAL, INC. has
caused this Note to be signed in its corporate name by one of its officers
thereunto duly authorized and to be dated as of the day and year first above
written.

                                    UNITED SURGICAL PARTNERS
                                    INTERNATIONAL, INC.

                                    By_______________________
                                    Name:
                                    Title:

<PAGE>

                                                                       Exhibit B

                             Form of Promissory Note

                                    SEE TAB 2

<PAGE>
                                                                  Execution Copy

                                                                       EXHIBIT B

                                  WLLIAM WILCOX

                                 PROMISSORY NOTE

$400,000                                                          Dallas, Texas
                                                               October 26, 1998

            FOR VALUE RECEIVED, the undersigned, WILLIAM WILCOX ("Payor"),
hereby promises to pay to UNITED SURGICAL PARTNERS INTERNATIONAL, INC., a
Delaware corporation ("Payee"), the principal sum of FOUR HUNDRED THOUSAND
DOLLARS in lawful money of the United States of America, on May 1, 2002 (the
"Payment Date") and to pay interest (computed on the basis of a 365-day year for
the actual number of days elapsed) from the date hereof on the unpaid principal
amount hereof at the rate of 7% per annum, payable quarterly in arrears on the
first day of each calendar quarter commencing on November 1, 1998, until the
date the outstanding principal amount hereof shall have become due and payable,
whether at maturity or otherwise, and thereafter at the rate of 9% per annum on
any overdue principal amount and (to the extent permitted by applicable law) on
any overdue interest, until paid.

            Payment of principal and interest shall be made at the address of
Payee at United Surgical Partners International, Inc., 17103 Preston Road, Suite
190 North, Dallas, Texas, 75248.

            Notwithstanding any provision of this Note to the contrary, Payor
may prepay the outstanding principal of this Note, without penalty or premium,
in whole or in part, at any time or from time to time, together with accrued
interest to such prepayment date.

            The outstanding principal amount of this Note, plus interest accrued
thereon through the date of payment, shall accelerate and become due and payable
pursuant to the following provisions:

            (i) if at any time while any amount of this Note shall be
outstanding, (x) Payee shall merge or consolidate with or into any other entity
(other than a merger which will not result in more than 50% of the voting
capital stock of Payee outstanding being owned of record or beneficially by
persons other than the holders of such capital stock immediately prior to such
merger in the same proportions in which such stock was held immediately prior to
such merger), (y) Payee shall sell all or substantially all of its assets and
properties as an entirety in a single transaction or in a series of related
transactions to any other person or (z) a majority of the outstanding voting
capital stock of Payee shall be acquired by any person (other than Welsh,
Carson, Anderson & Stowe VII, L.P. or its affiliates) in a single transaction or
series of related transactions, whether by way of merger, consolidation or
otherwise (any transaction described in clauses (x), (y) or (z) above being
referred to herein as a "Change of Control Event") and in connection with such
Change of Control Event Payor receives a cash payment in excess of the
outstanding principal amount of this Note, then the outstanding principal amount
of this Note, plus interest accrued thereon through the date of payment, shall
accelerate and become due and

<PAGE>

payable as of the seventh day after the date (if earlier than May 1, 2002) of
receipt of such cash payment by Payor;

            (ii) if at any time while any amount of this Note shall be
outstanding (x) a Change of Control Event shall occur in which Payor shall
receive freely tradable securities valued at an amount in excess of the
outstanding principal amount of this Note or (y) Payee shall complete an initial
public offering ("IPO") of its Common Stock, par value $.01, registered under
the Securities Act of 1933, as amended, then the outstanding principal amount of
this Note, plus interest accrued thereon through the date of payment, shall
accelerate and become due and payable as of the date (if earlier than May 1,
2002) that is six months after the date of receipt of such securities by Payor
or the consummation of the IPO, as the case may be; and

            (iii) if at any time while any amount of this Note shall be
outstanding Payor's employment with Payee (or any parent of subsidiary thereof)
is terminated for any reason, then the outstanding principal amount of this
Note, plus interest accrued thereon through the date of payment, shall
accelerate and become due and payable as of the date of such termination of
Payor's employment.

            Payor hereby waives presentment, demand, protest, notice and all
other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note.

            This Note may not be transferred or assigned by Payor without the
consent of the holder of this Note and may not be changed or altered except by a
writing duly signed by Payor and the holder of this Note.

            This Note shall be governed by and construed in accordance with the
laws of the State of Delaware.

            IN WITNESS WHEREOF, Payor has caused this Note to be executed as of
the day and year first above written.

                                      By______________________________
                                        William Wilcox

<PAGE>

                                                                       Exhibit C

                   Form of Amendment No. 3 to the Amended and
                     Restated Registration Rights Amendment

                                    SEE TAB 3

<PAGE>

                                                                  Execution Copy

                                                                       EXHIBIT C

                                 AMENDMENT NO. 3

                                       TO

                              AMENDED AND RESTATED
                          REGISTRATION RIGHTS AGREEMENT

            AMENDMENT NO. 3 to the Amended and Restated Registration Rights
Agreement, dated as of October 26, 1998 (the "Amendment"), among United Surgical
Partners International, Inc., a Delaware corporation (the "Company'") and the
several other parties named at the foot hereof, amending the Amended and
Restated Registration Rights Agreement dated as of April 30, 1998 among the
Company and the several signatories thereto (the "Registration Rights
Agreement'"). All capitalized terms used and not defined herein shall have the
meaning set forth in the Securities Purchase Agreement dated as of the date
hereof (the "Securities Purchase Agreement'") among the Company and the several
other parties named therein.

            On the date hereof, the Company and the Purchasers are consummating
the transactions contemplated by the Securities Purchase Agreement pursuant to
which the Company has agreed to sell to the Purchasers from time to time an
aggregate 9,157,356 shares of the Company's Class A Common Stock, $.0l par value
('"Class A Common Stock").

            It is a condition to the closing of the transactions contemplated by
the Securities Purchase Agreement that the Company and the parties hereto
execute this Amendment.

            Pursuant to Section 13(d) of the Registration Rights Agreement, the
Registration Rights Agreement is hereby amended as follows:

            1. Each WCASIHC Purchaser, other than Tucker Taylor, Alyce Craddock,
Greg Koonsman and Jon O'Sullivan, is hereby made a party to the Registration
Rights Agreement with the same rights and obligations as a holder of "Restricted
Stock" (with respect to the shares of Class A Common Stock purchased by such
WCAS/HC Purchaser pursuant to the Securities Purchase Agreement) as set forth in
the Registration Rights Agreement.

            2. Each Management Purchaser, Tucker Taylor, Alyce Craddock, Greg
Koonsman and Jon O'Sullivan is hereby made a party to the Registration Rights
Agreement with the same rights and obligations as a holder of "Investor Shares"
(with respect to the shares of Class A Common Stock purchased by such individual
pursuant to the Security Purchase Agreement) as set forth in the Registration
Rights Agreement.

            3. The Registration Rights Agreement, as amended by this Amendment,
is hereby in all respects confirmed.

            4. This Amendment shall be governed by and construed in accordance
with the laws of the State of Delaware.

<PAGE>

            5. This Amendment may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

                                   UNITED SURGICAL PARTNERS
                                   INTERNATIONAL, INC.

                                   By_______________________
                                   Donald Steen
                                   Chief Executive

<PAGE>

WCAS/HC Purchasers

WELSH, CARSON, ANDERSON
   & STOWE VII, L.P.

By WCAS VII Partners, L.P.
General Partner

By____________________________
Laura VanBuren
General Partner

WCAS HEALTHCARE PARTNERS, L.P.

By WCAS HC Partners
General Partner

By_____________________________
Laura VanBuren
Attorney-in-Fact

<PAGE>

Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Richard H. Stowe
Andrew M. Paul
Thomas E. McInerney
Robert A. Minicucci
Anthony J. deNicola
Paul B. Queally

By_____________________________
Laura VanBuren
Attorney-in-Fact

_______________________________
Laura Van Buren

_______________________________
Rudolph E. Rupert

_______________________________
D. Scott Mackesy.

_______________________________
Lauren Melkus

<PAGE>

_______________________________
Tucker Taylor

_______________________________
Alyce Craddock

_______________________________
Greg Koonsman

_______________________________
Jon O'Sullivan

<PAGE>

HEALTH CARE CAPITAL
 PARTNERS, L.P.

By Ferrer Freeman Thompson & Co., LLC
General Partner

By___________________________________
Name:
Title:

HEALTH CARE EXECUTIVE
   PARTNERS, L.P.

By Ferrer Freeman Thompson & Co., LLC
General Partner

By___________________________________
Name:
Title:

<PAGE>

Management Purchasers

_______________________________
Donald Steen

_______________________________
William Wilcox

_______________________________
Sue Shelley

_______________________________
Jeffrey Stockard

_______________________________
Laurie Hogue

_______________________________
Michael Crews

_______________________________
David McDonald FBO Tracy McDonald

_______________________________
James Branon

<PAGE>

                                                                       Exhibit D

    Form of Amendment No 3 to the Amended and Restated Stockholders Agreement

                                    SEE TAB 4

<PAGE>

                                                                  Execution Copy

                                                                       EXHIBIT D

                                 AMENDMENT NO. 3

                                       TO

                              AMENDED AND RESTATED
                             STOCKHOLDERS AGREEMENT

            AMENDMENT NO. 3 to the Amended and Restated Stockholders Agreement,
dated as of October 26, 1998 (the "Amendment"), among United Surgical Partners
International, Inc., a Delaware corporation (the "Company") and the several
other parties named at the foot hereof, amending the Amended and Restated
Stockholders Agreement dated as of April 30, 1998 among the Company and the
several signatories thereto (the "Stockholders Agreement"). All capitalized
terms used and not defined herein shall have the meaning set forth in the
Securities Purchase Agreement dated as of the date hereof (the "Securities
Purchase Agreement") among the Company and the several other parties named
therein.

            On the date hereof, the Company and the Purchasers are consummating
the transactions contemplated by the Securities Purchase Agreement pursuant to
which the Company has agreed to sell to the Purchasers from time to time an
aggregate 9,157,356 shares of the Company's Class A Common Stock, $.01 par
value.

            It is a condition to the closing of the transactions contemplated by
the Securities Purchase Agreement that the Company and the parties hereto
execute this Amendment.

            Pursuant to Section 13 of the Stockholders Agreement, the
Stockholders Agreement is hereby amended as follows:

            1. Lauren Melkus is hereby made a party to the Stockholders
Agreement with the same rights and obligations as the "Stockholders" as set
forth in the Stockholders Agreement.

            2. The several parties named in Annex I hereto are hereby
made a party to the Stockholders Agreement with the same rights and obligations
as the "Investors" as set forth in the Stockholders Agreement.

            3. The Stockholders Agreement is hereby amended by deleting
Section I (a) thereto in its entirety and replacing it with the following
language:

            Section 1. Voting Agreement. (a) At each annual or special
            stockholders meeting called for such purpose, and whenever the
            stockholders of the Company act by written consent with respect to
            the election of directors, each Stockholder agrees to vote or
            otherwise give such Stockholder's consent in respect of all shares

<PAGE>

            of capital stock of the Company (whether now or hereafter acquired)
            owned by such Stockholder or as to which such Stockholder is
            entitled to vote, and the Company shall take all necessary and
            desirable actions within its control, in order to cause the election
            to the Board of Directors of the Company of

            (i) the Chief Executive Officer of the Company, which individual
            will initially be Donald Steen, and

            (ii) for so long as Health Care Capital Partners, L.P. and Health
            Care Executive Partners, L.P. (together, "HC Partners") collectively
            maintain ownership of not less than 50% of the securities purchased
            by HC Partners under the Securities Purchase Agreement dated as of
            October 26, 1998 among the Company and the several other parties
            named therein (or securities into which such securities are
            converted, exchanged or reclassified), one individual designated by
            HC Partners and which individual shall be acceptable to WCAS in its
            reasonable discretion. Such individual shall be appointed to the
            Board of Directors on or before October 30, 1998 and Carlos Ferrer
            shall be HC Partners' initial designee.

      4. The Stockholders Agreement is hereby amended by adding at the
end of Section 4 the following language:

            (e) Notwithstanding the foregoing references in this Section 4 to
            shares of Class A Common Stock, if all of the shares of the
            Company's Class A Common Stock have been converted into shares of
            the Company's Common Stock, $.01 par value ("Common Stock"),
            pursuant to subparagraph 3B of Section II of Article IV of the
            Company's Certificate of Incorporation, as amended, then this
            Section 4 shall be applicable in its entirety to sales of such
            shares of Common Stock.

      5. The Stockholders Agreement is hereby amended by deleting the
phrase "of $2 per share" on line 7 of Section 5(a) and replacing it with the
following language:

            equal to the original per share purchase price paid to the Company
            with respect to each share of such Class A Common Stock (the
            "Departing Management Share Price").

      6. The Stockholders Agreement is hereby amended by deleting the
phrase "of $2" on line 8 of Section 5(b) and on line 8 of Section 5(c) and by
replacing it in each case with the following language:

            equal to the Departing Management Share Price.

<PAGE>

      7. The Stockholders Agreement is hereby amended by deleting the
text on line 3 of Section 13 and replacing it with the following language:

            by an instrument in writing signed by the Company, WCAS, HC Partners
            and the holders of the majority of the

      8. The Stockholders Agreement is hereby amended by deleting
Schedule I thereto in its entirety and replacing it with Schedule I attached
hereto.

      9. The Stockholders Agreement, as amended by this Amendment, is
hereby in all respects confirmed.

      10. This Amendment shall be governed by and construed in accordance
with the laws of the State of Delaware.

      11. This Amendment may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

                                       UNITED SURGICAL PARTNERS
                                       INTERNATIONAL, INC.

                                       By_______________________
                                       Donald Steen
                                       Chief Executive

<PAGE>

WELSH, CARSON, ANDERSON
 & STOWE VII, L.P.

By WCAS VII Partners, L.P.
General Partner

By_____________________________________
Lauren VanBuren
General Partner

HEALTH CARE CAPITAL
   PARTNERS, L.P.

By Ferrer Freeman Thompson & Co., LLC
General Partner

By_____________________________________
Name:
Title:

HEALTH CARE EXECUTIVE
   PARTNERS, L.P.

By Ferrer Freeman Thompson & Co., LLC
General Partner

By_____________________________________
Name:
Title:

<PAGE>

__________________________________
Tucker Taylor

__________________________________
Alyce Craddock

__________________________________
Greg Koonsman

__________________________________
Jon O'Sullivan

__________________________________
David McDonald FBO Tracy McDonald

__________________________________
James Branon

__________________________________
Lauren Melkus

<PAGE>

______The undersigned, as the holder of in excess of a majority of the
outstanding shares of capital stock of the Company held by the Management
Stockholders, consents to the foregoing amendment.

_______________________________
Donald Steen

<PAGE>

                                     ANNEX I

Health Care Capital Partners, L.P.
Health Care Executive Partners, L.P.
Tucker Taylor
Alyce Craddock
Greg Koonsman
Jon O'Sullivan
David McDonald FBQ Tracy McDonald
James Branon

<PAGE>

                            SCHEDULE I -STOCKHOLDERS

1. Investors

a. Management Stockholders

Donald Steen
Sue Shelley
Laurie Hogue
Michael Crews
SuZan Nelson
David McDonald
David McDonald FBO Tracy McDonald
James Branon
William Wilcox (with respect to all shares of capital stock acquired
                after June 26, 1998)
Jeffrey Stockard (with respect to all shares of capital stock
               acquired after July 31, 1998)

c/o United Surgical Partners
  International, Inc.
17103 Preston Road
Suite 190 North
Dallas, Texas 75248
Facsimile: 972-267-0084

<PAGE>

b.

Health Care Capital Partners, L.P.
Health Care Executive Partners, L.P.

c/o Ferrer Freeman
  Thompson & Co., LLC
10 Glenville Street
Greenwich, CT 06831
Facsimile: 203-532-8016

M. Robert Knapp Trust
Calver Fund, Inc.
James Ken Newman
NGKE/USPI Partners
L & W Co.
Norman Brownstein
Rivid LLC
Paul Whitman
CGJR II, L.P.
CGJR/MF III, L.P.
Patrick McMullan
Craig Callen
Lawrence Lavine
David Dennis
Michael R. & Jane L. Nicolais
Tom C. Davis
William Wilcox (with respect to the shares of Class A Common Stock
                acquired on June 26, 1998)
Edward W. Karrels
Michael W. Barton
Alice J. Charron
Charles Morton
David Gaw
Sandra Holshouser
Jeffrey Stockard (with respect to the shares of Class A Common Stock
                  acquired on July 31, 1998)

Tucker Taylor
Alyce Craddock
Greg Koonsman
Jon O'Sullivan

<PAGE>

2. WCAS Stockholders

Welsh, Carson, Anderson
 & Stowe VII, L.P.
WCAS Healthcare
 Partners, L.P.
Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Richard H. Stowe
Andrew M. Paul
Thomas E. McInerney
Laura VanBuren
Robert A. Minicucci
Anthony deNicola
Paul B. Queally
Rudolph E. Rupert
D. Scott Mackesy
Kenneth Melkus
Lauren Melkus

c/o Welch, Carson, Anderson
   & Stowe
320 Park Avenue - Suite 2500
New York, NY  10022-9500
Facsimile: 212-893-9575

<PAGE>

                                                                       Exhibit E

      Form of Certificate of Amendment to the Certificate of Incorporation

                                    SEE TAB 5

<PAGE>

                            CERTIFICATE OF AMENDMENT

                                       TO

                          CERTIFICATE OF INCORPORATION

                                       OF

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

--------------------------------------------------------------------------------
                     Pursuant to Section 242 of the General
                    Corporation Law of the State of Delaware
--------------------------------------------------------------------------------

      UNITED SURGIAL PARTNERS INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), hereby
certifies as follows:

      FIRST: that the following resolutions were adopted by unanimous written
consent of the Board of Directors for the Corporation, setting forth proposed
amendments to the Certificate of Incorporation of the Corporation, determining
that the capital of the Corporation will not be decreased on account of such
amendments, and declaring such amendments to be advisable and directing that
such amendments be submitted to the stockholders of the Corporation for their
approval. The resolutions are as follows:

      "RESOLVED, that there is hereby adopted an amendment to the Corporation's
Certificate of Incorporation pursuant to which (i) the authorized capital stock
of the Corporation shall be changed from 50,033,916 shares, consisting of
20,000,000 shares of Class A Common Stock, $.01 par value, 30,000,000 shares of
Common Stock, $.01 par value, 31,200 Series A Redeemable Preferred Stock, $.01
par value and 2,716 shares of Series B Convertible Preferred Stock, $.01 par
value, to 70,033, 916 shares, consisting of 30,000,000 shares of Class A Common
Stock, $.01 par value ("Class A Common Stock"), 40,000,000 shares of Common
Stock, $.01 par value ("Common Stock"), 31,200 shares of Series A Redeemable
Preferred Stock, $.01 par value ("Series A Preferred Stock") and 2,716 shares of
Series B Convertible Preferred Stock, $.01 par value ("Series B Preferred
Stock") (the Series A Preferred Stock and Series B Preferred Stock being
collectively referred to as the "Preferred Stock"), and (ii) the relative
voting, dividend, liquidation, redemption and other rights and the
qualifications, limitations and restrictions thereof, in respect of said
Preferred Stock, Class A Common Stock and Common Stock shall be restated; and,
in connection with such changes, Article FOURTH of the Certificate of
Incorporation of the Corporation shall be amended to read in its entirety as
follows:

      "Fourth: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 70,033,916 shares, consisting of
31,200 shares of Series A Redeemable Preferred Stock, $.01 par value ("Series A
Preferred Stock"), 2,716 shares of Series B Convertible Preferred Stock, $.01
par value ("Series B Preferred Stock") (the Series A Preferred

<PAGE>

Stock and Series B Preferred Stock being collectively referred to herein as the
"Preferred Stock"), 30,000,000 shares of Class A Common Stock, $.01 par value
("Class A Common Stock") and 40,000,000 shares of Common Stock, $.01 par value
("Common Stock").

      All cross-references in each subdivision of this Article FOURTH refer to
other paragraphs in such subdivision unless otherwise indicated.

      The following is a statement of the designations, and the powers,
preferences and rights, and the qualifications, limitation so or restrictions
thereof, in respect of each class of stock of the Corporation:

                                       I.

                                 PREFERRED STOCK

      Except as otherwise expressly provided herein, all shares of Preferred
Stock shall be identical and shall entitle the holders thereof to the same
rights and privileges.

                        1. Cumulative Dividends. The holders of shares of
      Preferred Stock shall be entitled to receive, on April 30th of each year
      beginning April 30, 2000, out of funds legally available for such purpose,
      cash dividends at the rate of (x) $50.00 per share per annum on April 30,
      2000 and (y) $75.00 per share per annum thereafter, and no more, payable
      (as determined from time to time by the Board of Directors) on each share
      of Preferred Stock that shall then be outstanding (each annual period
      ended April 30th being referred to for the purposes of this subdivision I
      as a "Dividend Period"). Such dividends shall be cumulative (so that if
      for any Dividend Period such dividends are not paid or declared and set
      apart therefore, the deficiency shall be paid, in whole or in part
      (without declared and set apart therefore, the deficiency shall be paid,
      in whole or in part (without interest), on the next succeeding dividend
      payment date on which the Corporation has any fund legally available
      therefore) and shall accrue from and after the date of issue whether or
      not declared and whether or not there are any funds of the Corporation
      legally available for the payment of dividends. Accrued but unpaid
      dividends shall not bear interest. The Board of Directors of the
      Corporation may fix a record date for the determination of holders of
      Preferred Stock entitled to receive payment of a dividend declared
      thereon, which record date shall be no more than 60 days prior to the date
      fixed for the payment thereof.

                        As long as any shares of Preferred Stock shall remain
      outstanding in no event (without the written consent of the holders of a
      majority of the outstanding Preferred Stock) shall any dividend whatsoever
      be paid upon, nor any distribution be made upon any share of Class A
      Common Stock or Common Stock, other than a dividend or distribution
      payable in shares of Common Stock, nor except for the repurchase of shares
      (x) from participants under any stock option plans approved by a majority
      of the Board of Directors of the Corporation and (y) pursuant to the
      Amended and Restated Stockholders Agreement dated April 30, 1998 (as
      amended) among the Corporation and the stockholders named therein, shall
      nay shares of Class A Common or Common Stock be purchased or redeemed by
      the Corporation, nor shall any moneys be paid to or made

<PAGE>

      available for a sinking fund for the purchase or redemption of shares of
      any Class A Common Stock or Common Stick, unless, in each such case,
      accrued and unpaid dividends on all outstanding shares of Preferred Stock
      for all prior Dividend Periods shall have been declared and paid in full
      and the full dividend on all outstanding shares of Preferred stock for the
      then-current Dividend Period shall have been paid or declared and
      sufficient funds for the payment thereof set apart, and any arrears or
      defaults in any redemption of shares of Preferred Stock shall have been
      cured.

                        2. Redemption. The shares of Preferred Stock shall be
      redeemable as follows:

                        2A. Mandatory Redemption. Except as and to the extent
      expressly prohibited by applicable law, the Corporation shall redeem (in
      the manner and with the effect provided in subparagraphs 2C through 2E
      below) all shares of Preferred Stock which shall then be outstanding, on
      the earlier to occur of (i) the consummation by the Corporation of an
      initial public offering of its Common Stock registered under the
      Securities Act of 1933, as amended (an "Initial Public Offering") or (ii)
      April 30, 2008. In case of the occurrence of any of the following (each a
      "Change of Control Event"): (i) a consolidation or merger of the
      Corporation with or into any other corporation (other than a merger which
      will not result in more than 50% of the voting capital stock of the
      Corporation outstanding immediately after the effective date of such
      merger being owned of record or beneficially by persons other than the
      holders of such voting capital stock immediately prior to such merger in
      the same proportions in which such shares were held immediately prior to
      such merger), (ii) a sale of all or substantially all of the properties
      and assets of the Corporation as an entirety in a single transaction or in
      a series of related transactions to any other person or (iii) the
      acquisition of "beneficial ownership" by any "person" or "group" (other
      than Welsh, Carson, Anderson & Stowe VII, L.P. or its affiliates) of
      voting stock of the Corporation representing more than 50% of the voting
      power of all outstanding shares of such voting stock, whether by way of
      merger of consolidation or otherwise, the Corporation shall, not later
      than 20 days prior to the effective date of any such Change of Control
      Event, give notice thereof to the holder of holders of shares of Preferred
      Stock and, in the event that within 15 days after receipt of such notice,
      any holder or holders of shares of Preferred Stock shall elect, by written
      notice to the Corporation, to have any or all of its shares of Preferred
      Stock redeemed, the Corporation shall redeem the same (in the manner and
      with the effect provided in subsections 2C through 2E below) not later
      than the effective date and time of such Change of Control Event. In
      addition, at any time on or after the second anniversary of the date on
      which shares of Series B Preferred Stock are first issued, the Corporation
      shall, not later than 30 days after receipt of written notice from any
      holder of shares of Series B Preferred Stock requesting redemption of any
      or all of its shares of Series B Preferred Stock, redeem such shares of
      Series B Preferred Stock (in the manner and with the effect provided in
      subparagraphs 2C through 2E below).

                        As used herein, (i) the terms "person" and "group" shall
      have the meaning set forth in Section 13(d)(3) of the Securities Exchange
      Act of 1934, as amended (the "Exchange Act"), whether or not applicable,
      (ii) the term "beneficial owner" shall have the meaning set forth in Rules
      13d-3 and 13d-5 under the Exchange Act, whether or not

<PAGE>

      applicable, except that a person shall be deemed to have "beneficial
      ownership" of all shares that any such person has person has the right to
      acquire, whether such right is exercisable immediately or only after the
      passage of time or upon the occurrences of certain events, and (iii) any
      "person" or "group" will be deemed to beneficially own any voting stock of
      the Corporation so long as such person or group beneficially owns,
      directly or indirectly, in the aggregate a majority of the voting stock of
      the Corporation.

                        2B. Optional Redemption. The Corporation may, in its
      sole discretion, redeem at any time and from time to time (in the manner
      and with the effect provided in subparagraphs 2C through 2E below), any
      whole number of shares of Preferred Stock. Any date on which the
      Corporation elects to redeem shares of Preferred Stock as provided in this
      subparagraph 2B and each date on which the Corporation shall be required
      to redeem shares of Preferred Stock as provided in subparagraph 2A above
      shall be referred to as a "Redemption Date."

                        2C. Redemption Price Notice of Redemption. The Preferred
      Stock to be redeemed on a Redemption Date shall be redeemed by paying for
      each share the sum of (i) $1,000, plus (ii) an amount equal to dividends
      accrued and unpaid thereon from the date of issuance of such share of
      Preferred Stock to such Redemption Date, the sum of (i) and (ii) being
      herein sometimes referred to as the "Redemption Price". Not less than 20
      days before such Redemption Date, written notice shall be given by mail,
      postage prepaid to the holders of record of the Preferred Stock to be
      redeemed, such notice to be addressed to each such stockholder at his post
      office address as shown by the records of the Corporation, specifying the
      number of shares to be redeemed, the paragraph or paragraphs of this
      Certificate of Incorporation pursuant to which such redemption shall be
      made, the Redemption Price and the place and date of such redemption,
      which date shall not be a day on which banks in the City of New York are
      required or authorized to close. If such notice of redemption shall have
      been duly given and if on or before such redemption date the funds
      necessary for redemption shall have been set aside so as to be and
      continue to be available therefor, then, notwithstanding that any
      certificate for shares of Preferred Stock to be redeemed shall not have
      been surrendered for cancellation, after the close of business on such
      Redemption Date, the shares so called for redemption shall no longer be
      deemed outstanding, the dividends thereon shall cease to accrue, and all
      rights with respect to such shares shall forthwith after the close of
      business on the Redemption Date, cease, except only the right of the
      holders thereof to receive, upon presentation of the certificate
      representing shares so called for redemption, the Redemption Price
      therefor, without interest thereon.

                        2D. Redeemed or Otherwise Acquired Shares to be Retired.
      Any shares of the Preferred Stock redeemed pursuant to this paragraph 2 or
      otherwise acquired by the Corporation in any manner whatsoever shall be
      permanently retired and shall not under any circumstances be reissued; and
      the Corporation may from time to time take such appropriate corporate
      action as may be necessary to reduce the number of authorized shares of
      Preferred Stock accordingly.

                        2E. Shares to be Redeemed. In case of the redemption,
      for any reason, of only part of the outstanding shares of Preferred stock
      on a Redemption Date, all shares

<PAGE>

      of Preferred Stock to be redeemed shall be selected pro rata and there
      shall be so redeemed from each registered holder in whole shares, as
      nearly as practicable to the nearest whole share, that proportion of all
      the shares to be redeemed which the number of shares held of record by
      such holder bears to the total number of shares of Preferred Stock at the
      time outstanding. Any shares of Preferred Stock that are designated for
      redemption on a Redemption Date and are not so redeemed shall be redeemed
      as soon thereafter as possible and in the manner in which shares are
      otherwise redeemed on a Redemption Date, and, in such event, as provided
      in this subdivision I, dividends shall continue to accrue on such shares.

                        3. Liquidation. Upon any liquidation, dissolution or
      winding up of the Corporation, whether voluntary or involuntary, the
      holders of the shares of Preferred Stock shall be entitled, before any
      distribution or payment is made upon any Class A Common or Common Stock,
      to be paid an amount equal to $1,000 per share plus any accrued but unpaid
      dividends (such amounts being sometimes referred to as the "Preferred
      Liquidation Payments"). If upon such liquidation, dissolution or winding
      up of the Corporation, whether voluntary or involuntary, the assets to be
      distributed amount the holders of the Preferred Stock of the Corporation
      shall be insufficient to permit payment to such holders of the full amount
      of the Preferred Liquidation Payments, then the entire assets of the
      Corporation to be so distributed shall be distributed ratably per share
      among the holders of Preferred Stock in proportion to the full per share
      amounts to which they respectively are entitled. Upon any such
      liquidation, dissolution or winding up of the Corporation, after the
      holders of Preferred Stock shall have been paid in full the preferential
      amounts to which they shall be entitled as provided herein, the remaining
      net assets of the Corporation shall be distributed to the holders of Class
      A Common Stock and Common Stock in accordance with this Certificate of
      Incorporation. Written notice of such liquidation, dissolution or winding
      up, stating a payment date, the amount of the Preferred Liquidation
      Payments to be made pursuant hereto and the place where said Preferred
      Liquidation Payments shall be payable shall be given by mail, postage
      prepaid, not less than 30 days prior to the payment date stated therein to
      the holders of record of the Preferred Stock, such notice to be addressed
      to each such holder at this post office address as shown by the records of
      the Corporation, provided, however, that failure to give notice pursuant
      to this sentence shall not invalidate the action involved. A Change of
      Control Event shall not, for purposes of this paragraph 3, be deemed a
      liquidation, dissolution or winding up of the Corporation.

                        4. Conversion of Series B Preferred Stock.

                        4A. Optional Conversion of Series B Preferred Stock. At
      any time on or after the second anniversary of the date on which shares of
      Series B Preferred Stock are first issued, subject to an upon compliance
      with the provisions of this paragraph 4, the holder of any share or shares
      of Series B Preferred Stock shall have the right, at its option, to
      convert any such shares of Series B Preferred Stock (except that upon any
      liquidation, dissolution or winding up of the Corporation or upon any
      redemption of the Series B Preferred Stock in accordance with paragraph 2,
      the right of conversion shall terminate at the close of business on the
      last full business day next preceding the date fixed for payment of the
      amount distributable on Series B Preferred or payable with

<PAGE>

      respect thereto) into such number of fully paid and non-assessable whole
      shares of Class A Common Stock as is obtained by multiplying the number of
      shares of Series B Preferred Stock so to be converted by $1,000 (plus any
      accrued and unpaid per share dividends through the time of conversion) and
      dividing the result by the grater of (x) $2.00 (such price, or such price
      as last adjusted hereunder, the "Base Conversion Price") and (y) the fair
      market value per share of Class A Common Stock at the time of conversion
      as determined in good faith by the Board of Directors of the Corporation.
      Such rights of conversion shall be exercised by the holder thereof by
      filing written notice that the holder elects to convert a stated number of
      shares of Series B Preferred Stock into Class A Common Stock and by
      surrender of a certificate or certificates for the shares so to be
      converted to the Corporation at its principal office (or such other office
      or agency of the Corporation as the Corporation may designate by notice in
      writing to the holder or holders of the Series B Preferred Stock) at any
      time during its usual business hours on the date set forth in such notice,
      together with a statement of the name or names (with address), subject to
      compliance with applicable laws to the extent such designation shall
      involve a transfer, in which the certificate or certificates for shares of
      Class A Common Stock shall be issued.

                        4B. Issuance of Certificates; Time Conversion Effected.
      Promptly after the receipt by the Corporation of the written notice
      referred to in subparagraph 4A and surrender of the certificate or
      certificates for the share or shares of the Series B Preferred Stock to be
      converted, the Corporation shall issue and deliver, or cause to be issued
      and delivered, to the holder, registered in such name or names as such
      holder may direct, subject to compliance with applicable laws to the
      extent such designation shall involve a transfer, a certificate or
      certificates for the number of whole shares of Class A Common Stock
      issuable upon the conversion of such share or shares of Series B Preferred
      Stock. To the extent permitted by law, such conversion shall be deemed to
      have been effected immediately prior to the close of business on the day
      the certificate or certificates for such share or shares shall have been
      surrendered as aforesaid, and at such time the rights of the persons in
      whose name or names any certificate or certificates for shares of Class A
      Common Stock shall be issuable upon such conversion shall be deemed to
      have become the holder or holders of record of the shares represented
      thereby.

                        4C. Fractional Shares; Dividends; Partial Conversion. No
      fractional shares shall be issued upon conversion of the Series B
      Preferred Stock into Class A Common Stock. In case the number of shares of
      Series B Preferred Stock represented by the certificate or certificates
      surrendered pursuant to subparagraph 4A exceeds the number of shares
      converted, the Corporation shall, upon such conversion, execute and
      deliver to the holder thereof, at the expense of the Corporation, a new
      certificate or certificates for the number of shares of Series B Preferred
      Stock, represented by the certificate or certificates surrendered which
      are not to be converted. If any fractional interest in a share of Class A
      Common Stock would, except for the provisions of the first sentence of
      this subparagraph 4C, be deliverable upon any such conversion, the
      Corporation, in lieu of delivering the fractional share there, shall pay
      to the holder surrendering the Series B Preferred Stock for conversion an
      amount in cash equal to the current fair value of such fractional interest
      as determined in good faith by the Board of Directors of the Corporation.

<PAGE>

                        4D. Subdivision or Combination of Stock. In case the
      Corporation shall at any time subdivide its outstanding shares of Class A
      Common Stock into a greater number of shares or shall declare or pay a
      dividend on its outstanding shares of Class A Common Stock payable in
      shares of Class A Common Stock, then in each case the Base Conversion
      Price shall be similarly reduced, and conversely, in case the outstanding
      shares of Class A Common Stock of the Corporation shall be combined into a
      smaller number of shares, the Base Conversion Price shall be similarly
      increased.

                        4E. Reorganization, Reclassification, Merger of Sale. If
      any capital reorganization or reclassification of the capital stock of the
      Corporation shall be effected in such a way (including, without
      limitation, by way of consolidation or merger) that holders of Class A
      Common Stock shall be entitled to receive stock, securities or assets with
      respect to or in exchange for Class A Common Stock, then, as a condition
      of such reorganization or reclassification, lawful and adequate provision
      shall be made whereby each holder of a share or shares of Series B
      Preferred Stock shall thereafter have the right to receive, upon the basis
      and upon the terms and conditions specified herein and in lieu of the
      shares of Class A Common Stock of the Corporation immediately theretofore
      receivable upon the conversion of such share or shares of Series B
      Preferred Stock, such shares of stock, securities or assets as may be
      issued or payable with respect to or in exchange for a number of
      outstanding shares of such Class A Common Stock equal to the number of
      shares of such stock immediately theretofore so receivable had such
      reorganization or reclassification not taken place, and in any such case
      appropriate provision shall be made with respect to the rights and
      interests of such holder to the end that the provisions hereof shall
      thereafter be applicable, as nearly as may be, in relation to any shares
      of stock, securities or assets thereafter deliverable upon the exercise of
      such conversion rights. In the event of a merger or consolidation of the
      Corporation as a result of which a greater or lesser number of shares of
      common stock of the surviving corporation are issuable to holders of Class
      A Common Stock of the Corporation outstanding immediately prior to such
      merger or consolidation, the Base Conversion Price shall e adjusted in the
      same manner as though there were a subdivision or combination of the
      outstanding shares of Class A Common Stock of the Corporation. The
      Corporation will not effect any such consolidation or merger, or any sale
      of any or substantially all its asserts and properties, unless prior to
      the consummation thereof the successor corporation (if other than the
      Corporation) resulting from such consolidation or merger of the
      corporation purchasing such assets shall assume by written instrument
      executed and mailed or delivered to each holder of shares of Series B
      Preferred Stock at the last address of such holder appearing on the books
      of the Corporation, the obligation to deliver to such holder such shares
      of stock, securities or assets as, in accordance with the foregoing
      provisions, such holder may be entitled to receive.

                        4F. Notice of Adjustment. Upon any adjustment made
      pursuant to 4D or 4E, then and in each such case the Corporation shall
      give written notice thereof, by first class mail, postage prepaid,
      addressed to each holder of shares of Series B Preferred Stock at the
      address of such holder as shown on the books of the Corporation, which
      notice shall state the number of shares of Class A Common Stock or other
      securities, cash or property issuable upon conversion of the Series B
      Preferred stock resulting from such

<PAGE>

      adjustment, setting forth in reasonable detail the method of calculation
      and the facts upon which such calculation is based.

                        4G. Stock to be Reserved. The Corporation will at all
      times reserve and keep available out of it authorized but unissued Class A
      Common Stock, solely for the purpose o issuance upon the conversion of the
      Series B Preferred Stock as herein provided, such number of shares of
      Class A Common Stock as shall then be issuable upon the conversion of all
      outstanding shares of Series B Preferred Stock. All shares of Class A
      Common Stock which shall be so issued shall be duly and validly issued and
      fully paid and non-assessable and free from all taxes, liens, and charges
      arising out of or by reason of the issue thereof. The Corporation will
      take all such action within its control as may be necessary on its part to
      assure that all such shares of Class A Common Stock may be so issued
      without violation of any applicable law or regulation, or of any
      requirements of any national securities exchange upon which the Class A
      Common Stock or the Corporation may be listed.

                        4H. No Reissuance of Series B Preferred Stock. Shares of
      Series B Preferred Stock which are converted into shares of Class A Common
      Stock as provided herein shall not be reissued.

                        4I. Issue Tax. The issuance of certificates for shares
      of Class A Common Stock upon conversion of the Series B Preferred Stock
      shall be made without charge to the holders thereof for any issuance tax
      in respect thereof, provided that the Corporation shall not be required to
      pay any tax which may be payable in respect of any transfer involved n the
      issuance and deliver of any certificate in a name other than that of the
      holder of the Series B Preferred Stock which is being converted.

                        4J. Closing of Books. The Corporation will at no time
      close its transfer books against the transfer of any Series B Preferred
      Stock or of any shares of Class a Common Stock issued or issuable upon the
      conversion of any shares of Series B Preferred Stock in any manner which
      interferes with the timely conversion of such Series B Preferred Stock.

                        4K. Definition of Class A Common Stock. As used in this
      paragraph 4, the term "Class A Common Stock" shall mean and include the
      Corporation's authorized Class A Common Stock, $.01 par value, as
      constituted on the date of filing of this Certificate of Amendment to the
      Certificate of Incorporation and shall also include any capital stock of
      any class of the Corporation thereafter authorized which shall not be
      limited to a fixed sum or percentage of par value in respect of the rights
      of the holders thereof to participate in dividends or in the distribution
      of assets upon the voluntary or involuntary liquidation, dissolution or
      winding up of the Corporation, provided that the shares of Class A Common
      Stock receivable upon conversion of shares of the series B Preferred
      Stock, or in case of any reorganization or reclassification of the
      outstanding shares thereof, the stock, securities, or assets provided for
      in subparagraphs 4D and 4E, shall include only shares designated as Class
      A Common Stock of the Corporation on the date of filing of this
      Certificate of Amendment to the Certificate of Incorporation.

<PAGE>

                        5. Restrictions. At any time when shares of Preferred
      Stock are outstanding except where the vote or written consent of the
      holders of a greater number of shares of the Corporation is required by
      law or by this Certificate of Incorporation, and in additional to any
      other vote required by law, without the prior consent of the holders of a
      majority of the outstanding Preferred Stock, given in person or by proxy,
      either in writing or at a special meeting called for that purpose at which
      meeting the holders of the shares of such Preferred Stock shall vote
      together as a class.

                        (a) The Corporation will not (i) create or authorize the
      creation of any additional class or series of shares unless the same ranks
      junior to the Preferred Stock as to the distribution of assets upon the
      liquidation, dissolution or winding up of the Corporation and as to the
      distribution of dividends, (ii) increase the authorized amount of the
      Preferred Stock, or the authorized amount of any additional class or
      series of shares unless the same ranks junior to the Preferred Stock as to
      the distribution of assets upon the liquidation, dissolution or winding up
      of the Corporation and as to the distribution of dividends, or (iii)
      create or authorize any obligation or security convertible into shares of
      Preferred Stock or into shares of any other class or series unless the
      same ranks junior to the Preferred Stock as to the distribution of assets
      upon the liquidation, dissolution or winding up of the Corporation and as
      to the distribution of dividends, in each such case whether any such
      creation or authorization or increase shall be by means of amendment of
      the Certificate of Incorporation, merger, consolidation or otherwise.

                        (b) The Corporation will not amend, alter or repeal the
      Corporation's Certificate of Incorporation or By-laws in any manner, or
      file any directors' resolutions pursuant to Section 151(g) of the General
      Corporation Law of the State of Delaware containing any provision, in
      either case, which adversely affects the respective preferences,
      qualifications, special or relative rights or privileges of the Preferred
      Stock or which in any manner adversely affects the Preferred Stock or the
      holders thereof. In addition, no such action shall be taken that would
      have the effect of creating any additional differences between the
      respective preferences, qualifications, special or relative rights or
      privileges of the Series A Preferred Stock and the Series B Preferred
      Stock and the holders of a majority of the outstanding Series B Preferred
      Stock, voting separately.

                        (c) The Corporation will not enter into any transaction
      that will result in the occurrence of a Change of Control Event.

            6. Voting. Except as otherwise required by law or this Certificate
      of Incorporation, the holders of Preferred Stock shall have no vote on any
      matters to be voted on by the stockholders of the Corporation.

<PAGE>

                                       II.

                      CLASS A COMMON STOCK AND COMMON STOCK

                        Except as otherwise expressly provided herein, all
      shares of Common Stock and Class A Common Stock shall be identical and
      shall entitle the holders thereof to the same rights and privileges.

                        1. Dividends. The holders of shares of Class A Common
      Stock and Common Stock, according to the number of shares of Class A
      Common Stock and Common Stock then outstanding shall be entitled to
      receive such dividends as from time to time may be declared by the Board
      of Directors of the Corporation out of any funds legally available
      therefor, subject to the provisions of subdivision I above with respect to
      the rights of holders of the Preferred Stock.

                        2. Liquidation. Upon any liquidation, dissolution or
      winding up of the Corporation, whether voluntary or involuntary, subject
      to the prior rights of the holders of Preferred Stock, the holders of the
      shares of Class A Common Stock and Common Stock, according to the number
      of shares of Class A Common Stock and Common Stock then outstanding, shall
      be entitled to share ratably in all assets of the Corporation available
      for distribution to its stockholders, provided, however, (x) that in the
      event that the amount available for distribution to the holders of Class A
      Common Stock is insufficient to permit the holders of Class A Common Stock
      to be paid an amount equal to the original per share purchase price paid
      to the Corporation with respect to each such share of Class A Common Stock
      plus any accrued but unpaid dividends, or, with respect to those shares of
      Class A Common Stock outstanding as a result of the conversion of shares
      of Series B Preferred Stock, $2.00 per share plus any accrued but unpaid
      dividends (such amounts being sometimes referred to as the "Class A
      Liquidation Payments"), then the holders of Class A Common Stock shall be
      entitled before any distribution or payment is made upon any Common Stock,
      to be paid an amount equal to the Class A Liquidation Payments and (y)
      that if the assets to be distributed among the holders of the Class A
      Common Stock shall be insufficient to permit payment to such holders of
      the full amount of the Class A Liquidation Payments then the entire assets
      of the Corporation to be so distributed shall be distributed ratably among
      the holders of Class A Common Stock. Upon any such liquidation,
      dissolution or winding up of the Corporation in which the amount available
      for distribution to the holders of Class A Common Stock is insufficient to
      permit such holders to be paid the full amount of the Class A Liquidation
      Payments (as describe din classes (x) and (y) above), after the holders of
      Class A Common Stock shall have been paid in full the preferential amounts
      to which they shall be entitled as provided herein, all remaining assets
      of the Corporation which are available for distribution to its
      stockholders shall be distributed ratably amount the holders of Common
      Stock. Written notice of such liquidation, dissolution or winding up,
      stating as payment date, the amount of the Class A Liquidation Payments
      and the place where said Class A Liquidation Payments shall be payable,
      shall be given by mail,

<PAGE>

      postage prepaid, not less than 30 days prior to the payment date stated
      therein, to the holders of record of Class A Common Stock, such notice to
      be addressed to each such holder at this post office address as shown by
      the records of the Corporation; provided, however, that failure to give
      notice pursuant to this sentence shall not invalidate the action involved.
      A Change of Control Event shall not, for purposes of this paragraph 2, be
      deemed a liquidation, dissolution or winding up of the Corporation.

                        3. Conversion of Class A Common Stock.

                        3A. Optional Conversion of Class A Common Stock. Subject
      to and upon compliance with the provisions of this paragraph 3and after
      receiving the written consent of the holders of the majority of the
      outstanding shares of Class A Common Stock ("Conversion Consent"), the
      holder of any share or shares of Class A Common Stock shall have the
      right, at its option to convert any such shares of Class A Common Stock
      (except that upon liquidation, dissolution or winding upon of the
      Corporation the right of conversion shall terminate at the close of
      business on the last full business day next preceding the date fixed for
      payment of the amount distributable on Class A Common Stock) into an equal
      number of full paid and non-assessable whole shares of Common Stock. Such
      rights of conversion shall be exercised by the holder thereof by giving
      written notice (which notice shall attach the Conversion Consent) that the
      holder selects to convert a stated number of share of Class A Common Stock
      into Common Stock and by surrender of a certificate or certificates for
      the shares so to be converted to the Corporation at its principal office
      (or such other office or agency of the Corporation as the Corporation may
      designate by notice in writing to the holder or holders of the Class A
      Common Stock) at any time during its usual business hours on the date set
      forth in such notice, together with a statement of the name or names (with
      address), subject to compliance with the applicable laws to the extent
      such designation shall involve a transfer, in which the certificate or
      certificates for shares of Common Stock shall be issued.

                        3B. Automatic Conversion of Class A Common Stock.
      Notwithstanding anything else herein to the contrary in this Section 3, in
      the event that, at any time while any of the Class A Common Stock shall be
      outstanding (i) the Corporation shall complete a firm commitment
      underwritten public offering of Common Stock registered under the
      Securities Act of 1933, as amended, in which (x) the aggregate price paid
      for such shares by the public shall be at least $30,000,000 and (y) the
      price per share paid by the public for such shares shall be at least $6
      per share (appropriately adjusted to reflect stock splits and combinations
      and stock dividends) (a "Qualified Offering") or (ii) a majority of the
      issued shares of Class A Common Stock shall have been converted into
      Common Stock, then all outstanding shares of Class A, Common Stock shall
      be automatically and without further action on the part of the holders of
      the Class A Common Stock converted into shares of Common Stock in
      accordance with the terms of subsection 3A hereof with the same effect as
      if the certificates evidencing such shares had been surrendered for
      conversion, suchconversion to be effective immediately prior to the
      closing of such Qualified Offering immediately prior to the conversion of
      Class A Common Stock satisfying clause (ii) above, as the case may be,
      provided, however, that certificates evidencing the shares of Common Stock
      issuable upon such

<PAGE>

      conversion shall not be issued except on surrender of the certificates of
      the shares of the Class A Common Stock so converted.

                        3C. Issuance of Certificates; Time Conversion Effected.
      Promptly after the receipt by the Corporation of the written notice
      referred to in subparagraph 3A and surrender of the certificate or
      certificates for the share or shares of the Class A Common Stock to be
      converted, the Corporation shall issue and deliver, or cause to be issued
      and delivered, to the holder, registered in such name or names as such
      holder may direct, subject to compliance with applicable laws to the
      extent such designation shall involve a transfer, a certificate or
      certificates for the number of whole shares of Common Stock issuable upon
      the conversion of such share of shares of Class A Common Stock. To the
      extent permitted by law, such conversion shall be deemed to have been
      effected immediately prior to the close of business on the day the
      certificate or certificates for such share or shares shall have been
      surrendered as aforesaid, and at such time the rights of the holder of
      such share or shares of Class A Common Stock shall cease, and the person
      or persons in whose name or names any certificate or certificates for
      shares of Common Stock shall be issuable upon such conversion shall be
      deemed to have become the holder of record of the shares represented
      thereby.

                        3D. Fractional Shares; Dividends; Partial Conversions.
      No fractional shares shall be issued upon conversion of the Class A Common
      Stock into Common Stock, nor shall any payment or adjustment be made upon
      any conversion on account of any cash dividends on the Class A Common
      Stock so converted to the Common Stock issued upon such conversion. In
      case the number of shares of Class A Common Stock represented by the
      certificate of certificates surrendered pursuant to subparagraph 3A
      exceeds the number of shares converted, the Corporation shall, upon such
      conversion, execute and deliver to the holder thereof, at the expense of
      the Corporation, a new certificate or certificates for the number of
      shares of Class A Common Stock, represented by the certificate or
      certificates surrendered which are not to be converted. If any fractional
      interest in a share of Common Stock would, except for the provisions of
      the first sentence of this subparagraph 3D, be deliverable upon any such
      conversion, the Corporation, in lieu of delivering the fractional share
      thereof, shall pay to the holder surrendering the Class A Common Stock for
      conversion an amount in cash equal to the current fair value of such
      fractional interest as determined in good faith by the Board of Directors
      of the Corporation.

                        3E. Subdivision or Combination of Stock. In case the
      Corporation shall at any time subdivide its outstanding shares of Common
      Stock into a greater number of shares or shall declare or pay a dividend
      on its outstanding shares of Common Stock payable in shares of Common
      Stock, then in each case the Class A Common Stock shall be similarly
      subdivided, and conversely, in case the outstanding shares of Common Stock
      of the Corporation shall be combined into a smaller number of shares, the
      Class A Common Stock shall be similarly combined.

                        3F. Reorganization, Reclassification, Merger of Sale. If
      any capital reorganization or reclassification of the capital stock of the
      Corporation shall be effected in such a way (including, without
      limitation, by way of consolidation or merger) that

<PAGE>

      holders of Common Stock shall be entitled to receive stock, securities or
      assets with respect to or in exchange for Common Stock, then, as a
      condition of such reorganization or reclassification, lawful and adequate
      provision (in form satisfactory to the holders of at least a majority of
      the outstanding shares of Class A Common Stock) shall be made whereby each
      holder of a share or shares of Class A Common Stock shall thereafter have
      the right to receive, upon the basis and upon the terms and conditions
      specified herein and in lieu of the shares of Common Stock of the
      Corporation immediately theretofore receivable upon the conversion of such
      share or shares of Class A Common Stock, such shares of stock, securities
      or assets as may be issued or payable with respect to or in exchange for a
      number of outstanding shares of such Common Stock equal to the number of
      shares of such stock immediately theretofore so receivable had such
      reorganization or reclassification not taken place, and in any such case
      appropriate provision shall be made with respect to the rights and
      interests of such holder to the end that the provisions hereof shall
      thereafter be applicable, as nearly as may be, in relation to any shares
      of stock, securities or assets thereafter deliverable upon the exercise of
      such conversion rights. In the event of a merger or consolidation of the
      Corporation as a result of which a greater or lesser number of shares of
      common stock of the surviving corporation are issuable to holders of
      Common Stock of the Corporation outstanding immediately prior to such
      merger or consolidation, the number of shares of Common Stock into which
      Class A Common Stock may be converted shall be adjusted in the same manner
      as though there were a subdivision or combination of the outstanding
      shares of Common Stock of the Corporation. The Corporation will not effect
      any such consolidation or merger, or any sale of any or substantially all
      its asserts and properties, unless prior to the consummation thereof the
      successor corporation (if other than the Corporation) resulting from such
      consolidation or merger of the corporation purchasing such assets shall
      assume by written instrument (in form reasonably satisfactory to the
      holders of at least a majority of the shares of Class A Common stock at
      the time outstanding) executed and mailed or delivered to each holder of
      shares of Class A Common Stock at the last address of such holder
      appearing on the books of the Corporation, the obligation to deliver to
      such holder such shares of stock, securities or assets as, in accordance
      with the foregoing provisions, such holder may be entitled to receive.

                        3G. Notice of Adjustment. Upon any adjustment made
      pursuant to 3E or 3F, then and in each such case the Corporation shall
      give written notice thereof, by first class mail, postage prepaid,
      addressed to each holder of shares of Class A Common Stock at the address
      of such holder as shown on the books of the Corporation, which notice
      shall state the number of shares of Class A Common Stock or other
      securities, cash or property issuable upon conversion of the Class A
      Common Stock resulting from such adjustment, setting forth in reasonable
      detail the method of calculation and the facts upon which such calculation
      is based.

                        3H. Stock to be Reserved. The Corporation will at all
      times reserve and keep available out of it authorized but unissued Common
      Stock, solely for the purpose o issuance upon the conversion of the Class
      A Common Stock as herein provided, such number of shares of Common Stock
      as shall then be issuable upon the conversion of all outstanding shares of
      Class A Common Stock. All shares of Common Stock which shall be so issued
      shall be duly and validly issued and fully paid and non-

<PAGE>

      assessable and free from all taxes, liens, and charges arising out of or
      by reason of the issue thereof. The Corporation will take all such action
      within its control as may be necessary on its part to assure that all such
      shares of Common Stock may be so issued without violation of any
      applicable law or regulation, or of any requirements of any national
      securities exchange upon which the Common Stock or the Corporation may be
      listed.

                  3I. No Reissuance of Class A Common Stock. Shares of Class A
            Common Stock which are converted into shares of Common Stock as
            provided herein shall not be reissued.

                  3J. Issue Tax. The issuance of certificates for shares of
            Common Stock upon conversion of the Class A Common Stock shall be
            made without charge to the holders thereof for any issuance tax in
            respect thereof, provided that the Corporation shall not be required
            to pay any tax which may be payable in respect of any transfer
            involved n the issuance and deliver of any certificate in a name
            other than that of the holder of the Class A Common Stock which is
            being converted.

                  3K. Closing of Books. The Corporation will at no time close
            its transfer books against the transfer of any Class A Common Stock
            or of any shares of Common Stock issued or issuable upon the
            conversion of any shares of Series B Preferred Stock in any manner
            which interferes with the timely conversion of such Class A Common
            Stock.

                  3L. Definition of Common Stock. As used in this paragraph 4,
            the term "Common Stock" shall mean and include the Corporation's
            authorized Common Stock, $.01 par value, as constituted on the date
            of filing of this Certificate of Amendment to the Certificate of
            Incorporation and shall also include any capital stock of any class
            of the Corporation thereafter authorized which shall not be limited
            to a fixed sum or percentage of par value in respect of the rights
            of the holders thereof to participate in dividends or in the
            distribution of assets upon the voluntary or involuntary
            liquidation, dissolution or winding up of the Corporation, provided
            that the shares of Common Stock receivable upon conversion of shares
            of the Class A Common Stock, or in case of any reorganization or
            reclassification of the outstanding shares thereof, the stock,
            securities, or assets provided for in subparagraphs 3E and 3F, shall
            include only shares designated as Common Stock of the Corporation on
            the date of filing of this Certificate of Amendment to the
            Certificate of Incorporation.

                  4. Voting. Except as otherwise required by law or this
            Certificate of Incorporation, the holders of the Class A Common
            Stock and the holders of Common Stock shall be entitled to notice of
            any stockholders meeting in accordance with the By-laws of the
            Corporation and to vote together as a class upon any matter
            submitted to the stockholders for a vote as follows: (x) each holder
            of class A Common Stock shall be entitled to 10 votes for each share
            of Common Stock which would be issuable to such hold4er upon the
            conversion of all the shares of Class A Common Stock so held on the
            record date for the determination of stockholders entitled to vote
            and (ii) each holder of Common Stock shall have one vote per share."

<PAGE>

      SECOND: That the Amendment of the Certificate of Incorporation effected by
this Certificate was duly authorized by the stockholders of the Corporation,
after first having been declared advisable by the board of Directors of the
Corporation, all in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.

      THIRD: that the capital of the Corporation will no be reduced under, or by
reason of, the foregoing amendments to the Certificate of Incorporation of the
Corporation.

                                   * * * * * *

<PAGE>

      IN WITNESS WHEREOF, this Certificate of Amendment has been executed by the
Corporation by its Chief Executive Officer this 23rd day of October, 1998.

                                              UNITED SURGICAL PARTNERS,
                                              INTERNATIONAL, INC.

                                              BY:__________________________

                                                 Donald Steen
                                                 Chief Executive Officer

<PAGE>

                                SCHEDULE 2.01(b)

                  Company Ownership of Stock or Other Interests

A. SPANISH OPERATIONS

            1. USP International Holdings, Inc., a Delaware corporation
("International Holdings"), which is 100% owned by the Company.

            2. United Surgical Partners Europe, S.L., a Spanish corporation
("USP Europe"), which is 82.5% owned by International Holdings and 17.5% owned
by Hospital Management Team, S.L. ("HMT") , a Spanish corporation owned by the
executive officers of USP Europe's Spanish operations. The Company has entered
into a Shareholders Agreement with HMT pursuant to which HMT (a) purchased 17.5%
of the stock of USP Europe, (b) was granted an option to purchase an additional
2.5% of such stock and (c) has the right to purchase shares and be granted
options in connection with future stock issuances that will, if fully exercised,
allow HMT to maintain its 20% ownership interest (including shares underlying
options) in USP Europe. International Holdings has made loans to USP Europe that
are in the process of being converted into additional shares of USP Europe; when
these conversions are completed, the ownership percentage of International
Holdings in USP Europe may increase (depending on whether HMT exercises its
rights to purchase additional shares) USP Europe has the following subsidiaries
and ownership interests:

            (a) Columbia Healthcare Corporation of Spain, S.L., a Spanish
corporation ("Spanish Parent"), which is 100% owned by USP Europe. Spanish
Parent has the following subsidiaries/investments:

                  (i) Instituto Dexeus, S.A., a Spanish corporation that is
79.0654% owned by Spanish Parent ("Dexeus").

                  (ii) Diagnosticos y Tratamientos, S.A., a Spanish corporation
that is 71.28% owned by Dexeus.

                  (iii) Densitometria Oseo Comuterizada, S.L., a Spanish
corporation that is 15% owned by Dexeus.

                  (iv) Imagenes Diagnosticas, S.A., a Spanish corporation that
is 7% owned by Dexeus.

                  (v) Estudios Funcionales, S.A., a Spanish corporation that is
12% owned by Dexeus.

                  (vi) Unidad de Recuperacion del Suelo PelvicoL S.L., a Spanish
corporation that is 15% owned by Dexeus.

                  (vii) Centro de Patologia Celular, S,A., a Spanish corporation
that is 10% owned by Dexeus.

<PAGE>

            (b) Clinica Maternal Nuestra Senora de la Esperanza, S.A., a Spanish
corporation that is 80% owned by USP Europe.

            (c) Grupo CSC S.A. (the "Seville Parent"), a Spanish corporation
that is 100% owned by USP Europe and has the following subsidiaries and
affiliates:

                  (i) Clinica Sagrado Corazon, S.A.., a Spanish corporation that
is 90% owned by the Seville Parent. (The remaining 10% is to be purchased from
the widow of one of the original shareholders; the purchase price for this 10%
interest is being held pending resolution of the estate issues with the deceased
shareholder's widow.)

                  (ii) Hospitales Andaluces, S.L, a Spanish corporation that is
100% owned by the Seville Parent.

                  (iii) Contechos, S.L., a Spanish corporation that is 100%
owned by the Seville Parent.

                  (iv) Servicio de Radiologia Sagrado Corazon, S.A., a Spanish
corporation that is 24% owned by Centros Perefericos Asistenciales, S.L.
(referenced in paragraph (ix) below) and 76% owned by USP Europe.

                  (v) Servico Resonancia - TAC Vascular Clinica Sagrado Corazon,
S.L., a Spanish corporation that is 100% owned by USP Europe.

                  (vi) Servicios Asistenciales Clinica Sagrado Corazon, S.A., a
Spanish corporation that is 99% owned by the Seville Parent and 1% owned by
R-E-Asesores, S.L. (referred to in paragraph (vii) below).

                  (vii) R-E-Asesores, S.L., a Spanish corporation that is 100%
owned by USP Europe.

                  (viii) Hospitalizacion y Servicios, S,A. (HOYS, S,A.), a
Spanish corporation that is 6.1% owned by R-E Asesores, S,L. (referred in
paragraph (vii) above) and 49% owned by Hospitales Andaluces, S.L. (referred to
in paragraph (ii) above).

                  (ix) Centros Perifericos Asistenciales, S.L,, a Spanish
corporation that is 100% owned by USP Europe.

                  (x) Laboratorio del Dr. Repetto, S.L,, a Spanish corporation
that is 99% owned by USP Europe.

<PAGE>

B. DOMESTIC OPERATIONS

            1. Health Horizons Subsidiaries. On July 31, 1998, Health Horizons,
Inc , a Delaware corporation, merged into the Company, which resulted in the
Company owning 100% of the following Tennessee corporations and, through such
subsidiaries, the indicated percentages of the following limited partnerships
and limited liability companies:

                  (a) Health Horizons of Nashville, Inc., which owns:

                        (i) 36% of Physicians Pavilion, L.P., a Delaware limited
partnership; and

                        (ii) 30.25% of Southern Hills Realty Investors, L.P., a
Delaware limited partnership.

                  (b) Health Horizons of Kansas City, Inc., which owns 50% of
Creekwood Surgery Center, LLC, a Missouri limited liability company.

                  (c) Health Horizons of Murfreesboro, Inc., which owns 39% of
Middle Tennessee Ambulatory Surgery Center, L,P., a Delaware limited
partnership.

                  (d) Health Horizons of Decatur, Inc., which owns 60% of
Decatur Surgery Center, L.P,, a Delaware limited partnership.

            2. Joint Venture with St. Rose Hospital (Henderson, Nevada).

                  (a) USP Nevada, Inc., a Nevada corporation that is 100% owned
by the Company.

                  (b) Parkway Surgery Center, LLC, a Nevada limited liability
company that is currently 50% owned by USP Nevada, Inc. This LLC intends to
offer interests to local surgeons that, if fully subscribed, will reduce the
ownership of USP Nevada, Inc. to 40%.

            3. University Surgical Center (Winter Park, Florida)

                  (a) USP Winter Park, Inc , a Florida corporation that is 100%
owned by the Company

                  (b) University Surgery Center, Ltd , a Florida limited
partnership that is 70% owned by USP Winter Park, Inc.

<PAGE>

                           SCHEDULE 2.04(a) (10/23/98)

                    Ownership of Capital Stock of the Company
<TABLE>
<CAPTION>
          Stockholder of Record             Shares of Class A                  Shares of       Shares of
                                              Common Stock                      Series          Series B
                                                                              A Preferred     Convertible
                                                                                 Stock         Preferred
                                                                                                  Stock
<S>                                             <C>                             <C>            <C>
Welsh, Carson Andeson & Stowe VII, L.P.         9,399,780                       28,050
WCAS Healthcare Partners, L.P.                    140,490                          422
Patrick J. Welsh                                  114,600                          339
Russell L. Carson                                 114,600                          339
Bruce K. Anderson                                 114,600                          339
Richard H. Stowe                                   20,071                           59
Andrew M. Paul                                     20,071                           59
Thomas E. McInerney                                60,211                          178
Laura VanBuren                                      1,004                           12
Robert A. Minicucci                                20,071                           59
Anthony deNicola                                    7,024                           24
Rudolph E. Rupert                                   3,010                           12
Paul B. Queally                                    15,454                           48
D. Scott Mackesy                                    4,014                           12
Kenneth Melkus                                     15,000                           48
Donald Steen                                      875,000
Sue Shelley                                       250,000
Laurie Hogue                                       50,000
Michael Crews                                     100,000
SuZan Nelson                                       50,000
David McDonald                                    100,000
M. Robert Knapp Trust U/A
DTD August 31, 1990                                20,000                           60
Calver Fund, Inc.                                  40,000                          120
James Ken Newman                                   40,000                          120
NGKE/USPI Partners                                 40,000                          120
L & W Co.                                          20,000                           60
Norman Brownstein                                  30,000                           90
William Wilcox                                     20,000                           60
Paul Whitman                                       40,000                          120
Rivid LLC                                          30,000                           90
CGJR II, L.P.                                      25,500                           77
CGJR/MF III, L.P.                                  14,500                           43
Patrick McMullan                                   20,000                           60
Craig Callen                                       20,000                           60
Lawrence Lavine                                    10,000                           30
David Dennis                                       10,000                           30
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
          Stockholder of Record             Shares of Class A                  Shares of       Shares of
                                              Common Stock                      Series          Series B
                                                                              A Preferred     Convertible
                                                                                 Stock         Preferred
                                                                                                  Stock
<S>                                            <C>                              <C>             <C>
Michael R. Nicolais and Jane L.                    10,000                           30
Nicolais, as tenants in common                     10,000                           30
Tom C. Davis
Edward W. Karrels                                 473,581                                       1,420
Michael W. Barton                                 327,031                                         981
Jeffrey L. Stockard                                65,587                                         196
Alice J. Charron                                    2,677                                           8
Charles Morton                                     14,261                                          42
Sandra Holshouser                                   7,138                                          21
David Gaw                                          16,298                                          48
           TOTALS:                             12,781,573                       31,200          2,716
</TABLE>

<PAGE>

                                SCHEDULE 2.04(b)

                         Rights, Warrants, Options, Etc.

            1. The Company's Board of Directors and stockholders have adopted
the Stock Option Plan, which authorizes the grant of stock options covering up
to 1,750,000 shares of Common Stock. There are presently outstanding under the
Stock Option Plan stock options covering a total of 1,290,800 shares of Common
Stock at an option price of $2.00 per share. Upon completion of the Initial
Closing, the number of shares covered by the Stock Option Plan will increase to
3,250,000 shares and additional options will be granted as follows: 550,000
shares at $3.50 per share; and 250,000 shares at $5.00 per share.

            2. Pursuant to the Certificate of Amendment to the Company's
Certificate of Incorporation filed on July 30, 1998 in connection with the
merger of Health Horizons, Inc. into the Company, the Company is required to
redeem any or all outstanding shares of its Series B Convertible Preferred Stock
at the request of the respective holders of such shares given at any time on or
after July 31, 2000. The redemption price will be $1,000 per share plus accrued
but unpaid dividends.

            3. The Company's outstanding shares of Series B Convertible
Preferred Stock are convertible into Class A Common Stock at the election of the
respective holders of such shares at any time on or after July 31, 2000 at a
conversion price for the Class A Common Stock equal to the greater of $2.00 per
share or the fair market value per share (as determined in good faith by the
Company's Board of Directors) at the time of conversion.

<PAGE>

                                  SCHEDULE 2.05

                             Governmental Approvals

            1. The Company may file SEC Form D following the Initial Closing.

            2. If the Purchasers exercise their rights pursuant to Section 4 of
the Amended and Restated Registration Rights Agreement to require the Company to
register any portion of their Company shares, the Company will be required to
make filings under applicable federal and state securities laws in order to
perform its obligations.

<PAGE>

                                  SCHEDULE 2.06

                     United Surgical Partners 1nternational
                        Consolidated Balance Sheet As of
                                  July 31, 1998
                                 External Method

ASSETS

Cash                                                               $  5,772,193
Patient receivables                                                   3,281,107
Other receivables                                                     1,236.633
Allowance                                                              (703,663)
Inventories                                                             616,727
Prepaids & other current assets                                          27,454
                     Total current assets                            10,230,451

Land                                                                  1,154.864
Building                                                              6,224,391
Equipment                                                             7,866,014
Furniture & Fixtures                                                     83,660
                     Total property and equipment                    15,328.929

Investments in subsidiaries                                           1,469,409
Financial long-term investment                                        1,058,901
Intangible asset                                                      7,031,380
Long-term notes receivable                                              650,000
Other assets                                                            639,851
                                                                        639,851
                     Total other noncurrent assets                   10,849,542

                     Total assets                                  $ 36,408,922

LIABILITIES & EQUITY

Accounts payable                                                   $  3,636,161
Accrued salaries and benefits                                            23,614
Other accrued expenses                                                  976.898
Current portion of long-term debt                                     1,455,930
Other current liabilities                                               719,608
Reserve for unexpired risks                                             239,404
                     Total current Liabilities                        7,051,615

Minority interests                                                    3,980,176
Long-term debt                                                          719,400
Mortgage                                                              1,647.300
Series A Redeemable Preferred Stock                                   1,205,000
Series B Convertible Redeemable Preferred Stock                       2,716.000
Deferred gain                                                           321,201
Other noncurrent liabilities                                            904,064
                     Total noncurrent liabilities                    11,493,140

Current month earnings                                                 (369,143)
YTD earnings                                                           (439,168)
Common stock & paid-in capital - WC                                  13,862,500
Common stock & paid-in capital - others                               4,750,646
Retained earnings                                                        (5,000)
Translation                                                              64,331
                     Total equity                                    17,864,166

                          Total liabilities and equity             $ 36,408,922

<PAGE>

                     United Surgical Partners International
                          Consolidated Income Statement
                              For the period ended
                                  July 31, 1998
                         Internal and External Methods*

<TABLE>
<CAPTION>
                                                                         % Total                               % Total
                                                 Current Month           Revenue       Year to Date            Revenue
<S>                                              <C>                     <C>          <C>                 <C>
Routine                                          $   374,246                          $  1,107,116
Inpatient ancillary                                  901,053                             2,581,017
Outpatient ancillary                                 250,753                               706,295

Total patient revenue                              1,526,052                             4,394,428

Allowance                                            (27,312)                              (84,097)
Other revenue                                        130,597                               269,069

Miscellaneous revenue & deductions                   103,285                               184,972

Total revenue                                      1,629,337                             4,579,400

Staffing and benefits                                587,174               36.0%         1,721,590               37.6%
Supplies                                             272,921               16.8%           706,221               15.4%
Bad debt                                              13,109                0.8%            16,420                0.4%
Other operating expenses                             503,654               30.9%         1,460,541               31.9%

Total operating expenses                           1,376,857               84.5%         3,904,772               85.3%

EBITDA                                               252,480               15.5%           674,628               14.7%

Depreciation and amortization                        192,487               11.8%           429,702                9.4%
Interest expense                                      20,290                1.2%            51,217                1.1%
Management fee                                        12,367                0.8%            16,593                0.4%
Corporate G&A                                        171,329               10.5%           792,220               17.3%
Minority interest expense                            (58,426)              -3.6%           (42,009)              -0.9%
Exchange (gain) loss                                  (3,002)              -0.2%            (3,002)              -0.1%
Interest income - employee loans                     (31,413)              -1.9%           (89,837)              -2.0%

Total nonoperating expenses                          303,631               18.6%         1,154,884               25.2%

Pre-tax operating income before
   nonrecurring organization costs for USPE          (51,151)              -3.1%          (480,256)             -10.5%

Nonrecurring organization costs for USPE            (260,922)             -16.0%          (260,922)              -5.7%

Pre-tax operating income (loss)                     (312,073)             -19.2%          (741,178)             -16.2%

Tax provision                                         57,070                                                   67,134

Net income (loss)                                $  (369,143)                                             $  (808,313)
</TABLE>

*Internal and external methods are the same for purposes of the July income
statement and equity rollforward as Health Horizons acquisition, which became
effective July 31, does not impact income until August.

<PAGE>

                                  SCHEDULE 2.07

                       Events Subsequent to July 31, 1998

            1. See Schedules 2.01(b), 2.04(a) and 2.04(b), which are
incorporated herein by this reference.

            2. The Company entered into an Amended and Restated Operating
Agreement, dated as of August 1, 1998, with St. Rose Dominican Hospital, a
Nevada not-for-profit corporation, relating to Parkway Surgery Center, LLC, a
Nevada limited liability company that owns an outpatient surgery center in
Henderson, Nevada that opened on October 12, 1998.

            3. The Company has entered into non-binding letters of intent to
acquire (a) the assets of Health First Management, L.L.C. and its affiliates
(which own interests in five surgery centers in the Dallas/Fort Worth area), (b)
the assets of Day Op Center of Long Island and (c) a one-third interest in all
of the outpatient surgery centers owned by Physicians Resource Group, Inc.
(although the Company has executed a waiver allowing PRG to enter into a
transaction with another party which, if consummated, would terminate this
letter of intent).

            4. USP Europe is in negotiations to acquire several additional
hospitals in Spain. A definitive Stock Purchase and Sale Agreement, providing
for the purchase by USP Europe of 62.31% of the outstanding stock of Instituto
Policlinico Santa Teresa, S.A. and 12.5% of the outstanding stock of Resonancia
Nuclear Magnetica Santa Teresa, S.L., each of which is a Spanish corporation,
was executed by USP Europe on September 23, 1998.

            5. On October 1, 1998, USP Europe completed the purchase of 80% of
the outstanding stock of Clinica Maternal Nuestra Senora de la Esperanza, S.A.

            6. USP Europe has also entered into and consummated an Agreement for
Sale of Shares and Company Stock on October 16, 1998, whereunder it purchased of
the stock of the Spanish corporations that operate Clinica Sagrado Corazon and
related facilities, as indicated in Part A-2(c) on Schedule 2,01(b).

            7. On October 15, 1998, the Company acquired a 70% interest in
University Surgical Center in Winter Park, Florida.

<PAGE>

                                  SCHEDULE 2.08

                                 Actions Pending

None.

<PAGE>

                                  SCHEDULE 2.12

                                Title to Property

            1. Dexeus has an outstanding mortgage ~debt of approximately $1.9
million.

            2. Creekwood Surgery Center, LLC has granted security interests (a)
in certain leased assets to Lease Partners, Inc. and (b) in all of its accounts
receivable to North Kansas City Hospital.

            3. Decatur Surgery Center, L.P. has granted a security interest in
all of its assets to Compass Bank.

<PAGE>

                                  SCHEDULE 2.14

                             Affiliated Transactions

            1. See Schedule 2.04(b), which is incorporated herein by this
reference.

            2. Each of the Management Purchasers and SuZan Nelson is both a
stockholder in the Company and a party to one or more option agreements under
the Stock Option Plan.

            3. The partners of NGKE/USPI Partners are also partners in Nossaman,
Guthner, Knox & Elliott, LLP, which is a law firm that provides legal services
to the Company and its subsidiaries.

            4. Certain of the former stockholders of Health Horizons, Inc. are
stockholders in the Company and are parties to the Agreement and Plan of
Reorganization referred to in paragraph 4 of Schedule 2.06.

<PAGE>

                                  SCHEDULE 2.15

                            Brokers' or Finders' Fees

None.

<PAGE>

                                SCHEDULE 3.03(d)

                               Certain Purchasers

                                  Michael Crews
                                  Laurie Hogue
                                 David McDonald
                                  Lauren Melkus
                                  James Branon

<PAGE>

                                  SCHEDULE 3.05

                            Brokers' or Finders' Fees

None.<PAGE>

                                                                   EXHIBIT 10.10

================================================================================

                          SECURITIES PURCHASE AGREEMENT

                                      AMONG

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

                    WELSH, CARSON, ANDERSON & STOWE VII, L.P.

                         WCAS CAPITAL PARTNERS III, L.P.

                              FFT PARTNERS I, L.P.

                                       AND

              THE SEVERAL OTHER PURCHASERS NAMED IN ANNEX I HERETO

                           DATED AS OF MARCH 27, 2000

================================================================================
<PAGE>
                                TABLE OF CONTENTS

                                                                           PAGE

I.    PURCHASE AND SALE OF SECURITIES

      SECTION 1.01  Issuance, Sale and Delivery of Securities
                    the Closing Date.......................................2
      SECTION 1.02  Closing Date...........................................2

I.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY

      SECTION 2.01  Organization, Qualifications and Corporate Power.......5
      SECTION 2.02  Authorization of Agreements, Etc.......................6
      SECTION 2.03  Validity...............................................6
      SECTION 2.04  Authorized Capital Stock...............................7
      SECTION 2.05  Governmental Approvals.................................7
      SECTION 2.06  Financial Statements...................................7
      SECTION 2.07  Events Subsequent to Date of Financial Statements......8
      SECTION 2.08  Actions Pending........................................8
      SECTION 2.09  Trade Secrets..........................................9
      SECTION 2.10  Taxes..................................................9
      SECTION 2.11  Other Agreements.......................................9
      SECTION 2.12  Title to Properties....................................9
      SECTION 2.13  Compliance with Laws, Etc..............................9
      SECTION 2.14  Affiliated Transactions................................9
      SECTION 2.15  Brokers' or Finders' Fees..............................9
      SECTION 2.16  Disclosure............................................10

III.  REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

      SECTION 3.01  Authorization.........................................10
      SECTION 3.02  Validity..............................................10
      SECTION 3.03  Investment Representations............................11
      SECTION 3.04  Governmental Approvals................................12
      SECTION 3.05  Brokers' or Finders' Fees.............................12

III.  CONDITIONS PRECEDENT

      SECTION 4.01  Conditions Precedent to the Obligations of the
                    Purchasers............................................12
      SECTION 4.02  Conditions Precedent to the Obligations of the
                    Company...............................................14

                                        i
<PAGE>
                                                                            PAGE
V.    COVENANTS

      SECTION 5.01  Financial Statements, Reports, Etc....................17
      SECTION 5.02  Rights of Inspection..................................18
      SECTION 5.03  Notice of Certain Events..............................18
      SECTION 5.04  Use of Proceeds.......................................19
      SECTION 5.05  Consents and Approva1s................................19
      SECTION 5.06  Compliance with Laws..................................19
      SECTION 5.07  Preemptive Rights.....................................19
      SECTION 5.08  Management Fee........................................20

VI.   MISCELLANEOUS

      SECTION 6.01  Expenses, Etc.........................................20
      SECTION 6.02  Survival of Agreements................................21
      SECTION 6.03  Parties in Interest...................................21
      SECTION 6.04  Notices...............................................21
      SECTION 6.05  Waiver of Prior Preemptive Rights.....................22
      SECTION 6.06  Entire Agreement; Modifications.......................22
      SECTION 6.07  Assignment............................................22
      SECTION 6.08  Counterparts..........................................22
      SECTION 6.09  Governing Law.........................................22

TESTIMONIUM

                                       ii
<PAGE>
                    INDEX TO EXHIBITS, ANNEXES AND SCHEDULES

EXHIBIT          DESCRIPTION

   A             Form of 10% Senior Subordinated Note
   B             Form of Amendment No. 6 to Amended and Restated
                 Registration Rights Agreement
   C             Form of Third Amended and Restated Stockholders
                 Agreement D
   D             Form of Certificate of Amendment to the
                 Certificate of Incorporation

ANNEX            DESCRIPTION

  I              Purchasers
 II              Shares Purchased

SCHEDULE         DESCRIPTION

 2.01(b)         Company Ownership of Stock or Other Interests
 2.04(a)         Ownership of Capital Stock of Company
 2.04(b)         Rights, Warrants, Options, Etc.
 2.05            Government Approvals
 2.06            Financial Statements
 2.07            Events Subsequent to Date of Financial Statements
 2.08            Actions Pending
 2.12            Title to Properties
 2.14            Affiliated Transactions
 2.15            Brokers' or Finders' Fee
 3.03(d)         Certain Purchasers
 3.05            Brokers' or Finders' Fee

                                       iii
<PAGE>
      SECURITIES PURCHASE AGREEMENT, dated as of March 27, 2000, among UNITED
SURGICAL PARTNERS INTERNATIONAL, INC., a Delaware corporation (the "Company"),
WELSH, CARSON, ANDERSON & STOWE VII, L.P., a Delaware limited partnership ("WCAS
VII"), FFT PARTNERS I, L.P., a Delaware limited partnership, FFT EXECUTIVE
PARTNERS I, L.P., a Delaware limited partnership (together with FFT Partners I,
L.P., "FFT Partners"), WCAS CAPITAL PARTNERS III, L.P., a Delaware limited
partnership ("WCAS CP III") and the several other purchasers named in Annex I
hereto (such purchasers, WCAS VII, FFT Partners and WCAS CP III being
hereinafter at times referred to individually as a "Purchaser" and collectively
as the "Purchasers").

      WHEREAS, the Company is engaged in the business of owning and operating
hospitals and/or surgical centers and acquiring additional hospitals and/or
surgical centers and other businesses related thereto (collectively, the
"Business");

      WHEREAS, the Company desires to sell to the Purchasers (other than WCAS CP
III) on the Closing Date (as hereinafter defined), and such Purchasers desire to
purchase from the Company, on the terms and subject to the conditions set forth
therein, an aggregate 20,000 shares of Series C Convertible Preferred Stock,
$.01 par value ("Series C Preferred Stock") of the Company at a purchase price
of $1, 000 per share;

      WHEREAS, the Company desires to sell to WCAS CP III on the Closing Date,
and WCAS CP III desires to purchase from the Company, on the terms and subject
to the conditions set forth therein, (i) a 10% Senior Subordinated Note
substantially in the form attached hereto as Exhibit A (such note and any note
issued in substitution therefor being hereinafter called a "Note") in the
principal amount of $36,000,000 and (ii) an aggregate of 1,500,000 shares of
Class A Common Stock, $.01 par value per share (the "Common Stock", and together
with the Series C Preferred Stock, the "Shares"), of the Company; and

      WHEREAS, the Company has agreed to use the proceeds from the sale of the
Securities all in order to finance the expansion of the Business through
additional acquisitions or for certain operating expenses approved by the Board
of Directors of the Company;

      WHEREAS, the Purchasers, severally and not jointly, wish to purchase the
Securities (as hereinafter defined), all on the terms and subject to the
conditions hereinafter set forth;

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

<PAGE>
                                    ARTICLE I

                        PURCHASE AND SALE OF SECURITITES

      SECTION 1.01 ISSUANCE. SALE AND DELIVERY OF SERIES C PREFERRED STOCK ON
THE CLOSING DATE. (a) Subject to the terms and conditions set forth herein, on
the Closing Date, the Company shall issue, sell and deliver to each Purchaser
(other than WCAS CP III), and each Purchaser (other than WCAS CP III) shall
purchase from the Company the number of shares of Series C Preferred Stock set
forth opposite the name of such Purchaser on Annex II hereto under the heading
"Number of Series C Preferred Shares" at a purchase price of $1,000 per share.
On the Closing Date, the Company shall issue a certificate or certificates in
definitive form, registered in the name of each Purchaser (other than WCAS CP
III), evidencing the securities being purchased by each such Purchaser
hereunder.

             (b) As payment in full for the shares of Series C Preferred Stock
being purchased by each Purchaser (other than WCAS CP III) hereunder on the
Closing Date, and against delivery thereof as aforesaid, on the Closing Date,
each Purchaser (other than WCAS CP III) shall (i) pay to the Company, by wire
transfer of immediately available funds to an account or accounts designated by
the Company, the amount set forth opposite the name of such Purchaser on Annex
II hereto under the heading "Cash Purchase Price".

            SECTION 1.02 ISSUANCE SALE AND DELIVERY OF THE NOTE AND COMMON
STOCK TO WCAS CP III ON THE CLOSING DATE. (a) Subject to the terms and
conditions set forth herein, on the Closing Date, the Company shall issue, sell
and deliver to WCAS CP III, and WCAS CP III shall purchase from the Company the
Note and an aggregate 1,500,000 shares of Common Stock (said securities,
together with the Shares and the Note, being hereinafter collectively called the
"Securities"), for an aggregate purchase price of $36,000,000. On the Closing
Date, the Company shall issue the Note and a certificate representing 1,500,000
shares of Common Stock, in each case registered in the name of WCAS CP III.

            (b) On the Closing Date, as payment in full for the Note and the
shares of Common Stock being purchased by it, and against delivery of the Note
and certificates for such shares of Common Stock as aforesaid, WCAS CP III shall
pay to the Company $36,000,000 by wire transfer of immediately available funds
to an account designated by the Company.

                    SECTION 1.03 CLOSING DATE. The closing of the sale and
purchase of the Securities shall take place at the offices of Reboul, MacMurray,
Hewitt, Maynard & Kristol, 45 Rockefeller Plaza, New York, New York, at 10 a.m.,
New York time, on March 27, 2000, or at such other date and time as may be
mutually agreed upon among the Purchasers and the Company (such closing being
herein called the "Closing" and such date and time being herein called the
"Closing Date").

                                        2
<PAGE>
                                       II

                REPRESENT A TIONS AND W ARRANTIES OF THE COMPANY

            The Company represents and warrants to the Purchasers as follows:

            SECTION 2.01 ORGANIZATION QUALIFICATIONS AND CORPORATE POWER. (a)
The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and is duly licensed or
qualified in each jurisdiction in which the nature of its business or the
ownership of its properties makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
material adverse effect on its ability to carry on its business. The Company has
the corporate power and authority to own and hold its properties, to carry on
its business as currently conducted and to execute and deliver this Agreement,
the Note, Amendment No. 6 to Amended and Restated Registration Rights Agreement
dated as of the date hereof substantially in the form attached hereto as Exhibit
C (the "Registration Rights Agreement Amendment") among the Company and the
several other parties named therein and the Third Amended and Restated
Stockholders Agreement dated as of the date hereof substantially in the form
attached hereto as Exhibit D (the "Amended and Restated Stockholders Agreement")
among the Company and the several other parties named therein, to perform its
obligations under this Agreement, the Note, the Amended and Restated
Stockholders Agreement and the Registration Rights Agreement Amendment, and to
issue, sell and deliver the Securities.

           (b) Except as set forth on Schedule 2.01(b) hereto, the acquisition
of (i) any shares of capital stock or securities convertible into capital stock
of any other corporation or (ii) any participating interest in any partnership,
joint venture or other non-corporate business enterprise, owned of record of
beneficially, directly or indirectly, by the Company was duly approved by the
Board of Directors of the Company.

            SECTION 2.02 AUTHORIZATION OF AGREEMENTS ETC.

            (a) Each of the execution and delivery by the Company of this
Agreement, the Note, the Amended and Restated Stockholders Agreement and the
Registration Rights Agreement Amendment, the performance by the Company of its
obligations hereunder and thereunder, and the issuance, sale and delivery by the
Company of the Securities have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Certificate of Incorporation or By-laws of the
Company, or any provision of any indenture, agreement or other instrument to
which the Company or any of the properties or assets of the Company is bound, or
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or other instrument,
or result in the creation or imposition of any lien,charge or encumbrance of any
nature whatsoever upon any of the properties or assets of the Company or of any
corporation, partnership, joint venture or other entity in which the Company

                                        3
<PAGE>
owns, of record or beneficially, 50% or more of the voting interests of the same
(such an entity being hereinafter referred to individually as a "Subsidiary" and
collectively as subsidiaries").

            (b) The Shares have been duly authorized by the Company and, when
sold and paid for in accordance with this Agreement, will be validly issued,
fully paid and non-assessable shares of Common Stock and Series C Preferred
Stock, as the case may be. The issuance, sale and delivery of the Shares to the
Purchasers (other than WCAS CP III) hereunder is not subject to any preemptive
rights of stockholders of the Company or to any right of first refusal or other
similar right in favor of any person.

            (c) The Conversion Shares (as hereinafter defined) have been duly
authorized by the Company and, when issued upon the conversion of the Series C
Preferred Stock, will be validly issued, fully paid and non-assessable shares of
Common Stock (the "Conversion Shares"). The issuance, sale and delivery of the
Conversion Shares to the Purchasers are not subject to any preemptive rights of
stockholders of the Company or to any right of first refusal or other similar
right in favor of any person.

            SECTION 2.03 VALIDITY. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect
affecting the enforcement of creditors' rights generally and to general equity
principles. The Note, the Amended and Restated Stockholders Agreement and the
Registration Rights Agreement Amendment, when executed and delivered by the
Company as provided in this Agreement, and when executed and delivered by the
other parties hereto (if applicable), will constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws from time to time in
effect affecting the enforcement of creditors' rights generally and to general
equity principles.

          SECTION 2.04 AUTHORIZED CAPITAL STOCK.

          (a) The authorized capital stock of the Company consists of (i)
40,000,000 shares of Common Stock, $.01 par value, (ii) 30,000,000 shares of
Class A Common Stock, (iii) 31,200 shares of Series A Redeemable Preferred
Stock, (iv) 2,716 shares of Series B Convertible referred Stock, $.01 par value
and (v) 20,000 shares of Series C Preferred Stock. All of the issued and
outstanding shares of capital stock of the Company are owned of record as set
forth on Schedule 2.04(a) hereto.

           (b) Except as contemplated by this Agreement, the Amended and
Restated Stockholders Agreement dated as of April 30, 1998 among the Company and
the several other parties named therein, as amended, the Company's Certificate
of Incorporation or as set forth on Schedule 2.04(b) hereto, (i) no
subscription, warrant, option, convertible security or other right

                                       4
<PAGE>
(contingent or other) to purchase or acquire any shares of any class of capital
stock of the Company is authorized or outstanding, (ii) there is no binding
commitment of the Company to issue any shares, warrants, options or other such
rights or to distribute to holders of any class of the Company's capital stock,
any evidences of indebtedness or assets, and (iii) the Company has no
obligations (contingent or other) to purchase, redeem or otherwise acquire any
shares of its capital stock or any interest therein or to pay any dividend or
make any other distribution in respect thereof.

            SECTION 2.05 GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Article III
hereof, except as set forth on Schedule 2.05 hereto, no registration or filing
with, or consent or approval of, or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution and delivery of this Agreement, the Amended and Restated Stockholders
Agreement and the Registration Rights Agreement Amendment, the performance of
this Agreement, the Amended and Restated Stockholders Agreement and the
Registration Rights Agreement Amendment, or the issuance, sale and delivery of
the Securities, other than, if applicable, compliance with the requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act").

            SECTION 2.06 FINANCIAL STATEMENTS. Attached hereto as Schedule 2.06
are (x) the audited balance sheet of the Company as of December 31, 1998, and
the related statements of operations, stockholders' equity and cash flow of the
Company for the year then ended, certified by KPMG Peat Marwick LLP, the
independent public accountants retained by the Company and (y) the unaudited
balance sheet of the Company as of December 31, 1999, and the related statements
of operations, stockholders' equity and cash flow of the Company for the year
then ended. Such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied, and fairly
present the consolidated financial position of the Company as of the date of
such financial statements and the results of its operations for the period then
ended in accordance with generally accepted accounting principles. Except as
reflected in said financial statements or as disclosed in writing to WCAS VII
and FFT Partners, the Company had no material (individually or in the aggregate)
obligations or liabilities, absolute, accrued or contingent, as of the date of
such financial statements that would be required to be reflected on said
financial statements. Since December 31, 1999 there has been no material adverse
change in the properties, assets, condition (financial or other), prospects,
operating results or business of the Company and its Subsidiaries taken as a
whole.

            SECTION 2.07 EVENTS SUBSEQUENT TO DATE OF FINANCIAL STATEMENTS.
Since December 31, 1999, and except as set forth on Schedule 2.07 hereto, the
Company has not (i) issued any stock, bonds or other corporate securities, (ii)
borrowed any amount or incurred any liabilities (absolute or contingent) that
would be required to be disclosed on a balance sheet as of the date hereof
prepared in accordance with generally accepted accounting principles, except
current liabilities incurred, and liabilities under contracts entered into, in
the ordinary course of business, (iii) discharged or satisfied any lien or paid
any obligation or liability (absolute or contin-

                                        5
<PAGE>
gent) other than current liabilities shown on such financial statements and
current liabilities incurred since that date in the ordinary course of business,
(iv), declared or made any payment or distribution to stockholders or purchased
or redeemed any shares of its capital stock or other securities, (v) mortgaged,
pledged or subjected to lien any of its assets, tangible or intangible, other
than liens of current real property taxes not yet delinquent and payable, (vi)
sold, assigned or transferred any of its material tangible assets, except in the
ordinary course of business, (vii) acquired any material tangible assets or
properties, except in the ordinary course of business, (viii) canceled or
compromised any debts or claims, except in the ordinary course of business, (ix)
sold, assigned or transferred any patents, trademarks, tradenames, or other
intangible rights (or licenses thereto) or permitted any license, permit, or
other form of authorization relating to such rights to lapse, (x) suffered any
material losses, or waived any rights of material value, whether or not in the
ordinary course of business, (xi) received notification of cancellation, or
canceled or waived any rights which, individually or in the aggregate, are
material with respect to any currently existing agreement, contract, right or
understanding, (xii) made any changes in officer compensation, except for
compensation attributed to newly hired officers and for changes made in the
ordinary course of business and consistent with past practice or (xiii) entered
into any transaction except in the ordinary course of business.

            SECTION 2.08 ACTIONS PENDING. Except as set forth on Schedule 2.08
hereto, there is no action, suit, investigation or proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary or any of their respective properties or rights before any court or
by or before any governmental body or arbitration board or tribunal, the outcome
of which might reasonably be expected to result in any material adverse effect
on the properties, assets, condition (financial or other), prospects, operating
results or business of the Company and its Subsidiaries taken as a whole. To the
knowledge of the Company, except as set forth on Schedule 2.08 hereto, there
does not exist any reasonable basis for any such action, suit, investigation or
proceeding.

            SECTION 2.09 TRADE SECRETS. To the knowledge of the Company, (a) no
third party has claimed that any person affiliated with the Company or any
Subsidiary has violated any of the terms or conditions of his employment
contract with such third party, or disclosed or utilized any trade secrets or
proprietary information or documentation of such third party, or interfered in
the employment relationship between such third party and any of its employees
and (b) no person affiliated with the Company or any Subsidiary has employed any
trade secrets or any information or documentation proprietary to any former
employer.

            SECTION 2.10. TAXES. The Company and each Subsidiary, as applicable,
has duly and timely filed or caused to be filed all Federal, state, local and
foreign tax returns that have been required to be filed to date by it and has
timely paid or caused to be timely paid all taxes or all assessments received by
it to the extent that such taxes or assessments have become due.

            SECTION 2.11 OTHER AGREEMENTS. Neither the Company nor any
Subsidiary is in default in any material respect in the performance, observance
or fulfillment of any of the

                                       6
<PAGE>
obligations, covenants or conditions contained in any material agreement or
instrument to which it is a party.

            SECTION 2.12 TITLE TO PROPERTIES. Except as set forth on Schedule
2.12 hereto, the Company and each of its Subsidiaries owns its properties and
assets free and clear of mortgages, pledges, security interests, liens, charges
and other encumbrances.

            SECTION 2.13 COMPLIANCE WITH LAWS. ETC. (a) Each of the Company and
its Subsidiaries has all material governmental licenses, franchises and permits
for the conduct of its business as currently conducted (collectively,
"Governmental Permits").

            (b) The business of the Company and each of its Subsidiaries is
being conducted in compliance with all applicable laws, ordinances, rules and
regulations of all governmental authorities relating to their respective
properties or applicable to their respective businesses, including without
limitation the terms of all Governmental Permits and federal securities laws,
other than minor non-compliance that can be cured at nominal cost without
adversely affecting the business of the Company or any Subsidiary as it is
currently conducted. Neither the Company nor any Subsidiary has received any
notice of any alleged violation of any of the foregoing, nor is the Company
aware of any basis for any such allegation.

            SECTION 2.14 AFFILIATED TRANSACTIONS. Except as contemplated by this
Agreement, as set forth on Schedule 2.14 hereto or as disclosed to and approved
by the Board of Directors of the Company, to the knowledge of the Company, no
officer, director or stockholder of the Company or any person related by blood
or marriage to any such person or any entity in which any such person owns any
beneficial interest, is a party to any agreement, contract, commitment or
transaction with the Company or has any material interest in any material
property used by the Company.

            SECTION 2.15 BROKERS' OR FINDERS' FEES. Except as set forth on
Schedule 2.15, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Company with the Purchasers,
without the intervention of any person on behalf of the Company in such a manner
to give rise to any claim by any person for a finders' fee, brokerage commission
or similar payment.

            SECTION 2.16 DISCLOSURE. Neither this Agreement nor the Schedules
and Exhibits attached hereto contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein and therein, in the light of circumstances under which made,
not misleading.

                                        7
<PAGE>
                                       III

                REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

            Each Purchaser represents and warrants to the Company, severally and
not jointly, as follows:

            SECTION 3.01 AUTHORIZATION. The execution, delivery and performance
by such Purchaser of this Agreement, the Amended and Restated Stockholders
Agreement and the Registration Rights Agreement Amendment, if any, and the
purchase and receipt by such Purchaser of the Securities being purchased by it
hereunder have been duly authorized by all requisite action on the part of such
Purchaser, and will not violate any provision of law, any order of any court or
other agency of government applicable to such Purchaser, or any provision of
any indenture, agreement or other instrument by which such Purchaser or any of
such Purchaser's properties or assets are bound, or conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument.

            SECTION 3.02 VALIDITY. This Agreement has been duly executed and
delivered by such Purchaser and constitutes the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws from time to time in effect affecting the
enforcement of creditors' rights generally and to general equity principles. The
Amended and Restated Stockholders Agreement and the Registration Rights
Agreement Amendment, when executed and delivered by such Purchaser in accordance
with this Agreement, and when executed and delivered by the other parties
thereto, will constitute the legal, valid and binding obligation of such
Purchaser, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws from time to
time in effect affecting the enforcement of creditors' rights generally and to
general equity principles.

            SECTION 3.03 INVESTMENT REPRESENTATIONS. (a) Such Purchaser is
acquiring the Securities for its own account, for investment, and not with a
view toward the resale or distribution thereof in violation of applicable law.

            (b) Such Purchaser understands that it must bear the economic risk
of its investment for an indefinite period of time because the Securities are
not registered under the Securities Act or any applicable state securities laws,
and may not be resold unless subsequently registered under the Securities Act
and such other laws or unless an exemption from such registration is available.
Such Purchaser also understands that, except as provided in the Amended and
Restated Registration Rights Agreement dated as of April 30, 1998 among the
Company and the several other parties named therein, as amended (the "Amended
and Restated Registration Rights Agreement"), it is not contemplated that any
registration will be made under the Securities Act or that the Company will take
steps which will make the provisions of Rule 144

                                        8
<PAGE>
under the Securities Act available to permit resale of the Securities Such
Purchaser will not pledge, transfer, conveyor otherwise dispose of any of the
Securities, except in a transaction that is the subject of either (x) an
effective registration statement under the Securities Act and any applicable
state securities laws, or (y) an opinion of counsel to the effect that such
registration is not required (which opinion and counsel shall be reasonably
satisfactory to the Company, it being agreed that Reboul, MacMurray, Hewitt,
Maynard & Kristol shall be satisfactory, and may be relied on by the Company in
making such determination), it being intended that the agreements with respect
to the Securities contained in this sentence shall be construed consistently
with the provisions relating to the same subject matter contained in the Amended
and Restated Registration Rights Agreement.

            (c) Such Purchaser is able to fend for itself in the transactions
contemplated by this Agreement and has the ability to bear the economic risks of
its investment in the Securities being purchased by it for an indefinite period
of time. Such Purchaser has had the opportunity to ask questions of, and receive
answers from, officers of the Company with respect to the business and financial
condition of the Company and the terms and conditions of the offering of the
Securities and to obtain additional information necessary to verify such
information or can acquire it without unreasonable effort or expense.

            (d) Such Purchaser has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
its investment in the Securities. Such Purchaser (other than the Purchasers set
forth on Schedule 3.03(d) hereto) is an "accredited investor" as such term is
defined in Rule 501 of Regulation D under the Securities Act with respect to its
purchase of the Securities, and that if such Purchaser is a partnership, it has
not been formed solely for the purpose of purchasing the Securities it is
purchasing hereunder (unless each of the partners of such partnership is an
accredited investors).

            (e) Such Purchaser, to the extent that such Purchaser is subject to
the Connecticut Uniform Securities Act, is an institutional buyer under
ss.36b-21(b)(8) thereto.

            SECTION 3.04 GOVERNMENTAL APPROVALS. No registration or filing with,
or consent or approval of, or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary by such Purchaser
for the valid execution, delivery and performance of this Agreement, the Amended
and Restated Stockholders Agreement and the Registration Rights Agreement
Amendment, other than, if applicable, compliance with the requirements of the
HSR Act.

            SECTION 3.05 BROKERS' OR FINDERS' FEES. Except as set forth on
Schedule 3.05, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Purchasers with the Company,
without the intervention of any person on behalf of the Purchasers in such a
manner as to give rise to any claim by any person for a finders' fee, brokerage
commission or similar payment.

                                        9
<PAGE>
                                       IV

                              CONDITIONS PRECEDENT

            SECTION 4.01 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PURCHASERS. The obligations of each Purchaser hereunder are, at its option,
subject to the satisfaction, on or before the Closing Date, of the following
conditions:

            (a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects on the Closing Date, with the same
force and effect as though such representations and warranties had been made on
and as of such date, and the Company shall have certified to such effect to the
Purchasers in writing.

            (b) PERFORMANCE. The Company shall have performed and complied with
all agreements and conditions contained herein required to be performed or
complied with by it prior to or on the Closing Date, and the Company shall have
certified to such effect to the Purchasers in writing.

            (c) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by the Company and all waivers and consents to be
obtained by the Company in connection with the transactions contemplated hereby
shall have been taken or obtained by the Company and all documents incident
thereto shall be satisfactory in form and substance to such Purchaser and its
counsel.

            (d) LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding
shall have been instituted or threatened seeking to restrain, prohibit,
invalidate or otherwise affect the consummation of the transactions contemplated
hereby.

            (e) AMENDED AND RESTATED STOCKHOLDERS AGREEMENT AND REGISTRATION
RIGHTS AGREEMENT AMENDMENT. Each of the Amended and Restated Stockholders
Agreement and the Registration Rights Agreement Amendment shall have been
executed and delivered by the Company and a sufficient number of parties to
effect each such Agreement and Amendment.

            (f) CERTIFICATE OF AMENDMENT. The Certificate of Amendment to the
Certificate of Incorporation of the Company substantially in the form of Exhibit
E hereto shall have been duly adopted and shall have been duly filed with the
Secretary of State of the State of Delaware and become legally effective.

            (g) OPINION OF COUNSEL. The Purchasers shall have received an
opinion of Nossaman, Guthner, Knox & Elliott, LLP, in form and substance
reasonably satisfactory to the Purchasers and their counsel.

                                       10
<PAGE>
            (h) SUPPORTING DOCUMENTS. WCAS VII (on behalf of the Purchases and
its counsel shall have received copies of the following supporting documents:

            (i)(x) copies of the Certificate of Incorporation of the Company,
      and all amendments thereto, certified as of a recent date by the Secretary
      of State of the State of Delaware, and (y) a certificate of said Secretary
      dated as of a recent date as to the due incorporation and good standing of
      the Company and listing all documents of the Company on file with said
      Secretary;

            (ii) a certificate of the Secretary or a Assistant Secretary of the
      Company dated the Closing Date and certifying (w) that attached thereto is
      true and complete copy of the By-laws of the Company as in effect on the
      date of such certification; (x) that attached thereto is a true and
      complete copy of resolutions adopted by the Board of Directors of the
      Company authorizing the execution, delivery and performance of this
      Agreement, the Registration Rights Agreement Amendment, the Amended and
      Restated Stockholders Agreement, the Note and the issuance, sale and
      delivery of the Securities, and that all such resolutions are still in
      full force and effect and are all the resolutions adopted in connection
      with the transactions contemplated hereby and thereby; (y) that the
      Certificate of Incorporation of the Company has not been amended since the
      date of the last amendment referred to in the certificate delivered
      pursuant to clause (i)(x) above; and (z) as to the incumbency and specimen
      signature of each officer of the Company executing this Agreement, the
      Registration Rights Agreement Amendment, the Amended and Restated
      Stockholders Agreement, the Note and the stock certificates representing
      the Shares and any certificate or instrument furnished pursuant hereto,
      and a certification by another officer of the Company as to the incumbency
      and signature of the officer signing the certificate referred to in this
      paragraph (ii); and

            (iii) such additional supporting documents and other information
      with respect to the operations and affairs of the Company as the
      Purchasers of their counsel may reasonably request

            All such documents shall be satisfactory in form and substance to
the Purchasers and their counsel.

            (i) CONSENTS; HSR ACT WAITING PERIOD. The Company shall have
obtained all consents required to be obtained pursuant to Section 5.05 hereof.
Without limiting the generality of the foregoing, all applicable waiting periods
under the HSR Act with respect to the transactions contemplated hereby shall
have expired or been terminated.

            SECTION 4.02 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company hereunder are, at its option, subject to the
satisfaction, on or before the Closing Date of the following conditions:

                                       11
<PAGE>
            (a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Purchasers contained in this Agreement
shall be true and correct in all material respects on the Closing Date, with the
same effect as though such representations and warranties had been made on and
as of such date.

            (b) PERFORMANCE. The Purchasers shall have performed and complied
with all agreements and conditions contained herein required to be performed or
complied with by them prior to or on the Closing Date.

            (c) ALL PROCEEDINGS TO BE SATISFACTORY. All proceedings to be taken
by the Purchasers and any waivers and consents to be obtained by the Purchasers
in connection with the transactions contemplated hereby shall have been taken or
obtained by the Purchasers and all documents incident thereto shall be
satisfactory in form and substance to the Company and its counsel.

            (d) LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding
shall have been instituted or threatened seeking to restrain, prohibit,
invalidate or otherwise affect the consummation of the transactions contemplated
hereby.

            (e) AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, REGISTRATION RIGHTS
AGREEMENT AMENDMENT. Each of the Amended and Restated Stockholders Agreement and
the Registration Rights Agreement Amendment shall have been executed and
delivered by a sufficient number of parties (other than the Company) to effect
each such Agreement and Amendment.

                                        V

                                    COVENANTS

            SECTION 5.01 FINANCIAL STATEMENTS, REPORTS, ETC.

            The Company shall furnish to each of WCAS VII and FFT Partners,
prior to the consummation of the Company's IPO and for so long as WCAS VII or
FFT Partners, as applicable, shall hold at least 25% of the Securities (or
securities into which such Securities are converted, exchanged or reclassified)
purchased by WCAS VII or FFT Partners hereunder:

            (a) within 90 days after the end of each fiscal year of the Company,
      a consolidated balance sheet of the Company as of the end of such fiscal
      year and the related consolidated statements of operations and retained
      earnings, changes in stockholders' equity and cash flows of the Company
      for the fiscal year then ended, together with supporting notes thereto,
      certified in accordance with generally accepted accounting principles,
      without qualification as to scope of audit, by a firm of independent
      public accountants of recognized national standing selected by the
      Company;

                                       12
<PAGE>
            (b) within 30 days after the end of each month in each fiscal year
      (other than the last month in each fiscal year), a consolidated balance
      sheet of the Company and the related consolidated statement of operations
      and retained earnings, unaudited but certified by the principal financial
      officer of the Company, such balance sheets to be as of the end of such
      month and such statements of operations and retained earnings to be for
      such month and for the period from the beginning of the fiscal year to the
      end of such month, in each case subject to normal year-end adjustments;

            (c) within 30 days prior to the beginning of each fiscal year of the
      Company (and with respect to any revision thereof, promptly after such
      revision has been prepared), a proposed annual operating budget for the
      Company, including projected monthly income statements, cash flow
      statements during such fiscal year and a projected consolidated balance
      sheet as of the end of such fiscal year, and each monthly financial
      statement furnished pursuant to (b) above shall reflect variances from
      such operating budget, as the same may from time to time be revised; and

            (d) promptly upon filing, copies of all registration statements,
      prospectuses, periodic reports and other documents filed by the Company or
      any Subsidiary with the Securities and Exchange Commission.

            SECTION 5.02 RIGHTS OF INSPECTION. The Company shall, and shall
cause its Subsidiaries, officers, directors, employees, representatives,
advisors and agents to, afford, from the date hereof, the representatives,
advisors and agents of WCAS VII (on behalf of the Purchasers) complete access
at all reasonable times during normal business hours to its officers, employees,
agents, properties, books, records and workpapers, and shall furnish WCAS VII
all financial, operating and other information and data that WCAS VII may
reasonably request through such representatives, advisors or agents. At the
request of WCAS VII, the Company shall promptly furnish to the Purchasers a copy
of all material written correspondence, filings communications (or memoranda
setting forth the substance thereof) between the Company or any of its officers,
employees, representatives, advisors or agents and any governmental entity with
respect to the obtaining of any waivers, consent or approvals and the making of
any registrations or filings that are necessary to the transactions contemplated
by this Agreement. The Purchasers agree to keep confidential any confidential
business information that may be provided to them by the Company pursuant to
this Agreement, unless disclosure is required by law as advised by counsel.

            SECTION 5.03 NOTICE OF CERTAIN EVENTS. The Company shall give WCAS
VII and FFT Partners prompt notice of (i) the occurrence, or failure to occur,
of any event that the Company believes would be likely to (x) cause any of the
representations or warranties of the Company contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof or
(y) cause any covenant, condition or agreement contained in this Agreement not
to be complied with or satisfied in any material respect, (ii) any failure of
the Company, or any officer, director, employee or agent thereof, to comply in
any material respect

                                       13
<PAGE>
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it hereunder, (iii) any event of default under
any agreement with respect to indebtedness for borrowed money or a purchase
money obligation, and any event which, upon notice or lapse of time or both,
would constitute such an event of default, that would permit the holder of such
indebtedness or obligation to accelerate the maturity thereof, (iv) any claim,
action, suit or proceeding at law or in equity or by or before any governmental
instrumentality or agency which, if adversely determined, would materially
impair the ability of the Company to carry on its business substantially as now
or then conducted, and which, in the case of each of the items set forth in
clauses (i) through (iv) above, would be likely to have material adverse effect
on the properties, assets, condition (financial or other), prospects, operating
results or business of the Company and its Subsidiaries taken as a whole.

            SECTION 5.04 USE OF PROCEEDS. The Company shall use the proceeds
from the sale of the Securities hereunder for the acquisition of certain
domestic or international surgical centers or hospitals (or assets relating
thereto) and for general corporate or other purposes approved by WCAS VII.

            SECTION 5.05 CONSENTS AND APPROVALS. Prior to the Closing Date, the
Company shall promptly apply for or otherwise seek and use its best efforts to
obtain all authorizations, consents, waivers and approvals (whether by or from
any person, entity, court or governmental agency or authority) as may be
required in connection with the consummation of this Agreement and the
transactions contemplated hereby. In addition, the Company shall pay any filing
fees and expenses relating to compliance with the HSR Act in connection with any
transaction to which the Company is a party, regardless of who may be deemed to
be the "ultimate parent" of the Company (as such term is defined in the HSR
Act).

            SECTION 5.06 COMPLIANCE WITH LAWS. The Company shall comply, and
shall cause each of its Subsidiaries to comply, with all applicable laws, rules,
regulations and orders, the noncompliance with which could have a material
adverse effect on the properties, assets, condition (financial or other),
prospects, operating results or business of the Company and its Subsidiaries
taken as a whole.

            SECTION 5.07 PREEMPTIVE RIGHTS. (a) Until such time as the Company
has consummated an IPO, the Company hereby grants to each of the Purchasers and
Donald Steen (collectively, the "Original Investors") the right to purchase such
Original Investor's Proportionate Percentage (as hereinafter defined) of any
future Eligible Offering (as hereinafter defined). For the purposes of this
Section 5.07 , the following terms shall have the meanings set forth below:

                  "PROPORTIONATE PERCENTAGE" means, with respect to such
            Original Investor as of any date, the result (expressed as
            percentage) obtained by dividing (i) the number of shares of Class A
            Common Stock and Common Stock owned by such Original Investor as of
            such date (treating, for purposes of such calculation, each share of
            Series C Preferred Stock as the number of shares of Class A Common
            Stock issuable upon conversion

                                       14
<PAGE>
            thereof) by (ii) the total number of shares of Class A Common Stock
            and Common Stock outstanding as of such date (treating, for purposes
            of such calculation, each share of Series C Preferred Stock as the
            number of shares of Class A Common Stock issuable upon conversion
            thereof).

                  "ELIGIBLE OFFERING" means an offer by the Company to sell to
            investors (including any of the Original Investors) for cash, shares
            of capital stock of the Company, or any security convertible into or
            exchangeable for, or carrying rights or options to purchase, capital
            stock of the Company, other than an offering of securities by the
            Company:

                        (i) to its full-time employees, and/or officers and/or
                  directors and/or consultants and/or advisors of options to
                  purchase shares of Common Stock in connection with or pursuant
                  to the Company's Stock Option Plan as in effect from time to
                  time;

                        (ii) in connection with the conversion or exercise of
                  outstanding securities of the Company;

                        (iii) in connection with any merger of, or acquisition
                  by, the Company; or

                        (iv) in an underwritten public offering of shares of
                  Common Stock registered under the Securities Act.

                  (b) The Company shall, before issuing any securities pursuant
to an Eligible Offering, give written notice thereof to each of the Original
Investors. Such notice shall specify the security or securities the Company
proposes to issue and the consideration that the Company intends to receive
therefor. For a period often (10) days following the date of such notice, each
of the Original Investors shall be entitled, by written notice to the Company,
to elect to purchase all or any part of such Original Investor's Proportionate
Percentage of the securities being sold in the Eligible Offering; PROVIDED,
HOWEVER, that if two or more securities shall be proposed to be sold as a "unit"
in an Eligible Offering, any such election must relate to such unit of
securities. In the event that elections pursuant to this Section 5.07 shall not
be made with respect to any securities included in an Eligible Offering within
such ten (10) day period, then the Company may issue such securities to
investors, but only for a consideration payable in cash not less than, and
otherwise on no more favorable terms to the investors than, that set forth in
the Company's notice and only within 180 days after the end of such ten (10) day
period. In the event that any such offer is accepted by one or more Original
Investors, on a mutually agreeable date not less than ten (10) business days
following such acceptance, the Company shall sell to such Original Investors and
such Original Investors shall purchase from the Company, for the consideration
and on the terms set forth in the notice as aforesaid, the securities that such
Original Investors shall have elected to purchase.

                                       15
<PAGE>
            SECTION 5.08 MANAGEMENT FEE. At no time shall WCAS VII (or its
partners) charge the Company for management or similar fees relating to its
investment in the Company.

                                       VI

                                  MISCELLANEOUS

            SECTION 6.01 EXPENSES. ETC. The Company shall pay its own expenses.
All fees and expenses of WCAS VII incident to the negotiation, preparation and
execution of this Agreement, including the fees and expenses of counsel,
accountants or other advisors (i) shall be paid by the Company in the event that
such transactions are consummated and (ii) shall be borne by the party incurring
such expense in the event such transactions are not consummated. Each party
hereto will indemnify and hold harmless the others against and in respect of any
claim for brokerage or other commissions relative to this Agreement or to the
transactions contemplated hereby, made as a result of any agreements,
arrangements or understandings made or claimed to have been made by such party
with any third party.

            SECTION 6.02 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the issuance, sale and delivery of the Securities
pursuant hereto and all statements contained in any certificate or other
instrument delivered by the Company hereunder shall be deemed to constitute
representations and warranties made by the Company.

            SECTION 6.03 PARTIES IN INTEREST. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not.

            SECTION 6.04 NOTICES. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient if contained in a written
instrument delivered in person or by overnight courier or duly sent by first
class certified mail, postage prepaid, or by facsimile addressed to such party
at the address or facsimile number set forth below:

            if to the Company, to:

                        United Surgical Partners International, Inc.
                        17103 Preston Road Suite 190 North
                        Dallas, Texas 75248
                        Facsimile: 972-267-0084
                        Attention: Donald Steen

                                       16
<PAGE>
            with a copy to:

                        Nossaman, Guthner, Knox & Elliott, LLP
                        445 South Figueroa Street, 31st Floor
                        Los Angeles, CA 90071
                        Facsimile: 213-612-7801
                        Attention: Robert D. Mosher, Esq.

            if to any Purchaser, to such Purchaser at the address appearing on
Annex I hereto;

or, in any case, at such other address or addresses as shall have been furnished
in writing by such party to the other parties hereto. All such notices,
requests, consents and other communications shall be deemed to have been
received (a) in the case of personal or courier delivery, on the date of such
delivery, (b) in the case of mailing, on the fifth business day following the
date of such mailing and (c) in the case of facsimile, when received.

            SECTION 6.05 WAIVER OF PRIOR PREEMPTIVE RIGHTS. Each of the
Purchasers and Donald Steen hereby (i) waive their respective rights to purchase
a proportionate percentage of the Shares as set forth in Section 5.07 of the
Securities Purchase Agreement dated Apri1 30, 1998 (the "Apri1 1998 Agreement")
among the Company, WCAS VII and the several other parties named therein and
Section 5.07 of the Securities Purchase Agreement dated October 26, 1998 (the
"October 1998 Agreement") among the Company, WCAS VII, FFT Partners and the
several other parties named therein and (ii) agree that Section 5.07 of this
Agreement shall supercede Section 5.07 of each of the April 1998 Agreement and
October 1998 Agreement in all respects.

            SECTION 6.06 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement
(including the Exhibits, Annexes and Schedules hereto) constitutes the entire
agreement of the parties with respect to the subject matter hereof and may not
be amended or modified nor any provisions waived except in a writing signed by
the party to be charged.

            SECTION 6.07 ASSIGNMENT. This Agreement may not be assigned by the
Company or the Purchasers without the prior written consent of the Company and
each of the Purchasers.

            SECTION 6.08 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but alJ of which
together shall constitute one and the same instrument.

            SECTION 6.09 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.

                                       17
<PAGE>
            IN WITNESS WHEREOF, the Company and the Purchasers have executed
this Agreement as of the day and year first above written.

                                   UNITED SURGICAL PARTNERS
                                     INTERNATIONAL, INC.

                                   By /s/ DONALD STEEN
                                          Donald Steen
                                          Chief Executive Officer

                                   WCAS PURCHASERS:

                                   WELSH, CARSON, ANDERSON
                                     & STOWE VII, L.P .

                                   By WCAS VII Partners, L.L.C.
                                   General Partner

                                   By /s/ JONATHAN M. RATHER
                                          Jonathan M. Rather
                                          General Partner

                                   WCAS CAPITAL PARTNERS III, L.P.

                                   By WCAS CP III Associates, L.L.C.
                                   General Partner

                                    By /s/ JONATHAN M. RATHER
                                           Jonathan M. Rather
                                           General Partner
<PAGE>
                                    WCAS HEALTHCARE PARTNERS, L.P.

                                    By WCAS HC Partners
                                    General Partner

                                    By /s/ JONATHAN M. RATHER
                                           Jonathan M. Rather
                                           Attorney-in-Fact

                                    Patrick J. Welsh
                                    Russell L. Carson
                                    Bruce K. Anderson
                                    Richard H. Stowe
                                    Andrew M. Paul
                                    Laura VanBuren
                                    Rudolph E. Rupert
                                    D. Scott Mackesy
                                    Thomas E. McInerney
                                    Robert A. Minicucci
                                    Anthony J. deNicola
                                    Paul B. Queally
                                    Sanjay Swani
                                    Sean Traynor

                                    /s/ JONATHAN M. RATHER
                                    By Jonathan M. Rather
                                    Attorney-in-Fact

                                    /s/ LAUREN MELKUS
                                        Lauren Melkus

                                    /s/ JONATHAN RATHER
                                        Jonathan Rather
<PAGE>
                                    FFT PARTNERS I, L.P.

                                    By Ferrer Freeman Thompson & Co., LLC
                                    General Partner

                                    By /s/ CARLOS A. FERRER
                                    Name:  Carlos A. Ferrer
                                    Title: General Partner

                                    FFT EXECUTIVE PARTNERS I, L.P.

                                    By Ferrer Freeman Thompson & Co., LLC
                                    General Partner

                                    By /s/ CARLOS A. FERRER
                                    Name:  Carlos A. Ferrer
                                    Title: General Partner

Acknowledge and Agreed
as to Section 6.05

/s/ DONALD STEEN
    Donald Steen

<PAGE>

                                    EXHIBIT A

                      Form of 10% Senior Subordinated Note

See Tab 2.

<PAGE>

                     THIS NOTE HAS NOT BEEN REGISTERED UNDER
                     THE SECURITIES ACT OF 1933, AS AMENDED,
                          OR ANY STATE SECURITIES LAWS.
            NEITHER THE SECURITIES EVIDENCED HEREBY, NOR ANY INTEREST
             THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED, ENCUMBERED
             OR OTHERWISE DISPOSED OF UNLESS EITHER (I) THERE IS AN
            EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND LAWS
            RELATING THERETO OR (II) THE CORPORATION HAS RECEIVED AN
             OPINION OF COUNSEL, REASONABLY SATISFACTORY IN FORM AND
                 SUBSTANCE TO THE CORPORATION, STATING THAT SUCH
                          REGISTRATION IS NOT REQUIRED.

           THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") AS
           DEFINED BY SECTION 1273(a)(1) OF THE INTERNAL REVENUE CODE
                OF 1986, AS AMENDED. THE FOLLOWING INFORMATION IS
                 PROVIDED PURSUANT TO THE INFORMATION REPORTING
             REQUIREMENTS SET FORTH IN TREASURY REGULATION 1.1275-3.

           THE ISSUE PRICE OF THIS DEBT INSTRUMENT IS $30,750,000. THE
               AMOUNT OF OID ON THIS DEBT INSTRUMENT IS $5,250,000
            ASSUMING ALL PAYMENTS OF PRINCIPAL ARE MADE AT MATURITY.
          THE ISSUE DATE OF THIS DEBT INSTRUMENT IS MARCH 27, 2000. THE
             PER ANNUM YIELD TO MATURITY OF THIS DEBT INSTRUMENT IS
                        12.61% COMPOUNDED SEMI-ANNUALLY.

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

                          10% Senior Subordinated Note
                               Due March 27, 2010
$36,000,000                                                       March 27, 2000

            UNITED SURGICAL PARTNERS INTERNATIONAL, INC., a Delaware corporation
(hereinafter called the "Corporation"), for value received, hereby promises to
pay to WCAS CAPITAL PARTNERS III, L.P., the principal sum of THIRTY SIX MILLION
DOLLARS ($36,000,000) on March 27, 2010 (subject to applicable restrictions set
forth in Section 12 hereof), and to pay interest (computed on the basis of a
360-day year consisting of twelve 30-day months) from the date hereof on the
unpaid principal amount hereof at the rate of 10% per annum, payable
semi-annually in arrears on September 27 and March 27 of each year (each said
day being an "Interest Payment Date"), commencing on September 27, 2000 and
until the date the outstanding principal amount hereof shall have become due and
payable in full, whether at maturity or by

                                       1
<PAGE>

acceleration or otherwise. If the principal amount hereof shall not be paid when
the same shall have become due and payable in full, whether at maturity or by
acceleration or otherwise, then such overdue principal amount and (to the extent
permitted by applicable law) any overdue interest shall thereupon bear interest
at the rate of 12% per annum until paid in full.

            All payments of principal and interest on this Note shall be in such
coin or currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts, and shall be made at
the offices of the person deemed the holder hereof in accordance with Section 4
below.

            On any Interest Payment Date on or after March 27, 2005, the Company
shall also pay such amount of accrued original issue discount on this Note as
shall be necessary to ensure that this Note shall not be considered an
"applicable high yield discount obligation" within the meaning of Section 163(i)
of the Internal Revenue Code of 1986, as amended (the "Code"), or any successor
provision. In the event that any such payment of accrued original issue discount
occurs, the amount of principal payable on this Note shall be reduced to the
extent necessary to ensure that the yield to maturity on this Note (determined
as provided by Section 1272 of the Code and the regulations thereunder and
computed by taking into account any such payment of accrued original issue
discount pursuant to this paragraph) shall equal the yield to maturity on this
Note (computed as though no payment of accrued original issue discount had been
made under this paragraph). The Company and the holder hereof agree that the
original issue discount characteristics of the Note reflected in the legend were
determined in accordance with Treasury Regulation Section 1.1273-2(h)(1) and
that they shall report the accrual of interest and original issue discount on
the Note consistent with those determinations for all tax purposes.

            1. The Note. This Note is issued pursuant to and is subject to the
terms and provisions of the Securities Purchase Agreement dated as of March 27,
2000 (the "Securities Purchase Agreement") among the Corporation, Welsh, Carson,
Anderson and Stowe VII, L.P. ("WCAS VII"), WCAS Capital Partners III, L.P., FFT
Capital Partners I, L.P. and the several other parties named therein. As used
herein, the term "Note" or "Notes" includes all of the 10% Senior Subordinated
Note or Notes due March 27, 2010 originally issued in connection with the
Securities Purchase Agreement and any 10% Senior Subordinated Note or Notes due
March 27, 2010 of the Corporation subsequently issued upon exchange or transfer
thereof.

            2. Transfer, Etc. of Notes. The Corporation shall keep at its office
or agency maintained as provided in paragraph (a) of Section 6 a register in
which the Corporation shall provide for the registration of this Note and for
the registration of transfer and exchange of this Note, The holder of this Note
may, at its option, and either in person or by duly authorized attorney,
surrender the same for registration of transfer or exchange at the office or
agency of the Corporation maintained as provided in paragraph (a) of Section 6,
and, without expense to such holder (except for transfer taxes, if any, imposed
in connection therewith), receive in exchange therefor a Note or Notes each in
such denomination or denominations as such holder may request (which
denominations shall be $100,000 or an integral multiple thereof, except for any
balance which may be less than $100,000), dated as of the date to which interest
has been paid on the Note or Notes so surrendered for transfer or exchange, for
the same aggregate principal amount as the then unpaid principal amount of the
Note or Notes so surrendered for transfer or exchange, and registered in the
name of such person or persons as may be designated by such holder, This Note,
when presented or surrendered for registration of transfer or exchange, shall be
duly

                                       2
<PAGE>

endorsed, or shall be accompanied by a written instrument of transfer,
satisfactory in form to the Corporation, duly executed by the holder of such
Note or his attorney duly authorized in writing. Every Note so made and
delivered in exchange for this Note shall in all other respects be in the same
form and have the same terms as this Note. No transfer or exchange of any Note
shall be valid unless made in the foregoing manner at such office or agency.

            3. Loss, Theft, Destruction or Mutilation of Note. Upon receipt of
evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of this Note, and, in the case of any such loss, theft or
destruction, upon receipt of an affidavit of loss and indemnity from the holder
hereof reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of this Note, the Corporation will
make and deliver, in lieu of this Note, a new Note of like tenor and unpaid
principal amount and dated as of the date to which interest has been paid on
this Note.

            4. Persons Deemed Owners; Holders. The Corporation may deem and
treat the person in whose name this Note is registered as the owner and holder
of this Note for the purpose of receiving payment of principal of and interest
on this Note and for all other purposes whatsoever, whether or not this Note
shall be overdue. With respect to any Note at any time outstanding, the term
"holder", as used herein, shall be deemed to mean the person in whose name such
Note is registered as aforesaid at such time.

            5. Prepayments. The Corporation may prepay this Note as follows:

            (a) Mandatory Prepayment. Except as and to the extent expressly
prohibited by applicable law, the Corporation shall prepay the principal amount,
plus accrued and unpaid interest, of all Notes which shall then be outstanding,
upon the consummation by the Corporation of an initial public offering of its
Common Stock, $.01 par value, registered under the Securities Act of 1933, as
amended. In case of the occurrence of any of the following (each a "Change of
Control Event"): (i) a consolidation or merger of the Corporation with or into
any other corporation (other than a merger which will not result in more than
50% of the voting capital stock of the Corporation outstanding immediately after
the effective date of such merger being owned of record or beneficially by
persons other than the holders of such voting capital stock immediately prior to
such merger in the same proportions in which such shares were held immediately
prior to such merger), (ii) a sale of all or substantially all of the properties
and assets of the Corporation as an entirety in a single transaction or in a
series of related transactions to any other person or (iii) the acquisition of
"beneficial ownership" by any "person" or "group" (other than WCAS VII or its
affiliates) of voting stock of the Corporation representing more than 50% of the
voting power of all outstanding shares of such voting stock, whether by way of
merger or consolidation or otherwise, the Corporation shall not later than 20
days prior to the effective date of any such Change of Control Event (the
"Change of Control Event Date"), give notice thereof to the holder or holders of
the Notes and, in the event that within 15 days after receipt of such notice,
the holders of a majority of the outstanding aggregate principal amount of the
Notes elect, by written notice to the Corporation, to have such Notes prepaid,
the Corporation shall prepay 100% of the principal amount of the Notes, plus any
accrued but unpaid interest as of the Change of Control Event Date, on or before
such date.

                                       3
<PAGE>

            As used herein, (i) the terms "person" and "group" shall have the
meaning set forth in Section l3(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), whether or not applicable, (ii) the term
"beneficial owner" shall have the meaning set forth in Rules 13d-3 and 13d-5
under the Exchange Act, whether or not applicable, except that a person shall be
deemed to have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time or upon the occurrence of certain events, and (iii) any
"person" or "group" will be deemed to beneficially own any voting stock of the
Corporation so long as such person or group beneficially owns, directly or
indirectly, in the aggregate a majority of the voting stock of a registered
holder of the voting stock of the Corporation.

            (b) Optional Prepayment. Upon notice given as provided in Section
5(c), the Corporation may, at its option, prepay this Note without penalty, as a
whole at any time or in part from time to time in amounts which shall be
integral multiples of $10,000. Any date on which the Corporation elects to
prepay any of the Notes as provided in this subparagraph 5(b) and each date on
which the Corporation shall be required to prepay the Notes as provide in
subparagraph 5(a) above shall be referred to as a "Prepayment Date,"

            (c) Notice of Prepayment. Not less than 20 days prior to a
Prepayment Date, written notice shall be given by registered or certified mail
or by overnight courier to the holders of record of the Notes to be prepaid,
such notice to be addressed to each such holder at his post office address as
shown by the records of the Corporation, specifying the dollar amount to be
prepaid, the paragraph or paragraphs of this Note pursuant to which such
prepayment shall be made, and the date of such prepayment, which date shall not
be a day on which the banks of New York are required or authorized to be closed.
Upon notice of prepayment being given as aforesaid, the Corporation covenants
and agrees that it will prepay, on the date therein fixed for prepayment, this
Note or the portion hereof, as the case may be, so called for prepayment, at the
prepayment price determined in accordance with Section 5(a) or 5(b) hereof. A
prepayment of less than all of the outstanding principal amount of this Note
shall not relieve the Corporation of its obligation to make scheduled payments
of interest payable in respect of the principal remaining outstanding on the
Interest Payment Dates.

            (d) Allocation of All Payments. In the event of any partial payment
of less than all of the interest then due on the Notes then outstanding or any
prepayment, purchase, redemption or retirement of less than all of the
outstanding principal amount of the Notes, the Corporation will allocate the
amount of interest so to be paid and the principal amount so to be prepaid,
purchased, redeemed or retired to each Note in proportion, as nearly as may be,
to the aggregate principal amount of all Notes then outstanding.

            (e) Interest After Date Fixed for Prepayment. If this Note or a
portion hereof is called for prepayment as herein provided, this Note or such
portion shall cease to bear interest on and after the date fixed for such
prepayment unless, upon presentation for such purpose, the Corporation shall
fail to pay this Note or such portion, as the case may be, in which event this
Note or such portion, as the case may be, and, so far as may be lawful, any
overdue installment of interest, shall bear interest on and after the date fixed
for such prepayment and until paid at the rate per annum provided herein.

                                       4
<PAGE>

            (f) Surrender of Note; Notation Thereon. Upon any prepayment of a
portion of the principal amount of this Note, the holder hereof, at its option,
may require the Corporation to execute and deliver at the expense of the
Corporation (other than for transfer taxes, if any), upon surrender of this
Note, a new Note registered in the name of such person or persons as may be
designated by such holder for the principal amount of this Note then remaining
unpaid, dated as of the date to which the interest has been paid on the
principal amount of this Note then remaining unpaid, or may present this Note to
the Corporation for notation hereon of the payment of the portion of the
principal amount of this Note so prepaid.

            6. Covenants. The Corporation covenants and agrees that, so long as
this Note shall be outstanding:

            (a) Maintenance of Office. The Corporation will maintain an office
      or agency in such place in the United States of America as the Corporation
      may designate in writing to the registered holder hereof where this Note
      may be presented for registration of transfer and exchange as herein
      provided, where notices and demands to or upon the Corporation in respect
      of this Note may be served and where, at the option of the holder thereof,
      this Note may be presented for payment. Until the Corporation otherwise
      notifies the holder of this Note, said office shall be the principal
      office of the Corporation at 17103 Preston Road, Suite 190 North, Dallas,
      Texas 75248.

            (b) Corporate Existence. The Corporation will do or cause to be done
      all things necessary and lawful to preserve and keep in full force and
      effect its corporate existence, rights and franchises and the corporate or
      partnership existence, rights and franchises of each of its subsidiaries;
      provided, however, that nothing in this paragraph (b) shall prevent (i) a
      consolidation or merger of, or a sale, transfer or disposition of all or
      any substantial part of the property and assets of, the Corporation or
      (ii) the abandonment or termination of any rights or franchises of the
      Corporation, or the liquidation or dissolution of, or a sale, transfer or
      disposition (whether through merger, consolidation, sale or otherwise) Of
      all or any substantial part of the property and assets of, any subsidiary
      or the abandonment or termination of the corporate or partnership
      existence, rights and franchises of any subsidiary if such abandonment,
      termination, liquidation, dissolution, sale, transfer or disposition is,
      in the good faith business judgment of the Corporation, in the best
      interests of the Corporation and is not disadvantageous in any material
      respect to the holder of this Note.

            (c) Notice of Default. If any one or more events which constitute,
      or which with notice or lapse of time or both would constitute, an Event
      of Default under Section 8 of this Note shall occur, or if any holder of
      the Notes shall demand payment or take any other action permitted upon the
      occurrence of any such Event of Default, the Corporation shall,
      immediately after it becomes aware that any such event has occurred or
      that such demand has been made or that any such action has been taken,
      give notice to all holders of the Notes, specifying the nature of such
      event or of such demand or action, as the case may be; provided, however,
      that if such event, in the good faith judgment of the Corporation, will be
      cured within ten days after the Corporation has knowledge that such event
      would, with or without notice or lapse of time or both, constitute such an
      Event of

                                       5
<PAGE>

      Default, no such notice need be given if such Event of Default shall be
      cured within such ten-day period.

            (d) Merger or Consolidation. Without limitation of the rights of the
      holder of this Note set forth in Section 5(a) hereof, if the Corporation
      shall effect a merger or consolidation in which it is not the surviving
      entity, then the Corporation shall take such action as may be necessary,
      as a condition to consummating such transaction, to cause the surviving
      entity to assume all of the Corporation's obligations under this Note, as
      if such entity had been the original issuer thereof, and such entity shall
      acknowledge in writing its obligation to fully and timely honor the
      Corporation's obligations under this Note.

            (e) Optional Prepayments of Debt. Other than with respect to Senior
      Indebtedness (as hereinafter defined), the Corporation will not make any
      optional prepayment of any indebtedness for borrowed money, prior to the
      repayment in full of this Note.

            7. Modification: Waiver. The Corporation may, with the written
consent of the holders of not less than 66 2/3% in principal amount of the Notes
then outstanding, modify the terms and provisions of the Notes or the rights of
the holders of the Notes or the obligations of the Corporation thereunder, and
the observance by the Corporation of any term or provision of the Notes may be
waived with the written consent of the holders of not less than 66 2/3% in
principal amount of the Notes then outstanding, provided, however, that no such
modification or waiver shall:

            (a) change the maturity of any Note or reduce the principal amount
      thereof or reduce the rate or extend the time of payment of interest
      thereon or reduce the amount or change the time of payment of premium
      payable on any prepayment thereof without the consent of the holder of
      each Note so affected; or

            (b) give any Note any preference over any other Note; or

            (c) reduce the aforesaid percentage of Notes, the consent of the
      holders of which is required for any such modification.

            Any such modification or waiver shall apply equally to all the
holders of the Notes and shall be binding upon them, upon each future holder of
any Note and upon the Corporation, whether or not such Note shall have been
marked to indicate such modification or waiver, but any Note issued thereafter
shall bear a notation referring to any such modification or waiver. Promptly
after obtaining the written consent of the holders as herein provided, the
Corporation shall transmit a copy of such modification or waiver to all the
holders of the Notes at the time outstanding.

            8. Events of Default. If any one or more of the following events,
herein called Events of Default, shall occur, for any reason whatsoever, and
whether such occurrence shall, on the part of the Corporation or any subsidiary,
be voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of a court of
competent jurisdiction or any order, rule or regulation of any administrative or
other governmental authority, and such Event of Default shall be continuing:

                                       6
<PAGE>

            (a) default shall be made in the payment of the principal when and
      as the same shall become due and payable, whether on demand or at a date
      fixed for prepayment or by acceleration or otherwise; or

            (b) default shall be made in the payment of any installment of
      interest when and as the same shall become due and payable or at a date
      fixed for prepayment or by acceleration or otherwise and such default
      shall continue for a period of 5 days; or

            (c) default shall be made in the due observance or performance of
      any other covenant, condition or agreement on the part of the Corporation
      to be observed or performed pursuant to the terms hereof and such default
      shall continue for 30 days after written notice thereof, specifying such
      default and requesting that the same be remedied, shall have been given to
      the Corporation by the holders of at least 25% of the principal amount of
      the Notes then outstanding (the Corporation to give forthwith to all other
      holders of Notes at the time outstanding written notice of the receipt of
      such notice specifying the default referred to therein); or

            (d) the entry of a decree or order for relief by a court having
      jurisdiction in the premises in respect of the Corporation or any
      subsidiary in an involuntary case under the federal bankruptcy laws, as
      now constituted or hereafter amended, or any other applicable federal or
      state bankruptcy, insolvency or other similar laws, or appointing a
      receiver, liquidator, assignee, custodian, trustee, sequestrator (or
      similar official) of the Corporation or any subsidiary or for any
      substantial part of any of their property, or ordering the winding-up or
      liquidation of any of their affairs and the continuance of any such decree
      or order unstayed and in effect for a period of 60 consecutive days; or

            (e) the commencement by the Corporation or any subsidiary of a
      voluntary case under the federal bankruptcy laws, as now constituted or
      hereafter amended, or any other applicable federal or state bankruptcy,
      insolvency or other similar laws, or the consent by any of them to the
      appointment of or taking possession by a receiver, liquidator, assignee,
      trustee, custodian, sequestrator (or other similar official) of the
      Corporation or any subsidiary or for any substantial part of their
      property, or the making by any of them of any assignment for the benefit
      of creditors, or the failure of the Corporation or any subsidiary
      generally to pay its debts as such debts become due;

then, the holder or holders of at least 25% in aggregate principal amount of the
Notes at the time outstanding may, at its or their option, by notice to the
Corporation, declare all the Notes to be, and all the Notes shall thereupon be
and become, forthwith due and payable together with interest accrued thereon
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived to the extent permitted by law, provided, however, that,
upon the occurrence and during the continuance of any of the events specified in
subsections (a) or (b) of this Section 8, the holder of any Note at the time
outstanding may, at its option by notice in writing to the Corporation, declare
any Note or Notes then held by it to be, and such Note or Notes shall thereupon
be and become, forthwith due and payable together with interest accrued thereon
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived to the extent permitted by law.

                                       7
<PAGE>

            At any time after any declaration of acceleration has been made as
provided in this Section 8, the holders of at least 66 2/3% in principal amount
of the Notes then outstanding may, by notice to the Corporation, rescind such
declaration and its consequences, provided, however, that no such rescission
shall extend to or affect any subsequent default or Event of Default or impair
any right consequent thereon.

            Without limiting the foregoing, the Corporation hereby waives any
right to trial by jury in any legal proceeding related in any way to this Note
or the Notes and agrees that any such proceeding may, if the holder so elects,
be brought and enforced in the Supreme Court of the State of New York for New
York County or the United States District Court for the Southern District of New
York and the Corporation hereby waives any objection to jurisdiction or venue in
any such proceeding commenced in such court The Corporation further agrees that
any process required to be served on it for purposes of any such proceeding may
be served on it, with the same effect as personal service on it within the State
of New York, by registered mail addressed to it at its office or agency set
forth in subsection (a) of Section 6 for purposes of notices hereunder.

            9. Suits for Enforcement. Subject to the provisions of Section 12 of
this Note, in case any one or more of the Events of Default specified in Section
8 of this Note shall occur and be continuing, the holder of this Note may
proceed to protect and enforce its rights by suit in equity, action at law
and/or by other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Note or in aid of the exercise of
any power granted in this Note, or may proceed to enforce the payment of this
Note or to enforce any other legal or equitable right of the holder of this
Note.

            In case of any default under this Note, the Corporation will pay to
the holder thereof such amounts as shall be sufficient to cover the reasonable
costs and expenses of such holder due to said default, including, without
limitation, collection costs and reasonable attorneys' fees, to the extent
actually incurred.

            10. Remedies Cumulative. No remedy herein conferred upon the holder
of this Note is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.

            11. Remedies Not Waived. No course of dealing between the
Corporation and the holder of this Note or any delay on the part of the holder
hereof in exercising any rights hereunder shall operate as a waiver of any right
of any holder of this Note.

            12. Subordination. (a) Anything contained in this Note to the
contrary notwithstanding, the indebtedness evidenced by this Note shall be
subordinate and junior, to the extent set forth in the following paragraphs (A),
(B), (C) and (D), to all Senior Indebtedness of the Corporation. "Senior
Indebtedness" shall mean the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law and
including any loans made to the Corporation as a debtor in possession in any
bankruptcy proceeding by any persons who were the holders of any Senior

                                       8
<PAGE>

Indebtedness on the date such bankruptcy proceeding was commenced) on all
indebtedness to a bank or banks or other financial institutions for borrowed
money and related fees and expenses now existing or hereinafter incurred which
by its terms is not subordinated to any other indebtedness of the Corporation.

            (A) In the event of any insolvency, bankruptcy, liquidation,
      reorganization or other similar proceedings, or any receivership
      proceedings in connection therewith, relative to the Corporation or its
      creditors or its property, and in the event of any proceedings for
      voluntary liquidation, dissolution or other winding up of the Corporation,
      whether or not involving insolvency or bankruptcy proceedings, then all
      Senior Indebtedness shall first be paid in cash in full before any
      payment, whether on account of principal, interest or otherwise, is made
      upon the Notes.

            (B) In any of the proceedings referred to in paragraph (A) above,
      any payment or distribution of any kind or character, whether in cash,
      property, stock or obligations which may be payable or deliverable in
      respect of the Notes shall be paid or delivered directly to the holders of
      Senior Indebtedness for application in payment thereof, unless and until
      all Senior Indebtedness shall have been paid in cash in full.

            (C) No payment shall be made, directly or indirectly, on account of
      the Notes (i) upon maturity of any Senior Indebtedness obligation, by
      lapse of time, acceleration (unless waived), or otherwise, unless and
      until all principal thereof and interest thereon and all other obligations
      in respect thereof shall first be paid in full and have terminated, or
      (ii) upon the happening of any default in payment of any principal of,
      premium, if any, or interest on or any other amounts payable in respect of
      Senior Indebtedness when the same becomes due and payable whether at
      maturity or at a date fixed for prepayment or by declaration or otherwise
      (a "Senior Payment Default"), unless and until such Senior Payment Default
      shall have been cured or waived or shall have ceased to exist.

            (D) Upon the happening of an event of default (other than described
      in clause (A), (B) or (C) above) with respect to any Senior Indebtedness
      permitting (after notice or lapse of time or both) one or more holders of
      such Senior Indebtedness to declare such Senior Indebtedness due and
      payable prior to the date on which it is otherwise due and payable (a
      "Nonmonetary Default"), upon the occurrence of (i) receipt by the holder
      of this Note of written notice from a holder of said Senior Indebtedness
      of a Nonmonetary Default (any such notice, a "Blockage Notice"), or (ii)
      if such Nonmonetary Default results from the acceleration of this Note,
      the date of such acceleration; then (x) the Corporation will not make,
      directly or indirectly, to the holder of this Note any payment of any kind
      of or on account of this Note; (y) the holder of this Note will not accept
      from the Corporation any payment of any kind of or on account of this Note
      and (z) the holder of this Note may not take, demand, receive, sue for,
      accelerate or commence any remedial proceedings with respect to any amount
      payable under this Note, unless and until in each case described in
      clauses (x), (y) and (z) all such Senior Indebtedness shall have been paid
      in full; provided, however, that if such Nonmonetary Default shall have
      occurred and be continuing for a period (a "Blockage Period") commencing
      on the earlier of the date of receipt of such Blockage Notice or the date
      of the acceleration of this Note and ending 179 days thereafter (it being
      understood that not more than one Blockage

                                       9
<PAGE>

      Period may be commenced with respect to this Note during any period of 360
      consecutive days), and during such Blockage Period (i) such Nonmonetary
      Default shall not have been cured or waived, (ii) the holder of such
      Senior Indebtedness shall not have made a demand for payment and commenced
      an action, suit or other proceeding against the Corporation and (iii) none
      of the events described in subsection (A) above shall have occurred, then
      (to the extent not otherwise prohibited by subsections (A), (B) or (C)
      above) the Corporation may, not less than 10 days after receipt by the
      holders of such Senior Indebtedness of written notice to such effect from
      the holder of this Note, make and the holder of this Note may accept from
      the Corporation all past due and current payments of any kind of or on
      account of this Note, and such holder may demand, receive, retain, sue for
      or otherwise seek enforcement or collection of all amounts payable on
      account of principal of or interest on this Note.

            (b) Subject to the payment in full in cash of all Senior
Indebtedness as aforesaid, the holder of this Note shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of any kind or character, whether in cash, property, stock or
obligations, which may be payable or deliverable to the holders of Senior
Indebtedness, until the principal of, and interest on, this Note shall be paid
in full in cash, and, as between the Corporation, it's creditors other than the
holders of Senior Indebtedness, and the holders of this Note, no such payment or
distribution made to the holders of Senior Indebtedness by virtue of this
Section 12 which otherwise would have been made to the holder of this Note shall
be deemed a payment by the Corporation on account of the Senior Indebtedness, it
being understood that the provisions of this Section 12 are and are intended
solely for the purposes of defining the relative rights of the holder of this
Note, on the one hand, and the holder of the Senior Indebtedness, on the other
hand. Subject to the rights, if any, under this Section 12 of holders of Senior
Indebtedness to receive cash, property, stock or obligations otherwise payable
or deliverable to the holder of this Note, nothing herein shall either impair,
as between the Corporation and the holder of this Note, the obligation of the
Corporation, which is unconditional and absolute, to pay to the holder thereof
the principal thereof and interest thereon in accordance with its terms or
prevent (except as otherwise specified therein) the holder of this Note from
exercising all remedies otherwise permitted by applicable law or hereunder upon
default hereunder.

            (c) If any payment or distribution of any character or any security,
whether in cash, securities or other property, shall be received by any holder
of this Note in contravention of any of the terms hereof or before all the
Senior Indebtedness obligations have been paid in full in cash, such payment or
distribution or security shall be received in trust for the benefit of, and
shall be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full in cash. In the event of the failure of any such holder to
endorse or assign any such payment, distribution or security, each holder of any
Senior Indebtedness is hereby irrevocably authorized to endorse or assign the
name.

            (d) The holders of Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to any holder of this Note,
without incurring responsibility to, and without impairing or releasing any of
the rights of the holders of Senior Indebtedness, or

                                       10
<PAGE>

any of the obligations of the holder of this Note: (i) change the amount,
manner, place, or terms of payment, or change or extend the time of payment of,
or renew, alter, extend or otherwise modify Senior Indebtedness in any and all
respects; (ii) release any party to the extent liable or otherwise obligated for
Senior Indebtedness; and (iii) exercise or refrain from exercising any rights
against the Corporation and others (including the holder of this Note).

            (e) No right of any holder of Senior Indebtedness to enforce the
subordination as provided in this Section 12 shall at any time or in any way be
prejudiced or impaired by any act or failure to act by the Corporation or by any
noncompliance by the Corporation with the terms, provisions and covenants of
this Note, regardless of any knowledge thereof with which any such holder may
have or be otherwise charged.

            13. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Corporation shall bind its successors and assigns, whether so expressed or
not.

            14. Governing Law. This Note shall be governed and construed in
accordance with the laws of the State of Delaware,

            15. Headings. The headings of the Sections and paragraphs of this
Note are inserted for convenience only and do not constitute a part of this
Note.

                                       11
<PAGE>

            IN WITNESS WHEREOF, UNITED SURGICAL PARTNERS INTERNATIONAL, INC. has
caused this Note to be signed in its corporate name by one of its officers
thereunto duly authorized and to be dated as of the day and year first above
written.

                                        UNITED SURGICAL PARTNERS
                                        INTERNATIONAL, INC.

                                        By: ____________________________________
                                        Name:
                                        Title:

                                       12
<PAGE>

      IN WITNESS WHEREOF, UNITED SURGICAL PARTNERS INTERNATIONAL, INC. has
caused this Note to be signed in its corporate name by one of its officers
thereunto duly authorized and to be dated as of the day and year first above
written.

                                        UNITED SURGICAL PARTNERS
                                        INTERNATIONAL, INC.

                                        By: ____________________________________
                                        Name:
                                        Title:

                                       13
<PAGE>

                                    EXHIBIT B

                 Form of Amendment No. 6 to Amended and Restated
                          Registration Rights Agreement

See Tab 3.
<PAGE>

                                 AMENDMENT NO. 6

                                       TO

                              AMENDED AND RESTATED
                          REGISTRATION RIGHTS AGREEMENT

      AMENDMENT NO. 6 to the Amended and Restated Registration Rights Agreement,
dated as of March 27, 2000 (the "Amendment"), among United Surgical Partners
International, Inc., a Delaware corporation (the "Company'"), WELSH, CARSON,
ANDERSON & STOWE VII, L.P., a Delaware limited partnership ("WCAS VII"), FFT
PARTNERS I, L.P., a Delaware limited partnership, FFT EXECUTIVE PARTNERS I,
L.P., a Delaware limited partnership (together with FFT Partners I, L.P., "FFT
Partners'"), WCAS CAPITAL PARTNERS III, L.P., a Delaware limited partnership
("WCAS CP III'") and the several other purchasers named in Annex I hereto (such
purchasers, WCAS VII, FFT Partners and WCAS CP III being hereinafter at times
referred to individually as a "Purchaser" and collectively as the "Purchasers"),
amending the Amended and Restated Registration Rights Agreement dated as of
April 30, 1998, as amended, among the Company and the several signatories
thereto (the "Registration Rights Agreement"). All capitalized terms used and
not defined herein shall have the meaning set forth in the Securities Purchase
Agreement dated as of the date hereof (the "Securities Purchase Agreement'")
among the Company and the several other parties named therein.

      On the date hereof, the Company and the Purchasers are consummating the
transactions contemplated by the Securities Purchase Agreement pursuant to which
the Company has agreed to sell to the Purchasers (other than WCAS CP III) an
aggregate 20,000 shares of the Company's Series C Convertible Preferred Stock,
$.01 par value ("Series C Preferred Stock") and has agreed to sell to WCAS CP
III an aggregate 1,500,000 shares of the Company's Class A Common Stock, $.01
par value (the "Class A Common Stock").

      It is a condition to the closing of the transactions contemplated by the
Securities Purchase Agreement that the Company and the parties hereto execute
this Amendment.

      Pursuant to Section 13(d) of the Registration Rights Agreement, the
Registration Rights Agreement is hereby amended as follows:

      1. Each Purchaser is hereby made a party to the Registration Rights
Agreement with the same rights and obligations as a holder of "Restricted Stock"
(with respect to the shares of Class A Common Stock and Series C Preferred Stock
purchased by such individual pursuant to the Securities Purchase Agreement and
the Class A Common Stock issued upon the conversion of the Series C Preferred
Stock) as set forth in the Registration Rights Agreement.

      2. The Registration Rights Agreement, as amended by this Amendment, is
hereby in all respects confirmed.

<PAGE>

      3. This Amendment shall be governed by and construed in accordance with
the laws of the State of Delaware.

      4. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

                                        UNITED SURGICAL PARTNERS
                                        INTERNATIONAL, INC.

                                        By: ____________________________________
                                        Donald Steen
                                        Chief Executive

<PAGE>

WELSH, CARSON, ANDERSON
   & STOWE VII, L.P.

By WCAS VII Partners, L.P.
General Partner

By: _______________________________
Jonathan M. Rather
General Partner

WCAS CAPITAL PARTNERS III, L.P.

By WCAS CP III Associates, L.L.C.
General Partner

By: _______________________________
Jonathan M. Rather
Attorney-in-Fact

WCAS HEALTHCARE PARTNERS, L.P.

By WCAS HC Partners
General Partner

By: _______________________________
Jonathan M. Rather
Attorney-in-Fact

<PAGE>

Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Richard H. Stowe
Andrew M. Paul
Thomas E. McInerney
Laura VanBuren
Rudolph E. Rupert
D. Scott Mackesy
Robert A. Minicucci
Anthony J. deNicola
Paul B. Queally
Sanjay Swani
Sean Traynor

By: _______________________________
Jonathan M. Rather
Attorney-in-Fact

___________________________________
Lauren Melkus

___________________________________
Jonathan M. Rather

<PAGE>

FFT PARTNERS I, L.P.

By Ferrer Freeman Thompson & Co., LLC
General Partner

By: _______________________________
Name:
Title:

FFT EXECUTIVE PARTNERS I, L.P.

By Ferrer Freeman Thompson & Co., LLC
General Partner

By: _______________________________
Name:
Title:

<PAGE>

                                     ANNEX I

                                   PURCHASERS

Patrick J. Welsh

Russell L. Carson

Bruce K. Anderson

Richard H. Stowe

Andrew M. Paul

Thomas E. McInerney

Laura VanBuren

Robert A. Minicucci

Anthony deNicola

Paul B. Queally

Rudolph E. Rupert

D. Scott Mackesy

Lauren Melkus

Sanjay Swani

Jonathan Rather

Sean Traynor

<PAGE>

                                    EXHIBIT C

            Form of Third Amended and Restated Stockholders Agreement

See Tab 4.

                                       1
<PAGE>

                           THIRD AMENDED AND RESTATED
                             STOCKHOLDERS AGREEMENT

      THIRD AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, dated as of
______________, 2000, by and among UNITED SURGICAL PARTNERS INTERNATIONAL, INC.,
a Delaware corporation (the "Company"), WELSH, CARSON, ANDERSON & STOWE VII,
L.P. ("WCAS") and the several other stockholders named in Schedule I hereto
(WCAS and such other stockholders being hereinafter at times referred to
individually as a "Stockholder" and collectively as the "Stockholders").

      WHEREAS, the Company and the Stockholders are parties to that certain
Second Amended and Restated Stockholders Agreement dated as of November 17, 1999
(the "Stockholders Agreement");

      WHEREAS, the Company and each of the Stockholders desire to amend and
restate the Stockholders Agreement and to make certain arrangements among
themselves with respect to the matters set forth herein;

      NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto hereby agree that
the Stockholders Agreement shall be amended and restated as follows:

      SECTION 1. Voting Agreement. (a) At each annual or special stockholders
meeting called for such purpose, and whenever the stockholders of the Company
act by written consent with respect to election of directors, each Stockholder
agrees to vote or otherwise give such Stockholder's consent in respect of all
shares of capital stock of the Company (whether now or hereafter acquired) owned
by such Stockholder or as to which such Stockholder is entitled to vote, and the
Company shall take all necessary and desirable actions within its control, in
order to cause the election to the Board of Directors of the Company of: (i) the
Chief Executive Officer of the Company, which individual will initially be
Donald Steen; (ii) for so long as FFT Partners I, L.P. and FFT Executive
Partners I, L.P. (together, "FFT Partners") collectively maintain ownership of
not less than 50% of the securities purchased by FFT Partners under the
Securities Purchase Agreement dated as of October 26, 1998 among the Company and
the several other parties named therein (or securities into which such
securities are converted, exchanged or reclassified), one individual designated
by FFT Partners and which individual shall be acceptable to WCAS in its
reasonable discretion. Such individual shall be appointed to the Board of
Directors on or before October 30, 1998 and Carlos Ferrer shall be FFT Partners'
initial designee; and (iii) for so long as Baylor Health Services ("Baylor") and
entities to which Baylor may transfer its membership interest in Texas Health
Ventures Group L.L.C. ("THVGI") under Section 4.1(a) of the Second Amended and
Restated Regulations of THVGI dated as of June 1, 1999 (each such entity being a
"Permitted Baylor Transferee"), collectively maintain ownership of not less than
50% of the outstanding principal of the Convertible Subordinated Promissory Note
(the "Note") issued to Baylor under the Contribution and Purchase Agreement
dated as of May 11, 1999 among Baylor and the several other parties named
therein (or 50% of the aggregate securities into which the Note, directly or
indirectly, is converted, exchanged or reclassified), one individual designated
by Baylor who is an officer of Baylor Health Care

                                       2
<PAGE>

System at or above the level of senior vice president. Such individual shall be
appointed to the Board of Directors on or before June 2, 1999 and Boone Powell
shall be Baylor's initial designee.

            (b) The Board of Directors shall meet on at least a quarterly basis
unless otherwise agreed by the Board. The Company will reimburse all such
directors for travel expenses reasonably incurred in connection with attending
meetings of the Board.

      SECTION 2. Investor Transfer Restrictions. (a) Each of the Stockholders
listed on Schedule I hereto under the heading "Investors" (the "Investors")
shall be entitled at any time to transfer (x) the shares of capital stock of the
Company owned by such Investor by will or by the laws of descent and
distribution, (y) up to 10% of the shares of capital stock of the Company owned
by such Investor by gift to such Investor's spouse, lineal descendants, parents
or siblings (or to a trust for the benefit of any of the foregoing) or (z) in
the case of Baylor, the shares of capital stock of the Company owned by Baylor
to any Permitted Baylor Transferee; provided that any such transferee shall
agree in writing with the Company to be bound by, and to comply with, all
applicable provisions of this Agreement and to be deemed to be an Investor for
purposes of this Agreement. Except for such transfers by will or by the laws of
descent and distribution or by gift as described in clauses (x) and (y) above or
such transfers to a Permitted Baylor Transferee as described in clause (z)
above, each Investor shall not be entitled to sell, pledge or otherwise transfer
shares of capital stock of the Company unless such Investor complies with the
provisions of Sections 3 and 4 below.

      SECTION 3. Right of First Refusal. Subject to the provisions of Section 2
above, an Investor (a "Selling Investor" for purposes of this Section 3) may
sell for cash all or any portion of the capital stock of the Company held by him
(whether now or hereafter acquired) at any time, pursuant to a bona fide offer
from a third party, subject to such Selling Investor's compliance with the
following provisions:

            (a) The Selling Investor shall promptly deliver a notice of
intention to sell (a "Sale Notice") to the Company setting forth in reasonable
detail the capital stock of the Company to be sold (the "Subject Securities"),
the identity of the proposed purchaser and the proposed purchase price and terms
of sale (including a copy of any written offer or indication of interest).

            (b) Upon receipt of a Sale Notice from the Selling Investor, the
Company shall have the first right and option to elect to purchase at the price
and on the terms stated in the Sale Notice, all or part of the number of the
Subject Securities. In the event that the Company shall elect to purchase all or
part of the Subject Securities, the Company shall so notify the Selling Investor
within 20 days (the "Company Option Period") after the receipt by the Company of
the Sale Notice. Any such election shall be made by written notice (a "Company
Notice of Election") to the Selling Investor.

            (c) If the Company Notice of Election with respect to the Subject
Securities shall have been received as aforesaid by the Selling Investor, the
Selling Investor shall sell such Subject Securities to the Company at the price
and on the terms stated in the Sale Notice. The closing of such sale of Subject
Securities shall take place at the offices of the Company no later

                                       3
<PAGE>

than 20 days following the expiration of the Company Option Period (or upon the
expiration of such longer period if required by law), or such other place and
earlier date as may be agreed by all parties to the transaction. At such closing
the Selling Investor shall deliver a certificate or certificates for the Subject
Securities to be sold, accompanied by stock powers with signatures guaranteed
and all necessary stock transfer stamps affixed, against receipt of the purchase
price therefor by certified or official bank check in New York Clearing House
Funds or by wire transfer of immediately available funds.

            (d) Any Subject Securities not sold pursuant to the provisions of
this Section 3 may be sold (in compliance with Section 4 below) to the person
identified in the related Sale Notice for a period of 60 days following the
expiration of the Company Option Period or to any person or persons at a price
not lower than the price specified in the Sale Notice and on other terms not
materially more favorable to the purchaser than those specified in the Sale
Notice. Any Subject Securities not sold by such 60th day shall again be subject
to the restrictions contained in this Agreement.

      SECTION 4. Right of Co-Sale. Any Stockholder (for purposes of this Section
4, a "Selling Stockholder"), subject to compliance with the provisions of
Sections 2 and 3 above (if applicable), may sell all or any portion of the Class
A Common Stock held by him (whether now or hereafter acquired), subject to such
Stockholder's compliance with the following provisions:

            (a) Such Selling Stockholder shall promptly deliver a notice of
intention to sell (a "Co-Sale Notice") to the Company and to each Stockholder
setting forth the number of shares of Class A Common Stock to be sold (the
"Co-Sale Securities") and the proposed purchase price and terms of sale, except
that no Co-Sale Notice need be given by any Selling Stockholder exercising any
right to sell securities in response to a Co-Sale Notice delivered pursuant to
this paragraph (a). Upon receipt of the Co-Sale Notice, each Stockholder shall
have the right and option to elect to sell, at the price and on the terms stated
in the Co-Sale Notice, all or part of that number of shares of Class A Common
Stock which is equal to the product obtained by multiplying (i) the aggregate
number of shares of Class A Common Stock covered by the proposed sale by (ii) a
fraction, the numerator of which is the number of shares of Class A Common Stock
at the time owned by such Stockholder and the denominator of which is the number
of shares of Class A Common Stock at the time owned by all the Stockholders. Any
such election shall be made by written notice (a "Co-Sale Notice of Election")
to the Selling Stockholder and the Company within 10 business days after receipt
by such Stockholder of the Co-Sale Notice. Thereupon, the Selling Stockholder
shall not sell any of the Co-Sale Securities (i) except at the price and on the
terms stated in its Co-Sale Notice and (ii) if a Stockholder shall have
delivered a Co-Sale Notice of Election in respect thereof as aforesaid, unless
such Stockholder shall have been afforded the opportunity to sell the shares in
respect of which such Co-Sale Notice of Election shall have been delivered, at
said price and on said terms.

            (b) Any Co-Sale Securities not sold pursuant to the provisions of
(a) above shall again be subject to the restrictions contained in this Agreement
and shall not thereafter be sold, except in compliance with the applicable
provisions of this Agreement.

            (c) Upon electing to participate in a proposed sale pursuant to
paragraph (a) above, each Stockholder (i) shall deliver to the Company, as its
agent, for transfer to the

                                       4
<PAGE>

proposed acquiror, one or more certificates, duly endorsed for transfer or
accompanied by stock transfer powers duly endorsed for transfer, with all stock
transfer taxes paid and stamps affixed, which represent the number of shares of
Class A Common Stock that such Stockholder shall have so elected to sell and
(ii) shall not be subject to Sections 2 and 3 hereof, if applicable.

            (d) The stock certificate or certificates delivered by each
Stockholder to the Company pursuant to paragraph (c) above shall be transferred
by the Company to the acquiror in consummation of the sale of the Class A Common
Stock pursuant to the terms and conditions specified in the Co-Sale Notice, and
the Company shall promptly thereafter remit to such Stockholder that portion of
the proceeds to which such Stockholder is entitled by reason of such
participation.

            (e) Notwithstanding the foregoing references in this Section 4 to
shares of Class A Common Stock, if all of the shares of the Company's Class A
Common Stock have been converted into shares of the Company's Common Stock, $.01
par value ("Common Stock"), pursuant to subparagraph 3B of Section II of Article
IV of the Company's Certificate of Incorporation, as amended, then this Section
4 shall be applicable in its entirety to sales of such shares of Common Stock.

      SECTION 5. Legend on Stock Certificates. Each certificate representing
shares of capital stock purchased by any Stockholder or issued in exchange of or
upon conversion of any of the securities purchased thereby shall conspicuously
bear the following legend until such time as the shares represented thereby are
no longer subject to the provisions hereof

            "THE SECURITIES REPRESENTED BY THIS CERTIFICATE
            ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
            STOCKHOLDERS AGREEMENT, DATED AS OF APRIL 30,
            1998, AS AMENDED, AMONG THE ISSUER AND THE OTHER
            PARTIES THERETO. COPIES MAY BE OBTAINED AT NO
            COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
            RECORD OF THIS CERTIFICATE TO THE COMPANY."

      The Company covenants that it shall keep a copy of this Agreement on file
at the address listed in Section 11 for the purpose of furnishing copies to the
holders of record of shares of capital stock of the Company.

      SECTION 6. Duration of Agreement. This Agreement shall terminate upon the
earliest to occur of (i) the tenth anniversary of the date hereof, (ii) the
consummation of an initial public offering registered under the Securities Act
of 1933, as amended, of shares of Common Stock, par value $.01, of the Company,
(iii) the consummation of any sale, transfer or other disposition of all or
substantially all the capital stock or assets of the Company for cash, or (iv)
with respect to any Stockholder, the date on which such Stockholder no longer
owns any shares of capital stock of the Company.

      SECTION 7. Representations and Warranties. Each Stockholder represents and
warrants to the Company and the other Stockholders as follows:

                                       5
<PAGE>

            (a) The execution, delivery and performance of this Agreement by
such Stockholder will not violate any provision of law, any order of any court
or other agency of government, or any provision of any indenture, agreement or
other instrument to which such Stockholder or any of its or his properties or
assets is bound, or conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument, or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the properties or assets of
such Stockholder.

            (b) This Agreement has been duly executed and delivered by such
Stockholder and constitutes the legal, valid and binding obligation of such
Stockholder, enforceable in accordance with its terms.

      SECTION 8. Headings. Headings of articles, sections and paragraphs of this
Agreement are inserted for convenience of reference only and shall not affect
the interpretation or be deemed to constitute a part hereof.

      SECTION 9. Severabilitv. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable,
such illegality, invalidity or unenforceability shall not affect any other
provisions of this Agreement.

      SECTION 10. Benefits of Agreement. Nothing expressed by or mentioned in
this Agreement is intended or shall be construed to give any person other than
the parties hereto and their respective successors and permitted assigns any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and their respective successors and permitted
assigns. Subject to compliance with the terms of this Agreement, each
Stockholder shall have the right to assign its interests hereunder to any
transferee of the capital stock of the Company; provided that such transferee
shall agree in writing with the parties hereto to be bound by, and to comply
with, all applicable provisions of this Agreement and to be deemed to be a
Stockholder for purposes of this Agreement.

      SECTION 11. Notices. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient and received if contained
in a written instrument delivered in person or by courier or duly sent by first
class certified mail, postage prepaid, or by facsimile addressed to such party
at the address or facsimile number set forth below:

            (1)   if to the Company, to:

                  United Surgical Partners International, Inc.
                  17103 Preston Road
                  Suite 200 North
                  Dallas, TX 75248
                  Facsimile: 972-267-0084
                  Attention: Chief Executive Officer

                                       6
<PAGE>

            (2) if to any other Stockholder, to the address of such Stockholder
appearing in Schedule I hereto;

or, in any case, at such other address or facsimile number as shall have been
furnished in writing by such party to the other parties hereto. All such
notices, requests, consents and other communications shall be deemed to have
been received (a) in the case of personal or courier delivery, on the date of
such delivery, (b) in the case of mailing, on the fifth business day following
the date of such mailing and (c) in the case of facsimile, when received.

      SECTION 12. Modification. Except as otherwise provided herein, neither
this Agreement nor any provision hereof may be modified, changed, discharged or
terminated except by an instrument in writing signed by the Company, WCAS, FFT
Partners and the holders of the majority of the aggregate voting power of shares
of capital stock (on an as-converted basis) of the Company held by the
Management Stockholders; provided, however, that no modification or amendment
shall be effective to reduce the percentage of the shares of capital stock of
the Company the consent of the holders of which is required under this Section
12; provided further, that no such amendment or modification shall be effective
without Baylor's consent if such amendment or modification affects Baylor any
differently than it affects other holders of Investor Shares. Notwithstanding
the foregoing, the Company may amend this Agreement without the consent of the
Stockholders solely to add stockholders to Schedule I hereto (which stockholders
shall be included in the definition of "Investors" hereunder).

      SECTION 13. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.

      SECTION 14. Governing Law. This Agreement shall be governed by,
enforceable under, and construed in accordance with the laws of the State of
Delaware.

                            [Signature pages follow]

                                       7
<PAGE>

      IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the day and year above written.

                                        UNITED SURGICAL PARTNERS
                                        INTERNATIONAL, INC.

                                        By:_____________________________________
                                                 Donald Steen
                                                 Chief Executive Officer

                                        MANAGEMENT STOCKHOLDERS

                                        ________________________________________
                                        Donald Steen

                                        ________________________________________
                                        Sue Shelley

                                        ________________________________________
                                        Laurie Hogue

                                        ________________________________________
                                        Michael Crews

                                        ________________________________________
                                        William Wilcox (with respect to all
                                        shares of capital stock acquired after
                                        June 26, 1998)

                                        ________________________________________
                                        Jeffrey Stockard (with respect to all
                                        shares of capital stock acquired after
                                        July 31, 1998)

                                       8
<PAGE>

                                        FFT PARTNERS I, L.P.

                                        By: Ferrer Freeman Thompson & Co., LLC
                                            General Partner

                                        By:_____________________________________
                                        Name:
                                        Title:

                                        FFT EXECUTIVE PARTNERS I, L.P.

                                        By: Ferrer Freeman Thompson & Co., LLC
                                            General Partner

                                        By:_____________________________________
                                        Name:
                                        Title:

                                        ________________________________________
                                        M. ROBERT KNAPP TRUST

                                        ________________________________________
                                        M. Robert Knapp, Trustee

                                        ________________________________________
                                        Elizabeth W. Knapp, Trustee

                                        CALVER FUND, INC.

                                        By:_____________________________________
                                            Neil R. Anderson, President

                                        ________________________________________
                                        James Ken Newman CGJR/MF
                                        III, L.P.

                                       9
<PAGE>

                                        NGKE/USPI PARTNERS

                                        By:_____________________________________
                                            Robert Mosher, Managing Partner

                                        L & W CO.

                                        By:_____________________________________
                                            Daniel R. Coleman, Vice-President &
                                            Trust Officer

                                        ________________________________________
                                        Norman Brownstein

                                        RIVID LLC

                                        By:_____________________________________
                                            David Vandewater, Manager

                                        ________________________________________
                                        Paul Whitman

                                        CGJR II, L.P.

                                        By: CGJR Capital Management, Inc.,
                                            General Partner

                                        By:_____________________________________
                                            Christopher Grand, Jr., President

                                        CGJR/MF III, L.P.

                                        By:  CGJR Capital Management, Inc.,
                                            General Partner

                                        By:_____________________________________
                                            Christopher Grand, Jr., President

                                       10
<PAGE>

                                        ________________________________________
                                        Patrick McMullan

                                        ________________________________________
                                        Craig Callen

                                        ________________________________________
                                        Lawrence Lavine

                                        ________________________________________
                                        David Dennis

                                        ________________________________________
                                        Michael R. Nicolais
                                        Tenants in Common with Michael R.
                                        Nicolais

                                        ________________________________________
                                        Jane L. Nicolais
                                        Tenants in Common with Michael R.
                                        Nicolais

                                        ________________________________________
                                        Tom C. Davis

                                        ________________________________________
                                        Edward W. Karrels

                                        ________________________________________
                                        Michael W. Barton

                                        ________________________________________
                                        Alice J. Charron

                                        ________________________________________
                                        Charles Morton

                                       11
<PAGE>

                                        ________________________________________
                                        Charles McKay

                                        ________________________________________
                                        David Gaw

                                        ________________________________________
                                        Sandra Holshouser

                                        ________________________________________
                                        Tucker Taylor

                                        ________________________________________
                                        Alyce Craddock

                                        ________________________________________
                                        Greg Koonsman

                                        ________________________________________
                                        Jon O'Sullivan

                                        ________________________________________
                                        Michael Bingham

                                        ________________________________________
                                        Ronald W. Disney

                                        BAYLOR HEALTH CARE SYSTEM FOUNDATION

                                        By:_____________________________________
                                        Name____________________________________
                                        Title___________________________________

                                       12
<PAGE>

                                       WCAS STOCKHOLDERS:

                                       WELSH, CARSON, ANDERSON & STOWE VII, L.P.
                                       By: WCAS VII Partners, L.P.
                                           General Partner

                                       By:______________________________________
                                           Johnathan M. Rather
                                           General Partner

                                       WCAS CAPITAL PARTNERS III, L.P.
                                       By: WCAS CP III Associates, L.L.C.
                                           General Partner

                                       By:______________________________________
                                           Johnathan M. Rather
                                           General Partner

                                       WCAS HEALTHCARE PARTNERS, L.P.
                                       By: WCAS HC Partners
                                           General Partner

                                       By:______________________________________
                                           Johnathan M. Rather
                                           Attorney-in-Fact

                                       Patrick J. Welsh
                                       Russell L. Carson
                                       Bruce K. Anderson
                                       Richard H. Stowe
                                       Andrew M. Paul
                                       Rudolph E. Rupert
                                       Laura VanBuren
                                       Thomas E. McInerney
                                       D. Scott Mackesy
                                       Robert A. Minicucci
                                       Anthony J. deNicola
                                       Paul B. Queally
                                       Sanjay Swani
                                       Sean Traynor

                                       By:______________________________________
                                           Johnathan M. Rather
                                           Attorney-In-Fact

                                       13
<PAGE>

                                        ________________________________________
                                        Lauren Melkus

                                        ________________________________________
                                        Johnathan Rather

                                       14
<PAGE>

                            SCHEDULE I - STOCKHOLDERS

1.    Investors

      a.    Management Stockholders

      Donald Steen
      Sue Shelley
      Laurie Hogue
      Michael Crews
      William Wilcox (with respect to all shares of capital stock acquired
      after June 26, 1998)
      Jeffrey Stockard (with respect to all shares of capital stock acquired
      after July 31, 1998)

      c/o United Surgical Partners
           International, Inc.
      17103 Preston Road
      Suite 200 North
      Dallas, TX  75248
      Facsimile: 972-267-0084

                                       15
<PAGE>

      b.

      FFT Partners I, L.P.
      FFT Executive Partners I, L.P.

      c/o Ferrer Freeman
      Thompson & Co., LLC
      10 Glenville Street,
      Greenwich, CT 06831
      Facsimile: 203-532-8416

      M. Robert Knapp Trust
      Calver Fund, Inc.
      James Ken Newman
      NGKE/USPI Partners
      L & W Co.
      Norman Brownstein
      Rivid LLC
      Paul Whitman
      CGJR II, L.P.
      CGJRIMF III, L.P.
      Patrick Mcullan
      Craig Callen
      Lawrence Lavine
      David Dennis
      Michael R. & Jane L. Nicolais
      Tom C. Davis
      William Wilcox (with respect to the share of Class A Common Stock
            acquired on June 26, 1998)
      Edward W. Karrels
      Michael W. Barton
      Alice J. Charron
      Charles Morton
      Charles McKay
      David Gaw
      Sandra Holshouser
      Jeffrey Stockard (with respect to the share of Class A Common Stock
            acquired on July 31, 1998)
      Tucker Taylor
      Alyce Craddock
      Greg Koonsman
      Jon O'Sullivan
      Michael Bingham
      Ronald W. Disney

                                       16
<PAGE>

      Baylor HealthCare System Foundation
      3500 Gaston Avenue
      Dallas, Texas 75246
      Attention; Timothy M. Parris, Chief Financial Officer
      Facsimile: (214) 855-8840

2.    WCAS Stockholders

      Welsh, Carson, Anderson
            & Stowe VII, L.P.
      WCAS Healthcare
            Partners, L.P.
      WCAS Capital Partners III, L.P.
      Patrick J. Welsh
      Russell L. Carson
      Bruce K. Anderson
      Richard H. Stowe
      Andrew M. Paul
      Thomas E. McInerney
      Laura VanBuren
      Robert A. Minicucci
      Anthony deNicola
      Paul B. Queally
      Rudolph E. Rupert
      D. Scott Maskesy
      Lauren Melkus
      Sanjay Swani
      Jonathan Rather
      Sean Traynor

      c/o Welsh, Carson, Anderson
            & Stowe
      320 Park Avenue - Suite 2500
      New York, NY 10022-9500
      Facsimile: 212-893-9575

                                       17
<PAGE>

                                    EXHIBIT D

      Form of Certificate of Amendment to the Certificate of Incorporation

See Tab 6.
<PAGE>

                                                               STATE OF DELAWARE
                                                              SECRETARY OF STATE
                                                        DIVISION OF CORPORATIONS
                                                       FILED 09:00 AM 06/01/2000
                                                              01279037 - 2865387

                            CERTIFICATE OF AMENDMENT

                                       TO

                          CERTIFICATE OF INCORPORATION

                                       OF

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

================================================================================

                         Pursuant to Section 242 of the
                General Corporation Law of the State of Delaware

================================================================================

      UNITED SURGICAL PARTNERS INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), hereby
certifies as follows:

      FIRST: that the following resolutions were duly adopted by unanimous
written consent of the Board of Directors of the Corporation, setting forth
proposed amendments to the Certificate of Incorporation of the Corporation;
determining that the capital of the Corporation will not be decreased on account
of such amendments; and declaring such amendments to be advisable and directing
that such amendments be submitted to the stockholders of the corporation for
their approval. The resolutions are as follows:

            "RESOLVED, that there is hereby adopted an amendment to the
      Corporation's Certificate of Incorporation pursuant to which (i) the
      authorized capital stock of the Corporation shall be changed from
      70,033,916 shares, consisting of 30,000,000 shares of Class A Common
      Stock, $.01 par value, 40,000,000 shares of Common Stock, $.01 par value,
      31,200 Series A Redeemable Preferred Stock, $.01 par value, 2,716 shares
      of Series B Convertible Preferred Stock, $.01 par value, to 70,053,916
      shares, consisting of 30,000,000 shares of Class A Common Stock, $.01 par
      value ("Class A Common Stock"), 40,000,000 shares of Common Stock, $01 par
      value ("Common Stock"), 31,200

<PAGE>

      shares of Series A Redeemable Preferred Stock, $.01 par value ("Series A
      Preferred Stock") 2,716 shares of Series B Convertible Preferred Stock,
      $.01 par value ("Series B Preferred Stock"), and 20,000 shares of Series C
      Convertible Preferred Stock, $.01 par value ("Series C Preferred Stock",
      together with the Series B Preferred Stock, the "Convertible Preferred
      Stock") (the Series A Preferred Stock, Series B Preferred Stock and Series
      C Preferred Stock being collectively referred to as the "Preferred
      Stock"), and (ii) the relative voting, dividend, liquidation, redemption
      and other rights, and qualifications, limitations and restrictions
      thereof, in respect of said Preferred Stock, Class A Common Stock and
      Common Stock shall be restated; and, in connection with such changes,
      Article FOURTH of the Certificate of Incorporation of the Corporation
      shall be amended to read in its entirety as follows:

            FOURTH: The total number of shares of all classes of stock which the
      Corporation shall have authority to issue is 70,053,916 shares, consisting
      of 31,200 shares of Series A Redeemable Preferred Stock, $.01 par value
      ("Series A Preferred Stock"), 2,716 shares of Series B Convertible
      Preferred Stock, $.01 par value ("Series B Preferred Stock") and 20,000
      shares of Series C Convertible Preferred Stock, $.01 par value ("Series C
      Preferred Stock") (the Series A Preferred Stock, Series B Preferred Stock
      and Series C Preferred Stock being collectively referred to herein as the
      "Preferred Stock"), 30,000,000 shares of Class A Common Stock, $.01 par
      value ("Class A Common Stock") and 40,000,000 shares of Common Stock, $.01
      par value ("Common Stock").

            All cross-references is each subdivision of this Article FOURTH
      refer to other paragraphs in such subdivision unless otherwise indicated.

            The following is a statement of the designations, and the powers,
      preferences and rights, and qualifications, limitations or restrictions
      thereof, in respect of each class of stock of the Corporation.

                                       I.
                                 PREFERRED STOCK

            Except as otherwise expressly provided herein, all shares of
      Preferred Stock shall be identical and shall entitle the holders thereof
      to the same rights and privileges.

            1. Cumulative Dividends. The holders of shares of Series A Preferred
      Stock and Series B Preferred Stock shall be entitled to receive, on April
      30th of each year beginning April 30, 2000, out of funds legally available
      for such purposes, cash dividends at the rate of (x) $50.00 per share per
      annum on April 30, 2000 and (y) $75.00 per share per annum thereafter, and
      no more, payable (as determined from time to time by the Board of
      Directors) on each share of Preferred Stock that shall then be outstanding
      (each annual period ended April 30th being referred to for the purposes of
      this subdivision I as a "Dividend Period"). Such dividends shall be
      cumulative (so that if for any Dividend Period such dividends are not paid
      or declared and set apart therefore, the deficiency shall be paid, in
      whole or in part (without interest), on the next succeeding dividend
      payment date on which the Corporation has any funds legally available
      therefore) and shall accrue

<PAGE>

      from and after the date of issue whether or not declared and whether or
      not there are any funds of the Corporation legally available for the
      payment of dividends. Accrued but unpaid dividends shall not bear
      interest. The Board of Directors of the Corporation may fix a record date
      for the determination of holders of Series A Preferred Stock and Series B
      Preferred Stock entitled to receive payment of a dividend declared
      thereon, which record date shall be no more than 60 days prior to the date
      fixed for the payment thereof.

            As long as any shares of Preferred Stock shall remain outstanding,
      in no event (without the written consent of the holders of a majority of
      the outstanding Preferred Stock) shall any dividend whatsoever by paid
      upon, nor any distribution be made upon, any shares of Class A Common
      Stock or Common Stock, other than a dividend or distribution payable in
      shares of Class A Common Stock or Common Stock, as the case may be, nor
      except for the repurchase of shares (x) from participants under any stock
      option plans approved by a majority of the Board of Directors of the
      Corporation and (y) pursuant to employment agreements or stock purchase
      agreements with employees approved by the Board of Directors of the
      Corporation, shall any shares of Class A Common or Common Stock be
      purchased or redeemed by the Corporation, nor shall any moneys be paid to
      or made available for a sinking fund for the purchase or redemption of
      shares of any Class A Common Stock or Common Stock, unless, in each such
      case, accrued and unpaid dividends on all outstanding shares of Preferred
      Stock for all prior Quarterly Payment Dates and Dividend Periods shall
      have been declared and paid in full and the full dividend on all
      outstanding shares of Preferred Stock for the then-current Quarterly
      Payment Date and Dividend Period shall have been paid or declared and
      sufficient funds for the payment thereof set apart, and any arrears or
      defaults in any redemption of shares of Preferred Stock shall have been
      cured. In the event that the Corporation shall at any time pay a dividend
      on the Class A Common Stock or Common Stock (other than a dividend payable
      solely in shares of Class A Common Stock or Common Stock) in accordance
      with this paragraph, it shall, at the same time, pay to each holder of
      Series C Preferred Stock (in addition to any payment such holder is
      entitled to receive pursuant to this paragraph 1), a dividend equal to the
      dividend that would have been payable to such holder if the shares of
      Series C Preferred Stock held by such holder had been converted into Class
      A Common Stock or Common Stock, as the case may be, on the date of
      determination of holder of Class A Common Stock or Common Stock entitled
      to receive such dividend.

            2. Redemption. The shares of Series A Preferred Stock and Series B
      Preferred Stock (collectively, the "Redeemable Preferred Stock") shall be
      redeemable as follows:

            2A Mandatory Redemption. Except as and to the extent expressly
      prohibited by applicable law, the Corporation shall redeem (in the manner
      and with the effect provided in subparagraphs 2c through 2E below) all
      shares of Redeemable Preferred Stock which shall then be outstanding, on
      the earlier to occur of (i) the consummation by the Corporation of an
      initial public offering of its Common Stock registered under the
      Securities Act of 1933, as amended (an "Initial Public Offering") or (ii)
      April 30, 2008. In case of the occurrence of any of the following (each a
      "Change of Control Event"): (i) a consolidation or merger of the
      Corporation with or into any other corporation (other

<PAGE>

      than a merger which will not result in more than 50% of the voting capital
      stock of the Corporation outstanding immediately after the effective date
      of such merger being owned of record or beneficially by persons other than
      the holders of such voting capital stock immediately prior to such merger
      in the same proportions in which such shares were held immediately prior
      to such merger), (ii) a sale of all or substantially all of the properties
      and assets of the Corporation as an entirety in a single transaction or in
      a series or related transactions to any other person or (iii) the
      acquisition of "beneficial ownership" by any "person" or "group" (other
      than Welsh, Carson, Anderson & Stowe VII, L.P. or its affiliates) of
      voting stock of the Corporation representing more than 50% of the voting
      power of all outstanding shares of such voting stock, whether by way of
      merger or consolidation or otherwise, the Corporation shall, not later
      than 20 days prior to the effective date of any such Change of Control
      Event, give notice thereof to the holder or holders of shares of
      Redeemable Preferred Stock and, in the event that within 15 days after
      receipt of such notice, any holder or holders of shares of Redeemable
      Preferred Stock shall elect, by written notice to the Corporation, to have
      any or all of its shares of Redeemable Preferred Stock redeemed, the
      Corporation shall redeem the same (in the manner and with the effect
      provided in subsection 2c through 2E below) not later than the effective
      date and time of such Change of Control Event. In addition, at any time on
      or after the second anniversary of the date on which shares of Series B
      Preferred Stock are first issued, the Corporation shall, not later than 30
      days after receipt of written notice from any holder of shares of Series B
      Preferred Stock requesting redemption of any or all of its shares of
      Series B Preferred Stock, redeem such shares of Series B Preferred Stock
      (in the manner and with the effect provided in subparagraph 2C through 2E
      below).

            As used herein, (i) the terms "person" and "group" shall have the
      meaning set forth in Section 13(d)(3) of the Securities Exchange Act of
      1934, as amended (the "Exchange Act"), whether or not applicable, (ii) the
      term "beneficial owner" shall have the meaning set forth in Rules 13d-3
      and 13d-5 under the Exchange Act, whether or not applicable, except that a
      person shall be deemed to have "beneficial ownership" of al shares that
      any such person has the right to acquire, whether such right is
      exercisable immediately or only after the passage on time or upon the
      occurrence of certain events, and (iii) any "person" or "group" will be
      deemed to beneficially own any voting stock of the Corporation so long as
      such person or group beneficially owns, directly or indirectly, in the
      aggregate a majority of the voting stock of a registered holder of the
      voting stock of the Corporation.

            2B Optional Redemption. The Corporation may, in its sole discretion,
      redeem at any time and from time to time (in the manner and with the
      effect provided in subparagraphs 2C through 2E below), any whole number of
      shares of Redeemable Preferred Stock. Any date on which the Corporation
      elects to redeem shares of Redeemable Preferred Stock as provided in its
      subparagraph 2B and each date on which the Corporation shall be required
      to redeem shares of Redeemable Preferred Stock as provided in subparagraph
      2A above shall be referred to as a "Redemption Date".

            2C Redemption Price; Notice of Redemption. The Redeemable Preferred
      Stock to be redeemed on a Redemption Date shall be redeemed by paying for
      each share the sum o f(i) $1,000, plus (ii) an amount equal to dividends
      accrued and unpaid thereof

<PAGE>

      from the date of issuance of such share of Redeemable Preferred Stock to
      such Redemption Date, the sum of (i) and (ii) being herein sometimes
      referred to as the "Redemption Price". Not less than 20 days before such
      Redemption Date, written notice shall be given by mail, postage prepaid to
      the holders of record of the Redeemable Preferred Stock to be redeemed,
      such notice to be addressed to each such stockholder a his post office
      address as shown by the records of the Corporation, specifying the number
      of shares to be redeemed, the paragraph or paragraphs of this Certificate
      of Incorporation pursuant to which such redemption shall be made, the
      Redemption Price and the place and date of such redemption, which date
      shall not be a day on which banks in the City of New York are required or
      authorized to close. If such notice of redemption shall have been duly
      given and if on or before such Redemption Date the funds necessary for
      redemption shall have been set aside so as to be and continue to be
      available therefore, the, notwithstanding that any certificate for shares
      of Redeemable Preferred Stock to be redeemed shall not have been
      surrendered for cancellation, after the close of business on such
      Redemption Date, the shares so called for redemption shall not longer be
      deemed outstanding, the dividends thereon shall cease to accrue, and all
      rights with respect to such shares shall forthwith after the closing of
      business on the Redemption Date, cease, except only the right of the
      holders thereof to receive, upon presentation of the certificate
      representing shares so called for redemption, the Redemption Price
      therefore, without interest thereon.

            2D Redeemed or Otherwise Acquired Shares to Be Retired. Any shares
      of the Redeemable Preferred Stock redeemed pursuant to this paragraph 2 or
      otherwise acquired by the Corporation in any manner whatsoever shall be
      permanently retired and shall not under any circumstances be reissued; and
      the Corporation may from time to time take such appropriate corporate
      action as may be necessary to reduce the number of authorized shares of
      Redeemable Preferred Stock accordingly.

            2E Shares to be Redeemed. In case of the redemption, for any reason,
      of only part of the outstanding shares of Redeemable Preferred Stock on a
      Redemption Date, all shares of Redeemable Preferred Stock to be redeemed
      shall be selected pro rata and there shall be so redeemed from each
      registered holder in whole shares, as nearly as practicable to the nearest
      whole share, that portion of all the shares to be redeemed which the
      number of shares held of record by such holder bears to the total number
      of shares of Redeemable Preferred Stock at the time outstanding. Any
      shares of Redeemable Preferred Stock that are designated for redemption on
      the Redemption Date and are not so redeemed shall be redeemed as soon
      thereafter as possible and in the manner in which shares are otherwise
      redeemed on a Redemption Date, and, in such event, as provided in this
      subdivision I, dividends shall continue to accrue on such shares.

            3. Liquidation. Upon any liquidation, dissolution or winding up of
      the Corporation, whether voluntary of involuntary, the holders of the
      shares of Series A Preferred Stock and the holder of the shares of Series
      B Preferred Stock shall be entitled, before any distribution or payment is
      made upon any Class A Common or Common

<PAGE>

      Stock, to be paid an amount equal to $1,000 per share plus any accrued but
      unpaid dividends, and the holders of the shares of series C Preferred
      Stock shall be entitled before any distribution or payment is made upon
      any Class A Common or Common Stock to be paid an amount equal to the
      Series C Preferred Liquidation Value with respect to each outstanding
      share plus any accrued but unpaid dividends thereon (such amounts being
      sometimes referred to as the "Preferred Liquidation Payments"). If upon
      such liquidation, dissolution or winding up of the Corporation, whether
      voluntary or involuntary, the assets to be distributed among the holders
      of the Preferred Stock of the Corporation shall be insufficient to permit
      payment to such holders of Preferred Stock in proportion to the full
      distributed ratably per share among the holders of Preferred Stock in
      proportion to the full per share amounts to which they respectively are
      entitled. Upon any such liquidation, dissolution or winding up of the
      corporation, after the holders of Preferred Stock shall have been paid in
      full the preferential amounts to which they shall be entitled as provided
      herein, the remaining net assets of the corporation shall be distributed
      to the holders of Class A Common Stock and Common Stock in accordance with
      this Certificate of Incorporation. Written notice of such liquidation,
      dissolution or winding up, stating a payment date, the amount of the
      Preferred Liquidation Payments to be made pursuant hereto and the place
      where said Preferred Liquidation Payments shall be payable shall be given
      by mail, postage prepaid, not less than 30 days prior to the payment date
      stated therein to the holders of record of the Preferred Stock, such
      notice to be addressed to each such holder at his post office address as
      shown by the records of the Corporation; provided, however, that failure
      to give notice pursuant to this sentence shall not invalidate the action
      involved. A Change of Control Event shall not, for purposes of this
      paragraph 3, be deemed a liquidation, dissolution or winding up of the
      Corporation.

            "Series C Preferred Liquidation Value" determined as of any date
      shall mean, in respect of each share of Series C Preferred Stock, an
      amount equal to $1,000 (appropriately adjusted to reflect stock splits and
      combinations and stock dividends, the "Initial Purchase Price") plus an
      amount equal to seven percent (7%) of the Initial Purchase Price,
      compounded quarterly on each of March 31, June 30, September 30 and
      December 31.

            4. Conversion of Convertible Preferred Stock.

            4A(1) Optional Conversion of Series B Preferred Stock. At any time
      on or after the second anniversary of the date on which shares of Series B
      Preferred Stock are first issued, subject to and upon compliance with the
      provisions of this paragraph 4, the holder of any share or shares of
      Series B Preferred Stock shall have the right, at its option, to convert
      any such shares of Series B Preferred Stock (except that upon any
      liquidation, dissolution or winding up of the Corporation or upon any
      redemption of the Series B Preferred Stock in accordance with paragraph 2,
      the right of conversion shall terminate at the close of business on the
      last full business day next preceding the date fixed for payment of the
      amount distributable on series B Preferred Stock or payable with respect
      thereto) into such number fully paid and non-assessable whole shares of
      Class A Common Stock as is obtained by multiplying the number of shares of
      Series B Preferred Stock so to be converted by $1,000 (plus any accrued
      and unpaid per share dividends through the time of conversion) and
      dividing the result by the greater of (x) $2.00 (such price, or such price
      as last adjusted hereunder, the "Series B Base Conversation Price") and
      (y) the fair market value per share of Class A Common Stock at the time of
      conversion as determined in good faith by the Board of Directors of the
      Corporation.

<PAGE>

      Such rights of conversion shall be exercised by the holder thereof by
      giving written notice that the holder elects to convert a stated number of
      shares of Series B Preferred Stock into Class A Common Stock and by
      surrender of a certificate or certificates for the shares so to be
      converted to the corporation at its principal office (or such other office
      or agency of the Corporation as the Corporation may designate by notice in
      writing to the holder or holders of the Series B Preferred Stock) at any
      time during its usual business hours on the date set forth in such notice,
      together with a statement of the name or names (with addresses), subject
      to compliance with applicable laws to the extent such designation shall
      involve a transfer, in which the certificate or certificates for shares of
      Class A Common Stock shall be issued.

            4A(2) Optional Conversion of Series C Preferred Stock. At any time
      on or after the date on which shares of Series C Preferred Stock are first
      issued, subject to and upon compliance with the provisions of this
      paragraph 4, the holder of any share or shares of Series C Preferred Stock
      shall have the right, at its option, to convert any such shares of Series
      C Preferred Stock (except that upon any liquidation, dissolution or
      winding up of the Corporation or upon any redemption of the Series C
      Preferred Stock in accordance with paragraph 2, the right to conversion
      shall terminate at the close of business on the last full business day
      next preceding the date fixed for payment of the amount distributable on
      Series C Preferred Stock or payable with respect thereto) into such number
      of fully paid and non-assessable whole shares of Class A Common Stock as
      is obtained by multiplying the number of shares of Series C Preferred
      Stock so to be converted by the Series C Preferred Liquidation Value (plus
      any accrued and unpaid per share dividends through the time of conversion)
      and dividing the result by $3.50, or by the conversion price as last
      adjusted and in effect at the date any share of shares of Series C
      Preferred Stock are surrendered for conversion (such price, or such price
      as last adjusted hereunder, the "Series C Conversion Price"). Such rights
      of conversion shall be exercised by the holder thereof by giving written
      notice that the holder elects to convert a stated number of shares of
      Series C Preferred Stock into Class A Common Stock and by surrender of a
      certificate or certificates for the shares so to be converted to the
      corporation at its principal office (or such other office or agency of the
      Corporation as the Corporation may designate by notice in writing to the
      holder or holders of the Series C Preferred Stock) at any time during its
      usual business hours on the date set forth in such notice, together with a
      statement of the name or names (with address), subject to compliance with
      applicable laws to the extent such designation shall involve a transfer,
      in which the certificate or certificates for shares of Class A Common
      Stock shall be issued.

            4B Issuance of Certificate; Time Conversion Effected. Promptly after
      the receipt by the Corporation of a written notice referred to in
      subparagraph 4A(1) or (2) and surrender of the certificate or certificates
      for the share or shares of the Convertible Preferred Stock to be
      converted, the Corporation shall issue and deliver, or cause to be issued
      and delivered, to the holder, registered in such name or names as such
      holder may direct, subject to compliance with applicable laws to the
      extent such designation shall involve a transfer, a certificate or
      certificates for the number of whole shares of Class A Common Stock
      issuable upon the conversion of such share or shares of Convertible
      Preferred Stock. To the extent permitted by law, such conversion shall be
      deemed to have been effected immediately prior to the close of business on
      the date the certificate or

<PAGE>

      certificates for such share or shares shall have been surrendered as
      aforesaid, and at such time the rights of the holder of such share or
      shares of Convertible Preferred Stock shall cease, and person or persons
      in whose name or names any certificate or certificates for shares of Class
      A Common Stock shall be issuable upon such conversion shall be deemed to
      have become the holder or holders of record of the shares represented
      thereby.

            4C Fractional Shares; Dividends; Partial Conversion. No fractional
      shares shall be issued upon conversion of the Convertible Preferred Stock
      into Class A Common Stock. In case the number of shares of Convertible
      Preferred Stock represented by the certificate or certificates surrendered
      pursuant to subparagraph 4(A)(1) or (2) exceeds the number of shares
      converted, the Corporation shall, upon such conversion, execute and
      deliver to the holder thereof, at the expense of the Corporation, a new
      certificate or certificates for the number of shares of Convertible
      Preferred Stock, represented by the certificate or certificates
      surrendered which are not to be converted. If any fractional interest in a
      share of Class A Common Stock would, except for the provisions of the
      first sentence of this subparagraph 4C, be deliverable upon any such
      conversion, the Corporation, in lieu of delivering the fractional share
      thereof, shall pay to the holder surrendering the Convertible Preferred
      Stock for conversion an amount in cash equal to the current fair value of
      such fractional interest as determined in good faith by the Board of
      Directors of the Corporation.

            4D Adjustment of Series C Conversion Price Upon Issuance of Common
      Stock. Except as provided in subparagraph 4F hereof, if and whenever the
      Corporation shall issue or sell, or is in accordance with subparagraphs
      4D(1) through 4D(5) deemed to have issued or sold, any shares of its
      Common Stock of Class A Common Stock for a consideration per share of its
      Common Stock or Class A Common Stock for a consideration per share less
      than the Series C Conversion Price in effect immediately prior to the time
      of such issue or sale, then, forthwith, the Series C Conversion Price
      shall be reduced to the price (calculated to the nearest cent) determined
      by dividing (x) an amount equal to the sum of (1) the number of shares of
      Common Stock outstanding immediately prior to such issuance or sale
      (including as outstanding all shares of Common Stock issuable upon
      conversion (i) outstanding Class A Common Stock, Series B Preferred Stock
      and Series C Preferred Stock and (ii) the Corporation's Convertible
      Promissory Note dated June 1, 1999 issued to Baylor Health Services)
      multiplied by the then existing Series C Conversion Price, and (2) the
      consideration, if any, received by the Corporation upon such issue or
      sale, by (y) the total number of shares of Common Stock outstanding
      immediately after such issue or sale (including as outstanding all shares
      of Common Stock issuable upon conversion (i) outstanding Class A Common
      Stock, Series B Preferred Stock and Series C Preferred Stock and (ii) the
      Corporation's Convertible Promissory Note dated June 1, 1999 issued by
      Baylor Health Services, without giving effect to any adjustment in the
      number of shares so issuable by reason of such issue or sale).

            For purposes of this subparagraph 4D, the following subparagraph
      4D(1) to 4D(7) shall also be applicable:

<PAGE>

            4D(1) Issuance of Rights or Options. In case at any time the
      Corporation shall in any manner grant any rights to subscribe for or to
      purchase, or any options for the purchase of, Common Stock, Class A Common
      Stock or any stock or securities convertible into or exchangeable for
      Common Stock or Class A Common Stock (such rights or options being herein
      called "Options" and such convertible or exchangeable stock or securities
      being herein called "Convertible Securities") whether or not such Options
      or the right to convert or exchange any such Convertible Securities are
      immediately exercisable, and the price per share for which Common Stock or
      Class A Common Stock, as the case may be, is issuable upon the exercise of
      such Options or upon conversion or exchange of such Convertible Securities
      (determined by dividing (i) the total amount, if any, received or
      receivable by the Corporation as consideration for the granting of such
      Options, plus the minimum aggregate amount of additional consideration
      payable to the Corporation upon the exercise of all such Options, plus, in
      the case of such Options which relate to Convertible Securities, the
      minimum aggregate amount of additional consideration, if any, payable upon
      the issue or sale of such Convertible Securities and upon the conversion
      or exchange thereto, by (ii) the total maximum number of shares of Common
      Stock or Class A Common Stock issuable upon the exercise of such Options
      or upon the conversion or exchange of all such Convertible Securities
      issuable upon the exercise of such Option) shall be less than the Series C
      Conversion Price in effect immediately prior to the time of the granting
      of such Options, then the total maximum number of shares of Common Stock
      of Class A Common Stock issuable upon the exercise of such Options or upon
      conversion or exchange of the total maximum amount of such Convertible
      Securities issuable upon the exercise of such Options shall be deemed to
      have been issued for such price per share as of the date of granting of
      such Options and thereafter shall be deemed to be outstanding. Except as
      otherwise provided in subparagraph 4E(3), no adjustment of the Series C
      Conversion Price shall be made upon the actual issue of such Common Stock
      or Class A Common Stock or of such Convertible Securities upon exercise of
      such Options or upon the actual issue of such Common Stock or Class A
      Common Stock, as the case may be, upon conversion or exchange of such
      Convertible Securities.

            4D(2) Issuance of Convertible Securities. In case the Corporation
      shall in any manner issue (whether directly or by assumption in a merger
      or otherwise) or sell any Convertible Securities, whether or not the
      rights to exchange or convert thereunder are immediately exercisable, and
      the price per share for which Common Stock or Class A Common Stock is
      issuable upon such conversion or exchange (determined by dividing (i) the
      total amount received or receivable by the Corporation as consideration
      for the issue or sale of such Convertible Securities, plus the minimum
      aggregate amount of additional consideration, if any, payable to the
      Corporation upon the conversion or exchange thereof, by (ii) the total
      maximum number of shares of Common Stock and Class A Common Stock issuable
      upon the conversion or exchange of all such Convertible securities) shall
      be less than the Series C conversion Price in effect immediately prior to
      the time of such issue or sale, then the total maximum number of shares of
      Common Stock or Class A Common Stock issuable upon conversion or exchange
      of all such Convertible Securities shall be deemed to have been issued for
      such price per share as of the date of the issue or sale of such
      Convertible Securities and thereafter shall be deemed to be outstanding,
      provided that (a) except as otherwise provided in subparagraph 4D(3)

<PAGE>

      below, no adjustment of the Series C Conversion Price shall be made upon
      the actual issue of such Common Stock or Class A Common Stock, as the case
      may be, upon conversion or exchange of such Convertible Securities, and
      9b) if any such issue or sale of such Convertible Securities is made upon
      exercise of any Option to purchase any such Convertible Securities for
      which adjustments of the Series C Conversion Price have been or are to be
      made pursuant to other provisions of this subparagraph 4D, no further
      adjustment of the Series C Conversion Price shall be made by reason of
      such issue or sale.

            4D(3) Change in Option Price or Conversion Rate. If (i) the purchase
      price provided for in any Option referred to in subparagraph 4D(1), (ii)
      the additional consideration, if any, payable upon the conversion or
      exchange of any Convertible Securities referred to in subparagraph 4D(1)
      or 4D(2) or (iii) the rate at which any Convertible Securities referred to
      in subparagraph 4D(1) or 4D(2) are convertible into or exchangeable for
      Common Stock or Class A Common Stock shall change at any time (in each
      case other than under or by reason of provisions designed to protect
      against dilution), then the Series C Conversion Price in effect at the
      time of such event shall, as required, forthwith be readjusted to such
      Series C Conversion Price which would have been in effect at such time had
      such Options or Convertible Securities still outstanding provided for such
      changed purchase price, additional consideration or conversion rate, as
      the case may be, at the time initial granted, issued or sold; and on the
      expiration of any such Option or the termination of any such right to
      convert or exchange such convertible Securities, the Series C Conversion
      Price then in effect hereunder shall, as required, forthwith be increased
      to the Series C Conversion Price which would have been in effect at the
      time of such expiration or termination had such Option or Convertible
      Securities, to the extent outstanding immediately prior to such expiration
      or termination, never been issued, and the Common Stock or Class A Common
      Stock, as the case may be, issuable thereunder shall not longer be deemed
      to be outstanding. If the purchase price provided for in any such Option
      referred to in subparagraph 4D(1) or the rate at which any Convertible
      Securities referred to in subparagraph 4D(1) or 4D(2) are convertible into
      or exchangeable for Common Stock or Class A Common Stock shall be reduced
      at any time under or by reason or provisions with respect thereto designed
      to protect against dilution, the, in case of the delivery of Common Stock
      or Class A Common Stock upon the exercise of any such Option or upon
      conversion or exchange of any such Convertible Securities, the Series C
      Conversion Price then in effect hereunder shall, as required, forthwith be
      adjusted to such respect amount as would have been obtained had such
      Option or Convertible Securities never been issued as to such Common Stock
      or Class A Common Stock, as the case may be, and had adjustments been made
      upon the issuance of the shares of Common Stock or Class A Common Stock
      delivered aforesaid, but only if as a result of such adjustment the Series
      C Conversion Price then in effect hereunder is thereby reduced.

            4D(4) Stock Dividends. In case the Corporation shall declare a
      dividend or make any other distribution upon any stock of the Corporation
      payable in Common Stock, Class A Common Stock, Options or Convertible
      Securities, and Common Stock, Class A Common Stock, Options or Convertible
      Securities, as the case may be, issuable in payment of such dividend or
      distribution shall be deemed to have been issued or sold

<PAGE>

      without consideration, and the Series C Conversion Price shall be reduced
      as if the corporation had subdivided its outstanding shares of Common
      Stock and Class A Common Stock into a greater number of shares, as
      provided in subparagraph 4E hereof.

            4D(5) Consideration for Stock. In case any shares of Common Stock,
      Class A Common Stock, Options or Convertible Securities shall be issued or
      sold for cash, the consideration received therefore shall be deemed to be
      the amount received by the Corporation therefore, without deduction
      therefrom of any expenses incurred or any underwriting commissions or
      concession paid or allowed by the Corporation in connection therewith. In
      case any shares of Common Stock, Class A Common Stock, Options or
      Convertible Securities shall be issued or sold for a consideration other
      than cash, the amount of the consideration other than cash received by the
      Corporation shall be deemed to be the fair value of such consideration as
      determined in good faith by the Board of Directors of the Corporation,
      without deduction therefrom of any expenses incurred or any underwriting
      commissions or concessions paid or allowed by the Corporation in
      connection therewith. In case any Options shall be issued in connection
      with the issue and sale of other securities of the Corporation, together
      comprising one integral transaction in which no specific consideration is
      allocated to such Options by the Corporation, such Options shall be deemed
      to have been issued without consideration.

            4D(6) Treasury Shares. The number of shares of Common Stock and
      Class A Common Stock outstanding at any given time shall not include
      shares owned or held by or for the account of the Corporation, and the
      disposition of any such shares shall be considered an issue or sale of
      Common Stock or Class A Common Stock for the purposes of this subparagraph
      4D.

            4D(7) Record Date. In case the Corporation shall take a record of
      the holders of its Common Stock or Class A Common Stock for the purpose of
      entitling them (i) to receive a dividend or other distribution payable in
      Common Stock, Class A Common Stock, Options or Convertible Securities, or
      (ii) to subscribe for or purchase Common Stock, Class A. Common Stock,
      Options or Convertible Securities, then such record date shall be deemed
      to be the date of the issue or sale of the shares of Common Stock or Class
      A Common Stock, as the case may be, deemed to have been issued or sold
      upon the declaration of such dividend or the making of such other
      distribution or the date of the granting of such right of subscription or
      purchase, as the case may be, provided that such shares of Common Stock or
      Class A Common Stock, as the case may be, shall in fact have been issued
      or sold.

            4E Subdivision or Combination of Stock. In case the Corporation
      shall at any time subdivide its outstanding shares of Class A Common Stock
      into a greater number of shares or shall declare or pay a dividend on its
      outstanding shares of Class A Common Stock payable in shares of Class A
      Common Stock, then in each case the Series B Base Conversion Price and the
      Series C Base Conversion Price shall be similarly reduced, and conversely,
      in case the outstanding shares of Class A Common Stock of the Corporation
      shall be combined into a smaller number of shares, the Base Conversion
      Price shall be similarly increased.

<PAGE>

            4F Certain Issues of Common Stock Excepted. Anything herein to the
      contrary notwithstanding, the Corporation shall not be required to make
      any adjustment of the Series C Conversion Price upon the occurrence of any
      of the following events: (i) the issuance of Class A Common Stock upon
      conversion of outstanding shares of Series B Preferred Stock or Series C
      Preferred Stock and (ii) the issuance and sale of, or grant of options to
      purchase shares of Common Stock or Class A Common Stock to employees and
      advisors of the Corporation pursuant to the Corporation's stock option
      plan or otherwise approved by the Board of Directors of the Company.

            4G Reorganization, Reclassification, Merger of Sale. If any capital
      reorganization or reclassification of the capital stock of the corporation
      shall be effected in such a way (including, without limitation, by way of
      consolidation or merger) that holders of Class A Common Stock shall be
      entitled to receive stock, securities or assets with respect to or in
      exchange for Class A Common Stock, then, as a condition of such
      reorganization or reclassification, lawful and adequate provision shall be
      made whereby each holder of a share or shares of Convertible Preferred
      Stock shall thereafter have the right to receive, upon the basis and upon
      the terms and conditions specified herein and in lieu of the shares of
      Class A Common Stock of the Corporation immediately theretofore receivable
      upon the conversion of such share or shares of Convertible Preferred
      Stock, such shares of stock, securities or assets as may be issued or
      payable with respect to or in exchange for a number of outstanding shares
      of such Class A Common Stock equal to the number of shares of such stock
      immediately theretofore so receivable had such reorganization or
      reclassification not taken place, and in any such case appropriate
      provision shall be made with respect to the rights and interests of such
      holder to the end that the provisions hereof shall thereafter be
      applicable, as nearly as may be, in relation to any shares of stock,
      securities or assets thereafter deliverable upon the exercise of such
      conversion rights. In the event of a merger or consolidation of the
      Corporation as a result of which a greater or lesser number of shares of
      common stock of the surviving corporation are issuable to holders of Class
      A Common Stock of the Corporation outstanding immediately prior to such
      merger or consolidation, the Series B Base Conversion Price and the Series
      C Base Conversion Price shall be adjusted in the same manner as though
      there were a subdivision or combination of the outstanding shares of Class
      A Common Stock of the Corporation. The Corporation will not effect any
      such consolidation or merger, or any sale of all or substantially all of
      its assets and properties, unless prior to the consummation thereof the
      successor corporation (if other than the Corporation) resulting from such
      consolidation or merger or the corporation purchasing such assets shall
      assume by written instrument executed and mailed or delivered to each
      holder of shares of Convertible Preferred Stock at the last address of
      such holder appearing on the books of the Corporation, the obligation to
      deliver to such holder such shares of stock, securities or assets as, in
      accordance with the foregoing provisions, such holder may be entitled to
      receive.

            4H Notice of Adjustment. Upon any adjustment made pursuant to 4C or
      4D, then and in each such case the Corporation shall give written notice
      thereof, by first class mail, postage prepaid, addressed to each holder of
      shares of Convertible Preferred Stock at the address of such holder as
      shown on the books of the Corporation, which notice shall state the number
      of shares of Class A Common Stock or other securities, cash or

<PAGE>

      property issuable upon conversion of the Convertible Preferred Stock
      resulting from such adjustment, setting forth in reasonable detail the
      method of calculation and the facts upon which such calculation is based.

            4I Stock to be Reserved. The Corporation will at all times reserve
      and keep available out of its authorized but unissued Class A Common
      Stock, solely for the purpose of issuance upon the conversion of the
      Convertible Preferred Stock as herein provided, such number of shares of
      Class A Common Stock as shall then be issuable upon the conversion of all
      outstanding shares of Convertible Preferred Stock. All shares of Class A
      Common Stock which shall be so issued shall be duly and validly issued and
      fully paid and non-assessable and free from all taxes, liens and charges
      arising out of or by reason of the issue thereof. The Corporation will
      take all such action within its control as may be necessary on its part to
      assure that all such shares of Class A Common Stock may be so issued
      without violation of any applicable law or regulation, or of any
      requirements of any national securities exchange upon which the Class A
      Common Stock of the Corporation may be listed.

            4J No Reissuance of Convertible Preferred Stock. Shares of
      Convertible Preferred Stock which are converted into shares of Class A
      Common Stock as provided herein shall not be reissued.

            4K Issue Tax. The issuance of certificates for shares of Class A
      Common Stock upon conversion of the Convertible Preferred Stock shall be
      made without charge to the holders thereof for any issuance tax in respect
      thereof, provided that the Corporation shall not be required to pay any
      tax which may be payable in respect of any transfer involved in the
      issuance and delivery of any certificate in a name other than that of the
      holder of the Convertible Preferred Stock which is being converted.

            4L Closing of Books. The Corporation will at no time close its
      transfer books against the transfer of any Convertible Preferred Stock or
      of any shares of Class A Common Stock issued or issuable upon the
      conversion of any shares of Convertible Preferred Stock in any manner
      which interferes with the timely conversion of such Convertible Preferred
      Stock.

            4M(1) Definition of Class A Common Stock. As used in this paragraph
      4, the term "Class A Common Stock" shall mean and include the
      Corporation's authorized Class A Common Stock, $.01 par value, as
      constituted on the date of filing of this Certificate of Amendment to the
      Certificate of Incorporation and shall also include any capital stock of
      any class of the Corporation thereafter authorized which shall not be
      limited to a fixed sum or percentage of par value in respect of the rights
      of the holders thereof to participate in dividends or in the distribution
      of assets upon the voluntary or involuntary liquidation, dissolution or
      winding up of the Corporation; provided that the shares of Class A Common
      Stock receivable upon conversion of shares of the Convertible Preferred
      Stock, or in case of any reorganization or reclassification of the
      outstanding shares thereof, the stock, securities or assets provided for
      in subparagraphs 4C and 4D, shall include only shares designated as Class
      A Common Stock of the

<PAGE>

      Corporation on the date of filing of this Certificate of Amendment to the
      Certificate of Incorporation.

            4M(2) Definition of Common Stock. As used in this paragraph 4, the
      term "Common Stock" shall mean and include the Corporation's authorized
      Common Stock, $.01 par value, as constituted on the date of filing of this
      Certificate of Amendment to the Certificate of Incorporation and shall
      also include any capital stock of any class of the Corporation thereafter
      authorized which shall not be limited to a fixed sum or percentage of par
      value in respect of the rights of the holders thereof to participate in
      dividends or in the distribution of assets upon the voluntary or
      involuntary liquidation, dissolution or winding up of the Corporation;
      provided that the shares of Common Stock receivable upon conversion of
      shares of the Convertible Preferred Stock, or in case of any
      reorganization or reclassification of the outstanding shares thereof, the
      stock, securities or assets provided for in subparagraphs 4C and 4D, shall
      include only shares designated as Common Stock of the Corporation on the
      date of filing of this Certificate of Amendment to the Certificate of
      Incorporation.

            5. Restrictions. At any time when shares of Preferred Stock are
      outstanding, except where the vote or written consent of the holders of a
      greater number of shares of the Corporation is required by law or by this
      Certificate of Incorporation, and in addition to any other vote required
      by law, without the prior consent of the holders of a majority of the
      outstanding Preferred Stock, given in person or by proxy, either in
      writing or at a special meeting called for that purpose, at which meeting
      the holders of the shares of such Preferred Stock shall vote together as a
      class:

                  (a) The Corporation will not (i) create or authorize the
      creation of any additional class or series of shares unless the same ranks
      junior to the Preferred Stock as to the distribution of assets upon the
      liquidation, dissolution or winding up of the Corporation and as to the
      distribution of dividends, (ii) increase the authorized amount of the
      Preferred Stock or the authorized amount of any additional class or series
      of shares unless the same ranks junior to the Preferred Stock as to the
      distribution of assets upon the liquidation, dissolution or winding up of
      the Corporation and as to the distribution of dividends, or (iii) create
      or authorize any obligation or security convertible into shares of
      Preferred Stock or into shares of any other class or series unless the
      same ranks junior to the Preferred Stock as to the distribution of assets
      upon the liquidation, dissolution or winding up of the Corporation and as
      to the distribution of dividends, in each such case whether any such
      creation or authorization or increase shall be by means of amendment of
      the Certificate of Incorporation, merger, consolidation or otherwise.

                  (b) The Corporation will not amend, alter or repeal the
      Corporation's Certificate of Incorporation or By-laws in any manner, or
      file any directors' resolutions pursuant to Section 151(g) of the General
      Corporation Law of the State of Delaware containing any provision, in
      either case, which adversely affects the respective preferences,
      qualifications, special or relative rights or privileges of the Preferred
      Stock or which in any manner adversely affects the Preferred Stock or the
      holders thereof. In addition, no action shall be taken that would
      adversely alter or change the powers, preferences or special rights of one
      series of Preferred Stock, but not so affect all of the

<PAGE>

      Preferred Stock, without the consent of the holders of a majority of the
      outstanding stock of such series of Preferred Stock voting separately as a
      class.

            In addition, no such action shall be taken that would have the
      effect of creating any additional differences between the respective
      preferences, qualifications, special or relative rights or privileges of
      the Series A Preferred Stock, the Series B Preferred Stock and the Series
      C Preferred Stock without the consent of the holders of a majority of the
      outstanding Series A Preferred Stock, the consent of the holders of a
      majority of the outstanding Series B Preferred Stock and the consent of
      the holders of a majority of the outstanding Series C Preferred Stock,
      voting separately.

                  (c) The Corporation will not enter into any transaction that
      will result in the occurrence of a Change of Control Event.

            6. Voting. Except as otherwise required by law or this Certificate
      of Incorporation, the holders of Series A Preferred Stock and Series B
      Preferred Stock shall have no vote on any matters to be voted on by the
      stockholders of the Corporation. Except as otherwise provided by law and
      this Certificate of Incorporation, the holders of Series C Preferred Stock
      shall vote together with the holders of Common Stock on all matters to be
      voted on by the stockholders of the Corporation, and each share of Series
      C Preferred Stock shall entitle the holder thereof to such number of votes
      per share on each such action as shall equal the number of shares of Class
      A Common Stock (including fractions of a share) into which each share of
      Series C Preferred Stock is then convertible.

                                      II.
                      CLASS A COMMON STOCK AND COMMON STOCK

            Except as otherwise expressly provided herein, all shares of Common
      Stock and Class A Common Stock shall be identical and shall entitle the
      holders thereof to the same rights and privileges.

            1. Dividends. The holders of shares of Class A Common Stock and
      Common Stock, according to the number of shares of Class A Common Stock
      and Common Stock then outstanding, shall be entitled to receive such
      dividends as from time to time may be declared by the Board of Directors
      of the Corporation out of any funds legally available therefor, subject to
      the provisions of subdivision I above with respect to the rights of
      holders of the Preferred Stock.

            2. Liquidation. Upon any liquidation, dissolution or winding up of
      the Corporation, whether voluntary or involuntary, subject to the prior
      rights of the holders of Preferred Stock, the holders of the shares of
      Class A Common Stock and Common Stock, according to the number of shares
      of Class A Common Stock and Common Stock then outstanding, shall be
      entitled to share ratably in all assets of the Corporation available for
      distribution to its stockholders; provided, however, (x) that in the event
      that the amount available for distribution to the holders of Class A
      Common Stock is insufficient to permit the holders of Class A Common Stock
      to be paid an amount equal to (1) the original per share purchase price
      paid to the Corporation with respect to each such share

<PAGE>

      of Class A Common Stock plus any accrued but unpaid dividends, or (2) with
      respect to those shares of Class A Common Stock outstanding as a result of
      the conversion of shares of Series B Preferred Stock, $2.00 per share plus
      any accrued but unpaid dividends, or (3) with respect to those shares of
      Class A Common Stock outstanding as a result of the conversion of shares
      of Series C Preferred Stock, $3.50 per share plus any accrued and unpaid
      dividends (such amounts being sometimes referred to as the "Class A
      Liquidation Payments"), then the holders of Class A Common Stock shall be
      entitled before any distribution or payment is made upon any Common Stock,
      to be paid an amount equal to the Class A Liquidation Payments and (y)
      that if the assets to be distributed among the holders of the Class A
      Common Stock shall be insufficient to permit payment to such holders of
      the full amount of the Class A Liquidation Payments, then the entire
      assets of the Corporation to be so distributed shall be distributed
      ratably among the holders of Class A Common Stock. Upon any such
      liquidation, dissolution or winding up of the Corporation in which the
      amount available for distribution to the holders of Class A Common Stock
      is insufficient to permit such holders to be paid the full amount of the
      Class A Liquidation Payments (as described in clauses (x) and (y) above),
      after the holders of Class A Common Stock shall have been paid in full the
      preferential amounts to which they shall be entitled as provided herein,
      all remaining assets of the Corporation which are available for
      distribution to its stockholders shall be distributed ratably among the
      holders of Common Stock. Written notice of such liquidation, dissolution
      or winding up, stating a payment date, the amount of the Class A
      Liquidation Payments and the place where said Class A Liquidation Payments
      shall be payable, shall be given by mail, postage prepaid, not less than
      30 days prior to the payment date stated therein, to the holders of record
      of Class A Common Stock, such notice to be addressed to each such holder
      at his post office address as shown by the records of the Corporation;
      provided, however, that failure to given notice pursuant to this sentence
      shall not invalidate the action involved. A Change of Control Event shall
      not, for purposes of this paragraph 2, be deemed a liquidation,
      dissolution or winding up of the Corporation.

            3. Conversion of Class A Common Stock.

            3A Optional Conversion of Class A Common Stock. Subject to and upon
      compliance with the provisions of this paragraph 3 and after receiving the
      written consent of the holders of the majority of the outstanding shares
      of Class A Common Stock ("Conversion Consent"), the holder of any share or
      shares of Class A Common Stock shall have the right, at its option, to
      convert any such shares of Class A Common Stock (except that upon any
      liquidation, dissolution or winding up of the Corporation the right of
      conversion shall terminate at the close of business on the last full
      business day next preceding the date fixed for payment of the amount
      distributable on Class A Common Stock) into an equal number of fully paid
      and non-assessable whole shares of Common Stock. Such rights of conversion
      shall be exercised by the holder thereof by giving written notice (which
      notice shall attach the Conversion Consent) that the holder elects to
      convert a stated number of shares of Class A Common Stock into Common
      Stock and by surrender of a certificate or certificates for the shares so
      to be converted to the Corporation at its principal office (or such other
      office or agency of the Corporation as the Corporation may designate by
      notice in writing to the holder or holders of the Class A

<PAGE>

      Common Stock) at any time during its usual business hours on the date set
      forth in such notice, together with a statement of the name or names (with
      address), subject to compliance with applicable laws to the extent such
      designation shall involve a transfer, in which the certificate or
      certificates for shares of Common Stock shall be issued.

            3B Automatic Conversion of Class A Common Stock. Notwithstanding
      anything else herein to the contrary in this Section 3, in the event that,
      at any time while any of the Class A Common Stock shall be outstanding,
      (i) the Corporation shall complete a firm commitment underwritten public
      offering of Common Stock registered under the Securities Act of 1933, as
      amended, in which (x) the aggregate price paid for such shares by the
      public shall be at least $30,000,000 and (y) the price per share paid by
      the public for such shares shall be at least $6 per share (appropriately
      adjusted to reflect stock splits and combinations and stock dividends) (a
      "Qualified Offering") or (ii) a majority of the issued shares of Class A
      Common Stock shall have been converted into Common Stock, then all
      outstanding shares of Class A Common Stock shall be automatically and
      without further action on the part of the holders of the Class A Common
      Stock converted into shares of Common Stock in accordance with the terms
      of subsection 3A hereof with the same effect as if the certificates
      evidencing such shares had been surrendered for conversion, such
      conversion to be effective immediately prior to the closing of such
      Qualified Offering or immediately prior to the conversion of Class A
      Common Stock satisfying clause (ii) above, as the case may be; provided,
      however, that certificates evidencing the shares of Common Stock issuable
      upon such conversion shall not be issued except on surrender of the
      certificates for the shares of the Class A Common Stock so converted.

            3C Issuance of Certificates; Time Conversion Effected. Promptly
      after the receipt by the Corporation of the written notice referred to in
      subparagraph 3A and surrender of the certificate or certificates for the
      share or shares of the Class A Common Stock to be converted, the
      Corporation shall issue and deliver, or cause to be issued and delivered,
      to the holder, registered in such name or names as such holder may direct,
      subject to compliance with applicable laws to the extent such designation
      shall involve a transfer, a certificate or certificates for the number of
      whole shares of Common Stock issuable upon the conversion of such share or
      shares of Class A Common Stock. To the extent permitted by law, such
      conversion shall be deemed to have been effected immediately prior to the
      close of business on the day the certificate or certificates for such
      share or shares shall have been surrendered as aforesaid, and at such time
      the rights of the holder of such share or shares of Class A Common Stock
      shall cease, and the person or persons in whose name or names any
      certificate or certificates for shares of Common Stock shall be issuable
      upon such conversion shall be deemed to have become the holder or holders
      of record of the shares represented thereby.

            3D Fractional Shares; Dividends; Partial Conversion. No fractional
      shares shall be issued upon conversion of the Class A Common Stock into
      Common Stock, nor shall any payment or adjustment be made upon any
      conversion on account of any cash dividends on the Class A Common Stock so
      converted or the Common Stock issued upon such conversion. In case the
      number of shares of Class A Common Stock represented by the certificate or
      certificates surrendered pursuant to subparagraph 3A exceeds the

<PAGE>

      number of shares converted, the Corporation shall, upon such conversion,
      execute and deliver to the holder thereof, at the expense of the
      Corporation, a new certificate or certificates for the number of shares of
      Class A Common Stock, represented by the certificate or certificates
      surrendered which are not to be converted. If any fractional interest in a
      share of Common Stock would, except for the provisions of the first
      sentence of this subparagraph 3D, be deliverable upon any such conversion,
      the Corporation, in lieu of delivering the fractional share thereof, shall
      pay to the holder surrendering the Class A Common Stock for conversion an
      amount in cash equal to the current fair value of such fractional interest
      as determined in good faith by the Board of Directors of the Corporation.

            3E Subdivision or Combination of Stock. In case the Corporation
      shall at any time subdivide its outstanding shares of Common Stock into a
      greater number of shares or shall declare or pay a dividend on its
      outstanding shares of Common Stock payable in shares of Common Stock, then
      in each case the Class A Common Stock shall be similarly subdivided, and
      conversely, in case the Class A Common Stock shall be similarly
      subdivided, and conversely, in case the outstanding shares of Common Stock
      of the Corporation shall be combined into a smaller number of shares, the
      Class A Common Stock shall be similarly combined.

            3F Reorganization, Reclassification, Merger of Sale. If any capital
      reorganization or reclassification of the capital stock of the Corporation
      shall be effected in such a way (including, without limitation, by way of
      consolidation or merger) that holders of Common Stock shall be entitled to
      receive stock, securities or assets with respect to or in exchange for
      Common Stock, then, as a condition of such reorganization or
      reclassification, lawful and adequate provision (in form satisfactory to
      the holders of at least a majority of the outstanding shares of Class A
      Common Stock) shall be made whereby each holder of a share or shares of
      Class A Common Stock shall thereafter have the right to receive, upon the
      basis and upon the terms and conditions specified herein and in lieu of
      the shares of Common Stock of the Corporation immediately theretofore
      receivable upon the conversion of such share or shares of Class A Common
      Stock, such shares of stick, securities or assets as may be issued or
      payable with respect to or in exchange for a number of outstanding shares
      of such Common Stock equal to the number of shares of such stock
      immediately theretofore so receivable had such reorganization or
      reclassification not taken place, and in any such case appropriate
      provision shall be made with respect to the rights and interests of such
      holder to the end that the provisions hereof shall thereafter be
      applicable, as nearly as may be, in relation to any shares of stock,
      securities or assets thereafter deliverable upon the exercise of such
      conversion rights. In the event of a merger or consolidation of the
      Corporation as a result of which a greater or lesser number of shares of
      common stock of the surviving corporation are issuable to holders of
      Common Stock of the Corporation outstanding immediately prior to such
      merger or consolidation, the number of shares of Common Stock in which
      Class A Common Stock may be converted shall be adjusted in the same manner
      as though there were a subdivision or combination of the outstanding
      shares of Common Stock of the Corporation. The Corporation will not effect
      any such consolidation or merger, or any sale of all or substantially all
      its assets and properties, unless prior to the consummation thereof the
      successor corporation (if other than the Corporation) resulting from such

<PAGE>

      consolidation or merger or the corporation purchasing such assets shall
      assume by written instrument (in form reasonably satisfactory to the
      holders of at least a majority of the shares of Class A Common Stock at
      the time outstanding) executed and mailed or delivered to each holder of
      shares of Class A Common Stock at the last address of such holder
      appearing on the books of the Corporation, the obligation to deliver to
      such holder such shares of stick, securities or assets as, in accordance
      with the foregoing provisions, such holder may be entitled to receive.

            3G Notice of Adjustment. Upon any adjustment made pursuant to 3E or
      3F, then and in each such case the Corporation shall give written notice
      thereof, by first class mail, postage prepaid, addressed to each holder of
      shares of Class A Common Stock at the address of such holder as shown on
      the books of the Corporation, which notice shall state the number of
      shares of Common Stock or other securities, cash or property issuable upon
      conversion of the Class A Common Stock resulting from such adjustment,
      setting forth in reasonable detail the method of calculation and the facts
      upon which such calculation is based.

            3H Stock to be Reserved. The Corporation will at times reserve and
      keep available out of its authorized but unissued Common Stock, solely for
      the purpose of issuance upon the conversion of the Class A Common Stock as
      herein provided, such number of shares of Common Stock as shall then be
      issuable upon the conversion of all outstanding shares of Class A Common
      Stock. All shares of Common Stock which shall be so issued shall be duly
      and validly issued and fully paid and non-assessable and free from all
      taxes, liens and charges arising out of or by reason of the issue thereof.
      The Corporation will take all such action within its control as may be
      necessary on its part to assure that all such shares of Common Stock may
      be so issued without violation of any applicable law or regulation, or of
      any requirements of any national securities exchange upon which the Common
      Stock of the Corporation may be listed.

            3I No Reissuance of Class A Common Stock. Shares of Class A Common
      Stock which are converted into shares of Common Stock as provided herein
      shall not be reissued.

            3J Issue Tax. The issuance of certificates for shares of Common
      Stock upon conversion of the Class A Common Stock shall be made without
      charge to the holders thereof for any issuance tax in respect thereof,
      provided that the Corporation shall not be required to pay any tax which
      may be payable in respect of any transfer involved in the issuance and
      delivery of any certificate in a name other than that of the holder of the
      Class A Common Stock which is being converted.

            3K Closing of Books. The Corporation will at no time close its
      transfer books against the transfer of any Class A Common Stock or of any
      shares of Common Stock issued or issuable upon the conversion of any
      shares of Class A Common Stock in any manner which interferes with the
      timely conversion of such Class A Common Stock.

            3L Definition of Common Stock. As used in this paragraph 3, the term
      "Common Stock" shall mean and include the Corporation's authorized Common
      Stock,

<PAGE>

      $.01 par value, as constituted on the date of filing of this Certificate
      of Amendment to the Certificate of Incorporation and shall also include
      any capital stock of any class of the Corporation thereafter authorized
      which shall not be limited to a fixed sum or percentage of par value in
      respect of the rights of the holders thereof to participate in dividends
      or in the distribution of assets upon the voluntary or involuntary
      liquidation, dissolution or winding up of the Corporation; provided that
      the shares of Common Stock receivable upon conversion of shares of the
      Class A Common Stock, or in case of any reorganization or reclassification
      of the outstanding shares thereof, the stock, securities or assets
      provided for in subparagraphs 3E or 3F, shall include only shares
      designated as Common Stock of the Corporation on the date of filing of
      this Certificate of Amendment to the Certificate of Incorporation.

            4. Voting. Except as otherwise required by law or this Certificate
      of Incorporation, the holders of the Class A Common Stock and the holders
      of Common Stock shall be entitled to notice of any stockholders meeting in
      accordance with the By-laws of the Corporation and to vote together as a
      class upon any matter submitted to the stockholders for a vote as follows:
      (x) each holder of Class A Common Stock shall be entitled to 10 votes for
      each share of Common Stock which would be issuable to such holder upon the
      conversion of all the shares of Class A Common Stock so held on the record
      date for the determination of stockholders entitled to vote and (ii) each
      holder of Common Stock shall have one vote per share."

            SECOND: that the Amendment of the Certificate of Incorporation
      effected by this Certificate was duly authorized by the stockholders of
      the Corporation, after first having been declared advisable by the Board
      of Directors of the Corporation, all in accordance with the provisions of
      Section 242 of the General Corporation Law of the State of Delaware.

            THIRD: that the capital of the Corporation will not be reduced
      under, or by reason of, the foregoing amendments to the Certificate of
      Incorporation of the Corporation.

<PAGE>

                                                               STATE OF DELAWARE
                                                              SECRETARY OF STATE
                                                        DIVISION OF CORPORATIONS
                                                       FILED 09:00 AM 06/01/2000
                                                              01279037 - 2865387

            IN WITNESS WHEREOF, this Certificate of Amendment has been executed
      by the Corporation this 31st day of May, 2000.

                                        UNITED SURGICAL PARTNERS
                                        INTERNATIONAL, INC.

                                        By: /s/ Donald E. Steen
                                            ------------------------------------
                                        Name:  Donald E. Steen
                                        Title: Chief Executive Officer

<PAGE>

                               ANNEX I -PURCHASERS

Welsh, Carson Anderson
  & Stowe VII, LP.
WCAS Healthcare Partners, LP.
Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Richard H, Stowe
Andrew M. Paul
Thomas E. Mclnerney
Laura VanBuren
Robert A. Minicucci
Anthony deNicola
Rudolph E. Rupert
Paul B. Queally
D. Scott Mackesy
Lauren Melkus
Sanjay Swani
Jonathan Rather
Sean Traynor

c/o Welsh, Carson, Anderson
  & Stowe
320 Park Avenue
Suite 2500
New York, NY 10022-9500
Facsimile: 212-893-9575

with a copy to:

Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
NewYork, NY 10111 Facsimile: 212-841-5725
Attention: Othon A. Prounis, Esq.

<PAGE>

2. FFT Partners

FFT Partners I, L.P.
FFT Executive Partners I, L.P.

c/o Ferrer Freeman Thompson & Co.
10 Glenville Street
Greenwich, CT 06833
Facsimile: 203-532-8016

<PAGE>

                                    ANNEX II

                                SHARES PURCHASED

                                    Number of
                                    Series C
          Purchaser              Preferred Shares            Cash Purchase Price
          ---------              ----------------            -------------------
Welsh, Carson, Anderson &                  14,107                    14,107,000
Stowe VII, L.P.

WCAS Healthcare Partners, L.P.                210                       210,000

Patrick J. Welsh                              170                       170,000

Russell L. Carson                             170                       170,000

Bruce K. Anderson                             170                       170,000

Richard H. Stowe                               30                        30,000

Andrew M. Paul                                 30                        30,000

Thomas B. Mclnerney                            89                        89,000

Laura VanBuren                                  4                         4,000

Robert A. Minicucci                            30                        30,000

Anthony deNicola                               11                        11,000

Paul B. Queally                                23                        23,000

Rudolph E. Rupert                               5                         5,000

D. Scott Mackesy                                6                         6,000

Lauren Melkus                                  23                        23,000

Sanjay Swani                                    5                         5,000

Jonathan Rather                                 5                         5,000

Sean Traynor                                    2                         2,000

FFT Partners I, L.P.

FFT Executive Partners I, L.P.

                          TOTAL:           15,000                   $15,000,000

<PAGE>

                                SCHEDULE 2.01(b)

None.

<PAGE>

                                SCHEDULE 2.04(a)

United Surgical Partners International, Inc.
Ownership of Class A Common Shares
December 31, 1999

<TABLE>
<CAPTION>
                                         -------------------------------------------------------------------------
                                                            Total Shares Outstanding at 12/31/99
                                         -------------------------------------------------------------------------
                                                        Value Common Stock
                                             Class A    ----------------------------------------------------------
                                         Common Shares    @ $2/Share    @ $3.5/Share  @ $4.00/Share      Total         %
                                         -----------------------------------------------------------------------------------
<S>                                        <C>          <C>             <C>             <C>          <C>             <C>
Welsh, Carson Anderson & Stowe VII, L.P.   15,813,272   18,799,560.00   22,447,222.00           --   41,246,782.00    72.39%
WCAS Healthcare Partners, L.P.                236,347      280,980.00      335,499.50           --      616,479.50     1.08%
Patrick J. Welsh                              192,792      229,200.00      273,672.00           --      502,872.00     0.88%
Russell L. Carson                             192,792      229,200.00      273,672.00           --      502,872.00     0.88%
Bruce K. Anderson                             192,792      229,200.00      273,672.00           --      502,872.00     0.88%
Richard H. Stowe                               33,766       40,142.00       47,932.50           --       88,074.50     0.15%
Andrew M. Paul                                 33,766       40,142.00       47,932.50           --       88,074.50     0.15%
Thomas E. Mclnerney                           101,293      120,422.00      143,787 00           --      264,209.00     0.46%
Laura VanBuren                                  1,689        2,008.00        2,397.50           --        4,405.50     0.01%
Robert A. Minicucci                            33,766       40,142.00        47932.50           --       88,074.50     0.15%
Anthony deNicola                               11,817       14,048.00       16,775.50           --       30,823.50     0.05%
Rudolph E. Rupert                               5,064        6,020.00        7,189.00           --       13,209.00     0.02%
Paul B. Oueally                                25,999       30,908.00       36,907.50           --       67,815 50     0.12%
D, Scott Mackesy                                6,753        8,028 00        9,586.50           --       17,614.50     0.03%
Kenneth Melkus/Lauren Melkus (10/26)           25,234       30,000.00        35,81900           --       65,819 00     0.12%
Donald E. Steen                             1,089,000    1,750,000.00      749,000.00           --    2,499,000.00     4.99%
Sue Shelley                                   260,000      500,000.00       35,000.00           --      535,000.00     1.19%
Laurie Hogue                                   55,000      100,000.00       17,500.00           --      117,500.00     0.25%
Michael Crews                                 115,000      200,000.00       52,500.00           --      252,500.00     0.53%
Su Zan Nelson                                  50,000      100,000.00              --           --      100,000.00     0.23%
David McDonald                                107,500      200,000.00       26,250.00           --      226,250.00     0.49%
M. Robert Knapp Trust U/A DTD 8/31/90          20.000       40,000.00              --           --       40,000.00     0.09%
Calver Fund, Inc.                              40,000       80,000.00              --           --       80,000.00     0.18%
James Ken Newman                               40,000       80,000.00              --           --       80,000.00     0.18%
NGKE / USPI Partners                           40,000       80,000.00              --           --       80,000 00     0.18%
L&W Co.                                        20,000       40,000 00              --           --       40,000 00     0.09%
Norman Brownstein                              30,000       60,000.00              --           --       60,000.00     0.14%
William Wilcox                                278,000       40,000.00      903,000.00           --      943,000.00     1.27%
Paul Whitman                                   40,000       80,000 00              --           --       80,000.00     0.18%
Rivid LLC                                      30,000       60,000.00              --           --       60,000 00     0.14%
CGJR II, L.P.                                  25,500       51,000.00              --           --       51,000.00     0.12%
R / MF III, L.P.                               14,500       29,000.00              --           --       29,000.00     0.07%
Patrick McMullan                               20,000       40,000.00              --           --       40,000.00     0.09%
Craig Callen                                   20,000       40,000.00              --           --       40,000.00     0.09%
Lawrence Lavine                                10,000       20,000.00              --           --       20,000 00     0.05%
David Dennis                                   10,000       20,000.00              --           --       20,000 00     0.05%
Michael R. Nicolais & Jane
L. Nicolais, as t                              10,000       20,000.00              --           --       20,000.00     0.05%
Tom C. Davis                                   10,000       20,000.00              --           --       20,000.00     0.05%
Edward W. Karrels                             473,581      947,162.00              --           --      947,162.00     2.17%
Michael W. Barton                             327,031      654,062.00              --           --      654 062 00     1.50%
Jeffrey L. Stockard                            85,587      131,174.00       70,000.00           --      201,174.00     0.39%
Alice J. Charron                                2,677        5,354.00              --           --        5,354.00     0.01%
Charles Morton                                 14,261       28,522.00              --           --         2852200     0.07%
David Gaw                                      16,298       32,596.00              --           --       32,596.00     0.07%
Sandra Holshouser                               7,138       14,276.00              --           --       14,276.00     0.03%
Health Care Capital Partners, L.P.          1,646,177              --    5,761,619.50           --    5,761,619.50     7.54%
Health Care Executive Partners, L.P.           68,109              --      238,381.50           --      238,381.50     0.31%
James Branon                                    5,000              --       17,500.00           --       17,500.00     0.02%
Tucker Taylor                                  17,143              --       60,000.50           --       60,000.50     0.08%
Alyce Craddock                                 17,143              --       60,000.50           --       60,000 50     0.08%
Greg Koonsman                                   8,571              --       29,998.50           --       29,998.50     0.04%
Jon O'Sullivan                                  8,571              --       29,998.50           --       29,998.50     0.04%
W. Glenn Bradham, M.D.                          7,500              --              --    30,000.00       30,000.00     0.03%
Maria I. Perales, M.D.                         15,000              --              --    60,000.00       60,000.00     0.07%
Eddie Joe Reddick, M.D.                        25,000              --              --   100,000.00      100,000.00     0.11%
James Branon repurchase                       (5,000)              --     (17,500.00)           --     (17,500.00)    -0.02%
Donald E. Steen cancellation of Cert. 31           --              --              --           --              --     0.00%
Marcus Anthony Steen Trust                         --              --              --           --              --     0.00%
Michelle Ann Steen Trust                           --              --              --           --              --     0.00%
Donald E. Steen                                    --              --              --           --              --     0.00%
D. McDonald repurchase -Cert #36             (75,000)    (150,000.00)              --           --    (150,000.00)    -0.34%
D. McDonald repurchase -Cert #83             (25,000)     (50,000.00)              --           --     (50,000.00)    -0.11%
D. McDonald repurchase -Cert #112             (5,509)              --     (19,281 50)           --     (19,281.50)    -0.03%
D. McDonald repurchase -Cert #142             (1,991)              --      (6,968.50)           --      (6,968.50)    -0.01%
S. Nelson repurchase -Cert# 35               (37,500)     (75,000.00)                           --     (75,000.00)    -0.17%
S. NeIson repurchase -Cert #84               (12 500)     (25 000.00)                           --     (25,000.00)    -0.06%
William O. Fitzpatrick                         21,428              --       74,998.00           --       74,998.00     0.10%
                                           ----------   -------------   -------------   ----------   -------------
                                           21,845,357   25,263,146.00   32,081,994.00   190,000.00   57,535,140.00   100.00%
</TABLE>

<PAGE>

United Surgical Partners International, Inc.
Ownership of Series A Preferred Shares

<TABLE>
<CAPTION>

                                         Certificate     Series A        Funded 7/98        Series A        Funded 9/98
                                           Number    Preferred Shares   @ $1,000/Share  Preferred Shares   @ $1,000/Share
                                           ------    ----------------   --------------  ----------------   --------------
<S>                                      <C>                    <C>        <C>                     <C>         <C>
Welsh, Carson Anderson & Stowe VII, L.P.                                                           4,722       $4,722,000
WCAS Healthcare Partners, L.P.                                                                        71           71,000
Patrick J. Welsh                                                                                      57           57,000
Russell L. Carson                                                                                     57           57,000
Bruce K. Anderson                                                                                     57           57,000
Richard H. Stowe                                                                                      10           10,000
Andrew M. Paul                                                                                        10           10,000
Thomas E. McInerney                                                                                   30           30,000
Laura VanBuren                                                                                         2            2,000
Robert A. Minicucci                                                                                   10           10,000
Anthony deNicola                                                                                       4            4,000
Rudolph E. Rupert                                                                                      2            2,000
Paul B. Queally                                                                                        8            8,000
D. Scott Mackesy                                                                                       2            2,000
Kenneth Melkus                                                                                         8            8,000
M. Robert Knapp Trust U/A DTD 8/31/90                              60          60,000
Calver Fund, Inc.                                                 120         120,000
James Ken Newman                                                  120         120,000
NGKE / USPI Partners                                              120         120,000
L&W Co.                                                            60          60,000
Norman Brownstein                                                  90          90,000
William Wilcox                                                     60          60,000
Paul Whitman                                                      120         120,000
Rivid LLC                                                          90          90,000
CGJR II, L.P.                                                      77          77,000
CGJR / MF III, L.P.                                                43          43,000
Patrick McMullan                                                   60          60,000
Craig Callen                                                       60          60,000
Lawrence Lavine                                                    30          30,000
David Dennis                                                       30          30,000
Michael R.  Nicolais  & Jane L.
Nicolais, as tenants in common                                     30          30,000
Tom C. Davis                                                       30          30,000
                                                     ----------------   -------------   ----------------   --------------
                                                                1,200      $1,200,000              5,050       $5,050,000

<CAPTION>
                                         ---------------------------------
                                              TOTAL SHARES OUTSTANDING
                                         ---------------------------------
                                             Series A       Funded 10/98       Series A
                                         Preferred Shares    $1,000/Share   Preferred Shares   @ $1,000/Share
                                         ----------------   -------------   ----------------   --------------
<S>                                                <C>        <C>                     <C>         <C>
Welsh, Carson Anderson & Stowe VII, L.P.           23,328     $23,328,000             28,050      $28,050,000
WCAS Healthcare Partners, L.P.                        351         351,000                422          422,000
Patrick J. Welsh                                      282         282,000                339          339,000
Russell L. Carson                                     282         282,000                339          339,000
Bruce K. Anderson                                     282         282,000                339          339,000
Richard H. Stowe                                       49          49,000                 59           59,000
Andrew M. Paul                                         49          49,000                 59           59,000
Thomas E. McInerney                                   148         148,000                178          178,000
Laura VanBuren                                         10          10,000                 12           12,000
Robert A. Minicucci                                    49          49,000                 59           59,000
Anthony deNicola                                       20          20,000                 24           24,000
Rudolph E. Rupert                                      10          10,000                 12           12,000
Paul B. Queally                                        40          40,000                 48           48,000
D. Scott Mackesy                                       10          10,000                 12           12,000
Kenneth Melkus                                         40          40,000                 48           48,000
M. Robert Knapp Trust U/A DTD 8/31/90                                                     60           60,000
Calver Fund, Inc.                                                                        120          120,000
James Ken Newman                                                                         120          120,000
NGKE / USPI Partners                                                                     120          120,000
L&W Co.                                                                                   60           60,000
Norman Brownstein                                                                         90           90,000
William Wilcox                                                                            60           60,000
Paul Whitman                                                                             120          120,000
Rivid LLC                                                                                 90           90,000
CGJR II, L.P.                                                                             77           77,000
CGJR / MF III, L.P.                                                                       43           43,000
Patrick McMullan                                                                          60           60,000
Craig Callen                                                                              60           60,000
Lawrence Lavine                                                                           30           30,000
David Dennis                                                                              30           30,000
Michael R.  Nicolais  & Jane L.
Nicolais, as tenants in common                                                            30           30,000
Tom C. Davis                                                                              30           30,000
                                         ----------------   -------------   ----------------   ------------
                                                   24,950     $24,950,000             31,200      $31,200,000
</TABLE>

<PAGE>

United Surgical Partners International, Inc.
Ownership of Common Stock

<TABLE>
<CAPTION>
                              ------------------------------------------------------------
                                          Total Shares Outstanding at 02/29/00
                              ------------------------------------------------------------
                                                  Value Common Stock
                              ------------------------------------------------------------
                              Common     @ $3.5/     @ $4.00/
                              Shares     Share        Share         Total            %
                              ------------------------------------------------------------
<S>                          <C>       <C>          <C>          <C>               <C>
John J. Wellik                10,000    35,000.00         0.00    35,000.00          7.93%
Johnny Bond                   28,571    99,998.50         0.00    99,998.50         22.66%
LuAnn Brown                   17,142    59,997.00         0.00    59,997.00         13.60%
Alex Bennett                   3,571    12,498.50         0.00    12,498.50          2.83%
Earl Reed, III          (A)   14,286    50,001.00         0.00    50,001.00         11.33%
Margaret Orman                 6,250         0.00    25,000.00    25,000.00          4.96%
Brett Brodnax                 25,000         0.00   100,000.00   100,000.00         19.83%
Bob Thunberg                   2,500         0.00    10,000.00    10,000.00          1.98%
Wesley Chick                  12,500         0.00    50,000.00    50,000.00          9.92%
Laura James                    3,750         0.00    15,000.00    15,000.00          2.97%
James Jackson                  2,500         0.00    10,000.00    10,000.00          1.98%
                             -------   ----------   ----------   ----------        -------
                             126,070   257,495.00   210,000.00   467,495.00        100.00%

                        (A)
</TABLE>

<PAGE>

United Surgical Partners International, Inc.
Ownership of Series B Preferred Shares

<TABLE>
<CAPTION>
                                                                        ---------------------------------
                                                                            TOTAL SHARES OUTSTANDING
                                                                        ---------------------------------
                                                                                      As of 2/29/00
                                                                        ---------------------------------
                      Certificate       Series B       Issued 7/31/98       Series B
                         Number     Preferred Shares   @ $1,000/Share   Preferred Shares   @ $1,000/Share
                         ------     ----------------   --------------   ----------------   --------------
<S>                        <C>                 <C>          <C>                    <C>         <C>
Edward W. Karrels          1                   1,420        1,420,000              1,420       $1,420,000
Michael W. Barton          2                     981          981,000                981         $981,000
Jeffrey L. Stockard        3                     196          196,000                196         $198,000
Alice J. Charron           5                       8            8,000                  8           $8,000
Charles Morton             6                      42           42,000                 42          $42,000
David Gaw                  8                      48           48,000                 48          $48,000
Sandra Holshouser          9                      21           21,000                 21          $21,000
                                    ----------------   --------------   ----------------   --------------
                                               2,716       $2,716,000              2,716        2,716,000
</TABLE>

<PAGE>

                                SCHEDULE 2.04(b)

                         Rights, Warrants, Options, Etc.

      1. The Company's Board of Directors and stockholders have adopted the
Stock Option Plan, which authorizes the grant of stock options covering up to
4,250,000 shares of Common Stock There are presently outstanding under the Stock
Option Plan stock options covering a total of 2,743,300 shares of Common Stock
at option prices ranging from $2.00 per share to $5.00 per share.

      2. Pursuant to the Certificate of Amendment to the Company's Certificate
of Incorporation filed on July 30, 1998 in connection with the merger of Health
Horizons, Inc into the Company, the Company...is required to redeem any or all
outstanding shares of its Series B Convertible Preferred Stock at the request of
the respective holders of such shares given at any time on or after July 31,
2000. The redemption price will be $1,000 per share plus accrued but unpaid
dividends.

      3. The Company's outstanding shares of Series B Convertible Preferred
Stock are convertible into Class A Common Stock at the election of the
respective holders of such shares at any time on or after July 31, 2000 at a
conversion price for the Class A Common Stock equal to the greater of $2.00 per
share or the fair market value per share (as determined in good faith by the
Company's Board of Directors) at the time of conversion.

      4. Under the Company's Asset Purchase Agreement with HealthFirst
Management, L.L.C., the sellers in that transaction have the option to require
the Company to make up to 20% of any "earn-out" payments that the Company is
obligated to pay under said Agreement in shares of the Company's Class A Common
Stock, valued at the greater of $4.00 per share or the fair market value per
share of such stock at the time that payment is due. Since the maximum total
earn-out payments are approximately $2,000,000, the maximum number of the shares
that the Company can be required to issue pursuant to this provision is
approximately 100,000 ($2,000,000 x 20% divided by $4.00).

      5. On June 1, 1999, the Company issued its $3,287,234 Convertible
Subordinated Promissory Note to Baylor Health Services ("Baylor"). This Note is
convertible into Class A Common Stock at a conversion price of $3.50 per share.
Under the Contribution and Purchase Agreement, dated May 11, 1999, with Baylor,
the Company could become obligated to issue up to $2,601,232 of additional
Convertible Subordinated Promissory Notes to Baylor.

      6. In connection with the Company's $25,000,000 Revolving Credit Agreement
with Chase Bank of Texas, and in consideration for the guaranty of such
indebtedness provided by WCAS VII, the Company issued its Stock Purchase
Warrant, dated June 18, 1999, entitling WCAS VII to purchase up to a maximum of
800,000 shares of Class A Common Stock at a price of $.01 per share at any time
on or prior to June 18, 2009.

      7. In connection with the Company's acquisition of the stock of Texas
Outpatient Surgicare Center, Inc. (the General Partner of TOPS Specialty
Hospital, Ltd.), the Company issued a Common Stock Purchase Warrant, dated as of
July 1, 1999, entitling Giasurg, LLP to purchase up to a maximum of 100,000
shares of the Company's Common Stock at a price of

<PAGE>

$4.00 per share at any time prior to July 1, 2004, subject to earlier
termination if Giasurg, LLP or any of its affiliates breaches the noncompetition
covenant included in the Common Stock Purchase Warrant.

<PAGE>

                                  SCHEDULE 2.05

                             Governmental Approvals

      1. If the Purchasers exercise their rights pursuant to Section 4 of the
Amended and Restated Registration Rights Agreement to require the Company to
register any portion of their Company shares, the Company will be required to
make filings under applicable federal and state securities laws in order to
perform its obligations.

      2. The Company may file an SEC Form D following the Closing.

<PAGE>

                                  SCHEDULE 2.06

                              Financial Statements

1.    Audited 1998 financial statements

2.    Unaudited 1999 financial statements

<PAGE>

                                                                   Schedule 2.06

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.

                                AND SUBSIDIARIES

                        Consolidated Financial Statements

                                December 31, 1998

                    With Independent Auditors' Report Thereon

<PAGE>

                          Independent Auditors' Report

The Board of Directors
United Surgical Partners International. Inc.:

We have audited the accompanying consolidated balance sheet of United Surgical
Partners International. Inc. and subsidiaries as of December 3 1, 1998, and the
related consolidated Statements of operations and comprehensive income (loss),
stockholders' equity, and cash flows for the period from February 27, 1998
(inception) through December 31, 1998. These consolidated financial statements
are the responsibility of Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of United Surgical
Partners International, Inc. and subsidiaries as of December 31, 1998, and the
results of their operations and their cash flows for the period from February
27, 1998 (inception) through December 31. 1998 in conformity with generally
accepted accounting principles.

April 29, 1999, except as to Note 15
         which is as of September 1, 1999

See accompanying notes consolidated financial statements

                                       1
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                           Consolidated Balance Sheet

                                December 31, 1998

                                     Assets

Cash and cash equivalents                                         $   4,964,751
Restricted cash (note 14)                                            13,100,000
Short-term investments                                                2,782,000
Patient receivables, net of allowance for doubtful
  accounts of $l,430,824                                              8,502,544
Other receivables                                                     1,343,365
Short-term notes receivable                                             902,828
Inventories of supplies                                               1,464,461
Prepaids and other current assets                                      520,.417
                                                                  -------------

         Total current assets                                        33,580,366
                                                                  -------------

Property and equipment, net (note 4)                                 40,581,311
Investments in affiliates (note 2)                                    3,155,826
Intangible assets, net of accumulated amortization
  of $385,32l (note 3)                                               45,574,241
Other long-term investments                                           1,221,000
Other assets, net of accumulated amortization of $298.438               679,658
                                                                  -------------

         Total assets                                             $ 124,792,402
                                                                  -------------

Liabilities and Stockholders' Equity
Accounts payable                                                      7,068,460
Accrued salaries and benefits                                           842,784
Current portion of long-term debt (note 6)                            4,437,107
Other accrued expenses                                                2,695,444
Deferred tax liability, net                                              47,000
                                                                  -------------

         Total current liabilities                                $  15,090,795
                                                                  -------------

Long-term debt, less current portion (note 6)                         7,238,189
Other long-term liabilities                                           3,576,970
Deferred tax liability, net                                           3,439,888
                                                                  -------------

         Total liabilities                                           29,346,042

Minority interests (note 2)                                           8,999,050

Redeemable preferred stock (note 7):
         Series A, $0.01 par value per share:
           31,200 shares authorized, issued and outstanding          11,571,465
         Series B, $0.01 par value per share:
           2,716 shares authorized, issued and outstanding            2,772,585
Commitments and contingencies (note 14)

Stockholders' equity:
     Common stock (note 8)
         C1ass A shares, $0.01 par value:
              30,000,000 shares authorized:
              21,938,929 shares issued and outstanding                  219,189
Other, $0.01 par value; 40,000,000 shares
  authorized; none issued                                                    --
Additional paid in capital                                           56,966,454
Notes receivable from employees (note 5)                             (1,050,000)
Accumulated other comprehensive loss, net of tax                       (104,285)
Accumulated deficit                                                  (3,928,298)
                                                                  -------------

         Total stockholders; equity                                   2,103,260
                                                                  -------------

         Total liabilities and stockholders' equity               $ 124,792,402
                                                                  =============

See accompanying notes consolidated financial statements
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

      Consolidated Statement of Operations and Comprehensive Income (Loss)

       Period from February 27, 1998 (inception) through December 31, 1998

Revenue:

     Net patient service revenue                                   $ 19,116,092
     Equity in loss of unconsolidated affiliates                        (39,822)
     Management services revenue                                        223,011
     Other income                                                     1,272,790
                                                                   ------------

                  Total revenue                                      20,572,071
                                                                   ------------

Expenses:

     Salaries, benefits and other employee costs                     10,020,124
     Supplies                                                         3,675,890
     Medical services                                                 3,929,676
     Other operating expenses                                         2,893,838
     Provision for doubtful accounts                                    235,725
     General and administrative                                       2,032,413
     Depreciation and amortization                                    2,015,123
                                                                   ------------

                  Total operating expenses                           24,802,789
                                                                   ------------

                  Operating loss                                     (4,230,718)

Non-operating income (loss):
     Minority interest in loss of consolidated subsidiaries              23,030
     Interest income                                                    721,530
     Interest expense                                                  (496,874)
Other                                                                  (246,378)
                  Total non-operating income                              1,308
                                                                   ------------

                  Loss before income taxes                           (4,229,410)

Income tax benefit (note II)                                            301,112
                                                                   ------------

                  Net loss                                           (3,928,298)

Other comprehensive loss. before tax:
     Foreign currency translation adjustments                          (160,438)

     Income tax benefit related to other comprehensive loss              56,153
                                                                   ------------

                  Comprehensive loss                               $ (4,032,583)
                                                                   ============

See accompanying notes consolidated financial statements
<PAGE>

                   UNITED SURGICAL PARTNERS INTERNALTION, INC.
                                AND SUBSIDIARIES

                 Consolidated Statement of Stockholders' Equity

       Period From February 27, 1998 (inception) through December 31, 1998

<TABLE>
<CAPTION>
                                             Common Stock
                                       ------------------------                   Note       Accumulated
                                                                  Additional   Receivable      Other
                                                                   Paid-in         From     Comprehensive  Accumulated
                                          Shares     Par Value     Capital      Employees      Income        Deficit       Total
                                       -----------  -----------  -----------   -----------   -----------   -----------  -----------
<S>                                     <C>         <C>           <C>           <C>             <C>         <C>          <C>
Balance, February 27, 1998 (inception)          --  $        --           --            --            --            --           --
Issuance of common stock                21,938,929      219,389   57,394,504    (1,050,000)           --            --   56,653,893
Accrued Dividends on preferred stock            --           --     (428,050)           --            --            --     (428,050)
Net loss                                        --           --           --            --            --    (3,928,298)  (3,928,298)
Foreign currency translation                    --           --           --            --      (104,285)           --     (104,285)
         adjustments
                                       -----------  -----------  -----------   -----------   -----------   -----------  -----------
Balance, December 31, 1998              21,938,929  $   219,389   56,966,454    (1,050,000)     (104,285)   (3,928,298)  52,103,260
                                       ===========  ===========  ===========   ===========   ===========   ===========  ===========
</TABLE>

See accompanying notes to consolidated financial statements
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                      Consolidated Statement of Cash Flows

       Period from February 27, 1998 (inception) through December 31, 1998

<TABLE>
<S>                                                                                        <C>
Cash flows from operating activities:
     Net loss                                                                              $ (3,928,298)
         Adjustments to reconcile net loss to net cash provided by
              operating activities:
              Provision for doubtful accounts                                                   235,725
              Depreciation and amortization                                                   2,015,123
              Deferred income taxes                                                            (301,112)
              Equity in loss of affiliates                                                       39,822
              Minority interest in loss of consolidated subsidiaries                            (23,030)
              Increases (decreases) in cash from changes in operating
                assets and liabilities, net of effects from purchases of new businesses:
                  Patient receivables                                                           118,590
                  Other receivables (1.036.3(17)                                             (1,046,467)
                  Inventories of supplies. prepaids and other assets                            603,553
                  Accounts payable and accrued expenses 1,001,133                             1,001,133
                  Other long-term liabilities                                                 1,906,083
                                                                                           ------------
                           Net cash provided by operating activities                            621,122
                                                                                           ------------

Cash flows from investing activities:
     Purchase of new businesses, net of cash received                                       (66,216,330)
     Purchases of property and equipment                                                     (3,948,751)
     Proceeds from sale of investments                                                          424,659
     Cash placed in escrow                                                                  (13,100,000)
                                                                                           ------------

                           Net cash used in investing activities                            (82,840,422)
                                                                                           ------------
Cash flows from financing activities:
     Proceeds from long-term debt                                                             1,493,337
     Payments on long-term debt                                                                (245,673)
     Proceeds from issuance of common stock                                                  54,750,747
     Proceeds from issuance of redeemable preferred stock                                    31,200,000
     Distribution on investments in affiliates                                                  (50,000)
                                                                                           ------------

                           Net cash provided by financing activities                         87,148,411
                                                                                           ------------

Effects of exchange rate changes on cash                                                         35,640
                                                                                           ------------
Net increase in cash and cash equivalents                                                     4,964,761
Cash and cash equivalents at February 27, 1998 (inception)                                           --

Cash and cash equivalents at end of period                                                 $  4,964,761
Supplemental information:
     Interest paid                                                                         $    473,046
                                                                                           ============
     Non-cash transactions:

         Sale of common stock for notes redeliverable from employees                       $  1,050,000
                                                                                           ============
         Common stock issued for purchases of new business                                 $  1,813,146
                                                                                           ============
         Preferred stock issued for purchase of new business                               $  2,716,000
                                                                                           ============
         Accrued dividends on preferred stock                                              $    428,050
                                                                                           ============
</TABLE>

See accompanying notes consolidated financial statements

<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

(1)   Summary of Significant Accounting Policies and Practices

      (a)   Description of Business

            United Surgical Partners International, Inc. and subsidiaries (USPI
            or the Company), a Delaware Company was formed in February 1998 for
            the main purpose of ownership and operation of hospitals, outpatient
            surgical centers and related businesses in the United States and
            Europe. At December 31, 1998, USPI, headquartered in Dallas, Texas,
            operated eleven surgical centers in the United States. Of these
            eleven centers, USPI consolidates the results of two and owns a
            minority equity interest in six which are accounted for under the
            equity method and holds no ownership interest in the remaining three
            centers which are operated by USPI under management contracts. In
            addition United Surgical Partners Europe, S.L. (USPE), a company
            incorporated in Spain and majority-owned by USPI, managed and owned
            a majority interest in four hospitals in Spain at December 31, 1998.

            The Company is subject to changes in government legislation that
            could impact Medicare. Medicaid and foreign government reimbursement
            levels and is also subject to increased levels of managed care
            penetration and changes in payor patterns that may impact the level
            and timing of payments for services rendered.

            The Company maintains its books and records on the accrual basis of
            accounting.

      (b)   Translation of Foreign Currencies

            The financial statements of USPE are measured in local currency and
            then translated into U.S. dollars. All assets and liabilities have
            been translated using the current rate of exchange at the balance
            sheet date. Results of operations have been translated using the
            average rates prevailing throughout the year. Translation gains or
            losses resulting from the changes in the exchange rates are
            accumulated in a separate component of stockholders' equity.

      (c)   Principles of Consolidation

            The consolidated financial statements include the financial
            statements of USPI and its wholly-owned and majority-owned
            subsidiaries. Significant investments in other affiliated companies
            are generally accounted for using the equity method. All significant
            intercompany balances and transactions have been eliminated in
            consolidation.

      (d)   Use of Estimates

See accompanying notes consolidated financial statements

                                       2
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

            The preparation of financial statements in conformity with generally
            accepted accounting principles requires management of USPI to make a
            number of estimates and assumptions relating to the reporting of
            assets and liabilities and the disclosure of contingent assets and
            liabilities at the date of the financial statements and reported
            amounts of revenues and expenses during the reporting period. Actual
            results could differ from those estimates.

      (e)   Cash Equivalents and In vestments

            For purposes of the statement of cash flows, USPI considers all
            highly liquid debt instruments with original maturities of three
            months or less to be cash equivalents.

            Short-term investments consist primarily of debt and equity
            securities and are held greater than three months and less than one
            year Securities are classified as available for sale and are
            recorded at fair value.

            Investments in unconsolidated companies owned between 20% and 50%
            are recorded on an equity basis.

            Investments in companies less than 20% owned, and for which the
            Company does not exercise significant influence, are carried at
            cost.

      (f)   Inventories of Supplies

            Inventories of supplies are stated at cost which approximates
            market.

      (g)   Property and Equipment

            Property and equipment are stated at cost. Depreciation is
            calculated on the straight-line method over the estimated useful
            lives of the assets. Upon retirement or disposal of assets, the
            asset and accumulated depreciation accounts are adjusted
            accordingly, and any gain or loss is reflected in earnings or loss
            of the respective period. Maintenance costs and repairs are expensed
            as incurred; significant renewals and betterments are capitalized.

      (h)   Intangible Assets

            Intangible assets consist of costs in excess of net assets acquired
            (goodwill), non-compete contracts, and costs associated with the
            purchase of management contracts. Intangibles; except goodwill, are
            amortized over the life of the associated contracts.

See accompanying notes consolidated financial statements

                                       2
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

            Goodwill is amortized on a straight-line basis over the expected
            periods to be benefited, generally 25 years

      (i)   Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed
            Of

            Long-lived assets, certain identifiable intangibles, and goodwill
            are reviewed for impairment whenever events or changes in
            circumstances indicate that the carrying amount of an asset, or
            related groups of assets, may not be fully recoverable from
            estimated future cash flows. The assessment of the recoverability of
            goodwill will be impacted if estimated future operating cash flows
            are not achieved. In the event of impairment, measurement of the
            amount of impairment may be based on appraisal, market values of
            similar assets or estimates of future discounted cash flows
            resulting from use and ultimate disposition of the asset.

      (j)   Fair Value of Financial Instruments

            The carrying amounts of cash and cash equivalents, short-term
            investments, accounts receivable, current portion of long-term debt,
            accounts payable and accrued expenses approximate fair value because
            of the short maturity of these instruments. The carrying values of
            long-term investments (excluding investments accounted for by the
            equity method) and long-term debt are based on quoted market prices
            and are not materially different from the estimated fair values of
            these instruments.

      (k)   Revenue Recognition

            Revenue consists primarily of net patient service revenues which is
            based on the facilities' established billing rates less allowances
            and discounts, principally for patients covered under contractual
            programs.

      (l)   Equity in Earnings (Loss) of Unconsolidated Affiliates

            Equity in earnings (loss) of unconsolidated affiliates consist of
            the Company's share of the profits or losses generated from its
            equity investment in six ambulatory surgery centers. Because these
            operations are central to the Company's business strategy, equity in
            earnings (loss) is classified as revenue in the accompanying
            statement of operations.

      (m)   Income Taxes

            The Company accounts for income taxes under the asset and liability
            method. Deferred tax assets and liabilities are recognized for the
            future tax consequences

See accompanying notes consolidated financial statements

                                       3
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

            attributable to differences between the financial statement carrying
            amounts of existing assets and liabilities and their respective tax
            bases and operating loss and tax credit carryforwards. Deferred tax
            assets and liabilities are measured using enacted tax rates expected
            to apply to taxable income in the years in which these temporary
            differences are expected to be recovered or settled. The effect on
            deferred tax assets and liabilities of a change in tax rates is
            recognized in income in the period that includes the enactment date.

      (n)   Stock Option Plan

            Time Company applies the intrinsic value-based method of accounting
            prescribed by Accounting Principles Board Opinion No. 25, Accounting
            for Stock Issued to Employees, and related interpretations in
            accounting for its stock options. As such, USPI does not record
            compensation expense because the Company issues options whereby the
            option exercise price equals the current market price of the
            underlying stock on the date of grant.

      (o)   Commitments and Contingencies

            Liabilities for loss contingencies arising from claims, assessments,
            litigation, fines and penalties, and other sources arc recorded when
            it is probable that a liability has been incurred and the amount of
            the assessment can be reasonably estimated.

      (p)   Comprehensive Income

            Comprehensive income consists of net income (loss) and foreign
            currency translation adjustments, and is presented in the
            consolidated statement of operations and comprehensive income
            (loss).

(2)   Acquisitions

      On April 30, 199$, USPE purchased 100% of the issued and outstanding stock
      of Columbia International Holdings, Inc. (CIH), an unrelated Delaware
      corporation, for approximately $7.3 million in cash. As a result of the
      purchase of CIH, USPI obtained ownership of 79% and 71%, respectively, of
      the issued and outstanding stock of Instituto Dexeus, S.A., the owner of a
      hospital in Spain, and Diagnosticos y Tratamientos Medicos, S.A., the
      owner of a group of clinics in Spain, both Spanish corporations. The total
      purchase price for the acquisitions was allocated to the purchased assets
      and liabilities based on their estimated fair values and approximated the
      fair value of the net assets acquired. Through this acquisition, USPI also
      obtained equity interests, ranging from 7% to 15% in five additional
      Spanish corporations which own healthcare related operations in Spain.
      USPI subsequently

See accompanying notes consolidated financial statements

                                       4
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

      contributed the Instituto Dexeus hospital plus $250,000 in cash for a
      majority ownership stake in USPE. At December 31, 1998, USPI owned
      approximately 86% of USPE. The remaining approximate 14% was held by
      Hospital Management Team (HMT), a hospital management company incorporated
      in Spain.

      On July 29, 1998, USPI acquired 100% of the stock of Health Horizons, Inc.
      (HHI), an unrelated Delaware corporation, for approximately $7.5 million
      consisting of $3 million in cash, $2.7 million in USPI Series B preferred
      stock and $1.8 million in USPI Class A common stock. As a result f the
      acquisition, USPI acquired a 66% interest in an ambulatory surgery center
      joint venture located in Decatur, Alabama and interests ranging from 35%
      to 50% in three additional ambulatory surgery center joint ventures
      located in Nashville, Tennessee, Kansas City, Missouri, and Murfreesboro,
      Tennessee. The total purchase price was allocated to the purchased assets
      and liabilities based on their estimated fair values and exceeded the fair
      value of the net assets acquired by approximately $7.3 million.

      On August 3, 1998, USPI and St. Rose Dominican Hospital, a not-for-profit
      hospital located in Henderson, Nevada entered into an operating agreement
      to organize a Nevada limited liability company, Parkway Surgery Center,
      LLC. Each party contributed assets totaling approximately $1.9 million for
      a 50% ownership interest in the Parkway Surgery Center.

      On October 5, 1998, USPE purchased 80% of the issued and outstanding stock
      of Clinica Maternal Nuestra Senora de la Esperanza, S.A., a Spanish
      corporation, for approximately $2.4 million in cash. The total purchase
      price was allocated to the purchased assets and liabilities based on their
      estimated fair values and exceeded the fair value of the net assets
      acquired by approximately $1.7 million (using the exchange rate in effect
      at the date of purchase).

      On October 15, 1998, USPI purchased a 70% interest in the assets used to
      operate the University Surgical Center in Winter Park, Florida (Assets)
      for approximately $5.7 million in cash and assumed approximately $200,000
      of liabilities of University Surgical Center, Inc (Seller), an unrelated
      Florida corporation. The Assets were then contributed to a newly formed
      Florida limited partnership, University Surgery Center, Ltd (limited
      partnership) in exchange for general and limited partnership interests.
      The Seller contributed the remaining 30% of assets to the Limited
      Partnership in exchange for its 30% limited partnership interest. The
      total purchase price was allocated to the purchased assets and liabilities
      based on their estimated fair values and exceeded the fair value of the
      net assets acquired by approximately $5.2 million.

      On October 16, 1998, USPI purchased, through USPE, 100% of the issued and
      outstanding stock of Clinica Sagrado Corazon, S.A., a hospital and Spanish
      corporation, and interests ranging from 55% to 100% in ten related
      companies providing a variety of medical services,

See accompanying notes consolidated financial statements

                                       5
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

      for approximately $27.5 million in cash. The total purchase price was
      allocated to the purchased assets and liabilities based on their estimated
      fair values and exceeded the fair value of the net assets acquired by
      approximately $17.8 million (using the exchange rate in effect at the date
      of purchase).

      On November 5, 1998,USPI purchased, through USPE, 62% of the issued and
      outstanding stock of Instituto Policlinico Santa Teresa, S.A., a hospital
      and Spanish corporation, which also owns 60% of Resonancia Nuclear
      Magnetica, S.A., a Spanish corporation that provides magnetic resonance
      imaging services. The total purchase price of approximately $8.8 million
      was allocated to the purchased assets and liabilities based on their
      estimated fair values and exceeded the fair value of the net assets
      acquired by approximately $5.3 million (using the exchange rate in effect
      at the date of purchase).

      On December 18, 1998, USPI entered into an asset purchase agreement to
      purchase certain management agreements related to the operations of five
      ambulatory surgery centers located in the Dallas and Ft. Worth, Texas
      metropolitan area (HealthFirst Transaction). In addition. USPI acquired a
      20% interest in two of the five ambulatory surgery centers (Equity
      Centers). The total cost of $8.2 million, all paid to unrelated parties,
      exceeded the fair value of the identifiable net assets acquired by $7.6
      million of which $5.5 million was allocated to the management agreements
      and $2.1 million was allocated to goodwill. USPI is also obligated to
      offer (the Buyup) to purchase newly issued partnership units that would
      increase USPI's ownership interest by 40% in each of the Equity Centers at
      a price based upon the financial performance of the centers. Successful
      completion of any or all of the Buyup further obligates USPI to make
      additional payments to the parties who sold USPI the equity interests.

      The terms of certain of USPI's acquisition agreements provide for
      additional consideration to be paid to or received from the seller based
      on certain financial targets for the acquired facilities. The potential
      for additional consideration ranged from USPI receiving a return of $1
      million of amounts previously paid to the sellers to a maximum of USPI
      paying up to an additional $5.5 million. Additional consideration paid or
      received, if any, will be paid or received in cash and will be recorded as
      an increase or decrease to goodwill at the time of payment or receipt.
      There were no payments made or received under the agreements during 1998.

      The acquisitions of majority interests referred to above were accounted
      for under the purchase method of accounting, and accordingly, the
      accompanying statement of operations and comprehensive income (toss) does
      not include any revenues or expenses related to these acquisitions prior
      to the respective closing dates. The unconsolidated ownership interests
      acquired are accounted for under the equity method of accounting.
      Following are the

See accompanying notes consolidated financial statements

                                       6
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

      unaudited pro forma results for the year ended December 3l, 1998 as if the
      consolidated acquisitions occurred on February 27, 1998 (inception):

            Net operating revenues                       $43,629,439
            Net loss, before income taxes                 (3,538,691)

      These unaudited pro forma results have been prepared for comparative
      purposes only. The pro forma results do not purport to be indicative of
      the results of operations which would have actually resulted had the
      acquisitions been in effect on February 27, 1998, nor are they necessarily
      indicative of the results of operations that may be achieved in the
      future.

(3)   Intangible Assets

      At December 31, 1998, intangible assets consisted of the following:

                                               Estimated
                                               useful lives
                                               ------------
      Goodwill                                 25 years       $ 40,388,455
      Management contracts                     5--17 years       5,471,107
      Non-compete contracts                    5 years             200,000

                                                                46,059,562
      Less accumulated amortization                              (485.321)
                                                              ------------

      Net intangible assets                                   $ 45,574.241
                                                              ============

(4)   Property and Equipment

      At December31, 1998, property and equipment consisted of the following:

                                               Estimated
                                               useful lives
                                               ------------
      Land and land improvements                   --           $    738,000
      Buildings and leasehold improvements        7--50 years     28.612.582
      Equipment                                   3--12 years      9,071.272
      Furniture and fixtures                      4--20 years      3,666,121
                                                                ------------
      Construction in progress                     --                 23,138
                                                                ------------

                                                                  42,111,113
                                                                ------------
      Less accunmulated depreciation
                                                                  (1,529,802)
                                                                ------------

                  No property and equipment                     $ 40,581,311
                                                                ============

See accompanying notes consolidated financial statements

                                       7
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

 (5)      Notes Receivable from Employees

         Notes receivable from employees resulted from purchases of common stock
         by employees. Accordingly, the notes are presented in the consolidated
         balance sheet as a deduction from stockholders' equity. Interest of 7%
         is due quarterly and principal payments are due May 1, 2002. Payment of
         the principal shall accelerate in the event of termination of
         employment, an initial public offering of common stock by the Company,
         or a change in control of the Company, as defined.

(6)      Long-term Debt

         Long-term debt consisted of the following at December31:

                                                                           1998
                                                                           ----
         Lines of credit with banks, unsecured, variable rates
            of interest ranging from MIBOR pIus 1% to M1BOR
            plus 3%.                                                $ 1,169,000
         Credit facilities with banks, unsecured, interest on
            fixed rate facilities ranging from 5.1% to 9.5% and
            interest on variable rate facility at MIBOR plus 0.85%.
            Substantially all principal due on September 30, 1999.    1,684,000
         7% Senior subordinated notes, subordinated to all senior
            indebtedness, due April 30, 2008, interest payable
            annually beginning April 30, 2000.                        1,493,337
         Loans due to the former owners of two subsidiaries,
            unsecured. Interest ranging from MIBOR plus 0.5% to
            MIBOR plus 1.5%. interest and principal due at
            maturity dates of October 2, 1999 and December
            31. 2001, respectively                                    2,103,000
         5.25% Mortgage note, payable in monthly installments
            of $21,350, including principal and interest with
            remaining principal due August 5, 2023, secured by
            land and building.                                        1,660,001)
         7.25% Mortgage note, payable in monthly installments
            of $27,000, including principal and interest with
            remaining principal due July 22, 200!. secured by
            land and building.                                          636,000
         Capital leases, secured by underlying equipment,
            interest ranging from 4,45% to 11.75%.                    1,889,851
         Other                                                        1,040,308
                                                                     11,675,496
            Less current portion                                     (4,437,107)
                                                                    -----------
                  Long-term debt, less current portion              $ 7,238,389
                                                                    ===========

See accompanying notes consolidated financial statements

                                       8
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

      The 7% senior subordinated notes are required to be repaid in the event of
      a change in control, as defined, MIBOR was 8 65% at December 31, 1998

      USPI has entered into a Securities Purchase Agreement which grants certain
      stockholders and note holders the right to obtain a specified amount of
      additional 7% senior subordinated notes aggregating not more than
      $20,120,000 in principal of which $1,493,337 had been issued at December
      31, 1993.

      The aggregate maturities of long-term debt for each of the five years
      subsequent to December 31, 1998 are as follows: 1999, $4,437,107; 2000,
      $3,079,219; 2001, $1,241,833; 2002, $619,000; 2003; $350,000; thereafter,
      $1,950,337.

(7)   Redeemable Preferred Stock, Series A and Series B

      The Company has authorized 3 1.200 shares of Series A redeemable preferred
      stock with a $.01 par value and authorized 2,716 shares of Series B
      redeemable preferred stock with a $.01 par value (collectively Preferred
      Stock). The Company may redeem some or all of the outstanding shares of
      preferred stock at any time for $1 000 per share plus accrued dividends
      The Company has a mandatory requirement to redeem all Preferred Stock on
      April 30, 2008 or upon an initial public offering of its common stock
      registered under the Securities Act of 1933, as amended, Additionally.
      preferred stockholders may choose to have their shares redeemed in the
      case of a change in control as defined. Shares of redeemed Preferred Stock
      are deemed retired. Preferred Stock has a stated liquidation preference of
      $1,000 plus accrued dividends and is senior to all common shares.
      Dividends are cumulative and accrue at an annual rate of $50 per share
      through April 30. 2000 and $75 per share thereafter. Accumulated dividends
      are non-interest bearing and accrue whether or not declared and whether or
      not funds are legally available for payment. As of December 31, 199$ the
      Company had issued 31,200 shares of Series A redeemable preferred stock
      for $31,200,000 and 2,716 shares of Series B redeemable preferred stock or
      $2,716,000, with accrued dividend; of $371,465 and $56,585, respectively.

      The holders of Series B redeemable preferred stock have the right at any
      time after the second anniversary of issuance to convert any such shares
      to Class A common stock. Each share of Series B redeemable preferred stock
      is converted by multiplying by I 000 with the result divided by the.
      greater of the base conversion price, currently $2 per share, or the fair
      market value of the Class A common stock, as determined by the Board of
      Directors.

(8)   Stockholders Agreement

      Employees and certain independent contractors holding common stock in the
      Company are bound by a Stockholders Agreement (Agreement), which
      restrict:; time to transfer or assign

See accompanying notes consolidated financial statements

                                       9
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

      Company common stock under certain circumstances and also contains certain
      repurchase rights,

      The Agreement terminates at the earlier of April 30. 2008. an initial
      public offering, the consummation of any salt. transfer or other
      disposition of substantially all the capital stock or assets of the.
      Company for cash, or with respect to any stockholder, the date on which
      such stockholder no longer owns any shares of capital stock.

(9)   Operating Leases

      The Company leases various office equipment and office space under a
      number of operating lease agreements, which expire at various times
      through the year 2008 Such leases do not involve contingent rentals, nor
      do they contain significant renewal or escalation clauses Office leases
      generally require the Company to pay all executory costs (such as property
      taxes, maintenance and insurance).

      Minimum future rental payments under noncancelable operating leases, with
      remaining terms in excess of one year as of December31, 1998, areas
      follows:

                        Years ended                    Operating
                        December 31,                     Leases
                        ------------                     ------

                            1999                      $ 1,260,007
                            2000                        1,269,850
                            2001                        1,239,420
                            2002                          868,292
                            2003                          872,092
                         Thereafter                     2,201,771
                                                      -----------
                                                      $ 7,711,432
                                                      ===========

      Total rent expense under operating leases was $538,792 for the period from
      February 27, 1998 (inception) through December31, 1998.

(10)  Related Party Transactions

      Several partners in a law firm that provides legal services to the Company
      are also partners in an entity that owns shares of the Company's stock.
      Legal 1~es related to those services were approximately $152,000 in 1998.

      A minority interest owner of HMT provided financial advisory services to
      USPE related to acquisitions. Fees related to these services were
      approximately $413,000 in 1998.

See accompanying notes consolidated financial statements

                                       10
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

      USPI has entered into agreements with certain majority and minority owned
      surgery center to provide management services. As compensation for these
      services, USPI charges time surgery centers management fees ranging from
      5% to 7% of net revenues, as defined. Amounts accrued under these
      agreements totaled approximately $223,000 at December 31. 1998.

      The Company held a note receivable at December 31. 1998 in the amount of
      $903,000 from HMT. In May 1999 HMT settled the note. by (I) transferring
      $510 000 in equity securities to the. Company and (2) paying $393,000 in
      cash to USPE in exchange for USPE the remaining $393,000 obligation to
      the. Company

      USPI has an agreement with HMT to manage. its hospitals in Spain. Total
      costs incurred by USPI under this arrangement were $2 180 87 4 in 1998.

(11)  IncomeTaxes

Income tax benefit attributable to income consists of:

                                                    Current      Deferred
                                                    -------      --------
         Year ended December 31, 1998:
            U.S. Federal                         $        --   $        --
            State and local                      $        --   $        --
            Foreign                              $        --   $  (301,112)
                                                 -----------
         Net tax benefit                         $             $  (301,112)
                                                 ===========   ===========

Income tax benefit differed from the amount computed by applying the U.S.
federal income tax rate of 34 percent to pretax income in fiscal year ending
December 31, 1998 as follows:

See accompanying notes consolidated financial statements

                                       11
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

                                                                   1998
                                                                   ----
            Computed "expected" tax benefit                        $(1,437,999)

            Increased (reduction) in income taxes resulting from:
                     Net operating loss carryforwards              20,944
                     Removal of 1% tax rate differential between
                        Spain and US                               (17,022)
                     Capitalized professional fees                 47,250
                     Goodwill                                      47,131
                     Increase in valuation allowance               362,166
                     Equity investment in foreign subsidiary       665,557
                     Other                                         10,861
                                                                   -----------
                              Total                                $ (301,112)
                                                                   ===========

      The tax effects of temporary differences that give rise to significant
      portions of the deferred tax assets and deferred tax liabilities at
      December 31, 1998 are presented below.

                                                                  1998
                                                                  ----
                     Deferred tax assets:
                        Net operating loss carryforwards          $540,458
                        Organization costs due to difference in   33,606
                          amortization lives
                         Basis difference in Start up Costs       155,383
                         Spanish Tax Credit                       518,112

                               Total deferred tax assets          1,247,559

                     Less valuation allowance                     (576,390)
                                                                  ---------
                               Net deferred tax assets            $671,169
                                                                  ========

                     Deferred tax liabilities:
                         Basis difference of acquisitions         $3,886,000
                         Capital Leases                           173,000
                         Unrealized gains                         82,000
                         Other                                    17,057
                                                                  ------

                               Total deferred tax liabilities     $4,158,057
                                                                  ==========

See accompanying notes consolidated financial statements

                                       12
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

      In assessing the reliability of deferred tax assets, management considers
      whether it is more likely than not that some portion or all of the
      deferred tax assets will be realized. The ultimate realization of deferred
      tax assets is dependent upon the generation of future taxable income
      during the periods in which those temporary differences become deductible.
      Management considers the scheduled reversal of deferred tax liabilities,
      projected future taxable income, and tax planning strategies in making
      this assessment. At December 31, 1998. USPI had net operating loss
      carryforwards for federal income tax purposes of $1,019,294, which arc
      available to offset Future federal taxable income, if' any, through 2018.
      In addition, USPI has $570,289 of net operating loss carryforwards. which
      are only available to reduce future federal taxable income related to the
      Health Horizons. Inc. acquisition. The valuation allowance which primarily
      reserves the net operating loss carryforwards. was increased by $362,166
      during the period.

(12)  Stock Option Plan

      On April 30, 1998, USPI adopted a stock option plan (the Plan) pursuant to
      which USP's Board of Directors may grant non-qualified or incentive stock
      options to selected employees, officers, and directors of the Company. The
      Plan authorizes grants of options to purchase up to 3.250.1)00 shares of
      par value $01 common stock. The Board of Directors or a designated
      committee shall have the sole authority to determine which employees
      receive grants, the type of grant to be received,. vesting period and all
      other option terms. Incentive stock options granted have an option price
      no less than 100% of the fair market value of time common stock on the
      date of grant with the term not to exceed ten years.

      At December 31, 1998, there were 966,700 shares available for grant under
      the Plan. The per share weighted-average fair value of stock options
      granted during 1998 was $0.85 on the date of grant using the Black Scholes
      option-pricing model, excluding a volatility assumption, with the
      following weighted-average assumptions: expected dividend yield 0%,
      risk-free interest rate of 6%, and an expected life of five years.

      USPI applies APB Opinion No. 25 in accounting for its Plan whereby options
      are granted at a price equal to the fair market value of the underlying
      stock on the date of grant. Accordingly, no compensation cost has been
      recognized for stock options granted in the accompanying financial
      statements. Had USPI determined compensation cost based on the fair value
      at the grant date for its stock options under SEAS No. 123, USPI's net
      loss would have resulted in the pro forma amounts indicated below:

                                          1998
                                          ----
            Net loss    As reported       $(3,928,298)
                        Pro Forma         (4129,306)

See accompanying notes consolidated financial statements

                                       13
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

Stock option activity during 1998 was as follows:

                                                                       Weighted-
                                                                       Average
                                                          Number of    Exercise
                                                          Shares       Price
                                                          ------       -----
           Balance at February 27, 1998 (inception)               --   $   --
                 Granted                                   2,283,300     2.80
                 Exercised                                                 --
                 Forfeited                                                 --
                 Expired                                                   --
           Balance at December 31, 1998                    2.283,300   $ 2.80
                                                           ---------   ------

      At December 31. 1998, the range of exercise prices and the
      weighted-average remaining contractual life of outstanding options were
      $2.00 - 55,00 and 9.6 years. respectively.

      At December 31, 1998, the number of exercisable options was 235,660 with a
      weighted average exercise price of $2.00.

(13)  Segment Disclosures

      The Company has adopted Statement of Financial Accounting Standards No.
      131, "Disclosures About Segments of an Enterprise and Related Information"
      (SFAS 131). SEAS 131 establishes standards for reporting information about
      operating segments in annual financial statements. The Company's business
      is the operation of hospitals, outpatient surgical centers and related
      businesses in the United State?'and Europe. The Company's chief operating
      decision maker, as that term is defined in the accounting standard,
      regularly reviews financial information about its hospitals and surgical
      centers for assessing performance and allocating resources both
      domestically and abroad. Accordingly, the Company's reportable segments
      consist of (1) U.S. based facilities and (2) European facilities.

            1998             U.S.            Europe        Total
            ----             ----            ------        -----
            Total revenues   5$ 1.920.071    18,652,000    20,572,071
                             ------------    ----------    ----------
            Operating loss   $ (1,849,844)   (2,380,874)   (4,230.718)
                             ------------    ----------    ----------
            Total assu.ts    $ 43,142,402    81,650,000    124,792,402
                             ------------    ----------    ----------

(14)  Commitments and Contingencies

      (a) Acquisition

See accompanying notes consolidated financial statements

                                       14
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

            On December 4. 199$. USPI entered into certain agreements with time
            shareholders of Day-Op Center of Long Island. Inc. (Day-Op Center)
            and Day-Op Management Company, Inc. (Day-Op Management), which arc
            awaiting regulatory approval State of New York. These agreements
            provide for the acquisition, by a newly created, wholly-owned
            subsidiary of USPI. of 100% of the common stock of Day-Op Management
            and certain tangible assets of Day-Op Center. in addition, USPI and
            the shareholders of Day-Op Center entered into a Consulting and
            Administrative Agreement by which the newly created subsidiary of
            USPI would provide certain administrative services to Day-Op Center
            in exchange for a monthly service 6e.

            These agreements, upon approval by the State at' New York. would
            become effective retroactive to December 1, 1998. No amounts or
            activity with respect to these pending agreements have been
            recognized in the accompanying financial statements. Approximately
            $13.1 million is being held in escrow pending state approval and is
            treated as restricted cash in the accompanying balance sheet.

      (b)   Financial Guarantees

            As of December 31. 1998, USPI had issued guarantees aggregating 53.9
            million on borrowings of unconsolidated affiliated companies. No
            amount has been accrued USPI's obligation tinder these guaranty
            arrangements.

            As of December 31. 1998, USPE had issued guarantees on certain
            acquisitions in the amount of $2.1 million. Short-term investments
            of approximately $722,000 and other long-term investments of
            approximately $1.1 million at December 31, 1998 have been pledged as
            security for these guarantees. USPE has also received guarantees in
            the amount of $2.9 million from the sellers of certain acquisitions
            regarding potential liabilities at the date of acquisition.

      (c)   General and Professional Liability

            In its normal course of business, the Company is subject to claims
            and lawsuits relating to patient treatment. The Company believes
            that its liability for damages resulting from such claims and
            lawsuits is adequately covered by insurance or is adequately
            provided for in its consolidated financial statements.

(15)  Subsequent Events

      On February 1, 1999, the Company acquired, for $400,000 in cash, a 50%
      interest in Texas Health Ventures Group L.L.C. (THVG I) which held
      ownership interests in ont operational surgery center and three surgery
      centers under development in the Dallas I Fort Worth, Texas

See accompanying notes consolidated financial statements

                                       15
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

      metropolitan area. THVG is a limited liability company which facilitates
      the joint management and development by the Company and Baylor Health
      System (Baylor) of ambulatory surgery centers On April 5 1999 and June 30,
      1999 the Company issued 7% senior subordinated notes totaling $9.0 million
      and $9.6 million, respectively, bringing the total issued and outstanding
      senior subordinated debt under the Securities Purchase Agreement to
      approximately $20.1 million.

      In May 1999, the Company acquired a 70% interest in USP Dermoestetica,
      S.L. for $1.6 million in cash. During April 1999 and May 1999, the Company
      made stock purchases totaling an additional 26% interest in Instituto
      Policlinico Santa Teresa, S.A.

      On June 1, 1999, the Company entered into an additional ambulatory surgery
      joint venture with Baylor by contributing its equity investments and
      management agreements acquired in the December 1998 HealthFirst
      Transaction to a newly created limited liability company, THVG I
      HealthFirst, L.L.C. (THVG 2). In exchange for its contribution to TFIVG 2,
      the Company received a 51% ownership interest in THVG 2. Baylor
      contributed 100% of the assets of two operational surgery centers to THVG
      I, in exchange for receiving a 49% ownership in THVG 2 as well as
      convertible subordinated notes payable from the Company in the amount of
      $3.3 million. The joint venture agreements for THVG I and THVG 2 have
      noncompete clauses and provide for shared management services and fees.

      On June 29, 1999, the Company entered into a credit agreement with Chase
      Bank of Texas. NA. which provides the Company with the ability to borrow
      up to $25 million. The agreement and any borrowings thereunder mature June
      30. 2001. Repayment of the loans is guaranteed by time Company s largest
      shareholder As of September I 1999 $21 7 million of borrowings were
      outstanding under the credit agreement.

      On June 30, 1999, the Company acquired 100% of the stock of Texas
      Outpatient Surgicare Center, Inc. (TOPS GP), a Texas corporation that is
      the general partner with a 63% ownership interest in TOPS Specialty
      Hospital. Ltd. (TOPS), a Limited Partnership that operates a surgical
      hospital in Houston, Texas. Concurrent with its acquisition of TOPS OP.
      USPI also facilitated the acquisition by TOPS OP of an additional 31%
      interest in TOPS. In connection with the acquisition of the additional
      limited partner interests, USPI issued warrants to purchase 45,000 shares
      of its common stock at an exercise price of $4.00 per share in exchange
      for noncompete agreements with the selling limited partners. Subsequent to
      these transactions, TOPS borrowed $15 million, guaranteed by USPI. TOPS OP
      subsequently sold limited partner interests representing approximately 25%
      ownership of TOPS. Total net cash consideration paid by USPI for these
      acquisition transactions was approximately $11 million. As a result of
      these transactions, USPI owns 100% of TOPS GP, which in turn owns
      approximately 69% of TOPS.

See accompanying notes consolidated financial statements

                                       16
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1998

      On July 1, 1999, the Company acquired 100% of time assets used to operate
      Warner Park Surgery Center in Chandler. Arizona for approximately $5.1
      million in cash.

      On August I, 1999, the Company invested an additional $2.7 million in cash
      in THVG 2, which acquired additional ownership in one of the two
      operational surgery centers in which it had previously invested,
      increasing THIVG 2's ownership interest in the center from 20% to 40%.

      On September I, 1999, the Company acquired 100% of the assets used to
      operate two ambulatory surgery centers in the Houston metropolitan area,
      for approximately $12 million in cash.

See accompanying notes consolidated financial statements

                                       17
<PAGE>

                  United Surgical Partners International, Inc.
                        Consolidated Balance Sheet as of
                                   December-99

                                                                         Dec-99
                                                                         Actual
ASSETS
Current assets
Cash and cash equivalents                                         $  16,905,194
Short-term investments                                                  859,644
Accounts receivable, net                                             12,114,148
Due from affiliates                                                   1,645,009
Other receivables                                                      1729,406
Short-term notes receivable                                               4,757
lnventories                                                           2,597,157
Prepaid expenses                                                      1,571,621
                                                                  -------------
     Total current assets                                            37,426,937

Property, plant and equipment
Land                                                                  2,571,027
Buildings and improvements                                           28,678,318
Equipment                                                            25,715,344
Furniture and fixtures                                                3,570,260
Construction in progress                                              1,648,891
Accumulated depreciation                                            (11,631,310)
                                                                  -------------
   Total property, plant and equipment                               50,552,529

Other noncurrent assets
Investment in subsidiaries                                            8,170,173
Financial long-term investment                                        1,034,774
Intangible assets                                                    72,741,140
Long-term notes receivable                                               19,033
Other assets                                                          1,060,392
                                                                  -------------
Total other noncurrent assets                                        83,025,512
                                                                  -------------
 Total assets                                                     $ 171,004,978
                                                                  =============

LIABILITIES AND EQUITY
Current liabilities
Accounts payable                                                  $   9,140,642
Accrued salaries and benefits                                         1,438,822
Short-term debt                                                       1,566,252
Current portion of long-term debt                                     5,424,842
Other current liabilities                                             9,486,092
                                                                  -------------
     Total current liabilities                                       27,056,649

Noncurrent liabilities
Long-term debt                                                       40,971,776
Subordinated debt                                                    23,407,232
Redeemable preferred stock                                           33,916,000
Deferred gain/revenue                                                 1,258,334
Other noncurrent liabilities                                          1,906,661
                                                                  -------------
     Total noncurrent liabilities                                   101,460,002

Minority interests                                                    6,040,863

Equity
Common stock & paid-in capital                                       56,057,536
Receivable from shareholders                                         (1,103,887)
Treasury stock                                                         (343,750)
Retained earnings                                                   (10,981,395)
Translation                                                          (7,181,040)
                                                                  -------------
     Total equity                                                    36,447,463
                                                                  -------------
         Total liabilities and equity                             $ 171,004,978
                                                                  =============

See accompanying notes consolidated financial statements

                                       2
<PAGE>

                  United Surgical Partners International, Inc.
                          Consolidated Income Statement
                                   December-99
                         (Variances are better/(worse))

                                                                   Year-to-date
REVENUE
Hospital revenue, net of deductions                                $ 50,095,895
ASC revenue, net of deductions                                       12,591,556
Other patient service revenue, net of deductions                        587,128
                                                                   ------------
    Total patient revenue                                            63,274,579

Administrative revenue                                                3,607,500
Management fee income                                                 1,494,514
Equity in earnings (loss) of affiliates                                (236,874)
Other revenue                                                         1,946,251
    Total other revenue                                               6,811,392

      Total revenue                                                  70,085,971

EXPENSES
Staffing and benefits                                                21,595,517
Supplies                                                             14,102,125
Purchased services                                                    3,061,969
Non-medical supplies and expenses                                     1,919,447
Professional fees                                                     6,169,096
Other operating expenses                                              8,373,713
                                                                   ------------
    Facility operating expenses                                      55,221,867

    Facility EB1TDA                                                  14,864,104

Corporate G&A                                                        10,884,533

    EBITDA                                                            3,979,571

Depreciation and amortization                                         7,037,882
Interest expense (income)                                             2,426,349
Other expense (income)                                                  177,931
    Total non-operating expenses                                      9,642,162

Minority interest expense (benefit)                                     (54,065)

    Pretax income                                                    (5,608,527)

Income taxes                                                          1,073,910
                                                                   ------------
    Net income                                                     ($ 6,682,437)

    EBITDA less minority interests                                    4,033,635

See accompanying notes consolidated financial statements

                                       3
<PAGE>

                     United Surgical Partners International
                      Consolidated Statement of Cash Flows
                      For the period ended December 31,1999

<TABLE>
<CAPTION>
                                                                         Current         Year-to-date
                                                                         Month           ------------
                                                                         -----
<S>                                                                      <C>             <C>
Cash flows from operating activities:
Net income (loss)                                                        $ (2,691,233)   $ (6,682,436)

Adjustments to reconcile to cash provided by operating activities:
     Depreciation expense                                                     417,066       4,631,926
     Amortization expense                                                     341.694       2,401,686
     (Gain) loss on sale of equipment                                          35,543          34,756
     Equity in (earnings) loss of affiliates                                   10,326         236,874
     (Increase) decrease in accounts receivable                               943,531      (1,398,860)
     (Increase) decrease in other receivables                               1,164,789      (1,720,798)
     (Increase) decrease in invent5Ttbs                                      (203,154)        155,033
     (Increase) decrease in prepaid expenses and other assets                 319,231        (708,634)
     Increase (decrease) in accounts payable                                  207,793        (778,048)
     Increase (decrease) in accrued salaries & benefits                      (834,176)        395,684
     Increase (decrease) in accrued expenses                                  402,680       1,777,318
     Increase (decrease) in other liabilities                                1487,783       2,997,538
     Increase (decrease) in minority interest payable                         125,414        (389,571)
                                                                         ============================
                           Total adjustments                                4,418,520       7,228,838
                                                                         ============================
Net cash provided by (used in) operating activities                         1,727,286         546,401
                                                                         ============================

Cash flows from investing activities
(Purchases) sales of fixed assets                                          (2,190,398)     (9,850,049)
(Increase) decrease in investment in subsidiaries net of cash acquired     (1,900,580)    (53,681,519)
(Increase) decrease in financial investments                                       43         750,593
(Increase) decrease in notes receivable                                        89,409         625,024
(Increase) decrease in short-term investments                                  47,309         720,687
Net cash used in investing activities                                      (3,954,198)    (61,435,284)

Cash flows from financing activities
Proceeds (repayments) of short and long-term borrowings                      (181,992)     56,966,644
Purchase of treasury stock                                                         --         (17,500)
Proceeds from issuance of common stock                                         58,609         (57,641)
Proceeds from distributions of capital                                      1,566,929         506,052
                                                                         ============================
Net cash provided by (used in) financing activities                         1,443,547      57,397,554
                                                                         ============================
Effect of exchange rate changes on cash and intercompany debt                   2,256       2,115,811
                                                                         ============================
Net increase (decrease) in cash                                              (781,108)     (1,375,497)
Cash balance, beginning of period                                        $ 17,686,303      18,280,692
                                                                         ============================
Cash balance, end of period                                              $ 16,905,194      16,905,195
                                                                         ============================
</TABLE>

See accompanying notes consolidated financial statements

                                       4
<PAGE>

                  United Surgical Partners International, Inc.
                   Statement of Changes in Stockholders Equity

<TABLE>
<CAPTION>
                        -----------------------------------------------------------------------------------------------------------
                              Common Stock                                                 Retained     Cummulative
                        ----------------------                 Additional   Receivable     Earnings        Effect
Changes in Stockholder  Number of                Treasury        Paid          From        (Accum'd       Foreign
Equity                    Shares      Par Value    Stock       In Capital   Shareholder     Deficit)     Curr Transl        Totals
                        -----------------------------------------------------------------------------------------------------------
<S>                     <C>          <C>          <C>          <C>           <C>           <C>            <C>           <C>
Balance as of
December 32, 1998       21,938,929   $219,390                  $46,966,455   $(1,050,000)  $ (4,298,958)  $  (104,285)   51,732,602
Net Income                                                                                   (6,682,437)   (7,056,755)   (6,682,437)
Effect of foreign
currency translation                                                                                                     (7,076,755)
Repurchase of common
stock                                                                                                                      (143,750)
Issuance of common
stock                     (162,500)                (343,750)                     200,000                                    268,606
Issuance of warrants       142,498      1,425                      521,068      (253,887)                                    45,000
accrue portion of
dividend payable
April 30, 2000                                                      45,000                                               (1,695,803)
Balance at
December 31, 1999       21,918,927   $220,815     $(343,750)   $(1,695,803)  $(1,103,887)  $(10,981,395)  $(7,181,040)  $36,447,463
</TABLE>

<TABLE>
<CAPTION>
                                     =========================================================    =================================
                                                Series A Redeemable Preferred Stock               Series B Redeemable Prferred Stock

      Classified as Debt                      WCAS                        Non-WCAS                             Non-WCAS
                                     Number
                                     of         Carrying
                                     Shares       Value      Number of Shares   Carrying Value    Number of Shares   Carrying Value
                                     =========================================================    =================================
<S>                                   <C>      <C>                      <C>         <C>                      <C>        <C>
Carrying value at December 31, 1998   30,000   $30,341,465              1,200       $1,230,000               2,716      $ 2,772,583
      Dividend Accrual                           1,500,000                              60,000                              135,800
                                               ===========                          ==========                          ===========
Carrying value at December 31, 1999            $31,841,465                          $1,290,000                          $ 2,908,383
                                               ===========                          ==========                          ===========

                                              =============
Stock Options Granted                         Total Options
                                               Outstanding
                                              =============

Outstanding at December 31, 1998                 2,313,000
      Year to date grants, net
      of cancellations                             398,000
                                              ============
Outstanding at December 31, 1999                 2,711,300
                                              ============
</TABLE>

Unaudited -- for internal use only

See accompanying notes consolidated financial statements

                                       2
<PAGE>

                                  SCHEDULE 2.07

                     Events Subsequent to December 31, 1999

      1. See Schedule 2.04(b), which is incorporated herein by this reference.

      2. Effective February 1, 2000, Don Steen's salary was increased from
$235,000 to $300,000.

      3. The Company has sold a total of 52,500 shares of its Common Stock, par
value $.01 per share, pursuant to the Company's Stock Option Plan since December
31, 1999 at $4.00 per share,

      4. The Company has borrowed $1.5 million under its $25,000,000 Revolving
Credit Agreement with Chase Bank of Texas since December 31, 1999.

See accompanying notes consolidated financial statements

                                       1
<PAGE>

                                  SCHEDULE 2.08

                                 Actions Pending

None.

See accompanying notes consolidated financial statements

                                       1
<PAGE>

                                  SCHEDULE 2,12

                                Title to Property

      1. Dexeus has an outstanding mortgage debt of approximately $1.9 million.

      2. Decatur Surgery Center, L.P. has granted a security interest in all of
its assets to Compass Bank.

      3. TOPS Specialty Hospital, Ltd. has granted a security interest in
substantially all of its real estate and personal property assets to Chase Bank
of Texas.

      4, Several subsidiaries have equipment financing facilities with Copeleo
Capital Corporation and other institutional lenders.

See accompanying notes consolidated financial statements

                                       1
<PAGE>

                  UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                             Notes       Accumulated
                              Common Stock                  Additional    Receivable         Other
                              ------------       Par         Paid-in         from       Comprehensive   Accumulated
                                 Shares         Value        Capital       Employees        Income        Deficit         Total
                                 ------         -----        -------       ---------        ------        -------         -----
<S>                             <C>          <C>            <C>            <C>              <C>          <C>            <C>
Balance, February 27, 1998
  (inception)                           --   $        --            --             --             --             --             --
Issuance of common stock        21,938,929       219,389    57,394,504     (1,050,000)            --             --     56,563,893
Accrued dividends on
  preferred stock                       --            --      (428,050)            --             --             --       (428,050)
Net loss                                --            --            --             --             --     (3,928,298)    (3,928,298)
Foreign currency translation
  adjustments                           --            --            --             --       (104,285)            --       (104,285)
                               -----------   -----------   -----------    -----------    -----------    -----------    -----------
Balance, December 31, 1998      21,938,929   $   219,389    56,966,454     (1,050,000)      (104,285)    (3,928,298)    52,103,260
                               ===========   ===========   ===========    ===========    ===========    ===========    ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       1
<PAGE>

                                  SCHEDULE 2.14

                             Affiliated Transactions

None.

See accompanying notes consolidated financial statements

                                       1
<PAGE>

SCHEDULE 2.15

Brokers' or Finders' Fees

None.

See accompanying notes consolidated financial statements

                                       1
<PAGE>

SCHEDULE 3 03(d)

Certain Purchasers

None.

See accompanying notes consolidated financial statements

                                       1
<PAGE>

SCHEDULE 3.05

Brokers' or Finders' Fees

None.

See accompanying notes consolidated financial statements

                                       1
>

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