Document:

Exhibit 10.12

                    THE 1999 WALNUT FINANCIAL SERVICES, INC.
                              STOCK INCENTIVE PLAN
                          (as adopted November 1, 1999)

1.       Purpose of the Plan

           This 1999 Walnut  Financial  Services,  Inc. Stock  Incentive Plan is
intended  to promote  the  interests  of the  Company  and its  stockholders  by
providing certain key individuals, on whose judgment, initiative and efforts the
successful  conduct of the business of the Company largely depends,  and who are
largely responsible for the management, growth and protection of the business of
the  Company,  with  appropriate  incentives  and rewards to  encourage  them to
continue their Employment with the Company and to maximize their performance and
to  provide  certain  "performance-based  compensation"  within  the  meaning of
Section 162(m)(4)(C) of the Code.

2.         Definitions

           As used in the Plan,  the  following  definitions  apply to the terms
indicated below:

           (a) "Affiliate"  shall mean any entity (whether or not  incorporated)
controlling, controlled by or under common control with the Company.

           (b) "Board of  Directors"  shall mean the Board of  Directors  of the
Company.

           (c) "Cash  Bonus"  shall  mean an  award of a bonus  payable  in cash
pursuant to Section 13 hereof.

           (d) "Cause" shall mean,  when used in connection with a Participant's
Termination of Employment:

                (i) to the extent  that  there is an  employment,  severance  or
           other agreement  governing the  relationship  between the Participant
           and the Company,  which  agreement  contains a definition of "Cause,"
           cause will consist of those acts or omissions  that would  constitute
           "cause" under such agreement; and otherwise

                (ii) the Participant's  Termination of Employment by the Company
           or an Affiliate on account of any one or more of the following:

                     (A) any failure by the Participant substantially to perform
                the Participant's employment duties;

                     (B)  any   excessive   unauthorized   absenteeism   by  the
                Participant;

                     (C) any  refusal  by the  Participant  to obey  the  lawful
                orders  of the  Board  of  Directors  or  any  other  person  or
                committee to whom the Participant reports;

                     (D) any act or omission by the  Participant  that is or may
                be injurious to the Company, monetarily or otherwise;

                     (E) any act by the Participant that is competitive with the
                best interests of the Company;

                     (F)  the  Participant's  material  violation  of any of the
                Company's  policies,   including,   without  limitation,   those
                policies relating to discrimination or sexual harassment;

                     (G) the  Participant's  unauthorized  (a) removal  from the
                premises of the Company or  Affiliate  of any  document  (in any
                medium or form)  relating to the Company or an  Affiliate or the
                customers of the Company or an Affiliate  or (b)  disclosure  to
                any  person or entity of any of the  Company's  confidential  or
                proprietary information;

<PAGE>

                     (H) the  Participant's  commission  of any  felony,  or any
                other crime involving moral turpitude; and

                     (I) the  Participant's  commission  of  any  act  involving
                dishonesty or fraud.

           To the extent the  definition of Cause herein is determined  pursuant
to Section 2(d)(ii) hereof, then solely for the purposes of Sections 6(h), 9(e),
10(g) and 11(e) of this Plan the definition of Cause shall be determined only by
reference to subsections (C), (F), (G), (H) and (I) of such Section 2(d)(ii).

           Any rights the  Company may have  hereunder  in respect of the events
giving  rise to Cause  shall be in  addition  to the rights the Company may have
under  any  other  agreement  with a  Participant  or at law or in  equity.  Any
determination  of whether a  Participant's  Employment  is (or is deemed to have
been)  terminated  for Cause shall be made by the  Committee in its  discretion,
which determination shall be final and binding on all parties. If, subsequent to
a Participant's  voluntary Termination of Employment or involuntary  Termination
of Employment without Cause, it is discovered that the Participant's  Employment
could have been terminated for Cause,  such  Participant's  Employment  shall be
deemed to have  been  terminated  for  Cause.  A  Participant's  Termination  of
Employment  for Cause shall be effective as of the date of the occurrence of the
event giving rise to Cause,  regardless  of when the  determination  of Cause is
made.

            (e)  "Change in  Control"  shall mean the  occurrence  of any of the
following:

                (i) a change in control of a nature that would be required to be
           reported in response to Item 5(f) of Schedule 14A of  Regulation  14A
           promulgated  under the Exchange Act shall have occurred,  unless such
           change  in  control  results  in  control  by  the  Participant,  his
           designee(s)  or  "affiliate(s)"  (as  defined in Rule 12b-2 under the
           Exchange Act) or any combination thereof;

                (ii) any  "person"  (as such term is used in Sections  13(d) and
           14(d)(2)  of the  Exchange  Act),  other  than the  Participant,  his
           designee(s)  or  "affiliate(s)"  (as  defined in Rule 12b-2 under the
           Exchange  Act),  or any  "person"  who  was a  shareholder  as of the
           Effective  Date  or  any  combination  thereof,  is  or  becomes  the
           "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
           directly or  indirectly,  of securities  of the Company  representing
           forty  percent  (40%)  or more of the  combined  voting  power of the
           Company's then outstanding securities;

                (iii) during any period of two (2) consecutive years during this
           Agreement, individuals who at the beginning of such period constitute
           the Board  cease for any  reason to  constitute  at least a  majority
           thereof,  unless the election of each director who was not a director
           at the  beginning  of such  period  has been  approved  in advance by
           directors  representing  at least a majority of the directors then in
           office who were directors at the beginning of the period;

                (iv)  the  stockholders  of the  Company  approve  a  merger  or
           consolidation of the Company with any other corporation, other than a
           merger or consolidation  which would result in the voting  securities
           of the Company  outstanding  immediately prior thereto  continuing to
           represent (either by remaining outstanding or by being converted into
           voting  securities  of the  surviving  entity)  more  than 80% of the
           combined voting power of the voting securities of the Company or such
           surviving  entity  outstanding   immediately  after  such  merger  or
           consolidation;  provided,  however,  that a merger  or  consolidation
           effected to implement a  recapitalization  of the Company (or similar
           transaction) in which no "person" (as hereinabove  defined)  acquires
           more than 25% of the  combined  voting  power of the  Company's  then
           outstanding  securities  shall not  constitute a Change in Control of
           the Company; or

                (v) the  stockholders  of the Company approve a plan of complete
           liquidation   of  the  Company  or  an  agreement  for  the  sale  or
           disposition  by the Company of, or the Company  sells or disposes of,
           all or substantially all of the Company's assets.

           (f) "Code" shall mean the Internal  Revenue Code of 1986,  as amended
from time to time.

                                      -2-

<PAGE>

           (g) "Committee" shall mean the Compensation Committee of the Board of
Directors or such other  committee as the Board of Directors  shall appoint from
time to time to administer the Plan; provided, however, that the Committee shall
at all times consist of two or more persons.  The Committee shall consist solely
of individuals who are (or grants shall be made by a subcommittee of two or more
persons, each of whom shall be) a "non-employee  director" within the meaning of
Rule 16b-3.  Each member of the Committee shall be an "outside  director" within
the meaning of Section 162(m) of the Code.

           (h)  "Company"  shall mean  Walnut  Financial  Services,  Inc. or any
successor thereto.

           (i) "Company Stock" shall mean the common stock of the Company.

           (j) "Disability"  shall mean,  except in connection with an Incentive
Stock Option,  any physical or mental condition that would qualify a Participant
for a disability  benefit under the long-term  disability plan maintained by the
Company  or, if there is no such  plan,  a  physical  or mental  condition  that
prevents  the  Participant  from  performing  the  essential  functions  of  the
Participant's  position (with or without reasonable  accommodation) for a period
of six consecutive  months or, in connection  with an Incentive Stock Option,  a
disability  described  in Section  422(c)(6)  of the Code.  The  existence  of a
Disability shall be determined by the Committee in its absolute discretion.

           (k) "Dividend Equivalent Right" shall mean an Incentive Award granted
pursuant to Section 14 hereof of a right to receive an amount  equivalent to the
ordinary cash  dividends paid in respect to some or all of the shares of Company
Stock underlying an Incentive Award.

           (l) "Employment"  shall mean, in the case of a Participant who is not
an employee of the Company, the Participant's association with the Company or an
Affiliate as a consultant.

           (m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.

           (n) "Fair  Market  Value"  shall  mean,  with  respect  to a share of
Company Stock on an applicable date:

                (i)  If  Company  Stock  is  traded  on  a  national  securities
           exchange,  (A) the average of the high and low  reported  sales price
           regular  way per share of  Company  Stock on the  principal  national
           securities  exchange  on which  Company  Stock is traded or (B) if no
           reported sales take place on the applicable  date, the average of the
           highest bid and lowest asked price of Company  Stock on such exchange
           or (C) if no  such  quotation  is  made on  such  date,  on the  next
           preceding day (not more than 10 business days prior to the applicable
           date) on which there were reported sales or such quotations.

                (ii) If Company  Stock is not  traded on a  national  securities
           exchange  but  quotations  are  available  for  Company  Stock on the
           over-the-counter  market,  (A) the mean  between  the highest bid and
           lowest asked quotation on the over-the-counter  market as reported by
           the National Quotations Bureau, or any similar  organization,  on the
           applicable  date or (B) if no such  quotation is made on such date on
           the next  preceding  day (not more than 10 business days prior to the
           applicable date) on which there were such quotations.

                (iii)  If  Company  Stock  is  neither   traded  on  a  national
           securities  exchange  nor are  quotations  therefor  available on the
           over-the-counter market or if there are no sales or quotations in the
           10  business  days  immediately  prior  to the  applicable  date,  as
           determined  in good faith by the  Committee in a manner  consistently
           applied.

           (o)  "Incentive  Award"  shall  mean an  Option,  LSAR,  Tandem  SAR,
Stand-Alone SAR, Dividend  Equivalent Right, share of Restricted Stock, share of
Phantom  Stock,  Stock Bonus,  Cash Bonus or other  equity-based  award  granted
pursuant to the terms of the Plan.

                                      -3-

<PAGE>

           (p)  "Incentive  Stock  Option"  shall  mean  an  Option  that  is an
"incentive  stock option" within the meaning of Section 422 of the Code and that
is  identified  as an  Incentive  Stock  Option in the  agreement by which it is
evidenced.

           (q) "Issue Date" shall mean the date  established by the Committee on
which  certificates  representing  shares of Restricted Stock shall be issued by
the Company pursuant to the terms of Section 10(d) hereof.

           (r) "LSAR"  shall  mean a limited  stock  appreciation  right that is
granted  pursuant to the  provisions  of Section 7 hereof and that relates to an
Option.  Each LSAR shall be exercisable  only upon the occurrence of a Change in
Control and only in the alternative to the exercise of its related Option.

           (s) "Non-Qualified  Stock Option" shall mean an Option that is not an
Incentive Stock Option.

           (t) "Option" shall mean an option to purchase shares of Company Stock
granted pursuant to Section 6 hereof.  Each Option shall be identified as either
an Incentive  Stock Option or a  Non-Qualified  Stock Option in the agreement by
which it is evidenced.

           (u) "Participant"   shall  mean  any  person  who  is   eligible   to
participate  in the Plan and to whom an Incentive  Award is granted  pursuant to
the Plan, and, upon his death, the employee's  successors,  heirs, executors and
administrators, as the case may be.

           (v) "Person"  shall mean a "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act.

           (w) "Phantom  Stock" shall mean the right to receive in cash the Fair
Market  Value of a share of Company  Stock,  which right is granted  pursuant to
Section 11 hereof and subject to the terms and conditions contained therein.

           (x) "Plan" shall mean this 1999 Walnut Financial Services, Inc. Stock
Incentive Plan, as it may be amended from time to time.

           (y) "Reload  Option" shall mean an Option granted to a Participant in
accordance with Section 6 hereof upon the exercise of an Option.

           (z)  "Restricted  Stock" shall mean a share of Company  Stock that is
granted  pursuant  to the terms of  Section 10 hereof and that is subject to the
restrictions set forth in Section 10(c) hereof for so long as such  restrictions
continue to apply to such share.

           (aa) "SAR shall mean a Tandem SAR, Stand-Alone SAR or LSAR.

           (bb) "Securities  Act" shall  mean the  Securities  Act of 1933,  as
amended from time to time.

           (cc) "Stand-Alone SAR" shall mean a stock  appreciation right granted
pursuant to Section 9 hereof that is not related to any Option.

           (dd) "Stock Bonus" shall mean a grant of a bonus payable in shares of
Company Stock pursuant to Section 12 hereof.

           (ee) "Tandem  SAR"  shall  mean a stock  appreciation  right  granted
pursuant to Section 8 hereof that is related to an Option. Each Tandem SAR shall
be exercisable  only to the extent its related Option is exercisable and only in
the alternative to the exercise of its related Option.

           (ff) "Termination of Employment"  shall mean a Participant's  ceasing
to be employed by the Company and any  Affiliates or by a  corporation  assuming
Incentive  Awards in a transaction  to which section 424(a) of the Code applies.
The Committee may determine, in its absolute discretion (i) whether any leave of
absence or

                                      -4-

<PAGE>

absence  in  military  or  government  service   constitutes  a  Termination  of
Employment for purposes of the Plan, subject to applicable law, (ii) the effect,
if any, of any such leave of absence on Incentive Awards granted under the Plan,
and  (iii)  when a change  in a  non-employee's  association  with  the  Company
constitutes a Termination of Employment for purposes of the Plan.

           (gg) "Vesting Date" shall mean the date  established by the Committee
on which a share of Restricted Stock or Phantom Stock may vest.

3.       Stock Subject to the Plan

           (a)    Plan Limit

                Subject to  adjustment  as  provided  in Section 16 hereof,  the
Committee  may grant  Incentive  Awards  hereunder  with  respect to a number of
shares of Company Stock that in the aggregate does not exceed 2,250,000  shares.
The grant of an LSAR,  Tandem SAR or Dividend  Equivalent Right shall not reduce
the number of shares of Company Stock with respect to which Incentive Awards may
be granted  pursuant to the Plan.  Incentive Awards granted under the Plan shall
count against the foregoing  limits at the time they are granted but shall again
become available for grant under the Plan as follows:

                (i) To the extent that any  Options,  together  with any related
           rights  granted  under the Plan,  terminate,  expire or are  canceled
           without  having been exercised  (including a  cancellation  resulting
           from the  exercise  of a  related  LSAR or a Tandem  SAR) the  shares
           covered by such Options  shall again be available for grant under the
           Plan.

                (ii) To the extent that any Stand-Alone  SARs terminate,  expire
           or are canceled without having been exercised,  the shares covered by
           such  Stand-Alone  SARs shall again be available  for grant under the
           Plan.

                (iii) To the extent any  shares of  Restricted  Stock or Phantom
           Stock,  or any shares of Company  Stock  granted as a Stock Bonus are
           forfeited  or  canceled  for any reason,  such shares  shall again be
           available for grant under the Plan.

                Shares  of  Company  Stock  issued  under the Plan may be either
newly issued shares or treasury shares, at the discretion of the Committee.

           (b)    Individual Limit

                Subject to  adjustment  as  provided  in Section 14 hereof,  the
Committee  shall  not,  during  any  calendar  year,  grant any one  Participant
Incentive  Awards  hereunder with respect to more than 450,000 shares of Company
Stock.  Such  Incentive  Awards  may be made  up  entirely  of any  one  type of
Incentive Award or any combination of types of Incentive  Awards available under
the Plan, in the  Committee's  sole  discretion.  Once granted to a Participant,
Incentive Awards shall not again be available for grant to that Participant. The
grant of an LSAR,  Tandem SAR or Dividend  Equivalent Right shall not reduce the
number of shares of Company Stock with respect to which Incentive  Awards may be
granted to any Participant pursuant to the Plan.

                                      -5-

<PAGE>

4.       Administration of the Plan

           The Plan shall be administered by the Committee.  The Committee shall
from time to time designate the key individuals  who shall be granted  Incentive
Awards and the amount and type of such Incentive Awards.

           The  Committee  shall have full  authority  to  administer  the Plan,
including  authority to interpret and construe any provision of the Plan and the
terms of any  Incentive  Award  issued  under it,  and to adopt  such  rules and
regulations for  administering the Plan as it may deem necessary or appropriate.
Decisions  of the  Committee  shall be final and  binding  on all  parties.  The
Committee's  determinations under the Plan may, but need not, be uniform and may
be  made  on a  Participant-by-Participant  basis  (whether  or not  two or more
Participants are similarly situated).

           The Committee may, in its absolute  discretion,  without amendment to
the Plan, (i) accelerate the date on which any Option or Stand-Alone SAR granted
under the Plan becomes  exercisable or otherwise adjust any of the terms of such
Option or Stand-Alone  SAR (except that no such  adjustment  shall,  without the
consent of a Participant,  reduce the Participant's  rights under any previously
granted and  outstanding  Incentive  Award unless the Committee  determines that
such adjustment is necessary or appropriate to prevent such Incentive Award from
constituting  "applicable  employee  remuneration" within the meaning of Section
162(m) of the Code),  (ii)  accelerate  the Vesting Date or Issue Date, or waive
any condition imposed  hereunder,  with respect to any share of Restricted Stock
granted under the Plan or otherwise  adjust any of the terms of such  Restricted
Stock and (iii)  accelerate  the  Vesting  Date or waive any  condition  imposed
hereunder,  with respect to any share of Phantom Stock granted under the Plan or
otherwise adjust any of the terms of such Phantom Stock.

           In  addition,  the  Committee  may, in its  absolute  discretion  and
without   amendment  to  the  Plan,  grant  Incentive  Awards  of  any  type  to
Participants on the condition that such Participants  surrender to the Committee
for  cancellation  such  other  Incentive  Awards of the same or any other  type
(including, without limitation,  Incentive Awards with higher exercise prices or
values) as the Committee specifies.  Notwithstanding  Section 3(a) hereof, prior
to the  surrender  of such other  Incentive  Awards,  Incentive  Awards  granted
pursuant to the preceding sentence of this Section 4 shall not count against the
limits set forth in such Section 3(a).

           No member of the Committee shall be liable for any action,  omission,
or determination  relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company  to  whom  any  duty  or  power  relating  to  the   administration   or
interpretation  of the Plan  has  been  delegated  against  any cost or  expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination  relating  to the Plan,  unless,  in  either  case,  such  action,
omission or determination was taken or made by such member, director or employee
in bad faith and without  reasonable belief that it was in the best interests of
the Company.

            Notwithstanding  anything  in the Plan to the  contrary,  until  the
Board of Directors shall have appointed the members of the Committee,  the Board
of Directors shall administer the Plan. In addition, the Board of Directors may,
in its sole  discretion,  at any time and  from  time to time,  grant  Incentive
Awards or resolve to administer  the Plan in which case, to the extent  provided
in such  resolutions,  the  Board of  Directors  shall  have the  powers  of the
Committee.

5.       Eligibility

           The  persons  who  shall be  eligible  to  receive  Incentive  Awards
pursuant  to the Plan shall be those key  current  and former  employees  of the
Company and its Affiliates  (including  prospective  employees,  which Incentive
Awards shall be  conditioned  on the  prospective  employees  actually  becoming
employees)  and certain  current  and former  consultants  or other  independent
contractors (including directors of the Company or any of its Affiliates who are
not  employees of the Company or any of its  Affiliates)  to the Company and its
Affiliates who are largely responsible for the management, growth and protection
of the  business of the Company and its  Affiliates  (including  officers of the
Company,  whether or not they are  directors  of the  Company) as the  Committee
shall select from time to time.  Except with respect to certain  consultants  or
other independent  contractors (including directors of the Company or any of its
Affiliates who are not employees of the Company or any of its Affiliates) to the
Company  and its  Affiliates,  persons  who are not (or are not  expected to be)
classified  as  employees  of the Company or an

                                      -6-

<PAGE>

Affiliate for purposes of the Company's or an  Affiliate's  payroll shall not be
eligible to receive Incentive Awards under the Plan.

6.       Options

           The Committee may grant  Options  pursuant to the Plan.  Such Options
shall be evidenced by agreements  in such form as the Committee  shall from time
to time approve. Options shall comply with and be subject to the following terms
and conditions:

           (a)    Identification of Options

                All Options  granted under the Plan shall be clearly  identified
in the agreement evidencing such Options as either Incentive Stock Options or as
Non-Qualified Stock Options.

           (b)    Conditions to Issuance and Excercisability

                At the time of the grant of any  Options  under  the  Plan,  the
Committee may impose such restrictions or conditions,  not inconsistent with the
provisions  hereof, to the issuance or  excercisability  of the Options,  as the
Committee, in its absolute discretion,  deems appropriate. By way of example and
not by way of  limitation,  the  Committee  may  require,  as a condition to the
issuance or exercisability  of any Options,  that the Participant or the Company
achieve such  performance  criteria as the  Committee may specify at the time of
the grant of such shares.

           (c)    Exercise Price

                The exercise  price of any  Non-Qualified  Stock Option  granted
under the Plan shall be such price as the Committee shall  determine  (which may
be equal  to,  less than or  greater  than the Fair  Market  Value of a share of
Company  Stock on the date such  Non-Qualified  Stock  Option is granted) on the
date on which such Non-Qualified  Stock Option is granted;  provided,  that such
price  may not be less  than the  minimum  price  required  by law.  Subject  to
Paragraph (d) of this Section 6, the exercise  price-per-share  of any Incentive
Stock  Option  granted  under  the Plan  shall be not less than 100% of the Fair
Market  Value of a share of Company  Stock on the date on which  such  Incentive
Stock Option is granted  (except as permitted in connection  with the assumption
or  issuance of Options in a  transaction  to which  Section  424(a) of the Code
applies).

           (d)    Term and Exercise of Options

                (i) Each  Option  shall be  exercisable  on such  date or dates,
           during such period and for such number of shares of Company  Stock as
           shall be  determined by the Committee on the day on which such Option
           is granted and set forth in the  agreement  evidencing  such  Option;
           provided,  however,  that: (A) if such agreement does not specify the
           date or dates on which the Option will become exercisable, the shares
           subject  to the  Option  shall  become  exercisable  in  three  equal
           installments  on each of the first,  second and third  anniversary of
           the day on which  the  Option  is  granted;  (B) no  Option  shall be
           exercisable  after the  expiration  of ten  years  from the date such
           Option was  granted;  and (C) each Option shall be subject to earlier
           termination, expiration or cancellation as provided in the Plan.

                (ii)  Each  Option  shall  be  exercisable  in whole or in part;
           provided,  that no  partial  exercise  of an  Option  shall be for an
           aggregate exercise price of less than $1,000. The partial exercise of
           an Option shall not cause the expiration, termination or cancellation
           of the remaining  portion  thereof.  Upon the partial  exercise of an
           Option,  the agreement  evidencing  such Option and any related LSARs
           and Tandem SARs shall be returned to the Participant  exercising such
           Option  together with the delivery of the  certificates  described in
           Section 6(d)(v) hereof.

                (iii) An Option shall be exercised by  delivering  notice to the
           Company's  principal  office,  to the attention of its Secretary,  no
           less than five business days in advance of the effective  date of the
           proposed exercise.  Such notice shall be accompanied by the agreement
           or agreements  evidencing the Option and

                                      -7-

<PAGE>

           any related LSARs and Tandem SARs, shall specify the number of shares
           of Company Stock with respect to which the Option is being  exercised
           and the effective  date of the proposed  exercise and shall be signed
           by the  Participant.  The Participant may withdraw such notice at any
           time prior to the close of business on the business  day  immediately
           preceding the effective date of the proposed exercise,  in which case
           such  agreement or agreements  shall be returned to him.  Payment for
           shares of Company  Stock  purchased  upon the  exercise  of an Option
           shall be made on the effective date of such exercise either:

                     (A) in cash, by certified  check,  bank cashier's check or
                wire transfer; or

                     (B) subject to the approval of the Committee,  in shares of
                Company Stock owned by the  Participant and valued at their Fair
                Market Value on the effective date of such  exercise,  or partly
                in  shares  of  Company  Stock  with the  balance  in  cash,  by
                certified check, bank cashier's check or wire transfer; or

                     (C) subject to the approval of the Committee, pursuant to a
                "cashless  exercise"  pursuant  to  procedures  adopted  by  the
                Committee whereby the Participant, by a properly written notice,
                directing (A) an immediate market sale or margin loan respecting
                all or a part of the  shares  of  Company  Stock  to  which  the
                Participant  is entitled upon exercise  pursuant to an extension
                of credit by the  Company  to the  Participant  of the  exercise
                price,  (B) the delivery of the shares of Company Stock from the
                Company  directly to the brokerage firm, and (C) the delivery of
                the exercise  price from the sale or margin loan  proceeds  from
                the brokerage firm directly to the Company.

                     Any payment in shares of Company Stock shall be effected by
           the delivery of such shares to the  Secretary  of the  Company,  duly
           endorsed in blank or  accompanied  by stock  powers duly  executed in
           blank,  together  with  any  other  documents  and  evidences  as the
           Secretary of the Company shall require from time to time.

                (iv) Except as  otherwise  provided in an  applicable  agreement
           evidencing  an Option,  during the  lifetime of a  Participant,  each
           Option  granted to a  Participant  shall be  exercisable  only by the
           Participant  and  no  Option  shall  be  assignable  or  transferable
           otherwise  than by will or by the laws of descent  and  distribution.
           The Committee may, in any applicable  agreement  evidencing an Option
           (other than an Incentive Stock Option to the extent inconsistent with
           the  requirements  of Section 422 of the Code applicable to incentive
           stock  options),  permit a Participant to transfer all or some of the
           Options to (A) the  Participant's  spouse,  children or grandchildren
           ("Immediate Family Members"), (B) a trust or trusts for the exclusive
           benefit  of such  Immediate  Family  Members,  or (C)  other  parties
           approved by the Committee in its absolute  discretion.  Following any
           such transfer,  any transferred  Options shall continue to be subject
           to the same terms and conditions as were applicable immediately prior
           to the transfer.

                (v)  Certificates for shares of Company Stock purchased upon the
           exercise of an Option shall be issued in the name of the  Participant
           or his beneficiary (or permitted transferee), as the case may be, and
           delivered  to  the  Participant  or  his  beneficiary  (or  permitted
           transferee), as the case may be, as soon as practicable following the
           effective date on which the Option is exercised.

           (e)    Limitations on Grant of Incentive Stock Options

                (i) The  aggregate  Fair Market Value of shares of Company Stock
           with respect to which Incentive  Stock Options granted  hereunder are
           exercisable  for the first time by a Participant  during any calendar
           year under the Plan and any other  stock  option  plan of the Company
           (or any "subsidiary corporation" of the Company within the meaning of
           Section 424 of the Code) shall not exceed $100,000.  Such Fair Market
           Value shall be determined as of the date on which each such Incentive
           Stock Option is granted.  In the event that the aggregate Fair Market
           Value of shares of Company Stock with respect to such Incentive Stock
           Options  exceeds  $100,000,  then  Incentive  Stock  Options  granted
           hereunder to such  Participant  shall, to the extent and in the order
           in  which  they  were   granted,   automatically   be  deemed  to  be
           Non-Qualified  Stock  Options,  but all other terms and provisions of
           such Incentive Stock Options shall remain unchanged.

                                      -8-

<PAGE>

                (ii) No Incentive  Stock Option may be granted to an  individual
           if, at the time of the proposed grant: (i) such individual was not an
           employee of the company,  a parent or subsidiary  corporation  of the
           Company,  or a corporation  or a parent or subsidiary  corporation of
           such corporation  issuing or assuming a stock option in a transaction
           to which Section  424(a) of the Code applies or (ii) such  individual
           owns stock  possessing  more than ten  percent of the total  combined
           voting  power of all  classes  of stock of the  Company or any of its
           "subsidiary  corporations"  (within the meaning of Section 424 of the
           Code),  unless (A) the exercise price of such Incentive  Stock Option
           is at least one hundred ten percent  (110%) of the Fair Market  Value
           of a share of Company Stock at the time such  Incentive  Stock Option
           is granted and (B) such  Incentive  Stock  Option is not  exercisable
           after the expiration of five years from the date such Incentive Stock
           Option is granted.

           (f)    Grants of Reload Options

                The Committee may, in its  discretion,  include in any agreement
evidencing an Option (the  "Original  Option") a provision  that a Reload Option
shall be granted to any Participant who, pursuant to Section 6(d)(iii), delivers
shares of Company Stock in partial or full payment of the exercise  price of the
Original Option. The Reload Option shall relate to a number of shares of Company
Stock equal to the number of shares of Company Stock  delivered,  and shall have
an exercise price-per-share equal to the Fair Market Value of a share of Company
Stock on the date of the exercise of the Original  Option.  In the event that an
agreement  evidencing  an  Original  Option  provides  for the grant of a Reload
Option,  such agreement shall also provide that the exercise  price-per-share of
the  Original  Option  shall be no less that the Fair Market Value of a share of
Company  Stock on its date of  grant,  and that any  shares  that are  delivered
pursuant to Section  6(d)(iii) in payment of such exercise price shall have been
held for at least six months.

           (g)    Effect of Termination of Employment

                (i) Unless  otherwise  provided in any  agreement  evidencing an
           Option,  in the event that the  Employment of a Participant  with the
           Company and its Affiliates  shall terminate for any reason other than
           Cause,  Disability or death (A) Options granted to such  Participant,
           to the  extent  that  they  were  exercisable  at the  time  of  such
           Termination  of  Employment,   shall  remain  exercisable  until  the
           expiration of three months after such  Termination of Employment,  on
           which  date  they  shall  expire,  and (B)  Options  granted  to such
           Participant, to the extent that they were not exercisable at the time
           of such  Termination  of  Employment,  shall  expire  at the close of
           business on the date of such  Termination  of  Employment;  provided,
           however,  that no Option shall be exercisable after the expiration of
           its term.

                (ii) Unless  otherwise  provided in any agreement  evidencing an
           Option,  in the event that the  Employment of a Participant  with the
           Company shall  terminate on account of the Disability or death of the
           Participant  (A) Options granted to such  Participant,  to the extent
           that  they  were  exercisable  at the  time  of such  Termination  of
           Employment,  shall remain  exercisable  until the  expiration  of the
           original  term as  provided  for in the Plan or as  specified  in the
           agreement  evidencing  the Option,  and (B)  Options  granted to such
           Participant, to the extent that they were not exercisable at the time
           of such  Termination  of  Employment,  shall  expire  at the close of
           business on the date of such Termination of Employment.

                (iii) Unless otherwise  provided in any agreement  evidencing an
           Option, in the event of a Participant's Termination of Employment for
           Cause,  all  outstanding  Options granted to such  Participant  shall
           expire at the  commencement of business on the effective date of such
           Termination of Employment.

           (h)    Acceleration of Exercise Date Upon Change in Control

                In the event a  Participant's  employment  is  terminated by the
Company, other than for Cause, on or after the occurrence of a Change in Control
but prior to the  expiration  of a  six-month  period  following  the  Change in
Control,   each  Option  granted  under  the  Plan  that  is   outstanding   and
unexercisable  immediately  prior to such termination of employment shall become
fully  and  immediately  exercisable  and  shall  remain  exercisable  until its
expiration, termination or cancellation pursuant to the terms of the Plan.

                                      -9-

<PAGE>

7.       LSARs

           The  Committee  may  grant  in  connection  with any  Option  granted
hereunder one or more LSARs relating to a number of shares of Company Stock less
than or equal to the number of shares of Company  Stock  subject to the  related
Option.  An LSAR may be  granted  at the  same  time  as,  or,  in the case of a
Non-Qualified  Stock Option,  subsequent to the time that, its related Option is
granted.  Each  LSAR  shall be  evidenced  by an  agreement  in such form as the
Committee shall from time to time approve.  Each LSAR granted hereunder shall be
subject to the following terms and conditions:

           (a)    Benefit Upon Exercise

                (i) The exercise of an LSAR  relating to a  Non-Qualified  Stock
           Option  with  respect to any number of shares of Company  Stock shall
           entitle the Participant to a cash payment, for each such share, equal
           to the excess of (A) the greater of (x) the  highest  price-per-share
           of Company  Stock paid in the  Change in Control in  connection  with
           which such LSAR became exercisable and (y) the Fair Market Value of a
           share of Company Stock on the date of such Change in Control over (B)
           the exercise price of the related Option.  Such payment shall be made
           as soon as practicable,  but in no event later than the expiration of
           five business days after the effective date of such exercise.

                (ii) The  exercise  of an LSAR  relating to an  Incentive  Stock
           Option  with  respect to any number of shares of Company  Stock shall
           entitle the Participant to a cash payment, for each such share, equal
           to the  excess  of (A) the Fair  Market  Value of a share of  Company
           Stock on the  effective  date of such  exercise over (B) the exercise
           price of the related  Option.  Such payment  shall be made as soon as
           practicable,  but in no  event  later  than  the  expiration  of five
           business days, after the effective date of such exercise.

           (b)    Term and Exercise of LSARs

                (i)  An  LSAR  shall  be  exercisable  only  during  the  period
           commencing on the first day  following the  occurrence of a Change in
           Control and  terminating  on the  expiration of sixty days after such
           date.  Notwithstanding  anything else herein,  an LSAR relating to an
           Incentive  Stock Option may be  exercised  with respect to a share of
           Company  Stock  only if the Fair  Market  Value of such  share on the
           effective  date of such exercise  exceeds the exercise price relating
           to such share.  Notwithstanding  anything else herein, an LSAR may be
           exercised  only if and to the  extent  that  the  Option  to which it
           relates is exercisable.

                (ii) The  exercise of an LSAR with respect to a number of shares
           of Company Stock shall cause the immediate and automatic cancellation
           of the Option to which it relates  with respect to an equal number of
           shares.  The exercise of an Option, or the cancellation,  termination
           or expiration  of an Option  (other than  pursuant to this  Paragraph
           (ii)),  with  respect to a number of shares of Company  Stock,  shall
           cause the  cancellation  of the LSAR related to it with respect to an
           equal number of shares.

                (iii)  Each  LSAR  shall  be  exercisable  in  whole or in part;
           provided,  that  no  partial  exercise  of an  LSAR  shall  be for an
           aggregate exercise price of less than $1,000. The partial exercise of
           an LSAR shall not cause the  expiration,  termination or cancellation
           of the remaining  portion  thereof.  Upon the partial  exercise of an
           LSAR,  the agreement  evidencing the LSAR, the related Option and any
           Tandem SARs related to such Option, marked with such notations as the
           Committee may deem  appropriate  to evidence  such partial  exercise,
           shall be returned to the  Participant  exercising  such LSAR together
           with the payment  described in Paragraph  7(a)(i) or (ii) hereof,  as
           applicable.

                (iv) Except as  otherwise  provided in an  applicable  agreement
           evidencing an LSAR,  during the lifetime of a Participant,  each LSAR
           granted to a Participant shall be exercisable only by the Participant
           and no LSAR shall be assignable  or  transferable  otherwise  than by
           will or by the laws of descent and  distribution  and otherwise  than
           together  with  its  related  Option.   The  Committee  may,  in  any
           applicable  agreement  evidencing an LSAR,  permit a  Participant  to
           transfer all or some of the LSAR to (A) the  Participant's  Immediate
           Family  Members,  (B) a trust or trusts for the exclusive  benefit of
           such Immediate

                                      -10-

<PAGE>

           Family Members, or (C) other parties approved by the Committee in its
           absolute  discretion.  Following any such transfer,  any  transferred
           LSARs shall  continue to be subject to the same terms and  conditions
           as were applicable immediately prior to the transfer.

                (v) An LSAR  shall be  exercised  by  delivering  notice  to the
           Company's  principal  office,  to the attention of its Secretary,  no
           less than five business days in advance of the effective  date of the
           proposed exercise. Such notice shall be accompanied by the applicable
           agreement evidencing the LSAR, the related Option and any Tandem SARs
           relating  to such  Option,  shall  specify  the  number  of shares of
           Company  Stock with respect to which the LSAR is being  exercised and
           the  effective  date of the proposed  exercise and shall be signed by
           the Participant. The Participant may withdraw such notice at any time
           prior to the  close  of  business  on the  business  day  immediately
           preceding the effective date of the proposed exercise,  in which case
           such agreement shall be returned to him.

8.       Tandem SARs

           The  Committee  may  grant  in  connection  with any  Option  granted
hereunder  one or more  Tandem  SARs  relating  to a number of shares of Company
Stock less than or equal to the number of shares of Company Stock subject to the
related  Option.  A Tandem SAR may be granted at the same time as, or subsequent
to the time  that,  its  related  Option is  granted.  Each  Tandem SAR shall be
evidenced by an agreement in such form as the Committee  shall from time to time
approve. Tandem SARs shall comply with and be subject to the following terms and
conditions:

           (a)    Benefit Upon Exercise

                The  exercise  of a Tandem  SAR with  respect  to any  number of
shares of Company Stock shall entitle a Participant to a cash payment,  for each
such  share,  equal to the  excess  of (i) the Fair  Market  Value of a share of
Company  Stock on the  effective  date of such  exercise  over (ii) the exercise
price of the related Option.  Such payment shall be made as soon as practicable,
but in no event  later than the  expiration  of five  business  days,  after the
effective date of such exercise.

           (b)    Term and Exercise of Tandem SAR

                (i) A Tandem  SAR shall be  exercisable  at the same time and to
           the same extent (on a proportional  basis, with any fractional amount
           being rounded down to the immediately  preceding whole number) as its
           related  Option.  Notwithstanding  the first sentence of this Section
           8(b)(i),  (A) a Tandem SAR shall not be  exercisable at any time that
           an LSAR  related  to the Option to which the Tandem SAR is related is
           exercisable  and (B) a Tandem  SAR  relating  to an  Incentive  Stock
           Option may be exercised with respect to a share of Company Stock only
           if the Fair Market Value of such share on the effective  date of such
           exercise exceeds the exercise price relating to such share.

                (ii) The  exercise  of a Tandem SAR with  respect to a number of
           shares of Company  Stock  shall  cause the  immediate  and  automatic
           cancellation of its related Option with respect to an equal number of
           shares.  The exercise of an Option, or the cancellation,  termination
           or expiration  of an Option  (other than  pursuant to this  Paragraph
           (ii)),  with  respect  to a number of shares of Company  Stock  shall
           cause the automatic and immediate  cancellation of its related Tandem
           SARs to the extent that the number of shares of Company Stock subject
           to such Option  after such  exercise,  cancellation,  termination  or
           expiration  is less than the number of shares  subject to such Tandem
           SARs.  Such  Tandem SARs shall be canceled in the order in which they
           became exercisable.

                (iii) Each Tandem SAR shall be  exercisable in whole or in part;
           provided,  that no partial  exercise  of a Tandem SAR shall be for an
           aggregate exercise price of less than $1,000. The partial exercise of
           a  Tandem  SAR  shall  not  cause  the  expiration,   termination  or
           cancellation  of the  remaining  portion  thereof.  Upon the  partial
           exercise of a Tandem SAR, the agreement  evidencing  such Tandem SAR,
           its  related  Option  and  LSARs  relating  to such  Option  shall be
           returned to the Participant  exercising such Tandem SAR together with
           the payment described in Section 8(a) hereof.

                                      -11-

<PAGE>

                (iv) Except as  otherwise  provided in an  applicable  agreement
           evidencing a Tandem SAR,  during the lifetime of a Participant,  each
           Tandem SAR granted to a Participant  shall be exercisable only by the
           Participant  and no Tandem SAR shall be  assignable  or  transferable
           otherwise  than by will or by the laws of descent  and  distribution.
           The Committee  may, in any applicable  agreement  evidencing a Tandem
           SAR,  permit a Participant  to transfer all or some of the Tandem SAR
           to (A) the  Participant's  Immediate  Family Members,  (B) a trust or
           trusts for the exclusive benefit of such Immediate Family Members, or
           (C)  other  parties   approved  by  the  Committee  in  its  absolute
           discretion.  Following any such transfer, any transferred Tandem SARs
           shall continue to be subject to the same terms and conditions as were
           applicable immediately prior to the transfer.

                (v) A Tandem SAR shall be exercised by delivering  notice to the
           Company's  principal  office,  to the attention of its Secretary,  no
           less than five business days in advance of the effective  date of the
           proposed exercise. Such notice shall be accompanied by the applicable
           agreement evidencing the Tandem SAR, its related Option and any LSARs
           related to such Option, shall specify the number of shares of Company
           Stock with respect to which the Tandem SAR is being exercised and the
           effective  date of the  proposed  exercise and shall be signed by the
           Participant.  The  Participant  may withdraw  such notice at any time
           prior to the  close  of  business  on the  business  day  immediately
           preceding the effective date of the proposed exercise,  in which case
           such agreement shall be returned to him.

9.       Stand-Alone SARs

           The Committee may grant  Stand-Alone SARs pursuant to the Plan, which
Stand-Alone  SARs shall be evidenced by agreements in such form as the Committee
shall  from time to time  approve.  Stand-Alone  SARs shall  comply  with and be
subject to the following terms and conditions:

           (a)    Exercise Price

                The exercise price of any Stand-Alone SAR granted under the Plan
shall  be  determined  by  the  Committee  at the  time  of the  grant  of  such
Stand-Alone SAR.

           (b)    Benefit Upon Exercise

                (i) The exercise of a Stand-Alone SAR with respect to any number
           of shares of Company  Stock  prior to the  occurrence  of a Change in
           Control shall entitle a Participant to a cash payment,  for each such
           share, equal to the excess of (A) the Fair Market Value of a share of
           Company Stock on the exercise date over (B) the exercise price of the
           Stand-Alone SAR.

                (ii) The  exercise  of a  Stand-Alone  SAR with  respect  to any
           number of shares of  Company  Stock on or after the  occurrence  of a
           Change in Control shall entitle a Participant to a cash payment,  for
           each such  share,  equal to the excess of (A) the  greater of (x) the
           highest price-per-share of Company Stock paid in connection with such
           Change in Control and (y) the Fair Market Value of a share of Company
           Stock on the date of such  Change in  Control  over (B) the  exercise
           price of the Stand-Alone SAR.

                (iii) All payments under this Section 9(b) shall be made as soon
           as practicable,  but in no event later than five business days, after
           the effective date of the exercise.

           (c)    Term and Exercise of Stand-Alone SARs

                (i) Each  Stand-Alone  SAR shall be  exercisable on such date or
           dates,  during  such  period and for such number of shares of Company
           Stock as shall be  determined  by the  Committee and set forth in the
           agreement evidencing such Stand-Alone SAR; provided,  however,  that:
           (A) if such agreement does not specify the date or dates on which the
           Stand-Alone  SAR will become  exercisable,  the shares subject to the
           Stand-Alone SAR shall become  exercisable in three equal installments
           on each of the  first,  second  and third  anniversary  of the day on
           which the Stand-Alone SAR is granted; (B) no Stand-Alone SAR shall be
           exercisable  after the  expiration  of ten  years  from the date such
           Stand-Alone  SAR was granted;  and (C)

                                      -12-

<PAGE>

           each  Stand-Alone  SAR  shall  be  subject  to  earlier  termination,
           expiration or cancellation as provided in the Plan.

                (ii) Each  Stand-Alone SAR may be exercised in whole or in part;
           provided,  that no partial exercise of a Stand-Alone SAR shall be for
           an aggregate exercise price of less than $1,000. The partial exercise
           of a Stand-Alone SAR shall not cause the  expiration,  termination or
           cancellation  of the  remaining  portion  thereof.  Upon the  partial
           exercise  of  a  Stand-Alone  SAR,  the  agreement   evidencing  such
           Stand-Alone SAR, marked with such notations as the Committee may deem
           appropriate to evidence such partial  exercise,  shall be returned to
           the Participant  exercising such Stand-Alone  SAR,  together with the
           payment described in Section 9(b)(i) or 9(b)(ii) hereof.

                (iii) A Stand-Alone SAR shall be exercised by delivering  notice
           to the Company's principal office, to the attention of its Secretary,
           no less than five business  days in advance of the effective  date of
           the  proposed  exercise.  Such  notice  shall be  accompanied  by the
           applicable  agreement  evidencing the Stand-Alone  SAR, shall specify
           the  number of shares of  Company  Stock  with  respect  to which the
           Stand-Alone  SAR is being  exercised  and the  effective  date of the
           proposed  exercise,  and  shall be  signed  by the  Participant.  The
           Participant  may withdraw  such notice at any time prior to the close
           of business on the business day  immediately  preceding the effective
           date of the proposed exercise, in which case the agreement evidencing
           the Stand-Alone SAR shall be returned to him.

                (iv) Except as  otherwise  provided in an  applicable  agreement
           evidencing a Stand-Alone  SAR,  during the lifetime of a Participant,
           each  Stand-Alone  SAR granted to a Participant  shall be exercisable
           only by the Participant and no Stand-Alone SAR shall be assignable or
           transferable  otherwise  than by will or by the laws of  descent  and
           distribution.   The  Committee  may,  in  any  applicable   agreement
           evidencing a Stand-Alone SAR, permit a Participant to transfer all or
           some of the Stand-Alone SAR to (A) the Participant's Immediate Family
           Members,  (B) a trust or trusts  for the  exclusive  benefit  of such
           Immediate  Family  Members,  or (C)  other  parties  approved  by the
           Committee in its absolute  discretion.  Following any such  transfer,
           any transferred  Stand-Alone SARs shall continue to be subject to the
           same terms and conditions as were applicable immediately prior to the
           transfer.

           (d)    Effect of Termination of Employment

                (i) Unless  otherwise  provided in any  agreement  evidencing  a
           Stand-Alone  SAR, in the event that the  Employment  of a Participant
           with the Company and its  Affiliates  shall  terminate for any reason
           other than Cause, Disability or death (A) Stand-Alone SARs granted to
           such  Participant,  to the extent that they were  exercisable  at the
           time of such  Termination  of  Employment,  shall remain  exercisable
           until the  expiration  of three  months  after  such  Termination  of
           Employment, on which date they shall expire, and (B) Stand-Alone SARs
           granted  to such  Participant,  to the  extent  that  they  were  not
           exercisable  at the time of such  Termination  of  Employment,  shall
           expire at the close of  business on the date of such  Termination  of
           Employment;  provided,  however,  that no  Stand-Alone  SAR  shall be
           exercisable after the expiration of its term.

                (ii) Unless  otherwise  provided in any  agreement  evidencing a
           Stand-Alone  SAR, in the event that the  Employment  of a Participant
           with the Company and its Affiliates shall terminate on account of the
           Disability or death of the Participant  (A) Stand-Alone  SARs granted
           to such Participant,  to the extent that they were exercisable at the
           time of such  Termination  of  Employment,  shall remain  exercisable
           until the expiration of the original term as provided for in the Plan
           or as specified in the agreement  evidencing the Stand-Alone SAR, and
           (B) Stand-Alone SARs granted to such Participant,  to the extent that
           they  were  not  exercisable  at the  time  of  such  Termination  of
           Employment, shall expire at the close of business on the date of such
           Termination of Employment.

                (iii) In the event of a Participant's  Termination of Employment
           for  Cause,   all  outstanding   Stand-Alone  SARs  granted  to  such
           Participant  shall  expire at the  commencement  of  business  on the
           effective date of such Termination of Employment.

                                      -13-

<PAGE>

           (e)    Acceleration of Exercise Date Upon Change in Control

                In the event a  Participant's  employment  is  terminated by the
Company, other than for Cause, on or after the occurrence of a Change in Control
but prior to the  expiration  of a  six-month  period  following  the  Change in
Control,  each  Stand-Alone  SAR granted under the Plan that is outstanding  and
unexercisable  immediately  prior to such termination of employment shall become
fully  and  immediately  exercisable  and  shall  remain  exercisable  until its
expiration, termination or cancellation pursuant to the terms of the Plan.

10.      Restricted Stock

           The Committee may grant shares of  Restricted  Stock  pursuant to the
Plan.  Each  grant of  shares  of  Restricted  Stock  shall be  evidenced  by an
agreement in such form and  containing  such terms and conditions and subject to
such  agreements  or  understandings  as the  Committee  shall from time to time
approve.  Each grant of shares of  Restricted  Stock  shall  comply  with and be
subject to the following terms and conditions:

           (a)    Issue Date and Vesting Date

                At the time of the  grant of  shares of  Restricted  Stock,  the
Committee  shall  establish  an Issue Date or Issue Dates and a Vesting  Date or
Vesting Dates with respect to such shares.  The Committee may divide such shares
into  classes and assign a different  Issue Date  and/or  Vesting  Date for each
class.  If the Committee does not specify a Vesting Date or Vesting Dates at the
time of the grant,  the shares  shall vest in three  equal  installments  on the
first,  second and third  anniversary  of the Issue Date.  Except as provided in
Sections  10(c) and 10(f)  hereof,  upon the  occurrence  of the Issue Date with
respect to a share of Restricted  Stock,  a share of  Restricted  Stock shall be
issued in accordance with the provisions of Section 10(d) hereof.  Provided that
all conditions to the vesting of a share of Restricted Stock imposed pursuant to
Section 10(b) hereof are satisfied, and except as provided in Sections 10(c) and
10(f) hereof, upon the occurrence of the Vesting Date with respect to a share of
Restricted  Stock,  such share shall vest and the  restrictions of Section 10(c)
hereof shall cease to apply to such share.

           (b)    Conditions to Vesting

                At the time of the  grant of  shares of  Restricted  Stock,  the
Committee may impose such restrictions or conditions,  not inconsistent with the
provisions  hereof,  to the  vesting  of  such  shares  as it,  in its  absolute
discretion,  deems appropriate.  By way of example and not by way of limitation,
the Committee may require, as a condition to the vesting of any class or classes
of shares of Restricted  Stock, that the Participant or the Company achieve such
performance  criteria as the  Committee  may specify at the time of the grant of
such shares.

           (c)    Restrictions on Transfer Prior to Vesting

                Prior to the vesting of a share of Restricted Stock, no transfer
of a  Participant's  rights with  respect to such share,  whether  voluntary  or
involuntary,  by operation of law or otherwise,  shall vest the transferee  with
any interest or right in or with respect to such share, but immediately upon any
attempt to  transfer  such  rights,  such share,  and all of the rights  related
thereto,  shall be forfeited by the  Participant and the transfer shall be of no
force or effect.

           (d)    Issuance of Certificates

                (i)  Except  as  provided  in  Sections  10(c) or 10(f)  hereof,
           reasonably  promptly  after the Issue Date with  respect to shares of
           Restricted  Stock,  the  Company  shall  cause  to be  issued a stock
           certificate,  registered in the name of the  Participant to whom such
           shares were  granted,  evidencing  such  shares;  provided,  that the
           Company shall not cause to be issued such a stock certificate  unless
           it has received a stock power duly  endorsed in blank with respect to
           such shares.  Each such stock  certificate  shall bear the  following
           legend:

                                      -14-

<PAGE>

                           The  transferability  of  this  certificate  and  the
                shares  of  stock   represented   hereby  are   subject  to  the
                restrictions,   terms  and  conditions   (including   forfeiture
                provisions and restrictions  against transfer)  contained in the
                1999 Walnut Financial Services, Inc. Stock Incentive Plan and an
                Agreement  entered  into  between the  registered  owner of such
                shares and Walnut  Financial  Services,  Inc. A copy of the Plan
                and  Agreement  is on file in the  office  of the  Secretary  of
                Walnut Financial Services, Inc., 650 Madison Avenue, 21st Floor,
                New York, New York 10022.

Such legend shall not be removed  from the  certificate  evidencing  such shares
until such shares vest pursuant to the terms hereof.

                (ii)  Each  certificate  issued  pursuant  to  Section  10(d)(i)
           hereof,  together  with the stock  powers  relating  to the shares of
           Restricted Stock evidenced by such certificate, shall be deposited by
           the  Company  with  a  custodian  designated  by the  Company  (which
           custodian may be the Company). The Company shall cause such custodian
           to issue to the  Participant a receipt  evidencing  the  certificates
           held by it which are registered in the name of the Participant.

           (e)    Consequences Upon Vesting

                Upon the vesting of a share of Restricted  Stock pursuant to the
terms hereof,  the  restrictions of Section 10(c) hereof shall cease to apply to
such share. Reasonably promptly after a share of Restricted Stock vests pursuant
to the terms  hereof,  the Company shall cause to be issued and delivered to the
Participant  to whom such shares were  granted,  a certificate  evidencing  such
share,  free of the legend set forth in Section 10(d)(i)  hereof,  together with
any other property of the Participant held by the custodian  pursuant to Section
16(b) hereof.

           (f)    Effect of Termination of Employment

                (i) In the event that the  Employment of a Participant  with the
           Company shall terminate for any reason (other than a termination that
           is, or is deemed to have  been,  for Cause)  prior to the  vesting of
           shares of Restricted Stock granted to such Participant,  a proportion
           of such shares,  to the extent not  forfeited or canceled on or prior
           to such Termination of Employment  pursuant to any provision  hereof,
           shall  vest on the  date  of  such  Termination  of  Employment.  The
           proportion  referred to in the preceding  sentence shall initially be
           determined  by the  Committee at the time of the grant of such shares
           of  Restricted  Stock  and may be  based  on the  achievement  of any
           conditions  imposed by the  Committee  with  respect  to such  shares
           pursuant to Section 10(b).  Such  proportion may be equal to zero. In
           the absence of any such provision in an agreement evidencing an award
           of Restricted  Stock, a Participant's  Termination of Employment with
           the Company and its  Affiliates  for any reason  (including  death or
           Disability)  shall cause the  immediate  forfeiture  of all shares of
           Restricted  Stock  that  have  not  vested  as of the  date  of  such
           Termination of Employment.

                (ii) In the event a Participant's  Employment is or is deemed to
           have been  terminated  for  Cause,  all  shares of  Restricted  Stock
           granted to such  Participant that have not vested as of the effective
           date  of  such  Termination  of  Employment   immediately   shall  be
           forfeited.

           (g)    Effect of Change in Control

                In the event a  Participant's  employment  is  terminated by the
Company, other than for Cause, on or after the occurrence of a Change in Control
but prior to the  expiration  of a  six-month  period  following  the  Change in
Control,  all shares of  Restricted  Stock  which have not vested as of the date
immediately  prior to such  termination  of  employment  (including  those  with
respect to which the Issue Date has not yet occurred), or have not been canceled
or forfeited pursuant to any provision hereof, immediately shall vest.

                                      -15-

<PAGE>

11.      Phantom Stock

           The Committee may grant shares of Phantom Stock pursuant to the Plan.
Each grant of shares of Phantom Stock shall be evidenced by an agreement in such
form as the Committee  shall from time to time approve.  Each grant of shares of
Phantom  Stock  shall  comply  with and be  subject to the  following  terms and
conditions:

           (a)    Vesting Date

                At the  time of the  grant  of  shares  of  Phantom  Stock,  the
Committee  shall  establish a Vesting Date or Vesting Dates with respect to such
shares. The Committee may divide such shares into classes and assign a different
Vesting Date for each class. If the Committee does not specify a Vesting Date or
Vesting  Dates at the time of the grant,  the shares  shall vest in three  equal
installments  on the first,  second and third  anniversary  of the date on which
such Phantom Stock was granted. Provided that all conditions to the vesting of a
share of Phantom Stock imposed  pursuant to Section 11(c) hereof are  satisfied,
and except as provided  in Section  11(d)  hereof,  upon the  occurrence  of the
Vesting Date with respect to a share of Phantom Stock, such share shall vest.

           (b)    Benefit Upon Vesting

                Upon the  vesting of a share of  Phantom  Stock,  a  Participant
shall be entitled to receive,  within 30 days after the date on which such share
vests,  an amount in cash in a lump sum equal to the sum of (i) the Fair  Market
Value of a share of  Company  Stock on the date on which  such  share of Phantom
Stock vests and (ii) the aggregate amount of cash dividends paid with respect to
a share of Company  Stock the  record  date for which  occurs  during the period
commencing  on the date on which the share of  Phantom  Stock  was  granted  and
terminating on the date on which such share vests.

           (c)    Conditions to Vesting

                At the  time of the  grant  of  shares  of  Phantom  Stock,  the
Committee may impose such restrictions or conditions,  not inconsistent with the
provisions  hereof,  to the  vesting  of  such  shares  as it,  in its  absolute
discretion,  deems appropriate.  By way of example and not by way of limitation,
the Committee may require, as a condition to the vesting of any class or classes
of shares of Phantom Stock,  that the  Participant  or the Company  achieve such
performance  criteria as the  Committee  may specify at the time of the grant of
such shares of Phantom Stock.

           (d)    Effect of Termination of Employment

                (i) In the event that the  Employment of a Participant  with the
           Company and its Affiliates shall terminate for any reason (other than
           a termination that is, or is deemed to have been, for Cause) prior to
           the vesting of shares of Phantom Stock granted to such Participant, a
           proportion of such shares, to the extent not forfeited or canceled on
           or prior to such Termination of Employment  pursuant to any provision
           hereof, shall vest on the date of such Termination of Employment. The
           proportion  referred to in the preceding  sentence initially shall be
           determined  by the  Committee at the time of the grant of such shares
           of  Phantom  Stock  and  may  be  based  on  the  achievement  of any
           conditions  imposed by the  Committee  with  respect  to such  shares
           pursuant to Section 11(c).  Such  proportion may be equal to zero. In
           the absence of any such provision in an agreement evidencing an award
           of Phantom Stock, a Participant's  Termination of Employment with the
           Company  and  its  Affiliates  for any  reason  (including  death  or
           Disability)  shall cause the  immediate  forfeiture  of all shares of
           Phantom Stock that have not vested as of the date of such Termination
           of Employment.

                (ii) In the event a Participant's  Employment is or is deemed to
           have been  terminated for Cause,  all shares of Phantom Stock granted
           to such  Participant  which  have not  vested  as of the date of such
           Termination of Employment immediately shall be forfeited.

                                      -16-

<PAGE>

           (e)    Effect of Change in Control

                In the event a  Participant's  employment  is  terminated by the
Company, other than for Cause, on or after the occurrence of a Change in Control
but prior to the  expiration  of a  six-month  period  following  the  Change in
Control,  all  shares of  Phantom  Stock  which  have not  vested as of the date
immediately  prior to such termination of employment,  or have not been canceled
or forfeited pursuant to any provision hereof, immediately shall vest.

12.      Stock Bonuses

           The  Committee  may grant Stock  Bonuses in such  amounts as it shall
determine from time to time. A Stock Bonus shall be paid at such time (including
a future  date  selected by the  Committee  at the time of grant) and subject to
such  conditions  as the Committee  shall  determine at the time of the grant of
such Stock Bonus.  Certificates  for shares of Company  Stock granted as a Stock
Bonus shall be issued in the name of the Participant to whom such grant was made
and delivered to such Participant as soon as practicable after the date on which
such  Stock  Bonus is  required  to be paid.  Prior to the date on which a Stock
Bonus awarded  hereunder is required to be paid, such award shall  constitute an
unfunded,  unsecured  promise by the Company to distribute  Company Stock in the
future.

13.      Cash Bonuses

           The Committee may, in its absolute discretion, in connection with any
grant of Restricted Stock or Stock Bonus or at any time thereafter, grant a cash
bonus,  payable  promptly after the date on which the Participant is required to
recognize  income for federal income tax purposes in connection  with such grant
of  Restricted  Stock or Stock  Bonus,  in such amounts as the  Committee  shall
determine  from  time to time;  provided,  however,  that in no event  shall the
amount of a Cash Bonus  exceed the Fair Market  Value of the  related  shares of
Restricted  Stock or Stock Bonus on such date.  A Cash Bonus shall be subject to
such  conditions  as the Committee  shall  determine at the time of the grant of
such Cash Bonus.

14.      Grant of Dividend Equivalent Rights

           The Committee may, in its absolute discretion, in connection with any
Incentive  Award  (other  than an award of shares  of  Phantom  Stock),  grant a
Dividend  Equivalent Right entitling the Participant to receive amounts equal to
the ordinary dividends that would be paid on the shares of Company Stock covered
by such Incentive  Award if such shares then were  outstanding,  during the time
such  Incentive  Award is  outstanding  and (a) in the case of Options and SARs,
during  the time  such  Options  or SARs are  unexercised  or (b) in the case of
Restricted  Stock and Stock  Bonuses,  prior to the issue  date for the  related
shares of Company  Stock.  The Committee  shall  determine  whether any Dividend
Equivalent  Rights  shall be payable in cash,  in shares of Company  Stock or in
another  form,  the time or times at which  they  shall be made,  and such other
terms and  conditions  as the  Committee  shall deem  appropriate.  No  Dividend
Equivalent Right shall be conditioned on the exercise of any Option or SAR.

15.      Other Equity-Based Awards

           The  Committee may grant other types of  equity-based  awards in such
amounts and subject to such terms and conditions,  as the Committee shall in its
discretion  determine,  subject to the  provisions of the Plan.  Such  Incentive
Awards  may  entail  the  transfer  of  actual   shares  of  Company   Stock  to
Participants,  or payment in cash or otherwise of amounts  based on the value of
shares of Company Stock.

16.      Adjustment Upon Changes in Company Stock

           (a)    Shares Available for Grants

                In the event of any  change in the  number of shares of  Company
Stock outstanding by reason of any stock dividend or split, reverse stock split,
recapitalization,  merger,  consolidation,  combination or exchange of shares or
similar  corporate  change,  the maximum  number of shares of Company Stock with
respect to which the Committee may grant Incentive Awards under Section 3 hereof
shall be appropriately adjusted by the Committee.

                                      -17-

<PAGE>

In the event of any change in the number of shares of Company Stock  outstanding
by reason of any other event or  transaction,  the Committee  may, but need not,
make such  adjustments  in the number and class of shares of Company  Stock with
respect to which  Incentive  Awards may be granted under Section 3 hereof as the
Committee may deem appropriate.

           (b)  Outstanding Restricted Stock and Phantom Stock

                Unless  the  Committee  in  its  absolute  discretion  otherwise
determines,  any securities or other property (including dividends paid in cash)
received by a Participant with respect to a share of Restricted Stock, the Issue
Date with respect to which occurs prior to such event,  but which has not vested
as of the date of such event, as a result of any dividend,  stock split, reverse
stock split, recapitalization,  merger, consolidation,  combination, exchange of
shares or otherwise  will not vest until such share of  Restricted  Stock vests,
and shall be  promptly  deposited  with the  custodian  designated  pursuant  to
Paragraph 10(d)(ii) hereof.

                The Committee may, in its absolute discretion,  adjust any grant
of shares of  Restricted  Stock,  the Issue  Date with  respect to which has not
occurred as of the date of the occurrence of any of the following events, or any
grant of shares of Phantom Stock, to reflect any dividend,  stock split, reverse
stock split, recapitalization,  merger, consolidation,  combination, exchange of
shares or similar  corporate  change as the  Committee may deem  appropriate  to
prevent the enlargement or dilution of rights of Participants under the grant.

           (c)  Outstanding  Options,  LSARs, Tandem SARs,  Stand-Alone SARs and
                Dividend  Equivalent  Rights --  Increase  or Decrease in Issued
                Shares Without Consideration

                Subject  to  any  required  action  by the  stockholders  of the
Company, in the event of any increase or decrease in the number of issued shares
of Company Stock  resulting  from a subdivision  or  consolidation  of shares of
Company  Stock or the  payment  of a stock  dividend  (but only on the shares of
Company  Stock),  or any other increase or decrease in the number of such shares
effected without receipt of  consideration  by the Company,  the Committee shall
proportionally  adjust  the number of shares of  Company  Stock  subject to each
outstanding  Option,  LSAR,  Tandem SAR and  Stand-Alone  SAR,  and the exercise
price-per-share  of  Company  Stock of each such  Option,  LSAR,  Tandem SAR and
Stand-Alone SAR and the number of any related Dividend Equivalent Rights.

           (d)  Outstanding  Options,  LSARs, Tandem SARs,  Stand-Alone SARs and
                Dividend Equivalent Rights -- Certain Mergers

                Subject  to  any  required  action  by the  stockholders  of the
Company, in the event that the Company shall be the surviving corporation in any
merger or  consolidation  (except a merger or consolidation as a result of which
the  holders  of  shares  of  Company  Stock   receive   securities  of  another
corporation),  each  Option,  LSAR,  Tandem SAR,  Stand-Alone  SAR and  Dividend
Equivalent Right  outstanding on the date of such merger or consolidation  shall
pertain to and apply to the securities which a holder of the number of shares of
Company  Stock  subject to such Option,  LSAR,  Tandem SAR,  Stand-Alone  SAR or
Dividend Equivalent Right would have received in such merger or consolidatation

           (e)  Outstanding  Options,  LSARs, Tandem SARs,  Stand-Alone SARs and
                Dividend Equivalent Rights -- Certain Other Transactions

                In the event of (i) a dissolution or liquidation of the Company,
(ii) a sale of all or substantially all of the Company's assets,  (iii) a merger
or consolidation involving the Company in which the Company is not the surviving
corporation or (iv) a merger or consolidation involving the Company in which the
Company is the surviving  corporation but the holders of shares of Company Stock
receive securities of another corporation and/or other property, including cash,
the Committee shall, in its absolute discretion, have the power to:

                (A) cancel,  effective  immediately  prior to the  occurrence of
           such event, each Option (including each LSAR,  Tandem-SAR or Dividend
           Equivalent Right related thereto) and Stand-Alone SAR (including each
           Dividend  Equivalent Right related thereto)  outstanding  immediately
           prior to such event

                                      -18-
<PAGE>

           (whether or not then exercisable), and, in full consideration of such
           cancellation,   pay  to  the  Participant  to  whom  such  Option  or
           Stand-Alone  SAR was  granted  an amount in cash,  for each  share of
           Company   Stock   subject  to  such   Option  or   Stand-Alone   SAR,
           respectively,  equal to the excess of (x) the value, as determined by
           the Committee in its absolute discretion,  of the property (including
           cash)  received by the holder of a share of Company Stock as a result
           of such  event  over  (y)  the  exercise  price  of  such  Option  or
           Stand-Alone SAR; or

                (B) provide  for the  exchange  of each  Option  (including  any
           related  LSAR,   Tandem  SAR  or  Dividend   Equivalent   Right)  and
           Stand-Alone  SAR (including any related  Dividend  Equivalent  Right)
           outstanding  immediately  prior to such  event  (whether  or not then
           exercisable)  for  an  option  on or  stock  appreciation  right  and
           dividend  equivalent  right with respect to, as appropriate,  some or
           all of the  property  for which  such  Option or  Stand-Alone  SAR is
           exchanged  and,  incident  thereto,  make an equitable  adjustment as
           determined  by  the  Committee  in  its  absolute  discretion  in the
           exercise  price of the  option or stock  appreciation  right,  or the
           number of shares or amount of property  subject to the option,  stock
           appreciation  right or dividend  equivalent right or, if appropriate,
           provide for a cash payment to the  Participant to whom such Option or
           Stand-Alone SAR was granted in partial consideration for the exchange
           of the Option or Stand-Alone SAR.

           (f)  Outstanding  Options,  LSARs, Tandem SARs,  Stand-Alone SARs and
                Dividend Equivalent Rights -- Other Changes

                In the event of any change in the  capitalization of the Company
or a  corporate  change  other than those  specifically  referred to in Sections
16(c), (d) or (e) hereof,  the Committee may, in its absolute  discretion,  make
such  adjustments in the number and class of shares  subject to Options,  LSARs,
Tandem SARs,  Stand-Alone SARs and Dividend Equivalent Rights outstanding on the
date on which such change  occurs and in the  per-share  exercise  price of each
such Option,  LSAR, Tandem SAR and Stand-Alone SAR as the Committee may consider
appropriate to prevent dilution or enlargement of rights. In addition, if and to
the extent the Committee  determines it is appropriate,  the Committee may elect
to cancel each Option  (including each LSAR,  Tandem-SAR or Dividend  Equivalent
Right related  thereto) and Stand-Alone SAR (including each Dividend  Equivalent
Right related thereto)  outstanding  immediately prior to such event (whether or
not then exercisable),  and, in full consideration of such cancellation,  pay to
the  Participant to whom such Option or Stand-Alone SAR was granted an amount in
cash, for each share of Company Stock subject to such Option or Stand-Alone SAR,
respectively,  equal to the excess of (i) the Fair Market Value of Company Stock
on the date of such  cancellation over (ii) the exercise price of such Option or
Stand-Alone SAR

           (g)  No Other Rights

                Except as expressly  provided in the Plan, no Participant  shall
have any rights by reason of any subdivision or consolidation of shares of stock
of any class,  the  payment of any  dividend,  any  increase  or decrease in the
number of shares of stock of any class or any dissolution,  liquidation,  merger
or  consolidation of the Company or any other  corporation.  Except as expressly
provided  in the Plan,  no  issuance  by the  Company  of shares of stock of any
class,  or  securities  convertible  into  shares of stock of any  class,  shall
affect,  and no adjustment by reason  thereof shall be made with respect to, the
number of shares of Company Stock subject to an Incentive  Award or the exercise
price of any Option, LSAR, Tandem SAR or Stand-Alone SAR.

17.      Rights as a Stockholder

           No person shall have any rights as a stockholder  with respect to any
shares of Company Stock  covered by or relating to any  Incentive  Award granted
pursuant  to this Plan until the date the  Participant  becomes  the  registered
owner of such  shares.  Except as  otherwise  expressly  provided  in Section 16
hereof,  no  adjustment  to any  Incentive  Award shall be made for dividends or
other  rights  for which the  record  date  occurs  prior to the date such stock
certificate is issued.

                                      -19-

<PAGE>

18.      No Special Employment Rights; No Right to Incentive Award

           Nothing  contained  in the Plan or any  Incentive  Award shall confer
upon  any  Participant  any  right  with  respect  to  the  continuation  of his
Employment  by the Company or interfere in any way with the right of the Company
or an Affiliate,  subject to the terms of any separate  employment  agreement to
the  contrary,  at any time to  terminate  such  Employment  or to  increase  or
decrease the  compensation of the Participant  from the rate in existence at the
time of the grant of an Incentive Award.

           No person shall have any claim or right to receive an Incentive Award
hereunder.  The  Committee's  granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant  or any other  Participant  or other person at any time nor preclude
the Committee  from making  subsequent  grants to such  Participant or any other
Participant or other person.

19.      Securities Matters

           (a)  The  Company   shall  be  under  no  obligation  to  effect  the
registration  pursuant to the Securities Act of any interests in the Plan or any
shares of Company Stock to be issued  hereunder or to effect similar  compliance
under any state  laws.  Notwithstanding  anything  herein to the  contrary,  the
Company  shall  not  be  obligated  to  cause  to be  issued  or  delivered  any
certificates  evidencing shares of Company Stock pursuant to the Plan unless and
until the Company is advised by its counsel  that the  issuance  and delivery of
such  certificates  is in compliance  with all applicable  laws,  regulations of
governmental  authority and the requirements of any securities exchange on which
shares of Company Stock are traded. The Committee may require, as a condition of
the issuance and delivery of  certificates  evidencing  shares of Company  Stock
pursuant  to the terms  hereof,  that the  recipient  of such  shares  make such
covenants, agreements and representations,  and that such certificates bear such
legends, as the Committee, in its sole discretion, deems necessary or desirable.

           (b) The exercise of any Option granted  hereunder  shall be effective
only at such time as  counsel to the  Company  shall  have  determined  that the
issuance and delivery of shares of Company Stock pursuant to such exercise is in
compliance with all applicable laws,  regulations of governmental  authority and
the requirements of any securities exchange on which shares of Company Stock are
traded.  The Committee may, in its sole discretion,  defer the  effectiveness of
any  exercise of an Option  granted  hereunder in order to allow the issuance of
shares of Company Stock pursuant  thereto to be made pursuant to registration or
an exemption from  registration or other methods for compliance  available under
federal or state  securities laws. The Committee shall inform the Participant in
writing of its decision to defer the  effectiveness of the exercise of an Option
granted  hereunder.  During the period that the effectiveness of the exercise of
an Option has been deferred,  the Participant  may, by written notice,  withdraw
such exercise and obtain a refund of any amount paid with respect thereto.

20.      Withholding Taxes

           (a)    Cash Remittance

                Whenever  shares of  Company  Stock  are to be  issued  upon the
exercise of an Option,  the  occurrence  of the Issue Date or Vesting  Date with
respect to a share of  Restricted  Stock or the payment of a Stock Bonus,  or in
connection with a Dividend Equivalent Right, the Company shall have the right to
require the Participant to remit to the Company,  in cash, an amount  sufficient
to satisfy the federal,  state and local withholding tax  requirements,  if any,
attributable  to such  exercise,  occurrence or payment prior to the delivery of
any certificate or certificates for such shares. In addition,  upon the exercise
of an LSAR,  Tandem  SAR or  Stand-Alone  SAR,  the grant of a Cash Bonus or the
making of a payment  with  respect  to a share of  Phantom  Stock or a  Dividend
Equivalent  Right,  the Company  shall have the right to withhold  from any cash
payment required to be made pursuant thereto an amount sufficient to satisfy the
federal,  state and local withholding tax requirements,  if any, attributable to
such exercise or grant.

                                      -20-

<PAGE>

           (b)    Stock Remittance

                At the election of the  Participant,  subject to the approval of
the  Committee,  when shares of Company Stock are to be issued upon the exercise
of an Option,  the occurrence of the Issue Date or the Vesting Date with respect
to a share of  Restricted  Stock or the grant of a Stock Bonus,  or a payment in
connection with a Dividend  Equivalent Right, in lieu of the remittance required
by Section 20(a) hereof,  the  Participant may tender to the Company a number of
shares of Company  Stock,  the Fair Market Value of which at the tender date the
Committee  determines to be  sufficient to satisfy the federal,  state and local
withholding tax requirements, if any, attributable to such exercise, occurrence,
grant or payment and not greater than the Participant's estimated total federal,
state and local tax obligations associated with such exercise, occurrence, grant
or payment.

           (c)    Stock Withholding

                The Company  shall have the right,  when shares of Company Stock
are to be issued upon the  exercise of an Option,  the  occurrence  of the Issue
Date or the  Vesting  Date with  respect to a share of  Restricted  Stock or the
grant of a Stock  Bonus or a payment in  connection  with a Dividend  Equivalent
Right, in lieu of requiring the remittance  required by Section 20(a) hereof, to
withhold a number of such shares, the Fair Market Value of which at the exercise
date the Committee determines to be sufficient to satisfy the federal, state and
local  withholding  tax  requirements,  if any,  attributable  to such exercise,
occurrence, grant or payment and is not greater than the Participant's estimated
total federal,  state and local tax  obligations  associated with such exercise,
occurrence, grant or payment.

21.      Amendment or Termination of the Plan

           The Board of Directors may, at any time,  suspend or discontinue  the
Plan or revise or amend it in any respect whatsoever; provided, however, that if
and to the extent  required  under Section 422 of the Code (if and to the extent
that the Board of Directors deems it appropriate to comply with Section 422) and
if and to the extent  required to treat some or all of the  Incentive  Awards as
"performance-based  compensation"  within the  meaning of Section  162(m) of the
Code, (if and to the extent that the Board of Directors  deems it appropriate to
meet such requirements), no amendment shall be effective without the approval of
the  stockholders  of the  Company,  that (a) except as  provided  in Section 16
hereof,  increases  the number of shares of Company  Stock with respect to which
Incentive  Awards  may be  issued  under  the Plan,  (b)  modifies  the class of
individuals  eligible to participate in the Plan or (c) materially increases the
benefits  accruing to  individuals  pursuant to the Plan.  Nothing  herein shall
restrict  the  Committee's  ability  to  exercise  its  discretionary  authority
hereunder  pursuant  to  Section 4 hereof,  which  discretion  may be  exercised
without  amendment to the Plan. No action under this Section 21 may, without the
consent of a Participant,  reduce the Participant's  rights under any previously
granted and  outstanding  Incentive Award except to the extent that the Board of
Directors  determines that such amendment is necessary or appropriate to prevent
such  Incentive  Awards from  constituting  "applicable  employee  remuneration"
within the meaning of Section 162(m) of the Code.

22.      No Obligation to Exercise

           The  grant  to a  Participant  of an  Option,  LSAR,  Tandem  SAR  or
Stand-Alone  SAR shall impose no obligation  upon such  Participant  to exercise
such Option, LSAR, Tandem SAR or Stand-Alone SAR.

23.      Transfers Upon Death

           Upon the death of a Participant, outstanding Incentive Awards granted
to such Participant may be exercised only by the executors or  administrators of
the  Participant's  estate or by any person or persons  who shall have  acquired
such right to exercise by will or by the laws of descent  and  distribution.  No
transfer by will or the laws of descent and distribution of any Incentive Award,
or the right to exercise  any  Incentive  Award,  shall be effective to bind the
Company  unless the Committee  shall have been furnished with (a) written notice
thereof and with a copy of the will and/or such  evidence as the  Committee  may
deem necessary to establish the validity of the transfer and (b) an agreement by
the  transferee  to comply with all the terms and  conditions  of the  Incentive
Award that are or would have been  applicable to the Participant and to be bound
by the  acknowledgments  made by the Participant in connection with the grant of
the Incentive Award. Except as provided in this Section 23, or in any

                                      -21-

<PAGE>

applicable  agreement  pusuant to  Sections  6(d)(iv),  7(b)(iv),  8(b)(iv),  or
9(c)(iv) of the Plan, no Incentive  Award shall be  transferable,  and Incentive
Awards  shall be  exercisable  only by a  Participant  during the  Participant's
lifetime.

24.      Expenses and Receipts

           The expenses of the Plan shall be paid by the  Company.  Any proceeds
received by the Company in connection  with any Incentive Award will be used for
general corporate purposes.

25.      Limitations Imposed by Section 162(m)

           Notwithstanding any other provision  hereunder,  prior to a Change in
Control,  if and to the  extent  that the  Committee  determines  the  Company's
federal  tax  deduction  in  respect of an  Incentive  Award may be limited as a
result of  Section  162(m) of the Code,  the  Committee  may take the  following
actions:

           (a)  With  respect  to  Options,  Tandem  SARs,  Stand-Alone  SARs or
Dividend  Equivalent  Rights,  the Committee may delay the payment in respect of
such Options,  Tandem SARs, Stand-Alone SARs or Dividend Equivalent Rights until
a date that is within 30 days  after the  earlier  to occur of (i) the date that
compensation  paid to the  Participant  no longer is  subject  to the  deduction
limitation  under Section 162(m) of the Code and (ii) the occurrence of a Change
in Control. In the event that a Participant  exercises an Option,  Tandem SAR or
Stand-Alone  SAR or would receive a payment in respect of a Dividend  Equivalent
Right at a time when the Participant is a "covered  employee," and the Committee
determines  to delay the  payment in respect of any such  Incentive  Award,  the
Committee  shall  credit  cash or, in the case of an amount  payable  in Company
Stock, the Fair Market Value of the Company Stock, payable to the Participant to
a book  account.  The  Participant  shall have no rights in respect of such book
account  and the  amount  credited  thereto  shall  not be  transferable  by the
Participant  other  than  by  will or laws  of  descent  and  distribution.  The
Committee may credit additional amounts to such book account as it may determine
in its sole discretion.  Any book account created hereunder shall represent only
an unfunded  unsecured promise by the Company to pay the amount credited thereto
to the Participant in the future.

           (b) With  respect  to  Restricted  Stock,  Phantom  Stock  and  Stock
Bonuses, the Committee may require the Participant to surrender to the Committee
any  certificates  with  respect  to  Restricted  Stock  and Stock  Bonuses  and
agreements  with respect to Phantom Stock, in order to cancel the awards of such
Restricted Stock,  Phantom Stock and Stock Bonuses (and any related Cash Bonuses
or Dividend Equivalent Rights). In exchange for such cancellation, the Committee
shall  credit to a book  account a cash amount equal to the Fair Market Value of
the shares of Company Stock subject to such awards.  The amount  credited to the
book account shall be paid to the  Participant  within 30 days after the earlier
to occur of (i) the date that  compensation paid to the Participant no longer is
subject to the deduction  limitation  under Section  162(m) of the Code and (ii)
the occurrence of a Change in Control.  The Participant  shall have no rights in
respect  of such book  account  and the  amount  credited  thereto  shall not be
transferable  by the  Participant  other  than by will  or laws of  descent  and
distribution.  The Committee may credit additional  amounts to such book account
as it may determine in its sole discretion.  Any book account created  hereunder
shall  represent  only an unfunded  unsecured  promise by the Company to pay the
amount credited thereto to the Participant in the future.

26.      Failure to Comply

           In addition to the  remedies of the Company  elsewhere  provided  for
herein,  a failure by a Participant (or beneficiary or permitted  transferee) to
comply  with  any of the  terms  and  conditions  of the  Plan or the  agreement
executed by such Participant (or beneficiary or permitted transferee) evidencing
an  Incentive  Award,  unless such failure is remedied by such  Participant  (or
beneficiary or permitted  transferee) within ten days after having been notified
of such  failure by the  Committee,  shall be grounds for the  cancellation  and
forfeiture of such Incentive  Award,  in whole or in part, as the Committee,  in
its absolute discretion, may determine.

                                      -22-

<PAGE>

27.      Effective Date of Plan

           The Plan was adopted by the Board of Directors on September 27, 1999,
subject to approval by the stockholders of the Company.  Incentive Awards may be
granted  under the Plan at any time  prior to the  receipt  of such  stockholder
approval;  provided,  however,  that each such  grant  shall be  subject to such
approval.  Without limitation on the foregoing,  no Option,  LSAR, Tandem SAR or
Stand-Alone SAR may be exercised prior to the receipt of such approval, no share
certificate  shall be issued  pursuant to a grant of  Restricted  Stock or Stock
Bonus prior to the receipt of such  approval  and no Cash Bonus or payment  with
respect to a Dividend  Equivalent  Right or share of Phantom Stock shall be paid
prior to the  receipt of such  approval.  If the Plan is not so  approved  on or
before [day before 1st anniversary of date of adoption],  2000 then the Plan and
all  Incentive   Awards  then   outstanding   under  the  Plan  shall  forthwith
automatically terminate and be of no force or effect.

28.      Term of the Plan

           The right to grant  Incentive  Awards  under the Plan will  terminate
upon the expiration of 10 years after the date the Plan was adopted.

29.      Application of Investment Company Act of 1940

           Any  provision of this Plan that would  conflict  with a provision of
the Investment  Company Act of 1940, to the extent  applicable to the Company or
any Affiliate, shall have no force or effect.

30.      Forfeiture of Gain from Awards in Certain Events

           To the extent that a Participant  breaches any  restrictive  covenant
applicable to the  Participant  (such as a  noncompetition,  nonsolicitation  or
nondisclosure  covenant) within one year after the date on which the Participant
exercises an Option,  LSAR,  Tandem SAR or Stand-Alone SAR, or the date on which
any  Restricted  Stock  or  Phantom  Stock  vests,  or the  date  on  which  the
Participant realizes income with respect to any other Incentive Award (each such
event, a "Realization  Event"),  then any gain realized by the Participant  from
the  Realization  Event  shall  be  paid  by  the  Participant  to  the  Company
immediately  upon notice from the Company.  Such gain shall be  determined as of
the date of the Realization  Event,  without regard to any subsequent  change in
the Fair  Market  Value of a share  of  Company  Stock.  To the  fullest  extent
permitted by  applicable  law,  the Company  shall have the right to offset such
gain  against  any  amounts  otherwise  owed to the  Participant  by the Company
(whether  as  wages,  vacation  pay or  pursuant  to any  benefit  plan or other
compensatory arrangement or otherwise).

31.      Applicable Law

           Except to the extent  preempted  by any  applicable  federal law, the
Plan will be construed and administered in accordance with the laws of the State
of New York, without reference to the principles of conflicts of law.

                                      -23-CREDIT AGREEMENT

                  CREDIT AGREEMENT dated as of December 17, 1998, among PROMEDCO
MANAGEMENT  COMPANY, a Delaware  corporation (the "Borrower"),  the lenders from
time to time parties to this Agreement  (the  "Lenders"),  NATIONSBANK,  N.A., a
national  banking  association,   as  agent  for  the  Lenders  hereunder,   and
NATIONSBANC MONTGOMERY SECURITIES LLC, as arranger (the "Arranger").

                                               Preliminary Statements

     1. The Lenders  have been  requested  to make  extensions  of credit to the
Borrower  to  finance  the  ongoing  working   capital  and  general   corporate
requirements of the Borrower and its Subsidiaries.

     2. The Lenders have agreed to make such  extensions  of credit,  subject to
the terms and conditions set forth below.

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

                                               SECTION 1.  DEFINITIONS

     1.1 Defined Terms.  As used in this  Agreement,  the following  terms shall
have the following meanings:

                  "Acquired Asset" means the Capital Stock, assets, control of a
         Physician Group or management  rights with respect to a Physician Group
         acquired  by the  Borrower  or any  Subsidiary  pursuant to a Permitted
         Physician Transaction.

                  "Acquired  EBITDA" means,  with respect to any Acquired Assets
         for any time  period  prior to the  acquisition  of such  assets by the
         Borrower or any  Subsidiary,  the Pro Forma ProMedCo  Distribution  for
         such period  attributable  to such assets  plus  depreciation  for such
         period attributable to such assets.

                  "Adjusted  Eurodollar Rate" means, for any Eurodollar Loan for
         any Interest Period therefor,  the rate per annum (rounded upwards,  if
         necessary,  to the nearest  1/100 of 1%)  determined by the Agent to be
         equal to the quotient  obtained by dividing (a) the Eurodollar Rate for
         such  Eurodollar  Loan  for such  Interest  Period  by (b) 1 minus  the
         Reserve Requirement for such Eurodollar Loan for such Interest Period.

<PAGE>

                                       82

DL:  1012147v8

                  "Affiliate"  means as to any Person,  any other  Person  that,
         directly or indirectly,  controls, is controlled by, or is under common
         control  with,  such Person or is a director or officer of such Person.
         For  purposes  of  this  definition,  "control"  (including  the  terms
         "controlled  by" and "under common control with") of a Person means the
         power,  directly  or  indirectly,  either to (a) vote 5% or more of the
         Capital  Stock  having  ordinary  voting  power  for  the  election  of
         directors  or other  managers of such Person or (b) direct or cause the
         direction of the management or policies of such Person, whether through
         ownership, by contract or otherwise.

                  "Affiliated Provider" means any Person that employs physicians
         for the purpose of  rendering  medical care and that has entered into a
         Service Agreement with the Borrower or any of its Subsidiaries, and any
         individual physician or other licensed health care provider, including,
         but not limited to, a physician's assistant or nurse practitioner,  who
         is employed by such Person.

                  "Agent"   means   NationsBank,   N.A.,   a  national   banking
         association,  in its  capacity as the agent for the Lenders  under this
         Agreement  and  the  other  Loan  Documents,  and  its  successors  and
         permitted assigns in such capacity.

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

                  "Aggregate  Outstanding  Revolving  Credit"  means  as to  any
         Lender at any time,  an  amount  equal to the sum of (a) the  aggregate
         principal  amount of all Loans made by such Lender then outstanding and
         (b) such  Lender's  Revolving  Credit  Commitment  Percentage of the LC
         Obligations then outstanding.

                  "Aggregate  Revolving Credit  Commitments" means, at any time,
         an amount equal to the sum of the Revolving  Credit  Commitments of all
         Lenders.

                  "Applicable  Lending  Office"  means,  for each Lender and for
         each  Type of Loan,  the  "Lending  Office"  of such  Lender  (or of an
         Affiliate of such Lender)  designated for such Type of Loan on Schedule
         1.1(d) or such other  office of such  Lender (or an  Affiliate  of such
         Lender) as such  Lender may from time to time  specify to the Agent and
         the Borrower by written  notice in accordance  with the terms hereof as
         the  office  by  which  its  Loans  of such  Type  are to be  made  and
         maintained.

<PAGE>

                  "Applicable  Margin" means,  for purposes of  calculating  the
         applicable interest rate for any day for Eurodollar Loans and Base Rate
         Loans and the  applicable  rate for the  Commitment Fee for any day for
         purposes of subsection  3.2(a), the appropriate  applicable  percentage
         set forth  below  corresponding  to the  Leverage  Ratio as of the most
         recent Calculation Date:

<TABLE>
<CAPTION>

-------------- ------------------------- -------------------- ---------------------- --------------------
                                          Applicable Margin        Applicable            Applicable
   Pricing             Leverage                  For               Margin For            Margin For
    Level                Ratio            Eurodollar Loans       Base Rate Loans       Commitment Fees
-------------- ------------------------- -------------------- ---------------------- --------------------
-------------- ------------------------- -------------------- ---------------------- --------------------
<S>           <C>                       <C>                   <C>                   <C>
      I        < 1.000 to 1.000                1.250%                   0                   .300%
-------------- ------------------------- -------------------- ---------------------- --------------------

      V        $3.250 to 1.000                 2.250%                 .750%                 .500%
-------------- ------------------------- -------------------- ---------------------- --------------------
</TABLE>

         Each  Applicable  Margin shall be determined and adjusted  quarterly on
         each  Calculation  Date occurring after the date hereof on the basis of
         the  financial   statements  delivered  by  the  Borrower  pursuant  to
         subsection  6.1(a)  or  6.1(b),  as  applicable,   and  the  Compliance
         Certificate  delivered by the Borrower  pursuant to subsection  6.2(b);
         provided,  however,  that (a) each initial  Applicable  Margin shall be
         based on Pricing  Level IV (as shown above) and shall remain at Pricing
         Level IV until the first Calculation Date occurring subsequent to March
         31, 1999 and, thereafter,  each Applicable Margin shall be based on the
         Pricing Level (as shown above)  corresponding  to the Leverage Ratio as
         of the last day of the most  recently  ended fiscal  quarter or year of
         the Borrower  preceding the  applicable  Calculation  Date,  (b) if the
         Borrower  fails to deliver to the Agent and the Lenders such  financial
         statements  and  Compliance  Certificate  for the most  recently  ended
         fiscal  quarter  or  year  of the  Borrower  preceding  the  applicable
         Calculation  Date, each Applicable  Margin from such  Calculation  Date
         shall be based on Pricing  Level V (as shown above) until the date such
         financial  statements and Compliance  Certificate  are delivered to the
         Agent and the  Lenders,  after which each  Applicable  Margin  shall be
         based on the  Pricing  Level  (as  shown  above)  corresponding  to the
         Leverage  Ratio as of the last day of the most  recently  ended  fiscal
         quarter or year of the Borrower  preceding such  Calculation  Date, (c)
         each  Applicable  Margin  shown above shall be increased by .25% on the
         Termination Date if the Borrower shall have converted the Loans to term
         loans pursuant to Section 2.4 and (d) if and for so long as any Default
         or Event  of  Default  shall  have  occurred  and be  continuing,  each
         Applicable  Margin shall be based on Pricing  Level V (as shown above).
         Each  Applicable  Margin shall be effective from one  Calculation  Date
         until the next  Calculation  Date.  Any  adjustment  in the  Applicable
         Margins shall be applicable to all Loans then existing or  subsequently
         made.

<PAGE>

                  "Application"  means  an  application,  in  such  form  as the
         Issuing  Lender may specify from time to time,  requesting  the Issuing
         Lender to issue a Letter of Credit.

                  "Assignment and Acceptance" means an Assignment and Acceptance
substantially in the form of Exhibit L.

                  "Available  Revolving  Credit  Commitment"  means,  as to  any
         Lender at any time, an amount equal to the excess,  if any, of (a) such
         Lender's  Revolving  Credit  Commitment  at such  time,  over  (b) such
         Lender's Aggregate Outstanding Revolving Credit.

                  "Base Rate"  means,  for any day,  the rate per annum equal to
         the higher of (a) the Federal  Funds Rate for such day plus one-half of
         one  percent  (.5%) and (b) the Prime Rate for such day.  Any change in
         the Base Rate due to a change in the Prime  Rate or the  Federal  Funds
         Rate shall be  effective  on the  effective  date of such change in the
         Prime Rate or the Federal Funds Rate.

                  "Base Rate  Loans"  means  Loans that bear  interest  at rates
based upon the Base Rate.

                  "Borrowing  Date" means any Business Day specified in a notice
         pursuant to Section 2.2 as a date on which the  Borrower  requests  the
         Lenders to make Loans hereunder.

                  "Business" has the meaning specified in subsection 5.17(b).

                  "Business Day" means (a) a Domestic  Business Day and (b) with
         respect  to any  Eurodollar  Loans,  a Domestic  Business  Day on which
         dealings in Dollar  deposits  are  carried out in the London  interbank
         market.

                  "Calculation  Date" means each date on or after March 31, 1999
         that is the fifth  Business Day following  receipt by the Agent and the
         Lenders of both (a) the financial  statements  required to be delivered
         pursuant to subsection  6.1(a) or 6.1(b),  as applicable,  for the most
         recently  completed  fiscal  period of the Borrower and (b) the related
         Compliance  Certificate required to be delivered pursuant to subsection
         6.2(b).

                  "Capital Expenditures" means, as to any Person for any period,
         the   aggregate   amount  paid  or  accrued  by  such  Person  and  its
         Subsidiaries  for  rental,  lease,  purchase  (including  by way of the
         acquisition  of  securities  of a Person),  construction  or use of any
         property during such period,  the value or cost of which, in accordance
         with GAAP, would appear on such Person's  consolidated balance sheet in
         the category of property, plant or equipment at the end of such period.

<PAGE>

                  "Capital  Lease  Obligations"  means,  as to any  Person,  the
         obligations  of such Person to pay rent or other  amounts under a lease
         of (or other agreement conveying the right to use) real and/or personal
         property which  obligations are required to be classified and accounted
         for as a capital  lease on a balance  sheet of such  Person  under GAAP
         and, for  purposes of this  Agreement,  the amount of such  obligations
         shall be the capitalized amount thereof,  determined in accordance with
         GAAP.

                  "Capital Stock" means, as to any Person,  the equity interests
         in such Person, including, without limitation, the shares of each class
         of capital  stock in any Person  that is a  corporation,  each class of
         partnership interest (including,  without limitation,  general, limited
         and  preference  units) in any Person that is a  partnership,  and each
         class of member  interest  in any  Person  that is a limited  liability
         company  and any and all  warrants  or options to  purchase  any of the
         foregoing.

                  "Cash Equivalents" means with respect to the Borrower and each
         of its  Subsidiaries (a) securities with maturities of one year or less
         from the date of acquisition  issued or fully  guaranteed or insured by
         the United States Government or any agency thereof, (b) certificates of
         deposit and  eurodollar  time deposits  with  maturities of one year or
         less from the date of  acquisition  and overnight  bank deposits of any
         Lender or of any  commercial  bank having capital and surplus in excess
         of  $500,000,000,  (c)  repurchase  obligations of any Lender or of any
         commercial  bank  satisfying  the  requirements  of clause  (b) of this
         definition,  having a term of not more than thirty days with respect to
         securities  issued or fully  guaranteed or insured by the United States
         Government,  (d) commercial  paper of a domestic  issuer rated at least
         A-2 by S&P or P-2 by Moody's,  (e)  securities  with  maturities of one
         year or less from the date of acquisition issued or fully guaranteed by
         any state,  commonwealth  or  territory  of the United  States,  by any
         political   subdivision   or  taxing   authority  of  any  such  state,
         commonwealth or territory or by any foreign government,  the securities
         of which state, commonwealth,  territory, political subdivision, taxing
         authority or foreign government (as the case may be) are rated at least
         A by S&P or A by Moody's, (f) securities with maturities of one year or
         less from the date of acquisition  backed by standby  letters of credit
         issued by any Lender or any commercial bank satisfying the requirements
         of clause (b) of this  definition  or (g) shares of money market mutual
         or similar  funds which invest  exclusively  in assets  satisfying  the
         requirements of clauses (a) through (f) of this definition.

<PAGE>

                  "CHAMPUS" means the Civilian Health and Medical Program of the
         Uniformed  Service,  a program of medical benefits  covering former and
         active  members  of  the  uniformed   services  and  certain  of  their
         dependents,  financed and administered by the United States Departments
         of  Defense,   Health  and  Human  Services  and   Transportation   and
         established  pursuant to 10 USC ss.ss.  1071-1106,  and all regulations
         promulgated  thereunder  including  without  limitation (a) all federal
         statutes  (whether set forth in 10 USC ss.ss.  1071-1106 or  elsewhere)
         affecting  CHAMPUS  and (b) all rules,  regulations  (including  32 CFR
         199),  manuals,  orders  and  administrative,  reimbursement  and other
         guidelines  of  all  Governmental   Authorities   (including,   without
         limitation, the Department of Health and Human Services, the Department
         of Defense,  the Department of Transportation,  the Assistant Secretary
         of Defense (Health Affairs),  and the Office of CHAMPUS,  or any Person
         succeeding  to the  functions  of any  of  the  foregoing)  promulgated
         pursuant to or in connection with any of the foregoing  (whether or not
         having the force of law), in each case as may be amended,  supplemented
         or otherwise modified from time to time.

                  "CHAMPVA" means the Civilian Health and Medical Program of the
         Department of Veteran Affairs,  a program of medical benefits  covering
         retirees  and  dependents  of a former  member of the  armed  services,
         established pursuant to 38 U.S.C. ss.ss.  7301-1713 and administered by
         the  Secretary  of Veteran  Affairs,  and all  regulations  promulgated
         thereunder  including  without  limitation  (a)  all  federal  statutes
         (whether set forth in 10 USC ss.ss.  1071-1713 or elsewhere)  affecting
         CHAMPVA,   (b)  to  the  extent  applicable  to  CHAMPVA,  the  CHAMPUS
         regulations  and (c) all rules,  regulations  (including  38 CFR ss.ss.
         17.54),  manuals,  orders and  administrative,  reimbursement and other
         guidelines  of  all  Governmental   Authorities   (including,   without
         limitation, the Department of Health and Human Services, the Department
         of Defense, the Department of Transportation, the Department of Veteran
         Affairs,  the Assistant Secretary of Defense (Health Affairs),  and the
         Office of CHAMPUS,  or any Person succeeding to the functions of any of
         the foregoing) promulgated pursuant to or in connection with any of the
         foregoing (whether or not having the force of law), in each case as may
         be amended, supplemented or otherwise modified from time to time.

                  "Closing Date" means the date of this Agreement.

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

                  "Collateral"  means all assets of the Loan Parties,  now owned
         or hereafter acquired,  upon which a Lien is purported to be created by
         any Security Document.

                  "Commitment  Fee"  has the  meaning  specified  in  subsection
3.2(a).

                  "Commonly  Controlled Entity" means an entity,  whether or not
         incorporated,  which is under common  control with the Borrower  within
         the  meaning  of  Section  4001 of  ERISA  or is part of a group  which
         includes the Borrower and which is treated as a single  employer  under
         Section 414 of the Code.

                  "Compliance Certificate" means a compliance certificate in the
form of Exhibit I.

<PAGE>

                  "Consolidated  EBITDA" shall mean, for any period,  the sum of
         (a) Consolidated Net Income for such period,  plus (b) an amount which,
         in the  determination of Consolidated  Net Income for such period,  has
         been  deducted  for  (i)  Consolidated  Interest  Expense,  (ii)  total
         federal,  state and local  income  taxes  and  (iii)  depreciation  and
         amortization  expense,  all as  determined  in  accordance  with  GAAP.
         Notwithstanding  the  foregoing  (and without  duplication),  (a) if an
         Acquired  Asset has not been an Acquired  Asset of the Borrower and its
         Subsidiaries for an entire fiscal quarter of the Borrower, Consolidated
         EBITDA shall include the Acquired EBITDA  attributable to such Acquired
         Asset for the entire four quarter period for which Consolidated  EBITDA
         is being  measured,  and (b) if an Acquired  Asset has been an Acquired
         Asset for one or more but less than four full  fiscal  quarters  of the
         Borrower,   Consolidated  EBITDA  for  such  Acquired  Asset  shall  be
         calculated by annualizing the actual  Consolidated  EBITDA attributable
         to such  Acquired  Asset for such period of completed  fiscal  quarters
         over a period of four fiscal quarters.

                  "Consolidated  Fixed  Charges"  means for any  period  for the
         Borrower and its  Subsidiaries on a consolidated  basis, the sum of (a)
         Consolidated  Interest Expense for such period (less interest income of
         the Borrower and its Subsidiaries received in cash during such period),
         plus (b) all  required  payments of principal  of  Indebtedness  of the
         Borrower  and  its  Subsidiaries  during  such  period  (including  any
         redemption  or purchase of such  Indebtedness)  and discount or premium
         relating to any such Indebtedness (but excluding mandatory  prepayments
         of the Loans pursuant to subsection  3.7(b) during the Revolving Credit
         Commitment Period), plus (c) all dividends paid by the Borrower in cash
         or property during such period,  plus (d) an amount equal to 20% of the
         Aggregate  Outstanding Revolving Credit on the last day of such period,
         in each case  determined on a  consolidated  basis in  accordance  with
         GAAP.

                  "Consolidated  Interest  Expense" means,  for any period,  the
         amount of interest expense,  both expensed and capitalized,  in respect
         of Indebtedness of the Borrower or any of its Consolidated Subsidiaries
         outstanding  during such period (including  imputed interest on Capital
         Lease  Obligations)  determined on a  consolidated  basis in accordance
         with GAAP.

                  "Consolidated  Net  Income"  means,  for any  period,  the net
         income (or loss) of the Borrower and its Subsidiaries,  determined on a
         consolidated  basis in accordance with GAAP, for such period;  provided
         that there shall be excluded  from such  calculation  of net income (or
         loss) (a) the  income  (if  positive)  of any Person in which any other
         Person  (other than the  Borrower or any of its  Subsidiaries)  has any
         interest,  unless the  Borrower  has the legal right to cause  (through
         control or otherwise)  dividends or other  distributions  to be paid to
         the  Borrower or any of its  Subsidiaries  by such  Person  during such
         period in an amount equal to (i) the amount of such income,  multiplied
         by (ii) the  percentage  ownership  interest  of the  Borrower  and its
         Subsidiaries  in such  Person,  (b) the  income (or loss) of any Person
         accrued prior to the date it becomes a Subsidiary of the Borrower or is
         merged  into  or   consolidated   with  the  Borrower  or  any  of  its
         Subsidiaries  or the date such  Person's  assets  are  acquired  by the
         Borrower  or  any  of  its  Subsidiaries  and  (c)  the  income  of any
         Subsidiary  of the  Borrower  to the  extent  that the  declaration  or
         payment of dividends or similar  distributions  by such  Subsidiary  of
         that income is not at the time  permitted by any  Requirement of Law or
         Contractual Obligation applicable to such Subsidiary.

                  "Consolidated  Net  Worth"  means,  as  of  the  date  of  any
         determination  thereof,  the amount of the shareholders'  equity of the
         Borrower  and its  Consolidated  Subsidiaries  as would be shown on the
         consolidated  balance  sheet  of  the  Borrower  and  its  Consolidated
         Subsidiaries  determined on a  consolidated  basis in  accordance  with
         GAAP.

<PAGE>

                  "Consolidated  Senior  Indebtedness" means all Indebtedness of
         the   Borrower   and  its   Subsidiaries,   except   (a)   Subordinated
         Indebtedness,  (b) any  commitment or obligation of the Borrower or any
         Subsidiary to fund or advance premiums for split-dollar  life insurance
         policies  permitted by subsection  7.8(j) and (c)  Indebtedness  of the
         type referred to in clause (m) of the definition of  "Indebtedness"  in
         this Section 1.1.

                  "Consolidated  Subsidiary" means at any date any Subsidiary or
         other entity the accounts of which, in accordance  with GAAP,  would be
         consolidated  with those of the Borrower in its consolidated  financial
         statements as of such date.

                  "Continue," "Continuation," and "Continued" shall refer to the
         continuation  pursuant to subsection  3.5(b) of a Eurodollar  Loan from
         one Interest Period to the next Interest Period.

                  "Contractual   Obligation"   means,  as  to  any  Person,  any
         provision  of any security  issued by such Person or of any  agreement,
         instrument or other  undertaking  to which such Person is a party or by
         which  it  or  any  of  its  property  is  bound,  including,   without
         limitation,   any  provision  in  any  Medicare  or  Medicaid  provider
         agreement to which such Person is a party.

                  "Convert,"  "Conversion,"  and  "Converted"  shall  refer to a
         conversion pursuant to subsection 3.5(a) or Section 3.12 of one Type of
         Loan into another Type of Loan.

                  "Debt  Issuance"  means the  issuance  by the  Borrower or any
         Subsidiary  of  indebtedness  for  borrowed  money  evidenced by notes,
         bonds,  debentures  or similar  instruments  in the private  placement,
         public  debt,  loan  or  syndicated  loan  markets,  including  without
         limitation  Subordinated  Debt  and debt  convertible  into  equity  or
         Capital Stock.

                  "Default"  means  any  Event of  Default,  whether  or not any
         requirement  for the giving of notice,  the lapse of time,  or both, or
         any other condition, has been satisfied.

                  "Deposit  Account" has the meaning  specified in the Guarantee
and Collateral Agreement.

                  "Deposit  Agreement" means a Deposit Agreement,  substantially
         in the form of Exhibit F, with such  changes or  additions to such form
         as shall be  approved by the Agent,  among a  Depository  Bank,  a Loan
         Party and the relevant Affiliated Provider.

                  "Depository  Bank"  means each bank which  shall  enter into a
         Deposit  Agreement as a  "Depository  Bank"  thereunder  and as defined
         therein,  which  shall be (a) a Lender or (b) a  Qualified  Bank.  Each
         Depository Bank and Deposit Account as of the Closing Date is listed on
         Schedule 1.1(a).

                  "Dollars"  and "$" means  dollars  in lawful  currency  of the
United States of America.

<PAGE>

                  "Domestic  Business  Day"  means  any day  except a  Saturday,
         Sunday  or other  day on which  commercial  banks in  Charlotte,  North
         Carolina, are required or authorized by law to close.

                  "Eligible  Assignee" means (a) a Lender, (b) an Affiliate of a
         Lender and (c) any other  Person  approved by the Agent and,  unless an
         Event  of  Default  has  occurred  and is  continuing  at the  time any
         assignment is effected in accordance  with Section 10.6,  the Borrower,
         such  approval  not  to be  unreasonably  withheld  or  delayed  by the
         Borrower  and such  approval to be deemed  given by the  Borrower if no
         objection  is received by the  assigning  Lender and the Agent from the
         Borrower  within  two  Business  Days  after  notice  of such  proposed
         assignment  has been provided by the assigning  Lender to the Borrower;
         provided,  however,  that  neither the Borrower nor an Affiliate of the
         Borrower shall qualify as an Eligible Assignee.

                  "Environmental  Laws"  means  any  and all  foreign,  Federal,
         state, local or municipal laws, rules, orders,  regulations,  statutes,
         ordinances,  codes,  decrees,  bases of liability,  requirements of any
         Governmental  Authority or other  Requirements of Law (including common
         law)  regulating,  relating to or imposing  liability  or  standards of
         conduct  concerning the  regulation or protection of health,  safety or
         the environment, as now or may at any time hereafter be in effect.

                  "Equity  Issuance"  means any  issuance by the Borrower or any
         Subsidiary  of  Capital  Stock  to any  Person  or the  receipt  by the
         Borrower or any  Subsidiary  of a capital  contribution  from any other
         Person.  The term "Equity  Issuance"  shall include the issuance by the
         Borrower or any Subsidiary of Capital Stock pursuant to the exercise of
         options or warrants and the conversion of any Indebtedness to equity.

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

                  "Eurodollar  Loans"  means  Loans that bear  interest at rates
based upon the Adjusted Eurodollar Rate.

<PAGE>

                  "Eurodollar  Rate"  means,  for any  Eurodollar  Loan  for any
         Interest  Period  therefor,  the rate per annum  (rounded  upwards,  if
         necessary,  to the nearest 1/100 of 1%) appearing on Telerate Page 3750
         (or any  successor  page)  as the  London  interbank  offered  rate for
         deposits  in Dollars at  approximately  11:00  A.M.  (London  time) two
         Business Days prior to the first day of such Interest Period for a term
         comparable to such Interest Period.  If for any reason such rate is not
         available,  the term  "Eurodollar  Rate" shall mean, for any Eurodollar
         Loan for any  Interest  Period  therefor,  the rate per annum  (rounded
         upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
         Screen LIBO Page as the London  interbank  offered rate for deposits in
         Dollars at  approximately  11:00 A.M.  (London  time) two Business Days
         prior to the first day of such Interest Period for a term comparable to
         such  Interest  Period;  provided,  however,  if more  than one rate is
         specified on Reuters Screen LIBO Page, the applicable rate shall be the
         arithmetic mean of all such rates (rounded  upwards,  if necessary,  to
         the nearest 1/100 of 1%).

                  "Event  of  Default"  means  any of the  events  specified  in
         Section 8, provided that any requirement for the giving of notice,  the
         lapse of time, or both, or any other condition, has been satisfied.

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

                  "Existing Credit  Agreement" means that certain Second Amended
         and Restated  Credit  Agreement  dated as of April 16, 1998,  among the
         Borrower, the lenders referred to therein and NationsCredit  Commercial
         Corporation,  as agent  for the  lenders,  as the  same  may have  been
         amended or modified.

                  "Existing Subordinated Indebtedness" means all Indebtedness of
         the Borrower and its  Subsidiaries  that,  as of the Closing  Date,  is
         subordinated to the prior payment in full of the Obligations.

                  "Extension of Credit" means, as to any Lender,  the making of,
         or the issuance of, or  participation  in, a Loan by such Lender or the
         issuance of, or participation in, a Letter of Credit by such Lender.

                  "Federal  Funds Rate"  means,  for any day, the rate per annum
         (rounded  upwards,  if necessary,  to the nearest 1/100 of 1%) equal to
         the  weighted   average  of  the  rates  on  overnight   Federal  funds
         transactions  with members of the Federal  Reserve  System  arranged by
         Federal funds brokers on such day, as published by the Federal  Reserve
         Bank of New York on the Business Day next succeeding such day; provided
         that (a) if such day is not a Business  Day, the Federal Funds Rate for
         such day shall be such rate on such  transactions on the next preceding
         Business Day as so published  on the next  succeeding  Business Day and
         (b) if no such rate is so  published on such next  succeeding  Business
         Day,  the  Federal  Funds Rate for such day shall be the  average  rate
         charged to the Agent (in its  individual  capacity) on such day on such
         transactions as determined by the Agent.

                  "Fixed Charge Coverage Ratio" means, for any day, the ratio of
         (a)  Consolidated  EBITDA  for the  period of four  consecutive  fiscal
         quarters of the Borrower  ending on, or most recently  preceding,  such
         day, to (b) Consolidated Fixed Charges for such period.

                  "GAAP" means generally accepted  accounting  principles in the
         United States of America applied on a consistent basis,  subject to the
         terms of Section 1.3.

<PAGE>

                  "Governmental  Authority" means any nation or government,  any
         state or other political  subdivision thereof and any entity exercising
         executive,   legislative,   judicial,   regulatory  or   administrative
         functions of or pertaining to government.

                  "Governmental  Programs"  means Medicare,  Medicaid,  CHAMPUS,
         CHAMPVA and all other governmental health care benefit programs.

                  "Guarantee"  means (a) the Guarantee and Collateral  Agreement
         or (b) any other  guarantee  delivered  to the Agent  guaranteeing  the
         Obligations.

                  "Guarantee and Collateral  Agreement"  means the Guarantee and
         Collateral  Agreement to be executed and  delivered by the Borrower and
         each of its Subsidiaries substantially in the form of Exhibit D, as the
         same may be amended, restated, supplemented, or otherwise modified from
         time to time.

                  "Guarantee   Obligation"   means   as  to  any   Person   (the
         "guaranteeing  person"),  any obligation of (a) the guaranteeing person
         or (b) another Person (including,  without  limitation,  any bank under
         any letter of credit) to induce the creation of which the  guaranteeing
         person  has  issued  a  reimbursement,   counterindemnity   or  similar
         obligation,  in either case guaranteeing or in effect  guaranteeing any
         Indebtedness,  leases,  dividends or other  obligations  (the  "primary
         obligations") of any other third Person (the "primary  obligor") in any
         manner, whether directly or indirectly,  including, without limitation,
         any obligation of the guaranteeing  person,  whether or not contingent,
         (i)  to  purchase   any  such  primary   obligation   or  any  property
         constituting  direct or indirect security therefor,  (ii) to advance or
         supply  funds  (A) for the  purchase  or  payment  of any such  primary
         obligation or (B) to maintain working capital, equity capital, earnings
         or other  financial  performance of the primary obligor or otherwise to
         maintain  the net worth or solvency of the  primary  obligor,  (iii) to
         purchase property,  securities or services primarily for the purpose of
         assuring the owner of any such primary obligation of the ability of the
         primary  obligor to make  payment of such  primary  obligation  or (iv)
         otherwise  to assure  or hold  harmless  the owner of any such  primary
         obligation against loss in respect thereof; provided, however, that the
         term Guarantee Obligation shall not include endorsements of instruments
         for deposit or  collection  in the  ordinary  course of  business.  The
         amount of any Guarantee  Obligation of any guaranteeing person shall be
         deemed  to be the  lower  of (a)  an  amount  equal  to the  stated  or
         determinable  amount of the primary obligation in respect of which such
         Guarantee  Obligation is made and (b) the maximum amount for which such
         guaranteeing  person  may  be  liable  pursuant  to  the  terms  of the
         instrument  embodying  such Guarantee  Obligation,  unless such primary
         obligation  and the maximum amount for which such  guaranteeing  person
         may be liable are not stated or determinable,  in which case the amount
         of  such  Guarantee  Obligation  shall  be such  guaranteeing  person's
         maximum  reasonably   anticipated   liability  in  respect  thereof  as
         determined by the Borrower in good faith.

                  "Guarantor" means any Person  delivering a Guarantee  pursuant
to this Agreement.

<PAGE>

                  "HCFA"  means the Health  Care  Financing  Administration,  an
         agency of the United States Department of Health and Human Services, or
         any successor.

                  "Health  Care  Permit"   means  any  license,   certification,
         registration,   permit,   approval,   accreditation  or  authorization,
         including  but  not  limited  to,  any  state  medical  license,   Drug
         Enforcement   Agency    registration,    state   controlled   substance
         certificate,  Clinical  Laboratory  Improvements of 1988 identification
         number,  pharmacy permit or business license that is required  pursuant
         to any Requirement of Law to provide medical care or other professional
         health  care  services  or to own,  operate  or  manage  an  Affiliated
         Provider practice.

                  "Hedge  Agreements"  means  interest rate swap,  cap or collar
         agreements,  interest  rate future or option  contracts,  currency swap
         agreements,  currency  future or option  contracts,  and other  similar
         agreements.

                  "Highest Lawful Rate" means at the particular time in question
         the maximum  non-usurious rate of interest which, under applicable law,
         the Lenders are then  permitted  to charge on the  Obligations.  If the
         maximum rate of interest which,  under  applicable law, the Lenders are
         permitted  to charge on the  Obligations  shall  change  after the date
         hereof,  the Highest  Lawful Rate shall be  automatically  increased or
         decreased,  as the case may be,  from time to time as of the  effective
         time of each change in the Highest  Lawful Rate  without  notice to the
         Borrower.  To the extent,  if any, that Chapter 303 ("Chapter  303") of
         the  Texas  Finance  Code,  as  amended  (the  "Texas   Finance  Code")
         establishes  the Highest  Lawful Rate, the Highest Lawful Rate shall be
         the "weekly ceiling" (as defined in Chapter 303).

<PAGE>

                  "Indebtedness"  means,  with  respect to any  Person,  without
         duplication, (a) all obligations of such Person for borrowed money, (b)
         all obligations of such Person evidenced by bonds, debentures, notes or
         similar   instruments,   (c)  all  obligations  of  such  Person  under
         conditional  sale or  other  title  retention  agreements  relating  to
         property or assets  purchased by such Person,  (d) all  obligations  of
         such  Person for the  deferred  purchase  price of property or services
         (excluding  trade  accounts  payable not more than ninety days past due
         incurred in the ordinary course of business,  but including commitments
         or  obligations  to  advance  or fund  premiums  on  split-dollar  life
         insurance policies),  (e) all obligations of such Person secured by any
         Lien on any property or asset owned by such Person,  whether or not the
         obligations of such Person secured thereby shall have been assumed, (f)
         all Capital Lease  Obligations of such Person,  (g) all  obligations of
         such Person in respect of letters of credit,  bankers'  acceptances and
         similar  instruments,  (h) all  obligations  of such Person under Hedge
         Agreements,  (i) any "withdrawal liability" of such Person as such term
         is  defined  under Part I of  Subtitle E of Title IV of ERISA,  (j) the
         principal portion of all obligations of such Person under any Synthetic
         Lease, (k) all Guarantee Obligations of such Person, (l) all Redeemable
         Securities  of  such  Person,  (m) at any  date of  determination,  all
         obligations  or  commitments of such Person to make or fund advances or
         payments  with respect to Program  Loans during the twelve month period
         following  such  date  and  (n) the  aggregate  amount  of  uncollected
         accounts  receivable  of such Person  subject at such time to a sale of
         receivables  (or  similar  transaction)   regardless  of  whether  such
         transaction is effected  without recourse to such Person or in a manner
         that would not be  reflected  on the  balance  sheet of such  Person in
         accordance with GAAP. The  Indebtedness of any Person shall include the
         Indebtedness  of any  partnership  or  unincorporated  joint venture in
         which such Person is a general partner or joint venturer.

                  "Indemnified  Party" has the meaning  specified in  subsection
10.5(c).

                  "Insolvency"  means, with respect to any  Multiemployer  Plan,
         the condition that such Plan is insolvent within the meaning of Section
         4245 of ERISA.

                  "Insolvent" means pertaining to a condition of Insolvency.

                  "Intellectual  Property" has the meaning  specified in Section
5.9.

                  "Interest  Payment  Date"  means (a) as to any Base Rate Loan,
         the last day of each March, June, September and December, (b) as to any
         Eurodollar  Loan having an Interest Period of three months or less, the
         last day of such  Interest  Period  and (c) as to any  Eurodollar  Loan
         having an Interest  Period longer than three months,  each day which is
         three months after the first day of such  Interest  Period and the last
         day of such Interest Period.

                  "Interest Period" means with respect to any Eurodollar Loan:

                  (i) initially,  the period commencing on the Borrowing Date or
         Conversion  date,  as the case may be, with respect to such  Eurodollar
         Loan and ending one, two, three or six months  thereafter,  as selected
         by the Borrower in its Notice of Borrowing or Notice of Conversion,  as
         the case may be, given with respect thereto; and

                  (ii) thereafter, each period commencing on the last day of the
         next preceding  Interest Period  applicable to such Eurodollar Loan and
         ending one,  two,  three or six months  thereafter,  as selected by the
         Borrower  by  irrevocable  notice  to the  Agent  not less  than  three
         Business Days prior to the last day of the then current Interest Period
         with respect thereto;

         provided that, all of the foregoing provisions relating to Interest
         Periods are subject to the following:

                  (1) if any Interest  Period  pertaining to any Eurodollar Loan
         would  otherwise end on a day that is not a Business Day, such Interest
         Period shall be extended to the next succeeding Business Day (unless in
         the case of a Eurodollar Loan, the result of such extension would be to
         carry such Interest  Period into another  calendar month in which event
         such Interest  Period shall end on the immediately  preceding  Business
         Day);

<PAGE>

                  (2) any Interest Period that would otherwise extend beyond the
         Termination  Date  or  beyond  the  Maturity  Date  shall  end  on  the
         Termination Date or the Maturity Date, as the case may be;

                  (3) any Interest  Period  pertaining to a Eurodollar Loan that
         begins on the last  Business  Day of a calendar  month (or on a day for
         which there is no numerically  corresponding  day in the calendar month
         at the end of such Interest  Period) shall end on the last Business Day
         of a calendar month; and

                  (4) the Borrower  shall select  Interest  Periods so as not to
         require  a payment  or  prepayment  of any  Eurodollar  Loan  during an
         Interest Period for such Loan.

                  "Investments" has the meaning specified in Section 7.8.

                  "Issuing Lender" means NationsBank,  in its capacity as issuer
of any Letter of Credit.

                  "Joinder Agreement" means a Joinder Agreement in substantially
the form of Exhibit M.

                  "LC Commitment" means $10,000,000.

                  "LC Fee Payment Date" means the last day of each March,  June,
September and December.

                  "LC Obligations" means at any time, an amount equal to the sum
         of (a) the  aggregate  then  undrawn and  unexpired  amount of the then
         outstanding  Letters of Credit and (b) the aggregate amount of drawings
         under Letters of Credit which have not then been reimbursed pursuant to
         subsection 2.8(a).

                  "LC  Participants"  means the collective  reference to all the
Lenders other than the Issuing Lender.

                  "Lending Party" has the meaning specified in Section 10.15.

                  "Letters of Credit"  has the  meaning set forth in  subsection
2.5(a).

                  "Leverage  Ratio" shall mean,  as of any day, the ratio of (a)
         Total Debt (less  Restricted  Cash) as of such day to (b)  Consolidated
         EBITDA  for the  period  of four  consecutive  fiscal  quarters  of the
         Borrower ending on, or most recently preceding, such day.

<PAGE>

                  "Lien" means any mortgage, pledge, hypothecation,  assignment,
         deposit arrangement,  encumbrance,  lien (statutory or other),  charge,
         levy, execution, seizure, attachment, garnishment, security interest or
         other  encumbrance  or  any  preference,  priority  or  other  security
         agreement or preferential  arrangement of any kind or nature whatsoever
         (including,  without  limitation,  any conditional  sale or other title
         retention  agreement having  substantially  the same economic effect as
         any of the foregoing and any Synthetic Lease).

                  "Loan" has the  meaning  specified  in Section  2.1.  The term
         "Loan"  includes  any  Loan  that  has been  converted  to a term  loan
         pursuant to Section 2.4.

                  "Loan  Documents"  means this  Agreement,  the Notes,  and the
         Security Documents,  in each case as amended,  modified or supplemented
         from time to time.

                  "Loan Parties"  means the Borrower and each  Subsidiary of the
Borrower which is a party to a Loan Document.

                  "Lockbox  Account" has the meaning  specified in the Guarantee
and Collateral Agreement.

                  "Lockbox  Agreement" means a Lockbox Agreement,  substantially
         in the form of Exhibit E, with such  changes or  additions to such form
         as shall be approved by the Agent,  among a Loan Party,  a Lockbox Bank
         and the  Agent,  as the same may be  amended,  supplemented,  waived or
         otherwise modified from time to time.

                  "Lockbox  Bank"  means  each bank  which  shall  enter  into a
         Lockbox  Agreement  as the  "Lockbox  Bank"  thereunder  and as defined
         therein,  which  shall be (a) a Lender or (b) a  Qualified  Bank.  Each
         Lockbox  Bank and Lockbox  Account as of the Closing  Date is listed on
         Schedule 1.1(b).

                  "Material Adverse Effect" means any act, circumstance or event
         that (a) could be  material  and adverse to the  business,  operations,
         property,  condition  (financial  or  otherwise)  or  prospects  of the
         Borrower  and its  Subsidiaries  taken  as a whole,  (b) in any  manner
         whatsoever  could  materially and adversely  affect (i) the validity or
         enforceability  of this  Agreement or any of the other Loan  Documents,
         (ii) the rights,  remedies,  powers or  privileges  of the Agent or the
         Lenders under this  Agreement or under any of the other Loan  Documents
         or  (iii)  the  Collateral,  or (c)  changes,  or could  reasonably  be
         expected to change, the  characterization  and treatment of assignments
         of Receivables  from the  Affiliated  Providers to the Borrower and its
         Subsidiaries pursuant to the Service Agreements as something other than
         true sales.

                  "Material   Contract"  means,  as  to  the  Borrower  and  its
         Subsidiaries,  (a) any Service Agreement, and (b) any supply, purchase,
         employment,  tax, tax sharing,  indemnity,  shareholder,  debt or other
         agreement  that,  under  applicable  Requirements  of  Law  (including,
         without limitation,  the rules,  regulations and interpretations of the
         Securities and Exchange Commission), is required to be disclosed to the
         public.

                  "Material Environmental Amount" means an amount payable by the
         Borrower  and/or its  Subsidiaries  in excess of $100,000  for remedial
         costs, compliance costs, compensatory damages, punitive damages, fines,
         penalties or any combination thereof.

<PAGE>

                  "Materials  of  Environmental  Concern"  means any gasoline or
         petroleum  (including crude oil) or petroleum products or any hazardous
         or toxic substances,  materials or wastes, defined, listed,  classified
         or  regulated  as such in or under any  Environmental  Law,  including,
         without   limitation,   asbestos,   petroleum  or  petroleum   products
         polychlorinated biphenyls and urea-formaldehyde insulation.

                  "Maturity   Date"   means  the  second   anniversary   of  the
Termination Date.

                  "Medicaid" means the medical assistance program established by
         Title XIX of the Social  Security Act (42 USC ss.ss.  1396 et seq.) and
         any  statutes  succeeding  thereto,  and  all  regulations  promulgated
         thereunder,  including  without  limitation  (a) all  federal  statutes
         (whether  set  forth  in  Title  XIX  of  the  Social  Security  Act or
         elsewhere)  affecting  Medicaid,  (b) all state  statutes and plans for
         medical assistance enacted in connection with such statutes and federal
         rules and  regulations  promulgated  pursuant to or in connection  with
         such  statutes  and  (c)  all  applicable   provisions  of  all  rules,
         regulations,  manuals,  orders and  administrative,  reimbursement  and
         other guidelines of all Governmental  Authorities  (including,  without
         limitation,  the  Department of Health and Human  Resources,  HCFA, the
         office of the Inspector  General for the Department of Health and Human
         Services,  or any  Person  succeeding  to the  functions  of any of the
         foregoing)  promulgated  pursuant to or in  connection  with any of the
         foregoing  (whether  or not having  the force of law),  in each case as
         amended, supplemented or otherwise modified from time to time.

                  "Medicare" means the health insurance program for the aged and
         disabled  established by Title XVIII of the Social Security Act (42 USC
         ss.ss.  1395 et seq.)  and any  statutes  succeeding  thereto,  and all
         regulations  promulgated  thereunder,  including without limitation (a)
         all federal  statutes  (whether  set forth in Title XVIII of the Social
         Security Act or elsewhere)  affecting  Medicare and (b) all  applicable
         provisions   of   all   rules,   regulations,   manuals,   orders   and
         administrative,  reimbursement and other guidelines of all Governmental
         Authorities  (including,  without limitation,  the Department of Health
         and Human Services,  HCFA, the office of the Inspector  General for the
         Department of Health and Human  Services,  or any Person  succeeding to
         the functions of any of the  foregoing)  promulgated  pursuant to or in
         connection  with any of the foregoing  (whether or not having the force
         of law), in each case as amended,  supplemented  or otherwise  modified
         from time to time.

                  "Moody's" means Moody's Investors Service, Inc.
                   -------

                  "Multiemployer  Plan"  means a Plan  which is a  multiemployer
plan as defined in Section 4001(a)(3) of ERISA.

                  "NationsBank" means NationsBank, N.A., a national banking
 association.

<PAGE>

                  "Net Cash Proceeds"  means with respect to any Equity Issuance
         or Debt Issuance, the gross amount of cash proceeds paid to or received
         by the Borrower or any Subsidiary in respect of such Equity Issuance or
         Debt Issuance, as the case may be (including cash proceeds subsequently
         received  at any  time in  respect  of  such  Equity  Issuance  or Debt
         Issuance from non-cash consideration  initially received or otherwise),
         net of  underwriting  discounts  and  commissions  or  placement  fees,
         investment banking fees, legal fees,  consulting fees,  accounting fees
         and other customary fees and expenses directly incurred by the Borrower
         or any Subsidiary in connection  therewith (other than those payable to
         the Borrower or any Subsidiary or any Affiliate of any such Person).

                  "Note" has the meaning specified in subsection 3.3(e).

                  "Notice of Borrowing" means a notice in substantially the form
of Exhibit A.

                  "Notice   of   Conversion/Continuation"   means  a  notice  in
substantially the form of Exhibit B.

                  "Obligations"  means  all  present  and  future  indebtedness,
         obligations  and  liabilities  of  every  type and  description  of the
         Borrower  or any  other  Loan  Party  at any time  arising  under or in
         connection  with this  Agreement  or any other Loan  Document,  whether
         fixed or contingent, due or to become due to the Agent, any Lender, any
         Person required to be indemnified  under any Loan Document or any other
         Person  and  shall  include  (a) all  liability  for  principal  of and
         interest (including post-petition interest) on the Loans, the Notes and
         Reimbursement   Obligations  and  (b)  all  liability  under  the  Loan
         Documents  for any  additional  interest,  fees,  taxes,  compensation,
         costs, losses, expense reimbursements and indemnification.

                  "Other Taxes" has the meaning specified in subsection 3.14(b).

                  "Participant" has the meaning specified in subsection 10.6(e).

                  "PBGC"  means  the  Pension   Benefit   Guaranty   Corporation
established pursuant to Subtitle A of Title IV of ERISA.

               "Pending Physician Transactions" means the Physician Transactions
 identified on Schedule 1.1(c).

<PAGE>

                  "Permitted   Physician    Transaction"   means   a   Physician
         Transaction  that satisfies each of the following terms and conditions:
         (i) the assets  acquired,  or the business of the Physician Group whose
         Capital Stock is acquired,  relates to a line of business  permitted by
         Section  7.16,  (ii) a  Physician  Transaction  structured  as an asset
         acquisition  shall  be for the  entire  business,  division,  facility,
         operation or product line of such Physician  Group,  excluding  medical
         assets not acquired by the Borrower or a Subsidiary,  (iii) a Physician
         Transaction structured as a stock acquisition shall be effected through
         the purchase of 100% of the Capital Stock of the Physician Group by the
         Borrower  or  through a merger  between  such  Physician  Group and the
         Borrower or a Wholly Owned Subsidiary of the Borrower,  as the case may
         be, so that after  giving  effect to such  merger  100% of the  Capital
         Stock  of the  surviving  corporation  of such  merger  is owned by the
         Borrower or a Wholly Owned Subsidiary of the Borrower,  (iv) no Default
         or Event of Default  shall have  occurred  and be  continuing  or would
         result  from  such  Physician  Transaction  or  the  incurrence  of any
         Indebtedness in connection with such Physician  Transaction,  (v) as of
         the date of such  Physician  Transaction  (after  giving effect to such
         transaction),  the representations and warranties of each Loan Party in
         each Loan Document shall be true and correct on such date with the same
         force and  effect as if made on such  date,  (vi)  prior to the date of
         such Physician Transaction,  such Physician Transaction shall have been
         approved by the board of directors  (or other  governing  body) and, if
         applicable, the shareholders of the Physician Group whose Capital Stock
         or  assets  are  being  acquired  in  connection  with  such  Physician
         Transaction and no claim or challenge shall have been threatened by any
         shareholder or director of such Physician Group which could  reasonably
         be  expected  to have a  material  adverse  effect  on  such  Physician
         Transaction or a Material Adverse Effect,  (vii) the Transaction Amount
         for each such Physician  Transaction  shall not exceed  $10,000,000 and
         (viii) the aggregate  Transaction  Amount for all  Permitted  Physician
         Transactions (exclusive of Pending Physician Transactions)  consummated
         during any twelve  month period after the Closing Date shall not exceed
         $25,000,000;  provided,  however,  that  if the  aggregate  Transaction
         Amount  for  Permitted  Physician  Transactions  (exclusive  of Pending
         Physician  Transactions)  consummated  during any twelve  month  period
         after the Closing  Date shall be greater  than  $25,000,000  (before or
         after giving effect to the Physician Transaction in question), then the
         Borrower or any Subsidiary may consummate any Physician Transaction (1)
         involving no more than five doctors,  (2) having a  Transaction  Amount
         less than  $1,500,000,  (3) with  respect to which  clauses (i) through
         (vi) above shall be satisfied  and (4) that has not been objected to by
         the  Agent,  at the  request  of  Required  Lenders,  by  notice to the
         Borrower  within seven days after delivery by the Borrower to the Agent
         and the  Lenders  of a  Physician  Transaction  Notice/Consent  Request
         required  by  subsection  6.2(h)  with  respect  to  such  a  Physician
         Transaction.  In the  case of a  Physician  Transaction  that  does not
         satisfy  clause  (vii)  or  (viii)  above  and  is not  subject  to the
         immediately  preceding proviso, the Borrower may submit to the Agent at
         least  twenty-one  days  prior to the  consummation  of such  Physician
         Transaction a Physician Transaction  Notice/Consent  Request containing
         the items specified in subsection  6.2(h) and requesting the consent of
         the  Required  Lenders  (at their sole  discretion)  to such  Physician
         Transaction.  The Lenders shall use commercially  reasonable efforts to
         respond  to such a request  by the  Borrower  within  fourteen  days of
         receipt  by the  Lenders of the  information  described  in  subsection
         6.2(h); provided, however, that any failure by any Lender to approve or
         disapprove  such a request  during such period shall not  constitute an
         approval.

                  "Person"  means  an  individual,   partnership,   corporation,
         limited  liability  company,  limited liability  partnership,  business
         trust, joint stock company, trust,  unincorporated  association,  joint
         venture,    professional    corporation,    professional   association,
         Governmental Authority or other entity of whatever nature.

                  "Physician  Group" means (a) any  professional  corporation or
         professional  association  that employs or  contracts  with one or more
         licensed  physicians  for the purpose of  engaging  in the  delivery of
         medical care, and (b) any physician  practice  management company owned
         or controlled by the physician  shareholders  of any such  professional
         corporation or professional association.

<PAGE>

                  "Physician  Transaction"  means any bona fide  transaction  or
         series of related transactions,  consummated after the date thereof, by
         which the  Borrower or any  Subsidiary  (i) acquires all or part of the
         assets, or a going business or division,  of a Physician Group, whether
         through  purchase of assets or  securities,  merger or otherwise,  (ii)
         directly or indirectly acquires control of any Physician Group or (iii)
         acquires the right to manage the non-medical aspects of the business of
         any  Physician  Group.  For the purpose of this  definition,  "control"
         means the possession, directly or indirectly, of the power to direct or
         cause the direction of management  and  non-medical  policies,  whether
         through the ownership of voting  securities,  by contract or otherwise.
         Notwithstanding the above,  "control" shall not include,  and shall not
         be construed to include,  the power to direct any physician's  practice
         of  medicine  or  the  power  to  interfere  in  any  physician/patient
         relationship.

                  "Physician Transaction  Notice/Consent Request" means a notice
         of, or request  for the  Required  Lenders to consent  to, a  Physician
         Transaction,  such notice or consent request to be substantially in the
         form of Exhibit G.

                  "Plan" means, at a particular  time, any employee benefit plan
         which is covered by ERISA and in  respect  of which the  Borrower  or a
         Commonly Controlled Entity is (or, if such plan were terminated at such
         time,  would under Section 4069 of ERISA be deemed to be) an "employer"
         as defined in Section 3(5) of ERISA.

                  "Prime Rate" means the per annum rate of interest  established
         from time to time by NationsBank as its prime rate,  which rate may not
         be the lowest rate of interest charged by NationsBank to its customers.

                  "Principal  Amortization  Date"  means  the  last  day of each
March, June, September, and December.

                  "Pro Forma ProMedCo  Distribution"  means, with respect to any
         Acquired Asset for any period, the Pro Forma ProMedCo  Distribution (as
         such  term is  defined  in  Schedule  1.1(f))  based  upon the  actual,
         historical financial performance of such Acquired Asset.

                  "Program  Loan" means a loan or advance by the Borrower or any
         Subsidiary to a Physician  Group, or a commitment to make any such loan
         or  advance,  in  connection  with such  Physician  Group  becoming  an
         Affiliated  Provider  pursuant to a Pending  Physician  Transaction,  a
         Permitted  Physician  Transaction  or any other  Physician  Transaction
         approved by the  Required  Lenders,  the proceeds of which have been or
         will be used by the  Affiliated  Provider  to make loans or advances to
         the physicians who are members of such Physician Group.

                  "Properties" has the meaning specified in Section 5.17.

<PAGE>

                  "Qualified  Bank" means any bank (a) having  combined  capital
         and surplus of at least  $50,000,000  and (b) the  deposit  accounts of
         which are insured by the Federal Deposit Insurance  Corporation (or any
         successor).

                  "Receivable"  means any  right to  payment  for goods  sold or
         leased or for services rendered, whether or not such right is evidenced
         by an Instrument or Chattel Paper and whether or not it has been earned
         by performance (including, without limitation, any Account).

                  "Redeemable  Securities" of any Person means any Capital Stock
         of such Person which by its terms (or by the terms of any security into
         which  it  is   convertible  or  for  which  it  is   exchangeable   or
         exercisable),  upon the happening of any event or otherwise (a) matures
         or is  mandatorily  redeemable or subject to any  mandatory  repurchase
         requirement, pursuant to a sinking fund obligation or otherwise, (b) is
         convertible  into or exchangeable  or exercisable  for  Indebtedness or
         Redeemable Securities or (c) is redeemable or subject to any repurchase
         requirement arising at the option of the holder thereof, in whole or in
         part, in each case on or prior to the first anniversary of the Maturity
         Date.

                  "Register" has the meaning specified in subsection 10.6(c).

                  "Regulation U" means Regulation U of the Board of Governors of
         the Federal Reserve System as in effect from time to time.

                  "Regulations"  means  Regulations  T, U and X of the  Board of
         Governors of the Federal Reserve System as in effect from time to time.

                  "Reimbursement   Obligation"   means  the  obligation  of  the
         Borrower to reimburse the Issuing Lender pursuant to subsection  2.8(a)
         for amounts drawn under Letters of Credit.

                  "Reorganization"  means,  with  respect  to any  Multiemployer
         Plan,  the  condition  that such plan is in  reorganization  within the
         meaning of Section 4241 of ERISA.

                  "Reportable  Event"  means  any of the  events  set  forth  in
         Section  4043(b)  of ERISA,  other  than  those  events as to which the
         thirty day notice  period is waived under  subsections  .13,  .14, .16,
         .18, .19 or .20 of PBGC Reg. ss. 2615.

                  "Required  Lenders"  means at any time Lenders having at least
         662/3% of the aggregate amount of the Revolving Credit  Commitments or,
         if the Revolving Credit Commitments shall have been terminated, holding
         Extensions  of  Credit  evidencing  at least  662/3%  of the  Aggregate
         Outstanding Revolving Credit.

<PAGE>

                  "Requirement of Law" means, as to any Person,  the certificate
         of  incorporation  and  by-laws or other  organizational  or  governing
         documents of such Person, and any law, statute, ordinance, code, order,
         decree, treaty, rule or regulation or determination of an arbitrator or
         a court or other Governmental  Authority, in each case applicable to or
         binding upon such Person or any of its property or to which such Person
         or any of its property is subject,  including,  without limitation, all
         laws, statutes, rules, regulations,  ordinances, codes, decrees, orders
         and  guidelines   governing,   relating  or  otherwise   applicable  to
         Governmental  Programs to which such Person or its  property is subject
         or in which such Person has elected to  participate  or with which such
         Person has contracted.

                  "Reserve  Requirement" means, at any time, the maximum rate at
         which reserves (including,  without limitation, any marginal,  special,
         supplemental,  or emergency  reserves)  are  required to be  maintained
         under regulations issued from time to time by the Board of Governors of
         the Federal  Reserve  System (or any  successor) by member banks of the
         Federal Reserve System against "Eurocurrency liabilities" (as such term
         is used in Regulation D). Without limiting the effect of the foregoing,
         the Reserve Requirement shall reflect any other reserves required to be
         maintained  by such  member  banks  with  respect  to any  category  of
         liabilities  which includes deposits by reference to which the Adjusted
         Eurodollar Rate is to be determined. The Adjusted Eurodollar Rate shall
         be adjusted automatically on and as of the effective date of any change
         in the Reserve Requirement.

                  "Responsible  Officer" means the chief  executive  officer and
         the  president of the  Borrower or, with respect to financial  matters,
         the chief financial officer of the Borrower.

                  "Restricted  Cash"  means  cash  or  Cash  Equivalents  of the
         Borrower and its Subsidiaries that have been specifically escrowed in a
         manner  satisfactory  to the  Required  Lenders  for the payment of the
         split-dollar life insurance premiums permitted by subsection 7.8(j).

                  "Restricted Payment" has the meaning specified in Section 7.7.

                  "Revolving  Credit  Commitment"  means, as to any Lender,  the
         obligation of such Lender to make Loans and issue and/or participate in
         Letters  of Credit  pursuant  to  Section 2 in an  aggregate  principal
         and/or face amount not to exceed at any one time outstanding the amount
         set forth  opposite  such  Lender's  name in Schedule  1.1(d) under the
         heading  "Revolving  Credit  Commitment" or, in the case of an Eligible
         Assignee,  the  amount  specified  in  the  Assignment  and  Acceptance
         pursuant to which it assumed its Revolving  Credit  Commitment (in each
         case as such  amount  may be  adjusted  from  time to time as  provided
         herein);  collectively,  as to all the Lenders,  the "Revolving  Credit
         Commitments."

                  "Revolving  Credit  Commitment  Percentage"  means,  as to any
         Lender,  the percentage of the aggregate  Revolving Credit  Commitments
         constituted by its Revolving  Credit  Commitment  (or, if the Revolving
         Credit Commitments have terminated or expired, the percentage which (a)
         the sum of (i) such  Lender's  then  outstanding  Loans  plus (ii) such
         Lender's  interests in the aggregate LC  Obligations  then  outstanding
         then  constitutes of (b) the sum of (i) the aggregate  Loans of all the
         Lenders then  outstanding  plus (ii) the aggregate LC Obligations  then
         outstanding).

<PAGE>

                  "Revolving Credit Commitment Period" means the period from and
         including the Closing Date to but not including the  Termination  Date,
         or  such  earlier  date  as  the  Revolving  Credit  Commitments  shall
         terminate as provided herein.

                  "Security  Documents"  means the  collective  reference to the
         Guarantee and Collateral  Agreement,  the Trademark Security Agreement,
         the Lockbox  Agreements,  the Deposit Agreements and all other security
         documents  now or hereafter  delivered to the Agent  granting a Lien on
         any asset or assets of any Person to secure the Obligations or any part
         thereof.

                  "Seller Notes" means any promissory  note or other  instrument
         evidencing  a  portion  of  the  Transaction  Amount  for  a  Permitted
         Physician  Transaction  issued by the Borrower or any Subsidiary to the
         Physician  Group  that is a party  to such  transaction  or any  member
         thereof.

                  "Service  Agreement" means any agreement pursuant to which the
         Borrower or any Subsidiary  provides management  services,  facilities,
         personnel,  equipment,  supplies or other services to a Physician Group
         or an  independent  physicians  association,  as such  agreement may be
         amended, modified, or supplemented from time to time.

                  "Single  Employer  Plan"  means any Plan  which is  covered by
Title IV of ERISA, but which is not a Multiemployer Plan.

                  "Solvent"  means with  respect  to any Person on a  particular
         date,  the  condition  that on such  date,  (a) the  fair  value of the
         property  of  such  Person  is  greater   than  the  total   amount  of
         liabilities,  including, without limitation, contingent liabilities, of
         such Person,  (b) the present fair salable  value of the assets of such
         Person is not less than the  amount  that will be  required  to pay the
         probable  liability of such Person on its debts as they become absolute
         and  matured,  (c) such Person does not intend to, and does not believe
         that it will,  incur debts or liabilities  beyond such Person's ability
         to pay as such debts and liabilities  mature and (d) such Person is not
         engaged in  business  or a  transaction,  and is not about to engage in
         business  or a  transaction,  for which such  Person's  property  would
         constitute an unreasonably small amount of capital.

                  "S&P" means Standard and Poor's Rating Group.
                   ---

<PAGE>

                  "Subordinated    Indebtedness"    means   (a)   the   Existing
         Subordinated  Indebtedness and (b) any other unsecured  Indebtedness of
         the Borrower or any Subsidiary (i) no part of the principal of which is
         required  to  be  paid  (whether  by  way  of  scheduled  amortization,
         mandatory sinking fund, mandatory  redemption,  mandatory prepayment or
         otherwise)  prior to the Termination Date (exclusive of future loans or
         advances to pay premiums on split-dollar life insurance policies), (ii)
         the  payment  of the  principal  of and  interest  on which  and  other
         obligations  of the Borrower or any  Subsidiary in respect  thereof are
         subordinated  to the  prior  payment  in full of the  principal  of and
         interest (including  post-petition interest) on the Loans and all other
         Obligations  on terms  and  conditions  at least  as  favorable  to the
         Lenders as those contained on Schedule 1.1(e) and (iii) all other terms
         and conditions of which are  satisfactory  in form and substance to the
         Required   Lenders  (as  evidenced  by  their  prior  written  approval
         thereof).

                  "Subordinated    Indebtedness    Documentation"    means   the
         agreements,  indentures and other  documentation  pursuant to which any
         Subordinated Indebtedness is or has been issued.

                  "Subsidiary" of any Person means any corporation, partnership,
         joint  venture,  limited  liability  company,  trust or estate or other
         Person of which  shares of stock or other  ownership  interests  having
         ordinary  voting  power  (other  than  stock  or such  other  ownership
         interests  having  such  power  only by  reason of the  happening  of a
         contingency)  to elect a majority  of the board of  directors  or other
         managers of such  corporation,  partnership  or other entity are at the
         time  owned,  or the  management  of  which  is  otherwise  controlled,
         directly or indirectly, through one or more intermediaries, or both, by
         such  Person.   Unless  otherwise   qualified,   all  references  to  a
         "Subsidiary"  or to  "Subsidiaries"  in this Agreement shall refer to a
         Subsidiary or Subsidiaries of the Borrower.

                  "Synthetic  Lease" means any  synthetic  lease,  tax retention
         operating  lease or  off-balance  sheet  financing  product  where such
         transaction is considered  borrowed money indebtedness for tax purposes
         but which is classified as an operating lease pursuant to GAAP.

                  "Taxes" has the meaning specified in subsection 3.14(a).

                  "Term Loan Election" has the meaning specified in Section 2.4.

                  "Termination Date" means December 17, 2001.

                  "Total  Debt" shall mean,  as of any day,  the total amount of
         Indebtedness  of the Borrower and its  Consolidated  Subsidiaries as of
         such day.

                  "Trademark  Security  Agreement" means the Trademark  Security
         Agreement to be executed and  delivered by the Borrower to the Agent in
         substantially  the  form of  Exhibit  N, as the  same  may be  amended,
         supplemented, or otherwise modified from time to time.

                  "Tranche" means the collective  reference to Eurodollar  Loans
         the then current Interest Periods with respect to all of which begin on
         the same date and end on the same later date (whether or not such Loans
         shall  originally  have been  made on the same  day);  Tranches  may be
         identified as "Eurodollar Tranches," as applicable.

<PAGE>

                  "Transaction  Amount"  means,  with  respect to any  Physician
         Transaction,  the sum (without  duplication) of the following,  in each
         case  determined in accordance  with GAAP:  (a) the aggregate  original
         principal  amount of all Loans the  proceeds  of which are  utilized to
         finance such Physician Transaction, in part or in whole, (b) the amount
         of cash paid by the Borrower and its  Subsidiaries  in connection  with
         such Physician Transaction, (c) the outstanding principal amount of all
         Indebtedness  incurred,  assumed or  acquired in  connection  with such
         Physician Transaction, (d) all additional purchase price amounts in the
         form of notes and other contingent obligations, (e) all amounts paid in
         consideration  of parties'  entering into  covenants not to compete and
         consulting agreements in connection with such Physician Transaction and
         (f ) the  aggregate  fair  market  value  of  all  other  consideration
         (including  Program  Loans and  commitments  to make loans or  advances
         thereunder)  given by the Borrower and its  Subsidiaries  in connection
         with such Physician  Transaction  (exclusive of Capital Stock issued by
         the  Borrower  or any  Subsidiary  to the  seller,  but  including  any
         treasury stock reissued by the Borrower pursuant to subsection 7.7(c)).

                  "Type" means any type of Loan (i.e., a Base Rate Loan or a
         Eurodollar Loan).

                  "Uniform  Customs" means the Uniform  Customs and Practice for
         Documentary Credits (1993 Revision),  International Chamber of Commerce
         Publication No. 500, as the same may be amended from time to time.

                  "Wholly  Owned  Subsidiary"  means,  as  to  any  Person,  any
         Subsidiary  of such  Person of which  such  Person  owns,  directly  or
         indirectly  through one or more Wholly Owned  Subsidiaries,  all of the
         Capital  Stock of such  Subsidiary  other  than  directors'  qualifying
         shares or shares held by nominees.

                  "Year 2000  Compliant"  has the meaning  specified  in Section
5.20.

                  "Year 2000 Problem" has the meaning specified in Section 5.20.

     1.2 Other Definitional Provisions.  (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
any Notes, any other Loan Documents or any certificate or other document made or
delivered pursuant hereto.

                  (b) For purposes of computation of time periods hereunder, the
word "from" means "from and  including" and the words "to" and "until" each mean
"to but excluding."

                  (c) The words "hereof,"  "herein" and "hereunder" and words of
similar  import when used in this  Agreement  shall refer to this Agreement as a
whole  and not to any  particular  provision  of this  Agreement,  and  Section,
subsection,  Schedule  and  Exhibit  references  are to  this  Agreement  unless
otherwise specified.

                  (d)  Capitalized  terms used  herein  that are  defined in the
Uniform  Commercial  Code as  adopted by the State of Texas and in effect on the
Closing Date, unless otherwise defined herein,  shall have the meanings assigned
therein.

<PAGE>

                  (e) The  meanings  given  to  terms  defined  herein  shall be
equally applicable to both the singular and plural forms of such terms.

                  1.3 Accounting Terms.  Except as otherwise  expressly provided
herein, all accounting terms used herein shall be interpreted, and all financial
statements and certificates  and reports as to financial  matters required to be
delivered  to the  Agent  and  the  Lenders  hereunder  shall  be  prepared,  in
accordance with GAAP applied on a consistent  basis. All  calculations  made for
the purposes of  determining  compliance  with this  Agreement  shall (except as
otherwise  expressly  provided herein) be made by application of GAAP on a basis
consistent  with  the most  recent  annual  or  quarterly  financial  statements
delivered  pursuant  to  Section  6.1 (or,  prior to the  delivery  of the first
financial  statements  pursuant  to Section  6.1,  consistent  with the  audited
financial statements described in Section 5.1); provided,  however,  that if (a)
the Borrower  shall object to determining  such  compliance on such basis at the
time of delivery of such  financial  statements due to any change in GAAP or the
rules  promulgated with respect thereto or (b) the Agent or the Required Lenders
shall so object in writing  within ninety days after  delivery of such financial
statements,  then such calculations shall be made on a basis consistent with the
most recent financial  statements delivered by the Borrower to the Lenders as to
which no such objection shall have been made.

         SECTION 2.  AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS

                  2.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions of this Agreement,  each Lender  severally agrees to make one or more
loans (each a "Loan") to the  Borrower  from time to time  during the  Revolving
Credit  Commitment  Period  in an  aggregate  principal  amount  at any one time
outstanding  which,  when added to such  Lender's  Revolving  Credit  Commitment
Percentage of the sum of the then  outstanding LC  Obligations,  does not exceed
the amount of such Lender's  Revolving Credit Commitment then in effect.  During
the  Revolving  Credit  Commitment  Period,  the Borrower may use the  Revolving
Credit  Commitments  by borrowing,  prepaying the Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.

                  (b) The Loans  shall be made in  Dollars  and may from time to
time be (i)  Eurodollar  Loans,  (ii)  Base  Rate  Loans or (iii) a  combination
thereof,  as  determined by the Borrower and notified to the Agent in accordance
with  Sections 2.2 and 3.5,  provided that no Loan shall be made as a Eurodollar
Loan after the day that is one month prior to the Termination Date.

<PAGE>

                  2.2 Procedure for Revolving Credit Borrowing. The Borrower may
borrow  under the  Revolving  Credit  Commitments  during the  Revolving  Credit
Commitment Period on any Business Day, provided that the Borrower shall give the
Agent an irrevocable  notice in the form of a Notice of Borrowing  (which notice
must be received by the Agent prior to (a) 12:00 Noon (Charlotte, North Carolina
time) at least three Business Days prior to the requested Borrowing Date, if all
or any part of the requested Loans are to be initially  Eurodollar Loans, or (b)
prior to 12:00 Noon (Charlotte,  North Carolina time) on the requested Borrowing
Date, if the requested  Loans are to be initially  Base Rate Loans),  specifying
(i) the amount to be borrowed,  (ii) the requested Borrowing Date, (iii) whether
the borrowing is to be of Eurodollar  Loans,  Base Rate Loans,  or a combination
thereof and (iv) if the  borrowing  is to be  entirely  or partly of  Eurodollar
Loans,  the  respective  amounts  of each such  Type of Loan and the  respective
lengths of the initial  Interest  Periods  therefor.  Each  borrowing  under the
Revolving Credit  Commitments  shall be in an amount equal to (x) in the case of
Base Rate Loans,  $1,000,000 or a whole  multiple of $500,000 in excess  thereof
(or,  if  the  then  Available   Revolving  Credit  Commitments  are  less  than
$1,000,000,  such  lesser  amount)  and  (y) in the  case of  Eurodollar  Loans,
$5,000,000 or a whole multiple of $1,000,000 in excess thereof.  Upon receipt of
any such notice from the Borrower,  the Agent shall promptly  notify each Lender
thereof.  Subject to the satisfaction of the conditions  precedent  specified in
Section 4, each Lender will make the amount of its Revolving  Credit  Commitment
Percentage of each borrowing of Loans  available to the Agent for the account of
the Borrower at the office of the Agent  specified in Section 10.2 prior to 2:00
P.M.  (Charlotte,  North  Carolina  time) on the Borrowing Date requested by the
Borrower  in Dollars  and in funds  immediately  available  to the  Agent.  Such
borrowing will then be made available to the Borrower by the Agent  crediting an
account of the  Borrower at such office with the  aggregate  of the amounts made
available  to the Agent by the  Lenders  and in like  funds as  received  by the
Agent.

                  2.3 Termination or Reduction of Revolving Credit  Commitments.
The  Borrower  shall  have the  right,  upon not less  than five  Business  Days
irrevocable  notice to the Agent, to terminate the Revolving Credit  Commitments
or, from time to time, to reduce the amount of the Revolving Credit Commitments,
provided  that no such  termination  or reduction  shall be permitted  if, after
giving effect thereto and to any  prepayments of the Loans made on the effective
date thereof,  the Aggregate  Outstanding  Revolving Credit of all Lenders would
exceed the Revolving Credit Commitments then in effect. Any such reduction shall
be in an amount equal to $5,000,000 or a whole  multiple of $1,000,000 in excess
thereof and shall reduce  permanently the Revolving  Credit  Commitments then in
effect.

                  2.4 Term Loan  Election.  The Borrower may upon written notice
given to the Agent not earlier than ninety or later than sixty days prior to the
Termination  Date,  elect (the "Term Loan Election") to convert all of the Loans
outstanding  on the  Termination  Date into term loans which the Borrower  shall
repay in full in accordance with subsection 3.3(a); provided,  however, the Term
Loan  Election may not be exercised if a Default or Event of Default  shall have
occurred and be continuing on the date the notice of Term Loan Election is given
to the Agent or on the  Termination  Date.  Such notice by the Borrower shall be
irrevocable on the part of Borrower once given. In connection with any Term Loan
Election, the Borrower shall pay the fee required by subsection 3.2(b).

                  2.5 LC  Commitment.  (a)  Subject to the terms and  conditions
hereof,  the Issuing Lender,  in reliance on the agreements of the other Lenders
set forth in subsection  2.7(a)  agrees to issue letters of credit  ("Letters of
Credit")  for the  account  of the  Borrower  on any  Business  Day  during  the
Revolving Credit  Commitment Period in such form as may be approved from time to
time by the  Issuing  Lender;  provided  that the Issuing  Lender  shall have no
obligation  to issue any  Letter  of  Credit  if,  after  giving  effect to such
issuance,  (i) the LC  Obligations  would exceed the LC  Commitment  or (ii) the
Available Revolving Credit Commitment would be less than zero.

<PAGE>

                  (b)      Each Letter of Credit shall:

                           (i) be denominated in Dollars and shall be either (1)
         a standby  letter  of  credit  issued  to  support  obligations  of the
         Borrower  or  any of  its  Subsidiaries,  contingent  or  otherwise  (a
         "Standby  Letter  of  Credit"),  or (2) a  commercial  letter of credit
         issued in respect of the  purchase of goods or services by the Borrower
         and its  Subsidiaries in the ordinary course of business (a "Commercial
         Letter of Credit");

                           (ii)    expire no later than the Termination Date and

                           (iii) unless otherwise agreed to by the Agent, expire
         no later  than  365 days  after  the  date of  issuance  in the case of
         Standby  Letters of Credit,  and 180 days after the date of issuance in
         the case of Commercial Letters of Credit.

                  (c)      Each Letter of Credit shall be subject to the Uniform
Customs.

                  (d) The Issuing  Lender  shall not at any time be obligated to
issue any Letter of Credit  hereunder if such issuance  would  conflict with, or
cause the Issuing  Lender or any LC Participant to exceed any limits imposed by,
any Requirement of Law.

                  2.6 Procedure for Issuance of Letters of Credit.  The Borrower
may from time to time request  that the Issuing  Lender issue a Letter of Credit
by delivering to the Issuing Lender at its address for notices  specified herein
an Application  therefor,  completed to the  satisfaction of the Issuing Lender,
and such other  certificates,  documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application,  the Issuing Lender
will process such Application and the  certificates,  documents and other papers
and information  delivered to it in connection  therewith in accordance with its
customary  procedures and shall  promptly  issue the Letter of Credit  requested
thereby  (but in no event  shall the  Issuing  Lender be  required  to issue any
Letter of Credit  earlier  than three  Business  Days  after its  receipt of the
Application therefor and all such other certificates, documents and other papers
and  information  relating  thereto) by issuing  the  original of such Letter of
Credit to the  beneficiary  thereof or as otherwise may be agreed by the Issuing
Lender and the Borrower.  The Issuing Lender shall furnish a copy of such Letter
of Credit to the Borrower promptly following the issuance thereof.

<PAGE>

                  2.7 LC  Participations.  (a) The  Issuing  Lender  irrevocably
agrees to grant and hereby  grants to each LC  Participant,  and,  to induce the
Issuing  Lender  to issue  Letters  of  Credit  hereunder,  each LC  Participant
irrevocably  agrees to accept and purchase and hereby accepts and purchases from
the Issuing Lender, on the terms and conditions  hereinafter stated, for such LC
Participant's  own  account  and  risk an  undivided  interest  equal to such LC
Participant's  Revolving Credit Commitment Percentage (determined on the date of
issuance of the relevant Letter of Credit) in the Issuing  Lender's  obligations
and rights under each Letter of Credit  issued  hereunder and the amount of each
draft paid by the Issuing Lender thereunder. Each LC Participant unconditionally
and  irrevocably  agrees with the Issuing  Lender that, if a draft is paid under
any Letter of Credit for which the Issuing  Lender is not  reimbursed in full by
the Borrower in accordance with the terms of this Agreement, such LC Participant
shall pay to the Issuing Lender upon demand at the Issuing  Lender's address for
notices  specified  herein an amount  equal to such LC  Participant's  Revolving
Credit  Commitment  Percentage of the amount of such draft, or any part thereof,
which is not so reimbursed.

                  (b) If any amount required to be paid by any LC Participant to
the Issuing Lender pursuant to subsection  2.7(a) in respect of any unreimbursed
portion of any payment made by the Issuing  Lender under any Letter of Credit is
paid to the  Issuing  Lender  within  three  Business  Days  after the date such
payment is due, such LC Participant shall pay to the Issuing Lender on demand an
amount  equal to the product of (i) such  amount,  times (ii) the daily  average
Federal Funds Rate during the period from and including the date such payment is
required  to the date on which such  payment  is  immediately  available  to the
Issuing  Lender,  times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the  denominator of which is 360. If any
such amount  required to be paid by any LC  Participant  pursuant to  subsection
2.7(a)  is not in  fact  made  available  to  the  Issuing  Lender  by  such  LC
Participant  within three  Business Days after the date such payment is due, the
Issuing Lender shall be entitled to recover from such LC Participant, on demand,
such amount with interest thereon  calculated from such due date at the rate per
annum  applicable to Base Rate Loans  hereunder.  A  certificate  of the Issuing
Lender  submitted to any LC Participant  with respect to any amounts owing under
this subsection shall be conclusive in the absence of manifest error.

                  (c)  Whenever,  at any time after the Issuing  Lender has made
payment under any Letter of Credit and has received from any LC Participant  its
pro rata share of such payment in accordance with subsection 2.7(a), the Issuing
Lender receives any payment  related to such Letter of Credit (whether  directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by the Issuing  Lender),  or any payment of  interest  on account  thereof,  the
Issuing Lender will, if such payment is received prior to 1:00 P.M.  (Charlotte,
North  Carolina time) on a Business Day,  distribute to such LC Participant  its
pro rata share  thereof  prior to the end of such Business Day and otherwise the
Issuing Lender will distribute such payment on the next succeeding Business Day;
provided,  however,  that in the event  that any such  payment  received  by the
Issuing Lender shall be required to be returned by the Issuing  Lender,  such LC
Participant  shall return to the Issuing Lender the portion  thereof  previously
distributed by the Issuing Lender to it.

                  2.8 Reimbursement Obligation of the Borrower. (a) The Borrower
shall  reimburse the Issuing  Lender upon receipt by the Borrower of notice from
the Issuing Lender of the date and amount of a draft  presented under any Letter
of Credit  and paid by the  Issuing  Lender  for the amount of (i) such draft so
paid and (ii) any taxes,  fees,  charges or other costs or expenses  incurred by
the Issuing Lender in connection  with such payment.  Each such payment shall be
made to the  Issuing  Lender at its  address  for  notices  specified  herein in
Dollars and in  immediately  available  funds,  on the Business Day  immediately
following the date on which the Borrower receives such notice.

                  (b) Interest shall be payable on any and all amounts remaining
unpaid by the Borrower  under this Section 2.8 from the date such amounts become
payable (whether at stated maturity, by acceleration or otherwise) until payment
in full at the rate which  would be payable on any  outstanding  Base Rate Loans
which were then overdue.

<PAGE>

                  2.9 Obligations Absolute. (a) The Borrower's obligations under
Sections 2.5 through 2.8 shall be absolute and  unconditional  under any and all
circumstances  and  irrespective  of any  set-off,  counterclaim  or  defense to
payment which the Borrower may have or have had against the Issuing Lender,  any
LC Participant or any beneficiary of a Letter of Credit.

                  (b) The Borrower also agrees with the Issuing  Lender that the
Issuing  Lender shall not be responsible  for, and the Borrower's  Reimbursement
Obligations  under  subsection  2.8(a)  shall not be  affected  by,  among other
things,  (i) the validity or  genuineness  of  documents or of any  endorsements
thereon,  even  though  such  documents  shall  in  fact  prove  to be  invalid,
fraudulent  or forged,  (ii) any dispute  between or among the  Borrower and any
beneficiary  of any Letter of Credit or any other  party to which such Letter of
Credit may be transferred or (iii) any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee.

                  (c) Neither the Issuing Lender nor any LC Participant shall be
liable for any error, omission, interruption or delay in transmission,  dispatch
or delivery of any message or advice,  however  transmitted,  in connection with
any Letter of Credit,  except for errors or  omissions  caused by such  Person's
gross negligence or willful misconduct.

                  (d) The  Borrower  agrees that any action  taken or omitted by
the  Issuing  Lender  under or in  connection  with any  Letter of Credit or the
related  drafts or  documents,  if done in the  absence or gross  negligence  or
willful misconduct and in accordance with the standards of care specified in the
Uniform  Customs,  shall be binding on the  Borrower and shall not result in any
liability of the Issuing Lender or any LC Participant to the Borrower.

                  2.10  Letter  of  Credit  Payments.  If  any  draft  shall  be
presented  for  payment  under any Letter of Credit,  the Issuing  Lender  shall
promptly notify the Borrower of the date and amount thereof.  The responsibility
of the Issuing Lender to the Borrower in connection with any draft presented for
payment under any Letter of Credit shall, in addition to any payment  obligation
expressly  provided for in such Letter of Credit, be limited to determining that
the documents  (including  each draft)  delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.

                  2.11  Application.  To the extent  that any  provision  of any
Application  related to any Letter of Credit is inconsistent with the provisions
of this Agreement, the provisions of this Agreement shall apply.

                  SECTION 3..       GENERAL PROVISIONS APPLICABLE TO
                                    LOANS AND LETTERS OF CREDIT

     3.1 Interest Rates and Payment Dates.  (a) Each  Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Adjusted Eurodollar Rate plus the Applicable Margin.

<PAGE>

                  (b) Each Base Rate Loan shall bear  interest for each day that
it is  outstanding  at a rate per annum equal to the Base Rate for such day plus
the Applicable Margin.

                  (c) Upon the  occurrence,  and during the  continuance,  of an
Event of Default,  the  principal of and, to the extent  permitted by applicable
law,  interest on the Loans and any other amounts  owing  hereunder or under the
other Loan Documents  shall bear  interest,  at a per annum rate equal to (a) in
the case of principal of any Loan, the rate  applicable to such Loan during such
period  pursuant  to Section  3.1,  plus 2%, (b) in the case of  interest on any
Loan,  the Base Rate plus 2% and (c) in the case of any other  amount,  the Base
Rate plus 2%.

                  (d)  Interest  shall be payable  in  arrears on each  Interest
Payment Date, the Termination Date and, if the Loans have been converted to term
loans  pursuant to Section 2.4, on the Maturity  Date;  provided  that  interest
accruing  pursuant to subsection  3.1(c),  shall be payable from time to time on
demand.

                  3.2 Commitment  Fee; Other Fees. (a) The Borrower shall pay to
the Agent for the account of each Lender a Commitment Fee (the "Commitment Fee")
for the  period  from  and  including  the  first  day of the  Revolving  Credit
Commitment Period to the Termination Date, computed at a rate per annum equal to
the  Applicable  Margin  for  Commitment  Fees on the  amount  of the  Available
Revolving  Credit  Commitment of such Lender during the period for which payment
is made,  payable  quarterly  in  arrears on the last day of each  March,  June,
September and December and on the  Termination  Date or such earlier date as the
Revolving Credit  Commitments  shall terminate or be reduced as provided herein,
commencing on the first of such dates to occur after the date hereof.

                  (b) In the event that the Borrower elects to convert the Loans
to term loans  pursuant to Section 2.4, the Borrower  shall pay to the Agent for
the account of each Lender a  conversion  fee in an amount  equal to .25% of the
outstanding  Loans of such  Lender that will be  converted  to term loans on the
Termination  Date.  Such  fee  shall  be due and  payable  on the  Business  Day
immediately preceding the Termination Date and shall be nonrefundable.

                  (c) The Borrower shall pay to the Agent and the Arranger, each
for its own account,  the fees on the dates and in the amounts  specified in the
letter agreement dated October 2, 1998, among the Borrower, the Arranger and the
Agent. Such fees shall be nonrefundable.

                  (d) The Borrower  shall pay to the Issuing Lender with respect
to each Letter of Credit issued by it under this  Agreement,  for the account of
the Issuing  Lender,  a fronting fee with respect to the period from the date of
issuance of such Letter of Credit to the expiration or termination  date of such
Letter of Credit,  computed  at a rate of .125% per annum on the face  amount of
such Letter of Credit during the period for which such fee is  calculated.  Such
fronting fee shall be payable in arrears on each LC Fee Payment  Date  occurring
after the issuance of such Letter of Credit and on the  Termination  Date (or on
such  earlier date as the  Revolving  Credit  Commitments  terminate as provided
herein) and shall be nonrefundable.

<PAGE>

                  (e) The  Borrower  shall pay to the Agent,  for the account of
the LC Participants,  a letter of credit  commission with respect to each Letter
of Credit issued under this  Agreement  with respect to the period from the date
of issuance of such Letter of Credit to the  expiration or  termination  date of
such  Letter of Credit,  computed  at a rate per annum  equal to the  Applicable
Margin in  respect  of Loans  which are  Eurodollar  Loans  from time to time in
effect on the face amount of such  Letter of Credit  during the period for which
such fee is  calculated.  Such  commission  shall be shared ratably among the LC
Participants in accordance with their  respective  Revolving  Credit  Commitment
Percentages.  Such commission shall be payable in arrears on each LC Fee Payment
Date to occur after the issuance of such Letter of Credit and on the Termination
Date  (or on  such  earlier  date  as the  Revolving  Credit  Commitments  shall
terminate as provided herein) and shall be nonrefundable.

                  (f) In addition to the  foregoing  fees and  commissions,  the
Borrower shall pay or reimburse the Issuing Lender for such normal and customary
costs and expenses as are incurred or charged by the Issuing  Lender in issuing,
effecting payment under,  transferring,  amending or otherwise administering any
Letter of Credit.

                  3.3  Repayment  of Loans;  Evidence of Debt.  (a) The Borrower
hereby  unconditionally  promises  to pay to the Agent for the  account  of each
Lender (i) the then unpaid  principal  amount of each Loan of such Lender on the
Termination Date (or such earlier date on which the Loans become due and payable
pursuant  to  Section  8) unless  the Loans  outstanding  on such date have been
converted  into term loans  pursuant  to Section 2.4 and (ii) if the Loans shall
have been  converted  to term loans  pursuant to Section  2.4, the Loans of such
Lender outstanding on the Termination Date in consecutive quarterly installments
of principal,  the first such  installment  being payable on the first Principal
Amortization  Date  following  the  Termination  Date,  and  on  each  Principal
Amortization Date thereafter,  with all outstanding principal of the Loans being
due and payable on the  Maturity  Date (or such  earlier date on which the Loans
become  due and  payable  pursuant  to  Section  8).  Except  for the  principal
installment due on the Maturity Date,  each such  installment of principal shall
be in an amount  equal to 5% of the  outstanding  principal  of the Loans on the
Termination  Date.  The Borrower  hereby  further  agrees to pay interest on the
unpaid principal amount of the Loans from time to time outstanding from the date
hereof until  payment in full thereof at the rates per annum,  and on the dates,
set forth in Section 3.1.

                  (b) Each Lender shall  maintain in  accordance  with its usual
practice an account or accounts evidencing  indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time,  including the
amounts of principal  and interest  payable and paid to such Lender from time to
time under this Agreement.

                  (c)  The  Agent  shall  maintain  the  Register   pursuant  to
subsection 10.6(c),  and a subaccount therein for each Lender, in which shall be
recorded  (i) the  amount  of each Loan  hereunder,  the Type  thereof  and each
Interest Period, if any, applicable thereto, (ii) the amount of any principal or
interest  due and payable or to become due and payable from the Borrower to each
Lender  hereunder  and (iii)  both the amount of any sum  received  by the Agent
hereunder from the Borrower and each Lender's share thereof.

<PAGE>

                  (d) The entries  made in the Register and the accounts of each
Lender  maintained  pursuant to subsection 3.3(b) shall, to the extent permitted
by applicable  law, be prima facie  evidence of the existence and amounts of the
obligations  of the  Borrower  therein  recorded;  provided,  however,  that the
failure of any Lender or the Agent to maintain the Register or any such account,
or any error  therein,  shall not in any  manner  affect the  obligation  of the
Borrower to repay (with  applicable  interest) the Loans made to the Borrower by
such Lender in accordance with the terms of this Agreement.

                  (e) The  Borrower  agrees that it will  execute and deliver to
each Lender on or before the Closing  Date,  a  promissory  note of the Borrower
dated the date hereof evidencing the Loans of such Lender,  substantially in the
form of Exhibit C, with a  principal  amount  equal to such  Lender's  Revolving
Credit Commitment (each, as amended,  modified,  extended,  renewed, or replaced
from time to time, a "Note").

                  3.4  Computation of Interest and Fees. (a) Interest,  whenever
it is calculated on the basis of the Base Rate, shall be calculated on the basis
of a 365 (or 366,  as the case may be) day  year for the  actual  days  elapsed.
Interest,  whenever it is  calculated  on the basis of the  Adjusted  Eurodollar
Rate, the Commitment Fee and all other fees and  commissions  hereunder shall be
calculated on the basis of a 360-day year for the actual days elapsed. The Agent
shall  as soon as  practicable  notify  the  Borrower  and the  Lenders  of each
determination  of the Adjusted  Eurodollar Rate. Any change in the interest rate
on a Loan or any other obligation  hereunder resulting from a change in the Base
Rate, the Federal Funds Rate, the Applicable  Margin or the Reserve  Requirement
shall  become  effective  as of the opening of business on the day on which such
change  becomes  effective.  The Agent shall as soon as  practicable  notify the
Borrower  and the  Lenders  of the  effective  date and the  amount of each such
change in interest rate.

                  (b)  Each  determination  of an  interest  rate  by the  Agent
pursuant to any provision of this  Agreement  shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error.  The Agent shall,
at the request of the Borrower,  deliver to the Borrower a statement showing the
quotations  used by the Agent in  determining  any  interest  rate  pursuant  to
Section 3.1.

                  3.5 Conversion and Continuation  Options. (a) The Borrower may
by notice to the Agent in accordance with  subsection  3.5(c) elect from time to
time to Convert  Eurodollar  Loans to Base Rate  Loans and to Convert  Base Rate
Loans to Eurodollar  Loans. All or any part of outstanding  Eurodollar Loans and
Base Rate Loans may be Converted as provided  herein,  provided that (i) no Base
Rate Loan may be Converted  into a Eurodollar  Loan when any Default or Event of
Default has occurred  and is  continuing  and, in the case of any  Default,  the
Agent has given notice to the Borrower  that such a Conversion  may not be made,
(ii) no Base Rate Loan may be Converted  into a  Eurodollar  Loan after the date
that is one month  prior to the  Termination  Date or,  if the  Loans  have been
converted to term loans pursuant to Section 2.4, the Maturity Date and (iii) any
Conversion of Eurodollar  Loans may only be made on the last day of the Interest
Period with respect thereto.

<PAGE>

                  (b) Any  Eurodollar  Loans may be  Continued  as such upon the
expiration  of the then  current  Interest  Period with  respect  thereto by the
Borrower  giving  notice  to  the  Agent,  in  accordance  with  the  applicable
provisions of the term "Interest Period" set forth in Section 1.1 and subsection
3.5(c),  of the  length of the next  Interest  Period to be  applicable  to such
Loans,  provided that no  Eurodollar  Loan may be Continued as such (i) when any
Default or Event of Default has occurred and is  continuing  and, in the case of
any Default, the Agent has given notice to the Borrower that such a Continuation
may  not be  made or  (ii)  after  the  date  that  is one  month  prior  to the
Termination  Date or, if the Loans have been converted to term loans pursuant to
Section 2.4, the Maturity Date, and provided, further, in the case of Eurodollar
Loans, if the Borrower shall fail to give any required notice as described above
in this  paragraph  or if such  Continuation  is not  permitted  pursuant to the
preceding  proviso,  such Eurodollar Loans shall be  automatically  Converted to
Base Rate Loans on the last day of such then expiring Interest Period.

                  (c) The Borrower  shall  deliver  notices of  Conversions  and
Continuations  to the Agent in the form of a Notice  of  Conversion/Continuation
prior to 12:00 Noon (Charlotte, North Carolina time) at least (i) three Business
Days prior to the requested date of  Continuation,  if Loans are to be Continued
as Eurodollar  Loans,  (ii) three  Business Days prior to the requested  date of
Conversion,  if Base Rate Loans are to be Converted  into  Eurodollar  Loans and
(iii) one Business Day prior to the requested date of  Conversion,  if Loans are
to be Converted into Base Rate Loans, specifying:

     (A) the proposed date of Conversion or Continuation;

     (B) the aggregate amount of Loans to be Converted or Continued;

     (C)  the  Type  of  Loans   resulting  from  the  proposed   Conversion  or
Continuation; and

     (D) except for  Conversions  into the Base Rate Loans,  the duration of the
requested Interest Period.

                  (d) Notwithstanding anything to the contrary contained herein,
during the existence of a Default or an Event of Default and upon the request of
the Required Lenders, all or any part of any outstanding  Eurodollar Loans shall
be Converted into Base Rate Loans.  The Agent will promptly  notify the Borrower
and the Lenders of any such Conversion request.

<PAGE>

                  3.6 Pro Rata  Treatment  and Payments.  (a) Each  borrowing of
Loans by the Borrower from the Lenders  hereunder,  each payment by the Borrower
of the Commitment Fee and any reduction of the Revolving  Credit  Commitments of
the Lenders, shall be made pro rata according to the respective Revolving Credit
Commitment  Percentages of the Lenders. Each payment (including each prepayment)
by the  Borrower on account of  principal  of and interest on the Loans shall be
made pro rata according to the respective  outstanding  principal amounts of the
Loans then held by the Lenders. All payments (including  prepayments) to be made
by the Borrower  under this Agreement and the other Loan  Documents,  whether on
account  of  principal,  interest,  fees or  otherwise,  shall  be made  without
set-off, deduction, recoupment,  counterclaim or other defense and shall be made
prior to 2:00 P.M.  (Charlotte,  North Carolina time) on the due date thereof to
the Agent,  for the account of the Lenders,  at the Agent's office  specified in
Section 10.2, in Dollars and in immediately  available funds.  Payments received
by the Agent  after such time shall be deemed to have been  received on the next
Business Day. The Agent shall  distribute  such payments to the Lenders,  if any
such payment is received prior to 12:00 Noon (Charlotte, North Carolina time) on
a Business Day, in like funds as received  prior to the end of such Business Day
and otherwise the Agent shall distribute such payment to the Lenders on the next
succeeding  Business Day. If any payment  hereunder becomes due and payable on a
day other  than a Business  Day,  such  payment  shall be  extended  to the next
succeeding  Business Day and,  with respect to payments of  principal,  interest
thereon  shall be payable at the then  applicable  rate during  such  extension,
unless the result of such extension would be to extend such payment into another
calendar  month,  in which event,  such payment shall be made on the immediately
preceding Business Day.

                  (b) Unless the Agent  shall have been  notified  in writing by
any Lender  prior to a  borrowing  of a Loan that such  Lender will not make the
amount that would constitute its Revolving Credit Commitment  Percentage of such
borrowing  available  to the  Agent,  the Agent may assume  that such  Lender is
making such amount  available to the Agent,  and the Agent may, in reliance upon
such  assumption,  make available to the Borrower in respect of such borrowing a
corresponding  amount.  If such amount is not made available to the Agent by the
required  time on the  Borrowing  Date  therefor,  such Lender  shall pay to the
Agent,  on demand,  such  amount  with  interest  thereon at a rate equal to the
Federal Funds Rate until such Lender makes such amount immediately  available to
the Agent.  A certificate  of the Agent  submitted to any Lender with respect to
any amounts  owing under this Section 3.6 shall be  conclusive in the absence of
manifest error. If such Lender's Revolving Credit Commitment  Percentage of such
borrowing  is not made  available  to the  Agent  by such  Lender  within  three
Business  Days of such  Borrowing  Date,  the Agent  shall also be  entitled  to
recover such amount with interest thereon calculated from such Borrowing Date at
the rate per annum equal to the Base Rate.

                  3.7 Optional and Mandatory Prepayments.  (a) The Borrower may,
at any time  and  from  time to time,  prepay  the  Loans,  in whole or in part,
without  premium or penalty,  upon at least one Business Days prior  irrevocable
notice to the Agent,  specifying  the date and amount of prepayment  and whether
the  prepayment  is of  Eurodollar  Loans,  Base Rate  Loans,  or a  combination
thereof,  and, if a combination thereof, the principal amount allocable to each.
Upon receipt of any such  notice,  the Agent shall  promptly  notify each Lender
thereof.  If any such notice is given, the amount specified in such notice shall
be due and  payable on the date  specified  therein,  together  with any amounts
payable  pursuant to Section  3.13 and, in the case of  prepayments  of the term
loans, accrued interest to such date on the amount prepaid.  Partial prepayments
shall be in an aggregate  principal  amount of $1,000,000 or a whole multiple of
$1,000,000 in excess thereof.

<PAGE>

                  (bi  Concurrently  with the receipt of Net Cash  Proceeds from
any Debt Issuance  (other than the issuance of Seller Notes) or Equity  Issuance
(other than from the exercise of stock  options held by employees of Borrower or
its  Subsidiaries  or the issuance of Capital Stock to a Physician  Group or any
physician  associated  with a  Physician  Group as a portion of the  Transaction
Amount for a Permitted Physician Transaction) by the Borrower or any Subsidiary,
the  Borrower  shall use,  or cause such  Subsidiary  to use,  all such Net Cash
Proceeds to prepay the Loans.  If the Loans being so repaid have been  converted
into term loans  pursuant to Section 2.4,  then the Net Cash  Proceeds  shall be
applied  to  payment  of the  principal  installments  in the  inverse  order of
maturity  (after payment of all accrued and unpaid interest on the Loans and any
accrued and unpaid fees).

                  (ci To the extent that any prepayment of a Eurodollar  Loan is
made on a date  other than the last day of its  Interest  Period,  the  Borrower
shall compensate each Lender in accordance with Section 3.13. Amounts prepaid on
account of the term loans may not be reborrowed.

                  3.8 Minimum Amounts and Maximum Number of Eurodollar Tranches.
All  borrowings,  Conversions  and  Continuations  of  Loans  hereunder  and all
selections of Interest  Periods  hereunder  shall be in such amounts and be made
pursuant to such elections so that,  after giving effect thereto,  the aggregate
principal amount of the Loans comprising each Eurodollar  Tranche shall be equal
to $5,000,000 or a whole multiple of $1,000,000 in excess  thereof.  In no event
shall there be more than eight Eurodollar Tranches outstanding at any time.

                  3.9 Increased Cost and Reduced Return.  (a) If, after the date
hereof, the adoption of any Requirement of Law, or any change in any Requirement
of Law, or any change in the  interpretation  or  administration  thereof by any
Governmental  Authority,  central bank, or  comparable  agency  charged with the
interpretation  or administration  thereof,  or compliance by any Lender (or its
Applicable  Lending Office) with any request or directive (whether or not having
the  force  of  law)  of any  such  Governmental  Authority,  central  bank,  or
comparable agency:

                           (i0 shall  subject  such  Lender  (or its  Applicable
         Lending  Office) to any tax,  duty or other  charge with respect to any
         Eurodollar  Loans, its Note or its obligation to make Eurodollar Loans,
         or change the basis of taxation  of any amounts  payable to such Lender
         (or its Applicable  Lending Office) under this Agreement or its Note in
         respect  of any  Eurodollar  Loans  (other  than  taxes  imposed on the
         overall  net income of such  Lender by the  jurisdiction  in which such
         Lender has its principal office or such Applicable Lending Office);

                           (ii0 shall impose,  modify,  or deem  applicable  any
         reserve,  special deposit,  assessment,  or similar  requirement (other
         than the  Reserve  Requirement  utilized  in the  determination  of the
         Adjusted Eurodollar Rate) relating to any extensions of credit or other
         assets of, or any deposits with or other liabilities or commitments of,
         such Lender (or its Applicable Lending Office), including the Revolving
         Credit Commitment of such Lender hereunder; or

                           (iii0 shall impose on such Lender (or its  Applicable
         Lending Office) or on the London  interbank  market any other condition
         affecting this Agreement,  its Note or any of such extensions of credit
         or liabilities or commitments;

<PAGE>

and the result of any of the  foregoing  is to increase  the cost to such Lender
(or its Applicable Lending Office) of making,  Converting into,  Continuing,  or
maintaining any Eurodollar  Loans or to reduce any sum received or receivable by
such Lender (or its Applicable  Lending Office) under this Agreement or its Note
with respect to any Eurodollar Loans, then the Borrower shall pay to such Lender
on demand  such  amount or  amounts  as will  compensate  such  Lender  for such
increased cost or reduction. If any Lender requests compensation by the Borrower
under this subsection 3.9(a), the Borrower may, by notice to such Lender (with a
copy to the Agent),  suspend the  obligation  of such Lender to make or Continue
Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until the
event or condition  giving rise to such request ceases to be in effect (in which
case the  provisions  of Section 3.12 shall be  applicable);  provided that such
suspension shall not affect the right of such Lender to receive the compensation
so requested.

                  (bi  If,  after  the  date  hereof,   any  Lender  shall  have
determined  that  the  adoption  of any  Requirement  of Law  regarding  capital
adequacy  or any  change  therein  or in the  interpretation  or  administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration  thereof,  or any request or directive
regarding  capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency, has or would have the
effect  of  reducing  the rate of return on the  capital  of such  Lender or any
corporation   controlling   such  Lender  as  a  consequence  of  such  Lender's
obligations  hereunder  to  a  level  below  that  which  such  Lender  or  such
corporation  could  have  achieved  but for such  adoption,  change,  request or
directive  (taking  into  consideration  its  policies  with  respect to capital
adequacy),  then from time to time upon  demand the  Borrower  shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.

                  (ci Each Lender  shall  promptly  notify the  Borrower and the
Agent of any event of which it has knowledge,  occurring  after the date hereof,
which will entitle such Lender to compensation  pursuant to this Section 3.9 and
will designate a different  Applicable  Lending Office if such  designation will
avoid the need for, or reduce the amount of, such  compensation and will not, in
the judgment of such  Lender,  be  otherwise  disadvantageous  to it. Any Lender
claiming  compensation  under this Section 3.9 shall furnish to the Borrower and
the Agent a statement  setting forth the additional amount or amounts to be paid
to it hereunder  which shall be conclusive in the absence of manifest  error. In
determining  such  amount,  such  Lender may use any  reasonable  averaging  and
attribution methods.

                  (di  Failure  or  delay on the part of any  Lender  to  demand
compensation  pursuant to this Section 3.9 shall not constitute a waiver of such
Lender's right to demand such compensation; provided, however, that the Borrower
shall not be required to compensate any Lender  pursuant to this Section 3.9 for
any  increased  costs or  reduction in amounts  receivable  or rate of return on
capital  incurred more than 180 days prior to the date that such Lender notifies
the Borrower of the event or occurrence  giving rise to such increased  costs or
reductions  and of such  Lender's  intention  to  claim  compensation  therefor;
provided, further that, if the event or occurrence giving rise to such increased
costs or reductions is  retroactive,  then the 180-day period  referred to above
shall be extended to include the period of retroactive effect thereof.

<PAGE>

     3.10  Limitation on Types of Loans.  If on or prior to the first day of any
Interest Period for any Eurodollar Loan:

                  (ai  the  Agent  determines  (which   determination  shall  be
conclusive)  that by reason of  circumstances  affecting  the  relevant  market,
adequate and reasonable  means do not exist for ascertaining the Eurodollar Rate
for such Interest Period; or

                  (bi the Required Lenders determine (which  determination shall
be conclusive)  and notify the Agent that the Adjusted  Eurodollar Rate will not
adequately and fairly reflect the cost to the Lender of funding Eurodollar Loans
for such Interest Period;

then the Agent shall give the Borrower  prompt  notice  thereof,  and so long as
such  condition  remains in effect,  the Lenders shall be under no obligation to
make Eurodollar Loans,  Continue Eurodollar Loans, or to Convert Base Rate Loans
into  Eurodollar  Loans and the Borrower  shall,  on the last day(s) of the then
current Interest Period(s) for the outstanding  Eurodollar Loans,  either prepay
such Loans or Convert  such  Loans into Base Rate Loans in  accordance  with the
terms of this Agreement.

                  3.11 Illegality.  Notwithstanding  any other provision of this
Agreement,  in the  event  that  it  becomes  unlawful  for  any  Lender  or its
Applicable Lending Office to make, maintain, or fund Eurodollar Loans hereunder,
then such Lender shall  promptly  notify the Borrower  thereof and such Lender's
obligation to make or Continue  Eurodollar  Loans and to Convert Base Rate Loans
into  Eurodollar  Loans  shall be  suspended  until such time as such Lender may
again make, maintain, and fund Eurodollar Loans (in which case the provisions of
Section 3.12 shall be applicable).

                  3.12  Treatment of Affected  Loans.  If the  obligation of any
Lender to make  Eurodollar  Loans or to Continue,  or to Convert Base Rate Loans
into Eurodollar  Loans shall be suspended  pursuant to Section 3.9 or 3.11, such
Lender's Eurodollar Loans shall be automatically  Converted into Base Rate Loans
on the last day(s) of the then current Interest  Period(s) (or, in the case of a
Conversion  required by Section  3.11,  on such  earlier date as such Lender may
specify to the  Borrower  with a copy to the Agent)  and,  unless and until such
Lender  gives  notice as  provided  below that the  circumstances  specified  in
Section 3.9 or 3.11 that gave rise to such Conversion no longer exists:

                  (ai to the extent  that such  Lender's  Eurodollar  Loans have
been so  Converted,  all  payments  and  prepayments  of  principal  that  would
otherwise be applied to such Lender's  Eurodollar Loans shall be applied instead
to its Base Rate Loans; and

                  (bi all Loans that would  otherwise  be made or  Continued  by
such Lender as Eurodollar Loans shall be made or Continued  instead as Base Rate
Loans,  and all Loans of such  Lenders that would  otherwise  be Converted  into
Eurodollar Loans shall be Converted  instead into (or shall remain as) Base Rate
Loans.

<PAGE>

If such Lender gives notice to the Borrower  (with a copy to the Agent) that the
circumstances  specified in Section 3.9 or 3.11 that gave rise to the Conversion
of such Lender's  Eurodollar Loans pursuant to this Section 3.12 no longer exist
(which such  Lender  agrees to do promptly  upon such  circumstances  ceasing to
exist) at a time when  Eurodollar  Loans made by other Lenders are  outstanding,
such Lender's  Base Rate Loans shall be  automatically  Converted,  on the first
day(s) of the next succeeding Interest Period(s) for such outstanding Eurodollar
Loans, to the extent necessary so that,  after giving effect thereto,  all Loans
held by the  Lenders  holding  Eurodollar  Loans and by such Lender are held pro
rata (as to principal  amounts,  Types, and Interest Periods) in accordance with
their respective Revolving Credit Commitments.

                  3.13  Compensation.  Upon  the  request  of  any  Lender,  the
Borrower  shall pay to such Lender such amount or amounts as shall be sufficient
(in the reasonable  opinion of such Lender) to compensate it for any loss, cost,
or expense  (including loss of anticipated  profits)  incurred by it as a result
of:

                  (ai any payment,  prepayment,  or  Conversion  of a Eurodollar
Loan for any reason  (including,  without  limitation,  the  acceleration of the
Loans  pursuant to Section 8) on a date other than the last day of the  Interest
Period for such Loan; or

                  (bi any  failure by the  Borrower  for any reason  (including,
without limitation,  the failure of any condition precedent specified in Section
4 to be satisfied) to borrow,  Convert,  Continue or prepay a Eurodollar Loan on
the date for such borrowing, Conversion, Continuation or prepayment specified in
the relevant notice of borrowing,  prepayment,  Continuation or Conversion under
this Agreement.

                  3.14 Taxes. (a) Any and all payments by the Borrower to or for
the  account  of any  Lender or the  Agent  hereunder  or under  any other  Loan
Document  shall be made free and clear of and without  deduction for any and all
present  or future  taxes,  duties,  levies,  imposts,  deductions,  charges  or
withholdings,  and all liabilities with respect, thereto, excluding, in the case
of each Lender and the Agent,  taxes imposed on its income,  and franchise taxes
imposed on it, by the  jurisdiction  under the laws of which such Lender (or its
Applicable Lending Office) or the Agent (as the case may be) is organized or any
political  subdivision  thereof (all such non-excluded  taxes,  duties,  levies,
imposts,  deductions,  charges,  withholdings and liabilities  being hereinafter
referred to as "Taxes").  If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable  under this  Agreement  or any other
Loan Document to any Lender or the Agent, (i) the sum payable shall be increased
as necessary so that after making all required deductions  (including deductions
applicable  to  additional  sums payable under this Section 3.14) such Lender or
the Agent receives an amount equal to the sum it would have received had no such
deductions  been made, (ii) the Borrower shall make such  deductions,  (iii) the
Borrower shall pay the full amount deducted to the relevant  taxation  authority
or other authority in accordance with applicable law and (iv) the Borrower shall
furnish to the Agent,  at its address  referred to in Section 10.2, the original
or a certified copy of a receipt evidencing payment thereof.

<PAGE>

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

                  (ci THE BORROWER AGREES TO INDEMNIFY EACH LENDER AND THE AGENT
FOR THE FULL AMOUNT OF TAXES AND OTHER TAXES (INCLUDING, WITHOUT LIMITATION, ANY
TAXES OR OTHER TAXES IMPOSED OR ASSERTED BY ANY  JURISDICTION ON AMOUNTS PAYABLE
UNDER THIS  SECTION  3.14) PAID BY SUCH LENDER OR THE AGENT (AS THE CASE MAY BE)
AND  ANY  LIABILITY  (INCLUDING  PENALTIES,   INTEREST,  AND  EXPENSES)  ARISING
THEREFROM OR WITH RESPECT THERETO.

                  (di Each  Lender  organized  under the laws of a  jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this  Agreement  in the case of each  Lender  listed on the  signature  pages
hereof  and on or prior to the date on which it  becomes a Lender in the case of
each other Lender,  and from time to time  thereafter if requested in writing by
the Borrower or the Agent (but only so long as such Lender remains lawfully able
to do so),  shall  provide the Borrower and the Agent with (i) Internal  Revenue
Service Form 1001 or 4224, as  appropriate,  or any successor form prescribed by
the  Internal  Revenue  Service,  certifying  that such  Lender is  entitled  to
benefits  under an income tax treaty to which the United States is a party which
reduces the rate of withholding  tax on payments of interest or certifying  that
the income receivable  pursuant to this Agreement is effectively  connected with
the conduct of a trade or business in the United States,  (ii) Internal  Revenue
Service Form W-8 or W-9, as appropriate, or any successor form prescribed by the
Internal Revenue Service and (iii) any other form or certificate required by any
taxing  authority  (including any  certificate  required by Sections  871(h) and
881(c) of the Code),  certifying  that such Lender is  entitled to an  exemption
from or a reduced rate of tax on payments  pursuant to this  Agreement or any of
the other Loan Documents.

                  (ei For any period  with  respect to which a Lender has failed
to provide the  Borrower  and the Agent with the  appropriate  form  pursuant to
subsection  3.14(d)  (unless such failure is due to a change in treaty,  law, or
regulation  occurring  subsequent  to the  date on which a form  originally  was
required to be provided),  such Lender shall not be entitled to  indemnification
under  subsection  3.14(a) with respect to Taxes  imposed by the United  States;
provided,  however,  that  should a Lender,  which is  otherwise  exempt from or
subject to a reduced rate of withholding tax, become subject to Taxes because of
its failure to deliver a form required  hereunder,  the Borrower shall take such
steps as such Lender shall  reasonably  request to assist such Lender to recover
such Taxes.

                  (fi If the Borrower is required to pay  additional  amounts to
or for the account of any Lender pursuant to this Section 3.14, then such Lender
will  agree  to  use  reasonable  efforts  to  change  the  jurisdiction  of its
Applicable  Lending  Office so as to  eliminate  or reduce  any such  additional
payment  which may  thereafter  accrue if such  change,  in the judgment of such
Lender, is not otherwise disadvantageous to such Lender.

<PAGE>

                  (gi Within  thirty days after the date of any payment of Taxes
or Other  Taxes,  the  Borrower  shall  furnish to the Agent the  original  or a
certified copy of a receipt evidencing such payment.

                  (hi Without  prejudice to the survival of any other  agreement
of the  Borrower  hereunder,  the  agreements  and  obligations  of the Borrower
contained in this Section 3.14 shall  survive the  termination  of the Revolving
Credit Commitments and the payment in full of the Notes.

                  3.15  Replacement  of  Lenders.  In the event  (a) any  Lender
requests  compensation pursuant to Section 3.9, (b) any Lender delivers a notice
to the Borrower  pursuant to Section 3.11 or (c) the Borrower is required to pay
any additional amount to any Lender or any Governmental  Authority on account of
any Lender  pursuant to Section 3.14,  the Borrower may, at its sole expense and
effort (including with respect to the processing and recordation fee referred to
in subsection  10.6(b)(iv)),  upon notice to such Lender and the Agent,  require
such Lender to transfer and assign,  without  recourse (in  accordance  with and
subject to the  restrictions  contained in Section 10.6),  all of its interests,
rights and  obligations  under this Agreement and the other Loan Documents to an
Eligible  Assignee that shall assume such assigned  obligations  (which assignee
may be another Lender, if a Lender accepts such  assignment),  provided that (i)
such assignment  shall not conflict with any Requirement of Law, (ii) no Default
or Event of Default shall have occurred and be continuing and (iii) the Borrower
or such Eligible  Assignee shall have paid to the affected Lender in immediately
available  funds  an  amount  equal to the sum of 100% of the  principal  of and
interest  accrued  to the date of such  payment  on the  outstanding  Loans  and
Reimbursement Obligations of such Lender, respectively, plus all Commitment Fees
and other amounts  accrued for the account of such Lender  hereunder  (including
any amounts under Sections 3.9, 3.13 and 3.14);  provided  further that if prior
to any such assignment the circumstances or event that resulted in such Lender's
request or notice  under  Section 3.9 or 3.11 or demand for  additional  amounts
under  Section  3.14,  as the case  may be,  shall  cease  to  exist  or  become
inapplicable  for any reason or if such Lender shall waive its rights in respect
of such  circumstances or event under Section 3.9, 3.11 or 3.14, as the case may
be, then such Lender shall not be required to make such assignment hereunder.

                 SECTION 4.  CONDITIONS PRECEDENT

                  4.1 Conditions to Initial  Extension of Credit.  The agreement
of each Lender to make the initial  Extension of Credit  requested to be made by
it is subject to the satisfaction, immediately prior to or concurrently with the
making of such Extension of Credit,  of the following  conditions  precedent (in
form and substance acceptable to the Agent and the Lenders):

     (ai Loan  Documents.  The Agent  shall have  received  the  following  Loan
Documents, duly executed and delivered as required below:

     (i0 this Agreement,  executed and delivered by a duly authorized officer of
the Borrower, with a counterpart for each Lender;

<PAGE>

                           (ii0  a  Note,  executed  and  delivered  by  a  duly
         authorized officer of the Borrower, payable to the order of each Lender
         and in a principal amount for each Lender equal to its Revolving Credit
         Commitment;

                           (iii0  the   Guarantee  and   Collateral   Agreement,
         executed and delivered by duly authorized  officers of the Borrower and
         each of its  Subsidiaries,  with a counterpart  or a conformed copy for
         each Lender;

                           (iv0 the Lockbox  Agreements  and Deposit  Agreements
         required  by the  Guarantee  and  Collateral  Agreement,  executed  and
         delivered by duly authorized officers of the Loan Parties,  the Lockbox
         Banks,  the  Depository  Banks,  and  the  Affiliated   Providers,   as
         applicable; and

                           (v0 the Trademark Security  Agreement,  executed by a
         duly  authorized  officer  of  the  Borrower,  with  a  counterpart  or
         conformed copy for each Lender.

                  (bi Corporate Proceedings of the Loan Parties. The Agent shall
have received, with a counterpart for each Lender, a copy of the resolutions, in
form and substance  satisfactory to the Agent, of the Board of Directors of each
of the Loan Parties  authorizing (i) the execution,  delivery and performance of
the Loan  Documents to which it is a party and (ii) with respect to the Borrower
only, the borrowings  contemplated  hereunder,  certified by the Secretary or an
Assistant Secretary of such Loan Party as of the Closing Date, which certificate
shall be in form and  substance  satisfactory  to the Agent and shall state that
the resolutions  thereby certified have not been amended,  modified,  revoked or
rescinded.

                  (ci  Incumbency  Certificate.  The Agent shall have  received,
with a counterpart for each Lender, a certificate of each Loan Party,  dated the
Closing  Date, as to the  incumbency  and signature of the officers of such Loan
Party executing any Loan Document to which such Loan Party is a party,  executed
by the Secretary or any Assistant Secretary of such Loan Party.

                  (di Corporate Documents. The Agent shall have received, with a
counterpart for each Lender,  true and complete copies of (i) the certificate of
incorporation and by-laws (or other similar governing documents serving the same
purpose) of each Loan Party and (ii)  certificates of good standing or existence
for each Loan Party  issued by the  appropriate  Governmental  Authority  in its
state of  incorporation  as of a recent date,  each  certified as of the Closing
Date,  as complete and correct  copies  thereof by the Secretary or an Assistant
Secretary of such Loan Party.

                  (ei Fees.  The Agent shall have  received  payment of all fees
and expenses owed to it by the Borrower, including, without limitation, the fees
to be received on or before the Closing Date pursuant to subsection 3.2(c).

     (fi Legal Opinions.  The Agent shall have received,  with a counterpart for
each Lender, the following executed legal opinions:

<PAGE>

     (i0 the executed legal opinion of Boult,  Cummings,  Conners & Berry,  PLC,
counsel  to the  Borrower  and its  Subsidiaries,  substantially  in the form of
Exhibit H-1; and

                           (ii0 the  executed  legal  opinion of Liddell,  Sapp,
         Zivley,  Hill & LaBoon, LLP, special Texas counsel for the Borrower and
         its Subsidiaries, substantially in the form of Exhibit H-2.

Each  such  legal  opinion  shall  cover  such  other  matters  incident  to the
transactions contemplated by this Agreement as the Agent may reasonably require.

                  (gi Actions to Perfect  Liens Under  Security  Documents.  The
Agent shall have received evidence in form and substance satisfactory to it that
all filings,  recordings,  registrations and other actions,  including,  without
limitation,  the filing of duly executed financing statements on form UCC-1, the
delivery of certificates  representing  shares of stock pledged  pursuant to any
Security  Document,  together with undated stock powers, and the delivery of the
promissory  notes pledged  pursuant to any Security  Document,  each endorsed in
blank, necessary or, in the opinion of the Agent, desirable to perfect the Liens
created by the Security Documents shall have been completed, and all agreements,
statements and other documents  relating  thereto shall be in form and substance
satisfactory to the Agent.

                  (hi  Actions  to  Perfect  Assignments  of  Receivables  Under
Service Agreements. The Agent shall have received evidence in form and substance
satisfactory  to it that (i) all filings,  recordings,  registrations  and other
actions,  including,  without limitation,  the filing of financing statements on
form UCC-1,  necessary, or in the opinion of the Agent, desirable to perfect the
ownership  interest of the  Borrower  and its  Subsidiaries  in all  Receivables
assigned to the Borrower and its Subsidiaries from Affiliated Providers pursuant
to the Service Agreements,  shall have been completed and (ii) all such filings,
recordings,  registrations and other actions have been assigned of record to the
Agent.

                  (ii Lien  Searches.  The Agent shall have received the results
of a recent  search  by a  Person  satisfactory  to the  Agent,  of the  Uniform
Commercial  Code,  judgment and tax lien filings  which may have been filed with
respect  to  personal  property  of  the  Borrower,  its  Subsidiaries  and  the
Affiliated  Providers in any of the  jurisdictions set forth in Schedule 4.1(i),
and the results of such search shall be satisfactory to the Agent.

     (ji Lien  Releases.  The Agent shall have received such Lien releases as it
may request with respect to Liens on assets of the  Borrower,  its  Subsidiaries
and the Affiliated Providers.

                  (ki Insurance.  The Agent shall have received evidence in form
and substance  satisfactory to it that all of the requirements of Section 5.3 of
the Guarantee and Collateral Agreement shall have been satisfied.

<PAGE>

                  (li  Financial  Information.  The Lenders  shall have received
photocopies  of and  shall be  satisfied,  in form and  substance,  with (i) the
audited  consolidated  income  statements,  balance  sheets  and  statements  of
shareholders'  equity  and  cash  flows  of the  Borrower  and its  Consolidated
Subsidiaries for fiscal years ended on December 31, 1995, December 31, 1996, and
December 31, 1997, in each case  accompanied by a report of Arthur Anderson LLP,
and (ii) the unaudited  consolidated  balance  sheet and unaudited  consolidated
statements of income and retained earnings and of cash flows of the Borrower and
its Consolidated Subsidiaries for each quarterly period ended after December 31,
1997, for which such statements are available.

                  (mi Related Agreements.  The Agent shall have received, with a
copy for each Lender,  true and correct copies,  certified as to authenticity by
the Borrower,  of each Service  Agreement in effect on the Closing Date and each
agreement or instrument evidencing Existing Subordinated Indebtedness.

                  (ni Receivables  Report.  The Agent shall have received a copy
of the  receivables  report  required to be delivered by the Borrower  under the
Existing  Credit  Agreement with respect to Receivables  outstanding on November
30, 1998.

                  (oi  Due  Diligence.  The  completion  of due  diligence  with
respect  to the  Borrower  and  its  Subsidiaries  in  scope  and  determination
satisfactory to the Agent in its sole discretion, including, without limitation,
due diligence with respect to historical financial information, litigation, tax,
accounting,  labor, insurance, pension liabilities (actual or contingent),  real
estate  leases,   Material  Contracts,   agreements   evidencing   Indebtedness,
contingent liabilities,  property ownership, and compliance with Requirements of
Law.

                  (pi No  Disruption  of Financial  Markets.  The absence of any
disruption or adverse change in the financial or capital markets generally which
the  Agent,  in its sole  discretion,  deems  material  in  connection  with the
syndication of the credit facility evidenced by this Agreement.

     (qi Termination of Lockbox Agreements under Existing Credit Agreement.  The
Agent shall have received evidence of the termination of all lockbox  agreements
under the Existing Credit Agreement.

     (ri Form of  Service  Agreement.  A copy of the form of  Service  Agreement
being used by the Borrower and its  Subsidiaries on the Closing Date,  certified
by the Secretary or an Assistant Secretary of the Borrower.

                  4.2 Conditions to Each Extension of Credit.  The obligation of
each Lender to make any Extension of Credit (including,  without limitation, its
initial  Extension of Credit) is subject to the  satisfaction  of the  following
conditions precedent:

                  (ai    Representations    and   Warranties.    Each   of   the
representations and warranties made by any of the Loan Parties in or pursuant to
the  Loan  Documents  shall be true  and  correct  on and as of the date of such
Extension of Credit as if made on and as of such date.

<PAGE>

     (bi No Default.  No Default or Event of Default  shall have occurred and be
continuing  immediately  before  or after  giving  effect to such  Extension  of
Credit.

                  (ci Additional  Matters.  All corporate and other  proceedings
and all documents,  instruments  and other legal matters in connection  with the
transactions  contemplated  by this Agreement and the other Loan Documents shall
be  satisfactory  in form and  substance to the Agent,  and the Agent shall have
received  such other  documents  and legal  opinions in respect of any aspect or
consequence  of the  transactions  contemplated  hereby or  thereby  as it shall
reasonably request.

Each  Extension  of Credit  hereunder  shall  constitute  a  representation  and
warranty by the Borrower as of the date thereof that the conditions contained in
this Section 4.2 have been satisfied.

                                     SECTION 5.  REPRESENTATIONS AND WARRANTIES

                  To  induce  the  Agent  and the  Lenders  to enter  into  this
Agreement and to make the Extensions of Credit,  the Borrower hereby  represents
and warrants to the Agent and each Lender that:

<PAGE>

                  5.1  Financial  Condition.  The audited  consolidated  balance
sheet of the Borrower and its Consolidated Subsidiaries as at December 31, 1997,
and the related audited consolidated  statements of income and of cash flows for
the fiscal year ended on such date,  reported on by Arthur  Andersen LLP, copies
of which have heretofore been furnished to each Lender, are complete and correct
and present fairly the consolidated  financial condition of the Borrower and its
Consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the fiscal year then ended. The
unaudited  consolidated  balance  sheet  of the  Borrower  and its  Consolidated
Subsidiaries  as at June  30,  1998,  and  the  related  unaudited  consolidated
statements  of income and of cash flows for the six month  period  ended on such
date, certified by a Responsible  Officer,  copies of which have heretofore been
furnished  to each  Lender,  are  complete  and correct  and present  fairly the
consolidated   financial   condition  of  the  Borrower  and  its   Consolidated
Subsidiaries as at such date, and the  consolidated  results of their operations
and their  consolidated  cash flows for the six month period then ended (subject
to normal year-end audit adjustments). All such financial statements,  including
the related  schedules and notes thereto,  have been prepared in accordance with
GAAP applied consistently throughout the periods involved (except as approved by
such  accountants or Responsible  Officer,  as the case may be, and as disclosed
therein).  Neither the Borrower nor any of its Consolidated Subsidiaries had, at
the date of the most  recent  balance  sheet  referred  to above,  any  material
Guarantee  Obligation,  contingent  liability  or  liability  for taxes,  or any
long-term lease or unusual forward or long-term commitment,  including,  without
limitation,  any interest rate or foreign currency swap or exchange transaction,
which is not  reflected in the  foregoing  statements  or in the notes  thereto.
Except as set forth on Schedule  5.1,  during the period from December 31, 1997,
to and  including  the date  hereof,  there has been no sale,  transfer or other
disposition  by the  Borrower  or any of its  Consolidated  Subsidiaries  of any
material  part of its business or property and no purchase or other  acquisition
of any business or property  (including  any Capital  Stock of any other Person)
material in relation to the consolidated financial condition of the Borrower and
its Consolidated Subsidiaries at December 31, 1997.

     5.2 No  Change;  Solvent.  Since  December  31,  1997,  there  has  been no
development  or event  which has had or could  reasonably  be expected to have a
Material Adverse Effect.  The Borrower and its  Subsidiaries,  taken as a whole,
are Solvent.

                  5.3  Corporate  Existence;  Compliance  with Law.  Each of the
Borrower and its  Subsidiaries  and, to the best of its  knowledge,  each of the
Affiliated  Providers  (a) is  duly  organized,  validly  existing  and in  good
standing under the laws of the  jurisdiction  of its  organization,  (b) has the
corporate  power and  authority,  and the legal  right,  to own and  operate its
property,  to lease the  property  it  operates  as lessee  and to  conduct  the
business in which it is currently  engaged,  (c) is duly  qualified as a foreign
corporation and in good standing under the laws of each  jurisdiction  where its
ownership,  lease or  operation  of  property  or the  conduct  of its  business
requires  such  qualification,  except where failure to so qualify or be in good
standing could not reasonably be expected to have a Material Adverse Effect, (d)
has  all  licenses,  accreditations,   authorizations,   permits,  consents  and
approvals (including,  without limitation, all accreditations and certifications
as  a  provider  of  health  care  services  eligible  to  receive  payment  and
compensation under, and to participate in, any Governmental Program) required to
carry on its business as now  conducted,  except where  failure to have the same
could not,  individually  or in the aggregate,  reasonably be expected to have a
Material  Adverse Effect and (e) is in compliance with all  Requirements of Law,
except  to  the  extent  that  the  failure  to  comply   therewith  could  not,
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse Effect.

                  5.4 Corporate Power;  Authorization;  Enforceable Obligations.
The Borrower has the  corporate  power and  authority,  and the legal right,  to
execute,  deliver and perform the Loan  Documents  to which it is a party and to
borrow  Loans  hereunder,  and has  taken  all  necessary  corporate  action  to
authorize the Loans on the terms and conditions of this Agreement, the Notes and
each other Loan Document to which it is a party and to authorize the  execution,
delivery  and  performance  of the Loan  Documents  to  which it is a party.  No
consent  or  authorization  of,  filing  with,  notice  to or other act by or in
respect of, any  Governmental  Authority  or any other  Person is required to be
obtained  or made  by or on  behalf  of the  Borrower  in  connection  with  the
Extensions of Credit  hereunder or with the  execution,  delivery,  performance,
validity or  enforceability  of the Loan  Documents  to which the  Borrower is a
party.  This  Agreement has been,  and each other Loan Document to which it is a
party will be, duly executed and delivered on behalf of the Borrower.  Each Loan
Document  to which the  Borrower is a party when  executed  and  delivered  will
constitute,  a legal, valid and binding  obligation of the Borrower  enforceable
against the Borrower in accordance with its terms,  except as enforceability may
be limited by the effects of bankruptcy, insolvency, reorganization,  moratorium
and other similar laws relating to or affecting  creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity or at
law).

<PAGE>

                  5.5 No Legal Bar. The execution,  delivery and  performance of
the Loan  Documents to which the Borrower is a party,  the  Extensions of Credit
hereunder  and  the  use of the  proceeds  thereof  (a)  will  not  violate  any
Requirement  of Law or  Contractual  Obligation of the Borrower and (b) will not
result in, or require,  the creation or  imposition of any Lien on any of its or
its  Subsidiaries'  respective  properties  or  revenues  pursuant  to any  such
Requirement of Law or Contractual Obligation.

                  5.6 No Material  Litigation.  Except as  disclosed in Schedule
5.6, no litigation,  investigation  or proceeding of or before any arbitrator or
Governmental  Authority  is  pending  or,  to the  knowledge  of  the  Borrower,
threatened by or against the Borrower,  any  Subsidiary or against any of its or
their  respective  properties  or revenues  (a) with  respect to any of the Loan
Documents or any of the transactions contemplated hereby or thereby or (b) which
could  reasonably  be  expected  to have a Material  Adverse  Effect.  Except as
disclosed  in  Schedule  5.6 and to the  best of the  Borrower's  knowledge,  no
litigation,   investigation  or  proceeding  of  or  before  any  arbitrator  or
Governmental  Authority is pending or  threatened  by or against any  Affiliated
Provider or against any of its properties or revenues (a) with respect to any of
the Loan Documents or Service Agreements or any of the transactions contemplated
hereby or thereby or (b) which could  reasonably  be expected to have a Material
Adverse Effect.

                  5.7 No Default.  Neither the Borrower nor any Subsidiary  nor,
to the best of the Borrower's  knowledge,  any of the Affiliated Providers is in
default  under or with  respect  to any of its  Contractual  Obligations  in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.

                  5.8 Ownership of Property; Liens. Each of the Borrower and its
Subsidiaries  has good record and marketable  title in fee simple to, or a valid
leasehold  interest  in,  all its real  property,  and good title to, or a valid
leasehold  interest  in, all its other  property,  and none of such  property is
subject to any Lien except as  permitted  by Section  7.3.  Schedule  5.8 hereto
lists all of the real  property  owned in fee or leased by the  Borrower and its
Subsidiaries on the Closing Date.

                  5.9  Intellectual  Property.  The  Borrower  and  each  of its
Subsidiaries  owns,  or is licensed to use,  all patents,  patent  applications,
trademarks, trademark applications, tradenames, copyrights, technology, know-how
and processes  necessary for the conduct of its business as currently  conducted
or as proposed to be conducted (the "Intellectual  Property"),  except for those
the failure to own or license  which could not  reasonably be expected to have a
Material Adverse Effect. No claim has been asserted and is pending by any Person
challenging  or  questioning  the use of any such  Intellectual  Property or the
validity  or  effectiveness  of any  such  Intellectual  Property,  nor does the
Borrower  know  of any  valid  basis  for  any  such  claim.  The  use  of  such
Intellectual  Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person,  except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

<PAGE>

                  5.10 No  Burdensome  Restrictions.  No  Requirement  of Law or
Contractual  Obligation  of  the  Borrower  or any  of  its  Subsidiaries  could
reasonably  be expected to have a Material  Adverse  Effect.  Schedule 5.10 sets
forth a complete  and  accurate  list as of the  Closing  Date of each  Material
Contract to which the  Borrower or any  Subsidiary  is a party or by which it or
any of its assets are bound or subject.  All of the  Material  Contracts  are in
full force and effect, and neither the Borrower nor any Subsidiary is in default
under any Material  Contract  and no other Person that is a party  thereto is in
default  under  any  Material  Contract,  except  for  defaults  that  could not
reasonably be expected to have,  individually  or in the  aggregate,  a Material
Adverse Effect.

                  5.11 Taxes.  Each of the  Borrower  and its  Subsidiaries  has
filed or caused to be filed all tax returns  which are  required to be filed and
has paid all  material  taxes shown to be due and payable on said  returns or on
any  material  assessments  made against it or any of its property and all other
material  taxes,  fees or other charges  imposed on it or any of its property by
any Governmental  Authority  (other than those taxes,  fees or other charges the
amount or  validity  of which are  currently  being  contested  in good faith by
appropriate  proceedings diligently conducted and with respect to which reserves
in  conformity  with GAAP have been provided on the books of the Borrower or its
Subsidiaries,  as the case may be) and no tax Lien has been filed,  and no claim
is being asserted, with respect to any such tax, fee or other charge.

                  5.12 Federal Regulations.  No part of the proceeds of any Loan
will be used for  "purchasing"  or  "carrying"  any  "margin  stock"  within the
respective meanings of each of the quoted terms under the Regulations, including
without limitation,  Regulation U. The Borrower is not engaged principally or as
one of its  important  activities  in the business of  extending  credit for the
purpose of  purchasing or carrying any margin stock within the meaning of any of
the  Regulations.  No  more  than  25% of the  assets  of the  Borrower  and its
Subsidiaries are margin stock. None of the Borrower and its Subsidiaries nor any
agent  acting on their  behalf,  have taken or will take any action  which might
cause the Borrower,  the Lenders,  this  Agreement or any other Loan Document to
violate any  regulation of the Board of Governors of the Federal  Reserve System
or to violate the Exchange Act, in each case as in effect now or as the same may
hereafter be in effect.  Neither the making of any Loans nor the  application of
any proceeds  thereof will violate,  or be inconsistent  with, the provisions of
any of the  Regulations.  If requested by any Lender or the Agent,  the Borrower
will furnish to the Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in Regulation U.

<PAGE>

                  5.13 ERISA.  Schedule  5.13 sets forth a complete and accurate
list as of the  Closing  Date of all Plans.  Neither a  Reportable  Event nor an
"accumulated  funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred  during the five-year  period prior to the
date on which this  representation  is made or deemed  made with  respect to any
Plan that could  reasonably be expected to have a Material  Adverse Effect,  and
each Plan has complied in all material  respects with the applicable  provisions
of ERISA and the Code.  No  termination  of a Single  Employer Plan has occurred
that could reasonably be expected to have a Material Adverse Effect, and no Lien
on the property of the Borrower or any of its  Subsidiaries in favor of the PBGC
or a Plan has arisen, during such five-year period. Neither the Borrower nor any
Commonly  Controlled  Entity has had a complete or partial  withdrawal  from any
Multiemployer  Plan that could reasonably be expected to have a Material Adverse
Effect, and neither the Borrower nor any Commonly Controlled Entity would become
subject to any liability under ERISA that could reasonably be expected to have a
Material Adverse Effect if the Borrower or any such Commonly  Controlled  Entity
were to withdraw  completely  from all  Multiemployer  Plans as of the valuation
date most closely  preceding  the date on which this  representation  is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent. There
have been no transactions  that resulted or could result in any liability to the
Borrower  or any  Commonly  Controlled  Entity  under  Section  4069 of ERISA or
Section  4212(c) of ERISA that could  reasonably  be expected to have a Material
Adverse Effect.

                  5.14 Investment Company Act; Other  Regulations.  The Borrower
is not an  "investment  company," or a company  "controlled"  by an  "investment
company," within the meaning of the Investment  Company Act of 1940, as amended.
The Borrower is not subject to regulation  under any Federal or State statute or
regulation  (other than  Regulation  X of the Board of  Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.

                  5.15   Subsidiaries.   Schedule   5.15  sets   forth  all  the
Subsidiaries  of the  Borrower at the date  hereof,  the  jurisdiction  of their
incorporation  and the direct or indirect  ownership  interest  of the  Borrower
therein.

                  5.16 Purpose of Loans. The proceeds of the Loans shall be used
by the  Borrower  to pay in full the  Indebtedness  of the  Borrower  under  the
Existing  Credit  Agreement  and for working  capital  purposes in the  ordinary
course of business and Permitted Physician Transactions.

          5.17     Environmental Matters.  Except as set forth on Schedule 5.17:

                  (ai To the best knowledge of the Borrower,  the facilities and
properties owned,  leased or operated by the Borrower or any of its Subsidiaries
(the  "Properties")  do not  contain,  and have not  previously  contained,  any
Materials  of  Environmental  Concern  in amounts  or  concentrations  which (i)
constitute or  constituted a violation of, or (ii) could  reasonably be expected
to give rise to liability  under,  any  Environmental  Law except in either case
insofar as such  violation or  liability,  or any  aggregation  thereof,  is not
reasonably likely to result in the payment of a Material Environmental Amount.

                  (bi To the best knowledge of the Borrower,  the Properties and
all operations at the Properties are in compliance,  and at all times during the
last five years  have been in  compliance,  in all  material  respects  with all
applicable  Environmental Laws, and there is no contamination at, under or about
the  Properties  or  violation  of any  Environmental  Law with  respect  to the
Properties or the business  operated by the Borrower or any of its  Subsidiaries
(the  "Business")  which could reasonably be expected to have a Material Adverse
Effect.  The  Borrower  has  not  assumed  any  liability  of any  Person  under
Environmental Laws.

                  (ci  Neither  the  Borrower  nor any of its  Subsidiaries  has
received or is aware of any claim or any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental matters
or compliance  with  Environmental  Laws with regard to any of the Properties or
the Business, nor does the Borrower have knowledge or reason to believe that any
such claim or notice will be received or is being  contemplated,  considered  or
threatened except insofar as such claim or notice or threatened claim or notice,
or any aggregation thereof,  does not involve a matter or matters that is or are
reasonably likely to result in the payment of a Material Environmental Amount.

<PAGE>

                  (di To the best  knowledge of the Borrower  after due inquiry,
Materials of Environmental Concern have not been transported or disposed of from
the  Properties  in  violation  of, or in a manner or to a location  which could
reasonably be expected to give rise to liability under, any  Environmental  Law,
nor have any Materials of Environmental Concern been generated,  treated, stored
or disposed of at, on or under any of the  Properties  in violation  of, or in a
manner that could  reasonably be expected to give rise to liability  under,  any
applicable  Environmental  Law except insofar as any such violation or liability
referred to in this  paragraph,  or any aggregation  thereof,  is not reasonably
likely to result in the payment of a Material Environmental Amount.

                  (ei No judicial  proceeding or governmental or  administrative
action or  investigation  is pending or, to the best  knowledge  of the Borrower
after due inquiry,  contemplated or threatened,  under any  Environmental Law to
which the Borrower or any Subsidiary is or will be named as a party with respect
to the  Properties or the Business,  nor are there any consent  decrees or other
decrees,  consent  orders,  administrative  orders  or  other  orders,  or other
administrative or judicial requirements  outstanding under any Environmental Law
with  respect  to  the  Properties  or  the  Business  except  insofar  as  such
proceeding,  action,  decree,  order or other  requirement,  or any  aggregation
thereof,  is not  reasonably  likely  to  result in the  payment  of a  Material
Environmental Amount.

                  (fi To the best  knowledge of the Borrower  after due inquiry,
there has been no release or threat of release  of  Materials  of  Environmental
Concern at or from the Properties,  or arising from or related to the operations
of the Borrower or any Subsidiary in connection with the Properties or otherwise
in connection  with the  Business,  in violation of or in amounts or in a manner
that could  reasonably  give rise to liability under  Environmental  Laws except
insofar as any such violation or liability referred to in this paragraph, or any
aggregation  thereof,  is not  reasonably  likely to result in the  payment of a
Material Environmental Amount.

                  5.18  No  Material  Misstatements.  The  written  information,
reports, financial statements,  exhibits and schedules furnished by or on behalf
of the  Borrower  and its  Subsidiaries  to the  Lender in  connection  with the
negotiation  of any Loan  Document or  included  therein or  delivered  pursuant
thereto,  taken as a whole, do not contain any material misstatement of fact and
do not omit to state any material fact necessary to make the statements therein,
in the light of the  circumstances  under which they were made,  not  materially
misleading.

                  5.19 Labor  Matters.  Except as  disclosed  in Schedule  5.19,
there are no collective  bargaining  agreements  covering the Borrower or any of
its Subsidiaries as of the Closing Date. There are no strikes pending or, to the
knowledge  of  the  Borrower,  threatened  against  the  Borrower  or any of its
Subsidiaries  which,  individually  or in the  aggregate,  could  reasonably  be
expected to have a Material  Adverse Effect.  The hours worked and payments made
to  employees  of the  Borrower  and each of its  Subsidiaries  have not been in
violation of any applicable  Requirements  of Law,  except where such violations
could not reasonably be expected to have a Material Adverse Effect.

<PAGE>

                  5.20 Year 2000  Compliance.  The Borrower has (a)  initiated a
review  and  assessment  of all  material  areas  within  its  and  each  of its
Subsidiaries'  business and operations  (including  those affected by suppliers,
vendors  and  customers  that  could be  adversely  affected  by the "Year  2000
Problem" (that is, the risk that computer  applications  used by the Borrower or
any of its Subsidiaries  (or suppliers,  vendors and customers) may be unable to
recognize and perform properly date-sensitive  functions involving certain dates
prior to and any  date  after  December  31,  1999),  (b)  developed  a plan and
timeline for addressing the Year 2000 Problem on a timely basis and (c) to date,
implemented that plan in accordance with that timetable. Based on the foregoing,
the Borrower  believes that all computer  applications  (including  those of its
suppliers,  vendors  and  customers)  that  are  material  to  its or any of its
Subsidiaries'  business and operations are reasonably expected on a timely basis
to be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 Compliant"),  except to the extent
that a failure  to do so could not  reasonably  be  expected  to have a Material
Adverse Effect.

                  5.21 Debt Instruments.  Schedule 5.21 sets forth a correct and
complete  list,  as of  the  Closing  Date,  of  each  instrument  or  agreement
evidencing  Indebtedness  of  the  Borrower  or  any  of  its  Subsidiaries  and
identifies all such Indebtedness that is Existing Subordinated Indebtedness.

                  5.22 Health Care Permits. (a) (i) The Borrower and each of the
Subsidiaries  and,  to  the  best  of its  knowledge,  each  of  the  Affiliated
Providers, now have, and have no reason to believe that they will not be able to
maintain in effect,  all Health Care Permits  necessary for the conduct of their
respective  businesses or operations in accordance with all Requirements of Law,
(ii) all such Health Care Permits are in full force and effect and have not been
amended or  otherwise  modified,  canceled,  terminated,  rescinded,  revoked or
suspended,  (iii) neither the Borrower nor any of its  Subsidiaries  nor, to the
best of its knowledge,  any of the Affiliated Providers, is in default under, or
in violation  of, any such Health Care Permit (and to the best  knowledge of the
Borrower, no event has occurred, and no condition exists, which, with the giving
of notice or passage of time or both, would  constitute a default  thereunder or
violation  thereof) that has caused or could reasonably be expected to cause the
loss  of any  such  Health  Care  Permit,  (iv)  neither  the  Borrower  nor any
Subsidiary  nor,  to the best of its  knowledge,  any  Affiliated  Provider  has
received  any notice of a violation  of any  Requirement  of Law or  Contractual
Obligation  which has caused or could  reasonably  be expected to cause any such
Health Care Permit to be modified, canceled,  terminated,  rescinded, revoked or
suspended,  (v) no condition exists or event has occurred which could reasonably
be expected to result in the suspension, cancellation,  termination, revocation,
impairment,  forfeiture or  non-renewal  of any such Health Care Permit and (vi)
the  continuation,  validity and  effectiveness  of all such Health Care Permits
will not in any way be adversely  affected by the  transactions  contemplated by
this Agreement, except for such instances that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.

<PAGE>

                  (b)  Each  Affiliated  Provider  is  (i)  fully  qualified  to
participate in, receive payment under,  and in compliance with the conditions of
participation in each Governmental Program in which such Affiliated Provider has
elected to participate or with which such  Affiliated  Provider has  contracted,
and (ii) fully qualified and eligible to receive  reimbursement from private and
commercial payors, including, but not limited to employers,  insurers and health
maintenance organizations,  except where the loss of the right to participate in
or receive  payments  under such  Governmental  Programs  or from such payors or
organizations  could not reasonably be expected to have,  individually or in the
aggregate, a Material Adverse Effect.

                  5.23  Fraud  and  Abuse.  Neither  (i)  the  Borrower  nor any
Subsidiary, (ii) nor any of their respective shareholders,  officers,  directors
or employees, (iii) nor, to the best of the Borrower's knowledge, any Affiliated
Provider,  has engaged in or is being investigated  (exclusive of routine audits
in the ordinary course of business) for any activities that are prohibited under
the Federal False Claims Act (31 U.S.C.  ss.ss. 3729 - 3733), 42 U.S.C. 1395 nn,
18 U.S.C. ss. 1347 or the federal fraud and abuse laws (42 U.S.C. ss.ss. 1320a -
7a or 1320a - 7b), or the regulations  promulgated  pursuant to such statutes or
similar state or local statutes or regulations, or which are prohibited by rules
of  professional  conduct,  including,  but not limited to, the  following:  (a)
knowingly  presenting or causing to be presented a false claim for payment,  (b)
knowingly  presenting  or causing  to be  presented  a false  record in order to
receive payment for a claim, (c) knowingly and willfully making or causing to be
made a false statement or  representation  of a material fact in any application
for any benefit or payment,  (d) knowingly and willfully making or causing to be
made  any  false  statement  or  representation  of a  material  fact for use in
determining rights to any benefit or payment,  (e) failing to disclose knowledge
by a claimant of the occurrence of any event  affecting the initial or continued
right to any benefit or payment on its own behalf or on behalf of another,  with
intent to secure  such  benefit  or  payment  fraudulently,  (f)  knowingly  and
willfully  soliciting or receiving  any  remuneration  (including  any kickback,
bribe or rebate),  directly or  indirectly,  overtly or covertly,  in cash or in
kind or  offering  to pay such  remuneration  (i) in  return  for  referring  an
individual to a Person for the furnishing or arranging for the furnishing of any
item or service for which  payment may be made in whole or in part by  Medicare,
Medicaid or other third party payors, or (ii) in return for purchasing,  leasing
or ordering or arranging for or recommending the purchasing, leasing or ordering
of any good, facility, service or item for which payment may be made in whole or
in part by Medicare,  Medicaid or other  third-party  payors, or (g) referring a
patient for "designated  health services" to a Person with which a physician has
a financial  relationship,  except for such  instances of prohibited  activities
that could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect. Neither the Borrower nor any Subsidiary or Affiliated
Provider,  nor any of their  respective  officers or directors has been excluded
from participation in any Governmental Program.

                  5.24  Reimbursement  from Third Party Payors.  The Receivables
assigned to the Borrower and each  Subsidiary by the  Affiliated  Providers have
been and will  continue to be  adjusted  so as to comply with the  reimbursement
policies of Government  Programs and third party payors such as Blue  Cross/Blue
Shield, private insurance companies, health maintenance organizations, preferred
provider organizations,  alternative delivery systems, and managed care systems.
The Receivables so assigned do not and shall not exceed in any material  respect
the amounts that the relevant  Affiliated  Providers are entitled to receive for
their services under any capitation arrangement, fee schedule, discount formula,
cost-based  reimbursement or other adjustment or limitation to the usual charges
of such Affiliated Providers.

<PAGE>

                  5.25  Title  to  Receivables.  Upon  the  assignment  of  each
Receivable of an Affiliated Provider to the Borrower or a Subsidiary pursuant to
a Service Agreement,  the Borrower or the relevant  Subsidiary shall acquire all
of the right,  title and interest of the Affiliated  Provider in such Receivable
free and clear of any Lien or adverse  claim and shall have a  perfected,  first
priority  ownership  interest  in such  Receivable  (except  for  Liens  created
pursuant to the Security  Documents).  Each  assignment  of a  Receivable  by an
Affiliated  Provider  to the  Borrower  or a  Subsidiary  pursuant  to a Service
Agreement will constitute a true and absolute  assignment (and not an assignment
for security purposes) under the laws of all relevant jurisdictions, and no such
assigned  Receivable will constitute  property of such Affiliated  Provider.  No
financing  statement or other instrument  similar in effect covering all or part
of any  Receivable  assigned  by an  Affiliated  Provider  to the  Borrower or a
Subsidiary is on file in any filing or recording office, except as may have been
filed in favor of the Agent  pursuant to the  Security  Documents or in favor of
the Borrower or a Subsidiary (with the Agent named as assignee)  pursuant to the
relevant Service Agreement.

                                          SECTION 6.  AFFIRMATIVE COVENANTS

                  The  Borrower  hereby  agrees that,  so long as the  Revolving
Credit Commitments remain in effect, any Note remains  outstanding and unpaid or
any other Obligation is owing to any Lender or the Agent, the Borrower shall and
(except in the case of delivery of financial  information,  reports and notices)
shall cause each of its Subsidiaries to:

           6.1      Financial Statements.  Furnish to the Agent and each Lender:

                  (a) as soon as  available,  but in any event  within  100 days
after the end of each fiscal year of the  Borrower,  a copy of the  consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as at the end of
such  year and the  related  consolidated  statements  of  income  and  retained
earnings  and of cash  flows  for  such  year,  setting  forth  in each  case in
comparative form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising out of the
scope of the audit, by Arthur Andersen LLP or other independent certified public
accountants  of nationally  recognized  standing  acceptable to the Agent in its
reasonable judgment; and

                  (b) as soon as  available,  but in any event not later than 50
days after the end of each of the first three  quarterly  periods of each fiscal
year of the Borrower,  the unaudited  consolidated balance sheet of the Borrower
and its Consolidated  Subsidiaries as at the end of such quarter and the related
unaudited  consolidated  statements of income and retained  earnings and of cash
flows of the Borrower and its Consolidated Subsidiaries for such quarter and the
portion of the fiscal year  through the end of such  quarter,  setting  forth in
each case in comparative form the figures for the previous year,  certified by a
Responsible  Officer as being fairly stated in all material respects (subject to
normal year-end audit adjustments);

all such  financial  statements  shall be complete  and correct in all  material
respects and shall be prepared in reasonable detail and in accordance with GAAP.

6.2      Certificates; Other Information.  Furnish to the Agent and each Lender:

<PAGE>

                  (a) concurrently with the delivery of the financial statements
referred to in subsection  6.1(a),  a certificate of the  independent  certified
public accountants reporting on such financial statements stating that in making
the examination  necessary  therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate;

                  (b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a Compliance  Certificate signed by a
Responsible  Officer (i) stating that, to the best of such officer's  knowledge,
no  Default or Event of Default  exists,  or if any  Default or Event of Default
does  exist,  specifying  the  nature  and extent  thereof  and what  action the
Borrower proposes to take with respect thereto, (ii) setting forth in reasonable
detail the  calculations  required to determine (A) compliance with Section 7.1,
and (B) the  Applicable  Margin  that will take effect on the  Calculation  Date
immediately  following  the  date  on  which  such  Compliance   Certificate  is
delivered,  (iii) stating that no Subsidiary has been formed or acquired (or, if
any Subsidiary  has been formed or acquired,  the Borrower has complied with the
requirements of Section 6.10 with respect thereto) and (iv) neither the Borrower
nor any of its  Subsidiaries  has  changed  its  name,  its  principal  place of
business,  its chief  executive  office or the location of any material  item of
tangible  Collateral  without  complying  with  the  requirements  of  the  Loan
Documents with respect thereto;

                  (c) as soon as  available,  but in any event  not  later  than
thirty days after the end of each fiscal year of the Borrower, (i) a copy of the
projections  by the  Borrower  of the  operating  budget,  cash flow  budget and
capital budget of the Borrower and its  Subsidiaries  for the succeeding  fiscal
year,  such  projections  to be  accompanied  by a certificate  of a Responsible
Officer to the effect that such  projections  have been prepared on the basis of
sound financial planning practice and that such officer has no reason to believe
they are incorrect or  misleading in any material  respect and (ii) in the event
that the budgeted  Capital  Expenditures  of the  Borrower and its  Subsidiaries
contained  in  such  projections  exceed  the  amount  of  Capital  Expenditures
permitted by Section 7.10, a request in the form of Exhibit J for the consent of
the  Required  Lenders  (at their  sole  discretion)  to such  budgeted  Capital
Expenditures;

                  (d) within  five days  after  receipt  thereof,  a copy of any
report or  "management  letter"  submitted  by  independent  accountants  to the
Borrower or any  Subsidiary  in connection  with any annual,  interim or special
audit of the books of such Person;

                  (e) within  five days  after the same are sent,  copies of all
financial  statements and reports which the Borrower sends to its  stockholders,
and  within  five  days  after  the  same are  filed,  copies  of all  financial
statements  and  reports  which  the  Borrower  may make to, or file  with,  the
Securities  and Exchange  Commission or any successor or analogous  Governmental
Authority;

                  (f) within  five days after the same are filed,  copies of all
registration  statements  and any  amendments  and exhibits  thereto,  which the
Borrower may file with the Securities  and Exchange  Commission or any successor
or analogous Governmental Authority,  and such other documents or instruments as
may be reasonably requested by the Agent in connection therewith;

<PAGE>

                  (g) within one day after the issuance thereof,  a copy of each
press release and other statement that the Borrower or any Subsidiary shall make
available generally to the public;

                  (h) not less than fourteen days prior to the  consummation  of
any Permitted  Physician  Transaction,  a Physician  Transaction  Notice/Consent
Request  containing the following items,  each in form and substance  reasonably
satisfactory to the Agent:

                  (i)      a description of the Physician Group practice whose
         Capital Stock or assets are to be acquired ("Practice");

                  (ii) a  description  of the material  terms of such  Permitted
         Physician  Transaction  (including,  without  limitation,  the purchase
         price,  method and structure of payment,  and proposed  closing  date),
         provided that a description of any additional or changed material terms
         of such Permitted Physician Transaction shall be disclosed to the Agent
         within three (3) days of such addition or change;

                  (iii) projected revenue and Consolidated  EBITDA  contribution
         levels  with  respect to the  Practice  to be  acquired,  prepared on a
         quarterly basis for the two-year period  following the  consummation of
         such Permitted Physician Transaction, in reasonable detail;

                  (iv)   confirmation,    supported   by   reasonably   detailed
         calculations,  of projected  covenant  compliance over the four quarter
         period  following such  Permitted  Physician  Transaction  after giving
         effect to the pro forma  consolidation  of the  Practice to be acquired
         with the Borrower and its Subsidiaries; and

                  (v)      a description of any Liens to be incurred or assumed
         in connection with such Permitted Physician Transaction;

                  (i) within  thirty  days after the  closing of each  Physician
Transaction,  a copy of each material Physician Transaction document,  including
any acquisition  agreement,  merger agreement,  master transaction  agreement or
Service Agreement relating to such Physician Transaction;

                  (j)  within  thirty  days  after  the last day of each  fiscal
quarter of the Borrower,  an Accounts  Receivable Aging Report, in substantially
the form of Exhibit K, certified by a Responsible Officer;

                  (k) within  ninety  days after the Closing  Date,  a copy of a
corporate  compliance  program (covering,  among other matters,  compliance with
applicable  healthcare and securities laws)  satisfactory to the Agent which has
been adopted by the board of directors of the Borrower for implementation by the
Borrower and its Subsidiaries; and

                  (l) promptly,  such additional financial and other information
as the Agent or any Lender may from time to time reasonably request.

<PAGE>

                  6.3  Payment  of  Obligations.  Pay,  discharge  or  otherwise
satisfy at or before maturity or before they become delinquent,  as the case may
be, all its obligations of whatever nature,  except where the amount or validity
thereof is currently  being  contested in good faith by appropriate  proceedings
and reserves in conformity  with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be.

                  6.4 Conduct of Business and Maintenance of Existence. Continue
to engage in business of the same  general type as conducted by the Borrower and
its Subsidiaries on the Closing Date and preserve,  renew and keep in full force
and  effect  its  corporate  existence  and  maintain  all  rights,  privileges,
licenses,  accreditations,  authorizations,  permits and franchises necessary or
desirable  in the  normal  conduct  of the  business  of the  Borrower  and  its
Subsidiaries,  except as otherwise permitted pursuant to Section 7.5; and comply
with all Contractual  Obligations  and  Requirements of Law except to the extent
that failure to comply  therewith  could not, in the  aggregate,  be  reasonably
expected to have a Material Adverse Effect.

                  6.5  Maintenance  of  Property;  Insurance.  Keep all property
useful and  necessary in the business of the  Borrower and its  Subsidiaries  in
good working order and condition;  maintain with financially sound and reputable
insurance  companies  insurance on all its property in at least such amounts and
against  at least  such  risks (but  including  in any event  public  liability,
product  liability and business  interruption  insurance) as are usually insured
against in the same general  area by companies  engaged in the same or a similar
business; and furnish to each Lender, upon written request,  information in full
detail as to the insurance carried.

                  6.6  Inspection of Property;  Books and Records;  Discussions.
Keep proper books of records and account in which full, true and correct entries
in  conformity  with  GAAP  and all  Requirements  of Law  shall  be made of all
dealings and transactions in relation to its business and activities; and permit
representatives  of any Lender to visit and  inspect any of its  properties  and
examine and make  abstracts from any of its books and records and to discuss the
business,  operations,  properties  and  financial  and other  condition  of the
Borrower and its  Subsidiaries  with  officers and employees of the Borrower and
its Subsidiaries and with its independent certified public accountants,  in each
case at any reasonable time and as often as may reasonably be desired.

                  6.7      Notices.  Promptly give notice to the Agent and each
Lender of:

                  (a)      as soon as possible and in any event within five days
after the occurrence thereof, any Default or Event of Default;

                  (b) as soon as  possible  and in any  event  within  five days
after the Borrower knows or reasonably  should know thereof,  any (i) default or
event of default under any Contractual  Obligation of the Borrower or any of its
Subsidiaries or (ii) litigation,  investigation or proceeding which may exist at
any time between the Borrower or any of its  Subsidiaries  and any  Governmental
Authority, which in either case, if not cured or if adversely determined, as the
case may be, could reasonably be expected to have a Material Adverse Effect;

<PAGE>

                  (c) as soon as possible and in any event within two days after
the  Borrower  knows or  reasonably  should  know  thereof,  any  litigation  or
proceeding affecting the Borrower or any of its Subsidiaries in which the amount
involved  is  $5,000,000  or more  and not  covered  by  insurance  or in  which
injunctive or similar relief is sought;

                  (d) any of the  following  events,  as soon as possible and in
any event  within  thirty  days after the  Borrower  knows or has reason to know
thereof:  (i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required  contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any  withdrawal  from, or
the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii)
the  institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly  Controlled Entity or any  Multiemployer  Plan with
respect to the withdrawal from, or the terminating, Reorganization or Insolvency
of, any Plan;

                  (e) any of the  following  events,  as soon as possible and in
any event  within  thirty  days after the  Borrower  knows or has reason to know
thereof:  (i) any release or discharge by the Borrower or any  Subsidiary of any
Materials of Environmental  Concern required to be reported under  Environmental
Laws to any Governmental Authority, (ii) any condition, circumstance, occurrence
or event that could result in liability under  Environmental  Laws in a Material
Environmental  Amount  or could  result in the  imposition  of any Lien or other
restriction on the title, ownership or transferability of any Property and (iii)
any  proposed  action to be taken by the Borrower or any  Subsidiary  that could
subject the Borrower or any  Subsidiary to any material  additional or different
requirements or liabilities under Environmental Law;

                  (f) as soon as  possible  and in any  event  within  five days
after the occurrence  thereof,  the termination,  cancellation or repudiation of
any Service Agreement by any party thereto;

                  (g) any of the  following  events,  as soon as possible and in
any event within five days,  after the Borrower knows or reasonably  should know
thereof,  (i) notice of the  occurrence  of any event that is or would (with the
passage of time, notice or both) be a default under or a violation of any Health
Care Permit  necessary  for the lawful  conduct of the business or operations of
the Borrower, any Subsidiary or any Affiliated Provider that could reasonably be
expected  to  have  a  Material  Adverse  Effect,  (ii)  any  violation  of  any
Requirement  of Law that could  reasonably  be expected to cause any such Health
Care Permit to be modified,  suspended,  canceled,  terminated,  or rescinded or
revoked,  and (iii) any  investigation  of the Borrower,  any  Subsidiary or any
Affiliated  Provider or its business by the Office of the  Inspector  General of
the United  States  Department of Health and Human  Services,  the United States
Department of Justice, or any other Governmental Authority;

                  (h) as soon as  possible  and in any  event  within  five days
after  receipt  thereof  by the  Borrower  or any  Subsidiary,  notice  from any
Governmental  Authority of a violation by the Borrower or any  Subsidiary of any
Requirement of Law; and

<PAGE>

                  (i) as soon as  possible  and in any  event  within  five days
after the Borrower knows or reasonably  should know thereof,  any development or
event which could reasonably be expected to have a Material Adverse Effect.

Each notice  pursuant to this Section 6.7 shall be accompanied by a statement of
a  Responsible  Officer  setting  forth  details of the  occurrence  referred to
therein  and  stating  what action the  Borrower  proposes to take with  respect
thereto.

                  6.8 Environmental Laws. (a) Comply with, and ensure compliance
by all tenants and subtenants,  if any, with all applicable  Environmental  Laws
and  obtain and comply  with and  maintain,  and  ensure  that all  tenants  and
subtenants obtain and comply with and maintain, any and all licenses, approvals,
notifications,  registrations  or permits  required by applicable  Environmental
Laws except to the extent that failure to do so could not be reasonably expected
to have a Material Adverse Effect.

                  (b) Conduct and complete all investigations, studies, sampling
and  testing,  and all  remedial,  removal  and  other  actions  required  under
Environmental  Laws and promptly comply with all lawful orders and directives of
all Governmental  Authorities regarding  Environmental Laws except to the extent
that the same are being  contested in good faith by appropriate  proceedings and
the  pendency of such  proceedings  could not be  reasonably  expected to have a
Material Adverse Effect.

                  6.9  Further  Assurances.  Upon  the  request  of  the  Agent,
promptly  perform or cause to be performed any and all acts and execute or cause
to be executed  any and all  documents,  instruments  and  agreements  which are
necessary  or  advisable  to  carry  out the  provisions  and  purposes  of this
Agreement and the Security Documents.

                  6.10  Additional  Collateral;  Service  Agreements.  (a)  With
respect to any assets  acquired after the Closing Date by the Borrower or any of
its  Subsidiaries,  promptly  (and in any event  within  twenty  days  after the
acquisition  thereof):  (i) execute and deliver to the Agent such  amendments to
the relevant Security  Documents or such other documents as the Agent shall deem
necessary or  advisable to grant to the Agent,  for the benefit of the Agent and
the Lenders, a Lien on such assets, (ii) take all actions necessary or advisable
to cause  such  Lien to be duly  perfected  in  accordance  with all  applicable
Requirements  of Law,  including,  without  limitation,  the filing of financing
statements in such  jurisdictions  as may be requested by the Agent,  (iii) with
respect to real property,  deliver to the Agent such title  insurance  policies,
surveys,  environmental  reports and other  documents  as the Agent may require,
(iv) take all actions  necessary or advisable to perfect its ownership  interest
in all  Receivables  assigned to it from time to time by an Affiliated  Provider
pursuant to a Service  Agreement or otherwise in accordance  with all applicable
Requirements of Law, including, without limitation, the filing of such financing
statements in such  jurisdictions  as may be requested by the Agent, (v) deliver
to the Agent  Uniform  Commercial  Code and other Lien searches  confirming  the
perfection and priority of the Liens created pursuant to this subsection 6.10(a)
and (vi) if requested by the Agent, deliver to the Agent legal opinions relating
to the matters  described in clauses (i), (ii) and (iv)  immediately  preceding,
which  opinions  shall be in form and  substance,  and from counsel,  reasonably
satisfactory to the Agent.

<PAGE>

                  (b) With respect to any Person that, subsequent to the Closing
Date,  becomes a Subsidiary,  promptly (and in any event within twenty days afer
such Person becomes a Subsidiary): (i) execute and deliver to the Agent, for the
benefit of itself and the Lenders,  a new pledge agreement or such amendments to
the  Guarantee  and  Collateral  Agreement as the Agent shall deem  necessary or
advisable to grant to the Agent,  for the benefit of the Lenders,  a Lien on the
Capital  Stock of such  Subsidiary  which is owned by the Borrower or any of its
Subsidiaries,  (ii)  deliver  to the Agent the  certificates  representing  such
Capital  Stock,  together  with undated  stock powers  executed and delivered in
blank by a duly authorized  officer of the Borrower or such  Subsidiary,  as the
case may be,  (iii)  cause  such  new  Subsidiary  (A) to  become a party to the
Guarantee and Collateral Agreement,  by execution and delivery to the Agent of a
Joinder  Agreement,  (B) to take all actions necessary or advisable to cause the
Lien created by the Guarantee and  Collateral  Agreement to be duly perfected in
accordance  with  all  applicable   Requirements  of  Law,  including,   without
limitation,  the filing of financing  statements in such jurisdictions as may be
requested  by the Agent,  (C) to take all  actions  necessary  or  advisable  to
perfect such Subsidiary's  ownership  interest in all Receivables  assigned from
time to time to such Subsidiary by an Affiliated  Provider pursuant to a Service
Agreement or otherwise in accordance  with all applicable  Requirements  of Law,
including,  without  limitation,  the  filing of  financing  statements  in such
jurisdictions  as may be  requested  by the  Agent,  (D)  to  take  all  actions
necessary or advisable to create and perfect a Lien in favor of the Agent on all
other assets of such Subsidiary,  (E) with respect to real property,  deliver to
the Agent such title  insurance  policies,  surveys,  and other documents as the
Agent may require and (F) to execute and deliver such documents and certificates
as the Agent or its counsel may reasonably request relating to the organization,
existence  and  good  standing  of such  Subsidiary,  the  authorization  of the
transactions  contemplated  hereby and by the other Loan  Documents  relating to
such Subsidiary and any other legal matters  relating to such Subsidiary and the
Loan Documents to which it is or is to become a party, all in form and substance
satisfactory  to the Agent and its counsel,  (iv)  deliver to the Agent  Uniform
Commercial  Code and other Lien searches  confirming the perfection and priority
of the Liens created  pursuant to clause (iii) above and (v) if requested by the
Agent,  deliver to the Agent legal opinions relating to the matters described in
clauses (i), (ii) and (iii)  immediately  preceding,  which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the Agent.

                  (c) With respect to each Service Agreement entered into by the
Borrower or any  Subsidiary  after the Closing Date,  promptly (and in any event
within twenty days after the execution and delivery thereof): (i) deliver to the
Agent a copy of such  Service  Agreement  and (ii)  exercise its best efforts to
deliver to the Agent a copy of a legal  opinion  issued to the  Borrower or such
Subsidiary  by  counsel  for the  Affiliated  Provider  that is a party  to such
Service Agreement regarding the due organization and existence of the Affiliated
Provider,  the due  authorization  of its  execution and delivery of the Service
Agreement,  the enforceability of the Service  Agreement,  and the perfection of
the  ownership  interest  of the  Borrower  or such  Subsidiary  in  Receivables
assigned to it  thereunder;  provided,  however,  that the Borrower shall not be
required to deliver such a legal opinion with respect to a Physician Transaction
involving no more than three physicians.

<PAGE>

                  (d) Each Service Agreement entered into by the Borrower or any
Subsidiary  with an  Affiliated  Provider  after the Closing Date shall  contain
terms and  conditions  substantially  the same as those  contained  in  Sections
3.1.10, 7, and 12.12 of the form of Service Agreement being used by the Borrower
and its Subsidiaries on the Closing Date.

                  6.11 Year 2000  Compliance.  Promptly  notify the Agent in the
event  the  Borrower  discovers  or  determines  that any  computer  application
(including  those of its suppliers,  vendors and customers)  that is material to
its or any of its Subsidiaries' or Affiliated Providers' business and operations
will not be Year 2000  Compliant,  except to the extent that such failure  could
not reasonably be expected to have a Material Adverse Effect.

                                           SECTION 7.  NEGATIVE COVENANTS

                  The  Borrower  hereby  agrees that,  so long as the  Revolving
Credit Commitments remain in effect, any Note remains  outstanding and unpaid or
any other  Obligation  is owing to any Lender or the Agent,  the Borrower  shall
not,  and  (except  with  respect  to  Section  7.1) shall not permit any of its
Subsidiaries to, directly or indirectly:

                  7.1      Financial Covenants.
                           -------------------

                  (a) Consolidated Net Worth.  Permit  Consolidated Net Worth as
of the  last day of any  fiscal  quarter  of the  Borrower  to be less  than the
"Minimum   Compliance   Level".   The   Minimum   Compliance   Level   shall  be
$152,634,900.00  on the Closing Date,  and shall be increased as of the last day
of each fiscal quarter of the Borrower ending after the Closing Date, commencing
with the fiscal quarter ending  December 31, 1998, by an amount equal to the sum
of (i) 75% of Consolidated  Net Income (if positive) for such fiscal quarter and
(ii) 75% of the amount of any Equity  Issuance  (net of  reasonable  transaction
costs) by the Borrower or any Subsidiary  during such fiscal quarter (other than
any capital contribution by the Borrower or any of its Wholly Owned Subsidiaries
to any Wholly Owned Subsidiary of the Borrower).  The foregoing increases in the
Minimum  Compliance  Level shall be fully  cumulative  and no  reduction  in the
Minimum  Compliance  Level shall be made to reflect  negative  Consolidated  Net
Income for any period.

                  (b) Fixed Charge  Coverage.  Permit the Fixed Charge  Coverage
Ratio, as of the last day of any fiscal quarter of the Borrower, to be less than
1.20 to 1.0.

                  (c) Ratio of Consolidated  Senior Indebtedness to Consolidated
EBITDA.  Permit at any time the ratio of (i)  Consolidated  Senior  Indebtedness
(less  Restricted  Cash) to (ii)  Consolidated  EBITDA  for the  period  of four
consecutive  fiscal  quarters  of the  Borrower  ending  on,  or  most  recently
preceding, the date of determination, to be greater than 3.0 to 1.0.

                  (d) Ratio of Total Debt to Consolidated EBITDA.  Permit at any
time the ratio of (i) Total Debt  (less  Restricted  Cash) to (ii)  Consolidated
EBITDA for the period of four consecutive fiscal quarters of the Borrower ending
on, or most recently  preceding,  the date of determination,  to be greater than
3.75 to 1.0.

<PAGE>

                  (e) Minimum Consolidated  EBITDA.  Permit Consolidated EBITDA,
determined  as of the last day of each  calendar  month,  for the  twelve  month
period ending on the date of determination, to be less than $19,000,000.

                  7.2  Limitation  on  Indebtedness.  Create,  incur,  assume or
suffer to exist any Indebtedness, except:

                  (a)      Indebtedness of the Borrower under this Agreement;

                  (b)  Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary;

                  (c)  Indebtedness of the Borrower and any of its  Subsidiaries
incurred to finance the acquisition of fixed or capital assets (whether pursuant
to a loan, a Synthetic  Lease,  a Capital  Lease  Obligation or otherwise) in an
aggregate principal amount not exceeding as to the Borrower and its Subsidiaries
$10,000,000 at any time outstanding, provided that such Indebtedness is incurred
simultaneously with such acquisition;

                  (d)  Indebtedness  of  the  Borrower  under  Hedge  Agreements
incurred in the  ordinary  course of business and not for  speculative  purposes
that have been  approved by the  Borrower's  board of directors and that have an
aggregate  notional amount not to at any time exceed, at the time any such Hedge
Agreement is entered into (and after giving effect to such Hedge Agreement), the
lesser of (i) $50,000,000 and (ii) 50% of the aggregate  principal amount of the
Extensions of Credit outstanding at such time;

                  (e) Indebtedness  outstanding on the date hereof and listed on
Schedule 7.2 and any refinancings, refundings, renewals or extensions thereof on
financial and other terms, in the reasonable  judgment of the Required  Lenders,
no more onerous to the Borrower or any of its  Subsidiaries  than the  financial
and  other  terms  of  such  Indebtedness;  provided  that  the  amount  of such
Indebtedness  is not  increased  at the  time  of such  refinancing,  refunding,
renewal or extension;

                  (f) to the  extent  that any  Guarantee  Obligation  permitted
under Section 7.4 constitutes Indebtedness, such Indebtedness;

                  (g)  Indebtedness of a Person which becomes a Subsidiary after
the  date  hereof  in  accordance  with  Section  7.17,  provided  that (i) such
indebtedness  existed at the time such Person  became a  Subsidiary  and was not
created in anticipation  thereof and (ii) immediately after giving effect to the
acquisition  of such  corporation by the Borrower no Default or Event of Default
shall have occurred and be continuing;

                  (h)      unsecured Subordinated Indebtedness;

                  (i)  Indebtedness  of  the  Borrower  or any  Subsidiary  with
respect to (x)  split-dollar  life  insurance  policies  permitted by subsection
7.8(j) and (y) Program Loans permitted by subsection 7.8(k); and

<PAGE>

                  (j) additional unsecured  Indebtedness of the Borrower and its
Subsidiaries  not otherwise  permitted by the preceding  clauses of this Section
7.2 not  exceeding  $1,000,000  in  aggregate  principal  amount at any one time
outstanding.

                  7.3 Limitation on Liens.  Create,  incur,  assume or suffer to
exist any Lien upon any of its property,  assets or revenues,  whether now owned
or hereafter acquired, except for:

                  (a) Liens  for taxes not yet due or which are being  contested
in good faith by appropriate  proceedings  diligently  conducted,  provided that
adequate  reserves  with  respect  thereto  are  maintained  on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with GAAP;

                  (b)   carriers',   warehousemen's,   landlords',   mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business  securing amounts which are not overdue for a period of more than sixty
days or which are  being  contested  in good  faith by  appropriate  proceedings
diligently conducted;

                  (c)  pledges,  deposits  or  other  Liens in  connection  with
workers'   compensation,   unemployment  insurance  and  other  social  security
benefits, including, without limitation,  pledges or deposits securing liability
to insurance carriers under insurance or self-insurance arrangements;

                  (d)  deposits  to  secure  the  performance  of  bids,   trade
contracts  (other than for  Indebtedness),  obligations  for utilities,  leases,
statutory  obligations  (except  pursuant  to  ERISA  and  Environmental  Laws),
performance  bonds  and  other  obligations  of a like  nature  incurred  in the
ordinary course of business;

                  (e)    easements,    zoning    restrictions,    rights-of-way,
restrictions and other similar  encumbrances  incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount and which do not
in any case materially detract from the value of the property subject thereto or
materially  interfere with the ordinary  conduct of the business of the Borrower
or such Subsidiary;

                  (f) Liens in existence  on the date hereof  listed on Schedule
7.3, securing Indebtedness permitted by subsection 7.2(e), provided that no such
Lien is spread to cover any additional  property after the Closing Date and that
the amount of Indebtedness secured thereby is not increased;

                  (g)  Liens  securing  Indebtedness  of the  Borrower  and  its
Subsidiaries  permitted by subsection 7.2(c) incurred to finance the acquisition
of fixed or  capital  assets,  provided  that (i) such  Liens  shall be  created
substantially  simultaneously  with the  acquisition  of such  fixed or  capital
assets,  (ii) such Liens do not at any time encumber any property other than the
property financed by such Indebtedness, (iii) the amount of Indebtedness secured
thereby is not increased and (iv) the principal  amount of Indebtedness  secured
by any such Lien shall at no time exceed 100% of the original  purchase price of
such property at the time it was acquired;

<PAGE>

                  (h) Liens on the property or assets of a Person which  becomes
a Subsidiary after the date hereof securing Indebtedness permitted by subsection
7.2(g),  provided  that (i) such Liens  existed at the time such Person became a
Subsidiary and were not created in anticipation  thereof,  (ii) any such Lien is
not spread to cover any  property or assets of such  corporation  after the time
such  corporation  becomes a  Subsidiary  and (iii) the  amount of  Indebtedness
secured thereby is not increased; and

                  (i)      Liens created pursuant to the Security Documents.

                  7.4 Limitation on Guarantee Obligations. Create, incur, assume
or suffer to exist any Guarantee Obligation except:

                  (a) Guarantee Obligations incurred after the date hereof in an
aggregate amount not to exceed $1,000,000 at any one time outstanding;

                  (b)  Guarantee  Obligations  with respect to Hedge  Agreements
permitted by subsection 7.2(d);

                  (c) Guarantee  Obligations  incurred in the ordinary course of
business  by the  Borrower  with  respect to  obligations  of its  Subsidiaries,
provided that such obligations of the Subsidiaries are otherwise permitted under
this Agreement; and

                  (d)      the Guarantees.

                  7.5 Limitation on Fundamental Changes.  Enter into any merger,
consolidation  or  amalgamation,  or liquidate,  wind up or dissolve  itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially  all of its property,  business or
assets,  or make  any  material  change  in its  present  method  of  conducting
business, except:

                  (a) any Subsidiary may be merged or consolidated  with or into
the Borrower  (provided  that the Borrower  shall be the continuing or surviving
entity) or with or into a Wholly Owned  Subsidiary  (provided  that (i) a Wholly
Owned  Subsidiary  shall be the  continuing  or  surviving  entity  and (ii) the
surviving  entity must be a Guarantor if any merged or consolidated  entity is a
Guarantor);

                  (b) the  Borrower  may merge with and into any other Person to
effect a Permitted Physician  Transaction so long as the surviving entity is the
Borrower;

                  (c) any  Subsidiary  may sell,  lease,  transfer or  otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise) to
the  Borrower  or any  other  Wholly  Owned  Subsidiary,  provided  that  if the
Subsidiary whose assets are sold,  leased,  transferred or otherwise disposed of
is  a  Guarantor,  any  Subsidiary  to  which  such  assets  are  sold,  leased,
transferred or otherwise disposed of must also be a Guarantor; and

<PAGE>

                  (d) any  Subsidiary  may be merged  with any  other  Person to
effect a Permitted Physician  Transaction so long as the surviving entity is the
Subsidiary.

                  7.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer  or  otherwise  dispose  of any of its  property,  business  or  assets
(including,  without limitation,  receivables and leasehold interests),  whether
now owned or hereafter  acquired,  or, in the case of any  Subsidiary,  issue or
sell any shares of such Subsidiary's  Capital Stock to any Person other than the
Borrower or any Wholly Owned Subsidiary of the Borrower, except:

                  (a) the  sale or other  disposition  of  obsolete  or worn out
property  in the  ordinary  course of  business,  provided  that if the net cash
proceeds from any transaction or series of related transactions exceed $500,000,
then the Borrower shall immediately repay the Loans by the amount of the excess;

                  (b) the sale or other  disposition of any property (other than
Receivables  or  property of the type  described  in clauses (a) and (c) of this
Section 7.6) in the ordinary  course of business,  provided  that the  aggregate
book  value  of all  assets  so sold or  disposed  of in any  period  of  twelve
consecutive  months shall not exceed 5% of  consolidated  tangible assets of the
Borrower and its Subsidiaries as at the beginning of such twelve-month period;

                  (c) the sale of inventory in the ordinary course of business;

                  (d)  the  sale  or  discount   without  recourse  of  accounts
receivable  arising in the ordinary  course of business in  connection  with the
compromise or collection thereof; and

                  (e)      as permitted by subsection 7.5(c).

                  7.7  Limitation  on  Restricted  Payments.  Declare or pay any
dividend (other than dividends  payable solely in Capital Stock of the Borrower)
on, or make any  payment  on  account  of, or set apart  assets for a sinking or
other analogous fund for, the purchase,  redemption,  defeasance,  retirement or
other acquisition of, any Capital Stock of the Borrower or any Subsidiary or any
warrants or options to purchase any such Capital Stock, whether now or hereafter
outstanding,  or make any other distribution in respect thereof, either directly
or indirectly,  whether in cash or property or in obligations of the Borrower or
any  Subsidiary  (such  declarations,   payments,   setting  apart,   purchases,
redemptions,  defeasances,  retirements,  acquisitions and  distributions  being
herein called "Restricted Payments"), except:

                  (a)  any  Subsidiary  may  declare  and pay  dividends  to the
Borrower or a Wholly Owned Subsidiary;

<PAGE>

                  (b) the Borrower may repurchase,  redeem or otherwise  acquire
or retire for value any Capital  Stock of the Borrower  held by employees of the
Borrower or any of its Subsidiaries pursuant to any employee equity subscription
agreement, stock option agreement or stock ownership arrangement,  provided that
(i) the aggregate  price paid for all such  repurchased,  redeemed,  acquired or
retired  Capital  Stock during any fiscal year of the Borrower  shall not exceed
$1,000,000  and (ii) no Default or Event of Default  shall have  occurred and be
continuing or would result therefrom; and

                  (c) the redemption or repurchase by the Borrower of its common
stock,  provided  that (i) any common stock so redeemed or  repurchased  must be
held  by the  Borrower  as  treasury  stock  or  reissued  as a  portion  of the
consideration for Permitted Physician Transactions,  (ii) any such stock held in
treasury may not be canceled, (iii) the aggregate amount paid for the redemption
or  repurchase  of any  such  stock  held in  treasury  by the  Borrower  at any
particular  time shall not exceed  $5,000,000,  and (iv) no common  stock of the
Borrower may be redeemed or  repurchased  if a Default or Event of Default shall
have occurred and be continuing or would result therefrom.

                  7.8 Limitation on  Investments,  Loans and Advances.  Make any
advance,  loan,  extension of credit or capital contribution to, or purchase any
stock,  bonds,   notes,   debentures  or  other  securities  of  or  any  assets
constituting  a business  unit of, or make any other  investment  in, any Person
(each an "Investment"), except:

                  (a)  extensions  of trade  credit  in the  ordinary  course of
business;

                  (b) Investments in cash and Cash Equivalents;

                  (c) Pending  Physician  Transactions  that close within ninety
days after the Closing Date;

                  (d) Permitted Physician Transactions;

                  (e) Investments  existing on the Closing Date and described on
Schedule 7.8, setting forth the respective amounts of such Investments as of the
Closing Date;

                  (f) loans and advances to officers,  directors or employees of
the  Borrower  or its  Subsidiaries  in the  ordinary  course of  business in an
aggregate amount for the Borrower and its Subsidiaries not to exceed  $2,500,000
at any one time  outstanding  (inclusive of any such loans or advances listed on
Schedule 7.8),  provided that (i) all such loans and advances shall be evidenced
by recourse  promissory  notes, (ii) such promissory notes shall not contain any
restriction  on  assignment  or  transfer  and (iii) the Agent,  for the ratable
benefit of itself and the other Lenders, shall hold a perfected,  first priority
security  interest in all such promissory notes and related security pursuant to
the Security Documents;

<PAGE>

                  (g) loans and advances to physicians  in  connection  with the
recruitment or retention of such  physicians by Affiliated  Providers,  provided
that (i) the  aggregate  principal  amount of all such loans and advances at any
time  outstanding  shall not exceed  $5,000,000  (inclusive of any such loans or
advances  listed on Schedule 7.8),  (ii) the aggregate loans and advances to any
physician  shall not  exceed  $300,000,  (iii) no loan or  advance  shall have a
maturity  greater  than three years,  (iv) all such loans and advances  shall be
evidenced by recourse  promissory  notes,  (v) such  promissory  notes shall not
contain any  restriction  on assignment or transfer and (vi) the Agent,  for the
ratable benefit of itself and the other Lenders,  shall hold a perfected,  first
priority  security  interest in all such promissory  notes and related  security
pursuant to the Security Documents;

                  (h)  Investments  by  the  Borrower  in its  Subsidiaries  and
investments by such Subsidiaries in the Borrower and in other Subsidiaries;

                  (i) Investments of the Borrower and its Subsidiaries under the
Hedge Agreements permitted by subsection 7.2(d);

                  (j) advances of premiums  under  split-dollar  life  insurance
policies,  provided  that  (i) the  owner of each  such  policy  is a  physician
employed by an Affiliated Provider, (ii) such split-dollar life insurance policy
was purchased as partial consideration for the employment of the physician by an
Affiliated  Provider in connection with a Physician  Transaction  involving such
Affiliated  Provider  and (iii) the  insurance  policy has been  assigned to the
Borrower  or a  Subsidiary  to secure  premium  advances  on such  policy by the
Borrower or such Subsidiary and reassigned to the Agent, for the ratable benefit
of itself and the Lenders, pursuant to the Security Documents; and

                  (k) Program  Loans by the  Borrower  and its  Subsidiaries  to
Affiliated  Providers  pursuant to Service  Agreements,  provided  that (i) each
Program Loan shall be evidenced by a recourse  promissory  note,  (ii) each such
promissory  note shall not contain any restriction on assignment or transfer and
(iii) the Agent shall hold a perfected,  first priority security interest in all
Program Loans and all security  therefor,  for the ratable benefit of itself and
the Lenders, pursuant to the Security Documents.

                  7.9 Limitation on Optional  Payments and Modifications of Debt
Instruments.  (a) Make any optional payment or prepayment of principal of or any
redemption, purchase or defeasance of any Indebtedness (other than the Loans and
Reimbursement Obligations),  (b) make any payment of principal of or interest on
or any other amount with respect to any Subordinated Indebtedness if any Default
or Event of Default  shall have  occurred  and be  continuing,  or would  result
therefrom,  (c) amend,  modify or change,  or consent or agree to any amendment,
modification  or  change  to any  of  the  terms  relating  to any  Subordinated
Indebtedness (other than any such amendment,  modification or change which would
extend the maturity or reduce the amount of any payment of principal  thereof or
which would reduce the rate or extend the date for payment of interest  thereon)
or  (d)  amend  the  subordination  provisions  contained  in  the  Subordinated
Indebtedness Documentation.

<PAGE>

                  7.10  Limitation  on Capital  Expenditures.  Make or commit to
make a Capital  Expenditure,  except Capital Expenditures in the ordinary course
of business not exceeding, in the aggregate for the Company and its Subsidiaries
during  any  fiscal  year of the  Borrower,  an  amount  in  excess of (a) 5% of
consolidated  tangible  assets of the Borrower and its  Subsidiaries on the last
day of the immediately  preceding  fiscal year or (b) such greater amount as may
be approved for such fiscal year by the Required  Lenders  pursuant to a request
by the Borrower under subsection 6.2(c)(ii); provided, however, that in addition
to the Capital Expenditures permitted by clauses (a) and (b) above (which may be
used for information technology investments),  the Borrower and its Subsidiaries
may make Capital  Expenditures  for investments in information  technology in an
additional aggregate amount not to at any time exceed $5,000,000 during the term
of this Agreement.

                  7.11 Limitation on Transactions  with  Affiliates.  Enter into
any transaction,  including,  without limitation,  any purchase,  sale, lease or
exchange of property or the rendering of any service,  with any Affiliate unless
such  transaction is (a) otherwise  permitted under this  Agreement,  (b) in the
ordinary  course of the  Borrower's or such  Subsidiary's  business and (c) upon
fair and reasonable  terms no less favorable to the Borrower or such Subsidiary,
as the  case  may  be,  than  it  would  obtain  in a  comparable  arm's  length
transaction with a Person which is not an Affiliate.

                  7.12  Limitation  on  Sales  and  Leasebacks.  Enter  into any
arrangement  with any Person  providing  for the leasing by the  Borrower or any
Subsidiary  of real or  personal  property  which  has  been or is to be sold or
transferred  by the Borrower or such  Subsidiary  to such Person or to any other
Person to whom  funds  have  been or are to be  advanced  by such  Person on the
security  of  such  property  or  rental  obligations  of the  Borrower  or such
Subsidiary, except the sale and leaseback of equipment in the ordinary course of
business  where the  Borrower or a Subsidiary  (a)  transfers to such Person its
right to purchase such  equipment  within ninety days after the Borrower or such
Subsidiary  has entered  into an agreement to purchase  such  equipment  and (b)
leases the equipment from such Person.

                  7.13  Limitation on Changes in Fiscal Year.  Permit the fiscal
year of the Borrower to end on a day other than December 31.

                  7.14  Limitation on Negative  Pledges.  Enter into,  assume or
become  subject  to any  agreement  prohibiting  or  otherwise  restricting  the
creation or  assumption of any Lien upon its  properties or assets,  whether now
owned or hereafter  acquired,  or  requiring  the grant of any security for such
obligation if security is given for some other  obligation,  except (a) pursuant
to this  Agreement and the other Loan  Documents or (b) pursuant to any document
or instrument governing  Indebtedness  incurred pursuant to subsection 7.2(c) or
7.2(g), provided that any such restriction contained therein relates only to the
asset or assets acquired in connection therewith.

                  7.15 Limitation on Restricted Actions. Enter into or permit to
exist or become  effective any  consensual  encumbrance  or  restriction  on the
ability of any  Subsidiary to (a) pay dividends or make any other  distributions
on its Capital Stock,  (b) pay any  Indebtedness or other obligation owed to the
Borrower or any other Subsidiary,  (c) make loans or advances to the Borrower or
any other  Subsidiary,  (d) sell,  lease or transfer  any of its  properties  or
assets to the Borrower or any other  Subsidiary or (e) act as a Guarantor  under
the Loan Documents,  except for such  encumbrances or restrictions that exist in
the Loan Documents.

                  7.16 Limitation on Lines of Business. Enter into any business,
either   directly  or  through  any  Subsidiary  or  joint  venture  or  similar
arrangement,  except  for  those  businesses  in  which  the  Borrower  and  its
Subsidiaries  are engaged on the date of this  Agreement  or which are  directly
related thereto.

<PAGE>

                  7.17  Limitations  on  Acquisitions.  Acquire by  purchase  or
otherwise  all or a  substantial  part of the  business or assets of, or Capital
Stock or other evidences of beneficial  ownership of, or any line of business or
division of, any Person, other than (a) Permitted Physician  Transactions or (b)
Pending  Physician  Transactions that close within ninety days after the Closing
Date.

                  7.18 Health Care Permits and Approvals.  Engage, or permit any
Affiliated  Provider to engage,  in any activity that (a) is or could reasonably
be expected to result in a default  under or violation of any Health Care Permit
necessary for the lawful  conduct of the business or operations of the Borrower,
any Subsidiary or any Affiliated Provider or (b) could reasonably be expected to
cause the loss by the Borrower, any Subsidiary or any Affiliated Provider of the
right to participate in, and receive  payment under,  any  Governmental  Program
with which it has  contracted or in which it has elected to  participate,  or to
receive  reimbursement from private and commercial payors and health maintenance
organizations,  except where the loss of such Health Care  Permit(s) or right(s)
to participate in or receive payments under such  Governmental  Programs or from
such payors or organizations  could not reasonably be expected,  individually or
in the aggregate, to have a Material Adverse Effect.

<PAGE>

                  7.19  Fraud  and  Abuse.  Engage,  or  permit  any  Affiliated
Provider or any of the  shareholders,  officers,  directors  or employees of the
Borrower, any Subsidiary or any Affiliated Provider to engage, in any activities
that are prohibited under the Federal False Claims Act (31 U.S.C.  ss.ss. 3729 -
3733), 42 U.S.C. ss. 1395 nn, 18 U.S.C. 1347 or the federal fraud and abuse laws
(42 U.S.C.  ss.ss.  1320a - 7a or 1320a - 7b),  or the  regulations  promulgated
pursuant to such statutes or similar state or local statutes or regulations,  or
which  are  prohibited  by rules of  professional  conduct,  including,  but not
limited to, the following: (a) knowingly presenting or causing to be presented a
false claim for payment,  (b) knowingly  making or using a false record in order
to receive payment for a claim, (c) knowingly and willfully making or causing to
be  made  a  false  statement  or  representation  of a  material  fact  in  any
application  for any benefit or payment,  (d) knowingly and willfully  making or
causing to be made any false statement or  representation of a material fact for
use in  determining  rights to any benefit or  payment,  (e) failing to disclose
knowledge by a claimant of the occurrence of any event  affecting the initial or
continued  right to any  benefit  or  payment  on its own behalf or on behalf of
another,  with  intent to secure  such  benefit  or  payment  fraudulently,  (f)
knowingly and willfully soliciting or receiving any remuneration  (including any
kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash
or in kind or offering to pay such  remuneration  (i) in return for referring an
individual to a Person for the furnishing or arranging for the furnishing of any
item or service for which  payment may be made in whole or in part by  Medicare,
Medicaid or other third party payors or (ii) in return for  purchasing,  leasing
or ordering or arranging for or recommending the purchasing, leasing or ordering
of any good, facility, service or item for which payment may be made in whole or
in part by any Governmental Program or other third party payors or (g) referring
a patient for "designated  health services" to a Person with which the referring
physician has a financial relationship,  except for such instances of prohibited
activities that could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Neither the Borrower nor any Subsidiary or
Affiliated  Provider,  nor  any  of  their  respective  officers,  directors  or
employees  shall take any  action or omit to take any action  that will have the
effect of excluding the Borrower, any Subsidiary or any Affiliated Provider from
contracting with or participating in any Governmental Program.

         7.20 Limitation on Modification of Other Agreements. Modify, terminate,
amend, supplement, or waive, or permit any modification, termination, amendment,
supplement  or waiver  of (a) any  Material  Contract,  (b) the  certificate  of
incorporation or bylaws (or analogous constitutional  documents) of the Borrower
of  any  Subsidiary  or (c)  any  Health  Care  Permit,  if  any  of  the  same,
individually  or in the  aggregate,  could  reasonably  be  expected  to  have a
Material Adverse Effect.

         7.21 Accounting for  Assignments of Receivables.  Prepare any financial
statements,  tax returns or schedules  which shall account for the assignment of
any  Receivable  by an  Affiliated  Provider to the  Borrower or any  Subsidiary
pursuant to a Service  Agreement or otherwise in any manner other than as a true
sale thereof,  or in any other respect  account for or treat any such assignment
in any manner  other than as a true sale of such  Receivable  by the  Affiliated
Provider to the Borrower or a Subsidiary.

                                            SECTION 8.  EVENTS OF DEFAULT

                  If any of the following events shall occur and be continuing:

                  (a) The Borrower  shall fail to pay any  principal of any Loan
or  Reimbursement  Obligation  when due in accordance  with the terms thereof or
hereof;  or the  Borrower  shall  fail  to pay  any  interest  on  any  Loan  or
Reimbursement  Obligation,  or any other amount payable hereunder,  within three
days after any such interest or other amount becomes due in accordance  with the
terms thereof or hereof; or

                  (b) Any  representation or warranty made or deemed made by the
Borrower or any other Loan Party  herein or in any other Loan  Document or which
is  contained  in any  certificate,  document or  financial  or other  statement
furnished by it at any time under or in  connection  with this  Agreement or any
such other Loan  Document  shall prove to have been  incorrect  in any  material
respect on or as of the date made or deemed made; or

                  (c) The Borrower or any other Loan Party shall  default in the
observance or performance  of any agreement  contained in Section 6.1 or 6.2, or
Section 7; or

                  (d) The Borrower or any other Loan Party shall  default in the
observance or performance of any other agreement  contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a) through (c) of
this  Section 8), and such default  shall  continue  unremedied  for a period of
thirty days; or

<PAGE>

                  (e) The Borrower or any of its Subsidiaries  shall (i) default
in any payment of principal of or interest of any  Indebtedness  (other than the
Loans  or  Reimbursement  Obligations)  or (ii)  default  in the  observance  or
performance  of  any  other   agreement  or  condition   relating  to  any  such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto,  or any other event shall occur or condition exist, the effect
of which  default  or other  event or  condition  is to cause,  or to permit the
holder or holders of such  Indebtedness (or a trustee or agent on behalf of such
holder or  holders)  to cause,  with the  giving  of  notice if  required,  such
Indebtedness to become due prior to its stated maturity; provided, however, that
no Default or Event of  Default  shall  exist  under this  paragraph  unless the
aggregate  amount of Indebtedness in respect of which any default or other event
or condition referred to in this paragraph shall have occurred shall be equal to
at least $5,000,000; or

                  (f) (i) The Borrower or any of its Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or future law of any
jurisdiction,   domestic  or  foreign,   relating  to  bankruptcy,   insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with  respect to it, or seeking to  adjudicate  it a bankrupt or  insolvent,  or
seeking  reorganization,   arrangement,   adjustment,  winding-up,  liquidation,
dissolution,  composition or other relief with respect to it or its debts or (B)
seeking  appointment  of a receiver,  trustee,  custodian,  conservator or other
similar  official for it or for all or any substantial part of its assets or the
Borrower  or any of its  Subsidiaries  shall make a general  assignment  for the
benefit of its creditors;  or (ii) there shall be commenced against the Borrower
or any of its  Subsidiaries  any case,  proceeding  or other  action of a nature
referred  to in clause (i) above  which (A) results in the entry of an order for
relief or any such  adjudication  or  appointment  or (B)  remains  undismissed,
undischarged  or unbonded  for a period of sixty  days;  or (iii) there shall be
commenced  against the Borrower or any of its Subsidiaries any case,  proceeding
or  other  action  seeking  issuance  of a  warrant  of  attachment,  execution,
distraint or similar process  against all or any substantial  part of its assets
which  results in the entry of an order for any such relief which shall not have
been vacated,  discharged or stayed or bonded  pending  appeal within sixty days
from the entry thereof;  or (iv) the Borrower or any of its  Subsidiaries  shall
take any action in furtherance of, or indicating its consent to, approval of, or
acquiescence  in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) the Borrower or any of its Subsidiaries  shall generally not, or shall be
unable to, or shall  admit in writing  its  inability  to, pay its debts as they
become due; or

                  (g)  (i)  Any   Person   shall   engage  in  any   "prohibited
transaction"  (as defined in Section  406 of ERISA or Section  4975 of the Code)
involving any Plan,  (ii) any  "accumulated  funding  deficiency" (as defined in
Section 302 of ERISA),  whether or not waived,  shall exist with  respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed,  to administer or to terminate,  any Single Employer
Plan,  which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders,  likely to result
in the  termination  of such Plan for  purposes  of Title IV of ERISA,  (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA,  (v) the
Borrower or any Commonly  Controlled Entity shall, or in the reasonable  opinion
of the Required  Lenders is likely to, incur any liability in connection  with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or  condition  shall occur or exist with respect to a Plan;
and in each case in clauses (i) through  (vi)  above,  such event or  condition,
together with all other such events or conditions,  if any, involve an aggregate
amount in excess of $5,000,000; or

<PAGE>

                  (h) One or more judgments or decrees shall be entered  against
the Borrower or any of its  Subsidiaries  involving in the aggregate a liability
(not paid or fully covered by  insurance)  of  $5,000,000 or more,  and all such
judgments or decrees shall not have been vacated,  discharged,  stayed or bonded
pending appeal within sixty days from the entry thereof; or

                  (i) (i) Any of the Security  Documents  shall  cease,  for any
reason,  to be in full force and effect, or the Borrower or any other Loan Party
which is a party to any of the  Security  Documents  shall so assert or (ii) the
Lien  created by any of the  Security  Documents  shall cease to be perfected or
enforceable and of the same effect as to perfection and priority purported to be
created thereby; or

                  (j)  Any  Loan  Document  (other  than  any  of  the  Security
Documents)  shall cease,  for any reason,  to be in full force and effect or any
Loan Party shall so assert; or

                  (k) (i) Any Person or "group"  (within  the meaning of Section
13(d) or 14(d) of the Exchange Act) (A) shall have acquired beneficial ownership
of 30% or more of any outstanding  class of Capital Stock having ordinary voting
power in the  election of  directors  or other  managers of the  Borrower or (B)
shall  obtain the power  (whether or not  exercised)  to elect a majority of the
Borrower's  directors or (ii) the Board of  Directors of the Borrower  shall not
consist of a majority of Continuing Directors; "Continuing Directors" shall mean
the  directors of the Borrower on the Closing Date and each other  director,  if
such other  director's  nomination for election to the Board of Directors of the
Borrower is recommended by a majority of the then Continuing Directors; or

                  (l) Any Service Agreement(s),  with respect to which more than
15% of the management fee revenue of the Borrower and its  Subsidiaries  for the
immediately  preceding fiscal year was attributable,  shall be (i) determined to
be  illegal or invalid  or not  binding  on one or more  parties  thereto by any
arbitrator or  Governmental  Authority and such Service  Agreement(s)  shall not
have  been  amended,   modified  or  restated   within  sixty  days  after  such
determination  in  a  manner  that  corrects  such  illegality,   invalidity  or
nonbinding effect, or (ii) terminated or repudiated by any party thereto, except
pursuant to a termination  permitted by the relevant Service  Agreement(s) where
the relevant Affiliated  Provider(s)  repurchase for cash in accordance with the
terms  of  such  Service   Agreement(s)  all  assets  sold  by  such  Affiliated
Provider(s)  to the  Borrower  or any  Subsidiary  for an  amount  equal  to the
repurchase price specified in the relevant Service Agreement(s); or

                  (m) Any  Service  Agreement  shall  for any  reason  cease  to
evidence the true and absolute assignment and transfer by an Affiliated Provider
to the  Borrower or any  Subsidiary  (or any of their  respective  assignees  or
transferees)  of the full legal and  equitable  title to, and ownership of, each
Receivable assigned thereunder; or

                  (n) Any change  shall  occur in any  Requirement  of Law or in
Governmental  Program  reimbursement  rates or payment  methodologies that could
reasonably be expected to have a Material Adverse Effect;

<PAGE>

then, and in any such event, (A) if such event is an Event of Default  specified
in clause  (i) or (ii) of  paragraph  (f) of this  Section  with  respect to the
Borrower,  automatically the Revolving Credit  Commitments  (including,  without
limitation,  the  obligation  of the Issuing  Lender to issue Letters of Credit)
shall  immediately  terminate and the Loans  hereunder  (with  accrued  interest
thereon) and all other  amounts  owing under this  Agreement  and the other Loan
Documents shall immediately  become due and payable and (B) if such event is any
other Event of Default,  either or both of the  following  actions may be taken:
(i) with the consent of the Required Lenders, the Agent may, or upon the request
of the Required Lenders,  the Agent shall, by notice to the Borrower declare the
Revolving Credit Commitments to be terminated  (including,  without  limitation,
the  obligation  of the Issuing  Lender to issue  Letters of Credit)  forthwith,
whereupon the Revolving Credit Commitments shall immediately  terminate and (ii)
with the consent of the Required Lenders,  the Agent may, or upon the request of
the Required  Lenders,  the Agent shall, by notice to the Borrower,  declare the
Loans  hereunder  (with  accrued  interest  thereon) and all other amounts owing
under  this  Agreement  and the  other  Loan  Documents  to be due  and  payable
forthwith, whereupon the same shall immediately become due and payable.

                  With  respect to all Letters of Credit  with  respect to which
presentment  for honor shall not have  occurred  at the time of an  acceleration
pursuant to the preceding paragraph,  the Borrower shall at such time deposit in
a cash  collateral  account opened by the Agent an amount equal to the aggregate
then undrawn and unexpired amount of such Letters of Credit. The Borrower hereby
grants  to  the  Agent,  for  the  benefit  of the  Issuing  Lender  and  the LC
Participants,  a  security  interest  in such  cash  collateral  to  secure  the
Obligations.  The  Borrower  shall  execute  and  deliver to the Agent,  for the
account of the Issuing Lender and the LC  Participants,  such further  documents
and instruments as the Agent may request to evidence the creation and perfection
of such security interest in such cash collateral account.  Amounts held in such
cash  collateral  account shall be applied by the Agent to the payment of drafts
drawn under such Letters of Credit,  and the unused  portion  thereof  after all
such  Letters of Credit  shall have  expired or been fully drawn  upon,  if any,
shall be  applied  to repay the other  Obligations.  After all such  Letters  of
Credit  shall  have  expired  or  been  fully  drawn  upon,  all   Reimbursement
Obligations  shall have been satisfied and all other Obligations shall have been
paid in full,  the balance,  if any, in such cash  collateral  account  shall be
returned to the Borrower.

                  Except  as  expressly   provided  above  in  this  Section  8,
presentment,  demand,  protest,  notice of acceleration or intent to accelerate,
and all other notices and formalities of any kind are hereby expressly waived by
the Borrower.

                                                SECTION 9.  THE AGENT

<PAGE>

                  9.1 Appointment,  Powers,  and Immunities.  Each Lender hereby
irrevocably  appoints  and  authorizes  the Agent to act as its agent under this
Agreement and the other Loan  Documents  with such powers and  discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan  Documents,  together with such other powers as are  reasonably  incidental
thereto.  The Agent (which term as used in this  sentence and in Section 9.5 and
the first  sentence of Section 9.6 shall include its  Affiliates and its own and
its Affiliates' officers, directors,  employees, and agents): (a) shall not have
any  duties  or  responsibilities  except  those  expressly  set  forth  in this
Agreement and shall not be a trustee or fiduciary for any Lender,  (b) shall not
be responsible  to the Lenders for any recital,  statement,  representation,  or
warranty  (whether  written  or  oral)  made in or in  connection  with any Loan
Document or any certificate or other document referred to or provided for in, or
received by any of them under,  any Loan Document,  or for the value,  validity,
effectiveness, genuineness, enforceability, or sufficiency of any Loan Document,
or any other document  referred to or provided for therein or for any failure by
any Loan Party or any other Person to perform any of its obligations thereunder,
(c) shall not be responsible for or have any duty to ascertain, inquire into, or
verify the  performance or observance of any covenants or agreements by any Loan
Party or the satisfaction of any condition or to inspect the property (including
the  books  and  records)  of any  Loan  Party  or any  of its  Subsidiaries  or
Affiliates,  (d) shall not be required to initiate or conduct any  litigation or
collection proceedings under any Loan Document except pursuant to the request of
the Required Lenders (but subject to Sections 9.2 and 9.3), and (e) shall not be
responsible  for any  action  taken  or  omitted  to be  taken by it under or in
connection  with any Loan  Document,  except  for its own  gross  negligence  or
willful misconduct.  The Agent may employ agents and attorneys-in-fact and shall
not be  responsible  for the  negligence  or  misconduct  of any such  agents or
attorneys-in-fact  selected by it with reasonable care. The Issuing Lender shall
act on behalf of the Lenders with respect to Letters of Credit issued under this
Agreement and the documents  associated  therewith.  It is understood and agreed
that the Issuing  Lender (a) shall have all of the benefits and  immunities  (i)
provided to the Agent in this  Section 9 with respect to acts taken or omissions
suffered by the Issuing Lender in connection with Letters of Credit issued under
this  Agreement and the documents  associated  therewith as fully as if the term
"Agent" as used in this  Section 9 included  the Issuing  Lender with respect to
such acts or omissions and (ii) as provided  elsewhere in this Agreement and (b)
shall have all of the benefits of the  provisions  of Section 9.5 as fully as if
the term "Agent" as used in Section 9.5 included the Issuing Lender.

                  9.2 Reliance by the Agent. The Agent shall be entitled to rely
upon any certification,  notice,  instrument,  writing,  or other  communication
(including,  without limitation,  any thereof by telephone or telecopy) believed
by it to be genuine and correct and to have been  signed,  sent or made by or on
behalf of the proper Person or Persons,  and upon advice and statements of legal
counsel (including  counsel for any Loan Party),  independent  accountants,  and
other experts  selected by the Agent.  The Agent may deem and treat the payee of
any Note as the holder  thereof  for all  purposes  hereof  unless and until the
Agent receives and accepts an Assignment  and Acceptance  executed in accordance
with  Section  10.6.  As to any  matters  not  expressly  provided  for by  this
Agreement,  the Agent shall not be required to exercise any  discretion  or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the  Required  Lenders,  and such  instructions  shall be  binding on all of the
Lenders;  provided,  however,  that the Agent  shall not be required to take any
action that  exposes the Agent to personal  liability or that is contrary to any
Loan Document or  Requirement  of Law or unless it shall first be indemnified to
its  satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking any such action.

<PAGE>

                  9.3 Defaults.  The Agent shall not be deemed to have knowledge
or notice of the  occurrence  of any  Default  or Event of Default  (other  than
nonpayment   of  principal  of  or  interest  on  the  Loans  or   Reimbursement
Obligations)  unless the Agent has received  written notice from a Lender or the
Borrower  specifying  such  Default or Event of Default  and  stating  that such
notice is a "Notice of  Default."  In the event that the Agent  receives  such a
notice of the occurrence of a Default or Event of Default or an Event or Default
occurs as a result of a failure of the Borrower to pay when due any principal of
or  interest  on the Loans or  Reimbursement  Obligations,  the Agent shall give
prompt notice  thereof to the Lenders.  The Agent shall (subject to Section 9.2)
take such  action  with  respect  to such  Default  or Event of Default as shall
reasonably be directed by the Required Lenders;  provided that, unless and until
the Agent shall have received such  directions,  the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such  Default  or Event of Default  as it shall  deem  advisable  in the best
interests of the Lenders.

                  9.4 Rights as Lender.  With  respect to its  Revolving  Credit
Commitment and the Loans made by it,  NationsBank  (and any successor  acting as
Agent) in its  capacity  as a Lender  hereunder  shall have the same  rights and
powers hereunder as any other Lender and may exercise the same as though it were
not acting as the Agent,  and the term "Lender" or "Lenders"  shall,  unless the
context  otherwise  indicates,  include  the Agent in its  individual  capacity.
NationsBank  (and any successor acting as Agent) and its Affiliates may (without
having to account  therefor to any Lender) accept  deposits from, lend money to,
make  investments in, provide  services to, and generally  engage in any kind of
lending, trust, or other business with any Loan Party or any of its Subsidiaries
or  Affiliates  as if it were not  acting as  Agent,  and  NationsBank  (and any
successor  acting  as  Agent)  and its  Affiliates  may  accept  fees and  other
consideration  from any Loan Party or any of its  Subsidiaries or Affiliates for
services in  connection  with this  Agreement  or  otherwise  without  having to
account for the same to the Lenders.

<PAGE>

                  9.5 Indemnification.  THE LENDERS AGREE TO INDEMNIFY THE AGENT
(TO THE  EXTENT  NOT  REIMBURSED  BY THE  BORROWER,  BUT  WITHOUT  LIMITING  THE
OBLIGATION OF THE BORROWER TO DO SO) RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE
REVOLVING   CREDIT   COMMITMENT   PERCENTAGES  FOR  ANY  AND  ALL   LIABILITIES,
OBLIGATIONS,  LOSSES,  DAMAGES,  PENALTIES,  ACTIONS,  JUDGMENTS,  SUITS, COSTS,
EXPENSES  (INCLUDING  ATTORNEYS'  FEES), OR DISBURSEMENTS OF ANY KIND AND NATURE
WHATSOEVER  THAT MAY BE IMPOSED ON,  INCURRED  BY OR ASSERTED  AGAINST THE AGENT
(INCLUDING  BY ANY  LENDER) IN ANY WAY  RELATING  TO OR ARISING  OUT OF ANY LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY OR ANY ACTION TAKEN OR OMITTED
BY THE AGENT UNDER ANY LOAN DOCUMENT  (INCLUDING  ANY OF THE  FOREGOING  ARISING
FROM THE ORDINARY  NEGLIGENCE  OF THE AGENT);  PROVIDED  THAT NO LENDER SHALL BE
LIABLE  FOR ANY OF THE  FOREGOING  TO THE  EXTENT  THEY  ARISE  FROM  THE  GROSS
NEGLIGENCE  OR  WILLFUL  MISCONDUCT  OF THE  PERSON TO BE  INDEMNIFIED.  WITHOUT
LIMITATION OF THE FOREGOING,  EACH LENDER AGREES TO REIMBURSE THE AGENT PROMPTLY
UPON  DEMAND  FOR ITS  RATABLE  SHARE OF ANY COSTS OR  EXPENSES  PAYABLE  BY THE
BORROWER  UNDER  SECTION  10.5,  TO THE  EXTENT  THAT THE AGENT IS NOT  PROMPTLY
REIMBURSED FOR SUCH COSTS AND EXPENSES BY THE BORROWER. THE AGREEMENTS CONTAINED
IN THIS SECTION 9.5 SHALL SURVIVE PAYMENT IN FULL OF THE LOANS AND REIMBURSEMENT
OBLIGATIONS AND ALL OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT.

                  9.6  Non-Reliance on the Agent and Other Lenders.  Each Lender
agrees that it has, independently and without reliance on the Agent or any other
Lender,   and  based  on  such  documents  and  information  as  it  has  deemed
appropriate,  made  its own  credit  analysis  of the  Loan  Parties  and  their
Subsidiaries and its own decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such  documents and  information  as it shall deem  appropriate  at the time,
continue to make its own analysis and  decisions in taking or not taking  action
under the Loan Documents.  Except for notices,  reports, and other documents and
information  expressly  required  to be  furnished  to the  Lenders by the Agent
hereunder,  the Agent shall not have any duty or  responsibility  to provide any
Lender with any credit or other  information  concerning the affairs,  financial
condition,  or  business  of any  Loan  Party  or any  of  its  Subsidiaries  or
Affiliates  that  may  come  into  the  possession  of the  Agent  or any of its
Affiliates.

                  9.7 Resignation of the Agent. The Agent may resign at any time
by  giving  notice  thereof  to the  Lenders  and the  Borrower.  Upon  any such
resignation,  the Required  Lenders  shall have the right to appoint a successor
Agent.  If no  successor  Agent  shall have been so  appointed  by the  Required
Lenders and shall have  accepted such  appointment  within thirty days after the
retiring  Agent's giving of notice of resignation,  then the retiring Agent may,
on behalf of the Lenders,  appoint a successor Agent which shall be a commercial
bank organized  under the laws of the United States of America  having  combined
capital  and  surplus  of at  least  $100,000,000.  Upon the  acceptance  of any
appointment as Agent  hereunder by a successor,  such successor  shall thereupon
succeed  to  and  become  vested  with  all  the  rights,  powers,   discretion,
privileges,  and duties of the retiring  Agent,  and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation  hereunder as Agent, the provisions of this Section 9 shall continue
in effect for its benefit in respect of any actions taken or omitted to by taken
by it while it was acting as Agent.

                  9.8 Duties of Arranger.  Notwithstanding  any other  provision
contained in this  Agreement to the contrary,  the Arranger shall have no duties
or obligations under this Agreement or any other Loan Document.

                                             SECTION 10.  MISCELLANEOUS

<PAGE>

                  10.1  Amendments  and Waivers.  Neither this Agreement nor any
other  Loan  Document,   nor  any  terms  hereof  or  thereof  may  be  amended,
supplemented  or  modified  except in  accordance  with the  provisions  of this
Section 10.1.  Any provision of this Agreement or any other Loan Document may be
amended,  supplemented,  modified  or waived  if, but only if,  such  amendment,
supplement,  modification  or  waiver is in  writing  and is signed by each Loan
Party that is a party  thereto  and the  Required  Lenders or the Agent with the
consent of the Required  Lenders  (and,  if Section 9 or the rights or duties of
the  Agent or the  Issuing  Lender  are  affected  thereby,  by the Agent or the
Issuing Lender,  as the case may be);  provided that no such amendment or waiver
shall,  unless  signed by all the Lenders,  (a) increase  the  Revolving  Credit
Commitments  of the  Lenders,  (b) reduce the  principal  of or rate of interest
(other  than as a result  of  waiving  the  applicability  of any  post  default
increase in interest rates) on any Loan or Reimbursement  Obligation or any fees
or other amounts payable hereunder,  (c) postpone any date fixed for the payment
of  any  scheduled   payment  of  principal  of  or  interest  on  any  Loan  or
Reimbursement  Obligation or any fees or other amounts payable  hereunder or for
termination of any Revolving Credit Commitment, (d) change the percentage of the
Revolving Credit Commitments or of the unpaid principal amount of the Extensions
of Credit, or the number of Lenders,  which shall be required for the Lenders or
any of them to take any action under this Section or any other provision of this
Agreement,  (e) release any material Guarantor from its Guarantee under the Loan
Documents or (f) release all or  substantially  all of the  Collateral  from the
Liens created by the Security Documents. Any such waiver and any such amendment,
supplement or modification  shall apply equally to each of the Lenders and shall
be binding upon the  applicable  Loan  Parties,  the Lenders,  the Agent and all
future holders of the Loans.  In the case of any waiver,  the Loan Parties,  the
Lenders and the Agent shall be restored  to their  former  positions  and rights
hereunder  and under the  other  Loan  Documents,  and any  Default  or Event of
Default  waived shall be deemed to be cured and not  continuing;  no such waiver
shall extend to any  subsequent  or other  Default or Event of Default or impair
any right consequent thereon.

                  10.2 Notices. All notices, requests and demands to or upon the
respective  parties  hereto to be effective  shall be in writing  (including  by
facsimile  transmission) and, unless otherwise expressly provided herein,  shall
be deemed to have been duly given or made (a) in the case of  delivery  by hand,
when  delivered,  (b) in the case of delivery by mail,  five Business Days after
being deposited in the mails,  postage prepaid or (c) in the case of delivery by
facsimile transmission,  when sent and receipt has been confirmed,  addressed as
follows in the case of the Borrower and the Agent,  and as set forth in Schedule
1.1(d) in the case of the other parties hereto,  or to such other address as may
be hereafter notified by the respective parties hereto and any future holders of
the Loans:

         The Borrower:     ProMedCo Management Company
                                    801 Cherry Street, Suite 1450
                                    Fort Worth, Texas  76102
                                    Attention:  Robert D. Smith
                                    Facsimile:  (817) 335-8321

         The Agent:                 NationsBank, N.A.
                                    NC1-001-15-04
                                    101 North Tryon Street
                                    Charlotte, North Carolina  28255
                                    Attention:  Agency Services
                                    Facsimile:  (704) 386-9923

<PAGE>

         with a copy to:            NationsBank, N.A.
                                    700 Louisiana St., 8th Floor
                                    Houston, Texas  77002-2700
                                    Attention:  Lawrence J. Gordon
                                    Facsimile:  (713) 247-6719

provided that any notice,  request or demand to or upon the Agent or the Lenders
pursuant to Section  2.2,  2.3,  2.4,  2.6,  3.5,  3.6,  3.7 or 6.2 shall not be
effective until received.

                  10.3 No Waiver;  Cumulative  Remedies.  No failure to exercise
and no delay in exercising,  on the part of the Agent or any Lender,  any right,
remedy,  power or privilege  hereunder or under the other Loan  Documents  shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
right,  remedy,  power or  privilege  hereunder  preclude  any other or  further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights,  remedies,  powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

                  10.4  Survival  of   Representations   and   Warranties.   All
representations  and warranties made hereunder,  in the other Loan Documents and
in any  document,  certificate  or  statement  delivered  pursuant  hereto or in
connection  herewith  shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.

                  10.5 Payment of Expenses and Taxes;  Indemnification.  (a) the
Borrower  agrees  to pay on  demand  all  costs  and  expenses  of the  Agent in
connection with the syndication,  preparation, negotiation, execution, delivery,
administration,  modification,  and amendment of (and any waiver or consent with
respect to) this Agreement, the other Loan Documents, and the other documents to
be delivered hereunder,  including,  without limitation, the reasonable fees and
expenses of counsel for the Agent with respect thereto (including, to the extent
permitted by applicable  law, the cost of internal  counsel) and with respect to
advising  the  Agent  as to its  rights  and  responsibilities  under  the  Loan
Documents.  The Borrower  further agrees to pay on demand all costs and expenses
of  the  Agent  and  the  Lenders  (including,  without  limitation,  reasonable
attorneys'  fees and,  with respect to the Agent and to the extent  permitted by
applicable law, the cost of internal  counsel) in connection with any Default or
Event of  Default  and the  enforcement  (whether  through  negotiations,  legal
proceedings,  or otherwise) of the Loan Documents and the other  documents to be
delivered hereunder.

<PAGE>

                  (b) THE BORROWER AGREES TO PAY, INDEMNIFY AND HOLD EACH LENDER
AND THE AGENT  HARMLESS  FROM, ANY AND ALL RECORDING AND FILING FEES AND ANY AND
ALL LIABILITIES  WITH RESPECT TO, OR RESULTING FROM ANY DELAY IN PAYING,  STAMP,
EXCISE AND OTHER TAXES, IF ANY, WHICH MAY BE PAYABLE OR DETERMINED TO BE PAYABLE
IN  CONNECTION   WITH  THE  EXECUTION  AND  DELIVERY  OF,  OR   CONSUMMATION  OR
ADMINISTRATION  OF ANY OF THE  TRANSACTIONS  CONTEMPLATED  BY, OR ANY AMENDMENT,
SUPPLEMENT OR MODIFICATION  OF, OR ANY WAIVER OR CONSENT UNDER OR IN RESPECT OF,
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ANY SUCH OTHER DOCUMENTS.

                  (c) THE  BORROWER  AGREES TO INDEMNIFY  AND HOLD  HARMLESS THE
AGENT  AND EACH  LENDER  AND  EACH OF  THEIR  AFFILIATES  AND  THEIR  RESPECTIVE
OFFICERS,  DIRECTORS,  EMPLOYEES,  AGENTS AND ADVISORS  (EACH,  AN  "INDEMNIFIED
PARTY") FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS
AND EXPENSES  (INCLUDING,  WITHOUT  LIMITATION,  REASONABLE  ATTORNEYS' FEES AND
EXPENSES) THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED
PARTY,  IN EACH  CASE  ARISING  OUT OF OR IN  CONNECTION  WITH OR BY  REASON  OF
(INCLUDING,   WITHOUT   LIMITATION,   IN  CONNECTION  WITH  ANY   INVESTIGATION,
LITIGATION, OR PROCEEDING OR PREPARATION OF DEFENSE IN CONNECTION THEREWITH) THE
LOAN DOCUMENTS,  ANY OF THE  TRANSACTIONS  CONTEMPLATED  HEREIN OR THE ACTUAL OR
PROPOSED  USE OF THE  PROCEEDS  OF THE  LOANS  (INCLUDING  ANY OF THE  FOREGOING
ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH
CLAIM,  DAMAGE,  LOSS,  LIABILITY,   COST  OR  EXPENSE  IS  FOUND  IN  A  FINAL,
NON-APPEALABLE  JUDGMENT BY A COURT OF COMPETENT  JURISDICTION  TO HAVE RESULTED
FROM SUCH  INDEMNIFIED  PARTY'S GROSS NEGLIGENCE OR WILLFUL  MISCONDUCT.  IN THE
CASE OF AN INVESTIGATION,  LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY
IN THIS SUBSECTION 10.5(C) APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR
NOT SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY THE BORROWER, ITS
DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR ANY OTHER PERSON
OR ANY  INDEMNIFIED  PARTY IS  OTHERWISE A PARTY  THERETO AND WHETHER OR NOT THE
TRANSACTIONS  CONTEMPLATED  HEREBY ARE  CONSUMMATED.  THE BORROWER AGREES NOT TO
ASSERT ANY CLAIM AGAINST THE AGENT, ANY LENDER, ANY OF THEIR AFFILIATES,  OR ANY
OF THEIR  RESPECTIVE  DIRECTORS,  OFFICERS,  EMPLOYEES,  ATTORNEYS,  AGENTS  AND
ADVISERS, ON ANY THEORY OF LIABILITY,  FOR SPECIAL,  INDIRECT,  CONSEQUENTIAL OR
PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO THE LOAN DOCUMENTS, ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN OR THE ACTUAL OR PROPOSED USE
OF THE PROCEEDS OF THE LOANS.

                  (d) Without  prejudice to the survival of any other  agreement
of the  Borrower  hereunder,  the  agreements  and  obligations  of the Borrower
contained in this Section 10.5 shall  survive the  termination  of the Revolving
Credit  Commitments  and payment in full of the Loans and all other  Obligations
payable under this Agreement.

<PAGE>

                  10.6 Successors and Assigns;  Participations  and Assignments.
(a)  This  Agreement  shall be  binding  upon and  inure to the  benefit  of the
Borrower,  the Lenders,  the Agent and their respective  successors and assigns,
except  that the  Borrower  may not  assign  or  transfer  any of its  rights or
obligations  under this  Agreement  without  the prior  written  consent of each
Lender.

                  (b) Each Lender may assign to one or more  Eligible  Assignees
all or a portion of its rights and obligations under this Agreement  (including,
without  limitation,  all or a portion of its Revolving Credit  Commitment,  the
Loans  and  Reimbursement  Obligations  owing  to it and the  Note  held by it);
provided, however, that

                           (i)      each such assignment shall be to an Eligible
         Assignee;

                           (ii) except in the case of an  assignment  to another
         Lender or an  assignment  of all of a Lender's  rights and  obligations
         under this Agreement, any such partial assignment shall be in an amount
         at least equal to $10,000,000 or an integral  multiple of $1,000,000 in
         excess thereof;

                           (iii) each such  assignment by a Lender shall be of a
         constant,  and  not  varying,  percentage  of  all of  its  rights  and
         obligations under this Agreement and the Note held by it; and

                           (iv) the parties to such assignment shall execute and
         deliver to the Agent for its acceptance an Assignment  and  Acceptance,
         together with any Note subject to such  assignment and a processing fee
         of $3,500.

Upon  execution,  delivery and acceptance of such  Assignment and Acceptance and
payment  to the  Agent of the  processing  fee  specified  above,  the  assignee
thereunder shall be a party hereto and, to the extent of such  assignment,  have
the  obligations,  rights,  and benefits of a Lender hereunder and the assigning
Lender shall,  to the extent of such  assignment,  relinquish  its rights and be
released from its obligations under this Agreement. Upon the consummation of any
assignment  pursuant  to this  Section  10.6,  the  assignor,  the Agent and the
Borrower shall make appropriate arrangements so that, if required, new Notes are
issued to the assignor  and the  assignee.  If the assignee is not  incorporated
under the laws of the  United  States of America  or a state  thereof,  it shall
deliver  to the  Borrower  and the  Agent  certification  as to  exemption  from
deduction or withholding of Taxes in accordance with subsection 3.14(d).

                  (c) The Agent shall  maintain  at its  address  referred to in
Section 10.2 a copy of each Assignment and Acceptance  delivered to and accepted
by it and a  register  for the  recordation  of the names and  addresses  of the
Lenders and the Revolving  Credit  Commitment  of, and  principal  amount of the
Loans owing to, each Lender from time to time (the  "Register").  The entries in
the Register shall be conclusive and binding for all purposes,  absent  manifest
error,  and the Borrower,  the Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender  hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender  at any  reasonable  time and from  time to time  upon  reasonable  prior
notice.

<PAGE>

                  (d) Upon its receipt of an Assignment and Acceptance  executed
by the parties  thereto,  together with any Note subject to such  assignment and
payment  of the  processing  fee,  the  Agent  shall,  if  such  Assignment  and
Acceptance has been completed,  (i) accept such Assignment and Acceptance,  (ii)
record the information  contained  therein in the Register and (iii) give prompt
notice thereof to the parties thereto.

                  (e) Each Lender may sell participations to one or more Persons
(each a "Participant") in all or a portion of its rights,  obligations or rights
and  obligations  under  this  Agreement  (including  all  or a  portion  of its
Revolving Credit  Commitment or the Loans or  Reimbursement  Obligations held by
it); provided,  however, that (i) such Lender's obligations under this Agreement
shall remain unchanged,  (ii) such Lender shall remain solely responsible to the
other  parties  hereto  for the  performance  of  such  obligations,  (iii)  the
Participant shall be entitled to the benefit of the yield protection  provisions
contained in Sections 3.9,  3.13 and 3.14 and the right of set-off  contained in
Section  10.7 and (iv) the  Borrower,  the  Agent and the  other  Lenders  shall
continue to deal solely and directly  with such Lender in  connection  with such
Lender's  rights and  obligations  under this  Agreement,  and such Lender shall
retain the sole right to enforce the obligations of the Borrower relating to the
Loans or  Reimbursement  Obligations  owing to it and the Note held by it and to
approve any amendment, modification or waiver of any provision of this Agreement
(other  than  amendments,  modifications,  or waivers  decreasing  the amount of
principal  of  or  the  rate  at  which  interest  is  payable  on  such  Loans,
Reimbursement  Obligations or Note,  extending any scheduled  principal  payment
date or date fixed for the  payment of  interest  on such  Loans,  Reimbursement
Obligations or Note or extending its Revolving Credit Commitment).

                  (f)  Notwithstanding  any  other  provision  set forth in this
Agreement,  any Lender may at any time  assign and pledge all or any  portion of
its Loans and Reimbursement Obligations and its Note to any Federal Reserve Bank
as  collateral  security  pursuant to  Regulation A and any  Operating  Circular
issued by such  Federal  Reserve  Bank.  No such  assignment  shall  release the
assigning Lender from its obligations hereunder.

                  (g) Any Lender may  furnish  any  information  concerning  the
Borrower or any of its  Subsidiaries  in the possession of such Lender from time
to time to assignees  and  Participants  (including  prospective  assignees  and
Participants), subject, however, to the provisions of Section 10.15.

                  10.7 Adjustments;  Set-off. (a) Upon the occurrence and during
the  continuance  of  any  Event  of  Default,  each  Lender  (and  each  of its
Affiliates)  is  hereby  authorized  at any time and from  time to time,  to the
fullest  extent  permitted  by law,  to set off and apply  any and all  deposits
(general or special, time or demand,  provisional or final) at any time held and
other  indebtedness  at any time owing by such Lender (or any of its Affiliates)
to or for the credit or the account of the  Borrower  against any and all of the
Obligations  of the Borrower held by such Lender,  irrespective  of whether such
Lender shall have made any demand under this Agreement or such  Obligations  and
although  such  Obligations  may be unmatured.  Each Lender  agrees  promptly to
notify the Borrower after any such set-off and application  made by such Lender;
provided,  however,  that the failure to give such  notice  shall not affect the
validity of such set-off and  application.  The rights of each Lender under this
Section  are in  addition  to other  rights  and  remedies  (including,  without
limitation, other rights of set-off) that such Lender may have.

<PAGE>

                  (b) If any Lender (a  "benefitted  Lender")  shall at any time
receive any payment of all or part of the Loans,  Reimbursement  Obligations  or
other  amounts  owing to it  hereunder,  or  interest  thereon,  or receive  any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
or otherwise),  in a greater  proportion  than any such payment to or collateral
received by any other Lender,  if any, in respect of such other Lender's  Loans,
Reimbursement  Obligations  or other amounts owing to it hereunder,  or interest
thereon, such benefitted Lender shall purchase for cash from the other Lenders a
participating  interest in such portion of each such other  Lender's Loans owing
to it,  or shall  provide  such  other  Lenders  with the  benefits  of any such
collateral,  or the  proceeds  thereof,  as shall  be  necessary  to cause  such
benefitted  Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all or any
portion of such excess  payment or benefits is  thereafter  recovered  from such
benefitted Lender, such purchase shall be rescinded,  and the purchase price and
benefits  returned,  to the extent of such recovery,  but without interest.  The
Borrower  agrees that any Lender so  purchasing  a  participation  from a Lender
pursuant  to this  Section  10.7 may, to the fullest  extent  permitted  by law,
exercise  all of its rights of payment  (including  the right of  set-off)  with
respect  to such  participation  as fully  as if such  Person  were  the  direct
creditor of the Borrower in the amount of such participation.

                  10.8  Counterparts.  This  Agreement may be executed by one or
more of the parties to this  Agreement  on any number of  separate  counterparts
(including  by  facsimile  transmission),  and  all of said  counterparts  taken
together shall be deemed to constitute one and the same instrument. A set of the
copies of this  Agreement  signed by all the parties  shall be  delivered to the
Borrower and the Agent.

                  10.9  Severability.  Any provision of this Agreement  which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.

                  10.10 Entire  Agreement.  THIS  AGREEMENT,  TOGETHER  WITH THE
OTHER  LOAN  DOCUMENTS,  REPRESENT  THE  FINAL  AGREEMENT  BETWEEN  THE  PARTIES
REGARDING THE SUBJECT MATTER HEREIN AND THEREIN AND MAY NOT BE  CONTRADICTED  BY
EVIDENCE OF PRIOR,  CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                  10.11  Governing  Law.  This  Agreement  and  the  rights  and
obligations  of the parties  hereunder  shall be governed by, and  construed and
interpreted in accordance  with, the law of the State of Texas without regard to
the principles of conflicts of laws thereof.

                  10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:

<PAGE>

                  (a) submits for itself and its property in any legal action or
proceeding  relating to this  Agreement and the other Loan Documents to which it
is a party,  or for  recognition  and  enforcement  of any  judgement in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
Texas,  the courts of the United States of America for the Northern  District of
Texas, and appellate courts from any thereof;

                  (b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or  proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

                  (c) agrees  that  service  of  process  in any such  action or
proceeding  may be effected by mailing a copy thereof by registered or certified
mail (or any  substantially  similar  form of  mail),  postage  prepaid,  to the
Borrower at its address  set forth in Section  10.2 or at such other  address of
which the Agent shall have been notified pursuant thereto; and

                  (d)  agrees  that  nothing  herein  shall  affect the right to
effect  service of process in any other  manner  permitted by law or shall limit
the right to sue in any other jurisdiction.

                  10.13 Acknowledgments.  The Borrower hereby acknowledges that:

                  (a)  it has  been  advised  by  counsel  in  the  negotiation,
execution and delivery of this Agreement and the other Loan Documents;

                  (b)  neither  the  Agent  nor any  Lender  has  any  fiduciary
relationship  with or duty to the Borrower  arising out of or in connection with
this Agreement or any of the other Loan Documents,  and the relationship between
Agent and  Lenders,  on one  hand,  and the  Borrower,  on the  other  hand,  in
connection herewith or therewith is solely that of debtor and creditor; and

                  (c) no joint  venture is  created  hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions  contemplated hereby
among the Lenders or among the Borrower and the Lenders.

                  10.14  Waiver of Jury Trial.  TO THE EXTENT  PERMITTED BY LAW,
THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY  WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.

<PAGE>

                  10.15  Confidentiality.  The Agent and each  Lender  (each,  a
"Lending Party") agrees to keep  confidential any information  furnished or made
available  to it by the  Borrower  pursuant  to this  Agreement  that is  marked
confidential;  provided that nothing herein shall prevent any Lending Party from
disclosing  such  information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director,  employee, agent, or advisor of any
Lending  Party or  Affiliate  of any Lending  Party,  (b) to any other Person if
reasonably  incidental to the  administration  of the credit  facility  provided
herein,  (c) as required by any  Requirement  of Law,  (d) upon the order of any
court or administrative agency, (e) upon the request or demand of any regulatory
agency or authority,  (f) that is or becomes  available to the public or that is
or becomes available to any Lending Party other than as a result of a disclosure
by any Lending Party  prohibited by this  Agreement,  (g) in connection with any
litigation to which such Lending Party or any of its  Affiliates may be a party,
(h) to the extent  necessary in connection with the exercise of any remedy under
this  Agreement  or any  other  Loan  Document  and (i)  subject  to  provisions
substantially similar to those contained in this Section 10.15, to any actual or
proposed Participant or assignee.

                  10.16 Interest and Charges. (a) It is not the intention of any
parties to this  Agreement  to make an agreement in violation of the laws of any
applicable  jurisdiction  relating to usury.  Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to charge, receive,  collect or
apply,  as  interest  on the  Obligations,  any amount in excess of the  Highest
Lawful Rate. If any Lender ever receives,  collects or applies, as interest, any
such excess,  such amount which would be  excessive  interest  shall be deemed a
partial  repayment of principal and treated  hereunder as such; and if principal
is paid in full, any remaining excess shall be paid to the Borrower.

                  (b) The Borrower  agrees that Chapter 346 of the Texas Finance
Code Annotated  (which  regulates  certain  revolving credit accounts) shall not
govern or in any manner apply to this Agreement or any of the Obligations.

                  (c) If at any time the interest rate (the "Contract Rate") for
any obligation of the Borrower under the Loan Documents shall exceed the Highest
Lawful Rate,  thereby  causing the interest  accruing on such  obligation  to be
limited  to the  Highest  Lawful  Rate,  then any  subsequent  reduction  in the
Contract Rate for such obligation  shall not reduce the rate of interest on such
obligation  below the Highest Lawful Rate until the aggregate amount of interest
accrued on such obligation  equals the aggregate  amount of interest which would
have accrued on such  obligation if the Contract Rate for such obligation had at
all times been in effect.

<PAGE>

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

                                    BORROWER:
                                    --------

                                    PROMEDCO MANAGEMENT COMPANY

                                    By:
                                    Name:
                                    Title:

<PAGE>

                                    ARRANGER:
                                    --------

                                    NATIONSBANC MONTGOMERY SECURITIES LLC

                                    By:
                                    Name:
                                    Title:

<PAGE>

                                    LENDERS:
                                    -------

                                    NATIONSBANK, N.A.
                                      as the Agent and as a Lender

                                    By:
                                    Name:
                                    Title:

<PAGE>

                                    AMSOUTH BANK

                                    By:
                                    Name:
                                    Title:

<PAGE>

                                    THE FIRST NATIONAL BANK OF CHICAGO

                                    By:
Name:
Title:

<PAGE>

                                    COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK          NEDERLAND", NEW YORK BRANCH

                                    By:
Name:
Title:

                                    By:
Name:
Title:

<PAGE>

                                    U.S. BANK NATIONAL ASSOCIATION

                                    By:
Name:
Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}]]