EXHIBIT 10.2








                           SECOND AMENDED AND RESTATED
                                CREDIT AGREEMENT

                                      among

                           APRIA HEALTHCARE GROUP INC.

                                  as Borrower,

                          CERTAIN OF ITS SUBSIDIARIES,

                                 as Guarantors,

                         THE LENDERS IDENTIFIED HEREIN,

                             BANK OF AMERICA, N.A.,

                                    as Agent

                                       and

                        CREDIT LYONNAIS NEW YORK BRANCH,
                THE BANK OF NOVA SCOTIA AND FLEET NATIONAL BANK,

                            as Co-Syndication Agents

                            Dated as of July 20, 2001

                                  ARRANGED BY:

                         BANC OF AMERICA SECURITIES LLC,
                   as Sole Lead Arranger and Sole Book Manager

<PAGE>

                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----

SECTION 1  DEFINITIONS AND ACCOUNTING TERMS.................... .............1
   1.1      Definitions......................................................1
   1.2      Computation of Time Periods and
              Other Definitional Provisions.................................28
   1.3      Accounting Terms................................................28

SECTION 2  CREDIT FACILITIES................................................29
   2.1      Revolving Loans.................................................29
   2.2      Letter of Credit Subfacility....................................31
   2.3      Swingline Loans.................................................36
   2.4      Tranche A Term Loan.............................................37
   2.5      Tranche B Term Loan.............................................39

SECTION 3  GENERAL PROVISIONS APPLICABLE TO LOANS...........................41
   3.1      Default Rate....................................................41
   3.2      Extension and Conversion........................................41
   3.3      Prepayments.....................................................42
   3.4      Termination and Reduction of Revolving Committed Amount.........44
   3.5      Fees............................................................45
   3.6      Capital Adequacy................................................46
   3.7      Limitation on Eurodollar Loans..................................46
   3.8      Illegality......................................................46
   3.9      Requirements of Law.............................................47
   3.10     Treatment of Affected Loans.....................................48
   3.11     Taxes...........................................................49
   3.12     Compensation....................................................50
   3.13     Pro Rata Treatment..............................................51
   3.14     Sharing of Payments.............................................52
   3.15     Payments, Computations, Etc.....................................52
   3.16     Evidence of Debt................................................54

SECTION 4  GUARANTY.........................................................55
   4.1      The Guaranty....................................................55
   4.2      Obligations Unconditional.......................................56
   4.3      Reinstatement...................................................57
   4.4      Certain Additional Waivers......................................58
   4.5      Remedies........................................................58
   4.6      Rights of Contribution..........................................58
   4.7      Guarantee of Payment; Continuing Guarantee......................59

SECTION 5  CONDITIONS.......................................................59
   5.1      Closing Conditions..............................................59
   5.2      Conditions to all Extensions of Credit..........................62

SECTION 6  REPRESENTATIONS AND WARRANTIES...................................63
   6.1      Financial Condition.............................................63
   6.2      No Material Change..............................................64
   6.3      Organization and Good Standing..................................64
   6.4      Power; Authorization; Enforceable Obligations...................64
   6.5      No Conflicts....................................................65
   6.6      No Default......................................................65
   6.7      Ownership.......................................................65
   6.8      Indebtedness....................................................65
   6.9      Litigation......................................................65
   6.10     Taxes...........................................................66
   6.11     Compliance with Law.............................................66
   6.12     ERISA...........................................................66
   6.13     Subsidiaries....................................................67
   6.14     Governmental Regulations, Etc...................................68
   6.15     Purpose of Loans and Letters of Credit..........................68
   6.16     Environmental Matters...........................................68
   6.17     Intellectual Property...........................................69
   6.18     Investments.....................................................69
   6.19     Disclosure......................................................70
   6.20     Business Locations..............................................70
   6.21     No Unusual Restrictions.........................................70
   6.22     Fraud and Abuse.................................................70
   6.23     Licensing and Accreditation.....................................71

SECTION 7  AFFIRMATIVE COVENANTS............................................71
   7.1      Information Covenants...........................................71
   7.2      Preservation of Existence and Franchises........................74
   7.3      Books and Records...............................................74
   7.4      Compliance with Law.............................................74
   7.5      Payment of Taxes and Other Indebtedness.........................74
   7.6      Insurance.......................................................74
   7.7      Maintenance of Property.........................................75
   7.8      Performance of Obligations......................................75
   7.9      Use of Proceeds.................................................75
   7.10     Audits/Inspections..............................................76
   7.11     Financial Covenants.............................................76
   7.12     Additional Credit Parties.......................................76
   7.13     Pledged Assets..................................................76

SECTION 8  NEGATIVE COVENANTS...............................................78
   8.1      Indebtedness....................................................78
   8.2      Liens...........................................................79
   8.3      Nature of Business..............................................79
   8.4      Consolidation, Merger, Dissolution, etc.........................79
   8.5      Asset Dispositions..............................................79
   8.6      Investments.....................................................80
   8.7      Restricted Payments.............................................80
   8.8      Prepayments of Subordinated Indebtedness, etc...................80
   8.9      Transactions with Affiliates....................................81
   8.10     Fiscal Year; Organizational Documents...........................81
   8.11     Limitation on Restricted Actions................................81
   8.12     Ownership of Subsidiaries; Limitations on Borrower..............81
   8.13     Sale Leasebacks.................................................82
   8.14     No Further Negative Pledges.....................................82
   8.15     No Foreign Subsidiaries.........................................82
   8.16     Capital Expenditures............................................82

SECTION 9  EVENTS OF DEFAULT................................................83
   9.1      Events of Default...............................................83
   9.2      Acceleration; Remedies..........................................85

SECTION 10 AGENT 86
   10.1     Appointment and Authorization of Agent..........................86
   10.2     Delegation of Duties............................................87
   10.3     Liability of Agent..............................................87
   10.4     Reliance by Agent...............................................87
   10.5     Notice of Default...............................................88
   10.6     Credit Decision; Disclosure of Information by Agent.............88
   10.7     Indemnification of Agent........................................88
   10.8     Agent in its Individual Capacity................................89
   10.9     Successor Agent.................................................89

SECTION 11 MISCELLANEOUS....................................................90
   11.1     Notices.........................................................90
   11.2     Right of Set-Off................................................90
   11.3     Successors and Assigns..........................................90
   11.4     No Waiver; Remedies Cumulative..................................93
   11.5     Payment of Expenses; Indemnification............................93
   11.6     Amendments, Waivers and Consents................................94
   11.7     Counterparts....................................................96
   11.8     Headings........................................................96
   11.9     Defaulting Lender...............................................96
   11.10    Survival of Indemnification and
              Representations and Warranties................................97
   11.11    Governing Law; Jurisdiction.....................................97
   11.12    Waiver of Right to Trial by Jury................................97
   11.13    Time............................................................98
   11.14    Severability....................................................98
   11.15    Entirety........................................................98
   11.16    Binding Effect..................................................98
   11.17    Confidentiality.................................................98
   11.18    Binding Effect; Termination of Credit Agreement; etc............99
<PAGE>
SCHEDULES
---------

Schedule 1.1(a)        Investments
Schedule 1.1(b)        Liens
Schedule 2.1(a)        Lenders Commitments
Schedule 2.2(a)        Existing Letters of Credit
Schedule 6.9           Litigation
Schedule 6.13          Subsidiaries
Schedule 6.20(a)       Real Property
Schedule 6.20(b)       Collateral Locations
Schedule 6.20(c)       Chief Executive Offices/Principal Places of Business
Schedule 7.6           Insurance
Schedule 8.1           Indebtedness
Schedule 11.1          Notices

EXHIBITS
--------

Exhibit 1.1(a)         Form of Pledge Agreement
Exhibit 1.1(b)         Form of Security Agreement
Exhibit 2.1(b)         Form of Notice of Borrowing
Exhibit 2.1(e)         Form of Revolving Note
Exhibit 2.4(f)         Form of Tranche A Term Note
Exhibit 2.5(f)         Form of Tranche B Term Note
Exhibit 3.2            Form of Notice of Extension/Conversion
Exhibit 7.1(c)         Form of Officer's Compliance Certificate
Exhibit 7.12           Form of Joinder Agreement
Exhibit 11.3(b)        Form of Assignment and Acceptance

<PAGE>

                                CREDIT AGREEMENT

    THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Credit Agreement"),
is entered  into as of July 20,  2001  among  APRIA  HEALTHCARE  GROUP  INC.,  a
Delaware  corporation (the "Borrower"),  the Subsidiaries of the Borrower listed
on the signature  pages hereto  (individually  a "Guarantor",  collectively  the
"Guarantors"),  the Lenders (as defined herein), BANK OF AMERICA, N.A., as Agent
for the Lenders,  and CREDIT  LYONNAIS NEW YORK BRANCH,  THE BANK OF NOVA SCOTIA
and FLEET NATIONAL BANK, as Co-Syndication Agents.

                                    RECITALS

    WHEREAS,  the  Borrower  and certain of its  Subsidiaries  are party to that
certain Amended and Restated Credit Agreement, dated as of November 13, 1998, as
amended  from  time  to  time  thereafter  (as  amended,  the  "Existing  Credit
Agreement"),  among the Borrower, certain of its Subsidiaries, the lenders party
thereto, Bank of America, N.A. (formerly known as Bank of America National Trust
and Savings  Association),  as the Administrative and Collateral Agent, and Bank
of America, N.A. (formerly known as NationsBank, N.A.), as Syndication Agent;

    WHEREAS,  the parties to the Existing Credit  Agreement have agreed to amend
the Existing Credit Agreement and for ease of reference have agreed to amend and
restate the Existing Credit Agreement in this Credit Agreement; and

    WHEREAS,  the Borrower and the Guarantors  have  requested,  and the Lenders
have agreed, to provide credit facilities in an aggregate amount of $400,000,000
(the "Credit Facilities") on the terms and conditions hereinafter set forth.

    NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable
consideration,  the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

                                    SECTION 1

                        DEFINITIONS AND ACCOUNTING TERMS
                        --------------------------------

    1.1  DEFINITIONS.
    ---  ------------

    As used herein, the following terms shall have the meanings herein specified
unless the context otherwise requires. Defined terms herein shall include in the
singular number the plural and in the plural the singular:

        "Acquisition",  by any Person,  means the  acquisition by such Person of
    all or substantially all of the capital stock or all or substantially all of
    the  Property of another  Person,  or of a division  or  business  unit of a
    Person, whether or not involving a merger or consolidation with such Person.

        "Adjusted Base Rate" means the Base Rate plus the Applicable Percentage.

        "Adjusted Eurodollar Rate" means the Eurodollar Rate plus the Applicable
    Percentage.

        "Affiliate" means, with respect to any Person, any other Person directly
    or indirectly  controlling  (including  but not limited to all directors and
    executive  officers  of such  Person),  controlled  by or  under  direct  or
    indirect  common  control  with  such  Person.  A Person  shall be deemed to
    control a corporation if such Person possesses,  directly or indirectly, the
    power (i) to vote 5% or more of the securities  having ordinary voting power
    for the election of directors of such corporation or (ii) to direct or cause
    direction  of the  management  and  policies  of such  corporation,  whether
    through the ownership of voting securities, by contract or otherwise.

        "Agent" means Bank of America,  N.A. (or any  successor  thereto) or any
    successor Agent appointed pursuant to Section 10.9.

        "Agent-Related Persons" means the Agent (including any successor agent),
    together with its Affiliates  (including,  in the case of Bank of America in
    its  capacity as the Agent,  the  Arranger),  and the  officers,  directors,
    employees, agents and attorneys-in-fact of such Persons and Affiliates.

        "Agent's  Fee  Letter"  means the fee letter  between  the Agent and the
    Borrower dated as of May 30, 2001, as amended.

        "Applicable  Lending Office" means, for each Lender,  the office of such
    Lender (or of an  Affiliate  of such Lender) as such Lender may from time to
    time specify to the Agent and the  Borrower by written  notice as the office
    by which its Eurodollar Loans are made and maintained.

        "Applicable   Percentage"   means,   for  purposes  of  calculating  the
    applicable  interest rate for any day for any Revolving  Loan, any Tranche A
    Term Loan or any Tranche B Term Loan, the applicable  rate of the Commitment
    Fee for any day for purposes of Section  3.5(a),  the applicable rate of the
    Letter of Credit  Fee for any day for  purposes  of Section  3.5(b)(i),  the
    appropriate  applicable  percentage  corresponding  to the Leverage Ratio in
    effect as of the most recent Calculation Date:
<TABLE>
<CAPTION>

  ===========================================================================================
                             APPLICABLE PERCENTAGES
  -------------------------------------------------------------------------------------------

                             FOR REVOLVING LOANS,
                             TRANCHE A TERM LOANS                FOR
                           AND LETTER OF CREDIT FEE      TRANCHE B TERM LOANS
                           ------------------------    -----------------------
                           EURODOLLAR    BASE RATE     EURODOLLAR    BASE RATE
                           LOANS AND      LOANS          LOANS         LOANS           FOR
  PRICING    LEVERAGE      LETTER OF                                                COMMITMENT
   LEVEL      RATIO        CREDIT FEE                                                  FEE
  -------  -------------   ------------------------    -----------------------      ----------
<S>         <C>             <C>           <C>           <C>            <C>             <C>
   I       <1.25 to 1.0     1.50%         .50%          3.00%          2.00%           .25%
  --------------------------------------------------------------------------------------------
   II      < 1.75 to 1.0    1.75%         .75%          3.00%          2.00%          .375%
           but > 1.25 to
           1.0
  --------------------------------------------------------------------------------------------
   III     < 2.25 to 1.0    2.00%         1.00%         3.00%          2.00%          .375%
           but > 1.75 to
           1.0
  --------------------------------------------------------------------------------------------
   IV      > 2.25 to 1.0    2.25%         1.25%         3.00%          2.00%           .50%
  ============================================================================================
</TABLE>


    The Applicable Percentages shall be determined and adjusted quarterly on the
    date (each a "Calculation  Date") five Business Days after the date on which
    the  Administrative  Agent receives the officer's  certificate in accordance
    with the  provisions of Section  7.1(c) for the most  recently  ended fiscal
    quarter of the Consolidated Parties; provided, however, that (i) the initial
    Applicable  Percentages  shall be based on Pricing Level II (as shown above)
    and shall  remain at  Pricing  Level II until the  Calculation  Date for the
    fiscal quarter of the Consolidated  Parties ending on September 30, 2001, on
    and after which time the Pricing  Level shall be  determined by the Leverage
    Ratio as of the last day of the most  recently  ended fiscal  quarter of the
    Consolidated  Parties preceding the applicable  Calculation Date and (ii) if
    the Credit  Parties fail to provide the officer's  certificate to the Agency
    Services  Address as required by Section 7.1(c) for the last day of the most
    recently  ended fiscal  quarter of the  Consolidated  Parties  preceding the
    applicable Calculation Date, the Applicable Percentage from such Calculation
    Date  shall be based on Pricing  Level IV until such time as an  appropriate
    officer's  certificate  is provided,  whereupon  the Pricing  Level shall be
    determined  by the  Leverage  Ratio as of the last day of the most  recently
    ended fiscal quarter of the Consolidated  Parties preceding such Calculation
    Date.  Each  Applicable  Percentage  shall be effective from one Calculation
    Date until the next  Calculation  Date.  Any  adjustment  in the  Applicable
    Percentages  shall be applicable to all existing Loans and Letters of Credit
    as well as any new Loans and Letters of Credit made or issued.

        "Application  Period",  in respect of any Asset Disposition,  shall have
    the meaning assigned to such term in Section 8.5.

        "Approved  Fund" means any Fund that is administered or managed by (a) a
    Lender,  (b) an Affiliate of a Lender or (c) with respect to any Lender that
    is a fund that  invests in bank loans,  any other fund that  invests in bank
    loans  which is an  "accredited  investor"  and is managed or advised by the
    same  investment  advisor  that  manages  or  advises  such  Lender or by an
    Affiliate of such investment advisor.

        "Arranger" means Banc of America Securities LLC, in its capacity as sole
    lead arranger and sole book manager.

        "Asset  Disposition"  means any  disposition,  other than pursuant to an
    Excluded Asset Disposition, of any or all of the Property (including without
    limitation  the Capital Stock of a  Subsidiary)  of any  Consolidated  Party
    whether by sale,  lease,  transfer or otherwise,  but other than pursuant to
    any casualty or condemnation event.

        "Asset  Disposition  Prepayment  Event" means, with respect to any Asset
    Disposition,  the  failure  of the  Credit  Parties to apply (or cause to be
    applied)  the Net  Cash  Proceeds  of such  Asset  Disposition  to  Eligible
    Reinvestments during the Application Period for such Asset Disposition.

        "Attorney   Costs"   means  and  includes   all   reasonable   fees  and
    disbursements of counsel.

        "Bank of  America"  means  Bank of  America,  N.A.  and its  successors.

        "Bankruptcy  Code" means the  Bankruptcy  Code in Title 11 of the United
    States Code, as amended, modified, succeeded or replaced from time to time.

        "Bankruptcy  Event" means, with respect to any Person, the occurrence of
    any  of  the  following  with  respect  to  such  Person:  (i)  a  court  or
    governmental agency having jurisdiction in the premises shall enter a decree
    or order for relief in respect of such Person in an  involuntary  case under
    any applicable bankruptcy,  insolvency or other similar law now or hereafter
    in effect,  or  appointing  a  receiver,  liquidator,  assignee,  custodian,
    trustee,  sequestrator  (or  similar  official)  of such  Person  or for any
    substantial  part of its Property or ordering the winding up or  liquidation
    of its  affairs;  or (ii) there shall be  commenced  against  such Person an
    involuntary  case  under  any  applicable  bankruptcy,  insolvency  or other
    similar law now or hereafter  in effect,  or any case,  proceeding  or other
    action for the appointment of a receiver,  liquidator,  assignee, custodian,
    trustee,  sequestrator  (or  similar  official)  of such  Person  or for any
    substantial part of its Property or for the winding up or liquidation of its
    affairs, and such involuntary case or other case, proceeding or other action
    shall  remain  undismissed,  undischarged  or unbonded for a period of sixty
    (60) consecutive  days; or (iii) such Person shall commence a voluntary case
    under any  applicable  bankruptcy,  insolvency  or other  similar law now or
    hereafter  in  effect,  or consent to the entry of an order for relief in an
    involuntary case under any such law, or consent to the appointment or taking
    possession  by  a  receiver,   liquidator,   assignee,  custodian,  trustee,
    sequestrator  (or similar  official)  of such Person or for any  substantial
    part of its  Property  or make any  general  assignment  for the  benefit of
    creditors; or (iv) such Person shall be unable to, or shall admit in writing
    its inability to, pay its debts generally as they become due.

        "Base Rate" means,  for any day, a  fluctuating  rate per annum equal to
    the higher of (a) the  Federal  Funds Rate in effect on such day plus 1/2 of
    1% and (b) the Prime Rate in effect on such day. If for any reason the Agent
    shall  have  determined  (which  determination  shall be  conclusive  absent
    manifest error) that it is unable after due inquiry to ascertain the Federal
    Funds Rate for any reason,  including  the inability or failure of the Agent
    to obtain  sufficient  quotations in accordance  with the terms hereof,  the
    Base Rate  shall be  determined  without  regard to clause  (a) of the first
    sentence  of this  definition  until the  circumstances  giving rise to such
    inability  no longer  exist.  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,
    respectively.

        "Base Rate Loan" means any Loan bearing interest at a rate determined by
    reference to the Base Rate.

        "Borrower" means Apria  Healthcare  Group Inc., a Delaware  corporation,
    together with any successors and permitted assigns.

        "Business  Day" means any day other than a Saturday,  a Sunday,  a legal
    holiday or a day on which banking institutions are authorized or required by
    law or other  governmental  action to close in Charlotte,  North Carolina or
    New York, New York;  provided that in the case of Eurodollar Loans, such day
    is also a day on which dealings  between banks are carried on in U.S. dollar
    deposits in the London interbank market.

        "Calculation  Date"  has the  meaning  set  forth in the  definition  of
    Applicable Percentage.

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

        "Capital  Stock" means (a) in the case of a corporation,  capital stock,
    (b) in the case of an  association or business  entity,  any and all shares,
    interests, participations,  rights or other equivalents (however designated)
    of capital stock,  (c) in the case of a partnership,  partnership  interests
    (whether  general  or  limited),  (d) in the  case  of a  limited  liability
    company,  membership  interests and (e) any other interest or  participation
    that  confers on a Person the right to  receive a share of the  profits  and
    losses of, or distributions of assets of, the issuing Person.

        "Cash  Equivalents"  means (a)  securities  issued or directly and fully
    guaranteed  or  insured  by the  United  States of  America or any agency or
    instrumentality  thereof  (provided  that the full  faith and  credit of the
    United States of America is pledged in support thereof) having maturities of
    not more than twelve months from the date of  acquisition,  (b) U.S.  dollar
    denominated  time and demand deposits and certificates of deposit of (i) any
    Lender,  (ii) any  domestic  commercial  bank having  capital and surplus in
    excess of $100,000,000 or (iii) any bank whose  short-term  commercial paper
    rating from S&P is at least A-1 or the equivalent thereof or from Moody's is
    at least P-1 or the  equivalent  thereof  (any such bank being an  "Approved
    Bank"), in each case with maturities of not more than 270 days from the date
    of acquisition, (c) commercial paper and variable or fixed rate notes issued
    by any Approved Bank (or by the parent company thereof) or any variable rate
    notes issued by, or guaranteed  by, any domestic  corporation  rated A-1 (or
    the equivalent  thereof) or better by S&P or P-1 (or the equivalent thereof)
    or  better  by  Moody's  and  maturing  within  six  months  of the  date of
    acquisition,  (d)  repurchase  agreements  with  a  bank  or  trust  company
    (including  any of the  Lenders) or  securities  dealer  having  capital and
    surplus in excess of $500,000,000 for direct  obligations issued by or fully
    guaranteed by the United States of America in which the Borrower  shall have
    a perfected first priority security interest (subject to no other Liens) and
    having,  on the date of purchase  thereof,  a fair market  value of at least
    100% of the  amount of the  repurchase  obligations  and (e) shares of money
    market  mutual or  similar  funds  which  invest  exclusively  in the assets
    satisfying the requirements of clauses (a) through (d) of this definition.

        "CHAMPUS" means the United States  Department of Defense Civilian Health
    and Medical Program of the Uniformed Services.

        "Change in Control"  means (i) any Person or two or more Persons  acting
    in concert shall have acquired, after the date hereof, beneficial ownership,
    directly  or  indirectly,  of  Capital  Stock  of  the  Borrower  (or  other
    securities  convertible into such Capital Stock) representing 25% or more of
    the  combined  voting  power of all  Capital  Stock of the  Borrower or (ii)
    Continuing  Directors shall cease for any reason to constitute a majority of
    the members of the board of directors of the Parent then in office.  As used
    herein, "beneficial ownership" shall have the meaning provided in Rule 13d-3
    of the Securities and Exchange  Commission under the Securities and Exchange
    Act of 1934.

        "Closing Date" means the date hereof.

        "Code"  means  the  Internal  Revenue  Code of 1986  and the  rules  and
    regulations  promulgated  thereunder,  as amended,  modified,  succeeded  or
    replaced from time to time.

        "Collateral"  means a collective  reference to all Property with respect
    to which Liens in favor of the Agent are purported to be granted pursuant to
    and in accordance with the terms of the Collateral Documents.

        "Collateral  Documents"  means a  collective  reference  to the Security
    Agreement,  the Pledge  Agreement,  the mortgage  instruments and such other
    documents  executed and  delivered in  connection  with the  attachment  and
    perfection of the Agent's security  interests and liens arising  thereunder,
    including  without  limitation,  UCC  financing  statements  and  patent and
    trademark filings.

        "Commitment"  means  (i) with  respect  to each  Lender,  the  Revolving
    Commitment  of such  Lender,  the  Tranche  A Term Loan  Commitment  and the
    Tranche B Term Loan  Commitment  of such  Lender,  (ii) with  respect to the
    Issuing  Lender,  the LOC Commitment and (iii) with respect to the Swingline
    Lender, the Swingline Commitment.

        "Commitment Fee" shall have the meaning assigned to such term in Section
    3.5(a).

        "Commitment Fee Calculation  Period" shall have the meaning  assigned to
    such term in Section 3.5(a).

        "Consolidated Assets" means, at any date, the consolidated assets of the
    Borrower and the Subsidiaries at such date, as determined in accordance with
    GAAP.

        "Consolidated   Capital   Expenditures"   means  the  sum  of   (without
    duplication)  (i) all expenditures of the Borrower and its Subsidiaries on a
    consolidated  basis during such period (a) for the acquisition,  maintenance
    or  repair of fixed or  capital  assets  (which  should  be  capitalized  in
    accordance with GAAP) and (b) for Rental Equipment or for the maintenance or
    repair of Rental  Equipment  (which should be capitalized in accordance with
    GAAP) and (ii) all  Capital  Leases  of the  Borrower  and its  Subsidiaries
    entered into during such period.

        "Consolidated  Cash Taxes"  means,  for any period,  with respect to the
    Borrower and its  Subsidiaries on a consolidated  basis the aggregate of all
    taxes to the extent the same are paid in cash during such period.

        "Consolidated  EBITDA" means, as of any date for the four fiscal quarter
    period ending on, or most recently  ended prior to, such date,  with respect
    to the Borrower and its Subsidiaries on a consolidated basis, the sum of (i)
    Consolidated Net Income,  plus (ii) an amount which, in the determination of
    Consolidated  Net Income,  has been deducted for (A)  Consolidated  Interest
    Expense, (B) total Federal, state, local and foreign income, value added and
    similar taxes and (C) depreciation and amortization  expense,  as determined
    in accordance with GAAP.

        "Consolidated  EBITDAR"  means,  for any  period,  with  respect  to the
    Borrower  and  its  Subsidiaries  on a  consolidated  basis,  the sum of (i)
    Consolidated  EBITDA  for such  period,  plus  (ii) an  amount  which in the
    determination  of Consolidated  Net Income for such period has been deducted
    for Consolidated Rent Expense for such period.

        "Consolidated  Interest Expense" means, for any period,  with respect to
    the Borrower and its Subsidiaries on a consolidated  basis, all net interest
    expense,   including  the  interest   component  under  Capital  Leases,  as
    determined in accordance with GAAP.

        "Consolidated  Net  Income"  means,  as of any date for the four  fiscal
    quarter  period ending on, or most  recently  ended prior to, such date with
    respect to the Borrower and its  Subsidiaries on a consolidated  basis,  net
    income, as determined in accordance with GAAP;  provided,  that in any event
    there  shall  be  excluded  any  extraordinary  items  and any  non-cash  or
    non-recurring gains or losses.

        "Consolidated  Parties" means a collective reference to the Borrower and
    its Subsidiaries, and "Consolidated Party" means any one of them.

        "Consolidated  Rent  Expense"  means all  payments  (including,  without
    limitation,  any property taxes paid as additional  rent or lease  payments)
    made by the Borrower and its Subsidiaries on a consolidated  basis under any
    agreement to rent or lease Property.

        "Consolidated  Scheduled  Funded Debt Payments"  means, as of the end of
    each fiscal quarter of the Borrower,  for the Borrower and its  Subsidiaries
    on a consolidated  basis, the sum of all scheduled  payments of principal on
    Funded Debt for the  applicable  period ending on such date  (including  the
    principal  component of payments due on Capital Leases during the applicable
    period ending on such date); it being understood that Consolidated Scheduled
    Funded  Debt  Payments  shall  not  include  voluntary  prepayments  or  the
    mandatory prepayments required pursuant to Section 3.3.

        "Continue", "Continuation", "Continuing", and "Continued" shall refer to
    the  continuation  pursuant to Section 3.2 hereof of a Eurodollar  Loan from
    one Interest Period to the next Interest Period.

        "Continuing  Directors"  means during any period of up to 24 consecutive
    months  commencing after the Closing Date,  individuals who at the beginning
    of such 24 month period were  directors of the Borrower  (together  with any
    new director whose  election by the  Borrower's  board of directors or whose
    nomination  for election by the  Borrower's  shareholders  was approved by a
    vote of at least a majority of the directors then still in office who either
    were  directors  at the  beginning  of such  period  or  whose  election  or
    nomination for election was previously so approved).

        "Contract  Provider"  means  any  Person  or  any  employee,   agent  or
    subcontractor of such Person who provides  professional health care services
    under or pursuant to any contract with any Consolidated Party.

        "Convert",  "Conversion",  "Converting" and "Converted" shall refer to a
    conversion pursuant to Section 3.2 or Sections 3.7 through 3.12,  inclusive,
    of a Base Rate Loan into a Eurodollar Loan.

        "Credit   Documents"  means  a  collective   reference  to  this  Credit
    Agreement, the Notes, the LOC Documents, each Joinder Agreement, the Agent's
    Fee Letter,  the Collateral  Documents and all other related  agreements and
    documents issued or delivered  hereunder or thereunder or pursuant hereto or
    thereto  (in  each  case as the  same may be  amended,  modified,  restated,
    supplemented,  extended, renewed or replaced from time to time), and "Credit
    Document" means any one of them.

        "Credit  Facilities" shall have the meaning assigned to such term in the
    recitals hereto.

        "Credit  Parties"  means the  Borrower  and the  Guarantors  and "Credit
    Party" means any one of them.

        "Credit Party Obligations" means,  without  duplication,  (i) all of the
    obligations and liabilities of the Credit Parties to the Lenders  (including
    the  Issuing  Lender)  and the Agent,  whenever  arising,  under this Credit
    Agreement,  the Notes,  the Collateral  Documents or any of the other Credit
    Documents  (including,  but not limited to, any interest  accruing after the
    occurrence  of  a  Bankruptcy  Event  with  respect  to  any  Credit  Party,
    regardless of whether such interest is an allowed claim under the Bankruptcy
    Code) and (ii) all liabilities and obligations, whenever arising, owing from
    the Borrower to any Lender, or any Affiliate of a Lender,  arising under any
    Hedging Agreement.

        "Debt  Issuance"  means the  issuance of any  Indebtedness  for borrowed
    money by any Consolidated  Party (other than any Debt Issuance  permitted by
    Section 8.1(a)-(f) and (h)).

        "Default"  means any event,  act or condition which with notice or lapse
    of time, or both, would constitute an Event of Default.

        "Defaulting  Lender" means, at any time, any Lender that, (a) has failed
    to make a Loan or purchase a Participation Interest required pursuant to the
    terms of this  Credit  Agreement  (but  only for so long as such Loan is not
    made or such Participation Interest is not purchased), (b) has failed to pay
    to the Agent or any Lender an amount  owed by such  Lender  pursuant  to the
    terms of this Credit  Agreement (but only for so long as such amount has not
    been  repaid) or (c) has been deemed  insolvent  or has become  subject to a
    bankruptcy  or insolvency  proceeding  or to a receiver,  trustee or similar
    official.

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

        "Domestic  Subsidiary" means, with respect to any Person, any Subsidiary
    of such Person  which is  incorporated  or  organized  under the laws of any
    State of the United States or the District of Columbia.

        "Eligible  Assets" means any assets or any business (or any  substantial
    part  thereof)  used or useful in the same or a similar  line of business as
    the  Borrower and its  Subsidiaries  were engaged in on the Closing Date (or
    any reasonable  extensions or expansions  thereof) and businesses  ancillary
    thereto.

        "Eligible  Assignee"  means (a) a Lender;  (b) an Affiliate of a Lender;
    (c) an Approved Fund; and (d) any other Person (other than a natural Person)
    approved by the Agent and,  unless an Event of Default has  occurred  and is
    continuing, the Borrower (each such approval not to be unreasonably withheld
    or delayed).

        "Eligible  Reinvestment"  means  (i)  any  acquisition  (whether  or not
    constituting a capital expenditure,  but not constituting an Acquisition) of
    Eligible Assets and (ii) any Permitted Acquisition.

        "Environmental   Claim"  means  any   investigation,   written   notice,
    violation,  written demand,  written allegation,  action, suit,  injunction,
    judgment, order, consent decree, penalty, fine, lien, proceeding, or written
    claim whether  administrative,  judicial,  or private in nature  arising (a)
    pursuant to, or in connection  with, an actual or alleged  violation of, any
    Environmental Law, (b) in connection with any Hazardous  Material,  (c) from
    any assessment,  abatement, removal, remedial, corrective, or other response
    action  in  connection  with  an  Environmental  Law  or  other  order  of a
    Governmental  Authority  or (d) from any actual or alleged  damage,  injury,
    threat, or harm to health, safety, natural resources, or the environment.

        "Environmental  Laws" means any current or future legal  requirement  of
    any  Governmental  Authority  pertaining  to (a) the  protection  of health,
    safety,  and the  indoor  or  outdoor  environment,  (b)  the  conservation,
    management,  or use of natural resources and wildlife, (c) the protection or
    use of  surface  water and  groundwater,  (d) the  management,  manufacture,
    possession, presence, use, generation,  transportation,  treatment, storage,
    disposal, release, threatened release,  abatement,  removal,  remediation or
    handling of, or exposure to, any hazardous or toxic substance or material or
    (e) pollution  (including any release to land surface water and groundwater)
    and includes, without limitation, the Comprehensive  Environmental Response,
    Compensation,  and  Liability  Act of  1980,  as  amended  by the  Superfund
    Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., Solid Waste
    Disposal  Act, as amended by the Resource  Conservation  and Recovery Act of
    1976 and Hazardous  and Solid Waste  Amendment of 1984, 42 USC 6901 et seq.,
    Federal  Water  Pollution  Control Act, as amended by the Clean Water Act of
    1977, 33 USC 1251 et seq., Clean Air Act of 1966, as amended, 42 USC 7401 et
    seq., Toxic Substances  Control Act of 1976, 15 USC 2601 et seq.,  Hazardous
    Materials  Transportation Act, 49 USC App. 1801 et seq., Occupational Safety
    and Health Act of 1970, as amended, 29 USC 651 et seq., Oil Pollution Act of
    1990, 33 USC 2701 et seq.,  Emergency  Planning and Community  Right-to-Know
    Act of 1986,  42 USC 11001 et seq.,  National  Environmental  Policy  Act of
    1969, 42 USC 4321 et seq.,  Safe Drinking Water Act of 1974, as amended,  42
    USC 300(f) et seq.,  any analogous  implementing  or successor  law, and any
    amendment, rule, regulation, order, or binding directive issued thereunder.

        "Equity  Issuance"  means any  issuance  by the  Borrower  or any of its
    Subsidiaries to any Person of (a) shares of its Capital Stock other than (i)
    any shares of its  Capital  Stock  pursuant  to the  exercise  of options or
    warrants, (ii) any shares of its Capital Stock pursuant to the conversion of
    any debt  securities  to equity and (iii) in the case of  Subsidiaries,  any
    shares  of  its  Capital  Stock  issued  to  the  Borrower  or  any  of  its
    Subsidiaries  or (b) any options or warrants  relating to its Capital Stock.
    The term "Equity Issuance" shall not include (a) any Asset Disposition,  (b)
    any Debt  Issuance or (c) the  issuance of Capital  Stock so long as the Net
    Cash  Proceeds  are  used  (within  the  period  of 90  days  following  the
    consummation of such Equity Issuance) to make Eligible Reinvestments.

        "ERISA" means the Employee  Retirement  Income  Security Act of 1974, as
    amended,  and any successor statute thereto, as interpreted by the rules and
    regulations thereunder,  all as the same may be in effect from time to time.
    References  to  sections of ERISA  shall be  construed  also to refer to any
    successor sections.

        "ERISA Affiliate" means an entity which is under common control with any
    Consolidated Party within the meaning of Section 4001(a)(14) of ERISA, or is
    a member  of a group  which  includes  any  Consolidated  Party and which is
    treated as a single employer under Sections 414(b) or (c) of the Code.

        "ERISA  Event" means (i) with respect to any Plan,  the  occurrence of a
    Reportable  Event or the  substantial  cessation of  operations  (within the
    meaning  of  Section   4062(e)  of  ERISA);   (ii)  the  withdrawal  by  any
    Consolidated  Party or any ERISA  Affiliate  from a Multiple  Employer  Plan
    during a plan year in which it was a  substantial  employer (as such term is
    defined in Section  4001(a)(2) of ERISA),  or the  termination of a Multiple
    Employer Plan;  (iii) the distribution of a notice of intent to terminate or
    the actual  termination of a Plan pursuant to Section 4041(a)(2) or 4041A of
    ERISA;  (iv) the  institution  of  proceedings  to  terminate  or the actual
    termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any event
    or condition which might constitute  grounds under Section 4042 of ERISA for
    the termination of, or the appointment of a trustee to administer, any Plan;
    (vi) the complete or partial  withdrawal  of any  Consolidated  Party or any
    ERISA  Affiliate  from  a  Multiemployer  Plan;  (vii)  the  conditions  for
    imposition of a lien under Section 302(f) of ERISA exist with respect to any
    Plan;  or (viii) the  adoption of an  amendment  to any Plan  requiring  the
    provision of security to such Plan pursuant to Section 307 of ERISA.

        "Eurodollar  Loan"  means  a  Loan  bearing  interest  based  at a  rate
    determined by reference to the Eurodollar Rate.

        "Eurodollar  Rate"  means,  for any  Eurodollar  Loan  for any  Interest
    Period,  therefor, the rate per annum (rounded upwards, if necessary, to the
    nearest  1/100th  of 1%)  determined  by the Agent to be equal to the London
    Interbank Offered Rate.

        "Event of Default" means any of the events or circumstances described in
    Section 9.1.

        "Excluded Asset  Disposition"  means,  with respect to any  Consolidated
    Party, (i) the sale of inventory in the ordinary course of such Consolidated
    Party's business, (ii) the sale or disposition of machinery and equipment no
    longer used or useful in the conduct of such Consolidated  Party's business,
    (iii) any Equity Issuance by such  Consolidated  Party, (iv) any Involuntary
    Disposition by such Consolidated Party and (v) any sale, lease,  transfer or
    other  disposition  of  Property  by such  Consolidated  Party to any  other
    Consolidated  Party,  provided  that the Credit  Parties  shall  cause to be
    executed and delivered such documents,  instruments and  certificates as the
    Agent may request so as to cause the Credit Parties to be in compliance with
    the terms of Section 7.13 after giving effect to such transaction.

        "Excluded  Property"  means,  with  respect to any  Consolidated  Party,
    including  any Person that  becomes a  Consolidated  Party after the Closing
    Date as  contemplated  by  Section  7.12,  (i) any owned or  leased  real or
    personal Property of such Consolidated Party which is located outside of the
    United  States,  (ii) any leased real Property of such  Consolidated  Party,
    (iii) any owned real  Property  of such  Consolidated  Party which has a net
    book value of less than $500,000, provided that the aggregate net book value
    of all real Property of all of the Credit Parties excluded  pursuant to this
    clause (iii) shall not exceed $2,000,000,  (iv) any leased personal Property
    of such  Consolidated  Party, (v) any personal Property of such Credit Party
    (including,   without  limitation,  motor  vehicles)  in  respect  of  which
    perfection  of a Lien is not either (A)  governed by the Uniform  Commercial
    Code or (B)  effected  by  appropriate  evidence  of the Lien being filed in
    either the United  States  Copyright  Office or the United States Patent and
    Trademark  Office and (vi) any  Property of such  Consolidated  Party which,
    subject to the terms of Section 8.11 and Section  8.14, is subject to a Lien
    of the type described in clause (vii) of the definition of "Permitted Liens"
    set  forth  in  Section  1.1  pursuant  to  documents  which  prohibit  such
    Consolidated Party from granting any other Liens in such Property.

        "Existing Credit Agreement" shall have the meaning assigned to such term
    in the recitals hereto.

        "Existing  Letters of Credit"  means the letters of credit  described by
    date  of  issuance,  letter  of  credit  number,  undrawn  amount,  name  of
    beneficiary and date of expiry on Schedule 2.2(a).

        "Federal  Funds Rate" means,  for any day,  the rate per annum  (rounded
    upwards 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 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 Bank of
    America on such day on such transactions as determined by the Agent.

        "Fixed  Charge  Coverage  Ratio"  means,  as of the end of  each  fiscal
    quarter of the  Consolidated  Parties for the four quarter  period ending on
    such date, the ratio of (a) Consolidated  EBITDAR for the applicable  period
    minus  Consolidated  Cash Taxes for the applicable  period to (b) the sum of
    (i)  Consolidated  Interest  Expense  for the  applicable  period  plus (ii)
    Consolidated  Scheduled Funded Debt Payments for the applicable  period plus
    (iii) Consolidated Rent Expense for the applicable period.

        "Foreign  Subsidiary"  means, with respect to any Person, any Subsidiary
    of such Person which is not a Domestic Subsidiary of such Person.

        "Fund" means any Person  (other than a natural  Person) that is (or will
    be)  engaged  in  making,  purchasing,  holding or  otherwise  investing  in
    commercial loans and similar  extensions of credit in the ordinary course of
    its business.

        "Funded  Debt"  means,   without   duplication,   the  sum  of  (a)  all
    Indebtedness of the Borrower and its  Subsidiaries  for borrowed money,  (b)
    all purchase money  Indebtedness of the Borrower and its  Subsidiaries,  (c)
    the  principal   portion  of  all   obligations  of  the  Borrower  and  its
    Subsidiaries  under  Capital  Leases,  (d) all  obligations,  contingent  or
    otherwise,  relative to the face amount of all letters of credit (other than
    letters  of credit  supporting  trade  payables  in the  ordinary  course of
    business),  whether or not drawn,  and banker's  acceptances  issued for the
    account of such Person (it being  understood  that, to the extent an undrawn
    letter of credit supports another obligation consisting of Indebtedness,  in
    calculating  aggregated  Indebtedness  only such other  obligation  shall be
    included), (e) all Guaranty Obligations of the Borrower and its Subsidiaries
    with  respect to Funded  Debt of  another  Person,  (f) all  Funded  Debt of
    another  entity  secured by a Lien on any  property of the  Borrower and its
    Subsidiaries  whether  or not  such  Funded  Debt has  been  assumed  by the
    Borrower or any of its Subsidiaries,  (g) all Funded Debt of any partnership
    or  unincorporated  joint  venture to the extent the  Borrower or one of its
    Subsidiaries is legally obligated,  net of any assets of such partnership or
    joint venture,  (h) the principal  balance  outstanding  under any Synthetic
    Lease and (i) the aggregate  amount of  Governmental  Reimbursement  Program
    Costs (exclusive of, with respect to the determination of Funded Debt in any
    period, the portion of Governmental Reimbursement Program Costs paid in such
    period).

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

        "Governmental  Authority" means any Federal, state, local, provincial or
    foreign  court  or  governmental  agency,   authority,   instrumentality  or
    regulatory body.

        "Governmental  Reimbursement  Program  Cost"  means with  respect to and
    payable by the Borrower and its Subsidiaries the sum of:

            (i) all  amounts  (including  punitive  and other  similar  amounts)
        agreed to be paid or  payable  (a) in  settlement  of claims or (b) as a
        result of a final,  non-appealable  judgment, award or similar order, in
        each case, relating to participation in Medical Reimbursement Programs;

            (ii) all final,  non-appealable  fines,  penalties,  forfeitures  or
        other  amounts  rendered  pursuant  to  criminal  indictments  or  other
        criminal proceedings relating to participation in Medical  Reimbursement
        Programs; and

            (iii) the amount of final, non-appealable recovery, damages, awards,
        penalties,  forfeitures or similar  amounts  rendered in any litigation,
        suit,  arbitration,  investigation  or  other  legal  or  administrative
        proceeding   of  any  kind   relating   to   participation   in  Medical
        Reimbursement Programs.

        "Guarantor" means each of the Persons identified as a "Guarantor" on the
    signature pages hereto and each Person which may hereafter execute a Joinder
    Agreement  pursuant to Section  7.12,  together  with their  successors  and
    permitted assigns, and "Guarantor" means any one of them.

        "Guaranty  Obligations"  means,  with  respect  to any  Person,  without
    duplication, any obligations (other than endorsements in the ordinary course
    of  business  of   negotiable   instruments   for  deposit  or   collection)
    guaranteeing  or intended to guarantee any  Indebtedness of any other Person
    in any manner,  whether direct or indirect, and including without limitation
    any  obligation,  whether  or not  contingent,  (a)  to  purchase  any  such
    Indebtedness  or other  obligation  or any  property  constituting  security
    therefor,  (b) to advance or provide  funds or other support for the payment
    or purchase  of such  indebtedness  or  obligation  or to  maintain  working
    capital,  solvency or other  balance  sheet  condition  of such other Person
    (including,  without limitation,  maintenance  agreements,  comfort letters,
    take  or  pay  arrangements,   put  agreements  or  similar   agreements  or
    arrangements  but excluding  obligations to provide funding for partnerships
    and joint  ventures) for the benefit of the holder of  Indebtedness  of such
    other  Person,  (c) to lease or purchase  property,  securities  or services
    primarily for the purpose of assuring the owner of such  Indebtedness or (d)
    to  otherwise  assure or hold  harmless  the owner of such  Indebtedness  or
    obligation  against  loss in respect  thereof.  The  amount of any  Guaranty
    Obligation hereunder shall (subject to any limitations set forth therein) be
    deemed  to be an amount  equal to the  outstanding  principal  amount of the
    Indebtedness in respect of which such Guaranty Obligation is made.

        "Hazardous Materials" means any substance,  material or waste defined or
    regulated in or under any Environmental Laws.

        "HCFA" means the United States Health Care Financing  Administration and
    any  successor  thereto,  including  the Centers for  Medicare  and Medicaid
    Services.

        "Hedging  Agreements"  means any interest rate  protection  agreement or
    foreign currency exchange agreement.

        "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,
    or upon which interest payments are customarily made, (c) all obligations of
    such  Person  under  conditional  sale or other title  retention  agreements
    relating  to  Property  purchased  by  such  Person  (other  than  customary
    reservations or retentions of title under agreements with suppliers  entered
    into in the ordinary course of business), (d) all obligations of such Person
    issued or assumed as the  deferred  purchase  price of  Property or services
    purchased  by such Person  (other than trade debt  incurred in the  ordinary
    course of  business  and due within six  months of the  incurrence  thereof)
    which would appear as liabilities on a balance sheet of such Person, (e) all
    obligations  of such Person under  take-or-pay  or similar  arrangements  or
    under commodities agreements,  (f) all Indebtedness of others secured by (or
    for which the holder of such Indebtedness has an existing right,  contingent
    or otherwise,  to be secured by) any Lien on, or payable out of the proceeds
    of production  from,  Property owned or acquired by such Person,  whether or
    not the  obligations  secured  thereby have been  assumed,  (g) all Guaranty
    Obligations of such Person with respect to  Indebtedness  of another Person,
    (h) the implied principal  component of all obligations of such Person under
    Capital Leases, (i) all obligations of such Person under Hedging Agreements,
    (j) the maximum  amount of all  performance  and  standby  letters of credit
    issued or bankers'  acceptances  facilities  created for the account of such
    Person and, without duplication,  all drafts drawn thereunder (to the extent
    unreimbursed),  (k) all  preferred  Capital  Stock issued by such Person and
    which by the terms thereof  could be (at the request of the holders  thereof
    or  otherwise)  subject to mandatory  sinking fund  payments,  redemption or
    other  acceleration  (other  than as a result of a Change of  Control  or an
    Asset  Disposition  that  does not in fact  result in a  redemption  of such
    preferred  Capital  Stock) at any time prior to the Maturity  Date,  (l) the
    principal  portion of all obligations of such Person under Synthetic Leases,
    (m) all  obligations  of such  Person to  repurchase  any  securities  which
    repurchase obligation is related to the issuance thereof, including, without
    limitation,  obligations  commonly  known as  residual  equity  appreciation
    potential shares,  (n) the Indebtedness of any partnership or unincorporated
    joint venture in which such Person is a general  partner or a joint venturer
    and (o) 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.

        "Interest Payment Date" means (a) as to Base Rate Loans, the last day of
    each month and the Maturity Date, (b) as to Eurodollar  Loans,  the last day
    of each  applicable  Interest  Period and the Maturity  Date and in addition
    where the applicable  Interest  Period for a Eurodollar Loan is greater than
    three  months,  then also on the date three months from the beginning of the
    Interest Period and each three months thereafter and (c) with respect to any
    Swingline Loan, the date such Loan is required to be repaid and the Maturity
    Date.

        "Interest  Period" means, as to Eurodollar  Loans, a period of one week,
    one month,  two  months',  three  months' or six  months'  duration,  as the
    Borrower may elect,  commencing,  in each case, on the date of the borrowing
    (including continuations and conversions thereof); provided, however, (a) if
    any  Interest  Period would end on a day which is not a Business  Day,  such
    Interest  Period  shall be  extended  to the next  succeeding  Business  Day
    (except  that  where  the next  succeeding  Business  Day  falls in the next
    succeeding  calendar month, then on the next preceding Business Day), (b) no
    Interest  Period shall extend beyond the Maturity  Date,  (c) with regard to
    the  Tranche A Term  Loans,  no  Interest  Period  shall  extend  beyond any
    Principal  Amortization  Payment  Date  unless the portion of Tranche A Term
    Loans  comprised of Base Rate Loans  together  with the portion of Tranche A
    Term Loans  comprised of  Eurodollar  Loans with Interest  Periods  expiring
    prior to the date such  Principal  Amortization  Payment is due, is at least
    equal to the amount of such Principal Amortization Payment due on such date,
    (d) with regard to the Tranche B Term Loans, no Interest Period shall extend
    beyond any Principal Amortization Payment Date unless the portion of Tranche
    B Term Loans  comprised  of Base Rate  Loans  together  with the  portion of
    Tranche B Term Loans  comprised of Eurodollar  Loans with  Interest  Periods
    expiring prior to the date such Principal Amortization Payment is due, is at
    least equal to the amount of such Principal Amortization Payment due on such
    date and (e) where an Interest  Period begins on a day for which there is no
    numerically  corresponding  day in the calendar  month in which the Interest
    Period is to end, such Interest Period shall end on the last Business Day of
    such calendar month.

        "Investment" in any Person means (a) the acquisition  (whether for cash,
    property, services, assumption of Indebtedness,  securities or otherwise) of
    assets comprising all or substantially all of the assets of any Person or of
    a division or business unit of a Person (other than equipment, inventory and
    supplies in the ordinary  course of business and other than any  acquisition
    of assets constituting a Consolidated Capital  Expenditure),  Capital Stock,
    bonds,  notes,  debentures,  partnership,  joint ventures or other ownership
    interests or other  securities of such other Person or (b) any deposit with,
    or advance,  loan or other  extension of credit to, such Person  (other than
    deposits  made in  connection  with the purchase of equipment  inventory and
    supplies  in the  ordinary  course of  business)  or (c) any  other  capital
    contribution to or investment in such Person, including, without limitation,
    any  Guaranty  Obligations  (including  any  support  for a letter of credit
    issued on behalf of such  Person)  incurred  for the benefit of such Person,
    but excluding any Restricted Payment to such Person.

        "Involuntary  Disposition"  shall have the meaning assigned to such term
    in Section 7.6(b).

        "Issuing Lender" means Bank of America, N.A., and its successors in such
    capacity as provided in Section 11.3(h).

        "Issuing  Lender  Fees" shall have the meaning  assigned to such term in
    Section 3.5(b)(ii).

        "Joinder Agreement" means a Joinder Agreement  substantially in the form
    of Exhibit 7.12.

        "Lender"  means  any of the  Persons  identified  as a  "Lender"  on the
    signature  pages hereto,  and any Person which may become a Lender by way of
    assignment  in  accordance  with  the  terms  hereof,  together  with  their
    successors and permitted assigns.

        "Letter of Credit"  means (i) any letter of credit issued by the Issuing
    Lender for the account of any Credit Party in  accordance  with the terms of
    Section 2.2 and (ii) any Existing Letter of Credit, as such Letter of Credit
    or Existing Letter of Credit may be amended, modified,  extended, renewed or
    replaced.

        "Letter of Credit Fee" shall have the  meaning  assigned to such term in
    Section 3.5(b)(i).

        "Leverage Ratio" means, as of the end of any fiscal quarter of
         the Consolidated Parties for the four fiscal quarter period ending on
         such date with respect to the Consolidated Parties on a consolidated
         basis, the ratio of (a) Funded Debt of the Consolidated Parties on a
         consolidated basis on the last day of such period to (b) Consolidated
         EBITDA for such period.

        "Lien" means any mortgage, pledge,  hypothecation,  assignment,  deposit
    arrangement,  security interest, encumbrance, lien (statutory or otherwise),
    preference,  priority or charge of any kind, including,  without limitation,
    any agreement to give any of the foregoing,  any  conditional  sale or other
    title retention agreement, and any lease in the nature thereof.

        "Loan" or "Loans"  means the Revolving  Loans,  the Tranche A Term Loans
    and/or the  Tranche B Term Loans (or a portion of any  Revolving  Loan,  any
    Tranche A Term Loan or Tranche B Term Loan bearing  interest at the Adjusted
    Base Rate or the  Adjusted  Eurodollar  Rate and  referred to as a Base Rate
    Loan or a Eurodollar Loan) and/or the Swingline Loans (or any Swingline Loan
    bearing  interest at the  Adjusted  Base Rate and referred to as a Base Rate
    Loan), individually or collectively, as appropriate.

        "LOC  Commitment"  means the  commitment of the Issuing  Lender to issue
    Letters  of  Credit in an  aggregate  face  amount  at any time  outstanding
    (together with the amounts of any  unreimbursed  drawings  thereon) of up to
    the LOC Committed Amount.

        "LOC Committed  Amount" shall have the meaning  assigned to such term in
    Section 2.2.

        "LOC Documents" means, with respect to any Letter of Credit, such Letter
    of Credit,  any amendments  thereto,  any documents  delivered in connection
    therewith,  any  application  therefor,  and  any  agreements,  instruments,
    guarantees or other documents  (whether general in application or applicable
    only to such Letter of Credit) governing or providing for (a) the rights and
    obligations  of the  parties  concerned  or at risk  of (b)  any  collateral
    security for such obligations.

        "LOC Obligations"  means, at any time, the sum of (a) the maximum amount
    which is, or at any time thereafter may become,  available to be drawn under
    Letters  of  Credit  then   outstanding,   assuming   compliance   with  all
    requirements for drawings referred to in such Letters of Credit plus (b) the
    aggregate  amount of all  drawings  under  Letters of Credit  honored by the
    Issuing Lender but not theretofore reimbursed by the Borrower.

        "London  Interbank  Offered Rate" means, for any Eurodollar Loan for any
    Interest Period therefor, the rate per annum (rounded upwards, if necessary,
    to the  nearest  1/100th of 1%) in each case  determined  by the Agent to be
    equal to:

            (i) the offered rate that appears on the Dow Jones  Telerate  Screen
        Page 3750 (or any  successor  page) that  displays  an  average  British
        Bankers  Association  Interest  Settlement  Rate for deposits in Dollars
        (for delivery on the first day of the applicable  Interest Period) for a
        term equivalent to the applicable Interest Period at approximately 11:00
        a.m.  (London  time)  two  Business  Days  prior to the first day of the
        applicable Interest Period; or

            (ii)  if  for  any  reason  the  foregoing  rate  in  clause  (i) is
        unavailable  or  undeterminable,  the offered rate on such other page or
        other  service  that  displays an average  British  Bankers  Association
        Interest  Settlement  Rate for deposits in Dollars (for  delivery on the
        first day of the applicable  Interest  Period) for a term  equivalent to
        the applicable Interest Period at approximately 11:00 a.m. (London time)
        two  Business  Days  prior to the first day of the  applicable  Interest
        Period; or

            (iii) if for any reason the foregoing  rates in clauses (i) and (ii)
        are  unavailable  or  undeterminable,  the  rate of  interest  at  which
        deposits  in Dollars  for  delivery  on the first day of the  applicable
        Interest  Period  in same day  funds in the  approximate  amount  of the
        applicable  Eurodollar  Loan  for a term  equivalent  to the  applicable
        Interest Period would be offered by the London branch of Bank of America
        to major banks in the London  interbank  Dollar market at  approximately
        11:00 a.m. (London time) two Business Days prior to the first day of the
        applicable Interest Period.

        "Material  Adverse  Effect" means a material  adverse  effect on (a) the
    operations,  condition  (financial or otherwise) or business of the Borrower
    and its  Subsidiaries  taken as a whole,  (b) the  ability of the  Borrower,
    individually,  or the Credit  Parties,  taken as a whole,  to perform its or
    their obligations, when such obligations are required to be performed, under
    this  Credit  Agreement  or any of the other  Credit  Documents,  or (c) the
    validity or enforceability of this Credit Agreement, any of the other Credit
    Documents, or the rights and remedies of the Lenders hereunder or thereunder
    taken as a whole.

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

        "Maturity  Date"  means (i) as to the  Revolving  Loans and  Letters  of
    Credit  (and the  related  LOC  Obligations),  the  Swingline  Loans and the
    Tranche A Term Loan,  July 20,  2006 and (ii) as to the Tranche B Term Loan,
    July 20, 2007.

        "Medicaid" means that means-tested  entitlement  program under Title XIX
    of the  Social  Security  Act that  provides  federal  grants to states  for
    medical assistance based on specific eligibility criteria.  (Social Security
    Act of 1965, Title XIX, P.L. 89-87, as amended; 42 U.S.C. 1396 et seq.).

        "Medicaid  Regulations"  means,  collectively,  (i) all federal statutes
    (whether  set forth in Title XIX of the Social  Security  Act or  elsewhere)
    affecting the medical  assistance  program  established  by Title XIX of the
    Social Security Act and any statutes succeeding thereto; (ii) all applicable
    provisions  of all  federal  rules,  regulations,  manuals and orders of all
    Governmental  Authorities  promulgated pursuant to or in connection with the
    statutes  described  in clause  (i) above  and all  federal  administrative,
    reimbursement  and other guidelines of all Governmental  Authorities  having
    the force of law promulgated  pursuant to or in connection with the statutes
    described  in clause  (i)  above;  (iii) all  state  statutes  and plans for
    medical  assistance  enacted in connection  with the statutes and provisions
    described in clauses (i) and (ii) above; and (iv) all applicable  provisions
    of  all  rules,   regulations,   manuals  and  orders  of  all  Governmental
    Authorities  promulgated  pursuant  to or in  connection  with the  statutes
    described in clause (iii) above and all state administrative,  reimbursement
    and other guidelines of all Governmental Authorities having the force of law
    promulgated  pursuant to or in  connection  with the  statutes  described in
    clause (ii) above, in each case as may be amended, supplemented or otherwise
    modified from time to time.

        "Medical  Reimbursement  Programs"  means  the  Medicare,  Medicaid  and
    CHAMPUS  programs and any other health care program  operated by or financed
    in whole or in part by any federal, state or local government.

        "Medicare"  means that  government-sponsored  entitlement  program under
    Title XVIII of the Social Security Act that provides for a health  insurance
    system for eligible elderly and disabled  individuals.  (Social Security Act
    of 1965, Title XVIII, P.L. 89-87 as amended; 42 U.S.C. 1395 et seq.).

        "Medicare  Regulations"  means,   collectively,   all  federal  statutes
    (whether set forth in Title XVIII of the Social  Security Act or  elsewhere)
    affecting the health insurance program for the aged and disabled established
    by Title  XVIII  of the  Social  Security  Act and any  statutes  succeeding
    thereto;  together with all applicable provisions of all rules, regulations,
    manuals and orders and  administrative,  reimbursement  and other guidelines
    having the force of law of all Governmental Authorities (including,  without
    limitation,  the Department of Health and Human Services ("HHS"),  HCFA, the
    Office of the  Inspector  General for HHS, or any person  succeeding  to the
    functions of any of the foregoing)  promulgated pursuant to or in connection
    with any of the  foregoing  having the force of law, as each may be amended,
    supplemented or otherwise modified from time to time.

        "Moody's"  means Moody's  Investors  Service,  Inc., or any successor or
    assignee  of the  business  of  such  company  in  the  business  of  rating
    securities.

        "Multiemployer  Plan" means a Plan covered by Title IV of ERISA which is
    a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA.

        "Multiple  Employer  Plan"  means a Plan  covered  by Title IV of ERISA,
    other than a  Multiemployer  Plan, with respect to which any Credit Party or
    any of its  Subsidiaries  or any ERISA  Affiliate  and at least one employer
    other than a Credit Party or any of its  Subsidiaries or any ERISA Affiliate
    are contributing sponsors.

        "Net Cash  Proceeds"  means the aggregate  proceeds paid in cash or Cash
    Equivalents  received  by any  Consolidated  Party in  respect  of any Asset
    Disposition,  Equity Issuance, Debt Issuance or Involuntary Disposition, net
    of (a) direct costs (including,  without limitation,  legal,  accounting and
    investment  banking  fees,  and sales  commissions)  and (b)  taxes  paid or
    payable as a result  thereof;  it being  understood that "Net Cash Proceeds"
    shall include,  without  limitation,  any cash or Cash Equivalents  received
    upon the sale or other disposition of any non-cash consideration received by
    any such Consolidated Party in any Asset Disposition,  Equity Issuance, Debt
    Issuance or Involuntary Disposition.

        "Note" or "Notes"  means the  Revolving  Loan Notes,  the Tranche A Term
    Notes,  and the Tranche B Term Notes, if any,  individually or collectively,
    as appropriate.

        "Notice of  Borrowing"  means a request by the  Borrower for a Revolving
    Loan, in the form of Exhibit 2.1(b).

        "Notice of  Extension/Conversion"  means the written notice of extension
    or  conversion  in  substantially  the form of Exhibit  3.2,  as required by
    Section 3.2.

        "Operating  Lease"  means,  as to any Person,  any lease of any property
    (whether  real,  personal  or mixed) by that  Person  as  lessee  which,  in
    accordance with GAAP, is or should be accounted for as an operating lease.

        "Participation Interest" means a purchase by a Lender of a participation
    in Letters of Credit or LOC  Obligations  as  provided  in Section  2.2,  in
    Swingline  Loans as  provided  in Section 2.3 or in any Loans as provided in
    Section 3.14.

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

        "Permitted Acquisition" shall mean an Acquisition by the Borrower or any
    Subsidiary of the Borrower,  provided that (a) the capital stock or property
    acquired in such  Acquisition  relates to a line of business  similar to the
    business of the Borrower and its Subsidiaries engaged in on the Closing Date
    or a  reasonable  extension  or  expansion  thereof or a business  ancillary
    thereto;  (b) in the case of an  Acquisition of the capital stock of another
    Person,  (i) the board of directors (or other comparable  governing body) of
    such other Person shall have duly  approved such  Acquisition  and (ii) such
    Person  shall become a  wholly-owned  direct or indirect  Subsidiary  of the
    Borrower (c) if the aggregate  consideration for such  Acquisition,  exceeds
    $25,000,000,  the Borrower shall have delivered to the Agent,  not less than
    10  days  prior  to  the  consummation  of  such  Acquisition,  a pro  forma
    certificate of a Responsible Officer  demonstrating that, upon giving effect
    to such  Acquisition  on a pro forma basis as though it had  occurred on the
    first day of the  relevant  calculation  period,  the  Borrower  shall be in
    compliance  with all of the  covenants  set forth in Section  7.11;  (d) the
    representations and warranties made by the Borrower herein shall be true and
    correct in all  material  respects  at and as if made as of the date of such
    Acquisition  (after  giving  effect  thereto)  except  to  the  extent  such
    representations  and warranties  expressly  relate to an earlier date and no
    Default or Event of Default exists as of the date of such Acquisition (after
    giving effect thereto) and (e) the aggregate  consideration  (including cash
    and non-cash  consideration  and any  assumption  of  Indebtedness)  for all
    Acquisitions  occurring after the Closing Date shall not exceed $100,000,000
    during any fiscal year.

        "Permitted Asset Disposition" means (i) any Asset Disposition  permitted
    by Section 8.5 and (ii) any Excluded Asset Disposition.

        "Permitted  Investments"  means  Investments  which are (a) cash or Cash
    Equivalents,  (b)  accounts  receivable  created,  acquired  or  made in the
    ordinary course of business and payable or  dischargeable in accordance with
    customary trade terms, (c) inventory,  raw materials and general intangibles
    acquired in the ordinary  course of business,  (d) Investments by one Credit
    Party in another  Credit Party;  (e)  Investments in notes  receivables  and
    loans to directors,  officers or employees of a Credit Party in the ordinary
    course  of  business  for  reasonable  business  expenses,   not  to  exceed
    $2,000,000 in the aggregate, at any one time outstanding, (f) Investments in
    Capital Expenditures,  (g) Permitted Acquisitions,  (h) Investments existing
    on the  date  hereof  and set  forth  on  Schedule  1.1(a),  and  (i)  other
    Investments  not to exceed  $10,000,000,  in the aggregate,  at any one time
    outstanding.

        "Permitted Liens" means:

            (i)  Liens  in  favor  of the  Agent  to  secure  the  Credit  Party
        Obligations;

            (ii) Liens  (other than Liens  created or imposed  under  ERISA) for
        taxes,  assessments  or  governmental  charges  or levies not yet due or
        Liens for taxes being contested in good faith by appropriate proceedings
        for which adequate reserves determined in accordance with GAAP have been
        established  (and as to which the  Property  subject to any such Lien is
        not yet subject to foreclosure, sale or loss on account thereof);

            (iii)   statutory   Liens  of  landlords   and  Liens  of  carriers,
        warehousemen,  mechanics,  materialmen  and  suppliers  and other  Liens
        imposed by law or pursuant to customary  reservations  or  retentions of
        title  arising in the ordinary  course of business,  provided  that such
        Liens  secure  only  amounts  not  yet due and  payable  or,  if due and
        payable,  are unfiled and no other  action has been taken to enforce the
        same or are being contested in good faith by appropriate proceedings for
        which  adequate  reserves  determined in accordance  with GAAP have been
        established  (and as to which the  Property  subject to any such Lien is
        not yet subject to foreclosure, sale or loss on account thereof);

            (iv) Liens  (other  than  Liens  created  or  imposed  under  ERISA)
        incurred  or deposits  made by any  Consolidated  Party in the  ordinary
        course  of   business  in   connection   with   workers'   compensation,
        unemployment  insurance and other types of social security, or to secure
        the  performance  of  tenders,  statutory  obligations,   bids,  leases,
        government  contracts,  performance and return-of-money  bonds and other
        similar  obligations  (exclusive  of  obligations  for  the  payment  of
        borrowed money);

            (v) Liens in connection  with  attachments  or judgments  (including
        judgment or appeal bonds)  provided that the  judgments  secured  shall,
        within  30 days  after  the  entry  thereof,  have  been  discharged  or
        execution  thereof stayed pending appeal,  or shall have been discharged
        within 30 days after the expiration of any such stay;

            (vi)  easements,   rights-of-way,   restrictions  (including  zoning
        restrictions),  minor  defects  or  irregularities  in title  and  other
        similar charges or encumbrances not, in any material respect,  impairing
        the use or value of the encumbered Property for its intended purposes;

            (vii)  Liens on  Property  of any  Person  securing  purchase  money
        Indebtedness  (including  Capital  Leases and Synthetic  Leases) of such
        Person  permitted  under  Section  8.1(c),  provided  that any such Lien
        attaches to such Property  concurrently with or within 90 days after the
        acquisition thereof;

            (viii) leases or subleases  granted to others not interfering in any
        material respect with the business of any Consolidated Party;

            (ix) any interest of title of a lessor under, and Liens arising from
        UCC  financing  statements  (or  equivalent  filings,  registrations  or
        agreements in foreign  jurisdictions)  relating to, leases  permitted by
        this Credit Agreement;

            (x)  Liens  deemed  to  exist  in  connection  with  Investments  in
        repurchase agreements permitted under Section 8.6;

            (xi) normal and customary  rights of setoff upon deposits of cash in
        favor of banks or other depository institutions;

            (xii) Liens of a collection  bank arising under Section 4-210 of the
        Uniform Commercial Code on items in the course of collection;

            (xiii)  Liens of  sellers  of goods to the  Borrower  and any of its
        Subsidiaries  arising under Article 2 of the Uniform  Commercial Code or
        similar provisions of applicable law in the ordinary course of business,
        covering only the goods sold and securing only the unpaid purchase price
        for such goods and related expenses;

            (xiv)  Liens  existing  on any  Property  prior  to the  acquisition
        thereof by the Borrower or any Subsidiary or existing on any property or
        asset of any Person  that  becomes a  Subsidiary  after the date  hereof
        prior to the time such Person  becomes a  Subsidiary;  provided that (i)
        such Lien is not created in  contemplation of or in connection with such
        acquisition  or such Person  becoming a Subsidiary,  as the case may be,
        (ii) such Lien  shall not apply to any other  property  or assets of the
        Borrower or any  Subsidiary  and (iii) such Lien shall secure only those
        obligations which it secures on the date of such acquisition or the date
        such Person  becomes a Subsidiary,  as the case may be, and  extensions,
        renewals and  replacements  thereof that do not increase the outstanding
        principal amount thereof; and

            (xv) Liens existing as of the Closing Date and set forth on Schedule
        1.1(b);  provided that (a) no such Lien shall at any time be extended to
        or cover any  Property  other than the Property  subject  thereto on the
        Closing Date and (b) the principal amount of the Indebtedness secured by
        such Liens shall not be extended, renewed, refunded or refinanced.

        "Person"  means  any  individual,   partnership,  joint  venture,  firm,
    corporation,   limited  liability  company,  association,   trust  or  other
    enterprise (whether or not incorporated), or any Governmental Authority.

        "Plan"  means any  employee  benefit plan (as defined in Section 3(3) of
    ERISA)  which is  subject  to Title I (other  than  Subtitle  A or Part 1 of
    Subtitle  B  thereof)  or Title IV of ERISA  and with  respect  to which any
    Credit Party or any of its  Subsidiaries  or any ERISA  Affiliate is (or, if
    such plan were terminated at such time, would under Section 4069 of ERISA be
    deemed to be) an "employer" within the meaning of Section 3(5) of ERISA.

        "Pledge  Agreement"  means the pledge  agreement dated as of the Closing
    Date in the form of Exhibit  1.1(a) to be  executed in favor of the Agent by
    each of the Credit Parties, as amended,  modified,  restated or supplemented
    from time to time.

        "Prime Rate" means, for any day, the rate of interest in effect for such
    day as publicly announced from time to time by Bank of America as its "prime
    rate." Such rate is a rate set by Bank of America based upon various factors
    including  Bank of  America's  costs and desired  return,  general  economic
    conditions and other factors,  and is used as a reference  point for pricing
    some loans, which may be priced at, above, or below such announced rate. Any
    change in such rate  announced  by Bank of America  shall take effect at the
    opening of business on the day specified in the public  announcement of such
    change.

        "Principal  Amortization  Payment"  means  a  principal  payment  on the
    Tranche A Term Loans as set forth in Section 2.4(d) or on the Tranche B Term
    Loans as set forth in Section 2.5(d).

        "Principal  Amortization  Payment  Date"  means  the  date  a  Principal
    Amortization Payment is due.

        "Property" means any interest in any kind of property or asset,  whether
    real, personal or mixed, or tangible or intangible.

        "Qui Tam  Litigation"  means that  certain qui tam  litigation  filed on
    behalf of the United States of America  against the Borrower,  which,  as of
    the Closing Date,  is being  investigated  by the United  States  Attorney's
    Office in Los Angeles,  California,  as such litigation is further described
    in Schedule 6.9.

        "Register"  shall  have the  meaning  assigned  to such term in  Section
    11.3(c).

        "Regulation T, U, or X" means Regulation T, U or X, respectively, of the
    Board of  Governors  of the Federal  Reserve  System as from time to time in
    effect and any successor to all or a portion thereof.

        "Rental  Equipment"  means all medical  equipment rented to patients for
    use in their homes or held by the Borrower and its Subsidiaries for such use
    and any other rental equipment required in accordance with GAAP to be stated
    as such on the consolidated balance sheet of the Borrower.

        "Reportable Event" means a "reportable event" as defined in Section 4043
    of ERISA with respect to which the notice  requirements to the PBGC have not
    been waived.

        "Required  Lenders" means,  at any time,  Lenders (other than Defaulting
    Lenders)  holding in the  aggregate  more than 50  percent  (50%) of (i) the
    Revolving Commitments (and Participation Interests therein), the outstanding
    Tranche  A  Term  Loans  (and  Participation   Interests  therein)  and  the
    outstanding  Tranche B Term Loans (and  Participation  Interests therein) or
    (ii) if the Revolving  Commitments  have been  terminated,  the  outstanding
    Loans,   LOC  Obligations  and   Participation   Interests   (including  the
    Participation  Interests of the Issuing  Lender in any Letters of Credit and
    the Participation Interests of the Swingline Lender in any Swingline Loans).

        "Requirement  of  Law"  means,  as  to  any  Person,   the  articles  or
    certificate  of  incorporation  and  by-laws  or  other   organizational  or
    governing  documents of such Person, and any law, treaty, rule or regulation
    or final, non-appealable  determination of an arbitrator or a court or other
    Governmental  Authority,  in each case  applicable  to or binding  upon such
    Person or to which any of its material property is subject.

        "Responsible  Officer" means the Chief Executive Officer,  President and
    Chief  Operating  Officer and Executive Vice  President and Chief  Financial
    Officer  (or  principal  accounting  and  finance  officer)  or  other  duly
    authorized officer.

        "Restricted  Payment"  means  (i)  any  dividend  or  other  payment  or
    distribution,  direct or indirect,  on account of any shares of any class of
    Capital  Stock  of any  Consolidated  Party,  now or  hereafter  outstanding
    (including   without   limitation   any  payment  in  connection   with  any
    dissolution, merger, consolidation or disposition involving any Consolidated
    Party),  or to the holders,  in their capacity as such, of any shares of any
    class  of  Capital  Stock  of  any  Consolidated  Party,  now  or  hereafter
    outstanding (other than dividends or distributions  payable in Capital Stock
    of the  applicable  Person or to any Credit Party  (directly  or  indirectly
    through  Subsidiaries)),  (ii) any redemption,  retirement,  sinking fund or
    similar  payment,  purchase  or  other  acquisition  for  value,  direct  or
    indirect,  of any shares of any class of Capital  Stock of any  Consolidated
    Party, now or hereafter outstanding, (iii) any payment made to retire, or to
    obtain the surrender of, any outstanding  warrants,  options or other rights
    to acquire shares of any class of Capital Stock of any  Consolidated  Party,
    now or hereafter outstanding.

        "Revolving   Commitment"   means,  with  respect  to  each  Lender,  the
    commitment of such Lender (i) to make Revolving Loans in accordance with the
    provisions of Section 2.1(a),  (ii) to purchase  Participation  Interests in
    Letters of Credit in accordance  with the  provisions of Section  2.2(c) and
    (iii)  to  purchase  Participation  Interests  in  the  Swingline  Loans  in
    accordance  with the  provisions  of Section 2.3, in an aggregate  principal
    amount not to exceed such Lender's Revolving Committed Amount.

        "Revolving  Committed  Amount"  means  (i) with  regard  to the  Lenders
    collectively,  the  aggregate  maximum  amount of Revolving  Loans as may be
    reduced from time to time as provided in Section 3.4 and (ii) with regard to
    each  Lender,  the amount of such  Lender's  Revolving  Commitment,  as such
    amount may be reduced  from time to time as  provided  in Section  3.4.  The
    initial  Revolving  Committed Amount of each Lender is set forth on Schedule
    2.1(a).

        "Revolving  Loan  Commitment  Percentage"  means,  for each Lender,  the
    percentage  identified  as its Revolving  Commitment  Percentage on Schedule
    2.1(a), as such percentage may be modified in connection with any assignment
    made in accordance with the provisions of Section 11.3.

        "Revolving  Loans"  means  the  Revolving  Loans  made  to the  Borrower
    pursuant to Section 2.1.

        "Revolving Note" or "Revolving  Notes" means the promissory notes of the
    Borrower  in favor of each of the Lenders  evidencing  the  Revolving  Loans
    provided  pursuant  to  Section  2.1,   individually  or  collectively,   as
    appropriate,   as  such   promissory   notes  may  be   amended,   modified,
    supplemented,  extended,  renewed  or  replaced  from  time to  time  and as
    evidenced in the form of Exhibit 2.1(e).

        "S&P" means  Standard & Poor's Ratings Group, a division of McGraw Hill,
    Inc.,  or any  successor or assignee of the business of such division in the
    business of rating securities.

        "Sale and Leaseback Transaction" means any arrangement pursuant to which
    any Consolidated  Party,  directly or indirectly,  becomes liable as lessee,
    guarantor or other  surety with  respect to any lease,  whether an Operating
    Lease or a Capital Lease, of any Property (a) which such Consolidated  Party
    has sold or transferred (or is to sell or transfer) to a Person which is not
    a Consolidated Party or (b) which such Consolidated Party intends to use for
    substantially  the same purpose as any other Property which has been sold or
    transferred (or is to be sold or transferred) by such Consolidated  Party to
    another  Person which is not a  Consolidated  Party in connection  with such
    lease.

        "Securities  Act" means the Securities Act of 1933, as amended,  and all
    regulations issued pursuant thereto.

        "Securities  Exchange Act" means the Securities Exchange Act of 1934, as
    amended, and all regulations issued pursuant thereto.

        "Security  Agreement"  means  the  security  agreement  dated  as of the
    Closing  Date in the form of Exhibit  1.1(b) to be  executed in favor of the
    Agent by each of the Credit  Parties,  as  amended,  modified,  restated  or
    supplemented from time to time.

        "Senior   Subordinated   Notes"  means  those   certain  9  1/2%  Senior
    Subordinated Notes due November 1, 2002.

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

        "Social  Security  Act"  means the Social  Security  Act as set forth in
    Title 42 of the United  States Code, as amended,  and any successor  statute
    thereto,  as interpreted by the rules and regulations issued thereunder,  in
    each case as in effect  from time to time.  References  to  sections  of the
    Social  Security  Act  shall be  construed  also to  refer to any  successor
    sections.

        "Stark I and II" means  Section  1877 of the Social  Security Act as set
    forth at Section  1395nn of Title 42 of the United  States Code, as amended,
    and  any  successor  statute  thereto,  as  interpreted  by  the  rules  and
    regulations issued thereunder, in each case as in effect from time to time.

        "Subordinated  Indebtedness" means up to $200,000,000 of Indebtedness of
    the  Borrower  (a)  having  a  maturity  of not less  than 7  years,  (b) no
    scheduled   amortization   and  (c)   containing   other  terms,   including
    subordination provisions,  reasonably acceptable to the Administrative Agent
    and the Required Lenders.

        "Subsidiary"  means, as to any Person, (a) any corporation more than 50%
    of whose stock of any class or classes having by the terms thereof  ordinary
    voting  power to  elect a  majority  of the  directors  of such  corporation
    (irrespective  of whether  or not at the time,  any class or classes of such
    corporation shall have or might have voting power by reason of the happening
    of any  contingency)  is at the  time  owned  by  such  Person  directly  or
    indirectly through  Subsidiaries,  (b) any partnership,  association,  joint
    venture or other entity in which such person directly or indirectly  through
    Subsidiaries  has more  than a 50%  equity  interest  at any time or (c) any
    other entity whose financial information is consolidated with the Borrower's
    financial statements in accordance with GAAP.

        "Swingline  Commitment"  means the commitment of the Swingline Lender to
    make  Swingline  Loans  in  an  aggregate   principal  amount  at  any  time
    outstanding of up to the Swingline Committed Amount.

        "Swingline  Committed  Amount"  shall have the meaning  assigned to such
    term in Section 2.3(a).

        "Swingline Lender" means Bank of America, N.A.

        "Swingline Loan" shall have the meaning assigned to such term in Section
    2.3(a).

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

        "Taxes" shall have the meaning assigned to such term in Section 3.11(a).

        "Tranche A Term Loan"  shall have the  meaning  assigned to such term in
    Section 2.4(a).

        "Tranche A Term Loan Commitment" means, with respect to each Lender, the
    commitment  of such Lender to make its portion of the Tranche A Term Loan in
    a principal  amount  equal to such  Lender's  Tranche A Term Loan  Committed
    Amount.

        "Tranche  A Term Loan  Committed  Amount"  means (i) with  regard to the
    Lenders  collectively,  the aggregate  amount of the Tranche A Term Loan, as
    referenced in Section 2.4(a) and (ii) with regard to each Lender, the amount
    of such Lender's  Tranche A Term Loan  Commitment,  as set forth on Schedule
    2.1(a).

        "Tranche A Term Loan Percentage"  means, for any Lender,  the percentage
    identified as its Tranche A Term Loan Percentage on Schedule 2.1(a), as such
    percentage  may be  modified  in  connection  with  any  assignment  made in
    accordance with the provisions of Section 11.3.

        "Tranche A Term Note" or  "Tranche A Term  Notes"  means the  promissory
    notes of the Borrower in favor of each Lender  provided  pursuant to Section
    2.4(f) and evidencing the Tranche A Term Loans of such Lender,  individually
    or  collectively,  as appropriate,  as such promissory notes may be amended,
    modified, restated, supplemented, extended, renewed or replaced from time to
    time.

        "Tranche B Term Loan"  shall have the  meaning  assigned to such term in
    Section 2.5(a). "Tranche B Term Loan Commitment" means, with respect to each
    Lender,  the  commitment of such Lender to make its portion of the Tranche B
    Term Loan in a principal  amount equal to such Lender's  Tranche B Term Loan
    Committed  Amount.  "Tranche B Term Loan  Committed  Amount"  means (i) with
    regard to the Lenders  collectively,  the aggregate  amount of the Tranche B
    Term Loan,  as referenced  in Section  2.5(a),  and (ii) with regard to each
    Lender,  the amount of such Lender's Tranche B Term Loan Commitment,  as set
    forth on Schedule 2.1(a).  "Tranche B Term Loan  Percentage"  means, for any
    Lender,  the percentage  identified as its Tranche B Term Loan Percentage on
    Schedule  2.1(a),  as such percentage may be modified in connection with any
    assignment made in accordance with the provisions of Section 11.3.  "Tranche
    B Term Note" or "Tranche B Term  Notes"  means the  promissory  notes of the
    Borrower in favor of each  Lender  provided  pursuant to Section  2.5(f) and
    evidencing  the  Tranche  B Term  Loans  of  such  Lender,  individually  or
    collectively,  as  appropriate,  as such  promissory  notes may be  amended,
    modified, restated, supplemented, extended, renewed or replaced from time to
    time.

        "Unused Revolving Committed Amount" means, for any period, the amount by
    which (a) the then  applicable  Revolving  Committed  Amount exceeds (b) the
    daily average sum for such period of (i) the outstanding aggregate principal
    amount of all Revolving  Loans (but not including any Swingline  Loans) plus
    (ii) the outstanding aggregate principal amount of all LOC Obligations.

        "Voting Stock" means,  with respect to any Person,  Capital Stock issued
    by such  Person  the  holders  of which are  ordinarily,  in the  absence of
    contingencies,  entitled to vote for the election of  directors  (or persons
    performing  similar  functions) of such Person,  even though the right so to
    vote has been suspended by the happening of such a contingency.

        "Wholly Owned Subsidiary" means any Person 100% of whose Voting Stock is
    at the time owned by the  Borrower  directly  or  indirectly  through  other
    Persons  100% of  whose  Voting  Stock  is at the time  owned,  directly  or
    indirectly, by the Borrower.

    1.2 COMPUTATION OF TIME PERIODS AND OTHER DEFINITIONAL PROVISIONS.
    ------------------------------------------------------------------

    For purposes of  computation of periods of time  hereunder,  the word "from"
means  "from and  including"  and the words "to" and  "until"  each mean "to but
excluding."  References  in this Credit  Agreement  to  "Articles",  "Sections",
"Schedules" or "Exhibits" shall be to Articles,  Sections, Schedules or Exhibits
of or to this Credit Agreement unless otherwise specifically provided.

    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  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 Credit Agreement shall (except as otherwise  expressly  provided herein) be
made by application of GAAP applied on a basis  consistent  with the most recent
annual or  quarterly  financial  statements  delivered  pursuant to Section 7.1;
provided,  however,  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)
either the Agent or the Required  Lenders  shall so object in writing  within 60
days after delivery of such financial statements (or after the Lenders have been
informed of the change in GAAP affecting such  financial  statements,  if later,
and the impact of such change),  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

                                CREDIT FACILITIES
                                -----------------

    2.1 REVOLVING LOANS.
    --------------------

        (a) Revolving Commitment. Subject to the terms and conditions hereof and
    in reliance upon the  representations  and warranties set forth herein, each
    Lender  severally  agrees to make  available to the Borrower  such  Lender's
    Revolving  Commitment  Percentage of revolving credit loans requested by the
    Borrower in Dollars  ("Revolving  Loans") from time to time from the Closing
    Date  until  the  Maturity  Date,  or such  earlier  date  as the  Revolving
    Commitments  shall  have  been  terminated  as  provided  herein;  provided,
    however,  that the sum of the  aggregate  outstanding  principal  amount  of
    Revolving Loans shall not exceed ONE HUNDRED MILLION DOLLARS  ($100,000,000)
    (as such  aggregate  maximum  amount  may be  reduced  from  time to time as
    provided  in Section  3.4,  the  "Revolving  Committed  Amount");  provided,
    further,  (A)  with  regard  to  each  Lender  individually,  such  Lender's
    outstanding  Revolving  Loans  shall  not  exceed  such  Lender's  Revolving
    Committed  Amount,  and (B) the sum of the aggregate  outstanding  principal
    amount of Revolving  Loans plus LOC  Obligations  plus Swingline Loans shall
    not exceed the aggregate  Revolving  Committed  Amount.  Revolving Loans may
    consist of Base Rate Loans or Eurodollar Loans, or a combination thereof, as
    the Borrower may request; provided,  however, that no more than 8 Eurodollar
    Loans shall be outstanding  hereunder at any time (it being understood that,
    for purposes hereof,  Eurodollar Loans with different Interest Periods shall
    be considered as separate  Eurodollar  Loans, even if they begin on the same
    date,  although  borrowings,  extensions and conversions  may, in accordance
    with the  provisions  hereof,  be combined  at the end of existing  Interest
    Periods to constitute a new Eurodollar Loan with a single Interest  Period).
    Revolving  Loans  hereunder may be repaid and reborrowed in accordance  with
    the provisions hereof.

        (b) Revolving Loan Borrowings.

            (i) Notice of Borrowing. The Borrower shall request a Revolving Loan
        borrowing by written notice (or  telephonic  notice  promptly  confirmed
        with a written  Notice of  Borrowing)  to the Agent not later  than 2:00
        P.M.  (Charlotte,  North Carolina time) on the Business Day prior to the
        date of the requested  borrowing in the case of Base Rate Loans,  and on
        the third  Business Day prior to the date of the requested  borrowing in
        the case of Eurodollar  Loans.  Each such request for borrowing shall be
        irrevocable  and shall  specify (A) that a Revolving  Loan is requested,
        (B) the date of the requested borrowing (which shall be a Business Day),
        (C) the aggregate  principal amount to be borrowed,  and (D) whether the
        borrowing shall be comprised of Base Rate Loans,  Eurodollar  Loans or a
        combination thereof, and if Eurodollar Loans are requested, the Interest
        Period(s)  therefor.  A form  of  Notice  of  Borrowing  (a  "Notice  of
        Borrowing") is attached as Exhibit 2.1(b). If the Borrower shall fail to
        specify  in any such  Notice of  Borrowing  (I) an  applicable  Interest
        Period  in the case of a  Eurodollar  Loan,  then such  notice  shall be
        deemed to be a request for an Interest  Period of one month, or (II) the
        type of Revolving Loan requested, then such notice shall be deemed to be
        a request for a Base Rate Loan hereunder. The Agent shall give notice to
        each affected  Lender  promptly upon receipt of each Notice of Borrowing
        pursuant to this Section  2.1(b)(i),  the contents thereof and each such
        Lender's share of any borrowing to be made pursuant thereto.

            (ii) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that is
        a Revolving  Loan shall be in a minimum  aggregate  principal  amount of
        $1,000,000 and integral  multiples of $500,000 in excess thereof (or the
        remaining amount of the Revolving Committed Amount, if less).

            (iii)  Advances.  Each  Lender  will make its  Revolving  Commitment
        Percentage of each Revolving  Loan borrowing  available to the Agent for
        the account of the Borrower as specified in Section 3.15(a),  or in such
        other  manner  as the  Agent  may  specify  in  writing,  by  2:00  P.M.
        (Charlotte, North Carolina time) on the date specified in the applicable
        Notice of Borrowing in Dollars and in funds immediately available to the
        Agent. Such borrowing will then be made available to the Borrower by the
        Agent by  crediting  the  account of the  Borrower  on the books of 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.

        (c) Repayment.  The principal amount of all Revolving Loans shall be due
    and  payable in full on the  Maturity  Date,  unless  accelerated
    sooner pursuant to Section 9.2.

        (d) Interest. Subject to the provisions of Section 3.1,

            (i) Base Rate Loans. During such periods as Revolving Loans shall be
        comprised  in whole or in part of Base Rate Loans,  such Base Rate Loans
        shall bear interest at a per annum rate equal to the Adjusted Base Rate.

            (ii) Eurodollar Loans.  During such periods as Revolving Loans shall
        be comprised in whole or in part of Eurodollar  Loans,  such  Eurodollar
        Loans  shall bear  interest  at a per annum  rate equal to the  Adjusted
        Eurodollar Rate.

    Interest on Revolving  Loans shall be payable in arrears on each  applicable
    Interest Payment Date (or at such other times as may be specified herein).

        (e) Revolving  Notes.  The Revolving Loans made by each Lender may, upon
    the request of a Lender, be evidenced by a duly executed  promissory note of
    the  Borrower to such Lender in an original  principal  amount equal to such
    Lender's Revolving  Commitment  Percentage of the Revolving Committed Amount
    and in substantially the form of Exhibit 2.1(e).

    2.2 LETTER OF CREDIT SUBFACILITY.
    ---------------------------------

        (a) Issuance. Subject to the terms and conditions hereof and in reliance
    upon the representations and warranties set forth herein, the Issuing Lender
    agrees to issue,  and each  Lender  with a  Revolving  Commitment  severally
    agrees to  participate  in the  issuance by the Issuing  Lender of,  standby
    Letters of Credit in Dollars  from time to time from the Closing  Date until
    the date thirty (30) days prior to the  Maturity  Date as the  Borrower  may
    request, in a form acceptable to the Issuing Lender; provided, however, that
    (i) the LOC  Obligations  outstanding  shall not at any time  exceed  TWENTY
    MILLION DOLLARS  ($20,000,000) (the "LOC Committed Amount") and (ii) the sum
    of the aggregate  outstanding  principal  amount of Revolving Loans plus LOC
    Obligations  plus Swingline Loans shall not at any time exceed the aggregate
    Revolving  Committed  Amount. No Letter of Credit shall (x) have an original
    expiry date more than one year from the date of issuance  (provided that any
    such Letter of Credit may contain customary "evergreen"  provisions pursuant
    to which the expiry date is automatically extended by a specific time period
    unless the Issuing Lender gives notice to the  beneficiary of such Letter of
    Credit at least a  specified  time  period  prior to the expiry date then in
    effect) or (y) as  originally  issued or as  extended,  have an expiry  date
    extending  beyond the date thirty (30) days prior to the Maturity Date. Each
    Letter of Credit shall comply with the related LOC  Documents.  The issuance
    and expiry dates of each Letter of Credit shall be a Business Day.

        (b) Notice and  Reports.  The  request  for the  issuance of a Letter of
    Credit shall be  submitted  by the  Borrower to the Issuing  Lender at least
    five (5) Business Days prior to the requested date of issuance.  The Issuing
    Lender  will,  at  least   quarterly  and  more   frequently  upon  request,
    disseminate to each of the Lenders a detailed report  specifying the Letters
    of Credit  which are then  issued  and  outstanding  and any  activity  with
    respect  thereto which may have occurred since the date of the prior report,
    and including therein, among other things, the beneficiary,  the face amount
    and the expiry date,  as well as any payment or  expirations  which may have
    occurred.

        (c)  Participation.  Each  Lender  with  a  Revolving  Commitment,  upon
    issuance of a Letter of Credit (or, in the case of each  Existing  Letter of
    Credit,  on the Closing  Date),  shall be deemed to have  purchased  without
    recourse a Participation  Interest from the Issuing Lender in such Letter of
    Credit and the obligations  arising  thereunder and any collateral  relating
    thereto,  in each  case in an  amount  equal  to its pro  rata  share of the
    obligations  under such Letter of Credit (based on the respective  Revolving
    Commitment Percentages of the Lenders) and shall absolutely, unconditionally
    and  irrevocably  assume and be obligated  to pay to the Issuing  Lender and
    discharge when due, its pro rata share of the obligations arising under such
    Letter of Credit.  Without  limiting  the scope and nature of each  Lender's
    Participation  Interest  in any  Letter of Credit,  to the  extent  that the
    Issuing Lender has not been reimbursed by the Borrower as required hereunder
    or under  any such  Letter of  Credit,  each  such  Lender  shall pay to the
    Issuing Lender its pro rata share of such  unreimbursed  drawing in same day
    funds on the day of  notification  by the Issuing Lender of an  unreimbursed
    drawing  pursuant to the  provisions of clause (d) below.  The obligation of
    each  Lender to so  reimburse  the  Issuing  Lender  shall be  absolute  and
    unconditional  and shall not be affected by the occurrence of a Default,  an
    Event of Default or any other  occurrence or event.  Any such  reimbursement
    shall not relieve or  otherwise  impair the  obligation  of the  Borrower to
    reimburse  the  Issuing  Lender  under any Letter of Credit,  together  with
    interest as hereinafter provided.

        (d)  Reimbursement.  In the event of any  drawing  under  any  Letter of
    Credit,  the Issuing  Lender will promptly  notify the Borrower.  Unless the
    Borrower  shall  immediately  notify the Issuing  Lender  that the  Borrower
    intends to otherwise  reimburse  the Issuing  Lender for such  drawing,  the
    Borrower shall be deemed to have requested that the Lenders make a Revolving
    Loan in the  amount of the  drawing as  provided  in clause (e) below on the
    related Letter of Credit,  the proceeds of which will be used to satisfy the
    related  reimbursement  obligations.  The Borrower promises to reimburse the
    Issuing Lender on the day of drawing under any Letter of Credit (either with
    the proceeds of a Revolving  Loan  obtained  hereunder or otherwise) in same
    day funds.  If the Borrower  shall fail to reimburse  the Issuing  Lender as
    provided  hereinabove,  the  unreimbursed  amount of such drawing shall bear
    interest  at a per annum rate equal to the  Adjusted  Base Rate plus 2%. The
    Borrower's  reimbursement   obligations  hereunder  shall  be  absolute  and
    unconditional under all circumstances  irrespective of any rights of setoff,
    counterclaim  or defense to payment the  Borrower  may claim or have against
    the Issuing Lender, the Agent, the Lenders, the beneficiary of the Letter of
    Credit drawn upon or any other  Person,  including  without  limitation  any
    defense  based on any failure of the  Borrower or any other  Credit Party to
    receive   consideration   or   the   legality,   validity,   regularity   or
    unenforceability  of the Letter of Credit.  The Issuing Lender will promptly
    notify the other Lenders of the amount of any unreimbursed  drawing and each
    Lender shall promptly pay to the Agent for the account of the Issuing Lender
    in Dollars and in immediately  available  funds, the amount of such Lender's
    pro rata share of such unreimbursed  drawing.  Such payment shall be made on
    the day such notice is  received  by such Lender from the Issuing  Lender if
    such notice is received at or before 2:00 P.M.  (Charlotte,  North  Carolina
    time),  and  otherwise  such  payment  shall be made at or before 12:00 Noon
    (Charlotte, North Carolina time) on the Business Day next succeeding the day
    such  notice is  received.  If such  Lender  does not pay such amount to the
    Issuing Lender in full upon such request,  such Lender shall, on demand, pay
    to the Agent for the  account of the Issuing  Lender  interest on the unpaid
    amount  during the period  from the date of such  drawing  until such Lender
    pays such amount to the Issuing Lender in full at a rate per annum equal to,
    if paid  within  two (2)  Business  Days of the date  that  such  Lender  is
    required to make payments of such amount pursuant to the preceding sentence,
    the Federal Funds Rate and thereafter at a rate equal to the Base Rate. Each
    Lender's  obligation  to make such  payment to the Issuing  Lender,  and the
    right of the  Issuing  Lender to receive  the same,  shall be  absolute  and
    unconditional,  shall not be affected  by any  circumstance  whatsoever  and
    without  regard  to  the  termination  of  this  Credit   Agreement  or  the
    Commitments hereunder, the existence of a Default or Event of Default or the
    acceleration of the obligations of the Borrower  hereunder and shall be made
    without  any  offset,   abatement,   withholding  or  reduction  whatsoever.
    Simultaneously  with the  making  of each  such  payment  by a Lender to the
    Issuing  Lender,  such Lender shall,  automatically  and without any further
    action  on the  part  of the  Issuing  Lender  or  such  Lender,  acquire  a
    Participation  Interest in an amount  equal to such payment  (excluding  the
    portion of such payment  constituting  interest owing to the Issuing Lender)
    in the related unreimbursed drawing portion of the LOC Obligation and in the
    interest  thereon and in the related LOC  Documents,  and shall have a claim
    against the Borrower with respect thereto.

        (e) Repayment  with  Revolving  Loans.  On any day on which the Borrower
    shall have  requested,  or been deemed to have  requested,  a Revolving Loan
    advance to  reimburse  a drawing  under a Letter of Credit,  the Agent shall
    give  notice to the  Lenders  that a Revolving  Loan has been  requested  or
    deemed  requested  by the Borrower to be made in  connection  with a drawing
    under a Letter of Credit,  in which case a Revolving Loan advance  comprised
    of Base Rate  Loans (or  Eurodollar  Loans to the extent  the  Borrower  has
    complied with the  procedures  of Section  2.1(b)(i)  with respect  thereto)
    shall be  immediately  made to the Borrower by all Lenders  (notwithstanding
    any termination of the  Commitments  pursuant to Section 9.2) pro rata based
    on  the  respective   Revolving   Commitment   Percentages  of  the  Lenders
    (determined  before  giving  effect to any  termination  of the  Commitments
    pursuant to Section 9.2) and the proceeds  thereof shall be paid directly to
    the Issuing Lender for application to the respective LOC  Obligations.  Each
    such  Lender  hereby  irrevocably  agrees to make its pro rata share of each
    such Revolving Loan  immediately  upon any such request or deemed request in
    the  amount,  in the  manner  and on the  date  specified  in the  preceding
    sentence  notwithstanding  (i) the amount of such  borrowing  may not comply
    with the minimum amount for advances of Revolving Loans  otherwise  required
    hereunder,  (ii)  whether any  conditions  specified in Section 5.2 are then
    satisfied,  (iii) whether a Default or an Event of Default then exists, (iv)
    failure for any such request or deemed request for Revolving Loan to be made
    by the time  otherwise  required  hereunder,  (v)  whether  the date of such
    borrowing is a date on which Revolving  Loans are otherwise  permitted to be
    made hereunder or (vi) any termination of the Commitments  relating  thereto
    immediately prior to or contemporaneously with such borrowing.  In the event
    that any Revolving  Loan cannot for any reason be made on the date otherwise
    required  above  (including,   without  limitation,   as  a  result  of  the
    commencement  of a proceeding  under the Bankruptcy Code with respect to the
    Borrower or any other Credit  Party),  then each such Lender  hereby  agrees
    that it shall  forthwith  purchase  (as of the  date  such  borrowing  would
    otherwise  have  occurred,  but adjusted for any payments  received from the
    Borrower on or after such date and prior to such  purchase) from the Issuing
    Lender such  Participation  Interests in the  outstanding LOC Obligations as
    shall  be  necessary  to  cause  each  such  Lender  to  share  in such  LOC
    Obligations  ratably  (based  upon  the  respective   Revolving   Commitment
    Percentages  of  the  Lenders   (determined  before  giving  effect  to  any
    termination of the Commitments  pursuant to Section 9.2)),  provided that at
    the time any purchase of Participation  Interests  pursuant to this sentence
    is actually  made,  the  purchasing  Lender  shall be required to pay to the
    Issuing Lender, to the extent not paid to the Issuing Lender by the Borrower
    in accordance with the terms of clause (d) above,  interest on the principal
    amount of Participation  Interests purchased for each day from and including
    the day upon which such  borrowing  would  otherwise  have  occurred  to but
    excluding the date of payment for such Participation  Interests, at the rate
    equal to, if paid within two (2) Business  Days of the date of the Revolving
    Loan advance,  the Federal Funds Rate, and thereafter at a rate equal to the
    Base Rate.

        (f)   Designation   of   Consolidated   Parties  as   Account   Parties.
    Notwithstanding anything to the contrary set forth in this Credit Agreement,
    including  without  limitation  Section  2.2(a),  a Letter of Credit  issued
    hereunder  may contain a statement  to the effect that such Letter of Credit
    is issued for the account of any  Subsidiary of the Borrower,  provided that
    notwithstanding  such  statement,  the Borrower  shall be the actual account
    party for all  purposes of this Credit  Agreement  for such Letter of Credit
    and such statement shall not affect the Borrower's reimbursement obligations
    hereunder with respect to such Letter of Credit.

        (g) Renewal, Extension. The renewal or extension of any Letter of Credit
    shall,  For  purposes  hereof,  be treated in all  respects  the same as the
    issuance of a new Letter of Credit hereunder.

        (h) Uniform  Customs  and  Practices.  The  Issuing  Lender may have the
    Letters  of Credit be  subject  to The  Uniform  Customs  and  Practice  for
    Documentary Credits (the "UCP") or the International  Standby Practices 1998
    (the  "ISP98"),  in either case as  published as of the date of issue by the
    International  Chamber of Commerce,  in which case the UCP or the ISP98,  as
    applicable,  may be incorporated  therein and deemed in all respects to be a
    part thereof.

        (i)    Indemnification;    Nature   of    Issuing    Lender's    Duties.

            (i) In addition to its other obligations under this Section 2.2, the
        Borrower  hereby  agrees to pay,  and protect,  indemnify  and save each
        Lender (including the Issuing Lender) harmless from and against, any and
        all claims, demands,  liabilities,  damages,  losses, costs, charges and
        expenses  (including  reasonable  attorneys'  fees) that such Lender may
        incur or be subject to as a consequence,  direct or indirect, of (A) the
        issuance  of any Letter of Credit or (B) the  failure of such  Lender to
        honor a  drawing  under a Letter  of  Credit  as a result  of any act or
        omission, whether rightful or wrongful, of any present or future de jure
        or de facto  government  or  Governmental  Authority  (all  such acts or
        omissions, herein called "Government Acts").

            (ii) As between the Borrower and the Lenders  (including the Issuing
        Lender),  the Borrower shall assume all risks of the acts,  omissions or
        misuse of any  Letter of Credit by the  beneficiary  thereof.  No Lender
        (including the Issuing Lender) shall be  responsible:  (A) for the form,
        validity,  sufficiency,  accuracy,  genuineness  or legal  effect of any
        document  submitted by any party in connection  with the application for
        and issuance of any Letter of Credit, even if it should in fact prove to
        be in any or all respects invalid, insufficient,  inaccurate, fraudulent
        or  forged;  (B) for  the  validity  or  sufficiency  of any  instrument
        transferring or assigning or purporting to transfer or assign any Letter
        of Credit or the rights or benefits  thereunder or proceeds thereof,  in
        whole or in part,  that may prove to be invalid or  ineffective  for any
        reason;   (C)  for  errors,   omissions,   interruptions  or  delays  in
        transmission  or delivery of any messages,  by mail,  cable,  telegraph,
        telex or otherwise,  whether or not they be in cipher;  (D) for any loss
        or delay in the  transmission  or otherwise of any document  required in
        order to make a drawing  under a Letter  of  Credit  or of the  proceeds
        thereof;  and (E) for any  consequences  arising from causes  beyond the
        control of such Lender,  including,  without limitation,  any Government
        Acts. None of the above shall affect,  impair, or prevent the vesting of
        the Issuing Lender's rights or powers hereunder.

            (iii) In  furtherance  and  extension  and not in  limitation of the
        specific  provisions  hereinabove set forth, any action taken or omitted
        by any Lender  (including  the Issuing  Lender),  under or in connection
        with any  Letter  of  Credit or the  related  certificates,  if taken or
        omitted in the absence of gross  negligence,  willful  misconduct or bad
        faith,  shall not put such Lender under any  resulting  liability to the
        Borrower or any other  Credit  Party;  provided,  that the Issuing  Bank
        shall make  payment  under a Letter of Credit only in respect of a draft
        that strictly conforms to the requirements  thereof. It is the intention
        of the parties that this Credit Agreement shall be construed and applied
        to protect and  indemnify  each Lender  (including  the Issuing  Lender)
        against  any and all risks  involved  in the  issuance of the Letters of
        Credit, all of which risks are hereby assumed by the Borrower (on behalf
        of itself  and each of the other  Credit  Parties),  including,  without
        limitation,  any and all  Government  Acts.  No  Lender  (including  the
        Issuing  Lender)  shall,  in any way,  be liable for any failure by such
        Lender or anyone else to pay any drawing under any Letter of Credit as a
        result of any  Government  Acts or any other cause beyond the control of
        such Lender.

            (iv)   Nothing  in  this   clause  (i)  is  intended  to  limit  the
        reimbursement obligations of the Borrower contained in clause (d) above.
        The  obligations of the Borrower under this clause (i) shall survive the
        termination of this Credit Agreement.  No act or omission of any current
        or prior  beneficiary  of a Letter of Credit  shall in any way affect or
        impair the  rights of the  Lenders  (including  the  Issuing  Lender) to
        enforce any right, power or benefit under this Credit Agreement.

            (v)  Notwithstanding  anything  to the  contrary  contained  in this
        clause (i),  the Borrower  shall have no  obligation  to  indemnify  any
        Lender  (including  the  Issuing  Lender) in  respect  of any  liability
        incurred by such Lender (A) arising  solely out of the gross  negligence
        or  willful  misconduct  of such  Lender,  as  determined  by a court of
        competent  jurisdiction,  or (B) caused by such Lender's  failure to pay
        under  any  Letter  of  Credit  after  presentation  to it of a  request
        strictly  complying  with the terms  and  conditions  of such  Letter of
        Credit, as determined by a court of competent jurisdiction,  unless such
        payment is prohibited by any law, regulation, court order or decree.

        (j)  Responsibility  of Issuing Lender.  It is expressly  understood and
    agreed that the  obligations of the Issuing Lender  hereunder to the Lenders
    are only those  expressly  set forth in this Credit  Agreement  and that the
    Issuing Lender shall be entitled to assume that the conditions precedent set
    forth in  Section  5.2 have been  satisfied  unless it shall  have  acquired
    actual  knowledge that any such condition  precedent has not been satisfied;
    provided,  however,  that  nothing  set forth in this  Section  2.2 shall be
    deemed to  prejudice  the right of any  Lender to recover  from the  Issuing
    Lender any amounts  made  available  by such  Lender to the  Issuing  Lender
    pursuant to this Section 2.2 in the event that the payment with respect to a
    Letter of Credit  constituted gross negligence or willful  misconduct on the
    part of the Issuing Lender.

        (k) Conflict with LOC  Documents.  In the event of any conflict  between
    this Credit  Agreement and any LOC Document  (including any letter of credit
    application), this Credit Agreement shall control.

    2.3  SWINGLINE LOANS.
    ---------------------

        (a) Swingline Commitment. Subject to the terms and conditions hereof and
    in reliance upon the  representations  and warranties  herein set forth, the
    Swingline  Lender,  in its  individual  capacity,  agrees  to  make  certain
    revolving  credit  loans  to the  Borrower  (each a  "Swingline  Loan"  and,
    collectively, the "Swingline Loans") from time to time from the Closing Date
    until the Maturity Date for the purposes  hereinafter  set forth;  provided,
    however,  (i) the aggregate  principal amount of Swingline Loans outstanding
    at any time shall not  exceed  TWENTY  MILLION  DOLLARS  ($20,000,000)  (the
    "Swingline  Committed Amount"),  and (ii) the sum of the aggregate principal
    amount of Revolving Loans  outstanding plus LOC Obligations plus obligations
    in respect of Swingline  Loans  outstanding at any time shall not exceed the
    aggregate  Revolving  Committed  Amount.  Swingline Loans hereunder shall be
    made as a Base Rate Loan in accordance  with the  provisions of this Section
    2.3, and may be repaid and  reborrowed  in  accordance  with the  provisions
    hereof.

        (b) Swingline Loan Advances.

            (i) Notices; Disbursement. Whenever the Borrower desires a Swingline
        Loan  advance  hereunder,  the Borrower  shall give  written  notice (or
        telephone notice promptly  confirmed in writing) to the Swingline Lender
        not  later  than  2:00  P.M.  (Charlotte,  North  Carolina  time) on the
        Business Day of the requested  Swingline Loan advance.  Each such notice
        shall be irrevocable and shall specify (A) that a Swingline Loan advance
        is  requested,  (B) the date of the  requested  Swingline  Loan  advance
        (which  shall be a  Business  Day) and (C) the  principal  amount of the
        Swingline Loan advance requested. Each Swingline Loan shall be made as a
        Base Rate Loan and shall have such  maturity date as set forth in clause
        (iii)  below.  The  Swingline  Lender  shall  make each  Swingline  Loan
        available  to the  Borrower  by 3:00 P.M.,  (Charlotte,  North  Carolina
        time),  on the Business Day of the  requested  Borrowing.  The Swingline
        Lender shall initiate the transfer of funds  representing  the Swingline
        Loan advance to the  Borrower by 3:00 P.M.  (Charlotte,  North  Carolina
        time) on the Business Day of the requested borrowing.

            (ii)  Minimum  Amount.  Each  Swingline  Loan  shall be in a minimum
        principal  amount of $100,000  and in integral  multiples of $100,000 in
        excess  thereof  (or the  remaining  amount of the  Swingline  Committed
        Amount, if less).

            (iii)  Repayment of Swingline  Loans.  The  principal  amount of all
        Swingline  Loans  shall be due and  payable on the earlier of (A) a date
        that is seven (7) Business Days from the date of advance  thereof or (B)
        the Maturity  Date.  The Swingline  Lender may, at any time, in its sole
        discretion,  by written  notice to the Borrower and the Lenders,  demand
        repayment of its Swingline Loans by way of a Revolving Loan advance,  in
        which case the  Borrower  shall be deemed to have  requested a Revolving
        Loan advance  comprised  solely of Base Rate Loans in the amount of such
        Swingline Loans; provided, however, that any such demand shall be deemed
        to have been given one Business  Day prior to the  Maturity  Date and on
        the date of the occurrence of any Event of Default  described in Section
        9.1 and upon acceleration of the Indebtedness hereunder and the exercise
        of remedies in  accordance  with the  provisions  of Section  9.2.  Each
        Lender hereby irrevocably agrees to make its pro rata share of each such
        Revolving Loan in the amount, in the manner and on the date specified in
        the preceding sentence  notwithstanding (i) the amount of such borrowing
        may not comply with the minimum  amount for advances of Revolving  Loans
        otherwise required hereunder,  (ii) whether any conditions  specified in
        Section  5.2 are then  satisfied,  (iii)  whether a Default  or Event of
        Default then exists,  (iv) failure of any such request or deemed request
        for Revolving Loan to be made by the time otherwise required  hereunder,
        (v)  whether  the date of such  borrowing  is a date on which  Revolving
        Loans  are  otherwise  permitted  to  be  made  hereunder  of  (vi)  any
        termination of the Commitments  relating thereto immediately prior to or
        contemporaneously  with such borrowing.  In the event that any Revolving
        Loan cannot for any reason be made on the date otherwise  required above
        (including,  without  limitation,  as a result of the  commencement of a
        proceeding under the Bankruptcy Code with respect to the Borrower), then
        each Lender  hereby agrees that it shall  forthwith  purchase (as of the
        date such borrowing would otherwise have occurred,  but adjusted for any
        payments  received  from the Borrower on or after such date and prior to
        such  purchase)  from the Swingline  Lender such  participations  in the
        outstanding  Swingline  Loans as shall be  necessary  to cause each such
        Lender to share in such Swingline Loans ratably based upon its Revolving
        Loan Commitment  Percentage of the Revolving Committed Amount,  provided
        that (A) all interest  payable on the  Swingline  Loans shall be for the
        account  of  the  Swingline  Lender  until  the  date  as of  which  the
        respective  participation  is purchased and (B) at the time any purchase
        of  participations  pursuant  to this  sentence is  actually  made,  the
        purchasing  Lender shall be required to pay to the  Swingline  Lender in
        accordance with the terms of subsection (c)(ii) hereof,  interest on the
        principal  amount  of  participation  purchased  for  each  day from and
        including  the day  upon  which  such  borrowing  would  otherwise  have
        occurred to but excluding the date of payment for such participation, at
        the rate equal to the Federal Funds Rate.

        (c) Interest on Swingline Loans.

            (i) Subject to the  provisions of Section 3.1, each  Swingline  Loan
        shall bear  interest  at the rate per annum equal to the  Adjusted  Base
        Rate in accordance with the provisions of Section 2.3(b).

            (ii) Interest on Swingline Loans shall be payable in arrears on each
        applicable  Interest  Payment  Date  (or at such  other  times as may be
        specified herein).

    2.4  TRANCHE A TERM LOAN.
    -------------------------

        (a)  Tranche A Term  Commitment.  Subject  to the  terms and  conditions
    hereof and in reliance upon the  representations  and  warranties  set forth
    herein each Lender severally agrees to make available to the Borrower on the
    Closing Date such Lender's  Tranche A Term Loan Percentage of a term loan in
    Dollars (the "Tranche A Term Loan") in the aggregate principal amount of ONE
    HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000) (the "Tranche A Term Loan
    Committed  Amount").  The Tranche A Term Loan may consist of Base Rate Loans
    or Eurodollar Loans, or a combination  thereof, as the Borrower may request;
    provided, however, that no more than 5 Eurodollar Loans shall be outstanding
    hereunder  at any time (it  being  understood  that,  for  purposes  hereof,
    Eurodollar  Loans with  different  Interest  Periods  shall be considered as
    separate  Eurodollar  Loans,  even if they begin on the same date,  although
    borrowings,   extensions  and  conversions   may,  in  accordance  with  the
    provisions  hereof,  be combined at the end of existing  Interest Periods to
    constitute a new Eurodollar  Loan with a single  Interest  Period).  Amounts
    repaid on the Tranche A Term Loan may not be reborrowed.

        (b)  Borrowing  Procedures.  The Borrower  shall  submit an  appropriate
    Notice of Borrowing to the Agent not later than 2:00 P.M. (Charlotte,  North
    Carolina  time) on the Business Day prior to the Closing Date,  with respect
    to the portion of the  Tranche A Term Loan  initially  consisting  of a Base
    Rate Loan,  or on the third  Business  Day prior to the Closing  Date,  with
    respect to the portion of the Tranche A Term Loan  initially  consisting  of
    one or more Eurodollar  Loans. Such Notice of Borrowing shall be irrevocable
    and shall specify (i) that the funding of a Tranche A Term Loan is requested
    and (ii)  whether the funding of the Tranche A Term Loan shall be  comprised
    of Base  Rate  Loans,  Eurodollar  Loans or a  combination  thereof,  and if
    Eurodollar  Loans are requested,  the Interest  Period(s)  therefor.  If the
    Borrower shall fail to deliver such Notice of Borrowing to the Agent by 2:00
    P.M. (Charlotte, North Carolina time) on the third Business Day prior to the
    Closing  Date,  then the full  amount of the  Tranche  A Term Loan  shall be
    disbursed  on the Closing  Date as a Base Rate Loan.  Each Lender shall make
    its Tranche A Term Loan  Percentage of the Tranche A Term Loan  available to
    the  Agent  for the  account  of the  Borrower  at the  office  of the Agent
    specified  in  Schedule  2.1(a),  or at such  other  office as the Agent may
    designate in writing, by 2:00 P.M.  (Charlotte,  North Carolina time) on the
    Closing Date in Dollars and in funds immediately available to the Agent.

        (c) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that is part
    of the Tranche A Term Loan shall be in an aggregate principal amount that is
    not less than  $1,000,000  and  integral  multiples of $500,000 (or the then
    remaining principal balance of the Tranche A Term Loan, if less).

        (d)  Repayment  of  Tranche A Term  Loan.  The  principal  amount of the
    Tranche A Term Loan shall be repaid in consecutive  quarterly  installments,
    as set  forth  below,  payable  on the last  Business  Day of each  calendar
    quarter,  commencing  with the quarter ending  December 31, 2001, and on the
    Maturity Date, unless accelerated sooner pursuant to Section 9.2:

                   Quarter Ending                       Installment Amount
                   --------------                       ------------------

                  December 31, 2001                         $5,500,000
                   March 31, 2002                           $5,500,000
                    June 30, 2002                           $5,500,000
                 September 30, 2002                         $5,500,000
                  December 31, 2002                         $6,000,000
                   March 31, 2003                           $6,000,000
                    June 30, 2003                           $6,000,000
                 September 30, 2003                         $6,000,000
                  December 31, 2003                         $6,000,000
                   March 31, 2004                           $6,000,000
                    June 30, 2004                           $6,000,000
                 September 30, 2004                         $6,000,000
                  December 31, 2004                         $6,750,000
                   March 31, 2005                           $6,750,000
                    June 30, 2005                           $6,750,000
                 September 30, 2005                         $6,750,000
                  December 31, 2005                         $7,000,000
                   March 31, 2006                           $7,000,000
                    June 30, 2006                           $7,000,000
                    Maturity Date                           $7,000,000

        (e)  Interest.  Subject to the  provisions of Section 3.1, the Tranche A
    Term Loan shall bear interest at a per annum rate equal to:

            (i) Base Rate Loans.  During such periods as the Tranche A Term Loan
        shall be  comprised  in whole or in part of Base Rate  Loans,  such Base
        Rate Loans shall bear interest at a per annum rate equal to the Adjusted
        Base Rate.

            (ii)  Eurodollar  Loans.  During such  periods as the Tranche A Term
        Loan shall be comprised in whole or in part of  Eurodollar  Loans,  such
        Eurodollar  Loans  shall bear  interest at a per annum rate equal to the
        Adjusted Eurodollar Rate.

    Interest  on the  Tranche A Term Loan  shall be  payable  in arrears on each
    applicable Interest Payment Date (or at such other times as may be specified
    herein).

        (f) Tranche A Term Notes. The portion of the Tranche A Term Loan made by
    each  Lender  may,  upon the  request of a Lender,  be  evidenced  by a duly
    executed  promissory  note of the  Borrower  to such  Lender in an  original
    principal  amount equal to such Lender's  Tranche A Term Loan  Percentage of
    the Tranche A Term Loan and substantially in the form of Exhibit 2.4(f).

        2.5 TRANCHE B TERM LOAN.
        ------------------------

        (a)  Tranche B Term  Commitment.  Subject  to the  terms and  conditions
    hereof and in reliance upon the  representations  and  warranties  set forth
    herein,  each Lender  severally  agrees to make available to the Borrower on
    the Closing Date such Lender's Tranche B Term Loan Percentage of a term loan
    in Dollars (the "Tranche B Term Loan") in the aggregate  principal amount of
    ONE HUNDRED SEVENTY-FIVE MILLION DOLLARS ($175,000,000) (the "Tranche B Term
    Loan  Committed  Amount").  The Tranche B Term Loan may consist of Base Rate
    Loans or Eurodollar  Loans,  or a combination  thereof,  as the Borrower may
    request;  provided,  however,  that no more than 5 Eurodollar Loans shall be
    outstanding  hereunder at any time (it being  understood  that, for purposes
    hereof, Eurodollar Loans with different Interest Periods shall be considered
    as separate  Eurodollar Loans, even if they begin on the same date, although
    borrowings,   extensions  and  conversions   may,  in  accordance  with  the
    provisions  hereof,  be combined at the end of existing  Interest Periods to
    constitute a new Eurodollar  Loan with a single  Interest  Period).  Amounts
    repaid on the Tranche B Term Loan may not be reborrowed.

        (b)  Borrowing  Procedures.  The Borrower  shall  submit an  appropriate
    Notice of Borrowing to the Agent not later than 2:00 P.M. (Charlotte,  North
    Carolina  time) on the Business Day prior to the Closing Date,  with respect
    to the portion of the  Tranche B Term Loan  initially  consisting  of a Base
    Rate Loan,  or on the third  Business  Day prior to the Closing  Date,  with
    respect to the portion of the Tranche B Term Loan  initially  consisting  of
    one or more Eurodollar  Loans. Such Notice of Borrowing shall be irrevocable
    and shall specify (i) that the funding of a Tranche B Term Loan is requested
    and (ii)  whether the funding of the Tranche B Term Loan shall be  comprised
    of Base  Rate  Loans,  Eurodollar  Loans or a  combination  thereof,  and if
    Eurodollar  Loans are requested,  the Interest  Period(s)  therefor.  If the
    Borrower shall fail to deliver such Notice of Borrowing to the Agent by 2:00
    P.M. (Charlotte, North Carolina time) on the third Business Day prior to the
    Closing  Date,  then the full  amount of the  Tranche  B Term Loan  shall be
    disbursed  on the Closing  Date as a Base Rate Loan.  Each Lender shall make
    its Tranche B Term Loan  Percentage of the Tranche B Term Loan  available to
    the  Agent  for the  account  of the  Borrower  at the  office  of the Agent
    specified  in  Schedule  2.1(a),  or at such  other  office as the Agent may
    designate in writing, by 2:00 P.M.  (Charlotte,  North Carolina time) on the
    Closing Date in Dollars and in funds immediately available to the Agent.

        (c) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that is part
    of the Tranche B Term Loan shall be in an aggregate principal amount that is
    not less than  $5,000,000 and integral  multiples of $1,000,000 (or the then
    remaining principal balance of the Tranche B Term Loan, if less).

        (d)  Repayment  of  Tranche B Term  Loan.  The  principal  amount of the
    Tranche B Term Loan shall be repaid in (i) twenty (20) consecutive quarterly
    installments of $437,500,  payable on the last Business Day of each calendar
    quarter,  commencing with the quarter ending December 31, 2001 and (ii) four
    (4) consecutive  installments  of $41,562,500,  payable on the last Business
    Day of each calendar  quarter,  commencing  with the quarter ending December
    31, 2006, and on the Maturity Date,  unless  accelerated  sooner pursuant to
    Section 9.2.

        (e)  Interest.  Subject to the  provisions of Section 3.1, the Tranche B
    Term Loan shall bear interest at a per annum rate equal to:

            (i) Base Rate Loans.  During such periods as the Tranche B Term Loan
        shall be  comprised  in whole or in part of Base Rate  Loans,  such Base
        Rate Loans shall bear interest at a per annum rate equal to the Adjusted
        Base Rate.

            (ii)  Eurodollar  Loans.  During such  periods as the Tranche B Term
        Loan shall be comprised in whole or in part of  Eurodollar  Loans,  such
        Eurodollar  Loans  shall bear  interest at a per annum rate equal to the
        Adjusted Eurodollar Rate.

    Interest  on  the Tranche B Term  Loan shall  be  payable in arrears on each
    applicable Interest Payment Date (or at such other times as may be specified
    herein).

        (f) Tranche B Term Notes. The portion of the Tranche B Term Loan made by
    each  Lender  may,  upon the  request of a Lender,  be  evidenced  by a duly
    executed  promissory  note of the  Borrower  to such  Lender in an  original
    principal  amount equal to such Lender's  Tranche B Term Loan  Percentage of
    the Tranche B Term Loan and substantially in the form of Exhibit 2.5(f).


                                    SECTION 3

                     GENERAL PROVISIONS APPLICABLE TO LOANS
                     --------------------------------------

    3.1 DEFAULT RATE.
    -----------------

    Upon the occurrence, and during the continuance,  of an Event of Default, at
the election of the Required  Lenders,  (i) the  principal of and, to the extent
permitted  by law,  overdue  interest on the Loans and any other  amounts  owing
hereunder or under the other Credit  Documents  shall bear interest,  payable on
demand,  at a per annum rate 2% greater  than the rate which would  otherwise be
applicable (or if no rate is applicable, whether in respect of interest, fees or
other  amounts,  then the  Adjusted  Base Rate  plus 2%) and (ii) the  Letter of
Credit Fee shall accrue at a per annum rate 2% greater than the rate which would
otherwise be applicable.

    3.2 EXTENSION AND CONVERSION.
    -----------------------------

    The Borrower shall have the option,  on any Business Day, to extend existing
Loans into a subsequent  permissible  Interest  Period or to convert  Loans into
Loans of another  interest  rate  type;  provided,  however,  that (i) except as
provided in Section 3.8,  Eurodollar Loans may be converted into Base Rate Loans
or extended as Eurodollar Loans for new Interest Periods only on the last day of
the Interest Period applicable thereto, (ii) without the consent of the Required
Lenders,  Eurodollar Loans may be extended, and Base Rate Loans may be converted
into  Eurodollar  Loans,  only  if no  Event  of  Default  has  occurred  and is
continuing on the date of extension or  conversion,  (iii) Loans extended as, or
converted into, Eurodollar Loans shall be subject to the terms of the definition
of  "Interest  Period"  set forth in  Section  1.1 and shall be in such  minimum
amounts as provided  in, with respect to Revolving  Loans,  Section  2.1(b)(ii),
with respect to the Tranche A Term Loan, Section 2.4(c), or, with respect to the
Tranche B Term Loan, Section 2.5(c), (iv) no more than 18 Eurodollar Loans shall
be  outstanding  hereunder at any time (it being  understood  that, for purposes
hereof,  Eurodollar Loans with different Interest Periods shall be considered as
separate  Eurodollar  Loans,  even if they  begin  on the  same  date,  although
borrowings,  extensions and  conversions  may, in accordance with the provisions
hereof,  be combined at the end of existing Interest Periods to constitute a new
Eurodollar Loan with a single Interest Period), (v) any request for extension or
conversion of a Eurodollar  Loan which shall fail to specify an Interest  Period
shall be  deemed to be a request  for an  Interest  Period of one month and (vi)
Swingline  Loans may not be extended or converted  pursuant to this Section 3.2.
Each such extension or conversion  shall be effected by the Borrower by giving a
Notice of  Extension/Conversion  (or  telephonic  notice  promptly  confirmed in
writing) to the office of the Agent specified in Schedule 11.1, or at such other
office as the Agent may  designate  in writing,  prior to 2:00 P.M.  (Charlotte,
North Carolina time) on the Business Day prior to, in the case of the conversion
of a Eurodollar  Loan into a Base Rate Loan, and on the third Business Day prior
to, in the case of the  extension of a Eurodollar  Loan as, or  conversion  of a
Base Rate Loan into, a Eurodollar  Loan,  the date of the proposed  extension or
conversion,  specifying the date of the proposed  extension or  conversion,  the
Loans to be so extended or  converted,  the types of Loans into which such Loans
are to be converted and, if appropriate,  the applicable  Interest  Periods with
respect thereto.  Each request for extension or conversion shall be irrevocable.
In the event the  Borrower  fails to  request  extension  or  conversion  of any
Eurodollar  Loan in accordance  with this Section 3.2, or any such conversion or
extension  is not  permitted  or required by this  Credit  Agreement,  then such
Eurodollar  Loan shall be  automatically  converted into a Base Rate Loan at the
end of the Interest Period applicable thereto.  The Agent shall give each Lender
notice as promptly as practicable  of any such proposed  extension or conversion
affecting any Loan.

    3.3 PREPAYMENTS.
    ----------------

        (a) Voluntary  Prepayments.  The Borrower shall have the right to prepay
    Loans in whole or in part from time to time;  provided,  however,  that each
    partial  prepayment  of Loans  (other than  Swingline  Loans)  shall be in a
    minimum principal amount of $5,000,000 and integral  multiples of $1,000,000
    in excess thereof (or the then remaining  principal balance of the Revolving
    Loans, the Tranche A Term Loan or the Tranche B Term Loan, as applicable, if
    less).  Subject to the foregoing  terms,  amounts prepaid under this Section
    3.3(a)  shall be applied as the  Borrower  may elect;  provided  that if the
    Borrower shall fail to specify, voluntary prepayments shall be applied first
    to  Revolving  Loans  and then  ratably  to the  Tranche A Term Loan and the
    Tranche  B Term  Loan (in  each  case  ratably  to the  remaining  Principal
    Amortization  Payments  thereof),  in each case first to Base Rate Loans and
    then to Eurodollar Loans in direct order of Interest Period maturities.  All
    prepayments  under this Section 3.3(a) shall be subject to Section 3.12, but
    otherwise  without  premium or  penalty,  and,  other  than with  respect to
    Revolving  Loans,  shall be accompanied by interest on the principal  amount
    prepaid through the date of prepayment.

        (b) Mandatory Prepayments.

            (i) (A) Revolving  Committed  Amount. If at any time, the sum of the
        aggregate  outstanding  principal  amount of  Revolving  Loans  plus LOC
        Obligations  plus Swingline  Loans shall exceed the aggregate  Revolving
        Committed  Amount,  the Borrower  immediately shall prepay the Revolving
        Loans  and  (after  all   Revolving   Loans  have  been   repaid)   cash
        collateralize the LOC Obligations,  in an amount sufficient to eliminate
        such excess.

                (B) LOC Committed  Amount. If  at  any  time,  the  sum  of  the
        aggregate  principal  amount of LOC  Obligations  shall  exceed  the LOC
        Committed Amount, the  Borrower  immediately  shall  cash  collateralize
        the LOC Obligations in an amount sufficient to eliminate such excess.

            (ii)(A) Asset Dispositions.  Immediately upon the occurrence of any
        Asset Disposition  Prepayment Event, the Borrower shall prepay the Loans
        in an  aggregate  amount  equal to 100% of the Net Cash  Proceeds of the
        related Asset  Disposition  not applied (or caused to be applied) by the
        Credit  Parties during the related  Application  Period to make Eligible
        Reinvestments  as  contemplated  by the terms of  Section  8.5(f)  (such
        prepayment to be applied as set forth in clause (v) below).

                (B) Casualty and Condemnation   Events.   Immediately  upon  the
        occurrence of any event requiring  application of any insurance proceeds
        to  the  prepayment  of  Loans  (and  cash   collateralization   of  LOC
        Obligations)  pursuant to Section 7.6(b),  the Borrower shall prepay the
        Loans in the amount required by such Section 7.6(b) (such  prepayment to
        be applied as set forth in clause (v) below).

            (iii) Debt  Issuances.  If the Leverage  Ratio, on a pro forma basis
        before and after  giving  effect to such Debt  Issuance,  is equal to or
        greater than 2.0 to 1.0,  immediately  upon receipt by any  Consolidated
        Party of proceeds from any Debt Issuance,  the Borrower shall prepay the
        Loans in an aggregate  amount  equal to 50% of the Net Cash  Proceeds of
        such Debt Issuance (such prepayment to be applied as set forth in clause
        (v) below).

            (iv) Equity  Issuances.  Immediately  upon receipt by a Consolidated
        Party of proceeds from any Equity  Issuance,  the Borrower  shall prepay
        the Loans in an aggregate  amount equal to 50% of the Net Cash  Proceeds
        of such Equity  Issuance (such  prepayment to be applied as set forth in
        clause (v) below).

            (v) Application of Mandatory Prepayments. All amounts required to be
        paid  pursuant to this Section  3.3(b) shall be applied as follows:  (A)
        with respect to all amounts prepaid pursuant to Section 3.3(b)(i)(A), to
        Revolving  Loans and (after all  Revolving  Loans have been repaid) to a
        cash collateral account in respect of LOC Obligations,  (B) with respect
        to all  amounts  prepaid  pursuant  to Section  3.3(b)(i)(B),  to a cash
        collateral  account in respect of LOC  Obligations,  (C) with respect to
        all amounts prepaid  pursuant to Section  3.3(b)(ii),  first pro rata to
        the Tranche A Term Loan (ratably to the remaining Principal Amortization
        Payments  thereof) and the Tranche B Term Loan (ratably to the remaining
        Principal  Amortization  Payments thereof),  second (after the Tranche A
        Term Loan and  Tranche B Term Loan have been  repaid)  to the  Revolving
        Loans and third (after all  Revolving  Loans have been repaid) to a cash
        collateral  account in respect of LOC Obligations  (with a corresponding
        reduction in the  Revolving  Committed  Amount in an amount equal to all
        amounts  applied to the Revolving Loans pursuant to this clause (C)) and
        (D) with respect to all amounts prepaid pursuant to Section  3.3(b)(iii)
        or (iv), pro rata to the Tranche A Term Loan and the Tranche B Term Loan
        (in each case ratably to the remaining Principal  Amortization  Payments
        thereof).  Within the  parameters of the  applications  set forth above,
        prepayments  shall be  applied  first  to Base  Rate  Loans  and then to
        Eurodollar  Loans in direct  order of Interest  Period  maturities.  All
        prepayments  under this Section 3.3(b) shall be subject to Section 3.12,
        but otherwise  without  premium or penalty,  and shall be accompanied by
        interest on the principal amount prepaid through the date of prepayment.

        3.4 TERMINATION AND REDUCTION OF REVOLVING COMMITTED AMOUNT.
        ------------------------------------------------------------

        (a) Voluntary Reductions. The Borrower may from time to time permanently
    reduce or terminate the Revolving  Committed  Amount in whole or in part (in
    minimum  aggregate  amounts  of  $5,000,000  or  in  integral  multiples  of
    $1,000,000 in excess thereof (or, if less, the full remaining  amount of the
    then applicable  Revolving Committed Amount)) upon five Business Days' prior
    written  notice to the Agent;  provided,  however,  no such  termination  or
    reduction  shall  be  made  which  would  cause  the  sum of  the  aggregate
    outstanding  principal  amount of Revolving Loans plus LOC Obligations  plus
    Swingline  Loans  to  exceed  the  Revolving   Committed   Amount,   unless,
    concurrently  with such  termination or reduction,  the Revolving  Loans are
    repaid to the extent  necessary  to eliminate  such excess.  The Agent shall
    promptly  notify each affected  Lender of receipt by the Agent of any notice
    from the Borrower pursuant to this Section 3.4(a).

        (b) Term Loan  Commitments.  The Tranche A Term Loan  Commitment of each
    Lender,  if any, shall  automatically  terminate at such time as such Lender
    shall have made available to the Borrower such Lender's share of the Tranche
    A Term Loan, and the Tranche B Term Loan Commitment of each Lender,  if any,
    shall  automatically  terminate  at such time as such Lender shall have made
    available to the Borrower such Lender's share of the Tranche B Term Loan.

        (c) Mandatory  Reductions.  The Revolving Committed Amount automatically
    shall be permanently  reduced from time to time in accordance with the terms
    of Section 3.3(b)(v).

        (d) Maturity Date. The Revolving Commitments, the LOC Commitment and the
    Swingline Commitment shall automatically terminate on the Maturity Date

        (e) General.  The Borrower shall pay to the Agent for the account of the
    Lenders in accordance with the terms of Section 3.5(a),  on the date of each
    termination or reduction of the Revolving  Committed Amount,  the Commitment
    Fee accrued through the date of such  termination or reduction on the amount
    of the Revolving Committed Amount so terminated or reduced.

    3.5 FEES.
    ---------

        (a) Commitment Fee. In consideration of the Revolving Commitments of the
    Lenders hereunder, the Borrower promises to pay to the Agent for the account
    of  each  Lender  a fee  (the  "Commitment  Fee")  on the  Unused  Revolving
    Committed  Amount  computed  at a per  annum  rate for each day  during  the
    applicable Commitment Fee Calculation Period (hereinafter defined) at a rate
    equal  to the  Applicable  Percentage  in  effect  from  time to  time.  The
    Commitment Fee shall commence to accrue on the Closing Date and shall be due
    and  payable  in  arrears  on the last  Business  Day of each  March,  June,
    September and December (and on any date that the Revolving  Committed Amount
    is reduced and on the Maturity Date) for the immediately  preceding  quarter
    (or portion  thereof)  (each such  quarter or portion  thereof for which the
    Commitment  Fee  is  payable  hereunder  being  herein  referred  to  as  an
    "Commitment Fee Calculation Period"), beginning with the first of such dates
    to occur after the Closing Date.

        (b) Letter of Credit Fees.

            (i) Letter of Credit Issuance Fee. In  consideration of the issuance
        of Letters of Credit  hereunder,  the  Borrower  promises  to pay to the
        Agent for the account of each Lender a fee (the  "Letter of Credit Fee")
        on such Lender's  Revolving  Commitment  Percentage of the average daily
        maximum  amount  available  to be drawn under each such Letter of Credit
        computed  at a per annum rate for each day from the date of  issuance to
        the date of expiration equal to the Applicable Percentage. The Letter of
        Credit Fee will be payable quarterly in arrears on the last Business Day
        of  each  March,  June,  September  and  December  for  the  immediately
        preceding quarter (or a portion thereof).

            (ii)  Issuing  Lender Fees . In addition to the Letter of Credit Fee
        payable  pursuant to clause (i) above,  the Borrower  promises to pay to
        the Agent for the account of the Issuing Lender  without  sharing by the
        other  Lenders  (i) a letter  of  credit  fronting  fee of 0.125% on the
        average daily maximum amount  available to be drawn under each Letter of
        Credit  computed  at a per  annum  rate  for  each  day from the date of
        issuance to the date of expiration  (which fronting fee shall be payable
        quarterly  in  arrears on the last  Business  Day of each  March,  June,
        September  and  December  for the  immediately  preceding  quarter (or a
        portion  thereof)) and (ii) the  customary  charges from time to time of
        the Issuing  Lender with respect to the issuance,  amendment,  transfer,
        administration, cancellation and conversion of, and drawings under, such
        Letters of Credit.

        (c) Administrative  Fees. The Borrower promises to pay to the Agent, for
    its own account,  for the account of the Issuing  Lender and for the account
    of Banc of America  Securities  LLC, as applicable,  the fees referred to in
    the Agent's Fee Letter.

    3.6 CAPITAL ADEQUACY.
    ---------------------

    If any Lender has determined that the adoption or the becoming effective of,
or any change in, or any change by any Governmental  Authority,  central bank or
comparable agency charged with the  interpretation or administration  thereof in
the  interpretation or administration of, any applicable law, rule or regulation
regarding  capital  adequacy in any case  occurring  after the date  hereof,  or
change after the date hereof in the manner of compliance by such Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority,  central bank or comparable  agency, has or would
have the  effect of  reducing  the rate of return on such  Lender's  capital  or
assets as a consequence of its  commitments or obligations  hereunder to a level
below  that  which  such  Lender  could  have  achieved  but for such  adoption,
effectiveness,  change or compliance  (taking into  consideration  such Lender's
policies with respect to capital  adequacy),  then, if such Lender  generally is
assessing  such amounts to its borrowers  that are  similarly  situated with the
Borrower,  upon notice  from such Lender to the  Borrower,  which  notice  shall
include a  calculation  of such  additional  amounts in reasonable  detail,  the
Borrower  shall be  obligated  to pay to such Lender such  additional  amount or
amounts as will compensate such Lender for such reduction. Each determination by
any such  Lender of amounts  owing under this  Section  shall,  absent  manifest
error, be conclusive and binding on the parties hereto.

    3.7 LIMITATION ON EURODOLLAR LOANS.
    -----------------------------------

    If on or prior to the first day of any  Interest  Period for any  Eurodollar
Loan:

        (a) 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

        (b)  the  Required  Lenders  determine  (which  determination  shall  be
    conclusive)  and  notify  the  Agent  that  the  Eurodollar  Rate  will  not
    adequately and fairly reflect the cost to the Lenders 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 additional  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  Eurodollar  Loans or Convert such  Eurodollar  Loans into Base Rate
Loans in accordance with the terms of this Credit Agreement.

    3.8 ILLEGALITY.
    ---------------

    Notwithstanding  any other provision of this Credit 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 3.10 shall be
applicable).

    3.9 REQUIREMENTS OF LAW.
    ------------------------

    If the adoption of any applicable law, rule, or regulation, or any change in
any applicable law, rule, or regulation,  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, in
any case after the date hereof or change  after the date hereof in the manner of
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:

        (i) shall subject such Lender (or its Applicable  Lending Office) to any
    tax, duty, or other charge with respect to any Eurodollar  Loans, its Notes,
    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 Credit  Agreement or its Notes 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);

        (ii) shall impose, modify, or deem applicable any reserve (including any
    reserve  imposed by the Board of  Governors of the Federal  Reserve  System,
    special deposit, capital,  assessment, or similar requirement against assets
    of,  deposits with or for the account of, or credit  extended by, any Lender
    or (or its  Applicable  Lending  Office),  including the  Commitment of such
    Lender hereunder; or

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

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 Credit  Agreement or
its Notes with respect to any Eurodollar  Loans,  then, if such Lender generally
is assessing such amounts to its borrowers that are similarly  situated with the
Borrower, 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  Section  3.9,  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
3.10 shall be applicable);  provided that such  suspension  shall not affect the
right of such Lender to receive the compensation so requested. 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,  and
reflecting  the  computation  thereof  in  reasonable  detail,  which  shall  be
conclusive in the absence of manifest  error. In determining  such amount,  such
Lender may use any reasonable  averaging and attribution  methods.  The Borrower
shall not be required to  compensate  a Lender  pursuant to this Section 3.9 for
any increased costs or reductions  incurred more than 180 days prior to the date
that such Lender  notifies the Borrower of the change of law giving rise to such
increased  costs  or  reductions  and  of  such  Lender's   intention  to  claim
compensation  therefor;  provided that, if the change of law giving rise to such
increased costs or reductions is retroactive,  then such 180-day period referred
to above shall be extended to include the period of retroactive  effect thereof.
The  provisions  of this  Section 3.9 shall  survive  repayment of the loans and
obligations  under the  Credit  Documents  and  termination  of the  Commitments
hereunder.

    3.10 TREATMENT OF AFFECTED LOANS.
    ---------------------------------

    If the obligation of any Lender to make any Eurodollar  Loan or to Continue,
or to Convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant
to Section  3.7,  3.8 or 3.9 hereof,  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)  for such  Eurodollar  Loans (or,  in the case of a
Conversion, 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 3.7, 3.8 or 3.9 hereof that
gave rise to such Conversion no longer exist:

        (a) 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

        (b) 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 Base Rate Loans of such Lender  that would  otherwise  be  Converted
    into Eurodollar Loans shall remain as Base Rate Loans.

If such Lender gives notice to the Borrower  (with a copy to the Agent) that the
circumstances  specified in Section 3.7, 3.8 or 3.9 hereof that gave rise to the
Conversion of such Lender's  Eurodollar  Loans  pursuant to this Section 3.10 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,  interest  rate  basis,  and  Interest
Periods) in accordance with their respective Commitments. The provisions of this
Section  3.10 shall  survive  repayment of the loans and  obligations  under the
Credit Documents and termination of the Commitments hereunder.

    3.11 TAXES.
    -----------

        (a) Any and all  payments  by any Credit  Party to or for the account of
    any Lender or the Agent  hereunder or under any other Credit  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 net  income  and  franchise  taxes
    imposed,  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 any Credit Party shall be required
    by law to deduct any Taxes from or in respect of any sum payable  under this
    Credit  Agreement or any other  Credit  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 3.11) such Lender or the Agent receives an amount
    equal to the sum it would have  received had no such  deductions  been made,
    (ii) such Credit Party shall make such  deductions,  (iii) such Credit Party
    shall pay the full amount  deducted to the  relevant  taxation  authority or
    other  authority in  accordance  with  applicable  law, and (iv) such Credit
    Party  shall  furnish to the Agent,  at its  address  referred to in Section
    11.1,  the  original or a  certified  copy of a receipt  evidencing  payment
    thereof.

        (b) 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
    Credit  Agreement  or any other  Credit  Document or from the  execution  or
    delivery  of, or  otherwise  with  respect to, this Credit  Agreement or any
    other Credit Document (hereinafter referred to as "Other Taxes").

        (c) 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  3.11) 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.

        (d)  Each  Lender  that is not a  United  States  person  under  Section
    7701(a)(30)  of the  Code,  on or  prior to the  date of its  execution  and
    delivery of this Credit  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  W-8 BEN or W-8  ECI,  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 to zero the
    rate of  withholding  tax on payments of  interest  or  certifying  that the
    income receivable pursuant to this Credit 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/or (iii) any other form or
    certificate  required by any taxing  authority  (including  any  certificate
    required  by  Sections  871(h) and  881(c) of the  Internal  Revenue  Code),
    certifying that such Lender is entitled to an exemption from tax on payments
    pursuant to this Credit Agreement or any of the other Credit Documents.

        (e) For any period with  respect to which a Lender has failed to provide
    the Borrower  and the Agent with the  appropriate  form  pursuant to Section
    3.11(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  Section  3.11(a)  or 3.11(b)  with  respect to Taxes
    imposed by the United States; provided, however, that should a Lender, which
    is otherwise exempt from 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.

        (f) If any Credit Party is required to pay additional  amounts to or for
    the account of any Lender  pursuant to this Section  3.11,  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.

        (g) Without  prejudice  to the  survival of any other  agreement  of the
    Credit  Parties  hereunder,  the  agreements  and  obligations of the Credit
    Parties  contained in this Section 3.11 shall  survive the  repayment of the
    Loans, LOC Obligations and other  obligations under the Credit Documents and
    the termination of the Commitments hereunder.

    3.12 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  (excluding  loss of
anticipated profits) incurred by it as a result of:

        (a) any payment,  prepayment, or Conversion of a Eurodollar Loan for any
    reason  (including,  without  limitation,  the  acceleration  of  the  Loans
    pursuant to Section  9.2) on a date other than the last day of the  Interest
    Period for such Loan; or

        (b) any  failure  by the  Borrower  for any reason  (including,  without
    limitation, the failure of any condition precedent specified in Section 5 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 Credit Agreement.

With respect to Eurodollar  Loans,  such  indemnification  may include an amount
equal to the  excess,  if any,  of (a) the amount of  interest  which would have
accrued on the amount so prepaid,  or not so borrowed,  Converted or  Continued,
for the period from the date of such  prepayment  or of such  failure to borrow,
Convert or Continue to the last day of the  applicable  Interest  Period (or, in
the case of a failure to borrow,  Convert or Continue,  the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest  for such  Eurodollar  Loans  provided  for herein  (excluding,
however, the Applicable Percentage included therein, if any) over (b) the amount
of interest (as  reasonably  determined by such Lender) which would have accrued
to such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank  Eurodollar  market. The covenants of
the Borrower set forth in this Section 3.12 shall  survive the  repayment of the
Loans, LOC Obligations and other  obligations under the Credit Documents and the
termination of the Commitments hereunder.

    3.13 PRO RATA TREATMENT.
    ------------------------

    Except to the extent otherwise provided herein:

        (a) Loans.  Each Loan,  each payment or (subject to the terms of Section
    3.3)  prepayment  of  principal  of any  Loan or  reimbursement  obligations
    arising from drawings  under Letters of Credit,  each payment of interest on
    the Loans or reimbursement  obligations  arising from drawings under Letters
    of Credit,  each payment of Commitment  Fees,  each payment of the Letter of
    Credit  Fee,  each  reduction  of the  Revolving  Committed  Amount and each
    conversion  or extension of any Loan,  shall be allocated pro rata among the
    Lenders  in  accordance  with  the  respective  principal  amounts  of their
    outstanding  Loans of the  applicable  type and  Participation  Interests in
    Loans of the applicable type and Letters of Credit.

        (b) Advances. No Lender shall be responsible for the failure or delay by
    any other Lender in its  obligation to make its ratable share of a borrowing
    hereunder;  provided, however, that the failure of any Lender to fulfill its
    obligations  hereunder shall not relieve any other Lender of its obligations
    hereunder.  Unless the Agent shall have been notified by any Lender prior to
    the date of any requested borrowing that such Lender does not intend to make
    available  to the Agent its ratable  share of such  borrowing  to be made on
    such  date,  the Agent may  assume  that such  Lender  has made such  amount
    available  to the  Agent on the  date of such  borrowing,  and the  Agent in
    reliance upon such  assumption,  may (in its sole discretion but without any
    obligation to do so) make available to the Borrower a corresponding  amount.
    If such corresponding amount is not in fact made available to the Agent, the
    Agent shall be able to recover such  corresponding  amount from such Lender.
    If such Lender does not pay such  corresponding  amount  forthwith  upon the
    Agent's demand  therefor,  the Agent will promptly notify the Borrower,  and
    the Borrower shall immediately pay such  corresponding  amount to the Agent.
    The Agent shall also be entitled to recover from the Lender or the Borrower,
    as the case may be, interest on such corresponding amount in respect of each
    day from the date such corresponding  amount was made available by the Agent
    to the  Borrower to the date such  corresponding  amount is recovered by the
    Agent at a per annum rate equal to (i) from the  Borrower at the  applicable
    rate for the  applicable  borrowing  pursuant to the Notice of Borrowing and
    (ii) from a Lender at the Federal Funds Rate.

    3.14 SHARING OF PAYMENTS.
    -------------------------

    The Lenders agree among  themselves that, in the event that any Lender shall
obtain payment in respect of any Loan, LOC  Obligations or any other  obligation
owing to such Lender under this Credit Agreement through the exercise of a right
of setoff,  banker's lien or counterclaim,  or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other  security or interest
arising from, or in lieu of, such secured  claim,  received by such Lender under
any applicable bankruptcy,  insolvency or other similar law or otherwise,  or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit  Agreement,  such Lender shall  promptly  purchase from the other
Lenders a  Participation  Interest  in such  Loans,  LOC  Obligations  and other
obligations in such amounts,  and make such other adjustments from time to time,
as shall  be  equitable  to the end  that all  Lenders  share  such  payment  in
accordance with their  respective  ratable shares as provided for in this Credit
Agreement.  The  Lenders  further  agree among  themselves  that if payment to a
Lender  obtained  by such  Lender  through  the  exercise  of a right of setoff,
banker's lien,  counterclaim  or other event as aforesaid  shall be rescinded or
must  otherwise be restored,  each Lender which shall have shared the benefit of
such payment shall, by repurchase of a Participation  Interest theretofore sold,
return  its  share  of that  benefit  (together  with its  share of any  accrued
interest  payable with respect  thereto) to each Lender whose payment shall have
been  rescinded or otherwise  restored.  The Borrower  agrees that any Lender so
purchasing such a Participation Interest may, to the fullest extent permitted by
law,  exercise  all  rights  of  payment,  including  setoff,  banker's  lien or
counterclaim,  with respect to such  Participation  Interest as fully as if such
Lender were a holder of such Loan, LOC  Obligations  or other  obligation in the
amount of such Participation Interest. Except as otherwise expressly provided in
this  Credit  Agreement,  if any Lender  shall fail to remit to the Agent or any
other Lender an amount  payable by such Lender to the Agent or such other Lender
pursuant to this  Credit  Agreement  on the date when such  amount is due,  such
payments  shall be made together  with  interest  thereon for each date from the
date such  amount is due until the date such amount is paid to the Agent or such
other Lender at a rate per annum equal to the Federal  Funds Rate.  If under any
applicable  bankruptcy,  insolvency or other similar law, any Lender  receives a
secured  claim in lieu of a setoff to which  this  Section  3.14  applies,  such
Lender shall, to the extent practicable,  exercise its rights in respect of such
secured claim in a manner  consistent  with the rights of the Lenders under this
Section 3.14 to share in the benefits of any recovery on such secured claim.

        3.15 PAYMENTS, COMPUTATIONS, ETC.
        ---------------------------------

        (a) Generally.  Except as otherwise  specifically  provided herein,  all
    payments  hereunder  shall be made to the Agent in  Dollars  in  immediately
    available funds, without setoff,  deduction,  counterclaim or withholding of
    any kind, at the Agent's office  specified in Schedule 2.1(a) not later than
    2:00 P.M.  (Charlotte,  North Carolina time) on the date when due.  Payments
    received  after such time shall be deemed to have been  received on the next
    succeeding Business Day. The Agent may (but shall not be obligated to) debit
    the  amount  of any  such  payment  which  is not  made by such  time to any
    ordinary  deposit  account  of  the  Borrower  or  any  other  Credit  Party
    maintained  with the Agent (with notice to the Borrower or such other Credit
    Party).  The  Borrower  shall,  at the time it makes any payment  under this
    Credit  Agreement,  specify to the Agent the Loans, LOC  Obligations,  Fees,
    interest or other  amounts  payable by the Borrower  hereunder to which such
    payment is to be applied  (and in the event that it fails so to specify,  or
    if such application would be inconsistent  with the terms hereof,  the Agent
    shall distribute such payment to the Lenders in such manner as the Agent may
    determine to be appropriate in respect of obligations  owing by the Borrower
    hereunder,  subject  to the  terms  of  Section  3.13(a)).  The  Agent  will
    distribute  such payments to such  Lenders,  if any such payment is received
    prior to 2:00 P.M.  (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  will  distribute  such  payment  to  such  Lenders  on the  next
    succeeding  Business Day.  Whenever any payment hereunder shall be stated to
    be due on a day which is not a Business  Day, the due date thereof  shall be
    extended to the next succeeding Business Day (subject to accrual of interest
    and Fees  for the  period  of such  extension),  except  that in the case of
    Eurodollar Loans, if the extension would cause the payment to be made in the
    next following  calendar  month,  then such payment shall instead be made on
    the next  preceding  Business Day.  Except as expressly  provided  otherwise
    herein,  all computations of interest and fees shall be made on the basis of
    actual  number of days elapsed over a year of 360 days,  except with respect
    to  computation  of interest  on Base Rate Loans  which shall be  calculated
    based on a year of 365 or 366 days, as  appropriate.  Interest  shall accrue
    from and include the date of borrowing, but exclude the date of payment.

        (b) Allocation of Payments After Event of Default.  Notwithstanding  any
    other  provisions  of this  Credit  Agreement  to the  contrary,  after  the
    occurrence and during the  continuance  of an Event of Default,  all amounts
    collected  or  received  by the Agent or any Lender on account of the Credit
    Party  Obligations or any other amounts  outstanding under any of the Credit
    Documents or in respect of the Collateral shall be paid over or delivered as
    follows:

            FIRST,  to the  payment of all  reasonable  out-of-pocket  costs and
        expenses  (including without limitation  reasonable  attorneys' fees) of
        the Agent in connection  with  enforcing the rights of the Lenders under
        the Credit Documents and any protective  advances made by the Agent with
        respect  to  the  Collateral  under  or  pursuant  to the  terms  of the
        Collateral Documents;

            SECOND, to payment of any fees owed to the Agent;

            THIRD,  to  the  payment  of all of  the  Credit  Party  Obligations
        consisting of accrued fees and interest;

            FOURTH,  to the payment of the outstanding  principal  amount of the
        Credit   Party    Obligations    (including    the   payment   or   cash
        collateralization of the outstanding LOC Obligations);

            FIFTH,  to the  payment of all  reasonable  out-of-pocket  costs and
        expenses (including without limitation,  reasonable  attorneys' fees) of
        each of the Lenders in  connection  with  enforcing its rights under the
        Credit   Documents  or  otherwise  with  respect  to  the  Credit  Party
        Obligations owing to such Lender;

            SIXTH, to all other Credit Party  Obligations and other  obligations
        which shall have become due and payable  under the Credit  Documents  or
        otherwise and not repaid  pursuant to clauses  "FIRST"  through  "FIFTH"
        above; and

            SEVENTH,  to the payment of the surplus,  if any, to whomever may be
        lawfully entitled to receive such surplus.

    In carrying out the foregoing,  (i) amounts received shall be applied in the
    numerical  order provided until  exhausted  prior to application to the next
    succeeding category;  (ii) each of the Lenders shall receive an amount equal
    to its pro rata share  (based on the  proportion  that the then  outstanding
    Loans and LOC  Obligations  held by such Lender bears to the aggregate  then
    outstanding  Loans and LOC  Obligations) of amounts  available to be applied
    pursuant to clauses "THIRD",  "FOURTH", "FIFTH" and "SIXTH" above; and (iii)
    to the extent that any amounts available for distribution pursuant to clause
    "FOURTH"  above  are  attributable  to the  issued  but  undrawn  amount  of
    outstanding  Letters of Credit, such amounts shall be held by the Agent in a
    cash  collateral  account and applied (A) first,  to  reimburse  the Issuing
    Lender from time to time for any  drawings  under such Letters of Credit and
    (B) then,  following the  expiration of all Letters of Credit,  to all other
    obligations of the types described in clauses "FOURTH",  "FIFTH" and "SIXTH"
    above in the manner provided in this Section 3.15(b).

    3.16 EVIDENCE OF DEBT.
    ----------------------

        (a) Each Lender shall  maintain an account or accounts  evidencing  each
    Loan made by such Lender to the Borrower  from time to time,  including  the
    amounts of principal and interest  payable and paid to such Lender from time
    to time  under this  Credit  Agreement.  Each  Lender  will make  reasonable
    efforts to maintain  the accuracy of its account or accounts and to promptly
    update its account or accounts from time to time, as necessary.

        (b) The Agent shall maintain the Register  pursuant to Section  11.3(c),
    and a subaccount for each Lender,  in which Register and subaccounts  (taken
    together) shall be recorded (i) the amount, type and Interest Period of each
    such Loan  hereunder,  (ii) the amount of any  principal or interest due and
    payable or to become due and payable to each Lender  hereunder and (iii) the
    amount of any sum received by the Agent hereunder from or for the account of
    any  Credit  Party and each  Lender's  share  thereof.  The Agent  will make
    reasonable  efforts to maintain the accuracy of the subaccounts  referred to
    in the preceding  sentence and to promptly update such subaccounts from time
    to time, as necessary.

        (c)  The  entries  made  in  the  accounts,   Register  and  subaccounts
    maintained  pursuant to clause (b) of this Section 3.16 (and,  if consistent
    with the entries of the Agent,  clause (a)) shall be prima facie evidence of
    the existence and amounts of the  obligations of the Credit Parties  therein
    recorded;  provided, however, that the failure of any Lender or the Agent to
    maintain any such account, such Register or such subaccount,  as applicable,
    or any error  therein,  shall not in any manner affect the obligation of the
    Credit Parties to repay the Credit Party Obligations owing to such Lender.

    3.17 REPLACEMENT OF AFFECTED LENDERS.
    -------------------------------------

    If any Lender having a Revolving  Commitment  becomes a Defaulting Lender or
otherwise  defaults  in its  Revolving  Commitment  or if  any  Lender  is  owed
increased costs under Section 3.6, Section 3.8, Section 3.9, or, or the Borrower
is required to make any payments  under  Section 3.11 to any Lender in excess of
those to the other Lenders,  the Borrower  shall have the right,  if no Event of
Default then exists, to replace such Lender (the "Replaced  Lender") with one or
more  other  Eligible  Assignee  or  Eligible  Assignees,  none  of  whom  shall
constitute a Defaulting  Lender at the time of such  replacement  (collectively,
the "Replacement  Lender") reasonably acceptable to the Agent, provided that (i)
at the time of any  replacement  pursuant to this  Section  3.17,  the  Replaced
Lender and  Replacement  Lender shall enter into an Assignment and Acceptance in
the form of Exhibit  11.3(b),  pursuant to which the  Replacement  Lender  shall
acquire  at  par  all  of  the  Commitments   and  outstanding   Loans  of,  and
participation  in Letters of Credit and Swingline  Loans by, the Replaced Lender
and the Replaced Lender shall assign its  Commitments,  Loans and  Participation
Interests to the  Replacement  Lender and (ii) all  obligations  of the Borrower
owing to the Replaced  Lender  (including,  without  limitation,  such increased
costs and excluding those specifically  described in clause (i) above in respect
of which the assignment  purchase price has been, or is concurrently being paid)
shall  be  paid  in  full  to  such  Replaced  Lender   concurrently  with  such
replacement. Upon the execution of the assignment documentation,  the payment of
amounts  referred to in clauses (i) and (ii) above and, if so  requested  by the
Replacement  Lender,  delivery to the Replacement Lender of the appropriate Note
or Notes executed by the Borrower,  the Replacement Lender shall become a Lender
hereunder and the Replaced Lender shall cease to constitute a Lender  hereunder,
except with respect to  indemnification  provisions under this Agreement,  which
shall  survive  as to such  Replaced  Lender.  Notwithstanding  anything  to the
contrary contained above, (1) the Lender that acts as the Issuing Lender may not
be  replaced  hereunder  at any time that it has  Letters of Credit  outstanding
hereunder unless arrangements  satisfactory to the Issuing Lender (including the
furnishing  of a back-up  standby  letter of credit in form and  substance,  and
issued by an issuer  satisfactory  to such Issuing  Lender or the  depositing of
cash  collateral  into a cash  collateral  account  maintained with the Agent in
amounts and pursuant to  arrangements  satisfactory to such Issuing Lender) have
been made with respect to such outstanding  Letters of Credit and (2) the Lender
that acts as the Agent may not be replaced  hereunder  except in accordance with
the terms of Section 10.9. The Replaced  Lender shall be required to deliver for
cancellation  its  applicable  Notes,  if any,  to be  canceled  on the  date of
replacement,  or if any such Note is lost or unavailable,  such other assurances
or indemnification therefor as the Borrower may reasonably request.


                                    SECTION 4

                                    GUARANTY
                                    --------

    4.1 THE GUARANTY.
    -----------------

    Each of the  Guarantors  hereby  jointly and  severally  guarantees  to each
Lender, each Affiliate of a Lender that enters into a Hedging Agreement, and the
Agent as hereinafter  provided, as primary obligor and not as surety, the prompt
payment of the Credit  Party  Obligations  in full when due  (whether  at stated
maturity,  as a mandatory  prepayment,  by  acceleration,  as a  mandatory  cash
collateralization  or otherwise)  strictly in accordance with the terms thereof.
The Guarantors  hereby further agree that if any of the Credit Party Obligations
are not paid in full  when due  (whether  at  stated  maturity,  as a  mandatory
prepayment,   by  acceleration,   as  a  mandatory  cash   collateralization  or
otherwise),  the Guarantors will, jointly and severally,  promptly pay the same,
without any demand or notice  whatsoever,  and that in the case of any extension
of time of payment or renewal of any of the Credit Party  Obligations,  the same
will be  promptly  paid in full when due  (whether at  extended  maturity,  as a
mandatory prepayment, by acceleration,  as a mandatory cash collateralization or
otherwise) in accordance with the terms of such extension or renewal.

    Notwithstanding  any  provision to the contrary  contained  herein or in any
other of the Credit  Documents or Hedging  Agreements,  the  obligations of each
Guarantor  under this Credit  Agreement and the other Credit  Documents shall be
limited to an aggregate amount equal to the largest amount that would not render
such  obligations  subject to avoidance under Section 548 of the Bankruptcy Code
or any comparable provisions of any applicable state law.

    4.2 OBLIGATIONS UNCONDITIONAL.
    ------------------------------

    The  obligations of the Guarantors  under Section 4.1 are joint and several,
absolute, irrevocable and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein or relating
thereto,  or any  substitution,  release,  impairment  or  exchange of any other
guarantee of or security for any of the Credit  Party  Obligations,  and, to the
fullest  extent   permitted  by  applicable  law,   irrespective  of  any  other
circumstance  whatsoever  which might otherwise  constitute a legal or equitable
discharge  or  defense  of a surety or  guarantor,  it being the  intent of this
Section 4.2 that the obligations of the Guarantors  hereunder shall be absolute,
irrevocable and unconditional  under any and all  circumstances.  Each Guarantor
agrees  that  such  Guarantor  shall  have no right of  subrogation,  indemnity,
reimbursement  or  contribution  against the Borrower or any other Guarantor for
amounts  paid  under  this  Section 4 until  such time as the  Lenders  (and any
Affiliates of Lenders  entering into Hedging  Agreements) have been paid in full
in respect of all Credit Party  Obligations,  all Commitments  under this Credit
Agreement have been  terminated and no Person or  Governmental  Authority  shall
have any right to request any return or  reimbursement of funds from the Lenders
in  connection  with  monies  received  under the  Credit  Documents  or Hedging
Agreements  between any Consolidated Party and any Lender, or any Affiliate of a
Lender. Without limiting the generality of the foregoing,  it is agreed that, to
the fullest  extent  permitted by law, the  occurrence of any one or more of the
following  shall not alter or impair the  liability of any  Guarantor  hereunder
which shall remain  absolute,  irrevocable and  unconditional as described above
and  each  Guarantor  hereby  waives  any  and all  defenses  that it may now or
hereafter  have arising out of any of the following or any other event set forth
in this Section 4.2:

        (a) at any time or from time to time,  without  notice to any Guarantor,
    the time for any  performance of or compliance  with any of the Credit Party
    Obligations  shall be extended,  or such  performance or compliance shall be
    waived;

        (b) any of the acts  mentioned  in any of the  provisions  of any of the
    Credit Documents,  any Hedging Agreement between any Consolidated  Party and
    any  Lender,  or any  Affiliate  of a  Lender,  or any  other  agreement  or
    instrument  referred to in the Credit  Documents or such Hedging  Agreements
    shall be done or omitted;

        (c)  the  maturity  of any of the  Credit  Party  Obligations  shall  be
    accelerated,  or any of the Credit Documents or the Credit Party Obligations
    shall be  modified,  supplemented  or amended in any  respect,  or any right
    under  any of the  Credit  Documents,  any  Hedging  Agreement  between  any
    Consolidated  Party and any Lender,  or any  Affiliate  of a Lender,  or any
    other  agreement or instrument  referred to in the Credit  Documents or such
    Hedging  Agreements  or  relating  thereto  shall  be  waived  or any  other
    guarantee of any of the Credit Party  Obligations  or any security  therefor
    shall be  released,  impaired or  exchanged in whole or in part or otherwise
    dealt with;

        (d) any Lien  granted  to,  or in favor of,  the Agent or any  Lender or
    Lenders as security  for any of the Credit Party  Obligations  shall fail to
    attach or be perfected;

        (e) any manner of application of Collateral, or proceeds thereof, to any
    or all of the  Guaranteed  Obligations,  or any  manner  of  sale  or  other
    disposition of any  Collateral for all or any of the Guaranteed  Obligations
    or any other assets of the Borrower or any of its Subsidiaries;

        (f) any change,  restructuring or termination of the corporate structure
    or existence of the Borrower or any of its Subsidiaries; or

        (g) any of the Credit Party  Obligations  shall be determined to be void
    or voidable (including,  without limitation, for the benefit of any creditor
    of any  Guarantor)  or shall be  subordinated  to the  claims of any  Person
    (including, without limitation, any creditor of any Guarantor).

With respect to its  obligations  hereunder,  each  Guarantor  hereby  expressly
waives promptness,  diligence,  presentment,  demand of payment, protest and all
notices whatsoever, and any requirement that the Agent or any Lender exhaust any
right,  power or remedy or proceed  against  any Person  under any of the Credit
Documents,  any Hedging Agreement between any Consolidated Party and any Lender,
or any Affiliate of a Lender,  or any other agreement or instrument  referred to
in the Credit Documents or such Hedging Agreements,  or against any other Person
under  any  other  guarantee  of,  or  security  for,  any of the  Credit  Party
Obligations.

    4.3 REINSTATEMENT.
    ------------------

    The   obligations  of  the   Guarantors   under  this  Section  4  shall  be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf  of any  Person in  respect  of the  Credit  Party  Obligations  is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations,   whether  as  a  result  of  any   proceedings  in  bankruptcy  or
reorganization  or otherwise,  and each Guarantor  agrees that it will indemnify
the  Agent  and each  Lender on demand  for all  reasonable  costs and  expenses
(including,  without  limitation,  fees and expenses of counsel) incurred by the
Agent  or such  Lender  in  connection  with  such  rescission  or  restoration,
including  any such costs and expenses  incurred in defending  against any claim
alleging  that such payment  constituted a  preference,  fraudulent  transfer or
similar payment under any bankruptcy, insolvency or similar law.

    4.4 CERTAIN ADDITIONAL WAIVERS.
    -------------------------------

    Without  limiting  the  generality  of the  provisions  of this  Section  4,
including,  without limitation,  any other waivers of defenses contained herein,
each Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. ss.ss.
26-7 through 26-9, inclusive,  to the extent applicable.  Each Guarantor further
agrees that such  Guarantor  shall have no right of recourse to security for the
Credit Party  Obligations,  except through the exercise of rights of subrogation
pursuant  to Section 4.2 and  through  the  exercise  of rights of  contribution
pursuant to Section 4.6.

    4.5 REMEDIES.
    -------------

    The  Guarantors  agree that,  to the  fullest  extent  permitted  by law, as
between the Guarantors,  on the one hand, and the Agent and the Lenders,  on the
other hand, the Credit Party Obligations may be declared to be forthwith due and
payable  as  provided  in  Section  9.2 (and  shall  be  deemed  to have  become
automatically due and payable in the circumstances provided in said Section 9.2)
for  purposes  of Section  4.1  notwithstanding  any stay,  injunction  or other
prohibition   preventing  such  declaration  (or  preventing  the  Credit  Party
Obligations  from becoming  automatically  due and payable) as against any other
Person  and  that,  in the  event  of  such  declaration  (or the  Credit  Party
Obligations  being deemed to have become  automatically  due and  payable),  the
Credit Party  Obligations  (whether or not due and payable by any other  Person)
shall forthwith become due and payable by the Guarantors for purposes of Section
4.1. The Guarantors  acknowledge and agree that their obligations  hereunder are
secured in accordance  with the terms of the  Collateral  Documents and that the
Lenders may exercise  their  remedies  thereunder in  accordance  with the terms
thereof.

    4.6 RIGHTS OF CONTRIBUTION.
    ---------------------------

    The Guarantors hereby agree as among themselves that, if any Guarantor shall
make an Excess Payment (as defined below),  such Guarantor shall have a right of
contribution  from  each  other  Guarantor  in an  amount  equal  to such  other
Guarantor's  Contribution  Share (as defined below) of such Excess Payment.  The
payment obligations of any Guarantor under this Section 4.6 shall be subordinate
and subject in right of payment to the prior  payment in full of the  Guaranteed
Obligations, and none of the Guarantors shall exercise any right or remedy under
this Section 4.6 against any other Guarantor  until payment and  satisfaction in
full of all of such  Guaranteed  Obligations.  For purposes of this Section 4.6,
(a) "Guaranteed  Obligations" shall mean any obligations arising under the other
provisions of this Section 4; (b) "Excess Payment" shall mean the amount paid by
any Guarantor in excess of its Pro Rata Share of any Guaranteed Obligations; (c)
"Pro Rata Share"  shall  mean,  for any  Guarantor  in respect of any payment of
Guaranteed Obligations,  the ratio (expressed as a percentage) as of the date of
such payment of Guaranteed  Obligations of (i) the amount by which the aggregate
present  fair  salable  value of all of its assets and  properties  exceeds  the
amount of all debts and  liabilities  of such Guarantor  (including  contingent,
subordinated,   unmatured,  and  unliquidated  liabilities,  but  excluding  the
obligations  of such  Guarantor  hereunder)  to (ii) the  amount  by  which  the
aggregate  present fair salable value of all assets and other  properties of all
of the Credit  Parties  exceeds  the amount of all of the debts and  liabilities
(including contingent,  subordinated,  unmatured, and unliquidated  liabilities,
but excluding the  obligations  of the Credit  Parties  hereunder) of the Credit
Parties;  provided,  however,  that,  for purposes of  calculating  the Pro Rata
Shares of the  Guarantors in respect of any payment of  Guaranteed  Obligations,
any Guarantor that became a Guarantor subsequent to the date of any such payment
shall be deemed to have been a  Guarantor  on the date of such  payment  and the
financial  information for such Guarantor as of the date such Guarantor became a
Guarantor  shall be utilized for such Guarantor in connection with such payment;
and (d)  "Contribution  Share" shall mean,  for any  Guarantor in respect of any
Excess  Payment  made  by  any  other  Guarantor,  the  ratio  (expressed  as  a
percentage) as of the date of such Excess Payment of (i) the amount by which the
aggregate present fair salable value of all of its assets and properties exceeds
the amount of all debts and liabilities of such Guarantor (including contingent,
subordinated,   unmatured,  and  unliquidated  liabilities,  but  excluding  the
obligations  of such  Guarantor  hereunder)  to (ii) the  amount  by  which  the
aggregate  present fair salable value of all assets and other  properties of the
Credit Parties other than the maker of such Excess Payment exceeds the amount of
all of the debts and liabilities (including contingent, subordinated, unmatured,
and  unliquidated  liabilities,  but  excluding  the  obligations  of the Credit
Parties)  of the Credit  Parties  other than the maker of such  Excess  Payment;
provided,  however, that, for purposes of calculating the Contribution Shares of
the  Guarantors in respect of any Excess  Payment,  any Guarantor  that became a
Guarantor  subsequent to the date of any such Excess  Payment shall be deemed to
have been a  Guarantor  on the date of such  Excess  Payment  and the  financial
information for such Guarantor as of the date such Guarantor  became a Guarantor
shall be utilized for such  Guarantor in  connection  with such Excess  Payment.
This  Section  4.6  shall not be  deemed  to  affect  any right of  subrogation,
indemnity,  reimbursement  or  contribution  that any  Guarantor  may have under
applicable  law  against the  Borrower  in respect of any payment of  Guaranteed
Obligations.  Notwithstanding the foregoing,  all rights of contribution against
any  Guarantor  shall  terminate  from and after such time,  if ever,  that such
Guarantor shall be relieved of its obligations pursuant to Section 8.4.

    4.7 GUARANTEE OF PAYMENT; CONTINUING GUARANTEE.
    -----------------------------------------------

    The  guarantee  in  this  Section  4 is a  guaranty  of  payment  and not of
collection,  is a  continuing  guarantee,  and shall  apply to all Credit  Party
Obligations whenever arising.


                                    SECTION 5

                                   CONDITIONS
                                   ----------

    5.1 CLOSING CONDITIONS.
    -----------------------

    The  obligation  of the Lenders to enter into this Credit  Agreement  and to
make the  initial  Loans or the Issuing  Lender to issue the  initial  Letter of
Credit,  whichever  shall occur first,  shall be subject to  satisfaction of the
following conditions (in form and substance acceptable to the Lenders):

        (a) Executed  Credit  Documents.  Receipt by the Agent of duly  executed
    copies of (i) this Credit Agreement,  (ii) the Collateral  Documents,  (iii)
    Agent's Fee Letter and (iv) all other Credit Documents.

        (b)  Corporate  Documents.  Receipt  by  the  Agent  of  the  following:

            (i) Charter  Documents.  Copies of the articles or  certificates  of
        incorporation or other charter  documents of each Credit Party certified
        to be  true  and  complete  as  of a  recent  date  by  the  appropriate
        Governmental  Authority  of  the  state  or  other  jurisdiction  of its
        incorporation  and  certified by a secretary  or assistant  secretary of
        such Credit Party to be true and correct as of the Closing Date.

            (ii) Bylaws.  A copy of the bylaws of each Credit Party certified by
        a secretary or  assistant  secretary of such Credit Party to be true and
        correct as of the Closing Date.

            (iii)  Resolutions.  Copies of resolutions of the Board of Directors
        of each Credit Party  approving  and  adopting  the Credit  Documents to
        which  it  is  a  party,  the  transactions   contemplated  therein  and
        authorizing execution and delivery thereof,  certified by a secretary or
        assistant  secretary  of such Credit Party to be true and correct and in
        force and effect as of the Closing Date.

            (iv) Good  Standing.  Copies of (A)  certificates  of good standing,
        existence or its equivalent  with respect to each Credit Party certified
        as of a recent date by the appropriate  Governmental  Authorities of the
        state or other jurisdiction of incorporation and each other jurisdiction
        in which the failure to so qualify and be in good standing  could have a
        Material Adverse Effect and (B) to the extent  available,  a certificate
        indicating  payment  of all  corporate  or  comparable  franchise  taxes
        certified  as of a recent date by the  appropriate  governmental  taxing
        authorities.

            (v)  Incumbency.  An  incumbency  certificate  of each Credit  Party
        certified by a secretary  or assistant  secretary to be true and correct
        as of the Closing Date.

        (c)  Pledge  of  Stock.   The  Agent  shall  have   received  all  stock
    certificates  evidencing  the Capital Stock pledged to the Agent pursuant to
    the Pledge  Agreement,  together  with duly  executed in blank undated stock
    powers attached thereto.

        (d) Opinions of Counsel. The Agent shall have received,  dated as of the
    Closing  Date, a legal  opinion of Gibson,  Dunn & Crutcher LLP, in form and
    substance reasonably satisfactory to the Agent and the Lenders.

        (e)  Personal  Property  Collateral.  The  Agent  shall  have  received:

            (i) searches of Uniform  Commercial Code filings in the jurisdiction
        of the chief executive office of each Credit Party and each jurisdiction
        where any  Collateral is located or where a filing would need to be made
        in order to perfect the  Agent's  security  interest in the  Collateral,
        copies of the  financing  statements on file in such  jurisdictions  and
        evidence that no Liens exist other than Permitted Liens;

            (ii) duly executed UCC  financing  statements  for each  appropriate
        jurisdiction as is necessary, in the Agent's sole discretion, to perfect
        the Agent's security interest in the Collateral;

            (iii) searches of ownership of, and Liens on, intellectual  property
        of each Credit Party in the appropriate governmental offices;

            (iv) all  certificates  evidencing  any  certificated  Capital Stock
        pledged to the Agent  pursuant to the Pledge  Agreement,  together  with
        duly executed in blank,  undated stock powers attached  thereto (unless,
        with  respect to the pledged  Capital  Stock of any Foreign  Subsidiary,
        such stock powers are deemed  unnecessary by the Agent in its reasonable
        discretion  under the law of the  jurisdiction of  incorporation of such
        Person);

            (v) such  patent/trademark/copyright  filings  as  requested  by the
        Agent  in  order  to  perfect  the  Agent's  security  interest  in  the
        Collateral; and

            (vi) duly executed  consents as are  necessary,  in the Agent's sole
        discretion, to perfect the Agent's security interest in the Collateral.

        (f) Evidence of  Insurance.  Receipt by the Agent of copies of insurance
    policies or certificates of insurance of the Consolidated Parties evidencing
    liability and casualty  insurance  meeting the requirements set forth in the
    Credit  Documents,  including,  but not  limited  to,  naming  the  Agent as
    additional  insured (in the case of liability  insurance) or sole loss payee
    (in the case of hazard insurance) on behalf of the Lenders.

        (g) Corporate  Structure.  The corporate capital and ownership structure
    of the Borrower and its Subsidiaries shall be as described in Schedule 6.13.

        (h)  Consent.  Receipt by the Agent of evidence  that all  governmental,
    shareholder  and material  third party  consents and approvals  necessary or
    desirable  in  connection   with  the  financings  and  other   transactions
    contemplated  hereby,  and no law or regulation shall be applicable which in
    the judgment of the Agent could reasonably be likely to have such effect.

        (i)  Litigation.  Except for matters  disclosed  in Schedule  6.9 (which
    matters have not had and are not likely to have a Material  Adverse Effect),
    there shall not exist any pending or threatened action, suit,  investigation
    or  proceeding  against a  Consolidated  Party  which  could  reasonably  be
    expected to have a Material Adverse Effect.

        (j) Officer's Certificates.  The Agent shall have received a certificate
    or certificates  executed by a Responsible Officer of the Borrower as of the
    Closing Date, in form and substance  satisfactory to the Agent, stating that
    (A) each Credit Party is in compliance with all existing material  financial
    obligations, (B) all governmental,  shareholder and third party consents and
    approvals, if any, with respect to the Credit Documents and the transactions
    contemplated thereby have been obtained, (C) no action, suit,  investigation
    or proceeding is pending or threatened in any court or before any arbitrator
    or governmental  instrumentality that purports to affect any Credit Party or
    any transaction  contemplated by the Credit Documents, if such action, suit,
    investigation  or proceeding could reasonably be expected to have a Material
    Adverse Effect,  except as disclosed in Schedule 6.9, which matters have not
    had and are not likely to have a Material  Adverse Effect and (D) no Default
    or Event of Default exists,  all  representations  and warranties  contained
    herein  and in the  other  Credit  Documents  are  true and  correct  in all
    material  respects and as of the Closing Date, the Credit Parties are in pro
    forma  compliance with each of the financial  covenants set forth in Section
    7.11  (assuming  for  purposes  hereof that such  financial  covenants  were
    measured as of, and for the 12-month period ending on, such date).

        (k) Other  Indebtedness.  Receipt by the Agent of satisfactory  evidence
    that  the  Credit   Parties  shall  have  no  Funded  Debt  other  than  the
    Indebtedness permitted under Section 8.1.

        (l) Senior  Subordinated  Notes.  Receipt  by the Agent of  satisfactory
    evidence of the repayment,  defeasance or other provision for payment of the
    Senior Subordinated Notes.

        (m) Fees and  Expenses.  Payment by the  Credit  Parties of all fees and
    expenses  owed by them to the  Lenders  and the  Agent,  including,  without
    limitation,  payment to the Agent of the fees set forth in the  Agent's  Fee
    Letter.

        (n) Other. Receipt by the Lenders of such other documents,  instruments,
    agreements or information as reasonably requested by any Lender,  including,
    but not limited  to,  information  regarding  litigation,  tax,  accounting,
    labor,  insurance,  pension liabilities (actual or contingent),  real estate
    leases,  material  contracts,   debt  agreements,   property  ownership  and
    contingent liabilities of the Consolidated Parties.

    5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
    -------------------------------------------

    The  obligations  of each Lender to make,  convert or extend any Loan and of
the  Issuing  Lender to issue or extend  any  Letter  of Credit  (including  the
initial Loans and the initial Letter of Credit) are subject to  satisfaction  of
the following  conditions in addition to satisfaction on the Closing Date of the
conditions set forth in Section 5.1:

        (a) The Borrower  shall have  delivered (i) in the case of any Revolving
    Loan, any portion of the Tranche A Term Loan or any portion of the Tranche B
    Term   Loan,   an   appropriate   Notice   of   Borrowing   or   Notice   of
    Extension/Conversion  or  (ii) in the  case of any  Letter  of  Credit,  the
    Issuing  Lender shall have received an  appropriate  request for issuance in
    accordance with the provisions of Section 2.2(b);

        (b) The  representations  and  warranties  set forth in Section 6 shall,
    subject to the  limitations  set forth  therein,  be true and correct in all
    material  respects as of such date (except for those which expressly  relate
    to an earlier date);

        (c) There shall not have been commenced  against any Consolidated  Party
    an  involuntary  case under any applicable  bankruptcy,  insolvency or other
    similar law now or hereafter  in effect,  or any case,  proceeding  or other
    action for the appointment of a receiver,  liquidator,  assignee, custodian,
    trustee,  sequestrator  (or  similar  official)  of such  Person  or for any
    substantial part of its Property or for the winding up or liquidation of its
    affairs, and such involuntary case or other case, proceeding or other action
    shall remain undismissed, undischarged or unbonded;

        (d) No Default or Event of Default shall exist and be continuing  either
    prior to or after giving effect thereto;

        (e) No  development  or  event  which  has had or  could  reasonably  be
    expected  to have a  Material  Adverse  Effect  shall  have  occurred  since
    December 31, 2000 (other than with respect to matters  reflected in Schedule
    6.9,  which  matters  have  not had and are not  likely  to have a  Material
    Adverse Effect); and

        (f) Immediately  after giving effect to the making of such Loan (and the
    application  of the  proceeds  thereof) or to the issuance of such Letter of
    Credit,  as the  case  may  be,  (i) the  sum of the  aggregate  outstanding
    principal  amount of Revolving  Loans plus LOC  Obligations  plus  Swingline
    Loans  shall not  exceed  the  Revolving  Committed  Amount and (ii) the LOC
    Obligations shall not exceed the LOC Committed Amount.

The delivery of each Notice of  Borrowing,  each Notice of  Extension/Conversion
and each  request  for a Letter of  Credit  pursuant  to  Section  2.2(b)  shall
constitute  a  representation   and  warranty  by  the  Credit  Parties  of  the
correctness  of the matters  specified  in clauses  (b),  (c),  (d), (e) and (f)
above.

                                    SECTION 6

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

    The Credit Parties hereby represent to the Agent and each Lender that:

    6.1 FINANCIAL CONDITION.
    ------------------------

    The  audited  consolidated  balance  sheets  and  income  statements  of the
Consolidated  Parties for the fiscal year ended 2000 and the  unaudited  interim
balance  sheets  and  income  statements  of the  Consolidated  Parties  for the
quarterly  period ended March 31, 2001,  have been prepared in  accordance  with
GAAP and present fairly in all material  respects (on the basis disclosed in the
footnotes to such  financial  statements)  the financial  condition,  results of
operations and cash flows of the applicable parties as of such date and for such
periods.  Since  December  31, 2000,  there has been no sale,  transfer or other
disposition  by any  Consolidated  Party of any material part of the business or
property of the Consolidated Parties, taken as a whole, and no purchase or other
acquisition  by any of them of any business or property  (including  any capital
stock of any other person)  material in relation to the  consolidated  financial
condition of the Consolidated Parties, taken as a whole, in each case, which, is
not (x) reflected in the foregoing financial  statements or in the notes thereto
or  (y)  otherwise   permitted  by  the  terms  of  this  Credit  Agreement  and
communicated to the Agent.

    6.2 NO MATERIAL CHANGE.
    -----------------------

    Since  December  31,  2000,  except  with  respect to matters  reflected  in
Schedule  6.9 (which  matters have not had and are not likely to have a Material
Adverse Effect), there has been no development or event relating to or affecting
a  Consolidated  Party  which  could  reasonably  be expected to have a Material
Adverse Effect.

    6.3 ORGANIZATION AND GOOD STANDING.
    -----------------------------------

    Each of the Consolidated Parties (a) is duly organized, validly existing and
is in good standing under the laws of the  jurisdiction of its  incorporation or
organization,  (b) has the corporate or other necessary 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
and (c) is duly  qualified as a foreign  entity 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,  other than in such
jurisdictions  where the failure to be so qualified and in good  standing  could
not reasonably be expected to have a Material Adverse Effect.

    6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
    --------------------------------------------------

    Each of the Credit  Parties has the corporate or other  necessary  power and
authority,  and the  legal  right,  to make,  deliver  and  perform  the  Credit
Documents  to which it is a party,  and in the case of the  Borrower,  to obtain
extensions of credit hereunder,  and has taken all necessary corporate action to
authorize  the  borrowings  and  other  extensions  of  credit  on the terms and
conditions of this Credit Agreement and to authorize the execution, delivery and
performance  of the  Credit  Documents  to which it is a party.  No  consent  or
authorization  of, filing with,  notice to or other similar 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 any Credit Party in  connection  with the  borrowings or
other  extensions  of  credit   hereunder  or  with  the  execution,   delivery,
performance,  validity or  enforceability  of the Credit Documents to which such
Credit Party is a party.  This Credit  Agreement has been, and each other Credit
Document  to which  any  Credit  Party is a party  will be,  duly  executed  and
delivered on behalf of the Credit Parties.  This Credit  Agreement  constitutes,
and each  other  Credit  Document  to which  any  Credit  Party is a party  when
executed and delivered will constitute, a legal, valid and binding obligation of
such Credit Party  enforceable  against such party in accordance with its terms,
except as enforceability  may be limited by applicable  bankruptcy,  insolvency,
reorganization,   moratorium  or  similar  laws  affecting  the  enforcement  of
creditors'  rights  generally  and  by  general  equitable  principles  (whether
enforcement is sought by proceedings in equity or at law).

    6.5 NO CONFLICTS.
    -----------------

    Neither  the  execution  and  delivery  of the  Credit  Documents,  nor  the
consummation of the transactions  contemplated  therein,  nor performance of and
compliance  with the terms and provisions  thereof by such Credit Party will (a)
violate or  conflict  with any  provision  of its  articles  or  certificate  of
incorporation  or  organization or bylaws or other  organizational  or governing
documents of such Person,  (b) violate,  contravene or conflict with contractual
provisions  of,  or cause  an  event  of  default  under,  any  indenture,  loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it may be bound,  the  violation  of which could
reasonably be expected to have a Material  Adverse  Effect,  or (c) result in or
require the creation of any Lien (other than those contemplated in or created in
connection with the Credit Documents) upon or with respect to its properties.

    6.6 NO DEFAULT.
    ---------------

    No  Consolidated  Party is in default  in any  respect  under any  contract,
lease,  loan  agreement,   indenture,  mortgage,  security  agreement  or  other
agreement or obligation to which it is a party or by which any of its properties
is bound which  default  which could  reasonably  be expected to have a Material
Adverse Effect.  No Default or Event of Default has occurred or exists except as
previously disclosed in writing to the Lenders.

    6.7 OWNERSHIP.
    --------------

    Each  Consolidated  Party is the owner of, and has good and marketable title
to, or a valid leasehold  interest in, all of its respective  assets and none of
such assets is subject to any Lien other than Permitted Liens.

    6.8 INDEBTEDNESS.
    -----------------

    Except as otherwise  permitted under Section 8.1, the  Consolidated  Parties
have no Indebtedness.

    6.9 LITIGATION.
    ---------------

    Except for matters disclosed in Schedule 6.9 (which matters have not had and
are not likely to have a Material Adverse Effect),  there are no actions,  suits
or legal, equitable,  arbitration or administrative proceedings,  pending or, to
the knowledge of any Credit Party,  threatened  against any  Consolidated  Party
which could reasonably be expected to have a Material Adverse Effect.

    6.10 TAXES.
    -----------

    Each Consolidated Party has filed, or caused to be filed, all tax
returns (federal, state, local and foreign) required to be filed and paid (a)
all amounts of taxes shown thereon to be due (including interest and penalties)
and (b) all other taxes, fees, assessments and other governmental charges
(including mortgage recording taxes, documentary stamp taxes and intangibles
taxes) owing by it, except for such taxes (i) which are not yet delinquent or
(ii) that are being contested in good faith and by proper proceedings, and
against which adequate reserves are being maintained in accordance with GAAP. No
Credit Party is aware as of the Closing Date of any proposed tax assessments
against it or any other Consolidated Party.

    6.11 COMPLIANCE WITH LAW.
    -------------------------

    Each  Consolidated  Party is in  compliance  with all Medicare  Regulations,
Medicaid  Regulations  and all  other  Requirements  of Law  (including  without
limitation  Environmental  Laws) applicable to it, or to its properties,  unless
such  failure to comply  could not  reasonably  be  expected  to have a Material
Adverse  Effect.  Without  limiting  the  generality  of  the  foregoing,   each
Consolidated  Party represents that (i) current billing policies,  arrangements,
protocols   and   instructions   comply  with   requirements   of  each  Medical
Reimbursement  Program and are administered by properly trained personnel except
where any such failure to comply could not  reasonably  be expected to result in
either (A) exclusion from a Medical Reimbursement  Program, or (B) loss of 5% or
more of  annual  consolidated  revenues  of the  Consolidated  Parties  and (ii)
current  compensation  arrangements  with physicians  substantially  comply with
state  and  federal  anti-kickback,   fraud  and  abuse,  and  Stark  I  and  II
requirements  except where any such failure to comply  could not  reasonably  be
expected  to result  in either  (A) an  exclusion  from a Medical  Reimbursement
Program,  or (B)  loss of 5% or  more of  annual  consolidated  revenues  of the
Consolidated Parties.

    6.12 ERISA.
    -----------

        (a)  During  the  five-year  period  prior  to the  date on  which  this
    representation is made or deemed made: (i) no ERISA Event has occurred, and,
    to the best  knowledge  of the Credit  Parties,  no event or  condition  has
    occurred or exists as a result of which any ERISA Event could  reasonably be
    expected to occur,  with respect to any Plan; (ii) no material  "accumulated
    funding  deficiency,"  as such term is defined  in Section  302 of ERISA and
    Section 412 of the Code, whether or not waived, has occurred with respect to
    any Plan;  (iii) to the best knowledge of the Credit Parties,  each Plan has
    been maintained,  operated,  and funded in compliance with its own terms and
    in material compliance with the provisions of ERISA, the Code, and any other
    applicable federal or state laws; and (iv) no lien in favor of the PBGC or a
    Plan has arisen or is reasonably likely to arise on account of any Plan.

        (b) The actuarial present value of all "benefit liabilities" (as defined
    in Section 4001(a)(16) of ERISA),  whether or not vested,  under each Single
    Employer  Plan,  as of the last annual  valuation  date prior to the date on
    which this representation is made or deemed made (determined,  in each case,
    utilizing  the  actuarial  assumptions  used  in  such  Plan's  most  recent
    actuarial valuation report),  did not, by any material amount,  exceed as of
    such valuation date the fair market value of the assets of such Plan.

        (c) Neither any Consolidated Party nor any ERISA Affiliate has incurred,
    or,  to the best  knowledge  of the  Credit  Parties,  could  be  reasonably
    expected to incur,  any  material  withdrawal  liability  under ERISA to any
    Multiemployer Plan or Multiple Employer Plan. Neither any Consolidated Party
    nor any ERISA  Affiliate  would become  subject to any  material  withdrawal
    liability under ERISA if any Consolidated  Party or any ERISA Affiliate were
    to withdraw  completely from all  Multiemployer  Plans and Multiple Employer
    Plans as of the valuation date most closely preceding the date on which this
    representation  is made or deemed made.  Neither any Consolidated  Party nor
    any ERISA  Affiliate has received any  notification  that any  Multiemployer
    Plan is in reorganization  (within the meaning of Section 4241 of ERISA), is
    insolvent  (within  the  meaning  of  Section  4245 of  ERISA),  or has been
    terminated  (within the meaning of Title IV of ERISA),  and no Multiemployer
    Plan is, to the best knowledge of the Credit Parties, reasonably expected to
    be in reorganization, insolvent, or terminated.

        (d) No  prohibited  transaction  (within  the  meaning of Section 406 of
    ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has
    occurred  with  respect to a Plan which has  subjected  or may  subject  any
    Consolidated  Party or any ERISA  Affiliate to any material  liability under
    Sections 406, 409,  502(i),  or 502(l) of ERISA or Section 4975 of the Code,
    or  under  any  agreement  or  other   instrument   pursuant  to  which  any
    Consolidated  Party or any ERISA  Affiliate  has  agreed or is  required  to
    indemnify any person against any such liability.

        (e)  Neither  any  Consolidated  Party nor any ERISA  Affiliate  has any
    material  liability  with  respect  to  "expected   post-retirement  benefit
    obligations" within the meaning of the Financial  Accounting Standards Board
    Statement 106.

    6.13 SUBSIDIARIES.
    ------------------

    Set  forth  on  Schedule  6.13  is a  complete  and  accurate  list  of  all
Subsidiaries of each Consolidated  Party as of the Closing Date.  Information on
Schedule 6.13 includes jurisdiction of incorporation or organization, the number
of shares of each class of Capital Stock outstanding,  the number and percentage
of  outstanding  shares of each class owned  (directly  or  indirectly)  by such
Subsidiary; and the number and effect, if exercised, of all outstanding options,
warrants,  rights of conversion  or purchase and all other  similar  rights with
respect  thereto.  The  outstanding  Capital Stock of all such  Subsidiaries  is
validly  issued,  fully  paid  and  non-assessable  and is  owned  by each  such
Consolidated Party,  directly or indirectly,  free and clear of all Liens (other
than  those  arising  under  or  contemplated  in  connection  with  the  Credit
Documents).  Other  than as set  forth  in  Schedule  6.13,  no  Subsidiary  has
outstanding  any securities  convertible  into or  exchangeable  for its Capital
Stock nor does any such Person have  outstanding  any rights to subscribe for or
to purchase or any options for the purchase of, or any agreements  providing for
the issuance  (contingent or otherwise) of, or any calls,  commitments or claims
of any character relating to its Capital Stock.

    6.14 GOVERNMENTAL REGULATIONS, ETC.
    -----------------------------------

        (a)  None of the  transactions  contemplated  by this  Credit  Agreement
    (including,  without limitation,  the direct or indirect use of the proceeds
    of the Loans) will violate or  contravene  or  materially  conflict with any
    Requirement  of  Law  or  any  other  law,  regulation  (including,  without
    limitation, the Securities Act, the Securities Exchange Act, Regulation U or
    Regulation  X),  order,  writ,  judgment,   injunction,   decree  or  permit
    applicable to it. If requested by any Lender or the Agent, the Borrower will
    furnish to the Agent and each Lender a  statement,  in  conformity  with the
    requirements of FR Form U-1 referred to in Regulation U, that no part of the
    Letters  of  Credit  or  proceeds  of the Loans  will be used,  directly  or
    indirectly,  for the purpose of "buying" or  "carrying"  any "margin  stock"
    within the meaning of Regulations U and X.

        (b) None of the Consolidated Parties is (i) an "investment  company", or
    a company  "controlled" by "investment  company",  within the meaning of the
    Investment  Company  Act of 1940,  as amended,  (ii) a "holding  company" as
    defined in, or otherwise  subject to regulation  under,  the Public  Utility
    Holding Company Act of 1935, as amended or (iii) subject to regulation under
    any other Federal or state statute or regulation which limits its ability to
    incur Indebtedness.

    6.15 PURPOSE OF LOANS AND LETTERS OF CREDIT.
    --------------------------------------------

    The  proceeds  of the Loans and  Letters of Credit  hereunder  shall be used
solely by the Borrower (a) to refinance  existing  Indebtedness  of the Borrower
under the Existing Credit Agreement and the Senior Subordinated Notes and (b) to
provide for ongoing  working  capital,  capital  expenditures  and other general
corporate purposes of the Borrower and its Subsidiaries.

    6.16 ENVIRONMENTAL MATTERS.
    ---------------------------

    Except for matters that could not be reasonably  expected to have a Material
Adverse Effect:

        (a) Each of the facilities and properties  owned,  leased or operated by
    the  Consolidated  Parties  (the  "Properties")  and all  operations  at the
    Properties  are in compliance  with all applicable  Environmental  Laws, and
    there is no violation of any material  Environmental Law with respect to the
    Properties  or the  businesses  operated by the  Consolidated  Parties  (the
    "Businesses"),  and there are no  conditions  relating to the  Businesses or
    Properties,  that  could  give  rise to any  material  liability  under  any
    applicable Environmental Laws.

        (b) To the best knowledge of the Credit Parties,  none of the Properties
    contains,  or has  previously  contained,  any  Materials  of  Environmental
    Concern at, on or under the  Properties  in amounts or  concentrations  that
    constitute  or  constituted  a violation of, or could give rise to liability
    under, Environmental Laws.

        (c) No Consolidated  Party has received any written or verbal notice of,
    or inquiry from any Governmental Authority regarding, any 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  Businesses,  nor does any  Consolidated  Party
    have knowledge or reason to believe that any such notice will be received or
    is being threatened.

        (d)  Materials of  Environmental  Concern have not been  transported  or
    disposed of from the Properties,  or generated,  treated, stored or disposed
    of at, on or under any of the Properties or any other location, in each case
    by or on behalf of any  Consolidated  Party in violation  of, or in a manner
    that could give rise to liability under, any applicable Environmental Law.

        (e) No judicial  proceeding or governmental or administrative  action is
    pending or, to the best knowledge of any Credit Party, threatened, under any
    Environmental  Law to which any Consolidated  Party is or will be named as a
    party,  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
    Consolidated Parties, the Properties or the Businesses.

        (f) 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  (including,   without  limitation,   disposal)  of  any
    Consolidated  Party  in  connection  with the  Properties  or  otherwise  in
    connection with the Businesses, in violation of or in amounts or in a manner
    that could give rise to a material liability under Environmental Laws.

    6.17 INTELLECTUAL PROPERTY.
    ---------------------------

    Each Consolidated Party owns, or has the legal right to use, all trademarks,
tradenames,  copyrights,  technology,  know-how and processes (the "Intellectual
Property")  necessary  for each of them to conduct  its  business  as  currently
conducted  except for those the  failure to own or have such legal  right to use
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 any Credit Party know of any such claim, and to
the Credit  Parties'  knowledge  the use of such  Intellectual  Property  by any
Consolidated  Party 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.

    6.18 INVESTMENTS.
    -----------------

    All Investments of each Consolidated Party are Permitted Investments.

    6.19 DISCLOSURE.
    ----------------

    The reports, financial statements, certificates or other written information
when furnished by the Borrower or any authorized  representative of the Borrower
to the Administrative  Agent or any Lender in connection with the negotiation of
this Credit  Agreement or delivered  hereunder (as modified or  supplemented  by
other  information  when so  furnished),  taken as a whole,  did not contain any
material  misstatement  of fact or 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.

    6.20 BUSINESS LOCATIONS.
    ------------------------

    Set forth on Schedule  6.20(a) is a list as of the Closing  Date of all real
property  located in the United  States and owned or leased by any  Consolidated
Party with street address and state where located. Set forth on Schedule 6.20(b)
is a list as of the Closing Date of all  locations  where any tangible  personal
property of a Consolidated Party is located,  including street address and state
where located.  Set forth on Schedule  6.20(c) is the exact legal name, state of
incorporation,  chief  executive  office and principal place of business of each
Consolidated Party.

    6.21 NO UNUSUAL RESTRICTIONS.
    -----------------------------

    No  Consolidated  Party is a party to any agreement or instrument or subject
to any other obligation or any charter or corporate restriction or any provision
of  any  applicable  law,  rule  or  regulation  which,  individually  or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

    6.22 FRAUD AND ABUSE.
    ---------------------

    To the knowledge of the officers of the  Consolidated  Parties,  neither the
Consolidated Parties nor any of their officers, directors or Contract Providers,
have engaged in any activities which are prohibited  under Medicare  Regulations
or Medicaid Regulations or which are prohibited by binding rules of professional
conduct, including but not limited to the following: (i) knowingly and willfully
making or causing to be made a false statement or  representation  of a material
fact  in any  applications  for any  benefit  or  payment;  (ii)  knowingly  and
willfully making or causing to be made any false statement or  representation of
a material fact for use in determining  rights to any benefit or payment;  (iii)
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;   (iv)  knowingly  and  willfully   soliciting  or  receiving  any
remuneration (including any kickback, bribe or rebate),  directly or indirectly,
overtly or covertly, in cash or in kind or offering to pay such remuneration (a)
in  return  for  referring  an  individual  to a Person  for the  furnishing  or
arranging  for the  furnishing  of any item or service for which  payment may be
made in whole or in part by Medicare,  Medicaid or other  applicable third party
payors, or (b) 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 applicable third party payors.

    6.23 LICENSING AND ACCREDITATION.
    ---------------------------------

    Each of the  Consolidated  Parties and, to the  knowledge of the officers of
the Consolidated Parties, each Contract Provider, has, to the extent applicable:
(i)  obtained  (or been duly  assigned)  all  required  certificates  of need or
determinations of need as required by the relevant state Governmental  Authority
for the acquisition,  construction,  expansion of, investment in or operation of
its  businesses  as currently  operated;  (ii)  obtained  and  maintains in good
standing all required licenses; (iii) to the extent prudent and customary in the
industry in which it is engaged,  obtained and maintains  accreditation from all
generally recognized  accrediting agencies;  and (iv) entered into and maintains
in good standing its status as a Medicare  Supplier and as a Medicaid  Supplier.
To the  knowledge of the officers of the  Consolidated  Parties,  each  Contract
Provider is duly  licensed  (where  license is  required) by each state or state
agency or commission,  or any other Governmental  Authority having  jurisdiction
over the  provisions  of such  services by such Person in the locations in which
the  Consolidated  Parties conduct  business,  required to enable such Person to
provide the  professional  services  provided by such Person and otherwise as is
necessary to enable the  Consolidated  Parties to operate as currently  operated
and as presently  contemplated to be operated.  To the knowledge of the officers
of the Consolidated  Parties,  all such required  licenses are in full force and
effect on the date hereof and have not been  revoked or  suspended  or otherwise
limited.


                                    SECTION 7

                              AFFIRMATIVE COVENANTS
                              ---------------------

    Each Credit  Party hereby  covenants  and agrees that so long as this Credit
Agreement  is in  effect or any  amounts  payable  hereunder  or under any other
Credit Document or Letter of Credit shall remain  outstanding,  and until all of
the Commitments hereunder shall have terminated:

    7.1 INFORMATION COVENANTS.
    --------------------------

    The Borrower will furnish,  or cause to be furnished,  to the Agent and each
of the Lenders:

        (a) Annual Financial Statements.  As soon as available, and in any event
    within  120 days  after the close of each  fiscal  year of the  Consolidated
    Parties,   a  consolidated   balance  sheet  and  income  statement  of  the
    Consolidated  Parties,  as of the end of such  fiscal  year,  together  with
    related  consolidated  statements of operations and retained earnings and of
    cash  flows  for  such  fiscal  year,  setting  forth  in  comparative  form
    consolidated  figures for the  preceding  fiscal  year,  all such  financial
    information described above to be in reasonable form and detail,  audited by
    independent  certified public  accountants of recognized  national  standing
    reasonably  acceptable to the Agent and whose opinion shall be to the effect
    that such financial  statements  have been prepared in accordance  with GAAP
    (except for  changes  with which such  accountants  concur) and shall not be
    limited  as to the scope of the audit or  qualified  as to the status of the
    Consolidated Parties as a going concern or qualified or limited in any other
    material respect.

        (b) Quarterly  Financial  Statements.  As soon as available,  and in any
    event  within  45 days  after  the  close  of  each  fiscal  quarter  of the
    Consolidated  Parties  (other than the fourth fiscal  quarter,  in which 120
    days  after  the end  thereof)  a  consolidated  balance  sheet  and  income
    statement of the Consolidated Parties, as of the end of such fiscal quarter,
    together with related  consolidated  statements  of  operations  and of cash
    flows for such fiscal quarter in each case setting forth in comparative form
    consolidated  figures for the  corresponding  period of the preceding fiscal
    year, all such  financial  information  described  above to be in reasonable
    form and detail and reasonably acceptable to the Agent, and accompanied by a
    certificate  of the chief  financial  officer of the  Borrower to the effect
    that such  quarterly  financial  statements  fairly  present in all material
    respects the financial  condition of the Consolidated  Parties and have been
    prepared in accordance  with GAAP,  subject to changes  resulting from audit
    and normal year-end audit adjustments.

        (c)  Officer's  Certificate.  At the time of delivery  of the  financial
    statements  provided for in Sections  7.1(a) and 7.1(b) above, a certificate
    of the chief financial officer of the Borrower  substantially in the form of
    Exhibit 7.1(c),  (i) demonstrating  compliance with the financial  covenants
    contained in Section 7.11 by calculation  thereof as of the end of each such
    fiscal  period and (ii) stating that 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 Credit  Parties  propose to take with
    respect thereto.

        (d)  Operating  Budget.  Simultaneously  with the  financial  statements
    referred to in (a) above, an operating budget for the fiscal year succeeding
    the year covered by such financial statements.

        (e) Compliance With Certain  Provisions of the Credit Agreement.  Within
    120 days after the end of each fiscal year of the  Borrower,  a  certificate
    containing  information  regarding (i) the amount of all Asset Dispositions,
    Debt  Issuances and Equity  Issuances that were made during the prior fiscal
    year.

        (f)  Auditor's  Reports.  Promptly upon receipt  thereof,  a copy of any
    other report or "management letter" submitted by independent  accountants to
    any  Consolidated  Party in connection  with any annual,  interim or special
    audit of the books of such Person.

        (g) Reports.  Promptly upon  transmission or receipt thereof,  copies of
    any filings and  registrations  with, and reports to or from, the Securities
    and  Exchange  Commission,  or  any  successor  agency,  and  copies  of all
    financial  statements,   proxy  statements,   notices  and  reports  as  any
    Consolidated Party shall send to its shareholders.

        (h) Notices.  Upon obtaining  knowledge thereof,  each Credit Party will
    give written  notice to the Agent promptly of (i) the occurrence of an event
    or condition  consisting  of a Default or Event of Default,  specifying  the
    nature and existence  thereof and what action the Credit Parties  propose to
    take with respect thereto,  (ii) the occurrence of any of the following with
    respect to any  Consolidated  Party (A) the pendency or  commencement of any
    litigation, arbitral or governmental proceeding against such Person which if
    adversely determined could reasonably be expected to have a Material Adverse
    Effect,  (B) the  institution  of any  proceedings  against such Person with
    respect to, or the receipt of notice by such Person of  potential  liability
    or responsibility for violation,  or alleged violation of any federal, state
    or  local  law,   rule  or   regulation,   including  but  not  limited  to,
    Environmental  Laws, the violation of which could  reasonably be expected to
    have a Material Adverse Effect,  (C) any notice or determination  concerning
    the imposition of any withdrawal  liability by a Multiemployer  Plan against
    such Person or any ERISA Affiliate,  the determination  that a Multiemployer
    Plan is, or is expected to be, in reorganization within the meaning of Title
    IV of ERISA or the  termination  of any Plan or (D) the  institution  of any
    investigation  or  proceedings  against such Person (or, to the knowledge of
    the  Borrower's  officers,  any  Contract  Provider)  to suspend,  revoke or
    terminate or which may result in the termination of its status as a Medicaid
    Supplier or its status as a Medicare  Supplier or exclusion from any Medical
    Reimbursement Program,  promptly deliver to the Agent written notice thereof
    stating  the  nature  and status of such  litigation,  dispute,  proceeding,
    investigation,  levy,  execution  or other  process  and (iii) any change in
    either Moody's or S&P's rating for the Borrower's long term Indebtedness.

        (i) ERISA.  Upon  obtaining  knowledge  thereof,  the Borrower will give
    written  notice to the Agent promptly (and in any event within five business
    days) of: (i) of any event or condition,  including, but not limited to, any
    Reportable Event,  that  constitutes,  or might reasonably lead to, an ERISA
    Event; (ii) with respect to any Multiemployer Plan, the receipt of notice as
    prescribed  in ERISA  or  otherwise  of any  withdrawal  liability  assessed
    against the Borrower or any of its ERISA  Affiliates,  or of a determination
    that any  Multiemployer  Plan is in reorganization or insolvent (both within
    the meaning of Title IV of ERISA); (iii) the failure to make full payment on
    or before the due date (including  extensions)  thereof of all amounts which
    any  Consolidated  Party or any ERISA Affiliate is required to contribute to
    each Plan pursuant to its terms and as required to meet the minimum  funding
    standard set forth in ERISA and the Code with respect  thereto;  or (iv) any
    change in the funding status of any Plan that could have a Material  Adverse
    Effect, together with a description of any such event or condition or a copy
    of any such notice and a  statement  by the chief  financial  officer of the
    Borrower briefly setting forth the details regarding such event,  condition,
    or notice,  and the action,  if any,  which has been or is being taken or is
    proposed to be taken by the Credit  Parties with respect  thereto.  Promptly
    upon  request,  the Credit  Parties  shall furnish the Agent and the Lenders
    with such  additional  information  concerning any Plan as may be reasonably
    requested,   including,   but  not  limited   to,   copies  of  each  annual
    report/return  (Form 5500 series),  as well as all schedules and attachments
    thereto  required  to be filed  with the  Department  of  Labor  and/or  the
    Internal Revenue Service pursuant to ERISA and the Code,  respectively,  for
    each "plan year" (within the meaning of Section 3(39) of ERISA).

        (j) Other Information. With reasonable promptness upon any such request,
    such other  information  regarding  the  business,  properties  or financial
    condition of any Consolidated Party as the Agent or any Lender,  through the
    Agent, may reasonably request.

    7.2 PRESERVATION OF EXISTENCE AND FRANCHISES.
    ---------------------------------------------

    Except  as a  result  of or in  connection  with a  dissolution,  merger  or
disposition  of a Subsidiary  permitted  under  Section 8.4 or Section 8.5, each
Credit  Party will,  and will cause each of its  Subsidiaries  to, do all things
necessary to preserve and keep in full force and effect its  existence,  rights,
franchises and authority.

    7.3 BOOKS AND RECORDS.
    ----------------------

    Each Credit  Party will,  and will cause each of its  Subsidiaries  to, keep
complete and accurate books and records of its  transactions  in accordance with
good accounting practices on the basis of GAAP.

    7.4 COMPLIANCE WITH LAW.
    ------------------------

    Each Credit Party will, and will cause each of its  Subsidiaries  to, comply
with all laws, rules,  regulations and orders,  and all applicable  restrictions
imposed by all  Governmental  Authorities,  applicable to it and its Property if
noncompliance  with any such law, rule,  regulation,  order or restriction could
reasonably be expected to have a Material Adverse Effect.

    7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
    --------------------------------------------

    Each Credit Party will, and will cause each of its  Subsidiaries to, pay and
discharge (a) all taxes,  assessments and governmental charges or levies imposed
upon it, or upon its income or profits,  or upon any of its  properties,  before
they shall become delinquent, (b) all lawful claims (including claims for labor,
materials and supplies) which, if unpaid,  might give rise to a Lien upon any of
its  properties,  and (c)  except  as  prohibited  hereunder,  all of its  other
Indebtedness  as it shall become due;  provided,  however,  that no Consolidated
Party shall be required to pay any such tax, assessment,  charge, levy, claim or
Indebtedness  which is being contested in good faith by appropriate  proceedings
and as to which adequate  reserves  therefor have been established in accordance
with GAAP, unless the failure to make any such payment (i) could give rise to an
immediate right to foreclose on a Lien securing such amounts or (ii) which could
reasonably be expected to have a Material Adverse Effect.

    7.6 INSURANCE.
    --------------

        (a) Each Credit Party will, and will cause each of its  Subsidiaries to,
    at all times maintain in full force and effect insurance (including worker's
    compensation insurance, liability insurance, casualty insurance and business
    interruption insurance) in such amounts, covering such risks and liabilities
    and with such deductibles or self-insurance  retentions as are in accordance
    with normal  industry  practice (or as otherwise  required by the Collateral
    Documents).  The Agent  shall be named as loss  payee or  mortgagee,  as its
    interest  may appear,  and/or  additional  insured  with respect to any such
    insurance providing coverage in respect of any Collateral, and each provider
    of any such  insurance  shall  agree,  by  endorsement  upon the  policy  or
    policies issued by it or by independent  instruments furnished to the Agent,
    that it will give the Agent thirty (30) days prior written notice before any
    such policy or  policies  shall be altered or  canceled,  and that no act or
    default  of any  Consolidated  Party or any other  Person  shall  affect the
    rights of the Agent or the  Lenders  under  such  policy  or  policies.  The
    present  insurance  coverage of the  Consolidated  Parties is outlined as to
    carrier, policy number, expiration date, type and amount on Schedule 7.6.

        (b) In the event that the Consolidated Parties receive Net Cash Proceeds
    in excess of  $5,000,000  in aggregate  amount during any fiscal year of the
    Consolidated  Parties ("Excess  Proceeds") on account of any loss of, damage
    to or destruction of, or any condemnation or other taking for public use of,
    any Property of the  Consolidated  Parties (with respect to any Consolidated
    Party, an "Involuntary  Disposition"),  the Credit Parties shall, within the
    period of 180 days  following  the date of receipt of such Excess  Proceeds,
    apply (or cause to be  applied) an amount  equal to such Excess  Proceeds to
    (i) make Eligible Reinvestments  (including but not limited to the repair or
    replacement  of the  related  Property)  or (ii)  prepay the Loans (and cash
    collateralize  LOC  Obligations)  in  accordance  with the terms of  Section
    3.3(b)(ii)(B).  All  insurance  proceeds  shall be subject  to the  security
    interest of the Agent (for the ratable of the Lenders)  under the Collateral
    Documents.  Pending final  application  of any Excess  Proceeds,  the Credit
    Parties may apply such Excess  Proceeds to temporarily  reduce the Revolving
    Loans or to make Permitted Investments.

    7.7 MAINTENANCE OF PROPERTY.
    ----------------------------

    Each Credit Party will, and will cause each of its Subsidiaries to, maintain
and  preserve  its  properties  and  equipment  material  to the  conduct of its
business in good repair,  working order and condition,  normal wear and tear and
casualty and condemnation  excepted, and will make, or cause to be made, in such
properties and equipment from time to time all repairs, renewals,  replacements,
extensions,  additions, betterments and improvements thereto as may be needed or
proper,  to the extent  and in the manner  customary  for  companies  in similar
businesses.

    7.8 PERFORMANCE OF OBLIGATIONS.
    -------------------------------

    Each Credit Party will, and will cause each of its  Subsidiaries to, perform
in all material  respects all of its obligations under the terms of all material
agreements, indentures, mortgages, security agreements or other debt instruments
to which it is a party or by which it is bound,  unless such  failure to perform
could reasonably be expected to have a Material Adverse Effect.

    7.9 USE OF PROCEEDS.
    --------------------

    The Borrower  will use the proceeds of the Loans and will use the Letters of
Credit solely for the purposes set forth in Section 6.15.

    7.10 AUDITS/INSPECTIONS.
    ------------------------

    Upon reasonable  notice and during normal business hours,  each Credit Party
will,  and  will  cause  each of its  Subsidiaries  to,  permit  representatives
appointed by the Agent or any Lender, including, without limitation, independent
accountants,  agents,  attorneys,  and  appraisers  to  visit  and  inspect  its
property,   including  its  books  and  records,  its  accounts  receivable  and
inventory, its facilities and its other business assets, and to make photocopies
or  photographs  thereof  and to write  down and  record  any  information  such
representative  obtains and shall permit the Lenders or their representatives to
investigate and verify the accuracy of information  provided to the Agent and to
discuss all such matters with the  officers,  employees and  representatives  of
such Person.

    7.11 FINANCIAL COVENANTS.
    -------------------------

        (a) Fixed Charge Coverage Ratio.  The Fixed Charge Coverage Ratio, as of
    the last day of each fiscal  quarter of the Borrower,  shall be greater than
    or equal to 2.0 to 1.0.

        (b)  Leverage  Ratio.  The  Leverage  Ratio,  as of the last day of each
    fiscal quarter of the Borrower, shall be less than or equal to 2.80 to 1.0.

    7.12 ADDITIONAL CREDIT PARTIES.
    -------------------------------

    As soon as  practicable  and in any event  within 30 days  after any  Person
becomes a Subsidiary of any Credit Party,  the Borrower  shall provide the Agent
with written  notice  thereof  setting forth  information  in reasonable  detail
describing  all of the assets of such  Person and shall (a) cause such Person to
execute a Joinder  Agreement in substantially the same form as Exhibit 7.12, (b)
cause 100% of the  Capital  Stock of such  Person to be  delivered  to the Agent
(together  with undated stock powers signed in blank),  and pledged to the Agent
pursuant to an appropriate pledge  agreement(s) in substantially the form of the
Pledge  Agreement and otherwise in form  acceptable to the Agent and (c) if such
Person  has any  Subsidiaries  (i)  deliver  all of the  Capital  Stock  of such
Subsidiaries  (together  with undated stock powers signed in blank) to the Agent
and (ii)  execute a pledge  agreement  in  substantially  the form of the Pledge
Agreement and otherwise in a form acceptable to the Agent.

    7.13 PLEDGED ASSETS.
    --------------------

        (a) Each Credit  Party will cause all of its owned  Property  other than
    Excluded  Property to be subject at all times to first  priority,  perfected
    and, in the case of owned real Property, title insured Liens in favor of the
    Agent to secure  the  Credit  Party  Obligations  pursuant  to the terms and
    conditions of the Collateral Documents or, with respect to any such Property
    acquired  subsequent to the Closing  Date,  such other  additional  security
    documents  as the Agent  shall  reasonably  request,  subject in any case to
    Permitted  Liens.  With respect to any real Property  acquired by any Credit
    Party subsequent to the Closing Date and required by this Section 7.13 to be
    pledged to the Agent,  such Person will cause to be  delivered to the Agent,
    in form and  substance  acceptable  to the  Agent,  documents,  instruments,
    opinions  and other  items  reasonably  requested  by the Agent,  including,
    without limitation:

            (i) Copies of recent ALTA  surveys by  registered  engineers or land
        surveyors (including the location of special flood hazard areas);

            (ii)  Standard  ALTA title  polices  ensuring  the  priority  of the
        mortgages in amounts and from  companies  acceptable  to the Agent.  The
        title  policies  shall  include  only  Permitted  Liens  and such  other
        exceptions as are reasonably acceptable to the Agent. Copies of recorded
        documentation  relating to all such exceptions  shall be provided to the
        Agent; and

            (iii)   Copies  of   existing   environmental   reports   and  other
        environmental documentation.

        (b) The Credit Parties will cause (i) 100% of the issued and outstanding
    Capital  Stock of the Borrower  and (ii) 100% of the issued and  outstanding
    Capital  Stock of each  Domestic  Subsidiary to be subject at all times to a
    first  priority,  perfected Lien in favor of the Agent pursuant to the terms
    and conditions of the Collateral  Documents or such other security documents
    as the Agent shall reasonably request.

        (c)  Notwithstanding  anything  to the  contrary  contained  in  Section
    7.13(a), this Credit Agreement or any of the Collateral Documents:

            (i) if at any time  (A) the Qui Tam  Litigation  has been  dismissed
        with prejudice,  or otherwise dismissed or disposed of in a manner which
        precludes  the  refiling  thereof,  settled  or is  subject  to a final,
        non-appealable  judgment, award or similar order and (B) (1) Moody's has
        assigned to the Credit Facilities a rating of Baa3 or higher and (2) S&P
        has assigned to the Credit Facilities a rating of BBB- or higher,  then,
        so long as no  Default or Event of Default  shall have  occurred  and be
        continuing,  the Borrower will not be required to cause all of its owned
        Property (other than the Collateral described in clause (b) above) to be
        subject at all times to first priority,  perfected Liens in favor of the
        Agent and the Agent shall deliver to the Credit Parties, upon the Credit
        Parties' request and at the Credit Parties' expense,  such documentation
        as is  reasonably  necessary  to  evidence  the  release of the  Agent's
        security  interest in such Collateral,  including,  without  limitation,
        amendments  or  terminations  of UCC financing  statements  and mortgage
        instruments with respect to any owned real property.

            (ii) if at any time either (A)  Moody's  has  assigned to the Credit
        Facilities  a rating of lower than Baa3,  or (B) S&P has assigned to the
        Credit  Facilities  a rating of lower  than  BBB-,  the  requirement  of
        Section  7.13(a) shall be in full force and effect and each Credit Party
        shall,  within 60 days following  such rating  change,  cause all of its
        owned and after  acquired  Property  other than Excluded  Property to be
        subject at all times to first  priority,  perfected  and, in the case of
        owned real Property, title insured Liens in favor of the Agent and shall
        deliver  to the  Agent  such UCC  financing  statements,  real  property
        documents,  instruments,  opinions and other items of the types required
        to be delivered pursuant to Sections 5.1(e) and 7.13(a) each in form and
        substance acceptable to the Agent.


                                    SECTION 8

                               NEGATIVE COVENANTS
                               ------------------

    Each Credit Party hereby  covenants  and agrees that, so long as this Credit
Agreement  is in  effect or any  amounts  payable  hereunder  or under any other
Credit Document or Letter of Credit shall remain  outstanding,  and until all of
the Commitments hereunder shall have terminated:

    8.1 INDEBTEDNESS.
    -----------------

    The  Credit  Parties  will not permit any  Consolidated  Party to  contract,
create, incur, assume or permit to exist any Indebtedness, except:

        (a)  Indebtedness  arising  under this  Credit  Agreement  and the other
    Credit Documents;

        (b)  Indebtedness  of the  Borrower  and its  Subsidiaries  set forth in
    Schedule 8.1;

        (c) purchase money Indebtedness  (including Capital Leases) or Synthetic
    Leases  hereafter  incurred by the  Borrower or any of its  Subsidiaries  to
    finance the purchase of fixed assets provided that (i) the total of all such
    Indebtedness  for all such  Persons  taken  together  shall  not  exceed  an
    aggregate  principal  amount  of  $25,000,000  at any one  time  outstanding
    (including any such Indebtedness  referred to in subsection (b) above); (ii)
    such  Indebtedness  when incurred shall not exceed the purchase price of the
    asset(s) financed;  and (iii) no such Indebtedness shall be refinanced for a
    principal amount in excess of the principal balance  outstanding  thereon at
    the time of such refinancing;

        (d) obligations of the Borrower or any of its Subsidiaries in respect of
    Hedging  Agreements  entered into in order to manage existing or anticipated
    interest rate or exchange rate risks and not for speculative purposes;

        (e) unsecured Indebtedness payable to the seller of the Capital Stock or
    Property acquired in a Permitted  Acquisition  representing all or a portion
    of the purchase price of the Capital Stock or Property so acquired;

        (f) Indebtedness owing by one Credit Party to another Credit Party;

        (g) Subordinated Indebtedness; and

        (h) other Indebtedness  hereafter incurred by the Borrower not exceeding
    $50,000,000 in aggregate principal amount at any time outstanding.

    8.2 LIENS.
    ----------

    The  Credit  Parties  will not permit any  Consolidated  Party to  contract,
create,  incur,  assume or permit to exist any Lien with  respect  to any of its
Property, whether now owned or after acquired, except for Permitted Liens.

    8.3 NATURE OF BUSINESS.
    -----------------------

    The Credit Parties will not permit any  Consolidated  Party to substantively
alter the  character or conduct of the  business  conducted by such Person as of
the Closing Date.

    8.4 CONSOLIDATION, MERGER, DISSOLUTION, ETC.
    --------------------------------------------

    Except in connection with an Permitted Asset Disposition, the Credit Parties
will not permit any  Consolidated  Party to enter into any transaction of merger
or  consolidation  or  liquidate,  wind up or  dissolve  itself  (or  suffer any
liquidation  or  dissolution);  provided  that,  notwithstanding  the  foregoing
provisions  of this  Section 8.4 but  subject to the terms of Sections  7.12 and
7.13,  (a) the Borrower may merge or  consolidate  with any of its  Subsidiaries
provided that the Borrower shall be the continuing or surviving corporation, (b)
any Credit Party other than the Borrower may merge or consolidate with any other
Credit Party other than the Borrower,  (c) any Consolidated Party which is not a
Credit  Party  may be  merged  or  consolidated  with or into any  Credit  Party
provided   that  such  Credit  Party  shall  be  the   continuing  or  surviving
corporation,  (d) any  Consolidated  Party  which is not a Credit  Party  may be
merged or consolidated with or into any other  Consolidated Party which is not a
Credit Party,  (e) any Subsidiary of the Borrower may merge with any Person that
is not a Credit Party in connection  with an Asset  Disposition  permitted under
Section 8.5, (f) the Borrower or any  Subsidiary  of the Borrower may merge with
any Person  other  than a  Consolidated  Party in  connection  with a  Permitted
Acquisition  provided  that,  if such  transaction  involves the  Borrower,  the
Borrower  shall be the  continuing or surviving  corporation  and (g) any Wholly
Owned Subsidiary of the Borrower may dissolve,  liquidate or wind up its affairs
at any time  provided  that such  dissolution,  liquidation  or  winding  up, as
applicable, could not have a Material Adverse Effect.

    8.5 ASSET DISPOSITIONS.
    -----------------------

    The Credit Parties will not permit any Consolidated  Party to make any Asset
Disposition (including,  without limitation, any Sale and Leaseback Transaction)
unless (a) the consideration paid in connection  therewith shall be cash or Cash
Equivalents,  (b) if such transaction is a Sale and Leaseback Transaction,  such
transaction is not prohibited by the terms of Section 8.13, (c) such transaction
does not involve the sale or other  disposition of a minority equity interest in
any  Consolidated  Party,  (d) such transaction does not involve a sale or other
disposition of receivables  other than  receivables  owned by or attributable to
other  Property  concurrently  being  disposed  of  in a  transaction  otherwise
permitted under this Section 8.5, (e) the aggregate net book value of all of the
assets sold or  otherwise  disposed of by the  Consolidated  Parties in all such
transactions after the Closing Date shall not exceed an aggregate amount of more
than ten percent (10%) of the  Consolidated  Assets  determined as of the end of
the most recently  completed  fiscal  quarter of the Borrower and (f) the Credit
Parties shall,  within the period of 120 days following the consummation of such
Asset Disposition (with respect to any such Asset Disposition,  the "Application
Period"),  apply  (or  cause  to be  applied)  an  amount  equal to the Net Cash
Proceeds of such Asset  Disposition to (i) make Eligible  Reinvestments  or (ii)
prepay the Loans (and cash collateralize LOC Obligations) in accordance with the
terms  of  Section  3.3(b)(ii)(A).  Pending  final  application  of the Net Cash
Proceeds of any Asset Disposition,  the Consolidated  Parties may apply such Net
Cash Proceeds to temporarily  reduce the Revolving Loans or to make  Investments
in Cash Equivalents.

    Upon a sale of assets or the sale of Capital Stock of a  Consolidated  Party
permitted  by this  Section  8.5,  the Agent  shall (to the  extent  applicable)
deliver  to the Credit  Parties,  upon the Credit  Parties'  request  and at the
Credit  Parties'  expense,  such  documentation  as is  reasonably  necessary to
evidence the release of the Agent's security interest, if any, in such assets or
Capital Stock, including, without limitation,  amendments or terminations of UCC
financing statements, if any, the return of stock certificates,  if any, and the
release of such  Consolidated  Party from all of its obligations,  if any, under
the Credit Documents.

    8.6 INVESTMENTS.
    ----------------

    The  Credit  Parties  will  not  permit  any  Consolidated   Party  to  make
Investments in or to any Person, except for Permitted Investments.

    8.7 RESTRICTED PAYMENTS.
    ------------------------

    The Credit Parties will not permit any  Consolidated  Party to,  directly or
indirectly,  declare, order, make or set apart any sum for or pay any Restricted
Payment,  except,  so long as no Default or Event of Default shall have occurred
or would occur as a result thereof,  (a) to make dividends payable solely in the
same class of Capital  Stock of such Person and (b) to make  dividends  or other
distributions  payable to any  Credit  Party  (directly  or  indirectly  through
Subsidiaries) and ratably to minority  shareholders and (c) other  distributions
in respect the  redemption,  retirement,  purchase or other  acquisition  of the
capital  stock of the  Borrower  (or any  warrant,  option or other  rights with
respect to any shares of capital  stock (now or  hereafter  outstanding)  of the
Borrower) so long as (i) if no Default has occurred and is  continuing  or would
result from such action,  (ii) the  aggregate  amount of all such  distributions
pursuant to this clause (c) shall not exceed (x)  $35,000,000  during any fiscal
year of the Borrower and (y) $100,000,000 in the aggregate following the Closing
Date.

    8.8 PREPAYMENTS OF SUBORDINATED INDEBTEDNESS, ETC.
    --------------------------------------------------

    The Credit  Parties  will not permit any  Consolidated  Party to,  after the
issuance  thereof,  amend or modify (or permit the amendment or modification of)
any  of  the  terms  of any  Subordinated  Indebtedness  if  such  amendment  or
modification  would add or change any terms in a manner adverse to the issuer of
such Indebtedness,  or shorten the final maturity or average life to maturity or
require any payment to be made sooner than originally  scheduled or increase the
interest rate applicable thereto or change any subordination provision thereof.

    8.9 TRANSACTIONS WITH AFFILIATES.
    ---------------------------------

    The Credit Parties will not permit any  Consolidated  Party to enter into or
permit to exist any  transaction  or series of  transactions  with any  officer,
director,  shareholder,  Subsidiary  or  Affiliate of such Person other than (a)
transactions  permitted by Section 8.1, Section 8.4, Section 8.6 or Section 8.7,
(b) normal  compensation and reimbursement of expenses of officers and directors
and (c) except as otherwise specifically limited in this Credit Agreement, other
transactions  which are entered  into in the  ordinary  course of such  Person's
business on terms and  conditions  substantially  as favorable to such Person as
would be obtainable by it in a comparable arms-length  transaction with a Person
other than an officer, director, shareholder, Subsidiary or Affiliate.

    8.10 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
    -------------------------------------------

    The Credit  Parties  will not permit  any  Consolidated  Party to change its
fiscal  year or  amend,  modify or  change  its  articles  of  incorporation  or
organization (or corporate charter or other similar organizational  document) or
bylaws or operating  agreement (or other similar document) in any manner adverse
to the Lenders without the prior written consent of the Required Lenders.

    8.11 LIMITATION ON RESTRICTED ACTIONS.
    --------------------------------------

    The Credit Parties will not permit any  Consolidated  Party to,  directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance  or  restriction  on the  ability  of any  such  Person  to (a)  pay
dividends  or make any other  distributions  to any Credit  Party on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits,  (b) pay any  Indebtedness  or other  obligation owed to any Credit
Party,  (c) make loans or  advances  to any  Credit  Party,  (d) sell,  lease or
transfer  any of its  properties  or  assets  to any  Credit  Party  (except  as
permitted  under Section  8.1(c)),  (e) grant a lien on its properties or assets
whether now owned or hereafter  acquired  (except to the extent  permitted under
Section  8.14) or (f) act as a Guarantor  and pledge its assets  pursuant to the
Credit  Documents  or  any  renewals,  refinancings,  exchanges,  refundings  or
extension  thereof,  except (in  respect of any of the  matters  referred  to in
clauses (a)-(d) above) for such  encumbrances or restrictions  existing under or
by reason of (i) this Credit  Agreement  and the other Credit  Documents or (ii)
applicable law.

    8.12 OWNERSHIP OF SUBSIDIARIES; LIMITATIONS ON BORROWER.
    --------------------------------------------------------

    Notwithstanding  any  other  provisions  of  this  Credit  Agreement  to the
contrary,  the Credit  Parties  will not permit  any  Consolidated  Party to (a)
permit any Person (other than the Borrower or any Wholly-Owned Subsidiary of the
Borrower) to own any Capital Stock of any Subsidiary of the Borrower, (b) permit
any Subsidiary of the Borrower to issue Capital Stock (except to the Borrower or
to a Wholly-Owned Subsidiary of the Borrower), (c) permit, create, incur, assume
or  suffer  to exist  any Lien  thereon,  in each  case (i)  except  to  qualify
directors  where required by applicable law or to satisfy other  requirements of
applicable  law with respect to the ownership of Capital Stock of  Subsidiaries,
(ii)  except  as a result  of or in  connection  with a  dissolution,  merger or
disposition of a Subsidiary  not prohibited  under Section 8.4 or Section 8.5 or
(iii)  except  for  Permitted  Liens  and (d)  notwithstanding  anything  to the
contrary contained in clause (b) above, permit any Subsidiary of the Borrower to
issue any shares of preferred Capital Stock.

    8.13 SALE LEASEBACKS.
    ---------------------

    The Credit Parties will not permit any Consolidated  Party to enter into any
Sale and Leaseback Transaction.

    8.14 NO FURTHER NEGATIVE PLEDGES.
    ---------------------------------

    Except (a) pursuant to this Credit Agreement and the other Credit Documents,
(b)  pursuant to any  document or  instrument  governing  Indebtedness  incurred
pursuant to Section 8.1(c), provided that any such restriction contained therein
relates  only to the asset or  assets  constructed  or  acquired  in  connection
therewith and (c) pursuant to any document or instrument governing  Subordinated
Indebtedness  permitted under Section 8.1(g)  hereunder,  provided that any such
restriction  contained  therein  does not  apply  to  "senior  debt"  thereunder
(including the Loans and Credit Party Obligations hereunder), the Credit Parties
will not permit any Consolidated  Party to 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.

    8.15 NO FOREIGN SUBSIDIARIES.
    -----------------------------

    The Credit  Parties will not create,  acquire or permit to exist any Foreign
Subsidiary.

    8.16 CAPITAL EXPENDITURES.
    --------------------------

        (a) Other than Consolidated  Capital  Expenditures of the type set forth
    in clause (b) below, the Credit Parties will not permit Consolidated Capital
    Expenditures  for any fiscal  year to exceed 14% of the annual  consolidated
    revenues of the Consolidated Parties, determined in accordance with GAAP, as
    of the end of the most recently completed fiscal year of the Borrower.

        (b) The Credit Parties will not permit Consolidated Capital Expenditures
    incurred in connection with Permitted  Acquisitions,  for any fiscal year to
    exceed 2% of the annual consolidated  revenues of the Consolidated  Parties,
    determined  in  accordance  with  GAAP,  as of the end of the most  recently
    completed fiscal year of the Borrower.


                                    SECTION 9

                                EVENTS OF DEFAULT
                                -----------------

    9.1 EVENTS OF DEFAULT.
    ----------------------

    An Event of Default shall exist upon the  occurrence of any of the following
specified events (each an "Event of Default"):

        (a) Payment. Any Credit Party shall

            (i) default in the payment  when due of any  principal of any of the
        Loans or of any  reimbursement  obligations  arising from drawings under
        Letters of Credit  (other  than solely as a result of the failure by the
        Administrative Agent or any Lender to comply with Section 2.2(e)), or

            (ii) default,  and such default shall continue for three (3) or more
        Business  Days,  in the payment when due of any interest on the Loans or
        on any reimbursement  obligations arising from drawings under Letters of
        Credit,  or of any fees or other amounts owing  hereunder,  under any of
        the other Credit Documents or in connection herewith or therewith; or

        (b) Representations.  Any representation,  warranty or statement made or
    deemed to be made by any Credit  Party  herein,  in any of the other  Credit
    Documents,  or in any statement or  certificate  delivered or required to be
    delivered  pursuant  hereto or thereto  shall prove  untrue in any  material
    respect on the date as of which it was made or deemed to have been made; or

        (c) Covenants. Any Credit Party shall

            (i)  default  in the due  performance  or  observance  of any  term,
        covenant or  agreement  contained  in  Sections  7.2,  7.9,  7.11 or 8.1
        through 8.16, inclusive;

            (ii)  default  in the due  performance  or  observance  of any term,
        covenant or agreement  contained  in Section 7.1 and such default  shall
        continue  unremedied  for a period of at least 5 business days after the
        earlier of a  responsible  officer of a Credit Party  becoming  aware of
        such default or notice thereof by the Agent; or

            (iii)  default in the due  performance  or  observance  by it of any
        term, covenant or agreement (other than those referred to in subsections
        (a),  (b),  (c)(i) or (c)(ii) of this  Section  9.1)  contained  in this
        Credit Agreement and such default shall continue unremedied for a period
        of at least 30 days  after the  earlier  of a  responsible  officer of a
        Credit Party  becoming  aware of such  default or notice  thereof by the
        Agent.

        (d) Other Credit  Documents.  (i) Any Credit Party shall  default in the
    due  performance or observance of any term,  covenant or agreement in any of
    the other Credit Documents (subject to applicable grace or cure periods,  if
    any) or repudiate its obligations thereunder,  or (ii) except as a result of
    or in connection  with a dissolution,  merger or disposition of a Subsidiary
    not prohibited  under Section 8.4 or Section 8.5, any Credit  Document shall
    fail to be in full force and effect or to give the Agent  and/or the Lenders
    the Liens, rights, powers and privileges purported to be created thereby, or
    any Credit Party shall so state in writing; or

        (e)  Guaranties.  Except  as  the  result  of or in  connection  with  a
    dissolution,  merger or disposition of a Subsidiary  permitted under Section
    8.4, the guaranty  given by any Guarantor  hereunder  (including  any Person
    after the Closing Date in  accordance  with Section  7.12) or any  provision
    thereof  shall  cease  to be in full  force  and  effect,  or any  Guarantor
    (including  any Person  after the Closing  Date in  accordance  with Section
    7.12) hereunder or any Person acting by or on behalf of such Guarantor shall
    deny or disaffirm such Guarantor's  obligations under such guaranty,  or any
    Guarantor  shall default in the due  performance  or observance of any term,
    covenant or agreement  on its part to be  performed or observed  pursuant to
    any guaranty; or

        (f)  Bankruptcy,  etc. Any Bankruptcy  Event shall occur with respect to
    any Consolidated Party; or

        (g) Defaults under Other  Agreements.  With respect to any  Indebtedness
    (other than Indebtedness  outstanding under this Credit Agreement) in excess
    of  $5,000,000  in the  aggregate  for the  Consolidated  Parties taken as a
    whole, (i) any  Consolidated  Party shall (A) default in any payment (beyond
    the applicable  grace period with respect  thereto,  if any) with respect to
    any such Indebtedness, or (B) default (after giving effect to any applicable
    grace period) in the  observance  or  performance  of any term,  covenant or
    agreement  relating to such  Indebtedness  or contained in any instrument or
    agreement  evidencing,  securing or relating thereto,  or any other event or
    condition  shall occur or condition  exist,  the effect of which  default or
    other event or  condition is to cause,  or permit,  the holder or holders of
    such  Indebtedness  (or trustee or agent on behalf of such holders) to cause
    (determined  without  regard  to  whether  any  notice  or  lapse of time is
    required), any such Indebtedness to become due prior to its stated maturity;
    or (ii) any such Indebtedness shall be declared due and payable, or required
    to be prepaid other than by a regularly scheduled required prepayment, prior
    to the stated maturity thereof.

        (h) Judgments. One or more judgments or decrees shall be entered against
    one or more of the Consolidated  Parties involving a liability of $5,000,000
    or more in the  aggregate  (to the  extent  not  paid or  fully  covered  by
    insurance  provided by a carrier who has  acknowledged  coverage and has, in
    the reasonable  judgment of the Agent,  the ability to perform) and any such
    judgments or decrees shall not have been satisfied,  vacated,  discharged or
    stayed or bonded pending appeal within 60 days from the entry thereof; or

        (i) ERISA. Any of the following  events or conditions,  if such event or
    condition could have a Material Adverse Effect (i) any "accumulated  funding
    deficiency," as such term is defined in Section 302 of ERISA and Section 412
    of the Code, whether or not waived, shall exist with respect to any Plan, or
    any lien shall  arise on the assets of any  Consolidated  Party or any ERISA
    Affiliate  in favor of the PBGC or a Plan;  (ii) an ERISA  Event shall occur
    with respect to a Single Employer Plan, which is, in the reasonable  opinion
    of the Agent,  likely to result in the termination of such Plan for purposes
    of Title IV of ERISA;  (iii) an ERISA Event  shall  occur with  respect to a
    Multiemployer  Plan or Multiple  Employer Plan,  which is, in the reasonable
    opinion of the Agent,  likely to result in (A) the  termination of such Plan
    for  purposes  of Title IV of ERISA,  or (B) any  Consolidated  Party or any
    ERISA  Affiliate  incurring any  liability in  connection  with a withdrawal
    from,  reorganization  of (within the meaning of Section 4241 of ERISA),  or
    insolvency  or (within the meaning of Section  4245 of ERISA) such Plan;  or
    (iv) any prohibited  transaction (within the meaning of Section 406 of ERISA
    or Section  4975 of the Code) or breach of  fiduciary  responsibility  shall
    occur which may subject any Consolidated Party or any ERISA Affiliate to any
    liability  under  Sections 406, 409,  502(i),  or 502(l) of ERISA or Section
    4975 of the Code,  or under any  agreement or other  instrument  pursuant to
    which  any  Consolidated  Party or any  ERISA  Affiliate  has  agreed  or is
    required to indemnify any person against any such liability; or

        (j) Ownership. There shall occur a Change of Control.

    9.2 ACCELERATION; REMEDIES.
    ---------------------------

    Upon  the  occurrence  of an Event of  Default,  and at any time  thereafter
unless and until such Event of Default has been waived by the requisite  Lenders
(pursuant to the voting requirements of Section 11.6), the Agent shall, upon the
request and direction of the Required  Lenders,  by written notice to the Credit
Parties take any of the following actions:

        (a)  Termination  of  Commitments.  Declare the  Commitments  terminated
    whereupon the Commitments shall be immediately terminated.

        (b)  Acceleration.  Declare  the  unpaid  principal  of and any  accrued
    interest in respect of all Loans, any reimbursement obligations arising from
    drawings  under  Letters  of Credit  and any and all other  indebtedness  or
    obligations  of any and every kind owing by the Borrower to the Agent and/or
    any of  the  Lenders  hereunder  to be  due  whereupon  the  same  shall  be
    immediately due and payable without  presentment,  demand,  protest or other
    notice of any kind, all of which are hereby waived by the Borrower.

        (c) Cash Collateral. Direct the Borrower to pay (and the Borrower agrees
    that upon  receipt of such  notice,  or upon the  occurrence  of an Event of
    Default  under  Section  9.1(f),  it  will  immediately  pay)  to the  Agent
    additional cash, to be held by the Agent, for the benefit of the Lenders, in
    a cash collateral account as additional  security for the LOC Obligations in
    respect of subsequent  drawings under all then outstanding Letters of Credit
    in an amount equal to the maximum  aggregate amount which may be drawn under
    all Letters of Credits then outstanding.

        (d)  Enforcement  of Rights.  Enforce  any and all rights and  interests
    created  and  existing  under  the  Credit  Documents   including,   without
    limitation, all rights and remedies existing under the Pledge Agreement, all
    rights and remedies against a Guarantor and all rights of set-off.

    Notwithstanding  the foregoing,  if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall  automatically  terminate and all
Loans,  all  reimbursement  obligations  arising from drawings  under Letters of
Credit, all accrued interest in respect thereof, all accrued and unpaid fees and
other  indebtedness or obligations  owing to the Agent and/or any of the Lenders
hereunder  automatically  shall  immediately  become due and payable without the
giving of any notice or other action by the Agent or the Lenders,  each of which
are hereby expressly waived.


                                   SECTION 10

                                      AGENT
                                      -----

    10.1 APPOINTMENT AND AUTHORIZATION OF AGENT.
    --------------------------------------------

    (a) Each  Lender  hereby  irrevocably  (subject to Section  10.9)  appoints,
designates  and authorizes the Agent to take such action on its behalf under the
provisions  of this  Credit  Agreement  and each other  Credit  Document  and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Credit Agreement or any other Credit  Document,  together with
such powers as are reasonably incidental thereto.  Notwithstanding any provision
to the contrary contained elsewhere herein or in any other Credit Document,  the
Agent shall not have any duties or responsibilities,  except those expressly set
forth  herein,  nor  shall the  Agent  have or be  deemed to have any  fiduciary
relationship  with  any  Lender  or  participant,   and  no  implied  covenants,
functions,  responsibilities,  duties,  obligations or liabilities shall be read
into this Credit  Agreement  or any other  Credit  Document or  otherwise  exist
against the Agent.  Without  limiting the generality of the foregoing  sentence,
the use of the term  "agent"  herein  and in the  other  Credit  Documents  with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express)  obligations  arising under agency  doctrine of any applicable law.
Instead,  such term is used merely as a matter of market custom, and is intended
to create or reflect only an  administrative  relationship  between  independent
contracting parties.

    (b) The Issuing  Lender  shall act on behalf of the Lenders  with respect to
any Letters of Credit issued by it and the documents  associated therewith until
such time (and  except for so long) as the Agent may agree at the request of the
Required Lenders to act for the Issuing Lender with respect  thereto;  provided,
however,  that the Issuing  Lender shall have all of the benefits and immunities
(i)  provided to the Agent in this  Section 10 with respect to any acts taken or
omissions  suffered by the Issuing  Lender in connection  with Letters of Credit
issued by it or proposed to be issued by it and the  application  and agreements
for  letters of credit  pertaining  to the  Letters of Credit as fully as if the
term "Agent" as used in this Section 10 included the Issuing Lender with respect
to such acts or omissions, and (ii) as additionally provided herein with respect
to the Issuing Lender.

    10.2 DELEGATION OF DUTIES.
    --------------------------

    The Agent may execute any of its duties  under this Credit  Agreement or any
other Credit Document by or through agents,  employees or attorneys-in-fact  and
shall be  entitled  to  advice  of  counsel  and other  consultants  or  experts
concerning  all  matters  pertaining  to such  duties.  The  Agent  shall not be
responsible  for the  negligence or misconduct of any agent or  attorney-in-fact
that it selects in the absence of gross negligence or willful misconduct.

    10.3 LIABILITY OF AGENT.
    ------------------------

    No Agent-Related  Person shall (a) be liable for any action taken or omitted
to be taken by any of them under or in connection with this Credit  Agreement or
any other Credit Document or the  transactions  contemplated  hereby (except for
its own gross  negligence or willful  misconduct  in connection  with its duties
expressly set forth  herein),  or (b) be responsible in any manner to any Lender
or participant for any recital,  statement,  representation  or warranty made by
any Credit Party or any officer thereof, contained herein or in any other Credit
Document, or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection  with,  this
Credit Agreement or any other Credit Document,  or the validity,  effectiveness,
genuineness, enforceability or sufficiency of this Credit Agreement or any other
Credit  Document,  or for any failure of any Credit  Party or any other party to
any Credit  Document to perform its  obligations  hereunder  or  thereunder.  No
Agent-Related  Person shall be under any obligation to any Lender or participant
to ascertain or to inquire as to the  observance  or  performance  of any of the
agreements  contained in, or conditions  of, this Credit  Agreement or any other
Credit  Document,  or to inspect the properties,  books or records of any Credit
Party or any Affiliate thereof.

    10.4 RELIANCE BY AGENT.
    -----------------------

    The  Agent  shall be  entitled  to rely,  and  shall be fully  protected  in
relying, upon any writing, communication, signature, resolution, representation,
notice, consent,  certificate,  affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it to
be  genuine  and  correct  and to have been  signed,  sent or made by the proper
Person or Persons,  and upon advice and  statements of legal counsel  (including
counsel to any Credit Party), independent accountants and other experts selected
by the Agent.  The Agent shall be fully justified in failing or refusing to take
any action under any Credit  Document  unless it shall first receive such advice
or concurrence  of the Required  Lenders as it deems  appropriate  and, if it so
requests,  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 or continuing to take any such action. The Agent shall in all cases be
fully  protected in acting,  or in  refraining  from  acting,  under this Credit
Agreement or any other Credit  Document in accordance  with a request or consent
of the Required  Lenders or all the  Lenders,  if required  hereunder,  and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and  participants.  Where this Credit  Agreement  expressly
permits or prohibits an action unless the Required Lenders otherwise  determine,
the Agent  shall,  and in all other  instances,  the Agent may, but shall not be
required to, initiate any solicitation for the consent or a vote of the Lenders.

    10.5 NOTICE OF DEFAULT.
    -----------------------

    The Agent shall not be deemed to have  knowledge or notice of the occurrence
of any  Default or Event of  Default,  except  with  respect to  defaults in the
payment of principal, interest and fees required to be paid to the Agent for the
account of the Lenders, unless the Agent shall have received written notice from
a Lender or the Borrower  referring to this Credit  Agreement,  describing  such
Default  or Event of  Default  and  stating  that such  notice  is a "notice  of
default."  The Agent will notify the Lenders of its receipt of any such  notice.
The Agent  shall  take such  action  with  respect  to such  Default or Event of
Default as may be directed by the Required Lenders in accordance with Section 9;
provided,  however,  that  unless  and until the  Agent  has  received  any such
direction,  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 or in the best interest of the Lenders.

    10.6 CREDIT DECISION; DISCLOSURE OF INFORMATION BY AGENT.
    ---------------------------------------------------------

    Each  Lender  acknowledges  that  no  Agent-Related   Person  has  made  any
representation  or  warranty  to it,  and that no act by the  Agent  hereinafter
taken,  including any consent to and  acceptance of any  assignment or review of
the affairs of any Credit  Party or any  Affiliate  thereof,  shall be deemed to
constitute any  representation  or warranty by any  Agent-Related  Person to any
Lender as to any matter,  including whether Agent-Related Persons have disclosed
material  information in their  possession.  Each Lender represents to the Agent
that it has,  independently and without reliance upon any  Agent-Related  Person
and based on such documents and information as it has deemed  appropriate,  made
its own appraisal of and investigation into the business, prospects, operations,
property,  financial  and other  condition  and  creditworthiness  of the Credit
Parties and their  respective  Subsidiaries,  and all  applicable  bank or other
regulatory Laws relating to the transactions  contemplated  hereby, and made its
own  decision to enter into this Credit  Agreement  and to extend  credit to the
Borrower and the other Credit  Parties  hereunder.  Each Lender also  represents
that it will,  independently and without reliance upon any Agent-Related  Person
and based on such documents and information as it shall deem  appropriate at the
time,  continue to make its own credit  analysis,  appraisals  and  decisions in
taking or not taking  action  under this Credit  Agreement  and the other Credit
Documents,  and to make  such  investigations  as it deems  necessary  to inform
itself as to the business, prospects,  operations, property, financial and other
condition  and  creditworthiness  of the Borrower and the other Credit  Parties.
Except  for  notices,  reports  and other  documents  expressly  required  to be
furnished to the Lenders by the Agent herein,  the Agent shall not have any duty
or  responsibility  to provide any Lender  with any credit or other  information
concerning the business,  prospects,  operations,  property, financial and other
condition  or  creditworthiness  of any of the  Credit  Parties  or any of their
respective  Affiliates  which may come into the possession of any  Agent-Related
Person.

    10.7 INDEMNIFICATION OF AGENT.
    ------------------------------

    Whether or not the transactions  contemplated  hereby are  consummated,  the
Lenders shall indemnify upon demand each Agent-Related Person (to the extent not
reimbursed  by or on  behalf  of any  Credit  Party  and  without  limiting  the
obligation  of any Credit  Party to do so),  pro rata,  and hold  harmless  each
Agent-Related  Person  from  and  against  any and all  Indemnified  Liabilities
incurred  by it;  provided,  however,  that no Lender  shall be  liable  for the
payment  to  any  Agent-Related  Person  of  any  portion  of  such  Indemnified
Liabilities resulting from such Person's gross negligence or willful misconduct;
provided, however, that no action taken in accordance with the directions of the
Required  Lenders  shall be deemed to  constitute  gross  negligence  or willful
misconduct  for purposes of this Section.  Without  limitation of the foregoing,
each Lender shall  reimburse  the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent
in  connection  with  the  preparation,   execution,  delivery,  administration,
modification,  amendment or enforcement  (whether  through  negotiations,  legal
proceedings  or  otherwise)  of,  or  legal  advice  in  respect  of  rights  or
responsibilities under, this Credit Agreement, any other Credit Document, or any
document  contemplated by or referred to herein, to the extent that the Agent is
not  reimbursed  for  such  expenses  by or  on  behalf  of  the  Borrower.  The
undertaking in this Section shall survive  termination of the  Commitments,  the
payment  of all  Credit  Party  Obligations  hereunder  and the  resignation  or
replacement of the Agent.

    10.8 AGENT IN ITS INDIVIDUAL CAPACITY.
    --------------------------------------

    Bank of  America  and its  Affiliates  may make loans to,  issue  letters of
credit for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or  other  business  with  each  of the  Credit  Parties  and  their  respective
Affiliates  as though Bank of America  were not the Agent or the Issuing  Lender
hereunder  and  without  notice  to or  consent  of  the  Lenders.  The  Lenders
acknowledge that, pursuant to such activities, Bank of America or its Affiliates
may receive information  regarding any Credit Party or its Affiliates (including
information that may be subject to confidentiality  obligations in favor of such
Credit Party or such Affiliate) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Loans,  Bank
of America shall have the same rights and powers under this Credit  Agreement as
any other Lender and may  exercise  such rights and powers as though it were not
the Agent or the Issuing  Lender,  and the terms "Lender" and "Lenders"  include
Bank of America in its individual capacity.

    10.9 SUCCESSOR AGENT.
    ---------------------

    The Agent may resign as Agent upon thirty (30) days'  notice to the Lenders.
If the Agent resigns  under this Credit  Agreement,  the Required  Lenders shall
appoint from among the Lenders a successor Agent for the Lenders which successor
Agent shall be  consented  to by the Borrower at all times other than during the
existence of an Event of Default  (which  consent of the  Borrower  shall not be
unreasonably  withheld or delayed).  If no successor Agent is appointed prior to
the effective date of the resignation of the Agent, the Agent may appoint, after
consulting  with the Lenders and the Borrower,  a successor Agent from among the
Lenders.  Upon the acceptance of its appointment as successor  Agent  hereunder,
such successor  Agent shall succeed to all the rights,  powers and duties of the
retiring  Agent and the term  "Agent"  shall mean such  successor  Agent and the
retiring  Agent's  appointment,  powers and duties as Agent shall be terminated.
After any retiring  Agent's  resignation  hereunder as Agent,  the provisions of
this Section 10 and Sections 11.5 and 11.10 shall inure to its benefit as to any
actions  taken or omitted to be taken by it while it was Agent under this Credit
Agreement.  If no successor Agent has accepted  appointment as Agent by the date
which is thirty (30) days following a retiring  Agent's  notice of  resignation,
the retiring Agent's  resignation shall nevertheless  thereupon become effective
and the Lenders  shall  perform all of the duties of the Agent  hereunder  until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above.


                                   SECTION 11

                                  MISCELLANEOUS
                                  -------------

    11.1 NOTICES.
    -------------

    Except  as  otherwise  expressly  provided  herein,  all  notices  and other
communications  shall  have been duly  given  and  shall be  effective  (a) when
delivered, (b) when transmitted via telecopy, (c) the Business Day following the
day on which  the  same  has been  delivered  prepaid  to a  reputable  national
overnight air courier  service,  or (d) the third Business Day following the day
on which the same is sent by certified or registered mail,  postage prepaid,  in
each case to the respective parties at the address or telecopy numbers set forth
on Schedule  11.1, or at such other address as such party may specify by written
notice to the other parties hereto.

    11.2 RIGHT OF SET-OFF.
    ----------------------

    In addition to any rights now or hereafter  granted under  applicable law or
otherwise,  and not by way of limitation of any such rights, upon the occurrence
and  during the  continuation  of an Event of Default  and the  commencement  of
remedies  described in Section 9.2,  each Lender is  authorized  at any time and
from time to time, without presentment,  demand,  protest or other notice of any
kind (all of which  rights  being hereby  expressly  waived),  to set-off and to
appropriate  and apply any and all  deposits  (general or special) and any other
indebtedness  at any  time  held or  owing by such  Lender  (including,  without
limitation, branches, agencies or Affiliates of such Lender wherever located) to
or for the credit or the account of any Credit  Party  against  obligations  and
liabilities of such Credit Party to the Lenders hereunder,  under the Notes, the
other Credit  Documents or otherwise,  irrespective  of whether the Agent or the
Lenders  shall have made any demand  hereunder  and although  such  obligations,
liabilities or claims,  or any of them, may be contingent or unmatured,  and any
such set-off shall be deemed to have been made  immediately  upon the occurrence
of an Event of Default  even  though such charge is made or entered on the books
of such Lender subsequent thereto.

    11.3 SUCCESSORS AND ASSIGNS.
    ----------------------------

    (a) The provisions of this Credit  Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby,  except that the Borrower may not assign or otherwise transfer
any of its rights or obligations  hereunder without the prior written consent of
each Lender (and any attempted  assignment  or transfer by the Borrower  without
such  consent  shall  be null  and  void).  Nothing  in this  Credit  Agreement,
expressed or implied,  shall be construed to confer upon any Person  (other than
the parties hereto,  their  respective  successors and assigns  permitted hereby
and, to the extent expressly  contemplated hereby, the Indemnitees) any legal or
equitable right, remedy or claim under or by reason of this Credit Agreement.

    (b) Any Lender may assign to one or more Eligible Assignees all or a portion
of its rights and obligations  under this Credit  Agreement  (including all or a
portion  of its  Commitments  and the  Loans  (including  for  purposes  of this
subsection (b), participations in LOC Obligations and in Swingline Loans) at the
time owing to it);  provided that (i) except in the case of an assignment of the
entire  remaining amount of the assigning  Lender's  Commitment and the Loans at
the time owing to it or in the case of an assignment to a Lender or an Affiliate
of a Lender  or an  Approved  Fund  with  respect  to a Lender  (so long as each
assignee  will  hold a minimum  Commitment  of not less  than  $1,000,000),  the
aggregate  amount of the  Commitment  (which  for this  purpose  includes  Loans
outstanding  thereunder) or the principal  outstanding  balance of the Tranche A
Term Loan or Tranche B Term Loan,  as the case may be, of the  assigning  Lender
subject to each such  assignment,  determined as of the date the  Assignment and
Acceptance with respect to such assignment is delivered to the Agent,  shall not
be less than  $1,000,000 and (ii) the parties to each  assignment  shall execute
and  deliver  to  the  Agent  an  Assignment  and  Acceptance,  together  with a
processing  and  recordation  fee of $3,500  (with only one such fee  payable in
connection  with  simultaneous   assignments  to  Approved  Funds).  Subject  to
acceptance and recording thereof by the Agent pursuant to subsection (c) of this
Section,  from and after the effective  date  specified in each  Assignment  and
Acceptance, the Eligible Assignee thereunder shall be a party hereto and, to the
extent of the interest  assigned by such  Assignment  and  Acceptance,  have the
rights  and  obligations  of a  Lender  under  this  Credit  Agreement,  and the
assigning  Lender  thereunder  shall, to the extent of the interest  assigned by
such  Assignment and  Acceptance,  be released from its  obligations  under this
Credit Agreement (and, in the case of an Assignment and Acceptance  covering all
of the assigning  Lender's rights and obligations  under this Credit  Agreement,
such Lender shall cease to be a party  hereto but shall  continue to be entitled
to the  benefits  of Sections  2.2(i),  3.6,  3.9,  3.11,  3.12 and 11.5).  Upon
request,  the  Borrower  (at its  expense)  shall  execute  and  deliver  new or
replacement  Notes  to  the  assigning  Lender  and  the  assignee  Lender.  Any
assignment  or transfer by a Lender of rights or  obligations  under this Credit
Agreement  that  does not  comply  with this  subsection  shall be  treated  for
purposes of this Credit Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with subsection (d) of this Section.

    (c) The Agent,  acting  solely for this purpose as an agent of the Borrower,
shall maintain at the Agent's  principal  office in Charlotte,  North Carolina a
copy of each  Assignment and  Acceptance  delivered to it and a register for the
recordation of the names and addresses of the Lenders,  and the  Commitments of,
and  principal  amount of the Loans and LOC  Obligations  owing to,  each Lender
pursuant to the terms hereof from time to time (the "Register").  The entries in
the Register  shall be conclusive,  and the Borrower,  the Agent and the Lenders
may treat each Person  whose name is recorded  in the  Register  pursuant to the
terms hereof as a Lender  hereunder  for all purposes of this Credit  Agreement,
notwithstanding  notice to the  contrary.  The Register  shall be available  for
inspection by the Borrower and any Lender,  at any reasonable time and from time
to time upon reasonable prior notice.

    (d) Any Lender may,  without  the consent of, or notice to, the  Borrower or
the  Agent,  sell  participations  to one or more  banks  or other  entities  (a
"Participant")  in all or a portion of such Lender's  rights and/or  obligations
under this  Credit  Agreement  (including  all or a portion  of its  Commitments
and/or the Loans  (including  such Lender's  participations  in LOC  Obligations
and/or  Swingline  Loans)  owing  to  it);   provided  that  (i)  such  Lender's
obligations under this Credit Agreement shall remain unchanged, (ii) such Lender
shall remain solely  responsible to the other parties hereto for the performance
of such  obligations  and (iii) 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 Credit Agreement.  Any agreement
or  instrument  pursuant  to which a Lender  sells  such a  participation  shall
provide  that such  Lender  shall  retain the sole right to enforce  this Credit
Agreement and to approve any amendment,  modification or waiver of any provision
of this Credit Agreement; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant,  agree to any
amendment,  waiver or other  modification  that would (i) postpone any date upon
which any payment of money is  scheduled  to be paid to such  Participant,  (ii)
reduce  the  principal,   interest,  fees  or  other  amounts  payable  to  such
Participant or (iii) release all or  substantially  all of the  Guarantors  from
their obligations under Credit Agreement and the other Credit Documents.

    (e) A Participant shall not be entitled to receive any greater payment under
Section  2.2(i),  3.6, 3.9, 3.11 or 3.14 than the  applicable  Lender would have
been  entitled  to  receive  with  respect  to the  participation  sold  to such
Participant,  unless the sale of the  participation  to such Participant is made
with the Borrower's prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 3.11
unless the Borrower is notified of the  participation  sold to such  Participant
and such  Participant  agrees,  for the benefit of the Borrower,  to comply with
Section 3.11(b) as though it were a Lender.

    (f)  Notwithstanding any other provision set forth in this Credit Agreement,
any Lender may,  without the consent of the  Borrower or the Agent,  at any time
(i) assign and pledge all or any portion of rights  under this Credit  Agreement
(including  under its Notes,  if any) to any Federal  Reserve Bank as collateral
security  pursuant to  Regulation A and any  operating  circular  issued by such
Federal  Reserve  Bank or (ii)  pledge all or any portion of its rights (but not
its obligations to make Loans or participate in Letters of Credit)  hereunder to
any trustee or holders of obligations owed, or securities issued, by such Lender
as security for such obligations or securities or to any other representative of
such holders;  provided that no such pledge or assignment shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or assignee
for such Lender as a party hereto.

    (g) If the  consent  of the  Borrower  to an  assignment  or to an  Eligible
Assignee is required hereunder  (including a consent to an assignment which does
not meet the minimum assignment threshold specified in clause (i) of the proviso
to the first sentence of Section 11.3(b)),  the Borrower shall be deemed to have
given its consent five (5) Business Days after the date notice  thereof has been
delivered by the  assigning  Lender  (through the Agent)  unless such consent is
expressly refused by the Borrower prior to such fifth Business Day.

    (h)  Notwithstanding  anything to the contrary  contained  herein, if at any
time Bank of  America  assigns  all of its  Commitments  and Loans  pursuant  to
subsection (b) above,  Bank of America may, (i) upon thirty (30) days' notice to
the Borrower and the Lenders, resign as Issuing Lender and/or (ii) upon five (5)
Business Days' notice to the Borrower,  terminate the Swingline  Commitment.  In
the  event of any such  resignation  as  Issuing  Lender or  termination  of the
Swingline  Commitment,  the Borrower shall be entitled to appoint from among the
Lenders a successor  Issuing  Lender or Swingline  Lender  hereunder;  provided,
however,  that no failure by the  Borrower to appoint any such  successor  shall
affect the  resignation of Bank of America as Issuing Lender or the  termination
of the  Swingline  Commitment,  as the case may be. Bank of America shall retain
all the rights and  obligations of the Issuing Lender  hereunder with respect to
all Letters of Credit outstanding as of the effective date of its resignation as
Issuing Lender and all LOC Obligations with respect thereto (including the right
to require the Lenders to make Base Rate Loans or fund participations in Letters
of Credit  pursuant  to  Section  2.2(c)).  If Bank of  America  terminates  the
Swingline  Commitment,  it shall retain all the rights of the  Swingline  Lender
provided  for  hereunder  with  respect  to  Swingline  Loans  made  by  it  and
outstanding as of the effective date of such termination, including the right to
require  the  Lenders  to  make  Base  Rate  Loans  or  fund  participations  in
outstanding Swingline Loans pursuant to Section 2.3(b)(iii).

    11.4 NO WAIVER; REMEDIES CUMULATIVE.
    ------------------------------------

    No failure or delay on the part of the Agent or any Lender in exercising any
right,  power or privilege  hereunder or under any other Credit  Document and no
course of dealing  between the Borrower or any Credit Party and the Agent or any
Lender  shall  operate  as a waiver  thereof;  nor shall any  single or  partial
exercise of any right,  power or  privilege  hereunder or under any other Credit
Document  preclude any other or further  exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies which
the Agent or any  Lender  would  otherwise  have.  No notice to or demand on any
Credit Party in any case shall  entitle any Credit Party to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights  of the  Agent or the  Lenders  to any  other or  further  action  in any
circumstances without notice or demand.

    11.5 PAYMENT OF EXPENSES; INDEMNIFICATION.
    ------------------------------------------

    (a) The Credit Parties agree to: (i) pay all reasonable  out-of-pocket costs
and  expenses  of  (A)  the  Agent  in  connection  with  (x)  the  negotiation,
preparation,  execution and delivery and administration of this Credit Agreement
and the other Credit  Documents and the documents  and  instruments  referred to
therein  (including,  without  limitation,  the reasonable  fees and expenses of
Moore & Van Allen,  PLLC,  special counsel to the Agent), and (y) any amendment,
waiver or consent relating hereto and thereto including, but not limited to, any
such amendments,  waivers or consents resulting from or related to any work-out,
renegotiation  or restructure  relating to the performance by the Credit Parties
under this Credit Agreement and (B) the Agent and the Lenders in connection with
(x)  enforcement  of the Credit  Documents  and the  documents  and  instruments
referred to therein, including,  without limitation, in connection with any such
enforcement,  the reasonable fees and disbursements of counsel for the Agent and
each of the Lenders, and (y) any bankruptcy or insolvency proceeding of a Credit
Party of any of its Subsidiaries.

    (b) Whether or not the transactions contemplated hereby are consummated, the
Credit  Parties  agree to indemnify,  save and hold harmless each  Agent-Related
Person,  each  Lender  and their  respective  Affiliates,  directors,  officers,
employees,  counsel, agents, trustees, investment advisors and attorneys-in-fact
(collectively  the  "Indemnitees")  from and  against:  (i) any and all  claims,
demands, actions or causes of action that are asserted against any Indemnitee by
any Person (other than the Agent or any Lender) relating  directly or indirectly
to a claim,  demand,  action or cause of action that such Person  asserts or may
assert  against any Credit  Party,  any  Affiliate of any Credit Party or any of
their  respective  officers  or  directors;  (ii) any and all  claims,  demands,
actions  or  causes  of  action  that  may at any  time  (including  at any time
following  repayment of the  Obligations  and the  resignation or removal of the
Agent or the  replacement  of any  Lender) be  asserted  or imposed  against any
Indemnitee, arising out of or relating to, the Credit Documents, any predecessor
loan documents, the Commitments,  the use or contemplated use of the proceeds of
any Loan or Letter of Credit, or the relationship of any Credit Party, the Agent
and the Lenders under this Credit Agreement or any other Credit Document;  (iii)
any  administrative  or investigative  proceeding by any Governmental  Authority
arising  out of or  related  to a claim,  demand,  action  or  cause  of  action
described  in  subsection  (i) or (ii) above;  and (iv) any and all  liabilities
(including liabilities under indemnities),  losses, costs or expenses (including
Attorney  Costs)  that any  Indemnitee  suffers  or  incurs  as a result  of the
assertion of any foregoing claim, demand, action, cause of action or proceeding,
or as a  result  of the  preparation  of any  defense  in  connection  with  any
foregoing claim, demand,  action,  cause of action or proceeding,  in all cases,
whether or not arising out of the  negligence of an  Indemnitee,  and whether or
not an Indemnitee is a party to such claim,  demand,  action, cause of action or
proceeding (all the foregoing,  collectively,  the  "Indemnified  Liabilities");
provided that no Indemnitee shall be entitled to  indemnification  for any claim
caused  by its own  gross  negligence  or  willful  misconduct  or for any  loss
asserted against it by another Indemnitee.  The agreements in this Section shall
survive the termination of the Commitments and repayment of all the Credit Party
Obligations.

    11.6 AMENDMENTS, WAIVERS AND CONSENTS.
    --------------------------------------

    Neither this Credit  Agreement nor any other Credit  Document nor any of the
terms  hereof  or  thereof  may  be  amended,  changed,  waived,  discharged  or
terminated unless such amendment, change, waiver, discharge or termination is in
writing  entered into by, or approved in writing by, each of the Credit  Parties
party thereto and the Required Lenders, provided, however, that:

        (a) without the consent of each Lender  affected  thereby,  neither this
    Credit  Agreement  nor any other Credit  Document  may be amended,  changed,
    waived, discharged or terminated so as to:

            (i) extend the final  maturity  of any Loan or of any  reimbursement
        obligation,  or any portion thereof, arising from drawings under Letters
        of Credit, or extend or waive any Principal  Amortization Payment of any
        Loan, or any portion thereof,

            (ii)  reduce  the rate or extend  the time of  payment  of  interest
        (other than as a result of waiving the applicability of any post-default
        increase in interest rates) thereon or fees hereunder,

            (iii)  reduce  or waive the  principal  amount of any Loan or of any
        reimbursement  obligation, or any portion thereof, arising from drawings
        under Letters of Credit,

            (iv) increase the  Commitment of a Lender over the amount thereof in
        effect (it being  understood  and agreed that a waiver of any Default or
        Event of Default or  mandatory  reduction in the  Commitments  shall not
        constitute a change in the terms of any Commitment of any Lender),

            (v)  except  as  the  result  of  or in  connection  with  an  Asset
        Disposition  not  prohibited  by Section 8.5 or in  connection  with the
        release of Collateral set forth in Section  7.13(c),  release all or any
        material portion of the Collateral,

            (vi) except as the result of or in  connection  with a  dissolution,
        merger or disposition of a Consolidated  Party not prohibited by Section
        8.4 or Section  8.5,  release the Borrower or  substantially  all of the
        other  Credit  Parties  from its or their  obligations  under the Credit
        Documents,

            (vii) amend,  modify or waive any  provision  of this Section  11.6,
        Section 3.13, Section 3.15(b) or 7.13(c),

            (viii) reduce any percentage  specified in, or otherwise modify, the
        definition of Required Lenders, or

            (ix) consent to the assignment or transfer by the
                  Borrower or all or substantially all of the other Credit
                  Parties of any of its or their rights and obligations under
                  (or in respect of) the Credit Documents except as permitted
                  thereby;

        (b) without the consent of Lenders  holding in the  aggregate at least a
    majority of the Revolving Commitments (and Participation  Interests therein)
    (or if the  Revolving  Commitments  have been  terminated,  the  outstanding
    Revolving  Loans  (and  Participation   Interests  therein,   including  the
    Participation Interests of the Issuing Lender in any Letters of Credit)), no
    Default or Event of Default may be waived for purposes of Section 5.2(d);

        (c) (i) without the consent of Lenders holding in the aggregate at least
    a  majority  of the  outstanding  Tranche A Term  Loans  (and  Participation
    Interests  therein),  Section  3.3(b) may not be amended,  changed,  waived,
    discharged  or  terminated so as to extend the time for or the amount or the
    manner of  application  of proceeds in respect of the Tranche A Term Loan on
    account of any mandatory  prepayment required by Section 3.3(b)(ii),  (iii),
    or (iv)  hereof,  and (ii)  without  the  consent of Lenders  holding in the
    aggregate at least a majority of the  outstanding  Tranche B Term Loans (and
    Participation  Interests  therein),  Section  3.3(b)  may  not  be  amended,
    changed,  waived,  discharged  or terminated so as to extend the time for or
    the  amount or the  manner of  application  of  proceeds  in  respect of the
    Tranche B Term Loan on  account  of any  mandatory  prepayment  required  by
    Section 3.3(b)(ii), (iii), or (iv) hereof;

        (d) without the consent of the Agent,  no provision of Section 10 may be
    amended, changed, waived, discharged or terminated; and

        (e) without the consent of the Issuing  Lender,  no provision of Section
    2.2 may be amended, changed, waived, discharged or terminated.

        (f) without the consent of the Swingline Lender, no provision of Section
    2.3 may be amended.

    Notwithstanding  the fact that the consent of all the Lenders is required in
    certain  circumstances  as set forth  above,  (x) each Lender is entitled to
    vote as such  Lender  sees fit on any  bankruptcy  reorganization  plan that
    affects  the Loans,  and each Lender  acknowledges  that the  provisions  of
    Section  1126(c) of the Bankruptcy  Code  supersedes  the unanimous  consent
    provisions  set forth herein and (y) the Required  Lenders  shall  determine
    whether or not to allow a Credit Party to use cash collateral in the context
    of a bankruptcy or insolvency  proceeding  and such  determination  shall be
    binding on all of the Lenders.

    11.7 COUNTERPARTS.
    ------------------

    This Credit Agreement may be executed in any number of counterparts, each of
which where so executed and  delivered  shall be an  original,  but all of which
shall  constitute  one and the same  instrument.  It shall not be  necessary  in
making  proof of this Credit  Agreement  to produce or account for more than one
such  counterpart.  Delivery by  facsimile  by any of the  parties  hereto of an
executed  counterpart  of this  Credit  Agreement  shall be as  effective  as an
original executed  counterpart hereof and shall be deemed a representation  that
an original executed counterpart hereof will be delivered.

    11.8 HEADINGS.
    --------------

    The  headings  of the  sections  and  subsections  hereof are  provided  for
convenience  only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.

    11.9 DEFAULTING LENDER.
    -----------------------

    Each  Lender  understands  and agrees  that if such  Lender is a  Defaulting
Lender  then  notwithstanding  the  provisions  of Section  11.6 it shall not be
entitled to vote on any matter  requiring the consent of the Required Lenders or
to object to any matter  requiring  the  consent of all the  Lenders;  provided,
however,  that all other  benefits and  obligations  under the Credit  Documents
shall apply to such Defaulting Lender.

    11.10 SURVIVAL OF INDEMNIFICATION AND REPRESENTATIONS AND WARRANTIES.
    ---------------------------------------------------------------------

    All indemnities set forth herein and all representations and warranties made
herein shall survive the execution  and delivery of this Credit  Agreement,  the
making of the Loans and the repayment of the Loans and other obligations and the
termination of the Commitments hereunder.

    11.11 GOVERNING LAW; JURISDICTION.
    ----------------------------------

        (a) THIS  AGREEMENT  AND THE OTHER CREDIT  DOCUMENTS  AND THE RIGHTS AND
    OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
    CONSTRUED AND  INTERPRETED  IN ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW
    YORK. Any legal action or proceeding  with respect to this Credit  Agreement
    or any other  Credit  Document  may be brought in the courts of the State of
    New York, New York County or of the United States for the Southern  District
    of New York and, by execution  and delivery of this Credit  Agreement,  each
    Credit  Party  hereby  irrevocably  accepts for itself and in respect of its
    property,  generally and  unconditionally,  the jurisdiction of such courts.
    Each Credit Party further irrevocably consents to the service of process out
    of any of the aforementioned  courts in any such action or proceeding by the
    mailing of copies thereof by registered or certified mail,  postage prepaid,
    to it at the address for notices  pursuant to Section 11.1,  such service to
    become effective 15 days after such mailing. Nothing herein shall affect the
    right of a Lender to serve  process in any other manner  permitted by law or
    to commence legal proceedings or to otherwise proceed against a Credit Party
    in any other jurisdiction. Each Credit Party agrees that a final judgment in
    any action or proceeding  shall be  conclusive  and may be enforced in other
    jurisdictions  by suit on the  judgment or in any other  manner  provided by
    law;  provided that nothing in this Section 11.11(a) is intended to impair a
    Credit  Party's right under  applicable  law to appeal or seek a stay of any
    judgment.

        (b) Each Credit Party hereby  irrevocably  waives any objection which it
    may now or  hereafter  have to the  laying of venue of any of the  aforesaid
    actions or  proceedings  arising  out of or in  connection  with this Credit
    Agreement or any other Credit Document  brought in the courts referred to in
    subsection (a) hereof and hereby further  irrevocably  waives and agrees not
    to  plead or claim in any such  court  that any such  action  or  proceeding
    brought in any such court has been brought in an inconvenient forum.

    11.12 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS CREDIT  AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,  ACTION
OR CAUSE OF ACTION  ARISING  UNDER ANY CREDIT  DOCUMENT OR IN ANY WAY  CONNECTED
WITH OR RELATED OR  INCIDENTAL  TO THE DEALINGS OF THE PARTIES  HERETO OR ANY OF
THEM WITH RESPECT TO ANY CREDIT DOCUMENT,  OR THE TRANSACTIONS  RELATED THERETO,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER  ARISING,  AND WHETHER FOUNDED IN
CONTRACT OR TORT OR  OTHERWISE;  AND EACH PARTY HEREBY  AGREES AND CONSENTS THAT
ANY SUCH  CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION  SHALL BE  DECIDED BY COURT
TRIAL WITHOUT A JURY,  AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN  EVIDENCE OF THE
CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

    11.13 TIME.
    -----------

    All  references to time herein shall be references to Eastern  Standard Time
or Eastern Daylight time, as the case may be, unless specified otherwise.

    11.14 SEVERABILITY.
    -------------------

    If any provision of any of the Credit Documents is determined to be illegal,
invalid  or  unenforceable,  such  provision  shall be fully  severable  and the
remaining  provisions  shall  remain  in full  force  and  effect  and  shall be
construed  without  giving  effect  to the  illegal,  invalid  or  unenforceable
provisions.

    11.15 ENTIRETY.
    ---------------

    This Credit Agreement together with the other Credit Documents represent the
entire  agreement of the parties  hereto and thereto,  and  supersede  all prior
agreements and understandings, oral or written, if any, including any commitment
letters or  correspondence  relating to the Credit Documents or the transactions
contemplated herein and therein.

    11.16 BINDING EFFECT.
    ---------------------

    This Credit  Agreement  shall become  effective at such time when all of the
conditions set forth in Section 5.1 have been satisfied or waived by the Lenders
and it shall have been executed by the Borrower,  the  Guarantors and the Agent,
and the Agent shall have received copies hereof  (telefaxed or otherwise) which,
when taken  together,  bear the signatures of each Lender,  and thereafter  this
Credit Agreement shall be binding upon and inure to the benefit of the Borrower,
the Guarantors,  the Agent and each Lender and their  respective  successors and
assigns.

    11.17 CONFIDENTIALITY.
    ----------------------

    Each of the Agent and the Lenders agrees to maintain the  confidentiality of
the Information (as defined below), except that Information may be disclosed (a)
to its and its Affiliates' directors,  officers, employees and agents, including
accountants,  auditors,  legal counsel and other  advisors (it being  understood
that the  Persons  to whom  such  disclosure  is made  will be  informed  of the
confidential  nature of such Information and instructed to keep such Information
confidential);  (b) to the extent requested by any regulatory authority;  (c) to
the extent  required by  applicable  laws or  regulations  or by any subpoena or
similar legal process;  (d) to any other party to this Credit Agreement;  (e) in
connection  with the exercise of any remedies  hereunder or any suit,  action or
proceeding  relating  to this  Credit  Agreement  or the  enforcement  of rights
hereunder;  (f) subject to an agreement containing provisions  substantially the
same as those of this Section,  to (i) any Eligible  Assignee of or  Participant
in, or any prospective Eligible Assignee of or Participant in, any of its rights
or  obligations  under this  Credit  Agreement  or (ii) any  direct or  indirect
contractual  counterparty  or  prospective  counterparty  (or  such  contractual
counterparty's or prospective counterparty's professional advisor) to any credit
derivative  transaction  relating to obligations  of the Borrower;  (g) with the
consent of the Borrower; (h) to the extent such Information (i) becomes publicly
available  other  than as a result  of a breach of this  Section  or (ii) was or
becomes available to the Agent or any Lender on a  nonconfidential  basis from a
source other than the Borrower;  or (i) to the National Association of Insurance
Commissioners  or any other similar  organization  or any nationally  recognized
rating  agency  that  requires  access to  information  about a Lender's  or its
Affiliates'  investment portfolio in connection with ratings issued with respect
to  such  Lender  or  its   Affiliates.   For  the  purposes  of  this  Section,
"Information"  means all information  received from the Borrower relating to the
Borrower or its business,  other than any such  information that is available to
the Agent or any Lender on a  nonconfidential  basis prior to  disclosure by the
Borrower;  provided that, in the case of information  received from the Borrower
after the date hereof,  such information is clearly identified in writing at the
time  of  delivery  as  confidential.   Any  Person  required  to  maintain  the
confidentiality  of  Information as provided in this Section shall be considered
to have complied  with its  obligation to do so if such Person has exercised the
same degree of care to maintain the  confidentiality of such Information as such
Person would accord to its similar client confidential information.

    11.18 BINDING EFFECT; TERMINATION OF CREDIT AGREEMENT; ETC.
    -----------------------------------------------------------

        (a) This Credit  Agreement  shall be deemed to have become  effective at
    such time on or after the Closing  Date when it shall have been  executed by
    the  Borrower,  the  Guarantors  and the  Agent,  and the Agent  shall  have
    received copies thereof (telefaxed or otherwise) which, when taken together,
    bear the  signatures of each Lender,  and  thereafter  the Credit  Agreement
    shall  be  binding  upon and  inure  to the  benefit  of the  Borrower,  the
    Guarantors,  the Agent and each Lender and their  respective  successors and
    assigns.

        (b) The term of the Credit Agreement shall be until no Loans, Letters of
    Credit, LOC Obligations or any other amounts payable under any of the Credit
    Documents shall remain  outstanding  and until all of the Commitments  shall
    have expired or been terminated.

        (c) At such time as this Credit  Agreement  shall have become  effective
    pursuant to the terms of Section 11.18(a),  the promissory notes executed in
    connection  with the Existing  Credit  Agreement  shall be replaced with the
    Notes, if any, executed in connection with this Credit Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

    Each of the parties hereto has caused a counterpart of this Credit Agreement
to be duly executed and delivered as of the date first above written.

BORROWER:

                                    APRIA HEALTHCARE GROUP INC.,
                                    a Delaware corporation

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


GUARANTORS:

                                    APRIA HEALTHCARE INC.,
                                    a Delaware corporation

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


                                    APRIA NUMBER TWO INC.,
                                    a Delaware corporation

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


                                    APRIACARE MANAGEMENT SYSTEMS INC.,
                                    a Delaware corporation

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



<PAGE>



                                    APRIA HEALTHCARE OF NEW YORK
                                    STATE, INC.,
                                    a New York corporation

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



                                    APRIA HEALTHCARE ESSENTIALS, LLC,
                                    a Delaware limited liability company


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





LENDERS:

                                    BANK OF AMERICA, N.A.,
                                    individually  in its  capacity as a Lender
                                    and in its capacity as Agent

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


                                    [OTHER LENDERS]

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


<PAGE>
                                 SCHEDULE 1.1(A)
                                 ---------------

                                   INVESTMENTS

1.   Nations Fund - money market account and overnight investment facility.

     Combined balance at May 31, 2001 - $11,325,113.77



2.   B & B Management Group, LLC - Commercial Loan Note Secured by Deed of Trust
     dated June 30, 2000

     Original amount - $690,000             Interest rate - 9%

     Principal balance outstanding at May 31, 2001 - $670,708.90
<PAGE>

                                 SCHEDULE 1.1(B)
                                 ---------------

                                      LIENS

Computer  equipment under capital lease with IBM - remaining  obligation at June
30, 2001: $4,204,882.

The  following  vehicle and  equipment  lease  filings for leases  which are not
capital leases:
<TABLE>

  Lessor/Secured Party                        Location                       Equipment
  --------------------                        --------                       ---------


<S>                                         <C>                          <C>
Ervin Leasing Co.                           Grand Rapids, MI             6 Cellular Phones
Falcon Leasing Corporation                  Omaha, NE                    1 Ice Machine
Cura Capital Corporation                    Littleton, CO                1 Feeding Pump
MWM, Inc.                                   Lenexa, KS                   1 Baler
NTFC Capital Corp.                          Norwood, MA                  Telephone Systems
Xerox Corp.                                 Costa Mesa, CA               4 Xerox Copiers
Cisco Systems                               Various                      Computer Networking Equipment
Pitney Bowes Credit Corporation             Newington, CT                Office Equipment
AT&T Credit Corporation                     Indianapolis, IN             Voice Mail System
GE Capital Fleet Services                   Various                      Vehicles
IKON Office Solutions                       St. Louis, MO                2 Copiers and 2 Sorters
Surety                                      St. Louis, MO                1 Ice Machine
Green Tree Vendor Services                  Evansville, IN               Scales
D.L. Peterson Trust                         Various                      Vehicles*
El Camino Resources                         Various                      Magnetic Tape Subsystem**
</TABLE>


 *Also includes boxes on certain trucks leased from PPH
**Lease expired June 2000


<PAGE>



                                 SCHEDULE 2.1(A)
                                 ---------------

                               LENDERS COMMITMENTS
<TABLE>
<CAPTION>


                                                                      Tranche A        Tranche A        Tranche B      Tranche B
                                      Revolving       Revolving       Term Loan        Term Loan        Term Loan      Term Loan
                                     Commitment       Commitment      Commitment       Commitment       Commitment     Commitment
Lender                                 Amount         Percentage        Amount         Percentage         Amount       Percentage
-------------------------------    --------------   -------------   --------------   -------------   ---------------   ----------
<S>                                <C>              <C>             <C>              <C>             <C>                  <C>
Bank of America, N.A.              $33,333,333.33   33.333333333%   $41,666,666.67   33.333333333%   $175,000,000.00      100%
Fleet Boston Financial             $15,555,555.56   15.555555556%   $19,444,444.44   15.555555556%         N/A            N/A
The Bank of Nova Scotia            $13,333,333.33   13.333333333%   $16,666,666.67   13.333333333%         N/A            N/A
Credit Lyonnais New York Branch    $13,333,333.33   13.333333333%   $16,666,666.67   13.333333333%         N/A            N/A
UBS AG, Stamford Branch            $ 8,888,888.89    8.888888889%   $11,111,111.11    8.888888889%         N/A            N/A
The Chase Manhattan Bank           $ 8,888,888.89    8.888888889%   $11,111,111.11    8.888888889%         N/A            N/A
Credit Suisse First Boston         $ 6,666,666.67    6.666666667%   $ 8,333,333.33    6.666666667%         N/A            N/A

Total:                            $100,000,000.00        100%      $125,000,000.00       100%         $175,000,000.00     100%

</TABLE>

<PAGE>


                                 SCHEDULE 2.2(A)
                                 ---------------

                           EXISTING LETTERS OF CREDIT

Issuer                    Beneficiary            Purpose            Amount
--------------------      -----------------      ------------       ----------
BANK OF AMERICA, N.A.     LIBERTY MUTUAL         GUARANTEE OF       $1,000,000
                          INSURANCE COMPANY      DEDUCTIBLE
                                                 REIMBURSEMENT

<PAGE>


                                  SCHEDULE 6.9
                                  ------------

                                   LITIGATION

 [The text of the disclosures appearing below is excerpted from the section
          entitled "BUSINESS - Legal Proceedings" in Amendment No. 1 to

         Form S-3 Registration Statement filed by the Borrower with the

              Securities and Exchange Commission on July 16, 2001.]

1.  SECURITIES CLASS ACTIONS

    Apria and certain of its present and former  officers  and/or  directors are
defendants in a class action lawsuit,  In Re Apria  Healthcare  Group Securities
Litigation,  filed  in the U.S.  District  Court  for the  Central  District  of
California,  Southern  Division  (Case  No.  SACV98-217  GLT).  This  case  is a
consolidation  of three similar  class  actions filed in March and April,  1998.
Pursuant to a court order dated May 27,  1998,  the  plaintiffs  in the original
three class  actions  filed a  Consolidated  Amended  Class Action  Complaint on
August 6, 1998. The amended complaint purports to establish a class of plaintiff
shareholders who purchased Apria's common stock between May 22, 1995 and January
20,  1998.  No class has been  certified  at this time.  The  amended  complaint
alleges,  among other things,  that the defendants made false and/or  misleading
public  statements  regarding Apria and its financial  condition in violation of
federal  securities laws. The amended complaint seeks  compensatory and punitive
damages as well as other relief.

    Two similar class actions were filed during July 1998 in the Superior  Court
for the State of California for the County of Orange: Schall v. Apria Healthcare
Group Inc.,  et. al. (Case No.  797060) and Thompson v. Apria  Healthcare  Group
Inc., et. al. (Case No. 797580).  These two actions were consolidated by a court
order dated  October 22, 1998 (Master Case No.  797060).  On June 14, 1999,  the
plaintiffs filed a Consolidated  Amended Class Action Complaint asserting claims
founded on state law and on Sections 11 and 12(2) of the 1933 Securities Act.

    Apria believes that it has meritorious  defenses to the plaintiffs'  claims,
and it intends to vigorously  defend itself in both the federal and state cases.
In the opinion of Apria's  management,  the ultimate  disposition of these class
actions will not have a material adverse effect on Apria's results of operations
or financial condition.

2.  QUI TAM LITIGATION

    Since  mid-1998  Apria has  received  a number  of  subpoenas  and  document
requests from U.S. Attorneys' offices and from the U.S. Department of Health and
Human Services. The subpoenas and requests generally ask for documents,  such as
patient  files,   billing  records  and  other  documents  relating  to  billing
practices,  related  to  Apria's  patients  whose  healthcare  costs are paid by
Medicare and other federal programs. Apria is cooperating with the government in
connection with these  investigations and is responding to the document requests
and  subpoenas.  In  July  1999,  Apria  received  notification  that  the  U.S.
Attorney's office in Sacramento closed its criminal  investigation file relating
to eight subpoenas that had been issued by that office.

    In January  2001,  Apria was informed by the U.S.  Attorney's  office in Los
Angeles  that the billing  investigation  being  conducted by that office is the
result of qui tam litigation  filed on behalf of the  government  against Apria,
and that the government is investigating  certain allegations for the purpose of
determining whether it will intervene in that litigation.  The complaints in the
litigation are under seal, however, and the government has not informed Apria of
either the  identity of the court or courts where the  proceedings  are pending,
the date or dates  instituted,  the  identity of the  plaintiffs  or the factual
bases alleged to underlie the proceedings.  To date, the U.S.  Attorney's office
has not  informed  Apria of any  decision to  intervene  in the qui tam actions;
however, it could reach a decision with respect to intervention soon.

    Apria has acknowledged  that there may be errors and omissions in supporting
documentation  affecting  a  portion  of  its  billings.  If a  judge,  jury  or
administrative  agency were to determine that such errors and omissions resulted
in the submission of false claims to federal healthcare  programs or significant
overpayments by the government, Apria could face civil and administrative claims
for refunds,  sanctions and penalties for amounts that would be highly  material
to its  business,  results of  operations  and  financial  condition,  including
exclusion of Apria from participation in federal healthcare programs.

    Since early 2001, Apria has had discussions with representatives of the
government concerning the results of a sampling of 300 patient files submitted
by Apria in response to government subpoenas. The government's sample of 300
patient files includes approximately 2,300 "claims" or monthly invoices for
services and products over a three-and-one-half year period from mid-1995
through year-end 1998. The government has alleged that certain of these claims,
involving up to approximately $110,000 of aggregate billings, are inadequately
supported by required documentation with the result, in the government's view,
that Apria is liable for overpayments and penalties under the False Claims Act.
On July 12, 2001, government representatives and counsel for the plaintiffs in
the qui tam actions asserted that, by a process of extrapolation from the 300
patient sample to all of Apria's billings to the federal government during the
sample period, Apria is liable to the government for treble damages of $309
million (based on an extrapolation to $103 million from the alleged false claims
in the sample), plus penalties of $5,000 to $10,000 for each of over 900,000
allegedly false claims, or a range of total liability from $4.8 billion to over
$9 billion.

    Apria considers these  assertions and amounts to be unsupported both legally
and factually. Apria's position is that the legal analysis of the government and
the qui tam  plaintiffs  is  incorrect,  that their review of the sample  vastly
overstates the number and  significance of  deficiencies,  and that the sampling
and extrapolation methodologies under the circumstances are statistically flawed
and  legally  problematic.  Apria  believes  that the number of sample  invoices
affected by substantive errors or omissions in supporting  documentation is much
less than the  government  and the qui tam  plaintiffs  assert.  Further,  Apria
believes that most of the alleged  errors and omissions  should not give rise to
any liability,  for refunds or otherwise. In fact, Apria believes that its total
obligation  to  refund  overpayments  attributable  to all of the  substantively
deficient  documentation in the government's  sample should be less than $10,000
instead of the $110,000 alleged by the government.

    Apria believes that the claims asserted are unwarranted and that Apria is in
a position  to assert  numerous  meritorious  defenses.  However,  Apria  cannot
provide any assurances as to the outcome of these proceedings. Management cannot
estimate  the  possible  loss or  range  of loss  that  may  result  from  these
proceedings and therefore has not recorded any related accruals.
<PAGE>

                                  SCHEDULE 6.13
                                  -------------

                                  SUBSIDIARIES

                            State of                               Outstanding
                         Incorporation/    Shares     % Owned by    Options,
Name                      Organization   Outstanding  Subsidiary  Warrants, etc.
----                     --------------  -----------  ----------  --------------

Apria Healthcare, Inc.         DE           1,000        100%*         None

Apria Number Two, Inc.         DE             100        100%*         None

ApriaCare Management           DE             100        100%**        None
Systems, Inc.

Apria Healthcare of            NY             300        100%**        None
New York State, Inc.

Apria Healthcare               CA             N/A        ***           None
Essentials, LLC


*Owned by Apria Healthcare Group Inc.

**Owned by Apria Healthcare, Inc.

***Apria Healthcare, Inc. is sole member

<PAGE>


                                SCHEDULE 6.20(A)
                                ----------------

                                  REAL PROPERTY

Owned Real Property:

None.


Leased Real Property:
<TABLE>

<S>                                        <C>                  <C>                    <C>       <C>
Street Address                             Suite                City                   State     Zip
------------------------------------------------------------------------------------------------------------------
4715 GAMBELL ST.                                                ANCHORAGE                AK      99503-7429
------------------------------------------------------------------------------------------------------------------
3519 INDUSTRIAL AVE.                                            FAIRBANKS                AK      99701
------------------------------------------------------------------------------------------------------------------
35348 K-B DR. #B-2                                              SOLDOTNA                 AK      99669
------------------------------------------------------------------------------------------------------------------
100 OXMOOR RD.                              104-106             BIRMINGHAM               AL      35209
------------------------------------------------------------------------------------------------------------------
175 W. OXMOOR RD.                           280                 BIRMINGHAM               AL      35209-6331
------------------------------------------------------------------------------------------------------------------
212 NORTH 25th ST.                                              BIRMINGHAM               AL      35203
------------------------------------------------------------------------------------------------------------------
5000 WHITEBURG DR.                          192                 HUNTSVILLE               AL      35802
------------------------------------------------------------------------------------------------------------------
4970 RANGELINE RD.                                              MOBILE                   AL      36619
------------------------------------------------------------------------------------------------------------------
5704 SOUTH 73rd PL.                                             FT. SMITH                AR      72903
------------------------------------------------------------------------------------------------------------------
2913 KING ST. #3                                                JONESBORO                AR      72401
------------------------------------------------------------------------------------------------------------------
1519 BOWMAN RD. #B & C                                          LITTLE ROCK              AR      72211
------------------------------------------------------------------------------------------------------------------
6701 WEST 12th ST. #14 & 15                                     LITTLE ROCK              AR      72204
------------------------------------------------------------------------------------------------------------------
124-A COMMERCIAL AVE.                                           LOWELL                   AR      72745
------------------------------------------------------------------------------------------------------------------
1514 GOLDRUSH RD. #242 & 244                                    BULLHEAD CITY            AZ      86442
------------------------------------------------------------------------------------------------------------------
2909 E. BROADWAY                                                PHOENIX                  AZ      85040
------------------------------------------------------------------------------------------------------------------
1912 THATCHER BLVD.                                             SAFFORD                  AZ      85548
------------------------------------------------------------------------------------------------------------------
4481 S. WHITE MOUNTAIN RD.                  E1                  SHOW LOW                 AZ      85901
------------------------------------------------------------------------------------------------------------------
900 E. WILCOX DR.                           L18                 SIERRA VISTA             AZ      85635
------------------------------------------------------------------------------------------------------------------
999 E. FRY BLVD.                            101                 SIERRA VISTA             AZ      85635
------------------------------------------------------------------------------------------------------------------
2850 E. VALENCIA RD.                                            TUCSON                   AZ      85706
------------------------------------------------------------------------------------------------------------------
2185 E. PALO VERDE                                              YUMA                     AZ      85365
------------------------------------------------------------------------------------------------------------------
1314 34TH ST.                               A-D                 BAKERSFIELD              CA      93301
------------------------------------------------------------------------------------------------------------------
1369 ROCKING "W" DR.                                            BISHOP                   CA      93514
------------------------------------------------------------------------------------------------------------------
909 EAST 236TH ST.                          173                 CARSON                   CA      90745
------------------------------------------------------------------------------------------------------------------
3028 ESPLANADE                              G                   CHICO                    CA      95973
------------------------------------------------------------------------------------------------------------------
14860 OLYMPIC DR.                                               CLEARLAKE                CA      95422
------------------------------------------------------------------------------------------------------------------
2260 OGULIN CANYON RD.                      J-16                CLEARLAKE                CA      95422
------------------------------------------------------------------------------------------------------------------
4095 PIKE LANE                                                  CONCORD                  CA      94520
------------------------------------------------------------------------------------------------------------------
1590 CORPORATE DR.                                              COSTA MESA               CA      92626
------------------------------------------------------------------------------------------------------------------
3500 HYLAND AVE.                                                COSTA MESA               CA      92626
------------------------------------------------------------------------------------------------------------------
3530 HYLAND AVE.                                                COSTA MESA               CA      92626
------------------------------------------------------------------------------------------------------------------
3550 HYLAND AVE.                                                COSTA MESA               CA      92626
------------------------------------------------------------------------------------------------------------------
3555 HARBOR GATEWAY SOUTH                   B & C2              COSTA MESA               CA      92626
------------------------------------------------------------------------------------------------------------------
3560 HYLAND AVE.                                                COSTA MESA               CA      92626
------------------------------------------------------------------------------------------------------------------
318 N. VINCENT AVE.                         290                 COVINA                   CA      91722
------------------------------------------------------------------------------------------------------------------
630 "G" ST.                                                     CRESCENT CITY            CA      95531
------------------------------------------------------------------------------------------------------------------
401 W. MAIN ST.                                                 EL CENTRO                CA      92243
------------------------------------------------------------------------------------------------------------------
1735 2ND ST.                                                    EUREKA                   CA      95501
------------------------------------------------------------------------------------------------------------------
790 CHADBOURNE RD.                          B                   FAIRFIELD                CA      94559
------------------------------------------------------------------------------------------------------------------
301-305 E. REDWOOD AVE.                                         FORT BRAGG               CA      95437
------------------------------------------------------------------------------------------------------------------
4747 N. BENDEL AVE.                         104 & 105           FRESNO                   CA      93722
------------------------------------------------------------------------------------------------------------------
5090 N. WEBER                               B4 & A8             FRESNO                   CA      93722
------------------------------------------------------------------------------------------------------------------
220 SCOTTSVILLE DR. #A                                          JACKSON                  CA      95642
------------------------------------------------------------------------------------------------------------------
43301 DIVISION ST.                          311-313             LANCASTER                CA      93535
------------------------------------------------------------------------------------------------------------------
2260 COOPER AVE.                            B                   MERCED                   CA      95348-4306
------------------------------------------------------------------------------------------------------------------
4400 SISK RD.                                                   MODESTO                  CA      95356
------------------------------------------------------------------------------------------------------------------
1 LOWER RAGSDALE DR.                        3,  STE 600         MONTEREY                 CA      93540
------------------------------------------------------------------------------------------------------------------
2150 N. TRABAJO                                                 OXNARD                   CA      93030
------------------------------------------------------------------------------------------------------------------
1050 PALM CANYON DR.                                            PALM SPRINGS             CA      92262
------------------------------------------------------------------------------------------------------------------
6200 ENTERPRISE DR.                         H                   PLACERVILLE              CA      95619
------------------------------------------------------------------------------------------------------------------
45 COMMERCE ST.                                                REDDING                  CA      96002
------------------------------------------------------------------------------------------------------------------
1880 IOWA AVE.                              400                 RIVERSIDE                CA      92507
------------------------------------------------------------------------------------------------------------------
4244 S. MARKET CT.                          A                   SACRAMENTO               CA      95834
------------------------------------------------------------------------------------------------------------------
7130 MIRAMAR RD. #30                                            SAN DIEGO                CA      92121
------------------------------------------------------------------------------------------------------------------
9115 ACTIVITY RD.                                               SAN DIEGO                CA      92108
------------------------------------------------------------------------------------------------------------------
555 FIRST STREET                                                SAN FERNANDO             CA      91340
------------------------------------------------------------------------------------------------------------------
2040 CORPORATE CT.                                              SAN JOSE                 CA      95131
------------------------------------------------------------------------------------------------------------------
2995 MCMILLAN AVE.                                              SAN LUIS OBISPO          CA      93401
------------------------------------------------------------------------------------------------------------------
185 N. PACIFIC ST.                          R4                  SAN MARCOS               CA      92069
------------------------------------------------------------------------------------------------------------------
4501 W. MacARTHUR #1161                                         SANTA ANA                CA      92704
------------------------------------------------------------------------------------------------------------------
190 WYE ROAD                                G6                  SANTA BARBARA            CA      93110
------------------------------------------------------------------------------------------------------------------
1265-A McCOY LN.                                                SANTA MARIA              CA      93455
------------------------------------------------------------------------------------------------------------------
3636 LAUGHLIN RD.                           190                 SANTA ROSA               CA      95403
------------------------------------------------------------------------------------------------------------------
476-480 CARLTON COURT                                           SOUTH SAN FRANCISCO      CA      94080
------------------------------------------------------------------------------------------------------------------
7720 LORRAINE AVE.                          114                 STOCKTON                 CA      95210
------------------------------------------------------------------------------------------------------------------
1445 PAUL BUNYAN RD. #C                                         SUSANVILLE               CA      96130
------------------------------------------------------------------------------------------------------------------
2521 MICHELLE AVE.                          100                 TUSTIN                   CA      92780
------------------------------------------------------------------------------------------------------------------
221 E. GOBBI ST.                                                UKIAH                    CA      95482
------------------------------------------------------------------------------------------------------------------
30116 EIGENBRODT WAY                                            UNION CITY               CA      94587
------------------------------------------------------------------------------------------------------------------
14464 ATSTAR DR.                            101, 102, 103 (&    VICTORVILLE              CA      92392
                                            gas at 104)
------------------------------------------------------------------------------------------------------------------
1526 E. MINERAL KING AVE.                                       VISALIA                  CA      93291
------------------------------------------------------------------------------------------------------------------
767 KILEY AVE.                              Q-04                YUBA CITY                CA      95991
------------------------------------------------------------------------------------------------------------------
990 KLAMATH LANE                            11                  YUBA CITY                CA      95993
------------------------------------------------------------------------------------------------------------------
1110 WEST AVE.                                                  ALAMOSA                  CO      81101
------------------------------------------------------------------------------------------------------------------
109 LATIGO LN. #G                                               CANON CITY               CO      81212
------------------------------------------------------------------------------------------------------------------
6275 - 6325 CORPORATE DR.                   CORPORATE CENTRE    COLORADO SPRINGS         CO      80919
                                            BUSINESS PARK
------------------------------------------------------------------------------------------------------------------
1108 N. MILDRED                                                 CORTEZ                   CO      81321
------------------------------------------------------------------------------------------------------------------
629 CRAWFORD AVE.                           E9                  DELTA                    CO      81416
------------------------------------------------------------------------------------------------------------------
3206 MAIN AVE.                              4 - OFFICE 7        DURANGO                  CO      81301
------------------------------------------------------------------------------------------------------------------
1337 RIVERSIDE                              1                   FORT COLLINS             CO      80524
------------------------------------------------------------------------------------------------------------------
1048 INDEPENDENT AVE.                       A110, UNIT B        GRAND JUNCTION           CO      81505
------------------------------------------------------------------------------------------------------------------
666 PATTERSON RD.                           A-1                 GRAND JUNCTION           CO      81501
------------------------------------------------------------------------------------------------------------------
1675 18TH AVE.                                                  GREELEY                  CO      80631
------------------------------------------------------------------------------------------------------------------
1600 E. 6th ST.                             174                 LA JUNTA                 CO      81050
------------------------------------------------------------------------------------------------------------------
300 E. MINERAL AVE.                                             LITTLETON                CO      80122
------------------------------------------------------------------------------------------------------------------
8000 S. LINCOLN AVE.                        8 & 9               LITTLETON                CO      80122
------------------------------------------------------------------------------------------------------------------
1649 MAIN ST.                                                   LONGMONT                 CO      80501
------------------------------------------------------------------------------------------------------------------
385 S. PIERCE ST.                           A&B                 LOUISVILLE               CO      80027
------------------------------------------------------------------------------------------------------------------
1714 E. TOPAZ DR.                           100, 105, 110,      LOVELAND                 CO      80537
                                            205, 210, 215

------------------------------------------------------------------------------------------------------------------
6909 SHANNON CT.                            E43                 LOVELAND                 CO      80537
------------------------------------------------------------------------------------------------------------------
6061 COUNTY RD. 335                         62                  NEW CASTLE               CO      81647
------------------------------------------------------------------------------------------------------------------
607 N. SANTA FE                                                 PUEBLO                   CO      81003
------------------------------------------------------------------------------------------------------------------
305 WEST 2nd St. #2                                             WRAY                     CO      80758
------------------------------------------------------------------------------------------------------------------
36415 HWY 385                                                   WRAY                     CO      80758
------------------------------------------------------------------------------------------------------------------
40 SEBETHE  DR.                                                 CROMWELL                 CT      06416
------------------------------------------------------------------------------------------------------------------
20 MURPHY RD.                                                   FRANKLIN                 CT      06254
------------------------------------------------------------------------------------------------------------------
225 LAKE DR.                                                    NEWARK                   DE      19702
------------------------------------------------------------------------------------------------------------------
13891 JETPORT LOOP                                              FORT MYERS               FL      33913
------------------------------------------------------------------------------------------------------------------
16550 SCHEER BLVD.                          3                   HUDSON                   FL      34667
------------------------------------------------------------------------------------------------------------------
3782 (3802) E. GULF TO LAKE HWY             14                  INVERNESS                FL      34453
------------------------------------------------------------------------------------------------------------------
9143 PHILLIPS HWY                           280                 JACKSONVILLE             FL      32256
------------------------------------------------------------------------------------------------------------------
10810 72ND ST. #205                                             LARGO                    FL      33777
------------------------------------------------------------------------------------------------------------------
274 N. WICKHAM RD.                                              MELBOURNE                FL      32925
------------------------------------------------------------------------------------------------------------------
10350 USA TODAY WAY                                             MIRAMAR                  FL      33025-3901
------------------------------------------------------------------------------------------------------------------
3443 PARKWAY CENTER CT.                     & 3457/3461         ORLANDO                  FL      32808
                                            PARKWAY CENTER
------------------------------------------------------------------------------------------------------------------
3636-D NORTH "L" ST.                        B                   PENSACOLA                FL      32505
------------------------------------------------------------------------------------------------------------------
327 INTERSTATE BLVD.                                            SARASOTA                 FL      34240
------------------------------------------------------------------------------------------------------------------
7882 SW ELLIPSE WAY                                             STUART                   FL      34997
------------------------------------------------------------------------------------------------------------------
5402 BEAUMONT CENTER BLVD.                  114                 TAMPA                    FL      33634
------------------------------------------------------------------------------------------------------------------
5414 BEAUMONT CENTER BLVD.                  210                 TAMPA                    FL      33634
------------------------------------------------------------------------------------------------------------------
9834 CURRIE DAVIS DR.                                           TAMPA                    FL      33619
------------------------------------------------------------------------------------------------------------------
2200 N. FLORIDA MANGO RD.                   3 & 4               WEST PALM BEACH          FL      33409
------------------------------------------------------------------------------------------------------------------
3629 HAVENDALE BLVD. N.W.                                       WINTER HAVEN             FL      33881
------------------------------------------------------------------------------------------------------------------
1225 OLD ALPHARETTA RD., SUITE 295                              ALPHARETTA               GA      30005
------------------------------------------------------------------------------------------------------------------
4555 MANSELL RD.                            220                 ALPHARETTA               GA      30022
------------------------------------------------------------------------------------------------------------------
5095 JEFFERSON RD. #100                                         ATHENS                   GA      30607-1720
------------------------------------------------------------------------------------------------------------------
200 CLEVELAND RD. #2                                            BOGART                   GA      30622
------------------------------------------------------------------------------------------------------------------
945 JOE FRANK HARRIS PKWY                                       CARTERSVILLE             GA      30120-2130
------------------------------------------------------------------------------------------------------------------
157 N. MAIN ST.                                                 CEDARTOWN                GA      30125-2645
------------------------------------------------------------------------------------------------------------------
52 MOUNTAIN DR.                                                 DAHLONEGA                GA      30533-1601
------------------------------------------------------------------------------------------------------------------
105 ADAMS DR.                                                   DEMOREST                 GA      30535-4501
------------------------------------------------------------------------------------------------------------------
2763 MEADOW CHURCH RD. #100                                     DULUTH                   GA      30097-4989
------------------------------------------------------------------------------------------------------------------
2545 FLINTRIDGE RD. #110                                        GAINESVILLE              GA      30501-7428
------------------------------------------------------------------------------------------------------------------
742 MAIN ST. SW                                                 GAINESVILLE              GA      30501
------------------------------------------------------------------------------------------------------------------
68 BULLSBORO DR.                                                NEWNAN                   GA      30263
------------------------------------------------------------------------------------------------------------------
5555 OAKBROOK PKWY                          470                 NORCROSS                 GA      30093
------------------------------------------------------------------------------------------------------------------
1102 NORTH 5th AVE.                                             ROME                     GA      30165-2604
------------------------------------------------------------------------------------------------------------------
703 MARTHA BERRY BLVD.                                          ROME                     GA      30165-1637
------------------------------------------------------------------------------------------------------------------
811 LAUKAPU ST.                             9                   HILO                     HI      96720
------------------------------------------------------------------------------------------------------------------
251 LALO PL.                                A-1                 KAHULUI                  HI      96732
------------------------------------------------------------------------------------------------------------------
285 HOOHANA ST.                             973 & 0163          KAHULUI                  HI      96732
------------------------------------------------------------------------------------------------------------------
431 ALAMAHA ST. #2 & 3B                                         KAHULUI                  HI      96732
------------------------------------------------------------------------------------------------------------------
73-5562 LAWEHANA ST.                        G48 (indicated as   KAILUA-KONA              HI      96740
                                            1-70-48 on invoice)
------------------------------------------------------------------------------------------------------------------
KALAE HWY - KUALAPUU BUSINESS CENTER                            KUALAPUU                 HI      96757
------------------------------------------------------------------------------------------------------------------
3134 KUHIO HWY.                             2*1*16              LIHUE                    HI      96766
------------------------------------------------------------------------------------------------------------------
98-720 KUAHAO PL.                                               PEARL CITY               HI      96782
------------------------------------------------------------------------------------------------------------------
126 S. 3rd ST.                                                  AMES                     IA      50010
------------------------------------------------------------------------------------------------------------------
609 N. COURT ST.                                                CARROLL                  IA      51401
------------------------------------------------------------------------------------------------------------------
701 W. TOWNLINE                             D & B               CRESTON                  IA      50801
------------------------------------------------------------------------------------------------------------------
351 WEST 76TH ST.                                               DAVENPORT                IA      52806
------------------------------------------------------------------------------------------------------------------
6525 CENTER ST.                             E-10                DES MOINES               IA      50312
------------------------------------------------------------------------------------------------------------------
218 E. BENTON ST.                           2                   IOWA CITY                IA      52240
------------------------------------------------------------------------------------------------------------------
2949 & 2957 SIERRA CT.                                          IOWA CITY                IA      52246
------------------------------------------------------------------------------------------------------------------
4165 NAPLES AVE.  #2                                            IOWA CITY                IA      52240-8598
------------------------------------------------------------------------------------------------------------------
5267 MERLE HAY RD.                          K17 & M15           JOHNSTON                 IA      50131
------------------------------------------------------------------------------------------------------------------
1515 BLAIRS FERRY RD.                       B                   MARION                   IA      52302
------------------------------------------------------------------------------------------------------------------
2849-A N. COURT RD.                                             OTTUMWA                  IA      52501
------------------------------------------------------------------------------------------------------------------
111 E. WASHINGTON (AT 2ND ST.)                                  RED OAK                  IA      51566
------------------------------------------------------------------------------------------------------------------
2400 PIERCE ST.                                                 SIOUX CITY               IA      51104
------------------------------------------------------------------------------------------------------------------
628 GENESEO                                                     STORM LAKE               IA      50588-1833
------------------------------------------------------------------------------------------------------------------
11212-24 AURORA AVE.                                            URBANDALE                IA      50322
------------------------------------------------------------------------------------------------------------------
2530 FALLS AVE.                                                 WATERLOO                 IA      50701
------------------------------------------------------------------------------------------------------------------
77 COMMERCE                                 B                   HAYDEN                   ID      83835
------------------------------------------------------------------------------------------------------------------
1103 MARTIN LUTHER KING DR.                 B                   BLOOMINGTON              IL      61704
------------------------------------------------------------------------------------------------------------------
8120 S. MADISON ST.                                             BURR RIDGE               IL      60521
------------------------------------------------------------------------------------------------------------------
19 ABC PARKWAY                                                  COLLINSVILLE             IL      62234
------------------------------------------------------------------------------------------------------------------
4711 WEST 135TH ST.                                             CRESTWOOD                IL      60445
------------------------------------------------------------------------------------------------------------------
515 AVENUE A                                                    DANVILLE                 IL      61832-5503
------------------------------------------------------------------------------------------------------------------
3453 RUPP PKWY, BLDG #8                     PARK 100            DECATUR                  IL      62526
                                            INDUSTRIAL PARK
------------------------------------------------------------------------------------------------------------------
311 E. WATER ST                                                 GALESBURG                IL      61402
------------------------------------------------------------------------------------------------------------------
1132 VETERANS DR.                                               JACKSONVILLE             IL      62650
------------------------------------------------------------------------------------------------------------------
2302 OAK LEAF ST.                                               JOLIET                   IL      60435
------------------------------------------------------------------------------------------------------------------
10910 N. SECOND ST.                                             MACHESNEY PARK           IL      61115
------------------------------------------------------------------------------------------------------------------
11320 N. 2ND ST.                            193                 MACHESNEY PARK           IL      61115
------------------------------------------------------------------------------------------------------------------
1912 W. RENDLEMAN ST.                                           MARION                   IL      62959
------------------------------------------------------------------------------------------------------------------
218 NORTH 9th ST.                                               MT. VERNON               IL      62864-3937
------------------------------------------------------------------------------------------------------------------
1300 W. OGDEN AVE.                                              NAPERVILLE               IL      60563
------------------------------------------------------------------------------------------------------------------
7847 N. CALDWELL AVE.                                           NILES                    IL      60714
------------------------------------------------------------------------------------------------------------------
507 E. ARMSTRONG AVE.                       2007 & 2041A        PEORIA                   IL      61603-3201
------------------------------------------------------------------------------------------------------------------
7708 N. HARKER DR.                                              PEORIA                   IL      61615
------------------------------------------------------------------------------------------------------------------
5320 MAINSAIL DR.                                               ROSCOE                   IL      61073
------------------------------------------------------------------------------------------------------------------
9123 N. SECOND                              1,38,39,41,42       ROSCOE                   IL      61073
------------------------------------------------------------------------------------------------------------------
81 E. REMINGTON RD.                                             SCHAUMBURG               IL      60173-3707
------------------------------------------------------------------------------------------------------------------
2833-2837 SINGER AVE.                                           SPRINGFIELD              IL      62703
------------------------------------------------------------------------------------------------------------------
1410 N. BLOOMINGTON ST., #3                                     STREATOR                 IL      61364
------------------------------------------------------------------------------------------------------------------
3802 INDUSTRIAL BLVD.                       3                   BLOOMINGTON              IN      47403
------------------------------------------------------------------------------------------------------------------
13195 BANK ST. #                                                DILLSBORO                IN      47018
------------------------------------------------------------------------------------------------------------------
2101 MAXWELL AVE.                                               EVANSVILLE               IN      47711
------------------------------------------------------------------------------------------------------------------
7515 WESTFIELD DR.                                              FORT WAYNE               IN      46825
------------------------------------------------------------------------------------------------------------------
7353 COMPANY DR.                                                INDIANAPOLIS             IN      46237
------------------------------------------------------------------------------------------------------------------
711 S. REED RD.                                                 KOKOMO                   IN      46901
------------------------------------------------------------------------------------------------------------------
1160 CREASEY LN.                            3                   LAFAYETTE                IN      47905
------------------------------------------------------------------------------------------------------------------
1581 E. 90TH PL.                                                MERRILLVILLE             IN      46410
-----------------------------------------------------------------------------------------------------------------
4401 W. WILLIAMSBURG BLVD.                                      MUNCIE                   IN      47304-5528
------------------------------------------------------------------------------------------------------------------
3371 CLEVELAND RD. EXTENSION #315                               SOUTH BEND               IN      46628-9780
------------------------------------------------------------------------------------------------------------------
1714 NORTH 5TH ST.                                              TERRE HAUTE              IN      47804
------------------------------------------------------------------------------------------------------------------
1709 WEST 7th ST.                                               CHANUTE                  KS      66720
------------------------------------------------------------------------------------------------------------------
1255 S. COUNTRY CLUB DR.                                        COLBY                    KS      67701
------------------------------------------------------------------------------------------------------------------
408 W. FRONTVIEW ST.                                            DODGE CITY               KS      67801-2211
------------------------------------------------------------------------------------------------------------------
306 EAST 23rd ST.                                               FORT SCOTT               KS      66701
------------------------------------------------------------------------------------------------------------------
204 E. FIFTH ST.                                                GARNETT                  KS      66032-1516
------------------------------------------------------------------------------------------------------------------
2009 VINE ST.                                                   HAYS                     KS      67601
------------------------------------------------------------------------------------------------------------------
900 WEST MYRTLE ST. #100-101                                    INDEPENDENCE             KS      67301-3242
------------------------------------------------------------------------------------------------------------------
67 SOUTHWEST BLVD.                          (in units 61-67)    KANSAS CITY              KS      66103-2130
------------------------------------------------------------------------------------------------------------------
9500 WIDMER RD.                                                 LENEXA                   KS      66215
------------------------------------------------------------------------------------------------------------------
1109 W. CRAWFORD                                                SALINA                   KS      67402-0765
------------------------------------------------------------------------------------------------------------------
1111 W. CRAWFORD                                                SALINA                   KS      67401
------------------------------------------------------------------------------------------------------------------
6261-B SW 9th ST.                                               TOPEKA                   KS      66615
------------------------------------------------------------------------------------------------------------------
7803 E. OSIE                                101 - 120           WICHITA                  KS      67207
------------------------------------------------------------------------------------------------------------------
1051 BRYANT WAY                                                 BOWLING GREEN            KY      42103
------------------------------------------------------------------------------------------------------------------
316 14th ST.                                and 1651-1653 S.    HENDERSON                KY      42420-2720
                                            GREEN ST.
------------------------------------------------------------------------------------------------------------------
2717 FORT CAMPBELL BLVD.                                        HOPKINSVILLE             KY      42240
------------------------------------------------------------------------------------------------------------------
2601 REGENCY RD. #A                                             LEXINGTON                KY      40503
------------------------------------------------------------------------------------------------------------------
813 N. MAIN ST.                                                 LONDON                   KY      40741
------------------------------------------------------------------------------------------------------------------
1805 TAYLOR AVE.                                                LOUISVILLE               KY      40213
------------------------------------------------------------------------------------------------------------------
2928 PARK AVE. #H                                               PADUCAH                  KY      42001
------------------------------------------------------------------------------------------------------------------
5311 KENTUCKY RT. 321 #7                                        PRESTONSBURG             KY      41653
------------------------------------------------------------------------------------------------------------------
701 BOLTON AVE. #D                                              ALEXANDRIA               LA      71301
------------------------------------------------------------------------------------------------------------------
6730 EXCHEQUER AVE.                                             BATON ROUGE              LA      70809
------------------------------------------------------------------------------------------------------------------
1510 KUEBEL ST.                                                 JEFFERSON                LA      70123
------------------------------------------------------------------------------------------------------------------
4740 W. CONGRESS ST.                                            LAFAYETTE                LA      70506
------------------------------------------------------------------------------------------------------------------
1830 RYAN                                   D & E               LAKE CHARLES             LA      71201
------------------------------------------------------------------------------------------------------------------
2113 JUSTICE ST.                                                MONROE                   LA      71201
------------------------------------------------------------------------------------------------------------------
5203 INTERSTATE AVE.                                            SHREVEPORT               LA      71109-6596
------------------------------------------------------------------------------------------------------------------
208 SOUTHBRIDGE ST.                                             AUBURN                   MA      01501
------------------------------------------------------------------------------------------------------------------
140 MAIN ST.                                715                 NORTH READING            MA      01864
------------------------------------------------------------------------------------------------------------------
575 UNIVERSITY AVE.                         3                   NORWOOD                  MA      02062
------------------------------------------------------------------------------------------------------------------
630 MacARTHUR BLVD.                                             POCASSET                 MA      02559
------------------------------------------------------------------------------------------------------------------
120 CARANDO DR.                                                 SPRINGFIELD              MA      01104
------------------------------------------------------------------------------------------------------------------
170 CARANDO DR.                                                 SPRINGFIELD              MA      01104
------------------------------------------------------------------------------------------------------------------
1658 G.A.R. HIGHWAY                         3                   SWANSEA                  MA      02777
------------------------------------------------------------------------------------------------------------------
874 COUNTY ST.                              335                 TAUNTON                  MA      02780
------------------------------------------------------------------------------------------------------------------
260 FORDHAM RD.                             C                   WILMINGTON               MA      01887
------------------------------------------------------------------------------------------------------------------
815-A WOBURN ST.                                                WILMINGTON               MA      01887
------------------------------------------------------------------------------------------------------------------
9321-I PHILADELPHIA RD.                                         BALTIMORE                MD      21237
------------------------------------------------------------------------------------------------------------------
12400 KILN COURT                                                BELTSVILLE               MD      20705
------------------------------------------------------------------------------------------------------------------
219 MARLBORO RD.                                                EASTON                   MD      21601-2720
------------------------------------------------------------------------------------------------------------------
919 SWEENEY DR.                                                 HAGERSTOWN               MD      21740
------------------------------------------------------------------------------------------------------------------
407 WINFIELD AVE.                                               SALISBURY                MD      21801-2197
------------------------------------------------------------------------------------------------------------------
100 DOWD RD.                                                    BANGOR                   ME      04401
------------------------------------------------------------------------------------------------------------------
14 YARMOUTH JUNCTION                        (AT N. ELM ST.)     YARMOUTH                 ME      04096
------------------------------------------------------------------------------------------------------------------
1665 HIGHLAND DR. #D                        (Elec. listed as    ANN ARBOR                MI      48108
                                            #C)
------------------------------------------------------------------------------------------------------------------
5615 STATION DR.                            CB29                CALUMET                  MI      49913
------------------------------------------------------------------------------------------------------------------
411 WEST 5TH ST.                                                CLARE                    MI      48617
------------------------------------------------------------------------------------------------------------------
1323 LUDINGTON ST.                                              ESCANABA                 MI      49829
------------------------------------------------------------------------------------------------------------------
4513 BROADMOOR AVE., S.E.                   D                   GRAND RAPIDS             MI      49512
------------------------------------------------------------------------------------------------------------------
704 W. SHARON AVE.                                              HOUGHTON                 MI      49931
------------------------------------------------------------------------------------------------------------------
9857 U.S. 31 SOUTH                                              INTERLOCHEN              MI      49643
------------------------------------------------------------------------------------------------------------------
116 S. MERRITT ST.                                              IRON MOUNTAIN            MI      49801
------------------------------------------------------------------------------------------------------------------
606 E. MICHIGAN AVE.                                            JACKSON                  MI      49201
------------------------------------------------------------------------------------------------------------------
5234 AZO COURT                                                  KALAMAZOO                MI      49001
------------------------------------------------------------------------------------------------------------------
4312 SO. CREYTS RD.                                             LANSING                  MI      48912
------------------------------------------------------------------------------------------------------------------
4728 WEST U. S. 10                                              LUDINGTON                MI      49431
------------------------------------------------------------------------------------------------------------------
925 W. WASHINGTON ST.                                           MARQUETTE                MI      49855-4061
------------------------------------------------------------------------------------------------------------------
2011 10TH ST.                                                   MENOMINEE                MI      49858
------------------------------------------------------------------------------------------------------------------
600 E. MORLEY DR.                                               SAGINAW                  MI      48601
------------------------------------------------------------------------------------------------------------------
103 W. SANILAC                                                  SANDUSKY                 MI      48471
------------------------------------------------------------------------------------------------------------------
323 W. GLENLORD RD.                                             ST. JOSEPH               MI      49085
------------------------------------------------------------------------------------------------------------------
1755 MAPLELAWN DR.                                              TROY                     MI      48084
------------------------------------------------------------------------------------------------------------------
508 BULLOCK ST.                                                 WHITTEMORE               MI      48770
------------------------------------------------------------------------------------------------------------------
701 N. SIXTH AVE.                                               DULUTH                   MN      55805
------------------------------------------------------------------------------------------------------------------
131 CHESHIRE LANE                           500                 MINNETONKA               MN      55305
------------------------------------------------------------------------------------------------------------------
1500 OPPORTUNITY RD.                                            ROCHESTER                MN      55901
------------------------------------------------------------------------------------------------------------------
1501 NORTHWAY DR.                                               ST. CLOUD                MN      56303
------------------------------------------------------------------------------------------------------------------
451 EAST ST. GERMAIN ST.                    3                   ST. CLOUD                MN      56304
------------------------------------------------------------------------------------------------------------------
1645 ENERGY PARK DR.                                            ST. PAUL                 MN      55108-2700
------------------------------------------------------------------------------------------------------------------
1260 FRONTAGE RD. WEST                      #M                  STILLWATER               MN      55082-2103
------------------------------------------------------------------------------------------------------------------
2012 S. ELLIOTT AVE. #D                                         AURORA                   MO      65605
------------------------------------------------------------------------------------------------------------------
545 N. BUSINESS HWY 65 #DME                                     BRANSON                  MO      65616-4500
------------------------------------------------------------------------------------------------------------------
BUSINESS HWY 65 NORTH, LEVEL 1                                  BRANSON                  MO
------------------------------------------------------------------------------------------------------------------
307 E. McELWAIN RD.                                             CAMERON                  MO      64429
------------------------------------------------------------------------------------------------------------------
1405 MT. AUBURN RD.                                             CAPE GIRARDEAU           MO      63701
------------------------------------------------------------------------------------------------------------------
433 S. GARRISON AVE.                                            CARTHAGE                 MO      64836
------------------------------------------------------------------------------------------------------------------
16824 CHESTERFIELD AIRPORT RD.              5002 & 5004         CHESTERFIELD             MO      63005
------------------------------------------------------------------------------------------------------------------
1669 NORTH 2ND ST. #A-C                     (elec. at #I & J)   CLINTON                  MO      64735
------------------------------------------------------------------------------------------------------------------
1604-B BUSINESS LOOP 70 WEST                                    COLUMBIA                 MO      65202
------------------------------------------------------------------------------------------------------------------
2694 HIGHWAY 67 SOUTH                                           FARMINGTON               MO      63640
------------------------------------------------------------------------------------------------------------------
3230 WISCONSIN, #A                                              JOPLIN                   MO      64804
------------------------------------------------------------------------------------------------------------------
102 S. FORREST                                                  LIBERTY                  MO      64068
------------------------------------------------------------------------------------------------------------------
249 W. MILL ST.                                                 LIBERTY                  MO      64068
------------------------------------------------------------------------------------------------------------------
210 N. CENTENNIAL                                               NEVADA                   MO      64772-4117
------------------------------------------------------------------------------------------------------------------
1104 VINE ST.                                                   POPLAR BLUFF             MO      63901
------------------------------------------------------------------------------------------------------------------
110 FAIRGROUNDS RD.                                             ROLLA                    MO      65401
------------------------------------------------------------------------------------------------------------------
117 SMITH ST. #105                                              SIKESTON                 MO      63801
------------------------------------------------------------------------------------------------------------------
1601  W. SUNSHINE                           B&C                 SPRINGFIELD              MO      65807
------------------------------------------------------------------------------------------------------------------
1821 W. SUNSET ST.                                              SPRINGFIELD              MO      65807-5901
------------------------------------------------------------------------------------------------------------------
8248 LACKLAND RD.                                               ST. JOHN                 MO      63114
------------------------------------------------------------------------------------------------------------------
4416 S. 40TH                                                    ST. JOSEPH               MO      64503
------------------------------------------------------------------------------------------------------------------
8440 ST. CHARLES ROCK RD.                   566 & 554           ST. LOUIS                MO      63114
------------------------------------------------------------------------------------------------------------------
100 DIDION RD.                                                  ST. PETERS               MO      63376-3944
------------------------------------------------------------------------------------------------------------------
1742 PASS ROAD K-20                                             BILOXI                   MS      39531
------------------------------------------------------------------------------------------------------------------
2198 PASS RD.                                                   BILOXI                   MS      39531
------------------------------------------------------------------------------------------------------------------
200 NORTH 40TH AVE.                         5, 6, 7, & 10       HATTIESBURG              MS      39401
------------------------------------------------------------------------------------------------------------------
2715 N. STATE ST.                           & 540 TAYLOR ST.    JACKSON                  MS      39216
------------------------------------------------------------------------------------------------------------------
1312 22ND AVENUE                                                MERIDIAN                 MS      39301
------------------------------------------------------------------------------------------------------------------
1139 NORTH 27th ST. #C-1                                        BILLINGS                 MT      59103
------------------------------------------------------------------------------------------------------------------
33 SPANISH PEAK DR.                                             BOZEMAN                  MT      59718
------------------------------------------------------------------------------------------------------------------
92-A HWY 2 EAST                                                 GLASGOW                  MT      59230-2001
------------------------------------------------------------------------------------------------------------------
815 26th ST. NORTH                                              GREAT FALLS              MT      59401
------------------------------------------------------------------------------------------------------------------
1524 CEDAR ST.                                                  HELENA                   MT      59601-1021
------------------------------------------------------------------------------------------------------------------
2221 LIVINGSTON AVE.                                            MISSOULA                 MT      59801-7505
------------------------------------------------------------------------------------------------------------------
137 GLENN BRIDGE RD.                                            ARDEN                    NC      28704
------------------------------------------------------------------------------------------------------------------
1901-D CROSS BEAM DR.                                           CHARLOTTE                NC      28217
------------------------------------------------------------------------------------------------------------------
4859 CUMBERLAND RD.                                             FAYETTEVILLE             NC      28306
------------------------------------------------------------------------------------------------------------------
4249 PIEDMONT PKWY.                         101                 GREENSBORO               NC      27410
------------------------------------------------------------------------------------------------------------------
702 W.H. SMITH BLVD.                        A                   GREENVILLE               NC      27834
------------------------------------------------------------------------------------------------------------------
415 WESTERN BLVD.                           B                   JACKSONVILLE             NC      28546
------------------------------------------------------------------------------------------------------------------
1400 S. STERLING ST.                        H291 & H302         MORGANTON                NC      28655
------------------------------------------------------------------------------------------------------------------
2600 PERIMETER PARK DR.                     100                 MORRISVILLE              NC      27560
------------------------------------------------------------------------------------------------------------------
165 PAGE RD.                                E-64                PINEHURST                NC      28374
------------------------------------------------------------------------------------------------------------------
501 COVIL AVE.                              400                 WILMINGTON               NC      28403
------------------------------------------------------------------------------------------------------------------
612 FLACK AVE.                                                  ALLIANCE                 NE      69301
------------------------------------------------------------------------------------------------------------------
500 MARKET ST.                                                  BEATRICE                 NE      68310
------------------------------------------------------------------------------------------------------------------
625-631 WEST 3RD ST.                                            CHADRON                  NE      69337
------------------------------------------------------------------------------------------------------------------
1254 12th AVE.                                                  COLUMBUS                 NE      68601
------------------------------------------------------------------------------------------------------------------
3022 W. OLD POTASH RD.                                          GRAND ISLAND             NE      68803
------------------------------------------------------------------------------------------------------------------
436 N. MINNESOTA                                                HASTINGS                 NE      68901
------------------------------------------------------------------------------------------------------------------
3700 N. 2ND AVE.                                                KEARNEY                  NE      68847
------------------------------------------------------------------------------------------------------------------
1631 CUSHMAN DR.                                                LINCOLN                  NE      68512
------------------------------------------------------------------------------------------------------------------
4911 S. 14TH ST.                            220                 LINCOLN                  NE      68512
------------------------------------------------------------------------------------------------------------------
711 EAST 11TH ST.                                               McCOOK                   NE      69001
------------------------------------------------------------------------------------------------------------------
214 EAST 5TH                                                    NORTH PLATTE             NE      69101
------------------------------------------------------------------------------------------------------------------
214 EAST 5TH                                                    NORTH PLATTE             NE      69103
------------------------------------------------------------------------------------------------------------------
214 EAST 5TH ST.                                                NORTH PLATTE             NE      69101
------------------------------------------------------------------------------------------------------------------
5505 F ST.                                                      OMAHA                    NE      68117
------------------------------------------------------------------------------------------------------------------
3912 AVENUE B                                                   SCOTTSBLUFF              NE      69361
------------------------------------------------------------------------------------------------------------------
1121 ILLINOIS ST.                                               SIDNEY                   NE      69162
------------------------------------------------------------------------------------------------------------------
915 HOLT AVE.                               2 & 3               MANCHESTER               NH      03109
------------------------------------------------------------------------------------------------------------------
915 HOLT AVE.                               C20-242             MANCHESTER               NH      03109
------------------------------------------------------------------------------------------------------------------
41 INTERCHANGE DR.                          1, UNIT 419         WEST LEBANON             NH      03784
------------------------------------------------------------------------------------------------------------------
2628 FIRE ROAD                              301                 EGG HARBOR TOWNSHIP      NJ      08234
------------------------------------------------------------------------------------------------------------------
170 OBERLIN AVE. NORTH                      23 & 24             LAKEWOOD                 NJ      08701
------------------------------------------------------------------------------------------------------------------
ONE-F FRASSETTO WAY                                             LINCOLN PARK             NJ      07035
------------------------------------------------------------------------------------------------------------------
118 BURRS RD.                               C                   WESTAMPTON               NJ      08060
------------------------------------------------------------------------------------------------------------------
906 ADAMS AVE.                              908 (for gas)       ALAMOGORDO               NM      88310
------------------------------------------------------------------------------------------------------------------
4401 McLEOD NE                                                  ALBUQUERQUE              NM      87109
------------------------------------------------------------------------------------------------------------------
5400 GIBSON BLVD. SE                                            ALBUQUERQUE              NM      87108-4729
------------------------------------------------------------------------------------------------------------------
1202 WEST 21ST ST.                                              CLOVIS                   NM      88101
------------------------------------------------------------------------------------------------------------------
1020 N. BUTLER                              1020 & 1014A&B      FARMINGTON               NM      87401
------------------------------------------------------------------------------------------------------------------
400 N. VINE                                 E36                 FARMINGTON               NM      87401
------------------------------------------------------------------------------------------------------------------
1714 S. SECOND ST. #241                                         GALLUP                   NM      87301
------------------------------------------------------------------------------------------------------------------
2827 N. DAL PASO ST.                        101,102,103         HOBBS                    NM      88240
------------------------------------------------------------------------------------------------------------------
127 E. IDAHO AVE.                           103                 LAS CRUCES               NM      88005
------------------------------------------------------------------------------------------------------------------
210 E. IDAHO                                B                   LAS CRUCES               NM      88001
------------------------------------------------------------------------------------------------------------------
604 E. COLLEGE BLVD.                                            ROSWELL                  NM      88201
------------------------------------------------------------------------------------------------------------------
1570 PACHECO ST.                            D-6                 SANTA FE                 NM      87505
------------------------------------------------------------------------------------------------------------------
1250 LAMOILLE HIGHWAY                                           ELKO                     NV      89801
------------------------------------------------------------------------------------------------------------------
1435 INDUSTRIAL WAY                         C                   GARDNERVILLE             NV      89410
------------------------------------------------------------------------------------------------------------------
3955 W. MESA VISTA AVE.                     1                   LAS VEGAS                NV      89118
------------------------------------------------------------------------------------------------------------------
4679 S. VICKI ANN RD.                       37                  PAHRUMP                  NV      89048
------------------------------------------------------------------------------------------------------------------
1395 GREG ST.                               112 & 113           SPARKS                   NV      89431
------------------------------------------------------------------------------------------------------------------
1250 SCOTTSVILLE RD.                        80                  CHILI                    NY      14624
------------------------------------------------------------------------------------------------------------------
109-05 14TH AVENUE                                              COLLEGE POINT            NY      11356-1400
------------------------------------------------------------------------------------------------------------------
12 PETRA LANE                                                   COLONIE                  NY      12205
------------------------------------------------------------------------------------------------------------------
4291 ALBANY ST.                             238                 COLONIE                  NY      12205
------------------------------------------------------------------------------------------------------------------
452 E. WATER ST.                                                ELMIRA                   NY      14901
------------------------------------------------------------------------------------------------------------------
3 WESTCHESTER PLAZA                                             ELMSFORD                 NY      10523
------------------------------------------------------------------------------------------------------------------
3116 WATSON BLVD.                                               ENDWELL                  NY      13760
------------------------------------------------------------------------------------------------------------------
BUILDING 110, BI-COUNTY BLVD.               122                 FARMINGDALE              NY      11735
------------------------------------------------------------------------------------------------------------------
625 SAWKILL RD.                                                 KINGSTON                 NY      12401
------------------------------------------------------------------------------------------------------------------
75 MARKET ST.                                                   POTSDAM                  NY      13676
------------------------------------------------------------------------------------------------------------------
6075 E. MOLLOY RD., BLDG. 6                                     SYRACUSE                 NY      13211
------------------------------------------------------------------------------------------------------------------
1975 WEHRLE DR.                                                 WILLIAMSVILLE            NY      14221
------------------------------------------------------------------------------------------------------------------
8077 LEAVITT RD.                            C                   AMHERST                  OH      44001
------------------------------------------------------------------------------------------------------------------
1000 RESOURCE DR.                                               BROOKLYN HTS             OH      44131
------------------------------------------------------------------------------------------------------------------
4060 BUSINESS PARK DR.                                          COLUMBUS                 OH      43204
------------------------------------------------------------------------------------------------------------------
10841 STATE ROUTE 66                        46                  FORT LORAMIE             OH      45845
------------------------------------------------------------------------------------------------------------------
180 INDUSTRIAL DR. #B & C                                       LEXINGTON                OH      44904-1339
------------------------------------------------------------------------------------------------------------------
1518 N. MAIN ST.                            11                  LIMA                     OH      45801
------------------------------------------------------------------------------------------------------------------
6535 WEATHERFIELD CT.                                           MAUMEE                   OH      43537-9018
------------------------------------------------------------------------------------------------------------------
311 INDUSTRIAL DR.                                              MINSTER                  OH      45865
------------------------------------------------------------------------------------------------------------------
2335-2347 CROWNE POINT DR.                                      SHARONVILLE              OH      45241
------------------------------------------------------------------------------------------------------------------
2048 S. ALEX RD.                                                WEST CARROLLTON          OH      45449-2491
------------------------------------------------------------------------------------------------------------------
1406 CADIZ RD.                                                  WINTERSVILLE             OH      43953
------------------------------------------------------------------------------------------------------------------
120 SUNRISE                                                     ZANESVILLE               OH      43701
------------------------------------------------------------------------------------------------------------------
240 EAST 3rd ST. #A                                             GROVE                    OK      74344
------------------------------------------------------------------------------------------------------------------
3435 NW 56TH ST. #506                                           OKLAHOMA CITY            OK      73112
------------------------------------------------------------------------------------------------------------------
4200 S. DOUGLAS AVE. #101                                       OKLAHOMA CITY            OK      73109
------------------------------------------------------------------------------------------------------------------
6125 W. RENO                                300                 OKLAHOMA CITY            OK      73127
------------------------------------------------------------------------------------------------------------------
9906 EAST 43rd ST.                          A&B                 TULSA                    OK      74152
------------------------------------------------------------------------------------------------------------------
330 NW ELKS DR.                             B                   CORVALLIS                OR      97330
------------------------------------------------------------------------------------------------------------------
2001 FRANKLIN BLVD.                                             EUGENE                   OR      97401
------------------------------------------------------------------------------------------------------------------
600 PLYMOUTH DR. N.E.                       C126-128-130        KEIZER                   OR      97303
                                            (makes 1 big
                                            unit), C124
------------------------------------------------------------------------------------------------------------------
12029 NE GLENN WIDING DR.                                       PORTLAND                 OR      97230
------------------------------------------------------------------------------------------------------------------
1544 E. PLEASANT VALLEY BLVD.                                   ALTOONA                  PA      16602
------------------------------------------------------------------------------------------------------------------
2041 AVENUE C                                                   BETHLEHEM                PA      18017
------------------------------------------------------------------------------------------------------------------
16 CREEK PARKWAY                            NAAMANS CREEK       BOOTHWYN                 PA      19061
                                            BUSINESS CENTER
------------------------------------------------------------------------------------------------------------------
245 PITTSBURGH RD.                          404                 BUTLER                   PA      16001
------------------------------------------------------------------------------------------------------------------
3552 OLD GETTYSBURG RD.                                         CAMP HILL                PA      17011
------------------------------------------------------------------------------------------------------------------
250 TECHNOLOGY DRIVE-SOUTHPOINTE                                CANONSBURG               PA      15317-9564
------------------------------------------------------------------------------------------------------------------
2401 W. 12TH ST.                                                ERIE                     PA      16505
------------------------------------------------------------------------------------------------------------------
1002 CORPORATE DR. (AT MELLON RD.)          A & B               EXPORT                   PA      15632
------------------------------------------------------------------------------------------------------------------
780 PRIMOS AVE. #C-D                                            FOLCROFT                 PA      19032
------------------------------------------------------------------------------------------------------------------
1000 CARLISLE ST.                                               HANOVER                  PA      17331
------------------------------------------------------------------------------------------------------------------
240 & 252 HARRISBURG AVE.                   (and Parking at     LANCASTER                PA      17063
                                            301 Harrisburg)
------------------------------------------------------------------------------------------------------------------
2 INTERCHANGE PL. #C                                            YORK                     PA      17402-9617
------------------------------------------------------------------------------------------------------------------
6904 N. MAIN ST.                            101 - 102           COLUMBIA                 SC      29203
------------------------------------------------------------------------------------------------------------------
325 INGLESBY PKWY #A                                            DUNCAN                   SC      29306
------------------------------------------------------------------------------------------------------------------
2540 OSCAR JOHNSON DR.                                          NORTH CHARLESTON         SC      29405
------------------------------------------------------------------------------------------------------------------
821 MOUNT RUSHMORE RD.                                          RAPID CITY               SD      57701
------------------------------------------------------------------------------------------------------------------
837 E. ST. PATRICK ST.                                          RAPID CITY               SD      57701
------------------------------------------------------------------------------------------------------------------
3703 N. CLIFF AVE.                                              SIOUX FALLS              SD      57104
------------------------------------------------------------------------------------------------------------------
1410 NORTH AVE.                             7                   SPEARFISH                SD      57783
------------------------------------------------------------------------------------------------------------------
4006 INDUSTRY DR.                           E12                 CHATTANOOGA              TN      37416
------------------------------------------------------------------------------------------------------------------
5959 SHALLOWFORD RD.                        545-549             CHATTANOOGA              TN      37406
------------------------------------------------------------------------------------------------------------------
600 COMMERCIAL LANE                         340                 CHATTANOOGA              TN      37405
------------------------------------------------------------------------------------------------------------------
614 E. MAIN BLVD.                           602                 CHURCH HILL              TN      37642
------------------------------------------------------------------------------------------------------------------
1217 S. ROANE ST.                                               HARRIMAN                 TN      37748
------------------------------------------------------------------------------------------------------------------
2975 N. HWY 45 BYPASS                                           JACKSON                  TN      38305
------------------------------------------------------------------------------------------------------------------
4355 HIGHWAY 45 N.                          310 & 250           JACKSON                  TN      38305
------------------------------------------------------------------------------------------------------------------
1075 MARTHA GLASS DR.                                           JEFFERSON CITY           TN      37760
------------------------------------------------------------------------------------------------------------------
2021 BROOKSIDE LANE                                             KINGSPORT                TN      37660
------------------------------------------------------------------------------------------------------------------
1701 LOUISVILLE DR.                         A                   KNOXVILLE                TN      37921
------------------------------------------------------------------------------------------------------------------
5254-5256 E. RAINES RD.                                         MEMPHIS                  TN      38118-7015
------------------------------------------------------------------------------------------------------------------
1865 AIR LANE DR.                           17                  NASHVILLE                TN      37210
------------------------------------------------------------------------------------------------------------------
8868 RESEARCH BLVD.                         107                 AUSTIN                   TX      78758
------------------------------------------------------------------------------------------------------------------
3077 CALDER AVE.                                                BEAUMONT                 TX      77702
------------------------------------------------------------------------------------------------------------------
4066 CROSSTOWN EXPRESSWAY                   2, 19, 233, 251     CORPUS CHRISTI           TX      78415
------------------------------------------------------------------------------------------------------------------
5449 BEAR LN. #400                                              CORPUS CHRISTI           TX      78405
------------------------------------------------------------------------------------------------------------------
10610 METRIC DR. #150                                           DALLAS                   TX      75243-5550
------------------------------------------------------------------------------------------------------------------
10737 GATEWAY WEST                          350                 EL PASO                  TX      79935
------------------------------------------------------------------------------------------------------------------
120 E. FELIX ST. #308                                           FORT WORTH               TX      76115
------------------------------------------------------------------------------------------------------------------
401 S. 77 SUNSHINE STRIP #C                                     HARLINGEN                TX      78550
------------------------------------------------------------------------------------------------------------------
1201 WEST LOOP NORTH                        100 & 140           HOUSTON                  TX      77055
------------------------------------------------------------------------------------------------------------------
18120-30 AMMI TRAIL                                             HOUSTON                  TX      77060
------------------------------------------------------------------------------------------------------------------
255 PENNBRIGHT                              240                 HOUSTON                  TX      77090
------------------------------------------------------------------------------------------------------------------
8056 EL RIO ST.                                                 HOUSTON                  TX      77054
------------------------------------------------------------------------------------------------------------------
8300 ESTERS ROAD                            920                 IRVING                   TX      75063
------------------------------------------------------------------------------------------------------------------
4621-4617 WEST LOOP 289                                         LUBBOCK                  TX      79414
------------------------------------------------------------------------------------------------------------------
14220 NORTHBROOK                            100                 SAN ANTONIO              TX      78232
------------------------------------------------------------------------------------------------------------------
1414 NEW BOSTON RD. #202                                        TEXARKANA                TX      75501
------------------------------------------------------------------------------------------------------------------
HIGHWAY 191  #57                                                BLANDING                 UT      84511
------------------------------------------------------------------------------------------------------------------
2551 E. HWY 6                               E194                PRICE                    UT      84501
------------------------------------------------------------------------------------------------------------------
1555 WEST 2200 SOUTH                                            SALT LAKE CITY           UT      84119
------------------------------------------------------------------------------------------------------------------
814 GREENBRIER CIRCLE                       U                   CHESAPEAKE               VA      23320
------------------------------------------------------------------------------------------------------------------
8210 CINDERBED RD.                          5 & 6               LORTON                   VA      22079
------------------------------------------------------------------------------------------------------------------
317 HOSPITAL DR.                                                MARTINSVILLE             VA      24112
------------------------------------------------------------------------------------------------------------------
7401-7403 WHITEPINE RD.                                         RICHMOND                 VA      23237
------------------------------------------------------------------------------------------------------------------
5151 B STARKEY ROAD SW                                          ROANOKE                  VA      24018
------------------------------------------------------------------------------------------------------------------
89 ETHAN ALLEN DR.                                              SOUTH BURLINGTON         VT      05401
------------------------------------------------------------------------------------------------------------------
709 W. ORCHARD DR. #6&7                                         BELLINGHAM               WA      98225
------------------------------------------------------------------------------------------------------------------
5299 HIGHWAY 303, N.E.                                          BREMERTON                WA      98310
------------------------------------------------------------------------------------------------------------------
5102 20TH STREET E                          103                 FIFE                     WA      98424
------------------------------------------------------------------------------------------------------------------
7921 W. GRANDRIDGE BLVD.                                        KENNEWICK                WA      99336
------------------------------------------------------------------------------------------------------------------
1026 E. FIRST                               1                   PORT ANGELES             WA      98362
------------------------------------------------------------------------------------------------------------------
14935 NE. 87TH ST. (AT WILLOWS RD.)                             REDMOND                  WA      98052
------------------------------------------------------------------------------------------------------------------
17285 NE 70TH ST.                           1B98                REDMOND                  WA      98052
------------------------------------------------------------------------------------------------------------------
820 McCLELLEN                               LL10                SPOKANE                  WA      99204
------------------------------------------------------------------------------------------------------------------
EAST 411 NORTH FOOTHILLS DR.                20                  SPOKANE                  WA      99207
------------------------------------------------------------------------------------------------------------------
N. 7028 DIVISION ST.                        709 & 722           SPOKANE                  WA      99208
------------------------------------------------------------------------------------------------------------------
1020 N. WENATCHEE AVE.                                          WENATCHEE                WA      98801
------------------------------------------------------------------------------------------------------------------
616 W. YAKIMA AVE.                                              YAKIMA                   WA      98902
------------------------------------------------------------------------------------------------------------------
616-618 W. YAKIMA AVE.                                          YAKIMA                   WA      98902
------------------------------------------------------------------------------------------------------------------
1316 N. HASTINGS WAY                        A                   EAU CLAIRE               WI      54703
------------------------------------------------------------------------------------------------------------------
2674 S. PACKERLAND DR.                                          GREEN BAY                WI      54313-6145
------------------------------------------------------------------------------------------------------------------
1803 W. ARNOLD ST.                                              MARSHFIELD               WI      54449
------------------------------------------------------------------------------------------------------------------
440 S. CENTRAL AVE. #A                                          MARSHFIELD               WI      54449
------------------------------------------------------------------------------------------------------------------
9871 HIGHWAY 70                             (9877 for           MINOCQUA                 WI      54548
                                            utilities)
------------------------------------------------------------------------------------------------------------------
857-859 E. BROADWAY                                             MONONA                   WI      53716-4012
------------------------------------------------------------------------------------------------------------------
2412 INDUSTRIAL DR.                                             NEENAH                   WI      54956
------------------------------------------------------------------------------------------------------------------
5335-45 S. MOORLAND RD.                                         NEW BERLIN               WI      53150
------------------------------------------------------------------------------------------------------------------
W6853 INDUSTRIAL BLVD.                                          ONALASKA                 WI      54650
------------------------------------------------------------------------------------------------------------------
710 S. MAIN ST.                                                 RICE LAKE                WI      54868-2542
------------------------------------------------------------------------------------------------------------------
903 GRAND AVE.                                                  ROTHSCHILD               WI      54474
------------------------------------------------------------------------------------------------------------------
2620 W. GRAND AVE.                                              WISCONSIN RAPIDS         WI      54495-2259
------------------------------------------------------------------------------------------------------------------
3202 ROBERT C. BYRD DR.                                         BECKLEY                  WV      25801
------------------------------------------------------------------------------------------------------------------
ROUTE 131, BLDG. 5                          INTERSTATE          BRIDGEPORT               WV      26330
                                            BUSINESS PARK
------------------------------------------------------------------------------------------------------------------
613 20th ST.                                                    HUNTINGTON               WV      25703-1545
------------------------------------------------------------------------------------------------------------------
4210 FIRST AVE.                             310                 NITRO                    WV      25143
------------------------------------------------------------------------------------------------------------------
22 NATIONAL RD.                                                 TRIADELPHIA              WV      26059
------------------------------------------------------------------------------------------------------------------
1170 46TH ST.                               2                   VIENNA                   WV      26101
------------------------------------------------------------------------------------------------------------------
1700 W. FIRST ST.                           3, BLDG 2           CASPER                   WY      82604
------------------------------------------------------------------------------------------------------------------
104 INDIAN HILLS CENTER                                         CHEYENNE                 WY      82009
------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
                                SCHEDULE 6.20(B)
                                ----------------

                              COLLATERAL LOCATIONS

Tangible  personal  property  of  Consolidated  Parties  is  located  at all the
locations listed on Schedule 6.20(a).  Additionally,  there is tangible personal
property located in the homes of rental patients. The addresses of such patients
are not listed.
<PAGE>

                                SCHEDULE 6.20(C)
                                ----------------

                            CHIEF EXECUTIVE OFFICES/

                          PRINCIPAL PLACES OF BUSINESS

                                             State of
                                           Incorporation/       Principal
Name                                        Organization     Place of Business
---------------------------------------    --------------  ---------------------

Apria Healthcare Group Inc.                     DE         3560 Hyland Avenue
                                                           Costa Mesa, CA  92626
Apria Healthcare, Inc                           DE         3560 Hyland Avenue
                                                           Costa Mesa, CA  92626
Apria Number Two, Inc.                          DE         3560 Hyland Avenue
                                                           Costa Mesa, CA  92626
ApriaCare Management Systems, Inc.              DE         3560 Hyland Avenue
                                                           Costa Mesa, CA  92626
Apria Healthcare of New York State, Inc.        NY         3560 Hyland Avenue
                                                           Costa Mesa, CA  92626
Apria Healthcare Essentials, LLC                CA         3560 Hyland Avenue
                                                           Costa Mesa, CA  92626

<PAGE>


                                  SCHEDULE 7.6
                                  ------------

                                    INSURANCE

                         (EFFECTIVE 6/28/01 TO 6/28/02)
<TABLE>

-----------------------------------------------------------------------------------------------------------------------------------
    COVERAGE        INSURANCE CARRIER     POLICY #S          LIMITS                              DESCRIPTION/LAYER
-----------------------------------------------------------------------------------------------------------------------------------

<S>                <C>                    <C>                <C>                   <C>         <C>
Primary Property   Lexington Ins. Co.     852-8827           $5,000,000            Per Loss    All Risk Including Flood
(Primary includes                                            Deductible $25,000    Per Loss    All Perils Excluding Flood
   Flood)
                                                             $5,000,000            Aggregate   Flood
                                                             Deductible $100,000   Per Loss    Flood
                                                             Deductible> $25,000   Per Loss    Wind; Coastal from Virginia to
                                                                          or 2%                        Texas

Excess Property    Westchester Fire       FXL-422166 - 0     $35,000,000           Per Loss    All Risk/Excluding Quake & Flood
                        Ins. Co.

Boiler &           CNA Ins. Co.           BM1057076603       $10,000,000           Per Loss    Combined PD; BI & Extra Expense
Machinery
                                                             Sublimits $500,000    Per Loss    Utility Interruption
                                                                       $250,000    Per Loss    Expediting Expense
                                                                       $250,000    Per Loss    Water Damage
                                                                       $250,000    Per Loss    Hazardous Substance
                                                                       $250,000    Per Loss    Ammonia Contamination
                                                                       $100,000    Per Loss    Consequential Damage
                                                             Deductibles $5,000    Per Loss    Property Damage
                                                             >of $2,500 or 10%     Per Loss    Consequential Damage
                                                                                   Per Loss    BI/EE
                                                                                   Per Loss    Utility Interruption
------------------------------------------------------------------------------------------------------------------------------------
Directors &        National Union         858-86-94          $20,000,000           Aggregate   3 year Term Limit 6/28/99 to 6/28/02
  Officers
                                                                $250,000           each occ.   Corporate Retention (Deductible)
                                                                      $0           each occ.   Directors Retention
                                                                      0%           each occ.   Co-Insurance
                   Zurich Ins. Co.        DOC 8385392 03     $10,000,000           Aggregate   3 year Term Limit 6/28/99 to 6/28/02
                   Reliance Ins. Co.      NDA 0130261-99     $10,000,000           Aggregate   Cancelled as of 8/3/00
                   Twin City Fire Ins.    NDA 0130261-99H    $10,000,000           Aggregate   Replaced Reliance policy
                     Co.                                                                       8/3/00-6/28/02
                   Royal & Sunalliance    SF001149           $10,000,000           Aggregate   3 year Term Limit 6/28/99 to 6/28/02
                                                                                               (99 yr will begin new 3 yr term
                                                                                                limits)
Fiduciary          Federal Insurance Co.  8181-26-24         $10,000,000                       Basic Form (14-02-0941 & 14-02-0945)
                                                             Deductible $25,000                Indemnifiable Loss

Crime              National Union         8735297            $3,000,000                        CrimeGuard Policy Form
                                                             Deductible $25,000
------------------------------------------------------------------------------------------------------------------------------------
Worker             Ins.Co.State of Penn.  RMWC527-7023(AOS)  Statutory                         Coverage A
Compensation
                   Ins.Co.State of Penn.  RMWC527-7024(CA)   $1,000,000            Each        Coverage B
                                                                                   Accident
                   National Union         RMWC527-7025(WI)   $1,000,000            Disease     Policy Limit
                   Maine Employers'       l1810048307 (ME)   $1,000,000            Disease     Each Employee
                    Mutual                                                ESCROW FUND FOR AIG WHICH IS ASSET OF APRIA $200,000

                                                             2001 Deductible       each        Loss Limit
                                                             Plan Terms:$250,000   accident

Auto Liability     National Union         RMCA534-8622(AOS)  $1,000,000            each        CSL BI/PD
                                                                                   accident
                                          RMCA534-8624(TX)      $10,000                        Medical Payments
                                          RMCA534-8623(OH)
                                                             Reject/Minimum                    Uninsured/Underinsured

                                                                          ESCROW FUND FOR AIG WHICH IS ASSET OF APRIA $100,000
                                                             2001 Deductible        each       Loss Limit
                                                             Plan Terms:$250,000    accident
-----------------------------------------------------------------------------------------------------------------------------------
General &          Columbia Casualty      HHP1064400918-4
 Hospital
Professional                              GENERAL LIABILITY- $1,000,000             per occ    Each Occurrence
 Liability                                Occurrence Form
                                                             $1,000,000             per occ    Fire Damage
                                                             $1,000,000             per occ    Liquor Liability
                                                             $1,000,000             per occ    Personal & Advertising Injury
                                                                $25,000             per occ    Medical Expense
                                                             $3,000,000             Aggregate  Products/Completed Operations
                                                             $3,000,000             Aggregate  General (x products/completed ops )
                                                                                                Above Limits apply per location
                                                                                                subject to $10,000,000 general agg.

                                                             $1,000,000             per claim  Employee Benefits-Occurrence
                                                             $3,000,000             Aggregate  Employee Benefits-Occurrence

                   HOSPITAL PROFESSIONAL-                    $1,000,000             each
                                                                                    person
                   Claims Made Form                          $3,000,000             Aggregate

                   SELF INSURED RETENTION                      $250,000             each
                                                                                    person or
                                                                                    occurrence

                                                (SIR applies to both indemnity payments and defense
                                                 expenses and both erode the deductible.)

Umbrella           Columbia Casualty      HHE1064400899-4                           Occurrence/Claims Made Where Applicable
 Liability
                                                            $50,000,000             Each Medical incident or Occurrence
                                                            $50,000,000             Aggregate  Professional Liability
                                                            $50,000,000             Aggregate  General/Products/Completed Ops.
                                                            $50,000,000             Aggregate  Other
                                                                     $0             each       Self Insured Retention for DIC claims
                                                                                    incident
</TABLE>
<PAGE>

                                  SCHEDULE 8.1
                                  ------------

                                  INDEBTEDNESS

            Indebtedness at June 30, 2001:

                                                   Amount
                                                ------------
          Bank of America term loan             $140,000,000

          9 1/2% senior subordinated notes      $200,000,000 {a}



          Capital Lease Obligations (multiple  obligations to  a single creditor
have been aggregated):

Debtor                                             Amount
------                                          ------------
IBM                                              $4,204,882

Deferred Acquisition Costs:
---------------------------

Debtor                                        Amount             Due Date
------                                        ------             --------
I Care Partners                              $265,000            12/22/01
Oxy+Plus, Inc.                               $754,400            7/15/01
Oxy+Plus, Inc.                               $768,800            11/15/01
Respiserv, Inc.                              $360,000            8/2/01
Respiserv, Inc.                              $360,000            2/2/02
HealthEast Home Med, Ltd.                    $287,500            8/16/01
HealthEast Home Med, Ltd.                    $287,500            1/16/02
Montana Oxygen Services, Inc.                $175,000            11/4/01
Montana Oxygen Services, Inc.                $175,000            5/4/02
CDS Home Care                                $ 75,000            12/8/01
CDS Home Care                                $ 75,000            12/8/02
CDS Home Care                                $ 75,000            12/8/03
The Core Group of Missouri, Inc.             $300,000            7/5/01
The Core Group of Missouri, Inc.             $150,000            1/15/02


The  existence of  interaffiliate  debt between one or more of the  Consolidated
Parties has been disclosed but is not specifically listed on this Schedule.

{a} Notes have been called for redemption on July 23, 2001.
<PAGE>

                                  SCHEDULE 11.1
                                  -------------

                                     NOTICES

CREDIT CONTACT                               ADMINISTRATIVE CONTACT

CREDIT LYONNAIS NEW YORK BRANCH
Credit Lyonnais                              Credit Lyonnais
Healthcare Group                             Client Banking Services
1301 Avenue of the Americas                  1301 Avenue of the Americas
New York, NY 10019                           New York, NY 10019
Attn:  Monique Benhamou                      Attn:  Gener David
Telephone:  (212) 261-7394                   Telephone:  (212) 261-7741
Facsimile:  (212) 261-3440                   Facsimile:  (212) 459-3181

CREDIT SUISSE FIRST BOSTON
Credit Suisse First Boston                   Credit Suisse First Boston
11 Madison Avenue                            Five World Trade Center, 8th Floor
New York, NY 10010                           New York, NY 10048-0928
Attn:  William Lutkins                       Attn:  Nilsa Ware
Telephone:  (212) 325-9705                   Telephone:  (212) 322-5094
Facsimile:  (212) 325-8319                   Facsimile:  (212) 335-0593

FLEET BOSTON FINANCIAL
Fleet Boston Financial                       Fleet Boston Financial
100 Federal Street                           100 Federal Street
MADE10010B                                   MADE10010B
Boston, MA 02110                             Boston, MA 02110
Attn:  Robinson Alston, Jr.                  Attn:  Christopher Murphy
Telephone:  (617) 434-6894                   Telephone:  (617) 434-5231
Facsimile:  (617) 434-2472                   Facsimile:  (617) 434-2472

THE BANK OF NOVA SCOTIA
The Bank of Nova Scotia                      The Bank of Nova Scotia
580 California Street, Suite 2100            600 Peachtree Street, N.E. #2700
San Francisco, CA 94104                      Atlanta, GA 30308
Attn:  Robert Reynolds                       Attn:  Kathy Clark
Telephone:  (415) 616-4166                   Telephone:  (404) 877-1542
Facsimile:  (415) 397-0791                   Facsimile:  (404) 888-8998

UBS WARBURG
UBS AG, Stamford Branch                      UBS AG, Stamford Branch
677 Washington Blvd., 6th                    677 Washington Blvd., 6th
Stamford, CT 06912                           Stamford, CT 06912
Attn:  Susan Brunner                         Attn:  Susan Brunner
Telephone:  (203) 719-4181                   Telephone:  (203) 719-4181
Facsimile:  (203) 719-4176                   Facsimile:  (203) 719-4176
<PAGE>


                                 EXHIBIT 1.1(A)
                                 --------------

                  FORM OF AMENDED AND RESTATED PLEDGE AGREEMENT

    THIS AMENDED AND RESTATED  PLEDGE  AGREEMENT  (this "Pledge  Agreement")  is
entered  into as of July __, 2001 among APRIA  HEALTHCARE  GROUP INC. a Delaware
corporation  (the  "Borrower"),  certain  Subsidiaries  of  the  Borrower  (each
individually a "Guarantor", and collectively the "Guarantors"; together with the
Borrower,  each  individually a "Pledgor",  and collectively the "Pledgors") and
BANK OF AMERICA,  N.A., in its capacity as agent (in such capacity, the "Agent")
for the lenders from time to time party to the Credit Agreement  described below
(the "Lenders").

                               W I T N E S S E T H

    WHEREAS, a $400 million credit facility has been established in favor of the
Borrower,  pursuant to the terms of that  Second  Amended  and  Restated  Credit
Agreement  dated  as of  the  date  hereof  (as  amended,  modified,  increased,
extended,  renewed or replaced,  the "Credit Agreement") among the Borrower, the
Guarantors, the lenders identified therein and the Agent; and

    WHEREAS,  it is a condition  precedent  to the  effectiveness  of the Credit
Agreement and the obligations of the Lenders to make their  respective Loans and
to issue Letters of Credit under the Credit  Agreement  that the Pledgors  shall
have  amended and  restated the terms and  conditions  of that certain  security
agreement  dated as of  March  13,  1998 (as  amended,  the  "Existing  Security
Agreement") among the Borrower, certain of its Subsidiaries and Bank of America,
N.A. (formerly known as Bank of America National Trust and Savings Association),
as agent thereunder,  by execution and delivery of this Pledge Agreement and the
Security Agreement to the Agent for the ratable benefit of the Lenders;

    NOW,  THEREFORE,  in  consideration  of these  premises  and other  good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties hereto agree as follows:

    1.  Definitions.  Capitalized  terms used and not otherwise  defined  herein
shall have the meanings provided in the Credit Agreement. As used herein:

        "Secured  Obligations"  means,  without  duplication,  (i)  all  of  the
    obligations and liabilities of the Credit Parties to the Lenders  (including
    the  Issuing  Lender),  and the Agent,  whenever  arising,  under the Credit
    Agreement or any of the other Credit Documents  (including,  but not limited
    to, any interest  accruing after the  occurrence of a Bankruptcy  Event with
    respect to any Credit  Party,  regardless  of whether  such  interest  is an
    allowed claim under the Bankruptcy Code),  whether now existing or hereafter
    arising,  due or to become due, direct or indirect,  absolute or contingent,
    howsoever evidenced,  created, held or acquired, whether primary, secondary,
    direct,  contingent,  or  joint  and  several,  as such  obligations  may be
    amended,  modified,  increased,  extended,  renewed or replaced from time to
    time, (ii) all obligations owing by the Credit Parties to the Lenders or any
    affiliate of a Lender,  whenever arising, under any interest rate protection
    agreements,  foreign currency exchange  agreements or commodity  purchase or
    option  agreements to the extent permitted under the Credit  Agreement,  and
    (iii) all costs and expenses  incurred in connection  with  enforcement  and
    collection of the Secured Obligations, including reasonable attorneys' fees.

    2. Pledge and Grant of Security  Interest.  To secure the prompt payment and
performance  in full when due,  whether  by lapse of time or  otherwise,  of the
Secured  Obligations,  each Pledgor hereby pledges and assigns to the Agent, for
the benefit of the holders of the Secured Obligations,  and grants to the Agent,
for the benefit of the holders of the Secured Obligations, a continuing security
interest in any and all right,  title and interest of such Pledgor in and to the
following,  whether  now  owned or  existing  or  owned,  acquired,  or  arising
hereafter (collectively, the "Pledged Collateral"):

        (a) Pledged Shares. (i) 100% (or, if less, the full amount owned by such
    Pledgor)  of the  issued  and  outstanding  Capital  Stock of each  Domestic
    Subsidiary  set forth on Schedule 2(a) attached  hereto and (ii) 65% (or, if
    less,  the full amount owned by such Pledgor) of the issued and  outstanding
    shares of Capital Stock entitled to vote (within the meaning of Treas.  Reg.
    Section  1.956-2(c)(2))  ("Voting  Equity") and 100% (or, if less,  the full
    amount owned by such  Pledgor) of the issued and  outstanding  Capital Stock
    not   entitled  to  vote  (within  the  meaning  of  Treas.   Reg.   Section
    1.956-2(c)(2)) ("Non-Voting Equity") of each Foreign Subsidiary set forth on
    Schedule 2(a) attached  hereto,  in each case together with the certificates
    (or other  agreements or  instruments),  if any,  representing  such Capital
    Stock,  and all options and other rights,  contractual  or  otherwise,  with
    respect thereto (collectively,  together with the Capital Stock described in
    Section  2(b) and 2(c) below,  the  "Pledged  Shares"),  including,  but not
    limited to, the following:

            (A) all shares,  securities,  membership  interests  or other equity
        interests  representing  a dividend  on any of the  Pledged  Shares,  or
        representing a  distribution  or return of capital upon or in respect of
        the  Pledged  Shares,  or  resulting  from  a  stock  split,   revision,
        reclassification  or other  exchange  therefor,  and any  subscriptions,
        warrants,  rights or options  issued to the holder of, or  otherwise  in
        respect of, the Pledged Shares; and

            (B) without  affecting  the  obligations  of the Pledgors  under any
        provision   prohibiting  such  action  hereunder  or  under  the  Credit
        Agreement,  in the event of any  consolidation  or merger  involving the
        issuer  of any  Pledged  Shares  and in  which  such  issuer  is not the
        surviving entity, all Capital Stock of the successor entity formed by or
        resulting  from such  consolidation  or merger  issued to the Pledgor in
        connection with such consolidation or merger.

        (b) Additional Shares.  100% (or, if less, the full amount owned by such
    Pledgor) of the issued and  outstanding  Capital  Stock of any Person  which
    hereafter  becomes a  Domestic  Subsidiary  and 65% (or,  if less,  the full
    amount  owned by such  Pledgor) of the Voting  Equity and 100% (or, if less,
    the full  amount  owned by such  Pledgor)  of the  Non-Voting  Equity of any
    Person which  hereafter  becomes a Foreign  Subsidiary,  including,  without
    limitation, the certificates representing such Capital Stock.

        (c) Proceeds.  All proceeds and products of the  foregoing,  however and
    whenever acquired and in whatever form.

    Without limiting the generality of the foregoing,  it is hereby specifically
understood  and agreed  that a Pledgor may from time to time  hereafter  deliver
additional  Capital  Stock to the Agent as  collateral  security for the Secured
Obligations.  Upon delivery to the Agent, such additional Capital Stock shall be
deemed to be part of the Pledged Collateral of such Pledgor and shall be subject
to the terms of this Pledge Agreement whether or not Schedule 2(a) is amended to
refer to such additional Capital Stock.

    3. Security for Secured Obligations. The security interest created hereby in
the  Pledged  Collateral  of  each  Pledgor  constitutes  continuing  collateral
security for all of the Secured Obligations of the Credit Parties to the holders
of the Secured Obligations.

    4.  Delivery of the Pledged  Collateral.  Each Pledgor  hereby  agrees that:

        (a) Each Pledgor shall deliver to the Agent (i)  simultaneously  with or
    prior  to  the  execution  and  delivery  of  this  Pledge  Agreement,   all
    certificates  representing  the  Pledged  Shares  of such  Pledgor  and (ii)
    promptly  upon the receipt  thereof by or on behalf of a Pledgor,  all other
    certificates and instruments  constituting  Pledged Collateral of a Pledgor.
    Prior to  delivery  to the  Agent,  all such  certificates  and  instruments
    constituting  Pledged Collateral of a Pledgor shall be held in trust by such
    Pledgor for the benefit of the Agent pursuant hereto.  All such certificates
    shall be  delivered  in suitable  form for  transfer by delivery or shall be
    accompanied by duly executed instruments of transfer or assignment in blank,
    substantially in the form provided in Exhibit 4(a) attached hereto.

        (b)  Additional  Securities.  If such Pledgor shall receive by virtue of
    its  being or  having  been the  owner of any  Pledged  Collateral,  any (i)
    certificate,  including without limitation,  any certificate  representing a
    dividend or  distribution  in  connection  with any increase or reduction of
    capital,   reclassification,   merger,   consolidation,   sale  of   assets,
    combination of shares or other equity interests,  stock splits,  spin-off or
    split-off,  promissory  notes or other  instruments;  (ii)  option or right,
    whether as an addition to, substitution for, or an exchange for, any Pledged
    Collateral  or  otherwise;  (iii)  dividends  payable in securities or other
    equity  interests;  or (iv)  distributions  of  securities  or other  equity
    interests in connection with a partial or total liquidation,  dissolution or
    reduction of capital,  capital surplus or paid-in surplus, then such Pledgor
    shall receive such certificate, instrument, option, right or distribution in
    trust for the benefit of the Agent,  shall  segregate it from such Pledgor's
    other property and shall deliver it forthwith to the Agent in the exact form
    received together with any necessary  endorsement  and/or  appropriate stock
    power duly executed in blank,  substantially in the form provided in Exhibit
    4(a),  to be  held  by the  Agent  as  Pledged  Collateral  and  as  further
    collateral security for the Secured Obligations.

        (c) Financing Statements.  Each Pledgor shall execute and deliver to the
    Agent such UCC or other applicable financing statements as may be reasonably
    requested by the Agent in order to perfect and protect the security interest
    created hereby in the Pledged Collateral of such Pledgor.

    5.  Representations  and  Warranties.  Each Pledgor  hereby  represents  and
warrants  to  the  Agent,  for  the  benefit  of  the  holders  of  the  Secured
Obligations, that:

        (a)  Authorization  of  Pledged  Shares.  The  Pledged  Shares  are duly
    authorized and validly issued,  are fully paid and nonassessable and are not
    subject to the preemptive rights of any Person.

        (b) Title.  Each Pledgor has good and indefeasible  title to the Pledged
    Collateral  of such  Pledgor  and will at all  times  (unless  such  Pledged
    Collateral  is subject to an asset  disposition  permitted  under the Credit
    Agreement) be the legal and beneficial owner of such Pledged Collateral free
    and clear of any Lien, other than Permitted Liens.  There exists no "adverse
    claim" within the meaning of Section 8-102 of the Uniform Commercial Code as
    in effect in the State of New York as of the date  hereof  (the  "UCC") with
    respect to the Pledged Shares of such Pledgor.

        (c)  Exercising  of Rights.  The exercise by the Agent of its rights and
    remedies  hereunder  will not  violate  any law or  governmental  regulation
    applicable to a Pledgor or any material  contractual  restriction binding on
    or affecting a Pledgor or any of its property.

        (d) Pledgor's Authority. No authorization, approval or action by, and no
    notice or filing with any  Governmental  Authority or with the issuer of any
    Pledged Stock is required either (i) for the pledge made by a Pledgor or for
    the granting of the security  interest by a Pledgor  pursuant to this Pledge
    Agreement (except as have been already obtained) or (ii) for the exercise by
    the Agent or the  holders of the  Secured  Obligations  of their  rights and
    remedies hereunder (except as may be required by laws affecting the offering
    and sale of  securities,  Hart-Scott-Rodino  and  other  antitrust  laws and
    applicable UCC provisions).

        (e) Security  Interest/Priority.  This Pledge Agreement  creates a valid
    security  interest  in favor of the Agent for the  benefit of the holders of
    the Secured Obligations, in the Pledged Collateral. The taking of possession
    by the Agent of the  certificates  representing  the Pledged  Shares and all
    other  certificates  and instruments  constituting  Pledged  Collateral will
    perfect and establish the first priority of the Agent's security interest in
    the Pledged Shares and, when properly  perfected by filing or  registration,
    in all other  Pledged  Collateral  represented  by such  Pledged  Shares and
    instruments  securing the Secured  Obligations.  Except as set forth in this
    Section  5(e),  no action is necessary to perfect or otherwise  protect such
    security interest.

        (f) Partnership and Membership Interests. Except as previously disclosed
    to the Agent,  none of the  Pledged  Shares  consisting  of  partnership  or
    limited  liability  company  interests  (i)  is  dealt  in  or  traded  on a
    securities  exchange or in a securities market,  (ii) by its terms expressly
    provides that it is a security governed by Article 8 of the UCC, (iii) is an
    investment  company  security,  (iv) is held in a securities  account or (v)
    constitutes a "security" or a "financial asset" as such terms are defined in
    Article 8 of the UCC.

        (g) No  Other  Interests.  No  Pledgor  owns  any  Capital  Stock in any
    Subsidiary other than as set forth on Schedule 2(a) attached hereto.

    6.  Covenants.  Each Pledgor  hereby  covenants,  that so long as any of the
Secured  Obligations or any Letter of Credit shall remain  outstanding and until
all of the Commitments shall have been terminated, such Pledgor shall:

        (a) Books and  Records.  Mark its books and records (and shall cause the
    issuer of the Pledged  Shares of such Pledgor to mark its books and records)
    to reflect the security  interest  granted to the Agent,  for the benefit of
    the holders of the Secured Obligations, pursuant to this Pledge Agreement.

        (b) Defense of Title.  Warrant and defend title to and  ownership of the
    Pledged Collateral of such Pledgor at its own expense against the claims and
    demands of all other parties claiming an interest therein,  keep the Pledged
    Collateral free from all Liens,  except for Permitted  Liens,  and not sell,
    exchange, transfer, assign, lease or otherwise dispose of Pledged Collateral
    of such  Pledgor or any  interest  therein,  except as  permitted  under the
    Credit Agreement and the other Credit Documents.

        (c) Further Assurances.  Promptly execute and deliver at its expense all
    further  instruments  and documents and take all further  action that may be
    reasonably  necessary or that the Agent may  reasonably  request in order to
    (i) perfect and protect the security  interest created hereby in the Pledged
    Collateral  of such  Pledgor  (including,  without  limitation,  any and all
    action  necessary  to satisfy the Agent that the Agent has  obtained a first
    priority perfected security interest in all Pledged Collateral); (ii) enable
    the Agent to  exercise  and  enforce its rights and  remedies  hereunder  in
    respect of the  Pledged  Collateral  of such  Pledgor;  and (iii)  otherwise
    effect the purposes of this Pledge Agreement,  including, without limitation
    and if requested by the Agent,  delivering to the Agent irrevocable  proxies
    in respect of the Pledged Collateral of such Pledgor.

        (d)  Amendments.   Not  make  or  consent  to  any  amendment  or  other
    modification or waiver with respect to any of the Pledged Collateral of such
    Pledgor or enter into any agreement or allow to exist any  restriction  with
    respect to any of the Pledged Collateral of such Pledgor other than pursuant
    hereto or as may be permitted under the Credit Agreement.

        (e)  Compliance  with  Securities  Laws.  File  all  reports  and  other
    information  now or hereafter  required to be filed by such Pledgor with the
    United  States  Securities  and  Exchange  Commission  and any other  state,
    federal or foreign  agency in  connection  with the ownership of the Pledged
    Collateral of such Pledgor.

        (f) Issuance or Acquisition of Capital Stock. Not, without executing and
    delivering,  or  causing to be  executed  and  delivered,  to the Agent such
    agreements,  documents and instruments as the Agent may reasonably  require,
    issue  or  acquire  any  Capital  Stock  consisting  of  an  interest  in  a
    partnership or a limited liability company that (i) is dealt in or traded on
    a securities exchange or in a securities market, (ii) by its terms expressly
    provides that it is a security governed by Article 8 of the UCC, (iii) is an
    investment  company  security,  (iv) is held in a securities  account or (v)
    constitutes a "security" or a "financial asset" as such terms are defined in
    Article 8 of the UCC.

    7. Advances by Holders of the Secured Obligations. On failure of any Pledgor
to perform any of the covenants and agreements  contained herein, the Agent may,
at its sole option and in its sole discretion,  perform the same and in so doing
may  expend  such  sums  as the  Agent  may  reasonably  deem  advisable  in the
performance thereof, including, without limitation, the payment of any insurance
premiums,  the payment of any taxes,  a payment to obtain a release of a Lien or
potential Lien, expenditures made in defending against any adverse claim and all
other expenditures which the Agent or the holders of the Secured Obligations may
make for the protection of the security hereof or which may be compelled to make
by operation  of law. All such  reasonable  and  documented  sums and amounts so
expended  shall be  repayable  by the  Pledgors  on a joint  and  several  basis
promptly  upon timely  notice  thereof  and demand  therefor,  shall  constitute
additional  Secured  Obligations  and  shall  bear  interest  from the date said
amounts are expended at the default rate  specified in Section 3.1 of the Credit
Agreement for Revolving Loans that are Base Rate Loans.  No such  performance of
any covenant or agreement by the Agent or the holders of the Secured Obligations
on behalf of any Pledgor,  and no such advance or  expenditure  therefor,  shall
relieve the  Pledgors of any default  under the terms of this Pledge  Agreement,
the other  Credit  Documents  or any other  documents  relating  to the  Secured
Obligations.  The holders of the Secured Obligations may make any payment hereby
authorized in accordance with any bill,  statement or estimate procured from the
appropriate  public  office  or holder  of the  claim to be  discharged  without
inquiry  into the  accuracy  of such bill,  statement  or  estimate  or into the
validity  of any tax  assessment,  sale,  forfeiture,  tax lien,  title or claim
except to the extent such payment is being  contested in good faith by a Pledgor
in  appropriate  proceedings  and  against  which  adequate  reserves  are being
maintained in accordance with GAAP.

    8.  Events of  Default.  The  occurrence  of an event which under the Credit
Agreement  would  constitute  an Event of  Default  shall be an Event of Default
hereunder (an "Event of Default").

    9. Remedies.

        (a) General  Remedies.  Upon the  occurrence  of an Event of Default and
    during the  continuation  thereof,  the Agent and the holders of the Secured
    Obligations shall have, in respect of the Pledged Collateral of any Pledgor,
    in  addition  to the  rights and  remedies  provided  herein,  in the Credit
    Documents, in any other documents relating to the Secured Obligations, or by
    law, the rights and  remedies of a secured  party under the UCC or any other
    applicable law.

        (b)  Sale of  Pledged  Collateral.  Upon the  occurrence  of an Event of
    Default and during the continuation thereof, without limiting the generality
    of this Section and without notice,  the Agent may, in its sole  discretion,
    sell or otherwise dispose of or realize upon the Pledged Collateral,  or any
    part  thereof,  in one or more  parcels,  at public or private  sale, at any
    exchange or broker's board or elsewhere, at such price or prices and on such
    other terms as the Agent may deem commercially reasonable,  for cash, credit
    or for future  delivery or otherwise in accordance  with  applicable law. To
    the extent  permitted  by law,  any Lender  may in such  event,  bid for the
    purchase of such securities.  Each Pledgor agrees that, to the extent notice
    of sale shall be required  by law and has not been  waived by such  Pledgor,
    any requirement of reasonable notice shall be met if notice,  specifying the
    place of any public sale or the time after  which any private  sale is to be
    made, is personally served on or mailed,  postage prepaid,  to such Pledgor,
    in  accordance  with the notice  provisions  of  Section  11.1 of the Credit
    Agreement at least 10 days before the time of such sale. The Agent shall not
    be  obligated  to  make  any  sale of  Pledged  Collateral  of such  Pledgor
    regardless  of notice of sale having  been given.  The Agent may adjourn any
    public or  private  sale from time to time by  announcement  at the time and
    place fixed therefor,  and such sale may, without further notice, be made at
    the time and place to which it was so adjourned.

        (c) Private Sale.  Upon the occurrence of an Event of Default and during
    the continuation  thereof, the Pledgors recognize that the Agent may deem it
    impracticable  to  effect  a public  sale of all or any part of the  Pledged
    Shares  or any of the  securities  or other  equity  interests  constituting
    Pledged Collateral and that the Agent may, therefore,  determine to make one
    or more private sales of any such Pledged  Collateral to a restricted  group
    of purchasers who will be obligated to agree, among other things, to acquire
    such Pledged Collateral for their own account, for investment and not with a
    view to the distribution or resale thereof.  Each Pledgor  acknowledges that
    any such  private  sale may be at prices and on terms less  favorable to the
    seller than the prices and other  terms which might have been  obtained at a
    public sale and,  notwithstanding  the  foregoing,  agrees that such private
    sale shall be deemed to have been made in a commercially  reasonable  manner
    and  that the  Agent  shall  have no  obligation  to delay  sale of any such
    Pledged  Collateral for the period of time necessary to permit the issuer of
    such Pledged  Collateral to register such Pledged Collateral for public sale
    under the Securities Act. Each Pledgor further  acknowledges and agrees that
    any  offer to sell  such  Pledged  Collateral  which  has been (i)  publicly
    advertised  on a bona fide  basis in a  newspaper  or other  publication  of
    general circulation in the financial community of New York, New York (to the
    extent that such offer may be advertised  without prior  registration  under
    the Securities  Act), or (ii) made privately in the manner  described  above
    shall be deemed to involve a "public  sale"  under the UCC,  notwithstanding
    that such sale may not constitute a "public  offering"  under the Securities
    Act, and the Agent may, in such event,  bid for the purchase of such Pledged
    Collateral.

        (d)  Retention  of Pledged  Collateral.  To the extent  permitted  under
    applicable law, in addition to the rights and remedies  hereunder,  upon the
    occurrence  of an Event of  Default,  the Agent  may,  after  providing  the
    notices required by Section 9-620(2) of the UCC or otherwise  complying with
    the requirements of applicable law of the relevant jurisdiction,  retain all
    or any  portion of the Pledged  Collateral  in  satisfaction  of the Secured
    Obligations.  Unless and until the Agent shall have  provided  such notices,
    however,  the  Agent  shall  not be  deemed  to have  retained  any  Pledged
    Collateral in satisfaction of any Secured Obligations for any reason.

        (e) Deficiency.  In the event that the proceeds of any sale,  collection
    or realization are insufficient to pay all amounts to which the Agent or the
    holders of the Secured Obligations are legally entitled,  the Pledgors shall
    be jointly and severally  liable for the deficiency,  together with interest
    thereon at the default rate specified in Section 3.1 of the Credit Agreement
    for  Revolving  Loans that are Base Rate Loans,  together  with the costs of
    collection and the reasonable fees of any attorneys employed by the Agent to
    collect such  deficiency.  Any surplus  remaining after the full payment and
    satisfaction of the Secured Obligations shall be returned to the Pledgors or
    to  whomsoever  a court of  competent  jurisdiction  shall  determine  to be
    entitled thereto.

    10. Rights of the Agent.

        (a) Power of Attorney. In addition to other powers of attorney contained
    herein,  each Pledgor hereby designates and appoints the Agent, on behalf of
    the holders of the Secured Obligations,  and each of its designees or agents
    as  attorney-in-fact  of  such  Pledgor,   irrevocably  and  with  power  of
    substitution,  with  authority to take any or all of the  following  actions
    upon the occurrence and during the continuance of an Event of Default:

            (i)  to  demand,  collect,  settle,  compromise,   adjust  and  give
        discharges  and  releases  concerning  the  Pledged  Collateral  of such
        Pledgor, all as the Agent may reasonably determine;

            (ii) to  commence  and  prosecute  any  actions at any court for the
        purposes of collecting any of the Pledged Collateral of such Pledgor and
        enforcing any other right in respect thereof;

            (iii) to defend,  settle or compromise  any action in respect of the
        Pledged  Collateral  brought  and, in  connection  therewith,  give such
        discharge or release as the Agent may deem reasonably appropriate;

            (iv) to pay or discharge taxes, liens, security interests,  or other
        encumbrances  levied or  placed on or  threatened  against  the  Pledged
        Collateral of such Pledgor;

            (v) to direct any parties  liable for any  payment  under any of the
        Pledged  Collateral  to make  payment  of any and all  monies due and to
        become  due  thereunder  directly  to the  Agent or as the  Agent  shall
        direct;

            (vi) to  receive  payment  of and  receipt  for any and all  monies,
        claims,  and other  amounts due and to become due at any time in respect
        of or arising out of any Pledged Collateral of such Pledgor;

            (vii) to sign and endorse any drafts,  assignments,  proxies,  stock
        powers,  verifications,  notices  and other  documents  relating  to the
        Pledged Collateral of such Pledgor;

            (viii)  to  settle,   compromise  or  adjust  any  suit,  action  or
        proceeding  described above and, in connection  therewith,  to give such
        discharges or releases as the Agent may deem reasonably appropriate;

            (ix)  to  execute   and  deliver   all   assignments,   conveyances,
        statements,  financing statements,  renewal financing statements, pledge
        agreements,  affidavits,  notices and other agreements,  instruments and
        documents that the Agent may determine necessary in order to perfect and
        maintain  the  security  interests  and  liens  granted  in this  Pledge
        Agreement  and in  order  to fully  consummate  all of the  transactions
        contemplated therein;

            (x) to exchange  any of the Pledged  Collateral  of such  Pledgor or
        other   property   upon  any  merger,   consolidation,   reorganization,
        recapitalization  or other  readjustment  of the issuer  thereof and, in
        connection  therewith,  deposit  any of the Pledged  Collateral  of such
        Pledgor with any committee,  depository,  transfer  agent,  registrar or
        other designated agency upon such terms as the Agent may determine;

            (xi) to vote for a shareholder resolution,  or to sign an instrument
        in  writing,  sanctioning  the  transfer  of any  or all of the  Pledged
        Collateral  of such Pledgor into the name of the Agent or one or more of
        the  holders  of  the  Secured  Obligations  or  into  the  name  of any
        transferee  to whom the Pledged  Collateral  of such Pledgor or any part
        thereof may be sold pursuant to Section 9 hereof; and

            (xii) to do and  perform all such other acts and things as the Agent
        may reasonably deem to be necessary,  proper or convenient in connection
        with the Pledged Collateral of such Pledgor.

This  power  of  attorney  is a power  coupled  with an  interest  and  shall be
irrevocable  (i)  for  so  long  as  any  of  the  Secured   Obligations  remain
outstanding,  any Credit Document or any other documents relating to the Secured
Obligations,  is in effect or any Letter of Credit shall remain  outstanding and
(ii) until all of the Commitments shall have been terminated. The Agent shall be
under no duty to exercise or withhold the exercise of any of the rights, powers,
privileges  and options  expressly  or  implicitly  granted to the Agent in this
Pledge Agreement,  and shall not be liable for any failure to do so or any delay
in doing so. The Agent  shall not be liable for any act or  omission  or for any
error of judgment or any  mistake of fact or law in its  individual  capacity or
its capacity as  attorney-in-fact  except acts or omissions  resulting  from its
gross negligence or willful  misconduct.  This power of attorney is conferred on
the Agent solely to protect,  preserve and realize upon its security interest in
the Pledged Collateral.

        (b) Assignment by the Agent. Pursuant to the Credit Agreement, the Agent
    may from time to time assign the Secured Obligations and any portion thereof
    and/or the Pledged  Collateral  and any portion  thereof,  and the  assignee
    shall be entitled to all of the rights and  remedies of the Agent under this
    Pledge Agreement in relation thereto.

        (c) The Agent's Duty of Care. Other than the exercise of reasonable care
    to assure the safe custody of the Pledged Collateral while being held by the
    Agent  hereunder,  the Agent  shall have no duty or  liability  to  preserve
    rights  pertaining  thereto,  it being  understood  and agreed that Pledgors
    shall  be  responsible  for  preservation  of  all  rights  in  the  Pledged
    Collateral  of  such  Pledgor,  and  the  Agent  shall  be  relieved  of all
    responsibility  for Pledged Collateral upon surrendering it or tendering the
    surrender of it to the Pledgors. The Agent shall be deemed to have exercised
    reasonable care in the custody and preservation of the Pledged Collateral in
    its   possession   if  such  Pledged   Collateral   is  accorded   treatment
    substantially equal to that which the Agent accords its own property,  which
    shall be no less than the  treatment  employed by a  reasonable  and prudent
    agent in the  industry,  it being  understood  that the Agent shall not have
    responsibility  for (i) ascertaining or taking action with respect to calls,
    conversions, exchanges, maturities, tenders or other matters relating to any
    Pledged  Collateral,  whether  or not the  Agent  has or is  deemed  to have
    knowledge of such matters;  or (ii) taking any  necessary  steps to preserve
    rights against any parties with respect to any Pledged Collateral.

        (d)   Voting   Rights   in   Respect   of   the   Pledged    Collateral.

            (i) So long as no  Event  of  Default  shall  have  occurred  and be
        continuing,  to the extent  permitted by law,  each Pledgor may exercise
        any and all voting and other consensual rights pertaining to the Pledged
        Collateral  of such  Pledgor or any part  thereof  for any  purpose  not
        inconsistent  with the  terms of this  Pledge  Agreement  or the  Credit
        Agreement; and

            (ii) Upon the occurrence  and during the  continuance of an Event of
        Default, and delivery by the Agent to the relevant Pledgor of its intent
        to exercise  its rights  under this  Section  10(d)(ii)  all rights of a
        Pledgor to  exercise  the voting and other  consensual  rights  which it
        would  otherwise be entitled to exercise  pursuant to  paragraph  (i) of
        this subsection  shall cease and all such rights shall thereupon  become
        vested in the Agent  which  shall then have the sole  right to  exercise
        such voting and other consensual rights.

        (e)   Dividend   Rights   in   Respect   of  the   Pledged   Collateral.

            (i) So long as no  Event  of  Default  shall  have  occurred  and be
        continuing and subject to Section 4(b) hereof,  each Pledgor may receive
        and retain any and all dividends  (other than stock  dividends and other
        dividends   constituting   Pledged   Collateral   which  are   addressed
        hereinabove)  or interest  paid in respect of the Pledged  Collateral to
        the extent they are allowed under the Credit Agreement.

            (ii) Upon the occurrence  and during the  continuance of an Event of
        Default and delivery by the Agent to the relevant  Pledgor of its intent
        to exercise its rights under this Section 10(e)(ii):

                (A) all  rights  of a  Pledgor  to  receive  the  dividends  and
            interest  payments which it would otherwise be authorized to receive
            and retain pursuant to paragraph (i) of this Section shall cease and
            all such rights  shall  thereupon be vested in the Agent which shall
            then have the sole right to receive  and hold as Pledged  Collateral
            such dividends and interest payments; and

                (B) all dividends and interest  payments which are received by a
            Pledgor  contrary to the provisions of paragraph (A) of this Section
            shall be received  in trust for the  benefit of the Agent,  shall be
            segregated  from other property or funds of such Pledgor,  and shall
            be  forthwith  paid over to the Agent as Pledged  Collateral  in the
            exact form received,  to be held by the Agent as Pledged  Collateral
            and as further collateral security for the Secured Obligations.

        (f)  Release of Pledged  Collateral.  The Agent may  release  any of the
    Pledged  Collateral from this Pledge  Agreement or may substitute any of the
    Pledged Collateral for other Pledged Collateral without altering, varying or
    diminishing in any way the force,  effect, lien, pledge or security interest
    of this Pledge Agreement as to any Pledged Collateral not expressly released
    or substituted, and this Pledge Agreement shall continue as a first priority
    lien on all Pledged Collateral not expressly released or substituted. If any
    of the Pledged  Collateral shall be sold,  transferred or otherwise disposed
    of by any Pledgor in a transaction  permitted by the Credit Agreement,  then
    the Agent,  at the request and sole expense of such  Pledgor,  shall execute
    and deliver to such  Pledgor  all  releases  or other  documents  reasonably
    necessary or desirable for the release of the Liens  created  hereby on such
    Pledged Collateral.

    11. Rights of Required  Lenders.  All rights of the Agent hereunder,  if not
exercised  by the Agent,  may be exercised by the  requisite  Lenders  under the
Credit Agreement.

    12. Application of Proceeds.  Upon the occurrence and during the continuance
of an Event of Default,  and request and direction of the Required Lenders under
Section  9.2 of the Credit  Agreement  any  payments  in respect of the  Secured
Obligations  and any proceeds of any Pledged  Collateral,  when  received by the
Agent  or  any  of the  holders  of  the  Secured  Obligations  in  cash  or its
equivalent, will be applied in reduction of the Secured Obligations in the order
set forth in the Credit  Agreement  or other  document  relating  to the Secured
Obligations,  and each  Pledgor  irrevocably  waives  the  right to  direct  the
application of such payments and proceeds and  acknowledges  and agrees that the
Agent shall have the continuing and exclusive right to apply and reapply any and
all such payments and proceeds in the Agent's sole  discretion,  notwithstanding
any entry to the contrary upon any of its books and records.

    13. Costs of Counsel. At all times hereafter, the Pledgors agree to promptly
pay upon demand any and all  reasonable  costs and expenses of the Agent and the
holders of the Secured  Obligations,  (a) as required  under Section 11.5 of the
Credit  Agreement  and (b) as necessary to protect the Pledged  Collateral or to
exercise any rights or remedies  under this Pledge  Agreement or with respect to
any Pledged Collateral. All of the foregoing costs and expenses shall constitute
Secured Obligations hereunder.

    14. Continuing Agreement.

        (a) This  Pledge  Agreement  shall be a  continuing  agreement  in every
    respect  and shall  remain in full force and  effect so long as the  Secured
    Obligations or any Letter of Credit shall remain  outstanding  and until all
    of the Commitments  shall have been  terminated  (other than any obligations
    with respect to the indemnities and the  representations  and warranties set
    forth in the Credit  Documents).  Upon the  payment  in full of the  Secured
    Obligations   and  such   termination,   this  Pledge   Agreement  shall  be
    automatically  terminated  and the  Agent  and the  holders  of the  Secured
    Obligations  shall,  upon the request  and at the  expense of the  Pledgors,
    forthwith  release all of its liens and  security  interests  hereunder  and
    shall  execute and  deliver  all UCC  termination  statements  and/or  other
    documents  reasonably requested by the Pledgors evidencing such termination.
    Notwithstanding  the  foregoing,   all  releases  and  indemnities  provided
    hereunder shall survive termination of this Pledge Agreement.

        (b)  This  Pledge  Agreement  shall  continue  to  be  effective  or  be
    automatically  reinstated,  as the case may be, if at any time  payment,  in
    whole or in part,  of any of the Secured  Obligations  is  rescinded or must
    otherwise  be restored or returned by the Agent or any holder of the Secured
    Obligations as a preference,  fraudulent  conveyance or otherwise  under any
    bankruptcy,  insolvency  or similar  law, all as though such payment had not
    been  made;  provided  that in the event  payment  of all or any part of the
    Secured  Obligations  is  rescinded  or must be  restored or  returned,  all
    reasonable costs and expenses  (including  without limitation any reasonable
    legal  fees and  disbursements)  incurred  by the Agent or any holder of the
    Secured  Obligations in defending and enforcing such reinstatement  shall be
    deemed to be included as a part of the Secured Obligations.

    15.  Amendments;  Waivers;  Modifications.  This  Pledge  Agreement  and the
provisions hereof may not be amended, waived, modified,  changed,  discharged or
terminated  except  as set  forth  in  Section  11.6  of the  Credit  Agreement.

    16. Successors in Interest.  This Pledge Agreement shall create a continuing
security  interest in the  Collateral and shall be binding upon each Pledgor and
its  successors  and  assigns,  and shall  inure,  together  with the rights and
remedies of the Agent and the holders of the Secured Obligations  hereunder,  to
the benefit of the Agent and the holders of the  Secured  Obligations  and their
successors and permitted assigns;  provided,  however, that except in connection
with mergers or consolidations  permitted by Section 8.4 of the Credit Agreement
that none of the Pledgors may assign its rights or delegate its duties hereunder
without the prior written consent of the requisite number of Lenders required by
the Credit  Agreement.  To the fullest  extent  permitted  by law,  each Pledgor
hereby releases the Agent and each Lender, and its successors and assigns,  from
any liability for any act or omission  relating to this Pledge  Agreement or the
Collateral,  except  for any  liability  arising  from the gross  negligence  or
willful  misconduct of the Agent, or such Lender, or their respective  officers,
employees or agents.

    17. Notices. All notices required or permitted to be given under this Pledge
Agreement shall be given as provided in the Credit Agreement.

    18.  Counterparts.  This Pledge  Agreement  may be executed in any number of
counterparts,  each of  which  where  so  executed  and  delivered  shall  be an
original,  but all of which shall  constitute  one and the same  instrument.  It
shall not be necessary  in making  proof of this Pledge  Agreement to produce or
account for more than one such counterpart.

    19.  Headings.  The  headings of the  sections  and  subsections  hereof are
provided  for  convenience  only and shall not in any way affect the  meaning or
construction of any provision of this Pledge Agreement.

    20. Governing Law; Submission to Jurisdiction; Venue.

        (a) THIS PLEDGE  AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
    HEREUNDER  SHALL BE GOVERNED BY AND CONSTRUED AND  INTERPRETED IN ACCORDANCE
    WITH THE LAWS OF THE STATE OF NEW YORK. Any legal action or proceeding  with
    respect to this Credit Agreement or any other Credit Document may be brought
    in the  courts of the State of New York,  New York  County or of the  United
    States for the Southern District of New York, and, by execution and delivery
    of this Pledge Agreement, each Pledgor hereby irrevocably accepts for itself
    and  in  respect  of  its  property,  generally  and  unconditionally,   the
    jurisdiction of such courts.  Each Pledgor further  irrevocably  consents to
    the service of process out of any of the  aforementioned  courts in any such
    action or  proceeding  by the  mailing of copies  thereof by  registered  or
    certified mail,  postage prepaid,  to it at the address for notices pursuant
    to Section 11.1 of the Credit  Agreement,  such service to become  effective
    three days after such mailing.  Nothing herein shall affect the right of the
    Agent to serve  process in any other manner  permitted by law or to commence
    legal  proceedings or to otherwise  proceed against any Pledgor in any other
    jurisdiction.

        (b) Each Pledgor hereby  irrevocably  waives any objection  which it may
    now or hereafter have to the laying of venue of any of the aforesaid actions
    or proceedings  arising out of or in connection  with this Pledge  Agreement
    brought  in the  courts  referred  to in  subsection  (a)  hereof and hereby
    further  irrevocably  waives  and  agrees  not to plead or claim in any such
    court that any such action or proceeding  brought in any such court has been
    brought in an inconvenient forum.

    21. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
THE  PARTIES TO THIS PLEDGE  AGREEMENT  HEREBY  IRREVOCABLY  WAIVES ALL RIGHT TO
TRIAL  BY JURY IN ANY  ACTION,  PROCEEDING  OR  COUNTERCLAIM  ARISING  OUT OF OR
RELATING TO THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

    22. Severability. If any provision of this Pledge Agreement is determined to
be illegal,  invalid or  unenforceable,  such provision shall be fully severable
and the remaining  provisions shall remain in full force and effect and shall be
construed  without  giving  effect  to the  illegal,  invalid  or  unenforceable
provisions.

    23.  Entirety.  This Pledge  Agreement,  the other Credit  Documents and the
other  documents  relating  to the  Secured  Obligations  represent  the  entire
agreement of the parties hereto and thereto,  and supersede all prior agreements
and understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Credit Documents, the other documents relating to
the Secured Obligations or the transactions contemplated herein and therein.

    24. Survival.  All  representations and warranties of the Pledgors hereunder
shall  survive the execution  and delivery of this Pledge  Agreement,  the other
Credit  Documents and the other documents  relating to the Secured  Obligations,
the  delivery  of the  Notes  and  the  extension  of  credit  thereunder  or in
connection therewith.

    25. Other  Security.  To the extent that any of the Secured  Obligations are
now  or  hereafter  secured  by  property  other  than  the  Pledged  Collateral
(including,  without  limitation,  real and other  personal  property owned by a
Pledgor),  or by a guarantee,  endorsement or property of any other Person, then
the Agent and the  holders of the  Secured  Obligations  shall have the right to
proceed  against  such  other  property,   guarantee  or  endorsement  upon  the
occurrence of any Event of Default, and the Agent and the holders of the Secured
Obligations  shall have the right, in their sole discretion,  to determine which
rights,  security,  liens,  security  interests  or  remedies  the Agent and the
holders  of the  Secured  Obligations  shall  at any  time  pursue,  relinquish,
subordinate,  modify or take with respect thereto,  without in any way modifying
or affecting any of them or the Secured  Obligations or any of the rights of the
Agent and the holders of the Secured  Obligations  under this Pledge  Agreement,
under any other of the Credit  Documents or any other  document  relating to the
Secured Obligations.

    26. Joint and Several Obligations of Pledgors.

        (a) Each of the  Pledgors  is  accepting  joint  and  several  liability
    hereunder in consideration of the financial  accommodation to be provided by
    the Lenders under the Credit Agreement, for the mutual benefit, directly and
    indirectly, of each of the Pledgors and in consideration of the undertakings
    of each of the  Pledgors  to accept  joint  and  several  liability  for the
    obligations of each of them.

        (b) Each of the Pledgors  jointly and severally  hereby  irrevocably and
    unconditionally  accepts,  not merely as a surety  but also as a  co-debtor,
    joint and several  liability  with the other  Pledgors  with  respect to the
    payment and performance of all of the Secured Obligations arising under this
    Pledge  Agreement,  the  other  Credit  Documents  and the  other  documents
    relating to the Secured  Obligations,  it being the intention of the parties
    hereto  that all the  Secured  Obligations  shall be the joint  and  several
    obligations of each of the Pledgors without preferences or distinction among
    them.

        (c)  Notwithstanding  any provision to the contrary contained herein, in
    any other of the Credit Documents or in any other documents  relating to the
    Secured  Obligations,  the  obligations of each  Guarantor  under the Credit
    Agreement  and the other Credit  Documents  shall be limited to an aggregate
    amount  equal to the largest  amount that would not render such  obligations
    subject  to  avoidance  under  Section  548 of the  Bankruptcy  Code  or any
    comparable provisions of any applicable state law.

                  [remainder of page intentionally left blank]
<PAGE>

    Each of the parties hereto has caused a counterpart of this Pledge Agreement
to be duly executed and delivered as of the date first above written.

BORROWER:                         APRIA HEALTHCARE GROUP INC.

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



GUARANTORS:                       APRIA HEALTHCARE INC.,
                                  a Delaware corporation

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


                                  APRIA NUMBER TWO INC.,
                                  a Delaware corporation

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


                                  APRIACARE MANAGEMENT SYSTEMS INC.,
                                  a Delaware corporation

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



                                  APRIA HEALTHCARE OF NEW YORK
                                  STATE, INC.,


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


                                   APRIA HEALTHCARE ESSENTIALS, LLC,
                                   a Delaware limited liability company


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



Accepted and agreed to as of the date first above written.

BANK OF AMERICA, N.A.,
as Agent

By:
   --------------------------------------
Name:
Title:
<PAGE>

                                  Schedule 2(a)
                                  -------------

                                       to

                                Pledge Agreement

                            dated as of July __, 2001

                        in favor of Bank of America, N.A.

                                    as Agent

                                  PLEDGED STOCK
                                  -------------
<TABLE>
<CAPTION>

                                                                               Number of   Certificate    Percentage
        Pledgor                         Issuer                                  Shares       Number       Ownership
        -------                         ------                                  ------       ------       ---------

<S>                              <C>                                            <C>             <C>
Apria Healthcare Group Inc.      Apria Healthcare, Inc.                         1,000                        100%

Apria Healthcare, Inc.           ApriaCare Management Systems, Inc.               100           1            100%

Apria Healthcare, Inc.           Apria Healthcare of New York State, Inc.         300           1            100%

Apria Healthcare, Inc.           Apria Number Two, Inc.                           100           2            100%

Apria Healthcare, Inc.           Apria Healthcare Essentials, LLC                 N/A          N/A           100%
</TABLE>
<PAGE>

                                  Exhibit 4(a)
                                  ------------

                                       to

                                Pledge Agreement

                            dated as of July __, 2001

                        in favor of Bank of America, N.A.

                                    as Agent

                             Irrevocable Stock Power

    FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to



the following shares of capital stock of  _____________________,  a ____________
corporation:

           No. of Shares                               Certificate No.
           -------------                               ---------------

and  irrevocably  appoints   __________________________________  its  agent  and
attorney-in-fact  to transfer all or any part of such capital  stock and to take
all necessary and appropriate action to effect any such transfer.  The agent and
attorney-in-fact  may substitute and appoint one or more persons to act for him.
The effectiveness of a transfer pursuant to this stock power shall be subject to
any and all transfer  restrictions  referenced  on the face of the  certificates
evidencing such interest or in the certificate of incorporation or bylaws of the
subject corporation, to the extent they may from time to time exist.

                                       -------------------------------

                                       By:
                                          ----------------------------
                                       Name:
                                       Title:
<PAGE>

                                 EXHIBIT 1.1(B)
                                 --------------

                 FORM OF AMENDED AND RESTATED SECURITY AGREEMENT

    THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Security  Agreement") is
entered into as of July __, 2001 among APRIA  HEALTHCARE  GROUP INC., a Delaware
corporation  (the  "Borrower"),  certain  Subsidiaries  of  the  Borrower  (each
individually a "Guarantor" and collectively the "Guarantors";  together with the
Borrower,  each individually an "Obligor",  and collectively the "Obligors") and
BANK OF AMERICA,  N.A., in its capacity as agent (in such capacity, the "Agent")
for the lenders from time to time party to the Credit Agreement  described below
(the "Lenders").

                                    RECITALS

    WHEREAS,  pursuant  to that  certain  Second  Amended  and  Restated  Credit
Agreement, dated as of the date hereof (as amended, modified,  extended, renewed
or replaced from time to time, the "Credit Agreement"),  among the Borrower, the
Guarantors, the Lenders and the Agent, the Lenders have agreed to make Loans and
issue Letters of Credit upon the terms and subject to the  conditions  set forth
therein; and

    WHEREAS,  it is a condition  precedent  to the  effectiveness  of the Credit
Agreement and the obligations of the Lenders to make their  respective Loans and
to issue Letters of Credit under the Credit  Agreement  that the Obligors  shall
have  amended and  restated the terms and  conditions  of that certain  security
agreement  dated as of  March  13,  1998 (as  amended,  the  "Existing  Security
Agreement")  among  the  Borrower,  certain  of its  Subsidiaries,  and  Bank of
America,  N.A.  (formerly  known as Bank of America  National  Trust and Savings
Association),  as agent  thereunder,  by execution and delivery of this Security
Agreement and the Pledge  Agreement to the Agent for the ratable  benefit of the
Lenders;

    NOW,  THEREFORE,  in  consideration  of these  premises  and other  good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the parties hereto agree as follows:

    1. Definitions.

        (a) Capitalized  terms used and not otherwise  defined herein shall have
    the meanings  provided in the Credit Agreement.  In addition,  the following
    terms which are defined in the Uniform Commercial Code in effect on the date
    hereof in the State of New York are used herein as so  defined:  Accessions,
    Accounts,  As-Extracted  Collateral,  Chattel Paper,  Commercial Tort Claim,
    Commingled Goods,  Consumer Goods,  Deposit Account,  Documents,  Electronic
    Chattel Paper,  Equipment,  Farm Products,  Fixtures,  General  Intangibles,
    Goods, Instruments, Inventory, Investment Property, Letter-of-Credit Rights,
    Manufactured  Home,   Proceeds,   Software,   Standing  Timber,   Supporting
    Obligation and Tangible Chattel Paper.

        (b) In addition, the following terms shall have the following meanings:

            "Copyright License" means any written agreement,  naming any Obligor
        as licensor,  granting any right under any Copyright including,  without
        limitation, any Copyrights referred to in Schedule 1(b) hereto.

            "Copyrights"  means (a) all registered  United States  copyrights in
        all  Works,  now  existing  or  hereafter   created  or  acquired,   all
        registrations and recordings thereof, and all applications in connection
        therewith, including, without limitation, registrations,  recordings and
        applications in the United States  Copyright Office  including,  without
        limitation,  any Copyrights referred to in Schedule 1(b) hereto, and (b)
        all renewals thereof including,  without limitation,  any referred to in
        Schedule 1(b) hereto.

            "Patent  License"  means any  agreement,  whether  written  or oral,
        providing for the grant by or to an Obligor of any right to manufacture,
        use or sell  any  invention  covered  by a  Patent,  including,  without
        limitation, any Patent Licenses referred to in Schedule 1(b) hereto.

            "Patents"  means (a) all letters  patent of the United States or any
        other  country  and all  reissues  and  extensions  thereof,  including,
        without  limitation,  any letters  patent  referred to in Schedule  1(b)
        hereto, and (b) all applications for letters patent of the United States
        or  any   other   country   and   all   divisions,   continuations   and
        continuations-in-part   thereof,  including,   without  limitation,  any
        thereof to in Schedule 1(b) hereto.

            "Secured  Obligations" means,  without  duplication,  (i) all of the
        obligations  and  liabilities  of the  Credit  Parties  to  the  Lenders
        (including the Issuing Lender), and the Agent,  whenever arising,  under
        the Credit  Agreement or any of the other Credit  Documents  (including,
        but not limited to, any  interest  accruing  after the  occurrence  of a
        Bankruptcy Event with respect to any Credit Party, regardless of whether
        such interest is an allowed claim under the  Bankruptcy  Code),  whether
        now  existing or  hereafter  arising,  due or to become  due,  direct or
        indirect, absolute or contingent,  howsoever evidenced, created, held or
        acquired, whether primary,  secondary,  direct, contingent, or joint and
        several,  as  such  obligations  may be  amended,  modified,  increased,
        extended,  renewed  or  replaced  from  time to  time,  (ii)  all of the
        obligations  owing by the Credit Parties to the Lenders or any affiliate
        of a Lender,  whenever  arising,  under  any  interest  rate  protection
        agreements,  foreign currency exchange  agreements or commodity purchase
        or option agreements to the extent permitted under the Credit Agreement,
        and (iii) all costs and expenses incurred in connection with enforcement
        and  collection  of  the  Secured   Obligations,   including  reasonable
        attorneys' fees.

            "Trademark License" means any agreement,  written or oral, providing
        for the grant by or to an  Obligor  of any  right to use any  Trademark,
        including,  without  limitation,  any Trademark  Licenses referred to in
        Schedule 1(b) hereto.

            "Trademarks" means (a) all trademarks, trade names, corporate names,
        company names, business names,  fictitious business names, trade styles,
        service marks, logos and other source or business  identifiers,  and the
        goodwill  associated  therewith,  now existing or  hereafter  adopted or
        acquired, all registrations and recordings thereof, and all applications
        in  connection  therewith,  whether  in the  United  States  Patent  and
        Trademark  Office or in any  similar  office  or  agency  of the  United
        States,  any  state  thereof  or any  other  country  or  any  political
        subdivision thereof, or otherwise,  including,  without limitation,  any
        referred to in Schedule 1(b) hereto, and (b) all renewals thereof.

            "UCC" shall have the meaning provided in Section 9(a) hereof.

            "Work"  means  any work  that is  subject  to  copyright  protection
        pursuant to Title 17 of the United States Code.

    2.  Grant of  Security  Interest  in the  Collateral.  To secure  the prompt
payment and performance in full when due, whether by lapse of time, acceleration
or  otherwise,  of the Secured  Obligations,  each Obligor  hereby grants to the
Agent, for the benefit of the holders of the Secured  Obligations,  a continuing
security interest in, and a right to set off against,  any and all right,  title
and  interest  of such  Obligor in and to the  following,  whether  now owned or
existing  or  owned,   acquired,   or  arising  hereafter   (collectively,   the
"Collateral"):

                    (a) all Accounts;

                    (b) all cash and currency;

                    (c) all Chattel Paper;

                    (d)  those  certain  Commercial  Tort  Claims  set  forth on
                    Schedule 2(d) attached hereto;

                    (e) all Copyrights;

                    (f) all Copyright Licenses;

                    (g) all Deposit Accounts;

                    (h) all Documents;

                    (i) all Equipment;

                    (j) all Fixtures;

                    (k) all General Intangibles;

                    (l) all Instruments;

                    (m) all Inventory;

                    (n) all Investment Property;

                    (o) all Letter-of-Credit Rights;

                    (p) all Patents;

                    (q) all Patent Licenses;

                    (r) all Software;

                    (s) all Supporting Obligations;

                    (t) all Trademarks;

                    (u) all Trademark Licenses; and

                    (v) all  Accessions  to and  Proceeds  of any and all of the
                    foregoing.

    The  Obligors  and the  Agent,  on  behalf  of the  holders  of the  Secured
Obligations,  hereby  acknowledge and agree that the security  interest  created
hereby in the Collateral (i) constitutes  continuing collateral security for all
of the Secured  Obligations,  whether now existing or hereafter  arising (ii) is
not to be construed as an  assignment  of any  Copyrights,  Copyright  Licenses,
Patents, Patent Licenses,  Trademarks or Trademark Licenses and (iii) is subject
to any  applicable  restriction  to the  creation of a security  interest to the
extent that such  restriction  is not made  ineffective  by UCC  Section  9-401,
9-406(d), 9-407, 9-408 or 9-409.

    3. Provisions Relating to Accounts.

        (a)  Anything  herein  to  the  contrary  notwithstanding,  each  of the
    Obligors  shall  remain  liable  under each of the  Accounts  to observe and
    perform all the conditions  and  obligations to be observed and performed by
    it thereunder, all in accordance with the terms of any agreement giving rise
    to each  such  Account.  Neither  the Agent  nor any  holder of the  Secured
    Obligations shall have any obligation or liability under any Account (or any
    agreement  giving rise thereto) by reason of or arising out of this Security
    Agreement  or  the  receipt  by  the  Agent  or any  holder  of the  Secured
    Obligations of any payment  relating to such Account  pursuant  hereto,  nor
    shall the Agent or any holder of the Secured Obligations be obligated in any
    manner to perform any of the  obligations  of a Obligor under or pursuant to
    any Account (or any agreement giving rise thereto),  to make any payment, to
    make any inquiry as to the nature or the sufficiency of any payment received
    by it or as to the  sufficiency  of any  performance  by any party under any
    Account  (or any  agreement  giving  rise  thereto),  to present or file any
    claim,  to take any  action to enforce  any  performance  or to collect  the
    payment of any amounts which may have been assigned to it or to which it may
    be entitled at any time or times.

        (b) Once during each calendar  year or at any time after the  occurrence
    and during the continuation of an Event of Default, the Agent shall have the
    right, but not the obligation, to make test verifications of the Accounts in
    any manner and through any medium that it  reasonably  considers  advisable,
    and the Obligors shall furnish all such  assistance  and  information as the
    Agent may require in connection  with such test  verifications.  At any time
    and from time to time,  upon the  Agent's  request and at the expense of the
    Obligors,  the Obligors shall cause independent public accountants or others
    satisfactory   to  the  Agent  to  furnish  to  the  Agent  reports  showing
    reconciliations,  aging and test  verifications  of, and trial balances for,
    the  Accounts.  The  Agent  in its own  name or in the  name of  others  may
    communicate  with account debtors on the Accounts to verify with them to the
    Agent's satisfaction the existence, amount and terms of any Accounts.

    4. Revised  Article 9. Each of the Obligors  acknowledges  and agrees to the
following provisions in anticipation of the possible application, in one or more
jurisdictions  applicable to the transactions  contemplated  hereby,  of revised
Article 9 of the Uniform  Commercial Code ("Revised  Article 9"), in the form or
substantially  in the  form  approved  by the  American  Law  Institute  and the
National  Conference  of  Commissioners  on Uniform  State Laws, as contained in
Appendix XVI of the 1999 edition of the Uniform Commercial Code Official Text:

        (a) Attachment. In applying the law of any jurisdiction in which Revised
    Article 9 is in effect, the Collateral is all assets of each Obligor secured
    by this Agreement, whether or not within the scope of Revised Article 9. The
    Collateral shall include,  without limitation,  the following  categories of
    assets  as  defined  in  Revised  Article  9:  goods  (including  inventory,
    equipment and any accessions  thereto),  instruments  (including  promissory
    notes), documents,  accounts (including  healthcare-insurance  receivables),
    chattel  paper  (whether   tangible  or   electronic),   deposit   accounts,
    letter-of-credit rights (whether or not the letter of credit is evidenced by
    a writing),  commercial  tort claims,  securities  and all other  investment
    property,  general intangibles (including payment intangibles and software),
    supporting  obligations and any and all proceeds thereof,  wherever located,
    whether now owned or hereafter acquired.

        (b)  Perfection  by  Filing.  The Agent may at any time and from time to
    time,  pursuant  to the  provisions  of Section 10  hereof,  file  financing
    statements, continuation statements and amendments thereto that describe the
    Collateral  as all assets of each  Obligor  or words of  similar  effect and
    which contain any other information  required by Part 5 of Revised Article 9
    for the sufficiency or filing office acceptance of any financing  statement,
    continuation  statement or amendment,  including  whether such Obligor is an
    organization,  the type of organization and any organization  identification
    number  issued to such  Obligor.  Each  Obligor  agrees to furnish  any such
    information  to  the  Agent  promptly  upon  request.   Any  such  financing
    statements, continuation statements or amendments may be signed by the Agent
    on behalf of each  Obligor and may be filed at any time in any  jurisdiction
    whether or not Revised Article 9 is then in effect in such jurisdiction.

        (c)  Other  Perfection,  etc.  At any time and from  time to time,  each
    Obligor  shall,  whether  or  not  Revised  Article  9 is in  effect  in any
    applicable jurisdiction, take such steps as the Agent may reasonably request
    for the  Agent  (a) to  obtain  an  acknowledgment,  in form  and  substance
    reasonably satisfactory to the Agent, of any bailee having possession of any
    of the Collateral, that such bailee holds such Collateral for the Agent, (b)
    to  obtain  "control"  of  any  investment   property,   deposit   accounts,
    letter-of-credit  rights or  electronic  chattel  paper  (as such  terms are
    defined in Revised  Article 9) as set forth in Revised Article 9, and, where
    control is established by written agreement, such agreement shall be in form
    and substance  reasonably  satisfactory  to the Agent,  and (c) otherwise to
    insure  the  continued  perfection  and  priority  of the  Agent's  security
    interest  in any of the  Collateral  and of the  preservation  of its rights
    therein,  whether in  anticipation  of or  following  the  effectiveness  of
    Revised Article 9 in any applicable jurisdiction.

        (d) Other  Provisions.  In applying the law of any jurisdiction in which
    Revised Article 9 is in effect, all references in this Security Agreement to
    any section of existing  Article 9 shall be deemed to be  references  to the
    corresponding section of Revised Article 9.

        (e)  Savings  Clause.  Nothing  contained  in this  Section  4 shall  be
    construed to narrow the scope of the Agent's security interest in any of the
    Collateral or the  perfection or priority  thereof or to impair or otherwise
    limit any of the rights, powers,  privileges or remedies of the Agent or any
    Secured Party hereunder, except (and then only to the extent) as mandated by
    Revised Article 9, if applicable in a particular jurisdiction.

    5.  Representations  and  Warranties.  Each Obligor  hereby  represents  and
warrants  to  the  Agent,  for  the  benefit  of  the  holders  of  the  Secured
Obligations, that:

        (a) Chief  Executive  Office;  Books &  Records.  Each  Obligor's  chief
    executive  office and chief  place of  business  are (and for the prior four
    months  have  been)  located at the  locations  set forth on  Schedule  5(a)
    hereto, and each Obligor keeps its books and records at such locations.

        (b) Location of Collateral. The location of all Collateral owned by each
    Obligor is as shown on Schedule  5(b) hereto.

        (c)  Ownership.  Each Obligor is the legal and  beneficial  owner of its
    Collateral  and (subject to clause (iii) in the last  sentence of Section 2)
    has the right to pledge,  sell,  assign or transfer the same. Each Obligor's
    legal name is as shown in this Security  Agreement and no Obligor has in the
    past four months changed its name, been party to a merger,  consolidation or
    other change in structure or used any fictitious name or tradename except as
    set forth in Schedule 5(c) attached hereto.

        (d) Security Interest/Priority.  This Security Agreement creates a valid
    security  interest in favor of the Agent,  for the benefit of the holders of
    the  Secured  Obligations,  in the  Collateral  of such  Obligor  and,  when
    properly  perfected by filing,  shall constitute a valid perfected  security
    interest in such  Collateral,  to the extent such  security  interest can be
    perfected  by filing  under the UCC,  free and clear of all Liens except for
    Permitted  Liens and subject to clause (iii) in the last sentence of Section
    2.

        (e)  Farm  Products.  None  of  the  Collateral  constitutes,  or is the
    Proceeds of, Farm Products.

        (f)  Accounts.  (i) Each  Account  of the  Obligors  and the  papers and
    documents  relating  thereto are genuine and in all material  respects  what
    they purport to be, (ii) each Account  arises out of (A) a bona fide sale of
    goods sold and  delivered  by such  Obligor  (or is in the  process of being
    delivered) or (B) services theretofore actually rendered by such Obligor (or
    in the process of being  rendered)  to, the account  debtor  named  therein,
    (iii) no  material  amount of  Accounts  of an Obligor is  evidenced  by any
    Instrument or Chattel Paper unless such Instrument or Chattel Paper has been
    theretofore endorsed over and delivered to the Agent and (iv) no surety bond
    was required or given in connection  with any material amount of Accounts of
    an Obligor or the contracts or purchase orders out of which they arose.

        (g)  Inventory.   No  Inventory  is  held  by  an  Obligor  pursuant  to
    consignment, sale or return, sale on approval or similar arrangement.

        (h) Copyrights, Patents and Trademarks.

            (i)  Schedule  1(b)  hereto  includes  all   Copyrights,   Copyright
        Licenses,  Patents,  Patent Licenses,  Trademarks and Trademark Licenses
        owned by the Obligors in their own names as of the date hereof.

            (ii) To the best of each Obligor's knowledge, each Copyright, Patent
        and  Trademark  of  such  Obligor  is  valid,   subsisting,   unexpired,
        enforceable and has not been abandoned.

            (iii)  Except as set forth in  Schedule  1(b)  hereto,  none of such
        Copyrights,  Patents and  Trademarks  is the subject of any licensing or
        franchise agreement.

            (iv) To the best of each Obligor's knowledge,  no holding,  decision
        or judgment has been rendered by any Governmental  Authority which would
        limit,  cancel or  question  the  validity of any  Copyright,  Patent or
        Trademark.

            (v) No action or proceeding is pending  seeking to limit,  cancel or
        question the validity of any Copyright,  Patent or Trademark,  or which,
        if adversely  determined,  would have a material  adverse  effect on the
        value of any Copyright, Patent or Trademark.

            (vi)  With  such  exceptions  as would  not  individually  or in the
        aggregate have a Material Adverse Effect, all applications pertaining to
        the  Copyrights,  Patents and  Trademarks of each Obligor have been duly
        and properly filed, and all registrations or letters  pertaining to such
        Copyrights, Patents and Trademarks have been duly and properly filed and
        issued, and all of such Copyrights, Patents and Trademarks are valid and
        enforceable.

            (vii) No Obligor has made any  assignment  or  agreement in conflict
        with the security  interest in the Copyrights,  Patents or Trademarks of
        each Obligor hereunder.

    6.  Covenants.   Each  Obligor  covenants  that,  so  long  as  the  Secured
Obligations  or any  Letter of Credit  shall  remain  outstanding  and until the
Commitments shall have been terminated, such Obligor shall:

        (a) Other Liens. Defend the Collateral against the claims and demands of
    all other parties  claiming an interest  therein,  keep the Collateral  free
    from  all  Liens,  except  for  Permitted  Liens,  and not  sell,  exchange,
    transfer,  assign,  lease or  otherwise  dispose  of the  Collateral  or any
    interest therein, except as permitted under the Credit Agreement.

        (b)  Instruments/Chattel  Paper.  If any amount in excess of  $1,000,000
    payable under or in connection with any of the Collateral shall be or become
    evidenced  by any  Instrument  or Chattel  Paper,  immediately  deliver such
    Instrument  or  Chattel  Paper  to the  Agent,  duly  endorsed  in a  manner
    satisfactory  to the  Agent,  to be  held  as  Collateral  pursuant  to this
    Security Agreement.

        (c) Change in Location.  Not,  without  providing 10 days prior  written
    notice to the Agent and without  filing such  amendments  to any  previously
    filed  financing  statements  as the  Agent  may  require,  (a)  change  its
    jurisdiction  of  incorporation,  or (b)  change  its  name or be party to a
    merger,  consolidation  or other  change in  structure  (except as permitted
    under Section 8.4 of the Credit Agreement).

        (d) Inspection.  Upon reasonable notice, and during reasonable hours, at
    all times  allow the Agent or its  representatives  to visit and inspect the
    Collateral as set forth in Section 7.10 of the Credit Agreement.

        (e)  Perfection of Security  Interest.  Execute and deliver to the Agent
    such agreements,  assignments or instruments (including affidavits, notices,
    reaffirmations and amendments and restatements of existing documents, as the
    Agent may reasonably  request) and do all such other things as the Agent may
    reasonably  deem  necessary  or  appropriate  (i) to assure to the Agent its
    security  interests  hereunder,  including  (A)  such  financing  statements
    (including renewal  statements) or amendments thereof or supplements thereto
    or other  instruments as the Agent may from time to time reasonably  request
    in order to perfect and maintain the security interests granted hereunder in
    accordance with the UCC, (B) with regard to Copyrights, a Notice of Grant of
    Security  Interest in Copyrights in the form of Schedule  6(e)(i),  (C) with
    regard to  Patents,  a Notice of Grant of  Security  Interest in Patents for
    filing with the United  States  Patent and  Trademark  Office in the form of
    Schedule  6(e)(ii)  attached  hereto and (D) with  regard to  Trademarks,  a
    Notice of Grant of  Security  Interest  in  Trademarks  for filing  with the
    United States Patent and Trademark Office in the form of Schedule  6(e)(iii)
    attached hereto, (ii) to consummate the transactions contemplated hereby and
    (iii) to otherwise  protect and assure the Agent of its rights and interests
    hereunder.  To that end, each Obligor  agrees that the Agent may file one or
    more financing statements disclosing the Agent's security interest in any or
    all of the Collateral of such Obligor  without,  to the extent  permitted by
    law, such Obligor's signature thereon,  and further each Obligor also hereby
    irrevocably  makes,  constitutes and appoints the Agent,  its nominee or any
    other person whom the Agent may  designate,  as such  Obligor's  attorney in
    fact with full power and for the limited purpose to sign in the name of such
    Obligor any such  financing  statements,  or amendments  and  supplements to
    financing statements,  renewal financing statements,  notices or any similar
    documents  which in the Agent's  reasonable  discretion  would be necessary,
    appropriate or convenient in order to perfect and maintain perfection of the
    security  interests  granted  hereunder,  such power,  being coupled with an
    interest, being and remaining irrevocable so long as the Secured Obligations
    or any Letter of Credit remains unpaid and until the Commitments  shall have
    been terminated.  Each Obligor hereby agrees that a carbon,  photographic or
    other  reproduction  of  this  Security  Agreement  or  any  such  financing
    statement  is  sufficient  for filing as a financing  statement by the Agent
    without  notice  thereof to such Obligor  wherever the Agent may in its sole
    discretion  desire to file the same.  In the event for any reason the law of
    any  jurisdiction  other  than  New York  becomes  or is  applicable  to the
    Collateral  of any  Obligor or any part  thereof,  or to any of the  Secured
    Obligations, such Obligor agrees to execute and deliver all such instruments
    and to do  all  such  other  things  as the  Agent  in its  sole  discretion
    reasonably  deems necessary or appropriate to preserve,  protect and enforce
    the security interests of the Agent under the law of such other jurisdiction
    (and,  if an Obligor  shall fail to do so  promptly  upon the request of the
    Agent,  then the Agent may execute any and all such  requested  documents on
    behalf  of  such  Obligor   pursuant  to  the  power  of  attorney   granted
    hereinabove).  If any  Collateral  is in the  possession  or  control  of an
    Obligor's  agents and the Agent so requests,  such Obligor  agrees to notify
    such agents in writing of the Agent's  security  interest  therein and, upon
    the  Agent's  request,  instruct  them to hold all such  Collateral  for the
    account of the holders of the Secured Obligations and subject to the Agent's
    instructions.  Each Obligor  agrees to mark its books and records to reflect
    the security interest of the Agent in the Collateral.

        (f)  Treatment of Accounts.  Not grant or extend the time for payment of
    any  Account,  or  compromise  or settle any  Account for less than the full
    amount thereof, or release any person or property, in whole or in part, from
    payment  thereof,  or allow any credit or  discount  thereon,  other than as
    normal and customary in the ordinary  course of an Obligor's  business or as
    required by law.

        (g) Covenants Relating to Copyrights.

            (i) Not do any act or  knowingly  omit  to do any  act  whereby  any
        material registered  Copyright may become invalidated and (A) not do any
        act, or knowingly  omit to do any act,  whereby any material  registered
        Copyright  may  become  injected  into the public  domain  except in the
        ordinary course of an Obligor's  business or as required by law; and (B)
        take  all  necessary  steps  as it  shall  deem  appropriate  under  the
        circumstances,  to maintain and pursue each  application  (and to obtain
        the relevant  registration)  and to maintain each  registration  of each
        material  Copyright owned by an Obligor including,  without  limitation,
        filing of applications for renewal where necessary.

            (ii) Not make any  assignment  or  agreement  in  conflict  with the
        security interest in the Copyrights of each Obligor hereunder except for
        sales and other dispositions permitted by the Credit Agreement.

        (h) Covenants Relating to Patents and Trademarks.

            (i) Except for changes in the ordinary course of the business of the
        Obligors (A) Continue to use each  material  Trademark on each and every
        trademark class of goods  applicable to its current line as reflected in
        its  current  catalogs,  brochures  and price lists in order to maintain
        such  Trademark  in full  force free from any claim of  abandonment  for
        non-use,  (B)  maintain  as in the  past the  quality  of  products  and
        services  offered under such  Trademark,  (C) employ such Trademark with
        the appropriate notice of registration,  and (D) not (and not permit any
        licensee or  sublicensee  thereof to) do any act or knowingly omit to do
        any act whereby any material Trademark becomes invalidated.

            (ii) Not do any act,  or omit to do any act,  whereby  any  material
        Patent may become abandoned or dedicated.

            (iii)  Notify the Agent and the holders of the  Secured  Obligations
        immediately if it knows that any application or registration relating to
        any Patent or Trademark  may become  abandoned or  dedicated,  or of any
        adverse determination or development (including, without limitation, the
        institution  of,  or any  such  determination  or  development  in,  any
        proceeding in the United States Patent and Trademark Office or any court
        or tribunal in any  country)  regarding  a  Obligor's  ownership  of any
        Patent or  Trademark  or its right to  register  the same or to keep and
        maintain the same.

            (iv) Take all reasonable  and necessary  steps,  including,  without
        limitation,  in any  proceeding  before  the  United  States  Patent and
        Trademark  Office,  or any similar office or agency in any other country
        or any  political  subdivision  thereof,  to  maintain  and pursue  each
        application  (and to obtain the relevant  registration)  and to maintain
        each  registration of its material  Patents and  Trademarks,  including,
        without  limitation,  filing of applications for renewal,  affidavits of
        use and affidavits of incontestability.

            (v) Not  make any  assignment  or  agreement  in  conflict  with the
        security interest in the Patents or Trademarks of each Obligor hereunder
        except  for  sales  or  other  dispositions   permitted  by  the  Credit
        Agreement.

        (i) New Patents,  Copyrights and Trademarks.  Promptly provide the Agent
    with (i) a listing of all applications, if any, for new Copyrights,  Patents
    or Trademarks  (together with a listing of the issuance of  registrations or
    letters  on  present  applications),   which  new  applications  and  issued
    registrations  or  letters  shall be  subject  to the terms  and  conditions
    hereunder,  and (ii) (A) with respect to Copyrights,  a duly executed Notice
    of Security  Interest in  Copyrights,  (B) with  respect to Patents,  a duly
    executed  Notice of  Security  Interest  in  Patents,  (C) with  respect  to
    Trademarks, a duly executed Notice of Security Interest in Trademarks or (D)
    such other duly executed  documents as the Agent may reasonably request in a
    form  acceptable  to counsel for the Agent and  suitable  for  recording  to
    evidence the security  interest in the Copyright,  Patent or Trademark which
    is the subject of such new application.

        (j) Insurance. Insure, repair and replace the Collateral of such Obligor
    as set  forth in the  Credit  Agreement.  All  insurance  proceeds  shall be
    subject to the security interest of the Agent hereunder.

    7. Advances by holders of the Secured Obligations. On failure of any Obligor
to perform any of the covenants and agreements  contained herein, the Agent may,
at its sole option and in its sole discretion,  perform the same and in so doing
may  expend  such  sums  as the  Agent  may  reasonably  deem  advisable  in the
performance thereof, including, without limitation, the payment of any insurance
premiums,  the payment of any taxes,  a payment to obtain a release of a Lien or
potential Lien, expenditures made in defending against any adverse claim and all
other expenditures which the Agent or the holders of the Secured Obligations may
make for the protection of the security hereof or which may be compelled to make
by operation  of law. All such  reasonable  and  documented  sums and amounts so
expended  shall be  repayable  by the  Obligors  on a joint  and  several  basis
promptly  upon timely  notice  thereof  and demand  therefor,  shall  constitute
additional  Secured  Obligations  and  shall  bear  interest  from the date said
amounts are expended at the default rate  specified in Section 3.1 of the Credit
Agreement for Revolving Loans that are Base Rate Loans.  No such  performance of
any covenant or agreement by the Agent or the holders of the Secured Obligations
on behalf of any Obligor,  and no such advance or  expenditure  therefor,  shall
relieve the Obligors of any default under the terms of this Security  Agreement,
the other  Credit  Documents  or any other  documents  relating  to the  Secured
Obligations.  The holders of the Secured Obligations may make any payment hereby
authorized in accordance with any bill,  statement or estimate procured from the
appropriate  public  office  or holder  of the  claim to be  discharged  without
inquiry  into the  accuracy  of such bill,  statement  or  estimate  or into the
validity  of any tax  assessment,  sale,  forfeiture,  tax lien,  title or claim
except to the extent such payment is being contested in good faith by an Obligor
in  appropriate  proceedings  and  against  which  adequate  reserves  are being
maintained in accordance with GAAP.

    8. Events of Default.

    The  occurrence of an Event of Default (as defined in the Credit  Agreement)
under the Credit Agreement shall be an Event of Default  hereunder (an "Event of
Default").

    9. Remedies.

        (a) General  Remedies.  Upon the  occurrence  of an Event of Default and
    during  continuation  thereof,  the holders of the Secured Obligations shall
    have, in addition to the rights and remedies  provided herein, in the Credit
    Documents or any other documents relating to the Secured Obligations,  or by
    law (including, but not limited to, the rights and remedies set forth in the
    Uniform  Commercial  Code of the  jurisdiction  applicable  to the  affected
    Collateral  (the  "UCC"))  and,  further,  the Agent  may,  with or  without
    judicial  process  or the aid and  assistance  of  others,  (i) enter on any
    premises  on  which  any  of the  Collateral  may be  located  and,  without
    resistance  or  interference  by  the  Obligors,   take  possession  of  the
    Collateral,  (ii)  dispose of any  Collateral  on any such  premises,  (iii)
    require  the  Obligors to assemble  and make  available  to the Agent at the
    expense of the Obligors any  Collateral at any place and time  designated by
    the Agent which is reasonably  convenient  to both parties,  (iv) remove any
    Collateral from any such premises for the purpose of effecting sale or other
    disposition  thereof,  and/or (v) without demand and without  advertisement,
    notice,  hearing or process of law, all of which each of the Obligors hereby
    waives to the  fullest  extent  permitted  by law,  at any place and time or
    times, sell and deliver any or all Collateral held by or for it at public or
    private sale, by one or more  contracts,  in one or more parcels,  for cash,
    upon  credit or  otherwise,  at such prices and upon such terms as the Agent
    deems  advisable,  in its sole discretion  (subject to any and all mandatory
    legal  requirements).  In  addition  to all other sums due the Agent and the
    holders of the Secured Obligations with respect to the Secured  Obligations,
    the  Obligors  shall pay the Agent and each of the  holders  of the  Secured
    Obligations  all reasonable  documented  costs and expenses  incurred by the
    Agent or any such  holder of the  Secured  Obligations,  including,  but not
    limited to,  reasonable  attorneys'  fees and court  costs,  in obtaining or
    liquidating the Collateral, in enforcing payment of the Secured Obligations,
    or in the  prosecution  or defense of any action or proceeding by or against
    the  Agent  or  the  holders  of the  Secured  Obligations  or the  Obligors
    concerning  any  matter  arising  out of or  connected  with  this  Security
    Agreement,  any Collateral or the Secured  Obligations,  including,  without
    limitation,  any of the foregoing  arising in, arising under or related to a
    case under the Bankruptcy Code. To the extent the rights of notice cannot be
    legally  waived  hereunder,  each  Obligor  agrees that any  requirement  of
    reasonable  notice  shall be met if such notice is  personally  served on or
    mailed,  postage  prepaid,  to the  Borrower in  accordance  with the notice
    provisions of Section 11.1 of the Credit Agreement at least 10 Business Days
    before the time of sale or other  event  giving rise to the  requirement  of
    such notice. The Agent and the holders of the Secured  Obligations shall not
    be  obligated  to make  any  sale or  other  disposition  of the  Collateral
    regardless of notice having been given. To the extent  permitted by law, any
    holder of the Secured  Obligations  may be a purchaser at any such sale.  To
    the extent  permitted by applicable  law, each of the Obligors hereby waives
    all of its rights of  redemption  with respect to any such sale.  Subject to
    the  provisions of applicable  law, the Agent and the holders of the Secured
    Obligations may postpone or cause the postponement of the sale of all or any
    portion  of the  Collateral  by  announcement  at the time and place of such
    sale, and such sale may, without further notice,  to the extent permitted by
    law, be made at the time and place to which the sale was  postponed,  or the
    Agent and the holders of the Secured  Obligations may further  postpone such
    sale by announcement made at such time and place.

        (b) Remedies  relating to Accounts.  Upon the  occurrence of an Event of
    Default and during the  continuation  thereof,  whether or not the Agent has
    exercised any or all of its rights and remedies hereunder, each Obligor will
    promptly upon request of the Agent instruct all account debtors to remit all
    payments in respect of Accounts to a mailing location selected by the Agent.
    In addition,  the Agent or its designee may notify any  Obligor's  customers
    and account  debtors that the Accounts of such Obligor have been assigned to
    the Agent or of the Agent's security  interest  therein,  and may (either in
    its own name or in the name of a Obligor or both) demand, collect (including
    without limitation by way of a lockbox  arrangement),  receive, take receipt
    for, sell, sue for,  compound,  settle,  compromise and give acquittance for
    any and all amounts due or to become due on any Account, and, in the Agent's
    discretion, file any claim or take any other action or proceeding to protect
    and  realize  upon the  security  interest  of the  holders  of the  Secured
    Obligations in the Accounts.  Each Obligor  acknowledges and agrees that the
    Proceeds of its Accounts remitted to or on behalf of the Agent in accordance
    with the provisions  hereof shall be solely for the Agent's own  convenience
    and that any right, title or interest of such Obligor in such Accounts or in
    any such other amounts shall be subject  thereto.  The Agent and the holders
    of the Secured  Obligations shall have no liability or responsibility to any
    Obligor for acceptance of a check, draft or other order for payment of money
    bearing the legend "payment in full" or words of similar import or any other
    restrictive  legend or  endorsement or be responsible  for  determining  the
    correctness of any  remittance.  Each Obligor hereby agrees to indemnify the
    Agent and the  holders  of the  Secured  Obligations  from and  against  all
    liabilities,  damages, losses, actions, claims, judgments,  costs, expenses,
    charges and reasonable  attorneys' fees suffered or incurred by the Agent or
    the  holders of the  Secured  Obligations  (each,  an  "Indemnified  Party")
    because of the maintenance of the foregoing  arrangements except as relating
    to or  arising  out of the gross  negligence  or  willful  misconduct  of an
    Indemnified  Party or its officers,  employees or agents. In the case of any
    investigation, litigation or other proceeding, the foregoing indemnity shall
    be effective whether or not such investigation,  litigation or proceeding is
    brought by an  Obligor,  its  directors,  shareholders  or  creditors  or an
    Indemnified  Party or any other  Person or any  other  Indemnified  Party is
    otherwise a party thereto.

        (c) Access. In addition to the rights and remedies  hereunder,  upon the
    occurrence of an Event of Default and during the continuation  thereof,  the
    Agent shall have the right to enter and remain upon the various  premises of
    the Obligors without cost or charge to the Agent, and use the same, together
    with materials,  supplies, books and records of the Obligors for the purpose
    of collecting and liquidating the Collateral,  or for preparing for sale and
    conducting the sale of the Collateral,  whether by  foreclosure,  auction or
    otherwise.  In  addition,  the  Agent  may  remove  Collateral,  or any part
    thereof,  from such  premises  and/or any records with respect  thereto,  in
    order to effectively collect or liquidate such Collateral.

        (d) Nonexclusive Nature of Remedies. Failure by the Agent or the holders
    of the Secured  Obligations  to exercise  any right,  remedy or option under
    this Security  Agreement,  any other Credit  Document,  any Other  documents
    relating to the Secured Obligations,  or as provided by law, or any delay by
    the Agent or the holders of the Secured  Obligations in exercising the same,
    shall not operate as a waiver of any such right, remedy or option. No waiver
    hereunder  shall be effective  unless it is in writing,  signed by the party
    against  whom such  waiver is  sought  to be  enforced  and then only to the
    extent specifically stated, which in the case of the Agent or the holders of
    the Secured  Obligations  shall only be granted as provided  herein.  To the
    extent  permitted  by law,  neither  the Agent,  the  holders of the Secured
    Obligations,  nor any party  acting as attorney for the Agent or the holders
    of the  Secured  Obligations,  shall  be  liable  hereunder  for any acts or
    omissions  or for any error of judgment or mistake of fact or law other than
    their  gross  negligence  or willful  misconduct  hereunder.  The rights and
    remedies of the Agent and the holders of the Secured  Obligations under this
    Security  Agreement shall be cumulative and not exclusive of any other right
    or remedy  which the Agent or the  holders of the  Secured  Obligations  may
    have.

        (e) Retention of Collateral.  To the extent  permitted under  applicable
    law, the Agent may, after providing the notices required by Section 9-620(2)
    of the UCC or otherwise complying with the requirements of applicable law of
    the relevant  jurisdiction,  to the extent the Agent is in possession of any
    of the  Collateral,  retain the  Collateral in  satisfaction  of the Secured
    Obligations.  Unless and until the Agent shall have  provided  such notices,
    however,  the Agent shall not be deemed to have  retained any  Collateral in
    satisfaction of any Secured Obligations for any reason.

        (f) Deficiency.  In the event that the proceeds of any sale,  collection
    or realization are insufficient to pay all amounts to which the Agent or the
    holders of the Secured Obligations are legally entitled,  the Obligors shall
    be jointly and severally  liable for the deficiency,  together with interest
    thereon at the default rate specified in Section 3.1 of the Credit Agreement
    for  Revolving  Loans that are Base Rate Loans,  together  with the costs of
    collection and the reasonable fees of any attorneys employed by the Agent to
    collect such  deficiency.  Any surplus  remaining after the full payment and
    satisfaction of the Secured Obligations shall be returned to the Obligors or
    to  whomsoever  a court of  competent  jurisdiction  shall  determine  to be
    entitled thereto.

    10. Rights of the Agent.

        (a) Power of Attorney. In addition to other powers of attorney contained
    herein,  each Obligor hereby designates and appoints the Agent, on behalf of
    the holders of the Secured Obligations, and each of its designees or agents,
    as  attorney-in-fact  of  such  Obligor,   irrevocably  and  with  power  of
    substitution,  with  authority to take any or all of the  following  actions
    upon the occurrence and during the continuation of an Event of Default:

            (i) to demand, collect, settle, compromise,  adjust, give discharges
        and releases, all as the Agent may reasonably determine;

            (ii) to  commence  and  prosecute  any  actions at any court for the
        purposes of collecting  any  Collateral and enforcing any other right in
        respect thereof;

            (iii) to defend,  settle or compromise  any action in respect of the
        Pledged  Collateral  brought  and, in  connection  therewith,  give such
        discharge or release as the Agent may deem reasonably appropriate;

            (iv) to receive,  open and dispose of mail  addressed  to an Obligor
        (subject  to  delivery  to  such  Obligor  of  mail   unrelated  to  the
        Collateral)  and  endorse  checks,  notes,  drafts,  acceptances,  money
        orders,  bills of lading,  warehouse  receipts or other  instruments  or
        documents  evidencing  payment,  shipment or storage of the goods giving
        rise to the  Collateral  of such Obligor on behalf of and in the name of
        such Obligor, or securing, or relating to such Collateral;

            (v) to sell, assign,  transfer, make any agreement in respect of, or
        otherwise deal with or exercise  rights in respect of, any Collateral or
        the goods or  services  which  have  given  rise  thereto,  as fully and
        completely  as though the Agent were the absolute  owner thereof for all
        purposes;

            (vi) to adjust and settle claims under any insurance policy relating
        thereto;

            (vii)  to  execute  and  deliver   all   assignments,   conveyances,
        statements, financing statements, renewal financing statements, security
        agreements,  affidavits,  notices and other agreements,  instruments and
        documents that the Agent may reasonably  determine necessary in order to
        perfect and maintain the security  interests  and liens  granted in this
        Security  Agreement  and  in  order  to  fully  consummate  all  of  the
        transactions contemplated therein;

            (viii) to institute any foreclosure  proceedings  that the Agent may
        reasonably deem appropriate; and

            (ix) to do and  perform  all such other acts and things as the Agent
        may reasonably deem to be necessary,  proper or convenient in connection
        with the Collateral.

This  power  of  attorney  is a power  coupled  with an  interest  and  shall be
irrevocable  (i)  for  so  long  as  any  of  the  Secured   Obligations  remain
outstanding,  any Credit Document or any other documents relating to the Secured
Obligations  is in effect or any Letter of Credit shall remain  outstanding  and
(ii) until all of the Commitments shall have been terminated. The Agent shall be
under no duty to exercise or withhold the exercise of any of the rights, powers,
privileges  and options  expressly  or  implicitly  granted to the Agent in this
Security  Agreement,  and shall not be liable  for any  failure  to do so or any
delay in doing so. The Agent  shall not be liable for any act or omission or for
any error of judgment or any mistake of fact or law in its  individual  capacity
or its capacity as attorney-in-fact  except acts or omissions resulting from its
gross negligence or willful  misconduct.  This power of attorney is conferred on
the Agent solely to protect,  preserve and realize upon its security interest in
the Collateral.

        (b) Assignment by the Agent. Pursuant to the Credit Agreement, the Agent
    may from time to time assign the Secured Obligations and any portion thereof
    and/or the  Collateral  and any portion  thereof,  and the assignee shall be
    entitled to all of the rights and remedies of the Agent under this  Security
    Agreement in relation thereto.

        (c) The Agent's Duty of Care. Other than the exercise of reasonable care
    to assure the safe custody of the  Collateral  while being held by the Agent
    hereunder,  the Agent shall have no duty or  liability  to  preserve  rights
    pertaining  thereto,  it being understood and agreed that the Obligors shall
    be responsible for  preservation  of all rights in the  Collateral,  and the
    Agent  shall be  relieved  of all  responsibility  for the  Collateral  upon
    surrendering it or tendering the surrender of it to the Obligors.  The Agent
    shall  be  deemed  to have  exercised  reasonable  care in the  custody  and
    preservation  of the  Collateral  in its  possession  if the  Collateral  is
    accorded treatment  substantially  equal to that which the Agent accords its
    own  property,  which  shall be no less  than the  treatment  employed  by a
    reasonable and prudent agent in the industry,  it being  understood that the
    Agent  shall not have  responsibility  for  taking  any  necessary  steps to
    preserve rights against any parties with respect to any of the Collateral.

        (d) Release of  Collateral.  The Agent may release any of the Collateral
    from this Security  Agreement or may  substitute  any of the  Collateral for
    other  Collateral  without  altering,  varying or diminishing in any way the
    force,  effect, lien, pledge or security interest of this Security Agreement
    as to any  Collateral  not  expressly  released  or  substituted,  and  this
    Security Agreement shall continue as a first priority lien on all Collateral
    not expressly  released or  substituted.  If any of the Collateral  shall be
    sold,  transferred or otherwise  disposed of by any Obligor in a transaction
    permitted by the Credit  Agreement,  then the Agent, at the request and sole
    expense of such  Obligor,  shall  execute  and  deliver to such  Obligor all
    releases  or other  documents  reasonably  necessary  or  desirable  for the
    release of the Liens created hereby on such Collateral.

    11. Application of Proceeds. Upon the occurrence and during the continuation
of an Event of Default,  upon the request and direction of the Required Lenders,
any  payments  in respect of the  Secured  Obligations  and any  proceeds of the
Collateral,  when  received  by the Agent or any of the  holders of the  Secured
Obligations  in cash or its  equivalent,  will be  applied in  reduction  of the
Secured  Obligations  in the order set forth in the  Credit  Agreement  or other
document  relating  to the Secured  Obligations,  and each  Obligor  irrevocably
waives the right to direct the  application  of such  payments  and proceeds and
acknowledges  and agrees that the Agent shall have the  continuing and exclusive
right to apply and reapply any and all such payments and proceeds in the Agent's
sole discretion, notwithstanding any entry to the contrary upon any of its books
and records.

    12. Costs of Counsel. If at any time hereafter,  whether upon the occurrence
of an Event of Default or not, the Agent employs  counsel to prepare or consider
amendments,  waivers or consents with respect to this Security Agreement,  or to
take  action or make a  response  in or with  respect  to any legal or  arbitral
proceeding relating to this Security Agreement or relating to the Collateral, or
to protect the Collateral or exercise any rights or remedies under this Security
Agreement or with respect to the Collateral, then the Obligors agree to promptly
pay upon demand any and all such reasonable documented costs and expenses of the
Agent or the holders of the Secured Obligations, all of which costs and expenses
shall constitute Secured Obligations hereunder.

    13. Continuing Agreement.

        (a) This  Security  Agreement  shall be a continuing  agreement in every
    respect  and  shall  remain in full  force and  effect so long as any of the
    Secured  Obligations  or any Letter of Credit shall remain  outstanding  and
    until the Commitments shall have terminated (other than any obligations with
    respect to the indemnities and the  representations and warranties set forth
    in the Credit Documents).  Upon such payment and termination,  this Security
    Agreement shall be automatically terminated and the Agent and the holders of
    the Secured  Obligations  shall,  upon the request and at the expense of the
    Obligors,  forthwith  release  all  of  its  liens  and  security  interests
    hereunder  and shall  execute  and deliver  all UCC  termination  statements
    and/or other documents  reasonably requested by the Obligors evidencing such
    termination.  Notwithstanding  the  foregoing  all releases and  indemnities
    provided hereunder shall survive termination of this Security Agreement.

        (b)  This  Security  Agreement  shall  continue  to be  effective  or be
    automatically  reinstated,  as the case may be, if at any time  payment,  in
    whole or in part,  of any of the Secured  Obligations  is  rescinded or must
    otherwise  be restored or returned by the Agent or any holder of the Secured
    Obligations as a preference,  fraudulent  conveyance or otherwise  under any
    bankruptcy,  insolvency  or similar  law, all as though such payment had not
    been  made;  provided  that in the event  payment  of all or any part of the
    Secured  Obligations  is  rescinded  or must be  restored or  returned,  all
    reasonable costs and expenses  (including  without limitation any reasonable
    legal  fees and  disbursements)  incurred  by the Agent or any holder of the
    Secured  Obligations in defending and enforcing such reinstatement  shall be
    deemed to be included as a part of the Secured Obligations.

    14.  Amendments;  Waivers;  Modifications.  This Security  Agreement and the
provisions hereof may not be amended, waived, modified,  changed,  discharged or
terminated  except  as set  forth  in  Section  11.6  of the  Credit  Agreement.

    15.  Successors  in  Interest.   This  Security  Agreement  shall  create  a
continuing  security  interest in the  Collateral and shall be binding upon each
Obligor,  its successors  and assigns and shall inure,  together with the rights
and remedies of the Agent and the holders of the Secured Obligations  hereunder,
to the benefit of the Agent and the holders of the Secured Obligations and their
successors and permitted assigns;  provided,  however, that none of the Obligors
may assign its rights or delegate its duties hereunder without the prior written
consent of the  requisite  Lenders  under the Credit  Agreement.  To the fullest
extent  permitted by law, each Obligor hereby releases the Agent and each holder
of the Secured Obligations,  and its successors and assigns,  from any liability
for any act or omission  relating to this Security  Agreement or the Collateral,
except for any liability arising from the gross negligence or willful misconduct
of the Agent,  or such holder of the Secured  Obligations,  or their  respective
officers, employees or agents.

    16.  Notices.  All  notices  required  or  permitted  to be given under this
Security Agreement shall be given as provided in the Credit Agreement.

    17.  Counterparts.  This Security Agreement may be executed in any number of
counterparts,  each of  which  where  so  executed  and  delivered  shall  be an
original,  but all of which shall  constitute  one and the same  instrument.  It
shall not be necessary in making proof of this Security  Agreement to produce or
account for more than one such counterpart.

    18.  Headings.  The  headings of the  sections  and  subsections  hereof are
provided  for  convenience  only and shall not in any way affect the  meaning or
construction of any provision of this Security Agreement.

    19.  Governing Law; Submission to Jurisdiction; Venue.

        (a) THIS  SECURITY  AGREEMENT  AND THE  RIGHTS  AND  OBLIGATIONS  OF THE
    PARTIES  HEREUNDER  SHALL BE GOVERNED BY AND  CONSTRUED AND  INTERPRETED  IN
    ACCORDANCE  WITH THE LAWS OF THE  STATE OF NEW  YORK.  Any  legal  action or
    proceeding  with  respect  to this  Credit  Agreement  or any  other  Credit
    Document  may be brought  in the  courts of the State of New York,  New York
    County or of the United States for the Southern  District of New York,  and,
    by execution and delivery of this Security  Agreement,  each Obligor  hereby
    irrevocably accepts for itself and in respect of its property, generally and
    unconditionally,  the  jurisdiction  of such courts.  Each  Obligor  further
    irrevocably   consents  to  the  service  of  process  out  of  any  of  the
    aforementioned  courts in any such  action or  proceeding  by the mailing of
    copies thereof by registered or certified mail,  postage  prepaid,  to it at
    the address for notices  pursuant to Section  11.1 of the Credit  Agreement,
    such  service to become  effective  three days after such  mailing.  Nothing
    herein  shall  affect  the right of the Agent to serve  process in any other
    manner  permitted by law or to commence  legal  proceedings  or to otherwise
    proceed against any Obligor in any other jurisdiction.

        (b) Each Obligor hereby  irrevocably  waives any objection  which it may
    now or hereafter have to the laying of venue of any of the aforesaid actions
    or proceedings  arising out of or in connection with this Security Agreement
    brought  in the  courts  referred  to in  subsection  (a)  hereof and hereby
    further  irrevocably  waives  and  agrees  not to plead or claim in any such
    court that any such action or proceeding  brought in any such court has been
    brought in an inconvenient forum.

    20. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
THE PARTIES TO THIS SECURITY  AGREEMENT HEREBY  IRREVOCABLY  WAIVES ALL RIGHT TO
TRIAL  BY JURY IN ANY  ACTION,  PROCEEDING  OR  COUNTERCLAIM  ARISING  OUT OF OR
RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

    21.  Severability.  If any  provision  of any of the  Security  Agreement is
determined to be illegal,  invalid or  unenforceable,  such  provision  shall be
fully  severable  and the  remaining  provisions  shall remain in full force and
effect and shall be construed  without giving effect to the illegal,  invalid or
unenforceable provisions.

    22. Entirety.  This Security  Agreement,  the other Credit Documents and the
other  documents  relating  to the  Secured  Obligations  represent  the  entire
agreement of the parties hereto and thereto,  and supersede all prior agreements
and understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Credit Documents, any other documents relating to
the Secured Obligations, or the transactions contemplated herein and therein.

    23. Survival.  All  representations and warranties of the Obligors hereunder
shall survive the execution and delivery of this Security  Agreement,  the other
Credit  Documents and the other documents  relating to the Secured  Obligations,
the  delivery  of the  Notes  and  the  extension  of  credit  thereunder  or in
connection therewith.

    24. Other  Security.  To the extent that any of the Secured  Obligations are
now or  hereafter  secured by  property  other than the  Collateral  (including,
without  limitation,  real property and securities owned by a Obligor),  or by a
guarantee,  endorsement or property of any other Person,  then the Agent and the
holders of the Secured  Obligations shall have the right to proceed against such
other  property,  guarantee or  endorsement  upon the occurrence of any Event of
Default, and the Agent and the holders of the Secured Obligations shall have the
right, in their sole  discretion,  to determine which rights,  security,  liens,
security  interests  or  remedies  the  Agent  and the  holders  of the  Secured
Obligations shall at any time pursue,  relinquish,  subordinate,  modify or take
with respect  thereto,  without in any way modifying or affecting any of them or
the Secured  Obligations or any of the rights of the Agent or the holders of the
Secured Obligations under this Security Agreement, under any other of the Credit
Documents or under any other document relating to the Secured Obligations.

    25. Joint and Several Obligations of Obligors.

        (a) Each of the  Obligors  is  accepting  joint  and  several  liability
    hereunder in consideration of the financial  accommodation to be provided by
    the holders of the Secured Obligations, for the mutual benefit, directly and
    indirectly, of each of the Obligors and in consideration of the undertakings
    of each of the  Obligors  to accept  joint  and  several  liability  for the
    obligations of each of them.

        (b) Each of the Obligors  jointly and severally  hereby  irrevocably and
    unconditionally  accepts,  not merely as a surety  but also as a  co-debtor,
    joint and several  liability  with the other  Obligors  with  respect to the
    payment and performance of all of the Secured Obligations arising under this
    Security  Agreement,  the other  Credit  Documents  and any other  documents
    relating to the Secured  Obligations,  it being the intention of the parties
    hereto  that all the  Secured  Obligations  shall be the joint  and  several
    obligations of each of the Obligors without preferences or distinction among
    them.

        (c)  Notwithstanding  any provision to the contrary contained herein, in
    any other of the Credit Documents or in any other documents  relating to the
    Secured  Obligations,  the  obligations of each  Guarantor  under the Credit
    Agreement  and the other Credit  Documents  shall be limited to an aggregate
    amount  equal to the largest  amount that would not render such  obligations
    subject  to  avoidance  under  Section  548 of the  Bankruptcy  Code  or any
    comparable provisions of any applicable state law.

    26. Rights of Required  Lenders.  All rights of the Agent hereunder,  if not
exercised by the Agent,  may be exercised by the requisite  Lenders  required by
the Credit Agreement.

                  [remainder of page intentionally left blank]
<PAGE>

    Each of the  parties  hereto  has  caused  a  counterpart  of this  Security
Agreement to be duly executed and delivered as of the date first above written.

BORROWER:                            APRIA HEALTHCARE GROUP INC.


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


GUARANTORS:

                                     APRIA HEALTHCARE INC.,
                                     a Delaware corporation

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


                                     APRIA NUMBER TWO INC.,
                                     a Delaware corporation

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


                                     APRIACARE MANAGEMENT SYSTEMS INC.,
                                     a Delaware corporation

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







                                     APRIA HEALTHCARE OF NEW YORK
                                     STATE, INC.,
                                     a New York corporation

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


                                     APRIA HEALTHCARE ESSENTIALS, LLC,
                                     a Delaware limited liability company


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








Accepted and agreed to as of the date first above written.

Bank of America, N.A.,
as Agent

By:
   ---------------------------------
Name:
Title:
<PAGE>

                                  SCHEDULE 1(b)
                                  -------------

                              INTELLECTUAL PROPERTY
<PAGE>

                                  SCHEDULE 4(a)
                                  -------------

                             CHIEF EXECUTIVE OFFICES
<PAGE>

                                  SCHEDULE 4(b)
                                  -------------

                             LOCATIONS OF COLLATERAL
<PAGE>

                                  SCHEDULE 4(c)
                                  -------------

       MERGERS, CONSOLIDATIONS, CHANGES IN STRUCTURE OR USE OF TRADENAMES


<PAGE>


                                SCHEDULE 5(f)(i)
                                ----------------

                                     NOTICE

                                       OF

                           GRANT OF SECURITY INTEREST

                                       IN

                                   COPYRIGHTS

United States Copyright Office

Gentlemen:

    Please be advised that pursuant to the Security  Agreement  dated as of July
__, 2001 (as the same may be amended,  modified,  extended or restated from time
to time, the "Security Agreement") by and among the Obligors party thereto (each
an "Obligor" and  collectively,  the "Obligors")  and Bank of America,  N.A., as
Agent (the  "Agent")  for the  holders  of the  Secured  Obligations  referenced
therein,  the undersigned  Obligor has granted a continuing security interest in
and continuing lien upon, the copyrights and copyright  applications shown below
to the Agent for the ratable benefit of the holders of the Secured Obligations:

                                   COPYRIGHTS
                                   ----------
                                                                 Date of
   Copyright No.            Description of Copyright            Copyright
   -------------            ------------------------            ---------



                             COPYRIGHT APPLICATIONS
                             ----------------------

    Copyright                Description of Copyright        Date of Copyright
 Applications No.                   Applied For                 Applications
 ----------------            ------------------------        -----------------

<PAGE>
    The  Obligors  and the  Agent,  on  behalf  of the  holders  of the  Secured
Obligations,  hereby  acknowledge  and agree that the  security  interest in the
foregoing  copyrights and copyright  applications  (i) may only be terminated in
accordance  with  the  terms  of the  Security  Agreement  and (ii) is not to be
construed as an assignment of any copyright or copyright application.

                                      Very truly yours,

                                      ----------------------------------
                                      [Obligor]

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


Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Agent

By:
   ---------------------------------
Name:
Title:
<PAGE>
                                SCHEDULE 5(f)(ii)
                                -----------------

                                     NOTICE

                                       OF

                           GRANT OF SECURITY INTEREST

                                       IN

                                     PATENTS


United States Patent and Trademark Office

Gentlemen:

    Please be advised that pursuant to the Security  Agreement  dated as of July
__, 2001 (the  "Security  Agreement")  by and among the Obligors  party  thereto
(each an "Obligor" and collectively,  the "Obligors") and Bank of America, N.A.,
as Agent (the  "Agent")  for the holders of the Secured  Obligations  referenced
therein,  the undersigned  Obligor has granted a continuing security interest in
and continuing lien upon, the patents and patent applications shown below to the
Agent for the ratable benefit of the holders of the Secured Obligations:


                                     PATENTS
                                     -------

                              Description of Patent               Date of
      Patent No.                      Item                        Patent
      ----------                      ----                        ------


                               PATENT APPLICATIONS
                               -------------------

       Patent                 Description of Patent           Date of Patent
   Applications No.                Applied For                 Applications
   ----------------          ---------------------           --------------

<PAGE>

    The  Obligors  and the  Agent,  on  behalf  of the  holders  of the  Secured
Obligations,  hereby  acknowledge  and agree that the  security  interest in the
foregoing  patents  and  patent  applications  (i)  may  only be  terminated  in
accordance  with  the  terms  of the  Security  Agreement  and (ii) is not to be
construed as an assignment of any patent or patent application.

                                     Very truly yours,

                                     ----------------------------------
                                     [Obligor]

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


Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Agent

By:
   ----------------------------------
Name:
Title:
<PAGE>


                               SCHEDULE 5(f)(iii)
                               ------------------

                                     NOTICE

                                       OF

                           GRANT OF SECURITY INTEREST

                                       IN

                                   TRADEMARKS


United States Patent and Trademark Office

Gentlemen:

    Please be advised that pursuant to the Security  Agreement  dated as of July
__, 2001 (the  "Security  Agreement")  by and among the Obligors  party  thereto
(each an "Obligor" and collectively,  the "Obligors") and Bank of America, N.A.,
as Agent (the  "Agent")  for the holders of the Secured  Obligations  referenced
therein,  the undersigned  Obligor has granted a continuing security interest in
and continuing lien upon, the trademarks and trademark  applications shown below
to the Agent for the ratable benefit of the holders of the Secured Obligations:

                                   TRADEMARKS
                                   ----------

                            Description of Trademark           Date of
     Trademark No.                    Item                    Trademark
     -------------                    ----                    ---------


                             TRADEMARK APPLICATIONS
                             ----------------------

      Trademark             Description of Trademark        Date of Trademark
   Applications No.                 Applied For                Applications
   ----------------         ------------------------        -----------------

<PAGE>

    The  Obligors  and the  Agent,  on  behalf  of the  holders  of the  Secured
Obligations,  hereby  acknowledge  and agree that the  security  interest in the
foregoing  trademarks and trademark  applications  (i) may only be terminated in
accordance  with  the  terms  of the  Security  Agreement  and (ii) is not to be
construed as an assignment of any trademark or trademark application.

                                     Very truly yours,

                                     ----------------------------------
                                     [Obligor]

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


Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Agent

By:
   ----------------------------------
Name:
Title:
<PAGE>


                                 EXHIBIT 2.1(B)
                                 --------------

                           FORM OF NOTICE OF BORROWING

Bank of America, N.A.,
  as Agent for the Lenders
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina  28255
Attention:  Agency Services

Ladies and Gentlemen:

    The undersigned, APRIA HEALTHCARE GROUP INC. (the "Borrower"), refers to the
Credit  Agreement dated as of July __, 2001 (as amended,  modified,  restated or
supplemented from time to time, the "Credit Agreement"), among the Borrower, the
Guarantors,  the Lenders and Bank of America, N.A., as Agent.  Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit  Agreement.  [The Borrower hereby gives notice pursuant
to Section 2.1 of the Credit Agreement that it requests a Revolving Loan advance
under the Credit  Agreement,  and in connection  therewith  sets forth below the
terms on which such Loan advance is requested to be made:]* [The Borrower hereby
gives notice  pursuant to Section 2.4 of the Credit  Agreement  that it requests
the Tranche A Term Loan under the Credit  Agreement on the Closing Date,  and in
connection  therewith  sets forth below the terms on which such Loan  advance is
requested to be made:]** [The Borrower  hereby gives notice  pursuant to Section
2.5 of the Credit  Agreement  that it requests the Tranche A Term Loan under the
Credit  Agreement on the Closing Date,  and in connection  therewith  sets forth
below the terms on which such Loan advance is requested to be made:]***

[(A)   Date of Borrowing (which is a Business Day)     _______________________]*

[(B)   Principal Amount of Borrowing                   _______________________]*

(C)    Interest rate basis                             _______________________

(D)    Interest Period and the last day thereof        _______________________


    In  accordance  with the  requirements  of Section 5.2, the Borrower  hereby
reaffirms the  representations  and warranties set forth in the Credit Agreement
as  provided  in clause  (b) of such  Section,  and  confirms  that the  matters
referenced  in  clauses  (c),  (d),  (e) and (f) of such  Section,  are true and
correct.

                                     APRIA HEALTHCARE GROUP INC.

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

* For all Revolving Loans
**For the initial advance of the Tranche A Term Loan on the Closing Date
**For the initial advance of the Tranche B Term Loan on the Closing Date
<PAGE>

                                 EXHIBIT 2.1(E)
                                 --------------

                             FORM OF REVOLVING NOTE

$_________________                                                July __, 2001

    FOR VALUE RECEIVED, APRIA HEALTHCARE GROUP INC., a Delaware corporation (the
"Borrower"),  hereby promises to pay to the order of __________________________,
its  successors  and assigns (the  "Lender"),  at the office of Bank of America,
N.A., as agent (the "Agent"),  at 101 North Tryon Street,  Independence  Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places
as the  holder  hereof  may  designate),  at the times  set forth in the  Credit
Agreement dated as of the date hereof among the Borrower,  the  Guarantors,  the
Lenders  and  the  Agent  (as  it  may  be as  amended,  modified,  restated  or
supplemented  from time to time, the "Credit  Agreement";  all capitalized terms
not  otherwise  defined  herein  shall have the meanings set forth in the Credit
Agreement),  but in no event  later than the  Maturity  Date,  in Dollars and in
immediately      available      funds,      the     principal      amount     of
________________________DOLLARS  ($____________) or, if less than such principal
amount, the aggregate unpaid principal amount of all Revolving Loans made by the
Lender to the  Borrower  pursuant to the Credit  Agreement,  and to pay interest
from the date hereof on the unpaid  principal  amount hereof,  in like money, at
said office,  on the dates and at the rates selected in accordance  with Section
2.1(d) of the Credit Agreement.

    Upon the occurrence and during the  continuance of an Event of Default,  the
balance outstanding  hereunder shall bear interest as provided in Section 3.1 of
the  Credit  Agreement.  Further,  in the  event  the  payment  of all  sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note, and
all other  indebtedness  of the Borrower to the Lender shall become  immediately
due and payable, without presentment, demand, protest or notice of any kind, all
of which are hereby waived by the Borrower.

    In the event  this Note is not paid  when due at any  stated or  accelerated
maturity, the Borrower agrees to pay, in addition to the principal and interest,
all costs of collection, including reasonable attorneys' fees.

    This Note and the Loans evidenced hereby may be transferred in whole or
in part only by registration of such transfer on the Register maintained by or
on behalf of the Borrower as provided in Section 11.3(c) of the Credit
Agreement.

    IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed by
its duly authorized officer as of the day and year first above written.

                                     APRIA HEALTHCARE GROUP INC.

                                     By:
                                        --------------------------------------
                                     Name:
                                          ------------------------------------
                                     Title:
                                           -----------------------------------
<PAGE>
                                 EXHIBIT 2.4(F)
                                 --------------

                           FORM OF TRANCHE A TERM NOTE

$_________________                                                 July __, 2001

    FOR VALUE RECEIVED, APRIA HEALTHCARE GROUP INC., a Delaware corporation (the
"Borrower"),  hereby promises to pay to the order of __________________________,
its  successors  and assigns (the  "Lender"),  at the office of Bank of America,
N.A., as agent (the "Agent"),  at 101 North Tryon Street,  Independence  Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places
as the  holder  hereof  may  designate),  at the times  set forth in the  Credit
Agreement dated as of the date hereof among the Borrower,  the  Guarantors,  the
Lenders  and  the  Agent  (as  it  may  be as  amended,  modified,  restated  or
supplemented  from time to time, the "Credit  Agreement";  all capitalized terms
not  otherwise  defined  herein  shall have the meanings set forth in the Credit
Agreement),  but in no event  later than the  Maturity  Date,  in Dollars and in
immediately      available      funds,      the     principal      amount     of
________________________DOLLARS  ($____________),  and to pay interest  from the
date  hereof on the unpaid  principal  amount  hereof,  in like  money,  at said
office, on the dates and at the rates selected in accordance with Section 2.4(e)
of the Credit Agreement.

    Upon the occurrence and during the  continuance of an Event of Default,  the
balance outstanding  hereunder shall bear interest as provided in Section 3.1 of
the  Credit  Agreement.  Further,  in the  event  the  payment  of all  sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note, and
all other  indebtedness  of the Borrower to the Lender shall become  immediately
due and payable, without presentment, demand, protest or notice of any kind, all
of which are hereby waived by the Borrower.

    In the event  this Note is not paid  when due at any  stated or  accelerated
maturity, the Borrower agrees to pay, in addition to the principal and interest,
all costs of collection, including reasonable attorneys' fees.

    This Note and the Loans  evidenced  hereby may be transferred in whole or in
part only by registration  of such transfer on the Register  maintained by or on
behalf of the Borrower as provided in Section 11.3(c) of the Credit Agreement.

    IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed by
its duly authorized officer as of the day and year first above written.

                                     APRIA HEALTHCARE GROUP INC.


                                        --------------------------------------
                                     Name:
                                          ------------------------------------
                                     Title:
                                           -----------------------------------
<PAGE>

                                 EXHIBIT 2.5(F)
                                 --------------

                           FORM OF TRANCHE B TERM NOTE

$_________________                                                July __, 2001

    FOR VALUE RECEIVED, APRIA HEALTHCARE GROUP INC., a Delaware corporation (the
"Borrower"),  hereby promises to pay to the order of __________________________,
its  successors  and assigns (the  "Lender"),  at the office of Bank of America,
N.A., as agent (the "Agent"),  at 101 North Tryon Street,  Independence  Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places
as the  holder  hereof  may  designate),  at the times  set forth in the  Credit
Agreement dated as of the date hereof among the Borrower,  the  Guarantors,  the
Lenders  and  the  Agent  (as  it  may  be as  amended,  modified,  restated  or
supplemented  from time to time, the "Credit  Agreement";  all capitalized terms
not  otherwise  defined  herein  shall have the meanings set forth in the Credit
Agreement),  but in no event  later than the  Maturity  Date,  in Dollars and in
immediately      available      funds,      the     principal      amount     of
________________________DOLLARS  ($____________),  and to pay interest  from the
date  hereof on the unpaid  principal  amount  hereof,  in like  money,  at said
office, on the dates and at the rates selected in accordance with Section 2.5(e)
of the Credit Agreement.

    Upon the occurrence and during the  continuance of an Event of Default,  the
balance outstanding  hereunder shall bear interest as provided in Section 3.1 of
the  Credit  Agreement.  Further,  in the  event  the  payment  of all  sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note, and
all other  indebtedness  of the Borrower to the Lender shall become  immediately
due and payable, without presentment, demand, protest or notice of any kind, all
of which are hereby waived by the Borrower.

    In the event  this Note is not paid  when due at any  stated or  accelerated
maturity, the Borrower agrees to pay, in addition to the principal and interest,
all costs of collection, including reasonable attorneys' fees.

    This Note and the Loans  evidenced  hereby may be transferred in whole or in
part only by registration  of such transfer on the Register  maintained by or on
behalf of the Borrower as provided in Section 11.3(c) of the Credit Agreement.

    IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed by
its duly authorized officer as of the day and year first above written.

                                     APRIA HEALTHCARE GROUP INC.

                                     By:
                                        --------------------------------------
                                     Name:
                                          ------------------------------------
                                     Title:
                                           -----------------------------------
<PAGE>
                                   EXHIBIT 3.2
                                   -----------

                     FORM OF NOTICE OF EXTENSION/CONVERSION

Bank of America, N.A.,
  as Agent for the Lenders
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina  28255
Attention:  Agency Services

Ladies and Gentlemen:

    The undersigned, APRIA HEALTHCARE GROUP INC. (the "Borrower"), refers to the
Credit  Agreement dated as of July __, 2001 (as amended,  modified,  restated or
supplemented from time to time, the "Credit Agreement"), among the Borrower, the
Guarantors,  the Lenders and Bank of America, N.A., as Agent.  Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement. The Borrower hereby gives notice pursuant to
Section 3.2 of the Credit  Agreement that it requests an extension or conversion
of a [Revolving  Loan] [Tranche A Term Loan]  [Tranche B Term Loan]  outstanding
under the Credit  Agreement,  and in connection  therewith  sets forth below the
terms on which such extension or conversion is requested to be made:

(A)   Loan Type/Tranche                               _______________________

(B)   Date of Extension or Conversion
      (which is the last day of the
      the applicable Interest Period)                 _______________________

(C)   Principal Amount of Extension or Conversion     _______________________

(D)   Interest rate basis                             _______________________

(E)   Interest Period and the last day thereof        ______________________

    In  accordance  with the  requirements  of Section 5.2, the Borrower  hereby
reaffirms the  representations  and warranties set forth in the Credit Agreement
as  provided  in clause  (b) of such  Section,  and  confirms  that the  matters
referenced  in  clauses  (c),  (d),  (e) and (f) of such  Section,  are true and
correct.

                                     APRIA HEALTHCARE GROUP INC.

                                     By:
                                        --------------------------------------
                                     Name:
                                          ------------------------------------
                                     Title:
                                           -----------------------------------
<PAGE>
                                 EXHIBIT 7.1(C)
                                 --------------

                    FORM OF OFFICER'S COMPLIANCE CERTIFICATE

    For the fiscal quarter ended _________________, 20___.

    I,  ______________________,  [Title] of APRIA  HEALTHCARE  GROUP  INC.  (the
"Borrower")  hereby  certify  solely in such  capacity  that,  to the best of my
knowledge and belief,  with respect to that certain Credit Agreement dated as of
July __, 2001 (as amended, modified, restated or supplemented from time to time,
the "Credit  Agreement";  all of the defined  terms in the Credit  Agreement are
incorporated  herein by  reference)  among the  Borrower,  the  Guarantors,  the
Lenders and Bank of America, N.A., as Agent:

    a.  The   company-prepared   financial   statements   which  accompany  this
    certificate  are true and  correct in all  material  respects  and have been
    prepared in accordance with GAAP applied on a consistent  basis,  subject to
    changes resulting from normal year-end audit adjustments.

    b. Since  ___________  (the date of the last similar  certification,  or, if
    none,  the Closing  Date) no Default or Event of Default has occurred  under
    the Credit Agreement; and

    Delivered herewith are detailed calculations demonstrating compliance by the
Credit  Parties with the  financial  covenants  contained in Section 7.11 of the
Credit Agreement as of the end of the fiscal period referred to above.

    This ______ day of ___________, 20__.


                                      APRIA HEALTHCARE GROUP INC.

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

<PAGE>
                       Attachment to Officer's Certificate

                       COMPUTATION OF FINANCIAL COVENANTS


<PAGE>

                                  EXHIBIT 7.12
                                  ------------

                            FORM OF JOINDER AGREEMENT

    THIS JOINDER AGREEMENT (the "Agreement"),  dated as of _____________,  20__,
is  by   and   between   _____________________,   a   ___________________   (the
"Subsidiary"),  and BANK OF AMERICA,  N.A.,  in its capacity as Agent under that
certain  Credit  Agreement  (as  it  may  be  amended,  modified,   restated  or
supplemented  from time to time, the "Credit  Agreement"),  dated as of July __,
2001,  by and among APRIA  HEALTHCARE  GROUP INC., a Delaware  corporation  (the
"Borrower"),  the Guarantors,  the Lenders and Bank of America,  N.A., as Agent.
All of the defined  terms in the Credit  Agreement  are  incorporated  herein by
reference.

    The Credit  Parties are required by Section 7.12 of the Credit  Agreement to
cause the Subsidiary to become a "Guarantor".

    Accordingly, the Subsidiary hereby agrees as follows with the Agent, for the
benefit of the Lenders:

    1. The  Subsidiary  hereby  acknowledges,  agrees and confirms  that, by its
execution of this Agreement,  the Subsidiary will be deemed to be a party to the
Credit Agreement and a "Guarantor" for all purposes of the Credit Agreement, and
shall  have  all of  the  obligations  of a  Guarantor  thereunder  as if it had
executed the Credit Agreement.  The Subsidiary  hereby ratifies,  as of the date
hereof,  and agrees to be bound by, all of the terms,  provisions and conditions
applicable to the Guarantors contained in the Credit Agreement. Without limiting
the generality of the foregoing terms of this paragraph 1, the Subsidiary hereby
(i) jointly  and  severally  together  with the other  Guarantors,  irrevocably,
unconditionally  and  absolutely  guarantees  to each  Lender and the Agent,  as
further  provided in Section 4 of the Credit  Agreement,  the prompt payment and
performance of the Credit Party  Obligations in full when due (whether at stated
maturity, as a mandatory  prepayment,  by acceleration or otherwise) strictly in
accordance with the terms thereof.

    2. The  Subsidiary  hereby  acknowledges,  agrees and confirms  that, by its
execution of this Agreement,  the Subsidiary will be deemed to be a party to the
Security Agreement,  and shall have all the obligations of an "Obligor" (as such
term is defined in the Security Agreement)  thereunder as if it had executed the
Security Agreement.  The Subsidiary hereby ratifies,  as of the date hereof, and
agrees to be bound by, all of the terms,  provisions and conditions contained in
the Security  Agreement.  Without limiting  generality of the foregoing terms of
this paragraph 2, the Subsidiary  hereby grants to the Agent, for the benefit of
the Lenders,  a continuing  security interest in, and a right of set off against
any and all right, title and interest of the Subsidiary in and to the Collateral
(as  such  term is  defined  in  Section  2 of the  Security  Agreement)  of the
Subsidiary. The Subsidiary hereby represents and warrants to the Agent that:

        (i) The Subsidiary's  chief executive office and chief place of business
    are (and for the prior four months have been)  located at the  locations set
    forth on Schedule 1 attached  hereto and the Subsidiary  keeps its books and
    records at such locations.

        (ii) The type of Collateral  owned by the Subsidiary and the location of
    all  Collateral  owned by the  Subsidiary is as shown on Schedule 2 attached
    hereto.

        (iii) The Subsidiary's  legal name is as shown in this Agreement and the
    Subsidiary has not in the past four months changed its name, been party to a
    merger,  consolidation  or other change in  structure or used any  tradename
    except as set forth in Schedule 3 attached hereto.

        (iv) The patents  and  trademarks  listed on Schedule 4 attached  hereto
    constitute all of the  registrations  and  applications  for the patents and
    trademarks owned by the Subsidiary.

         3. The Subsidiary hereby acknowledges, agrees and confirms that, by its
execution of this Agreement, the Subsidiary will be deemed to be a party to the
Pledge Agreement, and shall have all the obligations of a "Pledgor" thereunder
as if it had executed the Pledge Agreement. The Subsidiary hereby ratifies, as
of the date hereof, and agrees to be bound by, all the terms, provisions and
conditions contained in the Pledge Agreement. Without limiting the generality of
the foregoing terms of this paragraph 3, the Subsidiary hereby pledges and
assigns to the Agent, for the benefit of the Lenders, and grants to the Agent,
for the benefit of the Lenders, a continuing security interest in any and all
right, title and interest of the Subsidiary in and to Pledged Shares (as such
term is defined in Section 2 of the Pledge Agreement) listed on Schedule 5
attached hereto and the other Pledged Collateral (as such term is defined in
Section 2 of the Pledge Agreement).

    4. The  address of the  Subsidiary  for  purposes  of all  notices and other
communications is ____________________,  ____________________________, Attention
of ______________ (Facsimile No. ____________).

    5. The Subsidiary  hereby waives  acceptance by the Agent and the Lenders of
the guaranty by the Subsidiary  under Section 4 of the Credit Agreement upon the
execution of this Agreement by the Subsidiary.

    6. This Agreement may be executed in two or more counterparts, each of which
shall  constitute  an  original  but all of  which  when  taken  together  shall
constitute one contract.

    7. This  Agreement  shall be governed by and  construed and  interpreted  in
accordance with the laws of the State of New York.

    IN WITNESS WHEREOF,  the Subsidiary has caused this Joinder  Agreement to be
duly executed by its authorized officers,  and the Agent, for the benefit of the
Lenders, has caused the same to be accepted by its authorized officer, as of the
day and year first above written.

                                     [SUBSIDIARY]


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


                                     Acknowledged and accepted:

                                     BANK OF AMERICA, N.A.,
                                     as Agent

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

<PAGE>
                                   SCHEDULE 1
                                   ----------

                          TO FORM OF JOINDER AGREEMENT

                           [Chief Executive Office and
                     Chief Place of Business of Subsidiary]


<PAGE>
                                   SCHEDULE 2
                                   ----------

                          TO FORM OF JOINDER AGREEMENT

                       [Types and Locations of Collateral]
<PAGE>

                                   SCHEDULE 3
                                   ----------

                          TO FORM OF JOINDER AGREEMENT

                                  [Tradenames]

<PAGE>

                                   SCHEDULE 4
                                   ----------

                          TO FORM OF JOINDER AGREEMENT

                            [Patents and Trademarks]

<PAGE>

                                   SCHEDULE 5
                                   ----------

                          TO FORM OF JOINDER AGREEMENT

                                [Pledged Shares]


<PAGE>


                                 EXHIBIT 11.3(B)
                                 ---------------

                        FORM OF ASSIGNMENT AND ACCEPTANCE

    Reference  is made to the  Credit  Agreement  dated as of July __,  2001 (as
amended,  supplemented  or  otherwise  modified  from time to time,  the "Credit
Agreement")  among Apria  Healthcare  Group Inc.,  a Delaware  corporation  (the
"Borrower"),  the Lenders party thereto and Bank of America,  N.A., as Agent for
the Lenders (the "Agent"). Terms defined in the Credit Agreement are used herein
with the same meaning.

    The "Assignor" and the "Assignee"  referred to on Schedule 1 hereto agree as
follows:

    1. The Assignor  hereby sells and assigns to the Assignee,  and the Assignee
hereby  purchases  and  assumes  from the  Assignor,  an  interest in and to the
Assignor's  rights and  obligations  under the Credit  Agreement  as of the date
hereof equal to the  percentage  interest  specified on Schedule 1 hereto of all
outstanding  rights and  obligations  under the Credit  Facilities  specified on
Schedule  1  hereto.  After  giving  effect  to such  sale and  assignment,  the
Assignee's  Commitment AND THE AMOUNT OF THE ADVANCES OWING TO THE ASSIGNEE will
be as set forth on Schedule 1 hereto.

    2. The  Assignor  (i)  represents  and  warrants  that it is the  legal  and
beneficial  owner of the interest  being  assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty  and  assumes  no  responsibility   with  respect  to  any  statements,
warranties or representations made in or in connection with the Credit Documents
or the execution, legality, validity, enforceability,  genuineness,  sufficiency
or value of, or the  perfection  or priority  of any lien or  security  interest
created or  purported  to be created  under or in  connection  with,  the Credit
Documents or any other instrument or document furnished pursuant thereto;  (iii)
makes no representation  or warranty and assumes no responsibility  with respect
to the financial  condition of any Credit Party or the performance or observance
by any Credit Party of any of its  obligations  under any Credit Document or any
other instrument or document furnished  pursuant thereto;  and (iv) attaches the
Note or Notes, if any, held by the Assignor and requests that the Agent exchange
such Note or Notes for a new Note or Notes  payable to the order of the Assignee
in an amount equal to the Commitments assumed by the Assignee pursuant hereto or
new  Notes  payable  to the  order of the  Assignee  in an  amount  equal to the
Commitments  assumed by the  Assignee  pursuant  hereto and the  Assignor  in an
amount  equal to the  Commitments  retained  by the  Assignor  under the  Credit
Agreement, respectively, as specified on Schedule 1 hereto.

    3. The  Assignee  (i)  confirms  that it has  received  a copy of the Credit
Agreement,  together  with  copies of the  financial  statements  referred to in
Section 7.1 thereof and such other  documents and  information  as it has deemed
appropriate  to make its own credit  analysis  and  decision  to enter into this
Assignment and Acceptance;  (ii) agrees that it will,  independently and without
reliance  upon the Agent,  the  Assignor  or any other  Lender and based on such
documents and information as it shall deem appropriate at the time,  continue to
make its own credit  decisions  in taking or not taking  action under the Credit
Agreement;  (iii)  confirms that it is an Eligible  Assignee;  (iv) appoints and
authorizes  the Agent to take such action as agent on its behalf and to exercise
such powers and  discretion  under the Credit  Documents as are delegated to the
Agent by the terms  thereof,  together  with such powers and  discretion  as are
reasonably  incidental  thereto;  (v) agrees that it will perform in  accordance
with  their  terms  all of the  obligations  that  by the  terms  of the  Credit
Agreement  are  required  to be  performed  by it as a  Lender  Party;  and (vi)
attaches any U.S.  Internal Revenue Service forms required under Section 3.11(d)
of the Credit Agreement.

    4. Following the execution of this Assignment and Acceptance, it will
be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof and the recordation of the information herein
in the Register by the Agent, unless otherwise specified on Schedule 1 hereto.

    5. Upon such  acceptance  and  recording by the Agent,  as of the  Effective
Date,  (i) the  Assignee  shall be a party to the Credit  Agreement  and, to the
extent  provided  in  this  Assignment  and  Acceptance,  have  the  rights  and
obligations of a Lender  thereunder and (ii) the Assignor  shall,  to the extent
provided  in this  Assignment  and  Acceptance,  relinquish  its  rights  and be
released from its obligations under the Credit Agreement.

    6. Upon such  acceptance  and  recording  by the  Agent,  from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement and
the  Notes in  respect  of the  interest  assigned  hereby  (including,  without
limitation, all payments of principal, interest and commitment fees with respect
thereto) to the Assignee.  The Assignor and Assignee shall make all  appropriate
adjustments  in payments  under the Credit  Agreement  and the Notes for periods
prior to the Effective Date directly between themselves.

    7. This  Assignment  and  Acceptance  shall be governed by, and construed in
accordance with, the laws of the State of New York.

    8.  This  Assignment  and  Acceptance  may  be  executed  in any  number  of
counterparts and by different parties hereto in separate  counterparts,  each of
which when so executed  shall be deemed to be an original and all of which taken
together shall  constitute one and the same  agreement.  Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier  shall
be effective as delivery of a manually  executed  counterpart of this Assignment
and Acceptance.

    IN WITNESS WHEREOF,  the Assignor and the Assignee have caused Schedule 1 to
this  Assignment and Acceptance to be executed by their officers  thereunto duly
authorized as of the date specified thereon.

<PAGE>

                                   SCHEDULE 1

                                       TO

                            ASSIGNMENT AND ACCEPTANCE

[As to the Tranche A Term Facility in respect of which an interest is being
assigned:

Percentage interest assigned:                                       __________%

Aggregate outstanding principal amount of Advances assigned:       $__________

Principal amount of Tranche A Term Note __ payable to Assignee:    $__________

Principal amount of Tranche A Term Note __ payable to Assignor:    $__________]



[As to the Tranche B Term Facility in respect of which an interest is being
assigned:

Percentage interest assigned:                                       __________%

Aggregate outstanding principal amount of Advances assigned:       $__________

Principal amount of Tranche B Term Note __ payable to Assignee:    $__________

Principal amount of Tranche B Term Note __ payable to Assignor:    $__________]



[As to any Revolving Credit Facility in respect of which an interest is being
assigned:

Percentage interest assigned:                                       __________%

Assignee's Revolving Commitment:                                   $__________

Aggregate outstanding principal amount of Advances assigned:       $__________

Principal amount of Revolving Note payable to Assignee:            $__________

Principal amount of Revolving Note payable to Assignor:            $__________]

<PAGE>

Effective Date (if other than date of acceptance by Agent):

1________ __, 2001

                                     [NAME OF ASSIGNOR], as Assignor

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

                                     Dated: _________ __, 2001

                                     [NAME OF ASSIGNEE], as Assignee

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

                                     Dated:         , 2001

                                     Domestic Lending Office:


                                     Eurodollar Lending Office:



Accepted 2 [and Approved] this ____
day of ___________, 2001

BANK OF AMERICA, N.A., as Agent

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

*[Approved this ____ day
of _____________, 2001

APRIA HEALTHCARE GROUP INC.

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





--------
1   This date should be no earlier than five Business Days after the delivery of
    this Assignment and Acceptance to the Agent.
2   If required by the Credit Agreement.