Document:

Exhibit 4.1

 

THIS WARRANT AND THE SECURITIES REPRESENTED BY
THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. 
THIS WARRANT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED OR PLEDGED,
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR SUCH APPLICABLE STATE SECURITIES LAWS, OR IF THE PROPOSED TRANSFER MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR REGISTRATION OR
QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.  THIS WARRANT IS SUBJECT TO THE TERMS AND
PROVISIONS OF THE SECURITIES PURCHASE AGREEMENT BETWEEN MQ ASSOCIATES, INC. AND
MQ INVESTMENT HOLDINGS II, LLC, DATED AS OF SEPTEMBER 7, 2005, AS AMENDED
FROM TIME TO TIME (THE “PURCHASE AGREEMENT”), AND IS ENTITLED TO THE
BENEFITS THEREOF.

 

MQ
ASSOCIATES, INC.

 

STOCK
SUBSCRIPTION WARRANT

 

September 7,
2005

 

VOID
AFTER SEPTEMBER 7, 2015

 

THIS CERTIFIES
that, for value received, MQ INVESTMENT HOLDINGS II, LLC or its permitted
assigns (the “Holder”), shall be entitled to subscribe for and purchase
from MQ ASSOCIATES, INC., a Delaware corporation (the “Company”),
up to three million (3,000,000) shares (the “Warrant Shares”) of Common
Stock, par value $0.001 per share, of the Company (the “Common Stock”),
at the Exercise Price (as defined in Section 1.1 hereof), during
the Exercise Period (as defined in Section 1.2 hereof), pursuant to
the terms and subject to the conditions hereto.

 

1.1                               Exercise
Price.

 

The exercise price (the “Exercise Price”) at
any time for each Warrant Share shall be $0.01, subject to adjustment pursuant
to Section 1.5 hereof.

 

1.2                               Exercise
Period.

 

This Warrant may be exercised by the Holder at any
time or from time to time after the date hereof and on or prior to September 7,
2015 (such period being herein referred to as the “Exercise Period”).

 

 

1.3                               Exercise
of Warrant; Warrant Shares.

 

(a)                                  The
rights represented by this Warrant may be exercised, in whole or in any part
(but not as to a fractional share of Common Stock), by (i) the surrender
of this Warrant (properly endorsed) at the office of the Company (or at such
other agency or office of the Company in the United States of America as it may
designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company), (ii) delivery to the Company of a
notice of election to exercise in the form of Exhibit A attached
hereto, and (iii) payment to the Company of the aggregate Exercise Price
by (A) cash, wire transfer funds or check or (B) shares of Common
Stock or Warrants to purchase Common Stock (net of the Exercise Price for such
shares) valued for such purposes at the Market Price per share on the date of exercise.  As used herein, “Market Price” at any
date of one share of Common Stock shall be (i) the last reported sales
price regular way or, in case no such reported sales took place on such day,
the last reported bid price regular way on the principal national securities
exchange on which the Common Stock is listed or admitted to trading (or if the
Common Stock is not at the time listed or admitted for trading on any such
exchange, then such price as shall be equal to the last reported sale price, or
if there is no such sale price, the last reported bid price, as reported by the
National Association of Securities Dealers Automated Quotations System (“NASDAQ”)
on such day, or if, on any day in question, the security shall not be quoted on
the NASDAQ, then such price shall be equal to the last reported bid price on
such day as reported by the National Quotation Bureau, Inc. or any similar
reputable quotation and reporting service, if such quotation is not reported by
the National Quotation Bureau, Inc.) or (ii) if the Company’s Common
Stock is not listed or admitted to trading on a principal national securities
exchange, the value given such share as determined by the Company’s Board of
Directors (including the directors nominated pursuant to Section 3.1(a)(i) of
the Stockholders’ Agreement dated as of August 15, 2002, as amended (the “Stockholders’
Agreement”)); provided, however, that if the Holder notifies
the Company in writing disputing such determination by the Company’s Board of
Directors within 20 days after such determination, the Holder and the Company
shall mutually agree upon and select an investment bank to determine the value
of one share of Common Stock, the investment bank’s determination to be
conclusive, absent manifest error, and the costs of such determination to be
borne by the Company, except that the Holder shall bear such costs if the
investment bank’s determination is more than 20% less than the determination of
the Company’s Board of Directors.

 

(b)                                 Each
date on which this Warrant is surrendered and on which payment of the Exercise
Price is made is referred to herein as an “Exercise Date”.  Simultaneously with each exercise, the Company
shall issue and deliver a certificate or certificates for the Warrant Shares
being purchased pursuant to such exercise, registered in the name of the Holder
or the Holder’s designee, to such Holder or designee, as the case may be.  If such exercise shall not have been for the
full amount of Warrant Shares, then the Company shall issue and deliver to the
Holder a new Warrant, registered in the name of the Holder, of like tenor to
this Warrant, for the balance of the Warrant Shares that remain after exercise
of the Warrant.

 

(c)                                  The
person in whose name any certificate for shares of Common Stock is issued upon any
exercise shall for all purposes be deemed to have become the holder of record
of such shares as of the Exercise Date, except that if the Exercise Date is a
date on which the stock transfer books of the Company are closed, such person
or entity shall be deemed to have become

 

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the holder of
record of such shares at the close of business on the next succeeding date on
which the stock transfer books are open. 
The Company shall pay all documentary, stamp or other transactional
taxes attributable to the issuance or delivery of shares of Common Stock upon
exercise of all or any part of this Warrant.

 

1.4                               Representations,
Warranties and Covenants as to Common Stock; Potential Adjustment.

 

The Company
represents and warrants to the Holder that (i) all shares of Common Stock
which may be issued upon the exercise of this Warrant in accordance with its
terms will, upon issuance, be validly issued, fully paid and nonassessable,
with no personal liability attaching to the ownership thereof, and free from
all taxes, liens and charges with respect to the issue thereof and (ii) the
issuance of this Warrant, the shares of Common Stock issuable hereunder and the
other transactions contemplated hereunder do not require the consent of any
person or entity and do not and shall not conflict, result in a default under
or violate the terms of any agreement, contract, document, instrument or
obligation which may be binding upon the Company or any of its
subsidiaries.  The Company covenants to
the Holder that it will from time to time take all such action as may be
required to assure that the stated or par value per share of the Common Stock
is at all times no greater than the then effective Exercise Price.  The Company further covenants and agrees that
the Company will take all such action as may be required to assure that the Company
shall at all times have authorized and reserved, free from preemptive rights, a
sufficient number of shares of its Common Stock to provide for the exercise of
this Warrant.  If any shares of Common
Stock reserved for the purpose of issuance upon the exercise of this Warrant
require registration with or approval of any governmental authority under any
federal or state law before such shares may be validly issued or delivered upon
exercise, then the Company shall in good faith and as expeditiously as possible
endeavor to secure such registration or approval, as the case may be.

 

1.5                               Number
of Warrant Shares.

 

(a)                                  As
used herein, the term “Excluded Stock” shall have the meaning ascribed
to such term as of the date hereof in the Charter.

 

(b)                                 If,
at any time after the date hereof, the Company shall issue any shares of Common
Stock, or options or warrants to purchase or rights to subscribe for Common
Stock, or securities by their terms convertible into or exchangeable for such
Common Stock, or options or warrants to purchase or rights to subscribe for
such convertible or exchangeable securities, other than Excluded Stock, at a
price per share less than the Market Price immediately prior to the issuance of
such security, then the Exercise Price in effect immediately prior to each such
issuance shall forthwith be adjusted (subject to the provisions of this Section 1.5),
effective as of the date of such issuance, to a number equal to the product
obtained by multiplying the Exercise Price in effect immediately prior to the
issuance of such Common Stock or other security by a fraction, the numerator of
which is equal to the sum of (x) the number of shares of Common Stock deemed
outstanding on a fully-diluted basis immediately prior to such issuance
(including shares deemed outstanding as provided in subsection 1.5(c)(iii) below)
plus (y) the quotient of the aggregate consideration received by the Company
upon such issuance, divided by the Market Price immediately prior to the
issuance of such Common Stock, and the denominator of which is

 

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equal to the total
number of shares of Common Stock deemed outstanding on a fully-diluted basis
(including shares deemed outstanding as provided in subsection 1.5(c)(iii) below)
immediately after (and including) such issuance.

 

(c)                                  For
purposes of any adjustment of the Exercise Price pursuant to this Section 1.5,
the following provisions shall be applicable:

 

(i)                                     In
the case of the issuance of Common Stock for cash, the consideration shall be
deemed to be the amount of cash paid therefor after deducting therefrom any
discounts, commissions or other expenses allowed, paid or incurred by the Company
for any underwriting or otherwise in connection with the issuance and sale
thereof.

 

(ii)                                  In
the case of the issuance of Common Stock for a consideration in whole or in
part other than cash, the consideration other than cash shall be deemed to be
the fair market value thereof as determined in good faith by the Company’s Board
of Directors (including the directors nominated pursuant to Section 3.1(a)(i) of
the Stockholders’ Agreement), irrespective of any accounting treatment
(provided that any dispute as to such fair market value shall be resolved in
accordance with the procedures set forth for the determination of Market Price
in Section 1.3(a)).

 

(iii)                               In
the case of the issuance of (i) options or warrants to purchase or rights
to subscribe for Common Stock, (ii) securities by their terms convertible
into or exchangeable for Common Stock, or (iii) options or warrants to
purchase or rights to subscribe for such convertible or exchangeable
securities:

 

(A)                              the
aggregate maximum number of shares of Common Stock deliverable upon exercise of
such options or warrants to purchase or rights to subscribe for Common Stock
shall be deemed to have been issued at the time such options or warrants or
rights were originally issued and for a consideration equal to the
consideration (determined in the manner provided in items (i) and (ii) above),
if any, received by the Company upon the issuance of such options or warrants or
rights plus the minimum purchase price provided in such options or warrants or
rights for the Common Stock covered thereby;

 

(B)                                the
aggregate maximum number of shares of Common Stock deliverable upon conversion
of or in exchange for any such convertible or exchangeable securities or upon
the exercise of options or warrants to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or exchange
thereof, shall be deemed to have been issued at the time such securities were originally
issued or such options or warrants or rights were originally issued and for a
consideration equal to the consideration received by the Company for any such
securities and related options or warrants or rights (excluding any cash
received on account of accrued interest or accrued dividends), plus the
additional consideration, if any, to be received by the Company upon the
conversion or exchange of such securities or the exercise of any related
options or warrants or rights (the consideration in each case to be determined
in the manner provided in items (i) and (ii) above);

 

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(C)                                on
any change in the number of shares of Common Stock deliverable upon exercise of
any such options or warrants or rights or conversions of or exchange for such
convertible or exchangeable securities, the Exercise Price shall forthwith be
readjusted to such Exercise Price as would have been obtained had the
adjustment made upon the issuance of such options, warrants, rights or
securities not converted prior to such change or options or warrants or rights
related to such securities not converted prior to such change, been made upon
the basis of such change; and

 

(D)                               on
the expiration of any such options or warrants or rights, the termination of
any such rights to convert or exchange or the expiration of any options or
warrants or rights related to such convertible or exchangeable securities, the
Exercise Price shall forthwith be readjusted to such Exercise Price as would
have been obtained had the adjustment made upon the issuance of such options, warrants,
rights, securities or options or warrants or rights related to such securities,
been made upon the basis of the issuance of only the number of shares of Common
Stock actually issued upon exercise of such options or warrants or rights, upon
the conversion or exchange of such securities or upon the exercise of the
options or warrants or rights related to such securities and subsequent
conversion or exchange thereof.

 

(d)                                 If,
at any time after the date hereof, the number of shares of Common Stock outstanding
is increased by a stock dividend payable in shares of Common Stock or by a
subdivision or split-up of shares of Common Stock, then, following the record
date fixed for the determination of holders of Common Stock entitled to receive
such stock dividend, subdivision or split-up, the Exercise Price in effect at
such time shall be decreased such that the aggregate number of Warrant Shares
issuable upon exercise of this Warrant as of such record date shall be
increased in proportion to such increase in outstanding shares.

 

(e)                                  If,
at any time after the date hereof, the number of shares of Common Stock
outstanding is decreased by a combination of the outstanding shares of Common
Stock, then, following the record date for such combination, the Exercise Price
in effect at such time shall be increased such that the aggregate number of
Warrant Shares issuable upon exercise of this Warrant as of such record date
shall be decreased in proportion to such decrease in outstanding shares.

 

(f)                                    If,
at any time after the date hereof, any capital reorganization, or any
reclassification of the capital stock of the Company (other than a change in
par value or from par value to no par value or from no par value to par value
or as a result of a stock dividend or subdivision, split-up or combination of
shares) shall be consummated, then this Warrant shall be exercisable after such
reorganization or reclassification into the kind and number of shares of stock
or other securities or property of the Company to which the holder of the
number of shares of Common Stock (immediately prior to the time of such
reorganization or reclassification) issuable upon exercise of this Warrant
would have been entitled upon such reorganization or reclassification.  The provisions of this Section 1.5
shall similarly apply to successive reorganizations or reclassifications.

 

5

 

Upon any adjustment to the Exercise Price under this
Warrant, the number of Warrant Shares purchasable upon the exercise of this Warrant
shall be adjusted to the number obtained by dividing (i) an amount equal
to the product of (x) the number of Warrant Shares purchasable hereunder
immediately prior to such adjustment multiplied by (y) the Exercise Price
immediately prior to such adjustment, by (ii) the Exercise Price
immediately after such adjustment.

 

All calculations under this Section 1.5
shall be made to the nearest one-thousandth of a cent ($0.001) or to the
nearest one-thousandth of a share, as the case may be.

 

1.6                               Distributions
Upon Declaration of Dividend or Other Distribution.

 

So long as this Warrant remains outstanding, the Company
shall pay, upon the declaration and payment of any dividend or distribution
(whether such dividend or distribution is in the form of cash, debt securities,
equity securities, rights or other property) on any class of common stock, to
the Holder the dividend or distribution that the Holder would be otherwise
entitled to receive had the Holder exercised this Warrant in full immediately
prior to the taking of record of those holders of Common Stock entitled to any
such dividend or distribution.  This
provision shall not apply to stock dividends of additional shares of Common
Stock, provided that the Company adjusts the Exercise Price pursuant to Section 1.5
hereof.

 

A reclassification or recapitalization of the Common
Stock shall be deemed a distribution by the Company to the holders of its
Common Stock of such shares of such other class of stock within the meaning of
this Section 1.6 and, in the event the outstanding shares of Common
Stock shall be changed into a larger or smaller number of shares of Common
Stock as a part of such reclassification, then such event shall be deemed a
subdivision or combination, as the case may be, of the outstanding shares of
Common Stock within the meaning of Section 1.5 hereof.

 

1.7                               Restrictions
on Transfer.

 

This
Warrant and all rights hereunder are transferable only in accordance with the
terms of the Stockholders’ Agreement, in whole or in part, at the agency or office
of the Company referred to in Section 1.9 hereof, by the Holder in
person or by duly authorized attorney, upon (i) surrender of this Warrant
properly endorsed, and (ii) delivery of a notice of transfer in the form
of Exhibit B hereto.  Each
transferee and holder of this Warrant, by accepting or holding the same,
consents that this Warrant, when endorsed, in blank, shall be deemed
negotiable, and, when so endorsed, the holder hereof shall be treated by the Company
and all other persons dealing with this Warrant as the absolute owner hereof
for any purposes and as the person entitled to exercise the rights represented
by this Warrant, or to the transfer hereof on the books of the Company, any
notice to the contrary notwithstanding; provided, however, that
until each such transfer is recorded on such books, the Company may treat the
registered holder hereof as the owner hereof for all purposes.  The Company shall not assign, pledge or
transfer any of its rights hereunder without the prior written consent of the
Holder.  Any party to which this Warrant
is transferred shall be required to become a party to the Stockholders’ Agreement.

 

1.8                               Lost,
Stolen, Mutilated or Destroyed Warrant.

 

If this Warrant is lost, stolen, mutilated or
destroyed, the Company shall, on such terms as to indemnity or otherwise as it
may in its reasonable discretion impose (which shall, in the

 

6

 

case of a mutilated Warrant, include the surrender thereof), issue a
new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed.  Any such new
Warrant shall constitute an original contractual obligation of the Company,
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall
be at any time enforceable by anyone.

 

1.9                               Notices.

 

The terms and provisions of Section 8.5 of the
Securities Purchase Agreement are expressly incorporated into this Warrant.

 

1.10                        Governing
Law.

 

This Warrant shall be governed by, and construed in
accordance with, the laws of the State of New York without giving effect to
principles of conflicts of laws.

 

1.11                        Headings.

 

The headings of the various sections contained in this
Warrant have been inserted for convenience of reference only and should not be
deemed to be a part of this Warrant.

 

1.12                        Notices of
Corporate Action.

 

In the event of: (a) any capital reorganization
of the Company, any reclassification or recapitalization of the capital stock
of the Company or any tender offer, consolidation, merger, sale or transfer of
any assets, dividend or other distribution, issuance of indebtedness or equity,
(b) any voluntary or involuntary dissolution, liquidation or winding-up of
the Company or (c) the taking of any vote of securityholders (whether at a
meeting or by written action or otherwise) (each, a “Corporate Action”),
the Company will provide 30 days (or in the case of clause (c), 10 days) prior
written notice to the Holder specifying the expected date on which any record
is to be taken for the purpose of such Corporate Action, together with details
thereof, and the date or expected date on which any such Corporate Action is to
be consummated.  The Company shall not
consummate such Corporate Action and will not permit the fixing of a record
date with respect thereto prior to the receipt of written notice from the
Holder electing or declining to exercise its rights and options hereunder.  If the Holder shall have given notice of any
such election to exercise, then any such record date shall not be fixed for a
date prior to the full consummation of the issuance or transfer on the books of
the Company of all securities to the Holder pursuant to all such exercises in
order to permit the Holder to participate as a holder of such securities in all
voting or other aspects relating to such Corporate Action.

 

*  * 
*  *

 

7

 

IN WITNESS WHEREOF,
the Company has caused this Warrant to be executed by its duly authorized
officers as of the date first written above.

 

	
   

  	
  MQ ASSOCIATES, INC. 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald C. Tomasso

  	
   

  
	
   

  	
   

  	
  Name: Donald C. Tomasso

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  

 

 

EXHIBIT A

 

FORM OF
NOTICE OF ELECTION TO EXERCISE

 

To MQ Associates, Inc.:

 

The undersigned, the holder of the Warrant to which
this form is attached, hereby elects to exercise the right represented by such
Warrant to purchase                                      
shares of Common Stock of MQ ASSOCIATES, INC.,
and herewith tenders the aggregate payment of $                    
in the form of (a) cash, wire transfer funds or check and/or (b) shares
of Common Stock or Warrants to purchase Common Stock (net of the Exercise Price
for such shares) valued for such purposes at the Market Price per share on the
date of exercise, in full payment of the purchase price for such shares.  The undersigned requests that a certificate
for such shares be issued in the name of                                      ,
whose address is                                      ,
and that such certificate be delivered to                                      ,
whose address is                                      .

 

The foregoing exercise is (elect one):

 

o 
irrevocable

 

o 
conditioned upon the consummation of the transaction described briefly below:

 

 

If such number of shares is less than all of the
shares purchasable under the current Warrant, the undersigned requests that a
new Warrant, of like tenor as the Warrant to which this form is attached,
representing the remaining balance of the shares purchasable under such current
Warrant be registered in the name of                                      ,
whose address is                                         ,
and that such new Warrant be delivered to                                      ,
whose address is                                        .

 

(Capitalized terms used herein shall have the meanings
given to such terms in the Warrant, and references to sections are references
to sections of the Warrant).

 

	
   

  	
  Signature:

  	
   

  	
   

  

 

(Signature
must conform in all respects to the name of the holder of the Warrant as specified
on the face of the Warrant)

 

	
   

  	
  Date:

  	
   

  	
   

  

 

 

EXHIBIT B

 

FORM OF
NOTICE OF TRANSFER

 

For value received, the undersigned hereby sells,
assigns and transfers unto                                                      
all of the rights represented by the Warrant to which this form is attached to
purchase                                                      
shares of Common Stock of MQ ASSOCIATES, INC. (the
“Company”), to which such Warrant relates, and appoints                                                      
as its attorney to transfer such right on the books of the Company, with full
power of substitution in the premises.

 

(Capitalized terms used herein shall have the meanings
given to such terms in the Warrant).

 

 

	
   

  	
  Signature:

  	
   

  	
   

  

 

(Signature
must conform in all respects to the name of the holder of the Warrant as
specified on the face of the Warrant)

 

	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:Exhibit 10.1

 

EXECUTION VERSION[2]

 

FOURTH WAIVER AND THIRD AMENDMENT TO AMENDED

AND RESTATED CREDIT AGREEMENT

 

THIS
FOURTH WAIVER AND THIRD AMENDMENT, dated as of September 6,
2005 (this “Waiver and Amendment”), to that certain Amended and Restated
Credit Agreement, dated as of September 3, 2003, is made among MQ
ASSOCIATES, INC., a Delaware corporation (“Holdings”), MEDQUEST, INC., a
Delaware corporation (the “Borrower”), the Lenders (as defined in the
Credit Agreement defined below) identified on the signature pages hereto,
and WACHOVIA BANK, NATIONAL ASSOCIATION (“Wachovia”), as administrative
agent for the Lenders (in such capacity, the “Administrative Agent”).

 

RECITALS

 

A.                                   Holdings,
the Borrower, the Lenders, Chase Lincoln First Commercial Corporation, as
Syndication Agent, Wachovia and General Electric Capital Corporation, as
Co-Documentation Agents, and Wachovia as Administrative Agent, are parties to
an Amended and Restated Credit Agreement, dated as of September 3, 2003
(as amended, supplemented, restated or otherwise modified from time to time,
the “Credit Agreement”), providing for the availability of certain
credit facilities to the Borrower upon the terms and conditions set forth
therein.  Capitalized terms used herein
without definition shall have the meanings given to them in the Credit
Agreement.

 

B.                                     Pursuant
to that certain First Amendment to Amended and Restated Credit Agreement, dated
as of August 16, 2004 (the “First Amendment”), among the parties thereto,
the Required Lenders permitted, among other things, the issuance by Holdings
from time to time of Specified Holdings Securities (as defined in the First
Amendment).

 

C.                                     Pursuant
to that certain Limited Waiver and Agreement, dated as of February 14,
2005 (the “First Waiver”), among the parties thereto, the Required
Lenders (i) temporarily waived the Specified Defaults (as defined in the
First Waiver), (ii) permanently waived the Section 6.2(c) Default
(as defined in the First Waiver) and (iii) extended the deadline for
delivery of the 2005 Projections (as defined in the First Waiver).

 

D.                                    Pursuant
to that certain Second Limited Waiver and Second Amendment to Amended and
Restated Credit Agreement, dated as of March 30, 2005 (the “Second
Waiver”), among the parties thereto, the Required Lenders (i) temporarily
waived the Second Waiver Specified Defaults (as defined in the Second Waiver),
and (ii) extended the deadline for delivery of the 2005 Projections, which
projections were delivered on May 11, 2005.

 

E.                                      Pursuant
to that certain Third Limited Waiver to Amended and Restated Credit Agreement,
dated as of May 13, 2005 (as amended by the amendment thereto dated as of June 30,
2005 (as further amended and restated from time to time), the “Third Waiver”),

 

 

among the parties thereto,
the Required Lenders temporarily waived (i) the Third Waiver Specified
Defaults (as defined in the Third Waiver) and (ii) the effect of the Accounting
Matter (as defined in the First Waiver, the “Accounting Matter”) on any
financial statements or other information of Holdings, the Borrower and their
Subsidiaries or any related representations and warranties.

 

F.                                      Holdings
and the Borrower have (i) advised the Administrative Agent that the Third
Waiver Specified Defaults are, or may be, continuing, (ii) requested that
the Required Lenders agree to waive the Fourth Waiver Specified Defaults (as
defined below), subject to the terms and conditions of this Waiver and
Amendment and (iii) as a condition to obtaining the waivers requested,
agreed to amend the Credit Agreement, including certain financial covenants, as
set forth herein.

 

STATEMENT OF AGREEMENT

 

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

 

1.                                       Waivers.
In reliance upon the representations and warranties and agreements made by
Holdings, the Borrower and each of the Guarantors in this Waiver and Amendment,
each of the Lenders and the Administrative Agent hereby (i) waives (I) the
Third Waiver Specified Defaults and (II) one of more Defaults and/or Events of
Default that may have occurred and may be continuing, or that may occur, with
respect to (t) the covenants to deliver copies of the audited and unaudited
consolidated balance sheets of the Borrower and its consolidated Subsidiaries,
and the related audited and unaudited consolidated statements of income and of
cash flows for the Borrower and its consolidated Subsidiaries, for all prior
fiscal years and fiscal quarters, as required by Sections 6.01(a) and (b) of
the Credit Agreement, as applicable, (u) the Borrower’s failure to fully satisfy
its obligation to deliver updated and correct statements and schedules as
required by Section 6 of the Third Waiver, (v) the Borrower’s
delivery of Schedule 1.1B to the Credit Agreement providing that the
Borrower does not own any real property, (w) the accounting changes (the “Other
Accounting Matter”) as outlined in the Current Report on Form 8-K
filed by Holdings with the SEC on July 29, 2005 (the “July 8-K”),
(x) other than the covenant set forth in Section 4(d) hereof, the
covenant to deliver a copy of the unaudited consolidated balance sheet of Holdings
and its consolidated Subsidiaries as at the end of the fiscal quarter ending September 30,
2005, and the related unaudited consolidated statements of income and cash
flows for such fiscal quarter and the related certification, within 45 days
after the end of such fiscal quarter, as required by Section 6.1(b) of
the Credit Agreement, (y) the failure to give notice of any such Default and/or
Event of Default listed in clauses (t), (u), (v), (w), (x) and (y), or any
representation or warranty made or deemed made or to be made by Holdings and
the Borrower that no such Default or Event of Default has occurred and, in the
case of the event specified in the foregoing clause (i)(II)(u), that the
information previously provided pursuant to Section 6 of the Third Waiver
was true and correct in all material respects on and as of each date when such
representation and warranty was made ((I) and (II), collectively, the “Fourth
Waiver Specified Defaults”) and (ii) agrees that, for

 

2

 

the purposes of Section 5(c) hereof
and Section 5.2(a) of the Credit Agreement, any effect that the
Accounting Matter and the Other Accounting Matter has had, or may have, on any
financial statements or other information of Holdings, the Borrower and their
Subsidiaries previously delivered to the Administrative Agent and the Lenders
or any related representations and warranties made or deemed made by any Loan
Party in or pursuant to the Loan Documents shall be disregarded; provided
that notwithstanding the foregoing, the effect of the foregoing waivers shall
terminate and be of no further force or effect upon the earlier to occur of any
of the following: (1) prior to the Restatement Filing Date (as defined
herein), the occurrence or existence of any Default or Event of Default other
than the Fourth Waiver Specified Defaults; (2) December 31, 2005 if,
by such date, the Administrative Agent shall not have received (i) a copy
of the audited consolidated balance sheet of Holdings and its consolidated
Subsidiaries for the fiscal year ended December 31, 2004, and the related
audited consolidated statements of income and cash flows for such fiscal year
and (ii) copies of the unaudited consolidated balance sheets of Holdings and
its consolidated Subsidiaries for the fiscal quarters ended March 31, 2005,
June 30, 2005 and September 30, 2005, and the related unaudited
consolidated statements of income and cash flows for such fiscal quarters,
together with the certifications and certificates required by Section 6.2
of the Credit Agreement ((i) and (ii) collectively referred to herein
as the “Financial Reports”); (3) the date (the “Restatement
Filing Date”) when Holdings shall have filed with the SEC the past due
Financial Reports and the restated financial statements and related reports
with respect to any prior fiscal periods (such restated statement and reports
collectively referred to herein as the “Restated Financials”) if the
Financial Reports and Restated Financials contain financial information with
respect  to, without duplication,
Consolidated EBITDA and the aggregate amount of restated accounts receivable
which, when compared to the corresponding financial information in the draft
audited financial statements delivered by Holdings to the Administrative Agent
and the Lenders on August 26, 2005 varies (positively or negatively) by more
than $4,000,000 in the aggregate or $2,000,000 with respect to any fiscal
period; or (4) prior to the
Restatement Filing Date, the requisite holders or beneficiaries (or trustee or
agent on behalf of such holders or beneficiaries, as may be applicable) under
any indenture, agreement or instrument evidencing Indebtedness for borrowed
money in an aggregate principal amount in excess of $2,000,000 delivering any
notice of Default (as defined in any such indenture, agreement or instrument) that
may have occurred or may occur under such indenture, agreement or instrument.

 

2.                                       Amendments.
 (a) The Credit Agreement is hereby
amended by inserting each of the provisions which appear with computerized
underscoring and by deleting each of the provisions which appear with
computerized strike-through in the document annexed hereto as Exhibit A.

 

(b)                                 Exhibit B
to the Credit Agreement is hereby replaced in its entirety by Exhibit B
hereto.

 

(c)                                  The
Credit Agreement is hereby further amended by inserting Schedule 4.2
hereto as a new Schedule 4.2 thereto.

 

3

 

(d)                                 Schedule 4.6
to the Credit Agreement is hereby replaced in its entirety by Schedule 4.6
hereto.

 

3.                                       Certain
Agreements.  Notwithstanding anything
in the Credit Agreement to the contrary:  (1) (a) from April 1, 2005
until the earlier to occur of (x) September 30, 2005 and (y) the
Restatement Filing Date, the Borrower shall pay, together with each interest
payment required to be made under the Credit Agreement, an additional cash
interest amount at a rate of 0.75% per annum on the average daily amount of
outstanding Loans during each monthly period and (b) if the Restatement
Filing Date shall have not occurred on or prior to September 30, 2005, the
Borrower shall pay, together with each interest payment required to be made under
the Credit Agreement (other than any such payment due and payable on or about September 30,
2005 for any interest period prior to such date), an additional cash interest
amount at a rate of 1.00% per annum on the average daily amount of outstanding
Loans during each monthly period through the Restatement Filing Date; (2) from
the Effective Date until the Restatement Filing Date, the Interest Payment Date
(A) as to any ABR Loan shall be the last day of every month, (B) as
to any Eurodollar Loan shall be the last day of each Interest Period, and (C) as
to any Loan (other than any Revolving Loan that is an ABR Loan and any
Swingline Loan) shall be the date of any repayment or prepayment made in
respect thereof; (3) from the Effective Date until the Restatement Filing
Date, as to any Eurodollar Loan, the Interest Period applicable thereto shall
not exceed a period commencing on the borrowing or conversion date, as the case
may be, with respect to such Eurodollar Loan and ending one month thereafter; and
(4) from the Effective Date until the Restatement Filing Date, paragraph 4
of the Compliance Certificate (as amended by this Waiver and Amendment) may
contain the qualification that such Financial Statements delivered with such
certificate may be adjusted to the extent reflected in the most recently
delivered audited financial statements (it being understood that such
qualification and subsequent adjustment shall not constitute a Default or Event
of Default).

 

4.                                       Additional
Covenants.  (a)  The Borrower confirms and agrees that it shall,
promptly following the Restatement Filing Date, deliver, or re-deliver, as the
case may be, the certificates and information required by Sections 6.2(a) and
(b) of the Credit Agreement.

 

(b)                                 The Borrower shall file with the SEC a Current
Report on Form 8-K: (i) not later than the fifteenth (15th) day after
the end of each month setting forth selected financial and operational
information consisting of the following: gross revenue, interest expense, scan
volumes, existing center gross revenue and number of centers in operation,
total outstanding indebtedness, cash bank balance and book balance (including
outstanding checks); (ii) not later than the forty-fifth (45th) day after the
end of each month, selected financial and operating information consisting of
net revenue and capital expenditures; and (iii) not later than the
forty-fifth (45th) day after the end of each month beginning with the month of September 2005,
selected financial information consisting of operating cash flow; provided,
however, that the foregoing covenants set forth in this Section 4(b) shall
cease upon the Restatement Filing Date.

 

4

 

(c)                                  By no later than (i) September 2, 2005,
the Borrower shall have delivered to the Administrative Agent (or its counsel) original
title certificates executed in blank with respect to not fewer than five (5) of
the motor vehicles identified by vehicle identification number on Exhibit C
hereto and (ii) September 30, 2005 (or such later date as to which
the Administrative Agent may agree), the Borrower shall have used its best
efforts to deliver to the Administrative Agent (or its counsel) original title
certificates executed in blank to each of the motor vehicles identified by vehicle
identification number on Exhibit C hereto.

 

(d)                                 Unless the Restatement Filing Date shall have
occurred, by no later than November 15, 2005 the Borrower shall have
delivered to the Administrative Agent and the Lenders a consolidated balance
sheet of Holdings and its consolidated Subsidiaries as at the end of the fiscal
quarter ended September 30, 2005, and related consolidated statements of
income and cash flows for such fiscal quarter, in all cases prepared internally
by Holdings; provided, however, that no representation,
warranty or certification shall be made in respect of such financial
statements.

 

5.                                       Representations
and Warranties.  In order to induce
the Administrative Agent and the Lenders to enter into this Waiver and
Amendment, each of Holdings and the Borrower hereby represents and warrants to
the Administrative Agent and the Lenders as of the date hereof that:

 

(a)          this Waiver and
Amendment has been duly executed and delivered by it and constitutes its legal,
valid and binding obligation, enforceable against it 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);

 

(b)         after giving effect to
this Waiver and Amendment, no Default or Event or Default has occurred and is
continuing;

 

(c)          after giving effect to
this Waiver and Amendment, each of the representations and warranties made by
any Loan Party in or pursuant to the Loan Documents is true and correct in all
material respects on and as of the date hereof as if made on and as of the date
hereof, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
shall be true and correct in all material respects as of such earlier date);

 

(d)         at all times, Indebtedness
incurred pursuant to the Credit Agreement constituted, and continues to
constitute, indebtedness not prohibited to be incurred pursuant to Section 3.3
of the Senior Subordinated Note Indenture; and

 

(e)          there exists no
Subsidiary of Holdings other than such Subsidiaries which have executed this
Waiver and Amendment and the related Acknowledgement and Consent hereto.

 

5

 

6.                                       Conditions
of Effectiveness.  This Waiver and
Amendment shall become effective as of the date (the “Effective Date”)
that: (i) the Administrative Agent shall have received executed
counterparts hereof from each of Holdings, the Borrower and the Required
Lenders and an Acknowledgment and Consent hereto from each of the Subsidiary
Guarantors in form and substance reasonably satisfactory to the Administrative
Agent; (ii) (x) the Seventh Supplemental Indenture dated as of August 15,
2005 to the Senior Subordinated Note Indenture and (y) the First Supplemental
Indenture dated as of August 15, 2005 to the Indenture dated August 24,
2004 in connection with the issuance of the 12 1⁄4% Senior Discount Notes (as
therein defined) due 2012 (the “Senior Discount Note Indenture”), entered
into by Holdings, as the case may be, as filed by Holdings with the SEC in the
Current Report on Form 8-K dated August 15, 2005, shall become
effective upon the occurrence of the Effective Date; (iii) affiliates of
J.P. Morgan Partners LLC and/or certain other existing and direct and indirect
stockholders of Holdings and their respective transferees, successors and
assigns (collectively, the “Equity Investors”) shall have purchased
shares of qualified capital stock of Holdings pursuant to a purchase agreement (in
form and substance substantially similar to such agreement delivered to counsel
for the Administrative Agent on August 19, 2005) for an aggregate amount,
in cash, of not less than $20 million (the “Additional Equity Investment”)
which Additional Equity Investment shall have been paid to Holdings, and not
less than $18 million contributed to the Borrower and used in reduction of the
Revolving Loans (but without a reduction to the Revolving Commitment); (iv) the
Administrative Agent shall have received an amendment fee in an aggregate
amount of $347,000 for the respective account of each Lender (on a pro  rata
basis based on such Lender’s Commitment as of the date hereof) that has
executed and delivered to the Administrative Agent a counterpart of this Waiver
and Amendment by no later than 5:00 p.m. (Charlotte, North Carolina time)
on September 2, 2005; (v) the Administrative Agent shall have
received the fees set forth in that certain Fee Letter dated as of the date
hereof by and between Wachovia and the Borrower; and (vi) the Borrower
shall have paid all fees and expenses due and owing to Morgan, Lewis &
Bockius LLP, counsel to the Administrative Agent, and FTI Consulting, financial
advisors to the Administrative Agent to the extent unpaid and invoiced on or
before the date hereof.

 

7.                                       Effect
of Waiver.  (a) Except as expressly
set forth herein, this Waiver and Amendment shall not, by implication or
otherwise, limit, impair, constitute a waiver of, or otherwise affect the
rights and remedies of the Lenders, the Administrative Agent, the Borrower,
Holdings or any other Loan Party under the Credit Agreement or any other Loan
Document, and shall not alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document, including the Guarantee and Collateral
Agreement, all of which are ratified and affirmed in all respects and shall
continue in full force and effect. 
Nothing herein shall be deemed to entitle the Borrower, Holdings or any
other Loan Party, or constitute an express or implied agreement by the
Administrative Agent or the Lenders,  to
a consent to, or a waiver, amendment, modification or other change of, any of
the terms, conditions, obligations, covenants or agreements contained in the
Credit Agreement or any other Loan Document in similar or different
circumstances.  This Waiver and Amendment
shall constitute a “Loan Document” for all purposes of the Credit Agreement and
the other Loan Documents.

 

6

 

(b)                                 From
and after the occurrence of the Effective Date, the terms and provisions of
this Waiver and Amendment shall, in every respect, supersede and replace the
Third Waiver.

 

(c)                                  Section 7
of the Third Waiver shall no longer apply following the Restatement Filing
Date.

 

8.                                       Releases.  For purposes of this Section, the following
terms shall have the following definitions:

 

“Related Parties” shall mean,  with respect to any released party, such
party’s parents, subsidiaries, affiliates, successors, assigns, predecessors,
officers, directors, employees, agents, representatives, attorneys, accountants
and shareholders, if any.

 

“Claims” shall mean  any and all claims, losses, debts,
liabilities, demands, obligations, promises, acts, omissions, agreements,
costs, expenses, damages, injuries, suits, actions, causes of action, including
without limitation, any and all rights of setoff, recoupment or counterclaim of
any kind or nature whatsoever, in law or in equity, known or unknown, suspected
or unsuspected, contingent or fixed.

 

Excluding only the
continuing obligations of the Lenders and the Administrative Agent from and
after the Effective Date under the express terms of the Credit Agreement, the
Loan Documents and this Waiver and Amendment, Holdings, the Borrower and each
Guarantor hereby release, acquit and forever discharge the Lenders and the
Agents, and each of them, and their respective Related Parties, of and from any
and all Claims arising out of, related or in any way connected with any action
or failure to act, prior to the Effective Date, in response to or otherwise in
connection with the events or circumstances arising under or otherwise related
to the Credit Agreement, the Loan Documents or any Defaults occurring under the
Credit Agreement or the Loan Documents.

 

9.                                       Governing
Law.  THIS WAIVER AND AMENDMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

 

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

 

7

 

11.                                 Successors
and Assigns.  This Waiver and
Amendment shall be binding upon, inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.

 

12.                                 Construction.  The headings of the various sections and
subsections of this Waiver and Amendment have been inserted for convenience
only and shall not in any way affect the meaning or construction of any of the
provisions hereof.

 

13.                                 Counterparts.  This Waiver and Amendment may be executed by
one or more of the parties to this Waiver and Amendment on any number of
separate counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. Delivery of an executed
signature page of this Waiver and Amendment by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof.

 

[Signature pages follow]

 

8

 

IN
WITNESS WHEREOF, the parties hereto have caused this Waiver
and Amendment to be executed by their duly authorized officers as of the date
first above written.

 

 

	
   

  	
  MEDQUEST, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Donald
  C. Tomasso

  	
   

  
	
   

  	
   

  	
  Name: Donald C.
  Tomasso

  
	
   

  	
   

  	
  Title: Interim
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MQ ASSOCIATES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Donald
  C. Tomasso

  	
   

  
	
   

  	
   

  	
  Name: Donald C.
  Tomasso

  
	
   

  	
   

  	
  Title: Interim
  Chief Executive Officer

  

 

 

(signatures continued on following pages)

 

 

Signature Pages to Fourth
Waiver and Third Amendment

 

 

	
   

  	
  WACHOVIA BANK,
  NATIONAL

  ASSOCIATION, as Administrative Agent

  and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ C. Mark
  Hedrick

  	
   

  
	
   

  	
  Name: C. Mark Hedrick

  
	
   

  	
  Title: Director

  

 

 

Signature Pages to Fourth
Waiver and Third Amendment

 

 

	
   

  	
   

  	
  UBS AG, Stamford
  Branch, as Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Irja R. Otsa

  	
   

  
	
   

  	
  Name:

  	
  Irja R. Otsa

  
	
   

  	
  Title:

  	
  Associate Director

  Banking Products

  Services, US

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard L.
  Tavrow

  	
   

  
	
   

  	
  Name:

  	
  Richard L. Tavrow

  Director

  
	
   

  	
  Title:

  	
  Banking Products

  Services, US

  
					

 

 

Signature
Pages to Fourth Waiver and Third Amendment

 

 

	
   

  	
  Foothill Income
  Trust, L.P., as Lender

  by FIT GP, LLC, Its Gen Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeff Nikora

  	
   

  
	
   

  	
  Name:  Jeff Nikora

  
	
   

  	
  Title:    Managing Member

  

 

 

Signature
Pages to Fourth Waiver and Third Amendment

 

 

	
   

  	
  Chase Lincoln
  First Commercial Corporation, as Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dawn Lee Lum

  	
   

  
	
   

  	
  Name:  Dawn Lee Lum

  
	
   

  	
  Title:    Director

  

 

 

Signature
Pages to Fourth Waiver and Third Amendment

 

 

	
   

  	
  General Electric
  Capital Corporation, as Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brent A.
  Shepherd

  	
   

  
	
   

  	
  Name:  BRENT A. SHEPHERD

  
	
   

  	
  Title:    DULY AUTHORIZED SIGNATORY

  

 

 

Signature
Pages to Fourth Waiver and Third Amendment

 

 

	
   

  	
  Mountain Capital
  CLO I Ltd., as Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan
  Dietz

  	
   

  
	
   

  	
  Name:  Jonathan Dietz

  
	
   

  	
  Title:    Director

  

 

 

Signature
Pages to Fourth Waiver and Third Amendment

 

 

	
   

  	
  Mountain Capital
  CLO II Ltd., as Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan
  Dietz

  	
   

  
	
   

  	
  Name:  Jonathan Dietz

  
	
   

  	
  Title:    Director

  

 

 

Signature
Pages to Fourth Waiver and Third Amendment

 

 

	
   

  	
  By:

  	
  Landmark V COO
  Ltd

  Aladdin Capital Management LLC, as Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William S.
  Luthains

  	
   

  
	
   

  	
  Name:  William S. Luthains

  
	
   

  	
  Title:    Director

  

 

 

Signature
Pages to Fourth Waiver and Third Amendment

 

 

	
   

  	
  Black Diamond
  International

  Funding Ltd., as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alan Corkish

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Alan Corkish

  
	
   

  	
   

  	
  Title:

  	
  Director

  
					

 

 

Signature Pages to Fourth
Waiver and Third Amendment

 

 

	
   

  	
  Black Diamond CLO
  2005-1, Ltd, as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Black Diamond
  Capital Management, L.L.C.,

  As Its Collateral Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James J.
  Zenni, Jr.

  	
   

  	
   

  
	
   

  	
   

  	
  Name: James J.
  Zenni, Jr.

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President &
  Managing Partner

  Black Diamond Capital Management, L.L.C.

  	
   

  
						

 

 

Signature
Pages to Fourth Waiver and Third Amendment

 

 

	
   

  	
  Indosuez Capital
  Funding VI Limited

  Lyon Capital Management LLC

  As Collateral Manager, as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alexander B.
  Kenna

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Alexander B. Kenna

  
	
   

  	
   

  	
  Title: 

  	
  LYON CAPITAL MANAGEMENT LLC

  Portfolio Manager

  
					

 

 

Signature
Pages to Fourth Waiver and Third Amendment

 

 

ACKNOWLEDGMENT AND CONSENT

 

Pursuant to Section 6
of the Fourth Waiver and Third Amendment to Amended and Restated Credit
Agreement, dated as of September 6, 2005 among MQ Associates, Inc., a
Delaware corporation (“Holdings”), MedQuest, Inc., a Delaware
corporation (the “Borrower”), the Lenders identified on the signature pages thereto,
and Wachovia Bank, National Association (“Wachovia”), as administrative
agent for the Lenders (the “Waiver and Amendment”), to which this
acknowledgment is attached, each of the undersigned hereby acknowledges receipt
of a copy of and consents to the execution and delivery by Holdings and the
Borrower of the Waiver and Amendment and acknowledges and grants the releases
contained therein.  Each of the
undersigned further confirms and agrees that, after giving effect to the Waiver
and Amendment, each Loan Document to which it is a party shall continue in full
force and effect in accordance with its terms. Capitalized terms used herein
without definition shall have the meanings given to them in the Amended and
Restated Credit Agreement dated September 3, 2003 among Holdings, the
Borrower, the Lenders, JPMorgan Chase Bank, as Syndication Agent, Wachovia and
General Electric Capital Corporation, as Co-Documentation Agents, and Wachovia,
as Administrative Agent.

 

[Remainder of this page intentionally left blank.]

 

 

Acknowledgment to Fourth Waiver and Third Amendment

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this
Acknowledgment and Consent to be executed by their duly authorized officers as
of the date first above written.

 

	
  ANDERSON
  DIAGNOSTIC IMAGING, INC.

  ASHEVILLE OPEN MRI, INC.

  BIOIMAGING AT CHARLOTTE, INC.

  BIOIMAGING OF COOL SPRINGS, INC.

  BIOIMAGING AT HARDING, INC.

  CABARRUS DIAGNOSTIC IMAGING, INC.

  CAPE FEAR DIAGNOSTIC IMAGING, INC.

  CAROLINA IMAGING, INC. OF

  FAYETTEVILLE

  CAROLINAS DIAGNOSTIC IMAGING,

  INC.

  CHAPEL HILL DIAGNOSTIC IMAGING,

  INC.

  CHATTANOOGA DIAGNOSTIC IMAGING,

  INC.

  DOTHAN DIAGNOSTIC IMAGING, INC.

  FLORIDA DIAGNOSTIC IMAGING

  CENTER, INC.

  GROVE DIAGNOSTIC IMAGING CENTER,

  INC.

  ILLINOIS DIAGNOSTIC IMAGING, INC.

  IMAGING SERVICES OF ALABAMA, INC.

  KANSAS DIAGNOSTIC IMAGING, INC.

  LEXINGTON OPEN MRI, INC.

  MECKLENBURG DIAGNOSTIC IMAGING,

  INC.

  MEDQUEST ASSOCIATES, INC.

  MISSOURI IMAGING, INC.

  On behalf of each of the entities listed above:

  	
   

  	
  MOBILE OPEN MRI,
  INC.

  MRI & IMAGING OF WISCONSIN, INC.

  NORTHEAST COLUMBIA DIAGNOSTIC

  IMAGING, INC.

  OCCUPATIONAL SOLUTIONS, INC.

  OPEN MRI OF GEORGIA, INC.

  OPEN MRI & IMAGING OF GEORGIA,

  INC.

  OPEN MRI & IMAGING OF RICHMOND,

  INC.

  PALMETTO IMAGING, INC.

  PHOENIX DIAGNOSTIC IMAGING, INC.

  PIEDMONT IMAGING, INC. (FORSYTH)

  PIEDMONT IMAGING, INC.

  (SPARTANBURG)

  SOUTH CAROLINA DIAGNOSTIC

  IMAGING, INC.

  SUN VIEW HOLDINGS, INC.

  TEXAS IMAGING SERVICES OF EL PASO,

  INC.

  TRIAD IMAGING, INC.

  TYSON’S CORNER DIAGNOSTIC

  IMAGING, INC.

  VIENNA DIAGNOSTIC IMAGING, INC.

  VIRGINIA DIAGNOSTIC IMAGING, INC.

  WILLIAM S. WITT, INC.

  WISCONSIN DIAGNOSTIC IMAGING,

  INC.

  On behalf of each of the entities listed above:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/ Donald C.
  Tomasso

  	
   

  	
   

  	
  By:

  	
  /s/ Donald C.
  Tomasso 

  	
   

  
	
   

  	
  Name: Donald C.
  Tomasso 

  	
   

  	
   

  	
  Name: Donald C.
  Tomasso 

  
	
   

  	
  Title:   Interim
  Chief Executive Officer

  	
   

  	
   

  	
  Title:   Interim
  Chief Executive Officer

  
							

 

 

Signature Page to Acknowledgment to Fourth
Waiver and Third Amendment

 

 

	
  ATHENS MRI, LLC

  BIRMINGHAM DIAGNOSTIC IMAGING,

  LLC

  BRIDGETON MRI AND IMAGING

  CENTER, LLC

  BRUNSWICK DIAGNOSTIC IMAGING,

  LLC

  BUCKHEAD DIAGNOSTIC IMAGING, LLC

  CAPE FEAR MOBILE IMAGING, LLC

  CAPE IMAGING, L.L.C.

  CAROLINA MEDICAL IMAGING, LLC

  CLAYTON OPEN MRI, LLC

  COASTAL IMAGING, LLC

  CUMMING DIAGNOSTIC IMAGING, LLC

  DIAGNOSTIC IMAGING OF ATLANTA,

  LLC

  DIAGNOSTIC IMAGING OF GEORGIA,

  LLC

  DIAGNOSTIC IMAGING OF HIRAM, LLC

  DIAGNOSTIC IMAGING OF MARIETTA,

  LLC

  DULUTH DIAGNOSTIC IMAGING, LLC

  DULUTH CT CENTER, LLC

  DURHAM DIAGNOSTIC IMAGING, LLC

  EAST COOPER DIAGNOSTIC IMAGING,

  LLC

  FARMFIELD DIAGNOSTIC IMAGING,

  LLC

  FORT MILL DIAGNOSTIC IMAGING, LLC

  HAPEVILLE DIAGNOSTIC IMAGING, LLC

  IMAGING CENTER OF CENTRAL

  GEORGIA, LLC

  JACKSONVILLE DIAGNOSTIC IMAGING,

  LLC

  KIRKWOOD MRI AND IMAGING

  CENTER, LLC

  On behalf of each of the entities listed above:

  	
   

  	
  MEDICAL
  SCHEDULING OF MISSOURI,

  LLC

  MIDTOWN DIAGNOSTIC IMAGING, LLC

  MONTGOMERY OPEN MRI, LLC

  OPEN MRI & IMAGING OF CONYERS,

  LLC

  OPEN MRI & IMAGING OF ALBANY, LLC

  OPEN MRI & IMAGING OF ATHENS, LLC

  OPEN MRI & IMAGING OF

  DOUGLASVILLE, LLC

  OPEN MRI OF ATLANTA, LLC

  OPEN MRI OF CENTRAL GEORGIA, LLC

  OPEN MRI & IMAGING OF DEKALB, LLC

  OPEN MRI & IMAGING OF NORTH

  FULTON, LLC

  OPEN MRI & IMAGING OF MACON, LLC

  OPEN MRI & IMAGING OF N.E.

  GEORGIA, LLC

  OPEN MRI AND IMAGING OF

  SNELLVILLE, LLC

  OPEN MRI OF SIMPSONVILLE, LLC

  OPEN MRI & IMAGING OF RICHMOND,

  LLC

  RICHMOND WEST END DIAGNOSTIC

  IMAGING, LLC

  SIMPSONVILLE OPEN MRI, LLC

  ST. PETERS MRI & IMAGING CENTER,

  LLC

  TOWN & COUNTRY OPEN MRI, LLC

  TRICOM DIAGNOSTIC IMAGING, LLC

  WEST ASHLEY DIAGNOSTIC

  IMAGING, LLC

  WEST PACES DIAGNOSTIC IMAGING,

  LLC

  WOODSTOCK DIAGNOSTIC IMAGING,

  LLC

  On behalf of each of the entities listed above:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/ Donald C.
  Tomasso

  	
   

  	
   

  	
  By:

  	
  /s/ Donald C.
  Tomasso 

  	
   

  
	
   

  	
  Name: Donald C.
  Tomasso 

  	
   

  	
   

  	
  Name: Donald C.
  Tomasso 

  
	
   

  	
  Title:   Interim
  Chief Executive Officer

  	
   

  	
   

  	
  Title:   Interim
  Chief Executive Officer

  
							

 

 

Signature Page to Acknowledgment to Fourth
Waiver and Third Amendment

 

 

	
   

  	
  OPEN MRI OF
  MYRTLE BEACH, LLC

  
	
   

  	
  OPEN MRI &
  IMAGING OF FLORENCE, LLC

  
	
   

  	
   

  
	
   

  	
  By: Palmetto
  Imaging, Inc., as sole member of each

  of the entities listed above

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Donald
  C. Tomasso

  	
   

  
	
   

  	
   

  	
  Name: Donald C.
  Tomasso

  
	
   

  	
   

  	
  Title: Interim
  Chief Executive Officer

  

 

 

Signature Page to Acknowledgment to Fourth
Waiver and Third Amendment

 

 

EXHIBIT A

 

[BLACKLINE OF CREDIT AGREEMENT]

 

 

Exhibit A to Fourth Waiver and Third Amendment

 

 

 

[CONFORMED COPY]

 

$140,000,000

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

among

 

MQ ASSOCIATES, INC.,

 

MEDQUEST, INC.,

 

as Borrower,

 

The Several Lenders from Time to Time Parties Hereto,

 

JPMORGAN CHASE BANK,

 

as Syndication Agent,

 

GENERAL ELECTRIC CAPITAL
CORPORATION

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Co-Documentation Agents

 

and

 

WACHOVIA BANK, NATIONAL
ASSOCIATION,

 

as Administrative Agent

 

Dated as of September 3, 2003

 

 

 

J.P. MORGAN SECURITIES INC.,

 

as Sole Lead Arranger and Bookrunner

 

CONFORMED
TO REFLECT MODIFICATIONS SET FORTH IN THE FIRST AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT DATED AS OF AUGUST 16, [2004 AND]2004, THE SECOND
LIMITED WAIVER AND SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF MARCH 30, 2005 AND THE FOURTH WAIVER AND THIRD AMENDMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT DATED AS OF SEPTEMBER 6, 2005

 

THIS CONFORMED COPY OF THE AMENDED AND RESTATED CREDIT AGREEMENT, AS
AMENDED, IS FOR PURPOSES OF EFFECTING THE FOURTH WAIVER AND THIRD AMENDMENT
ONLY. THE LEGALLY OPERATIVE TERMS OF SUCH CREDIT AGREEMENT, AS AMENDED, ARE AS
SET FORTH IN THE SEPARATE CREDIT AGREEMENT AND AMENDING DOCUMENTS.

 

 

TABLE OF CONTENTS

 

	
  SECTION 1.
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Defined Terms

  	
   

  
	
  1.2

  	
  Other Definitional Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.
  AMOUNT AND TERMS OF COMMITMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Term Commitments

  	
   

  
	
  2.2

  	
  Procedure for Term Loan Borrowings

  	
   

  
	
  2.3

  	
  Repayment of Term Loans

  	
   

  
	
  2.4

  	
  Revolving Commitments

  	
   

  
	
  2.5

  	
  Procedure for Revolving Loan Borrowing

  	
   

  
	
  2.6

  	
  Swingline Commitment

  	
   

  
	
  2.7

  	
  Procedure for Swingline Borrowing; Refunding
  of Swingline Loans

  	
   

  
	
  2.8

  	
  Commitment Fees, etc.

  	
   

  
	
  2.9

  	
  Termination or Reduction of Revolving
  Commitments

  	
   

  
	
  2.10

  	
  Optional Prepayments

  	
   

  
	
  2.11

  	
  Mandatory Prepayments and Commitment
  Reductions

  	
   

  
	
  2.12

  	
  Conversion and Continuation Options

  	
   

  
	
  2.13

  	
  Limitations on Eurodollar Tranches

  	
   

  
	
  2.14

  	
  Interest Rates and Payment Dates

  	
   

  
	
  2.15

  	
  Computation of Interest and Fees

  	
   

  
	
  2.16

  	
  Inability to Determine Interest Rate

  	
   

  
	
  2.17

  	
  Pro Rata Treatment and Payments

  	
   

  
	
  2.18

  	
  Requirements of Law

  	
   

  
	
  2.19

  	
  Taxes

  	
   

  
	
  2.20

  	
  Indemnity

  	
   

  
	
  2.21

  	
  Change of Lending Office

  	
   

  
	
  2.22

  	
  Replacement of Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3. LETTERS OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  L/C Commitment

  	
   

  
	
  3.2

  	
  Procedure for Issuance of Letter of Credit

  	
   

  
	
  3.3

  	
  Fees and Other Charges

  	
   

  
	
  3.4

  	
  L/C Participations

  	
   

  
	
  3.5

  	
  Reimbursement Obligation of the Borrower

  	
   

  
	
  3.6

  	
  Obligations Absolute

  	
   

  
	
  3.7

  	
  Letter of Credit Payments

  	
   

  
	
  3.8

  	
  Applications

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4. REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Financial Condition

  	
   

  
	
  4.2

  	
  No Change

  	
   

  
	
  4.3

  	
  Existence; Compliance with Law

  	
   

  
	
  4.4

  	
  Power; Authorization; Enforceable
  Obligations

  	
   

  

 

i

 

	
  4.5

  	
  No Legal Bar

  	
   

  
	
  4.6

  	
  Litigation

  	
   

  
	
  4.7

  	
  No Default

  	
   

  
	
  4.8

  	
  Ownership of Property; Liens

  	
   

  
	
  4.9

  	
  Intellectual Property

  	
   

  
	
  4.10

  	
  Taxes

  	
   

  
	
  4.11

  	
  Federal Regulations

  	
   

  
	
  4.12

  	
  Labor Matters

  	
   

  
	
  4.13

  	
  ERISA

  	
   

  
	
  4.14

  	
  Investment Company Act; Other Regulations

  	
   

  
	
  4.15

  	
  Subsidiaries

  	
   

  
	
  4.16

  	
  Use of Proceeds

  	
   

  
	
  4.17

  	
  Environmental Matters

  	
   

  
	
  4.18

  	
  Accuracy of Information, etc.

  	
   

  
	
  4.19

  	
  Security Documents

  	
   

  
	
  4.20

  	
  Solvency

  	
   

  
	
  4.21

  	
  Senior Indebtedness

  	
   

  
	
  4.22

  	
  Regulation H

  	
   

  
	
  4.23

  	
  Certain Documents

  	
   

  
	
  4.24

  	
  Inspections and Investigations

  	
   

  
	
  4.25

  	
  Medicare Participation

  	
   

  
	
  4.26

  	
  Fraud and Abuse

  	
   

  
	
  4.27

  	
  HIPAA Compliance

  	
   

  
	
  4.28

  	
  Prior Representations and Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5. CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Conditions to Effectiveness of Amended and
  Restated Credit Agreement

  	
   

  
	
  5.2

  	
  Conditions to Each Extension of Credit

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6. AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Financial Statements

  	
   

  
	
  6.2

  	
  Certificates; Other Information

  	
   

  
	
  6.3

  	
  Payment of Obligations

  	
   

  
	
  6.4

  	
  Maintenance of Existence; Compliance

  	
   

  
	
  6.5

  	
  Maintenance of Property; Insurance

  	
   

  
	
  6.6

  	
  Inspection of Property; Books and Records;
  Discussions

  	
   

  
	
  6.7

  	
  Notices

  	
   

  
	
  6.8

  	
  Environmental Laws

  	
   

  
	
  6.9

  	
  Additional Collateral, etc

  	
   

  
	
  6.10

  	
  Matters Relating to Collateral

  	
   

  
	
  6.11

  	
  USA PATRIOT Act Compliance

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7. NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Financial Condition Covenants

  	
   

  
	
  7.2

  	
  Indebtedness

  	
   

  
	
  7.3

  	
  Liens

  	
   

  
	
  7.4

  	
  Fundamental Changes

  	
   

  
	
  7.5

  	
  Disposition of Property

  	
   

  

 

ii

 

	
  7.6

  	
  Restricted Payments

  	
   

  
	
  7.7

  	
  Investments

  	
   

  
	
  7.8

  	
  Optional Payments and Modifications of
  Certain Debt Instruments

  	
   

  
	
  7.9

  	
  Transactions with Affiliates

  	
   

  
	
  7.10

  	
  Sales and Leasebacks

  	
   

  
	
  7.11

  	
  Changes in Fiscal Periods

  	
   

  
	
  7.12

  	
  Negative Pledge Clauses

  	
   

  
	
  7.13

  	
  Clauses Restricting Subsidiary
  Distributions

  	
   

  
	
  7.14

  	
  Lines of Business

  	
   

  
	
  7.15

  	
  Amendments to Recapitalization Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8. EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9. THE AGENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Appointment

  	
   

  
	
  9.2

  	
  Delegation of Duties

  	
   

  
	
  9.3

  	
  Exculpatory Provisions

  	
   

  
	
  9.4

  	
  Reliance by Administrative Agent

  	
   

  
	
  9.5

  	
  Notice of Default

  	
   

  
	
  9.6

  	
  Non-Reliance on Agents and Other Lenders

  	
   

  
	
  9.7

  	
  Indemnification

  	
   

  
	
  9.8

  	
  Agents in Their Individual Capacities

  	
   

  
	
  9.9

  	
  Successor Administrative Agent

  	
   

  
	
  9.10

  	
  Closing Agent, Co-Documentation Agents and
  Syndication Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10. MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Amendments and Waivers

  	
   

  
	
  10.2

  	
  Notices

  	
   

  
	
  10.3

  	
  No Waiver; Cumulative Remedies

  	
   

  
	
  10.4

  	
  Survival of Representations and Warranties

  	
   

  
	
  10.5

  	
  Payment of Expenses and Taxes

  	
   

  
	
  10.6

  	
  Successors and Assigns; Participations and
  Assignments

  	
   

  
	
  10.7

  	
  Adjustments; Set-off

  	
   

  
	
  10.8

  	
  Counterparts

  	
   

  
	
  10.9

  	
  Severability

  	
   

  
	
  10.10

  	
  Integration

  	
   

  
	
  10.11

  	
  GOVERNING LAW

  	
   

  
	
  10.12

  	
  Submission To Jurisdiction; Waivers

  	
   

  
	
  10.13

  	
  Acknowledgements

  	
   

  
	
  10.14

  	
  Releases of Guarantees and Liens

  	
   

  
	
  10.15

  	
  Confidentiality

  	
   

  
	
  10.16

  	
  WAIVERS OF JURY TRIAL

  	
   

  

 

iii

 

ANNEX:

 

SCHEDULES:

 

1.1A                                 Commitments

1.1B                                   Mortgaged
Property

1.1C                                   Excluded
Subsidiaries

4.2                                         No
Changes

4.4                                           Consents,
Authorizations, Filings and Notices

4.6                                           Litigation

4.9                                           Intellectual
Property

4.15                                     Subsidiaries

4.19(a)                       UCC Filing
Jurisdictions

4.19(b)                      Mortgage
Filing Jurisdictions

7.2(d)                            Existing
Indebtedness

7.3(f)                               Existing
Liens

7.7                                           Existing
Investments

7.9                                           Permitted
Affiliate Transactions

 

EXHIBITS:

 

A                                                Form of
Guarantee and Collateral Agreement

B                                                  Form of
Compliance Certificate

C                                                  Form of
Closing Certificate

D                                                 Form of
Assignment and Assumption

E                                                   Form of
Legal Opinion of O’Melveny & Myers LLP

F                                                   Form of
Exemption Certificate

G                                                  Form of
Solvency Certificate

H-1                                       Form of
New Lender Supplement

H-2                                       Form of
Incremental Facility Activation Notice

 

iv

 

AMENDED AND
RESTATED CREDIT AGREEMENT (this “Agreement”), dated as of September 3,
2003, among MQ ASSOCIATES, INC., a Delaware corporation (“Holdings”),
MEDQUEST, INC., a Delaware corporation (the “Borrower”), the several
banks and other financial institutions or entities from time to time parties to
this Agreement (the “Lenders”), JPMORGAN CHASE BANK, as syndication
agent (in such capacity, the “Syndication Agent”), GENERAL ELECTRIC
CAPITAL CORPORATION and WACHOVIA BANK, NATIONAL ASSOCIATION, as co-documentation
agents (in such capacities, the “Co-Documentation Agents”), and WACHOVIA
BANK, NATIONAL ASSOCIATION, as Administrative Agent (in such capacity, the “Administrative
Agent”).

 

W I  T
N  E  S  S  E  T  H:

 

WHEREAS,
Holdings, the Borrower, the lenders parties thereto (the “Existing Lenders”)
and the Administrative Agent are parties to a Credit Agreement, dated as of August 15,
2002 (the “Existing Credit Agreement”), as in effect immediately prior
to the Amendment Effective Date (as defined herein);

 

WHEREAS, Holdings
and the Borrower have requested that the Existing Credit Agreement be amended
and restated to provide for a term loan facility in the amount of $60,000,000
and as otherwise provided herein; and

 

NOW,
THEREFORE, Holdings, the Borrower, the Existing Lenders, the Tranche B Term
Lenders, the Administrative Agent, the Co-Documentation Agents and the
Syndication Agent agree that, subject to the conditions to effectiveness
hereof, the Existing Credit Agreement is amended and restated in its entirety
as follows:

 

SECTION 1.                                DEFINITIONS

 

1.1                                 Defined
Terms.  As used in this Agreement,
the terms listed in this Section 1.1 shall have the respective meanings
set forth in this Section 1.1.

 

“ABR”:  for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate
in effect on such day plus 1⁄2 of 1%.  For
purposes hereof:  “Prime Rate”
shall mean the rate of interest per annum publicly announced from time to time
by Wachovia Bank, National Association as its prime rate in effect at its
principal office in Charlotte, North Carolina, (the Prime Rate not being
intended to be the lowest rate of interest charged by Wachovia Bank, National
Association in connection with extensions of credit to debtors).  Any change in the ABR due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate or
the Federal Funds Effective Rate, respectively.

 

“ABR Loans”:  Loans the rate of interest applicable to
which is based upon the ABR.

 

“Accounting Matter”: as defined in the Third Amendment.

 

“Adjustment
Date”:  as defined in the Pricing
Grid.

 

“Administrative
Agent”:  Wachovia Bank, National
Association, together with its affiliates, as the administrative agent for the
Lenders under this Agreement and the other Loan Documents, together with any of
its successors.

 

 

“Affiliate”:  as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person.  For purposes
of this definition, “control” of a Person means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.

 

“Agents”:  the collective reference to the Syndication
Agent, the Co-Documentation Agents and the Administrative Agent.

 

“Aggregate
Exposure”:  with respect to any
Lender at any time, an amount equal to (a) prior to the Amendment
Effective Date, the aggregate amount of such Lender’s Revolving Commitments at
such time and (b) on the Amendment Effective Date and thereafter, the sum
of (i) the aggregate then unpaid principal amount of such Lender’s Term
Loans and (ii) the amount of such Lender’s Revolving Commitment then in
effect or, if the Revolving Commitments have been terminated, the amount of
such Lender’s Revolving Extensions of Credit then outstanding.

 

“Aggregate
Exposure Percentage”:  with respect
to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s
Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at
such time.

 

“Agreement”:  as defined in the preamble hereto.

 

“Amendment
Effective Date”:  the date on which
the conditions precedent set forth in Section 5.1 shall have been
satisfied or waived.

 

“Applicable
Margin”:  [(a)]  Subject to the terms set forth in the Third Amendment with respect
to “Applicable Margin”, with respect to Tranche B Term
Loans that are (i) ABR Loans, 2.75% per annum and (ii) Eurodollar
Loans, 3.75% per annum, (b) with respect to Revolving Loans and Swingline
Loans, the rates per annum determined pursuant to the Pricing Grid, and (c) with
respect to Incremental Term Loans, such per annum rates as shall be agreed to
by the Borrower and the applicable Incremental Term Lenders as shown in the
applicable Incremental Facility Activation Notice.

 

“Application”:  an application, in such form as the Issuing
Lender may specify from time to time, requesting the Issuing Lender to open a
Letter of Credit.

 

“Approved
Fund”:  as defined in Section 10.6(b).

 

“Asset Sale”:  any Disposition of property or series of
related Dispositions of property that yields Net Cash Proceeds to any Group
Member in excess of $150,000; provided that the following shall be
excluded from this definition: (i) any Disposition permitted by clause
(a), (b), (d) or (g) of Section 7.5; (ii) any Disposition
permitted by Section 7.5(c) except to the extent such Disposition
relates to Section 7.4(e); (iii) any Disposition of an Investment
permitted under Section 7.5(f) except to the extent such Disposition
relates to an Investment made pursuant to Section 7.7(i)(C) or
7.7(k); and (iv) any Disposition permitted by Section 7.5(h) to
the extent that any Net Cash Proceeds resulting from any such Disposition are
not received, directly or indirectly, by distribution, contribution or
otherwise, by a Loan Party.

 

“Assignee”:  as defined in Section 10.6(b).

 

“Assignment
and Assumption”:  an Assignment and
Assumption, substantially in the form of Exhibit D.

 

 

“August Stock Purchase Agreement”: 
that certain Securities Purchase Agreement dated as of September 6,
2005, by and among Holdings and MQ Investment Holdings II, LLC, and each of
their respective transferees, successors and assigns.

 

“Available
Revolving Commitment”:  as to any
Lender at any time, an amount equal to the excess, if any, of (a) such
Lender’s Revolving Commitment then in effect over (b) such Lender’s
Revolving Extensions of Credit then outstanding; provided, that in
calculating any Lender’s Revolving Extensions of Credit for the purpose of
determining such Lender’s Available Revolving Commitment pursuant to Section 2.8(a),
other than with respect to the Swingline Lender, the aggregate principal amount
of Swingline Loans then outstanding shall be deemed to be zero.

 

“Benefitted
Lender”:  as defined in Section 10.7(a).

 

“Board”:  the Board of Governors of the Federal Reserve
System of the United States (or any successor).

 

“Borrower”:  as defined in the preamble hereto.

 

“Borrowing
Date”:  any Business Day specified by
the Borrower as a date on which the Borrower requests the relevant Lenders to
make Loans hereunder.

 

“Business”:  as defined in Section 4.17(b).

 

“Business
Day”:  a day other than a Saturday,
Sunday or other day on which commercial banks in Charlotte are authorized or
required by law to close, provided, that with respect to notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Loans, such day is also a day for trading by and between banks in
Dollar deposits in the interbank eurodollar market.

 

“Capital
Expenditures”:  for any period, with
respect to any Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of
fixed or capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) that should be
capitalized under GAAP on a consolidated balance sheet of such Person and its
Subsidiaries.

 

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

 

“Capital
Stock”:  any and all shares,
interests, participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in a Person
(other than a corporation).

 

“Cash
Equivalents”:  (a) marketable
direct obligations issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within one year from the
date of acquisition; (b) certificates of deposit, time deposits,
eurodollar time deposits or overnight bank deposits having maturities of six
months or less from the date of acquisition issued by any Lender or by any
commercial bank organized under the laws of the United States or any state
thereof having combined capital and

 

 

surplus of not
less than $500,000,000; (c) commercial paper of an issuer rated at least A-1
by Standard & Poor’s Ratings Services (“S&P”) or P-1 by
Moody’s Investors Service, Inc. (“Moody’s”), or carrying an
equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of commercial paper issuers
generally, and maturing within six months from the date of acquisition; (d) repurchase
obligations of any Lender or of any commercial bank satisfying the requirements
of clause (b) of this definition, having a term of not more than six
months, with respect to securities issued or fully guaranteed or insured by the
United States government; (e) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody’s; (f) securities with
maturities of six months or less from the date of acquisition backed by standby
letters of credit issued by any Lender or any commercial bank satisfying the
requirements of clause (b) of this definition; (g) money market
mutual or similar funds that invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition; or (h) money
market funds that (i) comply with the criteria set forth in SEC Rule 2a-7
under the Investment Company Act of 1940, as amended, (ii) are rated AAA
by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least
$5,000,000,000.

 

“Catch-Up
Payments”: with respect to any issue of Specified Holdings Securities, the
payment in cash of all or any portion of the accrued and unpaid interest
(including, if necessary, capitalized interest and pay-in-kind interest) and
original issue discount on such Specified Holdings Securities (with such
accrued and unpaid interest and original issue discount calculated to the end
of the first accrual period following the fifth anniversary of the date of
issue thereof) in excess of the Maximum Accrual with respect thereto, if such a
payment is required or permitted to be made pursuant to the terms of such
Specified Holdings Securities which amount shall not be less than the minimum
amount necessary to ensure that such Specified Holdings Securities are not
issued with “significant original issue discount” with the meaning of Section 163(i)(2) of
the Code.

 

“Certificate
of Need Regulations”:  regulations
issued by any Governmental Authority requiring a service provider to
demonstrate the need for such services in the local area prior to operating
such services.

 

“CHAMPUS”:  collectively, the Civilian Health and Medical
Program of the Uniformed Service and Tricare, a program of medical benefits
covering former and active members of the uniformed services and certain of
their dependents, financed and administered by the United States Departments of
Defense, Health and Human Services and Transportation, and all laws, rules,
regulations, manuals, order, guidelines or requirements pertaining to such
program including (a) all federal statutes (whether set forth in 10 U.S.C.
§§ 1071-1106 or elsewhere) affecting such program; and (b) all rules,
regulations (include 32 C.F.R. § 199), manuals, orders and administrative,
reimbursement and other guidelines of all Governmental Authorities promulgated
in connection with such program (whether or not having the force of law), in
each case as the same may be amended.

 

“CLO”:  as defined in Section 10.6(b).

 

“Closing
Agent”:  JPMorgan Chase Bank,
together with its affiliates (including, without limitation, J.P. Morgan
Securities Inc.), as the closing agent.

 

“CMS”:  the Centers for Medicare and Medicaid
Services, formerly known as the Health Care Financing Administration, the
entity within the United States Department of Health and Human

 

 

Services responsible for administering the Medicare program and the
federal aspects of the Medicaid programs, directly and through its fiscal
intermediaries and agents, and any successor entities.

 

“Code”:  the Internal Revenue Code of 1986, as amended
from time to time.

 

“Co-Documentation
Agents”:  as defined in the preamble
hereto.

 

“Collateral”:  all property of the Loan Parties, now owned
or hereafter acquired, upon which a Lien is purported to be created by any
Security Document.

 

“Commitment”:  as to any Lender, the sum of the Tranche B
Term Commitment, any Incremental Term Commitments and the Revolving Commitment
of such Lender.

 

“Commitment
Fee Rate”:  the rate per annum
determined pursuant to the Pricing Grid.

 

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

 

“Compliance
Certificate”:  a certificate duly
executed by a Responsible Officer substantially in the form of Exhibit B.

 

“Conduit
Lender”: any special purpose corporation organized and administered by any
Lender for the purpose of making Loans otherwise required to be made by such
Lender and designated by such Lender in a written instrument; provided,
that the designation by any Lender of a Conduit Lender shall not relieve the
designating Lender of any of its obligations to fund a Loan under this
Agreement if, for any reason, its Conduit Lender fails to fund any such Loan,
and the designating Lender (and not the Conduit Lender) shall have the sole
right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender (including,
without limitation, all consents and waivers under Section 10.1), and provided,
further, that no Conduit Lender shall (a) be entitled to receive
any greater amount pursuant to Section 2.18, 2.19, 2.20 or 10.5 than the
designating Lender would have been entitled to receive in respect of the
extensions of credit made by such Conduit Lender (it being understood that the
designating Lender shall not be entitled to any such amount) or (b) be
deemed to have any Revolving Commitment.

 

“Consolidated
Current Assets”:  at any date, all
amounts (other than cash and Cash Equivalents) that would, in conformity with
GAAP, be set forth opposite the caption “total current assets” (or any like
caption) on a consolidated balance sheet of the Borrower and its Subsidiaries
at such date.

 

“Consolidated
Current Liabilities”:  at any date,
all amounts that would, in conformity with GAAP, be set forth opposite the
caption “total current liabilities” (or any like caption) on a consolidated
balance sheet of the Borrower and its Subsidiaries at such date, but excluding (a) the
current portion of any Funded Debt of the Borrower and its Subsidiaries and (b) without
duplication of clause (a) above, all Indebtedness consisting of Revolving
Loans or Swingline Loans to the extent otherwise included therein.

 

“Consolidated
EBITDA”:  for any period,
Consolidated Net Income for such period plus, without duplication and to
the extent reflected as a charge in the statement of such Consolidated Net
Income for such period, the sum of (a) income tax expense, (b) interest
expense, amortization or writeoff of debt discount and debt issuance costs and
all commissions, discounts and other fees and charges associated with
Indebtedness (including the Loans, letters of credit, bankers’ acceptance
financing), and

 

 

net costs under Swap Agreements, (c) depreciation and amortization
expense, (d) amortization or write-off of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any non-cash expenses or
losses, (f) any non-cash expenses or charges resulting from the grant of
stock options, equity or profit related employment incentives, (g) any
extraordinary, unusual or non-recurring cash expenses or losses, which,
together with any cash payments made during such period in respect of items
reflected as extraordinary, unusual or non-recurring non-cash expenses or
losses in the statement of Consolidated Net Income in a prior period, shall not
exceed an aggregate amount of $2,000,000 in any fiscal year, and ([i]h) Excluded Charges and minus, (a) to
the extent included in the statement of such Consolidated Net Income for such
period, the sum of (i) interest income, (ii) any extraordinary,
unusual or non-recurring non-cash income or gains (including, whether or not
otherwise includable as a separate item in the statement of such Consolidated
Net Income for such period, gains on the sales of assets outside of the
ordinary course of business) and (iii) any other non-cash income and (b) any
cash payments made during such period in respect of items reflected as
extraordinary, unusual or non-recurring non-cash expenses or losses in the
statement of Consolidated Net Income in a prior period to the extent such
non-cash expense or loss was previously included in the calculation of
Consolidated EBITDA and is in excess of the limitation set forth in clause ([h]g) above, all as determined on a consolidated
basis.  For the purposes of calculating
Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a
“Reference Period”) pursuant to any determination of the Consolidated
Leverage Ratio or the Consolidated Senior Leverage Ratio, (i) if at any
time during such Reference Period the Borrower or any Subsidiary shall have
made any Material Disposition, the Consolidated EBITDA for such Reference
Period shall, after giving Pro Forma Effect thereto, be reduced by an amount
equal to the Consolidated EBITDA (if positive) attributable to the property
that is the subject of such Material Disposition for such Reference Period or
increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Reference Period, in each case, to the same
extent that the Indebtedness attributable to such property was deducted from
Consolidated Total Debt in the determination of the Consolidated Leverage Ratio
or the Consolidated Senior Leverage Ratio, and (ii) if during such
Reference Period the Borrower or any Subsidiary shall have made a Material
Acquisition, Consolidated EBITDA for such Reference Period shall be calculated
after giving Pro Forma Effect thereto. 
As used in this definition, “Material Acquisition” means any acquisition
of property or series of related acquisitions of property that (a) constitutes
assets comprising all or substantially all of an operating unit of a business
or constitutes all or substantially all of the common stock of a Person and (b) involves
the payment of consideration by the Borrower and its Subsidiaries in excess of
$300,000; and “Material Disposition” means any Disposition of property or
series of related Dispositions of property that yields total consideration to
the Borrower or any of its Subsidiaries in excess of $300,000.

 

“Consolidated
EBITDAR”:  for any period,
Consolidated EBITDA plus, without duplication, Consolidated Lease
Expense for such period.

 

“Consolidated
Fixed Charge Coverage Ratio”:  for
any period, the ratio of (a) Consolidated EBITDAR for such period to (b) Consolidated
Fixed Charges for such period.

 

“Consolidated
Fixed Charges”:  for any period, the
sum (without duplication) of (a) Consolidated Interest Expense for such
period, (b) Consolidated Lease Expense for such period (c) income tax
expenses for the Borrower and its Subsidiaries for such period paid in cash, (d) scheduled
payments made during such period on account of principal of Indebtedness of the
Borrower or any of its Subsidiaries, [and ](e) the aggregate (without duplication)
of all Restricted Payments made by the Borrower or any of its Subsidiaries
during such period pursuant to [Sections]Section 7.6(h)(i) and 7.6(h)(ii), and (f) De Novo Capital
Expenditures.

 

“Consolidated
Holdings Total Debt”: at any date, the aggregate principal amount of all
Indebtedness, without duplication, of Holdings and its Subsidiaries at such
date, determined on a

 

 

consolidated
basis in accordance with GAAP, but excluding Indebtedness of the type described
in clause (f) of the definition thereof and, to the extent relating to
such clause (f), the types described in clauses (h) and (i) of the
definition thereof, unless such Indebtedness has been fully liquidated and is
no longer a contingent obligation.

 

“Consolidated
Interest Expense”:  for any period, (a) total
cash interest expense (including that attributable to Capital Lease
Obligations) of the Borrower and its Subsidiaries for such period with respect
to all outstanding Indebtedness of the Borrower and its Subsidiaries (including
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers’ acceptance financing and net costs under Swap
Agreements in respect of interest rates to the extent such net costs are
allocable to such period in accordance with GAAP) minus (b) total
cash interest income of the Borrower and its Subsidiaries for such period.

 

“Consolidated
Lease Expense”:  for any period, (a) the
aggregate amount of fixed and contingent rentals payable in cash by the
Borrower and its Subsidiaries for such period with respect to operating leases
of real and personal property, determined on a consolidated basis in accordance
with GAAP minus (b) the aggregate amount of rental income under leases
of real and personal property, determined on a consolidated basis in accordance
with GAAP.

 

“Consolidated
Leverage Ratio”:  as at the last day
of any period of four consecutive fiscal quarters, the ratio of (a) Consolidated
Total Debt on such day to (b) Consolidated EBITDA for such period.

 

“Consolidated
Net Income”:  for any period, the
consolidated net income (or loss) of the Borrower and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP; provided
that there shall be excluded (a) the income (or deficit) of any Person
accrued prior to the date it becomes a Subsidiary of the Borrower or is merged
into or consolidated with the Borrower or any of its Subsidiaries, (b) the
income (or deficit) of any Person (other than a Subsidiary of the Borrower) in
which the Borrower or any of its Subsidiaries has an ownership interest, except
to the extent that any such income is actually received by the Borrower or such
Subsidiary in the form of dividends or similar distributions and (c) the undistributed
earnings of any Subsidiary of the Borrower to the extent that the declaration
or payment of dividends or similar distributions by such Subsidiary is not at
the time permitted by the terms of any Contractual Obligation (other than under
any Loan Document) or Requirement of Law applicable to such Subsidiary.

 

“Consolidated
Senior Debt”:  all Consolidated Total
Debt other than the Senior Subordinated Notes and other subordinated debt.

 

“Consolidated
Senior Leverage Ratio”:  as of the
last day of any period of four consecutive fiscal quarters, the ratio of (a) Consolidated
Senior Debt on such day to (b) Consolidated EBITDA for such period.

 

“Consolidated
Total Debt”:  at any date, the
aggregate principal amount of all Indebtedness, without duplication, of the
Borrower and its Subsidiaries at such date, determined on a consolidated basis
in accordance with GAAP, but excluding Indebtedness of the type described in
clause (f) of the definition thereof and, to the extent relating to such
clause (f), the types described in clauses (h) and (i) of the
definition thereof, unless such Indebtedness has been fully liquidated and is
no longer a contingent obligation.

 

“Consolidated
Working Capital”:  at any date, the
excess of Consolidated Current Assets on such date over Consolidated
Current Liabilities on such date.

 

 

“Continuing
Directors”:  the directors of
Holdings on the Original Closing Date, and each other director, if, in each
case, such other director either (i) was nominated or recommended for
election or appointed to the board of directors of Holdings by a majority of
the then Continuing Directors or by the Permitted Investors, (ii) receives
the vote of the Permitted Investors in his or her election by the shareholders
of Holdings, or (iii) was nominated or elected pursuant to the terms of
the Stockholders Agreement.

 

“Contractual
Obligation”:  as to any Person, any
provision of any security issued by such Person or of any material agreement,
instrument or other legally binding undertaking to which such Person is a party
or by which it or any of its property is bound.

 

“Control
Investment Affiliate”:  as to any
Person, any other Person (including, without limitation, any fund or investment
vehicle) that (a) directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person and (b) is organized by
such Person primarily for the purpose of making equity or debt investments in
one or more companies.  For purposes of
this definition, “control” of a Person means the power, directly or indirectly,
to direct or cause the direction of the management and policies of such Person
whether by contract or otherwise or acts as investment advisor or manager.

 

“Copyrights”:  as defined in the Guarantee and Collateral
Agreement.

 

“Default”:  any of the events specified in Section 8,
whether or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.

 

“Defaulting
Lender”:  at any time, any Lender
that, at such time, has failed to make a Loan required to be made by such
Lender pursuant to the terms of this Agreement.

 

“De Novo Capital Expenditures”: for any
period, with respect to any Person, the aggregate of all expenditures by such
Person and its Subsidiaries for the acquisition of a De Novo Facility that
should be capitalized under GAAP on a consolidated balance sheet of such Person
and its Subsidiaries, but excluding the principal amount of Funded Debt (other
than Funded Debt incurred hereunder) incurred in connection with such
expenditures and any such expenditures to the extent financed with the proceeds
of any Reinvestment Deferred Amount or the issuance of equity.

 

“De Novo Facility”:  as of any time of determination, any Health
Care Facility that has been acquired (solely to the extent relating to a new
construction or development), developed or constructed by, or on behalf of, any
Group Member, unless such facility is of a
comparable size to and within 10 miles from an existing facility in the process
of closing and being replaced by such acquired, developed or constructed
facility.

 

“Disposition”:  with respect to any property, any sale,
lease, sale and leaseback, assignment, conveyance, transfer or other
disposition thereof.  The terms “Dispose”
and “Disposed of” shall have correlative meanings.

 

“Disqualified
Capital Stock”:  any Capital Stock
that is not Qualified Capital Stock.

 

“Dollars”
and “$”:  dollars in lawful
currency of the United States.

 

“Domestic
Subsidiary”:  any Subsidiary of the
Borrower organized under the laws of any jurisdiction within the United States.

 

 

“Environmental
Laws”:  any and all foreign, Federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, lawful requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating, relating to or
imposing liability or standards of conduct concerning protection of human
health from environmental or workplace hazards or the protection of the
environment, as now or may at any time hereafter be in effect.

 

“ERISA”:  the Employee Retirement Income Security Act
of 1974, as amended from time to time.

 

“Eurocurrency
Reserve Requirements”:  for any day
as applied to a Eurodollar Loan, the aggregate (without duplication) of the
maximum rates (expressed as a decimal fraction) of reserve requirements in
effect on such day (including basic, supplemental, marginal and emergency
reserves) under any regulations of the Board or other Governmental Authority
having jurisdiction with respect thereto dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board) maintained by a member bank of the
Federal Reserve System.

 

“Eurodollar
Base Rate”:  with respect to each day
during each Interest Period pertaining to a Eurodollar Loan, the rate per annum
determined on the basis of the rate for deposits in Dollars for a period equal
to such Interest Period commencing on the first day of such Interest Period
appearing on Page 3750 of the Telerate screen as of 11:00 A.M.,
London time, two Business Days prior to the beginning of such Interest
Period.  In the event that such rate does
not appear on Page 3750 of the Telerate screen (or otherwise on such
screen), the “Eurodollar Base Rate” shall be determined by reference to
such other comparable publicly available service for displaying eurodollar
rates as may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 11:00 A.M., Charlotte time, two
Business Days prior to the beginning of such Interest Period in the interbank
eurodollar market where its eurodollar and foreign currency and exchange
operations are then being conducted for delivery on the first day of such
Interest Period for the number of days comprised therein.

 

“Eurodollar
Loans”:  Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.

 

“Eurodollar
Rate”:  with respect to each day during
each Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula (rounded
upward to the nearest 1/100th of 1%):

 

	
  Eurodollar Base Rate

  
	
  1.00 -
  Eurocurrency Reserve Requirements

  

 

“Eurodollar
Tranche”:  the collective reference
to Eurodollar Loans having Interest Periods which begin on the same date and
end on the same later date (whether or not such Loans shall originally have
been made on the same day).

 

“Event of
Default”:  any of the events
specified in Section 8, provided that any requirement for the
giving of notice, the lapse of time, or both, has been satisfied.

 

“Excess
Cash Flow”:  for any fiscal year of
the Borrower, the excess, if any, of (a) the sum, without duplication, of (i) Consolidated
Net Income for such fiscal year, (ii) the amount of all non-cash charges
(including depreciation and amortization) deducted in arriving at such
Consolidated Net Income, (iii) any decrease in Consolidated Working
Capital for such fiscal year, (iv) the aggregate net

 

 

amount of non-cash loss on the
Disposition of property by the Borrower and its Subsidiaries during such fiscal
year (other than sales of inventory in the ordinary course of business), to the
extent deducted in arriving at such Consolidated Net Income, and (v) the amount
of all income tax expense, interest expense, amortization or writeoff of debt
discount and debt issuance costs and all commissions, discounts and other fees
and charges associated with Indebtedness (including the Loans, letters of
credit, bankers’ acceptance financing), and net costs under Swap Agreements, in
each case to the extent deducted in arriving at such Consolidated Net Income, over
(b) the sum, without duplication, of (i) the amount of all non-cash credits,
income and gains included in arriving at such Consolidated Net Income, (ii) the
aggregate amount actually paid by the Borrower and its Subsidiaries in cash
during such fiscal year on account of Capital Expenditures (excluding the
principal amount of Funded Debt (other than Funded Debt hereunder) incurred in
connection with such expenditures and any such expenditures financed with the
proceeds of any Reinvestment Deferred Amount or issuance of equity), (iii) the
aggregate amount actually paid by the Borrower and its Subsidiaries in cash
during such fiscal year on account of Permitted Acquisitions in such fiscal
year (as such sum shall be reduced by the principal amount of Funded Debt
(other than Funded Debt hereunder) incurred in connection with such Permitted
Acquisitions and any such expenditures for such Permitted Acquisitions financed
with the proceeds of any Reinvestment Deferred Amount or issuance of equity),
(iv) (x) the aggregate amount of all prepayments of Revolving Loans and
Swingline Loans during such fiscal year to the extent of accompanying permanent
optional reductions of the Revolving Commitments and all optional prepayments
of the Term Loans (together with any prepayment fees accompanying such
prepayments) during such fiscal year, in each such case, divided by (y) the
Prepayment Percentage, (v) the aggregate proceeds of Asset Sales and Recovery
Events during such fiscal year, but only to the extent that such Asset Sales
and Recovery Events increased Consolidated Net Income during such fiscal year,
(vi) the aggregate amount of all regularly scheduled principal payments of
Funded Debt (including the Term Loans and Funded Debt incurred to finance
Capital Expenditures and Permitted Acquisitions) of the Borrower and its
Subsidiaries made during such fiscal year (other than in respect of any
revolving credit facility to the extent there is not an equivalent permanent
reduction in commitments thereunder), (vii) any increase in Consolidated
Working Capital for such fiscal year, (viii) any cash payments made during such
period in respect of items described in clauses (a)(ii) and (a)(iv) above
subsequent to the fiscal quarter in which such relevant non-cash expenses or
losses were reflected as a charge in the statement of Consolidated Net Income,
(ix) the aggregate net amount of non-cash gain on the Disposition of property
by the Borrower and its Subsidiaries during such fiscal year (other than sales
of inventory in the ordinary course of business), to the extent included in
arriving at such Consolidated Net Income, (x) the aggregate amount actually
paid by the Borrower and its Subsidiaries in cash during such fiscal year on
account of income tax expense, interest expense and all commissions, discounts
and other fees and charges associated with Indebtedness (including the Loans,
letters of credit, bankers’ acceptance financing), and net costs under Swap
Agreements, [and ](xi) the aggregate amount of dividends and other
distributions actually paid by the Borrower and its Subsidiaries (without
duplication) in cash during such period to Holdings in accordance with Section
7.6(h) , and (xii)
solely to the extent not deducted in determining Consolidated Net Income, the
aggregate amount actually paid by the Borrower and its Subsidiaries in cash
during such period in respect of fees, costs and expenses actually incurred in
connection with the restatement of the financial statements of Holdings and its
Subsidiaries arising out of or in connection with the Accounting Matter and the
Other Accounting Matter, including, without limitation, fees, costs and
expenses incurred in connection with the Third Amendment and each of the
waivers and other modifications to this Agreement granted by the Administrative
Agent and the Lenders during fiscal year 2005, and the amendments to other
Indebtedness of the Borrower and Holdings effected in connection with the Third
Amendment, in each case without duplication.

 

“Excess
Cash Flow Application Date”:  as
defined in Section 2.11(c).

 

 

“Excluded
Charges”:  without duplication, all (i) transaction
fees, costs and expenses incurred in connection with the Recapitalization
Transactions[ and], (ii) with respect to any Permitted
Acquisition or any Disposition of assets outside of the ordinary course of
business permitted by Section 7.5, all adjustments (including, without
limitation, operating and expense reductions and other synergistic benefits) as
would be permitted pursuant to Regulation S-X under the Securities Act of 1933,
as amended, (iii) the aggregate
amount of fees, costs and expenses actually incurred in connection with the
restatement of the financial statements of Holdings and its Subsidiaries
arising out of or in connection with the Accounting Matter and the Other
Accounting Matter , including, without limitation, fees, costs and expenses
incurred in connection with the Third Amendment and each of the waivers and
other modifications to this Agreement granted by the Administrative Agent and
the Lenders during fiscal year 2005, and the amendments to other Indebtedness
of the Borrower and Holdings effected in connection with the Third Amendment,
in each case without duplication and (iv) non-recurrent charges in respect
of terminating and replacement management.

 

“Excluded
Foreign Subsidiary”:  (i) any
Foreign Subsidiary designated as such on Schedule 4.15 in respect of which
either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such Subsidiary of the Obligations,
would, in the good faith judgment of the Borrower, result in material adverse
tax consequences to the Borrower, and (ii) any Subsidiary of an Excluded
Foreign Subsidiary as designated on Schedule 4.15.

 

“Existing
Credit Agreement”:  as defined in the
recitals. hereto.

 

“Existing
Lenders”:  as defined in the recitals
hereto.

 

“Facility”:  each of (a) the aggregate Tranche B Term
Commitments of all Lenders and the Tranche B Term Loans made thereunder (the “Tranche
B Term Facility”), (b) the aggregate Incremental Term Loan Commitments
of all Lenders having the same Incremental Term Facility Closing Date and the
Incremental Term Loans made thereunder (each, an “Incremental Term Loan
Facility”) and (c) the Total Revolving Commitments and the Revolving
Extensions of Credit made thereunder (the “Revolving Facility”).

 

“Federal
Funds Effective Rate”:  for any day,
the weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for the day of such transactions received by
Wachovia Bank from three federal funds brokers of recognized standing selected
by it.

 

“Fee
Payment Date”:  (a) the last day
of each March, June, September and December and (b) the last day
of the Revolving Commitment Period.

 

“First
Amendment”: the First Amendment to Amended and Restated Credit Agreement,
dated as of August 16, 2004, among Holdings, the Borrower, the Lenders
party thereto and the Administrative Agent.

 

“Foreign
Subsidiary”:  any Subsidiary of the
Borrower that is not a Domestic Subsidiary.

 

“Funded
Debt”:  as to any Person, without
duplication, all Indebtedness of such Person that matures more than one year
from the date of its creation or arises under a revolving credit or similar
agreement that obligates the lender or lenders to extend credit during a period
of more than one year from such date and, in the case of the Borrower,
Indebtedness in respect of the Loans.

 

 

“Funding
Office”:  the office of the
Administrative Agent specified in Section 10.2 or such other office as may
be specified from time to time by the Administrative Agent as its funding
office by written notice to the Borrower and the Lenders.

 

“GAAP”:  generally accepted accounting principles in
the United States as in effect from time to time, except that for purposes of Section 7.1,
GAAP shall be determined on the basis of such principles in effect on the date
hereof and consistent with those used in the preparation of the most recent
audited financial statements referred to in Section 4.1(b).  In the event that any “Accounting Change” (as
defined below) shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement, then
the Borrower and the Administrative Agent agree to enter into negotiations in
order to amend such provisions of this Agreement so as to reflect equitably
such Accounting Changes with the desired result that the criteria for
evaluating the Borrower’s financial condition shall be the same after such
Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall
have been executed and delivered by the Borrower, the Administrative Agent and
the Required Lenders, all financial covenants, standards and terms in this
Agreement shall continue to be calculated or construed as if such Accounting
Changes had not occurred.  “Accounting
Changes” refers to changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants or, if applicable, the SEC.

 

“Governmental
Authority”:  any nation or
government, any state or other political subdivision thereof, any agency,
authority, instrumentality, regulatory body, court or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, and, with respect to any Lender,
including any central bank, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).

 

“Group Members”:  the collective reference to Holdings, the
Borrower and their respective Subsidiaries, other than those Subsidiaries
listed on Schedule 1.1C.

 

“Guarantee
and Collateral Agreement”:  the
Guarantee and Collateral Agreement dated as of August 15, 2002, as
executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor,
substantially in the form of Exhibit A.

 

“Guarantee
Obligation”:  as to any Person (the “guaranteeing
person”), without duplication, any obligation of the guaranteeing person
guaranteeing or in effect guaranteeing (including through reimbursement,
counterindemnity or similar obligation) any Indebtedness, leases, dividends or
other obligations (the “primary obligations”) of any other third Person
(the “primary obligor”), including any issuing bank under any letter of
credit, in any manner, whether directly or indirectly, including any obligation
of the guaranteeing person, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or
hold harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation
shall not include endorsements of instruments for deposit or collection in the
ordinary course of business.  The amount
of any Guarantee Obligation of any guaranteeing person shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made unless such primary
obligation for which such guaranteeing person may be liable are not stated or

 

 

determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person’s maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.

 

“Guarantors”:  the collective reference to Holdings and the
Subsidiary Guarantors.

 

“Health
Care Facility”:  any facility,
whether licensed as a skilled nursing facility, intermediate care facility,
personal care facility, out-patient clinic, diagnostic center or hospital
(including, without limitation, any long-term acute care hospital) which
provides any level of medical care, diagnostic or rehabilitative services or
any products or services reasonably related thereto.

 

“Health Care
Permits”:  any and all licenses,
provisional licenses, JCAHO and/or other accreditations, franchising rights to
conduct business, approvals by a Governmental Authority, authorizations,
certificates of need, consents, qualifications, operating authority, and/or any
other permit that is related to the provision of health care services required
by any applicable Governmental Authority or otherwise necessary for any Group
Member to operate its business or to own, lease, operate or manage a Health
Care Facility of any Group Member.

 

“HIPAA”:  the Health Insurance Portability and
Accountability Act of 1996, as the same may be amended, modified or
supplemented from time to time, and any successor statute thereto, and any and
all rules or regulations promulgated from time to time thereunder.

 

“Holdings”:  as defined in the preamble hereto.

 

“Holdings Consolidated
Leverage Ratio”: as at the last day of any period of four consecutive
fiscal quarters, the ratio of (a) Consolidated Holdings Total Debt on such
day to (b) Consolidated EBITDA for such period.

 

“Incremental
Facility Activation Notice”:  a
notice substantially in the form of Exhibit H-2.

 

“Incremental
Facility Closing Date”:  any Business
Day designated as such in an Incremental Facility Activation Notice.

 

“Incremental
Term Commitment”:  as to any Lender,
the obligation of such Lender, if any, to make an Incremental Term Loan to the
Borrower hereunder in a principal amount not to exceed the amount set forth in
the applicable Incremental Facility Activation Notice.

 

“Incremental
Term Lender”:  (a) on any
Incremental Facility Closing Date relating to Incremental Term Loans, the
Lenders signatories to the relevant Incremental Facility Activation Notice and (b) thereafter,
each Lender that is a holder of an Incremental Term Loan.

 

“Incremental
Term Loan”:  as defined in Section 2.1(a).

 

“Incremental
Term Maturity Date”:  with respect to
the Incremental Term Loans to be made pursuant to any Incremental Facility
Activation Notice, the maturity date specified in such Incremental Facility
Activation Notice, which date shall be on or after the Tranche B Term Maturity
Date.

 

“Incremental
Term Percentage”:  as to any Lender
in respect of any Incremental Term Loan Facility, the percentage which the
aggregate principal amount of such Lender’s Incremental Term Loans under such
Facility then outstanding constitutes of the aggregate principal amount of the
Incremental Term Loans then outstanding under such Facility.

 

 

“Indebtedness”:  of any Person at any date, without duplication,
(a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services (other than trade payables and other current liabilities incurred in
the ordinary course of such Person’s business and contingent purchase price
adjustments), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (e) all Capital
Lease Obligations of such Person, (f) all obligations of such Person,
contingent or otherwise, as an account party or applicant under or in respect
of acceptances, letters of credit, surety bonds or similar arrangements, (g) the
liquidation value of all Disqualified Capital Stock of such Person, (h) all
Guarantee Obligations of such Person in respect of obligations of the kind
referred to in clauses (a) through (g) above, (i) all
obligations of the kind referred to in clauses (a) through (h) above
secured by (or for which the holder of such obligation has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including
accounts and contract rights) owned by such Person, whether or not such Person
has assumed or become liable for the payment of such obligation, and (j) for
the purposes of Section 8(e) only, all obligations of such Person in
respect of Swap Agreements.  The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness expressly provide that such Person is not liable
therefor.

 

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

 

“Insolvent”:  pertaining to a condition of Insolvency.

 

“Intellectual
Property”:  the collective reference to
all rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all
rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.

 

“Interest
Payment Date”:  (a) as to any
ABR Loan, the last day of each March, June, September and December to
occur while such Loan is outstanding and the final maturity date of such Loan, (b) as
to any Eurodollar Loan having an Interest Period of three months or less, the
last day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day that is three months, or a
whole multiple thereof, after the first day of such Interest Period and the
last day of such Interest Period and (d) as to any Loan (other than any
Revolving Loan that is an ABR Loan and any Swingline Loan), the date of any
repayment or prepayment made in respect thereof.

 

“Interest
Period”:  as to any Eurodollar Loan, (a) initially,
the period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not later than 11:00 A.M., Charlotte time, on the
date that is three Business Days prior to the last day of the then current
Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:

 

 

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

 

(ii)                                  the Borrower may not
select an Interest Period under a particular Facility that would extend beyond
the Revolving Termination Date or beyond the date final payment is due on the
Term Loans, as the case may be; and

 

(iii)                               any Interest Period that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a calendar month.

 

“Investments”:  as defined in Section 7.7.

 

“Issuing
Lender”:  Wachovia Bank, National
Association or any affiliate thereof, in its capacity as issuer of any Letter
of Credit.

 

“JCAHO”:   the Joint Commission on Accreditation of
Healthcare Organizations.

 

“Joint
Venture”:  as to any Person, any
other Person or any arrangement in which such Person has any direct or indirect
interest and that is not a Subsidiary of such Person.

 

“Junior
Capital”:  any Qualified Capital
Stock of the Borrower or Holdings and any subordinated Indebtedness of Holdings
or the Borrower that has a final maturity date at least 180 days after the
later of the Tranche B Term Maturity Date and the latest Incremental Term Maturity
Date and no payments in cash of principal or interest thereon (other than in
the circumstances described in the proviso of the definition of Qualified
Capital Stock) prior to the later of the Tranche B Term Maturity Date and the
latest Incremental Term Maturity Date issued to, or placed by, the Sponsor or
its Control Investment Affiliates.

 

“L/C
Commitment”:  $5,000,000.

 

“L/C
Obligations”:  at any time, an amount
equal to the sum of (a) the aggregate then undrawn and unexpired amount of
the then outstanding Letters of Credit and (b) the aggregate amount of
drawings under Letters of Credit that have not then been reimbursed pursuant to
Section 3.5.

 

“L/C
Participants”:  the collective
reference to all the Revolving Lenders other than the Issuing Lender.

 

“Lenders”:  as defined in the preamble hereto; provided,
that unless the context otherwise requires, each reference herein to the
Lenders shall be deemed to include any Conduit Lender.

 

“Letters of
Credit”:  as defined in Section 3.1(a).

 

“Lien”:  any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), charge
or other security interest or other security agreement of any kind or nature
whatsoever (including any conditional sale or other title retention agreement
and any capital lease having substantially the same economic effect as any of
the foregoing).

 

“Loan”:  any loan made by any Lender pursuant to this
Agreement.

 

 

“Loan
Documents”:  this Agreement, the
Security Documents, the Notes and any other document related thereto to which a
Loan Party is party which expressly provides that such document is a Loan
Document hereunder.

 

“Loan
Parties”:  Each Group Member other
than the Excluded Foreign Subsidiaries.

 

“Majority
Facility Lenders”:  with respect to
any Facility, the holders of more than 50% of the aggregate unpaid principal
amount of the Term Loans or the Total Revolving Extensions of Credit, as the
case may be, outstanding under such Facility (or, in the case of the Revolving
Facility, prior to any termination of the Revolving Commitments, the holders of
more than 50% of the Total Revolving Commitments then in effect); provided,
however, that if any Lender shall be a Defaulting Lender at such time,
then there shall be excluded from the determination of the Majority Facility
Lenders such Defaulting Lender’s Term Loans then outstanding and such
Defaulting Lender’s Revolving Commitments, or after termination of the Total
Revolving Commitments, the Revolving Extensions of Credit of such Defaulting
Lender then outstanding.

 

“Material
Adverse Effect”:  a material adverse
effect on (a) the business, property, operations or condition (financial
or otherwise) of the Borrower and its Subsidiaries taken as a whole or (b) the
validity or enforceability of this Agreement or any of the other Loan Documents
or the rights or remedies of the Administrative Agent or the Lenders hereunder
or thereunder.

 

“Materials
of Environmental Concern”:  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 Law, including
asbestos and polychlorinated biphenyls.

 

“Maximum
Accrual”: with respect to any issue of Specified Holdings Securities, an
amount equal to the product of (i) the initial issue price (as defined in
Sections 1273(b) and 1274(a) of the Code) of such Specified Holdings
Securities and (ii) the yield to maturity (interpreted in accordance with Section 163(i) of
the Code) of such Specified Holdings Securities.

 

“Medicaid”:  collectively, the healthcare assistance
program established by Title XIX of the Social Security Act (42 U.S.C. §§1396
et seq.) and any statutes succeeding thereto, and all laws, rules, regulations,
manuals, orders, guidelines or requirements pertaining to such program
including (a) all federal statutes (whether set forth in Title XIX of the
Social Security Act or elsewhere) regulating such program; (b) all state
statutes, regulations and plans for medical assistance enacted in connection
with such program and federal rules and regulations promulgated in
connection with such program; and (c) all applicable provisions of all
rules, regulations, manuals, orders and administrative, reimbursement, guidelines
and requirements of all Governmental Authorities promulgated in connection with
such program (whether or not having the force of law), in each case as the same
may be amended, supplemented or otherwise modified from time to time.

 

“Medicaid
Provider Agreement”:  an agreement
entered into between a Health Care Facility, supplier or physician and CMS or
any federal or state agency or other entity administering Medicaid in such
state, or any other grant of authority by CMS or any federal or state agency or
other entity administering Medicaid in such state, under which the Health Care
Facility, supplier or physician is authorized to provide medical goods and
services to Medicaid recipients and to be reimbursed by Medicaid for such goods
and services.

 

“Medicare”:  collectively, the health insurance program
for the aged and disabled established by Title XVIII of the Social Security Act
(42 U.S.C. §§ 1395 et seq.) and any statutes

 

 

succeeding
thereto, and all laws, rules, regulations, manuals, orders or guidelines
pertaining to such program including (a) all federal statutes (whether set
forth in Title XVIII of the Social Security Act or elsewhere) regulating such
program; and (b) all applicable provisions of all rules, regulations,
manuals, orders and administrative, reimbursement, guidelines and requirements
of all Governmental Authorities promulgated in connection with such program
(whether or not having the force of law), in each case as the same may be
amended, supplemented or otherwise modified from time to time.

 

“Medicare
Provider Agreement”:  an agreement
entered into between a Health Care Facility, supplier or physician and CMS or
any federal or state agency or other entity administering Medicare in such
state, or other grant of authority by CMS or any federal or state agency or
other entity administering Medicare in such state, under which the Health Care
Facility, supplier or physician is authorized to provide medical goods and
services to Medicare patients and to be reimbursed by Medicare for such goods
and services.

 

“Mortgaged
Properties”:  the real properties
listed on Schedule 1.1B, as to which the Administrative Agent for the
benefit of the Lenders shall be granted a Lien pursuant to the Mortgages.

 

“Mortgages”:  each of the mortgages and deeds of trust made
by any Loan Party in favor of, or for the benefit of, the Administrative Agent
for the benefit of the Lenders, in form and substance reasonably satisfactory
to the Administrative Agent.

 

“Multiemployer
Plan”:  a Plan that is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.

 

“Net Cash
Proceeds”:  in connection with any
Asset Sale or any Recovery Event or any incurrence of Indebtedness, the
proceeds thereof in the form of cash and Cash Equivalents (including any such
proceeds received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise,
but only as and when received) of such Asset Sale or Recovery Event or
incurrence of Indebtedness, net of (i) attorneys’ fees, accountants’ fees,
investment banking fees and all other professionals’ and advisors’ fees, (ii) all
reasonable costs and expenses arising therefrom (including, without limitation,
all underwriting, brokerage, commitment, arrangement, consent, title, filing,
recording,  and similar fees, premiums,
commissions and discounts), (iii) amounts required to be applied to the
repayment of Indebtedness secured by a Lien expressly permitted hereunder on
any asset that is the subject of such Asset Sale or Recovery Event, including,
without limitation, all premiums, penalties, breakage, indemnity, consent fees
and similar amounts in connection therewith, and distributions or other
payments required to be made to any minority interest holders in Subsidiaries
(which shall not exceed such holders’ ratable interests), (iv) all
reserves reasonably established by the Borrower in respect of post-closing
adjustments, payments, indemnities and other contingent liabilities, provided
that upon the date upon which such reserve is no longer required to be
maintained, the remaining amount of such reserve shall then be deemed Net Cash
Proceeds, and (v) all other customary fees and expenses actually incurred
in connection therewith and net of taxes paid or reasonably estimated to be
payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements).

 

“New Lender”:  as defined in Section 2.1(c).

 

“Non-Excluded
Taxes”:  as defined in Section 2.19(a).

 

“Non-U.S.
Lender”:  as defined in Section 2.19(d).

 

“Notes”:  the collective reference to any promissory
note evidencing Loans.

 

 

“Obligations”:  the unpaid principal of and interest on
(including interest accruing after the maturity of the Loans and Reimbursement
Obligations and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Loans and all other
obligations and liabilities of the Borrower to the Administrative Agent or to
any Lender (or, in the case of Specified Swap Agreements, any affiliate of any
Lender), whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or
in connection with, this Agreement, any other Loan Document, the Letters of
Credit, any Specified Swap Agreement (to the extent that, after giving effect
to such Specified Swap Agreement, the aggregate principal amount of outstanding
Loans and Senior Subordinated Notes bearing interest at a fixed rate is not
less than 35% of such aggregate principal amount) or any other document made,
delivered or given in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by the
Borrower pursuant hereto) or otherwise.

 

“Original
Closing Date”:  August 15, 2002.

 

“Other Accounting Matter”:  as
defined in the Third Amendment.

 

“Other
Taxes”:  any and all present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies arising from any payment made hereunder or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document.

 

“Patents”:  as defined in the Guarantee and Collateral
Agreement.

 

“Participant”:  as defined in Section 10.6(c).

 

“PBGC”:  the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA (or any successor).

 

“Permitted
Acquisition”: any acquisition of property or series of related acquisitions
of property that (a) constitutes assets constituting all or substantially
all of a business unit or constitutes all or substantially all of the Capital
Stock of a Person, and (b) is permitted by and consummated in compliance
with the requirements of Section 7.7(g).

 

“Permitted
Investor Preferred Stock”:  the Series A
Redeemable Preferred Stock and the Series B Redeemable Preferred Stock of
Holdings as set forth in the Fourth Amended and Restated Certificate of
Incorporation of Holdings, as further amended and modified from time to time.

 

“Permitted
Investors”:  the collective reference
to (i) the Sponsor and its Control Investment Affiliates and (ii) senior
management of Holdings and the Borrower as of the Amendment Effective Date,
together with any other members of such senior management approved by the Board
of Directors of Holdings or the Borrower, as the case may be.

 

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

 

 

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

 

“Prepayment
Percentage”:  75%; provided,
that, the Prepayment Percentage shall be reduced to 50% if the Consolidated
Leverage Ratio as of the last day of such fiscal year is not greater than 3.75
to 1.0.

 

“Pricing
Grid”:  the table set forth below.

 

	
  Consolidated

  Leverage Ratio

  	
   

  	
  Applicable Margin for

  Eurodollar Loans

  	
   

  	
  Applicable Margin for

  ABR Loans

  	
   

  	
  Commitment Fee Rate

  
	
  Greater than or equal to 4.0 to 1.0

  	
   

  	
  2.75%

  	
   

  	
  1.75%

  	
   

  	
  .500%

  
	
  Less than 4.0 but greater than or equal to 3.25 to 1.0

  	
   

  	
  2.50%

  	
   

  	
  1.50%

  	
   

  	
  .500%

  
	
  Less than 3.25 but greater than 2.5 to 1.0

  	
   

  	
  2.25%

  	
   

  	
  1.25%

  	
   

  	
  .500%

  
	
  Equal to or less than 2.5 to 1.0

  	
   

  	
  2.00%

  	
   

  	
  1.00%

  	
   

  	
  .375%

  

 

For the
purposes of the Pricing Grid, changes in the Applicable Margin resulting from
changes in the Consolidated Leverage Ratio shall become effective on the date
(the “Adjustment Date”) that is three Business Days after the date on
which financial statements are delivered to the Lenders pursuant to Section 6.1
and shall remain in effect until the next change to be effected pursuant to
this paragraph.  If any financial
statements referred to above are not delivered within the time periods
specified in Section 6.1, then, until the date that is three Business Days
after the date on which such financial statements are delivered, the highest
rate set forth in each column of the Pricing Grid shall apply.  In addition, at all times while an Event of
Default shall have occurred and be continuing, the highest rate set forth in
each column of the Pricing Grid shall apply. 
Each determination of the Consolidated Leverage Ratio pursuant to the
Pricing Grid shall be made in a manner consistent with the determination
thereof pursuant to Section 7.1.  As
of the Amendment Effective Date, and until adjustment as provided herein, the
Applicable Margins shall be determined based on the financial statements most
recently delivered to the Lenders pursuant to Section 6.1 of the Existing
Credit Agreement (which reflect a Consolidated Leverage Ratio greater than 4.0
to 1.0).

 

“Pro Forma
Balance Sheet”:  as defined in Section 4.1(a).

 

“Pro Forma
Effect”:  with respect to any event
or transaction occurring during any period of four consecutive fiscal quarters,
such event or transaction (including any other transactions consummated in
connection therewith or required thereby) shall be deemed to have been made on
the first day of such period of four consecutive fiscal quarters.

 

“Projections”:  as defined in Section 6.2(c).

 

“Properties”:  as defined in Section 4.17(a).

 

 

“Qualified
Capital Stock”:  any Capital Stock
that by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable or exercisable) or upon the happening of any
event does not provide for scheduled payments of dividends in cash and does not
(i) mature or becomes mandatorily redeemable pursuant to a sinking fund
obligation or otherwise; (ii) become convertible or exchangeable at the
option of the holder thereof for Indebtedness or Capital Stock that is not
Qualified Capital Stock; or (iii) become redeemable at the option of the
holder thereof, in whole or in part, in each case, on or prior to the later of (A) the
date that is 180 days after the later of the Tranche B Term Maturity Date and
the latest Incremental Term Maturity Date and (B) the final maturity date
of the Senior Subordinated Notes; provided, that any Capital Stock that
would not constitute Qualified Capital Stock solely because the holders thereof
have the right to require Holdings to repurchase such Capital Stock upon the
occurrence of a change of control or asset sale (each defined in a
substantially similar manner to the description of change of control in Section 8(k)
of this Agreement and to the corresponding definition of Asset Sale in this
Agreement) shall nonetheless constitute Qualified Capital Stock.  Notwithstanding anything to the contrary, the
Permitted Investor Preferred Stock shall be deemed to be Qualified Capital
Stock.

 

“Qualified
Public Offering”: any QPO as such term is defined in the Fourth Amended and
Restated Certificate of Incorporation of Holdings, as further amended and
modified from time to time.

 

“Recapitalization”:  (i) the purchase by MQ Investment
Holdings, LLC (together with any other Control Investment Affiliates of the
Sponsor) of equity securities of Holdings representing approximately 70.5% of
the post-closing equity of Holdings, (ii) the exchange by the Rollover
Stockholders of existing equity in Holdings for newly issued shares in Holdings
representing approximately 29.5% of the post-closing equity of Holdings and (iii) the
redemption or repurchase by Holdings of the Seller Shares (other than the Seller
Shares held by the Rollover Stockholders exchanged for “rollover equity” as
contemplated by clause (ii) above), in each case, in accordance with the
Recapitalization Agreement.

 

“Recapitalization
Agreement”:  the Recapitalization
Agreement among MQ Investment Holdings, LLC, Holdings, the stockholders of
Holdings signatory thereto and Gene Venesky and David Lang, as the stockholders’
representatives, dated as of July 16, 2002 and amended as of August 8,
2002.

 

“Recapitalization
Documentation”:  collectively, the
Recapitalization Agreement and all schedules, exhibits and annexes thereto and
all side letters and agreements modifying or supplementing the terms thereof or
entered into in connection therewith.

 

“Recapitalization
Transactions”:  collectively, the
Recapitalization, the repayment of certain Indebtedness and the other
transactions contemplated by the Recapitalization Documentation, any other
transactions consummated in connection with any of the foregoing (including,
without limitation, the payment of transaction fees and expenses) and the
financing of any of the foregoing.

 

“Receivable”:  as defined in the Guarantee and Collateral
Agreement.

 

“Recovery
Event”:  any settlement of or payment
in respect of any property or casualty insurance claim or any condemnation
proceeding relating to any asset of any Group Member.

 

“Refunded
Swingline Loans”:  as defined in Section 2.7.

 

“Register”:  as defined in Section 10.6(b).

 

 

“Regulation
U”:  Regulation U of the Board as in
effect from time to time.

 

“Reimbursement
Approvals”:  with respect to all Third Party Payor
Arrangements, any and all certifications, provider numbers, provider agreements
(including, without limitation, Medicare Provider Agreements and Medicaid
Provider Agreements), participation agreements, accreditations (including JCAHO
accreditation) and/or any other agreements with or approvals by organizations
and Governmental Authorities.

 

“Reimbursement
Obligation”:  the obligation of the
Borrower to reimburse the Issuing Lender pursuant to Section 3.5 for
amounts drawn under Letters of Credit.

 

“Reinvestment
Deferred Amount”:  with respect to
any Reinvestment Event, the aggregate Net Cash Proceeds received by any Group
Member in connection therewith that, as a result of the delivery of a Reinvestment
Notice, are not applied to prepay the Term Loans and the Revolving Loans and,
if applicable, reduce the Revolving Commitments pursuant to Sections 2.11(b) and
2.11(d).

 

“Reinvestment
Event”:  any Asset Sale or Recovery
Event in respect of which the Borrower has delivered a Reinvestment Notice.

 

“Reinvestment
Notice”:  a written notice executed
by a Responsible Officer stating that no Event of Default has occurred and is
continuing and that the Borrower (directly or indirectly through a Subsidiary)
intends and expects to use all or a specified portion of the Net Cash Proceeds
of an Asset Sale or Recovery Event to acquire, maintain, develop, construct,
improve, upgrade or repair assets useful in the business of any Group Member
(other than Holdings).

 

“Reinvestment
Prepayment Amount”:  with respect to
any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less
any amount expended prior to the relevant Reinvestment Prepayment Date to
acquire, maintain, develop, construct, improve, upgrade or repair assets useful
in the business of any Group Member (other than Holdings).

 

“Reinvestment
Prepayment Date”:  with respect to
any Reinvestment Event, the earlier of (a) the date occurring [twelve]six months after such Reinvestment Event and (b) the
date on which the Borrower shall have determined not to, or shall have
otherwise ceased to, acquire, maintain, develop, construct, improve, upgrade or
repair assets useful in the business of any Group Member (other than Holdings)
with all or any portion of the relevant Reinvestment Deferred Amount.

 

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

 

“Reportable
Event”:  any of the events set forth
in Section 4043(c) of ERISA, other than those events as to which the
thirty day notice period is waived under subsections .27, .28, .29, .30, .31,
..32, .34 or .35 of PBGC Reg. § 4043.

 

“Required
Lenders”:  at any time, the holders
of more than 50% of (a) prior to the Amendment Effective Date, the Total
Revolving Commitments and (b) on the Amendment Effective Date and
thereafter, the sum of (i) the aggregate unpaid principal amount of the
Term Loans then outstanding and (ii) the Total Revolving Commitments then
in effect or, if the Revolving Commitments have been terminated, the Total
Revolving Extensions of Credit then outstanding; provided, however,
that if any Lender shall be a Defaulting Lender at such time, then there shall
be excluded from the determination of Required Lenders such Defaulting Lender’s
Revolving Commitments, or after termination of the Total

 

 

Revolving
Commitments, the Revolving Extensions of Credit of such Defaulting Lender then
outstanding.

 

“Requirement
of Law”:  as to any Person, the
Certificate of Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
legally binding determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

 

“Responsible
Officer”:  the chief executive
officer, president or chief financial officer of the Borrower, but in any
event, with respect to financial matters, the chief financial officer of the
Borrower.

 

“Restatement Date”:  the date
when Holdings files with the SEC its restated financial statements and related
reports which restate such statements and reports previously filed with the SEC
for fiscal periods prior to fiscal year 2005.

 

“Restatement Filing Date:  as
defined in the Third Amendment.

 

“Restricted
Payments”:  as defined in Section 7.6.

 

“Revolving
Commitment”:  as to any Lender, the
obligation of such Lender, if any, to make Revolving Loans and participate in
Swingline Loans and Letters of Credit in an aggregate principal and/or face
amount not to exceed the amount set forth under the heading “Revolving
Commitment” opposite such Lender’s name on Schedule 1.1A or in the Assignment
and Assumption pursuant to which such Lender became a party hereto, as the same
may be changed from time to time pursuant to the terms hereof.  The original amount of the Total Revolving
Commitments is $80,000,000.

 

“Revolving
Commitment Period”:  the period from
and including the Original Closing Date to the Revolving Termination Date.

 

“Revolving
Extensions of Credit”:  as to any
Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Revolving Loans held by such Lender then outstanding, (b) such
Lender’s Revolving Percentage of the L/C Obligations then outstanding and (c) such
Lender’s Revolving Percentage of the aggregate principal amount of Swingline
Loans then outstanding.

 

“Revolving
Lender”:  each Lender that has a
Revolving Commitment or that holds any Revolving Extension of Credit.

 

“Revolving
Loans”:  as defined in Section 2.4(a).

 

“Revolving
Percentage”:  as to any Revolving
Lender at any time, the percentage which such Lender’s Revolving Commitment
then constitutes of the Total Revolving Commitments or, at any time after the
Revolving Commitments shall have expired or terminated, the percentage which
the aggregate principal amount of such Lender’s Revolving Loans then
outstanding constitutes of the aggregate principal amount of the Revolving
Loans then outstanding, provided, that, in the event that the Revolving
Loans are paid in full prior to the reduction to zero of the Total Revolving
Extensions of Credit, the Revolving Percentages shall be determined in a manner
designed to ensure that the other outstanding Revolving Extensions of Credit
shall be held by the Revolving Lenders on a comparable basis.

 

 

“Rollover
Stockholders”:  as defined in the
Recapitalization Agreement.

 

“Revolving
Termination Date”:  August 15,
2007.

 

“Sale-Leaseback
Transaction”:  as defined in Section 7.10.

 

“SEC”:  the Securities and Exchange Commission, any
successor thereto and any analogous Governmental Authority.

 

“Security
Documents”:  the collective reference
to the Guarantee and Collateral Agreement, the Mortgages and all other security
documents hereafter delivered to the Administrative Agent granting a Lien on
any property of any Person to secure the obligations and liabilities of any
Loan Party under any Loan Document.

 

“Seller
Shares”:  the Existing Common Stock,
the Existing Class B Common Stock, the Existing Series A Preferred
Stock, and the Existing Series C Preferred Stock, as such terms are
defined in the Recapitalization Agreement.

 

“Senior
Subordinated Note Indenture”:  the
Indenture dated August 15, 2002 entered into by the Borrower and certain
of its Subsidiaries in connection with the issuance of the Senior Subordinated
Notes, together with all instruments and other agreements entered into by the
Borrower or such Subsidiaries in connection therewith.

 

“Senior
Subordinated Notes”:  the
subordinated notes of the Borrower issued pursuant to the Senior Subordinated
Note Indenture and any Exchange Notes (as defined in the Senior Subordinated
Note Indenture) as contemplated therein.

 

“Single
Employer Plan”:  any Plan that is
covered by Title IV of ERISA, but that is not a Multiemployer Plan.

 

“Solvent”:  when used with respect to any Person, means
that, as of any date of determination, (a) the amount of the “present fair
saleable value” of the assets of such Person will, as of such date, exceed the
amount of all “liabilities of such Person, contingent or otherwise”, as of such
date, as such quoted terms are determined in accordance with applicable federal
and state laws governing determinations of the insolvency of debtors, (b) the
present fair saleable value of the assets of such Person will, as of such date,
be greater than the amount that will be required to pay the liability of such
Person on its debts as such debts become absolute and matured, (c) such
Person will not have, as of such date, an unreasonably small amount of capital
with which to conduct its business, and (d) such Person will be able to
pay its debts as they mature.  For
purposes of this definition, (i) ”debt” means liability on a “claim”, and (ii) ”claim”
means any (x) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.

 

“Specified
Change of Control”:  a “Change of
Control” (or any other defined term having a similar purpose) as defined in the
Senior Subordinated Note Indenture.

 

“Specified
Holdings Securities”: unsecured notes and/or Disqualified Capital Stock
issued by Holdings, in one or more series from time to time, together with any
accretion in the principal

 

 

amount or liquidation value thereof and any pay-in-kind notes or
Capital Stock issued for the payment of interest or dividends thereon.

 

“Specified
Swap Agreement”:  any Swap Agreement
entered into by the Borrower and any Lender or affiliate thereof in respect of
interest rates, currency exchange rates or commodity prices, so long as any
such Swap Agreement is not entered into for speculative purposes.

 

“Sponsor”:  J.P. Morgan Partners (BHCA), L.P.

 

“Stockholders
Agreement”:  the Stockholders’
Agreement, dated as of August 15, 2002, among Holdings and each of the
stockholders party thereto, as further amended and modified from time to time.

 

“Subsidiary”:  as of any date of determination, as to any
Person, a corporation, partnership, limited liability company or other entity
the accounts of which would be consolidated with those of such Person in such
Person’s consolidated financial statements prepared in accordance with GAAP as
of such date, as well as any other corporation, limited liability company,
partnership, association or other entity of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of general partnership interests, more
than 50% of the general partnership interests, are owned by such Person.  Unless otherwise qualified, all references to
a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.

 

“Subsidiary
Guarantor”:  each Subsidiary of the
Borrower other than any Excluded Foreign Subsidiary and any Subsidiary that is
not a Group Member.

 

“Supermajority
Lenders”:  at any time, the holders
of more than 75% of (a) prior to the Amendment Effective Date, the Total
Revolving Commitments and (b) on the Amendment Effective Date and
thereafter, the sum of (i) the aggregate unpaid principal amount of the
Term Loans then outstanding and (ii) the Total Revolving Commitments then
in effect or, if the Revolving Commitments have been terminated, the Total
Revolving Extensions of Credit then outstanding; provided, however,
that if any Lender shall be a Defaulting Lender at such time, then there shall
be excluded from the determination of Supermajority Lenders such Defaulting
Lender’s Revolving Commitments, or after termination of the Total Revolving
Commitments, the Revolving Extensions of Credit of such Defaulting Lender then
outstanding.

 

 “Swap Agreement”:  any agreement with respect to any swap,
forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial
or pricing indices or measures of economic, financial or pricing risk or value
or any similar transaction or any combination of these transactions; provided
that no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Borrower or any of its Subsidiaries shall be a “Swap
Agreement”.

 

“Swingline
Commitment”:  the obligation of the
Swingline Lender to make Swingline Loans pursuant to Section 2.6 in an
aggregate principal amount at any one time outstanding not to exceed
$5,000,000.

 

“Swingline
Lender”:  Wachovia Bank, National
Association, in its capacity as the lender of Swingline Loans.

 

 

“Swingline
Loans”:  as defined in Section 2.6.

 

“Swingline
Participation Amount”:  as defined in
Section 2.7.

 

“Syndication
Agent”:  as defined in the preamble
hereto.

 

“Target Leverage Ratio”: a Consolidated Leverage Ratio of less than 4.0
and a Consolidated Senior Leverage Ratio of less than the ratio specified in Section 7.1(b) applicable
at such time.

 

“Term
Lenders”:  the collective reference
to the Tranche B Term Lenders and the Incremental Term Lenders.

 

“Term Loans”:  the collective reference to the Tranche B
Term Loans and the Incremental Term Loans.

 

“Third Amendment”: the Fourth Waiver and Third Amendment to Amended and
Restated Credit Agreement, dated as of September 6, 2005, among Holdings,
the Borrower, the Lenders party thereto and the Administrative Agent.

 

“Third
Party Payor Arrangements”:  any and
all arrangements with Medicare, Medicaid, and any other Governmental Authority,
or quasi-public agency, Blue Cross, Blue Shield, any and all managed care plans
and organizations, including but not limited to health maintenance organizations
and preferred provider organizations, private commercial insurance companies,
employee assistance programs and/or any other third party arrangements, plans
or programs for payment or reimbursement in connection with health care
services, products or supplies.

 

“Total
Revolving Commitments”:  at any time,
the aggregate amount of the Revolving Commitments then in effect.

 

“Total
Revolving Extensions of Credit”:  at
any time, the aggregate amount of the Revolving Extensions of Credit of the
Lenders outstanding at such time.

 

“Trademarks”:  as defined in the Guarantee and Collateral
Agreement.

 

“Tranche B
Term Commitment”:  as to any Lender,
the obligation of such Lender, if any, to make a Tranche B Term Loan to the
Borrower in a principal amount not to exceed the amount set forth under the
heading “Tranche B Term Commitment” opposite such Lender’s name on Schedule 1.1A.  The original aggregate amount of the Tranche
B Term Commitments is $60,000,000.

 

“Tranche B
Term Lender”:  each Lender that has a
Tranche B Term Commitment or that holds a Tranche B Term Loan.

 

“Tranche B
Term Loan”:  as defined in Section 2.1(a).

 

“Tranche B
Term Maturity Date”:  September 3,
2009.

 

“Tranche B
Term Percentage”:  as to any Tranche
B Term Lender at any time, the percentage which such Lender’s Tranche B Term
Commitment then constitutes of the aggregate Tranche B Term Commitments (or, at
any time after the Amendment Effective Date, the percentage which the

 

 

aggregate principal amount of such Lender’s Tranche B Term Loans then outstanding
constitutes of the aggregate principal amount of the Tranche B Term Loans then
outstanding).

 

“Transferee”:  any Assignee or Participant.

 

“Type”:  as to any Loan, its nature as an ABR Loan or
a Eurodollar Loan.

 

“United
States”:  the United States of
America.

 

“Wholly
Owned Subsidiary”:  as to any Person,
any other Person, all of the Capital Stock of which (other than directors’
qualifying shares required by law) is owned by such Person directly and/or
through other Wholly Owned Subsidiaries.

 

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

 

(b)                         As
used herein and in the other Loan Documents, and any certificate or other
document made or delivered pursuant hereto or thereto, (i) accounting
terms relating to any Group Member not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined,
shall have the respective meanings given to them under GAAP, (ii) the
words “include”, “includes” and “including” shall be deemed to be followed by
the phrase “without limitation”, (iii) the word “incur” shall be construed
to mean incur, create, issue, assume, become liable in respect of or suffer to
exist (and the words “incurred” and “incurrence” shall have correlative
meanings), (iv) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, Capital Stock, securities,
revenues, accounts, leasehold interests and contract rights, [and ](v) references to agreements or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer
to such agreements or Contractual Obligations as amended, supplemented,
restated or otherwise modified from time to time and (vi) after the Restatement Filing Date, any financial
calculations delivered by a Loan Party to the Administrative Agent shall be
based on the audited financial statements filed on the Restatement Filing Date.

 

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

 

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

 

SECTION 2.                                AMOUNT
AND TERMS OF COMMITMENTS

 

2.1                                 Term
Commitments.  (a)  Subject to
the terms and conditions hereof, (i) each Tranche B Term Lender severally
agrees to make one or more term loans (each, a “Tranche B Term Loan”) to the
Borrower (A) on the Amendment Effective Date in an amount equal to but not
to exceed the amount of the Tranche B Term Commitment of such Lender and (B) from
time to time to the extent provided in Section 2.1(b), and (ii) each
Incremental Term Lender severally agrees to make one or more term loans (each,
an “Incremental Term Loan”) to the Borrower to the extent provided in Section 2.1(b).  The Term Loans may from time to time be
Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to
the Administrative Agent in accordance with Sections 2.2 and 2.12.

 

 

 

(b)                         The
Borrower and any one or more Lenders (including New Lenders) may from time to
time agree that without the consent of the other Lenders hereunder (w) such
Lenders shall make Revolving Commitments or shall increase the amount of their
Revolving Commitments, (x) such Lenders shall make Tranche B Term Loans or
shall increase the amount of their Tranche B Term Loans, (y) at any time when the Target
Leverage Ratio exists, such Lenders shall make
Incremental Term Loans or shall increase the amount of their Incremental Term
Loans or (z) such Lenders may effect any combination of the foregoing clauses
(w), (x) and (y).  The Borrower shall
effect the same by executing and delivering to the Administrative Agent an
Incremental Facility Activation Notice specifying (i) the details with
respect to the Facility or Facilities involved, (ii) the applicable
Incremental Facility Closing Date, (iii) in the case of Incremental Term
Loans, (A) the applicable Incremental Term Maturity Date, (B) the
amortization schedule for such Incremental Term Loans, [and ](C) the Applicable Margin for such
Incremental Term Loans, and (D) that
attached to such notice is a certificate (x) attaching the most recently
delivered Compliance Certificate and (y) information updating such Compliance
Certificate to reflect the incurrence of the proposed Incremental Term Loan,
which certificate shall be certified as of the date of such notice by a
Responsible Officer as being true, accurate and complete in all material
respects; provided that, (1) no Default or
Event of Default has occurred and is
continuing or would result after giving effect to the increase of Revolving
Commitments or the making or increase of the Term Loans or the application of
the proceeds therefrom, (2) after giving pro  forma effect to
any Revolving Loans actually made pursuant to such increased Revolving
Commitments or the making or increase of the Term Loans, the repayment of
Indebtedness with the proceeds therefrom, and any Permitted Acquisition
consummated in connection therewith, (x) the Borrower would be able to borrow
at least $5,000,000 of Revolving Loans and no Default or Event of Default would
result therefrom, and (y) the Borrower and its Subsidiaries are in compliance
with the covenants contained in Section 7.1 as of the last day of and for
the most recent four consecutive fiscal quarters of the Borrower for which
financial statements have been delivered pursuant to Section 6.1 (as
demonstrated by delivery to the Administrative Agent of a certificate to such
effect showing such calculation in reasonable detail), (3) in the case of
Incremental Term Loans, in the event that Incremental Term Loans are issued
that have an Applicable Margin (which, for such purposes only, shall be deemed
to include all original issue discount payable to all Lenders providing such
Incremental Term Loans, amortized over the actual life of such Incremental Term
Loans) greater than 0.25% above the Applicable Margin then in effect for the
Tranche B Term Loans (which, for such purposes only, shall be deemed to include
all original issue discount paid to the relevant Lenders, amortized over the
actual life of such Tranche B Term Loans), the Applicable Margin for the
Tranche B Term Loans shall, as of the applicable Incremental Facility Closing
Date, automatically be adjusted (without any further action acquired under this
Agreement) to be 0.25% less than the Applicable Margin for such Incremental
Term Loans, (4) other than with respect to amortization, maturity date, and
pricing, such Incremental Term Loans shall have the same terms and conditions
as those applicable to Tranche B Term Loans, (5) without the consent of
the Supermajority Lenders, the aggregate amount of increases of Revolving
Commitments, borrowings of incremental Tranche B Term Loans and borrowings of
Incremental Term Loans pursuant to this Section 2.1(b) shall not
exceed $40,000,000, and (6) unless otherwise consented to by the
Supermajority Lenders, each increase in Revolving Commitments and each
borrowing of incremental Tranche B Term Loans or Incremental Term Loans
pursuant to this Section 2.1(b) shall be in a minimum amount of at
least $20,000,000.  No Lender shall have
any obligation to participate in any increase described in this paragraph
unless it agrees in writing to do so in its sole discretion.

 

(c)                          Any
additional bank, financial institution or other entity that, with the consent
of the Borrower and the Administrative Agent (which consent shall not be
unreasonably withheld), elects to become a “Lender” under this Agreement in connection
with any transaction described in Section 2.1(b) shall execute a New
Lender Supplement (each, a “New Lender Supplement”), substantially in
the form of Exhibit H-1, whereupon such bank, financial institution or
other entity (a

 

 

“New Lender”) shall become a Lender
for all purposes and shall be bound by and entitled to the benefits of this
Agreement.

 

(d)                         Any
incremental Revolving Commitments and incremental Tranche B Term Loans shall be
governed by this Agreement and the other Loan Documents.  The terms and conditions applicable to any
Incremental Term Loan Facility shall be set forth in the applicable Incremental
Facility Activation Notice which shall become a part hereof when executed and
delivered by the Borrower, the Lenders providing such Incremental Term Loan
Facility and the Administrative Agent and after giving effect thereto, any
Incremental Term Loan Facility shall be governed by this Agreement and the
other Loan Documents.

 

(e)                          On
each Incremental Facility Closing Date, the Borrower shall borrow (i) Revolving
Loans under the increased Revolving Commitments, (ii) incremental Tranche
B Term Loans and (iii) Incremental Term Loans, in each case from each
Lender participating in the relevant increase (A) if ABR Loans under the
relevant Facility are outstanding on the relevant Incremental Facility Closing
Date, in an amount of ABR Loans that will result in each such participating
Lender having ABR Loans outstanding in a principal amount equal to its
Revolving Percentage, Tranche B Term Percentage or Incremental Term Percentage,
as applicable, of the aggregate outstanding principal amount of ABR Loans and (B) if
Eurodollar Loans under the relevant Facility are outstanding on the relevant
Incremental Facility Closing Date, in an amount of Eurodollar Loans on such
date (if a Eurodollar Tranche is being continued for another Interest Period on
such date) and/or such later date on which a Eurodollar Tranche outstanding on
the Incremental Facility Closing Date is continued for another Interest Period that
will result, in each case, in each such participating Lender having Eurodollar
Loans made by it included in such extended Eurodollar Tranche in a principal
amount equal to its Revolving Percentage, Tranche B Term Percentage or
Incremental Term Percentage, as applicable, of the aggregate outstanding
principal amount of Eurodollar Loans included in such Eurodollar Tranche.

 

2.2                                 Procedure
for Term Loan Borrowings.  The
Borrower shall give the Administrative Agent irrevocable notice (which notice
must be received by the Administrative Agent prior to 11:00 A.M.,
Charlotte time, (a) not less than three Business Days prior to the
Amendment Effective Date (or, in the case of any Term Loan to be made after the
Amendment Effective Date pursuant to Section 2.1(b), the requested
Borrowing Date), in the case of Eurodollar Loans, or (b) one Business Day
prior to the Amendment Effective Date (or, in the case of any Term Loan to be
made after the Amendment Effective Date pursuant to Section 2.1(b), the
requested Borrowing Date), in the case of ABR Loans), requesting that the
relevant Term Lenders make the relevant Term Loans on such date and specifying (i) the
amount and Type of Term Loans to be borrowed and (ii) in the case of
Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Period therefor.  Upon receipt of such notice the
Administrative Agent shall promptly notify each Term Lender thereof.  Each relevant Term Lender will make the
amount of its Term Loan available to the Administrative Agent for the account
of the Borrower at the Funding Office prior to 12:00 Noon, Charlotte time, on
the relevant Borrowing Date in funds immediately available to the
Administrative Agent.  Such borrowing
will then be made available to the Borrower by the Administrative Agent
crediting the account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Administrative Agent by such
Term Lenders and in like funds as received by the Administrative Agent.

 

2.3                                 Repayment
of Term Loans.  (a)  The Tranche
B Term Loan of each Tranche B Term Lender shall mature in 23 consecutive
quarterly installments and a final installment on the Tranche B Term Maturity
Date, each of which shall be in an amount equal to such Lender’s Tranche B Term
Percentage multiplied by the amount set forth below opposite such installment:

 

 

	
  Installment

  	
   

  	
  Principal Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 30,
  2003

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  December 31,
  2003

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  March 31,
  2004

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  June 30,
  2004

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  September 30,
  2004

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  December 31,
  2004

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  March 31,
  2005

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  June 30,
  2005

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  September 30,
  2005

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  December 31,
  2005

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  March 31,
  2006

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  June 30,
  2006

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  September 30,
  2006

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  December 31,
  2006

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  March 31,
  2007

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  June 30,
  2007

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  September 30,
  2007

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  December 31,
  2007

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  March 31,
  2008

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  June 30,
  2008

  	
   

  	
  $

  	
  150,000

  	
   

  
	
  September 30,
  2008

  	
   

  	
  $

  	
  14,250,000

  	
   

  
	
  December 31,
  2008

  	
   

  	
  $

  	
  14,250,000

  	
   

  
	
  March 31,
  2009

  	
   

  	
  $

  	
  14,250,000

  	
   

  
	
  Tranche B
  Term Maturity Date

  	
   

  	
  $

  	
  14,250,000

  	
   

  

 

(b)                         The
Incremental Term Loans of each Incremental Term Lender shall mature in
consecutive installments as specified in the Incremental Facility Activation
Notice pursuant to which such Incremental Term Loans were made; provided
that (x) no
Incremental Term Maturity Date shall occur prior to the Tranche B Term Maturity
Date and (y) the weighted average life
to maturity of any Incremental Term Loan shall not be shorter than the
remaining weighted average life to maturity of the Tranche B Term Loans.

 

2.4                                 Revolving
Commitments.  (a)  Subject to
the terms and conditions hereof, each Revolving Lender severally agrees to make
revolving credit loans (“Revolving Loans”) to the Borrower from time to time
during the Revolving Commitment Period in an aggregate principal amount at any
one time outstanding which, when added to such Lender’s Revolving Percentage of
the sum of (i) the L/C Obligations then outstanding and (ii) the
aggregate principal amount of the Swingline Loans then outstanding (except to
the extent that such Revolving Loans are to be applied to repay outstanding
Swingline Loans), does not exceed the amount of such Lender’s Revolving
Commitment.  During the Revolving
Commitment Period the Borrower may use the Revolving Commitments by borrowing,
prepaying the Revolving Loans in whole or in part, and reborrowing, all in
accordance with the terms and conditions hereof.  The Revolving Loans may from time to time be
Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to
the Administrative Agent in accordance with Sections 2.5 and 2.12.  Revolving Loans outstanding under the
Existing Credit Agreement on the Amendment Effective Date and not repaid on
such date shall continue thereafter hereunder with the same respective Interest
Periods.

 

(b)                         The
Borrower shall repay all outstanding Revolving Loans on the Revolving
Termination Date.

 

 

2.5                                 Procedure
for Revolving Loan Borrowing.  The
Borrower may borrow under the Revolving Commitments during the Revolving
Commitment Period on any Business Day, provided that the Borrower shall give
the Administrative Agent irrevocable notice (which notice must be received by
the Administrative Agent prior to 11:00 A.M., Charlotte time, (a) three
Business Days prior to the requested Borrowing Date, in the case of Eurodollar
Loans, or (b) one Business Day prior to the requested Borrowing Date, in
the case of ABR Loans), specifying (i) the amount and Type of Revolving
Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in
the case of Eurodollar Loans, the respective amounts of each such Type of Loan
and the respective lengths of the initial Interest Period therefor.  Each borrowing under the Revolving
Commitments shall be in an amount equal to (x) in the case of ABR Loans,
$1,000,000 or a whole multiple thereof (or, if the then aggregate Available
Revolving Commitments are less than $1,000,000, such lesser amount) and (y) in
the case of Eurodollar Loans, $2,000,000 or a whole multiple of $500,000 in
excess thereof; provided, that the Swingline Lender may request, on behalf of
the Borrower, borrowings under the Revolving Commitments that are ABR Loans in
other amounts pursuant to Section 2.7. 
Upon receipt of any such notice from the Borrower pursuant to the first
sentence of this Section 2.5, the Administrative Agent shall promptly
notify each Revolving Lender thereof. 
Subject to Section 2.1(e), each Revolving Lender will make the
amount of its pro rata share of each borrowing available to the Administrative
Agent for the account of the Borrower at the Funding Office prior to 2:00 P.M.,
Charlotte time, on the Borrowing Date requested by the Borrower in funds
immediately available to the Administrative Agent.  Such borrowing will then be made available to
the Borrower by the Administrative Agent crediting the account of the Borrower
on the books of such office with the aggregate of the amounts made available to
the Administrative Agent by the Revolving Lenders and in like funds as received
by the Administrative Agent.

 

2.6                                 Swingline
Commitment.  (a)  Subject to the
terms and conditions hereof, the Swingline Lender agrees to make a portion of
the credit otherwise available to the Borrower under the Revolving Commitments
from time to time during the Revolving Commitment Period by making swing line
loans (“Swingline Loans”) to the Borrower; provided that (i) the aggregate
principal amount of Swingline Loans outstanding at any time shall not exceed
the Swingline Commitment then in effect (notwithstanding that the Swingline
Loans outstanding at any time, when aggregated with the Swingline Lender’s
other outstanding Revolving Loans, may exceed the Swingline Commitment then in
effect) and (ii) the Borrower shall not request, and the Swingline Lender
shall not make, any Swingline Loan if, after giving effect to the making of
such Swingline Loan, the aggregate amount of the Available Revolving
Commitments would be less than zero. 
During the Revolving Commitment Period, the Borrower may use the
Swingline Commitment by borrowing, repaying and reborrowing, all in accordance
with the terms and conditions hereof. 
Swingline Loans shall be ABR Loans only. 
Swingline Loans outstanding under the Existing Credit Agreement on the
Amendment Effective Date and not repaid on such date shall continue thereafter
hereunder.

 

(b)                         The
Borrower shall repay to the Swingline Lender the then unpaid principal amount
of each Swingline Loan on the earlier of the Revolving Termination Date and the
first date after such Swingline Loan is made that is the 15th or last day of a
calendar month and is at least two Business Days after such Swingline Loan is
made; provided that on each date that a Revolving Loan is borrowed, the
Borrower shall repay all Swingline Loans then outstanding.

 

2.7                                 Procedure
for Swingline Borrowing; Refunding of Swingline Loans.  (a)  Whenever the Borrower desires that
the Swingline Lender make Swingline Loans it shall give the Swingline Lender
irrevocable telephonic notice confirmed promptly in writing (which telephonic
notice must be received by the Swingline Lender not later than 1:00 P.M.,
Charlotte time, on the proposed Borrowing Date), specifying (i) the amount
to be borrowed and (ii) the requested Borrowing Date (which shall be a
Business Day during the Revolving Commitment Period).  Each borrowing under the Swingline Commitment
shall be in an amount equal to $250,000 or a whole multiple of $50,000 in
excess thereof.

 

 

Not later than 3:00 P.M., Charlotte
time, on the Borrowing Date specified in a notice in respect of Swingline
Loans, the Swingline Lender shall make available to the Administrative Agent at
the Funding Office an amount in immediately available funds equal to the amount
of the Swingline Loan to be made by the Swingline Lender.  The Administrative Agent shall make the
proceeds of such Swingline Loan available to the Borrower on such Borrowing
Date by depositing such proceeds in the account of the Borrower with the
Administrative Agent on such Borrowing Date in immediately available funds.

 

(b)                         The
Swingline Lender, at any time and from time to time in its sole and absolute
discretion may, on behalf of the Borrower (which hereby irrevocably directs the
Swingline Lender to act on its behalf), on one Business Day’s notice given by
the Swingline Lender no later than 12:00 Noon, Charlotte time, request each
Revolving Lender to make, and each Revolving Lender hereby agrees to make, a
Revolving Loan, in an amount equal to such Lender’s Revolving Percentage of the
aggregate amount of the Swingline Loans (the “Refunded Swingline Loans”)
outstanding on the date of such notice, to repay the Swingline Lender.  Each Revolving Lender shall make the amount
of such Revolving Loan available to the Administrative Agent at the Funding
Office in immediately available funds, not later than 2:00 P.M., Charlotte
time, one Business Day after the date of such notice.  The proceeds of such Revolving Loans shall be
immediately made available by the Administrative Agent to the Swingline Lender
for application by the Swingline Lender to the repayment of the Refunded
Swingline Loans.  The Borrower
irrevocably authorizes the Swingline Lender to charge the Borrower’s accounts
with the Administrative Agent (up to the amount available in each such account)
in order to immediately pay the amount of such Refunded Swingline Loans to the
extent amounts received from the Revolving Lenders are not sufficient to repay
in full such Refunded Swingline Loans.

 

(c)                          If
prior to the time a Revolving Loan would have otherwise been made pursuant to Section 2.7(b),
one of the events described in Section 8(f) shall have occurred and
be continuing with respect to the Borrower or if for any other reason, as
determined by the Swingline Lender in its sole discretion, Revolving Loans may
not be made as contemplated by Section 2.7(b), each Revolving Lender
shall, on the date such Revolving Loan was to have been made pursuant to the
notice referred to in Section 2.7(b), purchase for cash an undivided
participating interest in the then outstanding Swingline Loans by paying to the
Swingline Lender an amount (the “Swingline Participation Amount”) equal
to (i) such Revolving Lender’s Revolving Percentage times (ii) the
sum of the aggregate principal amount of Swingline Loans then outstanding that
were to have been repaid with such Revolving Loans.

 

(d)                         Whenever,
at any time after the Swingline Lender has received from any Revolving Lender
such Revolving Lender’s Swingline Participation Amount, the Swingline Lender
receives any payment on account of the Swingline Loans, the Swingline Lender
will distribute to such Revolving Lender its Swingline Participation Amount
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Revolving Lender’s participating interest was
outstanding and funded and, in the case of principal and interest payments, to
reflect such Revolving Lender’s pro  rata portion of such payment
if such payment is not sufficient to pay the principal of and interest on all
Swingline Loans then due); provided, however, that in the event
that such payment received by the Swingline Lender is required to be returned,
such Revolving Lender will return to the Swingline Lender any portion thereof
previously distributed to it by the Swingline Lender.

 

(e)                          Each
Revolving Lender’s obligation to make the Loans referred to in Section 2.7(b) and
to purchase participating interests pursuant to Section 2.7(c) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (i) any setoff, counterclaim, recoupment, defense or other right
that such Revolving Lender or the Borrower may have against the Swingline
Lender, the Borrower or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of a Default or an Event of Default or the failure to
satisfy any of the other conditions specified in Section 5; (iii) any
adverse change in the condition (financial or otherwise) of the Borrower;

 

 

(iv) any breach of this Agreement or any
other Loan Document by the Borrower, any other Loan Party or any other Lender;
or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.

 

2.8                                 Commitment
Fees, etc.  (a)  The Borrower
agrees to pay to the Administrative Agent for the account of each Revolving
Lender a commitment fee for the period from and including the Original Closing
Date to the last day of the Revolving Commitment Period, computed at the
Commitment Fee Rate on the average daily amount of the Available Revolving
Commitment of such Lender during the period for which payment is made, payable
quarterly in arrears on each Fee Payment Date, commencing on the first such
date to occur after the Original Closing Date; provided, that no Defaulting
Lender shall be entitled to accrue or receive any such commitment fee for so
long as such Lender is a Defaulting Lender.

 

(b)                         The
Borrower agrees to pay to the Administrative Agent the fees in the amounts and
on the dates previously agreed to in writing by the Borrower and the
Administrative Agent.

 

2.9                                 Termination
or Reduction of Revolving Commitments. 
The Borrower shall have the right, upon not less than three Business
Days’ notice to the Administrative Agent, to terminate the Revolving
Commitments or, from time to time, to reduce the amount of the Revolving
Commitments; provided that no such termination or reduction of Revolving
Commitments shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Loans and Swingline Loans made on the effective
date thereof, the Total Revolving Extensions of Credit would exceed the Total
Revolving Commitments.  Any such
reduction shall be in an amount equal to $1,000,000, or a whole multiple
thereof, and shall reduce permanently the Revolving Commitments then in effect.

 

2.10                           Optional
Prepayments.  The Borrower may at any
time and from time to time prepay the Loans (either the Revolving Loans, the
Term Loans or both), in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Administrative Agent no later than 11:00 A.M.,
Charlotte time, three Business Days prior thereto, in the case of Eurodollar
Loans, and no later than 11:00 A.M., Charlotte time, one Business Day
prior thereto, in the case of ABR Loans, which notice shall specify the date
and amount of prepayment and whether the prepayment is of Eurodollar Loans or
ABR Loans; provided, that if a Eurodollar Loan is prepaid on any day other than
the last day of the Interest Period applicable thereto, the Borrower shall also
pay any amounts owing pursuant to Section 2.20.  Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.  If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein, together with (except in the case of Revolving Loans that are ABR
Loans and Swingline Loans) accrued interest to such date on the amount
prepaid.  Partial prepayments of Term
Loans and Revolving Loans shall be in an aggregate principal amount of
$1,000,000 or a whole multiple thereof. 
Partial prepayments of Swingline Loans shall be in an aggregate
principal amount of $100,000 or a whole multiple thereof.  Any Revolving Loans or Swingline Loans
prepaid hereunder may be reborrowed.

 

2.11                           Mandatory
Prepayments and Commitment Reductions. 
(a)  If any Indebtedness shall be incurred by any Group Member
(excluding any Indebtedness incurred in accordance with Section 7.2 or
permitted by the Required Lenders pursuant to Section 10.1 (except as may
be otherwise agreed to by the Required Lenders in connection with their
approval of such Indebtedness pursuant to Section 10.1)), an amount equal
to 100% of the Net Cash Proceeds thereof shall be applied on the date of such
incurrence toward the prepayment of the Loans and, if applicable, the reduction
of the Revolving Commitments as set forth in Section 2.11(d).

 

(b)                         If
on any date any Group Member shall receive Net Cash Proceeds from any Asset
Sale or Recovery Event then, unless a Reinvestment Notice shall be delivered in
respect thereof,

 

 

such Net Cash Proceeds shall be applied on
such date toward the prepayment of the Loans and, if applicable, the reduction
of the Revolving Commitments as set forth in Section 2.11(d); provided,
that, notwithstanding the foregoing, on each Reinvestment Prepayment Date, an
amount equal to the Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event shall be applied toward the prepayment of the Loans and, if
applicable, the reduction of the Revolving Commitments as set forth in Section 2.11(d).

 

(c)                          If,
for any fiscal year of the Borrower commencing with the fiscal year ending December 31,
2004, there shall be Excess Cash Flow, the Borrower shall, on the relevant
Excess Cash Flow Application Date, apply the Prepayment Percentage of such
Excess Cash Flow toward the prepayment of the Loans and, if applicable, the
reduction of the Revolving Commitments as set forth in Section 2.11(d).  Each such prepayment and reduction of
Revolving Commitments, if applicable, shall be made on a date (an “Excess
Cash Flow Application Date”) no later than five Business Days after the
earlier of (i) the date on which the financial statements of [the Borrower]Holdings referred to in Section 6.1(a),
for the fiscal year with respect to which such prepayment and, if applicable,
reduction in Revolving Commitments is made, are required to be delivered to the
Lenders and (ii) the date such financial statements are actually delivered.

 

(d)                         Amounts
to be applied in connection with prepayments and Revolving Commitment
reductions pursuant to this Section 2.11 and Section 7.5(a)(v) shall
be applied, (i) first, to the prepayment of the Term Loans in
accordance with Section 2.17(b) until all Term Loans have been paid
in full, provided that, notwithstanding the foregoing, if there exists a Target
Leverage Ratio (as determined after taking into account the prepayments of Term
Loans to be made from the Net Cash Proceeds or Excess Cash Flow, as the case
may be (as evidenced by a certificate attaching the most recently delivered
Compliance Certificate certified as of the date of such notice by a Responsible
Officer as being true, accurate and complete in all material respects)) then,
(x) an aggregate amount of Net Cash Proceeds from Asset Sales and Recovery
Events not to exceed $20,000,000 and (y) an aggregate amount of Excess Cash
Flow not to exceed $20,000,000 that would otherwise be applied toward the
prepayment of the Term Loans may be applied to prepay outstanding Revolving
Loans without reduction of the Revolving Commitments, and, (ii) second,
to the permanent reduction of Revolving Commitments as set forth in this Section 2.11(d).  Any such reduction of the Revolving
Commitments shall be accompanied by prepayment of the Revolving Loans and/or
Swingline Loans to the extent, if any, that the Total Revolving Extensions of
Credit exceed the amount of the Total Revolving Commitments as so reduced, provided
that, in the case of any such permanent reduction of the Revolving Commitments,
if the aggregate principal amount of Revolving Loans and Swingline Loans then
outstanding is less than the amount by which the Total Revolving Extensions of
Credit exceeds the amount of Total Revolving Commitments as so reduced (because
L/C Obligations constitute a portion thereof), the Borrower shall, if an Event
of Default shall have occurred and be continuing, to the extent of the balance
of such excess, replace outstanding Letters of Credit and/or deposit an amount
in cash in a cash collateral account established with the Administrative Agent
for the benefit of the Lenders on terms and conditions satisfactory to the
Administrative Agent.  The application of
any prepayment pursuant to this Section 2.11 or Section 7.5(a)(v) shall
be made, first, to ABR Loans and, second, to Eurodollar
Loans.  Each prepayment of the Loans
under this Section 2.11 or Section 7.5(a)(v) (except in the case
of Revolving Loans that are ABR Loans and Swingline Loans) shall be accompanied
by accrued interest to the date of such prepayment on the amount prepaid.   Unless required as a result of the permanent
reduction of Revolving Commitments, any Revolving Loans prepaid hereunder may
be reborrowed.

 

2.12                           Conversion
and Continuation Options.  (a) 
The Borrower may elect from time to time to convert Eurodollar Loans to ABR
Loans by giving the Administrative Agent prior irrevocable notice of such
election no later than 11:00 A.M., Charlotte time, on the Business Day
preceding the proposed

 

 

conversion date, provided that any such
conversion of Eurodollar Loans may only be made on the last day of an Interest
Period with respect thereto.  The
Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans
by giving the Administrative Agent prior irrevocable notice of such election no
later than 11:00 A.M., Charlotte time, on the third Business Day preceding
the proposed conversion date (which notice shall specify the length of the
initial Interest Period therefor), provided that no ABR Loan under a particular
Facility may be converted into a Eurodollar Loan when any Event of Default has
occurred and is continuing and the Administrative Agent or the Majority
Facility Lenders in respect of such Facility have determined in its or their sole
discretion not to permit such conversions. 
Upon receipt of any such notice the Administrative Agent shall promptly
notify each relevant Lender thereof.

 

(b)                         Any
Eurodollar Loan may be continued as such upon the expiration of the then
current Interest Period with respect thereto by the Borrower giving irrevocable
notice to the Administrative Agent, in accordance with the applicable
provisions of the term “Interest Period” set forth in Section 1.1, of the
length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan under a particular Facility may be continued as such
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such continuations,
and provided, further, that if the Borrower shall fail to give
any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Loans
shall be automatically converted to ABR Loans on the last day of such then
expiring Interest Period.  Upon receipt
of any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof.

 

2.13                           Limitations
on Eurodollar Tranches. 
Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions and continuations of Eurodollar Loans and all
selections of Interest Periods shall be in such amounts and be made pursuant to
such elections so that, (a) after giving effect thereto, the aggregate
principal amount of the Eurodollar Loans comprising each Eurodollar Tranche
shall be equal to $2,000,000 or a whole multiple of $500,000 in excess thereof
and (b) no more than eight Eurodollar Tranches shall be outstanding at any
one time.

 

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

 

(b)                         Each
ABR Loan shall bear interest at a rate per annum equal to the ABR plus the
Applicable Margin.

 

(c)                          (i) If
all or a portion of the principal amount of any Loan or Reimbursement
Obligation shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), all outstanding Loans and Reimbursement Obligations
(whether or not overdue) shall bear interest at a rate per annum equal to (x)
in the case of the Loans, the rate that would otherwise be applicable thereto
pursuant to the foregoing provisions of this Section plus 2% or (y)
in the case of Reimbursement Obligations, the rate applicable to ABR Loans
under the Revolving Facility plus 2%, and (ii) if all or a portion
of any interest payable on any Loan or Reimbursement Obligation or any
commitment fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum equal to the rate then
applicable to ABR Loans under the relevant Facility plus 2% (or in the
case of any such other amounts that do not relate to a particular Facility, the
rate then applicable to ABR Loans under the Revolving Facility plus 2%),
in each case, with respect to clauses (i) and (ii) above, from the
date of such non-payment until such amount is paid in full (as well after as
before judgment).

 

 

(d)                         Interest
shall be payable in arrears on each Interest Payment Date, provided that
interest accruing pursuant to paragraph (c) of this Section shall be
payable from time to time on demand.

 

2.15                           Computation
of Interest and Fees.  (a) 
Interest and fees payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to ABR
Loans the rate of interest on which is calculated on the basis of the Prime
Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed.  The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate.  Any change in the
interest rate on a Loan resulting from a change in the ABR or the Eurocurrency
Reserve Requirements shall become effective as of the opening of business on
the day on which such change becomes effective. 
The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate.

 

(b)                         Each
determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and
the Lenders in the absence of manifest error. 
The Administrative Agent shall, at the request of the Borrower, deliver
to the Borrower a statement showing the quotations used by the Administrative
Agent in determining any interest rate pursuant to Section 2.14(a).

 

2.16                           Inability
to Determine Interest Rate.  If prior
to the first day of any Interest Period:

 

(a)                          the
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) 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
Administrative Agent shall have received notice from the Majority Facility
Lenders in respect of the relevant Facility that the Eurodollar Rate determined
or to be determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (as conclusively certified by such Lenders) of
making or maintaining their affected Loans during such Interest Period,

 

the
Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter.  If such notice is given (x) any Eurodollar
Loans under the relevant Facility requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (y) any Loans under the relevant
Facility that were to have been converted on the first day of such Interest
Period to Eurodollar Loans shall be continued as ABR Loans and (z) any
outstanding Eurodollar Loans under the relevant Facility shall be converted, on
the last day of the then-current Interest Period, to ABR Loans.  Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans under the relevant Facility
shall be made or continued as such, nor shall the Borrower have the right to
convert Loans under the relevant Facility to Eurodollar Loans.

 

2.17                           Pro
Rata Treatment and Payments.  (a) 
Each borrowing by the Borrower from the Lenders hereunder, each payment by the
Borrower on account of any commitment fee and any reduction of the Commitments
of the Lenders shall be made pro rata according to the respective Tranche B
Term Percentages, Incremental Term Percentages or Revolving Percentages, as the
case may be, of the relevant Lenders.

 

(b)                         Each
scheduled payment by the Borrower on account of principal of and interest on
the Term Loans of any Facility shall be made pro  rata according
to the respective outstanding principal amounts of the Term Loans of such
Facility then held by the relevant Term Lenders, and each

 

 

prepayment by the Borrower pursuant to Section 2.10
or 2.11 on account of principal of and interest on the Term Loans shall be made
pro  rata according to the respective outstanding principal
amounts of the Term Loans then held by the Term Lenders.  The amount of each principal prepayment of
the Term Loans shall be applied to reduce the then remaining installments of
the Term Loans, pro  rata based upon the then remaining principal
amounts thereof; provided that any prepayments in respect of the principal
of and interest on the Term Loans made by the Borrower pursuant to Section 2.10
shall be applied in forward chronological order of scheduled installments in
accordance with the then outstanding amounts thereof.  Amounts prepaid on account of the Term Loans
may not be reborrowed.

 

(c)                          Each
payment (including each prepayment) by the Borrower on account of principal of
and interest on the Revolving Loans shall be made pro  rata
according to the respective outstanding principal amounts of the Revolving
Loans then held by the Revolving Lenders.

 

(d)                         All
payments (including prepayments) to be made by the Borrower hereunder, whether
on account of principal, interest, fees or otherwise, shall be made without
setoff or counterclaim and shall be made prior to 1:00 P.M., Charlotte
time, on the due date thereof to the Administrative Agent, for the account of
the Lenders, at the Funding Office, in Dollars and in immediately available
funds.  The Administrative Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received.  If any payment hereunder
(other than payments on the Eurodollar Loans) becomes due and payable on a day
other than a Business Day, such payment shall be extended to the next
succeeding Business Day.  If any payment
on a Eurodollar Loan becomes due and payable on a day other than a Business
Day, the maturity thereof shall be extended to the next succeeding Business Day
unless the result of such extension would be to extend such payment into
another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.  In
the case of any extension of any payment of principal pursuant to the preceding
two sentences, interest thereon shall be payable at the then applicable rate
during such extension.

 

(e)                          Unless
the Administrative Agent shall have been notified in writing by any Lender
prior to a borrowing that such Lender will not make the amount that would
constitute its share of such borrowing available to the Administrative Agent,
the Administrative Agent may assume that such Lender is making such amount
available to the Administrative Agent, and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount.  If such amount is not made
available to the Administrative Agent by the required time on the Borrowing
Date therefor, such Lender shall pay to the Administrative Agent, on demand,
such amount with interest thereon, at a rate equal to the greater of (i) the
Federal Funds Effective Rate and (ii) a rate determined by the
Administrative Agent in accordance with banking industry rules on
interbank compensation, for the period until such Lender makes such amount
immediately available to the Administrative Agent.  A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this paragraph
shall be conclusive in the absence of manifest error.  If such Lender’s share of such borrowing is
not made available to the Administrative Agent by such Lender within three
Business Days after such Borrowing Date, the Administrative Agent shall also be
entitled to recover such amount with interest thereon at the rate per annum
applicable to ABR Loans under the relevant Facility, on demand, from the
Borrower.

 

(f)                            Unless
the Administrative Agent shall have been notified in writing by the Borrower
prior to the date of any payment due to be made by the Borrower hereunder that
the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro  rata
shares of a corresponding amount.  If
such payment is not made to the Administrative Agent by the Borrower within
three Business Days after such due date, the Administrative Agent shall be
entitled to recover, on

 

 

demand, from
each Lender to which any amount which was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per annum
equal to the daily average Federal Funds Effective Rate.  Nothing herein shall be deemed to limit the
rights of the Administrative Agent or any Lender against the Borrower.

 

2.18                           Requirements
of Law.  (a)  If the adoption of
or any change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the Original Closing Date:

 

(i)                                     shall subject any
Lender to any tax of any kind whatsoever with respect to this Agreement, any
Letter of Credit, any Application or any Eurodollar Loan made by it, or change
the basis of taxation of payments to such Lender in respect thereof (except for
Non-Excluded Taxes covered by Section 2.19 and changes in the rate of tax
on the overall net income of such Lender);

 

(ii)                                  shall impose, modify
or hold applicable any reserve, special deposit, compulsory loan or similar
requirement against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender that is not otherwise
included in the determination of the Eurodollar Rate; or

 

(iii)                               shall impose on such
Lender any other condition;

 

and the result
of any of the foregoing is to increase the cost to such Lender, by an amount
that such Lender deems to be material, of making, converting into, continuing
or maintaining Eurodollar Loans or issuing or participating in Letters of
Credit, or to reduce any amount receivable hereunder in respect thereof, then,
in any such case, the Borrower shall promptly pay such Lender, upon its demand,
any additional amounts necessary to compensate such Lender for such increased
cost or reduced amount receivable.  If
any Lender becomes entitled to claim any additional amounts pursuant to this
paragraph, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so
entitled.

 

(b)                         If
any Lender shall have determined that the adoption of or any change in any
Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether
or not having the force of law) from any Governmental Authority made subsequent
to the Original Closing Date shall have the effect of reducing the rate of
return on such Lender’s or such corporation’s capital as a consequence of its
obligations hereunder or under or in respect of any Letter of Credit to a level
below that which such Lender or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration such Lender’s or
such corporation’s policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, after submission
by such Lender to the Borrower (with a copy to the Administrative Agent) of a
written request therefor, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or such corporation for such
reduction.

 

(c)                          A
certificate as to any additional amounts payable pursuant to this Section submitted
by any Lender to the Borrower (with a copy to the Administrative Agent) shall
be conclusive in the absence of manifest error. 
Notwithstanding anything to the contrary in this Section, the Borrower
shall not be required to compensate a Lender pursuant to this Section for
any amounts incurred more than six months prior to the date that such Lender
notifies the Borrower of such Lender’s intention to claim compensation
therefor; provided that, if the circumstances giving rise to such claim
have a retroactive effect, then such six-month period shall be extended to
include the period of such retroactive

 

 

effect. 
The obligations of the Borrower pursuant to this Section shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.

 

2.19                           Taxes.  (a)  All payments made by the Borrower
under this Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes, branch profits and similar
franchise taxes, imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than
any such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document).  If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded Taxes”)
or Other Taxes are required to be withheld from any amounts payable to the
Administrative Agent or any Lender hereunder, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent necessary
to yield to the Administrative Agent or such Lender (after payment of all Non-Excluded
Taxes and Other Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in this Agreement, provided, however,
that the Borrower shall not be required to increase any such amounts payable to
any Lender with respect to any Non-Excluded Taxes (i) that are
attributable to such Lender’s failure to comply with the requirements of
paragraph (d) or (e) of this Section or (ii) that are
United States withholding taxes imposed on amounts payable to such Lender at the
time such Lender becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related
participation), except to the extent that such Lender’s assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph.

 

(b)                         In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

 

(c)                          Whenever
any Non-Excluded Taxes or Other Taxes are payable by the Borrower, the Borrower
shall promptly send to the Administrative Agent for its own account or for the
account of the relevant Lender, as the case may be, a certified copy of an
original official receipt received by the Borrower showing payment
thereof.  If the Borrower fails to pay
any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts
or other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as
a result of any such failure.

 

(d)                         Each
Lender (or Transferee) that is not a “U.S. Person” as defined in Section 7701(a)(30)
of the Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender from
which the related participation shall have been purchased) two copies of either
U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the
case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax
under Section 871(h) or 881(c) of the Code with respect to
payments of “portfolio interest”, a statement substantially in the form of Exhibit G
and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan
Documents.  Such forms shall be delivered
by each Non-U.S. Lender on or before the date it becomes a party to this Agreement
(or, in the case of any Participant, on or before the date such Participant
purchases the related participation).  In
addition, each Non-U.S. Lender shall deliver

 

 

such forms
promptly upon the obsolescence or invalidity of any form previously delivered
by such Non-U.S. Lender.  Each Non-U.S.
Lender shall promptly notify the Borrower at any time it determines that it is
no longer in a position to provide any previously delivered certificate to the
Borrower (or any other form of certification adopted by the U.S. taxing
authorities for such purpose). 
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender
shall not be required to deliver any form pursuant to this paragraph that such
Non-U.S. Lender is not legally able to deliver.

 

(e)                          A
Lender that is entitled to an exemption from or reduction of non-U.S.
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender
is legally entitled to complete, execute and deliver such documentation and in
such Lender’s judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.

 

(f)                            If
the Administrative Agent or any Lender determines, in its sole discretion, that
it has received a refund of any Non-Excluded Taxes or Other Taxes as to which
it has been indemnified by the Borrower or with respect to which the Borrower
has paid additional amounts pursuant to this Section 2.19, it shall pay
over such refund to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 2.19
with respect to the Non-Excluded Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent or such
Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, that the
Borrower, upon the request of the Administrative Agent or such Lender, agrees
to repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority.
This paragraph shall not be construed to require the Administrative Agent or
any Lender to make available its tax returns (or any other information relating
to its taxes which it deems confidential) to the Borrower or any other Person.

 

(g)                         The
agreements in this Section shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.

 

2.20                           Indemnity.  The Borrower agrees to indemnify each Lender
for, and to hold each Lender harmless from, any loss or expense that such
Lender may sustain or incur as a consequence of (a) default by the Borrower
in making a borrowing of, conversion into or continuation of Eurodollar Loans
after the Borrower has given a notice requesting the same in accordance with
the provisions of this Agreement, (b) default by the Borrower in making
any prepayment of or conversion from Eurodollar Loans after the Borrower has
given a notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of Eurodollar Loans on a day that is not the last day of
an Interest Period with respect thereto. 
Such indemnification may include an amount equal to the excess, if any,
of (i) the amount of interest that 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 such 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 Loans
provided for herein (excluding, however, the Applicable Margin included
therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) that 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. 
A certificate as to any amounts payable pursuant to this

 

 

Section submitted to the Borrower by any
Lender shall be conclusive in the absence of manifest error.  This covenant shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.

 

2.21                           Change
of Lending Office.  Each Lender
agrees that, upon the occurrence of any event giving rise to the operation of Section 2.18
or 2.19(a) with respect to such Lender, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such
event with the object of avoiding the consequences of such event; provided,
that such designation is made on terms that, in the sole judgment of such
Lender, cause such Lender and its lending office(s) to suffer no economic,
legal or regulatory disadvantage, and provided, further, that nothing in this Section shall
affect or postpone any of the obligations of the Borrower or the rights of any
Lender pursuant to Section 2.18 or 2.19(a).

 

2.22                           Replacement
of Lenders.  The Borrower shall be
permitted to replace any Lender that (a) requests reimbursement for
amounts owing pursuant to Section 2.18 or 2.19(a) or (b) is a
Defaulting Lender, with a replacement financial institution; provided that (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event
of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have
taken no action under Section 2.21 so as to eliminate the continued need
for payment of amounts owing pursuant to Section 2.18 or 2.19(a), (iv) the
replacement financial institution shall purchase, at par, all Loans and other
amounts owing to such replaced Lender on or prior to the date of replacement, (v) the
Borrower shall be liable to such replaced Lender under Section 2.20 if any
Eurodollar Loan owing to such replaced Lender shall be purchased other than on
the last day of the Interest Period relating thereto, (vi) the replacement
financial institution, if not already a Lender, shall be reasonably satisfactory
to the Administrative Agent, (vii) the replaced Lender shall be obligated
to make such replacement in accordance with the provisions of Section 10.6
(provided that the Borrower shall be obligated to pay the registration and
processing fee referred to therein), (viii) until such time as such
replacement shall be consummated, the Borrower shall pay all additional amounts
(if any) required pursuant to Section 2.18 or 2.19(a), as the case may be,
and (ix) any such replacement shall not be deemed to be a waiver of any
rights that the Borrower, the Administrative Agent or any other Lender shall
have against the replaced Lender.

 

SECTION 3.                                LETTERS
OF CREDIT

 

3.1                                 L/C
Commitment.  (a)  Subject to the
terms and conditions hereof, the Issuing Lender, in reliance on the agreements
of the other Revolving Lenders set forth in Section 3.4(a), agrees to
issue letters of credit (“Letters of Credit”) for the account of the Borrower
on any Business Day during the Revolving Commitment Period in such form as may
be approved from time to time by the Issuing Lender; provided that the Issuing
Lender shall have no obligation to issue any Letter of Credit if, after giving
effect to such issuance, (i) the L/C Obligations would exceed the L/C
Commitment or (ii) the aggregate amount of the Available Revolving
Commitments would be less than zero. 
Each Letter of Credit shall (A) be denominated in Dollars and (B) expire
no later than the earlier of (x) the first anniversary of its date of issuance
and (y) the date that is five Business Days prior to the Revolving Termination
Date, provided that any Letter of Credit with a one-year term may provide for
the renewal thereof for additional one-year periods (which shall in no event
extend beyond the date referred to in clause (y) above).  The Letters of Credit outstanding on the
Amendment Effective Date under the Existing Credit Agreement shall be deemed to
be Letters of Credit for all purposes of this Agreement and the other Loan
Documents.

 

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

 

 

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

 

3.3                                 Fees
and Other Charges.  (a)  The
Borrower will pay a fee on all outstanding Letters of Credit at a per annum
rate equal to the Applicable Margin then in effect with respect to Eurodollar
Loans under the Revolving Facility, shared ratably among the Revolving Lenders
and payable quarterly in arrears on each Fee Payment Date after the issuance
date.  In addition, if requested by the
Issuing Lender, the Borrower shall pay to the Issuing Lender for its own
account a fronting fee not to exceed 1/4 of one percent per annum on the
undrawn and unexpired amount of each Letter of Credit, payable quarterly in
arrears on each Fee Payment Date after the issuance date.

 

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

 

3.4                                 L/C
Participations.  (a)  The
Issuing Lender irrevocably agrees to grant and hereby grants to each L/C
Participant, and, to induce the Issuing Lender to issue Letters of Credit, each
L/C Participant irrevocably agrees to accept and purchase and hereby accepts
and purchases from the Issuing Lender, on the terms and conditions set forth
below, for such L/C Participant’s own account and risk an undivided interest
equal to such L/C Participant’s Revolving Percentage in the Issuing Lender’s
obligations and rights under and in respect of each Letter of Credit and the
amount of each draft paid by the Issuing Lender thereunder.  Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Lender upon demand at the Issuing Lender’s address for
notices specified herein an amount equal to such L/C Participant’s Revolving
Percentage of the amount of such draft, or any part thereof, that is not so
reimbursed.

 

(b)                         If
any amount required to be paid by any L/C Participant to the Issuing Lender
pursuant to Section 3.4(a) in respect of any unreimbursed portion of
any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such
payment is required to the date on which such payment is immediately available
to the Issuing Lender, times (iii) a fraction the numerator of which is
the number of days that elapse during such period and the denominator of which
is 360.  If any such amount required to
be paid by any L/C Participant pursuant to Section 3.4(a) is not made
available to the Issuing Lender by such L/C Participant within three Business
Days after the date such payment is due, the

 

 

Issuing Lender
shall be entitled to recover from such L/C Participant, on demand, such amount
with interest thereon calculated from such due date at the rate per annum
applicable to ABR Loans.  A certificate
of the Issuing Lender submitted to any L/C Participant with respect to any
amounts owing under this Section shall be conclusive in the absence of manifest
error.

 

(c)                          Whenever,
at any time after the Issuing Lender has made payment under any Letter of
Credit and has received from any L/C Participant its pro  rata
share of such payment in accordance with Section 3.4(a), the Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral applied
thereto by the Issuing Lender), or any payment of interest on account thereof,
the Issuing Lender will distribute to such L/C Participant its pro  rata
share thereof; provided, however, that in the event that any such
payment received by the Issuing Lender shall be required to be returned by the
Issuing Lender, such L/C Participant shall return to the Issuing Lender the
portion thereof previously distributed by the Issuing Lender to it.

 

3.5                                 Reimbursement
Obligation of the Borrower.  If any
draft is paid under any Letter of Credit, the Borrower shall reimburse the
Issuing Lender for the amount of (a) the draft so paid and (b) any taxes,
fees, charges or other costs or expenses incurred by the Issuing Lender in
connection with such payment, not later than 1:00 p.m., Charlotte time, on
(i) the Business Day following the date that the Borrower receives notice
of such draft, if such notice is received on such day prior to 10:00 A.M.,
Charlotte time, or (ii) if clause (i) above does not apply, the
second Business Day immediately following the day that the Borrower receives
such notice.  Each such payment shall be
made to the Issuing Lender at its address for notices referred to herein in
Dollars and in immediately available funds. 
Interest shall be payable on any such amounts from the date on which the
relevant draft is paid until payment in full at the rate set forth in (x) until
the Business Day next succeeding the date of the relevant notice, Section 2.14(b) and
(y) thereafter, Section 2.14(c).

 

3.6                                 Obligations
Absolute.  The Borrower’s obligations
under this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment that the Borrower may have or have had against the Issuing Lender, any
beneficiary of a Letter of Credit or any other Person.  The Borrower also agrees with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrower’s
Reimbursement Obligations under Section 3.5 shall not be affected by,
among other things, the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee.  The Issuing Lender shall not be liable for
any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit, except for errors or omissions found by a final decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the Issuing Lender. 
The Borrower agrees that any action taken or omitted by the Issuing
Lender under or in connection with any Letter of Credit or the related drafts
or documents, if done in the absence of gross negligence or willful misconduct
and in accordance with the standards of care specified in the Uniform Commercial
Code of the State of New York, shall be binding on the Borrower and shall not
result in any liability of the Issuing Lender to the Borrower.

 

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

 

 

Letter of Credit in connection with such
presentment are substantially in conformity with such Letter of Credit.

 

3.8                                 Applications.  To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.

 

SECTION 4.                                REPRESENTATIONS AND
WARRANTIES

 

To induce the
Administrative Agent and the Lenders to enter into this Agreement and to make
the Loans and issue or participate in the Letters of Credit, from and after the
Amendment Effective Date, Holdings and the Borrower hereby jointly and
severally represent and warrant to the Administrative Agent and each Lender (provided
that the representations and warranties set forth in Section 4.28 shall be
made solely for the benefit of the Administrative Agent and the Revolving
Lenders) that:

 

[4.1                             ][Financial Condition] [. ]

 

4.1                                 Financial Condition.(a)   (i)  The audited consolidated balance
sheet of Holdings as at December 31, 2002, and the related consolidated
statements of income and of cash flows for the fiscal year ended on such date,
reported on by and accompanied by an unqualified report from
PricewaterhouseCoopers LLP, present fairly the consolidated financial condition
of Holdings as at such date, and the consolidated results of its operations and
its consolidated cash flows for the fiscal year then ended, (ii) the
unaudited consolidated balance sheet of Holdings as at March 31, 2003, and
the related unaudited consolidated statements of income and cash flows for the
three-month period ended on such date, present fairly the consolidated
financial condition of Holdings as at such date, and the consolidated results
of its operations and its consolidated cash flows for the three-month period
then ended (subject to normal year-end audit adjustments) and (iii) all
such financial statements, including any related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the aforementioned firm of accountants
and disclosed therein and, in the case of clause (ii), except for the absence
of footnotes).  As of the Amendment
Effective Date, no Group Member has any material Guarantee Obligations,
contingent liabilities and liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, including any interest rate or
foreign currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the financial statements referred to in
this paragraph, any financial statements for any periods after March 31,
2003 delivered prior to the Amendment Effective Date or the Confidential
Information Memorandum dated June 26, 2003 relating to the syndication of
the Tranche B Term Loans (it being understood that “material” shall be
construed in the context of all Group Members taken as a whole).  During the period from December 31, 2002
to and including the date hereof, there has been no Disposition by any Group
Member of any material part of the business or property of the Group Members
taken as a whole.

 

4.2                                 No
Change.  [Since December 31, 2002,]Except as set forth on Schedule 4.2 (delivered in connection
with the effectiveness of the Third Amendment), since July 29, 2005 or,
following the Restatement Date, December 31, 2004,
there has been no development or event that has had or is reasonably expected
to have a Material Adverse Effect.

 

4.3                                 Existence;
Compliance with Law.  Each Group
Member (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the power and
authority, and the legal right, to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification except to the extent that the failure to be

 

 

so qualified could not reasonably be expected
to have a Material Adverse Effect, and (d) is in compliance with all
Requirements of Law (including, without limitation, Certificate of Need
Regulations and any requirement to timely file reports, data and other
information with any relevant Governmental Authority) except to the extent that
the failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

4.4                                 Power;
Authorization; Enforceable Obligations. 
Each Loan Party has the power and authority to make, deliver and perform
the Loan Documents to which it is a party and, in the case of the Borrower, to
obtain extensions of credit hereunder. 
Each Loan Party has taken all necessary organizational action to
authorize the execution, delivery and performance of the Loan Documents to
which it is a party and, in the case of the Borrower, to authorize the
extensions of credit on the terms and conditions of this Agreement.  No material consent or authorization of,
filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the extensions of
credit hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents, except (i) consents,
authorizations, filings and notices described in Schedule 4.4, which
consents, authorizations, filings and notices have been obtained or made and
are in full force and effect, and (ii) the filings referred to in Section 4.19.  Each Loan Document has been duly executed and
delivered on behalf of each Loan Party party thereto.  This Agreement constitutes, and each other
Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Loan Party party thereto, enforceable against each such Loan
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).

 

4.5                                 No
Legal Bar.  The execution, delivery
and performance of this Agreement and the other Loan Documents, the issuance of
Letters of Credit, the borrowings hereunder and the use of the proceeds thereof
will not violate any Health Care Permit, Reimbursement Approval, Requirement of
Law or any Contractual Obligation of any Group Member in any material respect
and will not result in, or require, the creation or imposition of any Lien on
any of their respective properties or revenues pursuant to any Requirement of
Law or any such Contractual Obligation (other than the Liens created by the
Security Documents).  No Requirement of
Law or Contractual Obligation applicable to the Borrower or any of its
Subsidiaries could reasonably be expected to have a Material Adverse Effect.

 

4.6                                 Litigation.  Except as set forth in Schedule [4.6,]4.6 (in form delivered in connection with the effectiveness of the
Third Amendment), no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of Holdings or the Borrower, threatened by or against any
Group Member or against any of their respective properties or revenues (a) with
respect to any of the Loan Documents or any of the transactions contemplated
hereby or thereby, or (b) that could reasonably be expected to have a
Material Adverse Effect.

 

4.7                                 No
Default.  No Group Member is in
default under or with respect to any of its Contractual Obligations in any
respect that could reasonably be expected to have a Material Adverse
Effect.  As of the Amendment Effective
Date, no Default or Event of Default (as each is defined in the Existing Credit
Agreement) has occurred and is continuing under the Existing Credit
Agreement.  No Default or Event of
Default has occurred and is continuing.

 

4.8                                 Ownership
of Property; Liens.  Each Group
Member has title in fee simple to, or a valid leasehold interest in, all its
material real property, and good title to, or a valid leasehold interest in,
all its other material property, in each case, except for minor defects which
do not materially interfere with the conduct of the business of such Group
Member, and none of such property is subject to any Lien except as permitted by
Section 7.3.

 

 

4.9                                 Intellectual
Property.  Except as, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
or as set forth on Schedule 4.9, (a) each Group Member owns, or is
licensed or otherwise has the right to use, all Intellectual Property necessary
for the conduct of its business as currently conducted, (b) no material
claim has been asserted and is pending by any Person challenging or questioning
the use of any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does Holdings or the Borrower know of any valid
basis for any such claim, and (c) the use of Intellectual Property by each
Group Member does not infringe on the rights of any Person in any material
respect.

 

4.10                           Taxes.  Each Group Member has filed or caused to be
filed all Federal, material state and other material tax returns that are
required (which, for the avoidance of doubt, does not include tax returns for
which a filing extension has been received) to be filed and has paid all taxes
shown to be due and payable on said returns or on any material assessments made
against it or any of its property and all other material taxes, fees or other
charges imposed on it or any of its property by any Governmental Authority
(other than any the amount or validity of which are currently being contested
in good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the relevant Group
Member); no tax Lien has been filed, and, to the knowledge of Holdings and the
Borrower, no claim is being asserted, with respect to any such tax, fee or
other charge.

 

4.11                           Federal
Regulations.  No part of the proceeds
of any Loans, and no other extensions of credit hereunder, will be used for “buying”
or “carrying” any “margin stock” within the respective meanings of each of the
quoted terms under Regulation U as now and from time to time hereafter in
effect or for any purpose that violates the provisions of the Regulations of
the Board.  If requested by any Lender or
the Administrative Agent, the Borrower will furnish to the Administrative Agent
and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred
to in Regulation U.

 

4.12                           Labor
Matters.  Except as, in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect:  (a) there are no strikes or
other labor disputes against any Group Member pending or, to the knowledge of
Holdings or the Borrower, threatened; (b) hours worked by and payment made
to employees of each Group Member have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters; and (c) all payments due from any Group Member on account of
employee health and welfare insurance have been paid or accrued as a liability
on the books of the relevant Group Member.

 

4.13                           ERISA.
Except as could not reasonably be expected to have a Material Adverse
Effect:  (a) neither a Reportable
Event nor an “accumulated funding deficiency” (within the meaning of Section 412
of the Code or Section 302 of ERISA) has occurred during the five-year
period prior to the date on which this representation is made or deemed made
with respect to any Plan, and each Plan has complied in all material respects
with the applicable provisions of ERISA and the Code, (b) no termination
of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a
Plan has arisen, during such five-year period, (c) the present value of
all accrued benefits under each Single Employer Plan (based on those
assumptions used to fund such Plans) did not, as of the last annual valuation
date prior to the date on which this representation is made or deemed made,
exceed the value of the assets of such Plan allocable to such accrued benefits
by a material amount, (d) neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan
that has resulted or could reasonably be expected to result in liability under
ERISA, and neither the Borrower nor any Commonly Controlled Entity would become
subject to any liability under ERISA if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as
of the valuation date most closely preceding the date on which this
representation is made or deemed made, and (e) no such Multiemployer Plan
is in Reorganization or Insolvent.

 

 

4.14                           Investment
Company Act; Other Regulations.  No
Loan Party is an “investment company”, or a company “controlled” by an “investment
company”, within the meaning of the Investment Company Act of 1940, as
amended.  No Loan Party is subject to
regulation under any Requirement of Law (other than Regulation X of the Board)
that limits its ability to incur Indebtedness.

 

4.15                           Subsidiaries.  Except as disclosed to the Administrative
Agent by the Borrower in writing from time to time after the Amendment
Effective Date, (a) Schedule 4.15 sets forth the name and
jurisdiction of incorporation of each Subsidiary and, as to each such
Subsidiary, the percentage of each class of Capital Stock owned by any Loan
Party and (b) there are no outstanding subscriptions, options, warrants,
calls, rights or other agreements or commitments (other than stock options
granted to employees or directors and directors’ qualifying shares) of any
nature relating to any Capital Stock of the Borrower or any Subsidiary, except
as created by the Loan Documents.

 

4.16                           Use
of Proceeds.  The proceeds of the Revolving
Loans, Swingline Loans, the Letters of Credit and of any Incremental Term Loan
shall be used to finance the working capital needs and general corporate
purposes (including certain acquisitions permitted pursuant to Section 7.8
of this Agreement) of the Borrower and its Subsidiaries in the ordinary course
of business.  The proceeds of the Tranche
B Term Loans received on the Amendment Effective Date shall be used to repay
outstanding Revolving Loans under the Existing Credit Agreement (but not to reduce
the Revolving Commitments), to pay fees and expenses related to the Tranche B
Term Loans and to the extent there are remaining proceeds, for general
corporate purposes.

 

4.17                           Environmental
Matters.  Except as, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect:

 

(a)                          the
facilities and properties owned, leased or operated by any Group Member (the “Properties”)
do not contain, and, to the knowledge of Holdings and the Borrower, have not
previously contained, any Materials of Environmental Concern in amounts or
concentrations or under circumstances that constitute or constituted a
violation of any Environmental Law;

 

(b)                         no
Group Member has received or is aware of any written notice of violation,
alleged violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any
of the Properties or the business operated by any Group Member (the “Business”),
nor does Holdings or the Borrower have knowledge or reason to believe that any
such notice will be received or is being threatened;

 

(c)                          Materials
of Environmental Concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location that could reasonably
be expected to give rise to liability under, any Environmental Law, nor have
any Materials of Environmental Concern been generated, treated, stored or
disposed of at, on or under any of the Properties in violation of, or in a
manner that could reasonably be expected to give rise to liability under, any
applicable Environmental Law;

 

(d)                         no
judicial proceeding or governmental or administrative action is pending or, to
the knowledge of Holdings and the Borrower, threatened, under any Environmental
Law to which any Group Member is or, to the knowledge of Holdings and the
Borrower, will be named as a party with respect to the Properties or the
Business, nor are there, to the knowledge of Holdings and the Borrower, any
consent decrees or other decrees, consent orders, administrative orders or
other orders outstanding under any Environmental Law with respect to the
Properties or the Business;

 

 

(e)                          there
has been no release or threat of release of Materials of Environmental Concern
at or from the Properties, or arising from or related to the operations of any
Group Member in connection with the Properties or otherwise in connection with
the Business, in violation of or in amounts or in a manner that could
reasonably be expected to give rise to liability under Environmental Laws;

 

(f)                            the
Properties and all operations at the Properties are in compliance, and have in
the last five years been in compliance, with all applicable Environmental Laws;
and

 

(g)                         no
Group Member has contractually assumed any liability of any other Person under
Environmental Laws.

 

This Section 4.17 contains the sole representations and warranties
of Holdings and the Borrower concerning environmental matters.

 

4.18                           Accuracy
of Information, etc.  The information
(other than projections and pro forma financial information) contained in this
Agreement, any other Loan Document or any other document, certificate or
written statement furnished by or on behalf of any Loan Party to the
Administrative Agent or the Lenders, or any of them, as modified and
supplemented by other information so furnished, taken as a whole, did not
contain as of the date so furnished any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained herein
or therein not materially misleading in light of the circumstances under which
the statements in such information were made. 
The projections and pro forma financial information contained in the
materials referenced above are based upon good faith estimates and assumptions
believed by management of the Borrower to be reasonable at the time made, it
being recognized by the Lenders that such financial information as it relates
to future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount.  There is no fact known to any Loan Party
(including, without limitation, proposed laws or rules in respect of
healthcare regulations that are generally considered to be reasonably likely to
be passed or adopted) that could reasonably be expected to have a Material
Adverse Effect that has not been expressly disclosed herein, in the other Loan
Documents or in any other documents, certificates and statements furnished to
the Administrative Agent and the Lenders for use in connection with the
transactions contemplated hereby and by the other Loan Documents.

 

4.19                           Security
Documents.  (a)  The Guarantee
and Collateral Agreement is effective to create in favor of the Administrative
Agent, for the benefit of the Lenders, a legal, valid and enforceable security
interest in the Collateral described therein and proceeds thereof (except as
expressly provided in the Guarantee and Collateral Agreement).  In the case of the Pledged Stock described in
the Guarantee and Collateral Agreement, stock certificates representing such
Pledged Stock having been delivered to the Administrative Agent, and in the
case of the other Collateral described in the Guarantee and Collateral
Agreement, financing statements and other filings specified on Schedule 4.19(a) in
appropriate form having been filed in the offices specified on Schedule 4.19(a),
the Guarantee and Collateral Agreement constitutes a fully perfected Lien on,
and security interest in, all right, title and interest of the Loan Parties in
such Collateral and the proceeds thereof, as security for the Obligations (as
defined in the Guarantee and Collateral Agreement), in each case prior and
superior in right to any other Person (except, in the case of Collateral other
than Pledged Stock, Liens permitted by Section 7.3).

 

(b)                         Each
of the Mortgages is effective to create in favor of the Administrative Agent,
for the benefit of the Lenders, a legal, valid and enforceable Lien on the
Mortgaged Properties described therein and proceeds thereof, and when the
Mortgages are filed in the offices specified on Schedule 4.19(b), each
such Mortgage shall constitute a fully perfected Lien on, and security interest
in,

 

 

all right, title
and interest of the Loan Parties in the Mortgaged Properties and the proceeds
thereof, as security for the Obligations (as defined in the relevant Mortgage),
in each case prior and superior in right to any other Person.  Schedule 1.1B lists, as of the Amendment
Effective Date, each parcel of owned real property located in the United States
and held by the Borrower or any of its Subsidiaries that has a value, in the
reasonable opinion of the Borrower, in excess of $300,000.

 

4.20                           Solvency.  The Loan Parties, taken as a whole, after
giving effect to the incurrence of all Indebtedness and obligations being
incurred in connection herewith are and will be and will continue to be,
Solvent.

 

4.21                           Senior
Indebtedness.  The Obligations
constitute “Senior Indebtedness” and “Designated Senior Indebtedness” of the
Borrower under and as defined in the Senior Subordinated Note Indenture.  The obligations of each Subsidiary Guarantor
under the Guarantee and Collateral Agreement constitute “Guarantor Senior
Indebtedness” of such Subsidiary Guarantor under and as defined in the Senior
Subordinated Note Indenture.

 

4.22                           Regulation
H.  No Mortgage encumbers improved
real property that is located in an area that has been identified by the
Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the National
Flood Insurance Act of 1968.

 

4.23                           Certain
Documents.  The Borrower has
delivered to the Administrative Agent a complete and correct copy of the Senior
Subordinated Note Indenture including any amendments, supplements or
modifications with respect thereto.

 

4.24                           Inspections
and Investigations.  Except as could
not reasonably be expected to have a Material Adverse Effect, (a) neither
the Borrower’s nor any Subsidiary’s right to receive reimbursements pursuant to
any government program or private program has been terminated or otherwise
adversely affected as a result of any investigation or action, whether by any
Governmental Authority or other third party; (b) neither the Borrower nor
any Subsidiary has, during the past three years, been the subject of any
inspection, investigation, survey, audit, monitoring, or other form of review
by any Governmental Authority based upon any alleged improper activity on the
part of such Person, nor has the Borrower or any Subsidiary received any notice
of deficiency during the past three years in connection with the operations of
its business; (c) there are not any outstanding deficiencies or work
orders of any Governmental Authority having jurisdiction over the Borrower or
any Subsidiary, or requiring conformity to any applicable agreement with any
Governmental Authority or Requirement of Law; and (d) there is not any
notice of any claim, requirement, or demand of any licensing or certifying
agency or other third party supervising or having authority over the Borrower
or any Subsidiary to rework or redesign any part thereof or to provide
additional furniture, fixtures, equipment, appliances, or inventory so as to
conform to or comply with any existing Requirement of Law.

 

4.25                           Medicare
Participation.  Except as could not
reasonably be expected to have a Material Adverse Effect, the Borrower and its
Subsidiaries are qualified for participation in the Medicare and Medicaid
programs, have current and valid provider contracts with the Medicare and
Medicaid programs, are in compliance with all conditions of participation in
such programs, and have received all approvals or qualifications necessary for
reimbursement.

 

4.26                           Fraud
and Abuse.  To the knowledge of
Holdings and the Borrower, no Group Member has engaged in any material
activities that are prohibited under federal Medicare and Medicaid statutes,
including, but not limited to, 42 U.S.C. § § 1320a-7, 1320a-7a, 1320a-7b,
1395nn and 1396b, or 31 U.S.C. § § 3729-3733, the federal statutes
regulating CHAMPUS, or the regulations promulgated

 

 

thereunder pursuant to such statutes, or any
similar federal, state, or local statutes or regulations promulgated pursuant to
such statutes, including, but not limited to the following:

 

(a)                          knowingly
and willfully making or causing to be made a false statement or representation
of a material fact in any application for any benefit or payment;

 

(b)                         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;

 

(c)                          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; and

 

4.27                           knowingly
and willfully soliciting or receiving any remuneration (including any kickback,
bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in
kind, or offering to pay such remuneration (i) in return for referring an
individual to a person for the furnishing or arranging for the furnishing of
any item or service for which payment may be made in whole or in part by
Medicare, Medicaid, or other applicable third party payors, or (ii) in
return for purchasing, leasing, or ordering or arranging for or recommending
the purchasing, leasing or order 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.

 

4.28                           HIPAA
Compliance.  To the extent that and
for so long as (a) any Group Member is a “covered entity” within the
meaning of HIPAA or (b) any Group Member and/or its business and
operations are subject to or covered by the so-called “Administrative
Simplification” provisions of HIPAA, except as could not reasonably be expected
to have a Material Adverse Effect, such Group Member, (i) has undertaken
all necessary surveys, audits, inventories, reviews, analyses and/or
assessments (including any necessary risk assessments) of all areas of its
business and operations required by HIPAA; (ii) has developed a detailed
plan and time line for becoming HIPAA Compliant (as defined below) (a “HIPAA
Compliance Plan”); and (iii) has implemented those provisions of such
HIPAA Compliance Plan in all material respects necessary to ensure that such
Group Member is or becomes HIPAA Compliant.  
For purposes hereof, “HIPAA Compliant” shall mean that such Group Member
(x) is or will be in material compliance with each of the applicable
requirements of the so-called “Administrative Simplification” provisions of
HIPAA on and as of each date that any part thereof, or any final rule or
regulation thereunder, becomes effective in accordance with its or their terms,
as the case may be (each such date, a “HIPAA Compliance Date”) and (y) is not,
as of any date following any such HIPAA Compliance Date, the subject of any
civil or criminal penalty, process, claim, action or proceeding, or any
administrative or other regulatory review, survey, process or proceeding (other
than routine surveys or reviews conducted by any government health plan or
other accreditation entity).

 

4.29                           Prior Representations and
Warranties.  As of the Amendment
Effective Date, the representations and warranties set forth in Sections 4.1,
4.2, 4.4, 4.18, 4.20, 4.23 and 4.24 of the Existing Credit Agreement are true
and correct in all material respects, as if made on and as of such date.

 

4.30        Schedules.  As of the times set forth in Section 6.2(i),
all of the information contained in the schedules to this Agreement and to the
Guarantee and Collateral Agreement, as updated or supplemented by the Borrower
from time to time prior to such times, sets forth all information required by
such schedules in reasonable detail, and does not contain any omissions
reasonably likely to be misleading in any material respect. 

 

 

SECTION 5.                                CONDITIONS PRECEDENT

 

5.1                                 Conditions
to Effectiveness of Amended and Restated Credit Agreement.  In addition to the conditions set forth in Section 5.2,
each of the effectiveness of this Agreement to amend and restate the Existing
Credit Agreement and the agreement of each Tranche B Term Lender to make the
Tranche B Term Loan requested to be made by it is subject to the prior or
concurrent satisfaction, or waiver of the following conditions precedent:

 

(a)                          Credit
Agreement.  The Administrative Agent
shall have received (i) this Agreement, executed and delivered by the
Agents, Holdings, the Borrower, all Existing Lenders and all Tranche B Term
Lenders and (ii) an acknowledgment and consent, executed and delivered by
each Subsidiary Guarantor, acknowledging receipt of this Agreement, consenting
to the transactions contemplated hereby and confirming that its obligations
under each Loan Document to which it is a party shall remain in full force and
effect.

 

(b)                         Financial
Statements; Projections.  The Lenders
shall have received, or shall have been provided or offered access to, (i) unaudited
interim consolidated financial statements of Holdings for each quarterly period
that has ended after the Original Closing Date and 45 or more days prior to the
Amendment Effective Date, and such financial statements and the unaudited
consolidated financial statements for the same period of the prior fiscal year
shall not reflect any material adverse change in the consolidated financial
condition of Holdings, as reflected in the financial statements or projections
previously furnished to the Lenders and (ii) recent projections with
respect to fiscal years 2003 through and including 2009 of the Borrower and its
Subsidiaries.

 

(c)                          Approvals.  All material governmental and third party
approvals necessary in connection with the Tranche B Term Facility shall have
been obtained and be in full force and effect without any action being taken or
threatened by any competent authority that would restrain, prevent or otherwise
impose material adverse conditions on the financing contemplated hereby.

 

(d)                         Fees.  The Lenders and the Administrative Agent
shall have received all fees required to be paid, and all expenses required to
be paid for which invoices have been presented (including the reasonable fees
and expenses of legal counsel), on or before the Amendment Effective Date.  All such amounts will be paid with proceeds
of Tranche B Term Loans made on the Amendment Effective Date and will be
reflected in the funding instructions given by the Borrower to the
Administrative Agent on or before the Amendment Effective Date.

 

(e)                          Officer’s
Certificate; Closing Certificates. 
The Administrative Agent shall have received (i) a certificate of a
Responsible Officer of each of Holdings and the Borrower, dated the Amendment
Effective Date, substantially in the form of Exhibit C, with appropriate
insertions and attachments, (ii) a long form good standing certificate for
each Loan Party from its jurisdiction of incorporation, and (iii) a
certificate of a Responsible Officer of the Borrower, certifying that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not violate the terms of any other
instrument governing Indebtedness of Holdings, the Borrower and its
Subsidiaries (including, without limitation, the Senior Subordinated Note
Indenture), and accompanied by calculations in reasonable detail evidencing
compliance with the Senior Subordinated Note Indenture.

 

(f)                            Legal
Opinion.  The Administrative Agent
shall have received an executed legal opinion of O’Melveny & Myers
LLP, counsel to the Borrower and the other Loan Parties, substantially in the
form of Exhibit E.

 

(g)                         Filings,
Registration and Recordings.  Each
document (including any Uniform Commercial Code financing statement) required
by the Security Documents or under law or reasonably

 

 

requested by
the Administrative Agent to be filed, registered or recorded in order to create
in favor of the Administrative Agent, for the benefit of the Lenders (including
the Tranche B Term Lenders), a perfected Lien on the Collateral described
therein, prior and superior in right to any other Person (other than with
respect to Liens expressly permitted by Section 7.3), shall have been
filed, registered or recorded on or prior to the Amendment Effective Date or
any amendments thereto required in connection with the transactions
contemplated hereby shall have been delivered to the Administrative Agent in
proper form for filing, registration or recordation.

 

(h)                         Solvency
Certificate.  The Administrative Agent
shall have received a solvency certificate of the Borrower, dated the Amendment
Effective Date, substantially in the form of Exhibit G.

 

(i)                             Insurance.  The Administrative Agent shall have received
(and the Lenders shall have received final forms of) insurance certificates
satisfying the requirements of Section 6.5.

 

5.2                                 Conditions
to Each Extension of Credit.  The
agreement of each Lender to make any extension of credit requested to be made
by it on any date (including its initial extension of credit) is subject to the
satisfaction of the following conditions precedent:

 

(a)                          Representations
and Warranties.  Each of the
representations and warranties made by any Loan Party in or pursuant to the
Loan Documents shall be true and correct in all material respects on and as of
such date as if made on and as of such date except to the extent such
representations and warranties expressly relate to an earlier date in which
case such representations and warranties shall be true and correct in all
material respects as of such earlier date.

 

(b)                         No
Default.  No Default or Event of
Default shall have occurred and be continuing on such date or after giving
effect to the extensions of credit requested to be made on such date.

 

(c)                          Other
Documents.  In the case of any extension
of credit made on an Incremental Facility Closing Date, the Administrative
Agent shall have received such documents and information as it may reasonably
request.

 

Each borrowing
by and issuance of a Letter of Credit on behalf of the Borrower hereunder shall
constitute a representation and warranty by the Borrower as of the date of such
extension of credit that the conditions contained in this Section 5.2 have
been satisfied.

 

SECTION 6.                                AFFIRMATIVE COVENANTS

 

From and after
the Amendment Effective Date, Holdings and the Borrower hereby jointly and
severally agree that, so long as any Commitments remain in effect, any Letter
of Credit remains outstanding or any Loan or other amount (other than any
contingent or unliquidated obligations or liabilities) is owing to any Lender
or the Administrative Agent hereunder, each of Holdings and the Borrower shall
and shall cause each of its Subsidiaries to:

 

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

 

(a)                          as
soon as available, but in any event within 90 days after the end of each fiscal
year of [the Borrower]Holdings, a copy of the audited consolidated
balance sheet of [the Borrower]Holdings and its consolidated Subsidiaries as
at the end of such year and the related audited consolidated statements of
income and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a “going
concern” or like

 

 

qualification
or exception, or qualification arising out of the scope of the audit, by
PricewaterhouseCoopers LLP, or other independent certified public accountants
of nationally recognized standing, reasonably satisfactory to the
Administrative Agent; and

 

(b)                         as
soon as available, but in any event not later than 45 days after the end of
each of the first three quarterly periods of each fiscal year of [the Borrower]Holdings, the unaudited consolidated balance
sheet of [the Borrower]Holdings and its consolidated Subsidiaries as
at the end of such quarter and the related unaudited consolidated statements of
income and of cash flows for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments and except for the absence of footnotes).

 

All such
financial statements shall be prepared in reasonable detail and in accordance
with GAAP (except, in the case of unaudited financial statements, for the
absence of footnotes) applied (except as approved by such accountants or
officer, as the case may be, and disclosed in reasonable detail therein)
consistently throughout the periods reflected therein and with prior periods.

 

6.2                                 Certificates;
Other Information.  Furnish to the
Administrative Agent and each Lender (or, in the case of clause (f), to the
relevant Lender):

 

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

 

(b)                         concurrently
with the delivery of any financial statements pursuant to Section 6.1, (i) a
certificate of a Responsible Officer stating that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except as specified in
such certificate, (ii) a Compliance Certificate containing all information
and calculations necessary for determining compliance by the Borrower with the
provisions of Section 7.1, and (iii) to the extent not previously
disclosed to the Administrative Agent, a description of any change in the
jurisdiction of organization of any Loan Party;

 

(c)                          as
soon as available, and in any event no later than 45 days after the end of each
fiscal year of the Borrower, a detailed consolidated budget for the following
fiscal year prepared on a quarterly basis (including a projected consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of the
following fiscal year, the related consolidated statements of projected cash
flow, projected changes in financial position and projected income and a
description of the underlying assumptions applicable thereto), and, as soon as
available, significant revisions, if any, of such budget and projections with
respect to such fiscal year (collectively, the “Projections”), which
Projections shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Projections are based on estimates, information and
assumptions believed to be reasonable when made;

 

(d)                         within
five Business Days after the same are sent, copies of all financial statements
and reports that Holdings or the Borrower sends to the holders of any class of
its debt securities or public equity securities and, within ten days after the
same are filed, copies of all financial statements and reports that Holdings or
the Borrower may make to, or file with, the SEC;

 

(e)                          within
five Business Days (i) after obtaining knowledge thereof, the occurrence
of any event that would (with the giving of notice, the passage of time, or
both) be a violation of any Health Care Permit necessary for the lawful conduct
of the business or operations of any Group

 

 

Member,
including, without limitation, the ownership and operation of its Health Care
Facilities, (ii) after receipt thereof, any notice of any violation of any
Requirements of Law which would (with the giving of notice, the passage of
time, or both) cause any of the Health Care Permits referred to in clause (i) to
be modified, rescinded or revoked, (iii) after receipt thereof, any
notice, summons, citation or other proceeding seeking to adversely modify in
any material respect, revoke, or suspend any Medicare Provider Agreement,
Medicaid Provider Agreement, Medicare certification or Medicaid certification
applicable to any of the Health Care Facilities of any Group Member, or (iv) after
obtaining knowledge thereof, any revocation or involuntary termination of any
Medicare Provider Agreement, Medicaid Provider Agreement, Medicare
certification or Medicaid certification applicable to any of the Health Care
Facilities of any Group Member, in each case, which could reasonably be
expected to have a Material Adverse Effect;

 

(f)                            promptly,
such additional financial and other information as any Lender may from time to
time reasonably request;

 

(g)                         any
accountants’ management letters received by any Group Member; [and]

 

(h)                         [                                                                                            (h)                                 promptly
upon execution and/or delivery thereof, copies of any indenture, purchase
agreement and other material documents and instruments entered into by Holdings
and any offering memorandum or prospectus distributed by Holdings in connection
with the issuance of any Specified Holdings Securities[.]; and

 

(i)            (x)
within 45 days after the end of each fiscal quarter of the Borrower, updated
schedules to the Guarantee and Collateral Agreement (other than Schedule 7
thereto) and (y) within 90 days after the end of each fiscal year of the
Borrower, updated schedules to this Agreement and an updated Schedule 7 to the
Guarantee and Collateral Agreement, in each case setting forth as of the date
of delivery all material information required by such schedules in reasonable
detail.

 

6.3                                 Payment
of Obligations.  Pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, all its obligations of whatever nature, except where the
amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of the relevant Group Member except to
the extent that failure to pay, discharge or otherwise satisfy such obligations
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.

 

6.4                                 Maintenance
of Existence; Compliance.  (a)  (i) 
Preserve, renew and keep in full force and effect its organizational existence
and (ii) take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business
(including, without limitation, all Health Care Permits and Reimbursement
Approvals reasonably necessary for the lawful conduct of its business or
operations where now conducted and as planned to be conducted, including the
ownership and operation of its Health Care Facilities, pursuant to all Requirements
of Law), except, in each case, as otherwise permitted by Section 7.4 and
except, in the case of clause (ii) above, to the extent that failure to do
so could not reasonably be expected to have a Material Adverse Effect; (b) ensure
that all Health Care Facilities owned, leased, managed or operated by any Group
Member are entitled to participate in, and receive payment under, the
appropriate Medicare, Medicaid and related reimbursement programs, and any
similar state or local government-sponsored program, to the extent any Group
Member has decided to participate in any such program, and to receive
reimbursement from private and commercial payers and health maintenance
organizations to the extent applicable thereto, except where a failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (c) comply
with all Contractual

 

 

Obligations and Requirements of Law except to
the extent that failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

6.5                                 Maintenance
of Property; Insurance.   [(a) ](a) Keep all property useful and
necessary in its business in reasonable working order and condition, ordinary
wear and tear excepted, (b) if requested by the Lenders, maintain with
financially sound and reputable insurance companies key man life insurance on
certain officers of the Borrower and (c) maintain with financially sound
and reputable insurance companies insurance on all its property in at least
such amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar
business. All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Administrative Agent of
written notice thereof, (ii) name the Administrative Agent as insured
party or loss payee, and (iii) be reasonably satisfactory in all other
respects to the Administrative Agent. 
The Borrower shall deliver to the Administrative Agent and the Lenders a
report of a reputable insurance broker with respect to such insurance
substantially concurrently with each delivery of the [Borrower’s ]financial statements referred to in Section 6.1(a) and
such supplemental reports with respect thereto as the Administrative Agent may
from time to time reasonably request.

 

6.6                                 Inspection
of Property; Books and Records; Discussions.  [(a)  ](a) Keep proper books of records and
account in which full, true and correct entries in all material respects are
made of all dealings and transactions in relation to its business and
activities and (b) upon reasonable prior notice, permit representatives of
any Lender to visit and inspect any of its properties and examine and make
abstracts from any of its books and records at any reasonable time and as often
as may reasonably be desired (so long as such visits and inspections do not
disrupt the business and operations of the Group Members) and to discuss the
business, operations, properties and financial and other condition of the Group
Members with officers and senior management of the Group Members and with their
independent certified public accountants 
(and the Borrower shall be provided the opportunity to participate in
any discussions with such independent certified public accountants).

 

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

 

(a)                          the
occurrence of any Default or Event of Default;

 

(b)                         any
(i) default or event of default under any Contractual Obligation of any
Group Member or (ii) litigation, investigation or proceeding that may
exist at any time between any Group Member and any Governmental Authority, that
in either case, could reasonably be expected to have a Material Adverse Effect;

 

(c)                          any
litigation or proceeding affecting any Group Member (i) in which the
amount involved is $1,000,000 or more and not covered by insurance, (ii) in
which injunctive or similar relief is sought or (iii) which relates to any
Loan Document;

 

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

 

 

(e)                          any
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.

 

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

 

6.8                                 Environmental
Laws.  (a)    Except as could not reasonably be expected
to have a Material Adverse Effect, (i) comply with, and ensure compliance
by all tenants and subtenants, if any, with, all applicable Environmental Laws,
and (ii) obtain and comply with and maintain, and ensure that all tenants
and subtenants obtain and comply with and maintain, any and all licenses,
approvals, notifications, registrations or permits required by applicable
Environmental Laws.

 

(b)                         Except
as could not reasonably be expected to have a Material Adverse Effect, conduct
and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and
promptly comply with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws.

 

6.9                                 Additional
Collateral, etc.  (a)  With
respect to any property acquired after the Amendment Effective Date by any
Group Member (other than (x) any property described in paragraph (b), (c), (d) or
(e) below, (y) any property subject to a Lien expressly permitted by Section 7.3(g) or
(l), and (z) property acquired by any Excluded Foreign Subsidiary) as to which
the Administrative Agent, for the benefit of the Lenders, does not have a
perfected Lien, promptly (i) execute and deliver to the Administrative
Agent such amendments to the Guarantee and Collateral Agreement or such other
documents as the Administrative Agent reasonably deems necessary or advisable
to grant to the Administrative Agent, for the benefit of the Lenders, a
security interest in such property and (ii) take all actions necessary or
reasonably advisable to grant to the Administrative Agent, for the benefit of
the Lenders, a perfected first priority security interest in such property,
including the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Guarantee and Collateral Agreement or
by law or as may be reasonably requested by the Administrative Agent.

 

(b)                         With
respect to any fee interest in any real property having a value (together with
improvements thereof) of at least $300,000 acquired after the Amendment
Effective Date by any Group Member (other than (x) any such real property
subject to a Lien expressly permitted by Section 7.3(g) or (l) and
(y) real property acquired by any Excluded Foreign Subsidiary), promptly (i) execute
and deliver a first priority Mortgage, in favor of the Administrative Agent,
for the benefit of the Lenders, covering such real property, (ii) if
requested by the Administrative Agent, provide the Lenders with (A) title
and extended coverage insurance covering such real property in an amount at
least equal to the purchase price of such real property (or such other amount
as shall be reasonably specified by the Administrative Agent) as well as a
current ALTA survey thereof, together with a surveyor’s certificate and (B) any
consents or estoppels reasonably deemed necessary or advisable by the
Administrative Agent in connection with such Mortgage, each of the foregoing in
form and substance reasonably satisfactory to the Administrative Agent and (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.

 

(c)                          With
respect to any new Subsidiary (other than an Excluded Foreign Subsidiary)
created or acquired after the Amendment Effective Date by any Group Member
(which, for the purposes of this paragraph (c), shall include any existing
Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly (i) execute
and deliver to the Administrative Agent such amendments to the Guarantee and
Collateral Agreement as the Administrative Agent deems necessary or advisable
to

 

 

grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in the Capital Stock of such new Subsidiary that is
owned by any Group Member, (ii) deliver to the Administrative Agent the
certificates (if any) representing such Capital Stock, together with (if
applicable) undated stock powers, in blank, executed and delivered by a duly
authorized officer of the relevant Group Member, (iii) cause such new
Subsidiary (A) to become a party to the Guarantee and Collateral
Agreement, (B) to take such actions necessary or advisable to grant to the
Administrative Agent for the benefit of the Lenders a perfected first priority
security interest in the Collateral described in the Guarantee and Collateral
Agreement with respect to such new Subsidiary, including the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be required
by the Guarantee and Collateral Agreement or by law or as may be requested by
the Administrative Agent and (C) to deliver to the Administrative Agent a
certificate of such Subsidiary, substantially in the form of Exhibit C,
with appropriate insertions and attachments, and (iv) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.

 

(d)                         With
respect to any new Excluded Foreign Subsidiary created or acquired after the
Amendment Effective Date by any Group Member (other than by any Group Member
that is an Excluded Foreign Subsidiary), promptly (i) execute and deliver
to the Administrative Agent such amendments to the Guarantee and Collateral
Agreement as the Administrative Agent deems necessary or advisable to grant to
the Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in the Capital Stock of such new Subsidiary that is
owned by any such Group Member (provided that in no event shall more
than 65% of the total outstanding voting Capital Stock of any such new
Subsidiary be required to be so pledged), (ii) deliver to the
Administrative Agent the certificates (if any) representing such Capital Stock,
together with (if applicable) undated stock powers, in blank, executed and
delivered by a duly authorized officer of the relevant Group Member, and take
such other action as may be necessary or, in the reasonable opinion of the
Administrative Agent, desirable to perfect the Administrative Agent’s security
interest therein, (iii) if requested by the Administrative Agent, deliver
to the Administrative Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent, and (iv) deliver to
the Administrative Agent an updated Schedule 4.15.

 

(e)                          Notwithstanding
any of the foregoing provisions, the Administrative Agent may, in its sole
discretion, waive the requirements of paragraphs (a) through (d) of
this Section 6.9 with respect to any property acquired after the Amendment
Effective Date by any Group Member if the Administrative Agent determines that
the costs of obtaining a security interest in such property are excessive in
relation to the value of such property.

 

6.10                           Matters
Relating to Collateral.  [(a)  ](a)  Promptly following (but in any
event no later than 20 Business Days after the occurrence thereof) the date
upon which any Loan Party changes its jurisdiction of organization or changes
its name, notify the Administrative Agent of such change and deliver to the
Administrative Agent all additional executed financing statements and other
documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for
herein.

 

(b)                         Promptly
deliver to the Administrative Agent a copy of each material demand, notice or
document received by any Loan Party that questions or calls into doubt the
validity or enforceability of more than the greater of (x) $4,000,000 in net
amount of outstanding Receivables and (y) 10% of the aggregate net amount of
the then outstanding Receivables.

 

 

 

(c)         Except
as could not reasonably be expected to have a Material Adverse Effect, each
Loan Party shall not (a) grant any extension of the time of payment of any
Receivable, (b) compromise or settle any Receivable for less than the full
amount thereof, (c) release, wholly or partially, any Person liable for
the payment of any Receivable, (d) allow any credit or discount whatsoever
on any Receivable or (e) amend, supplement or modify any Receivable in any
manner that could adversely affect the value thereof.

 

(d)        Except
as could not reasonably be expected to have a Material Adverse Effect, each
Loan Party (either itself or through licensees) will (i) 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, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) use such
Trademark with the appropriate notice of registration and all other notices and
legends required by applicable Requirements of Law, (iv) not adopt or use
any mark which is confusingly similar or a colorable imitation of such
Trademark unless the Administrative Agent, for the ratable benefit of the
Lenders, shall obtain a perfected security interest in such mark pursuant to
this Agreement, and (v) not (and not permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby such Trademark
may become invalidated or impaired in any way.

 

(e)         Except
as could not reasonably be expected to have a Material Adverse Effect, each
Loan Party (either itself or through licensees) will not do any act, or omit to
do any act, whereby any material Patent may become forfeited, abandoned or
dedicated to the public.

 

(f)         Except
as could not reasonably be expected to have a Material Adverse Effect, each
Loan Party (either itself or through licensees) (i) will employ each material
Copyright and (ii) will not (and will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any
material portion of the Copyrights may become invalidated or otherwise
impaired.  No Loan Party will (either
itself or through licensees) do any act whereby any material portion of the
Copyrights may fall into the public domain.

 

(g)        Whenever
any Loan Party, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any material
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office, such Loan Party shall report such filing to the
Administrative Agent within five Business Days after the last day of the fiscal
quarter in which such filing occurs. 
Such Loan Party shall execute and deliver, and have recorded, any and
all agreements, instruments, documents, and papers as the Administrative Agent
may reasonably request to evidence the Administrative Agent’s and the Lenders’
security interest in any material Copyright, Patent or Trademark and the
goodwill and general intangibles of such Loan Party relating thereto or
represented thereby.

 

(h)        Except
as could not reasonably be expected to have a Material Adverse Effect, each
Loan Party will take all reasonable and necessary steps, including, without
limitation, in any proceeding before the United States Patent and Trademark
Office, the United States Copyright 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 the material Intellectual Property, including, without
limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.

 

6.11         USA PATRIOT Act
Compliance.  Holdings and the
Borrower shall, and shall cause each of their Subsidiaries and Affiliates to,
provide, to the extent commercially reasonable, such information and take such
actions as are reasonably requested by the Administrative Agent or any Lenders in
order to

 

 

assist the Administrative Agent and the
Lenders in maintaining compliance with the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 or similar laws, rules or regulations.

 

SECTION 7.           NEGATIVE COVENANTS

 

From and after
the Amendment Effective Date, Holdings and the Borrower hereby jointly and
severally agree that, so long as any Commitments remain in effect, any Letter
of Credit remains outstanding or any Loan or other amount (other than any
contingent or unliquidated obligations or liabilities) is owing to any Lender
or the Administrative Agent hereunder, each of Holdings and the Borrower shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly:

 

7.1           Financial
Condition Covenants.

 

(a)         Consolidated
Leverage Ratio.  Permit the
Consolidated Leverage Ratio as at the last day of any period of four consecutive
fiscal quarters of the Borrower ending [with
any fiscal quarter]on each of the dates
set forth below to exceed the ratio set forth below opposite such [fiscal quarter]date:

 

	
  Fiscal Quarters Ending

  	
   

  	
  Consolidated

  Leverage Ratio

  	
   

  
	
  [June 30,
  2003]

  	
   

  	
  [4.50]

  	
   

  
	
  [September 30,
  2003]

  	
   

  	
  [4.50]

  	
   

  
	
  [December 30,
  2003]

  	
   

  	
  [4.50]

  	
   

  
	
  [March 31,
  2004]

  	
   

  	
  [4.25]

  	
   

  
	
  [June 30,
  2004]

  	
   

  	
  [4.25]

  	
   

  
	
  [September 30,
  2004]

  	
   

  	
  [4.25]

  	
   

  
	
  December 31, 2004

  	
   

  	
  [4.25]5.25

  	
   

  
	
  March 31, 2005

  	
   

  	
  [4.25]5.40

  	
   

  
	
  June 30, 2005

  	
   

  	
  [4.25]5.25

  	
   

  
	
  September 30, 2005

  	
   

  	
  [4.25]5.25

  	
   

  
	
  December 31, 2005

  	
   

  	
  [4.25]5.25

  	
   

  
	
  March 31, 2006

  	
   

  	
  [4.00]5.50

  	
   

  
	
  June 30, 2006

  	
   

  	
  [4.00]5.25

  	
   

  
	
  September 30, 2006

  	
   

  	
  [4.00]5.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  [4.00]4.75

  	
   

  
	
  March 31, 2007 [and
  thereafter]

  	
   

  	
  [3.75]4.75

  	
   

  
	
  June 30, 2007

  	
   

  	
  4.50

  	
   

  
	
  September 30, 2007

  	
   

  	
  4.50

  	
   

  
	
  December 31, 2007

  	
   

  	
  4.25

  	
   

  
	
  March 31, 2008 and the
  last day of each fiscal quarter thereafter

  	
   

  	
  4.00

  	
   

  

 

(b)        Consolidated
Senior Leverage Ratio.  Permit the
Consolidated Senior Leverage Ratio for any period of four consecutive fiscal
quarters of the Borrower ending [with
any fiscal

 

 

quarter]on each of the dates set forth below to
exceed the ratio set forth below opposite such [fiscal
quarter]date:

 

	
  Fiscal Quarters Ending

  	
   

  	
  Consolidated Senior

  Leverage Ratio

  	
   

  
	
  December 31, 2004

  	
   

  	
  1.75

  	
   

  
	
  March 31, 2005

  	
   

  	
  1.75

  	
   

  
	
  June 30, [2003]2005

  	
   

  	
  [2.25]1.75

  	
   

  
	
  September 30, [2003]2005

  	
   

  	
  [2.25]1.75

  	
   

  
	
  December [30,]31, [2003]2005

  	
   

  	
  [2.25]1.75

  	
   

  
	
  March 31, [2004]2006 and the last day of each fiscal
  quarter thereafter

  	
   

  	
  2.00

  	
   

  

 

(c)         Consolidated Fixed
Charge Coverage Ratio.  Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters [of
the Borrower ]ending
[with any fiscal quarter]on each of the dates set forth below to be
less than the ratio set forth below opposite such [fiscal quarter]date:

 

	
  Fiscal Quarter Ending

  	
   

  	
  Consolidated Fixed

  Charge Coverage Ratio

  	
   

  
	
  [June 30,
  2003]

  	
   

  	
  [1.35]

  	
   

  
	
  [September 30,
  2003]

  	
   

  	
  [1.35]

  	
   

  
	
  [December 31,
  2003]

  	
   

  	
  [1.35]

  	
   

  
	
  [March 31,
  2004]

  	
   

  	
  [1.45]

  	
   

  
	
  [June 30,
  2004]

  	
   

  	
  [1.45]

  	
   

  
	
  [September 30,
  2004]

  	
   

  	
  [1.45]

  	
   

  
	
  December 31, 2004

  	
   

  	
  [1.45]1.00

  	
   

  
	
  March 31, 2005

  	
   

  	
  [1.45]1.00

  	
   

  
	
  June 30, 2005

  	
   

  	
  [1.45]1.05

  	
   

  
	
  September 30, 2005

  	
   

  	
  [1.45]1.05

  	
   

  
	
  December 31, 2005

  	
   

  	
  [1.45]1.05

  	
   

  
	
  March 31, 2006

  	
   

  	
  [1.50]1.05

  	
   

  
	
  June 30, 2006

  	
   

  	
  [1.50]1.05

  	
   

  
	
  September 30, 2006

  	
   

  	
  [1.50]1.05

  	
   

  
	
  [December 31,
  2006]

  	
   

  	
  [1.50]

  	
   

  
	
  [March]December 31, [2007]2006 and the last day of each fiscal
  quarter thereafter

  	
   

  	
  [1.55]1.15

  	
   

  

 

(d)         Holdings Consolidated Leverage Ratio.
Permit the Holdings Consolidated Leverage Ratio for any period of four
consecutive fiscal quarters of Holdings ending on each of the dates set forth
below to exceed the ratio set forth below opposite such date:

 

 

	
  Fiscal Quarters Ending

  	
   

  	
  Holdings Consolidated

  Leverage Ratio

  	
   

  
	
  December
  31, 2004

  	
   

  	
  7.20

  	
   

  
	
  March
  31, 2005

  	
   

  	
  7.50

  	
   

  
	
  June 30,
  2005

  	
   

  	
  7.50

  	
   

  
	
  September
  30, 2005

  	
   

  	
  7.50

  	
   

  
	
  December
  31, 2005

  	
   

  	
  7.50

  	
   

  
	
  March
  31, 2006

  	
   

  	
  7.50

  	
   

  
	
  June 30,
  2006

  	
   

  	
  7.50

  	
   

  
	
  September
  30, 2006

  	
   

  	
  7.25

  	
   

  
	
  December
  31, 2006

  	
   

  	
  7.25

  	
   

  
	
  March
  31, 2007

  	
   

  	
  7.00

  	
   

  
	
  June 30,
  2007

  	
   

  	
  6.75

  	
   

  
	
  September
  30, 2007

  	
   

  	
  6.75

  	
   

  
	
  December
  31, 2007

  	
   

  	
  6.50

  	
   

  
	
  March
  31, 2008

  	
   

  	
  6.00

  	
   

  
	
  June 30,
  2008

  	
   

  	
  6.00

  	
   

  
	
  September
  30, 2008

  	
   

  	
  6.00

  	
   

  
	
  December
  31, 2008

  	
   

  	
  6.00

  	
   

  
	
  March
  31, 2009 and the last day of each fiscal quarter thereafter

  	
   

  	
  5.50

  	
   

  

 

7.2           Indebtedness.  Create, issue,
incur, assume, become liable in respect of or suffer to exist any Indebtedness,
except:

 

(a)         Indebtedness of any
Loan Party pursuant to any Loan Document;

 

(b)        Indebtedness (i) of
Holdings to the Borrower in connection with Investments permitted in Section 7.7(f)(i),
(ii) of any Loan Party (other than Holdings) to the Borrower or any
Subsidiary, and (iii) of any Subsidiary that is not a Loan Party to (x)
any Loan Party (other than Holdings) to the extent such Investment is permitted
under Section 7.7(f), and (y) any Person that is not a Loan Party, provided
that Indebtedness incurred under this clause (y) shall not exceed $10,000,000
at any one time outstanding;

 

(c)         Guarantee Obligations
incurred in respect of any Indebtedness permitted hereunder;

 

(d)        Indebtedness
outstanding as of the Original Closing Date and listed on Schedule 7.2(d) and
any refinancings, refundings, renewals or extensions thereof (without
increasing, or shortening the maturity of, the principal amount thereof);

 

(e)         Indebtedness incurred
to finance the acquisition, construction, development, maintenance, upgrade or
improvement of any assets (including, without limitation, Capital Lease
Obligations and as incurred pursuant to Sale-Leaseback Transactions), which may
be secured by Liens permitted by Section 7.3(g), in an aggregate principal
amount, when aggregated with the amount of Indebtedness outstanding under
clause (ii) of Section 7.2(i) at such time, not to exceed
$25,000,000 at any one time outstanding;

 

 

(f)         [(i) ](i)     Indebtedness
of the Borrower in respect of the Senior Subordinated Notes in an aggregate
principal amount not to exceed $200,000,000 and (ii) Guarantee Obligations
of any Subsidiary Guarantor in respect of such Indebtedness, provided
that such Guarantee Obligations are subordinated to the same extent as the
obligations of the Borrower in respect of the Senior Subordinated Notes;

 

(g)        additional subordinated
Indebtedness of the Borrower that (i) has a final maturity date at least
180 days after the later of the Tranche B Term Maturity Date and the latest
Incremental Term Maturity Date and no scheduled payments of principal thereon
prior to the later of the Tranche B Term Maturity Date and the latest
Incremental Term Maturity Date and (ii) is subject to terms (other than as
to interest rate and equity components, which shall be consistent with
transactions of a similar nature conducted at such time) substantially similar
to (or less restrictive taken as a whole to the Loan Parties than) the Senior
Subordinated Notes so long as after giving effect to the incurrence thereof,
the Borrower would be in compliance with the covenants set forth in Section 7.1
after giving Pro Forma Effect to the incurrence of such Indebtedness and the
use of the proceeds thereof;

 

(h)        Indebtedness arising
from agreements of the Borrower or any Subsidiary providing for
indemnification, adjustment of purchase price or similar obligations incurred
or assumed in connection with Permitted Acquisitions or any Disposition
permitted under Section 7.5;

 

(i)          Indebtedness of any
Person that becomes a Subsidiary Guarantor in connection with a Permitted
Acquisition after the Original Closing Date and any refinancings, refundings,
renewals or extensions thereof (without increasing the principal amount
thereof) in an aggregate principal amount not to exceed $20,000,000 at any one
time outstanding; provided that such Indebtedness (i) exists at the
time such Person becomes a Subsidiary Guarantor and is not created in
contemplation of or in connection with such Person becoming a Subsidiary
Guarantor and (ii) may exceed $20,000,000 to the extent that the aggregate
principal amount of such additional Indebtedness, when aggregated with the
amount of Indebtedness outstanding under Section 7.2(e) at such time,
does not exceed $25,000,000 at any one time outstanding;

 

(j)          Indebtedness with
respect to surety, appeal and performance bonds and similar arrangements in the
ordinary course of business;

 

(k)         unsecured
Indebtedness (including, without limitation, overdraft facilities) not
otherwise permitted hereunder in an aggregate principal amount not exceeding
$5,000,000 at any time outstanding; and

 

(l)         [                               (l)            Indebtedness
of Holdings in respect of Specified Holdings Securities, so long as (i) on
the date of incurrence thereof, no Default or Event of Default shall have
occurred and be continuing or would result therefrom, (ii) after giving
Pro Forma Effect in the calculation of Consolidated Holdings Total Debt to the
incurrence thereof, the use of the proceeds thereof to repay Indebtedness and
any Indebtedness repaid since the end of the last fiscal quarter ending prior
to the incurrence thereof for which financial statements have been delivered to
the Lenders, the Holdings Consolidated Leverage
Ratio (as calculated as of the end of the last fiscal quarter ending prior to
the incurrence of Indebtedness in respect of such Specified Holdings Securities
for which financial statements have been delivered to the Lenders) does not
exceed 5.75 to 1.0, and ([iii]ii) such Indebtedness has a final maturity
date at least 91 days after, and does not provide for any scheduled payments of
principal thereon or (other than pursuant to customary requirements to make
prepayment or redemption offers upon asset sales or change of control events)
any mandatory redemption or redemption at the option of the holder thereof (in
whole or in part) prior to, the later of the Tranche B Term Maturity Date and
the latest Incremental Term Maturity Date. 
For purposes of clarification, the

 

 

conditions in
clauses (i)-(iii) in the immediately preceding sentence shall not apply to
any accretion in the principal amount or liquidation value of any Specified
Holdings Securities or any pay-in-kind notes or Capital Stock issued for the
payment of interest or dividends thereon.

 

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

 

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

 

(b)        carriers’, warehousemen’s,
mechanics’, materialmen’s, repairmen’s, landlords’ or other like Liens arising
in the ordinary course of business that are not overdue for a period of more
than 90 days or that are being contested in good faith by appropriate
proceedings;

 

(c)         pledges or deposits in
connection with workers’ compensation, unemployment insurance and other social
security legislation;

 

(d)        deposits to secure the
performance of bids, trade contracts, leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations and arrangements of a
like nature incurred in the ordinary course of business;

 

(e)         (i) easements,
rights-of-way, restrictions and other similar encumbrances incurred in the
ordinary course of business that, in the aggregate, are not substantial in
amount and that do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
the business of the Borrower or any of its Subsidiaries and (ii) as
permitted in the reasonable discretion of the Administrative Agent, Liens
disclosed on any title policy in respect of a Mortgaged Property and any other
Lien permitted by a Mortgage;

 

(f)         Liens in existence on
the Original Closing Date listed on Schedule 7.3(f), provided that
no such Lien is spread to cover any additional property after the Original
Closing Date and that the amount of obligations secured thereby is not
increased (other than in respect of assets financed by the same financing
source);

 

(g)        Liens securing
Indebtedness of the Borrower or any other Subsidiary incurred pursuant to Section 7.2(e);
provided that (i) such Liens shall be created not later than six
months following the acquisition, construction, development, maintenance,
upgrade or improvement of the assets financed with such Indebtedness (provided,
that such Liens may be created at any time with respect to real property), (ii) such
Liens do not at any time encumber any assets other than the assets financed by
such Indebtedness except for other assets financed by the same financing
source, and (iii) the amount of Indebtedness secured thereby is not
increased except in respect of other asset financings from the same financing
source;

 

(h)        Liens created pursuant
to the Security Documents;

 

(i)          (i) any interest
or title of a lessor under any lease entered into by the Borrower or any other
Subsidiary in the ordinary course of its business and covering only the assets
so leased, and (ii) leases and licenses of assets (including, without
limitation, intellectual property rights) in the ordinary course of business
which do not interfere in any material respect with the conduct of business;

 

 

(j)          Liens in respect of
judgments that do not constitute an Event of Default under Section 8(h) (other
than judgments in excess of $2,000,000 which have been stayed or bonded pending
appeal solely as a result of the imposition of such Liens);

 

(k)         Liens of a collection
bank arising in the ordinary course of business under Section 4-208 of the
Uniform Commercial Code in effect in the relevant jurisdiction;

 

(l)          any Lien existing on
any asset prior to the acquisition thereof by the Borrower or any Subsidiary or
on any asset of any Person that 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 Guarantor and (ii) such
Liens shall not apply to any other assets except assets financed by the same
financing source);

 

(m)        any Lien of a Group
Member (i) in favor of any Loan Party, and (ii) if such Group Member
is not a Loan Party, in favor of any other Person, provided that the
aggregate fair market value (determined as of the date such Lien is incurred)
of the assets encumbered by such Liens under this clause (ii) shall not
exceed $10,000,000 at any one time;

 

(n)        any Liens securing
obligations under Specified Swap Agreements (to the extent not otherwise
secured pursuant to clause (h) above) so long as such Liens are subject
and subordinate to any Liens created pursuant to the Security Documents; and

 

(o)        Liens not otherwise
permitted by this Section so long as neither (i) the aggregate
outstanding principal amount of the obligations secured thereby nor (ii) the
aggregate fair market value (determined as of the date such Lien is incurred)
of the assets subject thereto exceeds (as to the Borrower and all Subsidiaries)
$5,000,000 at any one time.

 

7.4           Fundamental
Changes.  Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its property or business, except that:

 

(a)         (i) any
Subsidiary of the Borrower may be merged, consolidated, amalgamated, or
liquidated with or into the Borrower (provided that the Borrower shall
be the continuing or surviving entity) or with or into any Loan Party (provided
that the Loan Party shall be the continuing or surviving entity), and (ii) any
Subsidiary of the Borrower which is not a Loan Party may be merged,
consolidated or liquidated with or into any other Subsidiary of the Borrower
which is not a Loan Party;

 

(b)        any
Subsidiary of the Borrower may Dispose of any or all of its assets (upon
voluntary liquidation or otherwise) (i) to any Loan Party (other than
Holdings), and (ii) if such Subsidiary is not a Loan Party, to any other
Subsidiary;

 

(c)         any
Disposition permitted by Section 7.5;

 

(d)        any
Investment expressly permitted by Section 7.7 may be structured as a
merger, consolidation or amalgamation (including, without limitation, any
Disposition resulting in an Investment permitted under Section 7.7); and

 

(e)         any Subsidiary may
liquidate, wind-up or dissolve if the Borrower determines in good faith, and
the Administrative Agent concurs with such determination if such Subsidiary has
contributed more than 5% to Consolidated EBITDA in the immediately preceding
twelve months, that such liquidation, winding-up or dissolution is in the best
interests of the Borrower and is not adverse to

 

 

the interests of the Lenders hereunder in
any material respect, provided that any remaining assets of such
Subsidiary are transferred to a Loan Party or are otherwise disposed of in
accordance with to Section 7.5.

 

7.5           Disposition of
Property.  Dispose of any of its
property, whether now owned or hereafter acquired, or, in the case of any
Subsidiary, issue or sell any shares of such Subsidiary’s Capital Stock to any
Person, except:

 

(a)         the Disposition of (i) obsolete
or worn out property in the ordinary course of business, (ii) equipment
which the Borrower determines in good faith is no longer useful to the conduct
of business, (iii) assets subject to a Recovery Event, (iv) assets
consisting of trade-ins and exchanges for similar assets, and (v) within
twelve months after the consummation of a Permitted Acquisition, assets
acquired in connection with such Permitted Acquisition so long as the Borrower
applies the Net Cash Proceeds of the Disposition of such assets acquired in
connection with such Permitted Acquisition to repay any outstanding Term Loans,
Revolving Loans and/or Swingline Loans in accordance with Section 2.11;

 

(b)        in the ordinary course
of business, (i) the sale of inventory and supplies, (ii) leases and
licenses of assets (including, without limitation, intellectual property
rights) which do not interfere in any material respect with the conduct of
business, and (iii) the Disposition of accounts receivable in connection
with the compromise, settlement or collection thereof;

 

(c)         Dispositions permitted
by Sections 7.4(a), (b) and (e);

 

(d)        the sale or issuance of
any Subsidiary’s Capital Stock (i) to the Borrower or any Loan Party, and (ii) to
the extent such sale or issuance is an Investment permitted by Section 7.7(f),
to any other Subsidiary;

 

(e)         the Disposition of
other property (including, without limitation, Capital Stock of Subsidiaries)
so long as the aggregate fair market value of all property Disposed of pursuant
to this paragraph (e), after giving effect to such Disposition, does not exceed
(i) in any fiscal year, 15% of the consolidated tangible assets of the
Borrower and its Subsidiaries for such fiscal year as determined immediately
prior to the time of such Disposition and (ii) at any time, 25% of the
greater of (x) consolidated tangible assets of the Borrower and its
Subsidiaries as determined immediately prior to the time of such Disposition,
and (y) consolidated tangible assets of the Borrower and its Subsidiaries at
the Original Closing Date;

 

(f)         the
Disposition of Investments permitted pursuant to clauses (b), (i), (j), (k) and
(l) of Section 7.7;

 

(g)        the
Disposition of assets in connection with Sale-Leaseback Transactions permitted
by Section 7.10;

 

(h)        the
Disposition of foreign assets and Dispositions by Excluded Foreign
Subsidiaries; and

 

(i)          the
Disposition of (i) surplus property in the ordinary course of business and
(ii) equipment which the Borrower determines in good faith is uneconomic.

 

7.6           Restricted
Payments.  Declare or pay any
dividend (other than dividends payable solely in shares of Qualified Capital
Stock or equivalent equity interests) on, or make any payment on account

 

 

of, or set
apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any Capital Stock
of any Group Member, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of any Group Member (collectively, “Restricted
Payments”), except that:

 

(a)         any Subsidiary may
make Restricted Payments (i) to the Borrower or any other Loan Party, (ii) as
may be required by applicable law, or (iii) in the case of Excluded
Foreign Subsidiaries, to its immediate stockholders, and (iv) in the case
of any Subsidiary which is not a Loan Party, to its immediate stockholders
solely on a ratable basis in accordance with the equity interests therein;

 

(b)        so long as no Default
or Event of Default shall have occurred and be continuing, the Borrower may pay
dividends and distributions to Holdings to permit Holdings to, and Holdings
may, purchase Holdings’ Capital Stock or options in respect of Qualified
Capital Stock from present or former directors, officers, employees or
consultants of any Group Member in connection with the death, disability, or
termination of employment or engagement of such director, officer, employee or
consultant, provided, that the aggregate amount of payments under this
paragraph (b) after the Original Closing Date (net of any proceeds
received by Holdings after the Original Closing Date in connection with resales
of any Capital Stock or options so purchased) shall not exceed $5,000,000 in
the aggregate; provided, further, that, notwithstanding the
foregoing, additional payments may be made under this Section 7.6(b) after
the Original Closing Date so long as the Consolidated Senior Leverage Ratio,
after giving effect to any such payment, does not exceed the ratio set forth in
Section 7.1(b) for the period in which such payment is made minus
0.25 and the aggregate of all such payments made pursuant to this Section 7.6(b) does
not exceed $15,000,000 in the aggregate;

 

(c)         the Borrower may pay
dividends to Holdings to permit Holdings to (i) pay corporate overhead
expenses incurred in the ordinary course of business not to exceed $1,000,000
in any fiscal year and (ii) pay any taxes that are due and payable by
Holdings and the Borrower as part of a consolidated group;

 

(d)        the Borrower may make
Restricted Payments with Qualified Capital Stock (or equivalent equity
interests), including, without limitation, the conversion, exchange, exercise,
surrender or similar transaction of any Qualified Capital Stock or any option
or similar right in respect thereof, provided that Restricted Payments
with Qualified Capital Stock shall not be permitted to the extent such a
payment would result in a Default under Section 8(k)(iv);

 

(e)         so
long as no Default or Event of Default shall have occurred and be continuing or
would result therefrom, Holdings may redeem or repurchase the Permitted
Investor Preferred Stock to the extent such redemption or repurchase is made
with the proceeds of the sale or issuance of any Qualified Capital Stock of
Holdings;

 

(f)         so long as no Default
or Event of Default shall have occurred and be continuing, the Borrower may pay
dividends to Holdings to permit Holdings to, and Holdings may, purchase
Holdings’ Capital Stock or options from present or former directors, officers,
employees or consultants of any Group Member upon the death of such director,
officer, employee or consultant from the proceeds of any “key-man” life insurance
policies with respect to such person received by the Borrower or Holdings;

 

(g)        [                               (g)           Holdings may
at any time and from time to time pay dividends or make other distributions on,
or repurchase or redeem, shares of its Qualified or Disqualified Capital Stock
with the proceeds of any issuance of Specified Holdings Securities permitted
under

 

 

Section 7.2(l) or the issuance of any
Qualified Capital Stock or, with respect to dividends or other distributions on
shares of Disqualified Capital Stock, in shares of Disqualified Capital Stock
permitted under Section 7.2(l);[
and]

 

(h)        [                               (h)           so long as
no Default or Event of Default shall have occurred and be continuing or would
result therefrom:

 

(i)            [                               (i)            the
Borrower may, from time to time at any time after August 16, 2008, pay
dividends or make other distributions to Holdings to permit Holdings to, and
Holdings may, make required cash interest or dividend payments with respect to
Specified Holdings Securities;

 

(ii)           [                               (ii)           the Borrower
may at any time and from time to time pay dividends or make other distributions
to Holdings, which dividends or other distributions may be used by Holdings to
pay dividends and make other distributions on, or repurchase or redeem, shares
of its Capital Stock, to make payments in respect of Indebtedness permitted to
be incurred hereunder, or for any other lawful purpose not otherwise prohibited
by this Agreement, in an aggregate amount not to exceed $10,000,000 during any
fiscal year (it being understood that any unused amounts under this clause (ii) during
any fiscal year may be carried forward to the immediately succeeding fiscal
year but may not be further carried forward to any subsequent fiscal year); and

 

(iii)         [                               (iii)          the Borrower
may, from time to time at any time after August 16, 2008, pay dividends or
make other distributions to Holdings to permit Holdings to, and Holdings may,
make Catch-Up Payments with respect to Specified Holdings Securities;

 

so long as
after giving Pro Forma Effect to any such payment or distribution by the
Borrower in the calculation of Consolidated Fixed Charges thereto (and to any
Indebtedness incurred by the Borrower in connection therewith) (x) in each case
under clauses (i)-(iii) above, the Borrower would be in compliance with
the covenants contained in Section 7.1 as of the end of the last fiscal
quarter ending prior to such payment or distribution for which financial
statements have been delivered to the Lenders and (y) in the case of clauses (ii) and
(iii) above, the sum of (1) the aggregate Available Revolving
Commitments of the Lenders at the date of determination and (2) all
transferable cash and Cash Equivalents of the Borrower and its Domestic
Subsidiaries at such date is not less than $15,000,000 (in each case under
clauses (x) and (y) above, as demonstrated by delivery to the Administrative
Agent of a certificate of the Borrower to such effect showing such calculation
in reasonable detail)[.]; and

 

(i)         so long as no Default or Event of Default shall
have occurred and be continuing, at any time after June 30, 2006, the Borrower
may pay dividends to Holdings to permit Holdings to, and Holdings may, pay cash
dividends or distributions to holders of Holdings’ Capital Stock and/or
purchase, repurchase, redeem or otherwise acquire Capital Stock held by holders
of Holdings’ Capital Stock in an aggregate amount not to exceed $10,000,000 so
long as after giving effect to such repayment, distribution, purchase,
repurchase, redemption or acquisition by the Borrower, the Holdings
Consolidated Leverage Ratio is not more than 5.1 to 1.0.

 

7.7           Investments.  Make any advance, loan, extension of credit
(by way of guaranty or otherwise) or capital contribution to, or purchase any
Capital Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, “Investments”), except:

 

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

 

 

(b)        investments
in Cash Equivalents;

 

(c)         (i) Guarantee
Obligations in respect of Indebtedness permitted by Section 7.2 and other
Guarantee Obligations in the ordinary course of business, and (ii) payment
in respect of such Guarantee Obligations, together with any repayment,
reimbursement, indemnification or similar right arising out of such payment;

 

(d)        loans and advances to
employees of any Group Member (i) in the ordinary course of business
(including for travel, entertainment and relocation expenses) in an aggregate
amount for all Group Members not to exceed $1,000,000 at any one time
outstanding, and (ii) for the purpose of acquiring Capital Stock of
Holdings; provided, that if such acquisition of Capital Stock by such
employee is from a party other than a Group Member then such loans and advances
shall not exceed an aggregate amount for all Group Members of $1,000,000 at any
one time outstanding;

 

(e)         Investments in assets
useful in the business of the Borrower and its Subsidiaries made by the
Borrower or any of its Subsidiaries with the proceeds of any Reinvestment
Deferred Amount;

 

(f)         Investments by (i) the
Borrower in Holdings to permit Holdings to make any Restricted Payment
permitted under Section 7.6, (ii) any Loan Party in any other Loan
Party (other than Holdings) and (iii) any Subsidiary which is not a Loan
Party in any other Subsidiary or Joint Venture;

 

(g)        the Borrower and any
Subsidiary Guarantor may make Permitted Acquisitions, and may create and make
Investments in Subsidiaries to own, directly or indirectly, the property
acquired thereby; provided that (i) any acquisition of Capital
Stock results in the issuer thereof becoming a Subsidiary, (ii) any
Domestic Subsidiary created or acquired in connection therewith shall become a
Subsidiary Guarantor and the requirements of Section 6.9 shall be
satisfied prior to or concurrently with the consummation of such Permitted
Acquisition, (iii) no Permitted Acquisition shall be consummated unless,
after giving Pro Forma Effect to such Permitted Acquisition (and the related
Indebtedness incurred or assumed), the Borrower and its Subsidiaries would be
in compliance with the covenants contained in Section 7.1 during such
period (as demonstrated by delivery to the Administrative Agent of a
certificate to such effect showing such calculation in reasonable detail), (iv) no
Default or Event of Default exists at the time thereof or would result
therefrom, (v) immediately prior to and after giving effect to any such
Permitted Acquisition, the Borrower and its Subsidiaries shall be in compliance
with the provisions of Section 7.14, (vi) each such Permitted
Acquisition shall be made on a consensual (meaning, in the case of a Person to
be acquired, approved by the majority in interest of the board of directors or
analogous governing body of such Person) basis between the Borrower and its
Subsidiaries, on the one hand, and the Person or Persons being so acquired and
the seller or sellers of such assets or such business, on the other hand and (viii) immediately
after giving effect to such Permitted Acquisition, the Borrower shall be able
to borrow at least $5,000,000 under the Total Revolving Commitments and no
Default or Event of Default would result therefrom;

 

(h)        Investments in
receivables and other trade payables owing to the Borrower or any of its
Subsidiaries and loans and advances made to customers and suppliers, in each
case, if created, acquired or made in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms;

 

(i)          Investments received
in connection with (A) the bankruptcy, insolvency or reorganization of
suppliers and customers, (B) in settlement of delinquent obligations of,
and other disputes with, or judgments against customers and suppliers arising
in the ordinary course of business and (C) the Disposition of assets
permitted under Section 7.5 (other than Section 7.5(g); provided,
that

 

 

the consideration for any such Disposition
under Section 7.5(e) shall consist of at least 75% cash and cash
equivalents (for purposes of this clause (i), assumption of any Indebtedness
related to the assets subject to such Disposition shall be deemed to be cash);

 

(j)          (i) Investments
under Swap Agreements, so long as any such Swap Agreement is not entered into
for speculative purposes, and (ii) pledges, deposits and similar arrangements
with respect to leases and utilities in the ordinary course of business or
arising out of Liens permitted under Sections 7.3(c) and (d);

 

(k)         Investments (i) existing
on the Original Closing Date and set forth on Schedule 7.7 attached
hereto, and (ii) of any Person existing at the time such Person becomes a
Subsidiary of the Borrower or consolidates or merges with the Borrower or any
of its Subsidiaries (including, without limitation, in connection with a
Permitted Acquisition) so long as such Investments were not made in
contemplation of such Person becoming a Subsidiary or of such merger; and

 

(l)          in addition to
Investments otherwise expressly permitted by this Section, Investments by the
Borrower or any of its Subsidiaries in an aggregate amount (net of all
repayments, returns, interest, distributions, income, profits and similar
amounts realized therefrom) not to exceed $10,000,000 at any time outstanding.

 

7.8           Optional Payments
and Modifications of Certain Debt Instruments.   (a)  Make or
offer to make any optional or voluntary payment, prepayment, repurchase or
redemption of or otherwise optionally or voluntarily defease or segregate funds
with respect to the Senior Subordinated Notes; provided that, at any time and
from time to time prior to August 15, 2005, the Borrower may redeem in the
aggregate up to 35% of the original principal amount of the Senior Subordinated
Notes with the Net Cash Proceeds of one or more Equity Offerings received by,
or contributed by Holdings to, the Borrower, subject to the applicable terms
and conditions of the Senior Subordinated Note Indenture (for this purpose, the
terms “Net Cash Proceeds” and “Equity Offerings” have the meanings given to
them in the Senior Subordinated Note Indenture); (b) amend, modify, waive or
otherwise change, or consent or agree to any amendment, modification, waiver or
other change to, any of the terms of the Senior Subordinated Notes (other than any such amendment,
modification, waiver or other change contemplated by the solicitation documents
included in Holdings’ Current Report on Form 8-K filed with the SEC on July 29,
2005, including, without limitation, the modification to certain interest rates
and payment of fees, each as described therein) if the
effect thereof could reasonably be expected to be adverse or disadvantageous to
the Lenders in any material respect; (c) amend, modify, waive or otherwise
change, or consent or agree to any amendment, modification, waiver or other
change to, any of the terms of any Disqualified Capital Stock or Permitted
Investor Preferred Stock or any Specified Holdings Securities (other than any such amendment,
modification, waiver or other change contemplated by the solicitation documents
included in Holdings’ Current Report on Form 8-K filed with the SEC on July 29,
2005, including, without limitation, the modification to certain interest rates
and payment of fees, each as described therein) that are
not Disqualified Capital Stock if the effect thereof could reasonably be
expected to be adverse or disadvantageous to the Lenders in any material
respect; (d) designate any Indebtedness (other than obligations of the
Loan Parties pursuant to the Loan Documents) as “Designated Senior Indebtedness”
(or any other defined term having a similar purpose) for the purposes of the
Senior Subordinated Note Indenture; or (e) except as contemplated by [Sections]Section 7.6(g) and (h), make or
offer to make any optional or voluntary payment, prepayment, repurchase or
redemption of or otherwise optionally or voluntarily defease or segregate funds
with respect to any Specified Holdings Securities, except with proceeds of
additional Specified Holdings Securities issued by Holdings in accordance with Section 7.2(l),
proceeds of Qualified Capital Stock issued by Holdings, or proceeds of
dividends or other distributions permitted under Section 7.6(h)(ii).

 

 

7.9           Transactions with
Affiliates.  Enter into any
transaction (other than any transaction permitted by Section 7.6),
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with
any Affiliate (other than any Group Member) unless such transaction is (a) otherwise
permitted under this Agreement and (b) upon terms no less favorable to the
relevant Group Member than it would obtain in a comparable arm’s length
transaction with a Person that is not an Affiliate; provided, that
notwithstanding the foregoing, Holdings and its Subsidiaries may enter into the
transactions set forth in Schedule 7.9 attached hereto[.]; it being understood that the transactions contemplated by the August Stock
Purchase Agreement and the subsequent purchase, repurchase, redemption or other
acquisition as permitted by clause (i) of Section 7.6 hereof shall
not constitute a transaction prohibited by this Section 7.9.

 

7.10         Sales and
Leasebacks.  Enter into any
arrangement with any Person providing for the leasing by any Loan Party of
personal property that has been or is to be sold or transferred by such Loan
Party to such Person or to any other Person to whom funds have been or are to
be advanced by such Person on the security of such property or rental
obligations of such Loan Party (a “Sale-Leaseback Transaction”) other than as
permitted pursuant to Section 7.2(e); provided that in the case of any
Sale-Leaseback Transaction resulting in an operating lease, solely for purposes
of determining whether such lease would be permitted pursuant to Section 7.2(e) as
contemplated by this Section 7.10, the present value of the rent payments
during the term of such lease shall be deemed to constitute Capital Lease
Obligations.

 

7.11         Changes in Fiscal
Periods.  Permit the fiscal year of
the Borrower to end on a day other than December 31 or change the Borrower’s
method of determining fiscal quarters.

 

7.12         Negative Pledge
Clauses.  Enter into or suffer to
exist or become effective any agreement that prohibits or limits the ability of
any Group Member to create, incur, assume or suffer to exist any Lien upon any
of its property or revenues, whether now owned or hereafter acquired, other
than (a) this Agreement and the other Loan Documents, (b) any
agreements governing (i) any purchase money Liens or Capital Lease
Obligations otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby together
with any other assets financed by the same financing source), (ii) any
Indebtedness permitted under Sections 7.2(f), (g), (i) and (l), and (iii) the
Permitted Investor Preferred Stock, (c) any document governing any Lien
permitted under Section 7.3 so long as such restriction is limited to the
assets subject to such Lien, (d) customary provisions in leases, licenses,
and similar arrangements in the ordinary course of business, (e) customary
provisions in agreements for the Disposition of assets pending the consummation
of such Disposition, (f) as imposed by any Requirement of Law, and (g) as
relating to the assets of any Excluded Foreign Subsidiary.

 

7.13         Clauses
Restricting Subsidiary Distributions. 
Enter into or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary of the Borrower to (a) make
Restricted Payments in respect of any Capital Stock of such Subsidiary held by,
or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the
Borrower, (b) make loans or advances to, or other Investments in, the
Borrower or any other Subsidiary of the Borrower or (c) transfer any of
its assets to the Borrower or any other Subsidiary of the Borrower, except for
such encumbrances or restrictions existing under or by reason of (i) any
restrictions existing under the Loan Documents, (ii) any restrictions with
respect to a Subsidiary imposed pursuant to an agreement that has been entered
into in connection with the Disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary, (iii) any restrictions
existing under any agreements governing (x) any Indebtedness permitted under [Sections]Section 7.2(f), (g), (i) and (l),
and (y) the Permitted Investor Preferred Stock, (iv) as imposed by any
Requirement of Law, and (v) as relating to any Excluded Foreign
Subsidiary.

 

 

7.14         Lines of Business.  Enter into any business, either directly or
through any Subsidiary, except for those businesses in which the Borrower and
its Subsidiaries are engaged on the date of this Agreement or that are
reasonably related, incidental or ancillary to diagnostic imaging services
(other than any businesses acquired as a result of a Permitted Acquisition,
which other businesses, if not permitted under this Section 7.14, shall be
disposed of in accordance with Section 7.5(a)(v)).

 

7.15         Amendments to
Recapitalization Documents.  Amend,
supplement or otherwise modify (pursuant to a waiver or otherwise) the terms
and conditions of the Recapitalization Documentation, in a manner which could
reasonably be expected to have a Material Adverse Effect.

 

SECTION 8.           EVENTS OF DEFAULT

 

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

 

(a)         the Borrower shall
fail to pay any principal of any Loan or Reimbursement Obligation when due in
accordance with the terms hereof; or the Borrower shall fail to pay any
interest on any Loan or Reimbursement Obligation, or any other amount payable
hereunder or under any other Loan Document, within five Business Days after any
such interest or other amount becomes due in accordance with the terms hereof;
or

 

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

 

(c)         any Loan Party shall
default in the observance or performance of any agreement contained in clause (i) or
(ii) of Section 6.4(a) (with respect to Holdings and the
Borrower only), Section 6.6(b), Section 6.7(a), 6.10(a) or Section 7
of this Agreement; or

 

(d)        any Loan Party shall
default in the observance or performance of any other agreement contained in
this Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days after notice to the Borrower from the
Administrative Agent or the Required Lenders; or

 

(e)         any Group Member shall
(i) default in making any payment of any principal of any Indebtedness
(including any Guarantee Obligation of any Group Member in respect thereof, but
excluding the Loans) on the scheduled or original due date with respect thereto
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness was created; or (ii) default in making any
payment of any interest on any such Indebtedness beyond the period of grace, if
any, provided in the instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due prior
to its stated maturity or (in the case of any such Indebtedness constituting a
Guarantee Obligation) to become payable; provided, that a default, event
or condition described in clause (i), (ii) or (iii) of this paragraph
(e) shall not at any time constitute an Event of Default unless, at such
time, one or more defaults, events or conditions of the type described in
clauses (i), (ii) and (iii) of this paragraph (e) shall

 

 

have occurred and
be continuing with respect to Indebtedness the outstanding principal amount of
which exceeds in the aggregate $2,000,000; or

 

(f)         other than in
connection with any transaction permitted under Section 7.4(e) (so
long as such transaction does not affect any other Group Member and the value
of the Subsidiary subject to such transaction, when aggregated with the value
of all other Subsidiaries liquidated, wound up or dissolved pursuant to Section 7.4(e) does
not exceed 5% of the consolidated total assets of the Group Members), (i) any
Group Member shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign, relating
to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have
an order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or any Group Member shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against any Group Member any case, proceeding or other action of a
nature referred to in clause (i) above that (A) results in the entry
of an order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against any Group Member any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets that results
in the entry of an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) any Group Member shall take any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in clause (i), (ii), or (iii) above; or (v) any Group
Member shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due; or

 

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

 

(h)        one or more judgments
or decrees shall be entered against any Group Member involving in the aggregate
a liability (not paid or fully covered by insurance as to which the relevant
insurance company has not denied coverage) of $2,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 30 days from the entry thereof; or

 

(i)          any
of the Security Documents shall cease, for any reason, to be in full force and
effect, or any Loan Party or any Affiliate of any Loan Party shall so assert,
or any Lien created by

 

 

any of the Security Documents shall cease
to be enforceable and of the same effect and priority purported to be created
thereby; or

 

(j)          the guarantee
contained in Section 2 of the Guarantee and Collateral Agreement shall
cease, for any reason, to be in full force and effect or any Loan Party or any
Affiliate of any Loan Party shall so assert; or

 

(k)         (i)  at any time
prior to the initial public offering of Holdings, the Sponsor and its Control
Investment Affiliates, collectively, shall cease to have the power to vote or
direct the voting of securities having a majority of the ordinary voting power
for the election of directors of Holdings (determined on a fully diluted
basis); (ii) at any time after the initial public offering of Holdings,
(x) the Sponsor shall cease to be the “beneficial owner” (as defined in Rules 13(d)-3
and 13(d) –5 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), directly or indirectly, of at least 20% of the outstanding common stock
of Holdings having ordinary voting power for the election of directors of
Holdings, or (y) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), excluding the Sponsor and its Control
Investment Affiliates, shall become the “beneficial owner” (as defined in Rules 13(d)-3
and 13(d)-5 of the Exchange Act), directly or indirectly, of more than 35% of
the outstanding common stock of Holdings having ordinary voting power for the
election of directors of Holdings and the Sponsor and its Control Investment
Affiliates, collectively, shall own beneficially and of record a lesser amount
of common stock of Holdings having ordinary voting power for the election of
directors of Holdings; (iii) the board of directors of Holdings shall
cease to consist of a majority of Continuing Directors; (iv) Holdings
shall cease to own and control, of record and beneficially, directly, 100% of
each class of outstanding Capital Stock of the Borrower free and clear of all
Liens (except Liens created by the Guarantee and Collateral Agreement); or (v) a
Specified Change of Control shall occur; or

 

(l)          Holdings shall (i) conduct,
transact or otherwise engage in, or commit to conduct, transact or otherwise
engage in, any business or operations other than those (x) incidental to its
ownership of the Capital Stock of the Borrower and beneficial ownership of the
other Group Members, and (y) relating to the administration of the businesses
of the Group Members taken as a whole, including, without limitation the
engagement of professionals, advisors and consultants, (ii) incur, create,
assume or suffer to exist any Indebtedness or other material liabilities or
financial obligations, except (v) parent guarantees and similar
arrangements of a parent company for the benefit of its subsidiaries, (w)
nonconsensual obligations imposed by operation of law (including, without
limitation, any judgments, orders, decrees, writs or injunctions), (x)
obligations pursuant to the Loan Documents to which it is a party, (y)
obligations expressly permitted or contemplated for it by Section 7 and
(z) obligations with respect to its Capital Stock, or (iii) own, lease,
manage or otherwise operate any properties or assets (including cash and cash
equivalents (other than (x) cash received in connection with dividends made by
the Borrower in accordance with Section 7.6 pending application in the
manner contemplated by said Section, [and
](y) cash
proceeds of any issuance of Specified Holdings Securities pending application
in the manner contemplated by Section 7.6 and (z) up to $2.0 million of cash received in connection with the
sale of Capital Stock contemplated by the August Stock Purchase Agreement
to pay fees, expenses and cash interest in respect of the amendments to the
Specified Holdings Securities with any residual amounts to be contributed to
the Borrower) other than the ownership of shares of
Capital Stock of the Borrower or otherwise in connection with or incidental to
any of the foregoing; or

 

(m)        the
Senior Subordinated Notes or the guarantees thereof shall cease, for any
reason, to be validly subordinated to the Obligations or the obligations of the
Subsidiary Guarantors under the Guarantee and Collateral Agreement, as the case
may be, as provided in the Senior Subordinated Note Indenture, or any Loan
Party, the trustee in respect of the Senior Subordinated Notes

 

 

or the holders of at least 25% in aggregate
principal amount of the Senior Subordinated Notes shall so assert;

 

then, and in
any such event, (A) if such event is an Event of Default specified in
clause (i) or (ii) of paragraph (f) above with respect to the
Borrower, automatically the Revolving Commitments shall immediately terminate
and the Loans (with accrued interest thereon) and all other amounts owing under
this Agreement and the other Loan Documents (including all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters
of Credit shall have presented the documents required thereunder) shall
immediately become due and payable, and (B) if such event is any other
Event of Default, either or both of the following actions may be taken:  (i) with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower declare the
Revolving Commitments to be terminated forthwith, whereupon the Revolving
Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters
of Credit shall have presented the documents required thereunder) to be due and
payable forthwith, whereupon the same shall immediately become due and
payable.  With respect to all Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and unexpired amount of
such Letters of Credit.  Amounts held in
such cash collateral account shall be applied by the Administrative Agent to
the payment of drafts drawn under such Letters of Credit, and the unused
portion thereof after all such Letters of Credit shall have expired or been
fully drawn upon, if any, shall be applied to repay other obligations of the
Borrower hereunder and under the other Loan Documents.  After all such Letters of Credit shall have
expired or been fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other obligations of the Borrower hereunder and under the
other Loan Documents (other than any contingent or unliquidated obligations or
liabilities) shall have been paid in full, the balance, if any, in such cash
collateral account shall be returned to the Borrower (or such other Person as
may be lawfully entitled thereto). 
Except as expressly provided above in this Section, presentment, demand,
protest and all other notices of any kind are hereby expressly waived by the
Borrower.

 

SECTION 9.           THE AGENTS

 

9.1           Appointment.  Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental
thereto.   Notwithstanding any provision
to the contrary elsewhere in this Agreement, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.

 

9.2           Delegation of
Duties.  The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not

 

 

be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with reasonable
care.

 

9.3           Exculpatory
Provisions.  Neither any Agent nor
any of their respective officers, directors, employees, agents, attorneys-in-fact
or affiliates shall be (i) liable for any action lawfully taken or omitted
to be taken by it or such Person under or in connection with this Agreement or
any other Loan Document (except to the extent that any of the foregoing are
found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from its or such Person’s own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the
Lenders for any recitals, statements, representations or warranties made by any
Loan Party or any officer thereof contained in this Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agents under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder.  The
Agents shall not be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of any Loan Party.

 

9.4           Reliance by
Administrative Agent.  The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any instrument, writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy, telex or teletype message, statement,
order 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 Holdings
or the Borrower), independent accountants and other experts selected by the
Administrative Agent.  The Administrative
Agent may deem and treat the payee of any Note as the owner thereof for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Administrative Agent.  The Administrative Agent shall be fully
justified in failing or refusing to take any discretionary action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders (or, if so specified by this Agreement,
the Majority Facility Lenders or all Lenders) as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.  The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders (or, if so specified by this
Agreement, the Majority Facility Lenders or all Lenders), and such request and
any action taken or failure to act pursuant thereto shall be binding upon all
the Lenders and all future holders of the Loans.

 

9.5           Notice of Default.  The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Administrative Agent has received notice from a Lender,
Holdings or the Borrower referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders.  The Administrative Agent
shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders (or, if so specified by
this Agreement, the Majority Facility Lenders or all Lenders); provided that
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.

 

 

9.6           Non-Reliance on
Agents and Other Lenders.  Each
Lender expressly acknowledges that neither the Agents nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
any Agent hereafter taken, including any review of the affairs of a Loan Party
or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by any Agent to any Lender.  Each Lender represents to the Agents that it
has, independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and
their affiliates and made its own decision to make its Loans hereunder and
enter into this Agreement.  Each Lender
also represents that it will, independently and without reliance upon any Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Loan Parties and their
affiliates.  Except for notices, reports
and other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of any Loan Party or any affiliate
of a Loan Party that may come into the possession of the Administrative Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.

 

9.7           Indemnification.  The Lenders severally agree to indemnify each
Agent in its capacity as such (to the extent not reimbursed by Holdings or the
Borrower and without limiting the obligation of Holdings or the Borrower to do
so), ratably according to their respective Aggregate Exposure Percentages in
effect on the date on which indemnification is sought under this Section (or,
if indemnification is sought after the date upon which the Commitments shall
have terminated and the Loans shall have been paid in full, ratably in
accordance with such Aggregate Exposure Percentages immediately prior to such
date), from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever that may at any time (whether before or after the payment of
the Loans) be imposed on, incurred by or asserted against such Agent in any way
relating to or arising out of, the Revolving Commitments, this Agreement, any
of the other Loan Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by such Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements that are found by a final
and nonappealable decision of a court of competent jurisdiction to have
resulted from such Agent’s gross negligence or willful misconduct.  The agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder.

 

9.8           Agents in Their
Individual Capacities.  Each Agent
and its affiliates may make loans to, accept deposits from and generally engage
in any kind of business with any Loan Party as though such Agent were not an
Agent.  With respect to its Loans made or
renewed by it and with respect to any Letter of Credit issued or participated
in by it, each Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not an Agent, and the terms “Lender” and “Lenders” shall include each
Agent in its individual capacity.

 

9.9           Successor
Administrative Agent.  The
Administrative Agent may resign as Administrative Agent upon 30 days’ notice to
the Lenders and the Borrower.  If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders, which

 

 

successor
agent shall (unless an Event of Default under Section 8(a) or Section 8(f) with
respect to the Borrower shall have occurred and be continuing) be subject to
approval by the Borrower (which approval shall not be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers
and duties of the Administrative Agent, and the term “Administrative Agent”
shall mean such successor agent effective upon such appointment and approval,
and the former Administrative Agent’s rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans. 
If no successor agent has accepted appointment as Administrative Agent
by the date that is 30 days following a retiring Administrative Agent’s notice
of resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and after consulting with the Lenders, appoint a successor
Administrative Agent, which successor agent shall (unless an Event of Default
under Section 8(a) or Section 8(f) with respect to the
Borrower shall have occurred and be continuing) be subject to approval by the
Borrower (which approval shall not be unreasonably withheld or delayed).  If no successor to the Administrative Agent has
accepted appointment as Administrative Agent by the date that is forty-five
(45) days following a retiring Administrative Agent’s notice of resignation,
the retiring Administrative Agent’s resignation shall nevertheless thereupon
become effective, and the Lenders shall assume and perform all of the duties of
the Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.  After any retiring Administrative Agent’s
resignation as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement and the other Loan
Documents.

 

9.10         Closing Agent,
Co-Documentation Agents and Syndication Agent.  JPMorgan Chase Bank and its affiliates, in
their capacity as Closing Agent shall be entitled to the protections, rights
and benefits of this Section 9 to the same extent as Wachovia Bank,
National Association and its affiliates in their capacity as the Administrative
Agent.  Neither the Co-Documentation
Agents nor the Syndication Agent shall have any duties or responsibilities
hereunder in its capacity as such.

 

SECTION 10.         MISCELLANEOUS

 

10.1         Amendments and
Waivers.  Neither
this Agreement, any other Loan Document, nor any terms hereof or thereof
may be amended, supplemented or modified except in accordance with the
provisions of this Section 10.1. 
The Required Lenders and each Loan Party party to the relevant Loan
Document may, or, with the written consent of the Required Lenders, the
Administrative Agent and each Loan Party party to the relevant Loan Document
may, from time to time, (a) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Loan Parties hereunder or thereunder
or (b) waive, on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any
of the requirements of this Agreement or the other Loan Documents or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall (i) forgive
the principal amount of any Loan or extend the final scheduled maturity date of
any Loan, the scheduled date of any amortization payment in respect of any Term
Loan or the Revolving Termination Date, reduce the stated rate of any interest
or fee payable hereunder (except (x) in connection with the waiver of
applicability of any post-default increase in interest rates (which waiver
shall be effective with the consent of the Majority Facility Lenders of each
adversely affected Facility) and (y) that any amendment or modification of
defined terms used in the financial covenants in this Agreement shall not
constitute a reduction in the rate of interest or fees for purposes of this
clause (i)) or extend the scheduled date of any payment thereof, or increase
the amount or extend the expiration date of any Lender’s Revolving Commitment,
in each case without the written consent of each Lender directly affected
thereby;  (ii) eliminate or reduce
the voting rights of any Lender

 

 

under this Section 10.1 without the
written consent of such Lender (other than through an increase of the
Commitments of other Lenders pursuant to Section 2.1(b) or with
respect to any Defaulting Lender); (iii) reduce any percentage specified
in the definition of Required Lenders or Supermajority Lenders, consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement and the other Loan Documents, release all or a material
portion of the Collateral (other than in connection with any transaction
permitted pursuant to Section 7.5) or release any significant Guarantor
from its obligations under the Guarantee and Collateral Agreement (other than
in connection with any transaction permitted pursuant to Section 7.5), in
each case without the written consent of all Lenders (other than Defaulting
Lenders); (iv) modify Section 2.1(b) without the consent of the
Supermajority Lenders; (v) amend, modify or waive any provision of Section 2.17
without the written consent of the Majority Facility Lenders in respect of each
Facility adversely affected thereby; (vi) change the allocation of any
prepayment under this Agreement to any Facility or to the installments of such
Facility without the written consent of the Majority Facility Lenders with
respect to each relevant Facility; (vii) reduce the percentage specified
in the definition of Majority Facility Lenders with respect to any Facility
without the written consent of all Lenders under such Facility; (viii) amend,
modify or waive any provision of Section 9 without the written consent of
the Administrative Agent; (ix) amend, modify or waive any provision of Section 2.6
or 2.7 without the written consent of the Swingline Lender; or (x) amend,
modify or waive any provision of Section 3 without the written consent of
the Issuing Lender and provided, further, that except as otherwise provided
therein, the consent of the Lenders shall not be required for any increase in
Commitments pursuant to Section 2.1(b). 
Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Loan
Parties, the Lenders, the Administrative Agent and all future holders of the
Loans.  In the case of any waiver, the
Loan Parties, the Lenders and the Administrative Agent shall be restored to
their former position and rights hereunder and under the other Loan Documents,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.

 

10.2         Notices.  All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or five Business Days after being
deposited in the mail, postage prepaid; or, in the case of courier via
guaranteed next-day delivery, the next Business Day; or, in the case of
telecopy notice, when received, addressed as follows in the case of Holdings,
the Borrower and the Administrative Agent, and as set forth in an
administrative questionnaire delivered to the Administrative Agent in the case
of the Lenders, or to such other address as may be hereafter notified by the
respective parties hereto:

 

 

	
  Holdings:

  	
   

  	
  MQ Associates, Inc.

  4300 North Point Parkway

  Alpharetta, Georgia 30022

  Attention: [J.
  Kenneth Luke, President]Todd Latz,

  General Counsel

  Telecopy: 770-246-0202

  Telephone: 770-300-0101

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with [a
  copy]copies
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  O’Melveny & Myers LLP

  [30 Rockefeller Plaza, 41st Floor]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Times Square
  Tower

  7 Times Square

  NY, NY [10112]10036

  Attention: [Christopher
  P. Giordano]Ilan Nissan, Esq.

  Telecopy: 212-[408-2420]326-2061

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  J.P. Morgan
  Partners LLC

  39th Floor

  1221 Avenue of the Americas

  new York, New York 10020-1080

  Attention: Notices Department

  
	
   

  	
   

  	
   

  
	
  Borrower:

  	
   

  	
  MedQuest, Inc.

  
	
   

  	
   

  	
  4300 North Point Parkway

  Alpharetta, Georgia 30022

  Attention: [J.
  Kenneth Luke, President]Todd Latz,

  General Counsel

  Telecopy: 770-246-0202

  Telephone: 770-300-0101

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with [a
  copy]copies
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  O’Melveny & Myers LLP

  [30 Rockefeller Plaza, 41st Floor]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Times Square
  Tower

  7 Times Square

  NY, NY [10112]10036

  Attention: [Christopher
  P. Giordano]Ilan Nissan, Esq.

  Telecopy: 212-[408-2420]326-2061

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  J.P. Morgan
  Partners LLC

  39th Floor

  1221 Avenue of the Americas

  

 

 

	
   

  	
   

  	
  new York,
  New York 10020-1080

  Attention: Notices Department

  
	
   

  	
   

  	
   

  
	
  Administrative Agent:

  	
   

  	
  Wachovia Bank, National Association

  Syndication Agency Services

  201 South College Street, 8th Floor

  Charlotte, North Carolina 28288-0608

  
	
   

  	
   

  	
  Attention: Syndication Agency Services

  
	
   

  	
   

  	
  Telecopy: 704-383-0288

  
	
   

  	
   

  	
  Telephone: 704-374-2698

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wachovia Bank, National Association

  [Healthcare Agency Management]

  One Wachovia Center, 5th Floor

  301 South College Street, NC [0760]0537

  Charlotte, North Carolina 28288-[0760]0537

  
	
   

  	
   

  	
  Attention: [Ms]Mr. [Leanne]Mark  [Phillips]Hedrick

  
	
   

  	
   

  	
  Telecopy: 704-383-[7611]6249

  
	
   

  	
   

  	
  Telephone: 704-[374]383-[6278]0297

  

 

provided that any notice, request or
demand to or upon the Administrative Agent or the Lenders shall not be
effective until received.

 

Notices and
other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative
Agent; provided that the foregoing shall not apply to notices pursuant
to Section 2 unless otherwise agreed by the Administrative Agent and the
applicable Lender.  The Administrative
Agent or the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to procedures
approved by it; provided that approval of such procedures may be limited
to particular notices or communications.

 

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

 

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

 

10.5         Payment of
Expenses and Taxes.  The Borrower
agrees (a) to pay or reimburse each Agent for all its out-of-pocket costs
and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to this Agreement,
and the

 

 

other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including but not limited to the reasonable fees and disbursements
of counsel for the Administrative Agent, any other counsel that any of the
Agents shall retain and any other third-party appraisers, consultants,
financial consultants and auditors advising the Administrative Agent or
retained by counsel for the Administrative Agent, and filing and recording fees
and expenses, with statements with respect to the foregoing to be submitted to
the Borrower prior to the Amendment Effective Date (in the case of amounts to
be paid on the Amendment Effective Date) and from time to time thereafter on a
quarterly basis or such other periodic basis as each Agent shall deem
appropriate, (b) to pay or reimburse each Lender and the Administrative
Agent for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the other Loan
Documents and any such other documents, including the fees and disbursements of
counsel (including the allocated fees and expenses of in-house counsel) to each
Lender and of counsel to the Administrative Agent and any third-party
appraisers, consultants, financial consultants and auditors advising the
Administrative Agent or retained by counsel for the Administrative Agent, (c) to
pay, indemnify, and hold each Lender and the Administrative Agent harmless
from, any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, that may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents, and (d) to pay, indemnify,
and hold each Lender and the Administrative Agent and their respective
officers, directors, employees, affiliates, agents and controlling persons
(each, an “Indemnitee”) harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the other Loan Documents and any such other documents,
including any of the foregoing relating to the use of proceeds of the Loans or
the violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of any Group Member or any of the Properties and
the reasonable fees and expenses of legal counsel in connection with claims,
actions or proceedings by any Indemnitee against any Loan Party under any Loan
Document (all the foregoing in this clause (d), collectively, the “Indemnified
Liabilities”), provided, that the Borrower shall have no obligation hereunder
to any Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities resulted from the gross negligence or willful
misconduct of such Indemnitee.  All
amounts due under this Section 10.5 shall be payable not later than 10
days after written demand therefor. 
Statements payable by the Borrower pursuant to this Section 10.5
shall be submitted [to
J. Kenneth Luke (Telephone No. 770-300-0101) (Telecopy No. 770-246-0202),
]at the address
of the Borrower set forth in Section 10.2, or to such other Person or
address as may be hereafter designated by the Borrower in a written notice to
the Administrative Agent.  The agreements
in this Section 10.5 shall survive repayment of the Loans and all other
amounts payable hereunder.

 

10.6         Successors and
Assigns; Participations and Assignments. 
(a)  The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns permitted hereby (including any affiliate of the Issuing Lender that
issues any Letter of Credit), except that (i) 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) and (ii) no
Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this Section.

 

(b)        (i)            Subject to the conditions set forth
in paragraph (b)(ii) below, any Lender may assign to one or more assignees
(each, an “Assignee”) all or a portion of its rights and obligations

 

 

under this Agreement (including all or a
portion of its Revolving Commitments and the Loans at the time owing to it)
with the prior written consent (such consent not to be unreasonably withheld)
of:

 

(1)           the
Borrower, provided that no consent of the Borrower shall be required for
an assignment to a Lender, an Affiliate of a Lender, an Approved Fund (as
defined below) or, if an Event of Default has occurred and is continuing, any
other Person; and

 

(2)           the Administrative Agent, provided that no consent of
the Administrative Agent shall be required for an assignment, to a Lender, an
Affiliate of a Lender or an Approved Fund.

 

(ii)           Assignments
shall be subject to the following additional conditions:

 

(1)           except
in the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund or an assignment of the entire remaining amount of the assigning
Lender’s Commitments or Loans under any Facility, the amount of the Commitments
or Loans of the assigning Lender subject to each such assignment (determined as
of the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 (or,
in the case of the Tranche B Term Facility or any Incremental Term Loan
Facility, $1,000,000) unless each of the Borrower and the Administrative Agent
otherwise consent, provided that (1) no such consent of the
Borrower shall be required if an Event of Default under Sections 8(a), (f) or
(k) has occurred and is continuing and (2) such amounts shall be
aggregated in respect of each Lender and its Affiliates or Approved Funds, if
any;

 

(2)           the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500;

 

(3)           the Assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an administrative questionnaire; and

 

(4)           in
the case of an assignment to a CLO (as defined below), the assigning Lender
shall retain the sole right to approve any amendment, modification or waiver of
any provision of this Agreement and the other Loan Documents, provided
that the Assignment and Assumption between such Lender and such CLO may provide
that such Lender will not, without the consent of such CLO, agree to any
amendment, modification or waiver that (1) requires the consent of each
Lender directly affected thereby pursuant to the proviso to the second sentence
of Section 10.1 and (2) directly affects such CLO.

 

For the
purposes of this Section 10.6, the terms “Approved Fund” and “CLO” have
the following meanings:

 

“Approved
Fund” means (a) a CLO and (b) with respect to any Lender that is
a fund which invests in bank loans and similar extensions of credit, any other
fund that invests in bank loans and similar extensions of credit and is managed
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

 

“CLO”
means any entity (whether a corporation, partnership, trust or otherwise) that
is engaged in making, purchasing, holding or otherwise investing in bank loans
and similar extensions of credit in the ordinary course of its business and is
administered or managed by a Lender or an Affiliate of such Lender.

 

 

(iii)          Subject
to acceptance and recording thereof pursuant to paragraph (b)(iv) below,
from and after the effective date specified in each Assignment and Assumption
the Assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and obligations
of a Lender under this Agreement, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.18, 2.19, 2.20
and 10.5).  Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply
with this Section 10.6 shall be treated for purposes of this Agreement as
a sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (c) of this Section.

 

(iv)          The
Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Revolving Commitments of, and principal amount of the
Loans and L/C 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
Administrative Agent, the Issuing Lender 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 Agreement, notwithstanding notice to the
contrary.  The Register shall be
available for inspection by the Borrower, the Issuing Lender and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

 

(v)           Upon
its receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an Assignee, the Assignee’s completed administrative questionnaire
(unless the Assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) of this Section and any
written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.

 

(c)         (i)            Any Lender may, without the consent
of the Borrower or the Administrative Agent, sell participations to one or more
banks or other entities (a “Participant”) in all or a portion of such
Lender’s rights and obligations under this Agreement (including all or a
portion of its Revolving Commitments and the Loans owing to it); provided
that (A) such Lender’s obligations under this Agreement shall remain
unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the
Borrower, the Administrative Agent, the Issuing Lender and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement.  Any agreement pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement
may provide that such Lender will not, without the consent of the Participant,
agree to any amendment, modification or waiver that (1) requires the
consent of each Lender directly affected thereby pursuant to the proviso to the
second sentence of Section 10.1 and (2) directly affects such
Participant.  Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.18, 2.19 and 2.20
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.7(b) as
though it were a Lender, provided such Participant shall be subject to Section 10.7(a) as
though it were a Lender.

 

 

(ii)           A
Participant shall not be entitled to receive any greater payment under Section 2.18
or 2.19 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.  Any Participant that is a
Non-U.S. Lender shall not be entitled to the benefits of Section 2.19
unless such Participant complies with Section 2.19(d).

 

(d)        Any Lender may at any
time pledge or assign a security interest in all or any portion of its rights
under this Agreement to secure obligations of such Lender, including any pledge
or assignment to secure obligations to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or assignment of a security interest; provided
that any such pledge or assignment (other than to secure obligations to a
Federal Reserve Bank) shall be in connection with a bona fide pledge or
assignment of a security interest in all or a substantial portion of such
Lender’s lending portfolio; provided further that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or Assignee for such
Lender as a party hereto.

 

(e)         The Borrower, upon
receipt of written notice from the relevant Lender, agrees to issue Notes to
any Lender requiring Notes to facilitate transactions of the type described in
paragraph (d) above.

 

(f)         Notwithstanding the
foregoing, any Conduit Lender may assign any or all of the Loans it may have
funded hereunder to its designating Lender without the consent of the Borrower
or the Administrative Agent and without regard to the limitations set forth in Section 10.6(b).  Each of Holdings, the Borrower, each Lender
and the Administrative Agent hereby confirms that it will not institute against
a Conduit Lender or join any other Person in instituting against a Conduit
Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under any state bankruptcy or similar law, for one year and one day
after the payment in full of the latest maturing commercial paper note issued
by such Conduit Lender; provided, however, that each Lender designating
any Conduit Lender hereby agrees to indemnify, save and hold harmless each
other party hereto for any loss, cost, damage or expense arising out of its inability
to institute such a proceeding against such Conduit Lender during such period
of forbearance.

 

10.7         Adjustments; Set-off.  (a)  Except to the extent that this
Agreement expressly provides for payments to be allocated to a particular
Lender or to the Lenders, if any Lender (a “Benefitted Lender”) shall, at any
time after the Loans and other amounts payable hereunder shall immediately
become due and payable pursuant to Section 8, receive any payment of all
or part of the Obligations owing to it, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to events
or proceedings of the nature referred to in Section 8(f), or otherwise),
in a greater proportion than any such payment to or collateral received by any
other Lender, if any, in respect of the Obligations owing to such other Lender,
such Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of the Obligations owing to each such
other Lender, or shall provide such other Lenders with the benefits of any such
collateral, as shall be necessary to cause such Benefitted Lender to share the
excess payment or benefits of such collateral ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest.

 

(b)        In addition to any rights
and remedies of the Lenders provided by law, upon the occurrence and during the
continuance of an Event of Default, each Lender shall have the right, without
prior notice to Holdings or the Borrower, any such notice being expressly
waived by Holdings and the Borrower to the extent permitted by applicable law,
upon any amount becoming due and payable by Holdings or the Borrower hereunder
(whether at the stated maturity, by acceleration or otherwise), to set

 

 

off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct
or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or
the account of Holdings or the Borrower, as the case may be.  Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application
made by such Lender, provided that the failure to give such notice shall
not affect the validity of such setoff and application.

 

10.8         Counterparts.  This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts, and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.  Delivery of an
executed signature page of this Agreement by facsimile transmission shall
be effective as delivery of a manually executed counterpart hereof.  A set of the copies of this Agreement signed
by all the parties shall be lodged with the Borrower and the Administrative
Agent.

 

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

 

10.10       Integration.  This Agreement and the other Loan Documents
represent the entire agreement of Holdings, the Borrower, the Administrative
Agent and the Lenders with respect to the subject matter hereof and thereof,
and there are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to the subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.

 

10.11       GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

10.12       Submission [To]to
Jurisdiction; Waivers.  Each of
Holdings and the Borrower hereby irrevocably and unconditionally:

 

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

 

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

 

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

 

 

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

 

(e)         waives,
to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section any
special, exemplary, punitive or consequential damages.

 

10.13       Acknowledgements.  Each of Holdings and the Borrower hereby
acknowledges that:

 

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

 

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

 

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

 

10.14       Releases of
Guarantees and Liens.  (a) 
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the Administrative Agent is hereby irrevocably authorized by each
Lender (without requirement of notice to or consent of any Lender except as
expressly required by Section 10.1) to take any action requested by the Borrower
having the effect of releasing any Collateral or Guarantee Obligations (i) to
the extent necessary to permit consummation of any transaction not prohibited
by any Loan Document or that has been consented to in accordance with Section 10.1
or (ii) under the circumstances described in paragraph (b) below.

 

(b)        At such time as the
Loans, the Reimbursement Obligations and all fees due and owing under the Loan
Documents shall have been paid in full, the Revolving Commitments have been
terminated and no Letters of Credit shall be outstanding, the Collateral shall
be released from the Liens created by the Security Documents, and the Security
Documents and all obligations (other than those expressly stated to survive
such termination) of the Administrative Agent and each Loan Party under the
Security Documents shall terminate, all without delivery of any instrument or
performance of any act by any Person.

 

10.15       Confidentiality.  Each of the Administrative Agent and each
Lender agrees to keep confidential all non-public information provided to it by
any Loan Party pursuant to this Agreement that is designated by such Loan Party
as confidential; provided that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate thereof, (b) subject
to an agreement to comply with the provisions of this Section, to any actual or
prospective Transferee or any direct or indirect counterparty to any Swap
Agreement (or any professional advisor to such counterparty), (c) on a
confidential basis, to its employees, directors, agents, attorneys, accountants
and other professional advisors or those of any of its affiliates, (d) upon
the request or demand of any Governmental Authority, (e) in response to
any order of any court or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law, (f) if requested or required
to do so in connection with any litigation or similar proceeding, (g) that
has been publicly disclosed other than by the Administrative Agent, any Lender
or their respective affiliates, (h) to the National Association of
Insurance Commissioners or any similar organization or any

 

 

nationally
recognized rating agency that requires access to information about a Lender’s
investment portfolio in connection with ratings issued with respect to such
Lender, or (i) in connection with the exercise of any remedy hereunder or
under any other Loan Document.  Each
Lender shall have the right to review and approve any public announcement made
after the date hereof relating to such Lender or any of its affiliates or to
any matters contemplated hereby, before any such announcement is made (such
approval not to be unreasonably withheld or delayed); provided that this
paragraph shall not apply to the extent any such disclosure may be compelled in
a judicial or administrative proceeding or as otherwise required by law
(including any filings required by the SEC). Notwithstanding anything herein to
the contrary, any party to this Agreement (and any employee, representative, or
other agent of any party to this Agreement) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to it relating to
such tax treatment and tax structure. 
However, any such information relating to the tax treatment or tax
structure is required to be kept confidential to the extent necessary to comply
with any applicable federal or state securities laws.

 

10.16       WAIVERS OF JURY
TRIAL.  HOLDINGS, THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

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